Http:// - Http:// - Jurisdictions : All The Basics You Need To Know

Jurisdictions : all the basics you need to know

The English legal system lived quietly once upon a time before annoying people came to disturb them. I have always believed that judges should be qualified and fit!

One secret you didn’t know about jurisdictions

Since 2010, the English legal system controlled 80% of international commercial dispute resolutions in their London jurisdictions. The race amongst jurisdictions to be the forum of choice for the resolution of legal disputes has accelerated, supposedly, by reason of the decision of the United Kingdom to quit the European Union (EU) (Brexit). Many European countries regarded it as the time to advertise their own legal systems.

But hear what follows! The start was a flyer named ‘The Jurisdiction of Choice’ published by the England and Wales Bar. This leaflet marketed lawyers and English jurisdictions, singing their praises: ‘more certainty than in civil law systems, the principle of freedom of contract established on English common law, and more flexible than civil law systems’.

Stung to the quick, European lawyers and politicians replied by asking: ‘Isn’t there also freedom of contract in Civil law?’, then to produce in their turn pamphlets; Germany with ‘Le Droit Made in Germany’ -nota bene- in German and English; France, with a bilingual brochure on ‘Continental law’, upon the subtitle ‘global, predictable, flexible, and profitable.’

English has become the leading language in private international commercial law. Virtually all transnational contracts are drafted in the English language. This can be explained by several reasons: first the fact that practically all the laws are English or Anglo-American, then because the parties insert in their contracts a clause determining an English-speaking country as the place of arbitration for their disputes, or because the litigation is the extension of a forum that began in England or the United States.

Since the role of the English language in international commercial private matters was predominant, some European countries inferred that by proposing procedures in the English language, there would be no barriers for the foreigners to adopt their jurisdictions instead of England or the United States jurisdictions, and so be able to divert litigations from these locations. The patois’ wall beaten, a happy conjuncture allowed for an equitable championship, supported just by the quality of their civil justice systems and substantive law!

But do the rare cases that may be heard in English by continental courts justified all this fuss? In addition, was the project feasible? Generally, the law requires that judges have the nationality of the country. How could a judge appreciate the pleadings of an English dialect which is not an official language of his country, in other words, that he does not know?

A rational worry was about lawyers, judges, and court officers’ English proficiency to conduct a case in this language; a lack of mastery of the language could be the source of misunderstandings or constraints in the arguments, affecting the final decision to the detriment of the parties and of justice.

One first measure adopted by the states was to welcome documents in English, without official translations. Commonly, jurisdictions of these countries accepted foreign papers on the condition that they came along with official translations, but translations are costly and laborious since private international law covers commercial or financial litigations, which comprise hundreds or thousands of pages.

On the other hand, translation mistakes were very probable as translators were not automatically intimate with the terminology, technical facets, and legal concepts. On these grounds, parties should have had to review that the rewordings were factual. Indeed, each law owns its proper terms and meaning, and the notions behind are sometimes not transcribable; even a well-trained judge or lawyer could not be able to bring decoding them.

A second measure was the permission for written communication in English, from the parties to the court, and between them. Nevertheless, expenses should be less than those of documentary evidence, as the number granted is normally limited.

What does that mean? European jurisdictions and lawyers should have had the fear that their performances were not meet the standards required, or to ridicule themselves and lose their reputation. The ‘Grand Project of the European Civil law jurisdictions’, consisting in competing with the English jurisdictions by means of introducing the English language n their courts, should have been thought, in all conscience, and the actions utilised to be weighted, and not be undervalued.

So, some European countries, therefore, made up their minds, on the spur of the moment, that handling private international business cases in their own courts was amongst their main objectives! The French International Chamber Paris Court of Appeal (Chambre Commerciale Internationale de la Cour d’Appel de Paris, CCIP-CA in French, or ICCP-CA in English) was set up in March 2018. Other English-language jurisdictions emerged in the Netherlands, Germany, Belgium, and Sweden.

French Jurisdiction vs English Jurisdiction

French jurisdiction went further than its fellows in having the power to rule on English common law. French jurisdictions’ rules, such as the production of documents, discovery, cross-examinations, the collection of evidence, hearings’ organisation, etc, are inspired by the common law.

The French Code of Civil Procedure does not bind judges to work with interpreters, preconditioning that they have a good knowledge of the parties’ language. On another side, the French Constitution and their Ordinance of Villers-Cotterêts impose the French as the tongue for the pleas entered before French jurisdictions; all procedural documents must be redacted in
French, each submission in a foreign language must be accompanied by a French translation, against evidence reports may be submitted in English without translation.

Experts, witnesses, and lawyers may use the English language, but at the court’s discretion, and parties may, but at their own charges, have interpreters during oral proceedings held in Judgements are delivered in French with an English translation; the fee being included in the cost of the proceedings! After all, the idea was to attract international cases thanks to the use of the English language!

