The management of the CDR for the 2007 and 2008 financial years falls within the context of its backing to the Caisse des Dépôts et Consignations. This worked well, allowing a reduction in overheads and the mobilization of adequate skills. However, the Caisse des Dépôts was not solicited in the Adidas / Tapie case, other than for administrative assistance.
The management of the Adidas / Tapie file during this period revealed dysfunctions in the decision-making process of the CDR and the role of its board of directors. The latter was not fully informed of all the issues of the arbitration compromise.
On the merits, the decision taken by the CDR to accept the request of the liquidators of the companies of the Tapie group and of the Tapie spouses to enter into an arbitration procedure was motivated by the concern to close the Adidas / Tapie disputes more quickly, but had two drawbacks: the uncertainty about the legal possibility for the CDR to compromise on these cases and the refusal of Crédit Lyonnais to participate in this procedure, which weakened the defense and called into question a deductible of € 12 million accepted at the time. by Crédit Lyonnais.
The terms accepted in the drafting of the compromise amplified the risk run in this procedure, mainly with regard to the amounts accepted to cap the demands of the opposing party (€ 295 million in non-pecuniary damage before legal interest and € 50 million in non-pecuniary damage) or waiver from the compromise of the possibility of appealing against the judgment, waiver which deprived the CDR of guarantees in relation to respect for the law and the authority of res judicata.
The CDR accounts for 2007 do not comply with the principle of prudence and those for 2008 do not comply with the texts governing the financial relations between CDR and EPFR within the Crédit Lyonnais defeasance.
The financial balance sheet for the arbitration to date amounts to € 304.6 million for the CDR, to which the liquidators’ tax will be added later, capped at € 3.8 million. The total cost for the State is lower because it must take into account the tax claims recovered on the liquidation, not to mention the tax applicable to the sums paid for material damage.
Other threats still weigh on the CDR portfolio, mainly in respect of the AIG litigation and the consequences of the Executive Life affair.
The Court audited the accounts and the management of the Consortium of achievements (CDR) for the financial years 2007 and 2008, taking into account subsequent information relating to questions raised during this period.
This investigation follows the checks carried out by the Court for the period from 1995 to 1999 inclusive, then for the years 2000 to 2006. They were followed by a specific public report in December 2000 and an insertion in the annual public report of 2008 on the results of the management of defaults.
The control was notified on July 3, 2009 to the president of the CDR as well as to the general manager of the CDC and to the general manager of the State participation agency (APE). A statement of provisional findings was sent on January 6, 2010 to the CEO of CDR and on January 8 to the CEO of the APE, as well as for extracts to the head of the General Economic and Financial Control department, to the CEO of the Caisse des Dépôts et Consignations and to Mr. Patrick Peugeot, director resigning from CDR. A copy was also sent on May 12, 2008 to Mr. Stéphane Richard, as former chief of staff of the Minister responsible for the economy. The CEO of CDR,
The special report takes into account the comments or additions made during this contradictory phase.
The Court recalls that the Adidas / Tapie arbitration is covered by a confidentiality clause entered into by the parties. It covers the award itself and all the documents exchanged during the arbitral proceedings. This clause was lifted with regard to the Finance Committee of the National Assembly during the hearings of September 2008 and with regard to the Court of Auditors as part of its investigation. In addition, the sentence of July 7, 2008 was posted online on the Express site, which the CDR has made note by bailiff.
Certain information on ongoing litigation, particularly when it has an international dimension, is by nature confidential because of the interests at stake.
It is up to the recipients to ensure the confidentiality of any information contained in this document which may still be of such a nature.
Following this control by the CDR and that of the EPFR, the Court sent a summary to the Prime Minister on November 12, 2010. The latter replied on January 19, 2011, and the summary and this response were sent to the chairman of the finance committee of the National Assembly and to that of the Senate finance committee on February 3, 2011.
PART I: MANAGEMENT OF CDR IN 2007 AND 2008
Under the terms of the law n ° 95-1251 of November 28, 1995 relating to the action of the State in the recovery plans of Crédit Lyonnais and the Comptoir des Entrepreneurs, the CDR was given the task of managing the assets of Crédit Lyonnais which were the subject of a cantonment. As such, it benefits from financial support provided, in any form, by EPFR. The EPFR has a dual mission of financing the defeasance and monitoring the CDR to preserve the financial interests of the State. The CDR is subject to a specific check on documents and on site by authorized agents.
In its last specific report on the CDR of June 17, 2008, the Court noted certain dysfunctions of the CDR: high overheads, insufficient control of fees for external services, lack of method and rigor.
Since 1 st January 2007, CDR, which was transformed into a limited company with Board of Directors December 21, 2001 has entered a new phase, called a run-off. The streamlining of its structure is justified by the complete backing of its administrative and operational management to the Caisse des Dépôts et Consignations.
- THE GOVERNING BODIES
The articles of association of CDR were amended by the Combined General Meeting of December 20, 2006.
- COMPOSITION OF THE BOARD OF DIRECTORS
Directors are appointed for a term of three years, which expires at the end of the General Meeting responsible for approving the accounts for the past year. They are eligible for re-election.
During the reform at the end of 2006, the number of members of the board of directors was reduced from nine to five.
The members appointed by the General Meeting of December 20, 2006 were as follows: Mr. Jean François Rocchi, Chairman of the Board of Directors and Chief Executive Officer, MM. Francis Gavois, Patrick Peugeot and Didier Floquet, directors, as well as EPFR represented by its chairman, Mr. Bertrand Schneiter.
In accordance with the provisions of the law of November 28, 1995 (1), the members of the CDR board of directors, appointed by the General Assembly of December 20, 2006, were approved by the Minister responsible for the economy, by letter from the April 23, 2007. Two changes in the composition of the board took place subsequently.
The first resulted from the departure of Mr. Bertrand Schneiter, reached on July 22, 2007 by the age limit of 65 years relating to the activity of civil servants of the State (2). He was very involved in the Adidas / Tapie case and had constantly supported the principle of “neither rich nor bankrupt ” (3). The minister then extended his mandate, the end of which was theoretically set for October 12, on an interim basis.
Mr. Bernard Scemama succeeded him on September 15, 2007 and was appointed as permanent representative of EPFR on the board of directors of CDR by the board of directors of the public establishment at its meeting of September 18, 2007. He thus participated in the board of directors of the CDR on the very day of his appointment on September 18, 2007 and was immediately called upon to rule on the principle of resorting to an arbitration procedure in the Adidas / Tapie case.
However, he himself reached the age limit of 65, as of December 14, 2007, three months after his appointment. He could therefore only be kept in office beyond that date on an interim basis and for a limited period, while a successor was appointed to him. It was finally extended until February 2009, ie a period of fifteen months which clearly exceeds the duration of the appointment of a new president, as noted by the State Participation Agency (APE).
The second change in the composition of the CDR board was caused by the resignation of Mr. Patrick Peugeot from his duties as director at the end of the board of directors of July 28, 2008. His letter of resignation, addressed to the chairman on same day with effect from 1 st September 2008, invokes the following reasons:
“It seems to me that the supervisory authorities tend to take the initiative (on so-called” non-quantifiable “cases), without taking into account the opinions that the council may issue, to the point, moreover, in the case of ADIDAS, to inform the press of decisions even before we meet to discuss them. In addition, the interpretation of the public interest revealed by these decisions now differs greatly from the one we have used since 2002. ”
However, he was not replaced before the renewal of the Board of Directors, which took place at the end of the period scheduled for the General Meeting of June 30, 2010 (4). The workforce was thus reduced to four members, with the casting vote of the president.
(1) Article 14: “The corporate officers of the companies mentioned in the first paragraph of article 13 of this law are approved by the Minister responsible for the economy.
(2) Article 7 of the law of September 13, 1984 provides that, for State public establishments, whatever their nature and, except as otherwise provided for by the regulatory legislative texts governing the establishment or category of establishment to which it belongs, an age limit of 65 applies to the chairmen of the board of directors, general managers and directors.
(3) See infra pages 15 et sq.
(4) During this General Meeting, the four outgoing directors were renewed. Mr. François Lemasson was appointed to fill the vacant post.
For nearly two years including the crucial period of the Adidas / Tapie arbitration. The composition of the board during a crucial period deviated from the provisions of the Commercial Code applicable to public limited companies (5).
Attendance fees may be allocated to the board of directors by the General Assembly, the board then distributes them freely among its members. The amount of attendance fees was set at € 60,000 in 2007 as in 2008, distributed among the directors in office.
- THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
The chairman is elected from among its members for a term that may not exceed that of his mandate as director. He is eligible for re-election. His remuneration is determined by the board of directors.
In a note to the Minister of November 15, 2006, the APE recommended an application which had been rejected on the grounds that the person concerned had been in office at the Caisse des Dépôts et Consignations from 1984 to 2003 (6). Subsequently, Mr. Rocchi was appointed member of the board of directors of CDR by the General Meeting of December 20, 2006 and it is the board which on the same day appointed him chairman and chief executive officer, on the proposal of the chairman. of the EPFR.
The articles of association of the CDR provide, as in any public limited company with a board of directors since law n ° 2001-420 of May 15, 2001 relating to new economic regulations (NRE law), the possibility of combining the functions of chairman of the board of administration and general manager or to separate them (7). Like his predecessor, the chairman, installed at the end of 2006, assumed the function of managing director. On the other hand, that of deputy managing director has disappeared.
It is provided for in article 12 of the statutes of the CDR that the managing director and each deputy managing director are approved by the minister in charge of the economy, prior to their appointment. The appointment of Mr. Rocchi as Director General of CDR has never been formally approved by the Minister.
In accordance with a letter from the Minister of the Economy, Finance and Industry and the Minister for Industry, the remuneration of Mr. Rocchi, seconded to the Mining and Chemical Company (EMC), was paid in full by the EMC for the years 2007 and 2008 and reimbursed in the amount of a quota by the CDR.
(5) Article L. 225-24 of the Commercial Code provides that in the event of a vacancy due to death or resignation of one or more director seats, the board of directors may, between two general meetings, proceed provisional appointments. The statutory provisions enabled the CDR to ask the State to initiate the procedure for replacing an administrator earlier.
(6) “The appointment of a CEO from the Caisse des Dépôts could be potentially conflicting”, according to the annotation of the Minister who asked “to make, if necessary, other proposals to the President of the EPFR”.
(7) Under the terms of the NRE law, it is up to the board of directors to choose between one of the two possible methods of exercising general management.
The remuneration trajectory for CDR was set as follows for the duration of his mandate by the Board of Directors on December 20, 2006: € 100,000 in 2007, € 118,000 for 2008, € 150,000 for 2009. As the Court l ‘ noted, the growth in compensation paid by CDR was inversely proportional to the decrease in its portfolio. Finally, the remuneration for 2009 was reduced to € 112,500, his duties as EMC liquidator having been extended at the same time (8). Mr. Rocchi was then appointed President of the Bureau of Geological and Mining Research (BRGM) on November 25, 2009.
- THE FUNCTIONING OF THE BOARD OF DIRECTORS
The board of directors met very regularly. He appears to have been properly informed, subject to arbitration proceedings in the Adidas / Tapie case (see below).
The minutes of the boards of directors were sometimes validated late. Thus, those of the sessions of September 12, September 18 and October 2, 2007 were only validated during the session of October 24, 2007, even though they covered a critical period for the follow-up of the Adidas / Tapie file. (recourse to the arbitration procedure and content of the compromise). Likewise, the minutes of the meetings of June 27, 2008, July 17, 2008, July 24, 2008 and July 28, 2008 were not approved until October 3, 2008. In order to “not slow down the smooth running of the meeting” , they were approved as is, subject to review by the administrators within eight days (9).
- THE AUDIT COMMITTEE
On December 20, 2006, the Board decided on the composition of an audit committee, the operating methods of which were set in March 2007. The remuneration committee disappeared, as, in 2004, the disposal committee and risks.
The audit committee was chaired by Mr. Patrick Peugeot until his resignation at the end of July 2008 and then by Mr. Francis Gavois appointed chairman at the meeting of the audit committee on October 3, 2008. The committee also took note of the during this meeting the appointment of Mr. Floquet, who had applied as a member of the audit committee (10).
It met three times in 2007 (May 9, June 25, December 5) and five times in 2008 (February 11, April 15, October 3, November 26, December 11). He regularly made the
update on risks, execution forecasts, accounts and provisions, as well as changes in overheads.
However, as the minutes of his meetings attest, he did not hear any report from the Caisse des Dépôts services on the evolution of the Adidas / Tapie case and only had to know about it on two occasions. : December 5, 2007 on a various question asked by the president, who wanted to know if the compromise of arbitration had been signed; then on November 26, 2008, when the Caisse’s services indicated with regard to the first profit forecasts for 2008 that, following the update on the accounting treatment which had been made, the entire sentence (including damages for moral damage) had to be included in the non-quantifiable risks.
- THE MONITORING MISSION
The law of November 28, 1995 lays down the principle of a specific control exercised by agents empowered to control documents and on the spot the companies of cantonment of the defeasances respectively of Crédit Lyonnais and of the Comptoir des Entrepreneurs, as well as their subsidiaries. At the end of their control operations, they send the CDR and the EPFR board of directors a report which must have been drawn up on both sides.
The decree of May 30, 1997 specifies that the members of the mission responsible for exercising on a permanent basis the control provided for by law (commonly referred to as “control mission”) are appointed by order of the Minister responsible for the economy and chosen from among the Category A civil servants. This specific control is therefore legally distinct, despite an obvious proximity, from the economic and financial control of the State provided for by the decree of May 26, 1955.
The decree of 22 December 1995 on the statutes of the EPFR specifies that the board of directors of the public establishment is the recipient of the reports produced by the control mission.
A management agreement of January 30, 1998 between the State and the EPFR specifies the modalities according to which the agents of the control mission assist the board of directors of the public establishment, in accordance with article 12-5- ” CDR monitoring and control ” in Annex 12 of the protocol. Under the terms of this article, the control mission:
– provides the EPFR board of directors with the information necessary for the performance of its supervisory role, in particular on the relevance of the strategic orientations proposed by the CDR, the adequacy of the multi-year program of disposals and the proposed quarterly plans and achieved in relation to the strategic orientations, the adequacy of the cash flow plan proposed by the CDR with the financial interests of the State, the annual operating budget proposed by the CDR and its implementation;
- LITIGATION WITH CDR STAFF
In principle, the departure of the last CDR employees (around 20) was scheduled for the end of 2006, as part of the corporate social plan that had been put in place. However, in addition to the former president who remained present for four months at the beginning of 2007 as an advisor to the new president to ensure the transition, several employees were maintained during the first quarter and two protected employees were kept for longer.
Despite the advantageous conditions of the social plan, fifteen cases were appealed to the industrial tribunal. These fifteen employees have already received, as part of the corporate social plan, the sum of € 2.9 million. All claims for damages amount to € 2.03 million, which have been provisioned. The litigation is still ongoing to the knowledge of the Court.
- THE LEGAL FRAMEWORK
An assistance contract, signed on April 8, 2005, defines the framework for the assistance that will be provided by the Caisse des Dépôts et Consignations to the administrative management of CDR. This assistance is presented as evolving and ” ” called to increase “ as the CDR decreases. The main provisions are as follows:
– a reconciliation is planned each year between the Caisse des Dépôts and the CDR, when the latter draws up its budget, in order to adapt the assistance modalities in the form of an amendment, if necessary;
– the assistance contract provides in its article 6 that, to ensure that the Fund is properly informed, the CDR will ensure that its general meeting is appointed, on the proposal of its board of directors, a non-voting director. will propose and who will be able to participate in the meetings of the board of directors, without voting rights, under the conditions set by the articles of association;
– under the terms of this assistance mission, the Caisse des Dépôts has no obligation of result but only an obligation of means. The implementation of its liability towards the CDR could only result from proof of a culpable breach of the consortium’s rules and procedures, and more generally from negligence or faults which it would have committed in respect of its obligations of means;
– the Caisse de Dépôts is reimbursed without margin for all its direct or indirect costs incurred in the performance of its assistance mission, according to the terms set out in the appendix;
– the agreement has a duration of two years from the date of signature and is renewable by tacit agreement for a period of two years, unless one of the parties has denounced it at least six months before the term. No denunciation took place at the end of the first period, i.e. on December 31, 2008.
By amendment signed on 18 December 2006 to mark the passage of the bad bank to asset management as of 1 st January 2007, the Caisse is entrusted the full administrative and operational management of the CDR.
The main provisions of this rider to the assistance contract are as follows:
– CDC takes care of the management and disposal of assets (in particular buildings, receivables, securities) which are divided into two categories: “major” assets and other assets. It must seek the authorization of the CDR before proceeding with the realization of the assets identified as “major”, under conditions set by the CDR which may go as far as giving it a specific mandate. For other assets, it must be given a global mandate.
– The Deposit “supports directly from 1 st January 2007 the management of litigation and reports its work to CDR.” The files are classified in the appendix to the agreement in major files and other files. The CDR sets the strategic and procedural orientations to be observed for each of the major files, after consultation with the Fund. Any decision-making or any action to be taken, as long as it is of real importance for the outcome of the dispute, must be subject to prior validation by the CDR, on the proposal of the Fund. If necessary, the CDR can give a specific mandate to the Fund to manage “all acts”(major files) or “all procedural acts” (other files), and documents necessary for the management of these disputes. Once a month, the Fund submits a progress report to the CDR, and if necessary reports more frequently for major litigation files.
– CDR reserves the right to call on service providers (third parties or subsidiaries), under its responsibility, for the performance of some of its missions. These service providers, who can be lawyers, auditors, accountants, etc. maintain a direct contractual relationship with the CDR, which covers the fees paid to them. However, the latter undertakes to closely associate the Caisse des Dépôts in its relations with this category of partners, since it is it which, under the terms of the assistance agreement, ensures the overall management. For litigation files, it is up to the Fund, on a case-by-case basis and periodically, to study the conditions under which the advisory fees are likely to be reduced,
– When it acts as an agent in the cases provided for by the amendment, the obligations of the Caisse des Dépôts result from the application of the relevant provisions of the Civil Code.
