Suspensive Effect of Arbitration to Alien Court Proceedings

Arbitration News – Suspensive Effect of Arbitration to Alien Court Proceedings

(Article by Dr. A. Tsavdaridis, published in the Arbitration Newsletter of the ILO on May 15, 2014)

In 2009, following explosions during the cutting of a series of tunnels as part of the
construction of the main motorway connecting northern and southern Greece, a major
rockfall occurred. The incident resulted in the closure of the existing road for five
months. The cause of the rockfall was disputed – being attributed either to force
majeure (involving the geological peculiarities of the area in combination with rainy
weather) or to the explosions. The matter was thus referred to an International
Chamber of Commerce (ICC) arbitration between the Greek state and the
concessionaire. During arbitration, the concessionaire claimed that it was not liable for
the rockfall and that the Greek state had to compensate it for its additional expenses
and potential liability to third parties.
As a result of the rockfall, all vehicles had to follow diversions that increased travel
times and distances. Eleven intercity bus operators claimed that they suffered millions
of euros in losses and initiated separate court proceedings against the concessionaire
and the Greek state.
As the respondents’ liability (an issue also pending in the arbitration proceeding) was a
preliminary matter in the court proceedings, the respondents sought to stay the court
proceedings, invoking Article 249 of the Code of Civil Procedure.(1) This provision gives
the court discretionary power to stay proceedings for preliminary matters that are
pending before another civil or administrative court or authority until a final decision is
issued. As the procedural rule does not provide for arbitration specifically, the
respondents sought to invoke its application by analogy. The claimants were opposed
to the request, claiming that:
l the provision did not apply to arbitration;
l as they were not parties to the arbitration, a ruling on liability would not be binding on
them. Therefore, there was no point in staying the court proceedings;
l they had no right to participate in the pending arbitration, whereas the respondents
were party to the arbitration; and
l the respondents’ attempt to stay the proceedings was a delaying tactic.


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