“Pathological” Arbitration Clause

Special substantive rules of interpretation have also developed for so-called pathological arbitration clauses. In practice, despite the availability of model clauses, such clauses occur relatively frequently.

The Berlin Court of Appeal (SchiedsVZ 2012, 337) summarised these rules in connection with an arbitration clause contained in an agreement between the German subsidiary of a Finnish group and a Belgian stock corporation. Under the clause, all disputes were to be decided in accordance with the “arbitration rules of the German Chamber of Commerce”. The Belgian stock corporation considered the clause invalid. Given the international nature of the matter, it argued that the clause was directed at arbitration before the German Chambers of Commerce Abroad, without it being possible to determine which such chamber was specifically competent. The Berlin Court of Appeal accepted the applicant’s interpretation that the clause provided for proceedings under the Arbitration Rules of the German Arbitration Institute (DIS). It rightly proceeded on the basis that the clause expressed the parties’ unequivocal intention to have their disputes resolved before a German arbitral tribunal.

NJW, 24 April 2013, pp. 3136 et seq.