Interpretation of Arbitral Agreements by German Courts - EIAR - Volume 1 - Issue 1
Sebastian D. Müller - lawyer (Rechtsanwalt) in the Frankfurt office of King & Spalding LLP.
Originally from European International Arbitration Review (EIAR)
The effective conduct of arbitration proceedings generally presupposes that the involved states do recognise the parties’ choice to arbitrate. Thus, even if one considers international arbitration as a self-contained legal system, the option to enforce the arbitration agreement and/or the arbitration award with the support of the state courts is arguably the distinguishing factor which makes arbitration a binding dispute resolution process. Without the blessing of the national legislator that empowers the competent court to grant the necessary support, if required, arbitration would depend on the parties’ voluntary compliance and therefore effectively remain a toothless tiger.1
The decision of the German Federal Court of Justice (BGH) dated 14 July 2011,2 which is the subject matter of this case comment, deals with the criteria applied under German law to enforce an arbitration agreement. The decision is important because it further relaxed the requirements that the German courts will have to apply when considering an ambiguously drafted arbitration agreement. In short, the BGH is willing to go to great lengths to ensure that such arbitration agreements can be enforced under the 1998 German arbitration law, which is based on the UNCITRAL Model Law. The court applies various interpretation techniques in order to salvage an arbitration agreement, as will be discussed below.
II. The Decision of the BGH and Its Background In its decision dated 14 July 2011, the BGH had to determine the validity of an arbitration clause in a sale and purchase agreement (the SPA) relating to shares in a law office. The BGH heard this matter on appeal from the Higher Regional Court of Cologne, which had earlier confirmed the validity of the arbitration agreement when deciding on a challenge of a partial award that confirmed jurisdiction.3