LUXEMBOURG Law and Practice Contributed by: Emilie Waty and Kloris Vjerdha, KLEYR_GRASSO
Nonetheless and despite having been the subject of a debate by the Luxembourg legislature, the Luxem - bourg Arbitration Law affirms the negative effect of the competence-competence principle as influenced by Swiss law, which allows the national judge to intervene even in cases where the arbitral tribunal has already been constituted. Article 1227-3 of the NCCP provides, more specifi - cally, that where a dispute falling within the scope of an arbitration agreement is brought before a national court, the state court is required to decline its jurisdic - tion, save where the arbitration agreement is void due to the non-arbitrable nature of the dispute or the fact that the arbitration agreement is manifestly null and inapplicable for any other reason. This provision was included by the legislature with the purpose of safeguarding the interests of the weaker party ( partie faible ) that is less economically empow - ered, and ensures that there is judicial oversight of the proceedings in determined cases. Lastly, state courts do not undertake a review of nega - tive rulings on jurisdiction issued by arbitral tribunals. Case law on the matter affirms that the content of an arbitral ruling is the product of the arbitrators’ reason - ing and reflects their understanding and knowledge. 5.3 Timing of Challenge The Luxembourg Arbitration Law, and more specifi - cally Article 1227-3 of the NCCP, does not foresee a specific timeframe within which the parties have the right to challenge the jurisdiction of the arbitral tribu - nal. 5.4 Standard of Judicial Review for Jurisdiction/Admissibility The standard of judicial review with respect to juris - diction and admissibility is de novo under the Luxem - bourg Arbitration Law. 5.5 Breach of Arbitration Agreement When a party initiates proceedings before a state court in violation of an existing arbitration agreement, the state court does not, of its own motion, declare its lack of jurisdiction. Rather, it is incumbent upon
the opposing party to raise such an objection in limine litis. Where no such objection is raised, the opposing par - ty shall be deemed to have consented to the court’s jurisdiction, thereby effectively waiving the right to submit the dispute to arbitration. Indeed, it is well established case law that arbitral jurisdiction remains entirely voluntary and may be waived by the parties at any time. State courts’ lack of jurisdiction resulting from a valid arbitration agree - ment is not a matter of public order but rather a matter of private law. As a result, the arbitration clause will be deemed waived where the objection is not raised in limine litis by the defendant. It follows, therefore, that state courts uphold the par - ties’ autonomy and accordingly interpret the absence of a timely objection as the parties’ intention to submit the dispute to the state courts’ jurisdiction. 5.6 Jurisdiction Over Third Parties As a general principle, an arbitration agreement pro - duces effects only inter partes, and therefore is bind - ing only vis-à-vis the parties who explicitly consented to it. Notwithstanding the above-mentioned principle, Arti - cle 1231-12 of the NCCP provides mechanisms for the involvement of third parties through intervention and joinder. On the one hand, intervention allows a third party, by means of a written request, to participate in the arbi - tration proceedings. On the other hand, joinder allows an existing party to the arbitration to request the inclu - sion of a third party. This is however contingent upon the existence of a submission agreement between the parties involved as well as the third party, and subject to the arbitral tribunal’s approval. Moreover, it is widely accepted that third parties may be drawn into arbitral proceedings in cases involving a chain of contracts containing interconnected arbitra - tion clauses or in instances where the piercing of the corporate veil doctrine is invoked.
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