Enforcement of Russian Arbitration Awards in Germany: Decision of the Higher Regional Court (OLG) Koblenz on Eckes-Granini
In spring 2022, the Higher Regional Court (OLG) Koblenz had to address the question of to what extent Russian arbitral awards can be declared enforceable in Germany. The central issue was the enforceability of an arbitral award issued by a Russian arbitral tribunal against the Eckes-Granini Group. Given the increasing number of transnational disputes between companies, the court’s decision offers important points for the ongoing discussion surrounding the recognition and enforcement of foreign arbitration judgments.
Background of the case
The proceedings were based on a dispute between a company based abroad and Eckes-Granini. A Russian arbitral tribunal had issued an award against the German corporate group. Subsequently, the prevailing party sought to have the arbitral award declared enforceable by German courts.
The enforcement of foreign arbitral awards in Germany is generally governed by the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). According to it, a foreign arbitral award may generally be recognized and enforced, provided that there is no legally stipulated ground for refusal.
Legal review of the requirements for recognition
Relevant legal provisions and principles
For the recognition of foreign arbitral awards, in particular §§ 1061 et seq. of the Code of Civil Procedure (ZPO) apply, relying upon the NYC. Key points of examination are, on the one hand, the formal validity of the arbitral award and, on the other, the absence of grounds for refusal within the meaning of Art. V NYC. The latter include, among others, violations of public policy (ordre public) as well as procedural deficiencies in the country of origin of the arbitral award.
On the application of the ordre public reservation
In the present case, the OLG Koblenz examined in detail whether the public policy (ordre public) of the Federal Republic of Germany barred recognition. The key question was whether the minimum procedural standards and the rule of law principles were maintained in the specific proceedings. This included, for example, assessing the extent to which the defendant was actually given sufficient opportunity to defend itself in the arbitration proceedings.
The court concluded that the basic procedural rights of the affected party had been violated. In particular, it referred to the limited opportunities for appropriate preparation and exercise of the right of defense, for example regarding summons and hearings in the arbitration process. Equal treatment of both parties and effective judicial oversight were emphasized as essential elements of German and European law.
Implications of current geopolitical developments
Sanctions and considerations under international law
Beyond the specific case at hand, the OLG Koblenz also addressed the effects of implemented international sanctions and their relevance to pending arbitration proceedings. In particular, with respect to the relationship between the EU and the Russian Federation following the attack on Ukraine, potential obstacles to cross-border cooperation as well as uncertainties regarding the enforcement of Russian arbitral awards are discussed. These developments underscore the importance of a thorough review of the recognition requirements, especially as international obligations of member states may also be affected.
Minimum standards under the rule of law
The decision reaffirms the prevailing view of German jurisprudence that judicial oversight of foreign arbitration proceedings, on the one hand, guarantees legal certainty and predictability for international trading partners, while, on the other hand, no compromise may be made on minimum standards of the rule of law.
Significance of the decision for cross-border business
The refusal to declare enforceability in the specific case discussed reflects a balance between the generally supported recognition of international arbitral awards and the consistent preservation of the rule of law. For internationally active businesses, the judgment highlights that any attempt to enforce a foreign arbitral award in Germany is subject to comprehensive review. Particularly when proceedings originate from countries whose legal systems and processes are not always deemed compatible with European standards, there are heightened requirements regarding fairness and the transparency of the proceedings.
Further considerations and need for action
Given the current geopolitical situation, it remains open how procedures for recognition and enforcement of arbitral awards from certain third countries will continue to develop. National courts will continue to carefully examine compliance with both international and national requirements. Companies, investors and contracting partners should be aware of these risks when drafting contracts and monitor relevant developments.
Especially in cross-border disputes between German and Russian companies, but also in a global context, it is advisable to carefully monitor the situation of arbitration proceedings, mechanisms of recognition and enforcement. MTR Legal Rechtsanwalt supports national and international clients with complex issues relating to arbitration proceedings and their enforceability and is happy to be available for a confidential discussion should legal questions arise from the topics mentioned above.