– The Fund is also responsible for all support functions (social life, management of CDR service providers) as well as the implementation of operations to dissolve group entities and monitoring off-balance sheet commitments.
– It is remunerated on presentation of estimated quarterly invoices with an adjustment at the end of the year, and any deviations from the provisional and corrective budgets must be explained.
– The amended Article 6 having abolished the position of censor, a representative of the Fund participates in the boards of directors of the CDR, when the latter reports on the matters for which it is responsible, but the Chairman and Chief Executive Officer may decide. otherwise when the board of directors (a word missing-Editor’s note) on the performance by itself of its obligations.
- THE CONDITIONS FOR IMPLEMENTING THE ASSISTANCE CONTRACT
Although the assistance contract and its amendment do not deal with the distribution of powers, a reference to the minutes of the meeting of the CDR board of directors of January 24, 2007 sheds light on the spirit: “the chairman comes back on the general architecture of the assistance contract, indicating that a distinction is made between files for which the CDC has full and entire responsibility and major files, the list of which was appended to the agreement and which are the responsibility of the CDR’s board of directors “.
To assess the quality of the administrative and operational management of the Fund, the Adidas / Tapie file should be distinguished from other files.
- A very limited involvement in the Adidas / Tapie file
The Court noted that the Caisse des Dépôts had intervened little in the management of the Adidas / Tapie arbitration case, except to ensure the administrative follow-up (conservation of the documents of the procedure, follow-up of lawyers’ fees, accounting of the execution of sentences).
– According to the president of the CDR, the Caisse des Dépôts did not wish to get involved in this file.
– According to its president, the Fund has remained at the disposal of the CDR, which fully retains the management of operations and sets the guidelines for a “major” file, but its intervention was logically adapted in view of the specificity and the confidentiality of the procedure, which was decided and implemented without seeking his advice.
The main drawback of this situation is that the management of the arbitration procedure in the Adidas / Tapie case rested exclusively on the person of the Chairman and Chief Executive Officer assisted by external advisers. The latter deprived both of the expertise of the legal department of the Fund and that of the audit committee since the legal department of the Fund was not authorized to bring this case before it. Faced with Maître Lantourne, the historical lawyer of the Bernard Tapie group, he also deprived himself of the services of the main lawyer in the Adidas / Tapie case, Maître Martel, because he was opposed to recourse to arbitration.
By letter of July 16, 2007, Mr. Rocchi informed Maître Jean-Pierre Martel of his decision to appoint August & Debouzy as co-counsel, Cécile-Blancpain-Soltner law firm… as necessary, and White & Case law firm (Maître Philippe Metais for matters affecting the European Distribution Company and
weighing system (CEDP) (11). Maître Martel was asked to ensure the proper functioning of the pool of lawyers thus constituted and to continue to draft the conclusions before the referral Court of Appeal. September 24 was also added as co-advisor Maître Vincent Gallet of the firm SCP Lyonnet-Bigot et associés.
In his answers to the Court, Mr. Rocchi argued that the August & Debouzy firm had already intervened in the past on CDR files and was also well known to the Caisse des Dépôts departments.
The total amount of attorneys’ fees paid in connection with the Adidas / Tapie case amounted to € 1,433,000 in 2007 and € 5,142,000 in 2008, for a total of € 6,575,000 in two years, virtually the equivalent to all of the fees paid so far for this file since 1995 (€ 7,109,000). The total legal fees from 1995 to 2008 thus amounted to € 13,684,000. The amount of fees allocated to August & Debouzy alone amounted to € 565,000 in 2007 and € 3,580,000 in 2008, i.e. € 4,145,000 or 30% of all fees paid since the origin of the file. .
The presentations to the CDR board of directors concerning the CEDP file, then the Adidas / Tapie file, were made by the Chairman and Chief Executive Officer or by the August & Debouzy firm, those to the EPFR board of directors on same files by the president of the CDR.
- Satisfactory management by the Caisse des Dépôts for other files
– For non-major asset files, the chairman of the CDR indicated that there was no need to establish the overall mandate, which nevertheless resulted from the terms of appendix 1 of the rider to the contract. assistance of December 18, 2006, considering that the assistance contract was in place. However, in accordance with the assistance contract, it has set up delegations for Caisse des Dépôts employees.
– For asset and major litigation files other than Adidas / Tapie, the principle of referral to the board of directors by the president of the CDR for the establishment of a global mandate has been respected.
– The chairman also announced on January 24, 2007 the setting up of a “management committee”, which meets monthly and before each meeting of the board of directors. To ensure that the directors are properly informed, the Caisse services updated before each meeting of the Board of Directors a monitoring table of the main assets and the main disputes, which testifies to a serious follow-up of the files on which the Caisse was involved. mandated, except for the Adidas / Tapie folder.
– Following an accident in the Vosges which revealed the existence of a real estate asset hitherto unknown to CDR, an audit mission was entrusted to the firm Veil Jourde to identify the files likely to present risks materials or
(11) Formerly Bernard Tapie Finances (BTF), 99.81% owned by the subsidiaries of CDR and 0.19% by minority shareholders at the start of 2007. In fact, the shares of CEDP had been allocated to the CDR in 1999 based on a valuation of € 76 million.
financial. It focused on around ten files carrying real estate risks likely to engage the responsibility of CDR and was completed at the end of 2007 – beginning of 2008.
– Outside the Adidas / Tapie case, greater vigilance was exercised on the amount of fees paid with the assistance of the Caisse des Dépôts departments. This effort responds, at least in part, to the criticisms formulated by the Court during its previous audit. For new cases, the selection of legal counsel was systematically the subject of a competition. For other cases, a provisional budget is negotiated each year with the lawyers concerned and is subject to billing and execution follow-up by the financial service. In the Disco case, a disagreement with the lawyer on his fees led to his separation despite his seniority on the subject. The CDR only resorts to agreements when the fees depend on the result, this is the case with certain debt collection cases or with American lawyers for EALC. On this last file, the president started very early, with the help of the services of the Fund, to reduce the number of interveners and to better supervise the fees of the main council.
III. ASSESSMENT OF CDR’S ACTIVITY
The activity report shows that the residual portfolio of CDR files (doubtful debts, litigation, subsidiaries and holdings) is shrinking less quickly than expected.
- MANAGEMENT OF THE ASSET PORTFOLIO
The assets of the CDR consist of securities, real estate and debt. The most spectacular result over the period under review is to have reduced the net asset value from € 141 million at the end of 2006 to € 17 million at the end of 2008 (-88%). The decrease is less marked in gross value, since it fell from € 559 million at the end of 2006 to € 251 million at the end of 2008 (-55%).
The same observation can be made for the number of cases concerned. At the end of 2008, there were only 93 majority or minority shareholdings to be sold or compacted against 187 at the end of 2006 (-50%), 105 receivables to be collected against 188 at the end of 2006 (-44%), 11 buildings for sale compared to 33 as of December 31, 2006 (-67%).
The very high provision rate in 2007 and 2008 (more than 90% of gross assets to be realized) testifies to the difficulty of the residual files.
- LITIGATION AND LITIGATION
The number of contentious proceedings in which the CDR is involved, as plaintiff or as defendant, fell from 188 at the end of 2006 to 107 at the end of 2008 (-43%).
It should also be noted that the count of cases was changed between 2006 and 2007, several disputes relating to the same case are no longer counted once, which automatically reduces the number.
During the 2007 financial year, 4 new cases were registered and 27 closed. During the 2008 financial year, 7 new cases were registered and 25 were closed.
These figures reflect a smaller percentage decrease than in previous years, which may be explained by the residual difficulty of disputes that have not yet been closed.
- REDUCTION OF LEGAL SCOPE
The number of companies included in the legal scope of CDR fell from 116 at the end of 2006 to 93 at the end of 2008 (-20%).
During a meeting of the audit committee in 2008, the question of the advisability of resorting to external service providers to accelerate the “compaction” of companies dependent on CDR was examined but did not have a positive result.
- CHANGES IN GENERAL EXPENSES
The drop in overheads between 2006 and 2007 reached 53%, demonstrating the benefit of backing up to the Caisse des Dépôts, which translates into staff savings and better control of attorneys’ fees.
However, this decrease seems difficult to continue.
General expenses amounted to € 19.8 million in 2008, down 59.2% compared to 2006 but only 12.7% compared to 2007 (€ 22.7 million).
CHANGES IN GENERAL EXPENSES
2006 2007 2008
STAFF EXPENSES 10 0.7 0.2 LITIGATION FEES 27.3 15.1 12.8 OUTSOURCING AND OTHER FEES 8.6 5.3 5.5 OTHER GENERAL EXPENSES 2.7 1.6 1.3 TOTAL GENERAL EXPENSES 48 , 6 22.7 19.8
Fees represented 90% of general expenses in 2007 and 93% in 2008. Litigation fees amounted to € 12.8 million in 2008 against € 15.1 million in 2007, a decrease of 15%. On litigation fees, in 2008 as in 2007, American cases (AIG, EALC) represented 51% of the total. The 2008 fees were € 3.7 million higher than forecast due to the arbitration procedure in the Tapie / Adidas case and the procedures initiated in the EALC case with the hope of significant gains.
In total, the provision for extinguishing costs, which had not been modified at the end of 2007 despite the statutory auditors’ reserve, was increased by € 20 million at the end of 2008.
to cover the anticipated needs until 2014. Its amount will have to be reassessed regularly with a strong probability of an upward revision, in particular due to the evolution of the AIG file.
According to the CDR, the forecasts show interesting possibilities of realization or recovery on the assets but a very slow decrease in the stock of litigation and legal structures managed by the CDC or with its assistance.
Thus, disputes (107 at the end of 2008) should decrease very gradually until 2013 to represent only around twenty residual disputes, a figure which should remain stable in 2014.
Ultimately, no scenario has been confirmed by the supervisory authorities on the prospects for CDR, among various possible developments: maintaining the CDR identically, entering a frankly liquidation phase, sale to a third party. In any event, it is very likely that the unresolved cases will not all be closed in 2014.
In this context, it would be desirable to enrich the activity indicators by bringing together the risks or the expected gains on the one hand, and the respective costs of fees and monitoring of the file internally (which is not yet operational). ), on the other hand. These indicators could be subject to more regular performance monitoring, as suggested by the audit committee.
PART II: EXAMINATION OF MAIN FILES
- ADIDAS / TAPIE FILE
The recourse to arbitration, accepted and negotiated by the CDR, ended in 2008 with a judgment of nearly € 403 million, largely exceeding the amount of the judgment by the Paris Court of Appeal on September 30, 2005 (135 million €), which had been the subject of a cassation on October 9, 2006 and the amount provisioned in the CDR accounts at the end of 2006, and again at the end of 2007 (€ 134 million) (12).
- STATUS OF LITIGATION IN EARLY 2007
The facts at the origin of the Adidas dispute and the various disputes in the Tapie case are set out in appendix 1.
- The position of the CDR
The CDR’s position in the Adidas litigation was considered by the CDR itself and by its counsel (13) to be favorable at the end of 2006, on the basis of the judgment of the Paris Court of Appeal of September 30, 2005 and the judgment of the Court of Cassation of October 9, 2006. Crédit Lyonnais, whose lawyer was Maître Jourde, made the same analysis.
The possibility of a final result in the Court of Reference more costly for the CDR than the amount of the conviction by the Paris Court of Appeal of September 30, 2005 (€ 135 million) appeared unlikely. This is why, according to its former president, the CDR had insisted on appealing to cassation and the advisability of this appeal had been validated in early 2006 by a “college of wise men” formed by the Minister of the Economy. The lawyers consulted argued that the judgment of the Court of Cassation, which had ruled in plenary assembly, was final and binding on the Court of Reference on all points of law ruled by the judgment, including its reasons. .
The lawyers of the CDR considered that this judgment (14), beyond its immediate effect, re-established a “balance of power more favorable to the CDR”. Their analysis was as follows
(12) No amount was provisioned in the EPFR accounts.
(13) Mainly the Orrick-Rambaud-Martel and Cécile Blancpain-Soltner firms.
(14) See below in appendix 1 the summary of the judgments of the Court of Appeal of September 30, 2005 and of the Court of Cassation of October 9, 2006.
a / On admissibility
The judgment of the Court of Cassation very strictly regulated the conditions of admissibility of the liquidators of the collective partnership Groupe Bernard Tapie (GBT) (15). The reaffirmed principle is that a shareholder is not eligible to seek compensation for the loss of the company whose shares he holds. In this case, the liquidators were considered admissible only for compensation for any damage resulting from failure to execute the memorandum of December 10, 1992 and the agreement of December 16, 1992 taken for its execution.
However, the only obligation of the SDBO, the only signatory of the memorandum of 1992 with the companies of the Bernard Tapie group, was the increase to the group of a fraction of the price of Adidas, set at 185 MF (28.2 M € ), amount that was actually paid to the general partnership GBT.
The possibility of executing the memorandum for purposes of repayment of the sale price to GBT is a condition which would be missing. This condition was based on the prior merger of all the companies into a new entity, otherwise BTF would have been guilty of misuse of corporate assets. However, it is because of the Tapie group itself that the merger provided for in the memorandum was never followed up, the latter having informed the SDBO that the project was no longer relevant by a letter of January 28. 1993.
B / On the alleged faults
The lawyers of the CDR considered that it could result from the reading of the reasons for the judgment of cassation that the first two faults (prohibition to act as counterpart and insufficient information) were devoid of any causal relation with the damage which the Court appeal remedies, and that the third fault on which the latter based its conviction (breach of a supposed obligation to offer a credit) has no legal basis. However, they cautiously recognized that the expectations of the judgment of the Court of Cassation could also be read by considering that the Court of Cassation did not rule on this causal relationship, since the question did not arise.
In any event, the Court of Cassation did not rule on the two other faults recognized by the Court of Appeal or on the arguments of the CDR, on the grounds that they did not constitute support for the decision, which left open the discussion of these faults by the CDR.
In addition, the judgment recalled that Crédit Lyonnais could not be held liable on the exclusively contractual ground, on which the liquidators had chosen to act, for the non-performance of a contract for which it was not. part. This could make the accusation of acquisition by the intermediary concerning Clinvest more difficult, since the agent (SDBO) had no capital link with Clinvest, a subsidiary of Crédit Lyonnais.
(15) This general partnership with the partners are Mr. and Mrs. Bernard Tapie was itself a shareholder of the limited company Bernard Tapie Finance (BTF), the majority shareholder of the German liability company Adidas.
He also mentioned the possibility which seemed to him still open to minority shareholders of CEDP to appeal in cassation against the judgment of September 30, 2005.
In their referral to the Court of Reference of February 8, 2007, the conclusions of which were served on June 6, 2007, the liquidators had sharply increased the amount of their claims compared to the previous phase, referring to the stock market value. current Adidas (9 billion euros in June 2007) and subsidiary to the valuation at the time of the IPO in 1993 (nearly 11 billion francs, or 1.68 billion euros before discount). Requests, which were € 967 million primarily and € 221 million subsidiary in 2005, thus increased to € 7.4 billion primarily (78% of Adidas’ value in 2007), 2, € 7 billion on a subsidiary basis (78% of the value of Adidas at the time of its initial public offering, after updating in 2007),
However, these new claims did not appear very serious at CDR, because the case law of the Court of Cassation established the principle of valuation on the day of the contract.
The claim for compensation for the material and moral damage of the Tapie spouses is increased to € 100 million. However, the Paris Court of Appeal had considered, in its judgment of September 30, 2005, that the breach of obligations by the agent under the conditions described constituted non-pecuniary damage which was compensated by the damages awarded, the sum requested by agents being limited to € 1.
- The analysis of the August & Debouzy firm
The new cabinet, August & Debouzy, recruited by Mr. Rocchi on the Adidas / Tapie file, issued a more nuanced opinion than its predecessors on the strength of the CDR’s position.
In a note of June 27, 2007, he does not consider that the framework for admissibility can be binding on the demonstration of damage. He considers that the lack of information of a possible sale to Mr. Robert Louis Dreyfus at double the price stipulated in the mandate contract constitutes the most seriously founded damage. This loss would be equal, according to the liquidators, to € 205.3 million (16) before discounting.
The firm specifies that the CDR could argue in this hypothesis that it can only be at best the loss of the chance to make a gain, a loss which is, according to case law, never equal to 100% of the expected gain. and not obtained. He concludes that the sentence could reach a maximum of € 415.2 million, corresponding to the lack of
(16) The loss would be equal, according to the liquidators, to the difference between 3.432 billion francs (523.2 M €), i.e. 78% of 4.4 billion francs (670.78 M €) which is the price of the acquisition of all the capital by Robert Louis Dreyfus in December 1994, and 2.085 billion francs (317.86 M €) which is the price paid to GBT in February 1993 for 78% of the capital, i.e. 1.347 billion francs or an equivalent of 201,348,826 euros.
gain discounted (17), increased by consequential damages (request of 100 M € for non-pecuniary damage), for a total of 515.2 M €. However, he does not take a position on the probability of reaching such an amount.
This note does not mention the fact that the CDR could also assert in this unfavorable hypothesis the deduction of the capital increase carried out in the meantime by the investors to absorb the losses of 1992 (517 MF or 78.8 M €).
- The unfortunate precedent of the acquisition of minority interests in CEDP
The buyout of minority interests in CEDP (formerly BTF SA) in spring 2007 had created an unfortunate precedent in the perspective of a possible arbitration, despite the precautions taken.
a / By letter dated February 27, 2007 , the president of the association of small carriers for the cancellation of the disputed sale of Adidas (APPALVA) had informed the CDR of his intention to lodge an appeal in cassation to the against the judgment rendered by the Paris Court of Appeal on September 30, 2005, which had still not been served on them by the CDR. He had also suggested the opening of discussions that could lead to the repurchase of securities held by small holders.