Still, the French intensified the game with legal fees of €100 to question the aggressive free passage bill of the English Rolls Building (Business and Property Courts of England and Wales). London’s commercial courts charged 5% of the value of a lawsuit, or up to £10,000. In Paris, litigants pay a maximum of € 100 for the indictments they brought to their courts, the rest being taken care of by the French State. All things considered; it is the French taxpayers who pay!

It would have been cretinous to think that the advocates of the operation ‘rivalry with English jurisdictions’, had other goals than the litigants’ satisfaction, the progress of the judiciary as well as that one of their own jurisdictions when private international affairs can be an important source of revenue for a national budget. The United Kingdom’s (UK) legal sector was worth £26bn to the economy!

By comparison, in the Netherlands and Swedish jurisdictions, the whole litigations process and hearings are held in English vernacular, and judgments are supplied in English – except if a dispute is addressed to the Dutch Supreme Court, where judgments are delivered in Dutch only.

A few Harsh Realities about Jurisdictions

What does that mean for consumers? It is a contemporary rule that jurisdictions dealing with international private law questions are in charge of administering justice, but also performing as service providers. This means that their roles as access providers should be at the heart of the race between the jurisdictions, and as the result, the key element to being chosen by the parties as a dispute resolution forum (constrained by the jurisdiction of the courts).

A 2015 study by the British Institute of International and Comparative Law (BIICL), investigated how London has become a prominent and traditional jurisdiction for the high-value cross-border litigations in the world. The motives encompassed the English lingua franca’ usage, defined as a widespread option of applicable law in international commercial transactions by virtue of its quality, certainty, and efficiency in commercial disputes.

Complementary, the methods applied by the courts to read commercial contracts appeared to be meticulously literal, contrasted to the French courts condemned for their interpretation of contractual terms, procedural ineffectiveness, inefficient remedies, forum neutrality, and especially the reputation and experience of English judges, understanding deeply complex circumstances.

Claimants seize English jurisdictions for access to the law because they are assured of certainty and fairness, and impartiality. Its membership in the EU approved the mutual recognition of UK judgments amidst the Union, in this manner, companies were guaranteed that their rights and interests were conserved under identical conditions before all other EU member jurisdictions.

Three states have rebuilt their judicial systems with the same appetite as these European jurisdictions. Dubai opened ‘the Dubai International Financial Centre (DIFC)’ in 2004, and in 2016 concluded 217 disputes for a value monetary of more than $ 500 million; Doha instituted ‘the Qatar International Court and Dispute Resolution Centre (QICDRC)’ in 2009 and released 38 judgments between 2009 and 2017; Singapore installed ‘the Singapore International Commercial Court (SICC)’ in 2015 and heard 9 cases since its constitution.

Other places are famous for the resolution of litigation under common law: New York, Dubai, and Singapore. In the summer of 2018, a survey exposed nearly 35% of businesses went for EU jurisdictions rather than UK jurisdictions only because of the ambiguities with Brexit.

It should be mentioned that Paris has long been an important centre of international arbitration. The International Chamber of Commerce (ICC) and its International Court of Arbitration (ICA) are regularly chosen by multinational companies. In 2010, it was inaugurated by the International and European Chamber (CIE) but its existence stayed little known to foreign litigants.

In 2012 companies which had experienced French jurisdictions confessed not to have been satisfied and not being in the mood to reiterate it. According to them, the role of experts would be idiosyncratic in France, compared to other jurisdictions where experts are appointed by the parties and represent an important part in the resolution of the dispute.

In French disputes, a court will almost never examine a scientific or other specialised question based solely on the observations of the parties, and without the advice of a neutral expert who will be appointed by the court to give its opinion on it. Still as reported by the litigants, expertise would be as bad as the experts who direct them. This system pretends to ensure that the experts are always well-informed in the terrain for which the courts appoint them, yet the truth is something else.

This concept behind this policy is legitimised by the necessity to handle a volume of disputes beyond the capacity of the courts. Thus, foreign litigants become confused, habituated to conscientious preparations of their litigations in common law jurisdictions, therefore judging the French system silly, plus misses and irregular court dates, creating perplexity as to when their claim will be managed.

Which is better: Qualified or Laymen Judges?

Recent judgments by French and English jurisdictions have reached contrary conclusions, showing the major differences that can arise between different jurisdictions. The creation of international commercial courts revived debates on the convergence between common law and civil law systems for resolving international commercial disputes. From me to you, I don’t think there is any union between the two!

Otherwise, the judges of the commercial jurisdictions in France are not professional judges, but laymen former business leaders elected in the business community. Each one is specialised in the area in which the chamber operates. Although knowledge of companies and markets promises an understanding of the issues at stake in the litigation, as well as its general context, should not judges be drawn from the legal profession rather than the world of business?

