Combine PDF

KluwerArbitration
Document information
Chapter 1: Overview of International Commercial
Author Arbitration
Gary B. Born (IAI profile) This Chapter provides an overview of the history and contemporary legal framework for
international commercial arbitration. First, the Chapter sets out a summary of the history of
international arbitration. Second, the Chapter considers the key objectives of contemporary
international commercial arbitration. Third, the Chapter outlines the contemporary legal
Publication framework for international commercial arbitration, including international arbitration
International Commercial conventions, national arbitration legislation, institutional arbitration rules, international
Arbitration (Second Edition) arbitration agreements and choice-of-law rules. Fourth, the Chapter briefly summarizes
leading theories of arbitration. Finally, the Chapter reviews the main sources of information
in the field of international commercial arbitration.
Bibliographic reference
1.01 HISTORY OF INTERNATIONAL ARBITRATION (1)
'Chapter 1: Overview of
International Commercial A thorough treatment of the history of international commercial arbitration is beyond the
P6
Arbitration', in Gary B. Born , scope of this Treatise. Indeed, such a history remains to be written by legal historians,
International Commercial even insofar as the comparatively limited subjects of arbitration in leading European or other
Arbitration (Second Edition), jurisdictions are concerned. (2)
2nd edition ( Kluwer Law Nevertheless, a brief review of the history of arbitration in international matters provides an
International; Kluwer Law important introduction to analysis of contemporary international commercial arbitration. In
International 2014) pp. 6 - 224 particular, this review identifies some of the principal themes and objectives of international
commercial arbitration and places modern developments in context. An historical review also
underscores the extent to which international state-to-state and commercial arbitration
developed in parallel, with similar objectives, institutions and procedures.
[A] Historical Development of International Arbitration Between States

The origins of international arbitration are sometimes traced, if uncertainly, to ancient
mythology. Early instances of dispute resolution among the Greek gods, in matters at least
arguably international by then-prevailing standards, involved disputes between Poseidon and
Helios over the ownership of Corinth (which was reportedly split between them after an
arbitration before Briareus, a giant), (3) Athena and Poseidon over possession of Aegina (which
was awarded to them in common by Zeus) (4) and Hera and Poseidon over ownership of Argolis
(which was awarded entirely to Hera by Inachus, a mythical king of Argos). (5) Egyptian
mythology offers similar accounts of divine arbitrations, including a dispute between Seth and
Osiris, resolved by Thot (he who decides without being partial). (6)
Apart from suggesting Poseidons persistent problems with his peers, these myths tempt
interpretation, perhaps more than they can fairly bear. Among other things, the diverse
outcomes of these various cases at once suggest and contradict images of arbitration as pure
compromise, (7) while the role of neutral humans (or giants) (8) in resolving disputes among
gods hints at the arbitrators impartial, adjudicatory function (9) and the central role of the
rule of law in arbitration. (10)
[1] Inter-State Arbitration in Antiquity
P7
Deities aside, international arbitration was a favored means for peacefully settling
disputes between states and state-like entities in Antiquity: arbitration is the oldest method
for the peaceful settlement of international disputes. (11) In particular, there is substantial
historical evidence for the use of arbitration to resolve disputes between states, city-states
and similar entities in ancient Greece, Rome, Persia and Mesopotamia. (12)
Historical scholarship provides no clear conclusions regarding the first recorded instance of
international arbitration between states (or state-like entities). In the state-to-state context,
some cite what contemporary reporters would denominate as the case of Lagash v. Umma,
apparently settled in 2550 B.C. by King Mesilim of Kish, (13) or the 2100 B.C. case of Ur v. Lagash,
in which the King of Uruk ordered one city to return territory seized by force from another. (14)
Others look to two disputes decided in the eighth century B.C. by Eriphyle, a noblewoman, over
Argoss plans to wage war on Thebes, (15) a 650 B.C. dispute between Andros and Chalcis over
possession of a deserted city, (16) a controversy between Athens and Megara in 600 B.C. over
the island of Salamis, (17) or a 480 B.C. disagreement between Corinth and Corcyra over control
of Leucas. (18)
Scholars of Antiquity are uniform in concluding that the ancient Greeks frequently resorted to
international arbitration to resolve disputes between city-states. In one authoritys words,
arbitration was used throughout the Hellenic world for five hundred years. (19) There are
records of 46 separate state-to-state arbitrations between 300 B.C. and 100 B.C., a reasonably
impressive figure of one inter-state arbitration every four years. (20) This was the result of
frequent inclusion of arbitration clauses in state-to-state treaties, providing for specified
P8
forms of arbitration to resolve future disputes that might arise under such treaties, (21) as
1
2017 Kluwer Law International. (All rights reserved). A Wolters Kluwer Company
well as submission agreements with regard to existing inter-state disputes. (22)
The procedures used in many ancient arbitrations between Greek city-states would not be
unfamiliar to contemporary litigants. (23) The parties were represented by agents, who acted
as counsel (in a dispute between Athens and Megara, Solon represented the former); (24) the
parties presented documentary evidence and witness testimony (or sworn witness statements);
(25) oral argument was presented through counsel, with time limits being imposed on counsels
arguments; (26) and the arbitrators rendered written, signed and reasoned awards. (27) As one
authority summarized the arbitral process, [a]s a method of dispute settlement, arbitration
did not rely on divine authority for its sanction, or even on the institutional power of an oracle
or amphictyony. Awards were respected because they were the product of a rhetorical
exchange where the interested parties could marshal whatever arguments or forms of
persuasion they wished. (28)
It is also clear, however, that the term arbitration encompassed a range of dispute resolution
mechanisms, some of which appear reasonably similar to contemporary international
arbitration, while others differed in substantial ways. One aspect of ancient state-to-state
arbitration that would strike contemporary observers as unusual was the number of
arbitrators: although most tribunals were apparently comprised of three members, there were
instances where tribunals consisted of large numbers (variously, 600 Milesians, 334
Larissaeans, and 204 Cnidians) which arguably reflect a quasi-legislative, rather than
adjudicatory, function. (29) Other arbitrations appear to have been more in the nature of non-
binding mediation, or political consultation, than true arbitration. (30)
P9 Nonetheless, the conception of the arbitrator as an independent and impartial
adjudicator was central to the state-to-state arbitral process. An oath, sworn by arbitrators in
one arbitration, illustrates these expectations of independence and impartiality:
I swear by Jupiter, the Lycian Apollo, and by the earth that I will judge in the case between the
parties under oath as will appear to be most just. I will not judge according to one witness if
this witness does not appear to me to tell the truth. I have not received any present with
relation to this suit, neither myself nor any other for me, man or woman, nor by any detour
whatsoever. May I prosper as I adhere to my oath, but unhappiness to me if I perjure myself.
(31)
Arbitration was also used to settle disputes between state-like entities during the Roman age.
Although commentators observe that the use of arbitration declined from Hellenic practice,
(32) it was by no means abandoned. Territorial subdivisions of the Roman Empire, as well as
vassal states and allies, appealed to the Roman Senate, to Roman proconsuls, or to other
Roman institutions for arbitral decisions or the appointment of arbitrators to resolve
territorial and other disputes. (33) In general, however, the historical record indicates that
Rome preferred political or military solutions, within the Empire, to inter-state arbitration or
adjudication. (34)
[2] Inter-State Arbitration in European Middle Ages
After an apparent decline in usage under late Roman practice, international arbitration
between state-like entities in Europe experienced a revival during the Middle Ages. Although
historical records are sketchy, scholars conclude that international arbitration existed on a
widespread scale during the Middle Ages, (35) that the constant disputes that arose in those
warlike days were very frequently terminated by some kind of arbitration, (36) and that it is
surprising to learn of the great number of arbitral decisions, of their importance and of the
prevalence of the clause compromissoire. (37) The states of the Swiss Confederation (38) and
P 10 the Hanseatic League, (39) as well as German and Italian principalities, (40) turned with
particular frequency to arbitration to settle their differences, often pursuant to agreements to
resolve all future disputes by arbitration. (41)
Determining the precise scope and extent of international arbitration between states or state-
like entities during the Medieval era is difficult, in part because a distinction was not always
drawn between judges, arbitrators, mediators and amiables compositeurs. (42) Indeed, one of
the most famous arbitrations of the age Pope Alexander VIs division of the discoveries of
the New World between Spain and Portugal appears not to have been an arbitration at all,
but rather a negotiation or mediation. (43) On the other hand, numerous treaties throughout
this period drew clear distinctions between arbitration (in the sense of an adjudicative,
binding process) and conciliation or mediation (in the sense of a non-binding procedure). (44)
Again, the procedures used during arbitral proceedings in Medieval times bore important
resemblances to those used today. Both parties presented arguments through counsel,
evidence and testimony was received by the tribunal, the arbitrators deliberated and a
written award was made. (45) There is even evidence that written briefs were a standard
element of inter-state arbitral procedures. (46)
Parties appear to have placed importance on the prompt resolution of their disputes,
including by imposing time limits in their agreements on the arbitrators mandates. (47) And, if
a losing party flouted an arbitral tribunals decision, the arbitrator or another authority was
P 11
sometimes empowered to impose sanctions to enforce compliance. (48) Arbitrators were
frequently ecclesiastics or rulers of neighboring or neutral states; (49) in particular, the Papacy
was frequently involved in arbitrating various categories of dynastic, territorial and similar
disputes between feudal rules. (50)
2
During the 16th, 17th and 18th centuries, the popularity of international arbitration as a means
of resolving state-to-state disputes apparently declined significantly. Although by no means
entirely abandoned, the rising tide of nationalism apparently chilled historic reliance on
arbitration: nor is arbitration the immediate jewel of Tudor souls. (51) It was only at the end
of the 18th century, with Jays Treaty between the newly-founded United States and Great
Britain (discussed below), (52) that international arbitration in the state-to-state context saw a
new resurgence.
[3] Inter-State Arbitration in 18th and 19th Centuries
Great Britains North American colonies appear to have embraced inter-state arbitration from
at least the moment of their independence. The 1781 Articles of Confederation provided a
mechanism for resolving inter-state disputes between different American states, through what
can only be categorized as arbitral procedures. (53)
More significantly, the modern era of arbitral or judicial settlement of international disputes,
by common accord among all writers upon the subject, dates from the signing on 19 November
1794 of Jays Treaty between Great Britain and the United States. (54) Among other things, in a
determined effort to restore amicable relations between the newly-independent United States
and Great Britain, Jays Treaty provided for the establishment of three different arbitral
mechanisms, dealing with boundary disputes, claims by British merchants against U.S.
P 12
nationals and claims by U.S. citizens against Great Britain. (55) This was a remarkable
step, between recent combatants, which ushered in a new age of inter-state arbitration.
The United States continued its tradition of arbitrating international disputes throughout the
19th century. (56) It included an arbitration clause (albeit an optional one) in the 1848 Treaty of
Guadalupe Hidalgo, which provided for resolution of future disputes between the United
States and Mexico by the arbitration of commissioners appointed on each side, or by that of a
friendly nation. (57) The United States did the same in the 1871 Treaty of Washington with
Great Britain, providing the basis for resolving a series of disputes provoked by the Civil War,
(58) including the classic Alabama Arbitration concerning U.S. claims that Great Britain had
violated its obligations of neutrality during the U.S. Civil War. (59) Among other things, the
Washington Treaty provided for arbitration of the disputes before a five-person tribunal, with
one arbitrator nominated by each of the United States and Great Britain, and three arbitrators
nominated by neutral states. The United States and Great Britain also repeatedly resorted to
arbitration to settle various boundary and other disputes during the 19th and early 20th
centuries. (60)
Agreements to arbitrate in the Americas were not confined to matters involving the United
States. On the contrary, between 1800 and 1910, some 185 separate treaties among Latin
American states included arbitration clauses, dealing with everything from pecuniary claims,
to boundaries, to general relations. (61) For example, an 1822 agreement between Colombia
and Peru, which was intended to draw more closely the bonds which should in future unite the
two states, provides that a general assembly of the American states shall be convenedas an
umpire and conciliator in their disputes and differences. (62) At the end of the 19th century,
P 13 several Latin American states entered into bilateral arbitration treaties, providing that
specified categories of inter-state disputes would be submitted to arbitration. (63)
Moreover, many Latin American states engaged in inter-state arbitrations arising from
contentious boundary disputes inherited from colonial periods, which the disputing parties
submitted to a foreign sovereign or commission for resolution. (64) Arbitration of such matters
was not always successful, especially when the disputed territory was rich in natural resources
or minerals, (65) and boundary disputes at times required additional arbitrations to interpret
or implement an initial award. (66)
Arbitration of state-to-state disputes does not appear to have been used significantly in
Europe during the 18th century. (67) By the late 19th century, however, arbitration provisions
began to be included in various types of treaties between European states. Multilateral
treaties containing institutional arbitration agreements included matters ranging from the
General Postal Union, (68) the carriage of goods by rail and post, (69) and European
colonization and trade in Africa, (70) to the slave trade. (71) A number of bilateral treaties
between European states during the late 19th century dealing with extradition (72) and
commercial relations (73) also contained arbitration clauses.
In the final years of the 19th century, European states also concluded a number of arbitration
treaties providing generally for the arbitration of defined categories of future disputes. (74)
One representative bilateral arbitration treaty from this era provided that the parties would
submit to arbitration: all the controversies, whatever their nature and cause, which may arise
P 14 between them in the period of existence of this Treaty. (75) As discussed below, the
popularity of bilateral arbitration treaties if not their actual usage continued into the first
half of the 20th century. (76)
[4] Proposals for Institutional Inter-State Arbitration
Proposals for institutional forms of state-to-state arbitration existed from an early date.
Grotius exhortations at the end of the 17th century are illustrative:
Christian kings and states are bound to pursue this method [arbitration] of avoiding wars.
[F]or this and for other reasons it would be advantageous, indeed in a degree necessary, to
hold certain conferences of Christian powers, where those who have no interest at stake may
3
settle the disputes of others, and where, in fact, steps may be taken to compel parties to
accept peace on fair terms. (77)
By the end of the 19th century, proposals for more universal and binding state-to-state
arbitration mechanisms emerged with greater frequency, often supported by religious and
pacifist groups. (78) Capturing the moral roots of such proposals, Andrew Carnegie famously
remarked that [t]he nation is criminal which refuses arbitration. (79)
Although seldom discussed in todays literature, an 1875 project of the Institut de Droit
International produced a draft procedural code, based on existing inter-state arbitral practice
and designed to provide basic procedural guidelines and mechanisms for future ad hoc
arbitrations between states. (80) The project provides impressive testimony to both the
frequency of inter-state arbitrations at the time and the perceived desirability of more
consistent, transparent and internationally-neutral procedures for such arbitrations.
In 1899, the Hague Peace Conference produced the 1899 Convention for the Pacific Settlement
of International Disputes. (81) A central feature of the Conferences program was the use of
P 15 adjudication to prevent conflicts between states, with proposals for an ambitious
multilateral convention requiring arbitration of most international legal disputes. (82) These
proposals were unacceptable to most states and the Conference instead adopted provisions
for voluntary arbitration of certain categories of state-to-state arbitration.
In particular, the 1899 Convention encouraged but did not require contracting states to
resolve their international disputes by arbitration. (83) The Convention included chapters on
international arbitration and established a so-called Permanent Court of Arbitration (PCA).
(84) Thus, Article XVI of the Convention declared that [i]n questions of a legal nature, and
especially in the interpretation of International Conventions, arbitration is recognized by the
Signatory Powers as the most effective, and at the same time the most equitable, means of
settling disputes. (85)
The 1899 Convention suggested that, where states chose to arbitrate a dispute, the award
would be binding. Article 18 of the Convention provided that an agreement to arbitrate
implies the engagement to submit loyally to the Award. (86) The Convention also
distinguished the binding character of arbitrations from the resolution of disputes through
commissions of inquiry, good offices and mediation each of which were provided for by
the Convention, but none of which entailed a binding decision. (87) At the same time, however,
the Convention contained no means to enforce awards, and the Conventions language
underscored the tenuous character of any obligation to comply with an award (providing only
that states impliedly engage[d] to submit in good faith to awards). (88)
In order to encourage states to resort to arbitration, the 1899 Convention established the PCA
(seated in the Hague), for administering inter-state arbitrations. (89) Articles XV to IXX of the
1899 Convention prescribed a set of rules regarding the constitution of inter-state arbitral
P 16 tribunals and the conduct of inter-state arbitrations, with the PCA serving as a form of
arbitral institution responsible for a variety of administrative and other functions, including
maintaining a list of arbitrators who might be appointed to tribunals in future cases (if states
chose to agree to such arbitrations). (90) The Convention also provided a skeletal set of
procedural rules that could be applied in proceedings (again, if states agreed to such
arbitrations). (91)
The 1899 Convention was revised in 1907, with the new version of the Convention for the Pacific
Settlement of International Disputes including the addition or amendment of a number of the
existing provisions regarding international arbitral proceedings. (92) However, the 1907
Conference made no fundamental changes to the treatment of international arbitration under
the 1899 Convention. (93)
PCA arbitral tribunals subsequently issued a handful of well-reasoned awards, occasionally in
disputes of some practical significance, which played a material role in the development of
customary international law. (94) In general, however, the PCA was used relatively infrequently
and addressed few cases of international importance during the first century or so of its
existence. (95) All told, during the first 70 years of the PCAs existence, only 25 arbitrations were
submitted to PCA tribunals; (96) even fewer non-binding PCA conciliations or inquiries were
conducted. (97)
The 1899 and 1907 Hague Conventions provided the foundation for more formal inter-state
adjudication, in the Permanent Court of International Justice (PCIJ) and International Court of
Justice (ICJ). (98) Also during the early 20th century, states negotiated large numbers of
bilateral (99) and multilateral (100) arbitration treaties providing for compulsory arbitration of
defined, but generally broad, categories of future disputes (along the lines of the proposals
rejected in the Hague Conferences).
P 17 The United States was an avid proponent of bilateral arbitration treaties and concluded a
number of such treaties with various European states. The U.S. treaties with the United
Kingdom and France, referred to as the Taft or Knox Arbitration Treaties, provided for broad
mandatory arbitration of all justiciable disputes, but were never ratified; instead, the United
States concluded a series of more limited treaties (not providing for binding arbitration), often
referred to as the Bryan Treaties, principally with European and Latin American states. (101)
Other states also concluded such agreements, with some 120 bilateral arbitration treaties
being entered into between 1900 and 1914. (102)
4
Multilateral arbitration treaties included the 1924 Geneva Protocol for the Pacific Settlement
of International Disputes and the 1928 Geneva General Act for the Pacific Settlement of
International Disputes, (103) both of which provided for the compulsory arbitration of a broad
range of international disputes. In addition, several hundred bilateral arbitration treaties were
entered into between 1900 and 1939, generally providing for compulsory arbitration of a wide
range of disputes between the contracting states. (104) In the words of one commentator, the
immense output of arbitration treaties has been such that today [i.e., 1928] they constitute a
very dense forest, in which it is difficult to find ones way. (105)
Nonetheless, most states remained sceptical of such treaties and declined to ratify them or,
if ratified, declined to use them. (106) Following World War II, the popularity of compulsory
arbitration treaties declined precipitously; in the words of one author, they were abandoned
almost entirely. (107) Moreover, as with the PCA itself, usage of these treaties was modest, with
fewer than ten arbitrations being conducted pursuant to general compulsory arbitration
treaties between 1920 and 1990. (108)
P 18
Despite this, through other mechanisms, international arbitration remained a favored
means of resolving state-to-state disputes throughout the 20th century. In total, some 200
inter-state arbitrations were conducted between 1900 and 1970, not involving the PCA or
compulsory arbitration treaties; instead, these arbitrations generally arose pursuant to ad hoc
submission agreements or compromissory clauses in particular bilateral treaties. (109)
Particularly compared to the PCIJ and ICJ, it is clear that arbitration was a preferred method of
resolving inter-state disputes during the 20th century. (110)
[5] Arbitral Procedures in Inter-State Arbitration
As outlined above, arbitral procedures have varied substantially, both over time and in
different geographic and political settings. At least in part, that reflects the inherent flexibility
of the arbitral process, which leaves the parties (and arbitrators) free to devise procedures
tailored to a particular dispute and legal or cultural setting. (111)
Despite this inherent flexibility, the procedures used in state-to-state arbitrations have also
displayed, with remarkable consistency, certain enduring, common characteristics. These have
included an essentially adversarial procedure, with states being free and required to
present their respective cases, often through counsel and/or agents; (112) an adjudicative
procedure, with decisions being based on the evidentiary and legal submissions of the parties
and generally resulting in a reasoned award; (113) and continuing efforts to devise procedures
that would provide a fair, efficient and expeditious arbitral process. (114) As already noted,
historic approaches to the inter-state arbitral process often produced procedures that were
not dissimilar to those used in contemporary state-to-state arbitrations. (115)
Arbitral procedures that evolved in state-to-state arbitrations during the 19th century bore
even closer resemblances to contemporary proceedings than was historically the case, with
international tribunals more systematically exercising their power to establish rules governing
pleadings and proceedings. (116) Governments were generally represented by an agent, who
P 19 represented the interests of the state, and a counsel, who provided advice, managed the
case and appeared before the tribunal. (117) Cases were initiated by a written memorial, which
asserted the basic legal claims and alleged sufficient facts to establish jurisdiction; the
opposing partys response then could come in the form of an answer, a plea, a motion to
dismiss, or an exception. (118)
Although rules for evidence varied, tribunals generally preferred documentary evidence to live
witnesses and, rather than excluding certain types of evidence, would accept all evidence and
weigh it at their discretion. (119) With the increased frequency of state-to-state arbitration over
the course of the 19th century, practices of civil and common law countries converged,
eventually giving way to the partial codification of these procedures in international
instruments. (120) Again, the procedures outlined in these 19th century instruments bear
striking similarities to contemporary procedural regimes. (121)
One of the enduring features of international arbitration procedure in the state-to-state
context, regardless of time or cultural setting, has been the nomination of members of the
tribunal by the parties and, in particular, unilateral nomination of one or more members of the
tribunal by each party. Indeed, from almost the beginning of recorded modern history
through every age until the present party-nominated arbitrators were an enduring, essential
feature of the international arbitral process. (122) Thus:
(a) In a 1254 treaty of peace among various German states, future disputes were to be
settled by mixed tribunals composed of judges of equal number of the two parties and
presided over by a gemeiner mann (or umpire). (123) Northern Italian states and Swiss
cantons adopted the same approach, during the 12th, 13th and 14th centuries, with the
occasional variation that each party was required to select a national of the counter-
party as co-arbitrator. (124)
(b) In one of the earliest Medieval plans for institutional international arbitration, in 1306,
P 20 Pierre Dubois proposed a means of settling disputes among European principalities,
involving each party nominating three arbitrators, to be joined by three additional
ecclesiastics. (125)
(c) The 1343 Arbitral Convention between King Waldemar of Denmark and King Magnus of
Sweden provided for each state to select three bishops and three knights and, if the
5
resulting tribunal was unable to resolve matters, to select two (one each) of its number
to make a final decision. (126)
(d) The 1516 Treaty of Perpetual Peace between the Swiss Cantons and Francis I provided for
arbitration before four men of substance, two named by each party, and if their
opinions are divided, the plaintiff may choose from the neighboring counties a
prudhomme beyond suspicion and who will meet with the arbitrators to decide the
difficulty. (127)
(e) The 1655 Treaty of Westminster between France and England provided for resolution of
future disputes by six arbitrators, three named by each side, with unresolved matters
being referred to the Republic of Hamburg, which was charged with selecting a further
tribunal. (128)
(f) The 1781 Articles of Confederation, of the American colonies, provided for the resolution
of disputes between states by an arbitral process, with the concerned states being
involved in selection of the tribunal, either by agreement or through an innovative list
system. (129)
(g) Jays Treaty of 1794, between the United States and Great Britain, provided for three
arbitral mechanisms, with the tribunals consisting of either three arbitrators (one
appointed by the United States and one by Great Britain, with the two party-nominated
arbitrators selecting a third, either by agreement or a prescribed list system) or five
arbitrators (two appointed by the King of England, two by the President of the United
States and the fifth by agreement or through the use of a prescribed list system). (130)
(h) The Treaty of 11 April 1839, between the United States and Mexico, provided for a
tribunal of five, with two arbitrators appointed by each state and (absent agreement)
P 21 the fifth arbitrator being selected by the King of Prussia. (131) A large number of other
treaties between the United States and various Latin American states provided for
party-nominated arbitrators on either three or five-person tribunals. (132)
(i) The so-called Portendick claims, between Great Britain and France (concerning an
allegedly unlawful French blockade of the Moroccan coast), were referred to the King of
Prussia, who in turn referred implementation of his award to a tribunal consisting of one
arbitrator nominated by each state and a third whom he selected. (133)
(j) The 1871 Treaty of Washington provided (with regard to U.S. claims against Great Britain)
for two party-nominated arbitrators on a tribunal of five, with the remaining three
arbitrators being nominated by neutral states. (134) To resolve claims by private citizens
against either of the two contracting states, the treaty provided for three-person
tribunals, with each state nominating one arbitrator and an umpire being selected by
agreement or by a neutral third party. (135) Other arbitration provisions between the
United States and Great Britain very frequently involved party-nomination of members
of the tribunal. (136)
(k) An 1897 reference to arbitration between Austria and Hungary, relating to territorial
claims near Lake Meerauge, was referred to a tribunal consisting of two party-nominated
arbitrators and an umpire. (137)
(l) Mixed claims tribunals have been repeatedly used, in a wide variety of contexts, to
resolve claims arising out of war, unrest, or similar circumstances. The invariable
procedure for constituting a tribunal was for one arbitrator to be nominated by each
side, and a presiding arbitrator or umpire to be selected by agreement or by a neutral
power. (138)
(m) The 1899 Hague Convention for the Pacific Settlement of International Disputes and the
1907 Hague Convention for the Pacific Settlement of International Disputes established
Rules for the constitution of arbitral tribunals, including provisions for each party to
P 22 nominate two co-arbitrators and for the co-arbitrators to select an umpire, failing
which a neutral party would be chosen to make the selection. (139)
(n) Both the Permanent Court of International Justice, and its eventual successor, the
International Court of Justice, provided mechanisms for the constitution of the Court that
included ad hoc judges nominated by each party. (140)
(o) Each of the governments of Guatemala and Honduras appointed an arbitrator with a
third arbitrator, the Chief Justice of the United States, appointed as a presiding
arbitrator by agreement of the parties under a Treaty of Arbitration signed between the
two states on 16 July 1930. (141)
(p) Under a 1989 arbitration agreement, France and Canada mutually agreed to the
appointment of three arbitrators and then each side appointed an additional arbitrator.
(142)
(q) Under the 2000 Eritrea-Ethiopia Boundary Commission Arbitration Agreement, each
party appointed two commissioners and the president of the Commission was selected
by the party-appointed commissioners, failing which the Secretary-General of the United
Nations would have appointed the president in consultation with the parties. (143)
(r) The 2008 arbitration agreement between the Government of Sudan and the Sudan
6
Peoples Liberation Movement/Army (the representatives of what would become the
Republic of South Sudan in 2011) provided that each party would appoint two arbitrators
and the party-appointed arbitrators would appoint a fifth arbitrator, or the Secretary-
General of the Permanent Court of Arbitration would do so. (144)
(s) In 2011, Croatia and Slovenia submitted an arbitration agreement for registration with
the United Nations that provided first for both parties to appoint by common agreement
the president of the tribunal and two members drawn from a list provided by the
President of the European Commission, and then for each party to appoint a further
member of the tribunal. (145)
Thus, one scholar of state-to-state arbitrations during the 19th century concluded his
discussion of the procedural aspects of the subject by referring to:
P 23 the very common idea that the sovereign power of the contestants should find
representation on the court, an idea which finds illustration even in the Permanent Court of
International Justice. The theory is that the representatives of the parties can speak with
authority within the bosom of the court with regard to the law and contentions of their
governments, an idea which would not be tolerated because of manifest evils within the bosom
of a national court. (146)
As discussed below, this was also an enduring characteristic of arbitrations between private
parties and states, (147) and in international commercial arbitrations between private parties.
(148) Indeed, the same reasoning that was invoked historically in state-to-state arbitrations
has been adopted, in almost identical terms, in the context of contemporary international
commercial arbitration, where party-nominated co-arbitrators have been a central feature of
the arbitral process since the historical record begins. (149)
[B] Historical Development of Commercial Arbitration

Just as arbitration between states has an ancient and rich history, so arbitration of commercial
disputes can be traced to the beginning of recorded human society. It is occasionally
suggested that as a technocratic mechanism of dispute settlement, with a particular set of
rules and doctrines, international commercial arbitration is a product of this century [i.e., the
20th century] (150) or at the beginning of this [the 20th] century,international commercial
arbitration was becoming established. (151) Insofar as these comments imply that
international commercial arbitration is a recent phenomenon, they are contradicted by a
detailed historical record, which leaves no serious doubt as to the long tradition stretching
for many centuries of arbitration as a means for resolving international and other cross-
border business disputes.
At the same time, it is again clear (as with state-to-state arbitration) (152) that the boundaries
between arbitration and other modes of dispute resolution were not always clearly drawn in
earlier times. Rather, arbitration sometimes resembled a form of state-sponsored (or -
compelled) alternative dispute resolution, which was more akin to judicial or administrative
P 24 proceedings, or to non-binding conciliation, than to contemporary international
commercial arbitration. (153) At the same time, ancient societies seldom possessed systems of
judicial administration and civil litigation comparable to those in contemporary legal systems.
(154) As one commentator concludes: Until well into imperial times there were no professional
judges in Rome. In all civil matters, the state deputed respected citizens, sometimes from a
panel to act as adjudicators on its behalf. (155)
Despite these ambiguities, there is substantial evidence of alternative dispute resolution
mechanisms for commercial disputes, distinct and different from judicial processes, and often
closely resembling contemporary arbitration, through almost all ages of recorded human
history. Indeed, in many eras, commercial and similar disputes were resolved consensually
through processes very closely resembling contemporary international commercial arbitration.
[1] Commercial Arbitration in Antiquity
As in the state-to-state context, some of the earliest reports of commercial arbitration are
from the Middle East. Archaeological research reports that clay tablets from contemporary
Iraq recite a dispute between one Tulpunnaya and her neighbor, Killi, over water rights in a
village near Kirkuk, which was resolved by arbitration (with Tulpunnaya being awarded 10
silver shekels and an ox). (156) Arbitration was also apparently well known in ancient Egypt,
with convincing examples of agreements to arbitrate future disputes (used alongside what
amount to forum selection clauses) included in funerary trust arrangements in 2500 B.C. and
2300 B.C. (157)
Arbitration was no less common in ancient Greece for the resolution of commercial and other
private disputes than for state-to-state disputes. (158) Homer describes an 8th-century B.C.
resolution of a blood debt through a public arbitral process, where the disputants appealed to
a man versed in the law, of their mutual choice, who presided over a tribunal of elders which
publicly heard the parties claims and rendered reasoned oral opinions. (159) The example
P 25 suggests the use of arbitration to resolve disputes between private parties in Antiquity,
but also confirms the lack of clear boundaries in some periods between governmental dispute
resolution mechanisms and private, consensual arbitration.
The reasons for resorting to arbitration in Antiquity appear to be remarkably modern.
Historical research indicates that ancient Greek courts like todays courts in many countries
suffered from congestion and back-logs, which led to the use of arbitrators, retained from other
7
city states (rather like foreign engineers or mercenaries), to resolve pending cases. (160) As one
commentator put it, [a]rbitration was the natural and regular process of choice for those who
could not afford litigation, were afraid of its outcome, preferred privacy, or were manipulating
the alternatives. (161)
Similarly, a summary of the basic legal rules governing commercial arbitration in ancient
Greece is not far removed from contemporary legislation in the area:
If any parties are in dispute concerning private contracts, and wish to choose any arbitrator, it
shall be lawful for them to choose whomsoever they wish. But when they have chosen by
mutual agreement, they shall abide by his decisions and shall not transfer the same charges
from him to another court, but the judgments of the arbitrator shall be final. (162)
Arbitral procedures in ancient Greece appear to have been largely subject to the parties
control, including with regard to the subject matter of the arbitration, the selection of
arbitrators, the choice of law and other matters. (163) Although sole arbitrators were not
uncommon, parties frequently agreed to arbitrate before three or five arbitrators, with each
party selecting one (or two) arbitrator(s) and the party-nominated arbitrators choosing a
presiding arbitrator (a koinos). (164) There were few restrictions on the subjects that could be
arbitrated, although commercial (and family) matters were apparently the most common. (165)
P 26 Arbitration of commercial matters in ancient Roman times was more common than Roman
state-to-state arbitrations, in part because there was no judicial system of litigation
comparable to those in contemporary legal structures. (166) A leading scholar on Roman law
summarizes the subject as follows:
from the beginning of the empire, Roman law allowed citizens to opt out of the legal process
by what they called compromissum. This was an agreement to refer a matter to an arbiter, as he
was called, and at the same time the parties bound themselves to pay a penalty if the
arbitrators award was disobeyed. Payment of the penalty could be enforced by legal action.
(167)
As in Greece, awards in Roman practice were reasoned, binding and apparently subject to very
limited subsequent judicial review: The award of the arbiter which he makes with reference to
the matter in dispute should be complied with, whether it is just or unjust; because the party
who accepted the arbitration had only himself to blame. (168) According to one authority,
[n]o appeal was possible against the arbiters decision. (169) Parties could seek enforcement
of awards in the courts (or other government forums), although the precise enforcement
mechanisms that were available varied over time. (170)
Arbitral procedures in Roman times were sophisticated; as one commentator summarizes the
evidence, [r]ecords of very advanced procedures of arbitration survive from [Greco-Roman]
periods. (171) In particular, it appears that arbitral procedures were not dissimilar to those in
more modern eras. (172) In a parallel to modern arbitral practice, the arbitrators jurisdiction
was strictly limited to the terms of the agreement for arbitration (compromissum), and,
therefore, he cannot decide anything he pleases, nor with reference to any matter that he
pleases, but only what was set forth in the agreement for arbitration, and in compliance with
the terms of the same. (173) Arbitrators in the classical age reportedly remained entirely free
P 27 in their decisions: they were not bound by any rules of substantive law. (174) Parties
enjoyed substantial autonomy with regard to establishing the arbitral procedures. (175)
Among other things, and again paralleling state-to-state practice, historical records reveal the
widespread use of party-nominated arbitrators: a common practice[was] to refer the matter
to two arbitrators and the praetor is bound to compel them, if they disagree, to choose a third
person themselves and his authority can be obeyed. (176) If an arbitrator agreed to hear a
dispute (receptum arbitrum), but subsequently refused to do so, local judicial authorities could
apparently compel him to fulfil his duties. (177)
Although records of ordinary commercial disputes from this era have seldom survived,
historians nonetheless conclude that arbitration was widely used in ancient Rome. (178) There
were few limits on the subjects of arbitration, and in practice a wide range of commercial and
family matters were arbitrated: With these few exceptions [for inheritance and status of
slaves/citizens]arbitration ex compromisso was used comprehensively to deal with all types
of disputes, relating to land and goods and slaves, and breaches of contract of all kinds. (179)
Roman law also dealt with questions of the enforceability of agreements to arbitrate future
commercial disputes (e.g., arising from a contract). It did so by treating arbitration clauses as
separate agreements (promissum), to which the parties could attach penalty mechanisms
(stipulationes poenae) to enforce compliance. (180) The parties promises to arbitrate could
P 28 apparently only be enforced through a mechanism of double promises (com-
promissum), (181) in which the promise to arbitrate was coupled with the promise to pay a
penalty if the arbitration agreement was breached. (182)
A representative compromissum from Roman times, including a penalty mechanism, provided:
In the dispute between L Cominius Primus and L Appuleius Proculus about the boundaries of
the Numidian land of L Cominius Primus and the Stlasanician land of L Appuleius Proculus,
they have by stipulation and pact agreed as follows: that Ti. Crassius Firmus should be arbiter
ex compromisso between L Cominius Primus and his heir and L Appuleius Proculus and his heir
and should render his award or order his award to be rendered, openly in his presence and in
the presence of each other, before the first day of February next, and may postpone that day
8
when he renders his award or orders it to be rendered or orders it to be postponed, and if
anything shall be done or fail to be done, against these agreements 1,000 sesterces of good
money shall be properly paid, fraud being absent from this matter and arbitration and to be
so in the future.
These various enforcement issues under Roman law, and the mechanisms that were adopted to
address them, foreshadowed challenges to the enforceability of arbitration agreements, and
mechanisms for addressing these challenges, that would recur in later historical periods. (183)
They also laid the foundations for the separability doctrine, which would also recur and play a
leading role in the law of arbitration in later historical periods. (184)
In the post-Classical period, arbitration became increasingly popular in many parts of the
Roman Empire because of deficiencies in state court systems, which were characterized as
unreliable, cumbersome and costly, and which faced particular difficulties in international
and other cross-border matters. (185) During this era, the enforceability of arbitration
agreements was progressively recognized, even without a penalty mechanism. (186) This result
was generally based on the principle of pacta sunt servanda, which was developed and applied
by canonical jurists in the context of agreements to arbitrate. (187)
The Church began to play a leading role in arbitration in the later Roman Empire, with arbitral
jurisdiction frequently being exercised by Christian bishops (episcopalis audentia). Once
parties had agreed to Episcopal arbitration, a subsequent award was enforceable through
P 29 the courts without judicial review. (188) Simultaneously, arbitral tribunals established
within Jewish congregations within the Roman Empire were granted similar powers, enabling
them to decide not only religious, but also commercial, disputes. (189)
Arbitration continued to play so far as the historical record reveals an important role in
commercial matters in the Byzantine period, in Egypt and elsewhere. Although the records and
details of such arbitrations are uncertain, those materials that survive involve merchants,
family feuds, inheritance disputes and other private law matters being submitted to binding
arbitration, with the results being enforced through penalty mechanisms (as in Roman times).
(190)
One apparent motivation for arbitration during this era was avoiding the delays and expense
of litigation. Thus, an 8th century Coptic record quotes an heir of one Germanos explaining the
resolution of his disputes with other heirs:
We fought each other before the most famous comes, dioketes [administrative tribunals] of the
castron [district] of Jeme, about the house on Kuelol Street.After much altercation before the
diokete, he made a proposal with which we all agreed: we elected arbitrators from the castron
and the diokete sent them into the house and they made the division. (191)
As described below, this motivation of avoiding protracted, uncertain litigation continues to
prevail today, often expressed in very similar language, as a reason for parties to agree to
international commercial arbitration. (192)
[2] Commercial Arbitration in European Middle Ages
A wide variety of regional and local forms of arbitration were used to resolve commercial and
other disputes throughout the Middle Ages in Europe. A recurrent theme of this development
was the use of arbitration by merchants in connection with merchant guilds, trade fairs, or
other forms of commercial or professional organizations. Indeed, it is very common, if
inaccurate, to say that commercial arbitration had its beginning with the practices of the
market and fair courts and in the merchant gilds. (193)
As in the state-to-state context, (194) arbitration was particularly common during Medieval
P 30 times in the Swiss Confederation, Northern Italy, Germany and neighboring regions (the
Hanseatic League in particular), France and England. Whatever the force of various claims to
historical priority, it is clear that commercial arbitration was very widespread in many
European localities in the Middle Ages. (195)
In Medieval England, (196) the charters of numerous guilds such as the Company of
Clothworkers or the Gild of St. John of Beverley of the Hans House (197) provided for
mandatory arbitration of disputes among members: the guilds entertain actions of debt and
covenant and trespass, and hardly dare we call such assemblies mere courts of arbitration, for
they can enforce their own decrees. (198) Where merchants did business with one another at
trade fairs, outside the context of a guild, arbitration also played a role. Indeed, because fairs
involved numerous itinerant or foreign merchants, this appears to have been a direct forbearer
of more modern forms of international commercial arbitration. Arbitration was also relied on
to resolve disputes in a wide range of substantive areas outside of commercial matters,
including real estate, medical negligence, employment, determinations of feudal status and
even quasi-criminal complaints of assault or arson. (199)
Arbitration of international disputes (including those arising from Medieval fairs) was
preferred for reasons of expedition and commercial expertise, as well as, increasingly, the
inadequacy of the local courts or other decision-makers to deal with the special jurisdictional
and enforcement obstacles presented by foreign or international litigation. In Blackstones
words, which again might be written almost equally well today:
The reason of their original institution seems to have been, to do justice expeditiously among
the variety of persons that resort from distant places to a fair or market; since it is probable
9
that no inferior court might be able to serve its process, or execute its judgments, on both or
perhaps either of the parties. (200)
It is unclear just how consensual arbitrations in the context of Medieval guilds and fairs really
were, since the relevant tribunals appear to have had a degree of mandatory jurisdiction. (201)
P 31 It nonetheless is clear that the guilds and fairs were central to developing their respective
arbitral mechanisms, which functioned with substantial independence from local court
systems. That is reflected in the explanation provided by Gerard Malynes, a 17th-century
English authority on the law merchant:
The second meane or rather ordinarie course to end the questions and controversies arising
between Merchants, is by way of Arbitrement, when both parties do make choice of honest men
to end their causes, which is voluntarie and in their own power, and therefore called Arbitrium,
or free will, whence the name Arbitrator is derived: and these men (by some called Good men)
give their judgments by Awards, according to Equitie and Conscience, observing the Custome of
Merchants, and ought to be void of all partialitie or affection more nor lesse to the one, than to
the other, having onely care that right may take place according the truth, and that the
difference may be ended with brevitie and expedition. (202)
It also appears that English courts were prepared during this early period to give effect to
arbitration agreements, by enforcing penalty clauses associated with them (in accordance with
the Roman law compromissum theory), (203) by barring litigation on claims within the scope of
arbitration agreements (204) and by a robust enforcement of awards. (205)
Arbitration appears to have been equally important in commercial affairs in Germany,
Switzerland, Northern Italy and France. The Edict of 1560, promulgated by Francis II, made
arbitration mandatory for the resolution of commercial disputes among merchants; at the
same time, it declared arbitration agreements valid, even without a penalty clause, thereby
moving beyond Roman law requirements for a compromissum. (206) Although successive
French Parliaments apparently fought to restrict the binding character of commercial
arbitration, the practice remained well-established until the French Revolution. (207)
P 32 Commercial arbitration was also prevalent in the Swiss cantons and German
principalities. (208) In these areas of Europe, arbitration developed from two principal
sources, which began to fuse in the 14th and 15th centuries. On the one hand, local traditions of
arbitration were integrated into the feudal system; on the other, the Catholic Church offered
arbitral mechanisms and practices which developed under canonical law. (209)
Whatever its sources, it is clear that commercial arbitration was very widely-used in these
regions of Europe during the Middle Ages. Consistent with this, early codifications of
procedural law dating from the 14th, 15th and 16th centuries provided for arbitration as a
supplement to local court proceedings. (210) Research in southern Germany, Switzerland and
Austria also reveals thousands of arbitration deeds (Schiedsurkunde) evidencing a rich and
varied arbitral practice in these regions during the Middle Ages. (211) A representative
example was Bavaria, where there is substantial evidence of commercial arbitration in the
13th and 14th centuries. (212) Another anecdotal example is drawn from the archives of the
principality of Frstenberg, which contain more than 500 arbitral deeds for the period between
1275 and 1600 (compared to records for some 25 court proceedings). (213)
The traditional concept of arbitration in Germany was remarkably modern in many respects.
Arbitration agreements were treated as binding by state courts, and thus did not require
penalty clauses for enforcement, while arbitral awards were subject to immediate
enforcement, with minimal judicial review. (214)
During Medieval times, arbitration in German-speaking regions frequently did not involve a
strict application of rules of substantive law, instead leaving considerable scope for decisions
based on equity (and for settlements). (215) At the same time, however, arbitral mechanisms
developed in which arbitrators were expected to apply formal legal rules. It is said that a new
type of arbiter emerged in the Middle Ages, who was taken to perform the function of a
judge: He was chosen by the parties not merely in order to restore the peace between the
parties or to determine, ex aequo et bono, points which the parties had left open in their
agreement, but to decide a dispute. (216) As a consequence, a distinction was drawn between
arbitration nach Guet (or in equity) and arbitration nach Recht (or in law). (217) Where
arbitration nach Recht was used, arbitrators were generally obliged to apply the law (in the
P 33 same manner as a judge), although an arbitrator acting ex aequo et bono was not subject
to such constraints. (218)
The canonical approach to arbitration during this period was somewhat different. The
absorption of canonical law (through the Church) and Roman law (imported from Italian
universities (219) ) changed the nature of arbitration in German-speaking regions from an
informal, consensual mechanism to a more formal, legalistic procedure, where awards could
be challenged in state courts. (220) The canonical model also offered more sophisticated legal
mechanisms based on written legal sources and doctrine, which limited the arbitrators
discretion. (221) Moreover, in the canonical tradition, an agreement to arbitrate still needed to
be combined with penalty clauses to be effective, (222) and canonical awards were not treated
as immediately enforceable, but remained subject to judicial challenge based on various
grounds, including laesio enormis or manifest injustice. (223)
The reasons that merchants resorted to arbitration during the Medieval era are we will see in
subsequent sections of this Chapter almost eerily familiar to contemporary users of
10
international commercial arbitration. Simply put, arbitration was used in substantial part as a
means of overcoming the peculiar difficulties and uncertainties of international litigation in
state courts. One of Europes leading historians of the feudal period put it as follows:
The most serious cases could be heard in many different courts exercising parallel
jurisdiction. Undoubtedly there were certain rules which, in theory, determined the limits of
competence of the various courts; but in spite of them uncertainty persisted. The feudal
records that have come down to us abound in charters relating to disputes between rival
jurisdictions. Despairing of knowing before which authority to bring their suits, litigants often
agreed to set up arbitrators of their own or else, instead of seeking a court judgment, they
preferred to come to a private agreement.Even if one had obtained a favourable decision there
was often no other way to get it executed than to come to terms with a recalcitrant opponent.
(224)
P 34 More generally, in the words of another authority on the feudal period, in order to escape
the consequences, the delays, or the uncertainties of strict law, arbitration was a more
attractive resort, in nine cases out of ten, than the ordinary judgment of a regular tribunal.
(225)
Despite its deep historical roots, commercial arbitration also encountered recurrent
challenges, often in the form of political and judicial mistrust or jealousy. These challenges
have sometimes been overstated, and they have almost always (eventually) been overcome by
the perceived benefits of the arbitral process in commercial settings and the (eventual)
acceptance of these benefits by local governments. Moreover, the enforceability of arbitration
agreements appears frequently to have been achieved, in historical commercial settings,
largely through non-legal sanctions, such as commercial, religious and other sanctions
effectuated via guilds or similar bodies. (226) Nonetheless, the historical record is not
complete without addressing some of the more significant challenges that have sporadically
emerged to the legal enforcement of arbitration agreements and arbitral awards.
[3] Commercial Arbitration at English Common Law and English Legislative Reform
In the common law world, Lord Cokes 1609 decision in Vyniors Case enjoys the greatest
notoriety, if least precedential support, for its treatment of agreements to arbitrate. The case
involved a suit by Vynior against Wilde, seeking payment on a bond, which had secured the
parties promise to submit a dispute over a parish tax payment to arbitration. (227) Coke
granted judgment for Vynior on the bond, but added the following reasoning:
althoughthe defendant was bound in a bond toobserve [the] arbitrament, yet he might
countermand it; for a man cannot by his act make such authoritynot countermandable, which
is by the law and of its own nature countermandable; as if I make a letter of attorneyso if I
make my testament and last will irrevocable.And thereforein both cases [i.e., both where an
arbitration agreement is supported by a bond and where the agreement incorporates no bond]
the authority of the arbitrator may be revoked; but then in the one case he shall forfeit his
bond and in the other he shall lose nothing. (228)
Scholarly analysis has challenged most aspects of Cokes opinion including its excursion into
unnecessary dicta, its inapposite analogies between an arbitration agreement and a power of
P 35
attorney or will and its ill-concealed distaste for the arbitral process. (229) Nonetheless,
as long as penalty bonds remained enforceable, Cokes dictum was of limited practical import:
parties could, and, as the Romans and Medieval Germans had, (230) routinely did, include
penalty provisions in their agreements to arbitrate. (231) The common laws treatment of such
provisions was changed, however, in 1687, when Parliament enacted the Statute of Fines and
Penalties, which disallowed recovery of penalties generally, limiting bond-holders to the
recovery of actual damages. (232) Apparently to correct the effect of this statute on
commercial arbitration, Parliament soon thereafter enacted one of the worlds first extant
arbitration statutes, adopting what is sometimes called the 1698 Arbitration Act. (233)
Reflecting an objective of promoting commerce that would recur in connection with arbitration
legislation in later eras, the Acts purposes were:
promoting trade, and rendering the awards of arbitrators more effectual in all cases, for the
final determination of controversies referred to them by merchants and traders, or others,
concerning matters of account or trade, or other matters. (234)
These objectives were realized by statutory provisions allowing parties to make their
arbitration agreement a rule of any of His Majestys Courts of Record, which would permit
enforcement by way of a judicial order that the parties shall submit to, and finally be
concluded by the arbitration and umpirage. (235) This legislation sought to remedy, at least in
part, the damage effected by the combination of Cokes dicta in Vyniors Case and the Statute
against Fines, allowing Blackstone to conclude:
it is now become the practice to enter into mutual bonds, with condition to stand to the
award or arbitration of the arbitrators or umpire therein named. And experience having shewn
the great use of these peaceable and domestic tribunals, especially in settling matters of
account, and other mercantile transactions, which are difficult and almost impossible to be
adjusted on a trial at law; the legislature has now established the use of them. (236)
P 36 It nonetheless remained the case that, at English common law, an arbitration agreement
was on the authority of the dicta in Vyniors Case, which later hardened into solid precedent
revocable at will. Although damages were in theory recoverable when an arbitration
11
agreement was revoked, damages could not readily be proven or recovered for breach of an
arbitration agreement rendering such agreements nearly unenforceable in those cases where
the 1698 Arbitration Act did not apply. (237)
Outside the statutory safe haven of the 1698 Arbitration Act, common law enforcement of
arbitration agreements was made even more problematic by the decision in Kill v. Hollister.
There, the court permitted an action on an insurance policy to proceed, notwithstanding an
arbitration clause, on the grounds that the agreement of the parties cannot oust this court.
(238) In subsequent centuries, that doctrine which appeared to raise a broad-based public
policy objection to arbitration (and forum selection) agreements provided ample support for
both English and U.S. proponents of judicial hostility to arbitration. (239)
Nonetheless, subsequent legislative reforms in England gradually introduced greater support
for commercial arbitration agreements and arbitral tribunals powers. The 1833 Civil Procedure
Act restated the rule that an arbitration agreement which was made a rule of court could not
be revoked, while providing arbitrators with a mechanism to summon witnesses and the power
to administer oaths. (240)
At the same time, in the middle of the 19th century, English courts revisited the analysis in Kill
v. Hollister, arriving at a very different view. The leading authority is Scott v. Avery, where Lord
Campbell said:
Is there anything contrary to public policy in saying that the Company shall not be harassed
by actions, the costs of which might be ruinous, but that any dispute that arises shall be
referred to a domestic tribunal, which may speedily and economically determine the dispute?
I can see not the slightest ill consequences that can flow from such an agreement, and I see
great advantage that may arise from it.Public policy, therefore, seems to me to require that
effect should be given to the contract. (241)
He also disposed of the ousting the court of jurisdiction adage proffered in Kill v. Hollister
by remarking dismissively that it probably originated in the contests of the different courts in
ancient times for extent of jurisdiction, all of them being opposed to anything that would
altogether deprive every one of them of jurisdiction. (242) In a subsequent case, decided the
same year, Lord Campbell declared:
Somehow the Courts of law had, in former times, acquired a horror of arbitration; and it was
even doubted if a clause for a general reference of prospective disputes was legal. I never
P 37 could imagine for what reason parties should not be permitted to bind themselves to
settle their disputes in any manner on which they agreed. (243)
Lord Campbell also provided a famously cynical explanation for the alleged historic hostility
of English common law judges to arbitration:
This doctrine had its origin in the interests of the judges. There was no disguising the fact that,
as formerly, the emoluments of the Judges depended mainly, or almost entirely, on fees, and
as they had no fixed salaries there was great competition to get as much as possible of
litigation into Westminster Hall and there was a great scramble in Westminster Hall for the
division of the spoil.And they had great jealousy of arbitration whereby Westminster Hall was
robbed of those cases. (244)
While Lord Campbells derisory description of the English courts historical attitude towards
commercial arbitration appears to have been overstated, (245) the more enduring point is his
own resounding endorsement of the arbitral process in commercial matters a point of view
that has been formulated with increasing vigor by English courts and legislatures in succeeding
decades. (246)
This was confirmed in the 1854 Common Law Procedure Act, one of the first modern efforts at a
comprehensive arbitration statute. (247) Among other things, the Act provided (albeit
circuitously) for the irrevocability of any arbitration agreement, by permitting it to be made a
rule of court, regardless whether the parties had so agreed. (248) At the same time, however,
the statute introduced new limits on the arbitral process by providing for fairly extensive
judicial review of the substance of arbitrators awards, through a case stated procedure that
permitted any party to obtain judicial resolution of points of law arising in the arbitral
proceedings. (249)
At the end of the 19th century, England enacted the 1889 Arbitration Act, which was in turn
P 38 widely adopted throughout the Commonwealth. (250) The Act confirmed the irrevocability
of agreements to arbitrate future disputes, (251) while granting English courts discretion
whether or not to stay litigations brought in breach of such agreements (effectively permitting
specific performance of arbitration agreements to be ordered, albeit on a discretionary basis).
(252) At the same time, the Act preserved previous features of English arbitration law, including
the case stated procedure for judicial review and the powers of the English courts to appoint
arbitrators and assist in taking evidence. (253) The 1889 Act remained in force for more than
half a century, (254) only eventually being replaced by Englands 1950 Arbitration Act. (255)
In terms of procedures, it appears that a variety of means of selecting arbitrators were used at
English common law. (256) In general, however, a consistent theme in English arbitration was
the use of party-nominated arbitrators, with a presiding arbitrator or umpire. (257) It is unclear
how often umpires, rather than three-arbitrator tribunals, were utilized, although the latter
remained a common fixture in English arbitration until well into the 20th century. (258) What
appears to have been an informal approach to rules of procedure in these early arbitrations
12
was later abandoned, at least in part and for a time, with local judicial procedures being
imposed on English arbitral tribunals (as discussed below). (259)
[4] Commercial Arbitration in France
A broadly similar set of historical developments occurred in France as in England. There, as
discussed above, the Edict of 1560 and merchant practice led to widespread use of arbitration
for resolving commercial disputes in the 16th, 17th and 18th centuries. (260)
The French Revolution changed this, like much else. Consistent with more general notions of
P 39 social contract and democratic choice, the arbitration agreement was initially afforded
enhanced dignity. Arbitration was described as producing pure, simple and pacific justice,
(261) which was legislatively declared to be the most reasonable means for the termination of
disputes arising between citizens. (262) In due course, arbitration was elevated to
constitutional status in the Constitution of 1793 (Year I) and the Constitution of 1795 (Year III).
Among other things, Article 86 of the French Constitution of Year I declared that [t]he right of
the citizens to have their disputes settled by arbitrators of their choice shall not be violated in
any way whatsoever. (263)
As with many other things, the French Revolution soon turned on its progeny, with arbitration
eventually being considered (ironically) a threat to the rule of law and the authority of the
revolutionary state. (264) With this hostility in the air, the 1806 Napoleonic Code of Civil
Procedure imposed numerous legislatively-mandated procedural and technical restrictions on
arbitration agreements and procedures. (265) In particular, Article 2059 of the Civil Code and
Article 1006 of the Code of Civil Procedure provided that agreements to arbitrate future
disputes were generally unenforceable. (266) The French Commercial Code permitted
agreements to arbitrate future disputes only in limited circumstances, consisting of maritime
insurance contracts and certain corporate and partnership contexts. (267) More generally, as
one commentator observes:
all the provisions of the [Napoleonic Code] do appear to reflect, so to speak, a hatred of
arbitration agreements and provide evidence of a secret desire to eliminate their existence.
(268)
This hostility towards the arbitral process was reflected in contemporaneous French legal
commentary, which held that arbitration is a rough draft of the institutions and the judicial
guarantees (269) and [a] satire of judicial administration. (270)
P 40 French courts did little during the 19th century to ameliorate this hostility. An 1843
decision of the Cour de cassation, in Cie LAlliance v. Prunier, held that agreements to arbitrate
future disputes were not binding unless they identified the particular dispute and specified
the individuals who were to serve as arbitrators. (271) The stated rationale, which would recur
in other historical and geographical settings, was that parties should be protected against the
advance and abstract waiver of access to judicial protections and guarantees. (272) That was
coupled with a parallel perception that [o]ne does not find with an arbitrator the same
qualities that it is assured to find with a magistrate: the probity, the impartiality, the
skillfulness, [and] the sensitivity of feelings necessary to render a decision. (273) The judicial
decisions that followed upon these observations significantly limited the practicality and
usefulness of arbitration agreements in 19th (and early 20th) century France.
As discussed below, it took some eight decades before this judicial hostility was moderated by
the French courts and legislature first in international cases and later in domestic ones. (274)
Indeed, it was only with Frances ratification of the 1923 Geneva Protocol, discussed below, that
agreements to arbitrate future international commercial disputes became fully enforceable in
French courts. (275)
[5] Commercial Arbitration in United States
A broadly similar course was followed with regard to commercial arbitration in the United
States during the 18th and 19th centuries as in England and France. Consistent with the United
States vital role in the development of state-to-state arbitration in the 18th century, (276)
arbitration was widely used to resolve commercial (and other) disputes during Colonial times
and the early years of the Republic. Despite this, over the course of the 19th century, significant
judicial (and legislative) hostility to arbitration agreements developed, as some U.S. courts
developed a peculiarly radical interpretation of historic English common law authority. (277)
Importantly, the resulting judicial hostility to the arbitral process did not prevent the use of
extrajudicial and commercial mechanisms for enforcing arbitration agreements and awards,
P 41
(278) but it nonetheless undoubtedly hindered use of arbitration in the 19th century
United States. This hostility was only fully overcome in the early 20th century, when
determined efforts by the U.S. business community resulted in enactment of the Federal
Arbitration Act (FAA) and similar state arbitration legislation. (279)
Difficulties in resolving private disputes existed from the earliest days of European settlement
in North America which was hardly surprising, in light of the lack of governmental
administrative structures and trained lawyers in the colonies, coupled with the fluid,
sometimes chaotic dynamism of colonial life. Equally unsurprising is the use of various forms of
arbitration to address these difficulties. Early Dutch settlers in New York, frustrated with efforts
to replicate European judicial institutions, turned to the election of a council of arbitrators,
which was in fact a form of judicial body whose jurisdiction appears in at least some cases to
have been mandatory. (280)
13
Nonetheless, from an early date, it was also common to refer disputes in New Amsterdam to
true consensual arbitration:
the arbitrators were left to the choice of the litigants, or appointed by the court.These
references were frequent upon every court day, andthough the amount involved was
frequently considerable, or the matter in dispute highly important,appeals to the court from
the decision of the arbitrators were exceedingly rare. (281)
Some commentators conclude that, after the 1664 hand-over of administration in New York to
Great Britain, the use of arbitration in commercial matters was one of the enduring features of
continuing Dutch influence. (282)
Arbitration of commercial and other matters was widespread in the American colonies during
the 17th and 18th centuries. Drawing on English, as well as Dutch, practice, the colonists found
the flexibility, practicality and speed of arbitral processes well-suited to their conditions:
From whatever source they derived the practice, the colonists engaged in extensive
arbitration throughout the period of English rule. (283) Relying on court files (relatively sparse
and terse), newspaper accounts (more fulsome), merchants books and chamber of commerce
records, historians have sketched a picture of widespread, routine use of arbitration in
P 42 Colonial commercial matters, including in transactions between businesses in different
colonies, typically by agreement between the parties after disputes had arisen. (284)
A primary motive then, as now, was avoidance of the delays and costs of litigation. One letter,
printed in a 1751 edition of the New York Weekly Post-Boy, recorded a litigants plea to a
counter-party:
let me tell you that after you have expended large Sums of Money, and squanderd away a
deal of Time & Attendance on your lawyers, and Preparations for Hearings one Term after
another, you will probably be of another Mind, and be glad Seven Years hence to leave it to
that Arbitration which you now refuse. (285)
Whatever the truth, Colonial businessmen of the day shared this view, turning with great
regularity and confidence to arbitration to settle their commercial disputes.
Following the American Revolution, the routine use of arbitration to resolve commercial
disputes did not diminish. On the contrary, as New York developed over the course of the 19th
century from a small, closely-knit colonial town into a cosmopolitan center of commerce, the
use of arbitration grew apace with the expansion of commercial affairs. (286) One
commentator concludes:
it is clear that arbitration has been in constant use in New York from its beginnings to 1920. It
did not suddenly come into being at that time because of the passage of a statute making
agreements to arbitrate future disputes enforceable. Rather, it has existed with and without
the benefit of statutes, and both separate from, and in connection with, court adjudication.
(287)
Or, in another commentators words, [a]rbitration actually was in widespread use in the
P 43 United States almost three centuries before modern arbitration statutes were passed in
the 1920s; its history traces back to the colonial period. (288) The driving motivation for
arbitration in commercial matters during this period, as in many earlier eras, continued to be
the perception by Colonial American businesses that government courts of the period did not
apply commercial law in what the merchant community considered to be a just and
expeditious fashion. (289)
As its role as the dominant U.S. commercial and financial center would suggest, New York
practice was representative of the country as a whole at the time. (290) Research into specific
jurisdictions, including New Jersey, Pennsylvania, Connecticut, Massachusetts, Delaware,
Virginia and Ohio, reveals a history similar to that in New York. (291) As one early 19th century
commentator noted, the commercial arbitration system established by New York merchants
offered a lead that has been taken by the merchants of [Philadelphia] and other cities. (292)
Other areas of the country had a history of arbitration independent of New Yorks lead.
Influenced by Quaker anti-legalism, (293) William Penns laws (1682) in Pennsylvania provided
that each precinct should appoint three individuals to serve as common peacemakers. (294)
In Dedham, Massachusetts, disputes were mediated from 1636 onwards by three
understanding men, or by two judicious men, chosen either by the parties or the community
itself whose decisions were routinely obeyed. (295) Similarly, in Kent County, Delaware, a
1680 judicial decision appointed two arbitrators to decide the case, who would in case of a
non agreementchuse a third person as an Umpire [to] make a final End thereof. (296)
Some early legislative efforts were made in different American states to support the arbitral
process in commercial matters. The first American arbitration legislation appears to have been
adopted in Connecticut, where a 1753 statute, modeled on the English Arbitration Act of 1698,
provided for the enforcement of agreements to arbitrate future disputes where they had been
P 44 made a rule of court. (297) In 1791, the New York legislature enacted a similar statute, also
virtually identical to the 1698 English Arbitration Act. (298) Similar mechanisms were adopted
in various colonies, including the use of conditioned bonds and promissory notes, designed to
make both arbitration agreements and arbitral awards more readily enforceable. (299)
A 1793 American insurance policy contained an arbitration clause, suggesting that legislation of
this character arose from the use of arbitration in routine commercial arrangements:
14
And it is agreed, that if any Dispute should arise relating to the Loss on this Policy; it shall be
referred to two indifferent Persons, one to be chosen by the Assured, the other by the Assurer,
who shall have full Power to adjust the same; but in case they cannot agree, then such two
persons shall choose a third; and any two of them agreeing, shall be obligatory to both
parties. (300)
Nonetheless, it appears that the principal means by which arbitration agreements and arbitral
awards were enforced during the Colonial era was through non-legal or extralegal commercial,
professional and other mechanisms. (301) That is in part because of the character of U.S.
commercial affairs at the time, and in part because of the general shortcomings of legal or
judicial enforcement mechanisms. (302)
Despite the prevalence of commercial arbitration as a means of dispute resolution, and the
existence of a measure of early legislative and judicial support, some 19th century American
P 45 courts developed a puritanical version of English common law hostility to agreements to
arbitrate future disputes. Indeed, for some decades, a number of U.S. courts held flatly that
agreements to arbitrate future disputes were contrary to public policy and revocable at will.
(303)
Joseph Story, a preeminent U.S. legal authority in a wide range of fields, reflected 19th century
American judicial hostility to arbitration agreements. In 1845, he stated the common law
position in the United States, inherited from England and elaborated with particular vigor:
Now we all know that arbitrators, at the common law, possess no authority whatsoever, even
to administer an oath, or to compel the attendance of witnesses. They cannot compel the
production of documents and papers and books of account, or insist upon a discovery of facts
from the parties under oath. They are not ordinarily well enough acquainted with the
principles of law or equity, to administer either effectually, in complicated cases; and hence it
has often been said, that the judgment of arbitrators is but rusticum judicium. Ought then a
court of equity to compel a resort to such a tribunal, by which, however honest and intelligent,
it can in no case be clear that the real legal or equitable rights of the parties can be fully
ascertained or perfectly protected?[An arbitration agreement is not specifically enforceable
because it] is essentially, in its very nature and character, an agreement which must rest in the
good faith and honor of the parties, and like an agreement to paint a picture, to carve a statue,
or to write a bookmust be left to the conscience of the parties, or to such remedy in damages
for the breach thereof, as the law has provided. (304)
While this left open the possibility of recovering money damages for breach of an arbitration
agreement, (305) this was virtually never an effective (or even very plausible) means of
enforcement, since adequate proof of injury resulting from a refusal to arbitrate was virtually
impossible. (306)
Relying on literal interpretations of the English common law in Vyniors Case and Kill v.
P 46 Hollister, (307) and evidencing a disdain for the arbitral process reminiscent of early 19th
century French authors, (308) Storys influential academic commentaries adopted similar
reasoning:
where the stipulation, though not against the policy of the law, yet is an effort to divest the
ordinary jurisdiction of the common tribunals of justice, such as an agreement, in case of any
disputes, to refer the same to arbitrators, Courts of Equity will not, any more than Courts of
Law, interfere to enforce that agreement, but they will leave the parties to their own good
pleasure in regard to such agreements.The regular administration of justice might be greatly
impeded or interfered with by such stipulations if they were specifically enforced. And at all
events courts of justice are presumed to be better capable of administering and enforcing the
rights of the parties than any mere private arbitrators, as well from their superior knowledge as
from their superior means of sifting the controversy to the very bottom. (309)
Elsewhere, Story apparently went even further, seemingly declaring that agreements to
arbitrate future disputes violated public policy (which would presumably result in denial of
even a claim in damages for breach of an arbitration agreement). He rejected specific
performance of such agreements, deeming it against public policy to exclude from the
appropriate judicial tribunals of the State any persons who, in the ordinary course of things,
have a right to sue there. (310)
Although the precise basis for this judicial hostility was unclear, (311) some U.S. courts applied
an extreme interpretation of English common law precedents to withhold meaningful judicial
enforcement of arbitration agreements throughout much of the 19th century. (312) In the words
P 47 of then-Judge Cardozo: It is true that some judges have expressed the belief that parties
ought to be free to contract about such matters as they please. In this state, the law has long
been settled to the contrary.The jurisdiction of our courts is established by law, and is not to
be diminished, any more than it is to be increased, by the convention of the parties. (313) Or,
as a leading treatise concluded: It is an elementary proposition of the common law cases, and
is almost universally accepted by the American courts, that future disputes clauses and
provisions for arbitration are revocable. (314)
Moreover, U.S. courts and legislatures did not quickly follow the path of Scott v. Avery or the
1889 English Arbitration Act, which had taken steps to facilitate the enforcement of arbitration
agreements in England. (315) As the Second Circuit once wrote, with only a measure of
exaggeration, [one] of the dark chapters in legal history concerns the [treatment of questions
of the] validity, interpretation and enforceability of arbitration agreements by U.S. courts in
15
the 19th century. (316)
Importantly, even while many U.S. courts refused to enforce commercial arbitration
agreements during the middle and late 19th century, arbitration remained both popular and
effective in American commercial settings: The use of commercial arbitration developed
during the colonial and post revolutionary periods in spite of this [judicial] hostility. (317) As
already noted, it did so on the basis of non-legal commercial sanctions and enforcement
mechanisms, including through membership in commercial guilds, societies, municipal
communities, or religious groups, all of which proved sufficiently resilient to sustain arbitration
as an effective means of dispute resolution notwithstanding judicial hostility. (318)
Moreover, even with regard to judicial enforcement of arbitration agreements and awards,
other movements were afoot in the United States by the mid- and late 19th century. Courts in a
number of American jurisdictions rejected the common law notion that arbitration agreements
P 48 were either unenforceable or revocable, and instead upheld them, (319) while also
enforcing arbitral awards with minimal judicial review. (320) Rejecting Storys doctrinal
authority, a Virginia court declared in 1858, in terms that could have been written 150 years
later, that:
The only ground on which [the arbitration agreement] can be said to be unlawful is, that in
referring all disputes and difficulties arising under the contract to the engineer or inspector, it
tends to oust the courts of law of their jurisdiction; and is therefore against the policy of the
law and void.I am certainly not disposed to extend the operation of a rule which appears to
me to have been founded on very narrow grounds, directly contrary to the spirit of later times,
which leaves parties at full liberty to refer their disputes at pleasure to public or private
tribunals. (321)
At the same time, as noted above, legislation or judicial decisions in a number of U.S. states
permitted the use of rules of court, conditioned bonds, or promissory notes to provide
enforcement mechanisms for arbitration agreements and arbitral awards. (322)
Shortly after the U.S. Civil War, the U.S. Congress enacted legislation encouraging efforts to use
arbitration to resolve international commercial disputes although it does not appear that
P 49 the statute had significant practical effects. (323) What did continue to have practical
effects, however, were commercial and professional associations, which ensured that
arbitration remained a central part of commercial life, even during the dark chapters in legal
history, when U.S. courts were most hostile to arbitration and agreements to arbitrate. (324)
U.S. judicial and legislative hostility to commercial arbitration substantially eroded in the late
19th and early 20th century. American judicial opinions began increasingly to question the
wisdom of Storys views, (325) while commercial pressure for legislative reform built. (326) This
pressure eventually had its intended effect, and in 1920 New York enacted legislation
providing for the validity and specific enforcement of arbitration agreements. That was
followed in 1925 by similar provisions in the FAA (which are discussed in detail below), which
paralleled negotiation and adoption of the 1923 Geneva Protocol (also discussed below). (327)
The New York arbitration law and FAA enacted a sea change from the American common law by
instituting a default rule that contracts to arbitrate were valid and would be specifically
enforced by the courts. (328)
[6] Commercial Arbitration in Other European Jurisdictions in 18th and 19th Centuries
The history of commercial arbitration in other nations did not always involve the same degree
of judicial or legislative hostility as occasionally demonstrated in 18th and 19th century
England, France and the United States. Historically, commercial arbitration was commonly
used by merchants in what is today Germany, perhaps particularly because of the lack of a
centralized government (until comparatively recently) and the demands of international
commerce. (329) Thus, a German commentator at the beginning of the 20th century could
P 50 observe, with regard to historic German experiences: arbitral tribunals have at all times
been regarded as an urgent necessity by the community of merchants and legislation has
always granted them a place alongside the ordinary courts. (330)
The role of arbitration in commercial matters was recognized, and given effect, in the civil
codes of Baden (in 1864), Prussia (in 1864) and Bavaria (in 1869). All of these statutory
codifications confirmed the role of arbitration in the resolution of commercial disputes, while
granting arbitrators varying degrees of freedom from local procedural and substantive
requirements and judicial control. (331) These developments led to statutory provisions
regulating arbitration in the first German Code of Civil Procedure of 1877 (which would remain
the fundamental basis for Germanys legal regime for arbitration until 1998).
The 1877 Code of Civil Procedure incorporated provisions that freed arbitrators from the
obligation to apply strict legal rules (and, concurrently, from judicial review of the substance of
awards). The drafters of the Code explained:
By submitting themselves to arbitration the parties want to escape from the difficulties and
complexities arising from the application of the law. They intend that the law as between them
should be what the arbitrators, according to their conscientious conviction ex aequeo et bono
determine. They will therefore as a rule consider the arbitrators to be friendly mediators
amiables compositeurs, as the Belgian draft says and it is obvious that they do so consider
them whenever they appoint as arbitrators persons who are not learned in the law. As a rule
therefore the goal of arbitration is attained only when the arbitrators are not bound to follow
16
the ordinary rules of law when giving their awards. (332)
At the same time, at the end of the 19th and beginning of the 20th century, German courts gave
active support to the arbitral process, including by pioneering the development of what would
later be termed the separability doctrine, in order to facilitate the enforcement of arbitration
agreements. (333)
By the turn of the 20th century, permanent arbitral tribunals, organized under the auspices of
trade organizations, became a common feature of German business life. In 1909, 1030 cases
were pending before such tribunals in Berlin alone. (334) Contemporaneous German authors
generally praised the arbitral process, highlighting its efficiency, trustworthiness and the
commercial sense of arbitrators with industry experience. (335)
Like some common law courts, however, the German courts came in the next decades to
guard[] their rights with extreme jealousy, and were only too inclined to set aside awards [on
P 51 the basis of] even a slight failure to comply with the provisions of the Code. (336) The
provisions of the German Code of Civil Procedure left considerable leeway to local courts to
interfere with the arbitral process, curtailing the practical value of arbitration. (337)
The mistrust for arbitration in German courts (and commentary) developed with particular
vigor between the two World Wars, (338) becoming especially pronounced after the rise of the
National Socialists in 1933. (339) According to the Guidelines of the Reich Regarding Arbitral
Tribunals, published in December 1933, arbitration threatened governmental authority and
the State itself, demanding a rejection of arbitration agreements in state contracts:
Directives for the Reichs-authorities on arbitration clauses have been enacted, which lay
down that all disputes arising out of contracts between the Reich and a private party must, in
principle, be brought before the ordinary courts. It is emphasized in the directives that due to
practical experience the alleged advantages of arbitration, namely rapidness of settlement
and lower cost-expenditure, are rather problematic and are altogether not capable to
outweigh the disadvantages of greater legal uncertainty mostly present in arbitration in
comparison to the ordinary jurisdiction. From the political perspective it must further be
noticed, that a greater extension of arbitration would constitute a loss of confidence in the
national jurisdiction and ultimately in the State itself. (340)
One local adherent approved the declaration, adding that the national-socialist state rejects
contrary to liberalists views arbitral tribunals altogether. (341)
Consistent with this rationale, the Nazi regime systematically curtailed the use of arbitration in
all walks of German life, both domestic and international. (342) As one contemporaneous
commentator explained, [t]o the totalitarian state, with its doctrine of the all-enslaving power
of the state (or more correctly, of the armed groups and their leaders) arbitration means an
P 52 attempt of private individuals to free an important part of their activities from the
dominating yoke of the governing group. (343)
As already described, the Napoleonic Code (and Cour de cassation, in an 1843 decision) had
adopted a similarly antiarbitration course in France, which persisted until the 1920s. (344)
Despite that, Belgian courts refused, unusually, to follow the approach of the French Cour de
cassation on this subject and instead gave effect to agreements to arbitrate future disputes.
(345) The Netherlands took a similar approach, enacting an Arbitration Act as part of its Code
of Civil Procedure in 1838 to provide a comprehensive legal framework for commercial
arbitration. (346) The Dutch and Belgian approach reflected the Low Countries historical
reliance on arbitration, (347) which can be attributed in significant part to their mercantile
cultures and the influence of Roman law. (348) Swiss cantonal legislation and constitutions
were also generally supportive of arbitration during this era. (349)
[7] Arbitration in Middle East, Asia, Africa and Americas
While there is not the same corpus of evidence of arbitration outside Europe and the Americas,
it appears from available historical materials that arbitration of commercial disputes has
been Arbitration in its contemporary form was introduced into many regions through British,
Spanish, Dutch or other colonialism, but often co-existed with or supplanted earlier local
traditions. (350)
[a] Middle East
In Arab and Islamic areas, in particular, there was a long and rich history of commercial
arbitration. (351) The use of arbitration in the Middle East dates to pre-Islamic times when
P 53 there was no centralized, established system of justice, and arbitration was used to settle
disputes between both individuals and tribes. (352) Arbitration was voluntary and the
arbitrators decision was not legally binding: (353) In one commentators words, [d]isputes in
pre-Islamic Arabia were resolved under a process of arbitration (of sorts).This was voluntary
arbitration, an essentially private arrangement that depended on the goodwill of the parties.
(354)
In terms of procedures, the arbitrator in pre-Islamic arbitrations in many parts of the Arab
Middle East was chosen by the parties and was not obliged to apply rules of law or follow
judicial procedures, but, at a minimum, typically conducted a hearing attended by all parties.
(355) Enforcement of awards generally depended on the moral authority of the arbitrator,
although in some instances parties were required to submit a bond to guarantee enforcement
of the awards (not dissimilar to Roman, canonical and English penalty mechanisms). (356)
17
Although political territories and religious groups in the region differed widely in their
practices, (357) arbitration continued to be a popular form of dispute resolution after the
advent of Islam. The Prophet Muhammad appointed arbitrators to resolve his own disputes
and counseled tribes to use arbitrators for peaceful settlement of their differences. (358)
The Prophet also served as arbitrator, with the most famous of these examples involving a
dispute between two clans over placement of the sacred black stone in the Kaaba in Mecca.
The Prophet fulfilled his mandate by placing a cloak under the stone and asking a
representative from each clan to lift one side of the cloak, with the resulting joint effort
marking the resting place of the Black Stone. In later arbitrations, the Prophet was chosen to
settle disputes between other clans, including the Aws and Khazraj tribes of Medina, and a
dispute with the Bani Qurayzah, a Jewish tribe, in which both parties agreed to submit their
dispute to arbitration. (359)
The Koran also condones arbitration with respect to family matters, in Verse 35 of the Surah of
the Women: If ye fear a breach Between them twain, Appoint (two) arbiters, One from his
family, And the other from hers; If they wish for peace, Allah will cause Their reconciliation: For
P 54 Allah has full knowledge, And is acquainted With all things. (360) The verse has been
interpreted to extend approval to party-nominated arbitrators (361) and to arbitration in
matters of politics and the state. (362)
The most famous arbitration in Islamic history took place between Ali (the Fourth Caliph) and
Muawiyyah (Governor of Syria). The arbitration arose from a written agreement including
provisions for nomination of arbitrators, terms of reference, applicable law and a time limit for
making the award. (363)
During the 19th century, the Ottoman Empire adopted legislation (modeled on then recently-
adopted European arbitration legislation) regulating the arbitral process. In particular, the
Ottoman Civil Code of 1876 contained 11 articles (Articles 1841-1851) dealing with arbitration,
generally in a relatively restrictive manner. (364) Among other things, paralleling the
unavailability in some states of specific performance of arbitration agreement, the Ottoman
Civil Code permitted either party to dismiss the arbitrator before he has given his decision,
unless the arbitrators appointment had been judicially confirmed. (365) Moreover, Article 1849
provided for broad powers of judicial review, mandating that an award shall be confirmed if
given in accordance with law. Otherwise it shall not be so confirmed. (366)
[b] Jewish Communities
There is a long tradition of arbitration in Jewish communities, both in the Middle East and
elsewhere. A system of Jewish courts (battei dinin), including the Sanhedrin, were developed at
an early stage for resolution of civil, criminal and other disputes. (367) According to many
authorities, arbitration only flourished in Jewish communities during the Roman period, as an
alternative to Roman courts, after Roman law restricted Jewish judicial autonomy. (368) In the
P 55
words of one writer, arbitration in Jewish communities in Antiquity was the outgrowth of a
period of persecution and oppression that followed the destruction of the Second Temple.
(369) At the same time that Jewish communities relied on arbitration as a means of preserving
local autonomy, agreements by Jews to submit disputes to arbitration, and decisions by Jewish
arbitral tribunals, were recognized and given effect by Roman authorities. (370) In contrast,
Jewish communities in Babylon apparently enjoyed substantial judicial autonomy from Roman
authorities and did not make use of arbitration. (371)
A characteristic feature of arbitration in Jewish communities in the Classical era was the use of
party-appointed arbitrators (on three-person tribunals); indeed, the Hebrew term for
arbitration (Zabla) is derived from the phrase zeh borer lo ehad, meaning he chooses one.
(372) The Talmud subsequently addressed the issue, providing: Civil cases by three; one party
may select one and so the other, and both of them select one more; so is the decree of R. Meir.
The Sages, however, maintain that the two judges may select the third one. (373) Classical
Jewish arbitrations were also characterized by the final resolution of disputes (with arbitration
distinguished from mediation or conciliation, which did not produce binding decisions). (374)
Arbitration was also widely-used in Jewish communities outside the Middle East as a
consequence of the Jewish Diaspora. (375) Jewish communities adapted differently in different
P 56 locales throughout Europe during the Middle Ages. (376) In some jurisdictions, such as
Germany, Jewish communities generally enjoyed substantial autonomy, (377) establishing
relatively formalized dispute resolution mechanisms with tribunals composed of rabbis,
applying Jewish law and sometimes denominated as Beth Dins (Jewish courts or, literally,
houses of judgment). (378) In other jurisdictions, such as Italy, Jewish communities were not
afforded substantial autonomy and informal arbitral mechanisms were adopted (with rabbis
again playing a significant role in dispute resolution). (379)
The tradition of three-person tribunals continued in Jewish communities during the Diaspora.
In general, where the arbitrators (or parties) were unable to agree upon the identity of the
third arbitrator, the appointment would be made by the elders of the locality; it was
apparently common practice for the rabbi of the city or town to be appointed as the third
arbitrator. (380) The parties were free to agree upon fewer or more than three arbitrators,
which apparently occurred not infrequently in practice. (381) Arbitrators were apparently
required to be (relatively) independent of the parties. (382)
Parties reportedly enjoyed broad autonomy over the arbitral procedures. (383) Formal
18
requirements applicable in Jewish courts were inapplicable in arbitration and in some
localities special rules of arbitral procedure were adopted. (384) In Krakow, for example,
arbitrators were required to begin the arbitral hearing within 24 hours of their appointment
and render a decision within three days of the hearing. (385)
There were apparently debates, in different Jewish localities, about the degree of formality
that was required for a binding arbitration agreement. (386) There were also apparently
disputes about the subjects that could be submitted to arbitration, with some authorities
indicating that both civil and criminal matters could be arbitrated and others limiting
arbitrable subjects to civil disputes. (387) Arbitrators were reportedly not required to render
reasoned awards, although they sometimes did (as in the cases of a 17th century award in
Vienna, holding that leaders of the Jewish community had not committed financial
malfeasance). (388)
P 57 The use of arbitration for the settlement of disputes in the Jewish community expanded
during the 20th century in many jurisdictions. The Beth Din of America was founded in 1960,
and provides an umbrella organization for the resolution of disputes by rabbinical courts (Beth
Din) in a number of U.S. cities. (389) Beth Dins exist in other jurisdictions as well, including
England, South Africa and Switzerland (site of the European Beth Din which serves individuals
and communities in a number of European states, including Austria, Bulgaria, Denmark,
Finland, Germany, Hungary, Norway, Poland, Romania, Slovakia, Sweden and Turkey). (390)
[c] East and Southeast Asia
In East and South Asia, commentators conclude that arbitration has existed since antiquity.
The recorded history of arbitration in many parts of Asia largely follows developments of the
colonial powers. (391) That said, fragments of history provide insights into a deep-rooted
reliance on arbitration in at least some areas and time periods.
China has a long tradition of settling disputes through conciliation and arbitration, said to be
grounded in the Confucian ideal of harmony. (392) For example, reports from the Qing dynasty
describe the resolution of a property dispute by six relatives and friends who examined the
dispute and crafted a compromise which was approved by a local court. (393)
P 58 Most traditional forms of dispute resolution, particularly in China and Japan, more closely
resemble conciliation or mediation, rather than arbitration. (394) For example, the lineage
system in parts of China recognized the authority of elder members of village society to
mediate disputes and settle local conflicts. (395) Similar private adjudicatory processes have
existed for centuries in Indonesia, the Philippines and other parts of South Asia. (396) Some of
these dispute resolution systems were later codified in the early 19th century, notably in the
Code of the Three Great Seals in Thailand, which prescribed an early form of binding
arbitration. (397)
[d] India
Hindu mythology provides early descriptions of arbitration. In some accounts of the
Ramayana, Rama and his family attempt to settle their disputes through arbitration by the
deities. (398) In one story, Shivas twin sons capture their fathers horse, leading to a battle
between the sons and father (who is unaware of the identity of his sons). A range of Hindu
deities (including Brahman, Siva, Indra, and their wives) attempt to resolve the dispute
through mediation, including by attempting to persuade the twins to accept a divine
arbitrator; in a development reminiscent of some contemporary arbitral settings, none of
these efforts succeed, because the parties reject all proposals for arbitrators for various
asserted reasons of partiality. (399)
In ancient India, local village councils (jirgas and panchayatts) conducted informal arbitral
proceedings and their decisions were considered binding. (400) These forms of dispute
resolution involved the nomination of local luminaries, often village elders or others of high
social stature, to settle disputes within communities. This traditional council of adjudicators
eventually evolved into a form of self-rule in India, the panchayatt raj, which incorporated
arbitral practices as part of a postcolonial ideal of local governance and grassroots
democracy. (401)
There is some evidence that early Indian practice preferred panchayat dispute resolution to
litigation before judges who had been appointed by political authorities; the informal nature
of the proceedings and the ability to avoid the technical requirements of Indias judicial
system was seen as a significant advantage. (402) Even today, many villages in Southern Asia
view state courts with suspicion and prefer to settle disputes before the panchayat, which
takes forms varying from informal mediation by family/village elders to enforceable decisions
P 59 of panchayat committees. Under British colonial administration, arbitration was accorded
a limited, but gradually expanding, place in the resolution of Indian commercial disputes.
(403)
[e] Africa
Africa presents a similar situation. The recorded history of arbitration is not well-elaborated
until the colonial period, when Europeans imported their use of commercial arbitration into
the African setting. (404) Nonetheless, local commentators report that [a]rbitration and ADR
have always existed in Africa, harking back to ancient custom that, unlike in the northern
hemisphere, is still practised widely. (405) In traditional African communities, when a
19
dispute arose among individuals, even in non-commercial transactions, the complainant
invariably referred the matter to a third party for redress. (406) The most serious disputes
were resolved by a council of elders that would take testimony and sometimes hear the
arguments of agents acting as advocates on behalf of the disputants. (407)
[f] Latin America
There is a long history of arbitration as a means of commercial dispute resolution in Latin
America. Spanish and Portuguese rule was particularly influential, and colonial arbitration
regulations and legislation remained in force even after independence, until the new American
states developed their own civil procedure codes. (408) This readiness to accept arbitration
changed somewhat with the new legislation, which did not always provid[e] very efficient
regulation for the enforcement of arbitration agreements and awards. (409)
While Mexican legal culture has a long history of promoting conflict resolution through
mediation and negotiation rather than through litigation, Mexicos 1890 Commercial Code
disfavored arbitration, instead expressing a preference for conventional litigation procedures.
P 60 (410) In both Paraguay and Chile, rules on arbitration were enacted as part of domestic
civil procedure codes in 1883 and 1902, respectively, and remained essentially unchanged
during the next century. (411)
As for independent Brazil, while it initially exhibited enthusiasm for commercial arbitration
enacting legislation in 1850 mandating arbitration for commercial cases this was repealed
only seventeen years later. (412) Thereafter, Brazil soon became known as one of the most
notorious examples of Latin American adversity against arbitration. (413) Indeed, until
recently, Brazilian courts would not enforce predispute agreements to arbitrate (414) and
Brazilian courts did not recognize a foreign arbitral award until 1940, citing the exclusive
jurisdiction of local courts under Brazilian civil procedural rules. (415)
Notwithstanding inefficient procedures and, in the case of Brazil, official hostility to
commercial arbitration pressure from domestic commercial interests nonetheless helped
foster a surge in and growing popularity of arbitration for the resolution of commercial
disputes, particularly after the end of the First World War. (416) In 1916, for example, the
Buenos Aires Stock Exchange entered into a bilateral agreement with the United States
Chamber of Commerce to establish a system of international commercial arbitration. (417) For
the most part, however, these efforts did not bear fruit until the 1990s, when Brazil began
increasingly to accept and support international commercial arbitration.
*****
Despite generally supportive historic traditions, international commercial arbitration
eventually came to be regarded with mistrust in parts of Asia, Africa, the Middle East and Latin
America during the course of the 20th century. Reflecting deep-seated political attitudes,
countries in these regions frequently limited the efficacy of agreements to arbitrate future
disputes and refused to recognize the finality of arbitral awards. (418) As discussed below, it
P 61 was only in the 1980s and 1990s that many countries in these regions ratified the New York
Convention and adopted even arguably workable international arbitration legislation. (419)
[8] Arbitral Procedures in Commercial Arbitration
The procedures that were historically adopted for commercial arbitration bore important
similarities to those in state-to-state arbitral proceedings. (420) Procedural flexibility,
informality and efficiency were key attributes of the arbitral process, and central to the
business communitys preference for arbitration. (421) Equally, contemporary users and
observers regarded commercial arbitration procedures as more likely to produce sensible
results and to facilitate settlement than litigation. (422)
Although evidence is less clear with regard to early periods, it appears that the institution of
party-nominated co-arbitrators was an enduring feature of commercial arbitration (just as in
inter-state arbitrations (423) ). As noted above, this procedure was prevalent in Rome, England,
Continental Europe, the United States, the Middle East and elsewhere. (424) A striking
example, drawn from George Washingtons last testament, records the use of party-nominated
arbitrators in U.S. colonial times:
My Will and direction expressly is, that all disputes (if unhappily any should arise) shall be
decided by three impartial and intelligent men, known for their probity and good
understanding; two to be chosen by the disputants, each having the choice of one, and the
third by those two. Which three men thus chosen, shall, unfettered by Law, or legal
constructions, declare their Sense of the Testator[]s intention; and such decision is, to all
intents and purposes, to be as binding on the Parties as if it had been given in the Supreme
Court of the United States. (425)
In a very different context, traditional Beth Din arbitration in Jewish communities provided for
party-appointed arbitrators (which were regarded as a distinguishing characteristic of the
arbitral process). (426) And, from yet another quarter, an 1875 Institut de Droit International
Resolution for International Arbitral Procedure provided for a default appointment mechanism
whereby each party selected one arbitrator and the two co-arbitrators then selected a
chairman. (427)
The use of party-nominated co-arbitrators continued into the 20th century. The predominant
means of selecting arbitral tribunals in 19th century New York practice appears, from standard
20
forms used in different types of contracts, to have been three-person tribunals, with each party
P 62
nominating an arbitrator and the co-arbitrators jointly choosing a chairman or umpire.
(428) The same procedures prevailed in other Colonial settings in the United States. (429) In
some instances, the two co-arbitrators were joined by an umpire, and in others by an
arbitrator, (430) but the basic structure of two party-nominated arbitrators, with a third
member of the tribunal presiding, was an enduring, universal feature of commercial
arbitration in widely different historical settings.
Arbitral procedures varied across geographic location, time period and commercial settings. In
some instances, arbitral procedures were highly informal, differing materially from national
court proceedings at the time. (431) In other settings, arbitral procedures were formalized,
including testimony under oath and representation of parties by counsel. (432) In some cases,
it appears that arbitrations were public events, attracting considerable local attention and
audiences. (433)
[C] Development of Contemporary Legal Framework for International Arbitration

During Early 20th Century
The mistrust of the arbitral process which had arisen in some jurisdictions during the 19th
century (434) was eroded, and then firmly repudiated, during the 20th century. This was
accomplished by means of a panoply of related developments, including the adoption of
international arbitration conventions, national arbitration legislation and institutional
arbitration rules, and the supportive roles of national courts in many jurisdictions. The driving
force behind these various developments was the international business community, also the
principal user of the arbitral process, which found ready audiences in national legislatures and
judiciaries eager to promote international trade, investment and peace by providing workable,
effective international dispute resolution mechanisms. It was the combination and active
P 63 collaboration of these two communities public and private that produced the
contemporary legal framework for international commercial arbitration.
The first international commercial arbitration treaty in the modern era was the Montevideo
Convention, signed in 1889 by various Latin American states. (435) Like other early efforts in the
field, the Montevideo Convention attracted few signatories and had little practical impact.
Nevertheless, it initiated a tradition of multilateral conventions that progressively elaborated
and improved the international legal framework for the arbitral process.
Almost immediately after adoption of the Montevideo Convention, the 1899 Hague Convention
for the Pacific Settlement of Disputes and the 1907 Hague Convention for the Pacific Settlement
of International Disputes provided (as discussed above, with limited success) for the
settlement of inter-state disputes by arbitration. (436) It remained, however, for later
developments, in the 1920s, to lay the foundations of the contemporary legal framework for
international commercial arbitration.
[1] Geneva Protocol of 1923
During the first decades of the 20th century, businesses in developed states made increasingly
urgent calls for legislation to facilitate the use of arbitration in resolving domestic and,
particularly, international commercial disputes. (437) These appeals emphasized the
importance of reliable, effective and fair mechanisms for resolving international disputes to
the expansion of international trade and investment. (438) In the international context, the
newly-founded International Chamber of Commerce (established in 1919) played a central role
in efforts by the business community to strengthen the legal framework for international
arbitration. (439)
In 1923, initially under the auspices of the International Chamber of Commerce, major trading
P 64
nations negotiated the Geneva Protocol on Arbitration Clauses in Commercial Matters
(Geneva Protocol). (440) The Protocol was ultimately ratified by the United Kingdom,
Germany, France, Japan, India, Brazil and about two dozen other nations. (441) Although the
United States did not ratify the Protocol, the nations that did so represented a very significant
portion of the international trading community at the time.
The Geneva Protocol played a critical if often underappreciated role in the development of
the legal framework for international commercial arbitration. (442) Among other things, the
Protocol laid the basis for the modern international arbitral process, requiring Contracting
States to recognize, if only imperfectly, the enforceability of specified international arbitration
agreements and arbitral awards; (443) in particular, the Protocol was limited to arbitration
agreements between parties subject respectively to the jurisdiction of different contracting
states. (444) The Protocol also permitted Contracting States to limit its scope to contracts
which are considered as commercial under its national law. (445)
Among other things, the Geneva Protocol declared:
Each of the Contracting States recognizes the validity of an agreement whether relating to
existing or future differences between parties subject respectively to the jurisdiction of
different contracting states by which the parties to a contract agree to submit to arbitration all
or any differences that may arise in connection with such contract relating to commercial
matters or to any other matter capable of settlement by arbitration, whether or not the
arbitration is to take place in a country to whose jurisdiction one of the parties is subject.
(446)
21
This provision was complemented by a further declaration, in Article IV, that:
The tribunals of the Contracting Parties, on being seized of a dispute regarding a contract
made between persons to whom Article I applies and including an arbitration agreement
whether referring to present or future differences which is valid by virtue of the said article
P 65 and capable of being carried into effect, shall refer the parties on the application of
either of them to the decision of the arbitrators. (447)
Within the space of these two sentences, the Geneva Protocol planted the seeds for a number
of principles of profound future importance to the international arbitral process including
the presumptive validity of agreements to arbitrate future (as well as existing) disputes, (448)
the obligation of national courts to refer parties to arbitration, (449) the concept of arbitrating
commercial disputes and disputes capable of settlement by arbitration, (450) and the
obligation to recognize international arbitration agreements on an equal footing with domestic
arbitration agreements. (451) As discussed elsewhere, all of these basic themes reappeared
repeatedly in international conventions and national legislation over the next 80 years and
remain the foundation of the contemporary legal framework for international commercial
arbitration. (452) Importantly, the Protocol also established standards which made
international arbitration agreements more enforceable than domestic arbitration agreements
had historically been in many nations, (453) reflecting a deliberate policy of promoting the use
of arbitration to resolve international commercial disputes. (454)
Additionally, Article III of the Geneva Protocol attempted to provide for the recognition of
international arbitral awards. It declared:
Each Contracting State undertakes to ensure the execution by its authorities and in
accordance with the provisions of its national laws of arbitral awards made in its own
territory. (455)
This provision was extremely limited, providing only for Contracting States to enforce awards
made on their own territory (i.e., not foreign awards, made in other countries). Even then,
enforcement was required only in accordance with local law effectively making the
commitment dependent on each individual states arbitration legislation. In contrast to the
simple, but dramatic, provisions of the Geneva Protocol regarding arbitration agreements,
Article IIIs treatment of arbitral awards was at best tentative and incomplete. (456)
Finally, the Protocol also recognized, again imperfectly, the leading role of party autonomy in
establishing the arbitral procedures. (457) In particular, it provided for the application of both
the procedures specified in the parties agreement to arbitrate and the law of the arbitral
seat, without any priority between the two sources. (458)
[2] Geneva Convention of 1927
P 66 The Geneva Protocol was augmented by the Geneva Convention for the Execution of
Foreign Arbitral Awards of 1927. (459) Recognizing the Protocols deficiencies in dealing with
this issue, the Geneva Convention expanded the enforceability of awards rendered pursuant to
arbitration agreements subject to the Geneva Protocol. It did so by requiring the recognition
and enforcement of such foreign awards within any Contracting State (rather than only within
the state where they were made, as under the Protocol), and forbidding substantive judicial
review of the merits of such awards in recognition proceedings. (460)
Regrettably, the Convention placed the burden of proof in recognition proceedings on the
award-creditor, requiring it to demonstrate both the existence of a valid arbitration
agreement, (461) concerning an arbitrable subject matter, (462) and that the arbitral
proceedings had been conducted in accordance with the parties agreement. (463) The
Convention also required the award-creditor to show that the award had become final in the
place of arbitration (464) and was not contrary to the public policy of the recognizing state.
(465) This approach to the awards finality led to the so-called double exequatur requirement
whereby an award could effectively only be recognized abroad under the Geneva Convention
if it had been confirmed by the courts of the place of the arbitration. (466) This proved a major
source of difficulty and uncertainty in establishing the finality of international arbitral awards
under the Geneva Convention. (467)
Despite their shortcomings, the Geneva Protocol and Geneva Convention were major steps
towards todays legal framework for international commercial arbitration. Most fundamentally,
both instruments established, if only imperfectly, the basic principles of the presumptive
validity of international arbitration agreements (468) and arbitral awards, (469) and the
enforceability of arbitration agreements by specific performance, (470) as well as recognition
of the parties autonomy to select the substantive law governing their relations (471) and to
determine the arbitration procedures. (472)
P 67 Further, the Geneva Protocol and Convention both inspired and paralleled national
legislation and business initiatives to augment the legal regime governing international
commercial arbitration agreements. As already discussed, in 1920, New York enacted
arbitration legislation, largely paralleling the Geneva Protocol, to ensure the validity and
enforceability of commercial arbitration agreements. (473) Likewise, with an eye towards
ratification of the Geneva Protocol, France adopted legislation in 1925 that made arbitration
agreements valid in commercial transactions, (474) while similar legislation was enacted in
England. (475)
22
Also in 1925, the United States enacted the Federal Arbitration Act providing the first federal
legislation in the United States governing domestic (and international) arbitration agreements.
(476) The centerpiece of the FAA was 2, which provided that arbitration agreements shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract, (477) while 9 and 10 of the Act provided for the presumptive
validity and enforceability of arbitral awards. (478) Much like the 1923 Geneva Protocol, the
stated purpose of the FAA was to reverse decades of judicial mistrust in the United States of
arbitration and render arbitration agreements enforceable on the same terms as other
contracts. (479) From the outset, U.S. judicial decisions embraced the Acts avowedly pro-
arbitration objectives. (480)
After a hiatus provoked by the Second World War, development of pro-arbitration legal
regimes for international commercial arbitration continued. As discussed in greater detail
below, the signing of the New York Convention (in 1958), (481) the promulgation of the UNCITRAL
Arbitration Rules (in 1976, with revisions in 2010), (482) the adoption of the UNCITRAL Model
Law on International Commercial Arbitration (in 1985, with revisions in 2006) (483) and the
enactment of modern arbitration statutes in many developed jurisdictions (between 1980
and 2012), (484) marked decisive advances in international acceptance of the arbitral process.
The international communitys growing embrace of arbitration was further demonstrated by
P 68 the progressive refinement of national arbitration statutes in leading jurisdictions and of
institutional arbitration rules by leading arbitral institutions (485) and by the widespread
adoption of multilateral and bilateral investment treaties in all major regions of the world.
(486) All of these various steps evidence an abiding and decisive commitment to international
arbitration as a means of resolving transnational commercial disputes and thereby
promoting international trade and to continually improving the arbitral process in response
to changing conditions and emerging (or reemerging) critiques.
*****
In sum, arbitration has been an enduring feature of dispute resolution both state-to-state
and commercial since the beginning of recorded history. In societies of profoundly different
characters, ranging from Sumerian and Egyptian, to ancient Greek and Roman, to medieval
English, French, Swiss, German and Italian, to Colonial American, Asian and Latin American, to
Islamic and Arab, to Jewish, to more modern common law and civil law jurisdictions,
arbitration has been used equally by both states and state-like entities, and by businessmen
and women, to resolve their disputes, and particularly, their international disputes.
So far as can be ascertained, parties have turned to international arbitration for remarkably
similar reasons, using broadly similar procedures, throughout history: they have sought to
avoid the expense, delays, rigidities and other defects of litigation in national courts, as well
as the peculiar uncertainties of international litigation (including jurisdictional, choice-of-law
and enforcement disputes). (487) Particularly in international matters, parties have instead
sought dispute resolution by expert commercially, technically, or diplomatically tribunals,
which they have a hand in selecting applying practical, neutral procedural rules, (488) which,
again, they have a hand in fashioning.
There have been periods of lesser, and periods of greater, judicial and legislative support for
the arbitral process. Different legal systems, in different eras, have taken a variety of
approaches to the extent of judicial support (or hostility). Judicial skepticism or hostility has
typically been cyclical, not infrequently coinciding with outbreaks of extreme nationalism or
totalitarianism, while in most instances the enduring needs of the business community, the
respect of enlightened governments for the parties freedom to order their commercial affairs
and the relative advantages of the arbitral process have eventually overcome limitations or
prohibitions on the arbitral process. For the most part, therefore, arbitration agreements and
awards have been capable, at least in commercial matters, of effective enforcement either
by non-legal, commercial measures or by formal judicial enforcement steps.
Against this historic background, the contemporary needs and objectives of commercial (and
P 69 other) users of arbitration which are the foundation and driving force for the
international arbitral process are discussed in greater detail below. (489) These historical
origins and current objectives play a central role in explaining and evaluating specific aspects
of the contemporary legal regime for international commercial arbitration, discussed in
subsequent Chapters.
1.02 OBJECTIVES OF INTERNATIONAL COMMERCIAL ARBITRATION

In contemporary legal systems, international commercial arbitration is a means by which
international business disputes can be definitively resolved, pursuant to the parties
agreement, by independent, non-governmental decision-makers, selected by or for the
parties, applying neutral judicial procedures that provide the parties an opportunity to be
heard. (490) As discussed below, there are almost as many other definitions of international
arbitration as there are commentators on the subject. (491)
Before considering these definitions in greater detail, it is useful to examine the objectives
that commercial parties generally have in entering into international arbitration agreements.
These objectives are essential to interpreting, and giving appropriate effect to, such
agreements and the arbitral awards they produce, as well as to interpreting the legislative
frameworks in which international arbitrations occur.
23
[A] Contractual Forum Selection in International Transactions
Preliminarily, it is important to appreciate the business and legal context in which
contemporary international arbitration agreements are made. In todays global economy,
business enterprises of every description can find themselves parties to contracts with foreign
companies (and states) from around the world, as well as parties to litigation before courts in
equally distant locales. The consequences of these proceedings and of losing them are
often enormous. (492) A contract means no more than what it is interpreted to say, and how it is
enforced; corrupt, incompetent, or arbitrary decisions can rewrite a partys agreements or
impose staggering liabilities and responsibilities.
Almost every international commercial controversy poses a critical preliminary question
Where, and by whom, will this dispute be decided? The answer to this question often
decisively affects a disputes eventual outcome.
There are many reasons why the same dispute can have materially different outcomes in
different forums. Procedural, choice-of-law and substantive legal rules differ dramatically from
P 70 one country to another. (493) Other considerations, such as inconvenience, local bias and
language, may make a particular forum much more favorable for one party than another. (494)
More pointedly, the competence and integrity of judicial officers also vary substantially among
different forums; annual corruption indices and other studies leave little doubt as to the
uneven levels of integrity in some national judiciaries. (495) Those indices are, regrettably,
confirmed by contemporary anecdotal experience as to the corruption endemic in civil
litigation in some jurisdictions.
Precisely because national legal systems differ profoundly, parties inevitably seek to ensure
that, if international disputes arise, those disputes are resolved in the forum that is most
favorable to their interests. In turn, that can mean protracted litigation over jurisdiction, forum
selection and recognition of foreign judgments. (496) These disputes can result in lengthy and
complex litigation often in parallel or multiple proceedings which produce more in legal
costs and uncertainty than anything else. (497) In this regard, contemporary international
litigation bears unfortunate, but close, resemblances to the difficulties reported by Medieval
commentators regarding transnational litigation in earlier eras. (498)
Because of the importance of forum selection in the international context, parties to cross-
border commercial transactions very often include dispute resolution provisions in their
agreements, selecting a contractual forum in which to resolve their differences. (499) By
selecting a forum in advance, parties are able to mitigate these costs and uncertainties of
international dispute resolution, through the centralization of their disputes in a single,
reliable forum. (500)
P 71 As discussed below, contractual dispute resolution provisions typically take one of two
basic forms: (a) forum selection clauses, or (b) arbitration agreements. (501) In some cases,
other forms of dispute resolution mechanisms, such as negotiation, conciliation, or mediation,
are combined with a forum selection or arbitration agreement. (502)
[1] International Forum Selection Agreements
A forum selection clause is an agreement which either permits or requires its parties to pursue
their claims against one another in a designated national court. (503) Forum selection
agreements can be either exclusive (i.e., requiring that all litigation between the parties be
resolved solely in their contractual forum, and nowhere else) or non-exclusive (i.e., permitting
litigation between the parties in their contractual forum, but not prohibiting substantive
claims from being brought in other national courts which possess jurisdiction). (504) Once
enforced, a forum selection clause will result in litigation in the selected national court, and
will produce (unless settled) a national court judgment.
[2] International Arbitration Agreements
An international arbitration agreement is similar in some respects to a forum selection clause,
in that it provides a contractual choice of a dispute resolution forum. In the words of the U.S.
Supreme Court, an agreement to arbitrate before a specialized tribunal [is], in effect, a
specialized kind of forum-selection clause that posits not only the situs of suit but also the
procedure to be used in resolving the dispute. (505)
Nonetheless, there are fundamental differences between such provisions, in both practical and
legal terms. (506) As already noted, international arbitration is a means for definitively
P 72 resolving a dispute, pursuant to the parties voluntary agreement, through the decision of
a non-governmental decision-maker selected by or for the parties (an arbitrator), who
applies neutral, adjudicative procedures. The various elements of this definition of
international commercial arbitration, and its differences from a forum selection clause, are
discussed in detail below. (507)
Arbitration (and forum selection) agreements can be entered into either before or after a
dispute arises. (508) In practice, almost all international commercial arbitrations occur
pursuant to arbitration clauses contained within underlying business contracts. (509) These
clauses typically provide for the arbitration of future disputes relating to the contract in
accordance with a specified set of procedural rules (often promulgated by an arbitral
institution). (510)
24
[B] Objectives of International Arbitration Agreements
There are a number of reasons why arbitration is the preferred means of resolving
international commercial disputes. Put simply, and as explained in greater detail below,
businesses perceive international arbitration as providing a neutral, speedy and expert
dispute resolution process, largely subject to the parties control, in a single, centralized
forum, with internationally-enforceable dispute resolution agreements and decisions. (511) As
one national court summarized the attractions of international arbitration for commercial
parties:
There are myriad reasons why parties may choose to resolve disputes by arbitration rather
than litigation[A]n arbitral award, once made, is immediately enforceable both nationally
and internationally in all treaty states. One would imagine that parties might be equally
motivated to choose arbitration by other crucial considerations such as confidentiality,
procedural flexibility and the choice of arbitrators with particular technical or legal expertise
better suited to grasp the intricacies of the particular dispute or the choice of law. Another
crucial factor that cannot be overlooked is the finality of the arbitral process. Arbitration is not
viewed by commercial persons as simply the first step on a tiresome ladder of appeals. It is
meant to be the first and only step. (512)
While far from perfect, international arbitration is, rightly, regarded as generally suffering
fewer ills than litigation of international disputes in national courts and as offering more
workable and effective opportunities for remedying or avoiding those ills which do exist.
[1] Neutrality of Dispute Resolution Forum
One of the central objectives of international arbitration agreements is to provide a neutral
P 73 forum for dispute resolution, detached from either the parties or their respective home
state governments. This objective of neutrality is cited by contemporary users of international
arbitration (513) and by commentators, (514) and is reflected in the history of state-to-state,
investor-state and commercial arbitration. (515)
Not surprisingly, parties often begin to negotiate dispute resolution mechanisms with the
objective of ensuring that disputes are resolved in the most favorable forum from their own
individual perspective rather than a neutral one. (516) In many cases, choosing the most
favorable forum for a party means choosing the local courts in that partys principal place of
business. These courts will be convenient and familiar to the home-town party, and to its
regular outside counsel; they will also probably be somewhat inconvenient and unfamiliar to
the counter-party. Where local courts are subject to political, media, popular, or other
pressures, the attractions of a home court judicial forum may be sharpened. (517)
The characteristics that make one partys local courts attractive to it will often make them
unacceptable to counter-parties. (518) If nothing else, an instinctive mistrust of the potential
for home-court bias usually prompts parties to refuse to agree to litigate in their counter-
P 74 partys local courts. As a consequence, outside of lending and similar transactions, (519) it
is very often impossible for either party to obtain agreement to dispute resolution in its local
courts.
In these circumstances, the almost universal reaction for business men and women is to seek
agreement on a suitable neutral forum a forum for dispute resolution that does not favor
either party, but that will afford each party the opportunity to fairly present its case to an
objective tribunal. The result, in most instances, will be an agreement to arbitrate (or, less
frequently, litigate) in a neutral forum, pursuant to neutral procedures. (520) That means, for
example, that a French and a Mexican company will agree to arbitrate their disputes in Miami,
Spain, or England, while a U.S. and a Japanese or German company will agree to dispute
resolution in Switzerland, England, or Singapore. Put simply, a party typically does not agree to
arbitrate because arbitration is the most favorable possible forum, but because it is the least
unfavorable forum that the party can obtain in arms length negotiations.
An essential aspect of the neutrality of international arbitration is the composition of the
arbitral tribunal. (521) International arbitration permits the parties to play a substantial role in
selecting the members of the tribunal, including the right to choose a sole or presiding
arbitrator whose nationality is almost always different from that of the parties involved (thus
reducing the risks of partiality or parochial prejudice). (522) The consequence, ordinarily, is the
constitution of a genuinely-international tribunal in line with the parties basic objectives in
entering into international arbitration agreements.
Another essential feature of the neutrality of international arbitration is the use of
internationally-neutral procedures and rules. (523) National courts apply local procedural
rules, which are often designed for particular judicial frameworks (e.g., a U.S. jury trial or a civil
law system that does not provide for witness testimony, discovery, or cross-examination) and
P 75 which therefore are usually unfamiliar to, and often ill-suited for, parties from different
legal traditions. (524) In contrast, international arbitration seeks to avoid the application of
domestic litigation rules and instead to apply internationally-neutral procedures tailored to
the parties expectations and dispute. (525)
[2] Centralized Dispute Resolution Forum
Another one of the basic objectives, and enduring attractions, of international arbitration is its
ability to avoid the endemic jurisdictional and choice-of-law difficulties attending
25
international civil litigation. This has long been a perceived advantage of the arbitral process,
and was identified as such even in Medieval times. (526) As already discussed above, [t]he
reason [for arbitration] seems to have been, to do justice expeditiously among the variety of
persons that resort from distant places to a fair or market; since it is probable that no inferior
court might be able to serve its process, or execute its judgments, on both or perhaps either of
the parties. (527)
This attraction is, if anything, even more important today. International transactions inevitably
involve parties from, and conduct in, two or more states. Under contemporary jurisdictional
principles, (528) this means that disputes arising from such transactions can potentially be
resolved in different national courts. Inevitably, parties will seek to litigate in the forum (or
forums) which each considers most favorable to its respective individual interests. In turn, that
results in recurrent, protracted disputes in and between national courts over jurisdiction,
forum selection, choice of law, evidence and recognition of foreign judgments. (529)
One of the central objectives of international arbitration agreements is avoiding multiplicitous
litigation in different national courts, as well as protracted jurisdictional disputes, inconsistent
P 76 decisions and enforcement uncertainties. Instead, international arbitration offers the
promise of a single, centralized dispute resolution mechanism in one contractual forum. (530)
As the U.S. Supreme Court has put it:
Much uncertainty and possibly great inconvenience to both parties could arise if a suit could
be maintained in any jurisdiction [where personal jurisdiction could be established]. The
elimination of all such uncertainties by agreeing in advance on a forum acceptable to both
parties is an indispensable element in international trade, commerce and contracting. (531)
Other authorities, (532) as well as empirical findings, (533) are to the same effect.
It bears emphasis that neutral, centralized dispute resolution is not merely desirable for its
own sake, but is a vital precondition to international trade and investment. That is, the
additional uncertainties, risks and costs of resolving international commercial disputes are
such that, unless they can be managed, legitimate businesses will not engage in transnational
enterprises. Indeed, it was precisely to promote international commerce that developed
states established and have sought to perfect todays legal regime for international
commercial arbitration. (534)
[3] Enforceability of Agreements and Awards
Another vital objective, and attraction, of international arbitration is to provide relatively
enforceable agreements and awards. Unless the parties dispute resolution agreement
selecting a neutral, competent and central forum can be enforced, it is of little value. The
same is true with regard to the decisions eventually rendered in the contractual forum: unless
they can be given effect, in places where the parties do business, they are of limited value.
One of the most basic objectives of contemporary legal regimes for international arbitration is
to provide for the enforceability of arbitration agreements and arbitral awards. (535) In
particular, international arbitration aspires to produce more enforceable, final results than
may be achieved by forum selection agreements. As one national court put it, modern legal
P 77 regimes for international arbitration aim, as a matter of policy, to adopt a standard
which seeks to preserve the autonomy of the forum selected by the parties and to minimize
judicial intervention when reviewing international commercial arbitral awards. (536) This
aspiration has been largely realized by contemporary international arbitration conventions
and national arbitration legislation.
As discussed below, international arbitration agreements are more readily and more
expeditiously enforced, with fewer exceptions, and more broadly interpreted, in most national
courts, than forum selection clauses. (537) This is consistently cited by users as one of the most
significant benefits of the arbitral process, (538) and is confirmed by anecdotal evidence from
a wide range of sources. (539) The comparative enforceability of arbitration agreements is in
large part because of the New York Convention, to which some 149 states are party, and
because of the existence of national arbitration legislation (increasingly based on the
UNCITRAL Model Law), both of which facilitate the enforceability of international arbitration
agreements. (540)
In contrast, there are only a few regional arrangements which seek to establish effective
international enforcement regimes for forum selection clauses. The most notable is Council
Regulation No. 44/2001 in the European Union (EU), which replaced the Brussels Convention.
(541) Among other things, Regulation 44/2001 provides for the enforceability of forum selection
agreements designating an EU Member States courts, subject to only limited exceptions. (542)
There are also a few industry-specific arrangements providing enforcement mechanisms for
international forum selection clauses (such as treaties governing carriage of goods by sea).
(543) In general, however, international forum selection agreements do not benefit from
anything comparable to the New York Convention.
P 78 Additionally, many states impose limitations on the enforceability of forum selection
clauses, such as requiring a reasonable relationship between the parties contract and the
forum or considering forum non conveniens objections to the parties contractual forum. (544)
Similarly, public policy or mandatory law limitations on forum selection mechanisms are
usually less significant obstacles to enforcing arbitration agreements than forum selection
clauses. (545) For these reasons, international arbitration agreements are often substantially
26
more enforceable than forum selection clauses.
The Hague Conference on Private International Laws draft Convention on Choice of Court
Agreements would provide more uniform international standards governing the enforcement of
forum selection agreements if it were ratified by significant numbers of states. (546) Even if
such ratifications occur, the draft Conventions limitations and exceptions would leave the
enforceability of forum selection clauses subject to significant uncertainties. At least for the
foreseeable future, international arbitration agreements will therefore continue to offer a
substantial enforceability premium as compared to forum selection clauses. (547)
Like agreements to arbitrate, international arbitral awards enjoy the protection of the New
York Convention, as well as favorable arbitration legislation in many countries. (548) As
discussed below, these instruments provide a pro-enforcement regime, with expedited
recognition procedures and only limited grounds for denying recognition to an arbitral award.
(549) Particularly in developed trading states, there is substantial, successful experience with
the enforcement of international arbitral awards. (550)
In contrast, there are only a few regional arrangements for the enforcement of foreign
judgments (in particular, Council Regulation 44/2001 in Europe (551) ), and there is no global
counterpart to the New York Convention for foreign judgments. (552) Some major trading states,
P 79 including the United States, are party to no bilateral or multilateral agreement on the
enforceability of foreign judgments. (553) In the absence of international treaties, the
recognition of foreign judgments in many nations is subject to local law, which often makes it
difficult or impossible to obtain effective enforcement.
As a consequence, there is generally a significantly greater likelihood that an international
arbitral award will be enforced abroad, and actually put the parties dispute to rest, than will
a national court judgment. (554) Together with the comparatively greater enforceability of
arbitration agreements, the more reliable enforceability of arbitral awards is another one of
the basic objectives, and attractions, of international arbitration.
[4] Commercial Competence and Expertise of Tribunal
Another essential objective of international arbitration is providing a maximally competent,
expert dispute resolution process. (555) It is a harsh, but undeniable, fact that some national
courts are distressingly inappropriate choices for resolving international commercial disputes.
In some states, local courts have little experience or training in resolving international
transactions or disputes and can face serious difficulties in fully apprehending the business
context and terms of the parties dispute. (556)
Even more troubling, in some states, basic standards of judicial integrity and independence
are lacking. The simple reality is that corruption, nepotism and personal favoritism are rife in
at least some national legal systems. (557) Particularly in cases against local litigants or state
entities, the notion of a fair, objective proceeding, much less an expert and sophisticated
proceeding, can be chimerical. The grim reality is that you get what you pay for in some
national courts which is a wholly unacceptable and untenable position for legitimate
businesses. (558)
P 80 Of course, some national judiciaries include very talented judges with considerable
experience in resolving international disputes. The courts of New York, England, Switzerland,
Japan, Singapore and a few other jurisdictions are able to resolve complex transnational
disputes with a fairly high degree of reliability. Additionally, with English increasingly serving
as the language of international commerce, translations may not be necessary in English, U.S.,
Singaporean and some other courts. (559) Nevertheless, even in these jurisdictions, local
idiosyncrasies can interfere with the objectives of competence and objectivity in resolving
commercial disputes. (560)
Moreover, it is fundamental in most national legal traditions that judges are generally selected
randomly for assignment to particular cases, regardless of their experience or aptitude in the
underlying matter. (561) Judges are ordinarily generalists, often without any specialization in
complex commercial matters, much less a particular type of transaction (M&A, joint venture)
or industry (oil and gas, insurance). These considerations inevitably affect the efficiency, and
sometimes the quality, of the dispute resolution process. As one commentator puts it:
while the civil justice system often selects its triers of fact on the basis that they know little or
nothing about the subject of the dispute, a hallmark of arbitration is the presence of one or
more decisionmakers with pertinent knowledge or experience. The theory is that an individual
familiar with the commercial context of the dispute, including industry customs and
vocabulary, is better suited to dispense justice than laypersons who might be hampered by
their relative lack of business experience and understanding of trade practices. (562)
As discussed above, arbitration was historically favored by commercial (and other) users
because it offered a more expert, experienced means of resolving commercial disputes. (563)
This continues to be the case today. Both empirical studies (564) and anecdotal commentary
P 81 (565) emphasize the importance of the tribunals commercial expertise and experience in
parties decisions to make use of international arbitration. In the brutal assessment of one
anonymous respondent to a survey of international arbitration users:
for a French party, the big advantage is that international commercial arbitration offers de
luxe justiceinstead of having a $600 million dispute before the Commercial Court in Paris,
27
where each party has only one hour for pleadings and where you cant present witnesses and
have no discovery; for a dispute of that importance it may well be worth the costs to get a type
of justice that is more international and more luxurious; what you get is more extensive and
thorough examination of witness testimony without the excesses of American court
procedure. (566)
This is not only a perception of businesses, but also of some national courts. In the words of the
former President of the French Cour de cassation, explaining why he regarded arbitration as
desirable: first, what you do we dont have to do;second, in many fields you are more
professional than we are. (567) Or, as one U.S. trial judge nicely put it, arbitrators know more
about the value of peach orchards, their productivity and earning power than I do. (568)
The parties desire for commercially-experienced decision-makers is achieved in substantial
part through the parties right to participate in the selection of the arbitral tribunal. As
discussed below, this aspect of the arbitral process is intended to enable the parties who
have the most intimate knowledge of their disagreements and the greatest incentive to wisely
choose a capable tribunal to select arbitrators with the best experience, abilities and
availability for their particular dispute. (569) This is confirmed by users of international
arbitration who frequently cite the possibility for the parties to select the members of the
P 82 tribunal themselves, as compared to being provided a randomly-picked judge of
uncertain experience, age and competence, as one of the processs most substantial benefits.
(570)
[5] Finality of Decisions
Another salient feature of international commercial arbitration is the absence, in most cases,
of extensive appellate review of arbitral awards. Judicial review of awards in most developed
countries is narrowly confined to issues of procedural fairness, jurisdiction and public policy:
as discussed below, any judicial scrutiny of the arbitrators substantive decisions is ordinarily
highly deferential. (571) This contrasts markedly with the availability of appellate review of
first instance judgments under national court systems, which may allow either de novo
relitigation or fairly searching reconsideration of both factual and legal matters.
There are both advantages and disadvantages to the general lack of appellate review
mechanisms for arbitral awards. (572) Dispensing with appellate review significantly reduces
both litigation costs and delays (particularly when a successful appeal means that the case
must be retried in the first instance court, with the possibility of yet further appeals). On the
other hand, it also means that a wildly eccentric, or simply wrong, arbitral decision cannot
readily (if ever) be corrected.
On balance, anecdotal evidence and empirical research indicate that business users generally
consider the efficiency and finality of arbitral procedures favorably, even at the expense of
foregoing appellate rights. (573) There are also some developed legal systems in which the
parties have the possibility, by contracting into or out of judicial review, to obtain a measure
of appellate review of the arbitrators substantive decisions, (574) or to select an arbitral
procedure that includes arbitral appeals. (575) As discussed below, however, international
businesses generally choose speed and finality over the opportunity for appellate review.
P 83 [6] Party Autonomy and Procedural Flexibility
A further objective, and advantage, of international commercial arbitration is the
maximization of party autonomy and procedural flexibility. (576) As discussed below, leading
international arbitration conventions and national arbitration laws accord parties broad
autonomy to agree upon the substantive laws and procedures applicable to their
arbitrations. (577) This emphasis on the importance of party autonomy parallels applications of
the doctrine throughout the field of contemporary private international law, (578) and
commercial law more generally, (579) but has particular significance in the field of
international commercial arbitration. (580)
In the words of one arbitral award: In general, parties to a commercial agreement are free to
choose the law which is to govern their contractual relationship.This doctrine of party
autonomy makes particular sense in the context of an international commercial arbitration.
P 84 (581) The same autonomy is recognized in other international contexts (including state-to-
state arbitration). (582)
One of the principal reasons that this procedural autonomy is granted is to enable the parties
and arbitrators to dispense with the technical formalities and procedures of national court
proceedings and instead fashion procedures tailored to particular disputes. (583) Thus,
technically-complex disputes can include specialized procedures for testing and presenting
expert evidence, (584) or fast track procedures can be adopted where time is of the essence,
(585) or tailor-made dispute resolution mechanisms can be adopted in particular commercial
markets (e.g., sports, commodities or construction arbitrations). (586) More generally, parties
are typically free to agree upon the existence and scope of discovery or disclosure, the modes
for presentation of fact and expert evidence, the length of the hearing, the timetable of the
arbitration and other matters. (587) The parties ability to adopt (or, failing agreement, the
tribunals power to prescribe) flexible procedures is a central attraction of international
arbitration again, as evidenced by empirical research (588) and commentary. (589)
An essential aspect of the international arbitral process, reflecting both commercial parties
desire for expertise and the exercise of their autonomy, involves the use of specialized arbitral
28
rules in particular markets. Thus, specially-tailored arbitral institutions exist in the fields of
maritime and salvage, (590) commodities, (591) insurance and reinsurance, (592)
P 85
transportation, (593) and labor and employment (594) disputes. In each case, specialized
procedural rules, required or optional lists of arbitrators and other contractual provisions
structure the arbitral process in order to provide users with the maximum degree of
specialized expertise and procedural predictability, efficiency and security.
[7] Cost and Speed
It has long been said that arbitration offers a cheaper, quicker means of dispute resolution
than national court proceedings. (595) Thus, proponents of arbitration often claim that the
underlying reason many parties choose arbitration is the relative speed, lower cost, and
greater efficiency of the process (596) and [t]he purpose of arbitration is to permit relatively
quick and inexpensive resolution of contractual disputes by avoiding the expense and delay of
extended court proceedings. (597)
More recently, however, it has become fashionable, at least in some circles, to describe
P 86 arbitration as a slower, costlier option. (598) As one U.S. appellate court remarked about a
less-than-efficient arbitration, [t]his appealmakes one wonder about the alleged speed and
economy of arbitration in resolving commercial disputes. (599) Surveys of users also report
pressure for more efficient and expeditious arbitral proceedings. (600)
In reality, both international arbitration and international litigation can involve significant
expense and delay, and it is unwise to make sweeping generalizations about which mechanism
is necessarily quicker or cheaper. Although sometimes advertised on grounds of economy, even
its proponents rightly acknowledge that [i]nternational arbitration is an expensive process
(601) or, more accurately, that international arbitration can be an expensive process. This is
particularly true in major international disputes, which can involve claims for billions of
dollars or Euro (or more), and complex factual and legal issues. (602) Disputes of this character
often require very substantial written submissions, factual and expert evidence, and lengthy
hearings, with the attendant costs; parties not only expect and tolerate these expenses, but
are concerned if disputes of this magnitude do not attract commensurate litigation efforts.
(603)
Moreover, in international arbitration, the parties are required (subject to later allocation of
arbitration costs by the tribunal) to pay the fees of the arbitrator(s) and, usually, an arbitral
institution. The parties will also have to pay the logistical expenses of renting hearing rooms,
travel to the arbitral situs, lodging and the like. (604) This entails expenses that may not exist
in national court litigation.
Nonetheless, the additional expenses of arbitration will often pale in comparison with the
costs of legal representation if there are parallel or multiplicitous proceedings in national
courts. This can be the case where the parties have, for whatever reason, not agreed upon an
exclusive forum selection clause, or where such a clause is held unenforceable or inapplicable.
(605) Likewise, the expenses of arbitration will typically not approach those that are incurred if
P 87 there is relitigation of factual issues in national trial and appellate courts. Arbitration also
usually does not have the potential for costly, scorched-earth discovery, or disputes over
service, evidentiary matters, immunity and other litigation formalities, which may exist in
some jurisdictions.
International commercial arbitration is also not always speedy. Outside of some specialized
contexts, meaningful commercial disputes often require between 18 and 36 months to reach a
final award, (606) with only limited possibilities for earlier summary dispositions. Procedural
mishaps, challenges to arbitrators and litigation over jurisdictional issues in national courts
can delay even these fairly stately timetables, as can crowded diaries of busy arbitrators and
counsel. It is possible to achieve greater expedition, through either drafting a fast-track
arbitration clause (607) or adroit arbitrator selection and procedural planning, but there are
limits to how quickly a major commercial arbitration can realistically and reliably be resolved.
Nonetheless, in many jurisdictions, national court proceedings are subject to at least equally
significant delays. Judicial dockets in many countries are overburdened and obtaining a trial
date and final decision may take years or longer; that is true even in states with reasonably
well-funded judicial systems, (608) while delays are substantially longer in states with
budgetary or other endemic organizational deficiencies. (609) Further, as already noted,
arbitration typically does not involve appellate review, (610) thereby avoiding the delay
inherent in appellate proceedings and reducing the risk that new trial proceedings will be
required (in the event of appellate reversal of an initial trial court decision).
On balance, international arbitration does not necessarily have either dramatic speed and
cost advantages or disadvantages as compared to national court proceedings. Broadly
speaking, the absence of appellate review means that arbitration is usually less slow than
P 88 litigation, but there will be exceptions to this generalization. (611) This conclusion is
supported by empirical evidence (612) and anecdotal accounts (613) of users evaluations of
the international arbitral process and its advantages.
[8] Confidentiality and Privacy of Dispute Resolution Process
Another objective of international arbitration is to provide a confidential, or at least private,
(614) dispute resolution mechanism. As discussed below, international arbitration is
substantially more likely than national court litigation to produce a nonpublic dispute
29
resolution process. (615) This often serves to prevent aggravation of the parties dispute, to
limit the collateral damage of a dispute and to focus the parties energies on an amicable,
business-like resolution of their disagreements.
Most national court proceedings offer little by way of confidentiality to the parties. Hearings
and court dockets are open to the public, competitors, press representatives and regulators in
many countries (sometimes by constitutional requirement), (616) and parties are often free to
disclose the contents of submissions and evidence to the public. Public disclosure can
encourage efforts at trial by press release and may impede negotiated compromises, by
hardening positions, fueling emotions, or provoking collateral disputes and damage.
In contrast, international arbitration is usually substantially more private, and often more
confidential, than national court proceedings. Arbitral hearings are virtually always closed to
P 89 the press and public, and in practice both submissions and awards often remain
confidential, or at least private. (617) In a number of jurisdictions, confidentiality obligations
are implied into international arbitration agreements as a matter of law, while some
institutional arbitration rules impose such duties expressly. (618) Nonetheless, there is no
clear duty of confidentiality in arbitral proceedings in many jurisdictions (619) and, even where
such obligations exist, they are subject to exceptions which have the effect that awards are
sometimes made public, either in enforcement actions or otherwise. (620)
Most international businesses prefer, and affirmatively seek out, the privacy and
confidentiality of the arbitral process. (621) Nonetheless, commercial parties sometimes
affirmatively desire that certain disputes and their outcomes be made public. Where a
company has a standard form contract, used with numerous counter-parties, it may want
interpretations of the contract to become publicly-known, and binding through precedent, as
widely as possible. Where that is the case, parties are of course free to agree that their arbitral
proceedings (or the awards) will be public; in practice, this occurs in some commercial
settings. (622)
[9] Facilitation of Amicable Settlement
Another objective and historic attraction of international arbitration is to facilitate the parties
efforts to settle their differences amicably. (623) Arbitral proceedings generally require some
P 90 measure of procedural cooperation between the parties (for example, in choosing
arbitrators and devising appropriate procedures). (624) Equally, the prospect of a competent,
expert decision by a commercially-sensible tribunal often facilitates the settlement process.
(625)
In reality, it is not clear that international arbitration is systemically more likely than litigation
to produce negotiated settlements. There is little empirical data on the subject, (626) and
anecdotal experiences vary. Nonetheless, the arbitral process does present parties with
opportunities for both procedural cooperation and more general settlement discussions.
Approached constructively, these opportunities can be used to pursue a negotiated resolution,
at least where parties are so inclined, and remain a material (if uncertain) objective of the
international arbitral process. (627)
[10] Disputes Involving States and State Entities
International commercial arbitration plays a particularly significant role in the resolution of
commercial disputes involving foreign states and state entities. Disputes involving states
present particular difficulties in national courts, because of traditional doctrines of sovereign
or state immunity, the act of state doctrine and similar obstacles to obtaining and enforcing
judgments, (628) and because of concerns about the impartiality of national courts in disputes
involving local state entities or corporations. International arbitration provides a means of
overcoming or mitigating these difficulties. (629) In particular, by agreeing to international
arbitration, a state or state entity ordinarily waives its sovereign immunity from enforcement
P 91 of the arbitration agreement and recognition of any resulting award; (630) execution of the
award against state assets often requires a separate (and specific) waiver of immunity, but
awards are generally more readily enforceable against state assets than national court
judgments. (631) Similarly, arbitration, particularly in a neutral seat, can provide a more
independent and impartial basis for resolution of disputes involving states and state entities
or corporations than proceedings in the courts of that state.
Arbitrations involving foreign states and state-related entities are a significant subset of
contemporary international commercial arbitrations. Although precise statistics do not exist,
at least 300 international commercial arbitrations involving foreign states or state-related
entities are filed each year; (632) this figure appears to have been growing solidly over the past
decade. In practice, many states and state-related entities must accept international
arbitration as a necessary condition to concluding significant international commercial and
financial transactions: unless the state accepts international arbitration, it will not be able to
conclude commercial arrangements, at least not with serious counter-parties.
*****
The aspirations of the arbitral process to accomplish the various objectives described above
lead the more enthusiastic proponents of international arbitration to proclaim:
In th[e] realm of international commercial transactions, arbitration has become the preferred
method of dispute resolution. Arbitration is preferred over judicial methods of dispute
30
resolution because the parties have considerable freedom and flexibility with regard to choice
of arbitrators, location of the arbitration, procedural rules for the arbitration, and the
substantive law that will govern the relationship and rights of the parties. (633)
P 92 Equally vigorous are some critics, including those who regard arbitration as the slower,
more expensive alternative, (634) or conclude that arbitration sometimes involves perils that
even surpass the perils of the seas. (635)
In fact, the truth about contemporary international commercial arbitration is less clear-cut,
and lies somewhere between these extremes:
The more enthusiastic of [its] sponsors have thought of arbitration as a universal panacea. We
doubt whether it will cure corns or bring general beatitude. Few panaceas work as well as
advertised. (636)
At bottom, if generalizations must be made, international arbitration is much like democracy;
it is nowhere close to ideal, and often fails fully to realize its objectives, but it is generally a
good deal better than the available alternatives. To those who have experienced it, litigation
of complex international disputes in national courts is often distinctly unappealing
particularly litigation in national courts that have not been carefully selected in advance for
their neutrality, integrity, competence and convenience. Indeed, the risks of corruption,
incompetence, or procedural arbitrariness make litigation of complex commercial disputes in
some national courts an unacceptable option. Despite daunting procedural and choice-of-law
complexities and other uncertainties, international arbitration generally offers the least
ineffective and damaging means to finally settle the contentious disputes that arise when
international transactions go awry.
1.03 INCREASING USE OF INTERNATIONAL COMMERCIAL ARBITRATION

Dispute resolution mechanisms must fulfill difficult, often thankless, tasks, particularly in
international disputes: parties who are often bent upon (mis)using every available procedural
and other opportunity to disadvantage one another simultaneously demand rapid, expert and
objective results at minimal cost. Despite these generally unrealistic expectations, arbitration
has for centuries been perceived as the most effective if by no means flawless means for
resolving international commercial disputes. (637)
That perception has not diminished, but rather has been strengthened, during the past several
decades. (638) In the words of one distinguished academic: arbitration is the ordinary and
normal method of settling disputes of international trade. (639)
P 93 The enduring popularity of international arbitration as a means of dispute resolution is
reflected by a number of developments. These include steadily increasing caseloads at
leading arbitral institutions, with the number of reported cases increasing between three and
five-fold in the past 30 years.
Among other things, the International Chamber of Commerces International Court of
Arbitration received requests for 32 new arbitrations in 1956, 210 arbitrations in 1976, 337
arbitrations in 1992, 452 arbitrations in 1997, 529 arbitrations in 1999, 599 arbitrations in 2007
and 759 in 2012 a roughly 25-fold increase over the past 50 years. (640) Similarly, in 1980, the
American Arbitration Association administered approximately 100 international arbitrations;
in 1993, 207 international arbitrations; in 2000, 510 international arbitrations; in 2007, 621
international arbitrations and in 2012, 996 international arbitrations. (641) Other institutions
show similar growth in case loads, (642) as illustrated in the following statistics, which show the
number of cases filed with each of the listed arbitral institutions between 1993-2011. (643)
P 94 The same increasing preference for, and use of, international commercial arbitration is
reflected in surveys of users, (644) in empirical studies of the use of arbitration clauses in
international commercial agreements (645) and studies of dispute resolution in international
sale of goods settings. (646) These conclusions have been confirmed in recent surveys of
corporate users. For example, in its 2010 International Arbitration Survey, the School of
International Arbitration at Queen Mary, University of London (surveying 136 corporate
counsel) found that 81% of the respondents had a policy of adopting arbitration rather than
31
forum selection clauses in their commercial contracts. (647) Subsequent studies have
confirmed these results. (648)
Anecdotal observations are even more robust in their assessments of the growing popularity of
international arbitration (in some cases, unrealistically enthusiastic). (649) Likewise, a
sizeable, specialized international arbitration bar has developed, consisting of international
P 95 practitioners in the worlds leading commercial centers, whose professional activities are
directed almost exclusively towards international commercial arbitration (or other forms of
international arbitration, including investor-state and state-to-state arbitrations). (650)
Finally, the use of arbitration as a means of resolving new (previously un-arbitrated)
categories of disputes, (651) including bilateral investment treaty claims, (652) online disputes,
(653) tax disputes, (654) class actions, (655) regulatory disputes (e.g., tobacco-related issues),
(656) outer space activities, (657) human rights claims (658) and other public issues, (659)
attests to its enduring and increasing popularity. Similarly, procedures developed in
international commercial arbitration have influenced other forms of dispute resolution, often
in significant respects. (660)
These various sources leave no doubt as to the robust growth in the use of international
commercial arbitration in the past several decades. At the same time, it is an
oversimplification to say that international arbitration is the dominant form of dispute
resolution in international matters. The number of disputes that are settled by negotiation
dwarfs those that are litigated or arbitrated. Moreover, litigation in national courts continues
to be a plausible means of dispute resolution in many cases. Parties frequently consider the
relative advantages and disadvantages of international arbitration and forum selection
agreements, not infrequently opting for the latter if their negotiating power permits. (661)
P 96 Arbitration enthusiasts sometimes make exaggerated claims concerning the prevalence of
international arbitration clauses suggesting that some 90% of all international commercial
contracts contain such provisions. (662) This figure lacks empirical support and is almost
certainly inflated: in reality, significant numbers of international commercial transactions
certainly much more than 10% of all contracts contain either forum selection clauses or no
dispute resolution provision at all. It is probably true that, in negotiated commercial (not
financial) transactions, where parties devote attention to the issue of dispute resolution, and
where the parties possess comparable bargaining power, arbitration clauses are more likely
than not to be encountered. This remains a highly impressive endorsement of arbitration, and
permits one to fairly say that international arbitration is the preferred means for contractual
dispute resolution, but more ambitious statistical claims are unproven.
1.04 OVERVIEW OF CONTEMPORARY LEGAL FRAMEWORK FOR

INTERNATIONAL COMMERCIAL ARBITRATION
International commercial arbitration is a fundamentally consensual means of dispute
resolution: unless the parties have agreed to arbitrate, there can be no valid arbitral
determination of their rights. (663) In turn, an agreement to arbitrate has binding effect only by
virtue of a complex framework of national and international law, ultimately enforced via
national courts. (664) Equally, an arbitral award has binding effect, and can be recognized and
enforced, only by virtue of this same legal framework. (665)
As discussed above, both national law and commercial practice have, for centuries, given legal
effect to parties agreements to arbitrate and the resulting awards. (666) There have been
periods in which arbitration agreements and/or awards were afforded only limited efficacy by
national laws, (667) or were given effect only pursuant to particular legal forms. (668)
Nonetheless, the general treatment of arbitration agreements and awards in developed
jurisdictions has usually been at least satisfactory. (669)
The current international legal regime for commercial arbitration has improved materially on
historic enforcement mechanisms. As detailed below, contemporary international conventions,
national arbitration legislation and institutional arbitration rules provide a specialized and
P 97 highly-supportive legal regime for most contemporary international commercial
arbitrations. This regime has been established, and progressively refined, with the express
goal of facilitating international trade and investment by providing a stable, predictable and
effective legal framework in which these commercial activities may be conducted:
international arbitration is the oil which lubricates the machinery of world trade. (670) More
specifically:
Enforcement of international arbitral agreements promotes the smooth flow of international
transactions by removing the threats and uncertainty of time-consuming and expensive
litigation. (671)
As discussed above, the foundations for this legal regime were laid in the first decades of the
20th century, with the 1923 Geneva Protocol and 1927 Geneva Convention, national arbitration
legislation that paralleled these instruments and effective institutional arbitration rules. (672)
Building on these foundations, the current legal regime for international arbitration was
developed in significant part during the second half of the 20th century, with countries from all
parts of the globe entering into international arbitration conventions and enacting national
arbitration statutes designed specifically to facilitate the arbitral process; at the same time,
national courts in most states have given effect to these legislative instruments, often
extending or elaborating on their terms. Most importantly, and as discussed below, this
32
avowedly pro-arbitration regime ensures the enforceability of both arbitration agreements
and arbitral awards, gives effect to the parties procedural autonomy and the arbitral
tribunals procedural discretion and seeks to insulate the arbitral process from interference by
national courts or other governmental authorities. (673)
[A] International Arbitration Conventions

Over the past century, major trading nations have entered into a number of international
treaties and conventions designed to facilitate the transnational enforcement of arbitration
agreements and awards and to promote the use of arbitration in international matters. (674)
They have done so for the specific purpose of providing an effective mechanism for resolving
international commercial disputes, and thereby promoting international trade and
investment. (675) These instruments have, for the most part, contributed to a stable and
effective legal framework for arbitration between international businesses.
International treaties dealing with arbitration sometimes took the form of bilateral treaties,
P 98 although the significance of such agreements was limited. (676) Much more importantly,
multilateral conventions have sought to facilitate and promote international arbitration by
encouraging the recognition of arbitration agreements and awards. These included the 1923
Geneva Protocol and the 1927 Geneva Convention. (677)
As discussed above these two instruments established basic requirements that Contracting
States recognize and enforce international arbitration agreements and awards (subject to a
number of important limitations), marking the beginning of contemporary international efforts
comprehensively to facilitate and support the international commercial arbitration process.
(678) The Geneva Protocol and Convention did not merely make international arbitration
agreements and awards as enforceable as their domestic counterparts. Rather, these
instruments made international arbitration agreements and awards more enforceable than
domestic ones, establishing pro-arbitration standards that did not then exist in many
domestic legal systems, for the specific purpose of promoting international trade and
investment.
[1] New York Convention (679)
The Geneva Protocol and the Geneva Convention were succeeded by the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards. (680) Generally
referred to as the New York Convention, the treaty is by far the most significant contemporary
legislative instrument relating to international commercial arbitration. It provides what
amounts to a universal constitutional charter for the international arbitral process, whose
sweeping terms have enabled both national courts and arbitral tribunals to develop durable,
effective means for enforcing international arbitration agreements and arbitral awards. The
Convention also provided the basis for most contemporary national legislation governing the
international arbitral process, and in particular the UNCITRAL Model Law, which has
implemented and elaborated upon the Conventions basic principles and legal framework.
P 99 [a] Historical Background of New York Convention
The Convention was adopted like many national arbitration statutes specifically to address
the needs of the international business community and international trade and commerce.
(681) In particular, the Convention was intended to improve the legal regime provided by the
Geneva Protocol and Geneva Convention for the international arbitral process. (682)
The first draft of what became the Convention was prepared by the International Chamber of
Commerce in 1953, focused exclusively on the enforcement of international arbitral awards.
(683) The ICC introduced the draft with the observation that the 1927 Geneva Convention was a
considerable step forward, but it no longer entirely meets modern economic requirements,
and with the objective of obtaining the adoption of a new international system of enforcement
of arbitral awards. (684)
The ICCs proposed Draft Convention would have provided for a denationalized form of
international arbitration, with both the international arbitral process and arbitral awards
contemplated to be largely detached from national laws. (685) In particular, the ICC declared
that the [Geneva] Conventions main defect was its enforcement of only those awards that
are strictly in accordance with the rules of procedure laid down in the law of the country where
the arbitration took place, and concluded that there could be no progress without full
recognition of the conception of international awards. (686)
The ICC draft was transmitted to the United Nations Economic and Social Council (ECOSOC),
which established a committee to study the proposal. (687) After some delays, the ECOSOC
produced a revised draft of a successor convention to the Geneva Convention, (688) which
adopted a somewhat less revolutionary approach to the recognition and enforcement of
foreign arbitral awards than that proposed by the ICC. (689)
P 100 After further governmental consideration, the ICC and ECOSOC drafts provided the basis
for a three week conference in New York the United Nations Conference on Commercial
Arbitration attended by 45 states in the Spring of 1958. (690) The New York Conference
resulted in a compromise draft convention that reconciled the ICC and ECOSOC drafts, (691)
while also introducing significant new elements not contemplated by either proposal. The
resulting document now termed the New York Convention was in many respects a radically
innovative instrument which created for the first time a comprehensive legal regime for the
33
international arbitral process.
Both the ICCs original text and the ECOSOCs subsequent draft were focused entirely on the
recognition and enforcement of arbitral awards, with no serious attention to the enforcement
of international arbitration agreements. As Professor van den Berg summarizes the drafting
history:
Originally, it was the intention to leave the provisions concerning the formal validity of the
arbitration agreement and the obligatory referral to arbitration to a separate protocol. At the
end of the New York Conference of 1958, it was realized that this was not desirable. Article II
was drafted in a race against time, with, as a consequence, the omission of an indication as to
which arbitration agreements the Convention would apply. (692)
This drafting approach paralleled that of the Geneva treaties (where the Geneva Protocol dealt
with arbitration agreements and the Geneva Convention addressed arbitral awards). (693) It
was only late in the Conference that the delegates recognized the limitations of this approach
and considered a proposal from the Dutch delegation to extend the proposed treaty from only
the recognition of arbitral awards to also include international arbitration agreements. (694)
That approach, which was eventually adopted, and the resulting provisions regarding the
recognition and enforcement of international arbitration agreements form one of the central
elements of the Convention. (695) At the same time, the extension of the Convention to
encompass both arbitration agreements and awards was a significant step beyond the Geneva
treaties and made the Convention the first international instrument to comprehensively deal
with the major elements of the international arbitral process.
The text of the Convention was approved on 10 June 1958 by a unanimous vote of the
Conference (with only the United States and three other countries abstaining). (696) The
Convention is set forth in English, French, Spanish, Russian and Chinese texts, all of which are
equally authentic. (697) The text of the Convention is only a few pages long, with the
instruments essential substance being contained in seven concisely-drafted provisions
(Articles I through VII).
P 101 The New York Convention made a number of significant improvements in the regime of the
Geneva Protocol and Geneva Convention for the enforcement of international arbitration
agreements and awards. Particularly important were the Conventions broader scope with
regard to arbitration agreements, (698) its shifting of the burden of proving the validity or
invalidity of awards away from the party seeking enforcement to the party resisting
enforcement, (699) its recognition of substantial party autonomy with respect to choice of
arbitral procedures, (700) its adoption of choice-of-law rules for the law applicable to the
arbitration agreement (701) and its abolition of the previous double exequatur requirement
(which had required that awards be confirmed in the arbitral seat before being recognized
abroad). (702)
The Conventions various improvements were summarized by the President of the U.N.
Conference on the Convention as follows:
it was already apparent that the document represented an improvement on the Geneva
Convention of 1927. It gave a wider definition of the awards to which the Convention applied; it
reduced and simplified the requirements with which the party seeking recognition or
enforcement of an award would have to comply; it placed the burden of proof on the party
against whom recognition or enforcement was invoked; it gave the parties greater freedom in
the choice of the arbitral authority and of the arbitration procedures; it gave the authority
before which the award was sought to be relied upon the right to order the party opposing the
enforcement to give suitable security. (703)
More generally, the Convention was intended to promote the use of arbitration as a means of
resolving international commercial disputes, in order to facilitate international trade and
investment. In the words of one national court decision, it is common ground that the evident
purpose of Albertas acceptance of the [New York] Convention is to promote international
trade and commerce by the certainty that comes from a scheme of international arbitration.
(704)
[b] Success of New York Convention
P 102 Despite the Conventions brevity and focus on arbitration agreements and arbitral awards,
the significance of its terms can scarcely be exaggerated. The Conventions provisions effected
a fundamental restructuring of the international legal regime for international commercial
arbitration, combining the separate subject matters of the Geneva Protocol and Geneva
Convention into a single instrument, which provided a legal regime that covered international
arbitrations from their inception (the arbitration agreement) until their conclusion (recognition
of the award). In so doing, the Convention established for the first time a comprehensive
international legal framework for international arbitration agreements, arbitral proceedings
and arbitral awards.
Moreover, the terms of this legal framework were important and remarkably innovative.
Considering only the Conventions provisions mandating recognition of arbitral awards, subject
to a limited, exclusive list of exceptions, one delegate to the New York Conference termed the
Convention a very bold innovation. (705) Equally, the Conventions introduction of uniform
international legal standards mandatorily requiring the recognition and enforcement of
international arbitration agreements, subject to only specified exceptions, was also a bold
34
advance, (706) as was the Conventions emphatic recognition of the predominant role of party
autonomy in the arbitral process. (707) Taken together, the Conventions provisions regarding
the recognition of arbitral awards and agreements provided an international legal framework
within which the arbitral proceedings could be conducted largely in accordance with the
parties desires and the arbitrators directions, and whose results could be effectively enforced
in national courts around the world. (708)
The Convention was ultimately successful in accomplishing its drafters objectives: it is now
widely regarded as the cornerstone of current international commercial arbitration, (709) the
most effective instance of international legislation in the entire history of commercial law
(710) and the single most important pillar on which the edifice of international arbitration
rests. (711) In the apt words of Judge Stephen Schwebel, former President of the International
Court of Justice, It works. (712)
P 103 Notwithstanding its present significance, the New York Convention initially attracted
relatively few signatories or ratifications, particularly from major trading states. Only 26 of the
45 countries participating in the Conference signed the Convention prior to its entry into force
on 7 June 1959. (713)
Moreover, many trading states that signed the Convention prior to June 1959, such as Belgium,
the Netherlands, Sweden and Switzerland, did not ratify it for several years thereafter. The first
states to ratify or accede to the Convention were Israel, Morocco, Egypt and Syria, none of
whom were major trading states; by 1970, only 32 states had ratified or acceded to the
Convention, including only a limited number of states with substantial economies. (714) Other
major trading states, including the United States and the United Kingdom, as well as much of
Asia (including China) and Latin America did not accede to the Convention until many years
later. (715) The United States did not accede to the Convention until 1970 (because of concerns
about domestic federalism issues and hostility from some within the U.S. State Department).
(716)
Over time, however, states from all regions of the globe reconsidered their position, (717) and
by the end of 2013 some 149 nations have ratified or acceded to the Convention. (718) The
Conventions parties include virtually all major trading states and most Latin American,
African, Asian, Middle Eastern and former socialist states. (719) During the past decade,
P 104 numerous states (including a number in the Middle East and Latin America) have
departed from their former distrust of international arbitration and have acceded to the
Convention. (720)
One reason for the Conventions success was its timeliness. It became available in the 1960s
and 1970s, as world trade and investment began significantly to expand (facilitated in part by
the Convention). With this expansion came substantially greater numbers of international
commercial disputes and arbitrations which gave both national courts and arbitral
tribunals opportunities to interpret and apply the Convention. (721)
[c] Overview of New York Conventions Provisions
It is often said that the Convention did not provide a detailed legislative regime for all aspects
of international arbitrations (as, for example, the UNCITRAL Model Law would later do (722) ).
Rather, the Conventions provisions focused on the recognition and enforcement of arbitration
agreements and arbitral awards, without specifically regulating the conduct of the arbitral
proceedings or other aspects of the arbitral process. (723) As one national court has observed,
the Convention was designed to
encourage the recognition and enforcement of commercial arbitration agreements in
international contracts and to unify the standards by which agreements to arbitrate are
observed and arbitral awards are enforced in the signatory nations. (724)
Although these observations are broadly accurate, the Convention also indirectly governs the
arbitral process, through its requirement that courts of Contracting States recognize
agreements to arbitrate including the procedural terms of those agreements (725) and its
provisions for non-recognition of arbitral awards if the parties agreed arbitral procedures
have not been complied with. (726) Taken together, the Conventions provisions set forth
P 105 binding international legal principles governing the entire arbitral process including the
recognition of arbitration agreements, the arbitral process and the recognition of arbitral
awards.
An essential objective of the Convention was uniformity: like the drafters of other international
treaties, the Conventions drafters sought to establish a single uniform set of international
legal standards for the enforcement of arbitration agreements and arbitral awards. As a
leading commentator on the Convention concludes, the significance of the New York
Convention for international commercial arbitration makes it even more important that the
Convention is interpreted uniformly by the courts. (727) Or, in the words of a well-reasoned
Canadian decision, [t]he purpose of the Convention is to facilitate the cross-border
recognition and enforcement of arbitral awards by establishing a single, uniform set of rules
that apply world-wide. (728)
In particular, the Conventions provisions prescribe uniform international rules that: (a) require
national courts to recognize the validity of arbitration agreements, subject to specified
exceptions (Article II(1)); (729) (b) require national courts to refer parties to arbitration when
they have entered into a valid agreement to arbitrate that is subject to the Convention (Article
35
II(3)); (730) and (c) require national courts to recognize and enforce foreign arbitral awards
P 106 (Articles III and IV), subject to a limited number of specified exceptions (Article V). (731)
Additionally, Articles II and V(1)(d) also indirectly govern the arbitral process itself,
generally according decisive weight to the parties agreements regarding arbitral procedures
(rather than the law of the arbitral seat). (732)
National courts have consistently held that these provisions of the Convention establish a pro-
enforcement or pro-arbitration regime for international arbitration agreements and arbitral
awards. According to one court:
The purpose of the New York Conventionis to encourage the recognition and enforcement of
commercial arbitration agreements in international contracts and to unify the standards by
which agreements to arbitrate are observed and arbitral awards are enforced in the signatory
countries. (733)
Other courts, and commentators, adopt similar interpretations of the Conventions basic pro-
enforcement objectives with respect to both arbitration agreements (734) and arbitral awards.
(735)
P 107 [i] Article II: Presumptive Validity of Arbitration Agreements
Central to the Convention is Article II(1), which establishes a basic rule of formal and
substantive validity for international arbitration agreements falling within the Conventions
scope:
Each Contracting State shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences which have arisen or which may arise
between them in respect of a defined legal relationship, whether contractual or not,
concerning a subject matter capable of settlement by arbitration. (736)
This basic rule is elaborated, and also provided an enforcement mechanism, in Article II(3) of
the Convention, which requires the courts of Contracting States to refer parties to international
arbitration agreements to arbitration unless the said [arbitration] agreement is null and void,
inoperative or incapable of being performed. (737) Importantly, as discussed below, Article IIs
obligations are applicable in Contracting States to all international arbitration agreements,
including agreements to arbitrate locally (in the Contracting State whose courts are asked to
apply Article II) and agreements to arbitrate abroad (in a foreign state). (738)
By virtue of Article II, international arbitration agreements are presumptively valid and
enforceable, subject only to specifically-defined exceptions (identified in Article II(3)), whose
applicability must be proven by the party opposing recognition of the arbitration agreement.
(739) Under the Convention, Contracting States are not free to fashion additional grounds for
denying recognition of agreements to arbitrate, and are instead subject to the mandatory
provisions of Articles II(1) and II(3). (740) As one U.S. court put it, [d]omestic defenses to
arbitration are transferable to [the challenge to an arbitration agreement under the New York
Convention] only if they fit within the limited scope of defenses permitted by Article II. (741)
The Convention is best interpreted as imposing international choice-of-law rules that govern
the selection of the law applicable to international arbitration agreements. As discussed
P 108 below, these choice-of-law rules (set forth in Article V(1)(a) and, impliedly, Article II (742) )
require Contracting States to give effect to the parties choice of law governing their agreement
to arbitrate, (743) and, in the absence of any (express or implied) choice by the parties, to
apply the law of the arbitral seat. (744) Moreover, the better view is that the Convention also
requires application of a validation principle, reflecting the parties implied intentions, which
mandates application of the national law of the jurisdiction, related to the parties
transaction, which will give effect to the parties arbitration agreement. (745)
The Convention is also best interpreted as imposing implied limits on the grounds of
substantive invalidity that can be asserted against international arbitration agreements. (746)
In particular, Article II(3) requires as a uniform and mandatory international rule the
recognition of the validity of international arbitration agreements except where such
agreements are invalid under generally-applicable, internationally-neutral contract law
defenses that do not impose discriminatory burdens or requirements on the formation or
validity of agreements to arbitrate. (747) These limits are required by Article IIs reference to
ordinary, generally-accepted principles of contract law (null and void, inoperative or
incapable of being performed), and by the Conventions objective of ensuring that Contracting
States recognize the validity of international arbitration agreements in accordance with
uniform international standards.
Under this standard, a Contracting State may not avoid its obligations to recognize
international arbitration agreements by adopting special rules of national law that make such
agreements invalid (or null and void, inoperative or incapable of being performed). Thus,
national law provisions that impose unusual notice requirements (e.g., particular font), consent
requirements (e.g., that arbitration agreements be specifically approved or established by
heightened proof requirements), procedural requirements (e.g., only institutional arbitration
agreements are permitted), or invalidity rules (e.g., arbitration agreements applicable to
future disputes, fraud claims, or tort claims are invalid) are all impermissible under Article
II(3). (748)
Consistent with this analysis, Contracting States have almost always applied generally-
36
applicable contract law rules to determine the validity of international arbitration agreements
in both their international arbitration legislation and judicial decisions. (749) Moreover, a
number of national courts have adopted this analysis, holding that only internationally
neutral grounds for challenging the validity of international arbitration agreements may be
asserted under Article II of the Convention. In the words of one U.S. decision:
The limited scope of the Conventions null and void clause must be interpreted to encompass
P 109 only those situationssuch as fraud, mistake, duress, and waiverthat can be applied
neutrally on an international scale. (750)
Finally, Article II applies to, and requires recognition of, all material terms of international
arbitration agreements. This includes provisions regarding the arbitral seat, the selection of
institutional rules, the choice of arbitrators, the procedures required by the arbitration
agreement and the like. (751) As a consequence, courts in Contracting States are mandatorily
required to enforce not just the parties exchange of commitments to arbitrate, but also the
material terms of that agreement to arbitrate, pursuant to Article IIs internationally-neutral
standards: Contracting States cannot uphold parties agreements to arbitrate, while ignoring
their choice of arbitral seat, arbitral institution, arbitrators, language, or other procedures.
Again, the overwhelming weight of national court authority is consistent with this analysis. (752)
[ii] Articles III, IV and V: Presumptive Validity of Arbitral Awards
Equally central to the Convention are Articles III, IV and V, which establish a basic rule of
validity and enforceability of foreign and nondomestic arbitral awards falling within the scope
of the Convention. Thus, Article III provides that Each Contracting State shall recognize arbitral
awards as binding (753) and enforce awards in accordance with the Convention and its national
procedural rules. Article IV prescribes streamlined procedures for the proof of foreign and
nondomestic arbitral awards by the award-creditor, essentially requiring only presentation of
certified and translated copies of the award and underlying arbitration agreement. (754) As
discussed below, these obligations apply only to foreign awards, made outside the
Contracting State in which recognition of the award is sought, and nondomestic awards, a
category of awards with limited relevance in contemporary practice. (755)
In turn, Article V provides that [r]ecognition and enforcement of the award may be refused
only if (756) one of seven specified exceptions applies, set forth in Articles V(1) and V(2). The
Conventions exceptions to the obligation to recognize foreign awards are limited to issues of
jurisdiction (Articles V(1)(a), V(1)(c)), procedural regularity and fundamental fairness (Article
V(1)(b)), compliance with the procedural terms of the parties arbitration agreement or, absent
such agreement, the procedural requirements of the arbitral seat (Article V(1)(d)) and public
policy or nonarbitrability (Articles V(2)(a), V(2)(b)); an award may also be denied recognition if
it has been annulled by a competent court in the arbitral seat (Article V(1)(e)). Notably, these
exceptions do not include review by a recognition court of the merits of the arbitrators
substantive decision. (757)
As with Article II, the provisions of Articles III, IV and V are self-evidently mandatory, not
permissive a conclusion that national courts and other authorities have uniformly confirmed.
P 110 (758) It is also clear that the exceptions set forth in Article V of the Convention, to the
general obligation on Contracting States to recognize awards, are exclusive and exhaustive;
courts in Contracting States may not deny recognition of foreign or nondomestic awards except
on the grounds specifically set out in Article V. (759) Moreover, the burden of proof under
Article V is on the award-debtor, not the award-creditor, and national courts have emphasized
that Article Vs exceptions are strictly construed. (760)
P 111 Finally, it is also clear that neither Article V nor anything else in the Convention requires a
Contracting State ever to deny recognition to a foreign or nondomestic award. The Convention
requires only that Contracting States recognize awards (and arbitration agreements) in
specified circumstances. Nothing in Article V, nor the basic structure and purpose of the
Convention, imposes the opposite obligation, not to recognize an award (or arbitration
agreement). That is made explicit in Article VII, which preserves rights that award-creditors
enjoy under national law or other international treaties to recognize and enforce arbitral
awards (and, by analogy, arbitration agreements). (761)
[iii] Articles II and V(1)(d): Recognition of Parties Procedural Autonomy
The Convention also addresses the procedures used in international arbitrations, albeit
indirectly. In particular, Articles II and V(1)(d) of the Convention both provide for recognition of
the parties agreed arbitral procedures.
As noted above, Article II(1) and II(3) of the Convention require Contracting States to recognize
the material terms of agreements to arbitrate, including their procedural terms, and to refer
the parties to arbitration in accordance with those terms. (762) Those provisions obligate
courts in Contracting States to give effect to the arbitral procedures that the parties have
provided for in their arbitration agreements (or otherwise). As discussed below, the Convention
impliedly permits Contracting States to deny effect to such agreements in limited, exceptional
circumstances, in order to protect the integrity of the arbitral process, but does not otherwise
limit the parties procedural autonomy. (763)
Article V(1)(d) similarly provides for non-recognition of arbitral awards where the composition
of the arbitral authority or the arbitral procedure was not in accordance with the agreement of
the parties, or, failing such agreement, was not in accordance with the law of the country where
37
the arbitration took place. (764) Even more explicitly than Article II, Article V(1)(d) gives
priority to the parties agreement regarding arbitral procedures, providing for application of
the law of the arbitral seat only as a default mechanism, when the parties have not made any
agreement regarding procedural matters. (765) At the same time, Article V(1)(b) of the
Convention also permits non-recognition of awards in cases where a party was denied an
opportunity to present its case, imposing a general requirement of procedural fairness and
regularity on the arbitral process (including in (exceptional) cases where the parties agreed
arbitral procedures are fundamentally unfair). (766)
Taken together, Articles II and V(1)(d) prescribe a basic rule of party autonomy for regulation of
the arbitral procedures. Under the Convention, Contracting States (and arbitral tribunals) are
P 112 mandatorily required to give the parties procedural agreements effect, subject to only
limited exceptions to protect the fundamental fairness of the arbitral process.
[d] Application of New York Convention by National Courts
In virtually all Contracting States, the New York Convention has been implemented through
national legislation. The practical effect of the Convention is therefore dependent on both the
content of such national legislation and the interpretations given by national courts to the
Convention and national implementing legislation. (767)
As discussed below, the extent to which Contracting States have been faithful to the
Convention and its underlying objectives varies. (768) Most states have adopted legislation
(such as the UNCITRAL Model Law) that gives almost complete effect to the Convention,
clarifying ambiguities or adding detail regarding the role of national courts. (769) Nonetheless,
a few states have failed (sometimes for prolonged periods) to enact any implementing
legislation, (770) or have promulgated national laws that do not comport with the Convention.
(771) Even in developed states, legislation is occasionally enacted or judicial decisions issued
that do not comport with the Conventions requirements. (772)
As noted above, an important aim of the Conventions drafters was uniformity. (773) The
fulfillment of that aim is dependent upon the willingness of national legislatures and courts, in
different Contracting States, to adopt uniform interpretations of the Convention. In general,
national courts have risen to the challenge of adopting uniform interpretations of the
P 113 Conventions provisions. (774) That process has accelerated in recent decades, as national
court decisions have become increasingly available in foreign jurisdictions (775) and national
courts have increasingly cited authorities from foreign and international sources in
interpreting the Convention. As one experienced (former) judge observed, the New York
Convention is one of the few international treaties in respect of which the courts look at what
the courts have done in other Contracting States. (776)
Thus, national courts have fairly consistently sought to interpret the Convention uniformly,
particularly in the past two decades, with judicial decisions drawing on interpretations of the
Convention and resolutions of particular issues in different legal systems; they have often done
so for the express purpose of achieving uniformity and developing a predictable and coherent
P 114 body of international arbitration law. (777) In the words of one recent Indian decision,
which reversed decades of Indian precedent that contradicted the Convention:
The underlying motivation of the New York Convention was to reduce the hurdles and produce
a uniform, simple and speedy system for enforcement of foreign arbitral award. Therefore
[Article V(1)(e) of the Convention should be interpreted in the manner that] seems to be
accepted by the commentators and the courts in different jurisdictions. (778)
Or, as another national court put it:
Insofar as the Act implements an international treaty, Australian courts will, as far as they
able, construe the Act consistently with the international understanding of that treaty.
Uniformity also accords with the Acts stated purpose to facilitate the use of arbitration as an
effective dispute resolution process. (779)
This process has been materially assisted by the adoption, in a significant number of
Contracting States, of the UNCITRAL Model Law. As discussed below, the Model Law is based
substantially on the New York Convention, mirroring its basic terms and specific language (in
Articles II, III, IV and V of the Convention) and providing elaboration of those terms. (780) The
interpretation of the Model Law in Contracting States that have adopted it has provided
further impetus towards uniformity in interpretation of the Convention and regulation of the
arbitral process.
National courts have not devoted substantial attention to the question whether the New York
Convention has direct application in the courts of Contracting States (or, formulated
differently, is self-executing). As discussed below, the weight of U.S. authority supports the
view that the Convention is self-executing. (781) There are a few decisions from other
jurisdictions which suggest the same conclusion. (782)
This analysis is clearly correct. The text of Articles II, III, IV, V and VI leave little question but
P 115 that the Conventions principal provisions are meant to have immediate, direct
application in national courts, regardless of the existence of national implementing
legislation. Each of these provisions prescribes mandatory rules directed towards national
courts (e.g., refer parties to arbitration; shall recognize arbitral awards as binding). These
provisions are text-book examples of treaty obligations that are meant to have direct effects,
38
without the need for implementing legislation.
[e] Constitutional Character of New York Convention
Finally, it also bears emphasis that the Convention is a constitutional instrument. (783) The
Conventions text is drafted in broad terms, designed for application in a multitude of states
and legal systems, over a period of decades. By necessity, as well as design, the interpretation
of the Convention must evolve and develop over time, as national courts and arbitral tribunals
confront new issues, develop more refined analyses and implement the treatys underlying
objectives. As one national court explained, accepting the characterization of the Convention
as a constitutional instrument, the Convention imposes uniform international standards
while leav[ing] a substantial role for national law and national courts to play in the arbitral
process. (784)
The process of interpretation and application of the Convention can be uneven and slow, but it
is very well-adapted to the evolving needs of the international arbitral process, which by its
nature is characterized by changing commercial demands and conditions. It is also well-
adapted to the nature of the Conventions constitutional structure, which leaves a substantial
role for national law and national courts to play in the international arbitral process, but
within the international framework and limitations imposed by the Conventions provisions.
Much of the discussion in the following Chapters is addressed to the manner in which national
courts and arbitral tribunals have jointly given effect to the Conventions terms and developed
their respective fields of competence within the Conventions framework.
There have been occasional proposals to amend the New York Convention. (785) Those
proposals have attracted substantial criticism, (786) and have gained little political or
P 116 other momentum. As a practical matter, it is highly unlikely that amendments to the
Convention are foreseeable in the coming decade.
A more significant step in this direction was the adoption by UNCITRAL of the UNCITRAL Model
Law and of two Recommendations regarding interpretation of Articles II and VII of the
Convention. (787) The Model Law was based in significant part on the Convention (with Articles
7, 8, 34, 35 and 36 largely tracking the text of the Convention in verbatim language). (788) As
discussed elsewhere, interpretations of the Model Law often look to the Convention and
decisions interpreting the Convention, while conversely influencing analysis and interpretation
of the Convention. (789)
At the same time, UNCITRALs Recommendations will (properly) influence interpretation of the
Convention (as well as the Model Law). These actions reflect the ongoing cooperation of
Contracting States in their judicial and quasi-legislation interpretations of the Convention,
progressively developing and elaborating the Conventions meaning over time. These actions
have been of particular importance given the constitutional character of the Convention,
whose broad and general text necessarily requires substantial interpretation and elaboration.
Finally, the New York Convention must also be interpreted in accordance with principles of
good faith, including as reflected in Article 31 of the Vienna Convention on the Law of Treaties.
As one well-reasoned national court decision held, as a treaty, the Convention must be
interpreted in good faith in accordance with the ordinary meaning to be given to the terms of
the treaty in their context and in the light of its object and purpose. (790) Other authorities
are to the same effect. (791) The Contracting States obligations of good faith under the
Convention complement the Conventions constitutional character, contemplating a
progressive and cooperative development of the Conventions basic objectives of facilitating
the recognition and enforcement of international arbitration agreements and awards.
[2] European Convention on International Commercial Arbitration
The 1961 European Convention on International Commercial Arbitration (792) is one of the
worlds most important regional commercial arbitration treaties. Drafting of the European
Convention began in 1954, aimed at producing a treaty that would improve upon the then-
existing legal framework for international arbitration involving parties from European states
P 117 (793) and particularly East-West trade. (794) The drafting process was protracted (and
delayed by the intervening New York Convention), but ultimately concluded with signing of the
Convention in Geneva on 21 April 1961. (795)
The European Convention entered into force in 1964, and 31 states are currently party to it.
(796) Most European states (but not the United Kingdom, the Netherlands or Finland) are party
to the Convention, while some ten non-European states are parties, including Russia, Cuba and
Burkina Faso. (797) The Convention consists of 19 articles and a detailed annex (dealing with
certain procedural matters).
The Convention addresses the three principal phases of the international arbitral process
arbitration agreements, arbitral procedure and arbitral awards. With regard to the arbitration
agreement, the Convention (impliedly) recognizes the validity of international arbitration
agreements, (798) while expressly providing for a specified, limited number of bases for the
invalidity of such agreements in proceedings concerning recognition of awards. (799) With
regard to the arbitral procedure, the Convention limits the role of national courts and confirms
the autonomy of the parties and the arbitrators (or arbitral institution) to conduct the
arbitration proceedings; the Convention also addresses the allocation of competence between
arbitral tribunals and national courts over jurisdictional challenges, to the existence, validity,
or scope of the arbitration agreement. (800) With regard to awards, the European Convention is
39
designed to supplement the New York Convention, essentially dealing only with the effects of a
judicial decision annulling an award in the arbitral seat in other jurisdictions (and not with
other recognition obligations). (801)
The Conventions impact in actual litigation has not been substantial (owing to the limited
number of Contracting States, all of whom are also party to the New York Convention). (802)
Nonetheless, the Conventions effects on international arbitration doctrine have been
significant. This is particularly true with regard to the arbitrators jurisdiction to consider
challenges to their own jurisdiction (so-called competence-competence) (803) and the
P 118 parties (and arbitrators) autonomy to determine the arbitral procedures. (804) The
Convention is currently somewhat dated reflecting its origins during the Cold War and
efforts are underway to revise its provisions. (805)
[3] Inter-American Convention on International Commercial Arbitration (806)
After the pioneering Montevideo Convention in 1889, and the Bustamante Code in 1920, (807)
much of South America effectively turned its back on international commercial arbitration.
Only Brazil ratified the Geneva Protocol, and even it did not adopt the Geneva Convention.
South American states were very reluctant to ratify the New York Convention, for the most part
only beginning to do so in the 1980s.
Nevertheless, in 1975, the United States and most South American nations negotiated the Inter-
American Convention on International Commercial Arbitration (Inter-American Convention),
also known as the Panama Convention. (808) The United States ratified the Convention in
1990; other parties include Mexico, Brazil, Argentina, Venezuela, Columbia, Chile, Ecuador,
Peru, Costa Rica, El Salvador, Guatemala, Honduras, Panama, Paraguay and Uruguay. (809)
The Inter-American Convention is similar to the New York Convention in many respects: indeed,
the Conventions drafting history makes clear that it was intended to provide the same results
as the New York Convention. (810) Among other things, the Inter-American Convention provides
for the presumptive enforceability of arbitration agreements (811) and arbitral awards, (812)
subject to specified exceptions similar to those in the New York Convention. (813)
P 119 The Inter-American Convention nonetheless introduces significant innovations, not
present in the New York Convention. It does so by providing that, where the parties have not
expressly agreed to any institutional or other arbitration rules, the rules of the Inter-American
Commercial Arbitration Commission (IACAC) will govern. (814) In turn, the Commission has
adopted rules that are similar to the UNCITRAL Rules. (815) The Convention also introduces
provisions regarding the constitution of the arbitral tribunal and the parties freedom to
appoint arbitrators of their choosing (regardless of nationality). (816) Less desirably, the Inter-
American Convention departs from the New York Convention by omitting provisions dealing
expressly with judicial proceedings brought in national courts in breach of an arbitration
agreement. (817)
[4] ICSID Convention
A central pillar of the international investment regime is the so-called ICSID Convention or
Washington Convention of 1965. (818) The Convention establishes the International Centre for
Settlement of Investment Disputes (ICSID), a specialized arbitral institution, which
administers arbitrations and conciliations, both pursuant to the Convention and otherwise.
(819)
The ICSID Convention was negotiated and opened for signature in 1965 and now has 150
Contracting States, including states in every geographic region of the world. (820) The
Convention is designed to facilitate the settlement of investment disputes (i.e., legal
dispute[s] arising directly out ofinvestment[s]) that the parties have agreed to submit to
ICSID. (821) Investment disputes are defined as controversies that arise out of an investment
and are between a Contracting State (or host State) or a designated state-related entity from
P 120 that state and a national of another Contracting State (or investor). (822) The Convention
does not apply to disputes not involving a Contracting State and an investor from another
Contracting State or to disputes between private parties; it also does not apply to purely
commercial disputes that do not involve an investment.
As to investment disputes that fall within its terms, the Convention provides both conciliation
(823) and arbitration procedures. The Convention does not provide an independent, stand-
alone basis for arbitrating particular disputes under the Convention. Instead, an ICSID
arbitration cannot be pursued without a separate consent to ICSID arbitration by the foreign
investor and host state, which usually takes the form of either an arbitration clause contained
within an investment contract or a consent provided in a foreign investment law, a BIT
(discussed below), or another treaty. (824)
If parties agree to submit a dispute to ICSID arbitration, the ICSID Convention (and related
ICSID Arbitration Rules) provide a comprehensive, stand-alone regime, almost entirely
detached from national law and national courts, for the conduct of ICSID arbitral proceedings.
This regime differs materially from that applicable in international commercial arbitrations
(under the New York Convention) and most other investment arbitration contexts.
Under the ICSID Convention regime, arbitral tribunals are granted exclusive competence-
competence to resolve jurisdictional challenges (subject to limited subsequent review by
ICSID-appointed annulment committees (and not by national courts)). (825) This differs from
40
international commercial arbitrations, where national courts play a significant role in
considering and resolving jurisdictional disputes. (826)
Likewise, ICSID awards are subject to immediate recognition and enforcement in the courts of
Contracting States without set aside proceedings or any other form of other review in national
courts, either in the arbitral seat or elsewhere (but subject to local rules of state immunity of
state assets). (827) Instead, ICSID awards are subject to a specialized internal annulment
procedure, in which ad hoc committees selected by ICSID are mandated, in limited
circumstances, to annul awards for jurisdictional or grave procedural violations; (828) if an
P 121 award is annulled it may be resubmitted to a new ICSID arbitral tribunal. (829) This is a
substantial difference from the New York Convention model, where awards are subject to
annulment (in the national courts of the arbitral seat) and non-recognition (in national courts
elsewhere). (830)
Moreover, ICSID (and not a national court) serves as the appointing authority in ICSID
arbitrations, when necessary, selecting and replacing arbitrators from a list of individuals
selected by individual Contracting States. (831) Again, this differs materially from appointment
mechanisms in at least some non-ICSID settings (particularly ad hoc arbitrations, where
national courts can be involved in the appointment and challenge process (832) ).
Finally, the ICSID Convention provides that, absent agreement by the parties, ICSID
arbitrations are governed by the law of the state that is party to the dispute (including its
conflict of laws rules) and such rules of international law as may be applicable. (833) In
contrast, neither the New York nor Inter-American Conventions contains comparable
substantive choice-of-law provisions.
Major international infrastructure and natural resource projects frequently include ICSID
arbitration clauses, usually as a consequence of demands from host governments. ICSID has
also frequently been included as an arbitral institution to administer arbitrations pursuant to
BITs, which proliferated during the 1990s. (834) As a consequence, ICSID has gained
substantially greater experience in administering international arbitrations, and enhanced
credibility as an arbitral institution during the past decade or so. (835) That trend has
continued in recent years, as ICSID has modernized the ICSID Rules, which led to some
improvement in the institutions arbitral procedures. (836)
ICSIDs caseload has very significantly increased in the past 25 years, particularly as a
consequence of arbitrations brought pursuant to bilateral investment treaties (BITs) or
investment protection legislation. (837) As of 31 December 2013, the Centre had registered 424
ICSID arbitrations since its establishment, with 40 new ICSID arbitrations registered in 2013.
P 122 (838) While only 4 ICSID awards were rendered between 1971 and 1980, 107 awards were
rendered between 2001 and 2010 (with a total of over 180 ICSID awards by March). (839)
[5] North American Free Trade Agreement
A number of other multilateral treaties also play important roles in the international
investment regime, establishing legal regimes that resemble, but also differ from, the ICSID
Convention. The North American Free Trade Agreement (NAFTA) is a multilateral treaty
between Canada, Mexico and the United States which addresses a wide range of trade,
investment and other issues. Chapter 11 of NAFTA sets forth standards for treatment by each
NAFTA state of investors from other NAFTA states, as well as a mechanism for arbitrating
investment disputes under those standards. The substantive rights provided by NAFTA include
protections against discriminatory treatment of a NAFTA investor by the host state, unfair or
inequitable treatment and expropriation without adequate compensation. (840)
Unlike the basic models for both international commercial arbitration and the ICSID
Convention, no separate consent to arbitration is required to permit an investor from one
NAFTA state to arbitrate claims under NAFTAs substantive provisions against another NAFTA
state. Rather, the necessary consent by the NAFTA state parties is provided in Chapter 11 of
NAFTA itself, which provides investors from NAFTA states with immediate access to an arbitral
forum. (841)
While NAFTA includes ICSID arbitration as an option for resolving disputes, neither Canada
(prior to October 2013) nor Mexico is currently a party to the ICSID Convention, and NAFTA
arbitrations therefore cannot be conducted under the Convention. (842) As a result, NAFTA
awards are not subject to the ICSID Convention (including its internal institutional annulment
procedure), and are instead subject to being set aside in national courts of the arbitral seat in
the same general manner as international commercial arbitration awards. (843) ICSIDs
Additional Facility Rules are commonly used in NAFTA arbitrations, permitting use of ICSID as
an appointing authority and administering institution, notwithstanding the ICSID Conventions
inapplicability. (844)
[6] Bilateral Investment Treaties (845)
P 123 BITs play a central role in the international investment regime. Unlike the ICSID
Convention (and other multilateral investment treaties), BITs are bilateral treaties, tailored to
the circumstances of individual bilateral relationships and only binding two Contracting
States. Nonetheless, as discussed below, most BITs follow a common structure and include
common provisions (often contained in model BITs published by some states). (846)
Capital-exporting states (including Germany, the United Kingdom, most other Western
41
European states, the United States and Japan) were the earliest proponents of BITs, which were
originally entered into principally between developed and developing countries. More
recently, states in all stages of development have concluded BITs with one another. More than
2,800 BITs are currently in force, with a substantial proportion of all BITs being between
developing states (so-called South-South BITs). (847)
Most BITs provide significant substantive protections for investments made by investors from
one of the two Contracting States in the territory of the other Contracting State. These
protections typically include guarantees against uncompensated expropriation, unfair or
inequitable treatment and discriminatory treatment. (848)
BITs also very frequently (but not always) contain dispute resolution provisions which permit
investors from one Contracting State to submit investment disputes with the other
Contracting State to arbitration, subject occasionally to specified exclusions (e.g., for tax
disputes). Importantly, like NAFTA and the Energy Charter Treaty, these provisions provide
each states binding consent to arbitration of investment disputes; this permits investors to
demand arbitration of covered disputes against the host state without a traditional
contractual arbitration agreement with the host state or other separate consent to arbitration
by the host state (so-called arbitration without privity). (849) A few BITs do not include the
P 124
Contracting States consent to arbitration, requiring foreign investors to conclude a
separate arbitration agreement with the host state in order to arbitrate an investment dispute
under the treaty, but this is unusual.
BITs contain a variety of different arbitration mechanisms. Some BITs provide for ICSID
arbitration of investment disputes under the BIT; other BITs provide for UNCITRAL or some form
of institutional arbitration (e.g., ICC or SCC) or ad hoc arbitration; and some BITs permit
investors to select among any of the foregoing (or other) options. (850) The appointing authority
in a particular BIT arbitration will vary, depending on the terms of the individual BIT and the
option(s) selected by the investor. Unless a BIT arbitration proceeds under the ICSID
Arbitration Rules and ICSID Convention, BIT awards will be subject to the New York Convention
and general national arbitration legislation. (851)
As with ICSID arbitrations, the past two decades have witnessed a steadily increasing number
of BIT arbitrations and awards. Recent reports indicate that more than 50 BIT arbitrations are
filed each year, with a substantial number of these proceeding to final awards. (852)
There is a substantial, and growing, body of specialized commentary addressing the subjects of
BITs and investor-state arbitration. (853) These topics are beyond the scope of this Treatise,
save where relevant as useful parallels, contrasts, or illustrations of issues arising in
[7] Bilateral Friendship, Commerce and Navigation Treaties
A number of nations have entered into bilateral treaties dealing principally with commercial
relations and incidentally with international arbitration. These treaties generally provide for
the reciprocal recognition of arbitral awards made in the territory of the Contracting States.
For example, the United States includes an article relating to arbitration between private
parties in many of its bilateral Friendship, Commerce and Navigation treaties. (854) A
representative example of such an article provides:
Contracts entered into between nationals or companies of either party and nationals or
P 125 companies of the other party that provide for settlement by arbitration of controversies
shall not be deemed unenforceable within the territories of such other party merely on the
grounds that the place designated for arbitration proceedings is outside such territories or
that the nationality of one or more of the arbitrators is not that of such other party. Awards
duly rendered pursuant to any such contracts which are final and enforceable under the laws
of the place where rendered shall be deemed conclusive in enforcement proceedings brought
before the courts of competent jurisdiction of either party, and shall be entitled to be
declared enforceable by such courts, except where found contrary to public policy. (855)
For the most part, these treaty provisions have been effectively superseded by the terms of the
New York Convention and other multilateral treaties, which generally provide substantially
more expansive protections. (856)
[B] Overview of National Arbitration Legislation

