Arbitration News – Force of arbitral Award Before Administrative Courts
(Article by Dr. A. Tsavdaridis, published in the Arbitration Newsletter of the ILO on August 7, 2014)
Introduction
When an arbitral award is invoked before an administrative court in the course of litigation stemming
from an agreement between the Greek state and a private party, the court has no authority to rule on
the expiry of the agreement if the award, although rendered in another case, was issued under the
arbitration mechanism provided in the same agreement between the same parties and for the same
issue. A ruling that the agreement had expired would effectively annul the award, and annulment can
result only from a judgment issued by a (non–administrative) court of appeal following a motion to set
aside the award, not from an interlocutory holding by an administrative court.
Facts
An agreement was entered into between the Greek state and Petrola SA (controlled by shipping
magnate John Latsis) in 1972 for the construction of a major oil refinery in Attica, Greece. The
agreement was ratified by Legislative Decree 1211/1972 and provided for tax exemption regarding the
transfer of real estate in connection with the investment. The agreement also provided for the
resolution of any disputes through arbitration, while the parties waived their right to file a motion to set
aside an award by way of derogation from the legislative prohibition of such waiver (the waiver was
permissible since the agreement took the form of a legislative decree). The period of the agreement
was extended by a subsequent agreement (which did not take the form of a legislative instrument).
In 2003 Petrola had to pay tax on the transfer of real estate to the Greek state. Following Petrola’s
merger with Hellenic Petroleum (ELPE), the latter filed a petition against the Greek state before the
Athens First Instance Administrative Court requesting a refund of the tax already paid on the grounds
of the tax exemption provided in the agreement and an earlier arbitral award issued in 2003 between
the same parties, which – in regard to another real estate transfer – had found that the tax exemption
was still in force. The first–instance court dismissed the petition by holding that it was not bound by
that arbitral award as the tax exemption (which remained in force through an extension of the
applicability of the initial agreement by a later agreement not ratified by a legislative instrument) was
unconstitutional.(1)
ELPE filed an appeal and the Athens Administrative Court of Appeal held that it was bound by the
arbitral award as the question of constitutionality of the tax exemption fell under the arbitral tribunal’s
exclusive jurisdiction, which had specifically dealt with this matter acknowledging the constitutionality
of the tax exemption.(2)
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