Arbitration (right)

The arbitration, judges private

Mechanism

The arbitration is governed by article 1442 and following New code of civil procedure. It is the procedure by which met of work the compromise has, such as it is framed by the general rule of article 2060 of the Civil code (the state and the capacity of the people, in particular, cannot be the subject of a compromise). It is a question of entrusting to an individual, not having any interest with the cause, the mission of seeking a contractual solution, which will bind the parts to the litigation, which must have initially agreed to compromise. The born litigation, the parts are appropriate of what one calls a compromise of arbitration, i.e. which, being initially granted on the principle even of the arbitration, she delegate then the search for the solution to the referee that they chose. The contracts signed between tradesmen can, moreover, to anticipate a still non-existent litigation by being appropriate that, if a dispute occurs, it will have to be solved by an arbitration and not by a judicial body. This stipulation, envisaged by articles 1442 from the NCPC and 631 of the commercial law, is called arbitration clause. Null until recently out of matter other than commercial, the legislator extended from them the access to the litigations between professionals of civil nature by rewriting article 2061 of the Civil code. This reform caused a certain mistrust, the arbitration clause being able to be imposed to the weakest contractor, deprived of the legal recourse “normal”. When the solution, called award, is returned, this one can (if one or the parts agree to it) acquire the executory force. The Court of Bankruptcy can then, after checking of what the authority and the award respect certain rules, to decide the exequatur, i.e. to affix the executory formula. The sentence is then suitable for distraint, under the same conditions as a decision of the public jurisdictions.

Application of the mechanism

The arbitration is a kind of “super-mediation”. It is an real alternative with the judicial body, and the legislator wanted that freedom, under article 1460 of the NCPC, is the rule. The parts take again the control of the business and lead the arbitration body to their own way, the referee being a delegate. They can choose each one a referee which will designate a third referee, the three formant a college called arbitration court. The parts have the choice of the person to which the mission of referee will be entrusted, but in practice, the technicality of the majority of the litigations passing in front of the arbitration requires that the mission fall to lawyers and senior technicians (and sometimes very specialized: frankness, import-export, data processing, intellectual property, etc) attached to permanent structures, such as the Arbitration Room of Paris.

The term of “mode jurisdictional” (but nonlegal) of payment of the litigations thus finds here perfectly to apply. Indeed, the arbitration is of hybrid nature, at the same time decisional and conventional, the referees being missionnés to decide under the terms of a convention formed by the parts. Their decision, called award, resembles almost exactly a “traditional” legal decision and is justified in right. The arbitration although very framed by the legal authority, is thus sometimes qualified private justice . The tradesmen and the companies have recourse to the arbitration because of the specific needs of the business world: speed, discretion and especially concrete cases very specialized. The arbitration is undoubtedly the most employed modes of alternative payments of the litigations, in particular in international commercial dispute (large companies against states, such as for example the business of the Frigates of Taiwan…). So much so that it manages from there to present many defects allotted to the justice of State: obstruction, heaviness, complexity, auquels are added the rather consequent fees of the referees, who put this mode of payment out of reach private individuals.

The referee, friendly type-setter

There exists an alternative with the preceding form: article 1474 of the NCPC provides that the compromise of arbitration (or the arbitration clause) can stipulate that the referee will rule like friendly type-setter. The authorization given to the referee by the parts to rule as friendly type-setter has important effects. It gives to the referee freedom, if he considers it necessary, to draw aside the legal provision which would bind a judge and to rule in equity. Equity is a tempting concept considered with prudence by the legislator. It consists in admitting that certain disputes can be solved, have regard to certain facts of the species, by drawing aside a legal provision which would be binding to the ordinary judge. A part can thus give up claiming the application of a right, which theoretically would apply, n the other hand satisfactory convention. A right which one can give up is for example that drawn from a regulation, right which one can, even in justice, to omit to raise. Friendly composition does not want to say for as much escape in the not-right. The friendly referee type-setter remains, on the one hand, held to observe the rules of law and order (that from which one cannot derogate by contract) but on the other hand its latitude to draw aside the rule is optional, the business extremely well being able to be regulated “equitably” pursuant to a legal provision. Nevertheless the Court of appeal judged that when the friendly referee type-setter made application of the legal provision to arrive at equity, it was, precisely because its mission is “the friendly compostion”, to justify this decision (Case. civ. 2nd, July 10th, 2003). Subparagraph 4 of article 12 of the NCPC is regarded by the doctrines as having, in its concision, of vast effects insufficiently applied. It lays out that “the born litigation, the parts also can, in the same matters and under the same condition, to confer to the judge mission of ruling like friendly type-setter (...)”. As an alternative mode, this provision is employed little. In the spirit of justiciable, the friendly composition is field of the arbitration. However subparagraph 4 of article 12 authorizes the judge with stautuer in equity, it thus acts of an exception, which could be very useful, to the general rule giving only mission to the judge of applying and of making respect the right. Subparagraph 4 transforms the judge into referee by offering a considerable freedom to him, without involving the principal disadvantage of the private arbitration which is its cost, inaccessible to the private individuals. Moreover, the justiciable one profits from all competence to the professional judge. Some reserves slow down nevertheless the more frequent recourse to this mode of resolution. The text conditions the friendly composition by the judge so that the litigation “was born”. The possibility of stipulating a clause envisaging it is thus excluded, which one can regret since article 2061 authorizes it from now on for the civil professionals, widening his field of application considerably, leaving, so to speak, subparagraph 4 of article 12 somewhat behind. There still, the distinction with the conciliation is not always clear, which can create a confusion in the spirit of the justiciable ones.

