ICC Rules: 1988

Claimant: Seller (Germany)

Defendant: Manufacturer (Italy)

The parties entered into a contract whereby Claimant undertook to promote sales of Defendant's products in the former Federal Republic of Germany and Austria (subsequently restricted to the first country only) for an unfixed term, in return for commission of 5%, later reduced to 3%. After nine years, Defendant terminated the contract, and controversy arose over commission payable. Claimant applied for and obtained attachments in German and Italian courts in order to secure part of its claims. In the arbitral proceedings, Defendant made a counterclaim for compensation to cover the harm it allegedly suffered as a result of such attachments.

With respect to jurisdiction over the counterclaim:

'Originally Defendant's counterclaim was for damages for the damage caused by the attachments in Germany. In the course of the arbitral proceedings, an attachment was also made in Italy and now Defendant counterclaims for damages for the damage caused there as well.

Defendant's counterclaim presents the Arbitral Tribunal with a difficult question since it invites the Tribunal to sanction a party for seeking from a state court a provisional remedy of a kind (attachment) which the state court has power to grant, and an Arbitral Tribunal does not. The arbitration clause . . . does not expressly confer jurisdiction on the Arbitral Tribunal to order conservatory or provisional measures at all (see Bernardini, in Mesures conservatoires et provisoires, ICC Publication No. 519, p. 22, 28). However, by implication, Article 8.5 of the ICC Rules does confer jurisdiction on the arbitrators to issue conservatory or provisional measures, but there remains a question as to the extent of such jurisdiction and whether any such jurisdiction would be exclusive. Does the Arbitral Tribunal's power extend to measures designed to ensure enforcement of a possible award such as attachment of assets at third-party debtors such as banks, or orders directed to third-party debtors to take or omit certain actions (e.g. Mareva injunctions)? The exercise of such powers requires the use of state power. Accordingly, the Arbitral Tribunal does not have power to grant such measures and state courts retain the jurisdiction to do so, which is granted to them by law, and not by agreement of the parties.

To be sure, parties may, subject to the requirements of ordre public, by contract agree not to present requests for provisional measures to a court of competent jurisdiction, and may become responsible in damages for a breach of that agreement. This is not the case here, however. Instead, Article 8.5 of the Rules does state that in "exceptional circumstances", a party shall be at liberty to apply to a competent judicial authority for conservatory interim measures. One can argue that this "exceptional circumstances" limitation should not apply in this case, since the conservatory measure sought - an attachment - is one that the Arbitral Tribunal does not have the power to grant.

Moreover, the Tribunal would say that the state court is ordinarily the best judge of its own jurisdiction and the determination of whether conservatory measures are appropriate. Substantial practical considerations support the view that the local courts of Germany and Italy should retain jurisdiction over these questions. They are much closer to the facts of the matter. Under Article 26 of the ICC Rules, an arbitral tribunal should be reluctant to issue an award concerning a question considered to be under the exclusive jurisdiction of the ordinary courts of the parties' countries. This Arbitral Tribunal is certainly reluctant to try to exercise any jurisdiction it might have to award damages, when a national court, acting within their own competence, has awarded conservatory measures.

Accordingly, the Arbitral Tribunal dismisses the counterclaim on the merits, finding that it would not normally be a breach of contract for a party to request, in good faith, a state court having jurisdiction over the matter to grant interlocutory measures, and that the grant of such a decree in due form by competent state tribunal would prima facie be a defense to a claim of breach. No evidence has been submitted by Defendant showing abuse of the judicial process by Claimant, or otherwise rebutting the prima facie validity of Claimant's action.'