On 11 January 2022, the Paris Court of Appeal agreed to enforce a contract-based ICC arbitration award, despite the final award being previously set aside by the domestic courts of the seat of arbitration, and the underlying contract also being annulled by a foreign court.
While this result may be surprising in many jurisdictions, the outcome underscores the insufficiency of setting aside a foreign award when enforcement proceedings are to be initiated in France.
The Arbitration Proceedings
Société Générale de Surveillance S.A (“SGS”) is a company incorporated in Switzerland specialised in testing, inspecting and the certification of import and export products.[1]
Following an international call for tenders, the Republic of Benin (“Benin”) and SGS entered into a procurement contract on 5 December 2014 for a duration of three years under which SGS would set up a certification program regarding customs values (the “Contract”).
The Contract was governed by the laws of Benin. It contained an arbitration clause providing for arbitration under the ICC Arbitration Rules in case of disputes between the parties.
Over the life of the Contract, Benin initially paid invoices to SGS. However, in 2015, Benin claimed that the Contract was null and void and thus stopped making payments.
On 31 January 2017, SGS filed a request for arbitration with the ICC claiming payment of outstanding invoices and compensation from Benin.[2]
However, while the arbitration proceedings were ongoing, Benin initiated proceedings before domestic Beninese courts to have the Contract annulled. The lower court declared the Contract null and void on 13 February 2017.[3] SGS filed an appeal of this decision.
On 12 March 2020, the Court of Appeal of Cotonou in Benin upheld the ruling of the lower court. According to the Court of Appeal of Cotonou, issues relating to the validity of a public contract were within the exclusive jurisdiction of the administrative judge and could not be raised before an arbitral tribunal.
In the parallel ICC arbitration, following a bifurcation request, on 6 April 2018 the arbitral tribunal sitting in Ouagadougou, Burkina Faso, had meanwhile ruled that it had jurisdiction over the dispute between SGS and Benin.[4]
Benin thus filed an application seeking annulment of the arbitral tribunal’s decision before the Court of Appeal of Ouagadougou in Burkina Faso. The Court of Appeal initially rejected Benin’s appeal.
Benin then lodged an appeal with the highest commercial court, the OHADA Common Court of Justice and Arbitration (“CCJA”), against the Court of Appeal’s decision.
On 27 February 2020, the CCJA reversed the decision of the Court of Appeal of Ouagadougou and set aside the award rendered by the arbitral tribunal on 6 April 2018 finding that it had jurisdiction.[5]
Meanwhile, the ICC arbitral tribunal rendered its final award on 31 March 2019 in the ICC arbitration in favor of SGS. It had rejected Benin’s arguments and notably ordered Benin to pay EUR 6,990,761.11 to SGS for outstanding invoices.[6]
The Republic of Benin then filed an application before the Court of Appeal of Ouagadougou for the annulment of the final award rendered by the arbitral tribunal. On 20 December 2019, the Court of Appeal of Ouagadougou annulled the final award.
However, by an order of the Tribunal de Grande Instance of Paris dated 24 May 2019, exequatur had been granted for the final ICC arbitration award rendered on 31 March 2019, allowing the final award to be enforced in France.
Benin thus lodged an appeal against this order of exequatur of the arbitration award before the Paris Court of Appeal on 10 December 2020.
The Decision of the Paris Court of Appeal
The French Court of Appeal thus had to rule on the recognition in France of a foreign arbitration award that had been set aside by foreign courts.
The Republic of Benin notably argued that because the arbitral tribunal was declared incompetent by the CCJA, the enforcement of the award would be contrary to international public policy.
The Paris Court of Appeal rejected Benin’s arguments and refused to set aside the award.
First, the Court explained that a foreign arbitration award had to be considered in light of the laws applicable in France. A foreign arbitration award being set aside at the seat of arbitration has no impact on its recognition in France, as an international arbitration award is not attached to the juridical order of a State:
28- Cependant, une sentence internationale, qui n’est rattachée à aucun ordre juridique étatique, est une décision de justice internationale dont la régularité est examinée au regard des règles applicables dans le pays où sa reconnaissance et son exécution sont demandées.
