What legislation applies to arbitration? Are there any mandatory laws?

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1 The Legal 500 & The In-House Lawyer Comparative Legal Guide France: Arbitration Country Author: White & Case LLP This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in France including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present. This Q&A is part of the global guide to Arbitration. For a full list of jurisdictional Q&As visit practice-areas/arbitration/ The Legal 500 Kirsten Odynski, Partner kirsten.odynski@whitecase.com Michael Polkinghorne, Partner mpolkinghorne@whitecase.com 1. What legislation applies to arbitration? Are there any mandatory laws? Since Decree No of 13 January 2011, the main provisions applicable to arbitration in France are set out in Book IV of the Code of Civil Procedure (CCP) (Articles 1442 to 1527). A few provisions on issues of arbitrability can also be found in the French Civil Code (Articles 2059 to 2061). The decisions of the Court of Cassation and of the Paris Court of Appeal are also very important in interpreting the codes and specifying their content because, although there is no doctrine of precedent as such under French law, lower courts generally rely on decisions of higher courts.

2 French law makes a clear distinction between domestic and international arbitration, although some provisions of the CCP apply to both. Arbitration is deemed international when international trade interests are at stake (Article 1504, CCP). This criterion is economic rather than legal and therefore means that the following are irrelevant in determining whether the arbitration is international: The nationality of the parties. The law applicable to the merits or the procedure. The location of the seat. What matters is that the underlying economic transaction operates a transfer of goods, services or funds across national borders (Paris Court of Appeal, 5 Apr 1990, 1992 Rev Arb 110). Some of the provisions applicable to domestic arbitration are also applicable to international arbitration (Article 1506, CCP). However, the French legislature has developed two separate regimes, with a number of more liberal principles applicable only to international arbitration. Only a few mandatory legislative provisions are applicable to international arbitration in France, which is very favourable to party autonomy. Certain provisions guaranteeing the fairness of the arbitration proceedings cannot be derogated from by the parties or disregarded by the arbitral tribunal. More specifically, the tribunal must always ensure that the principles of equal treatment of the parties and due process are respected (Article 1510, CCP). In addition, arbitrators cannot base their decision on facts or legal rules that were not debated by the parties (Court of Cassation, First Civil Chamber, 29 June 2011, No ). Moreover, an arbitral award must not violate French international public policy (i.e., the values that are considered to be fundamental to the French legal system). Such violations can lead to the award being set aside. In this regard, the French courts have ruled that the enforcement of an arbitral award can be denied only if giving effect to the award would result in a "flagrant, effective and concrete" violation of international public policy (Paris Court of Appeal, 18 Nov 2004, No. 2002/19606, Thalès; Court of

3 Cassation, First Civil Chamber, 4 June 2008, No , Cytec). However, certain commentators have criticised this somewhat minimalist approach, advocating a less deferential review. Recent decisions by the Paris Court of Appeal have referred only to an effective and concrete violation, suggesting that the French courts may become more willing to carry out a deeper review of the underlying award (Paris Court of Appeal, 4 March 2014, No. 12/17681, Gulf Leaders; 14 October 2014, No. 13/03410, Commisimpex). It remains to be seen whether this standard will be limited to cases where allegations of corruption are made and whether the Court of Cassation will approve it. 2. Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention? France is a signatory to the New York Convention, which entered into force in France on 24 September France has made a reciprocity reservation, but the provisions applicable to the recognition and enforcement of foreign awards are applicable to all awards rendered in foreign countries, regardless of whether they are signatories of the New York Convention or not. 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 requirement of an agreement in writing). 3. What other arbitration-related treaties and conventions is the country a party to? France is 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 of Investment Disputes (ICSID). Additionally, France has entered into bilateral treaties on the protection of investments with more than 100 states.

