Chapter VIII. Decisions of national tribunals

1. France

   COURT OF APPEALS OF RENNES

   GUINEA AND SOGUIPECHE V. ATLANTIC TRITON COMPANY: DECISION OF 26 OCTOBER 19841

   Arbitration of the International Centre for Settlement of Investment Disputes—Rule of judicial abstention of national courts

   The Court, in the case between The Revolutionary People's Republic of Guinea and La Societe Guineenne de Peche (SOGUIPECHE) v. The Atlantic Triton Company, ruled as follows:

   On 6 July 1984 the Revolutionary People's Republic of Guinea and SOGUIPECHE appealed against the order issued on 6 April, by the presiding judge of the Quimper Commercial Court, which disallowed their request for release of three fishing boats arrested at the request of the Norwegian company Atlantic Triton while undergoing repair in the Piriou yard at Concarneau, and were summoned on 25 and 31 July to appear at the hearing on 14 September so that a decision could be reached on the merits of their appeal.

   The Public Attorney has pointed out that the management agreement signed between the parties contained an arbitration clause providing that disputes should be referred for settlement to ICSID, set up by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 18 March 1965, ratified by France, Guinea and Norway; that such tribunal has the power to recommend any provisional measures, and enjoys sole jurisdiction to the exclusion of that of national courts; that the local judge should have either stayed the proceeding if the [ICSID arbitral] tribunal had not yet ruled on the matter, or, if that had been done, decided in the same manner as the tribunal; that this solution is consistent with the information in the section on provisional measures in the ICSID brochure;2 he therefore concludes that the order should be set aside and that the attachment of the three ships be vacated.

   As regards the facts

   The Minister of Fisheries of the revolutionary People's Republic of Guinea,... desig-nated as the shipowner, and the Norwegian company Atlantic Triton signed a management agreement on 12 August 1981 in which the State requested the company to undertake at the State's expense the conversion, equipping and operation of three vessels acquired with a view to establishing a fishing industry designed to meet the food needs of the urban population. The agreement was to last two years and could be terminated with three months' advance notice. The document contained a clause committing both parties to refer disputes to ICSID for settlement on an equitable basis, while disputes not falling within the jurisdiction of ICSID were to be arbitrated by the International Chamber of Commerce.

   The company undertook the ship repair and conversion work in Norway from August to November 1981, sailed the vessels to Guinea and operated them until September 1982.

   The Government of Guinea requested technical assistance from FAO to improve the poor results obtained by the national fishing company, SOGUIPECHE, during the first

   six months of operation. This study showed that the ships were unsuitable for fishing in Guinean waters, being too large, too expensive and too complicated; the Norwegian nets were unsuitable, and the ships had not been properly maintained, making a general overhaul necessary. FAO advised that overhaul of the two ships, Matakang and Sow, should be reorganized, that fuel should be subsidized and that the third trawler, Kaloum, be sold and new fishing vessels acquired. These conclusions were confirmed in a report from the technical director of SOGUIPECHE on 11 September 1982 which referred to a large number of mechanical and electrical breakdowns that had immobilized the vessels for long periods and left them in poor condition, although they had been overhauled, except for careening.

   The Government, acting on behalf of SOGUIPECHE, the shipowner, made arrangements in a contract dated 14 January 1984, pursuant to an agreement of 26 February 1983, for the Piriou facility to overhaul and convert the three ships .. . In the light of the break-downs and the evidence of the unsuitability of the ships for fishing in tropical waters, meetings took place between the Guinean Ministry of Fisheries and the Norwegian company at Bergen from 17 through 21 September 1982 regarding the performance of the management agreement. The record of the meeting prepared on 21 September referred to the unsatisfactory technical performance of the vessels, particularly the Matakang, the technically unfortunate choice of equipment which resulted in very small catches and represented an economic disaster, to the lack of flexibility of the arrangements and to the difficult character of operating conditions. Austerity measures were taken; the Norwegian company acknowledged its responsibility for the defects in the conversion in the Matakang but, alleging a difficult financial situation and the non-payment of management fees for the third quarter, undertook to finance 40 per cent of the rehabilitation plan. The parties agreed on the need for revision of the basic provisions of the management agreement.

