Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
International Arbitration (3rd edition)
Arbitration awards are final, binding and subject to no appeal on the merits. However, awards can be challenged in actions of nullity.
Grounds for nullity are set out in the Arbitration Law, and include:
- Lack of jurisdiction.
- Breach of public policy (normally statutory provisions of mandatory application).
- Failure to grant a party a right of defence.
- Excluding the application of the agreed law governing the merits of the claim.
If the nullity claim is successful, the arbitration award is declared null and void.
A nullity action must be brought within 90 days from the date on which the successful party notifies the other party of the award. A nullity action does not stop enforcement. However, the enforcement of the arbitration award may be suspended by the court if a nullity action includes a request for suspension, based on prima facie strong grounds.
Provisions on challenges to arbitral awards differ substantially depending on whether the arbitration is domestic or international.
Awards in domestic arbitration are generally subject to actions to set aside (recours en annulation). However, the parties can provide for a right to appeal the award, which leads to broader judicial review (Article 1489, CCP). In contrast, awards in international arbitration are subject only to actions to set aside and cannot be appealed (Article 1518, CCP).
Parties to an international arbitration can waive their right to bring an action to set aside an award (Article 1522, CCP). However, the right to bring an action to set aside an award in domestic arbitration is mandatory – that is, the right cannot be renounced – unless the parties have provided for a right to appeal (Article 1491, CCP). Where the right to set aside has been waived in international arbitration, the parties still retain their right to appeal an enforcement order (Article 1522, CCP).
Another difference relates to the effect that an action to set aside or a challenge to an enforcement order may have on the enforcement of an award. In domestic arbitration, enforcement of an award is stayed upon the filing of an appeal or action to set aside, or until the time limit for such an appeal or application has expired, unless the award states that it is provisionally enforceable (Article 1496, CCP). By contrast, Article 1526 of the CCP provides that, in international arbitration, “[n]either an action to set aside an award nor an appeal against an enforcement order shall suspend enforcement of an award”. As a result, an award is immediately enforceable even if it has been challenged, except where the Court of Appeal suspends or adjusts the enforcement to preserve the rights of one of the parties.
For domestic arbitration, the recognition or enforcement of the award must not be contrary to French public policy, and the award can also be set aside if (Article 1492, CCP):
- There are no stated reasons for the award.
- There is no mention of the date of the award.
- There is no indication of the name or signature of the arbitrators.
- The award was not rendered by a majority.
The following are the five possible grounds for setting aside an international award (Article 1520, CCP):
- The arbitral tribunal wrongly upheld or declined jurisdiction.
- The arbitral tribunal was not properly constituted.
- The arbitral tribunal ruled without complying with the mandate conferred upon it.
- Due process was violated.
- Recognition or enforcement of the award would be contrary to French international public policy.
In principle, when the place of arbitration is in France, a party can challenge an award before the Court of Appeal of the place where the award was made (Article 1519, CCP).
Article 34 of Law 101/1987)includes an exhaustive list of the grounds that arbitration proceeding or awards may be challenged. The litigant requesting the annulment of the award, must be file an application before the Court within three months from the date of notification of the concerning party.
The grounds for the challenge are:
1. The party that applies for the annulment proves that:
(a) the arbitration agreement is not valid under the law to which the parties subjected it to or under the Cypriot laws
(b) the notice that was given to him was not valid and could not participate in the appointment of the arbitrator, the proceedings in general and thus he could not make his case.
(c) The award refers to a dispute that is not included in the agreement or contains decision beyond the scope of said agreement.
(d) The composition of the tribunal or the proceedings of the arbitration are in contrast of the arbitration agreement or the Law.
2. The Court deems that:
(a) the dispute is not arbitrable
(b)the arbitral award is in conflict with the public policy of the Republic
Awards cannot be appealed. However, parties can agree in an arbitration agreement that an award will be reviewed by a new tribunal based on a request submitted by either party, as regulated in section 27 of the Arbitration Act.
