Arbitration News – Concept of public policy in domestic arbitration reconsidered
(Article by Dr. A. Tsavdaridis, published in the Arbitration & ADR Newsletter of the ILO on November 19, 2015)
The Supreme Court recently settled a longstanding debate over public policy as it relates to
arbitration, holding that the concept of public policy as grounds to set aside domestic arbitral
awards is the ‘international’ concept of public policy that serves the public interest, not simply
individual public policy provisions that serve private interests.
Facts
An International Chamber of Commerce arbitration proceeding took place in Greece under domestic
arbitration legislation(1) between a large Greek construction company as claimant and a major Greek
refinery as respondent. The dispute concerned a contract for upgrading the refinery’s installations.
In an award rendered in 2009, the arbitral tribunal applied the hardship provision of the Civil Code
(2) and adjusted the contracted price following an unforeseen increase of 44% in the cost of steel.
The refinery sought to set aside the award on the grounds (among others) of violation of public
policy.(3) In particular, it claimed that the award violated the hardship provision of the Civil Code,
which in turn led to a violation of public policy.
The Athens Court of Appeal(4) dismissed the motion to set aside the award, holding that in order to
establish a violation of public policy as grounds to set aside a domestic arbitral award, there should
be a violation of public policy as understood in the international context (ie, the most fundamental
principles of Greek legal order), and not simply of a public policy provision (ie, a provision that
cannot be derogated from by agreement), such as the hardship provision of Greek law.
The refinery appealed to the Supreme Court, which referred the case for a full plenary hearing due to
its significance.(5)
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