Deutsches und Internationales
Schiedsverfahrensrecht
WS 2013/2014
Prof. Dr. Joachim Zekoll, LL.M. (Berkeley)
Prof. Dr. Rolf Trittmann, LL.M. (Berkeley)
Interaktives Kolloquium in vier Blöcken und in
englischer/deutscher Sprache
• 13.1.2014
• 20.1.2014
• 27.1.2014
• 10.2.2014
Grundlagen der Schiedsgerichtsbarkeit/The
Basics of Arbitration
Der Ablauf eines nationalen Schiedsverfahrens/
The Course of a Domestic Arbitration Proceeding
in Germany
Der Ablauf eines internationalen
Schiedsverfahrens/ The Course of an
International Arbitration Proceeding
Schiedsspruch und Vollstreckung/The Arbitral
Award and Enforcement
Grundlagen der Schiedsgerichtsbarkeit/Basics of Arbitration
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Arbitration as a form of Dispute Resolution
Ad hoc and Institutional Arbitration
Sources of Law
Arbitrability
Arbitration Agreement
Confidentiality
Pros and Cons of Arbitration
Arbitration as a form of Dispute Resolution
Developments in the 20th century
1923 Foundation of the International Court of Arbitration at the
International Chamber of Commerce in Paris – ICC Court of
Arbitration
Foundation of other arbitration institutions, such as
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London Court of International Arbitration - LCIA
Stockholm Chamber of Commerce – SSC
Swiss Arbitration Association - ASA
American Arbitration Association - AAA
Singapore International Arbitration Centre – SIAC
China International Economy and Trade Arbitration Commission - CIETAC
German Institution for Arbitration - DIS
Arbitration as a form of Dispute Resolution (2)
Developments in the 20th Century
Various multilateral Treaties
1927 Genfer Abkommen zur Vollstreckung ausländischer Schiedssprüche
1958 New York Convention
1965 Übereinkommen zur Beilegung von Investitionsstreitigkeiten zwischen
Staaten und Angehörigen anderer Staaten von 1965
1965 Foundation of the International Centre for Settlement of Investment
Disputes – ICSID
1981 Iran – United States Claims Tribunal in Den Haag – 4000 cases
1985 UNCITRAL Model Law
Arbitrationas a form of Dispute Resolution (3)
Recent Developments in Germany
1998 Gesetz zur Neuregelung des Schiedsverfahrensrechts §§1025 ff ZPO based on the UNCITRAL – Model law
1998 DIS-Arbitration Rules published
Arbitration as a form of Dispute Resolution (4)
• State Courts are maintained by the state to provide a means
by which disputes between parties can be decided. They are
based on the sovereign power of the state and its
responsibility of ensuring a system of independent courts with
independent judges and proper rules of procedure
• Parties may agree to (to a large extent) remove their dispute
from the jurisdiction of the state courts and have third parties
deal with it (Alternative Dispute Resolution, „ADR“)
• Other Forms of ADR
• Mediation
• Conciliation
• Expert determination
Arbitration as form of dispute resolution (5)
• An alternative to litigation for protecting contractual rights
and enforcing contractual obligations
• Results in a final, binding award – like a court judgment, but
with no appeals on the merits
• Track record of use in disputes under:
• international contracts
• transactions with developing countries
• transactions involving States and governmental entities
Arbitration as form of dispute resolution (6)
• More than 80 % of all international contracts contain an
arbitration clause
• As of 2012, 817 pending cases at the International Court of
Arbitration in Paris, value in dispute up to 5 bn EUR
• As of 2012, 172 pending cases at the German Institution of
Arbitration , value in dispute up to 2 bn EUR
The Concept of Arbitration
• Parties agree to not use state courts to resolve their
(arbitrable) dispute but conclude an arbitration agreement by
which they consent that a particular legal issue will be finally
decided by one or more arbitrators.
• The arbitral tribunal consists of one or three arbitrators which
must be impartial and independent from the parties. The
arbitrators are selected by the parties or an indenpendent
third party
• The parties choose the seat of the arbitration
• The arbitration procedure is regulated by mandatory law but
also is determined and controlled by the parties
• The arbitral tribunal renders a final and binding as well as
enforceable decision
Ad hoc and Institutional Arbitration
• Institutional arbitration means that an arbitration is
administered by an arbitral institution
• Where parties have not selected an arbitration institution, the
arbitration will be ad hoc, i.e. governed by the mandatory law,
the lex arbitri
• Advantages/Disadvantages of the two forms of arbitration
Sources of Law
The Applicable Procedural Law
• Procedural law inlcudes those aspects of a legal system which
determines the technical aspects of a (court) procedure
• Substantive Law contains those elements of a legal system that
creates, defines and regulates the duties, liabilities and rights of
legal entitities
• The rules applicable to the procedure primarily result from the
arbitration agreement between the parties.