Many nations have enacted arbitration legislation, which provides a basic legal framework for
international arbitration agreements, arbitral proceedings and arbitral awards. National
arbitration statutes are of fundamental importance in giving effect to or, less frequently,
creating obstacles to the functioning of the international arbitral process. Despite occasional
rhetoric as to the autonomy of the international arbitral process, (857) it is essential to the
efficient functioning of the arbitral process, and the realization of the parties objectives in
agreeing to arbitrate, that national courts give effect to such agreements and provide support
for the arbitral process. The enactment of legislation accomplishing these ends has been a
major objective and achievement of developed trading states and many other jurisdictions
over the past 50 years. (858)
Over the past several decades, large numbers of developed and less-developed states have
enacted, revised or improved legislation dealing with international commercial arbitration.
42
(859) The extent of these legislative revisions is striking, both in number and diversity.
P 126 Important new enactments, or thorough revisions, have occurred in Algeria (2008), Australia
(1989 and 2011), Austria (2006), Bangladesh (2001), Bahrain (1994), Belgium (2013), Brazil
(1996), Bulgaria (1993 and 2007), Cambodia (2006), Chile (2004), China (1991 and 1994), Colombia
(2012), Costa Rica (1997 and 2011), Croatia (2001), Czech Republic (1994 and 2012), Denmark
(2005), Dominican Republic (2008), England (1996), Egypt (1994), Finland (1992), France (2011),
Germany (1998), Greece (1999), Hong Kong (1997 and 2010), India (1996), Indonesia (1999), Ireland
(1998 and 2010), Italy (2006), Japan (2004), Mexico (1993 and 2011), New Zealand (1996 and 2007),
Nicaragua (2005), Norway (2004), Peru (2008), Poland (2005), Portugal (2012), Russia (1993),
Saudi Arabia (2012), Scotland (2010), Singapore (1995 and 2012), South Korea (2009), Spain (2003
and 2011), Sweden (1999), Tunisia (1993), Turkey (2001), the United Arab Emirates (1992) and
Vietnam (2011).
Given these (and other enactments), and the even more widespread acceptance of the New
York Convention and ICSID Convention, international arbitration has become a global
mechanism of dispute resolution. As a leading Singaporean jurist has correctly observed
arbitration is no longer the preserve of the developed jurisdictions of Europe and North
America. (860) Rather, international arbitration is a universally accepted means of dispute
resolution, supported by national and international legal regimes and preferred by public and
private users from all jurisdictions.
Particularly in civil law jurisdictions, early arbitration legislation was often a part or chapter
within the national Code of Civil Procedure. (861) This continues to be the case in a number of
jurisdictions even today. (862) In common law jurisdictions, the tendency was (and remains) to
enact separate legislation dealing specifically with arbitration. (863) The growing popularity of
the UNCITRAL Model Law on International Commercial Arbitration (864) has made the latter
approach of stand-alone arbitration legislation increasingly common.
As discussed below, in many, (865) but not all, (866) cases, national arbitration statutes are
applicable only to international (not domestic) arbitrations, or contain separate parts dealing
differently with domestic and international arbitration. This approach has generally been
adopted in order to permit the application of particularly pro-arbitration rules and
P 127 procedures in the international context, which may not (for historical or other reasons) be
appropriate for purely domestic matters. (867) Nevertheless, a number of countries have
adopted the same legislation for both domestic and international arbitrations (even then,
however, with specific provisions that treat the two fields differently with regard to particular
subjects). (868)
Some commentators have suggested that there is no reason to distinguish between
international and domestic arbitrations. (869) That view may be appropriate in jurisdictions
where domestic arbitration agreements and awards are accorded strong guarantees of validity
and enforceability, and where the parties autonomy with regard to arbitral procedures,
arbitrator selection, choice of law and other matters are fully respected in domestic matters.
In many countries, however, such guarantees do not exist, or are subject to important
qualifications, in domestic contexts. Moreover, there are particular issues as to which local
traditions or policies may argue for greater restrictions on domestic, rather than on
international arbitration. (870) In these instances, the special characteristics of international
arbitration aimed at overcoming the unique jurisdictional, choice-of-law and enforcement
uncertainties which exist in international matters, and providing an internationally-neutral
dispute resolution process fully justify treating it differently from purely domestic
arbitration. (871)
Broadly speaking, there are two categories of national arbitration legislation: statutes which
are supportive of the international arbitral process (increasingly, but not always, based on the
UNCITRAL Model Law) and statutes which are not supportive of the arbitral process. Both of
these types of legislation are discussed below.
[1] Supportive National Arbitration Legislation
Most states in Europe, North America and parts of Asia have adopted legislation that
addresses all of the foregoing issues and provides effective and stable support for the arbitral
P 128 process. (872) In many cases, jurisdictions have progressively refined their national
arbitration statutes, adopting either amendments or new legislation to make their arbitration
regimes maximally supportive for the international arbitral process and attractive to users.
(873) Thus, over the past 50 years, virtually every major developed country has substantially
revised or entirely replaced its international arbitration legislation, in every case, to facilitate
the arbitral process and promote the use of international arbitration. (874)
Paralleling the main features of the New York Convention, the pillars of modern arbitration
statutes are provisions that affirm the capacity and freedom of parties to enter into valid and
binding agreements to arbitrate future commercial disputes, (875) provide mechanisms for the
enforcement of such agreements by national courts (through orders to stay litigation or to
compel arbitration), (876) prescribe procedures for confirming or annulling arbitral awards
(877) and require the recognition and enforcement of foreign awards. (878) In many cases,
national arbitration statutes also authorize limited judicial assistance to the arbitral process;
this assistance can include removing and selecting arbitrators, enforcing a tribunals orders
with respect to evidence-taking or discovery and granting provisional relief in aid of
arbitration. (879)
43
In addition, most modern arbitration legislation affirms the parties autonomy to agree upon
arbitral procedures and, sometimes, the applicable substantive law governing the parties
dispute, while narrowly limiting the power of national courts to interfere in the arbitral
process, either when arbitral proceedings are pending or in reviewing awards. (880) Although
generally off the beaten trail, the arbitration legislation of Djibouti is representative, in its
statement of legislative purpose of giv[ing] the widest effect to the contractual provisions
agreed upon by the parties in regard to the framework of the arbitration proceedings. (881)
As one distinguished authority put it:
[One focus of national legislative developments over the past four decades] is found in the
widening of the parties autonomy in regulating qualifying aspects of the arbitration (number
and manner of appointment of arbitrators; seat and language of the arbitration; rules
applicable to the proceedings; rules applicable to the merits of the dispute; and waiver of
means of recourse against the award). (882)
P 129 The central objective of these legislative enactments has been to facilitate international
trade and investment by providing more secure means of dispute resolution. Recognizing that
international transactions are subject to unique legal uncertainties and risks, (883) developed
and other states have sought to promote the use of arbitration expressly as a way of mitigating
such risks. (884) Among other things, they have done so through enactment of modern
arbitration statutes, giving effect to the constitutional principles of the New York Convention,
ensuring the validity and enforceability of international arbitration agreements and awards,
and facilitating the autonomy and efficiency of the arbitral process. A judicial opinion in a
recent Canadian decision captured this attitude, in a representative contemporary business
setting, in well-reasoned terms:
Access to justice in Canada no longer means access just to the public court system.
Historically, judges were reluctant to relinquish their grasp on dispute resolution, and they
even viewed alternative dispute resolution as antithetical to the parties interests. This era is
gone. It is the role of the legislature, not the courts, to limit access to alternative dispute
resolution mechanisms. Unlike several other provinces, British Columbia has not limited the
resolution of consumer disputes to a single procedural regime. On the contrary, it has left room
for arbitration and allowed arbitrators to exercise broad remedial powers, subject to the
agreement of parties to a dispute. Given the current structure of consumer protection
legislation in British Columbia, submitting a consumers dispute with their mobile phone
service provider to arbitration is entirely consistent with the important public purposes of
protecting consumers, vindicating their rights and promoting access to justice. (885)
P 130 Additionally, one of the stated objectives of new arbitration legislation during the past
several decades has been to attract international arbitration business. In the words of one
Irish legislator: The economies of other countries have benefited considerably from
arbitration business and there is no reason why Ireland should not share in those benefits.
(886) Or, as was asserted in debates on Englands arbitration legislation, a revised arbitration
act would supposedly bring the country $1 billion annually in lawyers and arbitrators fees.
(887)
Some have considered these motivations unseemly or illegitimate. One commentator has
complained that countries have, without shame, exhibited their desire to attract the business
of arbitration, (888) while another has observed, with a measure of reproach, that:
There has been a scramble among Western European nations to accommodate their
arbitration laws to what they perceive to be the consumers tastes, thereby attracting a greater
share of the fees that go to lawyers and arbitrators at the place of the proceeding. (889)
The reality appears to be that these legislative reforms have done relatively little to attract
international arbitrations to particular countries. (890) Whatever the case, however, there is no
reason to regard contemporary arbitration legislation with cynicism or reproach because of
such motivations. (891)
Modern international arbitration statutes do good (in addition to hopefully doing well) by
addressing the needs of international business and international trade (the consumers
tastes) and by further enhancing the ability of international arbitration to resolve commercial
disputes efficiently and definitively, without burdening the parties, national courts, or
international commerce with the peculiar uncertainties and difficulties of transnational
disputes. The fact that legislatures evince a natural and commonplace interest in fostering the
local economy, and that local residents and businesses in a particular jurisdiction will derive
professional opportunities and financial gain from increased use of that jurisdiction as an
P 131
arbitral seat, in no way alters the benefits that such legislation produces for international
businesses and, more broadly, for the global economy.
A recent Singaporean decision expressed this attitude, embraced by a number of courts in
developed states around the world, as follows:
There was a time when arbitration was viewed disdainfully as an inferior process of justice.
Those days are now well behind us. An unequivocal judicial policy of facilitating and promoting
arbitration has firmly taken root in Singapore. It is now openly acknowledged that arbitration,
and other forms of alternative dispute resolution such as mediation, help to effectively unclog
the arteries of judicial administration as well as offer parties realistic choices on how they
want to resolve their disputes at a pace they are comfortable with. More fundamentally, the
44
need to respect party autonomy (manifested by their contractual bargain) in deciding both the
method of dispute resolution (and the procedural rules to be applied) as well as the
substantive law to govern the contract, has been accepted as the cornerstone underlying
judicial non-intervention in arbitration. In essence, a court ought to give effect to the parties
contractual choice as to the manner of dispute resolution unless it offends the law. (892)
Finally, there is an additional, but deeply-rooted, foundation for contemporary support for the
arbitral process. The right of private parties to resolve their disputes consensually, by
arbitration, instead of by recourse to state courts or administrative agencies, is related to
constitutionally-protected rights of autonomy and association. (893) The parties freedom to
elect the manner in which they resolve their disputes is a basic aspect of individual autonomy
and liberty, no different from the freedom to enter into contracts and other forms of
association, which is properly accorded protection in almost all developed legal systems. (894)
Consistent with this analysis, national courts have characterized the right to arbitrate as a
fundamental right, with constitutional underpinnings. (895) One U.S. court declared: The
recognized autonomy of parties to enter into an arbitration agreementis directly correlated
to and stems from the constitutionally protected right of freedom to contract. (896) Similarly,
a Qubec court reasoned:
P 132
Arbitration is a fundamental right of the citizens and is an expression of the parties
contractual freedom. It should not be considered as an attack on the monopoly of state justice.
Rather, arbitration should be perceived as an alternative means of dispute resolution that,
depending on the circumstances, fulfils certain goals pursued by the parties e.g., rapidity,
peer review, cost efficiency etc. (897)
Courts in other jurisdictions, from widely different legal systems and geographic locations,
have similarly recognized the constitutional foundations of the right to arbitrate. (898)
Investor-state tribunals have recognized similar conceptions of a right to arbitrate, guaranteed
by both national laws and Article II of the New York Convention. (899)
These considerations have particular application in international matters, where commercial
parties choose to arbitrate in significant part to obtain neutral, effective adjudication of their
disputes, rather than dispute resolution that is frequently non-neutral, arbitrary and
unreliable. (900) It is particularly appropriate for states not just to protect, but to affirmatively
encourage and support, parties efforts to resolve their disputes in this manner.
There are by now a large number of supportive national arbitration statutes, in both
developed and less developed jurisdictions. Most, but not all, of these statutes are modern, in
the sense of having been adopted during the last three decades. The following sections briefly
P 133
outline the UNCITRAL Model Law and the English, French, Swiss and U.S. international
arbitration frameworks, which provide a selection of differing contemporary models for
supportive arbitral regimes. At the same time, there are substantial similarities, in many
respects, between contemporary international arbitration statutes in most developed
jurisdictions, (901) all of which represent further steps, beyond the New York Convention, in
establishing todays pro-arbitration legal regime for international commercial arbitration.
[a] UNCITRAL Model Law (902)
The United Nations Commission on International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration (UNCITRAL Model Law) is the single most important
legislative instrument in the field of international commercial arbitration. It has been adopted
in a substantial (and growing) number of jurisdictions and served as a model for legislation and
judicial decisions in many others. (903) Recent revisions to the Model Law (in 2006) sought to
improve its legislative framework, (904) introducing new features and providing a
representative example of ongoing legislative efforts aimed at improving the international
arbitral process.
The Model Law was initiated by a proposal from the Asian African Legal Consultative
Committee to supplement the New York Convention with a protocol regarding party-
P 134 adopted arbitration rules. (905) The origins of the UNCITRAL Model Law are detailed in a
Report by the UN Secretary-General, titled Possible Features of a Model Law of International
Commercial Arbitration. (906) Among other things, the Report declared that the ultimate goal
of a Model Law would be to facilitate international commercial arbitration and to ensure its
proper functioning and recognition. (907)
The Secretary-Generals Report also identified a number of defects in national laws, which
the New York Convention had sought to remedy, but which persisted in national legal systems:
To give only a few examples, such provisions may relate to, and be deemed to unduly restrict,
the freedom of parties to submit future disputes to arbitration, or the selection and
appointment of arbitrators, or the competence of the arbitral tribunal to decide on its own
competence or to conduct the proceedings as deemed appropriate taking into account the
parties wishes. Other such restrictions may relate to the choice of the applicable law, both the
law governing the arbitral procedure and the one applicable to the substance of the dispute.
Supervision and control by courts is another important feature not always welcomed by
parties especially if exerted on the merits of the case. (908)
The Report was the basis for extensive consultations and debates involving states, the
international business and arbitration communities (e.g., International Council for Commercial
45
Arbitration; ICC International Court of Arbitration), and regional organizations (e.g., Asian-
African Legal Consultative Committee). (909) These discussions ultimately produced the
current draft of the Model Law, which UNCITRAL approved in a resolution adopted in 1985. (910)
The Model Law was approved by a U.N. General Assembly resolution later the same year. (911)
The Model Law was designed to be implemented by national legislatures, with the objective of
further harmonizing the treatment of international commercial arbitration in different
countries. The Law consists of 36 articles, which deal relatively comprehensively with the
issues that arise in national courts in connection with international arbitration. Among other
things, the law contains provisions concerning the enforcement of arbitration agreements
(Articles 7-9), appointment and removal of arbitrators (Articles 10-15), jurisdiction of arbitrators
(Article 16), provisional measures (Article 17), conduct of the arbitral proceedings, including
language, seat and procedures (Articles 18-26), evidence-taking and discovery (Article 27),
P 135
applicable substantive law (Article 28), arbitral awards (Articles 29-33), setting aside or
vacating awards (Article 34), and recognition and enforcement of foreign awards, including
bases for non-recognition (Articles 35-36).
Under the Model Law, written international arbitration agreements are presumptively valid
and enforceable, subject to limited, specified exceptions. (912) Article 8 of the Law provides for
the enforcement of valid arbitration agreements, regardless of the arbitral seat, by way of a
dismissal or stay of national court litigation. (913) The Model Law also adopts the separability
presumption, (914) and expressly grants arbitrators the authority (competence-competence) to
consider their own jurisdiction. (915) (As discussed below, however, it is not entirely clear what
approach the Model Law takes to the allocation of competence to resolve jurisdictional
disputes, and in particular whether interlocutory judicial review of jurisdictional objections is
on a prima facie or a final basis. (916) )
The Model Law expressly prescribes a principle of judicial nonintervention in the arbitral
proceeding. (917) It also affirms the parties autonomy (subject to specified due process limits)
with regard to the arbitral procedures (918) and, absent agreement between the parties, the
tribunals authority to prescribe such procedures. (919) The basic approach of the UNCITRAL
Model Law to the arbitral proceedings is to define a basic set of procedural rules which
subject to a very limited number of fundamental, non-derogable principles of fairness, due
process and equality of treatment (920) the parties are free to alter by agreement. (921) The
Model Law also provides for judicial assistance to the arbitral process in prescribed respects,
including provisional measures, constitution of a tribunal and evidence-taking. (922)
The Model Law mandates the presumptive validity of arbitral awards, subject to a limited,
exclusive list of grounds for annulment of awards; these grounds precisely parallel those
available under the New York Convention for non-recognition of a foreign award (i.e., lack or
excess of jurisdiction, noncompliance with arbitration agreement, due process violations,
public policy, nonarbitrability). (923) The Model Law also requires the recognition and
P 136 enforcement of foreign awards (made both within and outside the recognizing state), again
on terms identical to those prescribed in the New York Convention. (924)
During the twenty-eight years since the Model Laws adoption (in 1985), significant
developments have occurred in the field of international commercial arbitration. In 1999, the
UNCITRAL Secretariat identified thirteen areas for study and potential modification of the
Model Law. (925) This list was culled and eventually produced proposals for amendments to
the Model Law concerning interim measures and the written form requirements for arbitration
agreements. (926)
In 2006, UNCITRAL adopted a limited number of amendments to the Model Law. (927) The
principal revisions were made to Article 2 (the addition of general interpretative principles),
(928) Article 7 (the definition and written form of an arbitration agreement), (929) Article 17 (the
availability of and standards for provisional measures from international arbitral tribunals
and national courts) (930) and Article 35 (procedures for recognition of awards). (931)
The 2006 revisions of the Model Law make useful improvements (for the most part) to the
original text, (932) but utilizing a drafting style that sits uneasily in the original Model Laws
relatively concise, elegant text. (933) The most important accomplishment of the revisions is
their tangible evidence of the ongoing process by which states and business representatives
P 137
seek to improve the international legal regime for the arbitral process. A few states have
revised their local adaptations of the Model Law to reflect its 2006 amendments. (934)
The Model Law and its revisions represent a significant further step, beyond the New York
Convention, towards the development of a predictable pro-arbitration legal framework for
commercial arbitration. Like the New York Convention, the Model Laws efficacy is ultimately
dependent upon its interpretation and application by national courts. But the Model Law goes
beyond the Convention by prescribing in significantly greater detail the legal framework for
international arbitration, by clarifying points of ambiguity or disagreement under the
Convention, (935) and by establishing directly applicable national legislation. At least as
important, the Model Law has set the agenda for reform of arbitration statutes, even in states
(like England and Switzerland) where it has not been adopted.
One of the central objectives of the UNCITRAL Model Law was to further encourage the uniform
treatment of international commercial arbitration in national courts, beyond that provided by
the New York Convention. In the words of the UNCITRAL Secretariat, [o]ne of UNCITRALs aims
through the Model Law was to reduce the divergences which might result from each States
46
interpretation of its obligations under the New York Convention. (936) At the same time, the
Model Laws uniform international terms and format were calculated to be accessible to
parties from diverse jurisdictions. Additionally, the Model Law drew on the experience of a
wide range of jurisdictions and authorities, in the UNCITRAL working groups and otherwise,
permitting an instrument that reflected a substantial body of international experience and
expertise.
Nearly 100 jurisdictions have adopted legislation based on the Model Law as of 2012, including
Australia, Bermuda, Brunei, Bulgaria, Canada, Costa Rica, Cyprus, Dominican Republic,
Germany, Georgia, Hong Kong, India, Ireland, Malaysia, Mauritius, Mexico, New Zealand,
Nigeria, Norway, Peru, the Russian Federation, Scotland, Singapore, Spain, Sweden, Tunisia,
Turkey and various U.S., Australian and Canadian jurisdictions. (937) Other nations are
considering its adoption.
The German Ministry of Justice explained some of the reasons for adopting the UNCITRAL
Model Law, during Germanys enactment of legislation derived predominantly from the Model
Law:
If we want to reach the goal that Germany will be selected more frequently as the seat of
international arbitrations in the future, we have to provide foreign parties with a law that, by
its outer appearance and by its contents, is in line with the framework of the Model Law that is
so familiar all over the world. This is necessary, in particular, in view of the fact that in
negotiating international contracts, usually not much time is spent on the drafting of the
P 138 arbitration agreement. The purpose of the Model Law, to make a significant contribution to the
unification of the law of international arbitration, can only be met if one is willing to prefer the
goal of unification instead of a purely domestic approach when it comes to the question of the
necessity and the scope as well as to the determination of the contents of individual rules.
(938)
These objectives accessibility, international uniformity and a tested structure have been
cited in other jurisdictions. For example, the Hong Kong Law Reform Commission concluded
that the Model Lawhas the advantage of making [Hong Kong] law internationally
recognizable and accessible and
[the] primary reason for recommending the adoption of the Model Lawis the need to make
knowledge of our legal rules for international commercial arbitration more accessible to the
international communityWe are convinced that it is much better [to avoid changes than]
trying to improve what is already the result of many years work by an international group of
experts. (939)
That said, it is noteworthy that the worlds leading international arbitration centers have
generally not adopted the UNCITRAL Model Law. That is true, in particular, of France,
Switzerland, England, the United States, the Netherlands, Belgium and Sweden. (940) In each
of these jurisdictions, legislatures (and arbitration practitioners) have extensively debated the
advisability of adopting the Model Law, but decided in favor of alternative solutions. Equally,
at least some distinguished practitioners consider the Model Law to be a conservative, overly-
detailed basis for national arbitration legislation. (941) Nonetheless, the Model Laws
contributions to the international arbitral process are enormous and it remains, appropriately,
P 139 the dominant model for national legislation dealing with international commercial
arbitration.
Importantly, decisions by courts in jurisdictions that have adopted the Model Law are
beginning to produce a reasonably uniform international body of precedent concerning its
meaning and application. (942) There are a variety of collections of these decisions, including
UNCITRALs 2012 Digest of Cases, (943) UNCITRALs CLOUT database (944) and the McGill
Model Arbitration Law Database. (945) It is safe to say that the importance of the Model Law to
international commercial arbitration will only increase in the future, as national court
decisions in Model Law jurisdictions contribute to a more comprehensive and detailed body of
precedent in the field.
Also importantly, decisions in jurisdictions that have adopted the UNCITRAL Model Law have
emphasized the close relationship between the Model Law and the New York Convention, with
authorities under one instrument informing decisions under the other. As one court reasoned:
The origin of some of [the Model Laws] key provisions, including Arts 35 and 36, may be traced
to provisions of the [New York Convention]Those considerations of international origin and
international application make imperative that the Model Law be construed without any
assumptions that it embodies common law concepts or that it will apply only to arbitral
awards or arbitration agreements that are governed by common law principles. The first of
those considerations makes equally imperative that so much of the text of the Model Law as
has its origin in the New York Convention be construed in the context, and in the light of the
object and purpose, of the New York Convention. (946)
These developments are of particular importance given the constitutional character of the
Convention (discussed above (947) ), which foresees and requires decisions by national courts
to give effect to the broad terms of the Contracting States under Articles II, III and V.
P 140
In many jurisdictions, it is in principle possible for parties to opt-out of the coverage of
the Model Law. Although national court authority is divided, the weight of better-reasoned
authority concludes that only express agreements excluding application of the Model Law will
47
have the effect of opting-out of the legislations coverage. (948)
[b] France (949)
France is one of the leading centers for international commercial arbitration in Europe and,
P 141
indeed, the world. More international arbitrations are reportedly seated in France than
any other European jurisdiction, (950) and French arbitration legislation and judicial decisions
have exceptional international importance. (951)
International arbitration in France is governed by the French Code of Civil Procedure,
principally as adopted in decrees promulgated on 14 May 1980, 12 May 1981 and 13 January
2011. These three decrees added (or revised) Articles 1442-1527 to the French Code of Civil
Procedure. (952) Articles 1442 to 1503 of the Code of Civil Procedure apply to domestic
arbitrations, while Articles 1504 to 1527 apply to international arbitrations. (953) Certain
provisions applicable to domestic arbitration apply by analogy to international arbitrations,
unless specifically provided otherwise by the parties (and subject to the specific rules
applicable to international arbitrations set forth in Articles 1504 to 1527 of the French Code of
Civil Procedure). (954)
The provisions of the Code of Civil Procedure have produced a strongly pro-arbitration legal
framework for international commercial arbitration. (955) That regime has been materially
assisted by the French judiciary and academic community (particularly Professors Berthold
Goldman, Philippe Fouchard, Pierre Mayer and Emmanuel Gaillard). For the past three
decades, both French courts and academics have interpreted French legislation, and
P 142 developed non-statutory doctrine, in a manner which has been highly supportive of the
international arbitral process. (956) This pro-arbitration approach was further enhanced by the
recent revision of the French arbitration regime by the decree dated 13 January 2011. (957)
French law emphatically recognizes the autonomy (or separability) doctrine, (958) and
provides for the presumptive validity and enforceability of arbitration agreements. (959) As
one classic French decision held:
by virtue of a substantive rule of international arbitration, the arbitration agreement is legally
independent of the main contract containing or referring to it, and the existence and
effectiveness of the arbitration agreement are to be assessed, subject to the mandatory rules
of French law and international public policy, on the basis of the parties common intention,
there being no need to refer to any national law. (960)
French law also expressly grants arbitrators the power (competence-competence) to decide
challenges to their jurisdiction. (961) Further, if claims which are allegedly subject to an
P 143
arbitration agreement are brought before the French courts, the Code of Civil Procedure
provides for dismissal of the judicial proceedings, except if the arbitral tribunal has not yet
been constituted and if the arbitration agreement is manifestly null or manifestly
inapplicable. (962)
With regard to the law applicable to the arbitration agreement, French courts have developed
a relatively unusual doctrine that arbitration agreements are autonomous, subject to specific
principles of international law, rather than to national law. (963) The nonarbitrability doctrine
has not been invoked to any significant extent by French courts, except in labor and consumer
matters. (964) In contrast to a number of developed jurisdictions, French courts do not appear
to have developed pro-arbitration rules of interpretation of arbitration agreements. (965)
French courts generally afford the parties to an arbitration agreement substantial autonomy
with respect to choice of law, procedural rules, selection of arbitrators and the like. (966) In
particular, French law expressly provides that arbitrators sitting in France are generally not
bound by local rules of civil procedure applicable in French courts, and have very wide
discretion in adopting arbitral procedures. (967) French law also confers the power to the
arbitral tribunal once it is constituted to order any provisional or conservatory measures
that it deems appropriate. (968)
The Code of Civil Procedure also grants French courts the power to assist in constituting an
arbitral tribunal, acting in the capacity of juge dappui (supporting judge), (969) and to
P 144
issue certain court-ordered provisional measures in aid of arbitration. (970) The efficacy of
Frances arbitration legislation is materially advanced through its centralization of most
international arbitration-related judicial proceedings in the Tribunal de Grande Instance in
Paris, which has developed a very substantial expertise in the field. (971) This is a significant
institutional advance, which could usefully be adopted in other jurisdictions.
The 2011 decree also reformed French law relating to recognition and enforcement of
international arbitral awards. Among other things, the Code of Civil Procedure permits actions
in French courts to annul international arbitral awards made in France, on limited grounds
(substantially similar to, and sometimes more liberal than, those provided for non-recognition
in the New York Convention). (972) The Code of Civil Procedure also provides for the recognition
and enforcement of international arbitral awards on the same grounds. (973)
[c] Switzerland (974)
P 145
Like France, Switzerland is one of Europes, and the worlds, leading centers for
international commercial arbitration. (975) Its arbitration legislation, and academic
community, have also been at the forefront of developments in the field of international
arbitration over the past century. (976) International arbitration in Switzerland is governed
48
primarily by a chapter of the federal Swiss Law on Private International Law. These statutory
provisions were significantly influenced by proposals and reviews of a committee of leading
Swiss arbitration practitioners and academics, (977) and entered into effect in 1989. Legislative
proposals for revision of the Swiss arbitration legislation have been advanced, recently
prompting a review of the legislation. (978)
The current version of the Swiss Law on Private International Law replaced, insofar as
international arbitration is concerned, the Swiss Inter-Cantonal Concordat. (979) The Swiss Law
on Private International Laws arbitration chapter is noteworthy for its brevity, comprising only
19 articles, drafted in brief, declarative terms. (980)
Under the Swiss Law on Private International Law, international arbitration agreements are
readily and effectively enforced. The Law expressly recognizes the separability doctrine (981)
P 146
and prescribes a specialized pro-arbitration choice-of-law regime, pursuant to which
international arbitration agreements, providing for arbitration in Switzerland, are
substantively valid provided they conform to either (a) the law chosen by the parties (where
the parties have made a specific choice of law governing the arbitration agreement); (b) the
law applicable to the dispute (in particular, that applicable to the principal contract); or (c)
Swiss law. (982)
The Swiss Law on Private International Law also expressly confirms the arbitrators
competence-competence, while generally permitting arbitral tribunals in Swiss-seated
arbitrations to resolve jurisdictional challenges in the first instance. (983) Swiss law also
provides for the arbitrability of a wide range of disputes (984) and the Swiss Federal Tribunal
has adopted a relatively expansive pro-arbitration rule of interpretation of the scope of
international arbitration agreements. (985) Where claims subject to an arbitration agreement
are asserted in Swiss courts, the parties arbitration agreement will be given effect by
dismissing judicial proceedings. (986)
Under the Swiss Law on Private International Law, the parties freedom to agree upon the
applicable procedural and substantive law is expressly recognized. (987) Judicial interference
by Swiss courts in the arbitral process (other than regarding the availability of provisional
measures and evidence-taking in aid of a tribunal) is narrowly limited. (988)
As to awards made in Switzerland, actions to annul are limited to grounds generally paralleling
those in the New York Convention. (989) Parties can agree to exclude even this review of
international awards, provided that none of the parties are domiciled in Switzerland. (990)
Swiss courts will recognize and enforce foreign awards without substantial judicial review,
subject only to the provisions of the New York Convention. (991) As in France, many judicial
functions relating to international arbitration are centralized, with the Swiss Federal Tribunal
generally having original jurisdiction in annulment actions. (992)
P 147 [d] England (993)
England is a significant center for international commercial arbitration, whose popularity has
increased over the past two decades. (994) The continuing spread of English as the language of
international business, and the development of London as an international financial and
business center, augur for continued growth in Englands importance as an arbitral center.
Both international and domestic arbitrations seated in England, Wales, or Northern Ireland are
governed by the English Arbitration Act, 1996, which provides a detailed (110 separate sections)
statement of English arbitration law. (995) The Act is based roughly on the UNCITRAL Model
Law, while introducing a number of formal and substantive innovations. (996) The Act departed
from the historic common law approach towards arbitration legislation (e.g., addressing
isolated issues, often in response to judicial decisions (997) ), in favor of greater codification
(derived in part from the Model Law). (998) Indeed, the Act has produced the somewhat
anomalous result that the cradle of common law jurisprudence now boasts a substantially
longer, more detailed statutory treatment of international arbitration law than any civil law
jurisdiction (and, specifically, France and Switzerland, whose arbitration statutes are
exceptional for their brevity (999) ).
P 148
The English Arbitration Act, 1996, was preceded in the 20th century by three other major
pieces of arbitration legislation, enacted in 1950, 1975 and 1979. (1000) The 1950 and 1975 Acts
established a highly-regulated legal regime for arbitration in England, with substantial scope
for judicial involvement in the arbitral process and review of arbitral awards. (1001) In
particular, English legislation prior to 1979 provided for a widely-criticized case stated
procedure, which had granted parties to arbitrations seated in England a mandatory right of
access to the English courts to review de novo issues of English law that arose in the course of
arbitral proceedings (without the possibility of exclusion agreements to contract out of such
review). (1002) The Arbitration Act, 1979, revised this historic approach and established a more
acceptable, if by no means ideal, regime for international arbitrations in England. (1003)
Under the Arbitration Act, 1979, agreements to arbitrate were presumptively enforceable in
England, including by means of a stay of national court litigation, and English courts imposed
few nonarbitrability constraints. Moreover, although not formally accepting the separability
doctrine, English courts did not in fact permit challenges to the parties underlying contract to
interfere unduly with the arbitral process. (1004) The 1979 Act amended, but did not eliminate,
the historic case stated procedure: the Act permitted parties to enter into exclusion
agreements, which waived the right to judicial review of the merits of the arbitrators award
49
(save for cases involving shipping, commodities and insurance). (1005) Where no such exclusion
agreement existed, more demanding judicial review persisted, (1006) which was the cause for
continuing criticism in many quarters. (1007)
In response to these (and other) criticisms, the English Arbitration Act, 1996, was adopted,
P 149 following an extensive consultation process with both English and foreign sources. (1008)
The Act was intended to and did significantly improve the legislative framework for
international arbitration in England. The Act compiled all prior English legislative provisions
relating to arbitration into a single statute, based in large part on the UNCITRAL Model Law,
and introduced a modern pro-arbitration legislative regime for international arbitration in
England. (1009)
The 1996 Act provides expressly for the validity of written (and some other) arbitration
agreements (as to both existing and future disputes) and for the stay of English court
proceedings concerning claims subject to valid arbitration agreements. (1010) The Act also
provides for the separability of arbitration agreements, (1011) and for recognition of the
arbitral tribunals competence-competence to rule on its own jurisdiction. (1012) Recent
English judicial decisions have interpreted the competence-competence doctrine broadly,
and adopted a robust pro-arbitration approach to the interpretation of international
arbitration clauses. (1013) The Act does not address the subject of nonarbitrable disputes or
claims, but English courts have adopted a narrow view of the doctrine. (1014)
The 1996 Act contains a number of provisions granting arbitrators broad freedom in conducting
arbitral proceedings, with a minimum of judicial interference. (1015) This freedom includes
wide authorization with respect to procedural and evidentiary matters, (1016) appointment of
experts, (1017) ordering the payment of security for the costs of the arbitration (1018) and
granting conservatory or provisional measures. (1019) Among other things, it is now clear that
P 150
arbitrators conducting arbitral proceedings seated in England are not obliged to apply
local rules of English civil procedure or evidence. (1020) The Act also provides for English
judicial assistance to arbitrations seated in England, including in taking evidence, (1021)
appointing or removing arbitrators (1022) and granting provisional measures in aid of
arbitration. (1023)
The changes introduced by the 1996 Act with regard to the arbitral procedures were described
in Lesotho Highlands Development Authority v. Impregilo SpA, where the House of Lords quoted
with approval the remarks of Lord Wilberforce during the legislative process:
I have never taken the view that arbitration is a kind of annex, appendix or poor relation to
court proceedings. I have always wished to see arbitration, as far as possible, and subject to
statutory guidelines no doubt, regarded as a freestanding system, free to settle its own
procedure and free to develop its own substantive law yes, its substantive law. I have always
hoped to see arbitration law moving in that direction. That is not the position generally which
has been taken by English law, which adopts a broadly supervisory attitude, giving substantial
powers to the court of correction and otherwise.Other countries adopt a different attitude
and so does the UNCITRAL Model Law. The difference between our system and that of others
has been and is, I believe, quite a substantial deterrent to people to sending arbitrations here.
How then does this Bill stand in that respect?I find that on the whole, although not going
quite as far as I should personally like, it has moved very substantially in this direction. It has
given to the court only those essential powers which I believe the court should have; that is,
rendering assistance when the arbitrators cannot act in the way of enforcement or procedural
steps, or, alternatively, in the direction of correcting very fundamental errors. (1024)
With respect to awards made in England, the Act departs entirely from the historic case
stated procedure and provides only limited grounds for annulling international arbitral
awards made in England. The Acts grounds for annulling awards are now limited to lack of
substantive jurisdiction of the tribunal, limited categories of serious irregularity in
procedural matters and limited appeals on points of law. (1025) Appeals on legal issues may
only be brought with leave of the court and may be excluded by agreement between the
parties; (1026) English courts have held that appeal for error of law is impliedly excluded
where the parties have chosen a substantive applicable law other than English law or where
the parties have chosen a set of institutional rules, such as the ICC Rules, which excludes the
P 151 right of appeal to the extent possible. (1027) The Act also provides for the recognition and
enforcement of foreign arbitral awards, primarily by incorporating the provisions of the New
York Convention. (1028)
[e] United States of America (1029)
The United States is an important center for international arbitrations (1030) and U.S.
companies are even more important participants in the international arbitral process. (1031)
Despite general concerns about the U.S. legal system (focused on jury trials, discovery, punitive
damages and delays), the United States has remained reasonably popular as an international
arbitral seat over the past three decades. (1032)
International arbitration in the United States is governed by an outwardly complex, but
generally adequate, legal framework. Most important issues relating to international
arbitration agreements and arbitral awards are governed primarily by U.S. federal (rather than
state) law. In particular, the Federal Arbitration Act (or FAA) sets forth a basic statutory
regime for arbitration, with separate chapters for both domestic arbitration (Chapter 1) and
international arbitrations subject to the New York and Inter-American Conventions (Chapters 2
50
and 3). (1033) The FAA has the distinction and burden of being the oldest surviving
arbitration statute in any major jurisdiction. (1034) Additionally, although limited, the role of
state law in the enforcement of international arbitration agreements is occasionally important.
(1035)
[i] Unenforceability of Arbitration Agreements Under U.S. Law in 19th Century
P 152
As discussed above, for the better part of the 19th century, many U.S. courts were hostile
towards agreements to arbitrate future disputes. Even more so than English courts (where
legislative reforms had intervened), some U.S. judges refused to grant specific enforcement of
arbitration agreements, and permitted their revocation at any time. (1036) This grudging
approach towards arbitration agreements reflected a variety of factors, including concern
about private agreements ousting the courts of jurisdiction, skepticism about the adequacy
and fairness of the arbitral process and suspicions that arbitration agreements were often the
product of unequal bargaining power. (1037)
As discussed above, these attitudes began to shift during the late 19th century, particularly in
some U.S. state court decisions. (1038) Following sustained lobbying from the business
community, New York enacted an arbitration statute in 1920 designed to reverse common law
hostility to arbitration and to render arbitration agreements enforceable in New York courts.
(1039) The New York statute provided a model for what became federal legislation dealing with
arbitration the Federal Arbitration Act, originally titled the United States Arbitration Act.
(1040)
The FAA was strongly supported by the U.S. business community, which saw litigation as
increasingly expensive, slow and unreliable: (1041) The clogging of our courts is such that the
delays amount to a virtual denial of justice, (1042) and the proposed FAA was intended to
enable business men to settle their disputes expeditiously and economically. (1043) With
virtually no opposition or amendment, the bill that became the FAA was unanimously adopted
in 1925 by both the House of Representatives and the Senate. (1044)
The Acts stated purpose was to reverse the hostility which U.S. courts had developed towards
P 153
arbitration agreements in commercial matters, and in particular the common law rules
that arbitration agreements were revocable or unenforceable as contrary to public policy.
(1045) According to the FAAs legislative history:
The need for the law arises from an anachronism of our American law. Some centuries ago,
because of the jealousy of the English courts for their own jurisdiction, they refused to enforce
specific agreements to arbitrate upon the ground that the courts were thereby ousted from
their jurisdiction. This jealousy survived for so long a period that the principle became firmly
embedded in the English common law and was adopted with it by the American courts. The
courts have felt that the precedent was too strongly fixed to be overturned without a
legislative enactment. (1046)
This historical description was not entirely accurate, omitting to note that English law had in
fact developed reasonably effective mechanisms for enforcing arbitration agreements, while
many American courts (and legislatures) had failed to do so. (1047) Nevertheless, this
explanation captured one of the key statutory objectives of the FAA: the fundamental
conception underlying the law is to make arbitration agreements valid, irrevocable, and
enforceable. (1048)
[ii] Federal Arbitration Act: Chapter One
As noted above, the FAA currently consists of three chapters: (a) the domestic FAA, 9 U.S.C.
1-16, enacted in 1925 and applicable to agreements and awards affecting either inter-state
or foreign commerce; (1049) (b) the New York Conventions implementing legislation, 9 U.S.C.
201-208, enacted in 1970 and applicable only to awards and agreements falling within the
Convention; (1050) and (c) the Inter-American Conventions implementing legislation, 9 U.S.C.
301-307, enacted in 1990 and applicable only to awards and agreements falling under the
Inter-American Convention. (1051)
The FAA is remarkably brief and, by contemporary standards, relatively skeletal; among other
things, it omits provisions on numerous topics addressed in most contemporary arbitration
legislation in other developed jurisdictions. (1052)
In true common law fashion, however, U.S. courts have developed an extensive body of judicial
authority which, while sometimes inconsistent and often not readily accessible to non-U.S.
P 154 parties or practitioners, provides an adequate legal regime for international arbitrations.
Most observers would agree, however, that the regime for international arbitration in the
United States would be materially improved by enactment of the UNCITRAL Model Law or
comparable contemporary international arbitration legislation. (1053)
The centerpiece of the domestic FAA is 2, which provides that arbitration agreements
involving inter-state and foreign commerce (1054) shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract. (1055) In turn, 3 and 4 of the Act provide the principal mechanisms for enforcing
2s general rule that arbitration agreements are presumptively valid. Section 3 requires any
court of the United States to stay proceedings before it, if they involve issues that are
referable to arbitration, while 4 requires United States district court[s] to issue orders
compelling arbitration of such issues. (1056)
51
Other sections of the FAA address limited aspects of the arbitral process. Section 5 grants
district courts the power to appoint arbitrators if the parties either have not done so or have
agreed upon an appointment procedure which proves unworkable. (1057) Section 7 of the Act
authorizes the issuance of subpoenas (orders to provide evidence) by arbitral tribunals, and
permits U.S. district courts to issue compulsory process to assist tribunals in taking evidence.
(1058) In turn, 9, 10 and 11 of the FAA provide that arbitral awards may be confirmed as U.S.
judgments, subject to only a limited number of enumerated exceptions. (1059) These sections
also set forth procedures for confirming, vacating, or correcting awards subject to the Act.
(1060)
It is notable how many subjects are not directly addressed by the FAA. The statute does not
expressly deal with such matters as the separability presumption, the allocation of
competence between U.S. courts and arbitrators to resolve disputes over arbitration
agreements (competence-competence), challenging and removing arbitrators, provisional
relief, the conduct of arbitral proceedings, interlocutory judicial review, choice of law, form of
the award and costs. Notable also is the relative brevity of the FAA on most of the issues which
it does address, such as the grounds and procedures for challenging either arbitration
agreements or awards. (1061)
P 155 As discussed below, most international arbitration agreements and arbitral awards are
subject to either the New York Convention or Inter-American Convention, and, as a
consequence, either Chapter Two or Three of the U.S. FAA. (1062) In the relatively unusual cases
where non-Convention agreements or awards are at issue in U.S. courts, the better view is that
Chapter One of the FAA (which applies to foreign, as well as interstate, commerce) is
applicable. (1063)
[iii] Federal Arbitration Act: Chapters Two and Three
As discussed above, the United States did not ratify the New York Convention for more than a
decade after its signing (from which the United States abstained). (1064) After U.S. ratification
of the Convention in 1970, Congress enacted amendments to the FAA, in a second chapter to the
Act, implementing the Convention. (1065) In ratifying the New York Convention, Congress was
motivated (as with the domestic FAA in 1925) by a desire for more efficient dispute resolution:
It is important to note that arbitration is generally a less costly method of resolving disputes
than is full-scale litigation in the courts. To the extent that arbitration agreements avoid
litigation in the courts, they produce savings not only with the parties to the agreement but
also for the taxpayers who must bear the burden for maintaining our court system. (1066)
In addition, Congress sought to facilitate the development of a stable and effective system of
international commercial dispute resolution, on which U.S. companies expanding into global
markets could rely, in order to promote international trade and investment. (1067)
Like the original domestic Act, the FAAs second chapter is remarkably brief. It provides that
arbitration agreements shall be enforceable, and contains provisions authorizing U.S. courts to
compel arbitration pursuant to such agreements (including in foreign arbitral seats). (1068) The
Acts second chapter also provides for the recognition and enforcement of awards that are
subject to the Convention, simply by incorporating the Conventions terms by reference. (1069)
U.S. federal courts are granted broad jurisdiction, including by removal from state courts,
P 156 over actions arising under the Convention (for the purpose of ensuring uniform and
effective enforcement of the Convention in U.S. courts). (1070)
In 1990, the United States enacted implementing legislation for the Inter-American Convention,
codified as a third chapter to the FAA. (1071) The chapter incorporates much of the New York
Conventions implementing legislation by reference, (1072) adding additional provisions to
deal with the Inter-American Commercial Arbitration Commissions rules (1073) and the
relationship between the New York and Inter-American Conventions. (1074) Like the domestic
FAA, at the heart of the third chapter are provisions requiring the enforcement of specified
arbitration agreements and awards, together with very briefly-described procedures for doing
so. (1075)
There is considerable overlap among the various sources of U.S. federal law affecting
international arbitration agreements and awards. Most obviously, arbitral awards and
agreements falling under the New York Convention are governed by both the Convention and
the second chapter of the FAA (which implements the Convention).
In addition, however, these awards and agreements are potentially governed by the first,
domestic chapter of the FAA, which is expressly incorporated by 208 of the FAA to the extent
it is not in conflict with the Convention. (1076) This potentially-confusing structure has the
effect that domestic U.S. arbitration law (and judicial authority) serves as a gap filler of sorts,
although the precise terms of this mechanism are not statutorily-defined and have not been
definitively articulated by U.S. courts. (1077)
Beyond its express terms, the FAA has provided the basis for a fairly expansive federal
common law of arbitration; (1078) this body of judicial authority also applies, more
P 157 broadly than in domestic matters, in the context of international arbitrations subject to the
New York and Inter-American Conventions. (1079) That body of law is of uncertain scope, but it
clearly extends to such subjects, discussed below, as the separability presumption, the
competence-competence doctrine, the interpretation and presumptive validity of
international arbitration agreements, the parties autonomy with regard to arbitral
52
procedures, the tribunals procedural powers and the availability of provisional relief in
connection with arbitrations. (1080) Importantly, as also discussed below, the FAA and the
federal common law rules derived from the FAA override (or preempt) inconsistent state (and
foreign) law rules governing the same subjects, particularly rules which seek to deny effect to
agreements to arbitrate and arbitral awards. (1081)
Despite the relatively spartan, and archaic, drafting and ad hoc origins of the FAAs three
chapters, U.S. courts have generally interpreted the Act in a fashion which is supportive of the
international arbitral process. For the most part, U.S. courts have been even more supportive
of the international arbitral process than of domestic U.S. arbitrations. (1082)
With respect to arbitration agreements, U.S. courts have repeatedly embraced the separability
doctrine, (1083) have defined in considerable and influential detail the allocation of
competence between courts and arbitrators to decide disputes over the formation, validity
and interpretation of arbitration agreements, (1084) have strongly affirmed the presumptive
validity of arbitration agreements (subject only to limited, neutral exceptions) (1085) and have
fashioned a decidedly pro-arbitration approach to the interpretation of arbitration
agreements. (1086)
With respect to the arbitral process, U.S. courts have emphasized the parties freedom to agree
P 158
upon arbitration rules and procedures, (1087) the arbitrators discretion in presiding over
the arbitral process and adopting arbitral procedures (1088) and the very limited scope for
interlocutory judicial review of the arbitrators decisions. (1089) U.S. judicial decisions have
also provided (with some exceptions) for court-ordered provisional measures (1090) and
disclosure, (1091) as well as judicial support for constitution of the arbitral tribunal. (1092)
Finally, with respect to arbitral awards, U.S. courts have permitted vacatur (annulment) of
awards made in the United States on limited grounds, generally paralleling those in the New
York Convention, but with some courts also permitting a very limited degree of substantive
judicial review of the merits of the arbitrators award (under the so-called manifest disregard
doctrine). (1093) With regard to foreign awards, U.S. courts have held that such awards are
presumptively valid and enforceable, subject only to the New York Conventions specified
exceptions. (1094)
There have been repeated suggestions in the past decades for revision or replacement of the
FAA, particularly as regards international arbitration. (1095) Critics have argued that the Act
fails to provide the statutory framework which exists in most developed arbitral centers,
placing the United States in an unattractive position vis--vis such jurisdictions (1096) and
failing to provide (particularly foreign) parties with clear guidance regarding the content of
U.S. law. (1097)
Others have responded that U.S. law regarding arbitration, and particularly international
arbitration, is highly developed, through judicial decisions, (1098) and that legislation would
likely produce a worse (not better) result. (1099) Business leaders in particular fear that
congressional legislation on arbitration could open a Pandoras box of special interests and
result in damage to the pro-arbitration legal framework currently existing in U.S. courts. (1100)
P 159
Although these fears are real, the inadequacies of the FAA as a statutory framework for
international arbitration are strikingly apparent and detract from both the efficacy of the
arbitral process and the attractiveness of the United States as an arbitral seat.
Legislation has been introduced in recent Congresses which would amend the domestic FAA (in
particular to render domestic consumer and employee disputes nonarbitrable). (1101)
Although predictions about legislative processes are notoriously risky, it continues to appear
unlikely that this legislation will be adopted, even in domestic matters. (1102) At least for the
present, legislative reform meaningfully affecting international commercial arbitration in the
United States appears unlikely.
One avenue for reform of U.S. international arbitration law would be through judicial
interpretation of the New York Convention (and Inter-American Convention), and the FAA.
Although there is contrary authority, (1103) most considered analyses have held that Article II
of the Convention is self-executing in U.S. courts (i.e., that these provisions of the Convention
have direct application). (1104) Relying on the Convention, U.S. courts have addressed, and can
be expected to continue to address, at least some of the lacunae and deficiencies in the FAA
(e.g., with regard to the allocation of jurisdictional competence, the selection of the arbitral
seat, the annulment of awards and the removal of arbitrators). Indeed, U.S. courts have already
done so, including in the development of choice-of-law rules for the law governing the
P 160
arbitration agreement (1105) and the application of the nonarbitrability doctrine in
international disputes. (1106)
[iv] U.S. State Arbitration Laws
The role of the FAA within the U.S. legal system, and in particular in relation to the laws of the
50 states, can appear complex. (1107) The basic principles can nonetheless be readily
summarized.
In principle, a U.S. federal statute will override, or preempt, inconsistent U.S. state law
substantive rules addressing the same subjects. (1108) Accordingly, insofar as the FAA was
intended to address particular substantive topics or general fields, it will preempt state law
addressing those topics or fields. (1109)
53
The U.S. Supreme Court has held that the domestic FAA contains no express preemptive
provision, nor does it reflect a congressional intent to occupy the entire field of arbitration.
(1110) At the same time, the Court has also repeatedly declared that the FAA creates a
P 161
body of substantive federal rules relating to arbitration: in enacting the FAA, Congress
declared a national policy favoring arbitration and withdrew the power of the states to require
a judicial forum for the resolution of claims which the contracting parties agreed to resolve by
arbitration. (1111) As a consequence, it is well-settled that U.S. state law rules which single out
and purport to render inter-state and international arbitration agreements invalid, illegal, or
revocable are preempted by the FAA. (1112) As noted above, it is also settled, in both domestic
and international contexts, that the FAA and federal law establish the presumptive
separability of the arbitration agreement, (1113) provide the exclusive standards for
interpreting arbitration agreements (1114) and for confirming and vacating arbitral awards.
(1115)
Nonetheless, in a purely domestic context, issues concerning the formation of arbitration
agreements, as well as at least some issues of substantive and formal validity, are governed
primarily by generally-applicable state contract law. (1116) In contrast, there is substantial
lower court and other authority holding that federal common law, derived from the New York
Convention, governs the formation and validity of international (as distinguished from
domestic) arbitration agreements. (1117) These issues of preemption under U.S. law are
complex and are addressed in greater detail below. (1118)
Apart from these complexities, U.S. state law is applicable to arbitration agreements and
awards when but only when the Convention and the FAA (and the federal common law
derived from both sources) are inapplicable. That may be the case, for example, because the
P 162 agreement or award does not affect inter-state or foreign commerce (which is by
definition virtually impossible in international commercial matters).
State law may also be applicable to issues bearing on arbitration that federal statutory and
common law do not directly or indirectly address. Although the issue is unsettled, that may
include the availability of court-assisted discovery, provisional relief, or consolidation. (1119)
Similarly, state law may apply to the (relatively infrequent) enforcement of foreign arbitral
awards, not falling within either the New York or Inter-American Conventions, in the United
States. (1120)
Every state of the Union has adopted legislation dealing with commercial arbitration. Many
states have enacted some version of the Uniform Arbitration Act. First proposed in 1924 by
the Conference of Commissioners on Uniform State Laws, (1121) the current, revised text of the
Act was adopted by the Conference in 2000, making substantial changes to earlier versions.
(1122)
The Uniform Arbitration Act has been enacted in some 39 states and the District of Columbia,
(1123) and has influenced arbitration legislation in other U.S. states. (1124) The original Uniform
Arbitration Act was substantially similar to the FAA. Among other things, it required specific
enforcement of arbitration agreements (as to both existing and future disputes) (1125) and
provided for the recognition and enforcement of awards with only limited judicial review.
(1126) The Revised Uniform Arbitration Act usefully adds a number of additional provisions,
P 163 roughly paralleling the UNCITRAL Model Law, concerning the constitution of the arbitral
tribunal, (1127) provisional measures, (1128) the arbitral procedure, (1129) the form of awards
(1130) and immunity of arbitrators. (1131)
Nevertheless, a number of U.S. states have not adopted the Uniform Arbitration Act, and a few
have rejected its generally pro-arbitration lead (although most or all state laws disfavoring
the arbitral process are preempted by the FAA). Thus, several state statutes do not permit
arbitration of various categories of claims, such as tort, real property and insurance claims
(although, again, federal law preempts these statutory provisions). (1132) Other U.S. states have
enacted legislation requiring that arbitration clauses be conspicuously identified (e.g., printed
in capital letters, placed on the front of any contract, etc.). (1133) And some state statutes do
not provide for the same general rule of enforceability and limited judicial review of arbitral
awards that the FAA and Uniform Arbitration Act require. (1134)
In addition, especially in recent years, some U.S. states have enacted legislation designed to
fill perceived gaps left in the U.S. federal framework for international arbitration. (1135) In
particular, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Maryland, North
Carolina, Ohio, Oregon and Texas have adopted statutes purporting to deal comprehensively
P 164 with the subject of international arbitration. (1136) The extent to which these statutes are
preempted by the FAA and federal common law principles remains unclear. To date, however,
both these statutes and state law more generally have played a distinctly secondary role in
the international arbitral process. (1137)
One potential exception to this general rule was the Supreme Courts decision in Volt
Information Sciences, Inc. v. Board of Trustees. (1138) There, a California choice-of-law clause in
the parties purely domestic contract was interpreted, in vaguely-defined circumstances, to
incorporate state procedural rules relating to arbitration, and the FAA was held not to preempt
this result. Subsequent U.S. Supreme Court decisions, (1139) and most lower court decisions,
(1140) have interpreted Volt narrowly, holding that general choice-of-law clauses ordinarily do
not encompass state arbitration laws and that the FAA preempts state law rules that impede
the enforcement of arbitration agreements.
54
[2] Less Supportive National Arbitration Legislation
Some nations regarded international commercial arbitration with a mixture of suspicion and
hostility during much of the 20th century. (1141) This hostility arose from a reluctance to
compromise perceived principles of national sovereignty, a disdain for principles of party
autonomy and doubts concerning the fairness, neutrality and efficacy of contemporary
international commercial arbitration. (1142) Although historic distrust for international
P 165
arbitration has waned substantially in recent decades, it has not entirely disappeared
and continues to influence legislation, judicial decisions and other actions in some countries.
(1143)
Developing countries in many parts of the world refused for much of the 20th century to
enforce agreements to arbitrate future disputes. This was particularly true in Latin America
and much of the Middle East. (1144) In the words of one leading commentator, there is a
definite ambivalence in the attitudes of developing countries towards international
commercial arbitration. (1145)
Some developing states took the position that international arbitration agreements were an
unjustifiable infringement upon national sovereignty, which was to be vigorously resisted.
(1146) In many cases, arbitration agreements were valid only if they concerned an existing (not
a future) dispute, which was the subject of a submission agreement committing the parties to
resolve the dispute by arbitration. (1147)
In Latin America, the Calvo doctrine (first formulated in 1896) declared among other things that
foreign nationals were mandatorily subject to the jurisdiction of local courts, which could not
be ousted by international arbitration agreements. (1148) The doctrine was incorporated into
national legislation and constitutional instruments, which not infrequently rendered
international arbitration agreements invalid. (1149) Political declarations from developing
states also reflected the continuing hostility of many developing states towards international
P 166 arbitration, even well into the 20th century. A 1971 declaration of the Andean Commission
reflected this perspective, declaring that:
[No agreement concerning foreign investment shall] withdraw possiblecontroversies from
the national jurisdiction of the recipient country. (1150)
The same principles were later reflected in various declarations during the 1970s associated
with the New International Economic Order. (1151)
Against this background, contemporary arbitration legislation in some developing states still
does not provide effective enforcement of agreements to arbitrate future disputes; such
provisions are sometimes either revocable at will, unenforceable in broad categories of
disputes, or subject to idiosyncratic form or substantive requirements. (1152) Similarly, in a
number of states, international arbitral awards are subject to either de novo judicial review or
to similarly rigorous scrutiny on other grounds. (1153) Finally, some national courts have been
prepared to interfere in the international arbitral process for example, by purporting to
remove arbitrators, to resolve preliminary issues, to bar foreign lawyers from appearing, or to
enjoin arbitrations. (1154)
Nonetheless, during the last several decades, a number of states which historically distrusted
international arbitration have ratified the New York Convention and/or enacted legislation
supportive of the arbitral process. (1155) These include India, China, Saudi Arabia, Argentina,
Algeria, Bahrain, Brazil, Tunisia, Turkey, Nigeria, Peru and (at least for a time) Russia, Ecuador
and Venezuela. Although there is often little practical experience with the application of
P 167 arbitration legislation in such states, these statutes have the potential for providing a
more stable, predictable framework for international arbitration.
Unfortunately, even where national law is superficially supportive of the international arbitral
process, some national courts have been quick to hold arbitration agreements or awards
invalid or to interfere with the arbitral process. That is particularly true when national courts
are requested to do so by local companies, state entities, or individuals. (1156) Moreover, the
early years of the 21st century have witnessed a potential resurgence of historic ideological
opposition to some aspects or applications of the international arbitral process, with a few
states (1157) and some commentators (1158) condemning the legitimacy and fairness of the
process. It remains to be seen how substantial and long-lived this trend is, although it has thus
far gained little currency outside a limited number of states.
*****
Despite resistance in a few quarters, most national arbitration statutes enacted during the
past several decades have adopted robustly pro-arbitration legal regimes that give effect to
the terms of the New York Convention and support the international arbitral process. These
legislative regimes are of essential importance to the contemporary international arbitral
process, enabling parties reliably to resolve their disputes efficiently in a neutral, centralized
forum. Equally, the continuing development and refinement of these legislative regimes is vital
to the ongoing improvement and adaptation of the arbitral process to changing conditions.
[C] Overview of Leading International Arbitration Institutions and Rules

As discussed above, a central objective of contemporary international arbitration conventions
and national arbitration legislation has been to give effect to commercial parties
international arbitration agreements, including agreements on arbitral procedures. (1159) A
P 168
55
P 168
vital means by which parties exercise their autonomy in this context is through the
inclusion, in their commercial contracts, of arbitration agreements incorporating institutional
or ad hoc arbitration rules.
International arbitration can be either institutional or ad hoc. There are vitally important
differences between these two alternatives. Institutional arbitrations are conducted pursuant
to institutional arbitration rules, almost always overseen by an administrative authority with
responsibility for various aspects relating to constituting the arbitral tribunal, fixing the
arbitrators compensation and similar matters. (1160) In contrast, ad hoc arbitrations are
conducted without the benefit of an appointing and administrative authority or (generally)
preexisting arbitration rules, subject only to the parties arbitration agreement and applicable
national arbitration legislation.
[1] Institutional Arbitration
A number of organizations, located in different countries, provide institutional arbitration
services, often tailored to particular commercial or other needs. As indicated above, the best-
known international commercial arbitration institutions are the International Chamber of
Commerce (ICC), the American Arbitration Association (AAA) and its International Centre for
Dispute Resolution (ICDR), the London Court of International Arbitration (LCIA), Stockholm
Chamber of Commerce Arbitration Institute (SCC), the Singapore International Arbitration
Center (SIAC), the Hong Kong International Arbitration Centre (HKIAC) and the Vienna
International Arbitral Centre (VIAC). Each of these organizations is described below. (1161)
Also active in the field are the Japan Commercial Arbitration Association (JCAA), the World
Intellectual Property Organization (WIPO), the Swiss Chambers Arbitration Institution, the
German Institution of Arbitration (DIS), the Chinese International Economic and Trade
Arbitral Center (CIETAC), the Cairo Regional Centre for International Commercial Arbitration
(CRCICA), the Australian Centre for International Commercial Arbitration (ACICA), the Kuala
Lumpur Regional Centre for Arbitration (KLRCA), the Indian Council of Arbitration (ICA) and
JAMS International. There are also a number of less widely-known regional or national arbitral
institutions, as well as the International Centre for the Settlement of Investment Disputes
(ICSID), dealing with investment disputes, (1162) and industry-specific institutions. (1163)
P 169 These (and other) arbitral institutions have promulgated sets of procedural rules that
apply where parties have agreed to arbitration pursuant to such rules. (1164) Among other
things, institutional rules set out the basic procedural framework and timetable for the arbitral
proceedings. Institutional rules also typically authorize the arbitral institution to select
arbitrators in particular disputes and resolve challenges to arbitrators (that is, to serve as
appointing authority), to designate the place of arbitration, to fix or influence the fees
payable to the arbitrators and (sometimes) to review the arbitrators awards to reduce the risk
of unenforceability on formal grounds. Each arbitral institution has a staff (with the size varying
significantly from one institution to another) and a decision-making body.
It is fundamental that arbitral institutions do not themselves arbitrate the merits of the
parties dispute. This is the responsibility of the particular individuals selected as arbitrators.
(1165) Arbitrators are virtually never employees of the arbitral institution, but instead are
private persons selected by the parties. (1166) If parties cannot agree upon an arbitrator, most
institutional rules provide that the host institution will act as an appointing authority, which
chooses the arbitrators in the absence of the parties agreement. (1167)
[2] Ad Hoc Arbitration
Ad hoc arbitrations are not conducted under the auspices or supervision of an arbitral
institution. Instead, parties simply agree to arbitrate, without designating any institution to
administer their arbitration. Ad hoc arbitration agreements will sometimes choose an
arbitrator (or arbitrators), who is (or are) to resolve the dispute without institutional
supervision or assistance. (1168) The parties will sometimes also select a preexisting set of
procedural rules designed to govern ad hoc arbitrations. For international commercial
disputes, the United Nations Commission on International Trade Law (UNCITRAL) has
published a commonly-used set of such rules, the UNCITRAL Arbitration Rules. (1169)
Where ad hoc arbitration is chosen, parties will sometimes designate an appointing authority,
(1170) that will select the arbitrator(s) if the parties cannot agree (or if their chosen arbitrator is
unable to serve) and that will consider any subsequent challenges to members of the tribunal.
If the parties fail to select an appointing authority, then the national arbitration statutes of
P 170 many states permit national courts to appoint arbitrators (although many practitioners
regard this as less desirable than selection by an experienced appointing authority). (1171)
[3] Relative Advantages and Disadvantages of Institutional and Ad Hoc Arbitration
Both institutional and ad hoc arbitration have strengths. Institutional arbitration is conducted
according to a standing set of procedural rules and supervised, to a greater or lesser extent, by
a professional staff. (1172) This reduces the risks of procedural breakdowns, particularly at the
beginning of the arbitral process, and of technical defects in the arbitration proceedings and
arbitral award. The institutions involvement can be particularly valuable on issues relating to
the appointment of arbitrators, the resolution of challenges to arbitrators, the selection of an
arbitral seat and fixing the arbitrators fees, where professional, specialized staff provide
better service than ad hoc decisions by national courts with little, if any, experience or
56
institutional resources for such matters. (1173)
Equally important, many institutional rules contain provisions that make the arbitral process
more reliable and expeditious. This includes provisions in institutional rules concerning
competence-competence, separability, provisional measures, consolidation and joinder,
disclosure, arbitrator impartiality, corrections and challenges to awards, replacement of
arbitrators and truncated tribunals, costs and the like. (1174) Less directly, an arbitral
institution lends its standing to any award that is rendered, which may enhance the likelihood
of voluntary compliance and judicial enforcement. (1175)
On the other hand, ad hoc arbitration is not infrequently said to be arguably more flexible, less
expensive (since it avoids sometimes substantial institutional fees) and more confidential
than institutional arbitration; despite this, the provisions of institutional rules sometimes
make institutional arbitrations more flexible (by minimizing the involvement of national
courts), more confidential (by including express confidentiality obligations) and less expensive
(by providing institutional oversight of arbitrator fees). Although there is room for debate, most
experienced international practitioners fairly decisively prefer the more structured,
predictable character of institutional arbitration, and the benefits of institutional rules and
appointment mechanisms, at least in the absence of unusual circumstances arguing for an ad
hoc approach. (1176)
[4] UNCITRAL Arbitration Rules (1177)
P 171 The UNCITRAL Arbitration Rules occupy an important position, both historically and in
contemporary arbitration practice. In 1973, UNCITRAL proposed the preparation of model
arbitration rules. (1178) The objective of the UNCITRAL Rules was to create a unified,
predictable and stable procedural framework for international arbitrations without stifling the
informal and flexible character of the arbitral process. (1179) The Rules aimed ambitiously to
be acceptable to common law, civil law and other legal systems, as well to capital-importing
and capital-exporting interests. (1180) The Rules were promulgated by Resolution 31/98,
adopted by the General Assembly of the United Nations on 15 December 1976. (1181)
UNCITRAL reviewed the usage of the Rules during the first decade of the 21st century and, after
extensive consultations and study, undertook a revision of the Rules in 2006. (1182) On 25 June
2010, UNCITRAL published extensive revisions of the original UNCITRAL Rules (the first revision
since their adoption). (1183)
P 172 The UNCITRAL Rules are designed for use in ad hoc international commercial arbitrations.
When the Rules were adopted in 1976, they were the only set of rules available specifically for
that purpose. Although alternatives now exist, (1184) most states, which generally will have
supported the Rules in the United Nations debates, and their state-owned entities, often find
it difficult to object to their use in an arbitration agreement or arbitral proceeding. (1185)
Like most institutional rules, the UNCITRAL Rules prescribe a basic procedural framework for
the arbitration. This includes provisions for initiating an arbitration, (1186) selection and
challenge of arbitrators, (1187) conduct of the arbitral proceedings (1188) (including, in the 2010
Rules, the joinder of third persons (1189) and issuance of interim relief (1190) ), choice of
applicable law or rules of law, (1191) awards (1192) and costs of the arbitration. (1193) The Rules
also contain provisions confirming the presumptive separability of the arbitration clause from
the underlying contract, and the tribunals power (competence-competence) to consider
jurisdictional objections. (1194) Under the Rules, where the parties have not agreed on an
appointing authority, (1195) the Secretary General of the Permanent Court of Arbitration serves
a sui generis function, of designating a suitable appointing authority. (1196)
The UNCITRAL Rules have contributed significantly to the harmonization of international
P 173 arbitration procedures. A number of arbitral institutions have either adopted the
UNCITRAL Rules entirely, or have substantially adopted the Rules in prescribing a set of local
institutional rules. (1197) Although designed principally for international trade disputes, the
Rules are not limited to commercial matters and have been used successfully in both state-to-
state and investor-state arbitrations. (1198)
[5] Leading International Arbitral Institutions
If institutional arbitration is desired, the parties must choose a particular arbitral institution
and refer to it in their arbitration clause. (1199) Parties ordinarily rely on one of a few
established international arbitral institutions. This avoids the confusion and uncertainty that
comes from inexperienced arbitrator appointments and administrative efforts by
inappropriatelyselected institutions.
All leading international arbitral institutions are prepared to, and routinely do, administer
arbitrations sited almost anywhere in the world, and not merely in the place where the
institution itself is located. (1200) There is therefore no need to select an arbitral institution
headquartered in the parties desired arbitral seat (e.g., the LCIA or VIAC can readily
administer an arbitration seated in Paris or New York, while the AAA can administer
arbitrations seated in Vienna or London).
A number of organizations provide institutional arbitration services. Some of the best known of
these organizations are described briefly below. (1201)
The services rendered by professional arbitral institutions come at a price, which is in addition
to the fees and expenses of the arbitrators. Every institution has a fee schedule that specifies
57
what that price is. The amounts charged by institutions for particular matters vary significantly,
as does the basis for calculating such fees. For example, some institutions use hourly charges
while others charge based upon a percentage of the amount in dispute.
All leading arbitral institutions periodically revise their institutional arbitration rules. Like the
P 174 rules themselves, these revisions are the product of extensive consultations among
leading practitioners, academics, business users and arbitrators. (1202) These consultative
processes are aimed at refining the institutional rules for the purpose of making arbitration
agreements and awards more enforceable and arbitral proceedings more efficient. As with the
refinement of national arbitration legislation, (1203) this is an example of the ongoing
adaptation and improvement of the international arbitral process in response to criticisms,
consumers needs and changing conditions.
[a] International Chamber of Commerce International Court of Arbitration (1204)
The ICCs International Court of Arbitration was established in Paris in 1923 (in parallel with
efforts by the international business community to secure adoption of the Geneva Protocol, the
FAA and other legislative reforms). (1205) The ICC is generally described as the worlds
P 175 leading international commercial arbitration institution, with less of a national character than
any other leading arbitral institution. (1206)
The ICCs annual case load was well above 300 cases filed per year during much of the 1990s,
and, by 2011 had reached nearly 800 cases filed per year. (1207) Most of these cases are
international disputes, many involving very substantial sums. The ICCs caseload includes
disputes between parties from around the world, with parties outside Western Europe being
involved in more than 50% of all ICC cases in many recent years. (1208) In 2012, as in other
years, nearly 10% of the ICCs caseload involved states or state-related entities. (1209)
The ICC has promulgated a set of ICC Rules of Arbitration (which are periodically revised, most
recently in 1998 and 2012 (1210) ) as well as the ICC Rules of Optional Conciliation, the ICC Rules
for Expertise, the ICC Dispute Board Rules and the ICC Rules for a Pre-Arbitral Referee
Procedure. (1211) The ICC Rules are published in English, French, Spanish, German, Russian,
Arabic, Chinese, Japanese, Italian, Polish, Portuguese and Ukrainian.
Under the ICC Rules, the ICC (through the International Court of Arbitration (ICC Court)) is
extensively involved in the administration of individual arbitrations. Among other things, the
ICC Court and its Secretariat are responsible for service of the initial Request for Arbitration;
(1212) fixing and receiving payment of advances on costs of the arbitration by the parties; (1213)
confirming the parties nominations of arbitrators; (1214) appointing arbitrators if a party
defaults or if the parties are unable to agree upon a presiding arbitrator or sole arbitrator;
(1215) considering challenges to the arbitrators including on the basis of lack of independence;
(1216) reviewing and approving so-called Terms of Reference (a unique procedure under the
ICC Rules), which define the issues and procedures for the arbitration; (1217) reviewing a
P 176
tribunals draft award for formal and other defects; (1218) and fixing the arbitrators
compensation. (1219)
The ICCs International Court of Arbitration is not, in fact, a court, and does not itself decide
disputes or act as an arbitrator. Rather, the ICC Court is an administrative body that acts in a
supervisory and appointing capacity under the ICC Rules. (1220) It maintains a sizeable legal
and administrative staff of some 35 persons, from more than a dozen nationalities, organized
as a Secretariat. Specialized teams of counsel and administrative staff are assigned to cases
originating from particular geographic, linguistic and/or cultural regions. As detailed above,
the Secretariat is substantially involved in the day-to-day supervision of arbitrations.
ICC arbitrations can be (and are) seated almost anywhere in the world. In 2012, for example,
ICC arbitrations were conducted in 59 different countries. (1221) Over the last decade, an
increasing number of ICC arbitrations have been seated outside of Europe, particularly in Asia
and the Pacific, Brazil and the Middle East. Nonetheless, by far the most common seats for ICC
arbitrations remain France, Switzerland, England, other Western European states, Singapore
and the United States. (1222)
One of the ICCs principal functions is the appointment of arbitrators and the resolution of
challenges to arbitrators. (1223) As discussed below, the ICC Rules prescribe procedures and
substantive standards for the exercise of these responsibilities (which are supplemented by a
substantial body of administrative practice and experience). (1224) The ICC does not maintain
P 177
a list of potential arbitrators and instead relies heavily on the experience of its
Secretariat and also on the ICCs National Committees in making arbitrator appointments.
(1225)
The ICC Rules are broadly similar to the UNCITRAL Rules (1226) (and many other leading
institutional rules) in providing a broad procedural framework for the arbitral proceedings.
This includes provisions for filing a request for arbitration and other initial written pleadings,
(1227) constituting an arbitral tribunal, (1228) conducting the arbitration (1229) and making an
award. (1230) As with most other institutional rules, only a skeletal procedural framework is
provided, with the parties and arbitrators being accorded substantial freedom to adopt
procedures tailored to particular disputes. Unlike other institutional rules, the ICC Rules
require both a Terms of Reference (1231) and procedural timetable to be adopted by the
Tribunal at the outset of proceedings (1232) and that an award be rendered within six months
(absent extensions). (1233) Also, the ICC Rules provide for the ICC Court to scrutinize draft
58
awards before they are finalized and executed by the arbitrators. (1234)
The ICCs administrative fees are based on the amount in dispute between the parties. With
respect to arbitrators fees, the ICC Rules fix both a minimum and a maximum amount which
can be charged, based on the amount in dispute. (1235) With respect to administrative fees
and charges, the ICC Rules provide for a sliding scale of charges that is again based upon the
amount in dispute between the parties. The ICC Rules require that the parties pay an advance
on the costs of the arbitration calculated by the ICC Court. (1236) The advance on costs is
equally divided between the claimant and the respondent, although one party may pay the
full amount in order to enable the arbitration to proceed if the other party defaults. (1237)
The ICCs Rules have been criticized as expensive and cumbersome. (1238) The 1998 and 2012
amendments to the Rules reflected a concerted effort to increase the efficiency, speed and
effectiveness of ICC proceedings. (1239) In particular, provisions were added to the ICC Rules in
P 178
the 2012 amendments addressing multiple contracts and parties, (1240) case management
conferences (1241) and emergency arbitrator procedures. (1242) It remains to be seen how
responsive to users needs these amendments, and the administration of ICC cases, will be.
Despite continuing criticisms about cost and efficiency, there are reasonable grounds for
believing that the ICC will continue to be the institution of preference for many sophisticated
commercial users.
Related to the ICC Rules of Arbitration are the ICCs ADR Rules. (1243) These Rules provide
(where agreed by the parties) a skeletal procedure for non-binding conciliation.
The ICC also operates the International Centre for Expertise (founded in 1976). (1244) The Centre
operates under rules last revised in 2003 (the ICC Rules for Expertise), (1245) which provide for
non-binding expert opinions or reports to be made, upon the request of parties (and following
opportunities for submissions to the designated expert). (1246) Parties are free to provide for
greater binding effect for such recommendations, but doing so requires a specific contractual
provision. (1247)
[b] London Court of International Arbitration (1248)
P 179 Founded in 1892, the LCIA is, by many accounts, the second most popular European
institution in the field of international commercial arbitration. (1249) The LCIAs annual
caseload, which is generally increasing, exceeded 220 cases filed in recent years. (1250)
The LCIA has made a determined, and increasingly successful, effort in recent years to
overcome perceptions that it is a predominantly English organization. It has appointed five
successive non-English presidents, and its vice-presidents include a number of non-English
practitioners. In recent years, fewer than 20% of the LCIAs cases have involved any U.K. parties.
(1251) More generally, in 2009, the LCIA launched the LCIA India (1252) and has recently entered
into an agreement to establish a new arbitration centre in Mauritius, LCIA-Mauritius
International Arbitration Centre (MIAC). It also has a partnership with the Dubai International
Financial Centre (DIFC).
The LCIA administers a set of arbitration rules, the LCIA Arbitration Rules, which were
extensively revised in 1998. Although identifiably English in drafting style, and to a lesser
extent in procedural approach, the LCIA Rules generally provide a sound basis for
international dispute resolution, particularly for parties desiring common law procedures (e.g.,
disclosure, security for costs). Broadly speaking, LCIA arbitrations are administered in a less
comprehensive fashion than ICC cases. Among other things, the LCIA Rules contain no Terms of
Reference procedure and do not provide for institutional review of draft awards. (1253) The
P 180 LCIAs administrative fees are calculated based upon the time spent by LCIA personnel (as
of 2014, 250/hour for the Registrar and 150 or 175/hour for the Secretariat, depending on the
activity). (1254)
In contrast to most other institutional rules, the LCIA Rules set out the powers of an LCIA
arbitral tribunal in some detail. (1255) The powers to order discovery (1256) and security for
legal costs (i.e., a deposit or bank guarantee securing the estimated amounts which an
unsuccessful claimant would be liable to reimburse to a successful respondent for its costs of
legal representation) (1257) are included among the arbitrators powers.
A particular procedural advantage of the LCIA Rules is their provision for expedited formation
of the arbitral tribunal. (1258) Consistent with many other institutional rules, the LCIA Rules
also permit intervention of third parties in LCIA arbitrations (subject to prescribed conditions).
(1259)
Unlike the ICC, the LCIA maintains a database of arbitrators from which it selects arbitrators,
taking into consideration the nature and circumstances of the dispute, the nationality, location
and languages of the parties and the number of parties. (1260) Historically, the LCIAs
appointments of arbitrators consisted predominantly of members of the English bar and
retired judiciary, in large part because many LCIA cases have involved contracts governed by
English law. In cases not involving English law, the LCIAs selections of arbitrators are more
international.
The LCIA fixes the arbitrators fees according to the time expended by the arbitrators at the
hourly rates published by the LCIA and fixed by agreement between the arbitrators and the
LCIA. (1261) Unusually, the LCIA publishes (in a redacted form) decisions of the LCIA Court on
challenges to arbitrators. (1262)
59
Most LCIA arbitrations are seated in London. In the absence of agreement by the parties to the
contrary, London will be selected by the LCIA as the arbitral seat under Article 16(1) of the LCIA
Rules. (1263)
[c] American Arbitration Association and International Centre for Dispute Resolution (1264)
P 181 The AAA was founded in 1926, following the merger of two New York arbitration institutions
(themselves founded in the early 1920s). (1265) The AAA remains based in New York (with
approximately 35 regional offices throughout the United States). (1266) The AAA is the leading
U.S. arbitral institution, and reportedly handles one of the largest numbers of arbitral disputes
in the world. (1267)
The primary arbitration rules administered by the AAA are the AAA Commercial Arbitration
Rules. (1268) These rules are used in a large majority of domestic U.S. commercial arbitrations.
(1269) Numerous other sets of AAA arbitration rules also exist, in particular for specialized
types of disputes, and can be selected in the parties arbitration agreement. (1270)
Non-U.S. parties have sometimes been reluctant to agree to arbitration against U.S. parties
under any of the available versions of the AAA rules, fearing parochial predisposition and
unfamiliarity with international practice. Over the past two decades, the AAA has taken a
number of steps aimed at overcoming this image and enhancing its position as an
international institution.
In 1991, the AAA promulgated the AAA International Arbitration Rules, designed specifically for
international arbitrations (which have since evolved into the current ICDR Rules). (1271) In 1996,
P 182
the AAA established an International Centre for Dispute Resolution (ICDR), with
exclusive responsibility for administering the AAAs international arbitrations. (1272)
The ICDR has an administrative facility in New York (having recently closed its administrative
facility in Dublin, Ireland) and administers ICDR cases seated outside the United States with
the support of a Senior Vice President located in Europe. The ICDR recently entered into
cooperative arrangements with the Chambers of Commerce of Colombia and Peru and
Bahrains Ministry of Justice and Islamic Affairs (to establish the Bahrain Chamber for Dispute
Resolution-AAA (BCDR-AAA). The ICDR also entered into a joint venture with SIAC, opening an
Asia Center in Singapore.
The ICDR International Dispute Resolution Procedures (ICDR Rules) provide the applicable
set of AAA arbitration rules for use in international disputes (except where the parties have
otherwise agreed). (1273) This alters the previous position under AAA Rules, in which the
primarily domestic AAA Commercial Arbitration Rules provided the default institutional rules
when parties to international agreements had agreed to AAA arbitration without designating a
particular set of AAA rules; absent contrary agreement, the current fallback rules in
international disputes where the parties have agreed to AAA arbitration (without specifying a
particular set of AAA arbitration rules) are the ICDR Rules. (1274)
The AAA/ICDRs international rules are based principally on the UNCITRAL Rules, and were
intended to permit a maximum of flexibility and a minimum of administrative supervision.
They are periodically revised, most recently in 2013. (1275) In addition to the official English
version, the ICDR Rules are available in Spanish, French, Portuguese, Chinese and German.
P 183 Under all versions of AAA rules, the AAA/ICDR administrative staff plays a less significant
supervisory role than does the ICC Secretariat. Among other things, the AAA/ICDR does not
receive or serve initial notices or requests for arbitration; does not require or review a Terms of
Reference; and plays a less significant role in setting the arbitrators fees. (1276) The AAAs
administrative charges are based on the amount in dispute. With respect to the arbitrators
fees, arbitrators fix their own rates, which are published on their resumes for parties to
consider when receiving a list of potential arbitrators. Compensation under the AAA/ICDR
international rules is ultimately based on the arbitrators amount of service, taking into
account their stated rates and the size and complexity of the case. (1277)
The ICDR/AAAs international rules allow the parties to agree on any procedure for appointing
arbitrators. (1278) In practice, most AAA appointments are based on a list procedure, whereby
names drawn from the AAAs rosters are presented to the parties for expressions of preference.
(1279) The ICDR maintains a list of some 650 arbitrators and mediators, including many non-
U.S. practitioners. Although the AAAs arbitrator selections have historically been dominated
by U.S. practitioners, the ICDR increasingly seeks to appoint arbitrators with international
experience in appropriate international cases. (1280) Nonetheless, some users have found the
AAA/ICDR appointment procedures and selections patchy, with less involvement of
experienced international practitioners than other leading institutions.
The AAAs case load has increased significantly over recent decades. In 1997, it reported a total
case load of 11,130 cases (under its Commercial Rules), rising to 20,711 cases (under its
Commercial Rules) in 2007. Similar growth is reported in international cases. The AAA reports
increases in its international case load from 453 cases filed in 1999 to 996 new international
filings in 2012. (1281) On any measure, these statistics place the AAA among the worlds most
active international arbitral institutions.
[d] Permanent Court of Arbitration (1282)
P 184 The Permanent Court of Arbitration (PCA), established by the 1899 and 1907 Hague
Conventions for the Pacific Settlement of International Disputes, is focused particularly on
60
international arbitrations involving states and state-like entities. (1283) As discussed above,
the PCA was not established as a court, with a standing panel of judges. (1284) Rather, as
originally established, the PCA was a registry for inter-state arbitrations conducted pursuant to
the Hague Conventions, which provided a number of institutional administering services. In an
often quoted phrase, the PCA has been described in its original form as a permanent
framework for temporary tribunals. (1285)
The PCAs original functions did not involve serving as an appointing authority. Instead, the PCA
was only responsible for maintaining a list of arbitrators who might be appointed to tribunals
in future arbitrations under the Hague Conventions (if states chose to agree to such
arbitrations), with the appointment of arbitrators reserved to states (either as parties to the
dispute or as a neutral appointing authority). (1286) At the same time, even as originally
conceived, the PCA provided a wider range of administrative services than many modern
arbitral institutions; these services included assistance in negotiation and drafting submission
agreements (1287) and serving as intermediary between the parties and tribunal. (1288)
Since the 1970s, the PCA has been called upon to act as a traditional appointing authority with
increasing frequency and now routinely serves as an institutional administering body for
arbitrations conducted under the PCA Arbitration Rules and ad hoc arbitration agreements.
Additionally, and at least as important, the PCA serves as the default institution to select
P 185
appointing authorities under the UNCITRAL Rules a function that has assumed increasing
importance in recent decades in both international commercial arbitrations and investment
arbitrations. (1289)
The PCA consists of three organs: (1) an Administrative Council, which is comprised of the
representatives of Member States that are party to the Hague Conventions and which serves as
the governing body of the PCA; (1290) (2) the Members of the PCA, which is a list of potential
arbitrators chosen by the Member States (each Member State being entitled to appoint up to
four individuals); and (3) an International Bureau, which functions as a registry or secretariat
and provides administrative support to arbitral tribunals administering arbitrations under the
PCA Rules or where the PCA is registry. (1291)
The Hague Conventions were negotiated with disputes between states in mind and the PCAs
early activity was confined to this area. As discussed above, the PCA enjoyed very modest
usage during its first 70 years of existence (when only 25 arbitrations and three conciliations
were submitted to PCA tribunals). (1292) By comparison, some 200 non-PCA inter-state
arbitrations were conducted during the same time period (1900 to 1970), often pursuant to ad
hoc submission agreements or compromissory clauses in bilateral treaties. (1293)
In a striking turn-around, the PCAs caseload has increased materially since 1995, in part
because of the PCAs interpretation of Article 26 of the 1899 Convention (and Article 47 of the
1907 Convention), which permits the PCA to place its premises and its staff at the disposal of
the Signatory Powers for the operations of any special Board of Arbitration, as allowing the
PCA to administer disputes between states and non-state actors. (1294) The PCAs
Administrative Council also expanded the PCAs remit to cover disputes involving international
organizations, and disputes relating to natural resources and/or the environment. (1295)
As a consequence, the PCAs caseload has significantly changed, both in size and composition.
From 2000-2012 more than 150 arbitrations were brought to the PCA, in comparison to only 34
cases administered in the organizations first 100 years (1899 1999). (1296) The substantial
P 186 majority of these new filings were either international commercial or investment
arbitrations, although there has also been growth in classic inter-state proceedings. (1297) Out
of 87 arbitrations administered in the course of 2012, six were state-to-state disputes (the
highest level in the PCAs history), while 54 were investor-state disputes under bilateral or
multilateral investment treaties; 27 disputes arose under contracts or other agreements to
which at least one party was a state, state-controlled entity, or intergovernmental
organization. (1298)
The PCAs International Bureau provides skilled support services for arbitrations conducted
under PCA auspices. In particular, PCA legal counsel provide administrative, research and
logistical support for tribunals hearing disputes administered by the PCA. Additionally, the PCA
frequently provides hearing facilities at the Peace Palace in The Hague, which is particularly
appropriate in arbitration involving one or more states. (1299)
During the 1990s, the PCA promulgated four sets of procedural rules for various categories of
arbitrations, all of which were based on the 1976 UNCITRAL Rules: Optional Rules for Arbitrating
Disputes between Two States (1992); Optional Rules for Arbitrating Disputes between Two
Parties of Which Only One Is a State (1993); Optional Rules for Arbitration Involving
International Organizations and States (1996); and Optional Rules for Arbitration between
International Organizations and Private Parties (1996). The PCA has also devised ad hoc
procedural regimes, such as rules of procedure for arbitration pursuant to Annex VII of the
United Nations Convention on the Law of the Sea (UNCLOS). All of these various rules have
been used relatively infrequently (with most parties to PCA-administered arbitration instead
electing to use the UNCITRAL Rules). (1300)
In 2012, the PCA published a new set of Rules, which effectively consolidate and replace the
PCAs existing four sets of rules (although the older rules were not withdrawn and technically
remain in existence). (1301) By combining the PCAs existing sets of rules into a single new
instrument, the drafting committee sought to streamline the process of PCA arbitrations and to
P 187
61
ensure that multi-party disputes can be submitted more easily to PCA arbitration. (1302)
The 2012 PCA Rules are similar to the 2010 UNCITRAL Rules, providing greater flexibility to the
parties than the PCAs earlier rules, but are also specifically tailored to suit cases involving
states, state-controlled entities and intergovernmental organizations. Among other things, the
2012 PCA Rules provide that a states or state-entitys adoption of the Rules in a dispute with a
non-state party constitutes a waiver of immunity from jurisdiction (although immunity from
enforcement requires an express waiver); (1303) provide for three-person tribunals by default,
but also allow the parties to agree upon one or five arbitrators (the latter being common in
inter-state arbitrations); (1304) permit the parties to select arbitrators that are not Members of
the PCAs Court; (1305) allow for the joinder of third parties and multi-party appointment of
arbitrators; (1306) contain provisions on the conduct of site visits; (1307) offer a model
arbitration clause for inclusion in treaties; (1308) and provide for application of international
law in state-to-state disputes, the rules of intergovernmental organizations where relevant and
the 2010 UNCITRAL Rules in investor-state disputes. (1309)
The 2012 PCA Rules depart from the 2010 UNCITRAL Rules by providing that the PCA Secretary
General will review the tribunals determination of its own fees and expenses and of those of
any tribunal-appointed experts in all cases, rather than only upon the request of a party; (1310)
and that the International Bureau, rather than the arbitral tribunal, will determine the amount
payable for arbitrators fees and expenses and hold the parties deposits. (1311)
One of the PCAs most significant functions is under the UNCITRAL Rules. As discussed below,
the Secretary General of the PCA serves a sui generis function under the UNCITRAL Rules, of
designating a suitable appointing authority for the appointment of arbitrators when the
parties to an agreement to arbitrate under the UNCITRAL Rules have not agreed upon the
arbitrators or an appointing authority. (1312) The 2010 Rules also provide that the parties may
designate the Secretary-General of the PCA directly as appointing authority. (1313)
Under these provisions of the UNCITRAL Rules, the PCA has frequently designated appointing
authorities in international commercial and investment disputes and, in a number of cases,
acted directly as appointing authority itself. Among other things, the PCA has considered and
resolved a substantial number of challenges to arbitrators, with its decisions frequently being
P 188 made public. (1314) In so doing, the PCA has played a significant and increasingly
important role in the formulation of standards of independence and impartiality under the
UNCITRAL Rules. (1315)
[e] Swiss Chambers Arbitration Institution (1316)
Switzerlands major cities have historically maintained local Chambers of Commerce and
Industry which have administered institutional arbitrations, including international
arbitrations. (1317) On 1 January 2004, the leading Swiss Chambers of Commerce adopted a
unified set of arbitration rules, the Swiss Rules of International Arbitration (Swiss Rules or
Swiss International Arbitration Rules), and designated an Arbitration Committee to oversee
arbitrations conducted under the Swiss Rules. (1318) A 1 June 2012 revision of the Swiss Rules
consolidated the administrative structure by replacing the Arbitration Committee oversight
with the Swiss Chambers Arbitration Institution, an independent association that, similar to
the ICC, consists of a Court of Arbitration and Secretariat. (1319)
P 189
Arbitrations under the Swiss Rules benefit from the pro-arbitration Swiss Law on Private
International Law (1320) and from the availability in Switzerland of substantial numbers of
potential arbitrators with impressive arbitration experience. The Swiss Rules are particularly
detailed, containing provisions regarding competence-competence, (1321) confidentiality,
(1322) expedited procedures, (1323) emergency and interim relief (including ex parte
measures), (1324) arbitrator immunity (1325) and consolidation and joinder. (1326) Between
2004 and 2012, 659 cases were submitted to the Swiss Chambers, with 89 new cases submitted
in 2012. The vast majority of cases submitted to the Swiss involved parties from Western
Europe (74% during the period 2004-2012). (1327)
[f] Vienna International Arbitral Centre (1328)
The Vienna International Arbitral Centre (VIAC) was established in 1975. (1329) VIAC is based in
Vienna, Austria and the overwhelming majority of the arbitrations that it administers are sited
in Vienna (although VIAC can also administer arbitrations sited elsewhere). (1330) VIAC
conducts only international arbitrations, as mandated by the VIAC Rules requirement that at
least one of the parties be of non-Austrian origin or that the dispute be of an international
character. (1331) VIAC reported the filing of 70 new cases in 2012, compared with 75 cases in
2011 and 68 cases in 2010. (1332)
VIAC arbitrations are administered in accordance with the Vienna Rules of Arbitration and
Conciliation (VIAC Rules). The VIAC Rules were revised in 2006 (1333) in order to take into
account changes to Austrian arbitration legislation. (1334) More recent revisions in 2013
P 190
preserved the essential features of the 2006 VIAC Rules while introducing amendments to
modernize and streamline the rules procedures. (1335)
VIAC was originally conceived primarily as a venue for East/West economic disputes during the
Cold War. These origins are reflected in the fact that a significant proportion of VIACs caseload
still includes parties from Central and Eastern Europe or Russia.
[g] Stockholm Chamber of Commerce Arbitration Institute
62
Founded in Stockholm in 1917, the Stockholm Chamber of Commerce Arbitration Institute
(SCC) developed into a substantial forum for disputes involving parties from the USSR and
(subsequently) China during the 1970s and 1980s. (1336) The SCC remains a preferred foreign
arbitral institution for Chinese state-owned entities, with China-related disputes comprising a
sizeable portion of the SCCs current caseload. (1337) The SCC registered 177 new arbitrations in
2012, which included 63 expedited arbitrations, 2 emergency arbitrations, 5 ad hoc arbitrations
and 3 arbitrations under the UNCITRAL Rules. (1338)
The SCC Rules were extensively revised in 2007 and again in 2010, with the addition of the
Emergency Arbitrators Rules. (1339) The SCCs Rules leave most aspects of arbitral procedure to
the tribunal. (1340) The SCC typically appoints members of the Swedish bar, with international
experience, or former Swedish judges, as arbitrators. SCC arbitrations are usually seated in
Sweden, although other places of arbitration can be chosen.
[h] Singapore International Arbitration Centre
P 191 The Singapore International Arbitration Centre (SIAC) was established in 1991, initially for
disputes arising out of construction, shipping, banking and insurance contracts. More recently,
consistent with Singapores increasing importance as an international commercial and
financial center, SIAC has seen a wider range of disputes, including energy, financial, joint
venture, sales and other matters. (1341) In 2013, 259 new arbitrations were filed with SIAC,
compared with 239 new filings in 2012 and 188 new cases in 2011. (1342) Arbitrations filed in
2013 involved parties from 50 jurisdictions, with the largest number of non-Singaporean parties
coming from India and China. (1343)
The SIAC Rules are based largely on the UNCITRAL Rules, and were revised in 2007, 2010 and
2013. (1344) The SIAC has made a determined, and successful, effort in recent years to
internationalize its procedures, (1345) including by appointing a Board of Directors,
Secretariat, Court and President (Dr. Michael Pryles) with broad international experience.
[i] Hong Kong International Arbitration Centre (1346)
The HKIAC was established in 1985 and had developed into Asias leading international
arbitration institution prior to hand-over of the British administration. On 1 September 2008,
HKIAC adopted the HKIAC Administered Arbitration Rules, which are based on the UNCITRAL
Rules (although parties are free to agree upon alternative procedural regimes). (1347) The
HKIAC Rules were revised in 2013, in response to users comments and developments in other
P 192
institutional rules. (1348) The HKIAC enjoys a substantial caseload (293 cases filed in 2012,
275 in 2011 and 291 in 2010). (1349)
The Hong Kong Arbitration Ordinance (which is based on the UNCITRAL Model Law) provides a
broadly favorable arbitration regime. Potential users have sometimes voiced concerns about
future stability and judicial independence in Hong Kong, and some parties remain reluctant to
designate the HKIAC, particularly in disputes involving Chinese parties. Nonetheless, the HKIAC
receives favorable reviews from a number of informed observers, and concerns about Hong
Kongs future have moderated somewhat, at least in cases not involving Chinese state-owned
(or similar) entities.
[j] Chinese International Economic and Trade Arbitration Center (1350)
The China International Economic and Trade Arbitration Center (CIETAC) was established by
the Chinese government in 1956. Also known as the Court of Arbitration of China Chamber of
International Commerce, CIETAC is based in Beijing, with offices in a number of other Chinese
cities. CIETAC enjoys a privileged position in Chinese arbitration and is focused overwhelmingly
on Chinese-related disputes. In particular, the 1995 Chinese Arbitration Law gave CIETAC (and
the China Maritime Arbitration Commission) a de facto monopoly on international arbitrations
seated in China. (1351)
During the 1980s, CIETAC played only a relatively minor role, even in Chinese arbitrations,
P 193
handling only some 40 cases a year. (1352) During recent years, however, CIETACs caseload
has reportedly increased substantially, with 1,060 arbitrations filed in 2012 (of which, 331 were
foreign-related and 729 were domestic arbitrations). (1353)
CIETAC frequently revises its Rules, most recently in 1998, 2000 and 2012. (1354) The revisions
have sought to bring CIETACs practices into line with other major international arbitration
institutions, by affording greater party autonomy, transparency and efficiency. Unlike early
versions of the CIETAC Rules, which required the parties to appoint arbitrators from CIETACs
Panel of Arbitrators, recent versions of the Rules permit the parties, by agreement, to choose
non-CIETAC arbitrators. (1355) Nevertheless, CIETAC reportedly continues to promote a Sino-
centric Panel of Arbitrators. (1356)
Under the 2012 CIETAC Rules, parties are able to choose either adversarial or inquisitorial
proceedings. (1357) The Rules impose a six month time limit from the date of composition of
the tribunal to issuance of an award (1358) and stricter requirements have been introduced for
disclosure of conflicts, as well as challenges to, and replacement of, arbitrators. (1359)
Other important changes to the CIETAC Rules include the parties ability to agree to CIETAC
arbitration outside China and to modify the CIETAC Rules and/or incorporate the rules of other
arbitral institutions. (1360) Arbitral tribunals have also been granted enhanced powers under
the CIETAC Rules, including the power in some cases to decide on its own jurisdiction (a power
63
previously reserved exclusively for CIETAC itself). (1361) The 2012 Rules have retained CIETACs
supervision over cases, including the practice of reviewing draft awards. (1362) In terms of fees,
both the administrative fees charged by CIETAC and the arbitrators fees are based upon the
amount in dispute between the parties. (1363)
Despite recent changes, experienced foreign users remain very skeptical about CIETAC
arbitration, particularly in matters involving disputes between Chinese and non-Chinese
parties. Uncertainty regarding CIETACs management and independence has, in the eyes of
P 194 many observers, deepened in recent years. (1364) Except in the most routine types of
commercial dealings, with limited amounts in dispute, foreign investors and other foreign
parties doing business related to China will continue to insist for the foreseeable future on
third-country arbitral institutions. Chinese state entities often suggest that they are unable to
accept any arbitral institution other than CIETAC, but experience indicates that this is not
correct.
[k] Cairo Regional Centre for International Commercial Arbitration
The Cairo Regional Centre for International Commercial Arbitration (Cairo Centre or CRCICA)
is a non-profit, international organization established in Egypt in 1979 under the auspices of
the Egyptian Government and the Asian-African Legal Consultative Organization. The Cairo
Centre administers both domestic and international arbitrations; the Centre received 66 new
arbitration filings in 2011 (19 of which were international arbitrations). Between 1979 and May
2012, the Cairo Centre handled some 834 arbitrations. (1365)
The Cairo Centre directs its services primarily towards Asian-African trade and investment
disputes, particularly in the Arab world. The CRCICA Rules were revised in 1998, 2000, 2002,
2007 and, most recently, in 2011, when the Cairo Centre adopted the UNCITRAL Rules, as revised
in 2010, with only minor changes addressing the Cairo Centres role as an arbitral institution
and appointing authority. (1366) The Cairo Centre reportedly maintains a list of more than
1,000 international arbitrators (drawn primarily from the Asian-African region).
[l] World Intellectual Property Organization (1367)
The Arbitral Centre of the World Intellectual Property Organization (WIPO) was established in
Geneva, Switzerland in 1994. WIPO and its Arbitration Rules are designed particularly for
intellectual property disputes, although other types of controversies are not excluded from use
of the WIPO Rules and facilities. WIPOs Arbitration Rules contain detailed provisions dealing
with issues that are of particular importance in intellectual property disputes. These include
provisions relating to discovery, disclosure and protection of trade secrets, and confidentiality
of arbitral proceedings. (1368)
As of 2014, the WIPO Arbitration and Mediation Centre had administered over 370 arbitrations,
mediations and expert determinations, covering a broad range of intellectual property
disputes (including patent, copyright, software licenses and research and development
P 195 matters). (1369) WIPO also administers a very large number of domain names disputes.
(1370)
[m] Court of Arbitration for Sport
The Court of Arbitration for Sport (CAS) was established in Lausanne, Switzerland, in 1984, and
is sometimes termed the Supreme Court of world sport. (1371) Most major sports governing
bodies use the CASs arbitration facilities, including the International Olympic Committee,
(1372) International Association of Athletics Federations, (1373) Fdration Internationale de
Football Association (FIFA), (1374) and the Union of European Football Associations (UEFA).
(1375) North American sports leagues are notable exceptions. (1376)
Arbitration procedure at CAS is governed by the Code of Sports-Related Arbitration and
Mediation Rules (CAS Rules). (1377) The Code provides for three different forms of arbitration
proceedings an ordinary (first instance) arbitration procedure, (1378) an appeals procedure,
(1379) and special ad hoc procedures. (1380) Ad hoc Divisions are established on site at sporting
competitions and, in principle, are able to render decisions within 24 hours of an application
being filed. (1381) Parties to CAS arbitrations must select from a list of arbitrators published by
CAS. (1382)
CASs case load has grown considerably over the last decade from 42 new cases in 2001 to 374
in 2012. (1383) The majority of cases relate to appeals of FIFA decisions or disputes over doping
violations. (1384) Other cases cover a mixture of appeals relating to selection and eligibility
decisions, governance issues, match-fixing and challenges to the granting of hosting rights for
championships. (1385) Approximately 10% of cases can be characterized as international
commercial cases. (1386) The efficiency and integrity of CAS arbitrations, including in highly-
scrutinized settings such as the Olympics, is a striking illustration of adaptation of the arbitral
process to new forms of dispute resolution, using procedures tailored to particular settings and
needs.
[n] German Institution of Arbitration
P 196 The German Arbitration Committee was originally founded in 1920 to offer arbitration
services in Germany. (1387) In 1992, the Committee merged with the German Arbitration
Institute to form the German Institution of Arbitration (Deutsche Institution fr
Schiedsgerichtsbarkeit or DIS) to provide nationwide arbitration services in Germany for all
64
sectors of the economy. (1388)
The DIS Arbitration Rules (published in English translation as well as an authoritative German
text) are intended for both national and international arbitrations. Much of the DISs caseload
consists of domestic disputes, although Germanys enactment of the UNCITRAL Model Law in
1998 (1389) may have helped somewhat to attract greater international usage. In 2012,
approximately 29% of the DIS annual caseload of 125 arbitrations involved non-German
parties. (1390)
[o] Japanese Commercial Arbitration Association
The Japan Commercial Arbitration Association (JCAA) and the Japan Shipping Exchange (JSE)
are Japans only permanent arbitral institutions. (1391) The JCAA was founded by the Japan
Chamber of Commerce and Industry in 1950, with a particular focus on international
commercial disputes.
The JCAA has adopted the JCAA Commercial Arbitration Rules, most recently revised in
February 2014, (1392) which have been used principally for Japan-related international
transactions. In 2011 19 new cases were registered with the JCAA. (1393) In general, the majority
of the JCAAs cases have involved at least one non-Japanese party. (1394)
[p] Australian Centre for International Commercial Arbitration
The Australian Centre for International Commercial Arbitration (ACICA) was established in
1985 on the initiative of the Institute of Arbitrators in Australia. The ACICA promulgated new
rules, based on the UNCITRAL Rules, in 2005, which were revised in 2011 (among other things
incorporating emergency arbitrator provisions). (1395)
The ACICA enjoys a growing reputation, particularly in arbitrations involving parties from the
P 197
Asia/Pacific region, providing a credible alternative to either HKIAC or SIAC. The ACICA can
also act as appointing authority under the UNCITRAL Rules. (1396) More than 30 new cases were
filed with ACICA in 2011. (1397)
[q] Kuala Lumpur Regional Centre for Arbitration
The Kuala Lumpur Regional Centre for Arbitration (KLRCA) was established in 1978 to promote
international commercial arbitration in the Asia/Pacific region. (1398) The KLRCA administers
arbitrations under its rules, adopted in 2010 and based on the 2010 UNCITRAL Rules. Although
it still has a relatively limited caseload at this stage (three international arbitrations in 2011),
KLRCA provides an alternative to HKIAC, ACICA and SIAC in commercial arbitrations involving
parties from the Asia/Pacific region. (1399)
[r] Indian Council of Arbitration
The Indian Council of Arbitration (ICA) was established in 1965 and is regarded as Indias
preeminent arbitral institution. The ICA Rules are based on the provisions of the Indian
Arbitration and Conciliation Act (1996) and were most recently revised in 2012. (1400) Many
users remain cautious about seating arbitrations in India, noting interventionist attitudes of
Indian courts and other concerns. (1401) The ICA handled eight international arbitrations in
2010 and 5 in 2011. (1402)
[s] JAMS International
In 2011, JAMS, a leading domestic mediation and arbitral institution in the United States,
combined with the ADR Center in Italy to form JAMS International, headquartered in London.
(1403) JAMS handles more than 10,000 arbitrations or mediations a year in North America,
where its panel of neutrals is comprised largely of former U.S. judges and litigators. JAMS
International is still in the process of compiling a list of arbitrators and mediators.
The JAMS International Arbitration Rules, adopted in 2011, have provisions similar to other
P 198 leading institutional arbitration rules. (1404) They include features that reflect recent
developments in arbitration practice, (1405) such as a liberal consolidation provision and
options for online filing and email communications. The Rules do not require terms of
reference, but include a process for scrutinizing awards before they are issued.
JAMS and JAMS International have sought to address concerns of parties about the costs of the
arbitral process. To that end, JAMS has adopted Efficiency Guidelines for the Pre-Hearing
Phase of International Arbitrations, which contain guidelines similar to those set in the IBA
Guidelines for the Taking of Evidence in International Arbitration. (1406)
[D] Overview of International Guidelines and Harmonization

In addition to institutional arbitration rules, there are a number of international guidelines or
codes of best practice regarding the conduct of international arbitrations. (1407) These sources
play an important role in providing tested procedural solutions and predictability in
international arbitrations. These guidelines are buttressed by extensive commentary from a
wide range of arbitrators, practitioners, users and academics addressing various procedural
aspects of the international arbitral process. (1408) These materials can provide important
sources of guidance for both tribunals and parties, making the arbitral process more
predictable and transparent, while not curtailing the parties and arbitrators ability to tailor
arbitral procedures in particular cases to the individual needs of those cases. (1409)
65
[1] IBA Rules on the Taking of Evidence in International Arbitration (1410)
P 199 Although not a set of institutional arbitration rules, the International Bar Associations
Rules on the Taking of Evidence in International Arbitration fulfill related functions. In 1983,
the IBA adopted the Supplementary Rules Governing the Presentation and Reception of
Evidence in International Commercial Arbitration. (1411) The Rules attempted to provide a
blend of civil law and common law approaches to the subjects of discovery and evidentiary
presentations in arbitration. (1412) The Rules were not independently binding, but could either
be adopted by parties in their arbitration agreement (or otherwise) or relied upon by arbitral
tribunals for guidance in making procedural orders. (1413)
The IBA Rules were extensively revised in 1999, and retitled the Rules on the Taking of
Evidence in International Commercial Arbitration (IBA Rules or IBA Rules on the Taking of
Evidence). The 1999 IBA Rules established a reasonably-detailed and workable set of
procedures for witness evidence and disclosure requests in international arbitrations. (1414)
Like their predecessors, the 1999 IBA Rules were not independently binding, but were intended
for incorporation into parties arbitration agreements or as a basis for tribunals procedural
rulings. (1415) In practice, the 1999 IBA Rules came to be used frequently as guidelines for
arbitral procedures in international commercial arbitrations. (1416)
The 1999 IBA Rules were revised in 2010 and (again) retitled the Rules on the Taking of
Evidence in International Arbitration. (1417) The 2010 IBA Rules were amended in three
principal respects.
First, the 2010 IBA Rules attempt to provide for a more efficient evidence-gathering process
P 200
which calls for early involvement of the tribunal (1418) and specific guidelines regarding
electronic documents, (1419) witness statements (1420) and expert reports. (1421) Second, in
order to maintain fairness and equality, the 2010 IBA Rules provide considerations for the
tribunal to take into account when determining whether a legal privilege should exclude a
certain item of evidence. (1422) Third, the 2010 IBA Rules provide an express requirement of
good faith in the taking of evidence, (1423) and authorize arbitral tribunals to consider
violations of this obligation in awarding costs. (1424)
The 2010 IBA Rules have achieved even greater currency than earlier versions of the rules.
According to a recent survey, the IBA Rules are used in 60% of international arbitrations. (1425)
[2] ABA/AAA Code of Ethics, IBA Rules of Ethics and IBA Guidelines on Conflicts of Interest in
International Arbitration (1426)
In a related set of developments, non-binding international guidelines have been adopted by
the IBA and other bar associations with regard to the ethics of international arbitrators. In 1977,
a joint committee of the American Bar Association (ABA) and American Arbitration
Association adopted the ABA/AAA Code of Ethics. (1427) As discussed in greater detail below,
the Code sought to provide ethical guidelines for arbitrators, focusing particularly on issues of
bias and partiality. (1428) After lengthy debate, in 2004, the ABA/AAA Code of Ethics was
amended, including to impose presumptive duties of independence and impartiality on co-
arbitrators. (1429)
In 1987, the IBA adopted Rules of Ethics for International Arbitrators. (1430) Derived in part
P 201
from the ABA/AAA Code, the IBA effort sought to establish ethical standards for
application to international arbitrators. (1431) The IBA Rules of Ethics were (and remain)
influential guidelines in international arbitration practice.
In 2004, the IBA published a detailed set of guidelines and accompanying commentary
concerning the impartiality and independence of arbitrators (the IBA Guidelines on Conflicts
of Interest in International Arbitration). (1432) As discussed in greater detail below, (1433) the
IBA Guidelines detail circumstances which are customarily considered to raise doubts
regarding an arbitrators independence or impartiality, and supersede the IBA Rules of Ethics
in this regard; they also provide for disclosure of such circumstances by arbitrators and
prospective arbitrators. (1434)
The IBA Guidelines have been the subject of considerable criticism, on the grounds that they
are needlessly detailed and encourage challenges to both arbitrators and awards. (1435) The
IBA Guidelines are not automatically binding on either national courts or arbitral institutions.
They nonetheless provide an influential perspective on customary attitudes towards an
arbitrators obligations of independence and impartiality.
[3] IBA Guidelines on Party Representation in International Arbitration
In 2013, the IBA adopted Guidelines on Party Representation in International Arbitration,
which seek to provide guidance regarding the conduct of counsel and other party
representatives in international commercial, investment and other arbitrations. The
Guidelines are not intended to displace otherwise applicable mandatory laws, professional or
disciplinary rules, or agreed arbitration rules that may be relevant or applicable to matters of
party representation, and instead purport to be purely contractual in nature and applicable
only when adopted by the parties. (1436)
The Guidelines are inspired by the principle that party representatives should act with
integrity and honesty and should not engage in activities designed to produce unnecessary
delay or expense, including tactics aimed at obstructing the arbitration proceedings. (1437) As
discussed below, the Guidelines set forth 27 principles, with accompanying commentary,
66
regarding the professional conduct of party representatives in international arbitrations,
P 202
focusing in particular on conduct during the arbitral proceedings (including disclosure,
witness preparation, submissions to the tribunal and similar subjects). (1438)
[4] UNCITRAL Notes on Organizing Arbitral Proceedings
In 1996, UNCITRAL published the UNCITRAL Notes on Organizing Arbitral Proceedings. (1439)
The UNCITRAL Notes are non-binding guidelines for arbitrators and parties which are designed
to identify issues that frequently arise in the course of international arbitrations. Among other
things, the UNCITRAL Notes briefly discuss procedural rules, communications, written
submissions, evidence, witnesses and hearings.
[5] Chartered Institute of Arbitrators Practice Guidelines
The Chartered Institute of Arbitrators (based in London) has issued a number of Practice
Guidelines providing recommendations regarding various practical aspects of the
international arbitral process. Among other things, the Guidelines address the interviewing of
arbitrators, documents-only arbitrations, costs orders and jurisdictional challenges: the
Guidelines are significantly influenced by domestic English practice and are infrequently
relied upon in international cases. The Guidelines are considered a work in progress by the
Institute with their most recent updates in December 2011. (1440)
[E] Overview of Elements of International Arbitration Agreements

As already discussed, international commercial arbitration is almost always consensual: (1441)
arbitration generally occurs only pursuant to an arbitration agreement between the parties.
(1442) It is, of course, possible for parties to agree to submit an existing dispute to arbitration,
pursuant to a submission agreement or compromise. (1443) Typically, however, disputes are
arbitrated as a consequence of preexisting arbitration clauses, applicable to future disputes,
in the parties underlying commercial contract. (1444)
P 203
Parties are largely free to draft their arbitration agreements in whatever terms they wish
and in practice this freedom is liberally exercised. (1445) Like other contractual clauses, the
terms of arbitration agreements are largely a product of the parties interests, negotiations
and drafting skills.
International arbitration agreements often and advisedly address a number of critical
issues. These are: (a) the agreement to arbitrate; (b) the scope of the disputes submitted to
arbitration; (c) the use of an arbitration institution and its rules; (d) the seat of the arbitration;
(e) the method of appointment, number and qualifications of the arbitrators; (f) the language
of the arbitration; and (g) a choice-of-law clause. In particular cases, other provisions may be
either vital to an effective international arbitration agreement or advantageous to one or both
parties. (1446)
[1] Agreement to Arbitrate
It is tautological but not always the case in practice that any arbitration clause must set
forth the parties agreement to arbitrate. (1447) As a drafting matter, this means that
arbitration agreements should (and usually do) expressly refer to arbitration and not to
expert determination, accounting, conciliation, mediation, negotiation, settlement, ADR, or
some other form of non-judicial resolution. (1448) As discussed in greater detail below, these
other forms of alternative dispute resolution are not categorized as arbitration under many
international treaties and national arbitration statutes, and will often not qualify for the pro-
enforcement safeguards provided by these instruments. (1449) Accordingly, a fundamental
element of any international arbitration agreement is the parties undertaking that all
disputes shall be finally resolved by arbitration.
Similarly, most international arbitration agreements provide (and should provide) that
disputes should be referred to arbitration for a binding or final disposition (and not for an
advisory recommendation). (1450) An arbitration clause also should not treat arbitration as a
P 204
possible future option, applicable only if the parties so agree after a dispute arises. (1451)
Thus, arbitration clauses should (and usually do) provide that all disputes shall be finally
resolved by arbitration. (1452)
[2] Scope of Arbitration Agreement
Critical to any arbitration clause is its scope that is, the categories of disputes or claims
that will be subject to arbitration. (1453) For example, an agreement to arbitrate may provide
that all disputes between the parties, bearing any conceivable connection to their dealings
with one another, are subject to arbitration. Alternatively, the parties may agree that only
contract claims that clearly arise under the express terms of the parties contract or,
alternatively, under only specified provisions of that contract, are to be arbitrated; similarly,
the parties may agree that particular types of claims are to be excluded from an otherwise
broad arbitration agreement. (1454)
There are a handful of formulae that are frequently used to define the scope of arbitration
clauses. (1455) These formulae include any or all disputes: (i) arising under this
Agreement; (ii) arising out of this Agreement; (iii) in connection with this Agreement; and
(iv) relating to this Agreement. Alternative formulations are also used, including: (v) all
disputes relating to this Agreement, including any question regarding its existence, validity,
67
breach, or termination; or (vi) all disputes relating to this Agreement or the subject matter
hereof. (1456)
As a general rule, international arbitration clauses are usually drafted broadly, to cover all
disputes having any connection with the parties dealings. (1457) Doing so avoids the expense
arising from parallel proceedings (when certain contractual disputes are arbitrated and other,
related contractual, or non-contractual, disputes are litigated). (1458) It also avoids the
uncertainties resulting from potentially inconsistent decisions in different forums and from
jurisdictional disputes over the scope of disputes to be heard in different forums.
Even where the parties have agreed in principle to a broad arbitration clause, there may be
claims or disputes that one party does not want submitted to arbitration. This can include
matters such as intellectual property rights or payment obligations, which are sometimes
excluded or carved out of the scope of the arbitration clause. (1459) Although these types of
provisions can serve legitimate objectives, it is usually better to avoid efforts to exclude
particular types of disputes from arbitration, except in unusual circumstances. Such exclusions
P 205 often lead (undesirably) to parallel proceedings in both the arbitral forum and national
courts, and to jurisdictional disputes over the application of a clause to particular claims.
(1460)
[3] Institutional Arbitration
As discussed above, institutional arbitration is conducted pursuant to procedural rules
promulgated by a particular arbitral institution, which generally also administers the
arbitration. (1461) If institutional arbitration is desired, the parties arbitration agreement
must select and refer to an arbitral institution and its rules. (1462) In general, every arbitral
institution provides its own model arbitration clause; parties wishing to invoke the institutions
rules should ordinarily use this clause as the basis for their arbitration agreement, departing
from it only with care and for considered reasons. (1463)
In cases where the parties do not wish to agree to institutional arbitration, they will sometimes
select a preexisting set of procedural rules designed for ad hoc arbitrations (such as the
UNCITRAL Rules). (1464) Arbitration clauses frequently accomplish this result by references
such as all disputes shall be settled by arbitration in accordance with the UNCITRAL
Arbitration Rules.
[4] Specifying Seat or Place of Arbitration
Another vital element of any international arbitration agreement is designation of the seat
(or place) of the arbitration. (1465) As discussed below, the arbitral seat is a legal concept: it
is the state where the arbitration has its formal legal or juridical home, whose arbitration law
governs the arbitral proceedings, and under whose law the arbitral award is made. (1466) The
seat of an arbitration is also the geographic location where many or all of the hearings in the
arbitration will be conducted, although this is not a requirement and the tribunal may hold
hearings elsewhere for reasons of convenience. (1467) The text of contractual provisions
selecting the arbitral seat is not complex, usually providing only The seat of the arbitration
shall be or The place of arbitration shall be.
As discussed below, there are a number of legal and practical consequences that follow from
selection of an arbitral seat, making this one of the most important aspects of any
international arbitration agreement. (1468) These consequences include influencing the choice
of law governing the arbitration agreement, the selection of the procedural law of the
P 206 arbitration and the national courts responsible for applying that law, the selection of the
national courts responsible for issues relating to constitution of the tribunal and assistance in
other aspects of arbitral procedure, and the selection of the national courts responsible for
(and arbitration law applicable to) annulment of arbitral awards. (1469) All of these issues are
of substantial importance to the arbitral process (which contrasts with domestic arbitration in
many countries, where the selection of an arbitral situs has much less practical importance).
[5] Number, Method of Selection and Qualifications of Arbitrators
It is also common for international arbitration agreements to address the number, means of
appointment and qualifications of the arbitrators. (1470) As discussed below, selection of the
arbitrators is one of the most critical issues in any arbitration. (1471) Addressing this issue in
the arbitration agreement is vitally important.
Arbitration clauses often specify the number of persons who will comprise an arbitral tribunal
in the event of future disputes. If the parties do not agree upon the number of arbitrators,
leading institutional rules generally grant the institution power to do so; (1472) otherwise,
national courts will have the power to decide, pursuant to default rules in national arbitration
legislation. (1473) Nonetheless, relying on a judicial or institutional decision regarding the
number of arbitrators can result in delays or jurisdictional disputes. As a consequence, parties
often specify the number of arbitrators in their arbitration clause. (1474)
The text of provisions designating the number of arbitrators is not complex. For example, a
typical clause would provide: Any dispute shall be finally resolved under the [Rules] by [three
arbitrators] [one arbitrator] appointed in accordance with the said Rules. An alternative
provides the number of arbitrators shall be [three] [one]. (1475)
It is also essential for an arbitration agreement to include some method for selecting the
68
arbitrator(s). The most common approach is for the parties to attempt to reach agreement on a
sole arbitrator or to each appoint one member of a three member tribunal, with the third
arbitrator chosen by the two party-appointed arbitrators or selected by an appointing
authority. (1476)
It is also essential for the parties to include a method of appointing the tribunal in the event
that they cannot, or do not, constitute the tribunal as agreed. (1477) The most common such
mechanism is designation of an appointing authority, which will select a sole arbitrator or
presiding arbitrator in the event that the parties (or party-nominated arbitrators) cannot do
P 207
so, or if a party fails to select a party-nominated arbitrator. (1478) All leading institutional
rules provide for such a role by the sponsoring institution when the parties agree to arbitrate
under an institutions rules, (1479) and no special wording (aside from adopting the institutions
rules) is necessary to select the institution as appointing authority. (1480)
Finally, international arbitration agreements can either directly specify or indirectly influence
the qualifications and characteristics of the arbitrators. (1481) For example, most leading
institutional rules provide that a presiding or sole arbitrator shall not have the same
nationality as that of any of the parties (unless otherwise agreed). (1482) An arbitration
agreement can also require (or prohibit) the appointment of persons with particular
credentials or expertise (such as legal qualifications, accounting degrees or engineering
experience). (1483) Arbitration clauses may also require that the arbitrators have particular
language abilities, such as each arbitrator shall be fluent in Spanish. (1484)
[6] Language of Arbitration
Arbitration clauses in international agreements frequently specify the language (or languages)
of the arbitral proceedings and award. (1485) Although sometimes overlooked, this is a point of
vital importance, which can have a profound practical effect on the selection of the arbitrators
(and counsel) and the character of the arbitral proceedings.
Absent the parties agreement, institutional rules usually expressly authorize the arbitral
tribunal to select a language (or languages) of the arbitration. (1486) This will often be the
P 208
language of the underlying contract or arbitration agreement. (1487) Even if institutional
rules do not address the issue, national law will ordinarily give the tribunal authority to select
a language for the arbitration. (1488) Nonetheless, there is seldom any reason to leave this
issue to chance, particularly given the simplicity of a provision to the effect that the language
of the arbitration shall be [English].
[7] Choice-of-Law Clauses
Any international dispute can give rise to tortuous choice-of-law questions. (1489) As a
consequence, and as discussed below, many international commercial agreements contain a
choice-of-law clause, specifying the substantive law applicable to the parties underlying
contract and related disputes. (1490)
In addition to the substantive law governing the parties underlying contract, other questions
of applicable law frequently arise in connection with international arbitrations. Thus, as
discussed in detail below, a different law may apply to the arbitration agreement (as
distinguished from the parties underlying contract); (1491) that is because an arbitration
clause is deemed a separable or autonomous contract in most legal systems, which is not
necessarily subject to the same substantive law as the underlying contract. (1492) It is possible,
and occasionally advisable, to adopt a choice-of-law clause that specifically addresses the law
applicable to the arbitration agreement, as distinct from the parties underlying contract.
It is also possible for a different law to apply to the procedural conduct of the arbitration
itself, separate from that governing the arbitration agreement or underlying contract. (1493) In
almost all cases, the procedural law of the arbitration will be that of the arbitral seat, although
there are rare exceptions. (1494) Parties sometimes include choice-of-law provisions that
designate the procedural law applicable to arbitral proceedings. Significant complexities can
arise from such provisions, and great care must be taken in utilizing them. (1495)
[8] Other Provisions of International Arbitration Agreements
Many international arbitration agreements also contain other provisions, in addition to the
elements discussed above. The existence and nature of these provisions varies from case to
case, depending on the parties negotiations, drafting and interests. The most common
additional elements include: (a) allocation of the costs of legal representation; (1496) (b)
P 209 interest and currency of an award; (1497) (c) disclosure or discovery; (1498) (d) fast-track or
other procedural rules; (1499) (e) so-called escalation clauses or multi-tier dispute resolution
clauses; (1500) (f) state/sovereign immunity waivers; (1501) and (g) confidentiality. (1502)
[9] Drafting Arbitration Agreements: Recommended Approach
Like other contractual provisions, an international arbitration clause is ultimately the product
of what the parties choose to agree upon. It is a creature of negotiations and drafting skill (or
fallibility). In some cases, the parties products are sui generis; they may be inspired or,
regrettably, pathologically deformed.
In the overwhelming majority of cases, however, international arbitration agreements are
straightforward exercises, adopting either entirely or principally the model, time-tested
69
clauses of a leading arbitral institution. (1503) Although pedestrian, this course is almost
always the wisest one. A representative example of such an arbitration agreement, which
should contain each of the elements identified above, is as follows:
All disputes, claims, controversies, and disagreements relating to or arising out of this
Agreement (including the formation, existence, validity, enforceability, performance, or
termination of this Agreement), or the subject matter of this Agreement, shall be finally
resolved by arbitration [under the Rules] by [three arbitrators] [one arbitrator]. The seat of
the arbitration shall be [Paris] [London, England] [New York/Washington]. The language of the
arbitration shall be English. (1504)
Provisions of this sort are frequently supplemented by a choice-of-law clause, selecting the law
applicable to the parties underlying contract and other disputes, as well as by one or more of
the optional provisions referred to above. Where such a clause is used, rather than more
complex or creative provisions, the risks of pathological defects or jurisdictional and
procedural disputes are minimized.
[F] Overview of Choice of Law in International Commercial Arbitration

Parties frequently agree to arbitration to avoid the jurisdictional and choice-of-law
uncertainties that arise when international disputes are litigated in national courts. (1505)
P 210
Unfortunately, international arbitration can produce its own set of complex, sometimes
unpredictable choice-of-law issues. (1506)
Choice-of-law issues play an important role in international commercial arbitration. It is
necessary to distinguish between four separate choice-of-law issues that can arise in
connection with an international arbitration: (a) the substantive law governing the merits of
the parties underlying contract and other substantive claims; (b) the substantive law
governing the parties arbitration agreement; (c) the law applicable to the arbitral
proceedings; and (d) the conflict of laws rules applicable to select each of the foregoing laws.
(1507) Although not common, it is possible for each of these four issues to be governed by a
different national (or other) law.
Each of the foregoing choice-of-law issues can have a vital influence on international arbitral
proceedings. Different national laws provide different sometimes dramatically different
rules applicable at different stages of the arbitral process. Understanding which national rules
will potentially be applicable can therefore be critical.
[1] Law Applicable to Substance of Parties Dispute
The parties underlying dispute will ordinarily be resolved under the rules of substantive law of
a particular national legal system. (1508) In the first instance, it will usually be the arbitrators
who determine the substantive law applicable to the parties dispute. (1509) As discussed in
detail below, international arbitral awards typically give effect to the parties agreements
concerning applicable substantive law (choice-of-law clauses). (1510) The principal exception
is where mandatory national laws or public policies purport to override private contractual
arrangements. (1511)
Where the parties have not agreed upon the substantive law governing their dispute, the
arbitral tribunal must select such a law. In so doing, the tribunal will sometimes (but not
always) refer to some set of national or international conflict of laws rules. These varying
approaches to the choice of substantive law in international arbitration are summarized here
and examined in detail below. (1512)
Although the historical practice was to apply the national conflict of laws rules (or substantive
law) of the arbitral seat, more recent practice is diverse. Some tribunals and commentators
P 211 adhere to the traditional approach, while others look to the conflicts rules of all states
having a connection with the dispute. (1513) Additionally, some authorities adopt either
international conflict of laws rules or validation principles. (1514) The development of bodies
of international substantive rules dealing with commercial matters has facilitated this
development. (1515)
[2] Law Applicable to Arbitration Agreement
As discussed elsewhere, arbitration agreements are universally regarded as presumptively
separable from the underlying contract in which they appear. (1516) One consequence of this
is that the parties arbitration agreement may be governed by a different national law than
that applicable to the underlying contract. This can occur either by the parties express choice
of law or by the application of conflict of laws rules (which may select different substantive
laws for the parties arbitration agreement and their underlying contract).
As described below, four alternatives for the law governing an arbitration agreement are of
particular importance: (a) the law chosen by the parties to govern the arbitration agreement
itself; (b) the law of the arbitral seat; (c) the law governing the parties underlying contract; and
(d) international principles, either applied as a substantive body of contract law (as in France)
or as rules of non-discrimination (as in most U.S. authority). (1517) As also discussed below, the
better view is that Articles II(1) and V(1)(a) mandate application of a validation principle to
international commercial arbitration agreements governed by the Convention, which upholds
the validity of those agreements if they are valid under any potentially-applicable national
law. (1518)
70
[3] Procedural Law Applicable to Arbitral Proceedings
The arbitral proceedings themselves are also subject to legal rules, governing both internal
procedural matters and external relations between the arbitration and national courts. In
most instances, the law governing the arbitral proceeding is the arbitration statute of the
arbitral seat (i.e., the location selected by the parties as the juridical place of arbitration).
(1519)
Among other things, the law of the seat typically deals with such issues as the appointment and
qualifications of arbitrators, the extent of judicial intervention in the arbitral process, the
availability of provisional relief, the procedural conduct of the arbitration, the form of any
P 212
award and the standards for annulment of any award. Different national laws take
significantly different approaches to these various issues. In some countries, national law
imposes significant limits or requirements on the conduct of the arbitration and local courts
have broad powers to supervise arbitral proceedings. (1520) Elsewhere, and in most developed
jurisdictions, local law affords international arbitrators virtually unfettered freedom to
conduct the arbitral process subject only to basic requirements of procedural regularity
(due process or natural justice). (1521)
In some jurisdictions, parties are free to select the law governing the arbitral proceedings
(variously referred to as the procedural law of the arbitration, the curial law, the lex arbitri, or
the loi de larbitrage). (1522) This theoretically includes the freedom to agree to the application
of a different procedural law than that of the arbitral seat; in practice, however, this seldom
occurs and the effects of such an agreement are uncertain. (1523)
[4] Choice-of-Law Rules Applicable in International Arbitration
Selecting each of the bodies of law identified in the foregoing three sections the laws
applicable to the merits of the underlying contract or dispute, to the arbitration agreement
and to the arbitral proceedings ordinarily requires application of conflict of laws rules. In
order to select the substantive law governing the parties dispute, for example, an arbitral
tribunal must generally apply a conflict of laws system. (1524) And, just as different states have
different rules of substantive law, they also have different conflict of laws rules. An
international arbitral tribunal must therefore decide at the outset what set of conflicts rules to
apply.
The actual practice of arbitral tribunals in selecting the law applicable to each of the foregoing
issues varies significantly. Approaches include application of (a) the arbitral seats conflict of
laws rules; (b) international conflict of laws rules; (c) successive application of the conflict of
laws rules of all interested states; and (d) direct application of substantive law (without any
express conflicts analysis). (1525)
The current state of conflict of laws analysis in international arbitration has not kept pace with
the parties aim of avoiding the peculiar jurisdictional, choice-of-law and enforcement
difficulties that attend the litigation of international disputes in national courts. There is often
uncertainty, and wasted time and expense, as a consequence of contemporary conflict of laws
analysis. Nonetheless, recent national court decisions and arbitral awards suggest the way
towards development of international principles of validation and non-discrimination which
hold promise of realizing more fully the aspirations of the international arbitral process. (1526)
P 213
1.05 THEORIES OF INTERNATIONAL ARBITRATION
There have been numerous theoretical efforts to categorize arbitration within domestic legal
systems. (1527) Among other things, these theories have included characterizations of
arbitration as contractual, jurisdictional, hybrid and autonomous. Although the practical
implications of this debate are often unclear, (1528) there is little academic agreement on
these various theories.
[A] Leading Theories of Arbitration

The contractual school of thought regarded arbitration as a form of contractual relations.
(1529) According to one early proponent of this analysis:
It is the arbitration agreement that gives [the arbitral award] its existence; it is from the
arbitration agreement that it derives all its substance; it has, then, like the arbitration
agreement, the character of a contract; and the precise truth is that it is only the performance
of the mandate that the parties have entrusted to the arbitrators; it is even, to put it precisely,
only an agreement to which the parties have bound themselves by the hands of the latter (the
arbitrators). (1530)
The contractualist school emphasized that arbitrators were not judges (since they performed
no public function and exercised no powers on behalf of the state). In general terms, the
contractualist school placed primary emphasis on the role of party autonomy in the arbitral
process. (1531)
Other authors reject the notion that arbitration including the arbitral proceedings and award
P 214 is predominantly contractual, and instead adopt a jurisdictional analysis. They reason
that arbitration is essentially adjudicative, involving the exercise of independent, impartial
decision-making by the arbitrators:
71
while an arbitration agreement has the formal aspects of a contract, by its very nature it
assumes the absence of any agreement between the parties with respect to a dispute other
than on the mode of settlement. Arbitration is a means, a method, a procedure, rather than an
agreement. (1532)
Or, as another authority put it, [a]n arbitrator is a private judge. (1533) Proponents of this
school emphasize the arbitrators performance of functions that are public, or judicial, in
character, (1534) and the role of national law in conferring such powers on the arbitrator. (1535)
In general terms, the jurisdictional theory of arbitration gives primary importance to the role
of national law, and particularly the law of the arbitral seat, in the arbitral process, while
contemplating greater limits on the parties autonomy than other authors. (1536)
More recently, commentators have advanced the theory that arbitration is hybrid or mixed,
involving elements of both contract and jurisdiction. (1537) Although deriving its effectiveness
from the agreement of the parties, as set out in the arbitral agreement, [arbitration] has a
jurisdictional nature involving the application of the rules of procedure. (1538) This school
offered comparatively little analysis as to what characteristics arbitration should
demonstrate, focusing instead on the parties autonomy. (1539)
P 215
More recently, some commentators urged that arbitration be treated as autonomous,
and not as either contractual or jurisdictional (or hybrid). (1540) Even less so than other
characterizations, it is unclear what doctrinal or practical consequences result from this
analysis.
Within each of the various foregoing categorizations of arbitration, different approaches
existed. In some legal systems, arbitration was characterized as a form of procedure, with
arbitration agreements being treated as procedural contracts. (1541) Other commentators and
courts classified arbitration as remedial in nature, and applied the law of remedies to
arbitration agreements. (1542) More recently, many developed national legal systems have
emphasized the contractual aspects of arbitration (1543) and the parties autonomy with
regard to choice-of-law, procedural and other issues. (1544)
[B] Future Directions: the Jurisprudential Character of International Arbitration

All of these theoretical characterizations contain elements which are accurate and, in an
abstract manner, useful. Arbitration manifestly exhibits attributes of contractual relations,
albeit of an unusual type. The arbitration agreement is the essential and necessary foundation
of the arbitral process, (1545) whose existence, validity and interpretation can only be
assessed pursuant to principles of contract law. (1546) Moreover, the parties agreement to
arbitrate retains a central role throughout the subsequent arbitral proceedings (1547) and is
critically important to the terms, validity and recognition of the arbitral award. (1548) In these
regards, it is essential that arbitration be considered as reflecting elements of contract and
the law of contracts.
At the same time, arbitration also manifestly involves attributes of jurisdictional authority and
adjudicative decision-making, different from other forms of contractual relations. The
P 216 arbitration agreement does not produce a typical commercial bargain, but instead
results in a particular kind of dispute resolution process, (1549) where the decision-maker must
be impartial and independent and must apply adjudicatory procedures in reaching a decision.
(1550) Moreover, the arbitral process is granted independence from and support by national
judicial systems, (1551) while the award is granted the binding force and res judicata effect of a
national court judgment. (1552) In these regards, it is necessary that arbitration be regarded as
an adjudicative or jurisdictional process.
More fundamentally, both the hybrid and autonomous theories capture remaining and
important analytical aspects of arbitration. For the reasons already outlined, it is impossible
not to consider arbitration as a hybrid, combining elements of both contractual relations and
jurisdictional authority. Indeed, arbitration cannot be conceptualized without adopting this
starting point: it makes no sense to seek to analyze the arbitration agreement, and its effects
at every stage of the arbitral process, without reference to contract law and principles, just as
it makes no sense to seek to analyze the arbitrators function, the arbitral proceedings and the
arbitral award without reference to the law and principles of adjudicative decision-making
and res judicata.
At the same time, arbitration is also sui generis and autonomous, exhibiting characteristics
that are not shared by either contract or judicial decision-making. That should hardly be
surprising, because arbitration has been treated for centuries as a separate field of law: as
discussed elsewhere, arbitration agreements and awards have been subject to specialized
legal rules since Antiquity, (1553) with this categorization becoming more explicit during the
20th century. (1554) Indeed, having regard to the specialized international legal regimes (i.e.,
the Geneva Protocol and Convention; New York Convention; European Convention) (1555) and
national legislative regimes (i.e., the UNCITRAL Model Law; modern arbitration legislation)
(1556) makes it difficult to conceive of treating arbitration as something other than an
autonomous field of law.
Thus, it is true that the field of international arbitration draws essential doctrine and rules
from contract law and from the law of civil procedure and judgments. But in many cases,
particularly in international matters, these disciplines are at most analogies, providing the
starting point, not the end result, of analysis. In all cases, it remains essential to categorize and
72
treat arbitration as a distinctive and autonomous discipline, specially designed to achieve a
particular set of objectives, (1557) which other branches of private international law fail
satisfactorily to resolve. (1558)
P 217
1.06 OVERVIEW OF SOURCES OF INFORMATION ABOUT INTERNATIONAL
ARBITRATION
One of the perceived benefits of international arbitration is its confidentiality or, at least,
privacy. (1559) Many international arbitral awards, as well as the submissions, hearings and
deliberations in almost all international commercial arbitrations, remain confidential. (1560)
Although it has benefits, the confidentiality or privacy of the arbitral process is at the same
time an obstacle to practitioners, decision-makers and academics, all of whom frequently
desire precedent, authority, or information about the arbitral process.
There are a wide variety of sources of information about international commercial arbitration
which are useful for both practitioners and academics. (1561) The number and detail of these
sources has increased materially in recent years, and new projects are underway which would
further expand the corpus of available information concerning the international arbitral
process. These are welcome, important developments that contribute to the efficacy of the
international arbitral process.
[A] ICCA Yearbook of Commercial Arbitration and ICC Handbooks

The Yearbook of Commercial Arbitration is published annually by the International Council for
Commercial Arbitration. The Yearbooks contain excerpts of international arbitral awards
(usually redacted to remove parties names), national arbitration legislation, judicial
decisions, and other materials relevant to international arbitration. The Yearbook is
supplemented by handbooks on national arbitration legislation, containing international
arbitration statutes from jurisdictions around the world. (1562)
[B] Mealeys International Arbitration Report

Since 1986, Mealey Publications has published a monthly summary of recent judicial decisions
concerning international arbitration and arbitral awards. The International Arbitration Report
is a source of timely information (with a recently-introduced email service) and provides full-
text copies of significant awards and decisions. The Reports primary focus is U.S., but it
increasingly includes authorities from other jurisdictions.
P 218
[C] Journal du Droit International (Clunet)
Published in French, the Journal du Droit International reprints excerpts and summaries of
arbitral awards and French judicial decisions concerning international arbitration and other
private international law subjects. The Journal is a significant source of extracts of otherwise
unavailable arbitral awards, often with comments by leading French practitioners or
academics.
[D] Revue Arbitrage

Published four times a year, in French, the Revue Arbitrage contains articles relating to
international and domestic arbitration as well as commentary on French judicial decisions and
arbitral awards. The Revue was founded in 1955 and was for many years directed by the late
Professor Phillip Fouchard and Mr. Charles Jarrosson.
[E] Arbitration International

Arbitration International is a quarterly journal, published since 1985 by the LCIA. It provides
commentary on international commercial arbitration, with a particular focus on Europe and
England.
[F] ASA Bulletin

The Bulletin of the Swiss Arbitration Association (ASA) is published quarterly. Available from
Kluwer Law International, it contains excerpts of Swiss (and other) judicial decisions dealing
with international arbitration, arbitral awards and commentary on recent developments.
[G] Collections of ICC Arbitral Awards

Five collections of ICC arbitral awards rendered between 1974 and 2007 have recently been
published. The collections cover awards made between 1974-1985, 1986-1990, 1991-1995, 1996-
2000 and 2001-2007. (1563) In addition, the ICC has published a collection of procedural
decisions in ICC arbitrations between 1993 and 1996. (1564) Each collection includes excerpts or
summaries of approximately 150 ICC arbitral awards, in both French and English. The excerpts
are edited to avoid identifying the parties to the dispute. Many of the awards were previously
published in the Yearbook of Commercial Arbitration or Journal du Droit International (Clunet),
but the collections are a convenient reference source. The ICC promises comparable
collections in the future.
[H] International Legal Materials

P 219
73
P 219 Sponsored by the American Society of International Law, the International Legal Materials
are published six times each year. They contain a wide range of international legal documents,
and do not focus specifically on arbitration. They are, however, a useful source of significant
developments legislative, judicial and otherwise in the arbitration field.
[I] Fouchard Gaillard Goldman on International Commercial Arbitration

The leading French commentary on international commercial arbitration, published in 1999 in
English, is authored by a distinguished French professor and practitioner, together with a very
able colleague. (1565) In addition to providing encyclopedic discussions of French
international arbitration law and practice, the work also offers insightful comment on more
general developments.
[J] Redfern and Hunter On International Arbitration

The leading English commentary on international commercial arbitration, originally titled Law
and Practice of International Commercial Arbitration, is in its fifth edition, now titled Redfern
and Hunter on International Arbitration. (1566) Authored by two respected English
practitioners, now assisted by able co-authors, the book is required reading for any lawyer
involved in international arbitration.
[K] Commentary On International Chamber of Commerce Arbitration

International Chamber of Commerce Arbitration is authored by three experienced practitioners
and commentators. (1567) The book is a comprehensive work on ICC arbitration, which was first
published in 1984, and most recently revised and updated in 2000 to address the 1998 ICC
Rules. The work is useful to any practitioner in an ICC arbitration, and contains commentary on
the ICC rules, with shrewd practical observations.
Yves Derains and Eric Schwartz (both of whom held the office of Secretary General of the ICC
International Court of Arbitration) have published A Guide to the ICC Rules of Arbitration, now in
its second edition. (1568) The work is thoroughly researched and provides valuable practical
guidance regarding the 1998 ICC Rules.
Most recently, three former members of the Secretariat of the ICC International Court of
Arbitration, published The Secretariats Guide to ICC Arbitration. (1569) The Guide provides a
P 220
practical commentary on the 2012 ICC Rules and contains detailed and helpful guidance
on the ICC Secretariats and Courts application of the Rules. Other useful works on ICC
arbitration have also recently been published. (1570)
[L] Commentary On New York Convention

Albert Jan van den Bergs The New York Arbitration Convention of 1958 is the leading work on the
New York Convention. (1571) The author is a distinguished Dutch academic and practitioner,
and his work assembles in a single source detailed commentary and materials relating to the
New York Convention. Although the books effort to annotate the Conventions various articles
with judicial decisions is now dated, it remains required reading on the subject. Several recent
commentaries have also been published on the New York Convention, updating and expanding
on Professor van den Bergs work. (1572)
Giorgio Gajas work on The New York Convention is an exhaustive compilation of the materials
relevant to the negotiation and drafting of the Convention. Ideal for detailed research on
particular aspects of the Convention, the book provides the successive drafts of the
Convention, the comments and questions of participating states, and various interim reports.
[M] Guide to the UNCITRAL Model Law On International Commercial Arbitration

Howard Holtzmann and Joseph Neuhaus have contributed a painstaking study of the UNCITRAL
Model Law and its history. (1573) Particularly as the Model Law gains in adherents, the Guide
will become a standard reference source for practitioners and courts.
[N] Domke On Commercial Arbitration

The leading U.S. work on domestic arbitration has been Domke on Commercial Arbitration.
(1574) First published in 1968, with a predominantly domestic focus, the work has been
updated, with efforts to look beyond U.S. shores, in recent years. For U.S. practitioners, it can
be a useful initial reference source.
[O] Smits Guides to International Arbitration

P 221 National arbitration statutes from around the world are collected in this multi-volume
work overseen by the late Professor Hans Smit. (1575)
[P] Awards of Iran-United States Claims Tribunal (1576)

The Iran-United States Claims Tribunal is one of the most ambitious international claims
commissions. (1577) The Tribunal was established pursuant to the so-called Algiers Accords,
which resolved some of the legal disputes arising from the Iranian seizure of U.S. hostages
during President Carters administration. (1578) Pursuant to the Accords, litigation in national
74
courts concerning defined claims between U.S. and Iranian entities was suspended. A nine-
person tribunal was established in The Hague, with defined jurisdiction over claims arising
from U.S.-Iran hostilities; three tribunal members were appointed by the United States, three
by Iran, and three from other states.
The Iran-U.S. Claims tribunal adopted the UNCITRAL Arbitration Rules (with some
modifications). It issued a substantial number of decisions, many of which are published and
which make useful contributions to the interpretation of the UNCITRAL Arbitration Rules and to
a number of issues commonly arising in international commercial (and investment)
arbitrations. (1579)
[Q] International Arbitration Law Databases

There are several useful databases providing online access to both source materials and
recent decisions under the New York Convention and/or UNCITRAL Model Law. UNCITRAL
maintains a searchable, online database of publicly-available court decisions regarding the
various instruments that have been produced by the Commission, including the New York
Convention and the UNCITRAL Model Law on International Commercial Arbitration. (1580)
UNCITRAL also hosts an online Guide to the New York Convention that contains recent
decisions by courts of Contracting States under the Convention, together with various basic
documents relating to the Convention and its travaux prparatoires. (1581) Other institutions
P 222 have also recently launched online databases providing access to international
arbitration materials and decisions. (1582)
[R] Kluwer Arbitration and Kluwer Arbitration Blog

Released by Kluwer Law International, the Kluwer Arbitration online service contains an
extensive, computer-searchable library of arbitral awards, judicial decisions and commentary.
The Kluwer Arbitration Blog provides brief, topical articles and essays on international
arbitration with online comments.
[S] Global Arbitration Review

Billing itself as the worlds leading international arbitration journal, the Global Arbitration
Review publishes (by email) five editions a week about topical developments in international
commercial and investment arbitration. It also publishes periodic articles and commentary by
arbitration practitioners and hosts live events at which international arbitration issues are
debated.
[T] Transnational Dispute Management and OGEMID

Transnational Dispute Management is an online service providing materials and commentary
concerning international commercial arbitration. An Internet-based discussion forum founded
by the late Professor Thomas Wlde, the Oil-Gas-Energy-Mining-Infrastructure Dispute
Management is a source of recent developments, with online comments, regarding
international arbitration. (1583)
[U] Swedish Arbitration Portal (1584)

The Swedish Arbitration Portal provides access to English translations of Swedish court
decisions on international arbitration issues. The Portal contains decisions from all instances
of the Swedish courts on issues related to both international and domestic arbitrations. The
Portal is facilitated by the Arbitration Institute of the Stockholm Chamber of Commerce. The
unofficial English case translations are provided by the Stockholm Chamber of Commerce, with
the assistance of Swedish arbitration practitioners.
[V] Draft Ali Restatement of International Commercial Arbitration Law

