It is in the exercise of its sovereign power to interpret an arbitration clause, made necessary by its imprecision, excluding any distortion, that a court of appeal rejects the argument based on the irregular constitution of the arbitral tribunal by holding that, in application of this clause manifesting the common will of the parties to submit their dispute either to institutional arbitration governed by the rules of the International Chamber of Commerce (ICC), or to ad hoc arbitration, a party could have chosen to resort to institutional arbitration, which entailed the designation of the arbitral tribunal in accordance with Article 8 of the ICC rules.

Judgment of the French Supreme Court (Cour de cassation), First Civil Chamber, November 6, 2024 (Appeal Nos. 22-16.580, 22-19.327 and 23-15.649).

In its judgement dated November 6, 2024, the French Supreme Court ruled on a series of appeals concerning the enforcement in France of an arbitral award rendered in India and resulting from a commercial dispute between Antrix Corporation Limited and Devas Multimedia Private Limited.

The dispute raised various questions relating, inter alia, to the intervention of a judicial liquidator – appointed by an Indian court – in proceedings relating to the enforcement of the award in France.

1. Facts

The French Supreme Court (Cour de Cassation) rendered a decision in relation to the challenge of a judgement rendered by the Court of Appeal of Paris – on March 22, 2022 – concerning the enforcement of an international arbitral award rendered in India (New Delhi) under the auspices and the arbitration rules of the International Chamber of Commerce (ICC).

Indeed, the Court of Appeal of Paris considered that the Indian companies involved in the case, Antrix Corporation Limited (“Antrix”) and Devas Multimedia Private Limited (“Devas”), entered into a commercial agreement providing for an arbitration clause, under the terms of which:

  • the venue of the arbitration shall be located in New Delhi, and
  • the arbitration proceedings will be conducted in accordance with the rules and procedures of the International Chamber of Commerce (ICC) or the United Nations Commission on International Trade Law (UNCITRAL).

For the purpose of settling the arising dispute, the Devas company initially submitted a request to the ICC for arbitration and for the constitution of an arbitral tribunal.

On September 14, 2015, the arbitral tribunal – constituted in New Delhi under the ICC rules – issued an arbitral award under the terms of which it ruled on its own jurisdiction and ordered the Antrix company to pay the Devas company a certain sum of damages.

The Devas company pursued enforcement in France where the Antrix company had assets, and the Antrix company appealed the order granting the exequatur.

In addition, under a judgment of the Court of Bangalore of May 25, 2021, the Devas company was placed into judicial liquidation and a judicial liquidator was designated. The designated judicial liquidator of Devas (the “Designated Liquidator”) then requested to intervene voluntarily, ex officio in the pending judicial proceedings in France.

The Designated Liquidator in particular challenged the judgment of the Court of Appeal of Paris of March 22, 2022, declaring his voluntary intervention in his official capacity to be inadmissible, given that:

  • “the standing to act of an agent (the Designated Liquidator) appointed by a foreign (Indian) judgment, rendered in the context of insolvency or liquidation proceedings of a company, is assessed independently of the divestment of that company resulting from the exequatur of that judgment;
  • (…) but finding nevertheless that this was not sufficient to make him admissible to intervene in that capacity in legal proceedings in France concerning that (Devas) company, on the ground that such an intervention would have had the improper effect of divesting the directors of that company of their powers, the Court of Appeal, which did not draw the legal consequences of its findings, violated (…) the general principles of private international law.”

2. Judicial decision

The French Supreme Court (Cour de Cassation) considered, inter alia, in its judgement (1st Civil Chamber – November 6, 2024) as to the Designated Liquidator thatthe recognition of a foreign judgment in France requires an exequatur procedure. In the absence of such recognition, the decision of the Indian Court of Bangalore regarding the liquidation of Devas and the appointment of a liquidator has no legal effect in France. Consequently, the company’s legal representatives retain their power of representation and cannot be divested of their authority. Accordingly, the foreign liquidator had no standing to intervene in the French proceedings.

