Under article 2060 of the French Civil Code (CC), certain subject matters are not arbitrable in France. This is the case for matters relating to personal status (capacity, marriage, divorce, etc), disputes relating to public bodies or administrations (except for the industrial and commercial activity of such public bodies if expressly authorised by decree) or matters relating to the violation of public order.
Intellectual property disputes are arbitrable except for disputes relating to the issuance and annulment of a patent that relate to the exclusive jurisdiction of national courts (article L.615-17 of the French IP Code).
Disputes involving matters relating to antitrust and competition law are arbitrable on all civil law aspects and consequences. However, arbitral tribunals are not allowed to pronounce injunctions or sanctions that fall within the exclusive power of the relevant public authority.
Intra-company disputes are also arbitrable unless prohibited by the company’s by-laws.
What formal and other requirements exist for an arbitration agreement?
Under French law, for international arbitration, the arbitration agreement’s validity is not subject to any formal requirement (article 1507 French Civil Procedure Code (CPC)). Therefore, the agreement does not need to be made in writing. French courts only consider the ‘common intent of the parties’ (Court of Cassation, 20 December 1993, Dalico, 5 January 1999, Zanzi). The arbitration agreement can be inserted in a document distinct from the main contract, for example, in general terms and conditions. However, in this case and in the absence of reference in the main contract, the validity of the arbitration agreement is subject to (1) the parties’ knowledge of the content of such distinct document (which can be established by previous and regular business relationships); and (2) the parties’ consent – even by silence – for incorporating this distinct document in the contractual relationships (Court of Cassation, 9 November 1993, No 91-15.194; Court of Cassation, 11 October 1989, No 87-15.094; Court of Cassation, 9 November 2016, No 15-25.554).
For matters relating to domestic arbitration, the arbitration agreement needs to be made in writing and signed by each party. This agreement can be made by signing a document that refers to other documents, which includes the arbitration clause (article 1443 CPC).
In what circumstances is an arbitration agreement no longer enforceable?
Arbitration agreements are materially separable from the underlying contract. Thus, any modification (annulment, termination, limitation, etc) affecting the latter does not impact the arbitration clause (article 1447 CPC). However, if the cause of annulment relates to the arbitration clause itself, it cannot be enforced.
The parties can renounce the arbitration agreement explicitly or implicitly. This can happen in the case of interdependent contracts where the latter contract provides for jurisdiction of state courts, or when one party initiates state court litigation on the merits and the other party does not challenge the jurisdiction of the state court.
In case of insolvency, the principles of creditors’ equality and suspension of individual claims are part of French public international order (Court of Cassation, 7 January 1992, No. 89-18.708). Therefore, state courts hold, to a certain extent, exclusive jurisdiction. The arbitration clause agreed before the insolvency remains valid and binding on the relevant party, but, until the end of the insolvency proceedings, the power of the arbitrators will not encompass the possibility to condemn the insolvent party to pay an amount of money to the other party. It may, however, rule on the case and liquidate the amount of the claim.
Are there any provisions on the separability of arbitration agreements from the main agreement?
Arbitration agreements are materially and legally separable from the main agreement.
Material separability means that inefficiency of the agreement containing the arbitration clause does not affect the validity of that arbitration clause (article 1447 CPC).
Legal separability means that the law applicable to the agreement containing the arbitration clause is not necessarily the law applicable to that clause (Court of Cassation, 5 January 1999, Zanzi; 20 December 1993, Dalico).
Third parties – bound by arbitration agreement
In which instances can third parties or non-signatories be bound by an arbitration agreement?
As a general rule, under French law, a party can only be bound by an arbitration agreement if it has given consent (article 2061 CC).
However, in the case of assignment of contract, the assignee is bound by all its assignor’s obligations, including those arising out from an arbitration clause, even without its previous acknowledgement (Court of Cassation, 5 January 1999) and even if the assignment contract is flawed (separability). The assignment of the arbitration clause does not work, however, if the arbitration agreement was intuitu personae (ie, provided for in consideration of the identity of the initial parties to the agreement) (Court of Cassation, 28 May 2002, No. 00-12.144, Cimat).
In addition, French case law holds that if a third party got involved in the performance of the main agreement while knowing about the existence of the arbitration clause, this third party must be bound by that clause (Paris Court of Appeal, 26 February 2013). The same rule applies in the event of co-dependency between several contracts with one containing an arbitration clause.
In the case of agency, a party is bound by the arbitration clause signed by its agent (Court of Cassation, 11 July 2006, No. 05-18.681).
In the case of insolvency, the liquidator is bound by the arbitration clause if agreed before the insolvency (Court of Cassation, 1 April 2015, No. 14-14.552).
Third parties – participation
Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice?
There are no provisions under French law as to third-party participation in arbitration. The parties’ intention is the main criteria to join independent arbitration proceedings.
Groups of companies
Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine?
Yes, this type of extension is accepted in case law (ICC Award, 21 October 1983, Dow Chemical followed by subsequent French case law: Paris Court of Appeal, 31 October 1989, Kis France v Société Générale).
Multiparty arbitration agreements
What are the requirements for a valid multiparty arbitration agreement?
French law does not prohibit multiparty arbitration agreements and does not provide for any special requirement in relation thereto (article 1507 CPC). Multiparty arbitration is governed by the same principles of equality between the parties and of due process (article 1510 CPC).
Can an arbitral tribunal in your jurisdiction consolidate separate arbitral proceedings? In which circumstances?
There is no specific provision under French law regarding the power of the arbitral tribunal to join separate arbitral proceedings. Such matters will be subject to the parties’ agreement or governed by the rules of the appointed arbitral institution (if any).
