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National arbitration laws
What legislation applies to arbitration in your jurisdiction?
In 1980 and 1981 France adopted a modern arbitration statute creating two arbitration regimes: one for domestic arbitration and the other for international arbitration. ‘International arbitration’ is defined broadly as arbitration in which “international trade interests are at stake” (Article 1504 of the Code of Civil Procedure). However, the statute, codified in Book IV of the Code of Civil Procedure, remained silent on many issues. As a result, a large body of jurisprudence emerged to fill in the blanks.
On January 13 2011 France adopted Decree 2011-48, replacing Book IV with a redrafted set of 85 articles divided into Title I (Domestic Arbitration: Articles 1442 to 1503 of the code) and Title II (International Arbitration: Articles 1504 to 1527 of the code). The new statute encompasses and clarifies the provisions of the previous statute, confirms and codifies existing case law and practice, and incorporates a few innovations.
Are there any mandatory laws?
Under French international arbitration law, only a few mandatory rules apply, relating to arbitrability, the obligation to ensure due process and a fair trial, and international public policy. The principle of party autonomy in respect of procedural matters is also emphasised.
New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?
France is a signatory to the New York Convention. It entered into force on September 24 1959.
Are there any reservations to the general obligations of the convention?
France applies the convention only to the recognition and enforcement of awards made in the territory of another contracting state. However, pursuant to Article VII(1) of the convention, a party may avail of the more favourable French provisions on recognition and enforcement of awards (Articles 1514 to 1527 of the Code of Civil Procedure). Therefore, the New York Convention is rarely applied in France.
Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?
France is a member of the European Convention on International Commercial Arbitration, signed on April 21 1961 in Geneva.
France is also a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, signed in Washington DC on March 18 1965; and the Energy Charter Treaty of December 17 1994, which includes provisions on the protection of foreign investments. In addition, France has signed over 100 bilateral treaties concerning the promotion and protection of investments, 96 of which are in force.
On March 17 2015 France signed the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (known as the ‘Mauritius Convention’). France has not yet ratified the Mauritius Convention.
Has your jurisdiction adopted the UNCITRAL Model Law?
France is not an UNCITRAL Model Law country and has thus followed its own path in respect of arbitration legislation.
Are there any impending plans to reform the arbitration laws in your jurisdiction?
France revised its arbitration statute in 2011 and is therefore unlikely to reform Book IV of the Code of Civil Procedure in the coming years.
What are the validity requirements for an arbitration agreement?
An arbitration agreement is valid if the parties have consented to it. In domestic arbitration, it must also be in writing (Article 1443 of the Code of Civil Procedure). This is not the case in international arbitration, where the arbitration agreement is subject to no formal requirements (Article 1507 of the code). That said, it is easier to establish consent to arbitration with a written agreement.
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
France is well known as a favourable venue for international arbitration. This is largely due to the deference accorded to the arbitration agreement and award, as well as the protection of arbitration proceedings from judicial interference. Thus, for example, when a dispute subject to an arbitration agreement is brought before a court, the default position is for the court to decline jurisdiction in favour of the arbitral tribunal (Article 1448 of the Code of Civil Procedure).
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
Decree 2011-48 is silent on the issue of consolidating separate arbitration proceedings. However, tribunals and courts have taken the position that a tribunal seated in France is not entitled to consolidate separate arbitration proceedings under one or more contracts, unless the parties have consented to such consolidation. That consent may be express or implied. It will be implied if it is found, for example, that there is a necessary link between the various contracts at issue. Conversely, tribunals will be less inclined to agree to consolidation if the various contracts have irreconcilable dispute resolution provisions, suggesting that the parties did not intend for consolidation to occur.
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
According to Article 1511 of the Code of Civil Procedure, the substantive law of the dispute is determined in accordance with the choice of the parties. If the parties have not made a choice, the tribunal shall decide the dispute in accordance with the rules of law that it considers appropriate. There is no obligation for the tribunal to apply conflict of laws rules. In general, the tribunal will select the law that is most closely connected to the dispute. In addition to the substantive law, the tribunal is to take trade usages into account.
Are there any provisions on the separability of arbitration agreements?
