An Arbitral Tribunal may refer questions to the Court of Justice of the European Union for a preliminary ruling

CJEU, 13 February 2014, case C-555/13

On 13 February 2014, the CJEU clarified the circumstances in which arbitral tribunals could make a request for a preliminary ruling, which implies that they may be considered as courts or tribunals of a Member State.

In November 2012, the pharmaceutical company Merck Canada brought an action before an arbitral tribunal, “the Tribunal Arbitral necessário”, which has compulsory jurisdiction in Portugal to determine disputes involving industrial property rights pertaining to reference medicinal products and generic drugs.

In the course of this procedure, the Tribunal Arbitral necessário decided to stay the proceedings and to refer the question to the CJEU for a preliminary ruling.

In its Order dated 13 February 2014, the CJEU examined whether the Tribunal Arbitral necessário could be considered to be a court or tribunal of a Member state under Article 267 of the Treaty of the Functionning of the European Union (“TFEU”). The CJEU, restating the Belov case, first reminded that several factors are taken into account to decide on this issue: whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent, (Decision of 31 January 2013, Belov, C-394/11, para. 38. See also the Dorsch Consult Case, Decision of 17 sept. 1997, C-54/96).

Therefore, in principle, arbitral tribunals are not considered as courts or tribunals of a Member State since (i) there is no obligation for the parties, in law or in fact, to refer their disputes to arbitration, and (ii) the public authorities of the relevant Member State are not involved in the decision to opt for arbitration nor required to intervene ex officio in the proceedings before the arbitrator, restating the Denuit and Cordenier case (Decision of 27 January 2005, Denuit and Cordenier, C-125/04, para. 13).

Applying the criteria laid down in the Belov case to the present matter, the CJEU noted that:

  • The jurisdiction of the Tribunal Arbitral necessário does not stem from the parties’ agreement, but from law n°62/2011 dated 12 December 2011, which confers compulsory jurisdiction to the tribunal arbitral;
  • The award is definitive and has the same effects as a judgment handed down by an ordinary court;
  • The arbitrators are subject to the same obligations of independence and impartiality as the judges of the ordinary courts;
  • The arbitral tribunal respects due process and equality of the parties, and decides on the basis of the Portuguese law on industrial property.

Two elements raised doubts as to the permanence of the Tribunal Arbitral necessário: the fact that (i) the arbitral tribunal may vary in form, composition and rules of procedure, according to the choice of the parties on the one hand, and that (ii) it is dissolved after making its decision on the other hand.

However, in the present case, the Tribunal Arbitral necessário (i) being established on a legislative basis, (ii) having a permanent compulsory jurisdiction and (iii) the national legislation defining and framing the applicable procedural rules, the CJEU decided that it has permanent compulsory jurisdiction.

The CJEU concluded that therefore, in light of the above circumstances, the Tribunal Arbitral necessário fulfilled the conditions to be characterized as a court or tribunal of a Member State.

The CJEU had already decided that an Industrial Arbitration Board may be considered as a court or tribunal of a Member State in the Danfoss case (Decision of 17 October 1989, Handels og Kontorfunktionaerernes Forbund I Danmark and Dansk Arbejdsgiverforening, C109/88). However, the application of the criterion of permanence differs in this case compared to the Danfoss case.: in 1989, the CJEU noted that “the composition of the industrial arbitration board is thus not within the parties’ discretion”. If the permanence of the composition of the arbitral tribunal was then required, it seems that in the present case the criterion of permanence is applied to the jurisdiction of the arbitral tribunal, as opposed to its composition.

Despite an apparent simplification of the criteria used by the CJEU, this new decision confirms that the CJEU is not prepared to decide that a “consensual” arbitral tribunal could be characterized as a court or tribunal of a Member state, since the consensual nature of arbitration is not compatible with the requirement of a compulsory and permanent jurisdiction.

The decision is available here.

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