France: Current State of Arbitration and Mediation

I recently finished another semester teaching International Commercial Dispute Resolution at New York Law School, and once more was reminded of how much one learns when one teaches.  The final papers in the course were very good, and I have chosen a few to share, with the permission of the student authors.

The first is an overview of arbitration and mediation in France, which is in a dynamic and creative state.  The author is Adena Altman.

            ALTERNATIVE DISPUTE RESOLUTION IN FRANCE

By Adena Altman

Introduction

            Alternative methods of dispute resolution (ADR), in particular mediation and arbitration, are growing increasingly popular in the vast majority of the world’s modern law countries.  This comes as no surprise – the traditional avenues of litigation through the courts are much slower in comparison, often backlogged, full of procedural headaches, and undeniably expensive.  In comparison therefore, ADR offers an attractive and often more flexible set of solutions to parties’ disputes.  In the commercial realm, as in many others, ADR programs have emerged as an alternative to litigating disputes through the courts.

            The path of this trend towards increased popularity and accessibility of ADR has varied from country to country, in some more quickly and readily than in others.  In France, the acceptance and utilization of one method of ADR hardly paved the way for the acceptability of the other.  It is fascinating to note the vast difference between the enthusiasm with which the country embraced one form, while remaining shy, if not skeptical of another.   The French laws on arbitration are widely considered to be some of the most modern and forward thinking in the world, whereas, the country’s history and reputation with regards to mediation has not been so positive.

            This paper will begin by briefly discussing France’s success in securing itself a place at the forefront of international arbitration, before then examining the country’s much slower progression towards the acceptance of mediation as a readily available and accessible tool.  The paper will then look at Directive 2008/52/EC of the European Parliament and Council on mediation, and its implementation in France.  Finally the paper will attempt to determine the impact of the Directive on the situation of mediation in France now and in the future.

France and Arbitration

            France as long been considered to be at the forefront of countries with regards to international arbitration.  This, no doubt, is in part because of the location of the International Chamber of Commerce (ICC), which has been headquartered in Paris since 1923.  Under the ICC rules, France has consistently been selected as the most popular arbitral seat, hosting hundred of arbitrations a year and being selected ahead of Switzerland, the United Kingdom and the United States.[1]

            In addition to the ICC, several other internationally renowned arbitration institutions are located in France, such as the Centre français de l’arbitrage (CFA), the Association Française d’Arbitrage (AFA), and the Institut d’arbitrage international (IAI).  French universities also provide extensive coursework and research opportunities in the field of international arbitration.  The presence of these bodies and university programs in France account, in part, for the wealth of experienced arbitration practitioners found amongst the judges and lawyers of Paris, as well as elsewhere in France.  All this has leant itself to the formation of a legal culture which is the ideal place for international arbitration as a result of the robust arbitration infrastructure located in France and, all of which further account for France’s place among the top ranked spots for arbitration.[2]

France’s substantive laws regarding arbitration have also played a significant role in France’s popularity as a place of arbitration.  French arbitration laws have long been viewed as a model for other countries.  The jurisprudence is considered to be clear and well established.  French courts have been known to be particularly sensitive to the independence of the arbitrator, and have consistently respected the doctrine of “competence-competence,” allowing arbitral tribunals to adjudicate their own issues of jurisdiction with regards to the arbitration clause.  French law further provides parties with legal certainty that their agreement to arbitrate will be enforced.  Even before it was reformed in January 2011, France’s arbitration law pursuant to the Decree of 1981 was considered one of the most liberal arbitration laws in the world, and the new law of 2011 only seems to have enhanced this fact.

No discussion of arbitration in France would be complete without mention of the enactment of the French Decree No. 2011-48 of January 13, 2011, which modernized the former French arbitration law of the 1980s in the French Code of Civil Procedure.[3]  The new decree codified many jurisprudential developments in arbitration law and took into account international best practices so that France will continue to be seen as the ideal venue for international arbitrations.  Among the important provisions of the new law are the arbitrators’ powers to order interim measures, the lack of a form requirement for what constitutes a binding agreement to arbitrate, the creation of a Juge d’appui, or support judge, for arbitration proceedings, the increased power to the chair of the arbitral tribunal, the decreased time period for challenging an arbitral award and the increased certainty of enforcement of awards.[4]

While the new law is without a doubt a positive step forward in an already forward thinking culture of arbitration practice, little else remains to be said about it.  Reactions to the implementation of the law seem to form a positive consensus.  What was done well, can now be done better – the Decree further clarifies and updates provisions of the prior law and reflects the strong political and judicial support for international arbitration practice in France.

