Germany / 18 January 1990 / Bundesgerichtshof / III ZR 269/88
| Country | Germany |
| Court | Germany, Bundesgerichtshof (Federal Court of Justice) |
| Date | 18 January 1990 |
| Case number | III ZR 269/88 |
| Applicable NYC Provisions | I | V | I(1) | V(1)(b) | V(2)(b) |
| Source | Original decision obtained from the registry of the Bundesgerichtshof |
| Languages | English |
| Summary | The parties concluded a contract for the sale of barley. A dispute arose and the Buyer initiated arbitration proceedings with the Grain and Feed Trade Association (GAFTA), which issued two awards ordering the Seller to pay damages to the Buyer. The Seller sought to have the awards annulled by the High Court of Justice in London but was unsuccessful. The Buyer sought enforcement of the award before the Landgericht (Regional Court) Hamburg. The Seller objected to the enforcement, arguing that the arbitral proceedings had been conducted deficiently since a third person had been involved as consultant in the oral hearing and the writing of the award. In addition, the Seller alleged that false testimony and insufficient factual statements by the Buyer had drawn an incorrect picture of the economic situation and that the arbitral tribunal had violated the Seller’s right to be heard. The Landgericht granted the enforcement of the first award in its entirety and part of the second award. The Seller unsuccessfully appealed the decision of the Landgericht to the Oberlandesgericht (Higher Regional Court) Hamburg. The Seller then appealed to the Bundesgerichtshof (Federal Supreme Court). The Bundesgerichtshof confirmed the decision of the lower courts, stating that enforcement was subject to the NYC and Section 1044 of the German Civil Procedure Code, based on which it saw no impediments to granting enforcement. The Bundesgerichtshof stated that it did not need to decide whether the application should be assessed in accordance with Section 1044 of the German Civil Procedure Code or the NYC, since either would lead to enforcement being granted. The Bundesgerichtshof stated that both awards fulfilled the requirements of Section 1044(1) sentence 1 of the German Civil Procedure Code and Article I(1) NYC, since, as the Oberlandesgericht had stated, the arbitral awards had become binding upon the parties as they could no longer be challenged before an arbitral tribunal or state court. The Bundesgerichtshof held that recognition of the arbitral awards would not lead to a result that was in obvious contradiction with fundamental principles of German law (Section 1044(2) German Civil Procedure Code and Article V(2)(a) [sic] NYC). In this context, the Bundesgerichtshof found that the involvement of a legal consultant in the proceedings, by the tribunal, did not constitute a public policy violation since such a violation could not simply be assumed on the grounds of a deviation of a foreign arbitral procedure from mandatory domestic procedural law. It reasoned that a divergence was only relevant when it violated international public policy, which was a less restrictive standard for the recognition of foreign arbitral awards as compared to the regime for the recognition of domestic arbitral awards. According to the Bundesgerichtshof, the enforcement of a foreign arbitral award would only be refused if the arbitral proceedings had a severe defect that touched upon the fundamental basis of public and economic life, which was not the case here. With respect to the Seller’s contention that the arbitral tribunal had not appreciated that the Buyer did not have the necessary funds to secure the purchase price claim by way of a letter of credit, the Bundesgerichtshof held that this argument had already been raised before the arbitral tribunal and could therefore not be brought at the enforcement stage. It based this conclusion on the fact that the existence of grounds for revision under Section 580 of the German Civil Procedure Code, which would generally imply violations of international public policy, could no longer be raised in proceedings for recognition and enforcement of an arbitral award if the underlying facts had already been raised in the arbitral proceedings. The Bundesgerichtshof also rejected the alleged violation of the Seller’s right to be heard under Article 1044(2) No. 4 of the German Civil Procedure Code and Article V(1)(b) NYC. It held that, even if the tribunal had not addressed all of the Seller’s arguments, this did not violate the Seller’s right to be heard since an arbitral tribunal does not have to discuss its position vis-à-vis all of the parties’ arguments, rather, it is sufficient that the arbitral tribunal discusses the arguments that underlie its reasoning in the award. |
| see also : |
Attachment (1)
 Original Language Adobe Acrobat PDF |
