Arbitration clause VS clause providing for the submission of a dispute to the competent courts

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It is therefore important to draft, with great care, any clause likely to waive jurisdiction of common law, this type of clause being in particular used in international contracts.

Arbitration clause VS clause providing for the submission of a dispute to the competent courts

In the case of contradiction between two clauses of the same contract, one providing that disputes will be submitted to the competent courts and the other submitting these to an arbitration procedure, the special clause providing for arbitration should apply.

An article of the statutes of an LLC consisted of two paragraphs:

  • the first stipulated that "in case of plurality of partners, all disputes that may arise between partners during the duration of the company, or during its liquidation, between partners or between the company and associates, relative to social matters or the execution of the present statutes, should be submitted to the competent courts";

  • the second paragraph did not specify what was inferred in the case of a plurality of partners, and provided that the same disaccord would be subject to arbitration.

A minority partner seeking the responsibility of the managing director, also an associate, had assigned the latter before the commercial court.

The court of appeal of Paris stated that the commercial court was not competent and held that the arbitration tribunal should be used, as it fell within the terms of paragraph 1 establishing "competent tribunals", which did not exclude the arbitration tribunal.

In a similar case, it was held that the arbitration clause, and the clause attributing jurisdiction to the commercial court of Paris, for a same dispute that were contained in an act of guarantee of liabilities were irreconcilable and should accordingly be deemed null and void (CA Paris (November 22nd, 2000).)

The criterion of interpretation of this type of clause remains therefore to seek the common intention of the parties, the principle of which is reaffirmed in order 2016-131 concerning contract laws reform, 10th February 2016.

 

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