4 4. Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two? French law on arbitration is not based on the UNCITRAL Model Law. However, French law provisions applicable to international arbitration are no less favourable and are substantially more liberal than the UNCITRAL Model Law in some respects for example, with regard to the recognition and enforcement of arbitral awards made abroad or in international arbitration. 5. Are there any impending plans to reform the arbitration laws? Decree No of 13 January 2011 made some significant changes to French arbitration law. The Decree codified some well-established jurisprudence and developed some new principles. It is therefore unlikely that there will be any further extensive changes made to arbitration law in the near future. However, the French courts are often one step ahead of the legislator when it comes to developing French arbitration law. 6. What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered? The International Chamber of Commerce (ICC) is the most well-known arbitral institution in France and, arguably, in the world. It recently amended its Arbitration Rules, which entered into force on March 1, 2017 (applicable to arbitration agreements concluded after that date). Other prominent Paris-based arbitration institutions include the: French Arbitration Association (Association française d'arbitrage). Its latest arbitration rules became effective on 1 January Paris Centre for Mediation and Arbitration (Centre de médiation et d'arbitrage de Paris). Its

5 latest arbitration rules became effective on 1 March International Arbitration Chamber of Paris (Chambre arbitrale internationale de Paris). Its latest arbitration rules became effective on 1 September There are also specialized arbitration centers for shipping and insurance disputes, such as the: Paris Maritime Arbitration Chamber (Chambre arbitrale maritime de Paris). Its latest arbitration rules became effective on 11 June French Reinsurance and Insurance Arbitration Centre (Centre français d'arbitrage de réassurance et d'assurance). Its arbitration rules are also those of the Paris Centre for Mediation and Arbitration. 7. What are the validity requirements for an arbitration agreement? In domestic arbitration, an arbitration agreement must be in writing to be valid (Article 1443, CCP). In international arbitration, French law does not impose any formal requirements, and the arbitration agreement does not need to be in writing or in any specific form (Article 1507, CCP). However, it is easier to prove the existence of an arbitration agreement where there is a writing. For both domestic and international arbitration, there are no substantive requirements, apart from the requirement that the underlying dispute be arbitrable (see Question 11). 8. Are arbitration clauses considered separable from the main contract? French law recognizes the principle of the autonomy or separability of arbitration agreements (Article 1447, CCP).

6 The nullity of the main contract thus does not affect the validity of the arbitration agreement, and an arbitral tribunal has jurisdiction to rule on allegations made by a party as to the nullity of the main contract, if that contract contains a valid, or at least not manifestly void, arbitration clause. In order to assess the validity of an international arbitration agreement, the French courts do not refer to the law applicable to the main contract (or to any national law). Instead the courts have established a substantive rule of international arbitration (règle matérielle) and look only to the parties consent to arbitrate their disputes as a factual matter (see Court of Cassation, First Civil Chamber, 20 December 1993, No , Dalico). There is a presumption of validity, and a party challenging an arbitration agreement bears the burden of proving its nullity (see Court of Cassation, First Civil Chamber, 5 January 1999, No , Zanzi). 9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration? French law does not preclude the parties from bringing claims arising out of more than one contract in one arbitral proceeding. In defining arbitration agreements, Article 1442 CCP provides that an arbitration clause is an agreement by which the parties to one or more contracts undertake to submit to arbitration disputes that may arise in relation to the contract(s). Although Article 1442 CCP is not applicable in international arbitration, pursuant to Article 1506 CCP, many scholars are of the opinion that the definition that Article 1442 CCP provides for the arbitration clause also applies in international arbitration. Therefore, French law allows the parties to bring claims arising out of more than one contract in one arbitral proceeding, on the condition that they consent. Multi-party proceedings have received particular attention since the Dutco case (see Court of Cassation, First Civil Chamber, 7 January 1992, No ). In that case, the court held that the principle of equality of the parties in the designation of arbitrators is a matter of public policy, which may not be waived before the emergence of a dispute. Therefore, two or more defendants cannot be required to appoint jointly an arbitrator if the claimant has had the opportunity, alone, to designate an arbitrator.

