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International Arbitration Forum

Sorelec v. Libya

Case summary

At a glance

Parties
Société Orléanaise d'Électricité et de Chauffage Électrique – SORELEC (France) v. State of Libya
Case no.
ICC Case No. 19329/MCP/DDA; Paris Court of Appeal RG 18/02568 (partial award) and RG 18/07347 (final award); Court of Cassation Appeal No. E 20-22.118 (Judgment No. 610 FS-B)
Forum and rules
ICC arbitration seated in Paris; set-aside proceedings before the French courts
Treaty
France–Libya BIT of 19 April 2004 (in force 1 July 2008)
Court
Paris Court of Appeal (Pôle 1, Chambre 1): Anne Beauvois (presiding), François Melin, Marie-Catherine Gaffinel. Court of Cassation, First Civil Chamber, presided by Chauvin
Underlying award(s)
Partial Award of 20 December 2017 and Final Award of 10 April 2018 (Yves Fortier, president; Bernard Hanotiau; Eric Loquin)
Sector
Construction (schools and housing)
Outcome
The Paris Court of Appeal set aside the partial award because it gave effect to a settlement obtained by corruption, contrary to international public policy. It set aside the final award as a consequence. The Court of Cassation dismissed SORELEC's appeal on 7 September 2022.
Amount
Claimed in the arbitration: EUR 109,238,764 plus interest. Partial award: EUR 230,000,000 payable within 45 days, failing which EUR 452,042,452.85. Final award: EUR 452,042,452.85 plus USD 299,775 in arbitration costs. Both awards were annulled. Court costs (Article 700) against SORELEC: EUR 150,000 (partial award case), EUR 10,000 (final award case) and EUR 3,000 (Court of Cassation).

The dispute

In 1979 SORELEC, a French company, made a contract with the Libyan education ministry entity to build schools and housing. Disputes arose from 1985. Settlement protocols followed in 1993 and 1994, and a protocol of January 2003 fixed SORELEC's claim at EUR 36,795,812. Libya did not pay. On 12 March 2013 SORELEC started ICC arbitration under the France–Libya BIT, claiming EUR 109,238,764 plus interest. During the arbitration, SORELEC asked the tribunal to approve a settlement Protocol signed on 27 and 29 March 2016 by Mr Omran, Minister of Justice of Libya's provisional government. The tribunal approved it in a partial award and later issued a final award. Libya applied to set both awards aside. It argued that the tribunal lacked jurisdiction, that the awards breached international public policy because the Protocol was obtained by corruption, and that the tribunal had exceeded its mandate.

Key holdings

  1. The jurisdiction challenge failed. Articles 4 and 5 of the Protocol expressly gave the tribunal in ICC Case 19329 power over all questions on the Protocol, including its validity. The tribunal therefore did not need to decide first whether it had jurisdiction under the BIT. CA Partial Award Decision ¶¶ 21–23
  2. Libya's argument that the one-month deadline in the Protocol for submitting it to the tribunal had expired was inadmissible under Article 1466 of the Code of Civil Procedure. Libya knew of the late submission but did not raise the point before the tribunal. CA Partial Award Decision ¶¶ 24–27
  3. The ban on bribing public officials is part of international public policy. The set-aside court may examine an allegation of corruption in law and in fact even if it was never raised before the arbitrators. Annulment follows if serious, precise and consistent indications show that the award covers corruption. Criminal proceedings are not required. CA Partial Award Decision ¶¶ 35–39
  4. Several serious, precise and consistent indications showed that the Protocol covered the corruption of Mr Omran by SORELEC. Libya was endemically corrupt and the Protocol was signed during a civil war. Mr Omran bypassed the Litigation Department, whose prior opinion he knew to be mandatory, and concealed that he had already signed. The UNCITRAL Ghenia award described similar conduct. There was no record of real negotiations. The Protocol gave SORELEC almost all it claimed in exchange for an illusory discount. The partial award was therefore annulled. CA Partial Award Decision ¶¶ 42–86
  5. The final award only sanctioned Libya's failure to perform the partial award, so its validity depended on the partial award. It was annulled as a consequence of the annulment of the partial award. CA Final Award Decision ¶¶ 13–17
  6. The Court of Cassation dismissed SORELEC's appeal. Compliance with substantive international public policy cannot depend on a party's conduct before the arbitrator. The Court of Appeal could examine all evidence of corruption, even evidence never submitted to the arbitrators, without reviewing the award on the merits. Cass. ¶¶ 7–8, 11–13

Procedural history

  1. 12 March 2013SORELEC files a request for ICC arbitration under the France–Libya BIT.
  2. 27–29 March 2016The settlement Protocol is signed by Mr Omran for Libya and by SORELEC.
  3. 22 August 2016SORELEC informs the tribunal of the Protocol and asks it to approve the Protocol.
  4. 20 December 2017Partial award: the tribunal declares it has jurisdiction, approves the Protocol and orders Libya to pay EUR 230,000,000 within 45 days.
  5. 26 January 2018Libya applies to set aside the partial award.
  6. 10 April 2018Final award: Libya is ordered to pay EUR 452,042,452.85 and USD 299,775 in costs. Libya applies to set it aside on 16 April 2018.
  7. 17 November 2020The Paris Court of Appeal annuls the partial award on international public policy (corruption) grounds.
  8. 17 November 2020The Paris Court of Appeal annuls the final award as a consequence.
  9. 7 September 2022The Court of Cassation dismisses SORELEC's appeal.

Tribunal, counsel and experts

Decided by
For the claimant
SELARL Pellerin - De Maria - Guerre · SARL Ortscheidt
For the respondent
SARL Cabinet Rousseau et Tapie · Jean-Claude Cheviller · Olivier Loizon · Laure-Anne Montigny

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Keywords

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

Country
Outcome
In favour of Investor
Treaty
France - Libya BIT (2004)