Source: https://iclg.com/practice-areas/international-arbitration-laws-and-regulations/france
Timestamp: 2019-04-26 12:24:10+00:00

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An arbitration agreement can be either (i) an arbitration clause inserted in a contract (clause compromissoire), or (ii) a separate agreement entered into once the dispute has arisen (compromis).
To be valid, a domestic arbitration agreement must be in writing. Pursuant to Article 1443 of the French Code of Civil Procedure (“CCP”), it canresult from“an exchange of written communications or be contained in a document to which reference is made in the main agreement”.
International arbitration agreements are not subject to any formal requirements and need not to be in writing (Article 1507 CCP). So long as the parties express their intention to arbitrate their disputes, the clause will be valid.
There is no other formal requirement as to the content of the arbitration clause. Nevertheless, in order to avoid uncertainty in the enforcement of the clause and the risk of delaying the proceedings, it is recommended to provide for the seat of arbitration, the language of the proceedings, the number and method of appointment of the arbitrators, and whether the arbitration is institutional (with the exact name of the institution) or ad hoc (in which case the clause should provide for all necessary procedural details or refer to a set of rules such as the UNCITRAL Rules).
Where a dispute arising under an arbitration agreement is brought before a state court and a party raises a jurisdictional challenge, the court declines jurisdiction unless both of the following conditions are fulfilled: (i) “an arbitral tribunal has not yet been seized”; and (ii) “the arbitration agreement is manifestly void or manifestly not applicable” (Article 1448 CCP).
France modernised its arbitration law with Decree No. 2011-48 of 13 January 2011, which forms part of the CCP.
Thus, most legislative provisions and legal principles governing arbitration are in the CCP. A number of provisions relating to arbitration can also be found in other statutes. For example, principles relating to arbitrability can be found in the French Civil Code (“CC”) (see question 3.1 below).
The CCP draws a distinction between domestic (Articles 1442 et seq.) and international arbitration (Articles 1504 et seq.). Some of the provisions applicable to domestic arbitration also apply to international arbitration (Article 1506 CCP). International arbitration benefits from the application of more liberal principles (for example, see question 1.1 above on the requirements of arbitration agreements).
The definition of international arbitration is extremely broad and inclusive – pursuant to Article 1504 of the CCP, “an arbitration is international when international commercial interests are at stake”. The French Cour de cassation held that an arbitration is international if it deals with “a transaction that does not economically occur in only one country, regardless of the nationality of the parties, the law applicable to the merits of the dispute, or the seat of the arbitral tribunal” (see, for example, Cass. Civ. 1, 26 January 2011, No. 09-10198 or, more recently, Cass. Civ. 1, 30 June 2016, No. 15-13904).
France’s arbitration law is not based on the UNCITRAL Model Law. One significant difference between French law and the UNCITRAL Model Law concerns the enforcement of interim measures issued by an arbitral tribunal. Under French law, such measures are generally not enforceable (see question 7.6 below). The latest version of the UNCITRAL Model Law, on the other hand, provides that such measures “shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued” (Article 17H of the UNCITRAL Model Law on International Commercial Arbitration). Other differences include the fact that France uses a much broader definition of “international arbitration” (see question 2.2 above).
Only a few French mandatory legislative provisions are applicable to international arbitration, which is very favourable to party autonomy.
These rules include the separability of the arbitration agreement from the main contract (Articles 1447 and 1506 CCP) and the equal treatment of the parties in international arbitration (Article 1510 CCP provides that “irrespective of the procedure adopted, the arbitral tribunal shall ensure that the parties are treated equally and shall uphold the principle of due process”). The tribunal has jurisdiction to decide on its own competence (Articles 1448, 1465 and 1506 CCP). Both the parties and arbitrators must act diligently and in good faith in the conduct of the proceedings (Articles 1464 and 1506 CCP). The parties may not appeal international awards or waive their right to appeal the decision granting exequatur thereof (Article 1522 CCP). More generally, an arbitral award must not violate French international public policy (Article 1514 CCP) (see section 10 below).
