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A Second Look at ArbitrabilityApproaches to Arbitration in the
United States, Switzerland and Germany Patrick M. Baron(*)
AuthorPatrick M. Baron Stefan Liniger
; Stefan Liniger
(**)
Jurisdiction I. INTRODUCTION ACCORDING TO the principle of
Kompetenz-Kompetenz, an arbitral tribunal is vested with the
authority to decide upon its jurisdiction with respect to any given
dispute. In making such a decision, it will review the respective
arbitration agreement and it will consider general legal principles
affecting its jurisdiction. This decision will inevitably include
an assessment as to whether the dispute at hand is arbitrable. The
arbitral tribunal's determination, however, is not necessarily
final. It might be subject to judicial review. In a motion to set
aside the tribunal's determination or during a challenge of the
final award at the recognition and enforcement stage, a court may
take a second look at the arbitrability of a particular matter. The
nature of such judicial review has been the subject of extensive
scholarly debate in the past. The key point of this debate has been
a conflict of interests with significant bearing on international
arbitration as an institution. On the one hand, there are national
concerns of public policy calling for the exclusive jurisdiction of
state courts with respect to the adjudication of certain disputes,
whereas, on the other hand, a more liberal and international
concept of arbitrability appears to be highly desirable for
international trade, with a lesser degree of state control over
private dispute resolution. Arbitrability, in essence, is a matter
of national public policy. As public policy can differ from one
country to another, the arbitrability of a particular dispute may
vary considerably from jurisdiction to jurisdiction. Naturally,
judges of different states will look at the question of whether a
given dispute is arbitrable from different angles. Arbitrators, of
course, will take yet a different approach to that page "27"
question. While state judges will make their determination in
accordance with their national laws and interests, arbitrators will
strive to strike a balance between the interests of the legal
systems concerned in the dispute and the (subjectively) reasonable
expectations of the parties of the proceeding. (1) Consequently,
interpretations of arbitrability by judges and arbitrators may
vary. The potentially different interpretations of arbitrability by
arbitratorsUnited States Switzerland Germany
SourcePatrick M. Baron and Stefan Liniger, A Second Look at
Arbitrability, Arbitration International, (Kluwer Law International
2003 Volume 19 Issue 1 ) pp. 27 - 54
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and state judges are the focus of our article. In particular, we
will analyse the development of the concept of arbitrability in the
context of international arbitration in the United States,
Switzerland and Germany. In the course of this analysis, we will
outline the limitations and restrictions imposed upon the parties'
freedom to opt for arbitration as an alternative to litigation, and
we will unearth existing familiarities in the approaches to
arbitration in these three jurisdictions. Finally, we will conclude
this article with our assessment of where the concept of
arbitrability in international arbitration currently stands, with a
particular focus on the arbitration of disputes that involve
significant public interests. II. THE US APPROACH: THE SECOND LOOK
DOCTRINE (2) The Federal Arbitration Act (FAA) contains one single
explicit exclusion from arbitrability: 9 U.S.C. 1 states that
nothing herein contained shall apply to contracts of employment of
seamen, railroad employees, or any other class of workers engaged
in foreign or interstate commerce. Apart from that provision, the
issue of arbitrability is not regulated in any statute or provision
and pursuant to 9 U.S.C. 2 all other arbitration agreements in
writing shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract. In the United States, the development of a concept
regarding arbitrability (3) is therefore predominantly a matter of
case law. The courts, over time, have set forth limitations to the
parties' freedom to arbitrate disputes in specific areas of law,
namely, with respect to controversies arising in connection with
such areas of law that were traditionally considered to be within
the exclusive domain of state and page "28" federal courts. As a
result, certain types of cases, in particular those involving
strong public interest, were considered as being non-arbitrable.
(4) Over the last couple of decades, however, US courts have more
and more taken an arbitration-friendly view. As a consequence, the
effects of public policy considerations limiting the arbitrability
of certain types of controversies have been reduced. (5) For the
purpose of illustrating this development, we will now turn to four
leading cases. These cases deserve to be looked at more closely, as
each of them highlights significant changes to the concept of
arbitrability in the United States. (a) Scherk v. Alberto-Culver
Co. (1974) (6) This case marks the beginning of a more liberal
approach of the US Supreme Court towards arbitration. The case
involved the question of arbitrability of claims under the
Securities Exchange Act of 1934.
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Some 20 years prior to this decision, in Wilko v. Swan, (7) the
US Supreme Court had held that disputes under the Securities Act of
1933 were not arbitrable. It reasoned that the right of an
individual to select a judicial forum could not be waived under the
Securities of Act 1933. (8) The US Supreme Court also voiced
concerns with respect to the review of an arbitrator's decision on
securities laws matters by the courts, and it finally concluded
that the effectiveness of the remedies available under the
Securities Act of 1933 would be lessened in arbitration as compared
to judicial proceedings. (9) In contrast, in Scherk the US Supreme
Court found claims under the Securities Exchange Act of 1934 to be
arbitrable. (10) The crucial criterion in the justification page
"29" for the opposite outcome to Wilko was the fact that the
underlying dispute had arisen in an international context: one of
the parties involved was a German national who was not residing in
the United States. The US Supreme Court held that different
standards had to be applied to such cases as opposed to than in
purely domestic cases. Transnational disputes would be suited for
arbitration. In such cases, the need for international commerce to
enforce arbitration procedures would prevail over other public
policy considerations. It further concluded that: the invalidation
of such an agreement [to arbitrate] would reflect a parochial
concept that all disputes must be resolved under our laws and in
our courts We cannot have trade and commerce in world markets and
international waters exclusively on our terms, governed by our
laws, and resolved in our courts. (11) (b) Mitsubishi Motors Corp
v. Soler Chrysler-Plymouth, Inc. (1985) (12) In the famous landmark
decision Mitsubishi, the US Supreme Court expanded the general
guidelines established in Scherk to antitrust disputes, which until
that time had been deemed to be nonarbitrable. Prior to Mitsubishi,
the opinion prevailed that the state and its courts have the duty
and responsibility to promote national interests in a competitive
economy by enforcing antitrust laws. Arbitration, with its
confidential and private character, was perceived as not suited for
the resolution of antitrust matters. It was feared that public
interests might be unjustifiably excluded behind the closed doors
of an arbitral proceeding. In Mitsubishi, again a case having
international dimensions, the US Supreme Court rejected these
considerations and concluded: that concerns of international
comity, respect for the capacities of foreign and transnational
tribunals, and sensitivity to the need of the international
commercial
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system for predictability in the resolution of disputes require
that we enforce the parties agreement, even assuming that a
contrary result would be forthcoming in a domestic context. (13)
Having thus given the arbitrators and parties the go-ahead to
commence with arbitration, the US Supreme Court, however, at the
same time stressed that this would not necessarily put an ultimate
end to judicial intrusion. It pointed out that page "30" the
national courts of the United States, pursuant to Article V(2)(b)
of the New York Convention 1958, would have an opportunity at the
award enforcement stage to ensure that the legitimate interest in
the enforcement of antitrust laws has been adequately addressed by
the arbitrators. (14) We will discuss infra why this position of
the US Supreme Court, effectively threatening a subsequent judicial
review of the decision of the arbitrators notoriously branded as
the Second Look remains one of the most controversial issues in
international commercial arbitration. (c) Shearson/American
Express, Inc. v. McMahon (1987) (15) Two years after Mitsubishi,
the US Supreme Court, in Shearson, handed down another
ground-breaking decision by affirming the arbitrability of a
domestic claim of customers against a broker based on a violation
of section 10(b) of the Securities Exchange Act of 1934, as well as
violations of the Racketeer Influenced and Corrupt Organizations
Act (RICO). With its broad, all-encompassing language, this
decision has been referred to in many other cases regarding the
arbitrability of controversies in different areas of law. As a
precedent for the arbitrability in domestic cases, its effect is
vastly persuasive. (16) Essentially, Shearson held that courts are
required to enforce arbitration agreements and that a court's duty
to do so is not diminished for claims founded on statutory rights,
namely rights afforded by the Securities Exchange Act of 1934 and
RICO. Similarly to Mitsubishi, the US Supreme Court held that a
party who agrees to arbitrate a statutory claim would not forego
the substantive protection afforded by the statute. Rather, it
trades the procedures and opportunity for review of the courtroom
for the simplicity, informality, and expedition of arbitration.
