No. 27/2023
All arbitrators involved must sign an arbitral award. If an arbitrator is not in a position to sign the award, the fact that he is unable to do so and the reason for his inability to sign must be stated in a note indicating the absence of a signature. In a decision published today, the Higher Regional Court of Frankfurt/Main ruled that an arbitral award was invalid because the third signature was missing without it being possible to ascertain the reason for the absence from the note indicating the absence of a signature.
The parties are in dispute about the setting aside of an "arbitration award". In the context of the intended acquisition of Monsanto Company, the respondent sold various business units to the claimant. The parties agreed on an arbitration clause. With its arbitration claim, the claimant subsequently sought damages from the respondent on the grounds of intentional damage inflicted in a manner offending common decency, as the respondent allegedly had not disclosed the relevant costs.
The arbitral tribunal, consisting of three arbitrators, dismissed the claim with a "final award" dated August 2022 and ordered the claimant to pay the costs. Within the three signature fields for the arbitrators, only two signatures are to be found. With regard to the third arbitrator, the words "signature could not be obtained" were noted below the pre-printed name. The claimant seeks the setting aside of this award or, in the alternative, a declaration that it is invalid.
The Higher Regional Court found that the challenged “arbitral award” was not valid. It lacked the required number of signatures. In principle, all arbitrators must sign an arbitral award. The purpose of the signature is to ensure that the signing arbitrators assume personal and legal responsibility and to establish that the arbitral award was properly reached.
If an arbitrator is not in a position to sign the award, – just as in court proceedings – both the fact of the absence of a signature and the reasons for it must be noted. In the present case, there was no indication of a reason for the absence of the signature of the third arbitrator. The typewritten note "signature could not be obtained" only indicated that a signature was missing. The reason why the signature of the arbitrator could not be obtained (such as illness, leave of absence, etc.), however, remained open.
Consequently, according to the findingsof the Senate, the document did not constitute an award in the sense of a final result of the arbitral proceedings. Therefore, it was not to be set aside, rather its invalidity had to be established.
The decision can be challenged by way of an appeal on points of law to be decided by the Federal Court of Justice (Bundesgerichtshof [BGH]).
Higher Regional Court Frankfurt/Main, decision of April 27, 2023, 26 Sch 14/22
English version: dep. press spokeswoman Dr. Kerstin Wierse