Construction Arbitration: France

1. Is your jurisdiction primarily a common law, civil law, customary law or theocratic law jurisdiction? Are the laws substantially derived from the laws of another jurisdiction and, if so, which? What instruments have legal force and effect? Who are the lawmaking bodies? How and where are new laws published? Can laws be passed with retrospective effect?

France

The French legal regime is a civil law system that relies primarily on legal codes and statutes. The French Civil Code has inspired and served as a basis for the laws of many civil law jurisdictions in Europe and across the world.

The vast majority of French law is derived from legislation, some of which incorporates or adopts European and international laws and regulations. Case law developed by French courts is not binding, but can be critical to the way courts interpret French legislation.

The Parliament is the primary law-making body of France. French legislation is officially published in the Official Gazette of France, other administrative publications and on the official website Légifrance.

Article 2 of the French Civil Code prohibits newly published laws from having a retroactive effect. However, certain laws that are considered to be public policy may be an exception to this rule, as can be determined by the Constitutional Council. There are other rules and exceptions that apply specifically to criminal law.

2. What are the requirements for a construction contract to be formed? When is a "letter of intent" from an employer to a contractor given contractual effect?

France

The formation of construction contracts under French law follows the traditional principle of offer and acceptance. An offer must provide all the essential elements of the contract including a description of the works and the purchase price, and must express the will of the offeror to be bound by those terms in case of acceptance.

Local construction contracts in France are almost always in writing and are usually bespoke contracts but may also be based on standard forms. International construction contracts often rely on standard forms such as the FIDIC of JCT contracts.

Under French administrative law governing public construction contracts, no letter of intent exists. The entire preliminary phase leading up to the signing of a construction project with a public body is governed by state regulations.  

For construction contracts with a private employer, a letter of intent can be either binding or non-binding, depending on the language agreed upon by the parties.

3. Are parties free to choose: (a) the governing law of their contract; (b) the law of the arbitration agreement; (c) the seat of the arbitration; (d) any arbitral rules; (e) anyone to act as arbitrator; and (f) the language of the contract and the arbitration? If not, what are the limitations on choice and what happens if the parties act contrary to them?

France

Parties to a construction contract in France are indeed free to choose the governing law of the contract, the law applicable to the arbitration agreement, the seat of arbitration, the applicable arbitral rules, the arbitrator and the language of both the contract and any arbitration proceedings which may arise from the contract.

4. How might terms be implied into construction contracts? What terms might be implied?

France

Article 1194 of the French Civil Code provides that the parties to a contract are not only bound by the express terms of that contract, but also by the legal consequences that would be derived from equity, usage or the law in relation to the contract.

In addition, some implied terms may consist of the duties derived from the obligation to perform contracts in good faith (article 1104 of the French Civil Code), which applies throughout the duration of a contract, including in the pre-contractual phase.

Another implied term is the statutory decennial guarantee required of contractors under article 1792-4-1 of the French Civil Code.

5. When must a certifier under a construction contract act impartially, fairly and honestly? To what extent are the parties bound by certificates (where the contract does not expressly empower a court or arbitral tribunal to open up, review and revise certificates)? Can the contractor bring proceedings directly against the certifier?

France

French law does not provide specific provisions governing the duties of a certifier under construction contracts; however, there can be an implied term that anyone appointed as a certifier would fulfil its mission impartially, fairly and honestly. The parties would be bound contractually by the certificate if the contract so provides, until and unless the competent court or arbitral tribunal decides otherwise.

6. If an employer would cause (eg, by variation) a two-week critical delay to the completion of the works (which by itself would justify an extension of time under the construction contract) but, independently, culpable delay by the contractor (eg, defective work) would cause the same delay, is the contractor entitled to an extension?

France

There is no black letter law in France specifically dealing with concurrent delays. However, under article 1231-2 of the French Civil Code, a party that has suffered damages due to the contractual breach of another party can only be compensated ‘for the loss it has suffered and for the gains of which it has been deprived’. In a scenario where the contractor breaches the contract, causing a delay on the critical path, the direct causal link between the contractual breach and the delay may be broken if the employer, by its own action, causes a longer delay, however, in the event of true concurrency, the employer may argue that the contractor is not entitled to any damages since it would have suffered the same loss regardless of the employer’s causative act.

