Towards an EU Law on International Commercial Arbitration?

A working group composed of French scholars chaired by Professors Mathias Audit and Sylvain Bollée (both Paris I Panthéon Sorbonne University) has issued a report on the opportunity of the EU lawmaker to include new provisions in the Brussels I bis Regulation on international commercial arbitration (Towards an EU Law on International Commercial Arbitration?). The report was presented in the Paris Arbitration Week and a recent conference on the recast of the Brussels I bis Regulation.

The core proposals would be to include two new provisions in the Regulation.

First, the report proposes to add a new Article 25 bis defining the jurisdiction of the courts of the Member States to support the arbitral process, to entertain challenges to arbitral awards, and to determine the existence and validity of arbitral agreements. The rule would grant jurisdiction to the court of the seat of the arbitration.

Article 25 bis

1. If the parties, regardless of their domicile, have agreed to settle their dispute by arbitration with its seat in the territory of a Member State, the courts of that Member State shall have jurisdiction over the following actions:
(a) Actions relating to the support for the constitution of the arbitral tribunal or the conduct of the arbitration procedure. This should be without prejudice to the jurisdiction of any other court expressly designated by the parties;

(b) Actions relating to the existence, validity or enforceability of the arbitration agreement. This should be without prejudice to:
– provisions of the national law of that State Member empowering the arbitral tribunal to rule on its own jurisdiction and, as the case may be, recognising it a priority in this respect; and
– article 31 bis paragraph 2.
(c) Actions for annulment, recognition or enforcement of the arbitral award.
2. Actions referred to in paragraph 1 (a) and (b) may not be brought before a court of a Member State on the basis of national rules of jurisdiction.

3. Paragraph 1 (c) should be without prejudice to the right for a party to seek recognition and enforcement of an arbitral award before a court of a Member State on the basis of its national rules of jurisdiction.

4. The provisions of this article are without prejudice to the application of a rule of national law of the Member State where the seat of arbitration is located enabling the parties to waive their right to bring an action for annulment.

5. The provision of this article do not apply in dis putes concerning matters referred to in Sections 3, 4 or 5 of Chapter II.

Second, the report proposes to add a new Article 31 bis which would grant a priority to the courts of the Member State of the seat of arbitration to decide on the existence, validity or enforceability of the arbitration agreement. The underlying policy would be to reinforce the rule of jurisdiction set out by proposed Article 25 bis, ensure the full protection of contractual agreements regarding the location of the seat, but also prevent forum shopping. On balance, the report finds it preferable that the court ruling on the existence, validity and enforceability of the arbitration agreement be that of the seat, which the parties have prima facie elected by mutual agreement, rather than a judge unilaterally seized by only one of the parties.

Article 31 bis

1. Where a court of a Member State is seized of an action and its jurisdiction is contested on the basis of an arbitration agreement establishing the seat of the arbitration in another Member State, it shall, on the application of the party seeking to rely upon the said agreement, stay the proceedings until the courts of this other Member State have ruled or may no longer rule on the existence, validity or enforceability of the arbitration agreement.

2. However the court whose jurisdiction is contested continues the proceedings if:
(a) the arbitration agreement is manifestly inexistent, invalid or unenforceable under the law of the Member State where the seat is located; or
(b) the arbitral tribunal was seized and declined jurisdiction, and the arbitration agreement is inexistent, invalid or unenforceable under the law of the Member State where the seat is located.
For the purposes of this paragraph, reference to the law of the Member State where t he seat is located encompasses conflict-of-laws rules applicable in that Member State.

3. The provisions of this article are without prejudice of the application of a rule of national law of the Member State where the seat of arbitration is located empowering the arbitral tribunal to rule on its own jurisdiction and, as the case may be, recognising it a priority in this respect.

The full report, including detailed comments of the proposed new provisions, can be downloaded here.