Doutrina Internacional

“L’affaire Tapie”, a Review From an Arbitration Perspective

Clément Fouchard
Linklaters L.L.P. (Paris).

RESUMO: O presente artigo discute os problemas da arbitragem jurídica surgidos na disputa entre o
empresário francês Bernard Tapie e seu antigo banco (que o Estado francês resgatou) devido à venda
da companhia alemã Adidas em 1992. A disputa foi finalmente decidida por um tribunal arbitral, o qual
ordenou o banco a pagar ao Sr. Tapie mais de € 400 milhões como danos. O caso foi levado às cortes
francesas, e a questão que se levantou foi se o banco tinha direito a requerer uma revisão judicial da
decisão baseado na alegada fraude cometida por Sr. Tapie e/ou seu advogado e um dos árbitros, a favor
de Sr. Tapie na arbitragem. O critério decisivo foi a natureza doméstica ou internacional da arbitragem, já
que a revisão só seria possível caso a arbitragem fosse doméstica. A Corte de Apelação de Paris (decisão
de 17 de fevereiro de 2015) e a Corte de Cassação (decisão de 30 de junho de 2016) decidiram a favor
do banco, declarando que a arbitragem foi de natureza doméstica e a revisão da decisão arbitral é ad-
missível. O juiz francês afirmou que a fraude foi de fato constituída, e retirou a decisão arbitral. Esse caso
clarifica a interpretação mais restrita das cortes francesas acerca da internacionalidade de uma disputa
e oferece uma boa ilustração da possibilidade de um juiz encarregado de uma revisão judicial de uma
decisão arbitral considerar elementos de procedimentos penais pendentes.

ABSTRACT: This paper discusses the arbitration law issues raised in the dispute that opposed French
businessman Bernard Tapie to its former bank (that the French state has since bailed-out) following the
sale of the German company Adidas in 1992. The dispute was eventually decided by an arbitral tribunal
which ordered the bank to pay to Mr Tapie over € 400 million as damages. The case was brought before
the French courts, and the question that arose was whether the bank was entitled to request a judicial
review of the award based on the alleged fraud committed by Mr Tapie and/or his counsel and one of the
arbitrators, to favour Mr Tapie in the arbitration. The decisive criterion was the domestic or international
nature of the arbitration, as a review would only be possible if the arbitration was domestic. The Paris
Court of Appeal (decision of 17 February 2015) and the Cour de cassation (decision of 30 June 2016) ruled
in favour of the bank, stating that the arbitration was of domestic nature and the review of the arbitral
award admissible. The French judge also held that fraud was indeed constituted, and withdrew the
arbitral award. This case sheds light on the French courts’ narrower interpretation of the internationality
of a dispute and offers a good illustration of the possibility for a judge entrusted with the judicial review of
an arbitral award to consider elements originating from pending criminal proceedings.

SUMMARY: Introduction; I – Domestic or international arbitration?; A) The current state of French law;
B) Review of the parties’ positions and the court’s judgement; C) Implications of the solution; II – The
issue of fraud; A) The mechanism of judicial review; B) The characterization of fraud; Conclusion.

INTRODUCTION
1. The Tapie Case, “L’affaire Tapie” in French, a seemingly endless saga,
has occupied the French judicial scene for over two decades now. Beyond
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the political aspects of the case1, this saga has shed light on multiple areas
of French domestic law: contract law, administrative law, criminal law, and
finally, arbitration.
2. It is almost impossible to find a Frenchman who was not astonished, at
the beginning of the summer of 2008, by the news that an arbitration tribunal
awarded to Mr and Mrs Tapie the absurdly high amount of € 45 million for
moral damages; An amount that had never been awarded for moral damages in
French judicial history and which exceeds, by very far, any amount awarded in
cases involving the loss of a parent or a child. A commentator has even stated
that had the tribunal not awarded an egregious amount of € 45 million for
moral damages, it is likely that the award would not have been subject to such
scrutiny, and may have even gone unnoticed2.
3. In France, so much has been said about this case that it would be
difficult to find a Frenchman, no matter how detached from the world of
arbitration, who has not heard of it. As a matter of fact, the mere mention of
arbitration often evokes to the uninitiated the Tapie Saga, first and foremost3. The
Tapie saga, for better or for worse, has boosted public awareness and interest
regarding arbitration. While, in France, press reports on the developments of
the case are no rare commodity, not much is available to the foreign arbitration
scholar or practitioner who, alarmed by the turbulence surrounding this affair,
wants to evaluate for herself the impact of the case on French arbitration law,
or more generally France as a major arbitration forum.
4. The following pages will try to provide an insight into this case: its
background, developments, and legacy. The author will especially focus on the
Paris Court of Appeal decision of 17 February 20154, which annulled the 2008

