Paris Court of Appeal, No. 13-20.318

Paris Court of Appeal, 20 January 2015, No. 13-20.318

TELECEL FASO S.A. vs. S.A. ALCATEL LUCENT INTERNATIONAL

The French company Alcatel-Lucent states that on 26 July 2000, it concluded an equipment supply contract with the Burkinabé company Telecel Faso, a telephone operator, for an amount of EUR 10,455,479.

It further states that on 26 July 2004, it concluded a settlement agreement with Atlantique Télécom, which had become the main shareholder of Telecel Faso, recording a debt of the latter amounting to EUR 2,198,455.75.

Finally, Alcatel-Lucent specifies that on 29 April 2005, in light of a letter of support from Atlantique Télécom, it concluded a new settlement agreement with Telecel Faso providing for the immediate payment by Telecel Faso of all amounts that are still due under the 2004 agreement, and a rescheduling of its debt.

By letter notified on 11 March 2011, Alcatel-Lucent gave formal notice to Telecel Faso to pay the sum of EUR 3,975,900.55 within 15 days.

On 5 June 2012, on the basis of article 11 of the contract of 29 April 2005, Alcatel-Lucent filed a request for arbitration against Telecel Faso with the International Court of Arbitration of the International Chamber of Commerce, requesting that Telecel Faso be ordered to pay the sum of EUR 2,681,515.97 for breach of contract.

On 2 August 2012, pursuant to Article 6 § 4 of the Rules of Arbitration of the International Chamber of Commerce, Telecel Faso challenged the implementation of the procedure and the constitution of the Arbitral Tribunal before the Court of Arbitration on the grounds that there was no arbitration clause referring to the Rules of arbitration and that therefore, they were not applicable.

On 19 September 2013, the arbitral tribunal composed of Mrs. Antonias Dimolitsa, Chairman, and Mr. B C and Mr. G-H I, arbitrators, sitting in Paris, ordered Telecel Faso to pay Alcatel-Lucent the sum of EUR 2,681,515.97 plus interest capitalised to the amount of EUR 911,152.94.

On 21 October 2013, Telecel Faso filed an action to set aside this award.

In view of the submissions notified by the “RPVA” (Virtual Private Network of Lawyers) on 20 January 2014 by Telecel Faso, which requests the Court, under Article 1520 of the Code of Civil Procedure, to annul the arbitral award of 19 September 2013, to order the defendant to pay the sum of EUR 15,000 pursuant to Article 700 of the Code of Civil Procedure and to order it to pay the costs pursuant to Article 699 of the same Code;

Having regard to the submissions notified by the RPVA on 20 March 2014 by the company Alcatel-Lucent International, which requests the Court, under Article 1520 of the Code of Civil Procedure and the Rules of Arbitration of the International Chamber of Commerce, to reject the action for annulment brought by the company Telecel Faso, to order it to pay the sum of EUR 90,000 pursuant to Article 700 of the Code of Civil Procedure and to order it to pay the costs pursuant to Article 699 of the same Code;

UPON WHICH,

On the first ground for annulment based on the fact that the arbitral tribunal wrongly declared itself competent (Article 1520-1 of the Code of Civil Procedure):

Telecel Faso first of all complains that the arbitral tribunal declared itself competent: On the one hand, the identity of the parties to the original contract that served as the basis for the settlement of 29 April 2005, itself the basis for the request for arbitration made by Alcatel-Lucent, has not been proven, as the contract was not produced by the latter; On the other hand, the financial undertaking given by Atlantique Télécom by letter dated 29 April 2005 and appearing in the contract of the same date was given directly to Alcatel-Lucent, so that only these two companies are parties to the disputed contract; that therefore, as a third party to the contract, the arbitration clause stipulated therein cannot be enforced against Telecel Faso;

The appellant also claims that the contract of 29 April 2005 containing the arbitration clause, on the basis of which the arbitral tribunal had jurisdiction, was signed in fraud of its rights by Mr. D E Z, its Managing Director, who was in fact acting on behalf of Atlantique Télécom, signatory of the disputed contract, and therefore it could not validly bind Atlantique Télécom and, moreover, Alcatel-Lucent, also a signatory of the contract, which could not have been unaware of the fraud, cannot assert a legitimate belief as to Mr. Z’s power of representation vis-à-vis Telecel Faso;

Finally, the appellant criticises the arbitral tribunal for having declared itself competent, even though the arbitration proceedings initiated by Alcatel-Lucent were a manoeuvre intended to prejudice it.

Whereas on the first branch of the ground that the company Alcatel-Lucent submits to the proceedings the agreement entitled " settlement agreement " concluded on 29 April 2005 to which the companies Telecel Faso and Alcatel-Lucent are both parties and which contains the arbitration clause in the light of which the arbitral tribunal declared itself competent, so that the failure to submit a previous contract to the proceedings is irrelevant;

Furthermore, given that Telecel Faso is a party to the disputed contract, the arbitration clause it contains is enforceable against it, the fact that Atlantique Télécom, by letter of intent dated 29 April 2005 and attached to the contract signed on the same day, rescheduling Telecel Faso’s debt to Alcatel Lucent and entering into new contracts, guaranteed to Alcatel-Lucent the proper performance of its subsidiary’s financial commitments is, in this respect, irrelevant;

Whereas, on the second ground, it is not disputed that Mr. Z was, on the day the disputed contract was signed, Managing Director of the Telecel Faso company; that he was, therefore, authorised to engage the company; that the filing by the Telecel Faso company of a criminal complaint against Mr. Z before the First Instance Court of X does not make it possible to characterise the alleged fraud; that finally, the appellant does not show, other than by way of assertion, that the alleged fraud committed at its expense by its representative acting in fraudulent concert with Atlantique Télécom was known or ought to have been known by Alcatel-Lucent on the day the contract was concluded, and that the arbitration proceedings initiated by Alcatel-Lucent constitutes a maneuver intended to harm it, when it was implemented in application of the arbitration clause stipulated in the settlement agreement' of 29 April 2005, due to Telecel Faso’s failure to fulfill its obligations under the terms of this agreement;

that the ground must be rejected;

On the ground of annulment based on the violation of international public policy (article 1520-5 of the Code of Civil Procedure)

Telecel Faso argues that the recognition or enforcement of the arbitration award rendered on 19 September 2013 would be contrary to French international public policy insofar as Alcatel-Lucent, which in June 2012 could not ignore the concerted fraudulent actions of Mr. Z and Atlantique Télécom to its detriment, could have challenged the latter during the arbitration proceedings;

Whereas Telecel Faso, which limits its arguments in support of this ground of appeal to simply stating the reasons for initiating the arbitration proceedings and merely criticising the conditions under which the arbitration was initiated, without otherwise characterising the alleged fraud as stated, does not demonstrate how the recognition or enforcement of the arbitral award of 19 September 2013 would manifestly and concretely violate French international public policy;

that the ground and appeal will be dismissed;

Whereas the company Telecel Faso, being unsuccessful, must be ordered to pay the costs;

Whereas it cannot therefore claim that the provisions of Article 700 of the Code of Civil Procedure should be applied in its favour and will be ordered on the same basis to pay Alcatel-Lucent International the sum of EUR 90,000;

FOR THESE REASONS,

Dismisses the action for annulment filed against the arbitral award of 19 September 2013;

Orders Telecel Faso to pay the costs that may be recovered in accordance with Article 699 of the Code of Civil Procedure and to pay Alcatel-Lucent International the sum of EUR 90,000.