LUXEMBOURG Trends and Developments Contributed by: Emilie Waty and Kloris Vjerdha, KLEYR_GRASSO
Introduction Centuries ago, Benjamin Franklin famously queried “When will mankind be convinced and agree to settle their difficulties by arbitration?”. In the modern era, international arbitration has not only responded to this question but has firmly established itself as one of the leading methods in both commercial and investment matters for resolving disputes across borders, recog - nised for its flexibility, neutrality and global enforce - ment. In response to its growing significance, countries around the world have undertaken legal reforms and institutional improvements to meet arbitration stand - ards, with Luxembourg being no exception. Indeed, through the years, the Grand-Duchy of Luxem - bourg has taken notable steps in integrating arbitra - tion within its legal know-how. By establishing a mod - ern and robust legislative framework, Luxembourg has significantly enhanced its profile as a sophisticated and arbitration-friendly venue that regularly advocates for the use of arbitration in disputes, particularly in the financial sector. Arbitration in Luxembourg The use of arbitration in Luxembourg is deeply rooted in its legal history and is by no means a novel con - cept. Its origins can be traced back to the early 19th century, when the foundational principles governing arbitration were first incorporated into Luxembourg law through the decree of 29 April 1806, enacted as part of the Napoleonic Code of Civil Procedure, as well as the Geneva Protocol on Arbitration clauses ratified in 1927. A more decisive shift occurred in 1939, when Luxem - bourg enacted legislation expressly recognising the legal force of arbitration agreements followed by fur - ther legislative refinement in 1981 which modernised the procedural rules governing the annulment and enforcement of arbitral awards. Luxembourg has since become a party to a plethora of international instruments including the landmark 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Con - vention on the Settlement of Investment Disputes
Between States and Nationals of Other States com - monly known as the Washington Convention, estab - lished in 1965, the European Convention on Interna - tional Commercial Arbitration of 1961, alongside a multitude of bilateral investment treaties and multilat- eral agreements, demonstrating Luxembourg’s dedi - cation to maintain an arbitration-friendly environment. Nonetheless, in order to keep up with economic glo - balisation and the legislative reforms of arbitration in neighbouring countries, Luxembourg has very recent - ly undertaken a thorough overhaul of its arbitration regime that has simplified arbitral proceedings and promises flexibility, efficiency as well as privacy, these being the main characteristics that render arbitration attractive in the first place. A preparatory step towards the modernisation of arbi - tration procedures was first initiated by the Chamber of Commerce’s new arbitration rules that came into force on 1 January 2020, and that apply to arbitration proceedings brought before the Luxembourg Arbitra - tion Center (LAC), Luxembourg’s main local institution with the competence of hearing arbitration disputes submitted to it. The LAC’s initiative regarding the renewal of its rules of arbitration, alongside other developments such as the creation of the Luxembourg Arbitration Day by the Luxembourg Arbitration Association, a non-profit organisation founded in 1996, as well as Luxem - bourg’s participation in a co-operation agreement in the Benelux area, laid the groundwork for the coun - try’s reconstruction of its arbitration regime and paved the way for the new arbitration law ultimately enacted in 2023. Recent Developments: A New Legislative Era Luxembourg enacted a new legislative framework governing arbitration through the law of 19 April 2023 amending the second part, book III, heading I of the New Code of Civil Procedure (the “New Arbitration Law”), which was the culmination of a comparative legal analysis undertaken over several years by legal practitioners such as lawyers, judges and law profes - sors, who convened on a regular basis between 2013 and 2017. The 2023 reform was designed to position Luxembourg as a preferred arbitral seat by capitalis -
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