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Germany: Higher Regional Court of Karlsruhe rules on sleeping arbitrator
Practical Law UK Legal Update 5-520-2180 (Approx. 3 pages)
Germany: Higher Regional Court of Karlsruhe rules on sleeping arbitrator
by Practical Law
| Published on 05 Jul 2012 • Germany |
Stephan Wilske (Partner) and Christian Leisinger (Associate), Gleiss Lutz
In a decision by the Higher Regional Court of Karlsruhe dated 4 January 2012, and only recently published, the court commented, among other things, on the issue of a sleeping arbitrator. The decision concerned the enforcement in Germany of a foreign arbitral award that was subject to the provisions of the New York Convention, which is part of German law (section 1061 of the German Code of Civil Procedure).
Background
Section 1061 of the German Civil Code of Procedure (Zivilprozessordnung, ZPO) reads as follows:
"(1) Recognition and enforcement of foreign arbitral awards shall be granted in ac-cordance with the Convention on the Recognition and Enforcement of Foreign Arbi-tral Awards of 10 June 1958. […] The provisions of other treaties on the recognition and enforcement of arbitral awards shall remain unaffected."
Article V of the New York Convention reads as follows:
"1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
[…]
d) The composition of the arbitral authority or the arbitral procedure was not in ac-cordance with the agreement of the parties, or, failing such agreement, was not in ac-cordance with the law of the country where the arbitration took place; or […]"
Facts
The award in question was rendered by an ICC arbitral tribunal with its seat in San Diego in the US. The respondent argued against its enforcement in Germany by claiming that there were several procedural errors and a breach of the international ordre public. Among other things, the respondent argued that its right to be heard was violated since one of the arbitrators repeatedly fell asleep in the proceedings during the eight days of the oral hearing (a phenomenon not completely unknown to arbitration practitioners).
Decision
The Higher Regional Court of Karlsruhe granted the enforcement application. It held that the fact that an arbitrator had fallen asleep several times during the oral hearing did not constitute a procedural error which could lead to a violation of the international ordre public.
In making reference to state court proceedings, the court noted that a claim that the arbitral tribunal was not properly constituted because an arbitrator fell asleep during the proceedings would require this issue to have been raised with the chairperson during the hearing. It would have been reasonable for the respondent to turn to the chairperson at an early stage of the oral hearing. This would not have led to a conflict since the arbitral tribunal itself has a strong interest in remedying such a deficiency in the proceedings.
The court concluded that under such circumstances a sleepy arbitrator would not be a violation of German procedural law and even less a violation of the international ordre public.
The decision is being appealed.
Comment
The decision by the Higher Regional Court of Karlsruhe illustrates once again that, in arbitration friendly jurisdictions, a refusal to enforce a foreign award based on procedural errors requires the objecting party to have first raised the defect before the arbitral tribunal. Let us learn from this not to "sleep" on our rights!