Paris Court of Appeal, No. 15/07642

Paris Court of Appeal, First Pole, First Chamber, 25 April 2017, No. 15/07642

DAMIETTA INTERNATIONAL PORT COMPANY S.A.E (DAMIETTA)

vs.

ARCHIRODON-ARAB CONTRACTORS JOINT VENTURE (JOINT VENTURE)

THE ARAB CONTRACTORS OSMAN AHMED OSMAN & CO

ARCHIRODON CONSTRUCTION (OVERSEAS) CO. S.A

By contract dated 17 June 2007, the Egyptian company DAMIETTA INTERNATIONAL PORT COMPANY SAE (DAMIETTA), holder of a concession for the construction and operation of a fully equipped quay wall in the new container terminal in the port of Damietta (Egypt), awarded the works to Archirodon-Arab Contractors Joint Venture (JOINT VENTURE).

Disputes having arisen between the parties, the JOINT VENTURE initiated arbitration proceedings with the International Chamber of Commerce on 13 April 2010.

The arbitral tribunal composed of Messrs. Blessing and Mantilla-Serrano, arbitrators, and Mr. Salès, chairman, rendered a partial award in Paris on 5 July 2011, in which it declared itself competent ratione temporis, ruling out the ground alleging non-compliance with the mandatory mechanism for the amicable settlement of disputes, which was a prerequisite for arbitration.

In a final award rendered in Paris on 18 July 2013, the arbitral tribunal ordered DAMIETTA to pay the JOINT VENTURE the cumulative amount of USD 138,314,701.15 for the work performed, to allow the joint venture to remove the remaining equipment from the site, and to partially assume the joint venture’s arbitration costs in the amount of USD 1,110,000.

By a statement filed on 9 April 2015, DAMIETTA filed an action for the annulment of both awards, directed against the joint venture and the two companies constituting it: Archirodon Construction (overseas) Co. S.A, and The Arab Contractors Osman Ahmed Osman & Co.

By submissions notified on 13 December 2016, DAMIETTA requested the court to annul the two awards, to dismiss the claims of the opposing parties and to order them to pay the sum of EUR 100,000 pursuant to article 700 of the Code of Civil Procedure. It invokes the lack of jurisdiction of the arbitral tribunal, the disregard by the arbitrators of their mission and the violation of international public policy.

By submissions notified on 2 January 2017, Archirodon Construction (overseas) Co. S.A, and The Arab Contractors Osman Ahmed Osman & Co, and the joint venture requested the court to declare inadmissible and unfounded the appeal against the two awards, to declare that this dismissal confers exequatur on them and to order DAMIETTA to pay them the sum of 100,000 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):

DAMIETTA argues that the arbitral tribunal erroneously retained its jurisdiction, first, because the joint venture, being devoid of legal personality, could not validly conclude the arbitration agreement on which it relied, second, because it did not have the capacity to institute legal proceedings, and third, because the arbitration clause on the basis of which the arbitral tribunal was seized was applicable to a foreign but not to an Egyptian contractor.

Considering, firstly, that the contract concluded on 17 June 2007 between DAMIETTA and the joint venture Archirodon-Arab Contractors was signed by Mr. Mohammed Al- Mazeedi, Chairman & Managing Director, XXX, ‘XXX’, XXX;

Considering that it appears, consequently, that if Archirodon Construction (Overseas) CO S.A. and The Arab Contractors have brought to the attention of the client, by the name of ‘joint venture’, the fact that they had concluded an agreement between them setting out the terms of their cooperation, it is indeed these two companies, undeniably endowed with legal personality, which have contracted with DAMIETTA;

That therefore, the first branch of the ground is in fact missing;

Considering, secondly, that the joint venture’s capacity to act in the arbitral proceedings is a question of admissibility of the action before the arbitral tribunal and not of the tribunal’s jurisdiction;

that a challenge on this point is not one of the cases for the opening of an action for the annulment of the award, exhaustively enumerated by article 1520 of the Code of Civil Procedure; that the ground, therefore, is inadmissible in its second branch;

Considering, thirdly, that under the terms of article 1466 of the Code of Civil Procedure, applicable in international cases by reference to article 1506: ‘A party who, knowingly and without legitimate reason, fails to invoke an irregularity before the arbitral tribunal in good time shall be deemed to have waived the right to invoke it’;

Considering that the contract of 17 June 2007 stipulates in article 20.6: ‘Unless otherwise specified in the Special Conditions, any dispute not settled amicably, and in respect of which the decision of the Conciliation Board (if any) is not final and binding, shall be finally settled by arbitration. Unless otherwise agreed by both parties :

(a) For contracts with foreign contractors, international arbitration, the procedure of which shall be administered by the institution designated in the Contract Data, conducted in accordance with the arbitration rules of the said institution, if any, or in accordance with the UNCITRAL Arbitration Rules, at the option of the designated institution.

