In a decision dated 30 September 2010 (see Legal update, Federal Court of Justice on most-favoured-nation principle and the recognition of foreign arbitral awards), the BGH ruled that a foreign arbitral award is to be declared enforceable in Germany if it complies with the formal requirements relating to domestic awards, stipulated in section 1031 of the German Code of Civil Procedure (Zivilprozessordnung, ZPO), even if it does not fulfil the formal requirements of Article II of the New York Convention. This decision confirms the worldwide trend in relaxing the formal requirements under Article II of the New York Convention.

The BGH ruled twice in 2010 on the issue of set-off in enforcement proceedings. In a decision dated 29 July 2010 (see Legal update, Federal Court of Justice on set-off in enforcement proceedings), the court held that in enforcement proceedings in German courts relating to a domestic or foreign arbitral award, the opposing party or debtor may not set off counterclaims if such counterclaims are themselves subject to an arbitration agreement. In a later decision dated 30 September 2010 (see Legal update, Set-off in enforcement proceedings possible if claims not subject to arbitration), the court then confirmed that the set-off of counterclaims in enforcement proceedings is permissible if such counterclaims are themselves not subject to an arbitration agreement. It is important for practitioners to be aware of the distinction applicable in German courts that set off counterclaims in enforcement proceedings may only be raised if they are not subject to an arbitration agreement.

Looking into 2011, an interesting decision is expected by the Frankfurt Higher Regional Court, the court of first instance for setting aside proceedings, where Slovakia filed an application on 26 November 2010 for the setting aside of an award on jurisdiction in an UNCITRAL investment arbitration between the claimant Eureko, a Dutch insurance provider, and Slovakia, with its seat in Frankfurt, Germany (Eureko v Slovakia) (see Legal update, UNCITRAL tribunal rules Slovak-Dutch BIT not affected by Slovakia's EU membership). The arbitral tribunal confirmed its jurisdiction by holding that the Slovakia-Netherlands BIT was valid despite Slovakia's accession to the EU in 2004. Slovakia has asked the German court to refer the matter to the European Court of Justice for a preliminary ruling on the EU law issues at stake. The arbitration is moving forward despite the setting aside proceedings. Eureko is claiming several hundred million Euros for losses arising from investments made prior to radical changes in Slovakia’s health insurance market.

A decision in this case could have far-reaching effects for the validity of intra-European BITs (see also Article, Investment treaty arbitration: round-up 2011). In light of this, there is speculation that the Netherlands might intervene in the German setting aside proceedings, or insofar as the proceedings are referred to the European Court of Justice, various Member States would have an interest in participating in such proceedings.