This article discusses the newly established Patent Mediation and Arbitration Centre (PMAC) of the Unified Patent Court (UPC), highlights certain issues about the judicial review of PMAC arbitral awards in annulment proceedings, and suggests three workarounds.
The PMAC was established in 2023 by the Agreement on a Unified Patent Court (UPCA) and it is expected to become fully operational by early 2026. Being the output of the enhanced cooperation among 17 EU Member States, the UPCA is not an EU legal instrument; it is an international treaty instead.
PMAC’s objective is the administration of patent mediations and arbitrations falling wholly or in part within the competence of the UPC, which is entrusted with the resolution of disputes on classical European patents and European patents with unitary effect.
As per Article 35 UPCA, the PMAC is seated in Lisbon (Portugal) and Ljubljana (Slovenia), nevertheless, mediation and arbitration proceedings can be held also elsewhere, pursuant to Rule 4 of the PMAC Rules of Operation.
Current annulment procedures of PMAC arbitral awards and its pitfalls
Since PMAC arbitrations can be conducted everywhere around the world, a disgruntling party with a PMAC arbitral award may challenge the award before the domestic courts of the country where the PMAC arbitration proceeding was held. As such, the annulment procedure of PMAC awards is not uniformed, rather it is based on the lex arbitri (viz., the national arbitration law) of the seat of the proceedings.
As patent law is rather a niche technical area requiring specialized legal knowledge, this raises the question as to whether any domestic court may be sufficiently qualified to deal with annulment proceedings of PMAC awards. For example, in Spain only specialized commercial courts deals with IP law, and among these specialized courts only a subset of them handles patent disputes. Since most national courts may lack familiarity with the intricacies of patent law (such as the array of FRAND damages calculation methods), not every national court may be well-equipped for adjudicating challenges to PMAC awards. Partially, this issue may be addressed by deploying a high level of deference to PMAC arbitral tribunals in annulment proceedings when reviewing their awards. Nevertheless, the need for greater predictability and harmonization in procedures reviewing PMAC awards may call for alternative solutions.
An ad hoc Annulment Committee
The Contracting States to the UPCA may bank on the fact that the PMAC came into existence on the basis of an international treaty in order to create a self-contained annulment mechanism on the international plane (similarly to the ICSID Convention).
For perspective, the PMAC forms part of the UPC, which is effectively a supranational court exercising international jurisdiction, being a “courts common to the Contracting Member States” for the purpose of article 71 of the Brussel Regulation № 1215/2012 (recast). Although the PMAC operates autonomously from the UPC, it presumably enjoys the same supranational character.
By setting up a designated supranational framework to internally review PMAC awards by a qualified ad hoc committee, it would be possible to insulate PMAC awards from erroneous annulment by national courts, which may lack the specific competence.
Further, this legal framework would allow for an uniformization of the grounds on which such ad hoc Committee may annul a PMAC award (instead of the different grounds available at the seat of a PMAC arbitration depending in which jurisdiction the arbitral proceedings took place).
This way, the parties participating in a PMAC arbitration will have the guarantee that – in case of a challenge to a PMAC arbitral award – a highly qualified panel will be entrusted with the review of their award under uniformed grounds of annulment. As a result, certainty, consistency, and by consequence confidence in this recently inaugurated patent ADR Centre will increase, thus encouraging more disputing parties to make use of it.
Such a self-contained annulment mechanism may be brough about in two ways: either by way of an addition to the UPCA (for instance in the form of an amendment or a protocol), or by way of the PMAC arbitration rules. Of course, the easiest way to implement this appellate mechanism would be by providing for such a mechanism directly in the PMAC arbitration rules. Indeed, pursuant to the Article 35 UPC Agreement, the PMAC itself is tasked with establishing its own arbitration rules. Accordingly, the PMAC may envisage this internal appellate procedure and simultaneously provide that the parties to a PMAC arbitration waive any other way of recourse or challenge against a PMAC award.