Under Article 2059 of the CC, certain rights cannot be referred to arbitration. The classic example is a dispute in relation to a divorce which cannot be submitted to arbitration. This applies both to domestic and international arbitration.
In addition to divorce and judicial separation of spouses, Article 2060 CC further provides that disputes related to the following subject matters cannot be settled through arbitration: status and capacity of individuals; disputes concerning certain public entities and authorities; and public policy related matters. French courts have, however, progressively reduced the scope of these prohibitions in domestic arbitration. French courts held that the fact that the subject matter of a dispute is subject to public policy rules no longer prevents the dispute from being referred to arbitration, thereby depriving part of Article 2060 of the CC of any effect (Cass. Com, 9 April 2002, No. 98-16829).
Regarding international arbitration, the French Cour de cassation has held the prohibitions under Article 2060 to be inapplicable (Cass. Civ. 1, Trésor Public v. Galakis,2 May 1966).
Further, Article 2061 of the CC, as recently amended in November 2016, provides that “where one of the parties has not contracted in the course of its professional activity, the arbitration clause may not be invoked against it”. It is yet to be seen whether French courts will hold that the new version of this article, which would, for example, prevent arbitration of consumer disputes, does not apply to international arbitration.
In France, the principle of competence-competence is widely recognised and applied. This means that the arbitral tribunal has exclusive jurisdiction to rule on its own jurisdiction in the first instance (Article 1465 CCP).
If court proceedings are initiated despite the existence of an arbitration agreement and the respondent raises a jurisdictional challenge, courts will routinely decline jurisdiction unless (i) arbitration proceedings have not commenced, and (ii) the arbitration agreement is manifestly null and void or manifestly inapplicable (Article 1448 CCP).
When a dispute subject to an arbitration clause is submitted to a state court, that court must generally decline jurisdiction (see question 3.3 above).
French courts can review the issue of the tribunal’s jurisdiction at the setting-aside stage or at the recognition/enforcement stage. In such a case, the court will review this specific issue de novo and its review will not be bound by the factual and legal findings of the tribunal (Cass. Civ. 1, 6 October 2010, No. 08-20563).
Arbitration agreements are binding only upon the parties to the arbitration agreement. There are, however, exceptions to this principle.
First, an arbitral tribunal has jurisdiction over a non-party to an arbitration agreement, in the case of transmission of an arbitration clause. Transmission involves third parties taking over the rights and obligations of the signatory (Cass. Civ. 1, 8 February 2000, No. 95-14330) or third-party assignees benefiting from the arbitration agreement (Cass. Civ. 1, 5 January 1999, No. 96-20202).
Second, in instances in which third parties participate in the negotiation, performance or termination of an agreement containing an arbitration clause, French courts can interpret their behaviour as implicit consent to be bound by the arbitration agreement (Cass. Civ. 1, 7 November 2012, No. 11-25891).
French law provides for limitation periods for the commencement of civil actions. The general limitation period for personal actions is five years after circumstances giving rise to the dispute were or should have been known to the party initiating the dispute (Article 2224 CC). There are, however, some specific durations and starting points of limitation periods, depending on the circumstances of the case.
Under French law, limitations are a matter of substantive law (Article 2221 CC).
As a result, these limitations periods will generally apply to arbitrations in France only if French law is the substantive law governing the parties’ contract.
In domestic arbitrations, proceedings must be stayed pending the insolvency of a party to the arbitration (Article 369 CCP, applicable by reference to Article 1471 CCP).
No such provision exists in the CCP for international arbitration. However, the Cour de cassation has held that the suspension of arbitral proceedings, once insolvency proceedings have been initiated, is “both a matter of domestic and international public policy” (Cass. Civ. 1, 5 February 1991, No. 89-14382).
