'Irregular and illegal' arbitration procedure
"The minister explicitly gave instructions to include damages for moral prejudice in the scope of the arbitration judgment, even though this is excluded under the law by virtue of it being an incalculable debt that was not included in the list of matters on which there could be a compromise," Nadal said.
Jean-Louis Nadal also noted that Lagarde "explicitly authorised the CDR and the EFPR to exclude the Crédit Lyonnais from the debate on whether the arbitration was soundly based, the bank having stated its opposition to the very principle of arbitration." He said that she had "explicitly refused to consider an appeal against an arbitration judgment that was however very unfavourable for public finances," and that she "chose not to seek an opinion from the Conseil d'Etat1" on the arbitration procedure, even though there were "major questions and uncertainties over the principle of arbitration itself and its consequences for the state."
Nadal judged that a charge of "abuse of authority" could be envisaged. Such a charge implies, regarding someone invested with public authority, that they carried out action that was aimed at obstructing the law.
"In this case there is plenty of evidence showing that undertaking an arbitration procedure, and the material submitted to it (notably damages for considerable sums for a moral prejudice that had nothing to do with the CDR, abandoning any appeal against an unfavourable arbitration judgment) and the consequences that resulted from this, notably for the state, went against general principles of French public law and the legal arrangements currently in force," he wrote, adding. "The arbitration judgment had the effect, under these conditions that were irregular and illegal, of wrongly extending the CDR's guarantee to areas which should not have concerned it because of its legal status."
He concludes: "Given the gravity and significance of the facts under consideration which can be attributed to the Minister for the Economy, Finance and Industry, the matter should be referred to the Petitions Commission of the Court of Justice of the French Republic which has the jurisdiction to decide on what the next steps should be in the attached complaint."Below is a transcription of the report sent by Jean-Louis Nadal to the Court of Justice of the French Republic (available in French only):
1: The Conseil d'Etat, or Council of State, is the highest jurisdiction in France and is the final arbiter of cases relating to executive power, local authorities, independent public authorities, public administration agencies or any other agency invested with public authority.