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 multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-mjg.

Thomas Bevilacqua and Ivan Urzhumov, Foley Hoag AARPI
Contents

Use of arbitration and recent trends

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

Use of commercial arbitration

For decades now, France has had the benefit of one of the most pro-arbitration bodies of law in the world. France's reputation as a place dependably hospitable to arbitration has been built on both the provisions of the French Code of Civil Procedure (CPC) and a reliably liberal jurisprudence in the field. Commercial arbitration is widely used in France whenever a contract involves parties of two or more nationalities. The choice of arbitration is not limited to any specific economic sectors and can be found across a wide range of fields. Arbitration clauses appear to be especially prevalent in France in corporate transfer contracts, joint venture projects, energy sector projects, sale and distribution agreements, and development initiatives in the high technology sector.

Recent trends

In early 2011, France reaffirmed its place at the forefront of the development of international arbitration law, with the enactment of Decree No. 2011-48 of 13 January 2011 (New Decree). With some exceptions, the provisions of the New Decree entered into force on 1 May 2011. (Until the reform, the CPC had been based on Decrees of 14 May 1980 and 12 May 1981 on domestic and international arbitration.) The New Decree introduces a major textual overhaul of French arbitration law characterised by the reorganisation of the existing law in several respects, the redrafting of a number of provisions for enhanced readability, and the introduction of a number of innovations and other revisions, including a certain number designed to bring the legal text up to date with French jurisprudential developments that had occurred in the preceding 30 years. One of the primary preoccupations of the New Decree was achieving a simple and clear drafting style, particularly with the aim of fostering better understanding by foreign legal professionals.

The New Decree replaces the entirety of the previously existing Book IV (entitled Arbitration) of the French CPC with a redrafted set of 85 Articles divided into Title I (Domestic Arbitration; CPC Articles 1442 to 1503 following the revision) and Title II (International Arbitration; CPC Articles 1504 to 1527 following the revision). Notably, Title II is somewhat more explicit and lengthier than its predecessor version, with the number of CPC articles dedicated specifically to international arbitration increasing from 16 to 24. In addition, the New Decree lists, by Article and paragraph number, all of the provisions under Title I that also apply to international arbitration.

Some of the novel or otherwise noteworthy provisions introduced by the New Decree include the following:

  • Parties can agree in advance to waive the right to initiate a petition to set aside an arbitral award issued in France (Article 1522, CPC).

  • Neither a petition to set aside an award nor the appeal of an enforcement order (ordonnance d’exequatur) has the effect of suspending the execution of an award in France (Article 1526, CPC).

  • The arbitral tribunal is explicitly authorised to issue interim orders calling for the production of evidence or dealing with conservatory or provisional measures, and to include in such orders a daily penalty provision (astreinte) applicable in the event of non-compliance (Articles 1467 and 1468, CPC).

(The references here, and throughout this chapter, are all to the CPC as revised following the New Decree.)

Advantages/disadvantages

The advantages of French arbitration as compared to French litigation include the following:

  • Arbitral awards are generally easier to enforce in other jurisdictions than foreign court judgments.

  • Arbitration provides greater flexibility as to its rules, as the proceedings can readily be tailored on a case-by-case basis to match the parties' particular needs and wishes (seat of arbitration, language(s) of the proceedings, choice of arbitrators, flexibility concerning the written and oral presentation of arguments and so on).

  • International commercial arbitration seated in France generally allows for greater discovery than would normally be allowed in French judicial proceedings, due in particular to the widespread use by arbitrators in France of the International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration (which represent a compromise between the civil law and common law traditions of fact gathering).

One disadvantage of French arbitration as compared to French litigation is that arbitration is probably more costly, as French court proceedings are generally not especially cumbersome or lengthy (particularly when compared to civil litigation in common law jurisdictions). Other disadvantages include the difficulty or outright impossibility, depending on the particular facts, of consolidating separate but related arbitration matters or of joining non-signatory third parties (see Question 11). Although it is addressed to some extent by provisions introduced in the 2012 International Chamber of Commerce (ICC) Arbitration Rules, this disadvantage remains particularly acute when multiple related disputes occur on a single project but arise under different contracts involving partially or wholly overlapping parties and more or less similar arbitration clauses.

 

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 was first codified in the early 1980s in Book IV of the CPC. A primary concern at that time was to ensure that the legislative texts applicable to international arbitration be streamlined and manageable. One consequence of this was that in the absence of a more detailed legislative text, courts seized the opportunity to fill in certain gaps, usually arriving at solutions that can be viewed as favourable to the continued development of arbitration in France. With the reform introduced in early 2011, many of the solutions introduced by case law have now been codified.

Both the earlier version of Book IV of the CPC and the New Decree are premised on a fairly original dualist logic that distinguishes between domestic arbitration (l'arbitrage interne) and international arbitration. The definition of international arbitration is broad and inclusive: an arbitration is considered international whenever it implicates interests of international trade (Article 1504, CPC).

French arbitration law does not follow, and is not based on, the UNCITRAL Model Law. It can be said fairly that French law provides a more favourable treatment of international arbitration than does the UNCITRAL Model Law.

 

Mandatory legislative provisions

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

French law on international arbitration sets out few mandatory rules. It places the emphasis on party autonomy and the ability to conduct arbitration proceedings that meet the parties' shared expectations. This general characteristic of French arbitration law was kept intact by the 2011 reform and was even reinforced in at least one particular respect (that is, through the inclusion of a provision allowing parties to waive their right to seek the annulment of an arbitral award rendered in France (Article 1522, CPC)).

A few mandatory rules apply in relation to the following matters:

  • Arbitrability. Access to arbitration is limited in areas of law that have traditionally been associated closely with the exercise of state judicial power (for example, certain family law matters, bankruptcy matters and so on).

