Paris Court of Appeal, 22 May 2018, Spouses Z v. ITM Sud Ouest, no. 16/24803

A trade-name license agreement for the operation of a store was concluded between ITM and Joriane, a company controlled and managed by the Spouses Z. In 2002, ITM undertook to buy (“promesse unilatérale d’achat”) the shares of Joriane company over a period of 10 years, this unilateral commitment included an arbitration clause.

A decision in 2010 ordered the liquidation of Joriane. The latter initiated arbitration proceedings on the basis of the arbitration clause as it considered that ITM has depreciated the value of the shares. The Arbitral Tribunal rendered a final award on 17 November 2016, dismissing the Spouses Z’s claims and considered in particular that it did not have jurisdiction to rule on potential breaches of ITM regarding the performance of its contractual obligations pursuant to the trade-name license agreement and a supply agreement.

The Spouses Z requested an annulment of the award as they considered that the Arbitral Tribunal has disregarded its mission, did not respect the Audi alteram partem principle (the principle that both parties should be heard), did not explain its decision and that the award was contrary to the public policy. The Court of Appeal dismissed this appeal, stating that the Arbitral Tribunal did not disregard its mission. The Court also explained that there was no violation of the Audi alteram partem principle as the parties had been invited to present their arguments on the different issues decided in the final award. Regarding the lack of motivation of the award and the violation of public policy, the Court of Appeal considered that the award did not lack appropriate motivation and that the arbitrators do not have to address the substantive questions which they are incompetent to decide or which are inadmissible.

Furthermore, the criticism of the adequacy between the award’s motivation and the arguments raised by the claimants leads the Court to review the substance of the award, which is not permitted.

2018-06-27T20:22:59+00:00 May 22nd, 2018|Court of Appeal, Paris Court of Appeal|0 Comments

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