Paul E. Mason on Decisions in France and Switzerland Dealing with Arbitration Clauses in Related Sets of Contracts
The volume of mergers & acquisitions, joint ventures and other complex transactions involving multiple, related groups of agreements has grown significantly, especially in a regulatory environment which has been relatively favorable to these activities in recent years. Many of these sets of complex, interrelated agreements contain arbitration clauses to resolve disputes between the parties. Paul E. Mason, an international arbitrator and business lawyer, examines recent national Supreme Court decisions dealing with arbitration clauses in related sets of contracts in two leading jurisdictions in the field of arbitration - France and Switzerland - and offers guidelines for practitioners drafting arbitration clauses in light of these decisions. He writes:
[T]he French Supreme Court upheld the transfer of an arbitration clause in a seller’s sub-supplier’s boilerplate terms and conditions to the buyer of the same goods, based on a finding that this clause was not reasonably possible to ignore given the history of business dealings between these parties. On the other hand, the Swiss Supreme Court decision dealt with a group of successive delivery contracts, and reached a conclusion which did not “automatically” pass along the terms of the arbitration clause amendment in the overall framework agreement to a successive agreement thereunder. Instead, it held that if one of the successive delivery contracts contains its own arbitration clause, then the terms of that clause must control over amendments to a prior framework agreement which did not specifically encompass that particular individual delivery contract.
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Although the types of disputes which can arise later are not always foreseeable, it is helpful when drafting related agreements to see if it makes sense to provide for one single arbitration regime or separate methods. Either way, it will be advisable to make explicit provisions in each contract stating which arbitration regime is to be used in order to avoid any ambiguity or conflict leading to litigation which is presumably what the parties are seeking to avoid.
In situations . . . where there are questions of incorporation of arbitration clauses by reference to standard boilerplate terms and conditions of sale, naturally, it will be advisable to examine these closely beforehand. This would be especially true in France where a third party which is not a signatory to the original contract may be required to abide by its arbitration clause – especially if there is a continuing business relationship with numerous contracts of the same kind where a third party could be held “not to have reasonably ignored” the boilerplate arbitration clause.
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