Paris as a place of arbitration: is Paris an arbitration friendly seat?
Market Insight 30 November 2023 30 November 2023
UK & Europe
Disputes - Geopolitical Risk
Paris has always enjoyed an outstanding reputation as a seat for an international arbitration. Indeed, French law and French courts are very supportive of arbitration and the arbitral process, which are the key building blocks of a strong seat of arbitration. Today, Paris stands in many ways as the capital city of international arbitration as it provides many advantages.
French law strongly favours arbitration
The provisions of the French Code of Civil Procedure (“the CCP”) date back to 1981 and were revised in 2011 (the “2011 law”). The 2011 law enshrines many of the decisions that had been taken by the French courts over the past years.
As a starting point the 2011 law affirms the well-established principle of the autonomy of the arbitration agreement. This means that the arbitration agreement is considered separate and independent from the main contract, pursuant to Article 1447 of the CCP, as modified by the 2011 law. The arbitration clause remains valid even if the underlying contract is either purportedly or actually invalid. Moreover, in contrast to many other jurisdictions, the agreement to arbitrate is not subject to formal requirements (Article 1507 of the CCP), thus permitting parties to arbitrate with more ease and ultimately providing them with the assurance that their agreement to arbitrate will be enforced.
Additionally, French law instituted the "competence-competence" principle very early on, granting the arbitral tribunal the authority to determine its own jurisdiction under an arbitration clause. Beyond these foundational aspects that are now commonplace in modern arbitration laws, the 2011 legislation introduced several innovative features, a few of which are explored below.
Arbitration innovations in France
First, the 2011 law addresses the concerns, that many international arbitration users have regarding the costs and speed of an arbitral process, by introducing an obligation on the parties and the arbitrators to conduct the arbitration in a diligent manner and in good faith (Article 1464 of the CCP).
A second innovation is the focus on the independence of the arbitral process. The 2011 law clarified the role of the French judge, which is to support the arbitration. This confirms that the arbitral process is independent from the courts – in fact, it goes so far as to refer to the relevant court judge merely as a “supporting judge” (juge d’appui), thereby reflecting the well-established French tradition that judges shall not unduly interfere in the arbitral process.
A third innovation, that makes France quite an outlier, is that awards are directly enforceable even when you have set aside proceedings pending (Article 1526 of the CCP). Indeed, while state courts may not review an award on the merits, a party may apply to have the award annulled at the seat of arbitration based on certain procedural grounds (Article 1520 of the CCP). The 2011 law therefore now dissuades parties from frivolously applying to set aside an award because, even if such proceedings are initiated, enforcement measures will continue to run their course.
In the same vein and in line with only a handful of other jurisdictions, the 2011 law also grants parties the novel option of essentially waiving their right to set aside an award (Article 1522 of the CCP).
However, in order to provide for a good seat of arbitration, a modern arbitration law is only one piece of the puzzle. The other equally important piece is state courts’ support of arbitration, which is the case in France as detailed below.
French courts’ consistent support of arbitration
France’s court system provides for a neutral and impartial jurisdiction with specialised courts accustomed to dealing with issues arising out of arbitrations at all stages of the proceedings
A number of renowned French court decisions illustrate particularly well how supportive the French courts are of arbitration. For example, in the Dallah v. Pakistan case, unlike the United Kingdom Supreme Court, the Paris Court of Appeals (Cour d’appel) gave full effect to the underlying arbitration agreement (in the UK:  UKSC 46; in France: docket No 09/28533). In this case, an arbitral tribunal sitting in Paris rendered an award against the respondent, the government of Pakistan. The claimant brought enforcement proceedings in England to enforce the award, which Pakistan sought to resist. The English courts applied French law and ruled that contrary to the Tribunal’s decision Pakistan was not bound by the arbitration clause because the actual signatory of the agreement was a trust created by the Ministry of Religious Affairs. Accordingly, the English courts refused to enforce the award. At the same time, Pakistan had applied to the French courts to have the Paris-seated award set aside.
The Paris Court of Appeals, which was confronted with the same question, namely whether Pakistan was bound by the arbitration clause as a matter of French law, reached the opposite conclusion to that of the English courts. The French court ruled that Pakistan was bound by the arbitration clause by virtue of its actions both before and after the contract was concluded. Ten years later, in the case of Kabab-ji v Kout Food Group, a similar saga unfolded with the French courts upholding the award and the English courts refusing to do so. The French court’s decision in Dallah and in Kabab-ji are good examples of the courts’ more liberal approach to upholding arbitration clauses.
Paris offers a plethora of practical advantages
Finally, there are also numerous practical considerations that make Paris an excellent choice for the seat of arbitration.
Paris’ long-standing reputation as a centre of arbitration is closely intertwined with the fact that the global headquarters of the International Chamber of Commerce (ICC) and its Court of International Arbitration are located in the heart of the city and have been ever since its establishment in 1923.
The city also offers top-notch lawyers that are experts in the field, a central location in Europe and excellent transportation connections. It also has numerous facilities for conducting arbitrations including the ICC Hearing Centre founded in 2008, and the European headquarters of the World Bank for investor-state arbitrations administered under the rules of the international centre for the settlement of investment disputes (ICSID).
Last but not least, apart from the favourable legal framework for international arbitrations that Paris offers, choosing Paris also has the benefit that once a long day of meetings or hearings is over, one can enjoy an apéritif at one of Paris’ quintessential sidewalk cafés and hopefully close off a successful day with a memorable dinner at one of the many fine Parisian restaurants.
Clyde & Co’s expertise in arbitration related proceedings before the French Court
Our Paris office has substanial experience assisting clients in arbitration related court proceedings, with regards to set aside proceedings, the enforcement of an arbitral award, or a request for interim measures.
We assist our clients who may have awards rendered in other parts of the world, or awards dealt with by other offices of Clyde & Co, if they want to enforce it in France, or, if the arbitration was seated in France, to help them get those awards either set aside or enforced.
Clients come to us and know the Paris office can handle the arbitration, at whatever stage of the proceeding it is, all the way to the enforcement.
Clyde & Co's International Arbitration Group specialises in representing its clients in complex, big-ticket, multi-jurisdictional international arbitrations across sectors and in the world's established and emerging markets. The group has a breadth and depth of arbitration experience, and clients include corporations, investors, financial institutions, private individuals, governments, states, and state-owned entities. To discuss your international arbitration needs please contact Nadia Darwazeh.
Watch Nadia Darwazeh share her thoughts