Richard j howarth I. Introduction

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Civil Code Comfort

Civil law jurisdictions have traditionally been 'liberal in their treatment of the Lex Mercatoria' .277 As alluded to earlier, this is possibly because civil jurists can closely identify with a legal concept leaving much to interpretation; happily relying on a degree of 'gap-filling' to construe the underlying purpose.278 Accordingly, Article 1496 of the French 1981 New Code of Civil Procedure (NCPC) has clearly been influenced by a liberal and tolerant approach to a-national arbitration, with similar approaches adopted by other civil code jurisdictions.279 The relevant French legislation reads:280

The arbitrator shall settle the dispute in accordance with the rules of law (règles de droit) which the parties have chosen, and in the absence of such a choice, in accordance with those rules of law which he considers appropriate.

Nygh points out that use of the words 'règles de droit’ is significant as the French word 'droit’, unlike 'loi' does not confine the scope to 'law emanating from a sovereign authority but includes rules of moral or social force'.281 Furthermore, the provision can give recognition to awards based on Lex Mercatoria even where 'the parties have not agreed on a decision based upon these sources'.282

Although certain commentators have raised doubts that the French code can be subject to such foregoing analysis,283 the proof lies in judicial interpretation. In the Compania Valenciana case,284 the French Supreme Court (SC)285 upheld a decision of the Court of Appeal286 in refusing to set aside an ICC award287 on the grounds of applying the Lex Mercatoria in the absence of choice of law by the parties. In doing so the French judiciary imposed their own interpretation of the pertinent ICC Arbitration Rule 13(3): this stated that failing any indication by parties as to applicable law, the arbitrators shall 'apply the proper law under the rule of conflict that they deem applicable'.288 The Court of Appeal however concluded that 'application of the Lex Mercatoria was consistent with the terms of reference because the arbitrator had applied the proper law, having indicated that Spanish, New York and English law would frustrate the contracting parties' tacit will'.289 Expression of the 'French courts' restraint in setting aside awards based upon the Lex Mercatoria '290 was evident in cases arising from awards pre­dating the NCPC. In an ICC award291 arising from a claim for partial remuneration following termination of an agency agreement, the ICC arbitrators had based their award not on any specific legal principle but on the 'general principles of obligation generally applicable in international trade' .292 The French Supreme Court293 upheld the Court of Appeal decision in affirming that the arbitrators had determined 'applicable law and had stayed within their jurisdiction'.294 Subsequently, the Norsolor award295 involving French and Turkish parties attracted attention from both the French and Austrian Supreme Courts.296 Concerning once again termination of an agency contract, the tribunal opted for the Lex Mercatoria297 and 'specifically the principles of "good faith" and "fair dealing”'298 in finding contract termination unjustified. The French Supreme Court upheld enforcement of the Court of Appeal decision to implement the award 'upon failing to find a violation of public policy';299 whilst in simultaneous proceedings the Austrian Supreme Court reversed the lower Court of Appeal decision by finding the application of Lex Mercatoria justified:300 'no mandatory provisions of either French or Turkish law [were violated so] the award was thus enforceable'.301

Accordingly, Lex Mercatoria was not just recognised, but enforced in both the French and Austrian Supreme Courts in the context of the Norsolor award. Also, in each case discussed here the award was enforced where arbitrators elected the Lex Mercatoria: evidently party autonomy concerning choice of the law merchant as the 'rule of law' must also prevail.302

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