7 As a result of this decision, Article 1453 CCP provides that, if there are more than two parties to the dispute and they fail to agree on the procedure for constituting the arbitral tribunal, the person responsible for administering the arbitration or, where there is no such person, the juge d appui shall appoint the arbitrator(s) (see Question 13). 10. How is the law applicable to the substance determined? French law provides that, in domestic arbitration, the arbitral tribunal has to decide disputes in accordance with the law, unless the parties have empowered it to rule as amiable compositeur (Article 1478, CCP). The principle of party autonomy is recognized under French law, and arbitral tribunals should abide by the provisions agreed upon by the parties, even if they do not accord with French law, unless they infringe upon mandatory rules or rules of public policy in France. Where no law is chosen, normal conflicts of law rules are generally applied. In international arbitration, French law provides that arbitrators have to decide the dispute in accordance with the rules of law chosen by the parties. If the parties have not chosen the applicable law in relation to a particular issue, arbitrators have the right to choose whatever rules of law they consider appropriate, regardless of conflict of laws rules. In any event, arbitrators have to take trade usages into account (Article 1511, CCP). If the parties empower the arbitral tribunal to rule as amiable compositeur, then it has to rule as such (Article 1512, CCP). 11. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years? As a matter of principle, parties may have recourse to arbitration with respect to any right that they enjoy freely (Article 2059, Civil Code). Parties are free to arbitrate antitrust and intellectual property disputes, for example. Thus, there are only a limited

8 number of types of disputes that may not be resolved by arbitration. The types of disputes that cannot be resolved by arbitration include those relating to: Civil status and capacity of natural persons. Divorce and judicial separation of spouses. In addition, disputes involving certain categories of public authorities and entities cannot be arbitrated. In principle, certain types of consumer and employment disputes also cannot be resolved through arbitration. However, the Court of Cassation has held that this prohibition does not apply in the same way to international arbitration (Court of Cassation, First Civil Chamber, 5 January 1999, No , Zanzi). For example, in the case of an international employment contract containing an arbitration clause, the French courts considered that the arbitration clause was not null and void but that the employee was nevertheless not prevented from initiating a claim before the French Employment Courts (as would normally be the case with a valid arbitration clause) (Court of Cassation, Social Chamber, 16 February 1999, No ). 12. Are there any restrictions in the appointment 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 cannot be an even number, 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

9 agreement. 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 in domestic 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 Question 15). 13. Are there any default requirements as to the selection of a tribunal? French law contains few default requirements that are applicable where the parties have not agreed otherwise. For example, Article 1452 CCP provides that, if the parties do not agree on the procedure for appointing the arbitrator(s): (1) Where there is to be a sole arbitrator and if the parties fail to agree on the arbitrator, he or she shall be appointed by the person responsible for administering the arbitration or, where there is no such person, by the judge acting in support of the arbitration. In France, the judge acting in support of the arbitration is called the juge d appui. (2) Where there are to be three arbitrators, each party shall appoint an arbitrator, and the two arbitrators so appointed shall appoint a third arbitrator. If a party fails to appoint an arbitrator within one month following receipt of a request to that effect by

10 the other party, or, if the two arbitrators fail to agree on the third arbitrator within one month of having accepted their mandate, the person responsible for administering the arbitration or, where there is no such person, the juge d appui shall appoint the third arbitrator. Similarly, Article 1453 CCP provides that, if there are more than two parties to the dispute and they fail to agree on the procedure for constituting the arbitral tribunal, the person responsible for administering the arbitration or, where there is no such person, the juge d appui shall appoint the arbitrator(s). 14. Can the local courts intervene in the selection of arbitrators? If so, how? The French juge d appui can be asked to appoint 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 Tribunal de grande instance (or of the Commercial Court, if the arbitration agreement so provides) (Article 1459, CCP). Article 1459 CCP lays down the rules to determine which Tribunal de grande instance has territorial jurisdiction typically (in the absence of specific agreement of the parties), the Tribunal de grande instance of the seat of arbitration. In international arbitration (unless the arbitration agreement provides otherwise), the juge d appui is the President of the Paris Tribunal de grande 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 the French courts over disputes relating to the arbitral procedure. One of the parties is at risk of a denial of justice.

11 15. Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction? If a party becomes aware of a problematic situation, that party must challenge the arbitrator during the arbitration proceedings by following the procedure and time limits set out in the applicable arbitration or procedural rules (rather than waiting until the setting-aside stage). If the party waits until the moment of setting-aside to challenge the arbitrator, the French courts will consider that the party waived its right to challenge the award on the basis of a lack of independence and impartiality of the arbitrator (see Court of Cassation, First Civil Chamber, 25 June 2014, No , Tecnimont). An arbitrator can be challenged on any of the following grounds, which apply to both domestic and international arbitration: Any circumstance that can affect his or her 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 cannot agree on the removal of an arbitrator, the issue is resolved by the person in charge of administering the arbitration or, where there is no such person, by the juge d appui (Articles 1456 and 1458, CCP). The time limit to file an application before the juge d appui is one month following the disclosure or the discovery of the fact at issue. Statistics from the Secretariat of the ICC Court suggest that the number of challenges registered with the Court has increased in recent years, but this is likely due to the substantial increase in the Court s caseload rather than a stronger propensity for challenging arbitrators.

