Paris Court of Appeal, No. 13/18818

Paris Court of Appeals, First Chamber, 10 March 2015, No. 13/18818

S.A.S. COMPAGNIE FRUITIÈRE FRANCE

S.A. AZ FRANCE SA

SA AGRUNORD

S.A.S. UNIVEG KATOPE FRANCE

VS.

COOL CARRIERS AB (COOL CARRIERS) (formerly known as NYCKOOL AB which became A P)

On 14 October 2005, an agreement was concluded between, on the one hand, the Swedish company NYKCOOL AB, which became A P then COOL CARRIERS AB (COOL CARRIERS), owner of the vessel “Chaiten” and, on the other hand, the limited liability companies DOLE FRANCE, to whose rights COMPAGNIE FRUITIERE FRANCE, AGRUNORD, KATOPE INTERNATIONAL, which became UNIVEG KATOPE FRANCE, AZ FRANCE, B, G, to whose rights the S.A.S.U KISSAO, now KIMAR, H and K, travel charterers (the importers), a charter party relating to the transport of lychees from Madagascar.

The importers, invoking the damage caused by the late arrival of the vessel in the port of unloading, in application of the arbitration clause stipulated in this contract, submitted on 27 January 2006 a request for arbitration to the Maritime Arbitration Chamber of Paris (CAMP).

The arbitral tribunal, composed of Mr. Delebecque and Mr. Molfessis, arbitrators chosen by the parties, and Mr. I, a third arbitrator appointed by the CAMP committee, rendered an award with provisional enforcement on 15 July 2009 in which it found NYKCOOL liable for the delay of the vessel and ordered it to pay a global indemnity of 1.092.000 euros to be divided among the importers in proportion to the quantities mentioned in their bills of lading, in addition to 120.000 euros in application of Article 700 of the Code of Civil Procedure, with the costs of experts being charged to the charterers and the arbitration costs to the ship-owner.

By a written record of rectification of a material error dated 12 October 2009, the arbitrators completed the main award in order to compensate for the failure to rule on interest and compound interest.

On the action for annulment made by NYKCOOL respectively on 19 October 2009 and 24 December 2009 against this award and this deed, this court, by a judgment of 10 March 2011, set aside the award of 15 July 2009 and the “written record of rectification of material error” of 12 October 2009. The unjustified refusal of the arbitrators to comply with a party’s request for a declaration of interest was likely to cast reasonable doubt on the independence and impartiality of the arbitral tribunal, when, in addition, one of the arbitrators was involved in other proceedings involving the same parties.

On 29 April 2011, the CAMP filed a third-party opposition to this decision, which was rejected by a decision of the court on 30 October 2012.

On 24 March 2011, the importing companies filed a new request for arbitration from the CAMP.

At the same time, on 11 and 13 April 2011, Company A and Company C summoned CAMP, its President and Secretary, who were also arbitrators, for the court to order them to pay the costs of the arbitration and the costs of the annulled award.

In an award rendered in Paris on 23 January 2013, the arbitral tribunal found Company A liable and ordered it to pay the sum of 98,839.26 euros in compensation for the damages caused and 20,000 euros under Article 700 of the French Code of Civil Procedure.

The importing companies, pursuant to CAMP’s regulations, filed a second-degree appeal with CAMP.

Under these conditions, in an award handed down in Paris on 11 July 2013, the second-degree arbitral tribunal composed of Messrs. D, L and X found Company A liable and ordered it to pay the sum of 153,200.16 euros in compensation for damages caused, and 150,000 euros under Article 700 of the French Code of Civil Procedure.

On 27 September 2013 and 22 November 2013 respectively, the importing companies, on the one hand, and A, on the other hand, respectively filed an action for annulment of this award.

By order dated 9 January 2014, the two actions were joined together.

In view of the summary submissions of the importing companies notified by Z on 15 December 2014, pursuant to which the Court is requested: to order a stay of proceedings pending the decision of the Court of Cassation on the appeal brought by CAMP against the decision of the Paris Court of Appeal dated 30 October 2012 rejecting the third party proceedings, to declare that the action for annulment is admissible, and to dismiss all of E’s claims, except as regards the annulment of the award rendered on 11 July 2013, to order the Company COOL CARRIERS to identify the possible links that may exist between the Mac Lean Group and the C and Nyk Group, to set aside the award rendered on 11 July 2013, to order Company COOL CARRIERS to pay the sum of 200. 000 for abusive request and irregularities in the conduct of the arbitration and the sum of 100,000 euros under article 700 of the Code of Civil Procedure, and order it to pay the costs.