An award can also be challenged in local courts under section 31 and following of the Arbitration Act upon a motion submitted by either party. The reasons for setting aside an award are the following:
- it is not possible to conclude an arbitration agreement on the subject matter (e.g. disputes arising from consumer contracts);
- the arbitration agreement is not valid for other reasons, or was cancelled or does not apply to the subject matter;
- an arbitrator was not supposed to decide the matter based on the arbitration agreement nor otherwise or he was not qualified to be an arbitrator at all;
- the award was not backed by the majority of the arbitrators;
- a party was not provided the opportunity to present its case;
- the award sentences a party to a remedy that was not requested by the other party or to a remedy that is not possible or allowed under domestic law;
- reasons to reopen civil proceedings have been discovered.
An arbitral award may be challenged only by an action for annulment, based on one of the following grounds: (i) the dispute was not capable of being settled by arbitration; (ii) the arbitral tribunal rendered the decision in the absence of an arbitration clause or agreement to arbitrate, or pursuant to an arbitration clause or agreement to arbitrate that was void or ineffective; (iii) the arbitral tribunal was not constituted in accordance with the arbitral agreement; (iv) the party who was absent at the time of the closing pleadings had not been properly summoned for the day when such pleadings took place; (v) the award was passed after the expiry of the term set by law, or the agreement of the parties for the conclusion of the arbitration proceedings; (vi) the arbitral tribunal exceeded its authority; (vii) the arbitral award does not contain the grounds, the order of the tribunal, does not mention the date and place where it was made, or is not signed by the arbitrators; (viii) the arbitral award is against public policy; or (ix) after the Arbitral Award was rendered, the Constitutional Court decided upon a plea of non-constitutionality which was raised during the arbitral proceedings, and declared unconstitutional the law, Government Ordinance or legal provision of a law or of a Government Ordinance subject to the plea of non-constitutionality.
The action for annulment can be brought before the court of appeal in the circumscription of which the arbitration took place. The decision of the court may be appealed to a higher court (usually, the High Court of Cassation and Justice).
It is not possible to challenge the award on merits by an appeal to the court.
The only way in which a party may challenge an award before the court is by requesting that the court set aside a domestic award. Foreign awards may be challenged in the course of procedure for their recognition.
Under Serbian law, the award may be set aside for following reasons: (i) if the arbitration agreement is invalid under the law applicable to its validity; (ii) if the party against whom the award was rendered was not properly informed on the arbitration proceedings, appointment of arbitrator, or was prevented from making its arguments for other reasons; (iii) if the arbitral tribunal decided on matters beyond the scope of the arbitration agreement; (iv) if the composition of the arbitral tribunal or the conduct of arbitration proceedings were in contradiction to the arbitration agreement or the applicable arbitration rules of a particular arbitration institution; (v) if the arbitral award is based on a false statement of a witness or expert, on a falsified document or if the award was made due to a criminal offense of a party or on arbitrator (provided that these reasons are proven by a final court judgment); (vi) if under Serbian law, the subject matter of the award is not arbitrable; (vii) if the decision is contrary to the public policy of Serbia.
Under Article 57 of the Arbitration Law, an arbitral award is legally effective from the date on which it is issued and is not subject to appeal.
However, parties may apply to the intermediate people’s court at the place where the arbitration institution resides to set aside an award. Under the Arbitration Law and Civil Procedure Law, the grounds for setting aside an arbitral award and refusing to enforce an award are identical. Please refer to Question 31 above for grounds for setting aside a domestic and foreign-related award respectively.
According to Article 59 of the Arbitration Law, a party that wishes to apply for setting aside the arbitration award shall submit such application within six months from the date of receipt of the award.
a. The proceedings can be challenged in the local courts on grounds like art. V of the New York Convention.
The challenge must be filed no later than three months after the award has been delivered.
Polish arbitration law does not provide for an appeal on merits from an arbitral award to a state court. The parties may agree, however, that the proceeding before the arbitral tribunal will include more than one instance. In the judgment of 20 March 2015 (Case II CSK 352/14), the Supreme Court of Poland held that if the parties agreed that the proceeding before the arbitral tribunal was to include more than one instance (Article 1205 §2 CPC), then all the rules of arbitral proceedings applied equally to the appellate arbitration proceedings.