1 Press articles have for example relayed suspicions that Mr Tapie benefited from political support during the
presidency of Mr Sarkozy, when the decision was taken jointly by the Tapie side and the French State to go to
arbitration (see infra no.12).
2 M. Henry, Arbitrage Tapie: les affres d’un préjudice moral immoral, ASA Bulletin 2016, Vol. 34, Issue 1, pp. 207-
-231, esp. no.3.
3 The Tapie Case is also – and paradoxically – an excellent shortcut to define the notion of arbitration to a layman.
4 Paris Court of Appeal, 17 February 2015, nº 13/13278.
There are numerous commentaries and articles regarding the judicial decisions rendered in the Tapie case from an
arbitration law view point, see for instance: M. Henry, op. cit.; X. Delpech, Admission du recours en révision de
la sentence, Dalloz Actualités, 20 February 2015; P. Mayer, Rétractation, par la cour d’appel saisie d’un recours
en révision, d’une sentence entachée de fraude, rendue dans un arbitrage qualifié d’interne, note sous Paris, 17
February 2015, Revue de l’arbitrage 2015, Issue 3 pp. 861-869; L. Weiller, Un recours en révision vraiment
«extraordinaire ». – (à propos de l’arrêt de la cour d’appel de Paris du 17 février 2015), Procédures nº 4, April
2015, study nº 4; M. Boissavy, La volonté des parties et la nature interne ou internationale d’un arbitrage, Gazette
du Palais, 4 April 2015, nº 094, Vol. 34, Issue 1, pp. 207-231; A. de Fontmichel, Rétractation d’une sentence
arbitrale surprise par la fraude d’un arbitre, les Cahiers de l’arbitrage, 1st July 2015, Issue 2, p. 281; D. Mouralis,
Affaire Tapie – Adidas : les sentences arbitrales sont rétractées, Dalloz 2015, p. 1253; S. Bolée, L’accueil du
recours en révision formé contre la sentence Tapie, La Semaine Juridique Edition Générale, nºs 10-11, 9 March
2015, nº 289.
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arbitral award5, and the French Court of Cassation Decision of 30 June 20166,
which confirmed the Paris Court of Appeal decision.
5. At the centre of the “Tapie saga” is, of course, the man himself, Mr
Bernard Tapie7: businessman, turned politician, and even Minister, then actor
and singer; a colourful personality who has for a long time been in the public
eye8.
6. The case started in 1990 when Tapie decided to acquire 95% of the
shares of German sportswear giant “Adidas”. The 1.6 billion French francs
acquisition was largely financed by a loan granted to Tapie by the Société de
Banque Occidentale (“SDBO”), a subsidiary of Crédit Lyonnais, at the time a
State-owned French bank.
7. At the end of 1992, Tapie was appointed Minister in the French
government and decided to part with most of his businesses, including Adidas.
He granted SDBO a mandate to sell the German holding company Bernard
Tapie GmbH, which held the Tapie group shareholdings in Adidas (for an
amount of 2.085 billion French francs). In 1993, SDBO executed the mandate
and sold the holding to several companies, both French and foreign, including
Clinvest, a subsidiary of Crédit Lyonnais, and Rice SA, owned by Robert Louis
Dreyfus, a French businessman.
8. Eventually, Tapie and the Tapie group went into bankruptcy
proceedings, and after the companies in the Tapie group had been wound up,
Tapie and the liquidators took legal action against Crédit Lyonnais and SDBO,
which had become CDR and CDR Créances9, accusing them of failure to fulfil
their obligations as agents pursuant to the sale mandate10. On 30 September

5 The present commentary will mainly deal with the arbitration law issues discussed in the Tapie case, to the
exclusion of the question of the liability of the Crédit Lyonnais in the execution of the sale mandate granted by
Tapie. This question (among many others) has been subsequently settled by French Courts (see infra 10).
6 French Court of Cassation, 1st Civil Section, 30 June 2016, nºs 15-13.755, 15-14.155 and 15-13.904.
7 The term “Tapie” will be used in the present article to designate Mr Bernard Tapie, his wife and the receivers of the
companies of the Tapie group of companies (as they were all claimants to the various judicial actions).
8 Bernard Tapie was even sentenced to jail (for six months) for complicity to corruption and intimidation of witnesses
in another (and completely unrelated) matter.
9 During the same period (1993), Crédit Lyonnais faced a risk of bankruptcy due to massive risky investments. A
parliamentary report denounced its system of advances and high-risk loans, particularly in the field of real estate.
The amount of losses (nearly € 20 billion) made it one of the biggest financial scandals in French history. The
French State organized, thereafter, the Crédit Lyonnais bailout, setting up a bad bank, the Consortium de realisation
(“CDR”) that took over € 28.3 billion of the debts of the Crédit Lyonnais group. SDBO became “CDR Créances”.
The “new” Crédit Lyonnais was subsequently privatized and acquired in 2003 by another French bank, the Crédit
Agricole.
10 As was seen above, one of the buyers was Clinvest, a subsidiary of Crédit Lyonnais. Tapie argued that while facing
bankruptcy, he discovered that the Dreyfus acquisition was financed by a loan from SDBO which was executed
through offshore companies. He further argued that he discovered that the sales contract contained a clause which
gave Dreyfus the option to buy out the rest of the Adidas shares within two years, for an additional 2.6 billion
French francs. Dreyfus made use of this option in December 1994, which resulted in considerable profits for Crédit
Lyonnais through its subsidiaries. Adidas was subsequently introduced in the Frankfurt stock market for an amount
of more that eleven billion French francs (i.e. an amount five times higher than the amount Tapie received in
execution of the sale mandate). Tapie therefore considered, among other claims, that Crédit Lyonnais had breached
a duty of loyalty towards him by subscribing to such a clause.
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2005, the Paris Court of Appeal declared CDR Créances and Crédit Lyonnais
liable for the damage suffered by Tapie and the Tapie Group and ordered the
former to compensate the latter. At the same time, it held the companies which
purchased Bernard Tapie GmbH free from any liability. The Court of Cassation,
in its decision of 9 October 2006, quashed the Paris Court of Appeal decision
with regard to the liability of CDR Créances and Crédit Lyonnais (whereas it
upheld the non-liability of the purchasers), and referred the case back to the
Paris Court of Appeal.
9. In the autumn of 2007, in addition to this case, two other lawsuits were
pending between Tapie and his former bank, regarding loan agreements.
10. On 16 November 2007, the bankruptcy liquidators, Tapie and the
companies CDR Créances and CDR (together the “CDR Companies”) signed
a submission agreement (“compromis d’arbitrage”) stipulating that all these
disputes would be submitted to arbitration, before a panel of three arbitrators,
namely Messrs Mazeaud, Bredin and Estoup11, who would be required to
respect the res judicata of the irrevocable decisions previously rendered12.
11. By an award of 7 July 2008, the arbitral tribunal held that the CDR
companies had committed two faults, namely a breach of the duty of loyalty,
and a breach of the prohibition for an agent to act as counterparty (ruling that
the Crédit Lyonnais faultily purchased Adidas (through subsidiaries) while
being, at the same time, Tapie’s agent for its sale)13. The arbitral tribunal ordered
the CDR companies to pay to Tapie, jointly and severally, the sum of € 240
million with interest, € 45 million for non-pecuniary i.e. moral damage, and
more than € 8 million for liquidation costs. Three other awards were rendered
on 27 November 2008, one of which ruled on the liquidation costs and the
other two on motions to interpret the main award. In July 2008, the Minister
of Finance, Christine Lagarde (today managing director of the International
Monetary Fund), decided not to challenge the arbitral awards, as most legal
experts consulted indicated a very low chance of success.
12. The award on the merits caused great commotion amongst the public,
the media and the political circles. It is, as stated above, the record amount
of compensation for non-pecuniary damage (€ 45 million) that shocked most.
The political opponents of the Sarkozy government immediately contested the
decision of the arbitral tribunal, and that of Christine Lagarde not to challenge
it, suggesting that the government chose arbitration precisely to maximize
Tapie’s chances of recovery in his long-standing litigation against the State, after

