Paris Court of Appeal, No. 15-02.556 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal - 1st Pole - 1st Chamber – 17 March 2015, No.15-02.556

Challenged decision: Paris Court of Appeal, 22 January 2015, No. 13/12002

THYSSENKRUPP

MASCHINENFABRIK AUGSBURG-NÜRNBERG (MAN)

vs.

REPUBLIC OF IRAQ

On 27 May and 10 June 1981, the German companies THYSSENKRUPP and MAN concluded a contract with the Republic of Iraq for the construction of an astronomical observatory on the summit of Mount Korek in Iraq.

This construction project was not supposed to be completed.

A dispute between the parties arose regarding the settlement of their contractual relations, and the companies THYSSENKRUPP and MAN, in application of the arbitration clause stipulated in the contract, submitted a request for arbitration to the International Court of Arbitration of the International Chamber of Commerce of Paris on 27 November 2003, in order to obtain the condemnation of the Republic of Iraq to the payment of the sum of 6,374,959.51 euros and the sum of 406,329,515 Iraqi dinars.

By a final award rendered in Paris on 26 February 2007, the Arbitral Tribunal composed of Messrs. Burkard Lotz and Nayla Comair-Obeid, arbitrators and Mr. Fathi Kemicha, Chairman, ordered the Republic of Iraq to pay the companies THYSSENKRUPP and MAN the sum of 6,374,959.51 euros and 406,329,515 Iraqi dinars with interest at a rate of 5% as from 29 November 2003.

On 14 June 2013, the Republic of Iraq, Ministry of Housing and Construction filed an action for annulment before this court on the basis of Article 1502 of the Code of Civil Procedure.

By submissions of an incident on 3 December 2014, THYSSENKRUPP and MAN requested the Pre-trial judge to find the action for annulment filed by the Republic of Iraq inadmissible on the grounds that it was filed late.

By order of 22 January 2015, the Conseil d’Etat declared the Republic of Iraq admissible in its action for annulment.

By request of 4 February 2015, THYSSENKRUPP and MAN referred this order to the court;

By submissions notified on 23 February 2015 by A, THYSSENKRUPP and MAN requested the court to amend the referred order, to declare the action for annulment inadmissible as being out of time and to order the Republic of Iraq to pay them the sum of 50,000 euros under Article 700 of the Code of Civil Procedure and to pay all the costs.

They argue, principally, that the parties expressly waived a notification by way of notice both in the Terms of Reference (paragraph 2) and with regard to the provisions of Article 28 of the ICC Rules (1998 version); that the arbitral award was notified to the Republic of Iraq on 4 March 2007 and was also notified through diplomatic channels twice on 7 July 2008 and 10 August 2010, which satisfies the requirements of Article 684 of the Code of Civil Procedure; that the indication of time limits and grounds on the notification document in international arbitration matters is not necessary, in order to respect the common intention of the parties who have agreed to submit to the provisions of the Rules of the International Chamber of Commerce; that the action for annulment is therefore late for not having been lodged within the month of notification, in accordance with Article 1519 of the Code of Civil Procedure, as amended by the decree of 13 January 2011, applicable to arbitral awards previously rendered pursuant to the transitional provisions provided for in Article 3 of the said decree.

Subsidiarily, they argue that the action for annulment is also inadmissible on the basis of the provisions of the former Article 1505 of the Code of Civil Procedure; that in order to proceed with the forced recovery of their debt in Germany, they requested and obtained from the Court of Appeal of X, on 11 June 2009, the enforcement (in French Exequatur) of the arbitral award; that this decision was notified to the Republic of Iraq on 10 August 2010, through diplomatic channels; that this notification is perfectly valid in that it meets the requirements set out in Articles 683 et seq. of the Code of Civil Procedure with regard to notifications made to a foreign State.

