Un consortium dont le chef de file était le demandeur eut recours au défendeur, en qualité d'intermédiaire, pour soumettre son offre relative à un contrat de construction de gazoduc dans un pays d'Asie du sud-est (Etat X). Il était convenu que le défendeur percevrait une commission établie sur la base de la valeur du contrat d'installation pour le cas où celui-ci serait attribué à la demanderesse. Un avenant ultérieur au contrat d'agence majorait le taux de la commission au cas où un contrat d'installation plus important que celui initialement envisagé serait attribué à la demanderesse, ce qui fut le cas. Au moment d'exécuter le projet, le demandeur rencontra un certain nombre de difficultés : il ne pouvait obtenir de licence d'importation temporaire pour ses matériels de chantier, et des différends opposèrent les parties quant à l'obligation du demandeur de respecter les échanges compensés prévus par le contrat d'installation. Les droits de douane furent finalement payés et les engagements de compensation respectés. De nouvelles difficultés se présentèrent concernant le soudage des conduits, les contraintes réglementaires, ainsi que le nombre de routes, chemins et cours d'eau traversés par le gazoduc, qui se révéla supérieur à celui figurant sur les plans inclus dans l'appel d'offres. Ces difficultés conduisirent plus tard le demandeur à réclamer au maître d'ouvrage (O) le paiement d'un montant supplémentaire. A la suite de négociations, le maître d'ouvrage accepta d'effectuer un versement à titre gracieux afin de satisfaire à la réclamation de la demanderesse. Le demandeur acheva la construction du gazoduc conformément au calendrier contractuel. La commission du demandeur fut payée comme convenu mais un litige s'ensuivit concernant l'étendue des services que le défendeur était supposé fournir aux termes du contrat des parties. Le demandeur suspendit donc ses paiements et engagea une procédure d'arbitrage, sollicitant une réduction de la commission due au défendeur et le remboursement de l'un des versements déjà effectués. Le tribunal arbitral rendit tout d'abord une sentence préliminaire sur le droit applicable, suivie près d'un an après d'une sentence finale sur le fond.

Sentence préliminaire

'1. Rule of conflict to be applied

There is no dispute between the parties, and the Tribunal concurs, that two provisions are relevant to determine the rule of conflict to be applied by the Tribunal.

Article 13(1) of the ICC Rules of Arbitration provides that "The parties shall be free to determine the law to be applied by the arbitrator to the merits of the dispute. In the absence of any indication by the parties as to the applicable law, the arbitrator shall apply the law designated as the proper law by the rule of conflict which he deems appropriate."

The second relevant provision is Article 187 of the Swiss Private International Law Act of December 18, 1987, according to which "The arbitral tribunal shall decide the dispute according to the rules of law chosen by the parties or, in the absence of such choice, according to the rules of law with which the case has its closest connection".

The first step is thus to examine whether there has been a choice of law by the parties. Were it not so, the Tribunal would have to decide which law has the closest connection to the case. Both parties clearly followed this two-tier reasoning in their writings and oral arguments.

2. Has there been a choice of law?

As a rule, parties are free to choose the law applicable to their agreement. Such a choice may be explicit or implicit. It may appear in the agreement itself but it may also be made later.

2.1 It is evident and undisputed that there has been no explicit choice of law by the parties in their agreement of April 24, 1987.

2.2 Claimant argues that there has been a later choice of French law by Defendant. The argument rests on the following passage of the sommation de payer served by Defendant upon Claimant on April 14, 1994:

Que les présentes ont pour objet de faire sommation à [Claimant] de payer entre mes mains la somme de . . . ou sa contrevaleur en Francs Français au jour de la présente, dans les 24 heures pour tout délai sous réserve de tous préjudices, intérêts et dommages et intérêts et de l'application des dispositions de l'article 1153 du Code civil.

This reference to a provision of the French Civil code, made by Defendant in a legal act by which he claimed payment of commissions due under the disputed agreement, at a time the present arbitration proceedings were already under way, certainly deserves close attention. The Tribunal cannot accept Defendant's far-fetched interpretation according to which the formula used simply meant that at the time of the sommation he still had not decided whether he would make a claim under Article 1153. « Sous réserve » means that Article 1153 would be invoked in case of delay.

Defendant raises two further objections. A choice of law must be bilateral; it must be made "mit Willen und im Bewußtsein".

While it is true that the sommation is a unilateral act, the reference to Article 1153 can be considered as an offer to apply French law to the dispute. Claimant submits that it has accepted this offer in its "Reply and Answer to the Counter-Claim" delivered in the present arbitration procedure on June 10, 1994 (i.e. less than two months after the sommation), under item 6, which reads as follows:

The Respondent seeks payment in France of the alleged balance of commissions which he claims [. . .], into the hands of his French agents with interest calculated as per the French Civil Code . . ., thereby treating the agreement as subject to French law. For its part, the Claimant too considers that the agreement is subject to French law.

