Welcome to our latest update, focused on bringing you closer to the pulse of arbitration in Paris. In this edition we have curated key arbitration points that we believe are important for you, our clients:

• Insights into a recent decision on the statute of limitations for arbitral award enforcement in France,
• An overview of the new reform proposals for French arbitration law,
• Practical tips for handling non-payment of the advance on costs when starting your arbitrations,
• Highlights from the arbitration landscape in the defense sector, and
• A special invitation to our PAW 2025 events on renewable energy and the future of aviation!

Enjoy the read! Please do get in touch if you have any feedback or questions.

Iona

LATEST FRENCH ARBITRATION CASE LAW

ARBITRATION & STATUTE OF LIMITATIONS: In a decision dated 10 December 2024, the Versailles Court of Appeal clarified the question of the statute of limitation applicable to the exequatur of arbitral awards in France.

The case stemmed from a dispute over losses in the management of a $25 million investment portfolio following the 2008 financial crisis, and the annulment of a FINRA arbitration award in the US. The plaintiff’s pursuit to enforce the award in France however faced legal barriers, including an order of personal imprisonment issued by the New York Supreme Court. The French legal saga concluded with the Versailles Court of Appeal affirming that while arbitral awards, unlike court judgments, are independent from the legal system of any state, their enforcement in France must occur within a 5-year statute of limitations under Article 2224 of the French Civil Code.

Takeaway? This decision illustrates the balance struck by French courts between the autonomy of arbitration and the necessity of legal certainty in enforcement proceedings.

(Read my analysis of the Versailles Court of Appeal’s decision here)

REGIONAL HIGHLIGHTS – New Reform of French Arbitration Law

Fourteen years after the significant reform of 2011, the French Ministry of Justice has initiated a new phase to modernize and enhance its arbitration law. On 21 March 2025, a working group appointed by the Ministry presented its comprehensive report detailing a proposed reform of French arbitration law – an initiative aimed at enhancing the attractiveness of French arbitration law and solidifying France’s leading position in the international arbitration landscape despite intensifying global competition. Here are the key highlights from this report:

• Autonomy and clarity: The report proposes the creation of a dedicated arbitration code, clarifying current legislative sources and establishing common rules for both international and domestic arbitration. It also advocates for a more concentrated approach by the judiciary in handling arbitration disputes,
• Increased flexibility: The report aims to align arbitration law more closely with the needs of economic actors and practitioners, and to make arbitration less formalistic. This includes propositions such as the removal of mandatory formalities for arbitration agreements, recognizing electronic arbitration awards, and facilitating the communication of the award to the parties,
• Enhanced protection: The proposed reforms seek to promote a more protective arbitration law. This includes a solemn affirmation of the arbitrator’s independence and impartiality, measures to address the impecuniosity of a party, and specific rules for arbitrations involving consumer, labor, and family matters,
• Boosting efficiency: To enhance the effectiveness of French arbitration, the report recommends strengthening the principle of competence-competence, allowing the consolidation of disputes by the arbitral tribunal, expanding the supporting powers of the juge d’appui (competent to settle certain difficulties that may arise from arbitration proceedings), and simplifying the recognition and enforcement of arbitral awards (including the introduction of a specific procedure for arbitration disputes before the court of appeal),
• Next steps: These initial ideas mark the beginning of the preparation for the reform and will certainly stir an interesting debate within and beyond the French arbitration community. The report’s recommendations will be discussed further at a symposium organized at the Sorbonne University on 8 April 2025, where the French Minister of Justice, Gérald Darmanin, is expected to make announcements regarding the future of these arbitration reform proposals.

PRACTICAL TIPS – Handling Non-Payment of the Advance on Costs

The first critical step to ensure that an arbitration can proceed is the contribution made by the parties at the outset of the procedure to the advance on costs. However, a common challenge arises when one party, typically the respondent, refuses to pay its share. In my experience, this not only threatens the commencement of the arbitration but also poses strategic and financial considerations for the claimant:

