Prokopis Dimitriadis, Konstantinos Rokas

Lambadarios Law Offices

Systems of alternative dispute resolution presenting many similarities to arbitration can be traced back to ancient Greece. The Greek legislature, aware of arbitration’s importance, has introduced a new legal regime that complies with the practical needs of the international business community. The Greek legislature has chosen to adopt the UNCITRAL Model Law on International Commercial Arbitration (Model Law), which has been thoroughly examined by many scholars and practitioners. Thus, particular attention will be paid to those aspects of the Greek Law on International Commercial Arbitration (hereinafter GLICA) that differ from the Model Law.

Legal framework

An arbitration is considered ‘domestic’ or ‘international’ according to the subject matter of the dispute. In article 1, section 2 of the GLICA, the term ‘international arbitration’ is defined in the same manner as in the Model Law. Domestic and international arbitrations are regulated by two distinct regimes. For present purposes, we will focus on the regulation of the international commercial arbitration in Greece and the treatment of foreign arbitral awards in the Greek legal system. The GLICA reflects essentially the contents of the Model Law but also contains some additional provisions. The GLICA does not regulate every possible issue that may arise in the context of an international commercial arbitration. The intended gaps of the Greek legal framework for international commercial arbitration are to be supplemented with the Greek conflict of laws rules, the règles d’application immediate (internationally mandatory rules) and with analogous application of the relevant provisions of the Greek Code of Civil Procedure (GCCP) regarding arbitration.
The Greek legal framework is supplemented by a number of important international conventions: the Geneva Protocol of 1923 on Arbitration Clauses; the Geneva Convention of 1923 on Execution of Foreign Arbitral Awards; the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards; and finally the Washington Convention of 1965 on the Settlement of Investment Disputes between States and Nationals of Other States. Additionally, Greece is party to a significant number of bilateral investment treaties (BITs).

The arbitration agreement
The form of the arbitration agreement

In general, the GLICA adopts the substantial provisions of the Model Law regarding the form of the arbitration agreement. Thus, the only formality required by Greek law is the written form of the agreement. The GLICA, however, also introduces two additional specific provisions regarding (i) arbitration clauses contained in bills of lading; and (ii) situations where the parties submit to an arbitration procedure without having executed an arbitration agreement.
More specifically, article 7, section 6 of the GLICA provides that “the issue of a bill of lading, in which there is an express reference to an arbitration clause contained in a carriage of goods contract, constitutes an arbitration agreement”, while section 7 reads that “any lack of form is covered if the parties unreservedly participate in the arbitral proceedings”.

Arbitrability

A pro-arbitration tendency characterises the Greek legal system. All private disputes may be submitted to arbitration except for those in which the subject matter concerns private legal rights that cannot be freely disposed by the parties (GCCP, article 867, section 1). Thus, family law matters such as divorce, relations between parents and their children, and adoption are excluded. Likewise, insolvency and antitrust issues (with the exception of claims founded on unfair competition) cannot be submitted to arbitration. Article 867, section 2 of the GCCP expressly excludes labour disputes.
A further indication of the pro-arbitration tendency in Greece is decision 24/1993, in which the Supreme Special Court (Anotato Eidiko Dikastirio) held that even tax disputes are arbitrable if an investment agreement between the state and a foreign investor so provides.

Effect of the arbitration agreement

Greek law ensures, particularly since the enactment of the GLICA, the strict enforcement of arbitration agreements. Enforceability will be safeguarded before and after the proceeding begins. If a party brings an action before a Greek court and the adverse party timely and specifically invokes the arbitration agreement as a defence to the judicial action, the court must stay the proceeding and refer the parties to arbitration, provided that the dispute falls within the scope of the arbitration agreement.
There is, however, no definite answer to the question of whether a court can rule on issues falling within the arbitrators’ jurisdiction either before or during the arbitration. Leading scholars opine that a distinction should be drawn:
Before the matter is submitted to the arbitrators, the court may examine the validity of the arbitration agreement, if the latter is invoked by a party. On the other hand, if the arbitration has already been set into motion, the court must refrain from ruling on the arbitrators’ jurisdiction until an award has been made. During that period the arbitrators alone can decide on their jurisdiction.

