The government recently adopted its new model bilateral investment treaty (BIT). The proposed changes, which are likely to limit investor protection, have now been incorporated, together with additional important amendments. The model BIT reflects two government objectives: a sustainable investment policy and a better balance between the rights and obligations of both states and investors.
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.
A consultation process on the new draft Dutch model bilateral investment treaty (BIT) recently ended. The government is expected to publish the finalised text of the new model BIT later in 2018. The new model will serve as the basis for renegotiation of the 79 BITs that the Netherlands has with states outside the European Union. Among other things, it proposes significant changes to the conduct of arbitral proceedings.
The Hague Court of Appeal recently ruled that its decision on an application for the enforcement of a foreign arbitral award would not be stayed solely on the basis of pending setting aside proceedings at the place of arbitration. Further, the court ruled that the party requesting exequatur did not have to submit Dutch translations of the award. The decision is notable, as the appeal court explicitly acknowledged the New York Convention's pro-enforcement bias, which several courts have failed to do in recent years.
The Supreme Court recently ruled that a Dutch court may enforce an annulled arbitral award if, among other things, the local annulment decision is based on grounds other than those set out in Article V(1)(a)-(d) of the New York Convention and which are not internationally recognised, or the annulment decision is irreconcilable with Dutch private international law. This judgment offers important guidance as to the Dutch courts' discretion to enforce annulled awards.
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.
The Amsterdam Court of Appeals recently ruled that the Russian liquidation order regarding OAO Yukos Oil Company is contrary to Dutch public order and therefore null and void. An interesting question is whether the judgment will have a bearing in the appeal of the annulment proceedings concerning the $50 billion Energy Charter Treaty arbitration case between former Yukos shareholders and Russia, which is pending before The Hague Court of Appeal.
The Amsterdam Court of Appeals recently annulled a 2013 Amsterdam District Court decision to set aside a $450 million arbitral award in proceedings between watchmaker Swatch and jeweller Tiffany. The main question for the court of appeals was whether the district court had been correct in holding that the tribunal had exceeded its authority. The judgment, which may be subjected to Supreme Court review, confirms the court's pro-arbitration and enforcement approach.
In a recent decision, the Supreme Court rigorously applied Article III of the New York Convention and ruled that a decision recognising an international arbitral award is no more subject to appeal than a decision recognising a domestic arbitral award. Further, the court rejected the plea that such an appeal should be available under Article 6 of the European Convention on Human Rights.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.