The link with the request to open an arbitration procedure presented at the same time by the liquidators of the Tapie group and the Tapie spouses is obvious. The letter from APPALVA refers to discussions with Maître Lantourne (as lawyer for the Tapie liquidation), and to the fact that the liquidators of the Tapie group had asked to consider a specific procedure to settle all the disputes. between CDR and Crédit Lyonnais on the one hand, the liquidators of companies in the Tapie group and the Tapie spouses on the other. According to the APE, according to the information provided by the president of the CDR, it is the very entourage of Mr. Tapie who suggested that exchanges take place in the first place with minority members of CEDP (18). Maître Lantourne subsequently participated, as a lawyer for certain minorities (19), in negotiations with the president of the CDR. These elements testify to a certain overlap between the two procedures.
The president of the CDR disputes this version and argues as the main motivation the difficulties in the functioning of the company CEDP, whose board had to be reconstituted due to the departure of the employees of the CDR (20). These people were also targeted as directors by an individual liability action. The stake of a negotiation was for him the reestablishment of a “normal social life”
(17) The note does not specify the method of updating the € 205 million, but retains a doubling of the initial sum, as was the case in the updating of the judgment of September 30, 2005.
(18) Note to the Minister of March 26, 2007.
(19) Meeting on March 21, 2007 between the CEO of CDR and Mr. Bruneau, president of the minority association, Me Farthouat, ad hoc representative, Me Lantourne acting here as representative of two minority shareholders of CEDP.
within CEDP. This is the argument he put forward during the debates at the CDR board of directors.
b / The board of directors of CDR gave on March 16, 2007 a negotiation mandate to its chairman, with a view to proceeding with the possible repurchase of the shares of minority interests of CEDP who had brought legal actions, directly or through the intermediary of the ad hoc representative .
During the discussions within the board, “several directors expressed their wish not to give the other players in the file the means to invoke an exploitable precedent. “ Indeed, the precedent could be exploited by the liquidators in connection with the application for review of the award to the RDC EDPS share price set at the time to 76 M €. The president of the CDR indicated, in response, that “the lawyers consulted on the file considered that this takeover should not present a risk of contamination towards the Adidas procedure. “
c / The president of the CDR informed the services of the APE and the president of the EPFR on March 21, 2007 of the basis of the transactional agreement that he was planning to conclude.
In two notes to the Minister of March 27 and March 30, 2007, the Director General of the APE indicated that this proposal aroused on his part the “greatest reservations”, in particular because the implicit valuation of CEDP at nearly 260 million €, on the basis of a proposed repurchase price of 37 euros per share, was likely to serve as a reference for Mr. Tapie in his action against the allocation of CEDP to CDR or for a possible global transaction. He saw it as a “major shift in the CDR’s defense strategy in the Tapie dossier”.The director general of the APE recommended to the minister to use the prerogatives provided for by the decree of 22 December 1995 establishing the statutes of the EPFR to convene, before the board of directors of the CDR scheduled for 3 April 2007, a council of administration of the EPFR in order to oppose this transaction in the terms envisaged.
The two APE notes were returned unanswered on May 4, 2007, with a cabinet mention referring to the CDR board of directors on April 3, 2007 (see below). The EPFR board of directors was therefore never consulted.
In addition, CDR has never asked EPFR, under the non-quantifiable risk mechanism, to reimburse the sums disbursed.
d / The president of the CDR reported, during the board of directors of April 3, 2007, on the execution of the negotiation mandate which had been granted to him, with the assistance of the lawyers whose services he has attached to this operation, Masters Gilles August and Marie Danis of August & Debouzy. He indicated that the individual investors represented in the negotiation would agree on a price of 37 euros per security, reflecting the 15-year update of the original par value, i.e. 15.24 euros, at the OAT rate over the period. (6.25%).
At the request of the directors, Mr. August indicated that, according to him, Mr. Tapie could always try to use the result of an agreement with the minorities, but that the texts in question were covered by confidentiality, and that the repurchases or transactions in question had only a relative effect between the parties, the low volume of the repurchased securities not being sufficient to create a value enforceable erga omnes.
The president of the EPFR considered that this file should be “assessed in the light of the main proceedings, Adidas. “And worried about the implicit valuation of CEDP which could emerge from the transaction: ” The president of EPFR quotes the figure
of 259 M € as being the one that could be put forward by those who would like to use the transaction to enhance the value of the company, this figure not appearing to him “unimaginable”. He recalled that, in the past, the CDR had, on numerous occasions, deliberated on the principle of “neither rich nor bankrupt” and that it was not opportune to leave it. ”
The chairman of the CDR put to the vote an adaptation of the mandate with a price per share of 15.24 euros (i.e. the amount retained at the launch of the public squeeze-out offer in 1999), supplemented by a global compensation of 107,494. euros distributed among minority shareholders at their discretion (21). This proposal, which aimed to mitigate the risks of a precedent, was adopted by three votes, one director and the EPFR representative abstaining.
The transaction protocols were signed on April 24, 2007 (22). The parties executed the agreements, with the withdrawals being regularized in June 2007.
In conclusion, contrary to the allegations of the president of the CDR and his lawyers in spring 2007, the sealing of information was not ensured between the transaction with the minority CEDP and the arbitration procedure which followed in the Tapie case. : not only Maître Lantourne was present in both proceedings, but even more so the liquidators requested authorization during the arbitration procedure to transmit the transactional protocol to the arbitral tribunal and that the CDR gave its agreement.
Ultimately, arbitration awards are much more favorable for liquidators than the consequences that could have been drawn from the implicit valuation of CEDP resulting from the transaction, in particular through the request for a price revision of CEDP shares made by the liquidators and included. within the scope of the arbitration.
- LAUNCHING AND PREPARING FOR ARBITRATION
- The first request for arbitration
At the same time as the referral to the Court of Referral, the liquidator agents formulated, in a letter sent on January 30, 2007 to the new president of the CDR, the proposal to resort to arbitration, with the constitution of an arbitral college, which would be referred to. the resolution of all pending disputes. This letter recalls that twelve years of procedures have already passed and evokes “the opportunity to bring a perspective other than five or six years of additional procedures”.
(21) The overall amount of the transaction remains unchanged for the CDR. The proposed transaction also included the reimbursement of fees and expenses of Maître Farthouat for € 210,000 and various expenses incurred by minority shareholders and in particular Mr. Bruneau for € 200,000.
(22) 27 minorities among the 32 who brought an action have signed, out of a total of 350 minorities.
In a response dated February 9, 2007, the president of the CDR announced the availability of the CDR to discuss with the liquidators of the “Tapie Group”, with a view to reaching a final settlement of the case. He indicates that it is not possible for him to answer on the substance before having been able to obtain the position of its directors as well as of its shareholder, EPFR. He also notes that the proposal formulated does not commit the minority shareholders of the European distribution and weighing company (CEDP, ex Bernard Tapie Finances) nor the ad hoc representative representing them.
In a note to the Minister of February 27, 2007, after having expressed an opinion unfavorable to arbitration, the Director General of the APE concluded by asking the Minister for his position on the opening of possible discussions between the CDR and the liquidators of the Tapie group, at the initiative of the latter, in the form of a conciliation procedure. It was returned unanswered on May 4, 2007, a few days before the resignation of the government led by Mr. de Villepin.
The board of directors of the CDR is informed in its meeting of March 16, 2007, of this arbitration proposal and of the waiting response of its chairman. However, it gives the chairman a mandate to negotiate a possible transaction for the repurchase of minority shares in CEDP (formerly BTF SA, now a subsidiary of CDR) which has initiated litigation (23).
The former director of the cabinet of the Minister of the Economy indicated, during his hearing by the Court on July 20, 2010, that it had been served on him by the Minister, as soon as he took office on May 22, 2007 (24) , that the orientation had been taken to go to arbitration. No written record of this orientation has been communicated to the Court.
- Renewal and acceptance of the request for arbitration
a / The liquidators’ proposal
In a letter dated 1 st August 2007, the liquidators revive CDR for a response to the arbitration proposal, citing specifically the “abnormally long period of liquidation proceedings of companies GBT, BT Management, FIBT and ACT, and of the TAPIE spouses in a personal capacity ”, with the prospect of a procedure which could last “ 18 to 20 years ” since its opening in 1994. They underline that this duration, affecting in this case natural persons, would be contrary to the European Convention on Human Rights, in particular Article 6, according to which“Everyone has the right to have their case heard fairly, publicly and within a reasonable time …”.
The argument of a reasonable time within the meaning of the European Convention on Human Rights has not been the subject of any in-depth legal expertise. It was never put forward by the CDR or by its legal advisers, especially as the liquidators and the Tapie spouses could be considered as having a share of responsibility in
(23) See above sub-part B.
(24) The first Fillon government was appointed on May 18, 2007.
the length of the procedure, since they had rejected the proposals of the mediator, Mr. Jean-François Burgelin, in April 2005.
b / The agreement of the president of the CDR and the government
According to a note from the director general of the APE to the minister dated September 17, 2007, the principle of arbitration was ratified by the government on an undisclosed date prior to September 11, 2007:“During a meeting held in the minister’s office on September 11, 2007 in the presence of the CEO of CDR, I was informed of the latter’s intention to propose a positive follow-up to the request expressed by the liquidators. of the Tapie spouses (reiterated by letter dated August 2, 2007, a copy of which was given to me at this meeting) to initiate an arbitration procedure aimed at settling, as far as possible, all the legal proceedings opposing them to the CDR, and of the decision definitively taken by the government to give its agreement in principle, through the EPFR council when it is seized of it, to the opening of such a procedure. “
Only four days later, which may suggest that the work had been started earlier, the APE was informed of the main lines of the draft arbitration compromise: “As a result of the request formulated by the minister’s office, my On September 14, 2007, the services received Mr Rocchi and his lawyer, Me Gilles August, who presented them with the main lines of the draft arbitration agreement currently being discussed with the lawyers of the liquidators (25) ”.
- Review by the CDR Board of Directors
The President of the CDR awarded the letter of 1 st August session administrators CDR at the Council of 12 September 2007, indicating that the subject would be discussed “at a forthcoming meeting.”
The CDR board of directors then deliberated on the issue in two stages, first in the form of a negotiation mandate to the president in its meeting of September 18, 2007, then to adopt the terms of the arbitration compromise in its meeting of October 2, 2007.
a / During the meeting of September 18, 2007 on the possible opening of negotiations , a general information note on the arbitration procedure and a document on the possible terms of reference were submitted to the meeting and commented on by the representatives of the August & Debouzy cabinet, recently called upon by the president to follow up the case (26).
In the ensuing discussion, although one director expressed reservations and two others raised questions, the chairman raised the idea of a sort of “tacit mandate” that would result from this meeting, the decision advice from CDR and EPFR can only intervene on the basis of a substantiated compromise project.
(25) Note from the Director General of the APE dated September 17, 2007
(26) See supra page 11
He requested and ultimately obtained (27) the consensus of the administrators on the possibility of authorizing the lawyers of the CDR to discuss with those of the opposing party, on the basis of the following conditions:
– arbitration in law and according to the rules of the new code of criminal procedure;
– abandonment of the procedures submitted to arbitration involving both CDR and Crédit Lyonnais;
– return of the opposing party to “reasonable” requests corresponding to its requests prior to those it had just formulated before the Court of Reference;
– strong procedural guarantees, in particular the appointment as of the compromise of an arbitral college by common agreement between the parties.
The position of an administrator, ” ” who says he is attached to the possibility of an appeal “ in the event of an arbitration procedure, was not retained.
b / During the meeting of October 2, 2007 , a draft compromise is submitted to the meeting and returned at the end of the meeting.
It at least partially meets the conditions set during the session of September 18, with a legal arbitration conducted according to the rules of the new code of civil procedure, the withdrawal of pending proceedings (with the exception of actions for review of collective proceedings ), the limitation of the amount of compensation claims to € 295 million as liquidators of the companies GBT, ACT, FIBT and BTG and to € 50 million “as liquidators of the Tapie spouses”.
The draft compromise included the names of the arbitrators appointed jointly by the parties: Mr. Pierre Mazeaud as chairman, MM. Jean Denis Bredin and Pierre Estoup as arbitrators. The latter must provide the parties with a declaration of independence including an obligation of extended disclosure. The fees are fixed by separate act, the figure not being mentioned at this stage.
Three additional conditions desired by the directors, in particular for Mr. Gavois, were retained by the chairman as “constituting an imperative mandate” : the need to have up-to-date figures on the liquidation binding the liquidators, the reminder in the compromise or in its appendices to the claims of the CDR, the clear reference to the judgment of the Court of Cassation and to the final part of the judgment of the Court of Appeal.
Subject to integrating these three points which form an “imperative mandate” , the board finally approved the project by four votes in favor (including that of the EPFR representative) and one abstention (Mr. Patrick Peugeot). The questions formulated by Mr. Peugeot on “a drafting of the compromise which could win recognition …
(27) The minutes end with the following statement: “the directors share the position thus formulated”.
personal injury to Mr. Tapie and ultimately lead to his compensation ”, shared by another director, have not been taken into account.
It emerges from the minutes that, even if reservations were made by certain directors and maintained by one of them, the reference to the authority of res judicata and to the judgments of the Court of Appeal and the Court of Cassation appeared to be a significant guarantee of security for the CDR, which was also the case for the EFPR board of directors.
On the other hand, the waiver of the possibility of appealing was not the subject of a specific debate, although the question was raised during the session of September 18, 2007, and the stakes in relation to the action for annulment have not been highlighted.
In addition, the qualification of “moral prejudice” for the entire claim for compensation of the Tapie spouses does not appear in the version submitted to the council. It was introduced a few days before the signing of the compromise on November 16, 2007 by the president of the CDR (see below). The board of directors of the CDR was not seized of it, even though the question could have been raised in its meeting of October 24, 2007 where it examined other files.
During this same meeting, the board of directors of the CDR was not informed either of the letter from the general manager of LCL dated September 28, 2007 which expressed a “very reserved” position on the very principle of the arbitration. He recognized that he could not prevent the CDR from wanting to embark on this path but specified that not being a party to the arbitration and therefore not being able to make its arguments prevail, it “could not legitimately suffer the slightest consequence, of whatever nature it is, in the event of a possible conviction of the CDR ”.
- The EPFR’s deliberation
In the mechanism of non-quantifiable risks, guaranteed by the EPFR, the president of the CDR is in practice obliged, although this does not result directly from the text of the addendum n ° 13 to the protocol of April 5, 1995, of its ensure the endorsement of its guarantor, the EPFR, for important decisions concerning major cases, of which the Adidas case is obviously a part, under penalty of running the risk of “abnormal management”. The Court noted that this practice has prevailed for several years between the CDR and the EPFR on the Adidas case.
The deliberation of the CDR of October 2 was not accompanied by a prior consultation clause of the EPFR in order to know the position of its guarantor “insofar as the Adidas case, which is the main stake of the procedures likely to to be submitted to arbitration, constitutes an “unquantifiable risk” ”.
The request clearly shows a condition, the board of directors of CDR having “considered that it could consider accepting the organization of an arbitration conducted according to the principles which have just been set out (…) provided that…
the Public Funding and Restructuring Establishment does not express its opposition to this choice.
This condition was expressed again, orally, before the EPFR Board of Directors on October 10, 2007: ” ” the Adidas case being an unquantifiable risk, the CDR considers it necessary to ensure the absence of ‘EPFR objection to the entry of the CDR into this arbitration procedure ”.
It is observed that the “terms of a compromise” detailed in the letter of the president of the CDR of October 2 integrate the three points added by the board of directors of the CDR on the same day, but not the qualification of moral prejudice for the whole. the claim for compensation from the Tapie spouses, which will appear later in the signed version. This letter was put back on the table to the administrators, but the full text of the draft compromise was not distributed (28).
The draft compromise sent to the APE on October 8, 2007, with a view to the EPFR’s board of directors on October 10, 2007, did not include the new wording concerning the Tapie couple’s claim for compensation either.
The term moral prejudice was used in the presentation by the president of the CDR at the meeting of the EPFR board of directors on October 10, 2007, the minutes of which were not approved until June 18, 2008, but in a way too imprecise to consider that the board of directors of the EPFR was validly informed: “Mr. Rocchi also specifies that the amount claimed by the opposing parties will be capped in the arbitration agreement: € 295 million for the liquidators of the Tapie group and € 50 million in respect of a claim based on “moral prejudice” alleged by the Tapie spouses. Mr. du Luart asks if these amounts take interest into account. Mr Rocchi specifies that these sums must be increased by the interest accumulated since 1995. “
The EPFR board of directors decided on October 10, 2007 not to oppose the launch of an arbitration, making explicit reference to the terms of the letter of October 2, 2007:
“By letter of October 2, you informed me of the agreement given by your board of directors, during its meetings of September 18 and October 2, 2007, on the terms of a compromise aimed at the organization of arbitration proposed by the liquidators of the former “Tapie group”. (…)
Insofar as your board of directors has considered that the organization of an arbitration, conducted according to the principles which are set out in the letter, is likely to protect the interests of the CDR, and where you indicate that the terms of the compromise appear to you to be such as to offer all the guarantees for the smooth running of the procedure, the EPFR Board of Directors meeting on October 10 did not oppose the organization of an arbitration under the terms you have set out to me. have submitted ”.
However, the EPFR made a condition of its acceptance, the written confirmation of the payment of the flat-rate contribution of € 12 million provided for in a letter from the Minister of the Economy of March 17, 1999 (see below):
“It will be up to you, however, before regularizing the compromise and initiating the arbitration procedure, to obtain written confirmation from Crédit Lyonnais, of its agreement to compensate the CDR up to 12 million euros of the possible conviction which could be pronounced by the arbitral tribunal ”.
The President of EPFR subsequently received a letter from the Minister of the Economy, Finance and Employment dated 23 October 2007, asking her to interpret the instructions given to the administrators representing the State and taken again in the position of the board of directors of October 10, 2007 as meaning that the confirmation of Crédit Lyonnais had to be obtained “before the final pronouncement of the sentence”. He communicated this request for interpretation from the minister to the president of the CDR, by letter of October 24, 2007, then launched a written consultation of his board of directors on October 26, 2007.
The implementation of these new instructions would have required that a resolution clause be introduced in the draft arbitration agreement.
