Paris Court of Appeal, No. 13/23404 | Rory Wheeler, avocat (Paris) & solicitor (England)

aris Court of Appeal, 24 February 2015, No. 13/23404

ARAB POTASH COMPANY

vs.

ATA CONSTRUCTION INDUSTRY AND TRANDING INC

By a contract dated 2 May 1998, stipulating an arbitration clause, the Jordanian company ARAB POTASH COMPANY (ARAB POTASH) entrusted the Turkish company ATA CONSTRUCTION, INDUSTRY AND TRADING INC (ATA) with the construction of Dam No. 19 on the Dead Sea. When the basin was impounded, the dam partially collapsed.

The two parties referred the matter to an ad hoc arbitral tribunal which, in an award rendered in Amman on 30 September 2003, dismissed ARAB POTASH COMPANY’s claims for compensation and ordered it to pay ATA the sum of USD 5,906,828.30 corresponding to the balance of the work.

In a judgment of 24 January 2006, the Court of Appeal of Amman set aside this award and, consequently, the arbitration agreement, for violation of Jordanian public policy. The appeal against this judgment was dismissed, and ARAB POTASH COMPANY brought an action on the merits which is still pending before the Jordanian domestic courts. ATA, for its part, brought a claim against the Kingdom of Jordan before the International Centre for Settlement of Investment Disputes (ICSID), based on the bilateral investment treaty (BIT) concluded between that State and Turkey, claiming compensation for the unlawful expropriation of its investment in Jordan. On 18 May 2010, the ICSID Tribunal rendered an award declaring that it had no jurisdiction ratione temporis to entertain the claim for compensation up to the amount of the award of 30 September 2003, as the treaty had only entered into force in January 2006. On the other hand, the ICSID Tribunal declared admissible the application for the annulment of the arbitration agreement, said that this annulment violated the BIT and ordered the termination of the lawsuit brought by ARAB POTASH COMPANY before the Jordanian state courts.

At ATA’s request, the 30 September 2003 award was declared enforceable by an order of the President of the Paris High Court (Tribunal de Grande Instance de Paris) dated 6 April 2011.

ARAB POTASH COMPANY appealed this order.

In a judgment dated 19 March 2013, this court invited the parties to produce a translation, either by a sworn translator or by agreement between them, of all the documents they intended to refer to and, in particular, the ICSID award of 18 May 2010, the interpretative decision of 7 March 2011, the pleadings before the ICSID arbitral tribunal, as well as the minutes of the proceedings, and ordered that the case be struck out.

These steps having been completed, the case was reinstated on 5 December 2013.

By submissions notified on 17 January 2013, ARAB POTASH COMPANY sought the reversal of the order made, the rejection of the application for enforcement (in French Exequatur), and the allocation of the sum of 60,000 euros pursuant to Article 700 of the Code of Civil Procedure. It claims that the recognition and enforcement of the 30 September 2003 award is contrary to international public policy by invoking, on the one hand, ATA’s unequivocal waiver of the benefit of this award, on the other hand, the estoppel, finally, the res judicata effect of the ICSID award.

By submissions notified on 23 January 2013, ATA requsested the court to declare the appeal inadmissible and unfounded, to confirm the enforcement order (in French Ordonnance d’exequatur), and to order ARAB POTASH COMPANY to pay it the sum of 60,000 euros pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH:

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

ARAB POTASH COMPANY argues, first, that ATA, by initiating an ICSID arbitration which was based on the expropriation resulting from the annulment of the award of 30 September 2003 by the Jordanian courts, and which sought to have the Jordanian State ordered to pay an amount equivalent to that allocated by that award, expressly acknowledged the annulment of this award. Furthermore, after the ICSID tribunal had found that the annulment of the arbitration clause violated the BIT, ATA proposed to enter into a new arbitration agreement on different terms, thereby demonstrating its unequivocal willingness to waive the 30 September 2003 award. The appellant argues, secondly, that this contradictory procedural conduct misled it, which is characteristic of estoppel, and prevents ATA from requesting the enforcement (in French Exequatur) of the award. Finally, ARAB POTASH COMPANY claims that the res judicata effect of the ICSID award and the irreconcilability of the ICSID award and the award of 30 September 2003 preclude the enforcement (in French Exequatur) of the latter.

