Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Dispute Resolution volume discussing topics including Brexit’s impact on choice of law and jurisdiction, market competition and the popularity of ADR within key jurisdictions worldwide.
1 What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration? What are the advantages and disadvantages of the most popular dispute resolution methods?
The most popular dispute resolution method for clients in Monaco is, undoubtedly, litigation, especially when it comes to commercial disputes. Clients feel more comfortable resorting to a method that is commonly used in Monaco.
Arbitration is regulated in Monegasque law by the Civil Procedure Code. Monaco is also party to the Geneva Protocol on Arbitration clauses of 1923 as well as to the New York Convention on the Recognition and Enforcement of Arbitral Awards of 1958. This may give the impression that arbitration is a common method of dispute resolution in Monaco. However, there is no International arbitration centre or chamber in Monaco, which makes arbitration a difficult method to resort to. Regardless, parties to a commercial contract may, at the time of the conclusion of the contract, agree to submit to arbitration all disputes that may arise between them. In such cases, parties usually appoint private arbitrators of their choice and choose the application of major arbitration centres’ rules, such as the London, Paris and Hong Kong arbitration centres. The concept of Arbitration in Monaco is, for the time being, mainly limited to the exequatur in Monaco of foreign arbitral sentences. Therefore, given the uncommon use of arbitration as a method to resolve disputes in Monaco, we can safely say that the balance strongly leans towards litigation.
As for the advantages of litigation, we believe this method has gained its popularity due to its particularly compelling and binding effect in Monaco, and particularly because the average timeframe of the litigation process in Monaco is rather short, comparatively to neighbouring jurisdictions. Not to mention that, notwithstanding the subjective judgments that can play an influential role in the outcome, litigation also means the potential for a predictable outcome due to the possible reference of precedent. These advantages, however, do not eliminate the fact that there are other many factors that a party needs to bear in mind before committing to any litigation, including the expense and the risk of an adverse outcome.
Other criteria specific to Monegasque law should also taken into consideration, such as the lack of full disclosure requirements and the absence of pre-requisites for filing an appeal. However, each criterion can be seen as an advantage or a disadvantage depending on the standpoint.
2 Are there any recent trends in the formulation of applicable law clauses and dispute resolution clauses in your jurisdiction? What is contributing to those trends? How is the legal profession in your jurisdiction keeping up with these trends and clients’ preferences? What effect has Brexit had on choice of law and jurisdiction clauses?
On the one hand, the formulation of applicable law clauses in Monaco remains unchanged and no recent trends in that context have been noticed in Monaco. Law No. 1.448 of 28 June 2017 codifying the rules of Monegasque Private International law, which until then was fragmented between scattered provisions of the Civil Procedure Code and Civil Code, is still producing its effects, especially with regards to the applicable law. According to the civil law rules applicable in Monaco, it is the law chosen by the parties that prevails. In the absence of such clause, the courts refer to the above-mentioned law and thus the applicable law defined by it. For instance, in commercial matters, failing the choice of the parties, article 69 of the above-mentioned law applies and retains the law of the country where the party required to perform the contract is domiciled.
On the other hand, we have noticed a recent trend in the formulation of dispute resolution clauses that involves the increasing use of a prior amicable conciliation clause. We believe that this trend is, essentially, an attempt to anticipate and overcome the animosity that can occur during the litigation process. Clients are becoming more aware of the importance of such methods and the fact that they can considerably reduce the degree of contentiousness associated with litigation.
The legal profession in Monaco is open to such trends, it adapts and evolves with them, and we personally deem that referring to conciliation or other methods prior to litigation may have numerous advantages, on both parties and the legal field in Monaco. This trend might encourage the use of other methods in Monaco and therefore broaden the legal options the parties may dispose of.
Brexit is yet to have an effect whatsoever on choice of law and jurisdiction clauses in Monaco, considering the latter is not part of the European Union. The simplicity and clarity of Monegasque law, as well as the fast and reliable process held before Monegasque Courts, continues to, regardless of the Brexit, inspire parties to choose Monegasque law and refer to Monegasque courts.
3 How competitive is the legal market in commercial contentious matters in your jurisdiction? Have there been recent changes affecting disputes lawyers in your jurisdiction? How is the trend towards ‘niche’ or specialist litigation firms reflected in your jurisdiction?
