French law is known to be highly favorable to the enforcement of international arbitral awards (notably those rendered outside of France). This forum should accordingly be considered as a matter of priority if the opposing party holds assets in France.
Are presented below the necessary steps in order to enforce an international arbitral award in France. Please note that some of the steps described are only potential and depend upon the other party’s possible will to resist enforcement.
Step 1: Obtaining exequatur
The award is presented to the Presiding Judge of the Paris Civil Court (Tribunal de Grande Instance de Paris) ex parte who decides whether or not to grant exequatur. There are no briefs to file.
The time required for the Presiding Judge’s answer varies greatly according to the caseload of the Court and his availability. Nevertheless, in case of specific emergency, it is always possible to discuss with the clerk’s office to handle the matter on an urgent basis.
On a practical note, the following documents are required in order to proceed: an original version or certified copy of the award, a certified translation of the award, a copy of the arbitration agreement and a certified translation of the same and one additional copy of each of these documents.
Step 2: Defending exequatur (potentially)
If exequatur is granted or denied, the order may be appealed at the Paris Court of Appeal within one month starting from its service. Additional delay for distance may apply if the appealing party is domiciled or is registered abroad.
If exequatur is granted, it is often the case that the opposing party attempts to question the enforceability of the award in France on the limited grounds of article 1520 of the French Code of Civil Procedure (« CCP »):
- the arbitral tribunal wrongly upheld or declined jurisdiction,
- the arbitral tribunal was irregularly constituted,
- the arbitral tribunal ruled without complying with the mandate conferred upon it,
- the due process requirement was violated, or
- recognition or enforcement of the award would violate French international public policy.
Of interest in the current judicial environment, is new case law of the Paris Court of Appeal allowing limited revision of the fact findings of the arbitral tribunal in cases of alleged bribery (see AD newsflash on the matter).
After filing an appeal, the opposing party is required to file its complete submissions on the appeal within 3 months and the defendant has 3 months to answer from the notification date of the appellant’s submissions (new delay as per the reform of 6 May 2017 in force since September 2017).
Additional submissions may be filed, one additional set is common practice, and a single hearing is usually scheduled to take place around 18 months after the appellant’s initial declaration to the Court.
It is important to note that during such proceedings the award, whose exequatur has been granted, will remain enforceable in France and that accordingly there are no obstacles for the beneficiary of the award to proceed with any seizure unless the defendant makes a specific application to the Court to stay enforcement (Article 1526 CCP).
Step 3: Defending immediate enforceability of the award (potentially)
In order to take into account specific circumstances that would unjustly prejudice the party against whom a decision is enforced, the CCP reserves the possibility to request the Court of Appeal a stay of the enforcement of the award in exceptional circumstances.
In such case, the debtor would have to prove that enforcement would entail seriously detrimental consequences to his rights (Article 1526 §2). The criteria to meet are restrictive. When the beneficiary of the award is a foreign company, it is often requested as an alternative that the monies be put under escrow and not immediately transferred to the beneficiary on the basis that it will be difficult for the opposing party to recover the funds should it be successful in its appeal against the exequatur order.
These proceedings are usually expedited (hearing within one or two months). The opposing party files a request as soon as it has appealed the exequatur order. A brief in answer rapidly needs to be filed depending on the date of the hearing.
Step 4: Seizing assets
Upon receipt of the exequatur order, a bailiff may be instructed to seize any funds held in bank accounts in France.
The process is that of a “saisie-attribution”, hereinafter referred to as a seizure. The bailiff is instructed to visit the relevant banks’ headquarters and notify that monies corresponding to the award are seized.
Please note that French bailiffs have access to a specific file called FICOBA which provides them with the names of all the banks where the debtor holds accounts.
As soon as a bailiff requests funds from a bank, the bank has an obligation to provide detailed information on the funds available. Most banks are organized to answer the bailiff’s request on the same day.
Once the bailiff has performed the seizure, the amounts are considered to be the creditor’s property and are rendered unavailable to the debtor. This can paralyze the business of the debtor so it is recommended to proceed with caution.
The seizure is then notified to the debtor within 8 days.
The funds remain frozen the time to allow potential challenges by the debtor (one month).
Seizing other kinds of assets
It is possible to seize a variety of other assets under French law of course (real property, company shares, debt obligations etc.). Seizing funds is usually the easiest.
Step 5: Challenge by the opposing party of the seizures (potentially)
The seized party will have a right to challenge the seizures before the Enforcement Judge (“Juge de l’exécution” or “JEX”) within a month of the notification of the seizure.
The arguments that can be raised by the opposing party usually concern the seizure itself and not the validity of the exequatur order as other proceedings are available for that purpose.
Several briefs are usually exchanged and a hearing is held before the JEX.
The JEX’s decision can be appealed. The appeal does not stay enforcement. However, there exist specific proceedings to request the Court of Appeals to stay enforcement under certain conditions (manifestly excessive consequences).
In conclusion, the process is rather straightforward even though there are legitimate recourses available to the debtor and the above may appear pretty technical. This is natural given the potential use of the public force once exequatur is obtained.
Please note that although French Courts are known not to be very generous in terms of awarding legal fees, there have been decisions in which significant amounts have been ordered in this field (for example EUR 600,000 in CA Paris, 26 sept. 2017, no 16/15338). Therefore, in case of success the costs of enforcement are borne by the debtor.
In case of absence of challenges, it usually takes between two to three months to obtain the wire of the funds in favor of the creditor (however as explained above, as soon as the seizure is performed the funds are immediately frozen until all potential recourses have expired).