  • Due process/fair trial. The New Decree specifically provides that even when specific rules are chosen to govern the arbitral proceedings, the arbitral tribunal must always ensure the equality of the parties and due process (Article 1510, CPC). Although no such provision existed before the reform, principles of equality and due process were long ago endorsed by the French Cour de Cassation (Cour de Cassation, 7 January 1992, better known as the Dutco case).

  • International public policy. A French court must set aside or decline to allow enforcement of an arbitral award that, conflicts with fundamental principles that can be considered part of international public policy. Therefore, an award giving legal effect to a contract involving corruption (for example, influence peddling through the payment of bribes) can be deemed contrary to French international public policy and set aside or refused enforcement by French courts (Paris Court of Appeal, 30 September 1993, European Gas Turbines). However, as a practical matter, for an international arbitral award to be set aside or refused enforcement, the infringement of international public policy must be "flagrant, effective and concrete", which is rarely the case (Cass. 1st Civil Chamber, 4 June 2008, SNF v Cytec; Cass. 1st Civil Chamber, 29 June 2011, Cass. 1st Civil Chamber, 10 July 2013, n°. 12-13351, Etisalat v Planor Afrique; Paris, 8 October 2013, n°. 12-18722, Iberia Lineas Aereas De Espana v Pan Atlantic).

 

Limitation

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

A major law (Law No. 2008-561) was enacted in France on 17 June 2008 to reform the statute of limitations regime. Under revised Civil Code Article 2224, the catch-all limitation period for personal actions (actions personnelles ou mobilières) is five years (before the revision, the generally applicable period was 30 years). A small number of other limitation periods exist, for example:

  • Tort actions for personal injury are barred after ten years.

  • Certain real estate disputes are subject to a 30-year limitation period.

These limitation periods may indeed apply if the claim brought to arbitration is governed on the merits by French law, in which case the limitation period is deemed interrupted on service of a request for arbitration. In addition, some writers have speculated that the new five-year limitation period may arguably apply to actions seeking recognition and enforcement of foreign arbitral awards.

Law No. 2008-561 also provides that once a judicial decision allowing enforcement of an award has been obtained, and when that decision is no longer susceptible to a further challenge that suspends execution (a situation known in French law as possessing a titre exécutoire), the limitation period for enforcing that award is generally ten years (Article 3-1, Law 91-650 of 9 July 1991, introduced through Article 23, Law of 17 June 2008, and the existing Article 3, Law 91-650).

 

Arbitration organisations

5. Which arbitration organisations are commonly used to resolve large commercial disputes in your jurisdiction?

The ICC has been organising arbitration proceedings since the 1920s through its International Court of Arbitration (www.iccwbo.org ). It is certainly the most reputable commercial arbitration centre in France, if not in the world and it is the most commonly used arbitration centre in France for the resolution of large international disputes.

Recent developments include revisions to ICC Arbitration Rules which apply to proceedings commenced on or after 1 January 2012. While they generally preserve the key distinctive features of the ICC arbitration, such as the prima facie verification of the existence of an arbitration agreement and the scrutiny of draft awards before issuance, the new rules also introduce a number of innovations that take account of developments since their last revision in 1998. These include novel provisions on multi-party and multi-contract arbitrations, the introduction of an emergency arbitrator procedure, and an update of the case management procedures in order to make ICC arbitration faster and more cost-efficient.

The ICC is not the only Paris-based institution administering arbitration. Others include the:

  • French Arbitration Association (Association française d'arbitrage) (AFA) (www.afa-arbitrage.com).

  • Paris Centre for Mediation and Arbitration (Centre de médiation et d'arbitrage de Paris) (CMAP) (www.mediationetarbitrage.com), created by the Paris Chamber of Commerce and Industry.

  • International Arbitration Chamber of Paris(Chambre arbitrale internationale de Paris) (CAP) (www.arbitrage.org).

  • Paris Maritime Arbitration Chamber (Chambre arbitrale maritime de Paris) (CAMP) (www.arbitrage-maritime.org).

  • French Reinsurance and Insurance Arbitration Center (Centre français d'arbitrage de réassurance et d'assurance) (CEFAREA) (www.cefarea.com).

Naturally, the world's other leading international arbitration centres (including the London Court of International Arbitration (LCIA) and the Arbitration Institute of the Stockholm Chamber of Commerce) also administer arbitrations with a seat of arbitration in France. However, there is a strong correlation between parties' choosing Paris as the seat of their arbitration and their electing the ICC as the administering institution.

See box, Main arbitration organisations.

 

Arbitration agreements

Validity requirements

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

Substantive/formal requirements

Except for rules governing arbitrability of the dispute (see Question 3), no substantive or formal requirements exist under French international arbitration law to render an arbitration agreement valid and enforceable. French law requires neither a written arbitration clause nor any other particular form for the arbitration agreement. The CPC now sets out this rule explicitly (Article 1507, CPC).

Separate arbitration agreement

The structure and contents of the arbitration agreement are not restricted in any particular manner by French law. The agreement can be found in the contract to which it relates (clause compromissoire), which is the most common situation, or in a separate written arbitration agreement entered into after a dispute has erupted (submission agreement or compromis d'arbitrage).

 

Unilateral or optional clauses

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

Optional dispute resolution clauses are occasionally used in international transactions, particularly in the financial sector. These clauses typically give one or both of the parties the option to choose between referring the dispute to arbitration or to a designated state court. When only one of the parties is granted an exclusive and unilateral option to choose between different forums, the question arises whether such a clause is valid in light of the principle of equality of procedural rights. In France, the validity of unilateral optional clauses was admitted by a 1972 ruling of the Angers Court of Appeals, which was upheld by the Cour de Cassation (Angers. 25 September 1972, S.A. Sicaly v Grasso Stacon Koninklijke Machine Fabrieken NV; Cass. 1st Civil Chamber, 15 May 1974). In a more recent decision the Cour de Cassation ruled that an agreement to refer disputes to the Luxembourg courts and also granting one party the unilateral right to seize another otherwise competent court was ineffective. This is because it seems to confer on one party a unilateral right to choose from an unlimited number of unspecified jurisdictional options (Cass. 1st Civil Chamber, 26 September 2012, n°11-26022). The Cour de Cassation recently upheld and enforced an agreement that conferred upon both contracting parties the freedom of choice between an LCIA arbitration or court litigation before an identified court (Cass. 1st Civil Chamber, 12 June 2013, n° 12-22656, Société Thermodyn v Société M-Real Alizay et autre).

