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V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / b. Tribunals’ discretion to organize and control the arbitral proceedings / §41
41. Arbitral tribunals can exercise their discretion to determine what is necessary for a party to present its case and most courts have demonstrated that they give tribunals great leeway in so doing.73 For example, the Paris Court of Appeal decided to uphold the order recognizing and enforcing an award when the complaining party alleged that it had not received documents used by an expert because neither the tribunal nor the opposing party had relied on those documents.74 Similarly, the Supreme Court of Austria rejected an alleged breach of due process, when a party claimed that the tribunal failed to investigate facts and refused certain evidence, because the party was still able to present its case.75
73. Société Unichips Finanziaria SPA et Société Unichips International BV v. Consorts Gesnouin, Court of Appeal, Paris, France, 12 February 1993, 92-14017; Oberlandesgericht [OLG], Munich, Germany, 14 November 2011, 34, Sch 10/11; Bundesgerichtshof [BGH], Germany, 14 April 1988, III ZR 12/87; Ministry of Defense & Support for the Armed Forces of Iran v. Cubic Defense Systems, Inc., District Court, Southern District of California, United States of America, 7 December 1998, 98-1165-B; Austria C v. Vladimir Z, Supreme Court, Austria, 31 March 2005, XXXI Y. B. COM. ARB. 583 (2006).
74. Société Unichips Finanziaria SPA et Société Unichips International BV v. Consorts Gesnouin, Court of Appeal, Paris, France, 12 February 1993, 92-14017.
75. Austria C v. Dr. Vladimir Z, Supreme Court, Austria, 31 March 2005, XXXI Y. B. COM. ARB., 583 (2006).
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / i. Presence of parties and witnesses / §42
42. A number of courts have interpreted the notion of being “unable to present his case” narrowly when parties have been unable to attend proceedings or hearings.76
76. Ukraine Kryukovskiy Car Building Works v. Shenyang Changcheng Economic and Trade Company, Shenyang Intermediate People’s Court, China, 22 April 2003, Shen Min Zi No. 16; Oberlandesgericht [OLG], Dusseldorf, Germany, 15 December 2009, I-4 Sch 10/09; Geotech Lizenz A.G. v. Evergreen Systems, Inc., District Court, Eastern District of New York, United States of America, 27 October 1988, CV 88-1406 (697 F. Supp 1248 (E.D.N.Y. 1988)).
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / i. Presence of parties and witnesses / §43
43. For example, a Chinese court found that there was no breach of due process where a party, unable to attend the proceedings, sent its defences in a letter.77 As a further illustration, a German court found that there was no breach of due process despite the fact that the complaining party was unable to attend a hearing because the court reasoned that it could have sent a representative in its stead.78 The United States Court of Appeals for the Fifth Circuit similarly found that there was no breach where a party alleged that it was unable to present its case because it could not be present due to a fear of being arrested. The Court noted that physical presence was not necessary to participate in a hearing and that the party could have sent a representative or participated remotely.79 Likewise, the Supreme Court of Victoria in Australia held that even if a party itself did not present its own case, the requirements of article V(1)(b) have been met as long as a related entity has done so.80
77. Ukraine Kryukovskiy Car Building Works v. Shenyang Changcheng Economic and Trade Company, Shenyang Intermediate People’s Court, China, 22 April 2003, Shen Min Zi No. 16.
78. Oberlandesgericht [OLG], Karlsruhe, Germany, 27 March 2006, 9 Sch 02/05.
79. Consorcio Rive S.A. de C.V. (Mexico) v. Briggs of Cancun, Inc. (US), Court of Appeals, Fifth Circuit, United States of America, 26 November 2003, 01-30553 (5th Cir. 2003).
80. Altain Khuder LLC v. IMC Mining Inc., Supreme Court of Victoria, Australia, 28 January 2011, 3827 of 2010.
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / i. Presence of parties and witnesses / §44
44. United States courts have applied the same narrow interpretation where the presence of a party’s representative is concerned.81 For example, a United States court held that there was no violation when the tribunal refused to adjourn the proceedings when the Chief Executive Officer of one of the parties was medically unfit to attend.82
81. Jiangsu Changlong Chemicals Co. (China) v. Burlington Bio-Medical & Scientific Corp. (US), District Court, Eastern District of New York, United Sates of America, 22 November 2005, CV 05-2082; Budejovicky Budvar, N.P. v. Czech Beer Importers, Inc., District Court, District of Connecticut, 10 July 2006, 1246 (JBA).