3. Comments

In accordance with French Arbitration Law (Book IV of the French Code of Civil Procedure), the recognition/enforcement of an arbitral award – which was rendered abroad – may be challenged – as per Article 1522 of the French Code of Civil Procedure – exclusively on the basis of one of the legal grounds which are specifically listed under Article 1520 of the same code.

In this respect, Article 1520 of the French Code of civil procedure is providing – under its paragraph 5°- that it may be challenged when the recognition or enforcement of the arbitral award is contrary to international public policy.

However, French positive law does not strictly state that the violation of the public policy of the forum can be a direct reason for the annulment of the international arbitral award. 1

In this respect, it is generally admitted that an international arbitral award must be in its enforcement phase in accordance with the mandatory rules of the forum. An international arbitral award in the context of recognition and enforcement proceedings is not simply subject to review in relation to international public policy in the strict sense of the term. It is also subject to review in relation, in specific cases, to mandatory rules of the forum. 2

In the present case, the judgement of the Indian Court appointing the Designated Liquidator, rendered in the context of insolvency or liquidation proceedings of the Devas company – which should be regarded as Indian mandatory rules, was actually assessed by the French Supreme Court independently of the divestment of the Devas company resulting from the exequatur of that judgment.

Indeed, the French Supreme Court considered the Indian Court of Bangalore’s decision effect shall not be assessed within the scope of the recognition/enforcement of the arbitral award in France but as a separate and incidental matter. The Court is in particular pointing out in this respect that:

  • the Indian Court of Bangalore’s decision which is relating to the liquidation of the Devas company and the appointment of the Designated Liquidator had not been granted exequatur in France; and
  • the Court of Appeal of Paris duly concluded that the legal representatives of the Devas company (who had been officing until its judicial liquidation) had not been divested of their power of representation in relation to the enforcement of the arbitral award in France.

This means that the legal effect to be given to the appointment of the Designated Liquidator – which shall result from Indian mandatory rules regarding insolvency proceedings – shall be assessed and appreciated outside the scope of the review by the French jurisdiction of the recognition/enforcement of the arbitral award rendered abroad (in India).

Indeed, by doing so the French Supreme Court assumed that the contrariety to international policy – which is one the five legal grounds for challenging the enforcement of an arbitral award as provided for in Article 1520 of the French Code of civil procedure – shall not cover and include the appreciation of the incidental legal effect to be given to the Court of Bangalore’s decision as to the appointment of the Designated Liquidator under Indian mandatory rules.

Conclusion

The appointment of the Designated Liquidator of the Devas company by an Indian Court shall be regarded as an incidental matter and must be appreciated separately from the recognition/enforcement of the arbitral award rendered in India, under which the Antrix company shall pay damages to the Devas company.

This consideration seems logical since the appointment of the Designated Liquidator of the Devas company in India does not affect the substance of the arbitral award which enforcement is sought in France.

However, it shall be pointed out that the French Supreme Court decided not to consider that the appointment of the Designated Liquidator – made under Indian mandatory rules – affect the international public policy as it must be appreciated by the French jurisdiction for enforcement purposes.

This may be evidenced by a reading a contrario of the French Supreme Court’s decision: the appointment of the Designated Liquidator – under Indian mandatory rules – is regarded as incidental because it is outside the scope of international public policy as appreciated by the French jurisdiction.

This consideration is actually in line with the recurring case-law of the French Supreme Court as to its appreciation of international public policy which has repeatedly not included foreign mandatory rules.

Footnotes

  1. As developed by Jean Baptiste Racine in “L’arbitrage commercial international et l’ordre public”, LGDJ, 1999, no. 851, p. 475. ↩

  2. As developed by Nestor Kouami and Gisèle Assaf in “Sentences arbitrales internationales face aux exigences de l’ordre public international et interne.” Colloque, thème: Conflit des lois et contrariété de décisions dans l’arbitrage international, Académie africaine de la pratique du droit international, Sept. 2020, Paris, France. ↩