FRANCE: An Introduction to International Arbitration
An Overview of Recent Trends in the Annulment and Recognition of Arbitral Awards in France
France remains a leading venue for international arbitration. Not only does it benefit from a pro-arbitration legislative framework and the presence of the ICC in Paris, but it is also traditionally accepted that challenging an arbitral award in France is difficult due to the French courts’ supportive stance towards arbitration. The scrutiny of arbitral awards has, however, recently encountered changes. This overview highlights key trends in this evolving landscape.
The landscape for challenging arbitral awards in France is continuously evolving
Challenging an arbitral award in France is possible only on limited grounds. To annul an award, the arbitral tribunal must have ruled without an arbitration agreement, been irregularly composed, exceeded its mandate, violated due process, or rendered an award contrary to international public policy.
Historically, French case law has demonstrated a strong reluctance to annul arbitral awards. This reluctance is rooted in a commitment to upholding the finality and enforceability of arbitration, ensuring procedural integrity, and maintaining France’s reputation as a pro-arbitration jurisdiction.
In recent years, there have been cases in which the courts have shifted their focus from purely procedural issues towards more substantive ones. A notable example follows the Achmea ruling by the Court of Justice of the European Union (CJEU), which declared that arbitration clauses in bilateral investment treaties (BIT) between EU member states are incompatible with EU law. In response, the Paris Court of Appeal noted that the principle of mutual trust between the courts of EU member states requires respect for decisions rendered in other member states, which in turn resulted in the annulment of the awards rendered in the Slot Group a.s. and Strabag v Poland cases.
While some of these developments are viewed positively, others have raised concerns. Notably, the fight against corruption has at times served as a gateway to annulment on the grounds of violation of French international public policy. In Sorelec v Libya, for instance, the French Court of Appeal conducted a substantive review of the facts of the case, resulting in the annulment of a partial award based on a finding of corruption. The French Cour de cassation (Court of Cassation) upheld this decision in 2022, ruling that the lower court had properly reviewed both the facts and the merits of the case to ensure that the award did not violate French international public policy. This decision effectively broadened the scope of the French courts’ control over arbitral awards.
In Ryan v Poland, while the Paris Court of Appeal ruled that investors could not introduce, at the annulment stage, jurisdictional arguments not raised before the arbitral tribunal, the Cour de cassation overturned this decision. This effectively allows parties to rely on new arguments to challenge the jurisdiction of arbitral tribunals post hoc in an attempt to annul unfavourable awards.
Most recently, two decisions highlight the contrasting approaches taken by French courts in determining whether arguments relate to jurisdiction or to the merits stage, thus influencing their ability to annul arbitral awards.
In Cengiz v Libya, a dispute arose when Cengiz, a Turkish company, sought USD300 million in damages for disruption of its construction projects in Libya following the 2011 uprisings, resulting in a favourable award for Cengiz. Libya subsequently challenged the tribunal’s jurisdiction before the French courts, arguing that the investment was tainted by corruption and hence illegal. The Paris Court of Appeal rejected Libya’s argument that the legality of the investment was a prerequisite for activating the BIT’s arbitration clause and refused to annul the award. In February 2025, the Cour de cassation upheld the lower court’s finding, holding that the state’s “standing arbitration offer is autonomous and independent of the validity of the operation that gave rise to the investment or supports it.” The validity of the investment was to be assessed at the merits stage.
The Cengiz decision contrasts with a ruling in Libya v Etrak, wherein the Cour de cassation conducted a thorough analysis of both the nature of the investment and the dispute at the jurisdictional stage. Libya had failed to make payments under a 2013 settlement agreement relating to a dispute arising from construction contracts dating back to the 1980s. In March 2023, Libya challenged the recognition of an award favourable to the investor, arguing that the arbitral tribunal lacked jurisdiction since the dispute pre-dated the BIT. In October 2024, the Cour de cassation held that the dispute over outstanding payments was connected to an investment that pre-dated the BIT and that, if considered separately from the dispute concerning the construction works, it would not qualify as an “investment” under the relevant BIT. As a result, the tribunal was found to lack jurisdiction and the award’s recognition was overturned.
These cases illustrate how French courts are continuously refining the rules, navigating the fine line between arbitral autonomy and judicial control.
The enforcement and setting-aside of arbitral awards are affected by EU sanctions
The question of the effect of international sanctions on arbitration has been brought to the forefront in recent years, notably following Russia’s invasion of Ukraine. The increasing prevalence of sanction regimes (particularly against Russia, Iran, Venezuela, and others) has complicated arbitration proceedings, by restricting the ability of parties to pay arbitration costs, advance fees or legal expenses. Likewise, frozen assets can make it difficult for sanctioned parties to cover their costs, resulting in delays in proceedings or even arbitral institutions refusing to administer cases involving sanctioned parties.
International sanctions also have an impact on the setting-aside of arbitral awards. The interplay between the definition of French public policy – the violation of which can justify setting aside an arbitral award – and international sanction regimes remains complex, as the French courts are still defining how international sanctions form part of international public policy.
Recently, in ICC case DNY Yemen and others v Yemen’s Ministry of Oil and Yemen Oil and Gas Corporation (YOGC), the claiming oil companies raised concerns that the YOGC, a state-owned company, is under the control of sanctioned Houthi rebels. The claimants tried to have the award set aside in France by arguing that its recognition would violate French international public policy by indirectly benefiting sanctioned individuals.
The Court of Appeal refused to annul the award, finding insufficient proof that the funds would reach sanctioned individuals. However, in November 2024, the Cour de cassation sought CJEU clarification on the interpretation of the relevant EU regulation to understand whether funds can be considered to indirectly reach a sanctioned individual or entity (ie, Houthis) if they directly benefit a non-sanctioned public institution (Ministry of Oil and YOGC) in a situation where the sanctioned individuals compete for that institution’s control. The Court, moreover, sought to understand whether a mere “reasonable risk” of sanctioned individuals benefiting from funds justifies annulment.
The CJEU has not yet issued a response. Its ruling will provide new standards for setting aside awards in the presence of EU sanctions.