Paris Court of Appeal, No. 19/11695

Paris Court of Appeal, Fifth Pole, Sixteenth Chamber, 29 September 2020, No. 19/11695

NESTLÉ CENTRAL AND WEST AFRICA LIMITED VS. PERISCOOP S.A.R.L.

I- FACTS AND PROCEDURE

  1. On 10 June 2016, the Ghanaian company Nestlé Central and West Africa Limited, part of the Nestlé food group, and the French production company Periscoop signed a partnership agreement in which the company Nestlé Central and West Africa Limited undertook to finance the production of the program “L’Afrique a un incroyable talent” in French-speaking African countries in return for the promotion of the Nescafé brand during the program.

  2. The duration of the engagement was planned for 3 seasons.

  3. At the end of the first season, the parties signed a new partnership agreement dated 20 April 2017, called “amended and restated partnership agreement” for the second season.

  4. After the second season, following discussions, Nestlé Central and West Africa did not wish to continue the collaboration for the third season 2018. As a result, a dispute arose which the parties were unable to end amicably.

  5. On 24 May 2018, Periscoop filed a request for arbitration with the International Chamber of Commerce (ICC) seeking damages for breach of contract in the amount of 1,425,163 euros covering the costs of financing the third season it had assumed.

  6. Mr. Z A sole arbitrator appointed by the ICC rendered an award in Paris on 27 February 2019 under the expedited procedure which:

  1. condemns the company Nestlé Central West Africa to pay to the company Periscoop:
  • an amount of USD 500,000 (i.e., EUR 432,510, according to the USD/EUR conversion made by PERISCOOP SARL) in respect of the licence fee due to FremantleMedia for the third season of the Programme in 2018;
  • an amount of EUR 481,253.18 in respect of expenses to be reimbursed as compensation for costs incurred by PERISCOOP SARL; and
  • an amount of EUR 49,344.00 in legal fees and expenses of PERISCOOP SARL.

These amounts must be increased by interest at the legal rate in France of 0.86% per annum from the date of notification of this Final Award, until payment in full of the amounts due.

  1. takes no decision regarding the fact that PERISCOOP SARL reserves the right to seek compensation from NESTLÉ CENTRAL AND WEST AFRICA LIMITED in the event that an action is brought by a third party after delivery of the award in this arbitration.

  2. sets the costs of ICC arbitration at USD 81,000 and states that they shall be borne by the Parties as follows: 1/3 to be borne by PERISCOOP SARL, i.e., USD 27,000 and 2/3 to be borne by NESTLÉ CENTRAL AND WEST AFRICA LIMITED, i.e., USD 54,000. As the Parties have each paid an amount of USD 40,500 in respect of their respective share of the provision for costs, NESTLÉ CENTRAL AND WEST AFRICA LIMITED shall reimburse PERISCOOP SARL an amount of USD 13,500.

  3. rejects all other claims and demands made by the Parties in this arbitration.

  1. On 4 June 2019, Nestlé Central and West Africa Limited appealed against this award.

II- CLAIMS OF THE PARTIES

  1. According to its submissions communicated electronically on 15 January 2020, Nestlé Central and West Africa Limited asks the court to receive its action for annulment and to declare it well founded:
  • to annul the arbitral award rendered on 27 February 2019 under the aegis of the ICC;
  • to dismiss Periscoop from all its claims, purposes and submissions;
  • to condemn Periscoop to pay the entire costs of the appeal, including the distraction to the profit of Mr. K L-M and to pay a sum of 20,000 euros pursuant to Article 700 of the Code of Civil Procedure.
  1. By submissions signified by electronic means on 12 March 2020 the company Periscoop asks the court in view of articles 32-1, 696, 700, 1464 paragraph 3, 1466, 1504, 1520-4, 1520-5 and 1527 of the code of civil procedure:

On the ground alleging infringement of Article 1520-4 of the Code of Civil Procedure:

To declare inadmissible, in application of the principle of estoppel and/or the provisions of Article 1466 of the Code of Civil Procedure, the action for annulment brought by the NESTLE CENTRAL AND WEST AFRICA COMAPNY in that it is based on an alleged violation of the “rights of the defence”;

Failing that:

To declare the action for annulment brought by the NESTLE CENTRAL AND WEST AFRICA COMPANY to be ill-founded in that it is based on an alleged violation of the “rights of the defence”;

