Arbitration Links - Linklaters
  • Year: 2016
  • Month: December

Escalation Clauses: no longer a tripping hazard for arbitrations with seat in Germany?

01 December 2016 Julia Grothaus; Dr. Rupert Bellinghausen, Europe; Germany


Escalation clauses need careful drafting to be enforceable and commercially useful. There is uncertainty as to the consequences of the parties’ non-compliance with escalation clauses providing for ‘final’ dispute resolution by means of arbitration. Will it affect the jurisdiction of the arbitral tribunal or the merits of the claim and can an arbitral award even be set aside? In two recent decisions, the German Federal Court of Justice (Bundesgerichtshof) clarified that, in arbitral proceedings seated in Germany, an arbitral tribunal is entitled to assume jurisdiction irrespective of whether the parties complied with the escalation clause.

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