Paris Court of Appeal, No. 14-21.345 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, First Pole, First Chamber, 10 January 2017, No. 14-21.345

MIDEX AIRLINES LLC

vs.

AERO VENTURES LLC

In January 2011, the American-based company (Florida) AERO VENTURES LLC sold to the Emirati-based company MIDEX AIRLINES LLC (MIDEX) three turbojet engines which were delivered on 16 February 2011.

MIDEX considered that one of the engines was defective and commenced arbitration proceedings on 31 January 2012 under the arbitration clause provided for in the contract.

By an award rendered in Paris on 6 May 2014, the arbitral tribunal constituted, under the aegis of the International Chamber of Commerce, of Mr. Y, sole arbitrator, condemned MIDEX to pay AERO VENTURES the sum of 724,000 USD.

MIDEX filed an action for annulment on 24 October 2014.

By an order of 19 March 2015, the Pre-Trial judge rejected AERO VENTURES’s submissions which stated that the appeal should be declared inadmissible.

By submissions notified on 22 September 2015, MIDEX requested the court to annul the award and to condemn the opposing party to pay the sum of 10,000 euros pursuant to Article 700 of the Code of Civil Procedure. It invokes the violation of international public policy, the arbitrator’s disregard of his mission and the violation of the adversarial principle.

By submissions notified on 16 May 2015, AERO VENTURES asked the court to dismiss the appeal and to condemn MIDEX to pay the sum of 15,000 euros pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH:

On the first ground for annulment based on the violation of international public policy (article 1520-5 of the Code of Civil Procedure):

MIDEX alleges that the award was made after the expiry of the conventional duration of the arbitration, which was extended at the discretion of the Court of the I.C.C., by virtue of a discretionary clause, without the parties giving their agreement, or even being informed, and within a period of time which cannot be regarded as reasonable within the meaning of Article 6 § 1 of the European Convention for the Protection of Human Rights.

Whereas according to article 30 of the Rules of Arbitration of the International Chamber of Commerce, which came into force on 1 January 2012: ‘1° The Arbitral Tribunal shall render its final award within a period of six months. This period shall begin (…) on the day on which the last signature of the Arbitral Tribunal or of the parties is affixed to the Terms of Reference (…). 2° The Court may, upon a reasoned request of the Arbitral Tribunal or, if necessary, of its own motion, extend this time limit if it deems it necessary’;

Whereas in this case the request for arbitration was filed with the International Chamber of Commerce on 31 January 2012 and the sole arbitrator appointed on 23 August 2012; that the statements of claim and defense were exchanged between 7 January 2013 and 9 April 2013, in accordance with the arbitration timetable; that the hearing was held by the arbitrator on 21 and 22 May 2013; that the post-hearing briefs were exchanged on 24 June 2013; that the arbitrator declared the proceedings closed on 15 July 2013;

Whereas the Terms of Reference having been signed by the arbitrator and the parties on 26 October 2012, the initial period within which the award was to be made expired on 26 April 2013; that on 18 April 2013, the ICC Court extended this period to 31 July 2013; that further extensions were granted on 25 July, 26 September, 31 October, 29 November 2013, then on 30 January, on 27 March and finally on 24 April 2014 until 30 May 2014; that the award was made on 6 May 2014;

Whereas, firstly, since most of the extensions took place after the closure of the proceedings, AERO VENTURES cannot complain to MIDEX that it did not raise before the arbitrator the ground based on the expiry of the arbitration period;

Whereas, secondly, pursuant to the abovementioned Article 30 of the Rules of Arbitration, it was for the International Court of Arbitration of the I.C.C., within the framework of its institutional functions of organizing and supervising the procedure, to extend on behalf of the parties the time limit within which the award had to be made, without any provision of these Rules providing that the Court should seek the opinion of the parties before deciding to extend the time limit, or even notify them of its decision to do so, the provisions of Article 27 of the Rules, according to which, as soon as possible after the last hearing, the Arbitral Tribunal shall inform the Secretariat and the parties of the date on which it intends to submit its draft Award to the Court for approval, being foreign to the mechanism of extension and, in any event, not included in the international public policy;

Whereas, thirdly, the stipulation by which the parties invest an arbitration institution with the power to grant them extensions of the conventional time limit for arbitration, without limitation and without giving reasons, is not of a discretionary nature, since this mission is entrusted to a pre-constituted third party, independent of the parties as well as of the arbitrators;

Whereas, finally, the alleged disregard of the right to be judged within a reasonable time is not a ground for the annulment of the award, and can only be used as a basis for a claim of compensation if it were shown that damage had resulted from it;

Whereas the first ground for annulment can only be ruled out;

On the second ground for annulment based on the arbitrator’s disregard of his mission (article 1520-3 of the code of civil procedure):

MIDEX argues that the arbitrator failed to apply the law of the State of Florida, applicable to the contract, to the claims for engine repair costs. Whereas it follows from paragraphs 59 to 67 of the award that the arbitrator applied the provisions of Florida law to the entire dispute submitted to him, and from paragraph 111 that he rejected the claim for reimbursement of the attempts to repair the disputed engine, for lack of precision as to the reason and nature of these expenses, which did not call for any specific development on Florida law;

That the ground must be set aside;

On the third ground for annulment alleging violation of the adversarial principle (in French Principe de la contradiction) (Article 1520-4 of the Code of Civil Procedure):

MIDEX submits that the arbitrator held ex officio that the claims were not reasoned or detailed even though they were accompanied by invoices, that it was up to the arbitrator to invite it, if necessary, to specify its claims and that, moreover, the defendant had not opposed their admission on this alleged ground of imprecision.

Whereas, firstly, the adversarial principle requires only that the parties should have been able to make their claims known in fact and in law and to discuss those of their adversary in such a way that nothing which served as a basis for the arbitral tribunal’s decision could have escaped their adversarial debate;

Whereas, secondly, the arbitrator is under no obligation to submit his reasons to a contradictory discussion between the parties in advance;

Whereas, on the one hand, it is not inferred from the award and it is not alleged that AERO VENTURES would have agreed to the claim for compensation costs presented by MIDEX; whereas it was therefore incumbent on MIDEX to demonstrate the merits of the claim and on the arbitrator to assess whether this demonstration was made;

Whereas, on the other hand, it is solely for the arbitral tribunal to decide what additional documents or details it deems necessary for the resolution of the dispute, and its assessment should not be open to question before the judge of the annulment, who is prohibited from the revision of the award on the merits;

Whereas the ground cannot be upheld;

Whereas it follows from the foregoing that the action must be dismissed;

On article 700 of the code of civil procedure:

Whereas MIDEX, which is not successful, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure and will be condemned on this basis to pay AERO VENTURES the sum of 10,000 euros;

FOR THESE REASONS:

Dismisses the action for annulment of the award rendered in Paris on 6 May 2014 between the parties.

Condemns the company MIDEX AIRLINES to the costs and to pay the company AERO VENTURES LLC the sum of 10,000 euros in application of article 700 of the code of civil procedure.

Dismisses any other request.