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Lisbon Court of Appeal | Compulsory Penalty | Motivation of the arbitral award | 13-02-2014 |Case #040

Lisbon Court of Appeal
Date: 13-02-2014
Case Nr. 724/13.2YRLSB-8


In the absence of an express provision providing jurisdiction, arbitral tribunals cannot impose periodic penalty payments.  

Arbitral awards that do not explain relevant facts should be annulled by state courts.


  1. The legitimacy of an arbitral tribunal arises from the will of the parties or from the legal provision that establishes them.
  2. The arbitral tribunals are devoid of potestas and the enforceability of their decisions only results from the support of the state courts.
  3. The remittance of an adjudication to the arbitral tribunal does not imply the attribution of judicial functions; the arbitrators are part of the arbitral tribunal, but do not act as officials of the state courts, do not have powers of authority inherent to the exercise of the judicial function, and their decision, the award, does not have the effectiveness of a decision issued by state courts.
  4. Compulsory pecuniary sanction aims at a dual function of morality and efficiency – strengthening the sovereignty of the courts and the prestige of justice, respect for their decisions and favoring the specific implementation of obligations of de facto or abstention – and bifronte character, a mixture of prevention and repression.
  5. In the absence of an express provision recognizing the competence of the Arbitral Tribunal to impose a periodic penalty payment- the only entity that can order it and to which is recognized a great freedom as to the various aspects of its regime is the state court.
  6. The arbitration decision that omits the explanation of the relevant facts should be annulled, since this makes the internal control of the decision and the re-weighting of the de facto judgment impossible; the absence of a decision on the facts is the limit situation of the defective decision.


This case summary was kindly prepared by Sameer Thakur (, NALSAR University of Law), Rishabh Raheja, (, NALSAR University of Law), and Abhishek Babbar (