Historically, French law is very favorable to arbitration, and to international arbitration in particular. It is against this background that it has recognized the principle of autonomy of arbitral awards for several decades. As a result, French law authorizes the recognition and enforcement in France of a foreign award, even if it has been set aside in its country of origin.
Indeed, in the well-known Hilmarton case (Cass. 1st civ., No. 92-15.137, Mar. 23, 1994), the highest French court—the Court of Cassation—asserted this principle on the grounds that “the award handed down in Switzerland was an international award that was not incorporated into the legal system of that State, so that its existence remained established despite its setting aside and its recognition in France was not contrary to international public policy.” Consequently, a foreign arbitral award can validly be recognized and enforced in France despite its setting aside at the place of arbitration, as long as the criteria for obtaining a declaration of enforceability are met.
The Hilmarton decision is certainly one of the most significant and commented decisions in international arbitration.
The Court of Cassation has confirmed this principle on several occasions, in particular in the Putrabali case (Putrabali Adyamulia v. Rena Holding, Cass. 1st civ., No. 05-18.053, June 29, 2007). More recently, the Paris Court of Appeal, which specializes in international arbitration, reiterated this principle in CA Paris (pole 1, ch. 1, No. 17/19850, May 21, 2019).
This case law principle truly embodies the French conception of arbitration. International arbitral awards exist independently of any legal system: their outcome does not depend on the place where they were issued, since the state where the award is enforceable is of more relevance than the state where it was issued.
This position is consistent with Article VII of the 1958 New York Convention.[1] It is also consistent with international public policy.
Moreover, this principle guarantees the continued recognition in France of awards set aside abroad, since another award, handed down after the setting aside of the first, relating to the same dispute and between the same parties cannot be recognized in France without infringing the force of res judicata attached to the enforceability of the first award. See Putrabali, Cass. 1st civ., No. 06-13.293, June 29, 2007).
This French distinctiveness is therefore a windfall for the party in whose favor the award was issued before its setting aside, as long as the debtor holds assets in France.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Paris
Alexandre Bailly
Xavier Haranger
[1] Article VII of the New York Convention on the recognition and enforcement of foreign arbitral awards notably states in its first paragraph that the provisions of the Convention “shall not deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.”