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Lawyers, other representatives, expert(s), tribunal’s secretary

Judgment of the Paris Court of Appeal

RULING:

- CONFLICTING

- by provision of the ruling to the Registry of the Court, the parties having been previously notified under the conditions laid down in the second subparagraph of Article 450 of the French Code of Civil Procedure.

- signed by François Ancel, Presiding Judge, and by Clémentine Glemet, Clerk, to whom the record was given by the signing magistrate.

I: FACTS

1.
On December 14, 2007, the Democratic Republic of the Congo (hereinafter referred to as the "DRC") and the association formed between the company Divine Inspiration Group (PTY) Ltd. (hereinafter referred to as the "company DIGOIL") and La Congolaise des Hydrocarbures [Congolese Hydrocarbons] entered into a production-sharing contract (PSC) for hydrocarbon resources covering Blocks 8, 23, and 24 of the Central Basin (Cuvette Centrale) of the Congo Basin.
2.
On January 21, 2008, the DRC and the consortium association formed between the company DIGOil, the company Petro SA, the company H-Oil Congo Limited, La Congolaise des Hydrocarbures, the company Congo Petroleum and Gas Sprl, and the company Sud Oil Sprl entered into another production-sharing contract (PSC) for hydrocarbon resources covering Block 1 of the Albertine Graben.
3.
Having found that these two production-sharing contracts had not been approved by the President of the DRC and, considering that the DRC had failed to fulfill its commitments by deciding to award the operation of one of the sites (Block 1 of Albertine Graben) to another consortium (the association Caprikat Ltd and Foxwhelp Ltd), the company DIGOil initiated an arbitration procedure.

II: PROCEDURE

4.
By an arbitral award rendered in Paris on November 7, 2018, under the auspices of the International Court of Arbitration of the International Chamber of Commerce, the Arbitral Tribunal, composed of Ms. Christine Lécuyer-Thieffry (Presiding Judge), Mr. Grégoire Bakandeja WaMpungu, and Ms. Ghizlane El Idrissi, in particular:

- ruled that the DRC was at fault for failing to issue to the company DIGOil the presidential order approving (i) the production-sharing contract entered into between the DRC, on the one hand, and, on the other hand, the association of the company DIGOil and La Congolaise des Hydrocarbures, and (ii) the production-sharing contract entered into between the DRC on the one hand, and, on the other hand, the consortium association of the company DIGOil, Petro SA, H-Oil Congo Limited, La Congolaise des Hydrocarbures, Congo Petroleum and Gas SPRL, and Sud Oil SPRL;

- ruled that the DRC was at fault for unilaterally claiming to terminate the production-sharing contract entered into between the DRC, on the one hand, and, on the other hand, the consortium association DIGOil, Petro SA, H-Oil Congo Limited, La Congolaise des Hydrocarbures, Congo Petroleum and Gas SPRL, and Sud Oil SPRL, for Block 1 of the Albertine Graben of January 21, 2008;

- pronounced the resolution of the exclusive wrongs of the DRC for the two aforementioned production-sharing contracts;

- ruled that the DRC must fully compensate the company DIGOil for all the damages it suffered as a result of the non-performance and termination of the aforementioned contract of December 14, 2007, and contract of January 21, 2008;

- ruled that the DRC must pay the company DIGOil the amount of USD 617,400,178 plus interest calculated at the rate of return of U.S. Treasury bonds for the next 20 years plus 2% from the date of the final award and until full payment;

- ruled that the DRC must bear all the expenses of the arbitration set by the court in the amount of EUR 691,437, and the costs incurred by the company DIGOil in its defense in the amount of USD 1,109,933.62;

- ruled that the DRC must pay the company DIGOil the amounts of USD 760,000 and USD 1,109,933.62 plus interest calculated at the rate of return of U.S. Treasury bonds for the next 20 years plus 2% from the date of the final award and until full payment;

- dismissed all other requests of the parties.