 

Separability

8. Does the applicable legislation recognise the separability of arbitration agreements?

According to well-established French case law, the arbitration clause is autonomous from the underlying contract (Cass. 1st Civil Chamber, 7 May 1963, Gosset). The CPC provides explicitly for this principle of autonomy of the arbitration agreement (Article 1447, CPC). The autonomy principle permits an arbitral tribunal to have jurisdiction to conduct an arbitration that leads to an award declaring the contract in issue to be null and that addresses the consequences flowing from such nullity.

 

Breach of an arbitration agreement

9. 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 a dispute subject to an arbitration clause is submitted to a state court for resolution, that court must generally decline jurisdiction (see Question 21). Only the manifest nullity or inapplicability of the arbitration clause allows an exception to this principle, and only if the matter was referred to the judge before the constitution of an arbitral tribunal (Article 1448, CPC). The notions of nullity and inapplicability have been narrowly construed by French jurisprudence (Cass. 1st Civil Chamber, 7 June 2006, Jules AQ v ABS). For example, the Cour de Cassation has noted that a French judge is not authorised to engage in a substantial and detailed examination of the arbitration agreement before the arbitral tribunal has had a chance to rule on its validity and scope.

Arbitration in breach of a valid jurisdiction clause

If an arbitration is commenced in breach of a valid jurisdiction clause referring disputes to a state court, the arbitral tribunal must decline to conduct the arbitration. However, once the tribunal has been constituted, and in light of the principle of kompetenz-kompetenz (see Question 21 and Question 22), the parties have to wait for such a refusal of jurisdiction by the arbitral tribunal before a state court action can commence in France (Article 1448, CPC).

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

Anti-suit injunctions are generally considered alien to French procedural law and to the laws of civil law countries generally, and their issuance has been the object of some criticism. The European Court of Justice (ECJ) disapproved of the use of these injunctions within the EU in the West Tankers case (10 February 2009).

However, a decision of the Cour de Cassation issued later that same year (1st Civil Chamber, 14 October 2009) approved the enforcement in France, outside the scope of EU conventions and law, of an anti-suit injunction that had been ordered by a foreign court in order to render effective a contractually agreed forum selection clause placing jurisdiction with it.

 

Joinder of third parties

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

Whether a third party can be joined in an ongoing arbitration depends on both:

  • The applicable procedural rules, which may provide certain time limits and/or other requirements for requesting joinder, or may even not contemplate such a request. For example, the 1998 ICC Arbitration Rules were silent on joinder, and some arbitral tribunals interpreted this as an implicit exclusion of any such right (ICC Award no. 5625 of 1987, in Collection of ICC Arbitral Awards, 1986-1990, at 484). This has changed in the 2012 ICC Arbitration Rules, which in general permit joinder if it is requested before the confirmation or appointment of the arbitrators (and in some cases thereafter).

  • The third party's being bound by the relevant arbitration agreement(s). The guiding principle of French law is that an arbitration agreement cannot be invoked or enforced against a non-signatory. However, French case law has on occasion recognised the possibility of applying an arbitration agreement beyond the strict limits of the signatory parties in certain specific circumstances. Two different notions should be distinguished in relation to this:

    • transmission of the arbitration clause;

    • extension of the clause.

Transmission of the arbitration clause

Transmission refers to situations in which the contract containing the agreement to arbitrate is the subject of a transfer to another entity (be it a transfer by operation of law or by agreement). The arbitration agreement is treated as inseparable from the overall economy of the contract. It therefore follows or accompanies the contractual relationship transferred, and binds the person or entity that succeeds to the rights of the original contracting party, irrespective of whether the assignment of the contractual rights is itself valid (Cass. 1st Civil Chamber, 28 May 2002, CIMAT v SCA). Case law has deemed a contractual arbitration clause to be transferred in a variety of factual circumstances, including in cases of receivables transfers (Paris, 10 September 2003, no. 2002/05034) and in situations of chains of contracts (Cass. 1st Civil Chamber, 27 March 2007; Cass. 1st Civil Chamber, 17 November 2010, Refcomp v Axa).

Extension of the clause

The notion of extension of the arbitration clause refers to situations in which the binding force of the arbitration agreement is interpreted broadly to include contracts not explicitly referred to by the arbitration agreement and/or entities that were not formally parties to the contract containing the arbitration agreement. Under certain circumstances, French jurisprudence has allowed the extension of an arbitration clause to non-signatories involved in the performance of the contract containing the arbitration clause (Paris, 7 December 1994, "Jaguar" case; Paris, 5 May 2011, Kosa v Rhodia; Paris, 26 February 2013, n° 12-12953, SARL Lola fleurs v Société Monceau fleurs et autres). Although extension of the arbitration clause is more often invoked in situations of groups of related companies, a landmark decision applied the theory to extend to a sovereign state an arbitration clause subscribed by a state-owned company (Paris, 17 February 2011, Government of Pakistan v Dallah). As another decision suggests, French courts remain cautious about extending an arbitration clause to non-signatory sovereign states and will require a high degree of proof of the state's involvement in the performance of the underlying contract (Cass. 1st Civil Chamber, 29 June 2011, Papillon Group v Syrian Arab Republic).

 

Arbitrators

Number and qualifications/characteristics

12. Are there any requirements in the legislation relating to the number and qualifications/characteristics of arbitrators?