Decree 2011-48 provides for the separability of arbitration agreements. Article 1447 of the Code of Civil Procedure provides that an arbitration agreement is independent of the contract in which it is contained. It follows, therefore, that the arbitration agreement is not itself affected by the invalidity of the contract in which it is contained.
Are multiparty agreements recognised?
Multiparty agreements are recognised under French arbitration law. However, Decree 2011-48 does not address issues that arise in the context of multiparty arbitration, except in relation to the constitution of the tribunal. In this respect, Article 1453 of the Code of Civil Procedure provides that if there are more than two parties to the dispute and they fail to agree on the procedure for constituting the tribunal, the person responsible for administering the arbitration or, where there is no such person, the judge acting in support of the arbitration shall appoint the arbitrator(s). This provision codifies the Court of Cassation decision in Dutco, which established the principle that the parties are to be treated equally in relation to the constitution of the tribunal.
Criteria for arbitrators
Are there any restrictions?
According to Article 1450 of the Code of Civil Procedure, only a natural person with full capacity to exercise his rights may act as an arbitrator. Moreover, if an arbitration agreement designates a legal person, that person shall only have the power to administer the arbitration. These are the only restrictions regarding arbitrator selection contained in Decree 2011-48.
Before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his independence or impartiality, and shall also disclose promptly any such circumstance that may arise after accepting the mandate (Article 1456 of the code). In this regard, French courts have held that the arbitrator’s duty is to disclose to the parties all circumstances that may affect his judgement and that may give rise, in the eyes of the parties, to reasonable doubts as to his impartiality. Arbitrators need not disclose information that is public knowledge.
What can be stipulated about the tribunal in the agreement?
Decree 2011-48 does not specify the kinds of contractual stipulation that parties can include about the tribunal in their arbitration agreement. However, Article 1452 of the Code of Civil Procedure sets out the procedure to be followed if the parties have not agreed on the procedure for appointing the arbitrator(s). It follows that parties are free to decide, and to stipulate in an arbitration agreement, the procedure regarding the appointment of arbitrator(s), as well as any qualifications that the parties may wish the arbitrator(s) to possess. This is confirmed by Article 1508 of the code, which provides that an arbitration agreement may designate the arbitrator(s) or provide for the procedure for their appointment, directly or by reference to arbitration rules or procedural rules. The only restriction is that the parties cannot include stipulations contrary to Articles 1450 to 1460 of the code in the arbitration agreement (Article 1461 of the code). These set out mandatory stipulations regarding arbitrators, the constitution of the tribunal and the judge acting in support of the arbitration.
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?
Decree 2011-48 provides for certain default requirements in respect of the constitution of a tribunal. Thus, for example, a tribunal shall be composed of a sole arbitrator or an uneven number of arbitrators; and if an arbitration agreement provides for an even number of arbitrators, an additional arbitrator shall be appointed (Article 1451 of the Code of Civil Procedure). Decree 2011-48 also includes provisions regarding the steps that must be followed when the parties have not agreed on the procedure for appointing the arbitrator(s) (Article 1452 of the code), and when there are more than two parties to the dispute and they fail to agree on the procedure for constituting the tribunal (Article 1453 of the code). Any other dispute relating to the constitution of a tribunal shall be resolved, if the parties cannot agree, by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration (Article 1454 of the code).
Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?
The manner of challenging the appointment of an arbitrator depends on the type of arbitration (Article 1456 of the Code of Civil Procedure). In the case of institutional arbitration, the particular institution’s rules will set out the proper procedure for challenging the appointment of an arbitrator. The courts are not involved until after the award is issued, given that the improper constitution of a tribunal is one of the grounds to set aside an award. Thus, once the award is issued, courts may be called upon to review an arbitrator’s appointment, including his independence and impartiality. French arbitration law therefore denies parties the right to seek an arbitrator’s removal from the courts during the course of arbitration if an arbitration institution or other authority has been designated by the parties to decide on challenges.
In the case of non-institutional or ad hoc arbitration, parties seeking to challenge the appointment of an arbitrator must do so before the judge acting in support of the arbitration. The judge’s ruling on the issue is final and binding, and parties may no longer rely on it to set aside the award once it has been rendered. In addition, regardless of the type of arbitration to which the parties have agreed, the parties may, by unanimous agreement, prevent an arbitrator from acting (Article 1458 of the code).
