Multiple contracts for the financing of equipment by means of leasing arrangements / Application of French law / Article 13(5) of the ICC Rules of Arbitration / Joint purpose of the parties / Single economic operation (yes) / Contracts creating obligations or benefits to the companies or groups of companies concerned (yes) / Admissibility of the claim brought by a parent Company A and its subsidiaries against a parent Company B and its subsidiary for sums allegedly payable by a subsidiary of Company B to a subsidiary of Company A (yes) / Joint and several liability of the defendants (yes)

The dispute opposes XBanque (France) and its subsidiaries, XBanque Pacific (Vanuatu) and XBanque Corporation (United States), Claimants, to the French company Trade France and its French subsidiary, Trade Develop, Defendants.

'Whereas XBanque and two of its subsidiaries, XBanque Pacific and XBanque Corporation, request that Trade France and Trade Develop be held jointly liable to pay to XBanque the sums allegedly payable by Trade USA, US subsidiary of Trade France, to XBanque in compliance with certain agreements, the purpose of which was the financing by the Claimants, by means of leasing in the United States, of equipment manufactured by Trade France, notice of which contract was given by XBanque;

Whereas Trade France and Trade Develop allege first that the claim is inadmissible and second that it is groundless.

I. On the admissibility of the claim

Whereas Defendants, to deny the admissibility of the claim, assert that as the dispute is limited to leasing operations in the US, XBanque is in no way entitled to demand the payment of any sum whatsoever; that only XBanque Corporation, its US subsidiary, would be eligible to submit a claim, but only against Trade USA, the US subsidiary of Trade France; that the pledge made by Trade France, which it honored, to take all the steps needed to make its foreign subsidiaries comply with their obligations to the subsidiaries of XBanque, in no way allows XBanque or its subsidiaries to ask Trade France to pay any sums alleged to be payable to them;

Whereas XBanque replies that the admissibility of the claim results from the organisation by two groups of companies of their relationship around a group of contracts;

Whereas the Terms of Reference state that the arbitrators shall decide the matter in accordance with the rules of French law and therefore it is in light of this law that it must be determined whether under the circumstances of the case, to be described hereafter, the Claimants have the capacity to bring their claim against Defendants;

Whereas [in May 1983], XBanque, acting on behalf of its leasing subsidiaries and of Banque Pacific as well as on its own behalf, and Trade France, acting on behalf of its trading subsidiaries as well as on its own behalf, agreed on a financing scheme through leasing in several countries, including the US, whereby Trade France secured the distribution of its equipment.

Whereas the contract specifies how the operations are to be financed, Trade France selling its machines to XBanque Pacific, which resells them to XBanque Corporation to be leased by the latter to customers suggested by Trade USA; the contract identifies the concept of loss by leasing companies, sets forth the procedure to be followed in cases of leaseholder default, provides for the creation by the parties of two guarantee funds to compensate leasing companies for losses, organizes the allocation of losses should the funds be inadequate; also includes provisions on the "guarantee of the obligations of the Trade subsidiaries", on conciliation and arbitration and lastly on the period of validity and notice of termination of the agreement; two riders to the said contract were signed by the same parties, acting in the same capacities, in 1983 and a third one in 1984;

Whereas however, [in July 1983], a further agreement was signed between XBanque Corporation, a leasing subsidiary of XBanque, and Trade California, having become Trade USA, a subsidiary of Trade; this agreement expressly refers to the contract of [May 1983] and extends its application to the US;

Whereas [in 1985] two further documents were also signed in the US: first, a fourth rider to the contract of [May 1983], signed by XBanque on behalf of XBanque Corporation as well as on its own behalf, and by Trade France on behalf of its subsidiary Trade X (Trade USA) as well as on its own behalf; and second, an agreement between XBanque, acting in the same capacity, and Trade Develop, acting on behalf of its subsidiary Trade X as well as on its own behalf;

Whereas XBanque avails itself of the provision regarding the settlement of disputes by means of arbitration included in the contract of [May 1983] and repeated with a slightly different wording in the agreements of [July 1983] and of [1985], to assert an inseparable link between the stated jurisdiction of the arbitral tribunal and the admissibility of its claim; without denying the powers of the arbitral tribunal, the defendant companies deny the existence of the alleged link;