In cases where the respondent is the insolvent party, the proceedings will be stayed until such time that the claimant has filed a declaration of its claim as part of the insolvency proceedings. Once proceedings have resumed, arbitrators can assess the amount of the debt but cannot order the insolvent party to pay it (Cass. Civ. 1, 6 May 2009, No. 08-10281).
If the claimant is the insolvent party, the principle of divestment of the debtor requires the appointment of a liquidator or a creditor’s representative, as the case may be, and the proceedings to be resumed upon the latter’s request.
In both domestic and international arbitration, parties may freely choose the substantive law and may also invite arbitrators to act as amiables compositeurs (Articles 1478 and 1512 CCP). Absent such choice, arbitrators in international cases need not use any conflict of law rules. They may choose any “appropriate” law, taking into account trade usages (Article 1511 CCP).
The principle of party autonomy is recognised under French law, and arbitral tribunals should abide by the provisions agreed upon by the parties. In international arbitrations, the parties may (subject to certain limitations when they have selected French substantive law) contract around all mandatory French laws other than those that arise due to French international public policy.
When French judges assess the formation, validity and legality of arbitration agreements, they apply a specific standard developed in French arbitration law. Pursuant to an established case law, “by virtue of a material rule of international arbitration law, [the] existence and effectiveness [of an arbitration clause] are determined (…) according to the common intention of the parties without reference to a national law” (Cass. Civ. 1, 30 March 2004, No. 01-11951).
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 cannot be an even number (Article 1451 CCP). In addition, the CCP provides that only natural persons having full capacity can act as arbitrators in domestic arbitration proceedings. Legal persons, if designated in the arbitration agreement, can only administer the arbitration (Article 1450 CCP). There are no corresponding rules for international arbitration. As a result, it is possible that parties could submit their disputes to an even number of arbitrators, and that legal persons could sit as an arbitrator.
The CCP does not provide for a default number of arbitrators in the absence of an agreement. French law does not impose requirements as to the arbitrators’ nationality, professional qualifications or their need for a licence to practise in France as an arbitrator.
The CCP lays down a requirement of independence and impartiality, applicable in both domestic and international arbitration (Articles 1456 and 1506 CCP).
French law does contain default provisions relating to the appointment of arbitrators (Article 1452 et seq. CCP).
Where there is a sole arbitrator and the parties do not agree on that sole arbitrator, the latter is designated by the person in charge of administrating the arbitration or, failing that, the judge acting in support (juge d’appui) (Article 1452 CCP).
Where there are three arbitrators, each party nominates an arbitrator (Article 1452 CCP). Both arbitrators nominated by the parties designate the third arbitrator. The person in charge of administrating the arbitration or, failing that, the juge d’appui must designate the missing arbitrator when a party does not designate an arbitrator within the required one-month period, and, also, when the two arbitrators designated by the parties cannot agree on the third arbitrator.
Parties can request the French juge d’appui to appoint one or several arbitrators where the mechanism set by the parties to appoint arbitrators is not functioning.
In domestic arbitration, the juge d’appui is the President of the Tribunal de Grande Instance (“TGI”) (or of the Commercial Court, if the arbitration agreement so provides) of the seat of arbitration (Article 1459 CCP).
if one of the parties is at risk of a denial of justice (Article 1505 CCP).
An arbitrator must disclose any circumstance likely to affect his or her independence or impartiality (Articles 1456 and 1506 CCP).
When an arbitrator fails to disclose any circumstances likely to affect his or her independence or impartiality, the arbitral award can be set aside and/or enforcement in France can be denied. If a party’s reasonable doubt regarding the independence and impartiality of an arbitrator arises during the arbitration proceedings, that party can challenge the arbitrator in compliance with the procedure and time limits set out in the applicable arbitration or procedural rules.
A party must challenge the arbitral tribunal’s independence and/or impartiality in the required time period. Failing this, a party is considered to have waived its right to challenge (Articles 1466 and 1506 CCP) (see question 10.1 below).
Parties to arbitration proceedings are free to determine the procedural rules applicable to the arbitral tribunal. The determination of the procedural rules can be direct or indirect (that is, by referring to sets of arbitration rules or national rules of civil procedure) (Articles 1464 and 1509 CCP).
