France – Enforcement of international arbitral awards

13 febrero 2018

Francia

Arbitraje

Québec’s international (and domestic) arbitration rules are codified in the Code of Civil Procedure (the “CCP”) and were first enacted over thirty years ago as part of a major, progressive reform of arbitration law in the Province. This reform was inspired by the 1985 UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) and sought to promote arbitration as a means of private dispute resolution.

Today, each of the other Canadian provinces have separate legislation that governs international arbitration that is, like Québec, largely based on the Model Law.

Frequently in the context of commercial arbitrations, a party seeks the specific enforcement of the terms of a contract, or, for example, other types of protective or preservation orders. An important issue that has arisen under Québec law over the years is whether an arbitrator has the jurisdiction to render these types of orders, which are injunctive in nature.

Until 2011, there was serious debate in Québec as to whether an arbitrator had the power to render orders of specific performance, namely orders that force a party to an arbitration to do something, or not to do something. The debate stemmed from the fact that: (1) orders of specific performance can be akin to an injunction – which is defined in the CCP as “an order enjoining a person not to do or to cease doing something or, in applicable cases, to perform an act or operation under pain of all legal penalties” – and the CCP expressly provides that the Superior Court of Québec, Québec’s court of original jurisdiction and the highest trial court in the Province (the “SCQ”), has the exclusive jurisdiction to issue the extraordinary remedy of an injunction; and (2) a specific article in the CCP provided that a “judge or court” (as opposed to an arbitrator) could grant provisional measures before or during arbitral proceedings.

In 2011, the Court of Appeal of Québec (the “QCA”), Québec’s highest court, rendered a decision (Service Bérubé Ltée v. General Motors du Canada Ltée, 2011 QCCA 567) (“Bérubé”) that examined the question of whether an arbitrator could order the performance of a contract by a party to an arbitration. More specifically, in Bérubé, a key issue was whether the arbitrator could force General Motors to renew a franchise agreement with its franchisee. The QCA held that not all orders of specific performance were akin to an injunction and that arbitrators can enforce the performance of a contract that is at issue before them.

A year later, in 2012, in a highly anticipated decision (Nearctic Nickel Mines Inc. v. Canadian Royalties Inc., 2012 QCCA 385) (“Nearctic Nickel”), the QCA reaffirmed that arbitrators can order specific performance of contractual obligations that do not amount to injunctions. In Nearctic Nickel, consistent with the terms of a joint venture agreement between the parties, an arbitrator ordered a minority partner to transfer its interest in a mining property to the majority partner. The QCA held that this order did not constitute an injunction but rather, “was tantamount to an order to convey title and where the award itself is equivalent to the specific performance of the contractual obligations.” The QCA did not, however, expressly hold that an arbitrator could issue an injunction.

In rendering its decision in Nearctic Nickel, the QCA rejected the assertion that an arbitrator never possessed the power to grant orders of an injunctive nature because, without limitation: (1) in Québec, specific performance of an obligation (as opposed to pecuniary damages) is, in cases where this is possible, the rule and this can be obtained through an injunction or a simple court order; (2) this interpretation would be incompatible with the codified principle in the CCP that arbitrators “have all of the necessary powers for the exercise of their jurisdiction”; and (3) consistent with the Supreme Court of Canada’s (the “SCC”), Canada’s final court of appeal, modern interpretation of arbitration as a “complete system of alternate dispute resolution”, the powers granted to arbitrators should include the possibility for arbitrators to render awards to be executed by specific performance that do not require court intervention.

In deciding whether the order of an arbitrator is the equivalent of an injunction, the QCA noted as follows:

[63] In order to appreciate whether an arbitrator issued a particular order which would be tantamount to an injunction, one must look at the commercial agreement, determine the true intentions of the parties and decide whether, in light of all the circumstances, the pith and substance of the order truly constitutes an injunction with all of its known penal implications or whether it is more of a declaratory nature which serves the purpose of giving full effect to the Arbitrator’s determinations of the parties’ rights.