From where we stand, the legal market in commercially contentious matters in Monaco is quite competitive and it is one that certainly requires a high level of attention and competence. Despite it being the second smallest country in the world, Monaco has a very dynamic economy and is very much open to trade and foreign investors. Thus, the Monegasque system, and the numerous advantages it holds, continue to attract investors from all over the world. Indeed, the implementation in Monaco of the most important businesses has led to a rise in commercially contentious matters and thus an increase in the legal market competition. This attraction is an upturn in the legal market, not only with regard to commercial matters but to all legal fields. Most of law firms in Monaco are generalist ones that try to cover all aspects of law and the diversity of contentious matters in Monaco. However, the highly competitive market, with all the expertise it requires, is pushing towards a specialisation trend, with firms that are increasingly organised according to a precise legal specialty.
4 What have been the most significant recent court cases and litigation topics in your jurisdiction?
The Supreme Court on 13 October 2020 considered the validity of article 852 of the Civil Procedure Code with regard to the interim relief made against an order on request. The second paragraph of the above article provided for the possibility of asking for an interim relief against an order on request when, in the absence of a legal prohibition, such remedy has been formally reserved by the judge’s order. The Supreme Court declared the latter condition unconstitutional. This decision has had a huge impact on the Monegasque legal field in general and on the perception of the available remedies in particular. It is still producing its effects on the way legal professionals are dealing with such cases. We believe that this decision is a step forward and other decisions in that sense are awaited.
Another significant decision, more in terms of value, is one rendered in 2020 by the Supreme Court involving the government. The case concerns a contract concluded between the government and a company, according to which the latter would conduct a project on the port of Monaco, including the construction of a complex of housing, offices, shops and museums. The issue was that this project required a rearrangement of the space hosting the world’s television studios during the Formula One Grand Prix, which was the reason behind the Monegasque government finally taking a step back and terminating the contract. The Supreme Court sentenced the Monegasque state to pay around €150 million to the involved company, which is the equivalent of 10 per cent of the Monegasque budget.
5 What are clients’ attitudes towards litigation in your national courts? How do clients perceive the cost, duration and the certainty of the legal process? How does this compare with attitudes to arbitral proceedings in your jurisdiction?
We can safely say that clients’ attitudes towards litigation in Monegasque courts is rather positive. Naturally, clients’ perception of the costs of the legal process in Monaco varies according to the numerous circumstances surrounding their cases, whether on a personal level or a professional one like the legal complexity of the case.
The duration and the certainty of the legal process in Monaco are very well perceived, whether by our clients or other jurisdictions in general. The generally fast process and the efficiency of the Monegasque courts are main criteria in the trust and positive attitude of clients.
We believe this is not the case with regards to arbitral proceedings in Monaco, at least not yet. Although we perceive arbitration as a safe and interesting method of dispute resolution, clients do not feel very comfortable resorting to it in Monaco. This reluctance is mainly due to the fact that this method, unlike in neighbouring countries, is still not very well supported in Monaco, despite it being regulated in Monegasque law. We can rather say that, even with the trust of the Monegasque courts, clients just do not feel like ‘getting out of their comfort zone’.
6 Discuss any notable recent or upcoming reforms or initiatives affecting court proceedings in your jurisdiction.
Following the example of its European neighbours, the Monegasque legislator completed a legislative arsenal to deal with the covid-19 pandemic. Bills suspending the administrative deadlines and relating to justice in the face of the pandemic were introduced. Since the start of this pandemic, physical hearings have been avoided, writings have been sent online and some courts have stopped delivering their rulings during a hearing, with the written decision, instead, being sent electronically to the involved lawyers. We have therefore noticed an expected rise in the dematerialisation of judicial communications.
Thus, it appears to us that Monaco is moving towards the adoption of a dematerialised concept in different judicial aspects.
7 What have been the most significant recent trends in arbitral proceedings in your jurisdiction?
Unfortunately, arbitral proceedings and arbitral sentences rendered by private arbitrators in Monaco are not public and are therefore not published. Thus, arbitral proceedings in Monaco were and still are limited to the exequatur of foreign arbitral sentences in Monaco and no recent trends can be noted in that context.
8 What are the most significant recent developments in arbitration in your jurisdiction?
The Monegasque government has, on numerous attempts, been approached by various successful individuals and bodies bringing together economic actors, such as the Economic and Social Council or the Chamber of Economic Development, to consider the possibilities of development of arbitration in Monaco. Thus, the idea of creating an arbitration chamber gradually took shape, which led to the foundation of the Maritime Arbitration Chamber of Monaco. After having operated in a consistent manner, this chamber, limited to maritime disputes, has seen its activity progressively decrease and is now almost dormant.