On the other hand, the parties can challenge a final arbitral award by filing a petition to set aside the award with the competent court of appeal within two months after service of the award. The court shall set aside an award if:
1) there was no arbitration agreement, or the arbitration agreement is invalid, ineffective or no longer in force under the provisions of applicable law;
2) the party was not given proper notice of the appointment of an arbitrator or the proceeding before the arbitral tribunal or was otherwise deprived of the ability to defend its rights before the arbitral tribunal;
3) the arbitral award deals with a dispute not covered by the arbitration agreement or exceeds the scope of the arbitration agreement; however, if the decision on matters covered by the arbitration agreement is separable from the decision on matters not covered by the arbitration agreement or exceeding the scope thereof, then the award may be set aside only with regard to the matters not covered by the arbitration agreement or exceeding the scope thereof; exceeding the scope of the arbitration agreement cannot constitute grounds for vacating an award, if a party who participated in the proceeding failed to assert a plea against hearing the claims exceeding the scope of the arbitration agreement;
4) the requirements with regard to the composition of the arbitral tribunal or fundamental rules of procedure before such tribunal, arising under the law or specified by the parties, were not observed;
5) the award was obtained by means of an offence or the award was issued on the basis of a forged or altered document; or
6) a legally final court judgment was issued in the same matter between the same parties.
The above grounds are considered by the court only at the party’s motion. However, the award will also be set aside if:
1) the dispute lacks arbitrability;
2) recognition or enforcement of the award would be contrary to fundamental principles of the legal order of the Republic of Poland (public policy clause); or
3) the award deprives a consumer of the protection afforded to him by mandatory provisions of law governing the contract, and if the law governing the contract is the law chosen by the parties, the protection afforded to the consumer by mandatory provisions of law that would be applicable in the absence of a choice of law.
These grounds are considered by the court ex officio.
The judgment of the court of appeal is subject to a cassation appeal to the Supreme Court.
In Switzerland an arbitral award is, in principle, deemed final, which is why appeals against arbitral awards do – as a rule – not have suspensive effect. In practice, however, when an appeal is filed, the parties are nevertheless asked not to commence enforcement proceedings. Both in international and domestic arbitration an arbitral award, whether final or partial, may only be appealed to the Swiss Federal Tribunal (art. 191 PILA and art. 389 para 1 CPC), i.e. the principle of one instance of appeals applies, such instance being the highest court in the country. In domestic arbitration, pursuant to art. 390 para 1 CPC, the parties are given the option to agree that the arbitral award shall first be appealed to the cantonal high court at the seat of arbitration.
Swiss Law provides for only a very restricted number of grounds on which arbitral awards may be appealed. In international arbitration the grounds for appeal provided by art. 190 para 2 PILA are: (i) the irregular composition of the arbitral tribunal, (ii) an incorrect decision on jurisdiction, (iii) the fact that the arbitral tribunal rendered a decision beyond the claims made by the parties or did not answer all claims raised, (iv) the violation of equal treatment of the parties or their right to be heard, and (v) a violation of the (procedural or substantive) principles of public policy.
In domestic arbitration arbitral awards may be appealed on two additional grounds pursuant to art. 393 CPC, namely (i) if the arbitral award is arbitrary in its result due to it being based on findings that are obviously contrary to the facts as stated in the case file or because it constitutes an obvious violation of law or equity, and (ii) if the costs and compensation fixed by the arbitral tribunal are obviously excessive.
Appeals to the Swiss Federal Tribunal are governed by the Federal Tribunal Act (the CPC governs the procedure for appeals to the cantonal court if so chosen by the parties in domestic arbitration). In both proceedings the appeal must be filed in writing within 30 days of notification of the award.
Chances of success with appeals against arbitral awards are remote. Based on available statistics, the chances of success to appeal an arbitral award on all available grounds other than jurisdiction range around 7%, while appeals on grounds of lack of jurisdiction have a statistical chance of success of about 10%. In addition, appeals proceedings are conducted rather swiftly. A decision of the Swiss Federal Tribunal can generally be expected to be rendered within 6 to 8 months following the lodging of the appeal.
