Luxembourg strengthens its position as an arbitration hub by adopting a new arbitration law
6 min read
On 23 March 2023, the Luxembourg Chamber of Deputies adopted a bill reforming its arbitration law. This long-awaited reform is the first significant modification of the Luxembourg provisions on arbitration since the Napoleonic codification.
This is a new step in the promotion of Luxembourg as an arbitration hub, after the recent reform of the rules of arbitration of the Luxembourg Chamber of Commerce, and the conclusion of a cooperation agreement between the three BENELUX arbitration institutions.
The new provisions are inspired by the UNCITRAL model law, as well as French and Belgian arbitration laws. This reform will enter into force after publication of the bill in the Mémorial (Luxembourg Official Journal).
Consecration of the Kompetenz-Kompetenz principle
The widely recognized kompetenz-kopetenz grants the arbitral tribunal with the power to rule on its own jurisdiction. This has now been enacted into the Nouveau Code de Procédure Civile (the "NCPP").
In respect of arbitration clauses, Luxembourg courts can only decide on the matter if the case is not arbitrable1 or if the arbitration clause is manifestly void or inapplicable.2
Interim Measures
Luxembourg courts can order provisional measures before the constitution of the arbitral tribunal. After the constitution of the arbitral tribunal, the arbitral tribunal becomes competent to grant interim measures, except measures such as third-party attachments (saisie-arrêts) which remain under the competence of the State courts.3
Luxembourg courts as supporting judge
Arbitration law introduces the function of the supporting judge (juge d'appui).4
The mission of the supporting judge is to resolve difficulties arising in the arbitration proceedings, such as the constitution of the arbitral tribunal5 or to assist in obtaining or preserving evidence.
Luxembourg courts (i.e., the President of the District court designed in the arbitration clause or, in the absence thereof, the President of the District court of Luxembourg6) are supporting judge if (i) Luxembourg is the seat or, in the absence of a designated seat, (ii.a), the parties agree to submit the dispute to Luxembourg procedural law, (ii.b) the parties agree to the jurisdiction of Luxembourg courts over procedural disputes or (ii.c) there is a significant link between the dispute and Luxembourg. In any event, Luxembourg courts are competent if there is a risk of denial of justice.7
The competence of the supporting judge remains subsidiary to the will of the parties, for example, if an arbitration institution is designated.
Arbitration procedure
The new bill also introduces some important features for the arbitration proceeding, such as confidentiality8 or the powers of the arbitral tribunal in case of default.9
To ensure expeditious proceedings, the default duration of an arbitration proceeding is 6 months as from the date of the last arbitrator's acceptance of his/her appointment.10
Limited challenge of an arbitral award seated in Luxembourg
The Court of Appeal becomes the sole jurisdiction competent for the setting aside of arbitral awards seated in Luxembourg. The grounds for the setting-aside are limited; (i) (in)competence of the tribunal, (ii) irregularity in the constitution of the tribunal, (iii) the tribunal did not comply with its mission, (iv) the award contradicts Luxembourg public policy, (v) the award is not reasoned or (vi) an infringement of the right of defence.11 This procedure does not suspend the enforceability of the award, but the Court of appeal can suspend or amend enforcement if such enforcement would seriously prejudice the rights of a party.12
Parties can also request the arbitral tribunal (or the Court of Appeal if the arbitral tribunal cannot be reconvened) to re-examine the case in fact and in law and withdraw the award if, after the issue of the award, (i) there is evidence of fraud, (ii) new evidence is found that was concealed by the other party or (iii) exhibits or statements are recognized as or declared false.
These remedies are only available to awards whose seat is in Luxembourg. These are also the sole remedies available to the parties against such awards.
Exequatur of an arbitral award seated in Luxembourg is obtained ex parte. Grounds to refuse exequatur are the same as the grounds for annulment. Challenge to the exequatur takes the form of an annulment proceeding.13
Enforcement of foreign arbitral awards
The procedure to request the exequatur of a foreign arbitral award is ex parte (contrary to the exequatur of a foreign decision, which is contradictory).14
The decision to grant exequatur can be appealed. The appeal does not suspend the enforceability of the award, but the Court of appeal can suspend or amend enforcement if such enforcement would seriously prejudice the rights of a party.15
Luxembourg law provides for ten grounds to refuse the exequatur, such as the discovery of the use of fraudulent evidence. However, these grounds are without prejudice to international conventions. In practice, the seven grounds of the New York Convention will likely prevail over these grounds.
1 Arbitrability is defined in new Article 1225 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023, excluding disputes with consumers, employees or over residential leases.
2 New Article 1227-3 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
3 New Article 1227-4 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
4 New Article 1229 of the NCPP, to be changed by of bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
5 New Article 1228-2 to 1228-5 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
6 New Article 1230 to 1228-5 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
7 New Article 1229 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
8 New Article 1231-5 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
9 New Article 1231-10 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
10 New Article 1231-6 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
11 New Article 1238 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
12 New Article 1241 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
13 New Articles 1234 and 1236 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
14 New Article 1245 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
15 New Article 1248 of the NCPP, to be changed by bill n°7671 adopted by the Chamber of Deputies in its public session of 23 March 2023.
Jade Henry (White & Case, Trainee, Luxembourg) contributed to the development of this publication.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2023 White & Case LLP
