A. LEGISLATION AND RULES
A.1 Legislation
While international arbitration in Luxembourg continues to be governed by the provisions of the 1998 New Code of Civil Procedure, Book III (article 1224 to 1251-24), an arbitration bill (Bill No. 7671) was filed on 15 September 2020. It is still under discussion before the Luxembourg House of Representatives.
That Bill, mainly based on the French arbitration law and the 2006 UNCITRAL Model Law, includes the following major changes:
- Article 1225 – Further to the current prohibitions to arbitrate any dispute relating to the legal status and capacity of the natural person, marital relationship, divorce and judicial separation, representation of legally declared incapable persons, the Bill prohibits parties from arbitrating employment disputes, consumer disputes and residential disputes.
- Article 1226 – The opening of a bankruptcy procedure has no impact on the validity of an arbitration agreement. However, disputes arising from collective proceedings are nonarbitrable.
- Article 1227-3 – The Bill explicitly recognizes the competence-competence principle. According to the Bill, if a jurisdictional objection is raised in a Luxembourg court, the court is required to refer the parties to arbitration unless the arbitration agreement covers non-arbitrable disputes, or is null and void.
- Article 1228-4 – In the event of a multiparty arbitration, if the parties fail to agree on the process to set up an arbitral tribunal, the institution in charge of the arbitration, or failing that, the juge d’appui (support judge) shall appoint the arbitrator(s).
- Article 1231-9 – An arbitral tribunal is entitled to issue any interim measures that are considered justified.
- Article 1231-12 – joinder can be ordered by an arbitral tribunal in some circumstances:
- An interested third party requests to join an existing arbitral proceeding.
- The claimant or the respondent requests a third party to join the proceeding.
- Joinder is possible if all parties have agreed to such a result in an arbitration agreement.
- All arbitrators of the proceeding must agree.
- Article 1238 – An award may be set aside on one of the following grounds:
- The arbitral tribunal wrongly upheld or declined jurisdiction.
- The tribunal was irregularly constituted.
- The arbitral tribunal ruled without complying with the mandate conferred upon it.
- The due process requirement was violated.
- Recognition or enforcement of the award would be contrary to public policy.
- The award is not motivated unless the parties have dispensed the arbitral tribunal to motivate its decision.
- The rights of due process were infringed.
- Article 1246 – Recognition and enforcement of an award may be refused on the same grounds as for setting aside an award.
A.2 Institutions, rules and infrastructure
The major arbitral institution in Luxembourg is the Arbitration Chamber of the Luxembourg Chamber of Commerce (ACLCC). ACLCC, headquartered in Luxembourg City, revised its Rules for administered arbitration, effective on 1 January 2020. The amendments in the 2020 Rules reflect a continuing and careful effort by the ACLCC to modernize its rules and to provide arbitration users with means to ensure that arbitral proceedings are conducted in a time- and cost-effective manner. The major changes include (i) provisions relating to complex arbitrations and (ii) provisions relating to simplified arbitration.
A.2.1 Provisions relating to complex arbitrations: article 6 (joinder), article 7 (multiple parties), article 8 (multiple contracts), and article 9 (consolidation).
Over the last decade, a substantial number of arbitration cases involved more than two parties and/or dealing with disputes arising from different contractual relationships. Against this background, the new ACLCC Rules 2020 make important changes to the ACLCC Rules 2014 by introducing new provisions on joinder, consolidation, multiple parties and multiple contract issues. These provisions have been incorporated to provide efficient and flexible arbitration services.
Article 6 of the ACLCC Rules 2020 (“Rules“) governs the joinder of additional parties. Paragraph of article 6 1 is a general regulation of joinders that provides for the intervention on the third party’s own motion (“A third party may request to intervene in the arbitration proceedings“), as well as for the joinder of a third party on the request of one of the original parties (“any party to the proceedings may seek to have a third party joined [in the proceedings]“). However, under these rules, the joinder of additional parties is entitled up to “the confirmation or appointment of an arbitrator, unless all parties, including the additional party, otherwise agree“.
It is worth noting that article 6 does not empower the tribunal to take the initiative to allow the application of the joinder provision.
