Paris Court of Appeal upholds partial award on jurisdiction in multi-contract dispute | Practical Law

Paris Court of Appeal upholds partial award on jurisdiction in multi-contract dispute | Practical Law

Brendan Green (Associate), Herbert Smith LLP

Paris Court of Appeal upholds partial award on jurisdiction in multi-contract dispute

Practical Law UK Legal Update 8-521-2639 (Approx. 3 pages)

Paris Court of Appeal upholds partial award on jurisdiction in multi-contract dispute

by Practical Law
Published on 06 Sep 2012France
Brendan Green (Associate), Herbert Smith LLP
The Paris Court of Appeal has dismissed an application by the Republic of Congo to set aside a partial award on jurisdiction rendered by an ICC tribunal on 20 August 2010. The decision arises out of a long running dispute involving multiple contracts and attempts at resolution.

Facts

The Congolese company, Commission Import Export SA (Commisimpex), undertook various public works projects in the Congo between 1984 and 1986. On 14 October 1992, the parties concluded an agreement with respect to amounts due to Commisimpex arising out of those projects and containing an ICC arbitration clause (1992 Agreement). Despite the Agreement, the parties failed to the resolve the dispute. Commisimpex commenced arbitration and received an award in its favour on 3 December 2000. In September 2001, it applied to the Commercial Court of Brazzaville for the appointment of an expert to quantify the amounts still outstanding, as well as an order for the payment of those sums. On appeal, the Congolese Supreme Court found that the commercial court only had jurisdiction to grant interim and conservatory measures and quashed the appellate court judgment ordering payment after expert determination.
On 23 August 2003, a second agreement was signed in which the parties agreed to the payment of sums due to Commisimpex pursuant to the 1992 Agreement and the 2000 arbitral award (2003 Agreement). The 2003 Agreement contained no arbitration or choice of forum clause.
In April 2009, Commisimpex commenced a second arbitration. Although the arbitration requested payments due under the 2003 agreement, it relied on the 1992 Agreement as the basis of the tribunal's jurisdiction.
The arbitral tribunal issued a partial award on 20 August 2010, finding that it had jurisdiction to hear the dispute.
Congo applied to the Paris Court of Appeal to set aside the award on 27 October 2011. Congo argued first that the tribunal had issued the award in the absence of an arbitration clause or on the basis of an invalid clause, and second that Commisimpex had implicitly waived its rights under the arbitration clause by applying for relief before the Congolese courts.

Decision

The Court of Appeal dismissed Congo's attempt to set aside the award.
With respect to the first argument raised by Congo, the court noted that the 2003 Agreement contained neither arbitration nor jurisdictional provisions. Given the lack of such a provision and the fact that the 2003 Agreement arose out of the 1992 Agreement, the court found that the two agreements were complimentary. It therefore concluded that a dispute arising out of the 2003 Agreement could be found to fall within the scope of the arbitration clause contained in the 1992 Agreement.
With respect to Congo's second argument, the court accepted that parties to an arbitration clause can waive their rights under such a clause, notably by referring a dispute to domestic courts instead of arbitration. However, the Court of Appeal held that, given that the Congolese courts had ultimately considered that they did not have jurisdiction to grant the requested relief, but rather that their jurisdiction was limited to Commisimpex's request conservatory measures, Commisimpex could not be seen as having waived its rights under the arbitration clause. This was the case even though it had made oral submissions with respect to the substance of the dispute before the Congolese courts.

Comment

While the decision demonstrates the reticence with which French courts may view claims that a party has waived its rights under an arbitration clause, it is particularly interesting as an example of the approach of French courts to issues related to the scope of an arbitration clause.
As noted, the court rejected Congo's arguments for a narrow reading of the relevant arbitration provisions. Although the dispute submitted to arbitration related more directly to the provisions of the 2003 Agreement, the court found that it could nonetheless be viewed as falling within the scope of the arbitration clause contained in the 1992 Agreement. This type of flexibility can be particularly valuable in complex, multi-contract disputes, where a strict, formalistic approach could lead to parallel proceedings and the attendant time, expense, and complications. The decision thus stands as an example of the pragmatic, arbitration-friendly approach of French courts.