Provisional Relief Judge declares itself not competent in view of Arbitration Agreement

Provisional Relief Judge declares itself not competent in view of Arbitration Agreement

Arnold van Steenderen
28 September 2018

On 19 June 2018 the Provisional Relief Judge of the Rotterdam District Court has handed down a judgment where the area of tension between the preliminary relief action available under the Dutch Code of Civil Procedure (“DCCP”) and the interim measures possibility under certain arbitration rules played an important role. Under Article 1022 DCCP a court seized of a dispute in respect of which an arbitration agreement has been concluded shall declare that it has no jurisdiction if a party invokes the existence of the arbitration agreement before submitting a defence, unless the agreement is invalid. However, an arbitration agreement shall not preclude a party from requesting the court to grant conservatory measures or from applying to the Provisional Relief Judge of the District Court or the Cantonal Judge for a decision in summary proceedings. If the defendant invokes the existence of an arbitration agreement before submitting a defence, the court shall only declare that is has jurisdiction if the requested decision cannot, or cannot in a timely manner, be obtained in arbitration. In the case at hand the plaintiff customer of a Rotterdam based Tank Terminal Operator decided to apply for interim relief from the Provisional Relief Judge of the Rotterdam District Court although the Tankstorage Agreement contained an arbitration clause as follows:

“Any disputes arising from or connected with this Agreement are to be arbitrated by one arbiter which is appointed by the Parties. Should the Parties not be able to agree on the arbiter, any dispute arising out of or in connection with this Agreement shall be exclusively referred to arbitration in Rotterdam in accordance with the TAMARA Arbitration Rules - see www.tamara-arbitration.nl.”

The operator of the Tank Terminal had sent a notice to the customer seeking to terminate the Agreement by the end of 2018. In the same letter of 15 June 2018 the Terminal Operator notified its customer that it would exercise a possessory lien over the biodiesel and acid oil stored until it received payment of outstanding invoices in the amount of EUR 524,954. The customer considered the termination of the Agreement a breach of contract and wanted continuation of the Agreement. The customer further considered exercising of a possessory lien was tortious and therefore the customer applied to the Provisional Relief Judge to request a relief order. The Terminal Operator invoked the competency issue and with success. The Judge concluded that the customer had not followed the arbitration clause which implied the obligation to first try to agree on one arbitrator and if this would prove to be impossible to refer the matter to the TAMARA Arbitration Institute for appointment of arbitrators. The Judge further noted that the TAMARA Rules 2015 do also contain provisions for interim relief proceedings and other provisional measures. Arbitrators may, on grounds of urgency and having regard to the parties’ interests, render an arbitral award in interim relief proceedings at any stage of the arbitration proceedings. The award in interim relief proceedings shall not prejudice the arbitrators’ final decision on the substance of the case (Article 6.1 TAMARA Arbitration Rules). For this reason the Provisional Relief Judge decided in favor of the defendant Terminal Operator. 

The decision of the Provisional Relief Judge seems entirely correct. If there is an Arbitration Agreement in place and the Arbitration Rules of the relevant Arbitration Institute enable the parties to request interim and/or conservatory measures, this should be the way forward, rather than going to the State Court for interim relief. The Provisional Relief Judge will assume jurisdiction if it is not sufficiently clear whether the arbitral clause will hold. Judges tend to take the existence of the arbitration clause very seriously and they will investigate whether such clause really exists between the parties.