French Law and Arbitration Clauses – Distinguishing Scope
from Validity: Comment on ICC Case No. 6519 Final Award
Serge Gravel* and Patricia Peterson-”
This comment examines the treatment of
two jurisdictional issues in a recent French law
arbitration award rendered under the Rules of
Arbitration of the International Chamber of
Commerce. The first challenge to jurisdiction
concerned the application of the groupe de
socidtis theory to the arbitration clause. This
theory has been used in France to justify the
application of an arbitration clause to claims
made by or against companies that belong to
the same corporate group as a party to the con-
tract. The authors observe that the approach
taken to this problem is inspired by cases con-
cerning the validity of arbitration clauses.
These cases have tended to resolve problems
of validity of an arbitration clause without ref-
erence to the law governing the contract in
which the clause appears. The authors argue
that this reasoning is inappropriate for prob-
lems of scope, which must be resolved by
application of the governing law of the
contract.
The second challenge to jurisdiction arose
from the application of an arbitration clause,
contained in a contract which never came into
force, to claims framed in tort. The authors
suggest that the validity or existence of the
arbitration clause in this context must be con-
sidered separately from that of its scope. They
argue that, on the basis of the French principle
of autonomie of the arbitration clause, the
clause should be enforceable in this instance.
The question of the scope of the arbitration
clause must, however, be determined by an
interpretation of the clause itself.
Ce commentaire examine le traitement de
deux questions de juridiction dans une dtci-
sion arbitrale rendue rcemment en droit fran-
gais selon les r~gles d’arbitrage de la Chambre
de Commerce Internationale. La premiere
mise en cause de lajuridiction concemait l’ap-
plication de ]a thiorie du groupe de soci~t~s b
]a clause d’arbitrage. Cette thdorie a 6t6 utili-
sde en France pour justifier l’application d’une
clause compromissoire t des reclamations
faites par ou contre des compagnies qui appar-
tiennent au meme groupe corporatif comme
partie au contrat. Les auteurs notent que rap-
proche est inspir6e par des cas concernant la
validit6 de clauses d’arbitrage qui sont gtn~ra-
lement rsolus sans r~f&ence au droit qui gou-
verne le contrat contenant la clause. Les
auteurs soutiennent que ce raisonnement est
inappropri6 pour des probl~mes de porte, qui
doivent 8tre rtsolus par l’application de la loi
qui gouverne le contrat.
La seconde question est lie A l’application
de ]a clause d’arbitrage contenue dans un con-
tratjamais mis en vigueur lors de poursuites en
responsabilit6 civile. Les auteurs sugg~rent
que ]a validit6 ou ‘existence de la clause d’ar-
bitrage dans ce contexte doit etre consid~re
stpartment de sa port~e. Us soutiennent que
selon le principe franqais d’autonomie de la
clause d’arbitrage, ]a clause devrait etre appli-
cable en l’esp~ce. La question de la portde de
la clause doit cependant 6tre d~terminte par
une interprtation de la clause elle-meme.
*Member of the ICC International Court of Arbitration; Partner, Lebray, Gaillot & Gravel,
Paris; French Counsel to Ogilvy Renault, Montral.
*Linklaters & Paines, Paris.
McGill Law Journal 1992
Revue de droit de McGill
To be cited as: (1992) 37 McGill L.J. 510
Mode de citation: (1992) 37 R.D. McGill 510
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FRENCH LAW & ARBITRATION CLAUSES
Synopsis
Introduction
I.
11.
The Facts of the Award in ICC Case No. 6519
The First Challenge: The Groupes de Socijtjs Theory
A. The Dow Chemical Arbitral Interim Award
B. The Decision of the Paris Cour d’appel
C. Autonomie of the Arbitration Clause
D. The Role of the Will of the Parties
E. Application of the Lex Mercatoria
F
The Reasons of the Arbitral Tribunal in ICC Case No. 6519
Ill. The Second Challenge: Application of the Arbitration Clause to
Claims Framed in Quasi-Delict
Conclusion
Introduction
The contractual foundation of arbitration has proved to be a source of both
flexibility and limitation. Important issues such as procedural rules, the law to
be applied to the merits and the scope of the arbitral tribunal’s powers can all
be settled by agreement of the parties. The limitations of arbitration are, how-
ever, derived from the fact that in relation to many issues, the agreement of the
parties is necessary and this is difficult to obtain when they are in conflict.
An agreement to resolve a dispute by arbitration amounts, in most
instances, to a waiver of one’s fundamental right to have a state court consider
a case on its merits. For this reason, French law has always treated arbitration
as an exception. This attitude is well illustrated by article 2061 of the Code
civil’ which states that an arbitration clause is null and void unless otherwise
provided by law.
1″La clause compromissoire est nulle s’il n’est dispos6 autrement par la loi.”
The origins of the principle embodied in this provision can be found in an arr~t de principe of
the Cour de cassation of 10 July 1843 (Cass. civ., 10 July 1843, S.1843.11.561). In this case the
Cour de cassation held that, apart from maritime insurance contracts which were specifically dealt
with in the Code de Commerce of that time, arbitration clauses were null and void. The validity
of an arbitration clause in commercial matters was not introduced until 1925 by the law of 31
December 1925 (art. 631 of the Code de Commerce). An arbitration clause is therefore prohibited
in civil matters. It will be noted, however, that French law distinguishes between an arbitration
clause and a “compromis,” which is an agreement to submit a dispute to arbitration after it has
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[Vol. 37
Nevertheless, as arbitration becomes a prominent method of dispute reso-
lution in the international commercial context, an erosion of certain fundamen-
tal principles of French law has occurred. Reforms made to the Nouveau Code
de procidure civile in 1981 established a set of rules for international arbitration
which is far more liberal than the rules which regulate domestic arbitration,
making the distinction between the two critical.2 The importance of this distinc-
tion does not date, however, from 1981. French jurisprudence relating to the
validity and effects of an agreement to arbitrate has, particularly since the arrt
de principe of the Cour de cassation in Etablissements Raymond Gosset v.
Socitj Carapelli,4 relied heavily upon it to side-step the rigours of French law.
The decision in the Gosset case conferred upon agreements to arbitrate
contained in contracts with an international dimension their much discussed
“autonomie.” The confusion as to precisely what the concept of autonomie
means continues to surface in relation to a variety of issues connected to the
jurisdiction of an arbitral tribunal. A recent award made by three French arbi-
trators appointed under the Rules of Arbitration of the International Chamber of
Commerce (ICC) raised two such jurisdictional issues.’ The first related to the
extension of an arbitration clause to entities within a group of companies which
had not signed the relevant contract. The second concerned the application of
the arbitration clause to claims framed in quasi-delict arising out of an agree-
ment which had never entered into force. This comment will be confined to an
examination of the two challenges to jurisdiction, leaving aside the decision on
the merits.
I. The Facts of the Award in ICC Case No. 6519
Mr. X, the controlling shareholder of companies comprising the French
group X, entered into an agreement with an English company, Y, of the Y group
arisen. A conipromis is generally permitted by art. 2059 of the Code civil, subject to exceptions
contained in art. 2060. For a highly informative and thoughtful discussion of these provisions and
the necessity for reform, see the presentation (and debates) of Charles Jarrosson at the Colloque
of 27 January 1992 of the ComitdFranfais de l’Arbitrage (“Perspectives d’6volution du droit fran-
gais de l’arbitrage”) to be published in the Revue de l’arbitrage.
2The reform of the rules relating to domestic and international arbitration in France were effected
by Ddcret no 81-500 du 12 mai 1981, J.O., 14 mai 1981, 1380, (1981) 108 JDI 392 [hereinafter
Nouv. C.p.c.]. Art. 1492 of the new rules defines international arbitration as arbitration proceedings
“qui met en cause des int6rats du commerce international”. This rather vague definition, inspired
by case law pre-dating the Decree, has been the subject of numerous commentaries. Particularly
helpful on this point is the analysis of the reforms of Professor Philippe Fouchard, “L’arbitrage
international en France apr~s le d~cret du 12 mai 1982” (1982) 109 JDI 374 at 377-81.
3French courts began to distinguish between international and domestic contracts in the arbitra-
tion context during the period when such clauses were prohibited in domestic matters (supra, note
1). The first significant decisions of the Cour de cassation validating arbitration clauses in inter-
national contracts came in the 1930s: see Cass. civ., 19 February 1930, D.H. 1930.Jur.228 and
Cass. civ., 27 January 1931, S.1933.I.A1. These decisions were themselves inspired by the famous
Matter case (Cass. civ., 17 May 1927, D.P. 1928.1.25) where, in relation to a monetary clause in
an international loan contract, the Cour de cassation first applied economic criteria to distinguish
between domestic and international contracts (the approach adopted by art. 1492 of the Nouveau
Code de procdure civile).
4Cass. civ. Ire, 7 May 1963, [1963] Rev. arb. 60 [hereinafter Gosset].
5ICC Case No. 6519 (final award), (1991) 118 JDI 1065.
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of companies, which provided for the combining of certain assets and resources
of the two groups to develop their interests in the luxury hotel and leisure indus-
tries in France. The basic idea behind the agreement was that Mr. X and Com-
pany Y were to transfer their shareholdings in various French companies active
in this business to Company XB, which was controlled by Mr. X. Seventy-five
per cent of the capital of Company XB was then to be transferred to a holding
company, the capital of which was to be held in the following manner: 50.1 per
cent to be held by Mr. X and 49.9 per cent to be held by Company Y. The
remaining 25 per cent of the capital of Company XB was to be held by the pub-
lic and the company was to be quoted. Amongst the companies whose shares
were to be transferred to Company XB were the companies XC and XD, both
of which were controlled by Mr. X.
