'5. Question 6

Is the provision of Art. 18(2) of the Contract applicable, with the consequence that the period of arbitration would last three months from the time when the third arbitrator announces his acceptance, thus expiring on 18 February 2007?

A. Summary of the parties' positions

(a) Respondent 1

171. Respondent 1's starting point is Art. 18(2) of the Contract, in which the parties provided for a three-month arbitration period:

The period of arbitration would be three months from the time when the third arbitrator announces his acceptance.

Since the Chairman of the Arbitral Tribunal was appointed by the ICC on 17 November 2006, in Respondent 1's opinion the three-month period established in Art. 18(2) expired on 18 February 2007.

172. Respondent 1 maintains that the arbitration agreement is governed by French law, and consequently the violation of the time limit fixed by the parties must be analysed in accordance with French law. The position of French law can be summarised in the 1994 French Supreme Court decision in the Degrémont case:1

Le principe selon lequel le délai fixé par les parties ; soit directement ; soit par référence à un règlement d'arbitrage, et dans lequel les arbitres doivent accomplir leur mission, ne peut être prorogé par les arbitres eux-mêmes traduit une exigence de l'ordre public aussi bien interne qu'international en ce qu'il est inhérent au caractère contractuel de l'arbitrage.

173. The position held by the Cour de Cassation in Degrémont was confirmed in the Société Dubois et Vanderwalle case2 of the Cour d'Appel de Paris.

174. French law - continues Respondent 1 - only permits that agreed time limits be extended or modified by a new agreement of the parties, or, in the absence of such agreement, by judicial decision. This is established in Art. 1456 NCPC, which provides as follows:

Si la convention d'arbitrage ne fixe pas de délai, la mission des arbitres ne dure que six mois à compter du jour où le dernier d'entre eux l'a acceptée.

Le délai légal ou conventionnel peut être prorogé soit par accord des parties, soit, à la demande de l'une d'elles ou du tribunal arbitral, par le président du tribunal de grande instance ou, dans le cas visé à l'article 1444, alinéa 2, par le président du tribunal de commerce.

175. According to Respondent 1, Claimant should have made an application for time extension to the President of the Tribunal de Grande Instance of Paris. Such application has not been made and the time limit for arbitration provided for under Art. 18(2) of the Contract is now expired. Accordingly, Respondent 1 submits that Claimant's claims should be dismissed for expiry of the time limit within which the arbitration had to be adjudicated between the parties.

(b) Claimant

176. Claimant disagrees with Respondent 1's arguments. The parties agreed to submit their dispute to the ICC and to the ICC Rules. In doing so, the parties decided not to submit their dispute to the ad hoc arbitration, initially foreseen in the Contract, and thus also waived their right to refer to Art. 18(2) of the Contract. The ICC Rules superseded Art. 18(2) in its entirety, and there was no need for the parties to agree to an extension of the time limit, as the three months' time limit did not apply to this arbitration.

177. Alternatively, if the Arbitral Tribunal were to consider that the three-month time period was still applicable, Claimant argues that Art. 32(2) of the ICC Rules3 regarding modified time limits would nevertheless apply, as a result of the choice of the ICC Rules to govern this arbitration.

178. Finally, Claimant alleges that both Claimant and Respondent 1 have requested extensions of time limit to the ICC and to the Arbitral Tribunal. The granting of these time extensions makes the fixed three-month time limit impossible to comply with.

B. Analysis by the Arbitral Tribunal

179. In order to decide this question, it is necessary to recall the decisions already taken by the Arbitral Tribunal with regard to the arbitration agreement:

• the proper law of the arbitration agreement is the lex arbitri, i.e. French law …

• Claimant and Respondent 1 have validly consented to international arbitration in general and to ICC administered arbitration in particular; the original arbitration agreement contained in Art. 18(2) of the Contract has been amended, and the original ad hoc arbitration has been superseded by an arbitration administered by the ICC and subject to ICC Rules …

Art. 24 of the ICC Rules

180. The parties have consequently accepted that the international arbitration agreed among them be governed by the ICC Rules. The Rules include, in Art. 24, detailed provision regarding the deadline for rendering the award, establishing a time limit of six months from the Terms of Reference, but giving the Court of Arbitration the power to extend it:

1. The time limit within which the Arbitral Tribunal must render its final Award is six months. Such time limit shall start to run from the date of the last signature by the Arbitral Tribunal or by the parties of the Terms of Reference or, in the case of application of Article 18(3), the date of the notification to the Arbitral Tribunal by the Secretariat of the approval of the Terms of Reference by the Court.

2. The Court may extend this time limit pursuant to a reasoned request from the Arbitral Tribunal or on its own initiative if it decides it is necessary to do so.

181. When Respondent 1 consented … to "ICC arbitration", it consented to an arbitration administered by the ICC, subject to ICC Rules, and thus with a six-month time period from the Terms of Reference for the rendering of the award and with an authorisation in favour of the ICC Court to extend this time limit. The replacement of the "ad-hoc arbitration procedure" by "an ICC arbitration" implied the derogation of the three-month period provided in Art. 18(2) of the Contract, and its substitution by the provisions contained in Art. 24 of the ICC Rules.4

182. The Arbitral Tribunal's opinion is confirmed by the decisions of the ICC Court throughout these arbitration proceedings: applying Art. 24(2) of the Rules, the Court extended the original six-month time limit to render the award, provided for in Art. 24(1), a total of four times, … last time until 30 April 2009. The present award is rendered within this time limit.

