DRC appeal ruling puts arbitration spotlight on France and New York Convention

The Court of Appeal rejected a bid by the Congolese state electrical company SNEL to overturn the enforcement order in France of an award of more than $11million, issued in November 2009.

FG Hemisphere – a company which purchases sovereign debts - had bought the debt owed by SNEL to Bosnian firm Energoinvest, which had been contracted to deliver a high-voltage power line in the DRC.

Through the arbitration clause in that agreement, an arbitral award was rendered in Zurich in 2003, and enforced in France six years later. The DRC and SNEL had attempted to challenge this order, arguing that enforcement should be precluded because of an alleged incompatibility with a 2010 Congolese judgment declaring the contracts null and void.

However, the proceedings were stayed due to parallel proceedings initiated by the DRC aimed at enforcing that same judgment, sparking a 13-year legal battle that resulted in two decisions in the French Supreme Court - the Cour de Cassation - last year. As a consequence, the initial appeal against the enforcement order was finally heard in May 2025 in which the court dismissed all SNEL’s arguments, upholding the enforcement order.

The decision is interesting as it puts a spotlight on the interaction between the New York Convention and French arbitration law. The DRC and SNEL’s arguments relied on the 1958 New York Convention - which aims at facilitating the enforcement of international awards worldwide - to argue that France should refuse recognition and enforcement of the award.

The Paris Court of Appeal acknowledged that France is a party to the New York Convention, which applies in the case against FG Hemisphere. However, the court also noted that article VII (1) of the Convention does not deprive the parties of the benefit of more favourable national rules.

This means that French judges may disregard the Convention and instead apply the principles of French international arbitration law if they are more favourable to the enforcement of arbitral awards – which is what happened with SNEL’s argument.

The court confirmed its long-standing position that under French arbitration law, a party’s capacity to commit to arbitration, which is necessary for the purpose of recognising or denying the effect of an international arbitral award in France, must be assessed based on autonomous principles, and not on any domestic rule – taking into account the common wish of the parties, good faith and the legitimate belief and understanding that the signatory of the clause had the capacity to conclude it pursuant to corporate rules.

The court noted SNEL’s acknowledgement that it was not itself aware of the alleged irregularity when it gave its to consent to arbitrate and thus ruled that such consent had been given in good faith, creating a legitimate belief that SNEL would be bound by the arbitration clause. This is perfectly in line with French law. Arbitration clauses can only be interpreted pursuant to autonomous principles listed by French judges, without any reference to any national rule.

This is why the court also rejected the argument from the energy company that enforcement would breach international public order because the arbitration clause was allegedly concluded in breach of DRC’s laws on public procurement. The reasoning is twofold.

The court first rejected FG Hemisphere’s argument that the claim was not admissible because SNEL would have failed to present it, without any legitimate reason, before the arbitral tribunal. Indeed, the court recalled that in line with article 1466 of the Code of Civil Procedure, one could only be deemed to have waived its rights in relation to breaches other than “protective” public order, which are the specific rules of French international public order that one cannot waive, such as public procurement rules.

However, the court went on to reject SNEL’s claim on the merits because the validity of the arbitration clause, under French law, can only be assessed considering the autonomous principles listed above - and one party cannot rely on breaches of its own domestic legislation, in this case the DRC’s public procurement rules, to escape its own obligations.

This is one of the examples that highlights how French international arbitration law - as interpreted by the Court of Appeal and the Cour de Cassation - is notably liberal and arbitration friendly, justifying that French judges disregard the New York Convention and apply French rules.

The court also dismissed SNEL’s argument that enforcement of the arbitral award would not have been incompatible with a 2010 judgement in Kinshasa declaring the contract with Energoinvest null and void, pointing out that as the enforcement of the earlier decision had been denied, it had no effect in France.

Denying the enforcement of an award on this ground is in line with existing case law, which holds a claimant must demonstrate the legal effects of the award are mutually exclusive with the effects of another decision that was either issued in, or recognised in, France. The mere fact that the decisions are not coherent or incompatible on a theoretical level is not sufficient.

Finally, SNEL’s argument that the dispute was not arbitrable under French law was dismissed. The energy company had claimed that, under article 2060 of the French Civil Code, one cannot conclude an arbitration agreement in “matters of disputes involving public bodies and institutions and more generally in all matters concerning public order”.

The court pointed to long-standing case-law dated 2 May 1966 that this prohibition is not applicable to international contracts concluded as per international trade usages.

This ruling relates to one of the oldest reasonings of French arbitration law, one that is generally relied on by international parties to defend the effects of an arbitration clause – and is an example which confirms why article 2060 is outdated. 

The proposed reform of French arbitration law looks to repealing article 2060 of the French Civil Code - claiming that, as it stands, this article contradicts established legal principles, particularly regarding the arbitrability of public order matters. The report that presents the reform argues that removal of this provision would eliminate unnecessary legal debates and allow for clearer rules, especially concerning public legal entities.