Background

In late 2014, the Republic of Benin (Benin) signed a three-year procurement contract (the Contract) with SGS, a Swiss company operating in the field of customs control and certification. The Contract contained an ICC arbitration clause. As of 2015, Benin stopped paying the company's invoices, invoking the nullity of the Contract.

Two parallel proceedings then began: the first initiated by Benin before the Beninese courts claiming nullity of the contract, the second an ICC arbitration seated in Ouagadougou, Burkina Faso, initiated by SGS, claiming payment of the invoices and compensation for breach of contract.

The Beninese courts accepted jurisdiction, notwithstanding the arbitration clause and dismissing SGS’ objections in this respect, on the grounds that the request for cancellation of an administrative contract falls within the exclusive jurisdiction of the administrative judge. The court found the contract to be annulled in a decision of February 2017, a decision later confirmed at appeal.

However, the Tribunal seated in Ouagadougou also accepted jurisdiction, and issued a partial award to that effect in April 2018, before going on to issue a final award in SGS’ favor in March 2019, ordering Benin to pay the remaining invoices. SGS applied for the exequatur of this Final Award before the High Court (Tribunal de Grande Instance) of Paris, which granted the award exequatur on May 24, 2019.

Benin subsequently received decisions from the local courts annulling both the partial award (on appeal to the CCJA, the Supreme Court of the OHADA region, incorporating both Benin and Burkina Faso) and the final award (at the seat in the Burkina Faso courts). Benin then appealed the exequatur decision of the final award before the French courts, claiming (i) the tribunal lacked jurisdiction, as confirmed by the local courts, and (ii) the exequatur of the award violated international public policy.

The Court’s decision

The Court of Appeal rejected Benin’s appeal against exequatur of the final award that had by now been annulled at its seat.

First, with regard to whether the annulment of the awards at the seat would influence the French courts’ consideration, the court referred to the solution that is now well established in the French courts, namely that an arbitral award, as an international decision, is not attached to any national legal order. The Court states that "the setting aside of the said award by the courts of the seat does not entail any consequence on its recognition" and that the two annulment decisions of the courts of the seat are "not of such a nature as to, by themselves, impede the examination by the judge of the control, with regard only to the rules applicable in France."

Such logic, and the refusal to be bound by local annulment decisions, is in line with French jurisprudence, as established in cases such as the well-known Putrabali decision back in 2007, promoting a transnational approach to international arbitration. The French courts would therefore consider the appeal on the basis of French law on enforcement of awards, without being influenced by the decision of the local courts.

Secondly, the court addressed Benin’s objection regarding public order, according to which Benin argued that because the local courts had found jurisdiction and issued a decision on the merits in February 2017, the issue was already decided by the time the Tribunal considered the issue, and the Tribunal’s awards thus violated the principle of res judicata. The French court thus considered whether the res judicata effect of a foreign court decision could prevent the recognition or enforcement of an arbitral award in France, and if so, under what conditions.

The Court acknowledged that the French conception of international public order (to be applied under Art. 1520(5) of the Code of Civil Procedure) could come into play where a foreign court decision and an arbitral decision were irreconcilable, on the basis of res judicata. However, it noted that for this to be an issue with regard to foreign decisions being considered by the French courts, the two decisions in question would have to be “equally enforceable” within the French territory. As Benin had not requested exequatur of the local court decisions, then such foreign decisions did not have status in France and as such could not prevent the exequatur of the final award.

What this means for enforcement

This decision provides a new clarification that refines the Planor case law of 2012, where the Paris Court of Appeal gave precedence to decisions from the courts of the arbitral seat on the basis of res judicata as they had been granted exequatur. In the Planor case, the Court of Appeal concluded that the enforcement of an arbitral award that was irreconcilable with the decisions of foreign courts recognized in France would effectively and concretely violate international public policy, regardless of whether the award had been granted exequatur before the foreign judgments.

In this regard, the contribution of the Court of Appeal in the SGS case lies in the clarification of the decisive criterion for refusing the enforcement of an award that is irreconcilable with foreign decisions. Whether or not res judicata will be considered will depend on the enforceability of a judicial decision on French territory. The Court of Appeal affirms that a foreign decision would be an obstacle to the recognition and enforcement of an arbitral award only if the latter has been granted exequatur on French territory.

Logically, this appears in line with the French courts’ previous approach and conception of international legal order. Unlike some other jurisdictions the French courts will not be distracted by considering the decision to set aside the arbitral award or delving into its reasoning, rather they will consider the foreign award or decision by applying French law standards.

The French courts will thus examine enforcement on the basis of the decisions that are brought within the French system and on the basis of French law. As such, parties would be well advised to apply quickly for exequatur of a favorable award or court decision if it could have an impact within France, as the timing of when decisions were taken in foreign jurisdictions will not be relevant. As such, this may create something of a race to exequatur, but in all cases the approach of the French Courts is consistent and clear, and as such upholds the visibility and international impact of the arbitral system.