Paris Court of Appeal, No. 15-13.466 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, First Pole, First Chamber, 10 January 2017, No. 15-13.466

MR. B X

vs.

SAS POM’ALLIANCE

By an award rendered on 27 January 2014, the French Committee for the Rules and Practices of the Inter-European Potato Trade (RUCIP), ruling as a first-degree arbitration commission, condemned Mr. B X, a farmer domiciled and operating in Italy, to pay the French company POM’ALLIANCE the sum of 68.469,25 euros in respect of unpaid invoices on a potato delivery contract concluded on 21 March 2011 through the intermediary of the brokerage company Z A, in addition to 10,000 euros in damages for abusive resistance, 5,000 euros in legal costs and 5,730 euros in reimbursement of the advance paid for arbitration costs. This award was declared enforceable by order of the delegate of the President of the Paris Trial Court (Tribunal de Grande Instance de Paris) dated 1 October 2014.

By declaration of 1 July 2015, Mr. B X brought an action for annulment of the award.

By an order of 22 September 2016, the Pre-Trial Judge rejected the ground of inadmissibility opposed by POM’ALLIANCE.

By submissions notified on 30 November 2015, Mr. B X requests the court:

in limine litis, to declare null and void the notification of the arbitral award and the order for its enforcement,
to declare his action admissible, to annul the arbitral award in question, and hence the order of exequatur, and to condemn POM’ALLIANCE to pay him the sum of 5,000 euros pursuant to Article 700 of the Code of Civil Procedure.

He invokes the lack of jurisdiction of the arbitral tribunal, the irregularity of its composition, the disregard of the adversarial principle and the violation of international public policy.

By submissions notified on 20 October 2016, POM’ALLIANCE asks the court to dismiss the claims, to declare the award valid and to condemn Mr. B X to pay 3,000 euros in damages for abusive proceedings and 5,000 euros pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH:

On the first ground for annulment based on the lack of jurisdiction of the arbitral tribunal (article 1520-1 of the code of civil procedure):

Mr. B X explains, in the first place, that the documents entitled “confirmation”, considered by the arbitral tribunal as materializing the contracts between the parties, are not signed by him, so that there is no demonstrated consent to arbitration and even less to arbitration by a RUCIP national committee which is not that of the domicile of the defendant.

Whereas by virtue of a substantive rule of international arbitration law, the arbitration clause is legally independent of the main contract which contains it directly or by reference and its existence and effectiveness are to be assessed, subject to the mandatory rules of French law and international public policy, according to the common will of the parties, without it being necessary to refer to a State law;

Whereas the dispute between the parties is related to a contract for the delivery of 100 tons of potatoes of various varieties, which POM’ALLIANCE claims was concluded on 21 March 2011 with Mr. B X through the international brokerage company Z A, and which gave place to the issuance of nine invoices from 2 April to 10 June 2011 for a total amount of 68,469.25 euros, which remained unpaid;

Whereas if Mr. B X, who did not appear before the arbitration body, maintains before the annulment judge that he did not sign a contract or receive the disputed invoices, it follows from his exchanges with the secretariat of the RUCIP committee that he did not at any time contest the very existence of the contract, merely maintaining that he had not received delivery of the potatoes, and adding, in a letter subsequent to the first-degree sentence, that he had not received the invoices either, that he had not signed a consignment note and that the claim was time-barred under Italian law; that Mr. B X’s challenge therefore, in reality, relates to the non-performance of the contract and not to the reality of the contractual relationship; that the existence of the agreement of will, which is not subject to any formal requirements, is thus demonstrated; that, moreover, article 3 of RUCIP (2006 edition) provides that business may be concluded verbally and through an intermediary and that if a business concluded verbally must be confirmed in writing by at least one of the contracting parties, the confirmation established by an intermediary is valid when neither of the parties confirms itself;

Whereas the delivery confirmations issued by the company Z A, which stipulate: ‘Any dispute arising from this contract and occurring either between the seller and the buyer, or between one of the parties and ourselves, shall be submitted to arbitration by the RUCIP Arbitration Commission of Paris which shall have sole jurisdiction in the first and second degree’, should therefore be regarded as the expression of the common will of the parties, it being of little importance that they do not bear the signature of Mr. B X;

Whereas RUCIP 2006 provides in article 1.3 that: ‘The arbitration commission competent at the First Degree is that of the country of the defendant, and the one competent at the Second Degree that of a third country, except in the case of a dispute between contractors having their headquarters in the same country and/or unless otherwise agreed between the parties’;

Whereas the parties having intended to derogate from the competence of the RUCIP committee of the defendant’s domicile, the French committee, designated by the arbitration clause, was competent to settle the dispute; Whereas the first ground will therefore be set aside;

On the second ground for annulment, based on the irregularity of the composition of the arbitral tribunal (article 1520-2 of the code of civil procedure):

Mr. B X argues that he did not appoint his arbitrator since he was waiting for the arbitration rules, which he had requested from the secretariat of the RUCIP committee, that the award does not indicate how the arbitration commission was composed nor does it specify the profession of the arbitrators, so that no control could be exercised over the regularity of the appointments in the light of the arbitration rules and the qualifications of the members of the arbitration commission.