The American Law Institute is preparing a Restatement of International Commercial Arbitration
Law. The Reporters of the project are Professor George Bermann, Professor Jack Coe, Professor
P 223
Chris Drahozal and Professor Catherine Rogers. The Restatement can be expected to have
P 224
significant impact on U.S. international arbitration law.
References
75
1) For commentary, see S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. (1996);
D. Bederman, International Law in Antiquity (2001); Cohn, Commercial Arbitration and the
Rules of Law: A Comparative Study, 4 U. Toronto L.J. 1 (1941); Crawford, Continuity and
Discontinuity in International Dispute Settlement, 1 J. Intl Disp. Sett. 3 (2010); R. David,
Arbitration in International Trade 83-130 (1985); Ellenbogen, English Arbitration Practice, 17
Law & Contemp. Probs. 656 (1952); Fraser, A Sketch of the History of International
Arbitration, 11 Cornell L.Q. 179 (1925-1926); K. Harter-Uibopuu, Das zwischenstaatliche
Schiedsverfahren im achaeischen Koinon (1998); Jones, Three Centuries of Commercial
Arbitration in New York: A Brief Survey, 1956 Wash. U. L.Q. 193 (1956); Jones, Historical
Development of Commercial Arbitration in the United States, 12 Minn. L. Rev. 240 (1927);
King & Graham, The Origins of Modern International Arbitration, 51 Disp. Res. J. 42 (1996);
Mann, The Formalization of Informal Law: Arbitration Before the American Revolution, 59
N.Y.U. L. Rev. 443 (1984); W. Manning, Arbitration Treaties Among the American Nations
(1978); J.B. Moore (ed.), International Adjudications (1936); Mustill, Arbitration: History and
Background, 6(2) J. Intl Arb. 43 (1989); Paulsson, International Arbitration Is Not
Arbitration, 2008:2 Stockholm Intl Arb. Rev. 1; J. Ralston, International Arbitration From
Athens to Locarno (1929); Roebuck, A Short History of Arbitration, in N. Kaplan, J. Spruce &
M. Moser (eds.), Hong Kong and China Arbitration: Cases and Materials xxxv (1994); D.
Roebuck, Early English Arbitration (2008); D. Roebuck, Ancient Greek Arbitration (2001);
Roebuck, Larbitrage en droit anglais avant 1558, 2002 Rev. arb. 535; D. Roebuck,
Mediation and Arbitration in the Middle Ages: England 1154-1558 (2012); D. Roebuck & B. de
Fumichon, Roman Arbitration (2004); Roebuck, Sources for the History of Arbitration: A
Bibliographical Introduction, 14 Arb. Intl 237 (1998) (comprehensive bibliography); Sayre,
Development of Commercial Arbitration Law, 37 Yale L.J. 595 (1927-1928); J. Scott, The
Hague Peace Conferences of 1899 and 1907 (1909); Sohn, The Function of International
Arbitration Today, 1963 Recueil des Cours 1; A. Stuyt, Survey of International Arbitrations
1794-1989 (3d ed. 1990); M. Tod, International Arbitration Amongst the Greeks (1913);
Westermann, Interstate Arbitration in Antiquity, II The Classical J. 197 (1906-1907); Wolaver,
The Historical Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132 (1934-1935); K.-
H. Ziegler, Das private Schiedsgericht in antiken rmischen Recht (1971).
2) Mustill, Foreword: Sources for the History of Arbitration, 14 Arb. Intl 235, 235 (1998)
(Arbitration has a long Past, but scarcely any History.There are none of the grand
perspectives in which modern arbitration could be viewed as the inheritor of a
continuous process of change.).
3) J. Ralston, International Arbitration From Athens to Locarno 153 (1929). See also C.
Phillipson, II The International Law and Custom of Ancient Greece and Rome 129-30 (1911)
(examples of Greek gods using arbitration).
4) C. Phillipson, II The International Law and Custom of Ancient Greece and Rome 129 (1911).
5) J. Ralston, International Arbitration From Athens to Locarno 153 (1929).
6) Mantica, Arbitration in Ancient Egypt, 12 Arb. J. 155, 155 (1957).
7) See2.02[C][4].
8) The theme of mortal arbitrator, presiding over divine (and unscrupulous) parties, is
repeated in Paris ill-fated role in deciding between the conflicting claims of Hera,
Athena and Aphrodite. D. Roebuck, Ancient Greek Arbitration 67-68 (2001).
9) See2.02[C][4]; 12.05.
10) One of the enduring challenges confronting the arbitral process is foreshadowed by
Poseidons refusal to honor the award against him by Inachus.
11) A. Stuyt, Survey of International Arbitrations 1794-1989 vii (3d ed. 1990).
12) See S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. (1996); D. Bederman,
International Law in Antiquity 93-94 (2001) (Persians were willing to submit certain kinds
of local disputes to third-party arbitration); Lafont, Larbitrage en Msopotamie, 2000
Rev. arb. 557; J. Ralston, International Arbitration From Athens to Locarno (1929); D.
Roebuck, Ancient Greek Arbitration (2001) (arbitration in Greek Antiquity).
13) L. Edmonson (ed.), Domke on Commercial Arbitration 2.1 (3d ed. 2010 & Update 2013).
14) Lafont, Larbitrage en Msopotamie, 2000 Rev. arb. 557, 568-78 (arbitrations between
principalities in ancient Mesopotamia).
15) D. Roebuck, Ancient Greek Arbitration 71 (2001). Eriphyle, the sister of the King of Argos,
also appears to have been one of the first recorded instances of a corrupt arbitrator,
accepting bribes (of a magic necklace and a magic robe), to decide, inter alia, against
her husband. Eriphyles misconduct was foreshadowed by that of Paris, whose decision
in favor of Aphrodite (and against Hera and Athena) was procured by the promise of
Aphrodites divine attentions.
16) Fraser, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179 (1925-1926)
(citing Raeder, LArbitrage international chez les Hellnes 16-17 (1912)).
17) Smith, Judicial Nationalism in International Law: National Identity and Judicial
Autonomy at the ICJ, 40 Tex. Intl L.J. 197, 203 n.30 (2005). Compare J. Verzijl, III
International Law in Historical Perspective 72 (1976) (first state-to-state arbitration in 600
B.C. between Athens and Mytilene).
18) Plutarch, Themosticles 24, cited in G. de Sainte Croix, The Origins of the Peloponnesian
War, Classical Philology 377-81 (1976).
19) Fraser, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 188 (1925-
1926). See also S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. 3 (1996).
20) Westermann, Interstate Arbitration in Antiquity, II The Classical J. 197, 197-98 (1906-1907).
76
21) J. Ralston, International Arbitration From Athens to Locarno 156-58 (1929); M. Tod,
International Arbitration Amongst the Greeks 65-69 (1913); Westermann, Interstate
Arbitration in Antiquity, II The Classical J. 197, 202 (1906-1907).
22) S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. 8-9 (1996); Westermann,
Interstate Arbitration in Antiquity, II The Classical J. 197, 199-200 (1906-1907).
23) Greek city-states also used religious arbitration, where priestly authorities rendered
decisions, but with mixed results. D. Bederman, International Law in Antiquity 83 (2001)
(Oracle of Delphi was an abominable arbitrator. Difficult questions were often evaded.
When awards were rendered they typically lacked the clarity and precision needed to
settle the matter authoritatively.).
24) M. Bohacek, Arbitration and State-Organized Tribunals in the Ancient Procedure of the
Greeks and Romans 197-204 (1952); J. Ralston, International Arbitration From Athens to
Locarno 161-62 (1929); D. Roebuck, Ancient Greek Arbitration 46-47 (2001).
25) S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. 15 (1996); D. Bederman,
International Law in Antiquity 83 (2001) (parties offered records of previous treaties or
decisions, maps and charts, the writings of historians, interpretations of myths and
legends, archeological evidence, and even eye-witness testimony); J. Ralston,
International Arbitration From Athens to Locarno 162-64 (1929).
26) J. Ralston, International Arbitration From Athens to Locarno 162-64 (1929).
27) D. Bederman, International Law in Antiquity 84 (2001) (in ancient Greece, the reasoned
character of the awardswas essential for their legitimacy and enforcement); J. Ralston,
International Arbitration From Athens to Locarno 162-64 (1929).
28) D. Bederman, International Law in Antiquity 84 (2001). See id. at 83 (So, as we might
expect, arbitrations became a largely secular, and reasoned, process.).
30) See, e.g., S. Ager, Interstate Arbitrations in the Greek World 337-90 B.C. 264-66 (1996)
(describing Romes increasingly frequent role as mediator and arbitrator in disputes
between Sparta and the Achaian league), 281 (describing interven[tion] and
mediation by Megara in a dispute between Achaia and Boeotia).
1926) (The republic lost what Greece had gained, and the empire lost the little the
republic had won.).
1926).
35) Fraser, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 190-91 (1925-
1926); J. Scott, The Hague Peace Conferences of 1899 and 1907 200-10 (1909).
1926).
1926); J. Ralston, International Arbitration From Athens to Locarno 177-78 (1929) (citing a
1235 treaty of alliance between Genoa and Venice providing for arbitration of future
disputes, a 1343 arbitral convention between Denmark and Sweden promising to
arbitrate any serious future disputes, and a 1516 treaty of perpetual peace between
France and England).
38) J. Verzijl, VIII International Law in Historical Perspective 189-90 (1974) (citing historical
authorities).
40) J. Verzijl, VIII International Law in Historical Perspective 189-90 (1974).
41) J. Ralston, International Arbitration From Athens to Locarno 176-77 (1929); Fraser, A Sketch
of the History of International Arbitration, 11 Cornell L.Q. 179, 192 (1925-1926). On the other
hand, there is scant evidence that these clauses were ever enforced, in the sense of
requiring arbitration by a state that had changed its mind about complying with an
arbitration agreement. Ibid.
1926); J. Ralston, International Arbitration From Athens to Locarno 179 (1929) (By a quite
universal practice it would appear that before proceeding to adjudge, the arbitrator
acted in the capacity of what subsequently became know as amiable compositeur in
other words he sought to find a basis for the composition of difficulties before
considering them from the standpoint of law.). For discussions of the differences
between arbitration, mediation or conciliation, and amiable composition, see2.02[C][2]
[c], pp. 272-77; 2.02[C][3], pp. 284-85.
43) Bourne, The Demarcation Line of Pope Alexander VI, in Essays in Historical Criticism, Chp.
VII (1901); Jarrett, XI Papal Arbitration, in The Catholic Encyclopedia (1911).
44) See the examples cited in J. Ralston, International Arbitration From Athens to Locarno 180
(1929).
1926) (quoting M. Novacovitch, Les compromis et les arbitrages internationaux du XIIe au
XVe sicle 85 (1905)); J. Ralston, International Arbitration From Athens to Locarno 185-86
(1929) (describing four-member legal teams of Kings of Castile and Navarre in 1176).
1926) (case study of arbitration by Henry II of England between Castile and Navarre);
Roebuck, Larbitrage en droit anglais avant 1558, 2002 Rev. arb. 535, 538.
77
47) J. Ralston, International Arbitration From Athens to Locarno 186 (1929) (citing 1405 treaty
requiring award to be rendered within six weeks and three days).
48) J. Ralston, International Arbitration From Athens to Locarno 187-88 (1929) (discussing
penalty bonds, undertakings and possibility that violators of arbitral awards might be
excommunicated by Pope).
49) J. Ralston, International Arbitration From Athens to Locarno 181 (1929) (It was, perhaps,
usual and natural that among the sovereigns of the Middle Ages there was little
inclination to bow in any cases of arbitration to the determination of anyone occupying
the rank of less than that of their peer.); Sohn, The Function of International Arbitration
Today, 1963 Recueil des Cours 1, 60 (In many cases, arbitration has been entrusted to a
single person whose position and experience were such as command the confidence of
the parties, such as Pope, other ecclesiastics, or heads of state.).
50) Jarrett, XI Papal Arbitration, in The Catholic Encyclopedia 1 (1911) (Papal arbitration is
[a]n institution almost coeval with the papacy itself); J. Ralston, International
Arbitration From Athens to Locarno 174-76 (1929) (earliest and most important influence
tending towards arbitration was that of the Papacy).
1926).
52) See1.01[A][3], pp. 12-13; 1.01[A][5], p. 21.
53) J. Ralston, International Arbitration From Athens to Locarno 190 (1929). The Articles of
Confederation provided for States with inter-state disagreements to jointly appoint five
commissioners or judges to resolve their disputes; failing agreement, a complex list
system was prescribed, in which each party was entitled to strike names of unsuitable
candidates. U.S. Articles of Confederation, Art. IX (1781); 1.01[A][5], p. 21.
54) J. Ralston, International Arbitration From Athens to Locarno 191 (1929). See also Raymond,
Demosthenes and Democracies: Regime-Types and Arbitration Outcomes, 22 Intl
Interactions 1, 3 (1996) (interstate arbitration prior to the Jay Treaty of 1794 remained
more of an episodic occurrence in world affairs than a patterned regularity).
55) Jays Treaty, Arts. V, VI, VII (1794), reprinted in H. Miller, II Treaties and Other International
Acts of the United States of America 1776-1863 245 (1931).
56) See Editorial Comment, The American Theory of International Arbitration, 2 Am. J. Intl L.
387 (1908).
57) Treaty of Guadalupe Hidalgo, Art. XXI (1848). The United States and Mexico entered into
a number of other treaty arrangements during the 19th century, to resolve various
categories of disputes. J. Ralston, International Arbitration From Athens to Locarno 203-07
(1929). A much greater number of arbitrations were conducted between the United
States and other countries during the 19th and early 20th centuries. Id. at 208-26.
58) Treaty of Washington, Art. I (1871), reprinted in C. Bevans, XII Treaties and Other
International Agreements of the United States of America 1776-1949 170 (1968).
59) The Alabama arbitration concerned claims by the United States that Great Britain had
wrongfully permitted the construction and outfitting of Confederate privateers, in
English shipyards, which subsequently caused substantial damage to Union shipping.
Following lengthy written proceedings and oral hearings in Geneva, a five-person
arbitral tribunal rendered the historic Alabama award, where Great Britain was ordered
to pay the equivalent of $15.5 million in gold. Despite the magnitude of that amount at
the time (equivalent to the annul budget for the British government), Great Britain
subsequently did so. The Alabama arbitration was a remarkable proceeding, eventually
overcoming a host of procedural challenges and mishaps. See T. Balch, The Alabama
Arbitration (1900); Bingham, The Alabama Claims Arbitration, 54 Intl & Comp. L.Q. 1
(2005); F. Hackett, Reminiscences of the Geneva Tribunal of Arbitration (1911).
61) See W. Manning, Arbitration Treaties Among the American Nations (1978).
62) Additional Treaty Between the Republic of Colombia and the Peruvian State to Form the
Assembly of Plenipotentiaries (Tratado Adicional Entre la Repblica de Colombia Y el
Estado de Per Para Formar La Asamblea de Plenipotenciarios), Arts. 1 & 3 (1822).
63) See J. Verzijl, VIII International Law in Historical Perspective 223-24 (1976) (citing
arbitration treaties between Brazil and Chile (1899), Argentina and Uruguay (1899),
Argentina and Paraguay (1899), and Guatemala and Honduras (1890, 1895)).
64) Woolsey, Boundary Disputes in Latin-America, 25 Am. J. Intl L. 324, 325 nn.1-2 (1931)
(Argentine and Paraguayan territorially dispute settled by 1878 award issued by U.S.
President Hayes; Costa Rican and Nicaraguan territorially dispute settled by 1888 award
issued by U.S. President Cleveland; Argentine and Chilean territorial dispute settled by
1902 award issued by King Edward VII of United Kingdom).
65) See Donovan, Challenges to the Territorial Integrity of Guyana: A Legal Analysis, 32 Ga. J.
Intl & Comp. L. 661, 675-78 (2004) (describing demise of arbitral ruling over Venezuela-
British Guyana territory with gold deposits); Woolsey, Boundary Disputes in Latin-
America, 25 Am. J. Intl L. 324, 330 (1931) (describing inconclusive nature of arbitration
over Ecuador-Peru territory rich in resources).
66) See Convention Between Costa Rica and Panama for the Settlement of the Boundary
Controversy, reprinted in 6 Am. J. Intl L. 1, 1-4 (Supp. 1912); K. Carlston, The Process of
International Arbitration 66-70 (1946).
67) There were exceptions in limited areas. See Usteri, Bienne-Beppet Arbitration: Relating to
Disputes Between the Town of Bienne (Biel) and the Town Clerk, John Serriant, and Benedict
Beppet, in J.B. Moore (ed.), II International Adjudications 3 (1936) (arbitration between
cities in Switzerland).
78
68) Treaty of Bern, Art. 16 (1874).
69) Convention of Bern, Art. 57(3) (1890).
70) General Act of the Berlin Conference on West Africa, Art. 12 (1885).
71) General Act of the Anti-Slavery Convention of Brussels, Art. 55 (1890), in Statutory
Instruments 1892/5017.
72) J. Verzijl, VIII International Law in Historical Perspective 223 (1976) (citing Italy-Uruguay
Treaty, Art. 16(1) (1879)).
73) J. Verzijl, VIII International Law in Historical Perspective 223 (1976) (citing Netherlands-
Portuguese Declaration, Art. 7 (1894)).
74) J. Verzijl, VIII International Law in Historical Perspective 223 (1976). See also H. Cory,
Compulsory Arbitration of International Disputes (1932).
75) Argentina-Italy Arbitration Treaty (1898), cited in J. Verzijl, VIII International Law in
Historical Perspective 223 (1976).
76) See1.04[A][7].
77) Grotius, De jure belli ac pacis, II, Chp. XXIII, 8 (1625), in F. Kelsey, Classics of International
Law 1925 563 (1964).
78) See, e.g., Best, Peace Conferences and the Century of Total War: The 1899 Hague
Conference and What Came After, 75 Intl Affairs 619, 619-21, 623-31 (1999); Caron, War and
International Adjudication: Reflections on the 1899 Peace Conference, 94 Am. J. Intl L. 4
(2000); Janis, Protestants, Progress and Peace in the Influence of Religion: Enthusiasm for
an International Court in Early Nineteenth Century America, in M. Janis (ed.), The Influence
of Religion on the Development of International Law 191 (1991).
79) Raymond, Demosthenes and Democracies: Regime-Types and Arbitration Outcomes, 22
Intl Interactions 1, 3-4 (1996).
80) Institute of International Law, Projet de rglement pour la procdure arbitrale
internationale (Session de La Haye 1875), available at www.idi-iil.org.
81) 1899 Convention for the Pacific Settlement of International Disputes (1899 Hague
Convention). See Bederman, The Hague Peace Conferences of 1899 and 1907, in M. Janis
(ed.), International Courts for the Twenty-First Century 9 (1992); Best, Peace Conferences
and the Century of Total War: The 1899 Hague Conference and What Came After, 75 Intl
Affairs 619, 619-21, 623-31 (1999); Janis, Protestants, Progress and Peace in the Influence of
Religion: Enthusiasm for An International Court in Early Nineteenth Century America, in M.
Janis (ed.), in The Influence of Religion on the Development of International Law 191 (1991);
S. Rosenne (ed.), The Hague Peace Conference of 1899 and 1907 and International
Arbitration: Reports and Documents (2001).
82) J. Scott, The Hague Peace Conferences of 1899 and 1907 276-77, 319-85 (1909). Under these
proposals, contracting states would have been obligated to arbitrate virtually all
disputes with other contracting states under a wide range of treaties (concerning, for
example, communications, transport, navigation, intellectual property, inheritance,
health and judicial cooperation), as well as all claims for monetary damages for wrongful
state actions.
83) 1899 Hague Convention, Arts. 15-29. See Best, Peace Conferences and the Century of Total
War: The 1899 Hague Conference and What Came After, 75 Intl Affairs 619, 619-21, 630
(1999) (Arbitration enthusiasts had hoped that the use of it would be obligatory. The
Great Powers were not having that!).
84) See Bederman, The Hague Peace Conferences of 1899 and 1907, in M. Janis (ed.),
International Courts for the Twenty-First Century 9 (1992); Best, Peace Conferences and the
Century of Total War: The 1899 Hague Conference and What Came After, 75 Intl Affairs 619,
619-21 (1999); Born, A New Generation of International Adjudication, 61 Duke L.J. 775, 796
(2012); Caron, War and International Adjudication: Reflections on the 1899 Peace
Conference, 94 Am. J. Intl L. 4 (2000); J. Scott, The Hague Peace Conferences of 1899 and
1907 (1909). Compare F. Holls, The Peace Conference at the Hague 354 (1900) (describing
Hague Convention as the Magna Charta of International Law) with Posner & Yoo, Judicial
Independence in International Tribunals, 93 Cal. L. Rev. 1, 9-10 (2005) (describing Hague
Convention as a tentative first step[] that fell into desuetude).
85) 1899 Hague Convention, Art. 16. Nothing in the Convention imposed any obligation that
arbitration (or any other form of adjudication) be pursued in particular cases.
86) 1899 Hague Convention, Art. 18.
87) 1899 Hague Convention, Arts. 6, 14.
89) The PCA is described below. See1.04[C][5][d], pp. 185-89.
90) 1899 Hague Convention, Arts. 22-25.
91) The Convention contained (in articles 30 to 57) procedural rules addressing limited
aspects of the arbitral process. The PCA was also responsible for providing limited
services as a registry (the International Bureau). 1899 Hague Convention, Arts. 22, 28.
These services did not include many of the functions of more developed arbitral
institutions, such as appointing arbitrators and hearing challenges to and removing
arbitrators.
92) 1907 Convention for the Pacific Settlement of International Disputes (1907 Hague
Convention).
94) Leading examples include the Island of Palmas Case (The Netherlands v. U.S.), 2 R.I.A.A.
829 (1928), Pious Funds of the California Case, 9 R.I.A.A. 1 (1902) and N. Atl. Coast Fisheries
Case, 11 R.I.A.A. 167 (1910).
79
95) Best, Peace Conferences and the Century of Total War: The 1899 Hague Conference and
What Came After, 75 Intl Affairs 619, 630 (1999) (The great days of the Hagues Court of
Arbitration were over by 1914.).
96) M. Hudson, International Tribunals: Past and Future 7 (1944). See Born, A New Generation
of International Adjudication, 61 Duke L.J. 775, 796 (2012).
97) There have been only three reported PCA conciliations. See PCA, 109th Annual Report,
Annex 4 (2009).
98) See generally S. Rosenne, I The Law and Practice of the International Court, 1920-2005 9-
42, 97-116 (4th ed. 2006).
99) See H. Cory, Compulsory Arbitration of International Disputes 63-65, 136-44 (1932) (same)
(citing compulsory bilateral arbitration treaties in 1920s and 1930s); Sohn, The Function
of International Arbitration Today, 1963 Recueil des Cours 1, 26-27, 33-34, 38-40.
100) See H. Cory, Compulsory Arbitration of International Disputes 63-65, 145-52 (1932); Sohn,
The Function of International Arbitration Today, 1963 Recueil des Cours 1, 29-33.
101) See, e.g., Treaty for the Advancement of Peace, U.S.-Ecuador, Oct. 13, 1914, 39 Stat. 1650;
Treaty for the Advancement of Peace, U.S.-Sweden, Oct. 13, 1914, 38 Stat. 1872; Treaty for
the Advancement of Peace, U.S.-Russia, Sept. 18-Oct. 1, 1914, 39 Stat. 1622; Treaty for the
Advancement of Peace, U.S.-China, Sept. 15, 1914, 39 Stat. 1642; Treaty for the
Advancement of Peace, U.S.-France, Sept. 15, 1914, 38 Stat. 1887; Treaty for the
Advancement of Peace, U.S.-U.K., Sept. 15, 1914, 38 Stat. 1853. See also Noyes, William
Howard Taft and the Taft Arbitration Treaties, 56 Villanova L. Rev. 535 (2011).
102) S. Rosenne, The World Court: What It Is and How It Works 10 (5th ed. 1995).
103) Geneva Protocol for the Pacific Settlement of International Disputes, Official Journal,
Spec. Supp. No. 21, at 21; Geneva General Act for the Pacific Settlement of International
Disputes (1928), 93 U.N.T.S. 343 (1929).
104) Between 1900 and 1914, an estimated 120 bilateral general arbitration treaties,
providing for arbitration of a broad range of disputes between the two contracting
states, were concluded. Sohn, The Function of International Arbitration Today, 1963
Recueil des Cours 1, 26-27, 33-34, 38-40. Between 1914 and 1939, hundreds of additional
bilateral arbitration treaties were also concluded. H. Mangoldt, Arbitration and
Conciliation Treaties, in 1 Encyclopedia of Public International Law 28, 30 (1981).
105) Minutes of the First Session of the Committee on Arbitration and Security, 16 January
1928, L.N. Doc. C.667.M.225.1927.IX (1928), quoted in Sohn, The Function of International
Arbitration Today, 1963 Recueil des Cours 1, 35.
106) H. Mangoldt, Arbitration and Conciliation Treaties, in 1 Encyclopedia of Public
International Law 28, 31 (1981) (In contrast to the astoundingly high number of general
arbitration and conciliation treaties concluded since the beginning of this century, the
frequency of their application to actual disputes is just as astoundingly low.).
107) Sohn, The Function of International Arbitration Today, 1963 Recueil des Cours 1, 40.
108) PCA, 109th Annual Report, Annex 2 (2009). See also A. Stuyt, Survey of International
Arbitrations 1794-1989 (3d ed. 1990).
109) A. Stuyt, Survey of International Arbitrations 1794-1989231-467 (3d ed. 1990). See also Gray
& Kingsbury, Interstate Arbitration Since 1945: Overview and Evaluation, in M. Janis (ed.),
International Courts for the Twenty-First Century 60 (1992).
110) See Born, A New Generation of International Adjudication, 61 Duke L.J. 775 (2012); Charney,
Third Party Dispute Settlement and International Law, 36 Colum. J. Transnatl L. 65, 68
(1997) (While the establishment of the World Court was particularly significant, ad hoc
arbitrationscontinue to be important [in the 20th century]); Gray & Kingsbury, Inter-
State Arbitration Since 1945: Overview and Evaluation, in M. Janis (ed.), International
Courts for the Twenty-First Century 55 (1992); Merrills, The Mosaic of International Dispute
Settlement Procedures: Complementary or Contradictory, 54 Neth. Intl L. Rev. 361 (2007);
A. Stuyt, Survey of International Arbitrations 1794-1989 (3d ed. 1990).
111) See alsoChapter 15.
112) See1.01[A][1]-[2], p. 9.
113) See1.01[A][1]-[2], p. 11.
114) See1.01[A][4].
115) See1.01[A][1], p. 9.
116) See C. Bishop, International Arbitral Procedure (1930); K. Carlston, The Process of
International Arbitration 3-33 (1946); Institute of International Law, Projet de rglement
pour la procdure arbitrale internationale (1875), available at www.idi-iil.org; J. Scott, The
Hague Peace Conferences of 1899 and 1907 286-303 (1909).
118) J. Ralston, International Arbitration From Athens to Locarno 77-78 (1929). See also K.
Carlston, The Process of International Arbitration 7 (1946) (noting that, in 19th century
arbitral practice, opening pleading was often designated case and was followed by
counter-case, or answer and reply); Institute of International Law, Projet de rglement
pour la procdure arbitrale internationale (1875), available at www.idi-iil.org. See15.08.
119) J. Ralston, International Arbitration From Athens to Locarno 79-80 (1929). See also K.
Carlston, The Process of International Arbitration 26-27 (1946); Pietrowski, Evidence in
International Arbitration, 22 Arb. Intl 373, 374-75 (2006); 15.08[W] & [X]; 15.09[A].
120) See Institute of International Law, Projet de rglement pour la procdure arbitrale
internationale (1875), available at www.idi-iil.org. See also K. Carlston, The Process of
International Arbitration 260-64 (1946).
80
121) Pietrowski, Evidence in International Arbitration, 22 Arb. Intl 373, 376-77 (2006) (noting
influence of 19th century arbitral procedure on draft arbitral code adopted by Institut
de Droit International in 1875, Hague Conventions of 1899 and 1907, Rules of the
Permanent Court of International Justice and International Court of Justice, and
International Law Commissions 1958 Model Rules on Arbitral Procedure).
122) Similarly, as discussed below, regardless of the market, cultural context, or geographic
location, parties opted for means of international commercial arbitration that included
party nomination of co-arbitrators. See1.01[B][3], p. 39; 1.01[B][8], pp. 62-63; 12.01[D],
pp. 1663-64.
124) J. Verzijl, VIII International Law in Historical Perspective 192-93 (1974).
125) Fraser, A Sketch of the History of International Arbitration, 11 Cornell L.Q. 179, 179 n.3
(1925-1926) (citing authorities).
127) J. Ralston, International Arbitration From Athens to Locarno 178 (1929) (quoting A.
Mergnhac, Trait thorique et pratique de larbitrage international 40 (1895)).
129) U.S. Articles of Confederation, Art. IX (1781) ([The two disputing States] shall then be
directed to appoint by joint consent, commissioners or judges to constitute a court for
hearing and determining the matter in question: but if they cannot agree, Congress shall
name three persons out of each of the United States, and from the list of such persons
each party shall alternately strike out one, the petitioners beginning, until the number
shall be reduced to thirteen; and from that number not less than seven, nor more than
nine names as Congress shall direct, shall in the presence of Congress be drawn out by
lot, and the persons whose names shall be so drawn or any five of them, shall be
commissioners or judges, to hear and finally determine the controversy, so always as a
major part of the judges who shall hear the cause shall agree in the determination.).
130) Jays Treaty, Arts. V, VI, VII (1794), reprinted in H. Miller, II Treaties and Other International
Acts of the United States of America 1776-1863 245 (1931).
131) Convention for the Adjustment of Claims of Citizens of the United States of America Upon
the Government of The Mexican Republic, Arts. I, VII (1839), reprinted in H. Miller, IV
Treaties and Other International Acts of the United States of America 1776-1863 189 (1931).
132) J. Ralston, International Arbitration From Athens to Locarno 205-26 (1929) (including
Mexican pecuniary and boundary disputes; Chilean, Colombian, Ecuadorean, German,
Peruvian, Spanish and other pecuniary disputes; Norwegian shipping claims and a host
of other matters).
134) Treaty of Washington, Art. I (1871), reprinted in C. Bevans, XII Treaties and Other
135) Treaty of Washington, Art. XII (1871), reprinted in C. Bevans, XII Treaties and Other
136) J. Ralston, International Arbitration From Athens to Locarno 194-96 (1929). A leading
example of this involved disputes over the harvesting of fur seals on U.S. islands. Ibid.
139) 1899 Hague Convention, Art. 24; 1907 Hague Convention, Arts. 45, 54. See R. Caldwell, A
Study of the Code of Arbitral Procedure Adopted by the Hague Peace Conference of 1899
and 1907 (1921).
140) Statute of the PCIJ, Arts. 5, 6 (1920); Statute of the International Court of Justice, Arts. 5, 6
(1945). See generally S. Rosenne, III The Law and Practice of the International Court 1920-
2005 1079-89 (4th ed. 2006). See also12.05[B][6].
141) Treaty of Arbitration Between Guatemala and Honduras (1930).
142) Agreement Establishing A Court of Arbitration for the Purpose of Carrying out the
Delimitation of Maritime Areas Between France and Canada, Art. 1 (1989), reprinted in
I.L.M. Background/Content Summary, 29 Intl Legal Mat. 1 (1990).
143) Agreement Between the Government of the State of Eritrea and the Government of the
Federal Democratic Republic of Ethiopia (the Algiers Agreement) (2000), available at
www.pca-cpa.org.
144) Arbitration Agreement Between the Government of Sudan and the Sudan Peoples
Liberation Movement/Army on Delimiting Abyei Area (2008), available at www.pca-
cpa.org.
145) Arbitration Agreement Between the Government of the Republic of Slovenia and the
Government of the Republic of Croatia (2009), available at www.vlada.si.
147) Agreement Between Lena Goldfields Company and Union of Soviet Socialist Republics,
U.N. Doc. A/CN.4/35, 28, reprinted in ILC, Memorandum on Arbitral Procedure, Prepared
by the Secretariat, II Y.B. I.L.C. 157, 162 (1950) (tribunal composed of two party-nominated
co-arbitrators and the super-arbitratorchosen by the two parties together by mutual
agreement or appointment mechanism).
148) See1.01[B][3] & [8].
149) See12.01[D]; 12.03[A]-[B].
150) Shalakany, Arbitration and the Third World: A Plea for Reassessing Bias Under the Specter
of Neoliberalism, 41 Harv. Intl L.J. 419, 430 (2000).
81
151) A. van den Berg, The New York Arbitration Convention of 1958 6 (1981). See alsoSornarajah,
The Climate of International Arbitration, 8(2) J. Intl Arb. 47, 50-51 (1991) (International
commercial arbitration, particularly in the field of foreign investment contracts,
developed principally in the latter part of the twentieth century.); UNCTAD, Dispute
Settlement: International Commercial Arbitration 20 (2005) (International commercial
arbitration as we know it today began in Continental Europe in the 1920s.).
152) See1.01[A][2] & [5].
153) M. Bohacek, Arbitration and State-Organized Tribunals in the Ancient Procedure of the
Greeks and Romans 197-204 (1952); D. Roebuck, Ancient Greek Arbitration 46-47 (2001).
Indeed, litigation in many historical settings bore little resemblance to contemporary
processes, making the categorization of arbitration as alternative dispute resolution
misleading.
154) SeeLafont, Larbitrage en Msopotamie, 2000 Rev. arb. 557; D. Roebuck, Ancient Greek
Arbitration 23-25, 36-45 (2001); D. Roebuck & B. de Fumichon, Roman Arbitration 193
(2004).
155) D. Roebuck & B. de Fumichon, Roman Arbitration 193 (2004).
156) Pfeiffer & Speiser, One Hundred New Selected Nuzi Texts, in M. Burrows & E. Speiser
(eds.), XVI The Annual of The American Schools of Oriental Research 79, 95 (1936), cited in
L. Edmonson (ed.), Domke on Commercial Arbitration 2.1 (3d ed. 2010 & Update 2013).
See alsoLafont, Larbitrage en Msopotamie, 2000 Rev. arb. 557, 579-81 (describing
evidence of Assyrian merchants resolving commercial disputes through arbitration).
157) Mantica, Arbitration in Ancient Egypt, 12 Arb. J. 155, 158-60 (1957).
158) D. Roebuck, Ancient Greek Arbitration 45-46, 348-49, 358 (2001) (Everywhere in the
Ancient Greek world, including Ptolemaic Egypt, and at all times within our period,
disputing parties considered arbitration to be a natural, perhaps the most natural,
method of resolving the differences they could not settle themselves, even though they
sometimes resorted to litigation (or in earlier times self-help) when they could not get
their own way.).
159) Hammond, Arbitration in Ancient Greece, 1 Arb. Intl 188 (1985) (citing Homer, The Iliad
XVIII 497-508). See also Aeschylus, Eumenides 433-753 (similar description of public
arbitration before distinguished arbitrators, from 460 B.C.); Herodotus, I Histories 96-98
(1858) (fictionalized exploits of Deioces as professional arbitrator); D. Roebuck, Ancient
Greek Arbitration 70-71 (2001) (citing description in Homers Odyssey 11.326 of Eriphyle as
arbitrator).
160) Bonner, The Institution of Athenian Arbitrators, 11 Classical Philology 191, 192 (1916);
Hammond, Arbitration in Ancient Greece, 1 Arb. Intl 188, 189 (1985); D. Roebuck, Ancient
Greek Arbitration 348-49 (2001).
161) D. Roebuck, Ancient Greek Arbitration 348-49 (2001).
162) Demosthenes, Against Meidias, in Demosthenes Against Meidias, Androtion, Aristocrates,
Timocrates, Aristogeiton 69, 94 (1935). See also Velissaropoulos-Karakostas, Larbitrage
dans la Grce antique Epoques archaque et classique, 2000 Rev. arb. 9, 18-26 (outlining
arbitral procedure in Greece during fourth and fifth century B.C.).
163) D. Roebuck, Ancient Greek Arbitration 347-48 (2001) (If the parties chose to submit their
disputes to private arbitration, then throughout the arbitration process they had almost
unlimited freedom of choice. By their agreement they controlled the subject-matter in
dispute, the selection of arbitrators, the limits of their jurisdiction, the rules of
procedure and even whether they should decide the issue according to the law or should
determine according to their sense of fairness.).
164) D. Roebuck, Ancient Greek Arbitration 349 (2001) (where tribunal consisted of more than
one arbitrator, each party would then appoint one, sometimes two, who would be
identified with that partys interests either as a friend or member of the family. The
parties arbitrators would then appoint a koinos, someone common to both sides, who
took his place as an equal with the others.).
165) D. Roebuck, Ancient Greek Arbitration 349 (2001) ([C]ivil litigation in Athens, probably
throughout Greece, was the preserve of the rich.The most common subjects [of
arbitration were] commercial in the widest sense and about property.).
166) See D. Roebuck & B. de Fumichon, Roman Arbitration 94 (2004) (The Romans probably
began to make use of arbitration ex compromisso, a private arbitration created and
controlled by the written agreement of the parties but supported by the praetor, at
some time in the second century BC, at a time of great imperial and colonial
expansion.); 1.01[A][1], p. 10.
167) Stein, Arbitration Under Roman Law, 41 Arb. 203, 203-04 (1974). See also D. Roebuck & B.
de Fumichon, Roman Arbitration 194 (2004) (Across a wide range of subject matter the
Romans had a selection of [dispute resolution] techniques.[A]t their heart was a simple
idea which remained essentially the same. That idea was the appropriateness of private
arbitration, which included a whole toolbag of imaginable techniques, from which the
parties could choose whatever was appropriate for their dispute.).
168) Digest, 2, 4, 8, 27 (Ulpian), in S. Scott (ed.), III The Civil Law (1932).
169) R. Zimmermann, The Law of Obligations 529 (1996). See also Coing, Zur Entwicklung des
Schiedsvertrages im Ius Commune in G. Baumgrtel et al. (eds.), Festschrift fr Heinz
Hbner 35 (1984).
170) M. Kaser & K. Hackl, Das rmische Zivilprozessrecht 640 (2d ed. 1996); Matthias, Die
Entwicklung des rmischen Schiedsgerichts, in Festschrift zum fnfzigjhrigen
Doctorjubilum von Bernhard Windscheid 102 (1888).
82
171) Mantica, Arbitration in Ancient Egypt, 12 Arb. J. 155, 158-60 (1957).
172) D. Roebuck & B. de Fumichon, Roman Arbitration 199 (2004) ([T]he Roman practice [in
arbitration] was much like ours today, particularly in those jurisdictions whose
arbitration law has followed the Roman law on compromissum. The documents that
survive are quite familiar to the modern practitioner, the arbitrators crisp summons to
the parties in Puteoli, and the awards from Dioscoruss files, whose otiose drafting makes
the purists spirits sink.).
173) Digest, 4, 8, 15, 32 (Paulus), in S. Scott (ed.), III The Civil Law (1932); Stein, Labeos
Reasoning on Arbitration, 91 S. African L.J. 135 (1974); R. Zimmermann, The Law of
Obligations 513-14 (1996) (the arbitrator can act only on the basis of a contractual
relationship (sui generis) existing between himself and the parties to the dispute).
174) R. Zimmermann, The Law of Obligations 529 (1996). See also Coing, Zur Entwicklung des
Schiedsvertrages im Ius Commune, in G. Baumgrtel et al. (eds.), Festschrift fr Heinz
Hbner 35-36 (1984).
175) D. Roebuck & B. de Fumichon, Roman Arbitration 160 (2004) (The parties controlled the
scope of the arbiters powers to dictate the form of the proceedings.).
176) Stein, Arbitration Under Roman Law, 41 Arb. 203, 205 (1974). Professor Stein describes the
use of three-person tribunals, where disputes were resolved by majority vote. Ibid. See
also12.02[E].
177) M. Kaser & K. Hackl, Das rmische Zivilprozessrecht 639 (2d ed. 1996); Litewski,
Schiedsgerichtsbarkeit nach den ltesten ordines iudiciarii, in N. Brieskorn et al. (eds.),
Vom mittelalterlichen Recht zur neuzeitlichen Rechtswissenschaft 198 (1994) (Roman-
canonic law of 11th through 13th century); Matthias, Die Entwicklung des rmischen
Schiedsgerichts, in Festschrift zum fnfzigjhrigen Doctorjubilum von Bernhard
Windscheid 102 (1888). The parties, however, apparently had no direct claim against the
arbitrator to perform his undertaking. Bornhak, Schiedsvertrag und Schiedsgericht nach
geschichtlicher Entwicklung und geltendem Recht, 30 Zeitschrift fr deutschen
Zivilproze 1, 13 (1902); R. Zimmermann, The Law of Obligations 514 (1996).
178) D. Roebuck & B. de Fumichon, Roman Arbitration (2004); F. Sanborn, Origins of the Early
English Maritime and Commercial Law 8-9 (1930); Stein, Arbitration Under Roman Law, 41
Arb. 203, 203-04 (1974).
179) D. Roebuck & B. de Fumichon, Roman Arbitration 105 (2004).
180) D. Roebuck & B. de Fumichon, Roman Arbitration 98 (2004) (A compromissum contained
a number of promises: to choose and appoint an arbitrator; to commit the matter to
him; to participate in the process; to perform whatever the award required; and to pay a
penalty in default of performance of any of those promises.); Stein, Arbitration Under
Roman Law, 41 Arb. 203, 203-05 (1974); R. Zimmermann, The Law of Obligations 526 (1996)
(The mere agreement to submit to arbitration was not binding under classical law;
[T]he parties could make their arrangement indirectly enforceable by means of two
(non-genuine) stipulationes poenae. Each of the parties had to promise a penalty; a
unilateral stipulationes poenae did not give rise to a valid compromissum.).
181) Compare D. Roebuck & B. de Fumichon, Roman Arbitration 126-27 (2004) (exclusivity of
arbitration).
182) R. David, Arbitration in International Trade 84-85 (1985); D. Roebuck & B. de Fumichon,
Roman Arbitration 121-24 (2004).
183) See1.01[B][3]-[6].
184) SeeChapter 3.
185) K.-H. Ziegler, Das private Schiedsgericht im antiken rmischen Recht 199-201 (1971).
186) K.-H. Ziegler, Das private Schiedsgericht im antiken rmischen Recht 182 (1971); R.
Zimmermann (ed.), The Law of Obligations 527 (1996).
187) Ziegler, Geschichtliche und dogmatische Aspekte des Schiedsvertrages, in R. Zimmermann
(ed.), Rechtsgeschichte und Privatrechtsdogmatik 671 et seq. (1999).
188) M. Kaser & K. Hackl, Das rmische Zivilprozessrecht 643 (2d ed. 1996). By 330 A.D., there
seems to have been episcopal jurisdiction (as opposed to contract-based arbitration).
By the end of the 4th century, however, Roman legislation limited episcopal jurisdiction
to religious disputes, while commercial disputes could be referred to a bishop based
only on the parties agreement. B. Matthias, Die Entwicklung des rmischen
Schiedsgerichts in Festschrift zum fnfzigjhrigen Doctorjubilum von Bernhard
Windscheid 132, 144 (1888).
189) K.-H. Ziegler, Das private Schiedsgericht im antiken rmischen Recht 175 (1971).
190) Mantica, Arbitration in Ancient Egypt, 12 Arb. J. 155, 161-62 (1957); Modrzejewski, Private
Arbitration in the Law of Greco-Roman Egypt, 6 J. Juristic Papyrology 239 (1952); R.
Taubenschlag, The Law of Greco-Roman Egypt in the Light of Papyri 372-75, 377 (1944).
Compare T. Gagos & P. van Minnen, Settling A Dispute: Toward A Legal Anthropology of
Late Antique Egypt 32-35, 121-27 (1994) (suggesting that arbitration was used, but less
frequently than mediation, in 3rd- to 7th-century Egypt).
191) W. Crum & G. Steindorff, Koptische Rechtsurkunden aus Djeme 835-37 (1912), quoted in
Mantica, Arbitration in Ancient Egypt, 12 Arb. J. 155, 162 (1957).
192) See1.02[B][5] & [7].
193) Wolaver, The Historical Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 133
(1934-1935).
194) See1.01[A][2].
195) See R. David, Arbitration in International Trade 85-86 (1985); D. Roebuck, Mediation and
Arbitration in the Middle Ages: England 1154-1558 (2012).
83
196) Before the development of the common law, arbitration appears to have been popular
among the Anglo-Saxons. See, e.g., Baker, From Lovedays to ADR: Arbitration and Dispute
Resolution in England 1066-1800, 3(5) Transnatl Disp. Mgt 1 (2006); Murray, Arbitration in
the Anglo-Saxon and Early Norman Periods, 16 Arb. J. 193 (1961); Roebuck, Larbitrage en
droit anglais avant 1558, 2002 Rev. arb. 535; D. Roebuck, Mediation and Arbitration in the
Middle Ages: England 1154-1558 (2012).
197) J. Cohen, Commercial Arbitration and the Law 4 (1918).
198) F. Pollock & F. Maitland, The History of English Law 668 (2d ed. 1898). For a less expansive
view, see A. Carter, A History of English Legal Institutions 258-59 (1902) (Members of the
same gild were bound to bring their disputes before the gilds before litigating the
matter elsewhere.).
199) SeeRoebuck, Larbitrage en droit anglais avant 1558, 2002 Rev. arb. 535, 567-76.
200) W. Blackstone, III Commentaries on the Laws of England 33 (1768), quoted in Wolaver, The
Historical Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 136 (1934-1935). See
also Baker, From Lovedays to ADR: Arbitration and Dispute Resolution in England 1066-
1800, 3(5) Transnatl Disp. Mgt 1 (2006) (describing Medieval arbitrations in England
involving Italian merchants).
201) Baker, From Lovedays to ADR: Arbitration and Dispute Resolution in England 1066-1800,
3(5) Transnatl Disp. Mgt 1 (2006) (distinction between arbitration, conciliation and
miscellaneous public courts was unclear in Medieval England); Wolaver, The Historical
Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 137 (1934-1935).
202) G. Malynes, Consuetudo, vel, Lex Mercatoria, or The Ancient Law Merchant: Divided Into
Three Parts: According to the Essentials Parts of Trafficke: Necessarie for All Statesmen,
Judges, Magistrates, Temporal and Civil Lawyers, Mint-men, Merchants, Mariners, and All
Others Negotiating in all Places of the World Chp. XV (1622). See also id. at Chp. XV (3d. ed.
1685) (when Merchants by their Letters or Commissions use these or the like words, Let
All things be done as shall be thought most expedient or convenient, that the said
Commissions or Directions are to be left to the interpretation of Arbitrators when any
question ariseth, which is also in many more questions concerning Merchants).
203) Simpson, The Penal Bond With Conditional Defeasance, 82 L.Q. Rev. 392 (1966).
204) Roebuck, Larbitrage en droit anglais avant 1558, 2002 Rev. arb. 535, 563-65 (The judges
increasingly accepted that not only an award but also an arbitration agreement or even
a mere agreement that would arrange to compromise could prevent a claim in a
tribunal.); D. Roebuck, Mediation and Arbitration in the Middle Ages: England 1154-1558
371-80 (2012).
205) Roebuck, Larbitrage en droit anglais avant 1558, 2002 Rev. arb. 535, 556; D. Roebuck,
Mediation and Arbitration in the Middle Ages: England 1154-1558 384-87 (2012).
206) R. David, Arbitration in International Trade 88-89 (1985).
207) D. Bell, Lawyers and Citizens: The Making of A Political Elite in Old Regime France 31 (1994);
Castan, The Arbitration of Disputes Under the Ancien Regime, in J. Bossy (ed.), Disputes
and Settlements: Law and Human Relations in the West 234-35, 253-54 (1983) (arbitration
of various types of social disputes); R. David, Arbitration in International Trade 88-89
(1985); Kessler, Enforcing Virtue: Social Norms and Self-Interest in An Eighteenth-Century
Merchant Court, 22 Law & Hist. Rev. 71, 82-86 (2004).
208) Bader, Arbiter arbitrator seu amicabilis compositor, 77 Zeitschrift fr Rechtsgeschichte
Kan. Abt. 239, 240 et seq. (1960); H. Krause, Die geschichtliche Entwicklung des
Schiedsgerichtswesens in Deutschland 36 et seq., 52 (1930).
209) H. Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 2 et
seq., 40 et seq. (1930).
seq. (1930).
211) See Bader, Arbiter arbitrator seu amicabilis compositor, 77 Zeitschrift fr
Rechtsgeschichte Kan. Abt. 239, 240 et seq. (1960).
212) M. Kobler, Das Schiedsgerichtswesen nach bayerischen Quellen des Mittelalters 107-08
(1966).
213) See Bader, Arbiter arbitrator seu amicabilis compositor, 77 Zeitschrift fr
Rechtsgeschichte Kan. Abt. 239, 240 et seq. (1960).
214) H. Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 4, 31,
35-36, 52 (1930).
215) H. Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 33
(1930).
216) R. Zimmermann, The Law of Obligations 529 (1996).
217) R. Zimmermann, The Law of Obligations 528 (1996).
218) Coing, Zur Entwicklung des Schiedsvertrages im Ius Commune 35 et seq., in G. Baumgrtel
et al. (eds.), Festschrift fr Heinz Hbner (1984); R. Zimmermann, The Law of Obligations
529 (1996).
219) There are records of arbitral tribunals composed of German academics trained in Italy
as early as the 14th century. M. Kobler, Das Schiedsgerichtswesen nach bayerischen
Quellen des Mittelalters 113-14 (1966); A. Lindheim, Das Schiedsgericht im modernen
Civilprocesse 14 (1891).
84
220) H. Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 48, 54
(1930); K. Kroeschell, Deutsche Rechtsgeschichte 2 (1250-1650) 34 (8th ed. 1992); R.
Zimmermann, The Law of Obligations 529 (1996) (in European Middle Ages, arbitrator
responsible for deciding dispute was bound to follow the rules of civil procedure (Nam
arbiter est, quem partes eliguant ad cognoscendum de quaestione, vel lite) and had to
apply law (Arbiter debet sequi iuris rigorem, et aequitatem scriptam)).
221) It is sometimes suggested that parties turned to canonical arbitration for sophisticated
answers that customary German law could not offer. M. Kobler, Das Schiedsgerichtswesen
nach bayerischen Quellen des Mittelalters 49 (1966); A. Lindheim, Das Schiedsgericht im
modernen Civilprocesse 14 (1891).
seq. (1930).
223) H. Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland 48, 54
(1930).
224) M. Bloch, Feudal Society 359 (1961) (emphasis added).
225) Adams, The Anglo-Saxon Courts of Law, in H. Adams et al. (eds.), Essays in Anglo-Saxon
Law 1, 26-27, 53 (1876).
226) See1.01[B][5], pp. 45-50; Benson, An Exploration of the Impact of Modern Arbitration
Statutes on the Development of Arbitration in the United States, 11 J. L. Econ. & Org. 479,
480 n.2, passim (1995).
227) Vynior v. Wilde [1609] 77 ER 595 (English K.B.). Earlier English decisions had commented
favorably on the use of arbitration to reduce litigation and resolve disputes. Cook v.
Songate [1588] 4 Leon 31 (English K.B.).
228) Vynior v. Wilde [1609] 77 ER 595, 598-600 (English K.B.) (emphasis added).
229) See, e.g., J. Cohen, Commercial Arbitration and the Law 84 et seq. (1918); Roebuck, The
Myth of Judicial Jealousy, 10 Arb. Intl 395, 400-01 (1994); Wolaver, The Historical
Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 138-41 (1934-1935).
230) See1.01[B][1]-[2].
231) R. David, Arbitration in International Trade 109 (1985) (noting willingness of English courts
to enforce penalty provisions); W. Holdsworth, 12 A History of English Law 519-20 (2d ed.
1966) (discussing legal distinction between penalty clauses and liquidated damages);
Roebuck, The Myth of Judicial Jealousy, 10 Arb. Intl 395 (1994).
232) An Act for the Better Preventing Frivolous and Vexatious Suits, 1697, 8 & 9 Will. III, Chp. 11.
See also Mann, The Formalization of Informal Law: Arbitration Before the American
Revolution, 59 N.Y.U. L. Rev. 443, 459 n.66 (1984) (noting that Act responded in part to
equity courts increasing refusal to enforce penalty clauses beyond amount of actual
damages).
233) Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 4 (1999).
234) English Civil Procedure Act, 1698, 9 & 10 Will. III, Chp. 15 (emphasis added). See also S.
Kyd, A Treatise on the Law of Awards (2d ed. 1799).
235) English Civil Procedure Act, 1698, 9 & 10 Will. III, Chp. 15.
236) W. Blackstone, III Commentaries on the Laws of England 16-17 (1768). It appears that use
of the 1698 Arbitration Act was limited, because of reluctance to invoke the contempt
authority of English courts. Samuel, Arbitration Statutes in England and the USA, 8 Arb. &
Disp. Res. L.J. 2, 4 (1999). As noted elsewhere, the use of commercial, professional and
other forms of non-legal influence appears to have played a more significant role in
enforcing arbitration agreements and awards during this era. See1.01[B][5], pp. 45-50;
N.Y.U. L. Rev. 443, 459 n.66 (1984).
237) See Doleman & Sons v. Ossett Corp. [1912] 3 KB 257, 267-68 (English Ct. App.).
238) Kill v. Hollister [1746] 95 ER 532, 532 (English K.B.).
239) See1.01[B][5].
240) English Civil Procedure Act, 1833, 3 & 4 Will. IV, Chp. 42, 39-41.
241) Scott v. Avery [1856] 5 H.L. Cas. 811, 853 (House of Lords).
242) Scott v. Avery [1856] 5 H.L. Cas. 811, 853 (House of Lords).
243) Russell v. Pellegrini [1856] 6 E. & B. 1020, 1025 (English Q.B.).
244) Scott v. Avery [1856] 5 H. L. Cas. 811, 853 (House of Lords). Compare Roebuck, The Myth of
Judicial Jealousy, 10 Arb. Intl 395 (1994).
245) Horowitz & Oldham, John Locke, Lord Mansfield and Arbitration During the Eighteenth
Century, 36 (I) The Historical Journal 137 (1993) (concluding that common law hostility to
arbitration was not significant); Roebuck, The Myth of Judicial Jealousy, 10 Arb. Intl 395,
403-04 (1994) (concluding that early English courts were not hostile to arbitration).
246) See1.04[B][1][d].
247) English Common Law Procedure Act, 1854, 17 & 18 Vict., Chp. 125. See Samuel, Arbitration
Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 6 (1999).
248) English Common Law Procedure Act, 1854, 17 & 18 Vict., Chp. 125, 17 (Every agreement
for submission to arbitration by consent, whether by deed or instrument in writing not
under seal may be made a rule of any one of the superior courts of law or equity at
Westminster, on the application of any party thereto, unless such agreement or
submission contain words purporting that the parties intend that it should not be made
a rule of court.).
249) English Common Law Procedure Act, 1854, 17 & 18 Vict., Chp. 125, 4. The Act also
required arbitrators to issue their awards within three months of their appointment,
unless the parties or a superior court judge agreed to extend the time limit. Id. at 15.
85
250) See Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 6 (1999)
(The 1889 Arbitration Act can be regarded as the first modern arbitration statute in the
common law world.).
251) English Arbitration Act, 1889, 52 & 53 Vict., Chp. 49 (arbitration agreement is irrevocable,
unless otherwise indicated).
252) English Arbitration Act, 1889, 52 & 53 Vict., Chp. 49, 4.
253) English Arbitration Act, 1889, 52 & 53 Vict., Chp. 49, 5, 8, 10, 19.
254) Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2 (1999). The
1889 Act was amended in 1934, in light of the Geneva Protocol and Geneva Convention.
See id. at 13; 1.01[C][1]-[2].
255) See1.04[B][1][d].
256) Cf. Re Shaw and Sims [1851] 17 LTOS 160 (English Bail Ct.) (arbitrators may be chosen by
lot). But see Harris v. Mitchell [1704] 2 Vern. 485 (English Ct. Ch.) (selection of umpire by
lot rendered his appointment and award invalid).
There is also some evidence that women served as arbitrators at the time. S. Kyd, A
Treatise on the Law of Awards 70-71 (2d ed. 1799) (an unmarried woman may be an
arbitratrix).
257) Baker, From Lovedays to ADR: Arbitration and Dispute Resolution in England 1066-1800,
3(5) Transnatl Disp. Mgt 1, 5 (2006) (advantage of 13th century arbitration: the parties
could nominate their own arbitrators with an umpire in case of disagreement); R.
Merkin, Arbitration Law 12.2 n.2 (1991 & Update August 2013). See also Doley v. Pitstow
[1755] 96 ER 859 (English K.B.); Elliott v. Chevall [1699] 125 ER 284 (English Common Pleas).
258) An umpire typically presided over deliberations between two party-nominated
arbitrators who were expected to function as quasi-advocates for their nominating
parties. See12.02[E].
259) See1.04[B][1][d]; 11.03[E][1][b]. There is historical evidence suggesting that legal
formalities had made occasional in-roads even in early English arbitration, provoking
complaints from arbitration users. R. Henryson, The Tale of the Sheep and the Dog,
reprinted in 7 Arb. Intl 66 (1991).
260) See1.01[B][2].
261) M. de Boissson, Le droit franais de larbitrage interne et international 8 (2d ed. 1990)
(quoting Thouret, Member of Constituent Assembly).
262) Law of 16-24 August 1790, Art. 1 (As arbitration is the most reasonable means of
terminating disputes between citizens, the legislators shall not make any provision that
would diminish either the favor or the efficiency of an arbitration agreement.).
263) French Constitution of Year I, 1793, Art. 86; French Constitution of Year III, 1795, Art. 210
(The right to chose arbitrators in any dispute shall not be violated in any way
whatsoever.). See Clre, Larbitrage rvolutionnaire: apoge et dclin dune institution
(1790-1806), 1981 Rev. arb. 3, 5-6; Hilaire, Larbitrage dans la priode moderne (XVIe-XVIIIe
sicle), 2000 Rev. arb. 187.
264) Clre, Larbitrage rvolutionnaire: apoge et dclin dune institution (1790-1806), 1981 Rev.
arb. 3, 21-23; R. David, Arbitration in International Trade 90 (1985). This perception
apparently arose from the use of compulsory arbitration in a wide range of civil disputes
(including domestic relations, inheritance and similar areas).
265) Articles 1003 to 1028 of the 1806 Code of Civil Procedure introduced an extremely
unfavorable legal regime for arbitration. See Clre, Larbitrage rvolutionnaire: apoge et
dclin dune institution (1790-1806), 1981 Rev. arb. 3; M. de Boissson, Le droit franais de
larbitrage interne et international 8-11 (2d ed. 1990).
266) French Code of Civil Procedure, 1806, Art. 1006; R. David, Arbitration in International
Trade 90 (1985); M. de Boissson, Le droit franais de larbitrage interne et international
8-11 (2d ed. 1990).
267) French Commercial Code, 1804, Arts. 51-63, 332; M. de Boissson, Le droit franais de
larbitrage interne et international 10 (2d ed. 1990).
268) R. David, Arbitration in International Trade 90 (1985) (quoting Bellot).
269) M. Bourbeau, Procedure civile, Tome VI 422 (1837-1863), quoted in Rubbelin-Devichi &
Loquin, JurisClasseur Proc. civ., Fasc. 1010 19.
270) Mounier, Rapport Rigaud, sur le projet de loi relative larbitrage forc, 1856 Dalloz 113.
271) Judgment of 10 July 1843, Cie LAlliance v. Prunier, 1843 Dalloz 561 (French Cour de
cassation civ.), reprinted in 1992 Rev. arb. 399.
272) J.-L. Delvolv, J. Rouche & G. Pointon, French Arbitration Law and Practice 8 (2d ed.
2009); Remarks by Avocat Gnral Hello regarding Judgment of 10 July 1843, Cie LAlliance
v. Prunier (French Cour de cassation civ.), 1992 Rev. arb. 399, 400 (The obligation to
nominate arbitrators in the arbitration agreement aims at avoiding incidents and
proceedings regarding the composition of an arbitral tribunal, and mainly at warning
the citizens against their own silliness, which would lead them to subscribe too easily
and without anticipation to future arbitrations, without being assured of having capable
and trustworthy persons as voluntary judges.). See also5.01[D].
273) Judgment of 10 July 1843, Cie LAlliance v. Prunier, 1843 Dalloz 561 (French Cour de
cassation civ.), reprinted in 1992 Rev. arb. 399.
274) See1.04[B][1][b].
275) See1.04[B][1][b]; French Commercial Code, 1925, Art. 631.
276) See1.01[A][3].
277) Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 7 (1999)
(baleful influence of the common law).
86
278) See Benson, An Exploration of the Impact of Modern Arbitration Statutes on the
Development of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 481-82 (1995);
N.Y.U. L. Rev. 443 (1984) [this is the current subsection].
279) See1.04[B][1][e][i]-[iv].
280) J. Auerbach, Justice Without Law? 32 (1983); Jones, Three Centuries of Commercial
Arbitration in New York: A Brief Survey, 1956 Wash. U. L.Q. 193, 195 (1956). While the label
arbitrator was used, the early Dutch colonial arrangements appear not to have been
arbitration as generally referred to today. As in some other historical settings,
arbitration was sometimes used to refer to a type of specialized court procedure with
mandatory jurisdiction.
281) Jones, Three Centuries of Commercial Arbitration in New York: A Brief Survey, 1956 Wash. U.
L.Q. 193, 196 (1956) (quoting Daly, History of the Court of Common Pleas, in 1 Smith xxix
(N.Y.C.P. 1855)).
282) Aiken, New Netherlands Arbitration in the 17th Century, 29 Arb. J. 145 (1974); A. Flick (ed.), 3
History of the State of New York 14-16 (1933) (noting influence of Dutch practice on
colonial New York under English rule); Jones, Three Centuries of Commercial Arbitration in
New York: A Brief Survey, 1956 Wash. U. L.Q. 193, 197-98 (1956).
L.Q. 193, 198 (1956). See also Mann, The Formalization of Informal Law: Arbitration Before
the American Revolution, 59 N.Y.U. L. Rev. 443, 472 (1984) (arbitration widely used to
resolve commercial disputes in 17th and 18th century).
284) Aiken, New Netherlands Arbitration in the 17th Century, 29 Arb. J. 145 (1974); Benson, An
Exploration of the Impact of Modern Arbitration Statutes on the Development of
Arbitration in the United States, 11 J. L. Econ. & Org. 479, 481-82 (1995); Conklin, Lost
Options for Mutual Gain? The Lawyer, The Layperson, and Dispute Resolution in Early
America, 28 Ohio St. J. Disp. Res. 581 (2013); Konig, Law and Society in Puritan
Massachusetts: Essex County 1629-1692 108-16 (1979) (arbitration used often and
effectively in the early years of settlement); Mann, The Formalization of Informal Law:
Arbitration Before the American Revolution, 59 N.Y.U. L. Rev. 443, 447, 452 (1984) (Along
with other legal traditions, arbitration was part of the cultural baggage of the trans-
Atlantic migration; there is no reason to doubt that arbitration was an accepted form
of adjudicating disputes in Connecticut before 1680); Odiorne, Arbitration Under Early
New Jersey Law, 8 Arb. J. 117 (1953).
L.Q. 193, 202 (1956) (quoting N.Y. Weekly Post-Boy, 20 May 1751). See also J. Higgins,
Sampson Against the Philistines, or the Reformation of Lawsuits 37 (2d ed. 1805) (early
19th-century pamphlet reporting on popularity of arbitration: so strong is the
predilection of men in favor of adjustment by reference, and so convenient is that mode
of terminating disputes, which have stood years in courts, been found to courts and
suitors, that in some states more judgments of courts are given on reports of referees
than on verdicts of juries); Mann, The Formalization of Informal Law: Arbitration Before
the American Revolution, 59 N.Y.U. L. Rev. 443, 454 (1984) ([Arbitration] was expeditious
and inexpensive. It was also less public and less adversarial than litigation.).
L.Q. 193, 213-14 (1956).
L.Q. 193, 211-18 (1956).
288) Benson, An Exploration of the Impact of Modern Arbitration Statutes on the Development
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 481-85 (1995).
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 482 (1995).
L.Q. 193, 218 (1956).
291) L. Edmonson (ed.), Domke on Commercial Arbitration 2.6 to 2.9 (3d ed. 2010 & Update
2013); Gwynne, The Oldest American Tribunal, 1 Arb. J. 117, 120 (1937); Mann, The
Formalization of Informal Law: Arbitration Before the American Revolution, 59 N.Y.U. L.
Rev. 443 (1984); Odiorne, Arbitration Under Early New Jersey Law, 8 Arb. J. 117 (1953).
292) J. Higgins, Sampson Against the Philistines, or the Reformation of Lawsuits 32 (2d ed. 1805).
293) M. Horwitz, The Transformation of American Law, 1780-1860 151 (1977) (noting that Quaker
doctrine urged that business disputes should be settled in a Christian manner.
Thereforeno member should appeal to law; buthe should refer his difference to
arbitration by persons of exemplary character in the Society.) (quoting T. Clarkson, 2 A
Portraiture of Quakerism 56 (1808)).
294) L. Friedman, A History of American Law 13 (3d ed. 2005). These arbitrations were
deemed as valid as the judgments of the Courts of Justice. Ibid. (quoting E. Bronner,
William Penns Holy Experiment 36 (1962)).
295) J. Auerbach, Justice Without Law? 25 (1983).
296) Groendyk v. Winsmore, reprinted in L. de Valinger (ed.), Court Records of Kent County,
Delaware, 1680-1705 4-5 (1959).
87
297) An Act for the More Easy and Effectually Finishing of Controversies by Arbitration, 1753, in
C. Hoadley (ed.), 10 The Public Records of the Colony of Connecticut 201-02 (1877)
(modeled on English Arbitration Act, 1698; permitting arbitration agreements to be
made a rule of court, with awards enforceable through contempt power of court). See
N.Y.U. L. Rev. 443 (1984).
Earlier Connecticut legislative enactments had encouraged resort to arbitration,
including a statement of approval in the first meeting of the Connecticut legislation (in
1645). J. Trumbull (ed.), 1 The Public Records of the Colony of Connecticut 117
(unnecessary tryalls by Jurymight be prevented if arbitrations were attended in a
more private way).
298) I Laws of the State of New York, 1802, Chp. XX, 1-23 (14th Sess.). Similar legislation was
proposed by some commentators at the time. See B. Austin, Observations on the
Pernicious Practice of the Law as Published Occasionally in the Independent Chronicle
(1796) (criticism of litigation and proposals for arbitration); J. Higgins, Sampson Against
the Philistines, or the Reformation of Lawsuits 41, 95 (2d ed. 1805) (proposing legislation
entitling either party to require resolution of disputes by arbitration).
299) Mann, The Formalization of Informal Law: Arbitration Before the American Revolution, 59
N.Y.U. L. Rev. 443, 458-60 (1984) (colonists used arbitration deeds, conditioned bonds
and promissory notes in late 17th century and 18th century Connecticut to make
arbitration agreements and awards enforceable).
300) 1793 Insurance Company of North American Insurance Policy, quoted in Wimm & Davis,
Arbitration of Reinsurance Disputes: Is There A Better Way?, 59 Disp. Res. J. 22, 22 (2004).
See also Arbitration Award, May 14, 1733, Gillette v. Hosford, 12 Connecticut Archives,
Private Controversies 39 (2d Ser. 1735) (arbitration agreed for the freindly [sic] ending
and appeasing of differences and controvercies), quoted in Mann, The Formalization of
Informal Law: Arbitration Before the American Revolution, 59 N.Y.U. L. Rev. 443, 463 (1984).
301) J. Auerbach, Justice Without Law? 19-46 (1983); Benson, An Exploration of the Impact of
Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J. L.
Econ. & Org. 479, 488 (1995) (arbitration was being developed and expanded under the
auspices of trade associations, mercantile exchanges, and other commercial
organizations where nonlegal sanctions apparently were relatively strong); Bernstein,
Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry,
21 J. Legal Studies 115 (1992). See also Conklin, Transformed, Not Transcended: The Role of
Extrajudicial Dispute Resolution in Antebellum Kentucky and New Jersey, 48 Am. J. Legal
Hist. 39 (2006).
302) See1.01[B][5], pp. 45-50.
303) Home Ins. Co. v. Morse, 87 U.S. 445, 451 (U.S. S.Ct. 1874); Robert Lawrence Co. v. Devonshire
Fabrics, Inc., 271 F.2d 402, 406 (2d Cir. 1959) (discussing U.S. courts hostility to
arbitration); J. Cohen, Commercial Arbitration and the Law 226-52 (1918); Sayre,
Development of Commercial Arbitration Law, 37 Yale L.J. 595, 595-97 (1927-1928).
304) Tobey v. County of Bristol, 23 F.Cas. 1313, 1321-22 (C.C.D. Mass. 1845). See also5.01[A].
305) Thomas W. Finucane Co. v. Bd of Educ. of Rochester, 82 N.E. 737 (N.Y. 1907).
306) See, e.g., Restatement (First) Contracts 550 (1932) (only nominal damages are
recoverable for its breach); Aktieselskabet Korn-Og Foderstof Kompagniet v.
Rederiaktiebolaget Atlanten, 250 F. 935, 937 (2d Cir. 1918) (breach of arbitration
agreement yields only nominal damages unless arbitral expenses have actually been
incurred); Munson v. Straits of Dover S.S. Co., 99 F. 787, 789 (S.D.N.Y. 1900) (no case is to
be found in whichany other than nominal damages have ever been indicated to be
recoverable, because too loose, indefinite and incapable of verification), affd, 100 F.
1005 (2d Cir. 1900); Sayre, Development of Commercial Arbitration Law, 37 Yale L.J. 595,
604-05 (1927-1928). See also Doleman & Sons v. Ossett Corp. [1912] 3 KB 257, 267-68
(English Ct. App.) (It will be evident, however, that the remedy in damages must be an
ineffective remedy in cases where the arbitration had not been actually entered into, for
it would seem difficult to prove any damages other than nominal.); Tan, Damages for
Breach of Forum Selection Clauses, Principled Remedies, and Control of International Civil
Litigation, 40 Tex. Intl L.J. 623 (2004-2005) (discussing conflicting authority on
availability of damages for breach of forum selection clause). See also8.03[C][7].
307) See1.01[B][3].
308) See1.01[B][4].
309) J. Story, 1 Commentaries on Equity Jurisprudence as Administered in England and America
670 (13th ed. 1886).
88
310) J. Story, 2 Commentaries on Equity Jurisprudence as Administered in England and America
1457 (13th ed. 1886) (citing Kill v. Hollister and its English progeny). See also The Hope, 35
U.S. 138 (U.S. S.Ct. 1836) (relying on doctrine of ousting courts of jurisdiction to hold
that agreement to arbitrate did not bar civil litigation); Parsons v. Ambos, 48 S.E. 696,
697 (Ga. 1904) (The mere executory agreement to submit is generally revocable.
Otherwise, nothing would be easier than for the more astute party to oust the courts of
jurisdiction. By first making the contract and then declaring who should construe it, the
strong could oppress the weak, and in effect so nullify the law as to secure the
enforcement of contracts usurious, immoral or contrary to public policy.).
The broad declaration that arbitration agreements were unenforceable as contrary to
public policy was also reflected in contemporaneous U.S. decisions regarding forum
selection agreements. See G. Born & P. Rutledge, International Civil Litigation in United
States Courts 462-63 (5th ed. 2011).
311) Blodgett Co. v. Bebe Co., 214 P. 38, 39 (Cal. S.Ct. 1923) (Judges and commentators have
ascribed the origin of the rule to the jealousy of courts in the matter of their power and
jurisdiction and have been somewhat inclined to criticize it on that ground. Another and
better ground assigned for it is that citizens ought not to be permitted or encouraged to
deprive themselves of the protection of the courts by referring to the arbitrament of
private persons or tribunals, in no way qualified by training or experience to pass upon
them, questions affecting their legal rights.); Cocalis v. Nazlides, 139 N.E. 95, 96 (Ill. 1923).
See also5.01[A].
312) See Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 982-86 (2d Cir. 1942), for
a detailed (and influential) historical review of the enforceability of arbitration
agreements at common law. See also S. Rep. No. 536, 68th Cong., 1st Sess. 2-3 (1924)
([judges] jealousy of their rights as courts, coupled with the fear that if arbitration
agreements were to prevail and be enforced, the courts would be ousted of much of
their jurisdiction); Arbitration of Interstate Commercial Disputes: Joint Hearings on S.
1005 and H.R. 646 Before the Subcommissions of the Commissions on the Judiciary, 68th
Cong. 21 (1924).
313) Meacham v. Jamestown, Franklin and Clearfield. R.R., 211 N.Y. 346, 354 (N.Y. 1914)
(Cardozo, J., concurring). See also Prince Steam-Shipping Co. v. Lehman, 39 F. 704, 704
(S.D.N.Y. 1889) (Such agreements have repeatedly been held to be against public policy
and void.); Wood v. Humphrey, 114 Mass. 185, 186 (Mass. 1873) (It has been long settled
that agreements to arbitrate which entirely oust the courts of jurisdiction will not be
supported either at law or in equity.); Hurst v. Litchfield, 39 N.Y. 377, 379 (N.Y. 1868)
(Such stipulations [for arbitration] are regarded as against the policy of the common
law as having a tendency to exclude the jurisdiction of the courts.).
314) W. Sturges, A Treatise on Commercial Arbitrations and Awards 45 (1930).
315) See1.01[B][3], pp. 37-39.
316) Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 406 (2d Cir. 1959).
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 483 (1995). See also Lvy, The
Transformation of Arbitration Law 1835-1870: The Lessening of Judicial Hostility Towards
Private Dispute Resolution (unpublished paper 1993); W. Wooldridge, Uncle Sam: The
Monopoly Man (1970); Paulsson, International Arbitration Is Not Arbitration, 2008:2
Stockholm Intl Arb. Rev. 1, 5 (U.S. Chamber of Commerce representations that
enforcement of arbitral awards depends in substantial part on a moral sanction, such
as can be exercised by the International Chamber of Commerce).
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 484-85 (1995) (New York Stock
Exchange; Quakers; New York Chamber of Commerce). See also1.01[B][5].
319) See, e.g., Burchell v. Marsh, 58 U.S. 344, 351-52 (U.S. S.Ct. 1854); Condon v. Southside R.R.
Co., 14 Gratt. 320 (Va. 1858); Snodgrass v. Gavit, 28 Pa. 221 (Pa. 1857) (dicta); Doolittle v.
Malcom, 8 Leigh 608 (Va. 1837). See generally Benson, An Exploration of the Impact of
Modern Arbitration Statutes on the Development of Arbitration in the United States, 11 J. L.
Econ. & Org. 479, 485-87 (1995) (discussing cases); Conklin, Transformed, Not Transcended:
The Role of Extrajudicial Dispute Resolution in Antebellum Kentucky and New Jersey, 48
Am. J. Legal Hist. 39 (2006).
From an early date, Pennsylvania decisions held that an agreement to arbitrate future
disputes before a specifically-named arbitrator was not revocable (in contrast to an
agreement to arbitrate before an as-yet-unidentified arbitrator). W. Sturges, A Treatise
on Commercial Arbitrations and Awards 48-49 (1930). Similar rules applied in some other
states. Conklin, Transformed, Not Transcended: The Role of Extrajudicial Dispute
Resolution in Antebellum Kentucky and New Jersey, 48 Am. J. Legal Hist. 39 (2006).
89
320) See, e.g., Ebert v. Ebert, 5 Md. 353, 354 (Md. 1854) (every reasonable intendment is now
made in favor of [arbitral] awardsand that all matters have been decided by them,
unless the contrary shall appear on the face of the award); Doolittle v. Malcom, 8 Leigh
608 (Va. 1837). See also President etc. of Delaware & H. Canal Co. v. Pennsylvania Coal Co.,
50 N.Y. 250, 258 (N.Y. 1872) (It appears to be well settled by authority that an agreement
to refer all matters of difference or dispute that may arise to arbitration, will not oust a
court of law or equity of jurisdiction. The reason of the rule is by some traced to the
jealousy of the courts, and a desire to repress all attempts to encroach on the
exclusiveness of their jurisdiction; and by others an aversion of the courts, from reasons
of public policy, to sanction contracts by which the protection which the law affords the
individual citizens is renounced. An agreement of this character induced by fraud, or
overreaching, or entered into unadvisedly through ignorance, folly or undue pressure,
might well be refused a specific performance, or disregarded.But when the parties
stand upon an equal footing, and intelligently and deliberately, in making their
executory contracts, provide for an amicable adjustment of any difference that may
arise, either by arbitration, or otherwise, it is not easy to assign at this day any good
reason why the contract should not stand, and the parties made to abide by it, and the
judgment of the tribunal of their choice.).
321) Condon v. Southside R.R. Co., 1858 WL 3945, at *6-7 (Va.). One may surmise that George
Washingtons attitude towards arbitration, expressed in his last will and testament,
favorably influenced Virginian courts. See1.01[B][8].
322) See1.01[B][5], p. 45; Mann, The Formalization of Informal Law: Arbitration Before the
American Revolution, 59 N.Y.U. L. Rev. 443, 458-60 (1984).
323) 22 U.S.C.A. 161 (1927) (duty of foreign service officers to encourage use of arbitration and
to facilitate arbitral processes).
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 488 (1995) (arbitration was
being developed and expanded under the auspices of trade associations, mercantile
exchanges, and other commercial organizations where nonlegal sanctions apparently
were relatively strong). See also Bernstein, Opting Out of the Legal System: Extralegal
Contractual Relations in the Diamond Industry, 21 J. Legal Studies 115 (1992); Bernstein,
Private Commercial Law in the Cotton Industry: Creating Cooperation Through Rules,
Norms and Institutions, 99 Mich. L. Rev. 1724, 1725 (2001) (The institutions that create and
administer the [cotton] industrys private legal system work extraordinarily well.The
arbitration tribunals that resolve disputes do so expeditiously and inexpensively. Their
decisions, which are recorded in written opinions, reveal a distinctive and coherent
jurisprudential approach. Within the industry, arbitration awards are widely respected
and complied with promptly.).
325) Hamilton v. Liverpool & London & Globe Ins. Co., 136 U.S. 242, 242-55 (U.S. S.Ct. 1890)
(recognizing arbitral award determining damages, where court decided general question
of liability); United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co., 222 F. 1006,
1008-09, 1010-11 (S.D.N.Y. 1915). See1.01[B][5]. Compare A. Corbin, 6A Corbin on Contracts
1432-44B (1962) (addressing arbitration agreements under heading of illegal
bargains).
326) To Validate Certain Agreements for Arbitration, H.R. Rep. No. 68-96, 1 (1924); Chamber of
the State of New York, Report of the Committee on Arbitration (1917); Sayre, Development
of Commercial Arbitration Law, 37 Yale L.J. 595, 595 n.2 (1927-1928).
327) See1.01[C][1]; U.S. FAA, 9 U.S.C. 1et seq.; N.Y. Arbitration Law, Chp. 275, Laws 803-807
(1920); Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 7-13
(1999).
328) Berkovitz v. Arbib & Houlberg, 130 N.E. 288, 290-92 (N.Y. 1921) (upholding New York
arbitration legislation); Stone, Rustic Justice: Community and Coercion Under the Federal
Arbitration Act, 77 N.C. L. Rev. 931, 982-87 (1999).
329) See1.01[B][2].
330) W. Haeger, Schiedsgerichte fr Rechtsstreitigkeiten der Handelswelt 2 (1910), quoted in
Berger, The New German Arbitration Law in International Perspective, 26 Forum Intl 1, 1
(2000).
331) A. Lindheim, Das Schiedsgericht im modernen Civilprocesse 17 (1891).
332) Begrndung des Entwurfs einer Zivilprozessordnung, Deutscher Reichstag, II, Legislatur-
Periode, I, session 1876, ad no. 6, 476, quoted in Cohn, Commercial Arbitration and the
Rules of Law: A Comparative Study, 4 U. Toronto L.J. 1, 16 (1942).
333) See3.02[B][3][a].
334) W. Haeger, Schiedsgerichte fr Rechtsstreitigkeiten der Handelswelt 21 (1910).
335) See W. Haeger, Schiedsgerichte fr Rechtsstreitigkeiten der Handelswelt 24 (1910).
336) Weiss, Arbitration in Germany, 43 L.Q. Rev. 205, 206 (1927). But see Kahn, Arbitration in
England and Germany, 12 J. Comp. Legis. & Intl L. 58, 76-77 (1930) (suggesting that Weisss
view of German courts was too bleak); Nussbaum, Schiedsgerichtsschriftstellerei zwecks
Strung internationaler Beziehungen, in 2 Internationales Jahrbuch fr
Schiedsgerichtswesen 384 (1928) (arguing that Weiss misinterpreted German law).
337) Nussbaum, Schiedsgerichtswesen, 42 Zeitschrift fr Zivilprozerecht 254, 259-60 (1912),
referring to Judgment of 28 January 1908, 69 RGZ 52, 55 (German Reichsgericht).
90
338) Legal Opinion Dated 17 October 1925, 31 DJZ 500, 501 (Chairman of Reichskartellgericht)
(1926) (emphasizing states duty to ensure that requirements of due process and
impartiality of arbitrators are observed during arbitral process); Nussbaum,
Schiedsgerichte und Rechtsordnung, 1926 JW 55.
339) Blomeyer, Betrachtungen ber die Schiedsgerichtsbarkeit, in Festgabe zum siebzigsten
Geburtstag von Leo Rosenberg 59 (1949); Kuntze, Schiedsgericht oder Rechtsprechung
durch die Gerichte des Staates, 1934 JW 649, 651; Raeke, Dienst am Recht, 65 Juristische
Wochenschrift 3 (1935).
340) See Richtlinien des Reiches ber Schiedsgerichte, 95 Deutsche Justiz 52, 821 (1933).
341) Kuntze, Schiedsgericht oder Rechtsprechung durch die Gerichte des Staates, 63 JW 649, 651
(1934).
342) Cohn, Commercial Arbitration and the Rules of Law: A Comparative Study, 4 U. Toronto L.J.
1, 27-28 (1941); Cohn, Foreign Awards and Exchange Restrictions Under German Law, 21 J.
Comp. Legis. & Intl L. 75-76, 81-82 (1939).
343) Cohn, Commercial Arbitration and the Rules of Law: A Comparative Study, 4 U. Toronto L.J.
1, 27 (1941).
344) See1.01[B][4].
345) Judgment of 17 December 1936, Pas. 1936 I 457, 458 (Belgian Cour de cassation); G. Keutgen
& G. Dal, Larbitrage en droit belge et international Tome I: Le droit belge 42 (2d ed.
2006); Keutgen & Huys, Chronique de Jurisprudence: Larbitrage (1950-1975), 1976 Journal
des Tribunaux 53, 54.
346) Sanders, The Netherlands, VI Y.B. Comm. Arb. 60 (1981) (describing Dutch arbitral
procedure under 1838 law); A. van den Berg, R. van Delden & H. Snijders, Netherlands
Arbitration Law 1.1 (1993).
347) van Bladel, Arbitration in the Building Industry in the Netherlands, 54 Disp. Res. J. 42, 43
(1999). See also Moglen, Commercial Arbitration in the Eighteenth Century: Searching for
the Transformation of American Law, 93 Yale L.J. 135, 136-37 (1983-1984) (noting historical
Dutch fondness for extrajudicial settlement as reflected in American colonies).
348) Aiken, New Netherlands Arbitration in the 17th Century, 29 Arb. J. 145, 146-49 (1974)
(describing influence of Roman arbitration law on Dutch legal tradition).
349) R. David, Arbitration in International Trade 101-02 (1985).
350) See, e.g., M. Moser & J. Choong (eds.), Asia Arbitration Handbook 431, 845 (2011).
351) M. Abu-Nimer, Non-Violence and Peacebuilding in Islam: Theory & Practice (2003); El-
Kosheri, Is There A Growing International Arbitration Culture in the Arab-Islamic Juridical
Culture?, in A. van den Berg (ed.), International Dispute Resolution: Towards An
International Arbitration Culture 47 (1998); Majeed, Good Faith and Due Process: Lessons
From the Shariah, 20 Arb. Intl 97, 104 (2004); S. Saleh, Commercial Arbitration in the Arab
Middle East 15 et seq. (2d ed. 2006).
352) S. Amin, Commercial Arbitration in Islamic Law and Iranian Law (1984); A. El-Ahdab & J. El-
Ahdab, Arbitration With the Arab Countries 5-6 (3d ed. 2011).; S. Saleh, Commercial
Arbitration in the Arab Middle East 18 (2d ed. 2006).
353) S. Saleh, Commercial Arbitration in the Arab Middle East 12 (2d ed. 2006).
354) Majeed, Good Faith and Due Process: Lessons From the Shariah, 20 Arb. Intl 97, 104
(2004).
355) El-Kosheri, Is There A Growing International Arbitration Culture in the Arab-Islamic
Juridical Culture?, in A. van den Berg (ed.), International Dispute Resolution: Towards An
International Arbitration Culture 47 (1998).
356) A. El-Ahdab & J. El-Ahdab, Arbitration With the Arab Countries 5 (3d ed. 2011).
357) SeeA. El-Ahdab & J. El-Ahdab, Arbitration With the Arab Countries 5 (3d ed. 2011)
(describing contemporary arbitration practices in countries across Arabic Middle East);
S. Saleh, Arbitration in the Arab Middle East 18-19 (1984).
358) Fry, Islamic Law and the Iran-United States Claims Tribunal: The Primacy of the
International Law Over Municipal Law, 18 Arb. Intl 105 (2002).
359) See M. Abu-Nimer, Non-Violence and Peacebuilding in Islam, Theory & Practice 63 (2003).
360) A. El-Ahdab & J. El-Ahdab, Arbitration With the Arab Countries 8-9 (3d ed. 2011).
361) Al Qurashi, Arbitration Under the Islamic Sharia, 1 Oil, Gas & Energy L. Intl (2003); Fathy,
Arbitration According to Islamic Law (Sharia), 1 Arab Arb. J. 31 (2000). As discussed above,
the institution of party-nominated arbitrators was an enduring feature of both state-to-
state and commercial arbitration in Europe from Antiquity until the present. See1.01[A]
[5]; 1.01[B][1], [3] & [8]; 12.01[D]; 12.03[A]-[B].
362) A. El-Ahdab & J. El-Ahdab, Arbitration With the Arab Countries 9-11 (3d ed. 2011).
363) A. El-Ahdab & J. El-Ahdab, Arbitration With the Arab Countries 9 (3d ed. 2011).
364) Article 1841 of the Civil Code provided broadly that Actions relating to rights concerning
property may be settled by arbitration. Ottoman Civil Code, 1876, Art. 1841.
365) Ottoman Civil Code, 1876, Art. 1847. The arbitrators authority was limited to the persons
who have appointed him, and the matters he has been appointed to decide. Ottoman
Civil Code, 1876, Art. 1842.
366) Ottoman Civil Code, 1876, Art. 1849.
367) II Encyclopaedia Judaica 364 (2d ed. 2007). Jewish courts are referred to in the
Pentateuch. Exodus 18:25-26; Deuteronomy 16:38, 17:8-13.
91
368) II Encyclopaedia Judaica 365 (2d ed. 2007); H. Lapin, Rabbis as Romans: The Rabbinic
Movement in Palestine, 100-400 C.E. 99 (2012) (describing increasing scope of rabbinic
arbitration in 3d and 4th century); Z. Warhaftig, Studies in Jewish Law 25-26 (1985)
(arbitration gradually established its prominence in Jewish adjudication, until finally it
became the sole adjudicative institution that was recognized by the Romans, pursuant
to the Emperors order in the year 398 of the Common era).
Some authorities conclude that arbitration predated Roman times, merely receiving
impetus from Roman domination of the judicial system. B. Cohen, Jewish and Roman Law
657, 796 (1966); A. Gulak, Foundations of Jewish Law IV.30 (1922) (most plausible view is
that the [Roman] assumption of jurisdiction over civil law and the dispersal of the
permanent courts prompted Rabbi Meir to amend his rulings regarding the
establishment of arbitrators courts).
369) S. Assaf, Jewish Courts and Procedure in the Post-Talmudic Period 54-57 (1924). See also
Sinai, Arbitration as An Ideal Judicial Procedure, in J. Fleishman (ed.), Jewish Law
Association Studies XVIII: The Bar-Ilan Conference Volume 279, 284-85 (2008).
370) II Encyclopaedia Judaica 365 (2d ed. 2007) (Codex Theodosianus 2:2, 10; Codex Justinianus
1:9, 8). [T]he background to the creation of arbitration as an institution of Jewish judicial
authority [finds] expression in an order of Honorius in 398 C.E., according to which Jews
were rendered subject to Roman law and the regular courts, but permitted, in civil law
matters and by mutual consent of the parties, to resort to their own arbitration
proceedings, enforceable at the hands of the provincial judges. II Encyclopaedia Judaica
365 (2d ed. 2007). See also H. Lapin, Rabbis as Romans: The Rabbinic Movement in
Palestine, 100-400 C.E. 121 (2012) (Roman law gave effect to agreements to resolve
disputes before the Jews or the Patriarchs after the manner of arbitration).
371) II Encyclopaedia Judaica 365 (2d ed. 2007).
372) Sinai, Arbitration as An Ideal Judicial Procedure, in J. Fleishman (ed.), Jewish Law
Association Studies XVIII: The Bar-Ilan Conference Volume 279, 279 (2008).
373) M. Rodkinson, The Babylonian Talmud: Tract Sanhedrin, Chp. 3 (2010). See also Sinai,
Arbitration as An Ideal Judicial Procedure, in J. Fleishman (ed.), Jewish Law Association
Studies XVIII: The Bar-Ilan Conference Volume 279, 279 (2008) (In the zabla form of
arbitration in the Jewish tradition, each party chooses one judge and the third judge is
chosen jointly by both parties or by the judges of their choice.).
Association Studies XVIII: The Bar-Ilan Conference Volume 279, 285 (2008) (distinguishing
Roman and Greek arbitrations, which supposedly were characterized by compromise,
from Jewish arbitration, which is not just reaching compromise and conciliation).
Association Studies XVIII: The Bar-Han Conference Volume 279, 287-89 (2008) (citing Rabbi
Yaakov Reisher: arbitration was an ancient tradition always practised and in many
communities, even though they had permanent judges, there were many cases in which
the parties compromised and agreed to litigate in zabla proceedings).
376) Gordis, Judaism: Freedom of Expression and the Right to Knowledge in the Jewish Tradition,
54 Colum. L. Rev. 676, 689 (1954).
377) S. Passamaneck & N.S. Hecht et al. (eds.), An Introduction to the History and Sources of
Jewish Law 326 (1996).
378) Kirshner, Introduction, 16 Jewish History 1, 10 (2002).
379) Siegmund, Division of the Dowry on the Death of the Daughter: An Instance in the
Negotiation of Laws and Jewish Customs in Early Modern Tuscany, 16 Jewish History 73, 81
(2002).
381) II Encyclopaedia Judaica 365 (2d ed. 2007) (citing authorities).
382) II Encyclopaedia Judaica 365-66 (2d ed. 2007) (Talmudic authorities rejected suggestion
that Jewish sources justify[] the arbitrators blind support of the party by whom he was
chosen when they should rather be read as meaning that the arbitrators appointed by
both parties would thoroughly investigate the facts objectively and negotiate on the
respective merits of the litigants claim the third arbitrator listening to them and then
deciding between them).
383) See B. Cohen, Jewish and Roman Law: A Comparative Study 13-17 (1985) (arbitral
procedures chosen by parties in traditional Jewish arbitrations); Z. Warhaftig, Studies in
Jewish Law 23-24 (1985) (arbitral procedures chosen by parties in traditional Jewish
arbitrations).
388) II Encyclopaedia Judaica 367 (2d ed. 2007) (citing M. Krochmal, Zemah Zedek 37 (1675)).
389) Grossman, Is This Arbitration? Religious Tribunals, Judicial Review, and Due Process, 107
Colum. L. Rev. 169 (2007); Royde, Jewish Law Courts in America: Lessons Offered to Sharia
Courts by the Beth Din of America Precedent, 57 N.Y.L.S. L. Rev. 287, 298 (2012); Wolfe,
Faith-Based Arbitration: Friend or Foe? An Evaluation of Religious Arbitration Systems and
Their Interaction With Secular Courts, 75 Fordham L. Rev. 427 (2006).
390) Legall, Beth Din Meets Secular Law: Orthodox Jews Often Rely on Their Own Religious
Court, the Beth Din, to Resolve Civil Disputes in Matters as Diverse as Business and Divorce,
62(2) Intl B. News 25, 25 (2008); European Beth Din, available at europeanbethdin.com.
92
391) See, e.g., Raghavan, New Horizons for Alternative Dispute Resolution in India The New
Arbitration Law of 1996, 13(4) J. Intl Arb. 5, 7 (1996) (describing influence of English law);
Schaefer, Leaving the Colonial Arbitration Laws Behind: Southeast Asias Move into the
International Arbitration Arena, 16 Arb. Intl 297, 298 (2000) (describing history of
arbitration in Southeast Asia); Xu & Wilson, One Country, Two International Commercial
Arbitration-Systems, 17(6) J. Intl Arb. 47 (2000) (describing British influence on arbitration
in Hong Kong).
392) Cohen, Chinese Mediation on the Eve of Modernization, in D. Buxbaum (ed.), Traditional
and Modern Legal Institutions in Asia and Africa (1967); Liu & Lourie, International
Commercial Arbitration in China: History, New Developments and Current Practice, 28 J.
Marshall L. Rev. 539, 540 (1995); D. Roebuck, A Miscellany of Disputes 21-26 (2000); Wang,
The Unification of the Dispute Resolution System in China: Cultural, Economic, and Legal
Contributions, 13(2) J. Intl Arb. 5, 7-10 (1996).
Arbitration was also reportedly preferred due to the interdependent nature of Chinese
society in which families resided in the same villages for generations. It is said that
villagers would not risk alienating a neighbor by bringing a lawsuit, so amicable
settlement of disputes was preferred. Liu & Lourie, International Commercial Arbitration
in China: History, New Developments and Current Practice, 28 J. Marshall L. Rev. 539, 540
(1995).
393) Wang, The Unification of the Dispute Resolution System in China: Cultural, Economic, and
Legal Contributions, 13(2) J. Intl Arb. 5, 8-9 (1996).
394) For a discussion of the influence of Confucianism on the resolution of social conflict in
China, see E. Black & G. Bell (eds.), Law and Legal Institutions of Asia: Traditions,
Adaptations, and Innovations 28 (2011).
395) See P. Huang, Chinese Civil Justice, Past and Present 4, 29 (2010).
396) See, e.g., M. Moser & J. Choong (eds.), Asia Arbitration Handbook 431, 819 (2011).
397) See M. Moser & J. Choong (eds.), Asia Arbitration Handbook 583 (2011).
398) See P. Richman (ed.), Many Ramayanas: Diversity of A Narrative Tradition in South Asia 123
(1991).
399) See P. Richman (ed.), Many Ramayanas: Diversity of A Narrative Tradition in South Asia 123
(1991).
400) M. Moser & J. Choong (eds.), Asia Arbitration Handbook 845, 903 (2011); Raghavan, New
Horizons for Alternative Dispute Resolution in India The New Arbitration Law of 1996, 13(4)
J. Intl Arb. 5, 6 (1996).
401) See R. Josh & G. Narvani, Panchayat Raj in India: Emerging Trends Across the States 13
(2002).
402) R. Josh & G. Narvani, Panchayat Raj in India: Emerging Trends Across the States 13 (2002).
403) D. Rautray, Master Guide to Arbitration in India 1-010 et seq. (2008).
404) Butler & Finsen, Southern Africa, in E. Cotran & A. Amissah (eds.), Arbitration in Africa 193-
95 (1996) (discussing impact of Roman-Dutch law and English arbitration practice in
Southern Africa). But see Amoussou-Guenou, Former French Territories, in E. Cotran & A.
Amissah (eds.), Arbitration in Africa 270 (1996) (France did not extend arbitration
provisions of French Code of Civil Procedure to its African colonies).
405) Goodman-Everard, Book Review Arbitration in Africa, 14 Arb. Intl 457, 458 (1998).
406) Liundi, Introduction: Status of Tanzania and Zanzibar and Applicable Laws, in E. Cotran &
A. Amissah (eds.), Arbitration in Africa 78-79 (1996).
407) Liundi, Introduction: Status of Tanzania and Zanzibar and Applicable Laws, in E. Cotran &
A. Amissah (eds.), Arbitration in Africa 78-79 (1996).
408) N. Blackaby, D. Lindsey & A. Spinillo (eds.), International Arbitration in Latin America,
Overview of Regional Developments 3-10 (2003); J. Kleinheisterkamp, International
Commercial Arbitration in Latin America 5 (2005); C. Leathley, International Dispute
Resolution in Latin America: An Institutional Overview (2006).
409) J. Kleinheisterkamp, International Commercial Arbitration in Latin America 5 (2005).
410) Balli & Coale, Recent Reforms to Mexican Arbitration Law: Is Constitutionality Achievable?,
30 Tex. Intl L.J. 535, 539-40 (1995); von Wobeser, Mexico, in N. Blackaby, D. Lindsey & A.
Spinillo (eds.), International Arbitration in Latin America 155, 159, 162 (2002).
411) Jorquiera & Helmlinger, Chile, in N. Blackaby, D. Lindsey & A. Spinillo (eds.), International
Arbitration in Latin America 89, 90-91 (2002); J. Kleinheisterkamp, International
Commercial Arbitration in Latin America 9 (2005).
412) Falco, Recognition and Enforcement of Foreign Arbitral Awards: A New Chapter in
Brazilian Arbitration History, 8 Am. Rev. Intl Arb. 367, 369 (1997).
413) Jorquiera & Helmlinger, Brazil, in N. Blackaby, D. Lindsey & A. Spinillo (eds.),
International Arbitration in Latin America, 61, 62-66 (2002); J. Kleinheisterkamp,
International Commercial Arbitration in Latin America 8 (2005).
414) J. Kleinheisterkamp, International Commercial Arbitration in Latin America 114-15 (2005);
Lee, Brazil, in N. Blackaby, D. Lindsey & A. Spinillo (eds.), International Arbitration in Latin
America 61, 62-63, 69 (2002).
415) Falco, Recognition and Enforcement of Foreign Arbitral Awards: A New Chapter in
Brazilian Arbitration History, 8 Am. Rev. Intl Arb. 367, 369 (1997); Volz & Haydock, Foreign
Arbitral Awards: Enforcing the Award Against the Recalcitrant Loser, 21 Wm. Mitchell L.
Rev. 867, 874-77 nn.29, 47 (1996).
416) H.-W. Greminger, Die Genfer Abkommen von 1923 und 1927 ber die internationale private
Schiedsgerichtsbarkeit 1-3 (1957).
93
417) Grigera Nan, Arbitration and Latin America: Progress and Setbacks, 21 Arb. Intl 127, 141
(2005).
418) See, e.g., Lew, The Recognition and Enforcement of Arbitration Agreements and Awards in
the Middle East, 1 Arb. Intl 161, 161 (1985) (the law in many Middle Eastern countries has
given rise to uncertainty and insecurity with respect to the effectiveness of the
arbitration agreement and award).
419) See1.04[A][1][b]; 1.04[B].
420) See1.01[A][5].
421) See1.01[B][2], [5]-[6].

