LUXEMBOURG Trends and Developments Contributed by: Emilie Waty and Kloris Vjerdha, KLEYR_GRASSO
Introduction Centuries ago, Benjamin Franklin famously asked: “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. Its origins can be traced back to the early 19th century, when the foundational prin - ciples 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 1923 Geneva Protocol on Arbitration Clauses ratified by Luxembourg in 1927. A more decisive shift occurred in 1939, when Luxem - bourg enacted legislation expressly recognising the legal force of arbitration agreements, followed by a further legislative refinement in 1981 which modern - ised the procedural rules governing the annulment and enforcement of arbitral awards. Luxembourg is in fact a party to a plethora of inter - national instruments including the landmark 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention), the 1961 European Conven - tion on International Commercial Arbitration and the
1965 Convention on the Settlement of Investment Dis - putes between States and Nationals of Other States (commonly known as the Washington Convention), alongside a multitude of bilateral investment treaties and multilateral agreements that demonstrate Lux - embourg’s dedication to maintaining 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 and privacy, these being the main characteristics that render arbitration attrac - tive in the first place. The first step in the modernisation of Luxembourg’s arbitration procedures was the Chamber of Com - merce’s new arbitration rules that came into force on 1 January 2020 and apply to arbitration proceedings brought before the Luxembourg Arbitration Center (LAC), Luxembourg’s main local institution with the competence to hear arbitration disputes submitted to it. The LAC rules have more recently been modernised effective from 1 October 2025 with the introduction of updated procedural provisions, notably with respect to electronic communications and the use of vide - oconferencing in arbitral hearings. The LAC’s initiative in renewing its rules of arbitra - tion, along with other initiatives such as the creation of Luxembourg Arbitration Day by the Luxembourg Arbitration Association, a non-profit organisation founded in 1996, as well as Luxembourg’s participa - tion in a co-operation agreement in the Benelux area, laid the groundwork for the country’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 Recently, 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, judg -
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