Paris Court of Appeal, No. 13/13174

Paris Court of Appeal, 26 May 2015, No. 13/13174

Mr. G X

vs.

PROMOSERVICE ITALIA SRL

By private deed of 18 November 2004, the Italian company PROMOSERVICE, which is active in the sale of television advertising spaces in exchange for goods or services produced or marketed by users in the context of operations known as ‘exchange of goods’, and the Italian company G 1 Z in the person of the sole director and legal representative, Mr. G X, concluded a contract for the provision of services and commercial cooperation. Under the terms of Article 13 of this contract, Mr. X has personally guaranteed ‘the exact and complete fulfilment of all the obligations assumed by G1 with the present contract which, for this purpose, has also been subscribed to by Mr. G X himself’. Article 17 contains an arbitration clause.

This contract was renewed by private deed of 15 May 2008 between the Italian company D, formerly PROMOSERVICE, and G1 Z on the same terms.

On 29 January 2009, the Italian companies D, C and G1 Z entered into a ‘joint acknowledgement deed’ relating to the contract of 18 November 2004 between D and G1, which expired on 31 December 2008, concerning the performance of the contractual obligations of the parties and fixing D’s claim against G1 at € 10,442,699.71 after set-off. This deed stated that the payment periods provided for would be guaranteed by Mr. X by means of the registration of a first-rank mortgage on real estate belonging to him or his family for an amount of €4,449,000.

In the course of 2011, D notified a request for arbitration to G1 Z and Mr. X.

By an arbitral award rendered in Milan on 10 January 2012, an arbitral board composed of Mr. Maurizio BOCCHIOLA and Mr. K L, arbitrators, and Mr. M E F, chairman, substantially ordered G 1 Z S.p.A. in liquidation, in the person of its pro tempore legal representative and M. M X, personally, in his capacity as guarantor and jointly and severally within the meaning of article 1944 of the Italian Civil Code, to pay the sum of € 7,251,853.89, plus interest and costs, to company D, to whose rights the company Promoservice Italia S.R.L. (Promoservice) is entitled.

No appeal has been lodged against this award.

On 17 July 2012, it was declared enforceable by order of the delegate of the President of the Paris Trial Court.

On 29 June 2013, Mr. X lodged an appeal against this decision.

In an order dated 10 April 2014, the Pre-Trial judge rejected Promoservice’s appeal on the grounds that it was out of time.

By submissions served on 25 March 2015, Mr. X asked the court to annul the exequatur order of 17 July 2012, to rule that there was no need to declare the arbitral award of 10 January 2012 enforceable and to order Promoservice to pay him €5,000 under Article 700 of the Code of Civil Procedure.

He maintains, firstly, that the arbitral tribunal wrongly declared itself competent (Article 1520-1 of the Code of Civil Procedure), secondly, that the recognition of the arbitral award would be contrary to French international public policy (1520-5) and thirdly, that the exequatur order rules ultra petita, the exequatur having been requested only against G 1 Z.

By submissions served on 1 April 2015, Promoservice seeks to declare Mr. X inadmissible on his appeal and in any event to dismiss it, to confirm the exequatur order undertaken and to award it the sum of €15,000 under Article 700 of the Code of Civil Procedure.

UPON WHICH,

Whereas the Pre-Trial Judge has ruled on the admissibility of the appeal lodged by Mr. X;

On the first ground alleging the lack of jurisdiction of the Arbitral Tribunal (Article 1520-1 of the Code of Civil Procedure)

Mr. X argues that the contract of 18 November 2004 containing an arbitration clause was followed by an act of 29 January 2009 without such a clause, giving a novation of the parties' contractual obligations so that the arbitral tribunal was incompetent and wrongly declared itself competent.

Considering that Article 1466 of the Civil Code provides: ‘A party who, knowingly and without legitimate reason, fails to invoke an irregularity before the arbitral tribunal in good time shall be deemed to have waived its right to invoke it’;

Considering that only GI Z has lodged a plea of lack of jurisdiction with the arbitral tribunal;

The award mentions on page 10: ‘As a preliminary ruling, it is necessary to examine the ground of lack of arbitral jurisdiction initially raised by the defendant Mr. X in the act of appointment of the arbitrator, but subsequently argued solely and exclusively by the other defendant, G1’, the operative part of this decision indicates (P.38):

‘as a preliminary ruling,

• Rejects the ground of lack of jurisdiction of the Arbitral Board formulated by the defendant G1 Z S.p.A. in Liquidation’;

Considering that by refraining from invoking this ground himself before the arbitrators even though the cause of incompetence he alleges was known to him from the outset of the arbitration proceedings, the appellant implicitly but necessarily waived his right to invoke it;

That this ground, raised for the first time before the court by the appellant, is consequently inadmissible;

On the second ground based on the award’s breach of international public policy (1520-5 of the Code of Civil Procedure)

Mr. X argues that the recognition in France of an award which gives effect to a null and void surety undertaking as lacking the handwritten indication enabling the determination of the precise amount of the undertaking entered into, is contrary to French international public policy for the protection of sureties of natural persons and in particular to the public policy provisions laid down by Articles 1326 of the Civil Code and L. 341-2 et seq. of the Consumer Code. He maintains that the surety bond contained in the deeds of 18 November 2004 and 15 May 2008 is null and void, in the absence of any handwritten mention, and that this ground was unsuccessfully raised before the arbitrators.

Considering that Mr. X invokes Article 1326 of the Civil Code, which lays down a rule of proof, and the provisions of Articles L 341-2 et seq. of the Consumer Code, which seek to protect guarantors who are natural persons;

That the fact that these provisions of the Consumer Code are public policy provisions under domestic law does not allow a violation of international public policy to be inferred from them, whereas the Consumer Code texts in question lay down standards whose disregard by an international award, assuming it is established, is not contrary to the French concept of international public policy;

Considering that the recognition in France of the Italian arbitral award does not violate French international public policy, the ground can only be rejected;

On the third ground alleging the violation of the non ultra petita principle by the exequatur order.

The appellant claims that the exequatur order was sought only against G 1 Z, so that it was ruled ultra petita.

Considering that the order for enforcement of an arbitral award made abroad is not subject to any appeal except on one of the grounds provided for in Article 1520 of the Code of Civil Procedure;

That it follows from this reference to the cases in which an action for annulment is opened, that only the award through this appeal, is submitted to the appeal judge;

That consequently, the alleged violation of the principle non ultra petita by the exequatur judge is inoperative;

On the application under Article 700 of the Code of Civil Procedure

Considering that Mr. X, who is unsuccessful in his appeal, is dismissed from his application under Article 700 of the Code of Civil Procedure and is ordered to pay Promoservice the sum of €15,000 on that basis;

FOR THESE REASONS,

Confirms the enforcement order of 17 July 2012 of the arbitral award rendered in Milan on 10 January 2012;

Dismisses Mr. G X’s claims.

Orders Mr. G X to pay the costs with direct recovery rights under Article 699 of the Code of Civil Procedure and to pay Promoservice Italia S.R.L. the sum of € 15,000 under Article 700 of the Code of Civil Procedure.