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05 July 2007
In a decision of March 20 2007 (10 Ob 20/07z) the Supreme Court had to decide whether an arbitration clause contained in a contract for the carriage of goods conformed with Article 33 of the Convention on the Contract for the International Carriage of Goods by Road.
A Spanish carrier had undertaken to transport machine parts from Spain to Austria for repair. However, the parts never arrived at the destination and their whereabouts remain unknown. The Spanish carrier was sued before the Austrian courts by a German insurer which had indemnified the contracting partner of the carrier. The contractual basis for the planned transportation was threefold:
All three documents contained arbitration clauses that established the jurisdiction of the Spanish Arbitration Court for Transportation. Neither the framework contract nor the contract of carriage contained a 'choice of law' clause. However, Article 1 of the general terms on the bill of lading stated that "land transport would be governed by [the convention]", whereas Article 18 of the terms provided, to some extent, for the application of the substantive law of the country of the load's origin (ie, Spanish law).
Considering that the parties had entered into a valid arbitration agreement in accordance with Spanish law, at first instance the Vienna Commercial Court found that it had no jurisdiction to decide the dispute. However, on appeal and considering the arbitration clause invalid, the Vienna Higher Regional Court overruled the lower court's decision. According to the higher court, contrary to the requirement of Article 33 of the convention, the parties had not agreed expressly that disputes would be governed by the convention. In the eyes of the court this contractual defect invalidated the arbitration agreement under Article 41 of the convention, pursuant to which any stipulation that derogates from the provisions of the convention (with the exception of cases where the parties are entitled to derogate by virtue of Article 40) shall be null and void. The reference to the convention contained in Article 1 of the general terms on the bill of lading was held to be insufficient to mandate the application of the convention, given that it was understood as only a general statement to the effect that the international carriage of goods by road is governed by the convention. The court held that, particularly in light of Article 18 of the general terms (which provided for the application of Spanish substantive law to some extent), the application of the convention was not sufficiently established.
On appeal, the Supreme Court upheld the decision of the Vienna Higher Regional Court. It reasoned that, according to Article 33 of the convention, the arbitration agreement itself must include an express provision ordering the application of the convention to the parties' contractual relationship. The Supreme Court held that mere reference to a national law of which the convention may be considered to form part (the perception of convention member states differs in this respect), such as Article 18 of the general terms, is insufficient to fulfil the requirements of Article 33 of the convention. Furthermore, an explicit stipulation that the convention applies for the resolution of this exact dispute would be required in order to support the arbitration clause. The court felt that this strict interpretation of Article 33, in line with the opinions of international scholars, was necessary in order to guarantee widespread application of the convention to contracts of carriage in all contracting states or by all arbitral tribunals. A mere reference to the applicability of a national law of a convention member state will not ensure the convention's application in all member states. Assigning weight to the convention member states' intention to preserve the international consensus as far as possible, and considering the importance of the convention as a uniform legal framework that limits trade rivalry between carriers, the court considered that the potential non-application of the convention by arbitral tribunals constituted valid grounds for the invalidation of the arbitration agreement in the present case.
The Supreme Court took a rather strict approach to the requirements prescribed by Article 33 of the convention for the validity of arbitration agreements. The court underlined its reasoning with international literature and jurisprudence, which supports this approach.
It may be asked, however, whether the rather broad reasoning (ie, that the arbitration clause must contain the express choice of the convention since not all convention member states consider it to be applicable as part of their national law) deals with this issue in too general a way. The Supreme Court omitted to examine whether, in a case involving Spanish national law, the parties' choice of law might have automatically entailed the application of the convention. Only if this had not been the case would the application of the convention indeed have been at risk.
However, as Article 33 of the convention prescribes that the arbitration clause must require the arbitral tribunal to apply the convention, the Supreme Court's interpretation is not unreasonably strict.
For further information on this topic please contact Gerold Zeiler or Barbara Steindl at Schönherr Rechtsanwälte by telephone (+43 1 53 43 70) or by fax (+43 1 53 43 76100) or by email (firstname.lastname@example.org or email@example.com).
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