Arbitration in France

Reproduced from Practical Law with the permission of the publishers.Arbitration For more information visit practicallaw.com or call 020 7202 1200. Copyright © 2013 Practical Law. All rights reserved.

Arbitration in France

This note provides an overview of the legal framework for domestic and international arbitration inFrance, as laid down in the applicable French legislation and developed by the French courts.

Nicolas Bouchardie (Counsel) and Celine Tran (Associate), White & Case LLP, Paris

Contents Sources of French arbitration law

Code of Civil Procedure

Civil Code and Code of Judicial Organisation

Paris Court of Appeal and Cour de Cassation case law

International sources

Jurisdictional issues: French approach to kompetenz-kompetenz

Arbitration agreements

Formal requirements

Separability

Extension to non-signatories

Unilateral/optional clauses

Arbitral tribunal

Number of arbitrators

Necessary qualifications

Appointment

Challenges

Arbitrators' duties and powers

Courts' powers in support of arbitration

Interim measures

Stay of court proceedings

Appointing and removing arbitrators

Resource type: Practice note Status: Maintained Jurisdiction: France

The original version of this practice note was published on Practical Law Arbitration.


Form, content and notification

Correction and interpretation

Challenges to awards

Grounds for challenge

Enforcement

Effects of an award set aside in another country

Key institutions

ICC International Court of Arbitration

French Arbitration Association

French Commission on Arbitration

International Arbitration Chamber of Paris

Paris Maritime Arbitration Chamber

Paris, the Home of International Arbitration

France is one of the most established and popular venues for international arbitration. Its attractiveness as a place of arbitration results from a variety of factors, including:

Its liberal arbitration laws.

A judicial pro-arbitration tradition.

The presence of leading arbitration practitioners.

The location of the International Chamber of Commerce (www.practicallaw.com/8-201-5878) (ICC)headquarters in Paris.

Paris is consistently ranked first as the most frequent seat for ICC arbitration. For example, according in 100 cases, followed by London (71 cases)

second behind Switzerland. French law was ranked fourth in terms of law elected by the parties in their contract, and 115 ICC arbitrators were

Sources of French arbitration lawThe provisions governing arbitration in France are primarily found in the Code of Civil Procedure (Code de procédure civile) (CCP), supplemented by general provisions contained in the Civil Code (Code civil) and Code of Judicial Organisation (Code de l'organisation judiciaire). These provisions have often been interpreted, and sometimes expanded upon, by the French courts. Although there is no doctrine of precedent as such under French law, lower courts generally rely on decisions of higher courts, which therefore have an important role in interpreting laws and specifying their content. Accordingly, this note will refer to important French court decisions where appropriate.

to ICC statistics for the year 2012, Paris was the seatand Geneva (62 cases), with France ranking overall

of French nationality.

Awards


This note substantially relies on an unofficial translation of the CCP's provisions on arbitration, which is available at www.parisarbitration.com. Articles from other codes and case excerpts are translated by the authors of this note.

In 1981, France enacted a Decree on international arbitration, one of the first modern, liberal arbitration laws (Decree No 81-500 of 12 May 1981). The Decree distinguished between domestic and internationalarbitration, taking a more permissive stance towards international arbitration. The courts soon developed a liberal interpretation of this Decree. Thirty years later, in 2011, France passed a new law reforming the statutory provisions on arbitration, codifying existing case law and introducing certain innovative features (Decree No 2011-48 of 13 January 2011, which came into force on 1 May 2011, subject to certain exceptions) (see Legal update, French arbitration law comes into force (www.practicallaw.com/1-505-9240)).

The new law did not dramatically change the previous legal framework, which was already very favourable to arbitration. However, it enhanced France's pro-arbitration policy, notably by broadening the scope of the parties' freedom with respect to the arbitral process. The new French arbitration law therefore confirmed France as one of the most arbitration-friendly jurisdictions in the world.

French law on arbitration is not directly based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (www.practicallaw.com/6-205-6445) and is substantially more liberal than the ModelLaw (www.practicallaw.com/7-205-6044) in some respects.

Code of Civil Procedure

The 2011 Decree introduced a new set of rules in the CCP, which remains divided into a section on domestic arbitration (Articles 1442 to 1503, CCP) and a section on international arbitration (Articles 1504 to 1527, CCP). However, many provisions are common to both types of arbitrations. Article 1506 of the CCP lists the provisions applicable to domestic arbitration that also apply to international arbitration.

According to the CCP, an arbitration is international "when international trade interests are at stake" (Article 1504, CCP). This article lays down an economic criterion of "internationality" rather than alegal/formal one, in line with France's pro-arbitration approach.

This criterion is broad and covers a wide variety of disputes. French courts have explained that the domestic or international nature of an arbitration does not depend on the applicable law, seat of the arbitration, parties' intentions, or their nationalities, but on the nature of the underlying economic transaction or relation, which must involve more than one state (Paris Court of Appeal, SARL Carthago Films v SARL Babel Productions (29 March 2001), Revue de l'Arbitrage 2001 at page 543). In short, to qualify as international within the meaning of French arbitration law, the dispute must involve a tangible or intangible cross-border transfer of goods, services or funds (Paris Court of Appeal, Agence Transcongolaise des Communications-Chemin de fer Congo (ATC-CFCO) v Compagnie Minière de l'Ogooue-Comilog S.A., Case No 95/80283 (1 July 1997)).

Mandatory provisions of the CCP include:

Article 1448, which describes the negative effect of kompetenz-kompetenz (www.practicallaw.com/4-205-6045) (see Jurisdictional issues: French approach tokompetenz-kompetenz) (domestic and international arbitration).

