Arbitration procedures and practice in France: overview

A Q&A guide to arbitration law and practice in France.

The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.

To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A Tool.

This Q&A is part of the global guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-guide.

Elizabeth Oger-Gross and Anaïs Harlé, White & Case LLP
Contents

Use of arbitration and recent trends

1. How is commercial arbitration used and what are the recent trends?

Use of commercial arbitration

Arbitration is a popular dispute resolution mechanism in France. Parties insert arbitration agreements into their contracts in a wide variety of sectors. This is notably the case for construction, energy, infrastructure and telecommunications contracts.

France is known as one of the most arbitration-friendly jurisdictions in the world. As a result, a number of international disputes that have otherwise no connection with France are arbitrated in Paris.

Recent trends

Decree No. 2011-48 of 13 January 2011 entered into force on 1 May 2011 and made the following changes to French arbitration law:

  • Granted parties more freedom in the organisation of arbitral proceedings.

  • Clarified certain existing provisions.

  • Codified a number of solutions developed by French courts over the previous 30 years, such as the absence of formal requirements for arbitration clauses in international contracts and the power of the arbitral tribunal to order provisional measures.

Since 2011, the French courts have been applying and interpreting the new provisions.

One recent debate in France concerns the proper standard of review for French courts determining the compliance of international awards with French international public policy. French courts had ruled that the enforcement of an arbitration award can be denied only if giving effect to the award would result in a "flagrant, effective and concrete" violation of international public policy (Paris Court of Appeal, 18 Nov 2004, No. 2002/19606, Thalès; C Cass, First Civil Chamber, 4 June 2008, No. 06-15.320, Cytec). However, certain commentators have criticised this somewhat minimalist approach, advocating a less deferential review. Recent decisions by the Paris Court of Appeal have referred only to an "effective and concrete" violation, suggesting that French courts may become more willing to carry out a deeper review of the underlying award (Paris Court of Appeal, 4 Mar 2014, No. 12/17681, Gulf Leaders; 14 Oct 2014, No. 13/03410, Commisimpex). However, it remains to be seen whether this new standard will be limited to cases where allegations of corruption are made and whether the Court of Cassation (the French Supreme Court in civil and commercial matters) will approve it.

Advantages/disadvantages

One of the main advantages of arbitration, as opposed to litigation before the French courts, is the flexibility offered to the parties in the organisation of the proceedings. The parties can choose the procedural rules that are most appropriate for their dispute (see Question 20). In addition, for highly complex and technical disputes, the parties can choose arbitrators with experience in the field of activity specific to their dispute.

Another important advantage is the facilitated enforcement of arbitral awards abroad, notably in countries that are signatories to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention). Arbitration sometimes permits a faster resolution of disputes than litigation before French courts, particularly when appeals are undertaken.

However, in France, court litigation is usually a less expensive way of resolving disputes than arbitration. In addition, the different scopes of document disclosure available (see Question 22) in litigation and arbitration may or may not be an advantage, depending on the case and the party's particular position.

 

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

French arbitration law is not based on the UNCITRAL Model Law. However, French provisions applicable to international arbitration are no less favourable.

Since Decree No. 2011-48 of 13 January 2011, the main provisions applicable to arbitration in France are set out in Book IV of the Code of Civil Procedure (CCP) (Articles 1442 to 1527). A few provisions on arbitrability issues can also be found in the French Civil Code (Articles 2059 to 2061). The decisions of the Court of Cassation and of the Paris Court of Appeal are also very important.

French law makes a clear distinction between domestic and international arbitration, although some provisions of the CCP apply to both. Arbitration is deemed "international" when international trade interests are at stake (Article 1504, CCP). This criterion is economic rather than legal and therefore means that the following are irrelevant to the determination:

  • The nationality of the parties.

  • The law applicable to the merits or to the procedure.

  • The location of the seat.

What matters is that the underlying economic transaction operates a transfer of goods, services or funds across national borders (Paris Court of Appeal, 5 Apr 1990, 1992 Rev Arb 110).

Some of the provisions applicable to domestic arbitration can be applied to international arbitration (Article 1506, CCP). However, the French legislator has developed two separate regimes, with a number of more liberal principles applicable only to international arbitration.

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

Only a few mandatory legislative provisions are applicable to arbitration in France. Therefore, arbitration in France is very favourable to party autonomy.

Certain provisions guaranteeing the fairness of the arbitration proceedings cannot be derogated from by the parties or disregarded by the arbitral tribunal (see Question 20).

In addition, an arbitration award must not violate French international public policy (see Questions 1, 33 and 34). Such violations can lead to the award being set aside.

 
4. Does the law prohibit any types of disputes from being resolved via arbitration?

French law prohibits a limited number of types of disputes from being resolved via arbitration. These disputes include those relating to (Article 2060, Civil Code):

  • Civil status and capacity of natural persons.

  • Divorce and judicial separation of spouses.

In addition, disputes involving certain categories of public authorities and entities cannot be arbitrated.

In principle, disputes relating to public policy issues cannot be arbitrated. However, French courts have defined "public policy" very restrictively. Parties are free to arbitrate anti-trust and intellectual property disputes, for example.

To be valid, an arbitration clause must be concluded in relation to a professional activity (Article 2061, Civil Code). As a result, certain types of consumer and employment disputes cannot be resolved through arbitration, and any arbitration clauses contained in such contracts will be considered null and void.

