Paris Court of Appeal, No. 12-20.478
Paris Court of Appeal, 8 April 2014, No. 12-20.478
Upheld by: Court of Cassation, First Civil Chamber, 4 November 2015, No. 14-226.43
SOCIETE NYCOOL AB
(Company under Swedish law formerly named NYK LAURITZENCOOL AB)
vs.
HELVETIA ,
LLOYD’S ,
SIAT ,
BELMARINE ,
BDM ,
D ,
NATEUS ,
Y ,
A
According to a Charter-Party concluded in London on 14 October 2005, the companies Dole France, Agrunord, Katope International, XXX, Selection, XXX, Helfer and Nosibé (the importers) chartered from the company NYK LAURITZENCOOL AB, now NYKCOOL AB (hereinafter referred to as NYKCOOL), the vessel Southern Harvest for a transport of lychees from Madagascar to Marseille or Dieppe.
The importers claiming damages (in French Avaries) to the goods were granted the appointment of an expert by the President of the Dieppe Commercial Court through an interim order dated 19 December 2005, who was replaced with a new expert by a second order dated 24 January 2007.
On 10 January 2006, the importers, in application of the arbitration clause stipulated in the Charter-Party, filed a request for arbitration as a conservatory measure before the Chambre Arbitrale Maritime de Paris (CAMP) (The Paris Maritime Arbitral Chamber) against NYKCOOL. On 8 October 2007, the insurance companies HELVETIA, LLOYDS, SIAT, BELMARINE, BDM, NATEUS, D, Y and A (the co-insurance company) intervened in the arbitration proceedings by virtue of acts of subrogation-assignment of rights.
In view of the ongoing expertise, Mr. X, the sole arbitrator appointed by the Chairman of the CAMP, in a decision taken on 23 October 2007 on the basis of Article V of the Arbitration Rules of the Chamber, extended the provisional nature of the request until 9 January 2009 and again until 9 January 2010, in order to monitor the proceedings until the resumption of the case.
On 29 July 2009, the co-insurance company announced that it waived the expertise, requested the resumption of the arbitration proceedings and appointed Mr. Z as arbitrator. NYKCOOL successively appointed two arbitrators who were not on the CAMP list. The Committee of the Chamber declined to accept them and proceeded to select Mr. E as arbitrator on behalf of NYKCOOL.
As the Chamber Committee rejected the requests for challenge of the arbitrators, NYKCOOL brought the matter to the President of the Paris Tribunal of Grande Instance who, acting as juge d’appui, by an order of 22 July 2011, appointed Mr. B as arbitrator in place of Mr. Z and dismissed the remainder of NYKCOOL’s applications. The appeal (in French Appel-nullité) lodged by NYKCOOL against the order of the juge d’appui was declared inadmissible by a judgment of that court of 20 March 2012.
In an award issued in Paris on 12 October 2012 under both French procedural law and English substantive law, the arbitral tribunal, in substance, declared the Charter Party applicable between NYKCOOL and the co-insureds, held NYKCOOL liable for the damages, ordered NYKCOOL to pay the co-insurer the sum of EUR 1,800,000 in principal, in addition to interest, EUR 150,000 pursuant to Article 700 of the Code of Civil Procedure, as well as the arbitration costs and fees, and ordered provisional enforcement.
NYKCOOL filed an action for annulment against this award on 14 November 2012.
By submissions served on 20 February 2014, NYKCOOL sought the annulment of the award and an order requiring the opposing parties to pay it EUR 200,000 in damages for abusive claims and irregularities in carrying out the arbitration, in addition to EUR 50,000 pursuant to Article 700 of the Code of Civil Procedure.
NYKCOOL alleges:
Firstly (1) the irregularity of the composition of the arbitral tribunal resulting, on the one hand, from the refusal to declare the independence of arbitrator E and the incomplete nature of the declaration of Mr. X, and, on the other hand, from the failure of arbitrator X to comply with the principle of impartiality (article 1520-2 of the Code of Civil Procedure).
Secondly (2), the absence of jurisdiction of the arbitral tribunal, reason taken from the expiry of the arbitration period and the manifest inapplicability of the arbitration clause in view of the lawsuit opposing it to the CAMP (article 1520-1 of the code of civil procedure).
