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French arbitration law

International Arbitration in France

A decree published in January 2011 (Decree n° 2011-48 of 13 January 2011) effected the first major reform of French arbitration law since 1981. The revised legislative framework for arbitration in France came into force on 1 May 2011 and is set out in the Code de procédure civile (CPC). The reform legislation maintained the distinction between international and domestic arbitration. An arbitration is international "if international trade interests are at stake" (article 1504 CPC). The definition therefore has an economic rather than geographical focus and is not based upon the nationalities of the parties.

By choosing France as the seat of an international arbitration, the parties are not considered to have made the arbitration subject to French procedural rules for either domestic arbitration or court proceedings. However, the provisions of the CPC that are stated to be applicable to international arbitrations seated in France will apply (Title II, comprising articles 1504 to 1527). Article 1506 of the CPC contains a list of provisions in the section of the Code dealing with domestic arbitration that also apply in relation to an international arbitration, unless the parties have agreed otherwise and subject to the provisions of the Code contained in Title II on International Arbitration. Where reference is made below to provisions of the CPC located in the section of the Code relating to domestic arbitration, this is pursuant to the terms of article 1506.

The provisions of the CPC for international arbitration are designed to give parties flexibility with respect to procedure and freedom of choice. Some of the key features of the regime for international arbitration in France are set out below:

  • There are no requirements of form for the validity of an international arbitration agreement (article 1507 CPC). An arbitration clause is independent from the main contract and the question of its validity is not affected by the invalidity of the main contract (article 1447 CPC).
  • French legislation confers on the Presiding Judge of the Paris Tribunal de Grande Instance the powers to intervene as “juge d’appui” in support of arbitral proceedings in order to assist in matters such as the constitution of the tribunal. The CPC confers jurisdiction in international arbitration matters on the “juge d’appui” in four cases: (i) where the arbitration is taking place in France; (ii) where the parties have agreed that French procedural law shall apply to the arbitration; (iii) where the parties have expressly granted jurisdiction to French courts over disputes relating to the arbitral procedure (regardless of whether the seat is in France); or (iv) if one of the parties is exposed to a risk of a denial of justice (article 1505 CPC).
  • Arbitrators sitting in France have a duty to be independent and impartial. Before accepting a mandate, an arbitrator must disclose any circumstance that may affect his or her independence or impartiality. The disclosure duty applies throughout the proceedings (article 1456 CPC).
  • The arbitral tribunal has exclusive jurisdiction to rule on objections to its jurisdiction and French courts must respect the principle of competence/competence: the court must decline jurisdiction, unless the agreement to arbitrate is manifestly void or inapplicable (articles 1465 and 1448).
  • The parties or, in the absence of any agreement between the parties, the arbitral tribunal, have the right to determine the arbitral procedure either directly or by reference to a procedural law or to a set of arbitration rules (article 1509 CPC). However, irrespective of the procedure chosen, the arbitral tribunal must treat the parties equally and ensure that due process is respected (article 1510 CPC). Further, both the arbitrators and the parties have a duty to act diligently and in good faith in the conduct of the proceedings (article 1464-3 CPC).
  • The arbitral tribunal is expected to decide the dispute in accordance with the rules of the law chosen by the parties or, in the absence of such a choice, in accordance with the rules of the law that it considers appropriate (in all cases, the tribunal is required to take trade usages into consideration) (article 1511 CPC). The arbitral tribunal may decide the dispute as amiable compositeur if the arbitration agreement so provides (article 1512 CPC).
  • Unless the arbitration agreement provides otherwise, any award is to be made by majority decision (article 1513). The arbitral tribunal’s deliberations are confidential (article 1479 CPC).
  • In contrast to domestic arbitration, in respect of which article 1464-4 of the CPC expressly refers to the confidentiality of arbitration proceedings (subject to legal requirements and any agreement of the parties to the contrary), the law is silent with respect to the confidentiality of arbitration proceedings in international arbitration. Therefore, parties that wish to ensure that any aspect of an international arbitration will be confidential are well advised to provide for this in their arbitration agreement.

Domestic arbitration provisions

The purely domestic arbitration provisions in the CPC (those contained in Title I (articles 1442 to 1503 CPC) which are not rendered applicable in international arbitration by article 1506 CPC) will be applicable to international arbitrations only where the parties provide expressly that the arbitration proceedings are to be subject to French law and there is no specific agreement between them to the contrary or one excluding any of those provisions. Since the focus of this commentary is on international arbitration, the French domestic rules will not be summarised here. It should be noted, however, that, for the purpose of drafting an arbitration clause which selects these rules, it may be desirable to make certain adjustments to the domestic provisions.