7. How does the law view "disruption" to the contractor (as distinct from delay or prolongation to the completion of the works) caused by the employer’s breaches of contract and acts of prevention? What must the contractor show for a disruption claim to succeed? If an entitlement in principle can be shown (eg, that a loss has been caused by a breach of contract) must the court or arbitral tribunal do its best to quantify that loss (even if proof of the quantum is lacking or uncertain)?

France

Generally, under French law a contractor may claim for costs and/or damages related to a disruption, even when a contract only expressly provides the right to claim for an extension of time due to delays. The contractor must, however, demonstrate to the court or arbitral tribunal proper causality, breach of contract and quantification, with certainty, of the claimed loss.

8. How does the law view "constructive acceleration" (where the contractor incurs costs accelerating its works because an extension of time has not been granted that should have been)? What must the contractor show for such a claim to succeed? Does your answer differ if the employer acted unreasonably or in bad faith?

France

If the contractor has either a contractual or other obligation (express or implied, eg, by not granting an extension of time) to accelerate the works in case of delay caused by the employer, and the contractor incurs costs because it has taken measures to accelerate the works to catch up on that delay, the contractor may successfully claim for the resulting costs.

9. What events of force majeure give rise to relief? Must they be unforeseeable and to whom? How far does the express or implied allocation of risk under the contract affect whether an event qualifies? Must the event have a permanent effect? Is impossibility in performing required or does a degree of difficulty suffice? Is relief available where only some obligations (eg, to make a single payment or carry out one aspect of the works) are affected or is a greater impact required? What relief is available and does it apply automatically? Can the rules be excluded by agreement?

France

As per the French Civil Code, force majeure is an occurrence that is outside the contractor’s control, could not reasonably have been foreseen at the time of entering into the relevant contract, the effects of which could not have been avoided by having taken adequate measures, and that would prevent the contractor from performing its obligations under the contract. Parties to a construction contract are, however, free to deviate from that legal definition and list specific possible events that they agree to consider would have the same effects as those of force majeure as per the French Civil Code.

The French Civil Code also provides that if the impediment caused by the event is temporary, the contractor’s performance of its obligation shall be suspended, unless the resulting delay would justify termination of the contract. However, if the impediment is permanent, the contract is automatically terminated (ie, without the intervention of a court) and the parties are set free from their obligations. Impossibility of performance is indeed a requirement of force majeure, and mere difficulty in performance does not qualify under French law.

10. When is a contractor entitled to relief against a construction contract becoming unduly expensive or otherwise hard to perform and what relief is available? Can the rules be excluded by agreement?

France

The French Civil Code gives judges the discretion to amend or even terminate a contract if the performance of said contract becomes excessively onerous for the contractor, as long as such difficulty was unforeseeable at the time the parties entered into the contract. Article 1195 of the French Civil Code, however, requires that the parties attempt to negotiate a solution prior to the judge’s intervention. The parties are free to exclude this provision by contractual agreement.

11. When is a contractor entitled to relief if after the contract is concluded it transpires (but not due to external events) that it is impossible for the contractor to achieve a particular aspect of the contractual specification? What relief is available?

France

Outside the occurrence of force majeure, a contractor may only be entitled to relief for the impossibility of its performance of the contract if a judge determines that such impossibility has arisen due to the inaccuracy or infeasibility of a particular aspect of the contractual specification for which the employer would have assumed responsibility. Damages are available.

12. How effective are contractual provisions that seek to pass risks to the contractor for matters it cannot foresee or control, for example, making the contractor liable for: (a) a specified event of force majeure; (b) ground conditions that no reasonably diligent contractor could have foreseen; or (c) errors in documents provided by the employer, such as employer's requirements in design and build forms?

France

A contractor is free to waive its statutory rights of relief for a specified event of force majeure, through an express contractual provision. A contractor can also agree to assume responsibility for unforeseeable ground conditions or errors in the documents provided by the employer, though the employer may not transfer a risk to the contractor knowing that consequences related to that risk were going to occur, or were more likely to occur than was communicated when the contractor assumed such risk.

13. When must the contractor warn the employer of an error in a design provided by the employer?

France

The contractor has a duty to warn the employer as soon as the contractor identifies an error in a design provided by the employer. Such duty may arise due to a contractual obligation and/or as part of a general duty to warn under French law.