Who can profit from it?

Any individual or very undertaken confronted with a litigation provided that the parts are of agreement both to resort to the arbitration. Two modes of recourse to the arbitration:

is by a Arbitration clause (article 1442 of the NCPC, to see higher); it is about a clause which lays down the recourse to the arbitration. The recourse to the arbitration can thus be envisaged in advance, before any litigation. the arbitration clause preexists to the litigation .
is with the concluding of an agreement of arbitration (article 1447 of the NCPC); known as Compromis (a compromise is the exchange of promises between two people or more. It is the result of a negotiation between the involved parts where each one will have made concessions to arrive at a common solution which they will have jointly to carry out). It is about a convention passed between the parts, but to the difference of the arbitration clause, once the litigation was born: the litigation preexists to the compromise . The parts will agree to submit the litigation to the referees.

However, it is not possible to compromise (with the legal direction) on the rights of which one does not have the free provision, which is very often the case in right of the family for example (divorce, filiation, etc…).

Since a law of May 15th, 2001, the arbitration clause in theory valid in all the “contracts is concluded at a rate of an community activity” (C. civ., Article 2061) commercial or not.

Can thus be subjected to the arbitration of the conflicts relating to consumption (litigation with a tradesman), to the payment of a succession, but also of the conflicts between tenants and financial backers, certain conflicts between employees and employers, etc

Which is the advantage of this procedure?

The principal advantage of the arbitration is the facility to make carry out the sentences in an international context, the majority of the country having ratified the Convention of New York of 1958 which recognizes the same value with an award as with a national judgment.

The business is not judged by a court but by one or more private individuals called “referee S”; each part designates its referee

If the parts gave them capacities of friendly composition, the referees are known as friendly type-setters and can exempt themselves to apply to the bottom of the litigation the applicable legal rules in front of the courts of the State. But they remain held to apply the guiding principles of the suit at law and to respect the law and order; moreover, the Amiable composition obliges them with Statuer in equity and to refer explicitly to equity as the determining cause of their decision, in the text of this one.

All the referees must be impartial and independent of the parts since they take part of the judicial office, as judges would do it. They deliver indeed a sentence, comparable to a judgment, of jurisdictional nature.

About no matter who can be referee, but they are generally people whose profession or experiment confers an unquestionable competence in right or legal experts to them.

This procedure compared to the ordinary grounds for appeal (procedures in front of the courts) has advantages: faster, more discrete and less expensive.

Advantages of the arbitration: myth or reality?

confidentiality ; it is one of the important advantages of the arbitration which leads many business men in practice to stipulate it in the contracts; nevertheless, in the event of recourse in front of the official jurisdictions, the confidentiality is reduced or cancelled.
speed ; it is a usual advantage of the arbitration, although certain arbitrations are sometimes as slow as a procedure in front of an official jurisdiction, because of multiple recourse. Note: the parts can prohibit interjeter call and if the parts give up the Appel reformation, it is faster. On the other hand, in France, contrary to Belgium or Switzerland, one cannot prohibit the Appel nullity. But this last is admissible, contrary to the call reformation, only to examine codified means of recourse and of limited number.
the cost ; in official justice, one does not pay the judges, in the arbitration, it is generally necessary to pay the referees. Their fees are high, but without relationship with the stakes of the litigations average or large, with the result that the cost is often a non-problem
the technicality of the referees of legal origin ; in practice, much of referees are lawyers of very high level: when the bottom of the litigation is legal, they bring a determining competence; but when, to slice the litigation, it is advisable to include/understand very technical facts (what is frequent in the litigations of businesses) they call upon experts external with the Arbitration court: one can then wonder where is their added-value which is supposed to justify their remuneration. The remedy consists in an adequate composition of the Arbitration court of integrating there necessary competences (what is too often omitted).