5.
The DRC filed an appeal for annulment against this award by declaration of April 2, 2019.

III: SUBMISSIONS OF THE PARTIES

6.
At the end of its last summary conclusions notified by electronic means on October 10, 2019, the DRC asked the Court, on the basis, in particular, of Article 150 subparagraph 3 of the former Congolese constitution of the transition of April 2003 and Articles 1518, 1519, 1520 (3), and 1520 (5) of the Code of Civil Procedure, to:

- receive the appellant in its pleadings and rectify its decision;

- rule that the Arbitral Tribunal ruled without complying with its mission;

- rule that the recognition or enforcement of the award would be contrary to international public order;

- annul the arbitral award of November 7, 2018, by the Arbitral Tribunal acting under the auspices of the International Court of Arbitration;

- accordingly, re-open the case and give it a definitive solution;

- order the company Divine Inspiration Group (PTY) Ltd. to pay the Democratic Republic of the Congo the amount of EUR 30,000 for non-recoverable expenses (Article 700 of the Code of Criminal Procedure) and to pay the full legal costs.

7.
At the end of its last summary conclusions notified by electronic means on November 8, 2019, the company Divine Inspiration Group (Pty) Ltd. asked the Court, on the basis of, in particular, Articles 32-1, 696, 700, 1504, 1520 (3), 1520 (5), and 1527 of the Code of Civil Procedure, to:

- dismiss the DRC’s requests, purposes, and conclusions in full;

Accordingly,

- declare that the ICC award of November 7, 2018, in the case CCI 22370/DDA has been granted exequatur and affix it to its certified copy, pursuant to Article 1527 of the Code of Civil Procedure;

- order the DRC to pay EUR 30,000 (thirty thousand euros) to the company Divine Inspiration Group (PTY) Ltd. for abuse of appeal against the ICC award of November 7, 2018, in the case CCI 22370/DDA, pursuant to Article 32-1 of the Code of Civil Procedure;

- order the DRC to pay EUR 70,000 (seventy thousand euros) to the company Divine Inspiration Group (PTY) Ltd on the basis of Article 700 of the Code of Civil Procedure;

- order the DRC to pay the full legal costs, pursuant to Article 696 of the Code of Civil Procedure.

IV: PLEAS OF THE PARTIES

8.
In support of its appeal, the DRC considers that the Arbitral Tribunal ruled without complying with the mission entrusted to it and that the recognition or enforcement of the award would be contrary to international public order.
9.
It states that the Arbitral Tribunal ruled without complying with the mission entrusted to it since Congolese law was applicable, the Arbitral Tribunal refused to take into account a decision of the former Supreme Court of Justice (now the Council of State) on the discretionary powers of the President of the Republic so that it went beyond the scope of its mission. It states that the Tribunal could not find fault on the part of the DRC for failing to issue the presidential order, whereas the ruling of the Supreme Court of Justice states, on the contrary, that such approval is a matter for the sovereign discretionary power of the President of the Republic.
10.
It states that, according to Article 150, subparagraph 3, of the Congolese constitution, courts and tribunals are required to comply with the jurisprudence of the Supreme Court of Justice and that the Tribunal pretended to interpret this jurisprudence in order to better exclude it, since its objective was to interpret Law No. 81/015 of April 2, 1981, on mines and hydrocarbons in its own way, without taking into account the aforementioned ruling of the Supreme Court.
11.
The DRC considers that there was no reason for the Arbitral Tribunal not to adopt the same reasoning as that of the Supreme Court of Justice, because although the facts submitted to it were not exactly the same as before the Congolese courts, it nevertheless raised the same questions of law regarding the presidential order.
12.
The DRC adds that international public order is constituted by the principles of universal justice considered in the opinion as having absolute international value and that the application by a lower court of precise and clear jurisprudence constitutes a fundamental general principle that is universally recognized. It states that by deciding not to comply with the jurisprudence of the Supreme Court of Justice of the DRC, even though it was obliged to apply Congolese law when considering the case submitted to it, the Tribunal came into conflict with the principles and values of universal justice in such a way that the recognition or enforcement of the award would be contrary to international public order.
13.
In response, the company DIGOil argues that the DRC is attempting, under cover of challenging the alleged violations of its mission by the Tribunal, to obtain a review of the merits of the award. It states that, by claiming that the Tribunal did not "comply" with the 2010 ruling, or that it "refused" to apply it, the DRC is merely contesting the Tribunal’s interpretation as to the manner in which the stipulations of the contracts, as well as Congolese law and applicable practices, were applied, whereas the Tribunal, on the contrary, as its mission required, applied the contracts, Congolese law and the practices concerned.
14.
In that regard, it states that the Arbitral Tribunal, after recalling and examining the respective claims of the parties and the documents submitted by them on that point, and taking into account administrative practice in the DRC, as well as Congolese law, concluded that the DRC had a contractual obligation to make every effort to enable the order to be issued under the conditions laid down by Congolese law, and that this obligation had to be fulfilled within a time limit of up to two years and four months in practice.
15.
The company DIGOil adds that, as regards the plea based on Article 1520-5 of the Code of Civil Procedure, the DRC does not invoke in its support any rule of French international public order, nor does it support or demonstrate that the recognition and/or enforcement of the award itself would be manifestly, effectively, and concretely contrary to French international public order.
16.
It considers that the arguments raised by the DRC amount to asserting that the relevant provision of the Congolese Constitution and the interpretation by the Supreme Court formulated in the 2010 ruling, and resulting from various facts and questions, would prohibit any interpretation of Congolese law other than that of the DRC, and that this interpretation would be binding on the Tribunal, in the name of an international public order unknown to French international arbitration law.
17.
The company DIGOil also argues that the award was made in the context of international arbitration and is therefore not subject to appeal or evocation, so that the DRC’s request that the Court refer to this case in the event that the award is annulled is therefore inadmissible.
18.
Finally, it considers that this appeal is abusive because it is not based on an inaccurate assessment by the DRC of its rights and that it is, in practice, intended to delay the enforcement of the award and aims only to justify a request for a stay of recognition and enforcement of the award outside France, since it makes any procedure for the enforcement of the award outside the seat of arbitration illusory and costly for the company DIGOil until the Paris Court of Appeal has ruled on this appeal, in particular, in the countries that signed the 1958 New York Convention other than France, since Article V.1(e) of that convention provides that a judge hearing a request for enforcement or recognition of such an award made abroad may refuse to grant it if the award has been annulled at the place where it was pronounced.