Thirdly (3), the arbitrators disregarded their mission resulting from the expiry of the arbitration period (Article 1520-3 of the Code of Civil Procedure).
Fourthly (4), the violation of due process (Article 1520-4 of the Code of Civil Procedure).
And finally (5), the violation of international public policy resulting from fraud (Article 1520-5 of the Code of Civil Procedure).
By submissions served on 10 February 2014, the co-insurance company requested the court to reject the action for annulment, to confirm the award, to dismiss the claims of NYKCOOL and order it to pay the sum of EUR 50,000 pursuant to Article 700 of the Code of Civil Procedure.
UPON WHICH,
On the first ground for annulment based on the irregularity of the composition of the arbitral tribunal (article 1520-2 of the code of civil procedure):
NYKCOOL claims, firstly, that Arbitrator E did not sign a declaration of independence, secondly, that Arbitrator X signed an incomplete declaration, and thirdly, that Arbitrator X, who is Vice-President and Treasurer of CAMP, is in a situation of conflict of interest.
Whereas by acts of 6 and 7 June 2011, NYKCOOL summoned the co-insurers and the CAMP before the President of the Paris Tribunal of Grande Instance, who is ruling by way of summary proceedings, for the purpose of having the Arbitral Tribunal dismissed because of the flagrant inapplicability of the Arbitration Agreement. NYKCOOL claims that there was a conflict of interest between CAMP and it because of, on the one hand, the annulment of an award between the same parties by a judgment of that court dated 10 March 2011 for failure to declare the independence of Arbitrator Z, in a dispute concerning the vessel Chaiten, and because of the third party proceedings (in French Tierce opposition) lodged by CAMP against that judgment. On the other hand, NYKCOOL claims that there was a conflict of interest between CAMP and it because of the action it had to bring against CAMP in order to obtain reimbursement of arbitration costs. CAMP refused NYKCOOL’s requests to challenge the arbitrators in the Southern Harvest dispute. The resolution of the dispute should therefore be referred to ad hoc arbitration and that NYKCOOL wished to appoint Professor Daigre as arbitrator;
Whereas by an order of 22 July 2011, the President of Paris Tribunal of Grande Instance appointed Mr. B as arbitrator to replace Mr. Z and dismissed all other requests considering the absence of sufficient reasonable doubt as to the independence and objective impartiality of Mr. X and Mr. E;
Whereas NYKCOOL’s appeal (in French Appel-nullité) against this order was declared inadmissible by a judgment of 20 March 2012;
Whereas NYKCOOL can, therefore, challenge the independence or impartiality of the arbitrators only in the light of new elements which could not be brought to the attention of the juge d’appui;
That the claimant invokes, on the one hand, without specifying the date, another arbitration procedure between the same parties, in which the award pronounced against it was reduced from one million to EUR 300,000. On the other hand, the claimant raises the rejection by the Court of Appeal of the third party proceedings (in French Tierce opposition) filed against the judgment of 10 March 2011, and lastly, the fact that Mr. X is the treasurer of the CAMP;
Whereas however, the aforementioned fact is by no means new and was not concealed, and the other facts do not affect the terms of the conflict of interest alleged by NYKCOOL before the juge d’appui;
That the ground alleging irregularity in the constitution of the arbitral tribunal must therefore be dismissed;
On the second ground for annulment based on the lack of jurisdiction of the arbitral tribunal (Article 1520-1 of the Code of Civil Procedure):
NYKCOOL claims, on the one hand, that the arbitration clause is grossly unenforceable in view of the dispute opposing it to the arbitration institution and, on the other hand, that the award was made when the court lost jurisdiction by the expiry of the arbitration period.