In the eyes of the Tribunal, the conjunction of the two passages quoted above does reveal that in the spring of 1994, an explicit agreement occurred between the parties concerning the application of French law to the merits of the dispute.

It is difficult to accept that the reference by Defendant to Article 1153 of the French Civil Code is not an intentional and conscious electio juris. The sommation concerns payment of the disputed commissions, i.e. the core of the current litigation, and it is a legal act which Defendant describes as having been prepared and served "following his lawyer's advice" ("Answer in defense and counter-claim", item 21). Article 1153 does not only concern interest due in case of delayed payment but also supplementary damages according to a law different than the law applicable to the main debt. The reference to Article 1153 reveals an intention to base the whole dispute on French law.

Another element is raised by Claimant. Defendant invoked the application of Swiss law for the first time when stating his case for the Terms of Reference, i.e. 10 months after having sent the above mentioned sommation; he should not be allowed to retract that electio juris under such circumstances. More explicitly, the Tribunal believes that a party having made such a reference to a certain law in a legal act and then failed to react to an explicit statement of the other party that it too considers that the agreement is subject to that law, is barred by estoppel from claiming so many months later that the reference did not amount to a choice of law.

2.3 That a choice of law can also be implicit is undisputed. Article 187 of the Swiss PIL Act is interpreted in such a way, and Article 13(3) of the ICC Rules broadly refers to the absence of any indication by the parties as to the applicable law.

Defendant claims that Swiss law was implicitly chosen from the start. The argument rests on the circumstance that in a previous contract between the parties and another previous contract between Defendant and a sister company of Claimant, as well as in a subsequent agreement between the parties, there was an express choice of Swiss law, coupled with the choice of Lausanne as the venue for an ICC arbitration . . . The omission of any reference to Swiss law in the agreement of April 24, 1987 was not explained by Claimant nor noticed by Defendant at the time the contract was concluded. However, Defendant claims that there was a course of dealings between the parties linking arbitration in Lausanne with the choice of Swiss law. It must be assumed that this practice could not be changed without an express choice of a law other than Swiss.

The Tribunal does not find this view convincing. Claimant argues that, on the contrary, the omission of the reference to Swiss law in this agreement reveals its intention not to submit it to that law, due to an alleged different scope of the intermediary's mission. Such an intention is not established, but clearly, the omission in itself can be interpreted a contrario as well as a pari.

2.4 The Tribunal concludes that in the absence of an explicit choice of law in the agreement of April 24, 1987, there has been no implicit choice of Swiss law, but a later explicit choice of French law, resulting from Defendant's referring to the law of that country in their sommation de payer and from Claimant's acceptance of that choice in its "Reply and Answer to the Counter-Claim".

2.5 This conclusion makes it unnecessary to examine which law could be considered as having the closest connection to the case.'

Final Award

'1. Reductibility of Defendant's contractually agreed commissions?

In its Preliminary Award . . ., the Tribunal has decided that French law is applicable to the parties' agreement.

Under French law, a Court may reduce the commission or remuneration of an agent, agreed in advance of rendering the services, when it appears to be excessive in regard of the services actually rendered. This is at the core of the litigation between the parties. . . . Defendant argues the rule does not apply to the parties' agreement; subsidiarily, if the Tribunal would find it applicable in principle, Defendant's remuneration is not excessive in comparison to the services rendered; thus Defendant claims full performance of what it considers to be a binding commitment.

2. French law on agent's fees

The French rule on reductibility should be briefly recalled, together with its rationale.

Agent's fees are the price of services, the value of which depends on the agent's duty. They are validly determined when the services have been already performed, each party being able to appreciate their value and the balance between respective obligations.

When, as it often happens, agent's fees are agreed in advance, the real value of the performance will appear only in the future.

As none of the parties has accepted the risk of imbalance, if the agreed fees are excessive, according to the services actually rendered and the circumstances of the case, a party can seek a judgment modifying them. This rule is constantly applied by French courts, as it appears through numerous judgments rendered by the French Cour de Cassation, some of which have been quoted by the Claimant (see for instance Req. July 5, 1934, Gaz. Pal., 1934, 446; Civ. 1, Jan. 19, 1970, B. I, no. 23; Civ. 1, Oct. 10, 1972, B. I, no. 192; Civ. 3, Febr. 20, 1973, B. III, no. 145; Com. March 9, 1976, B. IV, no. 82).

By its nature, this rule is a mandatory one; it cannot be set aside by an agreement prior to the execution of the services. The basis of such a rule does not lay in a special judicial power. The modification of the fees is merely a consequence of a lack of consideration. Thus, this rule is often considered as an application of the "théorie de la cause", one of the major principles of French contract law.

