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Lisbon Appeal Court | Recognition of Foreign Arbitral Awards | Arbitral | 11-12-2018 | Case #103

Lisbon Appeal Court | Recognition of Foreign Arbitral Awards |
Case nr. 2004/08.6TVLSB.L2-7
11-12-2018
LINK DGSI

Headline:

The court of appeal should not be aware of issues that have not been raised in the court whose decision is under appeal and that, for this reason, the lower court did not, and did not have to, analyze unless they were unofficially aware.

The review and confirmation of foreign judgments are based, in general, on the fulfillment of the requirements provided for in the paragraphs of Article 980.º Civil Procedure Code (Article 1096.º of the Civil Procedure Code of 1961), and do not imply a review of the merits of the respective case.

Regarding the review of foreign arbitral awards, Law Nº 63/2011, of December 14, 2011, which approved the new Law on Voluntary Arbitration (LAV), revoked the earlier Law Nº. 31/86, of August 29, 1986, which previously provided for the matter.

However, the so-called Law Nº. 63/2011 came into force on 14 March 2012 and the new regime is, in principle, only applicable to arbitral proceedings initiated after its entry into force, only applying to previous proceedings by the agreement of the parties, whether express or tacit (see Article 4 of the said Law). Since the LAV has only been referenced at an appellate stage in the present case, it could not be applied.

Summary:

I- The appellant requested the revision of a foreign arbitral award rendered in a State that has signed the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Where that Convention applies, the recognition and enforcement of that arbitral award may be refused if the Portuguese court of recognition finds, of its own motion, that the result arrived at in that arbitral award is contrary to the principles of international public policy of the Portuguese State;

II- The court of recognition shall be barred from making any assessment about the merits of the said award, but shall only verify that nothing in the order precludes its recognition and enforcement;

III- It is not contrary to the fundamental rules and principles of our legal system to apply, in the arbitral award, a penal clause that has been attributed a dual function, indemnificatory to the affected party and coercive to the party considered to be in breach of the contract under discussion, even if the affected party has not claimed and proved the damages suffered by him/her as a result of the breach of the counterparty;

IV- The value of the penalty clause is set at approximately 15% of the overall price agreed to, in the event that either party breaches the contract. This is not to be considered excessive in the context of a deal to acquire the share capital of a company;

V – Even if the arbitration agreement itself prohibits the use of moderation or reduction according to equity, and this is contrary to a mandatory rule of our legal system, this shall not constitute grounds for refusing to recognize the arbitral award if the value of the penalty clause is not considered excessive and the person condemned to pay has not discussed the possibility of such equitable reduction, but has rather requested that the counterparty be ordered to pay the amount set in the arbitration agreement.

Summary and headlines kindly prepared by Avani Agarwal (final year law student at NALSAR University of Law, Hyderabad, India; Avani Agarwal may be contacted by email: avaniagarwal28@gmail.com

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