The contract was subject to three conditions precedent, the most germane
to this dispute being the procurement of exchange control authorization from the
French Treasury for Company Y’s investment in the holding company. There
was a clause relating to the conditions precedent which required the parties to
use their best efforts to ensure that they were fulfilled. The contract also con-
tained a French governing law clause and an arbitration clause providing for
arbitration in Paris under the Rules of Arbitration of the ICC with either one or
three arbitrators (the latter option was in fact chosen). The clause provided that
the arbitrators were to have the powers of an “amiable compositeur.”6
The contract never came into force as the condition precedent relating to
exchange control authorization was not fulfilled. A few months after signing the
contract, but prior to the exchange control authorization having been obtained,
Company Y withdrew from the transaction. Mr. X, together with Companies
XB, XC, and XD, commenced arbitration proceedings against Company Y in
which they claimed damages in quasi-delict for losses suffered as a result of
Company Y’s withdrawal from the joint venture. Counsel for Company Y raised
two preliminary questions: first, whether the Arbitral Tribunal had jurisdiction
to hear claims made by Companies XB, XC and XD; and second, whether the
arbitrators had jurisdiction to consider claims framed in quasi-delict.
In relation to the first challenge to jurisdiction, the Arbitral Tribunal drew
a distinction between the situations of Company XB and of Companies XC and
XD. It will be recalled that shares in the latter two companies were to be trans-
ferred by Mr. X (and other companies which he controlled and whose
co-operation in the matter he was to guarantee by a “promesse de porte for’)
to Company XB. All three claimant companies argued that their involvement in
the transactions contemplated by the contract was such that they should be
treated like parties to the agreement by application of the “groupe de socigtgs
6For an exhaustive study of the powers of an arbitrator to resolve a dispute as amiable compo-
siteur, see the thesis of t. Loquin, L’amiable compositeur en droit compari et international (Paris:
Librairies Techniques, 1980). Art. 13(4) of the ICC Rules of Arbitration permits an arbitrator to
decide a case as amiable compositeur if the parties agree to give him such powers. It will be noted
that the Arbitral Tribunal’s powers of an amiable compositeur are not relevant to this discussion
of the two jurisdictional issues as such powers may only be exercised in relation to the merits of
a case.
McGILL LAW JOURNAL
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theory.”7 The Tribunal rejected this argument with regard to Companies XC and
XD as, in its view, this was merely a case of a shareholder freely disposing of
his shares.
The arbitrators did, however, consider that the position of Company XB,
as the recipient of the shares, justified treating it as a party to the contract. Their
reasons were twofold: first, applying the groupe de socitis theory, they found
that Company XB had been at the “heart” of all of the negotiations and, without
it, the contract would have been without an object; and second, in providing that
various assets would be transferred to Company XB, the contract contained a
stipulation pour autrui. It was apparent from the conduct of Company XB that
it had accepted the stipulation in its favour which rendered it enforceable. On
this basis, the tribunal held that as a third party beneficiary under the contract,
this Company could avail itself of the arbitration clause. In support of this con-
clusion the Arbitral Tribunal found that by taking steps to prepare for the receipt
of the assets to be transferred to it, Company XB had implicitly accepted the
stipulation, and in particular the arbitration clause, which formed an indivisible
whole with the rest of the agreement.
With regard to the second challenge to jurisdiction, relying on the theory
of the autonomie of the arbitration clause, the Tribunal held that it had jurisdic-
tion to consider the plaintiffs’ claims even though they were quasi-delictual.
The arbitration clause was meant to cover “tous diff6rends pouvant naitre 4 l’oc-
casion de l’interpr6tation ou de 1’ex6cution” of the contract. Company Y had
argued that the clause was drafted narrowly and only encompassed contractual
liability. In deciding that they had jurisdiction to consider the claims, the Tribu-
nal advanced two reasons. First, it stated that, as a matter of principle, an arbitral
tribunal has jurisdiction to consider all delicts and quasi-delicts committed in
the context of the conclusion or the performance of a contract containing an
arbitration clause. Secondly, although the contract never came into effect, Com-
pany Y’s behaviour had prevented its performance; the Tribunal therefore
viewed this dispute as one relating to performance, a matter coming within the
scope of the clause.
The claims in quasi-delict were examined by the Tribunal under French
law, the governing law of the contract. Upon examining the case on its merits,
the Tribunal awarded reliance damages to Mr. X and to Company XB, although
the amount was significantly less than what was claimed.
Each of the jurisdictional issues considered by the Arbitral Tribunal
brought it into areas of French law which are topical, but unsettled. In particular,
the Tribunal’s reliance on the groupe de socijtds theory in relation to the claim
of Company XB merits careful examination. The theoretical foundations of this
approach to interpreting the scope of an arbitration clause are open to question
and will be explored below. It will be argued that methods used to analyze the
validity of an arbitration clause are inappropriate for solving problems related
to their scope. Although, in the result, the Arbitral Tribunal’s reasoning with
regard to its jurisdiction to consider claims in quasi-delict is less vulnerable to
7See discussion infra, text accompanying note 8.
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criticism, it nonetheless lacks precision. This issue also deserves to be reviewed.
II. The First Challenge: The Groupes de Sociitis Theory
Since the concept of separate legal personality was first recognised, corpo-
rate law and practice have, in most jurisdictions, followed a course which has
encouraged the proliferation of separate legal entities, clustered together in eco-
nomic units that we refer to as corporate groups. The group concept has two
dimensions to it, which lead to opposite conclusions when used as a reference
point for determining the scope of an arbitration clause: the existence of a group
can imply economic unity as profits flow up to the head of the structure where
management decisions are made; however, it can also be synonymous with
diversity, a certain degree of independence and isolation of liability. When one
company is chosen within a group to sign a contract, it is usually no accident.
What then happens when other companies within the group, which have not
signed the contract, wish to claim against the counterparty? Or conversely,
should the counterparty to the contract be permitted to claim against non-
signatory companies within the group which have, in some way, been connected
with the contract? Although such issues are often difficult to resolve in the con-
text of court proceedings, they have taken on a certain poignancy in the field of
arbitration given its contractual foundation.
Many examples now exist of arbitration clauses being extended to apply to
claims made by or against companies within a group which have not signed the
contract containing the clause.’ The principle used to justify this is generally
formulated in the following manner: companies within a group that have partic-
ipated in the negotiation, performance or even termination of a contract along
with other group entities, should be treated as parties to the arbitration clause
regardless of the fact that they have not signed the relevant agreement. This
principle has been applied both to claims advanced by non-signatory companies
and to those brought against them, although more often in the former case.
Even the most liberal application of the groupe de socigtis theory would
suggest that the mere existence of a group is insufficient to warrant automatic
extension of an arbitration clause to non-signatories. However, some authors
suggest that the observation that a company which has not signed a contract
containing an arbitration clause and is a member of the same corporate group
8See, for example,: ICC, ICC Bulletin (November 1991) 20-36 (English and French versions);
ICC Case No. 1434, (1975) 102 JDI 978; ICC Case No. 2375, (1975) 102 JDI 973, ICC Case No.
4131, (1983) 110 JDI 899; ICC Case No. 4504, (1986) 113 JDI 1118; ICC Case No. 5103, (1988)
115 JDI 1206; ICC Case No. 4972, (1989) 116 JDI 1100; ICC Case No. 5721, (1990) 117 JDI 1990
1020; ICC Case No. 5730, (1990) 117 JDI 1029.
One could cite even more cases, were it not for reasons of confidentiality, where such an exten-
sion was sought but not granted. For instance, it is not uncommon for the ICC International Court
of Arbitration to apply art. 7 of the ICC Rules of Arbitration and decide that there is no primafacie
agreement to arbitrate in a specific case submitted to it, notwithstanding the claimant’s reliance on
the groupe de socidtds theory. In such a situation the arbitration cannot proceed (sometimes in its
entirety, sometimes only vis-4-vis one of several defendants), and there is usually no public record
or decision available with respect to the matter, since the decision of the ICC International Court
of Arbitration is an administrative and confidential decision.
REVUE DE DROIT DE McGILL
[Vol. 37
as a company that has signed it, raises a rebuttable presumption that the clause
should be extended to apply to claims made by or against the non-signatory
company.9 Clearly the mere existence of a group is insufficient to warrant auto-
matic extension of the clause. Perhaps the more conventional view expressed in
the doctrine, and one which would be more consistent with the implications of
submitting a dispute to arbitration, is that the burden of proof in relation to a
claim for extending the arbitration clause lies with the party seeking to expand
its scope of application.”
What is the basis of the principle used to justify extension of an arbitration
clause to non-signatory members of a corporate group? Some explanation can
be found in the first judicial endorsement of the groupe de socigtis theory,
which was provided by the Paris Cour d’appel in Sociitd Isover-Saint-Gobain
v. Socitis Dow Chemical France.” Both the award, 2 which was rendered by
a prestigious panel of arbitrators, 3 and the decision of the Cour d’appel merit
careful consideration.
A. The Dow Chemical Arbitral Interim Award
There were two contracts involved in the Dow Chemical case, one signed
in 1965, and a second in 1968 designed to replace the first contract. For reasons
unexplained, both contracts appear to have been at issue. Some further compli-
cation in the case stemmed from the fact that the rights of the companies on both
sides of the transaction had been assumed by other companies within their
respective groups. For our purposes, it is sufficient to note that there were two
contracts providing for the distribution in France of certain Dow Chemical prod-
ucts: one between Dow Chemical Europe SA and Isover-Saint-Gobain, and the
other between Dow Chemical AG and Isover-Saint-Gobain. Both contracts pro-
vided that, at the seller’s option, deliveries of the relevant products could be
effected by Dow Chemical France SA or any other wholly owned subsidiaries
of The Dow Chemical Company or its subsidiaries. The evidence suggested that
not only did the French subsidiary supply the products, but its representatives,
by reason of their presence in France, negotiated the contracts and ultimately
notified Isover-Saint-Gobain of their termination. All of the companies involved
were wholly owned subsidiaries of The Dow Chemical Company, which owned
all of the intellectual property rights to the products to be distributed under the
two contracts. Both contracts contained French governing law clauses and arbi-
tration clauses providing for application of the ICC Rules of Arbitration.