422) See1.01[B][2], [5] & [9].
423) See1.01[A][5].
424) See1.01[B][1], [3], [5]-[7].
425) J. Fitzpatrick (ed.), 37 The Writings of George Washington 275, 294 (1940).
426) See1.01[B][7][b], pp. 56-57; M. Rodkinson, The Babylonian Talmud: Tract Sanhedrin, Chp. 3
(2010) (Civil cases by three; one party may select one and so the other, and both of
them select one more; so is the decree of R. Meir. The Sages, however, maintain that the
two judges may select the third one.).
427) Institute of International Law, Projet de rglement pour la procdure arbitrale
internationale Art. 2 (1875).
428) Michel v. Am. Century Ins. Co., 44 N.Y.S. 832, 832-33 (N.Y. App. Div. 1897); Terry v. Moore, 22
N.Y.S. 785, 786-87 (N.Y. Ct. Common Pleas 1893). But see Smith v. Alker, 5 N.E. 791, 791-92
(N.Y. 1886) (disputes to be submitted to two arbitrators). See1.01[B][5].
429) See authorities cited at 1.01[B][5].
430) See, e.g., Union Ins. Co. of Philadelphia v. Cent. Trust Co. of New York, 157 N.Y. 633, 634-35
(N.Y. 1899) (arbitrator); Day v. Hammond, 57 N.Y. 479, 484 (N.Y. 1874) (discussing
distinctions between umpires and third arbitrators, although observing that [t]he
cases sometimes refer indiscriminately to these two classes of persons); Michel v. Am.
Century Ins. Co., 44 N.Y.S. 832, 832 (N.Y. App. Div. 1897) (umpire).
In some cases, the parties agreed to the appointment of a third arbitrator or umpire
only where the first two arbitrators disagreed or where certain conditions were not met.
But even in these cases, a rehearing with the full participation of the third arbitrator or
umpire was often required. See Hammond, 57 N.Y. 57 N.Y. 479, 484-88 (N.Y. 1874); In re
Grening, 26 N.Y.S. 117, 118 (N.Y. Gen. Term 1893).
431) Z. Swift, 2 A System of the Laws of the State of Connecticut 7 (1796) (Arbitrators are not
tied down to the same strictness, formality and precision as courts of law. While they
have greater latitude in the mode of proceeding than courts of law, they have ampler
powers to do compleat and perfect justice between the parties in the decision of the
matters in dispute.).
N.Y.U. L. Rev. 443, 475 (1984) (arbitrations in 18th-century Connecticut conducted with
counsel for parties and testimony under oath).
N.Y.U. L. Rev. 443, 468 (1984) (arbitration in 18th century Connecticut was public event
with numerous spectators).
434) See1.01[B][4]-[5].
435) Treaty Concerning the Union of South American States in Respect of Procedural Law,
Signed at Montevideo, 11 January 1889 (1889). Only six states ratified the Montevideo
Convention. The subsequent Bustamante Code of 1928, approved in 1928 by the Inter-
American conference, also attracted few ratifications.
436) See1.01[A][4].
of Arbitration in the United States, 11 J. L. Econ. & Org. 479, 491-94 (1995) (emphasizing role
of lobbying from legal profession in passage of FAA); Drahozal, In Defense of Southland:
Reexamining the Legislative History of the Federal Arbitration Act, 78 Notre Dame L. Rev.
101, 125-26 (2002); I. Macneil, American Arbitration Law: Reformation, Nationalization,
Internationalization 25-26 (1992); Stempel, A Better Approach to Arbitrability, 65 Tul. L.
Rev. 1377, 1380 (1990-1991). See also Arbitration of Interstate Commercial Disputes: Joint
Hearings on S. 1005 and H.R. 646 Before the Subcommissions of the Commissions on the
Judiciary, 68th Cong. 21-24 (1924) (listing 67 business organizations supporting proposed
Act and letters of endorsement from various groups); id. at 10 (statement of American Bar
Association representative W.H.H. Piatt).
438) See authorities cited at 1.04[A][1][a], pp. 100-02.
439) H.-W. Greminger, Die Genfer Abkommen von 1923 und 1927 ber die internationale private
Schiedsgerichtsbarkeit 1-3 (1957); Lorenzen, Commercial Arbitration International and
Interstate Aspects, 43 Yale L.J. 716, 750 (1933-1934); Nussbaum, Treaties on Commercial
Arbitration A Test of International Private-Law Legislation, 56 Harv. L. Rev. 219, 220-22
(1942-1943); A. van den Berg, The New York Arbitration Convention of 1958 6-7, 113-18
(1981).
440) The ICCs role in negotiating the Geneva Protocol was later taken over by the League of
Nations. For a review and interpretation of the Protocol and the Conventions see Mezger,
Zur Auslegung und Bewertung der Genfer Schiedsabkommen von 1923 und 1927, in 24
Zeitschrift fr auslndisches und internationales Privatrecht 222 (1959).
94
441) Geneva Protocol on Arbitration Clauses in Commercial Matters (Geneva Protocol), 27
L.N.T.S. 158 (1924). The Geneva Protocol was signed on 24 September 1923 at a meeting of
the Assembly of the League of Nations.
442) Contrary suggestions are inaccurate. See, e.g., H. Gharavi, The International Effectiveness
of the Annulment of An Arbitral Award 46 (2002) (The Protocol was not a major
contribution to the development of the law of arbitration). In fact, the Protocols
internationally-binding requirement of recognition of the validity of arbitration
agreements, and the formulae used in implementing that requirement, had a profound
effect on the language of the New York Convention, the UNCITRAL Model Law and other
leading instruments in the field and on the future of international arbitration law.
See2.01[A][1]; 5.01[B].
443) Geneva Protocol, Arts. III, IV (1924). See2.03[C][1][a]; 2.03[G]; 15.02[A].
444) Geneva Protocol, Art. I. See8.02[A][1].
445) Geneva Protocol, Art. I. See2.03[B][1][a], pp. 297-98.
446) Geneva Protocol, Art. I.
447) Geneva Protocol, Art. IV.
448) See2.01[A].
449) See5.01[B][1].
450) See2.03[B] (especially 2.03[B][1][a]).
451) See1.04[A][1][a].
452) See1.04[A][1] (New York Convention); 1.04[A][2] (European Convention); 1.04[B][1][a]
(UNCITRAL Model Law).
453) See1.01[C][2]; 2.01[A].
454) See2.01[A].
455) Geneva Protocol, Art. III. See3.02[A][1].
456) See11.03[C][1][a]; 26.03[A].
457) Geneva Protocol, Art. II. See11.03[C][1][a].
458) See4.04[A][1][a].
459) Geneva Convention on the Execution of Foreign Arbitral Awards (Geneva Convention),
92 L.N.T.S. 302 (1929). See H.-W. Greminger, Die Genfer Abkommen von 1923 und 1927 ber
die internationale private Schiedsgerichtsbarkeit 3-5 (1957); Mezger, Zur Auslegung und
Bewertung der Genfer Schiedsabkommen von 1923 und 1927, 24 Zeitschrift fr
auslndisches und internationales Privatrecht 222 (1959); A. van den Berg, The New York
Arbitration Convention of 1958 6-7, 113-18 (1981).
460) Geneva Convention, Arts. 1-4.
461) Geneva Convention, Art. 1(a).
462) Geneva Convention, Art. 1(b).
463) Geneva Convention, Art. 1(c).
464) Geneva Convention, Art. 1(d).
465) Geneva Convention, Art. 1(e).
466) See23.01[A]; 26.03[B][1] & [4]; A. van den Berg, The New York Arbitration Convention of
1958 7 (1981).
467) See11.03[C][1][b]; 26.03[B][4].
468) See1.04[A]; 2.01[A][1]; 5.01[B][1].
469) See26.03[A]-[B].
470) See8.02[A][1]; 8.03[C].
471) See19.04[A][1]-[4].
472) See15.02[A].
473) See1.04[B][1][e][i], p. 153; N.Y. Arbitration Law, 1920, Ch. 275, Laws 803-807 (providing for
validity of arbitration agreements).
474) French Commercial Code, 1925, Art. 631. See also von Mehren, International Commercial
Arbitration: The Contribution of the French Jurisprudence, 46 La. L. Rev. 1045, 1049-51
(1985-1986) (discussing impact of 1925 amendment).
475) See Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 13
(1999). See also1.01[B][3].
476) See1.01[B][5]; 1.04[B][1][e][i].
477) U.S. FAA, 9 U.S.C. 2. Section 2 was implemented by 3 and 4 of the FAA, providing for
the stay of litigation of matters subject to arbitration and for orders compelling
arbitration. See8.02[C]; 8.03[C][1].
478) U.S. FAA, 9 U.S.C. 9, 10. For discussion of 9 and 10, see25.03[B], pp. 3181-83.
479) See1.01[B][5]; 1.04[B][1][e][i]-[ii].
480) Marine Transit Corp. v. Dreyfus, 284 U.S. 263 (U.S. S.Ct. 1932) (upholding FAA against
constitutional attack). See1.04[B][1][e][iii].
481) See1.04[A][1][a].
482) See1.04[C][4].
483) See1.04[B][1][a].
484) See1.04[B].
485) This includes periodic amendments of the arbitration rules of the ICC, AAA/ICDR, LCIA,
ICSID and other institutions. See1.04[C][5].
486) See R. Dolzer & M. Stevens, Bilateral Investment Treaties 267-326 (1995); C. McLachlan, L.
Shore & M. Weiniger, International Investment Arbitration 1.01 to 1.16 (2007); UNCTAD,
Bilateral Investment Treaties in the Mid-1990s, U.N. Doc. UNCTAD/ITE/IIT/7, U.N. Sales No.
E.98.II.D.8 122 (1998); UNCTAD, The Entry Into Force of Bilateral Investment Treaties, U.N.
Doc. No. UNCTAD/WEB/ITE/IIA/2006/9 (2006).
95
487) See1.01[B][1]-[2].
488) See1.01[A][5]; 1.01[B][1]-[2] & [5].
489) See1.02.
490) See1.01[A][5]; 1.01[B][8]; 2.02.
491) See2.02.
492) United Intl Holdings, Inc. v. Wharf (Holdings) Ltd, 210 F.3d 1207 (10th Cir. 2000) ($153
million damages, including $58.5 million punitive damages); Shell Oil Co. v. Franco-
Franco, CV 03-88446 NM (C.D. Cal. 2005) ($489.4 million Nicaraguan default judgments);
CBS Corp. v. WAK Orient Power & Light Ltd, 168 F.Supp.2d 403 (E.D. Pa. 2001) ($1.4 billion
Pakistani default judgment, plus Pakistani judicial order to provide $11.5 billion letter of
credit).
493) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 2-4, 462-63
(5th ed. 2011).
494) Smith Kline & French Labs. v. Bloch [1983] 2 All ER 72, 74 (English Ct. App.) (As a moth is
drawn to the light, so is a litigant drawn to the United States. If only he can get his case
into their courts, he stands to win a fortune.). See generally M. Reimann & R.
Zimmermann (eds.), The Oxford Handbook of Comparative Law (2010); T. Weir, An
Introduction to Comparative Law (3d ed. 1998).
495) See Transparency International, Global Corruption Report 2007: Corruption in Judicial
Systems xxi (2007) (Corruption is undermining justice in many parts of the world,
denying victims and the accused the basic human right to a fair and impartial trial.);
Transparency International, Corruption Perceptions Index 2011, available at
www.transparency.org. See also1.02[B][1] & [4].
496) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 1-4, 344-45
(5th ed. 2011).
497) See1.02[B][2].
498) See1.01[B][2].
499) See1.02[A][2]; K.-P. Berger, International Economic Arbitration 8 n.62 (1993); C. Drahozal &
R. Naimark, Towards A Science of International Arbitration: Collected Empirical Research
59 (2005); Lalive, Transnational (or Truly International) Public Policy and International
Arbitration, in P. Sanders (ed.), Comparative Arbitration Practice and Public Policy in
Arbitration 257, 293 (ICCA Congress Series No. 3 1987); D. Lipsky & R. Seeber, The
Appropriate Resolution of Corporate Disputes: A Report on the Growing Use of ADR by U.S.
Corporations (1998); Queen Mary, University of London, 2008 International Arbitration
Survey: International Arbitration: Corporate Attitudes and Practices 2, 5 (2008) (88% of
corporations surveyed had used international arbitration, and 86% of corporate counsel
were satisfied with experience); Queen Mary, University of London, 2010 International
Arbitration Survey: Choices in International Arbitration, 2, 5 (2010) (68% of corporations
have some contractual dispute resolution policy).
500) SeeG. Born, International Arbitration and Forum Selection Agreements: Drafting and
Enforcing 1-15 (4th ed. 2013); Kerr, International Arbitration v. Litigation, 1980 J. Bus. L. 164,
164 (in international cases, where jurisdictional problems are bound to arise in the
event of dispute, the practice of incorporating arbitration clauses into contracts is
becoming almost universal); Park, Illusion and Reality in International Forum Selection,
30 Tex. Intl L.J. 135 (1995).
501) See1.02[A][1]-[2].
502) Either form of agreement can, and frequently is, combined with a choice-of-law clause,
selecting the substantive law applicable to the parties contract. See1.04[E][7], p. 209.
503) Commentary on forum selection clauses includes: G. Born, International Arbitration and
Forum Selection Agreements: Drafting and Enforcing (4th ed. 2013); G. Born & P. Rutledge,
International Civil Litigation in United States Courts 461-546 (5th ed. 2011); P. Friedland,
Arbitration Clauses for International Contracts (2d ed. 2007); Gilbert, Choice of Forum
Clauses in International and Interstate Contracts, 65 Ky. L.J. 1 (1976); Gruson, Forum-
Selection Clauses in International and Interstate Commercial Agreements, 1982 Ill. L. Rev.
133; D. Joseph, Jurisdiction and Arbitration Agreements and Their Enforcement (2d ed.
2010); Nadelmann, Choice-of-Court Clauses in the United States: The Road to Zapata, 21
Am. J. Comp. L. 124 (1973); Hague Conference on Private International Law, Choice of Court
Agreements in International Litigation: Their Use and Legal Problems to Which They Give
Rise in the Context of the Interim Text, Preliminary Doc. No. 18 (2002), available at
www.hcch.net; Park, Bridging the Gap in Forum Selection: Harmonizing Arbitration and
Court Selection, 8 Transnatl L. & Contemp. Probs. 19 (1998); W. Park, International Forum
Selection (1995); J. Paulsson, N. Rawding & L. Reed, The Freshfields Guide to Arbitration and
ADR: Clauses in International Contracts (3d ed. 2010); Solomine, Forum Selection Clauses
and the Privatization of Procedure, 25 Cornell Intl L.J. 51 (1992).
504) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 462-63 (5th
ed. 2011); W. Park, International Forum Selection (1995). Forum selection agreements are
also sometimes referred to as jurisdiction clauses or choice-of-forum agreements.
505) Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (U.S. S.Ct. 1974).
506) See2.02[C][2][a].
507) See2.02[C][2][a].
508) See2.03[F].
509) As discussed below, the principal exception to this generalization involves investor-
state arbitrations pursuant to bilateral or multilateral investment treaties. See1.04[A]
[6].
510) See1.04[E]; 1.04[F][3].
96
511) Drahozal, Why Arbitrate? Substantive Versus Procedural Theories of Private Judging, 22 Am.
Rev. Intl Arb. 163 (2011) (reviewing various rationales for arbitration).
512) Sumito v. Antig Invs. Pte Ltd, [2009] 4 SLR(R) 732, 29 (Singapore Ct. App.).
513) Empirical research reports that users of international arbitration identify neutrality as
one of the most important benefits of the process. Bhring-Uhle, A Survey on Arbitration
and Settlement in International Business Disputes, in C. Drahozal & R. Naimark (eds.),
Towards A Science of International Arbitration: Collected Empirical Research 25, 33 (2005);
Mason, The Corporate Counsels View: International Commercial Arbitration, 49 Disp. Res. J.
22 (1994); Queen Mary, University of London, 2010 International Arbitration Survey:
Choices in International Arbitration 2 (2010); Queen Mary, University of London, 2013
International Arbitration Survey: Corporate Choices in International Arbitration: Industry
Perspectives 8 (2013) (neutrality ranked second in order of importance among seven
perceived benefits of arbitration).
514) See Drahozal & Ware, Why Do Businesses Use (or Not Use) Arbitration Clauses?, 25 Ohio St.
J. Disp. Res. 433, 452 (2010); Fortier, International Arbitration on the Eve of the New
Millennium, 1997 Intl Arb. L. Rev. 1; Naimark & Keer, International Private Commercial
Arbitration: Expectations and Perceptions of Attorneys and Business People, 30 Intl Bus.
Law. 203 (2002); Paulsson, International Arbitration Is Not Arbitration, 2008:2 Stockholm
Intl Arb. Rev. 1, 2 ([I]nternational arbitration finishes first even though it was perhaps
never better than second best in anyones mind. The problem was that the most
preferred alternative of each side was the least acceptable to the other: unique
criterion of international arbitration is neutrality.); Reisman, International Arbitration
and Sovereignty, 18 Arb. Intl 231, 235 (2002); Rogers, Fit and Function in Legal Ethics:
Developing A Code of Conduct for International Arbitration, 23 Mich. J. Intl L. 341, 422
(2002) (International arbitrationfunctions to promote the rule of law at an
international level when national legal systems are inadequate to the task.).
515) See1.01[A][5]; 1.01[B][8].
Enforcing 5 (4th ed. 2013).
517) There have been suggestions that, in some jurisdictions, foreign litigants may be
preferred over domestic ones. Clermont & Eisenberg, Xenophilia in American Courts, 109
Harv. L. Rev. 1120 (1995).
518) Despite the foregoing advantages, a company is not always favored by litigation in its
home courts. In some cases, various procedural aspects of litigation can make a counter-
partys home courts a more favorable venue than its own courts. These include the
availability (or unavailability) of discovery, the applicable rules of law, the rules for
allocation of the parties costs for legal representation, the length of time required for a
decision, or trial by a lay jury or judge. More generally, a party that obtains a favorable
judgment in its own domicile may be required to enforce the judgment in its counter-
partys home forum, with the attendant uncertainties, costs and delays. There is no
universal convention on the recognition and enforcement of foreign judgments,
parallel to the New York Convention for arbitral awards. See22.02[A]; 26.03[B]; G. Born
& P. Rutledge, International Civil Litigation in United States Courts 2-3, 1077-86 (5th ed.
2011).
519) There is a long tradition in international financial transactions for the lender to be
granted exclusive forum selection provisions choosing its own home courts (typically,
New York, London, or Singapore). See Horn, The Development of Arbitration in
International Financial Transactions, 16 Arb. Intl 279, 280 (2000).
520) Of course, sometimes parties will simply not agree upon any dispute resolution
provisions, leaving it to post-dispute litigation to determine the place (or places) where
their dispute will be resolved. This happens with some frequency, but entails the costs
and uncertainties of conflicting jurisdictional claims, multiplicitous legal proceedings
and possibly inconsistent judgments.
521) See12.05.
522) See12.04[A]; Lalive, On the Neutrality of the Arbitrator and of the Place of Arbitration, in
Swiss Essays on International Arbitration 23, 24 (1984) (presiding or sole arbitrators
neutrality includes national neutrality: the fundamental idea of equality of the
partiesappears necessarily to imply and lead to the neutral nationality of the
arbitrator). Indeed, the presumption under virtually all institutional rules, and common
practice in other circumstances, is that the sole arbitrator or presiding arbitrator may
not be of the same nationality as any of the parties. See12.04[A][1].
523) As discussed above, this was also one of the historic attractions of international
arbitration. See1.01[A][5], [B][8]. See also D. Caron & L. Caplan, The UNCITRAL
Arbitration Rules: A Commentary 521 (2d ed. 2013) (in drafting UNCITRAL Rules it was
determined that different legal systems have different standards of proof and therefore
a neutral formulation was preferred); G. Petrochilos, Procedural Law in International
Arbitration 44 (2004) (It is believed that [the international business] community would
wish arbitration to be a truly universal practice, where the rules would not fluctuate
from one state to another and where parties would not be taken by surprise by the law
of the arbitration and its application by the courts.).
97
524) For this reason, there have been efforts to propose uniform international rules of
procedure for transnational disputes in national courts. ALI/UNIDROIT, ALI/UNIDROIT
Principles of Transnational Civil Procedure (2004); Hazard et al., Introduction to the
Principles and Rules of Transnational Civil Procedure, 33 N.Y.U. J. Intl L. & Pol. 769 (2001).
These efforts have gained limited business attention or political traction, nor is there a
realistic likelihood that they will do so; if nothing else, the absence of uniform
procedural rules in the various Member States of the European Union and states of the
United States leaves little doubt on this score.
525) See D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 30-31 (2d ed.
2013) (In international cases there is a special need for freedom from unfamiliar local
standards and requirements). See also15.01[A].
526) See M. Bloch, Feudal Society 359 (1961). See also1.01[B][2].
527) W. Blackstone, III Commentaries on the Laws of England 33 (1768), quoted in Wolaver, The
Historical Background of Commercial Arbitration, 83 U. Pa. L. Rev. 132, 136 (1934-1935).
See1.01[B][2], p. 31.
528) G. Born & P. Rutledge, International Civil Litigation in United States Courts 1-4 (5th ed.
2011); L. Collins (ed.), Dicey, Morris and Collins on The Conflict of Laws 1-003 to 1-004,
11-002 to 11-071, 13-002 to 13-003 (15th ed. 2012); J. Pontier & E. Burg, EU Principles on
Jurisdiction and Recognition and Enforcement of Judgments in Civil and Commercial
Matters: According to the Case Law of the European Court of Justice 1 (2004).
529) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 1-4, passim
(5th ed. 2011); L. Collins (ed.), Dicey, Morris and Collins on The Conflict of Laws, passim
(15th ed. 2012).
530) As discussed below, international arbitration agreements are typically drafted
expansively and given broad effect, including to preclude the parallel litigation of the
same or similar claims in national courts. See1.04[E][2]. This facilitates the parties
objective of centralizing their disputes in a single forum for prompt, efficient resolution.
The complexity of international commercial disputes provides a challenge for the
arbitral process, as disputes involving multiple parties, contracts, claims and
proceedings becomes more common. See Brower, Brower & Sharpe, The Coming Crisis in
the Global Adjudication System, 19 Arb. Intl 415 (2003).
531) M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13-14 (U.S. S.Ct. 1972) (in context of forum
selection clause). See also Scherk v. Alberto-Culver Co., 417 U.S. 506, 522 (U.S. S.Ct. 1974).
532) Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, 1990 Rev. arb. 921, 923 (Swiss
Federal Tribunal); Judgment of 27 February 1970, 6 Arb. Intl 79, 85 (1990) (German
Bundesgerichtshof); Judgment of 8 February 1991, 1991 NJW-RR 602, 603
(Oberlandesgericht Mnchen); Berger, Aufgaben und Grenzen der Parteiautonomie in der
internationalen Wirtschaftsschiedsgerichtsbarkeit, 1994 RIW 12.
533) See Bhring-Uhle, A Survey on Arbitration and Settlement in International Business
Disputes, in C. Drahozal & R. Naimark (eds.), Towards A Science of International
Arbitration: Collected Empirical Research 25, 31, 35 (2005); Queen Mary, University of
London, 2008 International Arbitration Survey: International Arbitration: Corporate
Attitudes and Practices 6-7 (2008).
534) See1.01[B][2]-[3] & [5]; 1.04[A][1][a]; 1.04[B][1].
535) See1.04[A][1]; 1.04[B][1]; Chapter 5.
536) Quintette Coal Ltd v. Nippon Steel Corp., XVIII Y.B. Comm. Arb. 159, 32 (B.C. Ct. App. 1990)
(1993).
537) SeeChapter 8; 9.02[D].
538) Bhring-Uhle, A Survey on Arbitration and Settlement in International Business Disputes,
in C. Drahozal & R. Naimark (eds.), Towards A Science of International Arbitration:
Collected Empirical Research 25, 31, 35 (2005) (one of two most significant advantages
and presumably the two most important reasons for choosing arbitration as a means of
international commercial dispute resolution [is]the superiority of its legal framework
with treaties like the New York Convention guaranteeing the international enforcement
of awards); Mistelis & Baltag, Trends and Challenges in International Arbitration: Two
Surveys of In-House Counsel of Major Corporations, 2(5) World Arb. & Med. Rev. 94 (2008);
Queen Mary, University of London, 2008 International Arbitration Survey: International
Arbitration: Corporate Attitudes and Practices 2, 5 (2008); Queen Mary, University of
London, 2010 International Arbitration Survey: Choices in International Arbitration 11, 21
(2010).
539) Empresa Constructora Contex Limitada v. Iseki, Inc., 106 F.Supp.2d 1020, 1023 (S.D. Cal.
2000) (Arbitration agreements are intended to make arbitration decisions binding and
enforceable and to limit how parties may challenge them.); Drahozal & Ware, Why Do
Businesses Use (or Not Use) Arbitration Clauses?, 25 Ohio St. J. Disp. Res. 433, 452 (2010);
McLaren, Effective Use of International Commercial Arbitration: A Primer for In-house
Counsel, 5 J. Intl Arb. 475, 477-78 (2002).
540) See1.04[A][1]; 1.04[B][1][a].
541) EC Regulation 44/2001; J. Pontier & E. Burg, EU Principles on Jurisdiction and Recognition
and Enforcement of Judgments in Civil and Commercial Matters: According to the Case Law
of the European Court of Justice 1 (2004).
542) EC Regulation 44/2001, Art. 23.
543) See, e.g., Warsaw Convention for the Unification of Certain Rules Relating to International
Carriage by Air (1929) (as Amended at the Hague, 1955, and by Protocol No. 4 of Montreal,
1975, ICAO Doc. 9148).
98
544) G. Born & P. Rutledge, International Civil Litigation in United States Courts 468-528 (5th
ed. 2011); Chang, The Superiority of the Arbitration Clause Over A Forum Selection Clause
Under French Law, 22 ASA Bull. 800 (2004). See5.06[C][14]. CompareBrekoulakis, The
Notion of the Superiority of Arbitration Agreements Over Jurisdiction Agreements: Time to
Abandon It?, 24 J. Intl Arb. 341, 346-47 (2007).
545) See5.06[C][14]; 6.02[F].
546) G. Born & P. Rutledge, International Civil Litigation in United States Courts 468, 485, 1085
(5th ed. 2011).
547) For discussions of the draft Hague Choice of Court Agreements Convention, see G. Born &
P. Rutledge, International Civil Litigation in United States Courts 468, 485 (5th ed. 2011);
Brand, Arbitration or Litigation? Choice of Forum After the 2005 Hague Convention on
Choice of Court Agreements, 7(1) Transnatl Disp. Mgt 2 (2010); Brand, Introductory Note to
the 2005 Hague Convention on Choice of Court Agreements, 44 Intl Legal Mat. 1291 (2005);
Garnett, The Hague Choice of Court Convention: Magnum Opus or Much Ado About
Nothing?, 8(2) Transnatl Disp. Mgt 7 (2011); Kessedjian, La Convention de La Haye du 30
juin 2005 sur llection de for, 133 J.D.I. (Clunet) 813 (2006); Note, Recent International
Agreement, 119 Harv. L. Rev. 931 (2006).
548) See1.04[A][1][c]; 1.04[B][1].
549) See1.04[A][1][c]; 26.01; 26.02; 26.03[B][3]; 26.03[D].
550) SeePart III; 26.03[D].
551) See EC Regulation 44/2001.
2011).
553) G. Born & P. Rutledge, International Civil Litigation in United States Courts 1085-86 (5th
ed. 2011).
554) Of course, where a regional or other treaty for the mutual recognition of foreign court
judgments is applicable, the advantages of arbitral awards may be smaller.
555) See, e.g., Drahozal & Ware, Why Do Businesses Use (or Not Use) Arbitration Clauses?, 25
Ohio St. J. Disp. Res. 433, 451 (2010); Shavell, Alternative Dispute Resolution: An Economic
Analysis, 24 J. Legal Studies 1, 6 (1995); Park, Arbitrations Protean Nature: The Value of
Rules and the Risks of Discretion, 19 Arb. Intl 279, 280 (2003) (parties choose to arbitrate
in part with hope of avoiding a grossly mismanaged judicial system); Stipanowich,
Rethinking American Arbitration, 63 Ind. L.J. 425, 427 (1987) (The success of arbitration is
a reflection of the shortcomings of the American civil justice system); Walt, Decision by
Division: The Contractarian Structure of Commercial Arbitration, 51 Rutgers L. Rev. 369,
430-31 (1999).
556) See1.01[B][8]. Even where such experience exists, the need to translate evidentiary
materials or legal authorities into the language of the forum will often create practical
problems and jeopardize a tribunals comprehension of the case.
557) Oko, Seeking Justice in Transitional Societies: An Analysis of the Problems and Failures of
the Judiciary in Nigeria, 31 Brooklyn J. Intl L. 9 (2005); Orts, The Rule of Law in China, 34
Vand. J. Transnatl L. 43 (2001). See also Transparency International, Global Corruption
Report 2007: Corruption in Judicial Systems (2007); U.S. State Department, Country Reports
on Human Rights Practices (2013).
558) In order to combat corruption internationally, including judicial corruption, the United
States adopted the Foreign Corrupt Practices Act of 1977. 15 U.S.C. 78dd-1.
Subsequently, in 1997, numerous states voted to adopt a similar convention, the
Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions of 17 December 1997 (OECD Convention), which entered into force on 15
February 1999.
559) Courts in some non-English-speaking jurisdictions (e.g., Germany) have begun to conduct
proceedings in certain international commercial matters in English, in part in an effort
to make local courts more attractive. Phillips, Open for Business: The German Commercial
Court, in English, The Lawyer (21 June 2010), available at www.thelawyer.com. The
practical efficacy of such arrangements remains uncertain.
560) The jury trial system, along with local discovery and evidentiary rules, methods of
judicial selection, the absence of fee-shifting and damages theories are often cited as
shortcomings in the United States. The divided legal profession, cost and length of
proceedings (particularly hearings) are often cited as shortcomings in England.
561) Ashenfelter, Eisenberg & Schwab, Politics and the Judiciary: The Influence of Judicial
Background on Case Outcomes, 24 J. Legal Studies 257, 266-70 (1995); Drahozal, Why
Arbitrate? Substantive Versus Procedural Theories of Private Judging, 22 Am. Rev. Intl Arb.
163, 174 (2011).
562) Stipanowich, Rethinking American Arbitration, 63 Ind. L.J. 425, 435-38 (1987).
563) See1.01[B][2], pp. 31-35.
99
Collected Empirical Research 25, 32, 35 (2005); Naimark & Keer, International Private
Commercial Arbitration Expectations and Perceptions of Attorneys and Business People,
Collected Empirical Research 45, 49 (2005) (expertise as one of several significant
objectives); Queen Mary, University of London, 2006 International Arbitration Survey:
International Arbitration: Corporate Attitudes and Practices 6 (2006) (The ability of
parties to select arbitrators with the necessary skills and expertise and who are well
suited to the appropriate cultural and legal context was also ranked highly.; 4th in
reasons cited by corporations surveyed); Queen Mary, University of London, 2013
International Arbitration Survey: Corporate Choices in International Arbitration: Industry
Perspectives 8 (2013) (In Financial Services, the number one benefit is the expertise of
decision-maker. This appears to be in line with the perception that many disputes in the
Financial Services sector are highly technical; expertise of decision-maker ranked 1st
overall across industries in importance of perceived benefits of arbitration).
565) Positive Software Solutions, Inc. v. New Century Mortg. Corp., 476 F.3d 278, 285 (5th Cir.
2007) (describing expertise as one of arbitrations most attractive features apart from
speed and finality); Judgment of 28 April 1999, Attorney Gen. of the Repub. of Kenya v.
Bank fr Arbeit und Wirtschaft AG, XXV Y.B. Comm. Arb. 692, 694 (Cyprus S.Ct.) (2000)
(familiarity of arbitrators with their subject matter); Trebilock & Leng, The Role of
Formal Contract Law and Enforcement in Economic Development, 92 Va. L. Rev. 1517, 1541
(2006) (As compared to public courts, the advantages of international commercial
arbitration in enforcing contracts include increased flexibility, technical expertise,
privacy, and confidentiality, all of which are important in satisfying the needs of private
parties for low-cost, expeditious, and effective resolution of contract disputes.).
Collected Empirical Research 25, 34 n.28 (2005).
567) Lazareff, International Arbitration: Towards A Common Procedural Approach, in S.
Frommel & B. Rider (eds.), Conflicting Legal Cultures in Commercial Arbitration: Old Issues
and New Trends 31, 33 (1999).
568) Gramling v. Food Mach. & Chem. Corp., 151 F.Supp. 853, 858 (W.D.S.C. 1957).
569) See12.01[A].
Collected Empirical Research 25, 33 (2005); Landau, Composition and Establishment of the
Tribunal, 9 Am. Rev. Intl Arb. 45 (1998); Queen Mary, University of London, 2010
International Arbitration Survey: Choices in International Arbitration 2-3 (2010).
571) See25.03[A]-[C]; 26.03[B][1] for a discussion of the extent of judicial review in
annulment and recognition actions.
572) Some empirical research suggests that users are ambivalent about the absence of
appellate review. See, e.g., Queen Mary, University of London, 2006 International
Arbitration Survey: International Arbitration: Corporate Attitudes and Practices 7 (2006).
For a discussion of when companies might prefer appellate review, see Drahozal & Ware,
Why Do Businesses Use (or Not Use) Arbitration Clauses?, 25 Ohio St. J. Disp. Res. 451, 455
(2010).
Collected Empirical Research 25, 32, 35 (2005); Landes & Posner, Adjudication as A Private
Good, 8 J. Legal Studies 235, 238 (1979); Queen Mary, University of London, 2010
International Arbitration Survey: Choices in International Arbitration 18 (2010) (Efficiency
and promptness of court proceedings is the most important aspect of the convenience
of a seat.); Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. Legal
Studies 1, 6 (1995).
574) See25.07[B].
575) See15.02[B]; 15.03[B]; AAA Optional Appellate Arbitration Rules; National Grain and
Feed Association Rules, 9 (appeals procedure).
576) See15.02; Arbitration Application No. 3 of 2011, [2011] CSOH 164 (Scottish Ct. Sess.)
(Scottish Arbitration Act, 2010, marks a new beginning for arbitration in Scotland,
recognising the desire in this field for party autonomy, privacy and finality); D. Caron &
L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 30 (2d ed. 2013) (procedural
flexibilityis generally regarded as one of the main advantages of arbitration);
Drahozal, Business Courts and the Future of Arbitration, 10 Cardozo J. Conflict Res. 497
(2008-2009) (citing control of parties over decision maker and procedural flexibility);
Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449, 534
(2005) (parties can experiment with dispute resolution cutting and tailoring, shaping
and adapting different processes to meet their own particular needs); Stipanowich, The
Arbitration Penumbra: Arbitration Law and the Rapidly Changing Landscape of Dispute
Resolution, 8 Nev. L.J. 427, 432 (2007) (The principle of freedom to choose among
procedural options suffuses nearly all aspects of arbitration, and the wide arbitration
spectrum includes a considerably rich and diverse array of procedures).
577) See25.04[B][3][c]; 26.05[C][3][b][iii].
100
578) Restatement (Second) Conflict of Laws 187 (1971); Berger, Party Autonomy in International
Commercial Arbitration, 4 Am. Rev. Intl Arb. 1 (1993); Bckstiegel, The Role of Party
Autonomy in International Arbitration, 54 Disp. Res. J. 24 (1997); L. Collins (ed.), Dicey,
Morris and Collins on The Conflict of Law 16-006 et seq. (15th ed. 2012); P. Nygh,
Autonomy in International Contracts (1999); Zhang, Party Autonomy and Beyond: An
International Perspective of Contractual Choice of Law, 20 Emory Intl L. Rev. 511 (2006).
See also International Law Institute, Resolution on the Autonomy of the Parties in
International Contracts Between Private Persons or Entities, 64 Ann. Inst. Droit Inter. 383
(1992).
579) See, e.g., Harbour Ass. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897, 903
(English Ct. App.) (there is the imperative of giving effect to the wishes of the parties
unless there are compelling reasons of principle why it is not possible to do so);
Fassberg, Lex Mercatoria Hoist With Its Own Petard?, 5 Chicago J. Intl L. 67, 77 (2004)
(The principle of party autonomy so essential to international trade is a central
principle of all aspects of private international law. It is expressed in the willingness of
national law to acknowledge the autonomy of parties to resolve disputes outside the
system, and to provide tools for enforcing that autonomy enforcing agreements and
awards irrespective of their content. It is expressed further in the willingness of almost
all systems to allow parties to choose almost any national law to govern their
relationship.); Mills, The Private History of International Law, 55 Intl & Comp. L.Q. 1, 7
n.302 (2006); Reich, A European Contract Law: Ghost or Host for Integration, 24 Wisc. Intl
L.J. 425 (2006).
580) Bernardini, The Role of the International Arbitrator, 20 Arb. Intl 113, 115 (2004); M. Bhler
& T. Webster, Handbook of ICC Arbitration: Commentary, Precedents, Materials 1vii (2d ed.
2008) (One of the fundamental principles that forms the basis and runs through most
aspects of modern international arbitration is party autonomy.).
Where parties do not agree upon arbitral procedures, the arbitrators are granted
expansive authority to prescribe procedural rules (which may differ substantially from
those used for litigation in national courts). See15.03.
581) Interim Award in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000).
582) See, e.g., ILC, Memorandum on Arbitral Procedure, Prepared by the Secretariat, U.N. Doc.
A/CN.4/35, II Y.B. I.L.C. 157, 161 (1950) (The parties are of course free to refer their
questions to any person or body available, or to create a tribunal in whatever shape
they may wish).
583) See15.02 for a discussion of the parties autonomy with regard to procedural matters.
584) See15.01[A]-[B]; 15.08[AA][7]; 15.08[BB].
585) See15.08[MM].
586) See2.02[C][2][g].
587) See15.02; 15.07[D]; Chapter 16. See also Lufuno Mphaphuli & Assocs. Pty Ltd v. Andrews,
[2009] ZACC 6, 219 (South African Const. Ct.) (The decision to refer a dispute to private
arbitration is a choice which, as long as it is voluntarily made, should be respected by
the courts. Parties are entitled to determine what matters are to be arbitrated, the
identity of the arbitrator, the process to be followed in the arbitration, whether there
will be an appeal to an arbitral appeal body and other similar matters.).
588) Queen Mary, University of London, 2013 International Arbitration Survey: Corporate
Choices in International Arbitration: Industry Perspectives 8 (2013) (Flexibility of
procedure cited as second most important benefit of arbitration to the energy
industry); Queen Mary, University of London, 2008 International Arbitration Survey:
International Arbitration: Corporate Attitudes and Practices 2, 5 (2008) (Flexibility of
procedure cited as prime advantage of international arbitration); T. Stipanowich & P.
Kaskell, Commercial Arbitration At Its Best: Successful Strategies for Business Users: A
Report of The CPR Commission on The Future of Arbitration xxiii (2001) (Ultimately,
control over the process the flexibility to make arbitration what you want it to be [is]
the single most important advantage of binding arbitration.).
589) Carlston, Theory of the Arbitration Process, 17 Law & Contemp. Probs. 631, 650 (1952)
(source of strength of commercial arbitration lies in the fact that it is a mode of trial,
to which the laws of evidence are largely inapplicable because they are a product of the
problem of communicating facts to a jurycommunicating facts to an arbitrator can
become enormously simplified, if he be skilled and expert in the field); Stipanowich,
Contract and Conflict Management, 2001 Wisc. L. Rev. 831.
590) 2012 London Maritime Arbitration Association Terms (maritime); 2013 German Maritime
Arbitration Association Rules (maritime); 2010 Society of Maritime Arbitration Rules
(maritime); 2004 China Maritime Arbitration Commission Arbitration Rules (maritime);
2010 Tokyo Maritime Arbitration Commission of Japan Shipping Exchange, Inc.
Arbitration Rules (maritime); 2013 Vancouver Maritime Arbitration Association Rules
(maritime); C. Ambrose & K. Maxwell, London Maritime Arbitration (3d ed. 2009); F. Rose,
International Commercial and Maritime Arbitration (1988).
591) D. Johnson, International Commodity Arbitration (1991); National Grain and Feed
Association Arbitration Rules (2008) (selected commodities disputes). See also
Bernstein, Private Commercial Law in the Cotton Industry: Creating Cooperation Through
Rules, Norms, and Institutions, 99 Mich. L. Rev. 1724 (2001).
592) ARIAS Procedures for the Resolution of U.S. Insurance Reinsurance Disputes (1999);
ARIAS-UK Arbitration Rules (1997).
101
593) Rail Arbitration Rules of the National Grain and Feed Association (2005).
594) AAA Labor Arbitration Rules (2007); AAA Rules for Impartial Determination of Union Fees
(1988); JAMS Employment Arbitration Rules (2009).
595) This was historically one of the reasons cited in favor of arbitration. See1.01[B][1]-[2] &
[5]; UNCITRAL, Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on
International Commercial Arbitration as Amended in 2006 15 (2008) (the parties to an
arbitration agreement make a conscious decision to exclude court jurisdiction and
prefer the finality and expediency of the arbitral process); Stipanowich, Arbitration and
Choice: Taking Charge of the New Litigation, 7 DePaul Bus. & Comm. L.J. 383 (2009);
Sussman, Why Arbitrate: The Benefits and Savings, 7 Transnatl Disp. Mgt 2 (2010).
Speed and efficiency are also frequently referred to in contemporary judicial
authorities. See15.01[B]; Stolt-Nielsen SA v. Animalfeeds Intl, 130 S.Ct. 1758, 1775 (U.S.
S.Ct. 2010) (In bilateral arbitration, parties forgo the procedural rigor and appellate
review of the courts in order to realize the benefits of private dispute resolution: lower
costs, greater efficiency and speed, and the ability to choose expert adjudicators to
resolve specialized disputes.); Folkways Music Publrs, Inc. v. Weiss, 989 F.2d 108, 111 (2d
Cir. 1993) (twin goals of arbitration, namely settling disputes efficiently and avoiding
long and expensive litigation); Bull HN Info. Sys. v. Hutson, 229 F.3d 321, 329 (1st Cir.
2000) (The purpose of arbitration in large part is to have simplified, expedited
proceedings and courts should be reluctant to adopt rules which interfere with the
accomplishment of those purposes.); Fradella v. Petricca, 183 F.3d 17, 19 (1st Cir. 1999)
(The primary purpose served by the arbitration process is expeditious dispute
resolution.).
596) Revised Uniform Arbitration Act, Prefatory Note (2000); Stipanowic & Lamare, Living with
ADR: Evolving Perceptions and Use of Mediation, Arbitration and Conflict Management in
Fortune 1,000 Corporations, Pepperdine Univ. Legal Studies Research Paper No. 2013/16,
14-15 (2013) (Most respondents believed arbitration to be better, faster and cheaper
than litigation.).
597) Diapulse Corp. of Am. v. Carba, Ltd, 626 F.2d 1108, 1110 (2d Cir. 1980).
598) See, e.g., Croft, Arbitrators Disappoint in Business Disputes, Study Finds, Financial Times 7
(4 October 2010) (Half of the multinational companies using arbitration to settle
business disputes have been disappointed with the performance of their arbitrator.);
Lyons, Arbitration: The Slower, More Expensive Alternative, The American Lawyer 107
(Jan/Feb 1985); Silberman, International Arbitration: Comments From A Critic, 13 Am. Rev.
Intl Arb. 9 (2002).
599) Blue Tee Corp. v. Koehring Co., 999 F.2d 633, 634 (2d Cir. 1993).
Choices in International Arbitration: Industry Perspectives 5 (2013) (Some interviewees
have expressed concerns over the judicialization of arbitration, the increased formality
of proceedings and their similarity with litigation, along with the associated costs and
delays in proceedings. This trend is potentially damaging to the attractiveness of
arbitration. In-house counsel value the features of the arbitration process that
distinguish it from litigation.).
601) Wetter, The Present Status of the International Court of Arbitration of the ICC: An Appraisal,
1 Am. Rev. Intl Arb. 91, 103 (1990). See Chartered Institute of Arbitrators, Costs of
International Arbitration Survey (2011); Kerr, International Arbitration v. Litigation, 1980 J.
Bus. L. 164, 164-65, 175-78 (Arbitral tribunals have to be paid, whereas court fees are
often negligible. In important cases, three arbitrators, or two and an umpire, are usually
preferred to a single arbitrator, and this greatly adds to the costs and complexities. If
the arbitrators are busy men, as they usually are, arbitration can be much more
protracted than litigation).
602) See, e.g., Goldhaber, 2011 Arbitration Scorecard: High Stakes, The American Lawyer 1 (1
July 2011) (between 2009 and early 2011, 113 pending international arbitrations where
amount in dispute was $1 billion or more were reported); Perry, The GAR 30 Unveiled, GAR
News (12 March 2012) (GARs measure of total value of international arbitration claims
and counterclaims that reached merits stage increased over 100% from $96 billion in
2010 to $206 billion in 2011).
603) Schneider, Not Quite A World Without Trials: Why International Dispute Resolution Is
Increasingly Judicialized, 2006 J. Disp. Res. 119.
604) See13.05[B]; 15.08[T].
605) See1.02[A][1].
606) See15.08[O]; Chartered Institute of Arbitrators, Costs of International Arbitration Survey
112 (2011) (average length of an arbitration is between 17 and 20 months); Dabdoub &
Cox, Which Costs Less: Arbitration or Litigation?, InsideCounsel 2 (6 December 2012) (the
median arbitration case lasted 21 months).
607) See15.08[O]; Welser & Klausegger, The Arbitrator and the Arbitration Procedure Fast
Track Arbitration: Just Fast or Something Different?, 2009 Austrian Arb. Y.B. 259.
102
608) Bureau of Justice Statistics, Civil Justice Survey of State Courts (CJSSC), Bureau of Justice
Statistics 2005, available at bjs.ojp.usdoj.gov (for state court contract cases in 75 largest
U.S. counties, average length of time from case filing to trial in jury cases was 25.3
months and for bench trials was 18.4 months); Judicial Business of the United States
Courts, 2011 Annual Report of the Director, Table C-5, 156, Table B-4, 83, available at
www.uscourts.gov (median of 23.4 months through trial in federal courts, with median in
various districts ranging from 12.3 to 37.6 months; median through appeal of 29.3
months); Judicial Business of the United States Courts, 2009 Annual Report of the Director,
Table C-5, 172 (median of 23.4 months through trial in federal courts, with median in
various districts ranging from 14.9 to 57.3 months; median through appeal of 32.1
months).
609) Kumar, Judicial Delays in India: Causes & Remedies, 4 J. L. Poly & Glob. 16, 16 (2012) (15
years on average to resolve case in Indian courts); Government of India/Law Commission
of India, Report No. 230 Reforms in the Judiciary Some Suggestions 14 (2009) (noting that
it often takes 10 - 20 - 30 or even more years before a matter is finally decided).
610) See1.02[B][5]; 25.02[B]; 26.03[B].
611) It may be possible to compare more precisely the relative speed and cost of
international arbitration and particular national courts with respect to a specific kind of
contract or category of disputes. But, even here, the uncertainties of appellate review,
summary dispositions, and other procedural developments will make predictions
difficult.
Collected Empirical Research 25, 32, 35 (2005); Naimark & Keer, International Private
Commercial Arbitration Expectations and Perceptions of Attorneys and Business People,
Collected Empirical Research 49 (2005) (cost and speed one of several significant
objectives); Queen Mary, University of London, 2008 International Arbitration Survey:
International Arbitration: Corporate Attitudes and Practices 2 (2008) (length of time and
the costs of International Arbitration are seen asdisadvantages); Queen Mary,
University of London, 2013 International Arbitration Survey: Corporate Choices in
International Arbitration: Industry Perspectives 5 (2013) (For respondents who considered
arbitration not to be well suited to their industry, costs and delay were cited as the
main reasons more than any other factors).
613) Judicial authorities provide a measure of anecdotal confirmation. See, e.g., Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S.Ct. 1985) (party
agreeing to arbitration trades the procedures and opportunity for review of the
courtroom for the simplicity, informality, and expedition of arbitration); McDonald v.
City of W. Branch, 466 U.S. 284, 292 (U.S. S.Ct. 1984); Judgment of 28 April 1999, Attorney
Gen. of the Repub. of Kenya v. Bank fr Arbeit und Wirtschaft AG, XXV Y.B. Comm. Arb. 692,
694 (Cyprus S.Ct.) (2000) (The length of time required for an action within the state
judicial system, the use of time-consuming judicial means which add to the delay, the
familiarity of arbitrators with their subject matter, the rigidity of regular judicial means,
are some of the reasons for which the institution of arbitration has flourished and been
established for disputes of various natures.).
614) The difference between privacy, where third parties are customarily denied access to
hearings, and confidentiality, where parties are legally prohibited from disclosing
matters relating to the arbitration to third parties, are discussed below. See20.01, pp.
2782-83; 20.05.
615) Nonetheless, there are often no legally-enforceable guarantees of confidentiality.
See20.03[C]; 20.03[D][2].
616) See20.01; Drahozal, Business Courts and the Future of Arbitration,10 Cardozo J. Conflict
Res. 491, 499 (2008-2009); Kann, A Report Card on the Quality of Commercial Arbitration:
Assessing and Improving Delivery of the Benefits Customers Seek, 7 DePaul Bus. & Comm.
L.J. 499, 502 (2009); Rogers, Transparency in International Commercial Arbitration, 54 Kan.
L. Rev. 1301, 1304 (2006).
617) SeeChapter 20 for a discussion of confidentiality in international arbitration.
618) See20.03[D].
619) See20.03[D][2].
620) See20.03[C]-[E]. It is possible to reduce these risks of disclosure by a counter-party,
through appropriately-drafted confidentiality provisions. SeeG. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing 12, 119-21 (4th ed.
2013); 20.03[B].
621) Empirical research suggests that confidentiality is a material, but not primary,
motivation for international arbitration agreements. Bhring-Uhle, A Survey on
Arbitration and Settlement in International Business Disputes, in C. Drahozal & R. Naimark
(eds.), Towards A Science of International Arbitration: Collected Empirical Research 25, 35
(2005) (confidentiality third in list of 11 reasons for arbitration); Queen Mary, University
of London, 2010 International Arbitration Survey: Choices in International Arbitration 29-31
(2010).
103
622) As discussed below, this is the practice in some industry sectors (e.g., some maritime,
commodities and other trade arbitrations). See20.10, pp. 2817-18; Bernstein, Opting
Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J.
Legal Studies 115, 124-30 (1992) (quoting Diamond Dealers Club Arbitration Bylaws, Art.
12(26): All decisions of arbitration panelswhich are not complied with within 10
working days, together with the picture of the non-complying member, shall be posted
in a conspicuous place in the Club rooms and communicated to other diamond
exchanges internationally).
Collected Empirical Research 25, 35 (2005).
This perception has deep historic roots. Baker, From Lovedays to ADR: Arbitration and
Dispute Resolution in England 1066-1800, 3(5) Transnatl Disp. Mgt 1, 5 (2006) (13th century
submission agreements disposing of pending litigations by way of referral to arbitration
of friends); Arbitration of Interstate Commercial Disputes: Joint Hearings on S. 1005 and
H.R. 646 Before the Subcommittee of the Committees on the Judiciary, 68th Cong., 1st Sess.,
7 (1924) (arbitration preserves business friendshipsIt raises business standards. It
maintains business honor, prevents unnecessary litigation and eliminates the laws
delay by relieving our courts.).
624) See8.02[B]; 13.06[B] for a discussion of the parties obligations to cooperate in the
arbitral process.
625) This is not always the case. Sometimes, the uncertainties of a random dispute resolution
process, or the hardships of an arbitrary process, do more to encourage settlement. See
Park, Arbitrations Protean Nature: The Value of Rules and the Risks of Discretion, 19 Arb.
Intl 279, 279 (2003) (recounting proverb involving Chinese emperor who encouraged
settlements by providing abusive and arbitrary judiciary).
626) Users of arbitration rank amicable dispute resolution and future relations relatively low
on the important objectives of international arbitration. Bhring-Uhle, A Survey on
Arbitration and Settlement in International Business Disputes, in C. Drahozal & R. Naimark
(eds.), Towards A Science of International Arbitration: Collected Empirical Research 25, 35
(2005); Naimark & Keer, International Private Commercial Arbitration Expectations and
Perceptions of Attorneys and Business People, in C. Drahozal & R. Naimark (eds.), Towards
A Science of International Arbitration: Collected Empirical Research 43, 52 (2005).
627) For an idiosyncratic critique of efforts to promote settlement, in a domestic setting, see
Fiss, Against Settlement, 93 Yale L.J. 1073, 1075 (1983-1984) (alternative dispute resolution
is a capitulation to the conditions of mass society and should be neither encouraged
nor praised).
628) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 231-356,
797-857 (5th ed. 2011).
629) See Annacker & Greig, State Immunity and Arbitration, 15(2) ICC Ct. Bull. 70 (2004);
Bockstiegel, States in the International Arbitral Process, 2 Arb. Intl 22 (1986); Bowett,
State Contracts With Aliens: Contemporary Developments on Compensation for
Termination or Breach, 59 Brit. Y.B. Intl L. 49 (1988); Fox, States and the Undertaking to
Arbitrate, 37 Intl & Comp. L.Q. 1 (1988); Gaillard, Effectiveness of Arbitral Awards, State
Immunity From Execution and Autonomy of State Entities: Three Incompatible Principles,
in E. Gaillard & J. Younan, State Entities in International Arbitration 179 (2008); Heiskanen,
State as A Private: The Participation of States in International Commercial Arbitration, 7(1)
Transnatl Disp. Mgt (2010); Shore, You Can Bet the Company But Not the State: The Proper
and Improper Conduct of Sovereigns in Arbitration, 3 World Arb. & Med. Rev. 465 (2009);
Silva Romero, The Dialectic of International Arbitration Involving State Parties, 15(2) ICC
Ct. Bull. 79 (2004).
630) See, e.g., U.S. Foreign Sovereign Immunities Act, 28 U.S.C. 1605(a)(1), 1605(a)(6), 1610(a)
(5); European Convention on State Immunity, Art 12(1); U.K. State Immunity Act, 1978,
9(1); Canada State Immunity Act; Australian Foreign States Immunities Act, 2010,
17(1)-(3). See also Annacker & Greig, State Immunity and Arbitration, 15(2) ICC Ct. Bull.
70 (2004); K. Bckstiegel, Arbitration and State Enterprises: Surveys on the National and
International State of Law and Practice 40 (1984); Gaillard, Effectiveness of Arbitral
Awards, State Immunity From Execution and Autonomy of State Entities: Three
Incompatible Principles, in E. Gaillard & J. Younan (eds.), State Entities in International
Arbitration 179 (2008).
631) See, e.g., 28 U.S.C. 1610(a)(6); U.K. State Immunity Act, 1978, 9, 13(2); Australian Foreign
States Immunities Act, 2010, 17(2); Creighton v. Ministre des Finances de lEtat du Qatar,
15(9) Intl Arb. Rep. A-1 (2000) (French Cour de cassation civ. 1re). See also Annacker &
Greig, State Immunity and Arbitration, 15(2) ICC Ct. Bull. 70 (2004); J. Dellapenna, Suing
Foreign Governments and Their Corporations 774-75 (2d ed. 2003).
632) See K.-H. Bckstiegel, Arbitration and State Enterprises: Surveys on the National and
International State of Law and Practice 20 (1984) (33% of ICC arbitrations in 1980s involve
state entities); ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 10 (2013) (9.9% of ICC
arbitrations filed in 2012 involved state or state entity). Conservatively assuming some
3,000 international arbitrations filed per year (1.03, pp. 93-95), with 10% involving state
entities, roughly 300 international arbitrations involving state entities are filed each
year. If a more realistic figure, of 5,000 international arbitrations per year is used, then
there are some 500 arbitrations filed per year involving states or state entities.
104
633) Buchanan, Public Policy and International Commercial Arbitration, 26 Am. Bus. L.J. 511, 512
(1988). See Aksen, The Need to Utilize International Arbitration, 17 Vand. J. Transnatl L. 11
(1984); Paulsson, International Arbitration Is Not Arbitration, 2008:2 Stockholm Intl Arb.
Rev. 1, 2 (In the transnational environment, international arbitration is the only game. It
is a de facto monopoly.).
634) Lyons, Arbitration: The Slower, More Expensive Alternative, The American Lawyer 107
(Jan/Feb 1985).
635) In re Canadian Gulf Line, 98 F.2d 711, 714 (2d Cir. 1938) (Learned Hand, J.).
636) Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 987 n.32 (2d Cir. 1942). See
also Bell Canada v. ITT Telecomms. Corp., 563 F.Supp. 636, 641-42 (S.D.N.Y. 1983)
(Arbitration is not a one-way street. It has its drawbacks as well as advantages.).
637) See1.01[B].
638) See Queen Mary, University of London, 2013 International Arbitration Survey: Corporate
Choices in International Arbitration: Industry Perspectives 6 (2013) (Overall, the 2013
International Arbitration Survey results confirm thatarbitration continues to be more
popular than any of the other options available.).
639) Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in
P. Sanders (ed.), Comparative Arbitration Practice and Public Policy in Arbitration 257, 293
(ICCA Congress Series No. 3 1987).
A study of domestic commercial arbitration in the mid-20th century United States
concluded that a substantial percentage of U.S. commercial disputes were arbitrated
(rather than litigated). Mentschikoff, The Significance of Arbitration A Preliminary
Inquiry, 17 Law & Contemp. Probs. 698, 698 (1952) (preliminary inquiry suggests that if we
lay aside first the cases in which the government is a party and second the accident
cases, then the matters going to arbitration rather than to the courts represent 70 per
cent or more of our total civil litigation).
640) See1.03.
641) See1.03. See also C. Drahozal & R. Naimark, Towards A Science of International
Arbitration: Collected Empirical Research App UNCITRAL Model Law, 2006 Revisionsendix
1, 341 (2005).
642) The International Centre for the Settlement of Investment Disputes registered 37 new
arbitrations (and one conciliation) in 2011 and 48 new arbitrations (and two
conciliations) in 2012. ICSID, The ICSID Caseload: Statistics 7 (2014); ICSID, The ICSID
Caseload: Statistics 7 (2013); ICSID, The ICSID Caseload: Statistics 8 (2012). See Aksen,
International Arbitration Its Time Has Arrived, 14 Case Western Reserve J. Intl L. 247
(1982); C. Drahozal & R. Naimark, Towards A Science of International Arbitration: Collected
Empirical Research Appendix 1, 341 (2005); Stein & Wotman, International Commercial
Arbitration in the 1980s, 38 Bus. Law. 1685 (1983).
643) C. Drahozal & R. Naimark, Towards A Science of International Arbitration: Collected
Empirical Research Appendix 1, 341 (2005). See also C. Drahozal & R. Naimark, Towards A
Science of International Arbitration: Collected Empirical Research 344 (2005) (for ICC 1921-
2003); J. Wetter, The International Arbitral Process: Public and Private 124 (1979) (for AAA
1975-1977); www.sccinstitute.com (for SCC domestic and international case load 1998-
2011); www.hkiac.org (for CIETAC and HKIAC 1985-2011).
644) Naimark & Keer, International Private Commercial Arbitration Expectations and
Perceptions of Attorneys and Business People, in C. Drahozal & R. Naimark (eds.), Towards
A Science of International Arbitration: Collected Empirical Research 45 (2005); Queen Mary,
University of London, 2008 International Arbitration Survey: International Arbitration:
Corporate Attitudes and Practices 2, 5 (2008).
645) C. Drahozal & R. Naimark, Towards A Science of International Arbitration: Collected
Empirical Research 59 (2005) (88% of surveyed international joint venture agreements
contain arbitration clauses); Naimark, Building A Fact-Based Global Database: The
Countdown, 20 J. Intl Arb. 105, 106 (2003).
For a contrary, if flawed, analysis in domestic U.S. contracts, see Eisenberg & Miller, The
Flight From Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in the Contracts
of Publicly Held Companies, 56 DePaul L. Rev. 335 (2007) (relying on limited sample of
contracts in domestic settings to conclude that arbitration is not frequently used in
lending and similar financial transactions). Compare Benson, To Arbitrate or to Litigate:
That Is the Question, 8 Eur. J. L. & Econ. 91 (1999); Drahozal & Ware, Why Do Businesses Use
(or Not Use) Arbitration Clauses, 25 Ohio State J. Disp. Res. 433 (rebutting Eisenberg
study); Koremenos, If Only Half of International Agreements Have Dispute Resolution
Provisions, Which Half Needs Explaining?, 36 J. Legal Stud. 189 (2007) (same).
646) Janssen & Spilker, The Application of the CISG in the World of International Commercial
Arbitration, 77 RabelZ 131, 134 (2013) (based on analyses of PACE database, at least 70-
80% of CISG-related cases hav[e] been settled by arbitral tribunals).
647) Queen Mary, University of London, 2010 International Arbitration Survey: Choices in
International Arbitration 5 (2010). Broadly similar results were reached in the Fulbright
7th Annual Litigation Trends Survey (of 403 corporate in-house counsel), where 48% of
respondents favored international arbitration in cross-border contracts, 21% preferred
national courts, 21% used both methods and 10% favored other means of dispute
resolution. Fulbright & Jaworski LLP, Fulbrights 7th Annual Litigation Trends Survey
Report 21 (2010).
105
Choices in International Arbitration: Industry Perspectives 6 (2013) (52% of respondents
identified international arbitration as their preferred mechanism for dispute resolution:
Conventional wisdom, anecdotal evidence and prior research all suggest that
arbitration is the business communitys preferred mechanism for resolving international
disputes.).
649) SeeJudgment of 10 June 2004, Bargues Agro Industrie SA v. Young Pecan Cie, XXX Y.B.
Comm. Arb. 499, 502 (Paris Cour dappel) (2005) (Arbitration is the usual means of
dispute settlement in international commerce.); Messrs. Eckhardt & Co. v. Mohammad
Hanif, PLD 1993 SC 42, 52 (Pakistan S.Ct. 1993) (With the development and growth of
International Trade and Commerce and due to modernization of
Communication/Transport systems in the world, the contracts containing such an
arbitration clause are very common nowadays.); Aksen, International Arbitration Its
Time Has Arrived, 14 Case Western Reserve J. Intl L. 247 (1982); K.-P. Berger, International
Economic Arbitration 8 (1993); R. Schtze, D. Tscherning & W. Wais, Handbuch des
Schiedsverfahrens 34 (1990); Stein & Wotman, International Commercial Arbitration in
the 1980s, 38 Bus. Law. 1685 (1983).
650) See Chambers, Global Guide: The Worlds Leading Lawyers (2012); Y. Dezalay & B. Garth,
Dealing in Virtue: International Commercial Arbitration and the Construction of A
Transnational Legal Order (1996).
651) See Rogers, The Arrival of the Have-Nots in International Arbitration, 8 Nev. L.J. 341
(2007); Youssef, The Death of Inarbitrability, in L. Mistelis & S. Brekoulakis (eds.),
Arbitrability: International and Comparative Perspectives 47-68 (2009).
652) See1.04[A][6].
653) Hill, On-Line Arbitration: Issues and Solutions, 15 Arb. Intl 2 (1999); Hrnle, Online Dispute
Resolution, in J. Tackaberry & A. Marriott (eds.), Bernsteins Handbook of Arbitration and
Dispute Resolution Practice (4th ed. 2003); Kallel, Online Arbitration, 25 J. Intl Arb. 345
(2008); G. Kaufmann-Kohler & T. Schultz, Online Dispute Resolution: Challenges for
Contemporary Justice (2004).
654) Ganguly, Tribunals and Taxation: An Investigation of Arbitration in Recent Tax Conventions,
29 Wisc. Intl L.J. 735 (2012); Gildemeister & Koppensteiner, Arbitration Clauses in Tax
Treaties (Conference Report), 7(1) Transnatl Disp. Mgt (2010); Park, Tax Arbitration and
Investor Protection, in C. Rogers & R. Alford (eds.), The Future of Investment Arbitration 227
(2009); Walck, Tax and Currency Issues in International Arbitration, 3 World Arb. & Med.
Rev. 173 (2009).
655) See10.08.
656) See British American Tobacco Cooperation Agreement, 2010; Japan Tobacco
International Cooperation Agreement, 2007; Imperial Tobacco Limited Co-Operation
Agreement, 2010; Philip Morris International Anti-Contraband and Anti-Counterfeit
Agreement and General Release, 2004.
657) PCA, Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (2011).
658) Alford, Arbitrating Human Rights, 83 Notre Dame L. Rev. 505 (2008); Eliasoph, A Missing
Link: International Arbitration and the Ability of Private Actors to Enforce Human Rights
Norms, 10 N. E. J. Intl & Comp. L. 83 (2004).
659) Rogers, International Arbitrations Public Realm, in A. Rovine (ed.), Contemporary Issues in
International Arbitration and Mediation: The Fordham Papers 2010 165 (2011).
660) Born, A New Generation of International Adjudication, 61 Duke L.J. 775 (2012); Malkawi,
Arbitration and the World Trade Organization, 24 Arb. Intl 173 (2007); Spain, Integration
Matters: Rethinking the Architecture of International Dispute Resolution, 32 U. Pa. Intl L.J.
1 (2010).
661) For discussion of the circumstances in which parties are likely to favor forum selection
clauses, seeG. Born, International Arbitration and Forum Selection Agreements: Drafting
and Enforcing 2-13 (4th ed. 2013); Brekoulakis, The Notion of the Superiority of Arbitration
Agreements Over Jurisdiction Agreements: Time to Abandon It?, 24 J. Intl Arb. 341 (2007); P.
Friedland, Arbitration Clauses for International Contracts 7-36 (2d ed. 2007).
662) See K.-P. Berger, International Economic Arbitration 8 n.62 (1993) (About ninety percent
of international economic contracts contain an arbitration clause.); Menkel-Meadow,
Are Cross-Cultural Ethics Standards Possible or Desirable in International Arbitration?, in P.
Gauch, P. Pichonnaz & F. Werro (eds.), Mlanges en lhonneur de Pierre Tercier 883, 884 n.2
(2008) (It is widely estimated that 90% of all international contracts contain arbitration
clauses); A. van den Berg, Arbitragerecht 134 (1988).
663) See1.01[A][2]; 1.04[E]; 2.01[A][1].
664) See2.01[A][1]; 5.01[A]-[B]; Chapter 8; N. Blackaby et al. (eds.), Redfern and Hunter on
International Arbitration 1.06 (5th ed. 2009) (The practice of resolving disputes by
international commercial arbitration only works because it is held in place by a
complex system of national laws and international treaties.).
665) SeePart III; Chapter 26.
666) See1.01[B][2]-[8].
667) See1.01[B][4]-[5].
668) See1.01[B][3].
669) See1.02.
106
670) Veeder, The Lawyers Duty to Arbitrate in Good Faith, in L. Lvy & V. Veeder (eds.),
Arbitration and Oral Evidence 115, 118 (2004). See also D. Caron & L. Caplan, The UNCITRAL
Arbitration Rules: A Commentary 2 (2d ed. 2013) (an effective system of international
dispute resolution is indispensable to the growth of more complex transnational
arrangements, and for the foreseeable future that system of resolution is primarily
international arbitration); Paulsson, International Arbitration Is Not Arbitration, 2008:2
Stockholm Intl Arb. Rev. 1.
671) David L. Threlkeld & Co. v. Metallgesellschaft Ltd, 923 F.2d 245, 248 (2d Cir. 1991).
672) See1.01[C].
673) See1.04[A]; 1.04[B][1].
674) See1.01[C].
675) See1.01[C]; 1.04.
676) Bilateral treaties relating to international commercial arbitration continue to exist
today. Many countries have entered into a number of friendship, commerce, and
navigation treaties that contain provisions relating to the mutual recognition and
enforcement of arbitration agreements and awards. See1.04[A][7]. For the most part,
these treaties are of very limited practical import, given the efficacy of multilateral
conventions (and, particularly, the New York Convention).
Numerous states have entered into bilateral investment treaties, which address issues
relating to international arbitration of investment disputes. See1.04[A][6]. These
treaties are much more significant internationally than bilateral treaties concerning
677) See Geneva Protocol, 27 L.N.T.S. 158 (1924); Geneva Convention, 92 L.N.T.S. 302 (1929);
1.01[C]. Other early multilateral treaties included the Montevideo Convention, the
Hague Conventions of 1899 and 1907 and the Bustamante Code. See1.01[A][5]; 1.01[C].
678) See1.01[C].
679) The standard reference works on the Convention are: A. van den Berg, The New York
Arbitration Convention of 1958 (1981) and G. Gaja, International Commercial Arbitration:
The New York Convention (1978). See also M. Blessing (ed.), The New York Convention of
1958 (ASA Spec. Series No. 9 1996); UNCITRAL, 1958 New York Convention Guide; H. Kronke
et al. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global
Commentary on the New York Convention (2010); UNCITRAL, Report on the Survey Relating
to the Legislative Implementation of the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, U.N. Docs. A/CN.9/656, A/CN.9/656/Add.1 (2008); United
Nations, Enforcing Arbitration Awards Under the New York Convention Experience and
Prospects (1998); R. Wolff (ed.), New York Convention: Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 10 June 1958 (2012).
680) New York Convention, 330 U.N.T.S., No. 4739 (1958).
681) Sanders, The History of the New York Convention, in A. van den Berg (ed.), Improving the
Efficiency of Arbitration Agreements and Awards: 40 Years of Application of the New York
Convention 11 (ICCA Congress Series No. 9 1999).
682) A. van den Berg, The New York Arbitration Convention of 1958 7 (1981) (although the
Geneva Treaties were undoubtedly an improvement in comparison with the previous
situation, they were still considered inadequate).
683) G. Gaja, International Commercial Arbitration: The New York Convention (1978); ICC, Report
and Preliminary Draft Convention Adopted by the Committee on International Commercial
Arbitration at Its Meeting of 13 March 1953, reprinted in 9(1) ICC Ct. Bull. 32 (1998).
684) ICC, Report and Preliminary Draft Convention Adopted by the Committee on International
Commercial Arbitration at Its Meeting of 13 March 1953, reprinted in 9(1) ICC Ct. Bull. 32, 32
(1998).
685) A. van den Berg, The New York Arbitration Convention of 1958 6-10, 29-40 (1981).
686) ICC, Report and Preliminary Draft Convention Adopted by the Committee on International
Commercial Arbitration at Its Meeting of 13 March 1953, reprinted in 9(1) ICC Ct. Bull. 32, 32
(1998).
687) Resolution 520 (XVIII) of ECOSOC Council.
688) Report of the Committee on the Enforcement of International Arbitral Awards, U.N. Doc.
E/AC.42/4 (1955).
689) In particular, as discussed below, the ECOSOC rejected the notion of a-national arbitral
proceedings and awards, and instead insisted on rooting the arbitral process firmly in
national law (particularly the law of the arbitral seat). See11.03[C][1][c][i], pp. 1547-48; A.
van den Berg, The New York Arbitration Convention of 1958 6-10, 29-40 (1981).
690) Sanders, The History of the New York Convention, in A. van den Berg (ed.), Improving the
Convention 11-12 (ICCA Congress Series No. 9 1999).
691) A. van den Berg, The New York Arbitration Convention of 1958 8 (1981) (the fundamental
difference between the ICC Draft Convention of 1953 and the ECOSOC Draft Convention of
1955 was reconciled by a compromise reached at the Convention).
692) A. van den Berg, The New York Arbitration Convention of 1958 8-10, 56 (1981).
693) See1.01[C].
694) A. van den Berg, The New York Arbitration Convention of 1958 12-13 (1981).
695) See2.01[A][1][a].
107
696) For a summary of these negotiations, seeSanders, The History of the New York Convention,
in A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40
Years of Application of the New York Convention 11 (ICCA Congress Series No. 9 1999); A.
van den Berg, The New York Arbitration Convention of 1958 1-10 (1981). For a useful
collection of the travaux preparatoires, see G. Gaja, The New York Convention (1978).
697) New York Convention, Art. XVI.
698) See1.04[A][1][c][i]; Renusagar Power Co. v. Gen. Elec. Co., XX Y.B. Comm. Arb. 681, 685
(Indian S.Ct. 1993) (1995).
699) See New York Convention, Arts. III-V; 1.04[A][1][c][ii]; 26.03[B][1]. The shift in the burden
of proof was accomplished by Articles III and V, which required the award-creditor to
present only minimal evidence in support of recognition of an award (in Article III), while
specifying only limited grounds, which needed affirmatively to be proven, that could
result in non-recognition (in Article V). See26.01[A]; 26.03[B][1].
700) See New York Convention, Art. V(1)(d); 1.04[A][1][c]; 11.03[C][1][c]; 15.02[A].
701) See New York Convention, Art. V(1)(a); 1.04[A][1][c][i].
702) See1.01[C][2]; 26.03[B][4].
703) Summary Record of the Twenty-Fifth Meeting of the United Nations Conference on
International Commercial Arbitration, U.N. Doc. E/CONF.26/SR.25, 2 (1958).
704) Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 651 (Alberta Ct. App.
1992) (1994). See also Repub. of Ecuador v. Chevron Corp., 2011 U.S. App. LEXIS 5351, at *14
(2d Cir.) (federal policy favoring arbitration is even stronger in the context of
international business transactions where arbitral agreements promote[] the smooth
flow of international transactions by removing the threats and uncertainty of time-
consuming and expensive litigation) (quoting David L. Threlkeld & Co. v.
Metallgesellschaft Ltd, 923 F.2d 245, 248 (2d Cir. 1991)); Park, Neutrality, Predictability and
Economic Cooperation, 12 J. Intl Arb. 99 (1995); A. van den Berg, The New York Arbitration
Convention of 1958 17-19 (1981); 1.01[C]; 1.04[A].
705) Summary Record of the Thirteenth Meeting of the United Nations Conference on
International Commercial Arbitration, U.N. Doc. E/CONF.26/SR.13, 3 (1958).
706) See2.01[A][1][a]; 4.02[A][1]; 4.04[B][2][b]; 5.01[B][2]; 5.05[A]; 11.03[C][1][c] discussing
effect of the Convention on the recognition and enforcement of international arbitration
agreements.
707) See11.03[C][1][c][ii]; 11.05[B][2].
708) The effect of the Convention on the conduct of international arbitral proceedings is
discussed below. See11.03[C][1][c].
709) A. van den Berg, The New York Arbitration Convention of 1958 1 (1981).
710) Mustill, Arbitration: History and Background, 6(2) J. Intl Arb. 43, 49 (1989).
711) Wetter, The Present Status of the International Court of Arbitration of the ICC: An Appraisal,
1 Am. Rev. Intl Arb. 91, 93 (1990). See also Yugraneft Corp. v. Rexx Mgt Corp., [2010] 1 R.C.S.
649, 657 (Canadian S.Ct.) (New York Convention is a great success); Graving, Status of
the New York Arbitration Convention: Some Gaps in Coverage But New Acceptances
Confirm Its Vitality, 10 ICSID Rev. 1, 3 (1995) (mortar of the edifice of international
commercial arbitration); Kerr, Concord and Conflict in International Arbitration, 13 Arb.
Intl 121, 127 (1997) (the foundation on which the whole of the edifice of international
arbitration rests).
712) Schwebel, A Celebration of the United Nations New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, 12 Arb. Intl 83, 85 (1996).
713) The Convention entered into force on the ninetieth day following the deposit of the third
instrument of ratification or accession. New York Convention, Art. XII(1).
714) UNCITRAL, Status: 1958 Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, available at www.uncitral.org.
715) Prior to 1980, the New York Convention had not been ratified or acceded to by (among
others) Algeria, Argentina, Bahrain, Bangladesh, Bolivia, Burkina Faso, Cameroon, China,
Costa Rica, Guatemala, Guinea, Haiti, Indonesia, Kenya, Laos, Lebanon, Malaysia, Mali,
Mauritania, Mozambique, Nepal, Panama, Paraguay, Peru, Saudi Arabia, Senegal,
Singapore, Turkey, Uruguay, Venezuela, Vietnam and Zimbabwe. Between 1980 and the
present, all of these states acceded to the Convention.
716) In the United States, historic distrust of arbitration and the domestic debate over the
appropriate scope of the federal treaty power and the authority of the several states led
to an initial recommendation from the U.S. delegation against ratifying the Convention.
Czysak & Sullivan, American Arbitration Law and the UN Convention, 13 Arb. J. 197 (1958);
Springer, The United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 3 Intl Law. 320 (1969). See also Paulsson, International Arbitration Is Not
Arbitration, 2008:2 Stockholm Intl Arb. Rev. 1, 20 (U.S. ratification of New York
Convention opposed by Heinrich Kronstein, an out-spoken opponent of arbitration, who
served as Deputy Legal Adviser) (citing Kronstein, Business Arbitration Instrument of
Private Government, 54 Yale L.J. 36 (1944)).
717) In 1970, the United States reconsidered its position and acceded to the Convention. See
Message From the President on the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, S. Exec. Doc. E, 90th Cong., 2d Sess. 18 (1968); Quigley, Accession
by the United States to the United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, 70 Yale L.J. 1049 (1961).
718) Seewww.uncitral.org for a list of states that have ratified or acceded to the Convention.
108
719) See G. Petrochilos, Procedural Law in International Arbitration 16 (2004) (The states party
to [the New York Convention] constitute a large and representative geographical, legal-
cultural, and economic sample of the international community).
720) In ratifying or acceding to the Convention, many states have attached reservations that
can have significant consequences in private disputes. These reservations frequently
deal with reciprocity and limiting the Conventions applicability to disputes arising from
commercial relations. See2.03[B][2]; 2.03[G].
721) It appears clear that the Conventions terms apply to agreements made prior to the
Convention entering into effect. Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 515 n.3 (2d Cir.
1975) (the [New York] Convention contains no prospective language and should be
applied retroactively to existing arbitration agreements and awards); A. van den Berg,
The New York Arbitration Convention of 1958 72-80 (1981).
722) See1.04[B][1][a]. It is instructive to compare the broad statements of principle,
succinctly set forth in the Convention, with the much more detailed provisions of the
UNCITRAL Model Law. See1.04[B][1][a].
723) See A. van den Berg, The New York Arbitration Convention of 1958 6, 54-55, 168-69, 262-63,
274, 357-58 (1981).
724) Scherk v. Alberto-Culver Co., 417 U.S. 506, 502 n.15 (U.S. S.Ct. 1974) (emphasis added). See
also Smith/Enron Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 96 (2d Cir.
1999) (goal of simplifying and unifying international arbitration law); D. Caron & L.
Caplan, The UNCITRAL Arbitration Rules: A Commentary 1 (2d ed. 2013) (In essence, the
treaty allows private parties to use the coercive power of national courts to implement
private arrangements for international arbitration); A. van den Berg, The New York
Arbitration Convention of 1958 1-3 (1981).
725) See4.04[B][2][b][ii].
726) See11.03[C][1][c][ii].
727) A. van den Berg, The New York Arbitration Convention of 1958 1, 6, 54-55, 168-69, 262-63,
274, 357-58 (1981). See also Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1285 (11th Cir. 2011)
(These precedents [including Scherk] reveal the Supreme Courts and our Circuits
recognition of the reciprocal nature of the Convention and the need for uniformity in the
enforcement of arbitration agreements.); Certain Underwriters at Lloyds v. Argonaut Ins.,
500 F.3d 571, 580 (7th Cir. 2007) (uniformity in determining the manner by which
agreements to arbitrate will be enforced is a critical objective of the Convention); IPCO
(Nigeria) Ltd v. Nigerian Natl Petroleum Corp. [2008] EWCA Civ 1157, 553 (English Ct. App.)
(we were however referred to an Austrian case, which the judge relied on, which is of
some relevance given the importance of uniformity in the interpretation of international
conventions); Hebei Imp. & Exp. Corp. v. Polytek Engg Co., XXIV Y.B. Comm. Arb. 652, 675
(H.K. Ct. Fin. App. 1999) (1999) (When a number of states enter into a treaty to enforce
each others arbitral awards, it stands to reason that they would do so in the realisation
that they, or some of them, will very likely have very different outlooks in regard to
internal matters. And they would hardly intend, when entering into the treaty or later
when incorporating it into their domestic law, that these differences should be allowed
to operate so as to undermine the broad uniformity which must be the obvious aim of
such a treaty and the domestic laws incorporating it.); IMC Aviation Solutions Pty Ltd v.
Altain Khuder LLC, [2011] 253 FLR 9, 19-20 (Victoria Ct. App.); Judgment of 26 April 1980,
[1981] E.C.C. 183, 186 (Genoa Corte dAppello) (it is necessary to depart from the
attitudes of the internal system in interpreting the basic core of the above Convention,
entered into to satisfy the need for greater expedition in decisions concerning
international trade relations and uniformity of substantive law and its interpretation,
already manifested by the growing concentration of disputes before existing arbitral
institutions).
728) Yugraneft Corp. v. Rexx Mgt Corp., [2010] 1 R.C.S. 649, 657 (Canadian S.Ct.) (emphasis
added). See also Gas Auth. of India, Ltd v. SPIE-CAPAG, SA, XXIII Y.B. Comm. Arb. 688, 694
(Delhi High Ct. 1993) (1998) (New York Convention lays down one uniform code for
recognition of international arbitration agreements; common yard stickgenerates
confidence in the parties, who may be unfamiliar with the diverse laws prevailing in
different countries with which they are trading).
729) New York Convention, Art. II(1). See2.01[A][1][a]; 5.01[B][2]; 5.06[B][1].
730) New York Convention, Art. II(3).
731) New York Convention, Arts. III, V. Recognition of an arbitral award refers to giving
preclusive effect to the award, usually to bar relitigation of the claims that were
arbitrated; enforcement refers to the invocation of coercive judicial remedies to fulfil
the award. SeePart III; 22.01[B].
732) See12.01[B][2].
733) Intl Ins. Co. v. Caja Nacional De Ahorro y Seguro, 293 F.3d 392, 399 (7th Cir. 2002).
109
734) See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (U.S. S.Ct. 1974); Repub. of
Ecuador v. Chevron Corp., 2011 U.S. App. LEXIS 5351, at *14 (2d Cir.) (federal policy
favoring arbitration is even stronger in the context of international business
transactions); Polimaster Ltd v. RAE Sys., Inc., 623 F.3d 832, 841 (9th Cir. 2010) (New York
Convention was enacted to promote the enforceability of international arbitration
agreements); Judgment of 20 January 1987, Socit Bomar Oil NV v. Entreprise Tunisienne
dActivits Ptrolires, 1987 Rev. arb. 482, 485-86 (Paris Cour dappel) (facilitate dispute
resolution by way of international commercial arbitration); Judgment of 30 September
2010, 2011 NJW-RR 569, 570 (German Bundesgerichtshof) (With the New York Convention,
the enforcement of arbitration agreements should be facilitated internationally.);
Judgment of 7 February 1984, Tradax Exp. SA v. Amoco Iran Oil Co., XI Y.B. Comm. Arb. 532,
535 (Swiss Federal Tribunal) (1986) (The purpose of the Convention is to facilitate the
resolution of disputes through arbitration); Renusagar Power Co. v. Gen. Elec. Co., XX
Y.B. Comm. Arb. 681, 685 (Indian S.Ct. 1993) (1995) (The purpose of this Convention was to
widen the scope of the Geneva Protocol of 1923); Altain Khuder LLC v. IMC Aviation
Solutions Pty Ltd, [2011] VSCA 248, 45 (Victoria Ct. App.) (The New York Convention is
widely recognised in international arbitration circles as having a pro-enforcement
policy.); Automatic Sys. Inc. v. Bracknell Corp., (1994) 18 O.R.3d 257, 264 (Ontario Ct. App.)
(The purpose of the United Nations conventions and the legislation adopting them is to
ensure that the method of resolving disputes, in the forum and according to the rules
chosen by the parties, is respected.). See also2.01[A][1][a].
735) See, e.g., Admart AG v. Stephen & Mary Birch Found., Inc., 457 F.3d 302, 307 (3d Cir. 2006)
(Consistent with the policy of favoring enforcement of foreign arbitral awards, parties
have limited defenses to recognition and enforcement of an award as set out in Article V
of the Convention.); Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir. 1983)
(intended purpose of Convention is to encourage the recognition and enforcement of
international arbitration awards); Parsons & Whittemore Overseas Co. v. Socit Generale
de lIndustrie du Papier, 508 F.2d 969, 973 (2d Cir. 1974) (Conventions basic thrust was to
liberalize procedures for enforcing foreign arbitral awards); Dowans Holdings SA v.
Tanzania Elec. Supply Co. [2011] EWHC 1957, 105 (Comm) (English High Ct.) (It is common
ground that the intention of the New York Convention was to make enforcement of a
Convention award more straightforward, and in particular to remove the previous
necessity for a double exequatur); Gater Assets Ltd v. Nak Naftogaz Ukrainy [2007]
EWHC 697, 29 (Comm) (English High Ct.) (policy of the Arbitration Act and the New York
Convention to give effect to Convention awards by speedy and effective enforcement);
Hainan Mach. Imp. & Exp. Corp. v. Donald & McArthy Pte Ltd, XXII Y.B. Comm. Arb. 771, 778
(Singapore High Ct. 1995) (1997) (principle of comity of nations requires that the awards
of foreign arbitration tribunals be given due deference and be enforced unless
exceptional circumstances exist); Bharat Aluminium v. Kaiser Aluminium, C.A. No.
7019/2005, 150 (Indian S.Ct. 2012) (The underlying motivation of the New York
Convention was to reduce the hurdles and produce a uniform, simple and speedy system
for enforcement of foreign arbitral award. Therefore [Article V(1)(e) of the Convention
should be interpreted in the manner that] seems to be accepted by the commentators
and the courts in different jurisdictions.); Judgment of 3 June 1988, XV Y.B. Comm. Arb.
498, 499 (Florence Corte dAppello) (1990) (The New York Convention clearly aimed at
making the enforcement of foreign arbitral awards easier.). See also26.03[B].
736) New York Convention, Art. II(1). The formal requirements that the Convention imposes
with regard to arbitration agreements are addressed in Article II(2) of the Convention.
See5.02[A][2][a].
738) See2.03[C][1][a]. The obligations imposed by Article II may be subject to reciprocity
exceptions, discussed in detail below. See2.03[G].
739) See2.01[A][1][a]; 5.01[B][2].
740) See5.01[B][2]; 8.02[A][1].
741) Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005). See also Aggarao v. MOL Ship
Mgt, 675 F.3d 355, 370-71 (4th Cir. 2012) (Convention expressly compels the federal
courts to enforce arbitration agreements, notwithstanding jurisdiction conferred on
such courts to adjudicate Seamans Wage Act claims.) (quoting Rogers v. Royal
Caribbean Cruise Line, 547 F.3d 1148, 1157 (9th Cir. 2008)); Francisco v. Stolt Achievement
MT, 293 F.3d 270, 273-74 (5th Cir. 2002); Ledee v. Ceramiche Ragno, 684 F.2d 184, 187 (1st
Cir. 1982); 5.01[B][2].
742) See4.02[A][1].
743) See4.04[B][2][b].
744) See4.04[A][1][b].
745) See4.04[A][3].
746) See4.04[A][1][b]; 5.06[B][1][a]. Article II(1) also provides that an arbitration agreement
need not be recognized if it concern[s] a subject matter not capable of settlement by
arbitration. New York Convention, Art. II(1). This exception deals with the
nonarbitrability or objective arbitrability doctrine and is also discussed below.
See6.02[A]et seq.
747) See5.06[B][1].
748) See5.06[B][1][a]; 5.02[D][1]-[3] & [5].
749) See5.06[B][1][a]et seq.
750) Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005) (quoting DiMercurio v. Sphere
Drake Ins. plc, 202 F.3d 71, 79 (1st Cir. 2000)). See5.06[B][1][c].
110
751) See15.02[A].
752) See15.02[B].
753) New York Convention, Art. III (emphasis added).
754) See26.01[A][1].
755) See22.02[E][1][a].
756) New York Convention, Art. V(1).
757) See26.05[C][12][a].
758) See, e.g., Telenor Mobile Commcns AS v. Storm LLC, 584 F.3d 396, 405 (2d Cir. 2009) (a
district court, upon petition by a party to a qualifying arbitral award, shall confirm the
award unless it finds one of the grounds for refusal or deferral of recognition or
enforcement of the award specified in theConvention); Admart AG v. Stephen & Mary
Birch Found., Inc., 457 F.3d 302, 307 (3d Cir. 2006) (Under the Convention, a district
courts role is limited it must confirm the award unless one of the grounds for refusal
specified in the Convention applies to the underlying award.); Rosseel NV v. Oriental
Commercial & Shipping (U.K.) Ltd [1991] 2 Lloyds Rep 625, 628 (Comm) (English High Ct.)
(If none of the grounds for refusal are present, the award shall be enforced.); Imbar
Maratima SA v. Repub. of Gabon, XV Y.B. Comm. Arb. 436, 439 (Cayman Islands Grand Ct.
1989) (1990) (It is plain upon the wording of subsect. (1) that enforcement of a
Convention award duly evidenced is mandatory upon this court except in one or other of
the circumstances detailed in [the implementing legislation for Article V of the
Convention].).
759) See, e.g., 26.03[B][5]; Encyclopaedia Universalis SA v. Encyclopaedia Britannica, Inc., 403
F.3d 85, 90 (2d Cir. 2005) (district court is strictly limited to the seven defenses under
the New York Convention when considering whether to confirm a foreign award); Karaha
Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 288
(5th Cir. 2004) (courts in countries of secondary jurisdiction may refuse enforcement
only on the grounds specified in Article V); Dallah Real Estate & Tourism Holding Co. v.
Ministry of Religious Affairs, Govt of Pakistan [2010] UKSC 46, 101 (UK S.Ct.) ([Article V]
grounds are exhaustive); Judgment of 28 July 2010, DFT 4A_233/2010, 8 (Swiss Federal
Tribunal) (Art. Vexhaustively sets forth the grounds on which recognition and
enforcement of a foreign arbitral award can be refused. Such grounds must be
interpreted restrictively in order to facilitate the enforcement of the arbitral award.);
Judgment of 25 January 1996, Inter-Arab Inv. Guarantee Corp. v. Banque Arabe et
Internationale dInvestissements, XXII Y.B. Comm. Arb. 643, 647 (Brussels Tribunal
Premire Inst.) (1997) (Article Venumerates limitatively the grounds for refusal of
recognition and enforcement of an award.); Karaha Bodas Co. LLC v. Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, XXXIV Y.B. Comm. Arb. 577, 580-81 (H.K. Ct.
Fin. App. 2008) (2009) (Both the Ordinance and the Convention give effect to the
principles of finality and comity by prohibiting refusal of enforcement of a Convention
award except in the cases for which they provide); Judgment of 13 January 2009, XXXIV
Y.B. Comm. Arb. 632, 635 (2009) (Jerusalem Dist. Ct.) (recognition and enforcement of a
foreign awardcan be opposed on limited grounds listed in Article V of the Convention).
760) See, e.g., Polimaster Ltd v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010) (the New York
Convention defenses are interpreted narrowly); Ario v. Underwriting Members of
Syndicate Lloyds for the 1998 Year of Account, 618 F.3d 277, 290-91 (3d Cir. 2010) (Article V
of the Convention sets forth the grounds for refusal, and courts have strictly applied the
Article V defenses and generally view[ed] them narrowly.); China Minmetals Materials
Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 283 (3d Cir. 2003) (generally have construed
those exceptions narrowly); Intl Trading & Indus. Inv. Co. v. Dyncorp Aerospace Tech.,
2011 U.S. Dist. LEXIS 5954, at *28 (D.D.C.) (Article V provides exclusive grounds for non-
recognition of Convention awards: Such a narrow reading of the New York Convention
comports with the context in which the Convention was enacted, as a broad construction
of the Convention would do nothing more than erect additional hurdles to confirmation
of arbitral awards, which in turn would contravene the principal purpose of the
Convention, i.e., to encourage the recognition and enforcement of commercial
arbitration agreements in international contracts.); AO Techsnabexport (Russian Fedn)
v. Globe Nuclear Servs. & Supply, Ltd (US), 656 F.Supp.2d 550, 555 (D. Md. 2009) (The
party opposing confirmation bears the heavy burden of proving the applicability of the
[New York] Conventions enumerated defenses.); FG Hemisphere Assoc. v. Democratic
Repub. of the Congo, [2008] HKCFI 906, 11 (H.K. Ct. First Inst.) (The regime under the
[New York Convention] is extremely onerous and a heavy burden is placed upon any
party seeking to set aside an award.).
761) See26.03[B][6].
762) See8.03[C]; 15.02[A].
763) See11.05[B][2][b].
764) New York Convention, Art. V(1)(d). See15.04[A][1][c].
765) See11.03[C][1][c][ii].
766) See26.05[C][3].
767) See1.04[B].
768) See1.04[B][1]-[2].
769) See1.04[B][1].
111
770) Nine years were required to bring implementing legislation into force in Indonesia. In
Colombia, similar delays occurred, including Supreme Court litigation over the validity
of the Presidents signature on the relevant enactment. For a good overview, see
Hermann, Implementing Legislation: The IBA/UNCITRAL Project, in The New York
Convention of 1958 135 (ASA Spec. Series No. 9 1996); Paulsson, The New York Convention
in International Practice Problems of Assimilation, in The New York Convention of 1958
100 (ASA Spec. Series No. 9 1996).
771) For example, Belize declared upon independence in 1981 that it would provisionally
apply the Convention, while Indonesia imposed requirements that made recognition of
foreign awards unlikely and Vietnam imposed substantive review requirements with
regard to recognition of foreign awards. Graving, Status of the New York Arbitration
Convention: Some Gaps in Coverage But New Acceptances Confirm Its Vitality, 10 ICSID
Rev. 1 (1995); Moser, The Recognition and Enforcement of Foreign Arbitral Awards: A Survey
of the Asia-Pacific Region, 5(2) ICC Ct. Bull. 20 (1994); Paulsson, The New York Convention in
International Practice Problems of Assimilation, in The New York Convention of 1958 100-
02 (ASA Spec. Series No. 9 1996).
772) For example, Singapore imposed restrictions on representation in international
arbitrations by foreign attorneys (later repealed), see21.01[D], pp. 2838-39, U.S. courts
have failed to give effect to the parties selection of the arbitral seat and to enforce
foreign arbitral awards (on forum non conveniens grounds), see14.04[B][1], pp. 2077-79,
Chinese courts have refused to recognize agreements to ad hoc arbitration, see5.02[D]
[5], pp. 721-22, and various courts have stayed arbitral proceedings pending resolution of
related litigation, see8.04[A].
773) See1.04[A][1][c].
774) Early experience was more mixed. Sanders, Court Decisions on the New York Convention
1958, Consolidated Commentary, IV Y.B. Comm. Arb. 231 (1979); Sanders, Court Decisions on
the New York Convention 1958, Commentary, II Y.B. Comm. Arb. 254 (1977); Sanders, Court
Decisions on the New York Convention 1958, Commentary, I Y.B. Comm. Arb. 207 (1976); van
den Berg, The New York Convention: Its Intended Effects, Its Interpretation, Salient
Problem Areas, in M. Blessing (ed.), The New York Convention of 1958 25, 25-26 (ASA Spec.
Series No. 9 1996).
775) As discussed below, there are a number of sources for national court decisions and
arbitral awards dealing with international arbitration. See1.06.
776) Kaplan, A Case by Case Examination of Whether National Courts Apply Different Standards
When Assisting Arbitral Proceedings and Enforcing Awards in International Cases as
Contrasting With Domestic Disputes, in International Dispute Resolution: Towards An
International Arbitration Culture 187 (ICCA Congress Series No. 8 1996).
777) For representative examples, see Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc.,
473 U.S. 614, 660 (U.S. S.Ct. 1985) (Stevens, J., dissenting) (citing Belgian and Italian
decisions on nonarbitrability doctrine); Karaha Bodas Co. v. Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, 364 F.3d 274 (5th Cir. 2004) (citing English, Hong Kong,
Swedish, Swiss and other authorities); Europcar Italia, SpA v. Maiellano Tours, Inc., 156
F.3d 310, 314 (2d Cir. 1998) (reviewing Italian and German court decisions to determine if
awards rendered under arbitrato irrituale were enforceable under Convention); Ministry
of Defense of the Islamic Repub. of Iran v. Gould Inc., 887 F.2d 1357, 1364 (9th Cir. 1989)
(citing English authority); Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] AC 221, 236
(House of Lords) (citing U.S. authority); Fiona Trust & Holding Corp. v. Privalov [2007] 1 All
ER 891 (Comm) (English Ct. App.) (citing U.S. and German authority), affd, [2007] UKHL 40
(House of Lords); IPCO (Nigeria) Ltd v. Nigerian Natl Petroleum Corp. [2008] EWCA Civ 1157,
19 (English Ct. App.) (citing Austrian authority); TMR Energy Ltd v. State Prop. Fund of
Ukraine, XXIX Y.B. Comm. Arb. 607, 630 (Canadian Fed. Ct. 2003) (2004) (citing English
authority); Wires Jolley LLP v. Jean Estate, [2010] CarswellBC 722, 26 (B.C. S.Ct.) (citing
English authority); Corporacin Transnacional de Inversiones, SA de CV v. STET Intl, SpA,
(2000) 49 O.R.3d 414 (Ontario Ct. App.) (citing U.S. and English authority); Grand Pac.
Holdings Ltd v. Pac. China Holdings Ltd (in liquidation) (No. 1), [2012] 4 HKLRD 1, 36-37
(H.K. Ct. App.) (citing English authority); Democratic Repub. of the Congo v. FG Hemisphere
Assocs. LLC, [2011] HKEC 747, 152-55 (H.K. Ct. App.) (citing U.S., English and Canadian
authority); Hebei Imp. & Exp. Corp. v. Polytek Engg Co., XXIV Y.B. Comm. Arb. 652, 668
(H.K. Ct. Fin. App. 1999) (1999) (citing U.S. and Indian authorities); Bharat Aluminium v.
Kaiser Aluminium, C.A. No. 7019/2005, 94, 128, 142, 150 (Indian S.Ct. 2012) (citing U.S.,
English and Hong Kong authorities); Universal Tractor Holding LLC v. Escorts Ltd, [2012] Ex.
P. 372 of 2010, 30 (Delhi High Ct.) (citing U.S. and English authorities); Gas Auth. of India,
Ltd v. SPIE-CAPAG SA, XXIII Y.B. Comm. Arb. 688, 694 (Delhi High Ct. 1993) (1998) (citing U.S.
authority); Uganda Telecom Ltd v. Hi-Tech Telecom Pty Ltd (No 2), [2011] FCA 206, 13
(Australian Fed. Ct.) (citing English authority); IMC Aviation Solutions Pty Ltd v. Altain
Khuder LLC, [2011] 253 FLR 9, 41 et seq. (Victoria Ct. App.) (citing U.S., English, Irish,
Canadian, Hong Kong and Singapore authority); Attorney Gen. v. Mobil Oil New Zealand,
Ltd, [1989] 2 NZLR 649, 668 (N.Z. High Ct.) (although U.S. judicial decisions reflect United
States judicial policy towards international investments and contractssuch principles
are appropriate even in this small country as international trade and commercial
relationships are of critical importance); Judgment of 28 April 1999, Attorney Gen. of the
Repub. of Kenya v. Bank fr Arbeit und Wirtschaft AG, XXV Y.B. Comm. Arb. 692, 704 et seq.
(Cyprus S.Ct.) (2000); Brostrom Tankers AB v. Factorias Vulcano SA, XXX Y.B. Comm. Arb.
591, 596-97 (Dublin High Ct. 2004) (2005) (citing U.S. authority).
112
778) Bharat Aluminium v. Kaiser Aluminium, C.A. No. 7019/2005, 150 (Indian S.Ct. 2012). See
also1.04[A][1][a].
779) IMC Aviation Solutions Pty Ltd v. Altain Khuder LLC, [2011] 253 FLR 9, 19-20 (Victoria Ct.
App.). See also Kaplan, A Case by Case Examination of Whether National Courts Apply
Different Standards When Assisting Arbitral Proceedings and Enforcing Awards in
International Cases as Contrasting With Domestic Disputes, in International Dispute
Resolution: Towards An International Arbitration Culture 187 (ICCA Congress Series No. 8
1996) (There appears to be much more cross-referencing of judicial decisions involving
international arbitration cases than there is in any other area of the law.).
780) See1.04[B][1][a].
781) See4.04[A][4][b]. See also Ritter, Disputing Arbitration Clauses in International Insurance
Agreements: Problems With the Self-Execution Framework, 3 Pace Intl L. Rev. 40 (2012);
Strong, Monism and Dualism in International Commercial Arbitration: Overcoming Barriers
to Consistent Application of Principles of Public International Law, in M. Novakovic (ed.),
Basic Concepts in Public International Law Monism & Dualism 547 (2013).
782) See, e.g.,Judgment of 7 February 1984, DFT 110 II 54 (Swiss Federal Tribunal) (Article II of
New York Convention is directly applicable in Swiss courts); Judgment of 8 October 2008,
XXXIV Y.B. Comm. Arb. 644, 647 (Italian Corte di Cassazione) (The Convention
provisionscreate a fully autonomous micro-system, either because treaty provisions (in
respect of both the requirements for enforcement of the foreign award and the grounds
to oppose enforcement) prevail over the provision in the [Italian] Code of Civil
Procedure, or because of the Conventions completeness and self-sufficiency.) (2009).
783) Cf. Carbonneau, The Reception of Arbitration in United States Law, 40 Me. L. Rev. 262, 272
(1988) (New York Convention is universal charter of international commercial
arbitration); Landau, The Requirement of A Written Form for An Arbitration Agreement:
When Written Means Oral, in A. van den Berg (ed.), International Commercial
Arbitration: Important Contemporary Questions 19, 64 (ICCA Congress Series No. 11 2003)
(New York Convention is a living document).
784) Yugraneft Corp. v. Rexx Mgt Corp., [2010] 1 R.C.S. 649, 661 (Canadian S.Ct.) (citing G. Born,
International Commercial Arbitration 101 (2009)). The same decision held that, as a
treaty, the Convention must be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and in the light
of its object and purpose. Ibid. (quoting Vienna Convention on the Law of Treaties, Art.
31(1)).
785) See, e.g., A. van den Berg (ed.), 50 Years of the New York Convention 667 (2009) (Annex I:
Text of the Hypothetical Draft Convention on the International Enforcement of
Arbitration Agreements and Awards); Veeder, Summary of the Discussion in the First
Working Group, 45, in A. van den Berg (ed.), 40 Years of the New York Convention (1999)
(noting proposals to amend writing requirement under Article II(2) of Convention).
786) See, e.g., Brekoulakis, Enforcement of Foreign Arbitral Awards: Observations on the
Efficiency of the Current System and the Gradual Development of Alternative Means of
Enforcement, 19 Am. Rev. Intl Arb. 415, 417 (2008); Gaillard, The Urgency of Not Revising
the New York Convention, in A. van den Berg (ed.), 50 Years of the New York Convention
689, 693 (2009); Veeder, Is There A Need to Revise the New York Convention?, 1 J. Intl Disp.
Sett. 499, 499 (2010).
787) See4.06[A][3]; 5.02[A][5][b].
788) See1.04[B][1][a].
789) See1.04[A][1][d].
790) Yugraneft Corp. v. Rexx Mgt Corp., [2010] 1 R.C.S. 649, 661 (Canadian S.Ct.) (quoting Vienna
Convention on the Law of Treaties, Art. 31(1)).
791) See Judgment of 2 July 2012, 5A_754 2011, 5.4.1 (Swiss Federal Tribunal) (New York
Convention shall be interpreted in good faith).
792) European Convention on International Commercial Arbitration (European Convention),
484 U.N.T.S. 349 (1961). See A. van den Berg, The New York Arbitration Convention of 1958
92-98 (1981).
793) Glossner, The Institutional Appointment of Arbitrators, 12 Arb. Intl 95 (1996); Hascher,
European Convention on International Commercial Arbitration of 1961 Commentary, XX
Y.B. Comm. Arb. 1006 (1995).
794) A. van den Berg, The New York Arbitration Convention of 1958 93 (1981) (European
Conventions main purpose is arbitration in East-West trade).
795) European Convention, 484 U.N.T.S. 349 (1961). See Hascher, European Convention on
International Commercial Arbitration of 1961 Commentary, XX Y.B. Comm. Arb. 1006
(1995).
796) See European Convention, 484 U.N.T.S. 349 (1961).
797) See European Convention, 484 U.N.T.S. 349 (1961).
798) The Convention does so through provisions regarding the obligations of public entities to
arbitrate and the treatment of jurisdictional objections. European Convention, Arts. II(1),
IV, V. See5.03[D]; 7.02[A][2].
799) European Convention, Art. V(1) (either non-existent or null and void or had lapsed).
See5.01[B][3].
800) European Convention, Arts. III, IV, V, VI, VII, Annex.
801) European Convention, Art. IX. See22.02[E][1][b]; 26.03[C][2]; A. van den Berg, The New
York Arbitration Convention of 1958 96 (1981) (the European Convention cannot function
without the New York Convention as the former is built upon the latter).
113
802) This is confirmed by the relative scarcity of judicial decisions (and commentary)
involving the Convention.
803) European Convention, Arts. V, VI. As discussed below, Article V confirms the arbitral
tribunals competence-competence to consider challenges to its own jurisdiction, while
Article VI provides in principle for national courts to permit initial resolution of
jurisdictional objections by the tribunal. See7.02[A][2], p. 1058.
804) European Convention, Art. IV, Annex.
805) United Nations Economic and Social Council, Economic Commission for Europe, Doc. No.
trade/2000/7, 25-28 (2000). See alsowww.unece.org.
806) For commentary, see J. Bowman, The Panama Convention and Its Implementation Under
the Federal Arbitration Act (2002); Garro, Enforcement of Arbitration Agreements and
Jurisdiction of Arbitral Tribunals in Latin America, 1(4) J. Intl Arb. 293 (1984); Holtzmann,
The United States Becomes A Party to the Inter-American Convention on International
Commercial Arbitration, XVI Y.B. Comm. Arb. 419 (1991); van den Berg, The New York
Convention 1958 and Panama Convention 1975: Redundancy or Compatibility?, 5 Arb. Intl
214 (1989).
807) See1.01[C].
808) Inter-American Convention on International Commercial Arbitration was signed in
Panama on 30 January 1975.
809) Seewww.oas.org/juridico/english/Sigs/b-35.html.
810) House Report No. 501, 101st Cong., 2d Sess. 4 (1990), reprinted in 1990 U.S.C.C.A.N. 675, 678
(The New York Convention and the Inter-American Convention are intended to achieve
the same results, and their key provisions adopt the same standards, phrased in the
legal style appropriate for each organization. It is the Committees expectation, in view
of that fact and the parallel legislation under the Federal Arbitration Act that would be
applied to the Conventions, that courts in the United States would achieve a general
uniformity of results under the two conventions.); Productos Mercantiles e Industriales,
SA v. Faberge USA, 23 F.3d 41, 45 (2d Cir. 1994) (the legislative history of the Inter-
American Conventions implementing statuteclearly demonstrates that Congress
intended the Inter-American Convention to reach the same results as those reached
under the New York Convention). See also2.01[A][1][b]; 5.01[B][3]; 22.02[E][1][c];
25.02[C]; 26.03[C][1].
811) Inter-American Convention, Art. 1.
812) Inter-American Convention, Arts. 4, 5.
814) Inter-American Convention, Art. 3. The Inter-American Commercial Arbitration
Commission was established in 1934 by the predecessor to the Organization of American
States. IACAC is composed of national sections in about a dozen nations; the AAA is the
U.S. national section. IACACs administrative headquarters is located in OAS facilities in
Washington, D.C., and is overseen on a day-to-day basis by a Director General.
815) IACAC Rules, available at www.sice.oas.org.
817) Compare New York Convention, Art. II(3); 8.02[A]; 8.03. See also A. van den Berg, The
New York Arbitration Convention of 1958 102 (1981) (Panama Convention shows a certain
number of lacunae and obscurities in comparison with the New York Convention).
818) Convention on the Settlement of Investment Disputes Between States and Nationals of
Other States, produced at Washington, D.C., 18 March 1965. For commentary, seeD.
Bishop, J. Crawford & M. Reisman, Foreign Investment Disputes: Cases, Materials and
Commentary (2005); C. Dugan et al., Investor-State Arbitration (2008); C. McLachlan, L.
Shore & M. Weiniger, International Investment Arbitration (2007); A. Newcombe & L.
Paradell, Law and Practice of Investment Treaties: Standards of Treatment (2009); L. Reed,
J. Paulsson & N. Blackaby, Guide to ICSID Arbitration (2d ed. 2011); C. Schreuer et al., The
ICSID Convention: A Commentary (2d ed. 2009).
819) ICSID Convention, Art. 1; C. Schreuer et al., The ICSID Convention: A Commentary Art. 1,
2-3 (2d ed. 2009). ICSID is affiliated with the International Bank for Reconstruction
and Development (IBRD or World Bank) and is based at the World Banks Washington,
D.C. headquarters.
820) ICSID, List of Contracting States and Other Signatories of the Convention (as of November
1, 2013), available at icsid.worldbank.org. In recent years, a few states have denounced
their accession to the ICSID Convention (e.g., Bolivia, Ecuador, Venezuela).
821) ICSID Convention, Art. 25(1). See Krishan, A Notion of ICSID Investment, in T. Weiler (ed.),
Investment Treaty Arbitration: A Debate and Discussion 66-84 (2008); C. Schreuer et al.,
The ICSID Convention: A Commentary 128-34 (2d ed. 2009).
822) See Amerasinghe, Jurisdiction Ratione Personae Under the Convention on the Settlement of
Investment Disputes Between States and Nationals of Other States, 47 Brit. Y.B. Intl L. 227
(1974-1975); Saverese, Investment Treaties and the Investors Right to Arbitration
Between Broadening and Limiting ICSID Jurisdiction, 7 J. World Inv. & Trade 407 (2006); C.
Schreuer et al., The ICSID Convention: A Commentary (2d ed. 2009); Yala, The Notion of
Investment ICSID Case Law: A Drifting Jurisdictional Requirement?: Some Un-
Conventional Thoughts on Salini, SGS and Mihaly, 22 J. Intl Arb. 105 (2005).
823) ICSID Convention, Arts. 28-35. See Nurick & Schnably, The First ICSID Conciliation: Tesoro
Petroleum Corporation v. Trinidad and Tobago, 1 ICSID Rev. 340 (1986).
824) See1.04[A][6].
114
825) ICSID Convention, Arts. 41, 52, 53; C. Schreuer et al., The ICSID Convention: A Commentary
516-24 (2d ed. 2009).
826) See7.02[A][4].
827) ICSID Convention, Arts. 53, 54; C. Schreuer et al., The ICSID Convention: A Commentary Art.
54, 42-44 (2d ed. 2009).
828) ICSID Convention, Art. 52. See C. Schreuer et al., The ICSID Convention: A Commentary Art.
52, 451-60, 466-510 (2d ed. 2009).
The ICSID annulment mechanism has been widely criticized. See, e.g., Crivellaro,
Annulment of ICSID Awards: Back to the First Generation?, in L. Lvy & Y. Derains (eds.),
Liber Amicorum Mlanges en lHonneur de Serge Lazareff 145 (2011); Redfern, ICSID
Losing Its Appeal?, 3 Arb. Intl 98 (1987); Schreuer, From ICSID Annulment to Appeal. Half
Way Down the Slippery Slope, 10 L. & Prac. Intl Cts. & Tribs. 211 (2011).
829) ICSID Convention, Art. 52. See C. Schreuer et al., The ICSID Convention: A Commentary Art.
52, 656 (2d ed. 2009).
830) See24.08.
831) ICSID Convention, Arts. 13(1), 38, 40(1); C. Schreuer et al., The ICSID Convention: A
Commentary45-47, 490-97, 508-10, 1102-05 (2d ed. 2009).
832) See1.04[C][2].
833) ICSID Convention, Art. 42.
834) See1.04[A][6].
835) See, e.g., Born, A New Generation of International Adjudication, 61 Duke L.J. 775 (2012);
Sedlak, ICSIDs Resurgence in International Investment Arbitration: Can the Momentum
Hold?, 23 Penn St. Intl L. Rev. 147 (2004).
836) See1.03.
837) See1.04[A][6].
838) ICSID, The ICSID Caseload: Statistics 7 (2014). See also Goldhaber, Arbitration Scorecard
2013, Focus Europe 1 (2013) (spotlights 165 treaty arbitrations and 109 contract
arbitrations that were active in 2011-12, including a record 121 billion-dollar disputes);
Goldhaber, Arbitration Scorecard 2009: One Battleground Isnt Enough, Focus Europe 28-
39 (2009) (33 treaty arbitrations in which at least $1 billion was at stake); Goldhaber,
Arbitration Scorecard 2007, Focus Europe 22-37 (2007) (63 treaty disputes in which at least
$1 billion was at stake).
839) ICSID, 2013 Annual Report 17 (2013).
840) NAFTA, Chapter 11, Art. 1102 (national treatment), Art. 1103 (most-favored-nation
treatment), Art. 1105 (fair and equitable treatment), Art. 1110 (expropriation).
The Dominican Republic-Central American Free Trade Agreement (commonly referred to
as CAFTA) provides substantive rights and dispute resolution mechanisms similar, but
not identical, to those under NAFTA among the CAFTA Contracting Parties (Costa Rica,
Dominican Republic, El Salvador, Guatemala, Nicaragua, Honduras and the United
States).
841) See NAFTA, Chapter 11, Art. 1122 (Each Party consents to the submission of a claim to
arbitration in accordance with procedures set out in this Agreement.).
842) ICSID, List of Contracting States and Other Signatories of the Convention (as of November
1, 2013), available at icsid.worldbank.org. ICSID arbitration could be exercised as an
option under NAFTA in certain cases if Canada or Mexico were to ratify the ICSID
Convention. NAFTA, Chapter 11, Art. 1120(1)(a). Canada is currently taking steps to do so.
843) C. Schreuer et al., The ICSID Convention: A Commentary 85 (2d ed. 2009).
844) See ICSID, Additional Facility Rules. See C. Schreuer et al., The ICSID Convention: A
Commentary 85 (2d ed. 2009).
845) For commentary, see R. Dolzer & M. Stevens, Bilateral Investment Treaties (1995); R. Dolzer
& C. Schreuer, Principles of International Investment Law 89-191 (2008); ICSID, Bilateral
Investment Treaties, 1959-1996, ICSID Doc. ICSID/17 (1997); A. Newcombe & L. Paradell, Law
and Practice of Investment Treaties: Standards of Treatment (2009); Parra, Provisions on
the Settlement of Investment Disputes in Modern Investment Laws, Bilateral Investment
Treaties and Multilateral Instruments on Investment, 12 ICSID Rev. 287 (1997); K.
Vandevelde, United States Bilateral Investment Treaties: Policy and Practice (1992).
846) See, e.g., U.S. Model BIT (2012); French Model BIT (2006); German Model BIT (2008);
Canadian Model BIT (2004); Indian Model BIT (2003); Colombian Model BIT (2007). These
model treaties are available at italaw.com/investment-treaties.
847) For example, 20 out of 58 BITs in 2010 were concluded between developing countries.
UNCTAD, World Investment Report 2011 (2011); UNCTAD, Bilateral Investment Treaties 1995-
2006: Trends in Investment Rulemaking (2007). A few states, notably Brazil, have refused
to conclude BITs, but most states, including the United States, China, all EU states, most
Latin American, Asian states and many African states, have concluded substantial
numbers of BITs.
848) See R. Dolzer & C. Schreuer, Principles of International Investment Law 130-212 (2d ed.
2012); A. Newcombe & L. Paradell, Law and Practice of Investment Treaties: Standards of
Treatment (2009); S. Schill, The Multilateralization of International Investment Law (2009).
115
849) See Paulsson, Arbitration Without Privity, 10 ICSID L. Rev. 232 (1995). In fact, arbitration
without privity is a misnomer: BITs contain standing offers by states to arbitrate
defined categories of investment disputes with foreign investors, which, when accepted
by a foreign investor, give rise to a bilateral arbitration agreement between the host
state and foreign investor. See Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 392 (2d
Cir. 2011) (this proves to be a distinction without a difference, since Ecuador, by signing
the BIT, and Chevron, by consenting to arbitration, have created a separate binding
agreement to arbitrate); R. Dolzer & C. Schreuer, Principles of International Investment
Law 254-64 (2d ed. 2012).
850) A. Newcombe & L. Paradell, Law and Practice of Investment Treaties: Standards of
Treatment 73-74 (2009).
851) G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing
142 (4th ed. 2013).
852) UNCTAD, Recent Developments in Investor-State Dispute Settlement (2013) (more investor-
state arbitrations (62) filed in 2012 than in any previous year).
853) See authorities cited at 1.04[A][6], pp. 124-25.
854) See, e.g., 11 U.S.T. 2398 (France); 7 U.S.T. 1839 (Germany); 8 U.S.T. 2043 (Netherlands); 14
U.S.T. 1284 (Belgium); T.I.A.S. No. 4797 (Denmark); 5 U.S.T. 1829 (Greece); 1 U.S.T. 785
(Ireland); T.I.A.S. No. 4685 (Italy); 4 U.S.T. 251 (Luxembourg); 8 U.S.T. 899 (Iran); 5 U.S.T. 550
(Israel); 4 U.S.T. 2063 (Japan); 8 U.S.T. 2217 (Korea); 9 U.S.T. 449 (Nicaragua); 12 U.S.T. 110
(Pakistan); 9 U.S.T. 5843 (Thailand); 18 U.S.T. 1 (Togo).
855) Treaty of Friendship, Commerce and Navigation, United States-West Germany, 7 U.S.T.
1839, 1845, T.I.A.S. No. 3593, Art. 6(2) (1954).
856) As noted above, the New York Convention leaves such bilateral arrangements intact,
applicable where the Convention either does not apply or does not provide for
recognition. See1.04[A][1].
857) See11.03[E][2].
858) See Ball, The Essential Judge: The Role of the Courts in A System of National and
International Commercial Arbitration, 22 Arb. Intl 74 (2006); Bckstiegel, The Relevance of
National Arbitration Law for Arbitrations Under the UNCITRAL Rules, 1(3) J. Intl Arb. 223
(1984); Goode, The Adaptation of English Law to International Commercial Arbitration, 8
Arb. Intl 1 (1992); Grigera Nan, Arbitration in Latin America: Overcoming Traditional
Hostility, 5 Arb. Intl 137 (1989); Herrmann, Does the World Need Additional Uniform
Legislation on Arbitration?, 15 Arb. Intl 211 (1999); Kaufmann-Kohler, Globalization of
Arbitral Procedure, 36 Vand. J. Transnatl L. 1313 (2003); Lew, Does National Court
Involvement Undermine the International Arbitration Process?, 24 Am. U. Intl L. Rev. 489
(2009); Park, National Law and Commercial Justice: Safeguarding Procedural Integrity in
International Arbitration, 63 Tulane L. Rev. 647 (1989); Samuel, Arbitration in Western
Europe: A Generation of Reform, 7 Arb. Intl 319 (1991); Wetter, The Proper Scope of A
National Arbitration Act, 5(10) Mealeys Intl Arb. Rep. 17 (1990).
859) See Park, National Law and Commercial Justice: Safeguarding Procedural Integrity in
International Arbitration, 63 Tulane L. Rev. 647, 680 (1989).
860) Menon, The Challenges of the Golden Age, ICC Newsletter 1 (April 2013).
861) M. de Boissson, Le droit franais de larbitrage interne et international 8-11 (2d ed.
1990); Weiss, Arbitration in Germany, 43 L.Q. Rev. 205, 206 (1927). See also1.01[B][4] &
[6].
862) See, e.g., French Code of Civil Procedure; German Zivilprozessordnung (ZPO);
Netherlands Code of Civil Procedure; Belgian Judicial Code.
863) See, e.g., U.S. FAA, 9 U.S.C. 1-16; English Arbitration Act, 1996; Singapore International
Arbitration Act, 2012; Hong Kong Arbitration Ordinance, 2013; Japanese Arbitration Law;
Indian Arbitration and Conciliation Act; Samuel, Arbitration Statutes in England and the
USA, 8 Arb. & Disp. Res. L.J. 2, 32 (1999).
864) See1.04[B][1][a].
865) For example, the UNCITRAL Model Law, the Swiss Law on Private International Law, the
Singapore International Arbitration Act, the relevant parts of the French Code of Civil
Procedure and U.S. Federal Arbitration Act deal only with international (and not
domestic) arbitrations.
In France, the drafters of the revised 2011 arbitration legislation considered, but
rejected, the unification of international and domestic arbitration regimes. SeeFrench
Code of Civil Procedure, Arts. 1442-1503 (domestic arbitration), Arts. 1504-1527
(international arbitration); Gaillard, Les principes fondamentaux du nouvel arbitrage, in T.
Clay (ed.), Le nouveau droit francais de larbitrage 57 (2011). See1.04[B][1][b]-[c].
866) See1.04[B][1][d].
116
867) The reasoning for distinguishing international matters from domestic ones rests on the
greater jurisdictional, choice-of-law and enforcement uncertainties in the international
context and the need for national neutrality predictability and certainty in international
commerce. See1.02[B]; 1.04[A]; Carducci, The Arbitration Reform in France: Domestic
and International Arbitration Law, 28 Arb. Intl 125, 125 (2012) ([Elaboration] of two
articulated and distinct domestic and international arbitration regimes has been
driven, in our view, by more than economic growth and the increasing needs of the
business community for smooth, fast and private justice.).
These considerations have been relied on in some national court decisions. See
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct. 1985);
Scherk v. Alberto-Culver Co., 417 U.S. 506, 517 n.10 (U.S. S.Ct. 1974); Judgment of 3 June 1997,
LexisNexis JurisClasseur No 95-17.603 (French Cour de cassation civ. le).
868) For example, England, Germany, Ireland, Portugal, Spain, Scotland and Hong Kongs
enactment of the UNCITRAL Model Law deleted provisions limiting the legislations
application to international arbitrations, extending it to all arbitrations. English
Arbitration Act, 1996, 2; German ZPO, 1025; Irish Arbitration Act, 2010, 6; Portuguese
Law on Voluntary Arbitration Law, 2011, Art. 49; Scottish Arbitration Act, 2010, 2(1);
Spanish Arbitration Act, 2011, Art. 1(1); Hong Kong Arbitration Ordinance, 2013, 5.
869) Mustill, Cedric Barclay Memorial Lecture, 1992 Arb. 159, 165 (never understood why
international arbitration should be different in principle from any other kind of
arbitration).
870) See6.01 for a discussion of these issues in the nonarbitrability context.
871) See1.02[B]; 1.04[A].
872) See1.04[B][1].
873) See1.04[B][1]; Mustill, Arbitration: History and Background, 6(2) J. Intl Arb. 43, 53 (1989)
(noting efforts made by individual nations to make their arbitration lawsmore
attractive); Park, National Law and Commercial Justice: Safeguarding Procedural Integrity
in International Arbitration, 63 Tulane L. Rev. 647, 680 (1989).
874) This includes legislation in France, Switzerland, Germany, Italy, Spain, Portugal and all
other Continental European states. It also includes England, Scotland, Ireland, Canada
(and its provinces), Australia and New Zealand, as well as Singapore, Hong Kong, India,
Malaysia and Saudi Arabia. The principal exception is the United States, where the FAA
dates to 1925, while U.S. implementing legislation for the New York Convention dates to
1970. See1.04[B][1][e][i].
875) See1.04[B][1][a]-[b] & [d]; 2.01[A][2]; 5.01[C]; 8.02[A][2].
876) SeeChapters 8et seq.
877) SeePart III; 22.01[B][3].
878) SeePart III; 26.01[B]; 26.03[D].
879) See12.03[E][4]; 16.03[A].
880) See15.02[B].
881) Djibouti Code of International Arbitration, Law No. 79/AN/84 of 13 February 1983,
Statement of Principles, 25 Intl Legal Mat. 1, 3 (1986).
882) Bernardini, The Role of the International Arbitrator, 20 Arb. Intl 113, 115 (2004).
883) These include jurisdictional, choice-of-law and enforcement issues. See1.02[B]; 1.04[E]
[7].
884) See1.04[B] (especially 1.04[B][1]); Foreign Arbitral Awards, S. Rep. No. 91-702, 91st Cong.,
2d Sess., 1-2 (1970) (In the committees view, the provisions of S. 3274 [implementing the
New York Convention] will serve the best interests of Americans doing business abroad
by encouraging them to submit their commercial disputes to impartial arbitration for
awards which can be enforced in both U.S. and foreign courts.); Australian International
Arbitration Act, 2011, Art. 2D (The objects of this Act are: (a) to facilitate international
trade and commerce by encouraging the use of arbitration as a method of resolving
disputes; and (b) to facilitate the use of arbitration agreements made in relation to
international trade and commerce; and (c) to facilitate the recognition and enforcement
of arbitral awards made in relation to international trade and commerce; and (d) to give
effect to Australias obligations under the [New York] Convention; and (e) to give effect to
the UNCITRAL Model Law on International Commercial Arbitration); Konkan Railways
Corp. v. Mehul Constr. Co., [2000] 7 SCC 201, 2 (Indian S.Ct.) (To attract the confidence of
the international mercantile community and the growing volume of Indias trade and
commercial relationship with the rest of the world after the new liberalisation policy of
the Government, Indian Parliament was persuaded to enact the Arbitration and
Conciliation Act of 1996 in UNCITRAL Model). See also Murray, Domestic Court
Implementation of Coordinative Treaties: Formulating Rules for Determining the Seat of
Arbitration Under the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, 41 Va. J. Intl L. 859, 865 (2001) (policymakersbelieve that if businesses are
confident that their arbitration agreements and awards will be enforced they will
engage in more cross-border transactions).
885) Seidel v. TELUS Commcns Inc., [2011] SCC 15, 54 (Canadian S.Ct.) (Lebel, J., dissenting).
See also Gallaway Cook Allan v. Carr, (2013) NZCA 11, 66 (N.Z. Ct. App.) (Two specific
purposes of [New Zealands arbitration legislation are] to encourage the use of
arbitration as an agreed method of resolving commercial and other disputes, and to
facilitate the recognition and enforcement of arbitration agreements and arbitral
awards.).
117
886) Press Release, ODonoghue Publishes Bill Designed to Attract International Inward
Investment to Ireland (2 October 1997), cited in C. Drahozal & R. Naimark, Towards A
Science of International Arbitration: Collected Empirical Research 113 (2005).
887) 392 Parl. Deb., HL (5th series) 99 (1978). See also Craig, Some Trends and Developments in
the Laws and Practice of International Commercial Arbitration, 30 Tex. Intl L.J. 1, 58 (1995)
(if the participants in international trade become accustomed to general arbitral
practices developed under the Model Law, any state which does not adapt its own
procedures to offer similar advantages risks losing its place as a preferred site for
arbitration).
888) T. Carbonneau, Cases and Materials on the Law and Practice of Arbitration 1143 (2d ed.
2000).
889) Park, Judicial Controls in the Arbitral Process, 5 Arb. Intl 230, 232-33, 256 (1989).
890) Frequently-cited examples include Belgium, which attracted little (if any) increased
arbitration business by radically revising its international arbitration law (see25.05, pp.
3340 n.991; 25.06, pp. 3362-63), and the United States, which has enjoyed increasing
numbers of international arbitrations despite an archaic legislative regime (see1.04[B]
[1][e], p.152).
891) Some commentators have concluded that, at least historically, so-called modern
arbitration statutes, which command courts to recognize arbitration settlements and
arbitration clauses in contracts, were not the major stimulus for the growth of
commercial arbitration that they are often assumed to have been. Benson, An
Exploration of the Impact of Modern Arbitration Statutes on the Development of
Arbitration in the United States, 11 J. L. Econ. & Org. 479, 497 (1995). Although this view
appears correct in 19th-century, and earlier, settings, it is doubtful that it would apply to
current international commercial dealings.
892) Sumito v. Antig Invs. Pte Ltd, [2009] SGCA 41, 28 (Singapore Ct. App.).
893) See Born, Arbitration and the Freedom to Associate, 38 Ga. J. Intl & Comp. L. 7 (2009).
894) As discussed above, the French Constitution of Year I accorded the right to arbitrate
constitutional status. See1.01[B][4]; French Constitution of Year I, 1793, Art. 86 (The right
of the citizens to have their disputes settled by arbitrators of their choice shall not be
violated in any way whatsoever.).
895) Laurentienne-vie, Cie dassurances Inc. v. Empire, Cie dassurance-vie, [2000] CanLII 9001
(Qubec Ct. App.) (arbitration is a fundamental right); Judgment of 3 April 2000, II ZR
373/98 (German Bundesgerichtshof) (right to arbitrate is based on constitutional rights to
personal freedom and private autonomy). The German Bundesgerichtshof cited Article
2(1) of the German Grundgesetz (Constitution), which provides: Every person shall have
the right to free development of his personality insofar as he does not violate the rights
of others or offend against the constitutional order or the moral law. German
Grundgesetz (Constitution), Art. 2(1).
896) Kona Village Realty, Inc. v. Sunstone Realty Partners, XIV, LLC, 123 Haw. 476, 478 (Haw.
2010). See also Matter of Sprinzen v. Nomberg, 389 N.E.2d 456, 459 (N.Y. 1979) (The
courtsmust exercise due restraint in this regard, for the preservation of the arbitration
process and the policy of allowing parties to choose a nonjudicial forum, embedded in
freedom to contract principles, must not be disturbed by courts).
897) Laurentienne-vie, Cie dassurances Inc. v. Empire, Cie dassurance-vie, [2000] CanLII 9001,
80 (Qubec Ct. App.).
898) See, e.g., Judgment of 4 January 2012, DFT 4A_238/2012, 3.2 (Swiss Federal Tribunal) (no
reason to deprive the parties able to bear the consequences of a renunciation to appeal
from the possibility offered by this provision which embodies procedurally the
principle of party autonomy to escape any state intervention which could harm the
confidentiality of arbitration or to prevent the swift rendering of an enforceable
decision putting an end to the dispute); Judgment of 23 August 1963, 1 AZR 469/61, 2
(German Fed. Labor Ct.) (The parties, decision to enter into arbitral proceedings arises
from their constitutional right of party autonomy as stated in Article 2 Grundgesetz
(German constitution). If the scope of application of the State Courts jurisdiction is
narrowed by the parties agreement upon an arbitration clause, this is only due to the
parties voluntary agreement, which is also a constitutional right under Article 2
Grundgesetz.); Judgment of 5 May 2009, 2010 SchiedsVZ 173, 176 (Schiedsgericht
Hamburg) (On the one hand the interest of the arbitral parties in upholding the
arbitration agreement is protected as an element of the freedom of contract and private
autonomy pursuant to Sec. 2 par. 1 of the German constitution. In the same way as having
the right to be judged by ones competent state court pursuant to Sec. 101 par. 1
sentence 2 of the German constitution there also exists a right to waive this right by
choosing an arbitral court.); Judgment of 9 April 2008, Case No. 2007/0063183-9, 16
(Brazilian Superior Tribunal de Justia) (It is well recognized that arbitration does not
subtract any constitutional guarantees from domestic proceedings, on the contrary, it
implies fulfilling these [constitutional rights and guarantees].); Judgment of 3 November
2010, Astivenca Astilleros de Venezuela, CA v. Oceanlink Offshore III AS, XXXVI Y.B. Comm.
Arb. 496, 5 (Venezuela Tribunal Supremo de Justicia) (Hence, the principles of
competence-competence and autonomy of the arbitration agreement are essential
elements in the statutory regime of arbitration, guaranteeing the fundamental right to
use alternative means of dispute resolution, including, obviously, arbitration.).
118
899) ATA Constr., Indus. & Trading Co. v. Hashemite Kingdom of Jordan, Award in ICSID Case No.
ARB/08.02 of 18 May 2010, 124-25 (Jordanian courts purported annulment of
arbitration agreement was denial of fair and equitable treatment); Saipem SpA v.
Peoples Repub. of Bangladesh, Award in PCA Case No. AA-280 of 26 November 2009
(Bangladeshi courts purported revocation of arbitral tribunals authority was violation
of Article II of New York Convention).
900) See1.02[B][1].
901) Brazil-David, Harmonization and Delocalization of International Commercial Arbitration,
28 J. Intl Arb. 445, 446 (2011) (In order to reduce the disparities between national
arbitration laws and the surprises one might have in international commercial
arbitrations, there has been a movement towards harmonization of the law and practice
of international commercial arbitration.); Craig, Some Trends and Developments in the
Laws and Practice of International Commercial Arbitration, 30 Tex. Intl L.J. 1, 57-58 (1995)
(substantial convergence in modern arbitration laws with respect to the procedures to
be followed in arbitration and the standards for judicial recourse therefrom); Hanotiau,
International Arbitration in a Global Economy: The Challenges of the Future, 28(2) J. Intl
Arb. 89, 92-93 (2011) (In the process of renewal and adaptation of their legislations,
legislators have erased the main differences existing between their national arbitration
laws.); Kaufmann-Kohler, Globalization of Arbitral Procedure, 36 Vand. J. Transnatl L.
1313, 1320-22 (2003) (arbitration legislation tend to become interchangeable because
of uniformity); Samuel, Arbitration in Western Europe: A Generation of Reform, 7 Arb. Intl
319 (1991).
902) For commentary, see H. Alvarez, N. Kaplan & D. Rivkin, Model Law Decisions: Cases
Applying the UNCITRAL Model Law on International Commercial Arbitration (2003);
Association for International Arbitration, The UNCITRAL Model Law on International
Commercial Arbitration: 25 Years (2010); P. Binder, International Commercial Arbitration
and Conciliation in UNCITRAL Model Law Jurisdictions (3d ed. 2009); Brekoulakis & Shore,
United Nations Commission on International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration, 1985/2006, in L. Mistelis (ed.), Concise International
Arbitration (2010); A. Broches, Commentary on the UNCITRAL Model Law on International
Commercial Arbitration (1990); Broches, The 1985 UNCITRAL Model Law on International
Commercial Arbitration: An Exercise in International Legislation, 18 Neth. Y.B. Intl L. 3
(1987); Gaillard, The UNCITRAL Model Law and Recent Statutes on International Arbitration
in Europe and North America, 2 ICSID Rev. 424 (1987); Hermann, The UNCITRAL Model Law
Its Background, Salient Features and Purposes, 1 Arb. Intl 6 (1985); H. Holtzmann & J.
Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration:
Legislative History and Commentary (1989); Kavass & Liivak, UNCITRAL Model Law of
International Commercial Arbitration: A Documentary History (1985); Kerr, Arbitration and
the Courts: The UNCITRAL Model Law, 34 Intl & Comp. L.Q. 1 (1985); Mantilla-Serrano &
Adam, UNCITRAL Model Law: Missed Opportunities for Enhanced Uniformity, 31 U. N.S.W.
L.J. 307 (2008); Sanders, Unity and Diversity in the Adoption of the Model Law, 11 Arb. Intl 1
(1995).
903) See1.04[B][1][a].
904) See1.04[B][1][a]; UNCITRAL Model Law, 2006 Revisions.
905) Note by the Secretary-General, U.N. Doc. A/CN.9/127, VIII Y.B. UNCITRAL 233 (1977).
906) UNCITRAL, Report of the Secretary-General on the Possible Features of A Model Law of
International Commercial Arbitration, U.N. Doc. A/CN.9/207, XII Y.B. UNCITRAL 75 (1981).
International Commercial Arbitration, U.N. Doc. A/CN.9/207, 9-11, XII Y.B. UNCITRAL 75
(1981).
International Commercial Arbitration, U.N. Doc. A/CN.9/207, 10, XII Y.B. UNCITRAL 75
(1981). The Report was submitted to UNCITRALs 14th Session in June 1981.
909) H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary 12-13 (1989).
911) UN General Assembly Resolution No. 40/72, Model Law on International Commercial
Arbitration of the UNCITRAL (1985).
912) UNCITRAL Model Law, Arts. 7-8. See5.01[C][1]; 5.02[A][5][a]-[b]; 5.06[C]. The Model
Laws writing requirement for arbitration agreements is broadly similar to, but
somewhat less demanding than, Article II of the New York Convention. SeeUNCITRAL
Model Law, Art. 7(2). See also5.02[A][5][a].
913) UNCITRAL Model Law, Art. 8(1). See8.02[A][2]; 8.02[C]; 8.03[A][2].
914) UNCITRAL Model Law, Art. 16. See3.02[B][3][e].
915) UNCITRAL Model Law, Art. 16. See7.02[B][1]; 7.03.
916) See7.03[A][2].
917) UNCITRAL Model Law, Art. 5. See15.06[B].
918) UNCITRAL Model Law, Art. 19(1). See15.02[B].
919) UNCITRAL Model Law, Arts. 19(2), 24(1). See15.03[B].
920) UNCITRAL Model Law, Art. 18 (The parties shall be treated with equality and each party
shall be given a full opportunity of presenting his case.), Art. 24(2) (The parties shall be
given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal
for the purposes of inspection of goods, other property or documents.). See15.04[B][1].
119
921) This addressed concerns that national mandatory laws were unduly constraining arbitral
procedures and that the definitions of mandatory and non-mandatory procedural laws
were unclear. UNCITRAL, Report of the Secretary-General on the Possible Features of A
Model Law of International Commercial Arbitration, U.N. Doc. A/CN.9/207, 12-13, XII Y.B.
UNCITRAL 75 (1981).
922) UNCITRAL Model Law, Arts. 9, 11-13, 27. See11.03[D][1][b]; 12.03[E][3][a]; 16.03[A][1].
923) UNCITRAL Model Law, Art. 34. See25.03[A].
924) UNCITRAL Model Law, Arts. 35, 36. See26.03[B].
925) Note of the Secretariat on the Possible Future Work in the Area of International
Commercial Arbitration, U.N. Doc. A/CN.9/460, XXX UNCITRAL Y.B. 395 (1999); Report of the
Secretary-General on the Possible Uniform Rules on Certain Issues Concerning Settlement
of Commercial Disputes: Conciliation, Interim Measures of Protection, Written Form for
Arbitration Agreement, U.N. Doc. A/CN.9/WG.II/WP.108 (2000).
926) UNCITRAL, Note by the Secretariat on the Preparation of A Model Legislative Provision on
Written Form for the Arbitration Agreement, Forty-Third Session, U.N. Doc.
A/CN.9.WG.II/WP.136 (2005); UNCITRAL, Note of the Secretariat on the Interim Measures of
Protection, Forty-Third Session, U.N. Doc. A/CN.9/WG.II/WP.138 (2005).
927) UNCITRAL Model Law, 2006 Revisions; Mantilla-Serrano & Adam, UNCITRAL Model Law:
Missed Opportunities for Enhanced Uniformity, 31 U. N.S.W. L.J. 307 (2008); Menon & Chao,
Reforming the Model Law Provisions on Interim Measures of Protection, 2 Asian Intl Arb. J.
1 (2006); Paulsson & Petrochilos, Report: Revision of the UNCITRAL Arbitration Rules
(2006); Sorieul, UNCITRALs Current Work in the Field of International Commercial
Arbitration, 22 J. Intl Arb. 543 (2005).
928) UNCITRAL Model Law, 2006 Revisions, Art. 2A.
929) UNCITRAL Model Law, 2006 Revisions, Art. 7. See5.02[A][5][b].
930) UNCITRAL Model Law, 2006 Revisions, Arts. 17, 17A-J. See17.02[A][3][b][i]; 17.04[C][1][a].
931) UNCITRAL Model Law, 2006 Revisions, Art. 35. See26.01[B].
932) As discussed below, the 2006 Revisions authorization of ex parte provisional measures is
of doubtful wisdom and has attracted substantial criticism. See17.02[G][10], pp. 2509-11.
933) UNCITRAL Working Group on Arbitration and Conciliation, APRAG Report on 43d and 44th
Sessions, 5 (9 January 2006) (proposed additions are very extensive, particularly in
comparison with the relatively short and concise drafting style of other articles in
[Model Law]).
At the same time, the 2006 Revisions failed to address a number of areas where
improvements would have been welcome (e.g., the choice of law governing the
arbitration agreement, the allocation of competence to resolve jurisdictional objections
and the grounds for holding arbitration agreements and awards invalid).
934) States that have adopted some or all of the 2006 amendments to the UNCITRAL Model
Law include Australia, Brunei, Costa Rica, Florida, Georgia, Hong Kong, Ireland, Mauritius,
Peru, Serbia and Slovenia.
935) In particular, the Model Law makes clear the grounds for annulling international arbitral
awards, defines the (limited) scope of national court interference in the arbitral process,
and prescribes the types and extent of judicial support for international arbitrations.
936) Note of Secretariat on Further Work in Respect of International Commercial Arbitration
(A/CN.9/169, 11 May 1979) at paras 6-9.
937) For an updated list of jurisdictions, seewww.uncitral.org.
938) Bundestags-Drucksache No. 13/5274 of 12 July 1996, reprinted in K.-P. Berger, The New
German Arbitration Law 140 (1998), quoted in K.-P. Berger, The New German Arbitration
Law in International Perspective, 26 Forum Intl 4 (2000). See also M. Krimpenfort,
Vorlufige und sichernde Manahmen in schiedsrichterlichen Verfahren 4-5 (2001).
939) Law Reform Commission of Hong Kong, Report on the Adoption of the UNCITRAL Model
Law of Arbitration 6, 11 (1987). See alsoSingapore International Arbitration Act, [Hansard
at col. 624] (In summary, the reasons why Singapore should adopt the Model Law are as
follows: Firstly, the Model Law provides a sound and internationally accepted framework
for international commercial arbitrations. Secondly, the general approach of the Model
Law will appeal to international businessmen and lawyers especially those from
Continental Europe, China, Indonesia, Japan and Vietnam who may be unfamiliar with
English concepts of arbitration. This will work to Singapores advantage as our
businessmen expand overseas. Thirdly, it will promote Singapores role as a growing
centre for international legal services and international arbitrations.); Singapore Law
Reform Committee (ed.), Report of the Sub-Committee on Review of Arbitration Laws 13
(1994) (If Singapore aims to be an international arbitration centre it must adopt [the
Model Law expressing] a world view of international arbitration.); Australian
International Arbitration Act, 2011, Art. 2D. See alsoSchaefer, Borrowing and Cross-
Fertilising Arbitration Laws A Comparative Overview of the Development of Hong Kong
and Singapore Legislation for International Commercial Arbitration, 16(4) J. Intl Arb. 41,
45-49, 54-56 (1999).
940) See1.04[B][1][b]-[e].
941) E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial
Arbitration 204 (1999). See also Kerr, Arbitration and the Courts: The UNCITRAL Model
Law, 34 Intl Comp. L.Q. 1, 19 (1985) (distinguished English judge warning: let us never
leave arbitration as immune from judicial review, and the parties as defenseless, as they
would be under the present text of Model Law).
120
942) See, e.g., H. Alvarez, N. Kaplan & D. Rivkin, Model Law Decisions: Cases Applying the
UNCITRAL Model Law on International Commercial Arbitration (2003). See alsoUNCITRAL,
Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on International
Commercial Arbitration as Amended in 2006 (2008); Association of International
Arbitration, The UNCITRAL Model Law on International Commercial Arbitration: 25 Years
(2010); Beraudo, Case Law on Articles 5, 8, and 16 of the UNCITRAL Model Arbitration Law,
23 J. Intl Arb. 101 (2006); Brekoulakis & Shore, United Nations Commission on
International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration,
1985/2006, in L. Mistelis (ed.), Concise International Arbitration (2010); Foster & Elsberg,
Two New Initiatives for Provisional Remedies in International Arbitration: Article 17 of the
UNCITRAL Model Law on International Commercial Arbitration and Article 37 of the
AAA/ICDR International Dispute Resolution Principles, 3(5) Transnatl Disp. Mgt (2006);
Liebscher, Interpretation of the Written Form Requirement Art. 7(2) UNCITRAL Model Law,
2005 Intl Arb. L. Rev. 164; Sanders, UNCITRALs Model Law on International and
Commercial Arbitration: Present Situation and Future, 21 Arb. Intl 443 (2005).
943) UNCITRAL, 2012 Digest of Case Law on the Model Law on International Commercial
Arbitration (2012), available at www.uncitral.org/pdf/english/clout/MAL-digest-2012-
e.pdf.
944) Case Law on UNCITRAL Texts (CLOUT), available at
www.uncitral.org/uncitral/en/case_law.html.
945) McGill Model Arbitration Law Database, available at www.maldb.org.
946) TCL Air Conditioner (Zhongshan) Co. v. Judges of the Federal Court of Australia, [2013] HCA
5, 7 (Australia High Ct.).
947) See1.04[A][1][e].
948) Compare Cargill Intl SA v. Peabody Australia Mining Ltd, [2010] NSWSC 887, 31 (N.S.W.
S.Ct.) (agreement by parties to refer any disputes to international arbitration under a
particular set of procedural rules (as opposed to an agreement that the lex arbitri should
be other than that of the Model Law) does not constitute an implied agreement to opt
out of the Model Law for the purposes of s21 of the Commonwealth Act), overruling
Eisenwerk Hensel Bayreuth Dipl-Ing Burkhardt GmbH v. Australian Granites Ltd, [2001] 1 Qd
R 461 (Queensland Ct. App.) (holding that parties opted out of Model Law by agreeing
that any dispute would be finally settled by arbitration under ICC Rules). See also John
Holland Pty Ltd v. Toyo Engg Corp. (Japan), [2001] 2 SLR 262 (Singapore Ct. App.) (holding
parties opted out of Model Law by agreeing to institutional arbitration; subsequently
overruled by Singaporean legislation).
949) For commentary, see Ancel, Le nouveau droit franais de larbitrage: le meilleur de soi-
mme, 2011 Arbitraje: Revista de Arbitraje Comercial y de Inversiones 822; J. Bguin,
Larbitrage commercial international (1987); Carducci, The Arbitration Reform in France:
Domestic and International Arbitration Law, 28 Arb. Intl 125 (2012); Castellane, The New
French Law on International Arbitration, 28 J. Intl Arb. 371 (2011); T. Clay (ed.), Le nouveau
droit franais de larbitrage (2011); D. Cohen, Arbitrage et socit (1993); S. Crepin, Les
sentences arbitrales devant le juge franais pratique de lexcution et du contrle
judiciaires depuis les rformes de 1980-1981 (1995); Darwazeh & Rigaudeau, Clues to
Construing the New French Arbitration Law, 28 J. Intl Arb. 381 (2011); M. de Boissson, Le
droit franais de larbitrage interne et international (2d ed. 1990); J.-L. Delvolv, French
Arbitration Law and Practice (2d ed. 2009); P. Fouchard, Larbitrage commercial
international (1965); Duprey, Prsentation du nouveau dcret sur larbitrage, 2011 Cah. CNB
15; P. Fouchard, E. Gaillard & B. Goldman, Trait de larbitrage commercial international
(1996); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration (1999); E. Gaillard & R. von Mehren, International Commercial
Arbitration Recent Developments (1988); Gaillard, France Adopts New Law on Arbitration,
N.Y. L.J. (24 January 2011); Gaillard & de Lapasse, Le nouveau droit franais de larbitrage
interne et international, 2011 Dalloz 175; Gaillard & de Lapasse, Commentaire analytique
du dcret du 13 janvier 2011 portant rforme du droit franais de larbitrage, 2011:2 Gaz.
Pal. 263; B. Goldman, Les conflits de lois dans larbitrage international de droit priv
(1963); L. Gouiffs et al., Recherches sur larbitrage en droit international et compar
(1997); Jarrosson & Pellerin, Le droit franais de larbitrage apres le dcret du 13 janvier
2011, 2011 Rev. arb. 5; A. Kassis, Problmes de base de larbitrage en droit compar et en
droit international I: Arbitrage juridictionnel et arbitrage contractuel (1987); A. Kassis,
Rflexions sur le rglement darbitrage de la Chambre de commerce internationale Les
dviations de larbitrage institutionnel (1988); E. Loquin, Lamiable composition en droit
compar et international Contribution ltude du non-droit dans larbitrage
commercial (1980); Loquin, La rforme du droit franais de larbitrage interne et
international, 2011 RTD Com. 255; P. Mayer, Lautonomie de larbitre international dans
lapprciation de sa propre comptence (1989); B. Oppetit, Thorie de larbitrage (1998); D.
Rn, Larbitrage dans le commerce international (1981); J. Robert, Larbitrage, Droit
interne, Droit international priv (5th ed. 1983); J. Robert & T. Carbonneau, The French Law
of Arbitration (1983); J. Rubellin-Devichi, Larbitrage: nature juridique, droit interne et droit
international priv (1965); Schwartz, The New French Arbitration Decree: the Arbitral
Procedure, 2011:2 Gaz. Pal. 349; Seraglini, Lefficacit et lautorit renforces des sentences
arbitrales en France aprs le dcret No. 2011-48 du 13 janvier 2011, 2011:2 Gaz. Pal. 375.
121
950) France has historically been the seat for more ICC arbitrations than any other state.
See14.02[B]. France was the seat for 17.63% of all the ICC arbitrations filed in 2012,
18.45% in 2011, 15.6% in 2010, 14.5% in 2000, and 15.5% in 1999. 2012 Statistical Report,
24(1) ICC Ct. Bull. 14 (2013); 2011 Statistical Report, 23(1) ICC Ct. Bull. 13 (2012); 2010
Statistical Report, 22(1) ICC Ct. Bull. 13 (2011); 2000 Statistic Report, 12(1) ICC Ct. Bull. 10
(2001); 1999 Statistic Report, 11(1) ICC Ct. Bull. 9 (2000).
951) The historical development of arbitration in France prior to the 20th century is
discussed above. See1.01[B][4].
952) See Code of Civil Procedure Book IV Arbitration, in J. Paulsson (ed.), International
Handbook on Commercial Arbitration (1984 & Update 2011), for English translations. The
original version is available at www.legifrance.gouv.fr.
953) The term is defined to include matters involving cross-border transfers of goods or
services. French Code of Civil Procedure, Art. 1504 (Arbitration is international when it
involves the interests of international commerce.). See2.03[C][2][c], pp. 333-35.
954) French Code of Civil Procedure, Art. 1506 (Unless the parties have agreed otherwise, and
subject to the provisions of the present Title, the following Articles shall apply to
international arbitration).
955) Ancel, French Judicial Attitudes Toward International Arbitration, 9 Arb. Intl 121 (1993);
Audit, A National Codification of International Commercial Arbitration: The French Decree
of May 12, 1981, in T. Carbonneau & M. Domke (eds.), Resolving Transnational Disputes
Through Arbitration 117 (1984); Bellet & Mezger, Larbitrage international dans le nouveau
code de procdure civile, 70 Rev. Critique de Droit Intl Priv 611 (1981); Castellane, The
New French Law on International Arbitration, 28 J. Intl Arb. 371 (2011); M. de Boissson, Le
droit franais de Larbitrage interne et international 21 (2d ed. 1990); Delaume,
International Arbitration Under French Law, 37 Arb. J. 38 (1982); Gaillard & de Lapasse,
Commentaire analytique du dcret du 13 janvier 2011 portant rforme du droit franais de
larbitrage, 2011:2 Gaz. Pal. 263, 2-3; Gaillard & de Lapasse, Le nouveau droit franais
de larbitrage interne et international, 2011 Dalloz 175; Gaillard, Les principes
fondamentaux du nouvel arbitrage, in T. Clay (ed.), Le nouveau droit franais de larbitrage
59 (2011); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 136-39 (1999); Goldman, La nouvelle rglementation franaise
de larbitrage international, in The Art of Arbitration Liber Amicorum Pieter Sanders 153
(1982); Jarrosson & Pellerin, Le droit franais de larbitrage aprs le dcret du 13 janvier
2011, 2011 Rev. arb. 54; Perrot, Sur la rforme de larbitrage international, in Travaux du
comit franais de droit international priv 1981-1982 53 (1983); von Mehren, International
Commercial Arbitration: The Contribution of the French Jurisprudence, 46 La. L. Rev. 1045
(1985-1986).
Arbitration 148-51 (1999).
957) Gaillard & de Lapasse, Commentaire analytique du dcret du 13 janvier 2011 portant
rforme du droit franais de larbitrage, 2011:2 Gaz. Pal. 263, 2-3; Gaillard, Les principes
fondamentaux du nouvel arbitrage, in T. Clay (ed.), Le nouveau droit franais de larbitrage
59 (2011); Jarrosson & Pellerin, Le droit franais de larbitrage aprs le dcret du 13 janvier
2011, 2011 Rev. arb. 5, 55 (The decree has not modified the French approach towards
international arbitration, which remains guided by strong liberalism based on
contractual freedom and limited only by international public policy.); Pierce, Born &
Scherer, Revision to French Arbitration Law Arrives, N.Y. L.J. S5 (16 May 2011) (With its
most recent revision of its arbitration law, France seeks to put itself once more at the
forefront of modern international arbitration legislation.The new law is in line with the
long-standing tradition of innovative and arbitration-friendly arbitration law in France,
which has been important in establishing Paris as one of the worlds most popular
venues for international arbitration.).
958) French Code of Civil Procedure, Art. 1447. See Carducci, The Arbitration Reform in France:
Domestic and International Arbitration Law, 28 Arb. Intl 125, 130-32 (2012); Castellane, The
New French Law on International Arbitration, 28(4) J. Intl Arb. 371 (2011). See also
Judgment of 7 May 1963, Ets Raymond Gosset v. Carapelli, JCP G 1963, II, 13, 405 (French
Cour de cassation civ. 1e) (In international arbitration, the arbitration agreement,
whether concluded separately or included in the contract to which it relates, shall, save
in exceptional circumstances, have full legal autonomy and shall not be affected by
the fact that the aforementioned contract may be invalid); E. Gaillard & J. Savage
(eds.), Fouchard Gaillard Goldman on International Commercial Arbitration 391 et seq.
(1999). French courts have given robust effect to the separability doctrine. See3.02[B][3]
[d], pp. 373-75.
959) Judgment of 20 December 1993, Municipalit de Khoms El Mergeb v. Socit Dalico, 1994
Rev. arb. 116 (French Cour de cassation civ. 1e); Judgment of 17 December 1991, Gatoil v.
Natl Iranian Oil Co., 1993 Rev. arb. 281, 284 (Paris Cour dappel) (in the field of
international arbitration, the principle of the autonomy of the arbitration agreement is
of general application, as an international substantive rule upholding the legality of the
arbitration agreement); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 436-37 (1999).
Rev. arb. 116, 117 (French Cour de cassation civ. 1e).
122
961) French Code of Civil Procedure, Art. 1465 (The arbitral tribunal alone has jurisdiction to
rule on objections to its jurisdiction); E. Gaillard & J. Savage (eds.), Fouchard Gaillard
Goldman on International Commercial Arbitration 650-60 (1999); Jarrosson & Pellerin,
Le droit franais de larbitrage apres le dcret du 13 janvier 2011, 2011 Rev. arb. 5, 35
(Article 1465 confirms the positive aspect of the competence-competence principle,
which is directed at the arbitral tribunal and which complements its negative aspect
which is directed at the state courts). See also7.03[B][1].
962) French Code of Civil Procedure, Art. 1448 (When a dispute subject to an arbitration
agreement is brought before a court, such court shall decline jurisdiction, except if an
arbitral tribunal has not yet been seized of the dispute and if the arbitration agreement
is manifestly void or manifestly not applicable.); Carducci, The Arbitration Reform in
France: Domestic and International Arbitration Law, 28 Arb. Intl 125, 133 (2012) (A very
important provision codifies the negative effect of Kompetenz-Kompetenz that has
been anticipated by the Cour de cassation and is mandatory in nature.); Gaillard,
France Adopts New Law on Arbitration, N.Y. L.J. (24 January 2011) (when no arbitral
tribunal has been constituted yet, the courts will be entitled to rule on the dispute only
where a prima facie examination of the arbitration agreement establishes that such
agreement is manifestly void or manifestly not applicable); Jarrosson & Pellerin, Le
droit franais de larbitrage apres le dcret du 13 janvier 2011, 2011 Rev. arb. 5, 35. See
also7.03[B][2].
Arbitration 418-19, 436-37 (1999). SeeJudgment of 20 December 1993, Municipalit de
Khoms El Mergeb v. Socit Dalico, 1994 Rev. arb. 116, 117 (French Cour de cassation civ.
1e) (no need to refer to any national law); Judgment of 4 July 1972, Hecht v. Buismans, 99
J.D.I. (Clunet) 843, 845 (French Cour de cassation civ. 1e) (1972) (total autonomy of
arbitration agreement in the field of international arbitration). See4.02[A][2][c], pp.
481-82.
964) SeeE. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial
Arbitration 574 (1999) (antitrust, intellectual property, bankruptcy and corporate law
issues are arbitrable). See also6.03[C][3].
Arbitration 481 (1999). See also9.02[D][2].
966) French Code of Civil Procedure, Arts. 1508, 1509, 1511, 1512; E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 753, 1171, 1200,
1427 (1999). See also12.03[D][1]; 15.02[B].
967) French Code of Civil Procedure, Arts. 1464, 1509; E. Gaillard & J. Savage (eds.), Fouchard
Gaillard Goldman on International Commercial Arbitration 1200-02 (1999); Jarrosson &
Pellerin, Le droit franais de larbitrage apres le dcret du 13 janvier 2011, 2011 Rev. arb. 5,
34. See also15.03[B]; 15.06[B].
968) French Code of Civil Procedure, Art. 1468. However, seizures of property and compulsory
posting of security may only be ordered by the French courts (However, only courts may
order conservatory attachments and judicial security.). See Clay, Lappui du juge
larbitrage, 2011:2 Gaz. Pal. 331, 49-51.
969) French Code of Civil Procedure, Arts. 1452-1454. See Clay, Lappui du juge larbitrage,
2011:2 Gaz. Pal. 331.
970) French Code of Civil Procedure, Arts. 1448, 1468 (French courts may order provisional
measures upon request of party before arbitral tribunal is constituted; following
constitution of tribunal, it may issue such measures, except for seizures and security
which may only be ordered by French courts). See Clay, Lappui du juge larbitrage,
2011:2 Gaz. Pal. 331, 49-51. See also17.04[C][1][b].
Arbitration 1290 (1999). Among other things, the Tribunal de Grande Instance is
responsible for selecting arbitrators and dealing with other problems in constituting a
tribunal, in cases where the parties have not agreed upon institutional or other
mechanisms. See French Code of Civil Procedure, Arts. 1452-1454, 1505; Judgment of 22
November 1989, Philipp Bros. v. Socit Drexel Burham Lambert, 1990 Rev. arb. 142 (French
Cour de cassation civ. 2e); Clay, Lappui du juge larbitrage, 2011:2 Gaz. Pal. 331. See
also12.03[E][2][c].
972) French Code of Civil Procedure, Art. 1520. See25.06. Following the decree of 13 January
2011, French law allows the parties to waive (by special agreement) the right to seek
annulment of an award made in France. See French Code of Civil Procedure, Art. 1522
(The parties may, by specific agreement, waive at any time their right to challenge the
award.). See also Seraglini, Lefficacit et lautorit renforces des sentences arbitrales en
France aprs le dcret No. 2011-48 du 13 janvier 2011, 2011:2 Gaz. Pal. 375, 30.
973) French Code of Civil Procedure, Arts. 1520, 1525. See25.06; 26.03[B][6].
123
974) For commentary, see B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland (2d ed. 2010); B. Berger & F. Kellerhals, Internationale und interne
Schiedsgerichtsbarkeit in der Schweiz (2006); S. Berti et al. (eds.), Basler Kommentar
Internationales Privatrecht (2d ed. 2007); S. Berti et al. (eds.), International Arbitration in
Switzerland (2000); A. Bucher & P.-Y. Tschanz, International Arbitration in Switzerland
(1988); E. Geisinger & N. Voser (eds.), International Arbitration in Switzerland (2008); E.
Geisinger & N. Voser (eds.), International Arbitration in Switzerland: A Handbook for
Practitioners (2d ed. 2013); G. Kaufmann-Kohler & A. Rigozzi, Arbitrage international
Droit et pratique la lumire de la LDIP (2007); P. Lalive, J.-F. Poudret & C. Reymond, Le
droit de larbitrage interne et international en Suisse (1989); J.-F. Poudret & S. Besson,
Comparative Law of International Arbitration (2d ed. 2007); T. Rede & R. Hadenfeldt,
Schweizerisches Schiedsgerichtsrecht (2d ed. 1993); von Segesser & Schramm, Swiss
International Arbitration Act (Chapter 12: International Arbitration), 1989, in L. Mistelis
(ed.), Concise International Arbitration 911 (2010); G. Walter, W. Bosch & J. Brnnimann,
Internationale Schiedsgerichtsbarkeit in der Schweiz (1991); T. Zuberbhler, C. Mller & P.
Habegger (eds.), Swiss Rules of International Arbitration: Commentary (2005).
975) Switzerland was the seat for approximately 21.29% of all ICC arbitrations filed in 2012,
15.98% in 2011, 14.5% in 2010, 17.8% in 2009 and 15.8% in 2008 (ranking as jurisdiction
with most locally-seated ICC arbitrations in 2009 and second behind France in 2008 and
2010). 2012 Statistical Report, 24(1) ICC Ct. Bull. 14 (2013); 2011 Statistical Report, 23(1) ICC
Ct. Bull. 13 (2012); 2010 Statistical Report, 22(1) ICC Ct. Bull. 13 (2011); 2009 Statistical
Report, 21(1) ICC Ct. Bull. 12-13 (2010); 2008 Statistical Report, 20(1) ICC Ct. Bull. 12-13
(2009). See14.02[B].
976) The historical development of arbitration in Switzerland prior to the 20th century is
summarized briefly above. See1.01[B][6].
977) The leading members of the committee were Professors Pierre Lalive and Claude
Reymond, together with Dr. Marc Blessing. See Blessing, in S. Berti et al. (eds.),
International Arbitration in Switzerland Introduction, 426 (2000).
978) Kommission fr Rechtsfragen, Bundesgesetz ber das internationale Privatrecht: Die
Attraktivitt der Schweiz als internationalen Schiedsplatz erhalten (3 February 2012),
available at www.parlament.ch.
979) See Blessing, in S. Berti et al. (eds.), International Arbitration in Switzerland Introduction,
414 (2000).
980) Chapter 12 of the Swiss Law on Private International Law is translated in S. Berti et al.
(eds.), International Arbitration in Switzerland, passim (2000). The official French, German
and Italian versions of Chapter 12, as well as unofficial English, Russian and Spanish
translations can be found at www.swissarbitration.ch./rules.php.
981) Swiss Law on Private International Law, Art. 178(3); 3.02[B][3][b].
982) Swiss Law on Private International Law, Art. 178(2); 4.02[A][2][b]; 4.04[B][3][d].
983) Swiss Law on Private International Law, Art. 186; 7.03[C][1].
984) Swiss Law on Private International Law, Art. 177; 6.03[C][2].
985) See9.02[D][1][b].
986) See8.03[C][1]; Judgment of 29 April 1996, Found. M v. Banque X, 14 ASA Bull. 527 (1996)
(Swiss Federal Tribunal) (where party challenges jurisdiction under arbitration
agreement providing for seat in Switzerland, Swiss court must decline jurisdiction,
unless it concludes upon a prima facie examination that arbitration agreement is null
and void, inoperative, or incapable of being performed); Judgment of 16 January 1995,
Compagnie de Navigation et Transports SA v. Mediterranean Shipping Co., XXI Y.B. Comm.
Arb. 690 (1996) (Swiss Federal Tribunal) (where party challenges jurisdiction under
arbitration agreement providing for seat abroad, Swiss court must subject question of
validity and scope of agreement to full judicial consideration); Wenger, in S. Berti et al.
(eds.), International Arbitration in Switzerland Art. 186, 5 et seq. (2000).
987) Swiss Law on Private International Law, Arts. 182, 187.
988) Swiss Law on Private International Law, Arts. 179(2),(3), 180(3), 183(2), 184(2), 185.
989) Swiss Law on Private International Law, Art. 190(2).
990) Swiss Law on Private International Law, Art. 192; 25.07[A][1]-[2].
991) Swiss Law on Private International Law, Art. 194.
993) There is extensive commentary on the English Arbitration Act, 1996. See, e.g., British
Institute of International and Comparative Law, The Eleventh Annual Review of the
Arbitration Act: Is English Law Really Better? (2008); B. Harris, R. Planterose & J. Tecks, The
Arbitration Act 1996: A Commentary (4th ed. 2007); R. Merkin & L. Flannery, Arbitration Act
1996 (4th ed. 2008); R. Merkin, Arbitration Law 1.6 to 1.45 (1991 & Update August 2013);
R. Merkin, Arbitration Act 1996 An Annotated Guide (1996); M. Mustill & S. Boyd,
Commercial Arbitration (2d ed. 1989 & 2001 Companion); Saville, The Origin of the New
English Arbitration Act 1996: Reconciling Speed With Justice in the Decision-Making Process,
13 Arb. Intl 237 (1997); Special Section, The 1996 English Arbitration Act: A Ten Year
Retrospective, 23 Arb. Intl 431 (2007); Fraser, Arbitration of International Commercial
Disputes Under English Law, English Arbitration Act 1996, 8 Am. Rev. Intl Arb. 1 (1997); D.
Sutton, J. Gill & M. Gearing, Russell on Arbitration (23d ed. 2007).
994) The United Kingdom was the seat for approximately 12.39% of all ICC arbitrations filed in
2012, 10.21% in 2011, 8.8% filed in 2010 and 10.1% in 2000. 2012 Statistical Report, 24(1)
ICC Ct. Bull. 14 (2013); 2011 Statistical Report, 23(1) ICC Ct. Bull. 13 (2012); 2010 Statistical
Report, 22(1) ICC Ct. Bull. 13 (2011); 2000 Statistical Report, 12(1) ICC Ct. Bull. 10 (2001).
See14.02[B].
124
995) English Arbitration Act, 1996, 2(1) (provisions of this Part apply where the seat of the
arbitration is in England and Wales or Northern Ireland).
996) Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration, 17 Arb. Intl
19, 19 (2001) (Arbitration Act 1996, unlike early versions of the draft Arbitration Bill
prepared for the Departmental Advisory Committee on Arbitration, bears the strong
impress of the Model Law); Saville, The Origin of the New English Arbitration Act 1996:
Reconciling Speed With Justice in the Decision-Making Process, 13 Arb. Intl 237 (1997). The
Act differs from the UNCITRAL Model Law in a number of respects. For a summary of the
most important of these, see R. Merkin, Arbitration Law 1.22 (1991 & Update August
2013).
997) See1.01[B][3].
998) Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 24-32 (1999).
999) Compare the 23 (short) sections of the French New Code of Civil Procedure, the 19
(shorter) sections of the Swiss Law on Private International Law and the 31 (short)
sections of the FAA (which include substantially duplicative implementing legislation for
the Inter-American and New York Conventions).
1000) See Hunter, Arbitration Procedure in England: Past, Present and Future, 1 Arb. Intl 82
(1985); Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 14,
19 (1999). The historical development of commercial arbitration in England prior to the
20th century is described above. See1.01[B][3].
1001) Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 19 (1999).
1002) English Arbitration Act, 1979, 1(3)(a), (b), 3; Antaios Compania Naviera SA v. Salen
Rederierna AB [1985] AC 191 (House of Lords); Pioneer Shipping v. B.T.P. Tioxide (The
Nema) [1982] AC 724 (House of Lords); Macassey, English Arbitration, XV J. Institute Arb.
63 (1947).
1003) For commentary on English arbitration law prior to 1996, see B. Harris, R. Planterose & J.
Tecks, The Arbitration Act 1996: A Commentary (4th ed. 2007); R. Merkin, Arbitration Law
(1991 & Update August 2013); D. Sutton, J. Gill & M. Gearing, Russell on Arbitration 1-
042 to 1-054 (23d ed. 2007).
For a critical overview, see Samuel, Arbitration Statutes in England and the USA, 8 Arb. &
Disp. Res. L.J. 2, 19 (1999) (A great deal of ink has been spilt on this ill-conceived piece of
compromise legislation.); Samuel, The 1979 Arbitration Act Judicial Review of Arbitral
Awards on the Merits in England, 2(4) J. Intl Arb. 53 (1985).
1004) Ashville Inv. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.); Samuel,
Separability in English Law Should An Arbitration Clause Be Regarded as An Agreement
Separate and Collateral to A Contract in Which It Is Contained?, 3(3) J. Intl Arb. 95 (1986).
The separability presumption was recognized in England in Harbour Ass. Co. (U.K.) Ltd v.
Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897 (English Ct. App.). See3.02[B][3][f].
1005) See English Arbitration Act, 1979, 3, 4; R. Merkin, Arbitration Law 22.5 (1991 & Update
August 2013).
1006) English Arbitration Act, 1979, 3, 4; R. Merkin, Arbitration Law 22.5 (1991 & Update
August 2013).
1007) Marriott, The Politics of Arbitration Reform, 14 C.L.Q. 125 (1995). See25.05[A][1][b];
25.07[A][1].
1008) See U.K. Departmental Advisory Committee on Arbitration Law, Report on the Arbitration
Bill (1996); U.K. Departmental Advisory Committee on Arbitration Law, Supplement to the
Departmental Advisory Committee on Arbitration Law Report of February 1996 (1997).
1009) Chukwumerije, Reform and Consolidation of English Arbitration Law, 8 Am. Rev. Intl Arb.
21 (1996); Mustill, A New Arbitration Act for the United Kingdom? The Response of the
Departmental Advisory Committee to the UNCITRAL Model Law, 6 Arb. Intl 3 (1990);
Saville, The Origin of the New English Arbitration Act 1996: Reconciling Speed With Justice
in the Decision-Making Process, 13 Arb. Intl 237 (1997).
1010) English Arbitration Act, 1996, 5, 6, 9. See5.02[A][5][e]; 8.03[C][1].
1011) English Arbitration Act, 1996, 7. See3.02[B][3][f].
1012) English Arbitration Act, 1996, 30, 31, 67; Aeberli, Jurisdictional Disputes Under the
Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl 253, 260-65 (2005). See7.03[F].
1013) See Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER 891 (Comm) (English Ct. App.),
affd, [2007] UKHL 40 (House of Lords); Film Fin. Inc. v. Royal Bank of Scotland [2007]
EWHC 195 (Comm) (English High Ct.); Vee Networks Ltd v. Econet Wireless Intl Ltd [2005] 1
Lloyds Rep. 192 (QB) (English High Ct.); 9.02[D][1][d].
1014) See Fulham Football Club (1987) Ltd v. Richards [2011] EWCA Civ 855 (English Ct. App.); ET
Plus SA v. Jean-Paul Welter [2005] EWHC 2115 (Comm) (English High Ct.); R. Merkin,
Arbitration Law 3.17 (1991 & Update August 2013); 6.03[C][5].
1015) The Act underscores the parties autonomy and the tribunals discretion to conduct the
arbitral proceedings. English Arbitration Act, 1996, 33, 34; 15.02[B]; 15.03[B].
Reflecting Article 5 of the UNCITRAL Model Law, the English Arbitration Act, 1996,
provides that, in matters covered by Part I (Arbitration Pursuant to an Arbitration
Agreement) the court should not intervene except as provided by this part. SeeEnglish
Arbitration Act, 1996, 1(c).
1016) English Arbitration Act, 1996, 34(1) (It shall be for the tribunal to decide all procedural
and evidential matters, subject to the right of the parties to agree any matter);
15.08[AA]][9], p. 2285.
1017) English Arbitration Act, 1996, 37; 15.08[AA][7].
125
1018) English Arbitration Act, 1996, 37; 17.02[G][4][f].
1019) English Arbitration Act, 1996, 38(4), 39; 17.02[G][4][a].
1020) See11.03[C][2][b]; 11.03[F]. This contrasts with the English Arbitration Act, 1950, which
operated on the presumption that arbitrators were to act in accordance with the
ordinary rules of evidence under applicable English law. See Land Sec. plc v. Westminster
City Council [1992] 44 EG 153 (QB) (English High Ct.).
1021) English Arbitration Act, 1996, 44; 16.03[A][2].
1022) English Arbitration Act, 1996, 16, 18, 19, 24; 12.03[E][2][e]; 12.06[B][1]; 12.06[C][2].
1023) English Arbitration Act, 1996, 44.
1024) Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] 1 AC 221, 231 (House of Lords).
1025) English Arbitration Act, 1996, 67-69; 25.05[A][1][b].
1026) English Arbitration Act, 1996, 69; 25.05[A][1][b].
1027) Athletic Union of Constantinople v. Natl Basketball Assoc. [2002] 1 Lloyds Rep. 305
(English Ct. App.); Sanghi Polyesters (India) Ltd v. Intl Investor (KCFC, Kuwait) [2000] 1
Lloyds Rep. 480 (QB) (English High Ct.).
1028) English Arbitration Act, 1996, 100-104. See25.05[A][1][b].
1029) For commentary on international arbitration in the United States, see Bermann,
Domesticating the New York Convention: The Impact of the Federal Arbitration Act, 2 J.
Intl Disp. Sett. 317 (2011); E. Brunet et al., Arbitration Law in America: A Critical Assessment
(2006); J. Carter & J. Fellas, International Commercial Arbitration in New York (2010);
Drahozal, New Experiences of International Arbitration in the United States, 54 Am. J.
Comp. L. 233 (2006); L. Edmonson (ed.), Domke on Commercial Arbitration (3d ed. 2010 &
Update 2013); F. Kellor, American Arbitration: Its History, Functions and Achievements
(2000); A. Lowenfeld, International Litigation and Arbitration (3d ed. 2005); I. Macneil et
al., Federal Arbitration Law: Agreements, Awards and Remedies Under the Federal
Arbitration Act (1994); I. Macneil, American Arbitration Law: Reformation, Nationalization,
Internationalization (1992).
1030) The United States was the seat for approximately 7.6% of all ICC arbitrations filed in
2012, 7.91% in 2011, 5.5% in 2010, 5.6% in 2006, and 7.9% in 2000. 2012 Statistical Report,
24(1) ICC Ct. Bull. 14 (2013); 2011 Statistical Report, 23(1) ICC Ct. Bull. 12 (2012); 2010
Statistical Report, 22(1) ICC Ct. Bull. 13 (2011); 2006 Statistical Report, 18(1) ICC Ct. Bull. 12
(2007); 2000 Statistical Report, 12(1) ICC Ct. Bull. 10 (2001).
1031) More U.S. companies are parties to ICC arbitrations than any other nationality. In 2012,
7.12% of the parties to new ICC arbitrations were U.S., more than from any other nation
(6.48% of parties to ICC arbitrations in 2012 were German, placing Germany in second
place). ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 10 (2013). Likewise, 6.76% of all
parties to ICC arbitrations filed in 2011 were U.S. parties, the highest proportion of any
nation. ICC, 2011 Statistical Report, 23(1) ICC Bull. 5, 9 (2012).
1032) See14.02[B].
1033) U.S. FAA, 9 U.S.C. 1-16 (domestic and non-New York or Inter-American Convention
international arbitrations), 201-208 (New York Convention), 301-307 (Inter-American
Convention).
1034) For much of the 20th century, Japans arbitration legislation dated to 1890; it was
replaced with a more modern statutory enactment in 2004. See Oghigan, Japans New
Arbitration Law, 2005 Asian Disp. Res. 56; Suzuki, Japans New Arbitration Law, 2005 Asian
Disp. Res. 16.
1035) For a discussion of the respective roles of federal and state law in international
arbitration in the United States, see1.04[B][1][e][iv]; 4.04[A][2][j].
1036) See1.01[B][5]; Red Cross Line v. Atl. Fruit Co., 264 U.S. 109, 121-22 (U.S. S.Ct. 1924); Tobey v.
County of Bristol, 23 F.Cas. 1313 (C.C. D. Mass. 1845).
1037) See1.01[B][5].
1038) See1.01[B][5].
1039) N.Y. Arbitration Law, Chp. 275, 1920 N.Y. Laws 803-808 (1920). See1.01[B][5].
1040) An American Bar Association committee prepared the initial draft of what was then
called the United States Arbitration Act. That bill was first introduced in Congress in
1922. See S. 4214, 67th Cong., 4th Sess., 64 Cong. Rec. 732 (1922); H.R. 13522, 67th Cong., 4th
Sess., 64 Cong. Rec. 797 (1922). The Senate Judiciary Committee held hearings on the bill
in 1923. See Hearings on S. 4213 and S. 4214 Before the Subcommittee of the Senate
Committee on the Judiciary, 67th Cong., 4th Sess. (1923). Joint congressional hearings on
the bill were held in 1924. Joint Hearings on S. 1005 and H.R. 646 Before the
Subcommittee of the Committees on the Judiciary, 68th Cong., 1st Sess. (1924).
1041) S. Rep. No. 536, 68th Cong., 1st Sess. 3 (1924); Committee on Commerce, Trade and
Commercial Law, The United States Arbitration Act and Its Application, 11 A.B.A.J. 153, 155-
56 (1925).
1042) Hearings on S. 4213 and S. 4214 Before the Subcommittee of the Senate Committee on the
Judiciary, 67th Cong., 4th Sess., 14 (1923) (Letter from H. Hoover, Secretary of Commerce).
1043) Hearings on S. 4213 and S. 4214 Before the Subcommittee of the Senate Committee on the
Judiciary, 67th Cong., 4th Sess., 14 (1923) (ABA Report).
1044) Supporters of the FAA stated on numerous occasions, without contradiction, that support
for the legislation was universal. Hearings on S. 4213 and S. 4214 Before the Subcommittee
of the Senate Committee on the Judiciary, 67th Cong., 4th Sess., 3, 5, 17, 21 (1923).
126
1045) Even after the passage of the FAA, U.S. courts historical mistrust of arbitration
agreements was reflected in the Restatement (First) Contracts, published in 1932.
Restatement (First) Contracts 550 (1932) (a bargain to arbitrate either an existing or a
possible future disputewill not be specifically enforced, and only nominal damages
are recoverable for its breach). While noting that Congress had enacted the FAA, the
Restatement observed that such statutes have not as yet been generally enacted in the
United States. Ibid.
1046) 65 Cong. Rec. 1931 (1924).
1047) See1.01[B][3] & [5].
1048) Hearings on S. 4213 and S. 4214 Before the Subcommittee of the Senate Committee on
the Judiciary, 67th Cong., 4th Sess., 2 (1923).
1049) U.S. FAA, Chp. 392, 1, 62 Stat. 669 (1947) (as codified at 9 U.S.C. 1-16).
1050) U.S. FAA, 84 Stat. 692 (1970) (as codified at 9 U.S.C. 201-208).
1051) U.S. FAA, Pub. L. 101-369 (1990) (as codified at 9 U.S.C. 301-307).
1052) The Act contains no or only the most rudimentary provisions regarding constitution of
the arbitral tribunal, conduct of the arbitral proceedings, provisional measures,
applicable law, costs and form of award.
1053) Cf. Samuel, Arbitration Statutes in England and the USA, 8 Arb. & Disp. Res. L.J. 2, 32 (1999)
(The [FAA] falls in the category of small but perfectly formed. It is very resilient and
loosely enough drafted in the right places to enable the court to do the right thing for
the arbitral process.).
1054) The FAA applies to arbitration agreements and awards affecting either inter-state or
foreign commerce. U.S. FAA, 9 U.S.C. 1; 2.03[B][2][b]. These jurisdictional grants have
been interpreted expansively. SeeG. Born, International Commercial Arbitration:
Commentary and Materials 124-26, 388-89 (2d ed. 2001). The FAAs focus was principally
domestic, although it also expressly applies to foreign commerce. U.S. FAA, 9 U.S.C. 1.
1055) U.S. FAA, 9 U.S.C. 2. For discussion of 2 and its savings clause, see4.04[A][2][j][i].
1056) U.S. FAA, 9 U.S.C. 3-4. For a discussion of 3 and 4, see8.02[A][2]; 8.02[C]; 14.08[B]
[2].
1057) See U.S. FAA, 9 U.S.C. 5; 12.03[E][2][b].
1058) See U.S. FAA, 9 U.S.C. 7; 16.03[A][4].
1059) See U.S. FAA, 9 U.S.C. 9-11; 22.01[B][3]; 25.03[B].
1060) See U.S. FAA, 9 U.S.C. 13.
1061) The domestic FAA consists of only 16 articles, a number of which are archaic or
immaterial. This contrasts with the much lengthier English Arbitration Act and UNCITRAL
Model Law, see1.04[B][1][d]; 1.04[B][1][a], while roughly paralleling French and Swiss
legislative style, see1.04[B][1][b]-[c].
1062) See1.04[B][1][e][ii].
1063) Restatement (Third) U.S. Law of International Commercial Arbitration 4-3, Reporters
Note e(i) (Tentative Draft No. 2 2012) (The Restatement position is that applying FAA
Chapter One to non-Convention awards is most consistent with the text of the FAA and
the federal policy in favor of arbitral dispute resolution.).
1064) See1.04[A][1][b].
1065) U.S. FAA, 9 U.S.C. 201-208.
1066) 116 Cong. Rec. 22, 732-33 (24 July 1970) (Hamilton Fish). See also id. at 22, 731 (Andrew
Jacobs).
1067) Foreign Arbitral Awards, S. Rep. No. 91-702, 91st Cong., 2d Sess. 1-2 (1970); Aksen, American
Arbitration Accession Arrives in the Age of Aquarius, 3 Sw. U. L. Rev. 1 (1971); Bermann,
Domesticating the New York Convention: The Impact of the Federal Arbitration Act, 2 J.
Intl Disp. Sett. 317 (2011).
1068) U.S. FAA, 9 U.S.C. 201. See8.02[C]; 14.06[B]. In addition, the amendments expand
federal subject matter jurisdiction and removal authority in cases falling under the
Convention. U.S. FAA, 9 U.S.C. 203, 205.
1069) U.S. FAA, 9 U.S.C. 206, 207. See26.03[D].
1070) U.S. FAA, 9 U.S.C. 203, 205. See Silec Cable SAS v. Alcoa Fjardaal Sf, 2012 U.S. Dist. LEXIS
167020, at *20 (3d Cir.) (for removal to be proper it need only be at least conceivable
that the arbitration clause will impact the disposition of the case); Infuturia Global Ltd
v. Sequus Pharm., Inc., 2011 U.S. App. LEXIS 2337 (9th Cir.) (permitting removal under 205
of FAA because one party sought to rely on prior arbitral award); Beiser v. Weyler, 284
F.3d 665, 669-70 (5th Cir. 2002) ([T]he district court will have jurisdiction under 205 over
just about any suit in which a defendant contends that an arbitration clause falling
under the Convention provides a defense. As long as [it] is not completely absurd or
impossible.).
1071) U.S. FAA, 9 U.S.C. 301-306; J. Bowman, The Panama Convention and Its Implementation
Under the Federal Arbitration Act (2002). See1.04[A][3]; 2.01[A][1][b]; 5.01[B][3];
22.02[E][1][c]; 22.04[A][3]; 25.02[C]; 26.03[C][1].
1072) U.S. FAA, 9 U.S.C. 302.
1073) U.S. FAA, 9 U.S.C. 303, 306. See2.03[C][2][b].
1074) U.S. FAA, 9 U.S.C. 305.
1075) U.S. FAA, 9 U.S.C. 202, 206, 207, 302-304.
1076) Section 208 of the FAA provides that the domestic FAA applies to actions and
proceedings brought under this chapter to the extent that [the domestic FAA] is not in
conflict with this chapter or the Convention as ratified by the United States. U.S. FAA, 9
U.S.C. 208.
127
1077) See Publicis Commcn v. True N. Commcns, Inc., 206 F.3d 725, 729 (7th Cir. 2000) (New
York Convention supplements the Federal Arbitration Act, and the logic of decisions
applied to the latter may guide the interpretation of the former).
1078) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct. 2010); Buckeye Check Cashing, Inc.
v. Cardegna, 546 U.S. 440, 447-48 (U.S. S.Ct. 2006); Southland Corp. v. Keating, 465 U.S. 1
(U.S. S.Ct. 1984); Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. S.Ct.
1983); Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967). See
Restatement (Third) U.S. Law of International Commercial Arbitration 4-3, Reporters
Note b (Tentative Draft No. 2 2012) (In light of the fact that the Conventions and their
implementing legislation are sparsely written and leave unanswered many specific
questions, courts have developed a fairly expansive federal common law of arbitration
to interpret and apply the Conventions.).
1079) See4.02[A][2][d]; 9.05[A]; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 628 (U.S. S.Ct. 1985).
1080) See3.02[B][3][c]; 4.02[A][2][d]; 4.04[A][2][j] (especially 4.04[A][2][j][iv]); 5.06[C][4];
5.06[C][6][c]; 6.04[H][1]; 7.02[B][7]; 9.05[A]; 10.02[A]; 15.02[B]; 15.06[B].
1081) See1.01[B][5]; 1.04[B][1][e] (especially 1.04[B][1][e][iv]); 4.04[A][2][j]; 6.04[A][1];
Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17 (U.S. S.Ct. 1974); Drahozal, The New York
Convention and the American Federal System, 2012 J. Disp. Res. 101.
1082) See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S.Ct.
1985); Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17 (U.S. S.Ct. 1974); 6.03[A]; 6.03[C]
[4].
1083) See Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct. 2010); Buckeye Check Cashing,
Inc. v. Cardegna, 546 U.S. 440, 445 (U.S. S.Ct. 2006); Prima Paint Corp. v. Flood & Conklin
Mfg Co., 388 U.S. 395, 402 (U.S. S.Ct. 1967); 3.02[B][3][c]; 3.03[A][2][b].
1084) See Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2855-56 (U.S. S.Ct. 2010);
Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct. 2010); PacifiCare Health Sys., Inc. v.
Book, 538 U.S. 401 (U.S. S.Ct. 2003); Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S.
S.Ct. 2002); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995); 7.03[E].
1085) See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); Doctors
Assocs., Inc. v. Casarotto, 517 U.S. 681 (U.S. S.Ct. 1996); Southland Corp. v. Keating, 465 U.S.
1 (U.S. S.Ct. 1984); 4.04[A][2][j][v]; 4.04[B][3][b]; 5.01[C][2].
1086) See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995); Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S.Ct. 1985); 9.02[D][1][a].
1087) See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S.Ct.
1985) (party agreeing to arbitration trades the procedures and opportunity for review of
the courtroom for the simplicity, informality, and expedition of arbitration); McDonald
v. City of W. Branch, 466 U.S. 284, 292 (U.S. S.Ct. 1984); 15.02[B]; 15.04[B]; 25.04[B][3]
[c]-[d].
1088) See15.03[B].
1089) See12.06[B][3]; 15.06[B].
1090) See17.04[B][2] (especially 17.04[B][2][b]).
1091) See16.03[A][4][a][iv](1).
1092) See12.03[E][2][a].
1093) See25.04[A][1]; 25.04[B][1]; 25.04[E][1]; 25.05[A][1][a]. This substantive review is
referred to under the rubric of manifest disregard of law. See25.05[A][1][a], pp. 3341-
48.
1094) See1.04[A][1][c][ii]; 26.03[B].
1095) See, e.g., Brunel, A Proposal to Adopt UNCITRALs Model Law on International Arbitration
as Federal Law, 25 Tex. Intl L.J. 43 (1990); Kolkey, Its Time to Adopt the UNCITRAL Model
Law on International Commercial Arbitration, 8 Transnatl L. & Contemp. Probs. 3 (1998);
Park, Amending the Federal Arbitration Act, 13 Am. Rev. Intl L. 75 (2002); Stipanowich,
Rethinking American Arbitration, 63 Ind. L.J. 425 (1987).
1096) Park, Amending the Federal Arbitration Act, 13 Am. Rev. Intl L. 75 (2002).
1097) Hulbert, The Case for A Coherent Application of Chapter 2 of the Federal Arbitration Act, 22
Am. Rev. Intl Arb. 45 (2011); Kaufmann-Kohler, Globalization of Arbitral Procedure, 36
Vand. J. Transnatl L. 1313 (2003).
1098) Rivkin & Kellner, In Support of the FAA: An Argument Against U.S. Adoption of the
UNCITRAL Model Law, 10 Am. Rev. Intl Arb. 535 (1999); Samuel, Arbitration Statutes in
England and the USA, 8 Arb. & Disp. Res. L.J. 2, 32 (1999).
1099) Hulbert, Should the FAA Be Amended?, 18(2) Mealeys Intl Arb. Rep. 37 (2003).
1100) Park, Amending the Federal Arbitration Act, 13 Am. Rev. Intl L. 75, 135 (2002). The same
author quotes the chief legal officer of a major company as saying that amendment of
the FAA sent shivers down the spine of the business community, because of concerns
about legislative interference with a system that basically functioned satisfactorily.
Compare Carrington & Haagen, Contract and Jurisdiction, 1996 S.Ct. Rev. 331, 401 (1997)
(As architecture, the arbitration law made by the Court is a shantytown.).
1101) See Arbitration Fairness Act of 2013, S. 878, 113th Congress (2013); Arbitration Fairness Act
of 2011, H.R. 1873, S. 987, 112th Cong. (2011); Arbitration Fairness Act of 2009, H.R. 1020,
111th Congress (2009); Arbitration Fairness Act of 2007, H.R. 3010, S. 1782, 110th Cong.
(2007).
128
1102) Although not as far-reaching as proposed legislation to render consumer and employee
disputes nonarbitrable, Congress enacted the Dodd-Frank Wall Street Reform and
Consumer Protection Act in 2010 to reform financial regulation. As part of the Act, the
Securities and Exchange Commission was granted the authority to invalidate mandatory
arbitration provisions in certain securities transactions. See Dodd-Frank Wall Street
Reform and Consumer Protection Act, 124 Stat. 1376, 921 (2010); 6.04[H][1].
1103) See, e.g., Medellin v. Texas, 552 U.S. 491, 521-22 (U.S. S.Ct. 2009) (dicta that New York
Convention is non-self-executing); Safety Natl Cas. Corp. v. Certain Underwriters at
Lloyds, London, 587 F.3d 714, 737 (5th Cir. 2009) (Elrod, J., dissenting) (New York
Convention is non-self-executing and therefore cannot preempt state law); Stephens v.
Am. Intl Ins. Co., 66 F.3d 41, 45 (2d Cir. 1995) (the Convention is not self-executing, and
therefore relies upon an Act of Congress for its implementation). See also ESAB Group,
Inc. v. Zurich Ins. plc, 685 F.3d 376, 390-91 (4th Cir. 2012) (raising, but not deciding,
question whether New York Convention is self-executing); Safety Natl Cas. Corp. v.
Certain Underwriters at Lloyds, London, 587 F.3d 714 (5th Cir. 2009) (raising, but not
deciding, question whether New York Convention is self-executing); Suter v. Munich Reins.
Co., 223 F.3d 150, 162 (3d Cir. 2000) (raising, but not deciding, question whether New York
Convention is self-executing).
1104) See, e.g., Louisiana Safety Assn of Timbermen Self Insurers Fund v. Certain Underwriters
at Lloyds, London, Amicus Curiae Brief of United States, 2010 WL 3375626, at *7 (The
better view of the matteris that Article II is self-executing.) (emphasis in original);
Safety Natl Cas. Corp. v. Certain Underwriters at Lloyds, London, 587 F.3d 714, 733 (5th Cir.
2009) (Clement, J., concurring) (the plain text of Article II of the Convention compels a
finding of self-execution; The text of Article II constitutes a directive to domestic
courts.It leaves no discretion to the political branches of the federal government
whether to make enforceable the agreement-enforcing rule it prescribes; instead, that
rule is enforceable by the Conventions own terms.The terms of Article II do not merely
describe arbitration rights which are of a nature to be enforced in a court of justice, but
expressly instruct courts to enforce those rights by referring the parties to arbitration.).
See also Publicis Commcn v. True N. Commcns, Inc., 206 F.3d 725, 729 (7th Cir. 2000).
1105) See4.04[A][2][j].
1106) See4.05[B].
1107) There has been a vigorous debate on the Supreme Court concerning the preemptive
effect of the FAA. Compare Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct.
1995) (Breyer, J.) with id. at 285 (Scalia, J., dissenting); compare Southland Corp. v. Keating,
465 U.S. 1 (U.S. S.Ct. 1984) (Burger, J.) with id. at 25 (OConnor, J., dissenting).
Academic debate has been just as robust. Compare Drahozal, In Defense of Southland:
Reexamining the Legislative History of the Federal Arbitration Act, 78 Notre Dame L. Rev.
101 (2002) with I. Macneil, American Arbitration Law: Reformation, Nationalization,
Internationalization 83-147 (1992).
It is difficult to be certain what Congress thought it was doing when it enacted the FAA in
1925. The better view is that it intended that 2 of the Act states a substantive rule of
federal law, governing the validity of arbitration agreements, which would preempt
state law and be enforceable in state, as well as federal, courts. Drahozal, In Defense of
Southland: Reexamining the Legislative History of the Federal Arbitration Act, 78 Notre
Dame L. Rev. 101, 163-65 (2002). This interpretation is buttressed by the then recently-
adopted 1923 Geneva Protocol, which also provided for the validity of arbitration
agreements (but not for the recognition of foreign arbitral awards), in a manner
structurally paralleling the FAA. See1.01[C][1].
1108) Am. Ins. Assn v. Garamendi, 539 U.S. 396 (U.S. S.Ct. 2003); Hines v. Davidowitz, 312 U.S. 52
(U.S. S.Ct. 1941). See also Drahozal, The New York Convention and the American Federal
System, 2012 J. Disp. Res. 101.
1109) The U.S. Supreme Court has repeatedly held that the FAA preempts particular state law
rules. AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740. 1747 (When state law prohibits
outright the arbitration of a particular type of claim, the analysis is straightforward: The
conflicting rule is displaced by the FAA.); Allied-Bruce Terminix Co. v. Dobson, 513 U.S.
265 (U.S. S.Ct. 1995); Perry v. Thomas, 482 U.S. 483 (U.S. S.Ct. 1987); Southland Corp. v.
Keating, 465 U.S. 1 (U.S. S.Ct. 1984); 4.04[A][2][j][iii]; 4.04[B][3][b]; 5.06[C][4]; 6.04[H]
[1]. See also Besson, The Utility of State Laws Regulating International Commercial
Arbitration and Their Compatibility With the FAA, 11 Am. Rev. Intl Arb. 211 (2000); Drahozal,
In Defense of Southland: Reexamining the Legislative History of the Federal Arbitration Act,
78 Notre Dame L. Rev. 101 (2002); Drahozal, Federal Arbitration Act Preemption, 79 Ind. L.J.
393 (2004); Hayford & Palmiter, Arbitration Federalism: A State Role in Commercial
Arbitration, 54 Fla. L. Rev. 175 (2002).
1110) See Restatement (Third) U.S. Law of International Commercial Arbitration 4-3 (Tentative
Draft No. 2 2012) (Since the FAA does not pre-empt state law in the sense of occupying
the field, state law may provide a basis for confirming, vacating, recognizing, or
enforcing international awards made in the United States.); Volt Info. Sciences, Inc. v.
Stanford Univ., 489 U.S. 468, 477 (U.S. S.Ct. 1989) (even when Congress has not
completely displaced state regulation in an area, state law may nonetheless be
preempted to the extent that it actually conflicts with federal law).
129
1111) Southland Corp. v. Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1984). See also Buckeye Check Cashing,
Inc. v. Cardegna, 546 U.S. 440, 444-48 (U.S. S.Ct. 2006) (Section 2 embodies the national
policy favoring arbitration and places arbitration agreements on equal footing with all
other contracts.).
1112) See4.04[A][2][j][iii]; 4.04[B][3][b]; 6.04[H][1]; AT&T Mobility LLC v. Concepcion, 131 S.Ct.
1740 (U.S. S.Ct. 2011); Doctors Assocs., Inc. v. Casarotto, 517 U.S. 681 (U.S. S.Ct. 1996);
Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995); Southland Corp. v.
Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1984).
1113) See3.02[B][3][c]; 3.03[A][2][b]; Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct.
2010); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); Prima Paint
Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967).
1114) See9.05[A]; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628
(U.S. S.Ct. 1985).
1115) See25.03[B].
1116) Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995); First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995); Perry v. Thomas, 482 U.S. 483 (U.S. S.Ct. 1987);
4.04[A][2][j].
In contrast, state laws that are specifically directed towards the formation or validity of
arbitration agreements (as distinguished from other types of agreements) are preempted
by the FAA. See Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995);
Southland Corp. v. Keating, 465 U.S. 1 (U.S. S.Ct. 1984); 4.04[A][2][j][iii].
1117) See4.04[A][2][j][iii]; Sourcing Unlimited Inc., d/b/a Jumpsource v. Asimco Intl, Inc., 526
F.3d 38, 46 (1st Cir. 2008); Certain Underwriters at Lloyds v. Argonaut Ins., 500 F.3d 571, 579
(7th Cir. 2007) (We believe that this overarching federal concern with the uniformity of
treatment of international arbitration agreements requires that the issue before us be
resolved by a federal common law rule, rather than by a state rule of decision.);
InterGen NV v. Grina, 344 F.3d 134, 143 (1st Cir. 2003).
1118) See4.04[A][2][j][iii]; 4.04[B][3][b]; 6.04[H][1].
1119) See25.04[F][3][e]; 25.03[B], 26.03[D].
Note e(ii) (Tentative Draft No. 2 2012) (To the extent that no state arbitration statute is
applicable, non-Convention awards may be enforced under state common law.);
Standard Magnesium Corp. v. Fuchs, 251 F.2d 455, 458 (10th Cir. 1957) (enforcing award
made in Norway under state common law); Weizmann Institute of Science v. Neschis, 421
F.Supp.2d 654, 674-75 n.21 (S.D.N.Y. 2005) (recognizing award made in Liechtenstein
under state common law); Gilbert v. Bernstine, 174 N.E. 706, 709 (N.Y. 1931) (enforcing
award made in London under state common law).
1121) See Lerner, The Uniform Arbitration Act: 25-Year Retrospective, N.Y. L.J. 1 (1981); Pirsig, The
New Uniform Arbitration Act, 11 Bus. Law. 44 (1956); Pirsig, Some Comments on Arbitration
Legislation and the Uniform Act, 10 Vand. L. Rev. 685 (1957); Report of the National
Conference of Commissioners on Uniform State Laws, 50 A.B.A.J. 134, 134-62 (1925).
1122) National Conference of Commissioners on Uniform State Laws, Revised Uniform
Arbitration Act (2000). The drafters of the Act observe: The Uniform Arbitration Act,
promulgated in 1955, has been one of the most successful Acts of the National
Conference of Commissioners on Uniform State Laws. Revised Uniform Arbitration Act,
Prefatory Note (2000).
1123) The Revised Uniform Arbitration Act (2000) has been adopted by the District of Columbia
and 15 states: Alaska, Arizona, Arkansas, Colorado, Hawaii, Minnesota, Nevada, New
Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Utah and
Washington. The 1956 Act remains in effect in 28 states: Alaska, Arizona, Arkansas,
Delaware, District of Columbia, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska,
Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and
Wyoming. Alaska, Arizona and Arkansas did not repeal the 1956 Act when they adopted
the 2000 Act.
1124) The National Conference of Commissioners on Uniform Laws originally opposed the
enforceability of arbitration agreements applicable to future disputes. Report of the
National Conference of Commissioners on Uniform State Laws, 50 A.B.A.J. 134, 134-62
(1925). As initially adopted, the Uniform Act was confined to agreements covering
existing disputes. Id. at 591.
1125) Revised Uniform Arbitration Act, 4, 6-7 (2000).
1126) Revised Uniform Arbitration Act, 22-23 (2000).
1127) Revised Uniform Arbitration Act, 11-12 (2000).
1128) Revised Uniform Arbitration Act, 8 (2000).
1129) Revised Uniform Arbitration Act, 9, 15-17 (2000).
1132) See, e.g., Arkansas Code Annotated 16-108-201 (tort claims); Kentucky Revised Statutes
417.050 (insurance disputes); Ohio Revised Code Annotated 2711.01 (real property
disputes). These state rules are preempted by the FAA in almost all circumstances.
See4.04[A][2][j][i]-[ii]; 6.04[H][1].
130
1133) See, e.g., California Code of Civil Procedure 1295(b) (requiring special notice of
arbitration clauses in medical services contracts); California Code of Civil Procedure
1298 (requiring special notice of arbitration clauses in real property contracts);
Missouri Annotated Statutes 435.460 (requiring notice of arbitration clause to appear in
ten point font capital letters before signature line); South Carolina Code Annotated 15-
48-10 (requiring front-page notice of arbitration clause in all but employment contracts,
lawyer/client and doctor/patient prearrangements, and personal injury claims). These
state law rules are also preempted by the FAA in almost all cases. See Doctors Assocs.,
Inc. v. Casarotto, 517 U.S. 681 (U.S. S.Ct. 1996) (state statute requiring special notice for
arbitration clauses preempted by FAA); Morrison v. Colo. Permanente Med. Group, 983
F.Supp. 937 (D. Colo. 1997) (state notice requirement for medical malpractice arbitration
clauses preempted by FAA). See4.04[A][2][j][i] & [v]; 5.02[D][1]-[3].
1134) Georgia Code Annotated 9-9-13; Pennsylvania Consolidated Statutes Annotated title 42,
7302(d)(2). Again, these state law provisions are generally preempted by the FAA.
1135) See Besson, The Utility of State Laws Regulating International Commercial Arbitration and
Their Compatibility With the FAA, 11 Am. Rev. Intl Arb. 211 (2000); Garvey & Heffelfinger,
Towards Federalizing U.S. International Commercial Arbitration Law, 25 Intl Law. 209
(1991); McClendon, State International Arbitration Laws: Are They Needed or Desirable, 1
Am. Rev. Intl Arb. 245, 250 (1990); Walker, Trends in State Legislation Governing
International Arbitrations, 17 N.C.J. Intl L. & Com. Reg. 419 (1992).
1136) Arbitration & Conciliation of International Commercial Disputes, California Code of Civil
Procedure 1297.11 et seq.; Colorado International Dispute Resolution Act, Colorado
Revised Statutes 13-22-501 to 13-22-507; UNCITRAL Model Law on International
Commercial Arbitration, Connecticut General Statutes 50a-100 to 50a-136; Florida
International Commercial Arbitration Act, Florida Statutes Annotated 684.0001 to
684.0048; Georgia International Commercial Arbitration Code, Georgia Code Annotated
9-9-20et seq.; Hawaii International Arbitration, Mediation, and Conciliation Act, Hawaii
Revised Statutes 658D-1 to 658D-9; Maryland International Commercial Arbitration
Act, Maryland Courts & Judicial Procedural Code Annotated 3-2B-01 to 3-2B-09; North
Carolina International Commercial Arbitration & Conciliation Act, N.C. Gen. Stat. 1-
567.30 to 1-567.68; International Commercial Arbitration, Ohio Revised Code Annotated
2712.01 to 2712.91; Oregon International Commercial Arbitration and Conciliation Act,
Oregon Revised Statutes 36.450 to 36.558; Arbitration & Conciliation of International
Commercial Disputes, Texas Civil Practice & Remedies Annotated 172.001 et seq.
1137) As discussed elsewhere, generally-applicable state law provides most basic rules of
contract law governing the formation of domestic arbitration agreements; federal
common law principles appear to apply to the formation and validity of international
arbitration agreements subject to the New York and Inter-American Conventions.
See1.04[B][1][e]; 4.04[A][2][j]. State law can, of course, also provide the substantive
rules governing the merits of the parties dispute.
1138) Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468 (U.S. S.Ct. 1989).
1139) Doctors Assocs., Inc. v. Casarotto, 517 U.S. 681 (U.S. S.Ct. 1996); Mastrobuono v. Shearson
Lehman Hutton, Inc., 514 U.S. 52 (U.S. S.Ct. 1995); 4.04[A][2][j][i].
1140) See4.04[B][6][c].
1141) See, e.g., Donovan, International Commercial Arbitration and Public Policy, 27 N.Y.U.J. Intl
L. & Pol. 645 (1995); El-Kosheri, Is There A Growing International Arbitration Culture in the
Arab-Islamic Juridical Culture?, in A. van den Berg (ed.), International Dispute Resolution:
Towards An International Arbitration Culture 47 (1998); Kassis, The Questionable Validity of
Arbitration and Awards Under the Rules of the International Chamber of Commerce, 6(2) J.
Intl Arb. 79 (1989); Nariman, East Meets West: Tradition, Globalization and the Future of
Arbitration, 20 Arb. Intl 123, 125-26 (2004); Shalakany, Arbitration and the Third World: A
Plea for Reassessing Bias Under the Specter of Neoliberalism, 41 Harv. Intl L.J. 419 (2000);
Sornarajah, The UNCITRAL Model Law: A Third World Viewpoint, 6(4) J. Intl Arb. 7 (1989);
Sornarajah, The Climate of International Arbitration, 8(2) J. Intl Arb. 47 (1991).
1142) See authorities cited at 1.01[B][5], pp. 153-54; 1.04[B][1][e][i], pp. 45-50.
1143) For a recent illustration of these attitudes in a largely domestic setting, see Albanese,
Ring of Diamonds, 2 Comm. Disp. Res. 28 (2010) (South African report criticizing
arbitration as permitting parties of European roots to perpetuate racism by allowing
them to avoid local courts).
1144) Briones & Tagvoryan, Is International Arbitration in Latin America in Danger?, 16 L. & Bus.
Rev. Ams. 131 (2010); El-Ahdab, Enforcement of Arbitral Awards in the Arab Countries, 11
Arb. Intl 169 (1995); N. Blackaby, D. Lindsey & A. Spinillo (eds.), International Arbitration
in Latin America, Overview of Regional Developments 3-10 (2003); Grigera Nan, Arbitration
in Latin America: Overcoming Traditional Hostility, 5 Intl Arb. 137 (1989); Grigera Nan,
Arbitration and Latin America: Progress and Setbacks, 21 Arb. Intl 127, 128-40 (2005); J.
Kleinheisterkamp, International Commercial Arbitration in Latin America 1, 17, 18 (2005);
Nattier, International Commercial Arbitration in Latin America: Enforcement of Arbitral
Agreements and Awards, 21 Tex. J. Intl L. 397 (1986); S. Saleh, Commercial Arbitration in the
Arab Middle East 39-40 (2d ed. 2006).
1145) Sornarajah, The UNCITRAL Model Law: A Third World Viewpoint, 6(4) J. Intl Arb. 7, 9 (1989).
131
1146) Afro-Asian Legal Consultative Committee, Report of the Seventeenth, Eighteenth and
Nineteenth Sessions held in Kuala Lumpur (1976), Baghdad (1977) and Doha (1978) 131 (1978)
(institutional arbitration rules do not work out particularly favourably for the
developing countries in the matter of venue, choice of arbitrators, as also fees and
charges leviable by the institutions concerned); Shalakany, Arbitration and the Third
World: A Plea for Reassessing Bias Under the Specter of Neoliberalism, 41 Harv. Intl L.J.
419, 427 et seq. (2000) (national judicial sovereignty is the price of capitulation to a
historically biased dispute settlement mechanisma system that is weighted in favor of
the capital exporting states) (quoting Sornarajah, The Climate of International
Commercial Arbitration, 8(2) J. Intl Arb. 47, 47 (1991)).
1147) Brazilian Arbitration Law, Arts. 6, 7 (arguably requiring post-dispute compromise);
Grigera Nan, Argentine Law and the ICC Rules: A Comment on the ECOFISA Case, 3 World
Arb. & Med. Rep. 100 (1992).
1148) C. Calvo, Derecho Internacional Teorico y Practico de Europa y America (1868); C. Calvo, Le
droit international thorique et pratique (4th ed. 1870-1872). See Grigera Nan, Arbitration
and Latin America: Progress and Setbacks, 21 Arb. Intl 127, 134-37 (2005).
1149) See1.01[B][3]-[8]; Baker & Yoder, ICSID and the Calvo Clause: Hindrance to Foreign
Direct Investment in LDCs, 5 Ohio St. J. Disp. Res. 75, 91 (1989); Garcia-Amador, 2 The
Changing Law of International Claims 481-82 (1984).
1150) Decision 24 of the Andean Commission Concerning Treatment of Foreign Capital, Article 51,
10 Intl Leg. Mat. 15 (1971).
1151) Charter of Economic Rights and Duties of States, UN General Assembly Resolution No.
3281 (XXIX), U.N. Doc. A/9631 (1974); Permanent Sovereignty Over Natural Resources, UN
General Assembly Resolution No. 3171, U.N. Doc. A/9030 (1973).
1152) See1.01[B][3]-[8]; 5.01[C][5]; Brazilian Arbitration Law, Arts. 6, 7 (arguably requiring
post-dispute compromise); Grigera Nan, Argentine Law and the ICC Rules: A Comment on
the ECOFISA Case, 3 World Arb. & Med. Rep. 100 (1992).
1153) See25.05[A]; 26.05[C]; Judgment of 1 August 2002, Electrificadora del Atlantico SA ESP v.
Termorio SA ESP, Expediente. 21.041 (Colombian Consejo de Estado) (As a consequence
of the evidence given, the arbitration process and the award from the 21st of December
of 2001between the companies Electrificadora del Atlntico SA E.S.P and Termorio
E.S.P. is annulled.).
1154) See8.04. For an account of efforts made by some states to frustrate the arbitration of
international disputes, see Kantor, International Project Finance and Arbitration With
Public Sector Entities: When Is Arbitrability A Fiction?, 24 Fordham Intl L.J. 1122, 1171-72
(2001) (substantial risk exists that courts in developing countries will intervene to halt
arbitration of disputes between investors and public authorities of that country,
particularly in circumstances of pervasive economic and political turmoil and
corruption).
1155) Alfaro & Guimarey, Who Should Determine Arbitrability? Arbitration in A Changing
Economic and Political Environment, 12 Arb. Intl 415, 424-26 (1996); A. Asouzu,
International Commercial Arbitration and African States: Practice, Participation and
Institutional Development (2001); Asouzu, The Adoption of the UNCITRAL Model Law in
Nigeria: Implications on the Recognition and Enforcement of Arbitral Awards, 1999 J. Bus. L.
185; Grigera Nan, Arbitration and Latin America: Progress and Setbacks, 21 Arb. Intl 127,
149-76 (2005); Grigera Nan, Arbitration in Latin America: Overcoming Traditional Hostility
(An Update), 22 U. Miami Inter-Am. L. Rev. 203, 231-34 (1991); Hamilton, International
Litigation and Arbitration: Three Decades of Latin American Commercial Arbitration, 30 U.
Pa. J. Intl L. 1099 (2009).
1156) Alfaro & Lorenti, The Growing Opposition of Argentina to ICSID Arbitral Tribunals: A Conflict
Between International and Domestic Law?, 6 J. World Inv. & Trade 417 (2005); Grigera
Nan, Arbitration and Latin America: Progress and Setbacks, 21 Arb. Intl 127, 150 (2005)
([D]espite the rosy landscape generally presented by the black letter law on arbitration
in Latin America after its recent modernisation, its substance or spirit has not always
been properly understood or applied. In certain cases, the Latin American courts have
ignored express legal provisions aimed at facilitating arbitration or ensuring its efficacy,
or advanced results notoriously incompatible with the policies favourable to arbitration
underlying the new and updated legal arbitration framework.).
1157) In May 2007, Venezuela, Bolivia, Ecuador and Nicaragua announced their intention to
withdraw from the ICSID Convention. See South American Alternative to ICSID in the Works
as Governments Create An Energy Treaty, Investment Treaty News (6 August 2008),
available at www.iisd.org. Bolivia (2007), Ecuador (2009), and Venezuela (2012)
subsequently withdrew from the ICSID Convention. See ICSID, List of Contracting States
and Other Signatories of the Convention (as of November 1, 2013), available at
icsid.worldbank.org.
1158) See1.04[B][2]; Franck, The Legitimacy Crisis in Investment Treaty Arbitration: Public
International Law Through Inconsistent Decisions, 73 Ford. L. Rev. 1521 (2005); Shalakany,
Arbitration and the Third World: A Plea for Reassessing Bias Under the Specter of
Neoliberalism, 41 Harv. Intl L.J. 419, 430 (2000).
1159) See1.04[A]-[B].
1160) See15.07[C].
132
1161) For brief descriptions of major international arbitral institutions, seeG. Born,
International Arbitration and Forum Selection Agreements: Drafting and Enforcing 46-61
(4th ed. 2013); P. Gola, C. Gtz Staehelin & K. Graf (eds.), Institutional Arbitration: Tasks
and Powers of Different Arbitration Institutions (2009); R. Schuetze, Institutional
Arbitration: Article-by-Article Commentary (2013); Tiefenbrun, A Comparison of
International Arbitral Rules, 15 Boston C. Intl & Comp. L. Rev. 25 (1992); von Mehren, Rules
of Arbitral Bodies Considered From A Practical Point of View, 9(3) J. Intl Arb. 105 (1992).
1162) See1.04[A][4].
1163) In a number of industries, specialized arbitral regimes provide well-established means
of dispute resolution. Examples include maritime, commodities, construction, insurance
and reinsurance, and labor arbitration. See1.02[B][6]; AAA, www.adr.org (providing
descriptions and rules for construction, textile, apparel, labor, pension, consumer and
insurance arbitrations); C. Ambrose & K. Maxwell, London Maritime Arbitration (2d ed.
2002); D. Johnson, International Commodity Arbitration (1991); F. Rose, International
Commercial and Maritime Arbitration (1988). See also Procedures for the Resolution of
U.S. Insurance and Reinsurance Disputes (reinsurance); ARIAS-UK Arbitration Rules; 2012
LMAA Terms (maritime); 2013 German Maritime Arbitration Association Rules (maritime);
2010 SMA Rules (maritime); AAA Labor Arbitration Rules (labor disputes); AAA Impartial
Determination of Union Fees Rules (organized labor union fees); 2011 Rail Arbitration
Rules of the National Grain and Feed Association (selected transport disputes); National
Grain and Feed Association Arbitration Rules (selected commodities disputes); 2010
Federation of Cocoa Commerce Arbitration and Appeal Rules (selected commodities
disputes); 2011 PCA Optional Rules for the Arbitration of Disputes Relating to Outer
Space Activities.
1164) The incorporation of institutional arbitration rules is discussed below, see5.05[C]; 9.03.
1165) SeeChapter 13.
1166) See12.05[A].
1167) See12.01[A].
1168) See12.03[C].
1169) For a discussion of the UNCITRAL Rules, see1.04[C][4].
1170) Most leading arbitral institutions (including the ICC, AAA, LCIA, PCA and SIAC) will act as
an appointing authority, for a fee, in ad hoc arbitrations.
1171) See12.03[E].
1172) See1.04[C][5].
1173) As discussed below, national courts will generally have the power, under most
arbitration statutes and where the parties have not otherwise agreed, to assist the
arbitral process by appointing arbitrators, considering challenges to arbitrators and
fixing compensation of arbitrators. See12.03[E]; 12.06[B]-[D].
1174) See3.02[D]; 7.02[C]; 12.01[D]; 12.03[D].
1175) See1.01[B][5]; Part III.
1176) For a contrary view, that is inconsistent with most observers conclusions, see T. Webster,
Handbook on UNCITRAL Arbitration 0-47 to 0-59 (2010) (There is a strong preference
for ad hoc as opposed to institutional arbitration due to the added flexibility and
independence).
1177) For commentary, see S. Baker & M. Davis, The UNCITRAL Arbitration Rules in Practice: The
Experience of the Iran-United States Claims Tribunal (1992); D. Caron & L. Caplan, The
UNCITRAL Arbitration Rules: A Commentary (2d ed. 2013); Dietz, Development of the
UNCITRAL Arbitration Rules, 27 Am. J. Comp. L. 449 (1979); I. Dore, Arbitration and
Conciliation Under the UNCITRAL Rules: A Textual Analysis (1986); S. Nappert, Commentary
on the UNCITRAL Arbitration Rules 2010: A Practitioners Guide (2012); J. Paulsson, The
Revised UNCITRAL Rules (2013); Sanders, Commentary on the UNCITRAL Arbitration Rules,
II Y.B. Comm. Arb. 172 (1977); Sanders, Procedures and Practices Under the UNCITRAL Rules,
27 Am. J. Comp. L. 453 (1979); van Haersolte-van Hof, United Nations Commission on
International Trade Law (UNCITRAL) Arbitration Rules, 1976, in L. Mistelis (ed.), Concise
International Arbitration 171 (2010); J. van Hof, Commentary on the UNCITRAL Arbitration
Rules: The Application by the Iran-U.S. Claims Tribunal (1991); T. Webster, Handbook of
UNCITRAL Arbitration: Commentary, Precedents & Models for UNCITRAL Based Arbitration
Rules (2010). See alsoUNCITRAL, Recommendations to Assist Arbitral Institutions and Other
Interested Bodies With Regard to Arbitrations Under the UNCITRAL Arbitration Rules, XIII
Y.B. UNCITRAL 420 (1982).
1178) Report of the UNCITRAL on the Work of Its Sixth Session, U.N. Doc. A/9017, 85, IV Y.B.
UNCITRAL 11 (1973).
1179) D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 30-36, 45-59 (2d ed.
2013); UNCITRAL, Report of the Secretary-General on the Revised Draft Set of Arbitration
Rules, Ninth Session, Introduction, U.N. Doc. A/CN.9/112, 17, VII Y.B. UNCITRAL 157 (1976).
See also UN General Assembly Resolution No. 31/98, dated 15 December 1976, II Y.B.
Comm. Arb. xi, xi (1977) (establishment of rules for ad hoc arbitration that are
acceptable in countries with different legal, social and economic systems would
significantly contribute to the development of harmonious international economic
relations).
1180) D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 45-59, 565-79 (2d ed.
2013); UNCITRAL, Report of the Secretary-General on the Preliminary Draft Set of
Arbitration Rules for Optional Use in Ad Hoc Arbitration Relating to International Trade,
Eighth Session, U.N. Doc. A/CN.9/97, VI UNCITRAL Y.B. 163, 176 (1975).
133
1181) Report of the UNCITRAL on the Work of Its Ninth Session, U.N. Doc. A/31/17, VII Y.B.
UNCITRAL 9, 20-27, 66-82 (1976). See D. Caron & L. Caplan, The UNCITRAL Arbitration Rules:
A Commentary 2 et seq. (2d ed. 2013).
1182) The UNCITRAL Working Group on International Arbitration and Conciliation began to
study possible revisions to the UNCITRAL Rules in 2006. SeeReport of the Working Group
on Arbitration and Conciliation on the Work of Its Forty-Seventh Session, U.N. Doc.
A/CN.9/641 (2007); Paulsson & Petrochilos, Report: Revision of the UNCITRAL Arbitration
Rules (2006).
1183) 2010 UNCITRAL Rules. By their terms, the revised Rules apply to arbitrations where the
arbitration agreement was concluded on or after 15 August 2010. They also apply to
arbitration agreements concluded earlier, where the parties agree to their application.
2010 UNCITRAL Rules, Art. 1(2). See9.03[C].
1184) The International Institute for Conflict Prevention and Resolution (formerly known as the
CPR Institute for Dispute Resolution) has published, on a regular basis, since 1989, a set
of Rules for Non-Administered Arbitration (formerly called Rules and Commentary for
Non-Traditional Arbitration for Business Disputes). The Permanent Court of Arbitration
has promulgated several sets of rules, based on the UNCITRAL Rules, applicable to
disputes between private and public parties. See1.04[C][5][d].
1185) Experience with the UNCITRAL Rules has been positive. See D. Caron & L. Caplan, The
UNCITRAL Arbitration Rules: A Commentary 11 (2d ed. 2013) (Since the 1980s, the
UNCITRAL Rules have come to be very widely used and, more importantly, the most
influential global procedural framework for international dispute settlement.);
Permanent Court of Arbitration: Optional Rules for Arbitrating Disputes Between Two
States, effective 20 October 1992, 32 Intl Leg. Mat. 572 (1993) (Experience since 1981
suggests that the UNCITRAL Arbitration Rules provide fair and effective procedures for
peaceful resolution of disputes between States concerning the interpretation,
application and performance of treaties and other agreements, although they were
originally designed for commercial arbitration.).
1186) 2010 UNCITRAL Rules, Arts. 3-4; 1976 UNCITRAL Rules, Arts. 3-4. See15.08[A].
1187) 2010 UNCITRAL Rules, Arts. 6-16; 1976 UNCITRAL Rules, Arts. 5-13. See12.01[D]; 12.03[B]
[1]; 12.03[D][2]; 12.06[A].
1188) 2010 UNCITRAL Rules, Arts. 17-32; 1976 UNCITRAL Rules, Arts. 14-25, 27-29. See15.02[D];
15.03[C].
1189) 2010 UNCITRAL Rules, Art. 17(5).
1190) 2010 UNCITRAL Rules, Art. 26.
1191) 2010 UNCITRAL Rules, Art. 35; 1976 UNCITRAL Rules, Art. 33. See19.03[C].
1192) 2010 UNCITRAL Rules, Arts. 33-40. See23.01[A]; 24.02.
1193) 2010 UNCITRAL Rules, Arts. 40-43. See23.08[B].
1194) 2010 UNCITRAL Rules, Art. 23; 1976 UNCITRAL Rules, Art. 21. See3.02[D]; 7.02[C].
1195) The parties can select an arbitral institution (like the ICC, AAA, or LCIA) as appointing
authority without adopting that institutions rules. Alternatively, a designated individual
or office-holder may be selected.
1196) The 2010 Rules provide expressly that the parties may designate the Secretary-General
of the Permanent Court of Arbitration directly as appointing authority. See2010
UNCITRAL Rules, Art. 6. See12.03[D][2].
1197) This includes IACAC, ICDR, HKIAC, Kuala Lumpur Regional Centre for Arbitration (KLRCA),
Cairo Regional Centre for International Commercial Arbitration (CRCICA) and the Iran-
U.S. Claims Tribunal. See D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A
Commentary 6-7 (2d ed. 2013); J. van Hof, Commentary on the UNCITRAL Arbitration Rules:
The Application by the Iran-U.S. Claims Tribunal (1991). In August 2010, the Kuala Lumpur
Regional Centre for Arbitration became the first arbitral institution to adopt new
arbitration rules incorporating the revised 2010 UNCITRAL Rules.
1198) See D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 7-8 (2d ed. 2013).
1199) Issues arising from arbitration agreements that incorporate institutional rules
(sometimes defectively) are discussed below. See9.03.
1200) See14.07. See also ICC Rules of Arbitration, Foreword (ICC arbitrations are held in
numerous countries, in most major languages, and with arbitrators from all over the
world); www.adr.org/about-icdr (noting that AAAs cooperative agreements with 62
arbitral institutions in 43 countries worldwide enable arbitration cases to be filed and
heard virtually anywhere in the world).
1201) For a comparison of the various institutional rules, see Gola, Gtz Staehelin & Graf,
Comparison of Various Arbitration Institutions, in P. Gola, C. Gtz Staehelin & K. Graf
(eds.), Institutional Arbitration 1 (2009); R. Schuetze, Institutional Arbitration: Article-by-
Article Commentary (2013).
1202) See, e.g., Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 3 (2d ed. 2005);
ICC Rules of Arbitration, Foreword (Drafted by dispute resolution specialists and
corporate users from different legal traditions, cultures and professions, these Rules are
applicable to disputes between parties in any part of the world, whether or not
members of ICC. They are intended for use worldwide in proceedings conducted in any
language and subject to any law.).
1203) See1.04[B].
134
1204) For commentary, see M. Bhler & T. Webster, Handbook of ICC Arbitration: Commentary,
Precedents, Materials (2d ed. 2008); W. Craig, W. Park & J. Paulsson, International Chamber
of Commerce Arbitration (3d ed. 2000); Y. Derains & E. Schwartz, A Guide to the ICC Rules
of Arbitration (2d ed. 2005); J. Fry, S. Greenberg & F. Mazza, The Secretariats Guide to ICC
Arbitration (2012); J. Grierson & A. van Hooft, Arbitrating Under the 2012 ICC Rules (2012).
See alsoS. Bond, M. Paralika & M. Secomb, International Chamber of Commerce (ICC)
Rules of Arbitration, 1998, in L. Mistelis (ed.), Concise International Arbitration 305 (2010);
Bond, The Present Status of the International Court of Arbitration of the ICC: A Comment on
An Appraisal, 1 Am. Rev. Intl Arb. 108 (1990); Cohn, The Rules of Arbitration of the
International Chamber of Commerce, 14 Intl & Comp. L.Q. 132 (1965); W. Craig, W. Park & J.
Paulsson, Annotated Guide to the 1998 ICC Arbitration Rules (1998); de los Santos Lago &
Bonnn, Emergency Proceedings Under the New ICC Rules, 2012:13 Spain Arb. Rev. 5;
Heitzmann, The International Chamber of Commerce (ICC), in P. Gola, C. Gtz Staehelin &
K. Graf (eds.), Institutional Arbitration 119 (2009); ICC Commission on Arbitration Task
Force, Arbitration Involving States and State Entities Under the ICC Rules of Arbitration
(2012); ICC, Guide to ICC Arbitration (1994); Kirby, The ICC Court: A Behind-the-Scenes Look,
16 ICC Intl Ct. Bull. 9 (2005); Pair & Frankenstein, The New ICC Rule on Consolidation:
Progress or Change?, 25 Emory Intl L. Rev. 1061 (2012); E. Schfer, H. Verbist & C. Imhoos,
ICC Arbitration in Practice (2005); Voser, Overview of the Most Important Changes in the
Revised ICC Arbitration Rules, 29(4) ASA Bull. 783 (2011); Wetter, The Present Status of the
International Court of Arbitration of the ICC: An Appraisal, 1 Am. Rev. Intl Arb. 91 (1990).
For collections of ICC awards and procedural decisions, see J.-J. Arnaldez, Y. Derains & D.
Hascher (eds.), Collection of ICC Arbitral Awards 2001-2007 (2009); J.-J. Arnaldez, Y. Derains
& D. Hascher (eds.), Collection of ICC Arbitral Awards 1996-2000 (2003); J.-J. Arnaldez, Y.
Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 1990-1995 (1997); S. Jarvin, Y.
Derains, & J.-J. Arnaldez (eds.), Collection of ICC Arbitral Awards 1986-1990 (1994); S. Jarvin
& Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 (1990). See also D. Hascher
(ed.), Collection of Procedural Decisions in ICC Arbitration 1993-1996 (1997). The ICC
International Court of Arbitration also publishes a periodical bulletin reporting on
recent developments in ICC arbitration. See ICC International Court of Arbitration
Bulletin.
1205) See1.01[C][1]; 1.04[B][1][e][i].
1206) The ICC model arbitration clause provides: All disputes arising out of or in connection
with the present contract shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed in
accordance with the said Rules.
1207) A total of 796 new cases were filed with the ICC International Court of Arbitration in 2011
and 759 new cases were filed in 2012. At the end of 2012, 1,476 cases were being
administered by the Court. These figures reflect a generally continual increase in the
Courts active caseload, which has more than doubled in the last twenty years. See ICC,
2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 5 (2013); ICC, 2011 Statistical Report, 23(1) ICC
Ct. Bull. 5, 7 (2012); Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 3 (2d
ed. 2005); 1.03.
1208) Parties to ICC arbitrations filed in 2012 were nationals of 137 different countries. ICC, 2012
Statistical Report, 24(1) ICC Ct. Bull. 5, 5 (2013).
1209) ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 10 (2013).
1210) The revised Rules became effective as of 1 January 2012 and apply to any ICC arbitration
commencing on or following that date, unless the parties agree otherwise. J. Fry, S.
Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 64 (2012).
1211) See Philippe, NetCase: A New ICC Arbitration Facility, in ICC, Using Technology to Resolve
Disputes 53 (ICC Ct. Bull. Spec. Supp. 2004).
1212) 2012 ICC Rules, Arts. 4(5), 5(4); 1998 ICC Rules, Arts. 4(5), 5(4).
1213) 2012 ICC Rules, Art. 36; 1998 ICC Rules, Art. 30.
1214) 2012 ICC Rules, Arts. 11-13; 1998 ICC Rules, Arts. 7-9.
1220) 2012 ICC Rules, Art. 1(2); 1998 ICC Rules, Art. 1(2). The Court acts pursuant to internal rules
governing its administrative actions. SeeY. Derains & E. Schwartz, A Guide to the ICC Rules
of Arbitration 1-8, 11-27 (2d ed. 2005); J. Fry, S. Greenberg & F. Mazza, The Secretariats
Guide to ICC Arbitration 17-19 (2012); ICC, Internal Rules of the International Court of
Arbitration, Appendix II.
1221) ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 5 (2013). See also ICC, 2011 Statistical
Report, 23(1) ICC Ct. Bull. 5, 13 (2012) (ICC arbitrations were seated in 63 different
countries in 2011); ICC, 2010 Statistical Report, 22(1) ICC Ct. Bull. 5, 13 (2011) (53 countries);
ICC, 2009 Statistical Report, 21(1) ICC Ct. Bull. 5, 12-13 (2010) (53 countries); ICC, 2008
Statistical Report, 20(1) ICC Ct. Bull. 5, 11 (2009) (50 countries); ICC, 2007 Statistical Report,
19(1) ICC Ct. Bull. 5, 11 (2008) (42 countries).
135
1222) See14.02[B]; ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5, 14 (2012); Jarvin, The Place of
Arbitration A Review of the ICC Courts Guiding Principles and Practice When Fixing the
Place of Arbitration, 7(2) ICC Ct. Bull. 54 (1996); Verbist, The Practice of the ICC
International Court of Arbitration With Regard to the Fixing of the Place of Arbitration, 12
Arb. Intl 347 (1996).
1223) 2012 ICC Rules, Arts. 11, 13, 14; 1998 ICC Rules, Arts. 7, 9, 1. See J. Fry, S. Greenberg & F.
Mazza, The Secretariats Guide to ICC Arbitration 161-67, 170-76 (2012).
1224) See12.03[D][3]; 12.06[A][1]-[2]; Bond, The Experience of the ICC in the
Confirmation/Appointment Stage of An Arbitration, in ICC, The Arbitral Process and the
Independence of Arbitrators 9 (1991); Fry & Greenberg, The Arbitral Tribunal: Applications
of Articles 7-12 of the ICC Rules in Recent Cases, 20(2) ICC Ct. Bull. 12 (2009); J. Fry, S.
Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 161-94 (2012); Greenberg
& Feris, Appendix: References to the IBA Guidelines on Conflicts of Interest in International
Arbitration When Deciding on Arbitrator Independence in ICC Cases, 28(2) ICC Ct. Bull. 33
(2009); Hascher, ICC Practice in Relation to the Appointment, Confirmation, Challenge and
Replacement of Arbitrators, 6(2) ICC Ct. Bull. 4 (1995); Whitesell, Independence in ICC
Arbitration: ICC Court Practice Concerning the Appointment, Confirmation, Challenge and
Replacement of Arbitrators (ICC Ct. Bull. Spec. Supp. 2008).
1225) Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 4, 167-76 (2d ed. 2005); J.
Fry, S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 161-67 (2012).
1226) See1.04[C][4].
1227) 2012 ICC Rules, Arts. 4, 5; 1998 ICC Rules, Arts. 4, 5.
1231) 2012 ICC Rules, Art. 23; 1998 ICC Rules, Art. 24; M. Bhler & T. Webster, Handbook of ICC
Arbitration: Commentary, Precedents, Materials 257 (2d ed. 2008); J. Fry, S. Greenberg & F.
Mazza, The Secretariats Guide to ICC Arbitration 9-10 (2012).
1232) Article 24(1) of the 2012 ICC Rules require ICC tribunals to conduct a case management
conference. The conference must be convened at the point when the tribunal is
drawing up the Terms of Reference or as soon as possible thereafter. See 2012 ICC
Rules, Art. 24; J. Fry, S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 9
(2012).
1233) 2012 ICC Rules, Art. 30(1); 1998 ICC Rules, Art. 24. This time limit is routinely extended. Y.
Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 305 (2d ed. 2005); J. Fry, S.
Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 312 (2012).
1234) 2012 ICC Rules, Art. 33; 1998 ICC Rules, Art. 27; J. Fry, S. Greenberg & F. Mazza, The
Secretariats Guide to ICC Arbitration 327-38 (2012).
1235) 2012 ICC Rules, Appendix III, Arts. 2, 4; 1998 ICC Rules, Appendix III, Art. 2; J. Fry, S.
Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 360-67 (2012).
1237) 2012 ICC Rules, Arts. 36(2), (5); 1998 ICC Rules, Art. 30(3).
1238) See Buehler, Costs in ICC Arbitration: A Practitioners View, 3 Am. Rev. Intl Arb. 116 (1992);
W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 3.05 (3d
ed. 2000) (attempting to counter criticisms); Wetter, The Present Status of the
International Court of Arbitration of the ICC: An Appraisal, 1 Am. Rev. Intl Arb. 91 (1990).
1239) SeeY. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 5 (2d ed. 2005); J. Fry,
S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration xi (2012).
A 2007 ICC task force, which continued its work in 2011-12, studied ways to reduce costs
and delay in ICC arbitrations. See ICC, Techniques for Controlling Time and Costs in
Arbitration (2d ed. 2012); ICC, Techniques for Controlling Time and Costs in Arbitration
(2007). See13.04[A][4].
1240) 2012 ICC Rules, Arts. 7-10. See18.02[C][1].
1241) See, e.g., 2012 ICC Rules, Art 24. See15.08[M].
1242) 2012 ICC Rules, Art. 29. See17.02[G][4][e].
1243) Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 8-9 (2d ed. 2005); Figueres,
Amicable Means to Resolve Disputes: How the ICC ADR Rules Work, 21 J. Intl Arb. 91 (2004).
The ICCs ADR Rules were adopted in 2002 and replaced earlier ICC Rules of Optional
Conciliation. Ibid.
1244) Charrin, The ICC International Centre for Expertise Realities and Prospects, 6(2) ICC Ct.
Bull. 33, 34 (1995).
1245) The Centres Rules were revised in 1993 and again in 2003. See Charrin, The ICC
International Centre for Expertise Realities and Prospects, 6(2) ICC Ct. Bull. 33 (1995); ICC,
The New Rules of the ICC International Centre for Technical Expertise, 4(1) ICC Ct. Bull. 53
(1993); Wolrich, ICC Expertise The New, Revised ICC Rules for Expertise: A Presentation and
Commentary, 13(2) ICC Ct. Bull. 11 (2002).
1246) In particular, Article 12 of the Centres Rules for Expertise provides that, unless otherwise
agreed by all parties, the findings of the expert shall not be binding upon the parties.
ICC Rules for Expertise, Art. 12(3).
136
1247) The Centre received 19 requests in 2012. ICC, 2012 Statistical Report, 24(1) ICC Ct. Bull. 5,
17 (2013). See also ICC, 2011 Statistical Report, 23(1) ICC Ct. Bull. 5, 17 (2012) (35 requests in
2011); ICC, 2010 Statistical Report, 22(1) ICC Ct. Bull. 5, 16 (2011) (29 requests); ICC, 2009
Statistical Report, 21(1) ICC Ct. Bull. 5, 16 (2010) (15 requests); ICC, 2008 Statistical Report,
20(1) ICC Ct. Bull. 5, 15 (2009) (10 requests); ICC, 2007 Statistical Report, 19(1) ICC Ct. Bull. 5,
15 (2008) (14 requests); ICC, 2006 Statistical Report, 18(1) ICC Ct. Bull. 5, 14 (2007) (10
requests); ICC, 2005 Statistical Report, 17(1) ICC Ct. Bull. 5, 14 (2006) (11 requests); ICC, 2004
Statistical Report, 16(1) ICC Ct. Bull. 5, 13 (2005) (8 requests); ICC, 2003 Statistical Report,
15(1) ICC Ct. Bull. 5, 16 (2004) (17 requests).
1248) For commentary on the LCIA, see Beale, London Court of International Arbitration (LCIA),
in P. Gola, C. Gtz Staehelin & K. Graf (eds.), Institutional Arbitration 141 (2009); Nesbitt,
London Court of International Arbitration (LCIA) Arbitration Rules, 1998, in L. Mistelis,
Concise International Arbitration 401 (2010); P. Turner & R. Mohtashami, A Guide to the
LCIA Arbitration Rules (2009); S. Wade & S. York, A Commentary on the LCIA Rules (2011).
1249) The LCIA model arbitration clause provides:
Any dispute arising out of or in connection with this contract, including any question
regarding its existence, validity or termination, shall be referred to and finally resolved
by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by
reference into this clause.
The number of arbitrators shall be [one/three].The place of arbitration shall be [City
and/or Country].The language to be used in the arbitral proceedings shall be _______.
The governing law of the contract shall be the substantive law of _______.
1250) The LCIA reports that 118 cases were referred to it in 2005, 133 in 2006, 137 in 2007, 215 in
2008, 272 in 2009, 246 in 2010, 224 in 2011 and 265 in 2012. See LCIA News, Director
Generals Reviews (2007-2012), available at www.lcia.org; LCIA, Registrars Report 2012
(2013). The number of disputes referred to the LCIA rose by 18.3% from 2011 to 2012. See
LCIA, Registrars Report 2012 4 (2013).
1251) LCIA News, Director Generals Review of 2011 (2012); LCIA, Registrars Report 2012 (2013).
1252) In April 2010, the LCIA India adopted rules based on the LCIAs Rules, with modifications
in light of the Indian Arbitration and Conciliation Act, 1996. See LCIA India Rules,
available at www.lcia-india.org; van den Berg, New and Amended Arbitration Rules: India
LCIA India, in A. van den Berg (ed.), XXXV Y.B. Comm. Arb. 18 (2010). See also Nariman,
Ten Steps to Salvage Arbitration in India: The First LCIA-India Arbitration Lecture, 27 Arb.
Intl 115 (2011); Zaiwalla, LCIA India: Will It Change the International Arbitration Scene in
India?, 27 J. Intl Arb. 657 (2010).
1253) See1.04[C][5][b].
1254) LCIA, Schedule of Arbitration Costs, available at www.lcia.org.
1255) LCIA Rules, Arts. 14, 15, 19, 22.
1256) LCIA Rules, Arts. 22.1(d), (e).
1257) LCIA Rules, Art. 25(2).
1258) LCIA Rules, Art. 9.
1259) LCIA Rules, Art. 22(1)(h). See18.02[C][4].
1260) See LCIA, Arbitration, available at www.lcia.org (The criteria are entered into the LCIAs
database of arbitrators, from which an initial list is drawn.If necessary, other
institutions are consulted for further recommendations.); LCIA Rules, Art. 5(5).
1262) See The LCIA Court Decisions on Challenges to Arbitrators, 27 Arb. Intl 281, 281-536 (2011).
See also Nicholas & Partasides, LCIA Court Decisions on Challenges to Arbitrators: A
Proposal to Publish, 23 Arb. Intl 1 (2007); GAR, LCIA to Publish Challenge Decisions, Global
Arb. Rev. (1 June 2006); 12.05[K].
1264) For commentary on the AAA, seeFellas, American Arbitration Association (AAA)
International Centre for Dispute Resolution (ICDR) International Arbitration Rules, 2009, in
L. Mistelis (ed.), Concise International Arbitration 467 (2010); M. Gusy, J. Hosking & F.
Schwarz, A Guide to the ICDR International Arbitration Rules (2011); Hoellering, How the
AAA International Arbitration Program Works, in T. Carbonneau (ed.), Handbook on
International Arbitration and ADR (2006); Traband, American Arbitration Association (AAA),
in P. Gola, C. Gtz Staehelin & K. Graf (eds.), Institutional Arbitration (2009). Information
about the AAA is available at the AAA/ICDR website, www.adr.org.
1265) I. Macneil, American Arbitration Law: Reformation, Nationalization, Internationalization
84-88 (1992).
1266) Deye & Britton, Arbitration by the American Arbitration Association, 70 N.D. L. Rev. 281, 281
n.1 (1994).
1267) The AAA reports that it has administered some 3.9 million alternative dispute resolution
(ADR) cases since its foundation. See AAA News Report, American Arbitration Association
Launches Updated Commercial Rules (9 September 2013).
1268) See AAA, Rules & Procedures, available at www.adr.org.
137
1269) A model AAA arbitration clause, selecting the AAAs Commercial Arbitration Rules,
provides:
Any controversy or claim arising out of or relating to this contract, or the breach thereof,
shall be settled by arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
1270) For example, these include specialized rules for construction, energy, health care,
insurance, securities, labor and intellectual property disputes. See AAA, Rules &
Procedures, available at www.adr.org.
1271) The AAAs International Rules were preceded by a set of Supplementary Procedures for
International Commercial Arbitration, adopted in 1982. The AAA Supplementary
Procedures continue to be used in international cases in which the parties have selected
rules other than the AAA International Rules. The Supplementary Procedures (as
amended in 1999) provide:
Recognizing that international arbitration cases often present unique procedural
problems, the AAA has created the following supplementary procedures to facilitate
such cases when rules other than the International Arbitration Rules govern the
proceedings. Unless the parties advise otherwise by the due date for the return of the
first list, the AAA will assume that they are desired.
1272) See 2010 ICDR International Dispute Resolution Procedures, Introduction. See also ICDR,
Areas of Expertise: International, available at www.adr.org. The ICDR provides two
alternative model clauses for selecting the International Arbitration Rules in the ICDR
International Dispute Resolution Procedures:
shall be determined by arbitration administered by the International Centre for Dispute
Resolution in accordance with its International Arbitration Rules.
shall be determined by arbitration administered by the American Arbitration
Association in accordance with its International Arbitration Rules.
1273) ICDR Rules, Art. 1(1). International disputes are not expressly defined in the ICDR Rules.
1274) If the parties have agreed to a set of AAA rules other than the ICDR International
Arbitration Rules (e.g., AAA Commercial Arbitration Rules) those rules will apply,
including to an international dispute. To deal with the unique issues presented by
international arbitrations, the AAA developed the International Commercial Arbitration
Supplementary Procedures, which are intended to deal with some of the problems that
may arise in managing an international case under domestic arbitration rules.
1275) The 2006 revisions added Article 37 to the ICDR Rules, which entitles parties to appoint
an emergency arbitrator to hear requests for emergency relief prior to the formation of
the entire arbitral tribunal. In 2010, a Flexible Fee Schedule was introduced, permitting
lower initial filing fees. See AAA, Rules & Procedures: Rules Updates, available at
www.adr.org. See17.02[A][5][e].
1276) Unusually, the ICDR Rules also provide for a waiver of punitive damage claims (unless
otherwise agreed). ICDR Rules, Art. 28(5).
1277) ICDR Rules, Art. 32. Article 32 provides that [t]he administrator shall arrange an
appropriate daily or hourly rate, based on such considerations, with the parties and with
each of the arbitrators as soon as practicable after the commencement of the
arbitration and, [i]f the parties fail to agree on the terms of compensation, the
administrator shall establish an appropriate rate and communicate it in writing to the
parties.
1278) ICDR Rules, Art. 6(1). See12.03[A][1].
1279) See ICDR Rules, Art. 6; ICDR International Dispute Resolution Procedures, Introduction
(describing options available to parties for appointment of arbitrators, including use of
an AAA/ICDR list). See also 2013 AAA Rules, Rules 3, 12 (providing, where AAAs
Commercial Arbitration Rules apply, specific procedures for appointments from AAAs
National Roster).
1280) The ICDR maintains its own International Panel of Arbitrators.
1281) AAA, 2012 Annual Report, Presidents Letter and Financial Statements 7 (2013); AAA, 2000
Annual Report, Presidents Letter and Financial Statements 8 (2000). See also Park, A
Comparative Analysis of Arbitral Institutions and Their Achievements in the United States
and Korea, 15 Am. Rev. Intl Arb. 475, 483 (2004) (tabulating international case filings in
AAA).
138
1282) For commentary, see Bederman, The Hague Peace Conferences of 1899 and 1907, in M.
Janis (ed.), International Courts for the Twenty-First Century 9 (1992); Best, Peace
Conferences and the Century of Total War: The 1899 Hague Conference and What Came
After, 75 Intl Affairs 619 (1999); Daly, Permanent Court of Arbitration, in C. Giorgetti (ed.),
International Litigation in Practice: The Rules, Practice and Jurisprudence of International
Courts and Tribunals 37 (2012); Daly, New Procedural Rules for the Permanent Court of
Arbitration, 17 IBA Arb. News 92 (2012); Grimmer, The Expanded Role of the Appointing
Authority Under the UNCITRAL Arbitration Rules 2010, 28 J. Intl Arb. 501 (2011); Hudson,
The Permanent Court of Arbitration, 27 Am. J. Intl L. 440 (1933); Le Cannu & Drabkin,
Assessing the Role of the Permanent Court of Arbitration in the Peaceful Settlement of
International Disputes, 27 LObservateur des Nations Unies 194 (2010); Moore, The
Organization of the Permanent Court of International Justice, 22 Colum. L. Rev. 497 (1922);
S. Rosenne (ed.), The Hague Peace Conference of 1899 and 1907 and International
Arbitration: Reports and Documents (2001).
1283) See1.01[A][4]; 1899 Hague Convention; 1907 Hague Convention.
1284) See1.01[A][4]. It is also sometimes claimed, less accurately, that the PCA was neither
permanent nor engaged in arbitration. Hudson, The Permanent Court of International
Justice An Indispensable First Step, 108 Am. Acad. Pol. & Soc. Sci., Annals 188, 189 (1923)
(It may well be said of the Permanent Court of Arbitration that it is not permanent, not a
court, and is not an adequate tribunal for arbitration.). In fact, the PCA was intended to
be (and certainly now is) permanent and it is engaged, at least adequately and, in most
observers eyes, much better, in arbitration.
1285) Daly, Permanent Court of Arbitration, in C. Giorgetti (ed.), International Litigation in
Practice: The Rules, Practice and Jurisprudence of International Courts and Tribunals 39
(2012) (quoting Louis Renault, a leading participant at 1899 and 1907 Hague Conferences).
1287) 1907 Hague Convention, Arts. 48, 53.
1289) Levine, Navigating the Parallel Universe of Investor-State Disputes Under the UNCITRAL
Rules, in C. Brown & K. Miles (eds), Evolution in Investment Treaty Arbitration 369 (2011).
1290) As of 2012, there were 115 PCA Member States. PCA, 112th Annual Report 5 (2012).
1291) In 2011, the International Bureau was comprised of some 39 people, including speakers
of the six official languages of the United Nations. PCA, 111th Annual Report 87 (2011).
1292) See1.01[A][4].
1293) A. Stuyt, Survey of International Arbitrations 1794-1989231-467 (3d ed. 1990). See also Gray
& Kingsbury, Interstate Arbitration Since 1945: Overview and Evaluation, in M. Janis (ed.),
International Courts for the Twenty-First Century 60 (1992).
(2012). The PCA administered its first arbitration with a non-state party in 1934. See Radio
Corp. of Am. v. China, Award of the Tribunal of 13 April 1935, III United Nations Reports of
International Arbitral Awards 1621-36 (2006).
Practice: The Rules, Practice and Jurisprudence of International Courts and Tribunals 40-41
(2012).
1296) See Siblesz, What Role for the Permanent Court of Arbitration Today? 2 (2013), available at
www.pca-cpa.org/showfile.asp?fil_id=2110. See also PCA Annual Reports, available at
www.pca-cpa.org/showpage.asp?pag_id=1069; Shifman, The Permanent Court of
Arbitration: An Overview, in P. van Krieken & D. McKay (eds.), The Hague: Legal Capital of
the World 128, 141-44 (2005).
1297) Born, A New Generation of International Adjudication, 61 Duke L.J. 775, 779 (2012); Le Cannu
& Drabkin, Assessing the Role of the Permanent Court of Arbitration in the Peaceful
Settlement of International Disputes, 27 LObservateur des Nations Unies 194 (2010)
(pending PCA cases in 2009 include 35 investment arbitrations, 14 commercial
arbitrations, 2 environmental arbitrations and 3 inter- or intra-state arbitrations); PCA,
Statistical Summary of Cases Using PCA Support (14 October 2010) (on file with author).
See6.06.
1298) PCA, 112th Annual Report 5 (2012).
1299) See A. Eyffinger, The Peace Palace: Residence for Justice, Domicile of Learning 129-44
(1988); A. Lysen, History of the Carnegie Foundation and the Peace Palace at The Hague 37-
38 (1934).
(2012). See1.04[C][5][d]; Grimmer, The Expanded Role of the Appointing Authority Under
the UNCITRAL Arbitration Rules 2010, 28 J. Intl Arb. 501 (2011); Levine, Navigating the
Parallel Universe of Investor-State Disputes Under the UNCITRAL Rules, in C. Brown & K.
Miles (eds.), Evolution in Investment Treaty Arbitration 369 (2011).
Although their use has been limited, the PCAs 1990 Rules have been adopted wholly or
adapted for use in a number of complex and politically-sensitive arbitrations, including
the Abyei Arbitration between the Government of Sudan and the Sudan Peoples
Liberation Movement/Army and arbitrations before the Eritrea-Ethiopia Claims
Commission. See Daly, New Procedural Rules for the Permanent Court of Arbitration, 17 IBA
Arb. News 92, 92 (2012). The awards in these arbitrations are available at www.pca-
cpa.org.
139
1301) The 2012 Rules became effective on 17 December 2012.
1302) Daly, New Procedural Rules for the Permanent Court of Arbitration, 17 IBA Arb. News 92, 92-
93 (2012).
1303) 2012 PCA Rules, Art. 1(2).
1304) 2012 PCA Rules, Arts. 7, 9(1).
1305) 2012 PCA Rules, Art. 10(4).
1306) 2012 PCA Rules, Art. 17(5).
1307) 2012 PCA Rules, Art. 27(3).
1308) 2012 PCA Rules, Art. 1, Annex.
1309) 2012 PCA Rules, Art. 35.
1310) 2012 PCA Rules, Art. 41.
1311) 2012 PCA Rules, Art. 43(1).
1313) See2010 UNCITRAL Rules, Art. 6. See12.03[D][2].
1314) See, e.g., The Repub. of Mauritius v. United Kingdom of Great Britain & N. Ireland, Reasoned
Decision on Challenge in PCA Case of 30 November 2011; ICS Inspection & Control Servs. Ltd
(U.K.) v. Repub. of Argentina, Decision on Challenge to Arbitrator in PCA Case No. AA359 of
17 December 2009; Perenco Ecuador Ltd v. Repub. of Ecuador & Empresa Estatal Petroleos
del Ecuador, Decision on Challenge to Arbitrator in PCA Case No. IR-2009/1 of 8 December
2009; Abaclat v. Argentine Repub., Recommendation on the Respondents Proposal for the
Disqualification of Arbitrators Pursuant to the Request by ICSID Dated November 18, 2011 in
PCA Case No. IR 2011/1 of 19 December 2011.
1315) See12.05[E].
1316) For commentary on the Swiss Rules of International Arbitration, see Blessing, Comparison
of the Swiss Rules With the UNCITRAL Arbitration Rules and Others, in The Swiss Rules of
International Arbitration: ASA Swiss Arbitration Association Conference on 23 January 2004
in Zurich 17 (ASA Spec. Series No. 24 2004); Burger, The New Swiss Rules of International
Arbitration: A Comparative Analysis, 19(6) Mealeys Intl Arb. Rep. 21 (2004); Frey & Ahrens,
New Arbitration Rules Reflect Modern Trends, 23 IFLR 58 (2004); R. Feg (ed.), The Swiss
Rules of International Arbitration Five Years of Experience (2009); Habegger, The Revised
Swiss Rules of International Arbitration An Overview of the Major Changes, 30(2) ASA Bull.
269 (2012); Landolt, The Character of International Arbitration Under the Swiss Rules, 27(5)
Mealeys Intl Arb. Rep. 32 (2012); Oetiker & Burkhalter, Swiss Chambers Court of
Arbitration and Mediation (SCCAM), in P. Gola, C. Gtz Staehelin & K. Graf (eds.),
Institutional Arbitration 233 (2009); T. Zuberbhler, C. Mller & P. Habegger (eds.), Swiss
Rules of International Arbitration: Commentary (2005).
1317) These included institutions in Basel, Bern, Geneva, Lausanne, Lugano and Zurich. See
2004 Swiss Rules, Introduction (b).
1318) These Rules can be found at www.swissarbitration.org. See also Habegger, The Revised
Swiss Rules of International Arbitration An Overview of the Major Changes, 30(2) ASA Bull.
269 (2012); T. Zuberbhler, C. Mller & P. Habegger (eds.), Swiss Rules of International
Arbitration: Commentary (2005). The standard Swiss Rules arbitration clause provides:
Any dispute, controversy or claim arising out of, or in relation to, this contract, including
the validity, invalidity, breach or termination thereof, shall be settled by arbitration in
accordance with the Swiss Rules of International Arbitration of the Swiss Chambers
Arbitration Institution in force on the date when the Notice of Arbitration is submitted in
accordance with these Rules.
1319) The Introduction (b) to the 2012 Swiss Rules describes the Institution as follows:
For the purpose of providing arbitration services, the Chambers founded the Swiss
Chambers Arbitration Institution. In order to administer arbitrations under the Swiss
Rules, the Swiss Chambers Arbitration Institution has established the Arbitration Court
(hereinafter the Court), which is comprised of experienced international arbitration
practitioners. The Court shall render decisions as provided for under these Rules. It may
delegate to one or more members or committees the power to take certain decisions
pursuant to its Internal Rules. The Court is assisted in its work by the Secretariat of the
Court (hereinafter the Secretariat).
The 2012 revised Swiss Rules apply to all proceedings under the Swiss Rules in which the
request for arbitration is submitted after 1 June 2012, unless the parties agree otherwise.
1320) See1.04[B][1][c].
1321) 2012 Swiss Rules, Art. 21.
1324) 2012 Swiss Rules, Art. 26 (Interim Measures of Protection), Art. 43 (Emergency Relief).
1327) Swiss Chambers Arbitration Institution, Arbitration Statistics 2012 (2013).
1328) For commentary on the VIAC Rules, seeF. Schwarz & C. Konrad, The Vienna Rules: A
Commentary on International Arbitration in Austria (2009); Stippl, International Arbitral
Centre of the Austrian Federal Economic Chamber (VIAC), in P. Gola, C. Gtz Staehelin & K.
Graf (eds.), Institutional Arbitration 273 (2009).
140
1329) The VIAC model arbitration clause provides:
All disputes arising out of this contract or related to its violation, termination or nullity
shall be finally settled under the Rules of Arbitration and Conciliation of the
International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna
(Vienna Rules) by one or more arbitrators appointed in accordance with these rules.
1330) Article 25 of the VIAC Rules provides Unless the parties have agreed otherwise (1) the
place of arbitration shall be Vienna
1331) In 2012, 145 out of 193 parties were non-Austrian. VIAC, VIAC Statistics 2012 (2013).
1332) VIAC, VIAC Statistics 2012 (2013).
1333) The 2006 version of the Rules was adopted by the Austrian Federal Economic Chamber
on 3 May 2006, with effect from 1 July 2006. SeeF. Schwarz & C. Konrad, The Vienna Rules:
A Commentary on International Arbitration in Austria 1-004 (2009).
1334) The Austrian ZPO was revised in 2006 based on the UNCITRAL Model Law. Austrian ZPO,
517-618; B. Kloiber et al., Das neue Schiedsrecht Schiedsrechts-nderungsgesetz 2006
(2006); C. Liebscher, The Austrian Arbitration Act 2006: Text and Notes (2006); J. Power, The
Austrian Arbitration Act A Practitioners Guide to Sections 577-618 of the Austrian Code of
Civil Procedure (2006); W. Rechberger (ed.), Kommentar zur ZPO 577-618 (3d ed. 2006);
A. Reiner, Das neue sterreichische Schiedsrecht SchiedsRG 2006, The New Austrian
Arbitration Law Arbitration Act 2006 (2006); S. Riegler et al. (eds.), Arbitration Law of
Austria: Practice and Procedure (2007); G. Zeiler, Schiedsverfahren 577-618 ZPO idF des
SchiedsRG 2006 (2006).
1335) For an overview of the changes introduced by the 2013 version of the Rules see VIAC, New
Vienna Rules 2013 (2013), available at www.viac.eu. The new version of the Rules was
adopted on 8 May 2013, with effect from 1 July 2013.
1336) See Ross, The SCC and Ulf Franke: The Sino-Swedish Connection, Global Arb. Rev. (27 April
2010).
1337) SCC, The SCC in Numbers Statistics 2012, available at www.sccinstitute.com.
1338) SCC, The SCC in Numbers Statistics 2012, available at www.sccinstitute.com.
1339) The Emergency Arbitrators Rules allow parties to seek interim relief prior to the
commencement of arbitral proceedings. See SCC Rules, Appendix II: Emergency
Arbitrator. See also Hobr & McKenzie, New Rules of the Arbitration Institute of the
Stockholm Chamber of Commerce, 23 Arb. Intl 261 (2007); Magnusson & Shaughnessy, The
2007 Rules of Stockholm Chamber of Commerce, 2006:3 Stockholm Intl Arb. Rev. 33, 49-
58; Pavlica, The Arbitration Institute of the Stockholm Chamber of Commerce (SCC), in P.
Gola, C. Gtz Staehelin & K. Graf (eds.), Institutional Arbitration 217 (2009); Shaughnessy,
Pre-Arbitral Urgent Relief: The New SCC Emergency Arbitrator Rules, 27 J. Intl Arb. 337
(2010).
1340) The SCC Rules provide for drafting a provisional timetable designating the language of
proceedings failing the agreement of the parties, the admissibility of evidence and
default by the parties. See Magnusson & Shaughnessy, The 2007 Rules of Stockholm
Chamber of Commerce, 2006:3 Stockholm Intl Arb. Rev. 33, 49-58.
1341) SIAC, 2013 Annual Report 6 (2014).
1342) SIAC, 2013 Annual Report 6 (2014).
1343) SIAC, 2013 Annual Report 7-9 (2014).
1344) The 2010 and 2013 revisions included the addition of expedited procedure and
emergency arbitrator procedure. See 2013 SIAC Rules, Rule 5 (expedited procedure),
Rule 26, Schedule 1 (emergency arbitrator). The model clause for arbitration under the
SIAC Rules provides:
Any dispute arising out of or in connection with this contract, including any question
regarding its existence, validity or termination, shall be referred to and finally resolved
by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore
International Arbitration Centre (SIAC Rules) for the time being in force, which rules are
deemed to be incorporated by reference in this clause.
1345) See21.01[D].
1346) For commentary, seeKaplan & Morgan, National Report for Hong Kong (2013), in J.
Paulsson (ed.), International Handbook on Commercial Arbitration 1 (1984 & Update 2013);
N. Kaplan, Hong Kong and China Arbitration: Cases and Materials (1994); R. Morgan, The
Arbitration Ordinance of Hong Kong: A Commentary (1997); M. Moser & T. Cheng,
Arbitration in Hong Kong: A Users Guide (2004); Polkinghorne & Fitzgerald, Arbitration in
Southeast Asia: Hong Kong, Singapore and Thailand Compared, 18 J. Intl Arb. 101 (2001); M.
Pryles, Dispute Resolution in Asia (2006); Xu & Wilson, One Country, Two International
Commercial Arbitration-Systems, 17(6) J. Intl Arb. 47 (2000).
1347) The HKIACs other arbitration rules include the Domestic Arbitration Rules, the Securities
Arbitration Rules, the Electronic Transaction Arbitration Rules and the Short Form
Arbitration Rules. See HKIAC, Arbitration Rules & Guidelines, available at www.hkiac.org.
The 2008 HKIAC Rules were described as being inspired by the light touch administered
approach of the Swiss International Rules of Arbitration.
141
1348) See 2013 HKIAC Rules, available at www.hkiac.org.
HKIAC has published its revisions to the HKIAC Administered Arbitration Rules which
came into force on 1 November 2013. The model arbitration provision for the HKIAC
Administered Arbitration Rules provides:
Any dispute, controversy, difference or claim arising out of or relating to this contract,
including the existence, validity, interpretation, performance, breach or termination
thereof or any dispute regarding noncontractual obligations arising out of or relating to
it shall be referred to and finally resolved by arbitration administered by the Hong Kong
International Arbitration Centre under the Hong Kong International Arbitration Centre
Administered Arbitration Rules in force when the Notice of Arbitration is submitted.
1349) Of the 293 arbitrations, 68% were international and 32% were domestic; 68 arbitrations
(of the total 293 international and domestic arbitrations) were fully administered by the
HKIAC. HKIAC, 2012 Annual Report 6 (2012).
1350) For commentary, see C. Dejun, M. Moser & W. Shengchang, International Arbitration in the
Peoples Republic of China: Commentary, Cases and Materials (2d ed. 2000); P. Leung & S.
Wang, Selected Works of China International Economic and Trade Arbitration Commission:
Awards (1963-1988) (1995); Moser, CIETAC Arbitration: A Success Story, 15(1) J. Intl Arb. 27
(1998); Moser & Yuen, The New CIETAC Arbitration Rules, 21 Arb. Intl 391 (2005); M. Pryles,
Dispute Resolution in Asia 20-21 (2006); Song, The New CIETAC Arbitration Rules of 2012, 29
J. Intl Arb. 299 (2012); Tao, China International Economic and Trade Arbitration
Commission (CIETAC) Arbitration Rules, 2005, in L. Mistelis (ed.), Concise International
Arbitration 513 (2010); Yang, CIETAC Arbitration Clauses Revisited, 2007 Intl Arb. L. Rev. 117.
1351) Chinese Arbitration Law, Arts. 10-15.
1352) Moser, CIETAC Arbitration: A Success Story, 15(1) J. Intl Arb. 27 (1998); Shields, Chinas Two
Pronged Approach to International Arbitration, 15(2) J. Intl Arb. 67 (1998).
1353) See Y. Jianlong, Working Report of 2012 and Working Plan of 2013 (2013).
1354) See 2012 CIETAC Rules, available at www.cietac.org; Heye, Forum Selection for
International Dispute Resolution in China Chinese Courts vs. CIETAC, 27 Hastings Intl &
Comp. L. Rev. 535 (2004); Jones, Trying to Understand the Current Chinese Legal System, in
J. Cohen (ed.), Understanding Chinas Legal System 18 (2003); Shields, Chinas Two Pronged
Approach to International Arbitration, 15(2) J. Intl Arb. 67 (1998).
1355) 2012 CIETAC Rules, Art. 24(2). In those cases where CIETAC appoints a presiding or sole
arbitrator, CIETAC is also now required to consider (but not necessarily appoint)
candidates nominated by the parties. 2012 CIETAC Rules, Art. 26. The 2012 CIETAC Rules
modify the procedure for appointing the presiding arbitrator (in cases with three-person
tribunals). Among other things, parties are permitted to provide a list of candidates for
presiding arbitrator. 2012 CIETAC Rules, Art. 25(3).
1356) See CIETAC, Panel of Arbitrators Effective as From May 1 2011 (2011).
1357) 2012 CIETAC Rules, Art. 33(3).
1358) 2012 CIETAC Rules, Art. 46(1).
1359) 2012 CIETAC Rules, Arts. 29, 30.
1360) 2012 CIETAC Rules, Arts. 4(3), 7(1), 34(2).
1361) 2012 CIETAC Rules, Art. 6(3).
1362) 2012 CIETAC Rules, Art. 49.
1363) 2012 CIETAC Rules, Art. 50(2).
1364) In 2012, CIETAC Shanghai announced that it was seceding from CIETAC Beijing and later
published its own arbitration rules and list of arbitrators. See China International
Economic and Trade Arbitration Commission Statement of 1 May 2012, available at
www.cietac.org. The announcement provoked controversy and litigation, which is
ongoing.
1365) See CRCICA, Annual Report 2011-2012 11 (2012).
1366) See 2011 CRCICA Rules, available at www.crcica.org.
1367) See WIPO Arbitration and Mediation Center, Guide to WIPO Arbitration, available at
www.wipo.int; WIPO Rules, available at www.wipo.int; Zuberbhler, World Intellectual
Property Organization (WIPO), in P. Gola, C. Gtz Staehelin & K. Graf (eds.), Institutional
Arbitration 293 (2009). See alsoT. Cook & A. Garcia, International Intellectual Property
Arbitration (2010).
1368) WIPO Rules, Arts. 48, 52.
1369) WIPO Arbitration and Mediation Center, WIPO Caseload Summary: Statistics.
1370) SeeE. Min & M. Lilleengen, Collection of WIPO Domain Name Panel Decisions (2003).
1371) Reilly, An Introduction to the Court of Arbitration for Sport (CAS) & The Role of National
Courts in International Sports Disputes, 2012 J. Disp. Res. 63, 64.
1372) Olympic Charter, Art. 61.
1373) IAAF Constitution, Art. 15; IAAF Competition Rules 2012-2013, Rule 42.
1374) FIFA Statutes, Arts. 66-68.
1375) UEFA Statutes, Arts. 59, 61-62.
1377) 2013 CAS Rules, available at www.tas-cas.org.
1378) 2013 CAS Rules, Rules 38-46.
1379) 2013 CAS Rules, Rules 47-59.
1380) See Arbitration Rules for the Olympic Games, available at www.tas-cas.org.
1381) Arbitration Rules for the Olympic Games, Art. 18.
142
1382) 2013 CAS Rules, Rule 33.
1383) CAS, Statistics (2012).
1387) R. Schtze, D. Tscherning & W. Wais, Handbuch des Schiedsverfahrens 775 (1990).
1388) K.-P. Berger, International Economic Arbitration 58 (1993).
1389) M. Krimpenfort, Vorlufige und sichernde Manahmen im schiedsrichterlichen Verfahren 1
(2001).
1390) DIS, Statistics (2012), available at www.dis-arb.de.
1391) J. Davis & Y. Takaishi, Dispute Resolution in Japan 156 et seq. (1996); Roughton, A Brief
Review of the Japanese Arbitration Law, 1 Asian Intl Arb. J. 127 (2005).
1392) See 2014 JCAA Rules, available at www.jcaa.or.jp.
1393) Pryles, Section 1: Introduction, The Asia-Pacific Arbitration Review 2013 Preface (2013).
1394) Goodrich, Japanese Arbitration - Much Work Done; Much Still to Do, 27 JCAA Newsletter 1
(2012).
1395) See ACICA website at www.acica.org.au.
1396) The ACICA has a comprehensive website detailing the services it provides at
www.acica.org.au.
1397) Pryles, Section 1: Introduction, The Asia-Pacific Arbitration Review 2013 Preface (2013).
1398) See KLRCA website at www.rcakl.org.my.
1399) See KLRCA, 2011 Annual Report 6 (2011).
1400) See ICA Rules of Arbitration, available at www.icaindia.co.in.
1401) See11.05[G]; 22.04[A][2] (especially 22.04[A][2][a][ii]); Kantor, International Project
Finance and Arbitration with Public Sector Entities: When Is Arbitrability A Fiction?, 24
Fordham Intl L.J. 1122 (2001).
1402) See ICA, 2011-2012 Annual Report 12 (2012); ICA, 2010-2011 Annual Report 9 (2011).
1403) See JAMS International website at www.jamsinternational.com. JAMS International has
representation in Amsterdam, Milan, New York, Rome and Toronto.
1404) The JAMS recommended clause for international disputes provides:
Any dispute, controversy or claim arising out of or relating to this contract, including the
formation, interpretation, breach or termination thereof, including whether the claims
asserted are arbitrable, will be referred to and finally determined by arbitration in
accordance with the JAMS International Arbitration Rules. The tribunal will consist of
[three arbitrators] [a sole arbitrator]. The place of arbitration will be [location]. The
language to be used in the arbitral proceedings will be [language]. Judgment upon the
award rendered by the arbitrator(s) may be entered by any court having jurisdiction
thereof.
1405) A distinctive feature of JAMS is its Mediator-in-Reserve Policy for International
Arbitrations. See JAMS International, Rules & Procedures, available at
www.jamsinternational.com.
1406) See1.04[D][1].
1407) See generally Park, The Procedural Soft Law of International Arbitration: Non-
Governmental Instruments, in L. Mistelis & J. Lew (eds.), Pervasive Problems in
International Arbitration 142 (2006); Paulsson, Ethics and Codes of Conduct for A Multi-
Disciplinary Institute, 70 Arb. 193 (2004); Trakman, Legal Traditions and International
Commercial Arbitration, 17 Am. Rev. Intl Arb. 1 (2006); C. von Kann, J. Gaitis & J. Lehrman
(eds.), The College of Commercial Arbitrators Guide to Best Practices in Commercial
Arbitration (2005).
1408) See1.06.
1409) For a criticism of the IBAs guidelines for evidence-taking, party representation and
arbitrator independence, see Schneider, The Essential Guidelines for the Preparation of
Guidelines, Directives, Notes, Protocols and Other Methods Intended to Help International
Arbitration Practitioners to Avoid the Need for Independent Thinking and to Promote the
Transformation of Errors into Best Practices, in L. Lvy & Y. Derains (eds.), Liber
Amicorum Serge Lazareff 563 (2011). See also Carter, The International Commercial
Arbitration Explosion: More Rules, More Laws, More Books, So What?, 15 Mich. J. Intl L. 785
(1993-1994). See also Carter, The International Commercial Arbitration Explosion: More
Rules, More Laws, More Books, So What?, 15 Mich. J. Intl L. 785 (1993-1994).
1410) For commentary, see15.07[E]; 20.04[C]; P. Ashford, The IBA Rules on the Taking of
Evidence in International Arbitration (2013); C. Baker et al., The Taking of Evidence in
International Commercial Arbitration (2010); T. Giovannini & A. Mourre, Written Evidence
and Discovery in International Arbitration: New Issues and Tendencies (2009); T.
Zuberbhler, IBA Rules of Evidence: Commentary (2012).
1411) IBA Supplemental Rules Governing the Presentation and Reception of Evidence;
Shenton, International Bar Association Supplementary Rules Governing the Presentation
and Reception of Evidence in International Commercial Arbitration, X Y.B. Comm. Arb. 145
(1985).
1412) See15.07[E].
1413) IBA Supplemental Rules Governing the Presentation and Reception of Evidence, Art. 1.
143
1414) See15.07[E]. See also Lew, Achieving the Potential of Effective Arbitration, 65 Arb. 283, 288
(1999); Veeder, Evidential Rules in International Commercial Arbitration: From the Tower of
London to the New 1999 IBA Rules, 65 Arb. 291, 296 (1999).
1415) IBA Rules on the Taking of Evidence, Preamble, 2; Bhler & Dorgan, Witness Testimony
Pursuant to the 1999 IBA Rules of Evidence in International Commercial Arbitration Novel
or Tested Standards?, 17 J. Intl Arb. 3, 5 (2000).
1416) See15.07[E].
1417) The word commercial was removed from the title in order to recognize that the rules
could be used in non-commercial settings such as investment treaty disputes. P.
Ashford, The IBA Rules on the Taking of Evidence in International Arbitration (2013); IBA,
Commentary on the IBA Rules on the Taking of Evidence in International Arbitration 2
(2010); T. Zuberbhler et al., IBA Rules of Evidence: Commentary on the IBA Rules on the
Taking of Evidence in International Arbitration 1 (2012).
The 2010 IBA Rules are discussed in detail below. See15.07[E]; 16.02[E][3][a][ii].
1418) 2010 IBA Rules on the Taking of Evidence, Art. 2(1).