In international arbitration, French law does not set out any particular requirements as to the number of arbitrators or their status, qualifications or other required characteristics. In domestic arbitration, however, French law requires that arbitrators be physical persons and that they be designated in an odd number (Articles 1450 and 1451, CPC). In both cases, and unless the parties agree otherwise, the choice of arbitrator(s) remains in the parties' sole discretion (subject to the requirement of independence and impartiality) (see Question 13).

 

Independence/impartiality

13. Are there any requirements in the legislation relating to arbitrators' independence and/or impartiality?

Arbitrators are subject to duties of independence and impartiality under French arbitration law. Before accepting their position, arbitrators have a statutory obligation under the CPC to disclose any circumstances that could potentially affect their independence or impartiality (Article 1456, CPC). The obligation is a continuing one: if circumstances potentially affecting an arbitrator's independence or impartiality arise after the appointment, the arbitrator must reveal the newly discovered circumstances without delay. As recent jurisprudence shows, French courts are increasingly rigorous in controlling that arbitrators timely and fully comply with their duty of disclosure (for example, Cass. 1st Civil Chamber, 1 February 2012). Failure to do so, can lead to the setting aside of the award when the non-disclosed circumstances could cause a party to have reasonable doubts as to the independence and impartiality of the arbitrator (Paris, 10 March 2011, Tecso v Neoelectra; Paris, 10 March 2011, Nykcool v Dole France). Among other things, each arbitrator is expected to disclose all information on relationships between either himself or his law firm and a party or a party's counsel (Paris, 9 Sept. 2010, Allaire v S.A.S. SGS Holding France; Paris, 13 November 2012, n° 11-11153, S.A. Fairplus Holding v JMB; Paris, 5 November 2013, n° 12-08681, ETE v Gascogne Paper).

However, a very recent case from the Cour de Cassation clarifies that where a party has knowledge of circumstances that question the independence or impartiality of an arbitrator but fails to challenge the arbitrator within the time limits set out in the governing arbitration rules, that party is deemed to have waived any right to rely on those circumstances to challenge the award in later judicial set aside proceedings (Cass. 1st Civil Chamber, 25 June 2014, Tecnimont SPA v J&P Avax; see also Articles 1466, 1506-3° CPC).

 

Appointment/removal

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

Appointment of arbitrators

In theory, the parties to an arbitration appoint the arbitrators at their own initiative. Difficulties may arise if parties do not agree on the choice of the sole arbitrator or, when the arbitration is to proceed before a panel of three arbitrators, if either party fails to appoint an arbitrator or if the two party-appointed co-arbitrators do not agree on the choice of the third arbitrator. These and other difficulties can be resolved by the arbitral institution or, if the arbitration is ad hoc, any party can solicit the assistance of the juge d’appui, the judge tasked with providing any necessary assistance for the arbitration proceedings. Unless the parties have provided otherwise, the functions of the juge d'appui in international arbitration are carried out exclusively by the chief judge (Président) of the Paris Tribunal de Grande Instance (TGI), who is entitled to intervene, provided that one of the following jurisdictional criteria is met (Article 1505, CPC):

  • The arbitration is proceeding in France.

  • The parties have agreed the arbitration will be governed by French procedural law.

  • The parties have expressly granted jurisdiction to French courts over disputes relating to the arbitration proceedings.

  • One of the parties faces the risk of a denial of justice. (This was present in the famous case of NIOC v Israel (Cass. 1st Civil Chamber, 1 February 2005), although the provision introduced by the 2011 reform goes further by allowing the juge d'appui to intervene in case of a risk of a denial of justice even if the case has no connection with France.)

The CPC provides that if the parties have not agreed on a technique for appointing the arbitrator(s), the appointment(s) must be made as follows (Article 1452):

  • If the arbitration is to proceed before a sole arbitrator, and if the parties do not agree on the choice of the arbitrator, the arbitrator must be appointed by the administering body or, if there is not one, by the juge d'appui.

  • If the arbitration is to proceed before three arbitrators, each party must choose one arbitrator, and the two arbitrators so chosen must appoint the third.

In relation to multi-party arbitration, French law includes an important principle of party equality in the process of appointing arbitrators. This principle was considered as rising to the level of public policy in the famous Dutco decision, which refused to enforce an arbitration agreement entered into before the dispute arose that allowed a single claimant to name one co-arbitrator and required multiple respondents to jointly name the other co-arbitrator. The amended CPC provides that when the dispute involves more than two parties and they do not agree on the procedure to be followed for the appointment of the arbitrator(s), the arbitrator(s) is (are) designated by the administering body or, if there is not one, by the juge d'appui (Article 1453, CPC).

Removal of arbitrators

An arbitrator who lacks independence or impartiality may be removed. Disputes relating to the removal of arbitrators are resolved by the arbitral institution or, in the case of ad hoc arbitration, by the juge d'appui (Article 1456, CPC).

 

Procedure

Commencement of arbitral proceedings

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

Arbitration proceedings are usually initiated by delivering a request for arbitration. French law contains no default rules relating to the submission of the request for arbitration. In institutional arbitration, the request usually must be submitted to the relevant arbitration centre and must comply with that centre's arbitration rules, which normally provide certain minimal requirements concerning the form and content of the request (for example, Article 4 of the 2012 ICC Rules of Arbitration).

 

Applicable rules

16. 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

French arbitration law affords parties the freedom to agree on the procedural rules applicable to their arbitration. Parties can elect the procedural law of a given country to apply to their arbitration or reach an agreement on specific procedural rules that will govern (typically by electing an existing set of arbitration rules).

