THE AUTHORS:
Zyad Loutfi, Triple-Qualified Attorney (Cairo – New York – Paris)
Adel Al Beldjilali-Bekkaïri, LL.M. Candidate at University of Paris-Est Créteil
Equality of arms is a foundation element of any fair trial. Similar to “due process”, the French principe de la contradiction, embodies this understanding and requires that parties are able to raise their claims of fact and law, and to exchange arguments with regard to the claims of the other parties, such that no claims that are the basis for an arbitrator’s decision escapes the adversarial debate.
Under the French Code of Civil Procedure, and precisely articles 1520, 4° and 1525, the enforcement of the award must be refused if the principle of contradiction has not fully been respected by the arbitral tribunal. Arbitrators ought to be careful in ensuring that each party is offered a reasonable opportunity to present its case and evidence, and that each party has had the opportunity to consider and comment on each legal and factual issue considered in the award.
On October 1, 2024, the Paris Court of Appeal (the “Court”) overturned an exequatur Order rendered against Libya in an ad hoc arbitration seated in Tunisia (Siba Plast v. Libya, Judgment of the Paris Court of Appeal (Department 5 – Chamber 16) 21/11112 – 1 Oct 2024).
Background
Following the Libyan revolution in 2012, as part of the Libyan State’s efforts to develop its Police forces, the Italian company Giacorosa entered into five commercial agreements with the Libyan National Transitional Council (“LNTC”). These contracts covered the importation of equipment and tools at a total cost of 47,634,500 euros; the importation of bullet-proof waistcoats at a total cost of 8 million euros; the design and construction of prison buildings at a cost of 157,500,000 euros; the training of the Libyan police force for 32,500,000 euros; the importation of equipment and tools for broadcasting and transmitting television programmes for 34,340,000 euros.
In April 2014, the contracts and their addenda were transferred to Siba Plast, a Tunisian company, which after estimating that Libya had not performed its duties under the contracts, initiated an ad hoc arbitration in Tunisia on the basis of the arbitration clause inserted in one of the addenda. Libya refused to take part in the arbitration proceedings. Therefore, Siba Plast requested the Tunis Court of Appeal to appoint an arbitrator in place of the respondent. On August 18, 2014, the Court appointed said arbitrator.
On November 28, 2014, the Tunis seated ad hoc arbitration resulted in a 280 million euros default award against Libya.
On March 6, 2017, Siba Plast obtained an exequatur order in France. On June 3, 2021, it also made seizures on bank accounts belonging to Libyan public entities; the Libyan Foreign Bank and the Libyan Investment Authority, all of which are emanations of the Libyan State.
On June 15, 2021, upon learning of said enforcement actions against its assets, Libya lodged an appeal before the Paris Court of Appeals against the exequatur Order alleging, amongst others, the irregular constitution of the arbitral tribunal and the violation of the principle of contradiction. Libya claimed that it did not have a fair opportunity to present its case before the Arbitral Tribunal for several reasons. Firstly, the Tribunal did not ensure that the State has received the summons and all the relevant documents pertaining to the dispute as the, @gmail and @yahoo, email addresses used were invalid and clearly did not correspond to that of a State. Secondly, Libya alleged that the tribunal did not allow it reasonable time to appear in the proceedings before recording a default award against it. On such account, Libya highlights that the hearings and the closure of the proceedings took place only 40 days after the filing of the request for arbitration.
Paris Court of Appeal’s Decision
The Paris Court of Appeal explained that this principle requires that nothing that served as the basis for the arbitrators’ decision has escaped their contradictory debate (paragraph 30). Therefore, the Court analysed the method of notification used by the tribunal to notify both the State of Libya and LNTC of the proceedings. The Court noticed some discrepancies in the email addresses used for notification, notably in the request for the arbitrator appointment sent out on June 9, 2014, the summons to the President of the Tunis Court of Appeal to appoint an arbitrator on behalf of the Libyan State on August 8, 2014, and the notification of the request for arbitration proceedings on September 1, 2014 (paragraph 32-36). Indeed, the Court noted that the spelling of the e-mails in the contracts varied from those sent to the bailiff appointed by Siba Plast; with the number zero replaced by the letter “o” on multiple occasions.
Moreover, the Court came to the finding that there is a lack of evidence proving that Libya had received crucial documents pertaining to the arbitration, including the invitation to participate in the hearings, their transcripts, and most importantly the new request made by Siba Plast during the hearing on October 13, 2014 (paragraphs 37-38).
Finally, the Court concluded that, in these circumstances, it appears that the principle of contradiction was not respected, as Libya was not given the opportunity to put forward its point of view or exercise its rights in the proceedings (paragraph 39).
Commentary and Conclusion
The decision of the Court underscores the essential responsibility of arbitral tribunals and parties to guarantee proper and effective notification throughout any arbitration, particularly when the award is rendered by default proceedings. The decision also serves as a reminder on the importance of notification clauses inserted into any contractual relationship. Although the Court indicates that email notifications may still be considered effective, a party must ensure that its counterpart is properly informed of the proceedings to avoid problems with the enforcement and recognition of the award. In summation, ensuring equality of arms in international arbitration is key to protecting the enforceability of any award, a point the Court found necessary to underscore for its audience in this decision.
ABOUT THE AUTHORS
Zyad Loutfi is a triple-qualified attorney based in Paris where he focuses on international commercial arbitration and dispute settlement. He is admitted to practice in Egypt, New York, and Paris. His expertise and scholarship span international arbitration, intellectual property law, and investment law, and his work involves advising and representing companies, states, and state-owned entities in a wide range of industries. He holds a Ph.D. in private law from the University of Paris Cité. He is also a graduate of Cornell Law School (where he was President of the Cornell International Arbitration Society), the University of Paris Descartes, the University of Paris-Est Créteil, and Cairo University.
Adel Al Beldjilali-Bekkaïri is an LL.M. Candidate in International Buisness Litigation at the University of Paris-Est Créteil. He holds a Master’s degree in International Arbitration and Trade Law (MACI) from the University of Saint-Quentin-en-Yvelines. He is also a graduate of the University of Algiers 1 and the University of Paris Saclay.
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