However, the Court of Cassation has held that this provision does not apply in the same way to international arbitration (C Cass, First Civil Chamber, 5 Jan 1999, No. 96-21.430, Zanzi). For example, in the case of an international employment contract containing an arbitration clause, the French courts considered the arbitration clause not to be null and void but that the employee was nevertheless not prevented from initiating a claim before the French employment courts (as would normally be the case with a valid arbitration clause) (C Cass, Social Chamber, 16 Feb 1999, No. 96-40.643).

 

Limitation

5. Does the law of limitation apply to arbitration proceedings?

Limitation periods are normally regarded as substantive rather than procedural. Substantive rules are those applicable to the merits of a dispute, whereas procedural rules regulate the conduct of the proceedings. Therefore, the law applicable to the underlying dispute or claim will also be applicable to the relevant statute of limitation.

When French law is applicable to the merits of a dispute, a general five-year limitation period applies to contractual and tortious matters, with a few exceptions such as for some construction contracts (see Article 2224, Civil Code). In general, this period commences from when the parties become aware (or should have been aware) of the event giving rise to the dispute. Commencing arbitration proceedings normally interrupts the limitation period (see Article 2241, Civil Code; C Cass, Second Civil Chamber, 11 Dec 1985, No. 84-14.209).

 

Arbitration organisations

6. Which arbitration organisations are commonly used to resolve large commercial disputes?

The International Chamber of Commerce (ICC) is the most well-known arbitral institution in France and, arguably, in the world.

Other prominent Paris-based arbitration institutions include the:

  • French Arbitration Association (Association française d'arbitrage).

  • Paris Centre for Mediation and Arbitration (Centre de médiation et d'arbitrage de Paris).

  • International Arbitration Chamber of Paris (Chambre arbitrale internationale de Paris).

There are also specialised arbitration centres for shipping and insurance disputes, such as the:

  • Paris Maritime Arbitration Chamber (Chambre arbitrale maritime de Paris).

  • French Reinsurance and Insurance Arbitration Centre (Centre français d'arbitrage de réassurance et d'assurance).

Parties who decide to arbitrate in France often choose the ICC Arbitration Rules. International arbitrations seated in France are not infrequently administered by other institutions, such as the:

  • London Court of International Arbitration.

  • Arbitration Institute of the Stockholm Chamber of Commerce.

See box, Main arbitration organisations.

 

Jurisdictional issues

7. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concept of kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

In France, the principle of kompetenz-kompetenz is widely recognised and applied (Article 1448, Code of Civil Procedure). Application of the principle means that:

  • In the first instance, the arbitral tribunal has jurisdiction to rule on its own jurisdiction.

  • French courts must decline jurisdiction in the presence of an arbitration agreement and let the arbitral tribunal decide.

However, this principle does not mean that national courts can never have a say on the jurisdiction of an arbitral tribunal. Before the constitution of the tribunal, a court can accept jurisdiction if the arbitration agreement is manifestly void or manifestly not applicable. The threshold for this test is very high, and French judges decide the issue on a prima facie basis (see C Cass, First Civil Chamber, 7 June 2006, No. 03-12.034). Any ambiguity is resolved in favour of the tribunal's power to decide the issue.

French courts can also review the issue of the tribunal's jurisdiction at the setting-aside stage. In such a case, the court will review the issue from scratch and in its review will not be bound by the factual and legal findings of the tribunal.

 

Arbitration agreements

Validity requirements

8. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

In domestic arbitration, an arbitration agreement must be in writing to be valid (Article 1443, Code of Civil Procedure (CCP)).

In international arbitration, French law does not impose any formal requirements, and the arbitration agreement does not need to be in writing or in any specific form (Article 1507, CCP). However, is it easier to prove the existence of an arbitration agreement where there is a written document.

For both domestic and international arbitration, there are no substantive requirements, apart from the requirement that the underlying dispute be arbitrable (see Question 3).

Separate arbitration agreement

In domestic arbitration, the CCP provides that an arbitration agreement can be in the form of either a:

  • Clause in the contract (clause compromissoire).

  • Separate agreement entered into after the dispute arises (compromis d'arbitrage).

There are no specific provisions for international arbitration. There is therefore no requirement for a separate agreement.

Arbitration clauses can also be incorporated into a contract by reference to another document, such as general terms and conditions, provided it is established that the parties have effectively consented to arbitrate their disputes. French courts consider this to be the case when the parties were aware of the existence of an arbitration clause when they entered the contract and did not object to it (C Cass, First Civil Chamber, 3 June 1997, No. 95-17.603).

Unilateral or optional clauses

 
9. Are unilateral or optional clauses, where one party has the right to choose arbitration, enforceable?

French courts have recognised the validity and enforceability of asymmetric arbitration clauses (that is, clauses that grant the right to arbitrate to only one of the parties) (CA Angers, Sept 25, 1972, SA Sicaly v Grasso Stacon Koninklijke Machine Fabrieken NV, 1973 Rev Arb 164). Similarly, clauses giving both parties the option to choose between arbitration and litigation before a specified forum are valid (C Cass, First Civil Chamber, 12 June 2013, No. 12-22.656, Thermodyn).

In 2015, the French Court of Cassation reaffirmed the validity and enforceability of asymmetric jurisdiction clauses, after some uncertainty was caused by a 2012 decision (C Cass, First Civil Chamber, 26 Sept. 2012, No. 11-26.022, Banque Rothschild). This case concerned a clause where (C Cass, First Civil Chamber, 7 Oct 2015, No. 14-16.898):

  • One party was required to go to particular courts.

