Third-Party Conciliation: France reacts to Covid-19 with a new alternative dispute resolution mechanism

The creation of a new means of alternative dispute resolution

In response to the Covid-19 crisis, and in an effort to mitigate the anticipated significant consequences of the pandemic for businesses, the entire French legal community[1] – including Paris City of Law,[2] the French association representing in-house counsels,[3] the Cercle Montesquieu,[4] Paris Arbitration,[5] the Paris Bar, and the Commercial Court of Paris – has developed and implemented a confidential and time-effective mechanism to support companies in the resolution of potentially contentious commercial issues. The “Tiers Conciliateurs” or Third-Party Conciliators platform (https://tiers-conciliateurs.fr/) aims to assist companies in finding amicable solutions in order to limit disruption and maintain trust between business partners.

The initiative is proposed for a limited time: it is related to Covid-19 and is not intended to become a new perennial body of conflict resolution. Rather, it is a “field hospital,” which is being set up truly in response to difficulties caused by Covid-19.[6]

A solidarity-based initiative with an international dimension

While in lockdown in May of 2020, the French legal world realized that most contracts could no longer be carried out as agreed. The extent of the hardship was so severe that lawyers, legal directors and judges alike anticipated that if all companies encountering difficulties were to initiate court proceedings, the outcome for both the judiciary and the economy would be dramatic.

Therefore, rather than observe the chaos unfold, the entire French legal family chose to anticipate the number of disputes that would arise from Covid-19. In an effort to prevent these disputes from reaching a contentious stage in court, the legal community set up a fully operational extra-judicial emergency and conciliation mechanism dedicated to companies exposed to difficulties generated by the effects of Covid-19. This mechanism is centered around the assistance, experience and guidance of Third-Party Conciliators: individuals who have agreed to intervene, on a voluntary basis, to assist companies in their effort to pursue their business relations without judicial intervention. In under three weeks, by June 2020, the platform was in place and operational.

Seventy prominent individuals from the French legal world volunteered as Third-Party Conciliators. Company legal officers from major French companies, lawyers from top-tier French and international law firms, judges and academics all stepped forward to provide assistance. These volunteers from eclectic backgrounds – ranging from ex-French ministers, to legal directors from L’Oréal or Total – all wish to leverage their skills and experience to assist companies in pre-crisis situations.
While the Third-Party Conciliators are all respected French practitioners, their vision and perspective are always international. Parties may choose the language in which they wish to carry out the Third-Party Conciliation process among over a hundred languages, including Russian. Notably, Marie-Aimée Peyron, former President of the Paris Bar Association and partner at Squire Patton Boggs, and Galina Zukova, a leading arbitration practitioner, are Russian-speaking Third-Party Conciliators.
The President of the Commercial Court of Paris presented this initiative to the French Minister of Justice in June 2020, who commented that it was “very interesting” and hoped that it would benefit companies outside of Paris.[7] Reaching companies beyond Paris, everywhere in France, but also internationally, is indeed the platform’s ambition.  

A pragmatic solution offered in addition to existing mechanisms  

The aim of the Third-Party Conciliators platform is to offer a dispute resolution mechanism prior to any judicial or arbitral proceeding. Commercial parties that come across difficulties in the execution of their contracts may wish to find an amicable solution, through negotiations limited in time and overseen by a Third-Party Conciliator.
The process is simple in order to guarantee its efficiency and was thought up in order to allow the parties as much freedom as necessary for the resolution of their contractual issues. Due to Covid-19, but also to allow additional flexibility, the entire process can be carried out online, through teleconference and email.
Importantly, the initiative is entirely free, excluding the 100-euro submission fee. The Third-Party Conciliators all work pro bono in an effort to maintain the country’s, and its companies’, economic health.

• Initiation of the Third-Party Conciliation

The initiation of this Third-Party conciliation process is based on the parties’ common will. The process cannot be forced upon one of the parties. The most diligent party completes, in the name and on behalf of all parties, the online form (accessible at: https://tiers-conciliateurs.avocats.paris), specifying the essential points of the dispute, as well as the parties’ identity. The website is secured and hosted by the Paris Bar.

100 euros of submission fees are paid by the parties at this stage.  The payment of this fee triggers the launch of the process. At any stage, the parties may wish to appoint external counsel, at their own cost.

• Appointment of the Third-Party Conciliator

A Third-Party Conciliator is appointed by the Platform Monitoring Committee based on objective criteria and after conflict of interest checks.

The Third-Party Conciliator’s role is to assist in the discussion, to help the parties in finding a common ground. However, Third-Party Conciliators do not draft any agreement, memorandum of understanding or amendment to the contract. Indeed, their experience bestows upon them a benevolent moral authority to help business partners. They are not in charge of applying the law to the legal situation before them. Rather, thanks to their understanding of the case, they will guide the parties towards a solution, and give them the tools to reflect and come to an understanding.

