Is there a statute of limitations applicable in France to requests for enforcement of foreign arbitral awards? On 10 December 2024, the Versailles Court of Appeal (the “Court”) responded in the affirmative and ruled that a request was time barred for having been filed more than 5 years after the issuance of the award (Case 23/07279).
As explained in this post, this decision is inconsistent with France’s delocalised approach of arbitral awards and calls for a reform of the regime of enforcement, which could be addressed as part of the ongoing French arbitration law reform initiated by the former Minister for Justice at the end of 2024 (see here).
Factual Background
The dispute related to the management by Citigroup of a portfolio, the value of which collapsed during the 2008 financial crisis. The investor, a US and Italian citizen, initiated an arbitration under the aegis of the Financial Industry National Regulatory Authority, a self-regulatory organization for brokerage firms and exchange markets, against Citigroup.
The arbitrators issued an award on 30 July 2013, ordering Citigroup to compensate the investor. Despite the setting-aside of the award by the New York courts (FINRA Case n°10-03615), the Paris Court of Appeal applied the delocalised approach endorsed in the Putrabali case (1st Civ., 29 June 2007, No. 05.18053) and granted an enforcement order. Citigroup appealled it and obtained an anti-suit injunction from the New York courts, forcing the investor to waive its rights under the enforcement order.
On 6 November 2018, the investor obtained a second enforcement order. Citigroup appealed it again, arguing that the request was time-barred because the 5-years timelimit under Article 2224 of the French Civil Code, had elapsed. This article provides that “personal or movable actions shall be barred after five years from the day on which the holder of a right knew or should have known of the facts enabling its exercise”.
On the contrary, the investor argued that the statute of limitations applicable was that of 10-years, applicable to enforceable titles pursuant to Article L.111-4 of the Code of Civil Enforcement (“CCE”).
In a decision issued on 12 July 2021 (Case 19/11413), the Paris Court dismissed the appeal and the time-bar defense, which is an issue of admissibility under French law. In a nutshell, the Paris Court held that its review excluded admissibility arguments, and was limited to the compatibility of the award with the limited grounds set forth under Article 1520 Code of Civil Procedure (“CCP”), none of which could justify the annulment.
This decision was then quashed by the Cour de Cassation on 13 april 2023, which ruled that French courts’ limited powers to review the award did not exclude the review of arguments of inadmissibility, such as time-bar issues. The Cour de Cassation’s review being limited to issues of law, it referred the case to the Versailles Court of Appeal, to implement its ruling.
Lack of Specific Statute of Limitations for Enforcement
The applicability of the 5-year statute of limitation itself was in question, as French arbitration law does not provide for any specific statute of limitation applicable to enforcement requests or set-aside proceedings. The only rules that apply to international arbitral awards are statute of limitations that are triggered by the notification of the award or of the enforcement order, and not by the issuance of the award. This notification always has to occur by service, unless otherwise agreed by the parties, which never occurs in practice.
Indeed, the CCP only provides that :
- Enforcement orders can be “filed by the most diligent party’” (Article 1516 );
- Actions to set aside shall be made “within one month following notification of the award” (Article 1519 );
- Appeals against the enforcement order shall be “brought within one month following notification of the award bearing the enforcement order” or “service of the order” denying the enforcement (Articles 1522, 1523 and 1525).
In this context, the Court first excluded the application of the rule applicable to foreign judgments, which are subject to a de facto statute of limitations, such requests being inadmissible if the judgment is no longer enforceable where it was issued (1st Civ., 11 January 2023, No. 21-21.168). In a contradictory statement, it then held that arbitral awards being independent from any legal order, the statute of limitations applicable to the request for enforcement is that of 5 years, commonly applicable in France. Accordingly, it ruled that the request dated 6 November 2018 was time-barred, as the award had been issued on 30 July 2013.
The Delocalised Approach Does Not Justify a 5-years Limitation
Consistent with the French delocalised approach, the Court ruled that it could not apply any rule applicable to the enforcement of foreign domestic decisions, as international arbitral awards are independent from any domestic legal order.
The second half of the reasoning, on the contrary, is more debatable as the Court did not properly justify the application of the 5‑year limitation period.
We agree with the Court that the 10-year time length applicable to enforceable titles pursuant to Article L.111-4 of the CCE is not relevant here. Indeed, the request for enforcement precisely aims at granting, or denying, an enforceable title in the French legal order.
However, the mere assertion that Article 2224 of the Civil Code would create a standard statute of limitations applicable to any action that is not an action in rem concerning an immovable property is not sufficient to justify the application of the 5-years limitation period. To the contrary, the scope of application of Article 2224 is not defined negatively as encompassing any action that is not an action in rem, but positively as including any “personal or movable” action. If it was the position of the Court that the action for enforcement of an award is either movable or personal, it should have justified it clearly. Lacking such justification, it risks being quashed by the Cour de cassation.
In addition, the reasoning of the Court could be seen as breaching the cornerstone principle of French arbitration law of autonomy and independence of arbitral awards by wrongly applying a statute of limitations that is not specific to requests for enforcement of international awards, but is meant to be applied to other categories of actions.
Potential Reform of Enforcement Actions in France?
This decision nonetheless underlines the fact that some aspects of enforcement actions in France could be reformed, as part of the ongoing French arbitration law reform.
The first – and main – aspect is the obligation to notify by service under Article 1525 CPC, unless otherwise agreed by the parties; which never occurs in practice. This excessively formalistic provision – unsual for French arbitration law – clearly limits the efficiency of enforcement, creating opportunities for disloyal or dilatory behaviour and thus undermining the greater body of rules applicable in one of the most arbitration-friendly jurisdictions in the world.
It is sufficient to note that last summer the Paris Court of Appeal decided that the 2-month statute of limitations to initiate annulment proceedings did not start running because the process of notification by way of diplomatic channel ended in the Ministry of Foreign Affairs, when it was aimed at the Ministry of Justice (Order 14 May 2024, No. 23/01696) (see also here). This example illustrates that there is room for more flexibility, while creating a more balanced bargain between the parties.
The second aspect is that one could understand the need to clarify the regime of notification by submitting requests for enforcement to a limitation period, and thus avoiding that international awards be indefinitely enforceable in France. This could be relevant in situations in which the party that won the arbitration has not been actively pursuing its enforcement.
Indeed, the need to ensure that legal decisions, including arbitral awards, are enforced within a reasonable timeframe, could also apply to parties and not only to states. This would be an incitation not to delay the enforcement of an award for tactical reasons, for instance in situations where a stream of business between the parties persists and the award is part of a bigger bargain.
Such a limitation would be in the interest of both respondents to enforcement actions as well as international trade. Even if it is true that a balance must be found as bad payers must not be advantaged, being able to enforce an award after years of inactivity could be seen as inconsistent with the need to ensure the efficiency of the procedure, and thus the restoration of normal business conditions following the resolution of the dispute.
However, one could simply deal with such exceptional situations by relying on waiver arguments to exclude the disloyal enforcement of an award or to create a time limit specific to the enforcement of foreign arbitral awards.
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In 2023, the French Supreme Court held that requests for enforcement of foreign judgments in France are not subject to any statute of limitation. Was this judgment raised and discussed by the Court of Appeal of Versailles?