The new arbitration rules of the French Reinsurance and Insurance Arbitration Centre (the “CEFAREA”) – An example of corporative rules designed to fit its users’ needs

In September 2013, The French Reinsurance and Insurance Arbitration Centre (the “CEFAREA”) has adopted new Arbitration rules.

The CEFAREA, set up in Paris in 1995, is an emanation of the French section of AIDA (the International Insurance Law Association). It is dedicated to the promotion of mediation and arbitration to resolve disputes between players of the insurance market (French and foreign insureds, insurers, cedants, reinsurers and intermediaries).

Since 2006, the CMAP (the Paris Mediation and Arbitration Centre) administers arbitrations conducted under the CEFAREA rules.

The adoption of new rules in 2013 takes place in the wider context of arbitration evolutions:  it aims at promoting an easier and quicker procedure, as well as taking into account the 13 January 2011 French Decree reforming Arbitration law and French case law.

More precisely, the new rules:

  • Strengthen arbitrators’ independence and impartiality, extending the obligation to disclose “any circumstances that would be, in the view of the parties, liable to affect their independence and impartiality” in the course of the proceedings (art. 12.3) – this provision is fully in line with French case law on independence and impartiality;
  • Provide that, in the absence of a choice, the language of arbitration is French or English – in the previous rules, the parties’ agreement on the language was the only option considered. In the absence of such a choice, no further guidance was given by the rules as to the language of the arbitration (art. 16.3);
  • Introduce the requirement of a “document organizing the proceedings” similar to the ICC Terms of reference (art. 17.4);
  • Provide that all arbitration proceedings, whether domestic or international, submitted to the rules are confidential (art. 17.6), whereas other rules do not refer to confidentiality as being the principle;
  • Tend to increase the speed of the proceedings, the award having now to be rendered “as soon as possible”, and in any case, as was previously provided, within six (6) months after the constitution of the tribunal (with a possibility to extend this timeline two times six months) (art. 21);
  • Introduce the obligation for the arbitral tribunal to communicate the draft award to the Arbitration commission of the CMAP, which may submit any useful comment, thus decreasing the risk for the award to be set aside (art. 26.2);
  • Encourage mediation by providing for a gateway to a mediation procedure, including after the constitution of the tribunal (in which case the tribunal has to propose the mediation itself) (art. 35);
  • Introduce a disclaimer of liability for arbitrators, appointed experts, the CMAP and the CEFAREA, with the exception of intentional and willful acts and omissions (art. 36).

Moreover, amiable composition, one of the main features of the CEFAREA rules, remains the principle. Thus, like a lot of other corporative arbitration rules, the CEFAREA tribunal decides ex aequo et bono, i.e., on the basis of what is just and fair, unless the parties have agreed otherwise (art. 23) (for further information, please see our post: “Why choose amiable composition?” here). This trend to impose as principle amiable composition instead of leaving the choice to the parties, which is also observed in construction arbitration, may be regretted since in these industries (in particular construction and insurance), parties may need to be assured of the strict application of their agreements.

Finally, it should also be noted that contrary to some of the new arbitration rules, no provisions relating to complex arbitrations have been included in the revised CEFAREA rules.  The concept of an emergency arbitrator is also absent from the new provisions.

In conclusion, the new CEFAREA rules appear as a new set of corporative rules destined to encourage players of the insurance market to submit their disputes to arbitration and pragmatically designed to fit their users’ needs.

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