   In a letter of 5 April 1983, Atlantic Triton, in the light of the refusal of its partner to perform its financial obligations, cancelled the agreement with the Guinean Government with effect from 30 June and requested payment of the sum of $US226,867 as owing to the Mjellem and Karlsen yards, and of $US334,444 as administrative expenses for the period 1 October 1982 through 30 June 1983. The Government protested about a considerable overrun in relation to the estimate for converting the ships. Having received no reply to its cancellation of the contract, Atlantic Triton obtained an order from the President of the Quimper Commercial Court dated 12 October, authorizing the attachment of the three ships as security for a claim estimated at $US571,311, plus a sum of $US 150,000 for expenses in penalty interest, provided that an appeal was lodged on the merits of the matter within three months. The company then informed ICSID that the ships had been attached by the bailiff and that the attachment order had been notified on 19 and 21 October to the Piriou yard and the Guinean Embassy respectively. The Government of Guinea and SOGUIPECHE moved to vacate the attachment and requested compensation of F 150,000 for abuse of process. The motion was dismissed by order of 6 April last, which was appealed.

   In the meantime a request for arbitration under the auspices of ICSID was submitted on

   9 January 1984 by the Norwegian company. Notice of registration of the request was dispatched on the 19th of that month, and the tribunal was constituted on 1 August (article 6 of the ICSID Arbitration Rules).

   On 20 August the Republic of Guinea requested the ICSID tribunal to order the immediate suspension of the provisional measures authorized by the President of the Quimper Court. A ruling was requested before 14 September, the date of the hearing before this court. It was alleged that the company had violated ICSID Rules which forbid that a request for provisional measures be submitted to a national jurisdiction.

   The appellants put forward the following grounds in support of their appeal: immunity from execution .. . and the Convention of Washington of 1965.

   On the first ground

   The State of Guinea did not waive its immunity from execution by adding a claim for compensation for wrongful attachment to its demand for the release of the ships attached.

   The ships, whose owner's identity is contested, had become the property of SOGUIPECHE as a result of the "acts of Guineazation" dated 7 June 1983 and communicated by Ms. Tessier, counsel for the appellants, on 19 December of the same year. Furthermore, they had become part of the company's assets from its establishment on 6 January 1982; in a telex of 3 June 1983 to Atlantic Triton the company indicated its desire to sell the ships' equipment; the company has both a separate legal identity from that of the State of Guinea and its own assets, and engages in commercial activity governed by the laws and customs of commerce (cf. decree of 6 January 1982, particularly article 10). Therefore the argument regarding immunity from execution is without foundation.

   On the third ground

   The Convention on the Settlement of Investment Disputes between States and Nationals of Other States established under the auspices of the International Bank for Reconstruction and Development (IBRD) on 18 March 1965,3 which came into effect on 14 October 1966 and was ratified by a large number of States, including France, Norway and Guinea, set up an International Centre for Settlement of Investment Disputes (ICSID) which includes conciliation and arbitration machinery (in this case a tribunal).

   Article 26 provides that the consent to arbitration shall "unless otherwise stated" be deemed consent to such arbitration to the exclusion of any other remedy, although "a Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention". Article 47 provides that "except as the parties otherwise agree, the Tribunal may, if it considers that the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party".

   The rules applicable to ICSID's arbitration proceedings, which is an official document drawn up by the Administrative Council of the Centre pursuant to article 6 of the Convention, provide, in rule 39 entitled "provisional measures", that at any time during the proceeding a party may request that provisional measures for the preservation of its rights may be "recommended" by the tribunal, which shall give priority to the request. The tribunal may also recommend provisional measures on its own initiative or recommend measures other than those specified in a request. In cases of urgency the tribunal may take decisions by correspondence among its...