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Available documents (338)
V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INCAPACITY OF THE PARTIES / C. Meaning of the “law applicable to them” / §23
23. In cases that concern challenging the authority of a party to conclude an arbitration agreement on behalf of another party, some courts have assessed the validity of a party’s power to conclude an arbitration agreement on behalf of another party pursuant to the personal law of the party that was purportedly bound by the arbitration agreement.33 For instance, in La Palentina, the Spanish Supreme Court held that when the act of representation is carried out by a company’s organs, the national law of that entity will apply.34 When the authority of a party to conclude an arbitration agreement on behalf of another party is based on a power of attorney, a German court held that its validity should be assessed pursuant to the law of the State where the power of attorney was to be exercised.35
33. See e.g., Dana Feed A/S v. OOO Artic Salmon, Federal Arbitrazh Court, Northwestern District, Russia, 9 December 2004, XXXIII Y.B. COM. ARB. 658 (2008).
34. Unión de Cooperativas Agrícolas Epis-Centre v. La Palentina SA, Supreme Court, Spain, 17 February 1998, XXXVII Y.B. COM. ARB. 533 (2002). See also, Dalmine S.p.A. v. M.&M. Sheet Metal Forming Machinery A.G., Court of Cassation, Italy, 23 April 1997, XXIV Y.B. COM. ARB. 709 (1999).
35. Oberlandesgericht [OLG] Celle, Germany, 4 September 2003, XXX Y.B. COM. ARB. 528 (2005).
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INCAPACITY OF THE PARTIES / D. Relevant time for incapacity / §24
24. Article V(1)(a) of the Convention does not specify the point in time at which a party must be under an incapacity. However, the use of the past tense in article V(1)(a) “[…] that the parties were […] under some incapacity” indicates that incapacity should be assessed at the time of conclusion of [the contract containing] the arbitration agreement.36 The drafters of the New York Convention sought to abandon the approach followed under the 1927 Geneva Convention, which focused on improper representation during the arbitral proceedings.37
36. See C. Ignacio Suarez Anzorena, The Incapacity Defence Under the New York Convention, supra note 8, at 631; Patricia Nacimiento, Article V(1)(a), supra note 9 at 218; Reinmar Wolff, Commentary of Article V(1)(a), supra note 9, at 272.
37. See Travaux préparatoires: United Nations Conference on International Commercial Arbitration, Summary Records of Seventeenth Meeting, E/CONF.26/SR.17, at 9.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INCAPACITY OF THE PARTIES / D. Relevant time for incapacity / §25
25. With very few exceptions,38 courts have assessed the capacity of a party at the time of conclusion of the arbitration agreement. For example, the Italian Court of Cassation accepted that the point in time at which representative capacity should be examined under article V(1)(a) was the time of conclusion of the arbitration agreement.40 In more recent decisions, courts in the United States,40 Russia41 and Canada42 have followed the same approach.
38. See James P. Corcoran, Superintendent of Insurance of the State of New York et al. v. Ardra Insurance Co. Ltd., Richard A. and Jeanne S. DiLoreto, Supreme Court of New York County, United States of America, 10 April 1990, XVI Y.B. COM. ARB. 663 (1991).
39. Dalmine S.p.A. v. M.& M. Sheet Metal Forming Machinery A.G., Court of Cassation, Italy, 23 April 1997, XXIV Y.B. COM. ARB. 709 (1999).
40. Seung Woo Lee, as Co-Receiver for Medison Co. Ltd. a Korean corporation and others v. Imaging3, Inc. and others, Court of Appeals, Ninth Circuit, United States of America, 19 June 2008, XXXIII Y.B. COM. ARB. 1180 (2008); China National Building Material Investment Co. Ltd. v. BNK International LLC, District Court, Western District of Texas, Austin Division, United States of America, 3 December 2009, A-09-CA-488-SS.
41. Dana Feed A/S v. OOO Arctic Salmon, Federal Arbitrazh Court, Northwestern District, Russia, 9 December 2004, XXXIII Y.B. COM. ARB. 658 (2008).
42. Grow Biz International Inc. v. D.L.T. Holdings Inc., Supreme Court, Province of Prince Edward Island, Canada, 23 March 2001, XXX Y.B. COM. ARB. 450 (2005).
See in context
26. The second limb of article V(1)(a) provides that recognition and enforcement may be refused on the ground that the arbitration agreement “is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.”
