Impecuniosity | Inoperativeness of the Arbitration Clause
Lisboa Court of Appeal
Case No. 7845/22.9T8LRS.L1-2
Date: 19 December 2024
Link to DGSI website HERE
Keywords: Impecuniosity | Inoperativeness of the Arbitration Clause
Summary:
I. A party bound by an arbitration clause who, due to supervening and fortuitous financial insufficiency, is rendered unable to bear the costs of constituting and operating the arbitral tribunal, may have recourse to the state courts; reliance on the arbitration agreement is inadmissible.
II. A company which, since 2020, has ceased activity, records accumulated losses exceeding €740,000, negative equity of more than €590,000, total liabilities of approximately €1,800,000—of which about €1,300,000 are supplier debts—and accounts receivable of about €1,000,000 that remain unsatisfied despite extrajudicial efforts and pending judicial recovery proceedings, must be deemed without the economic capacity to sustain the costs inherent in arbitral proceedings.
III. The omission by the appealed judgment to address a specific application or the documents annexed thereto does not entail its nullity, whether under Article 615(1)(d) CPC or any other provision. Nullity may only result from failure to decide issues on which the court was required to rule. As the relevant issues had already been raised in the initial pleading and were expressly addressed in the judgment, any inadequacy in their treatment concerns the merits and may ground reversal, not annulment.
IV. A prior action with identical subject matter, in which the claimant did not invoke financial insufficiency to sustain arbitral costs and where the defendant was released from the proceedings upon acceptance of the plea of breach of the arbitration agreement, does not preclude the claimant from instituting the present action; reliance on the arbitration agreement is likewise inadmissible in such circumstances.
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