Considering that, following the annulment by the Jordanian courts of the award of 30 September 2003, which rejected the claims for compensation for the disturbances affecting the disputed dam and ordered ARAB POTASH COMPANY to pay ATA the balance of the contract and damages, ATA instituted arbitration proceedings before the ICSID with the aim of ordering the Jordanian State to pay it compensation in the same amount for the expropriation resulting from this annulment; that by an award dated 18 May 2010, the ICSID arbitral tribunal declared it had jurisdiction with respect to the compensation claim and held, on the other hand, that the annulment of the arbitration agreement violated the BIT and ordered the end of the lawsuit brought by ARAB POTASH COMPANY before the Jordanian domestic courts; that ATA, claiming to enforce this decision, made an offer to ARAB POTASH COMPANY for a new arbitration agreement on terms different from the first one regarding the rights of the parties to submit claims, the law applicable to the merits of the dispute, the seat of arbitration and the competent jurisdiction in case of appeal;

Considering, first of all, that the alleged waiver of the benefit of an award is a question of enforcement; that the recognition of this award in France cannot therefore for this reason alone be likely to violate in a manifest, effective and concrete manner the French concept of international public policy;

Considering, moreover, that the final setting aside of the September 2003 award by the Jordanian courts was of such a nature as to mislead ATA as to the possibilities of obtaining its enforcement, whereas its co-contracting party was itself Jordanian and that most legal systems are opposed to the recognition of set aside awards in the State of the seat of arbitration;

Considering, secondly, that by virtue of the principle of estoppel, it is not permissible to contradict oneself to the detriment of others, i.e., to change one’s procedural conduct when the faith granted by the other party to the initial position of his adversary has led him/her to modify his/her own to his/her detriment or to the advantage of the opposing party;

But considering that in the present case, it does not appear that the tactics employed successively by ATA prejudiced ARAB POTASH COMPANY, which is not directly concerned by the ICSID award and did not respond to ATA’s offer to conclude a new arbitration agreement on terms particularly disadvantageous to it;

Considering, thirdly, that an award made abroad cannot be enforced if it is irreconcilable with a decision that has the authority of res judicata in France;

Considering that two court decisions are irreconcilable which entail mutually excluding legal consequences; that such irreconcilability does not exist between, on the one hand, the ICSID award by which the arbitral tribunal finds that it lacks jurisdiction to rule on the claim for compensation made by ATA against the Jordanian State, states that the annulment of the arbitration agreement violates the Turkish-Jordanian BIT and orders the termination of the proceedings initiated by ARAB POTASH COMPANY before the arbitral tribunal and, on the other hand, the award of September 2003 which, on the basis of the same arbitration agreement, dismisses the claims for compensation of ARAB POTASH COMPANY, the contracting authority, and orders it to pay ATA the balance of the contract and damages;

Whereas it follows from the foregoing that the single ground must be set aside in its three parts and the order undertaken confirmed;

On Article 700 of the Code of Civil Procedure:

Considering that ARAB POTASH COMPANY, who succumbs, cannot benefit from these provisions and will be condemned on this basis to pay to ATA the sum of 60,000 euros;

FOR THESE REASONS:

Dismisses the appeal filed by ARAB POTASH COMPANY.

Confirms the order of the President of the Paris High Court of 6 April 2011, which declared the award rendered between the parties on 30 September 2003 enforceable.

Orders ARAB POTASH COMPANY to pay the costs, which will be recovered in accordance with the provisions of Article 699 of the French Code of Civil Procedure.

Orders ARAB POTASH COMPANY to pay ATA CONSTRUCTION, INDUSTRY AND TRADING INC. the sum of 60,000 euros pursuant to Article 700 of the Code of Civil Procedure.

Dismisses all other requests.