Lisbon Court of Appeal | Agreement to arbitrate by reference | Standard Form Contracts | Kompetenz-Kompetenz | 07-07-2016 | Case #054

Lisbon Court of Appeal
Date: 07-07-2016
Case Nr. 508/14.0TBLNH-A.L1-2
LINK DGSI

Headline:

It will be considered sufficient for the purpose of incorporation if the contract signed by the parties or the correspondence between them contains a reference to a document containing the arbitration agreement.

The “competence-competence” principle applies with one exception arising from the application of article 5, paragraph 1 of the LAV – where it is ‘manifest’— that is obvious— that the arbitration agreement is invalid, ineffective or inapplicable.

  

Summary:

  1. The writing requirement is fulfilled even when the written declarations of the parties appear in separate documents, and this need not have to be in paper form. Thus, this requirement is fulfilled from an exchange of electronic mail, and the clicking of an icon on the internet to express acceptance of a clause.
  2. It will be considered sufficient for the purpose of incorporation if the contract signed by the parties or the correspondence between them contains a reference to a document containing the arbitration agreement.
  3. Where a broker had been working in that market for several years, was well aware of the policies practised in that market, possessed several clients in that market, concluded several contracts in that market, and knew that the general conditions of those contracts stipulated arbitration in London, a declaration by that broker stating “I agree with everything” means acceptance of the arbitration clause included in the “Conditions”.
  4. The principle of autonomy of the arbitration clause entails that the validity and effectiveness of the arbitration clause must be assessed separately from the validity and effectiveness of the contract in which it is inserted.
  5. The so-called “competence-competence” principle set out in Article 18 (1) of the LAV, “means that the arbitral tribunal has full jurisdiction to determine questions arising in the arbitral proceedings, whether of a substantive nature relating to the merits of the case or of a procedural nature. Therefore, the tribunal has authority to conclude whether it has jurisdiction to hear the dispute.
  6. Under the LAV, in the absence of signature of the contract containing the arbitration clause or the submission agreement, the decisive factor is that the arbitration agreement should be written, that this proposal be accepted in writing and that the acceptance be communicated to the proposer. Acceptance does not have to refer specifically to the arbitration agreement – simply accepting the contractual proposal as a whole is sufficient.
  7. The “competence-competence” principle applies with one exception arising from the application of article 5, paragraph 1 of the LAV – where it is ‘manifest’— that is obvious— that the arbitration agreement is invalid, ineffective or inapplicable, the judge may declare it so, and consequently, refuse referral to the tribunal.
  8. The use of the word ‘manifest’ is intended to ensure that courts respect the “competence-competence” of the tribunal. Thus, the judge can only refuse referral of a case to arbitration if the vices in the arbitration agreement are so obvious that they virtually have no need for demonstration. In other words, only in exceptional and evident cases can the judge refuse referral of a case to arbitration.
  9. With regard to arbitration agreements which constitute general contract clauses, it will be necessary to take into account, under the provisions of Article 2 (4), the legal regime of those agreements, particularly regarding their inclusion in the contract, their interpretation, and the prohibition of certain “abusive” clauses.

 

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).

 

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