Hilmarton Ltd. (U.K.) v. Omnium de Traitement et de Valorisation-OTV (France)

[Ed.’s note: This brief discusses two opinions issued from the France Court of Cassation that are discussed together in the casebook. The first decision was issued in 1994, and the second decision was issued in 1997, 22 Y.B. Comm. Arb. 696 (1997).] Hilmarton Ltd. (plaintiff) and Omnium de Traitement et de Valorisation-OTV (OTV) (defendant) entered into a contract under which Hilmarton agreed to provide legal and tax advice to OTV and assist OTV in obtaining a contract to design and construct a drainage project for the city of Algiers in Algeria. In return, OTV agreed to pay Hilmarton 5 percent of the awarded contract. The contract contained an arbitration clause, calling for arbitration of any disputes in Switzerland and stating that Swiss law applied to the contract. An Algerian statute prohibited the use of a middleman in connection with any government contract related to foreign trade. After OTV was awarded the contract, a dispute arose regarding the payment of Hilmarton’s fees. Hilmarton commenced arbitration in Switzerland. The sole arbitrator denied Hilmarton’s claims (the first award), citing violation of the Algerian statute and Swiss public policy. Hilmarton sought to have the award set aside in Swiss court, and it succeeded. However, OTV sought to have the same award enforced in France. The lower court determined that the award was enforceable. On appeal, the French Court of Cassation took up the issue of whether the award should be enforced despite having been set aside in Switzerland, the seat of arbitration. The French court determined that under French law, the court was not bound by the Swiss court’s nullification-ruling award, and the French court ruled that the award was enforceable. In the interim, a new arbitration commenced in Switzerland and a second award was issued, this time in favor of Hilmarton (the second award). Hilmarton then filed two actions in two different courts in France: one action sought to have the second award enforced, and the other action sought to have the first award set aside. Both courts granted Hilmarton’s requests. The overarching result of all of the proceedings in France was that French courts had recognized both the first award and second award as enforceable, even though the awards reached opposite results. OTV appealed the lower courts’ most recent decisions in favor of Hilmarton.