Presentation of international arbitration through a brief description of the arbitral procedure and the arbitral award, which is the decision of the arbitral tribunal.
About Internationonal Arbitration
What is arbitration?
In a broad sense, arbitration is a private judicial procedure paid by the parties. This alternative method of dispute resolution requires the consent of the parties to submit their dispute to an arbitral tribunal, which rules in compliance with the rule of law (business law).
Contrary to a procedure in a state court, the parties can decide the composition of the arbitral tribunal by appointing arbitrators. Another advantage of arbitration is the confidentiality of the proceedings.
Mediation vs Arbitration. The arbitration process is extrajudicial, but unlike other alternative dispute resolution such as mediation, the arbitrators will issue an arbitral award binding on the parties.
International arbitration refers specifically to determination of a dispute by the arbitral tribunal involving international commercial disputes. The International Chamber of Commerce (ICC), located in Paris, is hosting many international arbitration seats in its international arbitration court.
Specialised in international arbitration lawyers at Bélot Malan & Associés Paris were legal counsels for different firms in the Yukos case and represented them before the French courts.
In order to submit their dispute to international arbitration, the parties must write their expressed consent to arbitration in an agreement. This arbitration clause may be concluded either in respect of an existing dispute or in respect of an emerging dispute.
Article 1506 of the French civil code provides, by reference to article 1447 of the same code, that in international matters, the arbitration agreement is autonomous with regard to the main contract in which it is possibly added. Consequently, the arbitration clause is severable from the main contract. The nullity of one cannot affect the validity and the binding obligations of the other.
The effect of arbitration clauses is to deprive State courts of jurisdiction by submitting the parties’ dispute to arbitral proceedings. However, State courts remain competent as “supporting” judges in case of related procedural disputes to the international arbitration procedure according to article 1449 of code of civil procedure.
The formation of the arbitral tribunal
The parties to the arbitration clause usually appoint one or more arbitrators in order to constitute an arbitral tribunal. Appointment of the arbitrators can be made directly or by reference to arbitration rules or procedural rules according to article 1509 of code of civil procedure.
Articles 1506 al. 2 and 1552 of code of civil procedure provide that in case of disagreement, arbitrators shall be appointed by the person responsible for organising the arbitration or the referring judge.
The referring judge or “supporting” judge
In France, the President of the Paris Judiciary Court (Tribunal Judiciaire de Paris) is the referring judge in international arbitrations, unless otherwise provided.
The referring judge shall then have jurisdiction to hear and determine an application for a protective measure or a preliminary ruling or difficulties in setting up the arbitral tribunal.
The referring judge shall by way of order from which no appeal shall lie. However, the appeal may be possible in the event that the supporting judge considers that the arbitral tribunal should not be appointed because of the manifestly void or unenforceable nature of the arbitration clause.
The arbitration clause shall necessarily provide for the arbitral proceedings (article 1509 code of civil procedure). The arbitral tribunal shall determine procedural rules if the arbitration clause is silent, in compliance with principles of equality and that both parties should be heard. Parties shall act in good faith during proceedings.
The arbitral tribunal shall have the sole jurisdiction with regard to issues on its jurisdictional powers (article 1465).
The arbitral tribunal may stay proceedings pending in an event which it determines (article 1472). The course of the arbitral proceedings is therefore suspended.
The ruling of the award
According to article 1511 of the code of civil procedure, the arbitral award issued by the arbitral tribunal must settle the dispute in accordance with the rules of law chosen by the parties or, failing that, those which the arbitral tribunal considers appropriate. Moreover, the court must take into account “commercial practices”. Article 1512 provides that the arbitral tribunal may decide in equity as an amiable compositeur.
If there is more than one arbitrator, the award shall be made by a majority vote and shall be signed by all arbitrators. In the absence of a majority, the chairman of the arbitral tribunal shall rule alone. The arbitral award must be justified (article 1482).
The effects of the award
Pursuant to Article 1484 of the code of civil procedure, the arbitral award has authority of a final judgment (res judicata) and may be accompanied by provisional enforcement. The arbitral award shall dismiss the arbitral tribunal from such challenge (article 1485).
The enforcement of arbitral awards is subject to its compliance with international public order (article 1514 of the code of civil procedure). Enforcement shall require an order, which may, in accordance with the applicable provisions of the code of civil enforcement procedures, give rise to seizures. Enforcement orders can be challenged before a court of enforcement.
The legal remedies
In France, the arbitral award may only be challenged through an action for annulment. This action has to be brought before the Court of Appeal having jurisdiction (articles 1518 and 1519 of the code of civil procedure) within one month following the notification of the award. Such appeal is not suspensive and may only be possible in a limited number of cases (article 1520).
A decision refusing the recognition and enforcement (or exequatur) of an international arbitral award rendered in France may be appealed within one month following the notification of the award.
Pursuant to article 1524 of the code of civil procedure, the judicial decision granting enforcement may not be appealed except for specific cases. It may be appealed for review but is not subject to opposition or appeal in cassation (article 1506).
A ruling on an application for recognition or enforcement of an arbitral award rendered abroad may be appealed within one month following its notification. The French Court of Cassation established that international arbitral awards may be enforced and executed in France, even though the award has been set aside by a foreign judge at the seat of arbitration (Putrabali jurisprudence).