9See, for example, A. Chapelle, “L’Arbitrage et les tiers: II – Le droit des Personnes Morales
(Groupes de Soci~tfs; Interventions d’6tat)” [1988] Rev. arb. 475 at 485.
‘0See, for example, I. Fadlallah, “Clauses d’arbitrage et groupes de soci~t~s” [1984-85] Travaux
du Comit6 Frangais de Droit International Priv6 105 at 118.
“Paris, 21 October 1983, [1984] Rev. arb. 98 [hereinafter Dow Chemical].
12ICC Interim Award, 23 September 1982, [1984] Rev. arb. 137 [hereinafter Dow Interin
13The arbitration tribunal was comprised of Prof. Berthold Goldman, Prof. Michel Vasseur and
Award].
Prof. Pieter Sanders.
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Following termination of the contracts, arbitration proceedings were com-
menced under both arbitration clauses against Isover-Saint-Gobain by the two
Swiss subsidiaries, joined by Dow Chemical France SA and The Dow Chemical
Company. Isover-Saint-Gobain objected to the claims brought by the latter two
plaintiffs as they had not signed either the 1965 or the 1968 contract.
Critical to the result in Dow Interim Award was the Arbitral Tribunal’s
analysis of the sources of law to be applied to interpret the scope of the arbitra-
tion clauses. The defendant argued that the scope and effects of the arbitration
clauses had to be determined by the application of French law, as this was the
governing law of the two contracts. In response, the Arbitral Tribunal placed
considerable emphasis on the fact that the parties, by including ICC arbitration
clauses in their contracts, had incorporated the ICC Rules by reference; the pro-
visions relating to jurisdiction of arbitrators to define their own jurisdiction con-
tained in the ICC Rules did not refer to any national law.’4 In order to accord
itself greater flexibility, the Arbitral Tribunal then observed that the governing
law of the contracts did not necessarily govern the arbitration clauses. This, the
Tribunal stated, was a consequence of the autonomie of an arbitration clause,
which related not only to the validity of the arbitration clause, but also to its
scope and effects. When the analysis was taken a step further, the autonomie
concept was also said to imply that, in some cases, an arbitration clause may be
governed by sources of law which are unique to it and distinct from those which
govern -the merits.
On the basis of these principles the Arbitral Tribunal concluded that, in
defining its jurisdiction, it would examine the intentions of the parties as
reflected in the circumstances surrounding the conclusion, performance and ter-
mination of the contracts, taking into account international commercial usages,
particularly in relation to groups of companies. The only constraint imposed by
French law that was recognised by the Arbitral Tribunal was the requirement
that the decision not abridge rules of international public policy. 5
Applying these criteria, the Arbitral Tribunal found that Dow Chemical
France SA had been at the centre of the contractual relations between the parties
as it had played a primary role in the formation, performance and termination
of the two contracts. This finding of fact permitted the Arbitral Tribunal to con-
clude that the French subsidiary was a party to the contracts and therefore to the
arbitration clauses. It reached the same conclusion in relation to The Dow
Chemical Company, but its analysis concerning this company was fairly brief
by comparison and less convincing. In the case of The Dow Chemical Com-
pany, it found that its ownership of the intellectual property rights relating to the
products to be distributed and its control over the subsidiaries that were directly
involved in the conclusion, performance and termination of the contracts suf-
4See arts 8-3 and 8-4 of the ICC Rules. Some of the ICC Rules were modified with effect as
from I January 1988, but arts 8-3 and 8-4 have remained unchanged since the ICC Rules were first
adopted in 1975.
1 The Arbitral Tribunal was referring here to the concept of ordre public international as defined
by French law and distinguished from the less tolerant ordre public which is applied in domestic
matters.
McGILL LAW JOURNAL
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ficed to treat it as a party, thus bringing its claim within the scope of the arbi-
tration clauses.
After deciding that these two plaintiffs were parties to the contracts, the
Arbitral Tribunal observed that a corporate group possesses an economic reality,
despite the existence of separate legal personalities, which has to be taken into
consideration in defining its jurisdiction, particularly as the ICC Rules required
it to take account of the lex mercatoria. The Arbitral Tribunal then summarised
its reasoning as follows:
Consid6rant, en particulier, que la clause compromissoire express6ment accepte
par certaines socidt6s du groupe, doit lier les autres soci6t6s qui par le role qu’elles
ontjou6 dans la conclusion, l’exdcution ou la r6siliation des contrats contenant les
dites clauses, apparaissent selon la commune volont6 de toutes les parties h ]a pro-
c6dure, comme ayant 6t6 de v~ritables parties h ces contrats, ou comme 6tant con-
cem6es, au premier chef, par ceux-ci et par les litiges qui en peuvent ddcouler16
The conclusion that the two plaintiffs could assert claims under the arbitration
clause therefore rested upon the finding that the intention of the companies
involved was that they be treated as parties to the contracts.
B. The Decision of the Paris Cour d’appel
Isover-Saint-Gobain brought a recours en annulation before the Paris Cour
d’appel in which it sought to have the award quashed on two grounds: first, the
Arbitral Tribunal should have applied French law to determine the scope of the
arbitration clause; and second, there was no agreement to arbitrate. 7 The case
was dismissed on both grounds.
In relation to the first ground raised by Isover-Saint-Gobain, the Cour d’ap-
pel relied heavily on the wording of the terms of reference (acte de mission).
Oddly enough, the terms of reference asked the arbitrators to identify the law
which governed the contracts, despite the fact that there were French governing
law clauses in both of them. As a separate question, the terms of reference asked
the arbitrators to define the scope of the arbitration clause. As the terms of ref-
erence did not require the arbitrators to apply French law to the merits of the
case, the Cour d’appel reasoned that the Arbitral Tribunal was entitled, without
any failure to respect their mandate, to decide the question of jurisdiction with-
out referring to French law.
On the second ground, the Cour d’appel, like the Arbitral Tribunal, drew
attention to the ICC Rules on jurisdiction, and stated that, in keeping with these
Rules, the arbitrators were justified in considering the intention of the parties
and the lex mercatoria. It confirmed that the law applicable to the scope and
effects of the clause was not necessarily the same as the law applicable to the
merits of the case. Its conclusion was similar to that of the Arbitral Tribunal:
16Supra, note 12 at 148.
7Art. 1502(1) Nouv. C.p.c.:
L’appel de la d6cision qui accorde la reconnaissance ou 1’ex~cution n’est ouvert que
dans les cas suivants:
1. Si I’arbitre a statu6 sans convention d’arbitrage ou sur convention nulle ou expire.
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Consid~rant que par une interpretation souveraine des conventions susvis~es et des
documents 6chang6s lors de leur n6gociation et de leur r6siliation, les arbitres ont
jug6, au terme d’une motivation pertinente et exempte de contradiction, que, sui-
vant la volont6 commune de toutes les socidt6s intdressdes, les soci6ts Dow
ces conventions
Chemical France et Dow Chemical Company avaient W parties
bien que ne les ayant pas mat&iellement signs, et que la clause compromissoire
leur 6tait dos lors applicable;
Qu’ils ont aussi fait accessoirement appel A la notion de groupe de socidtds dont
I’existence A titre d’usage du commerce international n’est pas s~rieusement con-
test~e par la demanderesse. 18
The reasoning of the Arbitral Tribunal and the Cour d’appel in the Dow
Chemical case raises several questions. Perhaps the first is whether, as Professor
Vasseur (one of the arbitrators) has suggested, 9 the result in Dow Chemical was
confined to the facts of the case. Certainly the analysis of the Cour d’appel on
the question of the law to be applied to the arbitration clause in order to deter-
mine its scope relied to a considerable extent upon the drafting of the terms of
reference. One wonders if the result would have been different if the arbitrators
had been directed to apply French law to resolve the dispute. In that case, would
the Cour d’appel have been more hesitant to sweep French law aside in relation
to the arbitration clause? Certain recent decisions of the Paris Cour d’appel on
non-signatories suggest not.2″
Three years later, the Cour d’appel of Pau, in a much criticised judgment,
followed the reasoning of the Paris Cour d’appel in Dow Chemical. In Sponsor
A.B. v. Lestrade,2” the group concept was applied to extend an arbitration clause
where a Swedish parent company sought to avoid arbitration in relation to an
option agreement signed by its French subsidiary. The option agreement had
been signed pursuant to an agreement between the parent company, Sponsor
A.B., and the shareholders of two French companies providing for the creation
of the French subsidiary and for the acquisition of shares in these companies.
In performance of this contract the French subsidiary bought 80 per cent of the
shares concerned and signed a put option agreement in relation to the balance.
When the option was exercised by the vendors, the French subsidiary did not
purchase the shares.
The option agreement contained an ad hoc arbitration clause providing for
arbitration with three arbitrators, pursuant to which the vendors of the shares
commenced arbitration proceedings against Sponsor A.B. and its French subsid-
iary. When both defendants failed to appoint an arbitrator, the plaintiffs filed an
application with the Tribunal de Commerce in Tarbes requesting appointment of
an arbitrator on their behalf. Instead of contenting itself with the appointment
of an arbitrator, the Tribunal de Commerce proceeded to deal with the jurisdic-
tional issue and ruled that Sponsor A.B. must be treated as a party to the arbi-
tration proceedings.
On appeal, the Cour d’appel of Pau held that since the French company
was a special purpose vehicle created for this acquisition, its parent company
18Supra, note 11 at 100-01.
19Supra, note 9, contribution of Prof. Vasseur in the debates at 496-98.
20See infra, text accompanying notes 41-54.
21Pau, 26 November 1986, [1988] Rev. arb. 153.