1419) 2010 IBA Rules on the Taking of Evidence, Art. 3(3)(a)(ii).
1423) 2010 IBA Rules on the Taking of Evidence, Preamble, 3.
1425) Queen Mary, University of London, 2012 International Arbitration Survey: Current and
Preferred Practices in the Arbitral Process 2 (2012) (IBA Rules used as guidelines in 53% of
cases and as binding rules in 7% of cases).
1426) For commentary, see the authorities cited at 12.05[J][2], pp. 1834-36; 12.05[J][5][a], pp.
1839-40; 13.02[F], p. 1972.
1427) The original ABA/AAA Code of Ethics is excerpted in X Y.B. Comm. Arb. 131 (1985); Feerick,
The 1977 Code of Ethics for Arbitrators: An Outside Perspective, 18 Ga. St. U.L. Rev. 907
(2002).
1428) Consistent with historic practice in the United States, the Code prescribed
presumptively different ethical standards for party-appointed and neutral arbitrators.
See12.05[J][1], p. 1834; 12.05[J][2], pp. 1834-35; 12.05[B][3], pp. 1801-02.
1429) AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes, Note on Neutrality
(effective 1 March 2004); Byrne, A New Code of Ethics for Commercial Arbitrators: The
Neutrality of Party-Appointed Arbitrators on A Tripartite Panel, 30 Ford. Urb. L.J. 1815
(2003). The ABA/AAA Code of Ethics is discussed below. See12.05[B][3]; 12.05[C][2];
12.05[J][2]. The ABA publishes an annotated online version of the ABA/AAA Code of
Ethics for Commercial Arbitrators.
Seewww.americanbar.org/content/dam/aba/migrated/dispute/commercial_disputes.a
uthcheckdam.pdf.
1430) IBA Rules of Ethics, available at www.ibanet.org.
1431) Unlike the original ABA/AAA Code, the IBA Rules of Ethics applied the same standards of
impartiality and independence to party-appointed, sole and presiding arbitrators.
See12.05[J][1], p. 1834; 12.05[J][5][a], p. 1841.
1432) See IBA Guidelines on Conflicts of Interest, General Standard 3. The Guidelines are
discussed below. See12.05[J][5][b].
1433) See12.05[J][5][b].
1434) See12.05[L][3]; IBA Guidelines on Conflicts of Interest, General Standard 3. The
Guidelines categorize such circumstances into those matters that give rise to justifiable
doubts concerning independence (a so-called red list), matters that require disclosure
(a so-called orange list) and matters that do not ordinarily give rise to doubts
regarding independence and that do not require disclosure (a so-called green list). IBA
Guidelines on Conflicts of Interest, General Standard 4, Part II. See also12.05[J][5][b].
1435) See Veeder, Is There Any Need for A Code of Ethics for International Commercial
Arbitrators?, in J. Rosell (ed.), Les arbitres internationaux 187, 187-88 (2005).
1436) IBA Guidelines on Party Representation, Preamble.
1437) IBA Guidelines on Party Representation, Preamble.
1438) IBA Guidelines on Party Representation, Guidelines 1-27. See21.03[A][1][b], pp. 2854-56.
1439) Report of the UNCITRAL on the Work of Its Twenty-Ninth Session, U.N. Doc. A/51/17 (1996);
UNCITRAL, Notes on Organizing Arbitral Proceedings (2012). The UNCITRAL Notes are also
discussed in greater detail below. See15.08[N], pp. 2235-37.
1440) Chartered Institute of Arbitration, Practice Guideline 5: Guidelines for Arbitrators
regarding Documents-Only Arbitrations, available at www.ciarb.org.
1441) See1.01[B] (especially 1.01[B][1]-[2]); 2.02[C][1][b][i]; 5.04[D]; Rent-A-Ctr W., Inc. v.
Jackson, 130 S.Ct. 2772, 2776 (U.S. S.Ct. 2010) (fundamental principle that arbitration is a
matter of contract); United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S.
574, 582 (U.S. S.Ct. 1960) (arbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed to so submit).
1442) There is a small, but important, category of cases in which international arbitrations
may result without a consensual agreement, by virtue of provisions in international
investment protection or other conventions or legislation. See1.04[A][6], pp. 125-26.
1443) See1.01[A][4].
1444) See1.01[A][2]; 3.03[A].
144
1445) There is a substantial body of commentary on drafting arbitration agreements.
SeeBernardini, The Arbitration Clause of An International Contract, 9(2) J. Intl Arb. 45
(1992); Bishop, A Practical Guide for Drafting International Arbitration Clauses (2004);
Bond, How to Draft An Arbitration Clause (Revisited), 1(2) ICC Ct. Bull. 14 (1990); G. Born,
International Arbitration and Forum Selection Agreements: Drafting and Enforcing (4th ed.
2013); Debattista, Drafting Enforceable Arbitration Clauses, 21 Arb. Intl 233 (2005); P.
Friedland, Arbitration Clauses for International Contracts (2d ed. 2007); IBA Guidelines on
Drafting the International Commercial Arbitration Clause (2010); ICDR, Guide to Drafting
International Dispute Resolution Clauses (2011); J. Paulsson, N. Rawding & L. Reed, The
Freshfields Guide to Arbitration and ADR: Clauses in International Contracts (3d ed. 2011);
Townsend, Drafting Arbitration Clauses, 58 Disp. Res. J. 1 (2003). See also IBA Guidelines on
Drafting the International Commercial Arbitration Clause (2010); ICDR, Guide to Drafting
International Dispute Resolution Clauses (2011).
1446) These include provisions regarding provisional measures, waivers of appeals, immunity
issues, costs, currency and interest, and fast-track or other procedures. SeeG. Born,
(4th ed. 2013); P. Friedland, Arbitration Clauses for International Contracts (2d ed. 2007); J.
Paulsson, N. Rawding & L. Reed, The Freshfields Guide to Arbitration and ADR: Clauses in
International Contracts (3d ed. 2011).
1447) The definition of an arbitration agreement is discussed below. See2.02.
1448) See1.04[E][9]. Nonetheless, as discussed below, it is not essential that an arbitration
agreement use the term arbitration. Although this is usually the case, and is strongly
recommended, an agreement to arbitrate can be deduced from other language.
See2.02[C], p. 245.
1449) See2.02[C][2][b]-[c].
1450) See2.02[C][1][b][iv].
1451) See5.04[D][6].
38-39 (4th ed. 2013).
1453) The interpretation of arbitration agreements, with particular focus on their scope, is
discussed below. See9.02.
1454) See9.02[E][8].
39-44 (4th ed. 2013).
1456) The interpretation of these formulae is discussed below. See9.02[E], pp. 1345-47.
1457) See9.02[E] (especially 9.02[E][1]); G. Born, International Arbitration and Forum Selection
Agreements: Drafting and Enforcing 39-43 (4th ed. 2013).
1458) See1.02[B] (especially 1.02[B][2]); 9.02[E][8].
1459) For examples of exclusions for particular types of issues, seeG. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing 4344 (4th ed. 2013).
1460) See9.02[E][9].
1461) See1.04[C][1].
1462) See9.03[A]; G. Born, International Arbitration and Forum Selection Agreements: Drafting
and Enforcing 44-62 (4th ed. 2013).
1463) These model clauses are reproduced in G. Born, International Arbitration and Forum
Selection Agreements: Drafting and Enforcing Appendix C (4th ed. 2013).
1464) See1.04[C][2]; G. Born, International Arbitration and Forum Selection Agreements:
Drafting and Enforcing 63-65, 66-67 (4th ed. 2013).
1465) See11.03[A].
1466) See11.03[A].
1467) See11.03[A]; 11.04.
1468) See11.03[D][1]; 14.02[A].
1469) See11.03[D]; 14.02[A].
78-87 (4th ed. 2013).
1471) See12.01[A].
1472) See12.02[I].
1473) See12.02[H].
1474) As discussed below, the two most frequently-used numbers of arbitrators in
international commercial arbitration are one and three. See12.02[C], p. 1669. There is
no perfect number of arbitrators, although most significant disputes are better heard
by three (rather than one) arbitrators.
78, 81 (4th ed. 2013).
1476) See12.02[C].
1477) See12.03[D]; G. Born, International Arbitration and Forum Selection Agreements: Drafting
1478) See12.03[D].
1479) See12.03[D][3]-[5]; 2012 ICC Rules, Arts. 8, 11-13; ICDR Rules, Art. 6; 2010 UNCITRAL Rules,
Art. 6. An institution will also appoint an arbitrator on behalf of a party which fails to
exercise its right under the parties arbitration agreement to do so. 2012 ICC Rules, Arts.
12(3), (4); ICDR Rules, Art. 6(3); LCIA Rules, Art. 5(4).
145
1480) As discussed below, if the parties wish for the co-arbitrators to attempt to agree on the
identity of a presiding arbitrator, it may be necessary to include provisions to that effect
in the parties arbitration if ad hoc arbitration or some institutional rules are adopted.
See12.03[C][3], pp. 1698-1700; G. Born, International Arbitration and Forum Selection
Agreements: Drafting and Enforcing 81 (4th ed. 2013).
1481) See12.04[D].
1482) 2012 ICC Rules, Art. 13(5); LCIA Rules, Art. 6(1). Compare ICDR Rules, Art. 6(4).
83-85 (4th ed. 2013). Such provisions are often sui generis, providing each arbitrator
shall be a Certified Public Accountant or the arbitrators shall be practicing lawyers.
83-85 (4th ed. 2013). Nonetheless, it is often difficult to determine in advance what sorts
of expertise will be genuinely relevant to a future dispute. Moreover, imposing advance
requirements reduces the pool of available arbitrators sometimes unacceptably, such
as a legally-qualified national of Bermuda with a civil engineering degree and fluency
in Arabic. It can also indirectly influence the background and training of a potential
chairman (and the co-arbitrators), which may have consequences for the approach to
the merits of the dispute in the arbitral proceedings. See12.04[D][3].
87 (4th ed. 2013). See15.08[L].
1486) 2010 UNCITRAL Rules, Art. 19; 2012 ICC Rules, Art. 20; ICDR Rules, Art. 14.
1487) See15.08[L].
1488) See14.02[A][9].
1489) See1.04[F]; 4.01; 9.01.
1490) For a discussion of the drafting of such choice-of-law clauses, seeG. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing 159-70 (4th ed. 2013).
1491) See1.04[F][2]; 3.03[B]; 4.02[A][1].
1492) See1.04[F][2]; 3.03[B].
1493) See11.05.
1494) See11.05[B].
1495) See11.05[B][2]; G. Born, International Arbitration and Forum Selection Agreements:
Drafting and Enforcing 161 (4th ed. 2013).
91-93 (4th ed. 2013).
93-95 (4th ed. 2013).
95-98 (4th ed. 2013). SeeChapter 16.
1499) Berger, Law and Practice of Escalation Clauses, 22 Arb. Intl 1 (2006); G. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing 104-05, 112 (4th ed.
2013).
101-04 (4th ed. 2013).
32-33, 129 (4th ed. 2013).
119-21 (4th ed. 2013); 20.03[B].
1503) These are catalogued in G. Born, International Arbitration and Forum Selection
Agreements: Drafting and Enforcing 37-38 (4th ed. 2013).
1504) In transactions involving particular jurisdictions with idiosyncratic legislative or judicial
rules regarding the validity or enforceability of international arbitration agreements
(e.g., China, Brazil), more specialized text may be appropriate.
1505) See1.02 (especially 1.02[B][1]).
1506) See4.01; 11.05.
1507) For a more detailed discussion, seeChapter 4; 11.05. Additional subcategories arise, for
example, with regard to aspects of the law governing the arbitration agreement (e.g., the
law governing issues of formal validity, substantive validity, capacity, interpretation) or
the arbitral proceedings (e.g., the law governing the arbitrators contract, the
availability of provisional relief, privileges).
1508) Parties sometimes agree to permit arbitrators to resolve their dispute without reference
to law, that is, ex aequo et bono or as amiable compositeur (see2.02[C][3], pp. 284-85;
19.07, pp. 2770-76) or by reference to a non-national legal system (see19.06[C], pp.
2754-59; 19.06[C][5], pp. 2765-67).
1509) See19.02; 19.03.
1510) See19.04 (especially 19.04[A][4]); 19.04[E]; 2010 UNCITRAL Rules, Art. 35(1).
1511) The role of national and international public policy in arbitration gives rise to
particularly complex choice-of-law issues. See19.04[B].
1512) See19.01.
1513) See19.03[D][1].
1514) See19.03[A][3]; 19.03[D][3][e]; 19.04[A][6][d]. There is also authority supporting an
arbitral tribunals direct application of substantive rules of law, purportedly without
prior recourse to any set of conflict of laws rules. See19.03[D][3][b], pp. 2464-66.
146
1515) The U.N. Convention on the International Sales of Goods, the UNIDROIT Principles of
International Commercial Contracts and the Rome Convention are leading examples of
this trend. See4.04[A][1][e]; 19.03[A][4].
1516) See3.02; 4.02.
1517) SeeChapter 4 for a discussion of the choice of law applicable to the arbitration
agreement.
1518) See4.04[A][1][b][i].
1519) See11.03[A]. Parties sometimes agree that hearings may be conducted somewhere other
than the arbitral seat, for convenience, but this in principle does not change the arbitral
seat or the procedural law governing the arbitration. See11.03[A]; 11.04.
1520) For example, foreign lawyers may not be permitted to appear in arbitrations conducted
on national territory, arbitrators may be prohibited from ordering discovery,
administering oaths, or granting provisional relief, or detailed procedural requirements
or time schedules may be mandatorily applicable. See11.03[D][2], pp. 1582-83.
1521) The United States, England, Switzerland, France and Singapore generally fall within this
latter category.
1522) See11.05 for a discussion of the choice of law applicable to the arbitral proceedings.
1523) See11.05.
1524) See19.03.
1525) See19.03[D][3][b]-[e].
1526) See4.04[A][1][b][i]; 4.04[A][2][j][v].
1527) For commentary, see Carlston, Theory of the Arbitration Process, 17 Law & Contemp. Probs.
631 (1952); E. Gaillard, Legal Theory of International Arbitration (2010); C. Jarrosson, La
notion darbitrage (1987); A. Kassis, Problmes de base de larbitrage en droit compar et
en droit international I : Arbitrage juridictionnel et arbitrage contractuel (1987); F.-E. Klein,
Considrations sur larbitrage en droit international priv 113 (1955); J. Rubellin-Devichi,
Larbitrage: nature juridique, droit interne et droit international priv (1965); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration 32-74 (1989); Sauser-Hall,
LArbitrage en droit international priv, 44-I Annuaire de lInstitut de droit international
469 (1952), quoted in A. Samuel, Jurisdictional Problems in International Commercial
Arbitration 60 (1989); P. Schlosser, Das Recht der internationalen privaten
Schiedsgerichtsbarkeit 40 (1989).
1528) Cf. T. Carbonneau, Cases and Materials on the Law and Practice of Arbitration 624 (2d ed.
2000) (tempest in a teapot), quoted in J. Lew, L. Mistelis & S. Krll, Comparative
1529) Balladore-Pallieri, Larbitrage priv dans les rapports internationaux, 51 Recueil des
Cours 287, 316 (1935); J. Flix, Trait du droit international priv 461 (2d ed. 1847); P.
Merlin, 9 Recueil alphabtique des questions de droit 139, 143-49 (1829).
1530) P. Merlin, 9 Recueil alphabtique des questions de droit 139, 145 (1829), quoted in A.
Samuel, Jurisdictional Problems in International Commercial Arbitration 34 (1989). See
also Judgment of 27 July 1937, 1938 Dalloz 25 (French Cour de cassation civ.) (arbitral
awards, which have, as their basis, an arbitration agreement, form one entity with it and
share its contractual character); G. Petrochilos, Procedural Law in International
Arbitration 25 (2004) (An arbitrator is not dispensing justice by delegation of any state;
An arbitrator carries the jurisdictional authority of no particular state.).
1531) P. Fouchard, Larbitrage commercial international 19 (1965); F.-E. Klein, Considerations
sur larbitrage en droit international priv 115 (1955).
1532) Balladore-Pallieri, Larbitrage priv dans les rapports internationaux, 51 Recueil des
Cours 187 (1935); J. Niboyet, VI Trait de droit international priv franais Le conflit des
autorits, le conflit des jurisdictions 135 (1947) (The arbitrator metes out justice which is
always a prerogative of the local sovereign. Each state determines pursuant to what
requirements arbitral justice may be rendered in its territory and exclude the
jurisdiction of its courts. Arbitrators therefore mete out justice by delegation from the
sovereign of the territory); Laine, De lexcution en France des sentences arbitrales
trangres, 26 J.D.I. (Clunet) 641, 653-54 (1899). See A. Pillet, 2 Trait pratique de droit
international priv 537 (1924) (The arbitration agreement is necessary to give the
arbitrators their authority, but once that authority has been conferred on them,
provided they keep within the limits of the task given to them, their freedom is absolute
and the arbitration agreement has no influence on their award which is based on quite
different matters).
1533) H. Motulsky, Ecrits: Etudes et notes sur larbitrage 46 (1974). See also ibid. (Once a claim is
submitted to a person invested by the law with the power to accept or reject the claim
by the application of a rule of law, one is in the presence of a jurisdiction.); S. Contini,
LArbitrage en procedure civile vaudoise 13 (1951).
1534) See authorities cited at 2.02[C][2][a], p. 257; 2.02[C][4], p. 285; 13.02[G], pp. 1974-75.
1535) Mann, State Contracts and International Arbitration, 42 Brit. Y.B. Intl L. 1, 10-11 (1967).
1536) Mann, Lex Facit Arbitrum, reprinted in 2 Arb. Intl 241 (1986).
147
1537) Carlston, Theory of the Arbitration Process, 17 Law & Contemp. Probs. 631, 635 (1952); Rau,
The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449, 451 (2005)
(dual nature of arbitration: An arbitration is from one perspective an exercise of
private ordering it is formed by private agreement, and the particular shape it takes is
a result of conscious private choice. And at the same time, from another angle, it is an
exercise in adjudication resulting in an award that the force of the state makes
obligatory on the litigants in much the same way as the judgment of a public tribunal.);
Sauser-Hall, LArbitrage de droit international priv, 44-I Annuaire de lInstitut de droit
international 469, 471 (1952), quoted in A. Samuel, Jurisdictional Problems in International
Commercial Arbitration 60 (1989); P. Schlosser, Das Recht der internationalen privaten
Schiedsgerichtsbarkeit 40 (1989); Surville, Jurisprudence franaise en matire de droit
international, 29 Revue critique de lgislation et de jurisprudence 129, 148 (1900).
1538) Sauser-Hall, LArbitrage de droit international priv, 44-I Annuaire de lInstitut de droit
international 469 (1952), quoted in A. Samuel, Jurisdictional Problems in International
Commercial Arbitration 60 (1989). See also Carlston, Theory of the Arbitration Process, 17
Law & Contemp. Probs. 631, 635 (1952) (The statement that arbitration is a creature of
the parties, that its occurrence, form and scope are dependent on the will and consent
of the parties, is but part of the truth.).
1539) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 62-63 (1989).
1540) J. Rubellin-Devichi, Larbitrage: nature juridique, droit interne et droit international priv
365 (1965) (In order to allow arbitration to enjoy the expansion it deserves, while all
along keeping it within its appropriate limits, one must accept, I believe, that its nature
is neither contractual, nor jurisdictional, nor hybrid, but autonomous.).
1541) See3.02[B][2]; 3.02[B][3][b]; Judgment of 7 October 1933, Tobler v. Justizkommission des
Kantons Schwyz, DFT 59 I 177, 179 (Swiss Federal Tribunal); Judgment of 28 May 1915, Jrg v.
Jrg, DFT 41 II 534 (Swiss Federal Tribunal).
1542) See4.04[A][2][a]; The Eros, 241 F. 186, 191 (E.D.N.Y. 1916) (Hand, J.) (a general arbitration
clausegoes to the remedy, not to the rights, of the parties, andits effect is to be
determined by the law of the forum), affd, 251 F. 45 (2d Cir. 1916); Meacham v.
Jamestown, Franklin and Clearfield R.R., 211 N.Y. 346, 352 (N.Y. 1914) (Cardozo, J.,
concurring).
1543) See1.01[B][2] & [5]; 2.02[C][1][b][i]; 11.03.
1544) See4.04[B][2][b][ii]; 11.03[B]; 15.02.
1545) See1.02 (especially 1.02[A][2]); 1.04[E]; 2.01[A][1].
1546) See5.06[A][3].
1547) That includes in defining the arbitrators powers and jurisdiction and specifying the
arbitral procedures and applicable substantive law. See13.01.
1548) See23.02[B][1]; 24.02[B][3]; 25.04[A] & [C]; 26.05[C][1].
1549) See2.02[C][1] (especially 2.02[C][1][b]); 2.02[D].
1550) The judicial character of arbitration and the arbitrators mandate are discussed below.
See2.02[C][2][a]; 13.02[G].
1551) See11.01; 15.06.
1552) See27.01[B][2].
1553) See1.01[B][1].
1554) See1.01[C][1]-[2]; 1.04[A][1][a].
1555) See1.01[C][1]-[2]; 1.04[A][1][a].
1556) See1.04[B][1][a].
1557) See1.02.
1558) See1.02 (especially 1.02[B]).
1559) See20.01 for a discussion of the confidentiality or privacy of international arbitrations.
1560) See20.03. Both awards and submissions during the arbitration are much less likely to
be confidential (and instead to be publicly available) in investment arbitration.
See20.11[A].
1561) There is extensive commentary on international arbitration. For bibliographies, see, e.g.,
L. Brown, Selected Bibliography of International Commercial Arbitration: 1970-1978 (1978);
Hiramoto, A Path to Resources on International Commercial Arbitration 1980-1986, 4 Intl
Tax & Bus. Law. 297 (1986); Jolivet, Access to Information and Awards, 22 Arb. Intl 265
(2006); V. Pechota, Commercial Arbitration: An International Bibliography (1992); F. Sander
& F. Snyder, Alternative Methods of Dispute Settlement A Selected Bibliography (1979 &
1982 Rev.); Strong, Research in International Commercial Arbitration: Special Skills,
Special Sources, 20 Am. Rev. Intl Arb. 119 (2009).
1562) J. Paulsson (ed.), I-IV International Handbook on Commercial Arbitration (1984 & Update
2013).
1563) J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards 2001-2007
(2009); J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards1996-
2000 (2003); J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC Arbitral Awards
1990-1995 (1997); S. Jarvin, Y. Derains & J.-J Arnaldez (eds.), Collection of ICC Arbitral
Awards 1986-1990 (1994); S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards
1974-1985 (1990).
1564) D. Hascher (ed.), Collection of Procedural Decisions in ICC Arbitration 1993-1996 (1997).
Arbitration (1999).
1566) SeeN. Blackaby et al. (eds.), Redfern and Hunter on International Arbitration (5th ed.
2009); A. Redfern & M. Hunter (eds.), Law and Practice of International Commercial
Arbitration (4th ed. 2000).
148
1567) W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration (3d ed.
2000).
1568) Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration (2d ed. 2005).
1569) J. Fry, S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration (2012).
1570) See M. Bhler & T. Webster, Handbook of ICC Arbitration: Commentary, Precedents,
Materials (2d ed. 2008); E. Schfer, H. Verbist & C. Imhoos, ICC Arbitration in Practice
(2005).
1571) A. van den Berg, The New York Arbitration Convention of 1958 (1981).
1572) H. Kronke et al., Recognition and Enforcement of Foreign Arbitral Awards: A Global
Commentary on the New York Convention (2010); R. Wolff (ed)., New York Convention on
the Recognition and Enforcement of Foreign Arbitral Awards: Commentary (2012).
Commercial Arbitration: Legislative History and Commentary (1989).
1574) L. Edmonson (ed.), Domke on Commercial Arbitration (3d ed. 2010 & Update 2013).
1575) H. Smit & V. Pechota (eds.), 1 Smits Guides to International Arbitration: National
Arbitration Laws (2001).
1576) For commentary, see C. Brower & J. Brueschke, The Iran-United States Claims Tribunal
(1998); R. Khan, The Iran-United States Claims Tribunal: Controversies, Cases, and
Contribution (1990); R. Lillich, The Iran-United States Claims Tribunal 1981-83 (1984); J.
Westberg, International Transactions and Claims Involving Government Parties: Case Law
of the Iran-United States Claims Tribunal (1991).
1577) Bilateral claims commissions to resolve claims of nationals of one state against another
state have frequently been established, particularly following armed conflicts, between
European and American states. See1.01[A][5], pp. 20-23.
1578) See Algiers Accords, 1 Iran-US C.T.R. 3 et seq. (1981-1982).
1579) The decisions are important precedents on issues of both substantive international law
and arbitral procedure. They are available from the Iran-United States Claims Tribunal
Reports and Mealeys Iranian Assets Litigation Reporter.
1580) Case Law on UNCITRAL Texts: UNCITRAL Model Law on International Commercial
Arbitration, available at www.uncitral.org/uncitral/en/case_law.html.
1581) Seewww.newyorkconvention1958.org.
1582) See, e.g., www.newyorkconvention.org.
1583) The forum can be contacted at www.dundee.ac.uk/cepmlp; alternatively CEPMLP,
Carnegie Building, University of Dundee, Dundee, DD1 4HN, Scotland, Tel: +44 (0) 13 82 38
43 00.
1584) The Swedish Arbitration Portal can be found at
www.arbitration.sccinstitute.com/Swedish-Arbitration-Portal.
149
Part I: International Arbitration Agreements
Author ***
Gary B. Born (IAI profile) The foundation of almost every international arbitration and of the international arbitral
process itself is an international arbitration agreement. In the words of one commentator,
[o]bviously, no arbitration is possible without its very basis, the arbitration agreement. (1)
Absent a valid agreement to arbitrate, there are no legal grounds for requiring a party to
Publication arbitrate a dispute or for enforcing an arbitral award against a party. (2) Arbitration is a
International Commercial matter of contract and a party cannot be required to submit to arbitration any dispute which
Arbitration (Second Edition) he has not agreed to so submit. (3)
International arbitration agreements can take in countless forms. Typically, an arbitration
agreement is a provision in an underlying commercial contract, requiring arbitration of any
Bibliographic reference future disputes relating to the contract. (4) Such a provision can be either short and
standardized or longer and tailor-made for a particular transaction. As models of brevity, if not
'Part I: International prudence, European commentators sometimes cite clauses that provided English law
Arbitration Agreements', in arbitration, if any, London according ICC Rules, (5) and Arbitration Hamburg, Germany. (6) A
Gary B. Born , International U.S. counterpart read: Arbitration; if required in New York City. (7)
Commercial Arbitration
(Second Edition), 2nd edition At the opposite end of the spectrum are multi-paragraph arbitration provisions, recommended
( Kluwer Law International; by assiduous practitioners for inclusion in commercial contracts, or specially-drafted for a
Kluwer Law International 2014) particular transaction. It is also possible for entire agreements to be devoted exclusively to
pp. 225 - 228 the arbitration of disputes under a series of related contracts, typically involving multiple
parties. (8) Falling between these extremes are model clauses promulgated by leading
international arbitral institutions, including the International Chamber of Commerce (ICC),
London Court of International Arbitration (LCIA), the International Center for Dispute
Resolution (ICDR) and the Singapore International Arbitration Centre (SIAC), which provide
generic, but typically concise and well-tested, formulae. (9)
Whatever form they take, international arbitration agreements are vitally important to the
international arbitral process. Properly drafted, they can provide the basis for a relatively
smooth and efficient arbitration; less carefully drafted, they can give rise to a host of legal and
practical issues; badly drafted, arbitration agreements can be pathological, (10) either
incapable of enforcement or precursors to uncertain and costly litigation in national courts.
The Chapters which follow in this Part explore the principal legal and practical issues arising
from international arbitration agreements.
Chapter 2 discusses the legal framework for international arbitration agreements. It begins by
summarizing the basic rule of presumptive validity of international arbitration agreements
under contemporary international arbitration conventions (particularly the New York
Convention, the European Convention and the Inter-American Convention) and national
arbitration legislation (particularly the UNCITRAL Model Law, the U.S. Federal Arbitration Act
(FAA) and the main European, Asian and other arbitration regimes). The Chapter then
addresses the question of what constitutes an arbitration agreement, which will be
subject to the pro-arbitration legal regimes established by contemporary international
arbitration conventions and legislation. Finally, the Chapter addresses a number of
jurisdictional requirements of these conventions and legislation, including requirements that
the arbitration agreement concern a commercial relationship, an international matter and
a defined legal relationship, which are also conditions for the applicability of such
conventions and national legislation.
Chapter 3 discusses the universally-recognized principle that international arbitration
agreements are presumptively separable or autonomous from the underlying contract(s) with
which they are associated. The Chapter details the historic development, contemporary
acceptance and legal bases of the separability presumption, as well as the presumptions
various consequences for the recognition and enforcement of international arbitration
agreements.
Chapter 4 addresses the choice of the law governing international arbitration agreements. It
details the consequences of the separability presumption for choice-of-law analysis, and
describes the principal conflict of laws rules applied to international arbitration agreements,
including the law of the arbitral seat, the law governing the underlying contract and the law of
the state with which the arbitration agreement has its closest connection. The Chapter also
discusses the potential applicability of uniform international substantive rules of formation
and validity to such agreements, either as generally-applicable law or as international limits
on national law rules. In addition, the Chapter examines the applicability of a validation
principle, under both the New York Convention and leading national arbitration statutes, to
the substantive and formal validity of international arbitration agreements.
Chapter 5 discusses the substantive rules governing the formation, validity and legality of
international arbitration agreements. The Chapter addresses the formal validity of
international arbitration agreements, including requirements under the New York Convention
and national arbitration legislation for a writing. The Chapter also describes the rules of
substantive law applicable to issues of formation, including standards of proof and questions
150
of consent, and to issues of capacity and substantive validity, including fraud,
unconscionability, duress, mistake, waiver, termination and illegality. It concludes by
addressing questions of compliance with pre-arbitral procedural requirements.
Chapter 6 considers the so-called nonarbitrability doctrine (or, alternatively titled, the
doctrine of objective arbitrability) and related issues of public policy. The Chapter examines
the differences between the nonarbitrability doctrine and the validity, legality and
enforceability of international arbitration agreements. It also examines the bases on which
arbitration agreements have been declared nonarbitrable under national law, as well as
limitations imposed by the New York Convention and other international instruments on the
doctrine.
Chapter 7 addresses the authority of an international arbitral tribunal to consider and decide
disputes over the arbitrators own jurisdiction, including disputes over the existence, validity
and interpretation of the parties arbitration agreement. This question is the subject-matter of
the so-called competence-competence doctrine (also referred to as Kompetenz-Kompetenz
or jurisdiction to decide jurisdiction); the Chapter examines the bases for this doctrine in
leading international arbitration conventions and other sources of authority. The Chapter also
examines the allocation of competence to resolve jurisdictional challenges to
international arbitration agreements between arbitral tribunals and national courts, focusing
on the divergent approaches to this issue in different national legal systems.
Chapter 8 discusses the legal effects of international arbitration agreements and the
mechanisms for enforcing those agreements. It considers both the positive duties (e.g., the
obligation to participate in good faith and cooperatively in arbitral proceedings) and negative
duties (e.g., the obligation to refrain from litigating arbitrable disputes) imposed by
arbitration agreements. The Chapter also sets out the various means by which these
obligations are given effect, including stays of litigation, orders compelling arbitration,
damages actions, antisuit injunctions and non-recognition of judgments procured in breach of
a valid arbitration agreement.
Chapter 9 addresses the interpretation of international arbitration agreements. It considers
the rules applicable to interpreting the scope of arbitration agreements which have been
developed in different national legal systems. The Chapter also addresses the exclusivity of
international arbitration agreements, as well as issues concerning the mandatory or optional
nature of arbitration agreements.
Chapter 10 discusses issues relating to the identities of the parties to international arbitration
agreements. In particular, it examines the various legal theories that have been used to give
binding effect to arbitration agreements vis--vis non-signatories, including agency, alter ego
status, the group of companies theory, estoppel, guarantor relations, third party beneficiary
rights and miscellaneous other grounds. The Chapter also examines the choice of law governing
the foregoing issues and the allocation of competence to decide such disputes between
national courts and arbitral tribunals.
References
1) A. van den Berg, The New York Arbitration Convention of 1958 144-45 (1981). SeeAward in ICC
Case No. 7929, XXV Y.B. Comm. Arb. 312, 316 (2000) (Arbitration is a consensual process and
depends upon the existence of a valid agreement to arbitrate.); Watkins-Johnson Co. v.
Islamic Repub. of Iran, Award in IUSCT Case No. 429-370-1 of 28 July 1989, 22 Iran-US C.T.R.
218, 296 (1989) (Noori, J., dissenting) (There can be no doubt that arbitrations, whether
international or between subjects of private law, derive their mandate and competence
from the consent and agreement of the parties to the arbitral agreement; therefore, it is
the parties consent that determines the scope, limits and area of certitude of an
arbitrators authority and jurisdiction.); Reily v. Russell, 34 Mo. 524, 528 (Mo. 1864)
(arbitration rests on the will and consent of the parties litigant); Elektrim SA v. Vivendi
Universal SA [2007] EWHC 571 (QB) (English High Ct.) (Arbitrationsare the result of
agreements betweenparties to resolve legal disputes through a private impartial
tribunal. Such arbitrations are, by definition, consensual.); Judgment of 3 October 2000,
DFT 4P.60/2000, 3(a) (Swiss Federal Tribunal) (Among other prerequisites, an arbitral
tribunal has jurisdiction only in case the dispute is within the scope of the arbitration
agreement.); Judgment of 3 July 1975, 1978 NJW 109, 110 (German Bundesgerichtshof) (While
the citizen is subject to the jurisdiction of the state courts by virtue of public law set by the
state, the arbitral proceedingsare always the consequence of a private legal act, be it
as here an agreement, be it a final will or the articles of an association.).
2) See5.04[A], 8.02, 25.04[A], 26.05[C][1]. There are a few instances where arbitration of
international disputes may be compelled even absent a traditional arbitration agreement,
typically by virtue of international investor protection treaties. Even in these instances,
there is an agreement to arbitrate between the parties. See C. Schreuer et al., The ICSID
Convention: A Commentary Art. 25, 392-468 (2d ed. 2009).
3) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002) (quoting Steelworkers
of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (U.S. S.Ct. 1960)); EEOC v. Waffle
House, Inc., 534 U.S. 279, 294 (U.S. S.Ct. 2002) (Arbitration under the [FAA] is a matter of
consent, not coercion.).
151
4) It is also possible for parties to an existing dispute, not otherwise subject to arbitration, to
agree to submit that dispute to arbitration. The agreement doing so is typically a stand-
alone arbitration agreement, often called a submission agreement or compromis. See,
for example, the model submission agreement, excerpted in G. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing Appendix B (4th ed.
2013); P. Friedland, Arbitration Clauses for International Contracts 112-114 (2d ed. 2007).
5) Arab African Energy Corp. Ltd v. Olieprodukten Nederland BV [1983] 2 Lloyds Rep. 419 (QB)
(English High Ct.).
6) Judgment of 24 January 2003, 2003 SchiedsVZ 284, 287 (Hanseatisches Oberlandesgericht
Hamburg).
7) Oriental Commercial & Shipping Co. v. Rosseel, NV, 609 F.Supp. 75 (S.D.N.Y. 1985). See also
Schulze & Burch Biscuit Co. v. Tree Top, Inc., 831 F.2d 709, 715-16 (7th Cir. 1987) (All disputes
under this transaction shall be arbitrated in the usual manner.); Bauer Intl Corp. v.
Etablissements Soules & Cie., 303 N.Y.S.2d 884 (N.Y. 1969) (Arbitration in New York).
8) This is most likely to occur in complex transactions (such as infrastructure projects,
construction projects, or major intellectual property matters), with multiple parties and
multiple agreements, where a single, unified dispute resolution scheme is desired.
See18.02; ICC, Multi-Party Arbitration: Views From International Arbitration Practitioners
(1991); Nicklish, Multi-Party Arbitration and Dispute Resolution in Major Industrial Projects,
11(4) J. Intl Arb. 57 (1994); Wetter, A Multi-Party Arbitration Scheme for International Joint
Ventures, 3 Arb. Intl 2 (1987).
Appendix C (4th ed. 2013); P. Friedland, Arbitration Clauses for International Contracts 1-3
(2d ed. 2007); J. Paulsson, N. Rawding & L. Reed, The Freshfields Guide to Arbitration and ADR:
Clauses in International Contracts 131-143 (3d ed. 2011).
10) See5.04[D]; Eisemann, La Clause darbitrage pathologique, in Commercial Arbitration Essays
in Memorium Eugenio Minoli 129 (1974); Schmitthoff, Defective Arbitration Clauses, 1975 J. Bus.
Law 9.
152
Part II: International Arbitral Procedures
Author ***
Gary B. Born (IAI profile) At the heart of the international arbitral process are the arbitration proceedings and
procedures.
(1)
Publication (2) It is the procedural conduct of international arbitrations, as much as other factors, that
International Commercial leads parties to agree to arbitrate their disputes. In particular, parties agree to arbitrate in
Arbitration (Second Edition) order to obtain fair and neutral procedures which are expert, efficient and capable of being
tailored to the needs of their particular dispute, without being bound by the formalities and
technicalities of procedural rules applicable in national courts. (3)
Bibliographic reference In many cases, the aspirations of the parties are realized, with the arbitrators adopting
prompt, fair and predictable procedures, without adhering to any particular domestic
'Part II: International Arbitral approach to national court litigation. These procedures combine the best of different national
Procedures', in Gary B. Born , procedural traditions, together with international innovations, tailored to the parties needs
International Commercial and dispute. Nonetheless, in some cases obstructionist parties, inexperienced arbitrators or
Arbitration (Second Edition), other factors can produce chaotic, arbitrary, slow, or inappropriately parochial arbitral
2nd edition ( Kluwer Law proceedings. The Chapters in this Part examine the procedural conduct of international
International; Kluwer Law commercial arbitrations and the mechanisms which exist to ensure that arbitral procedures
International 2014) pp. 1525 - are efficient, expert and fair, rather than arbitrary, slow, or parochial.
1527
Chapter 11 examines the legal framework applicable to the arbitral proceeding and, in
particular, the importance of the arbitral seat and the procedural law of the arbitration
(also referred to as the curial law or lex arbitri). The Chapter first outlines the general
procedural autonomy accorded parties to international arbitration agreements under both
contemporary international arbitration conventions and national arbitration legislation.
Second, the Chapter summarizes the jurisdictional requirements that must be satisfied for
application of the New York Convention (and other international arbitration conventions), as
well as national arbitration legislation, to an international arbitration. Third, the Chapter
describes the concept of the arbitral seat and the issues governed by the law of the arbitral
seat, as well as the role of the New York Convention in limiting the effects of the arbitral seats
law. Fourth, the Chapter addresses the procedural law of the arbitration and the various issues
that are governed by that law. Finally, the Chapter discusses the conflict of law issues that
arise in identifying the procedural law of an arbitration, and the choice-of-law rules that have
been developed to address these issues.
Chapter 12 addresses the selection of arbitrators and constitution of the arbitral tribunal in
international commercial arbitrations. First, the Chapter discusses the number of arbitrators in
international arbitral proceedings, from both a practical and legal perspective. Second, the
Chapter addresses the parties autonomy to select arbitrators (or to agree upon a means of
selecting arbitrators). Third, the Chapter considers various limitations on the choice of
arbitrators, including nationality, capacity and contractual limitations or requirements. Fourth,
the Chapter considers the related topic of the impartiality and independence of arbitrators,
including under contemporary international conventions and national law, as well as under the
IBA Guidelines on Conflicts of Interest in International Arbitration. Fifth, the Chapter considers
the procedures which are commonly utilized for selecting the members of the arbitral tribunal
in contemporary international commercial arbitrations, including the role of arbitral
institutions and national courts in the selection process. Finally, the Chapter examines the
procedures for challenging, removing and replacing arbitrators, under both national
arbitration statutes and institutional rules.
Chapter 13 discusses the rights and duties of arbitrators in international commercial
arbitrations. The Chapter first addresses the duties that are owed by international arbitrators,
including discussion of the arbitrators contract and other legal sources of such obligations.
The Chapter next discusses the substantive content of such duties, including the arbitrators
duties of impartiality, diligence and confidentiality. The Chapter also addresses the rights and
protections of international arbitrators, including particularly the immunities of arbitrators.
Chapter 14 examines the selection of the arbitral seat in international commercial
arbitrations. It first discusses the importance of the arbitral seat, from both practical and legal
perspectives. The Chapter then addresses the parties autonomy to select the arbitral seat,
both directly and through the offices of an arbitration institution or arbitral tribunal. Finally,
the Chapter discusses the (limited) role of national courts in the selection of the arbitral seat.
Chapter 15 discusses the procedural conduct of contemporary international commercial
arbitrations. It first outlines the basic objectives and characteristics of the international
arbitral process, as compared with and distinguished from judicial procedures in national
courts. The Chapter then examines the parties autonomy to agree upon the procedural rules
governing the arbitration and the arbitral tribunals discretion to order particular procedures
(absent contrary agreement); it also considers the general principle, recognized under most
developed national laws, of judicial non-interference in arbitral proceedings. Finally, the
Chapter discusses how, as a practical matter, international arbitral tribunals treat subjects
153
such as written submissions, disclosure or discovery, hearings, evidence presentation
(including fact and expert witnesses), post-hearing submissions and the other major
procedural steps in an arbitration.
Chapter 16 examines the role of disclosure (or, as sometimes termed, discovery) in
international commercial arbitrations. The Chapter first addresses the disclosure or discovery
powers of arbitral tribunals under contemporary national arbitration statutes and
institutional arbitration rules. It also discusses the manner in which these powers are
exercised in practice, including under the IBA Rules on the Taking of Evidence in International
Commercial Arbitration. Finally, the Chapter considers the role of national courts in ordering
discovery or disclosure in connection with or in aid of international arbitrations.
Chapter 17 deals with the subject of provisional (or interim) relief in international commercial
arbitrations. The Chapter first explores the extent to which international arbitral tribunals are
authorized to grant provisional relief and the circumstances in which they will do so. Next, the
Chapter considers when national courts may grant provisional relief in aid of international
arbitrations (whether concurrently with arbitral tribunals or independently). Finally, the
Chapter considers the enforceability in national courts of provisional measures ordered by
international arbitral tribunals.
Chapter 18 addresses the procedural treatment of multi-party disputes in international
commercial arbitrations, including the subjects of consolidation, intervention and joinder. The
Chapter first considers when two or more different arbitrations may be consolidated into a
single arbitral proceeding. It then considers the joinder of parties, and the intervention of
parties, into an international arbitration. In each case, the Chapter addresses the treatment of
consolidation, joinder and intervention by both arbitral tribunals and national courts.
Chapter 19 examines the choice of the substantive law applicable to the merits of the parties
underlying dispute in international commercial arbitrations. It first considers the choice of
substantive law by international arbitrators in the absence of express agreement by the
parties as to the governing law. Second, the Chapter considers the choice of substantive law
where the parties have agreed upon an applicable law, including the validity and
interpretation of choice-of-law agreements and the role of mandatory laws and public
policies. In both situations, the Chapter examines what conflict of law principles apply both
to selecting the applicable substantive law and to determining the enforceability and meaning
of a governing law clause.
Chapter 20 deals with the confidentiality of international arbitrations and arbitral
proceedings. It examines the nature and scope of confidentiality obligations in international
commercial arbitration, including the divergent approaches that are taken on the subject in
different national jurisdictions and institutional arbitration rules.
Chapter 21 addresses the subject of representation of the parties in international arbitral
proceedings. The Chapter begins with a description of the provisions of international
arbitration conventions, national law and institutional arbitration rules guaranteeing parties
the right to representation of their choice in international commercial arbitrations
(particularly legal representation), as well as deviations from this guarantee. The Chapter also
discusses the rules of professional conduct governing legal representatives in international
arbitrations, including issues of conflict of interest, privilege, witness preparation, candor to
the tribunal and the like. In addition, the Chapter considers issues of forum selection for
disputes regarding legal representation in international commercial arbitrations.
References
1) For commentary on international arbitral proceedings and procedures generally, see N.
Blackaby et al. (eds.), Redfern and Hunter on International Arbitration Chapters 4-7 (5th ed.
2009); M. Bhler & T. Webster, Handbook of ICC Arbitration Chapter 4 (2d ed. 2008); W. Craig,
W. Park & J. Paulsson, International Chamber of Commerce Arbitration Parts III, IV (3d ed.
2000); Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration (2d ed. 2005); E.
Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial
Arbitration Part IV (1999); A. Redfern & M. Hunter (eds.), The Law and Practice of
International Arbitration Chapters 4-7 (4th ed. 2004).
2) G. Wetter, IV The International Arbitral Process: Public and Private 288 (1979) (arbitration as a
subject is procedure) (emphasis in original).
3) See15.01.
154
Part III: International Arbitral Awards
Author ***
Gary B. Born (IAI profile) The final steps in the arbitral process involve the arbitral award. Once the arbitral proceedings
are concluded, the tribunal will deliberate and make a final award, granting (or withholding)
relief on the parties claims and resolving their dispute. Arbitral awards are not advisory
recommendations; rather, awards are final and binding legal instruments, having immediate
Publication legal effects and creating immediate rights and obligations for the parties. (1)
International Commercial With the making of the final award, the arbitral tribunals original mandate concludes. The
Arbitration (Second Edition) tribunal becomes functus officio and its remaining responsibilities, and powers, are highly
circumscribed. Further actions with respect to the award, including any post-award
proceedings, are almost always matters for the parties and national courts, and not for the
Bibliographic reference arbitral tribunal. (2)
'Part III: International Arbitral In practice, the vast majority of awards in international commercial arbitrations are
Awards', in Gary B. Born , voluntarily complied with, without the need for post-award enforcement proceedings.
International Commercial Nevertheless, one (or both) parties sometimes reject the arbitral tribunals decisions, and
Arbitration (Second Edition), refuse to pay amounts awarded or otherwise to comply with the tribunals award. In these
2nd edition ( Kluwer Law circumstances, post-award proceedings will ensue, either challenging or seeking to enforce the
International; Kluwer Law award.
International 2014) pp. 2895 - International arbitration conventions and national arbitration legislation provides a robust,
2896 pro-enforcement legal framework governing post-award proceedings. This legal framework
permits parties to seek limited revisions of arbitral awards, in proceedings before the arbitral
tribunal to correct or interpret its award, but only in very narrow circumstances. (3) This
framework also permits the award-debtor to challenge the arbitral award, in proceedings
before the courts of the arbitral seat to annul or set aside the award, but again only in
defined and limited circumstances. (4)
At the same time, the legal framework for international arbitral awards permits the award-
creditor to commence proceedings in the courts of the arbitral seat to confirm or recognize
the award (i.e., to obtain exequatur). The successful confirmation of the award will usually
provide the basis for the entry of a judgment of the local national court based upon the
underlying award. (5) After confirmation of an award in the arbitral seat, the resulting judgment
can be confirmed or recognized, and then enforced in local courts in the arbitral seat,
with enforcement typically occurring in the same manner as a domestic court judgment. (6) In
addition, an award can also be taken by the award-creditor to a state outside the arbitral seat,
to be recognized (and then enforced) in the courts of that state, without first being
confirmed or recognized in the arbitral seat. Recognition of a foreign arbitral award occurs
in the form of a local national court judgment, which gives the award full legal force within the
local legal system (in the same manner that a foreign judgment is recognized). (7)
Once the award is recognized in a foreign state, the resulting judgment can then ordinarily be
given effect in the local courts of that state in the same manner as a judgment of that states
courts. This includes coercively enforcing the award/judgment against the assets of the
award/judgment-debtor, in accordance with local legislation and rules governing the
execution and enforcement of judgment. (8) It also includes giving the award/judgment
preclusive effect in the courts of the foreign state, presumptively in accordance with local
legislation regarding the preclusive effects of foreign awards and/or judgments. (9)
The Chapters in this Part address the status, effects and treatment of arbitral awards in
Chapter 22 discusses the legal framework applicable to international arbitral awards. It
introduces the legal effects of international awards and the post-award proceedings that are
available to correct, interpret, supplement, confirm, recognize, annul and recognize such
awards. The Chapter also examines the jurisdictional requirements which are applicable to
determine when the pro-enforcement legal framework of the New York Convention and
national arbitration legislation will be applicable to international arbitral awards. The Chapter
also discusses the limitations that this international legal framework places on the forums in
which actions to recognize and to annul international arbitral awards may be brought.
Chapter 23 discusses the form and content of international arbitral awards. Among other
things, the Chapter addresses the requirements under contemporary national arbitration
statutes concerning the form and publication of arbitral awards, including requirements that
awards be in writing, signed, dated, and identifying the place of arbitration. It also discusses
the requirement, in many legal systems, that international arbitral awards be reasoned. The
Chapter also examines the treatment of relief, costs and interest in international arbitral
awards.
Chapter 24 discusses the correction, interpretation and supplementation of international
arbitral awards. It first discusses the functus officio doctrine, defining the arbitrators limited
mandate, which terminates after making a final award. The Chapter also discusses the
circumstances in which corrections, interpretations and supplementations of awards can be
obtained under contemporary national arbitration laws and institutional arbitration rules.
155
Chapter 25 examines the setting aside or annulment of international arbitral awards. It
addresses the judicial forums in which annulment or setting aside can be sought, and the
permissible standards for granting such relief, under both international arbitration
conventions and leading national arbitration legislation. The Chapter also discusses the
various substantive grounds which are available for setting aside an award, as well as the legal
consequences of setting aside an award. Finally, the Chapter examines the interpretation and
enforcement of agreements providing for heightened (or reduced) standards of judicial review
of arbitral awards in annulment proceedings.
Chapter 26 discusses the recognition and enforcement of international arbitral awards. It
examines the proof of arbitral awards and the presumptive obligation of national courts, under
most international arbitration conventions and national arbitration statutes, to recognize and
enforce foreign arbitral awards. It also discusses the exceptions to this presumptive obligation
to recognize foreign awards, including on grounds of lack of jurisdiction, procedural defects,
bias of the arbitrators, public policy and nonarbitrability. The Chapter concludes by examining
the suspension of proceedings seeking recognition of foreign awards when an application to
annul the award is pending in the arbitral seat.
Finally, Chapter 27 discusses the role of preclusion in international arbitration, including
principles of res judicata and collateral (or issue) estoppel. It considers the preclusive effects
of arbitral awards, in both national court proceedings and arbitral proceedings, as well as the
preclusive effects of national court judgments in arbitral proceedings. The Chapter also
discusses application of lis pendens principles in international arbitration. Finally, the Chapter
examines the role of precedent and stare decisis in international arbitration.
References
1) See22.01[A]
2) See22.01[B].
3) See, e.g., UNCITRAL Model Law, Art. 34.
4) See, e.g., UNCITRAL Model Law, Art. 33; 25.04.
5) See, e.g., UNCITRAL Model Law, Arts. 35, 36; 22.01[B][3].
6) See, e.g., New York Convention, Arts. III-V; UNCITRAL Model Law, Arts. 35, 36; 22.01[B][3].
7) See22.01[B][5]; 26.03. As discussed below, one of the fundamental reforms of the New York
Convention was to remove the concept of double exequatur, which had required an award
to be confirmed in the arbitral seat before it could be recognized or enforced abroad.
Under the New York Convention, an award is capable of recognition outside the arbitral seat
even if it has not been recognized or confirmed in the arbitral seat. See26.03[B][4].
8) See22.01[B][6].
9) See22.01[B][7]; 27.01.
156
2017 Kluwer Law International BV (All rights reserved).
Kluwer Arbitration Law is made available for personal use only. All content is protected by copyright and other intellectual
property laws. No part of this service or the information contained herein may be reproduced or transmitted in any form or by any
means, or used for advertising or promotional purposes, general distribution, creating new collective works, or for resale, without
prior written permission of the publisher.
If you would like to know more about this service, visit www.kluwerarbitration.com or contact our Sales staff at
sales@kluwerlaw.com or call +31 (0)172 64 1562.
KluwerArbitration
157
KluwerArbitration
Chapter 2: Legal Framework for International Arbitration
Author Agreements
Gary B. Born (IAI profile) [Chapter 2] (1)
The validity, effects and interpretation of international arbitration agreements depend in
substantial part on a legal framework of international arbitration conventions and national
Publication arbitration legislation. These instruments eliminate historic obstacles to the enforceability of
International Commercial arbitration agreements and provide a decisively pro-arbitration enforcement regime for such
Arbitration (Second Edition) agreements. This Chapter examines that legal framework, focusing particularly on the
jurisdictional requirements which must be satisfied in order for this regime to apply.
First, the Chapter introduces the presumptive validity of international commercial arbitration
Bibliographic reference agreements under contemporary international arbitration conventions (particularly the New
'Chapter 2: Legal Framework York Convention) and national legislation. Second, the Chapter addresses the definition of an
for International Arbitration arbitration agreement, again under both international and national instruments. Third, the
Agreements', in Gary B. Born , Chapter examines a series of additional jurisdictional requirements applicable to arbitration
International Commercial agreements under leading international arbitration conventions and national legislation,
Arbitration (Second Edition), including requirements that such agreements concern a commercial, international and
2nd edition ( Kluwer Law defined legal relationship, and that they apply to the resolution of disputes. Finally, the
International; Kluwer Law Chapter addresses the role of the arbitral seats location in determining the legal framework
International 2014) pp. 229 - applicable to an international arbitration agreement.
348
2.01 INTRODUCTION
It is sometimes said that arbitration is a creature that owes its existence to the will of the
parties alone. (2) That is correct, but only partially correct. Although the parties consent is
essential for an agreement to arbitrate, the ultimate efficacy of an international arbitration
agreement depends in large part upon its validity and enforceability in national courts,
applying rules of national and international law. (3) Only if national courts are prepared to
recognize and enforce an agreement to arbitrate, under applicable national and international
law, can the parties will be effective.
After a dispute arises, parties sometimes reconsider their prior commitments to a neutral,
speedy and competent dispute resolution process (4) often in favor of more parochial, less
efficient, or less experienced decision-makers. That reappraisal frequently results in claims
that the parties arbitration agreement never existed, is invalid on various formal or
P 229 substantive grounds, has been repudiated, waived, or otherwise terminated, or does not
apply to the parties dispute. The speedy and effective resolution of such jurisdictional
objections is of fundamental importance to the international arbitral process.
[A] Presumptive Validity of International Arbitration Agreements

As discussed above, both developed states and the international business community have
taken a series of related steps over the past century to ensure the enforceability of
international arbitration agreements and the efficacy of the international arbitral process. (5)
In particular, they have developed increasingly pro-arbitration national and international
legal regimes that recognize the presumptive validity and enforceability of international
arbitration agreements and that provide effective enforcement mechanisms for such
agreements. These legal regimes have contributed significantly over past decades to
enhancing the efficacy of the international arbitral process. (6)
[1] Presumptive Validity of International Arbitration Agreements Under International
Arbitration Conventions
Essential to the enforcement of international arbitration agreements are contemporary
international arbitration conventions. Particularly significant in this regard are the New York
Convention, the European Convention and the Inter-American Convention.
[a] New York Convention
As discussed above, one of the basic purposes of the New York Convention, as ultimately
drafted, was to facilitate the enforcement of international arbitration agreements. (7) This was
one of the Conventions fundamental objectives notwithstanding the fact that the Convention
was originally conceived and drafted to deal only with the recognition and enforcement of
foreign arbitral awards; that focus continues to be reflected in the Conventions title, which is
limited to the recognition of arbitral awards. (8) In fact, as discussed elsewhere, it was only in
the final phases of negotiations that the Convention was extended to provide for the
recognition of arbitration agreements, as well as awards. (9)
P 230
The Conventions objectives with regard to arbitration agreements are evidenced in the
instruments negotiating history. That history documents the drafters desire to make
1
arbitration agreements more readily enforceable, including more readily enforceable than
under the 1923 Geneva Protocol, in accordance with uniform international standards. (10)
National court decisions uniformly cite these objectives of the Convention. (11) As one national
court concluded:
[The goal of the Convention was] to encourage the recognition and enforcement of commercial
arbitration agreements in international contracts and to unify the standards by which
agreements to arbitrate are observed and arbitral awards are enforced in the signatory
countries. (12)
Consistent with these objectives, Article II(1) of the Convention establishes a basic rule of
formal and substantive validity for international arbitration agreements:
Each Contracting State shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences which have arisen or which may arise
between them in respect of a defined legal relationship, whether contractual or not,
concerning a subject matter capable of settlement by arbitration. (13)
P 231
That rule is elaborated, and provided an enforcement mechanism, in Article II(3) of the
Convention, which requires the courts of Contracting States to refer parties to international
arbitration agreements to arbitration unless they find that the said [arbitration] agreement is
null and void, inoperative or incapable of being performed. (14) Unless one of those
enumerated grounds for non-recognition is present, Articles II(1) and II(3) mandatorily require
recognition of the arbitration agreement and reference of the parties to arbitration. (15)
As discussed in greater detail elsewhere, Article IIs rules of formal and substantive validity
and specific enforcement mechanism play a central role in the contemporary international
arbitral process. (16) They mandate a pro-arbitration legal regime in all Contracting States
which ensures the validity and enforceability of the material terms of those international
arbitration agreements which are subject to the Convention notwithstanding national
arbitration legislation that sometimes perpetuates or revives intermittent historical mistrust
of the arbitral process. (17) As an early commentator on the Convention observed, this
extraordinary provision establishes a mandatory international obligation, with multiple
facets, on Contracting States. (18)
As also discussed in greater detail below, Article II of the Convention provides the basis for
several fundamentally important rules of international law. First, Article II allocates the
burden of proof of the invalidity of an international arbitration agreement to the party
resisting enforcement of the agreement. (19) Second, Article II requires that courts of
Contracting States apply generally-applicable rules of contract law to the formation and
validity of international arbitration agreements, without singling out such agreements for
discriminatory requirements or burdens. (20) Third, Article II(1) permits Contracting States to
treat particular categories of disputes as nonarbitrable (or not capable of settlement by
arbitration), but requires that they do so exceptionally, and only where necessary to achieve
specific and articulated policies. (21) Taken together, these uniform international rules have
provided a highly effective and robust pro-enforcement legal framework for international
arbitration agreements.
P 232
Finally, and importantly, Article VII makes it clear that nothing in the Convention limits a
partys rights to enforce an arbitration agreement under national laws, where these are more
favorable than the terms of the Convention itself. (22) This savings provision is of fundamental
importance to the purpose and structure of the Convention, confirming its objective of
facilitating, not restricting, the recognition and enforcement of international arbitration
agreements.
[b] European Convention and Inter-American Convention
Other significant international arbitration conventions are similar to the New York Convention
in providing substantive and formal standards affirming the presumptive validity of
international arbitration agreements. The European Convention impliedly recognizes the
presumptive validity of international arbitration agreements, (23) while setting forth a
specified, limited number of bases for invalidity. (24) More explicitly, and paralleling Article II
of the New York Convention, Article 1 of the Inter-American Convention provides that [a]n
agreement in which the parties undertake to submit to arbitral decision any differences that
may arise or have arisen between them with respect to a commercial transaction is valid. (25)
Again, these provisions affirm the presumptive validity of those international arbitration
agreements which are subject to the respective Conventions and override historic (and
occasional contemporary) mistrust of the arbitral process. In so doing, these treaty provisions
play central roles in the contemporary international arbitral process.
[2] Presumptive Validity of International Arbitration Agreements Under National Arbitration
Legislation
National arbitration legislation in virtually all Contracting States has followed, and
implemented, the New York Convention and other international conventions in formulating
pro-arbitration rules of presumptive substantive and formal validity for international
arbitration agreements. As discussed in greater detail below, Article 8(1) of the UNCITRAL
Model Law is representative; it provides that a court, when it is seized of a matter which is the
subject of an arbitration agreement shall, if a party so requestsrefer the parties to
P 233
2
arbitration, subject only to exceptions if the court finds that the agreement is null and
void, inoperative or incapable of being performed. (26)
As also discussed below, the Model Laws enumeration of the available bases for invalidity of
arbitration agreements is based on general contract law principles and has been narrowly
construed by courts in most developed jurisdictions. (27) Like Article II(3) of the New York
Convention, Article 8 places the burden of proving the invalidity of an arbitration agreement
on the party resisting enforcement, while confining the grounds for such invalidity to generally-
applicable contract law defenses. (28)
Courts in Model Law jurisdictions consistently emphasize the importance of both Article 8 and
the obligation to enforce international arbitration agreements in accordance with their terms.
(29) In the words of one Model Law court: [P]redictability in the enforcement of dispute
resolution provisions is an indispensable precondition to any international business
transaction and facilitates and encourages the pursuit of freer trade on an international scale.
(30)
Legislation in other developed jurisdictions, which have not adopted the Model Law, similarly
guarantees the presumptive validity of international arbitration agreements, generally subject
only to a limited set of contract defenses. This is made explicit under 2 of the FAA in the
United States, which provides that arbitration agreements shall be valid, irrevocable, and
contract. (31) Legislation in other jurisdictions similarly provides for, or has been interpreted
as providing for, the presumptive validity of international arbitration agreements, subject only
to defined exceptions. (32)
P 234 Like leading international arbitration conventions, these statutory provisions generally
supersede historic common law or statutory rules or, in some cases, contemporary legal
regimes applicable to domestic arbitration agreements which treat agreements to arbitrate
as revocable or contrary to public policy, or which did not (or do not) provide for the effective
enforcement of such agreements. (33) Rather, leading contemporary arbitration legislation
parallels and implements the New York Convention in adopting a rule of presumptive validity
of international arbitration agreements and establishing a decisively pro-arbitration legal
framework for the recognition and enforcement of such agreements.
It is sometimes said that modern arbitration legislation renders arbitration agreements as
enforceable as other contracts, but not more so: The [Federal Arbitration] Act was designed
[to] place such agreements upon the same footing as other contracts, (34) and the
legislations purpose was to make arbitration agreements as enforceable as other contracts
but not more so. (35)
Where international arbitration agreements, as distinguished from domestic arbitration
agreements, are concerned, this observation is not entirely accurate. Instead, unlike most
other categories of contracts, international arbitration agreements are subject to a unique and
specialized international legal regime (particularly pursuant to the New York Convention and
specialized contemporary national arbitration legislation (36) ) which exceptionally
guarantees the validity and enforceability of such contractual provisions. Comparable
international legal regimes and rules do not exist for other categories of international
contracts, reflecting the particular importance that both states and private parties attach to
the effective enforcement of international arbitration agreements.
Moreover, most developed states have, again unlike their treatment of other types of
contracts, adopted specialized choice-of-law rules, (37) formal requirements, (38) standards of
proof, (39) interpretative principles (40) and other mechanisms (41) designed to ensure
P 235 effective enforcement of international arbitration agreements. National legislatures and courts
have done so deliberately, citing the importance of international arbitration as a means of
mitigating the peculiar jurisdictional, choice-of-law and other uncertainties of international
litigation. (42)
These actions are well-advised. Although there is superficial rhetorical appeal to the notion
that an arbitration agreement is no different from other contracts, this is inaccurate and
misleading, particularly in the international context. It is, of course, an oversimplification to
speak of the legal rules applicable to all contracts. Most legal systems have developed
specific rules of law applicable to particular categories of contracts, based on the individual
characteristics and requirements of those types of contracts. (43) In formulating and
interpreting the legal rules applicable to international arbitration agreements, it is essential
to take into account the characteristics of those agreements including in particular their
international character and the nature of an agreement to arbitrate.
As discussed above, an agreement to arbitrate is a sui generis type of contract, not involving a
typical commercial bargain but instead involving a commitment by the parties to a particular
procedure for resolving their future commercial disputes. (44) Moreover, again almost
uniquely, an agreement to arbitrate binds together parties when their commercial cooperation
has at least partially collapsed, requiring them to work together in an adjudicative process
which (often) one will win and the other lose. (45) Likewise, the transnational setting in which
international arbitration agreements apply also raises particular challenges and difficulties,
which legal rules in the field have been designed to overcome. (46)
It is hardly surprising, and equally necessary, that this sui generis type of agreement be
governed by a specialized legal regime, aimed at ensuring its validity and enforceability in
3
ways that do not exist for other categories of contracts. As outlined above, and discussed in the
remainder of this Part I, it is precisely such a specialized legal regime based on the New York
Convention and UNCITRAL Model Law that states have developed and progressively refined
over the past six decades.
[B] Jurisdictional Requirements for Contemporary International Arbitration

Conventions and Legislation
P 236 The pro-enforcement regimes of leading international arbitration conventions and
national arbitration legislation are not generally-applicable to all international agreements or
even all international dispute resolution agreements. Rather, the applicability of these
regimes depends upon satisfying a number of jurisdictional requirements. (47) These
requirements are virtually always relevant to the application of the New York Convention (and
other international conventions), and are also often relevant to the application of national
arbitration legislation, to a particular arbitration agreement.
The precise jurisdictional requirements that apply under a particular convention or national
arbitration statute vary, depending on the terms of the relevant instrument. In general,
however, most international conventions and national arbitration statutes impose most or all
of the following jurisdictional requirements: (a) the existence of an agreement to arbitrate or
arbitration agreement; (b) concerning a defined legal relationship; (c) arising from a
commercial relationship; (d) which is international or foreign; (e) dealing with the
resolution of a dispute or disputes; (f) whether contractual or not, (g) which have arisen or
which may arise. (48) At least arguably, the New York and European Conventions also contain
jurisdictional requirements that the arbitration agreement be in writing (although some
authorities treat this as a requirement for formal validity, rather than a jurisdictional
condition). (49)
As discussed below, each of these jurisdictional requirements arises in similar, and sometimes
identical, form under leading international arbitration conventions and many national
arbitration statutes. (50) Even where precise statutory formulations differ, however, the same
basic themes and policy considerations apply in defining the jurisdictional scope of national
arbitration legislation as apply in the context of international conventions.
P 237 Unless all of these various jurisdictional requirements are satisfied by a particular dispute
resolution agreement, then the pro-arbitration protections of international conventions and/or
national arbitration legislation will not apply to that agreement. In that event, the agreement
will instead be subject to either other statutory regimes (i.e., domestic arbitration or
conciliation legislation) or to preexisting common law rules developed historically for
arbitration (or other forms of dispute resolution). (51) Importantly, however, either of these
alternatives will ordinarily result in the applicability of materially less favorable mechanisms
for enforcing the dispute resolution agreement in national courts, (52) as well as differences
with regard to the possibility of judicial interference in the dispute resolution proceedings, (53)
the interpretation of the scope of dispute resolution provisions, (54) the availability of judicial
support for the proceedings (55) and the applicability of less effective mechanisms for
enforcement of the proceedings outcome. (56)
[1] Jurisdictional Requirements of New York Convention
P 238 Of central importance to the arbitral process are the jurisdictional requirements of the
New York Convention. Regrettably, the Convention does not comprehensively define what
arbitration agreements are subject to its terms, instead leaving the subject largely to judicial
and academic resolution. As one commentator on the Convention has observed, [t]he
Conventiononly speaks definitively of its field of application in respect of the arbitral award,
viz., a foreign award, which is an award made in another State. It does not define which
arbitration agreement shall come within its provision. (57)
In fact, as discussed below, the Conventions text does prescribe a number of jurisdictional
requirements with regard to arbitration agreements (e.g., requiring an agreement to arbitrate
concerning a defined legal relationship). (58) Interpreting these requirements is vitally
important to defining the scope of the Convention and its pro-arbitration regime.
Nonetheless, the drafting of the Conventions provisions concerning arbitration agreements
was hasty and failed to address key issues, (59) including by failing to provide a fully
comprehensive definition of those arbitration agreements that are subject to the Conventions
provisions. Instead, the Conventions text comprehensively addresses only what awards are
entitled to the treatys protections. (60)
Given the foregoing, the definition of those arbitration agreements governed by the New York
Convention must be ascertained by implication, either by reference to the Conventions
treatment of awards or otherwise. The resulting jurisdictional requirements of the Conventions
provisions regarding arbitration agreements, and the differing interpretations of these
requirements, are discussed below. In summary, these requirements are: (a) an agreement to
arbitrate; (b) concerning a defined legal relationship; (c) arising from a commercial
relationship; (d) which is international or foreign; (e) dealing with the resolution of a
dispute or disputes. (61) Only if all of these jurisdictional requirements are satisfied, will
the Convention apply to an arbitration agreement. Moreover, as already noted, some
P 239 authorities also hold that the Conventions applicability depends on satisfaction of a
minimum writing requirement. (62)
4
[2] Jurisdictional Requirements of National Arbitration Legislation
The jurisdictional requirements of most national arbitration legislation are broadly similar to
those of the New York Convention. In particular, although statutory requirements differ from
state to state, most jurisdictions condition the applicability of local arbitration legislation on
the existence of (a) an agreement to arbitrate; (b) arising from a commercial relationship;
(c) which is international, (d) dealing with the resolution of a dispute or disputes. (63) In
addition, some states also require that the agreement (e) concern a defined legal
relationship; or (f) as to certain statutory provisions, concern an agreement to arbitrate on
local territory. (64) Again, unless each of the relevant statutory requirements is satisfied, then
the national arbitration legislation will not apply. Additionally, at least arguably, some
national legislation contains a jurisdictional requirement that the arbitration agreement be in
writing (although some authorities treat this as a requirement for formal validity). (65)
2.02 DEFINITION OF AGREEMENT TO ARBITRATE

The applicability of most international arbitration conventions and national arbitration
statutes raises the threshold definitional question of what constitutes an arbitration
agreement. In general, these legal regimes will apply only if the parties have putatively made
an agreement to arbitrate as opposed to an agreement to do something else. For example,
parties may agree to expert determination, conciliation, mediation, or other forms of
alternative dispute resolution, or to a forum selection clause providing for litigation. (66)
Ordinarily, none of these various forms of dispute resolution constitutes arbitration, within
the meaning or the coverage of the New York Convention (or other leading international
arbitration conventions) or national arbitration legislation.
As noted above, significant legal consequences follow under virtually all international
conventions and national arbitration laws from characterization of a contractual provision as
something other than an arbitration agreement. (67) In these instances, the pro-arbitration
regimes of the New York Convention and national arbitration legislation do not necessarily
apply to the agreement (or any resulting decision). (68)
P 240 Given the importance of these consequences, there is a surprising lack of guidance under
both international conventions and national legislation relevant to the question of what
constitutes an arbitration agreement. Such guidance as does exist is discussed below. As
described there, the better view is that the New York Convention, and most national
arbitration legislation, defines arbitration as a process by which parties consensually submit a
dispute to a non-governmental decision-maker, selected by or for the parties, to render a
binding decision resolving a dispute in accordance with neutral, adjudicatory procedures
affording the parties an opportunity to be heard.
[A] Definition of Agreement to Arbitrate in International Arbitration Conventions

There is a range of different definitions of the terms arbitration agreement or agreement to
arbitrate in leading international arbitration conventions. Nonetheless, these various
definitions are all broadly similar both in what they say (and what they do not say) and in the
extent of the guidance they do (or do not) provide.
Article II(1) of the New York Convention refers to an agreement to arbitrate as including an
agreement in writing under which the parties undertake to submit to arbitration all or any
differences which have arisen or may arise between them in respect of a defined legal
relationship, whether contractual or not. (69) Similarly, the Inter-American Convention refers
to [a]n agreement in which the parties undertake to submit to arbitral decision any differences
that may arise or have arisen between them with respect to a commercial transaction. (70) Even
less helpfully, the European Convention provides that an arbitration agreement shall mean
either an arbitral clause in a contract or an arbitration agreement. (71)
These definitions are minimally useful, in the sense that they provide some general guidance
in ascertaining what arbitration is, and what it is not. In particular, they make clear that an
arbitration agreement involves a contractual relationship between parties; that this
agreement deals with disputes or differences, either future or existing; that these disputes will
be submitted to and resolved by arbitration; and that the agreement may take the form of
either an arbitration clause (in a broader commercial contract) or a separate contract (dealing
P 241 only with arbitration). As discussed below, the confirmation of various of these points is
helpful, particularly against the backdrop of historical doctrines to the contrary. (72)
At the same time, the foregoing definitions provide little specific guidance in determining
precisely what constitutes an arbitration agreement, as distinguished from an agreement
concerning related forms of dispute resolution. In particular, no effort is made, or even begun,
to address the fundamental definitional question of what constitutes arbitration. As
discussed below, this has left national courts, arbitral tribunals and commentators with the
principal responsibility for defining what constitutes arbitration and an arbitration
agreement. (73)
Despite their lack of detailed definitional language, it is relatively clear that the New York
Convention (as well as the European and Inter-American Conventions) must be understood as
prescribing a uniform international definition of arbitration agreement. (74) Contracting
States are therefore not free to avoid the Conventions substantive provisions by adopting
narrow or idiosyncratic definitions of arbitration or an agreement to arbitrate (for example,
5
by providing that an agreement to arbitrate exists only if it is governed by local law, is
approved in advance by local authorities, or provides for institutional (rather than ad hoc)
arbitration). (75) The substantive content of this international definition coincides with that
under leading national arbitration legislation and is discussed below. (76)
Moreover, given the Conventions broad purposes, the term arbitration agreement should be
interpreted liberally, in order to give maximum scope to Article IIs pro-arbitration provisions.
This means, in cases of doubt, that courts and tribunals should treat agreements for alternative
dispute resolution which have the essential characteristics of a classic agreement to
arbitrate, or which serve the same objectives as such an agreement, as arbitration
agreements within the meaning of the Convention. Again, this coincides with approaches
under leading national arbitration statutes and is discussed below. (77)
[B] Definitions of Agreement to Arbitrate in National Arbitration Legislation

Most national arbitration statutes adopt definitions of the term arbitration agreement which
P 242 are broadly similar to those in international arbitration conventions. As with such
conventions, these formulae are ultimately of only marginal direct guidance. Article 7(1) of the
UNCITRAL Model Law is representative, providing:
Arbitration agreement is an agreement by the parties to submit to arbitration all or certain
disputes which have arisen or which may arise between them in respect of a defined legal
relationship whether contractual or not. An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate agreement. (78)
In the United States, the FAA refers to [a] written provision to settle by arbitration a
controversy thereafter arising out of [a] contract or transaction, oran agreement to submit to
arbitration an existing controversy. (79) Similarly, 6(1) of the English Arbitration Act, 1996,
refers to an agreement to submit to arbitration present or future disputes (whether they are
contractual or not), (80) while the revised French Code of Civil Procedure defines an
arbitration clause as an agreement by which the parties to one or more contracts undertake
to submit to arbitration disputes which may arise in relation to such contract[s]. (81)
Similarly, most other national laws also lack express statutory definitions of the term
arbitration agreement sometimes omitting even the partial ones contained in the
P 243 UNCITRAL Model Law, FAA and French Code of Civil Procedure. That is true, for example, in
Switzerland, (82) Belgium, (83) Japan (84) and elsewhere. (85)
The statutory definitions of arbitration agreement in most national arbitration legislation are
similar in effect to those in international conventions. These definitions provide guidance
regarding some characteristics of international arbitration agreements (e.g., that an
agreement is involved and that existing or future disputes will be resolved in some
manner outside national courts), without addressing the central question of what constitutes
arbitration. The resolution of this definitional issue has therefore been left to national court
decisions, arbitral awards and commentary.
[C] Definitions of Agreement to Arbitrate in National Judicial Decisions and

International Arbitral Awards
As discussed above, most definitions of the term arbitration agreement in international
conventions and national legislation merely incorporate the words arbitration or arbitrate.
(86) Despite its foundational importance, virtually no international or national instrument
attempts expressly to define these critical terms.
The absence of any statutory definition of the term arbitration causes no practical difficulty
in the vast majority of cases. Almost all putative arbitration agreements expressly use the term
arbitration (or arbitrate) and either provide for or permit a process which clearly
constitutes arbitration. (87) Accordingly, there are in practice relatively few instances in which
it is necessary to examine precisely what these categories of arbitrate or arbitration
include.
P 244
Nonetheless, as discussed below, occasions requiring a definition of arbitration do
sometimes arise when parties agree to something more or less like arbitration, without using
that term, or when parties use the phrase arbitration to refer to some contractually-
prescribed process that differs materially from normal arbitration, or when parties disagree
about what it means to arbitrate. For these cases, as well as for analytical clarity, it is
necessary to provide a definition of what constitutes arbitration and an arbitration
agreement.
Preliminarily, it is trite law in virtually all developed jurisdictions that the label adopted by
the parties themselves for a dispute resolution mechanism is not decisive in determining the
true character of that mechanism. That is true in common law jurisdictions (U.S., (88) English
(89) and otherwise (90) ), as well as civil law (91) jurisdictions.
Parties are free to call a forum selection clause or an expert determination mechanism an
agreement to arbitrate, but this (mis)label does not alter the nature of the mechanism or
P 245 turn it into an agreement to arbitrate. (92) It is still necessary to examine the substance of
the dispute resolution provision in order to determine, objectively, whether it constitutes an
agreement to arbitrate within the meaning of applicable international and national
instruments.
6
National courts have repeatedly affirmed the foregoing conclusions. One early common law
decision held that you cannot make a valuer an arbitrator by calling him so or vice versa, (93)
while a more recent decision held that [n]o particular words are needed to create a valid
arbitration agreement, but the contract must reflect the parties intent to submit their dispute
to arbitrators and to be bound by that decision. (94) Another court reasoned, under the FAA,
that no magic words such as arbitrateare required to obtain the benefits of the FAA.[I]f the
parties have agreed to submit a dispute for a decision by a third party, they have agreed to
arbitration. (95) Commentary is to the same effect. (96)
Nonetheless, as a practical matter, if the parties agreement provides for something labeled
arbitration, it is a rare case where this will be categorized as something other than an
arbitration agreement. (97) In general, only where the parties have specified a particular
P 246 procedure, that is incompatible with the fundamental character of arbitration, but
labeled the process arbitration, will that label be denied effect. In other cases, by saying
that they have agreed to arbitrate, the parties will be held to have accepted the procedural
characteristics that accompany the definition of arbitration, thereby giving rise to a genuine
agreement to arbitrate.
[1] What Is Arbitration?
There is general, albeit not complete, agreement among national courts, arbitral tribunals and
commentators on what the term arbitration means for purposes of both international
arbitration conventions and national arbitration legislation. With some incidental variations,
virtually all authorities would accept that arbitration is a process by which parties
consensually submit a dispute to a non-governmental decision-maker, selected by or for the
parties, to render a binding decision resolving a dispute in accordance with neutral,
adjudicatory procedures affording the parties an opportunity to be heard. (98) This definition
draws support, if not its precise wording, from a wide range of sources.
[a] Definitions of Arbitration
The following definitions of arbitration are representative of international commentary on the
subject:
two or more parties, faced with a dispute that they cannot resolve for themselves, agreeing
that one or more private individuals will resolve it for them by arbitration; and if this
arbitration runs its full courseit will not be resolved by a negotiated settlement or by
mediation or by some other form of compromise, but by a decision which is binding on the
parties. (99)
a mode of resolving disputes by one or more persons who derive their power from the
agreement of the parties and whose decision is binding upon them. (100)
a contractual method for the relatively private settlement of disputes. (101)
a contractual form of dispute resolution exercised by individuals, appointed directly or
indirectly by the parties, and vested with the power to adjudicate the dispute in place of state
courts by rendering a decision having effects analogous to those of a judgment. (102)
a device whereby the settlement of a question, which is of interest for two or more persons, is
entrusted to one or more other persons the arbitrator or arbitrators who derive their
P 247 powers from a private agreement, not from the authorities of a State, and who are to
proceed and decide the case on the basis of such an agreement. (103)
voluntary submission by parties to a special kind of private litigation which is accepted,
tolerated and sanctioned by public international law and the laws of most civilized
jurisdictions. (104)
the voluntary submission by the parties of a dispute for decision by recognised and regular
procedure other than litigation. (105)
Arbitration is where the parties, injuring and injured, submit all matters in dispute, concerning
any personal chattels or personal wrongs, to the judgment of two or more arbitrators who are to
decide the controversy.And thereby the question is as fully determined, and the right
transferred or settled, as it could have been by the agreement of the parties of the judgment of
the court of justice.And experience having shewn [sic] the great use of these peaceable and
domestic tribunalsthe legislature has now established the use of them, as well in
controversies where causes are depending, as in those where no action is brought, and which
still depend upon the rules of the common law. (106)
a process by which parties agree to the binding resolution of their disputes by adjudicators,
known as arbitrators, who are selected by the parties, either directly or indirectly via a
mechanism chosen by the parties. (107)
Arbitration is an adjudicatory dispute resolution method in which the parties submit a
dispute to one or more arbitrators for a final and binding determination. (108)
[A]rbitration must have three basic elements: an agreement for arbitration between the
parties; reference of a dispute covered by that agreement to third party, who must be an
individual other than a national court judge acting as such; and the result must be an
adjudication, which is binding upon the parties in the same manner as a court judgment. (109)
7
National courts have generally adopted similar definitions:
P 248 an agreement to arbitrate before a specified tribunal [is], in effect, a specialized kind of
forum-selection clause that posits not only the situs of suit but also the procedure to be used
in resolving the dispute. (110)
a contractual method of resolving disputes. By their contract the parties agree to entrust the
differences between them to the decision of an arbitrator or panel of arbitrators, to the
exclusion of the Courts, and they bind themselves to accept that decision, once made, whether
or not they think it right. (111)
Consistent with the traditional notion of private arbitration, one may define [the arbitration
clause] as an agreement according to which two or more specific or determinable parties
agree in a binding way to submit one or several existing or future disputes to an arbitral
tribunal, to the exclusion of the original competence of state courts and subject to a (directly
or indirectly) determinable legal system. (112)
the two criteria of the arbitration [are]the existence of a dispute and the submission of the
party by agreement to an arbitrator whose powers are specified. (113)
[Arbitration is] a non-state jurisdiction regarding private law matters based upon the will of
the parties. (114)
Arbitration concerns a decision rendered by the parties choice and intention by [experts]
who take the place of the courts within the exact limits established by the law. (115)
Countless other definitions of arbitration have been suggested. (116)
P 249 In many instances, individual examples of these (and other) definitions are incomplete or
(partially) mistaken. (117) Nonetheless, as discussed in greater detail below, these formulations
cluster around, and capture, a common core definition which applies equally under
international arbitration conventions and developed national arbitration legislation: that is,
as a matter of the New York Conventions uniform international standards and national
arbitration legislations provisions, arbitration is and only is a process by which parties
consensually submit a dispute to a non-governmental decision-maker, chosen by or for them,
to render a binding resolution of that dispute in accordance with adjudicatory procedures
affording the parties an opportunity to be heard.
[b] Elements of Definition of Arbitration
As summarized above, the definition of arbitration contains a number of elements, all of which
are essential to characterizing a particular dispute resolution process as arbitration. In
particular, arbitration requires (i) a consensual agreement (ii) to submit disputes to (iii) a non-
governmental decision-maker, chosen by or for them, to (iv) render a binding resolution of that
dispute, (v) in accordance with adjudicatory procedures affording the parties an opportunity to
be heard. Each of the various elements of this definition of arbitration is important and
warrants elaboration.
[i] Consensual Agreement
It is elementary that arbitration is a consensual process that requires the agreement of the
parties. As discussed in detail elsewhere, Article II of the New York Convention applies only to
an agreementunder which the parties undertake to submit to arbitration, (118) while Article
8 of the UNCITRAL Model Law applies only where there is an agreement by the parties to
P 250 submit to arbitration all or certain disputes. (119) Other national arbitration legislation is
to the same effect. (120)
Similarly, as also discussed elsewhere, national courts uniformly hold that arbitration is a
creature that owes its existence to the will of the parties alone, (121) that [a]rbitration is
strictly a matter of consent and thus is a way to resolve those disputesbut only those
disputesthat the parties have agreed to submit to arbitration, (122) and that, unlike court
proceedings, arbitration proceedings are consensual. (123) There is no contrary authority from
either national courts or elsewhere. (124)
Dispute resolution processes mandatorily required by statute or other governmental
requirement are not arbitration within the meaning of the New York Convention or
international arbitration statutes in most jurisdictions. These processes can resemble
arbitration in many respects (e.g., the parties may choose the decision-maker; the procedures
P 251 may be identical to those in arbitration; the award may be binding), but a non-consensual
dispute resolution process is simply not arbitration for purposes of the Convention or
international arbitration legislation.
[ii] Resolution of Disputes
A distinguishing characteristic of arbitration is the resolution of disputes or disagreements.
(125) Thus, Article II(1) of the New York Convention applies to an agreement to arbitrate
differences, (126) while Article 7(1) of the UNCITRAL Model Law and most other national
arbitration legislation applies to agreements to arbitrate disputes or controversies. (127)
Thus, arbitration does not apply to the resolution of other types of issues, such as the
negotiation or formulation of contractual terms, the formation of commercial ventures, or the
expression of abstract legal or other opinions outside the context of a dispute. (128)
Arbitration is a form of dispute resolution, not a debating society, board of directors, or
8
academic forum. (129)
[iii] Non-Governmental Decision-Maker Selected by or for Parties
Another fundamental attribute of arbitration is that it involves the submission of disputes to
a non-governmental decision-maker selected by or for the parties. Both national courts and
commentary uniformly hold that arbitration entails a non-governmental or private decision-
P 252 maker and not a court or government agency. (130) As a decision of the German
Bundesgerichtshof put it: [Arbitration is] a non-state jurisdiction regarding private law matters
based upon the will of the parties. (131)
Rather, a defining characteristic of arbitration is the selection of particular arbitrators to
resolve a particular dispute, or defined category of disputes; typically, arbitrators are chosen
by the parties themselves or, in the absence of agreement by the parties, by an arbitral
institution chosen by the parties. (132) In contrast, as discussed below, arbitration does not
extend to forum selection agreements, where parties agree to submit their disputes to a
specified national court. (133)
[iv] Final and Binding Decision
A third defining characteristic of arbitration is that it produces a binding award that decides
the parties dispute in a final manner and is subject only to limited grounds for challenge in
P 253 national courts. (134) Arbitration does not produce a non-binding, advisory
recommendation, which the parties are free to accept or reject; it also is not merely a process
of negotiation, during which the parties are free to agree (or not) to settle their disputes. (135)
Nor is arbitration a process that leaves parties free to initiate or continue with litigation in
national courts. (136)
Instead, arbitration results in a final and binding decision by a third party decision-maker
the arbitrator that can be coercively enforced against the unsuccessful party or its assets.
(137) As one court explained, [m]ediation is a process in which a neutral facilitates
P 254 settlement discussions between parties and the neutral has no authority to make a decision or
impose a settlement on the parties. In contrast, arbitration is a form of adjudication in which
an arbitrator or panel of arbitrators renders a decision. (138) Indeed, as discussed elsewhere,
international arbitral awards are generally materially more binding and enforceable than
national court judgments. (139)
[v] Use of Adjudicatory Procedures
Finally, a defining characteristic of arbitration is the use of impartial adjudicative
procedures which afford each party the opportunity to present its case. As discussed in greater
detail below, forms of dispute resolution that do not provide parties the opportunity to
present their views (e.g., expert determination or valuation, where the decision-maker is free
to proceed with an independent investigation) do not generally constitute arbitration. (140)
Similarly, contractual provisions that give one party the right to unilaterally decide a
particular issue do not constitute arbitration. (141)
Rather, an essential characteristic of arbitration is its adjudicatory character, in which an
objective and independent tribunal affords the parties opportunities to present their
respective cases and then makes a decision based on those submissions. As one court
described:
the fundamental difference between [arbitration and appraisals] lies in the procedure to be
followed.Arbitrators, like a judicial tribunal, must give notice to the parties of the time and
place of the hearing of the controversy, and must listen to and decide upon the evidence
offered by the parties.In the case of a simple appraisal of values or the amount of a loss, the
appraisers, if they wish, may hear what others have to say on the question they are to
P 255 determine; but, unless the reference so provides they are not bound to take testimony
and may decide from their own knowledge or opinion. (142)
As discussed below, other authorities confirm the essential adjudicatory character of
arbitration. (143)
[2] What Isnt Arbitration?
The nuances of the foregoing definition of arbitration and hence, of the term arbitration
agreement are best appreciated when comparing arbitration to related, but distinct, forms
of dispute resolution. This includes litigation, expert determination, mediation or conciliation
and other forms of alternative dispute resolution.
[a] Arbitration Versus Litigation
It is elementary that arbitration is consensual. As discussed elsewhere, that is the uniform
holding of national courts, commentary and other authorities. (144) Simply put, absent an
agreement to arbitrate, there is, by definition, obviously no arbitration agreement. Thus,
although it is tautological, consensual arbitration is most obviously not national court
litigation pursuant to mandatory jurisdictional rules.
Of course, litigation in national courts may also be conducted pursuant to consensual
agreements, typically referred to as forum selection clauses (also variously termed
prorogation, jurisdiction or choice-of-court agreements). (145) Indeed, forum selection
9
agreements are occasionally confused with arbitration clauses. (146) For example, one lower
court opined that an arbitration clause is just a particular kind of forum selection clause
what holds for arbitration therefore must hold for other forum-selection clauses. (147)
P 256 Instances of confusion between forum selection and arbitration agreements are surprising,
because it is very clear that a forum selection clause is not an arbitration agreement, and vice
versa. It is fundamental to distinguish between arbitration agreements and forum selection
agreements. Needless to say, this is because a forum selection clause provides for resolution of
disputes by litigation in a national court, not by arbitration before a non-governmental
arbitrator selected by or for the parties. Most authorities recognize the distinction between
forum selection and arbitration agreements, which is in any event beyond controversy. (148)
For the most part, it is not difficult to differentiate forum selection clauses from arbitration
clauses. The non-governmental identity of the decision-maker is a critical, distinguishing
feature of arbitration agreements. If disputes are referred to arbitrators persons without
government office, who are selected by or for the parties, to resolve a particular dispute then
the clause may be an arbitration agreement. An arbitrator is not a national court judge (nor is
the reverse true): arbitration is not in the job description of a federal judge. (149)
The foregoing conclusion remains true even if an arbitration clause is titled forum selection
or choice of court clause. The decisive factor, in this circumstance, is not the label, but the
reality of who the decision-maker is. (150) If the decision-maker is a private party, selected by
the parties, to conduct an adjudicative process in order finally to resolve a dispute, the parties
have agreed to arbitrate, even if their agreement is labeled a forum selection clause.
Conversely, even if a clause is titled arbitration, but refers disputes to a specified national
P 257 court for resolution, then the parties have entered into a forum selection agreement, not
an arbitration agreement. (151) Again, the decisive factor is the substance of what the parties
have agreed to with regard to the decision-maker, not the label that they used. Of course,
where the parties have not clearly identified who is responsible for dispute resolution, then
the label that they have used will assume greater, and perhaps decisive, importance: if the
parties agree to arbitration of their disputes before unnamed persons in a particular place,
then it would contradict their agreement to refer their disputes to the local courts in that
place.
A further distinguishing characteristic of arbitration is that an arbitral tribunal is ordinarily
selected, usually by the parties or their contractually-specified delegate, for a specific dispute
or category of disputes. (152) In many cases, parties either will jointly agree upon a sole
arbitrator, (153) will jointly select the members of a multi-person tribunal, (154) or will have
previously agreed upon an appointing authority which will fulfill this function for them. (155)
The arbitrator(s) thus selected will have a particular mandate, limited to the disputes referred
to him or her. (156)
In contrast, a forum selection or choice-of-court clause cannot (and does not) select a
particular national court judge for a particular matter. Rather, the judge in any particular case
is a member of a standing judiciary, available to hear all disputes brought to it, who is
assigned to the parties dispute without regard to their choice. (157)
As noted above, there are significant legal consequences that result from characterizing an
agreement as a forum selection clause, rather than an arbitration agreement. (158) The New
York Convention (and other international arbitration conventions) and national arbitration
P 258 statutes apply only to arbitration agreements, and do not apply to forum selection
clauses. (159) Conversely, international conventions and national legislation dealing with forum
selection clauses do not apply to arbitration agreements. (160) That is well-illustrated by the
Hague Conference on Private International Laws proposed Convention on Choice of Court
Agreements, (161) which would apply to forum selection clauses, and not to arbitration
agreements, and by the EU Regulation 44/2001, which is the same. (162)
[b] Arbitration Versus Expert Determination or Valuation
Just as arbitration is not litigation, so too arbitration is not expert determination or valuation.
Commercial contracts not infrequently contain provisions for the resolution of certain
categories of disputes by an expert, an accountant, an engineer, or other specialized non-
governmental person selected (directly or indirectly) by the parties and authorized to render a
P 259 binding decision on an issue. (163) Such provisions can involve accounting (or other
financial) calculations by an accountant, quality determinations by an industry representative,
oil and gas reserve estimates by an expert, engineering or construction judgments by an
architect or engineer, or legal assessments by a lawyer. (164) The question not infrequently
arises whether such provisions establishing a non-litigation dispute resolution mechanism for
particular technical issues by an expert decision-maker are arbitration agreements subject
to international arbitration conventions and national arbitration legislation or something
else.
In many national legal systems, an important distinction is drawn between arbitration and
binding expert determination, appraisal, or valuation. (165) The latter categories are
variously referred to as expertise-arbitrage (French), (166) Schiedsgutachten (German) (167)
and bindend advies (Dutch); (168) common law decisions draw the same distinction. (169) As
P 260 discussed above, the ICC and some other arbitral institutions have promulgated separate
sets of rules applicable to these sorts of expert determinations. (170)
10
The processes of expert determination or valuation are very similar in many respects to
arbitration in that a non-governmental decision-maker consensually selected by the parties
renders a binding decision outside of the context of national court litigation. (171) In the words
of one representative national court decision:
Expert Determination is a process where an independent Expert decides an issue or issues
between the parties.Expert Determination provides an informal, speedy and effective way of
resolving disputes, particularly disputes which are of a specific technical character or
specialised kind. (172)
Nonetheless, expert determination and valuation are different from arbitration in several
significant respects, which are summarized below. These include (i) the character of the issues
submitted for decision (with arbitration generally involving broad disputes, presenting legal
issues and questions of liability, and expert determination and valuation involving narrower,
factual or technical issues), and (ii) the nature of the procedures used (with arbitration
involving neutral adjudicatory procedures affording the parties an opportunity to present their
cases and expert determination and valuation not necessarily providing these procedures and
permitting experts to rely more extensively on their own expertise and investigations). As in
other contexts, it is clear that the label that the parties attach to a dispute resolution
provision is not decisive for purposes of determining its character. (173)
P 261 First, expert determinations and valuations are sometimes distinguished from arbitration
on the grounds that they ordinarily do not involve open-ended decisions on disputed factual
and legal issues, as is usually the case in arbitration, but rather application of specified
technical, accounting or similar criteria to a relatively narrow question. A number of courts and
commentators have relied on this difference as the principal distinction between arbitration
and expert determination. (174) The rationale behind decisions adopting this distinction is
that the appointed valuation expert simply rendered a singular determination a finding of
fact by which the parties had agreed to be bound. They did not exercise the discretionary
judgment that is the hallmark of the arbitrators function. (175) Other decisions have
P 262 distinguished between the determination of facts in an appraisal and the resolution of
issues of law or disputes in an arbitration. (176)
Thus, German courts have reasoned that the characteristic element of an arbitration
agreement is the transfer of competence to render a final decision in a dispute, which
normally belongs to national courts, to an arbitral tribunal as opposed to an expert
determination of specific factual issues. (177) Likewise, according to the Austrian Oberster
Gerichtshof, the function of the arbitrator is a judicial one, namely the decision of a legal
dispute in lieu of an ordinary court, while an expert determination only creates the basis for
the settlement of the dispute, by determining relevant facts. (178)
Second, expert determinations and valuations have also been distinguished from arbitration
on the basis that these forms of dispute resolution do not characteristically involve the same
adjudicative procedures and opportunity for the parties to be heard as exists in arbitration
(e.g., expert determinations typically involve minimal written submissions, no oral hearing or
witness testimony, and instead rely more extensively on the experts personal expertise and
P 263 investigations). (179) Thus, [a]rbitration presupposes a quasi-judicial hearing with
witnesses, oaths, and the taking of testimony, (180) and [i]t is a characteristic of arbitration
that the parties should have a proper opportunity of presenting their case. (181) In general,
arbitrators are required to decide the parties dispute based on the evidence and arguments
presented to them, without independently investigating the facts. (182)
In contrast, appraisal is a proceedingwithout formal taking of evidence, without oaths,
procedural safeguards, discipline or other court-like restraints. [The] process does not lend
itself to the formal introduction of evidence by the parties or the opportunity to submit
rebuttal documents or proofs. (183) It is also often said that experts, appraisers and valuers
may rely on their own experience and knowledge, as well as or instead of the materials
presented by the parties during the expert determination. (184)
P 264 As one court summarized the differences in procedures in arbitration and expert
determinations and valuations:
Since arbitrators are entrusted with the broader obligation to determine liability as well as
the amount of the award, it is reasonable to require broader procedural safeguards in
arbitration. The subject-matter responsibility of appraiser being less, the procedural
safeguards attending an appraisal may be lower. (185)
These two distinguishing features of arbitration and expert determination are to an extent
overgeneralizations. Expert determinations can, and sometimes do, involve interpretation of
contractual standards in the context of relatively broad disputes, much like many arbitral
awards, (186) while some arbitral awards can involve comparatively narrow technical,
accounting, or other issues that are much like many expert determinations. Likewise, expert
determinations can be conducted, as a procedural matter, much like arbitrations (with witness
testimony, written and oral submissions, a reasoned decision, etc.), while some arbitrations
can be conducted with little similarity to judicial proceedings (e.g., documents only
arbitrations). For example, some commodities or maritime arbitrations can be almost
identical in their procedural conduct to some expert determinations, yet are considered as an
arbitration that produces an arbitral award. (187)
Despite this, there are generally-applicable and important differences in the procedures used,
11
as well as in the nature of the issues decided, in expert determinations, on the one hand, and
arbitration, on the other. Of primary importance, a defining and distinguishing characteristic of
arbitration is its mandatory use of adjudicatory procedures to resolve the disputes and claims
presented by the parties. (188) As one U.S. court put it:
P 265 a true arbitration agreement [requires]: (1) a third party decision maker; (2) mechanisms
for ensuring neutrality with respect to the rendering of the decision; (3) a decision-maker who
is chosen by the parties; (4) an opportunity for both parties to be heard; and (5) a binding
decision. (189)
The parties broad autonomy to establish procedures tailored and appropriate to their needs
is a key element of the arbitral process, (190) but there is a core minimum requirement for
adjudicative procedures which are required to constitute arbitration within the meaning of
the FAA.
English courts have taken a similar approach, adopting relatively expansive definitions of
arbitration (typically refusing to accord decisive or even material weight to the label used by
the parties), while placing principal emphasis on the nature of the dispute resolution
procedures contemplated by the parties agreement. One decision, dealing with the
characterization of a Contract Recognition Board charged with resolving contractual disputes
arising from professional automobile racing arrangements, concluded that the clause
constituted an arbitration agreement principally because of the Boards judicial
P 266 responsibilities. (191) Another English case held that a contractual clause, providing that
any disputes under an insurance policy would be referred to a Queens Counsel of the English
Bar, was an arbitration agreement. (192)
A similar approach has been adopted by New Zealand courts. In one case, the court held that
arbitrator immunity would not apply to individuals responsible for making valuations, based
upon their own expertise and investigations. (193) In a well-reasoned opinion, the court
concluded that an arbitration was characterized by judicial procedures, which could be
envisaged in a continuum:
At one end of the scale is the arbitrator who sits to hear evidence and submissions and then
adjudicates in the same way as a Judge. At the other end is the arbitrator [sic] who is
appointed to use his own expertise, skill and care to investigate a particular matter and come
to a decision on it without evidence, submissions or any type of hearing. (194)
Canadian, Australian, Singaporean and Hong Kong courts have similarly focused in this context
on the extent to which a proceeding involves an adjudicative function, of hearing the parties
submissions and evidence and rendering an impartial decision. (195) A Canadian Supreme
Court decision explains the importance of adjudicative procedures to the definition of
arbitration as follows:
the similarity that must exist between arbitration and the judicial process. The greater the
similarity, the greater the likelihood that reference to a third party will be characterized as
arbitration. The facts that the parties have the right to be heard, to argue, to present
testimonial or documentary evidence, that lawyers are present at the hearing and that the
third party delivers an arbitration award with reasons establish a closer likeness to the
adversarial process than the expert opinion and tend to establish that the parties meant to
submit to arbitration. (196)
P 267 Decisions in civil law jurisdictions have also cited the importance of the decision-maker
applying adjudicatory procedures to the definition of an arbitration agreement. In particular,
the French Cour de cassation, (197) and other French courts, (198) have emphasized that the
arbitrators judicial responsibilities are essential to the arbitral function. Similarly, in an
early decision, the German Bundesgerichtshof held that an arbitrator exercises a judicial
function and must conform to a quasi-judicial procedure in order to live up to [his or her]
function as a court. (199) Consistent with this, the Bundesgerichtshof more recently held that
the impartiality and independence of a body established by the internal rules of an
association was essential for characterization as an arbitral tribunal. (200)
Swiss courts draw a similar distinction, emphasizing that, in principle, the arbitrators task is to
adjudicate a dispute, whereas an expert determination is to establish facts. (201) The
distinction is drawn taking into account the substance of the dispute resolution mechanism
and the way in which the expert or arbitrator has understood and executed his mission. An
informal procedure without an exchange of factual allegations and requests for relief, as well
as the lack of any authority to award legal fees, point towards an expert determination under
Swiss law. (202)
Given these decisions, care should be taken in drafting clauses providing for the expert
determination of particular matters. In particular, international arbitration conventions and
national arbitration legislation will not ordinarily apply to such procedures, and the resulting
decisions, and if parties desire a different result then they should clearly denominate the
P 268 process as arbitration and allow for procedures that permit adjudicative opportunities
to be heard prior to a decision. (203) Failure to do so risks having a dispute resolution process
characterized as expert determination, rather than arbitration, and therefore as falling
outside of statutorily-mandated provisions for judicial assistance to, non-interference in, and
enforcement of the arbitral process, and statutory (204) or other provisions for arbitrator
immunity. (205) (Many legal systems will nonetheless give effect to agreements for expert
determination, (206) but typically pursuant to a less favorable, reliable legal regime.)
12
Conversely, if the parties wish to avoid the legislative framework applicable to arbitration (for
whatever reason), then they should denominate the dispute resolution process as expert
determination, and not arbitration, and should grant the expert the power to render a
decision without using quasi-judicial procedures. If parties desire an expert determination
procedure, they should also be careful to specify clearly what the intended consequences of
P 269 the experts decision are; in particular, they should specify that the decision is (or is not)
final and binding on the parties. (207)
Despite these conclusions, many national courts have adopted relatively expansive
conceptions of arbitration, increasingly extending the term to dispute resolution mechanisms
that are or closely resemble classic expert determinations, valuations, or appraisals. Under
the FAA, for example, U.S. courts have concluded that a wide variety of alternative dispute
resolution mechanisms constitute arbitration. (208) A few U.S. courts have held, however, that
particular forms of valuation or expert appraisals will not constitute arbitration. (209) Even in
some such cases, however, U.S. courts have sometimes applied local arbitration legislation
(apparently by analogy) to what have been categorized as expert determinations. (210) (In
P 270 some cases, U.S. state law provides expressly for the enforcement of appraisals on the
same basis as arbitral awards. (211) ) Similarly, a number of U.S. courts have held that litigation
should be stayed pending an appraisal or expert determination. (212)
Likewise, if somewhat less expansively, decisions in most other developed jurisdictions have
also adopted liberal approaches to the definition of arbitration agreements in the context of
provisions which arguably constitute agreements for expert determination. Thus, both common
law (213) and civil law (214) courts have held that a variety of alternative dispute resolution
provisions not fitting comfortably into classic notions of arbitration nonetheless constitute
arbitration agreements that are subject to the protections of national arbitration legislation.
[c] Arbitration Versus Mediation or Conciliation (215)
P 271 Arbitration agreements differ fundamentally from agreements for conciliation,
mediation, early neutral evaluation and the like. In contrast to arbitration, which produces a
binding decision, mediation and conciliation do not provide for a binding decision or award
that is imposed on the parties; rather, they provide for a process of discussions which at most
results in the non-binding expression of opinion(s) that may (or may not) assist the parties in
reaching a consensual settlement. (216)
The mediator or conciliator is not empowered to decide or resolve issues, but merely to
discuss and negotiate with the parties in an effort to persuade them to reach a consensual
resolution of their dispute. (217) As one early authority put it, [m]ediation is an advisory,
arbitration a judicial, function. Mediation recommends, arbitration decides. (218) This is a
fundamentally different outcome from arbitration, whose basic objective is to produce a
binding award that not only decides the parties dispute in a final manner, but that is subject
to only limited grounds for challenge in national courts. (219)
In some jurisdictions, separate legislation has been adopted governing mediation, conciliation
and related form of alternative dispute resolution. That includes the UNCITRAL Model Law on
International Commercial Conciliation (220) and an EU mediation directive, which has been
P 272 adopted in most EU Member States. (221) Where such statutory regimes exist, the different
legal frameworks that govern mediation or conciliation, on the one hand, and arbitration, on
the other hand, will be apparent. Even in other jurisdictions, however, mediation and
conciliation will be subject to a different legal regime than arbitration.
A number of leading arbitral institutions have adopted specialized conciliation/mediation
procedures. One of the forerunners in this regard was ICSID, where the original ICSID
Convention contained a separate chapter dealing specifically with conciliation. (222) Many
leading arbitration institutions have also adopted rules of conciliation. (223) These include the
ICC, (224) AAA and ICDR, (225) WIPO (226) and CPR. (227) Obviously, where parties agree to
dispute resolution in accordance with these mediation or conciliation rules, they will not have
entered into an arbitration agreement, but rather an agreement to mediate or conciliate.
In general, few difficulties should arise in distinguishing between arbitration agreements, on
the one hand, and mediation or conciliation agreements, on the other. Although, as
discussed above, labels are not decisive, (228) reference to arbitration will ordinarily be
sufficient to exclude the possibility that mediation or conciliation is intended, while the
converse will be equally true. In rare cases, parties may refer to a procedure (e.g.,
arbitration) but then specify an inconsistent outcome, such as a non-binding decision (e.g.,
P 273 the arbitrators may recommend). (229) In these instances, although conclusions
necessarily turn on appraisals of the parties intentions in particular cases, the focus should be
on the substantive outcome that the parties have attempted to provide for, rather than on the
label that they have used.
U.S. courts have generally held that when parties agree to a clause requiring only a non-
binding mediation or conciliation process, there is no agreement to arbitrate. (230) Thus, one
feature that must necessarily appertain to a process to render it an arbitration is that the third
partys decision will settle the dispute, (231) and [m]ediation is not the same as arbitration,
due to its non-binding nature. (232) The same is true where the parties agree only to the
provision of a non-binding recommendation, (233) or where parties retained the right to
litigate their dispute. (234) (As discussed below, courts have generally presumed, in cases of
doubt, that parties intended to agree upon binding arbitration, rather than a non-binding
13
recommendation mistakenly called arbitration, but where the parties clearly agree upon the
latter dispute resolution mechanism, it will be given effect. (235) )
Decisions in other jurisdictions are similar to the weight of U.S. authority in requiring that
arbitration involve a process that produces a binding result. French, (236) English, (237) Hong
P 274 Kong (238) and German (239) courts have held that an agreement that permits access to
national courts following a non-binding decision does not constitute an arbitration agreement,
but rather a conciliation or mediation clause. Thus, a French court held that, because the
parties had agreed that a decision issued in proceedings before the Arbitration and Mediation
Center of the World Intellectual Property Organization (WIPO) lacked binding res judicata
effect, it was not an arbitral award. (240) The court reasoned that while the WIPO
administrative proceeding shared certain attributes with a classical arbitration such as
independence and impartiality of the administrative panel, equal treatment of the parties
and evaluation of the evidence the decision could not be an arbitral award because it did
not bind the parties and because the parties agreement allowed them to refer their dispute to
a French court before, during and after the proceedings. (241) Other national courts have
reached similar results. (242)
Although defining arbitration as requiring a binding decision, and therefore as excluding
mediation and conciliation, some U.S. courts have suggested that the FAA will nonetheless be
applied (properly analyzed, by analogy) even to a non-binding mediation or conciliation
agreement. Although the reasoning of these decisions is not easy to follow, they appear to hold
that a mediation agreement is similar enough to an agreement to arbitrate to warrant
application of the same legal regime for enforcement. (243) As one court put it, [f]ederal
P 275 policy favors arbitration in a broad sense, and mediation surely falls under the preference
for non-judicial resolution. (244) Other U.S. decisions are even more difficult to follow,
incorrectly suggesting that non-binding mediation is really a form of arbitration; (245) for the
reasons discussed previously, this reasoning is wrong.
Similarly, in a recent decision, the U.S. Supreme Court correctly observed that [o]f course,
submitting to jurisdiction and agreeing to be bound are two different things, but then
proffered as an example an agree[ment] to compulsory nonbinding arbitration. (246) That
reasoning, which was unnecessary to the Courts conclusion, on a largely unrelated topic, is
difficult to square with the overwhelming weight of authority regarding the meaning of
arbitration and an agreement to arbitrate, which require a binding decision resolving the
parties dispute; the Courts reference to non-binding arbitration is a classic oxymoron.
Although it is possible to agree in a binding manner to submit to non-binding dispute
resolution, this is not what is intended or accomplished by submission of disputes to
arbitration or to (other forms of adjudication); rather, dispute resolution agreements of this
character constitute agreements to be bound by the arbitrators (or other adjudicators)
decision. (247)
Finally, although national arbitration legislation generally does not apply to mediation,
conciliation, or similar ADR agreements, courts have not infrequently given effect to such
P 276 agreements by applying general rules of contract law. (248) Nonetheless, the resulting
enforcement mechanisms are generally materially less effective than most contemporary
national arbitration statutes, and significant enforceability issues arise under many national
laws with regard to at least some types of agreements for non-binding dispute resolution. (249)
[d] Quality Arbitration
Quality arbitrations have historically been used in some industries (e.g., commodities) to
resolve disputes concerning the quality of goods which are delivered. These disputes
frequently turn entirely on technical issues, and are resolved by industry experts in a
procedural manner that is highly informal and that bears little resemblance to many normal
contemporary commercial arbitrations. (250) There are typically no written submissions,
witness testimony, hearings, or argument, and often no reasoned award; in many respects, the
arbitrators decision is more in the nature of a sports referees call than a judicial decision.
(251)
Given these procedural characteristics of quality arbitration, it is uncertain whether such
proceedings can properly be considered arbitration. The apparent view of most national
courts (252) and other authorities, (253) influenced in part by terminology and historical
practice, (254) is that quality arbitrations are a form of arbitration, notwithstanding the use of
procedures that are often adjudicative only in the loosest sense. Indeed, an early English
judicial decision remarked that one of the commonest types of arbitration contemplated by
the arbitration agreement is a quality arbitration. (255) There is contrary authority, but it is
unusual. (256)
P 277 This conclusion must be seen in the context of the parties autonomy to agree upon the
arbitral procedures and, to a lesser extent, the arbitrators discretion with regard to
procedural matters in the absence of such agreement. (257) One inevitable consequence of this
autonomy is that the parties may agree upon highly summary procedures, waiving many
aspects of normal judicial and arbitral processes. (258) Where the parties do so, while
nonetheless retaining the basic right to present their respective cases according to neutral,
albeit informal and summary, procedures to an impartial tribunal, the essence of the
definition of arbitration can be considered satisfied. Where the parties reach such an
agreement consistent with historic and contemporary practice in a particular commercial
setting, the arguments for applying international arbitration conventions and national
14
arbitration legislation are particularly difficult to resist. (259)
[e] Interest Arbitration
Another form of alternative dispute resolution is so-called interest arbitration, sometimes
used in labor settings, where the arbitrator has authority to devise new contractual terms
governing the parties future conduct. (260) This raises issues similar to questions whether
proceedings for the adaptation of contracts may constitute arbitration. (261) The better view is
that, if the other definitional requirements of arbitration are satisfied, a tribunal may exercise
the substantive power under applicable law to adapt an existing contract or structure a new or
revised contract without converting the process into something other than arbitration.
[f] Arbitration Following Other Dispute Resolution Processes
Some agreements contain so-called multi-tier dispute resolution mechanisms, which provide
for arbitration only after other contractually-prescribed procedures have been exhausted.
These provisions are also referred to as escalation clauses or step clauses. (262)
P 278 These provisions can include cooling-off or waiting periods; negotiations between
corporate representatives or officers; conciliation, mediation, or mini-trials; or referral to an
expert or other third party for a non-binding opinion. In some instances, parties agree to
attempt first to resolve their disputes by negotiation (sometimes with elevation to more senior
corporate representatives), followed by mediation or conciliation, with arbitration being
permitted only after these non-binding means of dispute resolution have been attempted for
prescribed periods of time. (263) These multi-tier approaches to dispute resolution and
prevention have been particularly popular in recent years. (264)
As discussed below, noncompliance with multi-tiered dispute resolution clauses of this sort
can raise jurisdictional and procedural issues (including, for example, whether a party may
initiate an arbitration prior to completing or fully completing the multi-tier dispute resolution
process). (265) In addition, questions have also arisen as to whether a multi-tiered dispute
resolution agreement constitutes an arbitration agreement for purposes of international
arbitration conventions or national legislation. In particular, disputes have arisen as to
whether the New York Convention and national arbitration legislation are applicable to
enforce a multi-tier dispute resolution mechanism when parties attempt to commence
litigation prior to initiation of an arbitration (e.g., during a cooling off period or mediation).
The proper answer is that the Convention and national arbitration regimes apply to multi-tier
dispute resolution provisions, even where arbitration has not yet been initiated, provided that
the mechanism will ultimately require arbitration. This is consistent with authority in virtually
all jurisdictions. Even where an agreement provides for arbitration only after a lengthy process
of other dispute resolution mechanisms, it still remains an arbitration agreement. Arbitration
delayed is not, so to speak, not arbitration.
Thus, in Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd, the House of Lords held,
without undue difficulty, that a clause providing for referral of disputes to three independent
P 279 experts, followed by an appeal to an arbitral tribunal, constituted an arbitration
agreement for purposes of English law. (266) Decisions in other national courts have routinely
treated clauses involving less elaborate pre-arbitration procedures as valid and enforceable
arbitration agreements. (267) A Hong Kong court explained this rule as follows:
An agreement that requires that the parties submit their disputes ultimately to arbitration,
although it may also require the parties in the first instance to follow a procedure such as,
attempting an amicable settlement is, to my eyes, an arbitration agreement.It matters not,
it seems to me, that the parties must, firstly, take some other step before [referring disputes to
arbitration]. (268)
In a few jurisdictions, however, courts have concluded that multi-tiered dispute resolution
agreements are not enforceable in the same fashion as arbitration agreements prior to the
initiation of arbitration. For example, a U.S. appellate court held that until the contractual
requirements for mediation and subsequent notice of arbitration are fulfilled by the parties,
an arbitration clause has not been triggered and litigation may proceed in the interim. (269)
This result is misconceived: the parties agreement to arbitrate should be regarded, absent
express contrary agreement, as excluding national court litigation during the period when any
escalation procedures or conditions precedent are being complied with. (270) This is no
different from the position when a party commences litigation in breach of an arbitration
agreement when an arbitration has not yet been initiated; it is clear, in that case, that the New
York Convention and national arbitration legislation both apply and, in principle, require a
P 280 stay of litigation. (271) The same result is even more obvious where pre-arbitration dispute
resolution processes such as consultations, mediation, or cooling-off periods are underway.
Agreements providing for arbitration following a mediation process can result in questions
about the impartiality of the arbitrator if an unsuccessful mediator is subsequently appointed
to serve as arbitrator. (272) This possibility does not alter the character of the dispute
resolution mechanism, as an arbitration agreement, but instead concerns how the arbitration
must be conducted and the identity of the arbitrator in that situation.
[g] Engineers and Dispute Adjudication Boards
In particular industries, specialized forms of dispute resolution agreements have been
15
developed which involve mechanisms that resemble both arbitration and expert
determination, but which are neither. This has been particularly true in construction and
building contracts, which historically have contained specialized dispute resolution
mechanisms (designed to provide both technical expertise and speed). (273)
In the international construction industry, contracts often provide for an engineer (employed
by the project owner) who plays a special contractual role vis--vis the owner and the
contractor. (274) This is particularly true under the so-called FIDIC civil engineering contract.
(275) This has been supplemented by more recent revisions of the FIDIC contract, which provide
for disputes to be resolved by a Dispute Adjudication Board (subject to subsequent
arbitration), rather than the engineer. (276)
The roles of the engineer and the Dispute Adjudication Board do not constitute arbitration, but
are instead a contractual mechanism for giving interim effect to a form of expert
determination. That mechanism is plainly not arbitration, because it is (by its terms) non-
binding, is not subject to the quasi-judicial procedural protections of the arbitral process and
P 281 involves a decision-maker who is not subject to the requirements of independence and
impartiality that accompany the arbitral process. (277) Agreement to resolution of disputes by
one of these mechanisms cannot be regarded as an agreement to arbitrate, subject to
international arbitration conventions and national arbitration legislation, but is rather a sui
generis and specialized form of non-binding expert determination.
[h] Baseball Arbitration and High/Low Arbitration
There are a variety of forms of binding dispute resolution that have developed in particular
settings which resemble arbitration, but which also differ in decisive ways from normal
commercial arbitration. These procedures raise difficult, if infrequent, analytical questions as
to whether such dispute resolution mechanisms constitute arbitration or not.
For example, so-called baseball arbitration (which originated in the United States) involves
an arbitral process where, at the conclusion of the parties submissions, each party provides
the tribunal with its best offer in a sealed envelope. (278) The tribunal is then charged with
choosing one partys offer, or the other partys offer, rather than making an independent
determination of the correct resolution under applicable law. Other forms of dispute
resolution similarly limit the decision-makers freedom to decide the parties dispute, in a
characteristically adjudicative fashion, and instead prescribe a particular issue to be
answered by the tribunal, as with high/low or bracketed arbitration. In high/low
arbitration, for example, the parties agree on the minimum and maximum amounts that the
arbitrator can award. (279)
It is debatable whether these sorts of dispute resolution mechanisms constitute arbitration
P 282 in the proper sense of the term. (280) Although these procedures involve binding dispute
resolution by a private decision-maker, selected by the parties, who disposes of legal
disputes, while affording substantial opportunities to be heard in an adjudicative manner,
they also are characterized by significant differences from most arbitral processes (e.g.,
removal of tribunals discretion to consider remedies or to resolve the dispute by application
of the governing law to the facts). These differences are difficult to reconcile with the tribunals
adjudicatory role, which requires a material measure of quasi-judicial independence from the
parties. (281) It is uncertain whether these differences remove such procedures from the ambit
of arbitration but, at a minimum, they push the outer limits of the definition. (282)
[i] Rent-A-Judge
Another form of dispute resolution (again, originating in the United States) is referred to as
rent-a-judge, and involves hiring a retired judge to conduct what is essentially a civil trial,
under private auspices. (283) The parties agree to be bound by the result, sometimes subject
to the same possibilities for appeal that exist in a normal civil litigation. In principle, this
dispute resolution mechanism is fairly characterized as arbitration. It is a text-book example
of a case where the label for a procedure does not alter its substance: (284) arbitration before
a judge, whether retired or not, is still arbitration.
[j] Courts as Arbitrators
A few national courts provide what they describe as arbitration for the consensual resolution
of certain categories of disputes. This differs from individual judges serving, in their private
capacity, as arbitrators; (285) rather, some courts make their judicial panel, filing and
administrative apparatus and physical facilities available to provide parties for what is
described as the arbitration of disputes that parties consent to submit for the courts
resolution.
The leading example of such a development is the Delaware Court of Chancery, where recently-
enacted Delaware state legislation permits business entities to submit business disputes
(involving amounts in dispute in excess of $1 million) to arbitration by a judge of the court.
P 283 (286) The Delaware arbitration scheme was recently invalidated on domestic
constitutional grounds (on the basis that the court was conducting judicial activities in
private, contrary to requirements for public hearings and access). (287) It is unclear whether
Delaware Chancery Court arbitrations would satisfy the definitions of arbitration under the
New York Convention and FAA, which typically include requirements for a non-governmental
decision-maker. (288)
16
[3] Amiable Composition or Arbitration Ex Aequo et Bono
Amiable composition and arbitration ex aequo et bono are variations of commercial arbitration
in which the parties expressly agree that the arbitrator is not bound by strict rules of law, but
is free to give effect to general considerations of equity and fair-play. (289) The arbitrators
freedom in such proceedings to disregard the law, and make a purely equitable or
commercial decision, arguably distinguish these forms of dispute resolution from true
arbitration, and therefore take them out of the definition of arbitration. One might argue, for
example, that the essence of arbitrations adjudicatory character is the application of law
(290) and that the deliberately a-legal nature of amiable composition and arbitration ex
aequo et bono is fundamentally irreconcilable with this character.
Indeed, some definitions of arbitration appear to adopt this conclusion, requiring that
arbitrators apply legal rules in the resolution of the parties dispute. According to one
authority:
[T]he common incidents of classic arbitration, include[d] (i) an independent adjudicator, (ii)
who applies substantive legal standards, (iii) considers evidence and argument (however
formally or informally) from each party, and (iv) renders a decision that purports to resolve the
rights and duties of the parties, typically by awarding damages or equitable relief. (291)
Although there is force to this analysis, it clearly should be rejected: the application of legal
principles or rules is not an essential element of arbitration. Amiable composition and
arbitration ex aequo et bono closely resemble other forms of arbitration in their procedural
conduct, and in the tribunals making of a final and binding award. Indeed, arbitration
historically often bore closer resemblances to arbitration ex aequo et bono and amiable
composition than to many normal contemporary international arbitrations. (292)
P 284
Ultimately, it is the character of the tribunal (non-governmental persons selected for a
particular dispute or category of disputes), the procedures (adjudicative) and the result (a
binding award) that qualifies amiable composition and arbitration ex aequo et bono as
arbitration. The fact that the parties have chosen to contract out of substantive national law
as and where permitted by national law (293) does not alter the fundamental character of
their agreement to arbitrate, and instead only affects the substantive standards that are
applied in such an arbitration. Given this character, amiable composition and arbitration ex
aequo et bono are readily characterized as arbitration in the sense that international
arbitration conventions and national legislation use the term, notwithstanding the fact that the
arbitrators do not apply legal rules in resolving the parties dispute.
[4] Adjudicatory Character of Arbitration
As discussed above, an essential feature of arbitration is its judicial character. (294) This is
affirmed in both national court decisions (295) and commentary (296) addressing the question
of what constitutes an arbitration agreement. It is also consistent with the historical
development of international commercial and state-to-state arbitration. (297)
Thus, a leading common law definition of the judicial function (or, more specifically, the
adjudicative process) is a process of decision that grants the affected party a form of
participation that consists of the opportunity to present proofs and reasoned arguments. (298)
The arbitral process not only satisfies this definition, but also bears other characteristics of
adjudication, in which the arbitrators serve a judicial function; these additional characteristics
include the provision of a reasoned, written decision, the legally-binding character of the
decision, and the application of procedural safeguards of the parties rights. (299)
Some commentators have suggested that arbitrators are not, in fact, comparable to judges,
because of various differences or asserted differences between litigation and the arbitral
process. These authorities argue that arbitrators are selected by the parties, are free to
decline appointment, are compensated contractually by the parties, are not bound by
precedent or strict rules of evidence, are not subject to the same appellate review as national
courts and may (in some settings) be predisposed towards the party that nominated them.
(300) In the words of one commentator, these factors make it a gross misapproximation to
equate arbitrators with judges. (301)
P 285 These observations misconceive the differences between the arbitral and litigation
processes. There are, to be sure, important differences between the arbitral and judicial
processes and between arbitrators and judges just as there are differences between judicial
processes and judges in different national legal systems (i.e., a Japanese judge differs from a
Brazilian, Saudi, Swiss, or U.S. judge). These differences do not, however, alter the reality that
arbitrators perform a quintessentially adjudicative function by resolving disputes in a binding
legal manner, expressed in a reasoned decision, based upon the law and record, following
legal or evidentiary submissions by the parties. (302) It is the arbitrators performance of this
function and not differences in how this function is performed that is decisive in
characterizing it as an adjudicative action.
This conclusion is not contradicted by consideration of the various factors cited by some
commentators to support claims that arbitrators do not perform a judicial or adjudicatory
function. On the contrary, a number of these factors suggest that contemporary international
arbitration is a more developed adjudicatory process than litigation, at least litigation as it is
practiced in many jurisdictions.
17
The arbitrators adjudicative function is in no way contradicted by the fact that arbitrators are
often selected by the parties (or a party) and are free to decline appointment. (303) These
factors go to how arbitrators are chosen for particular arbitrations, not to the functions that the
arbitrators perform in the arbitrations after appointment (which, as discussed above, is
quintessentially adjudicative (304) ). More fundamentally, the fact that parties can select
arbitrators who are optimally-qualified for their particular dispute advances, rather than
contradicts, an objective adjudicative process: as discussed above, the institution of party
involvement in selecting the arbitral tribunal is designed (and was historically used) precisely
to ensure that parties from differing jurisdictions and legal cultures will have a full and equal
opportunity to present their case to a decision-maker or set of decision-makers who can fairly
and competently evaluate their submissions. (305) Likewise, the fact that arbitrators can, and
do, decline appointments because there may be doubts about their independence or because
they are unable expeditiously to resolve the dispute again enhances, rather than contradicts,
their adjudicatory function. (306)
P 286 Equally, the fact that arbitrators are compensated by the parties, while judges are
(generally) compensated by the state, does not contradict the arbitrators adjudicative role
(307) : it is what an arbitrator does, not how he or she is paid, that determines the nature of his
or her role. The arbitrators functions are no different if paid by the parties, the state, or not at
all, just as a lawyers function remains that of a lawyer, whether providing paid assistance,
state-funded legal aid, or pro bono representation. Moreover, it is very difficult to understand
how, in an international setting, it is less neutral for both parties jointly to pay the arbitrator
than for one partys home state taxpayers to fund the local court system alone; rather, the
former is plainly a more neutral and independent funding mechanism.
The fact that arbitrators do not follow strict rules of evidence (308) is of no import (because
arbitrators do apply evidentiary rules and because rules of evidence differ widely around the
world (309) ), as is the reduced role of precedent in some arbitral contexts (310) (because the
role of precedent also differs widely in different legal systems around the world, including in
international arbitration (311) ). Also irrelevant is the fact that no transcript is kept of some
arbitrations (312) (because transcripts are the exception, rather than the rule, in litigations in
most legal systems and because transcripts or their equivalent are commonplace in many
international arbitrations (313) ) and the fact that arbitrations are generally confidential (314)
(because closed hearings, sealed records and the like are characteristics of obviously judicial
proceedings around the world and because many arbitrations are not confidential (315) ).
Instead, the fundamental point is that arbitrators impartially decide disputes based upon the
law and the evidentiary record, as presented by the parties in the exercise of their rights to be
heard, which is the essence of the adjudicative function. (316)
Likewise, it is in no way contrary to the judicial function for arbitral awards to be subject to
only limited appellate review. (317) It is the process by which an award is made, not the
process by which it might be reviewed, that determines whether the arbitrator has fulfilled a
P 287 judicial role. Moreover, it is precisely because arbitrators fulfill a judicial function that
awards are accorded binding and final legal effects by both international conventions and
national law, with exceptions to this status being recognized only in cases of gross departures
from judicial (not non-judicial) norms. (318)
Similarly, there is no substance to the suggestion that arbitrators, unlike judges, are
supposedly not essential to the preservation of democracy. (319) Most obviously, courts and
other tribunals perform judicial functions in monarchies, aristocracies, religious, or totalitarian
states and other political systems not just democracies. Equally, the role of commercial
litigation in preserving democracy is perhaps discernible, but hardly lies at the center of
democratic values and institutions: the political and civil rights values of a democracy that are
safeguarded by the judiciary are fulfilled in contexts other than commercial litigation between
businesses. And, more fundamentally, the parties autonomy to resolve their disputes in the
manner they wish is itself a vitally-important aspect of an open, democratic society and of the
civil rights of autonomy that such societies prize. (320)
The only serious issue raised concerning the international arbitrators adjudicative function
concerns non-neutral party-nominated arbitrators or advocate-arbitrators which are used in
some legal traditions. (321) As discussed elsewhere, some common law legal systems
historically permitted (and occasionally still permit) either arbitrator-advocates or co-
arbitrators who are predisposed towards the party that nominated them; (322) these
arbitrators are not only permitted, but are expected, to advocate their nominating partys
case in the tribunals deliberations. (323) Although increasingly rare, the predisposed co-
arbitrators function in these types of arbitrations is an unusual hybrid of judicial and
advocacy functions, which differs in important respects from most traditional adjudicative
roles. (324)
These observations regarding the role of predisposed co-arbitrators do not apply to co-
arbitrators in other settings, including particularly co-arbitrators who are required to be
impartial and unbiased, as is the case in most contemporary international arbitrations. (325)
The fact that a party may appoint a co-arbitrator of its choice (including a co-arbitrator of its
own nationality), following an interview, does not alter that co-arbitrators obligations of
P 288 impartiality and independence (326) nor convert the co-arbitrator into an advocate or
party representative. (327) There are well-established and respected judicial traditions (such
as the International Court of Justice) that permit party-nominated judges without this resulting
in questions about the judicial role of such nominees. (328)
18
There are of course instances in which co-arbitrators do not comply fully with their obligations
of impartiality; but these actions are comparatively infrequent and almost always obvious to
(and, at least in large part, compensated for by) the presiding arbitrator and other co-
arbitrator. (329) These actions also provide grounds for removing the arbitrator or annulling an
arbitral award, to permit the arbitral process to proceed properly. (330) The existence of
departures from applicable requirements of impartiality does not alter the fundamentally
adjudicative character of arbitration, or the arbitrators just as departures from judicial
ethical rules by individual judges do not alter the nature of national judicial systems.
Equally, suggestions that the co-arbitrator role is necessarily partial, and therefore non-
adjudicative, (331) ignore the realities of international litigation in national courts. If parties
from States A and B agree to litigate their disputes in the courts of State A, before judges who
are nationals of State A, no one would doubt that those judges will perform a judicial function,
notwithstanding their nationalities; this conclusion is not altered if the party from State A is a
major financial institution and State A is a leading international financial center, whose courts
avowedly endeavor to develop legal rules that safeguard State As status in that regard.
The reality in international dispute resolution is that no judicial process will involve a tribunal
that is unpredisposed in all respects. (332) Particularly in international matters, every
adjudicatory procedure occurs in a particular setting, where the decision-makers will have a
measure of predisposition on particular issues and involving particular parties. The use of co-
arbitrators in the international arbitral process is an effort to manage and mitigate the
foregoing risk in the international setting, by providing each party with equal involvement in
constituting a tribunal that will be as neutral and impartial as possible.
P 289 To be sure, there will be instances where the co-arbitrators may harbor either overt or
subtle predispositions towards his or her party. But such a co-arbitrator is surrounded by a
set of restraints, including obligations of impartiality, challenge procedures, another co-
arbitrator and a presiding arbitrator selected in a neutral manner. These restraints channel
the co-arbitrators energies into a mechanism and process that is both adjudicative and that
compares favorably to the resolution of international disputes by national courts in terms of
neutrality as the enduring and increasing use of international arbitration confirms.
Although there have been only limited empirical studies of the arbitral process, the results of
these efforts, together with anecdotal evidence, confirm the adjudicative character of that
process. The evidence provided by published international arbitral awards strongly supports
the view that arbitrators perform an adjudicatory function: as noted elsewhere, international
arbitral awards are almost invariably written and reasoned, typically not dissimilar in terms of
legal reasoning and evaluation of the evidence from national court judgments. (333) This is
supported by several empirical studies which indicate that arbitrators decision-making shows
a strong resemblance to judicial decision-making, in that there is little evidence of overt
baby-splitting, (334) which would arguably be inconsistent with an adjudicative function;
rather, arbitral awards very frequently grant or reject claims in full or substantial part, with
principled distinctions explaining other results. (335)
In sum, as national courts and commentators have concluded in a wide variety of contexts,
international arbitration is characterized by its adjudicative nature. This distinguishes
arbitration from expert determination, (336) conciliation/mediation (337) and some other (less
common) forms of dispute resolution. (338) At the same time, as discussed below, it also
informs the procedural requirements applicable to the arbitral proceedings (339) and the
impartiality and independence obligations of the arbitrators. (340)
[D] Future Directions: How Should Arbitration Be Defined?

P 290 As discussed above, there are nearly as many definitions of arbitration as there are
commentators or courts addressing the subject. (341) Nonetheless, there is a common core to
these definitions which is widely-accepted, even if not explicitly prescribed, in virtually all
developed legal systems. This common understanding of the term applies equally to defining
the term arbitration agreement in international arbitration conventions (including the New
York Convention) and national arbitration legislation (including the UNCITRAL Model Law).
The most comprehensive and precise definition of arbitration, which emerges from these
various views, and from a review of the different forms of dispute resolution employed in
contemporary commercial affairs, is that arbitration is a process by which parties consensually
submit a dispute to a non-governmental decision-maker, selected by or for the parties, who
renders a binding decision finally resolving the dispute in accordance with neutral,
adjudicative procedures affording the parties an opportunity to be heard. It is this definition
derived from a broad range of international and national authorities that should be applied,
inter alia, under Article II of the New York Convention as a uniform, internationally-mandatory
definition of arbitration, from which Contracting States may not properly deviate, (342) and
under Article 7 of the UNCITRAL Model Law and other national arbitration legislation. (343)
This definition resembles other efforts on the issue, (344) but emphasizes the requirement that
arbitration be conducted in a manner which affords the parties an opportunity to be heard in
an adjudicatory or quasi-judicial manner. (345) This qualification is necessary in order to
distinguish arbitration from other forms of alternative dispute resolution, particularly expert
determinations and valuations. (346) Unless a dispute resolution process involves some
material opportunity for the parties to present their legal positions and proof to the decision-
maker in accordance with neutral procedures, broadly in the procedural manner of a judicial
19
or adjudicatory proceeding, it cannot properly be considered to be arbitration. (347)
The difficult issue in most cases will be what degree of adjudicative (or judicial or quasi-
judicial) procedures will be necessary to qualify a dispute resolution mechanism as
arbitration. In general, it is appropriate to err on the side of flexibility, characterizing even
relatively informal or technical procedures as arbitration. This is consistent with the central
role of party autonomy in selecting arbitral procedures (348) and the historic procedural
P 291 flexibility and informality of the arbitral process. (349) Moreover, application of the
statutory regimes for arbitration to such arrangements involving considerable informality
and expedition would not appear to work unfairness, and would have the benefits of
providing predictability and relative clarity to both courts and litigants. (350)
Finally, the question whether a particular dispute resolution clause constitutes an arbitration
agreement should also leave ample scope for effectuating the parties intentions and wishes.
If parties intend that the legal regime applicable to arbitration agreements will apply to
their dispute resolution procedure, it is difficult to see why this should not ordinarily be
accommodated, even if they have not, strictly speaking, agreed to arbitrate. This is
consistent with principles of respect for party autonomy in international commercial matters,
(351) while, at the same time, there would appear to be only limited public policy interests in
preventing commercial parties from applying the procedural and legal protections of national
arbitration legislation to such forms of dispute resolution as they wish.
For example, if the parties agreed to a highly informal, technically-oriented meeting with an
expert to render a binding resolution of a technical dispute, which they have deliberately
provided would be treated as an arbitration, subject to national arbitration legislation, then
it is difficult to see why this characterization should not be accepted. (352) To be sure,
statutory mechanisms for recognizing and enforcing arbitration agreements (and arbitral
awards (353) ) should only be available where parties have clearly and knowingly provided for
their application to a process not ordinarily regarded as arbitration. (354) But, where this
occurs, it is difficult to see why the parties agreement should not, insofar as possible, be
respected. (355)
[E] Arbitration Before A Natural Person

P 292 Most arbitrations are conducted before an arbitrator who is a natural person, rather than
a corporation or other legal entity. This is in part reflective of arbitrations adjudicatory
character, where the tradition of individual (rather than corporate) judges runs deep. It is
therefore not surprising, that, in some countries, arbitrators must be natural persons, (356) nor
that one virtually never encounters international arbitrations involving arbitrators that are not
natural persons. (357)
Nonetheless, it is possible in many legal systems for a juridical person to be an arbitrator (358)
and there is a substantial argument that prohibitions against arbitration by legal entities
contradict the New York Conventions requirement that Contracting States recognize and
enforce agreements to arbitrate. (359) The uncertainties that such arrangements give rise to,
with regard to enforcement, counsel strongly against utilizing them in practice.
2.03 OTHER JURISDICTIONAL REQUIREMENTS AFFECTING LEGAL REGIME

APPLICABLE TO INTERNATIONAL ARBITRATION AGREEMENTS
As noted above, international arbitration conventions and national legislation contain a
number of jurisdictional requirements that must be satisfied before these instruments will
apply to an arbitration agreement. (360) Some such requirements restrict the types of
arbitration agreements to which these instruments apply for example, imposing
requirements that the arbitration agreement arise in respect of a defined legal relationship,
in a commercial relationship and in an international context. Other requirements are
more in the nature of confirmations that particular matters may validly be the subject of an
arbitration agreement for example, providing that an arbitration agreement may deal with
noncontractual (as well as contractual) matters and future (as well as existing) disputes.
Finally, both international arbitration conventions and national arbitration legislation also
contain a written form requirement, that serves as a jurisdictional prerequisite for
P 293 application of the legal regimes established by such instruments. (361) These written form
requirements must often be satisfied to establish the validity of arbitration agreements. (362)
Nonetheless, as discussed below, these written form requirements also serve as a condition for
application of the pro-arbitration regimes of leading international conventions (including the
New York Convention) and some national legislation. (363)
[A] Defined Legal Relationship

Some legislative frameworks for arbitration agreements are limited to agreements in respect
of a defined legal relationship. That is true of the New York Convention, the UNCITRAL Model
Law and other developed national arbitration legislation. (364) The effect of such limitations is
generally to place agreements to arbitrate which are not in respect of a defined legal
relationship outside of the pro-arbitration frameworks of international and national
arbitration instruments.
Under some legal systems, the defined legal relationship requirement is also a rule of
substantive validity (and not just a jurisdictional requirement for national arbitration
20
legislation). In these legal systems, parties cannot validly agree to arbitrate any disputes
which may arise between us in the future, but must instead specify with greater precision
what categories of disputes they intend to arbitrate. (365) That is illustrated well by Article 4 of
the former Swiss Concordat on Arbitration, which provided: Arbitration clauses may refer only
to future disputes arising out of a particular legal relationship. (366)
Some authorities have derived similar meanings from the New York Conventions provision, in
Article II(1), limiting the obligation of Contracting States to recognize arbitration agreements to
agreements to resolve disputes in respect of a defined legal relationship. In the words of one
commentary, [p]arties cannot enter into an unlimited agreement that any controversy that
P 294 should ever arise between them is subject to arbitration. There must be some degree of
specificity in defining the kind of controversy one undertakes to submit to arbitration. (367)
In practice, the defined legal relationship requirement has seldom been tested and has very
limited practical importance. Extremely broad arbitration clauses, (368) as well as arbitration
clauses with no express limits, (369) have frequently been enforced. Conversely, there are
virtually no reported cases in which an arbitration agreement has been held invalid on the
grounds that it does not deal with a defined legal relationship. (370)
One arguable exception arose in a New Zealand decision, where the arbitration clause
provided: any dispute which may arise between the parties to this agreement shall be settled
by arbitration. The New Zealand court held that the clause was not in terms, confined to
disputes which arise out of the particular business arrangement, and ex facie it would cover
any dispute whatever its character. (371) To this possibility, the court remarked obviously
some limitation has to be placed on it, though not explaining why this had to be done, and
therefore interpreted the clause as extending only to disputes related to the commercial
transaction covered by the contract. (372)
In principle, and despite some views to the contrary, (373) there is little, if any, reason that
even the most broadly drafted international arbitration agreements should not be given effect.
Provided that applicable standards of unconscionability are satisfied (374) and that the
disputes are arbitrable, (375) agreements to arbitrate open-ended categories of future
disputes compromise no public values and offer significant efficiencies. For example, if two
sophisticated multinationals agreed to arbitrate any future dispute arising between them in a
P 295 particular forum, there is scant reason to refuse to give effect to this bargain. It would
avoid future forum shopping, jurisdictional uncertainty and similar costs, while doing nothing
to prejudice public values or order. (376)
More controversial (but much less likely in practice) would be agreements among a large
number of commercial entities (e.g., half of all Fortune 250 companies), in which all disputes
among any two or more of these companies were submitted to arbitration. This would be
distantly related to the (non-binding) CPR pledges that a number of major multinational
corporations have made to resolve disputes among themselves by alternative dispute
resolution mechanisms. (377)
If a comparable selection of major multinationals were to agree that any international
disputes among their number would be resolved by international arbitration, in a particular
situs and under particular rules, concerns might be raised regarding the impact of such
arrangements on local judicial, legislative and governmental competences. It would likely be
said that this sort of agreement involved an unacceptable engagement by private parties in
the collective legislative ordering of dispute resolution mechanisms and decision-making.
(378) On the other hand, as long as the nonarbitrability and public policy doctrines were
available to protect particular public values (if necessary), (379) it is not clear why such
arrangements should not be enforced (as a means of relieving courts and governmental
budgets of the burden of commercial disputes). (380)
A debate over the foregoing considerations would be engaging, but is unlikely to come to pass,
outside academic discourse, because of the reluctance of private parties to commit
themselves to open-ended arrangements of this sort. However, the types of concerns that this
debate would involve illustrate the absence of any serious objection to the validity of
expansive arbitration agreements involving only limited numbers of parties. (381)
[B] Commercial Relationship

P 296 Some international and national arbitration instruments are expressly or impliedly
limited in scope to arbitration agreements arising from commercial relationships. (382) This
has the effect of excluding non-commercial matters from the scope of the pro-arbitration
regimes of such instruments. In turn, this exclusion can lead to definitional questions and
create opportunities for parochial resistance to contemporary pro-arbitration enforcement
regimes.
At the same time, as also discussed below, use of the term commercial has frequently played
a positive role in the international arbitral process. It is increasingly widely accepted that the
term commercial extends to the entire gamut of disputes arising from international trade,
financial, investment and related economic transactions, without excluding particular matters,
such as technology, intellectual property, employment, or other intensively-regulated fields. In
these circumstances, the contemporary requirement of a commercial relationship in fact
typically operates as a positive confirmation of the permissible and expansive breadth of
international arbitration agreements, rather than a meaningful negative limitation. (383)
21
[1] International Arbitration Conventions
[a] Geneva Protocol
Historically, the commercial scope of modern international arbitration has its roots in Article
1 of the Geneva Protocol. (384) Article 1 required that Contracting States recognize arbitration
agreements relating to commercial matters or to any other matter capable of settlement by
arbitration. It went on to provide that:
[e]ach Contracting State reserves the right to limit the obligation mentioned above to
contracts which are considered as commercial under its national law. Any Contracting State
which avails itself of this right will notify the Secretary-General of the League of Nations, in
order that the other Contracting States may be so informed. (385)
As the text of Article I of the Geneva Protocol suggests, the commercial requirement appears
to have been related to notions of nonarbitrability reflected in linkage of the requirement to
other matter[s] capable of settlement by arbitration and the apparently decisive role of
P 297 individual states national laws in defining what was commercial. (386) In turn, early
national arbitration statutes in many jurisdictions were limited to commercial relationships.
(387) This reflected the historic focus of arbitration in many jurisdictions as a means for
resolving business disputes, (388) as well as traditional restrictions under some national legal
systems regarding the scope of arbitrable disputes. (389)
[b] New York Convention
The New York Convention maintained a limited form of commercial requirement (modeled
generally on that of the Geneva Protocol). Article 1(3) of the Convention provides that
Contracting States may declare that the Convention applies only to relationshipswhich are
considered as commercial under the national law of the State making [the] declaration. (390)
The commercial exception in Article I(3) was adopted because some civil law nations took
the position during negotiations of the Convention that their domestic arbitration statutes
applied only to commercial (and not non-commercial) matters, and that they could ratify the
Convention only as to the former. (391) The commercial relationships requirement continued
to bear close parallels to the nonarbitrability doctrine, reflected in Articles II(1) and V(2)(a) of
the Convention, apparently permitting individual Contracting States to define particular
categories of non-commercial disputes as falling outside the scope of such states
commitments under the Convention. (392)
P 298 A substantial number of nations have made declarations under Article 1(3). (393) For
example, the U.S. reservation provides that the Convention will be applied only to differences
arising out of legal relationships, whether contractual or not, which are considered as
commercial under the national law of the United States. (394) In practice, these reservations
and the Conventions commercial requirement have given rise to few difficulties.
[i] Meaning of Commercial Under New York Convention
Even in Contracting States that have adopted a commercial reservation, national courts have
generally not construed the commercial relationship requirement to limit the scope of the
Convention. That is particularly true in the United States, where courts have repeatedly
rejected arguments that particular disputes are not commercial within the meaning of the
Convention. (395) Several lower U.S. courts have indicated that the definition of commercial
under the Convention is broader than that of commerce under the domestic FAA. (396)
U.S. courts have, unsurprisingly, held that a classic example of a commercial relationship is
one involving the purchase and sale of goods by two corporations. (397) Additionally, it is
clear in the United States that the term commercial relationship includes employee-
employer relations, (398) consumer transactions, (399) shareholder disputes, (400)
P 299 contracts where a foreign state constructs buildings for (and leases them to) a foreign investor,
(401) relationships giving rise to antitrust and other public law disputes, (402) cases involving
claims by foreign regulatory authorities, (403) insurance and reinsurance contracts (404) and
maritime agreements. (405) Emphasizing the breadth of commercial activities, one U.S. court
held that [t]he fact that the employer-employee relationship may include a degree of
fiduciary obligation does not deprive it of its commercial character. (406)
U.S. courts have also concluded that neither the U.S. commercial reservation to the
Convention nor the Convention and its U.S. implementing legislation, limit the scope of the
Convention in U.S. courts to those relationships which are subject to the domestic FAA. (407)
Thus, U.S. courts have held that arbitration agreements in seamens employment contracts,
which are specifically excluded from the scope of the domestic FAA, (408) are nonetheless
subject to the New York Convention and the FAAs second chapter. (409) As one court reasoned:
P 300 the language of the Convention, the ratifying language, and the [FAAs second chapter]
implementing the Convention do not recognize an exception for seamen employment
contracts. On the contrary, they recognize that the only limitation on the type of legal
relationship falling under the Convention is that it must be considered commercial and we
conclude that an employment contract is commercial. (410)
The court also concluded that, even if there were questions as to the correctness of this
conclusion, doubts as to whether a contract falls under the [Convention and its implementing
legislation] should be resolved in favor of arbitration. (411)
22
Courts from other developed jurisdictions have also generally interpreted the commercial
relationship requirement very broadly. (412) Indeed, most reported cases have raised no
serious questions as to the scope of the requirement. (413) In Carters (Merchants) Ltd v. Ferraro,
for example, an Italian court held that the arbitration clauses contained in the parties
contract fell within the New York Convention. The court noted that the clauses referred
exclusively to a contractual relationship involving a sale, which was plainly commercial
under Italian law. (414)
Nevertheless, there is still scope for differences over the Conventions commercial
requirement. In other contexts, such as under the foreign sovereign immunity and act of state
doctrines, national courts have struggled with commercial exceptions. (415) Disputes can
therefore be anticipated over the application of the Convention in the context of public law
P 301 statutory rights, such as the antitrust laws, (416) and concession agreements or other
contracts involving elements of national sovereignty. (417) Alternatively, suggestions have been
made that consumer transactions (418) and employment relations (419) should be treated as
non-commercial.
Motivated by such concerns, a few isolated national court decisions have adopted what
appear to be narrow definitions of commercial relationship under the Convention. (420) For
example, in one early decision, an Indian court held that agreements concerning the transfer
of technology were not commercial under Indian law or the Convention. (421) Likewise, the
Tunisian Cour de Cassation held that a contract for the architectural design in a town-planning
program was not commercial. (422)
These decisions are retrograde and fail to give effect to either the Conventions objectives or to
contemporary conceptions of commercial. They typically reflect parochial efforts to
safeguard local interests, without due regard for the Conventions objectives of ensuring a
neutral, efficient means of resolving international disputes. As discussed below, they also
adopt artificial and implausible conceptions of what constitutes commercial, which do not
accord with either parties expectations or the needs of international commerce.
[ii] International Limits on Definition of Commercial Under New York Convention
P 302 Read literally, Article I(3) of the New York Convention arguably leaves it to individual
Contracting States to define commercial under national law, without imposing any
international limits on national definitions. (423) This interpretation of Article I(3) would result
in the provision largely duplicating the nonarbitrability doctrine, (424) by permitting
Contracting States to rely on local law to avoid application of the Conventions pro-arbitration
regime. It would also permit dilution or circumvention of the Conventions objectives through
adoption of artificially narrow definitions of the term commercial. Despite this possibility,
the Conventions commercial requirement has in practice produced few such difficulties in
most national courts, and the clear trend has been towards a liberal and expansive definition
of the term.
Notwithstanding the literal language of Article I(3) of the Convention, a substantial case can be
made that Contracting States are not free to adopt whatever definition they choose of the term
commercial. Permitting this type of unilateral action without any sort of international limit
would effectively allow states to empty the Convention of most or all meaningful obligations,
(425) which cannot have been the drafters intentions.
Rather, the better view is that the Convention leaves Contracting States free, within the scope
of an internationally-defined conception of commercial, to adopt particular reservations
based on specific national law definitions. That is, a Contracting State is free under Article I(3)
to make a reservation declaring that it does not accept the Conventions obligations as to
particular non-commercial matters (e.g., domestic relations), but a state is not free to
categorize what are properly regarded, from an international perspective, as commercial
matters (e.g., contract claims arising from a joint venture agreement) as non-commercial, and
thereby to evade the Conventions obligations with regard to such matters. (426)
Under this analysis, if a Contracting State wished to do so, it would remain free to invoke
nonarbitrability and public policy exceptions to the recognition of arbitral awards (Article V(2))
(427) and arbitration agreements (Article II(1)). (428) Again, however, a Contracting State could
not define commercial matters to be non-commercial. In addition to limiting the possibilities
that the Conventions objectives would be frustrated or circumvented, this analysis would also
reduce duplication between the Conventions commercial relationship requirement and
P 303 nonarbitrability exception. It would do so by leaving Contracting States free to exclude
genuinely non-commercial disputes from the Convention, while also adopting more carefully-
tailored public policy and nonarbitrability restrictions as to particular categories of disputes
under Articles V(2)(a) and II(1).
In terms of the content of the term under the Convention, a commercial relationship should
have its ordinary meaning, being a relationship involving an economic exchange where one (or
both) parties contemplate realizing a profit or other benefit. This definition is consistent with
the weight of lower court authority under the Convention (429) and the definition of the term in
other contexts. (430) It is a liberal, expansive definition that includes all manner of business,
financial, consulting, investment, technical and other enterprise.
Among other things, the foregoing definition of commercial includes consumer transactions
and (less clearly) employment contracts, thereby bringing agreements to arbitrate disputes
23
arising from such matters within the Convention. This leaves Contracting States free, within the
Conventions other limits, to adopt rules of substantive validity or nonarbitrability tailored to
employment or consumer relations which is preferable to a categorical exclusion of the
Conventions protections in such cases: Contracting States may then permit the arbitrability of
certain kinds of employment or consumer disputes, in which case the Convention would apply,
but not others, in which case the dispute will be nonarbitrable. (431) Indeed, as discussed in
greater detail below, this would facilitate the use of international arbitration to resolve at
least some types of cross-border consumer or international employment disputes in ways that
can be fairer and more effective than traditional domestic litigation. (432)
It is also important to note that the character of a relationship as commercial is not affected
by the types of claims or disputes that arise from that relationship. The commercial
relationship requirement focuses only on the nature of the underlying relationship between
the parties, and not on whether the parties are asserting contract claims, statutory claims, or
other types of claims as a result of disputes that have arisen in the course of their relationship.
Where a party asserts claims that, under national law, are not capable of settlement by
arbitration, this can be addressed by the nonarbitrability doctrine (under Article II(1) and V(2)
(a) of the New York Convention and parallel provisions of national law); it is these provisions,
and not the commercial relationship requirement, that look to the character of the parties
claims and the subject matter of their dispute.
Finally, there are also good grounds for Contracting States to reconsider their commercial
reservations under the Convention as a matter of policy, in order to prevent the definitional
disputes and parochial responses discussed above. The better approach to Article I(3) was
P 304 adopted by France in 1989, which withdrew the commercial reservation that it made when
originally ratifying the New York Convention. (433) That removes the need for definitional
debates about what relationships, and arbitration agreements, are commercial. Similarly,
Slovenia followed this approach in 2008 when it withdrew the declaration it had made when
succeeding to the New York Convention in 1992. (434)
It does not appear that other countries have yet followed France and Slovenias example,
although its logic has much to recommend it. At the same time, as discussed above, most
Contracting States reservations for non-commercial matters have been invoked relatively
infrequently, making the need for such withdrawals less pressing.
[c] European Convention
Other international arbitration conventions have partially or entirely avoided the difficulties
arising from the New York Conventions approach to the commercial relationship
requirement. The 1961 European Convention is titled the European Convention on
International Commercial Arbitration and applies to arbitration agreements concluded for
the purpose of settling disputes arising from international trade between physical or legal
persons. (435) In contrast to the literal terms of the New York Convention, this definition
expressly adopts a uniform, international standard for international trade, from which
individual Contracting States are not free unilaterally to depart. (436) Although this does not
necessarily prevent Contracting State courts from adopting idiosyncratic interpretations of the
Convention, it materially limits the scope for doing so, by explicitly adopting an international
(rather than domestic) standard. (437)
Less helpful is the European Conventions reference to international trade, rather than
commercial relations. This change in terminology might be misused to imply a narrow
definition of commercial in other instruments (including the New York Convention and the
UNCITRAL Model Law) or, conversely, act as an exclusion of financial, investment and other
matters arguably not concerning trade.
In fact, the European Conventions drafters were seeking to make clear that the Convention
applied broadly to all agreements arising out of international trade, finance and investment,
P 305 without regard to historic or parochial distinctions between commercial and non-
commercial matters. (438) That objective could better have been accomplished by making
clear the contemporary, expansive international understanding of commercial. Nonetheless,
it is confirmed by the reference in the Conventions title to International Commercial
Arbitration, leaving little room for suggestions that the term commercial has a different
meaning than trade.
[d] Inter-American Convention
The Inter-American Convention applies to any agreement in which the parties undertake to
submit to arbitral decision any differences that may arise or have arisen between them with
respect to a commercial transaction. (439) Again, this improves on the New York Convention, by
removing any reference to national law definitions of commercial, and instead expressly
adopting a uniform international definition of the term. (440) Nonetheless, the Inter-American
Convention may be criticized for referring to a commercial transaction: that definition
arguably excludes non-transactional commercial conduct or disputes arising outside the
context of a specific transaction, and thereby creates scope for unnecessary jurisdictional
disputes. (441)
[e] Future Directions: Commercial Requirement in International Arbitration Conventions
The clear trend of international instruments and state conduct during the past eight decades
24
has been away from parochial definitions of commercial, and towards an expansive,
international understanding of the term, extending to all manifestations of international trade,
finance, investment, consulting, technical and similar activity characteristic of earning a profit
or realizing other economic returns or benefits. That is reflected in the express adoption of
uniform international standards in the European and Inter-American Conventions, as well as by
the liberal interpretation of the term commercial under the New York Convention by virtually
P 306 all authorities in virtually all leading jurisdictions. As discussed below, this trend is also
consistent with contemporary developments in the treatment of commercial
requirements under national arbitration legislation. (442)
The New York Conventions commercial relationship requirement should be interpreted
consistently with these developments. As discussed above, it should be interpreted as
contemplating international limits on what a state may characterize as non-commercial under
local law; in particular, Contracting States should not be permitted to define matters which are
characteristically engaged in for profit, in negotiated economic transactions or similar
business activity, as non-commercial. (443) This is consistent with the ordinary meaning of
the term commercial, while leaving Contracting States able to adopt more nuanced and
tailored rules of nonarbitrability with regard to particular types of commercial disputes that
implicate local public policies.
[2] National Arbitration Legislation
Like leading international conventions in the field, national arbitration statutes are frequently
limited to commercial matters. These limitations have, however, been interpreted in the
most liberal fashion and serve again more to emphasize the breadth of the international
arbitral process than to limit it.
[a] UNCITRAL Model Law
Article 1(1) of the UNCITRAL Model Law limits the Laws application to international
commercial arbitration. (444) Article 1(1) does not define the term commercial, but the Laws
drafters included a footnote to the text of the legislation which provides important guidance.
It reads:
The term commercial should be given a wide interpretation so as to cover matters arising
from all relationships of a commercial nature, whether contractual or not. Relationships of a
commercial nature include, but are not limited to, the following transactions: any trade
transaction for the supply or exchange of goods or services; distribution agreement;
commercial representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation agreement or
concession; joint venture and other forms of industrial or business cooperation; carriage of
goods or passengers by air, sea, rail or road. (445)
P 307 This explanation was not included formally as part of the text of the Model Law itself, but
nonetheless represents authoritative guidance as to the intended scope of the term
commercial, as used in the Model Law. (446)
The footnotes interpretation contains what may appear to be tautologies (e.g., commercial
means all relationships of a commercial nature). Nonetheless, the explanation confirms that
the term commercial has an extremely broad scope, extending to all forms of trade,
investment, finance and services. (447) Among other things, the term applies without regard to
the nature or form of the parties claims and looks only to the character of their underlying
transaction or conduct. (448) It also applies based on the nature of the parties underlying
relationship, rather than its purpose, which provides clarity sometimes lacking in state or
sovereign immunity settings. (449)
Some states that have implemented the Model Law have adopted the drafters explanatory
footnote as statutory language. (450) Other states have either omitted any definition of
commercial in their enactment of the Model Law (451) or have referred to international
trade or foreign trade in defining the scope of national legislation. (452) Regardless of the
statutory language adopted in particular jurisdictions, national courts have interpreted the
Model Laws definition of commercial broadly. (453)
P 308 Despite its breadth, the Model Laws footnote omits express reference to certain types of
transactions, including specifically consumer contracts and employment contracts. (454)
Equally, the Model Laws definition refers, albeit unclearly, to trade transactions, arguably
connoting involvement by traders or merchants, as distinguished from consumers or
employees. (455)
Nonetheless, the Model Laws list of examples of commercial relations is non-exclusive
(include, but are not limited to), making it difficult to draw conclusions from the exclusion of
particular types of transaction from the Laws footnote. (456) It is also noteworthy, however,
that the Model Laws footnote extends expressly to carriage ofpassengers and consulting,
which very arguably include at least certain consumer or employment relations raising the
question why other types of consumer and employment relations are any less commercial or
more appropriately excluded entirely from the Model Laws coverage. (457) The better view,
therefore, is that the Model Law includes within its coverage both consumer and employment
matters, subject to any specific nonarbitrability rules adopted in particular states pursuant to
Article 1(5) of the Law. (458) There are contrary decisions in Model Law jurisdictions, but they
are difficult to reconcile with the text of Article 1(5)s footnote and the objectives of the Model
25
Law. (459)
[b] U.S. Federal Arbitration Act
P 309 In jurisdictions that have not adopted the Model Law, national arbitration legislation and
judicial decisions confirm the trend towards expansive definitions of commercial
relationships. In the United States, 2 of the FAA is limited to arbitration agreements in
transaction[s] involving commerce. (460) U.S. courts historically interpreted this language
broadly, extending the domestic FAA to arbitration agreements arising in a wide range of
settings. (461)
Among other things, U.S. judicial decisions have held that both employment (462) and
consumer (463) contracts constitute commerce within the meaning of the FAA. As discussed
elsewhere, the FAA contains exceptions for certain categories of interstate transportation
workers (seamen, rail workers). (464) These exceptions have been narrowly interpreted in both
domestic (465) and international (466) cases. The very existence of these exceptions confirms,
however, that the FAA is in principle applicable to employment relations.
The FAAs second chapter, which applies to arbitration agreements subject to the New York
Convention, does not contain a separate definition of (or requirement to satisfy) the term
P 310 commercial. (467) U.S. courts have held that the FAAs second chapter instead simply
incorporates the Conventions definition of commercial, which, as discussed above, has been
interpreted broadly. (468)
[c] National Arbitration Legislation Omitting Any Commercial Relationship Requirement
In some European states, an even more expansive approach is taken to the commercial
relationship requirement than in the United States. French judicial decisions have repeatedly
held that domestic distinctions between commercial and non-commercial matters, which
existed under previous French arbitration legislation, (469) were inapplicable in international
arbitration and that there is no commercial requirement or limitation in the international
context. (470) In international arbitration, French courts made clear that international
arbitration agreements are presumptively valid even in contracts not involving merchants.
(471)
A number of other developed states omit a commercial relationship requirement, instead
adopting less demanding limitations. The English Arbitration Act, 1996, omits any jurisdictional
requirement based on the existence of a commercial relationship and applies to all
arbitration agreements. (472) Germany also omitted the Model Laws commercial
relationship requirement, adopting only a general nonarbitrability exception, requiring that
arbitration agreements concern claims involving an economic interest. (473) Similarly, the
new Italian arbitration legislation does not make any reference to commercial disputes, and
instead allows parties to submit any disputes to arbitration provided the subject matter does
not concern rights which may not be disposed of, except in case of express prohibition by law.
(474) Other national arbitration legislation is similar. (475)
P 311 The basic purpose of these various statutory regimes is to limit objections to the
enforceability of arbitration agreements to generally-applicable rules of substantive validity
(476) or the nonarbitrability doctrine, (477) rather than adopting a commercial relationship
requirement or permitting it to be used for such purposes. As discussed above, this reflects
sound policy and is also the better interpretation of the New York Convention. (478)
[d] National Arbitration Legislation Imposing Strict Commercial Relationship Requirements
There are exceptions to these expansive definitions of commercial (or the abandonment of
any commercial relationship requirement). In 1987, the Chinese Supreme Peoples Court
produced a circular setting forth an interpretation of commercial arbitrations, which
excluded arbitration between a foreign investor and the host country. (479) Likewise, as
noted above, an Indian court held that agreements concerning the transfer of technology were
not commercial under Indian law, (480) while a Tunisian court held that a contract for the
architectural design in a town-planning program was not commercial. (481) One Canadian
court has also held that at least certain employment relations are not commercial. (482)
As also discussed above, these decisions are retrograde and fail to give effect to contemporary
conceptions of commercial or, properly understood, Contracting States obligations under
the New York Convention. They typically reflect parochial efforts to benefit local business or
other interests, and ignore the true intent of national arbitration legislation and international
arbitration conventions. Insofar as states wish to further specific local public policies with
regard to particular matters, the appropriate course is through a more nuanced, tailored use of
the nonarbitrability doctrine, rather than a blanket categorization of particular matters as
non-commercial.
[e] Future Directions: Commercial Requirement in National Arbitration Legislation
Despite isolated decisions adopting narrow definitions of what constitutes commercial, the
P 312 clear trend of national arbitration legislation and judicial decisions is towards either an
expansive definition of the term commercial or the omission of any commercial
relationship requirement. All forms of trade, investment, financing, provision of services or
goods, joint cooperation, insurance, research, exploration or development, and similar
economic, industrial, or other commercial enterprise are covered by the term commercial.
26
Historic distinctions, reflecting local statutory rules concerning commercial courts or codes,
have been abandoned, in favor of more liberal, realistic definitions of the term commercial.
These expansive definitions properly serve to effectuate the pro-arbitration objectives of both
international arbitration conventions and national legislation, extending their enforcement
regimes and procedural protections to virtually all consensual arbitration agreements
involving business or economic interests or activities. (483)
It is relevant, but not decisive, in defining the term commercial in national arbitration
legislation to consider the definition of commercial in other international contexts. One
arguable analogy involves foreign state (or sovereign) immunity. (484) Under most
international instruments and national state immunity legislation, foreign states are denied
immunity in certain commercial activities. (485) These definitions of commercial vary, but
generally include any form of profit-making or contractual activity. (486)
Importantly, however, the definitions that are appropriate for ascertaining the scope of state
or sovereign jurisdictional immunity in national courts should not be decisive for interpreting
the scope of parties autonomy under the New York Convention, the UNCITRAL Model Law, or
other arbitration legislation. The proper application of the Convention and the Model Law
involves different considerations and policies than do questions of state jurisdictional
immunity. While definitions of commercial from the state immunity context provide a
reference point, more expansive policies (of facilitating a consensual dispute resolution
process) and fewer concerns (regarding state sovereignty from non-consensual national court
proceedings) are at work in the arbitration context.
[C] International or Foreign Arbitration Agreements