Given the summary submissions of the company COOL CARRIERS notified by Z on 9 January 2015, under the terms of which the Court is requested to reject the application for a stay of proceedings, to give notice of the fact that both parties agree that the said award should be set aside and that, consequently, this award should be considered null and void as far as they are concerned, in view of their partial conciliation on this point, to reject the requests, objectives and submissions, of the importers in particular to reject the request of 200. 000 for abusive request and alleged irregularity in the conduct of the arbitration, to order them to pay the sum of 100,000 euros for abusive proceedings, set aside the disputed award on the basis of the ground invoked by the claimant E, to order the defendants to pay 100,000 euros to COOL CARRIERS under Article 700 of the Code of Civil Procedure and the costs.

UPON WHICH

On the application for a stay of proceedings

Whereas, after having been referred by way of incident, the pre-trial judge, by order of 16 October 2014, joined to the merits the request of the importing companies for a stay of proceedings on the grounds that, in light of the new “Tecnimont” case law, it is, according to them, probable that the decision of the Paris Court of Appeal of 30 October 2012, which rejected the third-party proceedings appeal, will be overturned, which would result in the nullity of all subsequent awards as a consequence;

Whereas, however, the third-party proceedings only call into question, in relation to its author, the points it criticises and the decision that upholds them. The third-party procedure retracts or reforms the challenged judgment only on the grounds detrimental to the third party. The original judgment maintains its effects between the parties even on the grounds that were annulled.

that since the importing companies are not parties to the third-party proceedings filed against the judgment of this court of 30 October 2012, which rejected the CAMP’s third-party opposition filed against the judgment of 10 March 2011, which set aside the award of 15 July 2009 as well as the “minutes of rectification of material error” dated 12 October 2009. The limited devolutive effect of this remedy deprives the requested stay of proceedings of any interest;

As a result, the request of the importing companies will be rejected;

On the request aiming to refer the oath

Whereas the importing companies request that the oath be referred to company COOL CARRIERS because of the possible links existing between, on the one hand, Mac Lean, of which Mr. D, one of the arbitrators, is the director, which represents in France the P&I clubs which group together ship-owners' civil liability insurers, and on the other hand, the C, a ship-owners' mutual insurance company which intervened to pay the guarantee applicable to the enforceable sentence and, finally, E.

Whereas, however, the importing companies have not justified that they granted the special power required by article 522 of the Code of Civil Procedure to their counsel, their claim is inadmissible;

On the first ground of annulment based on the irregular composition of the arbitral tribunal (article 1520-2 of the Code of Civil Procedure)

Both parties agree that the award should be set aside on the basis of Arbitrator D’s refusal to sign a declaration of independence.

Whereas, according to article 1456 of the Code of Civil Procedure, applicable in international cases by virtue of article 1506 of the same Code: “Before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his or her independence or impartiality. He or she also shall disclose promptly any such circumstance that may arise after accepting the mandate”;

Whereas, however, that under the terms of article 1466 of the Code of Civil Procedure applicable to the arbitration S by reference of article 1506-3 of the same code: “A party which, knowingly and without a legitimate reason, fails to object to an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived its right to avail itself of such irregularity”;

According to Article VII of the Rules of Arbitration of the Paris Maritime Arbitration Chamber, to which the parties have agreed to submit, the parties have a period of fifteen days from the notification by the Chamber of the ‘date of departure of the arbitral proceedings’ to present to its president their reasoned request for recusal for the reasons set out in Article VII;

Whereas, in the present case, the arbitrators appointed by the Committee of the Chamber sent on 14 March 2013 for Mr. L and on 15 March 2013 (the date of 15 February 2013 written by Mr. D on his letter of 15 February proceeding from a simple material error, the date of creation of the file relating to the declaration mentioning 150315, which is not disputed) for Mr. D a declaration of exclusive independence from any circumstance that could call into question their independence or impartiality;

The secretariat of the Chamber informed the parties of these declarations and notified them by letter dated 26 March 2013 of the composition of the Arbitral Tribunal and of the starting point of the arbitral proceedings on the same day, thereby triggering the period of time for challenge provided for in the aforementioned text;

Upon receipt of this notice, the board of importing companies, by letter of 28 March 2013, requested arbitrator D to give explanations on the possible activity of Mc Lean as counsel to A, the NYK group and C, issuer of a guarantee in favour of the member of its mutual insurance company, as well as on the intervention of Mc Lean in the handling of claims of goods against one of the importers;

The arbitrator answered these questions in a letter dated 29 March 2013;

