Commercial Courts in Europe - Alternative to Arbitration?
| 1. Commercial Courts in Europe – Alternative to Arbitration?
In recent years several European countries have established courts or chambers which solely deal with commercial disputes and are structured so as to attract and better accommodate international parties. Since these Commercial Courts are targeted towards international commercial disputes some question their competitiveness with international commercial arbitration.
In a recent Webinar hosted by the German Arbitration Institute (DIS) and moderated by Hartmut Hamann, renowned lawyers and judges with experience in international commercial disputes shed light on the question whether the European Commercial Courts form a viable alternative to arbitration and in which cases it would be advisable to choose the jurisdiction of these Commercial Courts above an arbitration agreement.
| 1.1 Overview over Commercial Courts in Europe
In an attempt to make their domestic legal framework more attractive for parties involved in cross-border commercial disputes and thereby prevent them from transferring their disputes to the jurisdiction of foreign countries, France, Germany, Belgium and the Netherlands established internationally oriented Commercial Courts. Although the idea and aspiration for such Commercial Courts already existed beforehand, Brexit undeniably fostered their establishment seeing that London was a hotspot for international commercial disputes but became less attractive for parties after the UK has lost its connection to other EU Member States.
The panelists displayed in which ways these Commercial Courts differ from other national courts and are better suited for international disputes by the examples of Paris, Amsterdam, Stuttgart and Zurich.
| 1. 1. 1 Paris
Laure Aldebert introduced the International Commercial Center at the Paris Court of Appeal (ICCP-CA) which was established in 2018 as a division within the economic division at the Paris Court of Appeal. She reports that this international chamber introduced a new way of approaching cases based on the already existing procedural rules by taking a more functional approach towards the resolution of international disputes. The use of the English language before court has been made possible and the parties are able to present documents such as contracts in English. However, the proceedings themselves remain to be conducted in French. Judgments are also still issued in French language, however parties may request a certified English translation.
Currently 180 cases are pending before the ICCP-CA, 80 of which are setting aside proceedings against arbitral awards. Hence, more than 50% of these cases are arbitration related, indicating that Commercial Courts and arbitration can go hand in hand.
| 1. 1. 2 Stuttgart
Thomas Klink introduced the Commercial Court Stuttgart which was set up in 2020 together with the Commercial Court Mannheim as chambers to the Stuttgart and Mannheim Regional Courts. The Commercial Court Stuttgart is competent for all M&A cases with a place of jurisdiction in Stuttgart, irrespective of whether they exhibit a cross-border element.
Several aspects of the Commercial Court in Stuttgart are similar to arbitration proceedings and aim at attracting international parties. The Commercial Court is for example equipped with judges who are specialized in business law and oftentimes also have international experience. Their CVs are even available on the website of the Commercial Court. The court is also conveniently located near the airport.
Similar to Paris, court filings must be done in German, however documents can be submitted in English. Case management conferences and hearings, including the taking of evidence, may be conducted in English as well.
| 1. 1. 3 Amsterdam
Anna Stier introduced the Netherlands Commercial Court (NCC, District Court and Court of Appeal) which was created in 2019 as a chamber in the Amsterdam District Court. The NCC is competent for disputes with a commercial aspect and cross-border element.
Proceedings are held in English and judgments are issued in English as well. The lawyers representing the parties before the court must be Dutch, however foreign lawyers are allowed to speak before the court. Witness statements and documents can be submitted in English. This is not new to the Dutch judicial system as documents can be submitted in English, Dutch, German or French in general, unless the court requires otherwise.
| 1. 1. 4 Zurich
Switzerland does not yet home a Commercial Court, however Martin Bernet introduced two ongoing projects in Zurich and Geneva. Switzerland is a very attractive place of arbitration and is a hub of know-how on how to effectively deal with the resolution of international disputes. Switzerland being a neutral country, multilingual and conveniently located in the heart of Europe brings all prerequisites to become a strong player in the field of international Commercial Courts.
The plan in Zurich in particular is to introduce the new internationally oriented Commercial Court as a division to the already existing Commercial Court. The already existing Commercial Court decides in a panel of three judges with experience in a specific field (e.g. Construction and Architecture, Chemistry and Pharmaceuticals, …) which makes proceedings less expensive and faster as less expert witnesses are required.
Swiss courts already follow a pragmatic approach and allow for documents to be submitted in English. Furthermore, it has recently been decided that the whole proceedings may be conducted in English. However, it is still open, whether there will be the possibility of judgements being issued in English.
| 1.2 Arbitration or Commercial Court?
Having learnt about the ongoing trends in the field of internationally oriented Commercial Courts in Europe, the panelists turned to the question of whether Commercial Courts have so far proven themselves as a viable alternative to arbitration.
Arbitration undeniably offers advantages to parties that national courts cannot offer. The main feature of arbitration is the parties’ autonomy. National courts will never be able to offer such flexibility to the same extent. Further, in arbitration parties can benefit from confidentiality and their dispute being resolved on impartial terrain as parties can choose their seat of arbitration.
Another major advantage of arbitration is the binding nature of arbitral awards and their enforceability through the New York Convention.
These are things that not even the establishment of Commercial Courts will be able to substitute. However, Commercial Courts offer their own benefits and may even be more advantageous than arbitration in certain instances. Proceedings before Commercial Courts are usually less expensive and faster. Party autonomy is not always a benefit as parties have to find an agreement. This can lead to unwanted delays and inefficiencies for example if parties lose time over the strenuous process of choosing arbitrators. Unlike in arbitration, national courts usually try to facilitate settlements, for example by issuing preliminary opinions. It may also be mentioned that Commercial Courts benefit from having the full power of the state to force witnesses to appear before court if necessary.
In the end, all panelists agreed that arbitration and Commercial Courts do not stand in competition to another but rather complement each other. While some disputes may be more suited for arbitration others may be settled more efficiently before Commercial Courts. In general, middle-sized companies are usually better advised to settle their disputes before a Commercial Court if confidentiality is not an issue, seeing that proceedings before Commercial Courts are less expensive and faster. However, bigger companies may rather turn to arbitration for the abovementioned advantages.
Moreover, as can be seen by the example of the International Commercial Center at the Paris Court of Appeal, Commercial Courts can complement arbitration proceedings in terms of enforcement and setting-aside proceedings. In some cases, it may even be advisable to include a “hybrid” clause into a contract providing for interim relief proceedings before a Commercial Court and for the settlement of all other disputes in arbitration.
In light of the outcome of this discussion it may therefore be better not to question the competitiveness of international Commercial Courts with arbitration but rather seize the opportunities these courts offer to complement and facilitate international commercial arbitration.