Choosing international arbitration to settle a dispute is a decisive first step. But then a fundamental practical question arises: how will the procedure be organised in practice? Who will administer the process, appoint the arbitrators in the event of disagreement, and manage the logistical and financial aspects? There are two main options open to companies: "institutional" arbitration, supervised by a specialised centre, and "ad hoc" arbitration, managed directly by the parties and the arbitrators. This initial choice has major consequences for the way the procedure unfolds. Moreover, even in this private setting, state justice is never totally absent: the French "juge d'appui" plays an essential role in unblocking certain situations. This article explores these two modes of organisation and the crucial role played by arbitration institutions and the juge d'appui.
Institutional arbitration vs. ad hoc arbitration: which choice?
When drafting an arbitration clause or entering into a compromise agreement, the parties must make a strategic choice between two main organisational models:
- Ad hoc arbitration : Here, the parties and the arbitrators they appoint organise the entire procedure themselves. They must define the applicable rules (either by drafting bespoke rules or by referring to an existing body of rules such as the UNCITRAL Arbitration Rules), agree on the place, the language, the procedures for appointing the arbitrators, and so on.
- Advantages : Maximum flexibility, potential to reduce initial costs (no institutional administrative costs) if the dispute is straightforward and the parties are cooperative.
- Disadvantages: Requires strong involvement of the parties and their counsel, and a high degree of cooperation. The risk of deadlock (e.g. on the appointment of an arbitrator) is higher, and the absence of a pre-established framework can generate time-consuming procedural discussions.
- Institutional arbitration : The proceedings are administered by a permanent arbitration institution (often referred to as an "arbitration centre") in accordance with its own rules. The parties accept these rules by designating the institution in their arbitration agreement.
- Advantages : Offers a proven and comprehensive procedural framework, reducing discussions on the rules of the game. The institution provides administrative support (notifications, management of provisions, organisation of hearings, etc.) and has mechanisms for overcoming deadlocks (appointment of arbitrators in the event of disagreement, decision on challenges, etc.). The "brand" of a recognised institution can also enhance the credibility of the procedure and facilitate the subsequent enforcement of the award.
- Disadvantages: Involves the payment of administrative costs to the institution (in addition to the arbitrators' fees), which can be significant. The regulatory framework may seem less flexible than purely ad hoc arbitration.
The choice will depend on the nature of the dispute, the complexity of the case, the amount at stake, the relationship between the parties and their experience of arbitration.
Arbitration institutions: professional organisers
Arbitration institutions are bodies, generally non-profit-making associations or entities linked to chambers of commerce, whose mission is to administer arbitration proceedings. They play a central role in the promotion and smooth operation of international commercial arbitration.
There are a wide variety of institutions throughout the world:
- Some have a general and worldwide vocationThese include the International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris, the London Court of International Arbitration (LCIA), and the American Arbitration Association (AAA) and its International Centre for Dispute Resolution (ICDR).
- Others are regionalThese include the Singapore International Arbitration Centre (SIAC) and OHADA's Common Court of Justice and Arbitration (CCJA) in Africa.
- Others are specialised in certain sectors: maritime arbitration (such as the Chambre Arbitrale Maritime de Paris - CAMP), commodities, finance, intellectual property (WIPO Arbitration and Mediation Centre), or sport (Court of Arbitration for Sport - CAS).
- In France, institutions such as the Association Française d'Arbitrage (AFA) and the Centre de Médiation et d'Arbitrage de Paris (CMAP) play an active role alongside the ICC.
These institutions often establish lists of referees. Sometimes, the choice of an arbitrator from this list is compulsory ("closed" lists, frequent in highly specialised arbitrations), but more often the lists are indicative ("open" lists) or serve as a basis for the institution to appoint an arbitrator when the parties are unable to agree. These lists are intended to guarantee a certain level of competence and ethics, but their use must always respect the principle of equality of the parties in the appointment.
How do arbitration institutions work?
By opting for institutional arbitration, the parties adhere to the arbitration rules of the chosen institution. These rules become the "law of procedure" for the parties and the arbitrators, making up for their silence on a number of points: how the case is referred, time limits, constitution of the tribunal, conduct of the proceedings, form of the award, etc.
Internal operations vary, but most major institutions have :
- A Secretariat or an administration responsible for the day-to-day management of files, communications and logistics.
- A decision-making body (often called the "Court of Arbitration" or "Committee") made up of qualified individuals, independent of the administration, which takes the key decisions on the constitution of the tribunal (confirmation or appointment of arbitrators, decision on challenges), the extension of time limits, and sometimes the preliminary examination of draft awards.
The institution is also responsible for financial management of the arbitration. It sets the administrative costs and arbitrators' fees (according to a pre-established scale) and asks the parties to pay provisions to cover these costs. The payment of these provisions is often a condition for the continuation of the proceedings. This system provides considerable transparency and predictability regarding the cost of arbitration.