11 All three arbitrators were preeminent lawyers: Pierre Mazeaud was a former President of the Constitutional Council,
Jean-Denis Bredin a renowned lawyer with great experience, and Pierre Estoup, a former First President of the
Court of Appeal of Versailles.
12 For example, regarding the non-liability of the purchasers of Bernard Tapie GmbH. See supra, nº 8.
13 See footnote 10 above.
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Tapie supported Sarkozy in the 2007 presidential election. The situation took
a turn for the worse when suspicions of bias were raised against Pierre Estoup,
one of the arbitrators who had failed to disclose the ties he had with Bernard
Tapie’s lawyer, Maurice Lantourne, and the fact that he was acquainted with
Bernard Tapie, although he had declared to the contrary before the arbitration
commenced.
13. This triggered various reactions. In 2008, a bipartisan parliamentary
inquiry committee was set up, which conducted public hearings of all
individuals involved. Administrative appeals against the decision of Christine
Lagarde were filed but were ultimately dismissed by the Conseil d’État (the
French supreme administrative court) in 201114. The French Court of Auditors
(“Cour des comptes”) also conducted investigations and eventually rendered
a very critical report highlighting several irregularities in the way the CDR
Companies opted for arbitration15.
14. Following the Court of Auditors’ report, in June 2011, a preliminary
investigation was opened by the Paris public prosecutor’s office for misuse of
company assets (CDR’s assets). Subsequently, in September 2012, the Paris
public prosecutor’s office opened a formal judicial investigation for “misuse of
social powers and concealment of this offense”. The three investigating judges
carried out searches, including in the homes of the three arbitrators, as well
as that of Bernard Tapie, Christine Lagarde and her former cabinet director,
Stéphane Richard, as well as the offices of Mr Lantourne16.
15. Invoking fraud, the CDR companies brought an action for judicial
review (“recours en révision”) of the 2008 arbitral award before the Paris
Court of Appeal. Under French arbitration law, the ordinary recourse against
an arbitral award is a request for setting aside (Articles 1502 and 1520 of the
French Code of Civil Procedure)17. Such recourse should be filed within a

14 In parallel, at the request of Jean-Louis Nadal, Attorney General at the Court of Cassation, the “Cour de Justice de
la République” (“CJR”, Law Court of the Republic, a special French court established to try cases of ministerial
misconduct) was seized in May 2011 against Christine Lagarde for abuse of authority. In a decision dated 19
December 2016, Christine Lagarde was found guilty of “negligence”. Per the decision of the CJR, Christine Lagarde
“was personally involved in the decision not to appeal against arbitration”. The court reproached her for not
having sought other legal opinions regarding the possibility to set aside the award. According to the CJR, such
annulment proceedings would have enabled her to discover the fraud. However, the CJR issued no sanction against
Ms Lagarde, in light of her position at the International Monetary Fund, and the fact that, at the time, she was fully
engaged in managing the financial crisis.
15 The Court of Auditors’ report highlighted the following points: the CDR’s choice to go to arbitration coincided
with the change of the persons in charge of the file, serious irregularities affected the decision-making process
involving CDR, the submission agreement presented risks for the CDR, the legal validity of recourse to arbitration
is uncertain, and an action for the annulment of the arbitral award was not excluded.
16 In March 2016, the Paris public prosecutor’s office indicted Bernard Tapie for committing fraud in an organized
criminal group, and embezzlement of public funds, and sent the case to the criminal court. The same decision
was taken regarding Messrs Maurice Lantourne, Stéphane Richard, Pierre Estoup, as well as Messrs Jean-François
Rocchi and Bernard Scemama, who were then presidents of the CDR companies.
17 It should be noted that under the new arbitration decree of 2011, an appeal on the merits of the case is no longer
possible in international arbitration cases.
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month following the rendering of the arbitral award. In the present case, the
CDR Companies contemplated the possibility of filing a request for setting
aside back in 2008, when the arbitral awards were rendered. They eventually
refrained from doing so in the absence of evidence to support arguments to
set aside the awards. In 2012, after the opening of criminal investigations,
the situation radically changed and the CDR Companies attempted to initiate
setting aside proceedings, but their proceedings were dismissed as time-barred.
The only option available to the CDR Companies was therefore an application
for judicial review.
16. Pursuant to French law18, the review aims at withdrawing a res judicata
judgment in order to examine the merits of the case again. An application
for review is open only in four specific situations, including where, after the
rendering of the judgment, it appears that the judgment was tainted by fraud of
the party for whose benefit it was made. The time limit for filing an application
for review is two months from the day on which the party becomes aware of
the cause of review it invokes. If the application for review of an arbitral award
is granted, the award is not set aside (“annulée”) but withdrawn (“rétractée”).
The main difference between an award that is set aside and an award that is
withdrawn is that the former would entail the restitution of the sums received
by the winning party, whereas a judgment of withdrawal (“rétractation”) would
not necessarily do so19.
17. The CDR Companies succeeded in their action, with the Paris Court
of Appeal ruling, on 17 February 2015, that the decision-making of the arbitral
tribunal was tainted by fraud. As a consequence of the withdrawal of the
arbitral awards and because it found that the arbitration was domestic and not
international, the Paris Court of Appeal had the power to decide on the merits of
the case (“pouvoir d’évocation”). It thus ordered the parties to file submissions
on the merits by 30 April and 30 June of the same year.
18. On 3 December 2015, the Court of Appeal dismissed Tapie’s claims
for damages for the alleged fault of the CDR Companies in the execution of the
Adidas sale mandate, ordered the CDR Companies to pay to Tapie one euro
as moral damages, and ordered Tapie to reimburse the CDR Companies the
sum of € 404 million, which was paid in performance of the 2008 Awards, and
cover their arbitration costs.
19. Finally, the Cour de Cassation confirmed, on 18 May 2017 the Court
of Appeal judgment of 3 December 2015, and put to an end the Tapie arbitration
saga. The Cour de Cassation held that Mr Tapie is under the obligation to return