Courts' willingness to intervene in the arbitration process

Intervention by the French courts in the arbitration process is relatively limited in respect of an international arbitration:

  • Constitution of the arbitral tribunal: unless the parties have agreed otherwise (including through the selection of a set of institutional rules), the Presiding Judge of the Paris Tribunal de Grande Instance will appoint the members of the tribunal or individual arbitrators where the parties cannot reach agreement on the appointment method or on a joint appointment, or where a party fails to choose an arbitrator (articles 1452 to 1454 CPC).
  • Removal of arbitrators: if the parties cannot agree on the removal of an arbitrator, the Presiding Judge of the Paris Tribunal de Grande Instance will have jurisdiction to decide the matter (article 1456-3 CPC). However, if the parties have chosen a set of rules of an arbitral institution, the challenge procedure set out by those rules must be followed and challenges will be decided by the relevant institution (article 1456-3 CPC). The decision of that institution is considered to be final in the sense that the matter cannot then be referred to the Presiding Judge of the Paris Tribunal de Grande Instance, although it is possible to raise issues of arbitrator independence and impartiality in the context of a challenge to an award.
  • Other assistance: prior to the constitution of the arbitral tribunal, a party may apply to the Presiding Judge of either the Tribunal de Grande Instance or the Tribunal de Commerce (with territorial jurisdiction) for measures relating to the taking of evidence or provisional or conservatory measures (article 1449 CPC). Further, with leave of the arbitral tribunal, a party may apply to the Presiding Judge of the Tribunal de Grande Instance (with territorial jurisdiction - referred to in this context as “juge de la prevue”) for assistance in obtaining evidence from a third party (article 1469 CPC).
  • Jurisdiction: as indicated above, an arbitral tribunal has exclusive jurisdiction to rule on objections to its own jurisdiction (article 1465 CPC). This decision cannot be challenged before the courts until an award is rendered. If a dispute which is a subject of an arbitration agreement comes before a French court (prior to the constitution of an arbitral tribunal), the court must decline jurisdiction, in accordance with the competence/competence principle, unless the agreement to arbitrate is manifestly void or inapplicable (article 1448-1 CPC).
  • Enforcement: the award is res judicata with regard to the dispute as soon as it is made (article 1484 CPC). An award can only be enforced in France if an exequatur (recognition) order is granted by the Tribunal de Grande Instance of the place where the award was made or of the Paris Tribunal de Grande Instance if the award was made abroad (article 1516 CPC). The procedure for obtaining such an order is simplified and relatively quick (articles 1514 to 1517 CPC).

Appeals and review of awards

  • No appeal on the merits is available from an award rendered in France in respect of an international arbitration.
  • An application to set aside an international arbitration award made in France, or an appeal of a French court decision to recognise and/or enforce any arbitral award (rendered in France or abroad), may be made on the following grounds:
    • the arbitral tribunal wrongly upheld or declined jurisdiction;
    • the arbitral tribunal was not properly constituted;
    • the arbitral tribunal ruled without complying with the mandate conferred upon it;
    • due process was no respected;
    • recognition or enforcement is contrary to international public policy (articles 1520 and 1525-4 CPC).
  • Parties to an arbitration agreement may now agree at any time (by means of specific and written agreement) to waive the right to seek annulment of an award. However, the parties cannot waive their respective rights to appeal any decision granting recognition and/or enforcement in France in respect of an arbitral award covered by the waiver agreement (article 1522 CPC). As indicated above, the grounds for the two types of application are identical (article 1525-4).
  • The time limit for filing an application to set aside an arbitration award rendered in France runs as of the notification of the award after it is rendered (without it being necessary to obtain an enforcement order) (article 1519-2 CPC).
  • The filing of an application to set aside an arbitration award does not automatically suspend the enforcement of the award (article 1526-1 CPC).
  • A party which, knowingly and without a legitimate reason, fails to object to an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived its right to avail itself of the relevant irregularity (article 1466 CPC).

