A3-0318/94

Resolution on encouraging recourse to arbitration to settle legal disputes

The European Parliament,

-having regard to the motion for a resolution tabled by Mr Lafuente Lopez on encouraging recourse to arbitration to settle legal disputes (B3-0454/93),

-having regard to Rule 45 of its Rules of Procedure,

-having regard to the report of the Committee on Legal Affairs and Citizens' Rights (A3-0318/94),

A.whereas articles 181 and 182 of the EC Treaty provide for the possibility of concluding an arbitration clause: (a) by way of a contract concluded by or on behalf of the Union under public or private law and (b) by way of an agreement between Member States concerning any dispute relating to the subject matter of the Treaty; whereas, in accordance with those two articles of the EC Treaty, an arbitration procedure was also provided for in the EEC-Greece Association Agreement (Article 67 (3) and (5)) and the EEC-Turkey Association Agreement (Article 25 (4)) which empower the respective Councils of Association to decide on the arbitration procedure for settling disputes between the contracting parties,

B.whereas the national laws of the Member States provide for and regulate recourse to arbitration to settle disputes and whereas the possibility of referring disputes under private law to arbitration is at the discretion of the contracting parties, on whose initiative the arbitration tribunals are set up and operate,

C.whereas, therefore, it is appropriate to investigate and establish to what degree an arbitration clause may also be extended to cover disputes concerning everyday relations governed by Community legislation,

D.whereas the Single Market broadens the scope of international business and creates two specific problems: (a) an increase in private contracts falling under more than one body of law and legal system, only one of which must ultimately apply and (b) the overburdening of the normal courts with disputes on which they are required to give a ruling; many such disputes arise from consumer contracts,

E.whereas arbitration is excluded from the scope of : (a) the Rome Convention of 19 June 1980 on the law applicable to contractual obligations (Article 1(1) (d)), which has applied to all the Member States of the European Union since 1 April 1991, and (b) the Brussels Convention of 27 September 1968 concerning international jurisdiction and the execution of judgments in civil and commercial matters (Article 1)(4)); whereas such exclusion illustrates the special nature of arbitration inasmuch as an arbitration tribunal has a greater degree of freedom to choose the body of law to applied to a dispute without being bound by 'lex fori' (the principle whereby the law of the place the action is initiated applies) as normal courts are.

1.Notes that a growing number of disputes at national level are referred to arbitration for settlement; considers that this practice should be encouraged to avoid over-burdening the normal courts which results in denial of justice;

2.Notes, moreover, that, in most cases, the legislation in the Member States of the European Union confines the possibility of recourse to arbitration to disputes in private law and invalidates arbitration rulings which are contrary to public policy or morality;

3.Points out that most rules in primary and secondary Community law concern public policy and that, consequently, an arbitration agreement cannot exclude the application of rules of this nature; stresses moreover that, in cases where Community law specifies that the institutions of the European Union have exclusive jurisdiction to settle disputes, such jurisdiction cannot be waived by means of an arbitration agreement;

4.Believes that, in cases such as referred to in the preceding paragraph, any recourse to arbitration - taking into account the rules governing the workings of the arbitration tribunal - would jeopardize the uniform interpretation and implementation of Community law and that the necessary uniformity can only be safeguarded only by respecting the jurisdiction which the Treaties confer on the European Court of Justice and the Court of First Instance;

5.Takes the view that the freedom of the arbitration tribunal to choose the applicable law (unless this has been specified by the parties in agreeing the arbitration clause) could be appreciably restricted in the event of the harmonization of the Member States' private law and that such a prospect would facilitate implementation of both the New York Convention of 10 June 1958 for the Recognition and Enforcement of Foreign Arbitral Awards and the Geneva European Convention of 21 April 1961 on International Commercial Arbitration.

6.Considers, in connection with the settlement of disputes between the European Union and third countries having association or trade cooperation agreements with the Union - in which the contracting parties act as autonomous entities in international law - that the adoption of an arbitration procedure would facilitate the implementation of the relevant agreements; also takes the view that greater use should be made of arbitration clauses such as those incorporated in the EEC's Association Agreements with Greece and Turkey;

7.Takes the view that the Commission should also take account of the following observations in connection with its the Green Paper (COM(93)0576-C3-0493/93) on the access of consumers to justice and the settlement of consumer disputes in the single market:

(a)the completion of the single market affords every business the opportunity to target and enter into contracts with the consumers of all the Member States for the provision of services or goods which it produces or markets,

(b)this opportunity, in so far as it gives rise to cross-border disputes, puts the consumer at a disadvantage if he has to seek a legal settlement of a dispute between him and the business which is party to the contract but has its headquarters in another Member State,

(c)settlement of such disputes raises a number of issues - determining the applicable substantive and procedural law; pursuing a very expensive legal battle in a country other than the consumer's country of residence; insurmountable difficulties in enforcing the judgment -which, together with other related problems, discourage consumers from claiming their lawful rights,

(d)discouraging consumers in this way impedes the smooth operation of the internal market,

(e)in these circumstances, it is imperative in the interests of consumers and businesses alike, that the Commission submit a proposal for the introduction throughout the Union of a uniform arbitration procedure for the settlement of cross-border disputes, to be administered by decentralized arbitration tribunals readily accessible to consumers;

8.Instructs its President to forward this resolution to the Commission, the Council and the governments and parliaments of the Member States.