The Use of Equity in Regulating Civil Relations in France and Recommendations for Vietnam

Abstract: In Vietnam, equity has become a source of civil law. However, the application of equity is still ineffective because the regulations on the application of equity are narrow in terms of function, field and subject of application. This article will use the comparative legal method to analyze and evaluate the regulations and practices of applying the regulations on the application of equity in resolving civil cases in France to make recommendations for improving Vietnamese law on the function of equity and the subject of application of equity.Keywords: Equity, function of equity, application of equity, French, Vietnam.

Introduction

The use of equity in regulating legal relations in general and civil legal relations in particular is a highly debated issue in legal scholarship and judicial practice in France. The heated debates have mainly revolved around two fundamental questions: the role of equity and the manner of applying equity in judicial practice. After extensive discussions, the French legal community appears to have reached a consensus on two basic functions of equity, namely the supplementary function and the corrective function. Equity plays a supplementary role by filling legal gaps in cases where state law provides no regulation. Equity assumes a corrective role where state law exists but its application produces consequences that are manifestly unjust for the parties involved or for society at large. Furthermore, the authority to apply equity is recognized not only for the courts but has also been extended to arbitral tribunals. As a result, the application of equity has become more frequent in recent years and has demonstrated considerable effectiveness in practice, particularly in the field of arbitration in France.

To provide a foundation for recommendations aimed at improving Vietnamese law, this article employs historical research, legal analysis, and examination of law enforcement practice to clarify the following issues: the concept and role of equity; the recognition of equity as a source of law used to regulate civil legal relations and its relationship with other sources of law in France; specific provisions of French law on the application of equity, including the mechanisms, conditions, and entities entitled to apply equity in the regulation of civil legal relations.

I. Equity – A Source of Civil Law

Before presenting equity as a source of French civil law, it is necessary to first discuss the concept of equity, that is, to clarify the different understandings and perspectives of equity in French society [1].

1. The Concept of Equity

Equity, referred to by the French as “équité”, is a concept frequently mentioned in studies on the origins of law. In Western societies, of which France is one, equity is closely linked to morality and philosophy. It is a category that Aristotle paid particular attention to when he emphasized the essential interrelation between law, justice, and equity. He argued that “equity corrects the law because the law is always deficient and general.”

Aristotle defined equity as a corrective force against the injustices inherent in rigid law. It is understandable that Aristotle emphasized only the corrective function of equity, for in his time, law was expressed in rigid, imperative, and authoritative rules. According to Aristotle, legal rules must be divided into two basic categories: those aimed at protecting the legal order, and those principles that need to be applied reasonably based on specific circumstances. On this intellectual foundation, the strict application of public legal rules gradually shifted towards rules intended to balance conflicting private interests that did not directly affect the public legal order. The essence of equity is to seek a reasonable balance among opposing interests in each particular situation. Thus, appropriate rules must be found to ensure that judicial decisions yield equitable consequences. When justice becomes individualized, law becomes more flexible and humane.

In the Roman legal practice of applying equitable solutions, as well as in English Equity Law, the modification of rules for reasons of justice between opposing parties in specific situations was mainly based on considerations of good faith and assistance for the disadvantaged. Over time, each system developed a body of fundamental principles according to which rights should be based on substance rather than form; the law should not assist wrongdoers in achieving their schemes; agreements must be performed in good faith (pacta sunt servanda); and benefits gained from accident or mistake must be distributed fairly. In Roman times, provisions on events and conduct became more flexible and were applied more practically. With such legal developments, there was no longer a need for a separate body of principles to correct unjust consequences of laws in particular circumstances; equity and law, as in most legal systems, became intertwined, and equity turned into an inseparable part of what is right, with all law necessarily grounded in equity. Most Civil Law countries inherited nearly all principles of equity and incorporated them into codified law to such an extent that, at first glance, one sees only legal rules without recognizing equity itself.

Saint Thomas Aquinas, one of the medieval philosophers, asserted that “equity is inseparable from what is inherently right, but it may differ from what the law declares to be right” [2]. From the 12th century onward, canon law scholars drew inspiration from these writings and defined equity as a source of compassion or mercy. In France, however, many royal edicts reflected distrust of this concept. For example, the Edict of Blois of May 1579 and later the Edict of April 1667 prohibited Parliament [3] from invoking equity in adjudication.

D’Aguesseau, a legal theorist of the Enlightenment, even claimed that if equity were used, it would become “a dangerous instrument of judicial power.” Conversely, Jean Bodin, a 16th-century legal advisor, maintained that “law without equity is a body without a soul.” Jean Domat, a legal scholar of the following century and author of Les Loix Civiles, affirmed that “it is the understanding of equity and a broad perspective on the spirit of law that must serve as the primary foundation for applying and interpreting legal rules in specific circumstances.”

Definitions of equity advanced in recent research on its application often emphasize its functions. Depending on the perspective, one may highlight either the supplementary function or the corrective function of equity. Jacques Derrida, a contemporary thinker, wrote: “For a judgment to be just, at the appropriate moment, it must both rely on the law and transgress the law, both preserve the law and break or suspend the law, so that for each particular case, the judgment must reinvent the law, re-demonstrate the law; recreate the law at least in reaffirming and newly affirming the principle of law in freedom” [4]. Some have even proposed a “holistic approach” to answering the question of equity’s role in social regulation [5]. These postmodern and integrative approaches emphasize more strongly the corrective role of equity.

