French court re-affirms pro-enforcement stance on arbitral awards (even penalizing counsel for unfounded appeal of enforcement measures) (Congo v Commisimpex)

  • Market Insight 24 January 2023 24 January 2023
  • UK & Europe

  • Commercial Disputes

Arbitration analysis: This is yet another decision in the long-running saga between Commisimpex and the Republic of the Congo resulting from an arbitral award rendered in 2013. In its decision of 10 November 2022, the Paris Court of Appeal confirmed that the enforcement measures taken by Commisimpex in France were to be maintained in spite of the state’s recent allegation that the president of the tribunal had been corrupted.

For the court, the fact that the award is currently subject to review proceedings by a newly constituted tribunal (‘revision’), and might subsequently be revoked, does not invalidate the ongoing enforcement measures. Moreover, this appeal might have been one too many. The court considered that the appeal was particularly unfounded (‘injustifié’) and sanctioned the state’s counsel by holding them, together with the state, jointly liable for the procedural costs. The court took the same view regarding three other appeal proceedings in this case, which were brought simultaneously by the state and were decided by the same court on the same day. 

Republic of the Congo v Commisimpex N° RG 21/21942 
What are the practical implications of this case?

The decision is in line with the pro-enforcement stance taken by French courts, whereby arbitral awards are enforceable even when set aside or review proceedings are pending. Indeed, consistent with Article 579 of the French Code of Civil Procedure, the review of an arbitral award does not constitute a ground for suspending its enforcement. By the same token, pursuant to Article 1526 of the French Code of Civil Procedure, the set-aside proceedings do not have a suspensive effect on the enforcement proceedings.

The court rejected the stay of the enforcement proceedings on the basis that the ongoing enforcement measures were not only sought further to the allegedly corrupted award of 2013, but also a prior arbitral award rendered in 2000. This earlier award was not subject to any corruption allegations and was for an amount sufficiently large to justify the value of the properties against which the contested enforcement measures had been sought. The court’s reliance on this earlier award raises the question as to whether the court may have decided differently if only faced with the 2013 award.

Those who litigate in France should also be aware that French courts have the power (including ex officio) to order counsel to bear the costs for proceedings they initiated if the courts find these to be unfounded (‘injustifié’). In practice, however, the courts rarely exercise this power. In the present case, the state’s counsel was held jointly and severally liable for the costs of this appeal, as well as three other simultaneous appeals against first instance decisions regarding the same seizure of assets (N° RG 21/21942, but also N° RG 21/21933, 22/03220 and 22/00431).

What was the background?

Back in the 1980s, Commisimpex and the Republic of the Congo executed several public works contracts, which were financed by credits that Commisimpex had granted the state.

The dispute between the parties arose out of the state’s outstanding debts and led to two ICC arbitrations seated in France, both of which resulted in awards favourable to Commisimpex. The first arbitral award, worth more than €260m, was rendered on 3 December 2000 (tribunal—president André Bruyneel and co-arbitrators Charles Choucroy and Jean-Michel Darrois). The second arbitral award, worth more than €661m, was rendered on 21 January 2013 (tribunal—president Yves Derains and co-arbitrators Bernard Hanotiau and Carole Malinvaud).

Numerous enforcement proceedings have been brought by Commisimpex in France, including, inter alia, regarding the state’s immovable property seized in February 2021 (CA Paris, pole 1–10, 11 February 2021, N° RG 20/08151). Having filed an appeal against the enforcement judgment, the state sought to stay the sale of the seized properties. However, on 2 September 2021, the French enforcement judge rejected the application for stay (N° RG 16/00394).

Meanwhile, in October 2021, Congo alleged that Mr Yves Derains had been corrupted by Commisimpex, following which the French Prosecutor's Office (PNF) instigated an investigation. In December 2021, the state applied to the ICC for the review of the 2013 award in conformity with Article 1502 of the French Code of Civil Procedure (‘revision’) and a new tribunal was constituted. Nevertheless, in the present decision the court confirmed the French enforcement judge’s decision not to suspend the enforcement measures (N° RG 21/21942).

What did the court decide?

At first glance, the court’s decision of 10 November 2022 merely confirms the French enforcement judge’s decision of 2 September 2021, and is not groundbreaking as such. There are, however, two points that stand out.

First, the court did not take a clear position on whether it may stay enforcement measures regarding an arbitral award that is subject to corruption allegations. Indeed, in its reasoning, the court relied upon the fact that the enforcement measures had been taken based on two separate awards, with the 2000 award not being subject to corruption allegations. Since that award was by itself sufficiently large to justify the value of the properties against which the enforcement measures were sought, the application for the stay of proceedings was dismissed.

Moreover, the court added that neither the ongoing criminal investigations nor the possible review (‘revision’) of the 2013 award invalidate the enforcement measures.

Second, the court applied Article 698 of the French Code of Civil Procedure, according to which the costs of unjustified (‘injustifié’) court proceedings shall be borne by the counsel who initiated them. Here, the court found that the appeal ‘was particularly unjustified’ and held counsel for the state jointly and severally liable for the costs of the appeal.

According to a source, an appeal of the decision in question was filed by the state’s counsel before the French Supreme Court (‘Cour de cassation’).

Case details:

  • Court: Court of Appeal of Paris
  • Judges: Mrs Bénédicte Pruvost, President of the Chamber, Mrs Catherine Lefort, advisor, Mr Raphaël Trarieux, advisor
  • Date of judgment: 10 November 2022

This analysis was first published on Lexis®PSL on 17 January 2023 and can be found here (subscription required).


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