14. Is there a general duty of good faith? If so, how does it impact upon the following (where they are otherwise permitted under the construction contract): (a) the level of intervention in the works that is allowed by the employer; (b) a party’s discretion whether to terminate or suspend the contract; or (c) the employer’s discretion to claim pre-agreed sums under the contract, such as liquidated damages for delay?

France

Good faith is a key tenet of French contract law. To this end, article 1104 of the French Civil Code provides that ‘Contracts must be negotiated, concluded and performed in good faith’.

The duty of good faith extends to all areas of performance of the contract, and thus could indeed limit the degree of intervention in the works by an employer, particularly if that intervention unduly impedes the contractor’s ability to perform its obligations.

The obligation most certainly affects the parties’ use of discretion regarding termination or suspension of the contract. For example, while the parties may rely upon a contractual right to terminate based on the occurrence of certain conditions, a good faith test will still apply even if it is not expressly provided for in the contract. This means that a party who chooses to terminate or suspend the contract, whether relying on a contractual right or a statutory right, must still act honestly and fairly towards the co-contracting party in doing so.

15. How do contractual provisions that bar claims if they are not validly notified within a certain period operate (including limitation or prescription laws that cannot be contracted out of, interpretation rules, any good faith principles and laws on unfair contract terms)? What is the scope for bringing claims outside the written terms of the contract under provisions such as sub-clause 20.1 of the FIDIC Red Book 1999 ("otherwise in connection with the contract")? Is there any difference in approach to claims based on matters that the employer caused and matters it did not, such as weather or ground conditions? Is there any difference in approach to claims for (a) extensions of time and relief from liquidated damages for delay and (b) monetary sums?

France

French courts generally uphold contractually established time limits for issuing notices of claims. However, in the tradition of civil law, French courts can allow exceptions to an otherwise successful time-bar objection, especially if the objection is raised in violation of the principle of good faith. Parties may also assert claims that are not expressly accounted for in the contract, as long as they do not contradict terms of the contract. There is no difference in application of a time-bar provision for different kinds of claims unless a distinction is made in the provision itself.

16. What rights does the employer have to suspend paying the contractor or performing other duties under the contract due to the contractor’s (non-)performance, or the contractor have to suspend carrying out the works (or part of the works) due to the employer’s (non-) performance?

France

Pursuant to article 1219 of the French Civil Code, a contracting party may refuse to perform its obligations if the other party has not executed its own obligations, and if such non-performance is sufficiently severe. This principle must, however, be applied with caution in construction contracts because such a drastic measure must be proportionate to the importance or centrality of the obligation to the advancement of the works.

17. May the employer exercise an express power to omit work, or terminate the contract at will or for convenience, so as to give work to another contractor or to carry out the work itself?

France

In private construction contracts, an employer may only unilaterally terminate a contract for convenience if the parties have mutually agreed on this right and have enshrined the conditions and effects of such termination in the contract.

In the absence of express agreement to this end, a contractor whose contract has been unilaterally terminated by the employer will be compensated for the value of the works already performed and the anticipated profits, unless there is a clause specifically excluding such a remedy.

In public construction contracts, the employer is free to unilaterally terminate the contract if it is in the public interest, in which case the contractor would be compensated not only for the loss suffered but also for the loss of profit.

18. What termination rights exist? Can a construction contract be terminated in part? What are the practical and financial consequences?

France

Under French law (article 1224 et seq of the French Civil Code), a party may terminate a construction contract for any reason agreed upon by the parties in a termination clause or, in case of a breach that is sufficiently severe, by the mere act of notification.

The practical and financial consequences will vary depending on the reasons for which the termination occurred and the relevant contractual provisions.

19. If the construction contract provides for the circumstances in which each party may terminate the contract but does not expressly or impliedly state that those rights are exhaustive, are other rights to terminate available? If so, what are they and what are the practical and financial consequences?

France

No other termination rights would be available except for on the grounds of a contractual breach.

20. What limits apply to exercising termination rights?

France

A termination right may always be relied upon, except if the relying party has violated the principle of good faith in doing so. A contractor is prevented from unilaterally terminating a public construction contract, even if the termination is due to an alleged breach by the employer, without prior approval from either the co-contracting state party or a court. The only exception to this is in the event of force majeure.

21. Does the law of your jurisdiction deem the works to be completed (irrespective of what the contract says) if, say, the employer takes beneficial possession of the works and starts using them?