If the arbitration agreement identifies neither an applicable set of arbitration rules nor the governing procedural law, the arbitrators are free, to the extent necessary, to settle the procedural issues either directly (that is, without it being necessary to search the applicable procedural law) or by referring to a given arbitration law or any other rules of procedure. They may also supplement any governing rules and law as they deem appropriate. However, the principles of party equality and due process must always be respected (Article 1510, CPC). Arbitrators sitting in France may easily conform to prevailing international practice in international arbitration by, for example, drawing from institutional arbitration rules or other sets of rules such as the IBA Rules on the Taking of Evidence in International Arbitration or the UNCITRAL Notes on Organising Arbitral Proceedings.

Default rules

French law does not provide default procedural rules, except that general principles of party equality and due process must always be respected (Article 1510, CPC). The French concept of due process includes the principle that an award must not rely on a legal theory not debated by the parties in an adversarial manner (Cass. 1st Civil Chamber, 29 June 2011, affirming Paris, 25 March 2010, Caribbean Niquel; Cass. 1st Civil Chamber, 23 June 23 2010, No. 09-67.182; Cass. 1st Civil Chamber, 23 June 2010, No. 08-16858 09-12399; Cass. 1st Civil Chamber, 14 March 2006; Paris, 3 Dec. 2009; Paris 16 Oct. 2008; Paris, 8 January 2013, n° 11-14143, Inversiones Energeticas « INE » et Comision Ejecutiva Hidroelectrica Del Rio Lempa « CEL » v ENEL Produzione Spa et Enel Green Power SA; Bourges, 11 April 2013, n° 12-00596, SCEA Cotiniere-Moineaux v Ecuries Claude Meurgues; Cass. 1st Civil Chamber, 26 June 2013, n° 12-16224, Egyptian General Petroleum Corporation v National Gas Company). However, there is no breach of due process if a party was given an opportunity to present its case before arbitrators but decided not to participate in the proceedings (Paris, 23 June 2011, Sté de la Bergousie v Willex).

 

Arbitrator's powers

17. 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 the absence of any provision in the parties' arbitration agreement, arbitrators are generally free to exercise their discretion in resolving procedural matters (see Question 16). For example, an arbitrator may:

  • Instruct parties to produce documents.

  • Request that parties provide details about particular factual matters.

  • Engage experts.

  • Invite third parties to provide evidence.

However, due to arbitrators' limited power to compel, measures directed at or affecting third parties may be of limited efficacy. In particular, seeking to compel the production of documents held by third parties through an order of the arbitral tribunal is not particularly practical, as the arbitral tribunal has no power to bind third parties. A party to arbitration proceedings interested in obtaining the disclosure of documents held by a non-party can file a summary action (action en référé) "on invitation of the arbitral tribunal" to seek an order of production before the Chief Judge of the jurisdictionally competent TGI (Article 1469, CPC).

As to orders directed at parties to arbitration, one technique that arbitrators can adopt to increase their effectiveness is to include a provision in their order calling for the application of a cumulative daily penalty (astreinte) in the event of non-compliance. The power of arbitrators to resort to astreinte provisions has long been recognised in French jurisprudence (Paris, 7 October 2004) and was introduced into the CPC by the New Decree (Articles 1467 and 1468, CPC). However, in practice, parties to arbitration tend to comply with orders calling for the production of documents to avoid the drawing by the tribunal of any negative inferences as to the contents of the non-disclosed material.

 

Evidence

18. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure compare with disclosure in litigation? Can the parties determine the rules on disclosure?

Scope of disclosure

French judicial procedure does not provide for pre-trial fact-finding of a scope routinely associated with the common law tradition. Document production is particularly limited. Each party decides in the first instance what documents it possesses and wishes to annex to its pleadings and thereby place in issue. French judges can of course order the production of certain additional documents, but the scope of such orders is generally quite narrow, as French judges tend to order the production of only those documents that can be identified with a reasonable degree of precision and that are directly relevant to the issues in dispute.

The practices of French court litigation are not, however, particularly relevant to arbitrations seated in France. This is so, first, because it is within the parties' power to agree on the nature and extent of the pre-hearing fact-finding and, second, even if one can fairly conclude that the notion of discovery (as understood in common law jurisdictions) is alien to French civil procedure, nothing prevents arbitrators sitting in France from adopting a common law approach, to a greater or lesser extent, and arbitrators sitting in France may do so to fit the needs of a particular case or the parties' expectations.

Parties' choice

In practice, tribunals tend to seek the input of the parties as to the desired scope of the discovery. But notwithstanding the flexibility allowed to arbitrators under French arbitration law, if the majority of the arbitrators, parties and counsel have their centre of gravity in civil law jurisdictions, then as a practical matter it is quite unlikely that the tribunal will apply the full scope of discovery measures typical of common law countries. When the actors involved in a given case are from different legal traditions, tribunals endeavour to craft a solution on discovery that strikes a compromise between those traditions. The IBA Rules on the Taking of Evidence in International Arbitration are employed on a fairly regular basis in international arbitrations in France.

 

Confidentiality

19. Is arbitration confidential?

Parties can ensure the confidentially of their arbitration by signing a confidentiality agreement or by agreeing to arbitrate under a set of rules containing a confidentiality obligation. Many sets of arbitration rules contain no such obligation.

The issue of whether the duty of confidentiality applies in the absence of an agreement by the parties remained rather unclear for some time before the recent reform. The CPC now explicitly provides that unless parties agree otherwise, domestic arbitration proceedings are confidential (Article 1464, CPC). However, this provision is not among those domestic arbitration provisions expressly made applicable by Title II to international arbitration (Article 1506, CPC), leading some commentators to conclude that confidentiality is not a default rule of international arbitration and that the extent of confidentiality obligations in international arbitration will depend on the existence of a specific agreement between the parties.