There are no specific procedural steps required by law.
French arbitration law does not impose any ethical rules specifically applicable to counsel in international arbitration. However, lawyers admitted to a French Bar are bound by the Bar’s Code of Ethics, even if they intervene as counsel in arbitrations seated outside France. French lawyers must also comply with the Règlement Intérieur National de la profession d’avocat of the National Bar Council and the Code of Conduct for European lawyers.
French law provides for arbitrator’s evidentiary and disclosure powers (see question 8.2 below), and for the arbitral tribunal to decide on its own jurisdiction (see question 3.2 above).
Regarding their duties, arbitrators are under the obligation to promptly disclose to the parties any circumstances that may affect their independence or impartiality (Articles 1456 and 1506 CCP).
French law also imposes on them a duty to act diligently, promptly and fairly in the conduct of the proceedings (Articles 1464 and 1506 CCP). Arbitrators are under the obligation to respect the scope of their mandate and to carry out the latter until it is completed (Articles 1457 and 1506 CCP). They also have to ensure that the parties are treated equally, and to uphold the principles of due process (Article 1510 CCP).
There are no rules restricting the appearance of lawyers from other jurisdictions in arbitral proceedings. There is indeed no obligation to be admitted to any Bar to act as counsel in such proceedings. Such restrictions apply only to national court proceedings.
Nothing under French law provides that arbitrators are immune from liability. Nonetheless, they are not liable for objective legal or factual errors (Paris Court of Appeal, Bompard v. Consorts C. et autres, 22 May 1991). Exceptions to this rule relate to denial of justice, gross negligence and fraud (Cass. Civ. 1, 15 January 2014, No. 11-17196). Arbitrators are also liable for breaches of their obligations arising out of the arbitrator appointment contract (e.g., breach of confidentiality…) or involvement in criminal matters such as corruption of persons exercising judicial functions (Articles 434-9 and 435-7 of the Penal Code).
French courts may intervene to assist arbitration proceedings seated in France. When necessary, the juge d’appui will assist parties in the constitution of the arbitral tribunal (Articles 1451 to 1453 CCP). National courts might also summon a third party to obtain written evidence it holds, with the leave of the arbitral tribunal (Articles 1469 and 1506 CCP).
The arbitral tribunal may, on the conditions it determines and, if necessary, under financial compulsion (astreinte), “order upon the parties any conservatory or provisional measures that it deems appropriate”. However, only national courts can order conservatory seizures and judicial securities (Articles 1468 and 1506 CCP).
Under certain circumstances (see question 7.3 below), French courts have the power to order any measures relating to the taking of evidence as well as other provisional or conservatory measures (Articles 1449 and 1506 CCP). These orders do not affect the jurisdiction of the arbitral tribunal.
Prior to the initiation of arbitration proceedings, French courts are entitled to order measures relating to taking evidence, i.e. before the filing of a request for arbitration, so long as “there is a legitimate reason to preserve or establish evidence upon which the resolution of a dispute may depend” (Article 145 CCP). Under certain circumstances, ex parte applications are possible.
With respect to other provisional and conservatory measures, French courts will rule on the requested relief if the tribunal is not yet constituted and the matter is urgent.
Under French law, there is no prohibition against anti-suit injunctions. The French Cour de cassation held that anti-suit injunctions “are not contrary to international public policy” (Cass. Civ. 1, 14 October 2009, No. 08-16.369, 08-16.549). However, no available decisions demonstrate that French courts have been willing to order anti-suit injunctions. In any event, French courts do not recognise the validity of an anti-suit injunction that would restrain an individual from commencing proceedings before the courts of another European Union Member State – as this would be contrary to European Law (European Court of Justice, Allianz SpA v. West Tankers, 19 February 2009).
No French law provision addresses security for costs. However, an arbitral tribunal is entitled to order any measures it deems appropriate pursuant to Article 1468 of the CCP.
