Paris Court of Appeal, No. 12/16039 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 20 January 2015, No. 12/16039

CORALSA CORPORATION ALIMENTARIA S.A

vs.

INGELCO

On 23 January 2001, the Cuban public limited company CORALSA CORPORATION ALIMENTARIA SA (CORALSA) and the Panamanian company INGELCO SA, linked since 1998 by an international economic association contract in the field of food packaging, concluded an association agreement for the creation of a mixed company called Aliments Rio Zaza (ARZ), in which each party held half of the capital and whose object was the production and marketing of food and drink products in long-term packaging.

Following tax audits concerning ARZ and the initiation of various criminal proceedings by the Cuban authorities, CORALSA applied to the courts of the Cuban State on 9 September 2010 to dissolve and liquidate ARZ. On 30 September 2010, INGELCO filed a request for arbitration with the International Chamber of Commerce, in accordance with the arbitration clause provided for in the Association Agreement and in the Articles of Association of ARZ, requesting the dissolution of ARZ and the award of damages to CORALSA for breach of contract.

In a partial award rendered in Paris on 19 July 2012 between INGELCO and CORALSA, the arbitral tribunal composed of Mr. Orrego Vicuna and Mr. Avalos Fernandez, arbitrators, and Mr. Mourre, chairman, declared itself competent, declared INGELCO’s claims admissible and decided by a majority of votes that the claims relating to the dissolution and liquidation of ARZ were arbitrable, that dissolution was declared on the date of notification of the award by the Secretariat of the Court of the International Chamber of Commerce, that the liquidation proceedings were to commence and that the parties were to convene the general meeting to appoint the panel of liquidators and report on their work.

On 30 August 2012 CORALSA filed an appeal for annulment of this award (registered under No. RG 12-16039).

By a judgment of 3 April 2014, the court revoked the closure and ordered the appellant to produce a translation of the award by a sworn translator, on 15 October 2014.

By pleadings served on 2 December 2014, CORALSA sought the annulment of the award and an order for INGELCO to pay the sum of 60,000 euros pursuant to Article 700 of the Code of Civil Procedure. It submits, firstly, that the arbitrators ruled without an arbitration agreement and in breach of their mission, since the arbitration clause did not give them jurisdiction to order the dissolution and liquidation of ARZ and thus to submit the latter to their jurisdiction, secondly, that the award is vitiated by a lack of jurisdiction in that it orders the dissolution and liquidation of a company, a non arbitrable matter which falls within the exclusive jurisdiction of the state courts, thirdly that the principle of contradiction and the principle of equality between the parties were disregarded in that the owner and president of INGELCO was heard by videoconference, in the presence of one of INGELCO’s lawyers and without her having been informed early enough in order for her to be able to send one of her lawyers on site, and fourthly, that the arbitral tribunal did not comply with its mission and violated the principle of contradiction by conditioning the decision on the merits on facts subsequent to the presentation of the arbitration claim, in this case, the results of the liquidation accounts.

By submissions served on 19 November 2014, INGELCO asks the court to reject CORALSA’s claims and order it to pay the sum of EUR 80,000 pursuant to Article 700 of the Code of Civil Procedure. It maintains that the arbitration agreement covers all social disputes, that CORALSA did not support before the arbitrators the ground that the dissolution of the company was excluded, that the ground based on the absence of ARZ is belated and that it would in any event not have the effect of rendering the award null and void but only of rendering it unenforceable, and that the arbitration must be assessed under the procedural law, which is the French law, which does not preclude a dissolution from being pronounced by an arbitral tribunal, nor does Community law which does not apply to arbitration, that in addition, the arbitrators noted that the non arbitrability was not demonstrated in the Cuban law applicable to the merits of the dispute, that with regard to the principle of contradiction and equality of arms, the hearing of M. Z by videoconference had long been known to CORALSA, who had not requested its postponement and had not raised any objections during the proceedings. Lastly, the award of damages had been included in his initial application and in the terms of reference of the arbitral tribunal and the amount of damages should be fixed in the light of the parties' diligence, without any breach of the principle of contradiction resulting from it.

