Paris Court of Appeal, No. 12-21.230

Paris Court of Appeal, 1st Pole, 1st Chamber, 6 May 2014, No.12-21.230

S.A.S. UNITED MARITIME ALLIANCE HOLDING (UMA HOLDING)

Vs.

MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD (MISC BHD)

By an agency agreement dated 19 April 2002, stipulating that it is deemed to be established in Malaysia and subject to Malaysian law, MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD (MISC BHD), a company incorporated under Malaysian law and engaged in the management of ships and the provision of logistics services and maritime transport , has appointed the company under French law S.A.S UNITED MARITIME ALLIANCE HOLDING (UMA HOLDING), as its representative in France, Belgium, Luxembourg, Switzerland, Tunisia, Morocco and Algeria with the mission of providing MISC BHD’s clients with quality services and developing the scope of its activities.

This agreement stipulated that ‘any litigation, dispute or claim arising out of or relating to this agreement, or any breach, termination or invalidity of it, shall be settled by arbitration in accordance with the Arbitration Rules of the Kuala Lumpur Regional Arbitration Centre’.

As a dispute having arisen between the parties regarding the settlement of their financial relations following the breach of the contract, MISC BHD, by letter dated 23 October 2009, implemented the arbitration procedure provided for in the arbitration clause.

At the same time, UMA HOLDING, by summons dated 13 January 2010, brought an action against MISC BHD before the Marseille Commercial Court seeking compensation for the loss suffered as a result of the termination of the contract dated 19 April 2002.

By judgment of 10 September 2010, the court declared that it had no jurisdiction due to the existence of the arbitration clause.

In the meantime, the company MISC BHD, by letter of 2 December 2009, informed Mr. K.C. Z that the parties had agreed to appoint him as sole arbitrator to resolve their dispute.

During the course of the arbitration proceedings, UMA HOLDING was declared in compulsory liquidation by judgment of the Marseille Commercial Court of 9 June 2011.

These proceedings were closed for extinction of liabilities by judgment of 1 March 2012.

By award rendered in Kuala Lumpur (Malaysia) on 8 February 2012, the arbitral tribunal composed of Mr. K.C. Z, sole arbitrator, ordered UMA HOLDING to pay to MISC BHD the sums of:

• 3,344,472.91 in principal;

• 37,766.99 as arbitration costs;

• 3,147.25€ as reimbursement of the sums paid by MISC BHD;

• 1,021.53 € in respect of the sums paid by MISC BHD on behalf of UMA HOLDING ;

• 3,448.01 € in respect of interest accrued as of 9 November 2012.

At the request of MISC BHD, Mr. C D was appointed, by order of the Marseille Commercial Court of 7 August 2012, rectified on 10 September 2012, as ad hoc representative of UMA HOLDING, in order to represent it in legal proceedings for the enforcement of the arbitral award of 8 February 2012.

By order of 17 September 2012, the President of the High Court of Paris declared the arbitral award enforceable.

H and Mr. C D ex-officio appealed against this decision by a statement dated 23 November 2012.

In view of the conclusions served by the Private Virtual Lawyers' Network (RPVA) on 5 March 2014 by the appellants, under the terms of which they ask the court to:

• as a principal claim,

— decide that there is no need to confirm the exequatur order,

— annul, with reference to Article 1520 2e and 5e of the Code of Civil Procedure, the exequatur order of 17 September 2012, which acknowledges the award rendered on 8 February 2012,

— declare that the recognition or enforcement of the award of 8 February 2012 rendered by K.C. Z is contrary to international public policy,

• in the alternative,

— refer the following question to the CJEU for a preliminary ruling pursuant to Article 267 of the Treaty on the Functioning of the European Union:

‘Does the right to compensation provided for in Directive 86/653 imply that the national court must assess the possible infringement of public policyby an award on the ground that it was made by applying a law which does not allow this right to compensation?’

— stay its proceedings until his response is received,

• in all circumstances,

— order the Malaysian International Shipping Corporation to pay the entire costs and to pay € 10,000 pursuant to Article 700 of the Code of Civil Procedure, of which the payment is to be made to SCP GRAPPOTTE BENETREAU pursuant to Article 699 of the same code.

