Paris Court of Appeal, No. 16/18843

Court of appeal Paris, 1st Pole - 1st chamber- 16 October 2018, n° 16/18843

CERNER MIDDLE EAST, LTD (Cerner)

Vs.

Mr. X

CERNER MIDDLE EAST, LTD (hereafter Cerner), a company incorporated in the Cayman Islands, is part of the American group Cerner whose activity relates to the creation, development and promotion of information systems in the field of health.

I-Capital Sole Establishment (hereinafter I-Capital S / E), sole proprietorship under Emirati law of Mr. FGHXJ (hereinafter, Mr. X), had as its object the provision of IT services.

On 27 September 2008, I-Capital S / E entered into a subcontract with Cerner for the execution of a health information system project (‘Program Wareed’) which had been entrusted to it by the Ministry of United Arab Emirates Health. The contract was worth around 94 million USD. The subcontract included an arbitration clause.

Following defaults on contractual payments, Cerner initiated arbitration proceedings in September 2012 against I-Capital S / E and M. X.

On 29 December 2012, a Settlement and Payment Agreement (hereinafter ARP) was concluded between Cerner and, on the one hand, I-Capital LLC (Limited Liability Company), resulting from the transformation into a company in limited liability of the sole proprietorship I-Capital S / E, and, on the other hand, as guarantor, the company Belbadi Enterprises LLC having as chairman MX. The ARP agreement fixed a payment schedule and provided for the remittance by I -Capital LLC of several post-dated checks. At the same time, the same parties signed an amendment n ° 5 to the subcontracting contract which set out the schedule of the ARP, provided for a right of termination by Cerner if it was not respected, and contained an arbitration clause intended to replace that which was stipulated by the initial contract.

I-Capital LLC, citing Department of Health defaults, has failed to meet its own deadlines.

On 23 August 2013, Cerner filed a new arbitration request with the International Chamber of Commerce against I-Capital LLC and against Mr. X.

By an award issued in Paris on 16 July 2015, the arbitral tribunal composed of Messrs. LMD and CD, arbitrators, and of Mr. Y, president, jointly ordered I-Capital LLC and Mr. X to pay various sums to Cerner for a total principal amounting to around EUR 51,087,570.

This award was granted exequatur by an order of the president of the Paris tribunal de grande instance of 23 May 2016.

It was the subject of an action for annulment brought by Mr X on 16 September 2016.

By a first order of 9 February 2017, the pre-trial Judge stopped the execution of the award. By one second, he rejected Cerner’s request to access the results of a computer finding made in Mr. X’s residence for the search for seizable assets.

By submissions notified on 28 June 2018, Mr. X requests the court to set aside the contested award and to order Cerner to pay him the sum of EUR 100,000 in application of article 700 of the code of civil procedure. He raises the lack of jurisdiction of the arbitral tribunal (article 1520-1 of the code of civil procedure), the violation of the principle of due process (article 1520-4 of the code of civil procedure) and the violation of international public policy (article 1520-5 of the code of civil procedure).

By submissions notified on 30 July 2018, Cerner asks the court to dismiss the appeal for annulment and to order the appellant to pay him the sum of EUR 100,000 euros in application of article 700 of the code of civil procedure.

UPON WHICH:

On the ground alleging the lack of jurisdiction of the arbitral tribunal (article 1520-1 of the code of civil procedure):

Mr. X claims, first, that the arbitral tribunal was seized by virtue of the arbitration clause resulting from the ARP settlement agreement which was concluded between Cerner and I-Capital LLC and that it is in full knowledge that Cerner has contracted with this limited liability company replacing the sole proprietorship I-Capital S / E, without any fraud intended to hide the quality of the co-contractor. Mr X claims, secondly, that the arbitrators wrongly considered that he had implicitly consented to the arbitration agreement by holding that, in its form prior to the transactional agreement, I-Capital S / E was a sole proprietorship with no independent legal personality, so that the natural person who owned it remained liable to Cerner. The Appellant maintains that the arbitrators thus confused the enforceability of the arbitration clause against a person who did not sign it and the liability of that same person under the applicable substantive law. He adds that the sole quality of majority shareholder is not, in itself, a sufficient reason to extend the effects of an arbitration clause to a person who has not signed it. Finally, Mr X alleges that the reasoning of the arbitrators is vitiated by contradiction in that they hold that I-Capital never had a will or existence of its own - so that the social veil had to be lifted - , while pronouncing a solidarity sentence against the company and against himself.

