The arbitration award: final decision and appeal procedures

The arbitration procedure is drawing to a close, the arguments have been exchanged, the evidence administered and the arbitral tribunal has made its decision: the award. This is the culmination of the process you chose to settle your commercial dispute. But what exactly is the scope of this decision? Does it apply immediately? What if the opposing party refuses to comply? And, just as importantly, is it possible to challenge an arbitration award if you believe it to be incorrect or unfair? This article looks at the nature of arbitration awards, how they are enforced, and explores the remedies available to challenge them, which are often more limited than for a conventional judgment.

What is an arbitration award?

It is essential to understand that an arbitration award is not simply an opinion or a recommendation. Despite its private origin (it emanates from judges chosen by the parties), it constitutes a genuine court ruling. It settles the dispute that has been submitted to the arbitrators. There are two types of award finalwhich settle all or part of the substance of the dispute, awards preliminary rulingwhich order a preliminary measure (such as an expert opinion) without deciding on the merits, or awards provisional ordering a protective or provisional measure in the course of proceedings. Only awards that definitively settle part of the dispute on the merits have all the attributes we are about to describe.

To be valid, the award must comply with certain conditions form and contain essential informationThe arbitration decision must be signed by the parties and their counsel, as specified in articles 1481 and 1482 of the Code of Civil Procedure. It must state the names of the parties and their counsel, the names of the arbitrators who rendered it, and the date and place where it was pronounced. Above all, it must be motivated arbitrators must set out the reasons in fact and in law on which their decision is based. This obligation to state reasons applies even if they have been given the power to rule "amiable compositeur" (i.e. in equity). Finally, the award must be signed by all the referees (or at least by the majority of them, with mention of the minority's refusal to sign), in accordance with Article 1480 of the Code of Civil Procedure. Failure to provide reasons, date or signatures may result in the award being declared null and void (article 1492, 6° of the Code of Civil Procedure).

As soon as it is made, the arbitration award acquires the force of law.res judicata relating to the dispute it resolves, as stipulated in article 1484, paragraph 1, of the Code of Civil Procedure. This means that it is binding on the parties with the same force as a final judgment and that the dispute can no longer be re-litigated on the same points between the same parties.

Finally, by making the final award, the arbitrators are fulfilling their mission and are relinquished of the dispute (article 1485, paragraph 1). They can no longer change their decision or retry the case. There are, however, limited exceptions: the arbitrators may be called upon again to correct a material error (typing error, calculation error...), to interpret an obscure provision of the sentence, or to complete their decision if they have failed to rule on a claim submitted to them (articles 1485, paragraph 2 and 1486). Such applications must generally be made within three months of notification of the award.

How can an arbitration award be enforced?

It's one thing to have a judgment in your favour, but it's quite another to have it enforced, especially if the opposing party is ordered to pay a sum of money or take some other action.

Ideally, the execution is voluntarily. The condemned party respects the decision and complies spontaneously. This is the logical consequence of the commitment made by the parties in choosing arbitration.

Unfortunately, this is not always the case. If the convicted party refuses to comply, the case must be referred to theforced execution. For this reason, although the arbitration award has the force of res judicata, it does not immediately have the "enforceability" of a state judgment. An additional formality must be obtained: theexequatur. Under article 1487 of the Code of Civil Procedure, the party wishing to pursue enforcement must file the original award (together with the arbitration agreement) with the clerk of the court in the place where the award was made. It then asks the "exequatur judge" (a magistrate of that court) to affix an exequatur order to the award. The judge's review is limited: he or she does not review the merits of the case. Essentially, as provided for in Article 1488, he checks that the award is not clearly contrary to public policy. If exequatur is granted, the award then becomes an enforceable title (in accordance with article L. 111-3 of the Code of Civil Enforcement Procedures) and can be enforced by a bailiff (commissaire de justice), for example through seizures.

It is also possible that the sentence itself orders theprovisional enforcement of all or part of its provisions (article 1484, paragraph 2). This means that the decision must be enforced immediately, even if an appeal is lodged against it. This is a powerful tool for the successful party. However, the party subject to provisional enforcement may ask the First President of the Court of Appeal (to whom the appeal has been lodged) to halt or adjust provisional enforcement if it is likely to have manifestly excessive consequences (articles 1497 and 1498 of the Code of Civil Procedure).

Can an arbitration award be challenged? Avenues of appeal

In choosing arbitration, the parties often wish to obtain a rapid and definitive decision. As a result, the possibilities for challenging an arbitration award are much more limited than those available against a judgment handed down by a state court.

There are a number of standard remedies available excluded Article 1503 of the Code of Civil Procedure stipulates that the arbitration award is not subject to appeal. or opposition (appeal against a default judgment), a direct appeal in cassation.

The main means of recourse could exist, thecallhas become the exception. Since a 2011 reform (applicable to arbitration agreements entered into after 1 May 2011), Article 1489 of the Code of Civil Procedure lays down the principle that the award is not binding on the parties. not subject to appeal, unless the parties agree otherwise expressed in their agreement. If the appeal is open (because the parties have so agreed), it allows a full review of the case in fact and in law by the Court of Appeal. It must be lodged within one month of notification of the award (article 1494). The appeal suspends enforcement of the award, unless provisional enforcement has been ordered (article 1496). It should be noted that if the arbitrator had been instructed to rule as amiable compositeur, the Court of Appeal will also rule as amiable compositeur (article 1490).

Where an appeal is excluded (which is now the most common case), the only specific remedy against the award is the action for annulmentprovided for in articles 1491 and 1492 of the Code of Civil Procedure. This appeal does not seek a retrial of the case on its merits. Its sole purpose is to obtain thecancellation of the sentence for one of the limited list of reasons by Article 1492. These grounds are serious and mainly concern the regularity of the procedure or conformity with public policy:

1. The arbitral tribunal has wrongly declared itself competent or incompetent (absence of a valid arbitration agreement, non-arbitrable dispute, etc.).
2. The arbitral tribunal was improperly constituted (failure to comply with the rules governing appointment, problem of independence or impartiality of an arbitrator, etc.).
3. The arbitral tribunal ruled without complying with the terms of reference given to it (a decision that went beyond what was required). ultra petita, or failing to respond to a request - infra petitafailure to meet arbitration deadlines, etc.).
4. The principle of contradiction was not respected (one party was unable to present its arguments or respond to those of its opponent).
5. Recognition or enforcement of the award is contrary to public policy (here we are talking about substantive public policy; the decision itself runs counter to fundamental principles).
6. The award does not state the reasons on which it is based, or it does not mention the date or the names of the arbitrators, or it is not signed in accordance with the rules.

The action for annulment must also be brought before the Court of Appeal within one month of notification of the award (Article 1494) and also has suspensive effect (Article 1496). If the Court of Appeal annuls the award, Article 1493 provides that it must then, unless all the parties object, itself rule on the merits of the dispute, within the limits of the mission initially entrusted to the arbitrator.

Finally, two other forms of recourse exist but are very exceptional: the application for review (article 1502), possible if it is discovered afterwards that the award was obtained by fraud, and the third party opposition (article 1501), which is open to persons who were not parties to the arbitration but whose rights are adversely affected by the award.

The post-sentence phase, whether it involves obtaining enforcement or considering a challenge, raises complex legal issues. As the avenues of appeal are limited and technical, expert analysis is required. Our firm is at your side to enforce an arbitration award or to examine the possibilities of appeal and represent you before the court of appeal.

Sources

• Code of Civil Procedure (in particular articles 1480 to 1503)
• Code of civil enforcement procedures (in particular article L.111-3)