Court of Cassation, No. 18-10.395 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 6 November 2019, No. 18-10.395

Challenged decision: Paris Court of Appeal, Pole 1 - First Chamber, 17 October 2017, No. 15/13696

TRANS WORLD FINANCES

STB H2O INDUSTRIE

SM2G POLOWANIE

vs.

NOV BRANDT EUROPE FRANCE

THE COURT OF CASES, FIRST CIVIL COUNCIL CHAMBER, issued the following judgment:

On the sole ground:

Whereas, according to the facts as stated in the judgment under appeal (Paris, 17 October 2017), the company Nov Brandt Europe France (Nov) acquired two business assets from French and Gabonese companies, as well as shares in the Tunisian company STB H20 Tunisie, which operated a waste treatment centre in Tunisia, through a contract dated 11 March 2008 called the “Master share and business transfer agreement” (the Contract). Under the terms of this Contract, which provided for the claimant to have recourse, in the event of a dispute, to arbitration under the aegis of the Arbitration and Mediation Centre of Paris (CAMP), the French companies Trans World Finances (TWF), STB H20 Industrie and, SM2G, the Luxembourg company Polowanie, as well as Messrs. L… and E… I… (the guarantors) undertook to indemnify Nov in the event of a breach of the warranties set out in Annex 1 of the Contract, subject to several restrictions. In 2010, Nov notified the guarantors of four claims relating to breaches of the contractual warranties. On 12 August 2010, the parties signed a draft agreement under which the guarantors undertook to remove a certain volume of sludge at their own expense, in exchange for which all existing disputes were definitively settled. The draft agreement contained a clause conferring jurisdiction upon the Commercial Court of Paris. In 2012 and 2014, after notifying new claims, Nov implemented the arbitration clause. By a partial award issued on 1 June 2015, the arbitral tribunal declared that it had jurisdiction and the guarantors filed an action to set aside the award;

Whereas the guarantors object to the judgment dismissing their claim, then, according to the argument:

1°/ that the obligation for the arbitrator to rule first and foremost on his own jurisdiction does not prevent the parties from agreeing, in an agreement subsequent to the one containing the arbitration clause, on a clause conferring jurisdiction by which they decide to exclude from the scope of the arbitration clause certain disputes, even if they are required to determine the arbitrator’s jurisdiction. In the present case, the Court of Appeal admitted that it was necessary to interpret the draft agreement of 12 August 2010 and to appreciate the scope of the jurisdiction clause contained therein, in order to deduce the scope of application of the arbitration clause stipulated in the master share and business transfer agreement of 11 March 2008. By declaring the arbitral tribunal competent to interpret the draft agreement, without investigating, as it was invited to do, whether it did not result from this act that the parties had, by an expression of will contrary to the above-mentioned arbitration clause, intended to submit to the jurisdiction of the domestic courts, not only the disputes arising from the draft agreement but also those related to it, such as a dispute over its interpretation, the decision of the Court of Appeal lacks legal basis with regard to article 1520-1 of the code of civil procedure, article 1134, now 1103 of the civil code, and the principle of competence-competence;

2°/ that the parties, who agreed on an arbitration clause may, by a new expression of will, call into question or limit the scope of application of that clause; that by refraining from investigating, as it was invited to do, whether the draft agreement did not result in the parties, by an expression of will contrary to the arbitration clause, intending to submit to the jurisdiction of the domestic courts, not only disputes arising from the agreement but also those relating to it, such as the disputed claims, the subject matter of which, concerning drilling waste and fines, was related to the disputes settled by the draft agreement, and which implied interpreting the latter, the decision of the Court of Appeal lacks of a legal basis with regard to Article 1520-1 of the Code of Civil Procedure and Article 1134, now 1103 of the Civil Code;

3°/ that, in the alternative, by holding that the draft agreement clearly concerned treated drilling waste, without investigating, as it was invited to do, whether it did not result from the comparison between the introductory paragraphs of the settlement agreement of 12 August 2010 referring to processed cuttings, and article 2 of this draft agreement referring to waste in general (“cuttings”) without specification and therefore without limitation to a particular category, a contradiction or, at the very least, an ambiguity, requiring interpretation, the decision of the Court of Appeal lacks legal basis under article 1134, now 1103 of the Civil Code;

4°/ that, in the alternative, the comparison between the introductory paragraphs of the draft agreement of 12 August 2010 referring to “processed cuttings” and Article 2 of the draft agreement referring to “cuttings” in general, without specification and therefore without limitation to a particular category, reveals a contradiction or, at the very least, an ambiguity as to the exact subject matter of the dispute which is the subject of the transaction. Thus, in holding that the draft agreement was clear on this point and did not require any interpretation, the Court of Appeal breached Article 1134, now 1103 of the Civil Code;

On the third branch of the ground, hereafter annexed:

Whereas there is no need to give a specially reasoned decision on this complaint, which is clearly not such as to lead to cassation;

However, whereas, the judgment notes, firstly, that under the terms of the draft agreement, the parties recognised that, in return for the reciprocal concessions and commitments undertaken, all existing accounts, claims, disputes and liabilities of any kind whatsoever in relation to the contract were definitively and irrevocably settled. Secondly, the agreement referred only to existing disputes, which means that this agreement is applicable to all disputes arising from the initial contract which would relate to matters distinct from those covered by the 2010 claims. Finally, the judgment states that these claims related to processed drilling cuttings and penalties not declared at the time of the transfer or issued subsequently for prior events, whereas the new claims related to untreated drilling waste and fines allegedly declared by the transferors but falsely presented as relating to pollution by domestic wastewater and not by hydrocarbons. By these statements and findings, the Court of Appeal, which carried out the allegedly omitted searches, pointed out that the arbitration clause stipulated by the parties in the contract and the choice of court clause, which had different purposes, were not irreconcilable, and that the insertion of the latter in the draft agreement did not entail a waiver by the parties of the former. It concluded correctly from this that the arbitral tribunal had jurisdiction to hear claims which, not falling within the scope of the transaction, fell within the scope of the arbitration agreement; that the ground was unfounded;

FOR THESE REASONS:

Dismisses the appeal;

Orders the French companies Trans World Finances (TWF), STB H20 Industrie, SM2G, the Luxembourg company Polowanie and Messrs I… to pay the costs;

Pursuant to article 700 of the Code of Civil Procedure, dismisses their application and orders them in solidum to pay the company Nov Brandt Europe France the sum of 3,000 euros;

Thus, done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President at a public hearing on the 6th November two thousand and nineteen.