Set-off and other substantive law objections as defence against the enforcement of an arbitral award BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte Dr. Christian Borris, LL.M 3rd DIS Baltic Arbitration Days 2014 Riga, 27 June 2014

The issue  Set-off as a defence against enforcement of an arbitral award  Other substantive objections as defences against enforcement of an arbitral award - E.g.: Award obtained by fraud  Procedural alternatives BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte

Position of the German Federal Court of Justice (BGH)  Set-off recognized as a defence against enforcement of an arbitral award  Reasoning: procedural efficiency  Jurisdiction of enforcement courts vs. jurisdiction of general courts of the first instance Exceptions:  Set-off claim is subject to an arbitration agreement  Set-off claim could have been but was not raised during the arbitral proceedings - BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte

Legal situation in other countries  USA: set-off not recognized as a defence (because it does not fall within any of the NY Convention defences)  Canada: set-off not recognised as a defence (because it does not fall within any of the defences according to the Model Law BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte

Critique  Full right to be heard vs procedural efficiency  Loss of one instance  Enforcement proceedings not suited to deal with complex factual issues  Breach of the UN Convention: not one of the grounds for denying enforcement pursuant to Art. V? BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte

BORRIS ■ HENNECKE ■ KNEISEL Rechtsanwälte Im Zollhafen Cologne Germany T F