 

Courts and arbitration

20. Will the local courts intervene to assist arbitration proceedings?

French courts may become involved in arbitration only under limited circumstances, which include, most notably when the assistance of the state judiciary is necessary to ensure that the arbitral proceedings effectively get underway. This assistance can typically be requested at three stages of the arbitration:

  • Courts can become involved with respect to difficulties affecting the commencement and pursuit of arbitration proceedings. The juge d'appui has jurisdiction in certain circumstances:

    • concerning the designation or recusal of arbitrators (see Question 14); and

    • to extend the time period (if any) that the parties have granted to the arbitrators to complete their mission (Article 1463, CPC).

  • Parties can call on state courts in relation to provisional or conservatory measures. Although arbitrators have concurrent jurisdiction to order some of these measures (see Question 23), it is often more efficient to seek them directly from a state court. The types of measures that can be sought from the courts depend on whether the arbitral tribunal has already been constituted:

    • when the arbitral tribunal has not yet been constituted, the juge des référés may order urgent provisional measures designed to maintain the status quo or to put an end to an emergency situation (TGI Paris, 2 July 2013, n° 11-08522, Interpane Glass v Pilkington Technology Management et a) (for example, the discontinuation of activities that create a manifestly illegal state of affairs, such as conduct amounting to infringement of a patent). When, in addition to urgency, a claimant can demonstrate that its claim is not capable of being seriously challenged, the juge des référés can order the making of a provisional down-payment towards the amount claimed (Cass. 1st Civil Chamber, 6 March 1990; Cass. 2nd Civil Chamber 13 June 2002);

    • irrespective of whether the arbitral tribunal has already been constituted, parties can apply through an ex parte application for measures such as the registration of a judicial mortgage or pledge on the debtor's assets, or a conservatory seizure thereof (Article 1468, CPC).

  • It may become necessary or useful to request the involvement of state courts concerning matters of proof. A party can, for example, request a French judge to order, pending the constitution of the arbitration panel, discovery or fact-finding measures aimed at preserving or obtaining elements of proof on which the resolution of the dispute will turn (Articles 145 and 1449, CPC). After the tribunal has been formed, recourse to a state court judge can be had upon invitation of the arbitral tribunal in order to obtain the production of documents held by a non-party to the arbitral proceedings (Article 1469, CPC).

 
21. What is the risk of a local court intervening to frustrate the arbitration? Can a party delay proceedings by frequent court applications?

Risk of court intervention

An arbitration agreement has a dual effect: first, it provides the groundwork for the arbitral tribunal's jurisdiction (known as the positive effect) and, second, it precludes state courts from exercising jurisdiction over matters falling under the arbitration tribunal's jurisdiction (the negative effect) (Article 1448, CPC).

The negative effect is useful to defeat a party's attempt to slow down the commencement of the arbitration by delaying tactics. It applies in two circumstances:

  • When a dispute that is already pending before an arbitration tribunal is brought before a state court, the court must declare that it has no jurisdiction to address the merits of the case or the validity or scope of the arbitration agreement.

  • If the dispute has not yet been entrusted to an arbitral tribunal, the state court must still declare itself without jurisdiction, unless the arbitration clause is manifestly null or inapplicable (Cass. 1st Civil Chamber, 6 October 2010, Blonde d’Aquitaine v SCEA Plante Moulet; Cass. 1st Civil Chamber, 11 July 2006; Cass. 1st Civil Chamber, 25 April 2006; Cass. 1st Civil Chamber, 15 May 2013, n° 12-14726, M. Michel Bruno v Mme Nancy Lemont-Avet; Cass. 1st Civil Chamber, 10 July 2013, n° 12-25535, Consistoire israélite de Marseille v Ouaki).

In short, under French arbitration law, it is the arbitrators who first consider the validity and scope of the arbitration agreement. Their determination is subject to later review by a state judge when either a request for enforcement and recognition of the award is sought or a petition to set the award aside is filed. This framework reflects a policy choice designed to discourage dilatory tactics by parties seeking to avoid arbitration.

Delaying proceedings

Attempts to delay arbitration proceedings by turning to French state courts are not likely to be successful due to the "negative" effect of the arbitration agreement. French courts normally dismiss such applications and refer parties to arbitration in the first instance.

In addition, French law does not automatically impose the suspension of arbitral proceedings while a state court examines various types of applications that may be filed by a party to arbitration, such as an application to a court to obtain documents held by a third party. The decision to suspend the arbitration is left in the discretion of the arbitral tribunal (Article 1472, CPC).

 
22. 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?

French law was among the first national laws to subscribe to the principle of kompetenz-kompetenz, and even today France remains one of the few countries whose law consecrates both the positive and negative effects of that principle. The positive aspect of the doctrine allows arbitrators to rule on challenges to their jurisdiction, subject to later review by the state courts at the stage of enforcement of the award or in set-aside proceedings. The negative aspect means that the arbitral tribunal is the first to rule on its own jurisdiction, prior to the French state courts (see Question 21).

 

Remedies

23. What interim remedies are available from the tribunal?

Security for costs

While security for costs (cautio judicatum solvi) appears possible as a procedural matter, different legal commentators have opined that it should be requested only in exceptional cases (when, for example, a claim has been initiated by a party that appears to have planned its own insolvency, with the goal of applying pressure on, or causing negative consequences to, the other party).

Security or other interim measures

Arbitrators sitting in France have the general power to order interim measures (Article 1468, CPC). Some particular measures, such as conservatory seizure of assets and compulsory registration of a judicial mortgage or pledge, can be ordered exclusively by the state courts (Article 1468, CPC).

In practice, an arbitration tribunal can order measures designed to:

  • Ensure the execution of the forthcoming award, such as an order forbidding a party to dispose of certain assets or ordering it to post a security.

  • Maintain the status quo, such as an order to a supplier to continue making its deliveries.

However, measures ordered by a tribunal do not always enjoy the same concrete effect or scope as measures ordered by a court (see Question 17). Compulsory execution of measures ordered by an arbitration tribunal can be accomplished only with the assistance of the judiciary. However, as these measures are often ordered near the start of an arbitration, parties may be unwilling to run the risk of antagonising the tribunal by defying its orders so early in the proceedings. (See also Question 17 for astreinte provisions.)