18 See a combined reading of Articles 1491 (dealing with the review of arbitral awards) and 693 et seq. (dealing with
the review of judicial judgements) of the French Code of Civil Procedure.
19 See infra nºs 18-19.
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the amounts he received in the arbitration, finding that damages paid pursuant
to a court decision or arbitral award that is withdrawn need to be returned20.
20. Two main arbitration law issues are of interest in the Tapie Case.
21. The first issue is whether the arbitration was domestic, as the Court
of Appeal held, or international. As already seen, this point was essential: if the
arbitration qualified as domestic, the Court of Appeal would have jurisdiction
over a request of review, and the power to decide on the merits of the case;
if the arbitration qualified as international, the application for judicial review
could only be brought before an arbitral tribunal.
22. The second issue refers to fraud within the arbitral process. To decide
this question, the French courts had to determine the standard of proof of
fraudulent behaviour, and the admissibility of extracts of criminal investigation
then in progress, which were protected by the confidentiality of the investigation
and of which the public prosecutor had authorised production.

I – DOMESTIC OR INTERNATIONAL ARBITRATION?

23. This section will first present the current state of French law regarding
the internationality of arbitration and, more specifically, the consequences of
such qualification (A.), and then the parties’ positions and the court’s judgement
(B.), and finally the implications of the solution (C.).

A) The current state of French law

24. The distinction between domestic and international arbitration is
very important in French law, as the legal regime applicable to the two kinds of
arbitration is different (even though, since the 2011 reform of French arbitration
law, the two regimes generally tend to converge). The regime regarding the
judicial review of an award differs, depending on whether the arbitration is
international or domestic.
25. Before the reform of French arbitration law in 2011, a request for
judicial review of a domestic arbitration award was only possible on the same
conditions as applicable to national court judgments, and was brought before
the Court of Appeal which had jurisdiction over other recourses against the
award in question. The law did not include any provision regarding interna-
tional arbitration awards. Nevertheless, the Cour de Cassation decided that the
tribunal that had issued the award was competent to hear a request for review

20 French Court of Cassation, Commercial Section, 18 May 2017, nºs 15-28.683, 16-10.339 and 16-10.344.
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of such award21. The Cour de Cassation could however not grant jurisdiction
to another court over such a request, as this would amount to stepping in the
shoes of the legislator and creating a new judicial recourse22.
26. Although the pre-2011 legal regime applied to the Tapie arbitration, it
is worth mentioning that following the 2011 reform, Article 1502 of the French
Code of Civil Procedure states that the review – against both domestic and
international awards – is possible under the same conditions as that applicable
to the review of domestic judgments. The same Article provides that (for both
domestic and international arbitration) the arbitral tribunal is competent to hear
a request for review, except if the members of the tribunal cannot reconvene.
Further, the Code of Civil Procedure provides that if such a situation arises
in domestic arbitration, the Court of Appeal which has jurisdiction over other
recourses against the award is competent to hear the request. The Code of Civil
Procedure explicitly excludes this possibility in the context of international
arbitration, but does not provide any solution if the impossibility of the arbitration
tribunal to reconvene arises in the context of an international arbitration. This
has created concerns amongst the doctrine as, in a situation where the tribunal
can no longer reconvene, the review is, de facto, only available for domestic
arbitration awards23.
27. In the Tapie case, the tribunal could hardly reconvene, as one of the
arbitrators was under official investigation in the context of the criminal case
regarding the Tapie arbitration, and the two other arbitrators were “assisted
witnesses” (“témoins assistés”), i.e. persons against whom there is a simple
presumption of participation in a criminal offense (as opposed to the person
under official investigation and against whom there is sufficiently serious and
corroborating evidence).
28. Tapie tried to have a new tribunal constituted in replacement of
the initial tribunal, on the basis that in international arbitration, the Court of
Appeal did not have jurisdiction to rule upon a review request. According to
Professor Mayer, constituting such a replacement tribunal would not have been
possible anyway, because it would amount to “forced arbitration” (“arbitrage
forcé”) – arbitration in the absence of an agreement to arbitrate from both
parties (obviously, the CDR Companies opposed such application) or of a legal
obligation24.

