It is not possible to declare a sudden loss of jurisdiction to hear the matter by the Arbitral Tribunal when the contract is terminated (STSJ Andalucía CP 1ª December 15, 2022) (2023)

May 18, 2023May 18, 2023 Administrator

It is not possible to declare a sudden loss of jurisdiction to hear the matter by the Arbitral Tribunal when the contract is terminated (STSJ Andalucía CP 1ª December 15, 2022) (1)It is not possible to declare a sudden loss of jurisdiction to hear the matter by the Arbitral Tribunal when the contract is terminated (STSJ Andalucía CP 1ª December 15, 2022) (2)

TheJudgment of the Superior Court of Justice of Andalusia, Civil and Criminal Chamber, First Section, of December 15, 2022, appeal no. 9/2022 (speaker Miguel Pascua Liaño), dismisses the request for annulment of an arbitral award in collegiate arbitration, with the following considerations, conveniently ordered:

“(…)On the arbitration dispute. The arbitration dispute dealt with the interpretation of a contractual clause included in the first stipulation of the contract for the exchange of land and urban use in exchange for elements to be built and an amount of money entered into between the parties on October 19, 2004, according to which 'The effectiveness of this contract is conditional on the fact that the Vera General Urban Planning Plan, currently in the drafting phase, classifies -in the present municipal legislature- as developable land that corresponding to the farms described in statement I of this document' . Insofar as the Vera General Urban Planning Plan was finally not approved within the term or on the terms provided by the parties, the acquirer urged the arbitration provided for in the eighth stipulation of the contract in order to request that it be declared the supervening ineffectiveness of the contract as a consequence of "the lack of fulfillment of the constitutive event of the condition", with the consequent impossibility of compliance, which would entail the return of the amounts advanced by way of price and their interests from the celebration of an act of conciliation. The assignors opposed the claim and counterclaimed requesting compensation for damages for non-compliance by the acquiring company and plaintiff therein, of its obligation to immediately start the urbanization works. The arbitral award partially upheld the claim, declaring the termination of the contract due to supervening inefficiency "since the classification of developable land was not reached with respect to the land that was the subject of the contract", ordering the defendants to return the amount received as "payment on account of the benefits of the exchange', with the interest accrued from the award (not from the conciliation act), and dismissed the counterclaim, without ordering costs”.

“(…)Regarding the filing of the claim for annulment. The representation of Messrs. Pablo and Milagrosa file a claim for annulment of the award, in which they start from the following premises: a) That at the time of the execution of the contract (October 19, 2004) the lands object of assignment were, although rustic, immediately developable, the acquirer having assumed the contractual obligation to start urbanization works from the outset, without prejudice to the fact that the construction phase is delayed until the corresponding building permits are obtained; b) That the clause transcribed above establishes a condition of a resolving and not a suspensive nature. c) That the approval of the Vera Urban Plan, classifying the land as undevelopable, led to the termination of the contract, and that, from that moment on, the arbitral tribunal lost its "jurisdictional competence", since the arbitration submission clause would have continued the same fate as the contract in which it was included”.