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had played an important role in the conclusion and in the non-performance of
the option contract. Sponsor was, in fact, the “tate pensante de la partie contrac-
tante,”‘ 2 or the party making the decisions. The Court then reproduced the rea-
soning of the Arbitral Tribunal in the Dow Chemical case verbatim, prefacing
this with the statement that the principle cited was accepted in law.’ Although
it was not in a position to rely on the ICC Rules, as were the Arbitral Tribunal
and the Paris Cour d’appel in Dow Chemical, the Court then referred to the lex
mercatoria, which in its view, recognised the economic reality of corporate
groups.
In the absence of a decision of the Cour de cassation on this point, the sug-
gestion of the Pan Cour d’appel that the Dow Chemical reasoning has been
accepted in law would seem premature. As several academics have commented,
this is only an “orientation de la jurisprudence.”24 Equally objectionable is the
fact that the Cour d’appel proceeded to examine the jurisdiction of the arbitra-
tors rather than leave it to them to define in the first instance. The Cour d’appel
should only look at such jurisdictional issues in the context of a recours en
annulation or a challenge to enforcement of an award.’
C. Autonomie of the Arbitration Clause
Perhaps more troublesome in its implications, however, is the disregard in
both cases of French law. Although the Paris Cour d’appel did not refer specif-
ically to the theory of the autonomie of the arbitration clause, it approved the
reasoning of the Arbitral Tribunal which cited it in support of its decision not
to apply French law. The Arbitral Tribunal appears to subscribe to the broadest
view of the autonomie theory, as it stated that the principle relates not only to
the validity of the clause, but also to its scope and effects and involves the appli-
cation of a law that is unique to the agreement to arbitrate. Prior to commenting
on this approach, it may be helpful to review briefly the jurisprudence relating
to the autonomie of the arbitration clause.
As indicated above, the foundations of this theory were laid in the decision
of the Cour de cassation in the Gosset case. In Gosset, an objection was raised
by a French party to the enforcement in France of an award of an Italian arbitral
tribunal rendered under Italian law. The French party argued that the contract in
question was void ab initio, as it was contrary to an import prohibition and
therefore ordre public. This, it was argued, also rendered the arbitration clause
contained in the agreement null and void. The Court dismissed the pourvoi on
the basis that, in the context of international arbitration, the arbitration clause
possesses a complete legal autonomy which precludes it from being affected by
the possible invalidity of the contract.26
221bid. at 156.
23Ibid.
24See A. Chapelle, Annotation of Pau, 26 November 1986, [1988] Rev. arb. 153 at 158; and
comments of Prof. Vasseur in Chapelle, supra, note 9 at 497.
25Chapelle, ibid.
26Supra, note 4 at 61: “une complte autonomie juridique, excluant qu’il [l’accord compromis-
soire] puisse etre affects par une 6ventuelle invalidit6 de cet acte.”
1992]
FRENCH LAW & ARBITRATION CLAUSES
The choice of words used in this decision is not without significance. The
result in the Gosset case is both logical and consistent with the concept of sev-
erability that is now accepted in most jurisdictions in relation to arbitration
clauses. However, the Cour de cassation did not use the word “severable”; it
said that the clause was autonomous. Some of the doctrine has taken this to
mean that a contract containing an arbitration clause consists of two contracts,
the main contract and the agreement to arbitrate which is a separate procedural
contract between the parties.27 The fact that the Cour de cassation in Gosset did
not apply Italian law to the question of the validity of the arbitration clause also
implied a possible disassociation of the law applicable to the main contract from
the law applicable to the agreement to arbitrate.
This disassociation appears to have been effected by the Cour de cassation
in Hecht v. SocigtJ Buisman’s.2s In Hecht, the Cour de cassation used the auto-
nomie concept to save the arbitration clause itself in an otherwise valid contract.
H-echt was an agent commercial in France who concluded a distribution contract
governed by French law with a Dutch party providing for distribution in France
of the latter’s products. The contract contained an ICC arbitration clause. Hecht
commenced proceedings in the French courts for rescission and damages under
the contract. The Dutch party objected on the basis of the arbitration clause.
Hecht argued that French law should be applied to the arbitration clause and that
this led to the conclusion that the clause was null and void, as he did not have
the status of a commergant.29
The Cour de cassation upheld the arbitration clause in a decision which
hinged upon the fact that this contract fell conveniently into the international
category. The rigidity of French law was disposed of with the observation that
the principle of the autonomie of an arbitration clause contained in an interna-
tional contract was not a rule of conflicts of laws, but rather a substantive rule
of law.” The Court concluded that the Cour d’appel had correctly upheld the
clause on the basis that an arbitration clause, in the international context, enjoys
a complete autonomy.3′
27H. Motulski, Annotation of Cass. civ. ire, 7 May 1963, (1963) 52 Rev. crit. dr. int. priv6 615
at 619.
2 8Cass. civ. Ire, 4 July 1972, [1974] Rev. arb. 89 [hereinafter Hecht].
29Although the status of an agent commercial is, in fact, open to debate, it should be noted that,
under French law, an arbitration clause contained in a contract to which a non-commergant is a
party is void. This is referred to in French law as a mixed civil/commercial contract (contrat mixte).
See supra, note 1.
30The precise term used by the court was “rbgle matdrielle.” There is some debate in the doctrine
as to whether the “rfgle matdrielle” identified by the Cour de cassation in Hecht is merely a rule
of French law which validates an arbitration clause contained in any international contract, or
whether it is a concept with broader implications. For example, Professor Goldman has suggested
that it might be viewed as a “rfgle de vdritable droit international, largement accueillie pour les
besoins du commerce international, par les nations qui y sont engagdes”. See B. Goldman, Anno-
tation of the decision of the Cour d’appel in Hecht, J.C.P. 1971.II.16927. We prefer the former
view. For an excellent analysis of this issue, see P. Francescakis, “Le principe jurisprudentiel de
‘accord compromissoire aprbs l’arr&t Hecht de ]a Cour de cassation” [1974] Rev.
l’autonomie de
arb. 67 at 83-86.
31The most salient passages of the judgment merit a careful reading (supra, note 28 at 89-90):
que par lui-meme, Ie caract~re international du contrat ne soustrairait pas non plus A Ia
loi frangaise la clause compromissoire dont l’autonomie ne constituerait pas une r~gle
McGILL LAW JOURNAL
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The Hecht case has been interpreted by the majority of the doctrine as
detaching the arbitration clause from the law of any state.32 It does so by pro-
posing a rule of law which effectively preserves the agreement to arbitrate in the
face of allegations of invalidity in any case where the contract is international.33
To the extent that obscurities in the wording of the Hecht judgment left any
doubts as to the detachment of an arbitration clause from all state laws, the deci-
sion of the Paris Cour d’appel in Menicucci v. Mahietau’ sought to eliminate
them. When invited to consider the validity of an arbitration clause contained
in a contract between two French nationals, one of whom did qualify as a con-
tnergant,35 for the distribution in North America of certain French products, the
Cour d’appel upheld the clause on the basis of its autonomie. The Court stated
that it was unnecessary for it to determine the law applicable to the main con-
tract; the concept of the autonomy of an arbitration clause in an international
contract implied that such clauses possess a validity which is independent of
any state law.36
This approach might be viewed as desirable in the circumstances of Hecht
and Menicucci. In these cases, the French courts were attempting to redress, in
the international context, problems raised by French domestic law which has
always regarded arbitration with suspicion.37 The question which must be
de conflit, mais une simple r~gle mat~rielle, 6trang~re au litige, postulant que ]a nullit6
6ventuelle du contrat principal n’atteint pas automatiquement ]a clause compromis-
soire; qu’en definitive, l’arrat attaqu6 se bornerait h d~duire hypothriquement du
caract&e international du contrat que les parties “ont pu” l’exclure de la loi franqaise,
m6connaissant ainsi la r~gle frangaise de conflit et refusant de tirer de ses propres con-
statations, selon lesquelles les parties avaient soumis leur convention a ]a loi frangaise,
les consequences qui s’en 6vinceraient;
Mais attendu qu’ayant relev6 le caractre international du contrat qui liait les parties
et rappel6 qu’en mati~re d’arbitrage international l’accord compromissoire prdsente
une complete autonomic, l’arr& attaqu6 en a justement d~duit que ]a clause litigieuse
devait en l’esp~ce recevoir application.
32See, for example, Franceskakis, supra, note 30 at 76.
33 0n the question of whether or not this is a rule of French law, see supra, note 30.
34Paris, 13 December 1975, (1977) 104 JDI 106 [hereinafter Menicucci].
35Supra, note 29.
36The relevant passage from the judgment is as follows (supra, note 34 at 108):
Considrrant que, sans qu’il y ait lieu en l’6tat de rechercher la loi applicable soit au
fond du contrat, qui d’ailleurs en matire de mandat serait celle du lieu de son execu-
tion, soit A l’instance arbitrale et la sentence, il suffit, pour accueillir l’exception d’in-
competence, de constater que, compte tenu de l’autonomie de la clause compromissoire
instituant un arbitrage dans un contrat international, celle-ci est valable indrpendam-
ment de Ia r6frrence
toute loi 6tatique.
The second ground of attack in the Menicucci case was the assertion that the contract containing
the arbitration clause was not international in nature as it was concluded between two French
nationals. For an interesting discussion of the application by the Cour d’appel of the economic cri-
teria established in Matter, supra, note 3, see t. Loquin, (1977) 104 JDI 108 at 108-10.
37An alternative approach to the problem would have been to revise art. 2061 of the Code civil
in order to remove restrictions on arbitration in “contrats mixtes”; the autonomie concept could
then be focused upon the severability aspect explored by the Cour de cassation in Gosset. It has
recently been observed that the rationale of Hecht and Menicucci has mainly served to get around
the problems posed by art. 2061 in civil and mixed contracts. When viewed from this perspective,
these cases can be seen as establishing a rule of French law applicable to arbitration clauses in
international contracts rather than as endorsing the theory of a contract without a law. See J.C.