21 French Court of Cassation, 1st Civil Section, 25 May 1992, Fougerolle, Revue de l’arbitrage 1993, Issue 1,p. 91
et seq. M. de Boisséson and French Court of Cassation, 1st Civil Section, 19 December 1995, Westman, Revue
de l’arbitrage 1996, Issue 1, p. 49 et seq. D. Bureau.
22 P. Mayer, Rétractation, par la cour d’appel saisie d’un recours en révision, d’une sentence entachée de fraude,
rendue dans un arbitrage qualifié d’interne, note sous Paris, 17 février 2015, Revue de l’arbitrage 2015, Issue 3
pp. 861-869, esp. p. 863, nº 12.
23 Ch. Seraglini, J. Ortscheidt, Droit de l’arbitrage interne et international, Montchrestien 2013, esp. nºs 947-948.
See also Th. Clay, Code de l’arbitrage commenté, ed. 2015 LexisNexis, p. 165.
24 P. Mayer, op. cit., esp. p. 864, nº 14.
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B) Review of the parties’ positions and the court’s judgement

29. French case law has for a long time provided that the internationality
of arbitration depends on economic rather than legal criteria25. A first criterion
emerged in 1927, defining a contract that produces a movement of “ebb and
flow” (of capital, goods, services...) over the borders as international26. Later the
definition was broadened and eventually transcribed into French arbitration
law (former Article 1492 and now Article 1504 of the French Code of Civil
Procedure) which states that: “[a]n arbitration is international when international
trade interests are at stake”.
30. In 2011, the French Cour de cassation recalled that, pursuant to such
an economic definition, it is sufficient that the dispute concerns an operation
which does not unfold economically in a single State, regardless of the status
or nationality of the parties, of the law governing the merits or the procedure
of the case, or of the seat of the arbitration27. In summary, what matters – and
French courts review the issue on a case-by-case basis – is really the economic
reality of the legal contentious relationship (“rapport de droit litigieux”)28 or
contentious operation, that is to say the matter in dispute before the arbitrators.
31. In the present case, the parties’ views differed as to the internationality of
the arbitration. According to Tapie, the economic transaction that had triggered,
directly or indirectly, all the disputes between the parties, was the mandate
to sell Adidas’ shares held by the German company Bernard Tapie GmbH.
Such an operation did not take place in France since Bernard Tapie GmbH was
incorporated in Germany, and the sale of shares to foreign companies, which
took place under German law, implied the transfer of securities and capital
across borders. The CDR Companies, on the contrary, argued that the parties’
dispute was not in relation to an economic operation implying the transfer of
goods, services, or funds across the borders, but arose out of a sale mandate
between Tapie and SDBO.
32. The Court of Appeal dismissed Tapie’s argument and stated, in
essence, that the case the arbitrators had to rule upon did not originate from an
arbitration clause contained in the mandate for the sale of a German company’s
shares or the subsequent sale agreements, but from the submission agreement

25 Such an approach differs from several other national arbitration laws. For instance, the UNCITRAL Model Law (on
which the Brazilian Arbitration Act (of 1996, modified in 2015) is based, provides for specific external elements,
such as the parties having, at the time of the conclusion of the arbitration agreement, their places of business in
different States, or the place of arbitration being situated outside the State in which the parties have their places of
business.
26 “Pour être international,le contrat doit produire un mouvement de flux et de reflux au dessus des frontières”: this
criterion is known as the “Matter doctrine”, from the name of the general prosecutor who defined it in respect of
international contracts in the Pélissier du Besset case (French Court of Cassation, 1st Civil Section, 17 May 1927).
27 French Court of Cassation, 1st Civil Section, 26 January 2011, INSERM c/ Fondation Letten Saugstad, nº 09-
-10.198.
28 M. Henry, op. cit., esp. p. 216.
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concluded on 16 November 2007 between the judicial liquidators, Tapie
and the companies CDR Créances and CDR in order to settle “globally and
definitely” their pending legal disputes. The Court pursued in stating that the
disputes covered by the submission agreement concerned the unwinding of
multiple financial ties in France between a bank and its French clients, and
the alleged wrongdoings of the former towards the latter, and therefore did
not involve financing flows or transfer of funds across the borders29. The Court
concluded that the interests of international trade were not involved in the
arbitration, which is of a domestic nature30.
33. In dismissing Tapie’s appeal, the French Cour de cassation shed
additional light on the French courts’ reasoning. The Supreme Court held that it
is at the commencement of the arbitration (i.e. the signature of the submission
agreement) that the internationality of the latter is assessed. In the instant case,
when the arbitration commenced, the foreign companies which had acquired
the shares of Bernard Tapie GmbH had been held free from liability by the
Paris Court of Appeal on 30 September 2005, and therefore were “removed”
from the dispute – and the arbitrators were bound to respect the authority of res
judicata attached to the irrevocable judgments previously rendered. Therefore,
the situation changed and the international dimension that had pre-existed
disappeared: the disputes before the arbitrators were thus limited to transactions
unfolding economically in France, so that they no longer involved the interests
of international trade31.

C) Implications of the solution

Understanding the true motive and meaning of the French courts’ solution
gave rise to debate. Several commentators, while admitting that the solution
was fair, contested the justification brought by the French judge in its support.
34. First, as stressed by one commentator, if one of the claims (in our case
the claim regarding the inexecution of the sale mandate by the bank) brought
before the arbitrators is of an international nature, the entire case should be
deemed international, notwithstanding the fact that other claims are domestic32.
Second, it is also irrelevant whether the outcome of the arbitration would lead
to transfer of funds across borders; what matters is the contentious operation33.