The CDR informed the liquidators of this condition set by the EPFR by letter of October 31, 2007. In the absence of prior agreement from Crédit Lyonnais, the liquidators proposed, by letter to the chairman of the CDR of November 7, 2007, for “To avoid any blocking”, to “constitute for the benefit of the CDR an exemption from payment of any condemnation which could be pronounced against you by the arbitration award, equal to the amount of the contribution which you are entitled to obtain from Crédit Lyonnais, or according to your information € 12 million ”, without prejudice to any recourse against Crédit Lyonnais.
This solution did not respect the condition set by the EPFR Board of Directors in its meeting of October 10, even corrected by the Minister’s letter of October 23, 2007, relayed by the President of EPFR on October 24, 2007.
Seized by the president of the CDR by a note of November 7, 2007, the chief of staff of the Minister of the Economy, Finance and Employment replied by letter of November 9, 2007:
“Insofar as you yourself indicate to me that the commitment of the liquidators would lead to a financially neutral result for the finances of the State compared to the commitment of Crédit Lyonnais, I would point out to you that I do not oppose that the liquidators’ proposal is annexed to the compromise.
However, it will be your responsibility to continue to seek, by all means at your disposal, confirmation by Crédit Lyonnais of the contribution of 12 million euros that it has agreed to pay in the event of a conviction in the Adidas case, as prescribed. the letter of the Minister dated October 23, 2007, the engagement of the liquidators being called only to play in second rank ”.
The board of directors of CDR was not informed of the condition set by the board of directors of EPFR or of the transaction entered into by the CDR, before its meeting of May 23, 2008. Contrary to what has been said. affirmed on this occasion for the president of the CDR, the minutes of the meeting of the board of directors of the CDR of October 24, 2007, approved by the board of directors on December 17, 2007, do not contain any mention of the position of the board EPFR administration, setting as a condition that Crédit Lyonnais confirms its agreement to compensate CDR up to € 12 million.
A fortiori, he was not called upon to deliberate on the proposal of the liquidators by letter of November 7, 2007 nor on the agreement given by the president of the CDR.
- Finalization of the arbitration agreement
The compromise was signed on November 16, 2007.
The signed version is different from the text and the modifications which were approved by the board of directors of the CDR on October 2, 2007 on an important point, concerning the qualification of non-pecuniary damage for the entire claim for compensation of 50 M € for the Tapie couple.
The wording “In their capacity as liquidators of the Tapie spouses, parties B limit the amount of all their compensation claims to 50 (fifty) million euros” has been replaced by the following wording:
“In their capacity as liquidators of liquidators of the Tapie spouses, parties B limit the amount of all their claims for compensation for non-pecuniary damage to 50 (fifty) million euros.
This point was, however, of prime importance for public finances since compensation for non-pecuniary damage was left to the discretion of the judge, the arbitration procedure is confidential and thus eludes comparisons and the sums are not did not have to bear the tax.
The compromise had to be submitted by the liquidators to the authorization of the judge commissioner and to the approval of the Commercial Court of Paris to be able to enter into force.
– By order of the judge commissioner of November 20, 2007, the Commercial Court of Paris authorized the judicial liquidators of the companies GBT, ACT, FIBT, BTG and the Tapie spouses to compromise with the CDR Créances and with the CDR and consequently to sign the arbitration agreement, the draft of which was attached to the order. The judge commissioner simultaneously authorized the constitution in favor of CDR Créances of a payment exemption of 12 million euros on the amount of all convictions that may be pronounced in their favor by the arbitral tribunal, without prejudice to any recourse against the Credit. Lyonnais.
– The arbitration agreement was approved by judgment of the Paris Commercial Court of December 18, 2007. The “transaction elements” relating to the constitution of a deductible of € 12 million, in accordance with the terms of the CDR letter of October 31, 2007 and the liquidators of November 7, 2007 “who constitute the
elements of the transaction ”, were also approved. The court’s judgment became final in January 2008 after collecting all the signatures.
- The content of the arbitration agreement
a / Parties to arbitration
The parties to the arbitration are the CDR, CDR claims, the liquidators of the companies of the Tapie group and the Tapie spouses, as well as the Tapie spouses themselves. Crédit Lyonnais was not involved in arbitration (see above)
b / Arbitration field
The draft compromise, signed on November 16, 2007, was intended to bring together the ten disputes identified between the parties, the list of which is drawn up in the preamble, in order to put a definitive end to them.
Rather than agreeing beforehand on disputes which may or may not be arbitrable, which proved to be particularly difficult, the parties agreed to submit to the arbitral tribunal all the requests formulated in the disputes to the exclusion of all others, within the limit of public order and their arbitrability.
It was obvious to all that the criminal prosecution for bankruptcy would not be considered as arbitrable by the arbitrators, since the criminal matter is not susceptible to recourse to arbitration.
On the other hand, other procedures which did not seem a priori to be able to be subjected to the arbitration procedure were potentially included in this field:
– the ACT litigation (29), for which the CDR renounced in the compromise to continue the execution of the decision of the Commercial Court rendered on June 19, 2006
– litigation in review of the allocation of requests for CEDP actions (formerly BTF).
This choice was risky for CDR in an assessment by the EPA in a note of 1 st October 2007, because he “does not rule out completely the possibility for opposing parties to seek to prevail under the procedure arbitration, of an injury suffered by BTF. “
Indeed, it was considered by the August & Debouzy firm that this a priori non-arbitrable dispute could become so, “as soon as the action of the liquidators no longer tends to have the award order revised but to obtain a additional price in relation to the price determined in the award order ”.
(29) The ACT litigation (Alain Colas Tahiti, company which owned the vessel Phocéa) was initiated by CDR Créances (formerly SDBO) against the liquidators in January 2004. It consists of having a privileged claim recognized in collective proceedings.
Although this point was ultimately not retained as such in the award which considered that GBT’s admissibility was not limited, it was clearly an open breach in the defense of the CDR , which consisted in saying that GBT could not claim, as a shareholder, a loss suffered by its subsidiary BTF.
c / Ceilings set for arbitration
The liquidators limited the amount of all their claims for compensation for material damage to € 295 million, plus interest at the legal rate as of November 30, 1994, and all of their claims for compensation. moral damage for the Tapie couple at € 50 million.
The amounts retained were particularly high, whereas the CDR was not requesting arbitration and could impose its conditions.
– With regard to material damage, the reference for the CDR should be the amount of the condemnation by the Court of Appeal, ie 135 M € including interest, significantly lower than the accepted ceiling which could reach, including interest, around 450 M €;
– With regard to non-pecuniary damage, the wording finally adopted by the president of the CDR, without the approval of its board of directors or that of the EPFR, amounted to accepting the possibility of a conviction in this respect. up to € 50 million, while the references before ordinary courts are much lower (less than one million euros) and that the non-pecuniary damage had indeed been accepted by the Court of Appeal in 2005 and compensated for € 1 .
A few years earlier, in 2004, the president of the CDR had his supervisory minister accept very strict limits to an attempt at mediation (principle neither rich nor bankrupt).
b / Confidentiality clause
The parties adopted an extended confidentiality clause, which went against the CDR control and supervision requirements laid down by the law of 28 November 1995, and more generally, the proper exercise of public finance control.
e / Applicable law
The law applicable to the merits of the dispute is French law, the arbitral tribunal is required to rule in law and as such is bound by the authority of res judicata for final decisions rendered in disputes, in particular the judgment of the Court. of cassation of October 9, 2006 and the final expectations of the judgment of the Paris Court of Appeal of September 30, 2005.
The parties further agree that the arbitral tribunal will investigate and judge the dispute in accordance with articles 1460 et seq. Of the new code of civil procedure (NCPC), with the exception of article 1464 which derogates from the provisions of article 5-2. compromise (30).
The duration of the mission is not fixed in the compromise. A provisional timetable, “as short as possible”, should be established.
f / Choice of arbitrators
The current practice for the selection of arbitrators was not followed. Usually, the arbitrators are not appointed at the compromise stage, which provides for their terms of appointment. The most common modality is that each party chooses an arbitrator, the arbitrators thus chosen then proposing by mutual agreement a president. This system has the advantage that at least one of the three arbitrators can present the arguments and interests of one or other of the parties.
In the present case, the composition of the Arbitral Tribunal was fixed in the text of the compromise. The tribunal was composed of Mr. Pierre Mazeaud, as president, of MM. Jean Denis Bredin and Pierre Estoup as arbitrators.
No document was provided to the Court on the conditions for the choice of arbitrators.
The arbitrators were approached very early in the procedure, since their names were communicated to the director general of the APE during a meeting at the minister’s office on September 11, 2007 informing him of the government’s decision to resort to the procedure. ‘arbitration. However, their names were not communicated to the directors of the CDR during the meeting of September 18, 2007, but only with the text distributed during the meeting of October 2, 2007.
Mr. Rocchi indicated, during his speech to the EPFR board of directors on October 10, 2007, that “the choice results from the common will of the parties” and “that it has been verified that none of the arbitrators was in a conflict of interest and that each of them signed a declaration confirming their independence ”. He specified, during his hearing before the Court, which names resulted from exchanges between lawyers and were then validated by the two parties. Their designation is presented as “irrevocable”.
The Court was not aware of the verifications which may have been carried out by the CDR or its counsel, in particular with regard to Mr. Estoup, who is a magistrate familiar with arbitration proceedings. On the other hand, the declarations of independence, including an obligation of extended disclosure, were indeed signed by the arbitrators, in accordance with the terms of the arbitration agreement.
It is only later, after the wording of the sentence of July 7, 2008 but before the additional sentences of November 27, 2007, that a possible reason for challenge will be discovered. On November 3, 2008, in fact, the president informed the board
(30) Article 1464 provides that the arbitration proceedings are terminated, subject to the specific agreements of the parties: 1 ° By the dismissal, death or incapacity of an arbitrator as well as by the loss of the full exercise of his civil rights ; 2 ° By abstaining or challenging an arbitrator; 3 ° by the expiry of the arbitration period. Article 5.2 of the arbitration agreement provides that in the event that one of the arbitrators is unable to attend, the parties jointly appoint a new arbitrator.
administration that, during the control of the costs of the liquidation carried out by Master Vincent Gallet, appeared on October 2, 2008 a statement of fees, dated July 6, 1999, issued by Master Maurice Lantourne and paid by the liquidation for an amount of 12,060 francs (i.e. 1,838.53 euros). This brief mentions, as proof of the expense, a meeting with Mr. Estoup on June 30, 1999 and a note to Mr. Estoup on July 3, 1999.
According to numerous correspondence exchanges, Maître Lantourne alleges an error in attribution, indicating that he “was in contact at the time with Mr. Estoup during an arbitration for which he was appointed as a replacement. of a failing arbitrator ” in 1999, Mr. Estoup confirming this version.
The confidential documents consulted by the lawyers of the CDR confirm the participation of Mr. Estoup in an arbitration unrelated to the Tapie cases from April to November 1999, but without any trace of a meeting on June 30, 1999 or of a note from the July 3, 1999. The chairman of the CDR indicates that the CDR’s investigations have not, at this stage, made it possible to establish whether there was a violation of the extended disclosure obligation subscribed to by the arbitrators, see a case of challenge.
The subject was raised again after additional steps were taken during an exceptional meeting of the CDR board of directors, convened for this purpose on November 13, 2008.
In response to a letter from the CDR, Mr. Estoup confirmed in writing that he had “ not issued any consultation, no opinion, or received any note in the file which is the subject of this arbitration”, and that he did not intervene “in his capacity. arbitrator in any proceeding concerning one of the parties to the arbitration ”. Mr. Estoup also presented his account book for 1999, in which no collection of fees in connection with the Tapie files appears.
– During the second meeting with the lawyer of the CDR, Maître Lantourne produced a note, found after the first meeting, and presented as a document sent in July 1999, to a new arbitrator, for summarize for him the position of one of the parties. Mr. Estoup produced the same document on his side. The postulate that the document consulted by counsel for the CDR is indeed the note covered by the disputed invoice is based only, in the case of an undated and unsigned note, on the assertion of the two persons concerned.
– Two consultations written by academics specializing in arbitration concluded that the obligation of extended disclosure was not respected, but considered that this would not, in the present case, be sufficient to justify a possible challenge. The chances of a successful challenge appear for one to be “fairly uncertain” and for the other to be “insufficient” or “fairly low”.
– At the end of these debates, the president proposed to make a declaration before the arbitral tribunal and the council decided, unanimously, not to file a request for disqualification.
– Moreover, the possibilities of withdrawal or challenge of the arbitrators were framed in a very restrictive manner by the compromise (see above).
g / Waiver of the possibility of appealing
Article 1482 of the Code of Civil Procedure provides that the award is subject to appeal, unless the parties have waived it in the arbitration agreement.
In the present case, the parties, subject to the provisions of article 1484 of the Code of Civil Procedure, have agreed that the sentence to be handed down will be final and have waived the right to appeal on the merits of this sentence.
Article 1484 provides in this case that an action for annulment may nevertheless be brought, despite any stipulation to the contrary, in the following cases:
– if the arbitrator has ruled without an arbitration agreement or on a null or expired agreement;
– if the arbitral tribunal was irregularly composed or the sole arbitrator irregularly appointed;
– if the arbitrator has ruled without complying with the mission conferred on him;
– when the principle of contradiction has not been respected;
– in all cases of nullity provided for in article 1480 (in particular the names of the arbitrators and the date of the award);
– if the referee has violated a rule of public order.
This waiver of the possibility of an appeal which would have made it possible to verify that the sentence did indeed comply with the authority of res judicata (in particular the decision of the Court of Cassation of October 9, 2006), proved, with the amount ceilings accepted (€ 295 million before interest for material damage and € 50 million for non-pecuniary damage), the provision of the arbitration agreement which presented the greatest risks for the financial interests of the State.
- ELEMENTS OF ASSESSMENT ON THE USE OF THE ARBITRATION PROCEDURE
In view of the documents communicated to the court, the following elements of assessment can be drawn up.
- The opposition of the EPA
While the judicial procedure was already very advanced with a judgment of the highest court of the judicial order in its highest formation, the decision to resort to arbitration did not seem opportune to the APE, because it was likely to reopen margins of uncertainty.
In a note to the Minister of February 23, 2007, following the letter from the liquidators of January 30, 2007 addressed to the president of the CDR and proposing to resort to an arbitration procedure, the director general of the APE formally advised against following up on this proposal. : “It appears contrary to the interests of CDR and the State to accept the proposal of the liquidators of the Tapie group to settle all the disputes within the framework of the arbitration procedure, given the obvious risks that such a procedure would present. for the CDR. “
The EPA considered that, even if the CDR were to obtain in the arbitration agreement that the award be rendered on the basis of law and not simply of equity, “it will be difficult for CDR to escape the practice of arbitrators of to make room for the latter to temper the supposedly excessive consequences of the application of the rule of law. “ The warning was very clear: ” In the present case, it is very likely that whatever the wording of the arbitration agreement, an award rendered to put an end to the pending disputes would be marked by considerations drawn from the law. ‘equity or practices, which would clearly weaken the position of the CDR, which is otherwise solid in law ”.
Finally, she recalled that “if one of the traditional advantages of arbitral proceedings is confidentiality, this advantage can clearly be ruled out in the present case. “
The Director General of the EPA reiterated its position in a note to the Minister of the 1 st August 2007: “I have not advised the ante minister’s predecessor (see my note of February 23, referenced) authorize the CDR, if it referred this proposal to the EPFR, to embark on this path which would be contrary to the interests of the CDR and the State ”. Likewise, in his note of September 17, 2007, he reiterated his prejudices:
“The APE informed the Minister and his predecessors, in particular in the notes cited in reference, of the substantial risks for the CDR, and through it for public finances, of such a procedure, in particular in the context of the favorable decision of the Court of Cassation. Added to these risks is the fear that the CDR’s decision to initiate an arbitration procedure, and therefore to give up defending itself before a common law court, will allow Crédit Lyonnais to call into question the commitment. that he subscribed in 1999, in return for a confirmation by the State of his guarantee on the Adidas risk, to assume up to a maximum of € 12 million the consequences of the dispute in the event of a conviction, which would increase again the cost of the file for the State. “
- The analysis of Maître Martel, first CDR advice
The CDR did not communicate to the State and to the EPFR any note on the advisability of resorting to the arbitration procedure, the work of the August & Debouzy cabinet having from the outset focused on the content of the compromise d. ‘arbitration.
Asked by the rapporteurs to produce the lawyers’ notes drawn up in 2007 and relating to the advisability of an arbitration, the president of the CDR replied by letter of October 12, 2009 that he did not have strictly speaking notes relating to the desirability of arbitration, but rather its feasibility, adding:
“For the sake of realism, the point of view of the Orrick cabinet, hostile to any approach outside the ordinary litigation route, being perfectly known, it was unnecessary to request it in writing. Moreover, this firm, when the team of jurists assisting the CDR during the arbitration was composed, joined it with the eminent position of lead co-counsel, and never communicated any doubts about the relevance of ‘a compromise based on the authority of res judicata. “
The president of the CDR nevertheless transmitted, after his hearing by the Court on April 15, 2010, a note from Maître Jean-Pierre Martel of April 13, 2005. The latter had been consulted by the president of the CDR at the time, at the following the negative outcome of the mediation entrusted to Mr. Jean François Burgelin, on the possibility and the possibility of entrusting an arbitral tribunal with the task of settling globally and definitively all the legal sanctions in which the CDR is involved concerning Tapie liquidation.
In this note, he expressed an unfavorable opinion to the arbitration procedure, because of the multiplicity of disputes and the difficulty of bringing all the parties to these disputes or only some of them to an agreement, namely the CDR, Crédit Lyonnais, the liquidators, the Tapie spouses and minority shareholders of CEDP.
- The unfavorable position of Crédit Lyonnais
The CDR entered into the arbitration procedure when Crédit Lyonnais had expressed its opposition. The stakes, although considerable, were not brought to the attention of the CDR Board of Directors.
a / Crédit Lyonnais’ position
Crédit Lyonnais was not solicited by the liquidators, who turned exclusively to CDR.