Some case law seems to recognise the competence of a court to examine the validity of an arbitration agreement, without specifying the stage at which such examination may occur. Nevertheless, the legislation shed some light on the question by introducing article 16, section 3 in the GLICA, providing:
The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, the arbitral proceedings continue and an award on the merits is rendered, an integral part of which is the preliminary decision. Such interim award may be challenged only as part of the award on the merits according to the conditions and the procedure of article 34.

This provision seems to set specific limits on the power of courts to intervene in arbitration proceedings, to a greater extent ensuring the enforcement of arbitral agreements.
Despite the methodologies regarding the enforcement of arbitration agreements, it must be noted that a careless drafting of an arbitration clause may result in the intervention of state courts, thereby compromising the binding effect of the arbitral award. It is worth observing that a decision of the Multi-member Court of First Instance of Athens (Polimeles Protodikeio Athinon) in 1987 ruled that a clause containing a provision stating that “prior to any recourse to state tribunals an attempt for arbitral resolution will take place” must be interpreted as excluding the binding character of the arbitral award and hence not preventing the parties from submitting their dispute to state courts.

The law applicable to the arbitration agreement

The question of the law applicable to the arbitration agreement may arise both before the state courts and before the arbitral tribunal at several stages (i) before the issue of the award, or (ii) after the issuance of the award when any relevant deficiencies of the agreement are raised as grounds for the non-recognition or annulment of the award. The answer to this question can be found in the GLICA, the Greek Civil Code (GCC) and the New York Convention, depending on the stage when the issue arises and on the specific issue.
Thus, as far as the law applicable to the arbitration agreement before the commencement of arbitration proceedings is concerned, Greek courts shall apply the conflict-of-laws rule of article 25 of the GCC, which designates the contractual freedom of the parties as the dispositive connecting factor for the determination of the applicable law to the subject matter of a contract. A tacit choice of the applicable law might also be made. In this case, the court will consider several factors to interpret the parties’ choice, among which the law applicable to the main contract, the invocation from both parties of the same law, whether the arbitration clause provides for arbitration under an institutional framework of arbitration (eg, ICDR, LCIA or ICC) and the arbitral seat.
In the absence of a choice of law in the arbitration clause, the judge will apply the law that is most suitable in view of the totality of circumstances (GCC, article 25(b)). It has been contended, however, that in such cases it is expedient to find Greek law as the most suitable – as GLICA does in the absence of a choice of law (article 34) – in order to promote a uniform treatment of the validity of the arbitration agreement in all stages before Greek courts.
After the issuance of the award the law applicable to the arbitration agreement will depend on the role assumed by the tribunal. Specifically, when the court will be seized by an application for setting aside an arbitral award then article 34 of the GLICA will be applicable. Article 34 addresses the issue of applicable law in the context of an application for annulment of the award. According to this article, the validity of the arbitration agreement is governed either by the law to which the parties have submitted it, or by Greek law. When the state court assumes jurisdiction after petition for recognition or execution of a foreign arbitral award, the New York Convention, article 5, section 1 will provide the applicable law to the validity of the arbitration agreement. In that case the validity of the agreement as a condition for the recognition and enforcement of a foreign arbitral award shall be assessed either according to the law that the parties have chosen or to the law of the place where the award has been rendered.

The arbitral process
The law applicable to the arbitral process

Some preliminary remarks should be made concerning the rules applicable to the arbitration procedure. Traditionally, Greek law provided for a uniform treatment of domestic and international arbitration. Following the enactment of the GLICA, the complete set of procedural rules is to be found in the GLICA in conjunction with the GCCP. The Greek legislature’s primary concern is to safeguard the principle of equality of arms. This purpose is served by several provisions in the GLICA. Moreover, as to confidentiality, there are no specific provisions in Greek law. Therefore, confidentiality basically rests on the parties’ will.