V: GROUNDS FOR THE DECISION:

On the plea alleging the Arbitral Tribunal’s violation of its mission;

19.
Pursuant to Article 1520 (3) of the Code of Civil Procedure, an appeal for annulment may be brought if the Arbitral Tribunal ruled without complying with the mission entrusted to it.
20.
In this case, it is not disputed that, at the end of the disputed contracts (Article 27), the interpretation and execution of these contracts are subject to the law of the Democratic Republic of the Congo and that the arbitration agreements (Article 30) of each of these contracts refer to the Arbitration Rules of the International Chamber of Commerce of Paris, Article 21 of which stipulates that "1 : The parties are free to choose the rules of law that the Arbitral Tribunal shall apply to the merits of the dispute (...) 2: The Arbitral Tribunal shall take into account the provisions of the contract between the parties, if any, and all relevant trade practices
21.
It follows from the award of November 7, 2018, that the Arbitral Tribunal based its decision on the law of the Democratic Republic of the Congo, as follows, in particular, from paragraph 113 of the award, which states that "it follows from the cumulative application of the provisions of Article 189 of the Law of 2015 [Law No. 15/012 on the general regime for hydrocarbons of August 1, 2015] and the stipulations of Article 28 of the disputed contracts, that the Congolese law applicable to them is the Law of 1981 [Ordinance-Law No. 081-013 of April 2, 1981, on general legislation for hydrocarbons] and it is in the light of the provisions of the Law of 1981 that the respective claims of the parties must be examined, first of all with regard to the consequences of the non-issuance of the presidential order approving the disputed contracts."
22.
Similarly, in order to assess the consequences of the non-issuance of the presidential order, it should be noted that the Arbitral Tribunal referred to Article 79, subparagraph 5, of the Congolese Law of April 2, 1981, according to which "oil agreements, although duly signed by the parties, have effect only after they have been approved by an order of the President of the Republic" (paragraph 114), in order to consider that the non-issuance of the Presidential Order "has the effect of suspending certain effects of the disputed contracts, the parties remaining bound by the obligations contained therein" (paragraph 121).
23.
Having also noted that, according to "Article 29 of the disputed contracts, the State is under an obligation to take all necessary measures to facilitate oil activities, in particular, in order to obtain the necessary approvals, including the order of the President of the Republic" (paragraph 125), it held that "the issuance of the presidential order approving the disputed contracts does indeed constitute, under Article 29 of the disputed contracts, a commitment by the State, which is the guarantor of the application of its own legislation and from which it can be released only if the conditions laid down by the latter for its issuance are not fulfilled, which now must be determined" (paragraph 126).
24.
The DRC availed itself of supporting its defense of ruling RA.1006 of December 10, 2010, by the Supreme Court of Justice, Administrative Section, sitting in the matter of annulment in the first and last instance, at the end of which the Court was asked to rule on the appeal for annulment brought by an oil company under Dutch law against an interministerial ruling by the Minister for Hydrocarbons dated October 17, 2017, which reopened the exploitation of Block 1 of the Albertine Graben in defiance, according to the oil company, of the production-sharing contract it had entered into. To dismiss the appeal for annulment, the Supreme Court of Justice, in its reasons, "finds that the production-sharing contract was entered into under a suspensive condition that has not been fulfilled to date, in this case, the approval of the President of the Republic. It also notes that, under Congolese law, the latter does not have a related jurisdiction in this matter that would absolutely oblige him to give his approval; that, on the other hand, it is a discretionary power involving his sovereign assessment in the light of the elements of the case and the interests of the Congolese State, and for the exercise of which he is not bound by any time limit. The Court therefore considers that, in the absence of the presidential order of approval provided for by the previously recalled legal and contractual provisions, since the contract in question has not yet begun to take effect, the plaintiff’s action is manifestly premature and therefore inadmissible."
25.