Of note in Nearctic Nickel, the QCA also indicated, in obiter, that an arbitral tribunal could grant provisional measures even where the parties’ agreement was silent on this issue. In support of this position, the QCA relied on the fact that the Model Law (article 17) expressly provides that arbitrators have the power to grant interim measures and this article was expressly incorporated in the CCP with respect to inter-provincial and international arbitration and that it would not make sense for domestic arbitration in Québec to follow different rules.

The SCC refused leave to appeal from the QCA’s decision in Nearctic Nickel (19 July 2012, No. 34801). As is always the case when the SCC dismisses an application for leave to appeal, it did not provide reasons for its decision.

In 2016, the CCP provisions dealing with arbitration were amended, including to take into account amendments to the Model Law. As part of these significant amendments, the legislator added article 638 CCP, which provides that “[t]he arbitrator may, on a party’s request, take any provisional measure or any measure to safeguard the parties’ rights […].” The legislator also added article 639 CCP, which provides that in urgent situations, even before a party requests provisional or safeguard measures, the arbitrator may issue “provisional orders” for a period not exceeding twenty days. In addition, in article 646 CCP, which deals with the grounds on which a court can refuse to homologate (recognize) an arbitral award, the legislator added the following underlined terms: “The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that […].”

Subsequent to the 2016 amendments to the CCP, the ratio of the QCA’s decisions in Bérubé and Nearctic Nickel was applied by the SCQ in a 2017 decision in Truong v. Syndicat des copropriétaires Appartements Miraflor, 2017 QCCS 3673 (“Truong”). In Truong, the Court reaffirmed that in Québec, an arbitrator can issue an order of specific performance that is not necessarily an injunction.

More recently, the question of an arbitrator’s powers and more specifically whether an arbitrator can issue a safeguard order that was akin to a Mareva injunction (i.e., a freezing order to prevent a party from dealing with its assets) was considered by the SCQ in the case of Hachette Distribution Services (Canada) Inc. c. 2295822 Canada Inc., 2018 QCCS 1213 (“Hachette”). In Hachette, the SCQ noted the legislator’s clear recognition, in enacting article 646 CCP, that an arbitral tribunal has the power to grant provisional measures or safeguard orders. The SCQ noted that an arbitrator’s ability to do so must be linked to the arbitrator’s mandate, which must be interpreted in a broad and liberal manner.

It should be noted that in Ontario, the Arbitration Act (Ontario) expressly provides that an arbitrator can render orders of specific performance and injunctions. The same is true under the relevant arbitration legislation in a number of other Canadian provinces.

The author of this post is David Stolow.

French law is known to be highly favorable to the enforcement of international arbitral awards (notably those rendered outside of France). This forum should accordingly be considered as a matter of priority if the opposing party holds assets in France.

Are presented below the necessary steps in order to enforce an international arbitral award in France. Please note that some of the steps described are only potential and depend upon the other party’s possible will to resist enforcement.

Step 1: Obtaining exequatur

The award is presented to the Presiding Judge of the Paris Civil Court (Tribunal de Grande Instance de Paris) ex parte who decides whether or not to grant exequatur. There are no briefs to file.

The time required for the Presiding Judge’s answer varies greatly according to the caseload of the Court and his availability. Nevertheless, in case of specific emergency, it is always possible to discuss with the clerk’s office to handle the matter on an urgent basis.

On a practical note, the following documents are required in order to proceed: an original version or certified copy of the award, a certified translation of the award, a copy of the arbitration agreement and a certified translation of the same and one additional copy of each of these documents.

Step 2: Defending exequatur (potentially)

If exequatur is granted or denied, the order may be appealed at the Paris Court of Appeal within one month starting from its service. Additional delay for distance may apply if the appealing party is domiciled or is registered abroad.

If exequatur is granted, it is often the case that the opposing party attempts to question the enforceability of the award in France on the limited grounds of article 1520 of the French Code of Civil Procedure (« CCP »):

the arbitral tribunal wrongly upheld or declined jurisdiction,
the arbitral tribunal was irregularly constituted,
the arbitral tribunal ruled without complying with the mandate conferred upon it,
the due process requirement was violated, or
recognition or enforcement of the award would violate French international public policy.

Of interest in the current judicial environment, is new case law of the Paris Court of Appeal allowing limited revision of the fact findings of the arbitral tribunal in cases of alleged bribery (see AD newsflash on the matter).

