International arbitration: how do the proceedings work?

The arbitral tribunal has been set up and the arbitrators have accepted their assignment. The organisational phase gives way to the heart of the process: the arbitration proceedings themselves. How does this "private hearing" of an international dispute work in practice? What are the rules governing the exchanges between the parties and the arbitrators? Who decides which law is applicable to the dispute? Arbitration is renowned for its flexibility, but flexibility does not mean the absence of rules. This article guides you through the key stages and guiding principles for the conduct of international arbitration proceedings, from the choice of legal framework to the management of evidence and procedural incidents.

What is the legal framework for the proceedings? Procedural law

One of the major attractions of international arbitration is the freedom given to the parties to shape the proceedings. In accordance with Article 1509 of the French Code of Civil Procedure, it is first and foremost up to the parties to decide how to proceed. the parties which determine, in their arbitration agreement or by subsequent agreement, the rules of procedure to be followed. They may :

• Establish their own tailor-made rules.
• Refer to the procedural rules of a specific national law (for example, French, Swiss or English law).
• Adopt the rules of an arbitration institution (ICC, LCIA, etc.), which is the most frequent case in practice.
• Refer to non-state rules, such as the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules, designed specifically for ad hoc arbitration.

This freedom is very broad. There is no necessary link between the physical place where the hearings are held (the "seat" of the arbitration) and the procedural law chosen. An arbitration sitting in Paris may well be governed by the Swiss rules of procedure or the rules of the London-based LCIA.

What happens if the parties have made no provision? Article 1509 gives the arbitration tribunal the power to regulate the procedure itself, "either directly or by reference to arbitration rules or rules of procedure". Here, the arbitrator has the same freedom as the parties.

However, this freedom is not absolute. Whatever procedure is chosen or defined, Article 1510 of the Code of Civil Procedure requires compliance with two fundamental principles, considered to be part of international procedural public policy:

• Equality of the parties : Each party must have the same rights and the same procedural weapons.
• The principle of contradiction : Each party must be given the opportunity to know and discuss the arguments and evidence presented by the other party and taken into account by the court.

If the parties choose to submit their arbitration to French procedural law (which is possible even if the arbitration takes place abroad), or if this law applies in the absence of any other choice under certain conditions (via Article 1505), then a certain number of suppletive provisions of the French Code of Civil Procedure, listed in Article 1506, will apply to guide the proceedings (concerning in particular the arbitrators' powers of instruction, the management of incidents, etc.), always subject to respect for the autonomy of the parties' will.

The alternative: amicable composition

Rather than asking the arbitrators to decide the dispute strictly by applying the rules of law (whether national or other), the parties may agree, by means of an express clause in their arbitration agreement, to give them the power to decide in amicable composition (article 1512 of the Code of Civil Procedure).

The arbitrator acting as amiable compositeur no longer judges "in law" but "in equity". He seeks the solution that seems to him to be the fairest and most appropriate to the particular circumstances of the case, even if it departs from the strict application of the normally applicable rule of law. It may thus moderate the effects of a contractual clause deemed too harsh, or set aside a legal rule whose strict application would lead to an unfair result.

However, this option does not give the amiable compositeur full powers. He remains bound by his jurisdictional mission and must respect the fundamental principles of procedure (equality, contradiction). Above all, he cannot completely ignore the contractual framework and remake the contract in place of the parties. Its decision must also comply with international public policy. Amiable composition is less common in international arbitration than in domestic arbitration, as the parties often prefer the predictability of legal rules in a multicultural context.

Which law should govern the substance of the dispute?

Determining the rules of procedure is one thing; choosing the rules that will enable the case to be decided is another. background of the dispute is another. Here again, the guiding principle in international arbitration is party autonomy.

Article 1511 of the Code of Civil Procedure is very clear: the parties choose the "rules of law according to which the arbitral tribunal will rule. The use of the term "rules of law" rather than "law" is significant. It indicates that the parties are not limited to choosing a national law (French, Swiss, American, etc.). They may opt for :

• A specific national law.
• A combination of several national laws.
• Internationally recognised general principles of law (such as the UNIDROIT Principles of International Commercial Contracts).
• La Lex MercatoriaA set of uncodified principles and practices specific to international trade, developed through arbitration practice and case law.
• They can even "carve up" the contract, by subjecting different parts of the contract to different legal rules.

If the parties have not no choiceArticle 1511 gives the arbitrator a great deal of freedom: he or she decides the dispute. in accordance with the rules of law it considers appropriate. The court is not obliged to apply a specific conflict-of-laws method (as a national court would do) to determine the applicable national law. He can directly choose the national law that seems most relevant, or apply general principles, or combine different approaches. Its aim is to find the rules best suited to the nature of the dispute and the legitimate expectations of the parties.

In all cases, whether he applies rules chosen by the parties or by himself, Article 1511 specifies that the arbitrator shall "takes account of trade practices. These usages do not in themselves constitute a complete legal system, but they do shed light on the interpretation of contracts and the application of legal rules in the specific context of international trade.

