The authors are currently representing a client in proceedings regarding the enforcement and recognition of a SCC Award under the New York Convention in Austria.
While the proceedings are still pending, the Austrian Supreme Court already had to specify previous case law (see Austrian Supreme Court decision of 19 December 2018, 3 Ob 153/18y).
The arbitral proceedings
Starting point of the dispute was a loan agreement between the disputing parties which contained a clause providing that
"should the parties fail to reach an agreement a case shall be submitted, without recourse to courts of law, to the International arbitration court in Stockholm in accordance with the rules for procedure of the said court"
and a clause with the headline "Governing Law" inter alia providing that
"the parties hereby agree that all actions or proceedings arising hereunder, or in connection with this agreement shall be brought in first instance before the competent court in Nicosia, Cyprus."
The opponent of our client ("opponent") initiated arbitral proceedings before the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) (Case V 2015/12). Our client contested the validity of the arbitration clause. By decision of 5 November 2015, however, the Arbitral Tribunal affirmed its jurisdiction and subsequently issued an arbitral award on 13 June 2017 in favour of the opponent.
The enforcement proceedings
Subsequently, the opponent applied to the Vienna District Court Innere Stadt for enforcement and recognition of the arbitral award, against which our client filed an objection on various grounds under the respective Articles of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention").
The Supreme Court lifted the decision (i) of the Vienna District Court Innere Stadt and (ii) of the Regional Court on Civil Matters of Vienna (which had ruled in favour of our client and dismissed the opponent's application) and referred the proceedings back to the Vienna District Court Innere Stadt for the further decision on the client's objections in view of the arbitration clause in dispute.
The Supreme Court's Ruling
The Austrian Supreme Court specified its previous case law in many respects:
- Even if the arbitral tribunal, within the scope of its competence, has decided that a valid arbitration agreement exists, the state court is not bound by this decision. It can reassess both the question of law and the underlying facts. Insofar as the award contains statements on the affirmation of an arbitration agreement, this only has evidentiary effect in the recognition proceedings.
- The question of validity of an arbitration clause is subject to the (apparently) chosen law.
- The improvement of formal defects in documents which need to be provided in accordance with Article IV New York Convention can be omitted, if none of the parties denies the existence of the arbitral award or the authenticity of the signatures of the arbitrators thereon.
- The exemption under Article 1 para 2 lit d Brussels I Regulation covers the arbitral proceedings themselves, including the decisions of the arbitral tribunal on its jurisdiction, but also proceedings for the declaration of enforceability of arbitral awards in Austria.
- As regards Article V para 1 lit d of the New York Convention, the party with the "burden of proof" (Behauptungslast) must at least provide prima facie evidence that the alleged procedural violation could also have affected the content of the award.