In fact it is an excellent method in the life of the businesses, with the proviso of knowing it well: many vexations come from what it is regularly practiced by people who do not control the characteristics of them.

In spite of the many advantages in practical term of this procedure, it also should be known that the rules of the fair trial of 6 para. 1 CESDH are not applicable to the awards (Commission EDH October 22nd, th and th 1996. Indeed, by signing the compromise, the parts give up faculty to saidir an ordinary jurisdiction and to be prevailed of Convention ESDH.

The international arbitration!

The arbitration (nonofficial mode of payment of the litigations) is the resolution of conflict via an arbitration court composed of one or more referees (in general three). The referee is a true judge whose decision is binding to the litigants. The arbitration thus makes it possible to regulate a litigation (without passing by the courts of the State but by an arbitration jurisdiction), by entrusting the disagreement to one or more private individuals chosen by the parts.

It acts for the two parts in the presence of agreeing to make slice their litigation by one or more third. This private justice presents some of advantages:

- It is consensual, since the legitimacy of the referee is recognized by the parts;

- It is discrete, since the arbitration is not public, which is an asset in a certain number of fields, in particular in commercial matters;

- It is fast, since it is freed from heavinesses of the justice of State; from the point of view of this one,

- It is free, since in fact the parts take responsibility for their remuneration of the referee (S)

- It is possible that the referees decide not in right, but in equity if the parts theirs require of the title of the friendly composition.

- The arbitration presents some nuisances however: it can be difficult to find referees undeniable and their remuneration can be a problem.

Role of the CCI

The International court of arbitration of the CCI is the principal world institution of settlement of the international commercial disputes.

More than 14.000 files were treated by the Court since its creation. For the only year 2005,521 businesses were subjected to him, implying a total of 1.422 parts originating in 117 countries.

Association for International Arbitration

Association for the International arbitration encourages the arbitration, the alternative resolution of the conflicts and the mediation. Association was founded in 2001 in Paris.

The goal of association is to create a network of professionals such as lawyers, magistrates, professors but also of the students. In the past, the AIA organized a conference concerning alternative measurements in civil and commercial matters and the influence of the green book of the European commission.

Today (2007), the AIA organizes after midday of study on “INTERIM MEASURES IN INTERNATIONAL COMMERCIAL ARBITRATION” in Brussels, on October 5th, 2007.

To resort to the arbitration

Any natural person or morals of private law (and more exceptionally of public law), confronted with a litigation, can resort to the arbitration in order to make slice the disagreement the opponent with one or more other people.

All the parts must however grant the payment of the litigation by arbitration way. If only one of the parts does not accept the recourse to this private justice, only the ordinary courts are qualified according to the normal rules of procedure.

In addition, the legislation of each State can envisage additional conditions for the validity of an arbitration procedure. In French right for example, the arbitration is not possible that when it is a question of slicing a litigation in relation to the community activity of the parts (ex: an action in recognition of paternity is not submissible to arbitration but falls within the exclusive competence of the official jurisdictions of common right. On the other hand, a difficulty born of a non-delivery of goods bought by a tradesman with another tradesman within the framework of their respective community activities could be subjected to an arbitration court).

The parts can express their will to resort to an arbitration procedure by two means:

- is before the birth of the litigation, by stipulating a clause expecting that in the event of difficulty between them within the framework of the fulfilment of a contract, the disagreement will be sliced by an arbitration jurisdiction: this clause specific included to the contract (or envisaged in a convention which returns to the principal contract) is called " clause compromissoire". The arbitration clause must be stipulated in writing and indicate the name of () the referee (S) or lay down the methods of its (their) designation when the litigation is born.

- is after the birth of the litigation by writing an agreement subjecting the disagreement to the appreciation of an arbitration court: this document is called " compromise of arbitrage" (not to be confused with the compromise of sale which is the exchange of reciprocal promises of purchase and sale within the framework, for example, of a real sale or a transfer of goodwills).

In practice, it is extremely rare that the parts get along after the birth of a litigation to subject their disagreement to an arbitration court. In general, the arbitration procedures are thus installation because of the existence of a preliminary arbitration clause.

In the majority of the cases, the arbitration clauses are written in way minimalist, the parts being satisfied to indicate to it the principle of the recourse to the arbitration and the practical methods of nomination referees. On such an assumption, the practice developed the technique of the compromise after arbitration clause: at the time of the first audience of the arbitration court, the referees invite the parts to conclude a compromise from arbitration which supplements the arbitration clause by regulating the details of the procedure to be followed in front of the arbitration court (in particular, rules of behavior of the audiences, the number of memories of arbitration to be exchanged, etc…).

See too

; External bonds

international Home Page association for arbitration

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