EXIT: Internal compliance rules do not form part of the French conception of international public order!

On March 14, 2023, the Versailles Court of Appeal rendered a decision putting an end to the Alstom saga.  It confirmed the order dated March 30, 2016, which had granted exequatur to the award dated January 29, 2016.

As you will recall, the French and British companies Alstom Transport SA and Alstom Network Ltd. (“Alstom”), had entered into several consulting contracts with Alexander Brothers Ltd., a company from Hong Kong (“ABL”).  After the tenders in relation to which the contracts had been concluded were won, Alstom refused to pay the balance of the commissions due for two of the contracts or to make any payment for a third one on the grounds that there was a risk of the corruption of public officials.

ABL filed a request for arbitration before the International Chamber of Commerce (“ICC”) on the basis of the arbitration clauses in the three contracts.  An award under Swiss law was rendered against Alstom in Geneva on January 29, 2016.

This award was granted exequatur by an order dated March 30, 2016.  Alstom appealed the exequatur order before the Paris Court of Appeal.  The Paris Court of Appeal rendered a decision on May 28, 2019, in which it rejected the exequatur of the award.  After quashing the Paris Court of Appeal’s decision, the Supreme Court referred the case to the Versailles Court of Appeal on September 29, 2021.

Before the Versailles Court of Appeal, Alstom asked the Court to find that the recognition or enforcement of the award would be contrary to international public policy since it would give effect to several illicit payments.

Alstom claimed that ABL had obtained confidential information on the outcome of the technical bids submitted by the various bidders before it was officially announced.  The Versailles Court of Appeal, however, held that it had no evidence to suggest that these documents had been obtained in exchange for bribes, an advantage of any kind or unfair practices.  As a result, it deemed these elements insufficient to demonstrate serious, precise and concordant evidence of corruption.

Then, Alstom pointed to the disproportionate nature of ABL’s remuneration as a further indication of corruption.  The Versailles Court of Appeal noted that ABL’s remuneration consists in a success fee equal to 1.9% for the first contract, 0.5% for the second one and 2% for the third one.  The Versailles Court of Appeal found that these percentages, which are less than or equal to 2%, are in line with international standards, taking into account that the amount of the contract was particularly high and that the duration of the contract was not limited to obtaining the offer but continued during its performance.

Finally, Alstom added that audits revealed violations by ABL of its ethics and compliance policy, so recognition and enforcement of the award would lead it to make a payment prohibited under anti-corruption legislation and international public policy.  The Versailles Court of Appeal held that it examined only the compliance of the enforcement of an arbitral award with the French concept of international public policy in the light of the applicable international legal, legislative and regulatory standards; and not the internal compliance rules that a company had unilaterally set for itself in application of these texts.

Thus, the Versailles Court of Appeal highlighted that compliance and corruption are not synonymous and the internal compliance rules of a company do not, according to the French conception, fall within the scope of international public policy.

Source: Versailles Court of Appeal, 14 March 2023, n°21/06191.




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