The president of CDR wrote to Crédit Lyonnais on September 24, 2007 to let it know that CDR and CDR Créances, requested by the liquidators to resort to an arbitration procedure making it possible to put an end to all disputes, would be in favor of this case. of figure, “subject to finding a satisfactory solution with regard to our agreements”. He asked him to express his opinion on this solution, but without asking him to be a party to the arbitration.
By letter of September 28, 2007, the Chief Executive Officer of Crédit Lyonnais (LCL) issued a “very reserved” opinion :
“Crédit Lyonnais is very reserved on the very principle of arbitrage. Indeed, experience shows a tendency for arbitrators – even when they are asked to rule in law – to act as amicable composers, which, in the particular case, could not be to the advantage of Crédit Lyonnais, which has strong support for it. very favorable judgment rendered by the Court of Cassation, all chambers together, on October 9, 2006.
That being said, even though recourse to arbitration appears to Crédit Lyonnais, on the one hand less favorable than the pursuit of legal remedies, on the other hand carrying a real risk of image and reputation, it does not could prevent the CDR from wanting to choose this path today.
In addition, not being a party to the arbitration and therefore not being able to make its arguments prevail, Crédit Lyonnais could not legitimately suffer the slightest consequence, of any nature whatsoever, in the event of a possible conviction of the CDR. by the arbitral tribunal ”.
Subsequently, Crédit Lyonnais has always confirmed by various letters in response to reminders from CDR its very negative opinion on the arbitration procedure and its refusal to suffer any consequences.
In a letter of February 20, 2008, Crédit Lyonnais refers to CDR’s refusal of “our request to be a party” to the arbitration.
In a letter of August 4, 2008, the Chief Executive Officer of Crédit Lyonnais reminds us: “Moreover, it seems important to us to recall here your categorical refusal to allow Crédit Lyonnais to be a party to this arbitration, even though it was in legal proceedings
pending before the state courts, thus depriving him of all access to the documents of the proceedings, to the arguments of the opposing party and therefore to the possibility of directly asserting his defense. “
b / The stake in relation to the scope of the CDR guarantee towards Crédit Lyonnais
The Adidas and Tapie disputes are not covered by the CDR guarantee towards Crédit Lyonnais provided for by the protocol of April 5, 1995, as it results from article 16, appendix 16 and appendix 9- 2.
Nevertheless, in his letter of March 17, 1999, the Minister of the Economy took the initiative, within the framework of the privatization of Crédit Lyonnais, to confirm the CDR guarantee for the “financial consequences of the actions taken by the liquidator agents. in respect of the sale of BTF Gmbh (Adidas) ”, in return for the acceptance by Crédit Lyonnais of a flat-rate contribution of € 12 million on the amount of any possible condemnation.The Court has also recalled on two occasions (insertion on defeasances in the annual public report of February 2008 and special report on the accounts and management of the CDR for the years 2000 to 2006 sent on June 17, 2008 to the Prime Minister and the presidents of the finance committees of the two assemblies) the legal fragility of this letter, in a field which requires legislative validation.
On the other hand, no guarantee had ever been provided, even by ministerial letter, for other disputes involving Crédit Lyonnais, in particular the action aimed at requesting compensation for the damage suffered by the Tapie spouses in respect of a in abusive judicial liquidation.
The operating mode of the CDR guarantee towards Crédit Lyonnais was set by appendix N of addendum n ° 16 of May 20, 1999 to the protocol of April 5, 1999. It is in particular provided that the CDR can choose the lawyers and the defense system and decide, if necessary, to compromise.
However, it appears that these provisions refer explicitly to the case of the transaction but not to that of an arbitration. In addition, the scope of the envisaged arbitration included disputes in which Crédit Lyonnais is a party, but which are not covered by the guarantee. Under these conditions, CDR probably did not have the legal means to force Crédit Lyonnais to participate alongside it in the arbitration. Crédit Lyonnais, for its part, retained as an argument (letter of August 4, 2008) the fact that the CDR can decide on the defense system, “since this decision is not likely to seriously damage commercial or financial interests. , as well as to the reputation of the Crédit Lyonnais group ”.If Credit Lyonnais
considers that this is the case, he can refuse the CDR’s instructions and lose the benefit of the guarantee (31).
As a result of this situation, CDR has agreed to assume on its own the responsibilities which were incumbent at least in part on Crédit Lyonnais, outside the scope of the guarantee.
Thus, the facts mentioned in the sentence in support of the conviction for non-pecuniary damage relate more to the behavior of Crédit Lyonnais than that of its subsidiary SDBO, even if the court considered that it could have the judgment focused exclusively on the SDBO of the fact of its implication in the legal implementation of the procedures, even if these procedures would have been validated by the courts in 1999.
The sentence mentions in particular “the violent press campaign carried out by the bank using by all means of the name of Tapie – for example registered on a trash can to discredit him …”, referring to a cartoon Liberation taken up in an advertisement of the Credit Lyonnais, published in Le Figaro in September 1994. Mr. Bernard Tapie had also been dismissed of his defamation complaint by a judgment of the Paris Tribunal de Grande Instance on December 21, 1994.
“It appears certain that Mr. and Mrs. Tapie were the object during fourteen years of liquidation – since December 14, 1994 – of a campaign of serious acts, obviously abnormal, intended to destroy with them any professional future and any reputation.
Speaking at the hearing on June 4, 2008, without any party opposing it, Mr. Bernard Tapie described some of the humiliations and destructive maneuvers he had to undergo with his wife. CDR Créances and CDR did not orally dispute this painful statement indicating only that Crédit Lyonnais and not SDBO were the perpetrator.
The documents produced show that it was indeed the SDBO which initiated the seizures and requested judicial liquidation. “
It emerges from the reading of the award that the CDR exposed itself, by engaging alone in the arbitration procedure, to endure alone (and without being able to defend itself effectively) a heavy sentence (45 M €) on the grounds of actions that implicated Crédit Lyonnais.
c / The stake in relation to the fixed contribution of 12 M €
The flat-rate contribution of € 12 million was, to use the words of the Managing Director of the APE in a note to the Minister of October 3, 2007, the negotiated consideration for the confirmation of the CDR guarantee in the dispute over the sale of Adidas .
(31) Crédit Lyonnais nonetheless complied with the letter from the president of the CDR of February 23, 2008 asking him to accept the liquidators’ withdrawals: “My establishment could not understand that you did not comply with the stipulations contractual relationships that bind us ”.
The letter of March 17, 1999 mentions the flat-rate contribution “that Crédit Lyonnais agreed to make”, but the Court was not aware of a document from the time attesting to this acceptance. The reference made by the letter of the Minister to the intervention of the State representative before the board of directors of Crédit Lyonnais is not more enlightening, because the minutes of the board of directors of March 21, 1999 no trace of this flat-rate contribution.
However, Crédit Lyonnais did agree in 2005, following the joint condemnation of CDR and Crédit Lyonnais of € 135 million by the judgment of the Court of Appeal of September 30, 2005, to bear a lump sum contribution of € 12 million. CDR and Crédit Lyonnais then recovered these funds after the judgment was quashed.
As soon as Crédit Lyonnais was not a party to the arbitration, it no longer had to seek the guarantee of the CDR on the part of any condemnation due to it and could use this as a pretext to call into question its lump sum contribution of 12 million. €.
The president of CDR pleaded, in a letter of October 29, 2007 addressed to the president of Crédit Lyonnais, that the latter was not released from his obligations;
“Your position on this point calls for the following comments from me:
(i) first, the fact, for your establishment, of keeping away from an arbitration, when it could benefit from a complete withdrawal, on the part of the opposing party, in all cases where Crédit Lyonnais and present represents a definite advantage, resulting primarily from the economy resulting from the disappearance of costs and fees related to the proceedings in question ”. He adds :
(ii) then, we do not share your conclusions and we refute the idea that Crédit Lyonnais can consider itself released from its obligations under our agreements and, beyond that, from the letter from the Minister of the Economy dated March 17, 1999:
– It appears from the agreements in question that in return for the guarantee that it provides to Crédit Lyonnais, CDR Créances is free to decide on the defense strategy to be implemented, which you yourselves confirm in your mail.
– However, it seems to us precisely that recourse to arbitration makes it possible to settle globally and definitively a very old dispute which, without the planned solution, would have the vocation to last several more years.
The Managing Director of Crédit Lyonnais did not respond to this letter until December 18, 2007, the same day the arbitration agreement was approved by the Paris Commercial Court, to indicate that the arguments put forward in no way modified its position. expressed on September 28, 2007.
d / The stake in relation to the defense of the CDR
The absence of Crédit Lyonnais in the proceedings alongside the CDR weakened the defense of the CDR.
Crédit Lyonnais recalled in its letter of August 4, 2008, that it had expressed its concern to see that “for an arbitration of such a short duration, on a file with such a rich and complex history, where procedures become entangled, you have chosen a new law firm to defend your interests… ”
He noted that, not being himself a party to this arbitration, his own counsel, who today alone knew the history of the case, were absent from the proceedings and could no longer have access to the documents in the case.
“It even emerges, from what we can read in the press, that certain counts of conviction are motivated by the existence of old procedures initiated by or against Crédit Lyonnais, and about which your counsel had no answer. . “
In fact, it emerges from reading the sentence that Mr. Bernard Tapie was heard during the hearings while Crédit Lyonnais was not. Moreover, the CDR did not even ask that he be heard.
The presence of Crédit Lyonnais would nevertheless have been useful in defense on crucial points for the sentences handed down: the financial situation of the Tapie group at the end of 1992 and its banking relations with Crédit Lyonnais, the question of a possible carry on behalf of Crédit Lyonnais , the actions alleged against Crédit Lyonnais in the course of the liquidation.
- The legal validity of recourse to arbitration
The legal validity of recourse to arbitration can give rise to questions, because of the wording of article 2060 of the civil code: “We cannot compromise (…) on disputes involving (…) public authorities and public establishments “.
It is indisputable that the EPFR, as a public administrative establishment, is not authorized to resort to arbitration, which results as much from Article 2060 of the Civil Code as from Article L. 31-6 duke of administrative justice.
It is a question of appreciating, the words “on” and “interesting” of article 2060 being able to induce a broad meaning of the prohibition, if this one does not extend to the CDR, company of cantonment placed under the supervision of the EPFR and financed by it, in particular by the guarantee mechanism for “non-quantifiable risks”.
Admittedly, it is not for the Court of Auditors to rule on the legality of the recourse to arbitration in the present case, which has not been definitively decided by the administrative court (32). On the other hand, it is up to him, within the framework of his mission of auditing the accounts and the management of public enterprises, to ensure the proper
(32) The Administrative Court of Paris rendered a judgment on October 8, 2009, by which it rejected the plea alleging disregard of Article 2060 of the Civil Code (…)
use of public funds. In this regard, it does not appear that all precautions have been taken.
a / A question raised late
The question of the legality of recourse to arbitration was not addressed in any of the meetings of the board of directors of the CDR or the EPFR, nor in any of the APE’s notes to the minister during the first half of 2007, who nevertheless took a firm stand against the advisability of resorting to arbitration. Thus in a note to the Minister of August 4, 2008, following Mr. de Courson’s questions on the legality of recourse to arbitration, during the EPFR council of July 28, 2008, the APE made the following comment:
“The question raised by Mr. de Courson during the meeting of the Board of Directors had not been the subject of a specific analysis prior to the launch of the arbitration procedure by the CDR, given the other reasons which led the State Participation Agency to advise the Minister against authorizing recourse to arbitration by the CDR. At this stage of the case, I recommend that the Minister question the Department of Legal Affairs in order to determine whether the analysis developed by Mr. de Courson would not nevertheless be capable of providing a serious ground for annulment of the arbitration award, and in any event to analyze what would be the consequences, in particular on the validity of the award and its execution, of a dispute initiated by a third party in this area. “
The president of the CDR said that he had not had any note of his legal advice, nor had he sought it, on the question of the legality of the recourse to arbitration for the CDR in the Adidas / Tapie case.
B / Reasons for uncertainty
The CDR and the APE say that they considered that, as a company governed by commercial law, the CDR could easily compromise on disputes of a commercial nature.
In this case, the CDR argues that it has resorted to arbitration in seven cases, including four in domestic law, without being criticized by the supervisory authorities.
The CDR and the APE also argue that the protocol of April 5, 1995 between the State and Crédit Lyonnais provides for recourse to arbitration in certain situations.
However, the legal situation of CDR does not seem so simple in relation to this question and contains areas of uncertainty:
– The first question asked is that of the capacity to compromise subsidiaries of public establishments that are not themselves authorized to do so. To date, it appears that there is no definitive case law on this subject. It is possible that the sole capital link is not sufficient to found the notion of profit-sharing within the meaning of article 2060 of the civil code, “although it is not possible to affirm that no judge will make a literal application of article 2060 ”according to the note from the legal affairs department of the financial ministries.
– Secondly, it is necessary to take into account the particularity of the CDR, as a company of cantonment of the defeasance of Crédit Lyonnais whose object is fixed by the law of November 28, 1995, as well as its relations with the EPFR .
Under the terms of this law, the main activity of the CDR is the management or sale of receivables, participations or assets and as such benefits from a support or a financial guarantee in any form, direct or indirect, from EPFR. EPFR, for its part, has a dual mission of financing (“managing the financial support provided by the State”) and monitoring (“It notably ensures that the financial interests of the State are respected within the framework of the plan. recovery of Crédit Lyonnais ”). The EPFR itself is subject to close control by the minister who must approve all important decisions.
Financial relations between CDR and EPFR are regulated since 1998 by the Amendment No. 13 to the Protocol of 5 April 1995. This amendment provides that the risks considered unquantifiable at 1 st January 1998 “are subject to specific procedure ‘inventory and monitoring with a view to their assumption of responsibility by EPFR as and when disbursements are observed ”.
Adidas risk is classified in this category. The device for non-quantifiable risks does not constitute a mandate within the meaning of administrative case law, but corresponds to a guarantee mechanism, which can only be exercised under the supervision of the guarantor.
In practice, the CDR is subject to close control by the EPFR for the most significant risks, in particular the Executive Life and Adidas / Tapie cases. This practice was also approved by the Minister of the Economy, Industry and Employment in his response to the insertion of the Court of Auditors concerning the assessment of the management of defaults (annual public report of February 2008) (33). This practice requires that the CDR, although the operating mode of the guarantee has not been formalized by a text, seeks the approval of its guarantor for any important decision (34).
Thus, as was indicated above, the president of the CDR wrote to the EPFR to ensure that there was no objection, considered as a necessary condition for carrying out its own deliberation. The president of the CDR also declared before the finance committee of the National Assembly that he would naturally not have pursued the path of arbitration in the event of opposition from the EPFR. In this case, the autonomy of the CDR is severely restricted.
– With regard to the precedents, in addition to the fact that they do not constitute a guarantee of legality, it is observed that none of them fell within the framework of an unquantifiable risk subject to the approval of the ‘EPFR because of its importance.
– The memorandum of understanding between the State and Crédit Lyonnais effectively contains arbitration clauses, such as that provided for any dispute of the
(33) RPA 2008, p.96
(34) The president of the EPFR spoke to his board of directors on December 2, 2003 of the risk of “abnormal management” that the president of the CDR would take if he did not take this precaution.
agreement for the transfer of shares and receivables dated December 15, 1995 signed between Crédit Lyonnais and CDR, which forms appendix A of the protocol. It may be considered that these arbitrations have been expressly authorized by a protocol ratified by law and that , conversely, any other arbitration expressly mentioned is not authorized.
In view of these uncertainties, it was necessary to ensure by all appropriate channels, including consultation of the Council of State, that the CDR was empowered to resort to arbitration on behalf of a public establishment.
- THE PROCEDURE BEFORE THE ARBITRAL TRIBUNAL AND AWARDS
- The proceedings before the arbitral tribunal
The compromise provided that the time limit for the arbitration procedure would be “as short as possible”. Pursuant to the timetable proposed by the parties on January 29, 2008 and adopted by procedural order of January 30, 2008, the arbitral tribunal had to render its award ” ” within eight weeks from the second day of the hearing of pleadings ” . The second day of the oral hearing having been set for Thursday, June 5, 2008, the sentence had to be rendered no later than Thursday, July 31, 2008.
The documents successively sent to the arbitrators by the parties are as follows: plaintiffs’ brief on February 15, 2008, elements in rebuttal by the CDR of the liquidators’ thesis on April 5, 2008, CDR’s brief on April 15, 2008, liquidators’ reply memorandum of April 30, 2008, CDR rejoinder of May 30, 2008.
The hearings of June 4 and 5 were naturally confidential, only the parties and their lawyers could attend. The president of the CDR reported on the progress of the two hearings of oral pleadings of the boards of directors of the EPFR, on June 18, 2008, and of the CDR, on June 27, 2008, which constitutes the only source available to the Court, with references to the hearings present in the arbitration award. The following points emerge:
– The first hearing was devoted to the Adidas case. The court dismissed the request for intervention made by representatives of minority shareholders of CEDP to join the arbitration. He then heard the pleadings of counsel for the parties. The lawyers for the liquidators and husband Tapie tried to demonstrate that the banks had failed in their duty of loyalty and that they were counterparties in an unlawful manner. The lawyers of the CDR presented the disastrous economic situation of the Bernard Tapie group, in 1992-1993, which had no other choice but to sell Adidas, and pleaded in law to try to have the court recognize the absence of compensable damage.
– The court then examined the requests based on a possible abusive support and on the rupture, presented as abusive, of the banking relations in 1994. The lawyers of the CDR pleaded that the aggravation of the liabilities was largely attributable to the withdrawals of Bernard Tapie, and that the obsolescence of the March 1994 protocol had been recognized by the Paris Court of Appeal, definitively, in 1999, which authorized the bank to initiate collective proceedings.
- The sentence of July 7, 2008
The arbitration award is dated July 7, 2008 and was sent to CDR on the same day. CDR was ordered to pay € 240 million for material damage (to which legal interest should be added) and € 45 million for non-pecuniary damage, with liquidation costs provisionally set at € 8.5 million.