UK judges deciding Business and Property cases have been commercial lawyers in practice in Business and Financial litigations for 30 years before becoming judges, some were Queen’s Counsels (QC). In the French commercial jurisdictions, judges are talented in business but are not know-how in the law art.

The law governing the arbitration agreement

Where there is no express choice of the law applicable to the arbitration agreement, there are two main choices in terms of the source of the applicable law: the law of the seat, and the law governing the contract. Frequently, it will be the same e.g., Paris seat and French Law /London seat and English Law, nonetheless, this is not always the case as in our case Kabab-Ji S.A.L. (Lebanon) v Kout Food Group (Kuwait) we will go to criticise straight away.

English jurisdiction determined that in the absence of an express choice of law of the arbitration agreement, the governing law was the law of the seat of arbitration rather than the law of the underlying contract. Absolutely! The law lays down that it is the court exercising jurisdiction The law lays down that it is the court exercising jurisdiction which overrides the law to apply to the litigation involving foreign parties, transactions, or sum of elements. The court always wishes to enforce its own law, the law of the forum or, ‘the Lex Fori’, particularly the United States which espoused this mechanism.

Conversely, the French jurisdiction adopted another angle to interpret the parties’ discernible common intentions. The basis of French jurisdiction reasoning was ‘the principle of separability’ of an arbitration agreement, from the underlying contract. Judges were convinced that: ‘the arbitration agreement validity should be considered according to public international law, and independently of any national law governing the form or substance of the parties’ contract agreement.’

The English judges did not reckon with the principle of separability as their French confrères, hence did not linger on it. Even so, they gave an explanation: ‘the aim of the principle was to give legal effect to the parties’ presumed intention to ensure that their agreed procedure for resolving disputes remains effective in circumstances that would render the substantive contract ineffective, and not isolate the arbitration agreement from the substantive contract for all purposes.’

Above, we have an example of a difference of opinion between two jurisdictions arising from the fact that one jurisdiction has guru judges and the other has amateur judges. To continue, French judges found that: ‘under French law, there was a substantive rule of international arbitration law saying that the arbitration clause was legally independent of the main contract
in which it is contained, in accordance with the mandatory rules of French law and international public order, without the need to refer to domestic law.’

I am afraid that public international law, also named the ‘law of nations’, is different from private international law! Public international law englobes rules and customs governing relations between states in spheres such as armed conflict, human rights, the sea, space, territorial boundaries, diplomatic relations, and TRADE, but just between nations, not between but just between nations, not between private individuals: it is not about the sale from France of a boat to Vladimir Putin Russia (do you remember what happened?)! Public international law should not be mixed up with private international law!

So, what on earth was public international law doing in the midst of this topic!? Here again, we have an example of the dangers that can arise if judges are not professional and not used to working with the law! And the litigation is still rocked all along by differences of opinion resulting from errors in the application of laws.

Read What Experts Have to Say About the French Jurisdiction

Since 2018, French jurisdiction accommodated 52 cases in scopes such as commercial contracts, transport, unfair competition, and transactions on financial instruments. Parties came from all over the world: an English bank, a Ukrainian state-owned limited company, a Luxembourg company, an investment company from the Cayman Islands, Danish and Swiss companies, and an American transport company in business.

In a context of ceaseless competition, the French international business courts could have distinguished themselves from other jurisdictions by developing their own original expertise. Admittedly, the future of French international commercial jurisdictions could depend on their ability to attract common law disputes, however, jurisdictions such as New York or Singapore are already privileged litigation centres for international litigants confronted with common law disputes and could remain so.

French jurisdictions would have more to gain by attracting litigations related to the many systems of civil law existing in the world, such as for example South America, Africa, Asia and Eastern Europe. Alternatively, French international business courts could benefit from specialisation in sectors such as banking, insurance, and others in which the court could develop its own knowledge and distinct cases law.

Like France, several EU member states have set up international commercial jurisdictions. In other words, a patchwork of different rules and practices between jurisdictions will develop – even early started to come about- It will hurt, in the short term, businesses and, above all, the Law world.

In September 2018, the European Parliament proposed the creation of a European Commercial Court (CEC). The tribunal would function as an international forum. I share the Parliament’s opinion that this jurisdiction would be better placed than any European jurisdiction…

If European jurisdictions’ objective, when they overhauled their justice system, was, basically, when push came to shove, to compete with the major dispute resolution jurisdictions London and New York, without to forgot, and by contemplating the other challengers like Singapore, Hong Kong or Abu Dhabi, then indeed, the European Commercial Court might succeed this ambitious enterprise, as they would benefit of commercial judges from all member states, with diverse legal and cultural backgrounds!