A, in a letter dated 2 April 2013, requested the challenge of arbitrator L and requested arbitrator D for additional information concerning his relations with the parties' counsel, which the latter provided in a letter dated 4 April 2013;

Whereas the importing companies did not request the challenge of Mr. D, while A, which merely requested the challenge of arbitrator L, who withdrew upon receipt of this request and was replaced on 3 April 2013 by Mr. Y, expressly indicated in a letter dated 24 April 2013 that ‘he took into account note of Mr. D’s observations regarding direct or indirect links with the parties’ and maintained “his reservations”. So it cannot be drawn from the statement ‘We maintain our claims regarding the inapplicability of the arbitration clause and to the challenges’ that it intended, as it claims, to challenge also Mr. D;

The parties who did not submit a request to the Chamber to challenge this arbitrator and who did not state any new fact that would have been revealed to them after the expiration of the time limit set by the Rules for filing, cannot invoke before the judge of the annulment, the ground based on the failure of arbitrator D to comply with his obligation of independence and impartiality;

In this respect, the circumstance that the parties agree to consider that the latter’s violation of this obligation is proven, is inoperative as soon as the assessment of the existence or not of one of the causes of annulment referred to in article 1520 of the Code of Civil Procedure does not fall within the rights of which the parties are free to dispose, but falls within the sole jurisdictional power of the annulment judge. The parties are able only to waive by mutual agreement the right to rely on it in conditions that allegedly cause them to be deprived of their rights;

On the second ground for annulment alleging the violation of international public policy (Article 1520-5 of the Code of Civil Procedure)

The importing companies argue on the one hand that the arbitral tribunal, which is an entity of the CAMP, which appointed its three members, could not retain jurisdiction while the CAMP was engaged against COOL CARRIERS in three procedures. On the other hand, the importing companies argue that companies A and C would have fraudulently “instrumentalised” the procedures in order to influence the decision of the arbitral tribunal in particular by proposing a withdrawal of the proceedings against the CAMP under whose the arbitration was conducted and that their actions could be characterised as obstruction of justice and active corruption in that their purpose would have been to obtain, in return, a favourable decision.

Whereas, in the present case, it cannot be inferred, as the importing companies maintain, that the arbitral tribunal, by retaining its jurisdiction when its members were appointed by the CAMP, itself engaged against COOL CARRIERS in three proceedings, would have contributed to a fraudulent process put in place by the latter to influence its decision;

In fact, the dispute between A and the CAMP in other proceedings was not such as to intrinsically affect the arbitration clause or to hinder the organisation of the arbitration, since the CAMP, as an arbitration institution, has no judicial function and the appointment of the arbitrators can be challenged by way of challenge;

Whereas on the other hand the importing companies that accused A of having “instrumentalised” the procedures opposing it to the CAMP do not demonstrate how they participated in a fraudulent scheme intended to obtain from the Arbitral Tribunal a decision favourable to its interests, whereas these did not hinder the continuation of the arbitration proceedings;

that, moreover, there is nothing to establish that A, which merely informed the Arbitral Tribunal that it had informed the Tribunal de Grande Instance, which was seized of the guarantee appeal against CAMP, that, depending on the outcome of the arbitration proceedings, it might be led to withdraw from the action brought against this institution, would have attempted in this way, on the basis of a promise to withdraw, to obtain from the arbitrators that they carry out acts of their function, in violation of the obligations consubstantial to their mission;

Consequently, in the absence of evidence from the importing companies that the recognition or enforcement of the award effectively and concretely violates international public policy, the ground must be dismissed;

On the third ground of annulment based on the violation of due process (in French Principe de la contradiction) (Article 1520-4 of the Code of Civil Procedure)

According to the importing companies, the arbitral tribunal did not respect due process (in French Principe de la contradiction) on the one hand, by basing its decision on an arbitrary percentage which it raised with discretion without having first invited the parties to present their observations, and, on the other hand, by failing to propose an adversarial discussion on the upkeep of the arbitral tribunal after the proposal to withdraw the procedure initiated against CAMP before the Tribunal of Grande Instance, in case of a favourable decision in the arbitration.

According to E, in defiance of due process (in French Principe de la contradiction), invoices were produced before the arbitrators without having been communicated to it.

Whereas the due process (in French Principe de la contradiction) requires that the parties have been able to make known their claims in fact and in law and to discuss those of their adversary so that nothing that served as a basis for the tribunal’s decision has escaped their contradictory debate; the arbitrators must, in all circumstances, themselves observe and uphold this principle.

