Germany / 25 May 1970 / Bundesgerichtshof / VII ZR 157/68
| Country | Germany |
| Court | Germany, Bundesgerichtshof (Federal Court of Justice) |
| Date | 25 May 1970 |
| Case number | VII ZR 157/68 |
| Applicable NYC Provisions | II | II(2) |
| Source | Original decision obtained from the registry of the Bundesgerichtshof |
| Languages | English |
| Summary | A German Buyer sent a purchase order to the Seller, an Austrian spinning and weaving factory, referring to earlier phone conversations and requesting delivery of certain products. The Seller confirmed the orders by letters containing the Seller’s terms and conditions, which provided for arbitration before the Court of Arbitration of the Vienna Commodity Exchange. The Buyer did not reply or otherwise comment on the letters. Subsequently a dispute arose and the Seller initiated arbitration proceedings, obtaining a favorable award. The Seller sought enforcement before a first instance court in Germany, which was granted. The Buyer appealed the decision to the Oberlandesgericht (Higher Regional Court) Cologne, but was unsuccessful. The Buyer then appealed to the Bundesgerichtshof (Federal Supreme Court), seeking a declaration that the arbitral award could not be recognized in Germany. The Bundesgerichtshof rejected the Buyer’s appeal and upheld the decision of the lower courts granting enforcement. It found that pursuant to Section 1044 of the German Civil Procedure Code and Article 12(1) of the German-Austrian Agreement on Civil and Commercial Matters of June 6, 1959, enforcement was subject to the NYC and the European Convention on International Commercial Arbitration of April 21, 1961 (ECICA). The Bundesgerichtshof concluded that it was therefore necessary, as per Article II(2) NYC and Art. 1(2)(a) of the ECICA, that the arbitral award be based on an arbitration agreement in writing. However, it noted that Article 1(2)(a) of the ECICA, which had precedence over Article II(2) NYC as the more recent of the two provisions, provided that “in relations between States whose laws do not require that an arbitration agreement be made in writing, any arbitration agreement concluded in the form authorized by [such] laws” was sufficient. The Bundesgerichtshof found that under certain conditions German and Austrian law accepted arbitration agreements which were not in writing. It found that it needed to assess the arbitration agreement under German law and stated that the letters from the Seller to the Buyer, containing the Seller’s terms and conditions, including an arbitration clause, qualified a commercial letter of confirmation (kaufmännisches Bestätigungsschreiben). It held that since the Buyer had not raised any objections to the letters, and to the arbitration clause contained therein, the arbitration agreement had become binding upon the Buyer. In addition, it held that since both parties were merchants, with the arbitration agreement being a commercial matter between them, the arbitration agreement was not required to be in written form under Section 1027 (2) of the German Civil Procedure Code. |
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Attachment (1)
 Original Language Adobe Acrobat PDF |
