Court of Cassation, No. 15-29.158 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 4 May 2017, No. 15-29.158

Judicial Chronology:

ICC Award No. 10394/DB/EC

Paris Court of Appeal, Pole 1, First Chamber, 29 October 2009, No. 08/18544

Court of Cassation, First Civil Chamber, 12 October 2011, No. 10-14.687

Versailles Court of Appeal, 26 November 2015, No. 12/02855

GROUPE ANTOINE TABET

vs.

THE REPUBLIC OF CONGO

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

Whereas, according to the judgment under appeal (Versailles, 26 November 2015), handed down on referral after cassation (Court of Cassation, First Civ. 12 October 2011, No. 10-14.687), the Lebanese company Groupe Antoine Tabet… (GAT), which finances public works, particularly in Africa, signed financing agreements with the Republic of Congo in 1992 and 1993. The latter entrusted an oil company, TEP Congo, which accepted it, to pay the instalments of the loan. A dispute arose because the Republic of Congo considered that it paid too much. The oil company was ordered by the Swiss judicial courts to pay GAT a sum of more than 64 million Swiss francs. These decisions were declared enforceable in France and the appeals were dismissed by two judgments of 4 July 2007. At the same time, the Republic of Congo set up an arbitration procedure in Paris, under the authority of the International Chamber of Commerce, requesting the reimbursement by GAT of sums paid, according to it, without cause. By a first award dated 30 March 2000, the arbitral tribunal ruled on its jurisdiction. By a second judgment of 4 June 2002, it declared that there was cause for interest since the parties have to calculate it within a certain period. The arbitral tribunal ordered the Republic of Congo to pay a sum in excess of EUR 16 million, without penalty. A third award, dated 8 December 2003, which ordered GAT in particular to pay into an escrow account any sums that might be paid to it by the oil company in excess of the provision of 16 million euros, was subject to an action for annulment, which was rejected by decision of the Paris Court of Appeal on 11 May 2006. By procedural order of 11 December 2003, the chairman of the arbitral tribunal ordered GAT, pending signature of the escrow agreement, to deposit the sums paid in excess of 16 million euros in the hands of the President of the Bar. A fourth award of 27 February 2008, in particular, dismissed the action for partial annulment of award No. 2, stated that the balance of the account resulting from the payments made in execution of the 1993 Convention gave right to interest at the contractual rate of 10% until 31 December 2004, and beyond that to interest of 4.5% and stated that in compensation for the damage caused to the Republic of Congo by the non-execution of the provisional measures ordered by the third award, GAT would be deprived of the benefit of interest in the amount of 449,889.30 euros;

On the first ground:

Whereas GAT criticises the decision for rejecting the application for annulment of Award No. 4 made on 27 February 2008, based on the irregular composition of the arbitral tribunal, then, according to the ground:

1°/ that the independence of the arbitrator is of the very essence of his or her jurisdictional function. When one of the parties to the arbitration stipulates that it does not wish to have an arbitrator who has or would have had business relations with certain companies concerned, because of a possible direct and indirect conflict of interest which it fears, any arbitrator appointed or nominated must imperatively reveal the existence of such relations without having to assess their relevance or validity. In this case, it is common ground that GAT indicated that it did not want any party to the arbitration procedure to have or to have had links with the Total Group or any of its subsidiaries, due to a possible direct and indirect conflict of interest, since TEP Congo, which was concerned by the outcome of the arbitration with regard to the performance of certain financial obligations, was 100% controlled by the Total Group. In holding that Mr. D… C… who maintained and still maintains numerous business relationships with companies of the Total group, did not have to reveal the existence of such relationships, that the outcome of the arbitration procedure would have no impact on the financial situation of TEP Congo and that the assessment of the arbitrator’s independence and impartiality should be made objectively and not with regard to the specific expectations of GAT, the Court of Appeal violated the former Article 1452-2 of the Code of Civil Procedure, together with Articles 1456 and 1520-2 of the Code of Civil Procedure and Article 6 of the European Convention on Human Rights;

