Lisbon Court of Appeal | Arbitration Clause in Framework Agreement | Negative Kompetenz-Kompetenz | 05-11-2015 | Case #014

Lisbon Court of Appeal
Date: 05-11-2015
Case Nr. 2672-14.0T8LSB.L1-6
LINK DGSI

Headlines:

An arbitration clause in a framework agreement is applicable to contracts concluded under it. The failure to raise objections to the court’s jurisdiction on a dispute arising from one contract does not deprive a party of its right to raise such a defence in a dispute arising from a future contract under the same framework agreement.

Summary:

1. A Framework contract is one where an initial set of rules are negotiated, which in turn influence successive contracts formed under the broad agreement. It is a prerequisite for framework contracts to have an overarching ‘object’ of framing.

2. The core purpose of framework agreements is to simplify and accelerate commercial negotiations, which may be of a wide-ranging nature. This is accomplished through the creation of a common set of clauses laid down in advance, which are further complemented and supplemented by specific rules.

3. If a framework contract provides for an arbitration clause and does not expressly state that it exclusively applies to questions of interpretation of the framework agreement, then it must necessarily be understood that it is intended to be applicable to all successive contracts concluded under it.

4. Due to the negative effect of the arbitration agreement recognised in art. 5/1 of the VAL, courts faced with challenges to an arbitration clause must ascertain whether such clause is null and void, ineffective or unenforceable on a prima facie assessment and not on a detailed inquiry,. The remaining inquiry ought to be left to the tribunal created under the arbitration clause, which is in a position to examine such questions by virtue of the Kompetenz-Kompetenz principle.

5. A single instance of non-exercise of a right by a party cannot be understood as an admission or an inference of the fact that it will never be exercised again. Thus, where a procedural right to a defence (in this case, the right to exclude the jurisdiction of the court in favour of arbitration) has not been employed by a party on one former occasion, that party is not deprived of that right in a future proceeding. This is due to the fact that this right to raise a defence is a constitutional right based on European Union law and binding international law, and its abrogation would be against its status as a fundamental right.

This case summary was kindly prepared by Sameer Thakur (sameerthakur@live.in, NALSAR University of Law), Rishabh Raheja, (rishabharaheja@gmail.com, NALSAR University of Law), and Abhishek Babbar (abhishekbabbar1996@gmail.com, NALSAR University of Law).

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