31 years after the codification of the law on domestic arbitration and 30 years after the codification for international arbitration, France has enacted a further reform of its law of domestic and international arbitration, in a decree dated 13 January 20111, published in the Official Journal on 14 January 2011 ("the Decree"). The Decree was published together with a report of the Minister of Justice to the Prime Minister which describes the changes in detail.
Although the reform is not a revolution in French arbitration law; the spirit of the new law is faithful to the French policy of favor arbitrandum. The law aims to strengthen this policy, while updating it. To accomplish this, the Decree includes some new provisions, incorporates a significant number of contributions from French case law over the last thirty years, and clarifies and simplifies provisions that were open to interpretation. Many articles have been redrafted without changing their substantive content, in order to simplify and/or modernise the wording.
Article 2 of Decree n°2011-48 sets out the new provisions of Book IV of the French Civil Procedure Code ("CPC"), which replace the former Book IV in its entirety. Rules on domestic arbitration are set out in Title I while rules for international arbitration are in Title II. A new Article 1506 lists the provisions that apply to both domestic and international arbitration.
The new elements in this reform will be presented in the same order as an arbitration proceeding, rather than presenting first domestic arbitration and then international arbitration. We begin with (I), arbitration agreements, (II) noting the minimal involvement of national courts and (III) move on to issues regarding the arbitration proceeding itself and the arbitrator(s) and (IV) lastly, we deal with provisions affecting the enforcement of the award.
- The arbitration agreement
- The most noteworthy change is the elimination of any formal requirement (such as writing) for arbitration agreements in international arbitration (Article 1507).
- The principle that arbitration clauses are autonomous, until now established only by case law, has been codified for both domestic and international cases (Article 1447).
- Minimal involvement by the national courts
The arbitration reform codifies the relationship between arbitral tribunals and French courts. It clarifies the courts' power in both domestic and international arbitration.
- Before an arbitral tribunal has been appointed, whether in domestic or international arbitration, an application can be made to the national courts seeking measures of inquiry, or interim or protective measures (Article 1449).
- The new provisions create a judge with the task of supporting the arbitration process so as to ensure its effectiveness. This judge, referred to in French as the "juge d'appui" (literally the "supporting judge", hereafter the "arbitration judge"), is competent, among others, where there is a disagreement between the parties or a problem regarding the appointment the arbitral tribunal (Articles 1451 to 1454). Similarly, if there are issues regarding the challenge of an arbitrator, in both domestic and international arbitration, these are settled by the arbitration judge if the "person responsible for organising the arbitration" (i.e. the institution) does not do so (Article 1456).
- During the arbitration proceeding, the Arbitration judge in a domestic arbitration only has the power to extend the deadline for the proceeding, failing agreement between the parties (Article 1463). In both domestic and international arbitration, the Arbitration Judge has the power to resolve issues surrounding an arbitrator's failure to act or resignation (Article 1457), again subject to any applicable institutional rules chosen by the parties.
- The new provisions refer to two other possible situations in domestic and international arbitrations where a domestic court can intervene. These are areas in which, by definition, the arbitral tribunal does not have the necessary power: (1) ordering interim attachments (saisies conservatoires) and interim or provisional charges on property (suretés judiciaires) (Article 1468); (2) entertaining a party's application, at the arbitral tribunal's invitation, to the president of the tribunal de grande instance (High Court) for the production of notarised or private documents to which it is not a party (Article 1469).
- The arbitration judge is the president of the territorially competent tribunal de grande instance. The rules for territorial jurisdiction are set out in detail for domestic (Article 1459) and international arbitration. One particularity should be noted: even in matters that have no relationship to France, the arbitration judge has jurisdiction if there is a risk of denial of justice to one of the parties (Article 1505).
- The arbitrator and the arbitration procedure
The new provisions are mainly aimed at speeding up arbitration procedure while ensuring the arbitral process is fair, with enhanced procedural protection for parties and the prevention of conduct engaged in by parties or arbitrators that is intended to disrupt the arbitration procedure.
