Arbitration

Verified 09 December 2024 - Directorate for Legal and Administrative Information (Prime Minister)

Arbitration is the settlement of a dispute through the intervention of one or more arbitrators chosen by the parties. The arbitrator(s) shall be paid by the parties. The procedure remains confidential and is often faster than justice. International arbitration is not covered in this fact sheet.

Arbitration is to submit a dispute, by agreement between the parties, to an arbitral tribunal or to a single arbitrator. He shall decide the dispute by giving a decision called arbitral award. This one shall be binding on the parties as a judgment handed down by a state court. This procedure is sometimes expensive, but confidential and faster than litigation.

Arbitration is different from mediation in which the solution comes from will of the parties. A mediator helps the parties to re-establish communication and reach an agreement, but does not give an opinion: it seeks to respect the respective interests of the parties in order to preserve their future relations. Mediation can be used to resolve disputes between partners of a commercial business or between a tenant of a commercial lease and the owner.

Please note

For more information on mediation, see the dedicated card.

To implement arbitration, the parties must sign an arbitration agreement: this is a contract by which they undertake to use arbitration to resolve their dispute.

The arbitration agreement may take place at any of the following times:

  • Before the dispute : the parts incorporate a arbitration clause in the original contract. This clause states that any dispute related to the contract will be resolved through arbitration. It shall also indicate the arbitrator appointed to settle the dispute.
  • After the dispute arises : the parties decide to opt for arbitration when the dispute already exists. They then sign a arbitration compromise. It is an agreement by which the parties decide to submit their dispute to arbitrators. It shall also specify the statement of the case and appoint the arbitrator(s).

Warning  

Arbitration is not available after the opening of an arbitration collective proceedings.

Arbitration clause

The arbitration clause must take the form of writing inserted in the contract concerned or in a separate agreement.

The arbitration clause shall be authorized in contracts concluded between traders (e.g. commercial lease, franchise agreement). Where one of the parties is an individual, the trader may not invoke the arbitration clause.

The arbitration clause shall specify the following:

  • Appointment of arbitration as a means of resolving disputes related to the contract
  • Appointment of arbitrator(s): name, address

The following may be added:

  • Number of referees
  • Language of arbitration
  • Applicable rules of law

The arbitration clause shall be independent of the contract to which it is attached. This means that the contract remains even if the clause cannot apply.

If one of the parties applies to a court while an arbitration agreement has been signed, that court must declare that it has no jurisdiction. However, as long as the arbitral tribunal is not constituted, a party may bring an action before the courts for a measure of inquiry, a provisional measure or conservatory.

Arbitration 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.

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. To be valid, this compromise should include the following :

  • Set out the facts of the dispute
  • Appoint arbitrator(s)
  • Indicate the willingness of the parties to submit the dispute to arbitration.

If one of the parties refers the matter to the commercial court when an arbitration agreement has been signed, that court declares itself incompetent. However, as long as the arbitral tribunal is not constituted, a party may bring an action before the courts for a measure of inquiry, a provisional measure or conservatory. For example, a creditor claims a preservation on material of its debtor. This seizure is made to block material that cannot be resold. The seizure can be made until the arbitration has begun.

Appointment of arbitrator(s)

The appointment of arbitrators shall be made in accordance with the terms of the arbitration agreement.

Only the natural persons may be arbitrators. A legal person (e.g. an arbitration center) cannot be an arbitrator but can organize the arbitration.

The tribunal may consist of one or more arbitrators in an odd number.

If the parties are unable to reach an agreement to appoint an arbitrator, they must follow the following rules:

  • In the event of arbitration by a sole arbitrator : the arbitrator shall be appointed by the person responsible for organizing the arbitration or by the president of the judicial or commercial tribunal.
  • In the case of arbitration by 3 referees : each party chooses an arbitrator and the 2 arbitrators thus chosen designate the 3e. If a party does not choose an arbitrator or if the 2 arbitrators do not agree, the person in charge of organizing the arbitration or the president of the commercial court shall make the appointment.

The arbitral tribunal shall be constituted where the arbitrator or arbitrators have accepted the assignment entrusted to them. It is from this date that arbitral tribunal shall be constituted and seised of the dispute.

Independence and impartiality of the arbitrator

The appointed arbitrator shall disclose any facts affecting his or her independence or impartiality before accepting his mission. For example, an arbitrator who has given a consultation on the case before him is not impartial.

He must also disclose any new circumstances that may arise after the acceptance of his mission. In this case, his mission shall cease before the scheduled end.

Its mission shall also cease in the event of justified impediment (illness, accident, etc.), or revocation by the parties.

Arbitration settles disputes faster than litigation.

Where the arbitration agreement does not provide for a time limit, the arbitration shall take place on 6 months at the most.

This period may be extended by agreement of the parties or by the judge of the court of justice or the commercial court.

The arbitral tribunal (or sole arbitrator) shall freely determine the rules of the arbitration proceedings. It must, however play by the rules following:

  • The arbitrator cannot go beyond the scope of the dispute that has been set. He may, however, ask the parties for explanations.
  • It is imperative that a person's rights in a trial be respected during the arbitration proceedings. It is a question of respect for the principle of contradictory and the rights of the defense (submission of documents, presentation of arguments in particular).
  • The principle of confidentiality shall apply unless the parties decide otherwise.
  • Parties and arbitrators must act promptly and fairly (i.e. good faith) in the conduct of the procedure.

The parties also have the possibility to choose the how the arbitrators will rule :

  • Either by applying the rules of law
  • Amicable composer: this means that the arbitrator discards the application of certain legal rules when they are not mandatory. It shall decide in fairness but in the common interest of the parties.

The arbitral tribunal shall decide the dispute in accordance with rules of law. The parties may also instruct the arbitrators to rule as amiable composers, that is to say, to rule in equity. For example, the arbitrator may award the creditor only a portion of the amount set out in the contract.

The arbitral tribunal shall make a decision, called arbitral award. It shall be adopted by a majority vote and shall be signed by all the arbitrators. If a minority refuses to sign it, the award mentions it, but it has 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 : it shall be binding on the parties and shall bring the dispute to an end.

If it is not carried out voluntarily, it must be enforced. To do that, you have to apply for an order of exequatur the court of the place where the arbitral award was made. A request must then be made to the Registry with the original of the award and a copy of the arbitration agreement.

Who shall I contact

The arbitral award may be challenged in one of the following ways:

  • Either by the call : it is possible only when the parties have provided for it in the arbitration agreement. The court of appeal having jurisdiction shall be that of the place where the arbitral award was made. The appeal may vary or set aside the award.
  • Either by the action for annulment : it is possible only 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.

An appeal and an application for annulment must be made to the Court of Appeal of the place where the arbitral award was made. The parties shall have a period of one month from the date of notification of the award.

Who shall I contact

FYI  

A third party to the arbitration panel may third-party opposition. For example, the joint and several guarantee which has not been a party to the arbitration proceedings and which is adversely affected by the award fixing the amount of the principal debtor's debt to the creditor.

Who can help me?

The public service accompanying companies

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