• Mandatory procedural law in Germany relating to arbitration
• Sec 1025 – 1066 ZPO (10th Book)
Sources of Law (2)
• The Applicable Procedural Law
• primarily depends on the mandatory provisions at the place of
arbitration (lex loci arbitri)
• The parties have a free choice of the applicable procedural law as
long as it is in compliance with the lex loci arbitri
• In absence of parties´agreement the arbitral tribunal may decide
at its discretion or refer the applicable rules of procedure at the
place of arbitration
• Ranking order according to Sec 1042 ZPO:
• Mandatory Rules at the place of arbitration (Sub 1)
• Determination of the parties (Sub 2)
• Procedural Orders by the Tribunal (Sub 3)
Sources of Law (3)
• Limitations to Applicable Procedural Law
• Sec 1042 ZPO (Minimum standards)
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Fair Trial
Equality of the parties
Possibility of presenting its case
Counsel may not be excluded from acting as representative
Sources of Law (4)
The Applicable Substantive Law
• The law applicable to the merit of the dispute results usually from
the underlying agreement between the parties Mandatory
regulation on Substantive Law in Germany relating to arbitration :
Sec 1051 ZPO
• Parties may choose a legal system of a given jurisdiction as a whole
or only certain elements
• Limitations of the applicable substantive law
• An arbitral award can be set aside if it is in conflict with
mandatory law (ordre public), Sec 1059 II Nr 2b
Sources of Law (5)
• The UNCITRAL Model Law (1985/2006)
• Standard basis for the arbitration law in many jurisdictions
• Basis for 10 th Book of the ZPO
• Provides for the basic rules for all stages of an arbitration
proceeding
• Aims at harmonizing and unifying national arbitration laws
Sources of Law (6)
UNCITRAL Arbitration Rules (2010)
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Ad hoc framework of rules which is widely accepted
Regulates all stages of an ad hoc proceeding
No administrative support
Regulations include
• Scope of application and model arbitration clause
• Composition fo the arbitral tribunal
• Arbitral proceedings (place, language et al)
• The award (form, effect, applicable law, costs et al)
Sources of Law (7)
• Institutional Arbitration Rules
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DIS
ICC
UNCITRAL
LCIA
SCC
CIETAC
Swiss Rules
Vienna Rules
CAS
ICSID
HKIAC
Sources of Law (8)
• „Soft law“/ „best practice“
• IBA (International Bar Association) Guidelines for Drafting
International Arbitration Clauses
• IBA Rules on the Taking of Evidence in International Commercial
Arbitration
• IBA Guidelines on Conflicts of Interest
• Consistent and published case law of arbitral tribunals
• Articles by experienced practitioners
Case study
• Compare the Rules of DIS and ICC-Regeln. What are the
prerequisites for filing a request for arbitration, are there
differences with respect to mandatory content of the request
for arbitration / statement of claim?
Case study
A company from Brazil, (S) sells 50 t coffee – beans to a highly
reputed family company (B) in Hamburg for EUR 100 000.
Upon receipt, B discovers that roundabout 20% of the coffeebeans are damaged. He wants partial repayment of the purchase
price, i.e. EUR 20.000,00.
S denies responsibility and refuses payment. B decides to sue.
Case study
§ 10 of the Contract reads:
"All disputes arising out of or in connection with the present
contract shall be finally settled under the Rules of Arbitration of
the International Chamber of Commerce by three arbitrators
appointed in accordance with said rules.
The place of Arbitration shall be Hamburg, Germany. The
language of the proceedings shall be English.
The present contract shall be governed by German Law."
Case study
Applicable Law
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Statutory Rules of §§ 1025 et seq of the German Civil
Procedural Code
ICC Rules of Arbitration
Agreement of the parties
Discretion of the arbitral tribunal
Case study
Conflict of Law Rules
Question 1: Which conflict of law rules are applicable?
Question 2: To which substantive law lead the conflict of law
rules?
Question 3: What is the content of the applicable substantive
law?
Case study
Conflict of Law Rules
• Conflict of Law Rule of German Statutory Law (§1051 ZPO)
• Conflict of Law Rules of the ICC-Rules (Artikel 17 ICC-SchO)
• Conflict of Law Rules of German International Private Law (EGBGB
bzw. Rom-I und Rom-II-Conventions?)