See in context
27. Courts have generally determined the validity of an arbitration agreement within the meaning of article V(1)(a) by following the conflict of laws rule set out in that provision. Certain courts have however considered that the reference to article II in article V(1)(a) requires the validity of the arbitration agreement to be determined pursuant to the form requirements set by article II.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / §28
28. Article V(1)(a) provides that validity of an arbitration agreement is to be determined “under the law to which the parties have subjected it”, or “failing any indication thereon”, “under the law of the country where the award was made”.
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / a. The primacy of the parties’ choice of law / §29
29. Pursuant to article V(1)(a), the invalidity of an arbitration agreement shall, in the first instance, be assessed pursuant to the law chosen by the parties.43 Accordingly, courts have often applied the law chosen by the parties to govern the main agreement, or the law chosen by the parties governing the arbitral procedure, as an implicit choice of law governing the arbitration agreement.
43. See, e.g., Mabofi Holdings Limited v. RosGas A.G., Federal Arbitrazh Court for the Moscow District, Russia, 24 January 2012, A40-65888/11-8/553; Supreme Court, Spain, 10 February 1984, X Y.B. COM. ARB 493 (1985). See also Patricia Nacimiento, Article V(1)(a), supra note 9, at 227; VAN DEN BERG, THE NEW YORK ARBITRATION CONVENTION OF 1958: TOWARDS A UNIFORM JUDICIAL INTERPRETATION, supra note 7, at 282; Reinmar Wolff, Commentary of Article V(1)(a), supra note 9 at 275.
See in context
3. Initially, the draft of the ECOSOC ad hoc Committee reiterated only the provision related to the legal incapacity of a party but not that related to the validity of the arbitration agreement.1 However, during the United Nations Conference on International Commercial Arbitration convened for the preparation and adoption of the Convention, State delegates decided to abandon this provision on the ground that, as reported by the Norwegian delegate, it would be rare in practice for a party to be improperly represented during arbitral proceedings.2 Furthermore, during the Conference, the drafters of the Convention introduced a provision related to the validity of the arbitration agreement. It was, at first, added as an independent ground for obtaining recognition and enforcement, but then modified to become a ground for refusing to recognize and enforce an arbitral award.3 This provision was revised to clarify that the “law applicable” to the arbitration agreement should mean the “national law to which the parties have subjected their agreement, or, failing any indication thereon, under the law of the country where the award was made”.4
1. See Travaux préparatoires, Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Report of the Committee on the Enforcement of International Arbitral Awards, E/2704, E/AC.42/4/Rev.1, Annex, at 2. Article IV(c) of the ECOSOC draft provided that recognition and enforcement may be refused if “the competent authority in the country where recognition of enforcement is sought, is satisfied: […] that the party against whom the award is invoked, being under a legal incapacity, was not properly represented.”
2. See Travaux préparatoires, Text of the Convention as provisionally approved by the Drafting Committee on 6 June 1958, E/CONF.26/L.61, at 3; Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Seventeenth Meeting, E/CONF.26/SR.17, at 9.
3. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Seventeenth Meeting, E/CONF.26/SR.17, at 3; Travaux préparatoires, Text of Articles III, IV and V of the draft Convention proposed by the Working Party for adoption of the Conference, E/CONF.26/L.43, at 1.
4. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Twenty-Third Meeting, E/CONF.26/SR.23, at 14.
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / a. The primacy of the parties’ choice of law / §30
30. In practice, parties seldom expressly choose the law to govern their arbitration agreement. In reported case law, courts have looked to other factors to find that the parties have implicitly chosen the law to govern the arbitration agreement. For instance, a United States court held that the choice of the parties with respect to the law governing the arbitral proceedings amounted to an implicit choice of law regarding the validity of the arbitration agreement.44 In another case, the Egyptian Court of Cassation ruled that the law governing the parties’ main agreement should also govern the validity of the arbitration agreement.45 The Egyptian Court of Cassation found that because the parties chose Swedish law to govern their contract, that law should apply to the arbitration agreement in order to determine its validity within the meaning of article V(1)(a).
45. Egyptian Company for Concrete & Hashem Ali Maher v. STC Finance & Ismail Ibrahim Mahmoud Thabet & Sabishi Trading and Contracting Company, Court of Cassation, Egypt, 27 March 1996, 2660/59. See also, Stena RoRo AB v. OAO Baltiysky Zavod, Highest Arbitrazh Court, Russia, 13 September 2011, A56-60007/2008; Ltd. “R.L.” v. JSC “Z. Factory”, Supreme Court, Georgia, 2 April 2004, a-204-sh-43-03.
