Today, Paris is a major hub for international litigation, thanks in large part to the effectiveness and attractiveness of French international arbitration law, which is the preferred method of dispute resolution in the business world. When considering whether to opt for French international arbitration law, here are some key points to bear in mind.
I. Drafting the arbitration agreement
A. Independence of the arbitration agreement from the main contract
Under French law, the nullity of the contract containing the arbitration agreement does not affect the validity of the arbitration agreement itself.[1] This principle stems from the autonomy of the arbitration clause in relation to the main contract. Consequently, French case law allows the parties to select a specific law to assess not only the existence and effectiveness[2] of an arbitration clause but also its validity and effects.[3]
This enables the parties to take full advantage of the attractiveness of French law in international arbitration. French law offers flexible formalities for the conclusion of an arbitration agreement (no particular formal requirements are mandated),[4] Additionally, it offers a wealth of case law on key issues, such as the arbitrability of a dispute or the extension of the arbitration clause to third parties involved in the same economic transaction[5], or even belonging to the same group of companies as one of the parties[6]. All without necessarily having to choose French law as the law applicable to their contract.
In the absence of an explicit choice of the law applicable to the arbitration clause, where the seat of the arbitration is located in France, the mandatory rules of French law and international public policy will apply, rather than the law governing the main contract.[7] This approach differs from that taken in other major international arbitration jurisdictions, such as Switzerland or the United Kingdom.
B. Recommended combination with the ICC Rules
In practice, it is strongly recommended to include a reference to specific arbitration rules when drafting an arbitration agreement. Given that the International Chamber of Commerce [“ICC”] is headquatered in Paris, it is particularly coherent and judicious to associate an arbitration agreement providing for France as the seat of arbitration with the ICC Rules.[8]
The ICC is the world’s leading arbitral institution, offering an efficient and reliable method of resolving disputes arising in international commercial relations. ICC also provides important administrative support and oversees the arbitration proceedings to ensure that they run smoothly, thereby enhancing the quality and enforceability of these decisions. In addition, ICC endeavors to ensure the speed of the proceedings, by regulating the time limits set for arbitrators. [9]
The ICC Rules provide for a flexible procedure, which is perfectly adapted to the specific needs of the parties and the disputes involved. This includes the possibility of benefiting from accelerated procedures as well as rules governing arbitrations involving several parties and contracts. [10] The ICC Rules also make it possible to fully ensure the confidentiality of the arbitration proceedings, [11] and allow parties to estimate arbitration costs in advance, thanks to detailed calculators and fee scales that assess the costs of the arbitration in advance, depending on the amount in dispute. [12]
Recently, a law passed on June 13, 2024, aimed at enhancing business financing and the attractiveness of France, included for the first time in the French Code of Judicial Organization the exclusive jurisdiction of the International Chamber of the Cour d’Appel de Paris to hear challenges to set aside international arbitral awards. This reform illustrates the French legislator’s desire to maintaining the attractiveness of French law in the field of international arbitration.
II. Conduct of the arbitration proceedings
A. The “kompetenz-kompetenz” principle
Under French law, the arbitral tribunal has exclusive jurisdiction to rule on disputes relating to its own jurisdiction (positive effect of the “kompetenz-kompetenz” principle).[14] These disputes essentially include questions of arbitrability and the existence of a valid arbitration agreement.
If a party brings a case before a state court in breach of an arbitration clause, asking it to rule on its jurisdiction, the other party must raise a procedural objection in limine litis (before presenting any defense on the merits). [15] In any event, the state court must declare that it does not have jurisdiction, unless the arbitral tribunal has not yet been seized or the arbitration agreement is manifestly null and void or manifestly unenforceable (negative effect of the “kompetenz-kompetenz” principle).[16]
It is important to note that the parties may contractually exclude the application of the negative effect of the “kompetenz-kompetenz” principle, provided that this waiver is explicit and unequivocal.[17]
B. Choosing and challenging arbitrators
Under French law, in the absence of strict conditions regarding the number of arbitrators or their qualifications, the parties have considerable freedom in their choice of arbitrators. However, the principle of equality in the appointment of arbitrators must be respected.[18] If the parties are unable to agree on the appointment of arbitrators, the French Code of Civil Procedure sets out specific procedures before a dedicated French state court (the supporting judge - “juge d’appui”).[19] In international arbitration, the juge d’appui is generally the President of the Paris Court of First Instance (Tribunal Judiciaire de Paris).[20]
Before accepting his assignment, an arbitrator must disclose any circumstances likely to affect his independence or impartiality.[21] This obligation to disclose continues throughout the arbitration and is assessed in the light of the notoriety of the disputed circumstance.[22] If an arbitrator fails to disclose such circumstances which are likely to affect his independence or impartiality, then the award may be set aside[23].
In the event of reasonable doubt as to the independence and impartiality of an arbitrator, the parties may challenge that arbitrator. In principle, the removal of an arbitrator requires a unanimous decision by the parties. However, in the event of disagreement between the parties, this decision is taken by the person responsible for administering the arbitration or, failing this, by the juge d’appui, within one month of discovering the facts which in turn givesrise to the request for removal[24].
