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Arbitration & ADR

Surviving COVID-19: arbitrations involving insolvent companies
France | 01 April 2021

Although the COVID-19 pandemic's full impact on the world economy remains unclear, a global surge in insolvency is expected in 2021 and 2022. A party's insolvency can affect pending and future arbitrations, which will generally depend on whether the insolvency occurs before, during or after the arbitration. However, early comprehension of certain basic factors might mitigate future risks ensuing from a counterparty's insolvency.

Parties to set-aside proceedings can rely on new arguments that they failed to raise before arbitral tribunal
France | 18 March 2021

The Court of Cassation recently issued its decision in the ongoing Schooner saga, agreeing with the applicants that the Court of Appeal violated the Code of Civil Procedure (CCP) by preventing them from raising jurisdictional arguments in annulment proceedings. This appears to be the first time that the Court of Cassation has explicitly held that Article 1466 of the CCP does not prevent parties from raising new jurisdictional arguments at the annulment stage.

Seeking stay or amendment of enforcement of international awards: evolution of courts' approach
France | 04 February 2021

Under Article 1526 of the Code of Civil Procedure, if an award's enforcement is likely to severely harm the rights of one of the parties, such enforcement may be stayed or amended. This article clarifies the conditions which must be met for Article 1526 to apply and sets out the evolution of the courts' interpretation of the notion of severe harm to the rights of one of the parties.

Five key changes in the ICC's 2021 arbitration rules
International | 10 December 2020

The International Chamber of Commerce has updated its arbitration rules with effect from 1 January 2021 and applying to all cases registered from that date. These modifications are relatively subtle, aimed at streamlining the overall arbitral process. By expressly outlining certain procedural powers which had been arguably uncertain, the risk of disruption from parties' intent on delay should also be reduced. These updates are consistent with the chamber's efforts to control time and costs.

Arbitration proceedings during COVID-19 crisis: helpful tips and new developments
France | 29 October 2020

The COVID-19 pandemic has undeniably disrupted the performance of contracts. Although the Paris Commercial Court has ruled the pandemic to be a force majeure event in a commercial contract, this characterisation may not be retained in all situations. This article provides helpful tips to keep in mind when analysing a contractual situation, in light of French law specificities that might be unknown to foreign companies or counsel involved in arbitration proceedings to which French law applies.

Does Article 1466 of the Code of Civil Procedure include 'estoppel'?
France | 14 May 2020

The First Civil Chamber of the Court of Cassation recently overruled a Paris Court of Appeal decision and determined that there was no basis for the argument that Antrix Corporation Ltd had not made certain procedural objections during arbitration and therefore could not raise them in enforcement proceedings. The decision raises interesting questions about the nature of the 'waiver' contemplated in the Code of Civil Procedure.

Arbitrators' duty to disclose: developments from new International Chamber of Paris Court of Appeal
France | 09 April 2020

The International Chamber of the Paris Court of Appeal recently rendered five decisions on setting-aside proceedings against five awards issued in the same arbitration. It was alleged that the tribunal had been improperly constituted as a party-appointed arbitrator had failed to disclose information that affected his independence and impartiality. Although this decision confirms the existing jurisprudence, the question of the exact scope of arbitrators' duty to disclose remains.

Paris Court of Appeal confirms expansive scope of Article 1466 of Code of Civil Procedure
France | 08 August 2019

The Paris Court of Appeal recently clarified the scope of application of Article 1466 of the Code of Civil Procedure and for the first time confirmed that Article 1466 can also limit a party's ability to seek annulment based on a variety of arguments, whether relating to procedural irregularities or otherwise, that could have been raised in the arbitration.

French court rules that mandatory expert determination provisions do not render arbitration clauses inapplicable
France | 16 May 2019

The Court of Cassation recently confirmed the quasi-absolute priority given to arbitral tribunals to determine questions relating to their jurisdiction, even when this involves rules of French public order. Although this is well established in French case law, it is the first time that the court has upheld an arbitration clause that conferred on a tribunal the statutory power to value shares in lieu of a party-appointed or judicially appointed expert.

Paris Court of Appeal may revisit definition of 'investment' under Energy Charter Treaty
France | 31 January 2019

The US District Court for the District of Columbia recently lifted a stay of proceedings to confirm an award issued by an ad hoc tribunal in Paris under the Energy Charter Treaty. The district court noted that the French Court of Cassation had overturned a decision of the Paris Court of Appeal setting aside the award. This article revisits the relevant facts and issues that gave rise to the setting aside of the award in France, and the subsequent reversal at the highest instance.