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / b. The applicable law in the absence of the parties’ choice / §31
31. Where the parties have not expressly or implicitly selected a law to govern their arbitration agreement, courts have turned to the subsidiary rule and have assessed the validity of an arbitration agreement under the “law of the country where the award was made” pursuant to article V(1)(a).46
46. See e.g., Rocco Giuseppe e Figli s.n.c. v. Federal Commerce and Navigation Ltd., Court of Cassation, Italy, 15 December 1982, X Y.B. COM. ARB. 464 (1985); Official Receiver in the bankruptcy of Lanificio Walter Banci S.a.s. v. Bobbie Brooks Inc., Court of Cassation, Italy, 15 April 1980, VI Y.B. COM. ARB. 233 (1981); Supreme Court, Spain, 10 February 1984, X Y.B. COM. ARB. 493 (1985).
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / b. The applicable law in the absence of the parties’ choice / §32
32. For instance, the Supreme Court of Austria, in assessing the validity of an arbitration agreement under article V(1)(a) held that, since neither party had contended that the arbitration agreement was governed by a particular law, its validity would be assessed according to the law of the country where the arbitral award was made.47
47. K v. F AG, Oberster Gerichtshof, Austria, 23 October 2007, XXXIII Y.B. COM. ARB. 354 (2008).
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / b. The applicable law in the absence of the parties’ choice / §33
33. In a few reported cases, courts have looked directly to the law of the country where the award was made without expressly examining whether the parties had chosen a law applicable to the arbitration agreement.48 In these cases, the challenging parties have not expressly relied on any law chosen by the parties to govern the validity of the arbitration agreement. For example, the Svea Court of Appeal, in assessing the validity of an arbitration agreement, applied the law of the country where the award was made, without first expressly considering whether the parties had explicitly or implicitly selected a governing law for the arbitration agreement.49
48. G. A. Pap-KG Holzgrosshandlung v. Ditta Giovanni G. Pecoraro, Court of Appeal of Naples (Salerno Section), Italy, 13 February 1978, VI Y.B. COM. ARB. 228 (1981). See also, where the decision does not make any reference to the parties’ agreement: U.S. VOEST ALPINE International Trade Company v. Jiangsu Provincial Foreign Trade Corporation, Nanjing Intermediate People’s Court, China, 13 April 2009, (2008) Ning Min Wu Chu Zi No. 43.
49. Planavergne S.A., Fontanes v. Kalle Bergander i Stockholm AB, Svea Court of Appeal, Sweden, 7 September 2001, T 4645-99.
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / b. The applicable law in the absence of the parties’ choice / §34
34. The Convention is silent on how to determine where the award “was made”. Courts have, with the exception of one reported case,50 determined that the seat of arbitration as determined in the arbitration agreement was the place where the award was “made”.51 For example, the English High Court in Dallah noted that the validity of the arbitration agreement was to be assessed according to the law of the country where the award was made, i.e., the law of the country of the seat of arbitration.52 The court concluded that the seat of arbitration being in France, the validity of the arbitration agreement ought to be assessed pursuant to French law. Similarly, a Dutch court reasoned that, given the absence of a determination as to the law governing the arbitration agreement and the fact that the arbitration clause designated England as the seat of arbitration, English law would apply to determine the validity of the arbitration agreement.53
50. Richard Henry Moffit Outhwaite v. Robert Ralph Scrymegeour Hiscox, House of Lord, England and Wales, 24 July 1991, XVII Y.B. COM. ARB. 599 (1992). In this case, the House of Lords determined that the award is “made” at the place where it is signed and not at the seat of arbitration designated by the parties.
51. See e.g., K v. F AG, Oberster Gerichtshof, Austria, 23 October 2007, XXXIII Y.B. COM. ARB. 354 (2008); Supreme Court, Spain, 10 February 1984, X Y.B. COM. ARB. 493 (1985); Shandong Textiles Import and Export Corporation v. Da Hua Non-ferous Metals Company Limited, Court of First Instance, High Court of the Hong Kong Special Administrative Region, Hong Kong , 6 March 2002, HCCT 80/1997.
52. Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, High Court of Justice, England and Wales, 1 August 2008, [2008] EWHC 1901, upheld by Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Court of Appeal, England and Wales, 20 July 2009, 2008/2613; Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Supreme Court, United Kingdom, 3 November 2010, UKSC 2009/0165.
53. Société d’Etudes et de Commerce SA v. Weyl Beef Products BV, Arrondissementsrechtbank, Court of First Instance of Almelo, Netherlands, 19 July 2000, XXVI Y.B. COM. ARB. 827 (2001).
See in context V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / A. The choice of law rule under article V(1)(a) / b. The applicable law in the absence of the parties’ choice / §35
35. It is well established in arbitral practice, as well as reflected in institutions’ arbitral rules and in arbitration laws, that an award is made at the seat of the arbitration.54
54. See, e.g., Article 31(3) of the ICC Rules (2012) (“The award shall be deemed to be made at the place of the arbitration and on the date stated therein”); Article 31(3) of the UNCITRAL Model Law on International Commercial Arbitration (“The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award shall be deemed to have been made at that place”); Section 53 of the English Arbitration Act 1996 (“Unless otherwise agreed by the parties, where the seat of the arbitration is in England and Wales, or Northern Ireland, any award in the proceedings shall be treated as made there, regardless of where it was signed, despatched or delivered to any of the parties”).
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / B. Meaning of “invalidity” / §36
36. The Reported case law shows that parties have seldom been successful in opposing recognition and enforcement of an arbitral award pursuant to article V(1)(a) on the ground that the arbitration agreement was invalid.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / B. Meaning of “invalidity” / §37
37. In a number of cases, the party opposing recognition and enforcement argued that a defect in the main agreement rendered the arbitration agreement invalid. Courts have generally dismissed this argument pursuant to the principle of severability, which holds that an arbitration agreement is legally independent from the underlying contract which contains it, and the nullity of a contract does not imply that the arbitration agreement therein is invalid.55
55. See e.g., Altain Khuder LLC v. IMC Mining Inc and IMC Mining Solutions Pty Ltd, Supreme Court of Victoria, Australia, 28 January 2011; China Minmetals Materials Import & Export Co. v. Chi Mei Corp., Court of Appeals, Third Circuit, United States of America, 26 June 2003, 02-2897 and 02-3542; International Investor Kcsc v. Sanghi Polyesters Ltd., High Court of Andhra, India, 9 September 2002, Civil Revision Petition Nos 331 and 1441 of 2002; Oberlandesgericht [OLG] Koblenz, Germany, 28 July 2005, 2 Sch 4/05; Oberlandesgericht [OLG] Hamburg, Germany, 12 March 1998, XXIX Y.B. COM. ARB. 663 (2004); Oberlandesgericht [OLG] Saarbrücken, Germany, 30 May 2011, 4 Sch 03/10. For a more detailed analysis on the issue of separability, see the chapter on article II, paras. 105-107.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / B. Meaning of “invalidity” / §38
38. In some cases, parties have argued that the arbitration agreement was invalid pursuant to article V(1)(a) on the ground that one of the parties had not signed the arbitration agreement. For instance, in Dallah, the Supreme Court of the United Kingdom denied enforcement of an award on the ground that one party to the award was not validly bound by the arbitration agreement.56 Conversely, the Supreme Court of Victoria in IMC Mining Solutions, in assessing a challenge based on Section 8(5)(a) of the Australian International Arbitration Act of 1974 (implementing article V(1)(a) of the Convention), held that the party which had allegedly not signed the arbitration agreement was validly bound by it in accordance with the law applicable to the arbitration agreement, which was different from the law applicable to the main agreement.57 Similarly, a Swiss court enforced an arbitral award rendered on the basis of an arbitration agreement by reference despite it not being signed by one of the parties.58 In some jurisdictions, courts have ruled that, despite not having signed the arbitration agreement, a party’s behaviour in the arbitral proceedings, including its participation therein, could constitute a valid arbitration agreement within the meaning of article V(1)(a).59
56. Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Supreme Court, United Kingdom, 3 November 2010, UKSC 2009/0165.
57. Altain Khuder LLC v. IMC Mining Inc and IMC Mining Solutions Pty Ltd, Supreme Court of Victoria, Australia, 28 January 2011.
58. Camera di esecuzione e fallimenti del Tribunale d’appello, Repubblica e Cantone Ticino, Switzerland, 22 February 2010, 14.2009.104.