  • The other party had the right to choose between those same courts, the courts of the place where the first party had its seat or the courts of the jurisdiction where a harm had occurred.

The Court upheld the validity of the clause, but it seems this was because the clause did not offer a completely open-ended choice to one of the parties. There must be some foreseeability regarding the courts that the parties can select. Therefore, it is questionable whether a clause giving only one of the parties the option to choose between arbitration and any court of competent jurisdiction, without further detail, would be held valid by French courts.

 
10. In what circumstances can a third party that did not sign the contract incorporating the arbitral clause in question be compelled to arbitrate disputes relating to the contract in question?

Non-signatories can be compelled to arbitrate disputes relating to the contract in question in different situations where it can be deduced from the facts of the case or the behaviour of the non-signatory that it consented to be bound by the arbitration agreement. In French law, the analysis can take into account both:

  • The non-signatory's actual (express or tacit) consent.

  • Behaviour that can be "deemed" to constitute consent (such as extensive participation in performance of the contract containing the arbitration clause in certain circumstances).

French courts are more likely to compel a non-signatory to arbitrate in the context of international arbitration than in that of domestic arbitration. For example, in the case of a group of companies, where the parent company of the signatory was actively involved in the negotiation and performance of the contract, it was held that the parent was bound by the arbitration clause contained in the contract (Paris Court of Appeal, 21 Oct 1983, 1984 Rev Arb 98).

In addition, in the case of a group of contracts, where only one of the contracts contains an arbitration agreement, French courts have considered that a party to a related contract or sub-contract that does not contain an arbitration agreement can be compelled to arbitrate its disputes when it was involved in the performance of the contract containing the arbitration agreement (Paris Court of Appeal, 7 Dec 1994, 1996 Rev Arb 245, Jaguar; for chains of contract, see C Cass, First Civil Chamber, 27 Mar 2007, No. 04-20.842, ABS).

French courts have also accepted that an arbitration clause signed by a private party and a state-owned company can be extended to a state that did not sign the arbitration clause in certain circumstances (Paris Court of Appeal, 17 Feb 2011, 2011 Rev Arb 286).

 
11. In what circumstances is a third party that did not sign the contract incorporating the arbitral clause in question entitled to compel a party that did sign the contract to arbitrate disputes relating to the contract?

Third party beneficiaries can compel a party that signed a contract containing an arbitration clause to arbitrate disputes relating to the contract (and vice versa) (see C Cass, First Civil Chamber, 11 Jul 2006, 2006 Rev Arb 969).

When a contract containing an arbitration agreement is assigned to a third party, the assignee can normally invoke the arbitration agreement against the obligor, even if the assignment of the underlying rights was not validly made (see C Cass, First Civil Chamber, 28 May 2002, No. 99-10.741).

Under the same principles used to extend an arbitration clause to non-signatory third parties (see Question 10), a non-signatory can invoke an arbitration agreement against a signatory. The Dow Chemical award is a well-known application of this scenario (see Interim Award in ICC Case No. 4131, IX YCBA 131 (1984)). In this case, the non-signatory affiliates of a party who signed an arbitration agreement were allowed to bring claims under the arbitration agreement.

Separability

12. Does the applicable law recognise the separability of arbitration agreements?

French law recognises the principle of the autonomy or separability of arbitration agreements (Article 1447, Code of Civil Procedure). Therefore, the nullity of the main contract does not affect the validity of the arbitration agreement, and an arbitral tribunal has jurisdiction to rule on allegations made by a party as to the nullity of the main contract, if that contract contains a valid, or at least not manifestly void, arbitration clause.

In order to assess the validity of an international arbitration agreement, French courts do not refer to the law applicable to the main contract (or to any national law). Instead the courts have established a "substantive" rule of international arbitration (règle matérielle) and look only to the parties' consent to arbitrate their disputes as a factual matter (see C Cass, First Civil Chamber, 20 Dec 1993, No. 91-16.828, Dalico). There is a presumption of validity, and a party challenging an arbitration agreement bears the burden of proving its nullity (see C Cass, First Civil Chamber, 5 Jan 1999, No. 96-21.430, Zanzi).

Breach of an arbitration agreement

13. What remedies are available where a party starts court proceedings in breach of an arbitration agreement or initiates arbitration in breach of a valid jurisdiction clause?

Court proceedings in breach of an arbitration agreement

When court proceedings are commenced in breach of an arbitration agreement, the court, in principle, declines jurisdiction (see Question 7). However, the court cannot do so on its own motion. Rather, one of the parties must invoke the existence of an arbitration agreement (Article 1448, Code of Civil Procedure (CCP)). The objection must be raised before presenting any defence on the merits, to avoid a waiver of the arbitration agreement.

An application to the courts to obtain interim measures before the constitution of the arbitral tribunal is not regarded as a breach or a waiver of the arbitration agreement (Article 1449, CCP).

A party who invokes the arbitration agreement can claim its legal costs in defending an action wrongly initiated by the other party in the courts.

Arbitration in breach of a valid jurisdiction clause

If a party tries to initiate arbitration proceedings when there is absolutely no basis for doing so, it is unlikely that an arbitral tribunal will be formed. However, issues can arise when, despite the presence of a seemingly valid jurisdiction clause, there is a potential ambiguity as to the dispute resolution method chosen by the parties, for example:

  • There is a contradiction between two clauses of the contract.

