Jurisdiction and Enforcement of Arbitration Agreements

New York Convention Article II – (1) “Each Contracting State shall recognize an agreement in writing...” – (3) “The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall... refer the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”

Locations of Jurisdictional Challenges Arbitral Institution Arbitral Tribunal Court – Which court? – What is the effect of Article II of the New York Convention? Pros/cons of each approach

Law Governing Jurisdictional Issues Three types of law – Law governing the merits – Law governing procedure – Law governing the validity of the arbitration agreement Each of these may be different Identifying the third can be difficult

Separability Concept of the “container contract” Substantive Contract Arbitration Clause

Doctrine of Separability An arbitration clause is presumed to be independent (separate) from the substantive contract An arbitration clause is presumed to be independent (separate) from the substantive contract As a result, the validity of the arbitration clause is not affected by the invalidity or termination of the underlying agreement As a result, the validity of the arbitration clause is not affected by the invalidity or termination of the underlying agreement The effect is to preserve the arbitration agreement The effect is to preserve the arbitration agreement

Kompetenz-Kompetenz Alternate spelling: compètence-compètence Translation is “jurisdiction to decide jurisdiction” Effect is that arbitrators have the power to rule on the existence or non-existence of their own jurisdiction Scope varies in different countries

Negative Compètence-Compètence Reverse of “standard” compètence-comptence States that courts should generally avoid considering jurisdictional matters before the arbitrators have done so Scope varies in different countries

Bases for Jurisdictional Challenges Lack of consent to arbitration – Non-signatory – Agent not authorized – Equitable estoppel – Implied consent – Group of Companies/Veil Piercing/Alter Ego Void arbitration clause Defective or “pathological” arbitration clause Dispute involves claims outside of the scope of arbitration clause Failure of a condition precendent to clause Dispute involves claims that are not arbitrable Failure of form requirements (writing requirement)

Procedural Options for Challenging Jurisdiction Refuse to participate in arbitral proceedings Raise jurisdictional objection with arbitral institution Raise jurisdictional objection with the arbitral tribunal Raise jurisdictional objection with a national court – Defensively (opposing a motion to dismiss in favor of arbitration) – Offensively (seeking an anti-arbitration injunction) Raise jurisdictional objection in effort to annul award at the seat Raise jurisdictional objection in opposing recognition and enforcement of the award

Questions?