The arbitral tribunal ruled out the opposing party’s claims based on abusive support and abusive breach of funds. On the other hand, he retained the responsibility of the CDR, representing the banks SDBO and CLINVEST, due to the sale of Adidas in 1992-1993. It considered, in fact, that the judgment of the Paris Court of Appeal of September 30, 2005 had recognized GBT’s right to challenge the conditions under which the mandate to sell Adidas, entrusted by BTF to the SDBO, had been executed, this mandate being considered by the court to be inseparable from the memorandum to which GBT was a party.
It found two faults against the banks: a breach of the duty of loyalty of the agent and a violation of the prohibition on acting as counterparty, arising from article 1596 of the Civil Code:
– The disloyalty arose, for the court, from the impossibility for the bank to prove that it had informed its principal well that it granted to Mr. Robert Louis Dreyfus a purchase option for a price higher than that which was provided for in the agreements between the Tapie group and the SDBO; it also resulted from the fact that nothing came to prove that the principal knew that the bank financed all the buyers and that it had collected at least 70% of the capital gain on resale, the burden of proof belonging to the CDR;
– On the consideration, the court noted that Mr. Peyrelevade, during his hearing before the parliamentary commission of inquiry, had explicitly recognized the porterage and the fact that Crédit Lyonnais had bought Adidas. It is also, according to the court, indisputable that the porterage was recognized by the highest leaders of the structures to whose rights the CDR now comes. In addition, the court considered that the vehicle used to complete the roundtable was in fact controlled by the Crédit Lyonnais group.
With regard to the material damage , the court considered that the damage to the company GBT was obvious: it was indeed a personal damage suffered by the company GBT as a result of the execution of the sales mandate.
Without demonstrating this damage or its causal link with the faults attributed to the SDBO, the court relied on the comparison between the official sale price of 2.085 billion francs (317.85 M €) in 1993 and the price of the 1995 IPO (11 billion francs (1.68 billion €), amount reduced to 8.58 billion francs (1.308 billion €) taking into account the observation of the CDR that should only retain 78% of the sale price), i.e. a difference of six billion francs or nearly one billion euros.
Noting that “The liquidators finally retained only a loss of the order of 20% on the loss of profit as they calculated it on the basis of a value of 1995”, the court decided to fix the amount of GBT’s loss, “after
Analysis of the documents and arguments of the parties and in view of the decisive elements of assessment at his disposal ” to the sum of 240 million euros . The court recalls, “not for cause but for simple reference” , that the amount of public debts declared and verified amounts to 190 M €. It also decided that this sum be updated as of November 30, 2004 at the legal unfunded rate, after deduction of the basis of the conviction bearing interest on the mortgage loan on the building in rue des Saints-Pères that the Tapie spouses continued to live.
In addition, the court recognized that the Tapie couple had suffered moral prejudice. He considered in fact that the bank’s faults were accompanied by an “exceptional brutality” the procedures followed (violence of the press campaign, public and spectacular visit of the Tapie couple’s building, numerous criminal complaints, public seizure of the Tapie couple’s property, etc.). He also indicated that the bank had actively worked to put the Tapie spouses into compulsory liquidation and considered that the involvement of the SDBO in the proceedings made it possible to impute the conviction to it, even though the Crédit Lyonnais parent company would have a share of responsibility for the acts in question. As a result, compensation of 45 million euros was to be allocated to the Tapie spouses, through the liquidator.
The liquidators were also invited by the court, which echoed the reasoning of the Court of Appeal in its 2005 judgment, to quantify the possible difference in tax relating to the sum of € 240 million and the interest that could result from the comparison between the taxation applicable to the conviction and the taxation which would have been applied to GBT at the material time.
Expenses incurred on liquidation costs were stopped at € 8,448,529.59, the liquidators being asked to produce all useful supporting documents on the amount of costs to be incurred.
The award, with provisional enforcement, was served on the CDR on July 17, 2008, after the liquidators had obtained the exequatur from the Paris tribunal de grande instance.
3 The decisions relating to the action for annulment
– The board of directors of CDR ruled on July 28, 2008 against an appeal for annulment of the arbitration award, by three votes to two.
The president of the EPFR, after having indicated at the beginning of the meeting that he would not take part in the vote, finally voted against after having, according to the indications he provided during his hearing by the Court, received oral instructions from the minister’s office during the session. The minister’s chief of staff, also heard by the Court, formally challenges any intervention.
If the president of the EPFR had abstained, in accordance with the practice of his predecessors in this case and as he had apparently originally intended, the votes would have been evenly divided for and against and the vote no. ‘could only have been acquired if the president of the CDR had decided to exercise his casting vote.
– Meeting a few hours later, the EPFR board of directors did not oppose the CDR’s decision not to appeal. The directors representing the State on the EPFR board of directors had received a note dated the same day (July 28, 2008), signed by the Minister of the Economy, Industry and Employment, indicating that after having taken note of the analyzes produced by all the councils of the CDR, of the notes of the Agency of the participations of the State and of the counterparties negotiated with the waiver of filing an appeal, concerning the points still open for the execution of the award following the arbitration hearing of July 24, it asked them to rule against an appeal.
– These decisions were taken very quickly, without completely using the period of one month from service (July 17, 2008) which ran until August 17, 2008. The time was therefore reduced to assess the means and the chances of an action for annulment, and a fortiori to measure the scope of the counterparts presented on the same day of the boards of directors by the liquidators and the Tapie spouses, in particular on the tax question. The president of the CDR and the minister in charge of the economy indicated that this calendar was dictated by the departures on leave.
- The consequences of the first sentence
On July 23, 2008, the president of CDR gave Crédit Lyonnais formal notice to pay € 12 million as part of the contribution incumbent on it, under the terms of the letter from the Minister of the Economy and Finance of March 17, 1999. 4 August 2008, Crédit Lyonnais refused to submit to this formal notice. In support of his refusal, he recalled his previous answers, namely that “Crédit Lyonnais cannot favorably accept your request for a flat-rate contribution of 12 million euros”, that “he could not suffer the slightest consequence, of any kind. nature whatsoever, of a conviction of the CDR by the arbitral tribunal ” and which he did not intend to add today to the damage to image and reputation thus suffered“The payment of a lump sum contribution whose claim is clearly abusive and illegitimate”.
The court reconvened the parties for a hearing on July 24 to settle issues relating to taxation and outstanding liquidation expenses. These questions, to which was added the dispute which had arisen in the meantime on the calculation of interest, were referred to subsequent hearings.
By letter of July 28, 2008, the liquidators and the Tapie spouses made proposals on the terms of execution of the first award, subject to the condition that there is no appeal for annulment:
– claims for liquidation costs are capped at € 15 million, including the conviction of € 8,448,529.59
– CDR will appoint the auditor of its choice to analyze and verify the expenditures incurred and paid liquidation costs incurred unpaid, to engage, during the audit which will take place between 1 st September and 15 October 2008.
– The liquidators and the Tapie spouses waive their request for condemnation for the additional damage relating to the possible difference in tax relating to the sum of € 240 million plus interest, resulting from changes in taxation between 1995 and today ;
Given the difference in the amount of legal interest (€ 95,634,551.64 for the CDR, € 111,741,476.57 for the liquidators and
husband Tapie), the latter propose to cap their request in this regard at 105 M €;
– the commitment to take over the deductible of € 12 million will be executed on the balance of the convictions to be collected, all subsequent actions by the liquidators or the Tapie spouses with regard to Crédit Lyonnais on this matter must first be submitted to the CDR and approved by him;
– the liquidators and the Tapie spouses accept the compensation between, on the one hand, the principal judgment of € 240 million plus non-pecuniary damage of € 45 million, i.e. € 285 million, and on the other hand the balance between the gross amount of the SDBO debt, € 163,351,810.19, and the allocation price of BTF SA shares (today CEDP), € 76,224,508.62, i.e. € 87,127,301.57, which must be paid no later than September 5, 2008. The excess condemnation will be due on February 28, 2009 at the earliest.
This proposal received a favorable response from the president of the CDR on July 29, 2008, the waiver of an appeal having been recorded in the meantime (see below).
The decision rendered by the arbitrators was covered by the exequatur and was executed on September 5, 2008, the CDR giving the liquidators a check for 197,872,698.43 €.
5- The additional awards of November 27, 2008
After new hearings, the arbitral tribunal rendered three new awards on November 27, 2008:
1 / A sentence of interpretation, granting the liquidators and the Tapie spouses on the request for interpretation as to the basis for the calculation of interest.
The sentence of July 7, 2008 condemned the companies CDR Créances and CDR to pay legal interest on the sum of € 240 million, less, for the calculation of interest, “the mortgage loan of CDR Créances on the building on the street. of the Holy Fathers ”.
The two parties had presented to the court, on July 16 and 22, a request for interpretation to ask it what was meant by “the mortgage debt”. The CDR considered that these were all debts guaranteed by mortgages taken on the building (hotel in Cavoye), i.e. three mortgage debts for an amount of € 48.27 million (the amount of interest then showing at 95 M €). The liquidators and the Tapie spouses, for their part, considered that only the debt corresponding to the loan contracted for the acquisition of the hotel in Cavoye, for an amount of € 16.05 million was concerned (the amount of interest then amounting to 111, 7 M €).
The award validated this latter interpretation but capped the amount of interest at € 105 million, in accordance with the commitments made by the liquidators and the Tapie spouses in the letter of July 28, 2008.
2 / A sentence on request for interpretation,
A request for interpretation had been filed by the liquidators and the Tapie spouses in order to distribute the amount of the damage due to the two faults committed by the CDR according to the reason (violation of the obligation of disloyalty or violation of the ban on counterpart in application of article 1596 duke of the Commercial Code). Since the tax treatment of the conviction may be different depending on the fault retained, the applicants argued that it would be useful for them to know this breakdown.
However, the court had enunciated the following principles of reparation: “The violation of the obligation of loyalty is resolved in damages. On the other hand, the violation of the prohibition to act as counterpart allows the victim of the fault to request the nullity of the sale. The cancellation of the sale, in the case of shares, being impossible in this case, the victim can claim compensation by equivalence with the value of the shares. “
The Tribunal ruled that the complaint was inadmissible, considering that it was neither a problem of interpretation nor a remedy for a fault or an omission.
3 / An arbitration award on the costs of liquidation, and on the distribution of the damage.
The liquidators had agreed to cap their claim for liquidation costs at € 15 million by letter of July 28, 2008. CDR for its part accepted an amount of € 11,912,889.
Taking into account all the elements communicated and the explanations provided orally at the hearing, the court set the liquidation costs at € 13 million, including a maximum amount of € 3.8 million for the costs and fees of the liquidators. , payable to the CDR only when they are taxed by the commercial court or the Paris Court of Appeal.
With regard to the tax damage, the liquidators and the Tapie spouses maintained that the court remained seized and that this request would make it possible to obtain details on the distribution of the damage between the two faults retained by the court (violation of the obligation of loyalty and violation of the prohibition on acting as counterpart).
The court recalled that it was dismissed due to the withdrawal of the liquidators and the Tapie spouses (letter of July 28, 2008) and that this question appeared in any event to be irrelevant, the liquidators and the Tapie spouses having requested the fixing of the amount of damage from all causes. He confirmed that he had ruled “for all reasons on the amount of the damage, even if it is obvious that the prohibition to act as counterpart is sufficient to justify, in itself, this amount”.
- Additional awards and execution protocol
The additional sentences of November 27, 2008 were not served on the CDR until March 3, 2009, without this delay being explained.
On the same day, the lawyers of the CDR received an official letter from the counsel of the opposing parties requesting the CDR to pay within 48 hours, in addition to
the sum already paid on September 4, 2008 (197,872,698.43 €), the sum of 119,623,082.54 €, broken down as follows:
– € 105,000,000 for capped interest;
– € 8,864,359.40 for agreements on liquidation costs;
– € 5,758,723.14 for restitution of the receiver on the sale price of the vessel the “Phocéa”.
In addition, it was planned that the CDR would later pay the liquidators’ tax, “capped at € 3,800,000”. It emerges from this statement that the € 13 million for liquidation costs should ultimately amount to a maximum of € 12,664,359, with the future amount of the liquidators’ tax.
This letter did not mention the payment franchise of € 12 million in principle accepted by the liquidators. CDR counsel reacted immediately on instruction from the CDR president to recall that this request was in contradiction with past agreements, which led to the development between the councils of an amicable protocol.
Finally, CDR and CDR Créances concluded with the liquidators and the TAPIE spouses on March 16, 2009 a protocol for the execution of the sentences of July 7 and November 27, 2008, which included the commitments of the liquidators concerning the deductible of € 12 million and under the terms of which CDR and CDR Créances undertook to pay the opposing party, before April 4, 2009, a total sum of € 107,623,082.54 (including € 5,758,723.14 for ACT escrow). Taking into account the payment already made on September 4, 2008 (197,872,698.43 €), the CDR will have paid in total to the liquidators 305,495,780.97 € (35).
Within the framework of this protocol, CDR assigned its € 12 million receivable on Crédit Lyonnais free of charge to the liquidators, recalling that it was “discussed” by Crédit Lyonnais. The liquidators undertake to notify the CDR, at least one month before any assignment by Crédit Lyonnais, of any action against it and guarantee the CDR of any consequences that their actions against Crédit Lyonnais may have.
This debt assignment was not expressly provided for in the transaction that took place in November 2007. It implicitly resulted from the letter from the liquidators of July 28, 2008, which specified that they should not only inform the CDR of any action against the Crédit Lyonnais but moreover obtain its approval, a condition which was waived.
At this stage, Crédit Lyonnais had never been informed by CDR of the November 2007 transaction and its consequences, which is contrary to the terms of addendum no.16 of 20 May 1999 relating to the operating mode of the CDR guarantee towards Crédit Lyonnais: “For its part, CDR undertakes to inform the Crédit Lyonnais group as quickly as possible of any procedural act, transaction, negotiation, decision or event which could seriously undermine
(35) The payment of September 4, 2008 (197,872,698.43 €) corresponded to the contraction between the actual convictions (285 M €) and the balances of the SDBP’s receivables on the Tapie liquidation, i.e. 87,127,301.57 €.
Commercial or financial interests, as well as the image or reputation of the Crédit Lyonnais Group, in order to obtain its opinion ”.
The execution protocol of March 16, 2009 provides that in application of article 1690 of the civil code, the “transferee liquidators under this act, will notify the present transfer to Crédit Lyonnais by extra-judicial act”. The notification to Crédit Lyonnais had not been carried out at the beginning of November 2010 (36).
- THE LITIGATION OF ARBITRATION AND THE COST TO THE STATE
- The advisability of an action for annulment
The parties to the arbitration having waived within the framework of the compromise the possibility of appealing, only the way of an action for annulment remained open to the CDR (article 1484 of the code of civil procedure) after the wording of the arbitration award. .
The CEO of CDR was planning to meet his board of directors on July 7, but the president of EPFR told him that the EPFR board would not meet until July 24, in order to have the necessary time to do so. ‘analysis of the notes of the CDR’s counsel with regard to possible remedies.
The board of directors of CDR finally met three times, on July 17, July 24 and July 28, that of EPFR on July 28, 2008.
According to a our from the APE of July 16, 2008, the minister’s office gave the orientation to launch an action for annulment only if one of the cases provided for by article 1484 of the code of civil procedure had done so. subject to a “manifest violation”. However, this orientation could not be imposed on the board of directors of the CDR, of which there is nothing to indicate that it was directly aware of it.
Four legal consultations ordered by the CDR were issued: a memorandum from August & Debouzy of July 17, 2008 (an identical version presented as a working document is dated July 11), then completed by a memorandum of July 28, 2008 which summarizes the case law on the matter, a brief note from Maître Martel of July 17, 2008 (supplemented by an email of July 25, 2008 in which he indicated that he was following the advice of Maître Soltner), a note from Maître Benoit Soltner of July 17, supplemented by a second note of July 23, 2008 and the note of Maître Patrice Spinosi of July 25, 2008.
a / The opinions of CDR lawyers were very divided on the outcome of an appeal
Unlike the decision to go to arbitration, the issue of an action for annulment has been the subject of numerous legal opinions. No less than four law firms were consulted.
(36) The transfer would nevertheless remain definitively acquired despite failure to comply with this formality.
Opinion of the cabinet August et Debouzy
In the working document of July 11, 2008, the August & Debouzy firm presented the following summary:
“Article 1484 of the Code of Civil Procedure provides for several cases of opening (six) of the action for annulment against an arbitral award.
– Certain means of annulment must be ruled out at first glance, in particular the absence of an arbitration agreement or the irregular composition of the Tribunal unless new elements relating to the independence or impartiality of the arbitrators are discovered.
– With regard to the adversarial principle, in the absence of a flagrant violation committed by the Arbitral Tribunal in the procedure which has been carried out to its conclusion, an action for annulment on this basis should have little chance of success.
– An action for annulment on the basis of the violation by the Arbitral Tribunal of public order or the exceeding by the arbitrators of the limits of their mission could theoretically be considered in particular from the angle of the violation by the Tribunal of authority res judicata attached to the decisions rendered in this case (article 7.1 of the arbitration agreement).
– However, only a flagrant violation of the authority of res judicata or the absence of manifest reconciliation between the sentence and the decisions bearing the authority of res judicata could justify the annulment of the sentence. Taking into account the terms of the award and subject to the analysis of our colleagues who will focus particularly on this question, the possibilities of annulment of the arbitration award on this basis seem limited to us. ”
The August & Debouzy law firm also produced a memorandum dated July 28, 2008, which was “intended to provide, through the analysis of various decisions of the Paris Court of Appeal and the Court of Cassation, which are appear to be relevant, the trend in case-law in matters of annulment actions ”.
This memorandum would have been even more useful when the draft compromise was examined by the boards of directors of CDR and EPFR in October 2010 to assess the stakes of waiving the possibility of appeal.
