The Supreme Court of Cassation has ruled more than once that the arbitration agreement shall constitute a specific and explicit demonstration of the parties’ will to refer their dispute to arbitration. Presumed agreement is not acceptable except for the case when the respondent appears and participates in the proceedings without challenging the jurisdiction of the arbitral tribunal.

The Supreme Court of Cassation had the chance to consider a case for setting aside an arbitral award rendered against an owner in a building in condominium regime. The claimant to the arbitral proceedings argued that the arbitration agreement was present and valid because the general meeting of the owners had adopted a resolution authorizing the manager of the condominium to determine a competent tribunal to hear disputes for unpaid fees due by the owners to the condominium. The manager determined a particular arbitral tribunal, and the statement of claims against one of the owners was filed before this tribunal. The respondent however argued that an arbitration agreement was not executed between the parties.

This view of the respondent was held by the Supreme Court of Cassation, as well. Considering that the respondent has not expressed her free will to enter into an arbitration agreement with the condominium/its manager, the court found that she had not been bound by any resolutions of the general meeting, nor unilateral decisions of the manager. The court commented that the arbitration agreement shall be a product of the explicit free will of the parties, which is not the case here.

As a result, the arbitral award was set aside due to the lack of a valid arbitration agreement.

By rendering this decision, the Supreme Court of Cassation has once again reiterated its conservative approach toward arbitration. Nevertheless, in this particular case the court’s findings are justified and compliant with the essence of arbitration – expression of free untampered will of an individual party. This fundamental element will not be present in case a majority (the general meeting of the owners) decides in lieu of the individual.

The takeaway once again is that an arbitration clause or agreement shall be carefully implemented to be effective. It is always valuable to keep in mind the old proverb Measure Thrice, Check Twice and Cut Once.

Author: Tsvetelina Koleva