How should an objection to jurisdiction be raised?
The tribunal has exclusive jurisdiction to rule on objections to its jurisdiction (Article 1465 of the Code of Civil Procedure). Thus, objections to a tribunal’s jurisdiction should be raised promptly before the tribunal, in accordance with the relevant institutional rules if the arbitration is being administered by an institution.
Replacement of an arbitrator
Why and how can an arbitrator be replaced?
Arbitrators may be replaced for the same reasons that they can be challenged. These include lack of independence or impartiality (Article 1456 of the Code of Civil Procedure), legal incapacity (Article 1457 of the code) or unanimous consent of the parties (Article 1458 of the code). The procedure to replace an arbitrator is the same as that to challenge an arbitrator and is set out in Article 1456 of the Code of Civil Procedure.
Powers and obligations
What powers and obligations do arbitrators have?
The tribunal may define the procedure to be followed in the arbitration (Articles 1464 and 1509 of the Code of Civil Procedure). Moreover, the tribunal:
- has exclusive jurisdiction to rule on objections to its jurisdiction (Article 1465 of the code);
- shall take all necessary steps concerning evidentiary and procedural matters (Article 1467 of the code); and
- can order any conservatory or provisional measures that it deems appropriate, set conditions for such measures and, if necessary, apply penalties if such measures have not been complied with (Article 1468 of the code).
The tribunal also has the power to rule on a request for verification of handwriting or claim of forgery (Article 1470 of the code), and can stay the proceedings where necessary (Article 1472 of the code).
Arbitrators have the express duty to act diligently and in good faith in the conduct of the proceedings (Article 1464 of the code). Likewise, the tribunal must ensure that the parties are treated equally and uphold the principle of due process (Article 1510 of the code). Arbitrators also have a continuing duty of disclosure as regards circumstances that may affect their independence or impartiality (Article 1456 of the code). The arbitrators’ other obligations include the duty to:
- perform their mandate until it is completed (Article 1457 of the code);
- decide the dispute in accordance with the appropriate rules of law (Article 1511 of the code), or as amiable compositeur if empowered to do so (Articles 1478 and 1512 of the code), and in accordance with the mandate conferred on them (Article 1520 of the code); and
- maintain the confidentiality of the tribunal’s deliberations (Article 1479 of the code).
Finally, arbitrators have certain obligations concerning the drafting of arbitration awards (Articles 1481 and 1482 of the code).
Liability of arbitrators
Are arbitrators immune from liability?
Decree 2011-48 does not address the issue of arbitrator immunity, but case law confirms that arbitrators – like judges – are granted some form of immunity. Thus, for example, arbitrators are not liable for reasoning errors. However, this protection is not available in case of a personal failure that is incompatible with their adjudicatory function, such as wilful and gross negligence or denial of justice. In exceptional circumstances, arbitrators may also be exposed to criminal liability for acts that contravene the Penal Code. Moreover, in rare instances, arbitrators have been found responsible when an award has been annulled as a result of their misconduct. For example, in the context of domestic arbitrations (and in the absence of mechanisms implemented by institutions such as the International Chamber of Commerce to avoid such outcomes), arbitrators have been ordered to reimburse part or all of their fees when held liable for failing to request an extension of the statutory deadline for issuing an award (an award issued after that deadline has expired may be set aside).
Communicating with the tribunal
How do the parties communicate with the tribunal?
Decree 2011-48 includes no rules on parties’ communications with the tribunal. However, it is understood that ex parte communications with the tribunal would be considered inappropriate.
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?
Unanimous agreement from the tribunal is not required in domestic arbitration (Article 1480 of the Code of Civil Procedure). The same is true in international arbitration, unless the arbitration agreement provides otherwise (Article 1513 of the code). In both cases, the will of the majority is sufficient if the arbitrators are unable to reach a unanimous decision (Articles 1480 and 1513 of the code). Moreover, if there is no majority, the chairman of the tribunal in an international arbitration shall rule alone (Article 1513 of the code). There are no particular implications of a non-unanimous – or even non-majority – decision pursuant to Decree 2011-48. If the dissenting arbitrator(s) refuse to sign the award, it has the same effect as if all arbitrators had signed it.