82. 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 in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / i. Presence of parties and witnesses / §45
45. In addition, in a series of decisions, United States courts have held that the inability to cross-examine or present witnesses does not constitute a breach of a party’s ability to present its case.83
83. Generica Ltd. v. Pharma Basics, Inc., Court of Appeals, Seventh Circuit, United States of America, 29 September 1997, 96-4004; Parsons & Whittemore Overseas Co. v. Société Generale de L’Industrie du Papier (RAKTA), Court of Appeals, Second Circuit, United States of America, 23 December 1974, 74-1642, 74-1676; Sonera Holdings B.V. v. Cukurova Holding A.S., District Court, Southern District of New York, United States of America, 10 September 2012, 11 Civ. 8909 (DLC); Agility Public Warehousing CO. K.S.C., Professional Contract Administrators, Inc. v. Supreme Foodservice GMBH, Court of Appeals, Second Circuit, United States of America, 6 September 2012, 11-5201-CV; Phoenix Aktiengesellschaft v. Ecoplas, Inc., Court of Appeals, Second Circuit, United States of America, 10 December 2004, 03-9000; Dalmine S.p.A. v. M. & M. Sheet Metal Forming Machinery A.G., Court of Cassation, Italy, 23 April 1997, 10229, XXIV Y. B. COM. ARB. 709 (1999).
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / ii. Language of the arbitration / §46
46. Arguments that the language of the proceeding affected a party’s ability to present its case have generally failed.84
84. Kastrup Trae-Aluvinduet A/S (Denmark) v. Aluwood Concepts Ltd. (Ireland), High Court, Ireland, 13 November 2009, 2009 169 MCA, XXXV Y. B. COM. ARB., 404 (2009).
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / ii. Language of the arbitration / §47
47. Most courts consider the context of the language used in the arbitration in assessing whether or not there is a breach of due process. For example, the Spanish Supreme Court did not find a breach of due process when a party complained that the proceedings were conducted in English, holding that English was the common language in international commercial transactions.85 A German Court found that there was no breach when the proceedings and correspondence were in Russian and the respondent could not understand Russian because the burden was on the respondent to find a translator or interpreter and it should have done so.86
85. Precious Stones Shipping Limited (Thailand) v. Querqus Alimentaria SL (Spain), Supreme Court, Spain, 28 November 2000, 2658 of 1999, XXXII Y. B. COM. ARB. 540 (2007).
86. Oberlandesgericht [OLG], Celle, Germany, 2 October 2001, 8 Sch 3/01.
See in context V(1)(b) / 2. ANALYSIS (V(1)(b)) / B. Evidence that a party was “unable to present his case” / c. Narrow interpretation of “unable to present his case” / ii. Language of the arbitration / §48
48. Some courts take into consideration the arbitration agreement87 or the applicable procedural rules88 to determine the language chosen by the parties and have been reluctant to refuse enforcement when parties have previously agreed to the language of an arbitration even if that later poses difficulties. For example, the Supreme Court of Colombia upheld recognition and enforcement of an award when the complaining party was unable to afford the costs of translators or interpreters and could not understand the language of the arbitration.89
87. Petrotesting Colombia S.A. & Southeast Investment Corporation v. Ross Energy S.A., Supreme Court of Justice, Colombia, 27 July 2011, 11001-0203-000-2007-01956-00; K (Ukraine) v. F AG (Austria), Supreme Court, Austria, 23 October 2007, XXXIII Y. B. COM. ARB. 354 (2008).
88. Oberlandesgericht [OLG], Munich, Germany, 22 June 2009, 34 Sch 26/08.
89. Petrotesting Colombia S.A. & Southeast Investment Corporation v. Ross Energy S.A., Supreme Court of Justice, Colombia, 27 July 2011, 11001-0203-000-2007-01956-00.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / C. Procedural hurdles to showing a breach of article V(1)(b) / a. Outcome determinative requirement / §49
49. It is not uncommon for courts to require parties opposing enforcement under article V(1)(b) to prove not only a breach of due process, but also that the outcome of the case would have been different had the alleged breach not occurred.90
90. Firm P v. Firm F, Oberlandesgericht [OLG], Hamburg, Germany, 3 April 1975, II Y. B. COM. ARB. 241 (1977); German (F.R.) charterer v. Romanian shipowner, Bundesgerichtshof [BGH], Germany, 15 May 1986, XII Y. B. COM. ARB. 489 (1987); Seller v. Buyer, Bundesgerichtshof [BGH], Germany, 26 April 1990, XXI Y. B. COM. ARB. 532 (1996); Manufacturer (Slovenia) v. Exclusive Distributor (Germany), Oberlandesgericht [OLG], Schleswig, Germany, 24 June 1999, 16 SchH 01/99; Buyer v. Seller, Oberlandesgericht [OLG], Frankfurt, Germany, 27 August 2009, 26 SchH 03/09, XXXV Y. B. COM. ARB. 377 (2010); Apex Tech Investment Ltd. (China) v. Chuang’s Development (China) Ltd., Court of Appeal, Hong Kong, 15 March 1996, CACV000231/1995; Polytek Engineering Company Limited v. Hebei Import & Export Corporation, High Court of the Hong Kong Special Administrative Region, Court of Appeal, Hong Kong, 16 January 1998, 116 of 1997; Oberlandesgericht [OLG], Frankfurt, Germany, 18 October 2007, 26 Sch 1/07.