France

French courts have considered that an employer taking possession of a construction project and making complete payment will result in a presumption of tacit acceptance of the project. Parties are, however, permitted to contest this presumed acceptance and will thus bear the burden of proof to demonstrate that the owner or employer did not in fact tacitly accept the works.

22. Does approval or acceptance of work by or on behalf of the employer bar a subsequent complaint? What constitutes acceptance? Does taking over the work by the employer constitute acceptance? Does this bar subsequent complaint?

France

Even when acceptance is acknowledged by both the employer and the contractor, subsequent complaints are still permitted based on contractual provisions and/or defects liability periods inscribed into French law.

The French Civil Code provides that the works will be considered complete, and subject to a one-year guarantee of perfect completion, as of the date the works would be accepted by the employer, notwithstanding the existence of some minor defects that should be listed in a punch list or acceptance report.

23. To what extent are liquidated damages for delay to the completion of the works treated as an exhaustive remedy for all of the employer’s losses due to (a) delay to the completion of the works by the contractual completion date; and (b) delays prior to the contractual completion date (in the absence of, say, interim milestone dates with liquidated damages for delay attaching to them)? What difference does it make if any critical delay is caused by the contractor’s fraud, wilful misconduct, recklessness or gross negligence? If so, what constitutes such behaviour and can it be excluded by agreement?

France

Under French law, parties to a construction contract are free to negotiate liquidated damages, which would require a given contractual party to pay the other party a particular sum if the former does not fulfil certain of its contractual obligations to the latter. In a general sense, the parties to a contract are free to negotiate and agree upon the amount of liquidated damages to be available, and French courts may not award more or less than what is claimed in these liquidated damages clauses, except if the amount owed under the relevant clause is ‘manifestly excessive or derisory’ (article 1231-5 of the French Civil Code). The employer may claim additional remedies in the case of delay caused by the contractor’s wilful or gross misconduct.

24. If the employer causes critical delay to the completion of the works and the construction contract does not provide for an extension of time to the contractual completion date (there being no "sweep up" provision such as that in sub-clause 8.4(c) of the FIDIC Silver Book 1999) is the employer still entitled to liquidated damages due to the late completion of works provided for under the contract?

France

The employer will not be entitled to liquidated damages if it has caused the relevant critical delay to the completion of the works.

25. When might a court or arbitral tribunal award less than the liquidated damages specified in the contract for delay or other matters (eg, substandard work)? What factors are taken into account?

France

Article 1231-5 of the French Civil Code provides that a judge (or arbitrator) may award less than the contractually stipulated amount of liquidated damages if the amount agreed upon is ‘manifestly excessive’ in proportion to the fault itself and/or results of that fault.

A court or arbitral tribunal may determine that liquidated damages are manifestly excessive by assessing the proportionality between the amount fixed by agreement and the damage actually suffered.

26. When might a court or arbitral tribunal award more than the liquidated damages specified in the contract for delay or other matters (eg, work that does not achieve a specified standard)? What factors are taken into account?

France

Article 1231-5 of the French Civil Code provides that a judge (or arbitrator) may award more than the contractually stipulated amount of liquidated damages if the amount agreed upon is ‘derisory’.

27. How is monetary compensation for breach of contract assessed? For instance, if the contractor is liable for a defect in its works is the employer entitled to its lost profits? What if the lost profits are exceptionally high?

France

Article 1231-2 of the French Civil Code states that the damages due to the creditor are, in general, the loss it has incurred and the profit of which it has been deprived. The damages incurred by the employer would be analysed more under the lens of loss of opportunity rather than lost profits. Under this kind of analysis, since it is not entirely certain that an expected profit will be received, the compensation awarded for the loss of such profit cannot be exactly the same as the value of the expected profit itself but will have to be assessed in proportion to the probability that the profit would have actually been received.

28. If the contractor’s work is technically non-compliant, is the contractor liable for remedying it if the rectification cost is disproportionate to the benefit of the remedy? Can the parties agree on a regime that is stricter for the contractor than under the law of your jurisdiction?

France

Mere disproportion between the rectification cost and the benefit of the remedy will not alone excuse a contractor from the obligation to perform such rectification.

