Appeal against order granting enforcement only permitted under limited grounds relating to arbitral award (French Supreme Court)

In a judgment dated 7 October 2015, the Cour de cassation (French Supreme Court) has rejected an appeal against an order granting exequatur (enforcement) of a foreign arbitral award. The appellant had argued that such an order may be subject to an appel-nullité (nullity appeal) in circumstances where a judge has exceeded his or her powers. The Supreme Court reiterated that an appeal against an order granting enforcement is only permitted under certain limited grounds relating to the arbitral award itself (that is, those specified in Article 1520 of the French Code of Civil Procedure). It did not, however, expressly exclude the possibility of resorting to an appel-nullité in such circumstances. (Cass. Civ. 1^re, 7 Oct. 2015, F-P+B, n° 14-17.490.)

Enforcement of a foreign award in France

Under Article 1514 of the French Code of Civil Procedure (CPC), a foreign arbitral award (that is, an award made outside France) will be recognised or enforced in France if the party relying on it can prove that the award exists, and that recognition or enforcement is not manifestly contrary to international public policy. In order to establish the existence of an award, the requesting party must produce the original award, together with the arbitration agreement (or authentic copies of these documents) (Article 1515 of the CPC). If these documents are in a language other than French, a translation must be provided and the applicant may be asked to provide an accredited translation.

Article 1525 of the CPC permits an appeal against an order granting recognition or exequatur (enforcement) of a foreign award. The Court of Appeal may only overturn such an order on the limited grounds specified by Article 1520 of the CPC, which are as follows:

• The arbitral tribunal wrongly upheld or declined jurisdiction (1520 1°).
• The arbitral tribunal was not properly constituted (1520 2°).
• The arbitral tribunal ruled without complying with the mandate conferred upon it (1520 3°).
• Breach of due process (1520 4°).
• Recognition or enforcement of the award is contrary to international public policy (1520 5°).

Appel-nullité

Under French law, in circumstances where a judge has grossly disregarded or exceeded his or her powers, or committed a breach of a fundamental principle of law or public policy, and an ordinary appeal is not available, the decision may nonetheless be challenged via an "appel-nullité pour excès de pouvoir". This is an exceptional and subsidiary remedy.

Facts

On 3 March 2008, Dakin International Limited (Dakin), a BVI company, and its chief executive, (Mr X), concluded a memorandum of understanding (MoU) with Financial Technologies Middle East DMCC (FTME), an Emirati company, relating to the sale of 90% of the shares in Audit Control and Expertise Global Ltd Essex UK (ACE).

Pursuant to an amendment dated 11 August 2008, FT Group Investments Private Ltd (FTGIPL), a Mauritian company, became a party to the MoU. A share purchase agreement (SPA) between Dakin, FTME and FTGIPL was signed on the same day. The SPA provided for arbitration with a London seat, and was governed by English law.

A dispute arose between the parties and FTME and FTGIPL initiated arbitration. On 14 April 2011, a sole arbitrator sitting in London issued an award under the International Chamber of Commerce (ICC) Rules determining that:

• The sole arbitrator had jurisdiction over Mr X.
• 20% of the capital of ACE acquired by FTME and FTGIPL should be transferred to Dakin and Mr X, following their payment of a specified sum.

By an order dated 18 January 2012, the President of the Paris Tribunal de grande instance (the Paris court of first instance) granted enforcement of the award. In a judgment dated 21 January 2014, the Paris Court of Appeal confirmed the enforcement order and dismissed the appeal brought by Dakin and Mr X.  

Mr X appealed to the Supreme Court, arguing, among other things, that, although he acknowledged that the only recourse available against an order granting enforcement of a foreign award is the appeal permitted by Article 1525 of the CPC, such an order may still be subject to an appel-nullité in circumstances where a judge has exceeded his or her powers.

Here, Mr X contended that the judge had exceeded his powers as he had failed to verify that the requirements imposed by Articles 1514 and 1515 of the CPC had been met. As noted above, Article 1514 requires the party relying on an award to establish its existence. Under Article 1515, this is established through the production of the original award, with the arbitration agreement, and a translation (if necessary). The applicant may be required to provide a translation by an accredited translator, but this is not an absolute requirement. In this instance, Mr X argued that the applicants had produced an "incomprehensible" translation by a non-accredited translator and had failed to provide the judge with the arbitration agreement.

Decision

The French Supreme Court rejected Mr X's appeal, and reiterated that an appeal against an order granting enforcement is only permitted under certain limited grounds relating to the award itself (that is, those specified in Article 1520 of the CPC). Aside from those grounds, the enforcement order is not, in itself, subject to any form of recourse. Since the insufficiency or imperfection of the evidence submitted to the enforcement judge is not one of the grounds of appeal permitted under Article 1520 of the CPC, Mr X's submission was rejected.

Comment

This decision reiterates that, as a matter of principle, the only recourse available against an order granting enforcement of a foreign award is the appeal permitted by Article 1525 of the CPC, and that such an order is not, in itself, subject to any form of recourse. As such, it confirms previous case law in this respect.

The decision does not, however, resolve all doubts in this area. In the past, the French courts have appeared to accept that bringing an appel-nullité in order to attack an order granting enforcement of a foreign arbitral award might be possible where a judge has exceeded his or her powers (see Cass. Civ. 1re, 9 Dec. 2003, 01-13.341; Cass. Civ. 1re, 3 Nov. 2004, 01-03.262). In this instance, in contrast, the Supreme Court refrained from expressing an explicit opinion on whether an appel-nullité might be available, neither expressly accepting the possibility (and thereby endorsing its previous jurisprudence) nor expressly excluding it. This absence of an express ruling upon the availability of an appel-nullité, coupled with the Court's emphasis on the fact that the only recourse available against an order granting enforcement of a foreign award is the appeal permitted by Article 1525 of the CPC, may represent a move away from its previous position. However, until the Supreme Court rules expressly on the issue, whether (and to what extent) its position has changed will remain unclear.  

This lingering uncertainty contrasts with the situation regarding international arbitral awards rendered in France, in respect of which the Supreme Court has given a clear indication that an appel-nullité is not available (Cass. Civ. 1re, 6 Nov. 2013, 11-17739). It is to be hoped that, when given the opportunity to settle the issue, the French courts will adopt an equally clear approach with regard to foreign arbitral awards.

A version of this post was first published by Practical Law.

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