Whereas according to articles 3.3 and 3.4 of the RUCIP Rules of Arbitration (2006 edition): ‘3.3 After receipt of the advance deposit, the Secretariat shall immediately notify the defendant of the request for arbitration, informing him of the content of the request made against him and attaching the list of approved arbitrators, so that he can appoint an arbitrator.

3.4 If, within fifteen days of receipt of this list, the defendant has not informed the Secretariat of the name of the arbitrator chosen by him, the arbitrator shall be appointed ex officio by the National Delegate’;

Whereas by registered letter dated 30 July 2013, the secretariat of the French RUCIP Committee communicated to Mr. B X the request for arbitration and a list of arbitrators, recalling the above stipulations; whereas by registered letter dated 13 August 2013, Mr. B X requested the transmission of a complete copy of the RUCIP rules for fresh ware potatoes and potatoes for zootechnical use, as well as a complete list of arbitrators and not only Italian arbitrators; that this list and the RUCIP 2012 (Italian version) were sent to him by e-mail on 5 September 2013, to which he replied by e-mail on 11 September 2013, acknowledging receipt and requesting the transmission of the European RUCIP Committee rules of 1986 with the subsequent amendments of 1993, 2000 and 2006; that no follow-up was given to this exchange on either side and that on 28 October 2013 a registered letter was sent to M. B X that the hearing would take place on 14 January 2014 at 2.30 p.m., XXX in Paris 8e, and that the arbitration commission would be composed of Mr. D E, president, and Mr. F G and Mr. J K L, arbitrators;

Whereas the award mentions that G was appointed by the appellant and that Mr. J K L was appointed ex officio by the National Delegate;

Whereas, first of all, the parties having contracted in accordance with the rules and customs in force in the potato trade, they are presumed to know the content of the award; whereas Mr. B X cannot argue that he was waiting for all the successive versions of RUCIP since 1986 to be sent to him by the secretariat of the Arbitration Committee in order to appoint his arbitrator;

Whereas, secondly, the procedures for appointing the co-arbitrator, when the defendant fails to make his choice known within the time limit, result from the provisions of the arbitration rules recalled by the secretariat in its registered letter of 30 July 2013; whereas Mr. B X, who has not appointed an arbitrator, neither within fifteen days of that letter nor within fifteen days of the dispatch of a list containing all the arbitrators and not only the names of the Italian arbitrators, cannot complain that the supplementary rules of appointment of which he was aware have not yet been recalled in the Award;

Whereas, thirdly, the professional qualifications of the arbitrators result from the very conditions under which the lists are drawn up by each National Committee, and that the parties may challenge an arbitrator only on the grounds and within the time limits laid down in Articles 3.5 and 3.6, which Mr. B X refrained from doing; whereas, since the arbitrators appointed in the present case are actually on the list, the appellant may not complain that their profession is not mentioned;

Whereas it follows from the foregoing that the ground alleging irregularity in the composition of the arbitral tribunal can only 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):

M. B X argues, firstly, that, contrary to what the RUCIP rules provided for in case of disagreement of the parties on the language of the arbitration, the arbitral tribunal did not decide on the language of the proceedings, secondly, that the award is based on documents which were not attached to the initial request for arbitration and which the arbitral tribunal did not ensure that they had been communicated, thirdly, that no written memorandum from the opposing party was sent to him although he had indicated that he could not be present at the hearing, and lastly that the draft award of the arbitration commission at first instance was declared final without taking into account the opposition he had expressed.

Whereas, in the first place, according to article 2.1 of the Arbitration Rules: ‘The language of the proceedings shall be proposed by the appellant. In the event of disagreement between the parties, or between the parties and the arbitral tribunal, the president of the arbitral tribunal shall decide on the language to be used, taking into account the particular circumstances of each case and the best interests of the parties. The language must in this case be necessarily French, German, English, Spanish or Italian’;

Whereas, contrary to Mr. B X’s assertion, the mere fact that he replied to the secretariat in Italian does not show a disagreement on the language of arbitration and that, moreover, if that had been the case, it would have been open to the President of the Arbitral Tribunal to choose French;

Whereas, secondly, POM’ALLIANCE maintains that all the documents were communicated to Mr. B X on 28 October 2013;

