A. Co. Ltd. v. B. GmbH

At a glance

Parties

A. Co. Ltd. (South Korea), appellant and respondent in the arbitration, v. B. GmbH (Germany), respondent to the appeal and claimant in the arbitration

Case no.

Swiss Federal Tribunal No. 4A_342/2019

Court

Swiss Federal Tribunal (Bundesgericht), First Civil Law Division

Underlying award(s)

ICC Partial Award on Jurisdiction and Liability of 3 June 2019, ICC Case No. 23188/FS, seat Zurich

Forum and rules

Appeal in civil matters against an international arbitral award (Art. 190(2)(b) and 190(3) PILA; Art. 77 Federal Supreme Court Act)

Treaty

Arbitration clause in Art. 9(3) of the Quality Assurance Agreement (QAA); New York Convention Art. II considered by the arbitral tribunal on formal validity

Court

Judge Kiss (Presiding), Judges Hohl and Niquille

Sector

Automotive supply; TFT displays

Outcome

Appeal dismissed to the extent admissible; the ICC tribunal's jurisdiction was upheld.

Amount

Court costs of CHF 85,000 charged to A. Co. Ltd.; it must pay B. GmbH CHF 120,000 in party costs, CHF 80,000 of which comes from the security B. GmbH had paid into court.

The dispute

B. GmbH, a German parent company of a group active in automotive technology, ran a tender in June/July 2015 for about 6 million thin-film transistor (TFT) displays for its customer for 2017–2021 (the "A-IVI Project"). On 23 July 2015 it awarded the supply to A. Co. Ltd., a South Korean display manufacturer. The parties signed a Quality Assurance Agreement (QAA) in January and March 2016. They never agreed on or signed the framework Corporate Agreement (CA) or the Terms of Purchase. In June 2016 A. Co. Ltd. announced it was abandoning the project. B. GmbH started an ICC arbitration in Zurich claiming damages. A. Co. Ltd. contested jurisdiction: it argued that the arbitration clause in Art. 9(3) QAA covered only disputes about quality assurance and corporate social responsibility, not the supply obligation. The tribunal upheld its jurisdiction and found A. Co. Ltd. liable in principle in a partial award, and A. Co. Ltd. appealed to the Federal Tribunal under Art. 190(2)(b) PILA.

Key holdings

1. The partial award is an interim decision on jurisdiction and can be challenged under Art. 190(3) PILA. On jurisdiction the Federal Tribunal may itself declare whether the arbitral tribunal has jurisdiction. It considered nothing in the appellant's statement of facts that departed from the award's findings, and nothing in the reply that went beyond answering the other side's submissions. E. 2.1–2.5
2. The scope of the arbitration clause was assessed under Swiss principles of interpretation, which both parties accepted and which the tribunal had applied implicitly. A waiver of the state courts is not to be assumed lightly. But once the parties' intent to arbitrate is established, the principle of effectiveness applies. E. 3.1–3.2
3. The term "contract disputes" in Art. 9(3) QAA is not limited to disputes arising directly from the QAA. The QAA was part of the planned set of contracts for the supply relationship, and every draft contract, including the appellant's own version of Art. 23.4 CA, provided for ICC arbitration in Zurich. Read in good faith, the clause covers the whole supply relationship, including whether a supply obligation exists. E. 3.4
4. The appellant could not reasonably understand that quality-assurance claims would go to arbitration while disputes over the supply obligation stayed with the state courts. The fact that the QAA was signed months after the supply award does not change this. The complaint under Art. 190(2)(b) PILA is unfounded. E. 3.4
5. The appeal is dismissed to the extent admissible. The appellant pays court costs of CHF 85,000 and CHF 120,000 in party costs, CHF 80,000 of which is paid from the security deposited with the court. E. 4; operative part ¶¶ 1–3

Procedural history

1. 23 July 2015B. GmbH awards A. Co. Ltd. the TFT display supply for the A-IVI Project; confirmed by letter of 4 August 2015.
2. 27 January / 21 March 2016The QAA and its addendum are signed by A. Co. Ltd. and then by B. GmbH; the CA and Terms of Purchase are never signed.
3. 29 June 2016A. Co. Ltd. informs B. GmbH that it is abandoning the project and will stop deliveries by 31 December 2017.
4. 27 October 2017B. GmbH files for ICC arbitration.
5. 22 February 2018ICC confirms the tribunal's chair; the co-arbitrators had been confirmed on 19 January 2018. Procedural Order No. 1 of 22 March 2018 splits the proceedings into jurisdiction and liability, then quantum.
6. 4–5 October 2018Hearing in Cologne.
7. 3 June 2019Partial Award on Jurisdiction and Liability: the tribunal upholds its jurisdiction and finds A. Co. Ltd. liable in principle.
8. 6 January 2020Swiss Federal Tribunal dismisses A. Co. Ltd.'s appeal to the extent admissible.

Tribunal, counsel and experts

For the claimant

Martin Bernet

For the respondent

Christopher Boog · Philippe Bartsch · Philip Wimalasena

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Keywords

• scope of arbitration clause
• contract disputes
• Art. 190(2)(b) PILA
• lack of jurisdiction
• interim award on jurisdiction
• principle of good faith interpretation
• principle of effectiveness
• fall-back clause
• Quality Assurance Agreement
• framework agreement
• TFT displays
• automotive supply
• ICC
• Zurich seat
• New York Convention Article II
• set-aside
• Swiss Federal Tribunal

Summary generated with AI from the published documents — refer to the award for the authoritative text.