In a final award rendered by a majority on 17 July 2013, the arbitral tribunal dismissed the allegation of identity between CORALSA and the Cuban State, rejected INGELCO’s claims of liability of CORALSA for lawful or unlawful acts attributed to that State, dismissed INGELCO’s grievances relating to the transfer of usufruct of the factories, upheld, in contrast, CORALSA’s refusal to collaborate in good faith in the liquidation of ARZ, and ordered CORALSA to pay INGELCO, by way of damages, 50% of the liquidation value of ARZ on 31 December 2012, i.e., 17. USD 523,095 plus interest, stated that INGELCO would cease to own its shares in ARZ upon payment of these sums, and ordered CORALSA to pay USD 500,000 as arbitration costs.

CORALSA appealed against this award on 27 August 2013 (registered under no. RG 13-17333).

By submissions served on 2 December 2014, it seeks the annulment of the award and an order that the opposing party pay the sum of 80,000 euros pursuant to Article 700 of the French Code of Civil Procedure.

In addition to the claims of non arbitrability, lack of jurisdiction, violation of the mission and violation of the contradiction and equality of arms, which are raised against the partial award, CORALSA adds the following grounds:

violation of international public policy because, on the one hand, the final award does not take into account the obstacles to the enforcement of the partial award resulting from the criminal proceedings brought by the Cuban authorities against ARZ and the confiscation of that company’s assets pronounced by a judgment of the Havana Court of 2 May 2013, and, on the other hand, because it orders it to pay damages without examining the question of the causal link,
violation of international public policy and of the mission because the award, on the one hand, disregards the judicial competence of the Cuban State in criminal matters on its territory and condemns it for the omission of acts contrary to police laws on procedural and criminal matters of the country of execution, on the other hand, does not take into consideration the lex societatis, i.e., the Cuban law whose police provisions regulate the conditions for the dissolution and liquidation of companies due to illicit civil and criminal acts,
disregard of the mission and the principle of contradiction in that the arbitrators decided not to apply the law chosen by the parties to moratorium interests and did not allow them to debate this point.

By submissions served on 19 November 2014, INGELCO asks the court to reject the adverse claims and order CORALSA to pay 80,000 euros pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH

On the junction:

Considering that it is in the interest of the proper administration of justice to join the appeals registered under RG 12/16039 and 13/17333;

On the ground alleging lack of jurisdiction of the arbitral tribunal (article 1520-1 of the code of civil procedure):

CORALSA maintains that the arbitrators were not competent to rule on a request for dissolution of a company which was not a party to the arbitration proceedings.

Considering that no party can be judged without having been heard or summoned, the request for dissolution of a company requires that the company be called into question; that this ground of international public policy can be invoked for the first time before the judge of appeal;

Considering that the award rendered on 19 July 2012 between INGELCO and CORALSA “decides by a majority of votes that, on the date of the notification of this arbitration by the Secretariat of the International Court of the International Chamber of Commerce, the dissolution of ARZ had been declared” and that the procedure for the liquidation of ARZ must be initiated;

That such a decision does not only affect the relations between the co-partners but has the effect of putting an end to the existence of the ARZ company itself; that the fact that it was handed down in the absence of the dissolved company is a ground for nullity and not for inopposability against the main party concerned;

That it is therefore appropriate to annul the award of 19 July 2012, and consequently the award of 17 July 2013 which sanctions the non-performance of the previous one;

On Article 700 of the Code of Civil Procedure:

Considering that INGELCO, who is unsuccessful, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure and will be ordered on this basis to pay CORALSA the sum of 80,000 euros.

FOR THESE REASONS

Orders the joinder of appeals registered under RG 12/16039 and 13/17333.

Annuls the awards made between the parties on 19 July 2012 and 17 July 2013.

Orders the company INGELCO to pay the costs.

Orders company INGELCO to pay company CORALSA the sum of EUR 80,000 pursuant to Article 700 of the Code of Civil Procedure.