Articles 1450 to 1460, which govern all aspects of the arbitral tribunal:

Article 1450, which lays down the conditions for being an arbitrator (domestic arbitration only);


Article 1451, which requires an uneven number of arbitrators (domestic arbitration only);

Article 1452, which provides default rules for appointing arbitrators (domestic and

Article 1453, which provides default rules for appointing arbitrators in multi-party arbitrations (domestic and international arbitration);

Article 1454, which deals with disputes relating to the constitution of the arbitral tribunal (domestic and international arbitration);

Article 1455, which sets out the effect of a manifestly void or non-applicable arbitration agreement on the appointment of arbitrators (domestic and international arbitration);

Article 1456, which relates to the tribunal's mandate and disclosure duties, as well as the removal of arbitrators (domestic and international arbitration);

Article 1457, which governs the incapacity, unavailability and resignation of an arbitrator (domestic and international arbitration);

Article 1458, which relates to the removal of arbitrators (domestic and international arbitration);

Article 1459, which determines who is the judge acting in support of arbitration - the juge d'appui(support judge) (domestic arbitration only); and

Article 1460, which regulates applications before the judge acting in support of arbitration(domestic and international arbitration).

Article 1491, which guarantees the right to bring an action to set aside an award (domestic

Civil Code and Code of Judicial Organisation

Although most provisions relevant to arbitration are found in the CCP, a few overarching articles of the Civil Code apply to both domestic and international arbitration (Articles 2059 to 2061, Civil Code). These articles specify what matters may or may not be subject to arbitration ("arbitrability").

Article 2061 of the Civil Code generally recognises the right to arbitrate in France, "[s]ubject to specific statutory provisions, an arbitration clause is valid in contracts that are concluded for the purpose of a professional activity".

Article 2060 of the Civil Code generally prohibits French state subdivisions and state entities fromarbitrating their disputes, with possible exceptions for certain categories of industrial and commercial state entities (établissement public à caractère industriel ou commercial).

The issue of whether the rule set out in Article 2060 applies to international contracts (as opposed to purely domestic contracts) entered into by French state subdivisions and state entities has given rise to a disagreement between the Cour de Cassation (the highest French court for civil and criminal matters) and the Conseil d'Etat (France's highest administrative court):

The Cour de cassation has long held that the French State and French state entities can validly include an arbitration clause in international commercial contracts (Cour de cassation, Trésor Public v Galakis, first civil chamber, Case No.. 61-12.255 (2 May 1966)). By extension, the French courts have

international arbitration);

arbitration only).


held that foreign states and state entities can validly agree to arbitrate their disputes and are, as aconsequence, prevented from relying on their own domestic law later to challenge the jurisdiction of the arbitral tribunal (Paris Court of Appeal, Gatoil v National Iranian Oil Company, Case Nos 90/1957 and 90/22741 (17 December 1991)).

By contrast, the Conseil d'Etat has indicated that the prohibition laid down in Article 2060 applies to international contracts that also qualify as administrative contracts under French law (Conseil d'Etat, Opinion in the Eurodisney matter (6 March 1986), Revue de l'Arbitrage 1992 at page 397). Following this decision, the French legislator expressly authorised the French State and French state entities toinclude arbitration clauses in contracts entered into with foreign companies only if they relate to an "operation of national interest" (Article 9, Law No 86-972 of 19 August 1986).

Turning to the issue of jurisdiction, the Code of Judicial Organisation grants jurisdiction to the (civil) Court of First Instance (Tribunal de Grande Instance) for the recognition (exequatur) and enforcement of domestic and foreign arbitral awards (Article R.212-8, Code of Judicial Organisation) (see Awards: Enforcement). As an exception to this general principle, specific rules may apply to the recognition and enforcement of arbitral awards when a party is a French state subdivision or state entity (including for international contracts). For instance, French administrative courts may be competent to hear recognition and enforcement cases involving public procurement or public works contracts entered into with a foreign entity (Tribunal des Conflits, Institut national de la santé et de la recherche médicale v Fondation Letten F. Saugstad, Case No 3754 (17 May 2010); Conseil d'Etat, Syndicat mixte des aéroports de Charente v Société Ryanair Ltd., Case No 352750 (19 April 2013)).

Paris Court of Appeal and Cour de Cassation case law

The Paris Court of Appeal and the Cour de Cassation have had a major role in developing French arbitration case law, including aspects not codified in the CCP (for example, extension of the arbitration agreement to non-signatories, effect of an award set aside at the seat of arbitration, validity of optional arbitration clauses, and so on). These courts have developed a relatively uniform body of case law in the field of arbitration, ensuring consistency and legal predictability.

The substantial body of pro-arbitration case law developed over the years by these two courts was instrumental in revising France's arbitration law.

International sources

France is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention (www.practicallaw.com/6-205-5196)), in force in France since 24 September 1959. In practice, the New York Convention is rarely applied in France as French arbitration rules on recognition and enforcement are generally more favourable than the New York Convention (for example, on the formal requirements of arbitration agreements).

France is also a party to the Geneva (European) Convention on International Commercial Arbitration of 1961 and the Washington Convention of 1965 creating the International Centre for Settlement ofInvestment Disputes (www.practicallaw.com/7-205-5148) (ICSID). Additionally, France has entered into bilateral treaties on the protection of investments with almost 100 states.

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Jurisdictional issues: French approach to kompetenz-kompetenzFrance recognises the principle of kompetenz-kompetenz (www.practicallaw.com/4-205-6045) (or competence-competence) and interprets it broadly. Under French law, kompetenz-kompetenz is twofold, as it yields both a positive and a negative effect.

The positive aspect of kompetenz-kompetenz is stated in Article 1465 of the CCP:

"The arbitral tribunal has exclusive jurisdiction to rule on objections to its jurisdiction".

In other words, the arbitral tribunal has the authority to decide on its own jurisdiction, and on the existence and validity of the arbitration agreement.

If a party fails without cause to object in a timely manner to the arbitral tribunal's jurisdiction before the tribunal itself, it is deemed to have waived its right to raise such an objection (Article 1466, CCP).Although the CCP does not specify when exactly an objection to jurisdiction must be raised, most legal commentators support a stringent application of this rule, according to which an objection to jurisdiction must be raised in limine litis, that is, before any defence on the merits. Accordingly, a party is precluded from invoking the arbitral tribunal's lack of jurisdiction for the first time at the annulment or enforcement stage (see Paris Court of Appeal, Case No 2001/16532 (22 May 2003)).

