Paris Court of Appeal, No. 16/02572

Paris Court of Appeal, 5 October 2016, No. 16/02572

Judicial Chronology:

Evry Tribunal of Grande Instance, Judge of enforcement, 7 October 2015, No. 15/05236

Evry Tribunal of Grande Instance, Judge of enforcement, 19 January 2016, No. 15/0523

Paris Court of Appeal, Pole 4 - Chamber 8, 27 June 2017, No. 16/01314

HULLEY ENTERPRISES LIMITED

Vs.

SA ARIANSPACE

FACTS AND PROCEEDINGS

The Cypriot company Hulley Enterprises Limited was a shareholder of the Russian oil company Yukos between 1999 and 2007, when it was expropriated by the X Y.

On 18 July 2014, an arbitral tribunal in The Hague issued a final award, following arbitration proceedings, declaring that X Y failed to comply with its obligations under the Energy Charter Treaty and ordering X Y to pay Hulley Enterprises Limited compensation of USD 39,971,834,360, as well as EUR 3,388,197 for the reimbursement of arbitration costs and USD 47,946,190 for legal costs incurred by Hulley Enterprises Limited.

The President of the Paris Tribunal of Grande Instance issued an enforcement order (in French Ordonnance d’exequatur) on 1 December 2014 to enforce the final award.

On 30 June 2015, Hulley Enterprises Limited executed a garnishment on debts owed to Arianespace SA, rendering the latter’s obligations to X Y unavailable, including its federal agencies, notably Roscosmos, the Russian Federal Space Agency.

This garnishment was notified to the X Y by a deed delivered to the Public Prosecutor’s Office of the Evry Tribunal of Grande Instance on 7 July 2015 for the purpose of notification through diplomatic channels.

By writs notified on 9 and 21 July 2015 respectively, Arianespace SA and Roscosmos Russian Federal Space Agency (hereinafter Roscosmos) challenged the garnishment before the Evry enforcement judge. The cases were consolidated during the course of the proceedings.

By judgment of 19 January 2016 (No. RG 15/05236), the enforcement judge:

  • ordered the release of the garnishee executed on 30 June 2015 in the hands of Arianespace SA against the Russian federal space agency Roscosmos,

  • rejected the remaining part of more extensive or contrary requests,

  • said there is no need to apply Article 700 of the Code of Civil Procedure,

  • ordered Hulley Enterprises Limited to pay the costs.

Hulley Enterprises Limited appealed this decision on 19 January 2016.

By acts of bailiffs dated 27 and 28 January 2016, Hulley Enterprises Limited summoned Arianespace SA and the Russian Federal Space Agency “Roskosmos” before the First President of the Paris Court of Appeal, on the basis of Articles L. 111-5 of the Code of Judicial Organisation, R 121-22 of the Code of Civil Enforcement Proceedings, 455 and 700 of the Code of Civil Procedure and Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, in order to obtain a stay of enforcement of the measures taken by the enforcement judge and order Arianespace SA and Roscosmos to pay the costs and the sum of EUR 15,000 pursuant to Article 700 of the Code of Civil Procedure.

By submissions filed and supported orally at the hearing, Hulley Enterprises Limited maintained its application for a stay of enforcement of the disputed judgment while seeking the rejection of the counterclaims made by the opposing parties and increasing the compensation under Article 700 of the Code of Civil Procedure to the sum of EUR 30,000.

Hulley Enterprises Limited claims that:

  • as a preliminary point, since the release decision has not been implemented, the claim by Arianespace SA and Roscosmos that the application for a stay of enforcement is devoid of purpose is unfounded,

  • the Paris Court of Appeal, ruling on matters of enforcement, does not have jurisdiction and/or does not have the authority to examine requests from the X Y to challenge the enforcement order on the basis of which Hulley Enterprises Limited is entitled to take enforcement measures against it, and furthermore that the requests for nullity and lapsing of the garnishment are unfounded,

  • the enforcement judge of the Evry Tribunal of Grande Instance breached its obligations of reasoning and impartiality by issuing an unreasoned judgment on 19 January 2016 which was subsequently supplemented,

  • the debts seised on 30 June 2015, resulting from the contracts concluded by Roscosmos as X Y, are property belonging to its debtor X Y,

  • Roscosmos is an entity of the Russian state.

