Guimarães Court of Appeal | Kompetenz-Kompetenz | Impecuniosity & Enforceability of the Arbitration Agreement | 25-09-2014 | Case #017

Guimarães Court of Appeal | Kompetenz-Kompetenz | Impecuniosity & Enforceability of the Arbitration Agreement | 25-09-2014
Date: 25-09-2014
Case No. 403/13.0TCGMR.G1

– The arbitral tribunal is competent to decide on its own competence and the state court can only assess the validity, applicability and enforceability of the arbitration agreement where there are manifest defects (either on grounds of formalities or other substantive requirements, such as arbitrability) on the agreement to arbitrate.
– The fundamental right of access to justice does not prevail in a case where there is a mere difficulty to pay the costs of the arbitration. Only an absolute financial impossibility may render the arbitration agreement unenforceable.

1. Arbitral tribunals are competent to decide on their own competence, and state courts must refrain from deciding on this issue before a decision of the arbitral tribunal is made, even where the arbitral tribunal must assess the existence, validity or operativeness of the arbitration agreement or of the contract in which it is inserted.

2. Thus, when a lawsuit is brought before the state court and the defendant opposes an exception based on an arbitration clause, only in cases of manifest nullity, inoperativeness or inapplicability of that clause – i.e., when such defects need not more than an assessment based on the external requirements of the arbitration agreement, such as those related to formalities ou arbitrability – may the court decide upon that issue and, consequently, dismiss the objection as baseless.

3. The waiver of the state monopoly related to its jurisdictional role (by permitting voluntary arbitration) is admitted and justified only when such means allow to at least achieve the same goals of those pursued by state courts.

4. For this reason, given that access to justice is a fundamental right, which prevails over the optative right to resort to arbitration, where there is a situation of absolute financial impossibility, which renders the arbitration agreement unenforceable, there are grounds to avoid arbitration. For that purpose, it is not sufficient the mere “difficultas praestandi”.

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