The negative aspect of kompetenz-kompetenz is laid down in Article 1448 of the CCP:

"When a dispute subject to an arbitration agreement is brought before a court, such court shall decline jurisdiction, except if an arbitral tribunal has not been seised of the dispute and if the arbitration agreement is manifestly void or manifestly not applicable. A court may notdecline jurisdiction of its own motion."

Therefore, French courts decline jurisdiction to hear a matter whenever there is already a pendingarbitration and whenever a party claims the dispute is subject to arbitration, unless the arbitration agreement is prima facie void or not applicable.

Under French law, the principle of kompetenz-kompetenz does not grant arbitral tribunals absolute priority over French courts to rule on jurisdiction. Kompetenz-kompetenz is a rule of chronological, rather than hierarchical, priority, according to which the arbitral tribunal must rule first on questions relating to its jurisdiction, subject to the courts' subsequent scrutiny. French courts have specified that this judicial review at the annulment or enforcement stage is to be performed de novo without deference to the tribunal's findings of fact or law. The Cour de Cassation has held that French courts are entitled to perform a review of "all legal and factual elements that are relevant to determine the reach of the arbitration agreement and draw the corresponding conclusions regarding the arbitrators' compliance with their mission" (Cour de cassation, first civil chamber, Fondation Albert Abela Family Foundation et. a. v Fondation Joseph Abela Family Foundation, Case No 08-20,563 (6 October 2010)).

The above developments apply to both domestic and international arbitration.

For further discussion on this issue, see Practice note, Jurisdictional issues in international arbitration (www.practicallaw.com/2-382-1325).


Arbitration agreements

Formal requirements

The requirements for arbitration agreements differ between domestic and international arbitration.

For domestic arbitration, an arbitration agreement must be in writing (Article 1443, CCP) and can be in the form of either an arbitration clause in a contract (clause compromissoire) or a separate agreement to arbitrate an existing dispute (compromis) (Article 1442, CCP). If the latter, the agreement must define thesubject matter of the dispute (Article 1445, CCP).

Arbitration agreements in international arbitration are not subject to any formal requirements (Article 1507, CCP). Article 1515 of the CCP requires that the arbitration agreement, or a copy of it, must be provided at the stage of the award's recognition and enforcement. However, commentators agree that this does not require that the arbitration agreement is in writing, but only that the agreement is evidenced in a written document.

A recurring issue before the French courts is whether an arbitration agreement is binding when it is merely incorporated by reference into the contract giving rise to the dispute. In many decisions, the Cour de cassation has made it clear that courts will give effect to an arbitration clause contained in a separate document (for example, general terms and conditions) incorporated by reference into a contract, even if the clause is not explicitly referred to in the main contract, provided the other party was aware of the reference to it and did not object to it (Cour de cassation, first civil chamber, Prodexport v FMT Productions, Case No 95-17.603 (3 June 1997)).

In a ground breaking case, the Cour de cassation upheld the validity of an arbitration agreement which was contained in an annex amending standard terms and conditions that were incorporated by reference into the main contract (Cour de cassation, first civil chamber, Municipalité de Khoms El Mergeb v Dalico Contractors, Case No 91-16.828 (20 December 1993)). According to this liberal approach, the burden lies on the party challenging the arbitration clause, who must prove that it had no knowledge of the document containing it.

Separability

French law recognises the principle of separability (www.practicallaw.com/4-205-5215), that is, the arbitration agreement is separate from, and independent of, the contract in which it is contained or to which it refers (Article 1447, CCP). Therefore, an arbitration agreement will not be affected if the maincontract is void. This allows an arbitral tribunal to assert jurisdiction despite a challenge to the existence or validity of the underlying contract. Conversely, the invalidity of an arbitration clause will not extend to other contractual provisions.

The principle of separability applies to both domestic and international arbitration.

In international arbitration, the principle is considered a substantive rule of international arbitration (règle matérielle). This means that French courts apply it irrespective of the law governing the arbitral proceedings.

Reproduced from Practical Law Arbitration with the permission of the publishers. For more information visit practicallaw.com or call 020 7202 1200. Copyright © 2013 Practical Law. All rights reserved.

agreement should only be assessed with regard to the parties' consent and without reference to any national law (Cour de cassation, first civil chamber, Municipalité de Khoms El Mergeb v Dalico Contractors, Case No 91-16.828 (20 December 1993)). The existence and validity of the arbitrationagreement is therefore determined only by reference to the French concept of international public policy (ordre public international).

In international arbitration French courts have held that arbitration agreements are presumed to be valid, and the burden therefore lies on the party challenging the arbitration agreement to establish that it is not (Cour de cassation, first civil chamber, Zanzi v J. de Coninck, Case No 96-21.430 (5 January 1999)).

For further discussion about separability, see Practice note, Separability of arbitration agreements ininternational arbitration (www.practicallaw.com/0-381-0021).

Extension to non-signatories

Under general principles of French contract law, agreements only bind the contracting parties (Article 1165, Civil Code). The same rule applies to arbitration agreements, which are typically not binding on non-signatory parties.

However, in some instances, and to streamline legal proceedings in complex contractual disputes, French courts consider that third parties may be bound by an arbitration clause that they have not signed. This can occur in the context of a group of companies or interconnected contracts.

In particular, French courts have relied on the "group of companies" doctrine to hold that an arbitration clause is enforceable against third parties who are involved in the performance of the contract, when the contractual situation and activities of these parties made it possible to presume that they were aware ofthe existence and scope of the arbitration clause. The underlying rationale is to enable the arbitral tribunal to deal with all economic and legal aspects of a dispute, and is justified either by the theory of implied ratification or acceptance, or by the piercing of the corporate veil (Paris Court of Appeal, Société V 2000 v société Project XJ 220 ITD, Cases Nos 94/12322 and 94/12323 (7 December 1994)).