By submissions filed and argued orally at the hearing, Roscosmos Russian Federal Space Agency and Roscosmos State Corporation, voluntary intervener, requests the court, on the basis of Articles R. 121-15, R. 121-18, R. 121-22 et seq. of the Code of Enforcement Civil Procedure, articles 452, 453, 455, 458, 649, 693, 694 and 700 of the Code of Civil Procedure, to dismiss the opposing claims and to order Hulley Enterprises Limited to pay them EUR 1,000,000 in damages for abusive proceedings, in addition to EUR 20,000 each pursuant to article 700 of the Code of Civil Procedure. Also, they sought to order Hulley Enterprises Limited to pay a civil fine on the basis of article R. 121-22 of the Code of Civil Enforcement Proceedings and to pay the costs.

They argue that:

  • The action of Hulley Enterprises Limited before the First President is without object since the unavailability of funds ceased before the claimant’s action was brought,

  • There is no serious ground for the annulment or reversal of the judgment of 19 January 2016 since:

  • The garnishment is null and void since Roscosmos is not the X Y and cannot be assimilated to it, and for lack of the entries required by the code of civil procedure for performance,

  • The garnishment is null and void pursuant to Article R 211-3 of the Code of Civil Procedure,

  • The enforcement judge gave reasons for its decision and respected the due process (in French Principe de la contradiction),

  • Roscosmos has management and patrimonial autonomy and is not an entity of the XY,

  • Hulley Enterprises Limited has no right to seize the debts owed by Arianespace SA to Roscosmos.

By submissions filed and supported orally at the hearing, Arianespace SA requests this court, on the basis of articles R. 121-15, R. 121-18 and R. 121-22 of the code of Civil Enforcement Proceedings, articles 452, 453, 455, 458, 649, 693, 694 and 700 of the code of civil procedure, to :

  • primarily, dismiss Hulley Enterprises Limited’s application for a stay of enforcement for lack of purpose,

  • in the alternative, dismiss Hulley Enterprises Limited’s application for a stay of enforcement on the ground that there are no serious grounds for the annulment and/or reversal of the said decision,

  • as a counterclaim, order Hulley Enterprises Limited to pay the sum of EUR 100,000 as damages for abusive proceedings,

  • order Hulley Enterprises Limited to pay the costs and the sum of EUR 20 000 pursuant to Article 700 of the Code of Civil Procedure.

It claims that:

  • the application for a stay of enforcement of the judgment of 19 January 2016 has no purpose, since the unavailability of the funds seized has definitely ceased prior to the application for a stay of enforcement of the decision ordering the release of the garnishment of 30 June 2015. This was due, on the one hand, to Arianespace’s waiver to regularise notification to the clerk of the enforcement judge on 18 January 2016, and on the other hand, to Arianespace’s notification to Hulley Enterprises Limited of the judgment of 19 January 2016, at the request of Arianespace and Roscosmos prior to the summons to stay the enforcement of the judgment,

  • there are no serious grounds for the annulment and/or reversal of the judgment of 19 January 2016:

  • since, on the one hand, the enforcement judge has complied with the provisions of Articles 452 and 453 of the Code of Civil Procedure relating to the issuing and the availability of its decision, which is, inter alia, reasoned and detailed in accordance with Article 458 of the Code of Civil Procedure,

  • since, on the other hand, Roscosmos is a separate and autonomous entity, is not an entity of XY, it did not act on behalf of X Y in its contractual relations with Arianespace SA, and since the debts of Arianespace SA are not allocated to XY, Roscosmos is not liable for the debts of X Y. The debts seized in the hands of Arianespace SA cannot serve as a pledge to Hulley Enterprises Limited within the meaning of Articles 2285 of the French Civil Code and L 112-1 of the French Code of Civil Procedures for Performance, that Arianespace SA is not a debtor of X Y.