  • The parties have entered into a separate arbitration agreement after entering into an initial contract containing a jurisdiction clause.

According to the kompetenz-kompetenz principle, the arbitral tribunal has jurisdiction to assess its own jurisdiction and decline to rule on the case if it considers that there is no valid arbitration agreement (see Question 7). French courts cannot normally intervene after the arbitral tribunal has been formed.

However, at the setting-aside stage, the award can be annulled if the courts consider that the tribunal wrongly assumed jurisdiction. A party that seeks annulment of an arbitral award on such a ground must have objected to the jurisdiction of the arbitral tribunal during the arbitration proceedings. If the party does not do so, French courts consider that it has waived its objections (Article 1466, CCP).

If the jurisdiction clause designates French courts, a party can submit the dispute to the court before the constitution of an arbitral tribunal, that is, before all the arbitrators have accepted their nomination (Article 1456, CCP). If the court considers the arbitration clause to be is manifestly void, it will retain jurisdiction (see Question 7). French courts have held that an arbitration clause contained in a contract was not manifestly void, even where a party to the contract had paid invoices containing a jurisdiction clause, in application of the contract, over several years, without objecting (C Cass, First Civil Chamber, 25 June 2014, No. 13-23.669).

 
14. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

Anti-suit injunctions (generally associated with common-law courts) do not exist as such in the French legal system (however, see in the context of insolvency laws, Civ 1re, 19 Nov 2002, No. 00-22.334, Banque Worms).

However, French courts have been willing to enforce and give effect to an anti-suit injunction issued by a foreign court in support of a choice of forum agreement (see C Cass, First Civil Chamber, 14 Oct 2009, No. 08-16.369, Zone Brands). They may be ready to do the same in the context of the breach of an arbitration agreement.

Joinder of third parties

15. In what circumstances can a third party be joined to an arbitration or otherwise be bound by an arbitration award?

The Code of Civil Procedure provides no specific rules in relation to the joinder of third parties. In any event, the third party must have given its consent (or be deemed to have given its consent) to be joined to the proceedings (see Question 10).

A third party (even where it was not a party to the arbitration) may be bound by an arbitration award under the corporate veil piercing and agency doctrines. For example, an award rendered against a state can be enforced against a state-owned company, if the party seeking enforcement of the award can prove that the company is in fact the alter ego (émanation) of that State (see Paris Court of Appeal, 3 July 2003, No. 2002/03185, Société Nationale des Pétroles du Congo). Similarly, an award rendered against a subsidiary would be enforceable against its parent company if the conditions for piercing the corporate veil under French law are met.

 

Arbitrators

Number and qualifications/characteristics

16. Are there any legal requirements relating to the number and qualifications/characteristics of arbitrators? Must an arbitrator be a national of, or licensed to practice in, your jurisdiction in order to serve as an arbitrator there?

In domestic arbitration, the arbitrators must be natural persons (Article 1450, Code of Civil Procedure (CCP)). If the arbitration agreement designates a legal entity to be an arbitrator, this entity can only administer the arbitration (that is, it cannot make a ruling). The tribunal must be composed of an odd number of arbitrators (Article 1451, CCP). There are no equivalent provisions for international arbitration.

French law does not contain any requirements as to the nationality or qualifications of potential arbitrators. It is not necessary to be licensed to practise law (in France or at all) in order to serve as an arbitrator. French judges, who are civil servants, cannot serve as arbitrators. However, retired judges can.

Independence/impartiality

 
17. Are there any requirements relating to arbitrators' independence and/or impartiality?

Independence and impartiality requirements are clearly set out in the Code of Civil Procedure (Article 1456). Arbitrators must disclose any circumstances that could affect their independence or impartiality before and after accepting their mandate.

Failure to disclose any such information can lead to the award being set aside if the non-disclosed circumstances are likely to affect the arbitrator's judgment and create "a reasonable doubt" in the parties' minds as to his or her independence and impartiality (see CA Paris, 10 Mar 2011, 2011 Rev Arb 569). The non-disclosed information must not have been known or easily discovered by the parties. Therefore, the parties must investigate a prospective arbitrator.

If a party becomes aware of a problematic situation, that party must challenge the arbitrator during the arbitration proceedings by following the procedure and time limits set out in the applicable arbitration or procedural rules (rather than waiting until the setting-aside stage). If the party waits until the setting aside stage to challenge the arbitrator, the French courts will consider that the party waived its right to challenge the award on the basis of a lack of independence and impartiality of the arbitrator (see C Cass, First Civil Chamber, 25 June 2014, No. 11-26.529, Tecnimont).

Appointment/removal

18. Does the law contain default provisions relating to the appointment and/or removal of arbitrators?

Appointment of arbitrators

The parties can designate the arbitrator or arbitrators or designate a method for appointment in the arbitration agreement. The parties can do so directly or by reference to arbitration or procedural rules. In the absence of an agreement on the procedure for appointment, the following default provisions of the Code of Civil Procedure (CCP) apply:

  • Tribunal with sole arbitrator. If the parties cannot agree on the arbitrator, the person in charge of administering the arbitration must make the appointment. If there is no such person, the judge acting in support of the arbitration (juge d'appui) must make the appointment (see Question 24) (Article 1452, CCP).