Case study
Objective determination
§ 1051 (2) ZPO
Where the parties to the dispute failed to determine which statutory
provisions are to be applied, the arbitral tribunal is to apply the laws of
hat state to which the subject matter of the proceedings has the
closest ties.
Artikel 21 S. 2 ICC-SchO
In case the Parties have not agreed on the law applicable, the Arbitral
Tribunal shall apply the rules of law which it determines to be
appropriate.
Arbitrability
Party capacity („subjektive Schiedsfähigkeit“)
• To conclude an arbitration agreement the legal capacity of
the contracting person is required.
• The legal capacity and capacity to contract of a person are
governed by the law of the country of which the person is a
national or where a legal entity is registered.
• Limitations of party capacity are governed by the respective
national law. Under German Law, doubts with respect to
party capacity exist in cases where one party is consumer or
employee, or where a party is insolvent.
Arbitrability (2)
Eligibility for arbitration („objektive Schiedsfähigkeit“),
§ 1030 ZPO
(1) Any claim concerning an economic interest
(2) Private disputes in competition law matters may also be referred
to an arbitral tribunal including, for example, disputes arising out
of an agreement regarding restrictive trade practices.
(3) The German Federal Supreme Court (BGH) ruled in 2009 that
applications to set aside shareholders’ resolutions adopted at a
general meeting of a limited liability company, (Gesellschaft mit
beschränkter Haftung), may be subject to arbitration if certain
formal and procedural requirements are observed
Arbitrability (3)
Sec 1030 CCP (ZPO)
(1) An arbitration agreement regarding non-pecuniary claims
has legal effect insofar as the parties to the dispute are
entitled to conclude a settlement regarding the subject
matter of the dispute.
(2) An arbitration agreement regarding legal disputes arising in
the context of a tenancy relationship for residential space in
Germany is invalid.
Arbitration is not possible if statutory law provides that disputes
may not be subjected to arbitration proceedings.
Arbitration Agreement
• The Arbitration Agreement is the basic element of every arbitration
proceeding
• Sec 1029 Sub 1 CCP (ZPO)
„Schiedsvereinbarung“ ist eine Vereinbarung der Parteien, alle oder
einzelne Streitigkeiten, die zwischen ihnen in Bezug auf ein
bestimmtes Rechtsverhältnis vertraglicher oder nichtvertraglicher
Art entstanden sind oder künftig entstehen, der Entscheidung durch
ein Schiedsgericht zu unterwerfen“
• Two alternatives
• „separate arbitration agreement“ (Schiedvereinbarung)
• „arbitration clause“ (Schiedsklausel)
Arbitration Agreement (2)
• Example of an institutional arbitration clause :
• DIS arbitration clause
• „All disputes arising in connection with the contract (description
of the contract) or its validity shall be finally settled in accordance
with the Arbitration Rules of the German Institution of
Arbitration e.V. (DIS) without recourse to the ordinary courts of
law.“
• It is recommended to add the following provisions:
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„The place of arbitration is....“
„The tribunal consist of (number of) arbitrators“
„The language of the arbitration is.....“
„The substantive law of.....is applicable to the dispute.“
Arbitration Agreement (3)
• Legal qualification depends on applicable law: German law
qualifies arbitration agreement as „Procedural Agreement“
• Effect of arbitration agreement
• Binding on contracting parties
• No binding effect on third parties such as guarantors (exceptions
328 BGB, 398 BGB)
• Conclusion by offer and acceptance
• Necessary: well-defined description of controversies to be
resolved by arbitration
• Written form required (Sec 1031 ZPO)
• Trend to a liberal approach as to written form
Arbitration Agreement (4)
• What is compliant with the „written form requirement“ ?
• Exchange of letters, telefaxes, telegrams, or other means of
arbitration which provide a record of the agreement
• Contained in a document transmitted from one party to the other
or by a third party to both parties, as well as when such
document is considered to be part of the contract in accordance
with common usage („kaufmännsiches Bestätigungsschreiben“)
• A reference in a contract to a document containing an arbitration
clause is sufficient if the clause form part of the agreement
(„AGB“)
• Arbitration Agreements to which a consumer is a party must be
contained in a separate agreement which has been personally
signed by the parties
• Any non-compliance is cured by entering into discussions on
the merits
Question
• What is the relevance of the „written form requirement“ ?
• Should it be handled liberally or rather not ?
Arbitration Agreement (5)
Pathological clauses
Example 1:
Each dispute, disagreement or each claim which results out of this
agreement or which releates to this agreement, its infringement or ist
annulment is to be decided upon by arbitration proceedings according to
the UNCITRAL Rules of arbitration in their current version.
