Mediation and international arbitration

International arbitration is an alternative method of dispute resolution whereby the parties agree to submit their dispute to an arbitral tribunal, a tribunal which is not registered in any national judicial order.

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Chapter 1. Mediation

Section 1.1. Principle

Mediation is a practice that aims to involve a neutral and impartial third party to facilitate the resolution of disputes, and find an amicable agreement between the parties.

Thus, mediation happens (often) before litigation.

Indeed, and most often, this mediation is provided for by a premediation clause provided for in contracts between professionals. Although #8217; there is no obligation to reach a compromise, this premediation clause must be executed in good faith (ie bona fide), since refusing to go to mediation despite this clause will be potentially harmful for the continuation of the procedure.

Section 1.2. Prescription

Mediation normally stops the prescription (Article 8, Directive 2008/52 / EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters).

Section 1.3. Effect of #8217; mediation

The mediator can not make a decision, in the legal sense of the word.

Indeed, there is only #8217; a facilitator of the consent of the parties: thus, the result of #8217; mediation can only be an agreement or a transaction.

Section 1.4. Execution of agreements

1.4.1. Principle

We could say that the means available to execute the contract (ie the agreement) resulting from mediation are the conventional means in international commercial law.

You probably wouldn't be wrong.

Nevertheless, for greater security, an international convention (Singapore Convention, taken under the umbrella of UNCITRAL) was signed in August 2019 by fifty countries in order to facilitate the execution of the agreements made during mediation.

1.4.2. Resolution clause

We can question the applicability of this agreement if a contract termination clause exists in the mediation agreement (e.g. the court of Vesoul is competent): does the Singapore Convention applies & #8217; applies?

It seems that opinions differ on the question.

1.4.3. Refusal to execute by a State

The execution of the agreement may be refused in a member state (article 5 of the Singapore Convention) for a number of reasons, for example:

  • l & #8217; incapacity of 1 of the parties to sign the mediation agreement;
  • l & #8217; agreement is not final;
  • the obligations set out in the agreement have been met (e.g. the amount has been paid & #8230;)
  • the mediator was not impartial;
  • the agreement is contrary to the public order of the country where the execution is sought; #8217;
  • the subject of mediation is not likely to be settled by mediation according to the law of the country where the execution is sought.

Chapter 2. Arbitration

Section 2.1. Principle

Unlike mediation, the arbitrator has the power to settle a dispute: he has jurisdictional power.

Therefore, the decision (ie the award) of the arbitrators is binding.

C & #8217; is d & #8217; all the more & #8220; funny & #8221; qu & #8217; one should never lose sight of the fact that the arbitral tribunal only exists by the will of the parties: the arbitral tribunal is not a state creation and without agreement of the parties to submit to arbitration, the arbitral tribunal n & #8217 ; has no power.

Likewise, arbitration is not linked to a given country: it is anchored in a system which goes beyond the notion of countries (even if by definition, arbitration will take place physically somewhere), but this is simply for practical and not legal reasons).

Section 2.2. Choice of type of arbitration

When the parties choose an arbitration, it is possible to choose between several types of arbitration:

  • l & #8217; institutional arbitration,
  • l & #8217; ad-hoc arbitration.

In reality, these two trade-offs are very similar. The only major difference is the fact that institutional arbitration is done under the aegis of an international institution.

Section 2.3. Law applicable to arbitration and law applicable to litigation

2.3.1. Law applicable to arbitration (lex arbitri)

During an arbitration, it is possible to choose the lex arbitrator, ie the law which will regulate the procedure, the necessary competences of the arbitrators, the manner of summoning the parties, etc.

This is not necessarily a national law.

Most often, if the arbitral tribunal under the aegis of #8217; an international institution (such as the International Chamber of Arbitration of Paris, the London Court of International Arbitration or the Swiss Chambers' Arbitration Institution), this institution proposes rules of procedure which play the role of lex arbitri.

2.3.2. Law applicable to the dispute (the ex causae)

1) Principle

It is also possible to choose the law applicable to the dispute.

Most often the parties determine it in a special clause of the contract and their choice is free.

If the contract is silent, and if the parties do not manage to reach an agreement, the determination of the law applicable to the dispute generally falls to the arbitral tribunal which must determine it according to the contractual context.

2) Exclusion from public order

The only limit of the parties concerning the lex causae is public order: it is not possible to rule out the application of public order.

However, this is not very simple & #8230; indeed, what public policy to consider?

In reality, it is most often necessary to consider the public order of the countries for which the link with the dispute is & #8230; sufficient: it is therefore on a case-by-case basis that the question must be studied.

