Frankfurt’s higher regional court recently ruled that an award or finding of an arbitration tribunal is invalid if it is not signed by all the arbitrators and no adequate explanation in the form of a note or statement is provided (case ref.: 26 Sch 14/22).
Arbitration offers a number of potential advantages over judicial proceedings, particularly in the context of international legal disputes, where it is often easier to enforce a decision of an arbitration panel than a ruling of a national court, explains commercial law firm MTR Legal Rechtsanwälte.
However, in order for an award or finding of an arbitration tribunal to be valid, it needs to be personally signed by all the arbitrators. Should one of them be unable to personally render their signature, an absentee note explaining their absence or inability to carry out their duties must be provided. If this is not forthcoming, then – as the OLG Frankfurt’s ruling from April 27, 2023, demonstrates – the award or finding is invalid.
The facts of the case were as follows: Both the defendant and the plaintiff had agreed to an arbitration clause as part of an intended corporate takeover involving the sale of several business units by the former to the latter. The plaintiff later filed an arbitration action demanding compensation for the defendant’s alleged failure to disclose all the relevant costs associated with the transaction.
Though the action was subsequently dismissed by an arbitration tribunal, only two of the three arbitrators on the panel actually signed the ruling. Indeed, the only thing that featured next to the preprinted name of the third judge was a note stating that it had not been possible to obtain the relevant signature. Citing this irregularity, the plaintiff petitioned to have the tribunal’s decision overturned or declared invalid.
The OLG Frankfurt would go on to declare the ruling invalid due to the missing signature. The Court pointed out that it is general necessary for an award or finding of an arbitration panel to be personally hand-signed by the arbitrators. This is meant to ensure that the arbitrators take personal and legal responsibility and that they establish the ruling in the proper manner. If an arbitrator is not able to provide their signature, a note or statement explaining their absence or inability to carry out their duties must be provided, as is the case in civil proceedings.
Given the lack of an explanation in this instance, the OLG Frankfurt concluded that the arbitration ruling was invalid.
Those concerned can turn to MTR Legal Rechtsanwälte. The firm advises both domestic and international clients on all aspects of arbitration, as well as litigation.