Introduction
An arbitration award is final and binding. However, three elements can cause an arbitration award to be cancelled under the Arbitration and Alternate Dispute Resolution (ADR) Law – namely, if:
- a submitted letter or document is acknowledged or declared to be fake after the award has been determined;
- a decisive document is found after an award has been determined that was hidden by the counterparty; or
- an award was derived from the deception of one of the parties in an arbitration proceeding.
This article discusses the third – namely, deceit as grounds to cancel an arbitration award through a public court.
Court consideration of deceit
Arbitration and ADR Law does not explain deceit. Thus, it is necessary to examine the jurisprudence. One interesting and important consideration from court is as follows:1
the basis of lies and deception in the elucidation of the article [article 70 of the Arbitration Law and ADR] can no longer be absolutely interpreted as a form of criminal act, but must be interpreted as a form of action that must be proven civilly, namely declaring an evidence as valid or invalid or declaring (an evidence) as not having any legal force whether it was made in writing or formally.Thus, the element of a series of false words and/or deception which is a form of element in a criminal case cannot be used as the basis for a lawsuit in the a quo case, moreover, the dispute in the a quo case is based on an act of default due to a violation of the cooperation agreement between the the Applicant and Co-Respondent (Emphasis added.)
The phrase “can no longer be absolutely interpreted” may be understood that deception as a criminal act can still occur and become the basis for the cancellation of an arbitral award. Nevertheless, since the Constitutional Court has declared article 70 of the Arbitration and ADR Law to have no binding force, the emphasis on a “deceit” should be seen as a civil act. Namely, it should be seen as related to the submission of evidence in the arbitration proceeding. Deception may occur if invalid or illegitimate evidence was submitted to the tribunal during the arbitration proceeding.
Elements of deceit
However, proving the existence of deceit alone is not enough. The third reason regulated under article 0(c) of the Arbitration and ADR Law stipulates that other elements must be fulfilled:
- the existence of deceit must be proven; and
- the fact that “the award was derived from [a deceit]” must also be proven.
Both elements must be fulfilled in order to prove that invalid evidence was submitted during an arbitration proceeding and that “the award was derived from [that invalid evidence]”.
When deceit is used as grounds for cancelling an arbitration award, several elements must be fulfilled – namely:
- an award was made as a result of deceit;
- one of the parties was deceitful; and
- that deceit occurred in an arbitration proceeding.
The first two elements seem to coincide. However, the third element is decisive. If the first two elements exist, but the deceit did not influence the tribunal in determining the award, the provision of article 70(c) of the Arbitration and ADR Law is not fulfilled. Without all elements being fulfilled, the application to cancel an arbitration award must be declined.
For further information on this topic please contact Eddy Leks at Leks & Co by email (eddy.leks@lekslawyer.com). The Leks & Co website can be accessed at www.lekslawyer.com.
