Paris Court of Appeal, No. 13/10870 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 7 October 2014, No. 13/10870

S.A. BOURBON

vs.

Mr. G de Y

Pursuant to a private deed dated 28 August 1992, Mr. G de Y and the Company LES SUCRERIES DE BOURBON, now known as the Company BOURBON, entered into a Memorandum of Understanding under the terms of which Mr. de Y’s participation in the development of the presence of the Company LES SUCRERIES DE BOURBON to F was agreed upon and organized.

Article 4 of the Memorandum of Understanding provided that Mr. de Y was to receive 20% of the “holding” profits generated by the business he developed to F as well as the allocation of 20% of the interests share of SUCRERIES DE BOURBON;

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

As relations between the parties had deteriorated, and as they could not agree on the application of the terms of the Memorandum of Understanding, Mr. de Y, by registered letter dated 25 January 2007, initiated arbitration proceedings under the arbitration clause stipulated 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, inter alia :

noted that the Memorandum of understanding dated 28 August1992 and the convention dated 25 October 1999 entitled ‘Termination of employment contract and transaction’ were not concluded between the same parties;
said that the convention of 25 October 1999 had no effect on article 4 of the Memorandum of Understanding of 28 August 1992,
declared Mr. G de Y admissible in his requests based on the stipulations of article 4 of the Memorandum of Understanding of 28 August 1992,
ordered Company BOURBON to communicate, within the framework of the arbitration procedure, before the 1st May 2009, all the accounting information necessary for the calculation of the sums due to Mr. G de Y under the terms of article 4 of the Memorandum of Understanding of 28 August 1992,
stated that in the absence of agreement between the parties on the sums owed by Company BOURBON to Mr. G de Y under article 4 of the Memorandum of Understanding of 28 August 1992, the arbitration proceedings will continue, in accordance with Article IV, 3° of the arbitration Agreement of 7 April 2008,
dismissed all other claims and counterclaims of the parties.

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

upheld the request made by Mr. de Y for disclosure of documents, and enjoined company BOURBON, under penalty payment of € 8,000 per day of delay or € 5,000 per day of delay in case of partial disclosure, after the expiry of a period of two months from the notification of the award, to disclose various documents for the listed companies,
said that the company BOURBON shall communicate a table drawn up under the responsibility of its Chairman showing, for each of the companies, year by year since 1992 and until the completion of a sale of the business, and if no sale has occurred, until 2001, the percentage of direct or indirect shareholding held by company BOURBON, said that in the event that, within three months from the date of notification of this interim award, the company BOURBON has not fully complied with its terms, he may rule solely on the elements provided by the claimant,
stated that the provisional enforcement of this award should be ordered.

By a procedural order No. 8 issued in Paris on 27 November 2012, the arbitral tribunal has :

noted 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 paragraph 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,
consequently said that the penalty payment of € 5,000 per day of delay as from 26 August 2012, provided for in the event of partial communication of the documents required by the arbitral award of 26 June 2012, should be applied until communication by the company BOURBON of all the required documents, and that the arbitral tribunal remaining seized, it may subsequently liquidate the penalty payment if necessary.

On 18 March 2013, the arbitral tribunal rendered a new interim award in Paris, declaring admissible Mr. de Y’s request for the liquidation of the penalty payment pronounced under the terms of the interim award of 26 June 2012 with provisional enforcement, recalling that company BOURBON did not communicate within two months of the notification of the interim award of 26 June 2012 all the documents referred to in the operative paragraph of the said award, stating that the delay in the enforcement of the interim award of 26 June 2012 and the conduct of the company BOURBON justifies the liquidation of the penalty payment in the amount of € 500,000, consequently ordering the company BOURBON to pay Mr. de Y the said sum with interest at the legal rate and stating that there is reason to renew the penalty payment pronounced under the terms of the interim award of 26 June 2012 and to increase its rate to the sum of € 10,000 per day of delay as from 16 January 2013, until full compliance by the company BOURBON with the terms of the interim award, and thus until communication of all the relevant elements required and set out in the procedural order No. 8 of 27 November 2012, further ordering the company BOURBON to pay Mr. de Y the sum of €35,000 for his representation costs 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, the company BOURBON filed an action for annulment of the award of 18 March 2013, and on 8 November 2013, an action for annulment of the arbitral award of 26 June 2012.

In response to an incidental claim filed by Z on 18 December 2013, Mr. G de Y referred the matter to the pre-trial judge with a view to having BOURBON’s appeal for the annulment of the 26 June 2012 award declared inadmissible under articles 409, 410, 1520 and 32-1 of the French Code of Civil Procedure, for having acquiesced in the appeal.

By order dated 13 February 2014, confirmed by a court decision dated 24 June 2014, the pre-trial judge rejected the dismissal raised by M de Y.

By submissions served on 11 August 2014, BOURBON, receiving it in its appeal, requested, as its main claim, a stay of proceedings on its action to set aside the award of 18 March 2013, pending the court’s decision on its action to set aside the interim award of 26 June 2012, registered under roll number 13/21462, and, in the alternative, to set aside the arbitral award rendered on 18 March 2013 and to order M. de Y to pay €50,000 pursuant to article 700 of the French Code of Civil Procedure, and in any event, to dismiss Mr. D from all his requests.

By submissions served on 2 July 2014, Mr. G de Y requests to declare the company BOURBON inadmissible and ill-founded in its action for annulment, to dismiss its claims and to order it to pay €50,000 in damages for abusive proceedings, in addition to €50,000 in non-refundable costs.

UPON WHICH,

Considering that the interim award of 18 March 2013, having for object the liquidation of the penalty payment pronounced under the terms of the interim award of 26 June 2012 for lack of communication by the company BOURBON within two months of the notification of this award of the entirety of the documents concerned in its operative paragraph, and the renewal of the periodic penalty payment until all the relevant elements required have been communicated, the action for setting aside this award may not be examined prior to the action for setting aside the award that imposed the said periodic penalty payment with regard to the consequences that would result from its setting aside on the award in execution thereof;

That it is therefore appropriate to adjourn the decision on the action for setting aside the award of 18 March 2013 until the court’s decision on the action for setting aside the award of 26 June 2012;

FOR THESE REASONS,

Adjourns the proceedings on the action for setting aside the interim award rendered in Paris on 18 March 2013 until the court rules on the action for setting aside the interim award rendered in Paris on 26 June 2012 brought by the company BOURBON enlisted under docket number 13/21462;

Orders the withdrawal of the case from the docket;

States that as soon as the above-mentioned event occurs, the case will be reinstated at the request of the most diligent party;

Reserves the costs.

THE CLERK THE PRESIDENT