## Facts

- Eco Swiss China Time Ltd. and Benetton International N.V. entered a 1986 license agreement to manufacture watches and clocks under the Benetton trademark.
- The agreement required that all disputes be resolved by arbitration under the Netherlands Arbitration Institute rules.
- In 1991, Benetton terminated the agreement, and Eco Swiss initiated arbitration.
- In 1993, arbitrators issued an interim award finding the termination unlawful and ordering Benetton to compensate Eco Swiss; a later final award set damages.
- Benetton sought annulment in Dutch court, alleging the license agreement was void as anti-competitive under Article 85 EC (now Article 101 TFEU) and that the arbitral award therefore violated public policy.
- The Dutch District Court rejected annulment; the dispute reached the Supreme Court of the Netherlands, which referred questions to the Court of Justice for a preliminary ruling.

## Issues

1. When national law permits annulment of arbitral awards for breach of national public policy, must national courts also annul an award that conflicts with Article 85 EC?
2. Does EU law require national courts to disregard domestic res judicata rules and time limits that prevent review of an earlier, unchallenged interim award, even if needed to assess Article 85 EC compliance in later annulment proceedings?

## Decision

- The Court held that Article 85 EC is a fundamental rule essential to the internal market and must be treated, for annulment review purposes, as a public-policy norm when national law authorizes public-policy review.
- Therefore, if a national court must annul arbitral awards for breach of national public policy, it must also annul awards where the annulment claim is based on breach of Article 85 EC.
- The Court also held that EU law does not require national courts to disapply domestic res judicata rules or reasonable time limits that make an unchallenged interim award final, even if that finality prevents later examination of Article 85 EC in proceedings concerning a subsequent award.

## Legal Principles

- EU competition law prohibitions in Article 85 EC constitute a fundamental public-interest norm that national courts must enforce at least as strongly as comparable domestic public-policy rules when exercising annulment or enforcement control over arbitral awards.
- Under the principles of equivalence and effectiveness, national procedural rules governing EU-law claims are generally respected unless they treat EU-law claims less favorably than similar domestic claims (equivalence) or make EU-law rights impossible or excessively difficult to exercise (effectiveness).
- EU law does not generally require reopening final arbitral determinations barred by domestic res judicata or expired challenge periods; legal certainty and finality of awards may justify enforcing such limits.

## Conclusion

The Court required national courts, when applying public-policy review of arbitral awards, to treat Article 85 EC competition rules as part of that review, but it allowed national res judicata and time-limit rules to preserve the finality of unchallenged interim arbitral awards even if that restricts later Article 85 challenges.


Eco Swiss China Time Ltd. v. Benetton Int’l N.V., Case C-126/97, [1999] E.C.R. I-3055 (ECJ 1999)