On the ground alleging infringement of Article 1520-5 of the Code of Civil Procedure:

To declare the action for annulment brought by the NESTLE CENTRAL AND WEST AFRICA COMPANY to be ill-founded in that it is based on an alleged violation of international public order;

As a result:

To dismiss the NESTLE CENTRAL AND WEST AFRICA COMPANY from all its demands, purposes and submissions;

To declare that exequatur is conferred on the ICC award rendered on 27 February 2019 in ICC case 23657/DDA and affix it to its certified copy in application of Article 1527 of the Code of Civil Procedure;

To condemn the NESTLE CENTRAL AND WEST AFRICA COMPANY to pay 30,000 euros (thirty thousand euros) to the PERISCOOP COMPANY, for abusive recourse against the ICC award handed down on 27 February 2019 in the ICC case 23657/DDA, by application of article 32-1 of the Code of Civil Procedure;

To condemn the NESTLE CENTRAL AND WEST AFRICA COMPANY to pay 70,000 euros (seventy thousand euros) to the PERISCOOP COMPANY, on the basis of article 700 of the Code of Civil Procedure;

To condemn the NESTLE CENTRAL AND WEST AFRICA COMPANY to pay all the costs, including those relating to the distraction, for those concerned, at the benefit of Me Patricia HARDOUIN ' SELARL 2H AVOCATS and this, in accordance with the provisions of article 699 of the CPC.

  1. The closing order was issued on 30 June 2020.

III- GROUNDS OF THE PARTIES

  1. In support of its action, Nestlé Central and West Africa Limited relies successively on the following grounds:
  1. The disregard of the principles of contradiction and equality of arms (Article 1520-4 and 1520-5 of the Code of Civil Procedure) in that the arbitrator refused to grant its request to produce a witness attestation.

It points out that if, during the proceedings, it had refrained from producing a witness statement with its first brief, it seemed necessary to do so afterwards, which the arbitrator refused to do.

It explained that under these conditions it found itself at a disadvantage in relation to Periscoop, without being able to contradict the certificate and the statements made at the hearing by Ms E Y, director of Periscoop, who was the only witness to have taken part in the negotiations, thus placing the parties in an unequal situation.

It added that the Arbitrator’s proposal to add witnesses to the oral argument hearing that took place two days before the hearing was late and impracticable, given the travel formalities and the distance to Ghana.

It points out that the rights of the defence are an integral part of French international procedural public policy and that the enforcement of an award is incompatible with international procedural public policy when the fundamental principles of the trial have been violated, it being added that international procedural public policy includes the rule of equality of arms.

In response to the inadmissibility of the ground raised on the basis of the estoppel and Article 1466 of the Code of Civil Procedure, it argues that it never gave up challenging the arbitrator’s decision, which appears consistently in its rejoinder of 21 December 2018 and in its email of 8 January 2019 addressed to the Arbitrator and to the counsel of Periscoop who was aware of it.

It considers that the execution in France of an award handed down in disregard of equality of arms, an essential component of the right to a fair trial, is contrary to international public policy.

  1. The violation of international public policy in that, in the award, the Arbitrator erred in wrongly applying Article 1217 and not Article 1112 of the Civil Code in order to condemn it to pay compensation for the damage it allegedly caused to Periscoop on account of the alleged breach. It claims that only a loss of negotiation could be compensated and should have been limited to the costs incurred during the negotiations to the exclusion of any possible compensation for the loss of the benefits expected from the non-concluded contract, or for the loss of the chance to obtain those benefits.

It considers that the part of the condemnation pronounced by the Arbitrator which does not correspond to the prejudice of negotiation is undue and constitutes, if it were paid, a levy without cause on Nestlé’s assets, in other words, an infringement of the latter.

It thus argues that by retaining an amount far in excess of the negotiation loss, the award infringes the principle of proportionality, its right of ownership and the rules of civil liability which are recognised legal values in the French legal system applicable to international matters.

  1. In response, Periscoop submits that the first ground alleging infringement of the rights of the defence based on a change of procedural position is inadmissible under the principle of estoppel and alternatively under Article 1466 of the Code of Civil Procedure.

It explains that Nestlé Central West Africa deliberately chose not to produce witness attestations by refraining from doing so within the framework of the procedural timetable set by the arbitrator and that by allowing the proceedings to continue without raising any real objections to the rejection of its request for the production of a witness attestation outside the timetable, it waived her right to rely on this irregularity and its appeal based on this ground is in contradiction with its procedural position.