1992]
FRENCH LAW & ARBITRATION CLAUSES
addressed in relation to the problem of groups of companies is whether the
approach used to save an arbitration clause in cases like Hecht and Menicucci
should be used to determine whether the clause should be extended to a party
that has not signed a contract. In the group situation, neither the contract nor the
agreement to arbitrate between the signatories of the contract is in peril.”
Doubts can even be raised as to whether the Dow Chemical reasoning is
entirely consistent with the broadest reading of the autonomie concept. The first
step of the analysis requires one to sever the arbitration clause from the rest of
the contract when the decision is taken not to apply French law. The second step
involves an examination of the intentions of the parties, and eventually leads to
the conclusion that the non-signatory companies were, for all intents and pur-
poses, de facto parties to the main contract. Once this is established, the final
step is to infer from this finding of fact that the non-signatory was also a party
to the arbitration clause (which was severed from the main contract at the out-
set). Admittedly, this is a somewhat tricky exercise as the only indicia that
would support a finding of an agreement to arbitrate on the part of parties who
have not signed the main contract is circumstantial and necessarily related to the
latter.
The consequences of this analysis are potentially unsatisfactory. The arbi-
tration clause is said to apply to disputes between non-signatories and parties
because the non-signatories are parties to the contract. Does this mean that they
will be treated as parties when the arbitrators examine the merits of the case?
If French law is not applied to this question in the context of defining the scope
of the arbitration clause, one could end up with two different regimes governing
l’effet relatifdes contrats: one for French law contracts39 which contain an arbi-
tration clause, and another for those which do not. Such a result would obvi-
ously be unsound.40
In a series of more recent cases, the Paris Cour d’appel has continued to
link the question of the scope of an arbitration clause to the theory of its auto-.
nomie. In the context of these cases, the Cour d’appel has developed a broad
principle which it has presented in the form of a standard paragraph of reason-
ing reproduced in each case in almost identical terms.
In Korsnas Marna v. Socijtj Durand-Auzias,4′ a French subsidiary of a
Swedish company (Duran-Auzias) commenced proceedings before the Paris
Dubarry & E . Loquin, “Tribunaux de commerce et arbitrage” (1991) 44 Rev. trim. Droit com. 574
at 578.
38However, one could say that the existence of both the main contract and the agreement to arbi-
trate is in peril with respect to one or more of the parties involved.
39The general principle of French law applicable to such questions is set forth in art. 1165 of
the Code civil.
40Perhaps the way to reconcile the Dow Chemical analysis with the autonomie concept and avoid
this conceptual problem would be to view the finding that the non-signatories were parties to the
agreement to arbitrate as a preliminary matter which does not preclude a re-examination of the
question under the governing law of the contract when the merits of the case are considered.
41Paris, 30 November 1988, [1989] Rev. arb. 691 [hereinafter Korsnas Marma].
REVUE DE DROIT DE McGILL
[Vol. 37
Tribunal de Commerce on the basis of a contract which provided for distribution
of products of another Swedish company (Korsnas Marna). The contract in
question had been entered into by the parent company of Durand-Auzias (Bark-
man) with Korsnas Manna and referred to the French subsidiary as its “Paris
office.” The contract was terminated and, when Durand-Auzias was given
notice, it sued Korsnas Marina for an indemnity. The latter argued that the
French courts did not have jurisdiction to hear the matter as there was an arbi-
tration clause in the contract.
For a variety of reasons, the Tribunal de Commerce decided that Durand-
Auzias was not a party to the contract between Barkman and Korsnas Marina
and that it therefore had jurisdiction to hear the matter. Korsnas Marina
appealed to the Paris Cour d’appel, which overruled the decision of the Tribunal
de Commerce. The principle applied by the Cour d’appel to justify its reasoning
was formulated as follows:
Considrrant que ]a clause compromissoire ins~re dans un contrat international a
une validit6 et une efficacit6 propres qui commandent d’en 6tendre l’application
aux parties directement impliqu6es dans l’exdcution du contrat et dans les litiges
qui peuvent en r6sulter, des lors qu’il est 6tabli que leur situation et leurs activitds
font pr6sumer qu’elles ont eu connaissance de l’existence et de ]a port~e de ]a
clause d’arbitrage, bien qu’elles n’aient pas 6t6 signataires du contrat la stipulant. 42
Applying this principle to the facts, the Court determined that the claim of
Durand-Auzias came within the scope of the arbitration clause. The French sub-
sidiary had, in fact, been performing the contract which contained the arbitration
clause. Having been referred to as the “Paris office” of Barkman one could, in
the circumstances, presume that Durand-Auzias was aware of the arbitration
clause. In the final paragraph of its judgment, the Court specified that the ques-
tion of the law applicable to the merits of the case was distinct from that of the
“comp6tence internationale de la juridiction frangaise saisie,”‘ which was the
only issue raised by the appeal.
The principle applied by the Cour d’appel in the Korsnas Marma case con-
cerning the scope of application of an arbitration clause was cast in broader
terms than its reasons in the Dow Chemical case, or indeed those of the Arbitral
Tribunal. In the Dow Chemical case the Cour d’appel was content to affirm the
approach taken by the Arbitral Tribunal, based upon the intention of the parties
and the lex mercatoria, once it had satisfied itself that the Arbitral Tribunal was
not obliged to apply French law to resolve the problem. At least three significant
differences can be observed in this case. First, the Court has expressed the auto-
nomie concept in terms of a “validit6 et une efficacit6 propres,” an equally
vague, but perhaps further reaching concept. Second, although this was a cor-
porate group situation, there is no reference in the judgment to the groupe de
socitjs theory.44 Instead, the Court defined a principle that appears to apply to
42Ibid. at 694.
41bid.
44In Dow Chemical the group concept was tied to the application of the lex mercatoria, referred
to specifically in the ICC Rules; the arbitration clause in the Korsnas Manna case did not refer
to the ICC Rules of Arbitration and this may explain the omission.
1992]
FRENCH LAW & ARBITRATION CLAUSES
any person or entity directly involved in the performance of a contract in cir-
cumstances that would enable one to assume that they were aware of the arbi-
tration clause, regardless of whether they have signed it. Thus, the third differ-
ence is the lack of a direct reference to the volontg or intention of the parties and
the emphasis on circumstances that would permit one to presume that the party
which has not signed the contract was aware of the existence and meaning of
the arbitration clause.45
Almost identical wording has appeared in at least three further judgments
of the Paris Cour d’appel. A specific reference to the groupe de socigt~s theory
accompanied this paragraph of reasoning in the decision of the Cour d’appel in
Orri v. Socit6 des Lubrifiants Elf-Aquitaine.46 Mr. Orri was a Saudi business-
man who owned several companies, each of which operated a ship, comprising
the group Saudi Europe Lines (SEL). Elf had supplied certain products to com-
panies within the group and some of its invoices remained unpaid. In the context
of negotiations between Mr. Orri and Elf regarding the unsettled invoices, two
documents were signed: first, a document acknowledging the debts and provid-
ing for a rescheduling of payments was signed by Mr. Orri, and second, a con-
tract providing for the sale of further products to SEL was signed on behalf of
“Saudi Europe Lines SA” by another individual. This signature appeared next
to Mr. Orri’s name, which had been crossed out. Only the second document con-
tained an arbitration clause. When Elf eventually commenced arbitration pro-
ceedings against Mr. Orri and SEL for non-payment of the debts, Mr. Orri
argued that the arbitrators had no jurisdiction to consider claims against him as
he had not signed the second contract. The arbitrators assumed jurisdiction and
were upheld by the Cour d’appel.
Of the various reasons47 provided by the Court in support of its decision,
one would have sufficed: the interposition of a third party as a signatory of the
second contract which contained the arbitration clause. The Court held that, in
reality, the counterparty to the second contract was Mr. Orri. Apparently under
Saudi law, SEL was just a trade name and none of the relevant companies had
separate legal personality. The Court went so far as to find that the substitution
of the third party who signed the contract on behalf of SEL was a fraudulent act
designed to shield Mr. Orri from liability under the contract. The Court’s rea-
45The suggestion that an arbitration clause might be applied in relation to a party that is aware
of the existence and meaning of an arbitration clause, has recently surfaced in a decision of the
Cour de cassation relating to incorporation of an arbitration clause by reference to a document
where it is set forth. See Sociitj Dreistern Werk v. Socidtj Crouzer, Cass. civ. Ire, 26 June 1990,
[1991] Rev. arb. 291. This is to be contrasted to the approach taken to this problem in SociWtj
Bomnar Oil NV v. ETAP, Cass. civ. Ire, 11 October 1989, [1990] Rev. arb. 136. Enforcement of an
arbitration clause on the basis of implied acceptance is easier to justify in the case of incorporation
of a clause by reference, as one is in the presence of parties who have at least signed the main con-
tract and the debate is really over its terms.
46 Paris, 11 January 1990, (1990) 118 JDI 141.
47The Cour d’appel (ibid.) advanced three reasons to justify the arbitrators’s jurisdiction. First,
it held that the two contracts formed part of an indivisible ensemble. Second, it concluded that Mr.
Orri was the real counterparty to the contract containing the arbitration clause. Third, it stated that
Mr. Orri should be treated as a party to the contract by application of the groupe de socigts theory.
McGILL LAW JOURNAL
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soning in relation to the autonomie of an arbitration clause and groupe de socid-
tis was therefore superfluous.48
Not all of the Cour d’appel decisions have involved groups of companies.