  • Tribunal with three arbitrators. Each party appoints an arbitrator. The third arbitrator is then appointed by the two arbitrators appointed by the parties. The person responsible for administering the arbitration (or, if there is no such person, the judge acting in support of the arbitration) will appoint the arbitrator(s) where (Article 1452, CCP):

    • a party fails to appoint an arbitrator within one month following receipt of a request to that effect by the other party; or

    • the two arbitrators fail to agree on the third arbitrator within one month of having accepted their mandates.

  • Multi-party arbitration. If the parties fail to agree on a procedure for constituting the tribunal, the person responsible for administering the arbitration (or, if there is no such person, the judge acting in support of the arbitration) appoints the arbitrator or arbitrators (Article 1453, CCP). This provision was added to the CCP by Decree No. 2011-48 of 13 January 2011 to ensure equality of the parties when nominating the arbitrators. The courts had already recognised this principle (C Cass, First Civil Chamber, 7 Jan 1992, No. 89-18.708, Dutco).

Removal of arbitrators

If the parties cannot agree on the removal of an arbitrator, the issue is resolved by the person in charge of administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration (Articles 1456 and 1458, CCP). The time limit to file an application before the judge acting in support of the arbitration is one month following the disclosure or the discovery of the fact at issue.

Commencement of arbitral proceedings

 
19. Does the law provide default rules governing the commencement of arbitral proceedings?

There are no default rules governing the commencement of arbitral proceedings in France. Parties must follow the procedure set out in their arbitration agreement, in particular if they subscribed to institutional rules that prescribe necessary steps for commencing proceedings. Otherwise, arbitral proceedings are usually initiated by unequivocal service of a notice of arbitration on the other party.

Applicable rules

 
20. What procedural rules are arbitrators likely to follow? Can the parties determine the procedural rules that apply? Does the law provide any default rules governing procedure?

Applicable procedural rules

The parties candetermine the applicable procedural rules in their arbitration agreement. The parties can do so directly, by defining one by one the different rules to be applied by the arbitral tribunal, or by reference to sets of arbitration rules (such as institutional or UNCITRAL Rules) or national rules of civil procedure (French or foreign) (Article 1509, Code of Civil Procedure (CCP)).

Default rules

In the absence of an agreement between or among the parties, there are no default procedural rules that apply. The arbitrators have wide discretion in the conduct of the arbitration proceedings to determine the procedure, either directly or by reference to arbitration rules or procedural rules (Articles 1464 and 1509, CCP). For example, the parties are free to define the:

  • Procedure for appointing and challenging arbitrators.

  • Time limit for rendering an award.

  • Powers of the arbitral tribunal to order interim measures.

Regardless of the rules chosen by the parties or the arbitrators, the tribunal must always ensure that the principles of equal treatment of the parties and due process are respected (Article 1510, CCP). The arbitrators cannot base their decision on facts or legal rules that were not debated by the parties (C Cass, First Civil Chamber, 29 June 2011, No. 10-23.321).

Arbitrator's powers

 
21. What procedural powers does the arbitrator have under the applicable law? If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

In their arbitration agreement, the parties can define the procedural powers that the arbitrators will have in relation to the parties. In the absence of a specific agreement on such issues, the arbitrators have wide procedural powers.

The tribunal can take all necessary steps concerning evidentiary and procedural matters. In particular, the tribunal can (Article 1467, CCP):

  • Order the parties to produce evidence.

  • Sanction parties for non-compliance (for example, by applying penalties or drawing adverse inferences).

The arbitrators can also call on any person, party or non-party, to appear as a witness before the arbitral tribunal. However, the tribunal's powers in relation to third parties are limited. Following Decree No. 2011-48 of 13 January 2011, on leave of the tribunal a party can now summon a third party to appear before the president of the Tribunal de Grande Instance in order to obtain evidence (Article 1469, CCP).

 

Evidence

22. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure in arbitrations compare with disclosure in domestic court litigation? Can the parties set the rules on disclosure by agreement?

Scope of disclosure

To the extent that the parties have not done so, the arbitrators can decide the scope and extent of disclosure. Arbitrators from France or other civil law jurisdictions are unlikely to choose very broad, US-style discovery. The geographic origins of the parties to the proceedings can also influence the choice of the arbitrators. References to the IBA Guidelines on the Taking of Evidence (generally regarded as a reasonable middle-ground between common law and civil law traditions) are common in arbitrations seated in France. Arbitration practitioners in France are increasingly accustomed to document production.

Pre-trial disclosure does not exist as such in French civil litigation. There is no obligation to disclose any particular documents or categories of documents to the other party. The rule is that a party must prove its own case and disclose the documents on which it relies. A party can petition the judge, asking him or her to order production of documents. However, such an order generally concerns a limited number of specifically identified documents. The scope of disclosure in arbitration (especially so in international arbitration) will often be greater than the scope of disclosure in litigation in French courts.

Parties' choice

The parties can determine the rules on disclosure in their arbitration agreement or at the beginning of the arbitration proceedings. In domestic arbitration, the arbitrators can order a party to disclose a document (Article 1467, CCP). The same rule applies to international arbitration, unless the parties have agreed otherwise (Article 1506, CCP).

 

Confidentiality

23. Is arbitration confidential? If so, what is the scope of that confidentiality and who is subject to the obligation (parties, arbitrators, institutions and so on)?

Decree No. 2011-48 of 13 January 2011introduced a new provision into the Code of Civil Procedure (CCP), establishing that arbitration proceedings are confidential, unless the parties have agreed otherwise (Article 1464-4, CCP). The scope of that confidentiality is not specifically defined but concerns the arbitrators and the parties at a minimum.

