Court of Cassation, No. 13-24.626

Court of Cassation, First Civil Chamber, 28 January 2015, No. 13-24.626

Challenged decision: Paris Court of Appeal, 11 June 2013, No. 11/23333

SPA LEATHER INDUSTRY

Vs.

RUDIS

EMAC

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

Whereas, according to the judgment under appeal (Paris, 11 June 2013), the Slovenian company RUDIS, acting as leader of a group of companies, concluded in 1981 and 1983, with the company SONIPEC, to whose rights the Algerian company EMAC came, three contracts relating to the construction of shoe manufacturing plants in Algeria. Difficulties have appeared during the performance of the contracts, the companies RUDIS and EMAC signed, on 27 May 1992, a “memorandum of understanding” under the terms of which the latter undertook to pay the former a certain sum. The entire share capital of EMAC was allocated to the Algerian company LEATHER INDUSTRY, created on 10 August 1999. RUDIS was unable to obtain performance of the “memorandum” and initiated the arbitration proceedings provided for therein. An award was handed down on 9 December 2011, which jointly and severally ordered EMAC and LEATHER INDUSTRY to pay RUDIS a certain amount;

On the first ground, hereinafter annexed:

Whereas LEATHER INDUSTRY objects to the judgment, which dismissed its action for annulment of the award;

Whereas the Court of Appeal noted that Rudis had drawn from the “memorandum of understanding”, containing no restrictive provision, the power to act alone under the arbitration clause and was entitled to be the sole beneficiary of the agreement to be implemented to resolve the dispute arising from its non-performance, without having to justify a special mandate given by the other member companies of the group. After this finding, the court of appeal rightly decided, by application of a substantive rule derived from the principle of validity of the arbitration agreement, that this company was entitled to benefit from the arbitration agreement without having to justify a special mandate to compromise; that the ground cannot be accepted;

On the second ground, hereinafter annexed:

Whereas LEATHER INDUSTRY makes the same complaint against the judgment;

Whereas the Court of Appeal found that the entire capital of Emac had been allocated to the latter, and deduced exactly from this that this transfer entailed automatic transmission of the arbitration agreement; that the ground which, in its second part, criticises a superabundant ground of the judgment, cannot be upheld;

On the third ground, hereafter annexed:

Whereas the ground is clearly not of such a nature as to lead to cassation;

FOR THESE REASONS:

Dismisses the appeal;

Orders LEATHER INDUSTRY to pay the costs;

Pursuant to article 700 of the Civil Procedure Code, rejects its request and order it to pay the sum of 3,000 euros to the company Rudis;

Thus, done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of 28 January 2009.