The existence of a group of companies is not sufficient in and of itself to extend an arbitration agreement to third parties (and in fact, most arbitral tribunals refuse to extend an arbitration clause solely on this basis). It is merely a circumstance that favours such an extension, which requires interpreting a party's behaviour to infer its consent to be bound by the arbitration agreement. Accordingly, this doctrine is veryfact-dependent and French courts take into account a variety of elements, particularly the third party's participation in the negotiation, conclusion, performance and termination of the contract.

This doctrine was first applied by the Paris Court of Appeal in the landmark decision of Dow Chemical v Isover-Saint-Gobain (21 October 1983), Revue de l'Arbitrage 1984 at page 98). In Dow Chemical, the court dismissed an application to set aside an award that had extended the arbitration agreement to two companies of the same corporate group to which the signatory company belonged, although they were not party to the underlying agreements but had performed under them.

Subsequent cases have taken a more practical approach, generally holding that "the effects of an arbitration agreement extend to parties who are directly involved in the contract's performance and in the disputes that may arise from it", whether or not the parties belong to the same group of companies as the signatory and whether or not they were aware of the arbitration agreement and impliedly adhered to it (see Cour de cassation, first civil chamber, Stés ABS et AGF Iart v Sté Amkor technology et a., Case

Specifically, French courts have held that the existence, validity, and effectiveness of the arbitration

).No 04-20.842 (27 March 2007)


Although it is difficult to identify clear rules when determining whether an arbitration clause can be extended to a non-signatory under French law, the criterion ultimately used by the courts is the behaviour and involvement of the non-signatory party.

Unilateral/optional clauses

Unilateral or optional arbitration clauses are clauses that grant one party, but not the other, the right to choose between arbitration and court adjudication in case of a dispute. On the basis of a longstanding Court of Appeal decision (Angers Court of Appeal, S.A. Sicaly v Grasso Stacon Koninklijke Machine Fabrieken NV (25 September 1972), Revue de l'Arbitrage 1973 at page 164), these optional clauses have generally been deemed valid and enforceable under French law.

In 1972, the Angers Court of Appeal thus decided a case in which a contract between several Dutch companies and a French company granted the former the right to choose between arbitration and state courts (Angers Court of Appeal, S.A. Sicaly v Grasso Stacon Koninklijke Machine Fabrieken NV, Revue de l'Arbitrage 1973, p. 164, 25 September 1972). The French party brought suit before the French courts, arguing that such an optional clause could only mean that the parties had no intention to submit their dispute to arbitration. The court disagreed and refused to consider the clause null and void. The Cour de cassation subsequently dismissed the French party's application to reverse the Court of Appeal's decision (Cour de cassation, first civil chamber, Case No. 72-14.706, 15 May 1974).

However, a recent decision rendered by the Cour de cassation (Ms X v Banque Privée Edmond de Rothschild (Cour de cassation, first civil chamber, Case No 11-26.022 (26 September 2012))) on jurisdiction clauses has thrown this solution into question.

In Rothschild, the court ruled on the validity of a unilateral jurisdiction clause contained in an agreement between a bank and its client. The clause required the client to submit all disputes to the Luxembourgcourts, but allowed the bank to bring an action in the client's country of domicile or "any other competent court". The client brought proceedings against the bank in France and the bank challenged the French court's jurisdiction.

The court held that the jurisdiction clause was invalid because it was "potestative", that is, it gave the bank the unconditional right to choose the competent court, and contravened the Brussels Regulation (www.practicallaw.com/2-205-5103) (EU Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). In Rothschild, the courtfound the jurisdiction clause to be invalid not because it granted only one party the right to choose other forums, but because it did not specify which other forums the bank could seize, thus denying the other party certainty and predictability (see Legal update, French Supreme Court rules on validity of one-way jurisdiction clause (www.practicallaw.com/5-522-4238)).

The impact of this decision, if any, on unilateral arbitration clauses remains unclear. However, on the basis of this decision, it is possible that an arbitration clause that grants one party the right to choose between arbitration and "any competent court" could be struck down for lack of specificity. To be valid, such a clause would have to state precisely which court(s) is (are) competent, either by name or by reference to an objective criterion.

For more discussion on the validity and enforceability of unilateral option clauses in France, see Article, Unilateral option clauses in arbitration: an international overview (www.practicallaw.com/7-535-3743).


Arbitral tribunal

Number of arbitrators

In both domestic and international arbitration, the parties are free to determine the number of arbitrators, directly or by reference to arbitration rules (Articles 1444 and 1508, CCP).

However, in domestic arbitration, the number of arbitrators must always be uneven, so that if the arbitration agreement provides for an even number of arbitrators, an additional arbitrator must be appointed (Article 1451, CCP). There is no corresponding rule for international arbitration.

The CCP does not provide for a default number of arbitrators in the absence of an agreement.

Necessary qualifications

French law imposes few requirements on arbitrators, none of which relate to the arbitrators' nationality or professional qualifications.

Specifically, the CCP provides that only natural persons having full capacity can act as arbitrators indomestic arbitration proceedings. Legal persons, if designated in the arbitration agreement, can only administer the arbitration (Article 1450, CCP). This provision does not apply to international arbitration.

The CCP also lays down a requirement of independence and impartiality, applicable in both domestic and international arbitration (Article 1456, CCP). Failure by the arbitrators to meet this requirement may result in their removal (see Arbitral tribunal: Challenges).

Appointment

Under French law, the parties are not required to specify the procedure for appointing the arbitrators. Asmentioned above, the parties can also refer to institutional or ad hoc rules. In the absence of any specific procedure or designated arbitral rules, the CCP provides that the person or institution administering the arbitration or the support judge will appoint the arbitrators, whether the arbitration is domestic or international (Article 1452, CCP). In such cases:

Where the parties have agreed to have their dispute decided by a sole arbitrator, but fail to agree on who should be appointed, the person or institution administering the arbitration, if any, or the support judge will proceed with the appointment.