According to one Third-Party Conciliator, “The risk of permanently compromising a business relationship with a strategic partner must be balanced against the risk of legal uncertainty in a context of court congestion. In such a situation, commercial negotiations must be given priority, while ensuring that negotiators are provided with the legal arguments that will enable them to support their commercial position prior to meetings”.[8]

The parties’ inhouse legal counsel, or external counsel, should the parties choose to appoint one, will be responsible for the drafting of any legal documentation.

• Conduct of the Third-Party Conciliation

The Third-Party Conciliator contacts the parties by email as soon as possible to request, if necessary, useful documents and additional information and to propose a date for the holding of a first negotiation meeting by videoconference or in person. The Third-Party Conciliator shall determine, with the help of the parties, a timetable and the modalities for the conduct of the conciliation.

If the Parties reach an agreement, the Third-Party Conciliator invites the parties to draw up a memorandum of understanding. The parties may then ask for the approval of the memorandum of understanding in order to make it enforceable, in accordance with Article 1565 of the French Civil Procedure Code.[9] Alternatively, the parties may wish to simply sign an addendum to their contract in order to pursue their commercial relationship. The aim of the procedure is to be flexible, and business minded. 
If the parties do not reach an agreement, they may simply resort to the traditional dispute resolution mechanism: mediation, national courts or arbitration. 
At any time, the parties may choose to put an end to the Third-Party Conciliation, in which case they shall inform the Third-Party Conciliator as soon as possible. Likewise, the Third-Party Conciliator may decide to terminate the process should he or she note a persistent disagreement between the parties that makes any amicable agreement impossible within a reasonable timeframe.

Conclusion

This cost-effective, pragmatic procedure is also confidential. The “Ethical Charter” to which the Third-Party Conciliator and the parties agree provides that:

“The Third-Party Conciliator and the Parties undertake to respect the strict confidentiality of their exchanges. They shall refrain from disclosing the very existence of the Third-Party Conciliation attempt, as well as its outcome if it leads to a lack of agreement, if any, as well as all the elements exchanged between them within the framework of the Third-Party Conciliation.
The Third-party Conciliator shall in particular respect the confidential nature of any information to which he or she has access in the context of his or her mission. He or she may not reveal to anyone any element of the file entrusted to him or her. The Third-Party Conciliator and the Parties shall not reveal to any third party, except in the performance of their mission or if the third party is associated with the conduct of the Third-Party Conciliation, the existence or content of the dispute. This confidentiality undertaking is unlimited in time, unless otherwise agreed by the Parties.”[10]

After the international chambers of the Commercial Court of Paris and the Paris Court of Appeal, this initiative is once again an example of how the French legal community wishes to contribute to international dispute resolution. The Parisian legal community, respected for its expertise in dispute resolution, distinguishes itself by the extremely rapid implementation of Third-Party Conciliation.

Valence Borgia

Partner, Medici Law, Paris

[1] A. de Braux, « Il ne s’agit pas d’aider que les grands groupes du CAC 40 », in Decideurs Magazine, 22 October 2020.
[2] Paris City of Law was created in 2015 as a working group dedicated to French and international legal professionals, aiming to promote Paris as an international capital of law.
[3] Association Française des Juristes d’Entreprise (AFJE) is a professional association, created in 1969 in order to promote and represent in-house counsel.  
[4] Cercle Montesquieu is an association of legal directors, to promote their role, encourage dialogue between legal directors and contribute to the legal training of future legal directors.
[5] Paris Arbitration was created in 2009 and is dedicated to the promotion of Paris as the world’s leading site for international arbitration.
[6] L. Lavorel, « Soixante-dix tiers conciliateurs proposent de donner gratuitement de leur temps », in Editions Legislatives, 29 May 2020.
[7] A. Moreau, « Les tiers conciliateurs éteindront-ils les feux naissants dans tout l’hexagone ? », in Affiches Parisiennes, 19 June 2020.
[8] D. Tiourtite, « Lorsque le contentieux judiciaire n’est pas une option, comment gérer vos litiges commerciaux ? », in Le Monde du Droit, 24 September 2020.
[9] Article 1565 of the French Civil Procedure Code: “The agreement reached by the parties to a mediation, conciliation or participatory procedure may be submitted, for the purpose of making it enforceable, to the approval of the competent judge for hearing the litigation in the matter in question.
The judge to whom the agreement is submitted may not modify its terms”.
[10] Ethical Charter of the Third-Party Conciliation platform, available at: https://tiers-conciliateurs.fr/Charte_Tiers_Conciliateurs_V2.pdf.