Are there any disputes incapable of being referred to arbitration?
According to Article 2060 of the Civil Code, disputes regarding the status and capacity of persons, divorce and judicial separation, public bodies and institutions and, generally, all matters relating to public policy are not arbitrable. However, the French courts have not found this provision to apply in international arbitration, as opposed to domestic arbitration. Thus, in accordance with Article 1504 of the Code of Civil Procedure, all disputes in which international trade interests are at stake are arbitrable, subject to certain exceptions (ie, French or foreign overriding mandatory provisions that may trigger international public order exceptions, as established by the Court of Cassation in Dalico).
Can the arbitrability of a dispute be challenged?
In both domestic and international arbitration, the arbitrability of a dispute may be challenged before the tribunal and may also serve as grounds for an annulment application.
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
The principle of competence-competence is recognised in French arbitration law. Article 1465 of the Code of Civil Procedure provides in this regard that the tribunal has exclusive jurisdiction to rule on objections to its jurisdiction. A party can ask the courts to determine an issue relating to the tribunal’s jurisdiction, but only if a tribunal has not yet been seized of the dispute or if the arbitration agreement is manifestly void or manifestly not applicable (Article 1448 of the code).
Starting an arbitration proceeding
What is needed to commence arbitration?
Decree 2011-48 contains no provision on the commencement of arbitration proceedings. It only identifies the time when the tribunal can be said to be constituted (Article 1456 of the Code of Civil Procedure). Arbitration is usually commenced by the submission of an arbitration notice or request to a party or an administering institution.
Are there any limitation periods for the commencement of arbitration?
There is no specific limitation period in Decree 2011-48 for the commencement of arbitration. However, the tribunal must determine whether the arbitration has been filed in accordance with either a contractual or statutory limitation period. If the law governing the merits of the case is French law, the limitation period for actions in personam and in rem is five years from the date on which the claimant knew or ought to have known of the relevant facts (Article 2224 of the Civil Code). Other limitation periods exist – for instance, 30 years for certain real estate disputes. Service of an arbitration request interrupts the limitation period.
Are there any procedural rules that arbitrators must follow?
The arbitrators must follow the procedural rules agreed by the parties, either directly in the arbitration agreement or by reference. In the absence of agreement of the parties, the tribunal shall define the procedural rules to be followed in the arbitration (Article 1509 of the Code of Civil Procedure). Decree 2011-48 expressly provides that, even where specific procedural rules are adopted, “the arbitral tribunal shall ensure that the parties are treated equally and shall uphold the principle of due process” (Article 1510). In general, the tribunal must also comply with its mandate and ensure that its award is not contrary to international public policy (Article 1520 of the code). The arbitrators also have a duty of diligence and good faith (Article 1464 of the code). Other specific rules exist – for instance, Decree 2011-48 provides that witnesses appearing before the tribunal shall not be sworn in, even though the administration of oaths is common in international arbitration practice (Article 1467 of the code).
Are dissenting opinions permitted under the law of your jurisdiction?
Decree 2011-48 is silent on the issue of dissenting arbitrators. For a long time, dissenting opinions were a controversial topic, because some considered that they would violate the confidentiality of the tribunal’s deliberations. However, the prevailing view today is that there is no impediment to dissenting opinions, provided that the confidentiality of the deliberations is maintained.
Can local courts intervene in proceedings?
French courts may be involved in the arbitration proceedings only in limited circumstances. A party to an arbitration can have recourse to a supporting judge, who can assist in the constitution of the tribunal and has the power to take measures in aid of arbitration, such as assisting with provisional or conservatory measures and the taking of evidence.
Pursuant to Article 1449 of the Code of Civil Procedure, prior to the constitution of the tribunal, the French courts can appoint an expert to assess facts relevant to the dispute, usually of a technical nature. Although this procedure is aimed at safeguarding a party’s right to evidence, the expert carries out investigations and issues an opinion which may cover the issues to be decided in an arbitration.
Can the local courts assist in choosing arbitrators?
