{"id":12249,"date":"2022-10-25T08:41:48","date_gmt":"2022-10-25T08:41:48","guid":{"rendered":"https:\/\/www.alerionavocats.com\/?p=12249"},"modified":"2022-10-25T08:41:49","modified_gmt":"2022-10-25T08:41:49","slug":"update-french-highest-court-confirms-expansion-judicial-review-awards-potential-violations-international-public-policy","status":"publish","type":"post","link":"https:\/\/www.alerionavocats.com\/en\/update-french-highest-court-confirms-expansion-judicial-review-awards-potential-violations-international-public-policy\/","title":{"rendered":"UPDATE \u2013 French Highest Court confirms expansion of judicial review of awards regarding potential violations of international public policy"},"content":{"rendered":"\n

Cass. 1st<\/sup> Civil Chamber, 7 September 2022, No. 20-22.118, Libya v. SORELEC<\/em><\/p>\n\n\n\n

Earlier this year in the case Belokon<\/em>, the Cour de cassation<\/em> (French Supreme Civil Court) considered that the conformity of arbitral awards with French international public policy could be subject to a \u201cmaximalist review\u201d by the annulment judge.<\/p>\n\n\n\n

As pointed out previously in Alerion\u2019s<\/strong> newsletter<\/strong><\/a>, it remained uncertain whether such review applied to all cases of international public policy or whether it was limited to cases of money laundering, corruption and similar internationally recognized offences.<\/p>\n\n\n\n

In a recent decision dated 7 September 2022 rendered in the SORELEC <\/em>case, the Cour de cassation<\/em> seemed to confirm the expansion of the judicial review to all cases of alleged violations of French international public policy.<\/p>\n\n\n\n

However, this decision raises new questions as to whether the maximalist review would apply to all potential grounds of annulment which may be raised against an arbitral award under French law.<\/p>\n\n\n\n

A highly political background<\/strong><\/p>\n\n\n\n

In 1979, the Education Ministry of Libya granted SORELEC, a French company, a contract for the construction of schools in Libya. A dispute arose between the parties in 1985 and the project was interrupted. In 2003, after several years of negotiations, a settlement agreement was reached.<\/p>\n\n\n\n

In 2013, SORELEC filed an investment treaty claim against Libya to obtain the payment of the settlement, based on the France-Libya bilateral investment treaty of 2004. The proceedings took place in the context of the Libyan civil war where two rival governments were formed, in Tobruk and Tripoli.<\/p>\n\n\n\n

In 2016, SORELEC reached a new settlement agreement with the Justice Minister of the Tobruk government. Libya was to pay SORELEC Euro 230 million before a certain date. In case of failure, Libya would have to pay Euro 452 million.<\/p>\n\n\n\n

SORELEC requested the arbitral tribunal to homologate the settlement agreement, while Libya objected that the agreement was invalid since it was not signed by the Tripoli government. The arbitral tribunal homologated the agreement.<\/p>\n\n\n\n

In 2017, the arbitral tribunal rendered a partial award ordering Libya to pay SORELEC Euro 230 million within 45 days. Libya did not pay. In 2018, the arbitral tribunal rendered a final award condemning Libya to pay SORELEC Euro 452 million.<\/p>\n\n\n\n

Setting aside proceedings before French courts<\/strong><\/p>\n\n\n\n

Libya filed requests before the Paris Court of Appeal to set aside both awards. It alleged, for the first time, that the 2016 settlement agreement had been obtained through corruption and, therefore, that the awards would be in breach of French international public policy.<\/p>\n\n\n\n

By separate decisions dated 17 November 2020, the Paris Court of Appeal set aside both awards. Regarding the partial award, the Court considered that there were \u201cserious, precise and concurring<\/em>\u201d indicators that SORELEC had colluded with Libya\u2019s Justice Minister for the signing of the 2016 settlement agreement. This decision entailed the setting aside of the final award, since its sole purpose was to sanction the non-performance of the partial award.<\/p>\n\n\n\n

On 7 September 2022, the Cour de cassation<\/em> upheld the ruling of the Paris Court of Appeal setting aside the partial award for violation of international public policy. Consequently, on 14 September 2022, the Court dismissed SORELEC\u2019s appeal regarding the final award.<\/p>\n\n\n\n

The first argument raised by SORELEC was that the Court of Appeal had not correctly applied the applicable standard of proof (generally presented as a \u201cred flags\u201d approach) and reversed the burden of proof.<\/p>\n\n\n\n

