Paris Court of Appeal, No. 15/24961

Paris Court of Appeal, Pôle 1 - Chamber 1, 5 December 2017, No. 15/24961

Togolese Republic vs. Accor Afrique SAS , Société togolaise d’investissement et d’exploitation hôtelière (STIEH)

In a contract dated 18 February 1998, the Togolese Republic leased to Accor Afrique SAS a real estate complex located in Lomé, called Hotel Sarakawa. The term of the lease was fixed for a renewable period of fifteen years. The lessee undertook to carry out major works before the opening of the establishment.

A dispute about the scope of the work occurred between the parties following a report on a due diligence visit by the Togolese Republic in July 2008. On 24 April 2013, Accor Afrique notified the lessor its request for renewal of the contract on behalf of its Togolese subsidiary, Société togolaise d’investissement et d’exploitation hôtelière (STIEH). The Togolese Republic replied by letter dated 27 May 2013 that the lessee had forfeited its right to its right to renewal for having exercised it late.

On 12 May 2014, Accor Africa filed a request for arbitration with the International Chamber of Commerce on its behalf and on behalf of STIEH, after receiving formal notice to vacate the premises.

By an interim order of 11 July 2014, confirmed on appeal on 7 May 2015, the president of the Lomé regional court ordered the expulsion of Accor Afrique under penalty. This decision was immediately enforced.

On 6 March 2015, the Togolese Republic brought an action on the merits before the Lomé Accor Afrique Court of First Instance, STIEH, together with Accor SA, in its capacity as guarantor, to obtain their joint and several condemnation to pay a sum of FCFA 22 billion (approximately 34 million euros) in respect of unpaid rents and as compensation for reputational and financial harm resulting from contractual breaches in the operation of the hotel and the late vacating of the premises.

On 6 November 2015, the arbitral tribunal composed of Mr. X and Mr. M, arbitrators, and Mr. Y, President, rendered a partial award rejecting the pleas of lack of jurisdiction ratione personae and ratione materiae and declaring it had jurisdiction to rule on the issues submitted by all the parties, principally, on the one hand, by Accor Afrique SAS and STIEH under the commercial lease agreement and, on the other hand, by Accor SA under the surety bond agreement, and counterclaimed by the Togolese Republic.

The latter appealed against the award on 7 December 2015.

By submissions notified on 16 October 2017, the Togolese Republic asks the court to order the annulment for lack of jurisdiction of the arbitral tribunal, as well as the annulment or invalidation of the exequatur order issued on 23 November 2015 by the President of the Tribunal de Grande Instance de Paris, to reject the claims of the opposing parties and to order them jointly and severally to pay it the sum of 80,000 euros pursuant to Article 700 of the Code of Civil Procedure.

By conclusions notified on 27 September 2017, Accor SA, Accor Afrique SAS and STIEH ask the court to reject the appeal, to reject the plaintiff’s claims and to order it to pay the sums of 50,000 euros in damages for abusive procedure and 80,000 euros in application of Article 700 of the Code of Civil Procedure;

UPON WHICH:

On the sole ground for annulment based on the lack of jurisdiction of the arbitral tribunal (Article 1520-1 of the Code of Civil Procedure):

The Togolese Republic states that the arbitration clause relates only to disputes arising from the interpretation of the contract and that it is therefore not applicable to the present dispute relating to the execution of the agreement.

Whereas the Annulment Judge shall review the decision of the Arbitral Tribunal on its jurisdiction, whether it has declared itself competent or incompetent, assessing all elements of law or fact making it possible to assess the scope of the arbitration agreement and to deduce the consequences on the respect of the mission entrusted to the arbitrators;

Considering that the commercial lease concluded on 18 February 1998 between the Togolese Republic and the company Accor Afrique SAS with the guarantee of the SA Accor includes an article 12 “Applicable law and resolution of disputes” which stipulates:

‘The present lease is governed by Togolese law.

