Cour de cassation 1st Civil Chamber, October 14, 2009 - Decision N°08-16369 and 08-16549 (Wolberg v. In zone Brands)

An interesting decision of the Cour de cassation (French civil and Commercial Supreme Court) has been rendered on October 14th 2009, on the compatibility of an American anti-suit injunction procedure with the French public order.

This case concerned a distribution contract between an American Company and a French Company.

IN ZONE BRANDS is a company from the State of Georgia (USA) selling soft drinks and sodas. An exclusive distribution contract had been signed with a French company for the distribution of IN ZONE BRANDS products in Europe. The contract had a jurisdiction clause specifying that the Courts of Georgia (USA) had jurisdiction for any matters concerning the distribution contract. The contract also defined the law of the State of Georgia as the law applicable to the contract.

IN ZONE BRANDS decided to terminate the contract. The French distributor challenged the termination and undertook litigation before the French courts. IN ZONE BRANDS not only challenged the jurisdiction of the French judge but also undertook two actions before the Courts of Georgia.

The Superior Court of Cobb (Georgia) in March 3, 2006 rendered an anti suit injunction forbidding the French company to undertake any actions before the French courts and to pursue the ongoing litigation. The Superior Court of Cobb in the same decision recognized the principle of the supplier's credit.

IN ZONE BRANDS, then undertook to ask the exequatur of the decision of the Superior Court of Cobb in France.

The Court of Appeal of Versailles in April 17, 2008 declared the Georgian decision enforceable on the French territory. The appeal judges found that the supplier had seized the judge designated by the contract and that there couldn't be any fraud in such an action.

The appeal judges then ruled that the decision of the Superior Court of Cobb didn't forbid an access to a judge to the French Company since the Superior Court of Cobb only applied the jurisdiction clause.

The French Company appealed to the French Supreme Court. The Supreme Court confirmed the appeal judge's decision considering that the anti-suit injunction wasn't contrary to the French Public Order when it only consisted in applying a jurisdiction clause and sanctioning a breach of the contract.

The Cour de cassation in this decision took a different position than the European Court of Justice.

The Cour de cassation based its decision on the contractual aspects which is the law of the parties and not the French public Order. As long as the anti-suit injunction is only based on the contract, there shouldn't be any opposition to the public order unless the contract is in breach with the French public Order.

The question raised by this decision is whether the French supreme Court conflicts with the jurisprudence of the European Court of Justice (ECJ) in the West Tankers decision (ECJ February 10, 2009, Case C 185/07 West Tankers).

In this decision the ECJ had ruled that the anti-suit injunctions were not complying with the rules of the European Union and were going against Council regulation 44/2001. The Court clearly stated that :

“ 28 Accordingly, the use of an anti-suit injunction to prevent a court of a Member State, which normally has jurisdiction to resolve a dispute under Article 5(3) of Regulation No 44/2001, from ruling, in accordance with Article 1(2)(d) of that regulation, on the very applicability of the regulation to the dispute brought before it necessarily amounts to stripping that court of the power to rule on its own jurisdiction under Regulation No 44/2001.

29 It follows, first, as noted by the Advocate General in point 57 of her Opinion, that an anti-suit injunction, such as that in the main proceedings, is contrary to the general principle which emerges from the case-law of the Court on the Brussels Convention, that every court seised itself determines, under the rules applicable to it, whether it has jurisdiction to resolve the dispute before it (see, to that effect, Gasser, paragraphs 48 and 49). It should be borne in mind in that regard that Regulation No 44/2001, apart from a few limited exceptions which are not relevant to the main proceedings, does not authorise the jurisdiction of a court of a Member State to be reviewed by a court in another Member State (Case C‑351/89 Overseas Union Insurance and Others [1991] ECR I-3317, paragraph 24, and Turner, paragraph 26). That jurisdiction is determined directly by the rules laid down by that regulation, including those relating to its scope of application. Thus in no case is a court of one Member State in a better position to determine whether the court of another Member State has jurisdiction (OverseasUnion Insurance and Others, paragraph 23, and Gasser, paragraph 48).

30 Further, in obstructing the court of another Member State in the exercise of the powers conferred on it by Regulation No 44/2001, namely to decide, on the basis of the rules defining the material scope of that regulation, including Article 1(2)(d) thereof, whether that regulation is applicable, such an anti-suit injunction also runs counter to the trust which the Member States accord to one another's legal systems and judicial institutions and on which the system of jurisdiction under Regulation No 44/2001 is based (see, to that effect, Turner, paragraph 24).

31 Lastly, if, by means of an anti-suit injunction, the Tribunale di Siracusa were prevented from examining itself the preliminary issue of the validity or the applicability of the arbitration agreement, a party could avoid the proceedings merely by relying on that agreement and the applicant, which considers that the agreement is void, inoperative or incapable of being performed, would thus be barred from access to the court before which it brought proceedings under Article 5(3) of Regulation No 44/2001 and would therefore be deprived of a form of judicial protection to which it is entitled.

32 Consequently, an anti-suit injunction, such as that in the main proceedings, is not compatible with Regulation No 44/2001. ”

The decision of the Cour de cassation could therefore appear as going in another direction than the ECJ.

In fact, the Cour de cassation didn't have to use the European rules since the case opposed a French and an American Company. The matter was International and not within the E.U..

The decision of the Cour de cassation could also prepare a future evolution of the European rules and position. The elected judge could prevail in the future in order to insure sufficient power to the parties in a contract.

By Olivier Vibert, Attorney, Paris, France

Article Published in European Journal of Commercial contract Law.

Réf. Vol. 2 n°1