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11 October 2018
In a recently published decision, the Supreme Court rejected a challenge against a partial award for an alleged violation of the right to be heard and incompatibility with substantive public policy.(1)
The case pertained to a contract under which an Austrian company was to supply railway machinery to a Russian company. Further to alleged delays in the delivery of the machinery, the Russian company terminated the contract and started arbitration proceedings under the arbitration rules of the United Nations Commission on International Trade Law against the Austrian company in Zurich. In a partial award, the arbitral tribunal:
The Russian company challenged this partial award before the Supreme Court based on an alleged violation of the right to be heard and incompatibility with substantive public policy.
The Supreme Court rejected the challenge on the grounds that the Russian company had not established the asserted violation and incompatibility. In its reasoning, the court made a number of considerations, which practitioners should bear in mind when challenging an arbitral award. These may be summarised as follows:
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(2) Pursuant to Article 190(3) of the Private International Law Act, preliminary or interim awards are subject to an immediate challenge within 30 days from their notification on the grounds of irregular composition of the arbitral tribunal (Article 190(2)(a) of the Private International Law Act) and wrongful acceptance of jurisdiction (Article 190(2)(b) of the Private International Law Act).
(3) Ground 2 – the Supreme Court noted that in the present case the plaintiff had raised neither of the two grounds that allow an immediate challenge (ie, irregular composition of the arbitral tribunal and wrongful acceptance of jurisdiction) against the arbitral tribunal's decisions regarding the counterclaims.
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