Originally from The American Review of International Arbitration

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ABSTRACT

The German Federal Supreme Court (BGH) held in its 2022 decision KZB 75/21 that Germany’s state courts would henceforth be “allowed and obliged” to give a full review on the merits of domestic arbitral awards challenged on antitrust grounds. This decision likely signals a “maximalist” approach, which entails minimal judicial deference. In the same year, the US Supreme Court held in Badgerow v. Walters that parties seeking a federal court to review domestic arbitral awards must establish subject matter jurisdiction other than federal question jurisdiction even if the underlying dispute revolves around federal law. This paper argues that when it comes to arbitral awards involving antitrust disputes, Badgerow does not necessarily represent a “maximalist” decision like the one in KZB 75/21, although the heightened jurisdictional requirements of Badgerow would likely expand the opportunities for state courts to review arbitral awards. This is because the judicial review of arbitral awards on antitrust grounds in the United States has traditionally been justified on the basis of “public policy” enshrined in the New York Convention. However, the strict statutory divide between domestic arbitration and international arbitration in the Federal Arbitration Act and the lack of uniformity among state courts and federal district courts over the interpretation and implementation of public policy would most likely permit substantial discretion among state courts whether to conduct a maximalist review on the merits of the arbitral awards based on antitrust claims.

I.    INTRODUCTION: PARALLEL LIVES

In September 2022, the German Federal Supreme Court (BGH) held in its KZB 75/21 decision that state courts in Germany would henceforth be “allowed and obliged to” carry out a full review on the merits of domestic arbitral awards that are challenged on antitrust grounds.

Prior to this decision, German state courts were generally forbidden to fully review an arbitral award on its merits under both the New York Convention and Section 1059 of the German Procedural Code (ZPO).  Commentators note that this 2022 decision by the BGH reflects a maximalist approach in Germany,  as opposed to the minimalist approach adopted by the French, Italian, and several other German courts.  “Maximalist” here means that a court will exercise the maximum amount of discretion over an arbitral award, by fully reviewing its merits (i.e., against the Révision au fond) on both factual and legal grounds, while “minimalist” refers to judicial deference to the finality of an arbitral award, reviewing only obvious violations of competition law.  These are the two major competing approaches of judicial review in the arbitration of antitrust disputes in Europe.

When it comes to confirming or vacating an arbitral award on antitrust grounds, this rivalry between the maximalist and the minimalist approaches becomes a critical issue because of the public interests that antitrust law seeks to protect.  On the one hand, the whole point of arbitration is to allow private parties to efficiently resolve their conflicts outside the confines of the official court system.  On the other hand, these private parties and their privately appointed arbitrators operating outside the court system may not be able to fully give effect to the public interest goals of the underlying antitrust laws.