For the purposes of this article, we adopt the general definition of equity proposed by the Dictionary of Legal Terminology, which states: “Equity is the supreme goal of law, sometimes going beyond what the law prescribes. Equity is a principle that supplements and corrects the law, under which anyone has the right to be treated fairly, equally, and reasonably” [6].

2. The Recognition of Equity as a Source of Law Governing Civil Relations

The use of equity to regulate social relations has been a matter of much debate, revolving around two main issues.

The first issue—the content of the concept of equity—remains controversial because equity is not defined by law, and both judges and legal scholarship hold diverging views to such an extent that the debate on the application of equity has been compared to “the Loch Ness monster” [7]. Numerous modern and postmodern authors have devoted extensive research to equity, employing methods from legal studies, philosophy, sociology, and even interdisciplinary approaches combining chemistry, physics, sociology, psychology, and economics. Their works span a wide range of genres, including monographs, textbooks, dissertations, journal articles, and conference papers. Yet, this centuries-long debate continues without resolution [8].

The second issue—the role of equity—remains disputed because the provisions on equity’s role in French law are not entirely clear. Although the use of equity in adjudication has long existed in Western societies, rooted in Aristotelian thought, the French bourgeois revolution of 1789 sought to sever ties with feudalism and build a rule-of-law state in which the supremacy of law prevailed [9]. In the fervent revolutionary atmosphere, France aimed to break from the old regime to construct a new society under the motto “liberty, equality, fraternity.” However, many French philosophers of the time considered equality not as something naturally inherent in humanity. Diderot, a pre-revolutionary philosopher, wrote in the Encyclopédie of 1857: “Even in the most perfect democracy, complete equality among its members is impossible.” A similar perspective appears in Emmanuel Siéyès’ Qu’est-ce que le Tiers État? [10], in which he emphasized: “The rights that people possess differ and they surpass their mere civic status. Inequalities of property are no different from disparities in age, intelligence, height, or weight.” In short, under this philosophical perspective, humans are not born equal; rather, it is the law that enables them to be treated equally.

Thus, the dominant philosophical foundation of the revolutionary period was that equality (égalité) was not an innate human value. Instead, equality existed only by virtue of law. When equality assumed primacy, equity (équité—understood as dependent on the subjective will of the adjudicator) was relegated to a secondary position. Consequently, the State would use law to regulate social relations, and judges would be confined to the application of law. Because equity depends on the subjective perception of the one who grants it and stands in contrast to the cold rationality of Reason, in a rule-of-law state equity could only play a limited role. In such a state, no adjudication could be better than adjudication based on law; judges were merely the “mouth” of the law [11]. Judges were not the law itself but external to the law, merely reiterating it—its spokesperson. And since legislative power was vested in Parliament, a branch of government directly formed by the people’s choice, judges could not create legal norms. Naturally, judicial decisions could not become a source of law.

Nevertheless, the French bourgeois revolution—although regarded as the most thorough bourgeois revolution and highly influential in the drafting of the Civil Code of 1804—did not eliminate equity entirely. The principle of the supremacy of law also has its exceptions, and such exceptions were enshrined in the Civil Code of 1804 and other legislative instruments.

Specifically, certain provisions in the Civil Code of 1804, the Code of Civil Procedure, and the Administrative Code allow judges to apply equity, such as Article 565 on acquisition of land, Article 1135 on performance of contracts, Article 1244-1 on grace periods, Article 1152 on reduction of penalties (Civil Code), Articles 700 and 1474 on court costs (Code of Civil Procedure), and Article 761-1 on administrative court costs (Administrative Procedure Code).

In judicial practice, French judges at times go beyond the provisions of the law and apply equity outside the framework of positive law.

II. The Functions of Equity and Its Relationship with Other Sources of Law

1. The Functions of Equity

At present, French law contains no statutory provision defining equity, its functions, or its relationship with other sources of law. Nevertheless, legal scholarship and judicial practice show that equity serves two fundamental functions: the corrective function and the supplementary function.

1.1. The Corrective Function

Perhaps the first person to mention this function of equity was Aristotle. According to him, equity is a means to “correct the law where the law is deficient.” Even when a country’s legal system becomes increasingly refined, this function of equity does not disappear, because the very provisions of law may produce fairness in some circumstances but unfairness in others, given the complexity and diversity of civil life.

An illustration from the field of contract law may serve to demonstrate this conclusion. Specifically, Article 1134 of the French Civil Code of 1804 (now Article 1103) provides that a legally concluded contract becomes the law of the parties, and that the parties must perform the contract in good faith. Once a contract has become “the law of the parties,” the parties are bound to comply with it. This principle is referred to as the binding force of contracts. For a long period, French courts adhered strictly to this principle and did not allow for contractual modification.