C. The powers of the arbitral tribunal during the arbitration proceedings
The arbitrators, who are subject to French law, have broad discretion as to the content of the award and the remedies to be awarded. The arbitral tribunal may also order the parties to take any interim or protective measures that it considers appropriate, with the exception of precautionary and judicial seizures, which fall under the exclusive jurisdiction of the state courts.[25] Additionally, if interim measures have been granted prior to the appointment of an arbitral tribunal, the latter will nevertheless be responsible for their enforcement.[26]
It is also important to know that, under French law, arbitrators may be assisted by the juge d’appui. In addition to potential intervention in cases of difficulty concerning the appointment or confirmation of an arbitrator[27], the juge d’appui may intervene in various other circumstances. In particular, the judge may decide that the appointment of arbitrators is unnecessary if the arbitration agreement is manifestly invalid[28], may extend the mandate of the arbitral tribunal,[29] or may order the production of a document or evidence held by a third party to the arbitration.[30]
III. Enforcing and challenging arbitral awards
A. Facilitated enforcement of arbitral awards
One of the key advantages of the arbitration-friendly French law is that it facilitates the enforcement of arbitral awards. For arbitral awards made in France, enforcement is simplified in all States that have acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, which represents no fewer than 172 States. The enforcement process requires only the original award and arbitration agreement, along with a certified copy that meets the authenticity requirements[31].
Moreover, regarding international arbitral awards, French law is unique in that it has long accepted the possibility of enforcing a foreign award in France; even if the award has been set aside in the country where the arbitration was seated.[32]
B. Reduced scope for challenging arbitral awards
To ensure that arbitral awards are fully effective, French law not only facilitates their enforcement but also limits the scope for challenges. Thus, an international arbitral award made in France can only be challenged by an action for setting aside,[33] although the parties may expressly waive this right in their arbitration agreement.[34]
On the other hand, appeals may only be lodged against exequatur (recognition) orders.[35]. Therefore, an action for setting aside is admissible only on the grounds listed exhaustively. [36]
The arbitral tribunal wrongly declared that it had jurisdiction or that it lacked competence;
The arbitral tribunal was improperly constituted;
The arbitral tribunal ruled without complying with the terms of reference entrusted to it;
Failure to respect the adversarial principle
Recognition or enforcement of the award is contrary to international public policy.
Apart from these grounds, no other reason can call into question an arbitral award. French law has long accepted the principle that an arbitral award cannot be reviewed on its merits.[37] However, it is important to note that this principle has been attenuated in recent years, with regard to the control of violations of international public policy, in particular as a result of the fight against money laundering and corruption.[38]
In conclusion, opting for French law as the law applicable to arbitration proceedings is particularly relevant because of its efficiency and attractiveness throughout the various stages of an international arbitration.
[1] French Code of Civil Procedure, art. 1447.
[2] Court of Cassation, 1st Civil Chamber, December 20, 1993, Case n° 91-16.828; Court of Cassation, 1st Civil Chamber, March 30, 2004, Case n° 01-14.311.
[3] Court of Cassation, 1st Civil Chamber, September 28, 2022, Case n° 20-20.260.
[4] French Code of Civil Procedure, art. 1507.
[5] Court of Cassation, 1st Civil Chamber, September 5, 2018, Case n° 17-13.837 (for the latest case law in this matter).
[6] Court of Appeal of Paris, Dow Chemical v. Isover-Saint-Gobain - ICC Award No. 4131, (October 21, 1993).
[7] Case n° 20-20.260, supra note 3.
[8] Av. Cem Congar PhDc, Understanding ICC International Arbitration: An Overview, LinkedIn (Jun. 16, 2023), https://www.linkedin.com/pulse/understanding-icc-international-arbitration-overview-cem-congar?trackingId=LuZw89UDQW6huxiPtIi3AQ%3D%3D&lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_content_view%3BrQrVPff0SlelkL9VAS0%2BZw%3D%3D
[9] ICC Rules, art. 22.
[10] ICC Rules, art. 8, 9, 10.
[11] ICC Rules, art. 22.
[12] ICC Rules, Appendix III.
[13] Named “compétence-compétence” in French law
[14] French Code of Civil Procedure, art. 1465.
[15] Court of Cassation, 2nd Civil Chamber, November 22, 2001, case n° 99-21.662.
[16] French Code of Civil Procedure, art. 1448
[17] Court of Cassation, 1st Civil Chamber, March 9, 2022, Case n° 20- 21.572.
[18] French Code of Civil Procedure, art. 1510.
[19] French Code of Civil Procedure, art. 1451 to 1453 (nomination of the arbitral tribunal) / art. 1456 to 1458 (confirmation of the arbitral tribunal).
[20] French Code of Civil Procedure, art. 1505.
[21] French Code of Civil Procedure, art. 1456.
[22] Paris Court of Appeal, February 25, 2020, Case n° 19/07575.
[23] Court of Cassation, 2nd Civil Chamber, December 6, 2001, Case n° 00-10.711.
[24] supra note 18.
[25] French Code of Civil Procedure, art. 1468.
[26] French Code of Civil Procedure, art. 1467.
[27] supra note 18.
[28] French Code of Civil Procedure, art. 1455.
[29] French Code of Civil Procedure, art. 1463 & 1486.
[30] French Code of Civil Procedure, art. 1469.
[31] New York Convention, June 10, 1958, art. 4.
[32] Court of Cassation, 1st Civil Chamber, June 29, 2007, Case n° 05-18.053 (provided it complies with the French law related requirements).
[33] French Code of Civil Procedure, art. 1518.
[34] French Code of Civil Procedure, art. 1522.
[35] French Code of Civil Procedure, art. 1525.
[36] French Code of Civil Procedure, art. 1520.
[37] Court of Cassation, 1st Civil Chamber, January 6, 1987, Case n° 84-17.274.
[38] Court of Cassation, 1st Civil Chamber, March 23, 2022, Case n° 17-17.981.
[39] Miren Lartigue, Les chambres commerciales internationales de Paris, six ans après, Dalloz Actualité (Oct. 9, 2024).
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