Introduction to the “New” French Arbitration Law
The Decree no. 2011-48 issued by the French Ministry of Justice on 13 January 2011 provides the framework for the new French Arbitration Law (the “2011 Reform”). It is found in Articles 1442-1527 of the Code of Civil Procedure and contains provisions specific to domestic arbitration, international arbitrations, and common to both domestic and international arbitrations. French Arbitration Law thus maintains its dualist approach and continues to allow a more flexible regime for international arbitrations than in most countries.[1]
The new French Arbitration Law replaced the prior provisions of the 1980s decrees which predated the 1985 Model Law and established the French law as one of the most modern arbitration regimes. It did so by introducing, inter alia the autonomy of the parties (i.e. the separability doctrine),[2] limits to judicial interference and the arbitrators’ power to rule on the validity of the arbitration agreement and on their jurisdiction.
The 2011 French Arbitration Law codified many arbitration-friendly principles and the French courts’ interpretation of the Code of Civil Procedure since the 1980s provisions. The new Law goes further in reinforcing the French pro-arbitration philosophy in an attempt to remain a leading international arbitration forum.
The codification of French Arbitration Law sought to facilitate access to the relevant legislation, clarify principles which could only be found in case law and introduce innovations from other jurisdictions. Case law is expected to remain of paramount importance in the future and all principles have not been codified and left to the interpretation of the courts of justice.
Codified Principles of the 2011 French Arbitration Law
Some jurisprudential developments of the past three decades have led to the codification of the following principles in the French Arbitration Law.
The very broad interpretation of an arbitration agreement
First, a principle newly codified in French Arbitration Law is the very broad interpretation of an arbitration agreement. In accordance with Article 1507 of the Code of Civil Procedure, an arbitration agreement is not the subject to any requirements as to its form,[3] unlike its domestic counterpart which provides that an arbitration agreement shall be in writing.[4] It has long been recognized by the French courts that an arbitration agreement could be incorporated by reference to a main contract[5] and it may also result from the conduct of the parties when negotiating or performing a contract.[6]
Since an arbitration agreement does not have to be in writing (although this is most useful for the purpose of evidencing the consent to arbitration) one would expect the French Arbitration Law to take account of this principle at the enforcement stage. It does not however seem to be the case as Article 1515 of the Code of Civil Procedure requires that the existence of both the award and the arbitration agreement be proven by producing authenticated copies. There is no reason to believe that the absence of an arbitration agreement in writing will prevent the recognition or enforcement of the award as the jurisprudence made it clear that it was not a requirement of the French Arbitration Law.[7]
The “juge d’appui”
Second, the new French Arbitration Law redefines the role of the French Courts in arbitration in particular by granting a “juge d’appui” the power to issue orders, on behalf of the state, to support a particular arbitration and ensure that it occurs in accordance with the law to avoid a denial of justice. Article 1505 of the Code of Civil Procedure further provides that, in international arbitrations, the “juge d’appui” shall be President of the Tribunal de grande instance of Paris.[8] Undoubtedly, a “juge d’appui” is most useful when the parties to the arbitration have agreed to an ad hoc arbitration and he will then deal with arbitrator challenges or procedural issues which may arise throughout the arbitration proceedings by way of summary judgments (référé) for which no appeal is available.
The constitution of the arbitral tribunal
Third, the provisions of the French Arbitration Law applicable to the constitution of the arbitral tribunal in international arbitrations allow the parties to appoint individuals or legal entities to act as arbitrators and agree on any number of arbitrators.[9] Their counterpart in domestic arbitrations require an arbitrator to be a natural person.[10] A development worth noting in relation to the constitution of the arbitral tribunal is provided for at Article 1453, applicable to international arbitrations pursuant to 1506[11] (unless the parties have provided otherwise). There is a public policy principle of equal participation of the parties in the constitution of the tribunal, inspired by the Dutco case where two defendants in a multiparty proceedings contended for the right to nominate an arbitrator and the ICC Court warned them that, failing an agreement, the Court would proceed with the appointment. Further to the Dutco case, the French Arbitration Law now provides, at Article 1453, that in the case of multi-party proceedings, where the parties fail to agree on the procedure to constitute the tribunal, the entity responsible for the administration of the arbitration will proceed with the appointment. In case of ad hoc arbitrations (or where the rules of the arbitral institution are silent on this point), the “juge d’appui” will proceed with the appointment by way of a non-appealable summary judgment (référé).
An “international” arbitration
Fourth, in accordance with the new French Arbitration Law, an arbitration is international when “international trade interests are at stake”, which is to say, any cross border economic transaction.[12] This very broad definition, which does not require either party to be French for the arbitration to be “international”, is another codification of French case law.[13]
Other particularities of the French Arbitration Law
Other particularities of the French Arbitration Law based on case law or inspired from other jurisdictions include the following examples.
The waiver of right (“estoppel”)
Interestingly, the French Arbitration Law seems to bridge the gap with the common law principle of loss of a right to object (“estoppel”) at Article 1466 of the Code of Civil Procedure, applicable to international arbitrations pursuant to Article 1506.[14] In accordance with Article 1466, when an arbitral award has already been issued and that a party has not raised a procedural irregularity during the arbitration proceedings, this party is procedurally estopped from alleging that the award is defective before a court.[15] This principle in fact seems more like a waiver of right.
