Court of Cassation, No. 17-20.423 | Rory Wheeler, avocat (Paris) & solicitor (England)

ourt of cassation,1st Civil Chamber, 11 July 2019, No. 17-20.423

Challenged decision: Paris Court of Appeal, Pole 1 - First Chamber, 25 April 2017, No. 15/07642

DAMIETTA INTERNATIONAL PORT COMPANY S.A.E

Vs.

ARCHIRODON-ARAB CONTRACTORS JOINT VENTURE

THE ARAB CONTRACTORS OSMAN AHMED OSMAN & CO

ARCHIRODON CONSTRUCTION (OVERSEAS) CO. S.A

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

Whereas, according to the facts as stated in the judgment under appeal, the Egyptian company Damietta International Port Company SAE (Dipco), owner 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), entrusted the works to Archirodon-Arab Contractors Joint Venture (the Joint Venture), designated as the “Contractor”, incorporated for that purpose by the companies Archirodon Construction (Overseas) CO SA and The Arab Contractors I… & Co ; that disputes having arisen between the Parties, the latter have, pursuant to the arbitration clause stipulated in the contract, initiated arbitration proceedings on behalf of the Joint Venture on 21 April 2010; that the Arbitral Tribunal issued a partial award on jurisdiction in Paris on 5 July 2011, followed by a final award on 18 July 2013 ordering Dipco 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 bear part of the Joint Venture’s arbitration costs in the amount of USD 1,110,000; that Dipco has filed an action for annulment against the two awards;

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

Whereas the Joint Venture, Archirodon Construction (Overseas) CO SA and The Arab Contractors I… & Co, raise the inadmissibility of the appeal on the grounds that, in its statement of appeal of 26 June 2017, Dipco stated that it is domiciled at an address, which is indicated as being that of its registered office, was no longer correct since the bailiff in charge of the enforcement of the challenged judgment, encountered an impossibility to notify the deed, since the receiving agency in Egypt had made it known that this company had “left its registered office a long time ago”, which causes him a complaint;

Whereas, however, although Article 975 of the Code of Civil Procedure provides that the declaration of appeal must indicate the domicile of the Claimant to the Court of Cassation, under the penalty of nullity, no text requires the Claimant to inform the Court of its subsequent change of domicile; whereas the act of attempted service of the judgment, drawn up on 3 July 2017, does not establish that, on 26 June 2017, the address mentioned by Dipco in its declaration of appeal was no longer its own; that the appeal is admissible;

On the first ground of appeal:

Whereas Dipco claims that the judgment should dismiss its application to set aside the award, then, according to the grounds of appeal:

1°/ that an award must be set aside where the arbitral tribunal wrongly upheld or declined jurisdiction; that by dismissing the ground for setting aside the award, based on the lack of jurisdiction of the Arbitral Tribunal resulting from the fact that the Joint Venture, which has no legal personality, could not rely on the Arbitration Agreement, after having found, on the one hand, that the Joint Venture had no legal personality and, on the other hand, that the Arbitral Tribunal had no jurisdiction, that it is “Archirodon Construction (Overseas) CO SA and The Arab Contractors” that “have contracted with Dipco” and, on the other hand, that it is Archirodon-Arab Contractors Joint Venture that initiated the arbitration proceedings on April 13, 2010 and that the arbitral tribunal ordered Damietta to pay “the cumulative sum of 138,314,701”, 15 USD for the work carried out, ordered it to allow the Joint Venture to remove the remaining material from the site, and ordered it to partially pay the Joint Venture’s arbitration costs up to USD 1,110,000, which meant that the arbitration was initiated by the Joint Venture and the award in favour of the Joint Venture, which was not a party to the arbitration agreement, the Court of Appeal violated Article 1520-1, of the Code of Civil Procedure;

2°/ that by ruling on the inoperative ground that it was Archirodon Construction (Overseas) CO SA and The Arab Contractors I… & Co, both companies with legal personality, that had contracted with Dipco, after having noted, on the one hand, that the arbitration had been initiated by the Joint Venture and, on the other hand, that the arbitral award was made in its favour, without finding that the Joint Venture could validly rely on the arbitration agreement, the Court of Appeal did not legally justify its decision in accordance with Article 1520-1, of the Code of Civil Procedure;

3°/ that only the party who, knowingly and without a legitimate reason, fails to object to an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived its right to avail itself of such irregularity; that by dismissing the ground for setting aside the award based on the arbitral tribunal’s lack of jurisdiction since the arbitration clause, on the basis of which the arbitral proceedings were initiated, was inapplicable to an Egyptian contractor, considering that the ground was only raised before the arbitral tribunal “by a memorandum filed on 15 March 2012”, whereas Dipco “was aware of this circumstance as soon as the Terms of Reference were signed and (…) failed to object to it prior to the ruling on jurisdiction”, so that it “did not comply with the obligation to notify the irregularities in time by invoking them one year later during the proceedings on the merits”, the ground having been raised more than a year before the award relieving the arbitrators of jurisdiction was made, and almost a year before the end of the proceedings, or within a period of time which allowed the arbitral tribunal to rule usefully on this issue, the Court of Appeal misapplied Articles 1466 and 1506, 3°, of the Code of Civil Procedure;

But firstly, given that the judgment notes that the contract concluded between Dipco and the joint venture was signed by the representatives of Archirodon Construction (Overseas) CO SA and The Arab Contractors I… & Co, who 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 conditions of their cooperation; that, from these findings, the Court of Appeal correctly deduced that these two companies, with legal personality, were the contracting parties of Dipco and that, as the arbitration agreement had been validly concluded, the arbitral tribunal had jurisdiction over the claimant’s case;

Whereas, secondly, the 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; whereas, therefore, the Court of Appeal specifically held that Dipco’s challenge of the joint venture’s capacity to file an application for arbitration did not constitute one of the cases for the initiation of an action for annulment of the award, which are exhaustively listed in article 1520 of the Code of Civil Procedure;

Whereas, finally, the decisions notes that under the terms of Article 20. 6, a) of the contract, the parties had agreed to resort to institutional international arbitration for contracts with foreign contractors; Whereas it notes that while the request for arbitration was sent on 13 April 2010, the Terms of Reference signed on 9 March 2011, and a partial award on jurisdiction issued on 5 July 2011, Dipco challenged the jurisdiction of the arbitral tribunal only by a statement filed on 15 March 2012, arguing that, since all parties were Egyptian, the disputes should, under Article 20. 6, d) of the contract, be submitted to arbitration conducted in accordance with Egyptian law and not to international arbitration; that, from these statements and findings, the Court of Appeal rightly deduced that Dipco, which was aware of this circumstance from the signing of the Terms of Reference and had refrained from invoking it prior to the award on jurisdiction, was not admissible, failing to have raised this irregularity in good time, to rely on it during the proceedings on the merits one year later;

Hence it follows that the ground cannot be upheld;

On the second ground of appeal, hereinafter annexed:

Whereas there is no need to give a specially reasoned decision on this ground, which clearly does lead to the annulment;

FOR THESE REASONS:

DISMISSES the appeal;

Condemns Damietta International Port Company SAE to pay the costs;

Pursuant to Article 700 of the Code of Civil Procedure, rejects its request and orders it to pay to Archirodon-Arab Contractors Joint Venture and to the companies Archirodon Construction (Overseas) CO SA and The Arab Contractors I… & Co, the global sum of 3,000 euros ;

Thus done and judged by the Court of Cassation, First Civil Chamber, pronounced by the President in its public hearing of the eleventh of July two thousand and nineteen and signed by him and by Mrs Randouin, Chamber Registrar, who attended the delivery of the judgment.