By submissions of “voluntary incidental intervention” filed and upheld at the hearing, X Y requests, on the basis of Articles 328, 330, 1504, 1514, 1516 and 1520 of the Code of Civil Procedure, Article L. 111-2 et seq. of the Code of Civil Enforcement Proceedings, to declare its voluntary incidental intervention admissible and to “hold admissible and well-founded all the claims of Roscosmos Russian Federal Space Agency, Roscosmos Corporation and Arianespace SA, arising from the irregularity of the garnishments made by Hulley Enterprises Limited”.

X Y claims that the legal document, on which Hulley Enterprises Limited based its garnishment, has lapsed as a result of the annulment of the arbitral award.

The public prosecutor concluded orally that the application for a stay of proceedings was well-founded.

UPON WHICH,

1 - on the admissibility of the application for a stay of enforcement

* on the assessment of the validity of the enforcement order

Whereas pursuant to Article L. 111-3 of the Code of Civil Enforcement Proceedings, an arbitral award declared enforceable by a decision not subject to an appeal staying its enforcement, constitutes an enforceable award;

Moreover, Article 1526 paragraph 1 of the Code of Civil Procedure stipulates that the claimant’s appeal against the award and the appeal against the order granting the enforcement (in French Exequatur) are not suspensive;

Whereas by order of 1 December 2014, the President of the Paris Tribunal of Grande Instance granted enforcement (in French Exequatur) to the final award of 18 July 2014 issued by a foreign arbitral tribunal; whereas although X Y filed an appeal against this order on 3 June 2015 pursuant to the provisions of Article 1525 of the Code of Civil Procedure, this appeal is not suspensive pursuant to the aforementioned provisions;

Whereas it is established that the challenged provisional garnishment was carried out on the basis of the final award of 18 July 2014 issued by a foreign arbitral tribunal and which became enforceable by an enforcement order (in French Ordonnance d’exequatur) of 1 December 2014 by the President of the Paris Tribunal of Grande Instance;

Whereas the X Y requests the court ruling on enforcement proceedings to declare “lapsed” the document on the basis of which the measure of enforcement was carried out on the grounds that the final award of 18 July 2014 was annulled by the District Court of The Hague on 20 April 2016;

Whereas, however, the challenge to the validity of the final award which was granted enforcement (in French Exequatur) is a matter for the sole court of appeal already seised, by the X Y, on 3 June 2015, of the claimant’s appeal against the enforcement order (in French Ordonnance d’exequatur). This court of appeal is solely responsible for hearing the complaints relating to this decision and the impact of the annulment of the final award issued by a foreign arbitral tribunal on the order granting enforcement (in French Exequatur);

That the ground raised by the X Y must therefore be rejected;

* on the existence of a purpose to the request of the company Hulley Enterprises Limited and the unavailability of funds

Whereas Article R. 121-8 of the Code of Civil Enforcement Proceedings stipulates that the decision to release the enforcement or protective measures shall, within the limits of its purpose, entail a stay of proceedings as soon as it is pronounced and the removal of any effect of unavailability as soon as it is notified;

In application of the provisions of article R. 121-15 of this same code, each of the parties may inform the clerk’s office that they waive notification of the decision by registered letter with acknowledgement of receipt and in this case it is considered to have been notified on the date of its issuance;

Whereas SA Arianespace, Roscomos and Roscosmos Corporation d’Etat claim that SA Arianespace waived its right to be notified of the judgement, by letter dated 18 January 2016 - the day before the said judgment ordering the release of the seizure -. The letter was addressed to the enforcement judge of the Evry Tribunal of Grande Instance who withdrew the judgement as soon as it was pronounced - and with regard to Arianespace SA –, also withdrew any effect of the unavailability of the seized funds and consequently the summons to stay the enforcement of the judgment issued on 27 January 2016, i.e. after the date on which this decision was pronounced, Hulley Enterprises Limited’s request is without purpose;

Whereas, however, the unilateral waiver of notification by Arianespace SA can only have effect in respect of Arianespace SA;

