Court of Cassation, No. 11-26.529 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 25 June 2014, No. 11-26.529

Judicial Chronology:

ICC Partial award, 10 December 2007, No. 12273

Paris Court of Appeal, Pole 1, First Chamber, 12 February 2009, No. 07/22164

Court of Cassation, First Civil Chamber, 4 November 2010, No. 09- 12.716

Reims Court of Appeal, 2 November 2011, No. 10/02888

Paris Court of Appeal, 12 April 2016, No. 14/14884

Court of Cassation, First Civil Chamber, 19 December 2018, No. 16-18.349

TECNIMONT SPA

Vs.

J&P AVAX

THE COURT OF CASSATION, FIRST CIVIL CHAMBER, delivered the following decision:

Whereas, according to the judgment under appeal, handed down on referral after cassation (Court of cassation First Civil Chamber, 4 November 2010, No. 09-12.716), on 23 November 1998, the Italian company TECNIMONT concluded a subcontracting agreement with the Greek company J&P Avax (Avax) for the construction of a propylene plant in Thessaloniki. This agreement included an arbitration clause; a dispute arose between the parties, and Tecnimont has initiated arbitration proceedings, under the supervision of the International Chamber of Commerce (ICC), the rules of which stipulate in Article 11, paragraph 2, in particular, that the request to challenge the arbitrator must be sent, under penalty of foreclosure, within 30 days following the date on which the party making the request was informed of the facts and circumstances on which it relies in support of the request; that on 14 September 2007, Avax filed a challenge request against the Chairman of the Arbitral Tribunal before the ICC International Court of Arbitration, which was dismissed on 26 October 2007; that, on 10 December of the same year, a partial award was made on the principle of liability; that, on the following 28 December, the same company brought an action for annulment against this award, on the basis of Article 1502-2 of the Code of Civil Procedure, claiming that the president of this tribunal failed to comply with his duty of disclosure and his duty of independence;

On the first ground:

Whereas the company Tecnimont objects to the judgment which set aside the award, then, according to the ground :

1°/ that, before the referring court, the investigation is resumed in the state of the proceedings as it existed at the time the judgment was set aside; that the recourse to the referring court, whose purpose is to resume the proceedings in the state of the proceedings not reached by the cassation, does not constitute the exercise of an appeal, so that the conditions for opening an action for annulment against an arbitral award must be assessed on the basis of the texts in force on the date on which this appeal was filed; on the basis of Article 1520 of the French Code of Civil Procedure, as amended by Decree No. 2011-48 of 13 January 2011, which sets out the circumstances in which an action for annulment may be brought against an arbitral award made in France in an international arbitration matter, to set aside the partial arbitral award of 10 December 2007, even though the action for annulment against the award was brought by Avax on 28 December 2007, under the provisions prior to this decree, the Court of Appeal breached the above-mentioned text, by misapplying Articles 1502 and 1504 of the Code of Civil Procedure in their applicable wording, by refusing to apply, together with Article 631 of the Code of Civil Procedure, Article 3 of Decree No. 2011-48 of 13 January 2011 and Article 2 of the Civil Code ;

2°/ that the ground of appeal, of which a decision may be subject, are determined by the laws in force on the day it was rendered; that by setting aside the partial arbitral award rendered in Paris on 10 December 2007, on the basis of Article 1520-2 of the Code of Civil Procedure, in its wording resulting from Decree No. 2011-48 of 13 January 2011, which came into force on 1 May 2011, the Court of Appeal violated this text by misapplying, together with Article 2 of the Civil Code and Article 3 of Decree No. 2011-48 of 13 January 2011;

But whereas, subject to the exceptions provided for in Article 3 of the Decree of 13 January 2011, which came into force on 1 May 2011, the new rules on international arbitration are applicable to the dispute, so that the Court of Appeal rightly found the application of Article 1520-2 of the Code of Civil Procedure, in the wording resulting from this decree; that the ground of appeal is unfounded;

But, on the second ground:

Pursuant to Article 1520-2 of the Code of Civil Procedure, as amended by Decree No. 2011-48 of 13 January 2011;

Whereas, to find the ground for annulment admissible, the judgment holds that the annulment judge is not bound by the time limit for the admissibility of the challenge request to the arbitration institution. Tecnimont claims that it was exceeded on 14 September 2007 because Avax became informed at the latest of the events motivating its challenge between 16 July, when it began questioning Mr. X… about the London conference, and 26 July 2007, the date of the latter’s first reply; that it also holds that the absence of any subsequent application for challenge against Mr. X… before the ICC for other facts discovered by the appellant, according to the company Tecnimont, between the application for challenge of 14 September 2007 and the partial award of 10 December 2007, then after the award until 1 April 2008, the date on which Mr. X… resigned, does not prohibit the company Avax from criticising the award insofar as the latter did not waive it; after noting that Avax on several occasions, first, questioned the chairman of the arbitral tribunal on the extent of the links between Jones Day, in which he works, and Tecnimont and other related companies, while conducting parallel investigations, and then, reserving its rights, the judgment deduced that it could not be concluded that Avax waived its right to invoke the ground of Mr X’s due to the non-application of the challenge procedure before the ICC;

That in so ruling, a party who knowingly refrains from exercising, within the time limit provided for in the applicable arbitration rules, its right to challenge an arbitrator on the basis of any circumstance likely to call into question the independence or impartiality of an arbitrator, shall be deemed to have waived its right to do so before the annulment judge. Consequently, it was incumbent on the latter to determine whether, regarding each of the facts and circumstances that he or she considered as constituting a breach of the arbitrator’s obligation of independence and impartiality, the thirty-day time limit set by the arbitration rules for exercising the right of challenge was respected, the Court of Appeal did not give a legal basis for its decision;

FOR THESE REASONS, without having to rule on the other grounds:

REVERSE AND ANNUL, in its entirety, the judgement handed down on 2 November 2011, between the parties, by the Court of Appeal of Reims; return, consequently, the proceedings and the parties to their status quo ante and, for the proceedings to be determined in accordance with the law, transmit them to the Court of Appeal of Paris, otherwise composed;

Orders Avax to pay the costs;

Pursuant to Article 700 of the Code of Civil Procedure, orders Avax to pay the company Tecnimont the sum of 3,500 euros and dismisses its claim;

Holds that on the instructions of the public prosecutor at the Court of Cassation, this ruling will be transmitted for transcript in the margin or following the quashed ruling;

Thus, done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the president in its public hearing of the twenty-fifth of June two thousand and fourteen.