Headnote

Arbitration – Time limit for arbitration proceedings

Summary of facts

The parties signed an arbitration document whereby they agreed to nominate an arbitrator to settle the dispute between them. The arbitrator held the first meeting on 26 May 2002, at which the parties submitted their motions and evidence. The arbitration sessions took place until the arbitrator issued his award on 29 January 2003 in favour of the Petitioner, who filed his claim to get the award ratified and enforced. The Respondent objected to the arbitrators’ award as it had been issued after the legally fixed term and on the ground that it breached the arbitration document and public order. On 15 April 2003, the Court issued a decision rejecting the ratification of the award. The Petitioner filed an appeal and on 28 September 2003 the Court, in the absence of the parties, ruled to reject the appeal and to confirm the initial judgment. The Petitioner objected to the appealed judgment by way of cassation. The Respondent’s attorney deposited a defence memorandum requesting the dismissal of the challenge within the legal time period.

Held

The petition to cassation was dismissed.

Article 210.1 of the Civil Procedure Code states: “If the litigant parties haven’t set, as a condition in the agreement, a date for the arbitration the arbitrator should arbitrate within six month from the date of the session of the first arbitration, otherwise anyone who wanted of the litigant parties may prosecute the litigation to the court or may continue therein before the court if it was prosecuted before that.”

It is established by the Court that a failure to issue the award within the period agreed upon by the parties or the period set forth in the above-mentioned article if the parties do not agree on a period shall result in the invalidity of the arbitrators’ award, unless the Court, when hearing such a motion, finds that the challenging party expressly or impliedly accepted the arbitrators’ award after the expiry of the time limit for its issuance.

Judgment

The Petitioner alleged that the challenged judgment was issued in contravention of the law and included an incorrect inference, as the arbitration document stipulated that the renewal of the arbitration period six months after the expiry of the initial arbitration period fell within the arbitrator’s authority if he deemed it necessary. The first arbitration session was held on 26 May 2002. On 31 October 2003, the arbitrator decided to extend the arbitration term for another three months commencing from the date of expiry of the first period, which was due to end on 25 November 2002. As such, the arbitration period was extended until 24 February 2003. The arbitrator’s award was issued on 19 January 2003. Therefore, the award was issued within the extension period and should be endorsed.

The Respondent alleged that the award was issued in contradiction to the intention of the parties as per the arbitration document and the relevant correspondence between the parties during the signing period. It was also stated during the session dated 8 June 2003 that the parties authorized the arbitrator to renew the arbitration period if he should deem it necessary. According to the Petitioner, the challenged judgment determined that the Respondent’s withdrawal from the arbitration sessions dated 24 October 2002 affected the arbitration, while Article 208.2 of the Civil Procedure Code allows the arbitrator to rule on the basis of the motions of a single party, if the other party fails to attend the session. In addition, the authorization of the arbitrator to renew the arbitration period shall not constitute a power of attorney that may be revoked, as the arbitrator replaces the judge in the settlement of dispute. If the arbitration agreement allows him to extend the arbitration period, the extension shall [Page46:] be deemed to take place automatically if the dispute is not settled within the first period. The Respondent failed to appear before the arbitrator when the latter issued his initial award referring the issue to investigation. Therefore, the challenged judgment failed to verify the Petitioner’s defence arguments inviting the arbitrator to indicate the basis on which he extended the arbitration period. In addition, the award did not answer the Petitioner’s request to confirm a relevant attachment number.

The Court dismissed the petition as per Article 210.1 and Article 216 of the Civil Procedure Code. Failure to issue the award within the period agreed upon by the parties shall result in the invalidity of the arbitrators’ award, unless the Court, when hearing such a motion, finds that the challenging party expressly or impliedly accepted the arbitrators’ award after the expiry of the time limit for its issuance. The first session referred to in Article 210.1 of the Civil Procedure Code was held on 26 May 2002. Since the Respondent was neither present in person nor by proxy from 24 October 2002 onwards after seeking to withdraw from the arbitration and the arbitrator issued his award on 29 January 2003, the arbitrator should be deemed to have exceeded the set period.

The Respondent’s defence argument concerning the invalidity of the arbitration document on the ground that it exceeded the set period is acceptable without being affected by the Petitioner’s argument that the parties authorized the arbitrator to renew the arbitration term in the seventh article of the arbitration document, as this article states: “The arbitrator shall have the authority to estimate the arbitration fees, which, in addition to any costs related to the renewal of the arbitration period, shall be borne by the parties, if he deems necessary.” This sentence clearly provides for the estimation of the arbitrators’ fees and has nothing to do with the renewal of the arbitration period. The invalidation of the award is acceptable, as it is based on the correct documents and does not contradict the correct interpretation of the seventh article of the arbitration document, which did not include any express or implied agreement between the parties to authorize the arbitrator to extend the set date to issue his award. Since the document did not include any evidence that the parties agreed to extend the arbitration period beyond the arbitration document, the entire objection has no basis.

Accordingly, the present petition to cassation is dismissed.