Where the parties have agreed to have their dispute decided by three arbitrators, each party must appoint an arbitrator and the two party-appointed arbitrators must then appoint a third arbitrator. If aparty fails to appoint an arbitrator within one month of receiving a request to that effect, or if the two arbitrators fail to agree on the third arbitrator within one month of accepting their appointment, the person or institution administering the arbitration, if any, or the support judge will appoint the third arbitrator.

(Article 1452, CCP.)


Difficulties can arise in "multiparty arbitration", that is, when there are more than two parties involved in the dispute. In these cases, each party may not be given an equal opportunity to participate in the selection of the arbitrator(s), thereby potentially undermining the principles of fairness and equality.

This occurred in the Dutco case, an arbitration conducted under the aegis of the ICC. At the time, the ICC considered it could resolve the situation by requiring two respondents to appoint one and the samearbitrator (which the co-respondents eventually did under protest). Subsequently, the respondents sought to annul the resulting award before the French courts. Ultimately, the Cour de cassation held that requiring multiple defendants to jointly nominate one arbitrator was contrary to the public policy principle of equality between the parties, thereby condemning the ICC's practice (Cour de cassation, first civil chamber, Dutco construction v BKMI and Siemens, Cases Nos 89-18.708 and 89-18.726 (7 January 1992)).

Article 1453 of the CCP now provides that where there are more than two parties to the dispute and they fail to agree on the constitution of the arbitral tribunal, the person or institution administering the arbitration, if any, or the support judge must appoint the arbitrators (that is, the arbitral tribunal in itsentirety). Incidentally, following the Dutco decision, the ICC amended its rules along the same lines (see Article 12(8), ICC Arbitration Rules 2012 (www.practicallaw.com/6-502-7911)).

Challenges

An arbitrator can be challenged on any of the following grounds, which apply to both domestic andinternational arbitration:

Any circumstance that can affect his independence or impartiality (Article 1456, CCP).

Legal incapacity, refusal to act or resignation (Article 1457, CCP).

Unanimous consent of the parties (Article 1458, CCP).

If the parties do not all consent to the removal of an arbitrator on any one of these grounds, the matter must be resolved within one month following the discovery of the circumstances that gave rise to thechallenge (Articles 1456 and 1458, CCP) by either:

The person or institution administering the arbitration, if any.

The support judge.

Arbitrators' duties and powers

Duties of independence, impartiality and disclosure

Arbitrators have a duty to be independent and impartial and to disclose any circumstance that can impact on these two qualities (Article 1456, CCP). This duty of disclosure continues throughout the arbitration (Article 1456, CCP).

French courts have adopted a strict but pragmatic view of the duty to disclose, requiring arbitrators to reveal any circumstance that can affect their judgment and create in the parties' minds a "reasonable


doubt" as to their impartiality and independence (Paris Court of Appeal, SA Fremarc v Société ITM Entreprises, Case No 2002/01208 (2 April 2003)).

For example, in the Tecnimont saga, the Paris Court of Appeal (in 2009), followed by the Reims Court of Appeal (in 2011), set aside an ICC award because the chairman of the arbitral tribunal had not made a full disclosure of the links between the law firm where he was working as "of counsel" and one of the parties to the arbitration, which the courts found the chairman had a duty to investigate (see Paris Court of Appeal, J&P Avax SA v Société Tecnimont, Case No 07/22164 (12 February 2009), Cour de Cassation, first civil chamber, Case No 09-12.716 (4 November 2010), Reims Court of Appeal, J&P Avax SA v Société Tecnimont, Case No 10/02888 (2 November 2011) (review by the Cour de Cassation pending), and Legal updates, French Supreme Court reverses Court of Appeal decision to annul ICC award (www.practicallaw.com/4-504-3144) and Reims Court of Appeal sets aside ICC award forchairman's lack of independence (www.practicallaw.com/7-514-2915)).

In 2010, the Cour de cassation quashed two Court of Appeal decisions on the ground that the systematic appointment of an arbitrator by companies of the same group created a "business stream" between the arbitrator and that group of companies, which should have been fully disclosed (Cour de cassation, firstcivil chamber, Somoclest Bâtiment v DV Construction, and Batard v Prodin, Cases Nos 09-68.997 and 09-68.131 (20 October 2010)). These two decisions were rendered in the context of domestic arbitration, but the same principle applies in international arbitration.

The scope of disclosure is broad (covering both objective and subjective circumstances). However, thecourts have specified that the arbitrator is under no duty to disclose facts that are known to the parties, or facts that can reasonably have no impact on the proceedings (Paris Court of Appeal, Centre Technique des Industries Mécaniques v Société SDT International, Case No 06/12878 (13 March 2008)).

A disclosure by the arbitrator entitles either party to request that arbitrator's revocation, subject to both parties' consent or to the supporting institution's (or the support judge's) approval. However, if a party knew of the circumstance that gave rise to the disclosure and did not oppose that arbitrator's appointment or did not move to revoke him, that party will be precluded from raising lack of independence or impartiality to later impeach that arbitrator or seek annulment of the resulting award (Article 1466, CCP).

Procedural powers

Unless the parties agree otherwise, the tribunal has the power to determine the arbitral procedure as it thinks fit (Article 1464, paragraph 1, CCP).

However, while the tribunal is not bound by the French CCP rules on ordinary court proceedings, it must abide by a number of fundamental provisions (Article 1464, paragraph 2, CCP). These include Articles 4 -10, 11 (paragraph 1), 12 (paragraphs 2 and 3), 13 - 21, 23 and 23-1 of the CCP, which primarily relate to due process and other basic principles. These provisions apply only to domestic arbitration, although commentators consider that some of them are equally applicable to international arbitration throughthe "international public policy" exception (discussed in Awards: Grounds for challenge).

The arbitral tribunal can order any conservatory or provisional measures that it deems appropriate (which may be subject to a pecuniary penalty (astreinte)). However, only courts can order conservatory attachments and judicial security (Article 1468, CCP).


evidence (which may be subject to a pecuniary penalty (astreinte)), as well as order the appearance of any witness to provide oral testimony (Article 1467, CCP).

