When the Theory Doesn't Fit the Facts: A Further Comment on Putrabali

Abstract

The June 2007 decisions of the Cour de Cassation in the Putrabali arbitration represent the latest application of the French doctrine that an international arbitral award is not attached to any national juridical order and thus under Article VII of the New York Convention may be enforced in France even though annulled in its country of origin. The arbitration in Putrabali was conducted in London under the Rules of Arbitration and Appeal of the International General Produce Association (IGPA) between the Indonesian seller and the French buyer of a cargo of white pepper that was lost at sea while on route to Singapore for transhipment to Rotterdam. The buyer refused to pay. The IGPA Rules explicitly fix London as the geographical and juridical seat of the arbitration, confine party nominations for arbitrator to members of the IGPA Arbitration and Appeal Panel, exclude lawyers from any participation in the hearing or any appeal within IGPA, and allow application to the court under Section 69 of the UK Arbitration Act 1996 on issues of law arising in the arbitration. In October 2000 an award (the First Award) was rendered in favour of the seller. It was reversed in April 2001 by an appeal panel, which exonerated the buyer (the Second Award). The Second Award was annulled by a judgment of the High Court, which remanded the matter to the arbitrators. A Third Award, in August 2003, gave a net amount to the seller. In September 2003 the buyer obtained enforcement in France of the Second Award. The seller later unsuccessfully sought enforcement in France of the Third Award. The Cour de Cassation affirmed both decisions. The article considers three questions. First, in French law is party intent relevant in determining whether or not an arbitration is to be held to be embedded in a particular national legal system, as the facts suggest the parties intended in Putrabali? If so, should decisions of the legal system thus identified be taken into account in enforcement of awards in other countries? Second, is the French practice of granting enforcement to interim awards in favour of French respondents that can only serve to block enforcement of later adverse awards consistent with party expectations in international commercial arbitration? Third, does the French practice amount to no more than a race to the swift and is that consistent with party expectations or the more general interest of international commercial arbitration? The article concludes that there appear to be principles of French arbitration law that could usefully serve to modify current dogma and its application.