Arbitration Agreement (6)
Pathological clauses
Example 2:
Zur Durchführung von Streitigkeiten wählt die Firma G eine neutrale Person
aus der Wirtschaft oder dem Recht als Schiedsrichter. Der Schiedsrichter
entscheidet dann den Streitfall definitiv für beide Seiten. Die Entscheidung
ist ohne Widerspruch sofort vollstreckbar. Findet das Verfahren vor einem
ordentlichen Gericht statt, sind Rechtsanwälte als Parteivertreter zu
bestellen.
Arbitration Agreement (7)
Pathological clauses
Example 3:
"The Parties shall attempt to settle amicably any dispute or difference of
opinion that may arise in connection with the Contract. Disputes or
disagreements that cannot be solved through negotiations shall be brought
before the International Court in Switzerland. This court will proceed in
accordance with international law. The award of this court shall be
considered final and binding upon the Parties."
Arbitration Agreement (8)
Pathological clauses
Example 4:
"Arbitration: […] Any dispute not settled amicably […] shall be finally settled
by arbitration. […] For contracts with foreign contractors, international
arbitration with proceedings administered by the international arbitration
institution appointed in the Contract Data, conducted in accordance with
the rules of arbitration of the appointed institution, if any, or in accordance
with UNCITRAL arbitration rules, at the choice of the appointed institution.
The place of arbitration shall be the city where the headquarters of the
appointed arbitration institution is located. The arbitration shall be
conducted in the language for communications defined in Sub-Clause 1.4 of
the Contract Data."
Arbitration Agreement (9)
What went wrong ?
• Keep it simple
• Don‘t over-engineer
• Stick with Standard clauses of the leading arbitral institutions if you
want to avoid problems when starting your arbitration.
Arbitration Agreement
Choose
the
Law
Choose
the
Venue
Choose
the
Rules
Choose the
Number of
Arbitrators
If there’s
time, add
“Bells &
Whistles”
Case study
Draft an institutional arbitration clause relating to a supply
agreement between a German manufacturer and a Chinese
distributor.
Draft an ad hoc arbitration agreement for a German and a
Spanish party relating to the purchase of a solar-energy system
to be supplied to the Spanish customer in Malaga
Confidentiality
More private than state court litigation. Oral hearings not open
to the public.
• The private nature of arbitration is usually considered as one
of the key advantages of arbitral proceedings compared to
proceedings in state courts.
• Reluctance to publish awards; publications, if any, in a
sanitized version
• The public is not informed of the conduct and content of the
proceedings.
Confidentiality (2)
BUT: Confidentiality of such proceedings is not as clear as
parties assume.
German arbitration law does not expressly stipulate a
confidentiality obligation on the parties.
Regarding any consultation during the decision-making process,
the arbitrators are bound by the confidentiality of judicial
deliberations.
Case study
• During an arbitration the arbitrators become aware that the
parties are in dispute about claims arising out of a (prohibited)
cartel the European and national cartel offices are not aware
of. Are the arbitrators under an obligation to report the
prohibited behaviour to the authorities ?
• The arbitrators become aware that they are „used“ by the
parties to conduct a sham arbitration with the aim to illegally
transfer monies out of Russia. What should they do ?
• The arbitrators believe that they have written a faboulous
award which the world should be aware of. They want to
publish the award. Are they allowed to ?
Pros and Cons of arbitration (1)
Advantages of arbitration – perception and reality
• Enforceability – New York Convention awards are enforceable
in more than 149 signatory states – but do your do diligence
• Neutrality – “level playing field”´, away from local courts and
national administrative bodies
• Confidentiality of arbitral proceedings – but do not take it for
granted
• Procedural flexibility
• Expert arbitrators chosen by the parties more or less carefully
• Finality – a double edged sword?
• Speed and cost?
Pros and Cons of arbitration (2)
Disadvantages of Arbitration – inherent and other limitations
• Limited scope of arbitral jurisdiction – defined by contract
• Limited powers of arbitrators, e.g. to order injunctions with
effective sanctions/impact on third parties and (in practice) to
give summary judgments
• Flexibility may lead to unpredictable procedure
• The problem of multi-party disputes/lack of consolidation
powers
• Awards are not precedents, nor binding on third parties –
problem of contradicting awards
• Speed and cost?
Pros and Cons of arbitration (3)
Bottom line: ultimately, perhaps the only realistic option
– or the least worst alternative to home field advantage
Pros and Cons of institutional/ad hoc arbitration (1)
Choosing the rules – tailor made or ready to wear?