• Delaying tactics by the Respondent: Most of the times, refusing to pay the advance on costs is used by the respondent as tactic to delay the proceedings, since the arbitration cannot proceed without these initial costs (which covers the tribunal’s fees and the institution’s administrative costs),
• Majority positions by institutions: Most arbitration rules (ICC, SCC, LCIA, HKIAC) allow the other party to pay the non-paying party’s share to ensure the arbitration proceeds – a pragmatic solution that helps avoiding delays but places an initial financial burden on the paying party,
• Requesting a separate partial award: Another option available to the non-defaulting party is to seek a partial award ordering the non-paying party to reimburse it. While some tribunals have doubted their authority to issue such orders, it is relatively common to see tribunals granting such partial awards (when requested),
• Specificity in Eastern Europe: In countries like Poland, Romania and Turkey, arbitral institution rules require the claimant to pay the full advance on costs who can only recover them from the respondent if the case is won – a practice which seems at odd with international practice and may reflect a regional specificity,
• Counterclaims consideration: The dynamics change however when the respondent has counterclaims, since a refusal to pay its share could lead to its counterclaims being withdrawn (but not his defence to the claimant’s claims),
• Practical consequences: From my experience, non-payment of the advance on costs has three practical consequences: (i) for claimants, entering arbitration means being prepared for the possibility to have to cover the respondent’s share of the costs, (ii) this does not prevent claimants from recovering these costs at the end of the arbitration if they are successful, and (iii) conversely, respondents should carefully weigh the potential consequences before deciding to withhold their share.

SECTORIAL NEWS – Arbitration in the Defense Sector

With the escalation of geopolitical tensions, the defense sector is witnessing an unprecedented surge in global defense orders. As this industry – historically dominated by the United States and characterized by a relatively small set of actors – has becomes more global, the incidence of cross-border disputes has increased, highlighting the strategic importance, high value, and national security implication of defense contracts. With the sector’s dynamic growth and its key role in pioneering cutting-edge technologies, the arbitration landscape in the defense sector is evolving and confronted to both new opportunities and challenges:

• Typology of defense contracts: Defense sector contracts are typically established between private companies and states or state-owned entities. Given their nature, these contracts are extremely susceptible to political shifts, allegations of corruption, and regulatory constraints, frequently leading to complex disputes,
• Typology of disputes: Disputes in the defense sector range from standard contractual issues (performance, delays, termination, etc.) to challenges inherent to the involvement of state actors (national interest considerations, confidentiality requirements, sanctions and embargoes, etc.). Disputes are also increasingly influenced by modern and global challenges, such as technological advancements, cybersecurity threats, and the need to adapt defense infrastructure and capabilities to meet environmental compliance standards,
• Recent highlights: Latest decisions on disputes in the defense sector include an award of €25 million to a German defense contractor in an ICC arbitration against Greece rendered in November 2024, concerning late and withheld payments by Greece in a dispute over a €1.6 billion contract for the supply of 170 Leopard 2HEL tanks (the Greek army’s largest-ever procurement contract at the time), into a broader context of corruption scandal involving the Greek army’s arms deals uncovered in 2013,
• Recent highlights: Last year, Russia issued threats to Colombia that it may initiate arbitration, after the Colombian Ministry of Defense and its Russian counterpart failed to reach an agreement on maintenance contracts for military Mi-17 helicopters that were suspended following the invasion of Ukraine,
• Recent highlights: In April 2024, a Singapore court confirmed the enforcement of a US$20 million ICC award in favour of a satellite services provider against Indonesia’s Ministry of Defence, despite Indonesia’s claim that the contract (concerning a military satellite program) was allegedly procured by fraud. The court ruled that Indonesia’s challenge was too late and that the fraud allegations, even if arguable, were insufficient to prevent the award’s enforcement.

BY THE WAY

The Paris Arbitration Week approaches! It is finally that time of the year and the anticipation here at Addleshaw Goddard is palpable. This year, we are proud to be once more at the forefront of the “PAW” by organizing two events that we promise to be captivating and engaging.

The first panel, which I will have the honour of hosting and moderating as part of my traditional PAW event about the CEE/CIS region, will focus on a topic close to my heart: renewable energy and arbitration, with a unique client’s perspective. With an exceptional line-up of cross-disciplinary experts (counsels, arbitrators, legal directors, quantum experts), we will give you all the latest trends and legal twists and turns in renewable energy projects, spotlighting Romania’s particularly dynamic role in this sector.

Our second panel, “Off To A Flying Start: The Importance of Strategic Alliances in Aviation & The Role of International Arbitration When Conflicts Arise”, will take you to the skies. Together, we will discuss the future of aviation, explore the transition to sustainable aviation fuel, and the strategies to keep these vital alliances flying high.

Those panels will be more than just discussions: they will be opportunities for learning and connecting. We’re excited to welcome you so gear up and join us!

(Join us by registering here and here)