Key takeaways

The main elements of the reform can be summarized as follows:

Efforts to lighten the validity of the arbitration agreement

The new provisions on the validity of an arbitration agreement mirror Luxembourg's efforts to strengthen its pro-arbitration stance. First, under Luxembourg Arbitration Law, an arbitration agreement is no longer subject to any requirement form (Article 1227 of the New Code of Civil Procedure). Second, the Arbitration Law enshrines the separability doctrine under which an arbitration agreement will be treated as an agreement independent from the underlying contract (Article 1227-2 of the New Code of Civil Procedure). This provision puts an end to the jurisprudential inconsistency with respect to the application of that separability doctrine in Luxembourg. Third, the Arbitration confirms the well-established Kompetenz-Kompetenz principle. This principle empowers the arbitral tribunal to rule on its own jurisdiction and to decide on issues including the existence and the validity of the arbitration agreement (Article 1227-3 of the New Code of Civil Procedure).

Enhancing the efficiency of arbitral proceedings in Luxembourg-seated arbitrations: the establishment of a support judge whose mission is to help the arbitration proceedings

The Arbitration Law enshrines the role of the support judge whose role is to facilitate the arbitration proceedings and settle possible difficulties during these proceedings (Articles 1229 and following of the New Code of Civil Procedure). This judge will have jurisdiction for any claims arising out of or related to arbitral proceedings, including arbitrator appointments, arbitrator challenge, interim relief, evidence disclosure and denial of justice. To increase the speed and efficiency of the arbitral procedure in Luxembourg, the decision of the support judge cannot be subject to appeal.

Enhancing the efficiency of arbitral proceedings in Luxembourg-seated arbitrations: setting out a default procedure for multiparty arbitrator appointments

The Luxembourg Arbitration Law is one of the few arbitration laws to provide for a default procedure for multiparty arbitrator appointments (Article 1228-4 paragraph 3 of the New Code of Civil Procedure). Such provision is more than welcomed. In an ad hoc multiparty arbitration, there is a risk of a breach of equality of the parties in the arbitrator appointment process if the parties on the claimant's side or the respondent's side cannot agree on a joint arbitrator. That breach could lead to the annulment of the arbitral award. The Arbitration Law addresses such risk. Article 1228-4 paragraph 3 empowers the arbitration administering body, selected by the parties, or the support judge to appoint all arbitrators in case of failure to appoint a joint arbitrator by the parties on the claimant's side or on the respondent's side.

Empowering the arbitral tribunal to grant interim measures excluding attachment order

The Arbitration Law gives the arbitral tribunal the power to grant interim measures (Article 1231-9 paragraph 3 of the New Code of Civil Procedure). The domestic courts remain competent (i) prior to the constitution of the arbitral tribunal, (ii) when the arbitral tribunal cannot grant such measures, including the issuance of the attachment order, and (iii) if the parties so agree.

Setting out a more liberal regime for enforcement of Luxembourg-seated arbitral awards and foreign arbitral awards

The Arbitration Law narrows the challenge of a Luxembourg-seated arbitral award to six grounds: (i) the arbitral tribunal wrongly upheld or declined jurisdiction; (ii) the tribunal was irregularly constituted; (iii) the arbitral tribunal ruled without complying with the mandate conferred on it; (iv) the award violates public policy; (v) the award failed to state the reasons on which it is based, unless the parties agree otherwise; and (vi) the due process requirement was violated (Article 1238 of the New Code of Civil Procedure). Similar, in the event that the New York Convention or any international convention dealing with the recognition and the enforcement of a foreign arbitral award does not apply, the Arbitration Law narrows the grounds to resist enforcement of a foreign arbitral award in Luxembourg (Article 1246 of the New Code of Civil Procedure). Moreover, it should be noted that under Article 1246 the setting aside of an arbitral tribunal at the seat of arbitration is not a ground to refuse the enforcement of the foreign arbitral award. This raises the issue of whether the Luxembourg Arbitration Law offers a more liberal regime than the New York Convention.

Please find the detailed version of the alert which analyzes the key features of the arbitration reform in depth.