After filing an appeal, the opposing party is required to file its complete submissions on the appeal within 3 months and the defendant has 3 months to answer from the notification date of the appellant’s submissions (new delay as per the reform of 6 May 2017 in force since September 2017).

Additional submissions may be filed, one additional set is common practice, and a single hearing is usually scheduled to take place around 18 months after the appellant’s initial declaration to the Court.

It is important to note that during such proceedings the award, whose exequatur has been granted, will remain enforceable in France and that accordingly there are no obstacles for the beneficiary of the award to proceed with any seizure unless the defendant makes a specific application to the Court to stay enforcement (Article 1526 CCP).

Step 3: Defending immediate enforceability of the award (potentially)

In order to take into account specific circumstances that would unjustly prejudice the party against whom a decision is enforced, the CCP reserves the possibility to request the Court of Appeal a stay of the enforcement of the award in exceptional circumstances.

In such case, the debtor would have to prove that enforcement would entail seriously detrimental consequences to his rights (Article 1526 §2). The criteria to meet are restrictive. When the beneficiary of the award is a foreign company, it is often requested as an alternative that the monies be put under escrow and not immediately transferred to the beneficiary on the basis that it will be difficult for the opposing party to recover the funds should it be successful in its appeal against the exequatur order.

These proceedings are usually expedited (hearing within one or two months). The opposing party files a request as soon as it has appealed the exequatur order. A brief in answer rapidly needs to be filed depending on the date of the hearing.

*Step 4: Seizing assets***

Seizing funds

Upon receipt of the exequatur order, a bailiff may be instructed to seize any funds held in bank accounts in France.

The process is that of a “saisie-attribution”, hereinafter referred to as a seizure. The bailiff is instructed to visit the relevant banks’ headquarters and notify that monies corresponding to the award are seized.

Please note that French bailiffs have access to a specific file called FICOBA which provides them with the names of all the banks where the debtor holds accounts.

As soon as a bailiff requests funds from a bank, the bank has an obligation to provide detailed information on the funds available. Most banks are organized to answer the bailiff’s request on the same day.

Once the bailiff has performed the seizure, the amounts are considered to be the creditor’s property and are rendered unavailable to the debtor. This can paralyze the business of the debtor so it is recommended to proceed with caution.

The seizure is then notified to the debtor within 8 days.

The funds remain frozen the time to allow potential challenges by the debtor (one month).

Seizing other kinds of assets

It is possible to seize a variety of other assets under French law of course (real property, company shares, debt obligations etc.). Seizing funds is usually the easiest.

Step 5: Challenge by the opposing party of the seizures (potentially)

The seized party will have a right to challenge the seizures before the Enforcement Judge (“Juge de l’exécution” or “JEX”) within a month of the notification of the seizure.

The arguments that can be raised by the opposing party usually concern the seizure itself and not the validity of the exequatur order as other proceedings are available for that purpose.

Several briefs are usually exchanged and a hearing is held before the JEX.

The JEX’s decision can be appealed. The appeal does not stay enforcement. However, there exist specific proceedings to request the Court of Appeals to stay enforcement under certain conditions (manifestly excessive consequences).

In conclusion, the process is rather straightforward even though there are legitimate recourses available to the debtor and the above may appear pretty technical. This is natural given the potential use of the public force once exequatur is obtained.

Please note that although French Courts are known not to be very generous in terms of awarding legal fees, there have been decisions in which significant amounts have been ordered in this field (for example EUR 600,000 in CA Paris, 26 sept. 2017, no 16/15338). Therefore, in case of success the costs of enforcement are borne by the debtor.

In case of absence of challenges, it usually takes between two to three months to obtain the wire of the funds in favor of the creditor (however as explained above, as soon as the seizure is performed the funds are immediately frozen until all potential recourses have expired).

The author of this post is Flore Poloni

¿Cómo asegurase que a largo plazo pueda ejecutarse un crédito? En Suiza un acreedor podrá embargar los bienes de un deudor siempre que se cumplan ciertas condiciones. En la práctica, existen dos situaciones por las cuales se considera que se lleve a cabo un embargo de los activos: la primera de ellas es cuando el acreedor posee una acción contra un deudor sin residencia en Suiza, mientras que la segunda, es cuando el acreedor posee un título ejecutivo fundado en una sentencia favorable o en un laudo o resolución arbitral.

