<center><span class="news-text_italic-underline">State of Libya v. Siba Plast – Decision of 1 October 2024</span></center>
On 1 October 2024, the Paris Court of Appeal’s International Trade Chamber overturned the enforcement of a €280 million arbitral award against the State of Libya. The Court found that Libya had not been properly notified of the arbitration proceedings, leading to a breach of the principle of adversarial proceedings under French law. The decision emphasises the importance of procedural fairness in international arbitration, especially when dealing with State parties.
The dispute stemmed from five commercial contracts concluded in 2012 between an Italian company and the Libyan National Transitional Council, acting on behalf of the Libyan State. The Italian company’s rights under the contracts were later assigned to Siba Plast, a Tunisian company. Siba Plast alleged that Libya failed to fulfill its contractual obligations and initiated ad hoc arbitration in Tunisia, invoking the arbitration clause in the contract amendments. In Libya’s absence, the arbitral tribunal issued an award in November 2014, ordering Libya to pay €280 million.
After obtaining an enforcement order in France in March 2017, Siba Plast sought to enforce the award by seizing Libyan state-held bank accounts. Libya appealed the enforcement, claiming it was unaware of the arbitration as it was not properly notified. Libya's appeal cited Articles 1520 and 1525 of the French Code of Civil Procedure (“<span class="news-text_medium">FCCP</span>”), focusing on the breach of adversarial proceedings, a fundamental principle under French law.
The Paris Court of Appeal ruled that Siba Plast had failed to ensure Libya was duly notified of the arbitration proceedings. The court noted two critical issues: the email addresses used for notifying Libya were incorrect and did not match the designated contacts under the contract; and the notification methods stipulated in the contract were only applicable to contractual matters and not to arbitration, which is considered separable from the underlying contract.
The Tunisian Arbitration Code, which governed the arbitration, did not allow for electronic communications for procedural matters. Even if it had, the email addresses used were invalid.
Given these deficiencies, the court determined that the State of Libya had been deprived of the opportunity to defend itself, violating the principle of adversarial proceedings. Consequently, the enforcement order was overturned and Siba Plast was ordered to pay Libya’s legal costs.
Adherence to principles of adversarial proceedings is vital for the enforcement of arbitral awards in French courts. The ruling underscores that missteps regarding notifications can lead to the annulment or non-enforcement of arbitral awards. Parties should exercise caution when notifying State parties, ensuring that they comply with all contractual and procedural requirements to avoid similar outcomes. <span class="news-text_italic-underline">The State of Libya v. Siba Plast</span> illustrates the strict approach French courts take towards procedural fairness in arbitration.