Art. 32(2) of the ICC Rules

183. The above conclusions are based on the assumption that by submitting to ICC arbitrations the parties were waiving the three-month period provided for in Art. 18(2) of the Contract. It is worth noting that the conclusion would not change if arguendo we accepted the opposite argument, namely that Art. 18(2) of the Contract was not derogated from, and that the parties had consented to an ICC arbitration, but with the three-month time limit of Art. 18(2) of the Contract, and not with the extendable six-month period of Art. 24 of the Rules. In this hypothesis Art. 32(2) of the Rules5 would become applicable, a provision which grants the ICC Court the power to extend any time limit if required "in order that the Arbitral Tribunal … may fulfil [its] responsibilities in accordance with these Rules". And there can be no doubt that a three-month time period would have been totally inadequate in order to solve a dispute as legally difficult (determination of applicable law to be, time bar issues, validity of the arbitration agreement, etc.) and factually complex (facts to be recollected over the past 30 years) as the present one, and consequently the Court would have been empowered, under the Rules agreed upon by the parties, to extend it.

French law

184. Respondent 1 has alleged that Art. 1456-2 NCPC, applicable as the lex arbitri, requires that any extension of the time period for rendering the award be accepted by the parties or be authorised by a French judge, and has referred to a number of French court judgements which have applied this principle.

185. The Arbitral Tribunal disagrees with Respondent's analysis of French law.

186. In the opinion of Craig/Park/Paulsson:6 "French case law, which is of special interest since Paris is the site of approximately one-third of ICC arbitrations, has unequivocally confirmed the power of the ICC Court or the Committee of the Court to extend time limits within its discretion and without any requirement that it give reasons therefor." This opinion has been confirmed by a number of Court decisions quoted by these authors.7 Fouchard/Gaillard/Goldman share the same opinion:8 "The French courts have firmly established the principle that time-limits and extensions fixed by a pre-designated third party - in practice, an arbitral institution - are binding on the parties just as if they had been established by the parties themselves." The Arbitral Tribunal in the ICC case no. 2730 has also come to the conclusion that the ICC provisions regarding the deadline for rendering the award prevail over those of Art. 1456 NCPC.9

187. The Arbitral Tribunal has reviewed the French case law cited by Respondent 1 in its submissions:

• Degrémont:10 In this very unusual case the Arbitral Tribunal had decided that the arbitration clause did not provide for ICC arbitration, but for an ad hoc arbitration inspired by the ICC Rules and, thus, the power to extend the six-month time period for rendering the award did not lie with the ICC but with the Arbitral Tribunal itself. Enforcement of this award was denied by the Court of Appeal on the ground that the conditions under which the award was rendered were contrary to international public policy. The Court of Cassation confirmed this decision stating that the Arbitral Tribunal contravened a principle of international public policy when extending the time limit disregarding the six-month time limit agreed by the parties.

• Dubois:11 The arbitration agreement provided for an ad hoc procedure and established a three-month period in which the Arbitral Tribunal was to render the award. The Arbitral Tribunal issued the award after that period had expired. The Court of Appeal denied the enforcement of the award on the grounds that French public policy protected the parties' agreement on time limits. The commentator of this decision adds that when it is the arbitration institution which extends the time limits, as provided for in its Rules, the principle of public policy is no longer breached.

• Marchand:12 In this case the Court of Cassation made clear that tacit time limit extensions were only admissible provided that there was a positive and non-equivocal behaviour of the parties.

188. The analysis of these cases shows that the underlying facts are quite different from the present dispute: these were ad hoc cases, in which the parties had not agreed that their arbitrations would be governed by the ICC Rules. This being so, the findings in these cases are irrelevant for our decision.

Summary

189. For the reasons set forth above, the Arbitral Tribunal comes to the conclusion that the three-month time period provided for in Art. 18(2) of the Contract has been superseded by the ICC Rules, and that this Award is correctly rendered within the time frame established in Art. 24 of such Rules (or, subsidiarily and arguendo, under Art. 32(2) of the ICC Rules).'

1
Communauté Urbaine de Casablanca c. Societé Degrémont, Cour de Cassation 15 juin 1994 ...

2
Société Dubois et Vanderwalle c. Société Boots Frites BV, Cour d'Appel de Paris (1re Ch. C.) 22 septembre 1995 ...

3
Editor's note: This and subsequent references are to the 1998 ICC Rules of Arbitration.

4
Of the same opinion Craig/Park/Paulsson, [International Chamber of Commerce Arbitration, 3rd ed., 1998] fn. 3, p. 356.

5
Art. 32(2) of the Rules: "The Court, on its own initiative, may extend any time limit which has been modified pursuant to Article 32 (1) if it decides that it is necessary to do so in order that the Arbitral Tribunal or the Court may fulfil their responsibilities in accordance with these Rules."

6
[Supra note 18] p. 356.

7
See decisions of the Cour d'Appel de Paris of 3 December 1981 and 22 January 1982, in 1982 Rev. arb. 91; the latter case upheld by the Cour de Cassation, 8 June 1983, 1987 Rev. arb. 309.

8
[International Commercial Arbitration, 1999] p. 754.

9
111 JDI, 914, 1984 with observations by Y Derains cited in Fouchard/Gaillard/Goldman, [International Commercial Arbitration, 1999] p. 754 fn 97.

10
Cour de Cassation 15 June 1994 Communauté urbaine de Casablanca c. Société Degrémont ...

11
Cour d'Appel de Paris 22 September 1995 Société Dubois et Vanderwalle c. Société Boots Frites BV, with comment by Emmanuel Gaillard ...

12
Cour d'Appel de Paris 9 February 1995 R. Marchand c. Société Sogea Atlantique ...