In this regard, it should be noted that the Arbitral Tribunal, after recalling the differing analyses of the parties as to the powers of the President of the Republic to issue an approval order (a mere formality to be obtained, or a discretionary power), expressly relies on this jurisprudence of the Supreme Court of Justice, stating that it "emphasizes that the power of the President of the Republic is discretionary" and that this "power implies his sovereign assessment of the elements of the case and the interests of the Congolese State" but considers that "the interests of the State are those derived from the rights of the State on the subsurface of which the President of the Republic is the guarantor under the Constitution and the Law of 1981" and that "it is therefore for the President of the Republic to make a sovereign assessment of the extent to which an oil agreement is likely to affect national independence, territorial integrity, national sovereignty, and international treaties and agreements, and, if necessary, refuse to issue the order of approval if he is not satisfied that this is the case" (paragraph 132).
26.
The Arbitral Tribunal notes that not only was the order not issued but that "no rejection decision by the President of the Republic containing any reasons was produced during the deliberations, nor even its alleged existence" and it notes from paragraph 150 of the award that "the situation of the 2008 contract considered here differs from the elements of the case submitted to the Supreme Court in the proceeding that gave rise to its ruling of December 10, 2010," in the sense that "in the light of the elements of the case assessed sovereignly by the President of the Republic, the continuation of this contract could be contrary to the interests of the State" (paragraph 151), whereas in the case of the 2008 contract, "no reason of public interest was alleged" so that, according to the Arbitral Tribunal, "nothing among the elements in the deliberations therefore allows us to consider that the conditions for the issuance of the presidential order under the law of the DRC would not have been fulfilled by the 2008 contract" (paragraph 152).
27.
Thus, the Arbitral Tribunal considered that "the fact, as decided by the Supreme Court of Justice of the DRC in its ruling, that the President of the Republic has discretionary power does not mean that this power can be exercised arbitrarily" (paragraph 153); that "the nonissuance of the presidential order approving the 2008 contract has the effect of suspending its execution pursuant to Article 79, subparagraph 5, of the Law of 1981, but does not have the effect of releasing the parties from the obligations arising therefrom" (paragraph 154); and that "in the absence of an allegation by the defendant of a reason of public interest justifying a refusal to issue the presidential order, the plaintiff argues in a relevant way that the defendant’s unilateral decision to assign the rights it held under the 2008 contract to a third party constitutes an ‘unlawful act’ that contravenes the provisions of Article 33 of the Decree of July 30, 1888, (...)" (paragraph 159), which provides that "legally formed agreements shall serve as law for those who have made them. They may be revoked only with their mutual consent or for reasons permitted by law."
28.
The Arbitral Tribunal thus decides in paragraph 167 of the award that "the defendant was at fault (i) by failing to issue the presidential order approving the disputed contracts and (ii) by reassigning Block 1 of the Albertine Graben to a third party in violation of the stipulations of the 2008 contract, thereby depriving the plaintiff of its exclusive rights under the 2008 contract without consideration."
29.
With regard to the contract of December 14, 2007, the Arbitral Tribunal "finds" in paragraph 171 of its award that "the action underlying the appeal brought before the Supreme Court was an action for the annulment of an administrative act (the ruling for the annulment of the Tullow Contract) based on an abuse of power on the part of the perpetrator of that act. As it stands, no lessons can be drawn from it in the context of the situation before it, since, as already noted above, unlike the case before the Supreme Court, the 2007 contract has not been annulled and, notwithstanding the non-issuance of the presidential order, the parties remain bound by the obligations that are appropriate" to conclude in paragraph 174 that "the defendant was at fault by not issuing the presidential order approving the 2007 contract within a reasonable time limit."
30.
It follows from those reasons that not only did the Arbitral Tribunal offer grounds for its award under Congolese law, but that it also expressly assessed the impact of the Supreme Court of Justice ruling of December 10, 2010, which was alleged by the DRC in support of its defense, noting that it is not for this Court to assess the application of that law, except to engage in a process of revision of the merits of the award, which is not the responsibility of its office.
31.
Furthermore, while the Arbitral Tribunal is required to apply the law of the DRC, it does not deviate from its mission by interpreting it.
32.
As such, the plea for annulment will be dismissed.