Whereas the annulment judge examines the decision of the arbitral tribunal on its jurisdiction, whether it has declared itself competent or incompetent, by seeking all the elements of law or of fact allowing to assess the existence, the scope and the ‘opposability of the arbitration agreement and deduce the consequences on compliance with the mission entrusted to the arbitrators;

Whereas in the present case, on 27 September 2008, Cerner entered into a subcontracting contract (CCC) with I-Capital S / E, sole proprietorship of Mr. X, relating to the performance of a development of a health information system entrusted to I-Capital S / E by the UAE Ministry of Health; that this contract included an arbitration clause under the supervision of the International Chamber of Commerce;

Whereas for lack of payment of the deadlines, Cerner, in September 2012, initiated an arbitration procedure against I-Capital S / E and against Mr. X; that in the middle of 2012,

I-Capital S / E was transformed into a limited liability company, I-Capital LLC; that on 29 December 2012, a transactional agreement (ARP) was concluded by Cerner and by I-Capital LLC, represented by Mr. CE, as well as by the company Belbadi Enterprises LLC represented by Mr. X, as guarantor of the commitments of I-Capital LLC; that this agreement set a new payment schedule and provided for the delivery of post-dated checks;

Whereas, concomitantly with the ARP, Cerner and I-Capital LLC signed a rider n ° 5 which inserted the new schedule in the initial contract; that this rider also contained an arbitration clause which replaced the previous one in the following terms: ‘Article 9.3 (Arbitration and provisional and protective measures) of the CCC is deleted and replaced by the following stipulations:

Each of the Parties to this Contract submits to a compulsory arbitration procedure in the event of a dispute which will be submitted to the exclusive jurisdiction of the International Chamber of Commerce (the ‘CCI’) in accordance with the Rules of Conciliation and Arbitration of the Chamber. of international trade in force on the date concerned. '

Whereas the arbitral tribunal declared itself competent with regard to Mr. X, who was not a signatory of the rider n ° 5, by holding, first of all, that the restructuring of I-Capital had not eliminated nor diminished the liability incurred by Mr. X under the original agreement (award, § 10.2.26), secondly, that Mr. X had implicitly consented to the arbitration agreement (award, § 10.2.51), third, it ' ’s (Vait) abused the corporate form in a way that justified (has) the lifting of the corporate veil ' (award § 10.2.51) finally, having regard to the absolute control exercised by Mr. X on I-Capital which had never had ' distinct character, will or existence of its own ‘, it was’the alter ego ‘(sentence, § 10.2.54);

Whereas before the court, Cerner invokes the extension of the arbitration clause to third parties involved in the negotiation, conclusion, execution and / or termination of the contract and argues, moreover, that Mr. X remained bound by the arbitration clause appearing in the initial contract as the owner and sole responsible for I-Capital S / E;

Whereas according to the practice of international trade, the arbitration clause inserted in an international contract has its own validity and effectiveness which require its application to be extended to the parties directly involved in the negotiation, conclusion, performance and / or termination of the contract;

Whereas, firstly, according to a judgment of the Court of Cassation of Dubai n ° 20/2008 of 2 March 2008, cited by the sentence (§ 10.2.51) and whose existence and content are not contested by the parties: ' A private commercial establishment or a sole proprietorship does not have a legal personality independent of the person of its owner or of the holder of its commercial license. ‘; that this is the case with I-Capital S / E, so that the initial contract must be regarded as having been concluded between Cerner and Mr. X;

Whereas if the ARP agreement and the concomitant rider n ° 5 have been concluded with the limited liability company I-Capital LLC - coming to the rights of I-Capital S / E according to terms not specified by the parties -, and although they were signed by Mr. CE on behalf of I-Capital LLC, these agreements, which are inseparable, nonetheless constitute a transaction terminating an arbitration proceeding initiated against I-Capital S / E and against Mr. . X; that, consequently, this one necessarily participated in a direct way in the negotiation and in the conclusion of a transaction by which Cerner accepted that a limited liability company, I-Capital LLC of which Mr. X held 99% of the capital , or substituted for a company without legal personality, I-Capital S / E, in return for guarantees provided by a company Belbadi Enterprises LLC,

Whereas it follows that the arbitration clause is enforceable against Mr. X and that the arbitrators have rightly declared themselves competent;

That the first ground of annulment will therefore be dismissed;

On the second ground for annulment alleging violation of the principle of contradiction (in french principe de la contradiction) (article 1520-4 of the code of civil procedure):

Mr. X, who was in default of the arbitration, claims that he received neither the request for arbitration and the attached documents, nor the other documents of the procedure, sent to an address which was that of I-Capital and not that of his home.

