Paris Court of Appeal, No. 9999 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 3 April 2014, No. 9999

SARL FARMEX TECHNOLOGIES vs. FOREIGN FINANCING PROJECT MANAGEMENT CENTER OF THE MINISTRY OF FINANCE (FFPMC)

On September 30, 2009, a consortium including the French company FARMEX Technologies SARL (FARMEX) entered into a contract with MCA Armnia, a subsidiary of the US-based Millennium Challenge Corporation, for the rehabilitation of 17 pumping stations in Armenia for an initial price of US$36 million. The contract was subsequently awarded by MCA Armenia to the Ministry of Finance’s Foreign Financing Project Management Centre (FFPMC).

As the FFPMC refused to pay the balance of the contract, alleging defects and delays in the execution of the works, the parties submitted their dispute to Mr. A., the sole arbitrator, who, in an award rendered in Paris on 14 November 2013, ordered FARMEX to pay the Republic of Armenia the sum of USD 1,844,222.19.

FARMEX brought an action for annulment on 21 November 2013.

By submissions of 2 December 2013, it requested the Pre-Trial Judge to stay the enforcement of the award and by submissions of 3 March 2014, it requested the Pre-trial judge to declare the action for annulment, to uphold that the Republic of Armenia waived its immunity from execution and to order the Republic of Armenia to pay the sum of 30,000 euros pursuant to Article 700 of the Code of Civil Procedure.

In its submissions filed on 10 March 2014, the FFPMC requested the Pre-Trial Judge to exclude from the proceedings the free translation of the compromise produced by FARMEX, both as a principal and as a counterclaim, and to declare inadmissible the action for annulment and, consequently, the application for a stay of enforcement of the award, in view of the waiver of legal remedies stipulated in the arbitration agreement, in the alternative, to rule that FARMEX does not show that the enforcement of the award would be likely to seriously prejudice its rights, to dismiss its application for a stay of execution and to order it to pay the sum of 20,000 euros pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH

On the admissibility of the action for annulment

Whereas according to article 1527 paragraph 1 of the Code of Civil Procedure, actions to set aside awards shall be brought, heard and decided in accordance with the rules applicable to adversarial proceedings set forth in Articles 900 through 930-1; whereas it follows from the combination of this text and article 918 that the Pre-trial judge has jurisdiction, until he steps down from the case, to rule on the admissibility of the action for annulment;

Whereas under the terms of Article 1522 of the Code of Civil Procedure: “By special agreement, the parties may at any time expressly waive the action for annulment”;

Whereas the compromise concluded between the Parties on 15 April 2013 stipulates in its Article 6.2, following the sworn translation produced by FFPMC and not contested by FARMEX: “the DAB Award shall be final, binding and fully and immediately enforceable between the Parties and the Parties shall be inadmissible to file any appeal from and/or challenge the DAB Award before any court, tribunal or arbitral tribunal (unless criminal or other similar interferences in relation to the DAB Procedure are proven)";

Whereas the action for annulment is admissible; whereas the waiver of its benefit must expressly refer to it and cannot result from a general clause of the nature of the one just mentioned; moreover, the reservation made by this stipulation with regard to circumstances that are likely to characterise some of the grounds listed in Article 1520 of the Code of Civil Procedure is exclusive of the waiver, since the above-mentioned Article 1522 does not authorise partial waivers;

Whereas the FFPMC’s plea of inadmissibility must be rejected;

On application for a stay of enforcement of the award

Whereas under the terms of Article 1526 of the Code of Civil Procedure: “Neither an action to set aside an award nor an appeal against an enforcement order shall suspend enforcement of an award. ver, the first president ruling in summary proceedings or, as soon as the matter is referred to him or her, the Pre-Trial Judge may stay or adjust the enforcement of the award if such enforcement is likely to seriously prejudice the rights of one of the parties”;

Whereas the award ordered FARMEX to pay a sum of approximately 1.3 million euros; whereas the claimant considers that the enforcement of this award would affect its longevity;

Whereas FFPMC maintains that the opposing party is in a position to pay its debt, in view of the turnover achieved over the past years, which, according to the accounts filed with the clerk’s office of the Commercial Court, amounted to 10,987,712 euros in 2009 and 21,779,931 euros in 2010, 25,061,651 in 2011 and 8,267,984 euros in 2012, and that if the result for the financial year 2013, according to an uncertified account, is -2,399,632 euros, it is precisely because of the provisions made for the sums due in respect of the arbitration;

However, even though the challenged condemnation has been funded, it nevertheless shows a negative result; furthermore, it results from the certificate drawn up by an audit firm that the only significant credit accounts held by Farmex with French banks are blocked or relate to securities pledged; finally, a letter from the company’s statutory auditor dated 28 February 2014 indicates that : “As I wrote to you on 18 November 2013, I confirm that the impact of the sentence cannot, in my opinion, be borne by the company and is likely to compromise the continuity of the company’s operations”;

Whereas in the light of these elements which establish that the enforcement of the award is likely to seriously harm FARMEX and since no significant harm is alleged by the other party, the enforcement of the award should be stopped;

On a request that the free translation of the award shall be excluded from the proceedings

Whereas as regards the stipulation of waiver of legal remedy, the sworn translation is not contested; for the rest, the incident is joined to the merits ;

On Article 700 of the Code of Civil Procedure

Whereas FFPMC, which succumbs, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure; whereas it will be condemned on this basis to pay FARMEX the sum of 3,000 euros;

FOR THESE REASONS :

Rejects the request for dismissal.

Stay enforcement of the award made between the parties on 14 November 2013 pending the decision of the tribunal on the application for annulment.

Rejects the remainder of the applications.

Orders the Centre for the Management of Foreign Funding Projects to pay the SARL FARMEX the sum of 3,000 euros pursuant to Article 700 of the Code of Civil Procedure.