With regard to the grievances attached to the second ground, Periscoop replied that it was inadmissible and unfounded insofar as the appellant did not invoke in its support any rule of French international public policy and that it sought to ask the court to revise the award on a question that had in any event been pleaded and decided.

IV- REASONS FOR THE DECISION

On the ground derived from the disregard of due process (in French: principe de contradiction) and equality of arms (Articles 1520-4 and 1520-5 of the Code of Civil Procedure);

On the end of inadmissibility taken from Article 1466 of the Code of Civil Procedure and the principle of the prohibition of contradicting oneself to the detriment of others (estoppel)

  1. Article 1466 of the Code of Civil Procedure provides that a party who, knowingly and without legitimate reason, fails to invoke an irregularity before the arbitral tribunal in good time shall be deemed to have waived the right to invoke it.

  2. As for estoppel, it is a procedural conduct constituting a change of position which, in order to be characterised, must have the consequence of misleading its opponent as to its intentions, contradicting itself to the detriment of others.

  3. It appears from the arbitration proceedings and from the statements of the award that a timetable had been set following a conference on the management of the proceedings on 28 August 2018 by which it was noted that by mutual agreement the parties should, if they wished to rely on witness statements, produce them together with their first brief, i.e. by 8 October 2018 for the Claimant and by 19 November 2018 for Nestlé Central and West Africa Limited; that they could subsequently file a second and final brief on 7 December 2018 and 21 December 2018 (defendant) and that the court would decide by 23 November 2018 on the organisation of a physical hearing to be held on 9, 10 or 11 January 2019 depending on the availability of the parties.

  4. According to Order No. 2 dated 23 November 2018, pursuant to which the arbitral tribunal noted that Nestlé Central and West Africa Limited had not filed witness statements in support of its brief filed on 19 November 2018, while Periscoop had produced two certificates, it was decided to hold a physical hearing on 9 January 2019, inviting the parties to tell before 28 November 2018 whether witnesses would be available on that date.

  5. On 28 November 2018, Nestlé Central and West Africa Limited indicated by email to the arbitrator “that it was possible that it would produce a witness statement in support of its rejoinder and that if it had to do so, it would ensure the availability of the witness on that date” requesting in other words to produce statements outside the schedule agreed in the case management conference of 28 August 2018.

  6. Invited by the Arbitrator to give its opinion on the matter, the company Periscoop, by email of 6 December 2019, expressed its disagreement on this possibility on the grounds that it was in breach of the set calendar and the principle of loyalty set by Article 1464 of the Code of Civil Procedure, noting that it could not respond, given that there was no third set of writing planned.

  7. By Procedural Order No. 3 of 11 December 2018, the arbitral tribunal rejected the proposal of Nestlé Central and West Africa Limited, maintaining the timetable which, inter alia, indicated in the English version:

«11. Considering that the Arbitral Tribunal on 3 December 2018 requested Claimant’s comments as to […], as this had not been foreseen and not yet been discussed and as the procedural calendar fixed in agreement between the parties and laid down in Procedural Order Nr. 1 does not foresee a […]

12. Considering that Claimant on […], against the Parties’ agreement, against due process and against loyalty in the process, […]

[']

15. […], […], and as there is no third round of submissions foreseen or agreed between the Parties, the […] 2018) ».

  1. These paragraphs can be translated into French as follows:

« 11. Considérant que le 3 décembre 2018, le Tribunal arbitral demande à la Demanderesse de lui indiquer si elle accepterait que la Défenderesse produise avec son Deuxième Mémoire des attestations de témoins, étant donné que cela n’avait pas été prévue et n’avait pas encore été discuté, et que le calendrier procédural fixé conjointement par les Parties et contenu dans l’Ordonnance de procédure n°1 ne prévoit pas un nouveau jeu d’écriture après la communication du Deuxième Mémoire par chaque partie.

12.Considérant que, le 16 décembre 2018, la Demanderesse a exprimé ses objections concernant la production par la Défenderesse d’attestation de témoins avec son Deuxième Mémoire tout en soulignant que cela serait contraire aux Ordonnance de procédure de l’Arbitre, à l’accord des Parties, aux garanties d’un procès équitable au principe de loyauté de la procédure, si la Défenderesse produisait des attestations de témoins avec son Deuxième Mémoire qu’elle aurait dû et/ou aurait pu déposer avec son Premier Mémoire.

