Paris Court of Appeal, No. 12-11.596

Paris Court of Appeal, First Pole, First Chamber, 10 September 2013, No.12-11.596

SYNDICAT MIXTE DES AÉROPORTS DE CHARENTE (SMAC)

Vs.

SOCIÉTÉ X LIMITED (X)

SOCIÉTÉ Z D SERVICES LIMITED (Z D)

On 8 February 2008, the PARIS AIRPORTS JOINT UNION (SMAC), a public institution managing two airports, concluded two contracts with the Irish companies X LIMITED (X) and Z D SERVICES LIMITED (Z D) for the opening of an air link between Angoulême and London as well as for advertising services.

A dispute having arisen between the parties, X and Z D implemented the arbitration clauses which provided for arbitration in London under the aegis of the London Court of international arbitration, with application of French law. The two cases having been joined, the sole arbitrator issued a partial award on 22 July 2011 in which he accepted jurisdiction, declared the dispute arbitrable and the arbitration clauses valid, and dismissed the request for suspension of the arbitral proceedings.

The order of the delegate of the president of the Paris trial court, dated 21 May 2012, which conferred exequatur on this award, was appealed on 22 June 2012.

On 4 February 2013, SMAC, stating that it had lodged an appeal before the Council of State seeking the annulment of the award and, in the alternative, a declaration that it could not be recognized or enforced in France, referred the matter to the counsel for preliminary findings seeking a stay of proceedings pending the decision of that court. By an order of 18 April 2013, the Preventive Investigating Counsel noted that the application for a stay of proceedings had become pointless since the proceedings had already been held before the Council of State.

On 15 April 2013, the Prefect of Paris had the Public Prosecutor’s Office at this Court of Appeal file a declination of jurisdiction, alleging that the control of compliance with French public policy rules cannot fall within the jurisdiction of the judicial courts when the dispute submitted to arbitration concerns the performance of a public contract.

In its submissions of 13 May 2013, SMAC mainly requests the court to declare the judicial order courts incompetent to rule on the recognition or enforcement of the disputed award, to reform or annul the exequatur order undertaken and to refer the parties to appeal before the administrative courts, in the alternative, if the declination of jurisdiction were to be rejected, to stay the proceedings pending the decision of the jurisdictional court, in the alternative, if the conflict was not raised, to declare that the arbitral tribunal wrongly declared itself competent and consequently to reform the contested order, to reject the application for the exequatur of the award, to declare the claims of X and Z D inadmissible and ill-founded and to condemn them to the payment of the sum of 20,000 euros by application of Article 700 of the Code of Civil Procedure.

SMAC argues that the provisions of the Code of Civil Procedure are irrelevant in resolving a jurisdictional difficulty between the two orders of courts and that the classification of the contractual package as a public contract entails the jurisdiction of the administrative courts, in accordance with the decision of the jurisdictional court of 17 May 2010 INSERM, and as a result of the decision handed down on 19 April 2013 by the Council of State on the action for annulment of the disputed arbitral award.

By submissions dated 26 April 2013, X and Z D asked the court to reject the decline of jurisdiction and, consequently, in the absence of a rise in the dispute, to dismiss SMAC’s claims, declare that there was no stay of proceedings, confirm the order made and, in any event, to grant exequatur to the sentence of 22 July 2011 and condemn SMAC to pay them the sum of 10,000 euros pursuant to Article 700 of the Code of Civil Procedure.

They argue that the decision of the Council of State of 19 April 2013 recognized the lack of jurisdiction of the administrative courts to assess the validity of an international arbitral award made abroad. They add that if this decision admitted the jurisdiction of the administrative courts in matters of exequatur of such awards, it was for a reason devoid of any res judicata authority, and in disregard of the provisions of the Code of Civil Procedure which, on the one hand, entrust the Paris trial court with the exequatur of foreign awards, and on the other hand, restrict the refusal of exequatur to the cases enumerated in Article 1520.