• Pure ad hoc arbitration: tailor made to the (likely) dispute but
heavy administrative/financial burden on parties and risk of delay
(or worse) through non-cooperation (e.g. expensive applications to
court to appoint arbitrators). Drafting of arbitration clause is crucial!
• Ad hoc arbitration with UNCITRAL Rules: preferable to pure ad hoc
arbitration; must specify appointing authority and expressly exclude
appeals
• Institutional arbitration: may seem slower and more expensive, but
generally recommended; always adopt model institutional
arbitration clause
• Choice of institution: choose a major international institution
absent a particular reason not to (e.g. ICC, LCIA, SCC); check track
record/durability of regional alternatives
Pros and Cons of ad hoc/institutional arbitration (2)
• Advantages of Institutional Arbitration
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Existence of an automatically incorporated set of arbitration rules
Higher degree of forseeability and predictability
Assistance through trained staff
No issues with service of process
Quality assurance (some institutions)
Different types of rules for different situations
• Disadvantages of Institutional Arbitration
• Higher costs through administrative fees
• Potentially slower proceeding
• Not all institutions are of same quality
Choice of the arbitral institution
• Often chosen by default or because institute is well known in a
particular region or trade area
• Differences
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Default regulation on number of arbitrators
Nomination of arbitrators
Calculation of costs
Ability of the institution to consolidate proceedings or join parties
Rules on multi-party proceedings
Ability of the institution to control the proceeding
Scrutiny of the draft award
Level of administrative support
Experience of staff
Domestic Arbitration in Germany
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The initiation of the arbitration proceeding (ad hoc/DIS)
The selection of the arbitral tribunal (ad hoc/DIS)
The stages of an arbitration
The role of the ordinary courts
Interim relief (ad hoc/DIS)
Expedited Proceeding (DIS)
Rules for arbitrating corporate issues (DIS)
The initiation of the arbitration proceeding (ad hoc/DIS)
• Initiation of proceeding
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Sec 1044/1046 CCP/Sec 6 DIS-Rules
What are the prerequisites for initiating a domestic arbitration ?
Which elements are mandatory ?
What applies as to language ?
When is an arbitration proceeding „pending“ (Sec 204 Sub 1 no 11 Civil
Code) ?
• Practical issue: full reasoning or notice pleading ?
• Cost of initiating an arbitration proceeding
• Sec 7 DIS-Rules http://www.dis-arb.de/en/22/costcalculator/overviewid0
• Sec 6 Sub 1 and 12 GKG
• Consequence of non-payment ?
Initiation of proceeding (2)
• Service of process (Sec 8 DIS-Rules/Sec 1047 Sub 3 CCP)
• Reply (Sec 9 DIS-Rules/Sec 1046 Sub 1; 1040 Sub 2 CCP)
• No formal requirements as to contents
• Sec 1049 Sub 2 CCP requires Respondent to invoke lack of jurisdiction of
the arbitral tribunal in its reply, DIS-Rules ?
• Sec 1032 Sub 2 CCP allows until constitution of the tribunal the initiation
of court proceeding to request a declaration that an arbitration
proceeding is permissible/impermissible
• Counterclaim (Sec 10/11 DIS-Rules/Sec 1046 Sub CCP)
• Tribunal decides on permissibility (Sec 10 Aub 2 DIS-Rules)
• Is the Tribunal competent ? Is there a congruent arbitration agreement ?
• Set-off ?
The constitution of the arbitral tribunal (ad hoc/DIS)
• Key element in every arbitration
• Sole arbitrator, three or more arbitrators ? What is preferable in
which situation ?
• Default provision in Sec 1034 CCP/DIS ?
• Who is the „ideal“ arbitrator ?
• Qualifications
• What are the relevant condiderations ?
• Rules on the appointment of arbitrators, Sec 1035 Sub 3 CCP/Sec 12
DIS-Rules
• Nationality requirements ? Judges ? Lawyer ?
• Special situation
• Multi-party proceedings (Sec 13 Sub 3 DIS-Rules)
The constitution of the arbitral tribunal (2)
• What happens if the Respondent does not nominate an
arbitrator ?
• Sec 12 Sub 1 DIS-Rules (The „DIS-Appointing Committee“)
• Sec 1035 Sub 3 CCP (Appointment by the ordinary courts, cost
issues)
• Nomination of the Chairman
• By the two co-arbitrators within 30 days (Sec 12 Sub 2 DISRules/Sec 1035 Sub 3 CCP)
• Default nomination
• Sec 12 Sub 2 DIS-Rules, on request by one of the parties after
expiration of 3o days period
The constitution of the arbitral tribunal (3)
• Basic elements: Independence and impartiality
• Sec 1036 CCP/Sec 15 ff DIS-Rules
• Arbitrators shall disclose possible conflicts before and during an
arbitration proceeding
• The IBA Guidelines on Conflict of Interest/Sec 41 CCP
• What are the crucial elements ?
