In Docket No. III ZB 48/09, the respondent in the arbitration proceedings claimed to have counterclaims to set off against the main claims in the arbitration proceedings. While the claimant in the arbitration proceedings admitted that the counterclaims existed, it argued that they had already been fulfilled by the prior set-off declaration of the claimant with additional damages claims of the claimant against the defendant. The arbitral tribunal did not deal with these issues in its arbitral award, presumably because it did not consider itself competent to decide on the counterclaims or counter-counterclaims.

Therefore, in the enforcement proceedings before the German courts, the respondent in the arbitration proceedings again raised the issue of set-off with its alleged counterclaims. The Federal Court of Justice confirmed that set-off in enforcement proceedings is generally permissible, but only where the counterclaim is not disputed, or, if disputed, the German courts would be competent to determine the dispute on the counterclaim. If a disputed counterclaim would have to be decided by an arbitral tribunal or by a foreign court, set-off in German enforcement proceedings is not permitted. This is based on the principle that claims underlying an arbitration agreement may not be decided by a court instead of an arbitral tribunal. The same applies where a foreign court is competent under a jurisdiction agreement.

The decision helpfully clarifies that a set-off is not possible in proceedings for enforcement of an arbitral award if the counterclaims themselves would need to be decided in separate arbitration proceedings.