On 17 May 2013, the public prosecutor’s office filed an opinion stating that the declination of jurisdiction is admissible but ill-founded, since Article 1516 of the Code of Civil Procedure, issued by the decree of 13 January 2011, the legality of which is not disputed, designates only the Paris trial court to grant exequatur to a sentence handed down abroad, and the Code of Administrative Justice ignores the exequatur procedure.

UPON WHICH:

On the admissibility of the decline of jurisdiction:

Whereas the dispute, which was not raised at first instance, may be raised on appeal, in accordance with Article 4 of the Order of 1 June 1828;

That the declination of jurisdiction by the Prefect of Paris is admissible;

On the justification of the decline of jurisdiction:

Whereas the action brought against an arbitral award made in France, on the basis of an arbitration agreement, in a dispute arising out of the performance or breach of a contract made between a legal person governed by French public law and a person governed by foreign law, performed on French territory, involving the interests of international trade, even if it is administrative, according to the criteria of French domestic law, is brought before the court of appeal in whose jurisdiction the award was made, in accordance with Article 1505 of the Code of Civil Procedure, as this action does not infringe the principle of the separation of administrative and judicial authorities; that it is however different when the action, directed against such an award made under the same conditions, involves the control of the compliance of the award with the imperative rules of French public law relating to the occupation of the public domain, or those governing public order and applicable to public contracts, partnership contracts and public service delegation contracts; that these contracts being part of an administrative system of public policy, the action against an arbitration award made in a dispute arising from the execution or breach of such a contract falls within the jurisdiction of the administrative judge;

Whereas the refusal to recognize or enforce an award made abroad is subject to the same substantive conditions as the setting aside of an award made in France in international arbitration; whereas, therefore, the rules set out above are applicable to international awards, regardless of the seat of the arbitration;

Whereas although Article 1516 of the Code of Civil Procedure, in its wording resulting from Decree No. 2011-48 of 13 January 2011, entrusts the Paris trial court with the exequatur of sentences rendered abroad, such a provision, established to regulate jurisdiction within the judiciary, has no influence on the principle of the separation of administrative and judicial authorities;

Whereas the two agreements of 8 February 2008 were concluded with companies X and Z D by SMAC, a public institution under French law, for the development of the Angoulême airport, of which it is the owner; whereas it follows from the decision rendered on 19 April 2013 by the Council of State on an action for annulment of the award of 22 July 2011 that this contractual package constitutes a public service contract within the meaning of Article 1 of the Public Procurement Code;

Whereas, therefore, this court, which is not responsible for ruling on the ways in which the administrative courts are likely to be seized of an application for the exequatur of a sentence rendered abroad, must declare the incompetence of the judicial courts with regard to the case in question and overturn the order undertaken;

Whereas, finally, if the Council of State, by the aforementioned decision, rejected the SMAC’s conclusions tending to annul the award because it was brought before a court that was not competent to hear it, it did not decline the jurisdiction of the administrative courts with regard to an application for exequatur, in such a way that there is no need to refer the matter to the jurisdictional court pursuant to Article 34 of the Decree of 26 October 1849;

On the irrecoverable costs of the proceedings:

Whereas equity does not require that the provisions of Article 700 of the Code of Civil Procedure be applied to the benefit of either party;

FOR THESE REASONS:

Declares admissible the decline of jurisdiction of the Prefect of Paris.

Acknowledges the lack of jurisdiction of the courts of judiciary order.

Reverses the order of the Delegate of the President of the Paris trial court dated 21 May 2012, which granted exequatur to the award rendered in London on 22 July 2011 in the dispute between the companies X LIMITED and Z D SERVICES LIMITED and the PARIS AIRPORTS JOINT UNION (SMAC).

Refers the parties to take action as they will notify.

Dismisses the requests made in application of Article 700 of the Code of Civil Procedure.

Condemns X LIMITED and Z D SERVICES LIMITED to pay the costs to be recovered in accordance with the provisions of article 699 of the code of civil procedure.

THE CLERK THE PRESIDENT