French arbitration law has not been reformed since its inception in 1980/1981. The new law which came into force on 1 May 2011, (Decree n° 2011-48 dated 13 January 2011), includes some new provisions and also codifies rules established through French case law. The objectives of this reform are to assist and promote the use of alternative dispute resolution, to provide clarity to provisions which were considered to be open to interpretation and to sustain France’s prominent role in international arbitration. Certain aspects will only apply to arbitration agreements entered into after 1 May 2011 and arbitration hearings and awards after this date.
The new law amends the rules for both domestic and international arbitration law and replaces Book IV of the French Civil Procedure Code ("CPC") in its entirety.
The main reforms for international arbitration are as follows:
ARBITRATION AGREEMENTS AND CLAUSES
- In international arbitration, the elimination of any formal requirement for arbitration agreements (Article 1507 CPC). This was implicit under previous legislation, which permitted parties to waive the validity requirements of domestic arbitration agreements.
- In domestic law, whilst such written formality is still required, the agreement no longer has to stipulate the identity of, or how, the arbitrators are to be appointed. The new law also seeks to apply one regime regardless of whether an arbitration agreement is entered into before or after the dispute.
- the principle of autonomy of the arbitration clause previously established under case law has now been codified (Article 1447 CPC). Its validity is therefore independent of that of the main contract. It can be subject to a different law to that of the contract, and it is subject only to public policy (as opposed to domestic law).
To speed up the arbitration process, whilst ensuring the process is fair, all parties, including the arbitrator, must "act promptly and fairly in the conduct of the procedure" (Article 1464 CPC).
A party who knowingly and without a legitimate reason fails to object to an irregularity before the arbitral tribunal in a timely manner, shall be deemed to have waived its right to avail itself of the irregularity. This “estoppel” rule had previously been evoked in case law, but has now been codified.
In international arbitration, the arbitrator must ensure equal treatment of the parties and respect the adversarial principle, regardless of the applicable procedural law (Article 1510 CPC).
The arbitrators' powers during the hearing have been expanded both for domestic and international arbitration (codifying case law). They now have the express power to hear any person and to order disclosure of any documents "using methods to be determined by the arbitrator and if necessary, subject to penalties for non compliance" (Article 1467 CPC). They can also order any “appropriate” provisional or protective measures, and have the power to apply penalties if necessary (Article 1468 CPC).
ARBITRAL AWARD AND APPLICATIONS TO SET ASIDE
For the most part, these provisions have stayed the same, but some have been redrafted for clarification.
Under Article 1522 CPC, parties to an arbitration agreement may agree at any time to waive the right to seek annulment of an award, and thus the award will be final when it is handed down. However, parties cannot waive their right to appeal any decision granting leave to enforce the arbitral award in France or against enforcement orders. Therefore, it will still be possible to resist enforcement of an award before a French court if enforcement is sought in France.
In a departure from the previous law, an application to set aside no longer stays the enforcement of the award. Therefore, parties will be able to enforce an award while a challenge is still pending before French courts (Article 1526 CPC).
Also, the one-month time limit for filing an application to set aside now runs, as for domestic arbitration, from the date of notification of the award itself, and not from the date of service of the exequatur order (Article 1519 CPC).
The new provisions allow for judicial intervention to support the arbitration process to ensure its effectiveness (the "juge d'appui"). The support judge is now competent in relation to:
- Constitution and composition of the tribunal;
- Incapacity, removal, resignation and refusal of an arbitrator,
provided the parties have failed to reach an agreement and no institution is in charge of the administration of the arbitration.
Finally, Article 1505 CPC confers on the support judge in an international arbitration (President of the Paris Court of First Instance) the power to intervene if a party is exposed to the risk of a denial of justice irrespective of whether the applicant has a connection to France. Therefore, even in matters that have no relationship to France, an application can be made to a French judge.
The reforms appears to be a refinement rather than a modification of existing French arbitration law, but do assist to codify and simplify existing practices, and now provides a uniform text to which practitioners can refer.