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Arbitration & ADR


The issue of sovereign immunity from enforcement is highly sensitive. It is regarded as a vital component of state sovereignty and as necessary to preserve peaceful relationships between states, and should be recognised as a matter of international comity. However, the interests of international commerce and private parties cannot be denied. The Supreme Court recently issued a key decision focusing on diplomatic assets.

Two recent Paris Court of Appeal decisions offer a contrasting perspective on the challenges associated with arbitration: while the enforcement of awards that have been recognised must be facilitated and applications for stays of enforcement are held to the most stringent standards, the legitimacy of arbitration requires that the legal process remain immune from suspicions of corruption and fraud.

In order to enhance the flexibility of the arbitral process, French arbitration law allows parties to nominate their arbitrators, either directly or by reference to arbitration rules. Two recent decisions on conflicts of interest are illustrative of the approach of French courts, which seek to strike a delicate balance between giving arbitration users added freedom and ensuring that due process and fair trial guarantees apply

In its April 1 2014 decision the Paris Court of Appeal has reiterated its well-established position in relation to the enforcement of arbitral awards set aside at the seat of arbitration, confirmed the arbitrators' duty of disclosure, and restated the respective roles played by the arbitrators' duty of disclosure and the parties' duty of loyalty in arbitration proceedings.

The Supreme Court has upheld the validity and enforceability of a bilateral option clause which gave both parties the option to resolve their dispute by way of arbitration or through domestic courts. While this decision clarifies the French courts' position regarding bilateral option clauses, it raises concerns as to the validity of sole option clauses.

Reforms to French arbitration law determined that appellate review would no longer automatically stay execution of an award. A member of Parliament questioned this regime, which does not provide for an adversarial debate at the level of the application for an exequatur order, by posing a question to the minister of justice. The minister recently responded that exequatur proceedings are to remain ex parte – for now, at least.

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The courts previously applied a rather lenient test to waivers of immunity from execution. While French law required waivers to be specific and unequivocal, the courts allowed immunity to be waived implicitly. However, recently in three simultaneous decisions involving interim measures in pursuit of a foreign court judgment's enforcement, the Supreme Court applied a stricter test to waivers of sovereign immunity from execution.