Multi-party arbitration

The CPC is silent on the issue of multi-party arbitration. However, in a much discussed judgment on appointing arbitrators in multi-party proceedings (Dutco, 7 January 1992), the Cour de Cassation (the highest Court in France) held that, prior to a dispute arising, a party to an arbitration agreement cannot waive its right to equal treatment in respect of the appointment of arbitrators. This principle could cause difficulties where an arbitration clause, or a set of institutional rules selected in an arbitration clause, requires multiple defendants to make a joint appointment of an arbitrator. Where France is chosen as the arbitration seat, in an arbitration clause contained in a contract with more than two parties, care should be taken to ensure that the clause complies with the Dutco principle. Methods for achieving this include providing for a third party to appoint all members of the arbitral tribunal or providing for the appointment of arbitrators on behalf of both sides (claimant(s) and defendant(s)) in the event that multiple parties on either side of the case are not able to make a joint appointment. The Dutco principle is now reflected in article 1453 of the CPC and in the rules of many arbitral institutions. Article 1453 of the CPC provides that, if there are more than two parties to the dispute and they are unable to agree on a procedure for constituting the arbitral tribunal, the person responsible for the administration of the arbitration, or the “juge d’appui” if there is none, shall appoint the arbitrator(s). This principle applies in respect of both domestic and international arbitrations.

Consolidation

The CPC does not contain any provisions regarding consolidation of related arbitration proceedings. The consent of the parties or a properly drafted clause permitting consolidation would be required.

Injunctions

Through expedited proceedings (référé), French courts may, before the constitution of the arbitral tribunal (article 1449 CPC), grant interim provisional or conservatory relief notwithstanding an agreement to submit disputes to arbitration. An application for provisional or conservatory measures from the French courts in such expedited proceedings will generally have to demonstrate that the situation is urgent. The CPC gives arbitral tribunals broad powers to grant conservatory or provisional measures, including injunctions, as well as the power to amend such orders (article 1468 CPC). However, orders attaching assets, such as freezing orders and those creating security interests (surétés judiciaires) can only be obtained from a court in France and not from an arbitral tribunal (article 1449 CPC). The provisions of the CPC introduced in 2011 codify previous case law giving arbitrators sitting in France the power to order penalties for non-compliance with an order of the Arbitral Tribunal (an astreinte).

Mandatory Provisions

The French rules for international arbitration are extremely flexible; however, the following principles cannot be excluded:

  • certain types of dispute, which are closely connected to matters of international public policy, may not be submitted to arbitration in France (e.g. divorce, patent registrations (but not contractual rights relating to patents), insolvency claims (but not disputes involving an insolvent company), certain competition matters);
  • in certain circumstances, State and public entities may not settle disputes by arbitration;
  • the principle that an arbitration clause is severable from the rest of the contract and it will survive if the contract is held to be void or voidable;
  • the principle that the parties cannot waive, in advance of a dispute arising, their right to equal treatment in the appointment of arbitrators (as set out in the Dutco decision);
  • the power of the arbitral tribunal to rule upon its own jurisdiction.

Further Details

Useful websites include: the Comité Français de l’Arbitrage, Paris - the Home of International Arbitration, Association Française de l’Arbitrage, Centre de Mediation et d’Arbitrage de Paris and the ICC. Click here for the provisions of the CPC.

French arbitrators

Arbitrators' attitude to procedure

The type of procedure adopted for an arbitration will often depend on the type of procedure with which the arbitrators, the parties and their lawyers are most familiar. Given the flexibility of French law in this regard, particularly with relation to international arbitration, the type of procedure chosen can vary significantly and be tailored to the needs of the specific case. Where the parties request it, there are no impediments in an international arbitration to the arbitral tribunal giving procedural directions which incorporate features of procedure in common law jurisdictions, such as oral evidence with cross-examination, partial discovery and party-appointed experts, which are not part of the French civil law tradition in proceedings before the state courts. It is now common for parties to international arbitrations seated in France to refer to the IBA Rules on the Taking of Evidence in International Arbitration, either in whole or in part.

Arbitrators' role in settlement

In practice French arbitrators do not tend to play an active role in promoting settlement of the dispute. This is a matter which is generally left to the parties.

Costs of arbitrations in France

Except where the parties have agreed otherwise, the allocation of costs is in the discretion of the arbitrator(s) and, where a set of institutional rules has been chosen, will be determined in accordance with those rules. In practice, costs often follow the event, although a successful party is unlikely to recover all of its costs. Other costs will vary depending on the type of procedure chosen (i.e. the extent to which it is streamlined), the complexity of the case, the number of arbitrators and the scale of the fees of the arbitrator(s).

Availability of arbitrators

Partly due to the eminence of the ICC in Paris as an international arbitration institution, there are a substantial number of highly regarded French arbitrators with a wide range of specialities and experience.