Legal Cases on Arbitration Fraud and Sales Contract Qualification – May 17, 2023

Arbitrage

Arbitration fraud: refusal of exequatur

• A court of appeal, which noted that a company, acting through the intermediary of its subsidiary remaining under its full control notwithstanding apparent and misleading changes in its shareholding in the months preceding the action, had brought before a court Albanian case having the same object as that already initiated before an arbitral tribunal, with the aim of obtaining indirectly what it had failed to obtain before the latter, was able to hold the existence of an arbitration fraud and inferred from this exactly, leaving aside the erroneous but superfluous reason relating to the refusal to carry out the incidental review of the award, the nature of which was invoked as irreconcilable with the judgment, that the exequatur of the judgment should be refused. (Civ. 1^re17 May 2023, n° 21-18.406, FS-B)

Refusal of exequatur for contravention of international public order: office of the judge

• It follows from the combination of Articles 1520, 5°, and 1525, paragraph 4, of the Code of Civil Procedure that the exequatur is refused on the basis of the first only when the solution given to the dispute, and not the reasoning followed by arbitrators, specifically and in a characteristic way runs counter to international public order.
  To say that the award disregards French international public order, the judgment holds that it refers to Californian law chosen by the parties, without implementing the mandatory provisions of Article L. 420-2-1 of the Code of commerce, which prohibit, in overseas collectivities, agreements having as their object or effect the granting of exclusive import rights.
  In deciding thus, without seeking, as it was incumbent upon it, how the validation by the award of the breach of the contract, and the condemnation of one of the parties to pay a certain sum for the costs of arbitration and lawyers, clearly violated international public order, the Court of Appeal deprived its decision of a legal basis. (Civ. 1^re17 May 2023, n° 21-24.406, FS-B)

Consumption

Sales contract: qualification

• A contract, which relates to the delivery of photovoltaic panels and a water heater, as well as the provision of installation and commissioning services, must be qualified as a sales contract, in accordance with Article L. 221-1, II, of the Consumer Code, in its wording prior to that resulting from Ordinance No. 2021-1734 of December 22, 2021. (Civ. 1^re17 May 2023, n° 21-25.670, FS-B)

Contracts

CISG: compensation for breaches of contract and liability exoneration assumptions (no)

• Violates Articles 1, § 1, 6, 7, § 2, 35, § 1, 74 and 79 of the Vienna Convention on Contracts for the International Sale of Goods of April 11, 1980 (CISG), to which France and the ‘Italy are parties, the judgment which to decide to examine the responsibility of a company…