(17) Furthermore, as in Mitsubishi, the US Supreme Court emphasized
that the potential complexity of certain matters is in itself not
sufficient to ward off arbitration. (18) (d) Vimar Seguros Y
Reaseguros, SA v. M/V Sky Reefer et al. (1995) (19) A more recent
breakthrough with respect to arbitration clauses contained in bills
of lading was Sky Reefer, in which the US
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Supreme Court further consolidated its position regarding
arbitrability. The issue at stake in this case was whether a
foreign arbitration clause in a bill of lading would be invalid
under COGSA (20) because the selection of a foreign forum page "31"
in conjunction with the choice of foreign law might lessen the
liability of a carrier in a sense that the provisions of COGSA
prohibit. Based upon the notion that the United States should be a
trustful partner in international trade and multinational
endeavours, along with the idea that US courts will have the
opportunity at the award-enforcement stage to ensure that the
legitimate interest in the enforcement of the laws has been
addressed, (21) the US Supreme Court affirmed the arbitrability of
the matter. Although there could be no certainty as to whether the
arbitrators abroad would apply the law consistent with COGSA, it
would be premature at the interlocutory stage not to enforce the
arbitration clause. (22) (e) The Legacy of Mitsubishi: the Second
Look Doctrine In both Mitsubishi and Shearson, the US Supreme Court
held that potential complexity should not suffice to ward off
arbitration, (23) thus rejecting the respective plaintiffs'
argument that an arbitral tribunal could not properly handle
certain complex matters such as antitrust or RICO claims. The trust
the US Supreme Court conferred upon arbitrators appears to have a
catch though, because of a potential judicial review at the award
enforcement stage. One wonders what such a review could actually
mean for international arbitration: are the decisions of the US
Supreme Court ultimately to be applauded as yet another step
facilitating arbitration, or do they rather come across as wolves
in sheep's clothing? The arbitration clause between Mitsubishi
Motors Corporation and Soler Chrysler-Plymouth, Inc., for example,
provided for arbitration in Japan and included a choice of law
clause explicitly selecting Swiss substantive law as applicable to
the dispute. The US Supreme Court, in a footnote, (24) cautioned
the parties and arbitrators to take into account US antitrust laws
in the adjudicatory process, as it would otherwise void the
arbitration agreement for US public policy reasons. (25) This
passage, of course, can be read in two ways: on the one hand, the
US Supreme Court stated that it believes the arbitrators will be
capable of deciding the case. On the other hand though, it requires
the arbitrators to decide the case so that the US Supreme page "32"
Court will be satisfied with its outcome. It follows from this that
the arbitrators will have to respect the extraterritorial character
of US antitrust laws, even if they are forced to disrespect the
parties' explicit choice of law as a consequence of this. We will
revisit this issue infra where we will elaborate further on what
consequences such a (potential) Second Look could have for
international arbitration.
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III. SWITZERLAND In Switzerland, two main bodies of law govern
arbitration: the socalled Concordat, an intercantonal arbitration
convention (26) which applies to domestic arbitration, and Chapter
12 of the Private International Law Act (PIL), (27) a federal law
sometimes referred to as the Swiss Arbitration Act. Chapter 12 of
the PIL establishes a regime specific to international arbitration,
directly applicable to all international arbitrations that have
their seat in Switzerland. We will only concern ourselves with the
PIL, as the Concordat is of little interest in international
arbitrations. The relevant provision of the PIL with regard to
arbitrability is article 177, (28) which consists of two
paragraphs: paragraph (1) lays down the basic concept of objective
arbitrability (29) for international arbitral tribunals with their
seat in Switzerland, and paragraph (2) sets forth a special rule
for cases in which states or state-controlled entities are parties
to an arbitration. Pursuant to article 177(1) PIL, any dispute
involving an economic interest may be the subject matter of an
arbitration. Although there is no statutory definition of what
constitutes a dispute involving an economic interest, it is
commonly understood that the scope of page "33" Thus, article
177(1) PIL is to be interpreted broadly. (30) a dispute is
arbitrable if it involves any sort of economic interest, regardless
of whether the underlying transaction is commercial or private in
nature, and whether the respective controversy involves civil,
administrative or public law, or international public law. (31)
Arbitrability under the PIL is laid down as a material rule of
private international law. (32) This means that the PIL itself
determines the principle by which the issue of arbitrability has to
be determined. As a result, the parties or arbitrators are not
referred to the lex causae or any other national law to determine
whether the subject matter of the dispute is arbitrable. Thus,
article 177(1) PIL governs objective arbitrability notwithstanding
the potential applicability in the dispute of any mandatory
provisions of Swiss domestic or even foreign law to the contrary.
As we will see in more detail, the only limit to this principle is
public policy. This is true regardless of whether the issue of
arbitrability is raised before a court in an action to compel the
parties to resort to arbitration, in a proceeding to set-aside a
preliminary award ruling on the jurisdiction of the arbitral
tribunal, in a set aside proceeding regarding the final award, or
in the course of recognising and enforcing an arbitral award. (33)
An important case confirming this restrictive approach to the
application of domestic and foreign rules when determining the
arbitrability of a dispute is the well-known decision BGE 118 II
353 in Fincantieri-Cantieri Navali Italiani SpA v. page "34" Oto
Melara of June 1992. Here, the Swiss Federal Tribunal
(Bundesgericht) held
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that the issue of arbitrability has to be determined
irrespective of the validity of the contractual obligations under
the lex causae. As a result, foreign (as well as Swiss domestic)
mandatory rules of law as such do not function as barriers to
arbitrability. Arbitrability, as the Bundesgericht concludes in
dicta in Fincantieri, could only be denied with respect to claims
that are reserved to the exclusive jurisdiction of a certain
authority by rules of law, provided that the Swiss understanding of
public policy would require the application of such rules of law.
(34) The Fincantieri case not only underlines the existence of an
arbitration-friendly environment in Switzerland, but also
illustrates the Swiss tendency to lessen statutory or other
limitations and to reduce the impact of public policy concerns with
regard to arbitrability. (35) A dispute that involves public policy
issues is not per se regarded to be non-arbitrable. (36) Swiss
courts rather expect arbitrators to apply public policy rules along
with all other rules of law in settling disputes that have been put
forward to them. (37) Article 177(2) PIL addresses the problem
arising out of the participation of a state in arbitral
proceedings. Under its regime, a state, a state-held enterprise or
a page "35" state-owned organisation, as a party to an arbitration
agreement, can neither rely on its own law for the purpose of
challenging its own capacity nor can it invoke its own laws to
contest the arbitrability of the dispute at hand. Thus, a state
cannot frustrate an arbitration by denying its capacity to enter
into an agreement providing for the arbitration of disputes by
arguing, for example, that the arbitration clause had not been
approved by a specific council. Similarly, a state cannot deny the
objective arbitrability of a dispute by employing the argument that
the controversy involves a matter which is not arbitrable under its
own laws. (38) IV. GERMANY Before examining the arbitrability of
disputes within specific areas of law it is necessary briefly to
consider the statutory provisions governing the arbitrability of
controversies in general. The year 1998 saw one of the most
fundamental changes to the arbitration law of Germany when the
Tenth Book of the Code of Civil Procedure (ZPO) was fully replaced
by a new text based upon the UNCITRAL Model Law. (39) The question
of whether a dispute is arbitrable or not is now governed by the
new article 1030 ZPO. (40) The first sentence of article 1030(1)
ZPO significantly extended the scope of issues that are deemed
arbitrable under German law. (41) Any dispute involving page "36"
economic interests may be (42) referred to arbitration. This is
true regardless of whether such disputes are public or civil in
nature, the parties can freely dispose of
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the interests involved or whether a certain court would have
exclusive jurisdiction over the dispute if it were litigated. (43)
According to the second sentence of article 1030(1) ZPO, only the
arbitrability of controversies not involving economic interests
remains conditional upon whether the parties can freely dispose of
the rights affected and thereby are able to conclude a settlement
with respect to the issue in dispute. The purpose underlying this
provision was to exclude arbitration in matters concerning
particularly sensitive private interests (e.g. divorce proceedings,
proceedings concerning domestic relations, matters relating to
custody of persons of full age). (44) Such matters remain within
the exclusive domain of the courts. Article 1030(2) ZPO excludes
disputes relating to the existence of a lease of residential
accommodation within Germany from arbitration. This provision can
be viewed as a procedural reinforcement of the strong protection
tenants of residential accommodation, which are generally deemed to
be in a socially weak position, receive under article 535 et seq.
of the Civil Code (BGB). (45) Finally, article 1030(3) ZPO provides
that provisions outside the ZPO rendering certain disputes
non-arbitrable or imposing limits and restrictions on the
arbitrability of certain matters remain unaffected by article 1030
ZPO. (46) This means that the arbitrability of certain types of
disputes remains restricted by virtue of provisions contained in
other statutes notwithstanding the general notion of article
1030(1) ZPO, pursuant to which all disputes involving economic
interests may be submitted to arbitration. (47) Having briefly
outlined the general framework of article 1030 ZPO, we will now
turn in more detail to the arbitrability of disputes in selected
areas of law. (a) Antitrust Claims Since article 91 of the Act
against Restraints on Competition (GWB) (48) has page "37" been
repealed in the course of the reform of the Tenth Book of the ZPO,
all antitrust claims are now arbitrable. (49) During the
parliamentary debate regarding the repeal of article 91 GWB, it was
concluded that the exclusion of antitrust matters from arbitration
was no longer necessary. It was thought that arbitrators would
apply antitrust laws in the same manner as the courts would do.
Thus, decisions of arbitral tribunals would not disregard antitrust
laws and therefore protect the public policies underlying the
provisions of the GWB. And even in the event that arbitrators were
to disregard the law, it was further argued, public interest would
not be at stake since arbitral awards could still be reviewed by
the courts in set-aside proceedings or during the enforcement of
such an award.(50)
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(b) Securities Claims By virtue of article 28 of the Securities
Exchange Act (BrsenG) securities claims are arbitrable, provided
that an agreement to arbitrate is entered into between parties
permitted to trade in securities (51) or that a dispute is
submitted to arbitration after it has arisen. (52) In addition to
these statutory restrictions on arbitration, certain agreements to
arbitrate were rendered void by German courts. It was repeatedly
held by the Federal Supreme Court (Bundesgerichtshof) that disputes
in connection with securities are not arbitrable if the arbitration
agreement provides for arbitration before a foreign tribunal under
foreign law. (53) It reasoned that the combination of a choice of a
foreign tribunal and the choice of foreign law would probably have
the effect that German mandatory securities exchange laws would be
disregarded. (54) Arbitration agreements providing for the
settlement of controversies by German arbitral tribunals under
German law, on the other hand, were held to be valid since it could
not automatically be assumed that mandatory German law would be
evaded through the establishment of such a dispute resolution
mechanism. (55) Furthermore, arbitral awards would be subject to
review by the courts in subsequent set aside proceedings. (56) In
the course of such proceedings the courts page "38" would be able
to evaluate whether the award is or is not apparently inconsistent
with substantial principles of German law. (c) Actions Challenging
the Validity of Shareholder Resolutions One of the most vehement
disputes regarding arbitrability is the question whether actions
brought by shareholders seeking to challenge the validity of
shareholder resolutions may be submitted to arbitration or not.
