Originally from World Arbitration and Mediation Review (WAMR)

PREVIEW

In recent decades, the kompetenz-kompetenz principle  has emerged as one of the most prominent factors in developing commercial arbitration as an effective dispute resolution mechanism.   In fact, it is almost unquestionable nowadays that arbitration’s autonomy and its development mainly rely on the enforceability of the parties’ arbitral agreements by virtue of the application of this principle.  However, some scholars and practitioners argue that arbitration’s development is incomplete until high courts around the world recognize the negative effect of the same principle, even asserting that the positive effect of kompetenz-kompetenz is insufficient to resolve many international and domestic arbitration problems.  

Recognition by high courts in many countries  of the presumptive negative effect of the kompetenz-kompetenz  principle has awakened the controversy between those  in favor of narrowing the principle to its positive effect and those who support its dual function, which includes the negative effect.

The topic acquires greater significance as developing countries with longstanding anti-arbitration reputation histories of rulings against arbitration, such as Venezuela,  have begun to recognize the principle in its dual function through important rulings issued by their highest courts. 

Nevertheless, predictability on the issue has been impacted by the inconsistencies of domestic case law in many jurisdictions, which could be explained either by their lack of awareness of kompetenz-kompetenz or plain distrust of arbitration. 

Presumably, the pro-arbitration stance of national courts should lead parties to choose arbitration instead of litigation, and incentives created by domestic case law should play a fundamental role in their decision.

For the sake of certainty and stability, it is paramount for national courts to adopt a specific and consistent approach to the issue that contracting parties can rely on. By analyzing Venezuelan case law concerning the principle in question, this article discusses to what extent it has bolstered the practice of arbitration in that forum in recent years.