For example, in the famous Canal de Craponne judgment of 6 March 1876, the French Court of Cassation [12] rejected a request to reassess a fee that had been fixed since 1560. According to the Court, “In no circumstances may a court, even in the name of equity, take into account the passage of time and changing circumstances in order to amend the agreement of the parties and replace the terms voluntarily agreed upon by the parties with new terms determined by the court.”

However, this conception is no longer suitable in today’s ever-changing world. Changing circumstances may render one party excessively disadvantaged while allowing the other to reap undue benefits. Therefore, the content of a specific contract may at times need to be supplemented by a judicial decision in the name of equity. Strictly applying the law (that the contract is the law of the parties and cannot be altered) would lead to consequences that are manifestly unjust.

For this reason, Article 1195 of the current French Civil Code allows the court, at the request of one party, to terminate or amend a contract when circumstances have changed and caused excessive hardship for one party. Although the provision does not explicitly mention equity, one scholar has argued that this provision embodies the spirit of equity, since “equity requires that a contract must produce a minimum balance of benefits for the parties. The judge will rely on this balance to terminate the disadvantageous situation or adjust the contract in order to restore equilibrium” [13].

1.2. The Supplementary Function

With this function, equity supplements the law. The law regulates human behavior, while human behavior is particularly diverse; therefore, the law may contain gaps. Moreover, the law represents the crystallization of the will of the State at a given point in time, and thus it is always characterized by incompleteness or delays compared to the dynamics of social life. Consequently, the law needs to be supplemented by equity. An illustration is Article 700 of the Code of Civil Procedure, which allows the court to order the losing party to pay the winning party compensation corresponding to costs not included in court fees. The purpose of this provision is to remedy the economic imbalance between litigating parties by granting the court the authority to assess the unfairness of a situation or its excessive severity for one party.

The content of a contract may also be supplemented by a court decision based on equity. The court’s use of equity in this regard no longer aims to modify the rigidity and strictness of contractual terms, but rather to supplement them. It is precisely for this purpose that the parties are bound not only by what they have agreed upon with each other but also by “all the requirements of equity, custom, or law” (Article 1135 of the Civil Code of 1804 and Article 1194 of the current Civil Code).

2. The Relationship between Equity and Other Sources of Law

As analyzed above, French law currently contains no provision defining equity, nor its functions, nor the relationship between equity and other sources of law. However, from Article 12 and other provisions (to be presented below), it can be affirmed that equity has both an exclusive relationship and a complementary relationship with other sources of law.

Specifically, equity and other sources of law have an exclusive relationship when the law prescribes particular situations in which judges are permitted to apply equity. This means that in cases where no explicit provision is made, judges must apply the law and are not allowed to apply equity.

Equity and other sources of law have a complementary relationship when the law explicitly provides that judges must apply both law and equity in specific situations; or when the law contains no provisions at all for a particular situation.

III. Provisions on the Application of Equity in Regulating Civil Legal Relations

In France, in addition to explicit provisions granting judges the authority to apply equity, there also exist implicit provisions based on which courts apply equity.

1. Explicit provisions on the application of equity in regulating specific civil legal relations

At present, within the French private law system, there are several provisions that explicitly confer on judges the authority to apply equity:

First, judges apply equity to resolve the issue of accession in relation to movable property. Specifically, Article 565 of the French Civil Code provides: “If two things are movables belonging to different owners, accession shall be governed entirely by the principles of natural equity. The following provisions shall serve merely as examples for the court to refer to when deciding in specific cases where there is no governing provision of law [Articles 566–577].”

Second, judges apply equity to resolve matters concerning co-heirs who have improved undivided estate property. Specifically, Article 815-13 of the French Civil Code provides: “Where one co-heir of an undivided estate has improved estate property using his or her own resources, then, according to the principle of equity, such expenses shall be taken into account when dividing or transferring the estate, corresponding to the increased value. This rule also applies to necessary expenses incurred by that co-heir to preserve the estate assets. Conversely, the co-heir of the undivided estate shall be held liable for deterioration or damage that diminishes the value of the property caused by his or her actions or fault.”

Third, judges apply equity to determine the legal consequences of contracts. Specifically, Article 1194 of the French Civil Code provides: “Contracts are binding not only with regard to what is expressly agreed therein but also with respect to all requirements of equity, custom, or law.”

Fourth, judges apply equity in determining the valuation of marital community property upon termination of marriage. Specifically, Article 1579 of the French Civil Code provides: “If the application of the valuation principles laid down in Articles 1571 and 1574 results in an inequitable outcome, the court may, upon the request of either spouse, decide to waive the application of these principles.”

Fifth, judges apply equity to determine the amount of compensatory allowance after divorce. Specifically, Article 278 of the French Civil Code provides: “In the case of divorce by mutual consent, the spouses shall determine the amount of the compensatory allowance and the method of payment in an agreement executed in private writing signed by their respective lawyers, or in an agreement between the spouses submitted for judicial approval. The spouses may also agree on the circumstances in which payment of the compensatory allowance shall cease. The compensatory allowance may take the form of periodic payments for a limited duration. However, the judge may refuse to approve the spouses’ agreement if it unfairly regulates the rights and obligations of the husband and wife.”