UAE - Federal
Should a party wish to nullify an arbitral award, it may only do so by ‘lodging an action of nullity with the Court’ (Article 53) or by objecting during the process for recognising an arbitral award.
The Process for Challenging
Pursuant to Article 54 of the UAE Arbitration Law, a party has 30 days, from the date of notification of the arbitral award to apply to nullify the arbitral award.
The Court may, at the request of a party, stay enforcement proceedings for a period of up to 60 days in order to provide the Arbitral Tribunal with the opportunity to address any possible grounds for award nullification.
The Grounds for Challenging
The party which intends the arbitral award to be nullified, pursuant to Article 53 of the UAE Arbitration Law, can do so on the following grounds:
a. there was no arbitration agreement, or such agreement was null and void or forfeited pursuant the law applied by the parties or the UAE Arbitration Law, where no law was chosen;
b. a party to the arbitration agreement was incapacitated or lacked capacity, at the time of its conclusion;
c. a party had no legal capacity to be part of the arbitration;
d. a party was unable to submit his statement of defence due to having been given improper notice of the appointment of an arbitrator or arbitral proceedings, or by reason of a failure on behalf of the Tribunal, or for any reasons outside the control the party;
e. the arbitral award did not apply the law agreed by the parties, to the subject of the dispute;
f. the appointment and/or composition of the Arbitral Tribunal was contrary to the UAE Arbitration Law or the agreement of the parties;
g. the arbitral process is void in such a way that it influenced the arbitral award, or the arbitral award was issued after the deadline for issuing the arbitral award; and
h. the arbitral award addressed matters not covered by the arbitration agreement, or beyond the scope of the arbitration, unless such matters can be separated from the arbitral award.
Should a dissatisfied party wish to appeal Court’ decision on nullification of an arbitral award, it may do so through the Court of Cassation.
UAE - Free-zone Jurisdictions
The DIFC Arbitration Law (Article 41) and the ADGM Regulations (Regulation 53) set out the grounds on which an application for setting aside award may be made.
An arbitral award may be set aside under the DIFC Arbitration Law where the Court finds that:
‘the subject-matter of the dispute is not capable of settlement by arbitration under DIFC Law;
the dispute is expressly referred to a different body or tribunal for resolution under this Law or any mandatory provision of DIFC Law; or
the award is in conflict with the public policy of the UAE.
The first and last requirement listed above are essentially the same as in Article V of the New York Convention.
An arbitral award may be set aside under the ADGM Regulations only where the Court of First Instance finds that:
‘the subject-matter of the dispute is not capable of settlement by arbitration under the Laws of the ADGM’; or
the recognition or enforcement of the award would be contrary to the public policy of the UAE’.
The above grounds are essentially the same as those on which a foreign arbitral award may be refused recognition and enforcement under Article V of the New York Convention.
Under the 1996 Act, an award may be challenged (a) as to its substantive jurisdiction (s.67(1)); or (b) due to the existence of a serious irregularity affecting the tribunal, the proceedings or the award (s.68). Unless otherwise agreed by the parties, the parties can appeal to the court on a question of law arising out of an award made in the proceedings (s.69(1)). Appealing under s.69 is difficult and succeeds only in rare circumstances. The grounds for challenge and appeal are stated in these sections and the procedure is outlined in the Civil Procedure Rules.
Arbitration awards are not subject to appeal. An action to nullify an arbitration award may only be admitted in the following cases:
1. if no arbitration agreement exists, or if such agreement is void, voidable, or terminated due to expiry of its term;
2. if either party, at the time of concluding the arbitration agreement, lacks legal capacity, pursuant to the law governing his/her capacity;
3. if either arbitration party fails to present his defense due to lack of proper notification of the appointment of an arbitrator or of the arbitration proceedings or for any other reason beyond his/her control;
4. if the arbitration award excludes the application of any rules which the parties to arbitration agree to apply to the subject matter of the dispute;
5. if the composition of the arbitration tribunal or the appointment of the arbitrators is carried out in a manner violating the Arbitration Law or the agreement of the parties;
6. if the arbitration award rules on matters not included in the arbitration agreement (nevertheless, if parts of the award relating to matters subject to arbitration can be separated from those not subject thereto, then nullification shall apply only to parts not subject to arbitration); or
7. if the arbitration tribunal fails to observe conditions required for the award in a manner affecting its substance, or if the award is based on void arbitration proceedings that affect it.