 Mediation – The French Experience to Date

            Mediation, on the other hand, has not enjoyed such a happy history in France.  While French courts and culture have embraced arbitration practices, the same is not true for mediation.  In the past decade there has been somewhat of a concerted push to encourage mediation in France, which, while beginning to have some limited success, for the most part has only highlighted the extent to which mediation has not been utilized in the country.

            In 2006, for example, Mr. Thierry Garby, then the Vice Chair of the International Bar Association’s Mediation Committee, authored an article calling for companies to commit to resolving their disputes by mediation.  According to Mr. Garby, mediation is a “wonderful and powerful instrument to prevent the termination of commercial relationships… [that] saves time and money in such proportions that one would imagine that just any dispute would go through mediation before going to court and that any business manager would consider it necessary.”  Despite the utility of mediation as he described it, Mr. Garby further noted that “namely in France, only a small proportion of commercial disputes go through mediation.”[5]  Mr. Garby therefore created a group called the Academy of Mediation in order to facilitate companies’ access to ADR, and to promote mediation in France’s business community.  In 2006 the Academy of Mediation invited large French corporations to sign a charter, pledging to use mediation to solve future disputes, an act which gained some notoriety for France.[6]

            If one analyzes the way Mr. Garby describes mediation, one can almost hear the bewilderment in his tone as he comments on the lack of its widespread use in his native country.  Another Parisian scholar, Mr. Arnaud Stimec, noted that “mediation seems to be still largely unknown or even worse ‘misunderstood.'”[7]  This is a feeling that is probably shared by many students, professors, and practitioners alike who have become acquainted with the long list of benefits that accompany the use mediation as a method of ADR.  So why hasn’t it become more commonly used in France?  What’s the hold up? 

First, we may consider a series of general barriers to mediation that one might expect to find in any culture, unfamiliar with mediation practice and procedures.  These can be summed up by an unfamiliarity or lack of experience with the process, comfort with traditional judicial proceedings, preference for straightforward win/lose methods of resolving disputes and fear of perceived weakness by the other side.[8]  This list however, is hardly specific to the French experience and therefore will not be analyzed further here.

            Turning to matters more unique to France, some scholars have argued that the French tradition of the centralized state has hindered the move towards acceptance of mediation.  “The ways that law is currently made and taught are both largely the product of aspects unique to the evolution of France and continue to be [an] obstacle to change.”[9]  In France, since the Revolution, the tradition of an ultra-centralized state that almost views federalism as evil, and the implementation of laws and policy have forever required that they emanate from Paris.  This tradition of the centralized state bred a phenomenon whereby change from the periphery has historically been viewed with skepticism and distrust.  This skepticism has hindered the development of mediation practices in France.

Historically, Paris has held complete control over French courts, limiting judges’ power to bouches de la loi, mere “mouthpieces of the law,” and reserving the power to change the law to the legislature alone. [10]  The center in this way prevented the periphery from making legal changes by keeping the courts out of the people’s reach.[11]  Unlike the common law, American tradition, where judges make law by way of judicial opinion, French judges do not play the same role.  In France, unlike in North America, the people do not see the courts as being the guardians of their rights, but rather as an arm of the government, which exists for the more straightforward purpose of enforcing the laws promulgated by the legislature.  This culminates in a culture where the people are accustomed to having change handed down to them from Paris, the political and legal center of everything.  Therefore, absent a concerted effort from the Parisian center, the use of mediation in France would likely remain infrequent and undervalued.

Now, take this analysis a step further and consider the global level from which the trend towards ADR and mediation appears to emanate.  In light of France’s historic distrust of change which originates from the French periphery, how much more distrustful must they be of something which emanates from outside France altogether.  This hypothesis represents a cultural barrier, which explains, at least in part, the French resistance to mediation.

Furthermore, can the hypothesis stated above perhaps also suggest an explanation for why arbitration has developed more readily in France?  Perhaps the ICC’s presence in the French capital has given the impression that arbitration is something which stemmed from Paris, or at least has existed there long enough to allow the French to be comfortable with the idea of it, allowing them to move to the forefront of that field, despite lagging behind the trend towards mediation.

