Private Dispute Resolution: Arbitration
Verified 21 March 2022 - Directorate for Legal and Administrative Information (Prime Minister)
Any company may resort to arbitration to settle a dispute arising from a commercial transaction. The company then renounces going through state courts and chooses private justice. This choice requires the existence of an agreement of the parties to the dispute. Arbitration is sometimes expensive but confidential and expeditious. Arbitration is used in particular in distribution and franchising. The subject of international arbitration is not covered on this page.
The arbitration agreement is a contract in which 2 parties decide to use arbitration to resolve their dispute.
There are 2 possibilities:
- Either the parties agree in advance to settle their dispute by arbitration. That's what we call it arbitration clause.
- Either the parties decide to settle an existing dispute by arbitration. We're talking about arbitration compromise.
Arbitration may not be used for disputes concerning:
- Performance of a contract of employment
- Divorce and legal separation
- Matters of public policy, such as collective proceedings
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Arbitration clause
The arbitration clause must take the form of a written document signed by the two parties.
That written statement shall be inserted directly into the contract concerned or into a separate agreement. It must contain the following elements:
- Appointment of arbitration as a means of resolving disputes related to the contract
- Information concerning the arbitral tribunal chosen: name, address
Other optional elements may be added, such as the number of arbitrators, the language of the arbitration, the applicable rules of law or the manner of adjudication.
The arbitration clause shall be independent of the contract to which it is attached. This means that, if the clause cannot be applied, the main contract to which it is attached remains.
In the presence of an arbitration agreement, the dispute may not be brought before a court of the State which declares itself incompetent. However, as long as the arbitral tribunal is not seised and the arbitration agreement is not applicable, the court of the State shall have jurisdiction.
Until the arbitral tribunal is constituted, a party may apply to a State court for a measure of inquiry or an interim measure, or conservatory.
Compromise
It is a contract by which the parties decide to submit a dispute already existing to an arbitral tribunal, including where a judge has already been seised.
This compromise must determine the scope of the subject matter of the dispute and the appointment of arbitrators.
The compromise must be written down. It may take the form of an exchange of written material or a document referred to in the main contract.
In the event of non-compliance with these conditions, the arbitration compromise shall be null and void.
The arbitration agreement shall be independent of the contract to which it relates. This means that if the main contract is ineffective, the compromise continues to apply.
The parties may provide for an arbitration compromise even in proceedings already commenced before a court.
If there is an arbitration agreement, the dispute cannot be brought before a court of the State which declares itself incompetent. However, as long as the arbitral tribunal is not seised and the arbitration agreement is void or manifestly unenforceable, the court of the State shall have jurisdiction.
Until the arbitral tribunal is constituted, a party may apply to a State court for a measure of inquiry or an interim measure, or conservatory.
Mission of the arbitrator(s)
The role of arbitrator shall be exercised by a natural person enjoying its civil rights.
If the arbitration agreement designates a legal person (e.g. an arbitration center), the legal person has the power to organize the arbitration.
The arbitration agreement shall designate the arbitrator(s) or provide for the terms of their appointment.
Appointment of one or more arbitrators
The number of arbitrators must be odd, unless the parties wish otherwise.
In the case of arbitration by a single arbitratorif the parties do not agree on the choice of the arbitrator, the arbitrator shall be appointed by the person responsible for organizing the arbitration or by the president of the court.
In the case of arbitration by 3 referees, each party chooses 1 and the 2 arbitrators thus chosen designate the 3eme.
If a party does not choose an arbitrator or if the two arbitrators do not agree, the person in charge of organizing the arbitration or the President of the Judicial Tribunal shall make this appointment.
Exercise of the mission
The arbitrator, before accepting his assignment, must disclose any circumstances affecting his independence or impartiality. This obligation shall also apply after acceptance of the mission.
Where the arbitrator or arbitrators have accepted the task entrusted to them, the arbitral tribunal shall be constituted.
End of the referee's assignment
The arbitrator shall continue his or her assignment until the end of the assignment.
Its mission shall cease in the following three cases:
- Justified impediment (illness, accident)
- Legitimate cause of abstention (conflict of interest)
- Legitimate cause for resignation
The arbitrator may also be removed by unanimous consent of the parties.
Conduct of the proceedings
If the agreement does not provide for time limits, the proceedings shall last six months.
The arbitration agreement may provide that this period may be extended by agreement of the parties or, in the absence of agreement, by the President of the court.
The parties and the arbitrators must act promptly and fairly in the conduct of the proceedings.
The rights of the defense must be respected (communication of documents, presentation of arguments, etc.).
The principle of confidentiality shall apply unless the parties decide otherwise.
If one party takes the dispute to court, the other party may challenge the action on the basis of a inadmissibility, since it is the arbitral tribunal which has jurisdiction.
Arbitral Award
The arbitral tribunal shall decide the dispute in accordance with the rules of law. However, the parties may agree that the arbitrator shall amicable composer, i.e. it may exclude the application of certain legal rules where they are not mandatory. The arbitrator shall then rule in fairness in the common interest of the parties.
The arbitral tribunal shall make a decision, called sentence, which shall be binding on the parties and shall bring the dispute to an end.
The arbitral award shall be rendered by a majority vote and shall be signed by all arbitrators.
If a minority of them refuse to sign it, the award shall refer to it and it shall have the same effect as if it had been signed by all the arbitrators.
As soon as it is rendered, the arbitral award shall the authority of res judicata.
If the arbitral award is not enforced voluntarily, it must be enforced. To achieve this, an order of exequatur shall be given by the court of justice.
Appeals allow the validity of the arbitrator's decision to be challenged.
The call is possible only where the parties have provided for it in the arbitration agreement. It shall take place before the Court of Appeal of the place where the arbitral award was made.
The action for annulment is only possible when the parties have not provided for the possibility of appeal. It shall take place before the Court of Appeal of the place where the arbitral award was made.
The third-party opposition is possible for a sentence handed down in France. It is made before the court which would have had jurisdiction in the absence of arbitration (commercial court, for example).
The appeal for review is possible when all other remedies have been exhausted and only if there has been fraud.
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