French Cour de cassation: Recognition of the existence of an “international arbitral order” – Exclusive jurisdiction of judicial courts to order the enforcement of foreign awards, even when related to a public contract

In a judgment dated 8 July 2015, the French supreme court (“Cour de cassation”) upheld the exclusive jurisdiction of judicial courts to order the enforcement of arbitral awards rendered abroad, including those relating to administrative / public law contracts. For the first time, the first civil chamber of the Cour de cassation expressly relied in its decision on the existence of an “international arbitral order”, thus confirming the exclusive jurisdiction of judicial courts as regards enforcement of arbitral awards, as opposed to that of administrative courts. The court now prohibits any distinction between foreign and domestic awards.

This decision takes a position opposite to that adopted in the SMAC decision of 19 April 2013 (CE, 19 avril 2013, SMAC, requête n°352750), which, following the Inserm decision (Tribunal des conflits 17 mai 2012, Inserm, requête n°3754), had ruled that:

In the SMAC decision, the Syndicat mixte des aéroports de Charente (a syndicate in the airports’ sector – the “SMAC’) and the air company Ryanair had entered into two contracts on 8 February 2008, concerning the development of a regular air service between London-Stansted and Angoulême. The two contracts were ultimately terminated by Ryanair on 17 February 2010.

Following termination of the contracts, while Ryanair initiated arbitration under the aegis of the London Court of International Arbitration (LCIA) in accordance with the arbitration agreement contained in the two contracts, the SMAC commenced proceedings before the administrative court of Poitiers for the resolution of the same dispute.

By partial award of 22 July 2011, the arbitral tribunal accepted jurisdiction and rejected the SMAC’s request to stay the proceedings until the French administrative courts rendered their decision. On 18 June 2012, the arbitral tribunal rendered an award on the merits of the case and held that Ryanair had rightfully terminated the contracts.

The SMAC subsequently requested the Conseil d’Etat (i.e., the French supreme court for administrative matters) the annulment of the two awards and, in the alternative, to judge that the partial award could not be recognized or enforced in France.

On 21 May 2012, the President of the Tribunal de grande instance (i.e., tribunal of first instance) issued an enforcement order in relation to the partial award. On 22 June 2013, SMAC appealed this order before the Paris Court of Appeal.

On 19 April 2013, as explained above, the Conseil d’Etat clarified that, irrespective of the seat of the arbitration, administrative courts always had jurisdiction to issue an enforcement order for an award resolving a dispute arising out of or in connection with a public contract and involving French public entities.

In line with the Inserm decision and the SMAC decision of the Conseil d’Etat, the Paris Court of Appeal confirmed it lacked jurisdiction to order the enforcement of an arbitral award relating to a public contract. (Paris Court of Appeal, 10 September 2013 No. 12/11596).

In this context, the Cour de cassation reversed the decision of the Paris Court of Appeal on the basis of the New York Convention and Article 1516 of the French Code of civil procedure. Reiterating their finding in the Putrabali case (Cour de cassation, 29 June 2007, No. 05-18053 ), the supreme judges declared with force that an international award, which is not attached to any domestic legal order, is an international justice decision, the validity of which must be ascertained in light of the rules applicable in the jurisdiction where its recognition and enforcement is sought. Consequently, enforcement of foreign awards is exclusive of any revision on the merits of the case and falls under the unique jurisdiction of the judicial courts.

In addition, the Cour de cassation stated in its decision that the Court of Appeal, by stating that the 1958 New York Convention, applicable to the enforcement in France of an award rendered in London, prohibits any discrimination between foreign and domestic awards as well as any revision on the merits of a case and thus, by denying jurisdiction, the Court of Appeal violated the aforementioned texts which constitute an “international arbitral order”.

This ruling leads to question the SMAC decision of the Conseil d’Etat, which introduced a difference of treatment in the enforcement of arbitral awards following their object. The Cour de cassation thus clearly poses the exclusive jurisdiction of judicial courts on the basis of an “international arbitral order”.

The difference in treatment of the enforcement of awards, whether foreign or domestic, relating to a private or a public contract has now disappeared.

This decision, of double importance, puts an end to a French jurisdiction duality which contrasted with the role of Paris as a major place of arbitration, and does so in remarkable terms.

The decision is available here.

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