Paris Court of Appeal, No. 14/04522

Paris Court of Appeal, First Chamber, 24 June 2014, No. 14/04522

Challenged decision: Paris Court of Appeal, 13 February 2014, No. 13/21462

MR. DE VILLENEUVE vs. S.A. BOURBON

Pursuant to a private deed dated 28 August 1992, Mr. de Villeneuve and the company LES SUCRERIES DE BOURBON, now the company S.A. BOURBON, entered into a Memorandum of Understanding under the terms of which the participation of Mr. de Villeneuve in the development of the presence of the LES SUCRERIES DE BOURBON at MADAGASCAR was agreed and organised.

Article 4 of the Memorandum of Understanding provide for Mr. de Villeneuve 20% of the “holding” profits generated by the activity that he would have developed in MADAGASCAR and the allocation of 20% of the share of interests of the SUCRERIES DE BOURBON;

Article 7 of the memorandum stipulated recourse to arbitration in the event of disagreement regarding the determination of the method of calculation of this shareholding and regarding the net market value of the assets created by the SUCRERIES DE BOURBON MADAGASCAR Group since 1 September 1992.

The relations between the parties deteriorated and the latter were not able to agree on the application of the terms of the Memorandum of Understanding. Thus, Mr. de Villeneuve, by registered letter dated 25 January 2007, implemented the arbitration procedure by virtue of the arbitration clause contained in the Memorandum.

Pursuant to an Arbitral Award rendered in Paris on 27 March 2009, the Arbitral Tribunal composed of Messrs. BORRA and CALLOUD, arbitrators, and Mr. RONTCHEVSKY, Chairman, has, notably:

  • noted that the Memorandum of Understanding of 28 August 1992 and the agreement of 25 October 1999 entitled “Fin de contrat de travail et transaction” (Termination of employment contract and transaction) were not concluded between the same parties;
  • stated that the agreement of 25 October 1999 is without effect with regards to article 4 of the Memorandum of Understanding of 28 August of 1992;
  • declared Mr. de Villeneuve admissible in his claims based on the provisions of article 4 of the Memorandum of Understanding of 28 August 1992;
  • ordered BOURBON to produce, within the framework of the arbitration procedure, before 1 May 2009, all the accounting information necessary for the calculation of the sums due to Mr. de Villeneuve under the terms of Article 4 of the 28 August 1992 Memorandum of Understanding;
  • said that in the absence of agreement between the parties on the sums owed by BOURBON to Mr. de Villeneuve under Article 4 of the 28 August 1992 Memorandum of Understanding, the arbitration proceedings will continue, in accordance with Article IV, para. 3, of the Arbitration Agreement of 7 April 2008;
  • rejected all other claims and requested counterclaims by the parties.

In an interim award rendered on 26 June 2012, the arbitral tribunal:

  • held that the request for production of documents under penalty formulated by M.de X was well-founded and enjoined BOURBON, under penalty of 8.000 € per day of delay or 5.000 € per day of delay in case of partial production, at the expiry of a period of two months as of the notification of the award, to communicate various documents for listed companies,
  • Stated that BOURBON will have to produce a table established under the responsibility of its Chairman recurring, for each of the companies, for each year since 1992 and until the realisation of a sale of the activity, if no sale has taken place, until 2001 the percentage of direct or indirect participation held by company BOURBON. The arbitral tribunal stated that if within three months from the date of notification of the present interim award BOURBON does not fully comply with the terms of the award, it may decide only on the elements provided by the claimant,
  • States that it is appropriate to order the provisional enforcement of the present award;

By Procedural Order No. 8 issued in Paris on 27 November 2012, the arbitral tribunal:

  • noted that BOURBON did not produce within two months of the notification of the interim arbitral award of 26 June 2012 all the documents referred to in the operative part of the said award, the communication of which was required in order to determine the sums likely to be due pursuant to Article 4 of the memorandum of understanding of 28 August 1992, and,
  • ruled accordingly that a penalty payment of 5. 000 € per day of delay from 26 August 2012, provided for in the event of partial production of the documents required by the arbitral award of 26 June 2012, until production by BOURBON of all the required documents, and that the arbitral tribunal remains seized of the matter, it may subsequently liquidate the penalty payment if necessary.

On 18 March 2013, the arbitral tribunal rendered in Paris a new interim award declaring admissible the request of Mr. de Villeneuve for the liquidation of the penalty payment pronounced under the terms of the interim award of 26 June 2012 with provisional enforcement. The award also reminds that BOURBON did not communicate within two months of the notification of the interim arbitral award of 26 June 2012 all the documents referred to in the operative part of the said award. Moreover, the award states that the delay in the enforcement of the interim award of 26 June 2012 and the conduct of company BOURBON justifies the liquidation of the penalty payment as 500.000 €. Consequently the arbitral award orders BOURBON to pay Mr. de Villeneuve the said sum with interest at the legal rate and states that the penalty payment pronounced under the terms of the interim award of 26 June 2012 and fixes interest at the rate of € 10,000 per day of delay to be counted from 16 January 2013, until the perfect enforcement by BOURBON of the terms of the interim award, and therefore until the communication of all the relevant elements required and set out in the Procedural Order No. 8 of 27 November 2012. The award further orders BOURBON to pay Mr. de Villeneuve the sum of 35. 000 € for its representation fees in the context of the present request for the liquidation of the penalty and ordering the provisional enforcement of the award;

On 30 May 2013, BOURBON filed an action for annulment against the award of 18 March 2013 and then on 8 November 2013, an action for annulment against the arbitral award of 26 June 2012, as a “conservatory measure”.

