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Modernisation of arbitration

Arbitration is an alternative method of dispute resolution that is increasingly practiced both in Luxembourg and internationally. However, the rules applicable in this matter date back to the Napoleonic era and have changed little since then. While this law, regulated in a rather summary manner in articles 1224 to 1251 of the New Code of Civil Procedure, is no longer in line with practice, the Government has unequivocally shown its intention to develop this method of dispute resolution by introducing draft law n°7671 dated 15 September 2020 :

This alternative method of dispute resolution will be modernized in order to highlight its advantages of flexibility, speed and confidentiality, while providing appropriate guarantees, particularly with regard to respect for public order, the right of the parties to arbitration and respect for the rights of third parties".

The draft law is based on 3 fundamental choices:

-          the first choice is that of methodology: the global context in which Luxembourg is evolving has led the drafters of the bill to favour a text that is consistent with existing ones. Thus, they were inspired by French law, but also by the law of the United Nations Commission on International Trade Law, the latter having been transposed in about a hundred countries, including Belgium;

 

-          the 2nd choice is that of fair measure: the objective of the reform is to facilitate recourse to arbitration in civil and commercial matters, while excluding certain rights from its scope of application, in particular rights deemed protective for a party considered weak. These include consumer law, labor law, rent leases and personal status ;

 

-          the third choice is that of not distinguishing between internal and international arbitration: this choice is explained by the fact that no argument could justify a differentiated treatment, respectively arbitration in Luxembourg is most often international.

It should nevertheless be remembered that the enforcement of an arbitral decision requires the intervention of the state authority in order to be enforceable.

Conclusion :The reform project is part of a spirit of modernization and internationalization of arbitration. However, we will need to wait and see how the projected reform will go through the meanders of the first legislation.

 

For further information, please do not hesitate to contact Claire Riou--Le Jeune and/or Max Mailliet.