(57) The controversy originates from the fact that court decisions
regarding the validity of these resolutions, by virtue of article
248(1) of the Stock Corporation Act (AktG), have inter omnes
effects. (58) The reason for this statutory exception to the
general principle that judgments only have effects inter partes (as
laid down by article 325 (1) ZPO) is the very nature of the subject
matter of the proceedings in question: shareholder resolutions can
only be either valid or invalid in relation to all of the
shareholders of a given corporation. Unlike the case of judgments,
a statutory provision to the effect of article 248(1) AktG does not
exist with respect to arbitral decisions. Nevertheless, a number of
scholars although most of them have reached their conclusion for
different reasons have voiced the opinion that disputes regarding
challenges of shareholder resolutions
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are arbitrable. (59) In a judgment dating from March 1996, the
Bundesgerichtshof declared that article 248(1) AktG could not be
applied mutatis mutandis to arbitral awards, thereby rendering
challenges of the validity of shareholders' resolutions
non-arbitrable. (60) This judgment was mainly based upon procedural
considerations. page "39" First, the Bundesgerichtshof argued that
if such claims were deemed arbitrable there would be the danger of
a number of irreconcilable awards resulting from separate
proceedings with respect to one and the same shareholders'
resolution. (61) Each shareholder of a corporation could bring an
action before a different tribunal. This problem is avoided if such
actions are brought in courts because article 246(3) AktG (62)
provides that such actions shall be joined to be heard and decided
together. (63) Secondly, the Bundesgerichtshof held that there was
no guarantee that the shareholders have substantially equal rights
to participate in the proceedings, in particular, to be able to
appoint or influence the appointment of an arbitrator of their
choice. (64) Given the importance of the appointment of an
arbitrator of one's choice for the entire proceedings, this could
lead to a significant restriction of the rights of a party to such
proceedings in comparison to judicial proceedings. (65) In light of
this reasoning of the Bundesgerichtshof, one would be inclined to
think that such claims are arbitrable, if only some conditions were
met to safeguard that the arbitration procedure is not subject to
the problems addressed by the Bundesgerichtshof. (66) Thus,
arbitration procedures concerning challenges of shareholder
resolutions should be arbitrable and have inter omnes effect,
provided that regard is had to the multilateral character of the
issue in question: all shareholders must be able to participate in
the arbitration procedure and all of the participants must have
substantially equal rights with regard to the composition of the
arbitral tribunal. Furthermore, there must only be one such
proceeding. (67) page "40" (d) Labour and Employment German policy
with regard to the arbitrability of labour and employment matters
can be described as being rather hostile. Arbitration of such cases
is not governed by the provisions of the Tenth Book of the ZPO
referred to above, but exclusively by the regime set forth under
article 101 et seq. of the Labour Court Code (ArbGG). According to
article 101(1) and (2) ArbGG, only a very limited number of
disputes related to labour and employment can be submitted to
arbitration. While parties to collective bargaining
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agreements may generally resort to arbitration in so far as
civil law matters are concerned, such a possibility does not exist
for the vast majority of controversies relating to employeremployee
relationships. Pursuant to article 101(2) ArbGG, only disputes
arising out of a small number of specified occupations (68) are
arbitrable, provided that a collective bargaining agreement
provides for arbitration and that such employees are either
personally bound to that bargaining agreement or that the parties
to an employment agreement, without being bound by a collective
bargaining agreement, have expressly and in writing incorporated
the terms of a collective bargaining agreement into the employment
contract. (69) In addition to limiting the scope of matters that
can be submitted to arbitration, arbitration as a means of dispute
settlement in such labour and employment cases is made highly
unattractive by the fact that arbitral awards can be reviewed on
their merits in actions seeking to set aside such an award (article
110(1) No. 2 ArbGG). (70) Effectively, this means that, with the
threat of re-litigating the same matter after arbitration, most of
the (very limited number of) parties that are permitted to initiate
arbitral proceedings will refrain from doing so in order to save
both time and resources. (e) Intellectual Property Rights With
respect to the arbitrability of disputes over patents, it is
necessary to differentiate between claims for the declaration of
nullity, the revocation of patents and the issuance of compulsory
licences, (71) on the one hand, and all other claims in relation to
patents on the other hand. While the arbitrability of the latter
category of claims is generally accepted, the arbitrability of the
former group of claims is questionable. It has been argued that
page "41" disputes regarding the potential nullity and revocation
of patents as well as the issuance of compulsory licences cannot be
submitted to arbitration since patents are public in nature and
because the Patent Court (Patentgericht) has exclusive jurisdiction
over such disputes.(72)
Arguing in favour of the arbitrability of such controversies, it
is appropriabe to point out that the mere fact that such rights are
public in nature and that the Patentgericht has exclusive
jurisdiction over the settlement of such disputes if they were
litigated do not provide any grounds upon which the exclusion of
arbitration can be justified. (73) Rather, because of the fact that
the underlying interests of these disputes are economic in the
terms of article 1030 ZPO, they appear to be arbitrable. (74) A
substantially similar discussion arises with respect to the
arbitrability of disputes involving other intellectual property
rights.
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Again, reservations regarding the arbitrability of certain
disputes regarding trade marks and copyrights are voiced. They are
based upon the concentration of such controversies at courts
specialising in their adjudication and on the public nature of
copyrights and trademarks. (75) In light of the arguments made in
favour of the arbitrability of patents, namely, that the public
nature of the rights as well as the fact that certain courts
exercise jurisdiction over specific controversies cannot per se
render a dispute non-arbitrable, the conclusion is that disputes
regarding trade marks and copyrights are also arbitrable. (76) (f)
Insolvency Insolvency proceedings are arbitrable. Such proceedings
involve only interests that are economic in nature. (77) The
authority to enter into agreements to arbitrate, however, page "42"
is limited under certain circumstances. Pursuant to article 160(2)
No. 3 of the Insolvency Code (InsO), for example, a receiver may
only submit disputes where a high amount is involved to arbitration
with the debtors committee's consent. V. CONCLUSION From the
preceding discussion we have seen that, although a tendency
favouring arbitration is clearly visible in the United States,
Switzerland and Germany, the individual approaches taken with
respect to arbitrability are not uniform. The final part of this
article attempts to characterise the different concepts in more
detail. In addition, we will take a brief look at how the question
of arbitrability will be examined by the courts of the above
countries at both the recognition and enforcement stage as well as
in set-aside proceedings. (a) Switzerland Due to the broad
definition of objective arbitrability, on one hand, and the fact
that states and state-controlled parties are precluded from raising
objections to arbitrability based upon their own laws, on the other
hand, practically anything goes in international arbitration when
the arbitral tribunal is sitting in Switzerland. Because of the
transparent, stringent structure of Chapter 12 of the PIL as to
challenges of awards in setting aside or recognition and
enforcement proceedings, the Bundesgericht does not attempt to
promulgate an approach under which it would be entitled to take a
second look at or reserve second thoughts with respect to the
question of whether a given dispute is arbitrable or not, except
where truly international public policy so requires. Rather, the
Bundesgericht addresses this question within the limits set forth
in articles 190, 192 and 194 of the PIL.
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In an action for setting aside a final award, a party can only
rely upon the specific grounds set forth in article 190 (78) of the
PIL. (79) Any alleged non-arbitrability of a controversy may be
raised either under the lack of jurisdiction clause of (2)(b) or
under the public policy clause of (2)(e). page "43" In respect of a
challenge of the award based upon (2)(b), the state court has full
ability to review the alleged lack of jurisdiction. (80) The
Bundesgericht, however, will only review the merits of an award
pertaining to the jurisdiction of a tribunal and it will not
disturb the findings of facts, unless they can be reviewed under
another ground of article 190(2) PIL. As to the arbitrability
question raised in a motion to set aside an award pursuant to the
public policy clause of article 190(2)(e), the Bundesgericht has
repeatedly stated that public policy is only violated if an award
violates fundamental legal principles and is therefore incompatible
with Swiss legal understanding. (81) The present authors are not
aware of any case where the Bundesgericht has actually denied
arbitrability for public policy reasons. It has, nonetheless,
articulated potential public policy restrictions to arbitrability
when it reasoned in Fincantieri: Dans le contexte de la prsente
affaire, l'ordre public ne pourrait avoir de l'importance que s'il
exigeait imprativement que la prtention litigieuse soit soumise une
autorit tatique. (82) Beyond such circumstances, however,
Fincantieri suggests that article 177 of the PIL remains the only
benchmark to determine whether or not a dispute is arbitrable in
Switzerland. These set-aside principles similarly apply, if an
arbitral tribunal has ruled on its jurisdiction in a preliminary
award. The grounds for the annulment of such an award in an action
for setting aside however, are restricted to those listed under
article 190(2)(a) and (b). Therefore, a preliminary award may only
be set aside if the tribunal was not properly constituted, or if
the tribunal erred with respect to its jurisdiction. In addition,
articles 190(3) and 191(1) PIL require that such an action be
initiated within 30 days (83) after notification of the award. Any
failure to adhere to this time limit will lead to the forfeiture of
the right to bring an action to set aside the preliminary award.