Opinion of Maître Benoît Soltner
SCP Cecile, Blancpain and Soltner was CDR’s lawyer for the cassation appeal. A first note of July 17 expressing doubts was followed by a new note dated July 23, 2008, favorable to an appeal.
Master Soltner, after having declared himself “shocked by the exorbitant amount of the sentences pronounced, as much as by the aplomb of certain assertions which seem to ignore certain decisive documents which were nevertheless sufficient to throw
a definitive discredit on the thesis ” of the liquidators and the Tapie spouses, notes that the arbitrators reproduced the same errors of law made by the Paris Court of Appeal, by allowing the liquidators to seek compensation not for the personal injury suffered, but that experienced by the “Bernard Tapie Group”, for which the liquidators had no power of representation.
He observes that the reasons for the sentence in question “would probably not resist an appeal in appeal or cassation if such a route were opened, since it is a fact, that no more in 1994 than in 1998, the SNC GBT has the slightest right to seek compensation for damage from which she has not personally suffered ”. It is recalled that the shareholder of Adidas is the company Bernard Tapie Finance, which became CEDP and owned by CDR.
However, noting that the court had taken care “not to expose itself openly to this type of grievance”, it initially declared itself “dubious about the possibility of building serious means of annulment, given the very conditions. restrictive in which such recourse is open to us ”.
In the second note dated July 23, Me Soltner specifies that “the research that I was led to undertake lead me to think, going back to my first impression, that we have a means of cancellation a priori serious”.
He stresses that, in the case of a judgment rendered by the plenary assembly of the court of cassation, the authority of res judicata by the judgment extends to the reasons for the judgment and that a referral court , like the court in this case, is required to comply with the legal analyzes conducted by the Court of Cassation (37).
Now, writes Maître Soltner, “The Paris Court of Appeal and the Court of Cassation have expressly stated that there was no question for the liquidators of BGT to request the recovery of capital gains on the sale of ADIDAS from BTF. SA to GBT. “ He adds: ” One thing was therefore certain: in any case the action brought by the liquidators could not lead them to receive the equivalent of all the capital gains which the Tapie group, as a whole, would have been frustrated. , since the two aforementioned decisions, in turn, ruled that SNC GBT had no standing to seek compensation for damage of this type. “.
He notes that the sentence “is openly freed, and on many occasions we will see, of the thing thus definitively judged by the aforementioned judgments”.
In particular when the sentence says that the action of the liquidators is admissible ” without any limit” or “On the other hand, the Court of Cassation did not prohibit the liquidators from requesting” the equivalent “of the capital gain, unlike what the CDR maintains … since it has, on the contrary, admitted that the liquidators could seek compensation for the damage suffered by GB for having been deprived of part of the funds that the memorandum had planned to allocate to the repayment of its own debts ”.
(37) According to Article L. 131-4 of the Code of Judicial Organization, “when the referral is ordered by the plenary assembly, the referring court must comply with the decision of this assembly on points of law judged by it. “
As for the chances of success of the appeal, he specifies, on the basis of a case law of the Court of Cassation of January 6, 1987: “The Court of Appeal of Paris, if it is seized in the present case of an appeal in annulment, will have full latitude to determine, by substituting its assessment for that of the arbitrators if necessary, whether the latter have respected the authority of res judicata, by itself engaging in the interpretation of the terms of the compromise and judgments of the court of cassation and the court of Paris.
In conclusion, Me Soltner considers that “the CDR has a means of cancellation which can be qualified as serious and which could all the more win the conviction of a college of magistrates that we are in the presence of an infringement of the authority of res judicata by the highest judicial authority in this case, an infringement accompanied in addition by peremptory assessments and errors of fact and of law with which the sentence is also enamelled. “
Opinion of Master Jean Pierre Martel
Asked to provide a note, Maître Martel responded by email on July 25, 2008, apparently following a brief note of July 17. He indicates :
” I received your message. I understand that the decision-making of the board of directors incorporates other considerations than advice from advice or experts.
This is how a strategic choice was made, in order to quickly close this case, to entrust an arbitral tribunal with the mission of deciding, without recourse, in law and respecting the authority of res judicata of decisions. of the Paris Court of Appeal and of the Plenary Assembly of the Court of Cassation, all legal proceedings with the liquidators and the Tapie spouses.
In this regard, you have the advice of Maître Benoït Soltner, lawyer at the Council of State and at the Court of Cassation, who is undoubtedly among the CDR’s councils the best expert in legality recourse. I have nothing to add to these notes or to the brief note I gave you on July 17, 2008, except that the serious nature of a means is obviously not enough to guarantee its outcome. “
Nevertheless, the lived experience of the contentious strategy of the Tapie spouses and the judicial liquidators allows us to predict that in the event of an action for nullity against the sentence, they will undoubtedly immediately re-initiate all or part of the legal actions which they have waived, on the grounds that the very essence of the compromise / transaction, well underlined in the text of the agreement, was that the parties would irrevocably submit to the award to be reached (even if, as we know, it is not possible to waive by advance to the action for nullity).
He added in conclusion that “this new strategic choice to be made is indeed, like the previous one, the will of decision-makers and not the opinion of experts, as you have rightly written to me”.
Opinion of Master Patrice Spinosi
The president of the EPFR had indicated to the board of directors of the CDR on July 24, 2008 that the Minister wanted an additional analysis to be carried out.
The CDR consulted, late and within a very short time, a fourth lawyer, Maître Patrice Spinosi, who gave his consultation on July 25. The mission was limited to the examination of a plea which would be based on the disregard by the arbitral judge of the authority of res judicata as it resulted from article 7.1 of the arbitration agreement informed by article L. 131-4 of the code of judicial organization (now article L. 431-4 of the same code).
He recalls that disregard of the authority of res judicata does not constitute a violation of public order, since it is a matter of private interest and not of public order. As for the complaint of disregard by the arbitrators of their mission, it is considered in an extremely restrictive manner by the case law and can in no case allow an appeal for revision of the award.
It observes in this regard that the parties proposed, as soon as the briefs were exchanged, very different readings from the judgments of the Court of Appeal and the Court of Cassation and the consequences that should be drawn from them. These readings led the arbitrators to expressly ask the parties, by a procedural order of May 23, to draw up a note proposing a list of the decisions that have acquired the authority of res judicata and specifying the scope of these decisions on the anointed. litigation submitted to court. The rejection of the appeal on this head alone “cannot be neglected”.
If the court of appeal agrees to effectively control whether the court has respected the authority of res judicata, the outcome of such an examination would remain “largely uncertain”. Indeed, according to Master Spinosi:
– the drafting of one of the reasons of the Court of Appeal relating to the admissibility of the action of the liquidators, which reads as follows: “The liquidators also base their action on the compensation for the damage they estimate to have been indirectly affected by faulty performance of the contract without asking for the increase in the capital gain that could have been achieved by BTF following the sale of ADIDAS ”, can be read in two ways:
– Either, reaffirming the solution they put forward in their first report, the appellate judges note that the liquidators can request compensation for their damage suffered by ricochet to the exclusion of any consideration of the return of the most -value (this is the thesis of the CDR);
– Or, as a counterpoint to their first expectation, the appellate judges note that the liquidators, because they ask for compensation for damage by ricochet, do not seek the increase of the capital gain, this request being different.
It is clearly this behind interpretation which is favored by the arbitral tribunal which notes: “This indirect damage excludes the direct request for capital gains made by BTF but does not exclude its indirect effects. ”
– Article L. 431-4 of the code of judicial organization which is necessary for a referral court cannot be transposed to the arbitral tribunal. The arbitral tribunal would thus be perfectly justified to write in its award: “Do we have to interpret the motivations of the Court of Cassation in order to consider that these come to enlighten
the judgment of the Court of Appeal of September 30, 2005, or even limit its scope? This thesis is completely unfounded in law.
– Finally, by dissociating the right to act from the right to compensation, contrary to the reading of the reasons of the Court of Cassation proposed by the CDR, and thus deducing that the liquidators cannot be imposed any limit as to the amounts of their claims compensation, the arbitrators apply a classic legal solution. The question of the quantum of the reparable damage would thus be a question linked to the merits which cannot be confused with that of the admissibility of the action.
Maître Spinosi concluded as follows: “At the end of this analysis, I can only be very reserved as to the chances of success of an action for annulment, brought against the sentence of July 7, based on the disregard of the res judicata by the court ”. He added: “the personality and prestige of the arbitrators chosen will not be the least of the handicaps of such an action”.
The question of the chances of success therefore did not call for an obvious answer in view of the legal advice notes, since the control exercised in relation to respect for the authority of res judicata in this context could only be limited.
This last point, which appears in retrospect to be fundamental for the interests of the State, was never brought to the attention of the directors of the CDR during the meetings of the board of directors on the draft compromise.
In addition, an action for annulment based on the lack of legality of the arbitration could have some chances of prospering (38), but that amounted to the CDR and the public authorities to contradict each other.
b / The position of the APE
Should the CDR then nevertheless file an action for annulment which would be justified given the exceptional amount of the sentence, close to the maximum amount of claims made by the parties opposed to the CDR, even if its chances of success were uncertain?
The APE, in its notes to the minister of July 22, 23 and 25, and some CDR administrators advocated it. In its note of July 22, the APE remarks: We could however consider that the exceptional scale of the conviction, close to the maximum amount of the requests formulated by the parties opposed to the CDR in the context of the arbitrations, justifies in any event to bring an action for annulment, even if this has a low chance of success ”.
c / The CDR’s decision
The president of the CDR spoke out against the appeal for annulment after indicating that for his part, in the presence of contradictory notes, given the weak
(38) This point of view was defended by Mr. Thomas Clay, professor of law and specialist in arbitration, in his hearing by the Finance Committee of the National Assembly in September 2008.
Chances of the CDR in the event of an appeal, and of the immediate cost thereof by abandoning the opponent’s concessions, he considered in conscience not to be in favor of an appeal. He later indicated, during his hearing by the Finance Committee of the National Assembly, that these concessions represented, according to him, around € 70 million.
After indicating during the debate that he would not take part in the vote as a representative of the EPFR, which is the traditional position of the President of the EPFR, the latter finally took part in the vote against the appeal, all by specifying that its vote “is expressed subject to the future position of the EPFR”. If the EPFR representative had not taken part in the vote, the result would have been two votes for and two votes against, the decision then being able to be taken only if the president decided to use his casting vote.
According to the minutes, the representative of the control mission intervened in the debate to “recall that he represented the State before the board of directors” and indicate that according to him the State had more to lose than win by approving an appeal, given the high probability of a new legal defeat and the collateral damage that would appear as soon as the appeal is filed. He had estimated earlier in the meeting that “the amount of compensation provided by Bernard Tapie is of the order of 100 million euros. However, these compensations would be lost in the event of an appeal. There is an important element to take into consideration ”.
The calculations of the compensation proposed by the liquidators and the Tapie spouses, carried out by the chairman of the CDR (€ 70 million) and a fortiori by the representative of the control mission (€ 100 million), were not explained to the directors and are based on very summary expertises on the main item relating to the difference in tax treatment.
The president of the CDR justified his calculation during the Court’s investigation by mentioning among the potential advantages the capping of € 15 million for liquidation costs (i.e. € 5 M), the capping of € 105 M for interest (i.e. 6.7 M €), the payment in two portions of the sentence (between 2 and 3 M € at the rate of 4%) and my waiver of the tax gap, quantified in relation to the amount allowing to saturate the ceiling of 295 M € (without counting any interest) s or 55 M €.
The interest cap at 105 M € and liquidation costs at 20 M € do indeed represent a potential advantage of 11.7 M € (in retrospect the advantage is only proven for interest, ie 6.7 M €). On the other hand, the waiver by the liquidators of compensation for any difference in tax treatment remains an advantage that is much more difficult to assess without the assistance of the tax administration. The CDR itself claimed later in the proceedings that it was void.
- Third party opposition
Article 1481, paragraph 2, of the Code of Civil Procedure establishes the possibility for third parties to lodge an appeal in third party opposition against an arbitration award which would be prejudicial to them. This remedy is open to “any person who has an interest in it, on condition that he was neither a party nor represented in the judgment that he is attacking”, according to the terms of article 583 of the code of civil procedure. .
On February 23, 2009, a summons for purposes of third party opposition was issued to CDR, CDR Créances, liquidators and the Tapie spouses before the Paris Commercial Court by the association “Contribuables associés” and its president Mr. Alain Mathieu.
A hearing for the filing of the defendants’ pleadings took place on June 15, 2009. A new hearing was held on September 21, 2009, during which a deadline was set for November 2 for the liquidators and the Tapie spouses to file their pleadings. .
The defendants’ brief asserts the material incompetence of the Commercial Court. Indeed, under the terms of article 1481 paragraph 2 of the Code of Civil Procedure, the arbitration award “may be subject to third party opposition before the court which would have been competent in the absence of arbitration, subject to the provisions of article 588. (paragraph 1) ”. In this case, the disputes decided by the arbitral tribunal are those which were, before the signing of the arbitration agreement of November 16, 2007, pending before the Paris Court of Appeal (ACT dispute, Adidas dispute, abusive liquidation dispute, litigation abusive support and abusive termination).
In September 2010, the Paris Commercial Court had not yet ruled on this case.
- Appeal against the arbitration procedure
Four appeals were lodged with the Paris administrative court against the State’s decision to let the CDR initiate arbitration proceedings, following instructions from the Minister responsible for finance:
– a request for annulment of the deliberation of 10 October 2007 of the board of directors of the EPFR and of the decision of the Minister of the Economy deciding not to oppose the proposal to resort to arbitration, filed on October 9, 2008 by Mrs. Geneviève Sroussi and Mr. Philippe Lhomme, with Mr. Charles de Courson as voluntary speaker;
– a request for annulment of the Minister’s decision to accept recourse to arbitration, filed on November 18, 2008 by Mr. François Bayrou;
– a request for annulment of the decision dated July 28, 2008 by which the Minister of the Economy decided not to oppose the decision taken by the EPFR board of directors not to file a annulment action against the arbitration award of July 7, 2008, filed on September 29, 2008 by Mr. François Bayrou;
– a request for annulment of the decisions by which the Minister of the Economy decided to resort to arbitration and not to oppose the arbitration award of July 7, 2008, filed on September 30, 2008 by Mr. Jean Marc Ayrault.
These cases were consolidated and entered for the public hearing on September 25, 2009. The court rendered its judgment on October 8, 2009.
1 / Admissibility
The court considered that the minister’s instructions and the EPFR’s deliberations were indeed in the nature of administrative decisions liable to be appealed against for abuse of power (the minister’s agreement was necessary for the EPFR and the agreement of the EPFR was necessary for the CDR);
He declared admissible as members of the finance committee Mr Bayrou as well as Mr de Courson, who had produced a separate memorandum on 2 April 2009 asking to be considered as applicant (39). The other applicants were declared inadmissible, including Mr Ayrault, although a Member of Parliament.
2 / Legality
– The court rejected the plea based on disregard of Article 2060 of the Civil Code ( “we cannot compromise (…) on disputes concerning (…) public establishments”), considering that the CDR had autonomy real, that it was a dispute of private law and that it did not appear from the amendment n ° 13 to the protocol on the non-quantifiable risks that the CDR holds a mandate of the State or of the EPFR in the settlement of the dispute between Crédit Lyonnais and the Tapie group.
– The court also ruled out the plea alleging a manifest error of assessment, considering, within the framework of the limited control that it can exercise over acts detachable from the judicial procedure, but not unrelated to it, that the Minister no. had not committed a manifest error of assessment in deciding not to oppose the arbitration, then the decision not to file an annulment appeal.
– Mr. de Courson, associated with Ms. Sroussi and Mr. Lhomme, appealed against this judgment to the Administrative Court of Appeal. They were dismissed by a judgment of December 31, 2010 on the grounds of inadmissibility.
- Request for repurchase of CEDP
During the Board of Directors meeting on April 27, 2009, the Chairman informed the members of the Board that Mr. Bernard Tapie was proposing, through his lawyers, to buy out the company CEDP (formerly Bernard Tapie Finances), a subsidiary of CDR Créances , entered the group through the exercise of a pledge in 1995 (judicial allocation of the company’s shares), for a price to be specified which would be calculated from the net value of the company, i.e. around € 700,000 corresponding to the company’s treasury.
This request was not without risk, because the CEDP company remained outside the arbitration procedure and could have been considered as legitimate to receive a possible compensation in the event of conviction within the framework of the ADIDAS dispute.
The chairman of CDR proposed to reject this offer and, at the same time, to quickly initiate the repurchase of the last shares held by minority shareholders (now representing 0.10% of the capital) and to close, as soon as possible, the amicable liquidation of the company Tournus, a subsidiary of CEDP whose securities are fully provisioned, to allow the amicable liquidation of CEDP. The directors approved this position, with the buyback taking place at the maximum price of
(39) Mr. Bayrou is not a permanent member of the finance committee but took part in the work of this committee during the hearings on the Tapie arbitration in September 2008.
15.24 euros, the directors having considered that this value was not the result of an abnormal act of management.
At the time of completion of this special report, the disputes brought about by the arbitration have not been exhausted. Their chances of prospering and their financial consequences cannot be assessed at this time.
- The total cost to the state
EPFR coverage for non-quantifiable risks was € 152,872,698.43 on September 4, 2008, then € 116,864,359.40 at the end of March 2009, for a total of € 269,737,057.83 .
The amount paid by the EPFR differs from that borne by the CDR for two reasons: on the one hand the non-reimbursement of the CDR under the ACT dispute (€ 5,758,723.14), on the other hand a reduction of € 30 million, to take into account the reversal of the € 30 million provision for liability coverage in CDR’s accounts.
The arbitration thus leads, taking all the elements into account, in a judgment for a total amount of nearly € 403 million (40), much higher than the estimates at the end of 2006. It breaks down as follows:
– € 240 million for material damage;
– € 105 million for legal interest on material damage;
– € 45 million for non-pecuniary damage;
– € 13 million in liquidation costs.
