Enforcing Punitive Damages Awards in France: Facing Proportionality within International Public Policy

Abstract

International commercial arbitration is not alien to the concept of punitive damages. In fact, arbitral tribunals commonly resort to punitive measures in cases where one of the defendants’ conduct has breached all means of decency and deserves heavy sanctions. Accordingly, a question that follows is whether such an arbitral award can sustain enforceability in jurisdictions that prohibit punitive damages. France is often designated as the seat of arbitration because of its favorable laws and widespread opposition to punitive damages. Although much ink has been spilled in France regarding the legality of punitive damages, the rule remains unchanged: courts are strictly prohibited from issuing punitive damages for civil injuries. This contrasts strongly with common law jurisdictions, such as the United States, where the principle of exemplary damages is deeply rooted in the country’s tort liability regimes.This legal paradox lies in the deep opposition between principles of French law and the rules of international arbitration as applied in France. Thus, in the interest of understanding international arbitration in France, the answer to one question is essential: To what degree should the domestic prohibition of punitive damages affect punitive foreign arbitral awards when enforcement is sought before French courts?This article argues that France is not opposed to the enforcement of punitive damages awards; therefore, parties should not fear seeking enforcement before French courts. Indeed, French courts treat the prohibition against punitive damages as a question proper to domestic public policy, which is not encompassed within the narrower international public policy category. Thus, an objecting party would not find support in invoking the international public policy exception to bar the award’s enforcement. In addition, French law has carved a caveat pursuant to which punitive arbitral awards must satisfy a proportionality test; absent proportionality, an award would be in violation of French international public policy.