(b) the seat of the arbitration shall be the city where the head office of the designated institution is located.

(c) the arbitration shall be conducted in the language of communication as defined in par. 1.4, and

(d) For contracts with national contractors, arbitration, the procedure of which shall be conducted in accordance with the law of the country of the client’;

That the ‘Contract Data’ referred to in (a) provide for arbitration in Paris, in accordance with the rules of the ICC, with application of the law of the Republic of Egypt;

Whereas on 13 April 2010, a Request for Arbitration was filed with the Secretariat of the International Court of Arbitration of the International Chamber of Commerce by ‘Archirodon-Arab Contractors Joint Venture, a company governed by Egyptian law’; that, according to the Terms of Reference signed on 9 March 2011 by the parties and the arbitral tribunal, the disputes raised by DAMIETTA concerned the reality of the contractual non-performance attributed to it by the other party, the nature and amount of the damages claimed by the JOINT VENTURE, as well as the failure to comply with the preliminary conciliation procedure; that by a partial award rendered on 5 July 2011 on this last point, the arbitral tribunal rejected the ground based on the premature nature of the request and declared itself competent;

Considering that it was only by a brief filed on 15 March 2012 before the Arbitral Tribunal that DAMIETTA challenged the jurisdiction of the Arbitral Tribunal, arguing that since all parties are Egyptian, the disputes should, pursuant to article 20.6 (d) of the contract, be submitted to arbitration conducted in accordance with Egyptian law, and not to international arbitration administered by the ICC Court;

But considering that DAMIETTA, who was aware of this circumstance from the signing of the Terms of Reference and who refrained from invoking it prior to the award on jurisdiction, did not comply with the obligation to identify the irregularities in due time, invoking it one year later during the discussions on the merits;

That thus, the ground which is in fact missing in its first branch is inadmissible in its other two branches;

On the second ground for annulment alleging the arbitrators' disregard of their mission (Article 1520-3 of the Code of Civil Procedure):

DAMIETTA argues that the arbitrators have disregarded their mission, on the one hand, by refusing to apply Egyptian law, the law of contract, in this case by disregarding article 11- 2 of the Egyptian Civil Code on the issue of determining the legal status of a foreign company, on the other hand, by not making every effort to make an effective award, as provided for in the ICC Rules of Arbitration.

Considering, firstly, that, as has been said, DAMIETTA belatedly argued before the arbitral tribunal that, since all the parties were Egyptian, the dispute, in accordance with the arbitration clause, did not fall within the scope of arbitration administered by the ICC; that, therefore, the reasoning by which the arbitrators, having noted this belatedness with regard to the provisions of article 33 of the ICC arbitration rules, stated that the company Archirodon Construction (Overseas), being registered in Panama, was not an Egyptian company no matter the location of its headquarters in Egypt, is overabundant, so that the criticism addressed to it could not, in any case, lead to the annulment of the final award;

Considering, secondly, that this award benefited from exequatur in Egypt by a decision of 10 September 2014 that confirmed by a decision of the Cairo Court of Appeal of 3 February 2016, thus DAMIETTA does not show how the arbitrators did not render a legally effective award;

That the ground in its two branches can only be dismissed;

On the third ground of annulment alleging violation of international public policy (article 1520-5 of the Code of Civil Procedure):

DAMIETTA alleges that the award is contrary to the French concept of international public policy in that it disregards the principle stating that only legal persons can be holders of rights and obligations.

Considering that the designation of the joint venture ARCHIRODON-ARAB CONTRACTORS as a party to the award does not alter the nature of the legal relationships arising from the contract, according to which Archirodon and Arab Contractors have jointly and severally committed themselves to DAMIETTA as partners in a conspicuous joint venture; that the recognition or enforcement of such an award does not manifestly, effectively and concretely violate any principle of international public policy; that the ground must be dismissed;

Considering that it follows from all the foregoing that the action for annulment of the two awards must be rejected; that this rejection, in application of article 1527 of the Code of Civil Procedure, confers exequatur on them;

On article 700 of the Code of Civil Procedure:

Considering that DAMIETTA, who 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 the companies Archirodon and The Arab Contractors the sum of 100.000 euros;

FOR THESE REASONS:

Dismisses the action for annulment of the awards rendered in Paris on 5 July 2011 and 18 July 2013.

States that this dismissal confers exequatur on the contested awards.

Orders Damietta International Port Company S.A.E. to pay the costs and to pay the companies Archirodon Construction (overseas) Co. S.A, and The Arab Contractors Osman Ahmed Osman & Co the sum of 100,000 Euros in application of article 700 of the Code of Civil Procedure.

Dismisses all other claims.

THE CLERK THE PRESIDENT