Sixth, judges apply equity in determining court costs and other civil litigation expenses. Specifically, Article 700 of the French Code of Civil Procedure provides: “The judge shall order the losing party to pay: 1° to the other party an amount determined by the judge, corresponding to actual damages and excluding litigation costs; 2° and, where necessary, to the lawyer of the party benefiting from legal aid, part or all of the lawyer’s fees and related expenses, excluding litigation costs, which the aided party would have had to pay if not for such aid. In this case, the judge shall make the assessment in accordance with paragraphs 3 and 4 of Article 37 of Law No. 91-647 of 10 July 1991. In all cases, the judge shall take into account equity or the economic situation of the party ordered to pay. For reasons of equity and economic considerations, the judge may declare that none of the above orders shall be made” [14].

2. Implicit Provisions on the Application of Equity in Regulating Civil Legal Relations

In addition to the explicit provisions referring to equity as mentioned above, certain other legal provisions also allow for the inference of judges’ authority to apply equity.

For example, Article 1195 provides for the performance of contracts in cases of a fundamental change of circumstances, according to which: “If the change of circumstances, which was unforeseeable at the time of the conclusion of the contract, renders the performance of the contract excessively onerous for one party who has not agreed to assume such risk, that party may request a renegotiation of the contract from the other contracting party. The party requesting renegotiation must continue to perform its obligations during the renegotiation period. In the event that renegotiation is refused or fails, the parties may agree to terminate the contract on a date and under conditions determined by themselves, or they may agree to request the court to adapt the contract to the changed circumstances. If no agreement is reached within a reasonable time, the court may, at the request of one of the parties, revise the contract or terminate it on a date and under conditions it determines.” This provision is considered to have drawn from the Principles of European Contract Law (PECL), in which Article 6 explicitly provides for the modification of contracts and the allocation of costs based on equity [15]. Similarly, Article 1171 of the French Civil Code stipulates that in adhesion contracts, any clause creating a significant imbalance between the rights and obligations of the parties shall be null and void.

With respect to damages, “when an agreement provides that the party in breach of an obligation shall pay a sum of money as compensation, the judge shall order the breaching party to pay exactly that sum to the aggrieved party, neither more nor less. However, the judge has the authority, on his own initiative, to reduce or increase the sum agreed upon by the parties if that sum is manifestly excessive or inadequate. Any agreement to the contrary shall be null and void” (Article 1152 of the Civil Code).

Finally, with regard to excessive penalties, the judge may suspend or defer the repayment obligations for up to two years for the debtor on the basis of “taking into account the circumstances of the debtor.” In addition, the judge may decide that the deferred payments shall bear reduced interest, but not lower than the statutory minimum interest rate (Article 1244-1 of the Civil Code). However, this provision was repealed by Ordinance No. 2016-31 of 10 February 2016, Article 2, which promulgated Law No. 91-650 of 9 July 1991.

Although the above provisions do not explicitly refer to equity, explanatory reports as well as commentators agree that these provisions embody equity [16].

IV. Subjects Applying Equity in Regulating Civil Legal Relations

At present, in France, there are two subjects that may apply equity, namely courts and arbitration. Depending on the subject applying equity, the conditions for application will differ.

1. Courts Applying Equity

At present, in France, there are two subjects that may apply equity, namely courts and arbitration. Depending on the subject applying equity, the conditions for application will differ.

1.1. When the Law Contains Explicit Provisions

In the French legal system, as a rule, in adjudication judges may rely only on the law, not on equity, since Article 12 of the Code of Civil Procedure provides that “the judge shall decide the dispute in accordance with the rules of law […]”. Judges may only apply equity in specific cases where the law provides that, in such circumstances, judges are entitled to apply equity. Beyond those situations, judges may only apply the provisions of law and cannot disregard the law to invoke equity, even if the application of such provisions leads to inequitable results. The French Court of Cassation has on several occasions annulled appellate judgments that invoked equity.

Example: In a dispute relating to wages for work performed on public holidays, a labor court accepted the employee’s claim to be paid an additional 100% wage based on the principle of equity. This decision was annulled by the Court of Cassation, which held that employees working on public holidays are entitled only to their normal wages, unless an individual employment contract or a collective labor agreement provides otherwise. The Court of Cassation rejected all arguments based solely on equity or an equitable solution and concluded that equity cannot become a “source of law” [17].

Thus, where the law does not provide for the application of equity, as a principle, judges may not apply equity.

1.2. When the Law Does Not Contain Provisions

The number of provisions that expressly authorize judges to invoke equity is limited, and practice shows that judges tacitly rely on equity.

As the renowned lawyer Jean-Denis Bredin affirmed: “Every judgment, even when clearly based on legal rules, is first and foremost a judgment of equity.”

In practice, there are many instances where judges appear to strictly respect the supremacy of law, but in substance they decide according to equity. In principle, judges are required to follow logical reasoning beginning with the identification of the legal facts, then the determination of the applicable legal rules, and finally reaching a conclusion.