By submissions of incident served by Z on 18 December 2013, Mr. de Villeneuve referred the matter to the pre-trial judge for the purpose of, pursuant to articles 409, 410, 1520 and 32-1 of the code of civil procedure, declaring company BOURBON inadmissible in its action for annulment for having acquiesced in it and ordering it to pay him €50,000 in damages for abusive proceedings, in addition to €50.000 for irrecoverable expenses;

By order of 13 February 2014, the pre-trial judge rejected the objection to admissibility, dismissed Mr. de Villeneuve’s claims on the grounds that the award of 26 June 2012 was only “partially” enforced, which excludes any acquiescence, and ordered him to pay the expenses of the incident and to pay BOURBON the sum of €5,000 pursuant to Article 700 of the Code of Civil Procedure.

By motion filed on 28 February 2014, Mr. de Villeneuve referred this order to the court.

Given the submissions served by Z on 19 May 2014 by Mr. de Villeneuve, under the terms of which he requests the Court to:

  • amend the order on incident rendered on 13 February 2014 by the pre-trial advisor for the Pole 1 Chamber 1 of the Paris Court of Appeal,
  • declare BOURBON inadmissible in its appeal for annulment against the award rendered by the Tribunal Arbitral on 26 June 2012,
  • state that by its reckless action for annulment, company BOURBON has degenerated into abuse of its right to take legal action for damages,
  • order, as a consequence, BOURBON to pay Mr. de Villeneuve the sum of €50. 000 as damages for abusive proceedings as well as the sum of 50,000 € in respect of the irrecoverable costs and possible costs.

Having regard to the submissions served by Z on 16 May 2014 by company BOURBON, which requests the court to:

  • declare BOURBON’s action for annulment and its submissions admissible and well-founded,
  • declare that BOURBON has not acquiesced to the decision of 26 June 2012,

Consequently,

  • declare that BOURBON has not waived its right to take legal action against the award of 26 June 2012,
  • declare BOURBON’s action for annulment of the award rendered by the Arbitral Tribunal on 26 June 2012 admissible,
  • dismiss Mr. de Villeneuve from all his claims, grounds and submissions,

In any event,

  • Declare Mr. de Villeneuve’s claim for compensation to be unfounded,
  • Dismiss Mr. de Villeneuve’s claim for damages for allegedly abusive proceedings,
  • Dismiss Mr. de Villeneuve’s claim for unreasonable costs and expenses,
  • Order Mr. de Villeneuve to pay the sum of 50. 000 euros in respect of the irrecoverable costs of the incident.

UPON WHICH:

Considering that Mr. de Villeneuve opposes to BOURBON the inadmissibility of its action for annulment against the award rendered by the Arbitral Tribunal on 26 June 2012 on the grounds that the latter would have acquiesced;

He infers this acquiescence from the behaviour of BOURBON, which, in all its exchanges with the arbitral tribunal, has clearly expressed, according to him, its willingness to accept and submit to the operative part of the award, including the penalty imposed on it, without ever expressing any reservation on one or the other of the provisions of the award or implying, even implicitly, that it was considering exercising any action or questioning the said award;

For its part, BOURBON considers that, by producing documents, it has respected the principle of due process (in French Principe de la contradiction) but has in no way acquiesced to the decision of 26 June 2012, having never expressed its willingness to submit to the penalty payment.

Considering that the acts of enforcement have the nature of acquiescence only to the extent that they demonstrate an unequivocal willingness to accept the decision rendered;

This intention could not result from the fact that BOURBON referred to the injunction issued to it by the arbitral tribunal to produce documents, since the award of 26 June 2012, which had been ordered to be provisionally enforced and which was accompanied by a penalty payment, could be declared enforceable on French territory at the request of Mr. de Villeneuve. The latter also requested and obtained, regardless of the fact that the enforcement order (in French Ordonnance d’exequatur) could not be served, under the erroneous texts.

The intention of BOURBON being constrained, it does not matter that it did not make any reservation at the time of execution or even considered that it had complied with the request of the arbitral tribunal;

For this reason, the ground alleging that the action for annulment brought by Company BOURBON was initially made as a conservatory measure is completely unfitting;

The order referred must accordingly be confirmed.

Considering that Mr. de Villeneuve who succumbs must bear the costs of the incident and must be ordered to pay Company BOURBON a sum of 10,000 euros pursuant to Article 700 of the Code of Civil Procedure;

FOR THESE REASONS,

Confirms the order referred;

Orders Mr. de Villeneuve to pay the costs of the incident and to pay the sum of 10,000 euros pursuant to Article 700 of the Code of Civil Procedure.