Paris Court of Appeal, No. 12-21397

Paris Court of Appeal, 24 June 2014, No. 12-21397

Monsieur R S R M L W AA

Monsieur O R S R M L W AA

Monsieur AJ R S R M L W AA

(ML Family)

Vs.

SHACKLETON AND ASSOCIATES LIMITED

Messrs. R S R M L W AA, Mohamed R S R M L W AA and AJ R S R M L W AA (hereinafter, the ML Family), nationals of the United Arab Emirates, were opposed to a company under Greek law, Terna, in an arbitration in London.

The London law firm Eversheds was appointed to represent them under a letter of engagement dated 16 July 2009 which did not include an arbitration clause. When Mr. I A left the law firm to found his own firm, SHACKLETON AND ASSOCIATES LTD (Shackleton), ML Family agreed to leave the handling of the case to the new firm. As a dispute arose regarding the settlement of the fees, Company A implemented the arbitration clause stipulated in the engagement letter dated 29 March 2010 and signed by Mr. Y and the law firm Galadari & associates (H).

By an award issued in Paris on 17 July 2012, Mr. B, the sole arbitrator, declared himself competent to rule on company A’s claim for payment of a bill of fees and incompetent with respect to the counterclaim for damages brought by the ML Family for damage to their reputation with respect to Mr. A.

On 26 November 2012, the ML Family filed an appeal against this award (file registered under No. RG 12/21397).

In their submissions notified on 20 March 2014, they are seeking the annulment of the decision and an order that Company A pay them the sum of 50,000 euros pursuant to Article 700 of the French Code of Civil Procedure. They claim that the arbitral tribunal lacks jurisdiction (Article 1520 1° of the French Code of Civil Procedure), that the arbitrator violated his mission (Article 1520 3°), and that it violated procedural public policy (Article 1520 5°).

By submissions notified on 10 April 2014, Company A asks the court to declare inadmissible the appeal against the award of 17 July 2012 and the addendum of 24 August 2012, in the absence of production in support of the appeal of the translation of these two documents, to declare the appeal unfounded, to grant exequatur to the award and its addendum and to order the Family M L to pay the sum of EUR 150,000 in application of Article 700 of the Code of Civil Procedure.

In an award issuedin Paris on 1 March 2013, the arbitral tribunal ordered the Family M L to pay to company A the sum of GBP 1,066,322.11 plus interest.

On 18 April 2013, the M L Family filed an appeal against this award (file registered under no. 13/07955).

By submissions notified on 16 September 2013, they are seeking the annulment of the agreement and an order for Shackleton to pay them the sum of EUR 50,000 in application of Article 700 of the Code of Civil Procedure. They invoke the same opening cases as against the interim award. New submissions were notified on 20 March 2014 by Z in this case but concern the award of 17 July 2012.

By submissions notified on 18 January 2014, Company A asks the court to declare the appeal null and void on the basis of articles 908 et seq. of the French Code of Civil Procedure and inadmissible, since the appellants have not articulated in their submissions relating to the final award any ground distinct from those they have presented against the interim award. In the alternative, it concludes that the appeal is unfounded. It requests that the award be granted exequatur and that the ML Family be ordered to pay the sum of EUR 20,000 in damages for abusive procedure and 100,000 euros exclusive of tax pursuant to article 700 of the Code of Civil Procedure.

UPON WHICH,

On the consolidation:

Whereas it is in the interest of a good administration of justice to join the files registered under numbers RG 12/21397 and 13/07955;

On the admissibility of appeals:

Whereas, with regard to the appeal against the first award, the fact of not communicating documents concomitantly with the service of the conclusions is sanctioned by the exclusion from the debates of the incriminated documents and not by the inadmissibility of the appeal;

Whereas the dismissal resulting from the failure of the appellants to produce a translation of the award must therefore be set aside;

Whereas, with regard to the appeal against the second award, the fact that the ML Family articulate against it the same grounds as against the intermediate award is not a ground for inadmissibility of the appeal;

On the lapse:

Whereas the ground alleging the lapse of the recourse on the basis of article 908 is inadmissible before the court for lack of having been raised before the Pre-Trial Judge;

On the ground for annulment based on the lack of jurisdiction of the arbitral tribunal (article 1520-1 of the Code of Civil Procedure):

The M L Family claim that the special nature of the attorney’s agreement leads to the invalidity or at least attenuation of the principle of validity of the arbitration clause applicable to international trade, that the first engagement letter concluded with the firm Eversheds to assist them in the Terna arbitration did not include an arbitration clause and that the second engagement letter of 29 March 2010 concluded with M A to follow up on the same proceedings and containing an arbitration clause was signed by their usual law firm H, without their consent to such a stipulation.