The progress of the arbitration proceeding

The GLICA provides the parties with a specific time framework within which they have to proceed with all necessary actions. Therefore, according to article 23, section 1 of the GLICA, the respondent has to submit his defence within a period of 30 days from the time he was notified that the claimant had submitted his application, provided that the application contains the facts of the case and a specific claim. To the contrary, if a claim is not asserted in the application, the claimant has to submit such a claim within a period, not specifically determined by law, but left to the parties’ discretion or the arbitral tribunal. The parties are also obliged to submit any documents or to indicate any other kind of evidence that they intend to use within this time frame that eventually is fixed based upon a common agreement or by the arbitral tribunal.

Interim measures

GLICA reforms Greek law by explicitly recognising the arbitrator’s authority to order interim measures (injunctions). The arbitrators are free to order any measure deemed appropriate so long as those measures are not inimical to public policy. Nevertheless, this authority is moderate in comparison with the original iteration of the text because domestic courts still play the most crucial role. Specifically, the One-member Court of First Instance will be the competent court in Greece to implement the interim measures taken by the arbitral tribunal. During this proceeding the court will have prima facie control of the arbitration agreement and of any eventual opposition of the order entered to public policy. At the same time the extent of the measures depends on the arbitral tribunal’s original competence, as the wording of article 9 of Law No. 2735/1999 suggests: “It is not incompatible with an arbitration agreement for a court to grant an interim measure of protection pertaining to the subject matter of the arbitration before or during arbitral proceedings” (emphasis added). In the context of this stricture, it can be argued that the arbitral tribunal may review the scope of the arbitration agreement in order to rule on its competence (jurisdiction) to issue a provisional measure.
The competence of the arbitrators is always concurrent with that of state courts and, when the “court has already acquired jurisdiction to grant a relevant interim measure at the request of a party”, it shall not validate the arbitral tribunal’s order. It is further argued that, when the arbitral tribunal is not yet constituted, state courts have exclusive jurisdiction to grant provisional measures, especially those concerning differences relating to the arbitral tribunal’s constitution. It also has been suggested that when a party has applied for a provisional measure either before a court or the arbitrators, the competence of the alternate jurisdiction is lessened in order to avoid parallel proceedings and possible contradictory rulings on identical factual and legal issues. Under the GLICA the supremacy of courts over arbitral tribunals regarding interim measures is confirmed. Therefore, if the state courts assume jurisdiction to grant provisional measures, they shall still hold themselves competent to order interim relief even though a party earlier has applied to the arbitral tribunal for granting provisional measures. Consequently, the arbitrators’ authority to grant provisional relief remains limited under the new Greek legal framework because both parties would probably still apply to state courts for issuance of an order granting provisional relief in order to avert a mala fide reaction from the adverse party.

The annulment of the award
General

In order to determine the extent and the intensity of the control exercised by state courts over arbitration awards, the character of an award as domestic or foreign has to be assessed. Thus, the nationality of an arbitration award constitutes the criterion based on which the authority of Greek courts to control and assist arbitrations will be determined. Before the enactment of the GLICA most legal scholars contended that the award’s ‘nationality’ would derive from the law governing the procedure as a whole. Consequently, the authority of courts to control and assist arbitral proceedings should be based on the law chosen by the parties. Nevertheless, there is jurisprudence holding that the place of issuance of the award is the most important factor in determining the parties’ will in the absence of an explicit choice of the applicable law of designation. Under the GLICA it has been declared that “[c]ompetent to decide on the application provided by article 34(2) for setting aside the award is the Court of Appeal, in the jurisdiction of which the award is rendered.” Greek law does not provide for recourse against foreign arbitral awards. Only domestic awards can be set aside.
The parties can apply to set aside an award within three (3) months from receipt of the award (article 34, section 3 of the GLICA), for the same reasons as those provided in the UNCITRAL Model Law. An award can be set aside if:
(a) The party making the application furnishes proof that:
(1) a party to the arbitration agreement referred to in article 7 was under some incapacity; or
(2) the said agreement is not valid under the law to which the parties have subjected it or failing any indication thereon, under the Greek law; or
(3) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(4) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
(5) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with this Law.
(b) The court seized by an application for setting aside shall also decide ipso iure whether the subject-matter of the dispute is not capable of settlement by arbitration under Greek law or the award is in conflict with the international public policy as defined in article 33 of the Civil Code.

