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The new French international arbitration law
Practical Law Legal Update 9-504-7007 (Approx. 3 pages)
The new French international arbitration law
| Published on 02 Feb 2011 • France |
Herbert Smith LLP
Thirty-one years after the codification of the law on domestic arbitration and thirty years after the codification for international arbitration, France has enacted a further reform of the law on domestic and international arbitration, in a Decree dated 13 January 2011.
Although the Decree does not revolutionise French arbitration law, the spirit of the new law is faithful to the French policy of favor arbitrandum. The law aims to strengthen this policy, while updating it. To accomplish this, the Decree includes some new provisions, incorporates a significant number of contributions from French case law over the last thirty years, and clarifies and simplifies provisions that were open to interpretation. Many articles have been redrafted without changing their substantive content, in order to simplify and/or modernise the wording.
This note focuses on the main changes to French international arbitration.
Rules applicable to arbitration agreements
The most noteworthy changes are:
- The elimination of any formal requirement (such as writing) for arbitration agreements in international arbitration (Article 1507).
- The principle that arbitration clauses are autonomous, until now established only by case law, has been codified (Article 1447).
Relationship between arbitral tribunals and national courts clarified
The Decree codifies the relationship between arbitral tribunals and the French courts and severely limits the intervention of French courts in the arbitral procedure.
The new Decree creates a judge with the task of supporting the arbitration process so as to ensure its effectiveness. This judge is referred to in French as the "juge d'appui" (literally the "supporting judge"). It is not a new judge, but the President of the territorially competent Tribunal de Grande Instance (High Court equivalent). The juge d'appui has the power to determine challenges to arbitrators, in both domestic and international arbitration, if the "person responsible for organising the arbitration" (for example, the institution) has not done so (Article 1456). In addition, during the arbitration proceeding, the juge d'appui has the power to determine issues surrounding an arbitrator's resignation or failure to act (Article 1457), again subject to any applicable institutional rules chosen by the parties.
The only other situations where a domestic court can intervene during arbitration proceedings are situations in which, by definition, the arbitral tribunal does not have the necessary power to act, namely:
- Ordering interim attachments (saisies conservatoires) and interim or provisional charges on property (suretés judiciaires).
- Entertaining a party's application, at the arbitral tribunal's invitation, to the President of the Tribunal de Grande Instance (High Court) for the production of notarised or private documents to which it is not a party.
New provisions: fairness of the arbitral procedure and prevention of disruption to the arbitral procedure
The new provisions are mainly aimed at speeding up the arbitration procedure while ensuring that the arbitral process is fair, with enhanced procedural protection for parties and the prevention of conduct by parties or arbitrators that is intended to disrupt the arbitration procedure. The new provisions are:
- The principle that the arbitrators' independence and impartiality applies throughout the proceedings (Article 1457).
- The requirement that the arbitrator and the parties must "act promptly and fairly in the conduct of the procedure" (Article 1464-3).
- A party that refrains from alleging an irregularity in a timely manner, with full knowledge thereof and without legitimate reason is deemed to have waived the right to rely on that irregularity before the arbitral tribunal or the reviewing court (Article 1466). This is known as the "French Estoppel".
- The arbitrator has a new duty to ensure equal treatment of the parties and to respect the adversarial principle, regardless of the applicable procedural law (Article 1510). This duty codifies French case law in this regard.
Provisions applicable to the arbitral award and applications to set aside
Although for the most part the provisions applicable to the arbitral award and applications to set aside have not been amended, they have been simplified and clarified. There are a certain number of changes that are worth noting, all designed to promote the prompt enforcement of awards:
- The parties may now waive the right to apply to the courts to set aside the arbitral award, which was previously impossible (Article 1522). This waiver option, which already exists in other jurisdictions, aims to modernise French law, by giving greater autonomy to the parties. If the option is exercised, the award will be final as soon as it is handed down.
- Applications to set aside will no longer stay enforcement of the award. Parties will therefore be able to enforce an award while a challenge is still pending before the French courts (Article 1526). This is a clear break from the previous situation.
- The one month time limit for filing an application to set aside no longer runs from the date of service of the "award which has been declared enforceable" but from the date of notification of the award itself, which reduces the time during which the award is exposed to the risk of being set aside (Article 1519).
It is worth noting that the principle whereby arbitral awards cannot be revised on the merits and whereby they are subject to very limited judicial review remains in force: the circumstances under which awards may be set aside or the enforcement of an award may be denied are the same as before, albeit rephrased in certain cases.
The Decree will not enter into force until 1 May 2011. Article 3 of the Decree sets out transitional provisions, stating which provisions will apply to arbitration agreements concluded after 1 May 2011, arbitral tribunals appointed after this date or to awards rendered after this date.
French arbitration law was already very favourable to arbitration, particularly international arbitration. This reform strengthens French arbitration law and confirms it as one of the most modern, keeping in step with the changes in arbitration over the last thirty years. Evidently, it is intended to maintain France's status as a preferred venue for international arbitration.