Paris Court of Appeal, No. 19-12.440

Paris Court of Appeal – 1st Pole – 1st Chamber – 30 June 2020, No. 19-12.440

Mr. Y A B X

Vs.

THE STATE OF LIBYA

I- FACTS AND PROCEEDINGS

1- Mr. Y X is an investor, of German nationality, residing in Tunisia and has had a business relationship with the State of Libya.

2- Considering that he has suffered prejudice following the events that occurred in this country in 2011, in connection with an investment made in a Libyan company whose purpose is the manufacture of bricks for the Libyan market, Mr. X informed Libya on 27 December 2011 that he intended to initiate arbitration proceedings against it, on the basis of Article 11 of the bilateral investment treaty concluded between Germany and Libya.

3- A consent award was issued on 9 December 2016 ordering the payment by Libya to Mr. X of the sum of one hundred and twenty million dollars (USD 120,000,000).

4- This award was granted exequatur by an order of the President of the Paris Tribunal de Grande Instance issued on the 3rd of February 2017 and given enforceability on the 9th of February 2017.

5- The State of Libya filed an appeal for review against the award on 7 August 2017, claiming the existence of fraud.

6- In an award issued in France on 24 May 2019, the tribunal ordered the withdrawal of the consent award of 9 December 2016, ordered Mr. X to reimburse the Libyan State for the costs and fees of the arbitral tribunal and stated that the most diligent party may refer the matter to the tribunal on the merits within three months from the date of notification of the award.

7- On 25 June 2019, Mr. X filed an action for annulment against the award ordering withdrawal of the consent award. On 1 October 2019, the parties were notified that the file had been sent to the Public Prosecutor’s Office for an opinion.

II- CLAIMS AND GROUNDS OF THE PARTIES:

8- Under the terms of its incident submissions notified electronically on 6 January 2020, the State of Libya requests the Pre-Trial Judge to:

• Declare inadmissible the action for annulment brought by Mr. Y A B X against the award on the merits of the application for review rendered on 24 May 2019;

• Order Mr. Y A B X to pay the State of Libya the sum of EUR 20,000 pursuant to Article 700 of the Code of Civil Procedure, as well as the entire costs.

9- In support of its incident submissions, the State of Libya claims that, pursuant to Article 1518 of the Code of Civil Procedure, the action for annulment is not admissible against all awards and in particular not against those that do not rule, in whole or in part, on the merits of the dispute and do not terminate the proceedings.

10- The State of Libya claims that in this case, the Tribunal did not rule on the merits of the dispute, having recalled that it was ruling on the merits of the appeal “within the meaning of Article 601 of the Code of Civil Procedure” and that it was up to the most diligent party to refer the case to the arbitral tribunal for a new ruling on the merits of the dispute.

11- According to his submissions “in response upon incident”, notified electronically on 26 February 2020, Mr. Y X requests the Pre-Trial Judge, under the terms of Articles 1504 and 1520-3° to:

• Find that the Award on the Merits of the Application for Review issued by the Arbitral Tribunal on 24 May 2019 definitively settles the dispute between Mr. Y X and the State of Libya;

• Declare and rule that the appeal for annulment of Mr. Y X dated 25 June 2019 is admissible;

• Dismiss the State of Libya’s incident submissions;

• Order the State of Libya to pay Mr. Y X the sum of EUR 20,000 pursuant to Article 700 of the Code of Civil Procedure;

• Condemn the State of Libya to the entire costs of the proceedings, diverted in favour of Maître Samia MAKTOUF, Lawyer at the Bar of PARIS, and under her due affirmation.

12- In support of his response, Mr. X essentially claims that the award issued on 24 May 2019 has specific characteristics that make it a definitive resolution of the dispute since the sole and unique orientation of this award is against him, the Arbitral Tribunal having constantly stressed, in a quasi-criminal nature, that it would have resorted to multiple frauds and openly tried to mislead the arbitrators in order to obtain a decision in its favour. Mr. X considers that the Arbitral Tribunal places him under a presumption of bad faith which makes it impossible for the Tribunal to re-examine the merits of the case in a calm and impartial manner.

13- Mr. X points out that the impossibility of any serene and impartial decision by the same Arbitral Tribunal, acting as its own court of appeal and cassation, prohibits any idea of going back and thus any return to the merits of the case before it.