(84) page "44" The public policy standard developed under article
190 PIL also applies when it comes to recognizing and enforcing
foreign arbitral awards in Switzerland. (85) Article 194 PIL, which
is concerned with recognition and enforcement of foreign arbitral
awards, states that such procedures are governed by the New York
Convention, which therefore applies erga omnes. Non-arbitrability
can be invoked as a
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ground for the refusal of recognition and enforcement pursuant
to Article V(2)(a) and (b) of the New York Convention under both of
which arbitrability is determined in accordance with the
allencompassing arbitrability notion of article 177 PIL. (86) This,
however, is not the final word on the Swiss approach to
arbitrability. Ultimately, the anything goes concept is reflected
most clearly in the so-called exclusion agreement provision in
Article 192 PIL, pursuant to which the potential judicial review of
an award may be restricted even further. (87) If neither party has
its domicile, habitual residence or business establishment in
Switzerland, the parties are free to waive their right to bring an
action to set aside the award: they can exclude some or all of the
grounds to challenge an award provided for in Article 190(2) PIL.
Consequently, the authority of a Swiss judge to examine the award
in a set-aside proceeding will be limited to the grounds the
parties have not excluded from judicial scrutiny. The exclusion
agreement, however, does not entirely eliminate judicial control
over an award in Switzerland. Its effect is rather that the parties
waive their possibility to have their award set aside with erga
omnes effect. In other words, if parties agree on an exclusion
agreement, the arbitral award becomes foreign in the eyes of a
Swiss judge. So if a party seeks to enforce the award in
Switzerland, the New York Convention of 1958 will apply and a party
resisting recognition and enforcement is still able to invoke the
Articles of the New York Convention to resist recognition and
enforcement. (88) This leads us to one page "45" final observation
on the possible consequences of arbitrating a dispute in
Switzerland. While the Swiss legislator consciously linked
arbitrability to the subject matter of the dispute, it was taken
into account that, although an arbitral award may be honoured in
Switzerland, it may not be enforceable abroad. From this it follows
that arbitration under the liberal concept of the Swiss arbitration
regime is conducted at the risk of the parties. In the words of the
Bundesgericht: En optant pour la rglementation matrielle de
l'arbitrabilit, le lgislateur fdral a choisi une solution qui
n'exclut sans doute pas que des sentences rendues en Suisse ne
seront pas excutes dans tel ou tel pays. Il l'a fait cependant en
toute connaissance de la cause, laissant les parties seules juges
du risque qulles encourent du fait d'une eventuelle
nonreconnaissance de la sentence arbitrale, de sorte qu'il n'est
pas possible de justifier une approche restrictive de
l'arbitrabilit par l'existence de semblable risque. (89) Thus, the
Bundesgericht itself appears to read Switzerland's approach towards
arbitrability in the sense of an anything goes, but judge for
yourself formula.
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(b) Germany Before turning to some remarks of our own regarding
the German concept of arbitrability, let us briefly sketch how
German courts review arbitral awards with respect to this issue. We
start by discussing the degree of judicial scrutiny in the
set-aside context, (90) after which we will look at the standard of
review during the recognition and enforcement stage. Central to the
setting aside of domestic awards is article 1059(2) ZPO, which
lists a limited number of grounds under which an award may be set
aside. Two of these grounds are relevant to the question of
arbitrability: first, (2) No. 2 (a), which is concerned with
whether the subject matter of the dispute at bar is arbitrable
under German law; secondly, (2) No. 2 (b), according to which an
award may be set aside if it is contrary to public policy. (91) The
courts will review with full scrutiny whether or not the respective
subject matter is arbitrable under German law. The standard of
review is quite different, page "46" however, when the courts
examines whether the recognition or enforcement of an award would
lead to a result that would be contrary to public policy. The
Bundesgrichtshof, arguing in a manner strikingly similar to the
reasoning of the Swiss Bundesgericht, has repeatedly held that
public policy is violated only under very limited conditions, (92)
namely, if the application of a foreign rule of law is totally
incompatible with the basic principles of justice underlying German
laws, so that the application of such a foreign rule of law in
Germany would be unbearable. (93) This, of course, also means that
German courts will not investigate whether the arbitral tribunal
made mere errors of judgment or wrong findings of fact. (94) Courts
will recognize and enforce foreign arbitral awards in accordance
with the provisions of article 1061 ZPO, which declares the New
York Convention 1958 applicable. The standard of review a court
will adopt during a procedure to recognise and enforce a foreign
award is substantially similar to that in set aside proceedings.
(95) Arbitrability will be reviewed with full scrutiny, while a
violation of public policy requires that recognition and
enforcement of an award would be incompatible with fundamental
principles of German law.(96)
Thus, one can observe that the standard of judicial review of
the question of arbitrability from a technical point of view, by
which we mean to describe the degree of scrutiny a court will apply
when examining an award as opposed to evaluating the arbitrability
of the given dispute in accordance with German law, is largely
similar to that in the United States and Switzerland. This,
however, cannot be said of the concept of arbitrability as
such.
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As to the statutory concept of arbitrability, the first point to
make is that the German legislature still remains relatively
hesitant with respect to the arbitration of certain disputes.
Although an approach similar to the one under article 177(1) PIL
has been adopted in article 1030(1) ZPO, (97) it is fair to say
that the reform of the Tenth Book of the ZPO in 1998 has been
somewhat half-hearted since, pursuant to article 1030(3) ZPO,
limits on arbitrability imposed by statutes outside of the Tenth
Book of the ZPO, such as, for example, article 28 BrsenG and
article 101 page "47" et seq. ArbGG, (98) remained unaffected.
Arbitrability, therefore, is not only linked to whether or not a
dispute is concerned with economic interests, as the thrust of
article 1030(1) ZPO suggests, but also is a question of subject
matter. This approach by the German legislature can be described as
politically elegant. A number of hot topics were avoided during
parliamentary debate regarding the reform of the Tenth Book of the
ZPO. Reforms with respect to areas of law that escaped the ambit of
article 1030(1) ZPO by virtue of article 1030(3) ZPO were
effectively postponed to a later point of time, allowing for
further changes to be implemented in a gradual and selective
manner. We must not forget, however, that the remaining
restrictions upon the arbitrability of certain subject matters
still warrant deciding against Germany as the situs of arbitration.
Where such restrictions to arbitrability outside the Tenth Book of
the ZPO have already been reduced, as, for example, through the
enactment of the new article 91 GWB, the reasoning supporting such
action seems remarkably similar to the argument of the U.S. Supreme
Court. In finding that public interest in antitrust matters would
be protected by the fact that an arbitral award could be reviewed
during a set aside procedure or at the recognition and enforcement
stage, the German legislature, quite remarkably, reasons along the
lines of the Second Look doctrine. For the time being we will not
comment on this approach to arbitrability, as it will be dealt with
in great detail below. This leaves us with a final remark upon how
the judiciary, within the statutory regime, addresses the issue of
arbitrability. German courts, although generally adopting an
arbitration-friendly attitude, appear to have second thoughts when
faced with arbitration clauses providing for adjudication by
foreign tribunals, as illustrated by the above mentioned judgments
of the Bundesgerichtshof regarding the arbitrability of securities
claims. The justification given for this discrimination against
foreign tribunals is the likelihood that they would probably
disregard German mandatory securities exchange law in cases where
foreign law governs the respective securities transaction. (99)
Despite the fact that such views were articulated only in a limited
number of cases, which seem to establish the exception rather than
the rule, it emphasises that
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German courts are still a step apart from their counterparts in
the United States and Switzerland in so far as trust in the
competence of foreign arbitrators is concerned. (100) In summary,
we can say that the reform of the Tenth Book of the ZPO, without
doubt, has to be lauded as the most significant achievement in
German arbitration law. The unwillingness of the German legislature
to adopt a regime as rigorous and uncompromising as article 177
PIL, however, effectively means that the dust has page "48" not
settled yet with respect to the arbitrability of a number of
issues. Further legislative efforts are needed to expand the scope
of matters that can be submitted to arbitration. The latest
developments in this respect, such as the repeal of the old article
91 GWB, suggest that barriers to arbitration will be gradually torn
down over time. As we expect that the German courts will follow
this trend, we are confident that Germany will become an
increasingly attractive place for international arbitrations. For
the time being, however, one has to bear in mind that a number of
disputes remain to be non-arbitrable so that arbitration in Germany
still has to be approached with caution by parties willing to
arbitrate their conflicts. (c) United States The approach towards
arbitrability in the United States, the so-called Second Look
Doctrine, promulgated by the US Supreme Court in Mitsubishi, has
been fiercely criticised by a number of scholars. There are
essentially three different lines of argument upon which this
criticism has been based in the past: the first line of reasoning
is founded upon concerns that the decision in Mitsubishi paves the
way for a review of the merits of an arbitral award, which would
constitute a backward step not only for US but also international
arbitration, considering the efforts made in countries with modern
arbitration legislation to limit judicial supervision. (101)
Furthermore, it has been argued that the decision in Mitsubishi
would force arbitrators to depart from the parties' express choice
of law, whereby the arbitrators would exercise powers that the
parties never wanted them to have. (102) Finally, contrary to the
first line of argument, US scholars in particular have voiced
concerns that Mitsubishi had slaughtered the Golden Calf of
American capitalism, US antitrust legislation, by entitling private
judges all over the world to adjudicate problems regarding US
antitrust laws, which eventually could lead to an erroneous
application or even non-application of these laws. (103) Much has
