Art. 7 (1) and (2) LICA

Art. 2 (2) and (3) Rules of the CA at the BCCI

Art. 292 Commercial Law

Art. 367 Commercial Law

* Ruling on Domestic Arbitration Case No. 126/01 ruled on 28.02.2002

THE PARTIES’ CONSENT IN RELATION TO THE ARBITRATION CLAUSE COULD BE EXPRESSED IN DIFFERENT DOCUMENTS, BUT IT SHALL ONLY BE IN WRITING.

THE LACK OF FORMAL CONSENT IN WRITING IS EQUAL TO THE LACK OF AN ARBITRATION AGREEMENT.

The respondent in the present case is challenging the jurisdiction of the CA by arguing that no arbitration agreement that is in accordance with Art. 7 (2) and (3) of LICA exists. The transportation order made by the claimant, including an arbitration clause has not been accepted by the defendant in accordance with Art. 23 (1) and Art. 24 (1) and (3) of the General forwarding conditions enacted by the National Association of the Bulgarian Dispatchers.

Subject to the defendant’s objections, the claimant sustains that the order, which provides the conditions for transportation, is in fact an offer made to the defendant and is in accordance with Art. 13 of the Obligations and Contracts Act. This offer also includes a proposal for settlement of disputes through arbitration by an indication of the Arbitral Tribunal. The arbitration agreement is accessory to the contract of carriage, which of itself does not require written form in order to be valid (Art. 367 of the Law on Commerce). The fulfillment of the contract of carriage was initiated according to the terms of the order, which leads to the conclusion that the respondent has implicitly accepted the written request for and the arbitration clause (Art. 292 of the Commercial Law). If the defendant did not wish to accept the offer then he/she should have rejected it immediately.

The Arbitral Tribunal finds that the objection made by the defendant about the lack of jurisdiction resulting from the lack of a valid arbitration agreement, rendered in written form, is admissible and grounded. It was made within the time limit provided for by Art. 20(1) LICA (with the respondent’s answer the statement of claims).

The arbitration agreement was not executed in written form. Such requirement for validity is explicitly raised by the law. It is not necessary that the consent be expressed in a single document. If the offer containing an arbitration clause had been accepted in writing by the defendant one should conclude that there is a valid arbitration agreement. The parties’ consent could be given in different documents, but it is necessary that it be in writing (Art. 7 (1) and (2) LICA). This provision appears as special with respect to the provisions of the Law on Commerce from which one derives the conclusion that there is no requirement for a carriage contract to be in writing (Art. 367 of the Commercial Law), as well as the provision of Art. 292 of the same law treating the so-called “silent acceptance”, thus excluding their application. Moreover, Art. 293 of the Law on Commerce, which regulates the so-called “silent acceptance” in a trade contract, are of substantive law nature while an arbitration clause appearing as a separate agreement regulating the procedural way of resolving disputes.

Although specific instructions were given, no evidence proving that the respondent has accepted the offer for an arbitration clause in written form was presented.

The claimant’s arguments qualifying the arbitration agreement as an accessory that follows the regime of trade transactions are unfounded. The arbitration agreement is autonomous and independent from the other terms of the contract (Art. 26 (2) of the Rules of the CA at the BCCI).

Accordingly the Arbitral Tribunal holds that the parties have not entered into a valid arbitration agreement since the written form for the validity of such an agreement has not been observed. The contract is rendered null and void (Art. 7 (1) and (2) LICA). Hence the fact that no agreement was attained in writing means that no such agreement was actually made. The respondent’s objection based on Art. 20 (1) LICA and in connection with Art. 26 (1) of the Rules of the CA at the BCCI that the Court of Arbitration at the BCCI has no jurisdiction to hear the dispute is grounded and has to be accepted while the existing arbitration proceeding is dismissed.

* Published in Bulgaria in collection 2002-2003 under reference No. 156, p. 371