Whereas the arbitrators who were seized with a request for an evaluation of the prejudice suffered as a result of the delay in delivery of the goods, which the parties discussed before them and who were not obliged to submit to the parties the details of their motivation beforehand, assessed this damage with discretion by evaluating the impact of the fraudulent delay with regard to the evolution of the lychee price recorded during weeks 50 and 51 of the 2005-2006 season;

Whereas furthermore if, after the close of the proceedings on 28 June 2013, A transmitted to the Arbitral Tribunal a copy of the letter previously sent to the Tribunal of Grande Instance, it refers to the appeal against the CAMP to inform it that “The present proceedings before your tribunal will obviously be affected by the outcome of the aforementioned arbitral proceedings. Thus, if the arbitrators of the second degree confirm the decision of the first degree, my clients will not be condemned and will be brought to withdraw the appeal in warranty”, the arbitral tribunal did not have to provoke the explanations of the parties upon receipt of this unsolicited letter, which was not of a nature to influence the outcome of the dispute before it;

Whereas finally if COOL CARRIERS objects to the arbitrators’, who based their decision on invoices submitted by the opposing party without prior communication, this allegation is refuted by the statements of documents which show the communication of all of the invoices of sales intervened over the weeks 50 and 51 (parts 126 to 134 of the document);

The plea taken in its three branches must be rejected;

On the ground of annulment based on the arbitral tribunal’s failure to comply with its mission (Article 1520-3 of the Code of Civil Procedure)

E held that the arbitral tribunal exceeded the terms of its mission under the CAMP Rules by ruling on new claims at the second degree and by agreeing to examine the claims of the importing companies without justification for the payment of the deposit, as required under Article XIV of the Rules.

Whereas article XV §2 of the CAMP Rules provides that “The claim at second degree must strictly concern the facts examined at first instance and may not contain a new claim, unless the parties agree to that”;

Whereas the prohibition of new claims does not prevent the raising of new facts, documents and arguments in support of claims previously submitted to the arbitral tribunal at first instance, which renders inoperative the claim made by the importing companies;

In reality, the only new claims that the importing companies have asked the arbitral tribunal to reject on this ground are the ‘annexed costs’ and the additional handling costs linked to the delay;

Whereas however the claim for the due diligence carried out for 300,000 euros and the ancillary costs for 141.856.48 euros was presented in application of article 700 of the Civil Procedure Code and is merely an update of the claim presented in this respect before the arbitral tribunal of first instance for 300.000 euros and 120.000 euros for “costs not reimbursed to date”, which renders the ground inoperative;

Whereas furthermore, the importing companies, under the terms of their request for arbitration of 24 March 2011, expressly referred to the arbitration court of first degree a request for compensation for additional costs related to the late arrival of the vessel, of up to 56.065.17 euros. In their request for arbitration dated 22 February 2013 before the court of second instance, they limited themselves to reiterating (page 50) their initial request. So the ground is in fact lacking. Moreover, because of this request was rejected by the arbitral tribunal, COOL CARRIERS cannot claim any ground;

Whereas finally COOL CARRIERS cannot claim that the Tribunal failed in its mission by not applying the Rules to which the parties intended to submit it. These Rules required the arbitral tribunal, when requested to do so, to declare the claim inadmissible in the absence of evidence of payment of the deposit within the time limit imposed by the Rules;

In fact, the Arbitral Tribunal noted in its award that the importing companies formulated their request for a second-degree examination by paying the deposit to the Chamber, within the delay provided for in article XV of the Rules;

The ground in its two parts must be dismissed;

Whereas each of the parties succumbing to the claims shall bear its own costs and expenses.

Whereas the provisions of Article 700 of the Code of Civil Procedure do not apply;

FOR THESE REASONS,

States that there is no need to stay the proceedings;

Declares inadmissible the request to have the oath deferred;

Rejects the claims of the Swedish company NYKCOOL AB, which became A P and then COOL CARRIERS CARRIERS P (E), on the one hand, and the limited companies DOLE FRANCE, to whose rights currently belongs COMPAGNIE FRUITIERE FRANCE, AGRUNORD, KATOPE INTERNATIONAL, which became UNIVEG KATOPE FRANCE, AZ FRANCE, B, G, to whose rights the S.A.S. UKISSAO, now KIMAR, H and K, on the other hand, of their actions for annulment brought against the award rendered in Paris on 11 July 2013 by the Second Degree Arbitral Tribunal constituted under the aegis of the Maritime Arbitration Chamber of Paris;

States that each of the parties shall bear their own costs and expenses of the proceedings;

Dismisses the parties' claims for compensation in accordance with Article 700 of the Code of Civil Procedure.