• Independence: personal economic interests, professional
relationship with one of the parties, previous actvities
• Red/Orange/Green list
• Impartiality: Bias
• Formal acceptance by an arbitrator
• Sec 16 DIS-Rules/Sec 1035 CCP
• Formal nomination
• Sec 17 DIS-Rules
The constitution of the arbitral tribunal (4)
• How to find the „right tribunal“ ?
• What are the relevant criteria ?
• What is the right process ?
Competence-Competence
• Sec 1040 CCP
• The Tribunal has competence to rule on its jurisdiction
• Separability of the arbitration agreement (sub 1)
• By objection of one party the tribunal it should make a preliminary
ruling on its jurisdiction (sub 2)
• This ruling then can be challenged before the ordinary courts (sub 3)
• During the review by the courts the tribunal may continue the
arbitration proceedings
The further stages of an arbitration (ad hoc/DIS)
• How to structure an arbitration
• CCP and DIS-Rules give broad discretion (Sec 1042 CCP/Sec 24
DIS-Rules)
• Procedural Order No 1 (PO 1)
• „German court proceeding in a hotel“, „Hybrid approach“ or
„international best practice in Germany“
• Rules on factfinding process are very limited and leave many
options
• CCP contain in Sec 1042 only provides a procedural framework
• DIS-Rules contain more specific but still broad rules in Sec 24, 25, 26,
27. Difference to CCP procedure in Book 1 – 9 since arbitrators in Sec
27 have possibility to independently from evidence provided by the
parties may investigate the facts
The further stages of an arbitration (2)
• Generally, a domestic arbitration includes the following stages
• Presentation of facts by the parties including submission of the
relevant (e-)documents, possibly written witness statements,
expert reports
• Normally two rounds of submissions
• Evaluation of the relevant facts for the decision of the requests by
the arbitral tribunal
• Possibly bifurcation of proceeding
• Taking of evidence, controlled by the tribunal, some times
verbatim protocol
• Post-hearing briefs
• Drafting to the award
The further stages of an arbitration (3)
• No or only limited involvement of the DIS in the course of an
arbitration, no „scrutiny“ of the arbitration agreement, the
arbitration process or the award. In practice the DIS
nevertheless gives guidance and follows the arbitration
• In ad hoc proceedings there is no institution which follows the
proceedings
• No Terms of Reference, no time management requirements
• Best practice guides (?)
The role of the state courts
• The intervention of state courts is very limited and an
exception (only to the extent permitted by Sec 1026 CCP)
• Primary situations where an intervention might take place:
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Declaration of admissibility or inadmissibility of arbitration
Interim relief
Assistance in constituting the arbitral tribunal
Assistance in connection with the taking of evidence
Recognition and enforcement of the award
The role of the state courts (2)
• Recognition of the arbitration agreement
• Enforcing the agreement (Sec 1032 CCP), pursuant to Sub 1 an
action before a state court is inadmissible
• Anti-suit injunctions ? („West Tankers“ : Inadmissible where
Brussels I regulation applies)
• Declaration of (in)admissibility of an arbitration (Sec 1032 Sub 2
CCP)
• Application to OLG, only permissible until tribunal has been
constituted, thereafter exclusively to be dealt with by tribunal
• Interim Measures (see separate slides)
• Support and control during constitution process
• Appointment of sole arbitrator or chairman (Sec 1035 Sub 3 CCP)
• Replacement of arbitrator, challenge of arbitrators, if tribunal
dismissed the challenge (Sec 1037 Sub 3, Sec 1038 Sub 1 CCP)
The role of the state courts (3)
• Support in connection with the taking of evidence and other
measures (Sec 1050 CCP)
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To compensate lack of sovereign power of the tribunal
Upon application of one party or the tribunal
Summons and interrogation of witnesses
Excursus: US 28 U.S.C. § 1782a
Interim relief
• Alternative 1
• Request for interim relief to state court
• Alternative 2
• Request to arbitral tribunal
• Which issues exist ? What seems preferable ?