59. Comverse Inc. v. American Telecommunications do Brazil Ltda, Superior Court of Justice, Brazil, 14 June 2012, SEC 3.709; China National Building Material Investment Co. Ltd v. BNK International LLC, District Court, Western District of Texas, Austin Division, United States of America, 3 December 2009, A-09-CA-488-SS. See also the cases referenced in the chapter on article II, para. 22.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / C. Formal validity of an arbitration agreement / §39
39. Although article V(1)(a) sets outs the choice of law rules for assessing the validity of the arbitration agreement, parties opposing enforcement have often argued that enforcement should be denied on the basis that the arbitration agreement fails to comply with the form requirements of article II.60
60. For a more detailed discussion on the form requirements in article II, see the chapter on article II, paras. 36-57.
See in context
4. It was on the very last day of the Conference that article V(1)(a) surfaced in its current form at the recommendation of the Dutch delegate, who proposed to reintroduce a defence based on party incapacity.5
5. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Twenty-fourth Meeting, E/CONF.26/SR.24, at 7.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / C. Formal validity of an arbitration agreement / §40
40. In one reported case, the Italian Court of Cassation held that the requirements of article II do not apply in the context of assessing the validity of the arbitration agreement pursuant to article V(1)(a).61 The court reasoned that an arbitration agreement that fails to comply with the form requirement of article II could be held valid under article V(1)(a), as article V deals with recognition and enforcement of arbitral awards whereas article II deals with recognition and enforcement of arbitration agreements.
61. Official Receiver in the bankruptcy of Lanificio Walter Banci S.a.s. v. Bobbie Brooks Inc., Court of Cassation, Italy, 15 April 1980, VI Y.B. COM. ARB. 233 (1981). See also, G. HAIGHT, CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: SUMMARY ANALYSIS OF RECORD OF UNITED NATIONS CONFERENCE (1958), at 51.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / C. Formal validity of an arbitration agreement / §41
41. In a number of reported cases, however, courts have assessed the validity of the arbitration agreement pursuant to the form requirements of article II.62 As explained by a United States appeals court in China Minmetals, articles II, IV(1)(b) and V(1)(a) of the Convention contemplate as a whole that an enforcing court should enforce only valid agreements to arbitrate and only awards based on those agreements.63
62. See e.g., Concordia Trading B.V. v. Nantong Gangde Oil Co., Ltd, Supreme People’s Court, China, 3 August 2009, [2009] MinSiTaZi No. 22; Misr Foreign Trade Co. v. R.D Harboties (Mercantile), Court of Cassation, Egypt, 22 January 2008, 2010/64; Oberlandesgericht [OLG] Celle, Germany, 18 September 2003, 8 Scg 12/02; C S.A. v. E. Corporation, Court of Justice of Geneva, Switzerland, 14 April 1983, 187; Agrimpex S.A. v J.F. Braun & Sons, Inc., Supreme Court, Greece, 14 January 1977, IV Y.B. COM. ARB. 269 (1979); Landgericht [LG] Bremen, Germany, 8 June 1967, 11-OH 11/1966. See also a decision rendered in Russia applying the same reasoning without mentioning article II: Lugana Handelsgesellschaft mbH (Germany) v. OAO Ryazan Metal Ceramics Instrumentation Plant (Russia), Presidium of the Highest Arbitrazh Court, Russia, 2 February 2010, A54-3028/2008-S10. For a more detailed discussion on the forms requirement in article II, see the chapter on article II, paras. 38-57.
63. China Minmetals Materials Import & Export Co. v. Chi Mei Corp., Court of Appeals, Third Circuit, United States of America, 26 June 2003, 02-2897 and 02-3542.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / INVALIDITY OF THE ARBITRATION AGREEMENT / C. Formal validity of an arbitration agreement / §42
42. In this context, courts have generally accepted that, if the arbitration agreement fails to comply with the form requirements of article II, enforcement will still be ordered if, on the basis of the more-favourable-right provision at article VII(1), the agreement complies with the more liberal rules of the jurisdiction where enforcement is sought.64 In a series of decisions, German courts have applied the more favourable provisions of the German Code of Civil Procedure at the award enforcement stage to assess the validity of an arbitration agreement under article V(1)(a).65
64. See, e.g., Société Bomar Oil N.V. v. Entreprise tunisienne d’activités pétrolières (ETAP), Court of Appeal of Versailles, France, 23 January 1991, 1994 REV. ARB. 108; Ste A.B.S. American Bureau of Shipping v. Copropriété Maritime Jules Verne et autres, Court of Appeal of Paris, France, 4 December 2002, 2001/17293, 2006 REV. ARB. 945.