3. Applicability of the French rule

Considering French law is applicable to the parties' agreement, why would this particular rule of French law be discarded in the present case? Defendant argues that in this case, the application of French law only results from the arbitrators' construction of a passing reference to French law made by Defendant in a "sommation" and that the ICC Rules stipulate that in all cases the arbitrator shall take into account the provisions of the contract. Defendant adds that the rule itself is surprising and peculiar; it is to be used only to protect inexperienced parties in weak positions, and not in international contracts. Defendant also argues that such discretionary powers are not available to arbitrators, especially not in an international arbitration conducted in Switzerland.

a) Applicable law and contractual provisions

Pursuant to Articles 187 of the Swiss Private International Law Act and 13(3) of the ICC Rules, arbitrators sitting in an I.C.C. arbitration in Switzerland must apply the law chosen by the parties to govern the merits. They must further apply the provisions of the contract (Article 13(5) ICC Rules).

In the present case, the contract contains no choice-of-law provision and the Tribunal, in its Preliminary Award . . . has determined that, by a subsequent choice of the parties, French law is applicable to the merits of the dispute.

As a rule, unless the parties have clearly manifested a different intent, the system of law they have chosen applies in its entirety.

In this matter the parties have not manifested a different intent. Indeed, when they chose French law in Defendant's "sommation de payer" and Claimant's Reply and Answer to the Counterclaim, they did in no way limit the scope of the law so chosen.

b) Peculiarity of French law?

The fact that a rule is peculiar to a system of law chosen is not in and of itself a reason for ignoring it. Its alleged surprising character is not relevant either, especially in this case where Defendant admits that the electio iuris expressed in the sommation de payer was made "following his lawyer's advice" . . .

c) Protection of the weaker party?

It has been recalled that the French rule concerning the reductibility of agents' fees is justified by a concern for balance between the respective obligations and that it is closely linked with the "théorie de la cause". Therefore, it applies not only to the relationship between a professional agent and a non-professional one, but also to the relationship between professional parties in commercial business, as it is shown by several judgments exhibited by Claimant.

d) No application in international business transactions?

Defendant states that Claimant has not established that the power of a court to revise the agreed fees also applies in international contracts, and if so, in the same manner.

This is not a matter of burden of proof. Iura novit curia. In principle, French contract law does not have a different set of rules for international contracts. What has just been said about the rationale of the rule and its link with "théorie de la cause" justifies its application to international contacts as well.

French law does not provide either for any presumption of reasonableness of the fees agreed between parties to an international contract.

e) Judicial power unavailable to international arbitrators?

There appears to be no basis - and Defendant cites none - to affirm that the reduction is a power exclusively reserved to the French courts. It is a rule of substantive contract law, not of procedure. As such it is encompassed in the choice of law, which is deemed to refer to the entirety of the legal system.

Therefore there is no reason to prevent arbitrators from reducing agents' fees under French law. In this regard, international arbitration conducted in Switzerland is no special case. Article 187 of the Swiss Private International Law Act provides that "the arbitral tribunal shall decide the dispute according to the rules of law chosen by the parties …".

f) Conclusion

In conclusion, the Tribunal sees no reason to discard the application of the French rule on the reduction. . . .

4. Should Defendant's fees be reduced under the circumstances of the case?

The rule being in principle applicable to the parties' agreement, are there grounds not to apply it in this case? Defendant argues that the agreed fees are reasonable, the fee arrangements have been made knowingly and they were confirmed after the services had been rendered.

The Tribunal will determine the amount of the fees the contract provided for and the services which Defendant was supposed to render for that amount. The Tribunal will then investigate which services Defendant actually rendered and appreciate whether the agreed fees are excessive in relation to those services actually rendered. It will finally examine whether some payments were made voluntarily after the services had been rendered, before concluding.

a) Contractually agreed fees

According to the letter agreement . . ., Defendant was to receive a 6% commission of the total value of the contract. The agreement was to "automatically cover and extend to all eventual additions, extension, variation orders and claims to the Project".

The . . . letter amended the above arrangement by increasing the fee by 2.75% if the consortium were awarded the total combination of three sectors of the pipeline bid and any management contract. Since this was the case, the fee rate was thus raised to 8.75% of the total value of the contract.

The maximum amount of the agreed fees can thus be calculated by applying the 8.75% rate to the total value of the contract, including additions, extensions, variation orders and claims . . .

Claimant, however, refuses to admit that any commission should be due to Defendant on the ex gratia payment. There would be no justification for it as Defendant, Claimant alleges, has provided no assistance whatsoever in the negotiations leading to that ex gratia payment. Defendant's case is that the commission is due on the amount of all claims, that it did not have to provide services after getting the contract awarded and that in spite of it, Defendant did use its influence to bring [O] to that favorable settlement.

