The Arbitration Minute - June 2017

Are you a party to a contract subject to French public law rules? Beware your arbitration clause

A recent decision of the French Tribunal des conflits (Court of Jurisdictional Conflicts) confirmed that enforcement in France of arbitral awards involving contracts relating to French public property or public procurement will take place before the administrative courts and not before the civil courts. This is relevant, as the administrative courts apply a different standard of review than the civil courts.  

In 2008, the Syndicat Mixte des Aéroports de Charente (‘SMAC’), a French public syndicate controlled by several regional administrative entities which owns the Angoulême airport (a regional airport in Southwest France) entered into two contracts with Ryanair Ltd and one of its subsidiaries for a subsidized new flight route from Angoulême to London. The contracts, which were governed by French law, both contained an LCIA arbitration clause, providing for arbitration in London. Following the rendering of an arbitral award by a sole arbitrator, who held that Ryanair had rightfully terminated the contracts, Ryanair sought its enforcement in France. The President of the Paris Court of First Instance granted the enforcement order. SMAC appealed the order before the Paris Court of Appeal which in turn asked the Tribunal des conflits to determine which court, administrative or civil, had jurisdiction over the enforcement application.  

The Tribunal des conflits held that the contracts between SMAC and Ryanair were public services contracts governed by French public law rules. As a consequence, the administrative court had sole jurisdiction over the enforcement application.  

This decision from the Tribunal des conflits is in line with the ruling made by the Conseil d’Etat (France highest administrative court) in the Fosmax judgment of 9 November 2016. In this judgment, it partially set aside an award for breach of a mandatory rule of French public law, thereby equating domestic public policy with international public policy. The approach from the Conseil d’Etat differs from the approach of the French civil courts as the latter limit their review to a “flagrant, effective and concrete breach” of international public policy.  

If you are party to a contract subject to French public law rules, you should bear in mind the impact of the review from the French administrative courts. Accordingly, it is commendable to specify in your arbitration clause that the arbitrator(s) should be competent in French public law. In any case, when constituting the arbitral tribunal, you should nominate a person with the required competence.  

Judgment cited: Tribunal des conflits, 24 April 2017, n° 4075 (French)