Court Litigation over Arbitration Agreements: Is it Time for a New Default Rule? - Chapter 05 - International Arbitration and the Courts
Author(s):
Jack Graves
Page Count:
30 pages
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1 PDF Download
Published:
September, 2015
Description:
Originally from International Arbitration and the Courts
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I. INTRODUCTION
Once upon a time, arbitration was seen as a means of avoiding courts
in resolving parties’ contract disputes. Today, however, an arbitration
agreement all too often simply leads to a second dispute over the forum
for resolving the first. This often obstructive skirmish – on the border
between litigation and arbitration – arguably presents the single greatest
threat to the effectiveness of commercial, business-to-business arbitration
today. This threat is particularly acute in the context of international
commercial arbitration, where recalcitrant parties may seek to invoke the
jurisdiction of a broad array of national courts, with a broad variety of
views regarding the proper role of courts with respect to the arbitral
process. The primary tool for dealing with the interaction between
national courts and the arbitral process is the New York Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (1958)1
(the “New York Convention” or “Convention”).
For over 50 years, the New York Convention has served two
principle purposes, each of which relates to the enforcement of
agreements to arbitrate claims in lieu of bringing them in court. Article II
generally requires national courts to defer to agreed upon arbitration
proceedings, and Article III generally requires national courts to
recognize and enforce any resulting arbitration awards. This article will
focus on the former. To what extent are national courts precluded from
exercising jurisdiction over matters at least arguably subject to
arbitration?
This question requires a review of the “negative” aspect of
“competence-competence.” While “positive” competence-competence
provides an arbitral tribunal with the power to decide its own
jurisdiction, the negative version goes further in precluding a court from
addressing this same issue – at least as a preliminary matter. This
negative version is subject to significant variation under different
national arbitration laws. Thus, parties challenging the jurisdiction of
arbitrators will often bring parallel challenges in court, adding to the
overall cost of resolving the original dispute and reducing the efficiency
of the arbitral process. This potential for parallel court proceedings may
also sometimes add further complexity and uncertainty to the process,
such as the issuance of anti-suit injunctions and questions with respect to
the preclusive effect of any given court determination on another, or on
the arbitral process, itself. Concerns over these issues have only been
heightened in matters involving EU parties after the West Tankers2
decision. All of this added complexity and uncertainty is seemingly at
serious odds with the simple efficiency often touted as one of
arbitration’s most basic virtues.
A strong version of “negative competence-competence” in Article
II of the New York Convention could negate much of any detrimental
effect of these national variations. However, the Convention’s
treatment of the issue in Article II(3), as drafted, is not sufficiently
clear to serve this purpose. This article will, therefore, explore the
potential for addressing this arguable shortcoming of the Convention,
also noting analogous attempts to “modernize” the “writing”
requirement of Article II(2). Initially, two obvious alternatives present
themselves: (1) amend or replace the New York Convention; or (2)
provide interpretative guidance for the current Convention language
that is likely to achieve the desired result. Each is briefly explored here.
This article will, however, suggest a third alternative – a new
convention designating arbitration as the default means of resolving
international commercial disputes.