“(…)On the interpretation of the contract carried out by the award. Instead, the award was based on the premise that the land covered by the contract was not developable at the time the contract was signed, but could become so if the Plan in which it was so provided had been approved. However, it qualified the condition as resolutive, since the contract had binding effects from the outset, as demonstrated by the fact that the assignors represented the acquirers for the procedures that were necessary in order to obtain the qualification of the land as developable, and the acquirer delivered an amount of money as advance payment of the price. The arrival of the period foreseen for the fulfillment of the condition led to the termination of the contract, in accordance with the provisions of article 1117 CC. The plaintiffs are scandalized by the first premise established by the award (the undevelopable nature of the land), for which they invoke the statements made in the heading 'Urban Planning Situation' of the contract, according to which 'In relation to the indicated land, there is no subject to a special protection regime that makes it incompatible with its urban transformation (...)'. It is quite evident that such an absurd conclusion cannot be supported by this statement, such as that rustic land is considered no longer buildable for certain uses, but materially developable, as a de facto conversion into urban land: the non-existence of a regime special only means that there are no drawbacks for an 'urban transformation' through ordinary planning, that is, for the land to be classified as developable in the new plan. In fact, in the following paragraph of that epigraph, it is stated that it is the 'common objective of those involved in this document that it contemplates the land of the farms described in the second statement as developable land', which unequivocally entails the causalization of a motive, which is given the form of a condition. It is clear that if this was conceived as a 'common objective' of both parties, it is because the ceding party was also aware that at that time it had not been achieved, but was pending approval of the plan. Hence the condition established in the first stipulation, according to which 'the effectiveness of this contract is conditioned to the fact that the General Urban Planning Plan, currently in the drafting phase, classifies -in this municipal legislature- as developable land that corresponding to the farms described'. Also for this reason, in clause 3.1 it is stated that 'the maintenance of the obligatory ties derived from this contract (...) will require that, in the remaining time of this legislature, the Plan be definitively approved (...) making it possible to request and obtain of municipal building licences'. There is no evidence that failure to achieve that 'common objective' or causal reason is attributable to the acquirer, as it is the exclusive decision of the municipal corporation, not subject to commitments of any kind. Consequently, the thesis of the plaintiffs here is irrational, as they understand that the acquirer should have started the urbanization works immediately (before the classification of the land as developable): it would be a null obligation as it is a provision that is legally impossible original (arts. 1271.III and 1272 CC), and therefore said clause cannot be interpreted in such a way that it leads to its nullity (art. 1284 CC). It is also not understood what damage the acquirer would have caused to the assignors due to the fact that it did not (illegally) start the urbanization works when they would not have reported any profit, since no urban use derived from the land was obtained in the new plan. assigned (use that, by the way, formed part of the object that the assignors transmitted to the acquirers, as expressly stated in clause 2.1 of the contract). The purpose for the assignors was not, or could not be, the illegal construction of useless roads or other sterile connection works, but rather the receipt of specific construction units that could not have been obtained in any way without the foreseen but not certain modification of the Plan. Perhaps the explanation lies in what is stated on page 60 of the claim (which is actually page 14, since the numbering begins at page 46): that if the acquirer had started the works (in violation of urban regulations)' perhaps the plan would not have changed the rustic developable classification that the farms already enjoyed according to the NNSS', that is, that in the face of a fait accompli, perhaps the City Council would have granted the classification of developable land, a consideration that of course the award would not have due attend. The damage derived for the present actors, therefore, has not been caused by any breach of the acquirer, but by the non-approval of the Urban Plan in the terms that both parties expected, which cannot give rise to any compensation, but only to the supervening ineffectiveness of the contract, with the restorative consequences that are fully established in the operative part of the award. In no way is everything that has been said incompatible with the distinction that seems to be made in the contract between the urbanization phase and the construction phase, and to indicate as the delivery date of the built properties object of the exchange that of four years from the obtaining (obviously uncertain, due to the pending approval of the Plan in the terms initially provided) of the building permit; nor with the granting of authorizations to the acquirer so that it could "manage all the appropriate procedures so that the properties subject to assignment can be classified as developable land" (heading of the AUTHORIZATION document that accompanied the contract), This is yet another sign that the assignors were not unaware that the land assigned was not 'yet' developable. The interpretation of the contract that the arbitral tribunal has carried out is, therefore, not at all irrational or 'prevaricating' (as the technical representation of the plaintiffs goes so far as to say in their highly disoriented statement of claim), but rather would be It is surprising an interpretation like the one supported by the plaintiffs here.”

“(…)On the supervening loss of competence to hear the matter by the Court, when the contract is terminated. The plaintiffs also use as grounds for nullity that when the contract was definitively terminated as a result of the approval of the new Vera urban plan in which the ceded land was classified as undevelopable, this also led to the ineffectiveness of the arbitration clause. , so that the disputed issue would have to be ventilated before the civil jurisdiction. The argument is untenable. The art. 22.1 of the Arbitration Law establishes that '(...) The arbitration agreement that forms part of a contract will be considered as an independent agreement from the other stipulations thereof. The decision of the arbitrators that declares the nullity of the contract will not entail by itself the nullity of the arbitration agreement. If this is the case with the most serious causes of ineffectiveness (nullity), it cannot be otherwise with the resolution due to supervening impossibility or due to compliance with a condition, which are nothing more than incidents in the development of the life of the contract. The parties signed a commitment to submit to arbitration for 'all disputes that may arise regarding the interpretation or compliance with this annex -sic -'. There was a dispute about how the contract was to be interpreted (character and effectiveness of the condition, existence or not of an immediate obligation to develop, etc.), and whether there was a breach by any of the parties, and it was submitted to arbitration. The resolution of the obligations as a consequence of the fulfillment of the resolutive condition (end of the 'municipal legislature' without the final approval of the plan that classified the land as developable farms) caused a sudden inefficiency (art. 1117 CC) whose consequences, in In view of said submission clause, they could only be decided by arbitrators. This is how the plaintiffs understood it, by the way, by not initially formulating this exception to the existence of an arbitration agreement that covered the dispute, and on the contrary, retaliating by requesting that the arbitrators establish consequences other than those sought by the claimant. as a consequence of the termination of the contract.

“(…) The claim, then, must be dismissed in its entirety. It is inconsistent and borders on reckless. The order of the plaintiff to pay the costs falls by its weight.

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