All decisions from arbitral tribunals that qualify as “awards” under French law may be recognised and enforced by French courts (M. Ostrove, C. Emery, L’exécution des mesures conservatoires prononcées par les tribunaux arbitraux, R.G.D.I.P. 2017-3, p. 817 et seq.); “awards” are those decisions that “resolve in a definitive manner all or part of the dispute that is submitted to them on the merits, jurisdiction or a procedural matter which leads them to put an end to the proceedings”, irrespective of their formal qualification as an award or a procedural order by the arbitral award (Paris Court of Appeal, Sardisud v. Technip, 25 March 1994; Cass. Civ. 1, 12 October 2011, No. 09-72.439). Whether interim decisions rendered by arbitral tribunals can be enforced is more controversial. French courts have held that if the arbitral tribunal’s decision finally resolved the parties’ dispute regarding the issuance of provisional measures, the decision is properly an award, which may be immediately set aside (Paris Court of Appeal, S.A. Otor Participations v. S.A.R.L. Carlyle (Luxembourg) Holdings, 7 October 2004) and/or enforced.
No default rules of evidence apply to arbitrations in France. Parties can agree on the procedural rules applicable to the arbitration proceedings and the powers conferred on the arbitrators. These rules can also be determined by the applicable institutional rules or decided by the arbitrators, who have very broad powers (see question 8.2 below).
Under Article 1467 of the CCP, arbitrators can order necessary inquiry measures, compel any person to appear for questioning, whether he/she is a party to the arbitration agreement. They can also compel a party to disclose any document and any piece of evidence.
The arbitral tribunal may subject compliance with its orders to fines for failure to comply.
When a third party to the arbitration holds written evidence, and with the arbitral tribunal’s permission, national courts can issue orders to obtain that evidence (Articles 1469 and 1506 CCP).
Prior to the initiation of arbitral proceedings, parties may apply to courts for measures relating to the taking of evidence that may later be used in the arbitration. In particular, an application may be made to the President of the TGI or of the Commercial Court to obtain measures preserving or establishing evidence upon which the resolution of the dispute may depend (Articles 1449, 1506 and 145 CCP).
Once the arbitral tribunal is constituted, a party to the arbitration may apply to the President of the TGI to obtain the production of evidence held by a third party or the copy of an official (acte authentique) or private deed (acte sous seing privé) to which it was not a party (Articles 1469 and 1506 CCP).
Articles 1467 and 1506 of the CCP provide that the arbitral tribunal may call upon any person to provide testimony and that witnesses shall not be sworn in.
Cross-examination is allowed. A resolution of 26 February 2008 of the Paris Bar Council confirmed that, in the context of international arbitration, “preparation of witnesses by lawyers before their examination does not breach the core principles of the profession of lawyer”.
As there is no “document discovery” in French courts, no rules of “privilege” have developed as exists in the Anglo-American systems. On the other hand, rules of confidentiality and professional secrecy do exist.
All correspondence exchanged between members of a French Bar is confidential, unless it is clear that such a communication is “official” and can be shared with others. In-house counsel, however, do not benefit from this rule.
Any communication between a member of a French Bar and his or her client is protected by professional secrecy, and third parties cannot have access to such communications. Save under very specific circumstances, a lawyer cannot waive the application of professional secrecy. A client cannot authorise a lawyer to divulge material covered by professional secrecy to a third party. On the other hand, once a lawyer provides advice or any work product to a client, the latter is free to share that information with third parties without the lawyer’s consent.
Articles 1481 and 1506 of the CCP specify that domestic and international awards must be in writing because they must be produced for the purposes of their enforcement (Articles 1487 and 1515 CCP). An award must state: (i) the full names of the parties as well as their domicile or corporate headquarters; (ii) the names of the parties’ counsel, if applicable; (iii) the names of the arbitrator(s) who made the award; (iv) the date on which the award was made; and (v) the place where the award was made. The award shall also “succinctly set forth the respective claims and arguments of the parties” and state the reasons upon which it is based (Articles 1481, 1482 and 1506 CCP).
