Court of Cassation, No. 17-25.851

Court of Cassation, First Civil Chamber, 13 February 2019, No. 17-25.851

Challenged decision: Paris Court of Appeal, Pole 1 - First Chamber, 25 April 2017, No.15/01040

THE BOLIVARIAN REPUBLIC OF VENEZUELA

Vs.

FAMILY I.

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

Whereas, according to the judgment under appeal, Mr I… P… and his daughter, Mrs I… J… (Family I…) acquired in 2001 and 2006 from Mrs A… and Mrs B… I… the shares in two Venezuelan companies, Transporte Dole and Alimentos Frisa; in 2012, Family I… initiated arbitration proceedings against the Bolivarian Republic of Venezuela on the basis of the dispute settlement provisions of the bilateral treaty for the reciprocal promotion and protection of investments, concluded between the Kingdom of Spain and the Bolivarian Republic of Venezuela on 2 November 2015; the award on jurisdiction issued in Paris on 15 December 2014 was challenged by the Bolivarian Republic of Venezuela through an action for setting aside;

On the admissibility of the appeal, challenged by the defence:

Whereas Family I… argue that the appeal is inadmissible on the basis of the principle of estoppel, since the Bolivarian Republic of Venezuela brought an action before the arbitral tribunal to obtain a new award on jurisdiction;

Whereas, however, Family I… having requested the arbitral tribunal to hold a debate on the effects and scope of the partial annulment of the award, the Bolivarian Republic of Venezuela replied to this claim, and informed the arbitral tribunal of the existence of its appeal; since the Bolivarian Republic of Venezuela did not contradict itself at the expense of Family I…, the appeal is admissible;

On the first ground, taken in its first part:

In view of Article 1520-1, of the Code of Civil Procedure;

Whereas, in order to set aside the award solely in so far as it decides that the disputed assets are investments within the meaning of the Treaty, regardless of the nationality of the investors at the date on which they made their investments, the judgment first holds that the recognition by Spain of Family I… as its nationals at the date of commencement of the arbitral proceedings is sufficient to establish the jurisdiction ratione personae of the arbitral tribunal, secondly, that the investment is not an asset owned by an investor of the other Contracting Party, which excludes any reference to the date of acquisition, but rather an investment made by an investor of the other Contracting Party, which necessarily refers to a condition of nationality of the investor at the date of investment;

That in so ruling, while the applicability of the arbitration clause inferred from the bilateral treaty depends on the fulfilment of all the conditions required by that text on the nationality of the investor and the existence of an investment, the Court of Appeal, which could not proceed to a partial annulment of the award, did not draw the legal consequences of its findings and breached the above-mentioned text;

FOR THESE REASONS and without having to rule on the other grounds:

REVERSES AND ANNULS, in all its provisions, the judgment delivered on 25 April 2017, between the parties, by the Paris Court of Appeal; returns, consequently, the proceedings and the parties back to their status quo ante and, for the proceedings to be determined in accordance with the law, transmit them to the to the Paris Court of Appeal

Orders Mr I… P… and Mrs I… J… to pay the costs;

Pursuant to Article 700 of the Code of Civil Procedure, rejects their application and orders them to pay to the Bolivarian Republic of Venezuela the sum of 3,000 euros ;

Concerning the instructions of the Public Prosecutor (in French: Procureur général) at the Court of Cassation, the present judgment will be transmitted for transcript in the margin or following the reversed judgment ;

Done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of the thirteenth of February two thousand and nineteen.