However, practice sometimes reveals the opposite. In judicial practice, certain judges may begin by perceiving that the strict application of the law would run counter to what they deem equitable. In many cases, judges begin with a solution that, in their intuition, appears right and equitable, and only afterward employ traditional logical reasoning in drafting the judgment. One commentator described this judicial practice with the phrase: “The court has dressed equity in the legal garment required by law” [18].

An illustration of French judges’ hesitation in rendering decisions based on the principle of equity is the Giry case. Specifically, Dr. Giry was summoned by the judicial police to a hotel to treat certain guests who were suffering from asphyxiation. During the rescue operation, the doctor was injured by an explosion at the hotel, the cause of which was undetermined. Subsequently, Dr. Giry brought an action against the French Government before the Tribunal de première instance of Seine to claim damages. The court did not find any relevant legal provisions but nonetheless rendered a decision in favor of Dr. Giry. The Paris Court of Appeal considered the decision consistent with equitable principles but found no legal basis, since French law itself had no relevant provision. The court reasoned that the gaps in the law could not be filled by invoking equity, because equity is not a source of law. The Court of Appeal then reached the same conclusion as the lower court but based its reasoning on Article 1384 of the Civil Code, which provides that any person who has custody of a thing is liable for that thing. Since the explosion occurred while the police were securing the hotel, the government was held liable. It is clear, however, that the drafters of the Civil Code had not intended Article 1384 to be applied to a situation like the Giry case.

The case was later brought before the Court of Cassation [19]. The Court of Cassation did not accept the interpretation of the Court of Appeal but upheld its decision, on the ground that when disputes involve the liability of the State, judicial courts may apply rules of public law established by the system of administrative courts.

One notable point in this case is that, before the Court of Appeal, Advocate General Dupin argued that one cannot accept that what is true in administrative courts could be false in judicial courts. In resolving this matter, the Court of Cassation recognized the distinction between the two systems of jurisdiction concerning state liability in order to support the view that law is not self-sufficient but must instead be supplemented by equity.

Commenting on this case, one author concluded that recognizing principles of equity, which constitute the foundation of legal systems of civilized nations, requires the establishment of a common link between private and public law systems, thereby eliminating the public-private divide, so that every judgment bears the imprint of equity. More broadly, law should only exist in the form of general and universal principles, providing instruments to connect the strata of a society, even between nations, and between ideals of social order, progress, and equity common to all civilized societies, since these principles stem from the deepest aspirations of humanity [20].

2. Arbitration Applying Equity

With the aim of making France a preferred venue for dispute resolution among businesspeople worldwide, France is a country with a legal system that strongly supports arbitration. This support is reflected in various aspects, including the issue of applying sources of law to resolve disputes. Unlike judges, who may only apply equity when expressly provided for by law in specific circumstances, arbitrators are entitled to apply equity when the parties have conferred such authority upon them.

The French use two terms: “amiable compositeur” to refer to an arbitrator applying equity, and “amiable composition” to denote the mechanism allowing an arbitrator to apply equity.

This is regarded as a product of French law, first developed in the Civil Code of 1804 and later in the Code of Civil Procedure of 1806, under which arbitration may apply equity when the parties confer upon the arbitrator the authority to resolve their disputes on such a basis. When arbitration is conducted according to equity, the arbitrator is referred to as an “amiable compositeur,” while the provision establishing the mechanism through which arbitration is conducted on the basis of equity is referred to as “amiable composition.” When acting as an “amiable compositeur,” the arbitrator relies on his or her own conception of equity, departing from the strict application of statutory rules [21]. The arbitral award will thus be based on fairness and reasonableness. In addition, the mechanism of amiable composition permits the arbitrator to modify contractual terms, provided that such modification is appropriate and not contrary to public policy [22].

The origins of amiable composition in France date back to the mid-thirteenth century [23]. However, it was not until the eighteenth century, when the distinction between conciliators (amiabilis compositor) and arbitrators (arbitrator) became blurred, that the French Government decided that arbitrators could also render awards based on equity instead of being strictly bound by statutory provisions as before [24]. Article 1497 of the French Code of Civil Procedure provides: “The arbitrator shall render an award based on equity if the parties’ agreement confers such a mission upon them.” Following the major revision in 2011, the French Code of Civil Procedure provides, in Article 1478 (for domestic arbitration) and Article 1512 (for international arbitration, i.e., arbitration of disputes involving a foreign element), respectively, that: “The arbitral tribunal shall resolve the dispute in accordance with the rules of law, unless the parties have conferred upon it the mission to decide as amiable compositeur” (Article 1478), and “The arbitral tribunal shall decide as amiable compositeur if the parties have conferred such a mission upon it” (Article 1512). Under these provisions, when opting for arbitration as a means of dispute resolution, the parties may have greater confidence that their disputes will be resolved not only by the rigid and strict application of statutory provisions, but also by taking into account various considerations, with the arbitral award rendered on the basis of a synthesis of reasonable assessments, and of course, still in conformity with the general principles of society.