However, the chamber’s foundation attests to the existence of an arbitration tradition in Monaco, which needs a major and modern push. Indeed, the provisions of the Civil Procedure Code, exclusively oriented towards domestic arbitration, have not, since the date of their adoption, undergone any substantial evolution, even though Monaco has signed and ratified two conventions that offer guarantees in the field of international arbitration.
To this end, the Monegasque government has taken the initiative by launching a study on the subject and entrusting it to a competent working group. The latter issued in 2007 a bill specific to domestic and international arbitration and covering all aspects of arbitration. Unfortunately, this bill was not adopted, and, ever since, the government has not issued any project moving towards the development of international arbitration. This is where Monaco currently stands when it comes to arbitration, but we believe that, although not very developed to date, arbitration is increasingly sought by Monaco’s economic actors and is destined to develop in the years ahead.
9 How popular is ADR as an alternative to litigation and arbitration in your jurisdiction? What are the current ADR trends? Do particular commercial sectors prefer or avoid ADR? Why?
ADR as an alternative to litigation and arbitration might be interesting in some cases, however, it is not very popular in Monaco. The unpopularity of mediation is rather understandable given that Monegasque legislation does not provide for any provision on contractual mediation. However, family mediation was introduced by the Civil Code by Law No. 1.336 of 2007, later amended in 2017. As for conciliation, Law No. 473 of 1948 regulates conciliation of collective labour disputes, however the scope remains very limited. This is all to say that ADR is not very well regulated in Monegasque law.
However, for reasons we discussed earlier, parties are starting to refer more to ADR, not as an alternative to litigation, but more as a method of dispute resolution prior to litigation. Individuals and private parties sometimes manage to solve their disputes through ADR without having to resort to litigation, saving themselves a lot of time and expenses. However, others, mainly commercial sectors, avoid ADR considering that the outcome, the decision rendered by the expert or conciliator, is not binding to both parties, which may lead to the non-execution of the final decision and therefore put the parties in the same situation they were in at the time of the dispute, or even in a worse situation. In such cases, ADR would be perceived as a time-consuming dispute resolution method that some would prefer avoiding to directly resort to litigation.
10 What is the position in relation to litigation funding in your jurisdiction? Is funding available? Have there been any significant developments in this area in your jurisdiction?
Very little litigation funding is available in Monaco. That is mainly due to the fact that the legal market is quite limited and does not particularly need funding.
However, a law issued in 2011 provides for legal aids and compensation for lawyers. Its purpose is essentially to enable individuals with insufficient resources to assert their rights in court. In such cases, the government takes charge of all legal and judicial fees, including the allowances paid to the appointed lawyer. This allowance remains limited and determined according to a fixed unit of value.
The Inside Track
What is the most interesting dispute you have worked on recently and why?
One of the most interesting disputes we have recently worked on is a multi-jurisdictional litigation regarding recovering a debt where the debtor seemed to have no assets. One of the biggest challenges of this dispute was to be legally authorised to start a legal action against a third party on behalf of our opponent to recover the amount due by the company to our client. Beyond its stakes and complexity, the dispute showed that we must think out of the box in order to meet our client’s needs.
What do you consider to have been the most significant legal development or change in your jurisdiction of the past 10 years?
The Monegasque jurisdiction has known two particularly significant legal developments. The first concerns limitation periods. Law No. 1401 of 5 December 2013 on civil prescription standardised the prescription periods and shortened the 30-year common law period to a 5-year period. This major reform also established a new starting point for the limitation period, with the period beginning when the holder of a right has known or should have known the facts.
The second major development is the adoption Law No. 1.448 of 28 June 2017 on private international law. This law substantially modified the conflict of laws and jurisdiction rules that were once implemented. It codified the rules of Monegasque Private International Law that were, prior to the reform, fragmented between scattered provisions of the Civil Procedure Code and Civil Code and different case law. While the reform codifies some of the solutions already adopted by Monegasque courts, it also brings several legislative novelties.
What key changes do you foresee in relation to dispute resolution in the near future arising out of technological changes?
Given that Monaco is moving towards the promotion and support of new technologies through different projects, we believe that virtual hearings, filing and dematerialised judicial communications in general will become the new norm in Monaco.
Needless to say, those technological changes will also probably have an impact on the form and admissibility of evidence.