On the plea alleging the Arbitral Tribunal’s violation of international public order:

33.
Pursuant to Article 1520 (5) of the Code of Civil Procedure, an appeal for annulment may be brought if the recognition or enforcement of the award is contrary to international public order, which means the French legal system’s conception of it, that is to say, the values and principles of which it cannot be unaware, even in an international context.
34.
In this case, by interpreting in the light of the law of the DRC, including a decision of the Supreme Court of that State, the consequences of the failure of the President of the Republic of that State to issue an order approving the disputed production-sharing contracts, even if it deviated from the interpretation given by a ruling of that Supreme Court in otherwise distinct circumstances, the Arbitral Tribunal did not disregard any of the aforementioned values and principles.
35.
Accordingly, this plea will be dismissed, together with the request for the annulment of the award.
36.
In accordance with Article 1527 of the Code of Civil Procedure, the dismissal of the appeal for annulment grants exequatur to the arbitral award.

On the request made regarding abuse of process:

37.
Exercising legal action is, in principle, a right and only degenerates into abuse that may give rise to damages in the event of fault liable to incur the civil liability of its perpetrator.
38.
In this case, the company DIGOil will have its request on this ground dismissed, on the one hand, in the absence of proof of fault or negligence on the part of the DRC, which may have misunderstood the extent of its rights, and, on the other hand, in the absence of proof of damage other than that suffered as a result of the expenses incurred in its defense.

On the expenses and legal costs:

39.
The DRC, the losing party, should be ordered to pay the legal costs that will be recovered in accordance with Article 699 of the Code of Civil Procedure.
40.
In addition, the DRC must be ordered to pay the company DIGOil, which had to incur non-recoverable expenses to assert its rights, compensation under Article 700 of the Code of Civil Procedure, which it is fair to set at the amount of EUR 30,000.

VI: MEASURES

For these reasons, the Court:

1. Dismisses the appeal for annulment of the award of November 7, 2018, by the International Court of Arbitration of the International Chamber of Commerce (Case No. 22370/DDA);

2. Grants exequatur to that arbitral award;

3. Dismisses the request made regarding abuse of process;

4. Orders the Democratic Republic of Congo to pay the company Divine Inspiration Group (PTY) Ltd. the amount of EUR 30,000 under Article 700 of the Code of Civil Procedure;

5. Orders the Democratic Republic of the Congo to pay the legal costs, which shall be recovered in accordance with the provisions of Article 699 of the Code of Civil Procedure.

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