Sin lugar a duda, el mercado financiero suizo continúa jugando un papel predominante en el mundo financiero actual, a pesar de la presión reguladora que afronta. La jurisdicción suiza, por tanto, es relevante para los acreedores que deseen obtener el embrago de bienes por parte de un deudor que posea cuentas bancarias u otros bienes en Suiza. Si bien en la práctica, el embargo de bienes se efectúa sobre cuentas bancarias, es posible utilizar la misma obligación para embargar otros bienes con el mismo efecto, por ejemplo, bienes inmuebles, obras de arte o bienes de terceros a su vez acreedores del deudor.

A instancia de parte, el acreedor puede solicitar un embargo ex parte de bienes del deudor que se encuentren en Suiza ante el tribunal del lugar donde se encuentre la sede del banco o donde se sitúen los bienes, siempre y cuando se demuestre que existan prima facie los tres requisitos previstos por la Ley federal sobre la ejecución y sobre el concurso de acreedores (“DEBA”), es decir, que:

El acreedor que solicita el embargo posea un título fundado en un crédito exigible y ordinario.
Se den los presupuestos legales necesarios para obtener un embargo.
Los bienes del deudor se encuentren en Suiza.

Como ya se ha mencionado anteriormente, los presupuestos legales más relevantes para obtener el embargo de bienes son:

Que el deudor no sea residente en Suiza y que el crédito en sí esté lo suficientemente conectado con Suiza o que esté fundado en un reconocimiento de la deuda por parte del deudor (“embargo contra un sujeto no residente en Suiza”).
Que el acreedor posea una sentencia ejecutiva favorable o un laudo arbitral contra el deudor (“Título ejecutivo”)

Embargo contra un sujeto no residente en Suiza: Según la DEBA, el mero hecho de que los bienes del deudor se encuentren en Suiza no es suficiente como para establecer una “suficiente conexión con Suiza”. Dicho presupuesto depende en gran parte de los hechos específicos de la cuestión que se valorarán por parte del Juez caso por caso. La jurisprudencia suiza ha confirmado algunos criterios de conexión: que el contrato entre las partes se haya firmado o deba de ejecutarse en Suiza; que el contrato entre las partes esté regulado por la ley suiza, que el acreedor viva en Suiza o que el crédito del acreedor esté conectado a una actividad comercial desarrollada en Suiza.

Título ejecutivo: Para poder solicitar el embargo de los bienes, el acreedor debe además, cumplir con el segundo presupuesto legal, esto es, poseer un título ejecutivo. La DEBA no realiza distinciones entre sentencias y laudos o arbitrales pronunciados tanto en una jurisdicción interna como en una jurisdicción extranjera. Simplemente deben ser ejecutivos (teniendo en consideración el Convenio de Lugano, la Ley federal sobre derecho internacional privado – en el caso de un laudo arbitral dictado por una corte arbitral no suiza – teniendo en consideración el Convención de Nueva York), todas las sentencias favorables o los laudos arbitrales podrán obtener el embargo de los bienes que se encuentren en Suiza.

El tribunal suizo solicitará al acreedor que demuestre prime facie la existencia de los presupuestos legales para llevar a cabo el embargo, como anteriormente descrito. Debido a que el embargo se otorgará ex parte, en muchos casos, dicha acción tomará al deudor por sorpresa. Gracias a este efecto sorpresa y a la naturaleza del embargo, cuyo objetivo es que el deudor no pueda deshacerse de los activos, tal medio tiene un grande potencial para ayudar al acreedor a asegurarse y quedarse satisfecho de su crédito.

One of the commonly discussed advantages of international commercial arbitration over litigation in the cross-border context is the enforcement issue. For the purpose of swifter enforcement of foreign arbitral awards, the vast majority of countries signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

On contrary, there is no relevant international treaty of such scale for the enforcement of foreign court judgements. Normally, the special legal basis, such as agreement on judicial cooperation between two or more countries, needs to be relied upon in order to get a court judgment recognized and enforced in another country. There are quite many countries that do not have such an agreement with China. This includes, among others, US, Germany or the Netherlands.

