New rules for arbitration under Luxembourg law: A modern and flexible framework for dispute resolution
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Publications: 03 April 2023
On 25 April 2023, the new Luxembourg framework for arbitration foreseen by the Law of 19 April 2023 modifying the New Civil Procedure Code and reforming the arbitration entered into force.
This framework, inspired by the UNCITRAL Model Law on International Commercial Arbitration and on French arbitration law, aims to make arbitration more flexible, efficient and attractive for parties seeking to resolve their disputes.
Here are the main features of this framework that you need to know.
Submission to arbitration
Parties may freely submit to arbitration any dispute that involves rights of which they can freely dispose. Luxembourg law does not distinguish between domestic and international arbitration.
Some disputes, however, are excluded from arbitration (e.g. consumer or employment disputes).
Insolvency measures do not preclude either the application of arbitration agreements, nor the conclusion of an arbitration agreement.
The decision of the parties to submit a dispute to arbitration is formalised in an arbitration agreement. This can be agreed on even if an action has already been filed before the courts.
If there is an arbitration agreement, the courts will have to respect the parties’ choice and decline to hear the dispute, unless the agreement is null or inapplicable.
Selecting arbitrators and conducting arbitration
Parties can decide how many arbitrators they want, and how to appoint and remove them. This can also be done by reference to standard rules of arbitration. By default, there are three arbitrators: each party chooses one arbitrator and the two chosen arbitrators then designate a third arbitrator.
The arbitrators have the authority to decide whether they have jurisdiction to hear the dispute, based on the existence, validity and scope of the arbitration agreement.
The arbitrators can also order interim or protective measures, unless the parties have agreed otherwise.
Parties can tailor the arbitration to their needs and preferences, by choosing the seat of arbitration, the language, the applicable law (e.g. Luxembourg law, foreign law, amiable compositor) and the rules for procedure (directly or by reference to standard rules of arbitration). The proceedings are confidential, unless agreed otherwise.
If the arbitration agreement does not set a deadline, the duration of the mission of the arbitral tribunal is limited to six months from the acceptance of the mission by the last of the arbitrators (unless agreed otherwise).
The arbitrators must ensure that all parties are treated fairly and have a reasonable chance to present their case. The arbitrators can also invite the parties to ask for the help of the courts for the collection of evidence from third parties.
Where difficulties arise during the process and the parties or the arbitral tribunal cannot settle such difficulties, the President of the Luxembourg district court shall act as a supervising judge and decide on such disputes.
Any interested third party may intervene in the arbitration proceedings.
Obtaining and enforcing the arbitral award
The arbitral award must be rendered by the majority of the arbitrators and signed by them. It must explain the reasons for the decision, unless the parties have agreed otherwise.
The arbitral award has the same force as a court judgment and is immediately binding on the parties.
The enforcement of the award can be obtained in Luxembourg following a quick and simple procedure, described in the below table.
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Awards delivered in Luxembourg |
Awards delivered abroad |
|
|
Enforcement conditions |
Order (exequatur) from the President of the district court within whose area of jurisdiction the award was rendered. |
Order (exequatur) from the President of the district court within whose area of jurisdiction the defendant is domiciled or where the award needs to be executed if the defendant is not domiciled in Luxembourg. |
|
Procedure |
Without the presence of the opposite party |
Without the presence of the opposite party |
|
Grounds for refusing the enforcement |
The Court can only deny exequatur of the award in the following alternative limited cases: The arbitral tribunal had no jurisdiction or exceeded its jurisdiction; The tribunal was not properly formed; The tribunal ruled without complying with the mandate it had been given; The award is contrary to public order; The award is not reasoned, unless the parties agreed otherwise; There was a violation of the rights of the defence. |
The Court can only deny exequatur of the award in the following alternative limited cases, unless an international treaty applies: The arbitral tribunal had no jurisdiction or exceeded its jurisdiction; The tribunal was not properly formed; The tribunal ruled without complying with the mandate it had been given; The award is contrary to public order; The award is not reasoned, unless the parties agreed otherwise; There was a violation of the rights of the defence; It is revealed, after the award has been rendered, that it was obtained by fraud on the part of the winning party; New and decisive evidence was discovered after the award that was hidden by the act of another party; The award relied on documents that were later proven or declared to be false; The award relied on statements, testimonies or oaths that were later proven or declared to be false. Where international conventions (such as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards signed in New York on 10 June 1958 (the New York Convention)) apply, only the grounds listed in those conventions can be used to refuse enforcement. In the vast majority of the cases the New York Convention should apply. |
|
Appeal |
An order granting exequatur cannot be appealed. However, it is possible to challenge the order together with the award by filing a recourse in annulment (see below). An order denying exequatur can be appealed within one month of its notification. The other party(ies) to the arbitration proceedings must be summoned before the Court of appeal. The Court will decide on both the order and the annulment, unless the time for annulment has passed. |
The order (whether granting or denying exequatur) can be challenged by either party within one month of its service. The order can also be revised in exceptional cases, such as fraud or new evidence (see below). |
Challenging the award
The available appeal(s) of the award depends on the seat of arbitration.
You cannot appeal or oppose the award itself, but you can ask the Court of Appeal to declare it void or revise it in limited cases, and request the arbitral tribunal to interpret the award or amend formal errors. In addition, when the award was delivered outside of Luxembourg, no challenge is available against the award itself, only against the order granting or refusing exequatur.
|
Act challenged |
Conditions |
Procedure |
Time limit |
Effects |
||
| Annulment |
Arbitral award delivered in Luxembourg |
A recourse to annulment is only possible if (alternative conditions): The arbitral tribunal had no jurisdiction or exceeded its jurisdiction; The tribunal was not properly formed; The tribunal ruled without complying with the mandate it had been given; The award is contrary to public order; The award is not reasoned, unless the parties agreed otherwise; There was a violation of the rights of the defence. |
Action taken directly before the Court of appeal. Writ of summons against the other party(ies) to the arbitration proceedings. |
From the delivery of the award until one month after notification or service of the award. |
The award is declared null and void. No suspension of the enforcement of the award during the process. If the Court rejects the request, the award becomes enforceable. |
|
|
Revision |
Arbitral award delivered in Luxembourg |
The award can be withdrawn only if (alternative conditions): It is revealed, after the award has been rendered, that it was obtained by fraud on the part of the winning party; New and decisive evidence was discovered after the award that was hidden by the act of another party; The award relied on documents that were later proven or declared to be false; |
Recourse before the arbitral tribunal or, if impossible, before the Court of appeal. Revision can only be requested by persons who were parties to or represented in the award. |
Two months from the date the party to the arbitration proceedings filing the recourse had knowledge of the invoked cause of the revision. |
The award is withdrawn and a new decision must be taken. |
|
| Order enforcing the award delivered abroad |
The order can only be withdrawn if fraud on the part of the winning party is revealed to another party to the arbitration after the deadline for filing an appeal against the exequatur order has elapsed. | Action taken directly before the Court of appeal.
Writ of summons against the other party(ies) to the arbitration proceedings |
Two months from the day the party became aware of the cause of revision. | The order is withdrawn and a new decision must be taken.
If the Court rejects the request, the decision shall contain the decision on the exequatur. No suspension of the enforcement of the award during the process. |
||
| Third-party opposition | Arbitral award delivered in Luxembourg | Persons who were not party to the arbitration proceedings and whose rights are prejudiced by the award can file third-party opposition against the award. | Action before the court which would have had jurisdiction in the absence of this arbitration. | N/A | The court shall re-examine the (operative) parts of the award that are detrimental to the third parties.
No suspension of the enforcement of the award during the process. |
|