The competent court considering the nullification action shall, on its own initiative, nullify the award if it violates the provisions of Sharia and public policy in the KSA or the agreement of the arbitration parties, or if the subject matter of the dispute cannot be referred to arbitration under this Law.
The FAA provides the grounds and procedures for vacating or setting aside an arbitration award. Under the FAA, an award may be set aside if (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption by the arbitrators; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing for sufficient cause, in refusing to hear pertinent and material evidence, or any other misbehavior which prejudiced any party’s rights; or (4) the arbitrators exceeded their powers or so imperfectly executed them that a mutual, final, and definite award was not made. 9 U.S.C. § 10(a).
Although many state arbitration statutes mirror the FAA grounds, some state courts have held that such statutory grounds are not exclusive. For instance, certain states, such as Connecticut, allow awards to be set aside for public policy reasons. See Garrity v. McCaskey, 223 Conn. 1, 6, 612 A.2d 742, 745 (1992).
Within three months after the receipt of the arbitral award, a party is entitled to file an action that the award may be set aside based on one (or more) of the following grounds:
- a valid arbitration agreement does not exist, or the arbitral tribunal has denied its jurisdiction despite the existence of a valid arbitration agreement, or a party was under an incapacity to conclude a valid arbitration agreement under the law governing its personal status;
- a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was for other reasons unable to present its case;
- the award deals with a dispute not covered by the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or the plea of the parties for legal protection; if the default concerns only a part of the award that can be separated, only that part of the award shall be set aside;
- the composition or constitution of the arbitral tribunal was not in accordance with a provision of this chapter or with an admissible agreement of the parties;
- the arbitral proceedings were conducted in a manner that conflicts with the fundamental values of the Austrian legal system (ordre public);
- the requirements according to which a court judgment can be appealed by an action for revision under section 530 paragraph (1) numbers 1 – 5 have been met; [note that the grounds referred to here all relate to the circumstance that the decision was based on a fraudulent action or forged document or a criminal verdict that has since been reversed [note that the three-month time period to file the action for setting aside does not apply to this ground];
- the subject-matter of the dispute is not arbitrable under Austrian law;
- the arbitral award conflicts with the fundamental values of the Austrian legal system (ordre public).
Additional grounds are available to set aside an arbitral award rendered in arbitral proceedings in which either a consumer or an employee was involved.
The action to set aside an award is to be filed with the Austrian Supreme Court, which will decide as first and last instance, i.e. without possibility of a further appeal.
The law does not allow an appeal to be lodged against an arbitral award. However, a party to a domestic arbitration may within three (3) months from the date of the award apply to a High Court to have an award set aside on grounds that the: (i) tribunal exceeded its mandate or jurisdiction; (ii) tribunal was guilty of misconduct; or (iii) award was improperly procured. See sections 29-30, the ACA. Misconduct entails a wide range of violations such as breach of fair hearing, corruption, taking of bribes, partiality of the arbitrators, failure to comply with the terms, express or implied, of the arbitration agreement. See A. Savoia Ltd. v. Sonubi (2000) 12 NWLR (Pt. 682) 539. In fact, challenges regarding the misconduct of the tribunal or an arbitrator are open to a wide range of interpretations and parties are generally able to allege several grounds of challenge. Stabilini Visinoni Ltd. v. Mallinson & Partners Ltd. (2014) LPELR-23090(CA).
In addition to the foregoing grounds, arbitral awards delivered in international arbitrations may be challenged or set aside on the following additional grounds: (i) incapacity of a party to the arbitration agreement; (ii) invalidity of the arbitration agreement under the law which the parties have indicated should apply under the laws of Nigeria; (iii) the party seeking to set aside the award is not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; (iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration under the laws of Nigeria; (v) the award contains decisions on matters which are beyond the scope of the submission to arbitration, (however if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced); (vi) the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties; (vii) there is no agreement between the parties that the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the law of the country where the arbitration took place; or (viii) that the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made; or (ix) that the recognition or enforcement of the award is against public policy of Nigeria. See sections 48 and 52 of the ACA.
