Paris Court of Appeal, 27 March 2018, SAAD Buzwair Automotive Co (SAB) v. Audi Volkswagen Middle East FZE LLC (AVME), no. 16/09386

The English trading Company Continental Trading Ltd (“CCT”) bought from the Swiss company Noble Resources (“Noble”) 55.401 tons of soya beans to be paid by means of a documentary credit of EUR 19.999.761. Such documentary credit was issued by the company The International Banking Corporation (“TIBC”) incorporated in Bahrain, the French bank BIA intervening as advising and confirming bank of the transaction.

Noble addressed the bills of lading and the invoice and requested to be credited with such invoice’s amount. With TIBC’s agreement, BIA payed the letter of credit in favour of Noble and gave instruction to La Société Générale to credit Noble’s account, in HSBC’s books. CCT then paid the sum of EUR 19.724.971 corresponding to the commitments under the letter of credit.

Following the lack of payment by TIBC of its obligation under such letter of credit, BIA summoned it (together with, amongst others, CCT) before Paris High Court, which rejected the exceptions d’incompéténce (lack of jurisdiction arguments) raised by the respondents. CCT submitted that BIA is bound by the arbitration agreement provided for in the sale agreement (governed by English law), which is not manifestly void or inapplicable.

The Court partly overturned the decision of the Paris High Court in that it had jurisdiction to rule on the dispute, considering that the arbitration agreement contained in the sale agreement expresses that “such a clause expresses the will of the parties to submit to arbitration disputes arising from the contract; that it is not manifestly void or inapplicable, being observed that it results from a certificate of custom produced by CCT that the English law would consider it valid and would make it possible to remedy the silence of the convention concerning the modalities of appointment of the arbitral tribunal”.

2018-06-27T05:46:05+00:00 March 27th, 2018|Court of Appeal, Paris Court of Appeal|0 Comments

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