Designating specialized domestic courts
Another solution to achieve more certainty, consistency, and confidence in PMAC arbitrations could be for each Contracting Parties to the UPCA to designate a small number of its national courts as specialized in patent matters to hear challenges to PMAC awards (in a similar vein to the EU Trademark Regulation and the EUTM Courts under article 123). This could be another way to ensure a better quality of the review process for PMAC awards. Indeed, similarly to what happen with the EU trade mark courts (viz. domestic courts functioning as EU courts in the adjudication of disputes concerning unitary EU trademark rights), these specialized courts may bring several advantages, such as strengthening the protection of both types of European patents, ensuring the unitary character of European patents with unitary effect, increasing predictability of the competent court while preventing undesirable forum shopping, and improving the quality of the courts’ review of PMAC arbitral awards.
Obviously, this solution may derogate the current competence of domestic courts that could have jurisdiction over annulment proceedings of an arbitral awards on the basis of the national legislation. Of course, this derogation would be the trade-off for the abovementioned advantages. However, such a solution may turn out to have a limited impact every time a PMAC arbitration is held in a country other than a Contracting Party to the UPCA.
Lisbon or Ljubljana as seat of arbitration by legal fiction
A third solution to pursue greater certainty, consistency, and confidence in PMAC arbitrations could be achieved by way of a legal fiction anchoring the seat of PMAC arbitrations either in Lisbon or Ljubljana (despite the actual venue of the arbitration can be elsewhere, even in a country not party to the UPC Agreement or the EU). This workaround can be implemented simply by including a rule to this effect in the PMAC arbitration rules. Indeed, a distinction can be made between the seat of the arbitration – which constitutes the link with a given jurisdiction and its lex arbitri – and, on the other hand, the physical venue of the arbitration (i.e., where the hearings take place).
The seat of an arbitration determines the applicable lex arbitri which governs the faith of the arbitral award. Once rendered, an arbitral award can be annulled or upheld at the seat of the arbitration in accordance with the lex arbitri of the jurisdiction hosting that arbitration.
Hence, virtually limiting the seat of PMAC arbitration to Lisbon or Ljubljana entails that only Lisbon or Ljubljana courts will review PMAC arbitral awards in case of annulment proceedings. In a similar fashion to article 125(3) of the EU Trademark Regulation – which grants exclusive international jurisdiction to the EU trademark Court of Alicante in case the defendant and the plaintiff are both domiciled outside the EU – it may be possible to artificially set the seat of PMAC arbitration to Lisbon or Ljubljana, thus granting Lisbon or Ljubljana’s courts an exclusive jurisdiction over the annulment proceedings of PMAC awards.
Such a limited number of courts may ensure greater foreseeability, consistency and quality of the decisions reviewing PMAC awards. Indeed, the rationale behind article 125(3) of the EU Trademark Regulation and its recital n. 31 is to ensure a consistent and uniform interpretation of the law by limiting the number of competent courts as far as possible.
Further, this solution may allow for more in-depth scrutiny in cases where the respect of EU competition law may have been at stake. Issues of EU competition law may frequently arise in patent arbitrations and – since EU competition law integrates the concept of public policy of EU Member States – its infringement or misapplication may lead to an annulled or unenforceable award on the ground of public policy. Therefore, critical control over this matter by Lisbon or Ljubljana courts may better serve the interest of the Contracting Parties to the UPCA as well as the parties to a PMAC arbitration, whose venue could be also in non-EU Member State.
Conclusion
In a technical area like patent law, setting up a specific mechanism to review PMAC arbitral awards should be as important as it was to set up a specialized court such as the UPC with its annexed ADR institution, the PMAC. An inadequate judicial review of PMAC arbitral awards may frustrate the efforts of providing for a specialized forum to adjudicate patent disputes in the first place. A thoroughly well-thought-out mechanism to review PMAC arbitral awards in annulment proceedings may be key to achieving greater certainty, consistency, and confidence in PMAC arbitrations.