The trend of supporting arbitration applying equity is developing strongly in France. This support becomes evident when comparing the provisions on arbitration applying equity at different periods. While under the 1981 provisions, a “parties’ agreement” was required, this phrase was no longer retained in the 2011 version. Instead, the expression “if the parties confer” this authority upon the arbitrator was adopted. This change has the effect of easing the manner in which parties may entrust the arbitral tribunal with the mission of resolving disputes according to equity in two respects. First, with respect to the act of conferral, this may be accomplished by the arbitration agreement or by any other act, even in ad hoc arbitration. Second, with respect to the timing of the choice, this simplification allows the parties to request the arbitral tribunal to resolve the dispute according to equity at any stage of the arbitral proceedings, including transforming the initial mission to apply the law into the mission to apply equity.

V. Recommendations for Vietnam

Based on the analysis of the application of equity in adjusting civil relations in France as outlined above, we make the following recommendations:

First, Vietnamese law should broaden the function of equity. The application of equity to resolve disputes arising in social life is not a new matter in Vietnam or in other countries around the world [25], including France. The reason why the application of equity has been increasingly mentioned in recent times is because we have become more clearly aware of the inherent incompleteness of the law. No matter how talented a legislator may be, he or she cannot anticipate all situations that may arise in social life. Furthermore, Vietnamese law is codified law, meaning that the will of the legislator is embodied in statutory provisions, and that will is “fixed” at a certain point in time, while life, in contrast, is dynamic and constantly changing. It should also be noted that access to justice is a constitutional right [26] that must be implemented in practice. It is precisely in this context that the provision was introduced establishing the obligation of the courts to adjudicate even in the absence of law or when the law is not sufficiently clear [27]. This obligation is specified in Clause 2, Article 14 of the Civil Code 2015, which provides that “The Court may not refuse to resolve a civil case or matter on the grounds that there is no applicable law.” However, it must also be recognized that “Judges and lay assessors shall be independent and shall only obey the law.” This is also a constitutional principle, specifically provided in Clause 2, Article 103 of the Constitution of 2013. The question then arises: how can a judge “only obey the law” when there is no specific statutory provision to apply? The answer lies in the second sentence of Clause 2 of Article 14 of the Civil Code 2015: “In this case, the provisions of Articles 5 and 6 of this Code shall apply.”

Among the principles listed in Articles 5 and 6 of the Civil Code 2015, we find equity. Thus, the application of equity has become a statutory principle in resolving civil disputes. However, it must also be recognized that the application of equity is only a last resort when other solutions do not prove effective. In other words, although the application of equity in resolving civil disputes has been acknowledged, such recognition remains “cautious.”

Of course, such caution has its reasons. One of the reasons may be the lack of clarity of this concept. This is also the general situation in many countries around the world: although there are provisions on the application of equity, there is no definition of what equity actually is. Perhaps due to the complexity and variability of this concept, French law (as well as the law of many countries) remains “silent” and confers upon judges the authority to determine what constitutes equity in specific circumstances. In Vietnam, Clause 3 of Article 45 of the Code of Civil Procedure 2015 provides guidance, stating that: “Equity shall be determined on the basis of fairness recognized by all members of society, consistent with the principle of humanity, impartiality, and equality of rights and obligations of the parties to the civil case.” Yet this guidance is still insufficient to define equity in all situations. Therefore, the answer can only be found by considering the specific circumstances. In the process of determining what constitutes equity, judges must both listen to their inner conviction and gauge the sentiment of the people. These are highly difficult considerations.

Nevertheless, however difficult it may be, the application of equity to resolve disputes remains necessary, and the courts will still have to perform their mission. The French experience shows that courts not only apply equity when authorized by law but may also apply equity (without citing it) even when the law does not expressly permit it. French judges apply equity not only to fill gaps in the law but also to remedy the shortcomings of the law.

As to the concept of equity, French law does not provide a definition but instead confers upon adjudicatory bodies (judges, arbitrators) the authority to determine it themselves, based on the specific circumstances of the dispute. Defining equity, i.e., assigning it a fixed and immutable meaning, would be inappropriate when its function is to render the law adaptable to a constantly changing society. Once trust has been placed in judges and arbitrators to apply equity, it must also mean trusting them to determine what constitutes equity in specific cases.

Second, Vietnamese law should broaden the subjects entitled to apply equity. At present, the two most commonly used methods of resolving civil disputes are national courts and commercial arbitration. However, the current provisions of Vietnamese law on the application of equity refer only to the authority of the courts, without mentioning arbitration. In other words, if one were to rely solely on the wording of the law, only national courts have the authority to apply equity, while arbitral tribunals do not. It should be noted that, even in some countries where the term “tribunal” is used to refer to both national courts and arbitral tribunals, arbitration is not necessarily vested with the authority to apply equity. In the process of revising the Law on Commercial Arbitration, we may refer to the French experience to supplement provisions granting arbitrators the authority to apply equity, whereby when the parties agree to authorize the arbitrators to apply equity, the arbitral tribunal shall apply equity rather than the provisions of the law. The agreement of the parties on the application of equity (in lieu of the law) may be expressed in various forms (in the arbitration agreement or in a separate document) and at various times (at the time of concluding the arbitration agreement or at the time when the dispute arises). However, in order to ensure that the conferral of authority upon arbitrators to apply equity does not give rise to the risk of arbitral abuse, it is necessary to establish a mechanism for controlling arbitrators through provisions on the liability of arbitrators, which, in our view, should also be more clearly provided for in the relevant legal instruments, especially in the Law on Commercial Arbitration [28].