12 16. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings? In 1997, the Paris Court of Appeal (Paris Court of Appeal, 1 July 1997, 1999 Yearbook Commercial Arbitration 281) decided to set aside an ad hoc award rendered by only two arbitrators (one of the party-appointed arbitrators had resigned in protest against how the tribunal s deliberations were conducted), on the ground that the award at issue had been rendered by an arbitral tribunal lacking one of its members and the composition of which no longer conformed to the agreement on which its jurisdictional power was based. In addition, the president of the Court of First Instance had been seized of the issue and a party had already appointed a new arbitrator. However, the situation is different where the parties have chosen to apply arbitration rules which have provisions on this matter. For example, under Article 15(5) of the ICC Rules, if an arbitrator has died or has been removed, the ICC Court may decide, when it considers it appropriate, that the remaining arbitrators shall continue the arbitration but only [s]ubsequent to the closing of the proceedings. 17. Are arbitrators immune from liability? Nothing under French law provides that arbitrators are immune from liability. French courts, however, have established that arbitrators are generally immune from liability for rendering incorrect decisions. Such immunity, however, is not absolute. Arbitrators may be found liable for gross negligence, wilful misconduct, denial of justice or fraud (see Court of Cassation, First Civil Chamber, 16 December 1997, No ; Paris Tribunal de grande instance, 16 September 2009, Case 06/10155; Court of Cassation, First Civil Chamber, 15 January 2014, No ). 18. Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing

13 litigation in apparent breach of an arbitration agreement? In France, the principle of competence-competence is widely recognised and applied (Article 1448, CCP). Application of the principle means that: In the first instance, the arbitral tribunal has jurisdiction to rule on its own jurisdiction. A French court must decline jurisdiction in the presence of an arbitration agreement and let the arbitral tribunal decide. However, this principle does not mean that national courts can never have a say on the jurisdiction of an arbitral tribunal. Before the constitution of the tribunal, a court can accept jurisdiction if the arbitration agreement is manifestly void or manifestly not applicable. The threshold for this test is very high, and French judges decide the issue on a prima facie basis (see Court of Cassation, First Civil Chamber, 7 June 2006, No ). Any ambiguity is resolved in favour of the tribunal s power to decide the issue. French courts can also review the issue of the tribunal s jurisdiction at the setting-aside stage. In such a case, the court will review the issue de novo and its review will not be bound by the factual and legal findings of the tribunal. 19. How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware? There are no default rules governing the commencement of arbitral proceedings in France. Parties must follow the procedure set out in their arbitration agreement, in particular if they have opted for institutional rules that prescribe necessary steps for commencing proceedings. Otherwise, arbitral proceedings are usually initiated by unequivocal service of a notice of arbitration on the other party. Limitation periods are normally regarded as substantive rather than procedural. Substantive rules are those applicable to the merits of a dispute, whereas procedural rules regulate the conduct of the proceedings. Therefore, the law applicable to the

14 underlying dispute or claim will also be applicable to the relevant statute of limitation. When French law is applicable to the merits of a dispute, a general five-year limitation period applies to contractual and tortious matters, with a few exceptions, such as for some construction contracts (see Article 2224, Civil Code). In general, this period commences from when the parties become aware (or should have been aware) of the event giving rise to the dispute. Commencing arbitration proceedings normally interrupts the limitation period (see Article 2241, Civil Code; Court of Cassation, Second Civil Chamber, 11 December 1985, No ). 20. What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings? The person responsible for administering the arbitration or, if there is no such person, the juge d appui will nominate the arbitrator in lieu of the respondent (see Questions 13 and 14). Then arbitral proceedings shall proceed irrespective of whether the respondent participated in the arbitration. An award shall be rendered. In this regard, French courts have held that an award that was rendered against a respondent that wilfully did not participate in the arbitration despite the fact that it was notified of the various stages of the proceedings and had the chance to participate in the proceedings shall not be set aside (see Paris Court of Appeal, 7 February 1991, 1992 Rev Arb 634). Non-signatories can be compelled to arbitrate disputes relating to the contract in question in different situations where it can be deduced from the facts of the case or the behaviour of the non-signatory that the non-signatory consented to be bound by the arbitration agreement. In French law, the analysis can take into account both: The non-signatory s actual (express or tacit) consent. Behaviour that can be deemed to constitute consent (such as extensive participation in the performance of the contract containing the arbitration clause, in certain circumstances).

