Limited Judicial Review of Evidence Evaluation by Arbitral Tribunals
The question of judicial reviewability of arbitral awards, particularly regarding the evaluation of evidence by the arbitral tribunal, is of great practical importance for parties opting for arbitration. The Higher Regional Court of Frankfurt am Main elaborated essential principles in its ruling dated November 10, 2020 (Case No. 26 Sch 14/20), which must be observed in the context of state courts’ control over arbitral decisions.
Legal Framework of Arbitration in Germany
Arbitral tribunals provide parties in private law disputes the opportunity to obtain legally binding decisions outside of ordinary courts. However, the law imposes restrictions on the subsequent review of arbitral decisions. This serves to preserve party autonomy and the efficiency of arbitration.
German arbitration law, particularly codified in Book 10 of the Code of Civil Procedure (ZPO), stipulates that state legal remedies against arbitral awards—such as annulment petitions under § 1059 ZPO—are limited to specific, narrowly defined grounds. These include procedural violations, denial of the right to be heard, or exceeding the arbitration agreement, but generally exclude the substantive correctness or the manner of evidence evaluation.
Higher Regional Court Frankfurt am Main: Criteria for Judicial Review
The Higher Regional Court Frankfurt am Main emphasized in the mentioned decision that judicial review of the arbitral tribunal’s evaluation of evidence is fundamentally excluded. The court is expressly not entitled to conduct its own assessment of factual findings or presented evidence. The arbitral tribunal’s formation of conviction is—except for few exceptions—subject to procedural autonomy and therefore exempt from subsequent review in annulment proceedings.
Limits of Reviewability
To successfully challenge an arbitral award based on evidence evaluation, it must be demonstrated that a significant violation of the right to be heard or fundamental procedural principles occurred. This would, for example, be the case if the arbitral tribunal disregards evidentiary requests, ignores a party’s submissions, or conducts the proceedings in a manner that deprives parties of sufficient opportunity to respond and present evidence. Mere claims that the tribunal incorrectly assessed the facts or weighted evidence differently than a state court would do are insufficient.
Differentiation from Procedural Violations
The Higher Regional Court further clarifies that it is the arbitral tribunal’s task to independently and transparently assess the facts. This includes the free formation of conviction based on evidence introduced in the arbitration. Judicial correction is only warranted in cases of arbitrary disregard of essential procedural rules or complete frustration of the right to be heard. Simple errors in evidence evaluation or flawed evidentiary findings do not justify correction.
Practical Importance for Arbitration Proceedings
The key consequence of this ruling is the strengthening of the finality and binding nature of arbitral awards—an aspect often emphasized by companies and investors relying on arbitration. The intervention and review powers of state courts in the assessment of facts and evidence are very limited. Especially for parties with extensive and complex cases, this means that careful selection of arbitrators with specialized expertise and a well-considered conduct of the arbitration proceedings are critically important.
Relevance for Companies, Investors, and High-Net-Worth Individuals
In view of this case law, the principle of procedural autonomy gains special significance: parties should be aware of the limited scope of judicial review. The possibility of obtaining subsequent correction via state courts is only opened in exceptional cases. This increases the relevance of designing the arbitration proceeding carefully, starting with the arbitration agreement on arbitrator selection through to the conduct of hearings.
Conclusion
The decision of the Higher Regional Court Frankfurt am Main confirms the restrictive approach of German civil courts regarding arbitral awards, particularly concerning evidence evaluation. State courts intervene only in narrowly defined exceptional cases and fundamentally respect the autonomy of arbitral tribunals in factual and evidentiary matters.
For companies and investors who choose international or national arbitration as a dispute resolution mechanism, it is therefore advisable to ensure a comprehensive review and preparation of the arbitration proceedings at an early stage. Those who require legal support during the conduct or challenge of arbitration proceedings or have questions about the implications of current case law can confidently turn to the lawyers at the law firm MTR Legal for an individual assessment of the circumstances.