REFERENCE LIST

1. André-Jean Arnaud, Entre modernité et mondialisation – Cinq leçons d’histoire de la philosophie du droit et de l’État (Between Modernity and Globalization – Five Lessons in the History of the Philosophy of Law and the Rule of Law), L.G.D.J., coll. Droit et société, 1997.

2. Ahmet Cemil Yildirim, “Amiable Composition in International Arbitration,” Journal of Arbitration Studies, No. 24/2014.

3. Ngo Quoc Chien, “Citizens’ Right of Access to Justice and the Obligation of Courts to Adjudicate,” Journal of State and Law, No. 3 (335), March (2016).

4. Ngo Quoc Chien, Le Thi Thu Hanh, “Liability of Arbitrators under a Comparative Legal Perspective and Suggestions for Vietnam,” in National Scientific Conference “Improving the Law on Commercial Arbitration to Meet the Requirements of Integration and Development”, organized by the University of Economics – University of Danang, September 6, 2024, ISBN: 978-604-79-4644-0.

5. Nguyen Dang Dung, “The Role of Courts in Protecting Justice, Human Rights, and Citizens’ Rights under the 2013 Constitution,” in the book Implementation of Constitutional Rights in the 2013 Constitution, Hong Duc Publishing House, p. 744 (2015).

6.Do Van Dai, Methods of Dispute Resolution by Arbitration in the Context of International Economic Integration, Hong Duc Publishing House (2022).

7. Emmanuel Siéyès, Qu’est-ce que le Tiers État?, PUF, Col. Quadrige (1982).

8. Jean-Claude Monier, “A propos de deux textes de Portalis” (Remarks on Two Texts by Portalis), Revue Histoire de la Justice, No. 11 (1998).

9. J. Derrida, Force de la loi, Le fondement mystique de l’autorité (Force of Law: The Mystical Foundation of Authority), éd. Galilée (1994).

10. Dao Ba Minh, “The Formation and Development of Equity as a Source of Law in Civil Law Worldwide – Lessons for Vietnam,” Democracy and Law Journal, No. 391, October (2023).

11. Newman Ralph A., “La nature de l’équité en droit civil” (The Nature of Equity in Civil Law), Revue internationale de droit comparé, Vol. 16, No. 2, April–June (1964).

12.Pavia Marie-Luce, “Remarques méthodologiques autour du retour de l’équité dans le jugement” (Methodological Reflections on the Return of Equity in Adjudication), Revue interdisciplinaire d'études juridiques, Vol. 4 (2001).

13. Pieter Sanders, International Commercial Arbitration, Springer Netherlands (1960).

14.Phung Trung Tap, “Application of Equity in Civil Dispute Resolution,” Journal of Legislative Studies, No. 01 (401), January (2020).

15. Yves Letartre, Le juge et l’équité:mythe ou réalité ? (The Judge and Equity: Myth or Reality?). URL: https://adekwa-avocats.com/juge-lequite-mythe-realite. [truy cập ngày 22/6/2024].

16. French Supreme Court – Labour Chamber (Cass. soc., 24 January 1985, 82-41.635, Bulletin 1985 V No. 62 p. 43).

17. French Supreme Court – Civil Chamber (Cass., civ. 2, 23 November 1956, 56-11.871, Bulletin, No. 626 p. 407).

18. French Supreme Court – Civil Chamber (Cass., Civ., 6 March 1876).

[*] Assoc. Prof., PhD, Lecturer, Foreign Trade University. Email: ngoquocchien@ftu.edu.vn

[*] LLM, PhD Candidate in Economic Law, Foreign Trade University. Email: hanhlethu3377@gmail.com

[1] See Pavia Marie-Luce, “Remarques méthodologiques autour du retour de l’équité dans le jugement,” Revue interdisciplinaire d'études juridiques, Vol. 46, pp. 111–139 (2001).

[2] Quoted from: Yves Letartre, Le juge et l’équité: mythe ou réalité ?. URL: https://adekwa-avocats.com/juge-lequite-mythe-realite. [accessed June 22, 2024].

[3] Parlement – at that time also exercised judicial functions.

[4] J. Derrida, Force de la loi, Le fondement mystique de l’autorité, éd. Galilée, p. 51 (1994).

[5] Pavia Marie-Luce, op. cit., pp. 111–139.

[6] Online version. See entry “Équité.” Available at: https://www.dictionnaire-juridique.com/definition/equite.php#:~:text=L'%22%C3%A9quit%C3%A9%22%20est%20le,traitement%20juste%2C%20%C3%A9galitaire%20et%20raisonnable. [accessed June 23, 2024].

[7] In French, called “le vieux serpent de mer,” i.e., a very curious subject, much discussed, but ultimately no one can define exactly what is being discussed – much like the Loch Ness monster, often talked about but never actually seen.

[8]Pavia Marie-Luce, op. cit., pp. 111–139.

