This article was featured in Jus Mundi‘s 2024 Arbitration Year in Review, in collaboration with VYAPs, a yearly collection of articles from jurisdictions all around the globe updating you on arbitration-related developments from the previous year.
THE AUTHORS:
Margaux Vandewalle, Associate at Asafo & Co.
Karim Zein, Associate at Simmons & Simmons
The biggest development in international arbitration in 2024 was undoubtedly the announcement of an upcoming reform of French arbitration law. Nearly 15 years after the last major reform, the Ministry of Justice initiated a consultation process in September, followed by the appointment of a working group in November, tasked with drafting proposals by March 2025. The reform, expected to be adopted by decree before the summer of 2025, is designed to streamline arbitration procedures, enhance efficiency, and reinforce France’s appeal as a global arbitration hub.
This reform is part of a broader push to redefine alternative dispute resolution mechanisms, with the Ministry of Justice also working on an ambitious codification of mediation and conciliation rules. These efforts signal a clear intention to modernize procedural law and make dispute resolution in France more accessible and effective.
Beyond this announcement, 2024 also saw significant judicial decisions shaping arbitration practice. While the year may not have been as turbulent as previous ones, courts addressed key legal questions that reaffirm France’s role as a leading arbitration jurisdiction.
Arbitrator’s Duty to Disclose
French courts continue to shape the contours of the arbitrator’s duty to disclose, a key aspect of the tribunal’s impartiality and independence, and have progressively established key criteria for assessing an arbitrator’s lack of independence, focusing primarily on (i) past and present relationships between the parties or their counsel and the tribunal, and (ii) any other circumstances that could reasonably cast doubt on an arbitrator’s impartiality.
Two notable decisions in 2024 illustrate how these criteria are applied in practice.
In DIT v. Port Autonome de Douala, (First Civil Chamber) 23-10.972,19 June 2024, the Cour de cassation upheld the annulment of an arbitral award on the grounds that the chairman’s undisclosed personal ties with counsel for one of the parties created reasonable doubt about his impartiality. The challenge was based on a eulogy published by the chairman after the counsel’s passing. While the Court acknowledged that professional relationships between counsel and arbitrators are common in arbitration and do not inherently amount to close personal relationships, it ruled that said eulogy, despite being “dramatic and emotional” by nature, contained statements suggesting a much closer personal bond.
In Opportunity Fund and others v. Telecom Italia, the Paris Court of Appeal in a Judgment (Department 5 – Chamber 16) 21/08610, 2 May 2024, examined whether an arbitrator’s undisclosed business ties with a third party that had financial interest in the case could reasonably cast doubt on their impartiality. The Court observed that the chairman’s law firm had an undisclosed, longstanding and significant business relationship with a third party, which became the respondent’s controlling shareholder throughout the arbitration, thus evidencing stakes in the outcome of the arbitration. Accordingly, the Court held that this connection reasonably cast doubt on the arbitrator’s impartiality, warranting annulment of the award.
The Arbitration Agreement and its Implementation
Interpretation of the Arbitration Agreement
When ambiguous, French courts interpret arbitration clauses in a way that preserves the parties’ intent to arbitrate. The Cour de cassation reaffirmed this approach in Devas v. Antrix (First Civil Chamber) 22-16.580, 6 November 2024, where the contract provided for arbitration under either the ICC (International Chamber of Commerce) Arbitration Rules (1998) or the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules (1976), with New Delhi as the seat. The Paris Court of Appeal found that the clause granted the initiating party the right to select the applicable arbitration framework. The Cour de cassation upheld this reasoning, confirming that an arbitration clause offering a choice between institutional and ad hoc arbitration did not prevent arbitration from proceeding under ICC Rules, reaffirming accordingly that French courts will not allow vague drafting to be exploited to avoid arbitration.
Consent to the Arbitration Agreement
Two fundamental principles of French international arbitration law are that the validity of an arbitration clause does not depend on that of the main contract and that the parties’ agreement to arbitrate is not necessarily derived solely from the disputed contract. These principles were reaffirmed by the Paris Court of Appeal in Société Leplatre &Cie v. Établissements Trescarte (“Lentilles vertes du Val-de-Loire”) (Department 5 – Chamber 16) 23/08940, 26 March 2024.
The dispute arose from a contract for the sale of lentils. The buyer initiated arbitration before the Chambre Arbitrale Internationale de Paris (“CAIP”), while the seller contested the validity of the arbitration clause, arguing that no final contract had been concluded and, therefore, no valid arbitration agreement existed. In response, the buyer pointed to previous similar transactions from 2011 to 2018, each governed by a standard contract that systematically included an arbitration clause referring disputes to CAIP.