Fortunately, there are still certain principles common to a large number of states:

  • l & #8217; impartiality of the arbitral tribunal,
  • the contradictory nature of the debates,
  • etc.

This question of public order is notably very important in the case where the wish is to have the arbitration award enforced in a given country (so that the judges of this state do not dismiss the arbitration award as being contrary to the order. #8217; public).

Section 2.4. Arbitral awards

2.4.1. Legal framework

The legal framework for arbitration awards is multiple:

  • The New York convention from 1958;
  • National legislation
    • These laws may deal with national and / or international arbitrations in the same text or in different texts;
    • Many national laws (around 90) have been inspired by UNCITRAL Model law : c & #8217; is an example of legislation in order to simplify the convergence of legislations.

2.4.2. Definition

N & #8217; let's not go by four paths: there is no definition of what is an arbitral award, nor in the New York conventionnor in the majority of national laws.

In the end, only the national judge can affirm whether a document is an arbitral award or not.

2.4.3. Examples

However, it is possible to state that the following are not arbitral awards:

  • a procedural order,
  • a decision concerning the jurisdiction of the arbitral tribunal,
  • an interim measure ordered by the arbitral tribunal,
  • an interlocutory award (ie a decision that intervenes without definitively ruling on the parties 'claims, for example a decision ruling on the parties' liability, pending the decision on the amount of damages and interest),
  • etc.

On the contrary, is an arbitral award:

  • a decision rendered by default (ie in #8217; absence of & #8217; a party),
  • an award by consent (ie registration of #8217; agreement of the parties to the dispute),
  • etc.

2.4.4. Form

There is no mandatory form.

However, it is necessary that the sentence (A31 (1) UNCITRAL Model law) :

  • be written,
  • be signed by a majority of arbitrators provided that the absence of signatures is explained (e.g. the arbitrator who has not signed has not signed does not agree with this award),
  • indicate the date of the sentence and
  • specifies the place of arbitration.

Of course, the reasons for the award (ie the reasons) must be indicated except that the parties waive this indication. (A31 (2) UNCITRAL Model law) (but it is difficult to see why they would give it up).

2.4.5. Effect

The arbitration awards are final and binding on the parties involved.

In this case, it must be recognized that 90% of the awards are applied without reluctance from the parties (but there are still 10% & #8230; these 10% will be dealt with in the & #8220; execution of decisions & #8221;)

In addition, arbitral awards have the effect of & #8220; res judicata & #8221; : a party cannot raise the same dispute against the same defendants (same request, same basis, same parties).

Section 2.5. Annulment of an arbitration award

2.5.1. Impossible call

In most cases (ie in the national laws of the place of arbitration or the institution of arbitration or the legislation provided for by the procedural rule of arbitration), it is not possible to appeal from an award of arbitration .

However, if the law of arbitration is English law, it should be noted that an appeal is possible for points of law (and not of fact).

It is therefore more common to ask for the annulment of the sentence.

2.5.2. Jurisdiction

Cancellation must be requested before the court of the seat of the arbitral institution:

Thus, it is possible to avoid having to file multiple invalidity actions before a large number of countries.

2.5.3. Applicable law

The law applicable to an action for annulment is the law of the judge (lex fori).

2.5.4. Reasons for Cancellation

The principle remains to presume the validity of the arbitral award (ex. Eco Swiss China Time Ltd. 1999 ECJ).

For the rest, the reasons for & #8217; cancellation are limited, but each country can decide its own reasons & #8230;

For example :

  • lack of capacity to sign the arbitration agreement,
  • l & #8217; arbitration agreement n & #8217; is not valid (e.g. lack of consent),
  • the parties were not called correctly or were unable to present their case,
  • the decision relates to points which were not requested (ie ultra petita decision),
  • the court has a composition or rules which are not in agreement with the agreement of the parties or failing this the law of the arbitral seat,
  • the points of the decision were not arbitrable according to the law of the judge of the cancellation,
  • the decision is contrary to public order according to the law of the judge of the annulment (eg A34 (2) b) ii) UNCITRAL Model law , Article 1520 (5) CPC, 190 (2) (e) Swiss PILA) (ex. Cass. Civ. 1st, June 12, 2013, RG No. 12-16864, Victocor Technologies).

2.5.5. Renunciation of the right of annulment

We may wonder if it is possible to waive in advance (in the contract, for example) his right to request the cancellation of an arbitration award.