Some institutions (notably the CCI) provide for a examination of the draft award by their decision-making body before it is signed by the arbitrators. The main purpose of this review is to check the formal consistency of the award and to draw the arbitrators' attention to any substantive issues, without however being able to impose a solution on them. The aim is to enhance the quality and enforceability of the award.
What is the nature of an institution's involvement?
It is essential to understand that the institution of arbitration administers the procedure, but does not judge the dispute. Its role is organisational and procedural, not jurisdictional.
This administrative nature has important consequences:
- Decisions taken by the institution (e.g. on the challenge of an arbitrator) are not binding. not res judicata. They may be challenged before the state court in an appeal against the final award (for example, on the grounds that the tribunal was improperly constituted).
- The institution is generally not required to give reasons for its administrative decisions (unless its rules so provide).
- The institution is bound by a arbitration organisation contract with the parties. It incurs contractual liability if it fails to fulfil its obligations (for example, by not complying with its own regulations, by not guaranteeing the independence of the appointment process, etc.). This is a obligation of means It must take the necessary steps to ensure that the proceedings run smoothly. Clauses limiting its liability are often deemed ineffective if they cover a breach of its essential obligations.
The supporting judge: state justice support for arbitration
Although arbitration is a private form of justice, the State retains a supporting role to ensure that it functions properly and to compensate for any shortcomings. In France, this role is played by the support judge.
The support judge is a state judge specifically appointed to intervene in certain difficulties linked to the arbitration procedure, mainly during the tribunal constitution phase. His role is to help the parties overcome obstacles so that the arbitration can take place in accordance with their wishes.
In international arbitration, the French judge (the President of the Tribunal Judiciaire de Paris, unless otherwise agreed by the parties) may intervene if one of the following conditions is met, in accordance with Article 1505 of the Code of Civil Procedure:
- The arbitration takes place in France; OR
- The parties have agreed to submit the arbitration proceedings to French law; OR
- The parties have expressly given jurisdiction to the French courts to hear disputes relating to the arbitration proceedings; OR
- One of the parties is exposed to the risk of a denial of justice (for example, if the foreign law that normally has jurisdiction prevents the court from being constituted).
Sound area of intervention essentially concerns difficulties linked to the constitution of the arbitral tribunal (Articles 1451 to 1458 of the Code of Civil Procedure, made applicable by Article 1506) :
- Disagreement between the parties on the appointment of an arbitrator.
- Refusal or inertia of a party to appoint an arbitrator.
- Difficulties linked to the challenge of an arbitrator (if the institution is not competent or failing).
- Replacement of an arbitrator (death, impediment, contested resignation, dismissal).
- It may also be asked to extend the time limit for arbitration (article 1463).
The supporting judge has a subsidiary jurisdiction. It only comes into play if the parties have not resolved the difficulty themselves, or if the rules of the chosen arbitration institution do not provide a mechanism for doing so, or if that mechanism fails.
Jurisdiction and procedure before the supporting judge
The procedure before the juge d'appui is designed to be quick and efficient. A party (or even an arbitrator) applies to the judge. It rules "as in summary proceedings", after hearing or calling the parties and the arbitrators.
Before appointing an arbitrator or settling a dispute, the supporting judge must carry out a preliminary check: he or she must ensure that the arbitration agreement is not clearly null or inapplicable (article 1455 of the Code of Civil Procedure). If it finds that the agreement is null and void or unenforceable, it will refuse to intervene.
The decision of the supporting judge is a order. In principle, this order is not subject to appeal (neither appeal nor cassation), in accordance with article 1460 of the Code of Civil Procedure. It is signed by res judicata on the point it is deciding (for example, the validity of the appointment of an arbitrator or the rejection of a challenge). This is a major difference from the administrative decisions of arbitration institutions. There is one exception: if the judge refuses to intervene because he considers the clause to be manifestly null or inapplicable, his decision may be appealed. An appeal may also be considered in the event of manifest excess of power on the part of the judge.
The combined role of the arbitration institutions and the supporting judge thus provides an essential safety net to ensure that the parties' desire to resort to international arbitration can be effectively implemented, even in the event of disagreement or procedural difficulties.
The choice between institutional and ad hoc arbitration has important practical implications. In the event of a deadlock, recourse to a supporting judge is an effective solution. Our firm will advise you on the best strategy and assist you in the process.
Sources
- Code of civil procedure (in particular articles 1451-1461, 1505, 1506)
- Rules of arbitration institutions (for example: ICC Rules of Arbitration, LCIA Rules of Arbitration, AFA Rules of Arbitration)
- Key case law (listed by way of illustration: Cass. Civ. 1ère, 1 February 2005, NIOC v Société Israël)