• Alternative 1
• State courts are competent to render interim measures (Sec 1033
CCP, also with regards to arbitrations with seat outside of
Germany; Sec 1025 Sub 2 CCP)
Interim relief (2)
• Alternative 2:
• An arbitral tribunal is competent to render interim relief pursuant
to Sec. 1041 (1) CCP, which must be declared enforceable, Sec
1041 Sub 2 CCP
Expedited proceedings (DIS)
• Rationale: Arbitrations must be less time-consuming, i.e.
consume less efforts and money; arbitrations must be simpler
to organize without endangering the principles laid down in
the existing practice
• CCP does not provide expedited proceedings
• „Supplementary Rules for Expedited Proceedings“
• Issued by DIS in 2008, must be agreed on expressly
• Maximum Duration of proceeding: 6/9 months(Sec 1) but in
full compliance with Sec 24 DIS-Rules
• Sole arbitrator as default (Sec 3), shorter periods
• Shorter periods for submissions (Sec 4)
• Time schedule, two rounds of submissions, guidance by the
tribunal (Sec 5)
Expedited Proceedings (2)
• Time limits may be modified
• If parties and arbitrators cannot comply with the time-limits
the jurisdiction remains unaffected (Sec 6)
• The tribunal may in abstain from stating the facts in the award
(Sec 7)
• Limited practical success
• More success of (mandatory) expedited proceeding pursuant
to the Swiss Rules
Arbitrating corporate disputes (DIS)
• Rationale: Corporate disputes for a long time have been
considered non-arbitrable due to its impact on other
shareholders
• The Federal Supreme Court in its decisions „Schiedsfähigkeit I“
and „Schiedsfähigkeit II“ (BGH NJW 2009, 1962) finally
permitted to arbitrate corporate shareholder disputes,
provided certain prerequisites are fulfilled
• Implemented in „Supplementary Rules for Corporate Law
Disputes“ (in force since 2009)
The course of an international arbitration
proceeding
• The ICC rules and its features
• What differentiates an international arbitration from a
domestic arbitration ?
• Some elements of the common law approach to arbitration
• The IBA Rules on the Taking of Evidence in International
Arbitration
• Other elements of „best practice“
The ICC Rules and its features
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Revised in 2012
The ICC Court of Arbitration and the ICC Secretariat
Contain many quality assurance elements
Art 6
Rejection of obviously impermissible requests by
the Court
Art 12.5.
Selection of arbitrators by the Court or NCs
Art 23
Terms of reference
Art 24
Case management conference
Art 33
Scrutiny
Annex IV
Management Techniques
The ICC Commission on Techniques for Controlling Time and
Costs in international arbitration
What differentiates an international
arbitration from a domestic arbitration ?
• Different legal regimes (lex fori) lead to unexpected standards
the participants to an arbitration have to comply with
• Example: Settlement discussions
• „Best practice“, lex fori and applicable substantive law may
lead to discrepancies which have to be bridged
• Different legal cultures lead to different expectations
• On part of the parties to the arbitration
• On part of the arbitrators
• Lack of certainty as to the procedure followed may lead to
unpredictability
Some elements of the common law approach
to arbitration
• Civil law approach
• The „relative truth“
• Common law approach
• The search for „real truth“ (US) or the „truth“ (UK)
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Documents vs oral testimony
Concept of materiality and relevance
Electronically Stored Information (ESI)
Procedure driven by Counsel rather than by the judges
Witness statements; cross-examination; re-cross
Battle of the experts
The IBA Rules on the Taking of Evidence in
International Arbitration
• Revised in 2010
• Try to bridge different approaches in civil law and common
law
• Scope „Guidelines for international arbitration“
• Fairness and good faith as implied guideline
• Preparation by the tribunal
• Document production (Art 3)
• E-document production
• Witness and expert deposition
• Privileges
Other elements of „best practice“
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Case Management
(E-)Document production
Witness testimony
Use of Experts
Assistance to the tribunal
Deliberations
„Relationstechnik“ ?
Drafting of the award
Dissenting opinions
• More „Softlaw“ or is there enough already ?
The true „best practice“
• No „one size fits all“
• Expectation Management
• Tailormade arbitration
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Lex fori
What do the parties expect ?
In case of discrepancies: Accommodate the needs of the parties
Discussion, Agreement or Order ?