Interestingly, however, recently the Chinese court in Wuhan enforced the US court judgement rendered by the Los Angeles Superior Court of California in the Liu Li v Tao Li and Tong Wu case. It did so despite the fact that there is no agreement between China and US providing for mutual recognition and enforcement of such judgements. The court in Wuhan found, however, that the reciprocity in recognizing and enforcing the court judgments between China and US was established because of an earlier decision of the US District Court of the Central District of California recognizing and enforcing the Chinese judgement rendered by the Higher People’s Court of Hubei in the Hubei Gezhouba Sanlian Industrial Co., Ltd et. al. v Robinson Helicopter Co., Inc. case.

Interestingly, similar course of action was taken earlier in 2016 when the Chinese Nanjing Intermediate People’s Court enforced the Singaporean judgement relying on the reciprocity principle in the Kolma v SUTEX Group case.

How much does it tell us?

Should we now feel safe when opting for own courts in the dispute resolution clauses in the China-related deals? – despite the fact there are no relevant agreements between China and our country? The recent moves of the Chinese courts are, indeed, interesting developments changing the dispute resolution landscape in a desirable direction and increasing the chances for enforcing the foreign commercial court judgements. Yet, as of today, one should not see them as the universal door-openers for the foreign court judgements in similar situations. Accordingly, rather careful approach is recommended and the other dispute resolution methods securing the safer way of enforcement, like arbitration, should be kept in mind. The further changes remain to be seen.

The author of this post is Monika Prusinowska.

Some places are good to go to for arbitration, some places are better avoided. It is not this blog’s aim to hail the former and blame the latter but, rather, to outline why Switzerland certainly is a good choice when it comes to arbitration.

Arbitration clauses are sometimes called “Midnight Clauses”. They are called “Midnight Clauses” because they tend to be the very last clause that parties will negotiate on when trying to contractually finalize a business transaction. If the parties are looking for an excellent dispute resolution mechanism or are having last-minute difficulties in finding a suitable compromise, arbitration in Switzerland might be a valuable alternative. Why? There are a handful of unique selling propositions.

First of all, Switzerland has a long tradition of hosting international arbitrations of all kinds (both ad-hoc and institutional). The tradition dates back more than hundred years. As a consequence of this history and experience, you will find easy access to a great number of excellent legal practitioners, both counsel and arbitrators.

Second, Switzerland is politically neutral and is the seat of many international organizations (WTO, WIPO, IOC, etc.). This ensures an openness of mind to different cultures and values and makes Switzerland a great place for an international arbitration.

Third, Swiss substantive law offers a very liberal, clearly defined and predictable legal framework to its users. As a consequence, Arbitration in Switzerland is ideally combined with a choice of law clause in favour of Swiss substantive law.

Fourth and importantly, Switzerland offers both a very stable legal system and an excellent legal framework. Switzerland’s international arbitration law follows an efficient regime and is comprised of only 18 very concise articles. Furthermore, the Swiss judiciary applies a very arbitration-friendly approach in dealing with challenges of arbitral awards and only interferes in exceptional circumstances. There is only one challenge available and this challenge goes right to the Swiss Federal Supreme Court, Switzerland’s highest court. The Supreme Court will not review the merits of the award. It will, however, ensure that the most basic legal principles (public policy) are safe-guarded. Consequently, there are no cost-intense multi step annulment proceedings before state courts. Challenges are generally dealt with within six months.

Fifth, Switzerland offers great infrastructure both in terms of travelling access, hotels, security, court reporting and translation needs.

Last but not least, arbitration in Switzerland offers you great flexibility. You can arbitrate according to the arbitration rules of all of the major institutions, i.e., ICC, Swiss Chambers of Commerce, LCIA, SCC, DIS, AAA, SIAC, HIAC, CIETAC or under Ad-Hoc Rules and will find a suitable ground for your arbitration. For all of these reasons and many more, arbitral awards originating in Switzerland will profit from a great reputation and will be easily enforceable internationally in case of need.