The parties may agree to a contractual regime for liability stricter than that provided by French law subject to the legal guarantee regime (article 1792 et seq of the French Civil Code), which is considered public policy

29. If there is a defects notification period (DNP) during which the contractor must or may remedy any defect in its works that appears during a certain period after their completion, if the construction contract is otherwise silent, does it affect the employer’s rights to claim for any defects appearing after the DNP expires?

France

The provisions of article 1792 et seq of the French Civil Code provide for mandatory guarantee periods of: (i) one year for the repair of all defects either listed in the acceptance report/punch list or that are notified within said year, (ii) two years for the repair or replacement of any defective equipment that can be removed from the building and (iii) 10 years for the rectification of defects that were latent upon completion, and that compromise the stability of the works or make it unfit for its purpose, unless the contractor can prove that the damage is due to a foreign cause.

These provisions are considered public policy in France and thus cannot be waived or modified via contractual agreement.

30. What is the effect of a construction contract excluding liability for “indirect or consequential loss”?

France

The concept of ‘indirect’ or ‘consequential’ loss creates some confusion under French law. Strictly speaking, indirect loss cannot be repaired under French law, since a direct causal link with the breach must be established before the courts may award damages.

However, the concept of indirect or consequential loss, as understood in common law jurisdictions translates to a loss of profits or loss of opportunity under civil law systems, the exclusion of which will be given legal effect, except in the event of gross negligence or wilful misconduct.

31. Are contractually agreed limits on – or exclusions of – liability effective and how readily do claims in tort or delict avoid them? Do they not apply if there is fraud, wilful misconduct, recklessness or gross negligence: (a) if the contract is silent as to such behaviour; or (b) if the contract states that they apply notwithstanding such behaviour? If so, what causation is required between the behaviour and the loss?

France

The parties to a contract may always exclude or limit their liability except for fraud, wilful misconduct, recklessness or gross negligence, and for the legal guarantees that are of public policy.  

Claims in tort are not relevant or applicable to questions of contractual liability under French law.

32. What right does a contractor have to claim a lien (or similar) in the works it has carried out? If so, what are the limits of the right if, for example, the employer has no interest in the site for the permanent works? How is the right recognised and enforced?

France

The contractor has no inherent right to claim a lien over real property under French law. However, article 1799-1 of the French Civil Code offers two types of guarantee to the contractor. One possibility is that if the employer is funding the works through a bank, the contractor has a direct right to be paid by the funder. If the works are not funded by a bank, then the employer has to issue a performance bond to the benefit of the contractor that can be called by the latter in the case of failure of payment by the employer.

If the owner does not issue the required performance bond at the beginning of the project and then stops payment of the works, the contractor has the right to suspend performance of the works without notice.

33. How do conditional payment (such as pay-when-paid) provisions operate under the law of your jurisdiction (including interpretation rules, any good faith principles and laws on unfair contract terms)?

France

Pay-when-paid clauses are permissible under French law, and could have the effect of delaying the payment due to the contractor, but must not have the effect of depriving the contractor from the payment for the works it would have performed.

34. May a subcontractor claim against the employer for sums due to the subcontractor from the contractor? How are difficulties with the merits and proof of the subcontractor’s claim addressed, including any rights the contractor has to withhold payment? What if aspects of the project suggest that the law of your jurisdiction should not apply (eg, the parties to both the main contract and the subcontract have chosen a foreign law as the governing law)?

France

Subcontractors have an express right under French law to claim directly against an employer for sums due by the contractor to the subcontractor. The subcontractor must have been accepted, expressly or tacitly, by the employer to be able to rely on this right.

The right for subcontractors to claim directly against an employer is considered by the French courts as a ‘loi de police’, which applies to any construction project in France, irrespective of the law chosen by the parties.

35. May an employer hold its contractor to their arbitration agreement if their dispute concerns a subcontractor (there being no arbitration agreement between the contractor and the subcontractor or no scope for joining two sets of arbitral proceedings) or can the contractor, for example, require litigation between itself, the employer and the subcontractor? Does it matter if the arbitration agreement does not have its seat in your jurisdiction?

France

A dispute between the parties, will normally fall within the scope of an arbitration agreement that covers the works of the contractor arising from the contract, even if it concerns a subcontractor that is not party to the agreement since the works of the subcontractor in furtherance of the project are still the responsibility of the contractor towards the employer.