[']

15.En l’absence d’un accord entre les Parties postérieurement à l’Ordonnance de procédure n°1 afin de déroger à ce calendrier procédural en l’absence d’un troisième jeu d’écriture prévu ou convenu entre les Parties, le Tribunal arbitral ne peut pas accepter que la Défenderesse produise des attestations de témoins avec son Deuxième Mémoire (qu’elle devrait communique avant le 21 décembre 2018).»

In English:

“11. Whereas on 3 December 2018, the Arbitral Tribunal asked the Claimant to indicate whether it would agree to the Respondent’s production of witness statements with its Second Brief, as this had not been foreseen and had not yet been discussed, and the procedural timetable jointly agreed to by the Parties and contained in Procedural Order No. 1 does not provide for a new set of writing after the communication of the Second Memorial by each party.

12.Whereas, on 16 December 2018, the Claimant expressed its objections to the production by the Respondent of witness statements with its Second Submission while emphasizing that it would be contrary to the Arbitrator’s Procedural Order, the agreement of the Parties, the guarantees of a fair trial and the principle of fair trial, if the Respondent produced witness statements with its Second Submission, that it should have and/or could have filed with its First Submission.

[']

15.In the absence of an agreement between the Parties subsequent to Procedural Order No. 1 to derogate from this procedural timetable in the absence of a third set of written pleadings provided for or agreed upon by the Parties, the Arbitral Tribunal cannot accept that the Respondent produce witness statements with its Second brief (which it should communicate before 21 December 2018).”

  1. Although the proceedings continued on schedule without Nestlé Central and West Africa Limited providing a witness statement, the company nevertheless maintained its protest against this decision in its rejoinder and in an email dated 8 January 2019 on the eve of the hearing.

  2. It indeed pointed out to the arbitral tribunal, in paragraph 115 of its Rejoinder of 21 December 2018, under the heading “Reservations”, that if it was not allowed to produce a witness statement because of the claimant’s disagreement “Whatever the circumstances, the rights of the defence must be respected. The expedited nature of the proceedings cannot prevail over a mandatory rule of French law” which it reiterated in its email of 8 January 2019 addressed to the Arbitrator and to Periscoop’s counsel, pointing out that the Arbitrator could have reviewed the procedural timetable to respond to its request and that it was not in a position to have witnesses from abroad moved for the hearing, which took place within 48 hours.

  3. It follows from these statements and findings that the procedural behaviour of Nestlé Central and West Africa Limited does not amount to a waiver with regard to the reservations made.

  4. Moreover, this behaviour does not in any way characterise a change in the position of this company, nor could it mislead Periscoop as to its intentions.

  5. Consequently the end of inadmissibility drawn from the principle of the prohibition of contradicting oneself to the detriment of others must also be rejected.

On examining the merit of the ground

  1. In application of Article 1520-4 of the Code of Civil Procedure, the action for annulment is open if due process (in French: principe de contradiction) has not been respected.

  2. In this case, Nestlé Central and West Africa Limited challenges the arbitrator’s refusal to grant its request to produce a witness statement in the proceedings which gave rise to the award, whereas Periscoop exercised this right.

  3. It is not disputed that on the date on which Nestlé Central and West Africa Limited formalised its request to produce a witness statement, i.e. 28 November 2018, the time limits for doing so had expired and the proceedings were entering the phase of the last set of written pleadings due to take place on 21 December 2018 for Nestlé Central and West Africa Limited, i.e. on a date close to the oral argument hearing agreed to with the parties in January 2019 according to Procedural Conference No. 1 held on 28 August 2018.

  4. It is also true that the production of witness statements together with the second memorandum deprived Periscoop of the opportunity to discuss the matter and necessitated delaying the proceedings and shifting the date for the oral argument without Nestlé Central and West Africa Limited having put forward any explanation as to the late nature of its application or the circumstances which prevented it from keeping to the timetable, or having mentioned the name of a potential witness.

  5. In this regard, Nestlé Central and West Africa Limited cannot seriously claim that it was during the proceedings that the need to produce a certificate became apparent to it, even though it had indicated at the management conference of 28 August 2018 that it would produce witness certificates on the date fixed of the first memorandum and it did not explain the reasons that led it to change its mind.

