Germany / 18 October 2007 / Germany, Oberlandesgericht Frankfurt am Main (Higher Regional Court of Frankfurt am Main) / 26 Sch 1/ 07
| Country | Germany |
| Court | Germany, Oberlandesgericht Frankfurt am Main (Higher Regional Court of Frankfurt am Main) |
| Date | 18 October 2007 |
| Case number | 26 Sch 1/ 07 |
| Applicable NYC Provisions | VII | V | IV | II | VII(1) | V(2)(b) | V(1)(d) | V(1)(b) | V(1)(a) | II(2) |
| Source |
Original decision obtained from the registry of the Oberlandesgericht Frankfurt |
| Languages | English |
| Summary | The parties entered into a sales contract that provided for arbitration in Italy pursuant to the arbitration rules of the Camera Arbitrale del Piemonte. A dispute arose and the Seller initiated arbitration proceedings, obtaining a favourable award which it sought to enforce in Germany before the Oberlandesgericht (Higher Regional Court) Frankfurt. The Buyer opposed the enforcement arguing (i) that the arbitration agreement was invalid since it had not been signed by the parties and did not fulfil the form requirements under Italian law, (ii) that its right to be heard had been violated since it had not been properly informed of the constitution of the arbitral tribunal nor duly invited to the oral hearing, (iii) that the tribunal had not been properly constituted, and (iv) that the enforcement was against German public policy since the Buyer had no legal remedies against the award rendered by a sole arbitrator whom it had not appointed. The sole arbitrator had decided ex aequo et bono, even though the arbitration clause did not empower him to do so, the Buyer had not been duly invited to the oral hearing, and the sole arbitrator had violated its right to be heard since he failed to take into account the Respondent’s notice of defects (“Maengelruege”) regarding one of the objects of the sale. The Oberlandesgericht granted enforcement, rejecting all of the Respondent’s arguments. It clarified that the formal requirements under Article IV NYC had been fulfilled, even though the Seller had not provided a duly authenticated original of the arbitration award. The Oberlandesgericht considered that pursuant to Article VII NYC, it was sufficient that the relevant documents fulfilled the less stringent requirements under the applicable German law. It held that these requirements had been met as the Seller had provided the original arbitration award and arbitration agreement. The Oberlandesgericht concluded that the arbitration agreement was valid and enforcement could not be rejected under Article V(1)(a). It considered that it was sufficient that the parties had signed the general terms and conditions containing the arbitration clause. It also held that the invalidity of the arbitration agreement could not be based on form requirements under Italian law, which were more restrictive than the requirements under Article I NYC. It noted that according to Article VII NYC, a court could apply domestic form requirements only if they were less stringent than the form requirements under Article II NYC. The Oberlandesgericht considered that the Buyer was in any event precluded from questioning the validity of the arbitration agreement since it could have done so during the arbitration proceedings but did not. Moreover, the Oberlandesgericht 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) NYC, as the alleged failure to properly inform the Buyer of the constitution of the arbitral tribunal was not relevant because the Buyer had failed to show that it would have raised any additional defences had it been properly informed of such constitution. It followed the same reasoning in relation to the alleged failure to duly summon the Buyer to the oral hearing. The Oberlandesgericht held that under Article V(1)(b) NYC, 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. The Oberlandesgericht concluded that in this case the Buyer knew of the arbitration proceedings and could thus have raised its defences, but failed to do so. The Oberlandesgericht further stated that even though the arbitral tribunal had not been properly constituted in accordance with the agreement of the parties, this would not justify a refusal of enforcement under Article V(1)(d) NYC because the Buyer should previously have raised the objection in annulment proceedings at the seat of the arbitration, but had failed to do so within the relevant time limit. The Oberlandesgericht noted that the preclusion of a defence under the law of the seat of the arbitration would have to be recognized by an enforcement court in the interest of legal harmony, and it would be unreasonable to preclude a party’s defences against an award only at the arbitral seat but allow them in other contracting states to the NYC. Finally, the Oberlandesgericht found that enforcement could not be denied under Article V(2)(b) NYC based on the various alleged violations of German public policy. The Oberlandesgericht stated it was not a violation of German public policy that there were no legal remedies against the decision of the sole arbitrator noting that arbitration awards were generally not subject to appeal. The Oberlandesgericht further found that, in the present case, the Buyer’s non-participation in the constitution of the arbitral tribunal was acceptable under the rules of arbitration of the Camera Arbitrale, and that the sole arbitrator was empowered under the applicable rules to decide ex aequo et bono. It noted that, in any event, the arbitrator had also based his decision on the United Nations Convention on the International Sale of Goods. The Oberlandesgericht further stated that the Buyer’s defence that it had not been duly invited to the oral hearing was precluded also in the public policy context, since the Buyer could have raised the defence in the annulment proceedings at the seat of the arbitration but failed to do so. Finally, regarding the Buyer’s argument that its right to be heard had been violated because the sole arbitrator had failed to consider its notice of defects (“Maengelruege”) regarding one of the objects of the sale, the Oberlandesgericht held that the argument should be disregarded as it would require a review of the merits of the dispute which was prohibited under Article V NYC. |
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Attachment (1)
 Original Language Adobe Acrobat PDF |
