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Chronicles of Arbitration Awards in the Hospitality Industry

Author: Romain DUPEYRE et Marie-Claire DA SILVA ROSA

Type: Article : News

ref: 32018301-321

N0:3 of 2018

Pages: 301-321

Constant changes arising among the hospitality industry and the abundance of associated disputes undoubtedly demonstrate the importance of this branch of the economy. The present article will focus on conflicts encountered among parties to hotel management agreements, in particular between the hotel owner and its manager. These disputes raise issues which are specific to the hotel sector, such as those in relation to the validity of hotel management agreements, in relation to their performance and their termination, and issues related to the assessment of damages in this business sector. Validity of a management agreement is often disputed by one of the parties to an arbitration in response to complaints regarding the improper performance or wrongful termination of the management agreement. This argument is rarely successful before arbitral tribunals. Arbitrators are often led to rule on the proper or improper performance of management agreements, i.e. misconduct by the hotel manager or the hotel owner’s untimely interference in the hotel management. Moreover, arbitrators are also requested to decide on the principle and procedure of the termination. In this respect, parties subject to early termination on this ground usually challenge the termination, alleging that it did not comply with the formalities set by the agreement. Lastly, arbitral tribunals have to assess the compensation to be awarded to parties in relation to the direct and indirect consequences of the termination of the management agreement. In this regard, arbitrators have to examine the merits of claims related to the loss of value of the hotels, damage to reputation or damage caused by the operating loss.