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Sofregaz v. NGSC (CA Paris)

Published online by Cambridge University Press:  21 January 2021

Marie-Laure Bizeau*
Affiliation:
Marie-Laure Bizeau is a founding partner of Medici, a litigation and arbitration law firm based in Paris. She has seventeen years of experience in international arbitration, during which she has acted as an arbitrator and as counsel in numerous arbitration proceedings, as well as in proceedings before the Paris Court of Appeal in connection with actions to set aside awards.

Extract

On June 3, 2020, the International Commercial Chamber of the Paris Court of Appeal (the Court or the Court of Appeal) dismissed the annulment application brought by the Société Française d'Etudes et de Réalisation d'Equipements Gaziers (Sofregaz, now called TCM FR) of an arbitral award rendered in Paris on December 27, 2018, in favor of the Iranian Natural Gas Storage Company (NGSC), pursuant to the Rules of Arbitration of the International Court of Arbitration of the International Chamber of Commerce (ICC Rules). The Court ruled in particular that U.S. sanctions against Iran do not form part of French international public order but that European Union (EU) and United Nations (UN) sanctions do. This ruling provides useful guidance on the interaction between international sanctions and international arbitration.

Type
International Legal Documents
Copyright
Copyright © American Society of International Law 2021

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References

1 Created in 2018, this chamber has jurisdiction over international trade disputes. One of the main innovations is that proceedings before the International Commercial Chamber of the Paris Court of Appeal can be conducted in English. Further details available at: https://www.cours-appel.justice.fr/paris/presentation-generale-ccip-ca-iccp-ca.

2 By an order of December 10, 2009, the President of the Commercial Court granted this request (Tribunal de commerce [TC] [commercial court of original jurisdiction] Paris, Dec. 10, 2009, 2008084230); this decision was overturned by the Court of Appeal (Cour d'appel Paris [CA] [regional court of appeal], June 7, 2011, 10/04113) and the Cour de cassation dismissed the appeal (“pourvoi”) against the decision of the Court of Appeal on March 12, 2013 (Cour de cassation [Cass.] [supreme court for judicial matters] com., Mar. 12, 2013, 11-22.048).

3 Art. 1520-3° of the French New Code of Civil Procedure (NCPC).

4 Art. 1520-4° NCPC.

5 Art. 1520-5° NCPC.

6 Art. 1482, second paragraph, NCPC: “The award shall state the reasons upon which it is based” applicable to international arbitration pursuant to Article 1506.4 of the French Code of Civil Procedure.

7 Art. 31(2) of the 2012 ICC Rules.

8 CA Paris, Jun. 3, 2020, 19/07261, ¶ 34. This is the usual reasoning of the Court of Appeal—see, e.g., CA Paris, Nov. 27, 2018, 17/01628.

9 CA Paris, Jun. 3, 2020, 19/07261, ¶ 34.

10 Art. 1466 NCPC: “A party who knowingly and without good cause fails to raise an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived it applicable to international arbitration pursuant to Article 1506.3 of the French Code of Civil Procedure.”

11 According to Sofregaz, these sanctions imposed an embargo on exportations and prevented financial operations in U.S. dollars. Since the Contract imposed on Sofregaz to constitute a guarantee in U.S. dollars which had to be counter-guaranteed by an international bank, Sofregaz claimed that the sanctions prevented it from enforcing its obligations under the Contract.

13 Michael R. Pompeo, “The Return of UN Sanctions on the Islamic Republic of Iran,” U.S. Dep't of State (Sept. 19, 2020), https://www.state.gov/the-return-of-un-sanctions-on-the-islamic-republic-of-iran.

14 SC Res. 1737, UN Doc. S/RES/1737 (2006); SC Res. 1747, UN Doc. S/RES/1747 (2007); SC Res. 1803, UN Doc. S/RES/1803 (2008).

15 Council Regulation (EC) 423/2007 of April 19, 2007 concerning restrictive measures against Iran, OJ L 103, 20.4.2007, p. 1; Council Regulation (EU) 961/2010 of October 25, 2010 on restrictive measures against Iran and repealing Regulation (EC) 423/2007, 2010 O.J. (L 281) 1; Council Regulation (EU) 267/2012 of March 23, 2012 concerning restrictive measures against Iran and repealing Regulation (EU) 961/2010, 2012 O.J. (L 88) 1.