A domestic award that fails to comply with these requirements will be void (Article 1483 CCP). Further, under Article 1492 of the CCP, a domestic award will be subject to annulment if it “does not state the reasons upon which it is based, or its date or the identity of the arbitrators”. International awards that do not meet these requirements will not be subject to annulment (Article 1520 CCP).
International awards must be signed by all arbitrators. However, (i) if a minority of arbitrators refuse to sign, the other arbitrators shall state this in the award, and (ii) if the president rules alone and if the other arbitrators refuse to sign, the president alone shall sign (Article 1513 CCP).
Parties may request arbitral tribunals to interpret an award, correct clerical errors or make an additional award where the tribunal failed to decide on a claim. The request shall be presented within three months of the award’s service (Articles 1485, 1486 and 1506 CCP).
In domestic arbitration, the award cannot be appealed unless the parties have agreed otherwise. However, an arbitral award not subject to an appeal can always be set aside (Articles 1489 and 1491 CCP).
In international arbitration, when an arbitral award has been rendered in France, it can be set aside but not appealed (Article 1518 CCP).
An arbitral award can be set aside on strictly limited grounds (Article 1492 CCP for domestic arbitration and Article 1520 CCP for international arbitration): (i) the arbitral tribunal wrongly declared itself competent or incompetent; (ii) the arbitral tribunal was irregularly constituted; (iii) the arbitral tribunal ruled on the matter contrary to its mandate; (iv) the adversarial principle was not respected; (v) the arbitral award is contrary to public policy; or (vi) the arbitral award is not grounded or does not state the date on which it was rendered or the name of the arbitrator(s), does not include the required signature(s) or was not rendered by a majority vote (the latter ground applies to domestic awards only).
French courts also ensure that the principle of procedural estoppel is complied with. Article 1466 of the CCP states that “a party that 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 such irregularity”. It follows that an action based on any of the grounds set forth in Article 1520 of the CCP will be admissible only if the applicant raised the relevant objections on a timely basis during the arbitration proceedings. With respect to the alleged violation of rules of public policy concerned with the regulation of the economic and social affairs of society (“ordre public de direction”), some legal scholars consider that French courts should declare that challenges are admissible on this ground, even if this objection was not raised during the arbitral proceedings (C. Seraglini & J. Ortscheidt, Droit de l’arbitrage interne et international (2013), § 979). In contrast, a party is precluded from invoking a violation of public policy intended to protect certain parties to contracts (“ordre public de protection”) at the annulment stage if it had not raised the issue before the arbitral tribunal (Paris Court of Appeal, Janville Distribution, 25 February 2014).
Parties may, at any time, waive their right to challenge international awards issued in France by means of a petition to set aside (Article 1522 CCP). In this case, parties may still appeal an order declaring the award enforceable in France. Such an appeal would be limited to the same, narrow grounds as those governing a petition to set aside an award (Articles 1520 and 1522 CCP).
Parties may not exclude one of the five existing grounds to challenge an award (or, in case they waived their right to challenge the award, they cannot exclude one of these grounds to challenge the order declaring the award enforceable in France).
Absent any specific agreement regarding the scope of appeal of an arbitral award, a challenge can be raised only on the basis of the strictly limited grounds specified under Articles 1492 and 1520 CCP. Absent available decisions on this issue, it is debatable whether parties can expand the scope pursuant to which an arbitral award can be set aside.
In international arbitration, setting-aside proceedings must be initiated before the relevant court within one month of the award’s service (Article 1519 CCP) (extended by two months when the challenging party is located outside of France). Contrary to domestic arbitration, an application to set aside or an appeal of an enforcement order has no suspensive effect (Article 1526 CCP).
France has signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “NY Convention”) on 25 November 1958. It ratified the NY Convention on 26 June 1959, and the convention entered into force in France on 24 September 1959. France has not made any reservations, other than reciprocity.