By a statement of defence notified by B on 20 February 2015, the Republic of Iraq requested the Court to order the companies THYSSENKRUPP and MAN to communicate the ICC’s letter of 4 March 2007, to dismiss their application and to confirm the admissibility of the appeal;

Firstly, it is noted that while the claimant companies claim that the time limit for appeal ran from the ICC’s notification letter of 4 March 2007, they limited themselves, despite a summons to communicate dated 3 November 2014, to producing this notification letter of which they only communicated “the acknowledgement of receipt and follow-up of the letter notifying the Republic of Iraq of the award”.

The Republic of Iraq further maintains that neither Article 28 of the ICC Rules, which exclusively sets out the conditions under which the arbitral institution is released from its obligation to deliver the Award after payment of costs, nor paragraph 2 of the Terms of Reference relating to “addresses for communications and notifications relating to the arbitration”, which concerns only exchanges between the parties, the arbitrators and the Secretariat of the Court of Arbitration, constitute a waiver of the notification by way of service of the award bearing the enforcement formula provided for in Article 1505 in its wording in force at the time.

Finally, it adds that the service of the enforcement order (in French Ordonnance d’exequatur) rendered by the Court of Appeal of X, regarding a decision which is addressed only to a specific sovereignty, cannot run in France, where the Award was made, the time limit for appealing for annulment.

UPON WHICH:

Whereas, firstly, the conditions for exercising legal remedy against an award made in Paris in an international arbitration are governed by the Code of Civil Procedure;

that THYSSENKRUPP and MAN pointlessly claim that the time limit for appeal ran from the notification of the award to the Republic of Iraq by the ICC on 4 March 2007, whereas according to the provisions of Article 1505 of the Code of Civil Procedure in its wording resulting from the decree of 12 May 1981, applicable on that date, the appeal only ceased to be admissible from the date of service of the award declared enforceable;

that it cannot be argued that the parties would have waived the formal requirements of service in favour of notification by ICC both by the stipulations contained in the Terms of Reference (paragraph 2) and by their submission to the ICC Rules (1998 version), Article 28 of which provides that “once an Award has been made, the Secretariat shall notify to the parties the text signed by the Arbitral Tribunal”;

that indeed, on the one hand, Article 2 of the Terms of Reference, produced exclusively in English, is limited to defining the means of communication of the parties with the Arbitral Tribunal and the Secretariat of the ICC International Court of Arbitration during the proceedings and, on the other hand, the general provisions of Article 28 of the Rules only set out the conditions under which the arbitral institution is released from its obligation to make the award, after payment of costs. Finally, although Article 1519 now provides for the possibility for the parties to waive service, this text resulting from the decree of 13 January 2011 and applicable as from 1 May 2011 was not in force on the date of the notification of 4 March 2007;

Whereas, in accordance with Article 684 of the Code of Civil Procedure: “The document intended to be notified to a foreign State, to a foreign diplomatic agent in France or to any other beneficiary of immunity from jurisdiction is delivered to the public prosecutor’s office and transmitted through the Minister of Justice for service by diplomatic channel, unless by virtue of a European regulation or an international treaty the transmission can be made by another channel”;

that since France is not bound to Iraq by a convention regulating the conditions for notification of procedural documents, it is the national provisions on transmission through diplomatic channels which apply in this case;

that furthermore, the act of notification to a party must mention, under the terms of article 680 of the Code of Civil Procedure applicable to international arbitration, the existence and the conditions of exercise of the legal remedies;

that, consequently, the notifications through diplomatic channels of 7 July 2008 and 10 August 2010 which do not comply with the provisions of the aforementioned articles, the documents having been hand-delivered by the German Embassy in Baghdad to the Iraqi Ministry of Foreign Affairs, without any indication of the modalities of the remedies available, could not cause the time limit for appeal to run. Furthermore, it is noted that the award was made at the end of an arbitration which is based in Paris. Thus, the provisions of article 1505 of the Code of Civil Procedure in its wording resulting from the decree of 12 May 1981, applicable at the date of the notifications claimed, required that the award had previously been declared enforceable in France. The circumstance that it had been made enforceable abroad has no effect. It is therefore necessary to confirm the decision referred.

FOR THESE REASONS,

Confirms the order referred.

Orders in solidum the companies under German law THYSSENKRUPP and MAN to pay the costs of the incident.