Generally, a subcontractor who is not a party to an arbitration agreement between the employer and the contractor cannot be joined into arbitration proceedings arising from that agreement, except if the subcontractor or the employer can demonstrate that the arbitration agreement must be extended to the subcontractor due to its abnormal implication in the negotiation, performance or termination of the main contract.

36. May third parties obtain rights under construction contracts? How readily can those connected with the employer (such as future or ultimate owners) bring claims against the contractor in respect of (a) delays and (b) defects? To what extent are exclusions and limitations of liability in the construction contract relevant?

France

Under a principle known as the effet relatif des conventions (ie the French equivalent of privity of contract), only the contracting parties to a given agreement may hold rights or obligations under that agreement.

37. How readily (absent fraud, wilful misconduct, recklessness or gross negligence) can those connected with the contractor (such as affiliates, directors or employees) face claims in respect of (a) delays (b) defects and (c) payment? To what extent are exclusions and limitations of liability in the construction contract relevant?

France

In accordance with article 1199, a contract only creates obligations between the parties to said contract. Consequentially, a third party cannot seek performance of the contract nor be bound to perform it.

Contractual liability for delays, defects and payment is imputed solely to the contractor, and not to its directors or employees. The same principle applies to the affiliates of the contractor, or any other entity connected with the contractor, except if those entities have knowingly participated in the breach of contract.

38. What are the key limitation or prescription rules for claims for money and defects (and insofar as you have a mandatory decennial liability (or similar) regime, what is its scope)? What stops time running for the purposes of these rules (assuming the arbitral rules are silent)? Are the rules substantive or procedural law? May parties agree different limitation or prescription rules?

France

As pertains to claims for defects, the legal guarantee regime (mandatory guarantee periods of one, two and 10 years) for defects liability may not be waived.

As pertains to claims for monetary compensation, the main applicable limitation period for the right to bring a claim under a construction contract is five years from the day on which the party knew or should have known of the facts upon which the claim is based.

This time limitation for monetary claims can be either suspended or interrupted. As inscribed in the French Civil Code, a suspension, or pause, of this time-bar period occurs when the parties have entered negotiation through a process of mediation. Interruption of the time-bar period will, however, occur when one of the parties launches an action under the contract, even if the tribunal would in fact have no jurisdiction. The effect of an interruption is that the five-year time-bar period starts over.

Parties may contractually agree to shorten or extend the limitation period, as long as it does not become shorter than one year or longer than 10 years. After a time-bar period has elapsed, the beneficiary of the right may waive that period so that it begins running again.

39. What laws apply that cannot be excluded or modified by agreement where the law of your jurisdiction is the governing law of a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

France

No laws that are considered as public policy under French law may be excluded or modified by agreement.

One example of a key aspect of the FIDIC Silver Book that would not succeed in modifying the parties’ rights under French law would be the provisions establishing the ‘Defects Notification Period’, since the corresponding legal guarantee regime (guarantees of one, two and ten years for certain defects) are considered to be public policy.

The legal guarantee regime will take precedence over contractual provisions, but if a given defect does not fall within the scope of the legal guarantee, the contract provision of the FIDIC silver book may apply.

40. What laws of your jurisdiction apply anyway where a foreign law governs a construction contract? What are the key aspects of, say, the FIDIC Silver Book 1999 that would not operate as its plain words suggest?

France

Any law that is considered a loi de police under French law will apply regardless of the fact that a foreign law is governing the construction contract. The title of loi de police is attributed to laws that are deemed necessary to safeguard the social, political and economic organisation of France, and that thus cannot be excluded from application even if the law of another state is applicable to a given matter. One example of a loi de police in the construction sector is the right for subcontractors to bring claims directly against employers.

41. For a DAB decision awarding a sum to a contractor under, say, sub-clause 20.4 of the FIDIC Red Book 1999 for which the employer has given a timely notice of dissatisfaction, in an arbitration with its seat in your jurisdiction, might the contractor obtain: a partial or interim award requiring payment of the sum awarded by the DAB pending any final award that would be enforceable in your jurisdiction (assuming the arbitral rules are silent); or interim relief from a court in your jurisdiction requiring payment of the sum awarded by the DAB pending any award?

France

A contractor may ask an arbitral tribunal to grant such a partial or interim award, since as a matter of principle French law allows provisional payments in this context. Such a request must not be prima facie unfounded, which would imply that the reason for the dissatisfaction would be groundless.

