Case 991/20.5YRLSB.S1
22-06-2023
Summary:
I. The judgment rendered in a special action for the recognition of a foreign arbitral award is subject to a review appeal to the Supreme Court under the provisions of Article 671(1) of the Code of Civil Procedure (CPC) because the Court of Appeal acts exceptionally not as an appellate court but as the judicial body that, at first instance, examined the subject matter of the dispute.
II. The provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards are rules of international law whose primacy and preferential application over domestic law (as per Article 8 of the Constitution of the Portuguese Republic) are expressly recognized in the Voluntary Arbitration Act (Law No. 63/2011, of 14-12, as per Article 55).
III. Therefore, the provisions contained in Chapter X of the Voluntary Arbitration Act regarding the recognition and enforcement of foreign arbitral awards have a residual scope of application (essentially applying to arbitral awards originating from states that have not ratified the New York Convention and with which Portugal has not concluded other international conventions on this matter).
IV. An arbitral award becomes binding when it is no longer subject to any ordinary appeal and has acquired the force of res judicata, similar to final court decisions that have become final and binding under the law of the country in which the arbitral award was rendered.
V. Thus, it is possible to seek the recognition of a foreign arbitral award that is no longer subject to ordinary appeal, although it may still be possible to file an extraordinary appeal or a request for annulment, as the latter does not constitute an appeal but rather a distinct action.
VI. Therefore, under the regime provided for in the NYC, a pending application for the annulment of an arbitral award does not preclude the success of an action for the recognition of a foreign arbitral award in Portuguese courts [this results from the combination of the grounds for refusal of recognition and enforcement set forth in Article V(e)(1) with the regime provided for in Article VI of the Convention (if the NYC grants the discretionary power to “may” take the measures provided for in this Article VI, it also allows for the possibility that they may not be taken or may be revoked, allowing the recognition action to proceed even before the annulment request receives a final decision in the country of origin of the decision – a discretionary power that is reflected in Article 56(2) of the Voluntary Arbitration Act in our domestic law)].
VII. International public policy is assessed on a case-by-case basis and in light of the legal effects that a particular situation may generate. It is a strict term that should be used to safeguard extremely serious cases, aiming to “prevent the application of a foreign rule, through the indirect route of the enforcement of a foreign judgment, from leading, in the specific case, to a result that is absolutely intolerable to the prevailing ethical and legal sentiment or that seriously harms first-rate interests of the local community.”
VIII. Confirming an arbitral award rendered in violation of the principles of adversarial proceedings and equality of the parties would lead to a result incompatible with the international public policy of the Portuguese State.
IX. Regarding the ground for refusal of recognition and enforcement of foreign arbitral awards based on inconsistency with international public policy, our domestic law (Article 56(1)(b)(ii) of the Voluntary Arbitration Act) provides for a more favorable regime for recognition than that provided for in the NYC (Article V(2)(b)); therefore, with respect to this specific ground for refusal of recognition and enforcement of foreign arbitral awards, according to Article 7(1) of this Convention, our domestic law is applicable.
X. The lack of attendance by the lawyers and witnesses of the Respondents at the hearing (which would have been unfounded to postpone) does not constitute a violation of the principles of adversarial proceedings and equality of the parties. In such circumstances, the testimony of the Claimant’s witness was heard, and the arbitrator considered their testimony and the written statements in rendering the award. This falls within the power of assessing and evaluating the evidence presented, i.e., the exercise of the judicial power, and thus, there is no violation of these principles.