Other

An important new feature of the 2012 ICC Arbitration Rules is the emergency arbitrator procedure that allows parties to an arbitration agreement concluded after 1 January 2012 to seek urgent interim or conservatory measures prior to the transmission of the file to the arbitral tribunal and without regard to whether a request for arbitration was submitted (Article 29). The decision on whether to grant such measures belongs to an emergency arbitrator appointed by the President of the ICC International Court of Arbitration. Proceedings before the emergency arbitrator are conducted inter partes and come to an end with an order issued within 15 days of the emergency arbitrator's receipt of the file.

 
24. What final remedies are available from the tribunal?

Upon issue, the arbitral award is final (res judicata effect) in relation to the dispute it resolves. In their award, arbitrators can, among other things, order specific performance of the contract or order the losing party to pay a sum of money corresponding to the harm suffered by the claimant, along with accrued and future interest. The arbitrators can also include a component for moral damage. In addition, they can in their discretion apportion and assign among the parties their respective shares of responsibility for the overall costs of arbitration, including the administrative fees of any arbitration institute, the costs of any experts and the fees and expenses of the arbitrators and counsel.

One controversial issue concerns whether the arbitrators can award punitive damages and, if so, in what amount. The concern is that excessive awards of punitive damages could violate the principle of proportionality between the harm and the remedy, and such an award could run the risk of being deemed contrary to the French conception of international public policy and therefore unenforceable in France. The Cour de Cassation refused to enforce a judicial decision from the United States on the basis that the amount of damages awarded was disproportionate to the harm suffered and the breaches of contract in issue, because they "very significantly exceeded" the actual damages. (The amount of punitive damages awarded was only about 5% higher than the actual damages awarded.) Interestingly, while refusing enforcement of the judgment in that case, the Cour de Cassation stated that punitive damages were not, per se, contrary to French public policy (Cass. 1st Civil Chamber, 1 December 2010).

 

Appeals

25. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can the parties effectively exclude any rights of appeal?

Rights of appeal/challenge

An international arbitration award issued in France may be the subject of a petition to set aside made by the unsuccessful party before the court of appeals at the place of issuance of the award. The petition to set aside can be filed at any time between the award's issuance and the expiry of one month following its notification to the parties (Article 1519, CPC).

Grounds and procedure

The grounds for setting aside an award, slightly reformulated by the New Decree, are as follows (Article 1520, CPC):

  • The arbitral tribunal wrongfully found that it had, or did not have, jurisdiction.

  • An irregularity in the appointment of the tribunal.

  • In ruling, the arbitral tribunal failed to conform to the mission bestowed on it.

  • Failure to respect the principles of due process and fair trial (le principe de la contradiction).

  • Recognition or enforcement of the award conflicts with international public policy.

Excluding rights of appeal

An important innovation introduced by the 2011 reform is that parties can now explicitly agree at any time to waive the right to commence a petition to set aside an international award issued in France (Article 1522, CPC). Unlike the law of certain jurisdictions, French law does not limit this possibility to situations in which all of the parties have their domicile, habitual residence and place of business outside France.

 

Costs

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

Counsel fees are determined by agreement between the attorney and the client. French law generally prohibits an attorney from employing a success fee arrangement (pacte de quota litis) when it represents the entirety of the attorney's fees (Article 10, Law No. 71-1130 of 31 December 1971). However, the ban on pure success fee arrangements applicable to judicial representation matters may be somewhat eased in arbitration (even one seated in France), provided the agreed fees are not manifestly excessive (Paris Court of Appeal, 10 July 1992).

French law is silent on the fees of the arbitrators, which may be set either by the arbitrators themselves or, in institutional arbitration, by an arbitration institution. Fees tend to be based on the number of hours worked (the LCIA's practice) or of the amount in dispute (the ICC's practice), with other factors, such as the complexity of the case and the reputation of the arbitrators, also sometimes taken into account.

 
27. 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

French law does not set out an obligation for the unsuccessful party to bear its opponent's fees and costs. Decisions concerning the possible division of responsibility between the prevailing party and the losing party for the costs of arbitration, including counsel’s fees, are generally left to the discretion of the arbitrators (barring any alternate contractual arrangement between the parties or presumption in the governing rules of arbitration) (see Question 24). Such decisions are typically found in the final arbitral award.

Cost calculation

Costs normally include the fees and expenses of the arbitrators, the administrative expenses of the arbitral institution, and the reasonable fees of the parties' legal counsel (for example, Article 37 of the 2012 ICC Arbitration Rules). Although not as common, the costs of arbitration may also include internal expenses incurred by the winning party, such as the loss of productivity of its employees due to the time devoted to the arbitration.

Factors considered

The factors considered by arbitrators in allocating costs include the relative proportions of successful and unsuccessful claims, the reasonableness of the parties' legal expenses and the parties' procedural behaviour during the arbitration. Therefore, a respondent that deliberately delayed proceedings may be ordered to bear a portion of the claimant's legal costs, irrespective of the outcome of the arbitration.

 

Enforcement of an award

Domestic awards

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

The enforcement proceeding is commenced before the enforcement judge of the TGI within whose territorial jurisdiction the award was issued (Article 1516, CPC). The process for requesting recognition and enforcement (demande d'exequatur) is simple, and the request is made ex parte. The request consists of a short demand in more or less standard language that is typically written by hand on the original or a copy of the award. This is submitted to the TGI together with a copy of the arbitration agreement (with a translation of these documents if they are not in French; translations generally need not be by a court certified translator, following the 2011 reform) (Article 1515, CPC).

The enforcement judge issues an order generally within a few weeks (at most). The judge will recognise and order enforcement of the award if both:

  • The award's authenticity has been proven by the party seeking its recognition and enforcement.