Whereas under article 3.2 of the arbitration rules of the International Chamber of Commerce: “All notifications or communications from the Secretariat and the arbitral tribunal shall be made to the last address of the party or its representative for whom the same are intended, as notified either by the party in question or by any other party. Such notification or communication may be made by delivery against receipt, registered post, courier, email, or any other means of telecommunication that provides a record of the sending thereof.”;

Whereas the request for arbitration was filed with the CCI by Cerner on 23 August 2013 against Mr. X and against I-Capital LLC; that its copy accompanied by the supporting documents was sent by the Secretariat of the ICC on 30 August 2013 to the two defendants and, as regards Mr. X, to his professional address (award, § 2.1.4); that if I-Capital LLC, initially represented by a law firm, indicated that it was not receiving correspondence intended for Mr. X - without, moreover, specifying what would be the relevant address -, the Secretariat replied by recalling the aforementioned provisions of the arbitration rules accompanied by a copy of a delivery receipt attesting that Mr. X had indeed received the request (award, § 2.1.6);

Whereas it follows from the award (§ 1.2.1 and 1.2.4) that the correspondence intended for Mr. X was subsequently sent by the president of the arbitral tribunal by fax or by email to the following two addresses [-]@[-].ae and [-]@gmail.com, as well as, until 18 February 2014, the date from which they were refused, by transport service to the following two addresses: PO Box […] and c / o Belbadi Enterprises LLC 13 th floor, C1 Tower, Bainuna street, C Bateen, PO Box n ° 27330, Abu Dhabi, United Arab Emirates;

Whereas it follows from the statements of the award that Mr. X personally received the request for arbitration and the supporting documents; that, for the rest, the communications were made to a postal address which it is not disputed that it is that of Belbadi Enterprises LLC, of ​​which Mr. X is the owner and of which he was the representative at the time of the signing of the ARP, as well as, in accordance with the provisions of the arbitration rules to which the parties have agreed to submit, by emails sent to addresses, the accuracy of which Mr. X does not dispute;

That the proof is thus sufficiently reported of the adversarial nature of the procedure which Mr. X chose to fail;

That the second ground of annulment must therefore be dismissed;

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

Mr X claims that all of the factual circumstances demonstrate Cerner’s desire to unjustluy enrich himself at his expense by maliciously initiating enforcement proceedings unfounded against himself and his family and oust his competitor, I-Capital. He argues that I-Capital filed a complaint on 28 December 2016 in the United Arab Emirates against Cerner and against various natural persons, including within the UAE Ministry of Health for violation of business secrecy in connection with the fraudulent maneuvers deployed by Cerner to oust him from the Wareed Program. The Appellant states that criminal convictions have already been pronounced for forgery and use of forgery on the occasion of the request presented by Cerner for renewal of its commercial license based on a certificate from its co-contractor I-Capital, the date of which had been falsified. . Mr. X claims that the defaults of which I-Capital was the victim on the part of the Ministry of Health are attributable to this fraudulent concert.

Whereas it is established that I-Capital S / E - that is to say, Mr. X - and then I-Capital LLC have not honored the deadlines which were due in view of the services provided by Cerner, the settlement of which was not contingent by the contract on payments made by the UAE Ministry of Health;

That there is no link between the order to pay these sums indisputably due, by virtue of a lawful contract and for an effective consideration, and, on the one hand, the negotiations which may have been initiated between Cerner and the Ministry of Health to try to remedy the failures of I-Capital, and, on the other hand, the infringements which may have been committed by Cerner, after the termination of contractual relations to obtain a commercial license;

Whereas the award does not therefore manifestly, effectively and concretely violate international public policy, being moreover observed that the enforcement proceedings initiated in France on its basis, even supposing them to be abusive as argued by the Appellant, are not suspect to affect the international regularity of the award itself;

That the third ground for annulment can therefore only be ruled out;

Whereas it follows from the above that the action for annulment must be dismissed;

On article 700  of the code of civil procedure  :

Whereas Mr X, who succumbs, cannot benefit from the provisions of article 700 of the code of civil procedure, and will be condemned on this basis to pay to Cerner the sum of 100,000 euros;

FOR THESE REASONS:

Dismisses the appeal for annulment of the award issued between the parties in Paris on 16 July 2015.

Orders Mr FGHXJ to pay the costs and payment to CERNER MIDDLE EAST Ltd of the sum of EUR 100,000 in application of article 700 of the code of civil procedure.