On the first branch of the ground:
Whereas, on the one hand, the dispute between NYKCOOL and CAMP in another proceeding does not intrinsically affect the arbitration clause concerning the vessel Southern Harvest, and on the other hand, since the arbitration institution does not have a jurisdictional function, the disputes which may oppose it to a party do not preclude the organisation of the arbitration since, as was the case here, the difficulties of constitution of the arbitral tribunal may, if necessary, be settled by the juge d’appui;
That the ground of appeal cannot therefore be upheld in so far as it alleges the inapplicability of the arbitration agreement;
On the second branch of the ground:
Whereas through the arbitration clause, the parties have placed themselves under the Arbitration Rules of the Chambre Arbitrale Maritime de Paris;
That these rules, in the version in force on 9 June 2004, provide that the provisions of the Code of Civil Procedure relating to the arbitral proceedings are applicable only in the absence of an agreement between the parties and that, in particular, the provisions of that Code relating to the appointment of the members of the arbitral tribunal by the juge d’appui are inapplicable (Article II bis);
That Articles VI and VII lay down the conditions under which the CAMP Committee remedies difficulties in the constitution of the arbitral tribunal and rules on requests for the challenge of arbitrators;
With regard to the arbitration period, Article IX of the Rules stipulates: “When the statements of the claimants and the defendants have been delivered to the Secretariat of the Chambre, the payment of the deposit has been made, the arbitrators have accepted their appointment and the Tribunal has been constituted, the Secretariat shall notify the arbitrators and the parties of the date of the commencement of the arbitration proceedings as well as the place where the arbitration will be conducted”; that according to Article XIV: “Awards, signed by the arbitrators and dated, are to be delivered by them to the Secretariat within six months from the date fixed by the notification provided for in article IX. However, the President of the Committee may decide to grant one or several extensions of three months. Their number may not exceed four. After the fourth extension the President of the Committee may grant a further one-month extension on substantiated request by the President of the Arbitration Tribunal. Any further extension shall be expressly agreed by the parties or ordered by the competent jurisdiction following a request by one of the parties or the arbitration tribunal”;
Whereas in the present case, the CAMP Committee successively refused to approve two arbitrators chosen by NYKCOOL outside the list of the chamber. It appointed as arbitrator on behalf of that party M. E, and rejected NYKCOOL’s challenge of the whole arbitral tribunal;
That by a letter dated 30 November 2010, the Secretariat General of the Maritime Arbitration Chamber notified the parties, in accordance with the aforementioned Article IX of the Arbitration Rules, of the composition of the Arbitral Tribunal and informed them that the commencement of the proceedings was fixed at that date;
That the arbitration period has been extended until 30 August 2011 by a decision of the CAMP Committee of 30 May 2011; that no further extension has been granted;
Whereas, although the Rules of Arbitration exclude recourse to the juge d’appui to rule on the constitution of the Arbitral Tribunal, the CAMP Committee, in view of the impasse in the arbitration, invited the parties to refer the matter to that court if they considered it appropriate;
Whereas, as stated above, on 6 and 7 June 2011, company NYKCOOL brought a matter to the President of Paris Tribunal of Grande Instance for urgent measures in order to withdraw jurisdiction of the arbitral tribunal and appoint an ad hoc arbitrator. Whereas an order of 22 July 2011 appointed Mr. B as arbitrator to replace Mr. Z and rejected the remaining claims. Whereas company NYKCOOL filed an appeal (in French Appel-nullité) against this decision, which was declared inadmissible by this court on 20 March 2012;
Whereas by a letter dated 29 March 2012, addressed to its opponents, as well as to the arbitrators, the president and the secretary general of CAMP, NYKCOOL claimed that the arbitration period had expired because it had not been extended after 30 August 2011 in the manner provided for in the arbitration rules;
Whereas the CAMP Committee, considering that the arbitration proceedings had been suspended following the parallel legal proceedings, by a decision of 18 April 2012, declared that the Arbitral Tribunal was now composed of Mr. B, Mr. E and Mr. X and that the commencement of the proceedings was fixed at the date of that decision;
Whereas the Rules of Arbitration do not regulate the hypothesis of a stay of proceedings; whereas, in accordance with the provisions of Article II bis thereof, it is appropriate, in the absence of an agreement between the parties on this point, to refer to the provisions of the Code of Civil Procedure;
Whereas according to the terms of Article 1473 of the Code of Civil Procedure, as amended by Decree 2011-48 of 13 January 2011, which entered into force on 1 May 2011 pursuant to Article 3 of the same decree and is immediately applicable to pending proceedings: “Unless otherwise stipulated, arbitral proceedings shall also be stayed in the event of the death, legal incapacity, refusal to act, resignation, challenge or removal of an arbitrator, and until such time as a substitute arbitrator has accepted his or her mandate”.