However, this provision is applicable only to domestic arbitration. The CCP is silent on the confidentiality of international arbitration. Therefore, there is no express obligation of confidentiality in that context. French courts are not very consistent on the existence of a presumption of confidentiality for international arbitrations (see Paris Court of Appeal, 18 Feb 1986, 1986 Rev Arb 583 and Paris Court of Appeal, 22 Jan 2004, 2004 Rev Arb 647). Parties who want to ensure confidentiality should do both or either of the following:

  • Enter into confidentiality agreements, clearly specifying the scope of the obligation.

  • Refer to institutional rules that contain a clear confidentiality obligation.

The deliberations of the arbitral tribunal are confidential (Article 1479, CCP).

 

Courts and arbitration

24. Will the local courts intervene to assist arbitration proceedings seated in its jurisdiction?

French courts are supportive of arbitration. When requested, a court can (Article 1463-2, Code of Civil Procedure (CCP)):

  • Assist with the constitution of the tribunal.

  • Assist with the removal and replacement of arbitrators.

  • Extend the time limits for rendering an award.

Before the constitution of the arbitral tribunal, the parties can apply to the courts to obtain measures relating to the taking of evidence and provisional or preliminary measures (Article 1449, CCP).

Decree No. 2011-48 of 13 January 2011created the juge d'appui (that is, a special judge with jurisdiction over arbitration-related applications, who acts in support of the arbitration proceedings).

In international arbitration, unless the parties have agreed otherwise, the judge acting in support of the arbitration is the president of the Paris Tribunal de Grande Instance, who has jurisdiction if any of the following applies (Article 1505, CCP):

  • The arbitration takes place in France.

  • The arbitration takes place abroad, but the parties have agreed that French procedural law is applicable to the arbitration proceedings.

  • The parties have expressly granted jurisdiction to the French courts for disputes relating to the arbitral proceeding.

  • One of the parties is exposed to a risk of denial of justice.

 
25. What is the risk of a local court intervening to frustrate an arbitration seated in its jurisdiction? Can a party delay proceedings by frequent court applications?

Risk of court intervention

French courts are very supportive of arbitration in general and international arbitration in particular. The principle of kompetenz-kompetenz prevents them from intervening in the arbitration proceedings after the constitution of the tribunal (Article 1448, Code of Civil Procedure (CCP)) (see Question 7). However, courts can still act in support of the proceedings on the request of the parties (see Question 24).

Delaying proceedings

In principle, the arbitration proceedings are not affected by a party filing an application before French courts. The arbitral tribunal has sole discretion to stay the arbitration proceedings if it considers it necessary to do so (Article 1472, CCP). Therefore, delaying tactics are not likely to be successful in France.

 

Remedies

26. What interim remedies are available from the tribunal?

Interim measures

An arbitral tribunal can order any type of provisional or preliminary measures that it deems appropriate. It can also sanction non-compliance by, for example, making its orders subject to penalties. However, French courts have exclusive jurisdiction to order preliminary attachments and judicial security (Article 1468, CCP).

Ex parte

An arbitral tribunal seated in France that issued ex parte measures would risk having its award set aside. Such measures do not seem compatible with the overarching duty of the tribunal to respect the principles of equal treatment of the parties and due process (see Question 20).

Security

There are no specific rules regulating the power of the arbitral tribunal to award security. Nothing prevents a tribunal from ordering a party to provide security for costs and there have been such orders (see Procedural Order of December 2007 in ICC Case 14661, ICC Bulletin, vol 25/supplement, 2014, p 74; Société Casa v Société Cambior, Partial Award, ICC Case No. 6697, 26 Dec. 1990, 1992 Rev. Arb. 135).

 
27. What final remedies are available from the tribunal?

There are no statutory provisions in the Code of Civil Procedure regulating the remedies that a tribunal can award. However, it is clearly established that arbitrators have wide discretion as to the type of final remedies they can order. Arbitrators can:

  • Order a party to pay damages.

  • Issue injunctions (ordering or preventing a party from doing something).

  • Make a declaration as to whether a party is liable.

There are no rules limiting the type of interest that can be awarded by an arbitral tribunal. Therefore, arbitrators can award compound interest.

There are also no specific restrictions on the type of damages that can be awarded. French law allows for the full compensation of damages. Moral damages (that is, damages for the emotional and psychological distress suffered) and lost profits can be awarded.

It is unclear whether an award of punitive damages would be problematic. While such damages are never awarded in civil litigation, French courts have held that punitive damages are not necessarily contrary to French international public policy. However, such damages must not be disproportionate to the harm suffered (see C Cass, First Civil Chamber, 1 Dec 2010, No. 09-13.303).

 

Appeals

28. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitral clause itself)?

Rights of appeal/challenge

In domestic arbitration, an award can be appealed only if the parties so agreed (Article 1489, Code of Civil Procedure (CCP)). Where the parties have agreed that appeal is permissible, the parties cannot initiate setting aside proceedings (Article 1491, CCP).

In international arbitration, awards can never be appealed. International arbitration can therefore be subject only to setting aside proceedings (Article 1518, CCP). While an appeal permits a fresh review of the merits of a case, setting aside proceedings permit only the setting aside of an award, on narrowly defined grounds. In the latter case, no review of the merits is normally permitted.

