Court of Cassation, No. 19-18.849

Court of Cassation, Commercial Chamber, 12 November 2020, 19-18.849,

IPSA (French company)

CBF ASSOCIES

SOCIETE I…O…

Vs.

SOCIETE ALPHA PETROVISION HOLDING AG (APV) (Swiss company)

Facts and Proceedings

  1. Whereas, according to the judgment under appeal (Paris, 14 May 2019), by an agreement dated 9 September 2011, the Swiss company Alpha Petrovision Holding (the company APV) transferred to the company ACG Private Equity (the company ACG) all the shares of IPSA, a French-based mutual fund manager, for the price of EUR 1 pending the liquidation of the funds, and two price supplements, one representing 50% of the result of the company IPSA, known as Earn Out, and the other based on the performance of funds. In March 2012, ACG sold the shares to the French company IPSA Holding, which took ACG’s place in all of its rights and obligations.

  2. On 12 November 2014, the company APV initiated the arbitration proceedings to settle a dispute relating to the payment of the price supplements. The arbitral tribunal issued in Zurich, on 23 December 2016, an award ordering IPSA Holding to pay APV a sum of EUR 3,310,399.16 in principal and interest, in addition to subsequent interest, costs and expenses.

  3. On 9 January 2017, a court initiated the safeguard proceedings against the company IPSA Holding, the company CBF associés, in the person of MB, being appointed director, and the company I … O …, in the person of Mrs. O., being appointed as judicial representative. The company APV declared its debt which was disputed.

  4. On 8 March 2017, the company APV, in amicable liquidation, filed a request for the enforcement of the arbitral award, requesting the delivery of a copy bearing enforcement order (in French Revêtue de la formule exécutoire).It was granted by an order of the president of the Paris Tribunal de Grande Instance of 10 March 2017, which declared the award enforceable. IPSA Holding has appealed against the order.

  5. By an order of 22 May 2018, the judge-commissioner, seized of the request for admission of the claim of the company APV, stayed the proceedings pending the decision of the court of appeal ruling on the appeal of the enforcement order.

Examination of the grounds:

The preliminary cross-appeal ground

Ground Statement

  1. APV objects to the judgment having overturned the exequatur order (enforcement order) in that it enforces an order to pay sums of money, whereas “as exequatur is not an act of execution, the opening in France of insolvency proceedings against a debtor convicted by an arbitral tribunal abroad has no impact on the exequatur of the arbitral award; whereas, in overturning the exequatur order of 10 March 2017 insofar as it renders enforceable a sentence for payment of sums of money, whereas the exequatur could only have the purpose of recognition and enforceability in France of the sentence and could not, without disregarding the principle of the termination of individual prosecutions, enforce a payment order, the court of appeal wrongly ruled that the exequatur would be a compulsory execution measure and violated article 1516 of the Code of Civil Procedure.”

Response of the Court

  1. The judgment states that the principle of termination of individual proceedings against creditors is both domestic and international public policy and, after noting that the contested award of 23 December 2016, issued upon surrender, of the res judicata, had ordered the company IPSA Holding to pay various sums to the company APV, and that the court initiated the safeguard procedure of the company IPSA Holding on 9 January 2017, holds exactly that the exequatur could not, without disregarding the aforementioned principle, enforce a condemnation of the debtor to payment of sums of money.

  2. The ground is therefore unfounded.

The first ground of the main appeal

Statement of grounds

  1. The company IPSA Holding, the company CBF associés, in the person of MB, in its own capacity, and the company I … O …, in the person of Mrs. O., in its own capacity, object to the judgment confirming the order of exequatur in that it entails recognition of the award then, according to the ground:

“1 ° / that it follows from Articles L. 622-21, L. 622-22 and L. 624-2 of the Commercial Code that in the absence of proceedings pending at the date of the judgment initiating the debtor’s safeguard proceedings, the creditor, after having declared his debt, can only have the principle established and the amount fixed by following the procedure for verifying claims; that only a decision by which the judge-commissioner declares himself incompetent or notes his lack of judicial power to settle a dispute relating to a declared debt and consequently stays the proceedings on its admission, can invite the parties to seize the competent court; it follows that after having declared his debt, a creditor cannot directly submit a request for exequatur or recognition of an arbitration award to the judge and must wait for the decision of the judge-commissioner inviting him to refer the matter to the competent court, even if the dispute or the debt does not, a priori, fall within the jurisdictional power of the judge-commissioner; by ruling as it did, after noting that the company IPSA Holding had been placed in safeguard by a judgment of the Commercial Court of Paris of 9 January 2017, that the company APV had declared its debt as a liability of the company IPSA Holding on 16 February 2017 and then filed a request for the enforcement of the award on 8 March 2017, without waiting for the decision of the judge-commissioner who solely has the power to rule on the regularity of the declaration of debt,