As noted above, most international arbitration conventions apply only to arbitration
agreements that have some sort of foreign or international connection, and not to purely
domestic agreements. (487) The same is true under many national legal regimes, where
P 313 international or foreign arbitration agreements are often subject to distinct legislative
and/or judicial rules (distinguishable from those applicable to domestic arbitration
agreements). (488) This is consistent with the purpose of both types of instruments, which is to
facilitate the international arbitral process, without necessarily disturbing local regulation of
domestic arbitration matters.
[1] International Arbitration Agreements
[a] New York Convention
The Geneva Protocol was expressly limited to agreements to arbitrate between parties that
were nationals of different Contracting States. (489) This was the sole criterion for
internationality: other agreements to arbitrate, even if they involved classic cross-border
international trade or investment, were not subject to the Protocol.
In contrast, as noted above, the text of Article II of the New York Convention does not expressly
address the categories of arbitration agreements which are subject to the Convention. Instead,
the Conventions text only addresses what arbitral awards are entitled to the treatys
protections. (490) As a consequence, the definition of those arbitration agreements governed
by the New York Convention must be ascertained by implication, either by reference to the
Conventions treatment of awards or otherwise. In these circumstances, there are unfortunately
several possible interpretations that may be adopted. The analysis of these permutations can
be frustratingly complex, but, properly understood, ultimately produces a simple, sensible
result.
[i] International Arbitration Agreements Under New York Convention
As discussed below, by virtue of Article I(1), the New York Convention is applicable to specified
categories of foreign or nondomestic awards. (491) Arguably, the Convention is more broadly
applicable to a wider range of arbitration agreements, and is not limited by the Conventions
application to a specified category of foreign or nondomestic awards. (492) Under this view,
the Convention would apply either to all arbitration agreements, or, more satisfactorily, all
international arbitration agreements.
P 314 There is no text in the Convention that would specifically mandate such a definition.
Nonetheless, a compelling argument can be made that the Convention by its nature deals with
international arbitration agreements these, rather than domestic arbitration agreements,
being the obvious focus of the Conventions drafters. Equally, as discussed below, it would be
wrong to transpose the Conventions provisions regarding foreign and nondomestic awards
to arbitration agreements. (493)
Under this view, national courts would have the task of formulating an appropriate uniform
definition of such international arbitration agreements based on the Conventions structure
and objectives. As discussed below, this analysis would result in a straightforward, liberal
definition of international arbitration agreements to which the Convention applies as under
the UNCITRAL Model Law, presumptively including all agreements involving multinational
parties, transnational trade, investment, or other activities, and/or foreign arbitral seats. (494)
Before considering this result in greater detail, it is useful to outline other possible
interpretations of the Convention.
27
[ii] Foreign and Non-Domestic Arbitration Agreements Under New York Convention
The literal text of Article I(1) would arguably suggest that the New York Conventions foreign or
nondomestic award requirement (495) applies, albeit by analogy, to arbitration agreements.
Under this interpretation, the Convention applies to those arbitration agreements that will be
capable of producing a foreign or nondomestic award within the meaning of Article I(1) of
the Convention, but not to other arbitration agreements. (496)
(1) Foreign or Non-Domestic Awards
As discussed below, the Convention does not apply generally to international arbitral awards.
Instead, Article I provides that the Convention is applicable only to awards that are either: (i)
made in a state other than the Contracting State where recognition or enforcement is sought,
P 315 or (ii) not considered as domestic awards under the law of the Contracting State where
enforcement is sought. (497) These two criteria provide separate and independent bases for
concluding that an award is subject to the Conventions pro-arbitration enforcement regime.
(2) Foreign Arbitral Awards and Arbitration Agreements
The first of these two criteria is relatively mechanical and, as discussed below, can be readily
applied in the case of awards (e.g., is an award made in the state where litigation to recognize
or enforce the award is pending?). (498) This criterion would also be applied, a good deal less
easily, in the context of arbitration agreements (e.g., does the arbitration agreement provide
for arbitration in a state other than the state in which litigation has arisen?). (499)
Despite this apparent simplicity, a recurrent question applying this standard is whether the
New York Convention applies whenever a court in one Contracting State considers an
arbitration agreement specifying an arbitral seat in another Contracting State, including
particularly where the parties to the agreement are both nationals of the first Contracting
State (e.g., parties from State A agree to arbitrate in State B). Some national courts have
apparently held that this question is simple: if an arbitration agreement provides for
arbitration in another Contracting State, then it contemplates a foreign award and is subject
to the Convention, regardless of the nationality of the parties or the nature of the dispute. (500)
Thus, even if purely domestic parties agree to arbitrate a purely domestic dispute in a foreign
country, the arbitration agreement is subject to the New York Convention. This approach would
leave determination of an agreements international character substantially to the parties
choice, through their selection of the arbitral seat.
P 316 As discussed below, however, other national courts (particularly in the United States) have
been reluctant to apply the Convention to arbitration agreements between two nationals of
the same state concerning matters purely domestic to that state, even where the arbitral seat
is outside the state in question (i.e., two parties, both from State A, agree to arbitrate a
domestic dispute involving actions occurring only in State A, under State As law, in State B).
(501) These courts have reasoned that the Convention was not intended to apply to purely
domestic matters, involving only local parties. (502)
This interpretation is derived from U.S. legislation implementing the Convention, which
provides that an arbitration agreement or award arising out of a relationship between U.S.
citizens will not be subject to the Convention unless that relationship involves property
located abroad, envisages performance or enforcement abroad, or has some other reasonable
relation with one or more foreign states. (503) Relying on 202, U.S. courts have refused to
apply the Convention absent a reasonable relation between the parties agreement and one
or more foreign states; that includes refusals to apply the Convention to arbitration
agreements providing for arbitration outside the United States where the parties are only U.S.
citizens and their relationship is wholly domestic. (504)
Conversely, an application of Article I(1)s first criterion (i.e., a foreign award) would not
provide any basis for concluding that the Convention applies, in the national courts of a
particular Contracting State, to an arbitration agreement providing for arbitration within that
same Contracting State (e.g., if parties from States A and B engaged in a cross-border sale
transaction agree to arbitrate in State C, their agreement to arbitrate would be foreign in
States A and B, but would not be foreign in State C). Regardless of the international
character of the parties or the underlying contract or transaction, the relevant point under this
P 317 criterion is that the arbitration will not, in the courts of the Contracting State where the
arbitral seat is located, produce a foreign award; (505) by analogy, the arbitration agreement
that produces such an award would therefore not be subject to the Convention under this
criterion. (506)
(3) Non-Domestic Arbitral Awards and Arbitration Agreements
The second criterion for determining the applicability of the Convention is more (and
frustratingly) complex, even in the context of arbitral awards. This part of Article I(1) refers to
awards that are considered nondomestic under national laws in the Contracting State where
enforcement is sought. (507) This formula raises significant interpretative issues (although, in
practice, it is seldom applicable (508) ).
As discussed below, the better view of the Conventions treatment of awards is that Article I(1)s
reference to arbitral awards not considered as domestic awards in the State where their
recognition and enforcement are sought requires consideration of national law. (509) That is
required by the reference to awards that are not considered as domestic awards in the
28
enforcing state, which almost inevitably mandates an inquiry into the law of that state. (510)
Accordingly, as discussed in greater detail below, the category of what awards are subject to
the Convention according to Article I(1)s nondomestic criteria will vary depending on
definitions under national law in particular Contracting States. (511)
P 318 The same analysis would apply to arbitration agreements, where the scope of the
Convention would depend on individual Contracting States definitions of nondomestic
awards, because it would be the arbitration agreements that produce those nondomestic
awards which are subject to the Convention. (512) The definitions of nondomestic awards
under national law and hence, the derivative scope of Article I(1)s application to arbitration
agreements, if this analysis were adopted are discussed below. (513)
[iii] Future Directions: International Arbitration Agreements Under New York Convention
The better view of the foregoing issues is that the New York Conventions provisions regarding
arbitration agreements are not limited to those agreements that produce foreign and
nondomestic awards, but instead extend to all international arbitration agreements. In
practice, the most significant additional category of arbitration agreements that would be
encompassed by this definition of international arbitration agreements, but not by
arbitration agreements that produced foreign or nondomestic awards, would be
international agreements providing for arbitration in the state where recognition and
enforcement of the arbitration agreement is sought (e.g., parties from States A and B agree to
arbitrate in State C, with litigation concerning the arbitration agreement being commenced in
State C). The inclusion of this category of agreements in the Conventions coverage would
materially advance the Conventions purposes and is the better reading of its text.
The omission of any linkage between arbitral awards and arbitration agreements from the text
of the Convention is significant in this regard: although Article I(1) of the Convention defines
those awards to which the Convention applies, this definition does not expressly extend to
arbitration agreements, nor is there any indication that Article I(1)s definition is incorporated
into the definition of arbitration agreements, either expressly or impliedly. (514) Imposing such
a restriction on the Conventions scope requires implying a material limitation into the
Conventions text which could readily have been accomplished as a drafting matter, but was
not. Rather, the Convention adopts a sweeping approach towards arbitration agreements,
placing no literal limitation on those agreements that are subject to its pro-arbitration regime.
(515)
More important, implying such restriction would not advance, and would instead materially
contradict, the Conventions purposes, by excluding from its pro-arbitration regime a very
significant category of matters (e.g., litigations concerning an international arbitration
agreement in the courts of the arbitral seat). This would have the potential to frustrate the
Conventions fundamental objectives of facilitating the use and recognition of arbitration
P 319 agreements in international commercial matters. (516) Implying a restriction of this nature
on the Conventions scope, which contradicts the Conventions purposes, as well as its
language, is unjustified.
This interpretation is also consistent with the treatment of arbitration agreements under the
Geneva Protocol, from which the New York Conventions provisions regarding arbitration
agreements were directly derived. (517) The Protocol provided for the validity of arbitration
agreements between nationals of different Contracting States, essentially adopting a
nationality-based definition of international arbitration agreements. (518) Limiting the New
York Convention to arbitration agreements that would produce foreign or nondomestic
awards would be a retrograde step, that would materially reduce the protections for
international arbitration agreements under the Convention from that under the Protocol. It is
very difficult to conceive that this is what the Conventions drafters intended, particularly
given that one of their fundamental objectives was the exact opposite. (519)
The better view is that the scope of the textually unlimited Article II, as applied to arbitration
agreements, should be defined by reference to the Conventions purposes. That is, Article II(1)
and II(3) should not be interpreted to apply to purely domestic arbitration agreements, and
should instead apply to international arbitration agreements. (520) The precise
characteristics of an international arbitration agreement include reference to the parties
nationalities and domiciles (i.e., all arbitration agreements between parties of different
nationalities or domiciles are international) and the location(s) of their contemplated
business activities (i.e., all agreements involving transborder or foreign activities are
international). (521) This is consistent with the Conventions purposes of encouraging the use
of arbitration in international trade and investment, while not intruding upon purely domestic
matters. (522) As discussed below, most national arbitration regimes properly adopt a similarly
liberal definition of international arbitration agreements in these circumstances. (523)
[b] European Convention
P 320 Unlike the New York Convention, the European Convention attempts to provide a
definition of international arbitration agreements, to which the Convention applies. Article
I(1)(a) of the Convention provides:
This Convention shall apply: (a) to arbitration agreements concluded for the purpose of
settling disputes arising from international trade between physical and legal persons having,
when concluding the agreement, their habitual place of residence or their seat in different
29
Contracting States. (524)
This definition improves on the New York Conventions silence on this subject, but it was not
well-considered. The definition combines two requirements that is, that an agreement be for
the purpose of settling disputes arising from international trade, and that the agreement be
made between persons with their seats in different Contracting States. Requiring that both of
these criteria be satisfied in all cases imposes unnecessary limitations on the scope of the
Convention. For example, where two companies with their seats in State A (but with extensive
international operations) enter into a cross-border sales transaction or a joint venture in a
foreign state, it is very difficult to conceive why the Convention should not apply to their
arbitration agreement. Nonetheless, that is the effect of literal application of Article I(1)(a)s
criteria. (525)
[c] Inter-American Convention
The Inter-American Convention is applicable (according to its title and preamble) to
international commercial arbitration. (526) The Convention thus establishes a uniform
concept of international, but does not further define this phrase. That leaves national courts
and arbitral tribunals the responsibility to define international, based upon the Conventions
purposes. The appropriate definition of the term should parallel that under the New York
Convention (as discussed above). (527)
For the most part, national legislatures and judicial decisions have reached satisfying
definitions of international. These definitions are by no means uniform, but they reflect an
expansive conception of international arbitration agreements that generally ensures the
P 321 application of pro-arbitration enforcement regimes to any arbitration agreements
involving either cross-border trade and finance or transactions between parties of different
nationalities or domiciles. These definitions also inform the interpretation of the New York
Convention and its applicability to international arbitration agreements. (528)
The UNCITRAL Model Law contains a detailed definition of international arbitration, which is
indirectly applicable to arbitration agreements. Article 1(3) of the Model Law provides:
An arbitration is international if (a) the parties to an arbitration agreement have, at the time
of the conclusion of that agreement, their places of business in different States; or (b) one of
the following places is situated outside the State in which the parties have their places of
business: (i) the place of arbitration if determined in, or pursuant to, the arbitration
agreement; (ii) any place where a substantial part of the obligations of the commercial
relationship is to be performed or the place with which the subject-matter of the dispute is
most closely connected; or (c) the parties have expressly agreed that the subject matter of the
arbitration agreement relates to more than one country. (529)
Under Article 1(2) of the Model Law, (530) an international arbitration agreement is subject to
the most significant aspect of the Laws pro-enforcement regime Article 8s rule of
presumptive validity and specific enforceability of arbitration agreements regardless
whether the arbitral seat is located within the judicial enforcement forum or abroad. Notably,
this is a departure from the general structure of the Model Law, most of whose provisions apply
only to arbitrations seated on national territory. (531) Exceptionally, Article 1(2) makes the
Model Laws basic provision for enforcement of arbitration agreements applicable to
agreements providing for a foreign arbitral seat. (532) The UNCITRAL Secretariats Explanatory
Note on the Model Law emphasized the importance of this rule, noting that Article 8(1) 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. (533)
Most states that have adopted the Model Law have incorporated the definition contained in
P 322 Article 1(3), although a few statutes have modified the language (without apparent
substantive effect). (534) A few other states have limited the scope of international
arbitration as compared to the Model Law, (535) while others have eliminated the requirement
altogether (making the local enactment of the Model Law applicable to all arbitrations seated
on national territory, without regard to international or domestic character). For example,
Spain, Germany and Venezuelas enactment of the UNCITRAL Model Law, as well as the English
Arbitration Act, 1996, deleted provisions limiting the legislations application to international
arbitrations, extending it to all arbitrations, whether international or domestic. (536)
Article 1(3) of the Model Law provides an extremely broad definition of international, (537)
which has been criticized as overly-expansive. (538) Under its terms, an arbitration agreement
will be international if: (a) it is between parties from different states, (539) or (b) it provides
for arbitration outside the state where the parties have their places of business, (540) or (c) the
parties underlying commercial relationship provides for (substantial) performance outside
the state where the parties have their places of business. (541) Moreover, Article 1(3) also
separately permits parties to, in effect, contract into the Model Law by express agreement.
(542)
P 323 Under the Model Law, an arbitration agreement between nationals of State A, concerning
a local transaction in State A, providing for arbitration in State A, will not be subject to the
Model Law (absent agreement by the parties under Article 1(3)). (543) Purely domestic
30
arbitrations of this sort are not international in any respect and are excluded from the
coverage of the Model Law. Thus, some decisions in Model Law jurisdictions have considered
arguments that the Laws provisions do not apply to arbitration agreements purely local to a
foreign jurisdiction. In one Australian courts words:
At the heart of the application of the Act is the arbitration agreement. But the Act will not
apply to any and every arbitration agreement in the world: an arbitration agreement between
two Ruritanian subjects, made in Ruritania concerning a Ruritanian dispute and with the
conduct of the arbitration in Ruritania, could hardly be subjected to its provisions. (544)
Other than this, however, the scope of the Model Law is extremely broad: the definition of
international in Article 1(3) is expansive (indeed, arguably too expansive).
The Model Law provides in Article 1(3)(a) that an arbitration agreement will be international if
concluded between nationals of different states. This is sensible. If parties to an arbitration
agreement are from different states, many of the basic purposes of international arbitration
(i.e., providing a neutral dispute resolution mechanism that overcomes the jurisdictional
complexities and risks of local bias of international litigations (545) ) are implicated and it
makes perfect sense to apply the Model Laws pro-enforcement provisions. (546) Likewise, the
Model Laws statement (under Article 1(3)(b)(ii)) that an arbitration agreement will be
international if the parties contract concerns performance outside of the state where both
parties are located is sensible for the same reasons.
More controversial is Article 1(3)(b)(i)s provision that an arbitration agreement will be
international if it provides for an arbitral seat in a state other than that where the parties are
located. (547) Paralleling similar concerns that arise under the New York Convention, (548)
P 324 some commentators have questioned whether a choice made exclusively by the parties,
concerning the arbitral seat, should suffice to make the Model Laws pro-enforcement regime
applicable. (549) This criticism is understandable, but overbroad.
There may be cases where two domestic parties agree to arbitrate disputes concerning a
purely domestic transaction abroad, for the purpose of evading local regulatory requirements;
in these instances, Article 1(3)(b)(i) can readily be interpreted as not permitting such
circumvention. (550) In other cases, however, there is no reason not to apply Article 1(3)(b)(i) as
drafted.
For example, it is difficult to see why the Model Law should not apply where participants in a
particular industry agree to arbitrate in a foreign arbitral seat with recognized expertise,
experience and neutrality in their market, (551) or where companies with foreign roots or
affiliations (cultural, linguistic, or historical) agree to arbitrate in a foreign arbitral seat with
comparable cultural and linguistic affinities. (552) Although it is appropriate to be mindful of
the possibility that selection of a foreign arbitral seat may be a sham, to evade local
mandatory law or public policy, there are many instances where this is not the case and it is
inappropriate to discard legitimate private choices along with illegitimate ones.
Article 1(3)(c) has also been criticized on similar grounds, as permitting parties to opt-in to
the Model Laws internationality definition. (553) Some states that have adopted the Model
Law have therefore omitted Article 1(3)(c) from their definition of international arbitration.
(554)
This criticism is well-grounded. It would be an appropriate policy choice for a national
legislature to permit parties to any arbitration agreement international or domestic to
avail themselves of the legal regime set forth in the Model Law. Indeed, as discussed above,
some states have adopted identical legal regimes for both domestic and international
arbitration agreements and arbitrations. (555) Nonetheless, it makes little sense to permit
P 325 parties to do this by way of labeling domestic arbitrations/arbitration agreements as
international. This produces a lack of transparency and clarity which does not advance the
long-term interests of either international or domestic arbitration.
In the United States, the definition of international arbitration agreements for purposes of
domestic arbitration legislation (the FAA) is bound up with the specific text of the FAA and the
New York Convention. The U.S. approach nonetheless bears important parallels to
developments under the UNCITRAL Model Law. As discussed below, U.S. courts have held that
any arbitration agreement with a reasonable relation to one or more foreign states will be
governed by the New York Convention and its U.S. implementing legislation (Chapter 2 of the
FAA), (556) while indicating reluctance to apply the Convention to agreements exclusively
between U.S. nationals, concerning purely domestic U.S. transactions, to arbitrate in a foreign
arbitral seat. (557)
As discussed elsewhere, U.S. federal legislation provides two basic legal regimes for
arbitration: (a) the domestic FAA (Chapter 1), applicable to domestic arbitration agreements
and (residually) to international arbitration agreements not covered by the New York or Inter-
American Conventions; (558) and (b) the nondomestic FAA (Chapters 2 and 3), applicable to
international arbitration agreements covered by the New York Convention (Chapter 2) or Inter-
American Convention (Chapter 3). (559) This legislation provides only partial answers to the
question of what statutory provisions apply to particular arbitration agreements, although the
statutory framework is capable of being interpreted to provide a sensible result.
31
[i] Section 202 of Federal Arbitration Act
Section 202 of the FAA addresses the categories of arbitration agreements that are governed by
the statutes second, nondomestic chapter. Section 202 provides:
An arbitration agreement or arbitral award arising out of a legal relationship, whether
contractual or not, which is considered as commercial, including a transaction, contract, or
agreement described in 2 of this title, falls under the Convention. An agreement or award
arising out of such a relationship which is entirely between citizens of the United States shall be
deemed not to fall under the Convention unless that relationship involves property located
abroad, envisages performance or enforcement abroad, or has some other reasonable relation
with one or more foreign states. (560)
P 326 Section 202 is not, by its literal wording, an affirmative statement of the Conventions
scope in U.S. courts; rather, 202 is, by its terms, only a negative statement as to when the
Convention will be deemed inapplicable in U.S. courts. (561) Nonetheless, lower U.S. courts
have applied 202s reasonable relationship requirement as an (impliedly) affirmative
definition of when the Convention will apply to arbitration agreements and awards; in so doing,
they have assumed that, if an agreement or award has a reasonable relation to one or more
foreign states, then it will be subject to the Convention (regardless where the arbitration is
seated). (562) In effect, 202 constitutes the U.S. definition of the internationality of an
arbitration agreement, which in turn defines when the Convention and its U.S. implementing
legislation will apply to an arbitration agreement in U.S. courts.
There are three principal grounds for concluding that an arbitration agreement or arbitral
award has a reasonable relation to one or more foreign states: (i) the parties nationalities;
(ii) the locations of contractual performance, property, employees and other activities under
the parties agreement; and (iii) the arbitral seat. Each one of these grounds may provide an
independent basis for concluding that an arbitration agreement or award is subject to the
Convention in U.S. courts; the grounds may also be considered cumulatively, as contributing to
a conclusion that a particular agreement or award has a reasonable relation with a foreign
state (or states).
[ii] Nationalities of Parties
It is clear that 202 contemplates that the parties nationalities are relevant to determining
whether an arbitration agreement or arbitral award has a reasonable relation with a foreign
state. The text of 202 refers to agreements that are entirely between citizens of the United
P 327 States, leaving little question but that the parties nationalities or citizenships are
relevant to the relationship between their transactions and foreign states. (563) Consistent with
the statutory text, U.S. courts have repeatedly held that the Convention will apply to
arbitration agreements where one or more of the parties is a non-U.S. national. (564) As
discussed below, U.S. courts have reached this conclusion in cases where non-U.S. parties, or a
U.S. party and non-U.S. party, have agreed to arbitrate with the arbitral seat in the United
States. (565) Some U.S. courts have looked to the parties domiciles or principal places of
business, rather than their formal nationality, in applying 202s reasonable relation
standard. (566)
[iii] Location of Contractual Performance or Property
It is also clear that 202 provides for consideration of the location of the activities undertaken
in connection with the parties underlying contract, including the place of contractual
performance. That is evident from the text of 202, which contemplates consideration of the
extent to which the parties relationship involves property located abroad, [or] envisages
performance or enforcement abroad. Consistent with that text, U.S. courts have repeatedly
relied upon contractual performance (of the underlying commercial contract) outside the
United States in concluding that the parties arbitration agreement or arbitral award was (or
was not) subject to the Convention. (567)
[iv] Agreements to Arbitrate in United States
P 328 It follows from the foregoing that 202 is potentially applicable to agreements to arbitrate
at an arbitral seat in the United States, including agreements made solely between either U.S.
nationals or foreign nationals, provided only that the parties agreement has a reasonable
relationship to a foreign state. Applying 202, U.S. courts have held that the New York
Convention may apply to international arbitrations seated in the United States, including
arbitrations solely between U.S. nationals, as well as arbitrations between parties of other
nationalities in all cases provided that the arbitration agreement has a reasonable relation
to one or more foreign States.
Applying this analysis, in Lander Co., Inc. v. MMP Investments, Inc., (568) the Court of Appeals
held that the Convention applied to an arbitral award where the dispute was between two U.S.
parties and where the arbitration took place in the United States. The Seventh Circuit found
that the parties contract to distribute products in Poland fell squarely within the inclusion
[sic] and outside the exclusion of 202. The Court explored the language of 202, explaining:
Congress may have believed that confining enforcement under the Convention to awards
rendered abroad would drive away international arbitration business from New York. Or it may
have been seeking to secure the Conventions benefits, on the basis of reciprocity, to American
businesses seeking judicial enforcement of foreign arbitration awards in the countries in which
32
the award was made. Or it may simply have wanted to simplify the procedures governing the
foreign activities of American firms, since American firms doing business abroad are bound to
have contracts with foreign firms as well as other American firms. Whatever Congresss precise
thinking on the matter, it spoke clearly. (569)
Similarly, another U.S. appellate court categorized an award made in the United States as
nondomestic, and subject to the Convention under 202 of the FAA, because one of the
parties was German. The court reasoned that arbitration agreements and awards not
considered as domestic in the United States are those agreements and awards which are
subject to the Convention not because they were made abroad, but because they were made
within the legal framework of another country. (570) The court went on to note its preference
for this broad construction because it is more in line with the intended purpose of the [New
York Convention], which was entered into to encourage the recognition and enforcement of
international arbitration awards. (571)
Finally, in Bergesen v. Joseph Muller Corp., (572) the Second Circuit held that the New York
Convention was applicable to an award made in New York arising from an arbitration of a
dispute between two foreign parties:
P 329 We adopt the view that awards not considered as domestic denotes awards which are
subject to the Convention not because made abroad, but because made within the legal
framework of another country, e.g., pronounced in accordance with foreign law or involving
parties domiciled or having their principal place of business outside the enforcing
jurisdiction. We prefer this broader construction because it is more in line with the intended
purpose of the [New York Convention], which was entered into to encourage the recognition
and enforcement of international arbitration awards. Applying that purpose to this case
involving two foreign entities leads to the conclusion that this award is not domestic. (573)
Other U.S. decisions adopt similar analyses of 202s reasonable relationship standard and
the Convention. (574) These holdings are fully applicable to agreements to arbitrate in the
United States between U.S. nationals, as well as to awards.
[v] Agreements to Arbitrate Outside United States
Conversely, 202 is also applicable to agreements to arbitrate outside the United States,
including agreements solely between either U.S. or foreign nationals, again provided only that
the parties agreement has a reasonable relationship to a foreign state. In this regard, it is
clear that 202 encompasses virtually all agreements to arbitrate (in a non-U.S. seat or a U.S.
seat) between non-U.S. nationals or between U.S. and non-U.S. nationals. (575)
Agreements between U.S. nationals (and not involving any non-U.S. nationals) to arbitrate
abroad are potentially more complex under the FAA. Section 202 elaborates on the
reasonable relationship requirement by specifying that contracts involving property or
performance abroad have a reasonable relationship with a foreign state, but does not limit the
definition of agreements subject to the FAAs second chapter to such contracts. Rather, as a
P 330 matter of statutory interpretation, a reasonable relationship to a foreign state must
necessarily include things other than merely the existence of property or performance abroad
(which are separately mentioned in 202). It would therefore appear that this reasonable
relationship standard would in principle be satisfied by U.S. nationals agreeing to arbitrate a
domestic dispute (not concerning property or performance overseas) abroad, at least where
this was not an effort to circumvent local regulatory protections. For example, if a foreign
arbitral seat is selected because of historical, industry, or legal reasons (e.g., London,
Singapore or Hamburg for insurance or maritime matters), (576) this should be sufficient to
satisfy 202s reasonable relationship requirement.
This is confirmed by the fact that 202s reasonable relationship requirement is derived from
1-105 of the UCC. (577) As discussed elsewhere, 1-105 generally permits parties to a
transaction to select a neutral foreign law which has no connection to the parties transaction.
(578) Section 202 should similarly be interpreted as extending the FAAs second chapter to
cases where domestic U.S. parties have selected a neutral arbitral seat (especially where the
seat has particular expertise or historical experience). (579) U.S. judicial decisions are
generally consistent with this. (580)
By its terms, 202 nonetheless excludes some arbitrations that are seated outside the United
States, at least arbitrations involving only U.S. parties. The legislative history of 202 explains:
The second sentence of 202 is intended to make it clear that an agreement or award arising
out of a legal relationship exclusively between citizens of the United States is not enforceable
under the Convention in U.S. Courts unless it has a reasonable relation with a foreign state. (581)
The stated legislative purpose of 202s exclusion was therefore very clearly to avoid the
possible application in U.S. courts of the FAAs second chapter (and the New York Convention)
to arbitration agreements and awards concerning at least some purely local disputes between
P 331 U.S. nationals. (582) This legislative purpose and statutory limitation are consistent with
the criticism, discussed above, of Article 1(3)(b)(i) of the Model Law for its extension of the Law
to agreements by two locals to arbitrate a purely local dispute abroad. (583)
As contemplated by the text and legislative history of 202, U.S. courts have been reluctant to
apply the New York Convention and its implementing legislation to agreements to arbitrate
purely domestic disputes between U.S. nationals. Thus, one U.S. lower court held that the
33
Convention was not applicable to an agreement to arbitrate in Switzerland between a U.S.
company and its U.S. employee, where the parties underlying contract was to be entirely
performed in the United States. (584) Several other lower U.S. courts have reached similar
conclusions about agreements between U.S. citizens to arbitrate purely local disputes outside
the United States. (585) In contrast, as discussed above, where U.S. parties agree to arbitrate a
foreign or international transaction abroad (or at home), 202 clearly makes the Convention
applicable; (586) only agreements to arbitrate purely domestic U.S. disputes may be denied,
by some U.S. courts, protection under 202 and the Convention.
[vi] Consistency of 202 With New York Convention
The rationale of the U.S. decisions discussed above, and the text of 202, could not readily be
squared with a (mistaken) reading of the Convention as applying only to arbitration
agreements that produce foreign awards. (587) Under this reading, the Convention would not
make any exception for foreign awards which are rendered in disputes between local residents
or for foreign awards lacking a reasonable relationship to foreign matters; all such awards
fall within the literal terms of the Conventions definition of foreign awards and appear to be
subject to its coverage. Thus, if the Convention were (wrongly) interpreted as applying to
arbitration agreements that produce foreign awards, (588) then the foregoing U.S. decisions
would be very difficult to defend: they exclude from the Conventions coverage a category of
arbitration agreements that would be subject to its express coverage, by virtue of producing
foreign arbitral awards.
It is understandable that there are national legislative concerns about circumvention of
domestic regulations, by means of agreements to arbitrate purely domestic disputes abroad
(as under the Model Law). Nonetheless, the Conventions treatment of foreign awards does
P 332 not permit simply exempting all such awards from the scope of the Convention; rather, as
discussed below, some more nuanced and precise analysis into the circumvention of local
public policies would be required. That approach could refuse to give effect to arbitration
awards and (less clearly) agreements between local residents aimed at circumventing national
public policies or mandatory laws, but would not simply exclude all foreign awards between
local residents from the Conventions scope. (589)
On the other hand, if the Convention were interpreted as applying to international
arbitration agreements, as proposed above, (590) then the foregoing line of U.S. decisions
could be defended. Although such a result is not compelled, the definition of an international
arbitration agreement could be applied to exclude agreements between local nationals or
residents to arbitrate purely domestic disputes even if the arbitrations are conducted abroad.
(591)
Finally, even if the New York Convention, and the second chapter of the FAA, do not apply to an
agreement between U.S. parties specifying a foreign seat, it is important to note that 3 and 4
of the FAA still apply. (592) In principle, these provisions would also provide for the recognition
and enforcement of most arbitration agreements under a relatively pro-arbitration legislation
regime. (593) That regime is somewhat less favorable than the FAAs second chapter and the
New York Convention, but it would nonetheless generally provide an adequate basis for
enforcing an agreement to arbitrate.
[c] France
French law has a distinctive approach to the definition of international arbitration, which has
been influential in other francophone states. (594) Like earlier versions of French arbitration
legislation, (595) Article 1504 of the revised French Code of Civil Procedure provides that: an
P 333 arbitration is international when international trade interests are at stake. (596) Applying
this statutory definition (or its predecessor), French courts have focused exclusively on the
objective elements of a transaction or relationship, inquiring whether these elements
implicate international trade. (597)
Examples of agreements satisfying Article 1504s definition classically include cross-border
sale of goods, freight deliveries, or lending arrangements. (598) In the words of one leading
French judicial decision, addressing a predecessor version of Article 1504:
the international nature of an arbitration must be determined according to the economic
reality of the process during which it arises. In this respect, all that is required is that the
economic transaction should entail a transfer of goods, services or funds across national
boundaries, while the nationality of the parties, the law applicable to the contract or the
arbitration, and the place of arbitration are irrelevant. (599)
P 334 Another French authority reasons that the question whether an arbitration is international
or domestic is determined by the nature of the economic relationships from which the
dispute arose and does not depend on the parties will. (600)
These declarations have the advantage of clarity, but the disadvantage of being misconceived.
Ignoring the nationality of the parties, and insisting on some element of crossing national
borders, only imperfectly serves the purposes of the international arbitral process or the
legislation regulating that process. For example, if two French parties (or a French and a
foreign party) agree to participate in a joint venture in Egypt, or to construct a plant in China,
or to develop real estate in Florida, their undertaking must surely be considered international
even where the goods, materials, capital and know-how for the project are sourced entirely
abroad. Equally, the basic purposes of international arbitration (i.e., providing an efficient,
34
neutral decision-maker (601) ) are fully applicable in each instance. Yet, under the objective
approach to Article 1504 (and its predecessors) favored by French courts, it is exceedingly
difficult to reach this interpretative result, because in none of the cases is there any
meaningful transfer across national boundaries.
More fundamentally, the French approach ignores the fact that the nationality of the parties is
a consideration that is highly relevant to the basic purpose of the international arbitral
process. It is precisely because parties do not have confidence in, and familiarity with, the
courts of the home jurisdiction of their counterparty that they enter into international
arbitration agreements. (602) The French approach of ignoring the parties nationalities is
therefore not only contrary to the approach taken in the UNCITRAL Model Law (603) and FAA,
(604) as well as the European Convention (605) and Geneva Protocol, (606) but inconsistent
with one of the basic purposes of the international arbitral process.
[d] English Arbitration Act
The English Arbitration Act, 1996, provides one of the least complex approaches to the legal
regime governing international arbitration agreements. The Act does so by treating both
domestic and international arbitration agreements the same; both categories of arbitration
agreement are subject to the Act. (607) In so doing, the Act deliberately departed from the
UNCITRAL Model Law, which was limited to international arbitration agreements.
P 335 The English Arbitration Act does, however, adopt different approaches to arbitrations
seated in England and those seated abroad. (608) In particular, like the Model Law, most of the
Acts provisions apply only to arbitration agreements providing for arbitrations seated in
England (and not arbitrations seated abroad). (609) At the same time, basic provisions
regarding the presumptive validity of arbitration agreements and the specific enforceability of
such agreements (by means of a stay of litigation) (610) are applicable to arbitration
agreements regardless of the arbitral seat. (611) Like the Model Law, this approach makes the
fundamental requirement that arbitration agreements be recognized and specifically enforced
applicable regardless of the arbitral seat, while limiting other provisions (regarding
competencecompetence and separability) to agreements to arbitrate in England.
[e] Swiss Law on Private International Law
Article 176 of the Swiss Law on Private International Law provides that the Acts provisions are
limited to cases where at least one of the parties was neither domiciled nor resident in
Switzerland at the time of the conclusion of the arbitration agreement. (612) The nationality of
the parties is irrelevant for the purposes of this provision, which considers only issues of
domicile and residence. (613) Additionally, and importantly, the arbitration provisions of the
Swiss Law on Private International Law apply only to arbitration agreements where the arbitral
seat is in Switzerland. (614) Where the arbitral seat is abroad, the New York Convention is
applicable to arbitration agreements in Swiss courts (but not otherwise). (615)
[f] Other National Arbitration Legislation
Other nations adopt a variety of different approaches to the definition of international
arbitration agreements. (616) Many, but not all, of these approaches involve some
consideration of the parties nationalities.
Italys former arbitration statute provided that an arbitration agreement is international if at
P 336 least one of the parties is resident or has its de facto headquarters abroad, or where a
substantial part of the relationship from which the dispute has arisen must be performed
abroad. (617) To the same effect, Romania has adopted legislation providing that an
arbitration taking place in Romania shall be considered international if it has arisen out of a
private law relation having a foreign element. (618)
Other legislation adopts a cumulative requirement, along the lines of the European Convention
(discussed above (619) ). For example, Algerias arbitration legislation provides that an
arbitration is international if it relates to a dispute involving the interests of international
trade, in which at least one of the parties has its headquarters or domicile abroad. (620)
[g] Future Directions: International Arbitration Agreements Under National Arbitration
Legislation
The better approach, to be adopted in legislative drafting or by judicial interpretation when
statutory text will permit, is to define international arbitration agreements as extending to
any agreement between nationals or residents of different states, or to any agreement
involving a transaction that has a reasonable relationship to a foreign state. (621) That latter
category includes the shipment of goods, or the provision of intellectual property, technology,
know-how, services, or finance, to or from a foreign state. At the same time, this definition
generally excludes agreements to arbitrate between nationals and domiciliaries of a single
state, involving a purely domestic transaction, typically including when they agree to arbitrate
abroad. (622) This approach is consistent with the better-conceived national legislative
P 337 approaches (including the UNCITRAL Model Law, the FAA and the Swiss Law on Private
International Law), as well as with the objectives of the international arbitral process.
In principle, as discussed below, it is also better to extend national arbitration legislations
provisions regarding the validity and specific enforceability of arbitration agreements to all
international arbitration agreements regardless of the arbitral seat. (623) That is consistent
35
with the approach of the Model Law, FAA, English Arbitration Act and other national arbitration
legislation. (624) As discussed below, provisions of national law regarding other aspects of the
arbitration agreement, including particularly rules regarding choice of law and competence-
competence, should also apply to arbitration agreements regardless of the arbitral seat,
although this is not the majority approach of national legislation. (625)
[D] Disputes or Differences

International arbitration conventions and national legislation are generally limited to
agreements to arbitrate disputes, or differences. As discussed above, Article II(1) of the New
York Convention applies to an agreement to arbitrate differences, (626) while Article I(1)(a) of
the European Convention applies to agreements to arbitrate disputes. (627) Similarly, Article
7(1) of the UNCITRAL Model Law and most other national arbitration legislation applies to
agreements to arbitrate disputes or controversies. (628)
In virtually all settings, a dispute requires only an assertion or claim of a legal entitlement by
one party and a denial or refusal to fulfill that claim by a counter-party. (629) As the
Permanent Court of International Justice concluded, in one frequently-cited decision, [a]
P 338 dispute is a disagreement on a point of law or fact, a conflict of legal views or of interests
between two persons. (630) Or, in the words of one arbitral award, a dispute is a present
divergence of interests and opposition of legal views. (631)
In practice, virtually any commercial disagreement will constitute a dispute. (632) In
particular, it is clear that the existence of a dispute does not involve any consideration of the
merits or substance of either parties claims (or defenses), and considers only whether or not
there is a disagreement. (633)
Despite this, a few national courts have held, in particular cases, that national arbitration
legislation was inapplicable because there was no real dispute between the parties, after
concluding that one partys position was either concededly or undeniably unsustainable. (634)
As one court put it, a stay of litigation is only required if there is a real and genuine dispute
to be referred to arbitration. (635)
P 339 These interpretations of the term dispute are misconceived. A decision on the merits of
the parties dispute is one for the arbitrators to make, and national courts are not at liberty to
circumvent the agreement to arbitrate by inquiring whether one partys position is or is not
tenable. That is true even if requiring arbitration will impose undue costs or delays: it was the
parties decision to conclude an agreement to arbitrate and that agreement must be enforced.
Recognizing precisely this point, the drafters of the English Arbitration Act, 1996, (636) and
subsequent English judicial decisions, (637) have rejected prior authority and provided
expressly that a dispute exists so long as there is a claim by one party against another. (638)
Decisions in other jurisdictions are similar. (639)
Nonetheless, in cases involving unequivocal admissions of liability, some courts continue to
hold that no dispute capable of reference to arbitration exists. (640) This requirement is
P 340 generally interpreted narrowly, with those courts which apply it requiring proof that a party
has unequivocally admitted a claim; a showing that there is no arguable defense to a claim will
ordinarily not be sufficient. (641)
[E] Disputes Whether Contractual or Not

International and national arbitration instruments also contain language that extends the
definition of arbitration agreement to agreements to resolve disputes whether contractual
or not. (642) These provisions have the effect of ensuring the presumptive validity of
arbitration agreements concerning noncontractual disputes, such as disputes involving claims
of tort (delict) or breach of statutory protections (antitrust/competition, securities laws). (643)
As discussed elsewhere, these are categories of disputes where arbitration agreements
historically have been particularly likely to encounter enforcement difficulties, (644) and the
express confirmation that agreements concerning such claims are arbitrable assists in
overcoming these obstacles. It is clear that the reference to noncontractual disputes is to be
interpreted expansively, to permit arbitration in principle of the broadest possible range of
matters. (645)
P 341 Consistent with this analysis, a Canadian court held:
The mere fact that a claim sounds in tort does not exclude arbitration. The [New York]
Convention and [the International Commercial Arbitration] Actcover both contractual and
non-contractual commercial relationships. They thus extend their scope to liability in tort so
long as the relationship that creates liability is one that can fairly be described as
commerciala claim that a corporation conspired with its subsidiaries to cause harm to a
person with whom it has a commercial relationship raises a dispute arising out of a
commercial legal relationship, whether contractual or not. (646)
As discussed in greater detail below, arbitral tribunals and national courts have routinely
upheld the arbitrability of tort and other noncontractual claims. (647) There can be no serious
doubt but that agreements to arbitrate tort claims are subject to the New York Convention and
all contemporary national arbitration statutes. (648) The same is in principle true of statutory
claims, although these may exceptionally be subject to national nonarbitrability rules. (649)
36
[F] Disputes Which Have Arisen or Which May Arise
International and national arbitration instruments also contain provisions that extend the
definition of arbitration agreement to disputes which have arisen or which may arise. (650)
This language makes clear that an arbitration agreement may apply to future, as well as
existing, disputes. This expressly rejects an historic view (still followed until recently in some
jurisdictions) that an arbitration agreement would only be valid if it applied to existing, and
not future, disputes. (651) The Conventions treatment of future and existing disputes, on equal
terms, has been characterized as a uniform international standard arising under the
Convention. (652)
[G] Reciprocity Requirement

P 342 The New York Convention permits Contracting States to make reciprocity reservations.
(653) Article I(3) of the Convention provides that Contracting States may declare that they will
apply the Convention, on the basis of reciprocity, to the recognition and enforcement of only
those awards made in the territory of another Contracting State. (654) Roughly two-thirds of
the Conventions Contracting States have made reciprocity reservations. (655) In addition,
Article XIV of the Convention contains a separate, more general reciprocity provision, limiting a
Contracting States rights under the Convention to those which it is itself bound to apply.
(656)
In contrast, other international instruments do not ordinarily include a reciprocity limitation.
That is true with respect to both the European Convention and the Inter-American Convention.
(657) Similarly, national arbitration statutes do not ordinarily contain any express reciprocity
requirements applicable to the enforcement of arbitration agreements (or arbitral awards).
Thus, no reciprocity requirement is contained in the UNCITRAL Model Law, the FAA, the French
Code of Civil Procedure, the Swiss Law on Private International Law, or the Japanese Arbitration
Act.
The applicability of the New York Conventions reciprocity requirement to arbitration
agreements as distinguished from arbitral awards (658) is not clear. The reciprocity
limitations in Article I(3), and in most states reciprocity reservations, refer, by their literal
terms, only to arbitral awards, not arbitration agreements. At least arguably, therefore, Article
IIs requirements for the recognition and enforcement of arbitration agreements apply without
regard to reciprocity, including, for example, to agreements to arbitrate in non-Contracting
States or with nationals of non-Contracting States.
Notwithstanding this, several national courts have limited the reach of Article II of the
Convention to only those arbitration agreements that specify an arbitral seat in another
Contracting State that is, these courts have refused to refer a party to arbitration in a seat
within a country that is not a Contracting State under the Convention, reasoning among other
things that there is an implied exception to Article II for agreements that would produce
unenforceable awards because of the reciprocity reservation. (659) Similarly, Article XIV of the
P 343 Convention refers more broadly to reciprocity, without limiting the principle to awards; at
least arguably, the purposes of the reciprocity reservation would appear applicable to
arbitration agreements as well as awards.
Other national courts, both in the United States and elsewhere, have rejected this view. They
have reasoned, for example, that Article I(3)s reciprocity limitation clearly applies only to the
recognition and enforcement of arbitral awards; it has no relevance to the problem pending
before this court whether to order arbitration under the terms of the Convention. (660)
Even if it applies to arbitration agreements, a reciprocity limitation does not necessarily
relieve nationals of Contracting States of obligations to arbitrate against nationals of non-
Contracting States. Some U.S. courts have held that U.S. parties (and other parties from
Contracting States) are required by the Convention to arbitrate against parties from non-
Contracting States, provided that the arbitration agreement specifies an arbitral seat in a
Contracting State. (661) This reasoning fails to address the more general terms of Article XIV, or
the basic purposes of the Conventions reciprocity exception. As discussed in greater detail
below, these purposes would permit a Contracting State to deny the Conventions protections
to parties from non-Contracting States, who sought to invoke the Convention against a party
from a Contracting State. (662)
[H] Writing and Other Form Requirements

A final arguable jurisdictional condition involves written (and related) form requirements. As
discussed below, Article II of the New York Convention applies only to agreements in writing
to arbitrate, which are defined by Article II(2) of the Convention to include an arbitral clause
in a contract or an arbitration agreement, signed by the parties or contained in an exchange of
letters or telegrams. (663) Similarly, the UNCITRAL Model Law and other leading national
arbitration legislation impose a variety of different writing and similar form requirements.
(664)
As discussed below, some of these instruments form requirements are matters of the validity
of arbitration agreements; if these requirements are not satisfied, then the agreement is not
valid. (665) As also discussed below, other form requirements are instead jurisdictional
conditions for the applicability of the relevant convention or legislation; in particular, that is
P 344 the case with the written form requirement applicable under the New York Convention.
37
(666) The subject of written (and other) form requirements is discussed in detail below. (667)
2.04 RELEVANCE OF ARBITRAL SEAT TO LEGAL FRAMEWORK GOVERNING

INTERNATIONAL ARBITRATION AGREEMENTS
As discussed elsewhere, the location of the arbitral seat plays an essential role in determining
the legal framework for international arbitral proceedings (668) and international arbitral
awards. (669) In general, the law of the arbitral seat provides a mandatory legal framework
applicable to the conduct of the arbitral proceedings, (670) and to the form, notification,
correction and annulment of an arbitral award. (671)
As noted above, the location of the arbitral seat ordinarily has less importance in determining
the legal framework for international arbitration agreements than for arbitral proceedings or
awards. (672) Rather, the rules of presumptive validity of arbitration agreements, and related
enforcement mechanisms, that exist under leading pro-arbitration legal regimes generally
apply to international arbitration agreements providing either for arbitrations seated locally
or for arbitrations seated abroad. Nonetheless, as also noted above, there are important
instances where different statutory provisions of national arbitration legislation apply
depending on the location of the seat.

As discussed above, the pro-arbitration regimes of most international arbitration conventions
do not depend on the location of the arbitral seat insofar as provisions regarding arbitration
agreements are concerned. Rather, under the Geneva Protocol, the European Convention and
the Inter-American Convention, international arbitration agreements are subject to the
conventions respective pro-arbitration provisions regardless of the location of the arbitral
seat. (673)
The only arguable exception to this approach is the New York Convention, where, as discussed
above, application of Article II of the Convention arguably depends on whether an arbitration
agreement will result in a foreign arbitral award. (674) The better view, however, is that the
P 345 Convention applies to all international arbitration agreements, regardless whether the
arbitral seat is abroad or not. (675) This is consistent with the approach of other leading
international arbitration conventions and with the weight of national court authority under the
Convention, which applies Article II to all international arbitration agreements, whether
providing for foreign arbitral seats or otherwise. (676) This approach is also consistent with the
overwhelming weight of national arbitration legislation, including the UNCITRAL Model Law,
which apply regardless where the arbitral seat is located. (677)
[B] National Arbitration Legislation

Under all contemporary national arbitration legislation, the basic rule of presumptive validity
of international arbitration agreements, and the mechanisms for enforcing such agreements
apply equally to arbitration agreements providing for foreign arbitral seats and for domestic
arbitral seats. That is the case, for example, with Article 8 of the UNCITRAL Model Law, (678) as
well as virtually all other contemporary national arbitration statutes. (679)
As discussed elsewhere, the UNCITRAL Model Law is generally-applicable only to arbitrations
seated within national territory. (680) One important exception to this territorial limitation is
Article 8 setting forth the basic rule of presumptive enforceability of arbitration agreements
and the obligation of specific enforceability (681) which applies to international arbitration
agreements without regard to the location of the arbitral seat. (682) Consistent with this,
judicial decisions in Model Law jurisdictions have almost uniformly applied Article 8 without
regard to the location of the arbitral seat. (683)
Nonetheless, other significant aspects of the Model Laws legal regime for international
arbitration agreements apply, by their terms, only to agreements providing for arbitration
within national territory. In particular, as noted above, the Model Laws provisions regarding
written form, competence-competence and the tribunals power to order provisional measures
are not directly applicable to agreements to arbitrate abroad. (684) These provisions may be
applicable by analogy, (685) but are excluded from direct application by Article 1(2) of the
Model Law.
P 346 Other national arbitration legislation applies equally to agreements to arbitrate
domestically and abroad. In the United States, the FAAs provisions regarding the presumptive
validity of arbitration agreements apply without regard to the arbitral seat. (686) The same
applies to U.S. rules regarding competence-competence, (687) interpretation, (688) legal
effects (689) and the choice of law governing arbitration agreements. (690)
French law adopts an approach comparable to that in the United States. The international
provisions of the French Code of Civil Procedure (Articles 1504 to 1527) apply to all
international arbitration agreements, (691) regardless of the location of the arbitral seat. This
approach extends to French choice-of-law and competence-competence rules applicable to
international arbitration agreements. (692)
In contrast, the Swiss Law on Private International Law distinguishes between agreements to
arbitrate abroad and agreements to arbitrate in Switzerland. As discussed above, Article 176 of
the Swiss Law on Private International Law limits the legislations scope to any arbitration if
38
the seat of the arbitral tribunal is in Switzerland. (693) This limitation has been held
applicable to Article 178s provisions regarding the formal and substantive validity of
arbitration agreements. (694) Under Swiss law, arbitration agreements providing for
arbitration abroad are governed by Article II of the New York Convention (not Article 178). (695)
P 347 The better approach is that taken by U.S. and French law, which is generally to apply the
same legal framework to all international arbitration agreements, regardless of the location of
the arbitral seat. Provided that an international arbitration agreement is involved, there is no
reason to discriminate against (or in favor of) agreements to arbitrate abroad. The same
validity (substantive and formal), separability, choice-of-law, competence-competence,
enforceability and interpretation rules should be applied by a national court to all
international arbitration agreements, regardless of the arbitral seat. As discussed in
subsequent Chapters, this is also the approach generally taken, either directly or by analogy
(or otherwise), in most developed jurisdictions.
P 348
References
1) For commentary, see1.04.
2) Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, 51 (Canadian S.Ct.).
3) See1.02[B][3].
4) See1.02[B].
5) See1.04.
6) See1.04[A]; 1.04[B][1]; 5.01; 8.01. See also B. Berger & F. Kellerhals, International and
Domestic Arbitration in Switzerland 20 (2d ed. 2010); G. Born & P. Rutledge, International
Civil Litigation in United States Courts 1161-62 (5th ed. 2011); J. Carter & J. Fellas,
International Commercial Arbitration in New York 1-34 (2010); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 1-4 (1999).
7) See1.04[A][1].
8) As noted above, the Conventions title is the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, with no reference to arbitration
agreements. See1.04[A][1], p. 99
9) See1.04[A][1], p. 101
10) A. van den Berg, The New York Arbitration Convention of 1958 6-10, 135 (1981); Summary
Record of the Twenty-Third Meeting of the United Nations Conference on International
Commercial Arbitration, U.N. Doc. E/CONF.26/SR.23 (1958) (discussing Article II);
Consideration of the Draft Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, U.N. Doc. E/CONF.26/L.59, Agenda Item 4, 2 (1958) (working group draft of
Article II); Sanders, A Twenty Years Review of the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 13 Intl Law. 269, 277-79 (1979).
11) See, e.g., Polimaster Ltd v. RAE Sys., Inc., 623 F.3d 832, 841 (9th Cir. 2010) ([T]he New York
Convention was enacted to promote the enforceability of international arbitration
agreements.); Intl Ins. Co. v. Caja Nacional De Ahorro y Seguro, 293 F.3d 392, 399 (7th Cir.
2002) (The purpose of the New York Convention, and similarly the Panama Convention, is
to encourage the recognition and enforcement of commercial arbitration agreements in
international contracts and to unify the standards by which agreements to arbitrate are
observed and arbitral awards are enforced in the signatory countries.); Judgment of 20
January 1987, Socit Bomar Oil NV v. Entreprise Tunisienne dActivits Ptrolires, 1987 Rev.
arb. 482, 485-86 (Paris Cour dappel) (Considering the silence of the [New York]
Convention, its interpretation requires to determine the objective of its draftersto
facilitate dispute resolution by way of international commercial arbitration.); Judgment
of 7 February 1984, Tradax Exp. SA v. Amoco Iran Oil Co., XI Y.B. Comm. Arb. 532, 535 (Swiss
Federal Tribunal) (1986) (purpose of the Convention is to facilitate the resolution of
disputes through arbitration); Judgment of 30 September 2010, 2011 NJW-RR 569, 570
(German Bundesgerichtshof) ([Convention] was intended to facilitate the enforcement of
arbitration agreements); Automatic Sys. Inc. v. Bracknell Corp., (1994) 18 O.R.3d 257, 13
(Ontario Ct. App.) (The purpose of the United Nations Conventions and the legislation
adopting them is to ensure that the method of resolving disputes, in the forum and
according to the rules chosen by the parties, is respected.); Judgment of 28 January 2011,
Altain Khuder LLC v. IMC Mining Inc., [2011] VSC 1, 53 (Victoria S.Ct.); Altain Khuder LLC v.
IMC Aviation Solutions Pty Ltd, [2011] VSCA 248, 45 n.16 (Victoria Ct. App.) (The New York
Convention is widely recognised in international arbitration circles as having a pro-
enforcement policy.) (Warren, C.J.).
13) New York Convention, Art. II(1). The formal requirements that the Convention imposes with
regard to arbitration agreements are elaborated in Art. II(2) of the Convention.
See5.02[A][2].
15) See5.01[B][2]; 8.03.
39
16) See1.04[A][1]; 5.01[B][2]; 5.02[A][2]; 5.06[B][1]. See alsoJudgment of 15 January 1992,
XVIII Y.B. Comm. Arb. 427, 430 (Italian Corte di Cassazione) (1993) (Article II means that
arbitration prevails [over] court proceedings, so that the enforcement court, if it
ascertains that there is a clause validly referring disputes to foreign arbitration, may not
take into consideration court proceedings initiated before the foreign award became
final.The [enforcement court and the court seized of an action on the merits] maintain
their separate competence: the latter examines the arbitration agreement or arbitral
clause, in order to ascertain whether it has jurisdiction [over] the dispute; the former
the [court] seized of an enforcement action sees the existence of a valid arbitral clause
only as one of the conditions for enforcement under Article V(1)(a).).
17) See1.04[B][2].
18) Quigley, Accession by the United States to the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049, 1062 (1961)
(Article II(1) requires each State to recognize agreements in writing, to submit to
arbitration past or future differences arising between the parties in respect of a defined
legal relationship, whether contractual or not, concerning a subject matter capable of
settlement by arbitration. This extraordinary provision has many facets.).
19) See5.04[B][1].
20) See4.04[A][1].
21) See2.01[B][2]; 2.03[B][1][b][ii].
22) New York Convention, Art. VII(1); 4.06[A][2].
23) It does so through provisions for the organization of the arbitral proceedings, the rights of
public entities and jurisdictional objections. European Convention, Arts. II(1), IV, V. There
is, however, no express provision paralleling Article II of the New York Convention.
24) European Convention, Art. V(1) (either non-existent or null and void or had lapsed).
25) Inter-American Convention, Art. 1 (emphasis added). Unlike the New York Convention, this
provision does not expressly identify grounds for challenging the presumptive validity of
arbitration agreements, although such grounds are clearly implied in the Convention.
Thus, Article 5 of the Inter-American Convention specifies numerous grounds on which an
arbitral award may be denied recognition. One of these grounds is [t]hat the parties to
the agreement were subject to some incapacity under the applicable law or that the
agreement is not valid under the law to which the parties have submitted it, or, if such
law is not specified, under the law of the state in which the decision was made. Id. at Art.
5(1)(a); 26.05[A]. See also Grigera Nan, Arbitration in Latin America: Overcoming
Traditional Hostility, 5 Arb. Intl 137, 145 (1989).
26) UNCITRAL Model Law, Art. 8(1). See5.01[C][1]; 7.03[A][2]; 8.02[C].
27) See5.04[A][3]; 5.06[C].
28) See25.04[A][2].
29) See, e.g., Burlington N. R.R. Co. v. Canadian Natl Railway Co., (1995) 20 B.L.R. 20, 58 (B.C.
Ct. App.) (very strong public policy that arbitration agreement be given full effect)
(quoting Board Sweden AB v. NYA Stromnes AB, (1988) 41 B.L.R. 295, 302-03 (Ontario Super.
Ct.)), revd on other grounds, [1997] 1 S.C.R. 5 (Canadian S.Ct.). See also TheCity of Prince
George v. A.L. Sims & Sons Ltd, [1995] CanLII 2487 (B.C. Ct. App.); Automatic Sys. Inc. v. E.S.
Fox Ltd, [1994] CanLII 1857 (Ontario Ct. App.); BWV Invs. Ltd v. Saskferco Prods. Inc., [1994]
CanLII 4557 (Saskatchewan Ct. App.); Boart Sweden AB v. NYA Stromnes AB, (1988) B.L.R. 295
(Ontario Super. Ct.); Chung Siu Hong Celment v. Primequine Corp. Ltd, [1999] HKCFI 1472
(H.K. Ct. First Inst.).
30) Yugraneft Corp. v. Rexx Mgt Corp., (2007) 31 B.L.R. 168, 53 (Alberta Q.B.). See also Nanisivik
Mines Ltd v. Canarctic Shipping Co. Ltd, [1994] 2 FC 662 (Canadian Fed. Ct. App.); Canada v.
S.D. Myers Inc., [2004] 3 FCR 368 (Canadian Fed. Ct.); Grow Biz Intl, Inc. v. D.L.T. Holdings
Inc., [2001] PESCTD 27 (Prince Edward Island S.Ct.); Corporacin Transnacional de
Inversiones, SA de CV v. STET Intl, SpA, (2000) 49 O.R.3d 414 (Ontario Ct. App.); BWV Invs.
Ltd v. Saskferco Prods. Inc., [1994] CanLII 4557 (Saskatchewan Ct. App.); Kaverit Steel &
Crane Ltd v. Kone Corp., [1992] ABCA 7 (Alberta Ct. App.); Louis Dreyfus SAS v. Holding
Tusculum BV, [2008] QCCS 5903 (Qubec Super. Ct.); Bayview Irrigation Dist. #11 v. United
Mexican States, [2008] CanLII 22120 (Ontario Super. Ct.); Cangene Corp. v. Octapharma AG,
[2000] MBQB 111 (Manitoba Q.B.); Chung Siu Hong Celment v. Primequine Corp. Ltd, [1999]
HKCFI 1472 (H.K. Ct. First Inst.); Comandate Marine Corp. v. Pan Australia Shipping Pty Ltd,
[2006] FCAFC 192 (Australian Fed. Ct.).
31) U.S. FAA, 9 U.S.C. 2 (emphasis added). For discussion of 2 and the enforceability of
arbitration agreements under the FAA, see1.04[B][1][e][ii]; 4.04[B][3][b]; 5.01[C][2].
32) See1.04[B][1]; 5.01[C]; French Code of Civil Procedure, Art. 1448 (When a dispute subject
to an arbitration agreement is brought before a court, such court shall decline
jurisdiction, except if an arbitral tribunal has not yet been seized of the dispute and if
the arbitration agreement is manifestly void or manifestly not applicable.); Swiss Law on
Private International Law, Art. 178; Japanese Arbitration Law, Art. 4.
33) See1.01[B][4]-[5] & [7]; 1.04[B][2]; 5.01[C][5].
34) Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468, 478 (U.S. S.Ct. 1989) (quoting Scherk
v. Alberto-Culver Co., 417 U.S. 506, 511 (U.S. S.Ct. 1974)). See also Hall St. Assocs., LLC v.
Mattel, Inc., 552 U.S. 576, 581 (U.S. S.Ct. 2008) (Congress enacted the FAA to replace
judicial indisposition to arbitration with a national policy favoring it and placing
arbitration agreements on equal footing with all other contracts.).
40
35) Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 404 n.12 (U.S. S.Ct. 1967)
(emphasis added). See also AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (U.S. S.Ct.
2011) (courts must place arbitration agreements on an equal footing with other
contracts); id. at 1761 (Breyer, J., dissenting) (we have repeatedly referred to the Acts
basic objective as assuring that courts treat arbitration agreements like all other
contracts) (emphasis added); Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2776 (U.S. S.Ct.
2010); Dreyfuss v. Etelecare Global Solutions-U.S. Inc., 349 F.Appx. 551, 553 (2d Cir. 2009)
(the purpose of Congress in enacting the FAA in 1925 was to make arbitration agreements
as enforceable as other contracts, but not more so) (emphasis added); U.S. Titan, Inc. v.
Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 146 (2d Cir. 2001) (courts must treat
agreements to arbitrate like any other contract) (emphasis added); Kresock v. Bankers
Trust Co., 21 F.3d 176, 178 (7th Cir. 1994) (An agreement to arbitrate is treated like any
other contract.) (emphasis added).
36) See1.04[A][1]; 1.04[B]; 2.01[A].
37) See1.04[E]-[F]; 4.01.
38) See5.02.
39) See5.04[C].
40) See9.01.
41) See1.04[B][1][a]-[d]; 1.04[B][1][e][ii], for a discussion of the separability presumption.
42) See 1.02[B][9]; 1.03; 1.04[B].
43) See, e.g., H. Beale (ed.), Chitty on Contracts 1-087 to 1-104 (31st ed. 2012); E. Peel, Treitel
on the Law of Contract 48-50 (13th ed. 2011); German Civil Code (Contracts), 145 et seq.;
German Civil Code (Sales Contracts), 433 et seq.; German Civil Code (Service Contracts),
611 et seq.; Restatement (Second) of Contracts 6 (1981) (The following types of
contracts are subject in some respects to special rules that depend on their formal
characteristics and differ from those governing contracts in general: (a) Contracts under
seal, (b) Recognizances, (c) Negotiable instruments and documents, (d) Letters of
credit.).
44) See1.05; 3.02; 8.01; 8.03[A]. In some legal systems, arbitration agreements are
categorized as procedural contracts, recognizing their special status. See1.05[A];
3.02[B][2].
45) See1.02[B][1] & [6]; 8.01.
46) See1.04.
47) See A. Samuel, Jurisdictional Problems in International Commercial Arbitration passim
(1989). See also JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL
1863676, at *2 (S.D.N.Y.) (For the New York Convention to apply to this dispute, there must
be a written arbitration agreement that provides for arbitration in the territory of a
signatory to the Convention, the subject matter of the relationship must be commercial
and the dispute cannot be entirely domestic in scope.); Mangin v. Murphy Oil USA, Inc.,
2005 U.S. Dist. LEXIS 8338, at *3 (E.D. La.) (arbitration agreement is subject to New York
Convention because (1) there is an agreement in writing to arbitrate the dispute; (2) the
agreement provides for arbitration in the territory of a Convention signatory; (3) the
agreement to arbitrate arises out of a commercial legal relationship; and (4) a party to
the agreement is not an American citizen); B. Berger & F. Kellerhals, International and
Domestic Arbitration in Switzerland 260 et seq. (2d ed. 2010); J.-F. Poudret & S. Besson,
Comparative Law of International Arbitration 149 et seq. (2d ed. 2007).
48) See2.02; 2.03. In addition, as also discussed below, the applicability of national
arbitration legislation also frequently depends on the location of the arbitral seat.
See2.04.
49) See2.03[H]; 4.06[A]; 5.02.
50) In some cases, national arbitration statutes apply more broadly than international
conventions (for example, applying to domestic as well as international arbitrations).
See1.04[B][1][c]-[d]. In many cases, however, identical or nearly identical jurisdictional
requirements apply under both national arbitration legislation and international
treaties.
51) In many jurisdictions, modern arbitration legislation did not abrogate preexisting
statutory or common law mechanisms for enforcing arbitration agreements, which
continue to apply when legislative regimes do not. See W. Sturges, A Treatise on
Commercial Arbitrations and Awards 6 (1930) (it is generally accepted that common law
arbitrations in the several states are not abrogated by the arbitration statutes);
McClelland v. Hammond, 54 P. 538, 539 (Colo. App. 1898) (The act did not undertake,
either in terms or by implication, to abolish common law arbitrations.Arbitration is
favored by the law as a convenient mode of adjusting disputes.This being true, the
presumption will not be indulged that the Code abolished or made ineffective common
law arbitrations simply because it provided a method for the submission and settlement
of controversies which, if followed, might be more effective and furnish a more conclusive
and expeditious remedy.).
52) Thus, an agreement for something other than arbitration (e.g., an agreement for
conciliation or expert determination) is not subject to either Article II of the New York
Convention or to national arbitration legislation (such as Articles 7 and 8 of the UNCITRAL
Model Law or 3 of the FAA), providing for a stay of judicial proceedings pending
arbitration. See8.03[C][1].
41
53) As discussed below, proceedings involving something other than arbitration are not
subject to the protection of Article II of the New York Convention or Article 5 of the
UNCITRAL Model Law, limiting judicial interference in the arbitral process, or Articles 9,
12, 13 and 17 of the Model Law, providing specified forms of judicial assistance to the
arbitral process. See11.02[A]; 11.03[D][1]; 15.06.
54) As discussed below, international arbitration agreements are subject to a pro-arbitration
interpretative presumption that the parties intended to include all disputes relating to
their contract within the scope of their arbitration agreement. See9.02[D][1]. See also
Barclays Bank plc v. Nylon Capital LLP [2011] EWCA Civ 826, 27 (English Ct. App.) (As
arbitration will usually be an alternative to a court for the resolution of all the disputes
between the parties, it would not accord with the presumed intention of sensible
businessmen to draw fine distinctions between similar phrases to allow a party of the
dispute to be outside the arbitration and allocated to the court. In contradistinction,
expert determination clauses generally presuppose that the parties intended certain
types of disputes to be resolved by expert determination and other types by the court (or
if there is an arbitration clause by arbitrators). The rationale of Fiona Trust does not
therefore apply [to an expert determination clause] as the parties have agreed to two
types of dispute resolution procedure for disputes which might arise under the
agreement.).
55) As discussed below, judicial assistance with regard to provisional measures and
evidence-taking in aid of the arbitration are limited generally to arbitrations.
See11.03[D][1][d]; 17.04.
56) As discussed below, a decision other than an arbitral award, resulting from an agreement
to arbitrate, is not subject to Articles III, IV and V of the New York Convention, or to
provisions of national arbitration legislation (such as Articles 34 and 36 of the UNCITRAL
Model Law or 9 and 10 of the FAA) providing for very limited judicial review of an award.
See22.02[B][3][a].
57) A. van den Berg, The New York Arbitration Convention of 1958 56 (1981) (emphasis added).
58) See2.02[A]; 2.03[A].
59) See1.04[A][1]; Schramm, Geisinger & Pinsolle, Article II, in H. Kronke et al. (eds.),
Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New
York Convention 37, 39 et seq. (2010); A. van den Berg, The New York Arbitration Convention
of 1958 9 (1981) (It was the intention to leave the provisions concerning the formal
validity of the arbitration agreement and the referral by a court to arbitration to a
separate Protocol. A similar division existed under the Geneva Treaties. Not until the
final days of the New York Conference was it realized thata separation [of provisions
concerning arbitration agreements and arbitral awards] could seriously hamper the
effectiveness of the new Convention.).
60) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 91 (1989) (The
Convention itself is silent on the ambit of Article II.); A. van den Berg, The New York
Arbitration Convention of 1958 56-57 (1981) (Article II was drafted in a race against time,
with, as consequence, the omission of an indication as to which arbitration agreements
the Convention would apply.). See22.02 for a discussion of the awards that are subject to
the Convention.
61) See2.02; 2.03.
62) See5.02[A][2], pp. 670-72.
63) See2.02[B]; 2.03.
64) See2.03[A]; 2.04[B].
65) See2.03[H]; 4.06[A].
66) See2.02[C][2]; Connerty, The Role of ADR in the Resolution of International Disputes, 12 Arb.
Intl 47 (1996); J. Kendall, Expert Determination (4th ed. 2008); Neate, Mediation: A
Constructive Approach to Dispute Resolution, in G. Asken & G. Briner (eds.), Liber Amicorum
in Honour of Robert Briner 557 (2005); Plant, ADR in the United States of America, in ICC,
ADR: International Applications 75 (ICC Ct. Bull. Spec. Supp. 2001).
67) See2.01[A][1].
68) See, e.g., Felkner v. Dean Witter Reynolds, Inc., 800 F.2d 1466, 1470 (9th Cir. 1986) (refusing
to enforce dispute resolution agreement that did not meet definition of arbitration);
Judgment of 17 June 2004, Le Parmentier v. Socit Miss France, 2006 Rev. arb. 161 (Paris
Cour dappel) (decision of the WIPO administrative commission may not be set aside
because it is not an arbitral award); Judgment of 29 April 2003, Nationale des Ptroles du
Congo et Rpublique du Congo v. Socit Total Fina Elf E & P Congo, 21 ASA Bull. 662, 665
(Paris Cour dappel) (2003) (ICC Pre-Arbitral Referee procedure is not arbitration, but a
merely contractual mechanism; decision of pre-arbitral referee may not be set aside);
ICCA, Guide to the Interpretation of the 1958 New York Convention 16 (2011) (citing
[m]ediation, conciliation or expert determination as examples of dispute settlement
mechanisms outside scope of New York Convention).
69) New York Convention, Art. II(1) (emphasis added).
70) Inter-American Convention, Art. 1 (emphasis added).
71) European Convention, Art. I(2)(a) (emphasis added).
72) See2.03[F] (future disputes may be subject to arbitration agreement); 3.02[A]
[2](separability presumption).
73) See2.02[C]; A. Samuel, Jurisdictional Problems in International Commercial Arbitration 31
(1989) (For over two hundred and fifty years, jurists in Western Europe and the United
States have attempted to describe and define the concept of arbitration.).
42
74) See2.02[D]; A. van den Berg, The New York Arbitration Convention of 1958 61-63 (1981). See
also Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 802 F.Supp. 1069
(S.D.N.Y. 1992).
75) These sorts of national law rules would purport to impose rules of substantive validity in
the guise of a definition of agreements to arbitrate. The correct analysis is that the
Conventions formula arbitration agreement must be defined through interpretation
of the language and purposes of the Convention and the development of uniform,
mandatory international standards. See also4.04[A][1].
76) See2.02[C][1]; 2.02[D].
77) See2.02[C][1]; 2.02[D].
78) UNCITRAL Model Law, Art. 7(1) (emphasis added). See P. Binder, International Commercial
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 2-041 to 2-061, 2-074 to
2-079 (3d ed. 2010); A. Broches, Commentary on theUNCITRAL Model Law on International
Commercial Arbitration Art. 7, 1 et seq. (1990); H. Holtzmann & J. Neuhaus, A Guide to
theUNCITRAL Model Law on International Commercial Arbitration: Legislative History and
Commentary 258 et seq. (1989).
79) U.S. FAA, 9 U.S.C. 2 (emphasis added). U.S. courts have recognized that this statutory
definition provides limited guidance. Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d
684, 693 (6th Cir. 2012) (the FAA does not define arbitration); Liberty Mut. Group, Inc. v.
Wright, 2012 WL 718857 (D. Md.); Schofield v. Intl Dev. Group Co., 2006 U.S. Dist. LEXIS 8011,
at *2 (W.D. Tex.) (neither Congress nor the United States Supreme Court has defined what
constitutes arbitration under the FAA). See also Strong, What Constitutes An Agreement in
Writing in International Commercial Arbitration? Conflicts Between the New York
Convention and the Federal Arbitration Act, 48 Stan. J. Intl L. 47, 64-70 (2012).
80) English Arbitration Act, 1996, 6(1) (emphasis added). See R. Merkin, Arbitration Law
1.23, 3.1 to 3.7 (1991 & Update August 2013).
81) French Code of Civil Procedure, Art. 1442(2) (emphasis added). Article 1442(3) of the
French Code of Civil Procedure defines an arbitration agreement applicable to existing
disputes as an agreement by which the parties to a dispute submit such dispute to
arbitration. SeeJarrosson & Pellerin, Le droit franais de larbitrage aprs le dcret du 13
janvier 2011, 2011 Rev. arb. 5, 7.
The definition of the arbitration agreement set out in Article 1442 applies to domestic
arbitration and is not expressly incorporated by the relevant provisions of the French
Code of Civil Procedure applicable to international arbitration. SeeFrench Code of Civil
Procedure, Art. 1506. The drafters of the new French arbitration law sought to avoid
limiting the definition of the arbitration agreement, having in mind in particular
investment arbitration. See Gaillard & de Lapasse, Commentaire analytique du dcret du
13 janvier 2011 portant rforme du droit franais de larbitrage, 2011:2 Gaz. Pal. 263, 80
(Article 1442 definition of arbitration agreement is relevant in international arbitration,
but in investment arbitration consent to arbitration may result from investment
protection treaty, which does not readily fall within Article 1442); Jarrosson & Pellerin, Le
droit franais de larbitrage aprs le dcret du 13 janvier 2011, 2011 Rev. arb. 5, 88 (the
absence of cross-reference [to the definitions of arbitration agreements contained in
Article 1442] will not allow that the qualification of arbitration be denied because it
would not coincide with the terms of one of these definitions).
82) Swiss Law on Private International Law, Arts. 176-178 (not providing any statutory
definition of arbitration). See Judgment of 8 July 2003, DFT 129 III 675, 679 (Swiss Federal
Tribunal) (The statute does not define the minimal content of an arbitration
agreement.); B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland 261 (2d ed. 2010) (PILS, Chap. 12 contains no definition at all of either the
notion or the content of an agreement to arbitrate.).
Swiss commentary defines an arbitration agreement as an understanding between
parties regarding one or more (current or future) disputes that they will have these
resolved in a binding manner by judgment given by one or more individuals not acting in
a state judiciary function and to the exclusion of state courts. Wenger, in S. Berti et al.
(eds.), International Arbitration in Switzerland Art. 178, 3 (2000).
83) In Belgium, Articles 1676-1678 of the Judicial Code are limited to setting out certain
requirements of a valid arbitration agreement, rather than providing a definition of
arbitration or arbitration agreement.
84) Japanese Arbitration Law, Art. 1 (no definition of arbitration).
85) See, e.g., Italian Code of Civil Procedure, Art. 808 (no definition of arbitration
agreement); Chinese Arbitration Law, Arts. 16-20 (no definition of arbitration
agreement); New Zealand Arbitration Act, 2(1) (an agreement by the parties to submit
to arbitration all or certain disputes which have arisen or may arise between them in
respect of a defined legal relationship, whether contractual or not.); Indian Arbitration
and Conciliation Act, 7(1) (an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not); Argentine National Code of Civil
and Commercial Procedure, Arts. 736-741 (no definition of arbitration agreement).
86) See2.02[A].
43
87) That is reflected, for example, in the model arbitration clauses recommended by all
leading arbitral institutions. SeeG. Born, International Arbitration and Forum Selection
Agreements: Drafting and Enforcing Appendix C (4th ed. 2013); 1.04[E][1].
88) See, e.g., Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1, 14 (1st Cir. 2004)
(Whether accounting remedy is arbitration under the federal statutedoes not depend
on the nomenclature used in the agreement.); Liberty Mut. Group, Inc. v. Wright, 2012 WL
718857, at *5 (D. Md.) (It isirrelevant that the contract language in question does not
employ the word arbitration as such. Rather, what is important is whether the parties
clearly intended to submit some disputes to binding review by a third party.) (quoting
McDonnell Douglas Fin. Corp. v. Pa. Power & Light Co., 858 F.2d 825, 830-31 (2d Cir. 1988));
Vertner v. TAC Ams., Inc., 2007 WL 2495559, at *3 n.3 (W.D. Wash.) (no requirement that
arbitration agreement explicitly identify the dispute resolution procedures as
arbitration); Perceptics Corp. v. Societe Electronique et Systemes Trindel, 907 F.Supp. 1139,
1142 (E.D. Tenn. 1992) (No particular language is required to evidence an agreement to
arbitrate.); Powderly v. Metrabyte Corp., 866 F.Supp. 39, 42 (D. Mass. 1994) (use of the
term arbitrate is not a vital ingredient of an agreement to do so) (quoting Intl
Longshoremens Assn, AFL-CIO v. Hellenic Lines, 549 F.Supp. 435, 437 (S.D.N.Y. 1982)); Gale
Group, Inc. v. Westinghouse Elec. Corp., 683 So.2d 661, 663 (Fla. App. 1996) (The words
arbitrate or arbitration are not required to be expressly written in a contract to
constitute a valid arbitration agreement.). See also2.02[C][2][a]; 2.02[D].
89) See, e.g., Cott UK Ltd v. Barber [2002] EWCA Civ 180 (English Ct. App.); David Wilson Homes
Ltd v. Survey Servs. Ltd [2001] BLR 267 (English Ct. App.) (absence of words arbitrator and
arbitration from parties agreement not decisive); Wilky Prop. Holdings plc v. London &
Surrey Invs. Ltd [2011] EWHC 2226, 27 (Ch) (English High Ct.) (The way in which the
dispute resolution process is described or labelled by the parties in their agreement is
not conclusive as to the true character of that process.); Walkinshaw v. Diniz [2000] 2 All
ER 237 (English High Ct.); AIG Europe AG v. QBE Intl Ins. Ltd, [2001] 2 Lloyds Rep. 268 (QB)
(English High Ct.).
90) See, e.g., PT Tugu Pratama Indonesia v. Magma Nusantara Ltd, [2003] 4 SLR 257 (Singapore
High Ct.) (clause referring to appraiser held arbitration agreement); Northbuild Constrs.
Pty Ltd v. Discovery Beach Project Pty Ltd, [2008] QCA 160, 81-85 (Queensland Ct. App.);
Methanex Motunui Ltd v. Spellman, [2004] 1 NZLR 95 (Auckland High Ct.) (provision for
appointment of expert treated as arbitration).
91) See, e.g.,Judgment of 15 December 2010, Socit Gnrale Motors France v. Socit Champs
de Mars Automobile (CMA), 2011 Rev. arb. 435, 436 (French Cour de Cassation); Judgment of
26 November 1991, DFT 117 IA 365, 367-68 (Swiss Federal Tribunal); Judgment of 13 March
2008, 16 Sch 04/07 (Oberlandesgericht Schleswig-Holstein) (arbitration expert clause
held to be arbitration agreement); Judgment of 7 August 2006, 2006 SchiedsVZ 286, 288
(Oberlandesgericht Munich) (provision in articles of association of limited partnership
providing that advisory board should act as arbitral tribunal in certain cases is
reference to expert determination).
92) See, e.g., Bakoss v. Certain Underwriters at Lloyds of London, 2011 WL 4529668, at *6
(E.D.N.Y.) (term arbitration eludes easy definition, but agreement calls for arbitration if
it requires third-party to settle[] dispute between parties, without necessarily
mentioning arbitrate, binding arbitration, or final dispute resolution); Perceptics
Corp. v. Societe Electronique et Systemes Trindel, 907 F.Supp. 1139, 1142-43 (E.D. Tenn. 1992)
(language providing that agreement shall be governed by and under the jurisdiction of
the International Chamber of Commerce is agreement to arbitrate because ICC Rules
provide for arbitration); Campeau Corp. v. May Dept Stores Co., 723 F.Supp. 224, 227-28
(S.D.N.Y. 1989) (language in schedule attached to agreement for sale of corporate assets
which provided, in part, that any dispute concerning calculations made under pricing
formula would be resolved conclusively by an independent accounting firm of nationally
recognized standing selected by parties auditors is agreement to arbitrate); High Valley
Homes, Inc. v. Fudge, 2003 Tex. App. LEXIS 3273, at *4 (Tex. App.) (although contract
contained term mediation[,] contract read as a whole manifested an agreement to
submit disputes to binding arbitration, in part because term mediation was qualified
by terms mandatory and binding); M/S Indtel Tech. Servs. v. W.S. Atkins plc, [2008] INSC
1423 (use of words arbitration or arbitrator do not make clause an arbitration
agreement) (Indian S.Ct.).
For an extreme example, see Woodward Pipeline Inc. v. Reliance Pipeline Co., 776 S.W.2d
241, 243-44 (Tex. App. 1989) (agreement with provision for Board of Experts, who shall
not be deemed to be arbitrators but shall render their decision as experts andthe Law
relating to arbitrators shall not apply to such experts or their determination is subject to
FAA because use of the word shallweighs greatly in favor of construing this article as
requiring compulsory arbitration).
93) Taylor v. Yielding (1912) 56 Sol Jo 253, 253 (Ch) (English High Ct.).
94) Schofield v. Intl Dev. Group Co., 2006 U.S. Dist. LEXIS 8011, at *2 (W.D. Tex.).
95) Benson Pump Co. v. S. Cent. Pool Supply, Inc., 325 F.Supp.2d 1152, 1155 (D. Nev. 2004).
44
96) See, e.g., L. Mackay (ed.), 7 Halsburys Laws of England 1213 n.2 (5th ed. 2009) (It is not
necessary that the arbitration agreement should say in terms that the disputes are to be
referred to an arbitrator or to arbitration; what matters is that the agreement should
refer disputes to a person other than the court, who is to resolve them in a manner
binding on the parties to the agreement.); J. Mnch, in T. Rauscher, P. Wax & J. Wenzel
(eds.), Mnchener Kommentar zur Zivilprozessordnung 1025 et seq. (4th ed. 2012) (The
wording is in no case decisivenot even as a first indication.).
97) See, e.g., McNeil v. Haley S. Inc., 2010 WL 3670547, at *7 (E.D. Va.) (The term arbitration
must be given its plain and ordinary meaning.); Harco Natl Ins. Co. v. Millenium Ins.
Underwriting Ltd, 2005 U.S. Dist. LEXIS 15960, at *4 (N.D. Ill.) (the phrase arbitration
clause in a contract is sufficient to establish the parties agreement to arbitrate
disputes); Allianz Life Ins. Co. of N. Am. v. Am. Phoenix Life & Reassur. Co., 2000 U.S. Dist.
LEXIS 7216 (D. Minn.); N.C. League of Municipalities v. Clarendon Natl Ins. Co., 733 F.Supp.
1009, 1011 (E.D.N.C. 1990); Judgment of 8 July 2003, DFT 129 III 675 (Swiss Federal Tribunal)
(sole arbitrator assumption that parties mutual intent to submit to arbitration based on
term arbitrage in agreement was not contested in annulment proceedings).
98) See also1.04[E]; 2.02[D].
99) N. Blackaby et al. (eds.), Redfern and Hunter on International Arbitration 1.85 (5th ed.
2009).
100) de Vries, International Commercial Arbitration: A Contractual Substitute for National
Courts, 57 Tul. L. Rev. 42, 42-43 (1982).
101) W. Reisman et al., International Commercial Arbitration xxviii (1997).
102) J.-F. Poudret & S. Besson, Comparative Law of International Arbitration 3 (2d ed. 2007).
103) R. David, Arbitration in International Trade 5 (1985).
104) Wetter, The Legal Framework of International Arbitral Tribunals Five Tentative Markings,
in H. Smit, N.M. Galston & S.L. Levitsky (eds.), International Contracts 271, 274 (1981).
105) D. Roebuck, A Short History of Arbitration, in N. Kaplan, J. Spruce & M. Moser (eds.), Hong
Kong and China Arbitration: Cases and Materials xxxv (1994).
106) W. Blackstone, III Commentaries on the Laws of England 16-17 (1768).
107) M. McIlwrath & J. Savage, International Arbitration and Mediation: A Practical Guide 1-015
(2010).
108) Restatement (Third) U.S. Law of International Commercial Arbitration 1-1, comment c
(Tentative Draft No. 2 2012). See also Restatement (Third) U.S. Law of International
Commercial Arbitration 1-1(c) (Tentative Draft No. 2 2012) (Arbitration is a dispute
resolution method in which the disputing parties empower an arbitral tribunal to decide
a dispute in a final and binding manner.).
109) J.-L. Delvolv, G.-H. Pointon & J. Rouche, French Arbitration Law and Practice: A Dynamic
Civil Law Approach to International Arbitration 26 (2d ed. 2009).
111) Methanex Motunui Ltd v. Spellman, [2004] 1 NZLR 95 (N.Z. High Ct.).
112) Judgment of 21 November 2003, DFT 130 III 66, 70 (Swiss Federal Tribunal). See also
Judgment of 17 January 2013, DFT 4A_244/2012, 4.2 (Swiss Federal Tribunal) (An
arbitration clause must be understood as an agreement by which two or more
determined or determinable parties agree to be bound to submit some existing or future
disputes to an arbitral tribunal to the exclusion of the original jurisdiction of the state
courts, according to a determined or undetermined legal order.); Judgment of 7
November 2011, DFT 4A_246/2011 (Swiss Federal Tribunal) (same).
113) Judgment of 3 March 1992, Socit Europe immobilire v. Ofer, 1993 Rev. arb. 123, 123 (Paris
Cour dappel).
114) Judgment of 3 July 1975, 1976 NJW 109, 109 (German Bundesgerichtshof).
115) Judgment of 30 January 2008, Inepar Indstria e Construes (Brazil) v. Itiquira Energtica
SA, XXXIII Y.B. Comm. Arb. 404, 405 (Brazilian Superior Tribunal de Justia) (2008).
45
116) See, e.g., von Hoffman (Bernd) v. Finanzamt Trier, Case No. C-145/96, [1997] E.C.R. I-4857
(E.C.J.) (the services of an arbitrator are principally and habitually those of settling a
dispute between two or more parties); Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d
684, 693 (6th Cir. 2012) (Central to any conception of classic arbitration is that the
disputants empowered a third party to render a decision settling their dispute.)
(quoting Salt Lake Tribune Publg Co. v. Mgt Planning, Inc., 390 F.3d 684, 689 (10th Cir.
2004)); People ex rel. Bliss v. Bd of Supervisors, 15 N.Y.S. 748, 750 (N.Y. Sup. Ct. 1891)
(arbitration is a judicial investigation out of court); Boyden v. Lamb, 25 N.E. 609, 610
(Mass. Supp. Ct. 1890) (a substitution by consent of the parties of another tribunal for
those provided by the ordinary processes of law); In re Curtis, 30 A. 769, 770 (Conn. 1894)
(arbitration is an arrangement for taking and abiding by the judgment of selected
persons in some disputed manner, instead of carrying it to the established tribunals of
justice); Judgment of 2 August 2006, Tanning Research Lab., Inc. (U.S.A.) v. Hawaiian Tropic
de Venezuela CA (Venezuela), XXXIII Y.B. Comm. Arb. 1228, 1236-37 (Caracas Venezuelan
Juzgado Sexto de Primera Instancia) (2008) (procedural settlement of disputes by a third
person that runs parallel to traditional jurisdiction, that is, the States power to settle
disputes through its judicial organs); Carlston, Theory of the Arbitration Process, 17 Law &
Contemp. Probs. 631, 632 (1952) (arbitration is a means, a method, a procedure, rather
than an agreement); C. Jarrosson, La notion darbitrage 785 (1987) (arbitration is the
institution by which a third party rules on the dispute between two or more parties,
exerting the jurisdictional mission with which these parties have entrusted him);
Mentschikoff, The Significance of Arbitration A Preliminary Inquiry, 17 Law & Contemp.
Probs. 698, 699 (1952) (The four essential aspects of arbitration are (1) it is resorted to
only by agreement of the parties; (2) it is a method not of compromising disputes but of
deciding them; (3) the person making the decision has no formal connection with our
system of courts; but (4) before the award is known it is agreed to be final and binding.).
117) Defining arbitration as a method for the relatively private settlement of disputes or a
procedure other than litigation sweeps too broadly (by including conciliation,
mediation, expert determination and (even) some litigations). It also fails to address the
adjudicative or quasi-judicial nature of arbitral proceedings and the non-governmental
character of an arbitrator. Arbitration need not be private or relatively private, but it
must involve the use of adjudicatory procedures. See2.02[C][4]; 20.01.
118) New York Convention, Arts. II(1), (3) (emphasis added). See1.04[A][1][c], pp. 106-07;
2.01[B][1].
119) UNCITRAL Model Law, Arts. 7(1), 8(1) (emphasis added). See2.02[B].
120) See2.01[A][2]. See, e.g., UNCITRAL Model Law, Art. 7(1); U.S. FAA, 9 U.S.C. 2; English
Arbitration Act, 1996, 5; French Code of Civil Procedure, Art. 1442; German ZPO, 1031;
Japanese Arbitration Law, Art. 13.
121) Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, 51 (Canadian S.Ct.).
122) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2857 (U.S. S.Ct. 2010). See
Judgment of 8 July 2003, DFT 129 III 675, 679 (Swiss Federal Tribunal) (It results from the
purpose of the arbitration agreement that the intent of the parties must be expressed to
submit certain existing or future disputes to an arbitral tribunal, i.e. not a state court.).
123) Altain Khuder LLC v. IMC Mining Inc., XXXVI Y.B. Comm. Arb. 251, 295 (Victoria S.Ct.) (2011)
(unlike court proceedings, arbitration proceedings are consensual).
124) See, e.g., Stolt-Nielsen SA v. AnimalFeeds Intl Corp., 130 S.Ct. 1758, 1773, 1775 (U.S. S.Ct.
2010) (the basic precept that arbitration is a matter of consent, not coercion); Howsam
v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002) (arbitration is a matter of
contract and a party cannot be required to submit to arbitration any dispute which he
has not agreed so to submit) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363
U.S. 574, 582 (U.S. S.Ct. 1960)); AT&T Tech., Inc. v. Commercial Workers of Am., 475 U.S. 643,
648 (U.S. S.Ct. 1986); World Crisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997)
(Arbitration is essentially contractual, however, and parties may not be forced into
arbitration if that was not their true agreement.); Reily v. Russell, 34 Mo. 524, 528 (Mo.
S.Ct. 1864) (arbitration rests on will and consent of the parties litigant); Dallah Real
Estate & Tourism Holding Co. v. Ministry of Religious Affairs of the Govt of Pakistan [2010] 1
AC 763, 810 (U.K. S.Ct.) (Arbitration of the kind with which this appeal is concerned is
consensual the manifestation of parties choice to submit present or future issues
between them to arbitration.); Baytur SA v. Finagro Holding SA [1991] 4 All ER 129, 134
(English Ct. App.) (the nature of arbitration as a consensual matter of settling disputes);
Judgment of 8 July 2003, DFT 129 III 675, 679-80 (Swiss Federal Tribunal); TCL Air Conditioner
(Zhongshan) Co. Ltd v. The Judges of the Fed. Ct. of Australia, [2013] HCA 5, 31 (Australian
High Ct.) (The making of an arbitral award, which is recognised as binding on the parties
from the time it is made by force of Art 35 of the Model Law, is not an exercise of the
judicial power of the Commonwealth. That is because the existence and scope of the
authority to make the arbitral award is founded on the agreement of the parties in an
arbitration agreement. The exercise of that authority by an arbitral tribunal to determine
the dispute submitted to arbitration for that reason lacks the essential foundation for the
existence of judicial power.); Judgment of 5 March 2009, Indutech SpA v. Algocentro
Armazns Gerais Ltda, XXXIV Y.B. Comm. Arb. 424 (Brazilian Superior Tribunal de Justia)
(2009) (absence of unequivocal demonstration of partys consent to the arbitration
agreement violates public policy); Lufuno Mphaphuli & Assocs. Pty Ltd v. Andrews, [2009]
ZACC 6, 217 (South African Const. Ct.) (arbitration must be consensual no party may be
compelled into private arbitration).
46
125) See2.03[D]. See also Hartford Fire Ins. Co. v. Jones,108 So.2d 571, 572 (Miss. 1959)
(arbitration presupposes the existence of a dispute or controversy to be tried); Sutcliffe
v. Thackrah (1974) 1 All ER 859, 870 (House of Lords) (One of the features of an arbitration
is that there is a dispute between two or more persons who agree that they will refer their
dispute to the adjudication of some selected person whose decision on the matter they
agree to accept.); Judgment of 24 March 1988, Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R.
564, 48 (Canadian S.Ct.) (The common law has in fact developed two concepts which it
regards as characteristic of arbitration: the existence of a dispute and the duty or intent
of the parties, as the case may be, to submit that dispute to arbitration.); E. Gaillard & J.
Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration 11
(1999) ([A]rbitration should be defined by reference to two constituent elements.First,
the arbitrators task is to resolve a dispute.).
126) New York Convention, Art. II(1). See2.03[D].
127) UNCITRAL Model Law, Art. 7(1). See 2.03[D].
128) AES Corp. v. Argentina, Decision on Jurisdiction in ICSID Case No. ARB/02/17 of 26 April 2005,
43; C. Schreuer et al., The ICSID Convention: A Commentary 94 (2d ed. 2009) (The
disagreement between the parties must also have some practical relevance to their
relationship and must not be purely theoretical. It is not the task of the Centre to clarify
legal questions in abstracto.).
129) Unusually, a few national arbitration statutes define arbitration more broadly, to include
processes in addition to resolution of disputes. See, e.g., Netherlands Code of Civil
Procedure, Art. 1020(4) (Parties may also agree to submit the following matters to
arbitration: (a) the determination only of the quality or condition of goods; (b) the
determination only of the quantum of damages or a monetary debt; (c) the filling of gaps
in, or modification of, the legal relationship between the parties referred to in paragraph
(1).); Swedish Arbitration Act, 1(2) (In addition to interpreting agreements, the filling of
gaps in contracts can also be referred to arbitrators.), 1(3) (Arbitrators may rule on the
civil law effects of competition law as between the parties.); Bulgarian Law on
International Commercial Arbitration, Art. 1(2) (International commercial arbitration
shall resolve civil property disputes resulting from international trade relations as well as
disputes for filling gaps in contracts or their adaptation to newly established facts when
the domicile or seat of at least one of the parties is not in the Republic of Bulgaria.).
130) See, e.g., Bakoss v. Certain Underwriters at Lloyds of London, 2011 WL 4529668, at *6
(E.D.N.Y.) (term arbitration eludes easy definition, but agreement calls for arbitration if
it requires a third-party to settle[] a dispute between parties, without necessarily
mentioning arbitrate, binding arbitration, or final dispute resolution; third physician
provision in insurance contract requiring neutral third physician to settle disagreements
between party-appointed physicians was arbitration agreement); In re Curtis, 30 A. 769,
770 (Conn. 1894) (arbitration is an arrangement for taking and abiding by the judgment of
selected persons in some disputed manner); Lindsay v. Lewandowski, 43 Cal.Rptr.3d 846,
850 (Cal. Ct. App. 2006) (The characteristics of an arbitration agreement are (1) a third
party decision maker; (2) a mechanism for ensuring neutrality with respect to the
rendering of the decision; (3) a decision maker who is chosen by the parties; (4) an
opportunity for both parties to be heard, and (5) a binding decision.) (quoting Cheng-
Canindin v. Renaissance Hotel Assocs., 57 Cal.Rptr.2d 867 (Cal. Ct. App. 1996)); People ex rel.
Bliss v. Bd of Supervisors, 15 N.Y.S. 748, 750 (N.Y. Sup. Ct. 1891) (arbitration is a judicial
investigation out of court); Boyden v. Lamb, 25 N.E. 609, 610 (1890) (a substitution by
consent of the parties of another tribunal for those provided by the ordinary processes of
law); Judgment of 21 November 2003, DFT 130 III 66, 70 (Swiss Federal Tribunal)
(Consistent with the traditional notion of private arbitration, one may define [the
arbitration clause] as an agreement according to which two or more specific or
determinable parties agree in a binding way to submit one or several existing or future
disputes to an arbitral tribunal, to the exclusion of the original competence of state
courts and subject to a (directly or indirectly) determinable legal system.); Judgment of 2
August 2006, Tanning Research Lab., Inc. (U.S.A.) v. Hawaiian Tropic de Venezuela CA
(Venezuela), XXXIII Y.B. Comm. Arb. 1228, 1236-37 (Venezuelan Juzgado Sexto de Primera
Instancia de Caracas) (2008) (procedural settlement of disputes by a third person that
runs parallel to traditional jurisdiction, that is, the States power to settle disputes
through its judicial organs); C. Jarrosson, La notion darbitrage 785 (1987) (arbitration is
the institution by which a third party rules on the dispute between two or more parties,
exerting the jurisdictional mission with which these parties have entrusted him). See also
Restatement (Third) U.S. Law of International Commercial Arbitration 1-1(a), 1-1(b)
(Tentative Draft No. 2 2012) (An arbitral tribunal is a body consisting of one or more
persons designated directly or indirectly by the parties to an arbitration agreement and
empowered by them to adjudicate a dispute that has arisen between or among them.).
131) Judgment of 3 July 1975, 1976 NJW 109, 109 (German Bundesgerichtshof).
132) See1.04[E][5]; 12.03[B][1]. In cases when no agreement on either the arbitrator(s) or an
institutional appointing authority is possible, national courts can provide a default
mechanism for appointment of arbitrators. See12.03[B][2][b].
133) See2.02[C][2][a].
47
134) See25.04. See also Advanced Bodycare Solutions v. Thione, 524 F.3d 1235, 1239 (11th Cir.
2008) (If a dispute resolution procedure does not produce some type of award that can
be meaningfully confirmed, modified, or vacated by a court upon proper motion, it is not
arbitration within the scope of the FAA.); Dow Corning Corp. v. Safety Natl Cas. Corp., 335
F.3d 742, 745 (8th Cir. 2003) (Arbitration usually results in a final determination that is
binding on the parties to the underlying dispute, but the parties may instead agree to
non-binding arbitration, in which case the arbitrators decision is likely to be a precursor
to further litigation on the merits of the dispute. The distinction is significant. Mandatory
arbitration prior to resort to a court is a different concept from mandatory arbitration
precluding resort to a court.) (quoting Orlando v. Interstate Container Corp., 100 F.3d 296,
300 (3d Cir. 1996)); Methanex Motunui Ltd v. Spellman, [2004] 1 NZLR 95, 41 (N.Z. High Ct.)
(By their contract the parties agree to entrust the differences between them to the
decision of an arbitrator or panel of arbitrators, to the exclusion of the Courts, and they
bind themselves to accept that decision, once made, whether or not they think it right.).
See alsoN. Blackaby et al. (eds.), Redfern and Hunter on International Arbitration 1.02 (5th
ed. 2009) ([The arbitrators] decision is final and binding on the parties; and it is binding
because the parties have agreed that it should be.Arbitration, in short, is an effective
way of obtaining a final and binding decision on a dispute or series of disputes, without
reference to a court of law.); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 15 (1999) (An arbitral award will bind the parties to
the arbitration. Arbitration can therefore be easily distinguished from other procedures
where the intervention of a third party does not culminate in a binding decision.).
135) See2.02[C][2][c]. See also Salt Lake Tribune Publg Co., LLC v. Mgt Planning, Inc., 390 F.3d
684, 689, 690 (10th Cir. 2004) (one feature that must necessarily appertain to a process to
render it an arbitration is that the third partys decision will settle the dispute); Lander
Co. v. MMP Invs., Inc., 107 F.3d 476, 480 (7th Cir. 1997) (To agree to binding arbitration is to
agree that if your opponent wins the arbitration he can obtain judicial relief if you refuse
to comply with the arbitrators award.); SEI Societa Esplosivi Industriali SpA v. L-3 Fuzing &
Ordnance Sys., Inc., 843 F.Supp.2d 509, 514 (D. Del. 2012) (One of the features of
arbitration is that the parties agree that the arbitrator will resolve their dispute, subject
to extremely limited judicial review. Arbitration is thought to be more expeditious and
less expensive than litigation through the courts. The arbitrators factual and legal
conclusions are not subject to the same sort of review that an appellate court would give
to a trial court. The public policy exception is a very narrow one, and it is not a back door
through which to take claimed errors of contract law that cannot be taken through the
front door.); Heenan v. Sobati, 117 Cal.Rptr.2d 532, 535-36 (Cal. App. 2002) (California law
provides for two kinds of arbitrations nonbinding judicial arbitration under the Judicial
Arbitration Act and binding contractual arbitration under the California Arbitration Act.
In contrast to contractual arbitration, judicial arbitration is not arbitration at all, since it
does not result in a final decision, there is full and complete discovery, the arbitrator is
required to follow the facts and the law, and the parties may ask for a trial de novo.);
Mentschikoff, The Significance of Arbitration A Preliminary Inquiry, 17 Law & Contemp.
Probs. 698, 699 (1952) (The decisional nature of arbitration is what distinguishes it from
the more informal types of settlement with which we are all familiar and makes it true kin
to our court process.).
136) See, e.g., Dluhos v. Strasberg, 321 F.3d 365 (3d Cir. 2003) (1999 Internet Corporation for
Assigned Names and Numbers (ICANN) Uniform Domain Name Dispute Resolution Policy
(UDRP) is not arbitration and decision of UDRP is not arbitral award because parties
remain free to initiate litigation); Fowler v. Merrill Lynch, X Y.B. Comm. Arb. 499 (English
High Ct.) (agreement permitting arbitration is either inoperative or not an agreement to
arbitrate where it does not permit arbitration if parallel proceedings in national court
are pending).
137) See, e.g., Salt Lake Tribune Publg Co., LLC v. Mgt Planning, Inc., 390 F.3d 684, 689 (10th Cir.
2004) (one feature that must necessarily appertain to a process to render it an
arbitration is that the third partys decision will settle the dispute); Walkinshaw v. Diniz
[2001] Lloyds Rep. 632 (Comm) (English High Ct.) (agreement must contemplate that the
tribunal which carries on the process will make a decision which is binding on the
parties); Judgment of 17 June 2004, Le Parmentier v. La Socit Miss France, XXX Y.B.
Comm. Arb. 119, 123-24 (Paris Cour dappel) (2005) (Uniform Domain Name Resolution
Policy dispute resolution proceeding is not arbitration).
138) Harrells, LLC v. Agrium Advanced (U.S.A.) Tech., Inc., 795 F.Supp.2d 1321, 1328 (M.D. Fla.
2011).
139) See1.02[B][3]; 26.03.
140) See, e.g.,2.02[C][2]; Portland Gen. Elec. Co. v. U.S. Bank Trust Natl Assn, 218 F.3d 1085,
1090 (9th Cir. 2000) (arbitration agreements permit arbitrators to resolve pending
disputes generally through adversary hearings at which evidence is admitted and the
arbitrator plays a quasi-judicial role); Walkinshaw v. Diniz [2000] 2 All ER 237, 254 (Comm)
(English High Ct.) (It is a characteristic of arbitration that the parties should have a
proper opportunity of presenting their case.); MacDonald Estates plc v. Natl Car Parks
Ltd, 2010 SLT 36, 23 (Scottish Ct. Session) (The words acting as an expert are normally
used in legal practice in contradistinction to the words acting as an arbiter. They signify
that the decision maker is to base his decision on his own expertise, rather than
adjudicating between competing contentions and bodies of evidence: that is to say, he is
to make an expert determination rather than to conduct an arbitration.).
48
141) See, e.g., Evanston Ins. Co. v. Cogswell Props. LLC., 683 F.3d 684, 693-94 (6th Cir. 2012) (A
Policy that does not provide for a final and binding remedy by a neutral third party but
allows one party to retain its right to deny the claim does not constitute arbitration.);
AMF Inc. v. Brunswick Corp.,621 F.Supp. 456, 460 (E.D.N.Y. 1985) (If the parties have agreed
to submit a dispute for a decision by a third party, they have agreed to arbitration.)
(emphasis added); N. Blackaby et al. (eds.), Redfern and Hunter on International
Arbitration 1.02 (5th ed. 2009) (in its origins, the concept of arbitration is a simple one.
Parties who are in dispute agree to submit their disagreement to a [third person]. They
each put their respective cases to this person this private individual, this arbitrator who
listens, considers the facts and the arguments, and then makes a decision.) (emphasis
added).
142) Dworkin v. Caledonian Ins. Co., 226 S.W. 846, 848 (Mo. 1920).
143) See2.02[C][4], p. 285.
144) See2.02[C][1][b][i]; 5.04[D], pp. 763-64.
145) Forum selection agreements are discussed elsewhere, see1.02[A][1]; G. Born & P.
Rutledge, International Civil Litigation in United States Courts 461-86 (5th ed. 2011); G.
Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing 2-3
(4th ed. 2013); D. Joseph, Jurisdiction and Arbitration Agreements and Their Enforcement
1.01 to 1.11 (2d ed. 2010); M. McIlwrath & J. Savage, International Arbitration and
Mediation: A Practical Guide 1-005 (2010).
146) This confusion may stem, in part, from statements like that of the U.S. Supreme Courts
comment in Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (U.S. S.Ct. 1974), that [a]n
agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of
forum selection clause that posits not only the situs of suit but also the procedure to be
used in resolving the dispute. This conflation of arbitration clauses on the one hand and
forum selection clauses on the other has been repeated on other occasions. See, e.g.,
Armstrong v. LaSalle Bank Natl Assn, 552 F.3d 613, 616 (7th Cir. 2009) ([A]n arbitration
clause is a species of forum selection clause, reflecting an ex ante determination by the
parties of the most convenient forum to resolve disputes.); Natl Iranian Oil Co. v. Ashland
Oil, Inc., 817 F.2d 326, 332-33 (5th Cir. 1987) (forum selection clause establishing the situs
of arbitration must be enforced); Baoding Tianwei Group Co. v. PacifiCorp, 2008 WL
4224828, at *11 (D. Or.) (agreement to arbitrate before a particular arbitratorcan also
constitute a forum selection clause); Benefit Assn Intl, Inc. v. Mount Sinai Comp. Cancer
Ctr, 816 So.2d 164, 168 (Fla. App. 2002) (court describes provision selecting arbitral seat as
a forum selection clause).
147) Publicis Commcn v. True N. Commcns, Inc., 132 F.3d 363, 366 (7th Cir. 1997).
148) G. Petrochilos, Procedural Law in International Arbitration 27 (2004) (an arbitration clause
can only loosely be called a forum-selection clause). See also Vimar Seguros y
Reaseguros, SA v. M/V Sky Reefer, 515 U.S. 528 (U.S. S.Ct. 1995); Rodriguez de Quijas v.
Shearson/Am. Express, Inc., 490 U.S. 477, 482-83 (U.S. S.Ct. 1989); China N. Indus. Tianjin
Corp. v. Grand Field Co. Inc., 197 F.Appx. 543 (9th Cir. 2006) (stipulation selecting forum for
arbitration not forum selection clause).
For a discussion of the significant distinctions between both types of clauses, seeG. Born,
International Arbitration and Forum Selection Agreements: Drafting and Enforcing 2, 3 (4th
ed. 2013). See also Bremer Vulkan Schiffbau und Maschinenfabrik v. S. India Shipping Corp.
Ltd [1981] AC 909, 976 (House of Lords) (fact that parties agreed to arbitrate in a particular
forum does not mean that they agreed to litigate there); D. Joseph, Jurisdiction and
Arbitration Agreements and Their Enforcement 1.01 to 1.11 (2d ed. 2010); M. McIlwrath &
J. Savage, International Arbitration and Mediation: A Practical Guide 1-006 to 1-007
(2010); Stipanowich, Rethinking American Arbitration, 63 Ind. L.J. 425, 429 (1987)
(Arbitration is often described as everything that civil litigation is not.).
149) DDI Seamless Cylinder Intl, Inc. v. Gen. Fire Extinguisher Corp., 14 F.3d 1163, 1165 et seq. (7th
Cir. 1994) (Posner, J.).
150) See2.02[C], p. 245; Repub. of Mauritius v. U.K. of Great Britain & N. Ireland, Reasoned
Decision on Challenge in PCA Case Under the 1982 UN Convention on the Law of the Sea of
30 November 2011; China N. Indus. Tianjin Corp. v. Grand Field Co., Inc., 197 F.Appx. 543, 544
(9th Cir. 2006); AXA Re v. Ace Global Mkts Ltd [2006] EWHC 216 (QB) (English High Ct.)
(whether clause conferred jurisdiction upon arbitrators rather than national court
depends on intent of parties, not label used); Shell Intl Petroleum Co. v. Coral Oil Co. Ltd
[1999] 1 Lloyds Rep. 72 (QB) (English High Ct.). Compare Heenan v. Sobati, 117 Cal.Rptr.2d
532, 535 (Cal. App. 2002) (judicial arbitration); Elliott & Ten Eyck Pship v. City of Long
Beach, 67 Cal.Rptr.2d 140, 140 (Cal. App. 1997). For a comparison, see Lazareff, Larbitre est-
il un juge?, in Liber Amicorum Claude Reymond 173 (2004).
49
151) See, e.g., Kochert v. Adagen Med. Intl, Inc., 491 F.3d 674, 679 (7th Cir. 2007) (drawing
distinction between contracts arbitration and forum selection clauses based on forum
selection clauses reference to particular court); Abbott Labs. v. Takeda Pharm. Co., 476
F.3d 421, 425 (7th Cir. 2007); Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797, 799
(7th Cir. 2005) ([M]any contracts have venue or forum-selection clauses. These do not call
for arbitration but are routinely enforced, even when they send the dispute for resolution
outside the courts jurisdiction.); DDI Seamless Cylinder Intl, Inc. v. Gen. Fire Extinguisher
Corp., 14 F.3d 1163, 1165 (7th Cir. 1994); Heenan v. Sobati, 117 Cal.Rptr.2d 532, 535 (Cal. App.
2002); Elliott & Ten Eyck Pship v. City of Long Beach, 67 Cal.Rptr.2d 140, 140 (Cal. App.
1997); India Oil Corp. v. Vanoil Inc. [1991] 2 Lloyds Rep. 634 (English High Ct.) (express
reference to national courts in forum selection clause prevailed arbitration clause
allegedly incorporated by reference).
152) See1.02[B][1]; 12.01. Often, arbitrators will be selected pursuant to procedures specified
in a preexisting arbitration agreement in a contract to resolve a specific dispute after it
has arisen. See12.03. In rare cases, the preexisting arbitration clause will specify the
identity of the arbitrator(s) who will resolve future disputes under the contract.
See12.03[C][1].
153) See12.03[C][2].
154) See12.03[A][1]; 12.03[C][2].
155) See 12.03[D]. There are instances in which a national court will select the arbitrator(s),
because the parties have failed either to do so or to provide a mechanism for an
appointing authority to do so. See 12.03[E]. This default appointment mechanism is best
considered as an exception, required by necessity, to preserve the parties agreement to
arbitrate, but not as altering the characteristics of arbitration. The judicial assistance of
national courts in selecting arbitrators is utilized only when the arbitral process has not
functioned properly, and is only exercised in order to preserve the parties underlying
156) See 12.01[A]; 24.02.
157) See1.02[B][4].
158) See2.01[A].
159) See2.02[A]-[B]; Tenn. Imps., Inc. v. Filippi, 745 F.Supp. 1314, 1325-28 (M.D. Tenn. 1990);
Riley v. Kingsley Underwriting Agencies, Ltd, 969 F.2d 953, 956-58 (10th Cir. 1992) (discussing
contract containing both forum selection/choice-of-law clauses and arbitration
agreement); Cohen v. Stratis Bus. Ctrs, Inc., 2005 WL 3008807, at *3 (D.N.J.) (FAA irrelevant
to forum selection clause); von Mehren, An International Arbitrators Point of View, 10 Am.
Rev. Intl Arb. 203 (1999). See also Park, Bridging the Gap in Forum Selection: Harmonizing
Arbitration and Court Selection, 8 Transnatl L. & Contemp. Probs. 19, 25 (1998).
160) See, e.g., Allianz SpA v. W. Tankers Inc., Opinion of Advocate General Kokott, [2009] Case No.
C-185/07, 47 (E.C.J.) (2008) ([T]he parties to the Brussels Convention thus wished to
exclude arbitration in its entirety, over and above the actual arbitration proceedings,
including proceedings brought before the national courts which are related to
arbitration.); Beraudo, The Arbitration Exception of the Brussels and Lugano Conventions:
Jurisdiction, Recognition and Enforcement of Judgment, 18 J. Intl Arb. 13 (2001); G. Born & P.
Rutledge, International Civil Litigation in United States Courts 461-71, 1160-70 (5th ed. 2011);
Hascher, Recognition and Enforcement of Judgments on the Existence and Validity of An
Arbitration Clause Under the Brussels Convention, 13 Arb. Intl 33 (1997); Park & Yanos,
Treaty Obligations and National Law: Emerging Conflicts in International Arbitration, 58
Hastings L.J. 251, 277-78 & n.137 (2006).
161) See Hague Convention of 30 June 2005 on Choice of Court Agreements, Art. 2(4) (This
Convention shall not apply to arbitration and related proceedings.). See also Kessedjian,
La Convention de La Haye du 30 juin 2005 sur llection de for, 133 J.D.I. (Clunet) 813 (2006);
Note, Recent International Agreement, 119 Harv. L. Rev. 931 (2006) (Hague Convention sets
out uniform rules for enforcement of choice-of-court clauses and requires that courts in
member states assume jurisdiction pursuant to certain forum selection agreements);
1.02[B][3].
162) EU Regulation 44/2001, Art. 1(2)(d). The revised Regulation (that will apply from 10 January
2015) is to the same effect. See EU Regulation 1215/2012 of 12 December 2012 on
Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial
Matters (recast), Art. 1(2)(d).
In jurisdictions where forum selection clauses are not subject to a separate statutory or
treaty regime, specialized common law rules usually apply (which are distinct from
national arbitration legislation). G. Born & P. Rutledge, International Civil Litigation in
United States Courts 461-546 (5th ed. 2011); L. Collins et al. (eds.), Dicey, Morris and Collins
on The Conflict of Laws 12-099 to 12-166 (15th ed. 2012).
163) See Horn, The Development of Arbitration in International Financial Transactions, 16 Arb.
Intl 279, 280-81 (2000); ICC, Arbitration and Expertise (1994); Jones, Expert Determination
and Arbitration, 67 Arb. 17 (2001); J. Kendall, Expert Determination 1.1.1 (4th ed. 2008);
Pryles, Arbitrating Disputes in the Resource Industries, 21 Arb. Intl 405, 421-24 (2004);
Stipanowich, Contract and Conflict Management, 2001 Wisc. L. Rev. 831, 845; Valasek &
Wilson, Distinguishing Expert Determination From Arbitration: The Canadian Approach in a
Comparative Perspective, 29 Arb. Intl 63 (2013).
164) J. Kendall, Expert Determination 1.1.2 to 1.1.3 (4th ed. 2008).
50
165) See ICC, Arbitration and Expertise (1994); J. Kendall, Expert Determination 1.1.2 to 1.1.11
(4th ed. 2008); Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl
L.J. 449, 486 (2005) (Many legal systems draw a distinction, at least on paper, between
agreements calling for arbitration, and those calling for something else something that
may be termed appraisal, or expertise.); Redfern, Experts and Arbitrators: An
International Perspective, 2001 Intl Arb. L. Rev. 105, 106 (two entirely different roles of the
expert and the arbitrator); Schoell, Reflexions sur lexpertise-arbitrage en droit suisse, 24
ASA Bull. 621 (2006).
166) French Civil Code, Art. 1592 (if price is not fixed by parties, it can nevertheless be left to
the determination of a third party). SeeJudgment of 16 February 2010, Neervoort v. Socit
Holesco, 2010 Rev. arb. 503, 505 (French Cour de cassation com.) (agreement under which
the third party appointed by the parties was not mandated to exercise a judicial power,
but to arrive at a finding of facts by which the parties agreed to be bound does not
constitute an arbitration agreement); Judgment of 9 October 1984, Socit SECAR v. Socit
Shopping Dcor, 1986 Rev. arb. 263 (French Cour de cassation civ. 3e) (rental price to be
adjusted in accordance with index; if index ceased to be published, an alternative could
be selected by an arbitrator); J.-L. Delvolv, G.-H. Pointon & J. Rouche, French Arbitration
Law and Practice: A Dynamic Civil Law Approach to International Arbitration 40 (2d ed.
2009) (Although [Article 1592] uses the phrase arbitrage dun tiers (i.e., arbitration by a
third party), this is not at all arbitration as generally understood under French law.);
Mayer, Note on Judgment of 3 January 1985, 1986 Rev. arb. 267, 270 (French Cour de
cassation com.) (parties agreement excludes any possibility of discovering some
implicit intention in the contract .From that moment the role of the neutral is not to
interpret, but to freely create, and this role cannot be taken on by a judge nor, as a
consequence, by an arbitrator); Sanders, Larbitrage dans les transactions commerciales
long terme, 1975 Rev. arb. 83, 85 ([C]an we expand the notion of arbitration in such a way
as to include this type of decision [under Article 1592]? It may be unfortunate, but thats
really an exaggeration.).
167) Kurth, Zur Kompetenz von Schiedsrichtern und Schiedsgutachtern 1990 NJW 2038; J.-P.
Lachmann, Handbuch fr die Schiedsgerichtspraxis 74 (3d ed. 2008).
168) See Netherlands Civil Code, Art. 7:900(2) (a determination may be made through a
decision of the parties or through a decision rendered bya third party), Art. 7:900(4)
(arbitration is not governed by Book 7 of Civil Code; rather it is governed by Book 4 of
Code of Civil Procedure). See also A. Hartkamp & C. Sieburgh, Asser 6-III* Algemeen
Overeenkomstenrecht 431-32 (2010) (The main difference is that an arbitral award,
different from binding advice, provides an executory title.); A. van den Berg et al.,
Netherlands Arbitration Law 25-26 (1993).
169) See, e.g., Hartford Lloyds Ins. Co. v. Teachworth, 898 F.2d 1058 (5th Cir. 1990) (appraisal is
not arbitration); Rastelli Bros. Inc. v. Netherlands Ins. Co., 68 F.Supp.2d 440 (D.N.J. 1999)
(there is generally a great distinction between arbitration and appraisal and appraisal
is not subject to FAA); Johnson v. Mut. Serv. Cas. Co., 732 N.W.2d 340, 345 (Minn. App. 2007)
(appraisal was not arbitration); Mott v. Gaer Bros., Inc., 174 A.2d 549 (Conn. Super. Ct. 1961);
Barclays Bank plc v. Nylon Capital LLP [2011] EWCA Civ 826, 23 (English Ct. App.) (expert
determination is a very different alternative form of dispute resolution to which neither
the Arbitration Act 1996 nor any other statutory codes apply); Sport Maska Inc. v. Zittrer,
[1988] 1 S.C.R. 564 (Canadian S.Ct.); Pickens v. Templeton, [1994] 2 NZLR 718 (Christchurch
High Ct.).
170) See1.04[C][5][a] & [c]. See generally Chan, Construction Industry Adjudication: A
Comparative Study of International Practice, 22 J. Intl Arb. 363, 363-65 (2005); Sessler &
Leimert, The Role of Expert Determination in Mergers and Acquisitions Under German Law,
20 Arb. Intl 151 (2004).
171) See, e.g., Judgment of 17 November 2008, DFT 4A_438/2008 (Swiss Federal Tribunal)
(expert determination is an agreement of substantive law by means of which the parties
rely on a third partys opinion on a issue of fact or point of law, to which they declared to
be bound); A. van den Berg, The New York Arbitration Convention of 1958 45 (1981) (it is
characteristic of these procedures that the proceedings are not adversary and that the
third person makes the decision on the basis of his expert knowledge and experience).
172) Heart Research Institute Ltd v. Psiron Ltd, [2002] NSWSC 646, 16 (N.S.W. S.Ct.). The role of
the expert in an expert determination differs from the roles of experts in other contexts,
such as court or tribunal experts, party-nominated experts, or experts appointed to
provide a non-binding advisory opinion. See15.08[AA][7]; Valasek & Wilson, Distinguishing
Expert Determination From Arbitration: The Canadian Approach in a Comparative
Perspective, 29 Arb. Intl 63, 65 (2013) (the line separating arbitration from expert
adjudication is faint).
51
173) See, e.g., Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1, 6 (1st Cir. 2004)
(accountants determination of corporations earnings is arbitration in everything but
name); Harkers Distrib., Inc. v. Reinhart Foodserv., LLC, 597 F.Supp.2d 926, 937 (N.D. Iowa
2009) (rejecting contention that the accountant remedy is not arbitration, because it
never uses the word arbitrate, and does not incorporate any arbitration bodys or
arbitration acts rules of arbitration); Wilky Prop. Holdings plc v. London & Surrey Inv. Ltd
[2011] EWHC 2226 (Ch) (English High Ct.) (The way in which the dispute resolution process
is described or labelled by the parties in their agreement is not conclusive as to the true
character of that process. Nevertheless the language used by the parties may well
provide an important indication of the nature of the process that they intend.); British
Telecomms. plc v. SAE Group Inc. [2009] EWHC 252, 45 (TCC) (English High Ct.) (reference
to the person acting as an expertis a clear reference to the dispute being determined
by person acting in that capacity which is inconsistent with arbitration).
174) See, e.g., Portland Gen. Elec. Co. v. U.S. Bank Trust Natl Assn, 218 F.3d 1085, 1090 (9th Cir.
2000) (appraisal provisions are typically limited to ministerial determinations such as
the ascertainment of quality or quantity of items, the ascertainment of loss or damage to
property or the ascertainment of the value of property); State Farm Lloyds v. Johnson, 290
S.W.3d 886, 890 (Tex. 2009) (The word appraisal itself generally means [t]he
determination of what constitutes a fair price; valuation; estimation of worth.[T]he
scope of appraisal is damages, not liability.); Smithson v. United States Fid. & Guar. Co.,
411 S.E.2d 850 (W.Va. 1991) (the narrow purpose of an appraisal and the lack of an
evidentiary hearing make it a much different procedure from arbitration; rejecting
possibility for claim outside appraisal process); Preferred Ins. Co. v. Richard Parks
Trucking Co., 158 So.2d 817, 820 (Fla. Dist. Ct. App. 1963) (An agreement for arbitration
ordinarily encompasses the disposition of the entire controversy between the parties
upon which award a judgment may be entered, whereas an agreement for appraisal
extends merely to the resolution of the specific issues of actual cash value and the
amount of loss, all other issues being reserved for determination in a plenary action
before the court.); Judgment of 15 December 2010, Socit General Motors France v.
Socit Champs de Mars Automobile AS, 2011 Rev. arb. 435, 436 (French Cour de cassation,
civ. 1e) (because experts did not draw any legal conclusions consequent to their
decision, decision was not arbitral award); Judgment of 16 February 2010, Neervoort v.
Socit Holesco, 2010 Rev. arb. 503, 505 (French Cour de cassation com.) (agreement
pursuant to which the third party appointed by the parties was mandated not to exercise
an adjudicatory power, but to arrive at a finding of facts by which the parties agreed to
be bound, does not constitute arbitration agreement); Judgment of 9 November 1999,
Syndicat des Coproprietaires du 35, rue Jouvent v. Halpern, 2001 Rev. arb. 159 (Paris Cour
dappel) (architect/experts determinations were not to resolve dispute but only to
perfect a compromise). See also Rau, The Culture of American Arbitration and the Lessons
of ADR, 40 Tex. Intl L.J. 449, 486 (2005) (paradigm of the appraisal is a provision in a
casualty insurance policy by which, if the insured and the Company shall fail to agree as
to the actual cash value of the amount of the loss, then the loss shall be finally
determined by competent and disinterested decision makers.); Valasek & Wilson,
Distinguishing Expert Determination From Arbitration: The Canadian Approach in A
Comparative Perspective, 29 Arb. Intl 63, 79 (2013) (On the one hand, arbitration
agreements permit arbitrators to resolve pending disputes between the parties and to
determine ultimate liability, generally through adversary hearings at which evidence is
admitted and the arbitrator plays a quasi-judicial role.Appraisal agreements, on the
other hand,are typically limited to ministerial determinations such as the
ascertainment of quality or quantity of items, the ascertainment of loss or damage to
property, or the ascertainment of the value of property.).
175) Levine v. Wiss & Co., 478 A.2d 397, 402 (N.J. 1984). See also J. Kendall, Expert Determination
16.10.1 to 16.10.10 (4th ed. 2008); Mnch, in T. Rauscher, P. Wax & J. Wenzel (eds.),
Mnchener Kommentar zur Zivilprozessordnung, 1025 et seq. (2012) (It speaks in favor of
an expert determination if the task is limited to the concrete determination of a single
question of fact.); Park, When and Why Arbitration Matters, in G. Beresford Hartwell (ed.),
The Commercial Way to Justice 73, 93 (1997) (arguing that question is whether issues
approximate a request for judicial relief: was the roof completed?[is for expert, while]
does the customer owe $10,000 to the Contractor?is for arbitrator); W. Sturges, A
Treatise on Commercial Arbitrations and Awards 18-23 (1930) (identifying factors for
distinguishing arbitration from expert determination: (a) an arbitration presumes a
dispute or controversy; (b) an appraisal or valuation determines merely an incidental or
subsidiary matter and does not embrace the legal responsibility or the whole
controversy; (c) the functions of appraisers or valuers are ministerial whereas those of
arbitrators are judicial).
176) See, e.g., Quade v. Secura Ins., 814 N.W.2d 703, 708 (Minn. 2012) (Page, J., dissenting)
(Minnesota lawdoes not authorize appraisers to makelegal determination[s]);
Scottish Union & Natl Ins. Co. v. Clancy, 8 S.W. 630 (Tex. 1888); Judgment of 21 December
2000, Mutuelle Fraternelle dAssurances v. Chetouane, 2001 Rev. arb. 178 (Paris Cour
dappel) (no arbitration where doctor merely made factual determinations without
drawing legal conclusion).
52
177) Judgment of 23 May 1960, 1960 NJW 1462, 1463 (German Bundesgerichtshof) (an arbitration
clause cannot be limited to certain aspects of a claim); Judgment of 25 June 1952, 1952 NJW
1296 (German Bundesgerichtshof); Judgment of 20 January 1971, 1971 NJW 943
(Oberlandesgericht Zweibrcken).
178) Judgment of 14 December 1994, 7 Ob 604/94 (Austrian Oberster Gerichtshof). See also
Fellner & Netal, Chapter IV: Alternative Dispute Resolution Is Austria Fit for Adjudication?,
2010 Austrian Y.B. Intl Arb. 256 (the main difference between arbitration and expert
determination is that the arbitrator decides on a legal dispute whereas the expert
determinator determines facts or supplements the parties intentions and thereby
creates the basis for the settlement of the dispute).
179) See, e.g., City of Omaha v. Omaha Water Co., 218 U.S. 180, 193-94 (U.S. S.Ct. 1910)
(appraisers were to examine and estimate the value and acquaint themselves with the
condition and extent of the property in question in their own way and not according to
the procedure required in a judicial proceeding); Portland Gen. Elec. Co. v. U.S. Bank
Trust Natl Assn, 218 F.3d 1085, 1090 (9th Cir. 2000) (arbitration agreements permit
arbitrators to resolve pending disputes generally through adversary hearings at which
evidence is admitted and the arbitrator plays a quasi-judicial role); Corey v. N.Y. Stock
Exchange, 691 F.2d 1205, 1209 (6th Cir. 1982); Litman v. Holtzman, 149 A.2d 385, 389 (Md.
1959) (parties did not intend their respective accountants or the umpire to hold
adversary hearings; Customary auditing practice does not include the ascertainment of
facts or results only in the presence of those of opposing views. Auditing is essentially a
unilateral investigatory process.); Jacob v. Seaboard, Inc., 610 A.2d 189, 192 (Conn. App.
1992) (arbitration involves quasi-judicial proceeding that is adversarial in nature, and
implies that the parties will present witnesses and evidence, if they want, after notice of
a hearing date, and argue their positions to an impartial decision maker); Arenson v.
Casson Beckman Rutley & Co. [1975] 3 All ER 901 (House of Lords); Sutcliffe v. Thackrah
[1974] 1 All ER 859, 882 (House of Lords) (Judges and arbitrators have disputes submitted
to them for decision. The evidence and the contentions of the parties are put before them
for their examination and consideration.None of this is true about the valuer or the
architect who were merely carrying out their ordinary business activities.); Barclays Bank
plc v. Nylon Capital LLP [2011] EWCA Civ 826, 37 (English Ct. App.) (Unless the parties
specify the procedure, the expert determines how he will proceed; it is rare for what
might be perceived as procedural unfairness in an arbitration to give rise to a ground for
challenge to the procedure adopted by an expert.); Schulte v. Nile Holdings Ltd [2004] 2
Lloyds Rep. 352, 95 (QB) (English High Ct.) (A person sitting in a judicial capacity
decides matters on the basis of submissions and evidence put before him, whereas the
expert, subject to the express provisions of his remit, is entitled to carry out his own
investigations, form his own opinion and come to his own conclusion regardless of any
submissions or evidence adduced by the parties themselves.); Sport Maska Inc. v. Zittrer,
[1988] 1 S.C.R. 564 (Canadian S.Ct.); 4575 Poirier Inv. Ltd v. Gubbay, [1998] QJ 3171 (Qubec
Super. Ct.) (similarity with judicial process is most important criterion in deciding
whether dispute resolution procedure is arbitration).
180) Mott v. Gaer Bros., Inc., 174 A.2d 549, 552 (Conn. Super. Ct. 1961).
181) Walkinshaw v. Diniz [2000] 2 All ER 237, 252 (Comm) (English High Ct.). See also Metalform
Asia Pte Ltd v. Holland Leedon Pte Ltd, [2007] 2 SLR 268 (Singapore Ct. App.) (single most
significant distinction between expert determination and litigation/ arbitration is that
arbitrator was required to hear parties and expert was not); Age Old Builders Pty Ltd v.
Swintons Pty Ltd, [2003] VSC 307, 68-69 (Victoria S.Ct.) (the most significant feature of
an inquiry in the nature of a judicial inquiry is the parties fundamental right to a
hearing).
182) See15.07[D][2]. See also St. Georges Inv. Co. v. Gemini Consulting Ltd [2004] EWHC 2353
(Ch) (English High Ct.) (an arbitrator is entitled to use his expert knowledge to arrive at
his award, provided it is of the kind and in the range of knowledge that one would
reasonably expect the arbitrator to have and providing that he used it to evaluate the
evidence called and not to introduce new and different evidence.).
183) Ward v. Merrimack Mut. Fire Ins. Co., 753 A.2d 1214, 1222 (N.J. Super. Ct. App. Div. 2000). See
also2.02[C][1][b][v]; Valasek & Wilson, Distinguishing Expert Determination From
Arbitration: The Canadian Approach in A Comparative Perspective, 29 Arb. Intl 63, 87 (2013)
([T]he two key factors that distinguish arbitration from expert adjudication, namely the
duty to adjudicate between the competing arguments of the parties (without the neutral
being able to rely on his or her own subjective opinion) and the related duty to comply
with rules of procedural fairness.).
53
184) See Checkpoint Ltd v. Strathclyde Pension Fund [2003] EWCA Civ 84, 45 (English Ct. App.)
(intracranial information is different from information gained externally because the
former is already within the surveyors experience which he may then deploy); In re An
Arbitration Between Dawdy and Hartcup [1884-85] 15 Q.B. 426, 430 (English Ct. App.)
(appraisers make use of [their] eyes,knowledge andskill); Hanzek v. TRM (Canada)
Corp., [2007] BCSC 418 (B.C. S.Ct.); Evergreat Constr. Co. v. Presscrete Engg Ltd, [2005] SGHC
224, 37 (Singapore High Ct.) (If he has the sole discretion to arrive at his determination
without being hamstrung by procedural and evidential intricacies or niceties, it is most
unlikely that the court will view the proceedings to be arbitration proceedings. An expert
is permitted to inject into the process his personal expertise and to make his own
inquiries without any obligation to see the parties views or consult them. An expert is
also not obliged to make a decision on the basis of the evidence presented to him. He
can act on his subjunctive opinion, that is the acid test.); Mayers v. Dlugash, [1994] 1 HKC
755 (H.K. Ct. First Inst.) (accountant appointed to resolve dispute between two business
partners was expert, with investigative authority, and not arbitrator with judicial
function); Zeke Servs. Pty Ltd v. Traffic Techs. Ltd, [2005] QSC 135, 27 (Queensland S.Ct.)
(expert determinations are, at least in theory, expeditious because they are informal
and because the expert applies his own store of knowledge, his expertise, to his
observations of facts, which are of a kind with which he is familiar) (emphasis added);
Modi v. Modi, 3 SCC 573, 3.2 (Indian S.Ct. 1998) (The intention of the parties was not to
have any judicial determination on the basis of evidence led before the Chairman [of the
IFCI, who resolved the parties dispute regarding valuation of shares]. Nor was the
Chairman, IFCI required to base his decision only on the material placed before him by
the parties and their submissions. He was free to make his own inquiries. He had to apply
his own mind and use his own expertise for the purpose. He was free to take the help of
other experts. He was required to decide the question of valuation and the division of
assets as an expert and not as an arbitrator. He had been authorised to nominate another
in his place.).
185) Elberon Bathing Co. v. Ambassador Ins. Co., 389 A.2d 439, 447 (N.J. 1978).
186) J. Kendall, Expert Determination 6.7.1 (4th ed. 2008) (Clauses referring all disputes under
a contract to an expert are encountered from time to time in practice. These clauses do
not limit the exercise of the experts judgment to valuation or technical questions but call
on the expert to act more alike a judge or arbitrator. They have been found so far mainly
in construction disputes but there is nothing to prevent their use in other contexts.). See
also Quade v. Secura Ins., 814 N.W.2d 703, 708 (Minn. 2012) ([A]s an incidental step in the
appraisal process in this case, the appraisers must necessarily determine the cause of
the loss, as well as the amount necessary to repair the loss.).
187) See1.02[B][6], p. 85; 2.02[C][2][d]; J. Kendall, Expert Determination 16.6.5, 16.7.5 (4th
ed. 2008).
188) See the authorities cited 2.02[C][4], p. 285. See also the discussion of an arbitrators
judicial character in 1.05; 2.02[C][4]; 13.04[A].
189) Cheng-Canindin v. Renaissance Hotel Assocs., 50 Cal.App.4th 676, 684 (Cal. App. 1996). See
also Evanston Ins. Co. v. Cogswell Props., 683 F.3d 684, 693 (6th Cir. 2012) (Central to any
conception of classic arbitration is that the disputants empowered a third party to
render a decision settling their dispute.); Corey v. N.Y. Stock Exchange, 691 F.2d 1205,
1209 (6th Cir. 1982) (We believe that determinations made by the panel of arbitrators in
the case on appeal are functionally comparable to those of a judge or an agency hearing
examiner even though this was not a statutory arbitration or one where the arbitrators
were court appointed; [a]rbitrators are judges chosen by the parties to decide matters
submitted to them); Harkers Distrib., Inc. v. Reinhart Foodserv., LLC, 597 F.Supp.2d 926,
937 (N.D. Iowa 2009) (the common incidents of arbitration of a contractual dispute [a]re
whether the remedy was final; whether it involved an independent adjudicator;
whether there were substantive standards; and whether there was an opportunity for
each side to present its case.); Hodges v. MedAssets Net Rev. Sys., LLC, 2008 WL 476140, at
*3 (N.D. Ga.) (The [AAA]) defines arbitration as the submission of a dispute to one or more
impartial persons for a final and binding decision.); Miller v. Miller, 691 N.W.2d 788, 790
n.4 (Mich. Ct. App. 2004) (where arbitrator conducted no hearing, but met ex parte with
each party, no arbitration took place in the traditional sense of the word); Hartford Fire
Ins. Co. v. Jones,108 So.2d 571, 572 (Miss. 1959) (arbitration presupposes the existence of a
dispute or controversy to be tried and determined in a quasi judicial manner, whereas
appraisement is an agreed method of ascertaining value or amount of damage,
stipulated in advance, generally as a mere auxiliary or incident feature of a contract, with
the object of preventing future disputes, rather than of settling present ones.). See also
Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449, 495
(2005) (It is the peculiar nature, the identifying characteristic, of the arbitration process
that it proceed in an adversarial manner; there will as a consequence be a hearing, or at
the very least the introduction of evidence and argument. Appraisers, by contrast, are
hired not to proceed judicially, but to arrive at a decision by deploying their
professional experience and the use of [their] eyes,knowledge andskill perhaps
even by making their own investigations.) (quoting In re An Arbitration Between Dawdy &
Hartcup, [1884-85] 15 Q.B. 426, 430 (English Ct. App.)).
54
190) See1.02[B][6]; Salt Lake Tribune Publg Co. v. Mgt Planning, Inc., 390 F.3d 684, 690 (10th
Cir. 2004) (Parties need not establish quasi-judicial proceedings resolving their disputes
to gain the protections of the FAA, but may choose from a range of procedures and tailor
arbitration to their peculiar circumstances.); AMF Inc. v. Brunswick Corp., 621 F.Supp. 456,
460 (S.D.N.Y. 1985) (holding that FAA applied despite fact that procedures did not involve
an adversary hearing, but were based on ex parte communications).
191) Walkinshaw v. Diniz [2000] 2 All ER 237, 255 (Comm) (English High Ct.). That analysis
included reference to (a) the wording of the clause; (b) the tribunals obligation to apply
applicable law; (c) the nature of the proceedings, including impartiality, equality of
treatment, and an absence of ex parte contacts; (d) the enforceability of the putative
arbitration agreement; and (e) a binding decision on a dispute that is formulated at the
time the tribunal is constituted. Ibid. The Court relied on a discussion of the attributes of
arbitration in M. Mustill & S. Boyd, Commercial Arbitration 41 (2d ed. 1989).
192) David Wilson Homes Ltd v. Survey Servs. Ltd [2001] BLR 267, 15 (English Ct. App.). In
contrast, another English case involved a provision titled Arbitration, which provided
that any dispute was to be referred to an independent consultant, who was to act as an
expert and not an arbiter and his decision shall be final and binding on the parties. The
court held that this was not an arbitration agreement, but an agreement for expert
determination. Cott UK Ltd v. Barber [1997] 3 All ER 540, 545 (QB) (English High Ct.), affd. As
a consequence, English arbitration legislation did not apply and no immediate stay of
judicial proceedings was required.
193) See Pickens v. Templeton, [1994] 2 NZLR 718 (Christchurch High Ct.). Compare Motunui Ltd v.
Methanex Spellman, [2004] 1 NZLR 95 (Auckland High Ct.).
194) Pickens v. Templeton, [1994] 2 NZLR 718, 728 (Christchurch High Ct.).
195) See Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R. 564 (Canadian S.Ct.) (inquiring inter alia
whether parties have the right to be heard, to argue, to present testimonial or
documentary evidence, that lawyers are present at the hearing and that the third party
delivers an arbitral award with reasons); PT Tugu Pratama Indonesia v. Magma Nusantara
Ltd, [2003] 4 SLR 257 (Singapore High Ct.); Mayers v. Dlugash, [1994] HKLR 442, 443-44 (H.K.
Ct. First Inst.); Thomas Cooke v. Banking Corp., [1986] 4 BPR 9185 (N.S.W. S.Ct.) (most
important factor in whether arbitrator immunity applies is whether individual performed
judicial function and engaged in exercise with significant judicial element).
196) Sport Maska Inc. v. Zittrer [1988] 1 S.C.R. 564, 96 (Canadian S.Ct.).
197) See, e.g.,Judgment of 20 February 2001, Socit Cubic Dfense Sys. Inc. v. Chambre de
Commerce Internationale, 2001 Bull. civ. I No. 39, 24 (French Cour de cassation civ. 1e)
(judicial functions entrusted to the arbitrators); Judgment of 16 December 1997, Van Luijk
v. Socit commerciale Raoul Duval, 1999 Rev. arb. 253, 253 (French Cour de cassation civ.
1e) (The Court of Appeals correctly held that the arbitrator exercises a judicial
function.).
198) See, e.g.,Judgment of 28 October 1999, SA Fretal v. SA ITM Enters., 2000 Rev. arb. 299 (Paris
Cour dappel) (The independence and impartiality of the arbitrator are the essence of
his judicial role.); Judgment of 2 June 1989, Socit Gemanco v. Socit Arabe des engrais
phosphates et azotes, 1991 Rev. arb. 87 (Paris Cour dappel) (The independence of the
arbitrator is the essence of his judicial function.); Judgment of 9 May 2001, Socit
Soufflet Ngoce v. Socit Tradco Interoceanic Commodities, 2004 Rev. arb. 113 (Paris
Tribunal de Grande Instance) (judicial function of the arbitrator). See also Judgment of 4
December 2007, SA Generali Assurances IARD v. Lydie X, RG 07/00019 (Agen Cour dappel)
(existence of an arbitration agreement requires the [parties] intend to confer judicial
power to a third party or parties judicial power); Leboulanger, Note onJudgment of 9 May
2001 (Paris Tribunal de grande instance), 2004 Rev. arb. 118, 119 (an arbitral tribunal
fulfills a judicial mission).
199) Judgment of 25 June 1952, 1952 NJW 1296, 1297 (German Bundesgerichtshof). See also J.-P.
Lachmann, Handbuch fr die Schiedsgerichtspraxis 77 (3d ed. 2008) (distinction between
expert determination and arbitration is essential because of procedural differences: only
in arbitration must procedural principles securing a judicial procedure according to the
rule of law, like the right to be heard, be applied).
200) Judgment of 27 May 2004, 2004 NJW 2226, 2227 (German Bundesgerichtshof) (arbitration is
adjudication of disputes in the broader sense and therefore implies a decision by a
neutral third party).
201) Judgment of 26 November 1991, DFT 117 IA 365, 367-68 (Swiss Federal Tribunal)
(characterizing as arbitral award report of experts determining transfer price of shares);
C. Mller, International Arbitration: A Guide to the Complete Swiss Case Law 7 (2010).
202) C. Mller, International Arbitration A Guide to the Complete Swiss Case Law 7 (2010).
203) For commentary on drafting arbitration and expert determination clauses, seeG. Born,
(4th ed. 2013); Freyer, Practical Considerations in Drafting Dispute Resolution Provisions in
International Commercial Contracts: A U.S. Perspective, 15(4) J. Intl Arb. 7, 7-12 (1998); J.
Kendall, Expert Determination 16.3, 16.10 (4th ed. 2008).
204) Cott UK Ltd v. Barber [1997] 3 All ER 540 (QB) (English High Ct.) (refusing statutory stay of
litigation because no arbitration, but rather expert determination, was pending), affd;
Schoell, Reflexions sur lexpertise-arbitrage en droit suisse, 24 ASA Bull. 621 (2006)
(describing Judgment of 5 July 2004 (Geneva Ct. First Inst.), refusing judicial assistance to
appoint expert determiner).
205) See Thomas Cooke v. Banking Corp., [1986] 4 BPR 9185 (N.S.W. S.Ct.); Pickens v. Templeton,
[1994] 2 NZLR 718, 728 (Christchurch High Ct.).
55
206) See, e.g., Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797, 799 (7th Cir. 2005) (The
statement that PricewaterhouseCoopers will act as an expert and not as an arbitrator
means that it will resolve the dispute as accountants do by examining the corporate
books and applying normal accounting principles plus any special definitions the parties
have adopted rather than by entertaining arguments from lawyers and listening to
testimony. It does not imply that the whole section of the contract committing resolution
to an independent private party is hortatory. Thus the provision for the final, conclusive
and binding resolution of this dispute by someone other than a federal judge must be
honored; the judge is no more entitled to ignore it than he could ignore the contracts
detailed definition of net working capital.); State v. Martin Bros., 160 S.W.2d 58, 61 (Tex.
1942) (in contract that provided for dispute resolution through expert determination by
highway engineer, court observed: The contract also provides that the decision of the
Highway Engineer shall be final and conclusive. The Highway Engineer denied the claim of
the plaintiffs. They cannot escape the binding effect of the decision of the Highway
Engineer, without alleging and proving that his decision in this case was based upon
partiality, fraud, misconduct, or gross error. No such attack was made upon the decision,
either by pleadings or by proof, and, therefore, under the decisions of this Court plaintiffs
are not entitled to recover herein.); Palumbo v. Select Mgt Holdings, Inc., 2003 WL
22674397, at *2 (Ohio Ct. App.) (agreement for resolution of disputes by national
accounting firm is final and binding dispute resolution: even if the procedure
prescribed in the contract here was not arbitrationthe courts general jurisdiction would
give the court power to compel specific performance of a contractual agreement to
participate in another form of ADR; leaving open question whether the result maybe
subject to court enforcement); Aiton Australia Pty Ltd v. Transfield Pty Ltd, [1999] 153 FLR
236, 244 (N.S.W. S.Ct.) (It is trite to observe that parties ought to be bound by their freely
negotiated contracts.). Compare Grenier v. Compratt Constr. Co., 454 A.2d 1289, 1292 (Conn.
1983) (Frequently, building contracts provide that a third party, an architect or an
engineer, acting in good faith and in the exercise of his best judgment, shall decide when
one of the contracting parties has fulfilled the requirements of the contract. In such
circumstances, if the architect or engineer withholds certification, and his decision is not
arbitrary or made in bad faith, a court is not authorized to substitute its judgment for that
of the designated expert.). See also2.02[C][2][b].
207) Different jurisdictions apply different legal standards to the consequences of an expert
determination and there is no international convention or similar instrument that
requires either uniform or minimum recognition and enforcement of such determinations.
In general, most developed jurisdictions will treat expert determinations as binding,
subject to showings of clear error or fraud, but there is much less uniformity in such
standards than is the case with arbitral awards. See A. Samuel, Jurisdictional Problems in
International Commercial Arbitration 47 (1989) (In some cases, it would be wrong to apply
arbitration legislation to a valuation, for instance as regards provisions for judicial review
on the merits.).
208) See, e.g., Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797 (7th Cir. 2005)
(accountant review held to be arbitration clause); Wasyl, Inc. v. First Boston Corp., 813 F.2d
1579 (9th Cir. 1987) (provision for three independent appraisers to establish fair market
value of partnership interest is subject to FAA); Singleton v. Grade A Mkt, Inc., 607
F.Supp.2d 333, 339 (D. Conn. 2009) (in a case such as the one before this court where a
contract calls for dispute resolution through a binding appraisal process, and such
process would completely dispose of the case-appraisal is akin to arbitration and
therefore it is logical for the court to favor appraisal for the same reasons arbitration is
generally favored); Schofield v. Intl Dev. Group Co., 2006 U.S. Dist. LEXIS 8011, at *1 (W.D.
Tex.) (agreement to final decision by independent auditor was arbitration agreement);
Powderly v. Metrabyte Corp., 866 F.Supp. 39 (D. Mass. 1994) (finding arbitration agreement
where contract provided for accounting firm to calculate Net Operating Profit); Benson
Pump Co. v. S. Cent. Pool Supply, Inc., 325 F.Supp.2d 1152, 1155 (D. Nev. 2004) (provision for
independent, nationally-recognized accounting firm to resolve disputes over Accounts
Receivable Adjustment held subject to FAA); Schaefer v. Allstate Ins. Co.590 N.E.2d 1242
(Ohio 1992) (finding dispute resolution provision in automobile insurance contract
agreement to arbitrate); Stockwell v. Equitable Fire & Marine Ins. Co., 25 P.2d 873 (Cal. App.
1933) (finding arbitration agreement where contract provided for independent insurance
appraisal).
209) See Dwyer v. Fid. Natl Prop. & Cas. Ins. Co., 565 F.3d 284, 286 (5th Cir. 2009) (held not
arbitration where insurance policy clause provided: If you and we fail to agree on the
actual cash value or, if applicable, replacement cost of your damaged property to settle
upon the amount of loss, then either may demand an appraisal of the loss); Levine v. Wiss
& Co., 478 A.2d 397 (N.J. 1984); Gammel v. Ernst & Ernst, 72 N.W.2d 364 (Minn. 1955)
(accountants not arbitrators).
56
210) See, e.g., Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797 (7th Cir. 2005) (fact that
final, binding accounting procedure is not arbitration does not prevent enforcement);
Herndon v. Am. Family Home Ins. Co., 2009 WL 775428, at *1 (D. Ariz.) (Arizona courts treat
appraisal as analogous to arbitration and apply the principles of arbitration to
proceedings involving appraisal.); Wojdak v. Greater Philadelphia Cablevision, Inc., 707
A.2d 214, 219 (Pa. 1998) (a binding determination by a third party appraiser is basically
the equivalent of arbitration, and judicial review thereof is governed by the Delaware
Arbitration Act); Waradzin v. Aetna Cas. & Sur. Co., 570 A.2d 649 (R.I. 1990) (confirmation
proceeding under state arbitration statute permitted for appraisal); Reynoldsburg City
Sch. Dist. v. Licking Heights Local Sch. Dist. Bd of Educ., 2008 WL 4927406 (Ohio App.)
(binding expert determination can be confirmed as award); Meineke v. Twin City Fire Ins.
Co., 892 P.2d 1365, 1369 (Ariz. App. 1994) (despite some differences between arbitration
and appraisal, appraisal is analogous to arbitration [and] we apply principles of
arbitration law to this dispute). See also Omni Tech Corp. v. MPC Solutions Sales, LLC, 432
F.3d 797 (7th Cir. 2005) (fact that final, binding accounting procedure is not arbitration
does not prevent enforcement).
211) See, e.g., New York Civil Practice and Law Rules, Art. 75, 7601 (courts empowered to
enforce such an [appraisal] agreement as if it were an arbitration agreement). See also
Dimson v. Elghanayan, 19 N.Y.2d 316, 324 (N.Y. 1967) (Section 7601 of CPLR authorizes courts
to treat the proceeding brought to effect [enforcement of an appraisal agreement] as
one brought under the article (art. 75) relating to arbitration.).
212) See, e.g., Herndon v. Am. Family Home Ins. Co., 2009 WL 775428 (D. Ariz.) (compelling
appraisal under FAA, noting Arizona courts treat appraisal as analogous to arbitration
and apply the principles of arbitration to proceedings involving appraisal); Acme Roll
Forming Co. v. The Home Ins. Co., 110 F.Supp.2d 567, 569 (E.D. Mich. 2000) (appraisal is
similar to an arbitration clause); Phifer-Edwards, Inc. v. Hartford Fire Ins. Co., 1994 WL
236225, at *7 (Ohio App.) (This relief is much like the statutory procedure followed under
[state arbitration statutes], but it is not the same because the authority to provide such
relief stems from the common law.); Lynch v. Am. Family Mut. Ins. Co., 473 N.W.2d 515, 518
(Wis. App. 1991) (there is no statutory authority to stay a lawsuit commenced prior to a
demand for appraisal, [but] a proper demand for an appraisaltransforms completion of
the appraisal process into a condition precedent to the lawsuit).
213) See, e.g., Harvey Prop. Mgt Co. v. The Travelers Indem. Co., 2012 WL 5488898, at *3 (D. Ariz.)
(insurance policy calling for appraisal was subject to FAA); Pavlina v. Safeco Ins. Co. of
Am., 2012 WL 5412796 (N.D. Cal. 2012) (same); David Wilson Homes Ltd v. Survey Servs. Ltd
[2001] BLR 267 (English Ct. App.); Walkinshaw v. Diniz [2000] 2 All ER 237 (Comm) (English
High Ct.); PT Tugu Pratama Indonesia v. Magma Nusantara Ltd, [2003] 4 SLR 257 (Singapore
High Ct.) (appraisers treated as arbitrators); Methanex Motunui Ltd v. Spellman, [2004] 1
NZLR 95 (Auckland High Ct.) (expert treated as arbitrator).
214) See, e.g., Judgment of 26 November 1991, DFT 117 IA 365 (Swiss Federal Tribunal) (report of
experts determining transfer price of shares characterized as arbitral award); Judgment of
23 February 1999, Econerg Ltd v. Natl Elec. Co., XXV Y.B. Comm. Arb. 678, 681 (Bulgarian
Vurhoven Kasatsionen Sud) (2000) (arbitral award defined as judicial procedure act).
215) For commentary, seeN. Alexander, Global Trends in Mediation (2d ed. 2006); N. Alexander,
International and Comparative Mediation: Legal Perspectives (2009); K.-P. Berger, Private
Dispute Resolution in International Business: Negotiation, Mediation, Arbitration (2009); H.
Brown & A. Marriott, ADR Principles and Practice (2d ed. 1999); Cuperlier, Une nouvelle
avance de la mdiation?, JCP G 2009, 26, 43; de Boissson, Thoughts on the Future of ADR
in Europe: A Critical Approach, 15 Arb. Intl 349 (1999); M. Freeman, Alternative Dispute
Resolution (1995); J.-C. Goldsmith, A. Ingen-Housz & G. Pointen, ADR in Business: Practice
and Issues Across Countries and Cultures (2006); K. Kovach, Mediation: Principles and
Practice (3d ed. 2004); K. Mackie, D. Miles & W. Marsh, The ADR Practice Guide: Commercial
Dispute Resolution (3d ed. 2007); M. McIlwrath & J. Savage, International Arbitration and
Mediation: A Practical Guide (2010); P. Sanders, The Work of UNCITRAL on Arbitration and
Conciliation (2d ed. 2004); Stipanowich, The Arbitration Penumbra: Arbitration Law and the
Rapidly Changing Landscape of Dispute Resolution, 8 Nev. L.J. 427 (2007).
216) In many instances, mediation or conciliation will not even produce a non-binding
expression of opinion, recommendation, or similar advisory evaluation by the mediator
or conciliator. Instead, the mediator will only report the parties positions and raise
questions about their respective cases.
217) Barker, International Mediation A Better Alternative for the Resolution of Commercial
Disputes, 19 Loy. L.A. Intl & Comp. L. Rev. 1, 8-15 (1996). See also Report of the Secretary-
General, Possible Uniform Rules on Certain Issues Concerning Settlement of Commercial
Disputes: Conciliation, Interim Measures of Protection, Written Form for Arbitration
Agreement, U.N. Doc. A/CN.9/WG.II/WP.108, 11 (2000).
218) J. Moore, VII Digest of International Law 25 (1906). See also Mentschikoff, The Significance of
Arbitration A Preliminary Inquiry, 17 Law & Contemp. Probs. 698, 698 (1952) (Mediation or
conciliation or negotiation are means of compromising disputes on a give-and-take basis
and as informal compromises combine to constitute a distinct and well recognized phase
of trouble shooting.).
219) See1.02[B][3] & [5]; 25.02[B]; 26.05[C][12].
57
220) SeeUNCITRAL Model Law on International Commercial Conciliation With Guide to
Enactment and Use (2002), available at
www.uncitral.org/pdf/english/texts/arbitration/ml-conc/03-90953_Ebook.pdf.
Legislation based on the UNCITRAL Model Law on International Commercial Conciliation
has been enacted in Albania (2011), Belgium (2005), the Canadian provinces of Nova
Scotia (2005) and Ontario (2010), Croatia (2003), Honduras (2000), Hungary (2002),
Luxembourg (2012), Montenegro (2005), Nicaragua (2005), Slovenia (2008), Switzerland
(2008), the former Yugoslav Republic of Macedonia (2009), and the U.S. states of Idaho
(2008), Illinois (2004), Iowa (2005), Nebraska (2003), New Jersey (2004), Ohio (2005), South
Dakota (2007), Utah (2006), Vermont (2005), Washington (2005) and the District of
Columbia (2006). See also California Code of Civil Procedure 1297.11 to 1297.432.
221) See Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 of
Certain Aspects of Mediation in Civil and Commercial Matters, Art. 1, 1 (The objective of
this Directive is to facilitate access to alternative dispute resolution and to promote the
amicable settlement of disputes by encouraging the use of mediation and by ensuring a
balanced relationship between mediation and judicial proceedings.); Resolution
2011/2026(INI) of the European Parliament of 13 September 2011 on the Implementation of
the Directive on Mediation in the Member States, Its Impact on Mediation and Its Take-up by
the Courts, Preamble, F.
222) ICSID Convention, Chapter III, Arts. 28-35. Chapter III was implemented in ICSIDs Rules of
Procedure for Conciliation Proceedings (first promulgated in 1966 and subsequently
revised in 1984 and 2006). ICSID Conciliation Rules, XXVIII Y.B. Comm. Arb. 366 (2003). See
also Parra, The Development of the Regulations and Rules of the International Centre for
Settlement of Investment Disputes, 41 Intl Law. 47 (2007).
223) China Council for the Promotion of International Trade/China Chamber of Commerce
(CCPIT/CCOIC) Mediation Rules; DIS Mediation/Conciliation Rules; 2010 DIS Mediation
Rules; 2010 DIS Conflict Management Rules.
224) The ICC first adopted conciliation rules in 1922, immediately preceding the establishment
of the ICC Court. The Rules were revised extensively in 1988 and replaced in 2001 by the
ICC ADR Rules. See ICC Rules of Conciliation and Arbitration 8 (ICC Publication No. 447
1987); ICC Rules of Arbitration 46 (ICC Publication No. 581 1997); Schwartz, International
Conciliation and the ICC, 5(2) ICC Ct. Bull. 5 (1994).
225) AAA Commercial Arbitration Rules and Mediation Procedures, Arts. M1-M17; ICDR
International Mediation Rules, Arts. M1-M18. See AAA, Mediation Procedures Summary of
Changes (2007).
226) WIPO adopted Mediation Rules in 1994. See WIPO Mediation Rules.
227) CPR Mediation Procedure.
228) See2.02[C][2][a], p.257; Advanced Bodycare Solutions v. Thione, 524 F.3d 1235, 1240 n.4
(11th Cir. 2008) (Normally labels do not control; indeed, if an agreement specifies in
detail a dispute resolution procedure which it calls mediation (or anything else) but
which is, in substance, FAA arbitration, substance controls over title.); Champagne v.
Victory Homes, Inc., 897 A.2d 803, 805 (Me. 2006) (courts order that matter proceed to
non-binding arbitration rendered arbitration equivalent to mediation); High Valley
Homes, Inc. v. Fudge, 2003 Tex. App. LEXIS 3273 (Tex. Ct. App.) (despite use of word
mediation to describe dispute resolution, parties evidenced intention to be finally
bound by decision; agreement was for arbitration); AIG Europe SA v. QBE Intl Ins. Ltd
[2001] 2 Lloyds Rep. 268 (QB) (English High Ct.) (clause titled Arbitral Procedure, and
referring to arbitrator held to constitute conciliation agreement).
229) See Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449,
467-69 (2005) (non-binding arbitration: the parties may think that a trial run of the case,
ending in a prediction by a neutral expert, may cause the more recalcitrant among them
to reassess their own partisan estimates of the likely outcome of adjudication).
230) See Advanced Bodycare Solutions v. Thione, 524 F.3d 1235, 1240 (11th Cir. 2008) (In short,
because the mediation process does not purport to adjudicate or resolve a case in any
way, it is not arbitration within the meaning of the FAA.); Dluhos v. Strasberg, 321 F.3d
365, 371 (3d Cir. 2003) (dispute resolution provision was not arbitration agreement
because dispute would not necessarily be resolved by arbitration); Mirra Co., Inc. v. Sch.
Admin. Dist. No. 35, 251 F.3d 301, 304 (1st Cir. 2001) (no agreement to arbitrate when clause
requires non-binding mediation); Lander Co. v. MMP Invs., Inc., 107 F.3d 476, 480 (7th Cir.
1997); Harrison v. Nissan Motor Corp., 111 F.3d 343 (3d Cir. 1997) (informal dispute resolution
procedure is not arbitration under FAA); Harrells, LLC v. Agrium Advanced (U.S.) Tech.,
Inc., 795 F.Supp.2d 1321, 1328 (M.D. Fla. 2011); Gray v. Province-Grace, LLC, 2009 WL 259401,
at *4 (N.D. Ga.) (because the alternative dispute mechanism in the Declaration provides
for nonbinding mediation, the court finds that it is not governed by the [FAA]). See also
Stipanowich, Contract and Conflict Management, 2001 Wisc. L. Rev. 831, 840 (binding
arbitration involves (a) an agreement; (b) to settle controversies; (c) through an
adjudicative process; (d) before a private third party or parties; (e) who render a legally
binding award). But see Sekisui Ta Indus., LLC v. Quality Tape Supply, Inc., 2009 WL
2170500, at *3, 5 (D. Md.) (the court will assume that mediation is a form of alternate
dispute resolution that falls within the ambit of the term arbitration).
231) Salt Lake Tribune Publg Co. v. Mgt Planning, Inc., 390 F.3d 684, 689 (10th Cir. 2004).
232) Gate Precast Co. v. Kenwood Towne Place, LLC, 2009 WL 3614931, at *4 (S.D. Ohio).
58
233) See, e.g., Brennan v. King, 139 F.3d 258, 265-66 (1st Cir. 1998) (no arbitration agreement
because tribunal could only recommend a non-binding result); Schaefer v. Allstate Ins.
Co., 590 N.E.2d 1242 (Ohio 1992); Judgment of 17 June 2004, Le Parmentier v. La Socit Miss
France, XXX Y.B. Comm. Arb. 119, 123-24 (Paris Cour dappel) (2005) (provision that allows
for a recourse to state courts to have the dispute re-adjudged not arbitration); Judgment
of 20 May 2005, 2006 SchiedsVZ 103, 105 (Oberlandesgericht Naumburg) (no arbitral award
where main agreement provided that disputes should at first be decided by
conciliation and then referred to a local court).
234) Dluhos v. Strasberg, 321 F.3d 365 (3d Cir. 2003) (Uniform Domain Name Resolution Policy
dispute resolution proceeding is not subject to the FAA because no provisionprevents a
party from filing suit before, after or during the administrative proceedings).
235) See5.04[C][5], pp. 761-62.
236) See, e.g.,Judgment of 17 June 2004, Le Parmentier v. La Socit Miss France, XXX Y.B. Comm.
Arb. 119, 123-24 (Paris Cour dappel) (2005) (Uniform Domain Name Resolution Policy
dispute resolution proceeding is not arbitration because it allows for a recourse to state
courts to have the dispute re-adjudged, both before the administrative proceeding is
commenced and after it is concluded and,during the proceeding); Judgment of 23
March 1989, Socit Clause France v. Cooprative agricole de lAunis, 1990 Rev. arb. 713
(Paris Cour dappel).
237) See, e.g., Flight Training Intl v. Intl Fore Training Equip. [2004] EWHC 721 (Comm) (English
High Ct.) (reference to mediation is not arbitration agreement); Walkinshaw v. Diniz
[2000] 2 All ER 237, 254 (Comm) (English High Ct.) (agreement must contemplate that the
tribunal which carries on the process will make a decision which is binding on the
parties).
238) See, e.g., Kenon Engg Ltd v. Nippon Kokan Koji Kabushiki Kaisha, [2004] HKCA 101 (H.K. Ct.
App.) (reference to mediation could not have been intended to be arbitration).
239) See, e.g., Judgment of 20 May 2005, 2006 SchiedsVZ 103 (Oberlandesgericht Naumburg).
240) SeeJudgment of 17 June 2004, Le Parmentier v. La Socit Miss France, XXX Y.B. Comm. Arb.
119 (Paris Cour dappel) (2005).
241) SeeJudgment of 17 June 2004, Le Parmentier v. La Socit Miss France, XXX Y.B. Comm. Arb.
119 (Paris Cour dappel) (2005); Judgment of 29 April 2003, Nationale des Ptroles du Congo
et Rpublique du Congo v. Socit Total Fina Elf E & P Congo, 21 ASA Bull. 662, 665 (Paris
Cour dappel) (2003) (ICC Pre-Arbitral Referee procedure is not arbitration, but a merely
contractual mechanism; decision of pre-arbitral referee may not be set aside).
242) See, e.g., David Wilson Homes Ltd v. Survey Servs. Ltd [2001] BLR 267, 15 (English Ct. App.)
(In the present case, the parties cannot, with respect to the judge, have intended a
reference to a Queens Counsel as an expert or for a non-binding opinion, because in that
way no finality could be achieved. They must in my judgment have wanted a binding
result, and the clause thus constitutes an arbitration agreement.); OCallaghan v. Coral
Racing Ltd [1998] All ER (D) 607 (English Ct. App.); Judgment of 8 February 1995, 14 ASA Bull.
695, 698 (Valais Tribunal) (1996) (The fundamental criterion for the distinction between
the two institutions is that the award of an arbitrator, contrary to the one of an arbitral
expert, is an act creating legal obligations.); Judgment of 4 July 1977, 1977 DB 1786
(German Bundesgerichtshof); Judgment of 20 May 2005, 2006 SchiedsVZ 103, 105
(Oberlandesgericht Naumburg) (no arbitration where agreement permitted parties to
refer dispute to national court); Judgment of 17 April 2000, 10 Sch 01/00
(Oberlandesgericht Naumburg) (partys right of recourse to court inconsistent with
definition of arbitration).
243) See Dow Corning Corp. v. Safety Natl Cas. Corp.,335 F.3d 742, 747 (8th Cir. 2003) (Binding
arbitration is no doubt the norm under the FAA, but no express language limits the
statute to binding arbitration agreements. Other circuits have held that the FAA applies
to at least some agreements to engage in mandatory, non-binding arbitration.); United
States v. Bankers Ins. Co., 245 F.3d 315, 322 (4th Cir. 2001); Wolsey, Ltd v. Foodmaker, Inc.,
144 F.3d 1205, 1207 (9th Cir. 1998) (non-binding arbitration under AAA Rules held subject
to FAA); AMF, Inc. v. Brunswick Corp., 621 F.Supp. 456, 459-61 (S.D.N.Y. 1985) (in agreement
to seek rendition of an advisory opinion[enforceable]under the [FAA] and pursuant to
this courts equity jurisdiction, whether or not the agreement be deemed one to
arbitrate[there is no reason not to enforce]a confidential advisory process in a matter
of serious concern to the parties). See also Rau, The Culture of American Arbitration and
the Lessons of ADR, 40 Tex. Intl L.J. 449, 468 (2005) (agreements for non-binding
arbitration are regularly held to be within the FAA for the purposes of stays or orders to
compel). Compare Stipanowich, Contract and Conflict Management, 2001 Wisc. L. Rev. 831,
863 (the statute-based law of arbitration is a wholly inappropriate ground for
enforcement of mediation agreements).
244) Fisher v. GE Med. Sys., 276 F.Supp.2d 891, 894 (M.D. Tenn. 2003).
245) See, e.g., Eichinger v. Kelsey-Hayes Co., 2010 WL 2720931, at *5 (E.D. Mich.) (ability to
decline the decision and award does not mean the arbitration procedure is
unenforceable under the FAA); Mostoller v. Gen. Elec. Co., 2009 WL 3854227, at *2 (S.D.
Ohio) (The FAA does not require that a dispute resolution procedure be binding in order
to be considered arbitration for purposes of a motion to compel arbitration); CB
Richard Ellis, Inc. v. Am. Environ. Waste Mgt, 1998 U.S. Dist. LEXIS 20064, at *2 (E.D.N.Y.)
(mediation agreement manifests the parties intent to provide an alternative method to
settle controversies [and therefore]fits within the [FAAs] definition of arbitration);
Cecala v. Moore, 982 F.Supp. 609 (N.D. Ill. 1997) (same).
59
246) Medellin v. Texas, 128 S.Ct. 1346, 1358 (U.S. S.Ct. 2008).
247) Where an agreement to participate in a process producing a non-binding decision is
made, it does not constitute an agreement to arbitrate, whatever its label, but rather an
agreement to conciliate or to mediate. See2.02[C][2][c].
248) See, e.g., United States v. Bankers Ins. Co., 245 F.3d 315, 323 (4th Cir. 2001) (enforcing non-
binding arbitration clause); Willis Corroon Corp. v. United Capitol Ins. Co., 1998 WL 30069,
at *2 (N.D. Cal.) (dismissing suit based on non-binding mediation agreement that was
condition precedent to litigation); Gaston v. Gaston, 954 P.2d 572, 575 (Ala. 1998) (granting
order requiring parties to mediate); White v. Kampner, 641 A.2d 1381, 1382 (Conn. 1994)
(enforcing mandatory negotiation clause that stated [t]he parties shall negotiate in
good faith at not less than two negotiation sessions prior to seeking any resolution of any
dispute under the contracts arbitration provision); Laeyt v. Laeyt, 702 N.Y.S.2d 207 (N.Y.
App. Div. 2000) (dismissing suit because of failure to comply with mediation obligation);
Aiton Australia Pty Ltd v. Transfield Pty Ltd, [1999] 153 FLR 236 (N.S.W. S.Ct.).
249) See1.02[B][3]; 5.08[A]. See also Cumberland & York Distribs. v. Coors Brewing Co., 2002 WL
193323, at *4 (D. Me.) (declining to enforce mediation provision that had no time limit for
completion of such mediation); File, United States: Multi-Step Dispute Resolution Clauses,
3(1) IBA Mediation Committee Newsletter 33, 34-35 (2007).
250) See, e.g.,Award in Hamburg Friendly Arbitration of 27 May 2002, XXX Y.B. Comm. Arb. 17
(2005) (parties engaged in two separate arbitrations of their dispute, one regarding issue
of payment and one regarding quality of goods delivered).
251) There is little question that the definition of arbitration does not include sports referees.
Locklear, Arbitration in Olympic Disputes: Should Arbitrators Review the Field of Play
Decisions of Officials, 4 Tex. Rev. Ent. & Sports L. 199 (2003).
252) See, e.g., Quasem Group, Ltd v. W.D. Mask Cotton Co., 967 F.Supp. 288 (W.D. Tenn. 1997);
Judgment of 30 January 1992, Socit Sifca v. Socit Continaf BV, 1993 Rev. arb. 123 (Paris
Cour dappel).
253) J. Kendall, Expert Determination 16.6.5 (4th ed. 2008); R. Merkin, Arbitration Law 3.5
(1991 & Update August 2013).
254) Karstaedt, Maritime Arbitration in Germany, in K.-H. Bckstiegel et al. (eds.), Arbitration in
Germany: The Model Law in Practice 865 (2008) (In the beginning, arbitrations were
primarily concerned with the quality and condition of commodities.); Lionnet, Arbitration
and Mediation Alternatives or Opposites, 4(1) J. Intl Arb. 69, 74 n.3 (1987); Rau, The Culture
of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449, 492 (2005) (it is a
proposition of some antiquity that arbitration has had its greatest value in providing
expert determinations with respect to the ordinary disputes between merchants as to
questions of fact quantity, quality, time of deliveryand the like) (quoting Cohen &
Dayton, The New Federal Arbitration Law, 12 Va. L. Rev. 265, 281 (1926)).
255) London Exp. Corp. Ltd v. Jubilee Coffee Roasting Co. Ltd [1958] 1 All ER 494, 501 (QB) (English
High Ct.).
256) In Austria, quality arbitration is apparently a form of valuation, which is regarded as
distinct from arbitration. Melis, National Report for Austria (1984), in J. Paulsson (ed.),
International Handbook on Commercial Arbitration 1, 2 (1984). See also Judgment of 27
March 1985, 1 Ob 504/85 (Austrian Oberster Gerichtshof) (expert determination
distinguished from arbitration).
257) See1.02[B][6]; 15.01; 15.02; 15.03; 25.04[B].
258) See5.01[D].
259) In a few jurisdictions, national arbitration legislation provides expressly that quality
arbitrations are arbitration. In the Netherlands, for example, arbitration is statutorily
defined to include the determination only of the quality or condition of goods.
Netherlands Code of Civil Procedure, Art. 1020(4).
260) See Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449,
473 (2005) (the interest arbitrator is expected to go still further [beyond deciding the
parties existing rights] and to devise the actual contract provisions that will bind the
parties during a future term).
262) See Argumedo Pieiro, Multi-Step Dispute Resolution Clauses, in M. Fernndes-Ballesteros
& D. Arios (eds.), Liber Amicorum Bernado Cremades 733, 733 (2010); G. Born, International
Arbitration and Forum Selection Agreements: Drafting and Enforcing 101-04 (4th ed. 2013);
Jolles, Consequences of Multi-Tier Arbitration Clauses: Issues of Enforcement, 72 Arb. 329
(2006); M. McIlwrath & J. Savage, International Arbitration and Mediation: A Practical Guide
1-196 (2010).
263) Requiring mediation and other forms of conciliation prior to commencing arbitration is
also often termed med-arb. See Bartel, Med-Arb as A Distinct Method of Dispute
Resolution: History, Analysis, and Potential, 27 Willamette L. Rev. 661, 663 (1991); Berger,
Law and Practice of Escalation Clauses, 22 Arb. Intl 1 (2006); Blankenship, Developing Your
ADR Attitude, 42 Tenn. B. J. 28 (2006); Jolles, Consequences of Multi-Tier Arbitration Clauses:
Issues of Enforcement, 72 Arb. 329 (2006); Onyema, The Use of Med-Arb in International
Commercial Dispute Resolution, 12 Am. Rev. Intl Arb. 411 (2001).
60
264) See Brewer & Mills, Combining Mediation and Arbitration, 54 Disp. Res. J. 32, 33-34 (1999);
Coulson, Medaloa: A Practical Technique for Resolving International Business Disputes, 11(2)
J. Intl Arb. 111 (1994); Hill, MED-ARB: New Coke or Swatch, 13 Arb. Intl 105 (1997); Pryles,
Multi-Tiered Dispute Resolution Clauses, 18 J. Intl Arb. 159, 159 (2001) (It is now common to
find multi-tiered dispute resolution clauses particularly in complex construction
contracts.); Queen Mary, University of London, 2013 International Arbitration Survey:
Corporate Choices in International Arbitration: Industry Perspectives 6 (2013); Stipanowich,
Arbitration: The New Litigation, 2010 U. Ill. L. Rev. 1, 29 (Similar multistep dispute
resolution provisions are now become ubiquitous in commercial contracts and related
court decisions.).
265) See5.08[A].
266) Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1993] AC 334, 358 (House of Lords).
This result has been statutorily confirmed in England. English Arbitration Act, 1996, 9(2)
(stay of litigation available notwithstanding that the matter is to be referred to
arbitration only after the exhaustion of other dispute resolution procedures); Cable &
Wireless plc v. IBM U.K. Ltd [2002] EWHC 2059 (Comm) (English High Ct.); Melnyk, The
Enforceability of Multi-Tiered Dispute Resolution Clauses: The English Law Position, 2002
Intl Arb. L. Rev. 113.
267) See, e.g., Welborn Clinic v. Medquist, Inc., 301 F.3d 634 (7th Cir. 2002); Fluor Enters., Inc. v.
Solutia Inc., 147 F.Supp.2d 648 (S.D. Tex. 2001); Dave Greytak Enters., Inc. v. Mazda Motors
of Am., Inc., 622 A.2d 14, 23-24 (Del. Ch. 1992) (The highly detailed non-judicial dispute
resolution procedures [begin] with management review, [progress] to a stipulation as to
the facts and issues in dispute, [move] to third-party resolution, and, finally, to binding
arbitration.); Gary Excavating, Inc. v. Town of New Haven, 318 A.2d 84, 85 (Conn. 1972)
(disputes under contract were to be presented to defendants for decision, and if plaintiff
disagreed with defendants decision, it could demand arbitration; whether pre-
arbitration procedures were followed is issue for arbitration); Guangdong Agri. Co. v.
Conagra Intl (Far E.) Ltd, [1993] HKLR 113 (H.K. Ct. First Inst.) (arbitration agreement exists
and is valid notwithstanding provision that parties first seek settlement).
268) Westco Airconditioning Ltd v. Sui Chong Constr. & Engg Co., [1998] 1 HKC 254, 255 (H.K. Ct.
First Inst.).
269) Kemiron Atl., Inc. v. Aguakem Intl, Inc., 290 F.3d 1287, 1291 (11th Cir. 2002) (the parties
agreed to conditions precedent and, by placing those conditions in the contract, the
parties clearly intended to make arbitration a dispute resolution mechanism of last
resort[therefore,] [b]ecause neither party requested mediation, the arbitration
provision has not been activated and the FAA does not apply).
270) It makes little sense to permit litigation during an interim period, which could only
undermine or preempt the agreed arbitral process. The agreement to arbitrate should
include any associated steps necessary to trigger an arbitration.
271) See8.03[C][1].
272) Glencot Dev. & Design Co. v. Ben Barrett & Son (Contractors) Ltd [2001] BLR 207 (QB)
(English High Ct.); Acorn Farms Ltd v. Schnuriger, [2003] 3 NZLR 121 (Hamilton High Ct.). See
also12.05[K], pp. 1847-68.
273) See Bruner, Initial Decision Maker: The New Independent Dispute Resolver in American
Private Building Contracts, 27 Intl Constr. L. Rev. 375 (2011); Dreifus, The Engineer Decision
in California Public Contract Law, 11 Pub. Contl L.J. 1 (1979-1980).
274) See Chan, Construction Industry Adjudication: A Comparative Study of International
Practice, 22 J. Intl Arb. 363 (2005); Genton & Schwab, The Role of the Engineer in Disputes
Related More Specifically to Industrial Projects, 17(4) J. Intl Arb. 1 (2000); Molineaux,
Settlements in International Construction, 50 Disp. Res. J. 80 (1995).
275) The Federation Internationale des Ingenieurs-Conseils (FIDIC) published the so-called
Red Book (Conditions of Contract for Works of Civil Engineering) in 1987. The FIDIC
contract traditionally provided for the engineer to render preliminary decisions with
which the parties were contractually obliged to comply, subject to further dispute
resolution by arbitration. FIDIC, Conditions of Contract for Electrical and Mechanical Works
(3d ed. 1987); Graham, The F.I.D.I.C. Conditions of Contract for Electrical and Mechanical
Works (Including Erection on Site), 4 Intl Constr. L. Rev. 283 (1987); Seppl, International
Construction Contract Disputes: Commentary on ICC Awards Dealing with the FIDIC
International Conditions of Contract, 9(2) ICC Ct. Bull. 32 (1998).
276) Chatterjee, Settlement of Disputes Procedure and Arbitration Under FIDIC, 17(3) J. Intl Arb.
103 (2000); FIDIC, Conditions of Contract for Construction (1999); FIDIC, Conditions of
Contract for EPC/Turnkey Projects (1999).
277) Chatterjee, Settlement of Disputes Procedure and Arbitration Under FIDIC, 17(3) J. Intl Arb.
103, 108, 112 (2000) (if Dispute Adjudication Boards decision is not accepted by parties,
matter must be settled by arbitration); Nicklisch, The Role of the Engineer as Contract
Administrator and Quasi-Arbitrator in International Construction and Civil Engineering
Projects, 7 Intl Constr. L. Rev. 322 (1990). See also2.02[C][1][b]; 2.02[C][4]; Bhler,
Technical Expertise: An Additional Means for Preventing or Settling Commercial Disputes,
6(1) J. Intl Arb. 135, 141-47 (1989); Chan, Construction Industry Adjudication: A Comparative
Study of International Practice, 22 J. Intl Arb. 363, 368-71 (2005).
61
278) The name is derived from a form of dispute resolution used in fixing the salaries of
professional athletes in the United States. See Borris, Final Offer Arbitration From A Civil
Law Perspective, 24 J. Intl Arb. 307 (2007); Gordon, Final Offer Arbitration in the New Era of
Major League Baseball, 6 J. Am. Arb. 153 (2007); Jarrosson, Les frontires de larbitrage, 2001
Rev. arb. 5, 38; Meth, Final Offer Arbitration: A Model for Dispute Resolution in Domestic
and International Disputes, 10 Am. Rev. Intl Arb. 383 (1999); Mistelis, ADR in England and
Wales, 12 Am. Rev. Intl Arb. 167, 203 (1997) (baseball arbitration is a form of alternate
dispute resolution rather than arbitration, because a third party assists parties in
reaching agreement but does not make its own decisions); Mitrovic, Larbitrage baseball:
arbitrage ou mode alternatif de rglement, 2003 Rev. arb. 1167; Walz, Final-Offer-Arbitration
Oder: Drittentscheidung anhand verbindlicher Angebote, 2003 SchiedsVZ 119.
279) See Blackmand & McNeill, Alternative Dispute Resolution in Commercial Intellectual
Property Disputes, 47 Am. U.L. Rev. 1709, 1713 (1998).
280) Some European commentators conclude that, properly drafted, baseball or final offer
arbitration is properly categorized as arbitration. Borris, Final Offer Arbitration From A
Civil Law Perspective, 24 J. Intl Arb. 307, 312-14 (2007); Walz, Final-Offer-Arbitration Oder:
Drittentscheidung anhand verbindlicher Angebote, 2003 SchiedsVZ 119.
281) See1.05[A]; 2.02[C][1] & [4]; George Watts & Son, Inc. v. Tiffany & Co., 248 F.3d 577, 580-81
(7th Cir. 2001) (an arbitrator cannot be deprived authority to reach compromise
outcomes that legal norms leave within the discretion of the parties to the arbitration
agreement: is award a kind of settlement businesses reach all the time, each receiving
part of what it wanted?); Judgment of 9 October 1984, 1986 Rev. arb. 267, 269-70 (French
Cour de cassation com.), Note, Mayer (the neutrals decision is not confined to
alternatives, laid out by the conflicting claims of the parties).
282) Baseball arbitrations also raise questions with regard to the requirement, applicable
under many national arbitration statutes, for a reasoned award. See23.03[B]. Where this
requirement is not waivable, baseball arbitration gives rise to significant enforceability
issues.
283) Litkovitz, Advantages of Using A Rent-A-Judge System in Ohio, 10 Ohio St. J. Disp. Res. 491
(1994-1995); M. McIlwrath & J. Savage, International Arbitration and Mediation: A Practical
Guide 1-196 (2010).
284) See2.02[C], p. 245.
285) See12.04[B][5].
286) 10 Delaware Code 346. Technology disputes are eligible for Delaware Chancery Court
arbitration if: (1) the parties consent to the arbitration by express agreement; (2) at least
one of the parties is a business entity; and (3) at least one party is a business entity
formed under Delaware law or has its principal place of business in Delaware. No party to
the dispute may be a consumer. If the dispute involves solely a claim for money
damages, the amount in controversy must be at least $1 million.
287) See Delaware Coalition for Open Govt v. Hon. Leo E. Strine, 894 F.Supp.2d 493 (D. Del. 2012),
affd, 2013 WL 5737309 (3d Cir.).
288) See2.02[C][1][b][iii].
289) See19.07.
290) See1.05[A]; 2.02[C][4]; 13.04[A][5].
291) Advanced Bodycare Solutions v. Thione, 524 F.3d 1235, 1239 (11th Cir. 2008).
292) As discussed above, arbitration was distinguished from strictly legal decision-making in
some historical periods and geographic settings. See1.01[B][5]. In Medieval Germany,
parties could choose to participate in a court proceeding (nach Recht) or a proceeding in
equity (nach Guet), i.e., arbitration. See1.01[B][2]. The same process apparently served as
the primary dispute resolution mechanism for medieval merchants in France, Italy and
England. See1.01[B][2].
293) See19.03[B][6].
294) See1.05; 2.02[C][1].
295) See2.02[C][1][a], pp. 248-49.
296) See2.02[C][1][a], pp. 247-48.
297) See1.01[A]-[B].
298) Fuller, The Forms and Limits of Adjudication, 92 Harv. L. Rev. 353, 369 (1978). See also
Jarrosson, Les frontires de larbitrage, 2001 Rev. arb. 5, 21, 29; Molot, An Old Judicial
Role for A New Litigation Era, 113 Yale L.J. 27 (2003); Rogers, Regulating International
Arbitrators: A Functional Approach to Developing Standards of Conduct, 41 Stan. J. Intl L.
53, 67-71, 84-90 (2005).
299) See2.02[C][1][b]; 11.03[C][1][c]; 15.04; 23.03; 27.01[B].
300) For discussions of these issues, see Franck, The Liability of International Arbitrators: A
Comparative Analysis and Proposal for Qualified Immunity, 20 N.Y.L. S. J. Intl & Comp. L. 1,
23-24 (2000); Rutledge, Toward A Contractual Approach for Arbitral Immunity, 39 Ga. L. Rev.
151, 167-68 (2004).
301) Baker, Bill Analysis of A.B. 3030, California State Legislature (26 August 2002).
302) See2.02[C][1].
303) Rutledge, Toward A Contractual Approach for Arbitral Immunity, 39 Ga. L. Rev. 151, 168
(2004). The fact that parties agree to arbitrate is also no basis for questioning the
arbitrators judicial role just as there would be no basis for suggesting that the parties
agreement to a forum selection clause makes a national court a non-judicial body.
See1.02[A].
62
304) See1.05[B]; 2.02[C][1]; 13.04. Equally, it would be very odd to conclude that arbitrations
with sole arbitrators, or multi-member tribunals appointed by appointing authorities or
national courts, are arbitrations, but arbitrations with party-nominated arbitrators are
not.
305) See1.01[A][5]; 1.01[B][8]; 1.02[B][1] & [4]; 2.02[D]; 12.01[A]; 12.05[B].
306) Declining appointments advances the objectives of the adjudicative process, being to
assure a tribunal that is best-suited to resolve the parties dispute competently and
expeditiously. Indeed, the adjudicative function is not properly fulfilled by legal systems
which fail to provide mechanisms that enable parties and/or judges to avoid the risk of
arbitrary decisions resulting from judges deciding cases for which they are inexperienced
or ill-suited.
Similarly, dispute resolution mechanisms that provide for partial or dependent sole or
presiding arbitrators are held not to constitute arbitration. See, e.g.,Judgment of 27 May
2004, 2004 SchiedsVZ 205 (German Bundesgerichtshof) (dispute resolution under
companys articles of association not arbitration because decision-maker not impartial);
Desbois v. Indus. A.C. Davie Inc., [1990] CanLII 3619 (Qubec Ct. App.) (clause providing for
party to act as arbitrator nullified because impartiality of tribunal was fundamental
feature of arbitration).
307) Franck, The Liability of International Arbitrators: A Comparative Analysis and Proposal for
Qualified Immunity, 20 N.Y.L. S. J. Intl & Comp. L. 1, 23 (2000).
309) See2.02[C][2][b]; 15.07[D][2].
(2004).
311) See27.04[A]-[B] & [D].
(2004).
313) See15.08[AA][13].
315) SeeChapter 20 (especially 20.03[D][2]).
316) See1.05; 2.02[C][1]; 15.04; 25.04[B]; 26.05[C][3].
317) See2.02[C][1][b][iv]; 25.03.
318) See25.04, discussing denials of opportunities to be heard, improper selection of arbitral
tribunal, violations of public policy and disregard of law.
319) Baar v. Tigerman, 189 Cal.Rptr. 834, 838 (Cal. Ct. App. 1983).
320) Born, Arbitration and the Freedom to Associate, 38 Ga. J. Intl & Comp. L. 7 (2009).
321) There are also instances where persons denominated as arbitrators perform functions
that in fact do not constitute arbitration and that do not involve (or involve only
incidentally) a judicial function. As discussed above, that is the case with certain types of
valuations or expert determinations, which do not involve hearing the parties or making a
decision based upon an evidentiary record and legal (or other) submissions. See2.02[C]
[2][b]. Needless to say, persons entrusted with such tasks will not qualify as arbitrators
(even if that is what they are called) and will not enjoy arbitrator immunity. Of course,
they may enjoy other protections or immunities, depending on applicable law.
322) See12.05[B].
323) See12.05[B].
324) See12.05[B][6]; 13.04[A][1]. As discussed below, these differences are rightly relevant to
the existence and scope of arbitral immunities that are accorded to individuals fulfilling
such roles.
325) See13.04[A][1].
326) See12.05[B] (especially 12.05[B][6]).
327) Compare Rogers, Regulating International Arbitrators: A Functional Approach to Developing
Standards of Conduct, 41 Stan. J. Intl L. 53, 113-17 (2005).
328) See1.01[A][5]; 12.05[B][6].
329) See12.05[B][6]. Experienced practitioners are almost unanimous in confirming that a co-
arbitrators departure from principles of impartiality during the arbitral process is
seldom of benefit to his party. See, e.g., Lowenfeld, The Party-Appointed Arbitrator in
International Controversies: Some Reflections, 30 Tex. Intl L.J. 59, 60-61 (1995) (recounting
instances where overly zealous co-arbitrator lost credibility with the chairman); S.
Schwebel, Justice in International Law: Further Selected Writings 7 (2011) (the partisan
party-appointed arbitrator usually loses influence in proportion to his partisanship).
330) See25.04[E].
331) See, e.g., Carbonneau, The Exercise of Contract Freedom in the Making of Arbitration
Agreements, 36 Vand. J. Transnatl L. 1189, 1211-12 (2003).
332) Experienced practitioners will also confirm that the selection of individual judges to hear
a particular case will influence the outcome enormously (depending on that judges
background, judicial philosophy and other facts). The parties efforts to overcome the
random and arbitrary character of national court litigation does not suggest that the
resulting process is less judicial; rather, it reflects an effort to obtain a better and fairer
adjudicative process than provided by national courts.
333) See15.08[KK]; 23.03.
63
334) In any event, it is unclear whether evidence of baby-splitting would be inconsistent with
a judicial function. Solomon was presumably acting in a judicial capacity when rendering
his historic judgment. The Bible, 1 Kings 3:25.
335) Keer & Naimark, Arbitrators Do Not Split the Baby Empirical Evidence From International
Business Arbitration, 18 J. Intl Arb. 573, 578 (2001) (in study of international arbitral
awards, 31% of claimants received nothing, 35% received 100% claimed, and remaining
34% received widely varying percentages of amounts claimed; the results from this study
show emphatically that arbitrators do not engage in the practice of splitting the baby);
Mentschikoff, Commercial Arbitration, 61 Colum. L. Rev. 846 (1961) (50% of U.S. domestic
commercial arbitral awards studied granted all or nothing; many of the partial awards
are arrived at in a judicial manner since they result from the striking of particular items
of damages that the arbitrators believe are not justified under the facts or law of the
particular case.).
336) See2.02[C][2][b].
337) See2.02[C][2][c].
338) See2.02[C][2][h] (baseball arbitration).
339) See15.04; 25.04[B]; 26.05[C][3].
340) See12.05.
341) See2.02[C][1][a].
342) See2.02[A].
343) See2.02[B].
344) See2.02[C][1].
345) See2.02[C][4].
346) See2.02[C][2][b].
347) See2.02[C][4]. See alsoE. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 12-13 (1999); Laine, De lexcution en France des
sentences arbitrales trangres, 26 J.D.I. (Clunet) 641, 653-54 (1899) (What is the task given
to the arbitrators? It is to appraise the merits of the respective claims of the partiesand
that done, to make a decision, that is to sayjudge.); A. Samuel, Jurisdictional Problems
in International Commercial Arbitration 45 (1989) (The duty of the arbitrator to evaluate
the arguments put forward by the parties and make a binding decision on the merits of
the dispute isfundamental to the nature of arbitration.).
348) See1.02[B][6]; 11.03[C][1][c]; 15.01; 15.02.
349) See1.01[B][8]; 1.02[B][6]; 15.01; 15.03.
350) Compare the approach of some U.S. courts in this regard, effectively applying the FAA by
analogy to various forms of dispute resolution agreements. See2.02[C][2][b], p. 270;
2.02[C][2][c], pp. 275-76.
351) See1.02[B][6]; 11.03[C][1][c]; 15.01; 15.02; 19.04[A].
352) As noted previously, some U.S. judicial decisions have either expressly or impliedly
adopted this position. See2.02[C][2][b], p. 270.
353) SeePart III International Arbitral Awards, Chapter 21et seq.
354) There is greater scope for application of principles of unconscionability or mistake where
unsophisticated parties are alleged to have agreed to a dispute resolution process not
affording judicial or quasi-judicial procedural protections. See5.06[C][2] & [4].
355) If this analysis was to be accepted, it could amount in some contexts to a contracting
into arbitration legislation, even where no agreement to arbitrate existed. Naturally, if
specific public policy concerns were raised in particular cases, such an agreement could
not be given effect. See Stipanowich, Contract and Conflict Management, 2001 Wisc. L. Rev.
831, 862 ([U]sing laws governing binding arbitration to enforce other kinds of dispute
resolution agreements is not wholly unsupportable. Modern arbitration statutes are
founded on the proposition that private arrangement for final and binding resolution of
disputes are a good thing, not only because they relieve courts of commensurate burden,
but because they afford parties considerable latitude in structuring mechanisms for
resolving conflict in their own way, according to their own timetable and their own
particular needs. These broad principles are applicable not only to binding arbitration,
but also to mediation and other ADR processes that hold the promise of an out-of-court
resolution in a setting defined by private agreement.).
356) SeeFrench Code of Civil Procedure, Art. 1450 (1) (Only a natural person having full
capacity to exercise his or her rights may act as an arbitrator.); Netherlands Code of Civil
Procedure, Art. 1023 (Any natural person of legal capacity may be appointed as
arbitrator.); Spanish Arbitration Act, 2011, Art. 13 (All natural persons in full possession of
their civil rights may act as arbitrators, provided that they are not restricted by the
legislation applicable to them in the exercise of their profession.)(translation available
in J. Paulsson (ed.), International Handbook on Commercial Arbitration, Kluwer Law Intl
(1984), updated in June 2012 Suppl. No. 69); Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R. 564
(Canadian S.Ct.); Lalonde, National Report for Canada (2012), in J. Paulsson (ed.),
International Handbook on Commercial Arbitration 18 (1984 & Update 2012). See
also12.04[B][1].
357) A review of publicly-available international arbitral awards reveals virtually no instances
where legal persons served as arbitrator(s).
358) See12.04[B][1]; Greek Code of Civil Procedure, Book VII, Art. 871 (as amended by Law
2331/1995) (One or several persons as well as a court in its entirety may be appointed as
arbitrators.).
64
359) See2.01[A][1]. The Conventions uniform definition of arbitration imposes no requirement
that arbitration occur before a natural person and Contracting States that introduce such
a requirement arguably violate their obligations under Article II to recognize agreements
to arbitrate.
360) See2.01[B].
361) See5.02[A]; A. Samuel, Jurisdictional Problems in International Commercial Arbitration 75-
96 (1989).
362) See5.02[A].
363) See5.02[A] (especially 5.02[A][2]).
364) New York Convention, Art. II(1); UNCITRAL Model Law, Art. 7(1); French Code of Civil
Procedure, Art. 1442(2); Swedish Arbitration Act, 1; Italian Code of Civil Procedure, Arts.
807-808; Portuguese Law on Voluntary Arbitration, 2011, Art. 1(3); Chilean International
Commercial Arbitration Law, Art. 7(1).
365) French Code of Civil Procedure, Art. 1442(2) (An arbitration clause is an agreement by
which the parties to one or more contracts undertake to submit to arbitration disputes
which may arise in relation to such contract(s).) (emphasis added); Wenger, in S. Berti et
al. (eds.), International Arbitration in Switzerland Art. 178, 32 (2000) (global reference to
all legal disputes which might arise from the current or future business relationship
between the parties without any further particulars is not sufficient.).
366) Swiss Cantonal Concordat, Art. 4 (emphasis added) (repealed). See also Geneva Protocol,
Art. I (An agreement whether relating to existing or future differences between parties
by which the parties to a contract agree to submit to arbitration all or any differences
that may arise in connection with such contract) (emphasis added).
367) W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 6.02 (3d
ed. 2000). See also J.-F. Poudret & S. Besson, Comparative Law of International Arbitration
121 (2d ed. 2007) (The definition makes it clear that the disputes submitted to arbitration
must result from a defined legal relationship, whether contractual or not. The parties
cannot, without waiving their freedom, undertake to submit to arbitration any dispute
which might arise between them in the future.).
368) See5.04[D][1][c]; 9.02[E][8].
369) See, e.g., Bechtel Do Brasil Construes Ltda v. UEG Araucria Ltda, 638 F.3d 150 (2d Cir.
2011) (enforcing broad arbitration clause); Louis Dreyfus Negoce SA v. Blystad Shipping &
Trading Inc., 252 F.3d 218, 225-27 (2d Cir. 2001) (same); PaineWebber, Inc. v. Bybyk, 81 F.3d
1193, 1200 (2d Cir. 1996) (broad arbitration clause upheld); Kelso Enters. Ltd v. M/V
Diadema, 2009 WL 1788110 (S.D.N.Y.) (enforcing broad arbitration clause); ACE Capital Ltd v.
CMS Energy Corp. [2008] EWHC 1843 (Comm) (English High Ct.).
370) Compare R. David, Arbitration in International Trade 184 (1985); A. Samuel, Jurisdictional
Problems in International Commercial Arbitration 151-52 (1989) (presumably means that
an agreement to submit to arbitration any dispute arising between the parties in the
future which does not contain any link between the issues that might be arbitrated under
it and any alleged contract or other legal relationship between the parties formed in the
past, present and probably the immediate future, would be unenforceable).
371) Roose Indus. Ltd v. Ready Mixed Concrete Ltd, [1974] 2 NZLR 246, 247 (Wellington Ct. App.).
372) Roose Indus. Ltd, [1974] 2 NZLR at 248-49. The Court also observed that it should restrict
the operation of such a wide clause no further than necessary. The Courts analysis
arguably rested on issues of interpretation, rather than validity, with the Court possibly
reasoning that the parties could not have intended to agree to an arbitration clause with
unlimited scope.
373) See2.03[A], pp. 294-95.
374) See5.06[C][4].
375) See6.01.
376) Of course, generally-applicable nonarbitrability exceptions would apply to particular
disputes or claims. See6.04.
377) The text of the pledge, the Corporate Policy Statement on Alternatives to Litigation, is as
follows: In the event of a business dispute between our company and another company
which has made or will then make a similar statement, we are prepared to explore with
that other party resolution of the dispute through negotiation or ADR techniques before
pursuing full-scale litigation. If either party believes that the dispute is not suitable for
ADR techniques, or if such techniques do not produce results satisfactory to the
disputants, either party may proceed with litigation. CPR, Corporate Policy Statement on
Alternatives to Litigation 1 (1984). See also CPR, 21st Century Pledge 1 (2012) (Our company
pledges to commit its resources to manage and resolve disputes throughADR
processes.).
378) See, e.g., Fiss, Against Settlement, 93 Yale L.J. 1073, 1085 (1984).
379) See6.04.
380) Historically, guild and other trade association rules often had arbitration provisions
comparable to the example outlined in text. See1.01[B][2] & [5].
381) As discussed below, it may be appropriate as a matter of contract interpretation to imply
limits on arbitration clauses that are, by their terms, unrestricted. See2.03[A], p. 295;
5.04[D][1][c]; 9.02[F][1]. Parties should generally be free to agree to unrestricted
arbitration agreements, but it is ordinarily unlikely that they would do so. The more likely
intention, absent contrary indication, is that parties intend to arbitrate all disputes
relating directly or indirectly to their transaction, but not wholly unrelated disputes. See
also9.02[F][1].
65
382) New York Convention, Art. I(3); European Convention, Art. I(a); Inter-American Convention,
Art. 1; UNCITRAL Model Law, Art. 1(1); U.S. FAA, 9 U.S.C. 1; Canadian Commercial
Arbitration Act, 2013, Art. 1; Costa Rican Arbitration Law, 2011, Art. 1(1); Venezuelan
Commercial Arbitration Law, Art. 1.
383) It is comparatively unusual to encounter international arbitration agreements dealing
with non-commercial matters (save for the sui generis subject of state-to-state disputes).
Areas where it is conceivable that the commercial requirement would arguably not be
satisfied include domestic relations, criminal law, some administrative law issues, some
inheritance issues and some religious issues. Most such issues have historically been
dealt with through nonarbitrability exceptions. See6.04.
384) Geneva Protocol, Art. I (emphasis added). See1.01[C][1]. The Geneva Convention
incorporated this limitation. Geneva Convention, Art. I; 1.01[C][2].
385) This language paralleled that later adopted in Article I(3) of the New York Convention.
See2.03[B][1][b].
386) See6.01; 6.03[C][4]; 6.04 for a discussion of the nonarbitrability doctrine, including
limitations of arbitrable matters in some states to commercial matters.
387) U.S. FAA, 9 U.S.C. 2 (any maritime transaction or a contract evidencing a transaction
involving commerce); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 64-65 (1999) (Historically, French domestic law
was noted for its hostility towards the arbitration of non-commercial disputes. The
hostility resulted, in particular, in a prohibition on arbitration clauses for disputes other
than those within the jurisdiction of the commercial courts.); Jarrosson, La clause
compromissoire (art. 2061 C. civ.), 1992 Rev. arb. 259.
In England, nonarbitrability issues appear to have been historically unimportant (with
church, family and criminal matters being arbitrated). Roebuck, Sources for the History of
Arbitration: A Bibliographical Introduction 14 Arb. Intl 237, 257-65 (1998).
388) See1.01[B][5]. It also reflected the general limitation of private international law
conventions to civil and commercial matters. G. Born & P. Rutledge, International Civil
Litigation in United States Courts 1157 et seq. (5th ed. 2011).
389) See1.04[B][1][a]; 1.04[B][1][e][ii]; 2.03[B][2].
390) New York Convention, Art. 1(3) (When signing, ratifying or acceding to this Convention, or
notifying extension under article X hereof, any State maydeclare that it will apply the
Convention only to differences arising out of legal relationships, whether contractual or
not, which are considered as commercial under the national law of the State making such
declaration.) (emphasis added). See A. van den Berg, The New York Arbitration Convention
of 1958 51-54 (1981).
391) See Summary Record of the Twenty-Third Meeting of the United Nations Conference on
International Commercial Arbitration, U.N. Doc. E/CONF.26/SR.23 (1958); Message from the
President on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
S. Exec. Doc. E, 90th Cong., 2d Sess. 18 (1968) (commercial matters reservation was
included to remove a barrier to accession by nations having separate civil and
commercial codes which allow arbitration only of matters falling within the latter); A. van
den Berg, The New York Arbitration Convention of 1958 51 (1981).
392) See6.02[A] & [C]. See also Island Territory of Curacao v. Solitron Devices, Inc., 356 F.Supp.
1, 13 (S.D.N.Y. 1973) (there is nothing to show what the purpose of the commercial
limitation was, and that [w]e may logically speculate that it was to exclude matrimonial
and other domestic relations awards, political awards, and the like), affd, 489 F.2d 1313
(2d Cir. 1973).
393) Approximately one-third of the states ratifying the Convention have deposited a
commercial reservation (including, among others, the United States, Greece, Philippines,
Canada, Argentina, Venezuela, Barbados and Ecuador). SeeUNCITRAL, Status: 1958
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, available at
www.uncitral.org.
394) See U.S. FAA, 9 U.S.C. 201. This is codified in 202 of the FAA, which provides, among other
things, that [a]n arbitration agreementarising out of a legal relationship, whether
contractual or not, which is considered as commercialfalls under the Convention. U.S.
FAA, 9 U.S.C. 202 (emphasis added). Section 202 also provides that commercial
relations include those which fall within the very expansive definition contained in 2 of
the domestic FAA of arbitration agreements affecting interstate and foreign commerce.
See2.03[B][1][b][i]; 2.03[B][2][b]. The purpose of this provision was to make clear that the
Convention was applicable to agreements even if they were also subject to the first
chapter of the FAA. As discussed below, however, 202 excludes agreements and awards
between U.S. nationals having no reasonable relationship to the United States.
See2.03[C][2][b].
395) See Bautista v. Star Cruises, 396 F.3d 1289, 1300 (11th Cir. 2005) (arbitration clause
contained in cruise line crewmembers employment contracts is subject to Convention
and FAA because contracts constitute commercial relationships); Francisco v. Stolt
Achievement MT, 293 F.3d 270 (5th Cir. 2002) (seamen employment contracts fall within
scope of U.S. legislation implementing New York Convention: an employment contract is
commercial); Socit Gnrale de Surveillance v. Raytheon European Mgt & Sys. Co., 643
F.2d 863 (1st Cir. 1981). See also Draft Restatement (Third) U.S. Law of International
Commercial Arbitration 1-1(e) (Tentative Draft No. 2 2012) (Commercial matters or
relationships are those matters or relationships, whether contractual or not, that arise
out of or in connection with commerce.).
66
396) Bautista, 396 F.3d at 1300; Francisco, 293 F.3d at 274 (doubts as to whether a contract falls
under the Convention Act should be resolved in favor of arbitration); Sumitomo Corp. v.
Parakopi Compania Maritima, 477 F.Supp. 737, 740 (S.D.N.Y. 1979), affd, 620 F.2d 286 (2d Cir.
1980).
397) Siderius, Inc. v. Compania de Acero del Pacifico, SA, 453 F.Supp. 22, 24 (S.D.N.Y. 1978).
398) Bautista, 396 F.3d 1289; Sumitomo, 620 F.2d 286; Francisco, 293 F.3d 270 (rejecting
argument that seamans contract is not commercial within meaning of New York
Convention); Prograph Intl Inc. v. Barhydt, 928 F.Supp. 983 (N.D. Cal. 1996) (employment
dispute is commercial within meaning of New York Convention); Siderius, Inc. v.
Compania de Acero del Pacifico, SA, 453 F.Supp. 22 (S.D.N.Y. 1978); Antco Shipping Co. v.
Sidermar SpA, 417 F.Supp. 207 (S.D.N.Y. 1976); Star-Kist Foods, Inc. v. Diakan Hope, SA, 423
F.Supp. 1220 (C.D. Cal. 1976); Weight Watchers of Quebec v. Weight Watchers Intl, 398
F.Supp. 1057 (E.D.N.Y. 1975).
399) Compare Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006) (consumer
transaction subject to domestic FAA); Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S.
S.Ct. 1995); 3.02[B][3][c].
400) Maletis v. Perkins & Co., PC, 2005 WL 3021254, at *4 (D. Or.) (relationship between a
customer and a bank accepted as commercial within meaning of New York Convention);
Galtney v. KPMG LLP, 2005 WL 1214613, at *3 (S.D. Tex.) (same); Henry v. Murphy, 2002 WL
24307, at *4 (S.D.N.Y.) (rejecting argument that conflict between corporate shareholders
was not commercial).
401) See, e.g., Island Territory of Curacao v. Solitron Devices, Inc., 356 F.Supp. 1 (S.D.N.Y.), affd,
489 F.2d 1313 (2d Cir. 1973).
402) See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct.
1985) (antitrust laws); Scherk v. Alberto-Culver Co., 417 U.S. 506 (U.S. S.Ct. 1974) (securities
laws). See6.03[C][4].
403) See, e.g., Corcoran v. Ardra Ins. Co., 566 N.Y.S.2d 575 (N.Y. 1990).
404) See, e.g., Indus. Risk Insurers v. MAN Gutehoffnungshtte GmbH, 141 F.3d 1434 (11th Cir.
1998); Sedco, Inc. v. Petroleos Mexicanos Mexican Natl Oil Co., 767 F.2d 1140, 1145 (5th Cir.
1985); Murphy Oil USA, Inc. v. SR Intl Bus. Ins. Co., 2007 WL 2752366, at *4 (W.D. Ark.)
(insurance policies arose out of and involve a commercial relationship); Meadows
Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036 (E.D.N.Y. 1991).
405) See, e.g., Antco Shipping Co. v. Sidermar SpA, 417 F.Supp. 207 (S.D.N.Y. 1976) (maritime
contract of affreightment).
406) Faberge Intl Inc. v. Di Pino, 491 N.Y.S.2d 345, 348 (N.Y. App. Div. 1985).
407) See2.03[B][2][b].
408) U.S. FAA, 9 U.S.C. 1 (nothing herein contained shall apply to contracts of employment of
seamen, railway employees or any other class of workers engaged in foreign or interstate
commerce).
409) See, e.g., Aggarao v. MOL Ship Mgt Co., Ltd, 675 F.3d 355 (4th Cir. 2012) (exemption of
seamens contracts under 1 of FAA does not render New York Convention inapplicable to
arbitration agreements in such contracts); Balen v. Holland Am. Line Inc.,583 F.3d 647 (9th
Cir. 2009) (provision of FAA exempting contracts of employment of seamen from
domestic FAA does not apply to arbitration agreements governed by New York
Convention); Razo v. Nordic Empress Shipping Ltd, 362 F.Appx. 243, 245 (3d Cir. 2009) (the
District Court was correct in concluding that contracts of employment for seaman are not
excluded from the term commercial in the Convention Act.); Bautista, 396 F.3d 1289;
Francisco, 293 F.3d 270; Tancu v. Celebrity Cruises, Inc., 2010 WL 271432 (S.D. Fla.); Cardoso v.
Carnival Corp., 2010 WL 996528 (S.D. Fla.).
410) Francisco, 293 F.3d at 274.
411) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct. 1985);
Francisco, 293 F.3d at 274-75 (citing Scherk v. Alberto-Culver Co., 417 U.S. 506 (U.S. S.Ct.
1974)). This parallels the analysis of the nonarbitrability doctrine in international cases by
U.S. courts. See6.03[A]; 6.04[A][1]; 6.04[B][1].
412) Despite this, many jurisdictions would nonetheless consider categories of contracts such
as employment and consumer agreements as involving nonarbitrable matters.
See6.04[G]-[H]. This is typically not achieved through means of the commercial
exception, but rather through validity or nonarbitrability rules. Compare Matthews &
Stewart, Online Arbitration of Cross-Border, Business to Consumer Disputes, 56 U. Miami L.
Rev. 1111, 1136 (2002).
413) SeeCanada Packers Inc. v. Terra Nova Tankers Inc., XXII Y.B. Comm. Arb. 669 (Ontario
Super. Ct. 1992) (1997) (tort claims encompassed by Article I(3)s commercial reference);
Judgment of 2 November 1983, XIV Y.B. Comm. Arb. 629 (Oberlandesgericht Hamm) (1989);
RM Inv. & Trading Co. Pvt Ltd (India) v. Boeing Co., 1994 AIR 1136 (Indian S.Ct.) (consultancy
contract is commercial); European Grain & Shipping Ltd v. Bombay Extractions Pvt. Ltd,
VIII Y.B. Comm. Arb. 371, 375 (Bombay High Ct.) (We have no doubt that the contract in the
instant case, which was for the sale and purchase of a commodity, was clearly a contract
which brought about legal relationship which was commercial in nature under the Indian
law.); Judgment of 20 February 1975, Carters (Merchants) Ltd v. Ferraro, IV Y.B. Comm. Arb.
275 (Naples Corte dAppello) (1979) (sale contract is commercial).
414) SeeJudgment of 20 February 1975, Carters (Merchants) Ltd v. Ferraro, IV Y.B. Comm. Arb. 275
(Naples Corte dAppello) (1979).
415) See G. Born & P. Rutledge, International Civil Litigation in United States Courts 277-88, 842-
47 (5th ed. 2011).
67
416) For example, disputes over the terms civil or commercial have arisen under the Hague
Service Convention and the Hague Evidence Convention. See G. Born & P. Rutledge,
International Civil Litigation in United States Courts 914-15, 1027-28 (5th ed. 2011).
417) Many international concession agreements between developing states and
multinational companies contain arbitration clauses. These concession agreements
typically involve the development of the developing nations natural resources, a subject
over which some national courts have been reluctant to exercise jurisdiction, invoking the
foreign sovereign immunity, act of state and related doctrines. See G. Born & P. Rutledge,
International Civil Litigation in United States Courts 258, 781 (5th ed. 2011). Nonetheless,
the drafters of arbitral clauses in typical concession agreements clearly intend that these
clauses, and any subsequent arbitral awards, would fall within the Conventions
commercial scope. The effective enforcement of such provisions, in order to provide a
neutral, expert dispute resolution mechanism, falls squarely within the fundamental
objectives of leading international arbitration conventions and national arbitration
legislation. See1.02[B].
418) See, e.g., Matthews & Stewart, Online Arbitration of Cross-Border Business to Consumer
Disputes, 56 U. Miami L. Rev. 1111, 1136 (2002) (commercial reservation represents the
general international antipathy towards consumer arbitration); Rome & Shaiken,
Arbitration Carve-Out Clauses in Commercial and Consumer Secured Loan Transactions, 61
Disp. Res. J. 42 (2006). See also6.04[H].
419) See, e.g., Borowski v. Heinrich Fiedler Perforiertechnik GmbH, (1994) 158 A.R. 213 (Alberta
Q.B.); Rogers, The Arrival of the Have-Nots in International Arbitration, 8 Nev. L.J. 341
(2007). See also6.04[G].
420) For an unusual example, see BV Bureau Wijsmuller v. U.S.A., 1976 A.M.C. 2514, 2521 (S.D.N.Y.
1976) (claims for salvage of U.S. military vessel not commercial; court denied motion to
compel arbitration on basis that [w]hatever uncertainties may arise when agencies of
government engage in commercial transactions, relations arising out of the activities of
warships have never been regarded as commercial within the context of sovereign
immunity.). The decision also relied on U.S. statutory restrictions on the capacity of the
U.S. Government to enter into arbitration agreements.
421) See, e.g., RM Inv. & Trading Co. Pvt Ltd (India) v. Boeing Co., 1994 AIR 1136 (Indian S.Ct.);
India Organic Chems., Ltd v. Chemtex Fibres Inc., [1979] 81 BOMLR 49 (Bombay High Ct.).
These decisions should not survive Indias adoption of the UNCITRAL Model Law (in 1996).
See1.04[B][1][a].
422) Judgment of 10 November 1993, Taieb Haddad & Hans Barett v. Socit dInvestissement
Kal, XXIII Y.B. Comm. Arb. 770 (Tunisian Cour de cassation) (1998).
423) See New York Convention, Art. I(3) (considered as commercial under the national law of
the State making [the] declaration); 2.03[B][1][b].
424) See4.05[A]; 6.01.
425) This interpretation would in theory permit a Contracting State to define all but particular
types of contractual relationships (e.g., sale of goods between merchants) as non-
commercial. The consequence would be to exclude other types of agreements (e.g., joint
ventures, lending services, distribution) from the Convention.
426) This is consistent with the existence of international limits on Contracting States
applications of Article IIs nonarbitrability and null and void exceptions to the
presumptive validity of international arbitration agreements. See4.04[A][4]; 4.05[A][2].
427) See New York Convention, Arts. V(2)(a), (b); 26.05[C][9]-[10].
428) See New York Convention, Art. II(1); 6.01.
429) See2.03[B][1][b][i] & [v].
2011).
431) It is also awkward to treat consumer transactions, which are usually defined with
reference to a specific financial amount, see6.04[H], as non-commercial when slightly
larger transactions would be categorized as commercial. An alternative analysis would
be to attempt to categorize consumer transactions as commercial, but nonarbitrable,
though this analysis is also subject to criticism. See6.04[H][4].
432) See6.04[H][4]; 6.06.
433) French Decree No. 90-170 of 16 February 1990, Official Journal of 23 February 1990; Derains
& Kiffer, National Report on France (2013), in J. Paulsson (ed.), International Handbook on
Commercial Arbitration (1984 & Update 2013).
434) 2522 United Nations Treaty Collection 299.
435) European Convention, Art. I(a) (emphasis added).
436) That is clear from the Conventions text. It has also been affirmed by arbitral authority.
Interim Ad Hoc Award of 18 November 1983, X Y.B. Comm. Arb. 37 (1985).
437) The same approach is adopted in the 1987 Amman Arab Convention on Commercial
Arbitration. Article 2 provides that the Convention applies to commercial disputes
between natural or legal persons of any nationality, linked by commercial transactions
with one of the Contracting States. The Convention expressly adopts a uniform,
international standard for commercial, rather than suggesting any possibility for
individual national opt-outs. 1987 Amman Arab Convention on Commercial Arbitration,
Art. 2. See Jalili, Amman Arab Convention on International Commercial Arbitration, 7(1) J.
Intl Arb. 139 (1990).
438) Robert, La convention europenne sur larbitrage commercial international signe Genve
le 21 avril 1961, 1961 Dalloz Chron. 173.
439) Inter-American Convention, Art. 1 (emphasis added).
68
440) A. van den Berg, The New York Convention 1958 and Panama Convention 1975: Redundancy
or Compatibility?, 5 Arb. Intl 214, 220 (1989).
441) For interpretations of commercial under the Inter-American Convention, compareJ. Lew,
L. Mistelis & S. Krll, Comparative International Commercial Arbitration 4-25 to 4-26
(2003) (When the ambit of a commercial transaction is to be ascertained, regard should
be given to the international character of a convention and the need to promote
uniformity. Accordingly, only an autonomous and comparative interpretation and
characterization is appropriate) with van den Berg, The New York Convention 1958 and
Panama Convention 1975: Redundancy or Compatibility?, 5 Arb. Intl 214, 220 (1989) (Unlike
the New York Convention, which specifies that the word commercial is to be determined
under the national laws of the State making the reservation, the Panama Convention is
silent on the applicable law. Presumably, the same law as in the New York Convention
applies in case of the Panama Convention.). This latter observation misses the mark: the
essential point is that the Inter-American Convention provides for a uniform international
standard of commercial, not requiring (or permitting) reference to national laws.
442) See2.03[B][2].
443) See2.03[B][1][b][ii].
444) UNCITRAL Model Law, Art. 1(1) (emphasis added). See H. Holtzmann & J. Neuhaus, A Guide
to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History
and Commentary 32-35 (1989). The Model Laws title similarly refers to International
Commercial Arbitration.
445) UNCITRAL Model Law, Art. 1(1) n.2.
446) SeeReport of the Secretary-General on the Analytical Commentary on Draft Text of A Model
Law on International Commercial Arbitration, U.N. Doc. A/CN.9/264, Art. 1, 16 et seq.
(1985). See generally A. Broches, Commentary on theUNCITRAL Model Law on International
Commercial Arbitration Art. 1, 1 et seq. (1990).
Arbitration 8-9 (2012) (Article 1 defines the scope of application of the Model Law by
reference to the notion of international commercial arbitration, and provides for a
broad definition of the term[] commercial.; The footnote to Article 1(1) calls for a wide
interpretation and offers an illustrative and open-ended list of relationships that might
be described as commercial in nature, whether contractual or not.) (quoting Analytical
Commentary on Draft Text of A Model Law on International Commercial Arbitration, U.N.
Doc. A/CN.9/264, Art. 1, 16-21 (1985)).
448) G. Petrochilos, Procedural Law in International Arbitration 5 (2004) (the legal foundation
of a claim, that is, whether it be framed in the language of contract, tort or restitution, is
irrelevant to the question whether an arbitration is commercial); Reddy & Nagaraj,
Arbitrability: The Indian Perspective, 19 J. Intl Arb. 117 (2002).
ed. 2011).
450) See, e.g., British Columbia International Commercial Arbitration Act, 1(6); Australian
Arbitration Act, 2011, 1; Cyprus International Commercial Arbitration Law, 2(4), (5);
Egyptian Arbitration Law, Art. 2; Nigerian Arbitration and Conciliation Decree, 57(1).
451) Qubec Civil Code, Arts. 2638-2643; Qubec Code of Civil Procedure, Arts. 382, 940-51.
452) See, e.g., French Code of Civil Procedure, Art. 1504 (An arbitration is international when
international trade interests are at stake.); Russian Arbitration Law, Art. 1(2) (disputes
resulting from contractual and other civil law relationships arising in the course of foreign
trade and other forms of international economic relations); Bulgarian Law on
International Commercial Arbitration, Art. 1(2) (International commercial arbitration
shall resolve civil property disputes resulting from international trade relations);
Tunisian Arbitration Code, Art. 48(1)(d); Ouerfelli, National Report for Tunisia (2009), in J.
Paulsson (ed.), International Handbook on Commercial Arbitration 5 (1984 & Update 2009).
See alsoBahrain Legislative Decree No. 30 (providing specialized arbitration regime for
international commercial disputes).
453) See, e.g., United Mexican States v. Metalclad Corp., (2001) 89 B.C.L.R.3d 359, 95 (B.C. S.Ct.)
(The international CAA is based on a Model Law for international commercial
arbitrations. In the UNCITRAL report, the term commercial is explained by the
following footnote: The term commercial should be given a wide interpretation so as to
cover matters arising from all relationships of a commercial nature. This footnote was
discussed in the commentary as follows: The content of the footnote reflects the
legislative intent to construe the term commercial in a wide manner. This call for a wide
interpretation is supported by an illustrative list of commercial relationships. Although
the examples listed include almost all types of contexts known to have given rise to
disputes dealt with in international commercial arbitrations, the list is expressly not
exhaustive.); Carter v. McLaughlin, 27 (1996) O.R.3d 792, 15 (Ontario Super. Ct.) (sale of
personal residence is commercial; no requirement that parties be merchants); Comed
Chems. Ltd v. C. N. Ramchand, AIR 2009 SC 494 (Indian S.Ct.) (same). Compare Borowski v.
Heinrich Fiedler Perforiertechnik GmbH, (1994) 158 A.R. 213, 30 (Alberta Q.B.) (employment
relations not commercial).
69
454) A negative inference is arguably applicable to the definitions omission of particular
types of contracts or relations. As discussed below, consumer and employment contracts
are frequently the subject of either nonarbitrability or invalidity rules of national law.
See6.04[G]-[H]. See also Borowski v. Heinrich Fiedler Perforiertechnik GmbH, (1994) 158
A.R. 213 (Alberta Q.B.) (employment relations not commercial); Spanish Arbitration Act,
2011, Art. 1(4) (employment disputes excluded).
455) SeeUNCITRAL Model Law, Art. 1(1) n.2.
456) SeeUNCITRAL Model Law, Art. 1(1) n.2. SeeReport of the Secretary-General on the Analytical
Commentary on Draft Text of A Model Law on International Commercial Arbitration, U.N.
Doc. A/CN.9/264, Art. 1, 18 et seq. (1985).
457) Alternative approaches, discussed below, are to apply more specifically-tailored rules of
validity or nonarbitrability to particular types of transactions or claims. SeeUNCITRAL
Model Law, Art. 1(5); 6.03[C][1]-[2].
458) SeeUNCITRAL Model Law, Art. 1(5); 6.03[C][1].
459) See, e.g., Ross v. Christian & Timbers, Inc., (2002) 18 C.P.C.5th 348 (Ontario Super. Ct.)
(employer/employee relationship, as opposed to independent contractor relationship,
was noncommercial); Borowski v. Heinrich Fiedler Perforiertechnik GmbH, (1994) 158 A.R.
213 (Alberta Q.B.) (same). See also Patel v. Kanbay Intl Inc., [2008] ONCA 867 (Ontario Ct.
App.) (claim for wrongful dismissal and tort of negligent misrepresentation was held not
to satisfy commercial requirement).
460) U.S. FAA, 9 U.S.C. 2.
461) See, e.g., Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 272-74 (U.S. S.Ct. 1995) (broadly
interpreting involving commerce language); Prima Paint Corp. v. Flood & Conklin Mfg Co.,
388 U.S. 395, 401-02 n.7 (U.S. S.Ct. 1967) (favoring broad interpretation of involving
commerce to include contracts facilitating interstate commerce); Robert Lawrence Co. v.
Devonshire Fabrics, Inc., 271 F.2d 402 (2d Cir. 1959); Fairchild & Co. v. Richmond,
Fredericksburg & Potomac R.R. Co., 516 F.Supp. 1305, 1310 (D.D.C. 1981) (involving
commerce is not to be narrowly construed and reaches not only the actual physical
interstate shipment of goods, but also contracts relating to interstate commerce)
(quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 1 (1924)).
462) See, e.g., Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005); Francisco v. Stolt
Achievement MT, 293 F.3d 270, 274 (5th Cir. 2002) (an employment contract is
commercial); Physiotherapy Assoc. v. Schexneider, 1998 WL 34076415 (W.D. Ky.) (FAA
clearly covers employment agreements); Crawford v. W. Jersey Health Sys., 847 F.Supp.
1232, 1240 (D.N.J. 1994) (employment agreement among national health care providers is
transaction involving commerce and subject to FAA); Cullen v. Paine, Webber, Jackson &
Curtis, Inc., 587 F.Supp. 1520, 1522 (D.C. Ga. 1984); Legg, Mason & Co. v. Mackall & Coe, Inc.,
351 F.Supp. 1367, 1371 (D.D.C. 1972). As discussed below, the FAA contains an exception to
its scope (9 U.S.C. 1) which excludes certain types of employment relations from the Acts
coverage. See6.04[G][2].
463) See, e.g., Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 874-75 (11th Cir. 2005)
(consumer lending transaction satisfies commerce requirement); Richardson v. Palm
Harbor Homes, Inc., 254 F.3d 1321, 1324 (11th Cir. 2001) (consumer contract for purchase of
mobile home is transaction involving commerce under FAA); Zink v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 13 F.3d 330, 333 (10th Cir. 1993) (agreement between parties providing
for trade in securities involved commerce); Adkins v. Palm Harbor Homes, Inc., 157
F.Supp.2d 1256, 1257-58 (M.D. Ala. 2001) (parties did not dispute that sale of mobile home
constituted interstate commerce); Palozie v. State Farm Mut. Auto. Ins. Co., 1996 WL
814533 (D. Ariz.) (consumer insurance policies involve interstate commerce and are
subject to FAA); Crawford v. Great Am. Cash Advance, Inc., 644 S.E.2d 522, 695 (Ga. App.
2007) (proposition that payday loans constitute commerce was not disputed by party
contesting arbitration provision).
464) See2.03[B][1][b][i]; 6.04[G][2]; U.S. FAA, 9 U.S.C. 1.
465) Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 120 (U.S. S.Ct. 2001). See Ware, Employment
Arbitration and Voluntary Consent, 25 Hofstra L. Rev. 83, 128-38 (1996).
466) See2.03[B][1][b][i].
467) U.S. FAA, 9 U.S.C. 201. See Bautista, 396 F.3d 1289.
468) See authorities cited 2.03[B][1][b][i], pp. 299-301; Bautista, 396 F.3d 1289; Francisco, 293
F.3d at 274.
469) Article 2061 of the French Civil Code was amended in 2001 to provide: Subject to
particular legislative provisions, the arbitration clause is valid in contracts concluded
because of a professional activity. French Civil Code, Art. 2061. The provision previously
provided that [a]n arbitration clause shall be void unless the law provides otherwise.
470) See, e.g., Judgment of 5 January 1999, Zanzi v. de Coninck, 1999 Rev. arb. 260 (French Cour
de cassation civ. 1e) (principle of validity of the international arbitration agreement
without any condition of commerciality); Judgment of 4 July 1972, Hecht v. Buismans, 99
J.D.I. (Clunet) 843 (French Cour de cassation civ. 1e) (1972).
471) Judgment of 7 December 1994, V 2000 v. Project XJ 220 ITD, 1996 Rev. arb. 245 (Paris Cour
dappel) (consumers purchase of automobile).
472) English Arbitration Act, 1996, 1, 6; R. Merkin, Arbitration Law 1.22(a) (1991 & Update
August 2013).
70
473) German ZPO, 1025. Section 1030 of the German ZPO provides Any claim involving an
economic interest (vermgensrechtlicher Anspruch) can be the subject of an arbitration
agreement. An arbitration agreement concerning claims not involving an economic
interest shall have legal effect to the extent that the parties are entitled to conclude a
settlement on the issue in dispute.
474) Italian Code of Civil Procedure, Art. 806; Judgment of 13 September 2002, Lorenzini v.
Madaus, 2003 Corr. Giur. 1626 (Milano Corte dAppello).
475) Japanese Arbitration Law, Art. 2 (omitting any commercial requirement, although
limiting Laws application to civil disputes).
476) See4.04[A][4][c]; 5.06[A][3]; 6.04[A][3].
477) See6.01.
478) See2.03[B][1][b][ii].
479) Notice of the Supreme Peoples Court on the Implementation of Chinas Accession to the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (10 April 1987),
reprinted in C. Dejun, M. Moser & W. Shengchang, International Arbitration in the Peoples
Republic of China: Commentary, Cases and Materials 754-57 (1995).
480) RM Inv. & Trading Co. Pvt Ltd (India) v. Boeing Co., 1994 AIR 1136 (Indian S.Ct.); India
Organic Chems., Ltd v. Chemtex Fibres Inc., AIR 1978 Bom 106 (Bombay High Ct. 1977) (1979).
Compare Comed Chems. Ltd v. C N Ramchand, AIR 2009 SC 494 (Indian S.Ct.) (contractual
relationship between employee and employer held to be commercial relationship).
481) Judgment of 10 November 1993, Taieb Haddad & Hans Barett v. Societe dInvestissement
Kal, XXIII Y.B. Comm. Arb. 770 (Tunisian Cour de cassation) (1998).
482) Borowski v. Heinrich Fiedler Perforiertechnik GmbH, (1994) 158 A.R. 213 (Alberta Q.B.).
483) Of course, as discussed below, both the nonarbitrability exception under such
instruments and substantive contract law defenses (such as unconscionability) remain
applicable, even where a dispute concerns a commercial relationship. SeeChapter 5et
seq.
ed. 2011).
485) U.N. Convention on Jurisdictional Immunities of States and Their Property, Arts. 2(1), 2(2),
10, reprinted in 44 Intl Legal Mat. 801 (2005); U.S. Foreign Sovereign Immunities Act, 28
U.S.C. 1603(d), 1605(a)(2) (commercial activity); European Convention on State
Immunity, Arts. 4-8, 12 (industrial, commercial or financial activity); U.K. State Immunity
Act, 1978, 3, 4, 7-11.
486) See, e.g., Repub. of Argentina v. Weltover, 504 U.S. 607 (U.S. S.Ct. 1992); Butcher v. St. Lucia,
(1998) 21 C.P.C.4th 236 (Ontario Super. Ct.).
487) See1.04[A]; 1.04[B][1]; 2.01[A][1]. As discussed elsewhere, this is the case under the New
York Convention, the Inter-American Convention, the European Convention and other
international instruments. See1.04[A]; 2.03[C][1].
488) As noted above, this is the case in the United States, France, Australia, Canada and many
UNCITRAL Model Law jurisdictions. See1.04[B]. As also discussed above, other states have
enacted a single arbitration statute, applicable to both domestic and international
arbitrations; this is the case in England, Germany and Spain. See1.04[B].
489) Geneva Protocol, Art. I (Each of the Contracting States recognizes the validity of an
agreement whether relating to existing or future differences between the parties subject
respectively to the jurisdiction of different Contracting States by which the parties to a
contract agree to submit to arbitration.).
490) See1.04[A][1]; 2.01[A][1][a]; 2.02[A].
491) See New York Convention, Art. I(1) (This Convention shall apply to the recognition and
enforcement of arbitral awards made in the territory of a State other than the State
where the recognition and enforcement of such awards are sought. It shall also apply to
arbitral awards not considered as domestic awards in the State where their recognition
and enforcement are sought.); 2.03[C][1][a][i]; 22.02[E].
492) See, e.g., Smith/Enron Cogeneration LP Inc. v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 94
(2d Cir. 1999) (noting the Conventions sweeping approach towards arbitral agreements in
Article II); Ebb, Developing Views on What Constitutes A Foreign Arbitration Agreement and
A Foreign Award Under the New York Convention, 1 Am. Rev. Intl Arb. 364 (1990); A. van
den Berg, The New York Arbitration Convention of 1958 8 (1981) (The field of application of
the New York Convention is broader than that of the Geneva Treaties. The New York
Convention applies to an award made in any other State; it no longer requires that the
parties be subject to the jurisdiction of different Contracting States.); van den Berg, When
Is An Arbitral Award Non-Domestic Under the New York Convention of 1958?, 6 Pace L. Rev.
25, 51-54 (1985).
493) See2.03[C][1][a][iii].
494) See2.03[C][1][a][iii].
495) See2.03[C][2][b]; 22.02[E].
496) A. van den Berg, The New York Arbitration Convention of 1958 57 (1981) (As the [New York]
Convention applies to the enforcement of an award made in another State, it could apply
to the enforcement of an agreement providing for arbitration in another State.). This
conclusion is supported by a measure of national judicial authority considering the
application of the Convention to arbitration agreements. See2.03[C][1][a][ii](1).
71
497) See New York Convention, Art. I(1); 2.03[C][1][a][ii]. Article I(1) defines the awards that are
subject to the Convention as follows: This Convention shall apply to the recognition and
enforcement of arbitral awards made in the territory of the State other than the State
where the recognition and enforcement of such awards are sought, and arising out of
differences between persons, whether physical or legal. It shall also apply to arbitral
awards not considered as domestic awards in the State where their recognition and
enforcement are sought.
498) See22.02[E][1][a][i].
499) Reisman & Iravani, Arbitration and National Courts: Conflict and Cooperation: The Changing
Relation of National Courts and International Commercial Arbitration, 21 Am. Rev. Intl Arb.
5, 8 (2010); van den Berg, The New York Convention: Its Intended Effects, Its Interpretation,
Salient Problem Areas, in M. Blessing (ed.), The New York Convention of 1958 25, 34 (ASA
Spec. Series No. 9 1996). Contra A. Samuel, Jurisdictional Problems in International
Commercial Arbitration 91 (1989) (Article I, which is intended to define the scope of the
Convention, cannot be applied by analogy, because it only sets limits on the enforcement
of awards).
Complexities arise when the parties arbitration agreement does not specify the arbitral
seat (and this selection is left to an arbitral institution or the arbitral tribunal). See14.07;
14.08. In this event, it is not possible to determine in advance where the arbitral seat is
located; equally, the parties may agree to change the seat during the course of the
arbitration. Both possibilities, which are not uncommon, underscore the textual and
conceptual difficulties with transposing the treatment of foreign awards to the context
of agreements to arbitrate. See also4.04[A][1][b][ii].
500) See2.03[C][2][a], pp. 324-25; 2.03[C][2][e]; Smith/Enron Cogeneration, 198 F.3d at 93-94
(Under Article II of the Convention, the citizenship of the parties to the agreement and
the location of the disputed subject matter are not controlling.); Judgment of 8 January
1990, XVII Y.B. Comm. Arb. 539 (Milan Tribunale) (1992) (Convention applicable to
agreement between two Italian parties to arbitrate abroad). See also van den Berg, When
Is An Arbitral Award Non-Domestic Under the New York Convention of 1958?, 6 Pace L. Rev.
25 (1985).
501) See2.03[C][2][b][v]; Jones v. Sea Tow Servs. Freeport NY, Inc., 30 F.3d 360 (2d Cir. 1994); Best
Concrete Mix Corp. v. Lloyds of London Underwriters, 413 F.Supp.2d 182, 188 (E.D.N.Y. 2006)
(Only where an agreement satisfies both conditions will it be deemed entirely domestic
and, therefore, outside the scope of the Convention) (citing Jones, 30 F.3d at 365); Ensco
Offshore Co. v. Titan Marine LLC, 370 F.Supp.2d 594, 597-601 (S.D. Tex. 2005); Reinholtz v.
Retriever Marine Towing & Salvage, 1994 AMC 2981 (S.D. Fla.), affd, 46 F.3d 71 (11th Cir.
1995); Brier v. Northstar Marine, Inc., 1992 WL 350292 (D.N.J.); Wilson v. Lignotock U.S.A., Inc.,
709 F.Supp. 797 (E.D. Mich. 1989); Coastal States Trading, Inc. v. Zenith Navigation, SA, 446
F.Supp. 330, 341 (S.D.N.Y. 1977).
502) See, e.g., Jones, 30 F.3d at 366 (as between the partiesa United States forum is required
for the enforcement of any arbitral award and even to compel arbitration. The district
courts observation that the Committee of Lloyds has a long history of experience in the
arbitration of salvage disputes lends no support to the conclusion that the parties
envisioned performance in England. There is no indication that competent salvage
arbitrators are unavailable in the United States or that the necessary expertise is lacking
here.); Repub. of Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334 (S.D.N.Y. 2005), revd
on other grounds, 638 F.3d 384 (2d Cir. 2011); Sumitomo Corp. v. Parakopi Compania
Maritima, 477 F.Supp. 737, 741 (S.D.N.Y. 1979) (In delineating the coverage of the
Convention, Congress explicitly excluded purely domestic transactions.); Coastal States
Trading, Inc. v. Zenith Navigation SA, 446 F.Supp. 330, 341 (S.D.N.Y. 1977); Fuller Co. v.
Compagnie des Bauxites de Guine, 421 F.Supp. 938, 941 (W.D. Pa. 1976).
503) U.S. FAA, 9 U.S.C. 202 (An arbitration agreement or arbitral award arising out of [a legal,
commercial] relationship which is entirely between citizens of the United States shall be
deemed not to fall under the Convention unless that relationship involves property
located abroad, envisages performance or enforcement abroad, or has some other
reasonable relation with one or more foreign states.). See also2.03[C][2][b].
504) See2.03[C][2][b][i].
505) See also22.02[E][1][a][i]. In Switzerland, Germany and England, for example, an arbitral
award is considered to be a foreign award for the purposes of the New York Convention
only where it has been made in an arbitration seated outside the state where recognition
is sought. SeeEnglish Arbitration Act, 1996, 100(1); Geimer, in R. Zller (ed.),
Zivilprozessordnung 1061, 3 (30th ed. 2013); R. Merkin, Arbitration Law 19.1 (1991 &
Update August 2013); Patocchi & Jermini, in S. Berti et al. (eds.), International Arbitration in
Switzerland Art. 194, 12 (2000).
506) As discussed below, however, the agreement might be subject to the Convention by virtue
of the second criterion applicable to agreements that produce nondomestic awards.
See2.03[C][1][a][ii](3).
507) See2.03[C][1][a][ii](3); 2.03[C][2][b]; 22.02[E][1][a][ii]; Bergesen v. Joseph Muller Corp., 710
F.2d 928 (2d Cir. 1983); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 257 (1999) (the Convention also governs awards
which are not considered as domestic awards in the country where their recognition and
enforcement are sought); J.-F. Poudret & S. Besson, Comparative Law of International
Arbitration 121 et seq. (2d ed. 2007).
72
508) A. van den Berg, The New York Arbitration Convention of 1958 22 (1981) (The second
criterion an award not considered as domestic has remained a dead letter).
509) See22.02[E][1][a][ii](1).
510) Nothing in the structure or purposes of the Convention argues for a different result,
because the provision in question is merely a mechanism by which Contracting States are
free to unilaterally extend the scope of the Convention. See22.02[E][1][a][ii](2). See also A.
van den Berg, The New York Convention of 1958: An Overview 2 (2009) (A court (or, for that
matter, implementing legislation) may, but is not obliged to, treat an arbitral award
made within its jurisdiction to be non-domestic and determine that it is covered by the
Convention.).
511) See22.02[E][1][a][ii](2). This contradicts the Conventions basic purpose of achieving
uniformity, but is an almost inevitable consequence of Article Is provision that the
Convention applies to arbitral awards not considered as domestic awards in the State
where their recognition and enforcement are sought. New York Convention, Art. I(2). One
might attempt to develop an argument that Contracting States must treat certain awards
(and agreements) as nondomestic, but this is difficult to reconcile with the Conventions
text and purposes. See22.02[E][1][a][ii].
512) Of course, this category of awards could include awards that are not foreign.
See22.02[E][1][a][ii](1).
513) See22.02[E][1][a][ii](1).
514) See2.03[C][1][a].
515) Smith/Enron Cogeneration, 198 F.3d at 94; A. Samuel, Jurisdictional Problems in
International Commercial Arbitration 91 (1989).
516) See1.04[A][1]; 2.01[A][1][a]. See also A. van den Berg, The New York Arbitration Convention
of 1958 61 (1981) ([T]he primary goal of the Convention is to facilitate the enforcement of
agreements and awards. Accordingly, the main purpose of the Conventions provisions
concerning the arbitration agreement is to give uniform rules for the form of the
arbitration agreement (in writing), and to assure that the international commercial
arbitration will not be frustrated by court litigation on the same merits as covered by the
arbitration agreement. It is obvious that the purposes of uniformity can be fulfilled only if
the arbitration agreement is enforceable under Article II(3) in all Contracting States,
including the State where the arbitration is to take place.).
517) Geneva Protocol, Art. I; 1.01[C][1]; 2.03[C][1][a].
518) Geneva Protocol, Arts. I, IV; 1.01[C][1].
519) On the contrary, they intended the opposite that is, to ensure that the Convention
expanded and improved the Protocols provisions regarding arbitration agreements.
See1.04[A][1].
520) See also A. van den Berg, The New York Arbitration Convention of 1958 63 (1981) (Convention
applies to only those [arbitration agreements] which have an international element).
521) This definition is elaborated below. See2.03[C][2][g].
522) See1.04[A][1]; 2.01[A][1][a]; 22.02[E][1][a].
523) See2.03[C][2]; Smith/Enron Cogeneration, 198 F.3d 88; Bergesen, 710 F.2d at 932. See
alsoRomanian Code of Civil Procedure, Art. 369 (an arbitration taking place in Romania
shall be considered international if it has arisen out of a private law relation having a
foreign element).
524) European Convention, Art. I(1)(a) (emphasis added). SeeJudgment of 13 October 2000, XXVI
Y.B. Comm. Arb. 1141, 8 (Italian Corte di Cassazione) (2001) (With the aim of promoting
international trade, the European Convention binds its Member States to recognize
international commercial arbitrations concerning the import and export of goods, where
part of the contractual obligations is performed in different countries.).
525) It might be suggested that similar conclusions have been reached by U.S. courts in
interpreting the New York Convention. See2.03[C][1][a][ii][2]; 2.03[C][2][b]; 22.02[E][2][a]
[iv]. In fact, U.S. decisions interpreting the New York Convention rarely have involved
local parties and purely local transactions.
526) See1.04[A][3].
527) See2.03[C][1][a][iii].
528) See2.03[C][1][a][iii].
529) UNCITRAL Model Law, Art. 1(3). See H. Holtzmann & J. Neuhaus, A Guide to theUNCITRAL
Model Law on International Commercial Arbitration: Legislative History and Commentary
28-35, 41-43 (1989).
530) UNCITRAL Model Law, Art. 1(2) (The provisions of this Law, except Articles 8 [and] 9apply
only if the place of arbitration is in the territory of this State), Art. 8 (mandatory stay of
litigation). See2.04[B]; 8.03[C][1].
531) SeeUNCITRAL Model Law, Art. 1(2); 2.04[B]; 11.03[C][2][a].
532) Noteworthy also is that the Model Laws provisions regarding competence-competence
and separability do not expressly apply to arbitration agreements providing for a foreign
arbitral seat. See2.04[B]; 7.04; 11.03[C][2][a]; UNCITRAL Model Law, Art. 16.
533) Explanatory Note by the UNCITRAL Secretariat on the Model Law on International
Commercial Arbitration, 20, XIX Y.B. UNCITRAL 117, 119 (1988).
534) See, e.g., Russian Arbitration Law, Arts. 1(2), (3); Ukrainian Arbitration Law, Arts. 1(2), (3);
Nigerian Arbitration and Conciliation Decree, 57; Dominican Commercial Arbitration Law,
Art. 1(2).
73
535) See, e.g., Bulgarian Law on International Commercial Arbitration, Art. 1(2) (The
international commercial arbitration resolves civil property disputes arising from foreign
trade relationsif the domicile or the seat of at least one of the parties is not in the
Republic of Bulgaria.).
Tunisia appears to have adopted both the UNCITRAL Model Laws definition of
international and the approach of the French Code of Civil Procedure (discussed below).
Tunisian Arbitration Code, Art. 48. It is not clear how these provisions are to be
interpreted.
536) English Arbitration Act, 1996, 2; German ZPO, 1025; Spanish Arbitration Act, 2011, Art. 1(1);
Venezuelan Commercial Arbitration Law, Art. 1. See1.04[B] (especially 1.04[B][1][d]).
Arbitration 8 (2012) (Article 1 defines the scope of application of the Model Law by
reference to the notion of international commercial arbitration, and provides for a
broad definition of the term[] international.).
Arbitration 103 (1999) (some of which are probably too broad).
539) UNCITRAL Model Law, Art. 1(3)(a).
540) UNCITRAL Model Law, Art. 1(3)(b)(i); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL
Model Law on International Commercial Arbitration: Legislative History and Commentary 30
(1989) (It must be recalledthat the Model Law applies when the place of arbitration is
in the enacting State. As long as two parties from one State may validly select a foreign
place of arbitration and it is a basic policy of the Model Law to provide parties with
such freedom it is essential that the resulting arbitration be considered international
arbitration of the chosen foreign State. That result submitting an arbitration between
two parties from a foreign state to the domestic law of arbitration would be
anomalous.). See alsoReport of the UNCITRAL on the Work of Its Eighteenth Session, U.N.
Doc. A/40/17, 28-29, XVI Y.B. UNICTRAL 3 (1985).
541) UNCITRAL Model Law, Art. 1(3)(b)(ii). See Vanol Far E. Mktg Pte Ltd v. Hin Leong Trading Pte
Ltd, [1997] 3 SLR 484 (Singapore High Ct.) (arbitration may be international even if both
parties are from same state and agreement is governed by local law of that state);
Ananda Non-Ferrous Metals Ltd v. China Res. Metal & Minerals Co., [1993] 2 HKLR 348 (H.K.
Ct. First Inst.) (arbitration is international if substantial part of obligations are to be
performed outside of Hong Kong); Katran Shipping Co. v. Kenven Transp. Ltd, XVIII Y.B.
Comm. Arb. 175 (H.K. Ct. First Inst. 1992) (1993).
542) UNCITRAL Model Law, Art. 1(3) (the parties have expressly agreed that the subject matter
of the arbitration agreement relates to more than one country).
543) van den Berg, The New York Convention: Its Intended Effects, Its Interpretation, Salient
Problem Areas, in M. Blessing (ed.), The New York Convention of 1958 25, 35 (ASA Spec.
Series No. 9 1996) (Article II(2) does not apply to purely domestic arbitration
agreement[s]).
544) Am. Diagnostica Inc. v. Gradipore Ltd, XXIVa Y.B. Comm. Arb. 574 (N.S.W. S.Ct. 1998) (1999).
Compare2.03[C][1][a][ii](2); 2.03[C][2][b][v], discussing U.S. decisions holding that the
Convention and its implementing legislation would not apply to a purely domestic
agreement between two domestic U.S. parties.
545) See also1.02[B][1].
546) This parallels the terms of the Geneva Protocol. See1.01[C][1]; 2.03[C] (especially
2.03[C][1][a][iii]).
547) In enacting the Model Law, Germany modified the language of Article 1(3) (see 1025), and
its statute does not contain a provision similar to Article 1(3)(b)(i). Like Germany, Japan
also modified the text of Article 1(3), omitting any provision like Article 1(3)(b)(i). Japanese
Arbitration Law, Art. 3. Australia, by contrast, adopted the Model Law without change.
Australian International Arbitration Act, 2011, 16. Hong Kong adopted the Model Law, but
made the following reservation in Article 34(c)(2): Art. 1(1) of the UNCITRAL Model Law
shall not have the effect of limiting the application of the UNCITRAL Model Law to
international commercial arbitrations. Hong Kong Arbitration Ordinance, 2013, Art. 34(c)
(2).
548) See2.03[C][1][a][ii].
Arbitration 103 (1999) (such agreements may constitute fraud against the law). This
criticism parallels some U.S. judicial authority, refusing to apply the New York Convention
to agreements to arbitrate a purely domestic dispute between two U.S. parties outside
the arbitral seat. See2.03[C][1][a][ii](2); 2.03[C][2][b][v].
550) See2.03[C][1][a][ii](2); 2.03[C][2][b][v].
551) For example, if insurance companies agree to arbitrate in London, Bermuda, or New York,
or maritime companies in London, New York, Singapore, or Hamburg.
552) For example, if companies with Latin American origins, ownership connections, or
operations agree to arbitrate in Madrid, Miami, or Mexico City.
Arbitration 103 (1999). A number of states have omitted Article 1(3), which permits
parties to contract into the Model Law. See, e.g., German ZPO, 1025; Ontario International
Commercial Arbitration Act, 2(3); Spanish Arbitration Act, 2011, Art. 3(1)(c); Hungarian
Arbitration Act, 47; Senegalese Code of Civil Procedure, Arts. 819-27.
554) See2.03[C][2][a], pp. 322-23.
74
555) See1.04[B]. Likewise, some U.S. judicial decisions come close to permitting parties to
contract into the U.S. FAA, by applying the Act by analogy to mediation, conciliation and
expert determination agreements. See2.02[C][2][b], p. 270; 2.02[C][2][c], pp. 275-76.
556) See2.03[C][2][b], p. 327.
557) See2.03[C][2][b][v].
558) See1.04[B][1][e][ii]; U.S. FAA, 9 U.S.C. 1-16.
559) See1.04[B][1][e]; U.S. FAA, 9 U.S.C. 201-208 (implementing New York Convention), 301-
306 (implementing Inter-American Convention).
560) U.S. FAA, 9 U.S.C. 202 (emphasis added). See also1.04[B][1][e]; 2.03[C][1][a][ii](2).
Section 202s reasonable relationship standard was for better or worse based on 1-
105 of the Uniform Commercial Code, dealing with choice-of-law clauses. See2.03[C][2][b]
[v]. Section 1-105 was subsequently amended, to relax its reasonable relationship
requirement, after enactment of 202. See19.04[D][4].
561) See N. Motors, Inc. v. Knudsen, 2011 WL 2552573, at *2 (E.D. Mo.) (While [the language in 9
U.S.C. 202] clearly sets forth a class of agreements that is exempt from the New York
Convention, it does not provide an inclusive definition of agreements to which the New
York Convention applies.).
562) S&T Oil Equip. & Mach., Ltd v. Juridica Invs. Ltd, 46 F.Appx. 481, 484 (5th Cir. 2012)
(reasonable relation to a foreign state because performance of contract abroad and legal
relationship involved foreign property); Nomanbhoy v. Vahanvaty, 2011 WL 6736052 (N.D.
Ill.) (Convention applies only when legal relationship between parties has a significant
foreign element (e.g., performance abroad or property held abroad, not just incidental
business dealings); fact that award was made in foreign country does not satisfy
requirements of Convention and 202 of FAA); Tricon Energy, Ltd v. Vinmar Intl, Ltd, 2011
WL 4424802 (S.D. Tex.) (under 202 of FAA, New York Convention and second chapter of
FAA apply to shipping contract between two U.S. parties, providing for discharge of goods
at non-U.S. port); Repub. of Argentina v. BG Group plc, 715 F.Supp.2d 108, 120 (D.D.C. 2010)
(Given that Congress plainly intended for the New York Convention to cover certain
arbitral awards issued in matters involving two domestic parties, it would be nonsensical
for this Court to conclude that the Award which was issued in a dispute involving two
foreign parties, a foreign treaty, and a foreign investment falls outside the reach of a
treaty that was ratified for the purpose of recognizing and enforcing foreign arbitral
awards.) (emphasis in original), revd on other grounds, 665 F.3d 1363 (D.C. Cir. 2012);
Access Info. Mgt of Hawaii, LLC v. Shred-It Am., Inc., 2010 WL 4642045, at *5 (D. Haw.) (legal
relationship out of which Franchise Agreement arose had no important foreign element:
party could not confer a foreign element on legal relationship by unilaterally deciding to
perform its obligations abroad); Coastal States Trading, Inc. v. Zenith Navigation SA, 446
F.Supp. 330, 341 (S.D.N.Y. 1977) (applying 202, incorrectly, to hold that arbitration
agreement between U.S. and Panamanian company for shipment of oil from England to
United States was not nondomestic); Fuller Co. v. Compagnie des Bauxites de Guine, 421
F.Supp. 938, 941 (W.D. Pa. 1976).
563) This is also consistent with the UNCITRAL Model Laws definition of international and
with the scope of the Geneva Protocol. See1.01[C][1]; 2.03[C][2][a].
564) See, e.g., Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 903 (5th Cir. 2005) (The
Convention applies to international arbitration clauses when, among other facts, a party
to the agreement is not an American citizen.); Francisco v. Stolt Achievement MT, 293 F.3d
270, 272-73 (5th Cir. 2002) (same); Indus. Risk Insurers v. MAN Gutehoffnungshtte GmbH,
141 F.3d 1434, 1441 (11th Cir. 1998); Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir.
1983) (Convention applies to arbitration agreement between two non-U.S. parties:
involving parties domiciled or having their principal place of business outside the
enforcing jurisdiction); Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir. 1982)
(Convention applies to arbitration agreement involving non-U.S. party); Glencore Ltd v.
Degussa Engd Carbons LP,848 F.Supp.2d 410, 422 (S.D.N.Y. 2012) (Convention applies to
arbitration agreement involving Swiss party); Nanda v. Atul Nanda & Dibon Solutions Inc.,
2012 WL 2122181 (N.D. Tex.) (Convention applies to award in arbitration between two
Indian citizens domiciled in the United States); LaPine v. Kyocera Corp., 2008 WL 2168914
(N.D. Cal.) (Convention applies to award in arbitration between U.S. and Japanese party,
even though award was made in U.S. under California law).
565) See2.03[C][2][b][iv].
566) Glencore,848 F.Supp.2d at 422 (Convention applies to arbitration agreement because one
party was Swiss corporation with principal place of business in Switzerland); N. Motors,
Inc. v. Knudsen, 2011 WL 2552573 (E.D. Mo.) (defendants Missouri domicile, rather than
Danish nationality, determined his citizenship for purposes of 202 and made award
domestic). Compare Nanda v. Atul Nanda & Dibon Solutions Inc., 2012 WL 2122181 (N.D.
Tex.) (award in arbitration between two Indian citizens domiciled in United States was
nondomestic award under 202).
567) See, e.g., S&T Oil Equip. & Mach., Ltd v. Juridica Invs. Ltd, 456 F.Appx. 481 (5th Cir. 2012)
(commercial relationship between two U.S. nationals had reasonable relation with one or
more foreign states (regardless of parties citizenship); one party performed abroad by
wiring funds from Guernsey and held property abroad in form of collateral in Romanian
company); Lander Co. v. MMP Invs., Inc., 107 F.3d 476, 482 (7th Cir. 1997); Jacada (Europe),
Ltd v. Intl Mktg Strategies, Inc., 255 F.Supp.2d 744 (W.D. Mich. 2003) (applying FAA and
Convention to arbitral award where performance of contract was intended to occur
abroad and one of the parties was a non-U.S. citizen).
75
568) Lander, 107 F.3d 476.
569) Lander, 107 F.3d at 482.
570) Indus. Risk Insurers, 141 F.3d at 1441.
571) Indus. Risk Insurers, 141 F.3d at 1434 (quoting Bergesen, 710 F.2d 928).
572) Bergesen, 710 F.2d 928.
573) Bergesen, 710 F.2d at 932. See also22.02[E][1][a][ii](3).
574) See, e.g., S&T Oil Equip. & Mach., Ltd v. Juridica Invs. Ltd, 456 F.Appx 481 (5th Cir. 2012); Lim
v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 903 (5th Cir. 2005) (The Convention
applies to international arbitration clauses when, among other facts, a party to the
agreement is not an American citizen.) (quoting Francisco, 293 F.3d at 272-73);
Smith/Enron Cogeneration, 198 F.3d at 92-94; Ledee, 684 F.2d at 186-87 (Chapter 2 of FAA
requires enforcement of an arbitration agreement when one of parties to agreement is
not a U.S. citizen); Glencore,848 F.Supp.2d at 422; Nanda v. Atul Nanda & Dibon Solutions
Inc., 2012 WL 2122181 (N.D. Tex.); LaPine v. Kyocera Corp., 2008 WL 2168914 (N.D. Cal.);
Jacada, 255 F.Supp.2d 744.
575) See, e.g., Certain Underwriters at Lloyds London v. Argonaut Ins. Co., 500 F.3d 571 (7th Cir.
2007); Jacada, 401 F.3d at 707-09; Ledee, 684 F.2d at 187; Nanda v. Atul Nanda & Dibon
Solutions Inc., 2012 WL 2122181 (N.D. Tex.); DaPuzzo v. Globalvest Mgt Co., LP, 263 F.Supp.2d
714, 724 (S.D.N.Y. 2003).
There could conceivably be cases where U.S. and non-U.S. nationals, or only non-U.S.
nationals, agreed to arbitrate a purely domestic U.S. transaction abroad. If so, the
analysis discussed below regarding arbitrations between U.S. nationals would apply.
See2.03[C][2][b][v]-[vi].
576) See1.02[B][6].
577) See2.03[C][2][b][i], p. 326.
578) See19.04[D][4].
579) Despite this, as discussed below, a number of U.S. courts have concluded that the
Convention does not require giving effect to arbitration agreements, specifying a foreign
seat, involving consumers or workers. See2.03[C][1][a][ii](2), p. 317; 2.03[C][2][b][v], p. 332.
580) See, e.g., Smith/Enron Cogeneration, 198 F.3d 88 (in considering application of New York
Convention to arbitration agreement, fact that party was citizen of non-Contracting State
and disputes subject matter was located in non-Contracting State was not controlling
when seat of arbitration was in United States: The focus ofthe Convention is not on the
nationality of the party seeking to enforce an award but on the situs of the arbitration.
Indeed, arbitration awards rendered by panels sitting in contracting countries have been
confirmed consistently when the plaintiff is a national of a country which has not acceded
to the Convention); Fuller Co. v. Compagnie des Bauxites de Guine, 421 F.Supp. 938, 942-
43 (W.D. Pa. 1976) (agreement between U.S. parties to arbitrate dispute bearing
connection to Guinea, where arbitration was originally sited in Switzerland and parties
later agreed to move arbitration to Pittsburgh, Pennsylvania, within ambit of Convention).
581) H.R. Rep. No. 91-1181, 91st Cong., 2d Sess. 2, reprinted in 1970 U.S. Code Cong. & Ad. News
3601, 3602 (emphasis added).
582) Foreign Arbitral Awards, S. Rep. No. 91-702, 91st Cong., 2d Sess. 6, Appendix (Statement of
Richard D. Kearney) (1970) (it was necessary to modify the definition of commerce to
make it quite clear that arbitration arising out of relationships in interstate commerce
remains under the original Arbitration Act and is excluded from the operation of the
proposed Chapter 2).
583) See2.03[C][2][a], pp. 324-25.
584) Wilson v. Lignotock U.S.A. Inc., 709 F.Supp. 797 (E.D. Mich. 1989).
585) See, e.g., Jones v. Sea Tow Servs. Freeport NY, Inc., 30 F.3d 360 (2d Cir. 1994); Ensco Offshore
Co. v. Titan Marine LLC, 370 F.Supp.2d 594, 601 (S.D. Tex. 2005) (refusing to apply
Convention to arbitration agreement between two U.S. parties providing for arbitration in
London under Lloyds Salvage Arbitrators form); Reinholtz v. Retriever Marine Towing &
Salvage, 1994 AMC 2981 (S.D. Fla.), affd, 46 F.3d 71 (11th Cir. 1995); Brier v. Northstar Marine,
Inc., 1992 WL 350292 (D.N.J.); Coastal States Trading, Inc. v. Zenith Navigation, SA, 446
F.Supp. 330, 341 (S.D.N.Y. 1977). See also Bethlehem Steel Corp. v. Songer Corp., 1992 WL
110735, at *1 (S.D.N.Y.) (the Conventionwas not intended to confer jurisdiction on the
federal courts over disputes between United States citizens solely because that dispute
may have some relation to a contract one of the parties has with a foreign corporation).
586) See U.S. FAA, 9 U.S.C. 202; Beiser v. Weyler, 284 F.3d 665, 666 n.2 (5th Cir. 2002); Bergesen,
710 F.2d at 933 (noting reasonable relationship required to enforce an agreement or
award between two U.S. parties); 2.03[C][2][b][v].
587) See2.03[C][1][a][ii](2).
588) See2.03[C][1][a][ii](2).
589) See5.06[C][13]; 26.05[C][9].
590) See2.03[C][1][a][i] & [iii].
591) On the other hand, an international arbitration agreement could also include all
agreements to arbitrate outside the judicial enforcement forum, even if involving only a
domestic dispute between local nationals. This would leave the judicial enforcement
forum free to apply nonarbitrability or public policy exceptions to the arbitration
agreement, but not exclude the agreement altogether from the scope of the Convention.
See also2.03[C][1][a][i] & [iii]. A more nuanced view would include agreements to
arbitrate domestic disputes, between local nationals, abroad where there was a
legitimate basis for doing so (e.g., a market practice or cultural affinity).
76
592) See1.04[B].
593) See L. Edmonson, Domke on Commercial Arbitration, 7.6 (3d ed. & Update 2013).
594) The French objective approach to the question of internationality has been adopted by
Lebanon and the Ivory Coast, as well as Portugal. E. Gaillard & J. Savage (eds.), Fouchard
Gaillard Goldman on International Commercial Arbitration 107-26 (1999). See also Dell
Computer Corp. v. Union des consommateurs, 2007 SCC 34, 49 (Canadian S.Ct.).
595) Article 1492 of the previous version of the French New Code of Civil Procedure was similar
to Article 1504 of the revised Code. SeeE. Gaillard & J. Savage (eds.), Fouchard Gaillard
Goldman on International Commercial Arbitration 107-26 (1999).
596) French Code of Civil Procedure, Art. 1504. See Carducci, The Arbitration Reform in France:
Domestic and International Arbitration Law, 28 Arb. Intl 147-48 (2012); Pierce, Born &
Scherer, Revision to French Arbitration Law Arrives, N.Y. L.J. S5, S5 (2011) (Article 1504
defines international arbitration as one that involves the interests of international
commerce. This is the same definition as that contained in the old law (Article 1492).
Given that this definition has often been criticized for being tautological and for giving
too little guidance to the courts, it is notable that the French legislature did not seek to
amend it in the new law.); Schwartz, The New French Arbitration Decree: The Arbitral
Procedure, 2011 Paris J. Intl Arb. 349, 351 n.10 (the 2011 Decreebroadly defines an
international arbitration as an arbitration that implicates international commercial
interests).
597) Carducci, The Arbitration Reform in France: Domestic and International Arbitration Law,
Arbitration International, 28 Arb. Intl 125, 148 (2012); Delaume, What Is An International
Contract? An American and A Gallic Dilemma, 28 Intl & Comp. L.Q. 258 (1979).
598) See, e.g.,Judgment of 26 January 2011, 2011 Rev. arb. 284 (French Cour de cassation civ. 1e)
(transaction involving movement of funds across borders is international); Judgment of 12
May 2010, G. El Assidi v. Socit Nest, 2010 Rev. arb. 391 (French Cour de cassation civ. 1e)
(transaction producing movement of merchandise and payment across borders);
Judgment of 21 May 1997, Renault v. V 2000, 1997 Rev. arb. 537 (French Cour de cassation
civ. 1e) (sale of automobiles); Judgment of 17 May 1927, Plissier du Besset v. Algiers Land &
Warehouse Co., 1927 Bull. civ. No. 77, 163 (French Cour de cassation civ. 1e) (transaction will
be international if it produces movement across borders with reciprocal consequences in
more than one country).
599) Judgment of 14 March 1989, Socit Murgue Seigle v. Socit Coflexip, 1991 Rev. arb. 345,
355 (Paris Cour dappel). See alsoJudgment of 26 January 2011, 2011 Rev. arb. 284, 285
(French Cour de cassation civ. 1e) (the international nature of arbitration refers to an
economic definition according to which it is sufficient that a dispute submitted to the
arbitrator relate to a transaction which does not take place economically in one State,
while the nationality of the parties, the law applicable to the contract or the arbitration,
and the place of arbitration are irrelevant; transaction was international because it
involved a movement of funds [from Respondent] across the borders); Judgment of 8
October 2009, 2009 Rev. arb. 922 (French Cour de cassation civ. 1e); Judgment of 11 June
2009, 2009 Rev. arb. 652 (Paris Cour dappel); Carducci, The Arbitration Reform in France:
Domestic and International Arbitration Law, 28 Arb. Intl 147-48 (2012) (French arbitration
law has clearly adopted an economic definition, wherein arbitration is international
when it involves international trade, or more precisely, met an cause des intrts du
commerce international. Consequently, the French law regime for international
arbitration applies as to a dispute submitted to arbitration concerning a transaction
which is not economically limited within the boundaries of a country.); Gaillard & de
Lapasse, Commentaire analytique du dcret du 13 janvier 2011 portant rforme du droit
franais de larbitrage, 2011 Paris J. Intl Arb. 263, 74.
600) Judgment of 13 March 2007, 2007 Rev. arb. 498 (French Cour de cassation civ. 1e). See also
Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, 49 (Canadian S.Ct.) (The
matter of international trade test is different from connecting factors such as the parties
place of residence or the place where the obligations are performed. Thus, a contractual
legal situation may have foreign elements without involving any matters of
extraprovincial or international trade; in such a case. [T]he resulting arbitration will not
be considered an international arbitration.).
601) See1.02[B].
602) See1.02[B][1].
603) See2.03[C][2][a]; UNCITRAL Model Law, Art. 1(3).
604) See2.03[C][2][b]; U.S. FAA, 9 U.S.C. 202.
605) See2.03[C][1][b]; European Convention, Art. I(1)(a).
606) See1.01[C][1]; 2.03[C]; Geneva Protocol, Art. I.
607) English Arbitration Act, 1996, 1, 6; R. Merkin, Arbitration Law 1.22(a) (1991 & Update
August 2013).
608) In this respect, the Act parallels the Model Law (and particularly Articles 1(2) and 8).
See2.03[C][2][a], p. 322.
609) English Arbitration Act, 1996, 2(1), (3).
610) English Arbitration Act, 1996, 9-11.
611) English Arbitration Act, 1996, 2(a).
612) Swiss Law on Private International Law, Art. 176(1). SeeJudgment of 24 June 2002, 21 ASA
Bull. 131, 132 (Swiss Federal Tribunal) (2003).
77
613) B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 102 (2d
ed. 2010); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitage interne et
international en Suisse, Art. 176, 3 (1989).
614) SeeSwiss Law on Private International Law, Art. 176(1); Ehrat, in S. Berti et al. (eds.),
International Arbitration in Switzerland Art. 176, 16 (2000); Patocchi & Jermini, in S. Berti
et al. (eds.), International Arbitration in Switzerland Art. 194, 12 (2000).
615) Ehrat, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 176, 16 (2000).
616) For a decision addressing the time for determining the international character of an
arbitration agreement, seeJudgment of 13 October 2000, XXVI Y.B. Comm. Arb. 1141 (Italian
Corte di Cassazione) (2001) (The international nature of a possible future arbitration
must be ascertained at the time of the conclusion of the contract.).
617) Italian Code of Civil Procedure, Art. 832 (If on the date of signing the arbitration clause or
submission to arbitration at least one of the parties has its domicile or actual place of
business abroad, or if a substantial part of the obligations arising out of the relationship
to which the dispute refers must be performed abroad, the provisions of Chapter I to V of
this Title shall apply to arbitration in so far as they are not derogated from by this
Chapter.); Tampieri, International Arbitration and Impartiality of Arbitrators The Italian
Perspective, 18 J. Intl Arb. 549 (2001). See alsoBelgian Judicial Code, Art. 1718 (By an
explicit declaration in the arbitration agreement or by a later agreement, the parties
may exclude any application for the setting aside of an arbitral award, where none of
them is a natural person of Belgian nationality or a natural person having his domicile or
normal residence in Belgium or a legal person having its registered office, its main place
of business or a branch office in Belgium.). For revised Italian legislation, seeCutolo &
Esposito, The Reform of the Italian Arbitration Law, 24 J. Intl Arb. 49, 51 (2007) (new statute
abrogates specific provisions concerning international arbitration and extends provisions
for domestic arbitrations to international arbitrations). See alsoJudgment of 13 October
2000, XXVI Y.B. Comm. Arb. 1141, 1143-44 (Italian Corte di Cassazione) (2001) (arbitration is
international if a substantial (but not necessarily predominant) part of obligations
are performed abroad) and if parties of different residences were involved; the foreign
habitual place of residence or the foreign seat of the parties to the contract, at the time
of concluding the contract or the arbitral clause, is the first criterion for ascertaining the
international nature of the arbitration).
618) Romanian Code of Civil Procedure, Art. 369.
619) See2.03[C][1][b].
620) Algerian Code of Civil and Administrative Procedure, Art. 458.
621) See also2.03[C][1][a][iii]; 2.03[C][2][b][vi].
622) Where domestic parties agree to arbitrate a domestic dispute abroad for reasons of
expertise, culture, language, or the like, their agreements should also generally be
considered international and subject to international arbitration legislation.
See2.03[C][2][b][v].
623) See2.04 p. 348. See alsoSingapore International Arbitration Act, 2012, 15; Insigma Tech.
Co. v. Alstom Tech. Ltd, [2009] SGCA 24, 42 (Singapore Ct. App.) ([T]he parties to an
arbitration in Singapore are free to adopt the arbitration rules of their choice to govern
their arbitration. [T]heir choice of arbitration rules will be respected by Singapore law
and be given the fullest effect possible.).
624) See2.04[B]. It is inconsistent with the approach in Switzerland. See2.03[C][2][e].
625) See2.04[B], p. 348
626) New York Convention, Art. II(1). The Geneva Protocol applied to differences between
parties. Geneva Protocol, Art. I. See also A. van den Berg, The New York Arbitration
Convention of 1958 168 (1981) (there [must] be a dispute); 2.02[C][1][b][ii].
627) European Convention, Art. I(1)(a).
628) UNCITRAL Model Law, Art. 7(1). See also U.S. FAA, 9 U.S.C. 1 (controversies); Swiss Law on
Private International Law, Art. 177(1) (dispute); New Zealand Arbitration Act, Schedule 1,
Art. 8(1) (court not required to refer parties to arbitration if there is not in fact any
dispute between the parties with regard to the matters agreed to be referred); Russian
Arbitration Law, Art. 1(2) (disputes); Venezuelan Commercial Arbitration Law, Art. 5
(controversies). See also A. Samuel, Jurisdictional Problems in International Commercial
Arbitration 148 (1989); R. Merkin, Arbitration Law 8.38 to 8.42 (1991 & Update August
2013); 2.02[C][1][b][ii].
78
629) See Case Concerning Application of the International Convention on the Elimination of All
Forms of Racial Discrimination (Georgia v. Russian Fedn), Judgment on Preliminary
Objections of 1 April 2011, [2011] I.C.J. Rep. 70, 30 (I.C.J.) (The Court recalls its established
case law on that matter, beginning with the frequently quoted statement by the
Permanent Court of International Justice in the Mavrommatis Palestine Concessions case
in 1924: A dispute is a disagreement on a point of law or fact, a conflict of legal views or
of interests between two persons. Whether there is a dispute in a given case is a matter
for objective determination by the Court. It must be shown that the claim of one party is
positively opposed by the other. The Courts determination must turn on an examination
of the facts. The matter is one of substance, not of form. As the Court has recognized, the
existence of a dispute may be inferred from the failure of a State to respond to a claim in
circumstances where a response is called for. While the existence of a dispute and the
undertaking of negotiations are distinct as a matter of principle, the negotiations may
help demonstrate the existence of the dispute and delineate its subject-matter.);
Judgment of 30 June 1995, Case Concerning East Timor (Portugal v. Australia), 1995 I.C.J. Rep.
89, 100 (I.C.J.) (For the purpose of verifying the existence of a legal dispute in the present
case, it is not relevant whether the real dispute is between Portugal and Indonesia
rather than Portugal and Australia. Portugal has, rightly or wrongly, formulated
complaints of fact and law against Australia which the latter has denied. By virtue of this
denial, there is a legal dispute.); Interpretation of the Peace Treaties with Bulgaria,
Hungary and Romania, Advisory Opinion of 30 March 1950 (first phase), [1950] I.C.J. Rep. 65,
74 (I.C.J.) (situation in which the two sides held clearly opposite views concerning the
question of the performance or non-performance of certain treaty obligations);
Burlington Res. Inc. v. Repub. of Ecuador & PetroEcuador, Decision on Jurisdiction in ICSID
Case No. ARB/08/5 of 2 June 2010, 289, 320, 325 ((i) a disagreement between the parties
on their rights and obligations, an opposition of interests and views, and (ii) an expression
of this disagreement, so that both parties are aware of the disagreement) (emphasis
added).
630) Mavrommatis Palestine Concessions (Greece v. Great Britain), P.C.I.J. Series A, No. 2, 11
(P.C.I.J. 1924) (emphasis added).
631) Texaco Overseas Petroleum Co. v. Libyan Arab Rep., Preliminary Ad Hoc Award of 27
November 1975, 53 I.L.R. 389, 416 (1979).
632) Schreuer, What Is A Legal Dispute?, in I. Buffard & G. Hafner (eds.), International Law
Between Universalism and Fragmentation: Festschrift in Honour of Gerhard Hafner959, 978
(2008) (Arguments attempting to deny the existence of a dispute have hardly ever
succeeded. Therefore, an objection to jurisdiction based on the denial of a dispute
between the parties is not a promising strategy. Very little is required in the way of the
expression of opposing positions by the parties to establish a dispute. In particular, the
denial of the existence of a dispute by one party will be to no avail.).
633) See Quiborax SA v. Plurinatl State of Bolivia, Decision on Jurisdiction in ICSID Case No.
ARB/06/2 of 27 September 2012, 54 (At the jurisdictional stage, the Claimants must
establishthat they have a prima facie cause of action under the Treaty, that is that the
facts they allege are susceptible of constituting a breach of the Treaty if they are
ultimately proven.); Micula v. Romania, Decision on Jurisdiction and Admissibility in ICSID
Case No. ARB/05/20 of 24 September 2008, 66 (It is also common ground that the
jurisdictional stage is not the appropriate time to enter the merits of the case.. The
Tribunal concurs with Claimant that a tribunal need not go beyond determining whether
the facts alleged by a claimant, if established, are capable of constituting violations of
the provisions that are invoked.); Natl Grid plc v. Argentine Repub., Ad Hoc Decision on
Jurisdiction of 20 June 2006, 160 (The arguments advanced by the parties and the facts
alleged by them show that a dispute exists between them as to whether the protection
due to the investor under the Treaty has been violated and as to whether commitments
were made to the investor under the laws of the Argentine Republic that would give rise
to a claim under the Treaty.).
634) See Methanex N.Z. Ltd v. Kinugawa, [1998] 2 FC 583 (Canadian Fed. Ct.); Mitsui v. Egon
Oldendorff, [2003] BCSC 1478 (B.C. S.Ct.); Tai Hing Cotton Mill Ltd v. Glencore Gain
Rotterdam BV, [1996] 1 HKC 363 (H.K. Ct. App.); Fai Tak Engg Co. Ltd v. Sui Chong Constr. &
Engg Co. Ltd, [2009] HKDC 141 (H.K. Dist. Ct.); Tai-Ao Aluminium (Taishan) Co. Ltd v. Maze
Aluminium Engg Co. Ltd, [2006] HKCFI 220 (H.K. Ct. First Inst.); Owners of Sincere House v.
Sincere Co. Ltd, [2005] HKCU 625 (H.K. Lands Tribunal); Tommy C.P. Sze. & Co. v. Li & Fung
(Trading) Ltd, [2002] HKCFI 682 (H.K. Ct. First Inst.); Getwick Engrs Ltd v. Pilecon Engg Ltd,
[2002] HKCFI 189 (H.K. Ct. First Inst.); Joong & Shipping Co. v. Choi Chong-sick, XX Y.B.
Comm. Arb. 284 (H.K. High Ct. 1994) (1995); Fletcher Constr. NZ & S. Pac. Ltd v. Kiwi Co-op.
Dairies Ltd, Case No. CP 7/98 (N.Z. High Ct. 1998) (where no good faith defense, parties not
referred to arbitration); Kenya Oil Co. v. Kenya Petroleum Refineries Ltd, Civil Case No. 782
(Nairobi High Ct. 2009) (refusing to appoint arbitrator, apparently on grounds that there
was no genuine dispute between parties).
635) Bank Am. Trust & Banking Corp. v. Trans-World Telecom Holdings Ltd, XXV Y.B. Comm. Arb.
683 (Cayman Islands Grand Ct. 1999) (2000).
636) English Arbitration Act, 1996, 9(4); R. Merkin, Arbitration Law 8.38 to 8.42 (1991 &
Update August 2013).
637) Halki Shipping Corp. v. Sopex Oils Ltd [1998] 1 Lloyds Rep. 49 (QB) (English High Ct.), affd,
[1998] 1 Lloyds Rep 465 (English Ct. App.).
79
638) Amec Civil Engg Ltd v. Secretary of State for Transp. [2005] EWCA Civ 291, 67 (English Ct.
App.) (It follows that in the arbitration context it is possible and sensible to give to the
word dispute a broad meaning in the sense that a dispute may readily be found or
inferred in the absence of an acceptance of liability, a fortiori because the arbitration
process itself is the best place to determine whether or not the claim is admitted or
not.) (emphasis added); Mayer Newman v. Al Ferro Commodities Corp. [1990] 2 Lloyds
Rep. 290 (English Ct. App.); Hayter v. Nelson Home Ins. Co. [1990] 2 Lloyds Rep. 265 (QB)
(English High Ct.) (rejecting suggestion that if courts are to decide whether or not a claim
is disputable, they are doing precisely what the parties have agreed should be done by
the private tribunal. An arbitrators very function is to decide whether or not there is a
good defence to the claimants claims.).
639) See, e.g., Tai Hing Cotton Mill Ltd v. Glencore Grain Rotterdam BV, [1995] HKCA 626, 44-
46 (H.K. Ct. App.) (party needs to make an unequivocal admission as to liability and
quantum in order to permit conclusion that no dispute exists) (citing Hayter v. Nelson
[1990] 2 Lloyds Rep. 265, 268 (QB) (English High Ct.) and Zhan Jian E & T Dev. Area Serv.
Head Co. v. An Hau Co. Ltd, [1994] HKCFI 168, 18 (H.K. Ct. First Inst.)); Durga Charan
Rautray v. State of Orissa, (2012) 12 SCC 513 (Indian S.Ct.).
640) See, e.g., Sumito v. Antig Inv. Pte Ltd, [2009] SGCA 41, 49 (Singapore Ct. App.) (Having
considered the development of the post-1996 position that a merely asserted dispute
suffices to warrant a stay of court proceedings without any inquiry into the genuineness or
merits of the defence, we unhesitatingly endorse the judges application of this approach
from Dalian and Halki.[I]t is sufficient for a defendant to simply assert that he disputes
or denies the claim in order to obtain a stay of proceedings in favour of arbitration.);
Rinehart v. Welkar, [2012] NSWCA 95, 130 (N.S.W. Ct. App.) (Although at the time [the
appellant] had not formally responded to the claim, it could be reasonably anticipated
she would deny the allegations and in that sense there was a dispute.).
641) See, e.g., Sumito v. Antig Inv. Pte Ltd, [2009] SGCA 41, 59 (Singapore Ct. App.) (The proper
analysis of a claim brought in spite of an arbitration agreement where there has been
clear and unequivocal admission by the defendant, therefore, is as an exception to the
scrupulous enforcement of arbitration agreements. This exception will only be made where
there has been a clear and unequivocal admission, and it can thus be said that there exists
no dispute mandatorily referable to arbitration.) (emphasis in original); Tai Hing Cotton
Mill Ltd v. Glencore Grain Rotterdam BV, [1995] HKCA 626 (H.K. Ct. App.); Fai Tak Engg Co.
Ltd v. Sui Chong Constr. & Engg Co. Ltd, [2009] HKDC 141 (H.K. Dist. Ct.); Incorporated
Owners of Sincere House v. Sincere Co. Ltd, [2005] HKCU 625 (H.K. Lands Tribunal); Getwick
Engrs Ltd v. Pilecon Engg Ltd, [2002] HKCFI 189 (H.K. Ct. First Inst.); Leung Kwok Tim t/a Tim
Yip Engg Co. v. Builders Fed. (H.K.) Ltd, [2001] HKCFI 823 (H.K. Ct. First Inst.); F & D Bldg
Servs. Engg Co. Ltd v. Chevalier (E & M Contracting), [2001] 3 HKCFI 824 (H.K. Ct. First Inst.);
P & O Nedlloyd Ltd v. Wah Hing Seafreight (China) Co. Ltd, [1999] HKCU 1412 (H.K. Ct. First
Inst.); Louis Dreyfus Trading Ltd v. Bonarich Intl (Group) Ltd, [1997] HKCFI 312 (H.K. Ct. First
Inst.).
642) New York Convention, Art. II(1); Inter-American Convention, Art. 1 (any differences that
may arise or have arisen between them with respect to a commercial transaction);
European Convention, Art. I(1)(a) (arbitration agreements concluded for the purpose of
settling disputes arising from international trade); UNCITRAL Model Law, Art. 7(1)
(whether contractual or not); U.S. FAA, 9 U.S.C. 202 (whether contractual or not); Irish
Arbitration Act, 2010, Art. 6 (expressly adopting UNCITRAL Model Law); Chilean
International Commercial Arbitration Law, Art. 7. See also Larsen v. Hawaiian Kingdom,
Award in PCA Case No. 99-001 of 5 February 2001, 119 I.L.R. 566, 585-86 (there appears no
reason why the UNCITRAL Rules cannot be adapted to apply to a non-contractual
dispute).
643) Kaverit Steel & Crane Ltd v. Kone Corp., [1992] ABCA 7 (Alberta Ct. App.); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration 151 (1989) (It is apparent
from [Article II(1)] that tort or other types of civil law claims fall within the ambit of the
Convention.).
644) See1.04[B][2]; 6.01.
645) Analytical Commentary on Draft Text of A Model Law on International Commercial
Arbitration, U.N. Doc. A/CN.9/264, Art. 7, 4 (1985) (reference to contractual and
noncontractual disputes is expansive and should be given a wide interpretation so as to
cover all non-contractual commercial cases occurring in practice (e.g. third party
interfering with contractual relations; infringement of trademark or other unfair
competition)).
646) Kaverit Steel & Crane Ltd v. Kone Corp., [1992] ABCA 7 (Alberta Ct. App.).
647) See6.04.
648) Further, as discussed below, there is a substantial argument that a Contracting State
could not, consistent with the New York Convention, declare all agreements to arbitrate
tort claims invalid or declare all tort claims nonarbitrable. Such actions would violate
prohibitions, derived from Article II and the Conventions structure (see4.05[C][5]), as
well as the objectives of Article II(1)s express reference to noncontractual disputes.
649) See6.03.
80
650) New York Convention, Art. II(1) (differences which have arisen or which may arise); Inter-
American Convention, Art. 1 (any differences that may arise or have arisen between
them); European Convention, Art. I(2)(a) (by implication); UNCITRAL Model Law, Art. 7(1)
(which have arisen or which may arise); Irish Arbitration Act, 2010, Art. 6 (expressly
adopting the UNCITRAL Model Law); Chilean International Commercial Arbitration Law,
Art. 7.
651) See1.01[B][4]-[5]; 1.04[B][2].
652) A. van den Berg, The New York Arbitration Convention of 1958 134 (1981) ([T]he Convention
treats both types of agreements [i.e., agreements to arbitrate existing and future
disputes] alike. This can be considered a provisional uniform law which supersedes
municipal law for those agreements falling under the Convention.). As discussed
elsewhere, there is a substantial argument that the Convention would not permit a
Contracting State to treat all agreements to arbitrate future disputes as invalid.
See4.04[A][4][c], pp. 557-58.
653) Similarly, the Geneva Protocol was applicable only to agreements between nationals of
Contracting States while the Geneva Convention was applicable only to awards made in
other Contracting States, thereby imposing a reciprocity requirement of sorts.
See1.01[C][1]-[2].
654) New York Convention, Art. I(3).
655) A list of the Conventions parties and their reservations is available at www.uncitral.org.
Countries with reciprocity reservations include Argentina, Belgium, China, Denmark,
France, India, Japan, Netherlands, New Zealand, the United Kingdom and the United
States. The increasingly universal character of the New York Convention reduces the
practical importance of reciprocity reservations.
656) New York Convention, Art. XIV.
657) See1.04[A][2]; 22.02[F][5].
658) The application of the reciprocity requirement to arbitral awards is discussed in detail
below. See22.02[F][1].
659) See, e.g., Natl Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d 326, 331 (5th Cir. 1987); Ledee v.
Ceramiche Ragno, 684 F.2d 184, 185-86 (1st Cir. 1982); Tolaram Fibers, Inc. v. Deutsche Engg
Der Voest Alpine Industrieanlagenbau GmbH, 1991 U.S. Dist. LEXIS 3565 (M.D.N.C.). See
also14.08[B][2][a].
660) Fuller Co. v. Compagnie des Bauxites de Guine, 421 F.Supp. 938, 941 n.3 (W.D. Pa. 1976);
Gatoil Intl Inc. v. Natl Iranian Oil Co., XVII Y.B. Comm. Arb. 587 (QB) (English High Ct. 1988)
(1992).
661) E.A.S.T. Inc. of Stamford, Conn. v. M/V Alaia, 876 F.2d 1168 (5th Cir. 1989).
662) See14.08[B][2][a]; 22.02[F].
663) New York Convention, Arts. II(1), (2). See5.02[A].
664) UNCITRAL Model Law, 1985, Art. 7(1); UNCITRAL Model Law, 2006 Revisions, Arts. 7(2), (3);
U.S. FAA, 9 U.S.C. 2; English Arbitration Act, 1996, 5; Swiss Law on Private International
Law, Art. 178(1); 5.02[A][5].
665) See5.02, p. 657
666) See5.02 (especially 5.02[A][2]); Dedon GmbH v. Janus et Cie, 2011 WL 666174 (S.D.N.Y.)
(even if otherwise valid and binding arbitration agreement is unenforceable under
Convention for failure to satisfy writing requirement, it is not necessarily void for all
purposes and may potentially be enforced under another legal regime), affd, 411 F.Appx.
361 (2d Cir. 2011).
667) See5.02.
668) See11.01[B]; 11.03.
669) See11.03[D][1]; 11.03[F]; 22.04.
670) See11.01[B]; 11.03[C][2]; 11.03[E].
671) See11.03[D][1]; 11.03[D][2][j]; 22.01[D].
672) See2.01[B][2].
673) See Geneva Protocol, Art. I; 1.01[C][1]; European Convention, Art. I(1)(a); 2.03[C][1][b];
Inter-American Convention, Art. 1; 2.03[C][1][c].
674) See2.03[C][1][a].
675) See2.03[C][1][a][iii].
676) See2.03[C][1][a][iii]; 2.03[C][2][g].
677) See2.03[C][2][a]; 11.03[C][2].
678) UNCITRAL Model Law, Arts. 1(2), 8.
679) See2.01[A][2]; 8.02[A][2]; 8.03[A][2]; English Arbitration Act, 1996, 2(1), 2(2), 9-11;
French Code of Civil Procedure, Art. 1448; Swiss Law on Private International Law, Art.
176(1); German ZPO, 1025, 1032; Hong Kong Arbitration Ordinance, 2013, 5, 20.
680) See2.03[C][2][a]; 11.03[C][2][a]; UNCITRAL Model Law, Art. 1(3). See alsoUNCITRAL, 2012
Digest of Case Law on the Model Law on International Commercial Arbitration 8 (2012) (In
most legal systems, the place of arbitration is the exclusive criterion for determining the
applicability of national law.).
681) UNCITRAL Model Law, Art. 8(1); 2.01[A][2]; 5.01[C][1]; 7.03[A][2]; 8.02[C].
682) UNCITRAL Model Law, Art. 1(3); 2.03[C][2][a]; 8.02[C]; 8.03[B][2].
683) See8.03[A][2].
684) SeeUNCITRAL Model Law, Arts. 1(2), 7, 16, 17.
685) The fact that the Model Laws written form, competence-competence, or other provisions
do not apply directly does not prevent national courts from applying or looking to these
rules by analogy.
686) See2.03[C][2][b]; 5.01[C][2]; 8.02[C].
81
687) See7.02[B][2].
688) See9.02[D][1][a].
689) See8.02[C].
690) See4.04[A][2][j][i], [iii] & [v].
691) French Code of Civil Procedure, Art. 1504. See4.04[A][4][a]; 4.04[B][3][e]; 7.03[B]. The
domestic provisions of the French Code of Civil Procedure apply only to domestic
arbitrations, but some of these provisions apply by reference to international
arbitrations, unless the parties agree otherwise. SeeFrench Code of Civil Procedure, Art.
1506 (Unless the parties have agreed otherwise, and subject to the provisions of the
present Title, the following Articles shall apply to international arbitration). See also
Carducci, The Arbitration Reform in France: Domestic and International Arbitration Law, 28
Arb. Intl 148 (2012); Castellane, The New French Law on International Arbitration, 28 J. Intl
Arb. 372 (2011); Schwartz, The New French Arbitration Decree: The Arbitral Procedure, 2011
Paris J. Intl Arb. 349. Compare old Article 1495 of the French New Code of Civil Procedure
(Where the international arbitration is governed by French law, the provisions of Titles I,
II and III of the present Book shall apply only in the absence of a specific agreement, and
subject to Articles 1493 and 1494.). SeeE. Gaillard & J. Savage (eds.), Fouchard Gaillard
Goldman on International Commercial Arbitration 139 (1999); Schwartz, The New French
Arbitration Decree: The Arbitral Procedure, 2011 Paris J. Intl Arb. 349.
692) See4.04[A][4][a]; 7.03[B]. See alsoE. Gaillard & J. Savage (eds.), Fouchard Gaillard
Goldman on International Commercial Arbitration 140 (1999) (The substantive rules [of
Title V of the French Code of Civil Procedure] apply, as far as the French legal order is
concerned, to all international arbitration without requiring a particular connection
between the arbitration and France.).
693) Swiss Law on Private International Law, Art. 176(1); 2.03.
694) Swiss Law on Private International Law, Arts. 178(1), (2); Ehrat, in S. Berti et al. (eds.),
International Arbitration in Switzerland Art. 176, 16 (2000).
ed. 2010); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitage interne et
international en Suisse Art. 7, 3 (1989); G. Walter, W. Bosch & J. Brnnimann, Internationale
Schiedsgerichtsbarkeit in der Schweiz 77 (1991); Wenger, in S. Berti et al. (eds.), International
Arbitration in Switzerland Art. 178, 5 (2000).
82
KluwerArbitration
83
KluwerArbitration
Chapter 3: International Arbitration Agreements and
Author Separability Presumption
An international arbitration agreement is almost invariably treated as presumptively
separable or autonomous from the commercial or other contract within which it is
Publication P 349 found. This result is generally referred to as an application of the separability doctrine, or,
International Commercial more accurately, the separability presumption. This Chapter discusses the development,
Arbitration (Second Edition) current status, analytical bases and applications of the separability presumption.
3.01 INTRODUCTION
Bibliographic reference The separability presumption is one of the conceptual and practical cornerstones of
'Chapter 3: International international arbitration. The presumption is variously articulated. In the words of one leading
Arbitration Agreements and common law authority:
Separability Presumption', in The[] characteristics of an arbitration agreementare in one sense independent of the
Gary B. Born , International underlying or substantive contract [and] have often led to the characterization of an
Commercial Arbitration arbitration agreement as a separate contract. [An arbitration agreement] is ancillary to the
(Second Edition), 2nd edition underlying contract for its only function is to provide machinery to resolve disputes as to the
( Kluwer Law International; primary and secondary obligations arising under that contract. (2)
Kluwer Law International 2014)
pp. 349 - 471 More succinctly, courts must treat the arbitration clause as severable from the contract in
which it appears. (3) In the same vein, a frequently-cited arbitral award states the
presumption as follows: the arbitral clause is autonomous and juridically independent from
the main contract in which it is contained. (4)
From the civil law perspective, a classic French judicial authority summarizes the separability
(or autonomy) doctrine as follows:
In matters of international arbitration, the arbitration agreement, concluded separately or
included in the legal act to which it is related, always has, except in exceptional
circumstances, a complete juridical autonomy excluding it from being affected by an eventual
invalidity of that act. (5)
Similarly, a leading Swiss judicial decision holds that Swiss law recognizes the principle of
autonomy of the arbitration agreement, a principle adopted in case law for decades (and
universally accepted in Western Europe and in the United States under the concepts of
severability or separability). (6)
P 350
Whatever its precise formulation, the separability presumption is of central significance
in international commercial arbitration. Indeed, as discussed below, the presumption is one of
the foundations of the contemporary legal regime applicable to international arbitration
agreements.
The separability presumption has substantial practical, as well as analytical, importance, and
has a number of closely-related consequences relating to issues of choice of law, contractual
validity and competence-competence. Specifically, the consequences include: (a) the possible
application of a different national law, or a different set of substantive legal rules, to the
arbitration agreement than to the underlying contract; (7) (b) the possible validity of an
arbitration agreement, notwithstanding the non-existence, invalidity, illegality, or termination
of the parties underlying contract; (8) (c) the possible validity of the underlying contract,
notwithstanding the invalidity, illegality, or termination of an associated arbitration clause; (9)
and (d) in the (mistaken) view of some authorities, the analytical foundation for the
competence-competence doctrine, whereby the jurisdiction of the arbitral tribunal to decide
on its own jurisdiction is recognized. (10) The first two of the effects of the separability doctrine
the possible applicability of different legal rules and the possible validity of the arbitration
agreement, notwithstanding defects in the underlying contract play vital roles in ensuring the
efficacy of the international arbitral process. (11)
Despite the practical and analytical importance of the separability presumption, there are
significant uncertainties as to its basis, content and effects. There are even uncertainties
concerning the appropriate name of the separability doctrine.
Common law jurisdictions have historically referred to the separability or severability
doctrine, reflecting a focus on the contractual origins of the doctrine and the view that an
arbitration clause is an agreement that is severable from the parties related contract. (12) In
P 351 contrast, civil law jurisdictions have more often referred to the autonomy (13) or
independence (14) of the arbitration clause, arguably reflecting a greater focus on the
external legal regime applicable to international arbitration agreements and arguably
implying a greater degree of separation or legal distance between an arbitration agreement
and the parties underlying contract, than the separability doctrine connotes.
1
The complexities surrounding the separability presumption in some civil law jurisdictions are
exacerbated by occasional references to the autonomy of international arbitration
agreements from national legal systems and rules of national law (as well as from the parties
underlying contract). (15) In particular, as discussed below, a number of leading French judicial
authorities refer to the autonomy or independence of an international arbitration clause
from any national law, holding that the arbitration agreement has a validity and effectiveness
of its own (16) and emphasizing the total autonomy of arbitration agreements in the field of
international arbitration. (17) As one arbitral award, applying French international arbitration
law, explains: The arbitral clause is doubly autonomous: in relation to the arbitral agreement
and in relation to the law of the contract. (18)
There is little to be gained from debates over the appropriate label autonomy or
separability to be used in discussing international arbitration agreements. That is
particularly true because both sets of labels can create misimpressions and suffer from
imprecisions.
Nonetheless, the more accurate nomenclature is separability, rather than autonomy or
independence. (19) That is because, as discussed in greater detail below, it is inaccurate to
describe the arbitration clause as either wholly or necessarily autonomous or independent
from the parties underlying contract. In reality, the arbitration clause is closely connected to
the parties main contract and has an interrelated, supportive function for that contract. While
the arbitration agreement should presumptively be separated from the underlying contract,
P 352
for various purposes, it is never entirely or necessarily autonomous or independent
from the underlying agreement. (20)
Moreover, the term separability more accurately directs attention to the central role of the
parties intentions, as a contractual matter, in forming a separate arbitration agreement,
rather than to external legal rules imposing a particular conception of an autonomous
arbitration agreement upon the parties. (21) That is, it is the parties intentions (either
expressly stated or implied) that provide the foundation for the separability of their
arbitration agreement: indeed, as discussed elsewhere, the separability doctrine is more
accurately termed the separability presumption, reflecting the parties ability to negate or
alter the separable status of their arbitration clause by agreement. (22) Labels which suggest
that parties cannot agree upon an alternative type of arbitration agreement (e.g., an
arbitration agreement that is not separate from their underlying contract) or upon particular
consequences of the separability doctrine (e.g., that the same law governs the arbitration
agreement as the underlying contract) are inaccurate.
Finally, it is also helpful to avoid references to the autonomy of the arbitration agreement
given the usage of that phrase in some legal systems to denote the independence of the
arbitration clause from any national law. (23) The separability doctrine refers solely to the
separability of the arbitration agreement from the parties underlying contract, and does not
connote any autonomy on the part of the arbitration clause from national legal systems.
Accordingly, the following discussion will refer to the separability presumption, in preference
to the autonomy or independence of the arbitration clause. Although the latter phrases are
not wrong, and are frequently encountered in practice, they are more likely to give rise to
inaccurate connotations which oversimplify the relationship between the parties arbitration
clause and their underlying contract.
P 353
3.02 DEVELOPMENT OF SEPARABILITY PRESUMPTION
The origins of the separability doctrine have not been systematically explored. In some legal
systems, arbitration agreements were historically referred to as merely a part of the
underlying contract in which they were included. (24) In the words of one early U.S. court, the
arbitration clause here is an integral part of the charter party. (25) Or, as a mid-20th century
Indian decision put it, the logical outcomewould be that the arbitration clause perished
with the original contract. Whether the said clause was a substantive term or a collateral one,
it was nonetheless an integral part of the contract, which had no existence outside the
contract. (26)
These views were not consistent with other historical views and have long since and almost
universally been abandoned: arbitration clauses are now uniformly regarded in virtually all
jurisdictions as presumptively separate from and not an integral part of the parties
underlying contract. Indeed, as discussed below, it is now clear that the separability
presumption can be regarded as a general principle of international arbitration law, reflected
in international arbitration conventions, national arbitration legislation and judicial decisions,
institutional arbitration rules and arbitral awards. Although there are some differences in
application of the presumption, it is universally affirmed and almost never questioned.
The historical development of this separability presumption is discussed below. (27) The
application and legal consequences of the separability presumption, in various contexts, is
discussed in subsequent sections of this Chapter. (28)