If the parties cannot agree, and in the absence of a person or institution responsible for administering the arbitration, the supporting judge will appoint the sole or presiding arbitrator and will generally resolve any dispute relating to the constitution of the tribunal, unless the arbitration agreement is manifestly void or not applicable (Articles 1452 to 1455 of the Code of Civil Procedure).
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
Decree 2011-48 contains no provisions on the default of a party. Neither the arbitrators nor the French courts can compel parties to arbitrate. In practice, where a respondent fails to participate in an arbitration, the administering institution or, in its absence, the supporting judge will appoint the arbitrator in place of the defaulting party. The tribunal will then conduct the proceedings without participation from the defaulting respondent. Any award can be recognised and enforced, provided that the defaulting respondent was duly informed of the arbitration proceedings and their progress, had an opportunity to participate and elected not to do so.
The supporting judge may, upon application of a party with leave of the tribunal, summon a third party to obtain a copy of an official or private deed or the production of an item of evidence (Article 1469 of the Code of Civil Procedure). This provision is of assistance only where the supporting judge has territorial jurisdiction.
In what instances can third parties be bound by an arbitration agreement or award?
A third party can be bound by an arbitration agreement or an award only when it has consented, explicitly or implicitly, to the extension of the arbitration clause. Depending on the specific circumstances of the case, implicit consent may be found in the third party’s involvement in the negotiations, performance or termination of the underlying agreement, the intent of a parent company of the signatory or similar. A third party may also be bound when there is an assignment or transfer of rights.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
Decree 2011-48 is silent on the place and language of the arbitration. The determination of these issues is left to the discretion of the tribunal in the absence of an agreement between the parties.
How is evidence obtained by the tribunal?
Article 1467 of the Code of Civil Procedure, applicable to both domestic and international arbitration, provides that the tribunal shall take all necessary steps concerning evidentiary matters, including calling any person to provide testimony and enjoining a party to produce evidence (under threat of penalties if necessary).
What kinds of evidence are acceptable?
Admissible evidence includes documentary evidence, oral and written testimony and expert evidence.
Is confidentiality ensured?
Article 1464 of the Code of Civil Procedure expressly provides for the confidentiality of domestic arbitrations (unless the parties agree otherwise). This provision does not apply to international arbitration (unless the parties agree otherwise). If the parties disagree, the courts will likely decide on the extent of the confidentiality of the proceedings. As a result, parties would be well advised to include an appropriate provision in their agreement. A breach of confidentiality does not in itself provide a basis for setting aside or annulling the final award. However, it may entitle the injured party to compensation.
Can information in arbitral proceedings be disclosed in subsequent proceedings?
As there is no express provision in Decree 2011-48 on confidentiality in international arbitration, information provided in arbitration proceedings may be disclosed in subsequent proceedings (unless the parties have agreed otherwise). French courts will likely have to address this issue in the coming years. Regardless, parties may rely on the information provided in the arbitration in court proceedings relating to the recognition or challenge of the award.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
French law does not mandate the application to arbitration of any specific ethical code or other professional standards. Ordinarily, lawyers appearing before tribunals will be bound by the ethical and professional rules applicable to them. In any event, Article 1464 of the Code of Civil Procedure requires both the parties and the arbitrators to “act diligently and in good faith in the conduct of the proceedings.”
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
The costs of arbitration include the fees and expenses of the arbitrators, lawyers, experts, witnesses and other professionals whose services may be required (eg, court reporters and interpreters), as well as the fees and expenses of any arbitration institution involved in the proceedings. Although arbitrators have the right to determine their fees (eg, in ad hoc arbitration proceedings), these amounts will often be determined in accordance with the applicable arbitration rules by reference to various factors, including:
- the diligence of the arbitrators;
- the amount of time spent on adjudicating the dispute and writing the award;
- the speed of the proceedings; and
- the complexity of the claims.
Administrative fees are often determined based on the amount of the claims and counterclaims.
There are no specific rules on the award of costs in arbitration proceedings; nor is the unsuccessful party obliged to bear the successful party’s costs. However, parties may include provisions on the allocation of costs in the arbitration agreement. Otherwise, the allocation of costs is left entirely to the tribunal (Articles 1464 and 1509 of the Code of Civil Procedure). The tribunal will consider factors such as:
- the relative proportions of successful and unsuccessful claims;
- the reasonableness of the parties' legal expenses; and
- the parties' procedural behaviour during the arbitration.