29- En conséquence, la reconnaissance en France d’une sentence rendue à l’étranger est examinée au regard des règles applicables en France, et l’annulation de ladite sentence par les juridictions du siège n’emporte aucune conséquence sur sa reconnaissance.
Second, the Paris Court of Appeal addressed the grounds to refuse enforcement of an award in France.
Pursuant to Article 1520(1) of the French Code of Civil Procedure, the Court of Appeal may deny recognition or enforcement of an award if “the arbitration tribunal wrongly upheld or declined jurisdiction”.[7]
The Contract contained an arbitration clause under which the Parties had clearly established their common will to resolve disputes via ICC arbitration:[8]
Tout différend né de l’exécution du présent contrat et de ses annexes fait d’abord l’objet d’un règlement amiable, à l’initiative de l’une des deux parties qui saisit l’autre par un écrit en sollicitant l’ouverture des négociations dans un délai n’excédant pas quinze jours.
En cas d’échec du règlement amiable, les litiges, controverses ou réclamations nées du ou se rapportant au présent contrat ou à son interprétation sont soumis à un arbitrage selon le règlement d’arbitrage de la Chambre de Commerce Internationale (CCI) de Paris.
Le tribunal arbitral est composé de trois arbitres dont un est nommé par chacune des parties. Ces deux (02) arbitres désignent le troisième qui est le président du tribunal arbitral.
Faute d’accord entre les deux arbitres pour la désignation du troisième arbitre, président du tribunal arbitral, il y est pourvu par le recours à la Chambre de Commerce Internationale (CCI) de Paris.
La Chambre de Commerce Internationale (CCI) de Paris est saisie à cet effet par la partie la plus diligente.
Le tribunal arbitral siège dans un pays de l’UEMOA autre que le Bénin. Le droit applicable est le droit Béninois. La sentence arbitrale rendue s’impose aux parties.
The Paris Court of Appeal concluded that, in accordance with the parties’ common intention, the arbitral tribunal rightfully had found it had jurisdiction to decide upon disputes arising from the Contract.[9]
Third, according to the Republic of Benin, the recognition of the award contradicted the res judicata effect of the decision of the lower court dated 13 February 2017, upheld by the Court of Appeal of Cotonou on 12 March 2020.
The Court rejected this argument. It notably held that the decisions rendered by foreign local courts had not been granted exequatur in France and thus could not prevent the enforcement of the final award:[10]
56- Ces décisions n’étant pas revêtues de l’exequatur en France, elles ne peuvent en aucun cas faire obstacle pour ce motif à l’exequatur de la sentence finale étant rappelé que la seule méconnaissance de l’autorité de chose jugée d’une décision de justice étrangère est inopérante, de sorte qu’il n’y a pas lieu d’apprécier la reconnaissance de ces décisions qui est inopérante en l’espèce.
The Paris Court of Appeal thus confirmed that the final award should be recognized and enforced in France, although the underlying contract had been annulled and the award had been set aside by the courts of the seat of arbitration.
[1] https://www.sgs.com/en/our-company/about-sgs (last accessed on 3 February 2022).
[2] Société Générale de Surveillance S.A (SGS) v. Republic of Benin, ICC Case No. 22581/DDA, partial award dated 6 April 2018.
[3] Paris Court Judgment N° 068/2020 dated 27 February 2020, para. 7.
[4] Paris Court Judgment N° 068/2020 dated 27 February 2020, para. 8.
[5] Judgment of the OHADA Common Court of Justice and Arbitration No. 068/2020 dated 27 February 2020.
[6] Société Générale de Surveillance S.A (SGS) v. Republic of Benin, ICC Case No. 22581/DDA, Final Award dated 31 march 2019.
[7] Article 1520 of the French Code of Civil Procedure (emphasis added).
[8] Paris Court Judgment N° 068/2020 dated 27 February 2020, para. 45.
[9] Paris Court Judgment N° 068/2020 dated 27 February 2020, paras. 46-47.
[10] Paris Court Judgment N° 068/2020 dated 27 February 2020, paras. 53-57.