The first modern international arbitration conventions impliedly treated arbitration
agreements as distinct, at least in some respects, from the parties underlying substantive
contract. While not expressly providing for separability, these provisions rested upon, and
2
helped confirm, the notion that arbitration agreements were presumptively separable from
the underlying contract.
P 354
[1] Geneva Protocol and Geneva Convention
The first modern international arbitration convention, the Geneva Protocol, provided in Article
IV(1) that the courts of Contracting States, on being seized of a dispute regarding a contract
including an arbitration agreementwhich is validand capable of being carried into effect,
shall refer the parties to arbitration. (29) Article IV(1) drew both a textual and a substantive
distinction between underlying contract[s] and arbitration agreement[s], which were
include[ed] within those contracts: specifically, Article IV(1) referred separately to a
contract and an arbitration agreement, and established substantive rules of validity and
enforceability with regard to the latter, but not the former.
The Geneva Convention was similar, providing in Article I(a) for recognition of foreign awards
made in pursuance of a submission to arbitration which is valid under the law applicable
thereto. (30) These provisions were entirely consistent with the historic treatment of
arbitration agreements under many national laws which, as discussed above, treated
arbitration agreements differently (and sometimes less favorably) than other contracts (31)
requiring instruments such as the Geneva Protocol and Geneva Convention to specifically
address and provide for the validity of such (arbitration) agreements. (32)
[2] New York Convention
In similar fashion, the New York Convention does not independently impose or require
application of a separability (or autonomy) doctrine. Like the Geneva Protocol, however, the
Convention does assume that international arbitration agreements are separable from the
parties underlying contract, impliedly treats them as such, and sets forth substantive rules
applicable only to such agreements. In so doing, the Convention reflects the general
understanding and expectations of parties to international arbitration agreements that such
agreements are separable, but does not mandate such an understanding.
Both Article II and Article V(1)(a) of the New York Convention impliedly treat arbitration
agreements as separable from underlying contracts. Article II(1) refers to an arbitration
agreement as an agreement in writing under which the parties undertake to submit to
arbitration all or any differences (33) arising between the parties. More clearly, Article II(2)
defines a written agreement to arbitrate 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. (34)
P 355
Both Article II(1) and II(2) rest on the assumption that an arbitral clause in a contract is
itself an agreement, dealing with the subject of arbitration. (35) Neither provision requires
that such agreements always be treated as separable, or even assumes that this will
necessarily be the case. On the other hand, both provisions are most naturally understood as
assuming that arbitration clauses will presumptively be separate agreements, capable of
being treated as such, notwithstanding their relation to another contract between the parties.
More importantly, these agreements also attract specific legal rules that do not apply to the
parties underlying contract (e.g., Article II(1)s writing requirement (36) and Article IIs
presumption of substantive validity, together with specified exceptions to that presumption).
(37)
Similarly, Article V(1)(a) of the Convention presumes the separability of arbitration
agreements. Among other things, it provides for an exception to the enforceability of arbitral
awards where the said [arbitration] agreement is not valid under the law to which the parties
have subjected it or, failing any indication thereon, under the law of the country where the
award was made. (38) This provision contemplates the application of a specific national law
to the arbitration agreement itself (as distinct from the underlying contract) and an inquiry
into the validity of that agreement (again, as distinguished from the underlying contract). (39)
Even more clearly than Article II, Article V(1)(a) rests on the premise that international
arbitration agreements are presumptively separate from the parties underlying contract, and
thereby susceptible of being subject to different national laws and legal rules than the
underlying contract.
Commentators have reached divergent conclusions regarding the question whether these
provisions of the New York Convention compel recognition of the separability doctrine. Some
authors take the view that the Convention is indifferent to the existence of the separability
doctrine. (40) Others conclude that the Convention adopts or requires application of the
separability doctrine by implication. (41)
P 356 Both of these positions are mistaken. In reality, the New York Convention neither adopts
nor is indifferent to the separability doctrine. Rather, Articles II and V(1)(a) of the Convention
rest on the premise that arbitration agreements can, and will ordinarily, be separate
agreements and that these agreements therefore will often be treated differently from, and
subject to different rules of validity and different choice-of-law rules than, the parties
underlying contracts. (42)
This presumption of separability is not dictated or required by the Convention, but was instead
accepted by the Conventions drafters based upon their understanding of commercial parties
intentions and expectations, developed and interpreted in light of the needs and objectives of
the international arbitral process. The Convention then takes these ordinary intentions and
3
expectations of separability into account in the rules it articulates with regard to international
arbitration agreements. Simply put, the Convention rests on the premise that parties may, and
ordinarily do, intend their arbitration agreements to be separable, and it therefore sets forth
specialized legal rules (of substantive and formal validity, and governing choice-of-law issues)
that operate on the basis of this premise and that apply specifically (and only) to arbitration
agreements.
Finally, as discussed below, the Convention also gives effect, and requires national courts to
give effect, to the parties agreement to treat their arbitration clause as separable. (43) This
obligation arises from Article II(1)s basic requirement that arbitration agreements including
constituent elements of such agreements, such as their separable character be recognized.
(44) In this manner, Article II does not mandate separability, but it does mandate recognition
of agreements, express or implied, to treat arbitration clauses as separable. In practice,
virtually all international arbitration agreements are impliedly intended by their parties to be
separable, with Article II thus effectively mandating recognition of the separability of the
arbitration agreement in almost all circumstances.
[3] European Convention
The European Convention rests even more explicitly than the New York Convention on the
premise that international arbitration agreements are presumptively separable. Like Article II
of the New York Convention, Article I(2)(a) of the European Convention presumes that
P 357 arbitration agreements are separate from the parties underlying contract. (45) Even more
explicitly, Article V of the European Convention acknowledges the separability of the
arbitration agreement, by authorizing arbitral tribunals to consider challenges to the
existence or the validity of the arbitration agreement or of the contract of which the
agreement forms part. (46) Likewise, Article VI of the Convention provides a specialized set of
choice-of-law rules applicable only to arbitration agreements (comparable to those in Article
V(1)(a) of the New York Convention). (47) Again like the New York Convention, the European
Convention does not require the separability doctrine, but instead both permits it and
presumes that this will be what the parties intended.
The ICSID Convention does not expressly refer to the separability doctrine. Nonetheless, ICSID
tribunals have consistently given effect to the separability doctrine in the context of ICSID
arbitrations. (48) Thus, one ICSID tribunal referred to the nowadays generally accepted
principle of the separability (autonomy) of the arbitration clause. (49) Similarly, like many
other institutional arbitration rules, (50) the ICSID Additional Facility Rules provide that an
agreement providing for arbitration under the Additional Facility shall be separable from the
other terms of the contract in which it may have been included. (51)

The origins of the separability presumption predate contemporary international arbitration
conventions. As discussed below, national legal systems have long treated arbitration
agreements as separate and distinct from other contractual obligations. (52) Indeed, as
discussed below, it is now universally accepted that an international arbitration agreement is
presumptively separable from the parties underlying contract; virtually no jurisdiction,
developed or otherwise, dissents from this view.
P 358
In many legal systems, national contract law includes principles of separability or
severability that have been developed with respect to other contractual terms. These
principles typically address the question whether an invalid provision of a contract may be
severed, thus permitting the remainder of the contract to be enforced, (53) or whether a
particular provision of a contract is governed by a different law from the remainder of the
contract. (54) For the most part, these general principles of severability have played very
limited roles in the development of the separability presumption in the context of
[1] Historic Origins
As discussed above, some jurisdictions historically refused to give full effect to agreements to
arbitrate future disputes. This treatment can be traced to very early times, including under
Roman law, and continued intermittently until the early 20th century (particularly in England,
France and the United States). (56) Indeed, as also discussed above, Roman law provided that
the arbitration clause was a separate contract (promisum), which could only be made
enforceable by combining it with another contract, being a penalty mechanism (to produce a
com-promisum). (57)
This historic ambivalence towards arbitration clauses involved categorizing these provisions
differently from other categories of contracts (like sales contracts) and providing that
arbitration agreements were, in contrast to other contracts, either not valid or not specifically
enforceable. Ironically, given the contemporary pro-arbitration function of the separability
presumption, this historic hostility towards arbitration agreements helped lay the foundations
for the future separability of such agreements since it was the separate, distinctive character
of such agreements on which restrictions on their enforceability and validity were grounded.
[2] Procedural Character of Arbitration Agreement
4
At least a part of the impetus, and theoretical foundation, for the separability doctrine can
also be traced to the 19th century notion that the arbitration agreement was properly
P 359 characterized as a procedural contract, (58) rather than a substantive one. One authority
reasoned that the arbitration agreement is treated as a procedural contract and not as an
element (condition) of a material-legal contract, (59) while another concluded that arbitration
agreements are not mere agreements between individuals, but procedural agreements which
are subject to public law. (60)
Although sometimes misleading, (61) this characterization captured the underlying nature of
the arbitration agreement, which is that of an ancillary agreement that provides a specific
dispute resolution mechanism which is related to, but distinct from, the parties substantive
commercial contract(s). (62) In the words of one English judicial decision:
[A]n agreement to arbitrateis ancillary to the underlying contract for its only function is to
provide machinery to resolve disputes as to the primary and secondary obligations arising
under that contract. The primary obligations under the agreement to arbitrate exist only for
the purpose of informing the parties by means of an award what are their rights and
obligations under the underlying contract. (63)
One consequence of this analysis was (and is) to detach the procedural arbitration
agreement from the substantive main contract: the differing natures and characterizations of
the two agreements made it easy, indeed almost inevitable, that they generally be regarded
as separable.
[3] Contemporary National Arbitration Legislation and Judicial Decisions
As discussed below, the separability presumption was articulated in its modern form in 19th
and early 20th century German and Swiss judicial decisions. (64) These decisions held in a
P 360 variety of contexts that particular arbitration clauses were not affected by legal defects in
the parties underlying contract (such as fraud, mistake, or termination). Using language
remarkably similar to contemporary judicial analyses, these decisions relied on concepts
comparable to the separability presumption to hold that arbitrators were authorized to
decide disputes regarding the validity and legality of the parties underlying contract. (65)
Today, the separability presumption is widely established in the arbitration statutes of all
developed jurisdictions. (66) Under this legislation, and accompanying judicial decisions,
international arbitration agreements are presumptively separable from the parties underlying
contract: as a consequence, among other things, the invalidity, illegality, or non-existence of
the underlying contract will not necessarily affect the validity of the associated arbitration
agreement. The separability presumption is also well-established in judicial decisions and
commentary in jurisdictions, both common law and civil law, where national arbitration
legislation provides no express basis for the doctrine. (67)
Although there are occasional suggestions that the separability presumption is not universally-
acknowledged, (68) these views are mistaken. In fact, as the discussion below makes clear,
there are few aspects of private international law where there is more uniform and consistent
affirmation of a basic principle and the application of that principle in concrete cases.
National legislatures and courts have recognized the separability presumption for a variety of
reasons, and in order to produce a number of distinct consequences, which are discussed in
greater detail below. (69) The basic justification, which recurs in diverse contexts, has been the
importance of the presumption to uphold the validity and enforceability of international
arbitration agreements, in order to efficiently resolve international disputes, (70) and, thereby,
P 361
to facilitate international trade. (71) For example, as a U.K. consultation paper on
proposed English arbitration legislation reasoned:
Whatever degree of legal fiction underlying the doctrine, it is not generally considered
possible for international arbitration to operate effectively in jurisdictions where the doctrine
is precluded.[I]nternational consensus on autonomy has now grown very broad. (72)
As discussed below, the separability presumption accomplishes these purposes by limiting the
categories of claims which are capable of impeaching the existence, validity, or legality of the
arbitration agreements, to claims directed specifically at the arbitration agreement itself, (73)
while also providing the foundation for pro-arbitration choice-of-law rules that inhibit the
use of idiosyncratic or discriminatory national laws to invalidate agreements to arbitrate. (74)
[a] Germany
German law has long embraced the separability presumption, both well prior to and after
Germanys adoption of the UNCITRAL Model Law in 1998. (75) Indeed, as early as the 1890s,
German courts articulated and repeatedly applied what amounted to a separability
presumption. (76) Thus, one early decision held, [t]he [arbitral] clause canhave an
independent existence [so] that it shall also apply to decisions whether or not the main
contract is invalid, (77) while another held [the arbitration clause] is not invalid because the
main contract somehow appears to be invalid. The arbitral tribunal is therefore competent to
decide on the validity of the main contract. (78)
The separability doctrine was first accepted by German courts at the beginning of the 20th
century, albeit subject to important qualifications. As a general rule, the Reichsgericht treated
P 362
the arbitration clause as dependent on, and sharing the legal fate of, the underlying
contract. (79) Nonetheless, the Reichsgericht (and some German lower courts) also held that
5
the arbitration agreement could be separable, in some cases, provided that this was what the
parties intended; in these cases, German courts held that an arbitral tribunal would be
competent to decide whether or not the underlying contract was valid. (80) This general
approach was apparently not applicable in cases involving claims of illegality, with German
courts consistently holding that arbitration agreements in gambling contracts (which were
contrary to public policy and unenforceable) suffered the same legal fate as the underlying
contract. (81)
More recently, German courts reversed their historic presumption that arbitration clauses were
not separable, instead holding that such agreements are presumptively separable, but again
subject to contrary agreement by the parties. With occasional exceptions, this analysis was
followed throughout the 20th century. Thus, in 1970, the German Bundesgerichtshof held that
the invalidity of a commercial contract (because of the absence of a required governmental
approval) did not necessarily entail the invalidity of the arbitration clause contained therein,
which instead could remain effective for purposes of resolving disputes concerning the
underlying contracts validity. (82)
Consistent with German courts historic focus on the parties intentions, the Bundesgerichtshof
held that the question whether or not the arbitration clause was separable depended on what
the parties agreed. (83) It rejected a presumption (preferred by the lower court) that
arbitration agreements were dependent on the contract in which they were contained,
instead reasoning that businessmen would generally intend their arbitration clauses to be
separable from their underlying contract:
There is every reason to presume that reasonable parties will wish to have the relationships
created by their contract and the claims arising therefrom, irrespective of whether their
contract is effective or not, decided by the same tribunal and not by two different tribunals.
The fact that the assessment of [the invalidity of an agreement and claims under a valid
P 363
agreement would have] to be entrusted to different tribunals according to ones approach
will scarcely occur to the contracting parties. Above all, however, the parties to an arbitration
agreement will as a rule wish to avoid the unpleasant consequences of separate jurisdiction.
(84)
Accordingly, the Bundesgerichtshof concluded that arbitration clauses generally are intended
by their parties to mean in cases of doubt that the arbitration tribunal shall also decide on
the question of the validity of the contract and on the claims arising in the event of nullity.
(85) The Courts decision was a classic and careful articulation of the separability presumption,
with particular attention to the parties objective expectations. This view was (and is) shared
by virtually all contemporary German courts and commentators. (86)
Germanys enactment of the UNCITRAL Model Law in 1998 adopted the Model Laws formulation
of the separability presumption. (87) There is no indication in that legislation, or subsequent
commentary and judicial decisions, that the statute was intended to alter historic German
judicial analysis of the separability presumption. (88) On the contrary, the Bundesgerichtshof
has held that 1040(1) of the ZPO, adopting the Model Law, codifies a basic principle of
international arbitration.The arbitration agreement is autonomous from the underlying
contract. (89)
P 364 Under the German version of the Model Law, German courts continue routinely to apply
the separability presumption, holding that challenges to the parties underlying contract do
not necessarily impeach the separable arbitration agreement and are for the arbitral tribunal
to decide. (90) Nonetheless, German commentary has suggested that some defects in the
underlying contract may also simultaneously affect the existence or validity of the arbitration
agreement. (91) Thus, the Bundesgerichtshof has held that where consent to the underlying
contract is vitiated by duress or fraud, the arbitration clause may be invalidated as well, but
only where these defects affected consent to the arbitration agreement specifically. (92)
[b] Switzerland
Another one of the first modern jurisdictions to expressly recognize the separability
presumption in contemporary jurisprudence was Switzerland. As early as the turn of the 20th
century, Swiss courts held that the invalidity of the underlying contract did not affect the
arbitration agreement. (93) Thereafter, a 1933 decision of the Swiss Federal Tribunal held that:
the invalidity of the main contract does not render immediately the arbitration clause
contained therein invalid; the clause according to which disputes arising under the main
contract shall be submitted to arbitration encompasses, in cases of doubt, also disputes
relating to the validity and the objection of simulation. (94)
P 365 In its reasoning, the Federal Tribunal relied on the procedural nature of the agreement
to arbitrate, explaining:
According to settled case law of the Swiss Federal Tribunal the arbitration clause is not an
agreement of substantive law but of procedural nature. Even where the arbitration clause is
contained in the same document as the substantive law contract to which it relates and
therefore from the outside appears as a part of the main agreement, it still does not simply
constitute a single provision of the main agreement but an independent agreement of a special
nature. Accordingly, the invalidity of the main contract cannot without further ado cause the
invalidity of the arbitration agreement. This would only be the case if the grounds for invalidity
at the same time affect the main contract and the arbitration agreement (e.g., where the party
6
which signed the contract document was incapable or unlawfully forced to do so). (95)
This rationale was in part a reflection of the historic categorization of arbitration agreements
as procedural, rather than substantive. (96) At the same time, the Swiss Federal Tribunals
analysis went further, treating the arbitration clause as an independent agreement of a
special nature (which need not inevitably follow from characterizing the clause as
procedural). Equally important, the Swiss Federal Tribunal also concluded that invalidity of
the underlying contract did not inevitably result in the invalidity of the arbitration clause.
More recent Swiss authority is to the same effect. For example, the Geneva Court of Appeal has
reasoned broadly that [t]he principle of autonomy of the arbitration clause in relation to its
validity is generally accepted in international arbitration. In fact, such a clause can validly be
concluded, while the contract in which it is inserted lacks validity or the reverse. (97) This
position is now codified in Article 178 of the Swiss Law on Private International Law, (98) and
universally accepted in Swiss commentary. (99) As with earlier Swiss judicial decisions, Article
178 states a rule of substantive validity of the arbitration agreement, applicable in both
national courts and arbitral tribunals.
Swiss courts routinely apply the separability presumption, holding that challenges to the
P 366 underlying contract do not necessarily affect the validity of the separable arbitration
agreement. (100) At the same time, Swiss authority also recognizes that some defects in the
underlying contract may also affect the associated arbitration agreement. In particular, the
Swiss Federal Tribunal has held that incapacity to conclude the underlying contract or duress
will also invalidate the arbitration clause. (101)
[c] U.S. Federal Arbitration Act
U.S. arbitration legislation provided early, relatively express statutory recognition of the
separability doctrine. Section 2 of the FAA, enacted in 1925, refers to a written provision in a
contract evidencing a transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract. (102) Sections 3 and 4 of the FAA then provide for the
enforcement of an agreement in writing for such arbitration (103) and a written agreement
for arbitration. (104) Like the Geneva Protocol and the New York Convention, (105) these
provisions fairly clearly presuppose that the arbitration agreement can be a separate and
distinct agreement from the parties underlying contract or transaction. (106)
P 367 As discussed below, U.S. courts have consistently embraced the separability doctrine in
both international and domestic cases. (107) An early judicial recognition of the separability
doctrine was a land-mark Second Circuit decision in Robert Lawrence Co. v. Devonshire Fabrics,
Inc., where the court held that the mutual promises to arbitrate [generally] form the quid pro
quo of one another and constitute a separable and enforceable part of the agreement. (108)
The Court of Appeals went on, in a closely-reasoned opinion, to hold that an arbitral tribunal
(rather than a national court) therefore presumptively had jurisdiction to decide claims that a
contract (rather than an arbitration clause itself) had been fraudulently induced. (109) In so
doing, the Court expressly invoked the presumption that an arbitration clause is separable
from the parties underlying agreement. (110)
The conclusion in Robert Lawrence Co. was followed in subsequent U.S. authorities, including
the U.S. Supreme Courts 1967 holding in Prima Paint Corp. v. Conklin Mfg Co. (111) There, the
P 368 Court declared that, except where the parties otherwise intend, arbitration clauses are
separable from the contracts in which they are embedded. (112) Although the Court left open
the possibility that the parties might otherwise agree, (113) it concluded that an arbitration
agreement was presumptively separable from the parties underlying contract. In reaching this
conclusion, the Court adopted reasoning later used by the German Bundesgerichtshof,
recognizing the parties presumptive desire to insulate their arbitration agreement from
challenges directed at their underlying contract, and emphasized the FAAs legislative purpose
that the arbitration procedure, when selected by the parties to a contract, be speedy and not
subject to delay and obstruction in the courts. (114)
Relying on the presumptive separability of the arbitration clause, the Prima Paint Court also
held that if the claim is fraud in the inducement of the arbitration clause itself an issue
which goes to the making of the agreement to arbitrate the federal court may proceed to
adjudicate it. (115) As in Robert Lawrence Co., the Supreme Court concluded that a challenge to
the parties underlying contract (again, based on fraudulent inducement) could not ordinarily
be considered by a court prior to referring the issue to arbitration. (116) Rather, the Court said
that the FAA does not permit the federal court to consider claims of fraud in the inducement
of the contract generally, and that the court could consider only issues relating to the making
and performance of the agreement to arbitrate. (117) And, where a dispute involved a
challenge that was directed generally to both the underlying contract and the arbitration
clause, the Court held that referring these issues to arbitration was required by the plain
meaning of the statute and the parties presumed intention that their agreed dispute
resolution mechanism not be subject to delay and obstruction in the courts. (118)
The U.S. Supreme Court reaffirmed the separability presumption, and its implications for the
allocation of jurisdictional competence between courts and arbitral tribunals under the FAA, in
Buckeye Check Cashing Inc. v. Cardegna. (119) There, the Court reversed a Florida state court
decision, which had refused to enforce an arbitration clause in a loan agreement on the
grounds that the loan violated Floridas usury laws and was therefore void with this invalidity
supposedly extending to the arbitration clause contained within the loan agreement. (120)
7
Relying on Prima Paint, (121) the U.S. Supreme Court reversed, holding that the separability
presumption applied where the parties underlying contract was allegedly void, as well as
where it was voidable. (122)
P 369 The Buckeye Court held that the separability presumption was a substantive rule of
federal law, dictated by the FAA:
as a matter of substantive federal arbitration law, an arbitration provision is severable from
the remainder of the contract. (123)
The Court also reiterated, and made even more explicit, its holding in Prima Paint that a
challenge directed generally to the underlying contract would be referred to arbitration and
that only a challenge specifically directed at the arbitration agreement itself would be
subject to interlocutory judicial resolution. The Court reasoned that, because respondents
challenge the Agreement, but not specifically its arbitration provisions, those provisions are
enforceable apart from the remainder of the contract, and should therefore be considered by
an arbitrator, not a court. (124) Applying this standard, the Court held that the illegality
challenges at issue in Buckeye were not specifically directed at the arbitration agreement and
therefore did not affect the validity of that agreement; those claims were therefore for the
arbitrators substantive decision, not jurisdictional challenges for interlocutory judicial
resolution under 2, 3 and 4 of the FAA. (125)
More recently, the Supreme Court reaffirmed and extended the separability doctrine in Rent-
A-Center West, Inc. v. Jackson. (126) A sharply-divided Court held that a so-called delegation
provision contained within an arbitration agreement, providing for resolution of any disputes
about the validity or scope of the arbitration agreement by the arbitral tribunal, was itself
separable from the more general arbitration agreement. (127) The Court reversed a lower court
decision which had upheld an employees challenge of the underlying arbitration agreement
on unconscionability grounds. (128) Applying Prima Paint, the Supreme Court treated the
delegation clause as a separate mini-arbitration agreement divisible from the contract in
which it resides which just so happens also to be an arbitration agreement. (129) The Court
explained that:
[i]n this case, the underlying contract is itself an arbitration agreement. But that makes no
difference. Application of the severability rule does not depend on the substance of the
remainder of the contract. (130)
P 370 In so doing, the Court envisaged a new aspect of the separability presumption
something akin to Russian nesting dolls treating an agreement to arbitrate jurisdictional
objections as separable from the (also separable) arbitration agreement itself. (131)
Applying Prima Paint, Buckeye and other Supreme Court authority, a large body of lower U.S.
court decisions hold that arbitration clauses are presumptively separable from the underlying
contract. As one lower court put it, as a matter of substantive federal arbitration law, an
arbitration provision is severable from the remainder of the contract. (132) Among other
things, that conclusion permits the existence and validity of an arbitration agreement to be
upheld even where the underlying contract is invalid (133) or albeit less clearly nonexistent;
P 371 (134) it is also relied upon to refer challenges to the validity or legality of the parties
underlying contract to arbitration, on the basis that those challenges do not impeach the
validity of the separable arbitration agreement. (135)
These and other U.S. decisions make clear that there is only a presumption of separability,
which may be reversed by agreement. This analysis recognizes that parties would be free to
agree that their arbitration agreement was not separable from their underlying contract (e.g.,
by being governed by the same substantive law or by being valid only insofar as the underlying
agreement was valid). (136) As one lower court put it, arbitration clauses must be treated as
severable from the documents in which they appear unless there is clear intent to the contrary.
(137)
Similarly, the analysis in Rent-A-Center, Buckeye and other U.S. decisions recognizes that
arbitration agreements are not entirely independent from the parties underlying contract in
all circumstances. (138) Rather, the facts and circumstances that render the underlying
contract nonexistent or invalid may also in particular cases independently impeach the
separable arbitration agreement. Examples of this can include cases where a party denies
ever having agreed to anything (for example, because its signature on the putative contract
was forged) or denies the capacity of its representative to have concluded any agreement on
its behalf. These circumstances, where a challenge involving the underlying contract also
impeaches the separable arbitration clause, are discussed in detail below. (139)
Finally, it is clear that the separability presumption developed principally in domestic U.S.
settings applies fully in international contexts, including arbitration agreements subject to the
P 372 New York Convention. (140) As one lower court concluded: Prima Paints holding that
claims of unconscionability must be made against the arbitration agreement directly applies
to cases arising under the Convention. (141) This is confirmed by 208 of the FAA, which makes
the provisions of the domestic FAA applicable in cases under the New York Convention (unless
inconsistent with the Convention); as discussed in greater detail below, that includes 2, 3
and 4 of the FAA and their statutory recognition of the separability presumption. (142)
This conclusion is clearly correct: if anything, the separability presumption has a more deeply-
rooted international, rather than domestic, history (traced to the Geneva Protocol and earlier
8
international authority). (143) In contemporary settings, the separability presumption is given
effect by the mandatory international obligations of Article II of the New York Convention (144)
and serves the significant purpose of safeguarding the agreement to arbitrate and the arbitral
process from parochial national laws, obstructive litigation tactics and delays. (145) For all
these reasons, it is even more important to give effect to the separability presumption in the
context of international than in domestic settings.
[d] France
French courts have also repeatedly relied upon the separability presumption in recent
decades in considering the choice of law governing arbitration agreements and the substantive
validity of such agreements. (146) In 1963, the French Cour de cassation expressly adopted the
separability doctrine in Gosset v. Carapelli. (147) In that case, Carapelli sought to enforce an
Italian arbitral award made pursuant to an arbitration clause found in a sales contract. Gossett
argued that the award should not be enforced because the underlying sales contract was null
and void as a result of violations of French import regulations, which in turn supposedly
rendered the arbitration clause contained within the sales contract invalid. The Cour de
cassation rejected Gossetts argument, reasoning:
In matters of international arbitration, the arbitration agreement, concluded separately or
included in the legal act to which it is related, always has, except in exceptional
circumstances, a complete juridical autonomy excluding it from being affected by an eventual
invalidity of that act. (148)
P 373 This formulation of the separability doctrine was stated in what might be mistaken for
absolute terms (e.g., a complete juridical autonomy excluding it from being affected). In fact,
however, the Cour de cassation recognized that the separability presumption would not
invariably apply; it acknowledged that there would be exceptional circumstances where a
different result would be appropriate. Although the Court did not explain this, it no doubt
recognized that, in the event that parties so intended, an arbitration agreement would be
inseparable from, or otherwise limited to, the underlying contract and its legal
categorization. (149)
Subsequent French judicial decisions have uniformly reaffirmed the formulation of the
separability presumption set forth in Gossett. (150) As one classic decision expressed the
presumption:
The arbitration agreement is legally independent from the underlying contract in which it is
included either directly or by reference, and its existence and efficiency are interpreted
according to the common parties intention. (151)
In 1980, the French New Code of Civil Procedure at least impliedly codified the judicially-
developed separability presumption, providing in Article 1442 that [a]n arbitration clause is
an agreement by which the parties to a contract undertake to submit to arbitration the
disputes which may arise in relation to that contract. (152) French judicial decisions and
commentary repeatedly reaffirmed the separability doctrine and applied it broadly, including
in cases where the underlying contract was allegedly nonexistent or void. (153)
P 374 Article 1442 and its codification of the separability presumption were retained in the 2011
revision of French arbitration legislation, with Article 1447 of the revised French Code of Civil
Procedure providing that [t]he arbitration agreement is independent from the contract to
which it refers. It is not affected by its ineffectiveness. (154) Commentary and French judicial
decisions are unanimous in concluding that French law continues to recognize and give broad
application to the separability presumption. (155) According to one commentator,
ineffectiveness is a broad concept and the separability presumption will apply in all cases,
whether the contract is deemed inexistent, void, rescinded, obsolete, or terminated. (156)
[e] UNCITRAL Model Law
The UNCITRAL Model Law recognizes, at least for some purposes, the presumptive separability
of the parties arbitration agreement. Article 7(1) of the Model Law drew on the 1976 UNCITRAL
Rules and earlier national law authorities, and defined an arbitration agreement as:
an agreement by the parties to submit to arbitration all or certain disputes which have arisen
or which may arise between them in respect of a defined legal relationship, whether
contractual or not. An arbitration agreement may be in the form of an arbitration clause or in the
form of a separate agreement. (157)
As with Article II of the New York Convention, this provision acknowledges that arbitration
agreement[s] will often take the form of a clause in an underlying contract, which implies and
presupposes the existence of a separate agreement dealing with the subject of arbitration. In
turn, the Model Law prescribes specialized rules of formal validity, (158) substantive validity
(159) and competence-competence (160) for such arbitration agreements. (161)
P 375 In addition, Article 16 of the Model Law extends beyond the New York Convention, in
limited respects, in giving effect to the separability presumption. Derived from Article 21(2) of
the 1976 UNCITRAL Rules, Article 16(1) of the Model Law provides:
The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to
the existence or validity of the arbitration agreement. For that purpose, an arbitration clause
which forms part of a contract shall be treated as an agreement independent of the other terms
9
of the contract. A decision by the arbitral tribunal that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause. (162)
By the terms of the Model Law, Article 16 is not directly applicable to arbitrations seated
abroad; in contrast to Article 8, Article 16 is not included in Article 1(2)s list of provisions which
apply regardless of the arbitral seat. (163) Nonetheless, consistent with the character of the
separability presumption as a general principle of international arbitration law, courts in
Model Law jurisdictions have consistently applied Article 16 and the separability presumption
to foreign-seated arbitrations, as well as locally-seated arbitrations. (164)
Article 16 recognizes the separability presumption even more explicitly than the New York
Convention or the European Convention. It does so by stating that an arbitration clause shall
be treated as an agreement independent of the other terms of the contract, at least for
purposes of an arbitral tribunals jurisdiction to consider challenges to its own jurisdiction (or
competence-competence). (165) This provision goes beyond the New York Convention and the
European Convention by declaring an affirmative legal rule requiring that arbitration
P 376 agreements be treated as separable from the parties underlying contract for certain
competence-competence purposes, (166) rather than merely assuming that the parties have
intended such a result.
It is unclear whether the Model Law treats the separability presumption as a general rule of
substantive validity of the arbitration agreement or only a rule applicable for the particular
purposes of an allocation of competence over jurisdictional disputes. Article 16(1)s second
sentence provides that an arbitration clause shall be treated as independent, but qualifies
that rule with the statement that it is for th[e] purpose of the tribunals competence-
competence. (167) At the same time, the final sentence of Article 16(1) arguably states a general
principle of contractual []validity of the arbitration clause. (168)
The effect (and intent) of these provisions is unclear. The better view, however, is that the final
sentence of Article 16(1) states a generally-applicable rule of contractual validity, which is
applicable for all purposes. As discussed in greater detail elsewhere, it is only on the basis of
such a rule of contractual validity that Article 16(1) affects the allocation of jurisdictional
competence. (169)
Article 16(1) also reflects the essential nature of the separability presumption regarding the
parties intentions, whose application is dependent on the circumstances of particular cases.
Hence, the final sentence of Article 16(1) provides that the nullity of an underlying contract
shall not entail ipso jure the invalidity of the arbitration clause. (170) Under this rule, the
invalidity of the parties underlying contract does not necessarily or inevitably invalidate the
parties arbitration clause, but which may nonetheless do so in particular cases: Article 16(1)
provides that the parties arbitration clause may be valid, notwithstanding the invalidity of the
arbitration agreement, while leaving open the possibility that, in some circumstances, the
invalidity of the parties underlying contract will be accompanied by the invalidity of their
arbitration agreement. (171)
P 377 Put differently, although the invalidity of the underlying contract does not necessarily or
automatically invalidate the associated arbitration clause, there may be circumstances in
which this result does occur, by virtue of either the parties intentions or the nature of the
reasons for the invalidity of the underlying contract. Judicial decisions in Model Law
jurisdictions have been consistent with this analysis, generally holding arbitration agreements
separable and frequently giving them effect notwithstanding the invalidity or non-existence of
the underlying contract. (172) Nonetheless, judicial authority and commentary recognize that
there are occasional cases in which the defect affecting the underlying contract may also
simultaneously affect the existence or validity of the associated arbitration agreement. (173)
P 378 [f] England
English courts have also acknowledged the separability of the arbitration agreement, while
historically demonstrating particular reluctance to embrace sweeping formulations of any
general principle of autonomy or independence. That reluctance has been largely
abandoned, in recent legislative reform and judicial decisions, which adopt an expansive view
of the separability presumption. (174)
Throughout the early and mid-20th century, English courts recognized that international
arbitration agreements could survive the termination of the underlying contract with which
they were associated, (175) while expressing doubts as to the treatment of arbitration clauses
contained within illegal (176) and void or voidable (177) contracts. One distinguished English
judge put these doubts as follows:
If the dispute is whether the contract which contains the clause has ever been entered into at
all, that issue cannot go to arbitration under the clause, for the party who denies that he has
ever entered into the contract is thereby denying that he has ever joined in the submission.
Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for
example, the making of such a contract is illegal), the arbitration clause cannot operate, for on
this view the clause itself also is void. (178)
Over time, however, English courts adopted the view that an arbitration agreement
constitutes a self-contained contract collateral or ancillary to the substantive agreement.
(179) In the words of a leading decision:
10
These characteristics of an arbitration agreement which are in one sense independent of the
P 379
underlying or substantive contract have often led to the characterization of an arbitration
agreement as a separate contract. For an agreement to arbitrate within an underlying
contract is in origin and function parasitic. It is ancillary to the underlying contract for its only
function is to provide machinery to resolve disputes as to the primary and secondary
obligations arising under that contract. The primary obligations under the agreement to
arbitrate exist only for the purpose of informing the parties by means of an award what are
their rights and obligations under the underlying contract. (180)
Nonetheless, to a greater extent than many other national courts, English judicial decisions
historically expressed caution regarding the independence of an arbitration clause from the
parties underlying contract. In particular, English judicial decisions repeatedly emphasized
that separability is the product of contractual interpretation, based on the parties intentions,
(181) and that there are instances in which an arbitration clause will not survive the non-
existence, illegality, or invalidity of the parties underlying agreement. (182)
In a land-mark 1993 case, in Harbour Assurance Co. v. Kansa General International Insurance Co.,
the English Court of Appeal held that the illegality of a reinsurance contract did not necessarily
affect the legality or validity of an arbitration clause contained in that contract. (183) In
reaching this conclusion, the court adopted reasoning strikingly similar to that of the U.S.
Supreme Court in Prima Paint and the German Bundesgerichtshof in its classic 1970 decision on
the separability of arbitration agreements:
First, there is the imperative of giving effect to the wishes of the parties unless there are
compelling reasons of principle why it is not possible to do so.Secondly, if the arbitration
clause is not held to survive the invalidity of the contract, a party is afforded the opportunity
to evade his obligation to arbitrate by the simple expedient of alleging that the contract is
void. In such cases courts of law then inevitably become involved in deciding the substance of
a dispute. Moreover, in international transactions where the neutrality of the arbitral process
is highly prized, the collapse of this consensual method of dispute resolution compels a party
to resort to national courts where in the real world the badge of neutrality is sometimes
P 380 perceived to be absent. For parties the perceived effectiveness of the neutral arbitral
process is often a vital condition in the process of negotiation of the contract. If that
perception is absent, it will often present a formidable hurdle to the conclusion of the
transaction. A full recognition of the separability principle tends to facilitate international
trade. (184)
The English Arbitration Act, 1996, left this well-considered analysis intact, while also providing
a statutory resolution of sorts to the historic debate in England concerning the scope of the
separability doctrine. The Act provides in 7:
Unless otherwise agreed by the parties, an arbitration agreement which forms or was
intended to form part of another agreement (whether or not in writing) shall not be regarded as
invalid, nonexistent or ineffective because that other agreement is invalid, or did not come
into existence or has become ineffective, and it shall for that purpose be treated as a distinct
agreement. (185)
Like Article 16 of the UNCITRAL Model Law, (186) 7 of the Arbitration Act, 1996, expressly
adopts the presumption that an arbitration clause is separable, at least for some purposes,
from the parties underlying contract. (187) Even more explicitly than the Model Law, 7 makes
clear that the parties presumptively intend their arbitration agreement to be separable from
their underlying contract (by stating that the presumption applies unless otherwise agreed by
the parties). (188)
Unlike the UNCITRAL Model Law, however, the English Arbitration Act, 1996 clearly treats the
arbitration agreement as separable for purposes of the substantive validity of that agreement,
P 381 (189) while the Model Law (in Article 16(1)) arguably does so only for purposes of
competence-competence. (190) As discussed below, the English legislative approach is the
superior one, because the separability presumption is properly understood as a matter
relating to validity and not merely or only competence-competence.
In 2007, the English Court of Appeal and House of Lords embraced the most expansive view of
the separability doctrine thus far taken under English law. (191) As discussed in greater detail
below, the English courts held in Fiona Trust & Holding Corp. v. Privalov that claims of
fraudulent inducement (involving bribery of one partys agent) of the underlying contract did
not impeach the arbitration clause contained within that contract. (192) Among other things,
relying on comparable U.S. judicial authority, the Court of Appeal declared:
It is not enough to say that the bribery impeaches the whole contract unless there is some
special reason for saying that the bribery impeaches the arbitration clause in particular.It is
only if the arbitration agreement is itself directly impeached for some specific reason that the
tribunal will be prevented from deciding the disputes that relate to the main contract. (193)
The House of Lords reiterated this on appeal, holding that:
[t]he principle of separability enacted in section 7 [of the English Arbitration Act, 1996] means
that the invalidity or rescission of the main contract does not necessarily entail the validity or
rescission of the arbitration agreement. The arbitration agreement must be treated as a
distinct agreement and can be void or voidable only on the grounds which relate directly to
the arbitration clause. (194)
11
As Lord Hope concluded: Taken overall, the wording [of the arbitration agreement] indicates
that arbitration may be chosen as a one-stop method of adjudication for the determination of
all disputes. Disputes about validity, after all, are no less appropriate for determination by an
arbitrator than any other kind of dispute that may arise. (195)
The holding and rationale in Fiona Trust appear to have marked the conclusion of a lengthy
evolution, with the English courts now accepting a very expansive conception of the
separability presumption. (196) At the same time, as in other jurisdictions and as
P 382 discussed in greater detail below, the decision in Fiona Trust recognized that there will be
cases in which circumstances giving rise to defects in the underlying contract (i.e., capacity or
formation defects) may also impeach the associated arbitration agreement. (197) More
recently, English lower courts have applied the separability presumption to arbitration
agreements contained in contracts that are nonexistent, holding that, where negotiations had
(at least arguably) not yet resulted in a binding agreement, it was for the arbitrator to decide
whether the underlying contract had come into existence. (198)
[g] Japan
Japanese lower courts have long accepted the separability presumption. (199) In 1975, the
Japanese Supreme Court embraced the presumption, dismissing an action brought for a
declaration that a distribution agreement was not validly concluded and that the arbitration
agreement it contained was therefore invalid. (200) Basing its decision on the separability of
the arbitration clause, the Court reasoned:
An arbitration agreement was concluded in conjunction with the principal contract, but its
effect must be separated from the principal contract and judged independently. And, unless
P 383 there is a special agreement between the parties, a defect in the formation of the
principal contract does not affect the validity of the arbitration agreement. (201)
The Japanese Supreme Courts opinion affirmed that commercial parties presumptively intend
their arbitration agreement to be separable from their underlying contract (and, thus, not
necessarily affected by defects in the latter); although this presumption can be reversed, by a
special agreement between the parties, the court held that the separability of the arbitration
clause is the ordinary expectation of commercial parties. (202)
The revised Japanese Arbitration Law, which went into effect in 2004, statutorily adopted the
doctrine of separability. (203) Like the English Arbitration Act, 1996, and unlike the UNCITRAL
Model Law, the Japanese Law addressed the separability presumption in the context of the
substantive validity of the arbitration agreement, and not competence-competence. (204)
In a recent decision, the Tokyo High Court relied on Article 13 of the Japanese Arbitration Law
to uphold the validity of an arbitration agreement, despite the fact that the underlying
contract had been terminated by one of the parties. (205) As with other developed legal
systems, the Japanese formulation of the separability presumption is that the invalidity of the
underlying contract does not necessarily affect the validity of the arbitration agreement
leaving open the possibility that in particular transactions an arbitration clause will not be
separable, or that particular defects affecting the formation or validity of the underlying
contract will also affect the arbitration agreement.
[h] China
The separability doctrine in Chinese law has undergone a significant evolution over the past
two decades. Chinese courts were historically hesitant to embrace the doctrine, holding that
an arbitration clause in a contract that was found to be void ab initio was also void. (206) In the
P 384 words of one commentator, when a contract [was] terminated or legally voided, the
arbitral clause enclosed may cease to be valid with the dying of the main contract. (207)
The Chinese approach to the separability doctrine began to change in the early 1990s. (208) In
1990, the Guangdong Higher Peoples Court held that a CIETAC arbitration clause was valid
despite the fact that the underlying joint venture contract was void for lack of governmental
approval. (209) The 1995 Chinese Arbitration Law reflected this development, as well as
broader international developments, and expressly adopted the separability doctrine. Article
19 of the Law provides:
An arbitration agreement shall exist independently. The amendment, rescission, termination
or invalidity of a contract shall not affect the validity of the arbitration agreement. The
arbitration tribunal has the right to affirm the validity of a contract. (210)
Three years after the Arbitration Law was enacted, the Chinese Supreme Peoples Court
adopted an expansive view of the separability doctrine. It upheld the validity of an arbitration
clause although the underlying contract including the arbitration agreement was procured
by fraud. (211)
Subsequently, in 1999, the Beijing Higher Peoples Court issued an opinion, similar to that in
Prima Paint and Fiona Trust, holding that the validity of an arbitration agreement could be
challenged only by evidence showing that this agreement per se was invalid:
In the absence of evidence showing that the arbitration agreement per se was concluded
under fraudulence or duress, the arbitration agreement will be considered as an authentic
record of the parties intention to arbitrate the stated dispute. The underlying contract will
have no bearing on the validity of the arbitration agreement. (212)
P 385
12
P 385 This position was reiterated by the Supreme Peoples Court in a Judicial Interpretation in
2006, referring to Article 19 of the Arbitration Law, (213) which appears to fully embrace the
separability presumption in a manner not materially different from that in other leading
jurisdictions.
As in other jurisdictions, there are limits to the separability presumption under Chinese law.
Under the Chinese Arbitration Law, the separability presumption applies only to issues of
contractual amendment, rescission, termination or invalidity. (214) Article 19 of the
Arbitration Law leaves open the question of whether the presumption also applies when a
party challenges the existence of the contract. (215)
[i] India
The separability presumption has also undergone an evolution under Indian law. Historically,
Indian courts viewed the doctrine with skepticism. In the 1960s, the Indian Supreme Court
declared that:
[T]he logical outcomewould be that the arbitration clause perished with the original
contract. Whether the said clause was a substantive term or a collateral one, it was none the
less an integral part of the contract, which had no existence outside the contract. (216)
More recently, however, Indian legislation and judicial decisions have embraced the
separability presumption. The 1996 Indian Arbitration and Conciliation Act, adopted from the
UNCITRAL Model Law, adopted a statutory version of the separability presumption, based on
Article 16 of the UNCITRAL Model Law. (217) Relying in part on the Act, recent Indian judicial
decisions have also repeatedly recognized the separability presumption. In the words of one
lower court:
even assuming for the sake of argument that the agreement dated 20 May 1994 between the
P 386 parties was illegal and non-est, the same shall not on its own render the arbitration clause
invalid and it is still within the competence of the Arbitrator to decide the validity of the
same. (218)
Similarly, in a 2004 decision, the Indian Supreme Court relied upon the Arbitration and
Conciliation Act to hold that the arbitration clause contained in a partnership deed was
separable from other clauses and constitute[d] an agreement by itself. (219)
Indian lower courts have applied the separability presumption in a wide range of cases. Among
other things, the presumption has been extended to cases involving fraud in the inducement,
fraud in the factum and termination of the underlying contract by mutual consent. (220) The
Indian Supreme Court has suggested, albeit in dicta, a limitation of the presumption in cases
involving extensive fraud:
the jurisdiction of the arbitrator to determine his own jurisdiction is on the basis of that
arbitration clause which may be treated as an agreement independent of the other terms of
the contract and his decision that the contract is null and void shall not entail ipso jure the
validity of the arbitration clause. But, the question would be different where the entire
contract containing the arbitration agreement stands vitiated by reason of fraud of this
magnitude. (221)
The Supreme Court has not yet, however, considered the applicability of the separability
presumption in cases where the underlying contract never came into existence (for example,
for lack of consent or capacity).
[j] Other Jurisdictions
International arbitration legislation in a number of other jurisdictions, both common law and
civil law, has recognized some version of the separability presumption. That includes a number
of Model Law jurisdictions, such as Ireland, (222) Spain, (223) Singapore, (224) Hong Kong, (225)
P 387 Australia (226) and New Zealand. (227) It also includes other jurisdictions from all regions
of the world and reflecting a wide diversity of legal systems, such as Belgium, (228) the
Netherlands, (229) Sweden, (230) Italy, (231) Portugal, (232) Turkey, (233) Syria, (234) Indonesia,
(235) Scotland (236) and Algeria. (237)
P 388 Further, a number of Latin American states that traditionally rejected the validity of
agreements to arbitrate future disputes have recently embraced the separability presumption
in modern pro-arbitration legislation. That includes Bolivia, Brazil, Chile, Costa Rica,
Ecuador, El Salvador, Mexico, Paraguay, Peru and Venezuela. (238)
National courts, in jurisdictions from every region of the world, have also adopted the
separability presumption. In 1980, an Italian appellate court declared that the arbitral clause
is an autonomous legal contract with respect to the contract in which it is included, holding
that an arbitration agreement could be governed by a different substantive law than the
underlying contract. (239) Other Italian decisions rely on the same presumption, also holding
that the invalidity or nullity of the underlying contract does not affect the associated
Likewise, the Portuguese Supreme Court has held that: [i]n our legal regime, the autonomy
principle or the separability of the arbitration agreement from the contract which contains it
is valid, which means that, even if included in a single document, contains two contracts: an
insurance contractand an arbitration agreement. (241) Similarly, a recent Irish decision
applied the well established concept which emanates from the doctrine of separability which
13
applies to arbitration clauses in contracts. That doctrine recognizes that an arbitration
agreement has a separate existence from the matrix contract for which it provides the means
of resolving disputes. (242)
Judicial authorities in Sweden, (243) India, (244) Canada, (245) Australia, (246) Spain, (247)
Israel, (248) Argentina (249) and Uruguay (250) have also recognized the presumptive
P 389 separability of international arbitration agreements. Indeed, it is virtually impossible to
identify reported national court decisions rendered in the past several decades which reject or
question the separability presumption. (251) National judicial authority is essentially
unanimous in recognizing the basic principle that an agreement to arbitrate is presumptively
separable from the underlying commercial contract in which it is contained and that a defect
in the underlying contract will not ordinarily affect the validity of the associated arbitration
agreement.
[C] International Arbitral Awards

Like national judicial decisions, international arbitral awards made by a wide variety of
tribunals in different jurisdictions and legal systems have consistently recognized and relied
on the separability presumption. At least as explicitly as national judicial decisions, these
awards have cited the parties express and implied intentions in concluding that international
P 390 arbitration agreements are presumptively separable from the parties underlying
contract. Like national judicial decisions, (252) these awards have invoked the separability
presumption as a means of insulating the arbitration agreement from attacks on the
underlying contract, thereby giving maximum effect to the international arbitral process.
During the 1970s, successive arbitral awards in three Libyan nationalization cases affirmed the
separability of the parties arbitration agreements from their underlying contracts. In 1973, the
tribunal in BP Exploration Co. v. Libya held that the termination of the underlying oil
concession agreement did not affect the existence or validity of the arbitration clause
contained with that contract. (253) In 1975, the tribunal in Texaco v. Libya recognized [t]he
principleof the autonomy or the independence of the arbitration clause (254) in rejecting an
argument that the alleged voidness of the parties underlying contract affected the associated
arbitration clause. Similarly, in 1977, the tribunal in LIAMCO v. Libya, held that it is widely
accepted in international law and practice that an arbitration clause survives the unilateral
termination by the State of the contract in which it is inserted and continues in force even
after that termination. (255)
Subsequent international arbitral awards have consistently recognized the principle of
separability in even more explicit terms. In Elf Aquitaine v. National Iranian Oil Company, the
tribunal reasoned that:
The autonomy of an arbitration clause is a principle of international law that has been
consistently applied in decisions rendered in international arbitrations, in the writings of the
most qualified publicists on international arbitration, in arbitration regulations adopted by
international organizations and in treaties. Also, in many countries, the principle forms part of
national arbitration law. (256)
Relying on the separability presumption, the tribunal concluded that the parties arbitration
clause was unimpaired by claims that the parties underlying contract was null and void ab
initio. (257)
Numerous other awards have also adopted the separability doctrine in a wide variety of
contexts and under a wide variety of applicable laws. (258) As one ICC award formulated the
doctrine:
P 391 it is now generally accepted, in the law and practice of international commercial
arbitration, that an arbitration clause in a contract constitutes a separate and autonomous
agreement between the parties, which is distinct from their substantive agreement. (259)
Similarly, another frequently-cited award held:
the arbitral clause is autonomous and juridically independent from the main contract in
which it is containedand its existence and validity are to be ascertained, taking into account
the mandatory rules of national law and international public policy, in the light of the common
intention of the public policy, in the light of the common intention of the parties, without
necessarily referring to a state law. (260)
At the same time, leading awards have almost uniformly recognized that the separability of
the arbitration agreement is not absolute and that there are instances in which the non-
existence or invalidity of the parties underlying contract will affect the associated arbitration
clause. In the words of one award:
There may be instances where a defect going to the root of an agreement between the parties
affects both the main contract and the arbitration clause. (261)
Other well-considered awards, from a wide variety of provenances, are to the same effect. (262)
P 392 Importantly, like comparable national court decisions, these awards do not question or
contradict the separability presumption, but instead define its scope and limits. An
arbitration agreement is presumptively separable from the underlying contract, and the
invalidity, illegality, or non-existence of the underlying contract will not necessarily affect the
associated arbitration agreement; nonetheless, there will be circumstances in which particular
14
defects affecting the existence or validity of the underlying contract will also simultaneously
affect the separable arbitration agreement. (263)
[D] Institutional Arbitration Rules

Over the past several decades, the rules developed by leading arbitral institutions have
propounded the separability doctrine with increasing detail. This has been true of arbitral
institutions from most geographical regions of the world, again reflecting the consistency with
which the separability doctrine is acknowledged in contemporary international business and
legal communities.
One of the first international arbitral institutions to recognize the separability of the
arbitration agreement was the ICC in the 1955 version of the ICC Rules. Article 13(4) of the 1955
ICC Rules gave effect to the separability doctrine, providing that the nullity or non-existence of
the underlying contract does not affect the arbitrators jurisdiction. (264) The 1988 ICC Rules
retained and expanded this recognition of the separability doctrine, (265) as did Article 6(4) of
the 1998 ICC Rules, and, most recently, Article 6(9) of the 2012 ICC Rules. (266)
As with most national arbitration statutes and decisions, Article 6(9) recognizes the status of
P 393 the separability doctrine as a statement of the parties intent (which is made explicit in
the case of parties who adopt the ICC Rules), that can be reversed by agreement (hence, Article
6(9)s introductory phrase [u]nless otherwise agreed). Likewise, Article 6(9) recognizes that an
arbitration agreement may (but does not necessarily) continue to exist notwithstanding the
non-existence or nullity of the parties underlying contract. (267)
The 2010 UNCITRAL Rules also expressly acknowledged the separability of the arbitration
agreement (in terms closely paralleled by Article 16 of the UNCITRAL Model Law). (268) Thus,
Article 23(1) of the 2010 UNCITRAL Rules provides:
The arbitral tribunal shall have the power to rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. For that
purpose, an arbitration clause that forms part of a contract shall be treated as an agreement
independent of the other terms of the contract. A decision by the arbitral tribunal that the
contract is null shall not entail automatically the invalidity of the arbitration clause. (269)
The predecessor provision of current Article 23(1) was the former Article 21(2) of 1976 UNCITRAL
Rules, which referred in its final sentence to a decision by a tribunal that the contract is null
and void. (270) The 2010 amendments to the UNCITRAL Rules deleted the term void, instead
referring to a decision that the contract is null. That change is best understood as confirming
the broad scope of the separability presumptions applicability (to any contracts that are held
null, even if not both null and void); in practice, the change should have no practical
consequence, because the term null as used in Article 23(1) has a broad meaning, reaching
any instance where a court or tribunal holds a contract null, void, or nonexistent. (271)
Other institutional arbitration rules have embraced the separability doctrine, albeit with
varying degrees of specificity. (272) In almost all instances, provisions adopting the
separability presumption link it, with slightly differing formulae, to the arbitrators
competence-competence. (273)
P 394 The fact that international arbitral institutions from around the world consistently provide
for the presumptive separability of the arbitration clause from the parties underlying contract
is further evidence of the expectations which business and other users attach to an
international arbitration agreement and of the importance of the separability presumption in
accomplishing those objectives. These rules reflect both past experience and future
expectations, which are incorporated by institutions in their efforts to draft rules that address
the needs of commercial and other parties. (274) These rules also continue, even more
specifically, to reflect expectations of commercial parties after they have been promulgated,
when parties adopt them in their contracts.
[E] Future Directions: Separability Presumption and Its Basis