Thus, a party that deliberately delays proceedings may be ordered to bear a portion of the other party’s legal costs, irrespective of the outcome of the arbitration.
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
According to Article 1468 of the Code of Civil Procedure, a tribunal may impose on the parties any conservatory or provisional measures that it deems appropriate, including security for costs. In theory, French courts may also order security for costs notwithstanding the existence of an arbitration agreement, but only when the tribunal has not yet been constituted (Article 1449 of the code). In practice, however, French courts rarely do so. Moreover, this would be inconsistent with the French courts’ recent decisions holding that impecunious parties have a right to arbitral justice.
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?
In order for an international or foreign award to be recognised in France, it is necessary to establish its existence by producing the original award and arbitration agreement. French courts will recognise the award if it is not manifestly contrary to international public policy (Articles 1514 and 1515 of the Code of Civil Procedure). The order granting recognition of the award is subject to appeal on the limited grounds set forth in Article 1520 of the code.
Decree 2011-48 also provides that an award shall state:
- the full names and address of the parties;
- the names of the counsel, if applicable;
- the names of the arbitrators;
- the date and place of the award (Article 1481 of the code); and
- a “succinct” description of the claims and arguments of the parties and the reasons for the arbitrators’ decision (Article 1482 of the code).
Failure to comply with these requirements does not affect the validity of an international award (Article 1520 of the code). By contrast, a domestic award will be void if it:
- is not signed by all arbitrators (or does not state that a minority refused to sign);
- does not include the name of the arbitrators and date of the award; or
- does not contain the reasons for the award (Articles 1483 and 1492 of the code).
Timeframe for delivery
Are there any time limits on delivery of the award?
In domestic arbitration, the duration of the tribunal’s mandate is limited to six months “as of the date on which the tribunal is seized of the dispute” (Article 1463 of the Code of Civil Procedure). However, any time limit set pursuant to Article 1463 or the applicable arbitration rules can be extended by agreement between the parties, the administering institution or the supporting judge (Article 1463(2) of the code). Decree 2011-48 does not contain time limits on delivery of an international award.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
The issue of remedies is governed by the law applicable to the merits of the arbitration. Under French law, there are no express limits on available remedies in international arbitration. The tribunal may order specific performance of a contract or award monetary damages. The upper limit on available remedies is the French understanding of international public policy. For example, French courts may refuse to enforce an award for punitive damages if there is no causal link between the harm incurred and the amount awarded.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
The power of the French courts to order provisional or conservatory measures depends on whether the tribunal has been constituted (Article 1449 of the Code of Civil Procedure). Pending constitution of the tribunal, the French courts can issue a broad range of interim measures designed to maintain the status quo or put an end to an emergency situation (Article 1449 of the code). For instance, the courts may freeze assets, order the preservation of evidence or appoint an expert. Irrespective of whether the tribunal has been constituted, only the courts can order the attachment of assets and the registration of a mortgage or pledge on the debtor’s assets.
Can interest be awarded?
Nothing in Decree 2011-48 prevents a tribunal from awarding interest on an award.
At what rate?
An award of interest and its rate will be determined by the tribunal, taking into account the substantive and procedural law of the arbitration, any agreement of the parties and principles of public policy. Under French law, the award of interest is governed by the law applicable to the merits of the dispute and interest can be awarded on the principal and on costs.
Is the award final and binding?
An arbitration award is final and binding with regard to the adjudicated claims (Article 1485 of the Code of Civil Procedure).
What if there are any mistakes?
Within three months of notification of the award, a party may apply to the tribunal for:
- interpretation of the award;
- rectification of clerical errors and omissions; or
- an additional award where the tribunal failed to rule on a claim.
The tribunal shall render its decision within three months of the application, with a possible extension of this time limit (Articles 1485 and 1486 of the 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?
In the case of international arbitration, Decree 2011-48 expressly allows the parties to waive the right to seek to have the award set aside or annulled by a French court, irrespective of their nationality or domicile. However, the parties cannot waive their right to challenge or resist the enforcement of an award in France (Article 1522 of the Code of Civil Procedure).