Limitation to the challenge of the arbitral award

The right to challenge an arbitral award cannot be exercised in a way that manifestly exceeds the limits imposed by good faith, morality or its social or economic purpose (GCC, article 281). Another example drawn from the jurisprudence of the Greek Supreme Court arises from a litigant who does not invoke during the arbitral proceedings a flaw in the constitution of the arbitral tribunal or does not challenge the validity of the arbitration agreement, thus creating a reasonable expectation in the adverse party that he will not challenge the award on such a basis before domestic courts.

Waiver of the right to challenge an award

An ex ante waiver of the right to challenge an award is invalid because this would adversely compromise the public interest in exercising some control over arbitral awards by state courts (GCCP, article 900). Accordingly, only an ex post waiver can be recognised, while an ex ante waiver is only possible in cases where this agreement is ratified by law.

Recognition and enforcement of foreign arbitral awards

As mentioned, Greece has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards pursuant to legislative decree No. 4220/1961. International conventions ratified by the Greek parliament prevail over all contrary national provisions (article 28, section 1 of the Greek Constitution). The enforcement of foreign arbitral awards is to be sought before the One-member court of First Instance of the district where the debtor’s domicile is located. Where no party is domiciled in Greece, the One-member court of Athens is competent to exercise jurisdiction. (GCCP, article 905, section 1 and article 906).
In any event, Greek courts have traditionally had a very favorable stance towards the recognition and enforcement of foreign arbitral awards. Moreover, Greek judges do not hesitate to enforce foreign arbitral awards against Greek corporate entities. Public policy as an obstacle to the recognition of foreign arbitral awards is always construed in accordance with Greek rules of private international law. Thus Greek courts in the great majority of cases reject claims that foreign arbitral awards are contrary to public policy considerations. However, there is a rather illustrative list of procedural and substantive law issues that have been found in Greece to be contrary to international public policy:
• a party-appointed arbitrator raising arguments on behalf of the appointing party or submitting evidence for this purpose even if such intervention is provided for in the procedural rules governing the arbitration;
• violations of fundamental principles of a fair hearing;
• anti-suit injunctions protecting or facilitating the arbitration process;
• excessive insurance claims; and
• punitive damages, to the extent that they are disproportionately excessive and therefore fulfil a penalising function (not valid as to the excess under the GCC, articles 409 and 281).

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Due to the enactment of the GLICA and the evolution of jurisprudence, Greece is equipped with a modern legal framework for international commercial arbitration. Among the most interesting features of this framework is the acceptance of and proclivity for enforcement of arbitral clauses and support for the arbitration process from the very commencement of the proceeding, to the enforcement. Furthermore regarding the means to challenge an arbitral award, the Greek legislature was prudent. The original approach of the UNCITRAL Model Law is followed. As to the recognition of foreign arbitral awards, the New York Convention is applied and the Greek legal rubric declines recognition and enforcement only in the most extraordinary circumstances. Arbitration is deemed a reliable means of international dispute resolution in pari materia with judicial recourse. The modern legal framework in combination with the political stability of the country and its geographical position has the potential of transforming Greece into an important seat for arbitrations, particularly in connection with international disputes that may arise in the area of south-eastern Europe.