Lisbon Court of Appeal | Arbitral Award | Principle of Exhaustion of Jurisdictional Power | Compulsory Pecuniary Penalties | 09-01-2020 | Case #100
Case nr. 2970.19.6YRSB-6
The termination of the arbitrator’s jurisdictional powers, subsequent to a final decision, produces the effects of binding the tribunal to such decision and prevents it from modifying or revoking that decision.An arbitral tribunal is competent to order the payment of compulsory pecuniary penalties.
I. The principle of exhaustion of jurisdictional power prevents the arbitrator from rendering a new award on the same dispute, results from the making of the decision itself and does not depend on the decision being final; the making of a decision in violation of this principle entails nullity of the decision, pursuant to the Article 625(1)(d) of the Portuguese Code of Civil Procedure.
IV. Arbitral tribunals are competent to order the payment of a periodic and compulsory pecuniary penalty, since the nature of these penalties does not amount to a coercive power that is exclusively reserved to state courts.
V. The decision ordering the payment of these penalties requires two positive and two negative requirements. The positive requirements are (i) a creditor’s request and (ii) refer to obligations of infungible performance (be it obligations of “facere” or “non facere”). The negative requirements are the absence of (iii) a breach of the contract and (iv) special scientific or artistic qualities of the debtor are at stake.
VI. The compulsory pecuniary penalty aims at a dual purpose of morality and effectiveness, as it reinforces the sovereignty of the courts and tribunals, the respect for their decisions and the prestige of justice. At the same time, it aims at compelling the performance of “facere” and “non facere” obligations.
VII. None of these purposes require an actual or even an imminent breach of the obligation.IX. In arbitral proceedings it is not required the payment of courts’ fees and the reimbursement of the partys’ costs, which only applies if the arbitration matter is referred to state courts.