Conciliation, mediation and arbitration in financial disputes
Alternatives modes of settlement of disputes between banks and their clients could be an advantage for the development of the financial market.
Disputes that may arise between banks in Monaco’s financial market and their clients are traditionally subject to Monegasque law and judged, substantively, by the courts of Monaco. Client plaintiffs are quite often obliged to request the judge in chambers to appoint an expert to make an upstream appraisal, or must themselves produce an appraisal carried out by their own private expert. More and more frequently they also have to refer to the presiding judge in the court of first instance to obtain all the banking documents signed by him, and also the bank’s own documents, so as to be sure of the facts in dispute. All these procedures represent difficulties, obstacles and risks for the litigants. The development of alternative modes of settlement of disputes could preserve the relationship between bank and client and also protect the financial market as a whole, promoting sustainable quality and good levels of client satisfaction.
Three solutions in practice
At the beginning of a dispute, conciliation can be considered. With the help of lawyers, it may enable the parties to settle certain issues, concerning for example orders transmitted and executed. Mediation can also play a part, through a mediator appointed by the court of first instance or chosen by the parties when the dispute arises. This mediator is an independent expert. A clause concerning mediation may be part of the management mandate signed by the client, making recourse to mediation mandatory for a limited period after the dispute arises. The decision of the French court of appeal which effectively declares the courts incompetent during this period could be transposed to Monaco, thereby obliging the parties to turn to mediation. It is important to note that this form of mediation must be distinguished from banking mediation. The latter depends on the bank’s own internal mediator who is there to solve day-to-day problems between the bank and its clients as consumers.
Satisfying banks and clients
Arbitration offers the advantages of technical expertise and speed. It also guarantees confidentiality to the parties, something that is often desired by clients and is, finally, also to the bank’s advantage. Banking establishments can therefore include an arbitration clause in their standard management contracts. Otherwise, the parties may sign an agreement to go to arbitration when the dispute arises. In this case the appointed arbitrator will make an award in settlement of the dispute. Conciliation, mediation, arbitration: to differing degrees, all these alternative modes of settlement of disputes should make it possible to satisfy the banks in Monaco, and their clients.
