Putting a stop to powers of the “juge d’appui”

On 13 December 2017 (Cass. Civ. 1er, 13 December 13, 2017, appeal No. 16-22131, published in the Bulletin), the Court of Cassation pronounced on the power of the “juge d’appui” in the context of the Garoubé saga.

At the risk of oversimplifying them, the facts of the case were as follows: a leasing contract had been concluded between the State of Cameroon and Projet Pilote Garoubé. This contract, including an arbitration clause, was breached by the State. Garoubé then filed a request for arbitration, engaging the responsibility of the State for wrongful termination.

After many procedural twists, including the annulment of a sentence for lack of independence of the arbitral tribunal, a new tribunal was set up under ICC rules.

Act 1: ICC withdraws claims for lack of payment of the provision

Garoubé has not paid its provision for arbitration costs, arguing an impossibility to face this new expense after ten years of proceedings.  Then, the ICC decided, on 27 March 2015, to invite the arbitral tribunal to suspend its proceedings, and informed the parties that their claims were considered to be withdrawn, pursuant to Article 30 (2) of ICC rules.

Act 2: The “juge d’appui” restores the claims

Garoubé challenged this decision before the Parisian “juge d’appui”. And successfully: the “juge d’appui” ordered the ICC to reinstate the claims deemed withdrawn and invited the arbitral tribunal to resume its activities.

This decision of the “juge d’appui”, in favor of Garoubé, was appealed by the State of Cameroon, and censured by the Court of Appeal of Paris in a judgment of May 24, 2016.

Act 3: the Court of Appeal annuls the order of the “juge d’appui”

The Court of Appeal justified its decision to set aside the order for two reasons.

First, it is a question of jurisdiction. The Court considers that “it is incumbent upon a party, who complains of an improper performance by an arbitration institution of the contract of the arbitration organization, to seize, not the “juge d’appui” ruling by order not subject to appeal, but the common law judge of contracts; that the order made by which, against the agreement of the parties, the “juge d’appui” replaces the organs of the arbitration center in the interpretation of its rules, censures their decisions and orders them to adopt others, is tainted with an excess of power”. In other words, the “juge d’appui” has no jurisdiction to order the ICC to resume the arbitration proceedings and reinstate the disputed claims.

Then, the Court of Appeal set aside the order because of the violation of the adversarial principle. Since the case before the “juge d’appui” took place in the absence of the State of Cameroon, it had led the “juge d’appui” to reinstate only Garoubé’s claims, and not the counterclaims of the State.

The Court of Appeal concludes from these two considerations the need to censor the order of the “juge d’appui” for excess of power.

This decision was the subject of various assessments (see in particular V. Chantebout, obs., In Rev. Arb 2017.533, and M. de Fontmichel, see the Cahiers de l’arbitrage 2016, pp. 641).

This judgment was appealed by Garoubé, and gave rise to the judgment of 13 December 2017.

Act 4: the Court of Cassation dismisses the appeal

Before the Court of Cassation, Garoubé had formed a sole ground composed of three branches.

The appeal judgment was mainly criticized for having breached Article 6.1 of the European Convention for the Protection of Human Rights by not allowing the “juge d’appui” to put an end to a denial of justice. In other words, the ICC was guilty of a denial of justice by preventing the impecunious party from gaining access to an arbitral tribunal. The “juge d’appui” would have only exercised his mission to fight against denials of justice, as resulting from the NIOC jurisprudence.

The trial judges were also criticized for wrongly finding a breach of the adversarial principle by the trial judge, and for having breached Article 1505 of the Code of Civil Procedure, since the breach of the adversary was not in any case constitutive of an excess of power.

The Court of Cassation rejects Garoubé’s appeal.

It only pronounces on the first branch of the ground, relating to the jurisdiction of the “juge d’appui”, the other two branches being held to be inoperative.

On the jurisdiction of the “juge d’appui”, the first civil chamber states that “Article 1505 4° of the Code of Civil Procedure […] has not invested the “juge d’appui” with a general jurisdiction to settle all disputes occurring in the course of the arbitration proceedings but has only designated a state judge territorially who has jurisdiction to provide, for a supplementary basis, the constitution of an arbitral tribunal in case of risk of a denial of justice.

The Court concludes that “without infringing the right of access to the judge guaranteed by Article 6, § 1, of the Convention for the Protection of Human Rights and Fundamental Freedoms, the Court of Appeal has exactly concluded  that by substituting itself for the arbitration center in the application of its rules, the “juge d’appui” had exceeded his powers.

The reason lies in the division of jurisdiction between the “juge d’appui” and the common law judge, that is to say the TGI of Paris, place of residence of the defendant [the ICC] or execution of the contract. Indeed, as held by the High Magistrates, “litigation relating to the wrongful performance, by an arbitration institution, of the arbitration’s organization contract falling within the jurisdiction of the common law jurisdiction“.

What should be retained from the decision?

Firstly, the Court of Cassation, like trial judges, puts a brake on the development of the jurisdiction of the “juge d’appui”.

Admittedly, the latter gained its independence at the discretion of NIOC jurisprudences concerning the denial of justice, La Belle Créole concerning the intervention of the “juge d’appui” after constitution of the arbitral tribunal, but also as to the possibility of a preventive seizure of jurisdiction.

Admittedly, the fundamental right of access to the judge, guaranteed by Article 6.1 ECHR, may justify that the ICC be ordered to restore the claims of the impecunious co-litigant and resume the proceedings. The Court of Cassation does not question here its Pirelli jurisprudence.

More modestly, it asserts that this issue exceeds the jurisdiction of the “juge d’appui”, and is the responsibility of the common law judge of the contract, who is competent to judge the improper performance by the arbitration center of the arbitration’s organization contract.

On the merits, the decision may seem justified. Some will welcome this limit to the expansion of the “juge d’appui”. If the mission to fight against the denial of justice is not suppressed, it is confined to the denial resulting from the impossibility of constitution of an arbitral tribunal. Impecuniosity escapes its specter.

It is not certain, however, that the referral to the common law judge is anything but a smokescreen for the impecunious co-litigant. On the one hand, will he be able to pay the costs of a new trial on the merits? In this case, Garoubé claimed that ten years of proceedings had left it strained, and that the abusive termination of the contract had deprived it of all its resources. On the other hand, the duration of this new liability lawsuit against the arbitration center may constitute a significant drag.

Nor is it certain that the decision of the ICC to withdraw the claims and suspend the arbitration, pursuant to the arbitration rules to which the parties had adhered, constitutes a fault that could engage the liability of the ICC.

In addition, the decision leaves aside entirely the crucial question of effective access to arbitral justice.

Therefore, it seems rather debatable.

The decision is available here.

Louis Thibierge