Mediate Or Lose Your Claim. A Salutary Reminder For Claimants In French Court And Arbitration Proceedings

Author:Mr Andrew Tetley and Aurélie Lopez
Profession:Reed Smith (Worldwide)

In France, a failure to mediate, conciliate or even negotiate prior to initiating claim, can be a source of significant risk to a claimant in arbitration and court proceedings. Such failure can in fact be terminal for the claimant, where its claim is subject to French law. Where circumstances align, the claim will end up as inadmissible without any consideration being given by the Court or arbitrator to the merits. In practice, such circumstances not infrequently can and do need to be addressed.

Introduction Contracts frequently contain ADR provisions, in tune with current ways of thinking, directing the parties to try and resolve disputes prior to instituting arbitral or court proceedings. In complex contracts, dispute resolution provisions may be multi-tiered, perhaps with a requirement that the dispute be escalated internally with a view to negotiations, possibly conducted in several rounds, with mediation as a final fallback before arbitral or court proceedings can be envisaged.

What does a claimant do, faced with such provisions, perhaps in circumstances where an amicable resolution appears unlikely or if, worryingly, the time bar for claims is approaching? These will not be unfamiliar scenarios to clients, their in-house counsel or their advisers. They need to be approached with extreme care, given the serious consequences if the wrong decisions are taken.

One question that is foremost is: faced with such contractual provisions, will a claim founder if the claimant fails to mediate, conciliate or otherwise seek to negotiate a dispute prior to initiating a claim before the courts or in arbitration? The answer to that question will vary depending on the applicable law and jurisdiction, and the relevant ADR provisions. However, under French law, you ignore such provisions at your peril.

A recent decision of the French Supreme Court has underlined the risk for claimants in this area.

Case A Thales subsidiary entered into a contract with Copvial to act as head contractor on a construction project. A clause in the contract provided as follows:

"For all disputes that may arise in the performance of this contract, the parties undertake to obtain an opinion from a jointly nominated arbitrator before recourse to any other court."

The Thales subsidiary initiated a claim seeking an order to terminate the contract and award damages. Copvial contested the claim on the simple grounds that the claim was inadmissible because the Thales subsidiary had...

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