1958 Convention: Generally accepted principles

1958 Convention: Generally accepted principles

The Convention has not explicitly endorsed the “competencecompetence” principle, the limited review of arbitration agreements by courts at a pre-arbitration stage or the severability principle. Nevertheless, its object and purpose are better fulfilled if those principles are actually followed.

 

Arbitrators have jurisdiction to determine their own jurisdiction

The “competence-competence” principle (also sometimes referred to as Kompetenz-Kompetenz) permits arbitrators to hear any challenge to their jurisdiction and even reach the conclusion that they do not have jurisdiction.

This power is actually essential if the arbitrators are to carry out their task properly. It would be a major impediment to the arbitral process if the dispute must be remanded to the courts simply because the existence or validity of an arbitration agreement has been questioned.

The Convention does not explicitly require the application of the competence-competence principle. However, it is not neutral on the matter. Articles II(3) and V(1) of the Convention do not prohibit that both arbitral tribunals and courts may rule on the question of the arbitrator’s jurisdiction to deal with a particular dispute. In addition, the provisions of Articles V(1)(a) and V(1)(c) dealing with recognition and enforcement of awards imply that an arbitral tribunal has rendered an award despite the existence of jurisdictional challenges.

 

Scope of judicial review of challenges to the arbitral tribunal’s jurisdiction

The “competence-competence” principle has been interpreted by several courts, especially in the United States, in the light of the pro-enforcement bias of the Convention. Thus, priority has been given to the determination of the arbitral tribunal’s jurisdiction by the arbitral tribunal itself and the courts’ scrutiny of an arbitration agreement that is purportedly null and void, inoperative or incapable of being performed has remained superficial (or prima facie) at the early stage of a dispute. These courts have found that the arbitration agreement is invalid only in manifest cases.

Following this approach, the courts would only be empowered to fully review the arbitral tribunal’s findings on jurisdiction when seised of a request for enforcement of an arbitral award or at the setting-aside stage (the latter not being regulated in the Convention). This interpretation is not uncontroversial. While the position described above appears desirable in light of the object and purpose of the Convention, no explicit provision within the Convention prevents courts from making a full review of the arbitration agreement and issuing a final and binding judgment on its validity at an early stage of the dispute.

 

Arbitration clauses are not usually affected by the invalidity of the main contract

Closely intertwined with the principle of “competence-competence” is the principle of the severability of the arbitration clause from the main contract (also referred to as “separability” or the “autonomy of the arbitration clause” ).

This principle implies that, first, the validity of the main contract does not in principle affect the validity of the arbitration agreement contained therein; and second, the main contract and the arbitration agreement may be governed by different laws.

 

Timing of the referral request in the course of court proceedings

The Convention does not set a deadline for requesting the referral to arbitration. Should this request be filed before the first submission on the merits, or may it be filed at any time? Failing a provision thereto in the Convention, the answer lies in national arbitration or procedural law. If a party fails to raise the request in a timely manner, it may be considered that it has waived the right to arbitrate and that the arbitration agreement becomes inoperative. Most national laws provide that the referral to arbitration must be requested before any defence on the merits, i.e., in limine litis.

No consideration needed for concurrent arbitration proceedings

The admissibility of a request for referral and the court’s jurisdiction over it should be decided regardless of whether arbitration proceedings have already been initiated, unless national arbitration law provides otherwise. Although this is not provided for in the Convention, most courts hold that the actual commencement of arbitration proceedings is not a requirement for asking the court to refer the dispute to arbitration.

Source: ICCA’S Guide to the interpretation of the 1958 New York convention. Not changes allowed.

Conclusion

Notes

See Also

References and Further Reading

About the Author/s and Reviewer/s

Author: international


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