A party that is aggrieved by an arbitral award can apply to a High Court usually by way of an originating motion seeking to set aside the award within three months of the date of the award or after the correction of the award. The High Court may set aside the award or part of the award if the party making the application proves that the award or a part of it contains decisions on matters which were beyond the scope of the submission to arbitration. Where an application to set aside an award is brought, the High Court may, at the request of a party, suspend its proceedings for a period that it deems appropriate so that the arbitral tribunal can resume the arbitral proceedings or take other actions to eliminate the grounds for the setting aside of the award.
Unless otherwise agreed by the parties, an award can only be challenged by an application for setting aside the award according to article 46 of LAV.
Article 46 provides a restricted set of situations in which the award can be set aside, e.g. when one of the parties was under some incapacity; when there was a violation of fundamental principles referred in article 30 of LAV; when the award dealt with a dispute that cannot be considered included in the arbitration agreement; when the Tribunal was not established according the parties’ agreement; when the Tribunal condemned in amount in excess of what was claimed or dealt with issues that it shouldn’t have dealt; when the subject-matter of the dispute cannot be decided by arbitration or when the award is in conflict with the principles of public policy.
The application must be filed at the Portuguese Appeal Court and must be accompanied by a certified copy of the award or a translation into Portuguese of the award if it was granted by a tribunal seated abroad. The application must be filed within 60 days from the date on which the party received the notification of such award.
An arbitral award cannot be appealed but may be challenged before local courts with the grounds for challenge being identical to those provided in the New York Convention. An application for setting aside an award should be made within three months from the date on which the party making the application received an award. The procedure is similar to that of the recognition and enforcement of awards (see question 31 above). Upon request of a party, the court may suspend the annulment proceedings to let the tribunal resume the arbitration proceedings and remedy the grounds for challenge.
Arbitral awards cannot be appealed, as such. The only recourse against an award is to apply to the High Court to have it set aside on one of the grounds set out on Article 34 of the Model Law. Application to set aside may be made in a summary manner. Any application must be made within three months of the applicant seeking set aside having received the award. There is no appeal from the decision of the High Court.
Arbitration awards may not be appealed to the local courts unless otherwise agreed by the parties. The award may only be challenged on the grounds that it is invalid. An exhaustive list of grounds for invalidity is provided in section 43 of the Arbitration Act. The list is in accordance with Article V of the New York Convention. Examples of reasons for invalidity are that the award falls outside the scope of the tribunal’s jurisdiction, or that the composition of the tribunal was incorrect.
A claim that an arbitration award is invalid must be made in the form of a lawsuit before the courts, and the lawsuit must be filed within three months from the day the party received the arbitral award.
Absent different agreements of the parties, the German arbitration law does not provide for an appeal process. The only recourse following an arbitral award is to commence setting-aside proceedings.
Section 1059 ZPO provides for the details of the setting-aside proceedings for a domestic arbitral award, i.e. an award rendered by an arbitral tribunal with its seat in Germany. These proceedings have to be initiated within three months from the date of service of the arbitral award.
The list of grounds to set aside a domestic arbitral award mirrors the grounds for the refusal of recognition or end-enforcement of foreign awards under the New York Conventions. The grounds listed in section 1059 ZPO include in particular:
- The violation of due process (section 1059 (2) no. 1 lit. a) ZPO);
- violation of the parties' arbitration agreement (section 1059 (2) no. 1 lit. b) ZPO), which does not only include the agreement to arbitrate but also agreements of the parties during the arbitration, e.g. with respect to the taking of evidence;
- The arbitral tribunal exceeding its competence (section 1059 (2) no. 1 lit. c.) ZPO); and
- The violation of the policy (section 1059 (2) no. 2 lit. b. ZPO).
Other additional circumstances may not be taken into account by the respective district court. In particular, there is no review of the arbitral award on substance.