The Making of the Award
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Decision making (Sec 1052 CCP)
Deliberations and voting (Sub 1)
Refusal of an arbitrator to participate (Sub 2)
Formalities (Sec 1054 CCP)
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In writing
Signed by the arbitral tribunal (majority)
Specify the place and date of arbitration
Shall state the reasons on which the award is based
The making of the award (2)
Contents of the award
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Recitals
Procedural history
Facts of the case
Reasons
Dispositive sections
Place and date
Signature of the arbitrators
• Dissenting Opinion
• Delivery of the award
Effect of the award
• Same effect between the parties as a final and binding court
judgment (Sec 1055 CCP)
• Possibility to make certain corrections and interpret the
awards pursuant to Sec 1058 CCP
• Res iudicata (limited to dispositive section and to the parties)
• No agreement to appeal permissible under German law
• Exceptions from the binding effect
• If the award is set aside (Sec 1059 CCP)
• Foreign awards are binding only to the extent they have become
final under the lex arbitri
Types of awards
• Final awards
• Partial awards
• Interim/interlocutory awards
• Decision on jurisdiction
• Award on claim in principle
Settlement
• No need for tribunal to promote settlement discussions
• Settlement by means of a consent award (Sec 1053 Sub 2
CCP)
• Alternative
• Termination of proceeding pursuant to Sec 1053 Sub 1 CCP
Decision on costs
• Tribunal has to mandatorily decide on costs (Sec 1057 CCP)
• Except if parties have agreed otherwise
• The decision has to state the exact amounts
• It is possible to decide costs in a separate cost award
• Costs include administrative costs of institute (if applicable),
the fees and expenses of the tribunal and the costs of the
parties
• In case of a separate cost award the decision can be contested
separately too
Recourse against the award
• Application for setting aside (Sec 1059 CCP)
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Constitutionally required control of the arbitration process
In line with effect of Sec 1055 CCP
Largely in the disposition of the parties to the arbitration
Limiting function: only by an application for setting aside in
accordance with Sub 2 and 3, i.e. no review on the merits
• No waiver permissible in advance but after award has been
rendered
• Object of setting aside proceeding
• Only awards
• Only domestic awards (i.e. with seat of arbitration in Germany)
• To be treated separately from proceeding to declare domestic
award enforceable (Sec 1060 CCP)
Recourse against the award (2)
• Setting aside proceedings have to brought within three
months (Sec 1059 Sub 3 CCP)
• To appeals court (Sec 1063 CCP) hearing mandatory,
• Grounds for setting aside: (Sec 1059 Sub 2 CCP)
• Literally taken from Model Law and Art V of New York Convention
• Sub 1: grounds to be pleaded by parties
• Sub 2: grounds to be taken into account ex officio
Sub 1:
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Lack of valid arbitration agreement
Violations of the right to be heard
Excess of authority
Flaws in the composition of the tribunal or the procedure
Recourse against the award (3)
• Sub 2 (ex officio)
• Non-arbitrability
• Conflict with public policy (ordre public)
• “if the award led to a result that obviously violates basic principles of
German law, especially if it is inconsistent with constitutional rights”
• Form of decision
• Order, appealable to Federal Supreme Court
• Consequence of a setting aside
• Arbitration agreement becomes operable again (Sec 1059 Sub 3)
• Consequence of a rejection to set aside
• Determination with res iudicata that alleged defects do not exist
(Sec 1060 Sub 2 CCP)
Recognition and enforcement of arbitral
awards in Germany (Domestic Award)
• German approach different from Model Law and NYC 1958
since it differentiates between domestic and foreign awards
• Domestic awards (Sec 1060 CCP) are considered final and
binding per se (Sec 1055 CCP) unless it is set aside pursuant to
Sec 1059 CCP (application only permissible within three
months period)
• Pursuant to Sec 1060 CCP the award is not per se enforceable
but has to be declared enforceable
• Declaration will be granted in the absence of a reason to set aside
in Sec 1059 Sub 2 CCP
• Application required
• Procedure regulated in Sec 1063, 1064 CCP
• Appealable to Fed Supreme Court
Recognition and enforcement of arbitral
awards in Germany (Foreign award)
• For the recognition and enforcement of foreign arbitral
awards Sec 1061 CCP directly refers to the New York
Convention of 1958
• Recognition occurs automatically provided that no grounds to
resist enforcement exist
• Request to Appeals Court where debtor or assets are located
(Sec 1062, 1063 CCP)
• Foreign award is defined pursuant to NYC 1958
• Grounds to refuse Enforcement
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Lack of a valid arbitration agreement (Art V (1)(a) NYC 1958
Violations of the right to be heard (Art V (1)(b) NYC 1958
Excess of Authority (Art V (1)(c) NYC 1958
Irregularities in the Constitution of the Tribunal (Art V (1)(d)
Recognition and Enforcement of arbitral
awards in Germany (Foreign awards 2)
• Lack of a final and binding award (Art V (1)(e)
• Ground that have to be considered “ex officio”
• Lack of objective arbitrability (Art V (2)(a)
• Violation of public policy (Art V (2) (b)
• Annulment of the award in its country of origin constitutes a
ground to refuse the declaration of enforceability (Art V (1) (e)