Decisions about the validity of arbitration clauses at the seat of arbitration are binding in proceedings about the enforcement of an award

Decisions rendered in state court proceedings at the place of arbitration about the scope of the arbitration clause are binding for the German exequatur court and exclude a reconsideration of these issues or a successful invocation of the same defence in the German enforcement proceedings. This applies in particular to the defence of the lack of a valid arbitration agreement under Art. V (1) (a) NYC.

This position has recently been confirmed by a court of appeal ruling in Germany and is in line with earlier caselaw, both in Germany and other countries.

The first decision to be considered is one of the OLG Brandenburg from 2015. On Juy 24, 2015 the OLG Brandenburg (SchiedsVZ 2016, 43, 49) ruled as follows:

• Legal assesments made by the arbitral tribunal: First, the court of Brandenburg confirmed the general principle that that findings and legal assessments made by the arbitral tribunal on the conclusion of an arbitration agreement are in principle not binding for the German state court, as otherwise each arbitral tribunal could determine on its own authority and with binding effect for the state courts that it was authorized to act as an arbitral tribunal at all.
• Decisions of the state courts in the country of origin of the arbitral award: However, the situation is different for the decisions of the state courts in the country of origin of the arbitral award (Senate Decision of 24.07.2015 – 11 Sch 2/13, para. 117, juris Lachmann, Handbuch für die Schiedsgerichtspraxis, 3rd ed. Rn. 2561; as well as Kammergericht, Decision of 18.08.2006 – 20 Sch 13/04, which established the binding nature of the decision on the effectiveness of the arbitration clause with reference to Section 328 ZPO).
  In the said case the Supreme Court of the Republic of Austria confirmed in the last instance the jurisdiction of the arbitration court in its decision of 15.05.2019 (page 10 et seq. of the reasons for the decision). The German court is therefore precluded from re-examining the question of jurisdiction.

Background of the case: OLG Brandenburg, decision of July 24, 2015 (SchiedsVZ 2016, 43, 49)

The parties to a steel purchase contract applied to an arbitral tribunal with the Polish National Chamber of Commerce to resolve their dispute. The tribunal had found itself competent to consider the matter. The Polish district court as well as the Polish appeal court had confirmed the tribunal’s decision. The final arbitral award was issued in favour of the claimant. The Polish district court had rejected the respondent’s application to set aside the award.

The claimant asked the Higher Regional Court in Brandenburg to issue a declaration of enforceability of the said award. The respondent opposed the application contesting the formal validly of the award and the existence of the arbitration agreement. He also asked the Court to set-off his claims.

The Court granted the application and declared the foreign arbitral award enforceable. It decided that since the foreign court confirmed the jurisdiction of the arbitral tribunal in last instance, the German Court is thus precluded from reviewing this question again.

The Court also held that if a debtor in the exequatur proceedings raises an objection of set-off, a higher regional court must consider such an objection in its own jurisdiction. For this purpose it is irrelevant if the arbitral tribunal, for its part – rightly or wrongly – did not consider the set-off in the arbitration proceedings.

The decision of the OLG Brandenburg was also the subject of an appeal on points of law to the BGH (the Federal Court of Justice). The BGH overturned the decision, but not with regard to the comments on the effectiveness of the arbitration agreement that are decisive here, but with regard to a set-off asserted against a declaration of enforceability (BGH, Decision of 31.3.2016 – I ZB 76/15). The BGH thus clearly did not object to the findings on the binding nature of the decision in the original court with regard to the validity of the arbitration clause, but on the contrary confirmed them.

Background of the case: OLG Brandenburg, decision of May 20, 2020-11 Sch 1/19 NJOZ 2020, 1545 para. 81.

The OLG Brandenburg ruled the same way in its decision of May 20, 2020. The parties to the contract of use applied to an arbitral tribunal at the Vienna International Arbitral Centre (VIAC) to resolve their dispute and sought payment of operating costs. The tribunal had found itself competent to consider the matter. The arbitral tribunal considered itself to be duly constituted and to have jurisdiction on the basis of the arbitration clause contained in the contract of use. The final arbitral award was issued in favour of the claimant.

On the 19.09.2018, the respondents initiated set-aside proceedings before the Supreme Court of the Republic of Austria with regard to the arbitral award. The annulment proceedings were based essentially on an invalid arbitration agreement,. The respondents also claimed that the arbitral tribunal had awarded damages to the claimant in a manner incompatible with the fundamental values of the Austrian legal system. In its judgment of 15 May 2019, the Supreme Court however dismissed the action to set aside the arbitral award (OGH judgment, ref.18 OCg 6/18h – 12).

In the exequatur proceedings the German Court therefore decided that it is precluded from re-examining the question of jurisdiction. The violation of the right to be heard pursuant to § 1061 I in conjunction with Art. V no. 1 letter b UNC or any other violations of international public order were not apparent.

In line with position taken by Belgian courts

These German decisions are in line with the position taken by the Belgian courts in the notorious matter Doyen Sports Investments Ltd. vs. FIFA, UEFA, FIFPRO. The matter concerned “Third Party Investments” in football players, which is a means of financing football players against a share in the later proceeds from an onwards sale of the same player, which is forbidden by the statutes of FIFA and UEFA.

The Claimant, an investment company from Malta, had initiated arbitration proceedings against FIFA and UEFA in Switzerland, which it lost, and then tried – unsuccessfully – to have the award lifted at the seat of arbitration in Switzerland.

Later, the Claimant tried to bring the same matter in front of Belgian courts and requested the court to disregard the arbitration clause and present certain questions to the Court of the European Union. FIFA and UEFA invoked the arbitration defence in the proceedings. The Court d’Appel de Bruxelles (18e ch. F) in a decision rendered on 12 december 2019 ruled that Belgian courts do not have the right to reconsider the question of validity and scope of the arbitration clause and thus, considering the final decision of the Swiss courts on the validity of the arbitration clause, Belgian courts could not decide this matter otherwise.