Sonarem v Genebrier and Others
| Jurisdiction | Argelia |
| Court | Court of Appeal of Annaba (Algeria) |
| Date | 26 December 1968 |
State succession Continuity of the law Algeria Legal status before independence Continuance of laws after independence Continuity of administration Effect on nationality of corporations with head office in Algeria at date of independence The law of Algeria.
Jurisdiction Personal Over nationals abroad and their property abroad Corporations Corporation with French shareholders and head office in Algeria before and after independence Nationalization of corporation and vesting of assets in Algerian public corporation Purported transfer of head office of nationalized corporation to France Assets abroad Whether former directors or nationalized corporation entitled Whether court of place of head office before nationalization has jurisdiction over affairs of corporation The law of Algeria.
The individual in international law Nationality Of corporations Corporation founded to exploit mining concession in Algeria Corporation statutes and concession agreements providing for head office in Algeria and jurisdiction of Algerian courts over disputes, and reserving ultimate control over corporation to Governor-General of Algeria Legal status of Algeria before independence Effect of independence on nationality Continuity of law and administration Affirmation of Algerian nationality by corporation after independence Nationalization Whether corporation subject to Algerian law Whether transfer of head office to France and other acts of directors valid Whether former directors entitled to represent corporation and claim assets abroad Whether nationality of shareholders relevant criterion for determination of nationality of corporation The law of Algeria.
Summary: The facts.The Socit de l'Ouenza was incorporated, by deed drawn up in Paris in 1913, in order to exploit a mining concession in Algeria granted by the Governor-General of Algeria. This concession provided for the founding of the Socit de l'Ouenza, but reserved to the Governor-General of Algeria certain powers to veto amendments to the company statutes and to terminate its existence. The original statutes of the company provided, inter alia, that its head office should be in Algiers (it was subsequently transferred to Bne and then Ouenza, both in Algeria), that certain controls were vested in the Governor-General of Algeria, and that all internal disputes of the company must be submitted to the courts of the place in which the head office was situated.
After Algeria became independent in 1962, the company continued to operate in Algeria and in 1963 re-registered in Algeria, filling a declaration that its head office was in Algeria and that its nationality was Algerian. It also declared that for tax purposes its head office was in Algeria, and computed its tax liability on the basis of the Algerian post-independence tax code. By Ordinances and Decrees of 6 May and 14 July 1966, the company was nationalized by the Algerian. Government, and another company (BAREM) was appointed as administrator. The assets, rights and liabilities of BAREM were subsequently (by Ordinance dated 11 May 1967) transferred to the Socit Nationale de Recherches et d'Exploitation Minires (SONAREM, the plaintiff in this action). The former board of directors and certain shareholders of the Socit de l'Ouenza, at two General Meetings held in Paris during 1966 and 1967 (after the nationalization decrees), purported to transfer the head office of the company to Paris, in contravention of an Algerian Decree, No. 63483 of 23 December 1963. At the date of nationalization certain sums were owed to the company by French, Italian and English companies. Both the former directors of l'Ouenza and SONAREM claimed these sums. The former directors of l'Ouenza obtained judgment in the French courts against the French debtor on 30 June 1967, and also became involved in proceedings against the English and Italian debtors in England and Italy, respectively.
The plaintiff SONAREM brought an action in the Algerian courts seeking, inter alia, declarations that l'Ouenza was a company of Algerian nationality governed by Algerian law, and that SONAREM alone had the capacity to represent the nationalized Socit de l'Ouenza and in particular to authorize the institution of legal proceedings. The plaintiff also claimed injunctions restraining the former Chairman and Managing Director, and other directors, of l'Ouenza from intermeddling in the management, administration and control of the company and from bringing claims for debts, and enjoining them to discontinue the legal proceedings which they had already commenced against certain debtors. SONAREM also claimed 100,000 Algerian dinars in damages, and costs. The defendants failed to enter an appearance, and judgment was given in default.
Held: (1) that the Court had jurisdiction in respect of the claims. Under the Statutes of l'Ouenza, the courts of the Department in which the company's head office was situated had jurisdiction over all internal disputes of the company, in particular disputes between shareholders and directors and disputes among the shareholders themselves. SONAREM was now the owner of the shares of l'Ouenza, and the former directors were subject to the jurisdiction of the Court either as directors or as shareholders by virtue of their qualifying shares in l'Ouenza. The head office of the company was still situated in Ouenza (Department of Annaba), as it was before the nationalization of the company. The purported transfer of the head office to Paris was null and void, since it was effected in violation of Algerian law (the Decree of 23 December 1963). L'Ouenza must be considered an Algerian company subject to the Algerian legal system.
(2) The claims of SONAREM were well-founded on the merits. L'Ouenza had at all times, and in all matters pertaining to it, been governed by Algerian law, for the following reasons: it had always maintained its head office in Algeria, in pursuance of the unequivocal decision of its original founders to submit the company to the legal system peculiar to Algeria before and after independence; after independence, the company came under Algerian sovereignty; by acts subsequent to independence, the company had confirmed its Algerian nationality and its submission to Algerian lawwhich included the nationalization decrees. Consequently, the purported transfer of the head office to Paris and the holding there of General Meetings were null and void. On the international level, the activities of a corporation were governed by the law of the place where the head office was situated; the sole legal effect of the presence of offices elsewhere was to submit the company to the jurisdiction of the courts of those places in actions brought by third parties. The nationality of the shareholders was not a criterion relevant to the determination of the nationality of a corporation. Such a doctrine would expose a company to changes of nationality imposed by fortuitous changes in the nationality of its majority shareholders.
The Court also noted that the Decrees nationalizing l'Ouenza had been made with the promise of compensation, based on the average price of shares in...
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