Whereas the parties are also in disagreement regarding the scope of the provision headed "guarantee of the obligations of the Trade subsidiaries" according to which, as drafted in Article VII of the contract of [May 1983], "Trade France will take all useful steps to ensure that its foreign subsidiaries meet their obligations to local leasing subsidiaries of the XBanque Group, as they arise from this agreement and from the resulting local agreements", and in Article VIII of the agreement of [1985], in a slightly different wording, "the Trade group will take all useful steps to ensure that Trade Develop and Trade USA meet their obligations to the banks as they arise from this agreement"; XBanque argues that this provision was a commitment by Trade to procure results while Trade sees no more in it than a commitment to use certain means;

Whereas there is no need to dwell on the parties' disagreement over the meaning of these provisions;

Whereas indeed, in the first place, an examination of all the contracts concerned shows the existence of a link binding them together; the framework agreement of [May 1983] thus provides in its Article VII that all local agreements will proceed from it, its Article IX implies that any notice of termination of the agreement will put a stop to the negotiation of leasing contracts under local agreements, and Article VIII of the agreement of [July 1983], applicable to US operations, of which it has already been said that it made express reference to the agreement of [May 1983], provides that it will terminate immediately if notice of termination of the latter is given;

Whereas these agreements create a tight network of obligations to be discharged by or for the companies concerned; that the contract of [May 1983], signed only by the parent companies on behalf of their subsidiaries, imposes on the local subsidiaries of Trade the following obligations: to keep the leasing subsidiaries of XBanque informed; to circulate the files of prospective customers (Article I); in case of notice of termination of the leasing agreement, the obligation to recover the equipment and to try to find a new purchaser on common account (Art. IV); as an obligation of the leasing subsidiary, to communicate within a given period of time its acceptance or refusal of the proposed operations and, in case of acceptance, to secure the necessary financing (Art. I); as an obligation of Trade France and its subsidiaries towards the "XBanque Group", to direct customers to the financing program organized by the latter (Art. I); as an obligation of each of the parent companies towards the leasing companies, to remit an initial payment to the guarantee fund set up to compensate their losses (Art. V);

Whereas the riders, neither of which was signed by the subsidiaries, impose on them numerous obligations; whereas that on the contrary, the agreement of [July 1983], signed only by subsidiaries, XBanque Corporation and Trade California, compels the Trade group to make up for any deficiencies in the endowment of the guarantee fund placed with XBanque Pacific (Art. Vb);

Whereas the documents and the discussions further show that the subsidiaries, though they were not sham companies set up solely for the purpose of the said agreements, were operating, to carry them out, under the close control and following the instructions of the parent companies which made all the important decisions, commercial as well as financial, either unilaterally or jointly; that it was after final and unsuccessful negotiations between the managements of Trade France and XBanque that the latter, on ..., 1987, gave notice of termination of the agreements of [May 1983] and [1985]; that it was only on ..., 1987 that the Chief Executive Officer of Trade thought of telling XBanque to address themselves to "the companies concerned", i.e. Trade USA;

Whereas the abovementioned findings and statements show that in order to establish a single economic entity, XBanque and the Defendants set up a contractual construction to which their subsidiaries were bound; this joint purpose of the parties leads and entitles XBanque, together with its subsidiaries XBanque Pacific and XBanque Corporation, to take action aimed at ordering the Defendants to pay to XBanque the sums allegedly owed to XBanque Corporation by the subsidiary Trade USA on the contracts in question, subject to allocating these as the latter deems suitable; such action is valid with regard to Trade France and Trade Develop, who cannot oppose it by claiming that the credits allegedly payable to the Claimants have their origin in the contractual behaviour of Trade USA, such opposition being invalid in the abovementioned context and in view of their own permanent commitment;

Whereas the dispute is by nature a commercial one, the Defendants should, under French law, be jointly and severally liable, as requested by XBanque;

Whereas, moreover, as the circumstances of the case show that notwithstanding the multiple legal entities taking part in the conclusion and execution of the contracts, in effect only two groups of companies faced each other, it is right that XBanque, to support the admissibility of its claim, should advance this group concept-to which the said contracts, as was previously noted, expressly refer in several places-a concept recognized by the international trade usages the Arbitral Tribunal should consider, given Article 1496 of the new Code de procédure civile and Art. 13(5) of the Rules of the ICC Court of Arbitration.'