What is the procedure for challenging awards?
A request to set aside an international award issued in France should be brought before the court of appeal of the place where the award was issued. The recourse can be filed at any time up to one month after notification of the award (Article 1519 of the Code of Civil Procedure). The award shall be notified by service, unless the parties agree otherwise.
International awards that are the subject of setting aside proceedings in France can be enforced in France without having to await the outcome of such proceedings, unless otherwise ordered by a court (Article 1526 of the code).
On what grounds can parties appeal an award?
The only recourse against an international award issued in France is an action to set aside, not an appeal (Article 1518 of the Code of Civil Procedure). Article 1520 of the code lists five limited grounds for challenging an award:
- The tribunal wrongly upheld or declined jurisdiction.
- The tribunal was not properly constituted.
- The tribunal ruled without complying with its mandate.
- The principles of due process and fair trial were not respected.
- Recognition or enforcement of the award would be contrary to international public policy. This requires that the violation be “flagrant, effective and concrete”.
The grounds for recourse against an order granting recognition or enforcement of a foreign award are the same as those for setting aside an international award issued in France (Article 1525 of the code).
What steps can be taken to enforce the award if there is a failure to comply?
An action to enforce an award is brought before the Tribunal de grande instance of the place where the award was made or the Paris Tribunal de grande instance if the award was issued abroad. The request for recognition (exequatur) is written on the original award (or a copy thereof), and submitted ex parte to the Tribunal de grande instance with a copy of the arbitration agreement (and translations thereof if the documents are not in French). The Tribunal de grande instance will issue the recognition order if the award is authentic and if recognition and enforcement is not contrary to international public policy.
The recognition order is a short standard text affixed to the award or its translation. In the rare occurrence where an order denies enforcement, it must state the reasons for doing so (Article 1514 of the Code of Civil Procedure). Such an order may be appealed (Article 1523 of the code).
Can awards be enforced in local courts?
The enforcement order enables the interested party to pursue forced execution of the award in France.
How enforceable is the award internationally?
As France is a party to the New York Convention, awards issued in France 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?
French law recognises immunity from execution as a defence to enforcement against a state or a state entity. This defence can be waived by the state or state entity – for instance, by agreeing to execute an award in conformity with the International Chamber of Commerce Rules of Arbitration. Under certain circumstances, absent a waiver from the state, assets having an economic or commercial use and a connection with the dispute may still be attached.
Are there any other bases on which an award may be challenged, and if so, by what?
Pursuant to Article 1502 of the Code of Civil Procedure, parties may, in limited circumstances, apply for revision of an award by the tribunal (eg, in case of fraud). If the tribunal cannot be reconvened, the application will be heard by the court of appeal which would have jurisdiction to hear other forms of recourse against the award.
How enforceable are foreign arbitral awards in your jurisdiction?
The grounds for recourse against an order granting recognition or enforcement of a foreign award are the same as those for setting aside an international award issued in France (Article 1525 of the Code of Civil Procedure).
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
French courts may enforce awards that have been set aside by the courts of the seat of arbitration. The enforcement order can then be appealed only on the basis of the five limited criteria of Article 1520 of the Code of Civil Procedure.
Rules and restrictions
Are there rules or restrictions on third-party funders?
No. Third-party funding arrangements are valid and French lawyers are entitled to represent parties that benefit from such arrangements. However, French ethical rules must also be complied with and these may sometimes conflict with third-party funding agreements. For example, a lawyer can only be paid by his client or that client’s agent (Article 11.3 of the National Internal Regulations). Thus, third-party funders must always pay the lawyer’s fees to the client, which in turn will pay them to the lawyer.
Class-action or group arbitration
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
Although France passed its first class-action law, in connection with consumer law, in March 2014, class actions are generally not permitted in the French court system and there is no provision in Decree 2011-48 regarding class-action or group arbitration. Nevertheless, where parties organise a group arbitration by agreement, this will be recognised by the French courts.
Are there any hot topics or trends emerging in arbitration in your jurisdiction?