65. Oberlandesgericht [OLG] Celle, Germany, 14 December 2006, 8 Sch 14/05. See also, Oberlandesgericht [OLG] Celle, Germany, 18 September 2003, 8 Sch 12/02; Oberlandesgericht [OLG] Frankfurt, Germany, 18 October 2007, 26 Sch 1/07; Bundesgerichtshof [BGH] Germany, 30 September 2010, III ZB 69/09; Bundesgerichtshof [BGH] Germany, 21 September 2005, XXXI Y.B. COM. ARB 679 (2006). See contra: Oberlandesgericht [OLG] Schleswig, Germany, 30 March 2000, 16 SchH 05/99. For a more detailed discussion on the relationship between article II and article VII, see the chapter on article VII, paras. 31-35.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / PROCEDURAL ISSUES ARISING IN CONNECTION WITH ARTICLE V(1)(A) / A. Burden of proof / §43
43. Article V(1) provides that the party against whom the award is invoked must furnish proof of the ground for denying recognition and enforcement of an arbitral award.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / PROCEDURAL ISSUES ARISING IN CONNECTION WITH ARTICLE V(1)(A) / A. Burden of proof / §44
44. With respect to article V(1)(a), courts have typically ruled that it is for the party opposing recognition and enforcement to prove either that one of the parties was under some legal incapacity at the time of the conclusion of the arbitration agreement or that the arbitration agreement was invalid under the applicable law.66 The party seeking recognition and enforcement only bears the burden of supplying documentary evidence of the arbitration agreement pursuant to article IV(1)(b), which provides that the party applying for recognition and enforcement shall supply the original arbitration agreement or a copy thereof.67
66. See generally: O Limited v. S GmbH, Oberster Gerichtshof, Austria, 24 August 2005, XXXII Y.B. COM. ARB. 254 (2007). For cases concerning the incapacity defence, see, e.g, Dalmine S.p.A. v. M.& M. Sheet Metal Forming Machinery A.G., Court of Cassation, Italy, 23 April 1997, XXIV Y.B. COM. ARB. 709 (1999); Grow Biz International Inc. v. D.L.T. Holdings Inc., Supreme Court, Province of Prince Edward Island, Canada, 23 March 2001, XXX Y.B. COM. ARB. 450 (2005); China National Building Material Investment Co. Ltd. v. BNK International LLC, District Court for the Western District of Texas, Austin Division, United States of America, 3 December 2009, A-09-CA-488-SS. For cases concerning the invalidity of the arbitration agreement, see, e.g., Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Supreme Court, United Kingdom, 3 November 2010, UKSC 2009/0165; Altain Khuder LLC v. IMC mining Inc and IMC Mining Solutions Pty Ltd, Supreme Court of Victoria, Australia, 28 January 2011. 67. For a more detailed on article IV(1)(b), see the chapter on article IV, paras. 62-75.
67. For a more detailed on article IV(1)(b), see the chapter on article IV, paras. 62-75.
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / PROCEDURAL ISSUES ARISING IN CONNECTION WITH ARTICLE V(1)(A) / A. Burden of proof / §45
45. For example, the Court of Appeal of England and Wales in Yukos Oil Company v. Dardana Ltd held that, once the party seeking enforcement has provided prima facie evidence of the existence of the arbitration agreement, the burden shifts to the party opposing enforcement to prove any of the grounds for refusal under article V(1), including that the parties never entered into a valid arbitration agreement under article V(1)(a).68 Courts in other jurisdictions including those in Italy,69 Spain,70 Austria,71 Australia,72 and Bermuda73 have followed the same approach.
68. Yukos Oil Company v. Dardana Ltd, Court of Appeal, England and Wales, 18 April 2002, A3/2001/1029. See also: Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Supreme Court, United Kingdom, 3 November 2010, UKSC 2009/0165.
69. Jassica S.A. v. Ditta Gioacchino Polojaz, Court of Cassation, Italy, 12 February 1987, XVII Y.B. COM. ARB. 525 (1992).
70. Union Générale de Cinéma, SA (France) v. X Y Z Desarrollos, SA (Spain), Supreme Court, Spain, 11 April 2000, 3536 of 1998, XXXII Y.B. COM. ARB. 525 (2007); Strategic Bulk Carriers Inc. (Liberia) v. Sociedad Ibérica de Molturación, SA (Spain), Supreme Court, Spain, 26 February 2002, 153 of 2001, XXXII Y.B. COM. ARB. 550 (2007).