2°/ that in holding that the absence of disclosure by Mr. D… C… of his business relations with the Total group was not such as to give rise, in the minds of the parties, to reasonable doubt as to his impartiality and independence, this assessment must be made objectively and not in the light of the particular expectations raised by GAT which, in agreement with the Republic of Congo, essentially held that the arbitrator had no connection whatsoever with the Total group, the court of appeal disregarded the contractual basis of arbitral justice and the legitimate expectations specially stipulated by the GAT as regards the conditions of independence and impartiality of the various arbitrators and thus infringed the former Article 1452-2 of the Code of Civil Procedure, together with Articles 1456, 1507, 1511 and 1520-2 of the Code of Civil Procedure and Article 6 of the European Convention on Human Rights;

3°/ by not carrying out any analysis of the fact specifically raised by GAT of the direct link that the Chairman of the Arbitral Tribunal had with a subsidiary of the Total Group (a subsidiary which, moreover, was involved in the trade in Congolese oil, which was the subject of the arbitration dispute), when a potential direct conflict of interest nevertheless refers to an obligation on the part of the arbitrator to reveal the result, the Court of Appeal deprived its decision of a legal basis under the former Article 1452-2 of the Code of Civil Procedure and Articles 1456 and 1520-2 of the Code of Civil Procedure ;

However, the judgment notes that the outcome of the arbitration proceedings will have no impact on the financial situation of TEP Congo, which is not a party to the arbitration, and that the existence of a possible conflict of interest that could lead to a risk of a lack of independence and impartiality of the president of the arbitration tribunal therefore appears to be excluded. On these grounds alone, from which it concluded that the absence of disclosure by the Chairman of his business relations with the Total group was not such as to give rise to reasonable doubt in the minds of the parties as to his impartiality and independence, the Court of Appeal legally justified its decision on this ground;

On the second ground:

Whereas GAT criticises the judgment for rejecting the action for annulment of Award No. 4, handed down on 27 February 2008, on the grounds that the arbitral tribunal violated its duty to review Awards Nos. 2 and 3, then, according to the ground:

1°/ that the action for annulment is open if the arbitral tribunal wrongly declared it has jurisdiction, which implies, for the court of appeal, to examine the assessment made by the arbitrators on the existence or not of a possible fraud. In this case, the court of appeal did not carry out this necessary research. Thus, it deprived its decision of a legal basis in the light of article 1520-1 of the code of civil procedure;

2°/ that an action for the annulment of the arbitral award is open if the arbitral tribunal ruled without complying with it mission. GAT argued that the arbitral tribunal failed to comply with its mission by not analysing the letter of 20 October 1994, which were nevertheless concealed by the Congo for the purposes of fraud, and which was such as to reveal the contractual and immutable nature of the disputed repayment schedule. By failing to ascertain precisely whether the arbitral tribunal in fact examined this decisive document, the Court of Appeal deprived its decision of a legal basis under Article 1520-3 of the Code of Civil Procedure;

3°/ that the failure to reply to the submissions is equivalent to a lack of reasons. In the case in point, GAT requested the court of appeal to establish the existence of fraud perpetrated by Congo when it concealed the letter of 22 October 1994 which revealed the contractual and immutable nature of the disputed schedule. By not replying to this ground the court of appeal violated Article 455 of the code of civil procedure;

But given that after noting that GAT lodged an appeal for review, arguing that after the rendering of Award No. 4 it discovered new documents hidden by the Republic of Congo, in particular the letter of 20 October 1994 addressed by the latter to TEP Congo and to which the loan repayment schedule was appended, the judgment notes that the award states that in paragraphs 70 to 75, the reasons why the documents produced are not relevant to the application for withdrawal, and in paragraphs 76 to 80, the reasons which led to the repayment schedule being considered as not immutable, considering it to be a current account, and to prefer another method of calculation of the claims between the parties. From these findings and statements, the Court of Appeal, which did not have to carry out an inoperative search, highlighted the absence of fraud resulting from the alleged concealment of the letter of 20 October 1994 and concluded that the court respected its mission. Thus, it legally justified its decision;

FOR THESE REASONS

REJECTS the appeal;

Orders the company Groupe Antoine Tabet… to pay the costs;

In view of article 700 of the Code of Civil Procedure, rejects its application;

Thus, done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of the fourth of May two thousand and seventeen.