Ruling confirms ‘arbitral award’ is defined strictly in France

The court addressed the question of what constitutes an arbitral award in a case involving Italian company Mesa S.P.A (Mesa) in relation to its dispute with three individuals and two Portuguese companies, Nùmero Um Reparação de automóveis) and Topchallenge SGPS. S.A. (the respondents). The dispute arose in the context of a master franchise agreement, designed to develop a Portuguese franchise of Midas, one of the world's largest providers of automotive services. 

Mesa initiated proceedings before an ICC arbitral tribunal but subsequently notified “immediate withdrawal without prejudice” of all its claims. In parallel, Midas started another arbitration, related to the same facts and bringing similar claims, but also included claims related to the development of Midas franchise network in Angola.  

The first tribunal did not accept the withdrawal of Mesa’s claims. In three procedural orders, it indicated that it “rejected” the company’s request, ordered the arbitration to continue granting extensions of time for the submission of the statement of claim. Mesa, in turn, initiated a set-aside proceeding against the three orders, which the respondents opposed, on the basis that set-aside proceedings are only available against arbitral awards, and not procedural orders.  

The matter came before the Paris Court of Appeal, which confirmed that Article 1518 of the French Code of Civil Procedure only provides for set aside proceedings to be raised against awards only. The court referred to long-standing case law regarding how the notion of ‘arbitral awards’ is defined, which specifies that arbitral awards are acts of arbitrators that definitively rule, in whole or in part, the dispute that is submitted to them, be it on merits, on jurisdiction or on arguments of procedure that lead to the end to the arbitration. 

The court considered that, as the first of the orders did not put an end to the proceedings, but rather ordered the arbitration to continue, it did not qualify as an arbitral award. In relation to the other two procedural orders, it considered that they only deal with the delay granted by the tribunal to Mesa to submit its statement of claim and therefore did not constitute an arbitral award either.  

This decision illustrates the strictness of the French definition of an ‘arbitral award’, which excludes procedural orders, interim measures and orders issued by emergency arbitrators. This situation raises questions about the effective protection of the rights of the parties that may find themselves without any real remedy against measures substantially affecting their interests.

As part of the ongoing proposed reform of French arbitration law, itis proposed that the current case-law definition of ‘arbitral award’ is carried over into the updated law, under Article 17 of the proposed new code of arbitration.

However, the proposed reform includes a new mechanism which offers parties the opportunity to ask the judge supporting the arbitration to order the enforcement of interim or provisional measures, which would include an order issued by an emergency arbitrator.

Under the current way the proposed new law is drafted, such remedy would not allow parties to ask for an anti-suit injunction. Such injunctions granted by French courts would, in any event, be less efficient than those granted by a judge in the common law system for two reasons: injunctions issued by French judges would not be possible in respect of tribunals of other EU member states; and, as French law does not recognise a concept similar to contempt of court, any order from a French tribunal would be less efficient in changing the parties’ behaviour than a similar order in the common law system.  

This proposed new remedy would not prevent procedural orders of the type issued in the Midas case from being issued, because none of them qualify as interim measures. Instead, they are procedural decisions sovereignly issued by the tribunal, lacking any agreement of both parties to put an end to the arbitration.