Germany / 15 June 1987 / Bundesgerichtshof / / II ZR 124/86
| Country | Germany |
| Court | Germany, Bundesgerichtshof (Federal Court of Justice) |
| Date | 15 June 1987 |
| Parties | |
| Case number | II ZR 124/86 |
| Applicable NYC Provisions | V | II | V(2)(b) | II(1) |
| Source | BGH |
| Summary | An investment contract between a German individual and a New York corporation, governed by New York law and containing an arbitration clause, contravened certain mandatory provisions of German exchange laws. In court proceedings in Germany, the New York corporation invoked the arbitration clause. The Bundesgerichtshof (Federal Supreme Court) held that the case was non-arbitrable under German law. The combination of arbitration proceedings abroad and applicable law other than German law would leave the German mandatory exchange laws without effect, with regard to both the protection against claims filed against the persons protected by these laws and the possibility for the protected persons to obtain reimbursement of any sum paid. In the Court's opinion, Article V(2)(b) NYC would have been applicable to the facts of the case since the contract contravened German mandatory rules that are part of German "ordre public". If the arbitration agreement were to be recognised and its validity only verified at the stage of the recognition proceedings, the German individual would be referred to arbitration before an American arbitral tribunal that would not apply the German mandatory rules, with the result that the German individual would be incapable of recovering the sums unduly paid to the New York corporation. For these reasons, the Court denied recognition of the arbitration agreement for the "subject matter" not being "capable of settlement by arbitration" pursuant to Article II(1) NYC. |
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Attachment (1)
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