Finally, what are the advantages for consumers? There is no legal framework for litigation funding in France and funding remains uncommon for litigation in the French jurisdictions, nonetheless, from a financial perspective, France cannot be accused of false advertising: litigations are cheap, and accordingly, yes! Gainful! At least for the candidates! It is unquestionably a bargain! Notably, if you measure the damage of litigation before the local courts of the different states, to bear or prevent an arbitral process!

What are the advantages of French jurisdictions? Indeed, by leaving the EU the United Kingdom has no longer access to the EU regime for the mutual recognition of judgments provided for under the so-called Recast Brussels Regulations 2012.’ Obviously, France is
advantaged since this regulation, French’s judgments will be the sole authorised to enforce its judgments all around the EEA.

Predictions About the Future of English Jurisdiction

With Brexit, we can no longer speak of London as the EU’s hub jurisdiction. BUT London is not yet defeated! European jurisdictions won a battle, not the war! I’ll tell you more right now! The Hague Choice of Court Convention 2005 (the Hague Convention 2005) and the Hague Convention on the Recognition of Foreign Judgments in Civil and Commercial Matters 2019 (together the Hague Conventions) can play an important role as they regulate the enforcement of judgments between the UK and EU and the UK and other countries.

The Hague Convention 2005 accord a simple instrument for recognition and enforcement of judgments, provided that the parties have agreed on an exclusive jurisdiction clause. The EU States, the UK, Singapore, Mexico, and Montenegro, have already ratified it; China, the USA, the Republic of North Macedonia, and Ukraine have signed the convention but have not confirmed it yet.

The Hague Convention 2019 planned to supplement the Hague convention 2005, which pertains where no exclusive jurisdiction clause has been agreed upon between the parties. It currently has three contracting: Ukraine and Uruguay, and the UK on its own rights since January 2021. Widespread adoption of the Hague Conventions would be a game changer for the enforcement of judgments in the international plan.

Applicable in more than 150 countries, the New York Convention Arbitration of 1958 implemented a common aligned set of standards for recognition and enforcement of foreign arbitral awards. It prevents national courts from reviewing the tribunal’s decision on the merits.

The Foreign Judgments (Reciprocal Enforcement) Act 1933 (the FJA 1933) refers to judgments from courts in Australia, Canada (except Quebec and Nunavut), India, Israel, Pakistan, Guernsey, Jersey, and the Isle of Man. The FJA also applies to judgments from some European countries: Austria, Belgium, France, Germany, Italy, Netherlands, and Norway, to the extent that their subject matter is not covered by the European regime.

In another vein, international arbitration is the dispute settlement which offers the most flexibility, and the possibility of adapting the procedure. The parties can shape any future dispute when selecting arbitration in their underlying documentation by determining: the applicable law, English law or a suitable one for their transaction; seat of proceedings; the language of the procedure, and whether or not the procedure should be kept confidential.

The UK may join the Lugano Convention 2007 which control jurisdictions and the recognition and enforcement of judgments in civil and commercial matters within the EU and with European Free Trade Association (EFTA) states (Iceland, Norway, and Lichtenstein); but to enter, the UK needs the agreement of the EU and the non-EU countries mentioned above. Hitherto, the UK has the agreement of Iceland, Norway, and Switzerland, it is still awaiting the decision of all the countries of the Union.

The agreement is important for the mutual recognition of judgments from English courts. Still in a spirit of positive and negative, for honest competition and an excellent habitué service, the EU has earlier announced to its member states that it had firm and clear-cut arguments not to approve the UK request to cooperate with the Lugano convention on its own rights, without giving further details though. There are rumours that this is because the UK’s acceptance would give it a clear financial advantage to the UK legal sector.

Let us take another example in the field of financial services! Article 46 of Markets in Financial Instruments Regulation (EU) No 648/2012 (MiFIR) requires that the settlement of disputes, by litigation or arbitration take place in one of the EU member states. As underlined by the High Legal Committee for the Place Financière de Paris, (HCJP), there is global … and European competition between jurisdictions.

English jurisdictions were well known for resolving disputes in the international financial sector as well as nationally. The UK had a serious reputation in the sector thanks to expertise, transparency, and certainty. The jurisdiction’s frequenting was even reinforced in 2015, when the High Court of England instituted the ‘Financial List’: it offered litigants a dispute resolution forum by judges with great expertise, without the need for live litigations for receiving advice on their problems.

In short, no worries! Although the consent of the UK to the Lugano convention will avoid red tape for agents to have their English judgments executed, they still will have the possibility to be judged by English jurisdictions and see their judgments put into effect, thanks to a little bit of paperwork! In the worst-case scenario, petitioners will be able to file a request for recognition and enforcement of UK judgments in each EU member state where these judgments are to be prescribed. God save administrative procedures!

To escape complications of orders enforcement of dispute resolutions, individuals should shape their potential litigations by including an exclusive jurisdiction clause!

Leave a Reply

Your email address will not be published. Required fields are marked *