New Paris arbitration rules could unseat UNCITRAL in Paris, says expert

Out-Law Analysis | 28 May 2013 | 8:00 am | 2 min. read

OPINION: A new set of rules will make Paris a more attractive place for arbitration than ever for many, but organisations that could have to rely on witnesses should think twice about using those rules. 

Competition is fiercer than ever for arbitration business. London, Paris, New York and Switzerland have long battled it out and now seats such as Singapore and Stockholm are making strong cases for organisations to specify in their international contracts that those places will be the seat of arbitration for settling disputes.

Paris has traditionally been a seat for international arbitrations, a situation helped by the fact that the International Court of Arbitration of the International Chamber of Commerce (ICC) has been located there since its creation in 1923. French arbitration law has historically been very supportive of arbitration and the 2011 reform confirmed France's clear intention to promote the development of Paris as a centre for the resolution of international disputes.

In April, Paris has gone a step further and launched the Paris Arbitration Rules (the Rules), a new set of rules designed to help organisations to structure ad hoc arbitration. The Rules will compete with the commonly used United Nations Commission on International Trade Law (UNICITRAL) Arbitration Rules. For more information on ad hoc versus institutional arbitration see Out-Law's guide to the two processes.

The Rules mostly achieve their aim of improving the efficiency of ad hoc arbitration, but there is an aspect of them that organisations should check carefully before opting for those Rules: the potential treatment of witnesses.

In order to achieve maximum efficiency, the Rules give very wide powers to the arbitrators and go as far as giving the tribunal a discretion to refuse or limit witness or expert appearances.

This means that the parties are giving up some of their freedom of choice before the dispute commences, in circumstances where it will often be difficult for the parties to agree on opting out of the Rules on specific issues when the contract is negotiated in the first place. Once the dispute has started, it may not be possible to opt out of this power given to the arbitrators to limit witness involvement. This may not be an appropriate choice for all types disputes or parties – especially for parties from jurisdictions or business sectors where it is felt that oral witness evidence is key to the arbitration process.

For organisations for whom witness testimony is less likely to be vital and who are comfortable with the choice of Paris as a seat for their arbitration, the Rules have much to offer.  

They impose strict time limits on the arbitration process. The parties and the arbitrator must make every effort to enable an award to be rendered within 18 months from either the date of the first hearing or the date on which all members of the Tribunal accept their mandate as arbitrators, whichever is the later. In addition, the award must be rendered within three months from the date of the last procedural step in the calendar.

There are detailed provisions for the appointment of an interim arbitrator, and an innovative requirement in the Rules that submissions be "as concise and focused as possible". This is a useful incentive to conduct the arbitration as quickly and cost-effectively as possible, especially as compliance with this can be taken into account for the allocation of costs.

These new approaches could make the Rules more efficient than the UNCITRAL rules, in particular when dealing with emergency situations.  They will be a very appealing alternative for arbitrations with a seat in Paris.

However, in jurisdictions where local courts are unfamiliar with international arbitration, awards are often not enforced until all legal processes have been exhausted.  The Paris Appeal process can take four years to complete.  In many cases this will make Paris unattractive as an arbitral seat, even with its excellent new arbitration rules.   

Mark Roe is an international arbitration specialist at Pinsent Masons, the law firm behind Out-Law.com