71. Seller v. Buyer, Supreme Court, Austria, 22 May 1991, XXI Y.B. COM. ARB. 521 (1996).
72. See also, Altain Khuder LLC v. IMC mining Inc and IMC Mining Solutions Pty Ltd, Supreme Court of Victoria, Australia, 28 January 2011.
73. Sojuznefteexport (SNE) v. Joc Oil Ltd., Court of Appeal of Bermuda, Bermuda, 7 July 1989, XV Y.B. COM. ARB. 384 (1990).
See in context V(1) / V(1)(a) / 2. ANALYSIS (V(1)(a)) / PROCEDURAL ISSUES ARISING IN CONNECTION WITH ARTICLE V(1)(A) / A. Burden of proof / §46
46. However, certain courts have required the party seeking enforcement to prove that the arbitration agreement was valid in order to rely on it. Certain German courts, on the basis of the reference in article V(1)(a) to the “agreement referred to in Article II”, have ruled that the party relying on the arbitration agreement has the onus of proving its conformity with the requirements of article II .74
74. Oberlandesgericht [OLG] München, Germany, 12 October 2009, XXXV Y.B. COM. ARB. 383 (2010); Oberlandesgericht [OLG] Celle, Germany, 4 September 2003, XXX Y.B. COM. ARB. 528 (2005). See also, with respect to Switzerland: Federal Tribunal, Switzerland, 31 May 2002, 4P.102/2001; C S.A. v. E. Corporation, Court of Justice of Geneva, Switzerland, 14 April 1983, 187.
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47. The text and the drafting history of the Convention suggest that the applicant should only prove prima facie the existence of the arbitration agreement while the party opposing recognition and enforcement has the onus of proving its invalidity.75 Commentators have generally favoured this approach.76
75. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Eleventh Meeting, E/CONF.26/SR.11, at 12.
76. FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION, supra note 13, at 968, para. 1673 ; Wolff, supra note 9, at 278, para. 126; Patricia Nacimiento, Article V(1)(a), supra note 9, at 211.
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48. Article V(1)(a) is silent with respect to the standard of judicial review by enforcing courts.
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49. In assessing challenges to recognition and enforcement under article V(1)(a), certain courts have decided matters related to the jurisdiction of the arbitral tribunal and the validity of the arbitration agreement de novo. For instance, in China Minmetals, a United States appeals court held that it “must make an independent determination of the agreement’s validity (…) at least in the absence of a waiver precluding the defence.”77 In Dallah, the Supreme Court of the United Kingdom referred to China Minmetals and noted that article V(1)(a) does not restrict the nature of the review to be carried out by the court asked to enforce the award.78 Similarly, in Germany, some courts have found that they were not bound by the arbitral tribunal’s findings on jurisdiction, including issues relating to the incapacity of a party and the invalidity of the arbitration agreement.79
77. China Minmetals Materials Import & Export Co. v. Chi Mei Corp., Court of Appeals, Third Circuit, United States of America, 26 June 2003, 02-2897 and 02-3542.
78. Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, Supreme Court, United Kingdom, 3 November 2010, UKSC 2009/0165.
79. Oberlandesgericht [OLG] Schleswig, Germany, 30 March 2000, 16 SchH 5/99; Oberlandesgericht [OLG] Celle, Germany, 18 September 2003, 8 Sch 12/02. See also: Oberlandesgericht [OLG] Celle, Germany, 4 September 2003, 8 Sch 11/02, XXX Y.B. COM. ARB. 528 (2005) (although the Court did not relied on article V(1)(a) of the Convention), and with respect to the second limb of article V(1)(a), see Oberlandesgericht [OLG] Celle, Germany, 14 December 2006, 8 Sch 14/05.
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5. Article V(1)(a) extends the principles enriched in article II to the recognition and enforcement stage. Just as parties cannot be referred to arbitration under article II if they are not bound by a valid arbitration agreement,6 national courts may deny recognition and enforcement of an award pursuant to article V(1)(a) if the consent of the parties is not valid either because the parties lacked the capacity to agree to arbitrate or because the arbitration agreement is invalid under the law applicable to it.
6. For a more detailed discussion, see the chapter on article II, paras. 13-23.
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