Moreover, pursuant to Article 503 of the Code of Civil Procedure, judgments may be enforced against those to whom they are opposed only after they have been notified, unless enforcement is voluntary;

That in this case the clerk’s office of the enforcement judge of the Evry Tribunal of Grande Instance notified the judgment to Hulley Enterprises Limited on 3 February 2016 in accordance with the procedures set out in the first paragraph of Article R. 121-15 of the aforementioned code;

Hulley Enterprises Limited could not therefore be deprived of its right to apply for a stay of enforcement of the judgment even before it was notified of the judgment;

Whereas Arianespace SA, Roscosmos and Roscosmos Corporation d’Etat mention that the judgment of 19 January 2016 ordering the release of the garnishment was notified to Hulley Enterprises Limited on 27 January 2016 at 3.14 p.m. and on 27 January 2016 at 3.15 p.m. respectively, i.e. prior to the summons to stay the enforcement of the said judgment;

Whereas, however, the notification of a judgment of release to the debtor does not in itself characterise an effective enforcement of the said decision;

That Arianespace SA and Roscosmos and Roscosmos State Corporation do not submit any material evidence of an effective enforcement of the 19 January 2016 judgement, whereas Arianespace SA claims in support of its claim for damages that “Roscosmos and the Russian industrialists have not been paid for more than a year now”, thus acknowledging that it has not paid off its debts to Roscosmos ;

Whereas finally, Arianespace SA alleges a “release of the garnishment” which would have been delivered by a bailiff’s act on 27 January 2016 at 3.31 p.m. from Roscosmos to Arianespace SA and from Arianespace SA to itself on 27 January 2016 at 3.30 p.m.;

However, these “releases of seizure” by extrajudicial acts have no legal effect and cannot be considered as effective enforcement of the release decision of 19 January 2016;

Whereas, consequently, it has not been shown that Arianespace SA had dispossessed itself of the funds before the summons to the first president, and thus effectively executed the judgment;

Whereas the application for a stay of proceedings brought by Hulley Enterprises Limited is therefore not devoid of purpose; whereas the grounds alleged by Arianespace SA, Roscosmos and Roscosmos Corporation d’Etat must therefore be dismissed;

2 - on the merits of the application for a stay of enforcement

Whereas Article R 121-22 of the Code of Civil Enforcement Proceedings stipulates that “in the event of an appeal, a stay of enforcement of the decisions taken by the enforcement judge may be requested from the first president of the court of appeal. The application is made by summons in summary proceedings issued to the opposing party and notified, if necessary, to the third party in whose hands the garnishment was carried out. Until the day the first president issues the order, the application for a stay of enforcement suspends the proceedings if the contested decision has not jeopardised the continuation of such proceedings; it extends the effects attached to the garnishment and to the provisional measures if the contested decision has ordered the release of the measure. The stay of enforcement is granted only if there are serious grounds for annulling or reversing the decision referred to the court. An applicant for a manifestly unreasonable stay of enforcement may be sentenced by the First President to a civil fine of up to EUR 3,000, without prejudice to any damages that may be claimed”;

* on the lack of reasoning and impartiality of the enforcement judge

Whereas, pursuant to Article 454 of the Code of Civil Procedure, the judgment delivered in the name of the French people shall include in particular the date of the judgment, the names of the judges who deliberated on it, the parties and the lawyers who, where appropriate, represented or assisted them;

Whereas Article 455 of the Code of Civil Procedure also provides that the judgment must state the reasons on which it is based and that it must set out the decision in the form of an operative part;

Whereas, in support of its application for a stay of enforcement, Hulley Enterprises Limited seeks the annulment of the judgment of 19 January 2016 in so far as it was delivered in breach of the obligation to state reasons for court decisions and the obligation of impartiality of the judges, arguing that an undated and unsigned judgment was made available at the registry on 19 January 2016, limited to an operative part in which the Evry enforcement judge ruled on the dispute without giving reasons for its decision, which would was only completed on 27 January 2016 when the judgment was delivered to the parties in its entirety and whose operative part would be different from the operative part delivered on 19 January 2016; whereas Hully Enterprises Limited argues that the enforcement judge’s judgment could only “proceed from a personal assessment which necessarily stems from a preconceived opinion that the parties' grounds were not likely to affect";