Arbitration could be a strange world of wonders, but, on the other hand, if mastered professionally in the first place while planning and managing the process, arbitration could turn out to be a process that will be directed towards a winning strategy.

Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

1 – You must control your arbitral procedure – This may seem rather trivial. However, time and again, cases such as those this writer has scrutinized or managed indicate that when counsels who are aware of the «technicalities» and plan for them, they gain considerable advantages or at least control of the international arbitration.

2 – Precisely define your arbitration agreement/clauses – This essential cannot be emphasized enough, as to its importance and great impact over the arbitral process. This preliminary phase of any arbitration process – which is always based upon some kind of consent granting the jurisdiction to an arbitral tribunal – is the key for safeguarding interests.

3 – Cautiously choose and define the seat of arbitration– The seat of arbitration is not «just» the venue where the arbitration will take place – it is the country whose courts will have jurisdiction over the matters surrounding, supporting and enforcing the arbitration procedure.

This might have crucial relevance, even for the validity of the arbitration agreement itself, since each country has its own internal arbitration laws regulating arbitration and, thus, might interpret validity or non-validity of an arbitration agreement irrespective of the law applying to the arbitration or the intent of the parties initially. For example, some countries may not enforce an arbitration without a signed arbitration agreement, whereas others, such as Israel, might acknowledge consent for arbitration without a written document.

The seat of arbitration may also have a great impact even over interim measures. It is crucial to review what kind of interim measures are possible or impossible according to the law of the seat of the arbitration – some cases revolve around interim measures without which the arbitration might be meaningless.

The seat of arbitration might also have a great impact in light of the public policy in the specific country – which might not enable the validation or enforcement of an arbitral award counter to its public policy principles – and thus make an arbitral award worthless.

4 – Definition of the possible remedies and the exclusion of others – This is another essential that, for some reason, in practice is often overlooked, despite the obvious advantage this might have over the scope of the arbitration. Parties to an arbitration agreement have the power not only to provide the matters that are subject to arbitration and the applicable law, but also to control their legal exposure in arbitration – and, in fact, minimize or maximize it – if they just give thought to remedy definitions, rather than leave it inattentively hanging as a midnight clause.

For instance, a party might define that punitive or tort damages are included or excluded. Similarly, parties can provide to cap possible compensation (such as a certain value of the transaction), all in a manner so that the arbitration process can be navigated solely to what the parties, or any one of them, actually seek. This will contain and minimize the risk of the unexpected or unknown.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

For instance, parties sometimes provide that the tribunal will have the jurisdiction to render awards as to questions of interpretation of the contract and its terms – but such a provision may be found to not provide jurisdiction as to breach of the contract – this might turn out to be a substantial obstacle for the enforcing party.

5 – Determining the applicable law – This has great relevance and importance for obvious reasons – and yet many times parties are found to have agreed upon an applicable law – such as British or Swiss law – without actually looking into said law and its possible implications for the matter in the case in dispute. It is indeed worth the extra effort to consult with counsel acquainted with the proposed applicable law while presenting the scope of interests to be protected and any possible downsides in the transaction.

6 – Determining and controlling arbitration costs – International arbitration could be extremely costly, especially if parties have not provided in advance for the terms for conducting the process. Parties could and should consider controlling costs, inter alia, by the following:

Providing for a sole arbitrator rather than a tribunal of three
Providing that the arbitration will be conducted by written submissions and affidavits only
Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
Providing in advance for short hearings and a limitation on the number of hearings
Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

7 – Ensuring that enforcement is possible – An essential element to be reviewed in advance, even before engaging in an arbitration agreement, is the possibility of enforcing the arbitral award. In general, the New York Convention of 1958 provides sufficient reference for this consideration. This may not always be the case. Thus, a technical review of the convention is sufficient to ensure enforceability in a particular case or situation.

There are instances in which legal or political considerations may preclude enforcement even when the target jurisdiction is part of the New York Convention. For instance: non-mutuality of enforcement among countries, an award that contradicts public policy of the target enforcement country, difficulties originating from conflicts of law – since the enforcing jurisdiction will usually apply its set of laws, rules and values.

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.

