In the case of <span class="news-text_italic-underline">Rizzani de Eccher and others v BNP Paribas and another (RGs nos 24/20656; 24/20639; 24/20638)</span>, the Paris Court of Appeal (“<span class="news-text_medium">COA</span>”) has upheld a refusal to grant injunctive relief preventing French bank BNP Paribas (“<span class="news-text_medium">BNPP</span>”) from making payments to Kuwait under bank guarantees. The appellants, a consortium of contractors, applied for injunctive relief preventing BNPP from meeting Kuwait's payment demands under bank guarantees provided in a 2011 construction project, later subject to an ICSID arbitration, in which the state prevailed. Kuwait sought to draw on advance payment and performance guarantees (but not retention guarantees) while award annulment proceedings were pending. In December 2024, the Paris Tribunal of Commerce (“<span class="news-text_medium">TOC”</span>) issued orders denying the request for injunctive relief on admissibility grounds.
Before the COA, Kuwait and BNPP raised two unsuccessful jurisdictional objections, namely, Kuwait's immunity from jurisdiction and the TOC's lack of jurisdiction over the dispute. The COA rejected the consortium's argument that Kuwait could not claim immunity because it was merely an intervening party, not a respondent, finding that although the consortium's claims were solely against BNPP, they had directly summoned Kuwait. The COA nonetheless concurred that Kuwait was not immune from suit because no claim was advanced against it and the commercial nature and purpose of the guarantees meant that Kuwait had not acted in a sovereign capacity, as established in <span class="news-text_italic-underline">Business Network c/ Libya, Cass Civ 1, 12 January 2022, No 20-20.516.
The COA also confirmed the TOC's territorial and material jurisdiction over the dispute and, more specifically, held that the TOC president had the power to rule on the request for provisional measures blocking payment under the guarantees. On the merits, the COA concluded that, by requesting the application of French substantive rules on bank guarantees in their pleadings (namely, Article 2321 of the French Civil Code (“<span class="news-text_medium">FCC</span>”)), the parties had implicitly chosen French law as the applicable law under Article 3 of the <span class="news-text_italic-underline">Rome I Regulation (593/2008/EC)</span>.
Pursuant to Article 2321 of the FCC, the COA ruled that Kuwait's call on the advance payment and performance guarantees was neither abusive nor fraudulent and that the financial impact on the consortium was irrelevant. On the retention guarantees, the COA found that BNPP could not be prohibited from paying them because its power to enjoin payment was limited to fraudulent or abusive calls.
This decision reinforces key principles regarding state immunity, jurisdiction, applicable law and financial guarantees in construction contracts.