15 French courts are more likely to compel a non-signatory to arbitrate in the context of international arbitration than in that of domestic arbitration. For example, in the case of a group of companies, where the parent company of the signatory was actively involved in the negotiation and performance of the contract, it was held that the parent was bound by the arbitration clause contained in the contract (Paris Court of Appeal, 21 October 1983, 1984 Rev Arb 98). In addition, in the case of a group of contracts, where only one of the contracts contains an arbitration agreement, the French courts have considered that a party to a related contract or sub-contract that does not contain an arbitration agreement can be compelled to arbitrate its disputes when it was involved in the performance of the contract containing the arbitration agreement (Paris Court of Appeal, 7 December 1994, 1996 Rev Arb 245, Jaguar; for chains of contract, see Court of Cassation, First Civil Chamber, 27 March 2007, No , ABS). French courts have also accepted that an arbitration clause signed by a private party and a state-owned company can be extended to a state that did not sign the arbitration clause in certain circumstances (Paris Court of Appeal, 17 February 2011, 2011 Rev Arb 286). 21. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings? While states may in principle benefit from immunity against any legal action before the court of another country or an arbitral tribunal (immunité de juridiction), it is possible for a state to waive such immunity. Under French case law, a state waives its immunity from arbitration proceedings by entering into an arbitration agreement (see Court of Cassation, First Civil Chamber, 18 November 1986, No ). Yet, a state could still challenge the jurisdiction of an arbitral tribunal by arguing that it did not consent to have recourse to arbitration (see Paris Court of Appeal, 12 July 1984, 1985 JDI 129).

16 22. In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Under general principles of French contract law, agreements bind only the contracting parties (Article 1199, Civil Code). The same rule applies to arbitration agreements, which are normally not binding on non-signatories. However, in some circumstances, the French courts consider that it is possible for third parties to be bound by an arbitration clause that they have not signed. This may occur, for example, in the context of a group of companies or interconnected contracts (see Question 20). The existence of a group of companies is, however, 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 may favour 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 very fact-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. A third party (even where it was not a party to the arbitration) may also be liable for an arbitration award under the piercing of the corporate veil and agency doctrines. For example, an award rendered against a state can be enforced against a state-owned company, if the party seeking enforcement of the award can prove that the company is in fact the alter ego (émanation) of that state (see Paris Court of Appeal, 3 July 2003, No. 2002/03185, Société Nationale des Pétroles du Congo). Similarly, an award rendered against a subsidiary would be enforceable against its parent company if the conditions for piercing the corporate veil under French law are met. 23. What interim measures are available? Will local courts issue

17 interim measures pending the constitution of the tribunal? Until the arbitral tribunal is constituted, the 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). The French courts will decline to use these powers only if the parties expressly excluded recourse to these measures or if they 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 Tribunal de grande 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 shifts to the arbitral tribunal. The arbitral tribunal can order any type of provisional or preliminary measures that it deems appropriate. It can also sanction noncompliance by, for example, making its orders subject to penalties. Under the previous legal framework, the parties could still ask the French courts to order urgent interim measures. By contrast, the 2011 Decree seems to reserve this jurisdiction to the arbitral tribunal. However, the French courts retain exclusive jurisdiction to order conservatory attachments or judicial security, as well as to ensure satisfaction of a future award (Article 1468, CCP). In addition, recourse to a judge may be necessary to enforce any measure ordered by the arbitral tribunal that is not voluntarily complied with. 24. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? In general, arbitral tribunals have the right to undertake all necessary steps concerning evidentiary matters. Accordingly, the tribunal can call upon any person to provide testimony and enjoin a party to produce any item of evidence it possesses (Article

