In a decision dated 9 January 2024, the Paris Court of Appeal reiterated that an arbitral award’s compliance with international public policy cannot be assessed on the basis of hypothetical future circumstances.
In this case, the dispute concerned the performance of a contract between the Ethiopian Roads Authority (“ERA”), an Ethiopian public entity, and the Indian company Sew Infrastructure Ltd. (“Sew”) for the construction of a road in Ethiopia. In an ICC award rendered on 27 July 2021, the arbitral tribunal ordered each of the parties to pay various sums.
Sew then brought an action to set aside the award, arguing on the basis of article 1520 5° of the French Code of Civil Procedure, that the enforcement of the award would be contrary to international public policy. Sew argued that, in the context of a civil war in Ethiopia in which the Ethiopian government was committing serious human rights violations, the sums awarded to ERA by the arbitral tribunal would contribute to the financing of such violations.
The Paris Court of Appeal first emphasised that the fight against violations of human rights and international humanitarian law “is one of the principles that the French legal system cannot ignore, even in an international context”. These principles fall within the scope of international public policy, which the annulment judge must review.
The Court of Appeal added that since the compliance of an arbitral award with international public policy is assessed at the time of the Court’s decision, the Court cannot take into account “hypothetical future circumstances presuming the use by one of the parties to the dispute of the sums due in execution of the award for conduct that violates the values and principles protected by international public policy”.
Thus, in dismissing the action for annulment against the award, the Paris Court of Appeal reaffirmed that the international public policy exception cannot be invoked as a preventive measure.
Reference: Paris Court of Appeal, 9 January 2024, No. 21/14563.