To this should be added the interest charge (41) relating to the additional drawdown on Crédit Lyonnais over the five years remaining to run before the end of this competition, i.e. around € 60 million, which brings the total cost to € 463 million. The net cost is however lower, because it is necessary to subtract the contribution of 12 M €, the net claim of the SDBO on the liquidation (87.1 M €) and the tax receivables recovered on the liquidation.
For this last item, the Court of Auditors considers that it must provisionally retain the amount appearing in the summary statement of the attached liquidation liabilities.
(40) To which is added the restitution of the receiver on the sale price of the vessel the Phocéa for an amount of € 5,758,723.14.
(41) The refinancing of 130 billion francs (19.82 billion euros) granted by Crédit Lyonnais to EPFR carried an interest rate of 7% in 1995, then of 85% of the Money Market Rate (MMR) from of 1996. This interest rate was deliberately very low and constituted a contribution of the bank to the cost of carrying the defeasance. However, this financial burden has turned out to be unbearable for Crédit Lyonnais. In September 1996, on the proposal of the Minister of the Economy and Finance, the government decided to raise the interest rate applicable to the loan to EPFR to the level of the cost of refinancing this loan, and notified this aid urgently to the European Commission. It was also decided to abandon the implementation of the zero coupon. Finally,
to the arbitration agreement, i.e. € 30.1 million (significantly lower than the amount of declared tax claims of € 87 million).
The net cost for the State is therefore provisionally established at € 274 million (€ 334 million with the carrying costs of the Crédit Lyonnais loan), without taking into account any taxes paid on the sums paid by the liquidators to the company in collective name GBT, being reminded that the sums paid for moral prejudice are not taxable.
The taxes themselves depend on the amount actually paid in fine to the GBT company, once the liquidation costs and the claims of third parties have been paid by the liquidation, as well as the applicable tax system, depending in particular on the recognized nature of these sums. (damages or compensation).
The amount actually recovered by the Tapie spouses, directly or by a company in their own name, necessarily differs from that of the net cost for the State due to the costs of liquidation, claims from third parties that should be deducted (42) and liquidation assets (realized or not) that should be added.
(42) In a provisional calculation presented to the Finance Committee of the National Assembly on September 3, 2008, the deputy Charles-Amédée de Courson had failed to deduct the liquidation costs.
IV ACCOUNTING TREATMENT OF THE ADIDAS / TAPIE FILE
- FISCAL 2007
As of December 31, 2006, CDR had maintained the provision for receivables on the Tapie liquidation at € 104 million, but had reduced the provision for the risk for the filling of liabilities from € 56.8 million to € 30 million.
As of December 31, 2007, it seems difficult to justify that no provision had been made to take account of the arbitration agreement signed on November 16, 2007, which capped the amount of compensation at € 295 million for material damage and at 50 M € for moral damage, with no possibility of appeal. A fortiori, the CDR made no detailed mention of this risk in the appendix to the consolidated financial statements.
The principle is that the CDR constitutes provisions to cover the risks attached to the realization of its assets, liabilities and commitments, when they are not the subject of a specific cover mechanism by the EPFR.
This was clearly the case with the risk of conviction for non-pecuniary damage for the benefit of the liquidators of the Tapie spouses, capped at € 50 million. This risk was at least recognized by the president of the CDR in his letter of July 28, 2008 to the president of the EPFR, following the closing of the 2007 accounts: “In view of these elements, I ask EPFR to ensure the payment of the sentence, decided by the Arbitral Tribunal, with the exception of non-pecuniary damage, which should be insured by the CDR only, this damage resulting, according to the Tribunal, from the circumstances surrounding the liquidation, and no Adidas record strictly understood ”.
It is noted in this regard that the auditors of CDR had an unsigned version of the letter of July 28, 2008, submitted during their hearing by the Court on October 18, 2010, in which this paragraph was worded differently with a different meaning: “Having regard to these elements, I am asking EPFR to ensure that the sentence decided by the Arbitral Tribunal is taken care of. “.
- FINANCIAL YEAR 2008
It seems perfectly legitimate and in line with its interests that CDR has obtained to subtract from its payment the € 87 million of residual claims of SDBO on the liquidation. The amount paid by EPFR for non-quantifiable risks was logically reduced accordingly.
This method of calculation was also submitted by the Director General of the APE for validation by the Minister by a note of December 24, 2008, approved by the Director of Cabinet at the beginning of 2009.
On the other hand, two transactions which were not submitted for validation by the Minister in the note of December 24, 2008 call for observations:
1 / The payment by the EPFR of the conviction for non-pecuniary damage (45 M €)
The letter of the Minister in charge of the economy of March 17, 1999 limited the guarantee of CDR towards Crédit Lyonnais and therefore the assumption of responsibility by EPFR for non-quantifiable risks, to “the possible financial consequences of the actions undertaken. by the agents-liquidators of the Tapie group (…) in respect of the sale of BTF GmbH (Adidas) ”.
This restriction on actions initiated in connection with the sale of Adidas logically leads to excluding from the scope of the guarantee and the assumption of responsibility for non-quantifiable risks other disputes, including those relating to the behavior of the Crédit Lyonnais group in its relations with his debtor.
The letter of March 17, 1999 must be interpreted in a way that is all the more restrictive as it derogates from the protocol by extending the CDR guarantee to Adidas litigation, the wording of the protocol of April 5, 1995 and its amendments not in fact making it possible to guarantee none of the Adidas / Tapie litigation.
The CDR has placed itself in the legal position of being the only person liable for this conviction for non-pecuniary damage, while Crédit Lyonnais bears a great deal of responsibility for the actions in question, which is open to criticism in management (see below. : Management advice).
The fact that the CDR found itself obliged to pay a sentence for this reason, because of its management, does not mean that the EPFR should automatically ensure the payment.
Moreover, the exchanges of letters between the president of the CDR and the president of the EPFR at the beginning of October 2007 clearly show that they are aware that the non-quantifiable risk corresponds only to the Adidas litigation. In the summer of 2008, in this logic, the president of the CDR did not ask the EPFR to take charge of the conviction for non-pecuniary damage (45 M €). EPFR support amounted to € 152,872,698.43 while CDR simultaneously paid € 197,872,698.43 million to the liquidators, including € 45 million for non-pecuniary damage.
It was not until the fall of 2008 that it was decided, after consulting the CDR’s counsel (Maître Olivier Debouzy), that the € 45 million in non-pecuniary damage should be paid by EPFR in respect of non-quantifiable risks, which EPFR did not dispute.
In an email addressed to the president of the CDR on November 7, 2008, Maître Olivier Debouzy had concluded, referring to the context, that “the ambiguity relating to a hypothetical distinction between prejudices can be ruled out”. He argues as an argument that the letters exchanged between the CDR and the EPFR on the occasion of the transfer of certain non-quantifiable risks to the CDR do not repeat, in the detail of the annexed tables, this distinction.
This context argument is insufficient because it is not corroborated by all the other context elements. It is based on tables appended to letters exchanged between the presidents of CDR and EPFR, which only mention the title of non-quantifiable risks and not their description. This is how each year, in the risk report, the distinction appears between a short title (Adidas) and the description in another column of the non-quantifiable risk, in accordance with that of the letter of March 19, 1999.
The auditors invoked the fact that the conviction for non-pecuniary damage could also have been the subject of a request for a new non-quantifiable risk, in accordance with the mechanism provided for by amendment n ° 13 of November 27, 1998. to the protocol of April 5, 1995. But precisely this request has never been presented and examined as such by the EPFR.
2 / A contraction was then made in the calculation of the assumption of responsibility by the EPFR with the provision of 30 M € appearing in the CDR accounts for the risk of filling the liquidation liabilities.
This allowance was decided later, since it does not appear, unlike the payment of € 45 million in non-pecuniary damage, in the amending budget of the EPFR at the end of November 2008. It does, however, appear in the budget. amendment of the EPFR of March 2009 as well as in the CDR and EPFR accounts for 2008.
As the arbitral tribunal did not provide for any other specific condemnation of the fulfillment of liabilities, it is undisputed that this provision should be included in the CDR accounts.
On the other hand, it was not justified for the assumption of the non-quantifiable risk to be reduced by the same amount, because the risk for liability coverage was not a non-quantifiable risk. It had been provisioned for a very long time in the CDR accounts, first for € 56.8 million, then from 2006 for € 30 million. The reasons are not known.
All in all, the current CDR result before additional EPFR remuneration would have been significantly different without these two questionable accounting choices.
The payment by the EPFR would be reduced by € 15 million in net and the impact on the corporate income of the CDR as well as on its consolidated current result in 2008 would be – € 15 million.
It is true that these choices, if they have an impact on the corporate income of the CDR and on the interim balances of the management of the consolidated accounts of the CDR as well as on the balance sheet of the CDR, have no impact on the net income after additional remuneration of the CDR. the EPFR or debt waiver, by construction equal to zero, as well as on the consolidated accounts of the defeasance.
A / The management of the CDR over the 2007 and 2008 financial years corresponds to a new period in the life of the CDR qualified as extinctive, with support from the Caisse des Dépôts et Consignations for the administrative and operational management, the board of directors of the CDR remaining competent for major files. The new system has made it possible to significantly reduce structural costs while allowing more serious follow-up of cases, excluding the Adidas / Tapie case.
B / The extinction of the residual CDR portfolio turns out to be slower than expected, however, due to the complexity of certain receivables and certain disputes, not to mention the appearance of new disputes (notably AIG in 2005 and Dapta Mallinjoud in 2006 ). The terms of termination of the CDR, with a view to putting an end to the defeasance of Crédit Lyonnais in 2014, have not yet been defined at this stage.
The development of the AIG file and the possible consequences of the Executive Life file constitute the main financial uncertainties for the future.
C / The Adidas and Tapie litigation file concentrates many observations.
1 / The planned procedures were not followed:
– the management of the file was carried out personally by the Chairman and CEO of CDR, who did not seek the advice and assistance of the services of the Caisse de Dépôts et Consignations, contrary to the terms of the assistance contract of April 8 2005 and its amendment of December 18, 2006, nor the audit committee to which the Fund services could not report on this file. The lawyers, in particular a new cabinet in this file which the president appealed a few months before the arbitration, played a preponderant role. The chairman and the board of directors found themselves totally dependent on outside expertise.
– The president of the CDR signed on November 16, 2007 a text of arbitration compromise different from that approved by its board of directors on October 2, 2007. Indeed, the “claims for compensation” of the liquidators of the Tapie spouses who were capped at € 50 million, have become in the signed text “claims for compensation for non-pecuniary damage”. However, the amount of moral damage is left to the sovereign appreciation of the judges and does not bear any tax or social levy.
– The chairman of CDR did not inform its board of directors of the issues at stake in the absence of Crédit Lyonnais as a party to the arbitration in relation to the scope of the CDR guarantee, nor of Crédit Lyonnais’ “strong reservations” on the very principle of arbitration which led him to consider that he should not legitimately suffer the slightest consequence, of whatever nature, in the event of a possible condemnation of the CDR by the arbitral tribunal. However, this position called into question the payment by Crédit Lyonnais of a lump sum contribution of € 12 million in the event of a conviction, which appeared in the letter from the Minister of the Economy of
March 17, 1999 as the counterparty to the confirmation of the CDR guarantee to Crédit Lyonnais in the litigation on the sale of Adidas.
– The president of the CDR did not correctly inform the board of directors of the EPFR, which he had seized as guarantor to know his position on the recourse to arbitration. The EPFR did not validate the final wording of the compromise on moral prejudice. He was also not informed on the waiver of the possibility of appeal.
– The president of the CDR did not inform his board of directors of the condition set by the board of directors of the EPFR in accordance with the instructions of the minister responsible for the economy, namely that the agreement must be obtained. written by Crédit Lyonnais on the flat-rate contribution of 12 M € before the signing of the compromise, then in a second version before the pronouncement of the sentence.
– The president of the CDR did not submit to its board of directors the transaction with the liquidators, materialized by the exchange of letters of October 31 and November 7, 2007, then approved by the Paris Commercial Court, under the terms of which the liquidators undertook to constitute a payment franchise for the benefit of the CDR on any conviction of the latter by the arbitral tribunal, “ without prejudice to any recourse against Crédit Lyonnais. This transaction led to the assignment to the liquidators of CDR’s claim on Crédit Lyonnais in the protocol of March 16, 1999, presented as the “consequence”.
– Crédit Lyonnais was not informed of this transaction by the chairman of CDR either.
2 / Several elements were unfavorable for an arbitration procedure
– The possible legal risks linked to the ban on compromising in matters of interest to a public entity (article 2060 of the Civil Code) have not even been mentioned; due when we were in the presence of non-quantifiable risks, that is to say risks monitored directly in the EPFR accounts, it was necessary to ensure by all appropriate channels, including consultation of the Council of State, that the CDR was empowered to resort to arbitration on behalf of the public establishment.
nor a fortiori under the terms of the protocol of April 5, 1995, which authorizes no guarantee in this case. The complete absence of Crédit Lyonnais, which was not even heard during the hearings, weakened the defense of the CDR on important anointed ones (in particular the accusations of porterage and serious acts in the implementation of the liquidation).
– Finally, the transaction concluded between CDR and the minority shareholders of CEDP in April 2007 implicitly set an unfortunate precedent in financial terms for the valuation of CEDP (formerly BTF), at nearly € 260 million, of which the arbitrators were aware.
3 / In addition, the terms of the arbitration have contributed to reinforce the risks:
– The parties have voluntarily waived the possibility of appealing the judgment of the arbitrators. The possibility of appealing nevertheless offered to the CDR, a strong guarantee as for the respect of the authority of res judicata and a protection against “a tendency of the arbitrators – even when they are asked to rule in law – to act amicably. composer ”in the words used by the president of LCL-Crédit Lyonnais in one of his letters to the president of the CDR. In this context, it would have been prudent to proceed to in-depth legal consultations given the considerable financial stakes of this case, as was the case after the delivery of the arbitration award of July 7, 2008 on the question of the annulment appeal, where no less than four legal consultations were requested. These consultations showed that an action for annulment, which is still possible, could only be exercised under “very restrictive conditions”.
– The ceilings accepted for the opposing party’s claims appear excessively high, whether it is the ceiling for compensation for material damage (€ 295 million before legal interest, or potentially nearly € 450 million with legal interest) , much higher than the amount of the condemnation by the Court of Appeal on September 30, 2005 (135 M € with interest) or the ceiling for compensation for non-pecuniary damage (50 M €), without commensurate with the amounts that the ordinary courts award in respect of non-pecuniary damage and a fortiori with the amount of the conviction by the Court of Appeal on September 30, 2005 (€ 1). Nothing forced the CDR, which was not the applicant, to accept such conditions.
OPINION ON THE ACCOUNTS
The Court exercised its control over the consolidated annual accounts of CDR for the financial years 2007 and 2008, taking into account the provisions of the protocol of April 1995 and its amendments and the specific agreements between EPFR and CDR.
Within the limits of the investigations which it has carried out, and under the benefit of the preceding observations, it issues the following opinion.
CDR’s consolidated accounts are regular and fair and give a true picture of the financial situation and the assets of this company as of December 31 of each year, with a reserve for 2007 and an observation for 2008.
1 / For the year 2007, the Court makes the following reservation:
The Court noted that no provision had been made for the demand for compensation for non-pecuniary damage by the Tapie spouses, which was not yet considered at that time by CDR and EPFR as a non-quantifiable risk. supported by EPFR. In addition, no detailed information is given in the appendix to explain the concept of non-pecuniary damage and its consequences. However, the operative event did exist on December 31, 2007 with the signing of the arbitration protocol on November 16, 2007 and the homologation judgment of December 18, 2007. There was a probability of conviction when an envelope of 50 M € had been accepted, as part of a sovereign judgment of the judges. The regulations on liabilities should have led to a provision for risks or at least to a mention in the appendix. It is paradoxical that the risk report sent to EPFR even allusively mentions a risk with the conclusion of the arbitration agreement and that no translation has been given in the accounts.
2 / For the year 2008, the Court makes the following observation:
The “receivables on EPFR” item on the asset side, stopped at € 120.665 million in the CDR’s accounts for 2008, should be reduced by € 45 million corresponding to the judgment for non-pecuniary damage and increased by € 30 million corresponding to the amount of the provision for liability coverage risk. The corrected amount should therefore stand at € 105.665 million. The CDR’s current result, interim management balance stopped at € 10.259 million, should be corrected accordingly to € -4.741 million.
– Indeed, it is questionable that the judgment of 45 M € for non-pecuniary damage, justified by the arbitral tribunal by the actions of Crédit Lyonnais having accompanied the liquidation of the Tapie spouses, is finally considered in the 2008 financial statements as a non-risk. quantifiable even though its assumption of responsibility was not requested at the time of payment, on September 4, 2008. This solution does not appear to comply with the terms of the letter of March 17, 1999 which explicitly restricts the CDR guarantee to litigation on the sale Adidas, and even less so if we refer to the protocol of April 5, 1995 which does not provide for a CDR guarantee in favor of Crédit Lyonnais for this dispute. Even more than the absence of a request for recognition as an unquantifiable risk,
– It is also questionable that a reduction of € 30 million was made to the amount of the EPFR reimbursement, on the grounds of a reversal of a provision for the risk of liability filling of € 30 million within the CDR accounts. The liability risk, long provisioned in CDR’s accounts, was not a non-quantifiable risk. Only cash flow considerations at EPFR level or presentation of CDR’s corporate accounts could justify the contraction made.
Ultimately, the Court notes that, in application of the amendment n ° 13 of November 27, 1998 to the protocol of April 5, 1995, the net result of the CDR is by construction equal to zero, because of the repayment of the positive social result of the CDR to EPFRE as additional remuneration for the EPFR loan, or for the forgiveness of EPFR debts provided for in the event of a negative social result.
Done and deliberated at the Court of Auditors, First Chamber, on the report of Mr. Bichot, referendum advisor, and the observations of Mr. Lefas, master advisor, counter-rapporteur.
Present: MM. Babusiaux, President, Duret, Troesch, Beysson, Lefas, Mmes Morell, Ulmann, Dos Reis, Saliou and Malgorn, and M. Chouvet, master advisers.
October twenty-seventh, two thousand and ten.