Court of Cassation, No. 14-23.699 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 16 March 2016, No. 14-23.699

Judicial Chronology:

Award 17 July 2012

Addendum 24 August 2012

Award 1 March 2013

Paris Court of Appeal, 24 June 2014, No. 12/21397

Paris Court of Appeal, 20 January 2015, No. 14/21342

MR ALI X… ALI Y…

Z…, MARZOUQ ALI X… ALI Y…

Z… AND MOHAMMED ALI X… ALI Y…

Z… (CONSORTS Y…)

Vs.

SHACKLETON AND ASSOCIATES LIMITED

THE COURT OF CASSATION, FIRST CIVIL CHAMBER, delivered the following judgment:

On the sole ground of appeal:

Whereas, according to the judgment under appeal (Paris, 24 June 2014),

that Messrs Ali X… Ali Y…

Z…, Marzouq Ali X… Ali Y…

Z… and Mohammed Ali X… Ali Y…

Z… (consorts Y…), Emirati nationals, commissioned a London law firm, Eversheds, to represent them in an arbitration in London against a Greek company, by an engagement letter of 16 July 2009 which did not contain an arbitration clause. A second engagement letter, stipulating such a clause, was signed on 29 March 2010 between the Emirati law firm Galadari & associates (GLDR), usually in charge of the interests of consorts Y…, and Mr A…, so that the latter, who left Eversheds and founded SHACKLETON AND ASSOCIATES LIMITED (SHACKLETON), continues such proceedings. A dispute has arisen between the parties regarding the payment of fees, and SHACKLETON implemented the arbitration clause. An award, rendered in Paris on 17 July 2012 and corrected by an addendum of 24 August 2012, declared that the arbitral tribunal had jurisdiction to rule on the company’s claim for the payment of an invoice of fees. A second award, rendered in Paris on 1 March 2013, ordered consorts Y… to pay to the other party a certain amount.

Whereas, consorts Y… contest the judgement for dismissing their claim for the annulment of the awards, even though, according to the grounds of appeal:

1°/ that the annulment judge, who reviews in fact and in law the decision of the arbitral tribunal on its jurisdiction, must assess the existence, validity and extent of the contractual power to bind a party to the arbitration in consideration of the law applicable to the legal act in question. In deciding as it did, reasoned that “by virtue of a substantive rule of the law of international arbitration, the existence and validity of an arbitration clause shall be assessed, without reference to any national law, but solely with regard to the willingness of the parties to resort to arbitration, assessed according to the circumstances of the case” and “that there are no grounds for departing from these principles when the disputed agreement concerns the services provided by a lawyer to his client”, after noting, however, that the letter of commitment of 29 March 2010, containing the arbitration clause, was signed by M.A… and by the law firm GLDR. It resulted that the existence, validity and extent of the contractual power given to the GLDR law firm had to be assessed in consideration of the law applicable to this legal act. Thus, the Court of Appeal violated Article 1520. 1° of the Code of Civil Procedure ;

2°/ alternatively, only the common will of the contracting parties has the power to vest the arbitrator with his jurisdictional power. The Court of Appeal ruled as it did on the basis of inoperative grounds which are, on one hand, that the draft contract stipulating the arbitration clause was sent on 23 February 2010 by Mr A… to Mr B…, the group’s financial auditor, and to Mr Mohammed Y…, and on the other hand, that the draft engagement letter signed by Mr A… was again sent by email to Mr B… and GLDR on 29 March 2010 and was signed on 4 April 2010 by GLDR, which sent the signed copy by email to Mr Mohammed Y… and to Mr B… on the same day, and finally, that it is not disputed that the contract was subsequently executed by consorts Y… who directly gave instructions to firm A… and settled its first invoices, which does not result in acceptance by Mr Ali X… Ali Y…

Z…, Mr Marzouq Ali X… Ali Y…

Z… and Mr Mohammed Ali X… Ali Y…

Z…, of the arbitration clause contained in the engagement letter of 29 March 2010. Therefore, the Court of Appeal did not legally justify its decision with regard to Article 1520-1 of the Code of Civil Procedure.

3°/ alternatively, only the common will of the contracting parties has the power to vest the arbitrator with his jurisdictional power. The mere knowledge of an arbitration clause provided in a contract that was negotiated and signed by a third party, even if it is the representative of the one of the counterparties, is not sufficient to presume its acceptance. In ruling as it did, on the basis that consorts Y… cannot “without contradicting themselves, argue as they do that GLDR was in charge of negotiating the agreement with firm A… on their behalf but that they themselves were not bound by certain terms of this agreement, of which they were nonetheless fully aware before its signature”, the Court of Appeal did not legally justify its decision in light of Article 1520-1 of the Code of Civil Procedure.

4°/ alternatively, by ruling as it did, by reason that consorts Y… “cannot, without bad faith, hide behind the circumstance, which is irrelevant before this court, that under Emirati law an arbitration clause may only be validly signed by a representative if he is empowered by a special power of attorney to this effect”, while the partial award of 17 July 2012 demonstrates that consorts Y… specifically argued before the sole arbitrator that, in the absence of an express power of attorney given to the law firm GLDR, the arbitration clause was to be held null and void in accordance with the laws of the United Arab Emirates, which should be applied to the validity of the clause and to the capacity and power of GLDR to act as their representative, the court appeal violated Articles 1466, 1506-3 and 1520-1 of the Code of Civil Procedure.

However, the judgment notes that the first engagement letter empowered the London law firm Eversheds with the representation of consorts Y… in the arbitration between them and the Greek company, that the second engagement letter instructed Mr A… to pursue this mission and that these letters were signed by the firm GLDR. The judgement also notes that, on 23 February 2010, Mr A… sent an electronic message to the group’s financial auditor Y… and to Mr Mohammed Y… to submit to them the draft contract stipulating the arbitration clause, and that, on 29 March 2010, the draft engagement letter signed by Mr A… was, once again, sent to the financial auditor and to GLDR. The latter, which signed the letter on 4 April 2010, sent it to Mr Mohammed Y… and to the financial auditor on the same day. Finally, the judgement notes that this contract was subsequently signed by consorts Y… who directly gave instructions to firm A… and settled its first invoices. Having shown that consorts Y… had the will to submit to arbitration, the requirement of good faith could be enforceable against them. Moreover, having shown that the powers of the Emirati law firm were apparent, firm A…’s belief in the commitment of consorts Y… was legitimate, the court of appeal correctly deduced from the foregoing that the arbitral tribunal was competent. The ground cannot be upheld.

FOR THESE REASONS:

DISMISSES the appeal.

Condemns consorts X… Ali Y… Z… to pay the costs.

Having regard to Article 700 of the Code of Civil Procedure, dismisses their claim and condemns them to pay to A… and Associates Limited the sum of 5,000 euros.

Thus done and ruled by the Court of Cassation, First Civil Chamber, and delivered by the President during his public hearing of the sixteenth of march two thousand and sixteen.