{"id":4387,"date":"2012-08-08T10:35:37","date_gmt":"2012-08-08T17:35:37","guid":{"rendered":"http:\/\/www.taxsociety.org\/?p=4387"},"modified":"2012-08-08T10:35:37","modified_gmt":"2012-08-08T17:35:37","slug":"invalidity-of-arbitration-agreement","status":"publish","type":"post","link":"https:\/\/lawin.org\/invalidity-of-arbitration-agreement\/","title":{"rendered":"Invalidity of Arbitration Agreement"},"content":{"rendered":"
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Invalidity of Arbitration Agreement<\/h3>\n<\/div>\n

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Article V(1)(a) also provides a ground for refusal where the arbitration agreement “referred to in article II\u201d is “not valid under the law to which the parties have subjected it, or failing any indication thereon, under the of the country<\/a> where the award was made\u201d . This ground for refusal is commonly invoked in practice.
\nRespondents frequently argue under this ground that the arbitration agreement is not formally valid because it is not “in writing\u201d as required by Article II(2) (see Chapter II at IV.2). A related ground for refusal of enforcement that may be raised is that there was no agreement to arbitrate at all within the meaning of the Convention. Other common examples of the defences that may be raised under this ground include claims of illegality, Duress<\/a> or fraud in the inducement of the agreement. From time to time a respondent may rely on this ground where it disputes that it was party to the relevant arbitration agreement. This issue is decided by the court by re-assessing the facts of the case, independent of the decision reached by the arbitrators. For example, in the Sarhank Group case, the respondent argued that there was no signed arbitration agreement in writing between the parties.1<\/p>\n

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The United States Court of Appeals for the Second Circuit held that the district court incorrectly relied on the arbitrators’ finding in the award that the respondent was bound by the arbitral clause under Egyptian law, which applied to the contract. Rather, the district court should have applied United States federal law to this issue when reviewing the award for enforcement. The Court therefore remanded the case to the district court \u201cto find as a fact whether [the respondent] agreed to arbitrate … on any … basis recognized by American contract law or the law of agency\u201d . In the recent decision of Dallah Real Estate & Tourism Holding Co v. Pakistan the English Supreme Court clarified the scope of the doctrine of competence-competence in England. 2<\/p>\n

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The Supreme Court held that while an arbitral tribunal has the power to determine its own jurisdiction as a preliminary matter, upon an application for enforcement under the New York Convention, where an objection to its jurisdiction is made, the court has the power to reopen fully the facts and issues to determine the jurisdictional issue.
\nThe Supreme Court reviewed how the doctrine of competencecompetence is applied in various jurisdictions around the world. At paragraph 25 it noted that “every country<\/a> … applies some form of judicial review of the arbitrator’s jurisdictional decision. After all, a contract cannot give an arbitral body any power … if the parties never entered into it.\u201d (Citing the United States China Minmetals case; see footnote 16.) Thus the fact that a tribunal can determine its own jurisdiction does not give it an exclusive power to do so. An enforcing court which is not at the seat of the arbitration has the power to re-examine the jurisdictionof the tribunal.<\/p>\n

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Whilst the Court (Lord Collins) accepted that the trend internationally to limit reconsiderations of findings of tribunals and also stressed the pro-enforcement policy of the New York Convention, he found that neither of those took precedence. He held that under the 1996 Act (section 30) in England a tribunal is entitled to inquire as a preliminary matter as to whether it has jurisdiction. However, if the issue comes before a court, the court is required to undertake an independent investigation rather than a mere review of the arbitrators’ decision. The Supreme Court considered that the position was no different in France, where the award had been made. Shortly after the decision of the English Supreme Court, the French Court of Appeal rejected a request to set aside the three awards at issue, holding that the arbitral tribunal’s decision that had jurisdiction was correct. 3 Although the court did not express a view on the scope of judicial review of the arbitral tribunal’s jurisdiction, it reviewed its decision fully.<\/p>\n

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1. United States: United States Court of Appeals, Second Circuit, 14 April 2005 (Sarhank Group v. Oracle Corporation) Yearbook Commercial Arbitration XXX (2005) pp. 1158-1164 (US no. 523).
\n2. United Kingdom: [2009] EWCA Civ 755; [2010] 2 W.L.R. 805 (CA (Civ Div)).<\/p>\n

3. France: Cour d’Appel, 17 February 2011 (Gouvernement du Pakistan Minist\u00c3\u00a8re desAffaires Religieuses v. Dallah Real Estate and Tourism Holding Company).<\/p>\n

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Source: ICCA’S Guide to the interpretation of the 1958 New York convention. Not changes allowed.<\/h3>\n<\/div>\n
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Conclusion<\/h3>\n<\/div>\n
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Notes<\/h3>\n<\/div>\n
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See Also<\/h3>\n<\/div>\n
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References and Further Reading<\/h3>\n<\/div>\n
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About the Author\/s and Reviewer\/s<\/h3>\n<\/div>\n

Author: international<\/b><\/p>\n<\/p>\n

Mentioned in these Entries<\/h3>\n

Duress<\/a>, country<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"

Invalidity of Arbitration Agreement     Article V(1)(a) also provides a ground for refusal where the arbitration agreement “referred to in article II\u201d is “not valid under the law to which the parties have subjected it, or failing any indication thereon, under the of the country where the award was made\u201d . This ground for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124,78,5],"tags":[560,10,25,30,125,73],"_links":{"self":[{"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/posts\/4387"}],"collection":[{"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/comments?post=4387"}],"version-history":[{"count":0,"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/posts\/4387\/revisions"}],"wp:attachment":[{"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/media?parent=4387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/categories?post=4387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lawin.org\/wp-json\/wp\/v2\/tags?post=4387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}