2 ° / that the subject matter of the dispute is determined by the respective claims of the parties and that the judge must rule on all the claims and only on those claims; that by confirming the order of 10 March 2017 issued by the president of the Paris Tribunal de Grande Instance, in that it recognized the award issued on 23 December 2016, the company APV however requesting only, in its latest conclusions, the confirmation of this order in that it had conferred the exequatur on the arbitration award, without asking for its recognition, the Court of Appeal violated articles 4 and 5 of the Code of Civil Procedure;

3 ° / that the judge must observe and ensure that is observed the principles of due process (in French Principe de la contradiction); that by raising of its own motion the ground alleging that in the circumstances of the case, the exequatur could only have as its object the recognition and enforceability in France of the award, without first inviting the parties to explain this ground, the Court of Appeal violated article 16 of the Code of Civil Procedure.”

Response of the Court

  1. The judgment holds that, in accordance with the provisions of Article 1525 of the Code of Civil Procedure, the award can only be contested by appealing against the exequatur order and on the grounds listed exhaustively in this text, it is the responsibility of the creditor to apply for exequatur when the creditor’s verification of the claims reveals a dispute in respect of which the judge-commissioner is not competent, that the exequatur pronounced in the of such circumstances can only have as their object the recognition and enforceability in France of the award and that the exequatur order issued on 10 March 2017, subsequent to the declaration of the award, is not subject to the complaint of the violation of the principle of international public policy of the discontinuation of the debtor’s individual lawsuits by the creditors with regard to this effect alone. recognition. Of these findings and assessments, the Court of Appeal, which was seized by the APV company of conclusions asking for the exequatur of the award in order to incorporate its provisions into the legal system without disregarding the subject matter of the dispute or the principle of contradiction, it was precisely deduced that exequatur could, in the present case, be granted with the aim, not to confer on the arbitral award the enforceability of a decision condemning the debtor, but exclusively to allow APV to recognize its debt.

  2. The ground of appeal is therefore unfounded.

And on the second ground of the main appeal

Ground Statement

  1. The company IPSA Holding, the company CBF associés, in the person of Mr. B., in his capacity as such, and the company I…- O…, in the person of Mrs. O., in her capacity, make the same objection to the judgment, whereas “in its last notice of appeal, filed and notified on 3 December 2018, IPSA Holding precisely argued that the failure to recognize the principle of due process by the arbitral tribunal resulted from the fact that its decision on the items of expenses, in the second part of its arbitral award, had not taken into consideration criteriae that they had defined in the first part of this award, which did not correspond to the position of the claimant in the arbitration, the APV company, for which all expenses were to be treated in the same way, without distinction, as well as that of the defendant in the arbitration, IPSA Holding, which considered that all of the exceptional expenses relating to the management of the company before the closing were to be excluded from the calculation of the spending limit, since the arbitral tribunal had, on the contrary, ruled that such expenses should be excluded from the calculation of the expenses only if they result from a violation of the representations and warranties set out in the contract; that it added that the arbitral tribunal was therefore accused of not having given the opportunity to provide its own argumentation, item by item, in respect of these expenses, in the light of the criteria previously adopted in the award, which did not correspond to those proposed by the parties; that in ruling as it did, on the grounds that the item-by-item discussion of expenses had been introduced into the debate by the calculation note filed by the company IPSA Holding and challenged by the company APV, and that it had moreover been the subject of the hearing by the arbitrators of the witness from IPSA Holding, as the Swiss Federal Court noted, without responding to these operative conclusions, the Court of Appeal violated Article 455 of the Code of Civil Procedure.”

Response of the Court

  1. As soon as the arbitral tribunal was seized of a discussion on the interpretation to be given to the clause in the securities transfer agreement providing the rules for calculating the so-called Earn out, assuming that the expenses likely to be included in this calculation would be determined, the Court of Appeal, by noting that IPSA Holding had submitted to the arbitral tribunal documents detailing, item by item, the various elements involved, in its opinion, in the calculation of the earning out, each of the items being contested by APV, and by noting that the item-by-item discussion of expenses had been introduced into the debate by the calculation note filed by the company IPSA Holding and challenged by the company VPA, and had been the subject of the hearing by the arbitrators of the witness from IPSA Holding, replied, by dismissing them, to the submissions put forward.

  2. The ground of appeal is therefore unfounded.

FOR THESE REASONS, the Court:

Dismisses the main appeal and the cross-appeal;

Leaves each party to bear its own costs;

Pursuant to Article 700 of the Code of Civil Procedure, rejects the requests;

Thus done and judged by the Court of Cassation, chamber commercial, financial and economic, and pronounced by the President at his public hearing on the 12th November two thousand and twenty.