The Higher Regional Court (OLG) of Frankfurt/Main vacated an ICC-award rendered in Frankfurt (court order of 16.01.2020 case no. 26 Sch 14/18) for violation of the right to be heard in court and – in an obiter dictum – stated that dissenting opinions violate the (internal) German public policy.
The dispute in question was initiated by the insolvency administrator of a German GmbH (Limited) against a former shareholder. The decisive point was the question whether a contribution in kind made into the capital of the (later insolvent) GmbH reached the nominal value or whether the former shareholder was liable for payment of the difference between the nominal and the real value. In the course of the arbitral proceedings, an expert report was commissioned by the tribunal and the parties disputed whether or not the expert used the correct figures for the valuation. In the end, the arbitral tribunal dismissed the claim, however, one of the arbitrators wrote a dissenting opinion.
The main reason for vacating the award was a violation of the right to be heard in court. The OLG found that the arbitral tribunal had not sufficiently considered arguments raised by the claimant in respect of the expert report. In particular, the claimant had argued that the expert used figures that were outdated at the relevant date. The tribunal had reported these arguments in the factual section of the award, but, according to the OLG, not considered these arguments in sufficient depths. Thus, the OLG vacated the award for violation of German public policy, namely the right to be heard in court.
Sofar, the OLG is in line with German caselaw, see another similar case reported by us here: https://kdb.legal/en/german-supreme-court-rules-on-violation-of-the-right-to-be-heard-in-court/
In an obiter dictum, the OLG made a much more far-reaching comment: It stated that – given the clear violation of the right to be heard in court – it could be left open whether the fact that one of the arbitrators wrote a dissenting opinion constitutes a violation of the internal German public policy. The OLG then stated that there would be strong arguments to find that a dissenting opinion constitutes a violation of the internal German public policy, that is, of the public policy applicable to arbitral awards rendered in Germany. The reason for this is – according to the OLG – that the internal deliberations of the tribunal are confidential and that this confidentiality is protected by fundamental principles of German law. According to the OLG, it is necessary to uphold these principles to protect the impartiality and independence of the arbitrators and thus, neither the arbitrators nor the parties have the right to derogate from these principles.
This decision is already heavily criticised. For a more detailed analysis (in German) see www.zpoblog.de/?p=8460. As the decision is appealed, the German Supreme Court (BGH) might seize the opportunity to also comment on the admissibility of dissenting opinions in German arbitral awards. Until that matter is finally resolved, however, it would be prudent for parties to explicitly exclude the possibility of obiter dicta in the agreement with the arbitrators and for arbitrators to abstain from writing them.
The decision should not apply to arbitral awards rendered abroad, as enforcement of foreign arbitral awards can only be denied if the court finds a violation of the international German public policy, which is a much narrower concept than that of internal German public policy.