LUXEMBOURG Trends and Developments Contributed by: Emilie Waty and Kloris Vjerdha, KLEYR_GRASSO
This last provision was adopted with the express intention to safeguard the interests of the weaker party and prevent the risk of procedural inequities in cases where the economically dominant party would initiate arbitration proceedings prematurely, thereby circum - venting judicial oversight and placing the weaker party at a disadvantage. Limited recourse against arbitral awards The New Arbitration Law provides limited recourse against Luxembourg arbitral awards, which may only be subject to annulment proceedings ( recours en annulation ) as well as application for review ( recours en revision ). Annulment proceedings are provided for under Article 1237 of the NCCP and may be initiated before the Court of Appeal sitting in civil matters, on the basis of six grounds such as the absence of jurisdiction of the arbitral tribunal, violation of public policy, or infringe - ment of the rights of the defence. The annulment proceedings foreseen by Article 1237 of the NCCP do not, in principle, suspend the enforceability of the award in question. An application for review may also be lodged, pursu - ant to Article 1247 of the NCCP, before the Court of Appeal for the revocation of an award. For such an application to be successful, one of four specific con - ditions must be satisfied such as fraud or where the award was rendered on the basis of false evidence. Enforcement of arbitral awards The enforcement of Luxembourg and foreign arbitral awards by a simplified exequatur procedure is fore - seen in Chapter VII of the NCCP and more specifically in Articles 1233 to 1249. Luxembourg and foreign awards may be enforced in response to an ex parte application filed before the President of the District Court. Exequatur of Luxem - bourg awards may only be refused on the basis of six specific grounds set out in Article 1238 of the NCCP. Exequatur of foreign awards may be refused on the basis of the six grounds enumerated in Article 1238 of the NCCP and also on the basis of four additional grounds set out in Article 1246 of the NCCP, such as fraud.
The order granting or refusing the exequatur may be appealed before the Court of Appeal. Those proceed - ings are adversarial and do not suspend the enforce - ability of the award except if enforcement of the award would be highly detrimental to a party. For Luxembourg awards, the exequatur order can - not be appealed separately from an appeal against the award itself. For foreign awards, an application for review may also be filed against the exequatur order in case a fraud committed by the executing party is discovered after the expiry of the time limit to file an appeal against the order. In sum, the recent legislative arbitration reform is both ambitious in scope and purposely designed to posi - tion Luxembourg as a competitive and attractive arbi - tral seat on a global scale. Arbitration in Luxembourg’s Investment Fund Industry The Luxembourg investment fund industry is charac - terised by increasingly high sophistication. The Grand Duchy of Luxembourg stands in fact as the foremost domicile for investment funds within Europe and ranks as the second largest globally. Driven by its ambition in this domain, Luxembourg continually seeks to attract investment funds into its territory and to position itself as a leading domicile for such vehicles. Undoubtedly, the presence of 13,274 fund units in Luxembourg raises the likelihood of disputes arising in relation thereto. Until recently, financial institutions adopted a con - servative approach with respect to alternative meth - ods of dispute resolution, and therefore, disputes in the banking and financial sectors were predominantly brought before state courts through ordinary judicial proceedings. In fact, it was widely believed that the complexity of financial disputes and the necessity of specialised expertise with respect to their regula - tory framework made ordinary courts the most fitting choice for adjudicating such disputes.
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