In light of the conclusions served by the RPVA on 13 February 2014 by MISC BHD, which seek the dismissal of A B, the confirmation of the enforcement order of 17 September 2012 and the order of UMA HOLDING to pay a sum of 20,000 euros pursuant to Article 700 of the Code of Civil Procedure and to pay all costs with diversion to Pascale FLAURAUD in accordance with Article 699 of the same code

UPON WHICH:

On the first ground of annulment alleging that the award of 8 February 2012 is contrary to international public policy. (Article 1520-5 of the Code of Civil Procedure)

It is argued that the European Directive 86/653, which provides for a mandatory regime including a right to compensation for the agent in the event of breach of contract, applies to any activity in Europe and constitutes a rule of international public policy which has been disregarded by the award of 8 February 2012, because the latter refused to apply Community law.

Whereas the maritime agency contract binding the parties, which is a contract for services, does not fall within the scope ratione materiae of Council Directive 86/653/EEC of 18 December 1986 since the latter applies only to intermediaries entrusted with negotiating contracts for goods;

that although the law of 25 June 1991, which transposed this directive into French law, extended the protection afforded by the directive to service contracts, its provisions on this point are exclusively a matter of internal public policy;

that it follows that the provisions of law n° 91- 593 of 25 June 1991 on the status of commercial agents, codified in articles L.134-1 et seq. of the French Commercial Code, apply to commercial agents working under a service contract, and cannot therefore be considered as constituting a mandatory law in the international order, which can be opposed to an international arbitration award, it being of little importance in this respect that in this case, UMA HOLDING Company carries out part of its activity as a shipping agent on the territory of the European Union;

that with no infringement of international public policy within the meaning of Article 1520-5° of the Code of Civil Procedure being inferred from the fact that the Malaysian law chosen by the parties to govern their relations does not provide for a termination indemnity in favour of the agent, the request made in the alternative for a preliminary question to be referred to the Court of Justice of the European Union is without object;

that the ground of appeal should be dismissed;

On the ground for annulment based on the arbitrator’s partiality or lack of independence (Article 1520-2 of the Code of Civil Procedure).

The appellant argues that the arbitrator, who did not sign a declaration of independence and did not explain his prospective links and relationships, despite the fact that Company MISC BHD is a Malaysian public company and that he has had a career as a lawyer for the Malaysian State, has failed in his obligation of independence and impartiality;

Whereas the arbitrator shall reveal any circumstance likely to affect his judgment and cause the parties to have reasonable doubt regarding his qualities of impartiality and independence, which are the essence of the arbitral function, and shall inform them of any fact or relationship not of a well-known nature which may affect these essential qualities;

Whereas, however, any grievance invoked against an award under Article 1502 2° of the Code of Civil Procedure must, in order to be admissible before the annulment judge, have been raised, whenever possible, during the arbitration proceedings;

Whereas in the present case, by letter of 28 October 2009, Mr K.C. Z, the prospective arbitrator, made it known that he was a consultant for a law firm in charge of debt collection on behalf of MISC BHD and that if his appointment was approved by A, this information should be brought to the latter’s attention, which UMA HOLDING does not deny having done;

moreover, by letter of 10 November 2009, Mr. K.C. Z’s curriculum vitae was sent to UMA HOLDING’s counsel, who was asked to indicate his agreement to the latter’s appointment as arbitrator, to which A replied positively;

that as a result of being informed that the arbitrator had completed his career in the Malaysian judiciary, participated in the work of specialised legal commissions, was a member of international organisations and institutions specialised in arbitration matters and was the author of academic works, UMA HOLDING, which approved of Mr. K.C. Z as an arbitrator, and which does not mention any information that it would not have been able to know, the documents that it produces showing that the arbitrator was before exercising judicial functions, legal advisor to the customs and tax services of the State of Malaysia, then legal advisor to the Minister of Primary Industries and finally the Treasury’s lawyer and that MISC BHD has as shareholder Petronas, a Malaysian public company being extracted from free access internet sites, and who did not mention this grievance during the arbitration procedure, is inadmissible to invoke it before the annulment judge;

that the ground and the course of action must therefore be dismissed;

Whereas UMA HOLDING who is unsuccessful must bear the costs, without being able to claim compensation pursuant to Article 700 of the Code of Civil Procedure, and must be ordered on this basis to pay the sum of 10,000 euros.

FOR THESE REASONS:

Confirms the order of 17 September 2012 of the President of the Paris trial court which declared the arbitral award rendered in Kuala Lumpur (Malaysia) on 8 February 2012 by Mr. K.C. Z, sole arbitrator, enforceable;

Dismisses the claims of UMA HOLDING represented by Mr. C D ex officio as ad hoc representative;

Orders UMA HOLDING represented by Mr C D ex officio as ad hoc representative to pay the costs to be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure and to pay the sum of 10,000 euros pursuant to Article 700 of the same Code.

THE CLERK THE PRESIDENT