Confidentiality, expedition and loyalty

Article 1464 of the CCP provides that domestic arbitration proceedings are confidential (for the arbitrators and the parties), unless otherwise agreed by the parties or provided by law. There is no similar provision applicable in international arbitration, but commentators argue (based on conflicting case law) that parties to international arbitration generally have (at least) privacy expectations that should be protected. The relevant arbitration clause can (directly or by reference to arbitration rules) impose a confidentiality obligation on the arbitrators and the parties.

Article 1464 of the CCP also provides that the parties and the arbitrators have a duty to act expeditiously and loyally in the conduct of the arbitration proceedings. This rule applies to both domestic and international arbitration.

Courts' powers in support of arbitration

Interim measures

Until the arbitral tribunal is constituted, French courts have the power to order any measures relating to the taking of evidence as well as other provisional or conservatory measures (Article 1449, CCP). Frenchcourts will only decline to use these powers if the parties expressly excluded recourse to these measures or if these are otherwise forbidden in the applicable arbitral rules.

A party seeking a measure to preserve or establish evidence must apply to the President of the Court of First Instance or of the Commercial Court (Tribunal de Commerce), who will rule on the application through expedited proceedings (sur requête or en référé). If the matter is urgent, other provisional or conservatory measures can also be applied for and ordered through expedited proceedings (Article 1449, CCP).

Once the arbitral tribunal is constituted, the power to order conservatory or interim measures moves to the arbitral tribunal. Under the previous legal framework, the parties could still ask the French courts to order urgent interim measures. In contrast, the 2011 Decree seems to reserve this jurisdiction to the arbitral tribunal. However, French courts retain exclusive jurisdiction to order conservatory attachments or judicial security, to ensure satisfaction of a future award (Article 1468, CCP). In addition, recourse to the support judge may be necessary to force execution of any measure ordered by the arbitral tribunal that is not voluntarily complied with.

Stay of court proceedings

French law recognises the negative aspect of kompetenz-kompetenz, according to which the courts must decline jurisdiction whenever a claim is brought in breach of an arbitration agreement that is not "manifestly void or manifestly not applicable". However, the courts are prevented from raising this jurisdictional objection on their own motion (Article 1448, CCP).

The arbitral tribunal also manages evidentiary matters. In this capacity, it may enjoin a party to produce


Appointing and removing arbitrators

The French support judge can be asked to appoint or remove one or several arbitrators where the parties cannot agree on their appointment and where the arbitration is not administered by any institution.

In domestic arbitration, the support judge is the President of the Court of First Instance (or of the Commercial Court if the arbitration agreement provides for this) (Article 1459, CCP). Article 1459 of theCCP lays down the rules to determine which Court of First Instance has territorial jurisdiction; typically (in the absence of specific agreement of the parties), the Court of First Instance of the seat of arbitration.

In international arbitration (unless the arbitration agreement provides otherwise), the support judge is the President of the Paris Court of First Instance if one of the following conditions is met:

The arbitration takes place in France.

The parties have agreed that French procedural law will apply to the arbitration.

The parties have expressly granted jurisdiction to French courts over disputes relating to the arbitral procedure.

One of the parties is at risk of a denial of justice.


In practice, the President of the Paris Court of First Instance is a senior judge, who has significant experience in international arbitration.

Awards

Form, content and notification

The CCP sets out a number of formal and substantive conditions with which an award must comply.

In both domestic and international arbitration, the arbitral award must state the following:

The full names of the parties, as well as their domicile or corporate headquarters.

If applicable, the names of the counsel or other persons who represented or assisted the parties.

The names of the arbitrators who made it.

The date on which it was made.

The place where the award was made.


In terms of content, the award must concisely set out the respective claims and arguments of the parties and state the reasons on which it is based (Article 1482, CCP). This last requirement did not previously exist in international arbitration, but was developed by the courts and codified in the 2011 Decree.

While these requirements are common to domestic and international arbitration, the consequences of their breach are different. In domestic arbitration, a failure to state in an award the reasons on which it is


based, the date on which it was made, or the names or signature of the arbitrator(s) is ground for annulment (Article 1492, CCP). In contrast, none of these constitute grounds for annulment in international arbitration.

Additionally, awards in domestic arbitration must be made by majority decision, at the risk of being challenged before the courts (Articles 1480 and 1492, CCP), whereas in international arbitration, the chairman of the tribunal can rule alone in the absence of a majority (Article 1513, CCP).

Domestic awards in both domestic and international arbitration must be notified by formal service (signification), unless the parties agree otherwise (Articles 1484, paragraph 3 and 1519, paragraph 3, CCP). This last proviso (a novelty introduced by the 2011 Decree) is generally understood to allow notification in accordance with the arbitration rules chosen by the parties (for example, the ICC Rules provide for notification by the ICC Court's Secretariat, see Article 34(1), ICC Arbitration Rules 2012 (www.practicallaw.com/6-502-7911)) (see Paris Court of Appeal, SAS ITM Entreprises et al. v SAS Janville et al., Case No 13/05111 (23 April 2013)).

Correction and interpretation

Once an award is issued, the arbitral tribunal no longer has the power to rule on the claims adjudicated in that award. However, at the request of a party, the tribunal may interpret the award, rectify clerical errors and omissions, or even supplement the award if it failed to rule on a claim. In such case, the tribunal can only rule after hearing the parties or giving them the opportunity to be heard (Article

).

Applications for correction or interpretation must be filed within three months of the award's notification(Article 1486, CCP).

If the tribunal cannot be reconvened and if the parties cannot agree on the constitution of a new tribunal, the power to rule on omitted claims is vested in the court which would have had jurisdiction had there been no arbitration agreement (Article 1485, CCP). However, this solution only applies to domestic arbitration. In international arbitration, the only available remedy would be to seek annulment of the award or resist its enforcement on the basis that the arbitral tribunal did not comply with its mandate.

Challenges to awards

Provisions on challenges to arbitral awards differ substantially depending on whether the arbitration proceedings are domestic or international.