Starting the proceedings: referral and mission statement

Once the tribunal has been constituted, the proceedings are formally "initiated" or the tribunal is "seized" (vested with its mission). This moment often coincides with the acceptance of their mission by all the arbitrators. It is important to note that if the contract provides for a mandatory prior mediation or conciliation clause, referring the matter directly to the arbitral tribunal without having complied with this stage may render the arbitration claim inadmissible.

In practice, particularly in the case of institutional arbitration, the beginning of the proceedings is often marked by the establishment of a Mission Statement (or Terms of Reference). This essential document, generally prepared by the arbitral tribunal in consultation with the parties and signed by all, serves as a roadmap for the proceedings. It typically contains :

• The full identity of the parties and their counsel.
• The identity and address of the referees.
• A succinct statement of the circumstances of the case and the claims of the parties.
• The precise list of issues to be decided by the arbitral tribunal (its terms of reference).
• The applicable rules of procedure (if not already set).
• The place and language of the arbitration.
• Sometimes an initial procedural timetable.

The Terms of Reference crystallize the agreement of the parties and the arbitrators on the framework of the dispute and the procedure, which greatly contributes to the security and efficiency of the proceedings.

Confidentiality in international arbitration: myth or reality?

Arbitration is often perceived as a confidential procedure, out of sight of the public and competitors. This confidentiality is one of its supposed attractions. But what is the reality of international arbitration under French law?

Unlike domestic arbitration, where Article 1464(4) of the Code of Civil Procedure establishes a principle of confidentiality (unless the parties agree otherwise), there is no general legal provision requiring confidentiality in international arbitration. Article 1506 does not refer to article 1464 paragraph 4.

This means that if the parties wish their arbitration to be confidential (whether it be the proceedings, the documents exchanged, or the award itself), they must so state. expressly provide for :

• Either in their initial arbitration agreement.
• Or by a separate confidentiality agreement concluded at a later date.
• Or by choosing institutional arbitration rules that contain express provisions on confidentiality (which is the case with many rules, but with varying scope).

Even in the presence of an agreement, confidentiality has its limits. limits. It cannot override legal obligations to disclose (for example, with regard to the fight against money laundering, or for listed companies), or the exercise of legal remedies (proceedings before the Court of Appeal are public), or the need to produce the award in order to obtain its enforcement. A distinction must be made between simple privacy (non-public nature of hearings) of the confidentiality (a genuine obligation of secrecy incumbent on the parties, the arbitrators and the institution).

Managing the procedure: the arbitrator's powers and incidents

The arbitrator is the master of the proceedings he conducts. He has significant powers to investigate the case and manage any incidents that may arise.

• Jurisdiction : As mentioned above, it rules on its own jurisdiction (article 1465).
• Provisional and conservatory measures :
  • Before the constitution of the court, only the state judge has jurisdiction to order such measures, and only in an emergency (article 1449).
  • After When it is constituted, the arbitral tribunal may order "any conservatory or provisional measures that it considers appropriate" (article 1468). It may impose a penalty to ensure the effectiveness of such measures. Its jurisdiction does not, however, extend to protective attachments and judicial securities, which remain the monopoly of the national courts.
• Evidence : The principle is that each party must prove the facts necessary for the success of its claim (actori incumbit probatio). However, the arbitrator has extensive powers of inquiry (Article 1467). He may order the parties to produce evidence in their possession, if necessary subject to a fine. If a relevant document is in the possession of a third party, the arbitrator may invite a party to apply to the state court (President of the High Court) for its compulsory production (article 1469).
• Investigative measures : The arbitrator may decide to hear witnesses (whose written statements are often supplemented by an oral hearing), appoint a technical expert (although the parties often produce their own expert reports), carry out a site visit, etc. The procedure is generally more flexible than in state courts. The procedure is generally more flexible than in state courts.
• Procedural incidents : The arbitral tribunal has jurisdiction to rule on any incidents that may arise, such as a dispute over the authenticity of a handwriting or an allegation of forgery (article 1470). It may also decide to stay the proceedings (article 1472) if the resolution of the dispute depends on another decision (judicial, administrative, etc.) or if an event affects the capacity of a party (collective proceedings). The proceedings are also suspended in the event of the death or incapacity of an arbitrator, until he or she is replaced (article 1473).
• Procedural orders : The arbitral tribunal issues procedural orders to manage the proceedings (setting deadlines, organising the exchange of written submissions, ruling on requests for a preliminary hearing, etc.). These are measures of judicial administration and do not rule on the merits of the dispute; they are therefore not immediately appealable.

The conduct of international arbitration proceedings is marked by great procedural flexibility, framed by the fundamental principles of equality and contradiction, and supported by the extensive powers conferred on the arbitrator to hear the case and resolve incidents.

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Mastering the rules and procedures of arbitration proceedings is essential if you are to defend your interests effectively. Our team is on hand to provide strategic assistance throughout the proceedings.

Sources

• Code of Civil Procedure (in particular articles 1449, 1462-1473, 1506, 1509-1512)
• UNIDROIT Principles of International Commercial Contracts (mention)
• UNCITRAL Arbitration Rules (mention)