Court of Cassation, No. 12-28.453

Court of Cassation, First Civil Chamber, 24 September 2014, No. 12-28.453

Challenged decision: Paris Court of Appeal, 23 October 2012, No. 11/10023

MICHEL A. CHALHOUB INC

Vs.

CRISTALLERIE DAUM

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

On the sole ground:

Whereas, according to the judgment under appeal (Paris, 23 October 2012), that, by contract of 5 February 1976, the company Cristallerie Daum (Daum company) entrusted Mr Michel A. Chalhoub, to whose rights the company of the same name (Chalhoub company), the exclusive representation and control of the sales of the items manufactured and sold by it. This representation has to be exercised with qualified resellers in several countries in the Near and Middle East. A dispute arose between the parties on the termination of the contract by the Daum company, and the company Chalhoub initiated arbitration proceedings in accordance with the arbitration clause, which gave the arbitrators the mission to rule in accordance with the rules of French law. By an award rendered in Paris on 8 February 2011, the arbitral tribunal ordered Daum to pay Chalhoub… various sums, in particular in respect of the contract end indemnity provided for in Article L. 134-1 of the Commercial Code and the compensation for insufficient notice;

Whereas company Chalhoub… objects to the judgment, which dismissed its action for annulment against the award, then, according to the grounds:

1°/ that the arbitrator cannot rule as conciliator when the parties’ agreement did not confer him/her this mission; that by refusing to set aside the award, while it appeared from its findings that the arbitral tribunal clearly ruled “with reference to equity”, without having been entrusted with such a mission, the Court of Appeal violated article 1520-3, of the code of Civil Procedure, by refusing to apply it;

2°/ that the arbitrator cannot rule as conciliator when the parties’ agreement did not confer him/her this mission; that by refusing to set aside the award, when it appeared from its findings that the arbitral tribunal assessed with discretion the damage resulting from the breach of contract, which concealed an assessment in equity, without such a mission having been entrusted to him/her, the Court of Appeal violated article 1520-3, of the code of Civil Procedure, by refusing to apply it;

But whereas the Court of Appeal properly deduced from the detailed reasoning of the award, regarding the turnover to be taken into consideration and as to the extent of the breach of the contractual notice period, that the arbitrators did not intend to free them from the rules of law, but limited themselves to using their discretion to assess the extent of the damages suffered and the amount of the compensation in question. So they did not act as conciliators; that the ground is unfounded;

FOR THESE REASONS:

Dismisses the appeal;

Orders the company Michel A. Chalhoub Inc to pay the costs;

Pursuant to article 700 of the Civil Procedure Code, orders Michel A. Chalhoub Inc to pay the Daum the sum of 3,000 euros and rejects its request;

Thus done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of 24 September 2014.