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Summary
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The parties entered into a commercial agency agreement which provided for dispute resolution under the Rules of the International Chamber of Commerce (ICC) arbitration. The parties subsequently entered into a termination agreement ending the commercial agency agreement with immediate effect. When a dispute arose with respect to certain commission claims by the Respondent under the commercial agency agreement, the Respondent initiated arbitration proceedings seeking, inter alia, a declaration that the termination agreement was forged and thus void. The Applicant raised certain counterclaims and the arbitral tribunal issued an arbitral award ordering the Respondent to pay certain amounts to the Applicant. The Applicant sought enforcement of the award in Germany, which the Respondent opposed, contending that the arbitration agreement contained in the commercial agency agreement had been terminated when the parties entered into the termination agreement, and that the arbitral tribunal could not render a decision after it had concluded that the termination agreement was valid. In addition, it argued that it had already submitted in the arbitration that the arbitral tribunal was not competent to hear the Applicant’s counterclaims. As an alternative argument, the Respondent raised the defense of set-off.
The Oberlandesgericht (Higher Regional Court) granted enforcement, holding that the Applicant had met the formal requirements of Section 1064 of the German Civil Procedure Code, which was applicable pursuant to the more-favorable-right provision at Article VII NYC. The Oberlandesgericht also found that none of the non-enforcement grounds under Article V NYC were applicable, rejecting the Respondent’s argument under Article V(1)(a) NYC that the arbitration agreement was void because the commercial agency agreement had been terminated, finding that the commercial agency agreement and the arbitration clause were to be treated separately, and that the invalidity of the commercial agency agreement did not necessarily affect the validity of the arbitration clause. According to the Oberlandesgericht, the Respondent had failed to prove that the parties had intended to terminate the arbitration clause when they entered into the termination agreement. In addition, the Oberlandesgericht held that, in any case, the Respondent was precluded from questioning the validity of the arbitration agreement since it had failed to do so during the arbitration and had in fact initiated the arbitration proceedings in the first place, arguing that the termination agreement was invalid. The Oberlandesgericht dismissed the Respondent’s argument that it had previously objected to the jurisdiction of the tribunal to decide on the Applicant’s counterclaims, holding that it could not be ascertained if the Respondent’s objection had been based on the lack of a valid arbitration clause. The Oberlandesgericht further stated that the Respondent presumably wanted to allege that the Applicant’s counterclaims were not covered by the arbitration agreement. It found that this issue had been properly addressed in the award and had led to the dismissal of one of the Applicant’s counterclaims. The Oberlandesgericht held that to the extent that the arbitral tribunal had granted Applicant’s counterclaims, there was no reason to refuse enforcement under Article V(1)(c) NYC. Finally, with respect to the Respondent’s auxiliary defense of set-off, the Oberlandesgericht noted that the admissibility of a set-off at the enforcement stage was generally disputed, but held that it did not need to arrive at a conclusion on the matter since the Respondent was, in any event, time-barred under Section 767(2) of the German Civil Procedure Code from raising this defense. It further stated that an exception from the time-bar could only be made if the Respondent had raised its set-off claim during the arbitration and the arbitral tribunal had considered itself without jurisdiction to rule on it, which was not the case here.
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Refine your searchGermany / 28 July 2005 / Oberlandesgericht Koblenz / 2 Sch 4/05
