In its decision dated 12 January 2015 (Court of Appeal Munich, file no. 34 Sch 17/13, http://openjur.de/u/755584.html), the Court of Appeal Munich had to rule on an application for the declaration of enforceability concerning a French arbitral award. The claimant had initiated arbitral proceedings for payment claims against an insolvent company based in Belgium. In departure from the contractual dispute resolution clause, the claimant had entered into an UNCITRAL arbitration agreement with the insolvency administrator of the responding party. In its final award, the sole arbitrator ordered the responding party to effect certain payments to the claimant. By application of 26 July 2013, the claimant sought the award to be declared enforceable before the competent Court of Appeal Munich. The responding party defended the application by arguing that the arbitration agreement was invalid. The insolvency administrator would not have been permitted to enter into the arbitration agreement without permission of the insolvency court in Belgium; accordingly, the arbitration agreement would be invalid. The respondent added that, in line with German case law, the fact that the responding party did not challenge the final award before the French courts would not result in a waiver of jurisdictional objections at the enforcement level. The Court of Appeal Munich decided that the responding party was prevented from objecting to the tribunal’s jurisdiction at the enforcement level because it had failed to raise such objection during the arbitral proceedings. To start with, the Court confirmed earlier case law that the respondent’s decision not to challenge the final award at the seat of the arbitration does not amount to a waiver of jurisdictional objections at the enforcement level. (BGHZ 188, 1; BGH dated November 23, 2009, record no. 34 Sch 13/09) However, so the Court, the general principle of good faith prevents a party from asserting certain rights if such assertion is contradictory with earlier conduct (venire contra factum proprium). This principle, so the Court, would also apply to international arbitral proceedings. Accordingly, if a party fails to raise jurisdictional objections during the arbitral proceedings, this conduct would demonstrate that the party has no objections to the conduct of the arbitral proceedings. It would therefore generally have to be considered as contradictory if such objections are then raised at the enforcement level. The decision underlines the importance of timely objections during arbitral proceedings. While the failure to initiate challenge proceedings at the seat of the arbitration will in most cases not amount to a waiver of rights at the enforcement level, a failure to raise such objections during the arbitral proceedings may very well do.