Paris Court of Appeal exerts power to review allegations of corruption during enforcement proceedings
France | 08 November 2018

Consistent with France's reputation as a pro-arbitration jurisdiction, the French civil courts' review of arbitral awards on grounds of public policy is traditionally limited in terms of both standard and content. However, in recent years, the scope of the courts' review in this regard has been tested in certain Paris Court of Appeal decisions which reviewed the underlying evidence rather than the arbitral tribunal's own determinations in the relevant award.

Arbitrators' duty of disclosure
France | 04 January 2018

Parties' ability to choose their arbitrators remains one of the most frequently mentioned advantages of arbitration over litigation. However, this freedom makes sense only if it preserves the overarching duties of arbitrators and judges alike – that is, the duty to be and remain independent and impartial from the parties.

Paris Court of Appeal rules on Iraq war's impact on due process in arbitral proceedings
France | 16 March 2017

The Paris Court of Appeal recently set aside an award on the grounds of a violation of the principle of equality of arms. The court had to rule on the Iraq war's impact on due process in arbitral proceedings between the Republic of Iraq and two German companies. This decision comes as a reminder that arbitration is a jurisdictional process where parties and arbitrators, while enjoying considerable freedom and flexibility, should be mindful of due process and fair trial guarantees.

Principle of procedural estoppel under French arbitration law
France | 03 November 2016

The French courts recently supported the rigorous application of the principle of procedural estoppel and reiterated their commitment to the enforcement of agreements that govern arbitral proceedings. The principle prevents parties from relying on alleged irregularities that affect arbitration proceedings before the French courts if the requesting party has not initially raised them before the arbitral tribunal.

Independence and impartiality: Supreme Court confirms stern approach to duty of disclosure
France | 21 April 2016

A recent Supreme Court decision confirms French law's strict approach in matters involving arbitrators' independence and impartiality. The court found that despite an arbitrator's previous disclosure that his firm had had an inactive relationship with the parent company of one of the parties to the arbitration, his later failure to disclose that this relationship had resumed created reasonable doubt as to his independence and impartiality.

Acknowledgement that civil courts can rule on enforcement of foreign awards involving public law matters
France | 17 December 2015

The jurisdictional duality which characterises the French legal system triggers practical difficulties in international arbitrations, especially when they involve the recognition and enforcement in France of arbitral awards relating to issues of French administrative law. The Cour de Cassation recently decided on this issue, holding that civil courts have jurisdiction to rule on the recognition and enforcement of any foreign arbitral award.

Diplomatic immunity from enforcement: Supreme Court shatters the shield
France | 13 August 2015

The issue of sovereign immunity from enforcement is highly sensitive. It is regarded as a vital component of state sovereignty and as necessary to preserve peaceful relationships between states, and should be recognised as a matter of international comity. However, the interests of international commerce and private parties cannot be denied. The Supreme Court recently issued a key decision focusing on diplomatic assets.

Dilatory challenges of awards and fraudulent arbitration proceedings in crosshairs
France | 30 April 2015

Two recent Paris Court of Appeal decisions offer a contrasting perspective on the challenges associated with arbitration: while the enforcement of awards that have been recognised must be facilitated and applications for stays of enforcement are held to the most stringent standards, the legitimacy of arbitration requires that the legal process remain immune from suspicions of corruption and fraud.

Challenges of arbitrators: clarification on timeframe and standard of review
France | 04 December 2014

In order to enhance the flexibility of the arbitral process, French arbitration law allows parties to nominate their arbitrators, either directly or by reference to arbitration rules. Two recent decisions on conflicts of interest are illustrative of the approach of French courts, which seek to strike a delicate balance between giving arbitration users added freedom and ensuring that due process and fair trial guarantees apply

Paris Court of Appeal issues three confirmations in one decision
France | 29 May 2014

In its April 1 2014 decision the Paris Court of Appeal has reiterated its well-established position in relation to the enforcement of arbitral awards set aside at the seat of arbitration, confirmed the arbitrators' duty of disclosure, and restated the respective roles played by the arbitrators' duty of disclosure and the parties' duty of loyalty in arbitration proceedings.