18 1467, CCP). In addition, unless otherwise stipulated, the arbitral tribunal shall have the power to rule on a request for verification of handwriting or a claim of forgery in accordance with Articles 287 to 294 and Article 299 (Article 1470, CCP). Under French law, local courts may also play a role in the obtaining of evidence where the arbitral tribunal has not yet been constituted. According to Article 1449 CCP, an application shall be made to the President of the Tribunal de grande instance or of the Tribunal de commerce, who shall rule on the measures relating to the taking of evidence in accordance with the provisions of Article 145. Moreover, according to Article 1469(1) CCP, if one of the parties to arbitral proceedings intends to rely on an official (acte authentique) or private (acte sous seing privé) document to which it was not a party, or on evidence held by a third party, it may, upon leave of the arbitral tribunal, have that third party summoned before the President of the Tribunal de grande instance for the purpose of obtaining a copy thereof (expédition) or the production of the official document or piece of evidence. 25. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings? Apart from a resolution that was adopted by the Paris Bar on 26 February 2008 allowing counsel to prepare witnesses before oral examination in international arbitration, French law does not provide specific ethical codes or standards that apply to counsel and arbitrators. Accordingly, counsel and arbitrators should respect the general ethical codes and other professional standards as provided by the French Bar or by the ethical codes and professional standards as provided in their local bars or jurisdictions. 26. How are the costs of arbitration proceedings estimated and allocated? In France, parties can, as a general matter, use whatever legal fee structures they

19 deem appropriate (such as flat fees or an hourly rate). However, French lawyers cannot be paid solely on a contingency fee basis. Success fees are permitted but can be paid only in addition to a fixed or hourly fee arrangement. It has, however, been recognized that, in the context of international arbitration, such arrangements with lawyers whose home bar rules allow for them is not contrary to international public policy in France. (Paris Court of Appeal, 10 July 1992, 1992 Rev Arb 609). There are no specific provisions under French law for the arbitrators fees. They are usually fixed in agreement with the arbitrators or by the arbitral institution. There are also no specific rules on the manner in which the tribunal should calculate costs and fees, which typically include the fees and expenses of the arbitrators and the parties reasonable legal and other costs, such as travel expenses for hearings. Costs and fees can also include the administrative expenses of the arbitral institution and/or the fees and expenses of any experts appointed by the tribunal. Moreover, there are no specific provisions regulating the allocation of costs between or among the parties (in particular, the unsuccessful party is not under a legal obligation to pay the successful party s costs and fees). Subject to any agreement of the parties, the arbitral tribunal has wide discretion to determine the allocation of costs between or among the parties. 27. Can pre- and post-award interest be included on the principal claim and costs incurred? The question of whether interest should be applied on the principal claim and costs incurred is normally regarded as a substantive rather than a procedural question. Under French law, nothing precludes including interest on any monetary claim. Generally, in France, the interest rate is fixed annually by statute and should be respected unless the parties agree to apply a different rate. Under French law, post-award interest may be obtained at the enforcement stage even where it has not been awarded by the arbitral tribunal (see Court of Cassation, First

20 Civil Chamber, 30 June 2004, 2005 Rev. Arb. 645). 28. What legal requirements are there for the recognition of an award? There are two conditions for the recognition of an award in France: The existence of the award must be proven by producing the award and the arbitration agreement (original or duly authenticated copies). This requirement applies to both domestic (Articles 1487 and 1488, CCP) and international arbitration (Articles 1514 and 1515, CCP). For arbitration agreements or awards that are not in French, the parties must produce translations of the award and the arbitration agreement. The court can request a translation by an official translator (Article 1515, CCP). The recognition of the award must not be manifestly contrary to French public policy (Article 1488, CCP for domestic arbitration) or French international public policy (Article 1514, CCP for international arbitration). 29. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts? There are no statutory provisions in the CCP regulating the remedies that a tribunal can award. However, it is established that arbitrators have wide discretion as to the type of final remedies they can order. Arbitrators can: Order a party to pay damages. Issue injunctions (ordering a party to do something or preventing a party from doing something). Make a declaration as to whether a party is liable. There are no rules limiting the type of interest that can be awarded by an arbitral tribunal. Arbitrators can award compound interest. There are also no specific restrictions on the type of damages that can be awarded.