In Socidtj Ofer Bros v. The Tokyo Marine & Fire Insurance Co.,49 an arbitration
clause contained in a charterparty was applied to cover claims made against a
carrier on the basis that a bill of lading, which referred to the charterparty, was
signed by the ship’s captain who also affixed the carrier’s stamp to the docu-
ment. This was more a problem of transfer of an arbitration clause and incor-
poration by reference than extension of it to a non-signatory. 0
In another shipping case, Compagnie Tunisienne de Navigation (Cotunav)
v. Socijtj Comptoir Commercial Andre”i the Cour d’appel’s principle was used
to justify the application of an arbitration clause to claims brought against a car-
rier designated under an agreement for food aid between the French and Tuni-
sian governments. Among the documents forming the agreement was a “cahier
des charges” which established terms for companies participating in the pro-
gramme. An arbitration clause was included which submitted all disputes
between the agent of the country of destination of the goods and the exporter
to the Chambre Arbitrale de Paris. Comptoir Commercial Andr6, which was
selected by the French government to deliver wheat, commenced arbitration
proceedings against Cotunav in relation to a dispute between them over desig-
nation of a ship. Cotunav challenged the jurisdiction of the Arbitral Tribunal on
the basis that it had not signed the agreement concerned. When the Arbitral Tri-
bunal assumed jurisdiction and ordered Cotunav to pay damages, the latter
brought a recours en annulation before the Paris Cour d’appel. Applying its
now “standard” paragraph of reasoning, the Court held that, in agreeing to be
the transporter, Cotunav had accepted the terms set forth in the agreement
including the arbitration clause.
Cotunav then brought a pourvoi before the Cour de cassation on the same
ground.52 The Cour de cassation dismissed the case, but said nothing of the
autonomie of the arbitration clause. It affirned that the arbitration clause did
apply to the claim against Cotunav, but for the sole reason that, in agreeing to
perform the contract, Cotunav had ratified it.53
The facts of Cotunav were unusual, as the case involved adherence to a
contract negotiated between two governments. This, however, made it an easy
48There is support for this analysis in the admirable commentary on the case by B. Audit, (1991)
118 JDI 145.
49Paris, 14 February 1989, [1989] Rev. arb. 695 at 696.
501n view of the fact that this case involved a problem of “transmission,” as opposed to the valid-
ity of the arbitration clause, it is difficult to understand why the Cour d’appel found it necessary
to rely upon the “autonomie” concept to affirm that the clause applied to claims against the carrier.
For an excellent critique of this approach see the note of P. Mayer, [1989] Rev. arb. 698, esp. at
707-08.
51Paris, 28 November 1989, [1990] Rev. arb. 68 [hereinafter Cotunav].
52Cass. civ. Ire, 25 June 1991, [1991] Rev. arb. 453.
53Referring to the finding of the Cour d’appel that, in accepting the job of carrier, Cotunav had
necessarily subscribed to the terms of the agreement, the Cour de cassation stated that, on the basis
of this reason only, the Cour d’appel had legally justified its decision (ibid. at 454).
1992]
FRENCH LAW & ARBITRATION CLAUSES
case to decide and the Cour d’appel clearly went much further than it had to
when it based its decision on the “validit6” and “efficacit6 propres” of an arbi-
tration clause. It would be premature to conclude that the Cour de cassation will
not, in any circumstances, endorse the use of the autonomie theory to resolve
questions relating to the scope, as opposed to the validity of an arbitration
clause. However, the Court does appear to prefer an approach which is consist-
ent with principles of French contract law.
Even in relation to problems of validity, the Cour de cassation has recently
drawn a distinction between questions of form which relate to the existence of
an arbitration clause and other validity issues such as those raised in Gosset and
Hecht. In Socijtj L&B Cassia v. Socit6 Pia Investments,’4 the Cour de cassa-
tion affirmed a decision of the Paris Cour d’appel” which held that there was
no agreement to arbitrate where the arbitration clause was contained in a con-
tract which had been initialled, but not signed. The Cour d’appel had taken a
conflictual approach to the question and examined rules as to form and validity
of a contract both under its proper law (Pakistan) and under the law of the lex
fori (France). The Cour de cassation approved the conflictual approach to the
problem, stating that the principle of the autonomie of an arbitration clause finds
its limit when the existence of the contract containing the clause is at issue. This
question must be resolved by application of the law of the state selected by rules
of conflicts of laws.56
In the decisions of the Cour de cassation on the autonomie of an arbitration
clause, one does note a certain progression of thought which led the Court to
formulate in more ambitious terms in each subsequent case, a new rule of
French law (“r~gle matrrielle”) to be applied in relation to arbitration clauses
contained in international contracts. This tendency has been referred to by Pro-
fessor Francescakis as ‘Teffet d’entrainement”T: once an opening had been
made in the Gosset case, the Court found itself propelled along a course which
obliged it to take this principle to its logical conclusions. The Cour d’appel has
attempted to pursue the same course. It may be that the Cotunav and Pia Invest-
ments cases will be the first in a series which establishes the limits.
D. The Role of the Will of the Parties
There is no real consensus in the doctrine as to how the groupe de socigtis
problem should be approached, nor even as to the basis of the decisions
54Cass. civ. Ire, 10 July 1990, [1990] Rev. arb. 857 [hereinafter Pia Investments].
55Paris, 26 February 1988, [1990] Rev. arb. 851.
56The Cour de cassation summarised the reasoning as follows (supra, note 51 at 859):
Mais attendu qu’en mati~re d’arbitrage international, l’autonomie de la clause compro-
missoire trouve sa limite dans l’existence, en la forme, de la convention principale qui
contiendrait la clause invoqu~e; que cette existence doit nrcessairement s’apprcier
d’apr~s la loi qui, selon les principes du droit international priv6, rrgit la forme de Ia
convention; que l’arrt attaqu6, apr~s avoir rappel6 le principe d’autonomie, a 16gitime-
ment apprrci6 l’existence de la clause compromissoire en fonction d’une loi dtatique
drsign~e par la rfgle de conflit sans encourir les griefs du moyen qui, d~s lors, n’est
pas davantage fond6.
For an interesting critical analysis of this decision see Dubarry & Loquin, supra, note 37 at 578.
57Franceskakis, supra, note 30 at 72.
REVUE DE DROIT DE McGILL
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extending the application of arbitration clauses to companies within a group.
Professor Fadlallah, in his review of the problem for the Comiti Frangais de
Droit International Privg,58 identified the intention of the parties as the basis of
the arbitral and judicial decisions on this issue, rather than the recognition of the
economic relationship between companies that form a group. Extension of the
scope of an arbitration clause on the basis of the intention of the parties is pre-
sented by Professor Fadlallah and other French academics as the “classic”
approach. Although the accord de volontis is the “classic” analysis used in
French law in relation to formation of contracts, one can still question whether
it provides a “classic” solution in this context.
In many group scenarios, the extension of the scope of an arbitration clause
to non-signatories on the basis of the will of the parties is a fiction. Consider,
for example, the rather common situation where a parent company negotiates a
contract on behalf of a subsidiary and, in order to exclude its own liability, it
deliberately ensures that only the subsidiary is a signatory to the contract. It
would be somewhat disingenuous to permit the parent company to commence
arbitration proceedings against the subsidiary’s counterparty on the ground that
this reflected the will of the parties. Yet the Dow Chemical award identifies par-
ticipation of a non-signatory in the negotiation of a contract as one of the factors
which may support a finding that the parties intended to treat the non-signatory
as a party to the contract. Surely the desire to be treated as a party after the fact,
and against a backdrop of objections from the other side, does not constitute a
meeting of the minds or an accord de volontis.
Similarly, one might ask whether the theory of the will of the parties may
be used to justify the commencement of arbitration proceedings against the par-
ent company in the situation described above. The facts would again defy this
conclusion. However, if it could be demonstrated that the parent company had
in some way participated in the performance of the contract, or had taken most
of the subsidiary’s decisions relating to the contract, a finding that it was a de
facto party might be substantiated. The apparent will of the parties, gleaned
from the behaviour of the parent company, is perhaps a good reason to extend
the clause.59 As Professor Fouchard has suggested, the concepts of “maitre de
l’affaire” or “dirigeant de fait” are well known in French law.’ Their application
in this context might be more appropriate than the use of an artificial interpre-
tation of the will of parties. Extension of the arbitration clause would then
become a sanction where one is probably warranted.
It is submitted that this analysis provides the most compelling alternative,
but it is not exempt from conceptual difficulty. Theories such as “apparence”
(creating the appearance of being a party to a contract) and “dirigeant de fait”
(actual involvement in decision-making) are probably founded in quasi-delict,
rather than contract. These concepts could, therefore, only be used to justify
extension of an arbitration clause to a non-signatory if the clause is viewed as
58Supra, note 10 at 118.
59Some support for this position can be found in the comments of Prof. Lagarde in Fadlallah,
supra, note 10 at 129, and Prof. Fouchard in Chapelle, supra, note 9 at 500.
60in Chapelle, ibid. at 500.
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FRENCH LAW & ARBITRATION CLAUSES
a separate procedural contract which establishes the right to commence proceed-
ings (as distinguished from the cause of action itself).6 A rule of law would
have to be developed to permit extension of the agreement to arbitrate in these
special circumstances as an exception to the unusual requirement of an agree-
ment between the parties.
This approach would necessitate a two-step analysis: first, the arbitrators
would have to examine the question as to who should be treated as a party to
the agreement to arbitrate; second, whilst considering the merits of the case, the
arbitrators would have to determine the nature of the cause of action against
each defendant. Where the sanction approach is used, the arbitral tribunal would
be called upon to consider claims founded in both contract and quasi-delict.62 At
each stage of the analysis French law should be applied if it is the governing law
of contract.
The policy argument that would support the extension of an arbitration
clause on the basis of such quasi-delictual concepts stems from the obvious
advantages of consolidating proceedings. 63 Parallel proceedings before an arbi-
tration tribunal and the state courts could lead to conflicting decisions. It may
be that the risk of this problem, combined with the deliberate intervention of a
company within a group in a contractual relationship which provides for dispute
resolution by means of arbitration, presents a good enough reason to enforce the
arbitration clause against a non-signatory.
