Professional Documents
Culture Documents
Article 8 deals with the relationship between the arbitration agreement and resort to
courts.
It is patterned after Article II (3) of the 1958 New York Convention which provides that:
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, at the request of one of the parties, refer the parties to
arbitration, unless it finds that the said agreement is null and void,
inoperative or incapable of being performed
As worded, the referral is dependent on a request, which a party may make not later
than when submitting his first statement on the substance of the dispute.
Binds the courts of an adopting state, it is not restricted to agreements providing for
arbitration in that State and, thus, helps to give universal recognition and effect to
international commercial arbitration agreements.
Article 8 (1) relates to the so-called negative effect of the arbitration agreement,
which prevents the parties from commencing court actions in relation to matters
falling within the scope of the agreement.
Said article compels the courts to refer an action to arbitration under certain
conditions, namely:
First, subject-matter of the dispute falls within an arbitration agreement which is
neither null and void, inoperative nor incapable of being performed (substantive).
Second, referral to arbitration be sought no later than when the party requesting it
submits its frist statement on the substance of the dispute (procedural).
Some cases hold that as an additional condition, article 8 requires that there exist a
dispute between the parties.
Scope of application
The fact that the place of arbitration is located in a foreign jurisdiction has no
bearing on the applicability of article 8.
Similarly, the law chosen by the parties to govern the contract in which the
arbitration clause is inserted has no impact on the conditions under which a referral
application will be granted.
Conditions are always governed by the law of the jurisdiction in which the court
operates.
It applies where a court is seized of an action. Hence, if it has not seized such, said
article is not applicable and no referral order may be obtained.
Inapplicable incases other than ordinary contractual or extra-contractual actions
and when the court is seized of applications seeking interim measures of protection
as provided in article 9.
Case law provides that it applies to instances where; pre-action application seeking
to obtain documents from a prospective defendant; liquidation of a company;
application to set aside a default judgment on the merits of an action; summary
documents-only proceedings.
The purpose of article 8(1) is to grant parties limited access to the courts to resolve
jurisdictional disputes of a legal nature due to the courts expertise compared with
that of an arbitrator, the desire to avoid multiple legal disputes over the jurisdiction
of the arbitral tribunal, and the interest of finality.
Where the conditions set out therein are met, courts have no other option than to
refer the action to arbitration.
2. Arbitration agreement not validly transferred to the party making the referral
application or to the party responding thereto
Obligation to arbitrate arising out of the original agreement has not transferred to
the respondent to the referral application, or that the party seeking a referral order
has not acquired the right to compel the respondent to resort to arbitration.
Even though there may have been a meeting of the minds between the parties,
applicable formal requirements were not met.
Whether the writing requirement set out in article 7 (2) had been met.
The arbitration would only become binding after the setting up of an arbitral
tribunal, which had not yet occurred.
In a Canadian case, the arbitral institution chosen by the parties had ceased to
exist, and the parties disagreed as to whether another institution created
subsequently was the legal successor of the first.
Arbitral institution designated therein- which had become practically inactive- was
unwilling to administer the arbitration.
However, there are cases which ruled otherwise (that it did not entail that the
arbitration agreement was inoperative or incapable of being performed).
10. Failure to commence arbitration within the deadline provided for in the
arbitration agreement.
An arbitration agreement was held incapable of being performed where the party
against whom it was invoked did not have the financial resources needed to
proceed to arbitration.
Arbitration agreement became inoperative because of the defendants refusal to
participate in the arbitration.