21 French law allows for the full compensation of damages. Damages for emotional and psychological distress suffered and lost profits can be awarded. It is unclear whether an award of punitive damages would be problematic. While such damages are never awarded in civil litigation, the French courts have held that punitive damages are not necessarily contrary to French international public policy. However, such damages must not be disproportionate to the harm suffered (see Court of Cassation, First Civil Chamber, 1 December 2010, No ). 30. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure? Provisions on challenges to arbitral awards differ substantially depending on whether the arbitration is domestic or international. Awards in domestic arbitration are generally subject to actions to set aside (recours en annulation). 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 subject only 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, the right cannot be renounced unless the parties have provided for a right to appeal (Article 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 that an action to set aside or a challenge to an enforcement order may have 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

22 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 Appeal suspends or adjusts the enforcement to preserve the rights of one of the parties. For domestic arbitration, the recognition or enforcement of the award must not be contrary to French public policy, and the award can also be set aside if (Article 1492, CCP): There are no stated reasons for the award. There is no mention of the date of the award. There is no indication of the name or signature of the arbitrators. The award was not rendered by a majority. The following are the five possible grounds for setting aside an international award (Article 1520, CCP): 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 would be contrary to French international public policy. In principle, when the place of arbitration is in France, a party can challenge an award before the Court of Appeal of the place where the award was made (Article 1519, CCP). 31. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the

23 arbitration clause)? In domestic arbitration, an award can be appealed only if the parties have so agreed (Article 1489, CCP). Where the parties have agreed that appeal is permissible, the parties cannot initiate setting aside proceedings (Article 1491, CCP). In international arbitration, awards can never be appealed. International arbitration can therefore be subject only to setting aside proceedings (Article 1518, CCP). While an appeal permits a fresh review of the merits of a case, setting aside proceedings permit only the setting aside of an award, on narrowly defined grounds. In the latter case, no review of the merits is in principle permitted (see Question 30). 32. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage? French law recognizes state or sovereign immunity as a defence to enforcement, unless such immunity has been waived. The Court of Cassation has adopted different approaches to determining whether there has been waiver. In 2000, the Court of Cassation established that the state, by agreeing to an ICC arbitration, agrees to execute an award and that, consequently, such an agreement should be considered a waiver by the State of sovereign immunity (Court of Cassation, First Civil Chamber, 6 July 2000 (Bull. No. 207)). In 2013, the Court of Cassation held that the waiver can be recognized only if the waived assets were specifically and expressly presented in the contract (Court of Cassation, First Civil Chamber, 28 March 2013, Case ). In 2015, the Court of Cassation changed its position and required that the waiver be express, without requiring other conditions (Court of Cassation, First Civil Chamber, 13 May 2015, Case ). 33. To what extent might a third party challenge the recognition of an award?

24 In a recent decision (see Paris Tribunal de grande instance, 25 April 2017, Case 15/17869), a third-party challenge made against the enforcement order of a foreign arbitral award was declared admissible, although the challenge failed on the ground that the arbitral tribunal did not hold the third party liable to the award-creditor. However, due to the specific facts of the case it is unclear whether this decision will set a strong precedent for third party challenges of arbitral awards. Moreover, a third party may be more interested in directly challenging an award itself on the merits (rather than the order granting recognition or enforcement, which is made after a very limited review of the award), which is not currently permissible under French law. 34. Have there been any significant developments with regard to third party funding recently? On 21 February 2017, the Paris Bar Council (Conseil de l Ordre) approved a resolution confirming that third-party funding of legal proceedings facilitates access to justice in international arbitration and is allowed under French law. The resolution addressed the potential interference by a third party in the relationship between the lawyer and the client and the issue of whether the funding arrangement should be disclosed to the arbitrators. The resolution provides that French lawyers (avocats) should not communicate with, or give advice to, the third party providing funds to their client. A French lawyer may only have a meeting with the funder if the client is present. In addition, a lawyer should advise the client to disclose the existence of any funding arrangement to the arbitrators and inform the client of the adverse consequences (annulment of the award or enforcement problems) that lack of disclosure may create. 35. Is emergency arbitrator relief available? Is this frequently used? French law does not address emergency arbitrators. Where institutional rules provide for the possibility to appoint an emergency arbitrator, those provisions are upheld in France as a matter of contract (Paris Court of Appeal, 29 April 2003, 2003 Rev Arb