There is a number of dispute resolution mechanisms available for the disputes with the Chinese parties. Depending on bargaining power of the parties and few other circumstances, such as limitations of Chinese law, the dispute can be sometimes resolved outside of China. More frequently, however, the Sino-foreign disputes are resolved in China and this post offers a brief introduction to the methods available there .

As almost anything else in business, an optimal method for resolution of future disputes is worth of anticipating well in advance. Once there is a conflict, it is much more difficult for the parties to agree on the solution equally acceptable to both of them. There is a variety of options to choose from and each of them has its own advantages and disadvantages. Also, there is no “one size fits all” solution and each transaction as well as dispute should be approached individually. Of course, there is always is a default solution, which is going to state court in case the parties have not provided for any alternative mechanism, but this is not always the most optimal way to go.

Litigation

Chinese courts are commonly perceived by foreigners as rather undesirable scenario for dispute resolution. It is so due to the often mentioned problems, such as local protectionism of the Chinese courts or lack of their professionalism. However, in practice, this is not always true and especially the courts in the China’s well-developed regions, particularly in the biggest coastal cities are generally a safe harbor for disputes involving foreigners. The same holds true for the IP courts located in Beijing, Shanghai and Guangzhou. One needs to remember, however, that the jurisdiction of particular court depends on a number of factors, such as place of registration of the Chinese counterparty or place of performance of the contract and therefore, the Chinese top courts may not be the ones handling particular dispute in practice.

Arbitration

Arbitration is a common choice for foreign-related disputes in China. It happens so, because of a number of advantages of arbitration over litigation in such a context. To start with, China and the vast majority of the countries in the world are the parties to the New York Convention, which significantly streamlines the enforcement of foreign arbitral awards. There is no comparable treaty of that scale for the enforcement of state court judgements, what can cause practical problems if certain country does not have an agreement on judicial assistance with China and the enforcement of foreign court judgements is sought. Therefore, since the parties want money and not a piece of paper, the use of arbitration in the cross-border context can substantially improve the prospects for effective enforcement of arbitral award. Furthermore, in contrast to litigating in China, in arbitration English language can be used in proceeding and a party can be represented by a foreign counsel. In arbitration, the parties can also select arbitrators resolving their dispute and a foreign arbitrator is not an uncommon scenario in case of the Sino-foreign arbitration proceedings in China. The parties can also select a specific arbitration institution and rules applicable to the proceeding.

The China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC) are one of the most frequently chosen arbitration institutions in China for the foreign-related disputes. Alternatively, if the circumstances of the case permit – the dispute can be taken outside of China and resolved, for instance, by the Hong Kong International Arbitration Centre (HKIAC) or the Singapore International Arbitration Centre (SIAC), which are fairly acceptable alternative choices for the Chinese parties.

Other options

One of the other methods popular in China is mediation. Mediation is typically faster, cheaper and increases the chances of preserving good relationship between the parties. However, one needs to remember that in order to mediate, the parties need to be willing to do so, since the role of mediator is to help the parties reach an agreement and not to ultimately decide their dispute. Furthermore, the product of mediation is a contract and so, the breach of mediation agreement typically equals to contractual breach.

One additional important tool frequently used in practice is engaging local lawyers for the purpose of negotiating with the Chinese party as soon as the dispute escalates. The lawyers can help the parties communicate and when the communication is impossible – they can prepare a document describing the claims and informing the Chinese party about the risk of undertaking further legal steps, such as staring court proceeding, what is made mainly for the purpose of brining the other party back to negotiation and finding a solution acceptable to both parties. This often helps save time and money, but it can be problematic if the other party ignores the actions of lawyer. Also, like in case of mediation, the problem lies in the enforcement of any agreement reached by the parties in the course of negotiation.

The main takeaways from this short post are the following:

Think about the dispute resolution mechanism in advance. There are quite many issues that need to be taken into consideration and there is no “one size fits all” solution. There might be the situations when going to the Chinese court makes perfect sense and there also might be the situations when it makes no sense at all. What is the best option for me in particular case? Which court can potentially have jurisdiction over my case? Does the country involved have a judicial assistance agreement with China for the purpose of enforcement? What should be the language of proceeding? Which arbitration institution to choose?
Think about hiring professionals right from the very beginning, preferably at the stage of negotiating and drafting agreements. Choosing an optimal solution for resolution of future disputes can help save a lot of time, money and energy. In case of dispute occurring already – act promptly. If the dispute escalates, think about what you can do to best preserve your rights. Should you apply for interim measures? Do you need to first negotiate before you can go for arbitration in case of multi-tier clauses? Which documents are needed to start the proceeding?