A contractor may also appeal to a French court for interim measures in a dispute subject to an arbitration clause, to seek provisional payments based on the DAB decision, as long as the contractor can prove the urgency of the situation. This, however, must only occur prior to the constitution of the arbitral tribunal, except when requesting conservatory attachments or judicial securities, which must be requested of a domestic court.

42. Does your jurisdiction have courts or judges specialising in construction and arbitration?

France

There are no French courts that are formally and exclusively specialising in construction; however, there are civil courts that have sections dedicated to construction disputes. Administrative courts have jurisdiction over disputes dealing with the public sector, including disputes arising from public construction contracts.

The Paris Court of Appeal has a division specialising in arbitration-related matters to adjudicate issues arising out of arbitrations that take place in France or for which enforcement or annulment is being sought in France.

43. What are the relevant levels of court for construction and arbitration matters? Are their decisions published? Is there a doctrine of binding precedent?

France

All civil or commercial disputes between private entities, including construction disputes, can be submitted to the competent French civil courts. Appeals of civil court decisions are to be submitted to the Court of Appeal. The Paris Court of Appeal has divisions specialising in construction and arbitration-related disputes. Challenges to appellate decisions are submitted to the Court of Cassation, which is the highest civil court in France.

Disputes arising from contracts involving public entities that fall under French jurisdiction are submitted to the administrative courts. Appeals of these decisions are submitted to the Administrative Court of Appeal. After this stage, a case may be submitted to the State Council (Conseil d’Etat), which is the highest administrative court in France.

All decisions of French civil and administrative courts are published.

44. In your jurisdiction, if a judge or arbitrator (specialist or otherwise) has views on the issues as they see them that are not put to them by the parties, can they raise them with the parties? Is the court or arbitral tribunal permitted or expected to give preliminary indications as to how it views the merits of the dispute?

France

A judge or arbitrator may raise, ex officio, certain legal issues. In the interest of due process, the parties must, however, have a reasonable opportunity to express their respective views on such legal issues. The judge or arbitrator shall refrain from giving a preliminary indication of its views on the merits of the dispute.

45. If a contractor, say, wishes to arbitrate pursuant to an arbitration agreement, what parallel proceedings might the employer bring in your jurisdiction? Does it make any difference if the dispute has yet to pass through preconditions to arbitration (such as those in clause 20 of the FIDIC Red Book 1999) or if one of the parties shows no regard for the preconditions (such as a DAB or amicable settlement process)?

France

France, as a pro-arbitration forum, does not permit a party to launch judicial proceedings in France that would otherwise fall under the scope of the arbitration clause in ongoing arbitration proceedings irrespective of whether the preconditions have been fulfilled. Nevertheless, if an arbitral tribunal is not yet constituted in a given dispute that would be subject to a valid arbitration clause, a party may apply to a competent French court to seek interim measures pursuant to article 1449 of the French Code of Civil Procedure.

46. If the seat of the arbitration is in your jurisdiction, might a contractor lose its right to arbitrate if it applied to a foreign court for interim or provisional relief?

France

The contractor may not lose its rights to arbitrate if it applies to a French court for interim or provisional relief before the constitution of the arbitral tribunal, in accordance with article 1449 of the French Civil Code.

47. In your jurisdiction, are tribunal- or party-appointed experts used? To whom do party-appointed experts owe their duties?

France

French courts will commonly appoint experts in construction disputes as a preliminary measure before a case begins on the merits. More and more often in litigation of construction disputes in France, the parties to a dispute will appoint their own experts to assist them in the debate, and to participate in the larger debate with court-appointed experts. It is, however, less frequent that there are only party-appointed experts without the presence of court-appointed experts in the proceedings.

In international arbitration proceedings seated in France, it is quite common for parties to construction disputes to each appoint an expert to submit a report that can be relied upon in the parties’ respective legal submissions.

In any case, party-appointed experts must remain neutral and independent, regardless of the party by whom the experts have been appointed.

48. Summarise any specific limitations or requirements that apply when the employer is a state entity or public authority (including, for example, public procurement rules, limits on rights to suspend or terminate, excluded lien rights and arbitrating – as well as enforcing an award – against such an employer).

France

Construction contracts with a public employer are subject to a specific set of rules called the Public Procurement Code (CCP).