Bilateral option clause – importance of clear and unequivocal wording
France | 10 April 2014

The Supreme Court has upheld the validity and enforceability of a bilateral option clause which gave both parties the option to resolve their dispute by way of arbitration or through domestic courts. While this decision clarifies the French courts' position regarding bilateral option clauses, it raises concerns as to the validity of sole option clauses.

Enforcement of international arbitration awards: further developments
France | 03 October 2013

Reforms to French arbitration law determined that appellate review would no longer automatically stay execution of an award. A member of Parliament questioned this regime, which does not provide for an adversarial debate at the level of the application for an exequatur order, by posing a question to the minister of justice. The minister recently responded that exequatur proceedings are to remain ex parte – for now, at least.

Enforcement of international arbitration awards: latest developments
France | 14 March 2013

When French arbitration law was reformed in 2011, one major innovation was to amend the position on the stay of enforcement of international arbitral awards pending the outcome of annulment proceedings or of an appeal against an order granting leave to enforce (exequatur). However, the courts' severity towards requests for a stay of execution has given rise to concerns about exequatur proceedings.

Defining 'arbitral awards': Supreme Court weighs in
France | 29 November 2012

According to the French law on international arbitration, an action to set aside is available against international arbitral awards issued in France. Therefore, such an action may be instituted only against arbitral awards. The distinction between arbitral awards and other communications issued by tribunals can be unclear; however, a decision of the Supreme Court provides useful guidance.

Award annulled due to withdrawn counterclaims introduced by insolvent defendant
France | 12 April 2012

The interaction between insolvency proceedings and arbitration is treated differently in different countries. The French legal position is clear: the supervening insolvency of a party does not render a dispute inarbitrable. In a recent decision the Paris Court of Appeal found that the International Court of Arbitration of the International Chamber of Commerce had committed an "excessive measure" justifying the annulment of an award.

Supreme Court reiterates autonomy of the international arbitral legal order
France | 19 January 2012

In a recent case the Supreme Court reaffirmed the existence of an arbitral legal order, independent of any national legal order. It held that the arbitral proceedings in question were detached from the French judicial order, since the tribunal's seat was located in Sweden and proceedings were governed by the United Nations Commission on International Trade Law rules.

Arbitrators cannot seek a ruling on the constitutionality of statutory provisions
France | 13 October 2011

Since March 2010 the ordinary French courts have been able to challenge the constitutionality of a statute or statutory provision through a specific procedure. However, the reform was silent on the issue of whether arbitral tribunals enjoy similar rights to ask the Supreme Court to refer a matter to the Constitutional Council. In a recent decision, the Supreme Court found no basis for such rights to be allowed to arbitrators.

Dallah: one test, two different findings
France | 30 June 2011

It is a truism that relativity applies in arbitration. An award can be set aside by the courts of the English seat of arbitration and yet be declared enforceable in France. The conflicting decisions issued by the Paris Court of Appeal and the UK Supreme Court in Dallah illustrate that an arbitral award can have a different fate depending on the approach of the courts of the seat of arbitration and the courts of the places where enforcement is sought.

English translation of new arbitration law now available
France | 17 February 2011

The International Arbitration Institute has prepared an English translation of the new Decree 2011-48, which came into force in January and has introduced comprehensive reforms to the French arbitration system.

New arbitration law reform: the market's verdict
France | 27 January 2011

The reaction to the new arbitration law reform has been overwhelmingly positive, with commentators variously hailing it as arbitration friendly, innovative, elegant and trend setting. Practitioners agree that it has made a complex body of judicial solutions more accessible to non-specialist audiences and enhanced the predictability of solutions. This udpate considers the market response and delves more deeply into its provisions.

Long-awaited arbitration law reform finally passed
France | 20 January 2011

The new arbitration law reform features several innovations that will improve the efficiency of international arbitration and arbitral awards. It also codifies French court decisions in international arbitration law, updates the Code of Civil Procedure and clarifies the provisions of French domestic arbitration law applicable to international arbitration, with provisions inspired by foreign laws that have proved useful in practice.

French arbitration law reforms imminent
France | 13 January 2011

The government is about to approve long-awaited reforms to French domestic and international arbitration law. Among other things, the Paris Court of First Instance will be empowered to assist parties with the production of documents, and the enforcement of international arbitral awards will be made easier. The decree should be published tomorrow.