Confidentiality of arbitration proceedings
While domestic arbitral proceedings are confidential,[16] the French Arbitration Law does not provide for the confidentiality of international arbitrations and French case law has not always been consistent in this regard. For example, in Aïta v. Ojjeh, the Court of Appeal ruled in favour of a general principle of confidentiality in 1986 as it held that the highest degree of discretion was an inherent characteristic of the arbitration process in the resolution of disputes of private character,[17] while requesting the plaintiff to prove the existence of this principle in Nafimco v. Forster Wheeler Trading Company in 2004.[18]
The absence of provisions relating to confidentiality in the international arbitration provisions of the French Arbitration Law can be explained by the need to allow certain type of investment arbitrations, or arbitrations where public interests are at stake, to be seated in France. While the regime introduced by the French Arbitration Law fails to create a general rule in respect of confidentiality, it allows for a more flexible approach where the parties are encouraged to contractually agree to keep arbitration proceedings confidential or, where they have elected to conduct the arbitration under the aegis of the International Chamber of Commerce, request the arbitral tribunal to issue a procedural order relating to confidentiality generally or the confidentiality of certain aspects of the case.[19] The law of the seat of arbitration must therefore be read in conjunction with the applicable rules chosen by the parties.
Enforcement of arbitration awards
A significant procedural innovation of the French Arbitration Law is provided for at Article 1526 of the Code of Civil Procedure. According to these provisions, neither a party’s attempt to annul an award nor its appeal of an exequatur order will suspend the enforcement of the award.[20] The French Arbitration Law thereby makes a clear note of the rare success of annulment proceedings and logically seeks to diminish the duration of setting aside proceedings, a procedure which usually takes slightly over a year. It is however possible to obtain a stay, in accordance with Article 1526, in the event that enforcement would prejudice the rights of one of the parties. Another related innovation contained at Article 1522, inspired by foreign statutes,[21] allows the parties to waive the right to set aside an award made in France by a specific agreement – a general waiver clause would therefore not sufficient in light of the 2011 law.
Other provisions of the French Arbitration Law which, just like the ones of Article 1526, are likely to lead to speedier enforcement of awards, are contained at Article 1527(2) of the Code of Civil Procedure and provide that a decision which denies an appeal or an application seeking the annulment of an award is deemed an enforcement order of the award.[22]
Further considerations
Although the French Arbitration Law does not contain provisions relating to employment law specifically, some interesting developments have taken place. For example, the Cour de cassation ruled, in a case where a Belgian individual (hired by a Swiss company to execute works in France) chose to bring a dispute before the employment court rather than pursuant to the arbitration agreement, that the employer’s claim that the arbitration agreement should be enforced failed.[23]
Conclusion on the French Arbitration Law
There is no doubt that the presence of the ICC International Court of Arbitration in Paris and its contribution to the development of the practice of international arbitration in France created the necessary impetus for a new codification of the French Arbitration Law to facilitate the practitioners and end users’ access to the pertinent procedural provisions.
Five years after the 2011 Law came into effect,[24] France has undoubtedly kept its place as one of the most utilized international forum for international arbitrations and parties to international contracts remain confident choosing Paris as the seat of the arbitration in their arbitration agreements. The new French Arbitration Law therefore achieved its main objective, partly thanks to the separation between domestic arbitration and international arbitration provisions, which allowed a much more liberal and progressive approach for the latter.
The new French arbitration law itself is found below.
[1] E. Gaillard, France Adopts New Law On Arbitration, New York Law Journal, Vol. 245 – No. 15, p. 1
[2] Cour de cassation, 7 May 1963, Gosset c/ Carapelli, Revue de l’Arbitrage, 1963, p 60.
[3] CPC, Article 1507, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[4] CPC, Article 1443, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[5] Cour de cassation (Civ. 1ere), 11 October 1989, Bomar Oil NV c/ Entreprise Tunisienne d’Activites Petrolieres (ETAP), 1989 Bull. Civ. I, No 314.
[6] The Paris Court of appeal found that the government of Pakistan was involved during the performance of the contract and behaved as if the contract was its own and was therefore a party to the arbitration agreement, although it was signed by another entity, see Cour d’appel de Paris, 17 February 2011, Gouvernement du Pakistan – Ministère des Affaires Religieuses v. Dallah Real Estate and Tourism Holding Company, 09/28533.
[7] Cour d’appel de Paris, 23 October 1997, Inter-Arab Investment Guarantee Corporation c/ Banque Arabe et Internationale d’Investissement SA, Revue de l’Arbitrage, 1998.
[8] CPC, Article 1505, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[9] CPC, Article 1508, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[10] CPC, Articles 1450 – 1451, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[11] CPC, Articles 1453, 1506, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[12] CPC, Article 1504, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[13] Cour d’appel de Paris, 13 June 1996, Société KFTCIC v. société Icori Estero et autre, Revue de l’Arbitrage, Volume 1997 Issue 2 pp. 251 – 57.
[14] CPC, Article 1506, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[15] CPC, Article 1466, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[16] CPC, Article 1464, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[17] Cour d’appel de Paris, 18 February 1986, Aïta v. Ojjeh, Revue de l’Arbitrage, Volume 1986 Issue 4, pp. 583 – 584.
[18] Cour d’appel de Paris, 22 January 2004, NAFIMCO v. Société Foster Wheeler Trading Company AG, Revue de l’Arbitrage, Volume 2004, Issue 3, pp. 647 – 657.
[19] ICC Rules, Article 22(3), see also J. Fry, S. Greenberg, F. Mazza, The Secretariat’s Guide to ICC Arbitration, 2012, ¶¶ 3-805 – 3-813.
[20] CPC, Article 1526, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[21] See in particular the provisions of Articles 1717(4) of the Judicial Code of Belgium and 192(1) of the Swiss Federal Statute on Private International Law.
[22] CPC, Article 1527, https://www.sccinstitute.com/media/37105/french_law_on_arbitration.pdf
[23] Cour de cassation (Soc.), 16 February 1999, Picquet v. société Sacinter, No 90-40.643, Revue de l’Arbitrage, 1999.
[24] The Decree entered into force on 1 May 2011.
