The Amsterdam Court of Appeal1 has held that the enforcement of three awards made in the State of California, which had been applied for, had to be rejected since the awards were in breach of public policy.
The Background
A loan agreement in bitcoins had been entered into through an online trading platform.
One of the terms of that online platform was an arbitration clause, which provided that in case of default
“the loan will be sent to Dhami Law Firm (“Arbitrator”) an independent international law firm whose awards are recognized unilaterally under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards”.
The clause further provided that the arbitration would take place in the State of California and that, if the Respondent intended to oppose the proceedings, it had to do so by e-mail within 7 days from the Notice of Defence.
The loans were defaulted and the successful party applied to the Amsterdam Court of Appeal for recognition of three awards made in the United States by the Chief Executive Officer of that law firm.
The other party did not appear in the enforcement proceedings.
The Judgment
The Court of Appeal first rightly pointed out that it should proceed, on its own motion, to control whether the enforcement of the awards was in breach of public policy.
The Court found that there was a violation of public policy on various grounds such as that the arbitrator would have not informed the Respondent of the existence of the arbitral proceedings and of the grounds of the claim against it and that in any event the Respondent would have had only 7 days to file his defence.
The application for their enforcement was then rejected.
Comments
Even if the loan agreement was entered into online, the available information does not allow to establish whether the proceeding had taken place only online since the arbitral clause, while requesting the Respondent to file its defence online, limits itself to provide as to the request for arbitration that “the lean (sic!) will be sent” to the arbitrator.
Awards online are generally not made in a given place, but rather in the cyberspace, while the arbitration clause was provided that “all claims and disputes … are to be settled by binding arbitrator in the state of California”.
Apart from the peculiarities of online arbitration, the appointment as arbitrator of a law firm, instead of an individual, does not raise a general consensus.
The grounds for breach of public policy found by the Court of Appeal, the first and main one (but also the shortness of the time to the Respondent to file its defence) apply to any award and not exclusively to online awards.
This decision may probably then be described as criticising an award made under an online arbitration agreement, rather than barring the entire class of online awards.
Mauro Rubino-Sammartano