Originally from Limits to Party Autonomy in International Commercial Arbitration

INTRODUCTION

It is a trite statement that arbitration is based on the consent of the parties.  No party can be expected to participate in arbitral proceedings, to be bound by an award or to be denied enforcement of its rights in the state courts if it has not submitted to arbitration. Consequently, the legitimacy of arbitration depends on the existence of a valid arbitration agreement covering the disputes in question. At the same time, the question of who is entitled to decide about the existence and the validity of the arbitration agreement may be crucial for the efficiency and attractiveness of arbitration as a dispute resolution process. 

In principle, the question as to the existence of a valid arbitration agreement covering the dispute at issue may become relevant at all stages of the dispute resolution process. It may arise before the arbitral tribunal or before the state courts, at the pre-award stage or at the post-award stage and as the main question to be decided or as a merely preliminary or incidental question in the context of proceedings on the merits initiated before the state courts. 

In most jurisdictions, the principle of competence-competence,  sometimes supplemented by the doctrine of separability,  plays a crucial role in determining who may decide the issues and which standard is applicable. The principle of competence-competence is considered to be one of the “founding principles of international arbitration”, a “conceptual cornerstone of international arbitration as an autonomous and effective form of international dispute settlement”.  Despite this general agreement as to the importance of the principle its content is everything but uncontroversial if one goes beyond the mere statement that the arbitral tribunal may decide on its own jurisdiction. Different views exist whether in addition to these positive effects for the tribunal’s jurisdiction, the principle also affects the powers of the state courts to rule on the arbitral tribunal’s jurisdiction. Whether such a grant of competence-competence to the tribunal results at the pre-award stage in limitations for the courts to examine the validity of the arbitration agreement is answered differently in different jurisdictions. The same applies to the questions whether and to what extent the tribunal’s decision on its jurisdiction is binding for the state courts at the post-award stage or the legal justification for eventual limitation. The approach adopted to the underlying balancing test between the legitimacy and efficacy of arbitration is often influenced by purely national factors, such as the efficacy of the court system and the speed with which decisions are rendered or presumptions as to what is in the best interest of the parties.

The following contribution will discuss to what extent the parties can influence the questions as to who decides on the issue of jurisdiction and on the basis of which standard. To do so, first, the various scenarios in which the question may arise will be set out in some more details (II). The underlying conflicts may be relevant for the solutions adopted in various jurisdictions and for the question as to what extent the parties may influence the legal situation by their agreement. As that depends to a considerable extent on the understanding of the principle of competence-competence and the solutions adopted in the various jurisdictions, the discussion will be based on the positions taken by French, German and American arbitration law. All three jurisdictions are examples for different approaches to the problem. That applies less to the question of whether the arbitral tribunal can decide on its own jurisdiction (III), but concerns primarily the power of the courts to decide either at the pre-award stage (IV) or at the post-award stage (V) on the validity of the arbitration agreement.