[9] André-Jean Arnaud, Entre modernité et mondialisation – Cinq leçons d’histoire de la philosophie du droit et de l’État, L.G.D.J., coll. Droit et société (1997). See also: Jean-Claude Monier, “A propos de deux textes de Portalis,” Revue Histoire de la Justice, No. 11, pp. 79–84 (1998).

[10] Emmanuel Siéyès , Qu’est-ce que le Tiers État?, PUF, Col. Quadrige, p. 88 (1982).

[11] Le juge est la bouche du droit.

[12] French Supreme Court – Civil Chamber (Cass., Civ., 6 March 1876).

[13] Antoine Adeline, Gérer ses contrats par temps de crise : théorie et pratique de l’imprévision (article 1195 du code civil), La Revue (2022) https://larevue.squirepattonboggs.com/gerer-limprevision-art-1195-du-code-civil-quelques-conseils-pratiques-a-laune-de-decisions-recentes.html#:~:text=Le%20nouvel%20article%201195%20du,du%20contrat%20%C3%A0%20son%20cocontractant. [accessed March 2, 2025].

[14] Similarly, in administrative law, judges also apply equity in allocating administrative litigation costs. Specifically, Article 761-1 of the French Code of Administrative Justice provides: “In all proceedings, the judge shall order the losing party or the party liable for costs to pay to the other party an amount determined by the judge in accordance with actual damages, excluding litigation costs. The judge shall take into account equity or the financial situation of the party ordered to pay. The judge may, on his own motion, also decide, for reasons of equity or financial situation, that no such order shall be made.”

[15] Article 6:111-3 of the Principles of European Contract Law (PECL) provides: Where the parties fail to reach agreement within a reasonable time, the court may: (a) terminate the contract at a time and on conditions to be determined by the court; or (b) adapt the contract in order to fairly distribute between the parties the losses and gains resulting from the change of circumstances.

[16] In either case, the court may order the party who has refused to negotiate or terminated negotiations in bad faith to compensate the other party for losses caused by such refusal or termination.

[17] Yves Letartre, Le juge et l’équité: mythe ou réalité ?. URL: https://adekwa-avocats.com/juge-lequite-mythe-realite/ [accessed July 4, 2024].

[18] French Supreme Court – Labour Chamber (Cass. soc., 24 January 1985, 82-41.635, Bulletin 1985 V No. 62 p. 43). This solution has since been reiterated several times by the Supreme Court. See, for example, most recently: Cass. soc., 6 July 2022, 21-13652.

[19] Yves Letartre, Le juge et l’équité: mythe ou réalité ?. URL: https://adekwa-avocats.com/juge-lequite-mythe-realite/ [accessed July 4, 2024].

[20] French Supreme Court – Civil Chamber (Cass., civ. 2, 23 November 1956, 56-11.871, Bulletin, No. 626 p. 407).

[21] A. Newman Ralph, La nature de l'équité en “droit civil”, op. cit., pp. 289–295.

[22] On this mechanism, see also: Do Van Dai, Methods of Dispute Resolution by Arbitration in the Context of International Economic Integration, Hong Duc Publishing House, p. 511 (2022).

[23] Pieter Sanders, International Commercial Arbitration, Springer Netherlands (1960), p. 19; ICC Arbitral Award No. 3267 (1979) and No. 3316.

[24] Ahmet Cemil Yildirim, “Amiable Composition in International Arbitration,” Journal of Arbitration Studies, No. 24, p. 35 (2014).

[25] Ahmet Cemil Yildirim, tlđd, tr. 35.

[26] Dao Ba Minh, “The Formation and Development of Equity as a Source of Law in Civil Law Worldwide – Lessons for Vietnam,” Democracy and Law Journal, No. 391 (October 2023).

[27] Specifically, Clause 1, Article 14 of the Constitution of 2013 generally provides: “Human rights in the political, civil, economic, cultural and social fields shall be respected and guaranteed.” Thereafter, Clause 3, Article 102 of the Constitution of 2013 further clarifies the respect and guarantee of human rights by stipulating: “The People’s Courts shall have the duty to protect justice, human rights and citizens’ rights…” Some authors argue that “The Court has the duty to protect justice […]. That is equity, equity is justice.” See Nguyen Dang Dung (2015), “The Role of Courts in Protecting Justice, Human Rights, and Citizens’ Rights under the 2013 Constitution,” in IMPLEMENTATION OF CONSTITUTIONAL RIGHTS IN THE 2013 CONSTITUTION, Hong Duc Publishing House, p. 744 (2015).

[28] On this issue, see: Ngo Quoc Chien, “Citizens’ Right of Access to Justice and the Obligation of Courts to Adjudicate,” Journal of State and Law, No. 3 (335), March (2016).

[29] On the issue of arbitrators’ liability, see: Ngo Quoc Chien, Le Thi Thu Hanh, “Liability of Arbitrators under a Comparative Legal Perspective and Suggestions for Vietnam,” in National Scientific Conference “Improving the Law on Commercial Arbitration to Meet the Requirements of Integration and Development”, organized by the University of Economics – University of Danang, September 6, 2024, ISBN: 978-604-79-4644-0.