been made of the first line of argument, the fear of judicial
scrutiny of the merits of an arbitral award at the enforcement
stage. We, however, think that page "49" these concerns are greatly
overstated. Granted, there is some uncertainty as to what standard
of review a Second Look will entail. (104) The respective court
could interpret Mitsubishi in wide manner, and thus conduct a
thorough
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examination of the reasoning of the award to determine if the
arbitrator properly applied the law. Alternatively, such an
examination could be restricted to a test establishing whether the
arbitrator attempted in good faith to apply the law correctly, or
the review could be merely mechanical in nature, confined only to
the question of whether the arbitrator applied US antitrust laws at
all. These uncertainties, at first glance, appear to support the
concerns many scholars articulate. When one looks at the carefully
developed rulings of the US Supreme Court with regard to
arbitrability and the review of arbitral awards, however, one can
conclude that Justice Blackmun's words of warning were not much
more than a cry in the dark. First of all, because there is a long
line of US decisions that limit the setting aside of domestic
awards. Secondly, case law has produced clear standards for
recognising and enforcing foreign awards. As a consequence of this,
there is far less uncertainty than the critics of Mitsubishi try to
imply. In an action to vacate a domestic award, the powers of a US
court to set aside an award are strictly limited to the grounds set
forth in section 10 of the Federal Arbitration Act (FAA), as well
as to the grounds developed by the case law pertaining to that
section. (105) Under the regime established thereby, as a rule of
thumb, arbitration awards are generally considered to be final and
judicial review is extremely limited. On top of this, it should be
pointed out that section 10 does not include arbitrability as a
possible ground for vacation. Therefore a party intending to
challenge the arbitrability of a dispute would have to show either
that the arbitrators acted in manifest disregard of the law (106)
in rendering the award or it would have to invoke a violation of
public policy. A plea alleging a violation of public policy,
however, is highly unlikely to succeed. This conclusion can be
drawn from the fact that a court's authority to vacate an award
does not include broad judicial power to set aside arbitration
awards against public policy Rather, the court's power is limited
to situations page "50" where the contract as interpreted would
violate some explicit public policy that is well defined and
dominant, and is to be ascertained by reference to the laws and
legal precedents and not from general considerations of supposed
public interest. (107) As to the recognition and enforcement in the
United States, courts will scrutinize foreign awards under the
well-developed standards of Article V(2)(a) and (b) of the New York
Convention 1958. The latter subsection, which is of primary
interest at this point, has, as Article V in general, been narrowly
construed. US courts, adopting a proenforcement bias, will only
deny the enforcement of foreign arbitral awards where enforcement
would violate the forum state's most basic notions of morality and
justice. (108) In addition to this narrow form of review, it has to
be pointed out that the courts have repeatedly refused to review
the merits of awards under the
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provisions of the New York Convention 1958. (109) A manifest
disregard defence, available with respect to domestic awards,
cannot be invoked by a party seeking to frustrate recognition and
enforcement. (110) In summary, one can only conclude that there is
little reason for concern regarding an over-intrusive review of
arbitral awards by US courts. (111) The second contention against
Mitsubishi is related to potential tensions between express choice
of law by the parties and mandatory interventionist norms (lois de
police), rules of law that arbitrators might have or want to
consider in their decision, irrespective of the law that governs
the dispute at bar. (112) The language of page "51" Justice
Blackmun leaves no doubt that the US Supreme Court expects the
arbitrators to take into account US antitrust laws, i.e., mandatory
US laws. (113) It is precisely this notion that seems troublesome
to legal positivists who insist that the arbitrators rigorously
comply with the parties' will, which may even mandate that
fundamental rules of law and principles of transnational public
policy be ignored. With these legal positivists we can agree only
insofar as to the extent that the arbitrator, unlike a state judge,
cannot completely disregard the parties' will. One has to bear in
mind, however, that an international arbitrator is not merely the
obedient servant of the parties, and that it is not his sole duty
to hand down a decision in favour of their interests. (114) On the
contrary, he will have to take into account other interests in
rendering an award, although he cannot be placed on an equal
footing with a state judge, who can be described as the guardian of
the interests of a particular state or legal order. In an
international setting, an orientation is required from an
arbitrator which is not only grounded in a particular legal system,
but also takes notions into consideration that form part of a
transnational ordre public. (115) Hence, the diligent arbitrator
will have to reconcile the will of the parties, from which his
authority originates, with the lois de police. In rendering a
legally correct and enforceable decision, he will have to strike a
balance between the private autonomy of the parties, on the one
hand, and legal norms conflicting with the intentions of the
parties, on the other hand. When the US Supreme Court noted that it
expects the arbitrators to honour US antitrust laws in Mitsubishi,
it required from the arbitrators nothing but to act diligently in
the manner just described. Not only did it thereby define the role
it expects an arbitrator to assume, but it also promoted a
principle which is well recognized in statutes and common law as
well as in international arbitration: the principle of dpeage.
(116) Since the US Supreme Court does not seem to venture beyond
the principle of dpeage in Mitsubishi, we fail to see the
justification for criticizing the Second Look Doctrine on the basis
that it confers powers on the arbitrators inconsistent with the
will of the parties. Such criticism, in truth, is founded upon an
understanding of the function of an arbitrator equivalent to that
of an obedient servant, a fundamental misconception of the role of
an
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arbitrator in our view. page "52" At the heart of the concerns
voiced by scholars supporting the third line of argument against
the decision in Mitsubishi lies the ancient question of the
trustworthiness of arbitrators. This concern, we admit, is not to
be taken lightly. Selecting an arbitrator is one of the most
important steps in an arbitration proceeding, and it has therefore
accurately been referred to as a form of art. (117) One has to bear
in mind, however, that parties to international disputes are
usually highly sophisticated. Thus, it seems likely that they are
capable of choosing individuals as arbitrators who are competent to
hear and adjudicate their dispute. Moreover, in institutional
arbitration, the designated institution will assist the parties in
choosing such an arbitrator. As regards the competence of the
arbitrator so chosen, one can seriously doubt the suggestion that
they are less qualified than judges to handle complex disputes. It
can be assumed that a lawyer of the pedigree likely to be chosen
for an international arbitration will either be a specialist in the
area of law with which the arbitration is concerned, or he will
generally be able to learn enough about the relevant matter in the
course of the proceedings to resolve the questions put to him.
(118) In light of the above, the Second Look Doctrine appears to be
no different from approaches in civil law jurisdictions, such as
the legislative efforts defining arbitrability in Germany and
Switzerland. Naturally, as is always the case under common law, it
will need another decision of the US Supreme Court to end the
current uncertainty with respect to the standard of review of
arbitral awards at the award enforcement stage. Such a precedent,
we are confident to predict, will silence the current critique of
the Second Look Doctrine and thus put an end to all of Cassandra's
cries. (119) Besides, we are sure that most arbitrators who act on
the global scene do not have to fear a Second Look at their awards,
whatever such a review might entail. (d) Final Remarks The
different concepts of arbitrability reviewed illustrate a steady
trend towards a more liberal approach regarding the arbitrability
of disputes that involve a great degree of public interest.
Consequently, the importance of arbitrability as a mechanism of
state to control private adjudication of disputes has declined.
This, page "53" however, does not mean that the respective states
have divested themselves from exercising control over private
dispute resolution. Rather, the influence of the states on
arbitration is increasingly concentrated at the recognition and
enforcement stage of an award. Questions that were formerly
addressed under the heading of arbitrability now appear in the
guise of public policy. We
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therefore have to look to this stage to evaluate whether the
liberal trend with respect to arbitrability can be hailed as a
development that further encourages arbitration, or whether a
perceived new liberalism in truth falls prey to judicial scrutiny
at the award enforcement stage. Given the narrow interpretation of
the public policy defence, combined with the general
pro-enforcement bias adopted in the United States, Switzerland and
Germany, we are convinced that we are not merely dealing with a
shift of the focus of state control over arbitration procedures to
a different stage, that we are not just presented with old wine in
new bottles, but that international arbitration as an institution
has taken yet another significant step forward. page "54"
Associate, Simpson Thacher & Bartlett, London. Dr. iur.,
Associate, Br & Karrer, Zrich. The views represented herein are
strictly the authors' personal views. 1 See infra, section v(3). 2
The label Second Look Doctrine, under which the US approach
regarding the arbitrability of public interest sensitive issues is
most commonly referred to, originates from William Park, National
Law and Commercial Justice: Safeguarding Procedural Integrity in
International Arbitration in (1989) 63 Tul. L Rev. 648. 3 US
courts, including the US Supreme Court, do not use the term
arbitrability in a proper and uniform sense. They speak of
arbitrability not only in relation to the issue of whether a
certain dispute is capable of being arbitrated (objective
arbitrability), but also in relation to the capacity of the parties
to enter into an arbitration agreement (subjective arbitrability)
and with regard to whether a dispute is contained within the scope
of a specific arbitration agreement. See Alan Redfern and Martin
Hunter, Law and Practice of International Commercial Arbitration
(3rd edn., 1999), p. 148 n. 61; William Park, The Arbitrability
Dicta in First Options v. Kaplan in (1996) 12 Arbitration
International 137 at pp. 143144; cf. Edward R. Leahy and Carlos J.
