Towards the creation of a specialized international commercial court?
18/12/2017 - Articles and publications
Wednesday, 13 December 2017, a conference on the creation of a commercial court for international disputes was held at the Paris Court of Appeal.
The conference, organized by the Paris Place du Droit Association, gave the floor to economists, legal directors, lawyers, presidents of the court, and think-tanks.
Held in the presence of the Bâtonnier de Paris, President Canivet, and President Louvel, this conference concluded with a presentation by the Minister of Justice, Ms. Nicole Belloubet.
Various factors have given rise to the idea of creating a commercial court for international disputes in Paris.
First, a contextual element: the announced Brexit will necessarily have an impact on the European legal landscape. Even though, today, nearly 90% of the litigation relating to financial contracts is located in London and 40% of international arbitrations are subject to English law, this situation could soon evolve. By leaving the European Union, London will certainly gain freedom, but it will lose an essential instrument of its attractiveness: European judicial cooperation in civil and commercial matters. In other words, decisions in London will have to be enforced in each European State only after having obtained an exequatur, with all the additional time and costs this generates.
In fact, the plausible decline of London leads to the emergence of other legal and financial centers. Frankfurt, Dublin or Paris are on the line. Paris has great assets to become the legal base of reference (our language, our legal system that shines, our efficient and inexpensive courts, our universities and colleges, the headquarters of major multinational companies, our infrastructure …).
Next, an economic element: the legal market is a determining issue. France currently generates around 31 billion euros in this area, nearly 2% of GDP. By comparison, in 2016, commercial litigation yielded £ 25 billion to the UK Treasury. The law is a decisive economic asset. It is also a vector of attractiveness for finance. Paris will become the continental center of finance only if it is, first of all, the continental center of law. The law becomes a market, an instrument of the economic attractiveness of France.
Moreover, the consensus recognized that our commercial courts have thus far a moderate international attractiveness, and that drafters of international contracts sometimes have trouble convincing their counterparts to choose Paris as the competent jurisdiction. Their fears – right or wrong – essentially concern the obligation to use the French language, the inadequacy of our rules of evidence, the overcrowding of courts and the unpredictability of judgments. Hence the more frequent use of mediation or international arbitration.
Finally, an element of comparative law: many States have established specialized courts to deal with international commercial disputes, particularly in Doha, Singapore and Dubai. Germany and Belgium are also considering this option. Paris cannot remain indifferent to this growing demand.
Also, President Canivet, author of a report submitted to the Garde des Sceaux last March, proposed the creation of chambers, in Paris, specialized in the handling of international commercial disputes.
The High Legal Committee of the Paris Financial Center (Le Haut Comité Juridique de la Place Financière de Paris) also supported this perspective.
A certain terminological ambiguity has emerged. It is sometimes a question of creating a specialized court, endowed with its own means and particular premises. Other times, it is more modestly referred to as specialized chambers within the Paris Commercial Court and the Paris Court of Appeal.
The High Legal Committee of the Paris Financial Center (Le Haut Comité Juridique de la Place Financière de Paris) spoke of the need to create a specialized court: the international commercial chamber.
The Canivet Report referred to specialized judicial chambers for the settlement of transnational business law disputes.
At the conference on December 13th, the two terms, court and chambers, were used interchangeably. It seems at this stage, and the signing of the protocols by the Minister of Justice will bring the required clarity, that it is more about creating specialized chambers within the Paris Commercial Court and the Court of Appeal of Paris rather than creating an autonomous court.
It was noted that since 1995 the Paris Commercial Court has had specialized chambers in this area. It has been suggested to build upon the existing model and to take it a step further, notably by modifying the procedural rules.
What are the characteristics of these specialized chambers?
Specialized chambers would demonstrate their international openness through different aspects.
First, by the use of the English language.
This is a delicate issue given that the ordinance of Villers-Cotterêts imposes the use of the French language for all acts of justice and the Constitution states that French is the official language.
In order to not obstruct these prescripts, Ms. Belloubet proposed that one should consider a solution based on compromise.
Thus, it was suggested that the parties and their lawyers could speak English in front of the specialized chamber and communicate all their evidence in English. The judge may, nonetheless, require a French translation of the evidence.
The judge however, should speak in French since he represents the State and accordingly render his judgment in French, accompanied by a translation if necessary. In practice, this means that the judge would speak French to litigants who speak English. The viability of this process is questionable.
It has been envisaged to use a system of translation booths (but the cost is particularly high) or automatic translation software (whose reliability is not yet assured).
Next, the international openness of the specialized chambers would be demonstrated by modified rules of evidence.
The debate developed around the opportunity to import the discovery procedure before the specialized chambers, but by limiting the scope to avoid inflating the budget and time-consumption.
It has been proposed that communication in English without translation should be permitted, as well as adversarial discussions of the evidence, hearing of the experts, parties appearances in person … Many practices that are often the case today in international arbitration.
A protocol has been concluded between the Commercial Court, the Court of Appeal and the Ministry of Justice. It has not yet been signed.
On the merits of the law, no change is to be noted: the specialized chambers will judge according to the law applicable to the substance of the dispute, which will make it possible to hear, in France, litigation subject to English law.
The creation of these specialized chambers, we are next told, poses significant challenges, including:
- The recruitment of bilingual judges trained in Common lawpractices;
- The recruitment of bilingual clerks / assistants;
- The training of judges and assistants to new issues (discovery, process requirements…);
- The publicity of these new chambers must be widely ensured, at national and international levels. Legal directors who negotiate contracts do not wish to have to ‘sell’ the jurisdiction of the Paris courts;
- The financing of this new public service of justice, which is necessarily more expensive (translation, interpreting, length of hearings …).
Agrégé des Facultés de Droit, Louis Thibierge is Professor at the University of Aix-Marseille and Member of the Centre de Droit Economique de l’Université Aix-Marseille.