Arbitration clauses and jurisdiction clauses are frequently included in contracts entered into between merchants. Both types of clauses are designed to set out the procedure that shall govern any dispute arising from or in connection with the contract. However, they should not be confused as they are not exactly the same and are subject to two different sets of rules. This has been recalled by the First Civil Chamber of Cour de Cassation (French Supreme Court) in a decision dated September 5, 2018.
This decision also provides the opportunity to review the competence-competence principle that applies in arbitration matters and to address the complex implementation of this principle.
Arbitration clauses and jurisdiction clauses are both dispute settlement provisions.
The arbitration clause1 is a private dispute resolution scheme. It reflects the parties' will to avoid proceedings before national courts and to refer any potential dispute that may arise from or in connection with their contract to an arbitrator.
On the other hand, the jurisdiction clause2 aims at determining in advance the national court that will have exclusive jurisdiction to adjudicate any disputes that may arise in connection with the parties' contractual relationship.
Both types of clause depart from ordinary subject-matter (for the arbitration clause) and territorial (for the jurisdiction clause) jurisdiction rules.
As such, they must be set forth in writing and expressly accepted by the parties and they are enforceable only between professional traders.
The application of these clauses has given rise to numerous disputes and the decision commented herein3 provides an illustration thereof.
This decision of the Cour de Cassation indeed deserves particular attention as it firmly recalls that arbitration clauses and jurisdiction clauses - even though they have common features as they depart from ordinary rules of jurisdiction - are not subject to the same set of legal rules.
1/ Arbitration clauses and jurisdiction clauses: Two different sets of rules
In the case commented herein, company A had concluded with several companies of Group B a contract for the supply of solar modules that included a jurisdiction clause conferring jurisdiction to French courts. To this contract was annexed insurance policies that had been underwritten by companies of Group B with three insurers and that covered inter alia potential power losses of the solar modules. A dispute arose between the...