No Distinction to be Made Between Foreign Commercial and Administrative Law Awards for Exequatur in France

by DLA Piper
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France has had a dual jurisdictional system since the 19th century. On the one hand, the administrative courts have jurisdiction to hear most disputes which involve public entities and, on the other hand, the judicial courts have jurisdiction over all other disputes. The issues which may arise when determining which court system has jurisdiction are entrusted to a special court, the Tribunal des Conflits (literally, the "tribunal of conflicts").

The issue of determining which of the judicial or the administrative courts has jurisdiction arose recently regarding (i) the grant of exequatur orders (i.e. a decision authorizing enforcement) for foreign awards dealing with issues of French administrative law (hereafter foreign administrative awards), and (ii) challenges brought against these exequatur orders. After years of procedure, on 8 July 2015, the Cour de Cassation (the French Supreme Court for judicial matters, hereafter the CC) held against the jurisdiction of the administrative courts. It ruled that the exequatur for foreign administrative awards can be sought under the same conditions as those which apply to foreign awards in international commercial arbitration, i.e. before the judicial courts.

This landmark decision, which will further reinforce the favorable environment of the French judiciary system towards international arbitration, is a welcome development, in particular for the resolution of disputes between foreign parties and French public entities.

Background

In 2007, following a public tender process, the Syndicat Mixte des Aéroports de Charente (hereafter, the SMAC), a public legal entity, signed two contracts with Ryanair Ltd. and one of its Irish subsidiaries (together, Ryanair), for the creation and promotion of a regular flight route between England and France. Both contracts were governed by French law and contained an arbitration agreement which provided for London-seated LCIA arbitration. Given the route's lack of commercial success, Ryanair terminated the contracts.

Ryanair then filed a request for arbitration with the LCIA. The SMAC challenged the jurisdiction of the arbitral tribunal, arguing that the French administrative courts (before which it had initiated a parallel action) had exclusive jurisdiction over a dispute arising out of a public tender process with a public entity. The arbitral tribunal upheld its jurisdiction in a partial award rendered in 2011, which was subsequently made an order of court by the Paris Tribunal de Grande Instance (District Court). The SMAC filed an appeal against the exequatur order before the Paris Court of Appeals, and simultaneously brought an action to set aside the partial award before the Conseil d'État (which is the Supreme Court which has jurisdiction over disputes in the field of administrative law, hereafter the CE).

Both the CE (although in an obiter dictum) and the Paris Court of Appeals held that administrative courts have exclusive jurisdiction to grant and hear challenges of exequatur orders for foreign administrative awards. Both decisions intended to replicate the distribution of jurisdictions set in 2010 by the Tribunal des Conflits for the setting aside of foreign administrative awards.

However, in its decision of 8 July 2015, the CC reversed the Court of Appeals' decision and contradicted the CE's obiter dictum, ruling  that judiciary courts have exclusive jurisdiction to deal with the exequatur of all foreign awards.

Conclusion

This is a welcome decision because it establishes a coherent regime for all foreign awards. All foreign awards will benefit from the same exequatur regime rather than being subject to different jurisdictions and criteria for their exequatur depending on the subject matter of the dispute. Had the jurisdiction of the administrative courts been upheld, the exequatur of foreign administrative awards would have likely been subject to a wider control of the award. Indeed, while judiciary courts limit their review to the award's compliance with French international public policy, administrative courts would probably have checked the award's compliance with French public policy (i.e. a broader concept).

The CC's reasoning in this case does raise several questions however. For example, in order to deny the jurisdiction of the administrative courts, it held that the 1958 New York Convention on the Recognition and Enforcement of Awards "forbids any discrimination between foreign awards and domestic awards, as well as any revision of the merits of the award". But the New York Convention does not prohibit discrimination between foreign and domestic awards per se, but only situations which favor domestic awards at the expense of foreign awards. Had the jurisdiction of the administrative courts been upheld for the exequatur of foreign administrative awards, it is unlikely that this would have led to discrimination between foreign and domestic awards, save a potential difference of treatment between foreign awards based on their subject-matter. Moreover, it is difficult to understand the CC's reasoning, which relies on a concern that the administrative courts might review the merits of foreign awards.

Therefore, while the CC's decision does bring a welcome simplification from the practitioners' point of view, its reasoning is open to criticism and will in all likelihood give rise to further challenges before the administrative and judiciary courts in France. In the end, a decision from the Tribunal des Conflits will be necessary to bring clarity to the issue.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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