Grounds and procedure

The following are the five possible grounds for setting aside an international award (Article 1520, CCP):

  • The arbitral tribunal wrongly upheld or declined jurisdiction.

  • The arbitral tribunal was not properly constituted.

  • The arbitral tribunal ruled without complying with the mandate conferred upon it.

  • Due process was violated.

  • Recognition or enforcement of the award would be contrary to French international public policy.

For domestic arbitration, the recognition or enforcement of the award must not be contrary to French public policy and the award can also be set aside if (Article 1492, CCP):

  • There are no stated reasons for the award.

  • There is no mention of the date of the award.

  • There is no indication of the name or signature of the arbitrators.

  • The award was not rendered by a majority vote.

In principle, when the place of arbitration is in France, a party can challenge an award before the Court of Appeal of the place where the award was made (Article 1519, CCP).

In domestic arbitration, enforcement of the award is suspended during the time provided for appeal or challenge of the award, as well as during the appeal or challenge (Article 1496, CCP). The opposite applies to international arbitration where the award can be enforced, even if annulment proceedings have been initiated by the party resisting enforcement. However, when enforcement could severely prejudice the rights of one of the parties, that party can petition the courts to stay or set conditions for enforcement of the award (Article 1526, CCP).

Excluding rights of appeal

Decree No. 2011-48 of 13 January 2011 allows the parties to agree at any time, by way of a specific agreement, to waive their right to bring an action to set aside an award (Article 1522, CCP). Nevertheless, if a party starts enforcement proceedings in France and obtains an enforcement order, the other party still can resist enforcement of the award by initiating an appeal against this enforcement order, even where there has been such a waiver.

 
29. What is the limitations period applicable to actions to vacate or challenge an international arbitration award rendered?

The parties can challenge an award from the time it is rendered until one month after it was notified. After that time, any action is declared inadmissible. Notification is made by way of service under the CCP (signification) unless otherwise agreed by the parties (Article 1519, CCP).

 

Costs

30. What legal fee structures can be used? Are fees fixed by law?

In France, parties can use whatever legal fee structures they deem appropriate (such as flat fees or an hourly rate). However, French lawyers cannot be paid solely on a contingency fee basis. Success fees are permitted but can be paid only in addition to a fixed fee arrangement. This rule does not apply as such to international arbitration where lawyers can be paid on a contingency fee basis if the agreed fees are not manifestly excessive (Paris Court of Appeal, 10 July 1992, 1992 Rev Arb 609).

There are no specific provisions for the arbitrators' fees. They are usually fixed in agreement with the arbitrators or by the arbitral institution.

Third-party funding is another way to fund arbitration proceedings in France.

 
31. Does the unsuccessful party have to pay the successful party's costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Cost allocation

There are no specific provisions regulating the allocation of costs between or among the parties (in particular, the unsuccessful party is not under a legal obligation to pay the successful party's costs and fees). Subject to any agreement of the parties, the arbitral tribunal has wide discretion to determine the allocation of costs between or among the parties.

Cost calculation

There are no specific rules on the manner in which the tribunal should calculate costs and fees, which typically include the fees and expenses of the arbitrators and the parties' reasonable legal and other costs, such as travel expenses for hearings. Costs and fees can also include the administrative expenses of the arbitral institution and the fees and expenses of any experts appointed by the tribunal.

Factors considered

The tribunal has wide discretion to apportion costs between or among the parties. Arbitrators can be influenced by:

  • The conduct of the parties (such as their behaviour in the conduct of the proceedings).

  • The percentage of successful and unsuccessful claims presented by the parties.

  • The reasonableness of their cost submissions.

 

Enforcement of an award

Domestic awards

32. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts?

Arbitral awards made in France are easily enforced in the French courts. There are two conditions for the recognition or enforcement of an award:

  • The existence of the award must be proven by producing the award and the arbitration agreement (original or duly authenticated copies). This requirement applies to both domestic (Articles 1487 and 1488, Code of Civil Procedure (CPP)) and international arbitration (Articles 1514 and 1515, CCP).

  • The recognition or enforcement of the award must not be manifestly contrary to French public policy (Article 1488, CCP for domestic arbitration) or French international public policy (Article 1514, CCP for international arbitration).

A party seeking to enforce an award must obtain an enforcement order (exequatur) issued by the Tribunal de Grande Instance (of the place where the award was rendered). The proceedings are ex parte, and the application must be filed with the Court Registrar for both domestic (Article 1487, CCP) and international (Article 1516 CCP) arbitration. For awards that are not in French, the parties must produce translations of the award and the arbitration agreement. The court can request a translation by an official translator (Article 1515, CCP).

An order denying enforcement of an award can be appealed within one month following service of the order for both domestic arbitration (Article 1500, CCP) and international arbitration (Article 1523 CCP). This time limit is extended by two months when the party served is located abroad (Article 643, CCP).

An order granting enforcement of an award cannot be appealed. However, a party can still bring a setting aside action for both domestic (Article 1499, CCP) arbitration and international arbitration (Article 1524, CCP). In addition, an appeal of an enforcement action is still possible where the parties have waived their right to bring a setting aside action (see Question 28).

While obtaining exequatur is necessary to enforce the award, preliminary measures can be undertaken on the basis of the award, even if the exequatur has not yet been obtained, without the need to obtain authorisation from a judge (C Cass, Second Civil Chamber, 12 Oct 2006, No. 04-19.062).