Article 2060 of the Civil Code prohibits the arbitration of disputes involving French public entities. However, French courts have recognised that a dispute arising under a contract executed in France between a French public entity and a foreign party which involves “the interests of international commerce” is arbitrable, even if the contract is considered to be an administrative contract under French law (Conflicts Tribunal, INSERM v Fondation Letten F Saugstad, May 17 2010). In addition, according to INSERM, French administrative courts (and not the civil courts) have the authority to consider whether or not the arbitrators’ findings are consistent with certain mandatory rules of French public law and set aside the award if appropriate. Controversially, the French administrative and civil courts have issued opposing decisions regarding which courts (ie, the administrative or civil courts) have the authority to rule on the enforcement in France of arbitral awards rendered in such arbitrations (Council of State, SMAC v Ryanair, April 19 2013; Cour de cassation (Ch Civ 1), July 8 2015, 1325.846). It remains to be seen how the French courts will deal with this disagreement between the Council of State and the Court of Cassation. There remain other areas of uncertainty in this regard – for example, the identity and role of the supporting judge in connection with such arbitrations when taking place in France.
In March 2013 the Court of Cassation affirmed the principle that an impecunious party is entitled to maintain counterclaims despite being unable to pay the International Chamber of Commerce’s advance on costs if the counterclaims are inseparable from the original claim. Also in 2013, the Paris Court of Appeal confirmed that an impecunious party has a right to access arbitral justice. The insolvency of a claimant bound by an arbitration clause does not justify recourse to the jurisdiction of national courts, as the clause continues to produce its full effect. Moreover, the arbitrator is obliged to grant the insolvent party access to justice (Paris Court of Appeal, Lola Fleurs v Monceau Fleurs, February 26 2013). Arbitration institutions and arbitrators will have to address the issue of impecunious parties and their right to access arbitral justice in practice. In this regard, the Paris Tribunal de Grande Instance recently enjoined the International Chamber of Commerce to reinstate a party’s counterclaims and to invite the arbitral tribunal to lift the stay of proceedings, which resulted from that party’s failure to pay an advance on costs (TGI Paris, Ord, November 16 2015,Garoubé). The tribunal based its order, which effectively extends its competence with respect to the arbitration centre, on the right of access to court and due process.
A state may waive its immunity from execution and in past years French courts have considered that such a waiver must be explicit and, with respect to certain assets such as those used by diplomatic missions, it must also be specific (ie, the waiver must refer to specific assets or categories of assets to be valid). However, in May 2015 the Cour de cassationheld that the bank accounts of the Congo diplomatic mission to the United Nations Educational, Scientific and Cultural Organisation could be seized, although Congo’s explicit waiver was not specific. The French Parliament is currently considering a draft bill, which is intended to clarify the rules governing sovereign immunity from execution under French law (and to incorporate the 2004 United Nations Convention on Jurisdictional Immunities of States and their Property). If enacted, this bill would confirm that attachment of diplomatic or consular assets is permitted only where there has been an explicit and specific waiver. It would also require prior authorisation from the judiciary as a pre-requisite for the seizure of foreign states’ property.
Recent Paris Court of Appeal decisions suggest that courts are shifting towards a more extensive (or maximalist) review of the award when dealing with challenges of awards or exequatur orders based on violation of international public policy. Traditionally, the criteria for annulment required a “flagrant, actual and concrete” breach of international public policy. However, recently courts appear to have deleted the requirement of a ‘flagrant’ breach of international public policy (Gulf Leaders v SA Crédit Foncier de France, Paris Court of Appeal (Ch 1), March 4 2014; Commisimpex, Paris Court of Appeal (Ch 1), October 14 2014; Man Diesel, Paris Court of Appeal (Ch 1), November 4 2014 – all involving corruption allegations) or performed de facto a maximalist review by referring a prejudicial question on EU competition law to the European Court of Justice (ECJ) (Genetech, ECJ Case C-567/14, July 72016 (prejudicial question); Cour de cassation(Civ 1), no 14-26.482, November 18 2015 (upholding the referral)). The Cour de cassation upheld two of the lower courts’ decisions on corruption allegations, without providing further details on the standard of review (Cour de cassation, (Ch Civ 1), June 24 2015, Gulf Leaders; Cour de cassation, (Ch Civ 1), May 25 2016, Commisimpex).