Bianchi, The Changing Face of International Arbitration in (2000)
17 Journal of International Arbitration 19 at pp. 2425. 4 See Wilko
v. Swan, 346 U.S. 427 (1953); Zimmermann v. Continental Airlines,
Inc., 712 F.2d 55 (3d Cir. 1983), cert. denied 104 S.Ct. 699
(1984); N.V. Maatschappij Voor Industriele Waarden v. A.O. Smith
Corp., 532 F.2d 874 (2d Cir. 1976); Cobb v. Lewis, 488 F.2d 41 (5th
Cir. 1974); A&E Plastik Pak Co., Inc. v. Monsanto, Co., 396
F.2d 710 (9th Cir. 1968); American Safety Equip. Corp. v. J.P.
Maguire & Co., 391 F.2d 821 (2d Cir. 1968). 5 See Vimar Seguros
Y Reaseguros, S.A. v. M/V Sky Reefer et al., 515 U.S. 528 (1995);
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991);
Shearson/American Express, Inc. v. McMahon, 428 U.S. 220 (1987);
Mitsubishi Motors Corp. v. Soler Chrysler**
*
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Plymouth, Inc., 473 U.S. 614 (1985); Scherk v. Alberto-Culver
Co. 417 U.S. 506 (1974); Pritzker v. Merrill, Lynch, Pierce, Fenner
& Smith, Inc., 7 F.3d 1110 (3d Cir. 1993); Saturday Evening
Post Co. v. Rumbleseat Press Inc., 816 F.2d 1191 (7th Cir. 1987);
Kamakazi Music Corp. v. Robbins Music Corp., 684 F.2d 228 (2d Cir.
1982); Acquaire v. Canada Dry Bottling, 906 F. Supp. 819 (E.D.N.Y.
1995). 6 417 U.S. 506 (1974). 7 346 U.S. 427 (1953). 8 ibid. at
435. 9 ibid. at 436. 10 It is worthwhile pointing out that the US
Supreme Court, although it noted certain differences between the
provisions of the Securities Act of 1933, under which Wilko had
been brought, and the provisions of the Securities Exchange Act of
1934, did not rely on those differences in reaching a conclusion
opposite to the one in Wilko. Although the US Supreme Court was
critical of the reasoning of Wilko in Scherk, it was not until
Rodrigez De Quijas v. Shearson/American Express, Inc., 109 S.Ct.
1917, 1920 (1989), that Wilko was formally overruled. In reversing
the decision in Wilko, the US Supreme Court held that to the extent
that Wilko rested on suspicion of arbitration as a method of
weakening the protections afforded in the substantive law to
would-be complainants, it has fallen far out of step with our
current strong endorsement of the federal statutes favoring this
method of resolving disputes.
11 12
Scherk v. Alberto-Culver, supra n. 6 at 519. 473 U.S. 614
(1985). 13 ibid. at 629. The issue of whether domestic antitrust
claims are arbitrable has not yet reached the US Supreme Court.
Lower courts, however, have already answered this question in the
affirmative. Kotam Elecs. v. JBL Consumer Prods. Inc., 93 F.3d 724
(11th Cir. 1996), cert. denied, 117 S.Ct. 946 (1997); Coors Brewing
Co. v. Molson Breweries, 51 F.3d 1511 (10th Cir. 1995); GKG Caribe,
Inc. v. Nokia-Mobira, Inc., 725 F. Supp. 109 (D. Puerto Rico 1989);
Cindy's Candle Co., Inc. v. WNS, Inc., 714 F. Supp. 973 (N. D. Ill.
1989). With regard to the general significance of Mitsubishi for
antitrust litigation we should bear in mind Andreas F. Lowenfeld's
remark, that antitrust claims submitted to arbitration almost
exclusively arise in the context of counterclaims among parties to
an agreement once the contractual relationship has gone awry.
Companies squeezed out of the market by rivals or seeking to
prevent a merger among competitors do not resort to arbitration
because they have no contractual relationship with the persons or
entities against which they seek relief: Andreas F. Lowenfeld, The
Mistubishi Case: Another View in (1986) 2 Arbitration International
178 at p. 180.
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Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., supra
n. 5 at 638. 15 482 U.S. 220 (1987). 16 The US Supreme Court
practically opened the floodgates for the arbitration of domestic
cases when it stated, with respect to RICO claims, that although
the holding in Mitsubishi was limited to the international context,
much of its reasoning is equally applicable here (ibid. at 239). 17
ibid. at 229230. 18 ibid. at 239. 19 515 U.S. 528 (1995). 20
Carriage of Goods by Sea Act 1936, 46 U.S.C. 21 Vimar Seguros Y
Reaseguros, S.A. v. M/V Sky Reefer et al., supra n. 5 at 540. 22
One factor influencing the US Supreme Court in its decision to
dismiss speculation regarding the decision of the arbitrators as
premature was that the District Court had retained jurisdiction
over the case. This was categorically stated by Justice O'Connor,
who concurred in the judgment: Vimar Seguros Y Reaseguros, S.A. v.
M/V Sky Reefer et al., supra n. 5 at 542. It is worthwhile noting
at this point that such a retention of jurisdiction is not possible
in Germany or Switzerland. 23 Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., supra n. 5 at 633; Shearson/American
Express, Inc. v. McMahon, supra n. 5 at 239. 24 Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., supra n. 5 at 637 n. 19. 25
The very same cautionary note was re-emphasised in 1995 in the case
of George Fischer Foundry Systems, Inc. v. Adolph H. Hottinger
Maschinenbau GmbH, 55 F.3d 1206 (6th Cir. 1995), where the Court of
Appeals for the Sixth Circuit adopted the US Supreme Court's view
on non-interference with the resolution of US statutory claims in
pending international arbitration proceedings. In this case, a US
company had tried to bring an action for antitrust violations in
the United States while arbitration proceedings with respect to a
licensing dispute were pending in Switzerland. The action was
dismissed because ruling that the claim was non-arbitrable would
involve a premature judicial determination at odds with the US
policy favouring the enforceability of agreements to arbitrate in
crossborder transactions. 26 Intercantonal Concordat of 27 March
1969, on Arbitration, SR (Systematische Sammlung) No. 279. 27
Federal Law of 18 December 1987, on Private International Law, SR
(Systematische Sammlung) No. 291. 28 Article 177: 1 Any dispute
involving an economic interest (vermgensrechtlicher Anspruch) may
be the subject of an arbitration.
14
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2 A state, or an enterprise held by, or an organisation
controlled by a state, which is party to an arbitration agreement,
cannot invoke its own law in order to contest its capacity to
arbitrate or the arbitrability of a dispute covered by the
arbitration agreement.
The concept of objective arbitrability is concerned with the
question of whether a certain issue is capable of being arbitrated.
See supra n. 3. 30 Message of the Swiss Federal Council (Bundesrat)
of 10 November 1982 regarding the Private International Law Act,
Bundesblatt (BBl) 1983, p. 301; Final Report of the Expert
Committee on the Draft Bill for the Private International Law Act,
SSIR 13, Zrich 1979, pp. 4647. The Swiss Federal Tribunal's
(Bundesgericht) notion of what constitutes a dispute involving an
economic interest is very broad. It covers all claims having an
underlying economic purpose or aim (wirtschaftlicher Zweck). If the
underlying purpose or aim is both economic and non-economic
(ideeller Zweck) in nature, one has to evaluate as to which
prevails. BGE 82 II 296; BGE 108 II 77; Andreas Bucher, Die neue
Internationale Schiedsgerichtsbarkeit in der Schweiz (1989), p. 41;
Thomas Ruede and Reimer Hadenfeldt, Schweizerisches
Schiedsgerichtsrecht (2nd edn., 1993), pp. 5556; Robert Briner,
Article 177 in Stephen V. Berti et al. (eds), International
Arbitration in Switzerland (2000), p. 319; BGE 118 II 353, 355356:
La solution retenue, qui ne rserve pas la comptence exclusive des
tribunaux tatiques, contrairement au droit concordataire par
exemple manifeste, au demeurant, l'intention du lgislateur fdral
d'ouvrir largement l'accs l'arbitrage international. 31 Marc
Blessing, The New International Arbitration Law in Switzerland, A
Significant Step Towards Liberalism in (1988) 5 Journal of
International Arbitration 9 at p. 24; see also Frank Vischer,
Artikel 177 in Anton Heini et al. (eds), IPRG-Kommentar (1993), p.
1500; Bucher, supra n. 30 at p. 41; Ruede and Hadenfeldt, supra n.