Articles 1487 et seq. of the CCP apply to the enforcement of domestic arbitral awards, whereas Articles 1514 et seq. apply to the enforcement of international arbitral awards, comprising awards rendered in France in international matters and awards rendered abroad. The provisions of the CCP that are more favourable than those of the NY Convention prevail over the latter, by virtue of Article VII of the NY Convention.
France ratified the Geneva (European) Convention on International Arbitration on 24 April 1961.
French courts are generally considered as pro-arbitration, and decisions denying enforcement of awards are rare.
The French courts’ review of international awards is strictly limited to the five grounds set out in Article 1520 of the CCP. French courts cannot review the merits of the case, and enforcement cannot be denied because of errors of fact or law.
The setting aside of an award made outside of France is not a ground for denying enforcement of that award in France (Cass, Civ. 1, 29 June 2007, No. 05-18053).
The party seeking recognition and enforcement of an award in France must establish the existence of the arbitral award, provide the courts with the originals or copies of the arbitral award and arbitration agreement, and translate them when necessary (Articles 1487 and 1515 CCP).
The TGI has jurisdiction to order the enforcement of an award (Article 1516 CCP). When the arbitral award has been rendered outside France, the competent TGI is that of Paris. Otherwise, the competent TGI is that of the seat of the arbitration.
Arbitral awards have res judicata effect upon issuance, with respect to the matters decided in the award (Article 1484 CCP). This means that a court or another arbitral tribunal cannot revisit the same issues between the same parties.
Until 2014, only “flagrant, effective and concrete” violations of international public policy could result in awards being set aside. In 2014, the Paris Court of Appeal initiated a new trend and held that judges should consider all the facts of a case when determining whether an award violated international public policy in an “effective and concrete” manner – disregarding the prior “flagrancy” requirement (Paris Court Appeal, Gulf Leaders v. Crédit Foncier de France, 4 March 2014).
More recently, this Court of Appeal set out the requirement of a “manifest, effective and concrete” violation of international public policy and it conducted a broader examination of the facts of the case, in order to determine whether a violation had taken place. This amounted to a stricter control over international awards (Paris Court of Appeal, Kirghizstan v. Belokon, 21 February 2017; see also MK Group v. Onix, 16 January 2018).
There is currently some debate as to the exact approach that the Cour de Cassation will take. In any case, however, French courts remain very pro-arbitration and restrictive in their review of arbitral awards.
In domestic arbitration, unless the parties agree otherwise, the arbitral proceedings are subject to confidentiality (Article 1464 CCP).
In contrast, there is no confidentiality provision in international arbitration under French law. When parties agree to a French seat for their arbitral proceedings and want to ensure confidentiality, they can enter into a confidentiality agreement. Parties can also submit the arbitration proceedings to institutional rules providing for an express confidentiality obligation.
In any case, the arbitral tribunal’s deliberations must remain confidential (Articles 1479 and 1506 CCP).
Information disclosed in arbitral proceedings can be used in subsequent proceedings. However, some rules may apply to safeguard the confidentiality of the proceedings, should it apply. For instance, under Article 435 of the CCP, the judge may decide that the hearings will not be public.
The CCP does not contain any statutory provision regarding the remedies that an arbitral tribunal can award. The arbitrators benefit from a wide discretion as to the content of the award they render and the remedies they grant.
Generally, French courts do not award punitive damages. However, such damages are not contrary to French international public policy and, accordingly, can be awarded and enforced in France as long as they are not “disproportionate in light of the loss sustained and the contractual breach” (Cass. Civ. 1, 1 December 2010, No. 09-13303).
Nothing prevents the arbitral tribunal from ordering interest. The applicable law to determine the rate is decided by the arbitral tribunal. Should French law be applicable, the interest rate is fixed by statute.
French law does not contain any provision regulating cost allocation between parties to an arbitration. Absent an agreement between the parties, the arbitral tribunal is often granted discretion to decide on this issue, and the applicable institutional rules may also provide guidance on the subject.
