The court held that allegations already debated before the arbitral tribunal did not amount to procedural fraud and that domestic rules on contractual validity could not, without more, establish a breach of French international public policy.
Editorial illustration of the France Bulgaria Romania electricity trading dispute
Introduction
In a decision dated 2 June 2026, the Paris Court of Appeal, International Commercial Chamber, in case number RG 24/14702 (Paris Court of Appeal, Pôle 5, Chamber 16, 2 June 2026, No. RG 24/14702) rendered a judgment on whether an international arbitral award should be annulled for alleged procedural fraud and for giving effect to an allegedly illicit electricity-trading arrangement.
The court rejected Interprom [O]’s annulment application. It held that the alleged fictitious nature of the electricity transactions and the alleged falsity of supporting documents had been debated before the arbitral tribunal, whose decision had therefore not been procured by surprise. The court also held that the asserted invalidity or immorality of the underlying contract did not by itself identify a breach of a principle or value belonging to French international public policy.
Facts and Procedural History
The electricity supply relationship
Interprom [O] is a Bulgarian energy-supply company. Transenergo Com S.A. is a Romanian company operating in the same sector. Insolvency proceedings were opened against Transenergo by the Bucharest court on 1 February 2017.
The dispute arose from electricity-supply contracts entered into under a framework contract called the “General Agreement,” supplemented by special conditions contained in an “Election Sheet to the General Agreement” dated 8 September 2014. The decision records that Article 22.2 of the framework agreement contained the arbitration clause, but it does not reproduce the clause’s wording.
On 9 December 2020, Transenergo, represented by its insolvency officeholders, commenced arbitration under the Rules of the German Arbitration Institute (Deutsche Institution für Schiedsgerichtsbarkeit, or DIS). It principally sought payment of invoices said to be due and unpaid in the amount of EUR 1,302,810, together with late-payment penalties of EUR 99,680.84.
The arbitral award
On 7 February 2023, the arbitral tribunal issued a unanimous award. It ordered Interprom to pay Transenergo EUR 424,080, EUR 31,449.77 and EUR 6,256.23. It also awarded interest on the first two amounts at the one-month EURIBOR rate applicable on the date of the award plus three per cent per annum until full payment. All other claims and requests were dismissed.
The three annulment applications
Interprom first applied to annul the award on 17 March 2023. On 7 May 2024, the case-management judge declared that application lapsed under Article 911 of the French Code of Civil Procedure because Interprom had not served its submissions in time on Transenergo, which had not appointed counsel.
A second annulment application, filed on 10 January 2024, was declared inadmissible on 20 February 2025 because the Court of Appeal remained seised of the first application when the second was filed. Interprom filed the present, third application on 25 July 2024. The case-management judge held it admissible on 20 February 2025, and the Court of Appeal confirmed that ruling on 30 June 2025. The merits hearing took place on 3 February 2026.
Legal Considerations
Interprom’s public policy challenge
Interprom relied on Article 1520(5) of the French Code of Civil Procedure, under which an international award may be annulled when its recognition or enforcement is contrary to international public policy. Its single annulment ground had two branches: alleged procedural fraud and the alleged illegality of the underlying contract.
On procedural fraud, Interprom argued that the disputed invoices and the contracts on which they were based related to transactions for which no electricity had been transferred between the parties or to third parties. It characterised those documents as false and said Transenergo had knowingly used them to create the appearance of genuine, lawful transactions. Interprom also challenged a witness statement concerning electricity-market practices as untruthful and said that the tribunal had relied on it when rejecting the illegality defence.
On contractual illegality, Interprom relied on former Article 1131 and Articles 1128, 1162 and 1179 of the French Civil Code. It argued that the parties had purportedly agreed in 2016 to sell and repurchase the same quantity of electricity each month without physical delivery or payment netting, with the aim of increasing Transenergo’s reported trading volumes. Interprom pointed to reciprocal invoices and payments of nearly identical amounts, an asserted remuneration differential, and a statement from one of its traders. It contended that combating fraudulent transactions formed part of French international public policy and compared the alleged arrangement with contracts affected by corruption, money laundering or tax fraud.
Transenergo answered that procedural fraud requires proof that the arbitrators’ decision was procured by surprise through the relevant false evidence or concealment. It said that Interprom had made the same allegations during the arbitration, that the tribunal had examined the transactions, and that Interprom had not proved the invoices false. Transenergo also maintained that electricity trading need not involve a physical transfer between the two contractual counterparties and that the transactions were financial in nature. In its submission, Interprom was seeking a fresh assessment of the merits.
The court’s test under Article 1520(5)
The court defined international public policy by reference to the French legal order: the values and principles that it cannot tolerate being disregarded, even in an international context. Judicial review is limited to determining whether enforcement of the arbitral tribunal’s orders would amount to a characterised violation of those values and principles.
The court stated that procedural fraud in arbitration may fall within international procedural public policy. Such fraud requires the production of false documents, the taking of dishonest testimony, or the fraudulent concealment from the arbitrators of material relevant to the outcome, in circumstances where the decision was thereby procured by surprise.
No procedural fraud where the allegations were fully debated
The allegedly fictitious nature of the transactions had been part of Interprom’s defence throughout the arbitration, including in paragraphs 105 to 116 of the award. The disputed invoices and the challenged witness statement had been examined in adversarial proceedings on substantially the same basis later presented to the Court of Appeal. The award itself addressed “Interprom’s defence based on allegedly fictitious transactions” and explained the tribunal’s assessment in paragraphs 149 and 150.
Because those allegations coincided with the very subject matter submitted to arbitration and had been debated before the tribunal, they could not establish conduct that surprised the arbitrators’ decision. The award reflected the tribunal’s informed assessment of the accuracy and evidential weight of the material before it. The annulment court could not revise that assessment. The court therefore rejected the procedural-fraud branch of the challenge.
Contract invalidity is not automatically an international public policy breach
The court distinguished the arbitral tribunal’s task of deciding the contractual dispute from the state court’s limited supervisory role. An award’s incompatibility with international public policy does not follow mechanically from the underlying contract’s possible illegality under rules governing formation or validity, even when national civil-law systems would generally sanction that illegality with nullity. Domestic contract-validity rules are not, as such, rules of international public policy, and international public policy is not identical to domestic public policy.
The contrary approach would require the annulment court to revisit the merits in breach of Article 1520. The court found that Interprom invoked the alleged immorality or illegality of the contract without defining the alleged fraud or identifying a specific international-public-policy principle or value that recognition or enforcement of the award would violate. It also found that Interprom was advancing the same case, previously based on German law, that the arbitral tribunal had rejected.
Accordingly, Interprom had not shown how the alleged illicit financial arrangement infringed a value or principle protected by French international public policy. The court treated the application as an attempt to secure a merits review and rejected the Article 1520(5) ground in full.
Claim for Damages for Allegedly Abusive Arbitration
Interprom also sought EUR 70,000 under Article 1240 of the French Civil Code for the costs and internal resources it said it had incurred as a result of an allegedly abusive arbitration. The Court of Appeal held that the powers of the annulment judge are exhaustively defined by the five grounds in Article 1520 of the Code of Civil Procedure. Those powers do not include awarding damages for loss allegedly caused by the commencement or conduct of the arbitration. The damages claim was therefore inadmissible.
Order
The court rejected Interprom’s application to annul the DIS award of 7 February 2023, declared the EUR 70,000 damages claim inadmissible, and ordered Interprom to pay the costs. It also rejected Interprom’s request under Article 700 of the Code of Civil Procedure and ordered it to pay Transenergo EUR 20,000 under that provision.
