Use the Lexology Navigator tool to compare the answers in this article with those for 20+ other jurisdictions.
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
The arbitration award must be issued in writing within the time limit fixed by the parties.
Pursuant to Article 1244(8) of the New Code of Civil Procedure, the tribunal must state the reasons for its decision and the parties can seek annulment of the award if these are missing. The award must also be signed by the arbitrators according to Article 1237 of the code.
The award need not be reviewed by any other body.
Timeframe for delivery
Are there any time limits on delivery of the award?
Articles 1228 and 1233 of the New Code of Civil Procedure provide that the arbitration award must be issued within three months of the commencement of arbitration, unless otherwise agreed by the parties.
If this timeframe is exceeded, the arbitration award may be declared void by the courts. The parties are free to adapt and extend the deadline in accordance with their needs; however, any extension must be clear and precise. The Luxembourg courts have ruled that stating in the arbitration agreement that “the arbitrator will have sufficient time to issue his arbitration award” does not mean that the parties have agreed on a specific term. As a consequence, in this case the arbitration award – which was issued after the three-month period had lapsed – was declared null and void (Luxembourg District Court, January 25 2011).
An application to declare the award null and void must also be filed within one month of notification of the award or discovery of the grounds for filing the application (Article 1246 of the New Code of Civil Procedure).
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
Where Luxembourg law applies, the arbitrators can order, under sanction of penalty, the payment of a sum as damages in order to force a party to take certain steps.
The possibility to grant punitive damages depends on the applicable law. For instance, if a foreign law applies, the tribunal may award punitive or special damages even if the arbitration takes place in Luxembourg, as long as the foreign law is not contradictory to Luxembourg public order.
Where Luxembourg law applies, damages cannot exceed the amount of the loss.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
Luxembourg law includes no list of preliminary or interim measures. However, on the request of a party, arbitrators can order interim relief that will be declared enforceable by order of the president of the district court.
The courts have further held that an arbitration agreement does not prevent a judge from granting interim relief, such as preventive evidentiary injunctions (Article 350 of the New Code of Civil Procedure) or emergency evidentiary measures (Article 933 of the New Code of Civil Procedure), in urgent cases or where the claim does not seem to be seriously contested (Court of Appeal, January 30 1989; Court of Appeal, June 25 1991).
More recently, it has been held that arbitration clauses have no effect with regard to summary proceedings, which therefore remain admissible (Court of Appeal, June 3 2009). These cases specify that the parties may agree on the competence of the judge to order interim relief.
Anti-suit injunctions are not available under Luxembourg law.
Can interest be awarded?
Interest is determined by the underlying contract or the applicable substantive law.
At what rate?
Where Luxembourg law applies, a legal interest rate will apply. It will be calculated on the principal claim, not on costs.
Is the award final and binding?
The only way to appeal an arbitration award is to challenge it before a second arbitral instance. This is possible only if special provision has been made for this in the arbitration agreement between the parties.
What if there are any mistakes?
There are no specific provisions under Luxembourg law for such cases.
Award can be challenged only based on the limited grounds provided by the New York Convention and Article 1244 of the New Code of Civil Procedure.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
The parties can stipulate in the arbitration agreement whether the tribunal’s decision will be subject to appeal (Article 1231 of the New Code of Civil Procedure).
According to Article 1244 of the code, the enforcement of an award may further be challenged by the local courts.
What is the procedure for challenging awards?
An arbitration award can be challenged before the courts only once it is final.
The annulment of awards on the first nine grounds listed above must be sought within one month of notification of the enforcement order of the president of the district court.
If annulment is sought on the tenth to twelfth grounds listed above, the court must be seized within one month of disclosure of the forgery or the date on which the relevant document was declared fraudulent, provided that no more than five years have elapsed since notification of the enforcement order of the president of the district court.
The annulment of a domestic award must be challenged before the district court, while the enforcement order for an international award must be challenged before the Court of Appeal.
On what grounds can parties appeal an award?
Pursuant to Article 1244 of the New Code of Civil Procedure, an arbitration award can be challenged before the district court only by way of annulment. Article 1244 sets out the grounds for annulment of an award. Article 1246 further provides that the district court is seized of the request for annulment by way of an appeal to the order of execution issued by the president of the court.
The limited grounds for annulment are as follows:
- The arbitration award infringes the public order;
- The dispute should not have been subject to arbitration proceedings;
- There was no valid arbitration agreement;
- The tribunal exceeded the limits of its jurisdiction or its powers;
- The tribunal omitted to rule on one or more points of the dispute and the issues omitted cannot be separated from those on which it has ruled;
- The arbitration award was made by a tribunal that was established improperly;
- The rights of defence were breached;
- The arbitration award does not state the reasons on which it is based, unless the parties have agreed that no reasons are to be given;
- The arbitration award contains contradictory statements;
- The arbitration award was obtained through fraud;
- The arbitration award is based on evidence that has been declared false by an irrevocable judicial decision or that has been recognised to be false; or
- After the arbitration award was issued, a document or other piece of evidence that would have had a decisive influence on the award and was deliberately withheld by the other party was discovered.
