France
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Parties may formally or informally, confidentially or publicly, negotiate to some degree when a dispute arise, either as an alternative to, or at the same time as litigation or arbitration.
In France, various types of ADR apply in commercial litigation, the main types being conciliation and mediation, which can both be either judicial or conventional. In principle, mediation and conciliation are identical in that they have the same objective: to reach an agreement between the parties under the supervision and with the assistance of a third party, to resolve the dispute amicably, avoid a trial and a public court decision.
These attempts at amicable settlement can be envisaged for all commercial disputes, whatever the amount at stake and particularly between professionals. There are certain differences between mediation and conciliation:
- cost: conciliation is free, whereas mediation is not. The court conciliator, either the judge himself or a volunteer professional, offers their services free of charge. The mediator, an independent third party, charges for their services, but at progressive rates depending on the income level of the parties
- the status of the third party involved: the court conciliator is a sworn court officer. The mediator is an independent third party whose profession is not regulated. That being said, the training and the qualification of mediators (i) may be vetted by renowned private institutes (such as Equanim International or the CMAP) and (ii) will be regulated in upcoming legislations being currently discussed, with the aim to develop the trust in ADR mechanisms in France
The participatory procedure is also relevant. The participatory procedure agreement is defined as the agreement by which the parties to a dispute undertake to work together in good faith to resolve their dispute amicably or to put their dispute in order. This agreement is concluded for a fixed term. Although this procedure is extrajudicial, it is considered to be part of legal proceedings. In fact, it is governed by articles 1542 to 1564-4 of the Code of Civil Procedure, which provide that this agreement-seeking procedure, followed, where applicable, by proceedings for judgment, may also take place in the course of the proceedings, for the purposes of preparing the case for trial. Where the participatory procedure agreement has been concluded before the matter has been referred to a judge, and as long as the agreement is in force, it is inadmissible to apply to the judge for a ruling on the dispute, except in the event of non-performance of the agreement. The non-performance of the agreement by one of the parties authorizes the other party to apply to the court for a ruling on the dispute. In urgent cases, the agreement does not prevent the parties from requesting provisional or conservatory measures.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
ADR procedures generally do not, in themselves, have an impact on litigation or arbitration. ADR procedures do not have the effect of stopping the statute limitations (except for the participatory procedure), or to cause an automatic stay of the proceedings. The Parties can however jointly seek the postponement of hearings whilst being in an ADR procedure, so as to not hinder the settlement discussions.
ADR methods can therefore begin:
- before litigation or arbitration is commenced – which is encouraged by the French legislator – and then continue during the litigation or arbitration proceedings, without prejudice to the parties’ right to pursue the said proceedings before the courts, in the event that an agreement is not reached between the parties; or
- be initiated while litigation or arbitration is ongoing
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
Following successive reforms, notably in 2019 and 2023, the French legislator has done no more than encourage the use of prior ADR methods. Ever since, the initial claim must be preceded by an attempt at conciliation, mediation or a participatory procedure (notably for claims not exceeding EUR 5,000), and therefore the summons must contain, on pain of nullity, a reference to the steps taken with a view to an amicable resolution of the dispute or the justification for dispensing with such an attempt.
As regards all sorts of commercial claims (regardless of the amounts at stake), Article 127 of the French Code of Civil Procedure also provides that “the judge may propose a conciliation or mediation measure to parties who do not prove that they have taken the necessary steps to reach an amicable resolution of the dispute”. Likewise, before the Commercial Court, article 860-2 states that it is in the event that “conciliation between the parties appears feasible [that] the court may appoint a conciliator for this purpose. This appointment may take the form of a simple mention in the case file”. Furthermore, before the Judicial Tribunal (in French “Tribunal Judiciaire” ― as opposed to the Commercial Court, in French “Tribunal de commerce”) the President of the orientation hearing, the pre-trial judge, the judge hearing the case on the merits and the interim relief judge may decide, at the request of one of the parties or ex officio after having heard their opinion, that they will be summoned to a settlement hearing held by a judge who does not sit on the bench. At the end of the hearing, the parties can ask to have their settlement agreement recorded, in whole or in part. That judge then informs the judge hearing the dispute, that the amicable settlement hearing has been terminated and, where applicable, forwards the minutes of the agreement.
The parties also have the possibility, before the Judicial Tribunal and within the ordinary written proceedings, to request the court to rule only on some claims, and therefore to request from the pre-trial judge a partial closure for the purposes of a partial judgement. If the request is granted the pre-trial judge orders the partial closure of the case and refers the case back to the court for a decision on the merits and a partial judgement on the claim(s) determined by the parties. Pre-trial proceedings continue in respect of the claims that were not the subject of the partial closure.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes, the parties can contractually agree in advance to use ADR methods in the event of a dispute. Many contracts also include amicable dispute resolution clauses, which may or may not designate a particular dispute resolution method. This constrains parties to use ADR methods, as soon as a dispute arises. Should the parties fail to respect the ADR clause, then the proceedings initiated before the courts may be regarded as non-admissible (save for emergency proceedings). However the sanction is not as severe when arbitration proceedings are commenced without implementing a pre-litigation ADR clause, as it will be up to the arbitral tribunal to consider whether it is appropriately seized and its decision cannot be quashed for this reason by the French judges in the context of annulment proceedings.
When does ADR generally take place?
ADR can take place at any time, as soon as a dispute arises, during expertise proceedings (by which we mean surveys decided by a court, appointing an expert to make technical determinations and findings), or during the course of a litigation proceedings, depending on how the dispute or circumstances develop.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Yes. ADR in France is generally confidential. Mediation proceedings generally require the acknowledgment and signature of a mediation agreement specifying the confidential aspect of this ADR. Conciliation proceedings are also confidential by nature as well as the participatory procedure. When the conciliation is conducted by a judge and the parties fail to reach an agreement, another judge will hear the case.
Does the output from ADR create precedents?
Since ADR is confidential, settlement agreements signed between the parties are not published, do not create precedents and are not binding on third parties, unless a court is requested to acknowledge not only that an agreement was found but also the content of the said agreement.
Who bears the costs of ADR?
In general, parties share the cost of ADR. The parties are however free to contractually decide otherwise.
Is your jurisdiction subject to any specific rules for cross border ADR?
At an EU level, the institutionalization of mediation as an alternative dispute resolution method is the result of the transposition into French law of Directive 2008/52/EC of the European Parliament and of the Council of May 21, 2008 on certain aspects of mediation in civil and commercial matters. On an international level, France has not yet signed nor ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation 2020 (Singapore Convention).
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
Mediation is not a regulated profession. No diploma is required. Some organizations provide training and issue mediator diplomas or certificates. Mediators in civil, social and commercial matters may apply to be included on the lists of mediators drawn up by the Courts of Appeal.
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