Arbitration News – Form Requirements in Arbitration Clauses Incorporated by Reference
(Article by Dr. A. Tsavdaridis, published in the Arbitration Newsletter of the ILO on January 30, 2014)
Incorporation of an arbitration clause by reference should be made expressly. Such an
express reference should be clear as to the meaning of the clauses intended to be
incorporated and the identity of the set of standard terms referred to.
Requirements in Arbitration Clauses
Facts
In May 2004 a Greek textile company agreed to purchase a power loom manufactured
by a German company. The agreement was concluded through an exchange of letters
between the parties. In particular, the Greek company sent a written offer and the
German company replied by sending a written confirmation, which was eventually
signed by both parties.
Under the agreement, the loom had to be suitable to produce heavy fabrics to be used
by the army. However, the loom was unsuitable for the purpose and, despite the
German manufacturer’s assurances that it would fix the problem by January 2005, 85%
of the Greek company’s production was brought to a standstill. As a result, the Greek
company initiated court proceedings in November 2005 against the German company
in the Thebes First Instance Court, requesting damages of approximately €3 million.
The respondent German company requested a stay of proceedings, claiming that the
parties had agreed to refer any disputes to arbitration. The written confirmation
contained two terms in the text that was signed by the parties, which read:
- “For any other detail the General Terms of Supply apply”; and
- “For additional details please consult our enclosed General Terms of Delivery”.
Another term appeared on the last page of the confirmation – after the signatures of the
parties – which read “Enclosed General Terms of Delivery and Assembly G/G, VWA, V,
K, K1, K6, KD, VW, TAW”. The respondent said that the reference was to the Orgalime(1)
General Conditions for the Supply of Mechanical, Electrical and Electronic Products
(known as ‘Orgalime S2000’), Clause 44 of which provides:
“All disputes arising out of or in connection with the contract shall be finally
settled under the Rules of Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in accordance with said rules.”
(2)
The Orgalime S2000 was submitted to the court by the respondent but not by the
claimant. The court granted the requested stay(3) and the claimant appealed to the
Athens Court of Appeal.
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