The case Société PT Putrabali Adyamulia v Société Rena Holding et Société Moguntia Est Epices is one of the French landmark cases concerning the enforcement of an arbitral award in France, where the enforcement of an annulled arbitration award is possible.
In the case, Putrabali sold a cargo of white pepper to Rena Holding. The cargo was lost in a shipwreck and Rena failed to pay. Putrabali then filed for arbitration.
The contract provided for arbitration of disputes according to the Rules of Arbitration and Appeal of the International General Produce Association (IGPA).
The Arbitral Tribunal was constituted in London and issued an award in favor of Rena Holding.
Following this decision, Putrabali appealed to the High Court in London, which partially annulled the award. The court deemed that Rena’s failure to pay constituted a breach of contract. Afterwards, the Arbitral Tribunal issued a second award in favor of Putrabali and ordered Rena Holding to pay the price of the lost cargo.
Rena Holding then sought enforcement in France of the first award, and the President of the Paris Court granted enforcement of the award. The Paris Court of Appeal then denied Putrabali’s appeal from the enforcement decision.
Putrabali argued that Rena Holding violated the obligation to act in good faith and acted in abuse of right because the first award was replaced by a second award, which deprived it of all legal effect before the French court was seized, that the rule according to which the annulment of an award in a foreign state does not affect the enforcement of the award in France was not applicable here, that only the second award could be properly called an “award” and is the only one that could be subject to enforcement, and that recognition and forced execution of the replaced award was against the parties’ intentions and violated international public policy.
However, the French Court of Cassation confirmed the Court of Appeal’s decision and granted enforcement of the award.
The court reasoned that an international arbitral award is independent of a national legal order and its validity was to be ascertained by the laws of the country where enforcement is sought, in this case France.
Article VII of the New York Convention allowed Rena Holding to seek enforcement of the award as French rules do not refuse enforcement of an award by reason of its annulment at the seat of the arbitration.