16 “EU Restrictive Measures Against Iran,” European Council/Council of the European Union (Apr. 9, 2019), https://www.consilium.europa.eu/en/policies/sanctions/iran/.

17 The JCPOA is an agreement between Iran and the five permanent members of the UNSC (China, France, Russia, United Kingdom, United States) plus Germany according to which, among other things, Iran would commit not to enrich uranium up to 3.67%. In return, the United States, the European Union, and the UNSC would lift all nuclear-related sanctions against Iran. Further details available at: https://eeas.europa.eu/delegations/papua-new-guinea/3244/joint-statement-by-eu-high-representative-federica-mogherini-and-iranian-foreign-minister-javad-zarif-vienna-14-july-2015_en.

18 Council Regulation (EC) 2271/96 of November 22, 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom, 1996 O.J. (L 309) 1.

19 Commission Implementing Regulation (EU) 2018/1101 of August 3, 2018 laying down the criteria for the application of the second paragraph of Article 5 of Council Regulation (EC) 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom, 2018 O.J. (L 1991 I) 7. Further details on the Blocking Statute available at: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_18_4786.

20 CA Paris, Jun. 3, 2020, 19/07261, ¶ 48. This is also true for corruption allegations which can be raised for the first time before the Court of Appeal. E.g., CA Paris, Nov. 17, 2020, 18/02568.

21 To be noted that it is possible to waive the right to invoke rules that are part of the “procedural” public policy, which aims to protect the interests of the parties, and which the parties are therefore logically free to waive. See C. Seraglini & J. Ortscheidt, Droit de l'arbitrage interne et international 989-990 (LGDJ 2nd ed. 2019).

22 CA Paris, Jun. 3, 2020, 19/07261, ¶ 47.

23 Such solution should not come as a surprise. See Mercédeh Azeredo Da Silveira, Trade Sanctions and International Sales: An Inquiry into International Arbitration and Commercial Litigation 189-190 (2014): “Clearly, it is to be expected that a domestic court will disregard a sanction directed against the State of the forum or a sanction against which the forum State has enacted a blocking statute.” Furthermore, “If the sanction under consideration strives to be applied extraterritorially in breach of public international law […], the sanction may again have to be disregarded. It is however, insufficient that the extraterritorial scope of the sanction violate public international law. Its application in the case at hand must involve the operation of the extraterritorial connecting factor which is in breach of public international law.”

24 CA Paris, Jun. 3, 2020, 19/07261, ¶¶ 61–63.

25 Reiteration of previous case law: see Cass. 1e civ., Apr. 25, 2006, 02-17.344.

26 CA Paris, Jun. 3, 2020, 19/07261, ¶¶ 54–55.

27 This solution is not new. See, e.g., Gallay c. Fabricated Metals, CA Paris, Apr. 16, 1996, Rev. arb., 805 (2001) (regarding EU competition law); Cass. 1e civ., Mar. 11, 2009, 08-12.149 (regarding sales agents).

28 CA Paris, Jun. 3, 2020, 19/07261, ¶ 57.

29 CA Paris, Jun. 3, 2020, 19/07261, ¶ 70.

30 E.g., C. Seraglini & J. Ortscheidt, Droit de l'arbitrage interne et international 994 (LGDJ 2nd ed. 2019).

31 Art. 11.2(c): “The prohibition in paragraph (1) shall apply to any Iranian person, entity or body engaged: (c) in the exploration of production of crude oil and natural gas, the refining of fuels or the liquefaction of natural gas.”

32 The same decision was reached by the Cour de cassation in 2013 in the litigation proceedings initiated by Sofregaz regarding the bank guarantees. See Cass. com., Mar. 12, 2013, 11–22.048.

33 République du Kirghizistan c. Monsieur Valeriy Belokon, CA Paris, Feb. 21, 2017, 15/01650; Société MK Group c. SARL Onix, CA Paris, Jan. 16, 2018, 15/21703; Société Alstom Transport SA et autre c. Société Alexander Brothers Ltd., CA Paris, Apr. 10, 2018, Rev. arb., 574 (2018).

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