On 18 May 2016, the National Assembly debated a promising amendment, as part of the draft bill “21st Century Justice”.
The amendment, n° 395, aimed at granting exclusive jurisdiction to the judicial judge, and more precisely to the Paris Court of Appeal, to judge all appeals against international arbitration awards and against the enforcement orders of international arbitral awards or those rendered abroad.
In terms of form, it is true that the wording of the amendment could seem perfectible. It had been proposed to add a 4th subparagraph to Article L. 311-1 of the Judicial Organization Code, drafted as follows: “ “4 The international arbitral awards, or the enforcement orders of international arbitral awards or those rendered abroad, in all matters, in the case and conditions provided by Book IV of the Civil Procedure Code”. Thus, the Paris Court of Appeal (and it only) would hear all post-arbitration disputes. Beyond the problem of numbering (subparagraph and index are not synonyms), it is especially the explanatory statement that errs. It states, in fact, that the amendment “does not only concern international arbitral awards or those rendered abroad, and not domestic arbitral awards, which eliminates any risk of unconstitutionality”. Unless all expectations of intelligibility are to be abandoned, there is doubtlessly an extra negation. It should be understood, then, that the jurisdiction of the Paris Court would only concern international awards or those rendered abroad, with the exception of domestic awards.
On the substance, the proposed amendment relates to a logic of simplification and coherence. We would point out that today, post-arbitral litigation has exploded due to the jurisdictional duality.
To better understand this explosion and the necessity of remedying it, we will retrace the principle steps that resulted in this Gordian knot.
First step: the INSERM judgment of 2010
Pursuant to an INSERM decision of 17 May 2010 (Tribunal des conflits, 17 May 2010, Inserm, application n°3754), the Tribunal des conflits drew a distinction between the jurisdiction of administrative and judicial courts:
- By principle, the appeal formed against an arbitral award rendered in France settling a dispute arising out of the performance or the termination of a contract concluded between a French legal person governed by public law and a foreign legal person executed on the French territory, involving international business interests, be it administrative according to the criteria of internal French law, is brought before the judicial judge.
- By exception, this appeal must be brought before the administrative judge “when it involves the verification of the award’s compliance with the public policy rules of French public law relating to the occupation of the public domain or those governing public procurement, and applicable to public procurement contracts, partnership contracts and public service delegation contracts”.
The difference is significant, particularly because the verification performed by the two types of courts is not comparable. Whereas the administrative judge will scrupulously verify the compliance of the award with the mandatory rules of French public law, his judicial counterpart will only deliver a verification of the manifest violations of French international public policy.
Second step: the Joint association of the airports of Charente ruling of 2013
The Conseil d’Etat renewed and refined this position, in a ruling Syndicat mixte des aéroports de Charente of 19 April 2013. In this case, a dispute opposed a legal person under public law, the joint association of the airports of Charente, with the airline company Ryan Air. The joint association challenged the award rendered under the aegis of the LCIA that dismissed its demands against Ryan Air. It remained to be determined which court had jurisdiction over this appeal. The Conseil d’Etat ruled that “the appeal against [a] award, which involves the verification of its compliance with the binding rules of French public law to which such contracts are necessarily subject, falls under the jurisdiction of the administrative judge”.
A helpful clarification is however brought by the Conseil d’Etat:
- For an appeal against the award, the French administrative judge only has jurisdiction when the award was rendered in France. “Conversely, it judged, “in the case where the arbitral award was rendered by a court based abroad, the French administrative court [has no jurisdiction]”. In this case, the award having been rendered in London, the Conseil d’Etat ruled inadmissible the claims seeking the annulment of the award as they were brought before a court that lacked jurisdiction.
- Regarding the exequatur, the French administrative judge retains jurisdiction “regardless of the seat of the arbitral tribunal that ruled on a dispute born from such a contract”.