The Paris Court of Appeal ruled that the arbitration clause was binding despite the main contract not being executed since:
- The parties had a long-standing commercial relationship involving multiple contracts containing the same arbitration clause,
- The disputed transaction followed the same contractual structure and negotiation process, reinforcing the expectation that arbitration would apply, and
- References to a “classic contract” in the parties’ exchanges implied reliance on a standard contractual model that included arbitration.
As the seller had not explicitly rejected arbitration during negotiations, the Court inferred consent from past practices.
In Heirs to the Sultanate of Sulu v. Malaysia, (First Civil Chamber) 23-17.615, 6 November 2024 however, the Court clarified that arbitration agreements cannot be inferred where consent has effectively disappeared. The arbitration agreement designated the “Consul General of Borneo” as the arbitrator. Since the validity of the arbitration clause was contingent on the existence of this official role, its disappearance rendered the arbitration agreement ineffective.
Third Parties and Assignment of Rights
The year 2024 proved to be prolific in relation to the multi-faceted question of the procedural standing of third parties in arbitration-related litigation, particularly in the context of the assignment of rights to an arbitral award and its implications for enforcement proceedings.
In CC/Devas v. India (I) (Department 5 – Chamber 16) 22/11819,13 February 2024, the Paris Court of Appeal’s Conseiller de la Mise en Etat initially ruled that third parties who have been assigned rights to an arbitral award may intervene in enforcement proceedings. The case stemmed from the enforcement of two arbitral awards issued under UNCITRAL Rules in favor of Devas investors against the Republic of India following the cancellation of a telecommunications contract. After obtaining the awards, the investors assigned their rights to three companies through assignment agreements governed by English law. These agreements transferred all rights and interests in the awards, including enforcement rights. The Court found that, on the one hand, the contractual nature of arbitration did not preclude assigned third parties from participating in enforcement proceedings, particularly since the assignment agreements validly transferred rights under English law. On the other hand, it held that the definition of an investor under the applicable BIT was relevant only to the initiation of arbitration and did not prevent the assigned third party from intervening in enforcement proceedings.
The Court later reversed its decision in Judgment of the Paris Court of Appeal (Department 5 – Chamber 16) 24/00152, 10 September 2024, holding that, unless expressly agreed by the parties to the arbitration agreement, third-party intervention is not permitted in annulment or enforcement proceedings, even when the third party has a legitimate interest in enforcing the arbitral award.
Enforcement and Annulment Proceedings
Stay of Enforcement Proceedings
Under French law, annulment proceedings do not automatically suspend the enforcement of arbitral awards. However, Article 1526 CPC allows a party to request a stay if enforcement would cause serious harm to its rights. This safeguard is applied strictly to prevent undue delays in arbitration enforcement.
In Astaldi v. Georgia Roads Department, (Pôle 5 – Chambre 16) 22/15049, 3 October 2024 (“Astaris”), the Paris Court of Appeal reaffirmed that a stay cannot be granted simply because the annulment action appears serious or has a high chance of success, nor due to general financial hardship suffered by a party. Instead, the requesting party must demonstrate an immediate and concrete risk of harm that directly undermines legally protected rights.
Astaris, an Italian construction company undergoing insolvency proceedings in Italy, was ordered to pay over €16 million by an arbitral tribunal. It argued that enforcement in France would disrupt the principle of creditor equality and exceed its financial capacity, jeopardizing its restructuring plan. The Court found that enforcement would interfere with the Italian insolvency process and risk:
- Undermining the structured repayment plan; and
- Creating unfair treatment among creditors.
Accordingly, the Court warranted a stay to protect fundamental insolvency rights.
Stay of Annulment Proceedings
French courts adopt a cautious and stringent approach when considering requests to stay annulment proceedings, particularly when the request is based on ongoing foreign litigation. Courts are generally reluctant to grant a stay due to parallel proceedings abroad.
By contrast, in Dangelas v. Vietnam (I), (Department 5 – Chamber 16) 22/12879, 13 June 2024 the Paris Court of Appeal confirmed that a stay may be appropriate when the annulment proceedings hinge entirely on the outcome of a related case before another French court: the annulment action targeted a final award, while a separate appeal before the Cour de cassation concerned a challenge to an earlier partial award from the same arbitration. Since the validity of the final award was directly tied to the fate of the partial award, the Court found a stay justified to avoid inconsistencies in the decision-making processes.
Procedural Orders vs. Arbitral Awards
It is a well-established principle that not every decision issued by an arbitral tribunal constitutes an arbitral award subject to annulment. This principle was reaffirmed by the Paris Court of Appeal in Akhmetov and Investio v. Russia, (Department 5 – Chamber 16) 23/06872, 21 May 2024.