Whereas it is a fact that Hulley Enterprises Limited has appealed against a judgment RG 15/05236 issued on 19 January 2016 by the enforcement judge of the Evry Tribunal of Grande Instance, on the basis of which it has applied to this court for a stay of enforcement;

Whereas this decision, which includes a statement of the facts and claims of the parties, also includes a statement of reasons on the “garnishment”, in two pages, as well as on “damages” and “other claims and costs"; whereas this reasoned decision complies with the provisions of Article 455 of the Code of Civil Procedure; whereas the complaint of a personal assessment by the enforcement judge that the parties' arguments were not likely to affect the decision is therefore not established;

Whereas the existence of an “undated and unsigned judgment limited to an operative part” of which the parties could have been aware on 19 January 2016 is not reported in this case, whereas Hulley Enterprises Limited notifies judgment No. RG 15/05236 of 19 January 2016, which it has appealed against and which contains the information provided for in Article 454 of the Code of Civil Procedure and is drafted in accordance with Article 455 of the Code of Civil Procedure, as previously established by this court;

Whereas furthermore Hulley Enterprises Limited has not made any entry of forgery against the contested judgment;

Whereas consequently, the ground alleging a violation by the judge of the enforcement of its obligations of reasoning and impartiality is devoid of the serious character required by article R 121-22 of the code of Civil Enforcement Proceedings and must be rejected;

* on the ownership of seized debts

Whereas pursuant to Article L 211-1 of the Code of Civil Enforcement Proceedings “Any creditor holding an enforceable deed recording a debt that is liquid and due may, in order to obtain payment, seize in the hands of a third party the debts of its debtor on a sum of money, subject to the special provisions for the seizure of salaries provided for by the Labour Code”;

Whereas the conditions of validity of an enforcement measure are exclusively determined by French law; whereas the defendant parties are therefore not entitled to invoke the application of foreign law to determine the assets that may be seized;

Whereas in this case, in order to order the release of the garnishment, the enforcement judge, noting that “nothing” proved that the seized debts related to services provided by Roscosmos under the contracts concluded with Arianespace SA belonged to X Y, considered that the garnishment carried out on 30 June 2015 was affected by an irregularity due to the fault of Hulley Enterprises Limited for having seized the assets belonging to its debtor X Y ;

Whereas the final award of 18 July 2014 ordered X Y to pay Hulley Enterprises Limited an indemnity of USD 39,971,834,360 as well as EUR 3,388,197 for the reimbursement of arbitration costs and USD 47,946,190 for legal costs incurred by the company;

Whereas on 30 June 2015, Hulley Enterprises Limited had a garnishment order executed in the hands of Arianespace SA in respect of X Y “including its political, territorial, ministerial or administrative subdivisions, agencies, entities and/or asset management structures, regardless of their former or current name, including in particular (…) Roscosmos";

Whereas, following this garnishment, Arianespace SA transmitted on 3 July 2015 to the bailiff a “statement of the claims held by Roscosmos against Arianespace SA in accordance with the contractual provisions in force governing (its) relations with this entity”;

On 10 July 2015, Arianespace SA sent the bailiff a copy of the contracts and amendments listed in this statement;

Whereas these contracts indicate that they were concluded between Arianespace SA on the one hand and the “FEDERAL SPACE AGENCY, the federal body of the executive power of the X Y (…) hereinafter referred to as Roscosmos”, in particular, on the other hand;

Whereas on the date of the garnishment of 30 June 2015 Roscosmos Federal Space Agency was governed by a decree of the Russian government, a constituent act defining its status (Roscosmos Regulation); whereas this document determines when Roscosmos, a state body, acts as XY within the framework of the mandates attributed to it by the Russian state or as a separate legal entity under Russian law;

