Originally from: Stockholm International Arbitration Review

Preview Page

OBTAINING REVISION OF "SWISS" INTERNATIONAL ARBITRAL AWARDS: WHENCE AFTER THALÈS ?

Dr. Charles Poncet

On July 12, 1990, Frontier AG ("Frontier"), a Swiss company based in Bern, entered into a fiduciary agreement with Alfred Sirven, then a director of the French oil group Elf Aquitaine ("Elf"). Frontier, one of many Swiss fiduciary companies, was thereby empowered to act in its own name but really on Sirven’s behalf and Frontier would henceforth follow his instructions against a fee. A few days later, the French group Thales--at the time Thomson CSF--undertook to pay Frontier a commission of 1% on the sale price of certain frigates to the Republic of China ("ROC"). Frontier was to assist and facilitate the conclusion of the sale and in 1991 it assigned its claim to a Portuguese company, Brunner Sociedade Civil de Administraçao Limitada ("Brunner"). Six F-3000 frigates were indeed contracted for by the ROC for a price of USD 2,512,585,152. The French government, initially opposed, eventually relented and the transaction went ahead. Frontier and Brunner1 thus demanded payment of the commission (amounting to 160 million French francs, i.e. about 35 million USD at the time). Thales (Thomson) demurred. Frontier and Brunner filed a request for arbitration with the ICC, based on a clause in the 1990 agreement between Thales (Thomson) and Frontier providing for arbitration in Geneva under French law.

Thales (Thomson) argued that the 1990 undertaking was void because its real purpose had been to pay off a third party who would intervene to persuade the French government to authorize the transaction, thus making the contract illicit under French law and contrary to public policy.

Frontier/Brunner denied the charge and stated that the purpose of the agreement was to retain the services of a certain Edmond Kwan, a consultant to Elf in the People’s Republic of China ("PRC"), who used his network of connections there to remove the opposition of the PRC to the sale of warships to the ROC.