Whereas an action for annulment of an arbitral award is brought before the court of appeal, the court of appeal reviews the arbitral tribunal’s decision on its jurisdiction by looking for all elements of law or fact that allow it to assess the existence of the arbitration agreement;

Whereas, by virtue of a substantive rule of international arbitration law, the existence and validity of an arbitration clause are assessed, without reference to a national law, but only with regard to the willingness of the parties to resort to arbitration, assessed in the light of the circumstances of the case; whereas there are no grounds for departing from these principles when the agreement in dispute concerns the services provided by a lawyer to his client;

Whereas in the present case, it is constant that the first engagement letter dated 21 July 2009, entrusting Eversheds with the representation of the Family ML in the Terna arbitration, as well as the second engagement letter, dated 29 March 2010, entrusting M A to continue this mission, were signed by the firm H; that the Family ML acknowledge that the first one, devoid of an arbitration clause, was concluded on their behalf, but maintain that they did not consent to the arbitration clause stipulated by the second one;

Whereas, however, it results from an email sent on 23 February 2010 by Mr. A to Mr. D, financial controller of the M L group, and to Mr. O M L, that the draft contract stipulating the arbitration clause was submitted to the M L Family for proofreading before its signature by H; whereas the draft letter of commitment signed by Mr. A was again sent by email to Mr. O M L. E and H on 29 March 2010 and that it was signed on 4 April 2010 by H who sent the signed copy by e-mail to Mr. O M L and Mr. D on the same day; that it is not disputed that this contract was subsequently executed by the Family M L who directly gave instructions to law firm A and paid its first invoices;

Whereas it results from all of these circumstances that the commitment letter dated 29 March 2010 was signed by H in the name and on behalf of the Family ML who have expressed their willingness to submit to all of its conditions including the arbitration clause;

Whereas, moreover, the Family ML cannot, without contradiction, claim, as they do, that H was in charge on their behalf of negotiating the agreement with firm A but that they themselves were not bound by certain terms of this agreement, of which they had nevertheless had full knowledge before its signature, and cannot, without bad faith, hide behind the circumstance, which is irrelevant before this court, that under Emirati law an arbitration clause would be validly signed by an agent only if he holds a special mandate to that effect;

Whereas the ground based on the lack of jurisdiction of the arbitral tribunal can only be dismissed;

On the grounds of annulment based on the arbitrator’s lack of knowledge of his mission and the violation of procedural public policy (Article 1520-3 and 1520-5 of the Code of Civil Procedure):

The Family ML claim that the arbitrator, in order to uphold the existence of the arbitration agreement, relied primarily on the writings of H, who had been initially attracted to the arbitration before A withdrew from it. They argue that this use as evidence of a submission by a former party to the arbitration constitutes a breach of the arbitrator’s duty and a violation of the principle of equality of arms.

Whereas the reference by H, in his initial submission to the arbitral tribunal, to a meeting held at a hotel in Sharjah during which Mr. O M L instructed him to sign the letter of engagement on behalf of the M L , was known to all parties to the arbitration;

Whereas this element was in the debate, of little importance that H subsequently ceased to be a party to the arbitral proceedings; that it was up to the ML Family, if they contested the reality or the scope of the dispute, to produce any evidence to the contrary and, if necessary, to call H as a witness, which they refrained from doing, while continuing, moreover, their business relations with H;

Whereas the arbitrator, by relying, among others, on this factual element to establish his conviction, has neither disregarded his mission, nor infringed the principle of equality of arms;

Whereas the ground, in both its branches, is therefore unfounded;

Whereas it follows from the foregoing that the appeals must be dismissed; whereas, pursuant to the provisions of Article 1527 of the Code of Civil Procedure, this dismissal has the effect of conferring exequatur on the contested awards; whereas the same will apply, in accordance with Company A’s request in the addendum to the first award;

On Article 700 of the Code of Civil Procedure:

Whereas the Family M L, who succumb, cannot benefit from this provision; that they will be condemned, on this basis, to pay to company A the sum of EUR 20,000 including all taxes.

FOR THESE REASONS:

Orders the consolidation of the files registered under RG numbers: 12/21397 and 13/07955.

Rejects the appeals for annulment of the awards issued on 17 July 2012 and 1 March 2013 between the parties.

Declares that these awards and the addendum of 24 August 2012 are enforceable in France.

Rejects any other request.

Condemns Messrs. R S R M L W AA, Mohamed R S R M L W AA and AJ R S R M L W AA to the costs to be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure.

Orders Messrs. R S R M L W AA, Mohamed R S R M L W AA and AJ R S R M L W AA to pay the sum of EUR 20,000 including tax to the company SHACKLETON AND ASSOCIATES LTD in application of article 700 of the code of civil procedure.