The author of this post is Monika Prusinowska.

Las controversias mercantiles en Italia pueden ser resueltas de modo eficaz ante los tribunales italianos (ya sea mediante el procedimiento ordinario o mediante el procedimiento sumario) o, si así lo acuerdan las partes, mediante el arbitraje.

Normalmente un tribunal suele tardar en dictar sentencia –en primera instancia- alrededor de tres o cuatro años y –en segunda instancia- en unos cuatro o cinco años, mientras que la duración del procedimiento de arbitraje suele ser más corta (alrededor de un año), ya que depende de las condiciones de contratación de las partes y de las reglas de arbitraje que rigen el mismo.

Por otra parte, los costes que derivan de los procedimientos de arbitraje son más elevados que los costes requeridos para los procedimientos judiciales, mientras que los plazos en los procedimientos arbitrales son generalmente más rápidos, especialmente si el arbitraje se lleva a cabo atendiendo a las reglas de una institución arbitral (por ejemplo, la Cámara Internacional de Arbitraje de Milán).

Ejecución de sentencias extranjeras y laudos arbitrales internacionales

Las sentencias extranjeras se reconocen y se ejecutan en Italia a través de diferentes procedimientos, dependiendo de que la sentencia haya sido dictada por un tribunal de un Estado miembro de Unión Europea o por un tribunal no comunitario.

En general, cualquier sentencia, decisión o medida que cumpla con determinados requisitos, que haya sido dictada por un tribunal de un Estado miembro de la UE y que sea exigible en ese Estado, es reconocida automáticamente en la jurisdicción italiana sin que se requiera ningún procedimiento especial y/o sin que se requiera una declaración de ejecución, atendiendo a los Reglamentos UE 1215/2012, 44/2001 y los Convenios de Bruselas y Lugano II, cuando puedan ser aplicables.

Además, para las sentencias dictadas por un tribunal no perteneciente a la UE, existen una serie de convenios bilaterales relativos al reconocimiento y ejecución de resoluciones judiciales en materia civil.

En relación a los laudos arbitrales internacionales, en 1969 Italia firmó la Convención de Nueva York de 1958 sobre el reconocimiento y ejecución de sentencias arbitrales internacionales. En consecuencia, Italia reconoce los laudos arbitrales extranjeros de manera vinculante y los ejecuta de conformidad con la legislación procesal italiana en las condiciones establecidas en la Convención de Nueva York.

De ese modo, para que un laudo de arbitraje extranjero pueda ejecutarse en Italia, el mismo deberá presentarse ante el Tribunal de Apelación del lugar de residencia de la parte contraria (si se encuentra en Italia) o ante la Corte de Apelaciones de Roma (si la parte contraria reside en el extranjero). En este caso, el Tribunal de Apelación solo comprobará que el laudo extranjero respete los requisitos formales, sin entrar en el fondo de la controversia, después, el tribunal emitirá una orden ejecutiva, de ese modo el laudo se convertirá en equivalente a una sentencia que pueda ser ejecutiva.

Ejecución de sentencias y laudos arbitrales italianos en otras jurisdicciones

La posibilidad de hacer valer las sentencias y los laudos arbitrales italianos en el extranjero varía en función de cada una de las jurisdicciones.

En particular, las sentencias italianas son aplicables en el extranjero de conformidad con el Reglamento de Bruselas I bis de la UE y, cuando sea aplicable, con el Convenio de Lugano.

Como ya se ha mencionado anteriormente, Italia también forma parte de la Convención de Nueva York de 1958, el cual se basa en el principio de reciprocidad para el reconocimiento y ejecución de los laudos arbitrales dictados en territorio de otro Estado parte del Convenio. Por lo tanto, un laudo dictado en Italia es ejecutable en jurisdicciones extranjeras que sean parte de la Convención de Nueva York.

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