See in context
5. Article V(1)(b) is often raised by parties opposing recognition and enforcement of an award despite the fact that the vast majority are unsuccessful in proving a breach.7
7. See, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION E. Gaillard, J. Savage eds., 1999, para. 1698; ALBERT JAN VAN DEN BERG, THE NEW YORK ARBITRATION CONVENTION OF 1958: TOWARDS A UNIFORM JUDICIAL INTERPRETATION (1981), at 297; Andrés Jana, Angie Armer, et al., Article V(1)(b), in RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK CONVENTION, H. Kronke, P. Nacimiento et al. eds., 2010, at 233; Pierre A. Karrer, Must an Arbitral Tribunal Really Ensure that its Award is Enforceable?, in GLOBAL REFLECTIONS ON INTERNATIONAL LAW, COMMERCE AND DISPUTE RESOLUTION, LIBER AMICORUM IN HONOUR OF ROBERT BRINER, G. Asken et al. eds., 2005, at 431.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / C. Procedural hurdles to showing a breach of article V(1)(b) / a. Outcome determinative requirement / §50
50. In a recent German decision, a higher regional court found that there was no basis for rejecting enforcement on the grounds of a violation of the right to be heard under article V(1)(b), as the alleged failure to properly inform the buyer of the constitution of the arbitral tribunal was not relevant because it had failed to show that it would have raised any additional defences had it been properly informed of such constitution.91 The court followed the same reasoning in relation to the alleged failure to duly summon the buyer to the oral hearing. As stated by the higher regional court, violations of the right to be heard would only form the basis for rejecting enforcement if such violations had in fact prevented the affected party from raising its claims and defences. It concluded that in this case, the buyer knew of the arbitration proceedings and could thus have raised its defences, but failed to do so.92
91. Oberlandesgericht [OLG], Frankfurt, Germany, 18 October 2007, 26 Sch 1/07.
92. Oberlandesgericht [OLG], Frankfurt, Germany, 18 October 2007, 26 Sch 1/07.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / C. Procedural hurdles to showing a breach of article V(1)(b) / b. Waiver / §51
51. Violation of due process, under article V(1)(b), may, as a general matter, be waived, subject to limitations.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / C. Procedural hurdles to showing a breach of article V(1)(b) / b. Waiver / §52
52. A number of courts have considered that parties ought to object promptly to any violation of due process, rather than waiting until the enforcement stage to raise the issue for the first time. Courts have not found a violation of due process under article V(1)(b) where parties have waited until after the arbitration to raise a due process issue for the first time.93 For example, in the face of a party’s objection at the enforcement stage that one of the arbitrator’s had given an opinion in a related case, the Paris Court of Appeal found that the party should have objected to the arbitrator’s appointment at the time of the arbitral proceedings.94 A German court similarly refused to find a breach when a party claimed that it had not been timely informed of the opposing party’s counterclaims because it failed to object promptly at the time of the arbitral proceedings.95 As stated by an Indian court, “if the Defendant after receipt of the interim award failed to contest the matter, the blame cannot be laid at the door of the arbitrators for no fault of theirs.”96
93. AO Techsnabexport v. Globe Nuclear Services and Supply GNSS Lmt., Court of Appeals, Fourth Circuit, United States of America, 15 December 2010, 09-2064; Hanseatisches Oberlandesgericht [OLG], Germany, 26 January 1989, 6 U 71/88; Standard Elec. Corp. v. Bridas Sociedad Anonima Petrolera, Indus. Y Commercial, District Court, Southern District of New York, United States of America, 24 August 1990, 90 Civ. 0720 (KC); Oberlandesgericht [OLG], Hamm, Germany, 2 November 1983, 20 U 57/83; Consultant company (UK) v. Painting contractors (Germany), Oberlandesgericht [OLG], Munich, Germany, 28 November 2005, XXXI Y. B. COM. ARB. 722 (2006); Oberlandesgericht [OLG], Karlsruhe, Germany, 27 March 2006, 9 Sch 02/05, XXXII Y. B. COM. ARB. 342 (2007); Shenzhen Nan Da Industrial and Trade United Co Ltd v. FM International Ltd , High Court, Supreme Court, Hong Kong, 2 March 1992, MP 12492.
94. Compagnie Francaise d’études et de construction Technip (Technip) v. Entreprise nationale des engrais et des produits phyosanitaires (Asmidal), Court of Appeal, Paris, France, 2 April 1998, 97/6929.