Whereas it results from the registered letter that the latter sent on 25 February 2014 to the President of the Arbitration Commission that he was indeed in possession of the consignment notes whose probative value he criticizes in this letter; whereas, contrary to what he claims before the court, he did not receive only the documents attached to the arbitration motion but all the documents produced in the arbitration proceedings;

Whereas, thirdly, it follows from Article 5 of the Rules of Arbitration that the proceedings shall be oral and that the production of written pleadings is a mere option for the parties; whereas M. B X, who had received POM’ALLIANCE’s request and who, without alleging that he was unable to appear, sent a letter on 10 December 2013 to the secretariat of the RUCIP Committee in which he indicated that he would not attend the hearing on the grounds that the RUCIP rules communicated to him were not the ones in force, that the documents produced in connection with the disputed contract were of no value and that the main difficulty was the non-delivery of the goods, cannot complain about the fact that, in accordance with the arbitration rules, the appellant’s grounds were presented orally before the arbitrators;

Whereas, fourthly, according to article 6 of the arbitration rules: ‘6.1 The request for a Second Degree examination must be sent by registered letter with acknowledgement of receipt or written telecommunication to the European Delegate in order to be brought before a Second Degree Arbitration Commission within 30 days of receipt by registered letter with acknowledgement of receipt of the award at First Degree, failing which it will be time-barred. 6.2 The request must be summarily motivated and contain an indication of the award against which the Second Degree proceedings are initiated (the place and date where it was made and the date of receipt of the notification).

The request must also indicate the desired nationality of one of the Arbitrators, if the parties are of different nationalities’;

Whereas by registered letter with a request for acknowledgement of receipt sent on 25 February 2014 to the President of the Arbitration Commission, with the subject line: ‘Opposition to the draft award file n° 13-237N case SA POM’ALLIANCE v. Mr. B X’, the latter explains the reasons for which he contests the decision and concludes: ‘We hope that Mr. D E, President of the RUCIP Commission, after re-examining the procedure, will clarify the matter and consequently annul your unfair decision’;

Whereas by registered letter with acknowledgement of receipt dated 10 March 2014 the RUCIP Committee secretariat asked Mr. B X to clarify the terms of his letter, invited him to confirm whether he intended to appeal against the award at first instance and reminded him that, if so, he would have to pay a deposit within the time limit set, failing which the appeal would be considered withdrawn;

Whereas in the absence of an answer from Mr. B X to this last letter, a certificate of final award was issued on 28 May 2014 by the secretariat of the RUCIP Committee;

Whereas, contrary to Mr. B X’s assertion, his letter of 25 February 2014, which was addressed not to the European Delegate as provided for in the Regulation but to the president of the arbitral tribunal, and which did not specify the desired nationality of one of the arbitrators, was in the form of a request for re-examination of the case by the same tribunal rather than an appeal; whereas the letter was sufficiently ambiguous for the secretariat of the arbitration institution to ask the person concerned, without prejudice to his rights, to clarify his intentions; whereas Mr. B X, who did not comply with this request and evaded the obligation to make an advance payment, is not entitled to claim that his right to appeal under the arbitration rules has been disregarded;

Whereas it follows from the foregoing that the third ground must be set aside;

On the fourth ground alleging infringement of international public policy (Article 1520-5 of the Code of Civil Procedure):

M. B X argues that it would be contrary to international public policy to have the recognition or enforcement in France of an award made without an arbitration agreement, by an arbitral tribunal which, contrary to RUCIP’s provisions, did not seat in Italy, none of whose members had been chosen by him and whose appointment procedures were not specified, and before whom the proceedings, which had been conducted in the language of the opposing party over which he had no fluency, had been marked by violations of the adversarial principle, equality of rights and the rights of the defense, to the point of depriving him of his right of appeal against the award.

Whereas, however, as it has been stated, none of these claims is well-founded; whereas the fourth ground must be ruled out;

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

On the claim for annulment of the act of service of the award and of the order for enforcement:

Whereas the action for annulment having been declared admissible by the Pre-Trial Judge, it is not for the court seized pursuant to Article 1520 of the Code of Civil Procedure to rule on the regularity of the notification of the award and the exequatur order;

On the claim for damages for abusive recourse:

Whereas it is not proven that there was abuse in the exercise of the legal recourses; whereas this request will be rejected;

On article 700 of the Code of Civil Procedure:

Whereas Mr. B X, who is unsuccessful, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure and will be condemned on this basis to pay POM’ALLIANCE the sum of 5,000 euros;

FOR THESE REASONS:

Dismisses the action for annulment of the award rendered between the parties on 27 January 2014.

Condemns Mr. B X to pay the costs which may be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure and to pay the company POM’ALLIANCE of the sum of 5,000 euros pursuant to Article 700 of the Code of Civil Procedure.

Dismisses all other claims.