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Paris – The Capital of International Arbitration

Paris has always enjoyed an outstanding reputation as a location for the seat of international arbitration proceedings. In many ways, Paris is the capital of international arbitration because the city offers a multitude of advantages as a place of arbitration.

The ICC, the leading international arbitral institution, is based in Paris

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.

It is fair to say that the ICC is the leading international arbitral institution having administered to date more than 25,000 arbitrations around the world. In 2019, ICC arbitrations were seated in more than 110 cities in over 60 countries across the globe, with the most popular seats being Paris, London, Geneva and Singapore.

The fact that Paris has established itself as a major arbitral seat is no doubt due in part to the ICC’s radiance as well as the ICC’s continuous striving to stay on the cusp of innovation, as evidenced most recently by the 2012 ICC Rules of Arbitration. It was also the ICC that provided the United Nations with the first draft of what became perhaps the most successful and widely used international convention, namely the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (more commonly known as just the “New York Convention”) over 60 years ago. This convention, to which 168 countries have since acceded, is of paramount importance for international arbitration as it provides a strong legal framework for the recognition and enforcement of arbitral awards around the world. Unsurprisingly, France was one of the inaugural countries that signed the New York Convention back in 1958. Indeed, Paris is also a preferred seat of arbitration because France is a country that has historically been and continues to be very much pro-arbitration.

French law strongly favors arbitration

Paris has long been recognized as an impartial and neutral jurisdiction within which to conduct arbitrations due to the fact that both French laws and courts are supportive of arbitration. Similar to Germany, France has codified these laws in its Code de procédure civile (Code of Civil Procedure). The provisions of the French Code of Civil Procedure dealing with arbitration, which date back to 1981, were revised in 2011 (the “2011 law”) in order to codify the well-established French case law developed over the past thirty years and to introduce a number of innovations.

Autonomy of the arbitration agreement

As a starting point, the 2011 law confirms the long-established principle of the autonomy of the arbitration agreement, whereby the arbitration agreement is deemed to be independent from the contract itself (Article 1447). Therefore, the arbitration clause is severable from the main contract, allowing an arbitration to proceed even if the contract is purportedly or actually invalid. Moreover, unlike many other jurisdictions, the agreement to arbitrate is not subject to any formal requirements (Article 1507), thus permitting parties to arbitrate with more ease and ultimately providing them with security that the clause detailing their agreement to arbitrate will be enforced. French law also established the principle of “competence-competence” very early on, pursuant to which the arbitral tribunal has the power to determine whether it has jurisdiction under an arbitration clause. Apart from these “bells and whistles” provisions that one would expect to see today in any modern arbitration law, the 2011 law introduced a number of innovative features, a few of which are discussed below.

Independence of the arbitral process

The 2011 law also confirms the independence of the arbitral process from the influence of the French courts and actually encourages the courts to take measures to aid arbitral proceedings. In fact, the new law 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. Rather, French judges view their role as one of supporting the arbitral process.

In the same vein and in line with only a handful of other jurisdictions, the 2011 law grants parties the novel option of waiving their right to set aside an award (Article 1522). 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). This review is referred to as set-aside proceedings and the grounds for doing so in France are limited to serious procedural irregularities, as is the case in other jurisdictions. However, by providing parties with the ability to waive their right to annulment proceedings, French law allows them to further insulate the award from the state courts.

Efficiency of enforcement

The 2011 law has also further increases the efficiency of the enforcement of an award. Indeed, awards rendered in France are now directly enforceable even if set-aside proceedings are pending (Article 1526). Before 2011, one was not able to seek enforcement of an award until set-aside proceedings had been concluded. Accordingly, parties who were unsuccessful when the award was rendered could use such set-aside proceedings as a tactic to delay enforcement, even if they had no chance of getting the award set aside. 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 addition to these innovative features, it is important to remember that the choice of Paris as a seat of arbitration does not equate with the use of French language or French law in the arbitration. Indeed, even though Paris is consistently the number one seat chosen in ICC arbitrations, in 2019, 79% of approved awards were rendered in English, 7% in French and 1% in German. By the same token, 16% were governed by English law and 10% were governed by French law. Furthermore, if the parties choose Paris as the seat of arbitration, they can of course agree to hold the hearings anywhere else that is most convenient to them.

French courts have a reliable pro-arbitration track record

As those familiar with arbitration will know, 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 at the seat that apply the arbitration law properly, meaning they refrain from interfering with the arbitration process and instead support it.

France’s court system provides for a neutral and impartial jurisdiction with specialized 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: [2010] 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. 10 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 combine to make Paris an excellent choice for the seat of arbitration. It has top-notch lawyers that are experts in the field, offers a central location in Europe and has excellent transportation connections. It also offers 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 favorable 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