Foreign awards

33. Is your jurisdiction party to international treaties relating to recognition and enforcement of foreign arbitration awards, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

France is a signatory of the New York Convention, which entered into force in France on 24 September 1959. France has made a reciprocity reservation, but the provisions applicable to the recognition and enforcement of foreign awards (see Question 34) are applicable to all awards rendered in foreign countries, regardless of whether they are signatories of the New York Convention or not.

France is also a party to the European Convention on International Commercial Arbitration 1961. This convention provides for the simplified recognition and enforcement of awards rendered in the signatory countries.

Finally, France is a party to the Washington Convention on the Settlement of Investment Disputes 1965.

 
34. To what extent is a foreign arbitration award enforceable?

Foreign awards follow the same recognition and enforcement regime as international awards made in France, which means that their existence must be proven and that they must not be contrary to French international public policy (see Question 32). The only difference is that the application for the enforcement order (exequatur) must always be filed before the Paris Tribunal de Grande Instance (Article 1516, Code of Civil Procedure (CCP)).

An order granting or denying enforcement of an award made abroad can be appealed within one month following service of the order (Article 1525, CCP). This time limit is extended by two months when serving a party located abroad (Article 643, CCP).

The Court of Appeal can deny enforcement only on one of the five grounds set out in the CCP (see Question 28). Annulment of an award at the seat of arbitration is not a ground for denying its recognition or enforcement (see C Cass, First Civil Chamber, 10 June 1997, No. 95-18.402, Hilmarton and C Cass, First Civil Chamber, 29 June 2007, No. 05-18.053, Putrabali).

International public policy is construed narrowly by French courts. The enforcement of an award can be denied only if giving effect to such an award would result in a manifest violation of international public policy (see Question 1).

 
35. What is the limitations period applicable to actions to enforce international arbitration awards rendered outside your jurisdiction?

There is no specific limitation period applicable to the commencement of legal proceedings for enforcement of awards in France. A general five-year limitation period applies to personal actions (that is, actions not related to real property rights) (Article 2224, French Civil Code). Some commentators argue that this five-year limitation period is applicable to the filing of legal proceedings for enforcement of domestic and international awards in France. There is, however, no jurisprudence that the authors are aware of on this issue.

However, to enforce an international award rendered outside of France it is necessary to first obtain an enforcement order (exequatur) (see Question 34). Once the exequatur decision can no longer be appealed, the parties have ten years to execute the decision in France (Articles L111-3 and L111-4, Code des procédures civiles d'exécution).

Length of enforcement proceedings

36. How long do enforcement proceedings in the local court take, from the date of filing the application to the date when the first instance court makes its final order? Is there an expedited procedure?

Enforcement proceedings do not take long in France. It usually takes only a few weeks to obtain an enforcement order (exequatur) through ex parte proceedings (see Questions 32 and 34). Such an order can be appealed or be the object of setting aside proceedings, which can take between 12 to 18 months. However, an action to set aside an award and/or an appeal against an enforcement order will not suspend the enforcement of the award (Article 1526, Code of Civil Procedure). As a result, a party can pursue attachments straight after obtaining an enforcement order.

 

Reform

37. Are any changes to the law currently under consideration or being proposed?

Decree No. 2011-48 of 13 January 2011 made some significant changes to French arbitration law. The Decree codified some well-established jurisprudence and developed some new principles. It is therefore unlikely that there will be any further extensive changes made to arbitration law in the near future. However, French courts are often one step ahead of the legislator when it comes to developing French arbitration law.

 

Main arbitration organisations

International Chamber of Commerce, International Court of Arbitration

Main activities. Administering of international arbitrations.

W www.iccwbo.org

Paris Center for Mediation and Arbitration

Main activities. Management and resolution of commercial disputes.

W www.cmap.fr

French Arbitration Association

Main activities. Administering of commercial and general arbitrations.

W www.afa-arbitrage.com



Online resources

Légifrance

W www.legifrance.gouv.fr

Description Official website of the French government for the publication of up-to-date French legislation and many French court decisions. Provides non-official translations of the Civil Code and Code of Civil Procedure in several languages.

International Arbitration Institute

W www.iaiparis.com

Description Website of the International Arbitration Institute. Provides a non-official English translation of the articles of Decree No. 2011-48 of 13 January 2011 applicable to international arbitration.



Contributor profiles

Elizabeth Oger-Gross, Partner

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E elizabeth.oger-gross@whitecase.com
W www.whitecase.com

Professional qualifications. New York bar, 2005; Paris bar, 2012

Areas of practice. International arbitration (commercial and investment); cross-border litigation.

Recent transactions

  • Representation of an African, Middle-Eastern-owned company in a successful ICC arbitration conducted in French, against an African state, in connection with public works contracts.

  • Representation of a state-owned entity in an EUR1 billion ICC arbitration in the nuclear industry.

  • Representing the main contractor on one of the world's largest infrastructure projects located in Central America, in a series of related ICC arbitrations against the employer, worth in excess of US$1 billion.

Languages. English, French

Anaïs Harlé, Associate

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E anais.harle@whitecase.com
W www.whitecase.com

Professional qualifications. Paris bar, 2016

Areas of practice. International arbitration.

Recent transactions

  • Representing a construction company in ICC proceedings related to a major infrastructure project in Central America.

  • Representing a group of companies in an ICC arbitration regarding tax disputes arising out of a M&A transaction in Central Europe.

  • Representing a group of foreign companies resisting annulment of an international award before French courts.

    Languages. French, English


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