In terms of a decision, the district court can either set aside the arbitral award or refer the proceedings back to the arbitral tribunal where such option would be appropriate and requested (section 1059 (4) ZPO). Where possible, the dispute is referred back to the initial arbitral tribunal if the award is set aside, in which case the proceedings will continue before the original arbitral tribunal. Whether such option is available depends also on the circumstances and reasons of the decision to set aside the original award. E.g., if the decision is based on lack of due process or the arbitral tribunal exceeding its competence, continuing before the original arbitral tribunal may not be a reasonable option. In such case the arbitral proceedings must be repeated and started from the very beginning.
The court of appeals (Oberlandesgericht) is the competent court to decide on the setting aside proceedings. Its decision can be appealed to the Federal High Court (Bundesgerichtshof). Such appeal is limited to the reasons listed in section 1062 (1), i.e. issues regarding the admissibility of arbitration proceedings, jurisdiction of the arbitral tribunal, as well as the reasons for setting aside the award. Outside these reasons, the decision of the court is binding and cannot be appealed.
The arbitral awards issued by arbitral tribunals may not be appealed before Croatian national courts. As a default rule, the arbitral award has the force of a final judgment and there are no appellate proceedings against it. However, the parties may agree on the appeal procedure before an arbitral tribunal of a higher instance.
An arbitral award can, however, be contested before Croatian national courts in proceedings for the setting aside of the arbitral award.
Croatian national court may set aside the arbitral award if the party making such an application demonstrates that:
a) There was no arbitration agreement or the arbitration agreement was not valid;
b) A party to the arbitration agreement was incapable of concluding the arbitration agreement, or, was incapable of being a party to an arbitration dispute, or, a party was not duly represented;
c) The party making the application for the setting aside of the arbitral award was not given proper notice of the commencement of arbitral proceedings or was otherwise unable to present its case before the arbitral tribunal;
d) The arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission for arbitration, or contains decisions on matters beyond the scope of the submission for arbitration;
e) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the Croatian Arbitration Act or agreement of the parties that could have influenced the content of the arbitral award;
f) The arbitral award has no reasons or has not been signed.
If an application for the setting aside of the arbitral award is made, the Croatian national court examines ex officio the existence of the following reasons that are grounds for the setting aside of the arbitral award:
a) If the subject matter of the dispute is arbitrable under Croatian law and
b) If the arbitral award is conflict with the Croatian public order.
The parties may also agree that the application for the setting aside of the arbitral award may be submitted on the grounds that the party applying for the setting aside discovered new facts or the opportunity to present new evidence on the basis of which an award more favourable to it would have been made if these facts were known or evidence produced during the arbitral proceedings.
International arbitration proceedings and awards may not be appeal under Chilean Law, because it is not possible to review the merits of a case. As stated in Article 34 of the ICAL, the motion to dismiss (annulment) is the only recourse that parties may try against an arbitral award. Such recourse must be presented before the Court of Appeals within three months since the notification of the final award.
Accordingly, Article 33(2) of the Rules of International Commercial Arbitration of the CAM Santiago states that the arbitral award “will be final, not appealable and binding upon the parties”.
Under the ADR of 2004, both domestic and foreign arbitral awards cannot be appealed with the regular courts. The law limits the regular court’s intervention over arbitral awards to confirmation, enforcement and recognition.
It is important to note that it is the decision of the Regional Trial Court confirming, vacating, setting aside, modifying or correcting an arbitral award that may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. The losing party who appeals from the judgment of the court confirming an arbitral award be shall required by the appellate court to post a counterbond executed in favor of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court. [Section 46. ADR Act of 2004]
In domestic arbitration, parties are not allowed to take an appeal against the arbitral award before the State Courts (article 895 para. 1 GrCCP). The arbitration agreement may provide for an appeal to be taken before other arbitrators (article 895 para. 1 GrCCP), however this is obviously something different.
