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Supreme Court of Justice (Portugal) | State Courts are not Competent to Decide the Validity of an Arbitration Agreement | 09-07-2015 | Case #075

Supreme Court of Justice
Date: 09-07-2015
Case Nr. 1770/13.1TVLSB.L1.S1

The arbitral tribunal is competent to decide the validity of the arbitration agreement, unless such invalidity is blatant.

1. The interpretation of any arbitration agreement, such as an arbitration clause, relating to possible and future disputes arising from a specific contractual relationship, is subject to the rules of interpretation of the contractual declarations contained in the Art. 236 to 238 of the Civil Code.
2. The functional and economic connection between a framework contract and successive contracts between the same parties covered by that contractual framework leads to the conclusion that, despite the legal and formal autonomy of the contracts, the arbitration agreement stipulated in the first contractual framework should cover every contract included in that contractual setting.
3. The role of the Supreme Court of Justice is limited to ascertain whether the arbitration agreement it is manifestly inoperative. To the contrary, in case of doubts related to the scope of the arbitration agreement, the parties must be referred to arbitration, which was their jurisdictional choice.
4. According to Art. 21(1) of the Arbitration Act, for there to state courts defer the dispute to arbitration without further ado, it suffices the mere likelihood of a consent to arbitrate, save if the arbitration clause is manifestly invalid or inoperable. It shall be to the arbitral tribunal to decide on its own competence to hear the case.
5. The arbitration agreement covers all practical and legal disputes arising out of both the master agreement and the financial transactions established between the parties under that contractual framework. This framework includes the contractual terms under which both the financial exchanges (swaps) and the interest rate swaps are performed.
6. Because the parties have agreed on arbitration to solve the disputes arising out of the contract, and because this lawsuit has been brought before the state courts, there has been a violation of said clause, which gives rise to the absolute lack of jurisdiction of the court, as follows from Art. 96(b) of the Code of Civil Procedure.