The new arbitrator shall be appointed in accordance with the terms agreed between the parties or, failing that, in accordance with the terms that governed the appointment of the arbitrator being replaced;
That according to Article 1475: “When the proceedings resume, and by way of an exception to Article 1463, the arbitral tribunal may extend the duration of the proceedings for a period not exceeding six months”;
Whereas it follows from these provisions that the arbitral proceedings have been suspended during the course of the legal proceedings and that at the end of the latter, the CAMP Committee was able, by notifying the parties of the new composition of the tribunal, in application of the aforementioned stipulations of Articles IX and XIV of the Rules, to fix the duration of the arbitration at six months;
Whereas the award was made on 12 October 2012 before the expiry of the time limit set by the decision of 18 April 2012; whereas the ground of appeal, in so far as it alleges that the arbitral tribunal has no jurisdiction, must therefore be dismissed;
On the third ground for annulment based on the arbitrators' failure to comply with their mission (Article 1520-3 of the Code of Civil Procedure):
NYKCOOL claims that the arbitrators failed to comply with their mission by issuing the award after the expiry of the arbitration period.
Whereas, as stated, the time limit had not expired when the arbitrators issued their award; whereas the ground of appeal cannot be upheld;
On the fourth ground of annulment alleging the violation of due process (Article 1520-4 of the Code of Civil Procedure):
NYKCOOL maintains that by refusing to take account of the only adversarial expertise, that of Mr H-I, and by retaining the report of the expert Mestrejean, which was drawn up at least in part by third parties and which contained false statements, the arbitrators failed to observe the due process.
Whereas due process requires only that the parties should have been able to make known their claims in fact and in law and to discuss those of their opponent in such a way that anything that served as a basis for the arbitrators' decision did not escape their adversarial debate;
Whereas the parties discussed the relevance of the Mestrejean report on which the arbitrators relied, the ground for annulment, which, under the guise of an alleged violation of due process, intends to review the merits of the award prohibited to the annulment judge, must be dismissed;
On the fifth ground for annulment alleging a violation of international public policy (Article 1520-5 of the Code of Civil Procedure):
NYKCOOL claims that the insurers used false documents, in particular invoices that had already been produced in the Chaiten case in order to obtain double compensation, and that the arbitrators deliberately refused to take into account evidence of these forgeries.
Whereas the recognition in France of an award that had been the result of fraudulent manoeuvres is contrary to international public policy;
That NYKCOOL argues that such manoeuvres include the production of invoices whose numbers have been altered in order to be produced both in the arbitration concerning the Chaiten and in the arbitration concerning the Southern Harvest and thus to provide the claimants with double compensation;
Whereas however, NYKCOOL expressly alleged these facts during the arbitration proceedings, so that the arbitrators' decision was not misled, but rather was issued after examination and criticism of the documents in question;
Whereas the ground must therefore be dismissed;
Whereas it follows from the foregoing that the action for annulment must be dismissed;
On the claim for damages:
Whereas it is not for this court, seized pursuant to Article 1520 of the Code of Civil Procedure, to rule on a claim for damages for ‘abusive claim and irregularities in the conduct of the arbitration’;
That NYKCOOL’s claim on this ground shall be dismissed;
On Article 700 of the Code of Civil Procedure:
Whereas NYKCOOL, who is unsuccessful, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure; whereas NYKCOOL will be ordered on this basis to pay the co-insurers the total sum of EUR 50,000;
FOR THESE REASONS:
Dismisses the action for annulment of the award issued between the parties on 12 October 2012.
Rejects the claim for damages.
Orders NYKCOOL AB to pay the costs which will be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure.
Orders the company NYKCOOL AB to pay to the companies HELVETIA, LLOYDS, SIAT, BELMARINE, BDM, NATEUS, D, Y and A the global sum of EUR 50,000 pursuant to article 700 of the Code of Civil Procedure.