The Cour de cassation<\/em> rejected this ground summarily without setting forth its reasoning, which some may regret since the arbitration community would welcome a clear roadmap on this issue.<\/p>\n\n\n\n

Secondly, SORELEC alleged that the principle of procedural fairness should have precluded Libya from bringing for the first time before the annulment judge its corruption allegations which it intentionally refrained to submit before the arbitral tribunal.<\/p>\n\n\n\n

The Cour de cassation<\/em> also rejected this argument, considering that parties have the right to invoke potential violations of French international public policy for the first time before the annulment judge.<\/p>\n\n\n\n

Thirdly, SORELEC submitted that the Court of Appeal made a number of determinations which amounted to a prohibited de novo <\/em>review of the award on the merits.<\/p>\n\n\n\n

In response to this ground, the Cour de Cassation<\/em> first quoted entirely Article 1520 of the French Code of civil procedure, which lists the five grounds on which an international award may be set aside under French law.<\/p>\n\n\n\n

Then, the Court stated that although the annulment judge must limit its review to the grounds listed in this provision, there is no limit to its power to consider all elements \u2013 in fact or law \u2013 relevant to these grounds.<\/p>\n\n\n\n

Finally, the Court concluded that the Court of Appeal was allowed to verify the veracity of the allegation that the settlement had been obtained through bribery by examining all the evidence produced in its support, even if they had not been submitted to the arbitrators.<\/p>\n\n\n\n

The \u201cmaximalist\u201d review of awards<\/strong><\/p>\n\n\n\n

The Cour de cassation<\/em> confirmed the position taken in the Belokon <\/em>case that, when an international award is challenged based on potential violations of French international public policy, French courts will thoroughly examine such allegations, including by reviewing new evidence.  <\/p>\n\n\n\n

In addition, the Court disregarded the fact that the applicant chose not to bring these allegations before the arbitral tribunal, waiting for the issuance of the award. Hence, compliance with French international public policy on the merits took precedence over procedural fairness.<\/p>\n\n\n\n

The SORELEC<\/em> ruling calls for at least two comments.<\/p>\n\n\n\n

First, the maximalist review of grounds for setting aside an award becomes closer to a de novo <\/em>review of the merits of the case. The Court of Appeal reviewed in detail several aspects of the case including the respective concessions of both parties in the settlement agreement, in considering whether it could be an indicator of corruption.<\/p>\n\n\n\n

Second, the wording of the decision leads some authors to question the \u2013 until then \u2013 common understanding that the maximalist review applied to challenges pertaining to the arbitrator\u2019s jurisdiction and alleged violations of French international public policy. The Cour de cassation<\/em>\u2019s quotation of the entirety of Article 1520 of the French Code of civil procedure before reaffirming the maximalist review of the grounds raised against the award, could indicate that such review would apply to all five of them.<\/p>\n\n\n\n

Practitioners would welcome clarification on these issues.<\/p>\n\n\n\n

Conclusion<\/strong><\/p>\n\n\n\n

As the developments above suggest, this decision confirms the French Highest Court\u2019s willingness to track down any corruption traces in matters submitted to arbitration. Practitioners should take this into consideration when determining arbitration or enforcement strategies.<\/p>\n\n\n\n

Jacques Bouyssou<\/strong><\/a>, Partner, Marie-H\u00e9l\u00e8ne Bartoli-Vallet<\/a><\/strong>, Counsel, and Juan Diego Ni\u00f1o-Vargas<\/a><\/strong>, Associate.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cass. 1st Civil Chamber, 7 September 2022, No. 20-22.118, Libya v. SORELEC Earlier this year in the case Belokon, the Cour de cassation (French Supreme Civil Court) considered that the conformity of arbitral awards with French international public policy could be subject to a \u201cmaximalist review\u201d by the annulment judge. As pointed out previously in […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[664],"tags":[],"class_list":["post-12249","post","type-post","status-publish","format-standard","hentry","category-actualite"],"acf":[],"yoast_head":"\nUPDATE \u2013 French Highest Court confirms expansion of judicial review of awards regarding potential violations of international public policy - Alerion Avocats Paris<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.alerionavocats.com\/en\/update-french-highest-court-confirms-expansion-judicial-review-awards-potential-violations-international-public-policy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UPDATE \u2013 French Highest Court confirms expansion of judicial review of awards regarding potential violations of international public policy - Alerion Avocats Paris\" \/>\n<meta property=\"og:description\" content=\"Cass. 1st Civil Chamber, 7 September 2022, No. 20-22.118, Libya v. 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