Article 6 paragraph 2 lists the information required for a Request for Joinder as follows: (a) the case reference of the existing arbitration; (b) names in full, description, address and other contact details of each of the parties, and, if it is not the party requesting the intervention of the additional party; (c) the information required for a Request for Arbitration under the ACLCC Rules. Paragraph 3 contains provisions regarding the requirements to be met by the Request for Joinder, the answer to such Request, and possible third-party claims.
Article 7 of the Rules regulates multi-party arbitration by only providing a general framework. Such general provision is greatly welcomed since multi-party arbitrations are of great variety, including bipolar arbitration (there are just two camps of diverging interests) or multipolar arbitration (there are more than two diverging interests)[1].
Under article 8, parties may agree to submit to a single arbitral tribunal claim arising out of or in connection with more than one contract provided that both:
- parties have agreed to submit their claims to arbitration under the ACLCC Rules
- all the parties have agreed to have their claims decided within a single arbitration proceeding.
Pursuant to paragraph 2 of article 8, various applicable rules of law or various languages provided by several arbitration agreements do not prevent parties from submitting their claims to a single arbitral tribunal.
Article 9 of the Rules entitles the ACLCC Arbitration Council, at the request of a party, to consolidate two or more arbitration proceedings pending under the Rules into a single arbitration proceeding if any of the following apply:
- All parties agree – article 9.1 (a)
- All the claims are made under the same arbitration agreement – article 9.1 (b)
- (i) the claims are made under multiple arbitration agreements, (ii) the parties in the arbitration are the same, (iii) the disputes in the arbitrations arise from the same legal relationship – article 9.1 (c)
Similarly, where the parties so agree, the simplified proceedings may apply to disputes exceeding EUR 1 million.
A.2.2 Provision relating to simplified proceedings
Under article 22 of the Rules, cases not exceeding EUR 1 million now must be heard by a single arbitrator, unless otherwise agreed by the parties. Similarly, where the parties so agree, the simplified proceedings may apply to disputes exceeding EUR 1 million.
Under the Simplified Proceedings provisions, no Terms of Reference are required to define the dispute. After the arbitral tribunal has been constituted, parties are precluded from making new claims, unless the arbitral tribunal authorized the parties to do so. As a result, the framework of the dispute will only be defined by the claims and counterclaims included in the Request for Arbitration and the Answer to the Request.
B. CASES
B.1 Any criminal investigation would have no impact on the application for enforcement of the award for criminal facts committed after the issuance of an arbitral award
In a judgment of 27 February 2020[2], the Luxembourg Court of Appeal denied a request for a stay based on a criminal investigation for facts committed after an arbitral tribunal issues an arbitral award on the ground that such investigation would have no impact on the exequatur proceedings since it was not one of the grounds provided under article V of the New York Convention.
A Luxembourg Company (Appellant in the appeal proceeding) and a Hong Kong Company (Respondent in the appeal proceeding) entered into an agreement involving an arbitration clause. A dispute arose between them when Respondent refused to reduce the contractually agreed commission fee. Consequently, Appellant terminated the Agreement. The dispute was submitted to arbitration in London. With an arbitral award in its favor, the Respondent applied for recognition and enforcement of the award in Luxembourg. The District Court of Luxembourg granted the application. The Appellant filed an appeal.
Appellant raised several objections to the recognition and enforcement of the award. Among them, it requested the court to stay the enforcement proceeding on the ground that a criminal action takes precedence over a civil action. The court denied staying proceedings, holding that:
In any event, the rule according to which “le criminel tient le civil en état” [a criminal action takes precedence over a civil action] only applies if the [criminal] action is really pending and the criminal investigation can influence the answer to be given to the claim. In the present case, we find that […] whatever the outcome of a possible complaint, it would have no impact on the dispute of which the Court of Appeal is seized and which concerns the recognition and the enforcement in the Grand-Duchy of Luxembourg.[3]
[1] Yves Derains and Eric A. Schwartz, A guide to the ICC Rues of Arbitration, 2nd edn., pp.70-71.
[2] Court of Appeal, 27 February 2020, No. 25/20.
[3] ICCA Yearbook International Commercial Arbitration 2021 – Vol. XLVI, Court of Appeal, No. 25/20, 27 February 2020.