Any dispute resulting from the interpretation or execution of the present lease is settled amicably.

In the absence of an amicable agreement, all disputes resulting from the interpretation of the present contract will be settled definitely according to the arbitration rules of the International Chamber of Commerce, by one or more arbitrators appointed in accordance with these rules. The place of arbitration shall be Paris’;

Considering that the Togolese Republic avails itself of the drafting differences of the second and third paragraphs to maintain that the intention of the parties was to exclude from arbitration disputes which did not concern the interpretation of the contract and especially those which concerned its execution; that the defendants, for their part, maintain that paragraphs two and three are not autonomous, that they are bound by the expression ‘in the absence of an amicable agreement’ and that the whole constitutes an ‘escalation clause’ in which the two methods of settlement are intended to govern, successively in the event of failure of the first, the same disputes;

Considering that it thus appears that the scope of the arbitration clause is ambiguous and therefore subject to interpretation;

Considering that it is a principle in international arbitration law that the interpretation of contracts consists in seeking what was the common intention of the parties rather than stopping at the literal meaning of the terms; that this search must in particular be inspired by the principle of the useful effect which presumes that the parties have intended to give an effective scope to the stipulations they have introduced in their agreements;

Considering that, in the present case, the willingness of the contractors to have recourse to arbitration under the aegis of the International Chamber of Commerce clearly results from the disputed clause; the contract does not, moreover, provide for any other method of dispute resolution except, in Article 10, for the intervention of the interim relief judge to order the eviction from the rented premises;

Considering that the arbitration clause cannot therefore be understood in a sense that would deprive the intervention of the arbitrators of effectiveness in splitting the same dispute between the arbitral tribunal and state courts;

Considering that it can be deduced from this that the intention of the parties was not to oppose paragraphs 2 and 3 of Article 12 and to reduce arbitration to questions of interpretation of the contract, but, on the contrary, to extend the jurisdiction of the arbitrators, as is moreover expressly stipulated, to all that ‘follows’ from interpretation, that is to say, to all claims relating to the performance of contractual obligations the substance of which is under discussion;

Considering that in this case, the arbitral tribunal was seized, on one hand, of a claim for compensation for eviction and compensation for reputation harm presented by Accor Afrique and STIEH, and on the other hand, of a request from the guarantor, Accor SA, to find the guarantee void or inapplicable to the damages claimed by the Togolese Republic or without object due to the lack of claim of the latter against Accor Afrique and STIEH, finally, a counterclaim by the Togolese Republic for compensation for the non-performance by the lessee of its contractual obligations;

Considering that, as can be seen from the parties' pleadings, their dispute was essentially concerned with two questions: on one hand, what were the works implied by the approved international ‘4-star’ standard by reference to which were stipulated the renovation and embellishment obligations to be borne by the lessee, and on the other hand, what was the scope of Article 4-2 of the lease - notice clause or rendezvous clause - and what was the date of entry into force of the contract, which determined the conditions for its renewal; that from these points, which relate to the interpretation of the Convention, flowed all the requests for pecuniary condemnation made by the parties; that the Arbitral Tribunal therefore had jurisdiction to hear them, as well as the defences to them;

Whereas the sole plea based on Article 1520-1 of the Code of Civil Procedure will be rejected and the action for annulment dismissed;

On Article 700 of the Code of Civil Procedure:

Considering that the Togolese Republic, which succumbs, cannot benefit from the provisions of Article 700 of the Code of Civil Procedure and will be condemned on this basis to pay the defendants the global sum of 30,000 euros;

FOR THESE REASONS:

Rejects the annulment appeal of the partial award rendered in Paris between the parties on 6 November 2015.

Orders the Togolese Republic to pay the costs, which may be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure, and the payment to SAS Accor Afrique, SA Accor and Société togolaise d’investissement et d’exploitation hôtelière of the sum of 30,000 euros in application of Article 700 of the Code of Civil Procedure.

THE CLERK THE PRESIDENT