Whereas Chapter I on “General Provisions” of this Regulation stipulates in Article 1 that “the Federal Space Agency (Roscosmos) is a federal body mandated by the executive power exercising the functions of supervision of the implementation of national policy and normative regulation, and in matters of law, provision of public services and management of public assets in the field of space activities, international cooperation in the implementation of joint projects and programmes in the field of space (…)";

Article 2 provides that “The activities of the Federal Space Agency shall be managed by the Government of X Y";

That Chapter II on “Mandates” specifies in Article 5 that “The Federal Space Agency shall carry out the following mandates in the established field of activities:

(…)

5.3. On the basis of and in accordance with the procedures established by federal laws, presidential and governmental actions and decisions of Russia, the Federal Space Agency shall perform the following functions in the field of management of public property and provision of public services in the established field of activities:

(…)

5.3.19: concludes agreements (contracts) with foreign partners, including contracts concerning the implementation of international commercial space programmes and projects, in accordance with the terms and conditions in force";

The Federal Space Agency (Roscosmos) has a mandate from the executive power, the XY, to conclude contracts concerning the enforcement of commercial international space programmes and projects;

Whereas, moreover, in the light of the independent audit report communicated by Hulley Enterprises Limited (its Exhibit 46) retracing the payment transactions taking place between the various banks when Arianespace SA makes a payment to Roscosmos under the contracts, that these funds are stored on credit in a bank account - the “Direction interrégionale des opérations du Fédéral Trésor” - held at Bank Y and represent resources for the " federal budget “;

Whereas the claims arising from the contracts concluded by Roscosmos under mandate from X Y are therefore part of the budget of this X ;

Whereas it follows from all these observations and statements that the complaint made by Hulley Enterprises Limited is based on the failure to take into consideration the mandate entrusted by X Y to Roscosmos in the context of the contracts concluded with Arianespace SA, even though the claims arising from these contracts form part of the federal budget and the Federal Treasury of the Russian State and that the debts seized are therefore the property of X Y, constitutes a serious means of overturning decision No. RG 15/05236 issued on 19 January 2016 by the enforcement judge of the Paris Tribunal of Grande Instance;

Whereas it is therefore appropriate to stay the enforcement of this decision;

3 - on the other claims

Whereas the SA Arianespace, Roscosmos and Roscosmos State Corporation did not characterise a fault of Hulley Enterprises Limited, whose claim is upheld, resulting in an abuse of the right to sue, their claims for damages for abuse of the proceedings must be dismissed;

Whereas Roscosmos and Roscosmos State Corporation are inadmissible to seek the condemnation of Hulley Enterprises Limited of a civil fine, as this is a matter of the judge’s discretion;

Whereas the application of Hulley Enterprises Limited under Article 700 of the Code of Civil Procedure should be granted; whereas SA Arianespace, Roscosmos and Roscosmos Corporation d’Etat are ordered to pay the sum referred to in the operative part of this decision;

Whereas SA Arianespace, Roscosmos and Roscosmos Corporation d’Etat, the losing parties, shall bear the costs.

FOR THESE REASONS:

Order the stay of enforcement of judgment No. RG 15/05236 issued on 19 January 2016 by the enforcement judge of the Evry Tribunal of Grande Instance,

Order Arianespace SA, Roscosmos Russian Federal Space Agency and Roscosmos State Corporation to pay Hulley Enterprises Limited the sum of EUR 10,000 under Article 700 of the Code of Civil Procedure,

Dismiss the claims of Arianespace SA, Roscosmos Russian Federal Space Agency and Roscosmos State Corporation for damages for abusive proceedings and for compensation under Article 700 of the Code of Civil Procedure,

Declare Roscosmos Russian Federal Space Agency and Roscosmos State Corporation inadmissible in their application for a civil fine against Hulley Enterprises Limited,

Order Arianespace SA, Roscosmos Russian Federal Space Agency and Roscosmos State Corporation to pay the costs of these proceedings.

ORDER made available at the Court Registry; the parties having been given prior notice thereof in accordance with the conditions laid down in the second paragraph of Article 450 of the Code of Civil Procedure.