COMMERCIAL CONTRACTS.

New Zealand Herald, Volume LXIII, Issue 19234, 25 January 1926, Page 7

COMMERCIAL CONTRACTS.

SETTLING FRENCH DISPUTES. The French Parliament recently agreed to an important commercial reform in the law of arbitration, which was proposed by M. Louis Louis-Dreyfus (head of the firm of Louis Dreyfus and Co.) when he was a member of the French Parliament. Until this new statute came into force, tho arbitration clause in commercial contracts was not deemed to bo a contractual obligation, according to French law. A man could sign a contract undertaking to submit to arbitration any difference arising out of such contract, and later on say, " Although I undertook in writing to resort to arbitration, it does not suit me now. I have changed my mind. I prefer to go to law." And he was within the law in thus repudiating this contractual obligation. The arbitration clause in a French contract was, therefore, useless. The French Senate has now adopted the recommendation made by M. Louis LouisDreyfus in 1908, and the arbitration clause in commercial relations is now recognised by the French Courts. This does not mean that commercial arbitration has become compulsory in France. It means that when two parties have mutually and willingly undertaken to submit their differences to arbitration, and have inserted a clause to that effect in the contract, they must both honour the undertaking. The effect ,of the new statute, recognising the arbitration clause, as valid and enforceable, will mean that many commercial disputes will now be settled in France by the friendly means of arbitration, instead of by the costly procedure of litigation.