The last two arguments will be discussed later. At this stage, the Tribunal finds that the wording of the letter agreement of . . . is clear and general enough to include the ex gratia payment made in settlement of a claim in the basis on which the commission should be calculated.

Defendant argues that its actual fees did not amount to eight and three-quarters percent of the contract value thus interpreted. From that percentage, Defendant claims, 1.5% had to be paid to [A] and 4% to [B], thus reducing the rate to 3.25%. . . .

[A] was the local partner performing the engineering services; it was agreed between the parties that Defendant would pay that percentage of the fees to [A]. This is not denied by Claimant, who actually made several such payments directly to [A] . . . Under such circumstances, the Tribunal finds the 1.5% paid to [A] should be deducted from the 8.75% rate before considering whether Defendant's commission were excessive. Claimant itself presents calculations where payments to [A] are excluded . . .

Whether Defendant may have made payments to [B], [C] and possibly other persons is another matter. . . .

Claimant may have been aware that Defendant would have to compensate other people's services . . . but no evidence has been produced demonstrating it would have been the subject of an agreement between parties to this arbitration. Here, the amounts that may have been paid did not affect the contractual relationship between Claimant and Defendant. A consultant may engage sub-consultants and remunerate them with part of its own fees, but the question remains whether the services rendered to the principal are proportionate to the fees promised.

. . .

b) Services to be rendered

Which services was Defendant supposed to render under the contract?

. . .

Claimant develops several reasons why Defendant's services were to extend beyond contract award. The letter agreement uses the formula "agent's fees", significantly different from the expression "finder's fees" used in earlier agreements between the parties. The absence of indication can be interpreted against restricting the agent's obligations. Since there was a public invitation to tender for this project and Claimant itself negotiated with [State X] authorities, Defendant was neither a "courtier indicateur" nor a "courtier négociateur", thus making it more likely that his fees were mainly for post-award services. Similarly, since Claimant's bid was 20% lower than that of the second lowest bidder, the amount of the scope for pre-award commercial lobbying was reduced. Tender conditions included a provision prohibiting any agreement which provided a commission for the sole purpose of securing the execution of the contract. The fact that commissions were calculated not only on the initial price but also on additions, extensions, variation orders and claims implies that the agent is expected to give assistance in securing these increments. If the agreed fees are already excessive if they reward services during the whole contractual period, they become "mega-excessive", in Claimant's words, if they only cover the 18 months of services admittedly rendered to secure the award of the contract. . . .

Claimant admits that taken separately, none of those arguments is decisive. Put together, however, they should tend to the conclusion that the contract was for commercial agency services extending into the whole contractual period.

The Tribunal agrees. The strongest points are the pointed reference to "agent's fees" in the letter agreement of . . . and the fact that commissions are to be calculated also on additions, extensions, variation orders and claims.

This interpretation is in harmony with the type of contract involved. A contract for major construction works cannot be compared to simple, instantaneous operations like normal sales contracts. Such construction contracts do not only call for great efforts to get them awarded, they also imply a continuous involvement during the time of their performance, when some further difficulties are almost certainly bound to appear. When a project is to be carried out in a foreign country with an unfamiliar environment, the assistance of an agent with a good knowledge of the local conditions is necessary not only to help secure the award but also to overcome the subsequent problems. It would be surprising that Claimant would have asked for Defendant's assistance only to obtain the award and would have felt confident it could handle itself the possible difficulties in the future.

c) Which services did Defendant actually render?

. . .

Summing up, what did Defendant actually provide as services?

In 1987 and 1988, he gave useful assistance . . . to get the contract awarded to the consortium.

Afterwards, his alleged help concerning the import duties and countertrade difficulties may have consisted in having several discussions in 1989 with the Chairman of [O] and the [Minister of Finance of State X] to reduce the irritation caused by Claimant's attitude on both accounts. As to his alleged contribution towards the favourable solution of the claim, it may have consisted in having a certain number of meetings and conversations in 1991 and 1992 in London, in Central Asia (taking advantage of a mission with the Chairman of [O] and in [State X] (taking advantage of a visit to that country).

d) Are the contractually agreed fees excessive under consideration of the services actually rendered?

Are the agreed fees reasonable or should they be reduced under consideration of the services actually rendered?

. . . Defendant has been very active during one and a half years, in 1987 and 1988, to get the project awarded to the Consortium. Afterwards, he claims he has had a certain number of conversations and meetings with important people in 1989, 1991 and 1992.

The Tribunal does not want to underestimate Defendant's influential role in bringing about the contract award and helping Claimant at different stages. However, the application of the agreed rate of commission to the full value of the contract leads to an amount which is completely out of balance with the work and costs involved. . . .

The contractual fees must thus be reduced by the Tribunal. . . .'