Automatic Termination Clause Ruling and ICC Updates: Changes in Contract Law and Arbitration

Since June 2026, the Cour de cassation has clarified the conditions governing the validity of automatic termination clauses, and the new ICC Rules have entered into force.

1. VALIDITY OF AUTOMATIC TERMINATION CLAUSES: PRECISION DOES NOT REQUIRE AN EXHAUSTIVE LIST

In a 3 June judgment, the Commercial Chamber of the Cour de cassation (the Court) clarified the scope of Article 1255 of the French Civil Code, ruling in favour of upholding so-called “catch-all” automatic termination clauses.[1]

KEY TAKEAWAYS

The Court has clarified that an automatic termination clause is valid where the debtor’s obligations are identified clearly and unambiguously, whether or not they are listed individually, provided that the clause states that any failure to perform any obligation expressly set out in the agreement will result in termination of the agreement.

In the case at hand, the automatic termination clause in a sublicence agreement provided for termination in the event of a breach of a “significant obligation” or a “substantial obligation.” The lower courts had held the clause void for lack of specificity, finding those terms insufficiently precise for the purposes of Article 1225 of the French Civil Code and finding that the clause did not list the individual obligations that would trigger termination of the agreement if breached.[2]

The Court quashed that decision pursuant to Articles 1224 and 1225 of the French Civil Code, recalling that, under the case law predating the Order of 10 February 2016, an automatic termination clause must be expressly included in the agreement and must clearly and unambiguously reflect the parties’ common intention to terminate the agreement automatically.[3]

Such a clause may only sanction a breach of an obligation expressly set out in the agreement.[4] Where the clause refers to a breach of a specified obligation, it cannot logically apply to any other obligation.[5]

However, the requirement of precision under Article 1225 of the French Civil Code does not mean that the clause must list each obligation for which it sanctions a breach. It is sufficient for the relevant obligations to be clearly identifiable from the wording of the agreement.

An automatic termination clause may therefore validly refer to obligations expressly set out in the agreement, provided that the debtor can determine unambiguously which breaches are liable to result in termination.

The Court has therefore endorsed, as a matter of principle, the validity of “catch-all” automatic termination clauses.

2. REFORM OF ICC ARBITRATION RULES

On 22 May, the ICC published a new version of its arbitration rules, which entered into force on 1 June. The updated rules apply to arbitration agreements entered into on or after that date.

KEY TAKEAWAYS

The main innovations in the 2026 ICC Rules are organised around four key areas:

• Strengthening arbitrators’ disclosure obligations;
• Changes to the Terms of Reference regime;
• Updates to expedited and emergency procedures; and
• Introduction of new provisions on highly expedited arbitration.

The purpose of the new rules is to improve the efficiency, clarity, and management of arbitration proceedings.

Strengthening Arbitrators’ Disclosure Obligations

The disclosure standard remains unchanged regarding arbitrator independence and impartiality, but the new rules now confirm that when disclosure is being questioned the arbitrator must disclose.[6] The 2026 ICC Rules also codify the ICC’s longstanding practice that disclosure does not in itself establish a lack of independence or impartiality.[7] These provisions are intended to encourage prompt and full disclosure.

When filing the Request for Arbitration or the Answer, parties are now required to submit to the ICC Secretariat a list of persons and entities that they believe prospective and appointed arbitrators should consider, together with the reasons for their inclusion on that list.[8]

The arbitrator still assumes ultimate responsibility for making the necessary disclosures.

Changes to the Terms of Reference Regime

The Terms of Reference are no longer a mandatory step in ICC arbitrations. This development reflects the success of the Expedited Procedure Provisions (EPP) introduced in 2017.

For the purposes of procedural management, the parties and the arbitral tribunal may still agree to draw up Terms of Reference.

The 2026 ICC Rules strengthen the central role of the initial case management conference, which remains mandatory and must be held within 30 days of the arbitral tribunal’s receipt of the file.[9] This will now be communicated with the ICC Secretariat rather than the ICC.

Before the initial case management conference, new claims may be brought without authorisation. After the conference, any new claim will require the arbitral tribunal’s authorisation.

Updates to Expedited and Emergency Procedures

Strengthening the Emergency Arbitration Framework (EA – Emergency Arbitration)

The 2026 ICC Rules clarify the conditions governing the application of emergency arbitration in line with previous practice and broaden the range of parties[10] against whom emergency measures may be sought.[11] Where necessary, the emergency procedure under the 2026 ICC Rules now allows preliminary orders to be made without prior notice to all parties.

Increasing the Threshold for Expedited Procedure (EPP – Expedited Procedure Provisions)

Since introduction in 2017, the EPP has improved the efficiency of ICC arbitrations. The 2026 ICC Rules extend the scope of the procedure by raising the threshold to $4 million, below which the procedure applies by default to arbitration agreements entered into on or after 1 June 2026.[12]

This will increase the number of disputes that may be submitted to expedited arbitration.

Early Determination

The 2026 ICC Rules introduce an early determination procedure as a means of swiftly resolving certain disputes.[13]

Under this procedure, a party may request the arbitral tribunal to determine at an early stage that one or more claims or defences are manifestly without merit or outside the arbitral tribunal’s jurisdiction.

Introduction of New Provisions on Highly Expedited Arbitration Provisions (HEAP)

The 2026 ICC Rules also introduce a highly expedited arbitration provision[14] that applies only where the parties expressly agree, with no limit on the amount in dispute.

These new provisions further stipulate that:

• The final award must be rendered within three months of the initial case management conference;
• The dispute is decided by a sole arbitrator appointed within 20 days rather than the previous 30-day period; and
• The case management conference must be held within seven days.

From the outset of the proceedings, the procedure provides for the filing of the following submissions:

• The Request for Arbitration, including the Statement of Claim;
• The Answer, including the Statement of Defence; and
• The Statement of Counterclaim, where applicable.

As under the EPP, the sole arbitrator retains discretion over the conduct of the proceedings and may therefore limit the number of written submissions or decide against document production or a hearing.

Unlike in other ICC arbitrations, the parties may agree that the award need not state reasons.

Law clerk Cassiopée Gihr contributed to this LawFlash.