E. Application of the Lex Mercatoria
The extent to which one may rely upon usages or the lex mercatoria as a
reason for extending the scope of an arbitration clause is a much debated point.
This discussion is usually focused upon the Dow Chemical case and the refer-
61Some support for this analysis of the nature of an arbitration clause can be found in the com-
ment of Dean Loquin in the discussion following J.L. Goutal, “L’Arbitrage et les Tiers: I – Le
Droit des Contrats” [1988] Rev. arb. 439 at 472.
panying note 69.
62See the discussion on the scope of arbitration and claims in quasi-delict, infra at text accom-
63 The problem of consolidating proceedings has been considered by the French courts in the
context of groups of contracts involving the same parties, or some of the same parties, where the
contracts contain arbitration clauses. The somewhat restrictive approach taken by the courts is well
illustrated by the decisions of the Paris Cour d’appel (19 December 1986, [1987] Rev. arb. 359),
the Cour de cassation (8 March 1988, [1989] Rev. arb. 481) and the Cour d’appel of Versailles (7
March 1990, [1991] Rev. arb. 326: renvoi from the Cour de cassation quashing the decision of the
Paris Cour d’appel relating to ICC arbitration proceedings commenced by SOFIDIF, COGEMA
and EURODIF against OIAETI and OEAI). The proceedings were commenced on the basis of
three different arbitration clauses: (1) a clause providing for French law arbitration in Paris; (2) a
clause providing for French law arbitration in Geneva and (3) a clause which did not establish the
governing law, nor the place of arbitration. It was ultimately decided that differences in the three
clauses suggested a lack of intention on the part of the parties to consolidate proceedings. This less
imaginative approach to the question of the will of the parties contrasts greatly with the groupe
de socidtjs cases. It also suggests a reluctance on the part of the French courts to accept arguments
based on consolidation. In contrast to this, however, see the decision of the Paris Cour d’appel in
KIS France SA v. Socijtj Gingrale, 31 October 1989 (unpublished) where a group of contracts
concluded by various companies within two distinct groups resulted in a single arbitration
proceeding.
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ence to the lex mercatoria in the decision of the Cour d’appel. Some commen-
tators have taken the view that usages have been relegated by the Cour d’appel
to a position which is subordinate to the will of the parties; the concept of
groups of companies as a usage is only considered in the process of attempting
to identify the will of the parties. To proponents of the application of the lex
mercatoria, like Professor Berthold Goldman,’
this analysis effectively identi-
fies the will of the parties as the sole basis of the decision. Professor Goldman
is correct, but it is submitted that reference to usages in this context, as a jus-
tification for extension of an arbitration clause, should be undertaken with great
care, if at all.
Groups of companies are not constructed in order to make their compo-
nents interchangeable. Since isolation of liability is just as much a usage as eco-
nomic unity or common control, which usage does one choose to recognise? It
would not be uncommon to find that they are all present in a given situation.
One detects a certain tone of morality in the assertion that the usage of groups
of companies should be employed to combat the problem of subsidiaries being
used to shield parent companies from liability for the consequences of their own
decisions.65 However, as Professor Lagarde”6 has suggested, morality only
works as a justification when a non-signatory is being pursued; this result can
be achieved through the application of the theory of the maitre de l’affaire or
l’ingrence.
The groupe de sociitis problem is, in our view, one which relates primarily
to the effects of a contract (l’effet relatif des contrats). It is generally resolved
by identifying the parties to the contract, and this is a matter which should be
determined by application of its governing law. Where this is French law, reco-
gnised principles such as agency and ratification should be applied. As sug-
gested above, in appropriate cases, extra-contractual principles such as appar-
ence or gestion de fait may also justify extension of the arbitration clause.
Where extension of an arbitration clause cannot be justified on the basis of truly
“classic” concepts, it should not be extended.
One of the implications of this analysis worth noting is that, unless one can
find that a non-signatory party involved in the negotiation of a contract was rep-
resented by its signatory, participation in the negotiations will never, by itself,
be sufficient. Application of the concept of agency will usually lead to the con-
clusion that the non-signatory represented the company which signed the con-
tract. The assumption of obligations under the contract or participation in
decision-making in relation to the contract may, however, be sufficient in some
cases.
F. The Reasons of the Arbitral Tribunal in ICC Case No. 6519
The test applied by the Arbitral Tribunal to determine the scope of the arbi-
tration clause was inspired by the Dow Chemical case, although it did vary the
64See comments of Prof. Goldman in Fadlallah, supra, note 10 at 125.
651bid. at 126, 129.
66Supra, note 59.
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FRENCH LAW & ARBITRATION CLAUSES
formula slightly. In the Tribunal’s view, an arbitration clause may only be
extended to cover claims made by or against companies within a group if the
non-signatory company was represented expressly or impliedly by the company
that signed the relevant contract, if it played an active role in the negotiation of
the contract, or if it was “directly concerned” by it. It will be noted that, rather
than referring to involvement in the performance of the contract, the Tribunal
has proposed the broader test of being “directly concerned” by it.
In relation to the first two plaintiffs, Companies XC and XD, the Tribunal’s
decision appears to be correct. The extent of their involvement in the transaction
was limited to that of having their shares transferred by Mr. X and certain other
companies that he controlled to Company XB. Companies XC and XD did not
acquire any rights or assume any obligations under the contract. Regardless of
whether one applies the groupe de socigts theory or classic principles of French
law, the answer to this question is undoubtedly that they could not avail them-
selves of the arbitration clause.
The Tribunal’s reasoning in relation to Company XB is more vulnerable to
criticism. This part of the award is somewhat confused as it appears to rely on
both the groupe de socigtis theory and the fact that Company XB was a third
party beneficiary under the contract (biniflciaire of a stipulation pour autrui),
two analyses which, it is submitted, are incompatible. The Dow Chemical
approach requires a conclusion that the non-signatory was de facto party to the
contract. This cannot be reconciled with a finding that the Company was a third
party beneficiary under the contract.
Even if one accepts the groupe de socijtjs approach, the Arbitral Tribu-
nal’s application of the theory may be incorrect. From the recital of the facts,
it appears that the contract in question was essentially a joint venture agreement.
Company XB may have been, as the Tribunal stated, at the heart of the scheme,
but it was merely a vehicle. The fact that, in its role as vehicle, it was to receive
substantial assets could only support a finding that it was a third party benefi-
ciary and, therefore, not a party to the contract. The Tribunal’s substitution of
the criterion that the non-signatory company be “directly concerned” by the
contract for the Dow Chemical test of involvement in performance of the rele-
vant contract, which suggests an assumption of obligations thereunder, does not
resolve the problem. Each test is designed to lead to the conclusion that the
company in question was a party to the contract and therefore a party to the arbi-
tration clause.
If one disregards the groupe de socijt4s aspect of the reasoning, the Tribu-
nal also seems to have erred in its use of the third party beneficiary concept as
a basis for extending application of the arbitration clause. In Bisutti v. Socijtj
Financire Monsigny (Sefimo),67 the Cour de cassation held that a third party
beneficiary could not avail itself of an arbitration clause contained in the con-
tract which establishes its rights as beneficiary.
67Cass. corn., 4 June 1985, [1987] Rev. arb. 139 [hereinafter Bisutti].
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The facts of the Bisutti case are perhaps worth mentioning. In a contract
between Madame Bisutti and another party for the sale of certain shares, a por-
tion of the shares to be sold were to be transferred by Madame Bisutti to Sefimo.
When the latter refused to pay for the shares, Madame Bisutti commenced pro-
ceedings before the Tribunal de Commerce. In an attempt to avoid the suit,
Sefimo invoked the arbitration clause contained in the contract which estab-
lished its right to the shares as third party beneficiary. This argument was
accepted by the Tribunal de Commerce and the Versailles Cour d’appel. The
Cour de cassation rejected it on the basis that the arbitration clause only bound
“le stipulant et le promettant. ‘ 6S
Under French law, a stipulation pour autrui confers upon the beneficiary
the right to receive what he has been promised. Once the promise has been
accepted by the beneficiary, it becomes a right which he may enforce. 69 As a
third party beneficiary does not assume any obligations under the contract, it has
been a long-settled point that an arbitration clause cannot be asserted against
him. Some of the doctrine has argued that a third party beneficiary should be
permitted to invoke an arbitration clause to enforce his rights. The argument
advanced in support of this position is that the arbitration clause attaches itself
to the clause containing the promise as a term relating to the manner in which
it may be enforced. This may be what the Tribunal meant when it stated at the
end of the section of its award dealing with this issue, that the arbitration clause
formed with the rest of the agreement an indivisible whole. This argument
appears to have been rejected by the Cour de cassation. Furthermore, if the
groupe de socigtis theory relies upon the autonomie of the arbitration clause,
this statement clearly contradicts it.
M. The Second Challenge: Application of the Arbitration Clause to
Claims Framed in Quasi-Delict
The contract that the Arbitral Tribunal was invited to consider was one
which had been duly concluded, but had never entered into force. Liability in
relation to a contract which has lapsed for failure of conditions precedent takes
one across the rather ill-defined border in French law between contract and
quasi-delict. Faced with allegations that Company Y’s withdrawal from the
transaction prevented the condition relating to exchange control from being ful-
filled, the Tribunal decided that it had jurisdiction even though the claim was
framed in quasi-delict. Its decision was founded principally upon the proposi-
tion that an arbitral tribunal has jurisdiction to examine delictual and quasi-
delictual liability when it is related to the conclusion or performance of a con-
tract containing an arbitration clause.
An analysis of the Tribunal’s reasoning requires one to distinguish two
issues. The jurisdiction of the arbitrators to hear the matter in view of the fact
681bid. at 140.
