Comparison of arbitration, in France and in Czech Republic and at the international level (2006)

Résumé du document

Aristotle wrote, "For an arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity."

Arbitration is a form of Alternative Dispute Resolution, specifically, a legal alternative to litigation whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party, the arbitrator(s) for resolution. The decision is binding and avoids State jurisdiction.

Although arbitration is often referred to as an innovation, it has in fact existed for centuries. Archaeologists have uncovered evidence of the use of arbitration in the ancient civilizations of Egypt, Mesopotamia and Assyria. Arbitration was extensively used by the ancient Greeks and Romans and in a form of substantially similar to that used today.
In France, arbitration first appeared in the 13th century during the trade fairs.

Formerly, all arbitration was contractually based, which meant that it was private and voluntary. Recently, a non-consensual type of arbitration has evolved, which operates under the aegis of the courts, but remains an alternative to the full use of the litigation system.

In commercial fields, arbitration is an important mean to settle disputes. Indeed, this importance lies in its finality. Generally, private arbitration awards are binding on the parties, and cannot be overturned except on very narrow grounds, since most of the time it is a single-instance case. Arbitration resolution is binding, and in the same time, it stays a mean of resolution which enables parties to have a broad freedom, even to deem in equity instead of material law.

Moreover, it is preferred for the lower costs than a traditional trial. However, fees of arbitrators can sometimes be high. In addition, a lot of businessmen and enterprises favour this kind of resolution for its discretion, so necessary in the business world, since it is private and less formal. Another important advantage of arbitration is the use of experts to resolve disputes, which is beneficial for a dispute in a specific field.

And the last advantage is the celerity of this procedure, among other things owing to the single-instance resolution.

For international commercial transactions, parties may face many different choices when it comes to including a mechanism for resolving disputes arising under their contract. If they are silent, they will be subject to the courts of wherever a disaffected party decides to initiate legal proceedings and believe it can obtain jurisdiction over the other party. Or they can choose a method of dispute resolution, which can be either litigation before the domestic tribunal of one of the parties, or arbitration. If the parties choose to resolve their disputes in the courts, however, they may encounter difficulties. The first is that they may be confined to choosing one or the others' courts, as the courts of a third country may decline the invitation to devote their resources to deciding a dispute that does not involve any of that country's citizens, companies, or national interests. The second, and perhaps more significant difficulty, is that judicial decisions are not very "portable"; in that it is difficult and sometimes impossible to enforce a court decision in a country other than the one in which it was rendered.

Extraits

[...] Even if the definition is vague, the emphasis is put on the object of the litigation, on the international dimension of the commercial transaction. In French law, international regulation is regulated since the decree of 1981, included in the articles 1493 to 1507 of the NCPC. In Czech Republic, the Act of 1963 on Arbitration Proceedings in International Trade regulated the situation of a conflict between a Czech person and a foreign person. It was repealed with the Act relating to Arbitration and to Enforcement of Arbitration Awards of 1994. [...]

[...] Thus it permits opposing parties of different States to get a consensus during a dispute. Organisations in international arbitration As the Convention of New-York states, term "arbitral awards" shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.” Parties using arbitration have a choice between designating an institution, such as ICC, to administer it, or proceeding ad hoc outside an institutional framework. In ad hoc cases, the arbitration will be administered by the arbitrators themselves. [...]

[...] Similarly, the section 28 of the Act states that the award is enforceable in Courts of law. In France, the arbitral award is subject to appeal save where the parties have renounced to an appeal in the arbitration agreement-and this is often the case. However, it is not subject to appeal where the arbitrator has been assigned to decide as amicable composer, save where the parties have expressly set aside this right in the arbitration agreement. But even if the appeal is not possible, a revocation action to vacate the arbitral award may nevertheless be brought, possible in six different cases précised at the article 1484 NCPC. [...]

[...] relating to Arbitration and to enforcement of arbitration awards, given that the previous Act on arbitration (act of 1963) was just for international disputes. In France, it is the Civil Code that determines to what extent people have the possibility to make arbitration. And it is the Nouveau Code de Procédure Civile (NCPC) which specifies procedural rules. This regulation is the result of a decree of May the 14th of 1980 on domestic arbitration. In 1999, the arbitration chamber of Paris asked the government to change rules of arbitration in France. [...]

[...] The scope of arbitration is larger in French law. It is the articles of the Civil Code which regulate the possibility of an arbitration agreement. Thus, all persons may make arbitration agreements relating to rights of which they have free disposal, except in matters of status and capacity of the persons, in those relating to divorce and judicial separation or on controversies concerning public bodies and institutions and more generally in all matters in which public policy is concerned. However, categories of public institutions of an industrial or commercial character may be authorized by decree to enter into arbitration agreements. [...]