Skip to main content
International Arbitration Forum

Bombardier, Inc. v. The General Directorate for Defense Armaments and Investments of the Hellenic Ministry of National Defense

Case summary

At a glance

Parties
Eurobank Ergasias S.A. (appellant) v. Bombardier Inc., the General Directorate for Defense Armaments and Investments of the Hellenic Ministry of National Defense, and National Bank of Canada (respondents)
Case no.
Quebec Court of Appeal No. 500-09-027718-188 (500-11-046106-148), 2022 QCCA 802; underlying ICC Case No. 16032/GZ/MHM
Forum and rules
Quebec Court of Appeal; underlying arbitration under the ICC Rules (Paris)
Treaty
None. The arbitration clause is in the Offsets Contract.
Court
Mainville J.A., Hamilton J.A. (dissenting), Baudouin J.A.
Underlying award(s)
ICC Final Award of 30 December 2013, holding the Offsets Contract null and void ab initio under EU law; annulment application dismissed by the Paris Court of Appeal on 14 April 2015
Sector
Aerospace; defence procurement offsets; bank guarantees
Outcome
Appeal allowed only in part: the order requiring the Greek Ministry to comply with the award (¶ 245 of the trial judgment) was struck out. National Bank remains barred from paying under the counter-guarantee. Hamilton J.A. dissented.
Amount
Letter of Guarantee paid by Eurobank: US $13,868,354 (US $13,868,354.60 in the dissent). Procurement Contract value: US $252,151,899. Legal costs throughout awarded to Bombardier.

The dispute

In 1998 Bombardier agreed to sell ten CL-415 firefighting aircraft to the Greek Ministry of National Defense (HMOD). Under a related Offsets Contract, Bombardier undertook to subcontract work to Greek suppliers and to pay liquidated damages if it did not. That obligation was secured by a Letter of Guarantee issued in Greece, held in the end by Eurobank, and backed by a counter-guarantee from National Bank of Canada. Bombardier began ICC arbitration in December 2008. HMOD undertook in writing not to call the guarantee while the arbitration was ongoing, and in August 2013 the tribunal and the Quebec Superior Court both ordered that it not be called. HMOD nonetheless demanded payment. After serving an "Extrajudicial Invitation Protest" that threatened civil and criminal measures, it obtained payment from Eurobank on 24 December 2013, six days before the Final Award declared the Offsets Contract null and void ab initio. The Quebec Superior Court homologated the award and enjoined National Bank from paying Eurobank under the counter-guarantee. Eurobank appealed, arguing that the Quebec courts lacked jurisdiction and that it had not paid with knowledge of fraud.

Key holdings

  1. The Quebec courts have jurisdiction over the counter-guarantee because National Bank is domiciled in Quebec (arts. 3134 and 3148(1) C.C.Q.). Eurobank's a contrario reading of art. 3139 C.C.Q. is rejected: the rules of jurisdiction apply to actions, not to individual issues. ¶¶ 41–44
  2. The Superior Court may homologate the ICC Final Award under art. 652 C.C.P. But it had no jurisdiction to order HMOD, which is not domiciled in Quebec, to comply with the award. Paragraph 245 of the trial judgment is struck out insofar as it purports to apply outside Quebec. ¶¶ 45–46
  3. The trial judge made no reviewable error in finding fraud by HMOD. It acted in bad faith to get around the Interim Order and the Final Award. HMOD's challenge to this finding was also improperly before the Court, because HMOD did not appeal. ¶¶ 56–60
  4. The Court admitted the Athens Court of Appeal decision (No. 597/2021) as new evidence but gave it no weight. That decision held that the Greek State was not bound by its undertaking, the Interim Order or the Final Award. Giving it effect would be manifestly inconsistent with public order as understood in international relations (arts. 3081 and 3155(5) C.C.Q.), and the Athens court had itself disregarded the Quebec judgments. ¶¶ 62–69
  5. Eurobank knew of the fraud before it paid. Paying under threat of sanctions did not entitle it to claim under the counter-guarantee. Ordering National Bank to pay would condone evading a binding arbitration by fraud and threats. ¶¶ 70–76
  6. Dissent (Hamilton J.A.): HMOD's December 2013 demand was fraudulent. However, Eurobank had only suspicions, so the fraud was not clear and obvious to it, especially after the Greek court refused its injunction. Eurobank was therefore entitled to be paid under the counter-guarantee, and Bombardier should bear the risk of the loss. ¶¶ 201, 216–231

Procedural history

  1. 30 December 2008Bombardier files its Request for Arbitration with the ICC.
  2. 20 April 2012HMOD undertakes in writing not to call the Letter of Guarantee while the arbitration is ongoing.
  3. 13 August 2013The ICC tribunal issues Procedural Order No. 11, ordering HMOD not to demand payment until the Final Award. On 16 August 2013 Prévost J. of the Superior Court grants a provisional injunction.
  4. 22 August 2013Judge Chrysoula Pana in Athens grants Eurobank a preliminary injunction allowing it not to pay. Judge Panayiotis Kostis dismisses Eurobank's application on the merits on 16 December 2013.
  5. 24 December 2013Following HMOD's Extrajudicial Invitation Protest, Eurobank pays HMOD under the Letter of Guarantee. This comes after Davis J. issued a new provisional injunction on 20 December 2013.
  6. 30 December 2013ICC Final Award: the Offsets Contract is null and void ab initio. The Paris Court of Appeal dismisses the annulment application on 14 April 2015.
  7. 8 January 2014Schrager J. issues a safeguard order enjoining National Bank from paying under the counter-guarantee.
  8. 21 June 2018Wery J. of the Superior Court homologates the award, declares the counter-guarantee null and void, and enjoins National Bank from paying.
  9. 8 December 2020The Athens Court of Appeal overturns the first-instance judgment that had ordered the Greek State to repay Eurobank.
  10. 7 June 2022The Quebec Court of Appeal allows the appeal only in part, striking ¶ 245 of the trial judgment. Hamilton J.A. dissents.

Tribunal, counsel and experts

Decided by
For the claimant
Norton Rose Fulbright Canada LLP
For the respondent
Angelopoulos, Avocats
For other participants
Renno Vathilakis · Woods

Run a conflict check on these names →

Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
ICC Case No. 16032/GZ/MHM
Economic sector
Section