The arbitration award itself is not subject to tax. The awarded amount may, however, be regarded as taxable income if the winning party is subject to French tax, in accordance with general French tax laws.
There are no provisions specifically restricting or regulating third-party funding. Hence, it is allowed. This was confirmed by the Paris Bar on 21 February 2017. The Paris Bar adopted rules to ensure that lawyers comply with French ethics when using third-party funders. The parties’ lawyers cannot enter into contact directly with third-party funders and must not disclose information about the case. Also, parties are encouraged to disclose to arbitrators the existence of third-party funding to avoid conflicts of interest.
Success fees can be agreed only if they are paid in addition to an hourly or fixed fee, and if they are not manifestly excessive. Fee arrangements that are wholly contingent on a case’s outcome are illegal.
There are a number of professional funders active on the French market, e.g. La Française, AM International Claims Collection and Vannin Capital.
France signed the ICSID Convention on 22 December 1965 and ratified it on 21 August 1967. The Convention entered into force on 20 September 1967.
France has signed 115 bilateral investment treaties (“BITs”), with 96 in force. France is also a party to the Energy Charter Treaty and several other multilateral treaties relating to investments.
BITs are one of the cornerstones of French efforts to promote international investments.
This stance is notably reflected in the definition of investment contained in all French investment treaties, which is very broad, generally referring to “assets” or “all assets”, and providing a non-exclusive list of examples.
The French 2006 Model BIT contains a “Fair and equitable treatment” clause (Article 3) and a “Most favoured nation treatment” clause (Article 4). Five French investment treaties (Egypt, Guatemala, Morocco, Mauritius and Turkey) specify that fair and equitable treatment granted to foreign investors must be at least the same as the treatment granted by the host-state to its national investors. In some BITs (e.g. Paraguay, Sudan, Syria, Turkey), the fair and equitable treatment afforded to investors must be at least as favourable as that granted by the host-state to investors from the most favoured nation.
Further, most French investment treaties explicitly protect investments against both direct and indirect expropriation.
French courts consider that a state’s consent to arbitration is a waiver of its jurisdictional immunity (Paris Court of Appeal, UNESCO v. Boulois, 19 June 1998).
With respect to the immunity from execution, France adopted a new law on transparency, anti-corruption and modernisation (the “Sapin II Law”) on 9 December 2016 and introduced new provisions governing measures of execution against other states’ assets in France. In particular, the Sapin II Law provides that execution measures cannot be taken against property or assets used or intended to be used in the exercise of diplomatic missions, “unless there is an express and specific waiver of immunity by the states concerned”.
France is one of the most arbitration-friendly jurisdictions. France has developed a legal system that supports arbitration, particularly international arbitration. Over the years, and through successive reforms and developing case law, France has created a solid tradition of judicial non-interference of French courts in the arbitral process. An award can be set aside in France on limited grounds, construed narrowly. By way of example, foreign awards may be enforced in France even if they are annulled in the jurisdiction of the seat (see question 11.3 above).
The last major reform was implemented through Decree No. 2011-48 which came into force on 1 May 2011. More recently, Law No. 2016-1547 (18 November 2016) modified Article 2061 of the CC to allow non-professionals to refer domestic disputes to arbitration.
All types of commercial disputes are commonly referred to arbitration.
The most prominent arbitral institution based in France is the International Chamber of Commerce (“ICC”). According to the results of the 2018 Queen Mary University of London survey, the “ICC stands out as the most preferred institution”. The ICC Arbitration Rules were last amended in 2017. This version incorporates new features, including an expedited procedure that applies automatically to smaller claims, i.e. where the amount in dispute does not exceed US$ 2 million, unless the parties decide to opt out. The ICC has also issued a guide on techniques for controlling time and costs in arbitration and has taken steps to sanction arbitrators financially if they issue awards too slowly.
The authors would like to acknowledge the contribution of Michael Ostrove, Partner and Global Head of International Arbitration (michael.ostrove@dlapiper.com).

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