What steps can be taken to enforce the award if there is a failure to comply?
The enforcement of international arbitration awards is primarily governed by the New York Convention.
Can awards be enforced in local courts?
In order to be enforceable in Luxembourg, an arbitration award must be approved by a Luxembourg judicial authority.
Articles 1241 and 1242 of the New Code of Civil Procedure apply to domestic arbitration awards, whereas Articles 1250 and 1251 apply to international awards. Both sets of rules provide that the enforcement of an arbitration award will be subject to an enforcement order (exequatur) of the president of the district court.
Article 1251 provides that, subject to the provisions of international conventions, a judge may refuse to enforce an award on the following grounds:
- The award can still be challenged before the arbitrators and the arbitrators did not order its provisional enforcement notwithstanding an appeal;
- The award or its enforcement is contrary to the public order or the dispute was not arbitrable; or
- There are grounds for annulment pursuant to Article 1244.
Interpreting the New York Convention, the Court of Appeal has ruled that the fact that an award can be set aside at the seat of arbitration does not prevent the Luxembourg court from enforcing the award, since Article 1251 of the New Code of Civil Procedure does not recognise the annulment of an award at the seat of arbitration as grounds to refuse enforcement in Luxembourg (Court of Appeal, January 28 1999).
Thus, a party may not argue that annulment proceedings are pending at the seat of the arbitration award in order to object to its enforcement in another country (Luxembourg District Court, May 5 2010). This position has recently been called into question (Court of Appeal, June 25 2015).
Article 1241 of the New Code of Civil Procedure provides that the arbitration award shall be rendered enforceable by order of the president of the district court in whose jurisdiction it was issued. The award must further be recorded with the registry of the court by one of the parties or one of the arbitrators.
How enforceable is the award internationally?
As Luxembourg is a party to the New York Convention, awards issued in Luxembourg are fairly easy to enforce abroad.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
In Luxembourg, a state may claim immunity when facing enforcement measures directed at assets that are used in the exercise of sovereign activities or to fulfil public functions.
However, property of a state entity that serves a non-sovereign purpose and is used for private activity is deemed to be of a commercial nature and can thus be subject to enforcement measures by a creditor of the relevant state entity (Luxembourg District Court, February 25 2004).
Luxembourg is also party to the European Convention on State Immunity of May 16 1972 (Basel). Article 23 of the convention states that: “no measures of execution or preventive measures against the property of a contracting state may be taken in the territory of another contracting state except where and to the extent that the state has expressly consented thereto in writing in any particular case.”
Are there any other bases on which an award may be challenged, and if so, by what?
Article 1244 of the New Code of Civil Procedure provides that an arbitral award may be challenged on the following grounds:
- The award infringes public order;
- The dispute could not have been settled through arbitration;
- There was no valid arbitration agreement;
- The tribunal exceeded the limits of its jurisdiction or of its powers;
- The tribunal omitted to rule on one or more points of the dispute and the issues omitted cannot be separated from the issues on which the tribunal has ruled;
- The award was made by a tribunal that was established improperly;
- The rights of the defence have been breached;
- The award does not state the reasons on which it is based, unless the parties have agreed that no reasons are to be given;
- The award contains contradictory statements;
- The award has been obtained by fraud;
- The award is based on evidence that has been declared false by an irrevocable judicial decision or on evidence that was recognised to be false; or
- After the award was made, a document or other piece of evidence that would have had a decisive influence on the award and was withheld by a deliberate act of the other party was discovered.
How enforceable are foreign arbitral awards in your jurisdiction?
Luxembourg is a pro-arbitration jurisdiction. Luxembourg case law is often inspired by the French case law on arbitration and awards are usually easy to enforce.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
The Court of Appeal has ruled that the fact that an award may be set aside in the seat of arbitration does not prevent the Luxembourg court from enforcing the award, since Article 1251 of the New Code of Civil Procedure does not recognise annulment of an award in the seat of arbitration as grounds to refuse enforcement in Luxembourg (Court of Appeal, January 28 1999, 31, 95).
Therefore, a party may not argue that proceedings to set aside the award are pending in the country of origin in order to object to its enforcement in another country (in this case Luxembourg) (Luxembourg District Court, May 5 2010).
This position was recently called into question, as the Court of Appeal ruled that, in accordance with the New York Convention, enforcement of an award can be refused if it has been set aside in the state of the seat of arbitration – even if the annulment of an award in its state of origin does not constitute grounds for refusal of enforcement pursuant to Article 1251 of the New Code of Civil Procedure (Court of Appeal, June 25 2015).
Click here to view the full article.