  • The recognition and enforcement are not manifestly contrary to international public policy (Article 1514, CPC).

The order allowing recognition and enforcement (ordonnance d'exequatur) comprises a standard order which is simply stamped on the face of the award. In the rare instances when the order denies enforcement, it must state its reasons, and such an order is appealable (Articles 1517 and 1523, CPC).

There is no appeal open against a TGI decision granting an enforcement order concerning an international arbitration award rendered in France (Article 1524 CPC). The only means of recourse is a petition to set aside the award (see Question 25). If, however, the parties explicitly waived their right to request setting aside a future arbitral award, the TGI enforcement order can nevertheless be appealed on the same grounds as those provided for setting aside the award (Articles 1522 and 1524, CPC).

The enforcement order allows the interested party to pursue forced execution of the arbitral award. An important new feature of French law is that, generally, neither a petition to set aside the award nor an appeal against the enforcement order suspends the forced execution of the award in France (Article 1526, CPC). In addition, an international arbitral award has res judicata effect as from its issuance, which allows conservatory measures to be undertaken immediately without first seeking a special authorisation and even before an enforcement order is obtained (Article 68, Law No. 91-650 of 9 July 1991 and Cass. 2nd Civil Chamber, 12 October 2006).

 

Foreign awards

29. 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)?

By virtue of international conventions, and particularly the New York Convention, to which France is party, it is typically easier to execute abroad an arbitral award issued in France than a court judgment issued in France.

 
30. To what extent is a foreign arbitration award enforceable in your jurisdiction?

French law is generally more generous on questions of recognition and enforcement of foreign arbitration awards than is required by the New York Convention. Three characteristic features of French law warrant particular mention.

First, the process of obtaining a recognition and enforcement order is the same as that which applies to international awards issued in France, except that the judicial authority jurisdictionally competent to issue the order for a foreign award is the Paris TGI (Article 1516, CPC) (see Question 28). If an enforcement order is granted for a foreign arbitral award, the party against whom enforcement is sought can appeal that order on the same grounds as those provided for setting aside an international arbitral award issued in France (Articles 1520, 1525 CPC) (see Question 25).

Second, French law is rather unique in that even if an award issued abroad has been annulled by the courts of the place of arbitration, this fact does not in itself constitute a basis for denying recognition and enforcement in France (Cass. 1st Civil Chamber, 10 June 1997, Hilmarton v OTV; Cass. 1st Civil Chamber, 29 June 2007, Putrabali).

Third, in verifying an award's compliance with the requirements of international public policy, the French Cour de Cassation looks only for circumstances of "flagrant, effective and concrete" violation of those requirements, which represents quite a liberal approach even compared with the other arbitration-friendly jurisdictions (Cass. 1st Civil Chamber, 4 June 2008, SNF v Cytec; Cass. 1st Civil Chamber, 29 June 2011; Cass. 1st Civil Chamber, 10 July 2013, n° 12-13351, Etisalat v Planor Afrique).

 

Length of enforcement proceedings

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

Obtaining an enforcement order in relation to international arbitration awards (whether rendered in France or abroad) is a rapid, ex parte process. It generally takes between ten days and a few weeks. Under the New Decree, forced execution of the award can be pursued despite the pendency of recourse actions brought against either the award itself or the TGI's enforcement order, except when the competent appellate judge finds that execution could cause grave harm to the rights of one of the parties and suspends execution or sets conditions for execution (Article 1526, CPC).

 

Reform

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

The French CPC provisions on international arbitration are not likely to change in the coming years. However, French jurisprudence on international arbitration may bring further developments and clarifications on a number of topics, including for example the relevant standards for assessing arbitrators' independence and impartiality, the consequences and effects of waiving the right to commence a petition to set aside an award, and the extent of the control applied by state courts regarding an award's coherence with international public policy.

 

Main arbitration organisation

International Court of Arbitration of the International Chamber of Commerce

Main activities. Administering international commercial arbitrations.

W www.iccwbo.org



Online resources

W www.legifrance.gouv.fr

Description. The official website maintained by French government provides access to up-to-date texts of French legislation, as well as to selected case law of the French Cour de cassation and the lower courts.

W www.parisarbitration.com

Description. The website of the not-for-profit association Paris, the Home of International Arbitration/Paris, Place d’Arbitrage International contains useful practical information on arbitration in France as well as translations of French arbitration law (amended by Decree No. 2011-48 of 13 January 2011) in eight languages (English, Chinese, German, Portuguese, Italian, Spanish, Arabic and Turkish).



Contributor details

Thomas Bevilacqua

Foley Hoag AARPI

T +33 1 7036 6130
F +33 1 7036 6131
E tbevilacqua@foleyhoag.com
W www.foleyhoag.com

Qualified. France, 2003; New York, US, 1996; Texas, US, 1995

Areas of practice. International arbitration, both commercial and investor-State; international litigation and discovery.

Recent transactions

  • He has appeared in dozens of commercial arbitrations relating, in particular, to the energy, services, public works and technology sectors.
  • Has previously acted and currently acts as counsel in various BIT arbitrations in relation to numerous procedural matters and substantive treaty protections.
  • Has obtained significant expertise on matters of French and American arbitration practice and procedure, as well as fluency with the leading sets of arbitration rules.

Ivan Urzhumov

Foley Hoag AARPI

T +33 1 7036 6130
F +33 1 7036 6131
E iurzhumov@foleyhoag.com
W www.foleyhoag.com

Qualified. Russia, 2009; France, 2010

Areas of practice. International arbitration; cross-border litigation; cross-border transactions; Russian law.

Recent transactions

  • Acts as counsel in arbitrations under the ICC, UNCITRAL and ICSID Rules relating particularly to the energy, telecommunications, and waste management sectors.
  • Recently advised an international petroleum company concerning tax claims raised by an African state.
  • Currently represents an East European State in French court proceedings relating to enforcement of an arbitral award.

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