According to article 897 GrCCP, an arbitral award rendered in domestic arbitration may be set aside, in whole or in part, only by virtue of a court decision on the following grounds: (1) if the arbitration agreement is null and void; (2) if the award was rendered after the arbitration agreement had ceased to exist; (3) if the arbitrators that rendered the award were appointed in violation of the provisions of the arbitration agreement, or of the law, or if the parties had already revoked them, or if they rendered the award despite the fact that they had already been successfully challenged; (4) if the arbitrators that rendered the award acted in excess of the powers vested in them by the arbitration agreement or by the law; (5) if the provisions of paragraph 2 of article 886 GrCCP [regarding the principle of equal treatment], or of articles 891 GrCCP [regarding the majority vote] and 892 GrCCP [regarding the form of the award] were violated; (6) if the award is contrary to public policy rules or to morality; (7) if the award is incomprehensible or contains contradictory dicta; (8) if there are grounds for the reopening of proceedings pursuant to article 544 GrCCP [this is an extraordinary legal remedy provided against final State Court decisions premised upon grounds pertaining to vast procedural irregularities as well as fraudulent conduct].
Said request for setting aside the award is adjudicated by the Court of Appeals in the district of which the award was made (article 898 GrCCP). The procedure applicable is that provided for special property disputes pursuant to articles 614 et seq. GrCCP. Against the decision rendered by the Court of Appeals the aggrieved party may file a petition for cassation with the Supreme Court.
The request for setting aside the award shall be filed within three months from the date the award was notified to the party. Both this term as well as the filing of the request per se do not prevent the enforcement of the award. Following the filing said competent court may order the stay of the enforcement proceedings, with or without a guarantee, until a final decision is issued, in case it deems that a ground pleaded is likely to succeed.
Not only the parties to the arbitration proceedings but also third parties are allowed to challenge the arbitral award assuming that they have legal standing i.e. under the condition that they are bound by its res judicata effect (see Answer to Question 23 above).
Furthermore, in domestic arbitration article 901 GrCCP provides for an additional remedy against the arbitral award, namely the action seeking a binding declaration that the award in non-existent on the following grounds: (a) that an arbitration agreement was never concluded, (b) that the subject matter of the dispute resolved by the award was non-arbitrable, and, (c) that the award was rendered against a non-existent respondent.
This declaratory action is not subject to any time limitation. Apart from that, what has already been stated as regards the request for setting aside the award as to the competent court (CoA), the procedure (special property disputes), the available legal remedies against the decision (petition for cassation before the Supreme Court) and the fact that the enforcement of the challenged award is not ipso jure stayed, applies pursuant to article 901 para. 2 GrCCP also to the declaratory action at hand.
It is noted that the non-existence of the award on said grounds may also be pleaded by means of an affirmative defense. This is due to the fact that the award.
As regards international commercial arbitral proceedings having their seat in Greece, article 34 L. 2735/1999 incorporates the provisions of Model Law as to the grounds for setting aside the award. The distinction between grounds that must be pleaded by the plaintiff and grounds that are considered ipso jure is thus preserved. As it is well known, said grounds are almost identical to those provided under article V of the New York Convention. That being said, in legal literature it is argued that their interpretation may differ given that the legal consequences pegged to the annulment of the award are different compared to the legal consequences pegged to the refusal of its recognition and enforcement in a specific country.
The same procedural rules as to the request for setting aside an award rendered in domestic arbitral proceedings apply with regard to the competent court (CoA), the legal standing (parties to the arbitration proceedings and third parties bound by the res judicata effect of the award), the procedure (special property disputes), the available legal remedies against the decision (petition for cassation before the Supreme Court), the time limitation for filing the request (three months) and the fact that the enforcement of the challenged award is not ipso jure stayed.
It is disputed whether third parties which are not bound by the res judicata effect of the Award (see Answer to Question 23 above) but are nevertheless adversely affected by it may bring a third-party-challenge against parallel to their right to challenge the award on said specific grounds. The question is posed both in domestic as well as in international commercial arbitral proceedings. A third-party-challenge is a specific remedy provided for under article 583 GrCCP against judicial decisions or extrajudicial acts which adversely affect the interest of third parties which were not heard in the process. Many commentators answer this question in the affirmative.
See also Answer to Question 36 below.