Ferrovial Agroman v Electrica [T] [W] Pourvoi n W 21-21.148
What are the practical implications of this case?
This case confirms the strict approach taken by French courts when seized with setting-aside actions against arbitral awards based on Article 1520-3° of the Code of Civil Procedure (non-compliance with the tribunal’s mandate). The solution in the case at hand may come as a surprise to some, since the procedural non-compliance was clear-cut and undisputed (a simple failure to indicate the date and place of arbitration, as required by the applicable law).
Nevertheless, it is important to remember that the test applied by French courts does not relate to the non-compliance itself, but rather its seriousness. This strict approach stems from the principle that state courts cannot revisit the substance of a tribunal’s decisions relating not only to the merits of the case but also, to some extent, to the procedure. In this respect, it should be noted that, under French arbitration law, the absence of a reference to the date of the award and the place of arbitration does not constitute a ground for annulment of international awards (although the absence of date may be a ground for annulment for domestic award) (see Articles 1481, 1483 and 1506 of the Code of Civil Procedure). In this context, it is clear that the threshold of a defect of sufficient seriousness is not met.
What was the background?
As part of an international consortium, Spanish construction company, Ferrovial SA (the rights of which were transferred to Ferrovial Agroman) won an international call for tenders launched by the Tunisian State for the construction of an Olympic stadium in Tunis. Ferrovial Agroman concluded a subcontract with a Tunisian contractor, Electra, for high voltage electricity and generator works. A dispute arose between the parties concerning the retention of guarantee made by Ferrovial Agroman and disputed by Electra, and a claim for payment by Electra for additional work. The subcontract provided for arbitration under the Tunisian arbitration law.
An arbitral award was rendered, granting Electra’s claims and ordering Ferrovial Agroman to pay various sums. Electra then sought and obtained enforcement of the award from the Paris court. Ferrovial Agroman appealed against this decision to the Paris Court of Appeal. On 13 April 2021, the Paris Court of Appeal dismissed the appeal and ruled, among other things, that the failure to mention the date of the award and the place of arbitration cannot constitute, on its own, a breach of the arbitral tribunal’s mandate. The Paris Court of Appeal also noted that, in any case, the omission did not cause any grievance to Ferrovial Agroman and had no impact on the outcome of the dispute.
Ferrovial Agroman lodged an appeal to the French Court of Cassation on the basis that the arbitral tribunal, bound to respect the mission entrusted to him by the parties, must comply with the procedural rules referred to in the arbitration agreement.
What did the court decide?
The French Court of Cassation dismissed the appeal, ruling that the omission of the date and place where the award was rendered (although required by the applicable Tunisian arbitration code) does not constitute a valid ground for setting aside the arbitral award under Article 1520-3° of the Code of Civil Procedure. The Court of Cassation stated in particular that it is not for the Court of Appeal, seized on the ground of non-compliance with the tribunal’s mandate under Article 1520-3° of the Code of Civil Procedure, to review the conformity of the arbitral procedure with the applicable rules of procedure.
The solution is not new, however: the Paris Court of Appeal has recently ruled that ‘the arbitral tribunal deviates from its mission if it does not comply with the procedural rules agreed by the parties […] However, this deviation, as it relates to a procedural rule, can only lead to set aside the award if it is established that it may have adversely affected the interests of a party or influenced the outcome of the dispute and if the procedural irregularity had been previously raised before the arbitral tribunal’ (Paris, 20 Oct. 2020, No 19/05231, ITOC). In two other recent judgments, the same court has confirmed arbitral awards where the claimants alleged non-compliance with the applicable arbitration rules (Paris, 23 June 2020, No. 18/09652, Ginkgo), or the IBA rules in the context of document production requests (Paris, 1st Dec 2020, No 19/09347, 19/09352, 19/09554 and 19/09725, Sterling Merchant Finance).
- Court: Cour de cassation
- Judges: Mrs Guihal, Messrs Hascher and Bruyère
- Date of judgment: 13 April 2023
This article was first published by LexisNexis on 25th April 2023.