            The nature of the civil law system in France also explains some of the resistance to increased use of ADR.  French courts “are viewed as places of legal argument rather than places of broad legal problem-solving in which players work to root out evil.”[12]  In this system dissenting opinions are nonexistent and judges’ opinions are seen as authoritative and unanimous, rather than a result of a determination based on the strength of the parties arguments.  Courts are not expected to engage in problem solving, but rather only to hand down the law as supplied to them by the legislature.  Because the trial process in France is based almost exclusively on written procedure, no real forum exists to allow parties to meet and explain their sides, interests or demands.[13]  This culture of legal procedure, because it is not one in which mediation is naturally fostered, has offered another barrier to the development of mediation in France.  

            The resistance to mediation is something that pervades French society as a whole, not just the legal community.     In the context of labor law, for example, the French have been equally resistant to the notion of third party involvement in solving labor disputes.  The idea of providing peaceful means of settlement for collective disputes has had an unsuccessful history in France, where conflict, often followed by strike, and then negotiation, has been the norm.  There is something to be said for the French tendency to using strikes in order to achieve a particular goal.  In few other western countries is the trend to resort to strikes as dominant as in France.  Considering this fact, is it really such a surprise that the same people have been known not to utilize mediation when a dispute occurs.  “Due to recognition of the right to strike and the historical role of various unions, the subsequent attempts to introduce mediation or arbitration always failed.”[14]  In 1982, in an attempt to remedy this, the Legislature implemented the Act of November 13, 1982 to overhaul the provisions for solving these disputes by creating a venue for alternative dispute resolution measures such as conciliation, mediation and arbitration.[15]  Unfortunately at least through the labor strikes of the mid-1990s, the Act appears to have been largely unsuccessful in encouraging the use of mediation, but it remains an example of the will to change this situation emanating from France’s legal and political center.

            Finally, another scholar has noted that the increasing use of the term “mediation” in general in French society has not helped its true cause, because it has added confusion to the public conception of what the term means.  For example, the national train service in France, the SNCF, refers to certain employees whose role it is to help passengers with directions and organize the taxi lines as mediators.[16]  The relatively new popularity of the use of the word “mediator” when not used to describe the ADR procedure, does not help the cause of the development of mediation as ADR.  A French business, whose opposition in a dispute suggests mediation, may simply be turned off by the idea because of the connotation of the SNCF worker that is then so easily called to mind. 

            While the preceding paragraphs attempt to offer some cultural and societal explanations to the barriers which have prevented the French from embracing mediation, it is important to note that since 1996 the French Code has included some laws on court-annexed mediation.  Found in Articles 131-1 to 131-5 of the French Code of Civil Procedure, while these laws may show the beginnings of an appreciation for the value of mediation, their utility cannot be understated.[17]  Under these laws French judges could instruct parties to mediate their dispute once the judge had been assigned the case for litigation, but could only do so by first securing the consent of both parties.  Mediation, however, did not serve as an alternative to litigation, and did not remove the case from the judge.  Furthermore the judge retained the power to put an end to the mediation upon request of the parties, the mediator or sua sponte.  The lack of mention of these laws in any of the above articles cited above suggests that they had little impact on the situation of mediation in France to date.

The EU Directive of 2008

            On May 21, 2008 the European Parliament issued a Directive 2008/52/EC on mediation in commercial and civil matters.  The purpose of the Directive was to encourage the use of mediation in commercial and civil matters in order to facilitate cross-border dispute resolution and to attempt to create some uniformity throughout Europe with regards to the application and enforcement of mediated agreements and the quality of mediation procedures.[18]  The Directive came about in response to the call of Members States who recognized the ultimate value of ADR and who believed that the European Union would benefit from encouraging its use and enforcing an increased level of homogeneity in practice and enforceability across the borders of European states.  The preamble to the Directive itself recognizes that “mediation can provide a cost-effective and quick extra-judicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties.  Agreements resulting from mediation are more likely to be complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties.”[19]  This sentiment led the European Commission to publish the Green Paper of 2002 on the subject of mediation, which eventually led to the proposal that formed the basis for the Directive. 