29 Paris Court of Appeal, 17 February 2015, nº 13/13278, esp. p. 15.

30 The Paris Court of Appeal also dismissed an argument based on the fact that the notification of the arbitral awards
referred to the provisions applicable to international arbitration. Such an argument is flawed as the internationality
of an arbitration cannot depend upon the parties’ will.
31 French Court of Cassation, 1st Civil Section, 30 June 2016, nºs 15-13.755, 15-14.155 and 15-13.904, esp.
p. 5 out of 9.
32 D. Mouralis, op. cit., esp. nº 11.
33 Ibidem.
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35. The question at the heart of the case was how wide should the scope
of the “contentious operation” be: whether the judge should construe the
operation in its entirety including the underlying operation, or look only at the
specific operation which contained the agreement to arbitrate, in isolation of
the wider operation. French case law has traditionally adopted, in this respect,
a rather liberal approach considering a dispute as international as soon as an
international element can be associated to the dispute34.
36. In this context, the solution of the Tapie case can be interpreted
as a shift from this liberal approach towards a more restrictive vision of the
internationality of a dispute. Certain scholars opined that it is only correct to
consider the relationship between the bank and its client (Tapie) in isolation, as
the arbitral tribunal had to rule upon the allegations of wrongdoing of the bank
in the execution of the sale mandate, and not upon the Adidas’ sale35. Similarly,
other scholars welcomed a solution rediscovering the true raison d’être of the
distinction between international and domestic arbitration: when a contentious
dispute involves parties located in several jurisdictions so that several judicial
judges could be competent over the dispute, the liberal regime of international
arbitration should be preferred; on the contrary, when the parties and the seat
of arbitration are all located in the same country and there is no reason for the
parties to have recourse to a foreign judge, it would be difficult to find reasons
not to apply the domestic arbitration regime.
37. Another possible interpretation is that the solution of the French
Courts in the Tapie Case is very much influenced by the facts at hand. The
reference to the submission agreement could be understood as emphasising
the narrow scope of the mission of the arbitral tribunal before which the parties
only brought specific disputed points36.
38. That being said, it remains that the domestic nature of the arbitration
was, in the author’s view, nowhere near obvious. In light of French case law,
the main operation from which most of the disputes arose was the sale of a
German company, implying financing flows across the borders. It is therefore
possible to criticize (as have other scholars)37 that the courts in the Tapie case,
while distancing themselves from existing case law, did not further develop the
reasons why they preferred to adopt a strict interpretation of the scope of the
submission agreement, rather than looking at the main economic operation.

34 See for instance the Courrège Case (Paris Court of Appeal, 5 April 1990, Courrège Design v. Sté André Courrège,
Revue de l’arbitrage, 1992, Issue 1 pp. 117-124, comm. H. Synvet) where it was ruled that although the dispute
involved two French companies, it referred to the relationship between one of them and a foreign company.
35 M. Henry, Arbitrage Tapie les affres d’un préjudice moral immoral, ASA Bulletin 2016, Vol. 34, Issue 1, pp. 207-
-231, esp. p. 219.
36 D. Mouralis, op. cit., esp. nº 13.
37 A. de Fontmichel, op. cit., esp. p. 285 and S. Bolée, op. cit., esp. pp. 477-478. See also a critical view of the
Court’s solution: B. Le Bars, Arbitrage commercial international, les grands arrêts du droit français, LexisNexis,
2016, esp. pp. 12-13.
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39. Beyond the above-mentioned legal considerations, it seems plausible
to suggest that the real reason that led the Court to consider that the arbitration
was of domestic nature was that it needed to find a way to declare the review
admissible, and consequently rule upon the fraud allegations38. In effect, if
the dispute were to be considered as international, it would have had to be
heard again by the arbitral tribunal. Such an option, i.e. that a tribunal that
was accused of fraud itself reviewed a case which it had already examined and
which award was withdrawn by the State courts because of fraud, appeared, of
course, absurd.
40. The real question that gave rise to the debate over the nature of the
arbitration was, in effect, the alleged fraud committed by Tapie and/or his
counsel, and one of the arbitrators, to favour Tapie in the arbitration.

II – THE ISSUE OF FRAUD

41. Before analysing the characterization of fraud by the Court (B.), it is
essential to present the conditions and particularities of the judicial review (A.),
a mechanism rarely used by French courts in the context of an arbitral award.

A) The mechanism of judicial review

42. Under French law, the judicial review of a judgment (be it a judicial
decision or an arbitral award) shall be filed within two months from when
the requesting party obtains knowledge of the facts on which it then bases its
request for review, in the present case, the fraud39. Three initial comments can
be made: first, the starting date is not the occurrence of the underlying facts but
the knowledge thereof by the requesting parties. This is of utmost importance in
the context of fraudulent acts, which are concealed. Second, the facts should be
such that, if confirmed, they constitute fraud, not merely suspicious behaviour;
and third, the burden of proof to establish the date on which it acquired
knowledge of the facts justifying a review lies on the requesting party.
43. The CDR Companies therefore had the burden of proving that they
had discovered the facts underlying their application for review no more than
two months before filing such application (i.e. at the earliest on 28 April 2013,
as the review was filed on 28 June 2013). Tapie argued that the CDR Companies
had discovered the alleged circumstances supporting the existence of fraud
in 2008 and 2010, and therefore the CDR Companies were precluded from
invoking these facts in support of an application for review.

38 A. de Fontmichel, op. cit., esp. p. 285.

39 Article 596 of the French Code of Civil.
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44. To determine whether the CDR Companies were precluded, the Court
of Appeal examined, in this respect, each factual element of the record – a
summary of which is set out below40. The Court of Appeal noted that the evidence
gathered in 2008 “could not be regarded as decisive”. According to the Court,
it is only on 7 June 2013, at the moment when the CDR Companies acceded
as a civil party (“partie civile”) to the criminal investigation file regarding abuse
of social powers and concealment, forgery, embezzlement of public funds,
complicity and concealment of these offenses, and fraud committed in a gang41,
that they gained “access to decisive documents” demonstrating that, not only
had Mr Estoup failed to declare his ties with Tapie’s counsel, but had, in concert
with Mr Lantourne, counsel for Mr Tapie, expressly denied any relationship
with Mr Tapie, when the CDR Companies sought clarification in 200842. The
Court concluded that the CDR Companies had “no means before the searches
and hearings conducted by the investigating authorities revealed facts and
documents concealed by the protagonists, to substantiate what was then merely
suspicion”43. As a consequence, the Court ruled that the CDR Companies could
not have been aware of the circumstances in question, beyond the two months
prior to the review – and therefore they showed no negligence in that respect.
45. The Court of Appeal’s solution appears to be satisfactory, as it is
clear that the various factual elements retrieved from the criminal investigation
constituted convincing factors for the CDR Companies that the arbitration award
was the result of fraud. It is now apt to look at these elements, which were
characterised by the CDR Companies as fraud, and leading to the withdrawal
of the arbitral awards.