Domestic or international proceedings

Awards in domestic arbitration are generally subject to actions to set aside or annulment proceedings (recours en annulation) (see below). However, the parties can provide for a right to appeal the award,which leads to broader judicial review (Article 1489, CCP). In contrast, awards in international arbitration are only subject to actions to set aside and cannot be appealed (Article 1518, CCP).

Parties to an international arbitration can waive their right to bring an action to set aside an award (Article 1522, CCP). However, the right to bring an action to set aside an award in domestic arbitration is mandatory, that is, it cannot be renounced, unless the parties had provided for a right to appeal (Article

1485, CCP


1491, CCP). Where the right to set aside has been waived in international arbitration, the parties still retain their right to appeal an enforcement order (Article 1522, CCP).

Another difference relates to the effect of an action to set aside, or a challenge to an enforcement order, on the enforcement of an award. In domestic arbitration, enforcement of an award is stayed upon the filing of an appeal or action to set aside or until the time limit for such an appeal or application has expired, unless the award states that it is provisionally enforceable (Article 1496, CCP). By contrast,Article 1526 of the CCP provides that in international arbitration, "[n]either an action to set aside an award nor an appeal against an enforcement order shall suspend enforcement of an award". As a result, an award is immediately enforceable even if it has been challenged, except where the Court of Appealsuspends or adjusts the enforcement to preserve the rights of one of the parties (this was introduced in the 2011 Decree).

Grounds for challenge

The CCP sets out an exhaustive list of grounds to set aside an award (or appeal an enforcement order, see below) in international and domestic arbitration.

An award rendered in an international arbitration can be set aside if any of the following apply:

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 violated.

Recognition or enforcement of the award is contrary to international public policy.


The grounds for setting aside an award in a domestic arbitration are:

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 violated.

The award is contrary to public policy.

The award failed to state the reasons upon which it was based, the date on which it was made, the names or signatures of the arbitrator(s) having made the award; or the award was not made by majority decision.


The grounds for challenge in domestic arbitration therefore provide for additional circumstances in which an award can be set aside.

Where the first ground (tribunal wrongly upheld or declined jurisdiction) is relied on, as explained above, the Cour de cassation set a standard of strict scrutiny when checking an arbitral tribunal's decision to uphold or decline its jurisdiction. (Cour de cassation, first civil chamber, Fondation Albert Abela Family Foundation et. a. v Fondation Joseph Abela Family Foundation, Case No 08-20.563 (6 October 2010)).


Where the second ground (tribunal not properly constituted) is relied on, the courts' review is in practice limited to verifying that the appointment process was respected and that the arbitrators complied with their duties of impartiality and independence. Lack of independence or impartiality is a ground often invoked to challenge an award.

The third ground (tribunal ruled without complying with its mandate) covers situations where the tribunaldid not conform with the scope of the parties' claims (for example, it ruled on matters that were not within its purview or awarded more than the parties were claiming), where the tribunal overstepped its powers (for example, the tribunal ruled in equity, as amiable compositeur, without the parties' consent) or where the tribunal rendered an award after the expiry of an agreed deadline.

Regarding due process (fourth ground), an award will be annulled whenever the tribunal relied on evidence that was not subject to an adversarial debate between the parties (Cour de cassation, second civil chamber, M. Jean-Joseph Richard et al. v Société bretonne de bâtiment S.A., Case No 96-17.769 (30 September 1999)). For example, the Cour de cassation has held that an award should be annulled where an arbitrator had conducted personal investigations, albeit on general information, without informing the parties of those investigations (Cour de cassation, second civil chamber, Société Duarib v Société Nouvelle des Etablissements A. et G. Jallais, Case No 96-21.391 (10 November 1998)).

However, a party will be precluded from invoking a violation of due process at the annulment stage if it did not raise the issue before the arbitral tribunal when it had the opportunity to do so (Cour decassation, second civil chamber, Société Radiologie et Imagerie Médicale Pasteur Bergouignan v Philippe Hummel, Case No 02-10.101 (20 November 2003)). Violation of due process is often relied upon in conjunction with the public policy exception, which encompasses procedural irregularities.

The French courts construe the "public policy exception" (fifth ground) very narrowly, consistent with their arbitration-friendly approach, by generally holding that:

"[…] a public policy argument […] can be accepted only when the enforcement of the award would violate in an unacceptable way our legal system, such violation having to affect in a manifest manner an essential rule of law or a principle of fundamental importance […]."(Paris Court of Appeal, SA Thalès Air Défence v GIE Euromissile, Case No 2002/19606 (18 November 2004).)

Accordingly, to encourage recognition and enforcement of arbitral awards, French courts have annulledawards on public policy grounds only in exceptional cases.

The public policy exception in international arbitration is based on the standard of international public policy, whereas the same exception in domestic arbitration only refers to internal public policy. Although there is no precise definition of what constitutes international public policy, this concept is traditionallyinterpreted more narrowly by the courts than internal public policy, as it usually covers only fundamental principles of the French legal system, as well as mandatory rules of French law that preserve the essential political, social or economic interests of the state (lois de police).

Unlike in appeal proceedings, the court seised of an action to set aside an award cannot review the factual and legal bases of an award (see, for example, Cour de cassation, first civil chamber, société Eiffage construction v société Letierce et fils et a., Case No 05-12.395 (14 November 2006)). However, when a violation of due process or public policy is alleged in support of an action to set aside, the court will necessarily review the tribunal's reasoning.


Applications to set aside an award must be filed before the Court of Appeal of the place where the award was made, within:

One month of the award's notification if the notified party has its domicile or headquarters in mainland France (Articles 1494 and 1519, CCP).

Two months if that party has its domicile or headquarters in a French overseas territory (Article 643, 1°, CCP).

Three months if that party does not have its domicile or headquarters in France (Article 643, 2°, CCP).

In practice, as awards in international arbitration proceedings are most often rendered in Paris, the Paris Court of Appeal hears most applications to set aside.

