In a significant ruling, the Versailles Court of Appeal addressed the statute of limitations for applications seeking leave to enforce international arbitral awards in France. This decision stemmed from a case where the claimant initially filed for leave to enforce an arbitral award in 2016, but withdrew the request in 2017 due to an anti-suit injunction from the New York Supreme Court. The claimant later refiled the request in November 2018, which was granted. However, Citigroup Global Market Inc and one of its bankers (the respondents) appealed the decision to the Paris Court of Appeal, which dismissed their appeal. The French Supreme Court subsequently overturned the decision and remanded the case to the Versailles Court of Appeal.
Ultimately, the Versailles Court of Appeal ruled that a five-year statute of limitations applies to applications for leave to enforce foreign arbitral awards in France, starting from the date the award is issued.
This ruling has important implications for the enforcement of foreign arbitral awards in France:
The dispute arises from a management contract related to the claimant’s investment portfolio, valued at approximately US$25 million. In 2010, the claimant initiated arbitration proceedings under the FINRA dispute resolution centre in the United States, seeking compensation for financial losses incurred during the 2008 subprime crisis, alleging mismanagement by the respondents.
On 30 July 2013, the arbitral tribunal issued a FINRA arbitral award in favour of the claimant, ordering the respondents to compensate for the losses. However, on 2 January 2014, the New York Supreme Court set aside the award, ruling that the underlying claim had been settled between the parties on 29 April 2012. Despite this, on 30 March 2016, the claimant requested and obtained an order from the Paris First Instance Court to enforce the award in France. The claimant then took conservatory attachments on the respondents' assets based on this order. On 29 September 2016, the respondents challenged the order granting leave to enforce.
At the same time, on 18 January 2017, the respondents obtained an anti-suit injunction from the New York Supreme Court, which ordered the claimant to cease any enforcement actions related to the award in France. Consequently, on 13 February 2017, before the Paris Court of Appeal, the claimant waived the benefit of the enforcement order and lifted the conservatory attachments.
However, on 6 November 2018, the claimant filed a new request with the Paris First Instance Court to enforce the award again, which was granted on 21 December 2018. The respondents appealed the decision and simultaneously obtained a new order from the New York Supreme Court, which included an order for the claimant's imprisonment until the claimant withdrew the legal action in France.
On 12 July 2021, the Paris Court of Appeal dismissed the respondents' appeal, ruling that an appeal against an order granting leave to enforce is only permitted in the limited circumstances set out in Article 1520 of the French Code of Civil Procedure. The respondents then appealed to the French Supreme Court, which overturned the Paris Court of Appeal’s decision. The Supreme Court held that Article 1520 only applies to the review of the arbitral award itself and does not prevent the examination of any pleas of inadmissibility raised in relation to the leave application for enforcement. The case was then remanded to the Versailles Court of Appeal.
The respondents contended that the claimant’s new request for leave to enforce, filed on 6 November 2018, was inadmissible for three main reasons: (i) the claimant had waived the benefit of the first enforcement order on 13 February 2017; (ii) the request was time-barred; and (iii) the claim had already been settled by the parties on 29 April 2012.
The court ruled that the request for leave to enforce the arbitral award was time-barred under Article 2224 of the French Civil Code, deeming the claimant's application inadmissible.
First, the court rejected the claimant’s argument by drawing a distinction with the exequatur applications for foreign judgments. Under French law, foreign judgments are not subject to a statute of limitations as long as they remain enforceable in their jurisdiction of origin. However, such judgments are indirectly constrained by the limitation rules in their country of origin. In contrast, the court emphasised that arbitral awards are autonomous and independent from the national laws of the country where the award was made, as established in the <span class="news-text_italic-underline">Putrabali</span> case. Therefore, the limitation periods imposed by the laws of the country where the award originated cannot be applied to oppose enforcement in France.
The court further noted that extending the reasoning from the 11 January 2023 decision (which excluded time limits for foreign judgments) to arbitral awards would contradict French international public policy. It concluded that arbitral awards must be subject to a statute of limitations when seeking enforcement in France.
Second, the court confirmed that the general statute of limitations under Article 2224 of the French Civil Code applied to requests for leave to enforce an arbitral award. The court excluded the application of Article L 114-4 of the French Code of Civil Enforcement Procedure, which imposes a 10-year limitation period on the enforcement of enforceable titles. Since an arbitral award awaiting enforcement does not qualify as an enforceable title, the court ruled that the five-year limitation under Article 2224 applied, starting from the issuance of the arbitral award.
Thus, the court held that two limitation periods apply to the enforcement of arbitral awards: five years from the issuance of the award to request leave to enforce and ten years from the order granting leave to enforce the award.
Lastly, the court dismissed the claimant's attempt to rely on 2016 conservatory attachments as an interruption to the limitation period. While enforcement measures generally interrupt the statute of limitations, the claimant’s decision to waive the benefit of the initial leave order and lift the conservatory attachments in 2017 nullified any interruption of the limitation period. Consequently, the court ruled that the 2018 request for leave to enforce was time-barred, as the award had been issued in 2013, more than five years prior.
The Versailles Court of Appeal’s decision in this case establishes a clear framework for the statute of limitations applicable to exequatur proceedings for foreign arbitral awards in France. The court’s ruling highlights the distinction between arbitral awards and foreign judgments, confirming that arbitral awards are not exempt from time limitations, unlike foreign judgments, which are governed by the rules of the country of origin. This decision reinforces the importance of timely enforcement requests, as the court emphasised that the five-year limitation period for filing a request to enforce an arbitral award must be adhered to.
The court’s ruling also clarifies the interaction between conservatory measures and the statute of limitations, affirming that actions such as waiving an enforcement order can nullify any interruption of the limitation period. Ultimately, the decision underscores the need for careful attention to statutory timeframes when pursuing the enforcement of arbitral awards, ensuring that legal actions are initiated promptly and in compliance with French law.
