Notwithstanding an (international) arbitration clause agreed between the parties, the preliminary relief judge may consider itself competent to take cognizance of the dispute. This is very remarkable given that the parties have excluded this possibility by arbitration agreement.
On the basis of a recent decision of the Amsterdam District Court, procedural lawyer Martijn Kesler explains how this works.
Arbitration agreement (in principle) leads to lack of jurisdiction of the judge
The parties may agree to an arbitration agreement by including this arbitration agreement in an arbitration clause in a contract. The arbitration clause also determines to which arbitration institution future disputes must be submitted.
Arbitration is an alternative form of dispute resolution where an arbitral court adjudicates on the dispute. The ordinary court has (in principle) no jurisdiction.
The advantages and disadvantages of arbitration
There are several advantages to choosing arbitration over legal proceedings:
- The arbitrators are specialized in the nature of the case;
- Arbitration is confidential;
- The procedure is faster;
- An arbitral award is easier to enforce internationally than a court decision.
The disadvantages are limited:
- The arbitration procedure is more expensive than a regular procedure.
Various types of arbitration
There are different types of arbitration:
- Institutional Arbitration; is mainly used in construction disputes and trade disputes between entrepreneurs. In institutional arbitration, the dispute is submitted to an institute such as, for example, the Netherlands Arbitration Institute or the Council of the Arbitration for Construction.
- Ad-hoc arbitration; the parties themselves make agreements about the composition of the tribunal, without involving an arbitration institute.
The judge has jurisdiction in certain cases
The arbitral court must offer a timely and fully-fledged alternative. If the requested decision cannot be obtained in arbitration or not in time, the Dutch court can nevertheless declare itself exclusively competent under Article 1022c Rv and Article 1074d Rv.
Article 1022a also provides that an arbitration agreement does not prevent a party from applying to the ordinary court for a preliminary injunction in summary proceedings. The same standard also applies when arbitration outside the Netherlands has been agreed.
Enforcement of an arbitral award through exequatur proceedings
If a party has obtained an arbitral award, it may request the court to grant leave to enforce that award. With a so-called exequatur, the arbitral award is given an enforceable title.
The dispute does therefore not need to be brought before the Dutch courts again.
Refusal of enforcement in exceptional cases
Article 1063 paragraph 1 Rv provides that the preliminary relief judge can only refuse the leave for enforcement under certain circumstances
Annulment of the arbitral award can, for example, take place if there is no valid arbitration agreement or if the award, or the way in which it was reached, is contrary to public order or morality. This is therefore a brief investigation.
The Dutch court checks whether the judgment meets the elementary requirements of Dutch law, such as, for example, stating the names of the parties.
Injunctions judge deems himself competent despite arbitration agreement
In a recent dispute before the Amsterdam District Court, Plaintiff demanded that Defendants 1 and 2 perform their obligations under the contract.
Notwithstanding the arbitration agreement concluded between the parties on the basis of which the ICC in Paris had jurisdiction, the claimant had submitted the dispute to the preliminary relief judge.
The award of the claim in the interim injunction proceedings was of crucial importance to the claimant, as she did not have sufficient liquidity to meet her obligations. Despite the arbitration agreement, the preliminary relief judge considered itself competent. This is noteworthy.
The arbitration agreement is set aside for urgent reasons
Although the decision of the ICC Arbitration Court could have been obtained in time, it must also be possible to obtain an exequatur for an order from an emergency arbitrator, the preliminary relief judge ruled.
It is true that an order can be obtained in time, but an order for the collection of a claim does not qualify for (forced) enforcement.
As a result, an exequatur procedure has to be followed. This is also the reason why the emergency arbitrator of the ICC arbitration in Paris suddenly cannot be seen as a timely and fully-fledged alternative.
Public treatment in court affects desired confidentiality
Confidentiality is seen as one of the major benefits of an arbitration agreement. Nevertheless, the aforementioned ruling would detract from this basis.
In the ruling discussed, the emergency arbitrator’s order was not seen as a timely and fully-fledged alternative. The procedure to be followed before the Dutch preliminary relief judge therefore no longer takes place behind closed doors.
For many parties, an important motive for agreeing to arbitration has now disappeared.
For many parties, an arbitration agreement offers many advantages compared to ordinary case law. VIOTTA is happy to advise you on arbitration agreements.