14- Mr. X claims that this situation thus makes the arbitral award a decision on the merits and that, in so doing, the Arbitral Tribunal is subject to the provisions of Article 1520-3° of the Code of Civil Procedure, according to which an action for annulment is available if the Arbitral Tribunal has ruled in violation of the mission entrusted to it, which was to rule on a commercial dispute rather than to cast opprobrium on one of the parties solely on the basis of insinuations.

15- Mr. X adds that this action for annulment is admissible since, although the notion of withdrawal of an arbitral award exists specifically in French law, it has no existence in the UNCITRAL Arbitration Rules, which are relevant since the Award of 24 May 2019 is issued in ad hoc UNCITRAL arbitration, nor a fortiori in the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, The Commission considers that the principle of an arbitral award is that it is not subject to appeal and, as the New York Convention specifically stipulated, cannot be refused enforcement except on account of an irregularity vitiating it and which, in any event, must be proved.

16- It thus considers that the State of Libya cannot rely on the provisions of the Code of Civil Procedure common to all courts, including those under French law, which are bound by the general principles of law in France and therefore cannot be applied to proceedings that do not fall within the jurisdiction of any national court.

17- By electronic notification on 12 June 2020, the public prosecutor’s office claims that the action for annulment brought by Mr. X should be declared inadmissible. The public prosecutor states that the award refers several times to the Code of Civil Procedure such that it was indeed considered by the parties as the procedural law applicable to the dispute and that this code and in particular its Article 1520 is applicable to determine the remedies available. He added that paragraph 242 of the contested award states that the court “shall not, however, rule on the merits of the dispute” and that, in so doing, the award does not terminate the proceedings and therefore the action for annulment is not admissible.

III- REASONS FOR THE DECISION:

On the admissibility of the action for annulment;

18- According to Article 1527 of the Code of Civil Procedure, the appeal against the exequatur order and the appeal for annulment of the award are filed, investigated and judged in accordance with the rules relating to the contentious procedure provided for in Articles 900 to 930-1.

19- Pursuant to Article 914 of the Code of Civil Procedure, “the parties shall submit to the Pre-Trial Judge, who has sole jurisdiction from the time of his appointment until the end of the investigation, their conclusions, specifically addressed to this judge, tending to (… ) declare the appeal inadmissible and rule on this occasion on any question relating to the admissibility of the appeal (… )”.

20- With respect to arbitral awards, actions for annulment may only be brought against actual arbitral awards, formed by the acts of the arbitrators who rule definitively, in whole or in part, on the dispute submitted to them, whether on the merits, on jurisdiction or on a procedural ground that leads them to terminate the proceedings.

21- In this case, it is settled that the arbitral tribunal expressly stated in its award entitled “Award on the merits of the appeal for review” that it had not ruled “on the merits of the dispute, namely the alleged violation of the German-Libyan bilateral investment treaty”, by ruling “in the present award on the merits of the appeal within the meaning of Article 601 of the Code of Civil Procedure” and that “withdrawal of the award on agreed terms puts the parties back in the position they were in before the award was made” (paragraphs 239 to 243).

22- Therefore, it should be considered that by withdrawing the award of agreement-parties issued on 9 December 2016, even after a contradictory examination of the arguments and an assessment of their merits, the disputed award, which did not end the proceedings but, on the contrary, authorized a new investigation of the dispute without prejudging its outcome, cannot be immediately appealed regardless of the award on the merits.

23- Consequently, the action for annulment must be declared inadmissible.

On costs and expenses;

24- Mr. Y X, who is the unsuccessful party, should be ordered to pay the costs.

25- Moreover, Mr. Y X should be ordered to pay the State of Libya, which had to incur unrepeatable costs in order to assert his rights, compensation under Article 700 of the Code of Civil Procedure, fairly set at the sum of EUR 8,000.

IV - FOR THESE REASONS:

The Court

1 - Declares inadmissible the action for annulment against the award issued on 24 May 2019;

2 - Orders Mr. Y X to pay the State of Libya the sum of EUR 8,000 under Article 700 of the Code of Civil Procedure;

3 - Orders Mr. Y X to pay the costs.