In a UNCITRAL arbitration, the Russian Federation challenged the chairman’s appointment. The tribunal issued a Procedural Order confirming the regularity of its constitution, which Russia sought to annul before the Paris Court of Appeal, arguing that it should be treated as an arbitral award. It argued that the order:
- Definitively resolved the dispute over the tribunal’s appointment,
- Was a substantive jurisdictional ruling, and
- Risked undermining the arbitration’s legitimacy, since allowing the tribunal to validate its own composition without immediate judicial review could contaminate subsequent rulings including the final award.
The Court dismissed these arguments, emphasizing that an arbitral award must resolve a substantive issue, whether on the merits, regarding jurisdiction, or on a procedural matter that brings the proceedings to an end. Consequently, a decision solely addressing the regularity of an arbitrator’s appointment does not constitute an award and therefore cannot be subject to annulment.
Arbitration and Insolvency: Recognition vs. Enforcement
Enforcement and annulment issues frequently arise when an arbitral award is issued against an insolvent company. In arbitrations involving an insolvent company in France, one of the most fundamental rules is that an arbitral tribunal cannot issue a payment order against the debtor. This restriction is essential to uphold the principles of creditor equality and stay of individual legal actions, ensuring that no creditor bypasses the collective insolvency process, particularly by enforcing an arbitral award independently.
In Hydro v. Vergnet, (First Civil Chamber) 23-11.012, 15 May 2024, the Cour de cassation considered whether an arbitral award ordering payment by an insolvent debtor could be recognized. The decisive factor in this case was the precise wording of the exequatur request. Instead of seeking full enforcement, the creditor limited its request to the recognition of the debt established by the award. The Court held that as long as the request sought only recognition – without enforcement – there was no violation of international public policy or insolvency principles. The Court confirmed that exequatur could be granted solely to acknowledge the creditor’s claim, without allowing the creditor to recover funds outside the insolvency framework.
A similar approach was taken in SGI v. SGDF, (Department 5 – Chamber 16) 23/02368, 29 October 2024 (“Søstrene”). Upon reviewing an exequatur order, the Court observed that the ruling did not confer enforceability on the award’s payment orders, thereby upholding its validity. However, the Court clarified that exequatur could still be granted for arbitration costs, provided they arose from obligations that emerged after the initiation of insolvency proceedings and the validation of the insolvency plan.
Beyond French Law
In recent years, French courts have increasingly sought guidance from the CJEU to clarify ambiguous provisions of European law, particularly in the realm of international sanctions.
One such case is in Ministry of Oil and Minerals of Yemen v. DNO and others (First Civil Chamber) 22-13.596, 27 November 2024, where the Cour de cassation examined whether enforcing an arbitral award could indirectly violate EU sanctions.
The dispute concerned a production-sharing agreement in Yemen, where DNO and other oil companies had been ordered to pay damages to the Yemeni Ministry of Oil and Minerals and Yemen Oil & Gas Corporation following an ICC arbitration. DNO challenged the enforcement of the award, arguing that the execution of payments could lead to funds being transferred to entities controlled by sanctioned individuals or groups under EU Council Regulation No. 1352/2014.
The Cour de cassation considered whether enforcing the award would constitute an indirect provision of funds to sanctioned entities, as prohibited by Article 2.2 of said Regulation, which forbids making funds available, directly or indirectly, to sanctioned entities.
Finding Article 2.2 too ambiguous to dispel any reasonable doubt as to its interpretation and further impact on the enforcement of the award, the Court referred three preliminary questions to the CJEU:
- Does the notion of indirect provision of funds extend to payments made to public entities that are not directly subject to sanctions if there is evidence that sanctioned individuals or entities exert influence over them?
- If such influence is established, should the recipient entities be presumed to be controlled by sanctioned entities, and does this presumption allow for contrary evidence?
- Does the mere existence of a reasonable risk that sanctioned parties might ultimately benefit from the funds suffice to trigger the application of sanctions?
The Court stayed the proceedings pending the CJEU’s ruling.
ABOUT THE AUTHORS
Margaux Vandewalle is an associate at Asafo & Co., where she represents African governments and state-owned entities in high-stakes cross-border disputes across a wide range of sectors. She also advises African governments on complex legal and strategic aspects of maritime boundary delimitation. Margaux is a graduate of Université Paris I Panthéon-Sorbonne, Université Paris II Panthéon-Assasand Georgetown University Law Center (LL.M.). She is admitted in Paris and New York.
Karim Zein is a member of the New York and Paris bars and an international arbitration Associate at Simmons & Simmons (Paris office). His practice focuses on international commercial and investment arbitration. Karim also lectures in International Commercial and Trade Law at Université Panthéon-Assas. He is a graduate of Harvard Law School, Université Panthéon-Assas and Université Saint-Joseph de Beyrouth.
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