The Directive represents the political principles and government objectives of the Member States of the European Union.  The Member States must then enact their own laws consistent with the provisions of the Directive.[20]  In the case of Directive 2008/52/EC, Member States were expected to have transposed the provisions of the Directive into their national laws by May 21, 2011. [21]

            The major provisions of the Directive deal with the quality, accessibility, enforceability, and confidentiality of mediation proceedings.  Specifically in Article 4, the Directive calls on Member States to encourage “the development of, and adherence to, voluntary codes of conduct by mediators and organizations providing mediation services.”  Article 5 encourages recourse to mediation by empowering courts to invite parties to use mediation to settle disputes.  While the language of this first provision of Article 5 is permissive, it is followed by a paragraph that states that the Directive is not prejudice to national legislation making the use of mediation compulsory.  Thus the Directive leaves up to Member States the opportunity to further encourage the use of mediation practices by requiring courts to initiate mediation in whatever contexts the Member States’ legislature deems appropriate.

Article 6 then calls on Member States to set up a mechanism for the enforcement of mediated agreements but leaves the details of the mechanism up to Member States.  Article 7 is the Directive’s attempt at a confidentiality provision, which states that “neither mediators nor those involved in the administration of the mediation process shall be compelled to give evidence in civil and commercial judicial proceedings or arbitration regarding information arising out of or in connection with a mediation process.”   This part of the Directive has been criticized, however, because by only requiring that the mediators and administrators of the mediation process uphold the principles of confidentiality, the Directive leaves the parties themselves free to breach it, essentiality rendering the confidentiality provision irrelevant.  

Article 8 provides that parties who choose to mediate their disputes shall not later be prevented from initiating judicial proceedings.  And finally, Articles 9 and 10 provide that States shall provide readily available information regarding mediation and mediation organizations, and information regarding courts competent to enforce mediated agreements.

            The Directive as it is written must be applied obligatorily only to cross-border disputes, but nothing in its language prevents Member States from applying it to disputes within their own borders.  The Directive is therefore certainly a move in the right direction, but it is up to Member States to fulfill its potential and render it properly effective.

The Directive in France

            Initially, France did not manage to transpose the Directive into national law within the required time frame.  In July 2011, France was among nine other members of the European Union to receive letters from the European Commission, serving as formal notice for failure to communicate the transposition of the Directive.[22]         

            Finally then, in November 2011, the French Ministry of Justice and Liberty published an ordinance, No. 2011-1540, setting a standard for the mediation procedures.[23]  The stated purpose of the ordinance is to contribute to the development of alternative methods of resolving disputes.  The ordinance, for the first time in French law, gives a definition to the term “mediation,” one that the Ministry of Justice and Liberty stated to have been directly inspired by the 2008 EU Directive.  This definition of mediation is one that is purposefully broad.  Mediation is defined is a process by which two or more parties in dispute attempt to resolve their problems amicably with the aid of a neutral third party.[24]  This ordinance was then officially included into the French Code Civil on January 20, 2012 as Decree No. 2012-66.[25]

            The main provisions of the ordinance are as follows: The ordinance assures a level of quality of the mediation proceedings by requiring that the mediator be competent and impartial.  The ordinance also provides that, unless the parties agree otherwise, the procedure will be confidential.  “Les constatations du médiateur et les déclarations recueillies au cours de la médiation ne peuvent être divulguées aux tiers ni invoquées ou produites dans le cadre d’une instance judiciaire ou arbitrale sans l’accord des parties“ (Art. 21-3).  Translated, this means that the findings of the mediator and the statements collected throughout the course of the mediation proceedings cannot be divulged to third parties nor invoked or produced in court or in later arbitration proceedings without the accord of the parties.  With regards to confidentiality, it is interesting that the French law seems to be more stringent than the confidentiality requirement of the EU Directive.  While the Directive’s confidentiality requirements only apply to the mediator and administrators, the French version seems to apply to the whole mediation proceeding in general, although perhaps it remains to be seen as to whether this is how it will be applied.

The ordinance, like the old mediation law of 1996, grants the power to judges to send parties to mediation, but still requires the agreement of the parties to do so.  The text specifies that this judicial power does not apply in criminal cases, or in divorce cases.  The judge also has the power to set a time limit for the mediation and to grant extensions.  Finally, once the parties have reached an agreement through mediation, it is subject to approval by the judge, and then deemed enforceable.

            The above stated provisions however, are limited to disputes, which arise from a cross-border contract between parties.  Cross-border (transfrontalier) is defined at the time mediation is sought, to refer to parties, one of whom is domiciled in France, and the other in another Member State of the EU.