Enforcement

Enforcement procedure (exequatur)

Applications to enforce awards rendered in France must be filed before the Court of First Instance of the place where the award was made (Articles 1487 and 1516, CCP). Applications for awards not rendered in France can only be filed before the Paris Court of First Instance (Article 1516, CCP).

Enforcement proceedings are conducted ex parte and decisions are rendered by a single judge by way of enforcement orders (ordonnances d'exequatur) (Articles 1487 and 1516, CCP).

Enforcement applications must be filed with the award and arbitration agreement (original or authenticated copy) (Articles 1487 and 1515, CCP). If the award is in a foreign language, the applicant must provide a French translation (Article 1515, CCP).

Unlike an order granting enforcement, an order denying enforcement must state the reasons on which it is based (Articles 1488 and 1517, CCP).

An order that denies enforcement can be appealed before the Court of Appeal having jurisdiction over the Court of First Instance that issued the order, within:

One month of the award's notification if the notified party has its domicile or headquarters in mainland France (Articles 1500 and 1525, CCP).

Two months if that party has its domicile or headquarters in a French overseas territory (Article 643, 1°, CCP).

Three months if that party does not have its domicile or headquarters in France (Article 643, 2°, CCP). This rule applies to both domestic and international arbitration.

It is usually not possible to appeal an order granting enforcement of an award (in both domestic and international arbitration) (Articles 1499 and 1524, CCP), unless either:

The award was rendered abroad (Article 1525, CCP).

The award was rendered in France in international proceedings, and the parties waived their right to bring an action to set aside the award (Articles 1522 and 1524, CCP).

In any event, the application to set aside an award is deemed to constitute a challenge against the order that ruled on its enforcement (Articles 1499 and 1524, CCP).


In domestic arbitration proceedings, the recognition and enforcement of an award must not be manifestly contrary to public policy (Article 1488, CCP). Article 1514 of the CCP provides a similar rule for international arbitration but the standard is that of international public policy.

Grounds for resisting enforcement

The only recourse available against an arbitral award rendered abroad is an appeal against an order granting its enforcement (Article 1525, CCP).

The grounds for resisting enforcement are the same as those for setting aside an award.

Appeals must be lodged with the Paris Court of Appeal, as the enforcement judge for foreign awards is the President of the Paris Court of First Instance.

Effects of an award set aside in another country

Although most jurisdictions are likely to refuse enforcement of an award that has been set aside in another country (as envisaged under Article V(1)(e) of the New York Convention), French courts have enforced awards set aside at the seat of arbitration, based on Article VII of the New York Convention.

For example, in the Hilmarton case of 1994, the Cour de cassation held that:

"[…] the award rendered in Switzerland is an international award which is not integrated in the legal system of that state, so that it remains in existence even if set aside and its recognition in France is not contrary to international public policy […]" (Cour de cassation, first civil chamber, Hilmarton v Omnium, Case No 92-15.137 (23 March 1994)).

The rationale behind this decision is that an arbitral award is not integrated into the legal system of the country where the seat of arbitration is located, and that its annulment at the seat therefore has no impact on its existence outside that particular legal system.

In PT Putrabali Adyamulia v Rena (Cour de cassation, first civil chamber, Case No 05-18.053 (29 June 2007)), the Cour de cassation confirmed this solution, further stating that an international award is not associated with any national legal order:

"[…] an international arbitral award, which is not anchored in any national legal order, is a decision of international justice, the validity of which must be ascertained with regard to the rules applicable in the country where its recognition and enforcement are sought […]."

Key institutions

ICC International Court of Arbitration

The ICC Court of Arbitration was established in Paris in 1923 as the ICC's arbitration body. It is the mostprominent arbitration centre used in the world, and it has administered more than 19,000 cases, involving parties and arbitrators from 180 countries.

France (Paris) is the most frequent seat for ICC arbitration.


One of the defining characteristics of ICC arbitration is that the ICC Court oversees the entire arbitral process and reviews all awards before they are issued, thereby ensuring a minimum standard of quality and facilitating their enforceability.

For detailed discussion about ICC arbitration, see Practice notes, ICC arbitration (1998 Rules): a step by step guide (www.practicallaw.com/6-382-2040) and ICC Arbitration (2012 Rules): a step by step guide (www.practicallaw.com/5-508-7496).

French Arbitration Association

The French Arbitration Association (Association Française de l'Arbitrage) (AFA) was created in 1975 to promote arbitration in France and abroad, and to administer arbitrations under its arbitration rules. The AFA's Arbitration Committee, which comprises arbitration practitioners from various countries, supervises the conduct of arbitrations administered by the AFA and reviews awards in draft form prior to their issuance to the parties.

French Commission on Arbitration

The French Commission on Arbitration (Comité Français de l'Arbitrage) (CFA) was created in 1953 to promote the study and development of arbitration in France. It is not an arbitral institution; it is an independent institution, bringing together a wide variety of arbitration practitioners and academics. Itpublishes the Revue de l'Arbitrage.

International Arbitration Chamber of Paris

The International Arbitration Chamber of Paris (Chambre arbitrale internationale de Paris) (CAIP) was originally established in 1926 to settle agricultural trade disputes. Since then, it has extended its activity to cover all sectors of the economy and is used to arbitrate and mediate disputes arising from all types of domestic and international business transactions. The CAIP has its own set of arbitral rules.

Paris Maritime Arbitration Chamber

The Paris Maritime Arbitration Chamber (Chambre arbitrale maritime de Paris) (CAMP) was created in 1966 to arbitrate disputes in maritime shipping. It has published a set of rules of arbitration and maintains a list of potential arbitrators.

Paris, the Home of International Arbitration

Paris, the Home of International Arbitration (Paris, Place d'Arbitrage), an association of arbitration practitioners and academics, recently drafted the Paris Arbitration Rules (Règlement de Paris), a set of ad hoc arbitral rules to be used as an alternative to UNCITRAL and institutional rules (see Legal update,Paris Arbitration Rules launched (www.practicallaw.com/4-525-8417)).

This note reflects the opinion of the authors and not that of White & Case LLP.

Documents

Arbitration in France