1958 Convention: Road map to article II

When seised of challenges to the validity of an arbitration agreement for the purposes of Article II of the Convention, the court should ask itself the following questions:

1. Does the arbitration agreement fall under the scope of the Convention?

2. Is the arbitration agreement evidenced in writing?

3. Does the arbitration agreement exist and is it substantively valid?

4. Is there a dispute, does it arise out of a defined legal relationship, whether contractual or not, and did the parties intend to have this particular dispute settled by arbitration?

5. Is the arbitration agreement binding on the parties to the dispute that is before the court?

6. Is this dispute arbitrable? The parties must be referred to arbitration if the answers to these questions is in the affirmative.

Does the arbitration agreement fall under the scope of the convention?

For an arbitration agreement to benefit from the protection of the Convention, it has to come within its scope (see Chapter I at II.2).

Is the arbitration agreement evidenced in writing?

Article II(1) states that the arbitration agreement should be “in writing” . This requirement is defined at Article II(2) as including “an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams” .

Enforcement of an arbitration agreement cannot proceed under the Convention if the writing requirement set out in Article II is not met. The Convention sets a uniform international rule. Its drafters sought to reach consensus on a matter on which national legislations had and still have different approaches, by establishing a comparatively liberal substantive rule on the writing requirement which prevails over domestic laws.

Article II(2) thus sets a “maximum” standard that precludes Contracting States from requiring additional or more demanding formal requirements under national law. Examples of more demanding requirements include requirements that the arbitration agreement be of a particular typeface or size, made in a public deed or have a separate signature, etc. In addition to establishing a maximum standard, Article II(2) used to be construed as imposing also a minimum international requirement, according to which courts were not entitled to require less than provided for the written form under the Convention. However, this is no longer the general understanding. Following current international trade practices, Article II(2) has been increasingly understood as not precluding the application of less stringent standards of form by Contracting States.

This reading finds support in Article VII(1) which states that “[T]he provisions of the present Convention shall not … deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the Treaties of the country where such award is sought to be relied upon.”

This clause is intended to allow the application of any national or international provisions that may be more favourable to any interested party. Although Article VII(1) was adopted in relation to the enforcement of arbitral awards, a trend may be noted to also apply it to arbitration agreements (see on Article VII(1), Chapter I at V.1).

This approach, however, is not universally accepted. Many courts have sought to meet the modern demands of international trade not by dispensing with Article II(2) altogether but rather by interpreting it expansively readily accepting that there is an agreement in writing or reading it as merely setting out some examples of what is an agreement “in writing” within the meaning of Article II(1).

Both of these approaches have been endorsed by the United Nations Commission on International trade law (UNCITRAL) in its Recommendation of 7 July 2006 (see Annex III). UNCITRAL recommended that “article II, paragraph 2, of the [Convention] be applied as recognizing that the circumstances described therein are not exhaustive” and that

“article VII, paragraph 1 of the [Convention] should be applied to allow any interested party to avail itself of rights it may have, under the law or Treaties of the country where an arbitration agreement is sought to be relied upon, to seek recognition f the validity of such an arbitration agreement” .

Author: international

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International trade law, Treaties, country.