Originally from International Arbitration Court Decisions - 3rd Edition

JUDGMENT OF THE EUROPEAN COURT OF JUSTICE (FIRST CHAMBER) RENDERED IN 2006 IN CASE C-168/05

“The Mostaza Claro Case”

Subject Matter:
Whether a failure to raise the unfair nature of a term during arbitration proceedings precludes the possibility to raise that objection in the context of an action brought against the arbitration award.

Finding:
The Council Directive on unfair terms in consumer contracts must be interpreted as meaning that a national court seized of an action for annulment of an arbitration award must determine whether the arbitration agreement is void and annul that award where that agreement contains an unfair term, even though the consumer has not pleaded that invalidity in the course of the arbitration proceedings, but only in that of the action for annulment.

Parties:
Elisa María Mostaza Claro v Centro Móvil Milenium SL,

Place of Court Proceedings:
Audiencia Provincial de Madrid (Spain), European Court of Justice

Applicable Law:
1) Ley General 26/1984 para la Defensa de los Consumidores y Usuarios, of 19 July 1984, Boletín Oficial del Estado (Official State Gazette) (BOE) No 176 of 24 July 1984 (General Law 26/1984 for the protection of consumers and users), amended by Ley 7/1998 sobre Condiciones Generales de la Contratación, of 13 April 1998, BOE No 89 of 14 April 1998 (Law 7/1998 on general contractual conditions), which transposed the Directive 93/13/EEC into national law;
2) Ley 36/1988 de Arbitraje, of 5 December 1988, BOE No 293 of 7 December 1988 (Law 36/1998 on arbitration)