69Art. 1121 of the Code civil; P. Malaurie & L. Aynes, Cours de droit civil: les obligations, 2d
ed. (Paris: Cujas, 1990) at 366; H.L. Mazeaud, J. Mazeaud & F. Chabas, Obligations: Thiorie
Ginirale, 7th ed. (Paris: Montchrestien, 1985) at 888-89, 891-93.
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FRENCH LAW & ARBITRATION CLAUSES
that the contract had lapsed must be viewed as a separate and distinct question
from that of the scope of their jurisdiction. On the first point, the recent decision
of the Cour de cassation in Socitd Navimpex Centrale Navala v. Soci&t6 Viking
Trader70 has determined that, on the basis of the autonomie of the arbitration
clause, an arbitral tribunal may assume jurisdiction over a dispute related to the
conclusion of a contract which has never come into force. The theory of auto-
nomie, then, would clearly justify the investiture of the Arbitral Tribunal in the
present case. Although in the Navimpex arbitral award liability was founded in
quasi-delict, the Cour de cassation was not called upon to consider the question
of the scope of the Arbitral Tribunal’s jurisdiction, as the Cour d’appel held that
liability was actually sustainable in contract.
In his comments on this decision, Professor Goldman has suggested that an
arbitral tribunal is competent to consider any delicts or quasi-delicts committed
in connection with the conclusion, performance or the termination of a con-
tract.7′ This is a compelling argument, particularly in the present case, given that
the parties have expressed a desire in the contract that they concluded to resolve
at least certain disputes related to the contract through the process of arbitration.
However, one is not dispensed, as the arbitrators in the present case suggested,
from examining the clause itself in order to determine its scope.
An arbitral tribunal’s jurisdiction72 to define the limits of its own jurisdic-
tion, referred to in France as the “comp6tence-comp6tence,” necessarily
includes the power to interpret the arbitration clause. Generally, an arbitral tri-
bunal’s findings on matters of interpretation of a contract cannot be disturbed
by the Cour d’appel unless they result in some distortion of its terms. This is
not the case, however, with regard to questions of the arbitral tribunal’s jurisdic-
tion. The Cour de cassation has confirmed that, in the context of a recours en
annulation or a challenge to the enforcement of an arbitral award, the Cour
d’appel must itself interpret the relevant contract in order to determine whether
the arbitral tribunal had jurisdiction to hear the matter.” The interpretation of the
Cour d’appel will not be reversed by the Cour de cassation except where it is
manifestly incorrect.
Although they are not numerous, some examples can be found in the juris-
prudence of judicial interpretation of an arbitration clause. In Socit6 Merle et
Cie v. SFEIC,74 the Cour de cassation held that, due to the presence of an arbi-
tration clause, the Tribunal de Commerce must decline jurisdiction in relation
to a quasi-delictual claim founded upon the improper issue of a protet. The pro-
tet had been served on the purchaser of certain goods by the unpaid vendor,
70Cass. civ. Ire, 6 December 1988, [1989] Rev. arb. 641 [hereinafter Navimpex]. This case is to
be contrasted with Pia Investments, supra, note 54, where the contract did not come into existence
because it was not properly formed.
71See B. Goldman, Annotation of Cass. civ. Ire, 6 December 1988, [1989] Rev. arb. 642 at 651.
72Although this is more or less a universally accepted principle, authority for the “competence-
compdtence” of the Tribunal can be found in art. 1466 of the Nouveau Code de procedure civile
and in art. 8(3) of the ICC Rules of Arbitration.
73Cass. civ. Ire, 6 January 1987, (1987) 114 JDI 638 at 639.
74Cass. com., 11 October 1954, [1955] Rev. arb. 58 [hereinafter Socidti Merle].
McGILL LAW JOURNAL
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which had allegedly failed to respect the terms of the contract. Unfortunately the
judgment does not provide the exact wording of the arbitration clause that was
considered, but the clause appears to have referred at least to disputes relating
to performance of the contract. In response to the argument that the issue of a
protet was an act external to the contract, the Court stated that the arbitration
clause would cover any difficulty arising out of the performance of the
agreement.
A similar liberal approach was taken by the Paris Cour d’appel in BRGM
v. Patino International N. V 75 An arbitration clause submitting all disputes aris-
ing out of the agreement to arbitration was held to cover a quasi-delictual claim
to the effect that the defendants had fraudulently prevented the plaintiffs from
exercising certain of their rights under the contract. The Patino case can prob-
ably be cited as authority for the proposition that, where an arbitration clause
is broadly drafted, any quasi-delictual or delictual claims related to the perform-
ance of the contract containing the clause may be submitted to arbitration.76
When asked to construe more narrowly drafted arbitration clauses, the
French courts have, in some instances, been less generous in their interpreta-
tions. There are indeed some cases which suggest that an arbitration clause
should be interpreted restrictively, meaning that the power of an arbitral tribunal
is limited to the literal meaning of the words used in the arbitration clause.77 For
example, the Paris Cour d’appel quashed an award where the arbitrators, with
powers to hear disputes relating to the interpretation of a contract, had granted
the plaintiffs the remedies of rescission and damages.78 The Court reasoned that
the conferment of powers to interpret the contract meant that the arbitrators
could only define the obligations of the parties which gave rise to the dispute,
but they could not sanction a breach of those obligations.
Another regrettable example in the jurisprudence concerns a clause identi-
cal to the one in the ICC case being examined: the arbitrators were given juris-
diction over all disputes related to the interpretation and/or performance of the
contract concerned. In Dame Krebs v. Milton Stem 79 arbitrators with powers of
an amiable compositeur had awarded damages to the plaintiff on the basis that
the defendant’s reliance upon a rather harsh clause in the contract constituted an
abus de droit. This reasoning was upheld by the Paris Cour d’appel. However,
the Cour de cassation found that the Paris Cour d’appel had erred in not requir-
ing the arbitrators to examine whether or not the relief requested on this basis
was founded in quasi-delict and therefore outside the scope of the arbitration
clause. The Court did not provide any further guidance as to the meaning of the
75paris, 11 December 1981, [1982] Rev. arb. 31 [hereinafter Patino]. Note that the Avocat gdnl-
ral in this case, J.C. Lecantz, cited in his “conclusions” the decision of the Cour de cassation in
Socigtj Merle, supra, note 74 and recommended that it be followed. See D.1982.Jur.387 at 388.
761ndeed, Prof. Goldman has cited it for this proposition. See Goldman, supra, note 71 at 651.
We would only point out that the clause in the Patino case was very broadly drafted and easily
lent itself to this conclusion.
77Juris-classeur droit international, “Arbitrage commercial international,” fasc. 586-2, par B.
7 Sparis, 25 January 1972, Quijano Aguero v. Marcel Laporte, [1973] Rev. arb. 158.
79Cass. civ. Ire, 16 June 1976, [1977] Rev. arb. 272.
Goldman, r 45.
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FRENCH LAW & ARBITRATION CLAUSES
clause. The least that can be said is that this decision is difficult to reconcile
with the Socit Merle decision cited above.
In the present case, the Arbitral Tribunal only examined the arbitration
clause as a subsidiary point in its reasoning. The Tribunal took the view that the
allegation that Company Y had prevented the contract from being performed
brought the plaintiffs’ claims within the purview of the arbitration clause.
Quasi-delictual prevention of the contract from coming into force was therefore
equated with a dispute arising out of the performance of the contract.
The wording of the arbitration clause in this case was unfortunate and the
Arbitral Tribunal was clearly stretching it in order to establish its jurisdiction.”s
Given the current state of French law, this issue might have formed the
basis of a successful jurisdictional recours en annulation.81 On a policy level,
however, we would suggest that it is inappropriate for the courts to construe an
arbitration clause very narrowly or literally where it is clear that such an agree-
ment exists between the parties,’ as was done in the cases cited above. If the
parties have agreed to resolve disputes relating to the contract by arbitration,
this should, as Professor Goldman has suggested, be considered to include
claims in delict or quasi-delict which are related to the conclusion, performance
or termination of the contract.
In its examination of the quasi-delictual claims in the present case, the
Arbitral Tribunal applied the law of the contract to resolve them. In the arbitra-
tion context, claims in quasi-delict can give rise to difficulties in applying rules
of conflicts of laws. A discussion of these difficulties is obviously beyond the
scope of this paper; however, as a final observation, we would endorse the Arbi-
tral Tribunal’s application of the law of the contract to the claims in quasi-delict,
which would appear to be in line with several cases on the subject.8 3 As most
quasi-delicts examined by an arbitral tribunal would relate to the contract from
which the arbitrators derive their powers, it is preferable to consider claims aris-
ing in contract and quasi-delict under a single system of law as the boundaries
between these two areas are not drawn uniformly in all jurisdictions.
Conclusion
ICC Case No. 6519 provides an excellent example of some of the complex
jurisdictional issues which arbitrators are often called upon to resolve. Although
French law has, for some time, contained well developed principles for dealing
with problems related to the validity of an arbitration clause, this is not the case
801t will be noted that the plaintiffs do not appear to have advanced any claims framed in contract
in this case.
SITo our knowledge, this award was not the subject of any challenge.
82This is to be contrasted to the discussion in relation to the first jurisdictional issue which con-
cerned cases where there is no written agreement to submit disputes to arbitration between a non-
signatory and signatories of the contract containing the clause.
83See discussion and debates led by C. Reymond entitled “Conflits de lois en mati~re de respon-
sabilit6 d~lictuelle devant l’arbitre international” (17 May 1989) to be published in the Travaux du
Comit6 Frangais de Droit International Public (1988-1989).
536
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with regard to problems of scope. Judicial clarification of this area is needed to
put an end to the current confusion in the jurisprudence between these two
issues. It is hoped that, in contrast to questions of validity, the approach taken
to matters of scope of an arbitration clause will be consistent with the governing
law of the contract.