30 at p. 55; Lalive, Poudret and Reymond, Le droit de l'arbitrage
interne et international en Suisse (1989), p. 305; Walter, Bosch
and Brnimann, Internationale Schiedsgerichtsbarkeit in der Schweiz
(1991), p. 58; Briner, supra n. 30 at p. 317. 32 In contrast to
Art. 177 PIL, Art. 5 of the Concordat provides that any dispute
concerning rights the parties may freely dispose of is capable of
resolution by arbitration, unless the subject matter of the dispute
falls within the exclusive jurisdiction of a state authority by
virtue of mandatory law. Article 5 of the Concordat requires state
courts to examine whether these prerequisites for arbitration are
met based on the applicable conflict of law rules, effectively
adapting a conflict of law method to determine the arbitrability of
a given dispute: Briner, supra n. 30 at pp. 317, 318; Pierre
Lalive, The New Swiss Law on International Arbitration in (1988) 4
Arbitration International 2 at p. 8; Lalive, Poudret and Reymond,
supra n. 31 at
29
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pp. 52 and 305; Bucher, supra n. 30 at p. 40; Ruede and
Hadenfeldt, supra n. 30 at p. 48. The advantages of the approach of
Art. 177 PIL over Art. 5 of the Concordat are threefold: first, the
complicated question as to which law governs the issue of
arbitrability can remain open; secondly, arbitrators and courts are
not required to ascertain whether the dispute in question is within
the free disposal of the parties, and they are not forced to
determine the law that governs this issue; thirdly, Art. 177(1) PIL
does not as such limit arbitrability by deeming disputes
non-arbitrable if their subject matter falls within the exclusive
jurisdiction of specific state courts or administrative
authorities: Marc Blessing, Objective Arbitrability: Antitrust
Disputes, Intellectual Property Disputes in (1996) ASA Special
Series No. 6, 13, at pp. 1516; see Marc Blessing, Arbitrability of
Intellectual Property Disputes in (1996) 12 Arbitration
International 191 at pp. 191194; Antoine Kirry, Arbitrability:
Current Trends in Europe in (1996) 12 Arbitration International 373
at pp. 379382; with regard to the topic see generally Bernard
Hanotiau, What Law Governs the Issue of Arbitrability? in (1996) 12
Arbitration International 391 at pp. 391403; Julian D. M. Lew, The
Law Applicable to the Form and Substance of the Arbitration Clause
in Improving the Efficiency of Arbitration Agreements and Awards:
40 Years of Application of the New York Convention (ICC Congress
Series No. 9, 1999), p. 114 at pp. 136145; Bernard Hanotiau, The
Law Applicable to Arbitrability in Improving the Efficiency of
Arbitration Agreements and Awards: 40 Years of Application of the
New York Convention (ICC Congress Series No. 9, 1999), pp. 146167.
33 See below, section v(1). 34 Dans le contexte de la prsente
affaire, l'ordre public ne pourrait avoir de l'importance que s'il
exigeait imprativement que la prtention litigieuse soit soumise une
autorit tatique: BGE 118 II 353, 357. The Bundesgericht also stated
that the legislator consciously opted for a solution that does not
exclude the possibility that an award rendered in Switzerland would
not be enforced in a foreign state. Instead, it was decided that
risk-assessment with respect to a potential non-recognition of the
arbitral award should be left to the parties: BGE 118 II 353 at
358; see infra, section v(1). 35 supra n. 32 at pp. 373, 378. 36 le
fait que ladite prtention touche l'ordre public ne suffirait pas,
en soi, exclure l'arbitrabilit de la cause; il appartiendrait, dans
ce cas, au Tribunal arbitral de tenir compte de cette circonstance
et, le cas chant, de refuser toute protection juridique la
prtention conteste, sa sentence pouvant alors tre attaque sur ce
point pour le motif prvu l'art. 190 al. 2 let. e LDIP: BGE 118 II
353, 357. 37 Seminal in this respect is case law developed in the
area of competition law. Many contracts with perceived adverse
effects on competition provide not only for arbitration in
Switzerland but also for the application of Swiss law. Because of
the validity of such contractual arrangements, one might be
inclined to think that Switzerland provides a safe haven as far as
potential violations of (usually mandatory) competition laws are
concerned, for example, contraventions of European antitrust laws,
as such laws could
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potentially be evaded by employing a contractual regime that
explicitly excludes the application of European competition law.
This, however, is by no means so: in Ampaglas v. Sofia (Chambre de
Recours du Tribunal Cantonal du Canton de Vaud, Dcision du 28
Octobre 1975, commented in (1981) III Journal des Tribunaux 71),
the Chambre de Recours of the Canton of Vaud held obiter dictum
that an arbitrator is entitled to scrutinise a contract under the
notions of Arts 85 et seq. of the EC Treaty, irrespective of
contractual provisions seeking to limit such a standard of review.
The holding of Ampaglas was confirmed by the Bundesgericht in G. SA
v. V. Spa in 1992 (BGE 118 II 193), where the court held that
arbitral tribunals sitting in Switzerland not only have authority,
but are obliged to scrutinize a contract as to whether it is in
compliance with EC competition laws. The Bundesgericht concluded:
Ni l'art. 85 du Trait, ni son rglement d'application n. 17
n'interdisent au juge national ou l'arbitre saisi d'une cause ayant
pour objet le rglement de comptes qui doit intervenir entre parties
en relation avec l'execution ou l'inexecution d'une convention d'en
examiner la validit. A cet gard, le risque de dcisions
contradictoires n'est pas dterminant; ne l'est pas non plus le
risque de voir l'autorit d'execution ne pas accorder l'exequatur.
L'examen par les arbitres de la conformit des conventions qui sont
soumises la rglementation communautaire s'impose si l'on veut viter
des dcisions qui y seraient contraires. Aussi le Tribunal arbitral
ne pouvait-il rendre sa sentence sans avoir examin au pralable s'il
devait le faire en fonction d'une convention valable ou non: BGE
118 II 193 at 198.
38
Article 177(2) PIL has been lauded as a legislative milestone in
international commercial arbitration: Switzerland was the first
country to explicitly restrict the objections of states and
state-controlled organisations disputing arbitrability by invoking
their own national law. The PIL incorporated those fundamental
ideas which are embodied in a whole series of important arbitral
awards: see Marc Blessing, Introduction to Arbitration: Swiss and
International Perspectives (2000), p. 183. For a sample list of
such awards see Blessing, Objective Arbitrability supra n. 31 at
pp. 9, 2728. 39 A general overview of the characteristics of the
Tenth Book, which applies to both national and international
arbitrations, is provided by Karl-Heinz Bckstiegel, An Introduction
to the New German Arbitration Act Based on the UNCITRAL Model Law
in (1998) 14 Arbitration International 1931; Peter Gottwald and
Jens Adolphsen, Das neue deutsche Schiedsverfahrensrecht in (1998)
36 Deutsches Steuerrecht 1017 and Hubertus W. Labes and Torsten
Lrcher, Das neue Recht der Schiedsgerichtsbarkeit in (1997) 51
Monatsschrift fr Deutsches Recht 420.
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40
Article 1030 [Arbitrability] 1 Any claim involving an economic
interest (vermgensrechtlicher Anspruch) can be the subject of an
arbitration agreement. An arbitration agreement not involving an
economic interest shall have legal effect to the extent that the
parties are entitled to conclude a settlement on the issue. 2 An
arbitration agreement relating to disputes on the existence of a
lease of residential accommodation within Germany shall be null and
void. This does not apply to residential accommodation as specified
in 556a (8) of the Civil Code. 3 Statutory provisions outside this
Book by virtue of which certain disputes may not be submitted to
arbitration, or may be submitted to arbitration only under certain
conditions, remain unaffected.
Article 1030 ZPO, like Art. 177(1) PIL, determines the question
of arbitrability irrespective of the potential applicability in the
dispute of any mandatory provisions of foreign law (for example,
the lex causae) to the contrary: Reinhold Geimer, in Zller,
Zivilprozessordnung 1030, ann. 24 (22nd edn., 2001); Joachim Mnch,
in Mnchener Kommentar zur Zivilprozessordnung 1030, ann. 12 (2nd
edn., 2001). As a matter of fact, Art. 177(1) PIL served as a model
for the current version of art. 1030(1) ZPO: Geimer, op. cit 1030,
ann. 1; Mnch, op. cit 1030, ann. 1. 42 A claim involves economic
interests if it originates from an economic relationship, the claim
is for money, or a monetary remedy is sought. See Gnter Henn,
Schiedsverfahrensrecht (3rd edn., 2000), p. 9; Jens-Peter Lachmann,
Handbuch fr die Schiedsgerichtspraxis (1998), p. 42; Mnch, supra n.
41, 1030 ann. 8. 43 Jan Albers, in Baumbach, Lauterbach, Albers and
Hartmann, Zivilprozessordnung 1030, ann. 2 (59th edn., 2001); Heinz
Thomas, in Thomas and Putzo, Zivilprozessordnung 1030, ann. 2 (23rd
edn., 2001). 44 BT/Drs. 13/5274, 34; see Geimer, supra n. 41, 1030,
ann. 6; Gottwald and Adolphsen, supra n. 39 at p. 1018; Mnch, supra
n. 41, 1030, ann. 1. 45 See ibid., 1030, ann. 2 and 1416; Thomas,
supra n. 43, 1030, ann. 4. 46 Such provisions include, e.g., art.
1822 No. 12 BGB, art. 1908i (1) BGB, art. 1915 (1) BGB, art. 28
Securities Exchange Act (BrsenG), art. 101 et seq. of the Labour
Court Code (ArbGG). 47 See Mnch, supra n. 41, 1030, ann. 3. 48
Under the former version of art. 91(1) GWB a clause compromissoire
concerning disputes within the ambit of the GWB was either void
(sentence 1) or its existence had to be notified to the
41
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Federal Cartel Office in order for the clause to be valid
(sentence 2), unless the arbitral agreement provided that each
party had the alternative right to submit the dispute to a court of
law. A compromis, on the other hand, was generally valid under the
old version of art. 91(2) GWB. 49 Geimer, supra n. 41, 1030, ann.
12; Gottwald and Adolphsen, supra n. 39 at pp. 10181019; Mnch,
supra n. 41, 1030, ann. 19; Karl Heinz Schwab and Gerhard Walter,
Schiedsgerichtsbarkeit (6th edn., 2000), p. 37. 50 BT/Drs. 13/5274,
at 19, 36 and 74. 51 Parties permitted to engage in securities
transactions are defined under art. 53 BrsenG. 52 Schwab and
Walter, supra n. 49 at p. 38. 53 BGH, (1991) 44 NJW 2215 (2215);
BGH, (1987) 40 NJW 3193 (3194); contra Frank Ebbing, Zur
Schiedsfhigkeit von Brsengeschften und Brsentermingeschften in
(1999) 53 Zeitschrift fr Wirtschafts- und Bankrecht 1264 at pp.
