Set-off and other substantive law objections as defence against the enforcement of an arbitral award

BORRIS ■ HENNECKE ■ KNEISELRechtsanwälte

Dr. Christian Borris, LL.M

3rd DIS Baltic Arbitration Days 2014Riga, 27 June 2014

The issue

Set-off as a defence against enforcement of an arbitral award

Other substantive objections as defences against enforcement of an arbitral award

- E.g.: Award obtained by fraud

Procedural alternatives

BORRIS ■ HENNECKE ■ KNEISEL

Rechtsanwälte

Position of the German Federal Court of Justice (BGH)

Set-off recognized as a defence against enforcement of an arbitral award

Reasoning: procedural efficiency

Jurisdiction of enforcement courts vs. jurisdiction of general courts of the first instance

Exceptions:

Set-off claim is subject to an arbitration agreement

Set-off claim could have been but was not raised during the arbitral proceedings

-

BORRIS ■ HENNECKE ■ KNEISELRechtsanwälte

Legal situation in other countries

USA: set-off not recognized as a defence (because it does not fall within any of the NY Convention defences)

Canada: set-off not recognised as a defence (because it does not fall within any of the defences according to the Model Law

BORRIS ■ HENNECKE ■ KNEISELRechtsanwälte

Critique

Full right to be heard vs procedural efficiency

Loss of one instance

Enforcement proceedings not suited to deal with complex factual issues

Breach of the UN Convention: not one of the grounds for denying enforcement pursuant to Art. V?

BORRIS ■ HENNECKE ■ KNEISELRechtsanwälte

BORRIS ■ HENNECKE ■ KNEISELRechtsanwälte

Im Zollhafen 6 50678 Cologne

Germany T +491 716 13 000

F +49 221 716 13 009 mail@borris-legal.com