Two brokerage firms, E, belonging to the COVEA group and KBS Ltd, entered into a co-brokerage agreement on 16 February 2011, which contained an arbitration clause.
Following the transformation of the company KBS Ltd into Priosma Ltd, the COVEA group appointed this new company as the substitute of KBS Ltd in a letter dated 30 September 2013, stating that the financial terms applicable were identical to those fixed under the 2011 agreement but did not mention any dispute resolution clause.
Following the non-payment of the commissions by Priosma Ltd and applying the arbitration clause provided by the 2011 agreement, the company E initiated proceedings before an ad hoc arbitral tribunal. The tribunal ordered Priosma Ltd to pay the retrocession of half of the amounts collected.
The company Priosma Ltd filed an action for annulment of the award, arguing that the tribunal did not have jurisdiction over the case in the absence of an arbitration clause in the 2013 letter.
The Paris Court of Appeal dismissed the action. The Court held that the letter from 2013 and its supporting email only appointed the substitute company, ordered the transfer of the files and of liability, and stated that the financial terms, as agreed with the former co-contractor, were still applicable. Those two documents did not specify the subject matter of the contract, i.e. the entrusted mission, nor the parties’ rights and obligations other than the amount of the commission. In such circumstances, the 2013 agreement would be deprived of its substance, without a necessary reference to all the provisions of the 2011 agreement, including its arbitral clause. Therefore, the Court held that the arbitral clause under the 2011 agreement was applicable and that the arbitral tribunal had jurisdiction over the case.