12681269; Peter Schlosser, in Stein and Jonas, Zivilprozessordnung
1025, ann. 30a (21st edn., 1994); Schwab and Walter, supra n. 49 at
p. 39 (arguing that securities claims are arbitrable even if an
arbitration agreement provides for the settlement of disputes
before a foreign tribunal under foreign law). 54 BGH, (1991) 44 NJW
2215 (2215); OLG Dsseldorf, (1997) 12 NJW-RR 372 (373). 55 BGH,
supra n. 54. 56 BGH, ibid. 57 There are two kinds of actions
shareholders of a stock corporation (Aktiengesellschaft) may bring
to challenge shareholder resolutions: an action to set aside a
resolution (art. 246 AktG) and an action for the declaration of
nullity of a resolution (art. 249 AktG). The provisions of the AktG
dealing with challenges of shareholder resolutions are applied by
analogy to challenges of resolutions by shareholders of a limited
liability company (Gesellschaft mit beschrnkter Haftung). BGHZ 51,
209 (210); BGHZ 11, 231 (235); Marcus Lutter and Peter Hommelhoff,
GmbH-Gesetz, Anh. 47, ann. 1 (15th edn., 2000).
58
Article 248 Effect of Judgment 1 To the extent that the
resolution is declared invalid by a final judgment, such judgment
shall be binding upon all shareholders as well as members of the
managing board and of the supervisory board, even if they are not
parties to the action. 2
59
See Gregor Bender, Schiedsklagen gegen
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Gesellschafterbeschlsse im Recht der Kapitalgesellschaften nach
der Neuregelung des Schiedsverfahrensrecht in (1998) 51 Der Betrieb
1900 at p. 1904; Gnther M. Bredow, Die Zukunft der Schiedsklausel
fr GmbH-Beschlussmngelklagen in (1996) 34 DStR 1653 at pp.
16541655; Carsten Thomas Ebenroth and Andreas Mller, Anfechtung von
GmbH-Gesellschafterbeschlssen: Effiziente Gestaltung der
Beschlussberprfung in (1992) 45 Der Betrieb 361 at p. 365; Lutter
and Hommelhoff, supra n. 57, Anh. 47, ann. 7778; Schlosser, supra
n. 53, 1025, ann. 27f; Karsten Schmidt, Schiedsklagen gegen
Hauptversammlungsbeschlsse? in (1995) 40 Die Aktiengesellschaft
551; Schwab and Walter, supra n. 49 at pp. 3637; contra Albers,
supra n. 43, 1030, ann. 8; Hartwig Henze, Zur Schiedsfhigkeit von
Gesellschafterbeschlssen im GmbH-Recht in (1988) 17 Zeitschrift fr
Unternehmens- und Gesellschaftsrecht 542 at pp. 549557; Thomas,
supra n. 43, 1030, ann. 2.; Oleg de Lousanoff, Schiedsklauseln in
Gesellschaftsvertrgen in (1994) ASA Special Series No. 8, 89119. 60
BGHZ 132, 278 (286). Although rendered in 1996, and thus prior to
the reform of the Tenth Book of the ZPO, it is important to note
that this decision still represents good law. The Bundesgerichtshof
indicated in its opinion that the Bill for the proposed amendment
of the ZPO stated that the legislature intended to leave the issue
of whether challenges of shareholder resolutions are arbitrable or
not to be resolved by the courts. 61 ibid. at 285286. 62 Article
246 Action to Set Aside 1 2 3 The district court (Landgericht) of
the district in which the corporation is domiciled shall have
exclusive jurisdiction to adjudicate the action. The hearing shall
not be held before the expiration of the one-month period specified
in paragraph (1) hereof. If several actions to set aside are
pending, they shall be joined to be heard and decided together.
Article 249 AktG includes similar language, providing that actions
for a declaration of nullity of a resolution shall be joined to be
heard and decided together.
BGHZ 132, 278 (285286). ibid. at 287. 65 ibid. at 287. 66
Bredow, supra n. 59 at pp. 16541655; Geimer, supra n. 41, 1030,
ann. 9; Lachmann, supra n. 42 at p. 47; Hilmar RaeschkeKessler, The
New German Arbitration Act v. Old German Case Law: Which Case Law
of the Bundesgerichtshof (German Federal64
63
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Supreme Court) is to be Applied to the New Act? in (1998) 14
Arbitration International 47 at p. 53; contra Thomas, supra n. 43,
1030, ann. 2. 67 At this point in time, however, it is difficult to
predict how exactly the procedure before the arbitral tribunal
would have to be tailored to satisfy the Bundesgerichtshof that the
rights of all parties involved in the dispute are adequately
protected. In light of the discussed judgment of the
Bundesgerichtshof, Gnther M. Bredow has proposed a model clause to
govern such a procedure: Bredow, supra n. 59 at p. 1655. 68 Actors,
film-makers, artists, captains and crew-members as defined under
arts 2 and 3 Seaman's Law (SeemannsG). 69 According to a judgment
of the Federal Labour Court (Bundesarbeitsgericht), only members of
those professions mentioned supra n. 68 can consent to the
arbitration of disputes arising out their employment relationships
via the incorporation of the terms of a collective bargaining
agreement. The question of whether an employee is a member of one
of the aforementioned professions is to be determined by a test of
fact: BAG, (1998) 15 NZA 220 (221). 70 In contrast, a review of the
merits of an arbitral award is not possible under art. 1059 ZPO.
Geimer, supra n. 41, 1059, ann. 74. 71 Articles 65, 81 Patents Act
(PatG). 72 BGH, (1984) 39 BB 561 (562); BT/Drs. 13/5274, 35;
Albers, supra n. 43, 1030, ann. 8; Lachmann, supra n. 42 at p. 49;
Thomas, supra n. 43, 1030, ann. 6. 73 See Schlosser, supra n. 53,
1025, ann. 27d; P. Schlosser, Schiedsgerichtsbarkeit und
ffentlichrechtlich beeinflusste Streitgegenstnde in Karl-Heinz
Bckstiegel and Ottoarndt Glossner (eds), Festschrift fr Arthur Blow
(1981), pp. 189, 192193; Schwab and Walter, supra n. 49 at p. 39.
74 See Geimer, supra n. 41, 1030, ann. 14-15; Hilmar
RaeschkeKessler and Klaus Peter Berger, Recht und Praxis des
Schiedsverfahrens (1999), 187190 ann; Schlosser, supra n. 53, 1025,
ann. 27d; Schwab and Walter, supra n. 49 at p. 39. As Reinhold
Geimer points out, however, regard is to be had to the fact that
patents are public in nature and are granted by administrative acts
(Verwaltungsakt). From this it follows that, although arbitrators
can render decisions as to their validity, they are not vested with
the powers to revoke or declare the nullity of patents. Only the
patent office that initially granted the respective patent is
competent in this respect. Thus, the arbitral award can only order
the defendant to instruct the patent office to delete the patent
from the registrar. Such an award, when enforced pursuant to art.
894 ZPO, will create such an instruction per legal fiction and thus
have the effect as if the defendant himself had ordered the patent
office to strike the patent from the registrar. 75 Pursuant to arts
104 and 105 of the Copyrights Act (UrhG), controversies regarding
copyrights can be concentrated at particular courts. 76 See
Raeschke-Kessler and Berger, supra n. 74, ann. 192; see also Ina
Anne Frost, Schiedsgerichtsbarkeit im Bereich des geistigen
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Eigentums nach deutschem und US-amerikanischem Schiedsrecht
(2001). 77 See Geimer, supra n. 41, 1030, ann. 11; Mnch, supra n.
41, 1030, ann. 19; Schwab and Walter, supra n. 49 at p. 37; but see
Raeschke-Kessler and Berger, supra n. 74, ann. 198, who are of the
opinion that proceedings to rescind certain actions of debtors
under art. 129 et seq. InsO are not arbitrable. 78 Article 190: (1)
The award is final from its notification. (2) The award may only be
annulled: a if the sole arbitrator was not properly appointed or if
the arbitral tribunal was not properly consulted; b if the arbitral
tribunal wrongly accepted or declined jurisdiction; c if the
arbitral tribunal's decision went beyond the claims submitted to
it, or failed to decide one of the items of the claim; d if the
principle of equal treatment of the parties or the right of the
parties to be heard was violated; e if the award is incompatible
with public policy. (3) Preliminary awards can be annulled on the
grounds of the above (2) (a) and 2 (b) only; the time limit to
bring an action for annulment runs from the notification of the
preliminary award.
Stephen V. Berti and Anton K. Schnyder, Article 190 in Stephen
V. Berti et al. (eds), International Arbitration in Switzerland
(2000), pp. 569, 577. 80 BGE 117 II 94, 97: The Bundesgericht
reviews with full scrutiny (Kognition) whether jurisdiction has
been affirmed or denied correctly. 81 Seminal is BGE 116 II 634 et
seq.: Erroneous findings of fact or wrongful applications of the
law, without more, are insufficient to justify the annulment of an
arbitral award even when such errors are obvious. The review of the
award by the Bundesgericht is limited to the question as to whether
the award is compatible with ordre public. The evaluation of the
merits of a given claim only violates public policy if it is
contrary to the most fundamental principles of law, thus rendering
it totally incompatible with the legal and moral order. Such
principles include the doctrine of pacta sunt servand