  6. It follows from these elements that, contrary to what Nestlé Central and West Africa Limited maintains, the Arbitrator’s decision was not taken on the basis of Periscoop’s disagreement in disregard of the rights of the defence, but with regard to the imperative dates of the timetable of the proceedings, subject to the provisions of the expedited procedure, from which there was no reason to derogate as long as the parties were on an equal footing and were given the same time and opportunity to produce witness statements within an accepted time limit, which Nestlé Central and West Africa Limited had failed to meet.

  7. Moreover, it is clear from paragraphs 40 et seq. of the award that during his telephone conference the arbitrator did not allow Nestlé Central and West Africa Limited to call witnesses two days before the hearing.

  8. He only indicated on 7 January 2019 in the context of determining the persons entitled to attend the hearing, after having noted that Mr. X would represent Nestlé Central and West Africa Limited assisted by his lawyers and that Periscoop would be represented by Ms. Y assisted by Ms. F G, who would provide her with assistance and her lawyer, that Nestlé Central and West Africa Limited could still choose to be represented by other persons “in addition to Mr. X”, it being recalled that “it had not filed a witness statement” ( §44).

  9. Thus, it is clear from these statements and findings that the Arbitrator conducted the proceedings in a manner that struck a fair balance between Periscoop’s right to have its claims examined within a reasonable time and Nestlé Central and West Africa Limited’s right to organise its defence in a meaningful way.

  10. In the light of all these elements, the ground alleging infringement of the principle of contradiction and equality of arms will accordingly be rejected.

On the plea alleging breach of international public policy by disregard of the principle of proportionality and civil liability;

  1. In application of Article 1520.5° of the Code of Civil Procedure, an action for annulment shall be brought if the recognition or enforcement of the award is contrary to international public policy.

  2. The court’s control must relate not to the arbitrator’s assessment of the rights of the parties but to the solution given to the dispute by the arbitral tribunal, the award being annulled if its recognition or enforcement violates the French concept of international public policy, which, within the meaning of the aforementioned Article 1520.5°, means all the rules and values which the French legal system cannot disregard, even in situations of an international nature.

  3. In the present case, Nestlé Central and West Africa Limited, claiming that the Arbitrator did not correctly apply French law by wrongly applying Article 1217 and not Article 1112 of the Civil Code in rendering his award, and thus violating the principles governing civil liability, criticises the award on the merits, which is not within the supervisory powers of the Annulment Judge.

  4. It follows that this ground will be rejected.

  5. Since all the grounds invoked in support of the annulment of the award are rejected, this decision confers exequatur on the arbitral award pursuant to Article 1527 of the Civil Code.

On the counterclaim in abusive proceedings of the company Periscoop;

  1. The court noted that it results from Article 32-1 of the Code of Civil Procedure that the company Periscoop aims, in support of its claim, that the civil fine benefits to the State and not to the respondent party, so that the latter has no interest in requesting its application.

  2. Moreover, the exercise of a legal action is in principle a right and only degenerates into an abuse which may give rise to damages in the event of fault liable to give rise to the civil liability of the perpetrator.

  3. For these reasons, Periscoop will be dismissed on this ground, failing to prove any fault or blameworthy negligence on the part of Nestlé Central and West Africa Limited which may have legitimately misunderstood the extent of its rights, and to establish the existence of a prejudice other than that suffered as a result of the costs incurred for its defence.

On costs and expenses;

  1. Nestlé Central and West Africa Limited, the losing party, shall be condemned to pay the costs which shall be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure.

  2. In addition, it must be condemned to pay Periscoop, which had to incur irrecoverable costs in order to assert its rights, compensation under Article 700 of the Code of Civil Procedure that it is fair to fix it at the sum of EUR 25,000.

FOR THESE REASONS, THE COURT

1 ' Rejects the action for annulment brought by Nestlé Central and West Africa Limited;

2- Confers the exequatur of the arbitration award N°23657 rendered in Paris on 27th February 2019 under the aegis of the International Chamber of Commerce in the dispute between Periscoop and Nestlé Central and West Africa Limited;

3 – Dismisses Periscoop’s claim for abusive procedure;

4 - Condemns Nestlé Central and West Africa Limited to pay Periscoop the sum of 25,000 euros pursuant to Article 700 of the Code of Civil Procedure;

5- Condemns Nestlé Central and West Africa Limited to pay the costs which shall be recovered in accordance with the provisions of article 699 of the Code of Civil Procedure.