In brief, the case law is of a certain complexity:
- For internal matters, a dispute born from an administrative contract falls under the jurisdiction of the administrative courts;
- In international matters, a dispute born from an administrative contract between a French legal person and a foreign legal person may be subject to arbitration:
- Principle: The appeal against the arbitral award falls under the jurisdiction of the judicial judge;
- Exception: the appeal must be brought before the administrative judge “when it involves the verification of the award’s compliance with the binding rules of French public law relating to the occupation of the public domain or those governing public procurement, and applicable to public procurement contracts, partnership contracts and public service delegation contracts”.
- Exception to the exception: the appeal against the award is brought before the judicial judge if the seat of the arbitration is abroad;
- In any case, the administrative judge has sole jurisdiction for hearing a request of enforcement of an award when public policy rules “relating to the occupation of the public domain or those governing public procurement, and applicable to public procurement contracts, partnership contracts and public service delegation contracts” are invoked.
This excessive complexity, so fond of sibylline distinctions, renders the law barely intelligible for those accountable and proves harmful to the attractiveness of Paris, place of arbitration.
Third step: the resistance from the Cour de cassation
To complete this picture, the Cour de cassation entered the resistance. By a ruling of 8 July 2015, the first civil chamber judged that “exequatur of arbitral awards rendered abroad excludes all judgements on the merits and falls under the jurisdiction of the judicial courts” (Cass.civ. 1re, 8 July 2015, appeal n°13-25846).
Not without irony, one could point out that the decision was rendered in the Syndicat mixte des aéroports de Charente case. Within two years of each other, the two highest judicial and administrative courts adopted radically opposing positions. Where the Conseil d’Etat intends to maintain a residual jurisdiction, the Cour de cassation refuses to distinguish, and grants exclusive jurisdiction to the judicial courts.
Moreover, the Cour de cassation takes care to specify that the verification that will be made on the award shall be limited: “exequatur of arbitral awards rendered abroad are excluded from all judgements on the merits.”
This is to say that today, the situation is complex. Tribunal des conflits, Conseil d’Etat, Cour de cassation… So many different responses to the same question.
This is the Gordian knot that Amendment n°395 to the 21st Century Justice Draft bill intended to tackle.
It aimed at granting exclusive jurisdiction to the Paris Court of Appeal for “all appeals formed against arbitral awards”, says the draft amendment and, adds its draftsman, Mr. Jean-Yves Le Bouillonnec, “and against the enforcement orders of international arbitral awards or arbitral awards rendered abroad”.
The same draftsman specifies, for all practical purposes, that “this includes the verification of the award’s compliance with the binding rules of French public law relating to the occupation of the public domain, governing public procurement or applicable to public procurement contracts, partnership contracts and public service delegation contract, up until now falling within the jurisdiction of administrative courts”.
In brief, all post-arbitration litigation would be concentrated into the hands of the judicial judge.
The retraction of the amendment
The amendment was retracted on 18 May 2016, after intervention by the Minister of Justice (Garde des sceaux).
The principle reason put forward by him lies in the great complexity of the issue, which merits the drafting of a more extensive proposition, and not simply an amendment.
The Minister of Justice also put forward some arguments:
- The ire of the administrative court which would be dispossessed of its rights;
- The work overload that this would entail for the Paris Court of Appeal;
- The protection of the State’s interests, which is normally ensured by the administrative courts.
There perhaps exists a final argument: is the judicial court well-equipped to verify the compliance of the award with the mandatory rules of public law? In reality, the question only makes sense if the verification is thorough. If, as is its habit, the judicial court limits its control to flagrant and obvious violations of French international public policy, the question is raised with lesser acuity.
At this stage, the Law Commission has accepted to retract the amendment to favor a concerted reform on this point. Mr. Dominique Raimbourg, who presides over the Commission, underlined, however, the necessity to rapidly resolve this issue: “Paris’s position, as regards arbitration, is important; it must not be allowed to be taken hostage by an overly complicated appeal litigation”.
We can still hope for the imminent putting in place – as suggested by the Minister of Justice – of a commission composed of previous Cour de cassation and Conseil d’Etat judges, and that this commission restores simplicity and efficiency to the subject.