Frankfurt am Main at night, Germany

German law strictly protects the secrecy of the deliberations of a court and therefore does not allow the publication of dissenting opinions of lower court judges. This is for several reasons: Firstly, if the judges can stay anonymous and do not need to fear being pinned down in a dissenting opinion of a colleague, they are more inclined to openly express their views during the deliberations. Secondly, the publication of dissenting opinions could encourage and assist the losing party to appeal the judgment and could therefore impact the finality of judgments. Thirdly, the publication of dissenting opinions limit the authority of judgments. This aspect is particularly important in case of unpopular decisions.

In view of these policy considerations, German academic literature has been discussing the compatibility of the publication of dissenting opinions of arbitrators with German law.[1] The majority opinion was that dissenting opinions in arbitration proceedings would be admissible because the above policy considerations are not equally applicable to arbitration. Scholars following the majority opinion contend that arbitration differs from state court proceedings in many ways: this starts with different rules on the composition of the deciding body and continues with the parties’ interest to see that the tribunal has thoroughly deliberated on the case.[2] Moreover, there are no appeals to arbitral awards that could be based on the line of argument in the dissenting opinion.

Now, the jurisprudence has entered the field: In an obiter dictum, the Higher Regional Court Frankfurt[3] has expressed its view that the publication of a dissenting opinion in an arbitration seated in Germany violates German public policy and constitutes a ground for annulment.

Facts of the Case and Decision

The parties to the annulment proceedings are the insolvency administrator of the bankrupt company X (the applicant) and the former parent company of X, Y (the defendant). The underlying dispute concerned a transaction. In 2004, Y sold X to a group of investors. The following year, X applied for insolvency proceedings and the insolvency administrator was appointed.

In the subsequent arbitration proceedings under the ICC Rules with seat in Frankfurt am Main, the insolvency administrator claimed more than 300 million Euros in damages for an outstanding cash contribution. The key issue of the case was the liquidation value of X, which was estimated by a tribunal-appointed expert witness. In its final award of 31 May 2018, the tribunal dismissed the claims. One day later, one of the arbitrators issued its dissenting opinion in which it criticized the expert witness’s report and its assessment by the tribunal. Subsequently, the insolvency administrator filed an application for annulment of the award with the Higher Regional Court Frankfurt.

In its decision of 16 January 2020, the Court granted the application and set aside the award for infringement of public policy (ordre public). The ground for setting aside the award was not the dissenting opinion, but that the tribunal violated X’s right to be heard. The tribunal had not sufficiently taken X’s submissions on the expert witness’s report into account. Although the Court did not rely on the dissenting opinion to grant the annulment, the Court used the opportunity to address the issue and express its view on the compatibility of dissenting opinions with German public policy:

Obiter Dictum on dissenting opinions

The court expressed its view that the publication of a dissenting opinion is unlawful in arbitration proceedings seated in Germany:

In the Court’s assessment, there is much to suggest that issuing a dissenting opinion […] is unlawful in domestic arbitration proceedings and violates the secrecy of deliberations that applies to domestic tribunals […].[4]

To the best of the authors’ knowledge, this is the first reported case in which a German State Court has expressed its view on the compatibility of dissenting opinions with public policy.[5] The Court did not discuss in detail whether the policy considerations outlined above do apply to arbitrators. The Court merely stated that the independence and impartiality of arbitrators is endangered if a dissenting opinion is published.

Moreover, the Court found that Parties cannot derogate from the secrecy of deliberations, it is part of the German public policy:

The particular importance of the secrecy of deliberations for the guarantee of the independence and impartiality of the tribunal seems to suggest that the secrecy of deliberations is – even after final deliberation and issuing of the award –  not subject to the parties’ and/or the tribunal’s disposition but to be considered as part of the procedural public policy.[6]

Conclusion

There are two important limitations that have to be kept in mind:

Firstly, the OLG Frankfurt has not expressed a view on whether the publication of a dissenting opinion also violates the international public policy (ordre public international) which is applicable for the review of arbitrations seated outside Germany / enforcement of foreign awards. The Court has repeatedly stressed that its view is restricted to the review of arbitration proceedings seated in Germany.

Secondly, the decision of the OLG Frankfurt is not binding on other courts in Germany. Not only was the OLG Frankfurt’s opinion on dissenting opinions merely expressed in an obiter dictum, other Higher Regional Courts in Germany are also not bound by decisions of the OLG Frankfurt. It therefore remains to be seen whether other courts will follow the OLG Frankfurt’s lead or will decide differently. It might, however, take a while before a court will get another chance to review the issue. Dissenting opinions are rare in German commercial arbitrations[7].

 

[1] For an overview, see: Kaissis, Dissenting Opinions in International Arbitration, in Festschrift Geimer, p 301, and Schütze, Sondervoten im Schiedsverfahren – eine Bestandsaufnahme, ibid, p 646.

[2] Bartels, p 135.

[3] OLG Frankfurt am Main, decision of 16 January 2020, 26 Sch 14/18.

[4] Ibid, recital 226, citation according to juris.

[5] In a decision of 8 August 2007 (4 Sch 3/06), the OLG Jena dealt with the annulment of an award that included a dissenting opinion. In that case, the Court made no remarks on the compatibility of the dissenting opinion with German public policy. However, contrary to the present decision of the Higher Regional Court Frankfurt, the seat of arbitration was Zurich and the arbitration therefore ‘international’ under German law.

[6] OLG Frankfurt am Main, ibid.

[7] Escher, Die Dissenting Opinion im deutschen Handelsschiedsverfahren – Fear of the Unknown, SchiedsVZ 2018, 119, 220-221, on the experience of German arbitration practitioners with dissenting opinions.