B) The characterization of Fraud

46. Before analysing the reasoning of the Court regarding the
characterization of the fraud, several interesting legal questions can be
discussed.
47. Pursuant to Article 595 1º of the Code of Civil Procedure, the French
Courts had to decide whether the Tapie awards were “issued by fraud”. Although
the notion of fraud is not defined under French law, it is generally recognized
as constituting dishonest, disloyal, deceitful acts or deception where a person
intentionally uses legal rules to obtain an advantage that he or she is not
entitled to.

40 See infra nº 50.

41 See supra nº 14.
42 M. Henry, op. cit., esp. p. 222.
43 Paris Court of Appeal, 17 February 2015, nº 13/13278, esp. p. 22.
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48. The Court specified that the fraudulent acts can be proved based on
elements available before the filing of the judicial review, and also during the
review proceedings44.
49. Another issue was whether the assessment of fraud should be limited
to the fraudulent acts of the parties which benefited from the fraud, i.e. in our
case Tapie, or if other protagonists’ acts and concealments could be considered.
The Court of Appeal’s response is clear; the notion of fraud is wide enough
to encompass all sorts of actions and fraudulent schemes involving persons
other than the litigants. In the instant case, this was a central question, as the
main elements regarding the fraud concerned one of the arbitrators and Tapie’s
counsel. The Court held, in this respect, that Mr Estoup’s deception had been
perpetrated “in connivance” with Tapie and his counsel, Mr Lantourne45.
50. When it comes to the analysis of the elements brought by the CDR
Companies, the Paris Court of Appeal conducted a very detailed examination,
with very severe remarks towards the protagonists of the case. It focused on the
following elements46.
– A fees memorandum dated 6 July 1999 was retrieved and brought
to the CDR Companies’ knowledge. The memorandum, prepared by
Mr Lantourne and addressed to the bankruptcy receivers of Tapie’s
companies, mentioned a meeting with and a note to Mr Estoup. When
questioned on the purpose of the meeting and the note, Mr Lantourne
explained that the memorandum was wrongly imputed to the Tapie
matter; it concerned, in reality, a completely unrelated matter.
Mr Estoup confirmed that he had never delivered a legal opinion
or participated in an arbitration involving Tapie (but only in three
arbitrations involving Mr Lantourne). Examinations of Mr Lantourne’s
employees and verifications into his accountability systems revealed
that Mr Lantourne’s explanations were false and that fraud had been
used to conceal the fact that the memorandum related to the Tapie
matter.
– Preparation of the arbitration: while the submission agreement
between Tapie and the CDR Companies was entered into on
16 November 2007, the criminal investigation revealed several
instances of prior contact between Mr Estoup and Tapie’s counsel,
Mr Lantourne: in Mr Estoup’s agenda, the words “15h Tapie” were
written on the date 30 August 2006; the next day an associate of Mr
Lantourne’s firm prepared a memorandum regarding the option of

44 Paris Court of Appeal, 17 February 2015, nº 13/13278, esp. p. 22.

45 M. Henry, op. cit., esp. p. 226.
46 Paris Court of Appeal, 17 February 2015, nº 13/13278, esp. p. 22-27.
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arbitration; on 5 September 2006, a letter was sent to Mr Estoup with
several exhibits from the litigation regarding the sale of Adidas; and
on 12 September 2006, the same associate’s timesheets indicated
that a letter had been sent to Mr Tapie and Mr Estoup.
– Relationship with the association of minority shareholders: various
elements (letters, notes) seem to show that Mr Estoup tried to convince
the association of minority shareholders of Tapie’s holding company
to get involved in the litigation against Crédit Lyonnais.
– Close personal contact between Bernard Tapie and Pierre Estoup: a
book written by Bernard Tapie and found at Mr Estoup’s daughter’s
domicile contained a dedication “to President Estoupe [sic]”, in
which the author expressed his “endless gratitude […]”, highlighted
that Mr Estoup’s “support has changed [his] destiny”, thanked him
for “having the intelligence and the heart to seek the truth behind
the clichés and appearances” and affirmed his “affection”. The Court
held that such a note demonstrated concrete and decisive support,
which should be distinguished from an impersonal and banal
dedication, and concluded that “the dissimulation of these ancient,
close and repeated ties participates in the accomplishment of the
purpose hatched by the arbitrator in concert with Mr Tapie and his
representative, to promote during the arbitration, the interests of that
party”.
– Mr Estoup’s behaviour during the arbitral proceedings: the elements
used by the CDR Companies showed that Mr Estoup (and this is maybe
the most important part of the Court of Appeal’s reasoning) played
a preponderant role in the conduct of the arbitration: Mr Estoup,
although not acting as president of the arbitral tribunal, prepared the
draft of the terms of reference, listing the main issues to be settled
in the arbitration, so as to favour Tapie’s position. Moreover, these
issues were very similar to the issues conveyed by Mr Lantourne
to Mr Estoup before the signing of the terms of reference and their
transmission to the CDR Companies’ counsel. Mr Estoup admitted
that he prepared the drafts of all correspondence to the parties, the
procedural orders, the procedural timetable, as well as the arbitral
awards. Mr Estoup did not hesitate to constantly criticise the CDR
Companies’ position and the quality of their written submissions.
The moral damages awarded, mentioned above, were also, in the
Court’s view, an illustrationof Mr Estoup’s influence: the criminal
file showed that Mr Estoup conveyed the idea that the receivers of
Tapie’s companies were concerned that the liabilities of the bankrupt
companies would appear higher than expected, and that the moral
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damages allocated to Tapie could be used to reduce these liabilities.
In the end, the Court had strong words for the three arbitrators, in
finding that Mr Estoup played a leading role and marginalized his
co-arbitrators, who, in turn, took a back seat in the arbitral process
for convenience, or owing to excess of confidence, bias or simply
incompetence!
51. The Court concluded that “it is thus demonstrated that Mr Estoup has
exercised, in disregard of the requirement of impartiality which is of the very
essence of the arbitral function, by managing to have an unlimited dominance
on the arbitral proceedings, by presenting the dispute unequivocally and by
deliberately and systematically orienting the tribunal’s reasoning in favour of
the interests of the party he intended to promote, by conniving with the latter
and his counsel, a decisive influence and has determined by fraud the decision
of the arbitral tribunal”. Consequently, the arbitral awards rendered by the
tribunal were withdrawn.
52. It is interesting to note that the evidence originating from the criminal
investigations greatly facilitated the demonstration of fraudulent behaviour.
Moreover, the secrecy of the criminal investigations did not prevent the use of
evidence from the criminal file in the arbitration, as the evidence was produced
by the public prosecutor himself, to whom investigative secrecy does not apply
in the context of judicial review.
53. This leads to another question, underlined by one commentator47,
relating to the equality of arms between the parties. The equality of arms
principle is defined by the European Court of Human Rights as “the obligation
that each party shall have a reasonable opportunity of presenting his case to the
court under conditions which do not place him at a substantial disadvantage
vis-à-vis his opponent”48. In the Tapie case, the burden of proof regarding the
existence of fraud was, in practice, transferred from the CDR Companies to the
public prosecutor, who transmitted the documents from the criminal file. Is this
a situation characterized by inequality between the parties, as defined by the
ECHR? It is difficult to answer in a definitive manner: on the one hand, while the
judicial review was a purely civil matter which should be clearly distinguished
from the criminal action, in French law, the victims of a criminal offence that
participate in a criminal case as “partie civile” are not subject to the secrecy of
the investigation and consequently the CDR Companies remained free, in any
event, to use the documents originating from the criminal file. On the other
hand, the task of the CDR Companies was, de facto, particularly facilitated by
the public prosecutor’s intervention – a situation not uncommon when the State