25 1296). For example, the ICC Rules recognise the possibility of appointing an emergency arbitrator. According to the relevant articles, a party can seek urgent interim or conservatory measures prior to the transmission of the file to the arbitral tribunal (see Article 29 and Appendix V of the ICC Rules). 36. Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used? French law does not address simplified or expedited procedures, but, as for emergency arbitrator relief, the parties may resort to arbitral institutions that provide for such procedures. In late 2016, the ICC International Court of Arbitration introduced an expedited procedure within its Rules (see Article 30 and Appendix VI of the ICC Rules). The expedited procedure provisions apply if the arbitration agreement was concluded after 1 March 2017, the amount in dispute does not exceed US$2,000,000, and the parties have not opted out of the expedited procedure rules. They also apply, irrespective of the date of conclusion of the arbitration agreement or the amount in dispute, if the parties have agreed to opt in. On 6 September 2017, the ICC reported that seven cases were being managed under expedited provisions, all by express party agreement. The Centre for Mediation and Arbitration of Paris also provides for a fast-track procedure that may apply regardless of the amount of the claims. 37. Have measures been taken by arbitral institutions to promote transparency in arbitration? On 8 October 2015, the ICC Court agreed for the first time on the condition that all parties to an arbitration agree and that the request is made before a decision is

26 reached to provide the parties with its reasons in respect of: Challenges to an arbitrator under Article 14 of the ICC Rules. Decisions to initiate replacement proceedings and subsequently to replace an arbitrator on the ICC Court s own motion under Article 15(2) of the ICC Rules. Decisions on consolidation of arbitration proceedings under Article 10 of the ICC Rules and prima facie decisions on jurisdiction under Article 6(4) of the ICC Rules. The ICC has also declared that, as of 1 January 2016, the International Court of Arbitration will publish the names of the arbitrators and their nationality, if the appointment was made by the ICC Court or by the parties, whether each arbitrator is the president, a sole arbitrator or party-appointed arbitrator. In November 2016, referring to its impending 2017 Rules, the ICC Court announced important amendments to the ICC Rules of Arbitration with the aim of further increasing the efficiency and transparency of ICC arbitrations. Thus, Article 11(4) of the 2017 ICC Rules of Arbitration provides that [t]he decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final, deleting the sentence from the 2012 Rules stating that the reasons for such decisions shall not be communicated. 38. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how? In 2016, the ICC joined a range of institutions and prominent members of the international dispute resolution community in signing an Equal Representation in Arbitration Pledge, calling for more women to be appointed as arbitrators in international arbitration. On 31 May 2017, the ICC has revealed a marked growth in the number of women arbitrators appointed for ICC proceedings: up 4.4% from 2015 statistics, women arbitrators represented 14.8% of all arbitrators appointed by ICC Arbitration parties, co-

27 arbitrators or directly by the Court in This figure more than doubles the number of women arbitrators recorded for The ICC s efforts are not limited to gender diversity, but are also aimed at enhancing regional and generational diversity in the appointment of arbitrators. 39. Have there been any developments regarding mediation? In 2014, the ICC ADR Rules were replaced with the ICC Mediation Rules. This name change mostly reflects the fact that the ICC, in the field of ADR, has been dealing almost exclusively with mediation cases, but that should not prevent the parties from using other ADR methods: Like the ADR Rules, which they replace, they can be used for conducting other procedures or combinations of procedures that are similarly aimed at an amicable settlement of the dispute, such as conciliation or neutral evaluation (introduction to the Rules). The 2014 Mediation Rules are now published in the same booklet as the 2017 Arbitration Rules. In a recent decision, the Paris Court of Appeal (Paris Court of Appeal, 28 June 2016, 2016 Rev Arb 1153) issued a ruling confirming that an arbitral tribunal s decision with respect to a preliminary conciliation clause should be analysed in terms of admissibility rather than jurisdiction, which means that this decision is not subject to set-aside proceedings on one of the five grounds recognised under French law (see Question 30). In addition, Law No of 18 November 2016 on the modernization of justice in the 21st century features several provisions meant to favor mediation and ADR within the French justice system. 40. Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?