95. Hanseatisches Oberlandesgericht [OLG], Germany, 26 January 1989, 6 U 71/88.
96. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain, High Court, Delhi, India, 27 November 2008.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / C. Procedural hurdles to showing a breach of article V(1)(b) / b. Waiver / §53
53. Even though Article V(1)(b) does not mention the possibility of advance waivers, German courts have accepted limited waivers of certain procedures or deadlines,97 but not complete waivers of all due process requirements.98
97. K Trading Company (Syria) v. Bayerischen Motoren Werke AG (Germany), Bayerisches Oberstes Landesgericht [BayObLG], Germany, 23 September 2004, 4Z Sch 05-04, XXX Y. B. COM. ARB. 568 (2005).
98. Danish Buyer v. German (F.R.) Seller, Oberlandesgericht, Koln, Germany, 10 June 1976, IV Y. B. COM. ARB. 256 (1979). On the fact that due process is often considered as an integral part of public policy, see above at para. 7.
See in context
6. Courts are usually not formalistic in their approach to article V(1)(b), but focus on the actual facts and conduct of the parties, which leads to a restrictive application of article V(1)(b).8
8. See, e.g., X v. Y, Bundesgericht [BLG], Switzerland, 4 October 2010, 4A_124/2010; OOO Sandora (Ukraine) v.OOO Euro-Import Group (Russia), Federal Arbitrazh Court, Moscow District, Russia, 12 November 2010, A40-51459/10-63-440; Camera di esecuzione e fallimenti del Tribunale d’appello, Repubblica e Cantone Ticino, Switzerland, 22 February 2010, 14.2009.104; OAO 8. Byerezastroymaterialy (Belarus) v. Individual Entreprenueur D.V. Goryelov (Russia), Federal Arbitrazh Court, North Caucasus District, Russia, 14 September 2009, No. A01-342/2009; Consorcio Rive S.A. de C.V. (Mexico) v. Briggs of Cancun, Inc. (US), Court of Appeals, Fifth Circuit, United States of America, 26 November 2003, 01-30553 (5th Cir. 2003); Geotech Lizenz A.G. v. Evergreen Systems, Inc., District Court, Eastern District of New York, United States of America, 27 October 1988, CV 88-1406 (697 F. Supp 1248 (E.D.N.Y. 1988)); Union Générale de Cinéma SA (France) v. XYZ Desarrollos, SA (Spain), Supreme Court, Spain, 11 April 2000, XXXII Y. B. COM. ARB., 525 (2007); M.F. Global Inc., et al. v. Elio D. Cattan, et al., District Court, Western District of Pennsylvania, United States of America, 6 March 2006, 04cv0593; Karaha Bodas Co. (Cayman Islands) v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Indonesia), Court of Appeals, Fifth Circuit, United States of America, 23 March 2004, 02-20042, 03-20602.
See in context
7. Article V(1)(b) has some interaction and overlap with article V(2)(b), the latter of which provides that a court may refuse to recognize or enforce an award if the award “would be contrary to the public policy of that country.” In many respects, due process is closely connected to public policy.9 It is therefore not unusual for parties to raise both provisions in their attempt to resist enforcement of an award. However, courts may not sua sponte raise possible breaches of article V(1)(b) whereas they may do so with respect to public policy under article V(2)(b).10
10. X SA v. Y. Ltd., Federal Tribunal, Switzerland, 8 February 1978, P. 217/76. See also, Andrés Jana, Angie Armer, et al., Article V(1)(b), in RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK CONVENTION, H. Kronke, P. Nacimiento, et al. eds., 2010, at 235.
9. See the chapter of the Guide on Article V(2)(b), para 42
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / A. The requirement that the parties be given “proper notice” / §8
8. Article V(1)(b) provides that parties against whom the award is invoked must have been given proper notice, failing which recognition and enforcement of the award may be refused.
See in context V(1) / V(1)(b) / 2. ANALYSIS (V(1)(b)) / A. The requirement that the parties be given “proper notice” / a. Courts consider the parties’ knowledge and conduct in assessing “proper notice” / §9
9. Proper notice has been interpreted narrowly by courts, which usually apply more liberal standards than would be required for giving notice under domestic law. For example, a Mexican court held that parties waived Mexican procedural formalities on notice when they decided to submit their case to arbitration. Therefore, the fact that the notice did not comply with those formalities did not make the notice insufficient and did not prevent recognition and enforcement of the award.11
11. Presse Office S.A. v. Centro Editorial Hoy S.A., High Court of Justice, Eighteenth Civil Court of First Instance, Federal District of Mexico, Mexico, 24 February 1977, IV Y. B. COM. ARB. 301 (1979), at 301.
See in context