47 A. de Fontmichel, op. cit., esp. pp. 289-290.

48 ECHR, 27 October 1993, Dombo Beheer v. The Netherlands.
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uses its two hats: litigant on the one hand, and entity exercising its sovereign
powers on the other.

CONCLUSION
54. As already seen, the Cour de cassation dismissed, on 18 May 2017,
Tapie’s recourse against the Paris Court of Appeal’s decision on the merits of the
case. Tapie will have therefore to reimburse the monies received in execution
of the arbitration. This put an end to the arbitration aspect of the saga. But what
about other aspects and, above all, what consequences for French arbitration,
more globally?
55. Three remarks can be made at this stage: two as to the foreseeable
next steps in the arbitration case and a general remark regarding public opinion
on arbitration:
– The immediate next step in the Tapie case is the trial of Messrs. Tapie,
Estoup, Lantourne et al. before the Paris criminal court which will
rule upon their respective liability for abuse of social powers and
concealment, forgery, embezzlement of public funds, complicity and
concealment of these offenses and fraud committed in a gang. As
Prof. Thomas Clay said to GAR, it remains to be seen “whether any
criminal convictions will follow relating to the arbitration”49. Indeed,
we have seen that the French civil courts relied heavily on elements
originating from the criminal file and held that the arbitration was
tainted by fraud. Should the criminal court decide that Messrs. Tapie,
Estoup, Lantourne are not liable for the abovementioned offences it
would create an O. J. Simpson-like situation (actually a reverse-O. J.
Simpson situation). In that case the jury in the criminal proceedings
pronounced a verdict of “not guilty” for the two murders, and two
years later a civil jury found Simpson liable for the wrongful death of
the two victims and ordered him to pay $33,500,000 as damages.
– A (much) less immediate step could be the filing of a liability action
against the co-arbitrators. Indeed, beyond the situation of Mr Estoup
who is facing criminal charges which may trigger civil compensation,
it may be interesting to discuss the potential liability of the other two
arbitrators for negligence. Under French law, arbitrator’s liability is
personal (as opposed to the State’s liability in case of miscarriage
of justice), contractual and civil liability based on the existence of
an arbitrator’s contract entered into with the disputing parties, and

49 Global Arbitration Review, “Tapie: The end of the end of the affair?”, 20 May 2017.
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each arbitrator. According to French case law, an arbitrator is liable
for fraud, gross negligence in the exercise of his or her duties, or for
denial of justice50. In the present case and in light of the Paris Court of
Appeal decision which forcefully “accuses” the co-arbitrators51, it is
not impossible to imagine a civil claim against the co-arbitrators who
failed to hold effective and fair deliberations52. In any event, given
its publicity, the Tapie arbitration may certainly have a significant
impact on the career of the arbitrators, irrespective of any legal action
against them.
56. The Tapie case attracted much media attention to arbitration in
general; unfortunately, such publicity was mostly negative and contributed to
the general mistrust of the public, the politics and the media towards arbitration.
At the time where the scandal around the Tapie arbitration unfolds, a large
anti investor-state dispute settlement movement spread in France, as well as
in many parts of the world. It is probably not a coincidence that the Conseil
d’Etat affirmed its power to review international arbitration awards arising
from certain public law contracts (allowing, potentially, for the taking into
consideration of State prerogatives), despite the fact that the review of arbitral
awards traditionally falls within the jurisdiction of Civil courts53. In this context,
it is essential to note that what happened in Tapie arbitration is not the result
of a systemic failure. It is a result of individual action of potentially criminal
character, combined with the inaction of individuals who failed to fulfil their
duties. It would be extremely naïve to think that such circumstances will never
present themselves again; but it is evident that they are absolutely exceptional.
Above all, and in any event, the Tapie case also shows that in such exceptional
circumstances, the system provides for the means to sanction fraud, and an
arbitrator’s failure to perform his or her functions.

***

50 French Court of Cassation, 1st Civil Section, 15 January 2014, nº 11-17.196.

51 See supra, nº 50 last bullet point.
52 A. de Fontmichel, op. cit., esp. pp. 291-292.
53 French supreme administrative court, 7th Chamber of the Litigation Section, 9 November 2016, société Fosmax
LNG nº 388806.