New Arbitration Law In France: The Decree Of January 13, 2011

Author:Mr Jean-Pierre Harb
Profession:Baker & McKenzie

Originally published in MEALEY'S" International Arbitration Report

[Editor's Note: Jean-Pierre Harb is a Partner in Baker & McKenzie. He is based in Paris and is specialized in international arbitration. Christophe Lobier is an associate in Baker & McKenzie's Paris office and also specializes in international arbitration. The authors would like to thank Ana Sylvia Prado for her assistance in preparing this article. Copyright # 2011 by Jean-Pierre Harb and Christophe Lobier. Responses are welcome.]

Thirty years have passed since the arbitration decrees of 1980 and 1981, which, at the time, were considered to provide a modern framework for arbitration.1 These decrees contributed to making Paris one of the world's most favored seats for international arbitration. Nevertheless, the time had come for French arbitration law to codify the significant volume of precedent of the past thirty years in order to make French arbitration law more accessible to both foreign and domestic users.

Hence, on January 13, 2011, France issued a new decree amending the provisions of the French Code of Civil Procedure pertaining to arbitration (the ''Decree''). However, the Decree is not limited to a mere codification of well-established French case-law. It also introduces very progressive provisions which aim at attracting arbitrations to French seats even if the case has no connection with France. The Decree increases the freedom given to parties to international arbitration to tailor the proceedings to their specific needs. The efficiency of arbitration proceedings in France is improved, and the parties are given the ability to isolate the arbitration from the intervention of state courts.

It is relevant first to note that the Decree maintains, for better or worse, the distinction between domestic and international arbitration.2 The draftsman has chosen to follow the approach adopted by the 1981 decree and simply make a reference, under the provisions pertaining to international arbitration, to the specific provisions of domestic arbitration that are applicable to international arbitration (new Article 1506).

This article will provide an overview of the main changes introduced by the new Decree and their practical consequences for international arbitral proceedings. The Decree introduces changes and improvements within all the steps of the arbitration process, be it the arbitration agreement (I), the constitution of the arbitral tribunal (II), the arbitration proceedings (III), the arbitral award (IV), the recognition and enforcement of arbitral awards (V), or recourse against awards (VI). Finally, this article will provide a brief summary of the transitional provisions (VII).

  1. The Arbitration Agreement

    The distinction between international and domestic arbitration is first illustrated by the rules applicable to the arbitration agreement. While arbitration agreements in domestic arbitration must take the form of an arbitration clause or of a submission to arbitration and be in writing (new Articles 1442 and 1443), arbitration agreements in international arbitration are not subject to any mandatory formal requirements (new Article 1507). The rationale for the lack of mandatory formal requirement is to accommodate investment arbitrations, for which the investor's consent to arbitrate is often not contained in a prior written instrument.

    It is worth mentioning that, for domestic arbitration, the Decree allows for the consent to arbitrate to take the form of mere written correspondence or for the arbitration agreement to be included by reference (new Article 1443).3 Furthermore, a significant improvement and novelty in domestic arbitration introduced by the Decree is the validity of ''blank clauses'', i.e. arbitration agreements that do not provide for the designation of the arbitrators or for the modalities of their appointment (new Article 1444).4 Such a clause would have been invalid for domestic arbitration though acceptable for international arbitration under the decree of 1981.

    The Decree codifies the now well-established principle of the autonomy5 (or severability) of the arbitration clause, according to which such a clause is not affected by the defects or termination of the underlying agreement (new Article 1447).

    The new Article 1448 confirms the now widely admitted concept of ''competence-competence'',6 under which the arbitral tribunal has priority to rule on its own jurisdiction.7 State courts will thus have no jurisdiction to hear claims subject to arbitration agreements unless the agreement is ''manifestly void or manifestly inapplicable'' (new Articles 1448 and 1465).

  2. Constitution of the arbitral tribunal

    The composition of the arbitral tribunal is yet another example of the freedom the draftsman intended to offer parties to international arbitration. The constitution of an arbitral tribunal in international arbitration is not subjected to the same requirements as in domestic arbitration.8 Indeed, in international arbitration, arbitrators need not be natural persons, and the arbitral tribunal may be composed of an even number of arbitrators.

    Parties to an international arbitration may request assistance from state courts in numerous cases. For instance, if difficulties arise before or at the time of the constitution of the arbitral tribunal, the parties may request the assistance of the President of the Paris Tribunal de grande instance (Paris First Instance Tribunal) (new Article 1506(2)).9 In this respect, the new text consolidates the practice of assigning a specialized judge, the juge d'appui (supporting judge), to assist the parties throughout the arbitration process (within precisely defined limits).10

    In particular, the juge d'appui may assist the parties in the event they encounter difficulties with the constitution of the arbitral tribunal. Of course, in the case of institutional arbitration, this assistance role belongs first to the institution chosen by the parties to administer the arbitration proceedings.

    The Decree further increases the efficiency of the arbitration process by introducing a time limit for a party to appoint its arbitrator. Under the new Article 1452, a party may request the assistance of the juge d'appui if the other party has not appointed an arbitrator within one month of receiving the request to do so. Similarly, co-arbitrators have one month to appoint a chairman, after which the parties can request the assistance of the juge d'appui.

    The Decree also remedies a major oversight in the decree of 1981, which failed to address the difficulties inherent in multi-party arbitrations. The new Article 1453 provides that where more than two parties are involved in a dispute and cannot agree on the constitution of the arbitral tribunal, the entity in charge of the arbitration,11 or in the absence of such an entity, the juge d'appui, shall appoint the arbitrator(s). The new provision is the direct consequence of the Dutco ruling, in which the Cour de cassation (French Supreme Court in civil matters) held that the parties must have an equal right in the appointment of arbitrators.12

    Overall, the role of state courts has increased with the Decree. State courts may be of assistance in challenging arbitrators. The new Article 1456 imposes on arbitrators the duty to disclose any information likely to give rise to justifiable doubts as to their impartiality or independence. The arbitrators are compelled to observe said duty not only before accepting their appointment but throughout the proceedings. In this regard, it is worth noting that an arbitrator may be removed only with the consent of both parties (new Article 1458).13 If the parties disagree on whether an arbitrator who presents information pertaining to his impartiality and independence should be retained, they may turn for assistance to the institution overseeing the arbitration or, if there is no institution involved, to the juge d'appui. In addition, the new Articles 1457 and 1458 provide for the...

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