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Assignment of arbitral claims and arbitral awards: uncertain legal landscape in France

  • France
  • Litigation and dispute management

13-12-2023

Introduction

The assignment of arbitral claims and arbitral awards is a fast-growing market practice. When entering into agreements for such assignments, it is crucial to ensure that they comply with all the applicable legal requirements. In this context, the assignee should carefully assess the risks that may arise out of the award debtor's rights pursuant to the provisions of the law applicable at the seat of arbitration and/or at the place(s) of enforcement of the award. Under French law there is a specific mechanism called the right of "retrait litigieux" ("disputed withdrawal"). In accordance with this singular legal mechanism, which is designed as a tool to fight against speculation, when a disputed claim is assigned to a third party in the course of any judicial or arbitral proceedings, the debtor is entitled to discharge its debt by paying the assignee the actual price of the assignment, plus interest and costs, instead of the full amount of the original debt (article 1699 of the French Civil Code). As has been seen in the FG Hemisphere v Democratic Republic of the Congo saga, the conditions and requirements for exercising the right of retrait litigieux in the context of assignment of arbitral claims or arbitral awards are uncertain under French law.

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Sarah Monnerville Smith, Counsel
Valentin Leveque, Associate

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