- The principle of arbitrators' independence and impartiality applies throughout the proceedings in both domestic and international matters (Article 1457).
- The arbitrator and the parties in domestic and international cases must "act promptly and fairly in the conduct of the procedure" (Article 1464-3).
- A party that refrains from alleging an irregularity in a timely manner, with full knowledge thereof and without legitimate reason, is deemed to have waived the right to rely on that irregularity before the arbitral tribunal or the reviewing court. This rule, which has emerged in case law, applies in national and international matters. It is a French "Estoppel" rule (Article 1466).
- In international arbitration, the arbitrator has a new duty to ensure equal treatment of the parties and to respect the adversarial principle, regardless of the applicable procedural law (Article 1510). This duty codifies French case law in this regard.
- Arbitrators' powers have been expanded both for domestic and international arbitration. They have the express power to hear any person and order the submission of any documents held by the parties "using methods to be determined by the arbitrator and if necessary, subject to penalties for non compliance" (Article 1467). They can also order any provisional or protective measures "deemed appropriate" applying penalties if necessary (Article 1468). These new rules codify existing case law.
- The provisions applicable to the arbitral award and applications to set aside
Although for the most part these provisions have not been amended, they have been simplified and clarified. There are however a certain number of changes that are worth noting, all designed to promote the speedy enforcement of awards in national and international cases.
- Regarding domestic arbitration, useful clarifications for practitioners have been made to the application process for obtaining an enforcement order (exequatur) of an award: the Code now expressly states that enforcement orders are made ex parte (Article 1487) and that they may only be refused if the award is "manifestly contrary to public policy" (Article 1488).
- Appeals are now the exception in domestic arbitration. Previously the parties needed to expressly waive their right to appeal in their arbitration agreements. This is now the default rule and the parties must expressly reserve the right to appeal if they wish to reinstate it (Article 1489).
- The time limits within which an arbitral award may be challenged have been shortened: the time limit for appealing (in domestic cases) or making an application to set aside an award, is now one month from the date of notification of the award and not from the date of service of the exequatur order. Consequently, these time limits will now lapse earlier (Article 1494).
- In international arbitration, the parties may now waive the right to apply to the courts to set aside the arbitral award, which was previously impossible (Article 1522). This waiver option, which already exists in other jurisdictions, aims to modernise French law, by giving greater autonomy to the parties. If the option is exercised, the award will be final as soon as it is handed down.
- The procedure for obtaining the exequatur of the award has been spelled out in the CPC, thereby informing international users, in particular, of the details of this procedure (Articles 1515 to 1517).
- Regarding challenges to awards and/or enforcement in international arbitration, these are now presented in a more systematic manner, depending on whether the seat of the arbitration is in (i) France or (ii) abroad and (iii) the provisions applicable in both situations. In addition, two further changes are worth noting. First, applications to set aside no longer stay enforcement of the award. Parties will therefore be able to enforce an award while a challenge is still pending before French courts (Article 1526). This is a clear break with the previous situation. Second, the one-month time limit for filing an application to set aside no longer runs from the date of service of the "award which has been declared enforceable" but from the date of notification of the award itself, which reduces the time during which the award is exposed to the risk of being set aside (Article 1519).
- It is worth noting that the principle whereby arbitral awards cannot be revised on the merits and whereby they are subject to very limited judicial review remains in force: the circumstances under which awards may be set aside or the enforcement of an award may be denied are the same as before, albeit rephrased in certain cases.
The Decree will not enter into force until 1 May 2011. Article 3 of the Decree sets out transitional provisions, stating which provisions will apply to arbitration agreements concluded after 1 May 2011, arbitral tribunals appointed after this date or to awards rendered after this date.
French arbitration law was already very favourable to arbitration, particularly international arbitration. This reform strengthens French arbitration law and confirms it as one of the most modern, keeping in step with the changes in arbitration over the last 30 years. Evidently, it is intended to maintain France's status as a preferred venue for international arbitration.