Conclusion

            Because the ordinance and its official transposition into the body of French law is so recent, it is difficult, if not impossible to really assess its impact on the situation of mediation in France.  However, it is clearly a good sign.  Though the French law did not take the opportunity to expand its application to domestic mediations, and only applies, as strictly required by the Directive, to cross-border disputes, France’s compliance with the Directive on the whole is represents a promising step for the future of mediation in France.  The confidentiality and enforceability provisions of the French law should encourage confidence in the mediation process in France, and though these provisions apply only to cross-border disputes at the present time, their application may hopefully be expanded to domestic ones in the future.  Furthermore, the inclusion in the law of an official definition of the legal term “mediation” should help remove at least one barrier to understanding what mediation means in the context of commercial and civil disputes. 

            If a lack of impetus from the political and legal center of France was previously a major reason for the cultural resistance to the development of mediation, the implementation of the EU Directive of 2008 through the traditional avenues of French law making will certainly help to remedy this.  By presenting the change towards mediation through the traditional procedural channels, French legal and commercial society should hesitate less in the future to explore the use of mediation, and will inevitably learn to appreciate the great benefits its implementation offers.  

[1] Ayela, Christophe, Dany Khayat.  “Panorama of Mediation and Arbitration in France.” ADR Client Strategies in Europe, 2011 Edition. Thomson Reuters/Aspatore, January 2011.

[2] Ayela and Khayat.

[3] http://kluwermediationblog.com/2012/02/07/the-enactment-of-the-french-decree-no-2012-66-of-january-20-2012-related-to-the-amicable-settlement-of-disputes-some-progress-in-adr-in-france/

[4] For the text of Decree No. 2011-48, please see: http://www.legifrance.gouv.fr/affichTexte.do;jsessionid=57F0C817EE1B4FBA2447F81BEA8946F8.tpdjo02v_3?cidTexte=JORFTEXT000023417517&dateTexte=&oldAction=rechJO&categorieLien=id

[5] Garby, Thierry. “The French Pledge for Mediation.” Mediation Newsletter, International Bar Association Legal Practice Division. Vol. 2 No. 1, April 2006.

[6] Example of mention of Mr. Garby’s mediation charter in a news/update article from the Irish Commercial Mediation Association: http://www.icma.ie/news_and_events/international_commercial_mediation___presentation_by_arnaud_ingen_housz_at_icmas_agm.397.442.news.html

[7] Stimec, Arnaud. “Mediation Within or Between Organisations in France: State of development, barriers and paths.” Presented at the 2001 International Association for Conflict Management Conference at Cergy – Essec business school.

[8] Stimec.

[9] Lempereur, Alain.  “Negotiation and Mediation in France: The Challenge of Skill-Based Learning and Interdisciplinary Research in Legal Education.”  Harvard Negotiation Law Review.  Spring 1998.

[10] Lempereur.

[11] Lempereur.

[12] Lempereur.

[13] Boyron, Sophie. “The Rise of Mediation in Administrative Law Disputes: Experiences from England, France and Germany.” Public Law, pp. 320-343, 2006.

[14] Stimec.

[15] Rojot, Jacques. “The Role of Neutrals in the Resolution of Interest Disputes in France.” Comparative Labor Law & Policy Journal. Spring 1989.

[16] Stimec.

[17] Decree no. 96-652 of 22 July 1996, Article 2, Official Journal of 23 July 1996.

[18] General Information on the European Directive from the perspective of a law firm in the UK: http://www.nortonrose.com/news/31245/joe-tirado-jams-global-construction-solutions-the-european-mediation-directive

[19] 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.

[20] Phillips, F. Peter. “European Directive on Commercial Mediation: What It Provides and What it Doesn’t.” Business Conflict Management LLC, Montclair, New Jersey, USA.

[21] “Europa” press release on the Directive: http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/263&format=HTML&aged=0&language=EN&guiLanguage=en

[22] http://www.europe-eje.eu/en/actualite/letter-formal-notice-european-commission-9-member-failure-communicate-transposition-measur

[23] Please note: I was unable to find a version of the Ordinance translated into English.  The links provide are therefore in French – http://www.justice.gouv.fr/le-ministere-de-la-justice-10017/direction-des-affaires-civiles-et-du-sceau-10023/un-nouveau-cadre-pour-la-mediation-23229.html

[24] http://www.textes.justice.gouv.fr/lois-et-ordonnances-10180/ordonnance-fixant-un-cadre-general-a-la-mediation-23201.html

[25] http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000025179010&dateTexte=&categorieLien=id