Court confirms application of standard ICC arbitration clause to tort claims
France | 16 September 2010

The Supreme Court recently ruled that the standard International Chamber of Commerce arbitration clause included in a contract applied to a claim for wrongful termination, even though it was brought in tort on the grounds of a mandatory rule of French law. The legislation at issue purports to grant distributors mandatory indemnification rights in the event of termination without cause and appropriate advance notice.

Paris First Instance Court president upholds 'pathological' ICC arbitration clause
France | 22 April 2010

It is the policy of French courts to enforce arbitration agreements where the parties clearly intended to submit their dispute to arbitration. In keeping with this well-established trend, the president of the Paris First Instance Court recently upheld a 'pathological' International Chamber of Commerce arbitration clause and exercised his power to assist the parties in constituting the arbitral tribunal.

Third-party annulment proceedings against international arbitral awards inadmissible
France | 11 February 2010

The Cour de Cassation recently held that an international arbitral award may not be challenged by a third party to the arbitral proceedings by way of a third-party recourse. Only a party to the arbitration may bring proceedings in France to obtain the setting aside of an international award or to challenge the recognition of a foreign award by the French courts.

Dismissal of Setting-Aside Actions Must be Explicitly Reasoned
France | 17 September 2009

Courts must state the reasons for their decisions to enforce or vacate arbitral awards. Article 455 of the Code of Civil Procedure obliges judges to set forth the grounds on which their decisions are based and leads to frequent decisions being made by the Supreme Court in matters previously resolved by state courts.

Paris Court of Appeal Decides on Application of ICC Rules
France | 30 April 2009

The Paris Court of Appeal has held that the International Chamber of Commerce (ICC) Rules in force on the date an arbitration agreement is entered into apply unless the parties have agreed otherwise, and that the exclusion of liability clause contained in the 1998 version of the rules is unenforceable, as it is contrary to an essential duty owed by the ICC.

Court of Appeal Sets Aside ICC Award as Arbitrator Lacked Independence
France | 23 April 2009

The Paris Court of Appeal has set aside an ICC award on the grounds that the arbitral tribunal had been irregularly constituted due to the chairman's lack of independence. It ruled that the duties of independence and impartiality are "the very essence of the arbitral function". The duty of independence is generally considered to relate to issues that may arise during the course of the arbitrator's relationship with one of the parties.

Arbitral Tribunal to Rule on Extension of Arbitration Agreement in a Group of Contracts
France | 19 February 2009

In a recent decision the Supreme Court gave priority to an arbitral tribunal to rule on the extension of an arbitration agreement within a group of contracts on the grounds of two major principles of French arbitration law, namely the autonomy of the arbitration agreement and the kompetenz-kompetenz principle.

Supreme Court continues liberal approach to international arbitration
France | 11 December 2008

A recent judgment of the First Civil Section of the Supreme Court is interesting because it confirms a 2005 ruling regarding the conditions for granting a stay of annulment or enforcement proceedings when criminal proceedings are running parallel to them, adopts a test formulated by the Paris Court of Appeal and restates that a state court hearing annulment proceedings does not review the merits of the case.

Supreme Court Broadens Scope of Res Judicata
France | 02 October 2008

The doctrine of res judicata precludes a claimant from bringing proceedings when an earlier and final judgment or arbitral award has been made involving the same matter or relief, the same grounds and the same parties. The Supreme Court has now held that the broad interpretation of res judicata it established in Césareo also applies to arbitral awards.

Transfer of Arbitration Clauses in Chains of Contracts
France | 15 May 2008

The Supreme Court recently confirmed that in a chain of contracts which successively transfers title to the same goods the arbitration agreement is transferred automatically as an ancillary element to the right to sue, which is itself ancillary to the transferred substantive right.

Supreme Court Confirms Strict Criteria for Kompetenz-Kompetenz Exceptions
France | 06 March 2008

The Supreme Court recently reiterated the kompetenz-kompetenz principle, which empowers arbitrators to rule on their own jurisdiction, and confirmed that exceptions to it are to be construed narrowly. Under French law, this principle applies in both domestic and international arbitration.

Supreme Court Confirms Liberal Approach to Enforcement of Awards
France | 13 December 2007

In two recent decisions the Supreme Court confirmed its liberal approach to the enforcement of arbitral awards. The reasoning is consistent with the approach adopted by French courts since Norsolor and Hilmarton. Where two foreign arbitral awards are irreconcilable, the first for which leave to enforce is granted will be enforceable in France, creating the risk of a race for official recognition.