Paris Court of Appeal, No. 15-04.996 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 15 September 2015, No. 15-04.996

MONTE CARLO AVIATION CORPORATION

Vs.

S.A. DASSAULT AVIATION

Under a contract of 7 March 2005 MONTE CARLO AVIATION CORPORATION (“MCAP”), a company under the British Virgin Islands law, acquired a Falcon 7X aircraft from DASSAULT AVIATION (“Dassault”), a French limited company, for the price of USD 36,150,000, with delivery scheduled on 1 November 2010.

In November 2010, MCAP refused delivery of the presented aircraft claiming a lack of conformity. In application of Article 20 of the contract, which stipulated that in the event of refusal by MCAP to receive the aircraft when it is presented for delivery, Dassault would be entitled to terminate the contract immediately and to withhold up to 10% of the price of the aircraft, Dassault terminated the contract and retained the sum of USD 4,436,944 under the penalty clause.

On 26 January 2011, pursuant to the arbitration clause stipulated in the contract, MCAP filed a request for arbitration against the Dassault with the International Chamber of Commerce and appointed Mr. M N as co-arbitrator.

On 22 February 2011, ICC notified the Request for Arbitration to Dassault, which appointed Mr. D Y as co-arbitrator.

On 29 March 2011, ICC adressed the declaration of acceptance availability and independence of Mr Y to the parties, together with his curriculum vitae.

On 16 June 2011, the General secretary of ICC confirmed the appointment of Mr. A Lew as President of the Arbitral Tribunal upon the joint proposal of the co-arbitrators appointed by the parties.

By an arbitral award issued on 17 October 2013 in Paris, the Arbitral Tribunal composed of Mr. Julian Lew, President, Mr. M N and Mr. D Y, co-arbitrators, dismissed MCAP’s claims on the grounds that MCAP’s refusal to receive the aircraft in November constituted serious misconduct, authorizing Dassault to terminate the contract, that such termination was legitimate and in accordance with Article 20 of the contract, and that such termination authorized Dassault to keep the sums already retained by it pursuant to this contractual provision, ordered MCAP to pay Dassault the sum of USD 1,385,800 as part of the flat-rate damages to which Dassault was entitled but did not retain, dismissed Z’s claim for damages for procedural contempt and ordered MCAP to pay Dassault the sum of EUR 506,831.16 in external legal fees and the sum of USD 240,000 as a provision for costs paid to the ICC, all bearing simple interest at a rate equivalent to 3-month EURIBOR plus 1%.

On 19 November 2013, MCAP filed an action for annulment on the basis of article 1520 of the Code of Civil Procedure.

On 19 February 2015, by an order, the case was withdrawn from the roll and reinstated on 4 March 2015, after the parties jointly requested it.

Having regard to the submissions of MCAP notified on 29 April 2015 by B pursuant to which it asks the Court to :

Annul ICC Arbitral Award No. 18074 of 17 October 2013;
reject all of the claims, actions and conclusions of Dassault ;
order Dassault to pay the sum of EUR 70,000 pursuant to Article 700 of the Code of Civil Procedure;
order Dassault to pay all the costs;

Having regard to the submissions of the Dassault notified on 22 May 2015 according to which it asks the Court to reject all the requests submitted by the company S O and to order the latter to pay the sum of EUR 150,000 as damages for procedural contempt as well as the sum of EUR 70,000 pursuant to article 700 of the code of civil procedure, in addition to the entire costs.

UPON WHICH,

On the single ground of annulment based on the irregular constitution of the arbitral tribunal (article 1520-2 of the Code of Civil Procedure) :

MCAP claims to have discovered, after the issuance of the award, that M. D Y, the arbitrator appointed by Dassault, worked in the same law firm as Mr. Q F, the lawyer in charge of assisting Mr. K E, the director of MCAP, as well as other members of his family and various companies of the Plaza Group in the context of two criminal proceedings, the elements of which, according to the appellant, were produced during the proceedings, at the heart of the dispute submitted to the arbitrators, that Mr. Y or his associates may have had potential direct or indirect access to information relating to this criminal aspect and exchanged within the same law firm with Mr. F or his associates , and that these undisclosed facts are likely to cast doubt on the independence and impartiality of the arbitral tribunal.

Whereas it is a principle that the arbitrator must disclose to the parties any circumstance that might affect his judgment and provoke in the minds of the parties a reasonable doubt as to his capacity of impartiality and independence which are the very essence of the arbitral function;

Whereas the arbitrator’s duty to provide information must be assessed in light of the notoriety of the situation complained of, regarding its connection with the dispute and its impact on the arbitrator’s judgment;

Whereas the curriculum vitae of Mr. D Y signed on 23 March 2011 mentions his capacity as honorary lawyer, retired partner of law firm C since 31 December 2005, that this document became knowledgeable to the parties on 29 March 2011 by the ICC Secretariat without any request from MCAP on further details or clarifications regarding the arbitrator’s situation, after its communication.

Whereas Mr. F, who is a partner in the firm G, was in charge of defending the interests of various members of the E family and various companies owned or managed by them through a holding company PLAZA, left the firm in May 2012;

Whereas the consorts E, who were informed by the firm G by e-mail on 4 May 2012, have chosen to retain Mr. F as counsel;

Whereas MCAP, a company controlled by Mr. K E, could not have ignored that his own attorney had, upon his departure from firm G, joined firm C in May 2012, so that by not expressing any reservations during the arbitration proceedings regarding the independence and impartiality of Mr. Y, a retired partner of the same firm since 31 December 2005, the latter, which invokes, in an inoperative manner, in that it is later to have intervened in May 2013 the merger of firm C within firm X, is inadmissible to take advantage of such facts, since the information related to the successive association of Mr. F within these two firms was freely accessible by simple consultation of their website;

Whereas consequently, the ground of irregularity in the constitution of the arbitral tribunal must be dismissed;

On the claim for damages for procedural abuse.

Whereas Dassault does not show how MCAP has degenerated into abuse the exercise of the right of appeal provided by law, the proof of such an abuse cannot solely result from the weakness of the means invoked in support of it;

And thus the claim for damages formulated by Dassault must be rejected;

Whereas the company MCAP which succumbs must bear the costs, without being able to claim compensation pursuant to article 700 of the Code of Civil Procedure and must be ordered on this basis to pay the sum of EUR 70,000.

FOR THESE REASONS,

Dismisses the appeal brought by MCAP, a company under the British Virgin Islands law, to annul the arbitral award rendered on 17 October 2013 in Paris in the proceedings between MCAP and Z P;

Dismisses Dassault SA’s claim for damages for procedural contempt;

Condemns MCAP to pay the amount of EUR 70,000 pursuant to Article 700 of the French Code of Civil Procedure as well as to costs to be recovered in accordance with Article 699 of the same Code.

Rejects all other claims.