The answer is: it depends on #8230;

Indeed :

  • according to UNCITRAL Model law, this is not possible;
  • according to article 192 of article 192 of Swiss PILA, this is possible if no party is domiciled in Switzerland;
  • according to article 1522 CPC, it is possible to unconditionally waive the action for annulment (provided that the conditions for the execution of the article are #8217; 1522 CPC together 1520 CPC will continue to apply)

2.5.6. Effect of & #8217; a cancellation

A cancellation allows a new arbitration.

Furthermore, the cancellation of an arbitration award makes it possible to avoid the execution of an arbitration award:

  • in the country that made the cancellation;
  • in countries that recognize this cancellation, ie:
    • countries that have joined the New York convention (Article V (1) (e))
    • and who do not have national provisions more favorable to the party requesting execution (e.g. recognizing that execution can be requested even if the sentence is set aside, article VII and recommendation concerning the interpretation of this article) .

Section 2.6. Execution of arbitral awards

2.6.1. Principle

The New York convention organizes the rules on the recognition and enforcement of foreign arbitral awards.

This convention has been signed by more than 161 countries.

Of course, as in virtually all international conventions, countries can make reservations on particular points (Article I (3) of the New York convention), and in particular may provide to apply the convention that:

  • arbitrations in member countries;
  • if the nature of the arbitration is of a commercial nature according to national law.

In addition, article VII of the New York convention provides that member states may have more favorable provisions vis-à-vis the person requesting the execution of an arbitration award in their territory.

2.6.2. Reasons for refusing execution

According to New York convention (article V), there are only 7 reasons to refuse the application of an arbitration award:

  • the dispute was not un arbitrable according to national law (may be raised ex officio by the judge)
  • the sentence is contrary to the public policy of the country where the execution is sought (may be raised ex officio by the judge)
  • the parties were unable or the arbitration clause is invalid
  • l & #8217; arbitration did not proceed correctly (e.g. non-adversarial arbitration)
  • the award goes beyond the initial framework of arbitration;
  • l & #8217; arbitration has not followed the rules applicable to it;
  • decision n & #8217; is not yet mandatory or has been canceled by the competent court.

2.6.3. Reasons for refusing execution (in France)

In France, we find globally these same reasons in the articles 1514 CPC and 1522 CPC which refers to the causes of & #8217; cancellation of the & #8217; article 1520 CPC.

But we will immediately note that the cause of non-execution relating to & #8217; cancellation of & #8217; a decision by the competent court has not been reproduced in French law. This is possible, as it is more favorable to the person requesting execution (Article VII of the New York convention).

I & #8217; insists, because this will be important in a lower example (big teasing & #8230;).

2.6.4. A small example of complexity (in France)

We can summarize the Putrabali case (Court of Cass, 1st ch civ., June 29, 2007, RG n ° 05-18053) as follows :

  • Putrabali sold a shipment of white pepper to Rena Holding;
  • this cargo sank when transported by boat;
  • Rena Holding therefore refused to pay the price of the cargo;
  • a first arbitration (2001) took place in London, ruling that Rena Holding had the right to refuse to pay;
  • this first arbitration was annulled by the English Supreme Court because it considered that the refusal to pay was a contractual breach;
  • a second arbitration (2003) was still held in London, ruling that Rena Holding had to pay for the cargo.

And this is now getting a little more difficult & #8230;

  • Rena requested in France the execution of the 2001 arbitral award (which had been canceled by the English), which was granted;
  • Putrabali appealed against this execution, because this sentence had been annulled;
  • However, the French courts have indicated that the annulment of an arbitration award was not a reason under French law to refuse the execution of it.

But whereas the international award, which is not attached to any state legal order, is a decision of international justice whose regularity is examined with regard to the rules applicable in the country where its recognition and enforcement are requested; qu & #8217; in application of article VII of the New York Convention of January 10, 1958, the company Rena Holding was admissible to present in France the award rendered in London on April 10, 2001 in accordance with the convention of arbitration and the settlement of l & #8217; IGPA, and justified in availing itself of the provisions of French law of & #8217; international arbitration, which does not provide for the annulment of the award in its country of origin as a cause of refusal of recognition and of #8217; execution of the award rendered abroad #8217;

Of course, the execution of the 2001 arbitral award makes it impossible to execute the 2003 award at the same time: this latter award cannot therefore have effect in France.

We can clearly see the limits of international arbitration and the possibility left to member states of having a more favorable law for the person requesting the execution of international arbitration awards.

2.6.5. Effect of & #8217; an appeal against an execution (in France)

Appeals against the execution of an arbitration award in France have no suspensive effect (article 1526 CPC).

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