Under article L.2195-3 of the CCP, an employer who is a state or public entity is free to terminate the public contract on grounds of public interest, as long as the employer has provided prior notice and compensation to the contractor.

Disputes arising under public procurement contracts are generally submitted to the administrative courts, and not arbitral tribunals.

49. If the seat of the arbitration is in your jurisdiction, on what basis can a party make a settlement offer that may not be put before the arbitral tribunal until costs fall to be decided?

France

If the seat of the arbitration is in France, there is no impediment under French law to making a settlement offer on a ‘without prejudice save as to costs’ basis, such as the one suggested by the ICC Note to Parties and Arbitral Tribunals on the Conduct of Arbitration.

50. Does the law of your jurisdiction recognise "without prejudice" privilege (such that "without privilege" communications are privileged from disclosure)? If not, may it be agreed that a sum is payable if communications to try to achieve a settlement are disclosed to a court or arbitral tribunal?

France

Parties are free to agree to a confidentiality agreement at any point during settlement negotiations, which could then protect such negotiations from disclosure.

51. Is the advice of in-house counsel privileged from disclosure under the law of your jurisdiction? Is the relevant law characterised as substantive or procedural law?

France

The advice of in-house counsel is not privileged under French law (ie, it is not subject to the French ‘secret professionel’, which protects all attorney-client communications from disclosure).

52. What are the requirements for a guarantee under the law of your jurisdiction? Are oral guarantees effective?

France

There are two general categories of guarantee under French law. The first is an autonomous guarantee, for which a guarantor may not refuse or raise a defence to payment based on the related obligation. The second is the ‘ordinary’ guarantee, for which a guarantor may raise a defence to payment.

Guarantees under French law must be made by consensual agreement. The agreement and instructions pertaining to a given guarantee in a commercial matter can be oral. Instructions and agreement to provide a guarantee in civil, non-commercial, matters must, however, be executed in writing.

53. Under the law of your jurisdiction, will the guarantor’s liability be limited to that of the party to the underlying construction contract, if the guarantee is silent? Can the guarantee’s wording affect the position?

France

Under French law, an ordinary guarantee may not exceed what is owed by the original debtor. A guarantor has the right to raise objections derived from the underlying contract to which the guarantee pertains, as long as those arguments are those that the debtor itself could raise against the beneficiary of the guarantee.

54. Under the law of your jurisdiction, in what circumstances will a guarantor be released from liability under a guarantee, if the guarantee is silent? Can the guarantee’s wording affect the position?

France

A guarantor who has provided an ordinary guarantee under French law can be released from liability in the event that the beneficiary causes the guarantor to lose its subrogation rights in the rights of the beneficiary, or if the underlying debt is extinguished. The guarantor of an autonomous guarantee will only be released from liability if fraudulent collusion between the debtor and beneficiary is revealed, or upon the occurrence of manifestly abusive or fraudulent enforcement requests pertaining to the guarantee.

55. If an on-demand bond is governed by the law of your jurisdiction on what basis might a call be challenged in your courts as a matter of jurisdiction as well as substantive law? Assume the underlying contract is silent on when calls may be made.

France

An on-demand bond can only successfully be challenged upon the occurrence of fraudulent collusion between the debtor and beneficiary or manifestly abusive or fraudulent enforcement requests pertaining to the guarantee.

56. If an on-demand bond is governed by the law of your jurisdiction and the underlying contract restrains calls except for amounts that the employer is entitled to (such as sub-clause 4.2 of the FIDIC Red Book 1999), when would a court or arbitral tribunal applying your jurisdiction’s law restrain a call if the contractor contended that: (i) the employer does not have an entitlement in principle; or (ii) the employer has an entitlement in principle but not for the amount of the call?

France

On-demand bonds (or first demand guarantees) under French law are autonomous and automatic, in that the beneficiary of such a bond may call on the sum merely by producing the guarantee, and shall be granted payment on that call as long as it complies with the provisions of the bond letter. Objections raised by the guarantor that are based on the underlying contract will have no effect on the validity of the guarantee or the amount called in the bond, except as expressly agreed upon in the letter itself. Only in the event of abuse or manifest fraud on the part of the beneficiary can a call be restrained or suspended.

57. Are there any other material aspects of the law of your jurisdiction concerning construction projects not covered above?

France

No, although additional elements generally arise from specific contractual provisions.