As detailed above, a recurrent and virtually universal theme in national arbitration legislation,
judicial decisions and arbitral awards, across common law, civil law and other legal systems
from every region of the world, has been that arbitration agreements may be and
presumptively are intended by their parties to be separable from the underlying contracts
with which they are associated. This conclusion has been reached in multiple contexts,
including with regard to formal validity, (275) substantive validity, (276) choice of law (277) and
allocations of jurisdictional competence. (278) The breadth and consistency of the
acknowledgements of the separability presumption demonstrate the presumptions universal
and enduring character, as well as its practical utility.
In contrast, it is very difficult to identify national court decisions, national legislation, or
arbitral awards that reject the separability presumption. There are virtually no instances of
national court decisions or arbitral awards simply rejecting the proposition that an arbitration
agreement may, as a matter of principle, be separable. (279) Equally, although the separability
P 395 presumption may be reversed by agreement, there are virtually no decisions holding that
this was intended and that a particular arbitration clause was not separable. (280)
At the same time, these sources do not dictate a mandatory rule of international arbitration
law. Rather, these sources instead reflect and confirm the intention of parties to international
15
arbitration agreements that such agreements be separable from their underlying contracts.
This is not a rule or principle that is dictated by external legal sources and that parties are
obliged to follow: parties are free to agree that their arbitration clause is not separable from
their underlying contract, for either some or all purposes. (281)
Nor is this a rule that necessarily derives its existence or terms from legislative or other legal
sources external to the parties intentions: the separability presumption is instead derived
from and defined by the expectations of reasonable commercial parties to international
business transactions. (282) These intentions are often implied, but as the consistent approach
P 396 across virtually all jurisdictions confirms, (283) these intentions are unmistakable.
Similarly, and for the same reasons, parties in practice virtually never intend that their
arbitration agreement not be separable from their underlying contract.
As discussed above, the separability doctrine rests partly on the fact that the exchange of
promises to resolve disputes by international arbitration (instead of some other means) is
different in nature from other exchanges of commercial promises in the parties underlying
contract. (284) The arbitration agreement has a peculiar, specialized function sometimes
referred to as procedural (285) or ancillary (286) as contrasted to the parties underlying
substantive or main contract. Thus, the arbitration clause is concerned with the separate
function of resolving disputes about the parties commercial relations, rather than
contractually regulating the substantive terms of the parties commercial bargain. (287)
This distinct character is reflected in the very term arbitration agreement, connoting a
separate, independent agreement of a particular kind, as well as in the substance of that
agreement and in the historically separate and distinct legal regimes applicable to arbitration
agreements. (288) These related factors provide a starting point for concluding that parties will
P 397 expect and intend that their arbitration clause be treated as separable from their
underlying contract. Not surprisingly, similar conceptions of separability are applied to other
contractual provisions with comparable functions (such as choice-of-law clauses, choice-of-
forum clauses, expert determination clauses and similar provisions (289) ).
More importantly, as also discussed above, commercial parties very often expect and intend
and certainly should be presumed, as objectively rational parties, to intend that an
arbitration agreement will ordinarily remain valid and binding, notwithstanding either claims
or determinations regarding the non-existence, invalidity, illegality, or termination of their
underlying contract. That is because parties will ordinarily and reasonably expect their
arbitration clause to remain effective and encompass disputes about the existence, validity,
legality and continuing effectiveness of their underlying contract. (290) As we have seen,
parties do so in order to maximize the validity and enforceability of their arbitration
agreements and in order that disputes over the validity and legality of their underlying
contract which frequently arise in international matters can be resolved in a binding
manner in the same forum and proceedings as other contractual disputes. (291)
Thus: (a) parties to arbitration agreements generally intend to require arbitration of any
dispute not otherwise settled, including disputes over the validity of the contract or treaty; (b)
without the separability doctrine, it would always be open to a party to an agreement
containing an arbitration clause to vitiate its arbitration obligation by the simple expedient of
declaring the agreement void; and (c) the very concept and phrase arbitration agreement
P 398 itself imports the existence of a separate or at any rate separable agreement, which is or
can be divorced from the body of the principal agreement if needs be. (292)
As discussed in greater detail above, any other result would, at a minimum, be an invitation to
costly and multiplicitous legal proceedings in different forums and, more seriously, would
dramatically undermine the efficacy and durability of arbitration agreements. (293) This would
be particularly pernicious in the international context, where it would lead to parallel
proceedings in different national courts, with the attendant risks of inconsistent or partisan
outcomes; of course, it is precisely to avoid such multiplicitous proceeding that parties agree
to international arbitration. (294) Moreover, permitting such proceedings in national courts
would also often result in lengthy delays and uncertainties in the arbitral process, which again
contradicts the basic objectives of that process. (295)
Absent exceptional circumstances, no reasonable commercial parties would intend or desire
the results that would follow from denying the separability of the arbitration clause.
Accordingly, it is not surprising that there has been such a consistent and uniform approach,
across very diverse legal systems, towards the separability of international arbitration
agreements. Simply put, this approach relies upon and confirms the expectations and
intentions of commercial parties with respect to their international arbitration agreements.
And, for the same reasons, by helping to address the needs of international businesses and to
provide a mechanism for resolving international disputes efficiently, [a] full recognition of the
separability principle tends to facilitate international trade. (296)
The foregoing understanding of the basis for the separability presumption ensures that the
presumption is truly international, applicable to all international arbitration agreements,
regardless of national legal systems and regardless of the seat of the arbitration. That is
because the separability of the arbitration clause is not derived from, or dictated, by national
law, but is instead derived from the intentions of rational commercial parties seeking good
faith resolution of possible future international disputes. (297) These intentions are directed by
the needs and objectives of the international commercial arbitration process, rather than by
the provisions of particular national legal systems. And, as discussed below, the parties
16
agreement with regard to the separability of their arbitration agreement is recognized and
given mandatory international effect by Article II of the New York Convention. (298)
P 399 It is in this respect that it can, correctly, be said that the separability presumption is a
general principle of international arbitration law. (299) It is not a rule that mandatorily binds
the parties or has its origins in national legislation. Rather, it is a recognition of the parties
presumptive intentions in concluding international arbitration agreements, given mandatory
effect by Article II of the Convention and parallel provisions of national arbitration legislation.
Finally, it is critical to appreciate that the separability presumption concerns the existence
and substantive validity of the agreement to arbitrate, and only indirectly concerns issues of
competence-competence or the allocation of jurisdictional competence between courts and
arbitral tribunals. As discussed above, some national arbitration legislation and institutional
arbitration rules refer to the separability presumption only in the context of recognizing an
arbitral tribunals competence-competence, and particularly the arbitrators jurisdiction to
consider challenges to the existence or validity of the underlying contract. (300) More recent
and well-considered national arbitration legislation adopts a different approach, expressly
treating the separability presumption as a rule concerning the substantive validity of the
The latter legislative approach is better-considered and analytically-coherent. As discussed
below, the separability presumption concerns the contractual formation and validity of the
arbitration agreement: (302) it concerns the parties intentions regarding their agreement to
arbitrate and not the legislative framework for a tribunals exercise of competence-
competence. There will, of course, be circumstances in which the separability doctrine has
consequences for an arbitral tribunals competence, because a defect only in the underlying
contract will necessarily not affect the arbitration agreement and the tribunals jurisdiction.
(303) That is a consequence, however, of the substantive status and validity of the arbitration
agreement which is the fundamental nature of the separability presumption and not a
separate rule of competence-competence. (304)
P 400
3.03 APPLICATIONS OF SEPARABILITY PRESUMPTION
The separability presumption has a number of applications with highly important
consequences for the international arbitral process. These consequences play a vital role in
ensuring the efficacy and efficiency of the arbitral process. Indeed, it has been said that
[a]cceptance of [the] autonomy of the international arbitration clause is a conceptual
cornerstone of international arbitration. (305)
As detailed below, the consequences of the separability presumption include: (a) the possible
validity of an arbitration agreement, notwithstanding the non-existence, invalidity, or illegality
of the parties underlying contract; (306) (b) the possible application of a different national law
to the arbitration agreement than to the underlying contract; (307) (c) the possible application
of different legal rules within the same legal system to the arbitration agreement than to the
underlying contract; (308) (d) the possible validity of the underlying contract, notwithstanding
the invalidity, illegality, or termination of an associated arbitration clause; (309) and (e) in the
(mistaken) view of some authorities, the analytical foundation for the competence-
competence doctrine, whereby the jurisdiction of the arbitral tribunal to decide on its own
jurisdiction is recognized. (310) These various applications and consequences of the
separability presumption are outlined below, and then returned to in subsequent Chapters in
this Part.
[A] Consequences of Separability Presumption: Non-Existence, Invalidity, Illegality,

or Termination of Underlying Contract Does Not Necessarily Affect Arbitration
Agreement
The first essential consequence of the separability presumption is that the actual non-
existence, ineffectiveness, invalidity, illegality, or termination of the parties underlying
contract does not necessarily impeach the parties separable arbitration agreement. This in
turn has two related, but distinct, applications: (a) the non-existence, ineffectiveness,
invalidity, or illegality of the underlying contract does not necessarily mean that the
associated arbitration clause is also nonexistent, ineffective, or invalid; (311) and (b) a
challenge to the existence, validity, legality, or continued effectiveness of the parties
underlying contract may (and sometimes must) be often referred to arbitration because it
does not in fact affect the existence or validity of the associated, but separable, arbitration
agreement. (312)
P 401 Analytically, it is important to distinguish very clearly between these two consequences of
the separability presumption: although related, the question whether a valid arbitration
clause exists is separate from the issue of who has competence-competence to decide these
questions of validity. (313) As discussed below, neither national court decisions nor
commentary has always recognized this distinction, instead often conflating issues of
separability and competence-competence. (314)
As with other aspects of the separability doctrine, the principle that an arbitration agreement
is not necessarily affected by the invalidity of an associated contract is recognized in a wide
variety of international authority. International arbitration conventions, national legislation
and judicial decisions, and international arbitral awards consistently confirm that the validity
17
of an international arbitration agreement is not necessarily affected by the non-existence or
invalidity of the underlying contract. (315) As noted above, and discussed in detail below, an
arbitration clause may very readily be valid, notwithstanding the non-existence, invalidity,
illegality, or termination of the parties underlying contract. (316)
At the same time, as discussed below, these authorities also all recognize that an arbitration
agreement is not wholly independent or separate from the associated underlying contract and
that there are circumstances in which the status of the latter will affect the former. (317) In
particular, in cases where the underlying contract was never concluded (or formed), or where
that contract never included a particular party, there will be serious questions whether the
associated arbitration agreement was ever formed. (318) Likewise, there will be circumstances
where the invalidity, illegality, or termination of the parties underlying contract may affect
the validity or effectiveness of the arbitration clause. (319)
P 402 The interrelation between the parties arbitration agreement and their underlying
contract is not surprising. Parties do not typically agree to arbitration in the abstract or in a
vacuum, but instead do so in connection with a particular contract, transaction, or project.
(320) That is because of the essential character of an agreement to arbitrate as an ancillary
or procedural contract which is to provide a dispute resolution mechanism for a particular
category of commercial (and other) disputes. (321) If the underlying contract giving rise to such
disputes never comes into existence, it is natural that the associated arbitration agreement
might be affected.
The relationship between the arbitration agreement and the underlying contract raises some
of the most difficult analytical issues in international arbitration. As discussed below, these
issues include matters of choice of law, (322) competence-competence and the allocation of
jurisdictional competence, (323) and substantive validity, (324) each of which is also addressed
elsewhere. In particular, issues involving the arbitrators competence-competence are often
raised in conjunction with application of the separability presumption and are also addressed
in Chapter 7 below. (325)
As discussed above, a number of the provisions of the New York Convention rest on the premise
that arbitration clauses are presumptively separable from the parties underlying contract.
(326) Nonetheless, the Convention does not expressly provide that, as a consequence, an
arbitration clause may exist or continue to exist notwithstanding the non-existence, invalidity,
illegality, or termination of the parties underlying contract. (327) Instead, the Convention
permits, but does not require, parties to agree to separable arbitration agreements, (328) and,
where they do so agree, requires that their agreement to the separability of the arbitration
clause be given effect. (329) It is only in this latter regard requiring Contracting States to
recognize agreements regarding the separability of the arbitration clause that the
Convention can properly be said to mandate the separability presumption.
In contrast, as also discussed above, Article V of the European Convention recognizes the
separability presumption and also explicitly provides that arbitral tribunals may consider
challenges to the existence or the validity of the arbitration agreement or of the contract of
which the agreement forms part. (330) In so doing, the European Convention clearly recognizes
P 403 that the validity of an arbitration agreement is a distinct issue, distinguishable from that
of the validity of the underlying contract. (331) At the same time, as discussed below, the
Convention also gives effect to the competence-competence doctrine, affirming the
arbitrators authority to consider and decide on challenges to both the parties underlying
contract and their arbitration agreement. (332)
National arbitration legislation and judicial decisions from a wide variety of jurisdictions have
repeatedly recognized that one consequence of the separability presumption is that the non-
existence or invalidity of the parties underlying contract does not necessarily result in either
the invalidity of the associated arbitration clause or a loss of the tribunals jurisdiction. These
statutory provisions and decisions have applied the separability presumption in the context of
a number of different types of challenges to the existence, validity, or legality of the parties
agreements, in a wide range of different factual settings, producing a complex, sometimes
confusing body of authority.
In addressing questions of separability in this context, it is important to distinguish between
two issues, already outlined above: (a) whether a court, as distinguished from an arbitral
tribunal, will consider on an interlocutory basis whether there is a valid arbitration agreement;
(333) and (b) regardless who considers the issue, whether as a substantive matter the
underlying contract is nonexistent, ineffective, or invalid and whether this results in the non-
existence, ineffectiveness, or invalidity of the arbitration agreement. As noted above, these are
two analytically distinct issues: the former is an issue of competence-competence and the
allocation of jurisdictional competence, relevant to determining who decides disputes
regarding the validity of an arbitration agreement, while the latter is a substantive question,
relevant to determining whether or not a valid arbitration agreement exists. Despite this
distinction, both issues are often addressed in the same authorities (both U.S. (334) and non-
U.S. (335) ), often without clearly distinguishing the two lines of analysis.
18
Article 16 of the Model Law goes beyond the New York Convention and European Convention, in
P 404 limited respects, in recognizing the consequences of the separability doctrine for
international arbitration agreements in cases where the validity of the underlying contract is
challenged. Thus, as discussed above, Article 16 provides that:
The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to
the existence or validity of the arbitration agreement. For that purpose, an arbitration clause
which forms part of a contract shall be treated as an agreement independent of the other terms
of the contract. A decision by the arbitral tribunal that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause. (336)
Article 16(1) declares that, for the purpose of an arbitral tribunals jurisdiction (or competence-
competence), an arbitration clause shall be treated as independent from the underlying
contract within which it is contained, (337) and then provides that a decision by an arbitral
tribunal that an underlying contract is invalid shall not entail ipso jure the invalidity of the
arbitration clause. These provisions of Article 16 prevent a Catch-22 situation, where a
tribunal could arguably not declare a contract invalid without simultaneously rendering the
arbitration agreement (and, arguably, its own award) invalid. (338) Moreover, like the European
Convention, the Model Law approach expressly removes any question as to the tribunals
competence to rule on challenges to the validity of the underlying contract. (339)
As noted above, Article 16 refers to the separability presumption only in the context of the
arbitral tribunals competence-competence ([f]or that purpose) and not in the context of the
substantive validity of the arbitration agreement. (340) Nonetheless, the better view is that the
separability presumption reflected in Article 16(1) applies to the substantive contractual
validity of the arbitration agreement (which, in turn, is the basis for Article 16s treatment of
the arbitral tribunals competence-competence). (341)
There are a growing number of judicial decisions from Model Law jurisdictions considering
whether the non-existence, invalidity, illegality, or ineffectiveness of the parties underlying
contract affects an arbitration clause associated with the contract. These decisions have
repeatedly held, on particular facts, that the non-existence or invalidity of various underlying
contracts on a variety of different grounds does not entail the non-existence or invalidity of the
P 405 arbitration agreement associated with those contracts. (342) Other decisions have held,
again on particular facts, that the illegality of the underlying contract did not affect the
arbitration clause, (343) and that termination of the main contract did not have the effect of
terminating the separable arbitration agreement. (344) Similarly, the repudiation or
P 406 frustration of the underlying contract has been held by courts in Model Law jurisdictions,
relying on the separability presumption, not to affect the arbitration clause. (345)
At the same time, the UNCITRAL Model Law does not provide that the non-existence, invalidity,
illegality, or termination of the parties underlying contract never affects the associated
arbitration clause. On the contrary, the Model Law merely provides that the invalidity of the
underlying contract does not entail ipso jure the invalidity of the parties arbitration clause
recognizing that there may be circumstances where such a result may nonetheless follow, even
if not ipso jure. Those cases would include, in particular, circumstances where the existence
of the underlying contract was challenged on grounds that also applied to the separable
arbitration agreement (e.g., no consent, lack of capacity or authority). (346) Nonetheless, there
have been extremely few reported decisions in Model Law jurisdictions where defects in the
underlying contract have invalidated the associated arbitration agreement. (347)
As discussed above, the U.S. FAA impliedly recognizes the separability presumption (in 2, 3
and 4). (348) Under the FAA, U.S. courts have applied the separability presumption in a wide
range of circumstances, generating a remarkably large body of precedent. (349) A central
element of these decisions is the conclusion that an arbitration agreement is valid
notwithstanding the invalidity and, in some cases, non-existence of the underlying contract.
P 407 As noted above, in considering U.S. authority under the FAA, it is important to distinguish
between issues of the substantive validity of the arbitration agreement, on the one hand, and
issues of competence-competence and the allocation of jurisdictional authority between
arbitrators and U.S. courts, on the other. This is because, under U.S. law, these issues are
related, (350) with the allocation of jurisdictional competence often depending, at least in
part, on whether the substantive validity of the agreement to arbitrate is challenged.
[i] Prima Paint, Buckeye Check Cashing and Rent-A-Center
The most frequently-cited U.S. decisions on the separability presumption are Prima Paint Corp.
v. Flood & Conklin Manufacturing Co. (351) and Buckeye Check Cashing Inc. v. Cardegna. (352)
This is ironic, and sometimes confusing, because both decisions principally involve the
allocation of competence to address jurisdictional objections. Similarly, in a more recent
decision also dealing with the separability presumption Rent-A-Center West, Inc. v. Jackson
(353) the Supreme Court again linked issues of substantive validity and allocation of
jurisdictional competence.
(1) Prima Paint
As discussed above, the Supreme Court held in Prima Paint that claims of fraudulent
inducement, directed at the underlying contract and capable of rendering it voidable, did not
19
impeach the arbitration clause contained in that contract. The Court reasoned that, except
where the parties otherwise intendarbitration clauses are separable from the contracts in
which they are embedded. (354) Relying on the presumptive separability of the arbitration
clause, the Court also held that the FAA allocates the competence of U.S. courts to consider
jurisdictional objections: specifically, the FAA does not permit the federal court to consider
claims of fraud in the inducement of the contract generally and that a court may consider
only issues relating to the making and performance of the agreement to arbitrate. (355) The
Court implied, but did not squarely hold, that the separability presumption was a rule of
substantive federal law governing evaluation of the validity of agreements to arbitrate. (356)
P 408 (2) Buckeye Check Cashing
The holding and reasoning in Prima Paint were reaffirmed and extended by the Supreme Court
in Buckeye. (357) As discussed above, in Buckeye, the U.S. Supreme Court reversed a Florida
decision which had held that the illegality of a usurious loan agreement rendered both that
agreement and its arbitration clause void ab initio as a matter of Florida law. (358)
In reaching this conclusion, the Supreme Court held that the separability presumption was a
substantive rule of federal law, arising under the FAA, which applied regardless of state (or
foreign) law characterizations of particular contracts as invalid, void, voidable, illegal, or void
ab initio. (359) The Court also held that, under this rule of federal law, only challenges
specifically to the arbitration agreement would impeach its validity and, as a consequence,
general challenges to the underlying contract had to be referred to arbitration; the Court
emphasized that this conclusion applied even where the underlying contract was alleged to be
void or void ab initio. (360) The Courts opinion in Buckeye contains a number of important
conclusions, relevant to both the validity of an arbitration agreement and the allocation of
competence over jurisdictional objections under the FAA.
First, the Buckeye Court reaffirmed (and arguably extended) Prima Paints statement of the
separability presumption and its legal basis. The Court declared that as a matter of
substantive federal arbitration law, an arbitration provision is severable from the remainder of
the contract. (361) That substantive rule of federal arbitration law was based on the
statutory requirement, in 2, 3 and 4 of the FAA, to enforce agreements to arbitrate (362)
including to enforce the parties presumptive intention that such agreements are separable
from the underlying contract. (363)
Second, the Court observed that challenges to the validity of arbitration agreements can be
divided into two categories: (a) challenges specifically to the validity of the agreement to
arbitrate, and (b) challenges [to] the validity of the contract as a whole, either on the ground
that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on
the ground that the illegality of one of the contracts provisions renders the whole contract
invalid. (364) The Buckeye Court reiterated its holding in Prima Paint that a challenge directed
generally to the underlying contract would be referred to arbitration and that only a
challenge specifically directed at the arbitration agreement itself would be subject to
P 409 interlocutory judicial resolution. (365) The Court declared: regardless of whether the challenge
is brought in federal or state court, a challenge to the validity of the contract as a whole, and
not specifically to the arbitration clause, must go to the arbitrator. (366)
This aspect of the Courts opinion was a decision regarding the allocation of jurisdictional
competence, holding when particular issues would be referred to arbitration and when they
would be for interlocutory judicial resolution. This decision regarding jurisdictional
competence rested, however, on the underlying rule of federal substantive law, providing that
arbitration agreements are separable from underlying contracts.
Third, the Buckeye Court rejected the argument that the separability presumption was
inapplicable where a party claimed that the underlying contract was void or void ab initio.
(367) Specifically, the Court held that Prima Paints separability presumption made any
distinction between void and voidable contracts irrelevant. (368) In doing so, the Buckeye
Court rejected a substantial line of state (and federal) court authority holding that the
separability presumption did not apply where the underlying contract was void (as opposed
to voidable). (369)
P 410 Fourth, the Courts opinion in Buckeye elaborated on the character and consequences of
the separability presumption, reasoning:
because respondents challenge the Agreement, but not specifically its arbitration provisions,
those provisions are enforceable apart from the remainder of the contract. The challenge should
therefore be considered by an arbitrator, not a court. (370)
This analysis is vitally important to the nature of the separability presumption under the FAA.
The Courts analysis links both: (a) a conclusion about the substantive validity of the
arbitration agreement (those provisions are enforceable apart from the remainder of the
contract), and (b) a conclusion about the allocation of jurisdictional competence ([t]he
challenge should therefore be considered by an arbitrator, not a court). Indeed, the Buckeye
Court bases its allocation of jurisdictional competence expressly on the separability
presumption and the existence of a challenge to the separate arbitration agreement,
reasoning that, because the separable arbitration agreement is valid, therefore the
challenge to the underlying contract must be referred to arbitration.
The Courts analysis in Buckeye made explicit what Prima Paint had implied about the
20
character of the separability presumption, with a much more specific statement that the
separability presumption concerned the substantive validity of the arbitration agreement. The
logic of the Buckeye analysis, prefigured in Prima Paint, is that, where there is no challenge to
the arbitration agreement, then 2, 3 and 4 of the FAA require giving effect to that agreement,
by compelling arbitration and staying litigation. (371) Conversely, where there is a challenge
specifically to the arbitration agreement, then 4 requires a court to resolve that challenge
(including by conducting a trial). (372)
Finally, and also importantly, the Buckeye Court noted a potential qualification to this
statement of the separability presumption, applicable in cases where a party challenged the
existence as distinguished from the effectiveness or validity of the underlying contract. (373)
The Court held that the question whether the underlying contract was validly formed is, for
purposes of determining whether interlocutory judicial consideration is required, different
from the question whether the underlying contract is valid or effective. The Court did not
decide whether the separability presumption would apply in cases where no underlying
P 411 contract was ever formed, to require arbitral consideration of such challenges, but it
strongly suggested it would not: (374)
The issue of the contracts validity is different from the issue of whether any agreement between
the alleged obligor and obligee was ever concluded. Our opinion today addresses only the
former, and does not speak to the issue decided in [cases]which hold that it is for courts to
decide whether the alleged obligor ever signed the contract, whether the signed lacked
authority to commit the alleged principal and whether the signor lacked the mental capacity
to assent. (375)
In particular, the Buckeye Court identified cases involving disputes over consent (e.g., whether
the alleged obligor ever signed the contract) and capacity or authority (e.g., lacked
authority) as potentially requiring judicial resolution. (376)
(3) Rent-A-Center
More recently, the Supreme Court reaffirmed this distinction between challenges to the
legality or validity of the underlying contract, and challenges to the existence of that contract
and, extended it to so-called delegation provisions within a broader arbitration agreement.
In Rent-A-Center West, Inc. v. Jackson, (377) the Court reversed a Ninth Circuit decision holding
that a court should decide the question whether a clause within an arbitration agreement,
providing for resolution of jurisdictional disputes by the arbitrator, was unconscionable. (378)
Relying on Prima Paint and Buckeye, the Ninth Circuit held that where a party challenges the
arbitration agreement specifically and not the entire contract as unconscionable,
resolution of that challenge is for the court, not the arbitrator. (379)
The Supreme Court rejected the Ninth Circuits reasoning, instead treating the arbitration
agreement as the underlying contract and the clause delegating resolution of the jurisdictional
objection to the arbitrator as a mini-arbitration agreement (380) that was separable from the
general arbitration agreement. Applying the reasoning in Prima Paint and Buckeye but one
layer deeper the Supreme Court held that challenges as to the validity of the arbitration
agreement as a whole (as well as challenges to the underlying contract) would be for initial
decision by the arbitrator; challenges specifically to a (so-called delegation) provision within
the arbitration agreement providing for arbitration of jurisdictional disputes would be for the
court to adjudicate. (381)
P 412 The Rent-A-Center Court concluded that, because the party challenging jurisdiction had
not specifically challenged the delegation clause, but the arbitration agreement as a whole,
the jurisdictional objection was for the arbitrator, not the court. (382) In addition, the Rent-A-
Center Court declared that [t]he issue of the agreements validity is different from the issue
whether any agreement between the parties was ever concluded. (383) As it had in Buckeye,
the Court strongly suggested, albeit in dicta, that challenges to the existence of the underlying
contract would be for interlocutory judicial consideration (rather than reference to the
arbitrators). (384)
[ii] Applications of Separability Presumption by U.S. Courts
The separability analysis in Prima Paint, Buckeye and Rent-A-Center has been applied
differently by U.S. lower courts depending on the nature of the challenge to the underlying
contract. In particular, as discussed below, U.S. courts have adopted different approaches to
the effects of the separability presumption depending on whether (a) the validity, legality, or
continued effectiveness of the underlying contract is generally challenged; (b) the existence,
validity, legality, or continued effectiveness of the arbitration agreement is specifically
challenged; or (c) the existence of the underlying contract, as distinguished from its validity or
effectiveness, is challenged.
In the first category, U.S. courts have held that challenges to the validity, legality, or
effectiveness of the underlying contact do not affect the arbitration agreement, and therefore
are for the arbitrators to resolve; interlocutory judicial consideration of such challenges is not
permitted under the FAA. In the latter two categories, U.S. courts have held that challenges to
the existence or formation of the underlying contract or challenges specifically to the validity,
legality, or effectiveness of the arbitration agreement do impeach the arbitration agreement
itself, and therefore are generally for immediate interlocutory judicial resolution. Although
these general principles appear well-accepted, there remains a substantial degree of
21
uncertainty regarding their application.
(1) Treatment of Claims Challenging Validity, Legality, or Continued Effectiveness of Underlying
Contract Under Federal Arbitration Act
There is a substantial body of U.S. judicial authority addressing the consequences of
challenges to the validity, legality and continued effectiveness of the parties underlying
contract. As in other contexts, it is important in considering this authority to distinguish
between the allocation of jurisdictional competence and questions of substantive validity.
The approach of U.S. courts to the substantive validity of an arbitration clause, when the
validity, legality, or continued effectiveness of the underlying contract has been challenged, is
P 413 set forth in Buckeye. There, the U.S. Supreme Court held that, where there has been a
challenge to the validity of the underlying contract, but not specifically its arbitration
provisions, those provisions are enforceable apart from the remainder of the contract. (385) That
holding fairly clearly adopted the separability presumption as a rule of a substantive federal
law, providing that, unless otherwise agreed, a challenge to the underlying contract, rather
than a challenge specifically to its arbitration clause, does not affect the validity of the
agreement to arbitrate which is enforceable apart from the remainder of the contract.
A substantial body of U.S. lower court authority has applied the separability presumption
recognized in Prima Paint and Buckeye in cases involving challenges to the validity of the
underlying contract. Those decisions generally concern the allocation of competence to
resolve jurisdictional issues and do not ordinarily hold expressly that the arbitration
agreement is valid. Rather, these decisions simply refer the challenge to the underlying
contract to arbitration, presuming the validity of the arbitration agreement, but often not
stating this expressly.
Nonetheless, given the U.S. approach to the allocation of jurisdictional competence, which
links the existence of a challenge to the arbitration agreement to the availability of
interlocutory judicial consideration, (386) these decisions necessarily rest on conclusions
about the substantive validity of the arbitration agreement. Moreover, albeit in dicta, a
number of U.S. courts have expressly affirmed the substantive validity of arbitration
agreements where only challenges to the separable, underlying contract have been made.
(387)
Applying this analysis, U.S. courts have almost uniformly refused to consider interlocutory
jurisdictional objections based on allegations of invalidity, illegality, or termination of the
P 414 parties underlying contract. U.S. lower courts have repeatedly held that general claims
that the underlying contract is invalid or illegal must be referred to arbitration. (388) In the
words of one lower court:
[w]here claims of error, fraud or unconscionability do not specifically address the arbitration
agreement containing the arbitration provisions, then the question of whether the agreement,
as a whole, is unconscionable must be referred to the arbitration.[I]f, after examining the
crux of the complaint, the district court concludes that the challenge is not to the arbitration
provision itself but, rather, to the validity of the entire contract, then the issue of the contracts
validity should be considered by an arbitrator in the first instance. (389)
Another representative decision adopts similar reasoning, holding that challenges to the
parties underlying agreement had to be submitted to arbitration:
These claims do not relate to the Arbitration Agreements themselves; rather, they allege the
Agreements, in general, were adhesivethe FAA does not permit a federal court to consider
claims alleging the contract as a whole was adhesive. (390)
U.S. courts have applied this principle to require arbitration of objections resting on a wide
variety of alleged bases for invalidity of the underlying contract, including claims of fraudulent
P 415 inducement, (391) fraud, (392) lack of consideration, (393) illegality, (394) adhesion or
P 416 unconscionability, (395) the failure of a condition precedent, (396) mistake (397) and expiration
or termination. (398)
P 417 A representative decision in this line of authority reasoned:
The Plaintiffs do not contest the formation of an agreement to arbitrate. Rather, they
challenge the validity of the contract and assert that any agreement to arbitrate was rendered
invalid ab initio by Louisianas real estate license laws.The matter should be referred to the
arbitrator for a resolution of this dispute, including consideration of the Plaintiffs defense of
illegality. (399)
Or, as another court explained its analysis:
[W]hen claims allege unconscionability of the contract generally, these issues are determined
by an arbitrator because the dispute pertains to the formation of the entire contract, rather
than the arbitration agreement. (400)
These holdings have attracted some fairly harsh domestic criticism, on the grounds that they
afford undue authority to arbitrators and deny parties the opportunity for immediate judicial
review of their (asserted) jurisdictional objections. (401) Nonetheless, this is emphatically the
Supreme Courts interpretation of the FAA, now repeated in multiple decisions. (402)
P 418 This analysis also applies in cases involving a so-called delegation clause. If the parties
22
arbitration agreement includes a delegation provision, providing for the arbitration of
jurisdictional challenges to the arbitration agreement, a court will only decide the challenge if
it is directed specifically to the delegation provision. (403) If the parties have agreed to
arbitrate jurisdictional challenges, a challenge to the entire arbitration clause will be referred
to the arbitrators, rather than judicially resolved, because there has been no challenge to the
specific agreement to arbitrate jurisdictional disputes. (404)
P 419 (2) Treatment of Claims Challenging Validity, Legality, or Continued Effectiveness of
Arbitration Agreement Specifically Under Federal Arbitration Act
As discussed above, the Supreme Court held in both Buckeye and Rent-A-Center that
challenges that are directed specifically at the arbitration agreement itself are for
interlocutory judicial resolution, rather than reference to arbitration. (405) Thus, as already
discussed, the Court made it clear in Buckeye that a challenge specifically to the arbitration
clause is for interlocutory judicial resolution. (406)
U.S. lower courts have applied this standard in numerous cases. In the words of one lower court
decision, a challenge to the validity of a contract as a whole, and not specifically to an
arbitration clause, must be presented to the arbitrator and not the courts, and [t]he courts
may consider, in the first instance, only those challenges that are directed solely to the
arbitration component itself. (407) The general tenor of these decisions is reflected in the
analysis of one lower court:
An attack on the validity of the contract as a whole, as opposed to the arbitration clause in
particular, does not present a question of arbitrabilitythe well-settled general rule is that
when a contractual party challenges the validity of an arbitration agreement by contending
that one or more of its terms is unconscionable and unenforceable, a question of arbitrability
is presented.A partys unconscionability challenge to the enforcement of one or more terms
of an arbitration agreement presents a gateway matter for judicial determination. (408)
Despite uniform application of the analysis of the separability presumption in Prima Paint,
Buckeye and Rent-A-Center, it is not entirely clear when a challenge will be considered
directed specifically at the parties arbitration agreement, as distinguished from the
underlying contract generally. In particular, it is uncertain what is required in order to
challenge an arbitration clause specifically is it enough to claim that the arbitration
agreement and the underlying contract are both invalid or is it necessary to claim that only the
arbitration agreement is invalid?
Applying the standards formulated in Buckeye and Rent-A-Center, lower U.S. federal and state
courts have generally required the allegation of separate factual grounds, relevant solely to
the validity of the arbitration agreement, before concluding that the challenge is subject to
P 420 interlocutory judicial resolution. (409) The same rule applies to so- called delegation
clauses under the analysis in Rent-A-Center. (410) In particular, most U.S. courts have held that
grounds for invalidity that apply to both the underlying contract and arbitration agreement do
not specifically impeach the arbitration agreement and therefore must be referred to
arbitration. (411)
For example, one appellate court held that a challenge to the underlying contract including
to the arbitration clause for fraud, without identify[ing] any misrepresentations particular to
the arbitration agreement separate from the contract as a whole was insufficient to
invalidate the arbitration agreement. (412) Similarly, another lower court held that where the
challenge was to the validity of the contract as a whole this did not invalidate the arbitration
agreement and the dispute must therefore be submitted to arbitration. (413) The court
added that:
The Court realizes that the arbitration panel may find the [underlying] Agreement void due to
fraud in the factum, which would mean that the Court enforced an arbitration clause in a void
contract. While this result may seem paradoxical, it is exactly the result contemplated by the
Court in Buckeye. (414)
Applying this standard, U.S. lower courts have considered and resolved challenges to
arbitration agreements, on an interlocutory basis, where those challenges were directed
specifically to the validity, legality, or effectiveness of the arbitration agreement itself. Thus,
as discussed in detail below, U.S. courts have considered challenges to arbitration agreements
P 421 based on fraudulent inducement, (415) fraud, (416) lack of consideration or mutuality, (417)
duress, (418) mistake, (419) unconscionability, (420) impossibility, (421) uncertainty, (422)
P 422 illegality, (423) public policy, (424) failure to comply with a condition precedent to
arbitration (425) and expiration or termination. (426) Critically, in each case, the challenge
must be made specifically to the arbitration agreement, and not generally to the underlying
contract.
P 423 Some U.S. lower courts have adopted a different position, holding that an arbitration
agreement can be specifically challenged on grounds that also apply to the underlying
contract, but it appears to be a minority view. (427) Thus, according to one court, where an
allegation of fraud in the inception was directed at both the principal contract and the
arbitration agreement, it cannot be seriously contended that the party knew he was signing
one contract but did not know he was agreeing to another agreement when the two agreements
[the arbitration agreement and the underlying contract] are contained in the same document.
(428) In that situation, if a party is unaware he is signing any contract, obviously he is also
23
unaware he is agreeing to arbitration. (429)
(3) Treatment of Claims Challenging Existence of Underlying Contract Under Federal Arbitration
Act
A final category of cases involves the effect of challenges to the existence or formation of the
underlying contract on the parties arbitration clause (as distinguished from challenges to the
validity, legality, or continued effectiveness of the underlying contract). As discussed above,
the U.S. Supreme Court noted this issue in Buckeye, holding that the issue of contract formation
is for these purposes different from that of contractual validity, but reserving judgment on
whether the separability presumption would apply in cases where no underlying contract was
ever formed. (430) In particular, the Court identified cases involving disputes over contractual
consent (e.g., whether the alleged obligor ever signed the contract) and capacity or authority
(e.g., lacked authority), in each case with respect to the underlying contract, as potentially
impeaching the separable arbitration agreement and requiring interlocutory judicial
resolution. (431)
More recently, as also discussed above, the Supreme Court confirmed this distinction between
challenges to the legality or validity of a contract, and challenges to the existence of the
contract. In particular, the Court held in Rent-A-Center West, Inc. v. Jackson (432) that [t]he
P 424 issue of the agreements validity is different from the issue whether any agreement
between the parties was ever concluded, (433) and made clear that the issue of formation of
the underlying contract was for interlocutory judicial consideration. This holding was
confirmed by the Supreme Court more recently in Granite Rock Co. v. Intl Bhd of Teamsters,
where the Court ruled that where the dispute at issue concerns contract formation, the
dispute is generally for courts to decide. (434)
As already discussed, it is important to distinguish between issues of competence-competence
and substantive validity in considering U.S. authority under the FAA. (435) With regard to the
first issue, concerning the allocation of jurisdictional competence, lower U.S. courts have thus
far generally entertained interlocutory claims that no underlying contract was ever formed
(rather than referring them to arbitration). (436) The weight of U.S. authority holds that
challenges to the formation of the underlying contract are for interlocutory judicial resolution,
even though challenges to the underlying contracts validity or legality are ordinarily for
arbitral resolution:
the Prima Paint doctrine has been extended to require arbitration panels to decide many
issues regarding the validity of a contract containing arbitration language including
allegations that such contracts are voidable because they involved duress, undue coercion,
confusion, mutual mistake, or unconscionability. However, Prima Paint has never been
extended to require arbitrators to adjudicate a partys contention, supported by substantial
evidence, that a contract never existed at all. (437)
Or, as another lower court reasoned:
Where a party attacks the very existence of an agreement, as opposed to its continued
validity or enforcement, the courts must first resolve that dispute. (438)
Almost all lower courts appear to adopt this analysis, holding that a challenge directed to the
existence of the underlying contract also necessarily affects the existence of the arbitration
P 425 agreement and is therefore for interlocutory judicial resolution. (439) Despite this general
consensus, however, lower courts have reached widely divergent results in applying this
principle to different types of challenges to the underlying contract.
Thus, some lower courts have held that claims of lack of capacity or authority, directed at the
underlying contract, also necessarily impeach the associated agreement to arbitrate, and must
therefore be the subject of interlocutory judicial determination, (440) while other courts have
adopted the opposite view, holding that such claims do not impeach the arbitration clause
and are for initial arbitral determination. (441) For example, some courts have held that,
[u]nlike a claim of fraud in the inducement, which can be directed at individual provisions in
a contract, a mental capacity challenge can logically be directed only at the entire contract,
P 426 (442) while others have concluded that a claim of mental incapacity is not a specific
challenge to the arbitration clause. (443)
The same diversity in U.S. lower court authority exists with regard to claims of a lack of
consent, including claims of duress. (444) For example, some courts have held that duress
issue relates to the contract as a whole and not solely the arbitration provision [and] is
therefore an issue to be decided in arbitration, (445) while other courts have held:
The plaintiff here contends that no contract was ever formed because the plaintiff was under
duress and did not freely assent to enter into the separation agreement or any of its
provisions.[This] claim of duress challenges the existence of the contract itself, and therefore
relates to all the clauses and provisions in it, including the arbitration clause. The argument
that the arbitration clause is invalid and unenforceable, therefore, is not barred by the rule in
Prima Paint. (446)
P 427 U.S. lower courts have also not reached uniform results in cases involving alleged forgery
of the underlying contract. (447) Thus, one appellate court reasoned, in the context of claims
that a putative partys signature on the contract was forged, and that no agreement at all had
ever been formed, that:
24
Because the legal status of the arbitration clause is unresolved, Advents desire to arbitrate,
separate from the contract, appears as a desire, floating in the legal ether, untethered by
either reciprocal promises or other sufficient consideration. Only a [judicial] ruling on the
effect of Hueps signature can ground Advents wishes in the firmament. (448)
In contrast, at least one other U.S. lower court has reached the opposite conclusion, on very
similar facts, holding that challenges claiming that as a whole a contract is illegal, is void
as a matter of law, contains forged signatures, or was induced by fraud will generally not serve
to defeat an arbitration clause. (449)
U.S. lower courts have similarly reached divergent conclusions on the substantive question of
whether the consequence of the non-existence of an underlying contract is that there also is no
arbitration agreement (depending on the facts and applicable substantive legal rules). Some
courts have held that because there was never any underlying contract, there is no
P 428 arbitration agreement; (450) other courts have held that a valid arbitration agreement
was formed, notwithstanding the absence (or apparent absence) of any underlying contract.
(451)
For example, one U.S. court refused to enforce an arbitration agreement contained within a
contract that it held had never been concluded, reasoning that something can be severed
only from something else that exists. How can the Court sever an arbitration clause from a
non-existent charter party? (452) Similarly, another court reasoned that:
The validity of the arbitration clause as a contract, which the District Court must determine
prior to ordering arbitration, derives from [the agents] authority to bind Advent. Therefore,
there does not appear to be any independent source of the validity of the arbitration clause
once the underlying contract is taken off the table. If the [agents] signature is not binding, there
is no arbitration clause. (453)
In contrast, other courts have conducted a more nuanced inquiry, considering whether,
notwithstanding the non-existence of the underlying contract, the parties independently
concluded an agreement to arbitrate. For example, in Republic of Nicaragua v. Standard Fruit
Co., (454) the court considered whether an arbitration clause contained in an unsigned,
unfinalized set of agreements was binding, notwithstanding the fact that the underlying
contracts had admittedly never been finalized. The Court upheld the existence of an
agreement to arbitrate and ordered the parties to arbitrate their substantive disputes,
rejecting the argument that the non-existence of the underlying contracts resulted in the non-
existence or invalidity of the arbitration clause. Quoting earlier U.S. authority, the Court
reasoned:
[The defendant] argues that if there is no contract to buy and sell motors there is no
agreement to arbitrate. The conclusion does not follow its premise. The agreement to arbitrate
and the agreement to buy and sell motors are separate. [The plaintiffs] promise to arbitrate
P 429 was given in exchange for [the defendants] promise to arbitrate and each promise was
sufficient consideration for the other. (455)
Relying on this rationale, the Standard Fruit court held that the parties had agreed to arbitrate
their disputes, notwithstanding the non-existence of their underlying contracts, and ordered
them to do so. This holding rested on the conclusion that an arbitration agreement may be
and on the facts of the case was validly formed even in circumstances in which the underlying
contract was never concluded. (456)
Other U.S. lower courts have reached similar decisions, holding on particular facts that the
parties agreed to arbitrate, even if no underlying commercial contract was concluded. (457)
This result may follow from either the application of a different national law to the arbitration
agreement than to the underlying contract, (458) or from factual evidence indicating that the
parties had concluded their arbitration agreement, even if they had not yet entered into the
underlying contract. (459) Thus, as one U.S. court put it, if they have agreed on nothing else,
they have agreed to arbitrate, (460) while another court concluded that, despite an apparent
lack of consensus on the underlying contract, there was a meeting of the minds on the mode of
arbitrating disputes between the parties and the parties had agreed to arbitrate their
claims. (461)
While acknowledging the possibility that an arbitration agreement may validly be formed even
P 430 if no underlying contract was formed, U.S. courts are frequently not persuaded that this
has occurred as a factual matter. (462) In this regard, many U.S. courts have been skeptical
about the likelihood that an arbitration agreement may have been validly formed, even
though the underlying contract was not. Nonetheless, even these courts have generally
recognized the possibility that an agreement to arbitration can be validly concluded apart
from the underlying contract and even if the underlying contract is never formed. (463)
[iii] Arbitration Fairness Act
Legislation has been proposed in the United States that, at least in some versions, would
overrule Prima Paint and Buckeye and limit the consequences of the separability doctrine in
some domestic U.S. cases. The so-called Arbitration Fairness Act would provide that any
question of validity or enforceability of certain arbitration agreements subject to the domestic
FAA would be resolved on an interlocutory basis by a court, not the arbitral tribunal. The
proposed legislation would require this result, for provisions subject to the new enactment,
regardless whether the arbitration clause is challenged specifically or in conjunction with the
25
underlying contract, providing:
The applicability of this chapter to an agreement to arbitrate and the validity and
enforceability of an agreement to which this chapter applies shall be determined by a court,
rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the
P 431 arbitration agreement specifically or in conjunction with other terms of the contract
containing such agreement. (464)
The proposed legislation does not overrule the separability presumption as a rule affecting the
substantive validity of agreements to arbitrate (leaving intact the statutory basis for the
presumption in 2, 3 and 4 of the FAA). (465) Instead, the proposed Act would reverse the
existing U.S. approach to the allocation of jurisdictional competence, as articulated in Prima
Paint and Buckeye, without affecting analysis of the substantive validity of arbitration
agreements. The proposed act, as drafted in more recent versions, would not apply to most
international commercial arbitration provisions (instead being limited to consumer, labor,
civil rights and antitrust claims). (466)
As discussed below, the proposed Acts treatment of competence-competence would be a
profoundly retrograde step, particularly if it were extended to international commercial
arbitration agreements and the international arbitral process. If applied to international
arbitration agreements, the Act would be ill-considered policy that would likely place the
United States in serious violation of its commitments under the New York Convention. (467) In
part for that reason, most versions of the proposed Arbitration Fairness Act have excluded
international arbitration from their reach. (468) In any event, for the moment, these issues
remain purely theoretical, as the Arbitration Fairness Act has failed to be enacted in a number
of previous Congresses (since 2007) and may well progress no further in the future.
[iv] Future Directions: Separability Under the Federal Arbitration Act
There is a substantial body of U.S. judicial authority addressing the separability presumption
under the FAA. In evaluating that authority, it is important to distinguish between issues of the
substantive validity of the arbitration clause and the allocation of competence over
jurisdictional objections. As discussed above, under the U.S. approach to the allocation of
jurisdictional competence, these matters are closely-related. (469) Nonetheless, an evaluation
of the U.S. approach to the separability presumption requires different analyses and different
conclusions for each.
P 432 (1) Future Directions: Substantive Validity of Arbitration Agreements Under Federal
Arbitration Act
As discussed above, it is well-settled that an agreement to arbitrate is presumptively
separable as a matter of substantive law under the FAA. Thus, except where the parties
otherwise intendarbitration clauses are separable from the contracts in which they are
embedded (470) and as a matter of substantive federal arbitration law, an arbitration
provision is severable from the remainder of the contract. (471)
It is now also well-settled that, as a consequence of this separability presumption, the
invalidity, illegality, or ineffectiveness of the underlying contract does not affect the validity of
the associated arbitration agreement. Thus, where there has been a challenge to the validity of
the underlying contract, but not specifically its arbitration provisions, those provisions are
enforceable apart from the remainder of the contract. (472) In order to challenge the validity of
the arbitration agreement, there must be a challenge specifically to that agreement, as
distinguished from the underlying contract. (473) That requirement is a matter of substantive
federal law which, in 2, 3 and 4 of the FAA, gives effect to the parties agreement to arbitrate,
including its presumptively separable character. (474)
As also discussed above, U.S. courts have reached divergent results in applying the
separability presumption. In particular, lower courts have struggled in determining when an
arbitration agreement has been specifically challenged and when a challenge to the
existence of the underlying contract impeaches the arbitration agreement. (475) These two
issues, which are related, require further discussion.
First, as discussed above, most U.S. lower courts have held that an arbitration agreement is
only challenged specifically where a party alleges facts and makes arguments concerning the
validity of that agreement alone, not applicable also to the underlying contract. (476) That
approach is mistaken and should be reconsidered.
The only relevant question for purposes of the substantive validity of an arbitration agreement
should be whether the validity of the arbitration agreement itself has been challenged by
claims that specifically affect the validity of its terms, and not whether the underlying
contracts validity has also been challenged. A challenge should be regarded as directed
specifically at the arbitration agreement, and capable of vitiating its validity, if a party
satisfactorily alleges that the arbitration agreement itself is invalid, even if the grounds for
that claim are also simultaneously applicable to the underlying contract.
P 433 For example, a challenge to the arbitration clause specifically, capable of vitiating its
substantive validity, should be found if a party claims that both the arbitration agreement and
the underlying contract are unconscionable, alleging that particular aspects of each
agreement are unacceptably one-sided (477) and that the relationship between the parties
and character of the bargaining process was fundamentally unfair. (478) The fact that a party
26
also challenges the validity of the underlying contract, on parallel or closely-related
unconscionability grounds, does not mean that there is no challenge to the substantive validity
of the arbitration agreement itself. Similarly, a challenge specifically to the arbitration
agreement should be found where a party claims that there has been a fundamental change in
circumstances, affecting both the viability of a contractually-agreed project in a host state and
an agreement to arbitrate in the host state, because of radical changes in the host states
government and legal system.
In each case, the relevant question is whether there has been a claim of invalidity directed
specifically at the terms of the arbitration agreement itself and not whether the same or a
similar claim has also or simultaneously been directed at the underlying contract. The fact
that there are parallel claims of invalidity does not alter the fact that there is a claim of
invalidity directed specifically at the arbitration agreement. Rather, only where there is no
more than a claim directed generally at the validity of the underlying contract should it be
appropriate to conclude that there is no claim directed specifically at the arbitration
agreement.
As a practical matter, a challenge to the validity, legality, or continued effectiveness of the
underlying contract will very seldom also be capable of affecting the validity, legality, or
continued effectiveness of the arbitration agreement. That is because of the different
characters of the underlying contract and the arbitration agreement. In particular, the two
agreements have different provisions and different objectives; as a consequence, a defect in
the validity of the underlying contract for example, for uncertainty or indefiniteness,
unconscionability, impossibility, frustration, or fraud will very seldom be capable of also
having an effect on the validity of the arbitration agreement.
For example, the fact that the terms of an underlying contract are uncertain or indefinite says
nothing at all about the certainty or definiteness of the arbitration agreement (which could
well be a standard ICC or UNCITRAL model clause). The fact that the underlying contract was
tainted by fraud (for example, concerning the quality of goods sold) has nothing to do with the
separable arbitration agreement (which could have been thoroughly negotiated). And the fact
that the underlying contract had been frustrated or become impossible to perform does not in
any way suggest that the associated arbitration agreement cannot be performed in precisely
the manner intended by the parties.
Nonetheless, given the relationship between the underlying contract and the arbitration
agreement, there will be cases where grounds for challenging the validity of one agreement do
P 434 affect the other in at least some respects. For example, claims of unconscionability
directed at the underlying contract and the arbitration agreement may involve common
allegations, including the parties relative bargaining power and sophistication and the nature
of the negotiations (or lack thereof). Similarly, claims of mistake or fraud concerning a counter-
partys identity or the basic nature of the transaction will provide the basis for simultaneous
challenges to both the underlying contract and associated arbitration agreement.
The critical point is that the question whether the substantive validity of an arbitration
agreement is challenged requires considering the specific allegations and claims that are
made by a party and, in particular, considering whether these allegations and claims are
directed to the validity of the arbitration agreement itself. If there are such claims, then the
fact that similar or identical allegations and claims are made with respect to the underlying
contract is irrelevant. If there are allegations and arguments directed at the arbitration
agreement itself, then that agreements substantive validity has been challenged and the
agreement may be held invalid.
Second, a related analysis applies to U.S. decisions considering challenges to the existence of
the parties underlying contract. As discussed above, U.S. courts have uniformly held that a
challenge to the underlying contracts existence is different from a challenge to its
validity, and that, as a consequence, such challenges are for interlocutory judicial resolution.
(479) Nonetheless, in applying this rule, U.S. lower courts have reached widely divergent
conclusions with regard to the treatment of challenges to capacity, duress, authority, forgery
and the like. (480)
A sharp distinction between challenges to the validity and the existence of the underlying
contract is difficult to justify in analysis of the substantive validity of the arbitration
agreement (and, in particular, the international arbitration agreement). Specifically, it is very
difficult to say that an arbitration clause in an underlying contract that is void, voidable,
invalid, or illegal because of fraud, mistake, lack of consideration, or termination
necessarily exists, but that an arbitration clause in any underlying contract that is
nonexistent because of duress, lack of capacity, lack of authority, lack of consideration, or
lack of consent necessarily does not exist. In fact, there is very little basis for concluding that
particular categories of contract law defects in the underlying contract necessarily affect or do
not affect an associated arbitration clause in all cases. (481)
Thus, as discussed above, there can readily be instances in which a valid arbitration
agreement exists, notwithstanding the non-existence of the underlying contract including
P 435 because of lack of consent, (482) lack of authority, (483) or duress. (484) Less frequently,
and as already discussed, there can also be instances in which an arbitration agreement is
invalid or nonexistent for the same reasons that lead to the voidness or invalidity of the
underlying contract including fraud, (485) illegality (486) and mistake. (487) The simple point
is that general categorization of the type of challenge to the underlying contract does not have
27
any necessary relationship to the existence or non-existence of a valid arbitration agreement.
For example, claims of duress may in some cases apply equally to both the underlying contract
and the arbitration agreement, as when one party procures the signature on a contract at the
point of a gun. Likewise, claims of lack of capacity or authority may apply equally to both the
underlying contract and the arbitration agreement for example, when a party lacks any
mental capacity or when a putative agent is not authorized to do anything at all for the alleged
principal. Similarly, where a partys signature is forged on a contract, containing an arbitration
clause, that necessarily affects the arbitration clause contained within the contract; the same
is true when one party never agreed to, or even discussed, anything with its asserted counter-
party. These are all examples of doubly relevant facts, where a defect in the underlying
contract is simultaneously also a defect in the arbitration agreement. (488)
Nonetheless, as also discussed above, there can also readily be cases where the non-existence
of the underlying contract does not affect the existence of the separable arbitration
agreement. For example, an agent or corporate officer may be authorized to enter into some
types of contracts (including arbitration agreements), but not others; a challenge to the agents
authority to commit its principal to the underlying contract may not, in these cases, affect the
validity of the arbitration clause. (489) Similarly, there may well be cases where economic
duress applies to the underlying contract, but not to the separable arbitration agreement
(which may take the form of a standard institutional arbitration clause, frequently used by
P 436 parties in the industry). (490) And, parties can, and sometimes do, conclude agreements to
arbitrate even though they do not consent to the terms of an underlying transaction. (491)
As a consequence, the proper approach to the substantive validity of the arbitration
agreement under the FAA is to consider the specific factual allegations and legal claims or
defenses that are presented by a particular challenge to the arbitration agreement. The
decisive question in that consideration is whether these allegations and claims concern or are
directed at the arbitration agreement itself, as distinguished from the underlying contract.
Only if there are allegations and claims that would impeach the arbitration agreement itself
(e.g., the arbitral mechanism is unconscionable, uncertain, or terminated; there was fraud
regarding the existence or fundamental character of the arbitration agreement) can there be a
challenge to the validity of that agreement.
This analysis of the substantive validity of the arbitration agreement would not produce results
that are substantially different from those currently reached under well-reasoned decisions
applying the FAA. Consistent with U.S. lower court decisions, this analysis will virtually always
result in upholding the parties separable agreement to arbitrate, notwithstanding the
invalidity or illegality of the underlying contract. (492) That is, the unconscionability,
indefiniteness, illegality, or fraudulent inducement of the underlying contract will almost
never impeach the arbitration agreement: the contractual terms, negotiations, fairness and
performance of the underlying contract will simply not be relevant to, or bear upon, the
separable agreement to arbitrate. In contrast, again consistent with most U.S. lower court
authority, the non-existence of the underlying contract will be substantially more likely to
impeach the associated agreement to arbitrate. (493) That is, the absence of consent, capacity,
or authority in relation to the underlying contract will very often also simultaneously involve
defects in formation of the agreement to arbitrate.
Nonetheless, in assessing the substantive validity of an arbitration agreement, no weight
should be placed on whether a party also claims that no underlying contract exists, as well as
that no arbitration clause exists. As already discussed, there will be instances where a
challenge to the underlying contract also impeaches the associated arbitration clause (e.g.,
the underlying contract is forged, an agent lacked any authority or a party lacked mental
capacity). The proper inquiry in these cases should be to consider whether the alleged defects
in the particular case separately impeach the arbitration clause which they may (or may not)
do regardless whether they also affect the underlying contract. The decisive question in such
cases is whether the asserted facts give rise to the non-existence or invalidity of the agreement
to arbitrate, whether or not the underlying contract is also impeached.
P 437 (2) Future Directions: Allocation of Jurisdictional Competence Under Federal Arbitration Act
As discussed above, U.S. judicial authority expressly bases the allocation of jurisdictional
competence on the existence of a challenge to the validity of the arbitration agreement. (494)
Where a challenge is made specifically to the validity of the separate arbitration agreement
exists, Prima Paint, Buckeye and Rent-A-Center require U.S. courts to resolve it themselves, on
an interlocutory basis; where no such challenge exists, the parties dispute must be referred to
arbitration. As the Court declared in Buckeye, linking the allocation of jurisdictional
competence expressly to the existence of a challenge to the arbitration agreement: because
respondents challenge the Agreement, but not specifically its arbitration provisions, those
provisions are enforceable apart from the remainder of the contract. The challenge should
therefore be considered by an arbitrator, not a court. (495)
The approach to the allocation of jurisdictional competence under Prima Paint and its progeny
makes less sense than the approach to the substantive validity of the arbitration agreement.
There are a number of significant shortcomings to the approach to the allocation of
jurisdictional competence under the FAA.
First, for many of the reasons discussed above, it is ill-conceived to base the allocation of
competence to consider and resolve jurisdictional objections on sharp distinctions between
28
different categories of contract law defenses, holding that challenges to the formation or
existence of the underlying contract are for interlocutory judicial resolution, but that
challenges to the validity or legality of the underlying contract are for arbitral
determination. Doing so lacks any doctrinal justification and, even if it were supported by
some sort of formal logic, is impracticable and inefficient.
The Supreme Court rightly held in Buckeye that distinctions between void and voidable
contracts were artificial for purposes of allocating jurisdictional competence. (496) For the
same reason, it is also artificial to distinguish between nonexistent contracts, on the one
hand, and void or invalid contracts, on the other hand. Even if the allocation of
jurisdictional competence is linked to the existence of a challenge to the arbitration
agreement (as the terms of the domestic FAA suggest), (497) a distinction between
nonexistent and void or invalid contracts lacks any substantive justification. Rather, as
discussed above, there are instances in which no valid arbitration agreement exists, for the
same reasons that the parties underlying contract is invalid; conversely, there are other
instances in which a valid arbitration agreement does exist, even though no underlying
contract was ever formed. (498)
P 438 Second, basing the allocation of jurisdictional competence on the existence of a challenge
to the substantive validity of the arbitration agreement, as Buckeye and other U.S. authority
does, is unwise. This is illustrated graphically by the numerous irreconcilable U.S. lower court
decisions, detailed above, adopting contrary conclusions regarding disputes over the
allocation of jurisdictional competence in disputes concerning capacity, duress, forgery and
the like. (499) Moreover, the enormous number of U.S. judicial authorities addressing the
allocation of jurisdictional competence is a dramatic outlier, compared to other jurisdictions,
while the complexity and confusion of that body of authority does little to provide guidance to
parties, while imposing enormous expense. (500)
Furthermore, the approach mandated by Buckeye, linking the allocation of jurisdictional
competence to the existence of a specific challenge to the arbitration agreement, ignores
important considerations of judicial efficiency, fairness and the parties likely intentions. (501)
Instead of considering what forum would be the most efficient and fair place to consider a
jurisdictional challenge, the Buckeye analysis adopts an arbitrary rule that any challenge
directed specifically to the arbitration agreement or to the existence of the underlying
contract must be resolved on an interlocutory basis by a court. (502)
Relatedly, the Buckeye rule is difficult and costly to apply and produces inefficient and unfair
results. The difficulty and complexity of the Buckeye rule is evidenced by the large numbers of
divergent U.S. decisions on the subject (detailed above). The inefficiency of the rule is also
evident from the fact that U.S. courts will be required to consider any challenge made to an
arbitration agreement, regardless whether or not an arbitral tribunal is already in place, with
greater expertise in the applicable law. As discussed in greater detail below, this makes very
little practical sense at all. (503)
Rather than adopting this rule, the better approach would be for courts to stay litigation of
challenges to the parties arbitration agreement, and permit them to be arbitrated, depending
principally on considerations of efficiency and fairness. That approach, which is authorized by
3 of the FAA and the inherent authority of courts to stay proceedings before them, would
produce the following general guidelines. (504)
First, where there is no challenge of any sort to the existence of the arbitration clause, then the
parties substantive dispute regarding the underlying contract must be referred to arbitration.
That is, if the court determines that a party has simply not challenged the existence or validity
of the arbitration agreement, but only the underlying contract, then the challenge not only
P 439 should, but must, be arbitrated (as in Prima Paint). (505) As discussed in detail below,
where there is no challenge to the arbitration clause, then the New York Convention and most
developed national arbitration legislation (including 2 and 4 of the FAA) impose a
mandatory requirement to refer the parties to arbitration. (506)
Second, if either the validity or the existence of the arbitration agreement itself is specifically
challenged, then courts should consider whether it is efficient and fair to resolve the challenge
on an interlocutory basis. If the challenge is conclusory, unsubstantiated, or belated, or if the
arbitral tribunal is better-suited to consider the challenge efficiently, then it should be
referred to arbitration. (507) For example, if the arbitration is well-advanced when litigation is
commenced; if the arbitration agreement is governed by a foreign law in which the arbitrators
are expert; if the jurisdictional issues are intertwined with the merits issues; or if the challenge
to the arbitration agreement is unsubstantiated, then it will virtually always be appropriate to
refer the jurisdictional dispute to arbitration. Conversely, if the arbitral tribunal has not been
constituted or the dispute is governed by U.S. law, then it may be appropriate for the court to
decide the dispute on an interlocutory basis.
If there are no strong arguments for or against interlocutory judicial consideration, the
presumption should be that the jurisdictional objection will be referred to arbitration for
initial consideration. (508) As discussed below, the foregoing approach is consistent with the
European Convention and well-considered national court authority, which provide that
consideration of jurisdictional objections are presumptively for the arbitral tribunal but may,
in particular cases, be resolved by a national court. (509) In international cases, this approach
also avoids the risks of competing national court decisions about a single dispute, while
permitting initial resolution of the dispute in the presumptive contractual forum.
29
Finally, even if a court does undertake interlocutory judicial consideration of jurisdictional
objections, the facts (and law) may very well establish that the clause was validly formed even
though the underlying contract was not. In this case, the court would refer the parties dispute
over their underlying contract to arbitration, pursuant to their valid arbitration agreement,
where the arbitrators would be free to find that the underlying contract either was or was not
validly formed. This result is a consequence of the separable status of the arbitration
agreement as a matter of substantive contract validity.
P 440 [c] England
English courts have repeatedly held that the invalidity of the parties underlying contract does
not necessarily result in the invalidity of an associated arbitration clause. This was reflected
first in common law decisions and then, more recently, in the English Arbitration Act, 1996, and
judicial interpretations of the Act. (510)
Early English decisions recognized a separability presumption, but did not apply it broadly,
instead generally holding that claims of non-existence, voidness, or illegality of the underlying
contract necessarily affected the validity of the arbitration clause. (511) In one courts words:
The plaintiffs in this action sought a declaration that the contract which I have just read was
illegal by reason of the war. Of course, if it was illegal, then any question of arbitration under
the contract would fall with it. (512)
As the House of Lords observed later, there was for some time a view that arbitrators could
never have jurisdiction to decide whether a contract was valid. If the contract was invalid, so
was the arbitration clause. (513)
Over time, however, the English courts more whole-heartedly embraced the separability
doctrine, culminating in the Court of Appeals ruling in Harbour Assurance Co. (U.K.) Ltd v. Kansa
General International Insurance Co. (514) There, the court held that the parties arbitration
clause was separate from the underlying insurance contract and that, as a consequence, the
initial illegality of the underlying insurance contract did not necessarily affect the arbitration
clause. (515) At the same time, paralleling developments in the United States, the Harbour
Assurance court emphasized that there would be instances in which the invalidity that affected
the underlying contract also affected the arbitration clause (e.g., claims of forgery of the
underlying contract or denial of the existence of any underlying contract):
P 441 There will obviously be cases in which a claim that no contract came into existence
necessarily entails a denial that there was any agreement to arbitrate. Cases of non est factum
or denial that there was a concluded agreement, or mistake as to the identity of the other
contracting party suggest themselves as examples. But there is no reason why every case of
initial invalidity should have this consequence. (516)
This general approach to the separability presumption was embraced, and expanded, in 7 of
the English Arbitration Act, 1996. Section 7 provides that, unless otherwise agreed, an
arbitration agreement which formspart of another agreementshall not be regarded as
invalid, non-existent, or ineffective because that other agreement is invalid, or did not come
into existence or has become ineffective, and it shall for that purpose be treated as a distinct
agreement. (517) This provision confirms earlier English authority holding that an arbitration
agreement is not necessarily invalid, nonexistent, or ineffective because of the invalidity of the
parties underlying contract. (518)
Importantly, 7 provides for the separability of the arbitration agreement with specific
reference to the substantive validity of the arbitration agreement (providing that the
arbitration clause shall for that purpose be treated as a distinct agreement). (519) As noted
above, this contrasts with Article 16 of the Model Law, which deals with separability only in the
context of competence-competence (The arbitral tribunal may rule on its own jurisdiction
[f]or that purpose.). (520)
At the same time, in this respect like the Model Law, (521) 7 of the Act provides only that an
arbitration clause is not invalid simply because of the invalidity of the underlying contract. In
so doing, 7 recognizes that the circumstances which give rise to the non-existence, invalidity,
or ineffectiveness of the underlying contract, or other circumstances, may also, in particular
cases, result in the same status for the associated arbitration clause. (522) Section 7 only
provides that an arbitration agreement is not invalid, nonexistent, or ineffective simply or
automatically because the underlying contract is.
P 442
English courts have given expansive effect to 7s statement of the separability
presumption. (523) In particular, applying 7 in Fiona Trust & Holding Corp. v. Privalov, the
English Court of Appeal and the House of Lords confirmed and extended the historic scope of
the separability presumption.
The Court of Appeal firmly embraced the separability presumption in Fiona Trust, holding that,
in order to challenge an arbitration agreement, it is not enough to say that the contract as a
whole is impeachable and that there must be something more than that to impeach the
arbitration clause. (524) The court reasoned that [i]t is only if the arbitration agreement is
itself directly impeached for some specific reason that the tribunal will be prevented from
deciding the disputes that relate to the main contract. (525) The court cited, as examples of
circumstances where the arbitration agreement would be directly impeached, cases
involving forgery of a signature or fundamental mistake. (526) Applying this formulation of the
30
separability presumption, the court held that a claim that the parties underlying contract had
been fraudulently induced did not impeach the separable arbitration agreement, and referred
the dispute to arbitration.
On appeal, the House of Lords affirmed, holding that a claim that the parties underlying
contract was procured by fraud (specifically, bribery of one partys employee) does not affect
the alleged contracts putative arbitration clause, unless the fraud was directly specifically at
the arbitration agreement. The House of Lords reasoned that claims not directed specifically
at the arbitration agreement are for arbitral determination, subject to subsequent judicial
P 443 review of the award. (527) In particular, citing to Prima Paint and subsequent authority,
(528) the House of Lords explained the separability presumption in broad terms, similar to
those adopted by the U.S. Supreme Court in Buckeye: The arbitration agreement must be
treated as a distinct agreement and can be void or voidable only on grounds which relate
directly to the arbitration agreement. (529) Lord Hopes judgment underscored the rigor of this
requirement:
The doctrine of separability requires direct impeachment of the arbitration agreement before
it can be set aside. This is an exacting test. The argument must be based on facts which are
specific to the arbitration agreement. Allegations that are parasitical to a challenge to the
validity to the main agreement will not do. (530)
Based on this analysis, the House of Lords went on to hold that a claim that the underlying
contract had been procured by fraud had to be referred to arbitration, because that claim did
not relate directly or specifically to the arbitration agreement. The Law Lords reasoned
that: if (as in this case) the allegation is that the agent exceeded his authority by entering into
a main agreement in terms which were not authorised or for improper reasons, that is not
necessarily an attack on the arbitration agreement. (531) Rather:
Even if the allegation is that there was no concluded agreement (for example, that terms of
the main agreement remained to be agreed) that is not necessarily an attack on the
arbitration agreement. If the arbitration clause has been agreed, the parties will be presumed
to have intended the question of whether there was a concluded main agreement to be
decided by arbitration. (532)
P 444 Fiona Trust was an application of the separability presumption, codified in 7 of the
Arbitration Act, leading to a conclusion that the arbitration agreement in question had not
been challenged and, as a consequence, that the challenge to the underlying contract had to
be referred to arbitration. The linkage between the existence of a challenge to the substantive
validity of the arbitration agreement and the allocation of jurisdictional competence was
made explicit in Lord Hopes judgment, which concluded: That being the situation in this case
[i.e., no direct challenge to the arbitration agreement], the agreement to go to arbitration must
be given effect. (533)
Lord Hopes judgment also expressly adopted the approach of Buckeye to 4 of the FAA, under
U.S. law, basing the allocation of jurisdictional competence on the existence of a challenge to
the validity of the arbitration agreement:
That section [4 of the FAA] provides that, on being satisfied that the making of the agreement
for arbitration or the failure to comply therewith is not in issue, the court shall make an order
directing the parties to proceed to arbitration. Section 7 uses slightly different language, but it
is to the same effect. (534)
The Fiona Trust judgment also adopted an analysis similar to that in Buckeye, and other U.S.
authorities, holding that challenges to the existence of the underlying contract may impeach
the associated arbitration clause. (535) Thus, the Law Lords concluded that some challenges to
the underlying contract would also impeach the validity of the arbitration agreement,
reasoning that:
there may be cases in which the ground upon which the main agreement is identical with the
ground upon which the arbitration agreement is invalid. For example, if the main agreement
and the arbitration agreement are contained in the same document and one of the parties
claims that he never agreed to anything in the document and that his signature was forged,
that will be an attack on the validity of the arbitration agreement. But the ground of attack is
not that the main agreement was invalid. It is that the signature to the arbitration agreement,
as a distinct agreement, was forged. (536)
Similarly, the Fiona Trust judgments identified cases where a party alleges that someone who
purported to sign as agent on his behalf had no authority whatever to conclude any agreement
on his behalf, and reasoned that this is also an attack on both the main agreement and the
P 445 More clearly than analysis by U.S. courts under the FAA, the Law Lords identified precisely
why it is that some challenges to the existence of the underlying contract may also involve
challenges to the associated arbitration agreement. As the House of Lords explained, when
there is a claim that a signature on the underlying contract was forged, the ground of attack is
not that the main agreement was invalid, but is instead that the signature to the arbitration
agreement, as a distinct agreement, was forged. (538) Put differently, and as discussed
above, the facts that establish certain defects in the underlying contract are doubly relevant
facts, which simultaneously establish the non-existence or invalidity of the arbitration
agreement. (539)
31
If English courts were to return to the questions presented in Heyman v. Darwins Ltd, they could
be expected to adopt a conclusion similar to that reached in 1942 by Viscount Simon:
If the dispute is whether the contract which contains the clause has ever been entered into at
all, that issue cannot go to arbitration under the clause, for the party who denies that he has
ever entered into the contract is thereby denying that he has ever joined in the submission [to
arbitration]. (540)
Importantly, however, the rationale of English courts for this conclusion under Fiona Trust and
the English Arbitration Act, 1996, would be vitally different. In particular, English courts would
no longer reason that by denying it concluded the underlying contract, a party thereby
denied it ever agreed to arbitrate. Rather, the approach under Fiona Trust would be that the
facts underlying a claim that no underlying contract was ever formed was generally be
identical, or largely identical to, the facts underlying a claim that no arbitration agreement
was ever formed either. That difference is important both analytically and practically
because in at least a reasonable number of cases, there will be additional facts demonstrating
that, despite the non-existence of the underlying contract, the parties did conclude a valid
[d] France
As discussed above, French courts have long recognized the autonomy or independence of
the arbitration agreement. (542) In turn, French arbitration legislation has codified that
principle, in Article 1442 of the 1980 version of the French arbitration legislation and Article
1447 of the 2011 Decree. In particular, as discussed above, Article 1447 of the revised French
Code of Civil Procedure provides that [t]he arbitration agreement is independent from the
contract to which it refers. It is not affected by [the underlying contracts] ineffectiveness.
(543)
Like courts in other jurisdictions, French courts have long held that, as a consequence of the
separability presumption, various defects in the parties underlying contract will not affect the
P 446 associated arbitration clause. Among other things, French courts have upheld the validity
of international arbitration agreements notwithstanding claims that the underlying contract
was repudiated, discharged, illegal, or voided. (544)
As in other jurisdictions, however, there are limits to the separability presumption in French
law. Paralleling U.S. and English approaches, in cases involving allegations that no underlying
contract was ever formed, French courts have generally held that these claims are likely to
involve facts that also impeach the existence of the arbitration agreement. (545) As one
leading French commentator reasons:
The scenario in which an arbitration clause most clearly would not be severed, and hence
would be invalid, is where the assent of one of the parties is lacking. If the person to whom the
offer is made does not accept it, then no contract has been formed, and the arbitration clause
contained in the offer has not been agreed to any more than any of the other clauses, for there
was no specific mutual agreement with respect to that clause. (546)
On the other hand, again paralleling U.S. and English authority, French commentary concludes
that challenges to the validity or legality of the underlying contract, as distinguished from
challenges to the existence of the underlying contract, do not generally affect the associated
arbitration clause. In the words of one commentator:
it is thus necessary to carefully distinguish between the voidness of the contract (with the
arbitration clause) and the total lack (inexistence) of such a contract (with the arbitration
clause). In such a case, the existence of the arbitration agreement (of the clause inserted into
the contract) is at stake and the concept of the autonomy is no longer sufficient. (547)
It is also important to note that the foregoing conclusions are directed, under French law,
towards the substantive validity of the arbitration agreement (rather than the allocation of
competence over jurisdictional objections). As discussed in detail below, French courts have
adopted a specialized competence-competence regime, which permits arbitral consideration
P 447 of (and generally precludes interlocutory judicial consideration of) all jurisdictional
challenges, including challenges specifically to the arbitration agreement and challenges to
the existence of the underlying contract. (548)
[e] Switzerland
As discussed above, Swiss courts were among the earliest proponents of the separability
doctrine in contemporary times, with the Swiss Law on Private International Law now
statutorily confirming the principle. (549) There is a substantial body of Swiss authority
applying the separability presumption. (550)
In a number of different contexts, Swiss courts have held that claims that the underlying
contract was voidable, void, illegal, or terminated do not automatically impeach the
arbitration agreement and are for resolution by the arbitrators. (551) Nevertheless, the Swiss
Federal Tribunal has also repeatedly held that the separability presumption does not
necessarily result in validation of an arbitration clause where the grounds for the invalidity of
the underlying contract likewise affect the arbitration clause. According to these decisions, this
is generally true for deficiencies in assent, such as duress or lack of capacity. (552) One Swiss
decision explained this analysis as follows:
32
Without any doubt, the invalidity of a contract does not always render the arbitration clause
invalid: the clause inserted in a contract that was contested on grounds of fraudulent
misrepresentation would still apply to the proceedings seeking invalidation since as an
independent procedural agreement it would remain effective even where one of the parties
were not bound by the contract. However, it is required that the clause was agreed to by
someone who was capable of signing the contract which contains the clause. (553)
Swiss commentary is to the same effect, reasoning that there are cases of an identity of
defect in both the underlying contract and arbitration agreement such as lack of capacity,
P 448 lack (or excess) of authority, lack of consent and duress. (554) This analysis parallels that
adopted in other jurisdictions, including the United States, England, France and elsewhere,
where courts have recognized the possibility of doubly relevant facts or circumstances that
affect both the underlying contract and the arbitration agreement. (555)
[f] Germany
As discussed above, German courts have for nearly a century held that the invalidity of an
underlying contract (for example, because a mandatory governmental approval for the
contract had not been granted) does not necessarily entail the invalidity of an arbitration
clause contained therein, which instead may remain effective for purposes of resolving
disputes between the parties connected to the underlying contract. (556) Other German
authorities have reached similar results, (557) generally holding that a challenge must be
directed at the separable arbitration agreement itself (rather than the underlying contract) in
order to impeach the validity of that agreement. (558) In one courts words:
The arbitral tribunaland the court of first instance correctly noted that the nullity of the
main contract, if there is such nullity, does not affect the arbitration clause. This reasoning
agrees with the widespread opinion also adopted in German legal circles as to the relation of
arbitration agreement and main contract. (559)
P 449 The separability presumption, and its application to preserve the validity of the
arbitration agreement notwithstanding the invalidity of the underlying contract, was confirmed
by the German enactment of the UNCITRAL Model Law (560) and by German commentary on the
Model Law. (561)
At the same time, like other jurisdictions, German authorities also hold that defects in consent
to the underlying contract can also affect the associated arbitration clause. German
commentators reason that the separability presumption does not validate an arbitration
clause if a challenge to the underlying contract is identical to the grounds for challenge to the
arbitration clause (identity of defect or Fehleridentitt). (562) For example, if a party is
deceived about the identity of its counter-party, that can invalidate both the underlying
contract and the associated arbitration agreement. (563)
[g] Other Jurisdictions
Courts in other jurisdictions around the world have also affirmed that the separability
presumption permits an arbitration clause to survive the invalidity, illegality, or termination of
the underlying agreement. The Italian Supreme Court held in 1981 that an arbitration clause is
not affected by any nullity of the underlying contract and that this bar[s] the admissibility
before the court, of an action aimed at having a contract declared null and void because its
subject matter is unlawful. (564) Another Italian decision declared: the arbitral clause is
autonomous with respect to the contract so that the nullity of the latter does not
automatically affect the former. (565)
Similarly, as early as 1936, the Swedish Supreme Court held that claims of fraud and
P 450 unconscionability of the underlying contract did not effect the existence or applicability
of that contracts arbitration clause. (566) The same court reiterated this conclusion in 1976,
relying on the separability doctrine to hold that alleged failures to reach agreement regarding
the terms of the main contract were irrelevant to the existence and validity of the arbitration
clause contained in that contract. (567) These results have been codified in the current
Swedish international arbitration statute. (568)
As also discussed above, the Japanese Supreme Court held in 1975 that the invalidity of the
parties underlying contract did not affect the validity of an arbitration clause contained
within the contract. (569) The court reasoned broadly that the arbitration clause must be
separated from the principal contract and judged independently, and that, unless there is a
special agreement between the parties, a defect in the formation of the principal contract
does not affect the validity of the arbitration agreement. (570) The Japan Arbitration Law,
which was modeled on the UNCITRAL Model Law, confirmed this approach and expressly
provides for the separability of arbitration agreements. (571)
Likewise, particularly in recent years, Chinese courts have applied the separability
presumption to uphold the validity of the arbitration agreement, notwithstanding the
invalidity of the underlying contract. (572) Among other things, Chinese courts have held that
claims of fraud or duress directed at the underlying contract will have no bearing on the
validity of the arbitration agreement. (573)
Some Chinese decisions have recognized limits to the separability presumption; one Chinese
court refused to give effect to an arbitration agreement contained in a contract that one party
had created using a cut-and-paste fraud to forge the signature of an unsuspecting counter-
33
P 451 party. (574) More recently, the Chinese Supreme Peoples Court held that the separability
presumption applies even in cases where the main contract is not concluded (null) or
does not come into effect after conclusion (void), reasoning that even these defects will not
influence the effect of the arbitration clause agreed by the parties, as the arbitration clause is
completely separable from the contract. (575)
Similar conclusions have been reached in numerous jurisdictions including India, (576)
Pakistan, (577) Australia, (578) Canada, (579) New Zealand, (580) Netherlands, (581) Bermuda,
(582) Israel (583) and Hong Kong. (584) In the words of the Pakistani Supreme Court,
[u]nder English and Pakistan laws, Arbitration Clauses contained in contracts are treated as
separate and self-contained contracts in that if it were not so, arbitration clauses would not at
all survive an attack on the main contract which is known as the doctrine of separability
[A]llegations of invalidity even serious allegations of its being ab initio void are perfectly
capable of being referred to arbitration. (585)
P 452 At the same time, virtually all national courts have also recognized the limits of the
separability presumption, holding that at least some defects affecting the underlying contract
may also impeach the associated arbitration clause. These decisions have typically involved
so-called doubly relevant facts or identity of defects, in which a lack of consent, capacity,
or authority vitiate both the underlying contract and the arbitration agreement. (586)
[3] Institutional Arbitration Rules
Leading institutional rules provide that a consequence of the separability presumption is that
the validity of the arbitration clause is not necessarily affected by the invalidity of the
underlying contract. The 2010 UNCITRAL Rules are representative, providing in Article 23(1) that
[a] decision by the arbitral tribunal that the contract is null and void shall not entail
automatically the invalidity of the arbitration clause. (587) The current ICC, (588) ICDR (589)
and LCIA Rules (590) are all similar, as are other leading institutional rules. (591)
All of these rules contain provisions which expressly recognize that an arbitration agreement
P 453 may continue to exist notwithstanding the non-existence or nullity of the parties
underlying contract. None of these institutional rules provide further guidance as to the
circumstances in which the underlying contracts invalidity will affect the associated
arbitration clause and when it will not. Making this determination is the responsibility of the
arbitral tribunal, subject to any relevant national court review. (592)
Leading institutional rules also expressly or impliedly provide for the arbitral tribunals
competence-competence to consider whether the arbitration agreement itself (as
distinguished from the underlying contract) is nonexistent, invalid, or illegal. (593) The
resolution of this issue determining the existence of a valid arbitration agreement raises
issues of competence-competence, which are discussed in detail below. (594)
[4] International Arbitral Awards
Like judicial decisions in most jurisdictions, international arbitral awards consistently
recognize that a principal consequence of the separability presumption is that the invalidity of
the underlying contract does not necessarily affect the substantive validity of the associated
arbitration clause. A classic application of the separability doctrine was by the tribunal in
Sojuznefteexport v. JOC Oil Ltd. There, an arbitral tribunal appointed by the Soviet Foreign
Trade Arbitration Commission (FTAC) considered, inter alia, whether or not the parties
arbitration clause was valid, notwithstanding the invalidity of the parties underlying contract
(for failure to comply with a requirement under Soviet law for two signatures). (595) In a classic
exercise of competence-competence, (596) the tribunal upheld the validity of the arbitration
clause, concluding that:
by virtue of its procedural content and independently of the form of its conclusion, [the
arbitration clause] is autonomous in relation to the material-legal contract. An arbitration
clause, included in a contract, means that there are regulated in it relationships different in
P 454 legal nature, and that therefore the effect of the arbitration clause is separate from the
effect of the remaining provisions of the foreign trade contract. (597)
The JOC Oil tribunal reasoned that the arbitration clause is autonomous in relation to the
[underlying] material-legal contract, and, therefore, that the effect of the arbitration clause
is separate from the effect of the remaining provisions of the foreign trade contract. (598) The
tribunal also reasoned that:
[t]he requirements, laid down for the recognition of the validity of the two contracts, which
differ in their legal nature, need not coincide.[The] question as to the validity or invalidity of
this contract does not affect the agreement of the parties about the submission of the existing
dispute to the jurisdiction of the FTAC. (599)
As to the parties underlying contract, the tribunal applied Soviet civil law, which imposed a
two-signature requirement for such agreements, and held that this requirement had not been
satisfied. In contrast, as to the arbitration clause, the tribunal applied the FTAC Rules and the
New York Convention, which did not impose the same requirements as Soviet civil law. (600)
Accordingly, although the tribunal concluded that the parties underlying contract was invalid,
it also held that the arbitration clause contained in the contract is valid. (601)
Other arbitral awards have reached similar results. (602) In Interim Award in ICC Case No. 4145,
34
the tribunal held that the question of validity or nullity of the main contract, for reasons of
public policy, illegality or otherwise, is one of merits and not of jurisdiction, [with the result of]
the validity of the arbitration clause having to be considered separately from the validity of
the main contract. (603) Similarly, in the Final Award in ICC Case No. 10329, the arbitrator
reasoned that should the arbitrator declare, on the merits, that there is no contract binding
P 455 on the parties this would not necessarily cause the invalidity of the arbitration agreement by
virtue of Art. 178(3) of the [Swiss Law on Private International Law] which affirms the well
internationally established principle of severability or separability of the arbitration
agreement. (604)
At the same time, most international arbitral awards have also held that there are cases in
which the non-existence or invalidity of the parties underlying contract will affect the
associated arbitration clause. In the words of one award:
An arbitration clause may not always be operative in cases where it is clearly indicated by
facts and circumstances that there never existed a valid contract between the parties. (605)
While there are other awards to the same effect, relatively few arbitral tribunals have
considered claims that there never was a contract between the parties. (606) In the majority of
cases (particularly those involving issues of validity or legality, rather than formation), arbitral
tribunals have rejected arguments that alleged defects in the underlying contract also
impeached the associated arbitration agreement. (607)
P 456 [5] Future Directions: Separability Presumption and Validity of Arbitration Agreement
In sum, national arbitration statutes, judicial decisions, institutional arbitration rules,
international arbitral awards and other authorities uniformly hold that the non-existence,
invalidity, illegality, or termination of the parties underlying contract does not necessarily
impeach or affect the associated arbitration agreement. In turn, this has two related
applications in particular cases: (a) the arbitration agreement will exist and be substantively
valid, notwithstanding the non-existence, invalidity, or illegality of the underlying contract;
and (b) the arbitral tribunal may (and must) consider challenges to the existence, validity or
legality of the underlying contract, because such challenges do not impeach the arbitration
agreement, which requires resolving those challenges to the underlying contract by arbitration.
These two consequences of the separability presumption must be distinguished from the
competence-competence doctrine, discussed in detail below, which permits an arbitral
tribunal to consider challenges to the existence of the arbitration agreement itself. (608)
First, relying on the separability principle, national and international authorities have almost
uniformly held that the non-existence, invalidity, or illegality of the underlying contract does
not necessarily result, as a substantive matter, in the invalidity of the arbitration agreement.
(609) This conclusion is, in many respects, the most elementary, and most significant
consequence of the separability presumption. It is a direct and logical consequence of the
separability of the arbitration agreement, and it can be regarded as a general principle of
international arbitration law, giving effect to the parties intentions.
Second, national courts and arbitral tribunals have held, in the circumstances of a large
number of particular cases, that the invalidity or illegality of the parties underlying contract
did not in fact affect or invalidate the associated arbitration agreement. (610) Properly viewed,
the separability presumption means not just that the invalidity of the underlying contract will
not necessarily affect the associated arbitration agreement, but will not ordinarily do so.
Rather, in the vast majority of cases, the invalidity, illegality, termination, or ineffectiveness of
the underlying contract will have no effect on the associated agreement to arbitrate.
Third, national courts and arbitral tribunals have also held, albeit in relatively rare cases, that
the non-existence of the underlying contract has resulted in the non-existence or invalidity of
the associated arbitration agreement. These decisions have typically arisen in connection with
incapacity, lack of authority, duress, forgery, or similar lack of consent to the underlying
contract, where courts or tribunals have held that facts establishing the non-existence or
P 457 invalidity of the underlying contract also invalidated the parties arbitration agreement.
Courts in a number of jurisdictions, including the United States, England, France and
Switzerland, have all reached such results, albeit in rare and relatively unusual cases. (611)
For example, a party may deny that it ever executed or in any way assented to the underlying
contract, or even conducted negotiations with its putative counter-party (and that the asserted
underlying contract is a sham or a forgery). Critics of the separability presumption argue that
this example demonstrates the presumptions inadequacy, because it makes no sense to posit
the existence of an arbitration agreement where no underlying contract was conceivably
entered into:
carried to its extreme,the separability doctrinecould give rise to a valid arbitral award
even if two parties had never met, so long as one person alleged there was a contract between
the containing an arbitration clause. (612)
Other commentators broaden their criticism of the separability presumption, reasoning that:
[I]f an agreement contains an obligation to arbitrate disputes arising under it, but the
agreement is invalid or no longer in force, the obligation to arbitrate disappears with the
agreement of which it is a part. If the agreement was never entered into at all, its arbitration
clause never came into force. If the agreement was not validly entered into, then, prima facie,
35
it is invalid as a whole, as must be all of its parts, including its arbitration clause. (613)
These comments do not ultimately provide grounds for rejecting the separability presumption
and the possible validity of the arbitration agreement, notwithstanding the non-existence or
invalidity of the underlying contract.
It is true that the non-existence of an underlying contract may be accompanied by the non-
existence of the arbitration agreement. Thus, where two parties never met or negotiated in any
way, there will be no arbitration agreement and no underlying contract. This is not, however, in
any way inconsistent with the separability presumption; on the contrary, properly analyzed,
this type of case is a useful illustration of the separability presumptions application.
As discussed above, the separability presumption does not provide that, where the underlying
contract is nonexistent or invalid, the arbitration agreement is nonetheless necessarily
existent and valid. (614) Rather, it merely provides that the arbitration agreement may be
P 458 existent and valid even if the underlying contract is not. The relevant question, therefore,
is whether the parties did or did not negotiate and conclude a valid agreement to arbitrate
their disputes even if they did not also conclude the underlying contract. (615)
In general, given the close relationship between the underlying contract and the arbitration
agreement, defects in the formation of the former are likely to affect the latter: parties do not
ordinarily agree to arbitration provisions in the abstract (floating in the legal ether (616) ),
without an underlying contract. Nevertheless, there will be instances where the parties are
held to have concluded their negotiations, and reached a valid binding agreement, on an
arbitration clause, but not on the underlying contract. (617)
Importantly, under the separability presumption, the underlying factual allegations for any
alleged contractual defect must be considered separately, from both factual and legal
perspectives, to determine whether that defect impeaches the arbitration clause or the
underlying contract. In doing so, it is appropriate, as U.S., English, German and other courts
have concluded, to require that challenges to the existence or validity of the arbitration
agreement be made specifically, directly, per se, or in particular, to the agreement to
arbitrate. (618) These formulations all correctly require that any challenge to the arbitration
agreement involve factual allegations and legal claims that are specifically relevant to the
existence and validity of the agreement to arbitrate.
Contrary to the analysis in some lower court decisions, (619) however, the decisive issue for
purposes of deciding the substantive validity of the arbitration agreement is not whether a
defect also affects the underlying contract. That is because, in particular cases, defects
involving matters such as duress, forgery and incapacity may apply equally to both the
underlying contract and the arbitration agreement so-called doubly relevant facts or
P 459 identities of defect. (620) The fact that a defect affects the underlying contract should
not preclude it from also and simultaneously affecting the arbitration clause.
For example, there will be instances where a party lacked any mental capacity to agree to
anything, (621) where a partys signature was forged without it ever having even contemplated
contracting with its putative counter-party, (622) or where wholly unlawful duress occurred.
(623) In cases involving these types of facts, the substantive validity of the arbitration clause
itself will almost always be impeached, as well as the underlying contract.
In all of these cases, the arbitration agreement is not impeached because the underlying
contract is impeached, but rather, the arbitration agreement is impeached for the same
reasons and based on the same facts that impeach the underlying contract. The critical point
is, as the House of Lords observed in Fiona Trust, that the arbitration agreement is a separate
agreement, whose existence and validity must be considered separately: the ground of attack
is not that the main agreement was invalid. It is that the signature to the arbitration
agreement, as a distinct agreement, was forged. (624) The fact that an arbitration agreement,
as well as the underlying contract, may be invalid or nonexistent is thus not inconsistent with
the separability presumption, but an application of it.
On the other hand, many claims or facts that impeach the underlying contract will not affect
the substantive validity of the associated arbitration clause. That would be true of virtually all
fraudulent inducement, illegality, mistake, unconscionability, frustration, and termination
claims (e.g., the underlying contract is terminated, without any intention of terminating the
arbitration agreement, or the underlying contract is usurious or lacks governmental approval),
as well as some forgery or duress claims (e.g., the parties agree upon the arbitration clause,
and initial it, but do not voluntarily agree upon the underlying contract, which is then
procured by forgery or duress). (625) In these cases, there is a defect affecting the underlying
commercial contract, but there is nothing in the particular nature or circumstances of that
defect that provides any basis for challenging the associated arbitration clause.
The decisive issues in each case should be what the particular factual allegations of a defect
are and what the asserted legal consequences of those allegations are. Most categories of
defects can in principle be directed specifically at the arbitration agreement (e.g., the
arbitration agreements terms are unconscionable, were procured by fraud, were illegal, or
were indefinite), involving matters that do not concern the underlying contract. Equally, and
again in principle, these categories of defects can also be directed specifically and only at the
underlying contract. With regard to issues of substantive validity, the decisive question in each
P 460 case is whether the specific factual allegations and legal claims of the parties do or do not
impeach the separable arbitration agreement.
36
The most difficult issues arise when a particular alleged defect in formation affects both the
arbitration clause and the underlying contract (e.g., the contract, including the arbitration
clause, was never executed, or the contract was affected by forgery, or a party lacked mental
capacity). These are cases of doubly relevant facts or identities of defects, where a
particular fact or defect is relevant to the validity or existence of both the underlying contract
and the associated arbitration agreement.
In these cases, absent special or additional circumstances, the reasons for the defect in the
underlying contract almost always also affects the substantive validity of the arbitration
agreement. There is seldom a credible basis for arguing that forgery of a signature on a
contract, affecting the underlying contract, does not also impeach the arbitration clause:
unless the arbitration clause was separately signed, or agreed in some other manner, then a
forged signature on the underlying contract evidences the absence of agreement on anything
in that document. (626) Similarly, the failure to execute the underlying contract will generally
evidence a failure to agree upon the associated arbitration clause; there may be cases where
separate expressions of assent exist with regard to the arbitration agreement, but these
circumstances will be unusual, (627) and must be established through allegations directed
specifically at the existence of an arbitration agreement. Likewise, a lack of capacity or
authority to conclude the underlying contract will often simultaneously impeach the
associated arbitration clause; there may be cases where a party has capacity to execute one
agreement, and not the other, but these are unusual. (628)
In light of this, and returning to the commentary cited above, it is not correct to state that,
[where] the [underlying commercial] agreement is invalid or no longer in force, the obligation
to arbitrate disappears with the agreement of which it is a part. (629) There may be cases
where this result is true, but that depends on a separate analysis of the invalidity or
ineffectiveness of the arbitration agreement itself, not an automatic conclusion that the
arbitration clause disappears with the agreement of which it is a part. On the contrary, in
some circumstances the legal or factual reasons for the underlying contracts invalidity will
simply not also apply to the separable arbitration agreement.
Likewise, it is also not correct to say that, [i]f the agreement was never entered into at all, its
arbitration clause never came into force. (630) Again, this may sometimes (or even often) be
true, but there will also be cases where an arbitration agreement is formed prior to the parties
P 461 underlying contract being consummated, just as there are cases where termination of the
underlying contract does not result in termination of the associated arbitration clause. (631)
Turning to the extreme example of an arbitration agreement between two parties who have
never dealt with one another, the short answer is that no arbitration agreement would exist in
such circumstances. That would be true under the separability presumption, just as under an
analysis where there was no such presumption: there would simply be no consent to any
agreement to arbitrate anything, whether separable or not. (632) The hypothetical therefore
does not, on a correct analysis, provide grounds for questioning the separability presumption:
it merely underscores the fact that even a separable arbitration agreement may suffer from its
own separate flaws of formation, invalidity, or legality. (633) The essential point of the
separability presumption, however, is that it is the legal rules and facts relating to the
existence and validity of the separable arbitration agreement, not to the underlying contract,
that must be considered in particular cases.
Fourth, many decisions involving the separability presumption arise in the context of national
court proceedings considering questions of competence-competence, and particularly whether
a claim of contractual non-existence, invalidity, or illegality should be referred to arbitration
or judicially resolved. As discussed above, it is important to distinguish between decisions,
and analysis, based on allocations of jurisdictional competence and those based only on the
substantive validity of the arbitration agreement. (634)
Where a party challenges only the underlying contract, that claim must be referred to
arbitration. That is because, as a consequence of the separability presumption, a challenge
directed only to the underlying contract does not impeach the arbitration clause and there is
no basis for denying that the parties dispute must be referred to arbitration. Simply put, the
challenge to the underlying contract is not a jurisdictional challenge at all, and is therefore for
decision by the arbitrators. (635)
In contrast, where a party specifically challenges the separable arbitration agreement, and not
the underlying contract, that claim raises pure questions of the allocation of jurisdictional
competence, discussed in greater detail below. (636) Importantly, the allocation of
competence to decide these true jurisdictional challenges depends on different
considerations than the separability presumption or substantive validity of the arbitration
agreement. As discussed below, the allocation of jurisdictional competence depends instead
P 462 on considerations of fairness and efficiency, which may well call for resolving true
jurisdictional challenges by an arbitral tribunal, notwithstanding the existence of a good faith
dispute about the existence or validity of any agreement to arbitrate. (637)
The same analysis applies where a party challenges both the underlying contract and the
arbitration agreement. In order for such a challenge to impeach the arbitration agreement,
most national courts have held that it must be directed specifically or in particular at the
arbitration clause, and not generally at the underlying contract. (638) As already discussed,
unless a challenge is directed at the arbitration agreement, then there is no jurisdictional
challenge and the challenge (to the underlying contract) must be referred to arbitration. (639)
37
The better view is that challenges nominally directed to both the parties underlying contract
and the associated arbitration agreement should be carefully examined to determine whether
they actually impeach the arbitration clause. In many cases of alleged invalidity or illegality
including claims of fraudulent inducement, unconscionability, duress, mistake, frustration and
illegality (640) a challenge to the underlying contract will (as noted above) simply not
impeach the separable arbitration clause. In these instances, such claims must be referred to
arbitration, even if they purport to impeach the arbitration clause, because they, in actuality,
only concern the parties underlying dispute.
In other cases of alleged non-existence or invalidity including claims of lack of consent
(forgery, duress), lack of authority, or incapacity a challenge to the underlying contract may
also impeach the arbitration agreement. If a claim does impeach the arbitration agreement,
then generally-applicable rules regarding the allocation of jurisdictional competence apply.
As discussed in greater detail below, in these cases, procedural considerations of efficiency,
fairness and the apparent credibility of the parties claims should inform the decision whether
to refer a jurisdictional dispute to arbitration or retain it for interlocutory judicial
consideration. (641)
Finally, it is important in assessing national court decisions on this subject to take into account
their precise procedural posture and holding. As discussed below, national courts sometimes
rely on loose formulations of the separability presumption to reject jurisdictional challenges
and to require the parties to arbitrate, when their decisions are in fact allocations of
jurisdictional competence, referring a jurisdictional challenge to initial decision by the
arbitrators for reasons of efficiency. (642) Importantly, these decisions cannot properly be
considered final, substantive applications of the separability presumption. Rather, these
decisions reflect a procedural allocation of competence to render an initial decision on the
P 463 jurisdictional dispute, which neither decides the substantive validity of the arbitration
agreement or the limits the scope of judicial review of any jurisdictional award by the
arbitrators. (643)
[B] Consequences of Separability Presumption: Potential Applicability of Different

National Laws to Arbitration Agreement and Underlying Contract
The separability presumption has a second consequence, in addition to permitting the
arbitration agreement to remain valid, notwithstanding the non-existence or invalidity of the
underlying contract. As discussed in detail below, (644) the separability presumption means
that an arbitration agreement can be governed by a different national law from that (or those)
applicable to the parties underlying contract. The leading explanation for this result is the
separability presumption, which postulates two separable agreements of differing characters,
(645) which can readily be governed by two different national (or other) legal regimes.
As with its other applications, the separability presumption does not generally mean that the
law applicable to the arbitration clause is necessarily different from that applicable to the
underlying contract. (646) Indeed, in many cases, the same law governs both the arbitration
agreement and the underlying contract notwithstanding the separability of the arbitration
agreement. (647) The separability presumption instead means that differing national laws may
apply to the main contract and the arbitration agreement. The essential point, however, is
that, where the arbitration clause is a separate agreement, a separate conflict of laws analysis
must be performed with regard to that separate agreement. (648)
Moreover, as discussed in greater detail below, (649) the result in many cases where the law
applied to the arbitration clause differs from that applicable to the underlying contract has
been that the arbitration clause was upheld against challenges to its validity. That is, by
applying a law different from that governing the parties underlying contract, national courts
and arbitral tribunals have insulated international arbitration agreements against challenges
to their validity and legality based on (often idiosyncratic or discriminatory) local law. (650) By
P 464 providing the foundation for this result, the separability presumption has contributed
significantly to the efficacy of international arbitration agreements and the arbitral process.
(651)
[C] Consequences of Separability Presumption: Potential Applicability of Different

Legal Rules Within Same Legal System to Arbitration Agreement and Underlying
Contract
Even if only one national (or other) legal system applies to both an underlying contract and its
associated arbitration clause, a third consequence of the separability presumption is that
different substantive legal and/or choice-of-law rules within the same legal system may, and
often do, apply to the two agreements. It follows from the separability presumption that an
arbitration agreement is categorized as a different type of agreement than is the underlying
contract, (652) and that this agreement can be subject to a different set of legal rules than the
Thus, different rules governing formation, formal validity and substantive validity may
potentially apply to the parties arbitration agreement and to their underlying contract. (653)
This has been true historically, (654) and is the direct result of both international arbitration
conventions and, in a number of jurisdictions, national arbitration legislation. (655) This
possibility has received less attention than the potential applicability of different national
legal systems to the arbitration agreement and underlying contract, but is of almost equal
38
significance.
Most importantly, the New York Convention (and other international conventions, including the
European Convention) prescribe rules with regard to the form of arbitration agreements, which
are specifically applicable to international arbitration agreements, and not to other types of
agreements. (656) These treaties also contain basic pro-arbitration principles with regard to
the presumptive substantive validity of international arbitration agreements, which are not
applicable to other types of agreements. (657) Of critical importance, the rules applicable to
international arbitration agreements under the New York Convention (and other international
arbitration treaties) are international rules in contrast to the rules applicable to most other
types of contracts which individual states are obliged to respect. Equally, many developed
P 465 jurisdictions have adopted national arbitration statutes that prescribe specific rules with
regard to the form and validity of international arbitration agreements which are not
applicable generally to other types of contracts. (658)
This analysis is well-illustrated by the award in Sojuznefteexport v. JOC Oil, a classic arbitral
decision (also discussed above). (659) There, the tribunal held that Soviet law applied to both
the parties underlying contract and their arbitration agreement, but that the underlying
contract had not been validly concluded, under the Soviet law applicable to the contract
formation of such agreements, while the associated arbitration agreement had been validly
concluded, under the less-demanding rules of Soviet law applicable to the formation of
arbitration agreements:
An arbitration clause, included in a contract, means that there are regulated in it
relationships different in legal nature, and that therefore the effect of the arbitration clause is
separate from the effect of the remaining provisions of the foreign trade contract. The
requirements, laid down for the recognition of the validity of the two contracts, which differ in
this legal nature, need not coincide. (660)
As discussed in greater detail below, a number of national court decisions and arbitral awards
have reached similar results, applying differing legal sets of rules to uphold the existence of a
valid arbitration agreement notwithstanding the absence of a valid underlying contract. (661)
These results are applications of the presumption that international arbitration agreements
are separate from the underlying contract with which they are associated and, in many cases,
are subject to a separate, specialized set of legal rules. (At the same time, as also discussed
below, the New York Convention is also best understood as imposing international limits on
Contracting States discrimination against international arbitration agreements, which prevent
the application of specialized rules of contract law to deny effect to such agreements. (662) )
[D] Consequences of Separability Presumption: Existence, Validity and Legality of

Underlying Contract Does Not Necessarily Affect Arbitration Agreement
Just as the non-existence or invalidity of the underlying contract does not necessarily result in
the non-existence or invalidity of the arbitration clause, the converse is true: the existence and
P 466 validity of the underlying contract does not necessarily result in the same status for the
arbitration agreement. Rather, the separability of the arbitration clause, and the existence of
specialized legal rules applicable to the arbitration clause, (663) creates circumstances in
which the arbitration agreement may be invalid, notwithstanding the undisputed existence
and validity of the underlying contract.
For example, as discussed in greater detail below, the New York Convention, UNCITRAL Model
Law and other international arbitration instruments impose particular form requirements on
international arbitration agreements (e.g., requirements of a writing). (664) The fact that an
underlying contract satisfies the form requirements applicable to it (e.g., a valid oral contract)
does not necessarily mean that the associated arbitration agreement satisfies these
specialized form requirements. (665)
Alternatively, while the underlying contract is indisputably valid, there may be substantive
defects in the associated arbitration clause which can nonetheless render it invalid (e.g.,
contradictory terms, (666) lack of specificity, (667) unacceptably one-sided terms, (668) etc.).
Or, while the parties may clearly have expressed their assent to the terms of the underlying
commercial contract, they may not have agreed upon dispute resolution provisions. (669)
Likewise, the parties may have agreed to terminate, (670) or waived, (671) the arbitration
agreement, while not disturbing their underlying commercial contract; alternatively, the
arbitration agreement may have been repudiated (672) or become impossible to perform, (673)
even though the underlying contract has not. All of these cases are consequences of the
separable character of the arbitration agreement.
As discussed above, in determining whether an arbitration agreement is valid, notwithstanding
the non-existence or invalidity of the underlying contract, it is essential to focus specifically
and directly on the agreement to arbitrate. (674) Precisely the same analysis applies in
determining whether an arbitration agreement is invalid, notwithstanding the existence and
validity of the underlying contract. That is, determining whether an arbitration agreement has
been validly formed and remains in effect requires considering that agreement specifically,
and not the underlying contract.
[E] Consequences of Separability Presumption: Invalidity, Illegality, or Repudiation of

Arbitration Agreement Does Not Necessarily Affect Underlying Contract
P 467
39
P 467 There is another related application of the separability presumption, which receives little
attention, but which has some practical importance: the separability presumption means that
the invalidity, illegality, or repudiation of the arbitration clause does not necessarily entail the
invalidity of the underlying contract.
Despite deep-seated international and national commitments to the enforceability of
international arbitration agreements, there are instances in which such agreements are invalid
or illegal under applicable law. (675) Similarly, there are cases in which one party repudiates
its commitment to arbitrate, typically by commencing litigation in national courts
notwithstanding the parties arbitration agreement, (676) or in which circumstances render an
arbitration clause dysfunctional and unenforceable. (677)
Where the parties agreement to arbitrate is invalid or repudiated, there is at least a
theoretical possibility that the parties underlying contract is thereby also invalidated. If the
arbitration clause were considered to be an integral part of the parties overall agreement, as
was historically the case in some jurisdictions, (678) then the invalidity of the arbitration
clause would arguably require invalidating the underlying contract as well. (679)
In practice, however, there are relatively few circumstances in which the invalidity or
repudiation of the parties arbitration agreement results in the invalidity of their underlying
contract. Indeed, national courts are virtually never presented with this argument. That is, in
large part, a result of the separability presumption: under the presumption, defects in the
parties arbitration agreement will presumptively not taint the parties underlying contract.
More specifically, the separability presumption recognizes that the purpose of an
international arbitration agreement is to resolve disputes relating to the underlying contract
in the fairest, most efficient manner possible and that, where the arbitration agreement is
invalidated for unexpected reasons (and cannot be replaced by alternative terms), this will
P 468 ordinarily not provide a basis for concluding that the parties underlying commercial
transaction would not have been entered into. Rather, it will require dealing with the resulting
contractual gap in an internationally-neutral manner. Only where this cannot be done will the
invalidity of the arbitration clause potentially impeach the underlying contract.
This analysis is different from cases involving competing proposals between the parties as to
whether or not arbitration should be used as a dispute resolution mechanism, or as to what
arbitral mechanism should be used. (680) In these cases, where there has never been a
meeting of the minds on any arbitration clause, the validity of any underlying contract may be
affected by the non-existence of any agreement on arbitration or other dispute resolution
mechanisms. In particular, in transactions involving foreign states or foreign state entities,
where a private party seeks to internationalize the dispute resolution mechanism, non-
existence or invalidation of the arbitration agreement may very well impeach the entire
contractual relationship.
[F] Separability Presumption Does Not Provide Basis for Competence-Competence

Doctrine
It is sometimes asserted or assumed that the separability presumption requires or implies the
existence of the competence-competence doctrine. Thus, it is sometimes suggested, the
separability of the arbitration clause enables an arbitral tribunal to consider the existence
and scope of its own jurisdiction. (681) In the words of one commentary:
An independent (or autonomous) arbitration clause thus gives the arbitral tribunal a basis to
decide on its own jurisdiction, even if it is alleged that the main contract has been terminated
by performance or by some intervening event. (682)
This analysis is mistaken; it confuses the separability presumption with the competence-
competence doctrine. As discussed below, the separability presumption does not in fact
explain the competence-competence doctrine. (683) Although the competence-competence
doctrine arises from the same basic objectives as the separability presumption (e.g.,
enhancing the efficacy of international arbitration as a means of dispute resolution), it is not
logically dependent upon, nor explicable by reference to, the separability presumption. (684)
P 469 Rather, the competence-competence doctrine permits an arbitral tribunal to consider
and decide upon its own jurisdiction even where the existence or validity of an arbitration
agreement (as distinguished from the underlying contract) is disputed. (685) That is made
explicit, for example, in Articles V(3) and VI(3) of the European Convention, (686) Article 16(1) of
the UNCITRAL Model Law (687) and judicial authority in all developed jurisdictions. (688)
Accordingly, an arbitral tribunals jurisdiction to consider its own jurisdiction cannot depend
on the separability of the arbitration clause from the underlying contract, but must instead
rest on other considerations. (689)
Put simply, the competence-competence doctrine could very readily exist without a
separability presumption and, conversely, the separability presumption could be accepted
without also adopting a rule of competence-competence. Thus, national law can and, in some
jurisdictions (such as France and India), (690) does grant arbitral tribunals competence-
competence to consider and decide all jurisdictional objections, whether directed to the
underlying contract or the arbitration agreement. Conversely, national law could (and often
does) recognize the separability presumption, and thereby provide that challenges only to the
underlying contract are not jurisdictional challenges to the arbitrators power, but that, where
true jurisdictional objections to the validity or existence of the arbitration agreement are
40
made, there is no rule of competence-competence and the objections must be resolved by
Finally, it is important to note that the separability presumption and substantive validity of
the arbitration agreement raise different questions from the appropriate scope of judicial
review of either applications of the presumption or arbitral awards addressing challenges to
the validity of arbitration agreements. The scope of judicial review for arbitrators
jurisdictional decisions in different legal systems is discussed in detail below. (692)
Nonetheless, there are material relationships between the separability presumption and the
competence-competence doctrine. One consequence of the separability doctrine is that many
allegations that would otherwise potentially impeach the validity of the arbitration agreement
do not do so and therefore must be submitted to the arbitral tribunal for resolution as part of
P 470 their mandate of resolving the merits of the parties dispute. That is, because of the
separability doctrine, certain claims regarding the underlying contract simply do not impeach
or question the validity of the arbitration agreement, and therefore must be resolved by the
arbitrators. (693)
Despite these complexities, the separability presumption serves a very significant function in
the international arbitral process. It permits analysis of jurisdictional objections to be focused
specifically and properly on the arbitration agreement itself, rather than the underlying
contract. Even if the parties underlying contract is invalid or nonexistent, this will often not
affect the associated arbitration agreement, which will remain fully effective as a means to
resolve the parties disputes. The separability presumption also enables the arbitrators to
consider and resolve disputes about the existence, validity, legality and termination of the
underlying contract, regardless whether the competence-competence doctrine is accepted,
while requiring arbitration of disputes that concern only the existence, validity, or legality of
the underlying contract (and not the arbitration agreement). In all these respects, the
separability presumption is essential to preventing delays and disruptions in the international
P 471 arbitral process arising from litigation in national courts.
References
41
1) For commentary, see Aeberli, Jurisdictional Disputes Under the Arbitration Act 1996: A
Procedural Route Map, 21 Arb. Intl 253 (2005); Bermann, The Gateway Problem in
International Commercial Arbitration, 37 Yale J. Intl L. 1 (2012); Bermann, The Supreme
Court Trilogy and Its Impact on U.S. Arbitration Law, 22 Am. Rev. Intl Arb. 551 (2011); A.
Briggs, Agreements on Jurisdiction and Choice of Law 70-79, 85-97 (2008); J. Carter & J.
Fellas, International Commercial Arbitration in New York 213-15 (2010); Davis, A Model for
Arbitration Law: Autonomy, Cooperation and Curtailment of State Power, 26 Ford. Urb. L.J.
167 (1999); Dimolitsa, Separability and Kompetenz-Kompetenz, in A. van den Berg (ed.),
Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of Application of
the New York Convention 217 (ICCA Congress Series No. 9 1999); Drahozal, Buckeye Check
Cashing and the Separability Doctrine, 1 Y.B. Arb. & Med. 55 (2009); L. Edmonson (ed.),
Domke on Commercial Arbitration 11 (3d ed. & Update 2013); Gardner, The Doctrine of
Separability in Soviet Arbitration Law: An Analysis of Sojuzneftexport v. JOC Oil Co., 28
Colum. J. Transnatl L. 301 (1990); Gee, The Autonomy of Arbitrators and Fraud Unravels All,
22 Arb. Intl 337 (2006); Herrera Petrus, Spanish Perspectives on the Doctrine of Kompetenz-
Kompetenz and Separability: A Comparative Analysis of Spains 1988 Arbitration Act, 11 Am.
Rev. Intl Arb. 397 (2000); H. Kronke et al. (eds.), Recognition and Enforcement of Foreign
Arbitral Awards: A Global Commentary on the New York Convention 51-54 (2010); Mayer,
Lautonomie de larbitre internationale dans lapprciation de sa propre comptence, 217
Recueil des Cours 319 (1989); Mayer, The Limits of Severability of the Arbitration Clause, in
A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40
Years of Application of the New York Convention 261 (ICCA Congress Series No. 9 1999);
Monestier, Nothing Comes of NothingOr Does It? A Critical Re-Examination of the
Doctrine of Separability in American Arbitration, 12 Am. Rev. Intl Arb. 223 (2001); Note,
Federal Arbitration Act and Application of the Separability Doctrine in Federal Courts, 1968
Duke L.J. 588 (1968); Nussbaum, The Separability Doctrine in American and Foreign
Arbitration, 17 N.Y.U. L.Q. Rev. 609 (1940); Park, Determining Arbitral Jurisdiction: Allocation
of Tasks Between Courts and Arbitrators, 9 Arb. & Disp. Res. L.J. 19 (2000); Rau, Arbitral
Jurisdiction and the Dimensions of Consent, 24 Arb. Intl 199 (2008); Rau, Arbitral Power
and the Limits of Contract: The New Trilogy, 22 Am. Rev. Intl Arb. 435 (2011); Rau, Everything
You Really Need to Know About Separability in Seventeen Simple Propositions, 14 Am. Rev.
Intl Arb. 1 (2003); Rau, The Arbitrability Question Itself, 10 Am. Rev. Intl Arb. 287 (1999);
Rogers & Launders, Separability The Indestructible Arbitration Clause, 10 Arb. Intl 77
(1994); Rosen, Arbitration Under Private International Law: The Doctrines of Separability and
Competence de la Competence, 17 Ford. Intl L.J. 599 (1993-1994); Samuel, Separability in
English Law: Should An Arbitration Clause Be Regarded as An Agreement Separate and
Collateral to A Contract in Which It Is Contained?, 3(3) J. Intl Arb. 95 (1986); Samuel,
Separability and the U.S. Supreme Court Decision in Buckeye v. Cardegna, 22 Arb. Intl 477
(2006); Sanders, Lautonomie de la clause compromissoire, in Hommage Frdric
Eisemann 31 (1978); Schlosser, The Competence of Arbitrators and of Courts, 8 Arb. Intl 189
(1992); S. Schwebel, International Arbitration: Three Salient Problems (1987); Sheppard, The
Moth, the Light and the United States Severability Doctrine, 23 J. Intl Arb. 479 (2006);
Stipanovich, The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and
the Future of American Arbitration, 22 Am. Rev. Intl Arb. 323 (2011); D. Sutton, J. Gill & M.
Gearing, Russell on Arbitration 2-007 to 2-014 (23d ed. 2007); Svernlov, The Evolution of
the Doctrine of Separability in England: Now Virtually Complete?, 9(3) J. Intl Arb. 115 (1992);
Svernlov & Carroll, What Isnt, Aint: The Current Status of the Doctrine of Separability, 8(4)
J. Intl Arb. 37 (1991); Ware, Arbitration Laws Separability Doctrine After Buckeye Check
Cashing, Inc. v. Cardegna, 8 Nev. L.J. 107 (2007); Wilske & Fox, Recognition of Arbitration
Agreements, in R. Wolff (ed.), New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards: Commentary 182 (2012).
2) Westacre Invs. Inc. v. Jugoimport-SDPR Holdings Co. [1998] 4 All ER 570 (QB) (English High
Ct.). See also Bremer Vulkan Schiffbau und Maschinenfabrik v. S. India Shipping Corp. Ltd
[1981] AC 909, 980 (House of Lords) (The arbitration clause constitutes a self-contained
contract collateral or ancillary to the [underlying contract].).
3) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2857 (U.S. S.Ct. 2010). See also
Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 411 (2d Cir. 1959) (mutual
promises to arbitrate [generally] form the quid pro quo of one another and constitute a
separable and enforceable part of the agreement).
4) Final Award in ICC Case No. 8938, XXIVa Y.B. Comm. Arb. 174, 176 (1999).
5) Judgment of 7 May 1963, Ets Raymond Gosset v. Carapelli, JCP G 1963, II, 13, 405 (French
Cour de cassation civ. 1e). See alsoJudgment of 25 November 2008, St Les Pains du Sud v.
St Spa Tagliavini, 2008 Rev. arb. 681 (French Cour de cassation) (Such [an arbitration]
clause, due to its autonomy with regard to the underlying agreement in which it is
embedded, is not affected except where specifically stipulated by the ineffectiveness
of the contract.).
6) Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119 II 380, 384 (Swiss
Federal Tribunal).
7) See3.03[B]-[C]; 4.02.
8) See3.03[A].
9) See3.03[E].
10) See3.03[F].
11) See3.03[A]-[C].
42
12) See, e.g., Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2857 (U.S. S.Ct. 2010)
([C]ourts must treat the arbitration clause as severable from the contract in which it
appears.); Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 402 (U.S. S.Ct. 1967)
(arbitration clauses are separable from the contracts in which they are embedded); ITT
Educ. Servs., Inc. v. Arce, 533 F.3d 342, 345 (5th Cir. 2008); United Steel Serv. Workers Intl
Union v. Trimas Corp., 531 F.3d 531, 538 (7th Cir. 2008); Sauer-Getriebe KG v. White
Hydraulics, Inc., 715 F.2d 348, 350 (7th Cir. 1983) (The agreement to arbitrate and the
agreement to buy and sell motors are separate. Sauers promise to arbitrate was given in
exchange for Whites promise to arbitrate and each promise was sufficient consideration
for the other.); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 411 (2d Cir.
1959); Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40, 17 (House of Lords)
(principle of separability); Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v. Ras Al
Khaimah Natl Oil Co. [1987] 2 Lloyds Rep. 246, 250 (English Ct. App.), revd on other
grounds, [1988] 2 Lloyds Rep. 293 (House of Lords); Peterson Farms Inc. v. C&M Farming Ltd
[2004] 1 Lloyds Rep. 603, 609 (QB) (English High Ct.) (doctrine of separability).
CompareEnglish Arbitration Act, 1996, 7 (distinct agreement).
13) See, e.g.,Judgment of 25 November 2008, St Les Pains du Sud v. St Spa Tagliavini, 2008
Rev. arb. 681 (French Cour de cassation); Judgment of 7 May 1963, Ets Raymond Gosset v.
Carapelli, JCP G 1963, II, 13, 405 (French Cour de cassation civ. 1e); Judgment of 2
September 1993, Natl Power Corp. v. Westinghouse, DFT 119 II 380, 384 (Swiss Federal
Tribunal) (describing principle of autonomy as counterpart of principle of separability
or severability in other jurisdictions).
14) In German, the concept is generally referred to as the Selbststndigkeit of the
arbitration agreement, equating most closely to independence. See Judgment of 17
January 1891, 27 RGZ 378, 379 (German Reichsgericht); Judgment of 12 December 1918, 1919
Leipziger Zeitschrift fr Deutsches Recht 501 (Oberlandesgericht Marienwerder); Judgment
of 11 January 1912, 13 Schsisches Archiv 148, 149 (1912) (Oberlandesgericht Dresden).
15) These observations typically are made with regard to the choice of the substantive law
applicable to the arbitration agreement and issues of substantive validity of the
arbitration agreement. See3.03[A][2]; 3.03[B]-[C]; E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 47-52, 389-419,
420-51 (1999).
16) Judgment of 20 April 1988, Socit Clark Intl Fin. v. Socit Sud Matriel Serv., 1988 Rev.
arb. 570, 572 (Paris Cour dappel).
17) Judgment of 4 July 1972, Hecht v. Buismans, 99 J.D.I. (Clunet) 843, 843 (French Cour de
cassation civ. 1e) (1972).
18) Final Award in ICC Case No. 8938, XXIV Y.B. Comm. Arb. 174, 175 (1999).
19) The term separability is also preferable to severability, because the latter is more
frequently associated with the judicial act of severing an invalid provision from a
contract. See Drahozal, Buckeye Check Cashing and the Separability Doctrine, 1 Y.B. Arb. &
Med. 55, 82 (2009).
20) At the same time, the term separability can also imply a lack of relation or connection
between the arbitration clause and underlying contract, much like that conveyed by the
terms autonomy and independence. The difference is one of degree, rather than
nature, and the important point is to focus on the substance conveyed by whatever label
is employed. See also W. Craig, W. Park & J. Paulsson, International Chamber of Commerce
Arbitration 5.04 n.11 (3d ed. 2000) (It may be argued that the word severability reflects
a more modest vision than autonomy, in that it denotes merely potential or occasional
as opposed to invariable distinctness.) (emphasis in original); Mayer, Les limites de la
sparabilit de la clause compromissoire, 1998 Rev. arb. 359 (Preferable to the term
autonomy, that of severability suggests that if the fate of the arbitration clause can be
dissociated from the fate of the rest of the contract when there may be good reasons for
this, this is not always the case.).
21) As discussed below, there are legislative recognitions of the separability presumption (for
example, in Articles II and V(1)(a) of the New York Convention, Articles 7 and 16 of the
UNCITRAL Model Law and 2, 3 and 4 of the U.S. FAA). These provisions reflect and
implement and do not override the parties intentions; it is the basic contractual
structure of the arbitration agreement, reflecting the parties intentions, that is the
foundation for the separability presumption, rather than statutory or treaty provisions.
22) See3.02[E].
23) See4.02[A][2][c]; 4.04[B][3][e].
24) See, e.g., Judgment of 18 May 1904, 58 RGZ 152, 155 (German Reichsgericht); Judgment of 17
January 1891, 27 RGZ 378, 379 (German Reichsgericht); Powell, The Independent Validity of
Arbitration Clauses, 7 Current Legal Probs. 75 (1954). CompareSamuel, Separability in
English Law: Should An Arbitration Clause Be Regarded as An Agreement Separate and
Collateral to A Contract in Which It Is Contained?, 3(3) J. Intl Arb. 95 (1986) (suggesting
treatment of arbitration clause as secondary obligation comprised within main
contract, akin to liquidated damages, liability limitation and similar provisions). See
also1.01[B][5]; 3.02[B][1]-[2].
25) Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 985 (2d Cir. 1942). See also
Brown v. Gilligan, Will & Co., 287 F.Supp. 766, 769 (S.D.N.Y. 1968) (since [the] arbitration
provision is an integral part of the alleged contract, the issue as to whether the parties
agreed to that provision requires [the court] to first determine if a contract exists.).
26) Union of India v. Kishorilal Gupta & Bros., (1960) 1 SCR 493, 508 (Indian S.Ct.).
43
27) See3.02[B].
28) See3.03[A]-[C] (choice of law); 3.03[D]-[E] (substantive validity); 3.03[F] (competence-
competence).
29) Geneva Protocol, Arts. III, IV (emphasis added). See1.01[C][1].
30) Geneva Convention, Art. I(a) (emphasis added). See1.01[C][2].
31) See1.01[B][2]-[6].
32) See1.01[C]. As discussed elsewhere, the same treatment of arbitration agreements also
required national legislation to overcome their revocability, unenforceability and
invalidity. See1.01[B][2]-[5]; 1.04[B][1][e]; 5.01[B].
35) As one authority puts it, the very concept and phrase arbitration agreement itself
imports the existence of a separate or at any rate separable agreement, which is or can
be divorced from the body of the principal agreement if need be. S. Schwebel,
International Arbitration: Three Salient Problems 3-6 (1987). CompareH. Kronke et al. (eds.),
York Convention 52 (2010) (The New York Convention does not expressly provide for the
application of the doctrine of separability. Our comments are based on the assumption
that this doctrine applies, due to the doctrines prevalence in national and transnational
law.); A. van den Berg, The New York Arbitration Convention of 1958 146 (1981) (The New
York Convention does not contain express provisions concerning the separability of the
arbitral clause. It is suggested that the Convention would imply the separability of the
arbitral clause because Article V(1)(a) provides for conflicts rules for determining the law
applicable to the arbitration agreement; it must be presumed that the Convention is
indifferent as to the separability of the arbitral clause[and] it reverts to municipal law
whether the clause is to be treated independently.).
36) See5.02[A][2].
37) See2.01[A][1][a]; 4.04[A][1][b][i]; 4.04[B][2][b][i]; 5.01[B][2].
38) New York Convention, Art. V(1)(a) (emphasis added).
39) It does so either by operation of a specific choice of the parties or by application of a
default choice-of-law rule. See4.04[A][1][b][ii] & [v]; 4.04[B][2][b][i].
40) A. van den Berg, The New York Arbitration Convention of 1958 145-46 (1981). See alsoE.
Arbitration 299 (1999); Lessing, Sauer-Getriebe K.G. v. White Hydraulics, Inc.: Applicability
of the Federal Arbitration Act to International Commercial Arbitration, 2 Intl Tax & Bus. L.
331, 338 (1984); Samuel, Book Review S. Schwebel, International Arbitration: Three Salient
Problems, 5(1) J. Intl Arb. 119, 123 (1988); Svernlov & Carroll, What Isnt, Aint: The Current
Status of the Doctrine of Separability, 8(4) J. Intl Arb. 37, 42 (1991).
41) S. Schwebel, International Arbitration: Three Salient Problems 22 (1987).
42) See also3.02[E]; 4.02[A][1] (especially 4.04[A][1][b][v]).
43) See3.03[A][1]; 4.04[B][2][b][i]-[ii].
44) New York Convention, Art. II(1) (Each Contracting State shall recognize an agreement in
writing under which the parties undertake to submit to arbitration all or any differences
which have arisen or may arise between them.). As discussed below, Article II(1) requires
Contracting States to give effect to all material terms of international arbitration
agreements including regarding the seat of arbitration, number and means of selection
of arbitrators, procedural rules and (of relevance here) separable character of the
arbitration agreement. See5.01[B][2].
45) European Convention, Art. I(2)(a) (The term: arbitration agreement shall mean either an
arbitral clause in a contract or an arbitration agreement, the contract or arbitration
agreement being signed by the parties, or contained in an exchange of letters, telegrams,
or in a communication by teleprinter and, in relations between States whose laws do not
require that an arbitration agreement be made in writing, any arbitration agreement
concluded in the form authorized by these laws.).
46) European Convention, Art. V(3) (emphasis added).
47) European Convention, Art. VI(2).
48) See, e.g., Duke Energy Intl Peru Invs. No. 1, Ltd v. Repub. of Peru, Decision on Annulment in
ICSID Case No. ARB/03/28 of 1 March 2011, 131 (The separability of an arbitration
agreement from the contract of which it forms part is a general principle of international
arbitration law today.); ATA Constr. Indus. & Trading Co. v. Hashemite Kingdom of Jordan,
Award in ICSID Case No. ARB/08/2 of 18 May 2010, 119; Inceysa Vallisoletana SL v. Repub.
of El Salvador, Award in ICSID Case No. ARB/03/26 of 2 August 2006, 164; S. Pac. Props. Ltd
v. Arab Repub. of Egypt, Decision on Jurisdiction in ICSID Case No. ARB/84/3 of 27 November
1985, 3 ICSID Rep. 112, 129 (1995). See also C. Schreuer et al., The ICSID Convention: A
Commentary Art. 25, 622 (2d ed. 2009).
49) Plama Consortium Ltd v. Repub. of Bulgaria, Decision on Jurisdiction in ICSID Case No.
ARB/03/24 of 8 February 2005, 20 ICSID Rev. 262, 212 (2005).
50) See3.02[D].
51) ICSID Additional Facility Rules, Rule 45(1).
52) See3.02[B][3].
53) See, e.g., UNIDROIT Principles of International Commercial Contracts, Art. 6.1.17;
Restatement (Second) Contracts 208 (1981).
44
54) See Restatement (Second) Conflict of Laws 188(1) & comment d (1971) (The rights and
duties of the parties with respect to an issue in contract are determined by the local law
of the state which, with respect to that issue, has the most significant relationship to the
transaction and the parties under the principles stated in 6.; [t]he courts have long
recognized that they are not bound to decide all issues under the local law of a single
state).
55) For a discussion of the application of the severability doctrine to choice-of-law
agreements, see A. Briggs, Agreements on Jurisdiction and Choice of Law 85-97 (2008).
56) See1.01[B][1]-[5]; 1.04[B][1][e][i].
57) See1.01[B][1].
58) See, e.g.,Interim Award in ICC Case (1995), 14 ASA Bull. 544, 556 (1996) (An arbitration
clause, as a specific procedural and jurisdictional clause, requires particularly careful
interpretation.); Interim Award in VIAC Case No. SGH-5024 A of 5 August 2008, 2(2) Intl J.
Arab Arb. 341, 352 (2010) (an arbitration agreement is a procedural contract); Award in
Polish Foreign Trade Chamber of Commerce Case of 7 May 1963, 97 J.D.I. (Clunet) 405 (1970)
([T]he arbitration agreementis a judicial contract and, therefore, has a special
autonomous character different from the other clauses of the contract concerning a
transaction of material law.); Judgment of 7 October 1933, Tobler v. Justizkommission des
Kantons Schwyz, DFT 59 I 177, 179 (Swiss Federal Tribunal) (According to settled case law
of the Swiss Federal Tribunal the arbitration clause is not an agreement of substantive
law but of procedural nature.); Judgment of 28 May 1915, Jrg v. Jrg, DFT 41 II 534, 538
(Swiss Federal Tribunal) (procedural contract); Judgment of 30 January 1957, 23 BGHZ 198,
200 (German Bundesgerichtshof) ([arbitration agreement is] a contract of substantive law
governing procedural relations). See also1.01[B][2].
59) All-Union Foreign Trade Assn Sojuznefteexport v. JOC Oil Ltd, Award in USSR Chamber of
Commerce & Industry Case of 9 July 1984, XVIII Y.B. Comm. Arb. 92, 97 (1993).
60) Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118, 1119 (1986).
61) See1.05[B].
62) See1.05.
63) Westacre Invs. Inc. v. Jugoimport-SPDR Holdings Co. [1998] 4 All ER 570, 582 (QB) (English
High Ct.). See also Fiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ 20, 22-23 (English
Ct. App.) (Once it became accepted that the arbitration clause is a separate agreement,
ancillary to the contract, the logical impediment referring an issue of the invalidity of the
contract to arbitration disappears.) (citing Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl
Ins. Co. [1992] 1 Lloyds Rep. 81 (English Ct. App.)), affd, [2007] UKHL 40 (House of Lords);
AstraZeneca UK Ltd v. Albermarle Intl Corp. [2010] EWHC 1028, 98 (Comm) (English High
Ct.) (quoting Fiona Trust); El Nasharty v. J. Sainsbury plc [2007] EWHC 2618, 26 (Comm)
(English High Ct.) (quoting Fiona Trust); OK Petroleum AB v. Vitol Energy SA [1995] CLC 850,
857 (QB) (English High Ct.) (ancillary and therefore separable nature of an arbitration
clause).
64) See3.02[B][3][a]-[b].
65) See3.02[B][3][a]-[b]. See also Judgment of 11 January 1912, 13 Schsisches Archiv 148, 149
(1912) (Oberlandesgericht Dresden); Judgment of 24 May 1909, 1910 Zeitschrift fr
Rechtspflege in Bayern 43 (Oberlandesgericht Nrnberg).
66) See3.02[B][3].
67) See3.02[B][3][a]-[d]; 3.02[B][3][j].
68) See, e.g., Bermann, The Gateway Problem in International Commercial Arbitration, 37 Yale
J. Intl L. 1, 4 (2012) (often proclaimed universality [of separability presumption]is in
fact misleading). These authors confuse the allocation of jurisdictional competence,
where there is substantial diversity, and the acceptance and application of the
separability presumption, where there is virtually none. See3.03[A][2][b][ii].
69) See3.03[A]-[F].
70) See, e.g., Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 404 (U.S. S.Ct. 1967)
(separability presumption adopted in order that arbitration procedure, when selected
by the parties to a contract, be speedy and not subject to delay and obstruction in the
courts); Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897 (English
Ct. App.) (there is the imperative of giving effect to the wishes of the parties unless there
are compelling reasons of principle why it is not possible to do so); Judgment of 27
February 1970, 6 Arb. Intl 79, 82 (German Bundesgerichtshof) (1990) (Above all, however,
the parties to an arbitration agreement will as a rule wish to avoid the unpleasant
consequences of separate jurisdiction.). Compare Ware, Arbitration Laws Separability
Doctrine After Buckeye Check Cashing Inc. v. Cardegna, 8 Nev. L.J. 107, 134 (2007) (the
separability doctrine unlike nearly all the rest of arbitration law is incompatible with,
and thus cannot be justified as an application of, contract law).
71) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 93 (QB)
(English High Ct.), affd, [1993] 3 All ER 897 (English Ct. App.). See also3.02[E].
72) U.K. Department of Trade and Industry, Consultation Document on Proposed Clauses and
Schedules for an Arbitration Bill, reprinted in 10 Arb. Intl 189, 227 (1994).
73) See3.03[A][2][b][ii](2).
74) See3.03[B]; 4.02; 4.03.
75) Nussbaum, The Separability Doctrine in American and Foreign Arbitration, 17 N.Y.U. L.Q.
Rev. 609, 610-11 (1940) (separability doctrine can be found in German case law as early as
1890).
45
76) See, e.g., Judgment of 12 January 1934, 1934 Hanseatische Rechts-und Gerichtszeitschrift
113 (German Reichsgericht) (invalidity of underlying contract by reason of mistake does
not invalidate separable arbitration clause); Judgment of 26 March 1926, 1926 Leipziger
Zeitschrift fr Deutsches Recht 543 (German Reichsgericht) (non-existence of underlying
contract does not necessarily result in non-existence of arbitration clause); Judgment of
17 April 1914, 1914 JW 772, 773 (German Reichsgericht); Judgment of 30 April 1890, 1890 JW
202, 203 (German Reichsgericht); Judgment of 28 February 1929, 1929 JW 2617
(Kammergericht Berlin) (non-existence of underlying contract does not necessarily result
in non-existence of arbitration clause); Judgment of 6 February 1924, 1924 JW 1182, 1183
(Kammergericht Berlin) (non-existence of underlying contract held not to affect separable
arbitration clause); Judgment of 12 December 1918, 1919 Leipziger Zeitschrift fr Deutsches
Recht 501 (Oberlandesgericht Marienwerder) (invalidity of underlying contract by reason
of fraud does not invalidate separable arbitration clause). See also Hamburger,
Kompetenz-Kompetenz der Schiedsgerichte, 3 Internationales Jahrbuch fr
Schiedsgerichtswesen 152 (1931) (arbitration clause may have an independent
existence).
77) Judgment of 12 December 1918, 1919 Leipziger Zeitschrift fr Deutsches Recht 501, 501
(Oberlandesgericht Marienwerder).
78) Judgment of 30 April 1890, 1890 JW 202, 203 (German Reichsgericht).
January 1891, 27 RGZ 378, 379 (German Reichsgericht); Nussbaum, Schiedsgerichte und
Rechtsordnung, 1926 JW 55.
80) See, e.g., Judgment of 6 February 1924, 1924 JW 1182, 1183 (Kammergericht Berlin); Judgment
of 30 April 1890, 1890 JW 202, 203 (German Reichsgericht); Judgment of 21 June 1921, 1921
Hanseatische Gerichtszeitung 191 (Hanseatisches Oberlandesgericht Hamburg); Judgment
of 11 January 1912, 13 Schsisches Archiv 148, 149 (1912) (Oberlandesgericht Dresden);
Judgment of 24 May 1909, 1910 Zeitschrift fr Rechtspflege in Bayern 43
(Oberlandesgericht Nrnberg).
January 1891, 27 RGZ 378, 379 (German Reichsgericht); Nussbaum, Schiedsgerichte und
Rechtsordnung, 1926 JW 55.
82) Judgment of 27 February 1970, 6 Arb. Intl 79 (German Bundesgerichtshof) (1990). See also
Judgment of 6 June 1991, 1991 NJW 2215, 2216 (German Bundesgerichtshof); Judgment of 28
May 1979, 1979 NJW 2567, 2568 (German Bundesgerichtshof).
83) Judgment of 27 February 1970, 6 Arb. Intl 79, 82 (German Bundesgerichtshof) (1990) (It is
rather a question of whether the parties agreed that the arbitration tribunal should
decide not only on claims arising from the valid main contract, but also on the validity of
the main contract.[I]f the parties have also referred to the arbitration tribunal the
decision on the effectiveness of the main contract, the ineffectiveness of the main
contract of course cannot affect the existence of the arbitration agreement.).
84) Judgment of 27 February 1970, 6 Arb. Intl 79, 85 (German Bundesgerichtshof) (1990). The
Bundesgerichtshof described these consequences as follows: For if the arbitration
tribunal is not allowed to decide also on the effectiveness of the main contract, the
situation is as follows: either it must, as soon as this point is disputed in the arbitration
procedure, refrain from further activity and refer the parties for clarification of this
dispute to the ordinary court: if the latter confirms the effectiveness of the main contract,
the parties will have to return to the arbitration tribunal and continue the dispute there.
Or the arbitration tribunal can, if it finds the main contract to be effective continue its
proceedings.[T]here is then the danger, however, that the state tribunal will find
differently on the effectiveness of the main contract than the arbitration tribunal and the
arbitration award will therefore be reversed.Both outcomes cannot be desirable to
reasonable parties whose purpose in concluding an arbitration agreement is usually to
accelerate a decision. See also Boyd, Arbitration Under A Stillborn Contract The BGH
Decision of 27 February 1970, 6 Arb. Intl 75 (1990).
85) Judgment of 27 February 1970, 6 Arb. Intl 79, 86 (German Bundesgerichtshof) (1990).
86) Professor Schlosser authored a well-reasoned comment on the Courts decision which
began: A truly excellent judgment! See Judgment of 27 February 1970, 6 Arb. Intl 79, 86
(German Bundesgerichtshof) (1990), Comment, Schlosser. See also J.-P. Lachmann,
Handbuch fr die Schiedsgerichtspraxis 662-72 (3d ed. 2008); Mnch, in G. Lke & P. Wax
(eds.), Mnchener Kommentar zur Zivilprozessordnung 1040, 8 (3d ed. 2008); Schlosser,
in F. Stein & M. Jonas (eds.), Kommentar zur Zivilprozessordnung 1029, 40 (22d ed. 2002);
K.-H. Schwab & G. Walter, Schiedsgerichtsbarkeit Kap. 4, 41-16 to 41-17 (7th ed. 2005).
87) German ZPO, 1040(1) (The arbitral tribunal may rule on its own jurisdiction and in this
connection on the existence or validity of the arbitration agreement. For that purpose, an
arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract.).
88) See, e.g.,Judgment of 28 July 2005, XXXI Y.B. Comm. Arb. 673, 676 (Oberlandesgericht
Koblenz) (2006); Judgment of 12 March 1998, XXIX Y.B. Comm. Arb. 663, 667 (Hanseatisches
Oberlandesgericht Hamburg) (2004) (nullity of the main contract, if there is such, does
not affect the arbitration clause); Krll, Schiedsrechtliche Rechtsprechung 2006, 2007
SchiedsVZ 145, 147; J.-P. Lachmann, Handbuch fr die Schiedsgerichtspraxis 385 (3d ed.
2008); Voit, in H.-J. Musielak (ed.), Kommentar zur Zivilprozessordnung 1040, 4 (9th ed.
2012).
89) Judgment of 27 November 2008, 2009 HmbSchRZ 5 (German Bundesgerichtshof).
46
90) See, e.g.,Judgment of 29 October 2008, XII ZR 165/06, 24 (German Bundesgerichtshof) (In
case of doubt, an arbitration clause has to be interpreted widely, to the effect, that it
also covers the question of the invalidity of the main contract.); Judgment of 12 February
2008, 2008 34 SchH 006/07 (Oberlandesgericht Mnchen) (claim that underlying contract
was void for fraud was not directed at arbitration clause specifically and was therefore
for arbitral tribunal to decide).
91) See, e.g., Judgment of 27 November 2008, 2009 HmbSchRZ 5 (German Bundesgerichtshof)
(arbitration clause may be unenforceable if the threat or deception that led to the
conclusion of the underlying contract also directly affected the conclusion of the
arbitration agreement); Judgment of 29 March 2012, 2012 SchiedsVZ 159 et seq.
(Oberlandesgericht Mnchen) (separability presumption does not apply where defect
affecting underlying contract also specifically applies to arbitration clause); Rieder &
Schoenemann, Korruptionsverdacht, Zivilprozess und Schiedsverfahren, 2011 NJW 1169, 1172
et seq.; K. Schwab & G. Walter, Schiedsgerichtsbarkeit 4-18 (7th ed. 2005) (Certain
defects can apply to both contracts,the arbitration agreement and the underlying
contract, because of deception, threat or mistake.).
92) See, e.g., Judgment of 27 November 2008, 2009 HmbSchRZ 5 (German Bundesgerichtshof)
(arbitration clause may be unenforceable if the threat or deception that led to the
conclusion of the underlying contract also directly affected the conclusion of the
arbitration agreement); Judgment of 29 March 2012, 2012 SchiedsVZ 159
(Oberlandesgericht Mnchen).
93) See, e.g., Judgment of 27 April 1931, 1931 Entscheidungen des Appellationsgerichts des
Kantons Basel-Stadt 13 (Basel-Stadt Appellationsgericht) (invalidity of underlying
contract by reason of mistake or fraud does not invalidate separable arbitration clause);
Judgment of 3 October 1913, (1915) Bltter fr Zrcherische Rechtsprechung 21 (Zurich
Obergericht) (invalidity of underlying contract does not invalidate arbitration clause). But
see Judgment of 5 March 1915, DFT 41 II 310 (Swiss Federal Tribunal) (invalidity of
underlying contract results in invalidity of associated arbitration clause); Judgment of 22
October 1881, DFT 7 I 705 (Swiss Federal Tribunal) (same).
94) Judgment of 7 October 1933, Tobler v. Justizkommission des Kantons Schwyz, DFT 59 I 177, 179
(Swiss Federal Tribunal).
95) Judgment of 7 October 1933, Tobler v. Justizkommission des Kantons Schwyz, DFT 59 I 177, 179
(Swiss Federal Tribunal) (emphasis added). See also Judgment of 28 January 1938, DFT 64 I
39, 44 (Swiss Federal Tribunal); Judgment of 6 November 1936, DFT 62 I 230, 233 (Swiss
Federal Tribunal).
96) See authorities cited 3.02[B][2].
97) Judgment of 14 April 1983, Carbomin SA v. Ekton Corp., XII Y.B. Comm. Arb. 502, 504 (Geneva
Cour de Justice) (1987).
98) Swiss Law on Private International Law, Arts. 178(2), (3) (As regards its substance, an
arbitration agreement shall be valid if it conforms either to the law chosen by the parties,
or to the law governing the subject-matter of the dispute, in particular the law governing
the main contract, or if it conforms to Swiss law. The validity of an arbitration agreement
cannot be contested on the grounds that the main contract may not be valid or that the
arbitration agreement concerns disputes which have not yet arisen.).
99) See, e.g., B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland
604 (2d ed. 2010); D. Girsberger & N. Voser, International Arbitration in Switzerland
405-07 (2d ed. 2012); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitrage interne
et international en Suisse Art. 178, 4 (1989); Wenger, in S. Berti et al. (eds.), International
100) See, e.g.,Judgment of 16 October 2001, 2002 Rev. arb. 753, 757 (Swiss Federal Tribunal) (fact
that due to its function the arbitration clause is separable from the underlying contract
does not necessarily entail that it is independent); Judgment of 6 September 1996, 15 ASA
Bull. 291, 300 (Swiss Federal Tribunal) (1997) ([T]he arbitration clause has an independent
or autonomous character.[T]he arbitral tribunal has jurisdiction to decide on disputes
concerning, among other issues, the validity and extinction of the underlying contract.);
Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, DFT 116 Ia 56, 58 (Swiss Federal
Tribunal) (arbitration clause in construction service contract remains valid, even if
parties agree to terminate main contract).
101) See Judgment of 2 February 1993, DFT 119 II 380, 384 (Swiss Federal Tribunal) (any defect in
capacity for party to consent, or duress, affects arbitration clause); Judgment of 7 July
1962, DFT 88 I 100, 105 (Swiss Federal Tribunal). See also D. Girsberger & N. Voser,
International Arbitration in Switzerland 407 (2d ed. 2012).
102) U.S. FAA, 9 U.S.C. 2 (A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction, or the refusal to perform the whole
or any part thereof, or an agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.).
Similarly, the Revised Uniform Arbitration Act provides that [a]n agreement contained in
a record to submit to arbitration any existing or subsequent controversy arising between
the parties to the agreement is valid, enforceable, and irrevocable except upon a ground
that exists at law or in equity for the revocation of contract. Revised Uniform Arbitration
Act, 6(a) (2000).
47
103) U.S. FAA, 9 U.S.C. 3.
104) U.S. FAA, 9 U.S.C. 4. The U.S. Supreme Court has also held that 2 of the FAA (applicable
in state as well as federal courts) gives effect to the separability presumption. See Rent-
A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 (U.S. S.Ct. 2010); Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 449 (U.S. S.Ct. 2006).
105) See3.02[A][1]-[2]; 3.03[A][1].
106) See Park, Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts and
Arbitrators, 9 Arb. & Disp. Res. L.J. 19, 27 (2000); Rau, The Arbitrability Question Itself, 10
Am. Rev. Intl Arb. 287 (1999); Rosen, Arbitration Under Private International Law: The
Doctrines of Separability and Competence de la Competence, 17 Ford. Intl L.J. 599 (1993-
1994).
107) See3.02[B][3][c]; 3.03[A][2][b]; Rau, Everything You Really Need to Know About
Separability in Seventeen Simple Propositions, 14 Am. Rev. Intl Arb. 1, passim (2003).
U.S. state courts, applying state law, almost uniformly adopt the separability
presumption. See, e.g., J.A. Walker Co. v. Cambria Corp., 159 P.3d 126, 129 (Colo. 2007)
(adopting separability standard from Prima Paint under Colorado Uniform Arbitration
Act); Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 854-55 (Ky. 2004) (adopting
separability doctrine from Prima Paint under Kentucky Uniform Arbitration Act; noting
that of the thirty-five states that have adopted the Uniform Arbitration Act thus far, at
least thirty have chosen to follow the majority view); Old Repub. Ins. Co. v. Lanier, 644
So.2d 1258 (Ala. 1994); Weiss v. Voice/Fax Corp., 640 N.E.2d 875 (Ohio 1994); Thompson v.
Lee, 589 A.2d 406 (D.C. 1991); Quirk v. Data Terminal Sys., Inc., 400 N.E.2d 858 (Mass. 1980);
Weinrott v. Carp, 298 N.E.2d 42, 47 (N.Y. 1973) (adopting separability doctrine in relation to
arbitrations governed by New York law: The result we suggest in this case is consistent
with the policy adopted by the Federal courts.).
As discussed below, there are a few isolated state court decisions which appear to reject
the separability presumption, but these are preempted by the FAA and wrong.
See3.03[A][2][b][ii](1) n. 387.
108) Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 411 (2d Cir. 1959). See also In re
Kinoshita & Co., 287 F.2d 951, 952-53 (2d Cir. 1961); Watkins v. Hudson Coal Co., 151 F.2d 311,
320 (3d Cir. 1945); Gatliff Coal Co. v. Cox, 142 F.2d 876, 880-81 (6th Cir. 1944); Paramount
Famous Lasky Corp. v. Natl Theatre Corp., 49 F.2d 64, 66 (4th Cir. 1931); In re Albert, N.Y. L.J.
1176 (12 March 1936) (N.Y. Sup. Ct. 1936) (recognizing separability of arbitration clause).
109) Robert Lawrence Co., 271 F.2d at 412. The Court also relied on 2 of the FAA, and in
particular its references to the arbitration agreement as a separable provision of the
underlying contract. Id. at 410-11.
110) Robert Lawrence Co., 271 F.2d at 409-10 (That the [FAA] envisages a distinction between
the entire contract between the parties on the one hand and the arbitration clause of the
contract on the other is plain on the fact of the statute. Section 2 [of the FAA, which
concerns the validity, irrevocability and enforceability of arbitration clauses] does not
purport to affect the contract as a whole.).
111) Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967).
The Court in Prima Paint appeared to distance itself somewhat from the rationale in
Robert Lawrence Co. (We agree, albeit for somewhat different reasons.), but without
clearly identifying the differences in its analysis. Id. at 400. The Courts analysis appeared
not to rely on 2 of the FAA, as the Court of Appeals had, instead apparently relied only on
3 and 4 (and, as a consequence, at least arguably confined its decision to cases arising
in federal (and not state) courts). The Supreme Court subsequently made clear, in
Buckeye, that the separability presumption was a matter of federal law, applicable in
state, as well as federal, courts. See3.03[A][2][b][i]; J. Carter & J. Fellas, International
Commercial Arbitration in New York 213 (2010).
112) Prima Paint, 388 U.S. at 402.
115) Prima Paint, 388 U.S. at 403-04.
117) Prima Paint, 388 U.S. at 404 (emphasis added).
118) Prima Paint, 388 U.S. at 404. Subsequent U.S. lower court decisions almost uniformly
adopted the separability presumption. See authorities cited 3.02[B][3][c].
119) Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006).
120) Cardegna v. Buckeye Check Cashing, Inc., 894 So.2d 860, 864-65 (Fla. S.Ct. 2005) (We hold
that an arbitration provision contained in a contract which is void under Florida law
cannot be separately enforced while there is a claim pending in a Florida trial court that
the contract containing the arbitration provision is itself illegal and void ab initio.).
122) Buckeye, 546 U.S. at 448.
123) Buckeye, 546 U.S. at 445.
124) Buckeye, 546 U.S. at 446. See also3.03[A][2][b][ii](2).
125) Buckeye, 546 U.S. at 446. See3.03[A][2][b][i](2), pp. 409-11.
48
126) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct. 2010); Stipanovich, The Third
Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future of American
Arbitration, 22 Am. Rev. Intl Arb. 323, 361 (2011).
The conclusion that a portion of an arbitration agreement can be severable from the rest
of the arbitration agreement was suggested in earlier U.S. appellate authority. See Puleo
v. Chase Bank USA, 605 F.3d 172, 186 (3d Cir. 2010). As discussed below, it is doubtful that
the conclusion that portions of the arbitration agreement (including so-called
delegation agreements) are separable from the arbitration agreement itself is well-
considered. See3.03[A][2][b][i](3).
127) Rent-A-Ctr, 130 S.Ct. at 2778-79.
128) Rent-A-Ctr, 130 S.Ct. at 2778-79. See also3.03[A][2][b][i](3).
129) Rent-A-Ctr, 130 S.Ct. at 2787 (Stevens, J., dissenting).
130) Rent-A-Ctr, 130 S.Ct. at 2779. Indeed, the Supreme Court saw no logical reason why an
agreement to arbitrate one controversy is not severable from an agreement to arbitrate a
different controversy (enforceability) as there is no magic bond between arbitration
provisions that prevents them from being severed from each other. Id. at 2779.
131) Rent-A-Ctr, 130 S.Ct. at 2786 (Stevens, J., dissenting).
132) DAntuono v. Serv. Road Corp., 789 F.Supp.2d 308, 319 (D. Conn. 2011).
133) See, e.g., Arrigo v. Blue Fish Commodities, Inc., 408 F.Appx. 480, 482 (2d Cir. 2011) (holding
arbitration clause valid and leaving unscrambling of incomprehensible and
garbled contract to arbitrators); Dialysis Access Ctr, LLC v. RMS Lifeline, Inc., 638 F.3d 367,
383 (1st Cir. 2011) (Although appellants have challenged the validity of the [contract] as a
whole, they have not specifically challenged the validity of the arbitration clause itself.
Appellants have not alleged that the arbitration clause itself was fraudulently induced.
[T]he arbitration clause is severable from the [contract] and must be enforced.); JLM
Indus. v. StoltNielsen SA, 387 F.3d 163, 170 n.5 (2d Cir. 2004); Ferro Corp. v. Garrison Indus.,
Inc., 142 F.3d 926, 933 (6th Cir. 1998) ([T]he arbitration agreement is effectively
considered as a separate agreement which can be valid despite being contained in a
fraudulently induced contract.); Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 868-69 (7th
Cir. 1985) (An arbitration clause will often be severable from the contract in which it is
embedded, in the sense that it may be valid even if the rest of the contract is invalid.);
DAntuono v. Serv. Road Corp., 789 F.Supp.2d 308, 319 (D. Conn. 2011) (unless the challenge
is to the [enforceability of the] arbitration clause itself, the issue of the contracts validity
is [usually] considered by the arbitrator); Torrance v. Aames Funding Corp., 242 F.Supp.2d
862, 868-69 (D. Or. 2002) (arbitration clause may be enforced even though the rest of the
contract is later held invalid by the arbitrator); Solar Planet Profit Corp. v. Hymer, 2002
WL 31399601, at *2 (N.D. Cal.) (arbitration clause in a voidable contract remains valid);
Cline v. H.E. Butt Grocery Co., 79 F.Supp.2d 730, 732 (S.D. Tex. 1999) (Questions related to
the enforcement of a contract as a whole are properly referable to an arbitrator; it is only
when an attack is made on the arbitration clause itself that a court, rather than an
arbitrator, should decide questions of validity.); Hodge Bros., Inc. v. DeLong Co., 942
F.Supp. 412, 417 (W.D. Wis. 1996); Hydrick v. Mgt Recruiters Intl, Inc., 738 F.Supp. 1434, 1435
(N.D. Ga. 1990) ([I]f the arbitration clause is valid, the Court must enforce it, even if the
underlying contract might be declared invalid.).
134) See, e.g., Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 591-92 (7th Cir. 2001) (if they
have agreed on nothing else, [the parties] have agreed to arbitrate); Colfax Envelope
Corp. v. Local No. 458-3M, Chicago Graphic Commcns Intl Union, 20 F.3d 750, 754-55 (7th
Cir. 1994) (despite apparent lack of meeting of minds on underlying contract, there was a
meeting of the minds on the mode of arbitrating disputes between the parties and the
parties had agreed to arbitrate their claims); Repub. of Nicaragua v. Standard Fruit Co.,
937 F.2d 469, 477 (9th Cir. 1991); Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir. 1990)
(parties signed draft agreement, including arbitration clause, which was to be finalized;
court considered challenge to arbitration clause and rejected it); C.B.S. Employees Fed.
Credit Union v. Donaldson, Lufkin & Jenrette Sec. Corp., 912 F.2d 1563, 1568 (6th Cir. 1990)
(validity of arbitration agreement should be analyzed separately from underlying
contract, challenged as void for fraud in factum); Lawrence v. Comprehensive Bus. Servs.
Co., 833 F.2d 1159, 1162 (5th Cir. 1987) (arbitration clause enforceable in spite of a claim
that thecontract containing it was void from its inception because of the parties failure
to comply with a state statute).
As discussed in detail below, U.S. courts have applied the separability presumption and
principles of competence-competence differently in cases involving, on the one hand,
claims of invalidity of the underlying contract, and, on the other hand, claims of non-
existence of the underlying contract. See3.03[A][2][b][ii](1) & (3). It is nonetheless clear
that, in principle, the separability presumption can be applied in both sets of cases,
although it may produce different results in each; in particular, in many cases where the
underlying contract is nonexistent, the same facts will also result in the non-existence of
the arbitration clause. See3.03[A][2][b][ii](3).
135) See3.03[D].
49
136) Prima Paint, 388 U.S. at 402 (The view of the Court of Appeals for the Second Circuit, as
expressed in this case and in others, is that except where the parties otherwise intend
arbitration clauses as a matter of federal law are separable from the contracts in which
they are embedded.) (emphasis in original) (citing Robert Lawrence Co. v. Devonshire
Fabrics, Inc., 271 F.2d 402 (2d Cir. 1959) and In re Kinoshita & Co., 287 F.2d 951 (2d Cir. 1961));
Moseley v. Elec. & Missile Facilities, Inc., 374 U.S. 167, 171 (U.S. S.Ct. 1963); Spahr v. Secco,
330 F.3d 1266, 1271 (10th Cir. 2003); Graham Oil Co. v. ARCO Prods. Co., 43 F.3d 1244, 1248-49
(9th Cir. 1994); Repub. of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 477 (9th Cir. 1991)
(Thus, in the absence of any evidence that [the arbitration agreement] was intended as non-
severable, we must strictly enforce [it, even if the rest of the contract is later held to be
invalid].) (emphasis added); Sigety v. Axelrod, 535 F.Supp. 1169, 1172 (S.D.N.Y. 1982)
(Unless the parties intend otherwise arbitration clauses are separable from the contracts
in which they are embedded) (emphasis added) (quoting Prima Paint, 388 U.S. at 402).
137) Boston Telecomms. Group, Inc. v. Deloitte Touche Tohmatsu, 278 F.Supp.2d 1041, 1049 (N.D.
Cal. 2003).
138) See3.03[A][2][b][ii](3).
139) See3.03[A][2][b][ii](3); Buckeye, 546 U.S. at 444 n.1.
140) See, e.g., Sphere Drake Ins. Ltd v. Clarendon Natl Ins. Co.,263 F.3d 26 (2d Cir. 2001); Sphere
Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587 (7th Cir. 2001); Sandvik AB v. Advent Intl Corp.,
220 F.3d 99 (3d Cir. 2000); Repub. of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 477 (9th
Cir. 1991); Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir. 1990); Ernst & Young Ltd v.
Quinn, 2009 WL 3571573 (D. Conn.); Toray Indus. Inc. v. Aquafil SpA, 17(10) Mealeys Intl Arb.
Rep. D-1 (N.Y. Sup. Ct. 2002) (2002).
141) Guang Dong Light Headgear Factory Co. v. ACI Intl, Inc., 2005 WL 1118130 (D. Kan.).
142) See3.03[A][2][b][i](2).
143) See3.02[A].
144) See3.02[A][2].
145) See1.02[B]; 3.02[B][3].
146) French decisions have not relied on the separability presumption in considering issues of
competence-competence. That is because of the broad French approach to a tribunals
competence and the limited interlocutory role of French courts in considering challenges
to the existence, validity, or scope of international arbitration agreements. See7.03[B][2].
Cour de cassation civ. 1e).
Cour de cassation civ. 1e).
149) Later French decisions recognized that parties are free to agree that an arbitration
agreement is, contrary to the presumptive rule, not separable from the underlying
contract. See, e.g.,Judgment of 25 November 2008, St Les Pains du Sud v. St Spa
Tagliavini, 2008 Rev. arb. 681, 682 (French Cour de cassation) (Such a[n arbitration]
clause, due to its autonomy with regard to the underlying agreement in which it is
embedded, is not affected except where specifically stipulated by the ineffectiveness
of the contract.) (emphasis added).
Rev. arb. 681, 682 (French Cour de cassation) ([The arbitration clause], because it is
separate from the underlying contract in which it is included, is not affected by the
unenforceability of the contract as a whole.); Judgment of 4 April 2002, Socit Barbot CM
v. Socit Bouygues Btiment et autre, 2003 Rev. arb. 103 (French Cour de cassation civ.
2e); Judgment of 20 December 1993, Municipalit de Khoms El Mergeb v. Socit Dalico, 1994
Rev. arb. 116 (French Cour de cassation civ. 1e); Judgment of 26 March 1991, Comit
populaire de la Municipalit dEl Mergeb v. Socit Dalico contractors, 1991 Rev. arb. 456
(French Cour de cassation civ. 1e); Judgment of 24 February 1994, Ministry of Public Works v.
Socit Bec Frres, XXII Y.B. Comm. Arb. 682 (Paris Cour dappel) (1997).
Rev. arb. 116 (French Cour de cassation civ. 1e).
152) French Code of Civil Procedure, Art. 1442.
Rev. arb. 681 (French Cour de cassation) (extending separability presumption to contracts
that are void, voidable, or ineffective); Judgment of 11 July 2006, Socit Natl
Broadcasting Co. v. Bernadaux, 2006 Rev. arb. 981 (French Cour de cassation civ. 1e)
(extending separability presumption to nonexistent contract); Judgment of 25 October
2005, Case No. D. 2005.3052 (French Cour de cassation com.), Note, Clay (arbitration
agreement is affected by neither invalidity nor non-existence of underlying contract);
Judgment of 4 April 2002, Socit Barbot CM v. Socit Bouygues Btiment et autre, 2003
Rev. arb. 103 (French Cour de cassation civ. 2e); Judgment of 20 December 1993,
Municipalit de Khoms El Mergeb v. Socit Dalico, 1994 Rev. arb. 116 (French Cour de
cassation civ. 1e); Judgment of 7 April 2011, 2011 Rev. arb. 747 (Paris Cour dappel)
(arbitration agreement is independent from underlying contract); Judgment of 10
September 2003, Quille v. SQ CEE Euro Idolation, 2004 Rev. arb. 623 (Paris Cour dappel)
(judicial aspect of arbitration agreement explains its separability from underlying
contract); Judgment of 8 October 1998, Sam v. Perrin, 1999 Rev. arb. 350 (Paris Cour
dappel) (arbitration clause is enforceable regardless of existence or validity of
underlying contract); Judgment of 24 February 1994, Ministry of Public Works v. Socit Bec
Frres, XXII Y.B. Comm. Arb. 682 (Paris Cour dappel) (1997).
50
155) Judgment of 25 November 2008, St Les Pains du Sud v. St Spa Tagliavini, 2008 Rev. arb.
681 (French Cour de cassation); Judgment of 11 July 2006, Socit Natl Broadcasting Co. v.
Bernadaux, 2006 Rev. arb. 981 (French Cour de cassation civ. 1e); Judgment of 25 October
2005, D. 2005.3052 (French Cour de cassation com.), Note, Clay; Judgment of 20 December
1993, Municipalit de Khoms El Mergeb v. Socit Dalico, 1994 Rev. arb. 116 (French Cour de
cassation civ. 1e); Castellane, The New French Law on International Arbitration, 28 J. Intl
Arb. 371 (2012); Clay, Libert, Egalit, Efficacit: La devise du nouveau droit franais de
larbitrage, 139 J.D.I. (Clunet) 8 (2012); P. Mayer, Les limites de la separabilit de la clause
compromissoire, 1998 Rev. arb. 359.
156) T. Clay, Libert, Egalit, Efficacit: La devise du nouveau droit franais de larbitrage, 139
J.D.I. (Clunet) 8 (2012).
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 2-006 to 2-013 (3d ed.
2009); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary 258 (1989).
158) UNCITRAL Model Law, Art. 7(2); 1.04[B][1][a]; 5.02[A][5][a]-[b].
159) UNCITRAL Model Law, Art. 8(1); 5.01[C][1].
160) UNCITRAL Model Law, Arts. 8(1),16; 7.02[B][1]; 7.03[A].
161) Articles 34(2)(a)(1) and 36(1)(a)(1) of the Model Law permit annulment and non-recognition
of an award if a party to the arbitration agreement referred to in Article 7 was under
some incapacity, or the said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the
award was made. UNCITRAL Model Law, Arts. 34(2)(a)(1), 36(1)(a)(1) (emphasis added).
See25.03[A]. As with Article V(1)(a) of the New York Convention, this provision
acknowledges the presumptive separability of international arbitration agreements, for
choice-of-law purposes, and adopts a particular choice-of-law rule applicable to such
agreements. See3.02[A][2]; 4.02[A][2][a]; 4.04[A][2][i].
Arbitration and Conciliation inUNCITRAL Model Law Jurisdictions 4-006 to 4-011 (3d ed.
2009); H. Holtzmann & J. Neuhaus, A Guide to theUNCITRAL Model Law on International
163) UNCITRAL Model Law, Art. 1(2). See3.02[B][3][e].
164) See, e.g., Siderurgica Mendes Junior SA v. Icepearl, [1996] CanLII 2746 (B.C. S.Ct.) (applying
separability presumption to agreement for foreign-seated arbitration); Harper v. Kvaerner
Fjellstrand Shipping A.S., [1991] CanLII 1735 (B.C. S.Ct.); D.G. Jewelry Inc. v. Cyberdiam Canada
Ltd, [2002] O.J. No. 1465 (Ontario Super. Ct.); OEMSDF Inc. v. Europe Israel Ltd, [1999] O.J. No.
3594 (Ontario Super. Ct.); Comandate Marine Corp. v. Pan Australia Shipping Pty Ltd, [2006]
FCAFC 192 (Australian Fed. Ct.) (applying separability presumption even though Article
16(1) not literally applicable where arbitration agreement provides for foreign arbitral
seat); Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, [2005] FCA 1102
(Australian Fed. Ct.) (same); Subway Sys. Australia Pty Ltd v. Ireland, [2013] VSC 550, 57
(Victoria S.Ct.); Blue Ltd v. Jaribu Credit Traders Ltd, Civil Case No. 157 of 2008 (Nairobi High
Ct.).
165) UNCITRAL Model Law, Art. 16(1) (emphasis added).
166) The application of Article 16 is discussed below. See3.03[A][2][a]; 7.02[B][1].
167) UNCITRAL Model Law, Art. 16(1). Article 16(1) might be interpreted as applying only in the
context of the arbitral tribunals consideration of jurisdictional issues. UNCITRAL, 2012
Digest of Case Law on the Model Law on International Commercial Arbitration 76 (2012)
(second sentence could be read as limiting the operation of the separability principle to
situations where a jurisdictional objection is being examined by the arbitral tribunal, as
opposed to a court). That suggestion would make no sense (because the same approach
to separability must apply in both arbitral proceedings and national courts).
Courts in Model Law jurisdictions have consistently adopted this analysis. See, e.g.,
Siderurgica Mendes Junior SA v. Icepearl, [1996] CanLII 2746 (B.C. S.Ct.); Krutov v.
Vancouver Hockey Club Ltd, [1991] CanLII 2077 (B.C. S.Ct.); Harper v. Kvaerner Fjellstrand
Shipping AS, [1991] CanLII 1735 (B.C. S.Ct.); D.G. Jewelry Inc. v. Cyberdiam Canada Ltd, [2002]
O.J. No. 1465 (Ontario Super. Ct.); OEMSDF Inc. v. Europe Israel Ltd, [1999] O.J. No. 3594
(Ontario Super. Ct.); Campbell v. Murphy, (1993) 15 O.R.3d 444 (Ontario Super. Ct.); Mind
Star Toys Inc. v. Samsung Co., (1992) 9 O.R.3d 374 (Ontario Super. Ct.); Walter Rau Neusser
Oel und Fett AG v. Cross Pac. Trading Ltd, [2005] FCA 1102 (Australian Fed. Ct.); Judgment of
25 September 2008, Blue Ltd v. Jaribu Credit Traders Ltd, Civil Case No. 157 of 2008 (Nairobi
High Ct.).
168) UNCITRAL Model Law, Art. 16(1).
169) See also3.03[A][2][a]; 7.02[B][1]; 7.03[A].
170) UNCITRAL Model Law, Art. 16(1) (emphasis added).
171) The circumstances in which the non-existence, invalidity, or illegality of the parties
underlying contract can affect their arbitration agreement are discussed in greater detail
below. See3.03[A][2][a]. See also Sanders, Lautonomie de la clause compromissoire, in
Hommage Frdric Eisemann 31 (1978).
51
172) See, e.g., JSC BTA Bank v. Ablyazov [2011] EWHC 587, 42-54 (Comm) (English High Ct.)
(relying on Fiona Trust to hold that arbitration agreement is separable and valid even
though underlying contract was voidable because signed by agent acting outside scope of
authority); Cecrop Co. v. Kinetic Sciences Inc., [2001] BCSC 532 (B.C. Sup. Ct.)
(ineffectiveness of underlying contract, because effective date had not occurred, did not
render arbitration agreement ineffective); World LLC v. Parenteau Intl Inc., [1998] A.Q. No.
736 (Qubec Super. Ct.) (recognizing separability presumption); Globe Union Indus. Corp. v.
G.A.P. Mktg Corp., [1994] CanLII 186 (B.C. S.Ct.) (claim that underlying contract was illegal
does not affect arbitration clause); Brian Harper v. Kvaerner Fjellstrand Shipping AS, XVIII
Y.B. Comm. Arb. 358, 359-60 (B.C. S.Ct. 1991) (1993); Krutov v. Vancouver Hockey Club Ltd,
[1991] CanLII 2077 (B.C. S.Ct.) (arbitration clause not affected by failure of condition
precedent to underlying contract); Rampton v. Eyre, [2007] ONCA 331 (Ontario Ct. App.)
(relying on separability presumption to hold that termination of underlying contract did
not affect arbitration clause); D.G. Jewelry Inc. v. Cyberdiam Canada Ltd, [2002] O.J. No.
1465 (Ontario Super. Ct.) (relying on separability presumption to hold that fraud affecting
underlying contract did not affect arbitration clause); NetSys Tech. Group AB v. Open Text
Corp., (1999) 1 B.L.R.3d 307 (Ontario Super. Ct.) (claim that underlying contract was void on
grounds of mistake did not impeach arbitration clause); Campbell v. Murphy, (1993) 15
O.R.3d 444 (Ontario Super. Ct.) (repudiation of underlying contract did not affect
arbitration clause); Comandate Marine Corp. v. Pan Australia Shipping Pty Ltd, [2006] FCAFC
192 (Australian Fed. Ct.) (relying on separability presumption to hold that fraud affecting
underlying contract did not affect arbitration clause); Walter Rau Neusser Oel und Fett AG
v. Cross Pac. Trading Ltd, [2005] FCA 1102 (Australian Fed. Ct.) (same); Ferris v. Plaister,
(1994) 34 NSWLR 474 (N.S.W. Ct. App.) (claim that underlying contract is fraudulently
induced does not impeach arbitration clause); M/S Magma Leasing & Fin. Ltd v. Potluri
Madhavilata, AIR 2010 SC 488 (Indian S.Ct.) (arbitration clause valid where underlying
contract was terminated by breach); Fittydent Intl GmbH v. Brawn Labs., Ltd, XXXV Y.B.
Comm. Arb. 401 (Delhi High Ct. 2010) (2010) ([E]ven assuming for the sake of arguments
[sic] that the agreement dated 20 May 1994 between the parties was illegal and non-est,
the same shall not on its own render the arbitration clause invalid and it is still within the
competence of the Arbitrator to decide the validity of the same.); Blue Ltd v. Jaribu Credit
Traders Ltd, Civil Case No. 157 of 2008 (Nairobi High Ct.) (arbitration clause not affected by
failure of condition precedent to underlying contract).
173) See, e.g., Judgment of 27 November 2008, 2009 HmbSchRZ 5, 5 (German Bundesgerichtshof)
(arbitration clause may be invalid if the threat or deception that led to the conclusion of
the underlying contract also directly affected the conclusion of the arbitration
agreement); K. Schwab & G. Walter, Schiedsgerichtsbarkeit 4-18 (7th ed. 2005) (Certain
defects can apply to both contracts,the arbitration agreement and the underlying
contract, because of deception, threat or mistake.); Sojuznefteexport v. JOC Oil Ltd, XV
Y.B. Comm. Arb. 384 (Bermuda Ct. App. 1989) (1990) (exception may exist to separability
doctrine where underlying contract never existed); van den Berg, Consolidated
Commentary Cases Reported in Volumes XXII (1997) XXVII (2002), XXVIII Y.B. Comm. Arb.
562, 626-27 (2003).
174) See L. Collins (ed.), Dicey Morris and Collins on The Conflict of Laws 16-008 et seq. (15th
ed. 2012); R. Merkin, Arbitration Law 5.40 et seq. (1991 & Update August 2013); Samuel,
Separability in English Law: Should An Arbitration Clause Be Regarded as An Agreement
Separate and Collateral to A Contract in Which It Is Contained?, 3(3) J. Intl Arb. 95 (1986); D.
Sutton, J. Gill & M. Gearing, Russell on Arbitration 2-007 et seq. (23d ed. 2007); Svernlov,
The Evolution of the Doctrine of Separability in England: Now Virtually Complete?, 9(3) J. Intl
Arb. 115 (1992).
175) See, e.g., Bremer Vulkan Schiffbau und Maschinenfabrik v. S. India Shipping Corp. Ltd [1981]
AC 909 (House of Lords); Heyman v. Darwins Ltd [1942] AC 356, 366 (House of Lords);
Mackender v. Feldia AG [1967] 2 QB 590 (English Ct. App.); Paul Smith Ltd v. H & S Intl
Holdings Inc. [1991] 2 Lloyds Rep. 127 (QB) (English High Ct.).
176) See, e.g., Joe Lee Ltd v. Lord Dalmeny [1927] 1 Ch 300 (Ch) (English High Ct.)
(illegality/invalidity of underlying gambling contract invalidates associated arbitration
clause); Ateus v. Lashley, 101 ER 435 (1794) (English K.B.) (annulling award on grounds that
underlying contract was illegal stock-jobbing agreement).
177) Heyman v. Darwins Ltd [1942] AC 356, 366 (House of Lords). In early precedents of this sort,
English courts often spoke of the arbitration clause as simply another term of the parties
underlying contract, albeit one which warranted special treatment. Ashville Inv. Ltd v.
Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.); Dalmia Dairy Indus. Ltd v. Natl
Bank of Pakistan [1978] 2 Lloyds Rep. 223 (English Ct. App.).
178) Heyman v. Darwins Ltd [1942] AC 356, 366 (House of Lords) (Viscount Simon, L.C.).
179) Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v. Ras Al Khaimah Natl Oil Co. [1987] 2
Lloyds Rep. 246, 250 (English Ct. App.), revd on other grounds, [1988] 2 Lloyds Rep. 293
(House of Lords). See also Bremer Vulkan Schiffbau und Maschinenfabrik v. S. India
Shipping Corp. Ltd [1981] AC 909 (House of Lords); Paul Smith Ltd v. H & S Intl Holdings Inc.
[1991] 2 Lloyds Rep. 127 (QB) (English High Ct.).
180) Westacre Invs. Inc. v. Jugoimport-SDPR Holdings Co. [1998] 4 All ER 570 (QB) (English High
Ct.).
52
181) See, e.g., Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyds Rep. 603, 609 (QB)
(English High Ct.) (Under the doctrine of separability, an arbitration agreement is
separable and autonomous from the underlying contract in which it appears. The
autonomy of arbitration agreements has become a universal principle in the realm of
international commercial arbitration. A corollary to the separability doctrine is that the
law applicable to the arbitration agreement may differ from the law applicable both to
the substance of the contract underlying the dispute and to the arbitral proceedings
themselves.); Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep.
81, 92-93 (QB) (English High Ct.), affd, [1993] 3 All ER 897 (English Ct. App.).
182) See3.03[A][2][c]; Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English
Ct. App.), affd, [2007] UKHL 40 (House of Lords).
183) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897 (English Ct. App.);
Gross, Separability Comes of Age in England: Harbour v. Kansa and Clause 3 of the Bill, 11
Arb. Intl 85 (1995); D. Sutton, J. Gill & M. Gearing, Russell on Arbitration 2-007 to 2-013,
2-070 (23d ed. 2007).
184) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 92-93 (QB)
(English High Ct.), affd, [1993] 3 All ER 897 (English Ct. App.).
185) English Arbitration Act, 1996, 7 (emphasis added). Section 7 used the term distinct,
rather than separable or autonomous. There does not appear to have been any change
in substantive meaning attributed to the new terminology.
186) See3.02[B][3][e]; 3.03[A][2][a].
187) Aeberli, Jurisdictional Disputes Under the Arbitration Act 1996: A Procedural Route Map, 21
Arb. Intl 253, 253 n.3 (2005) (note also 7 (giving effect to the doctrine of separability));
R. Merkin, Arbitration Law 5.40 (1991 & Update August 2013) (There are two intertwining
principles recognized at common law, and codified by the Arbitration Act 1996.The first
principle is that of separabilitynow set out in 7 of the Arbitration Act 1996.); Samuel,
Separability and the U.S. Supreme Court Decision in Buckeye v. Cardegna, 22 Arb. Intl 477,
491 (2006) (This led to the assumption that a future House of Lords would introduce
mainstream separability if it ever dealt with a case involving a main contract that was
illegal. In 1992, the Court of Appeal in Harbour, however, jumped the gun and ruled that
the alleged illegality of an insurance contract did not deprive the arbitrator of
jurisdiction. Unsurprisingly, the views expressed there were reproduced in section 7 of the
Arbitration Act 1996.).
188) English Arbitration Act, 1996, 7; R. Merkin, Arbitration Law 5.43 (1991 & Update August
2013).
189) CompareEnglish Arbitration Act, 1996, 7withUNCITRAL Model Law, Art. 16(1). See3.02[B][3]
[e], p. 375; 7.02[B][1]; 7.03[A], p. 1110.
The English choice was a deliberate one. U.K. Departmental Advisory Committee on
Arbitration Law, Report on the Arbitration Bill 43 (1996) (This clause [7] sets out the
principle of separability which is already part of English law, which is also to be found in
Article 16(1) of the Model Law, and which is regarded internationally as highly desirable.
However, it seems to us that the doctrine of separability is quite distinct from the
question of the degree to which the tribunal is entitled to rule on its own jurisdiction, so
that, unlike the Model Law, we have dealt with the latter elsewhere in the Bill (Clause
30).) (citing Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897
(English Ct. App.)).
190) See3.03[A][2][a]; 7.02[B][1]; 7.03[A].
191) See also Lesotho Highlands Dev. Auth. v. Impregilo SpA [2006] 1 AC 221, 232 (House of Lords)
(separability presumption is part of the very alphabet of arbitration law).
192) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.), affd,
[2007] UKHL 40 (House of Lords).
193) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891, 29, 38 (English Ct.
App.) (emphasis added), affd, [2007] UKHL 40 (House of Lords). The Court of Appeal relied
in particular on L. Collins (ed.), Dicey, Morris and Collins on The Conflict of Laws 12-099
(14th ed. 2006), which approved the analysis in Prima Paint and subsequent U.S.
decisions.
194) Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40, 17 (House of Lords).
196) In El Nasharty v. J. Sainsbury plc, a case involving a claim of duress, the court applied
Fiona Trust and held that the arbitration clause would only be invalidated if that clause
itself resulted from duress. Although there was substantial evidence that the underlying
contract had been procured by duress, the Court held that the duress did not prevent
[the party from] exercising his own free will in relation to [the] dispute resolution
machinery. El Nasharty v. J. Sainsbury plc [2007] EWHC 2618, 31 (Comm) (English High
Ct.). See also Deutsche Bank AG v. Asia Pac. Broadband Wireless Commcns Inc. [2008] EWCA
Civ 1091 (English Ct. App.) (applying separability presumption where contract was
unauthorized and thus void); Entico Corp. Ltd v. United Nations Educ. Scientific & Cultural
Assn [2008] EWHC 531 (Comm) (English Ct. App.) (applying separability presumption
where contracts existence was contested); UR Power GmbH v. Kuok Oils & Grains Pte Ltd
[2009] EWHC 1940 (Comm) (English High Ct.) (applying separability presumption where
negotiations had arguably not yet resulted in binding agreement); Vee Networks Ltd v.
Econet Wireless Intl Ltd [2005] 1 Lloyds Rep. 192 (QB) (English High Ct.); Svenska Petroleum
Exploration AB v. Lithuania [2005] EWHC 2437 (Comm) (English High Ct.).
197) See3.03[A][2][b][ii](3); 3.03[A][2][c].
53
198) UR Power GmbH v. Kuok Oils & Grains Pte Ltd [2009] EWHC 1940, 34 (Comm) (English High
Ct.) (arbitrator to decide whether condition precedent to formation of underlying
contract, containing arbitration clause, had been fulfilled).
199) Lower court decisions holding that termination of an underlying agreement does not
terminate an arbitration clause include Judgment of 5 August 1936, Contl Ins. Co. v. Fuji
Shokai, IV Y.B. Comm. Arb. 115, 122 (Tokyo Koto Saibansho) (1979) (agency agreement);
Judgment of 21 October 2005, Taiyo Ink Mfg Ltd v. Tamura Kaken Ltd, Hanrei Jiho No. 1926-
127 (Tokyo Chiho Saibansho) (validity of arbitration agreement is not affected by validity
of underlying license agreement); Judgment of 25 August 1999, Heisei 10 (wa) 3851
(Yokohoma Chiho Saibansho) (applying separability presumption where sale agreement
was terminated); Judgment of 3 May 1980, Kabushiki Kaisha Ameroido Nihon v. Drew Chem.
Corp., VIII Y.B. Comm. Arb. 394 (Yokohama Chiho Saibansho) (1983); Judgment of 17 October
1973, Koji Sato v. Ikeuchi Kenchiku Seisaku K.K., 301 Hanrei Taimuzu 227 (Tokyo Chiho
Saibansho) (construction contract); Judgment of 10 April 1953, Compaia de Transportes del
Mar SA v. Mataichi K.K. (Tokyo Chiho Saibansho) (charter party agreement), cited in T. Doi,
Japan: The Role of Courts in the Settlement of Commercial Disputes by Arbitration, 4 Intl Co.
& Comm. L.R. 366, 366 (1993).
200) Judgment of 15 July 1975, Kokusan Kinzoku Kogyo K.K. v. Guard-Life Corp., IV Y.B. Comm. Arb.
115, 122 (Japanese Saiko Saibansho) (1979).
115, 122 (Japanese Saiko Saibansho) (1979).
115, 122 (Japanese Saiko Saibansho) (1979). See alsoJudgment of 30 May 1994, XX Y.B.
Comm. Arb. 745, 748 (Tokyo Koto Saibansho) (1995) (fraud in connection with underlying
contract does not taint arbitration clause).
203) Japanese Arbitration Law, Art. 13(6) (Even if in a particular contract containing an
arbitration agreement, any or all of the contractual provisions, excluding the arbitration
agreement, are found to be null and void, cancelled or for other reasons invalid, the
validity of the arbitration agreement shall not necessarily be affected.).
204) See also3.02[B][3][f]; 3.03[A][2][a]; 7.02[B][1]; 7.03[A].
205) Judgment of 26 February 2006, Taiyo Ink Mfg Ltd v. Tamura Kaken Ltd, LEX/DB 28110611
(Tokyo Koto Saibansho).
206) See China Natl Tech. Imp. Exp. Corp. v. Swiss Indus. Res. Co. Inc., [1989] 1 Gazette of the
Supreme Peoples Court of the PRC 26 (Chinese Zuigao Fayuan) (where respondent
defrauded claimant regarding nonexistent goods, entire sale of goods contract, including
arbitration clause, was void ab initio), cited in Weixia, Chinas Search for Complete
Separability of the Arbitral Agreement, 3 Asian Intl Arb. J. 163, 164-65 (2007).
207) Weixia, Chinas Search for Complete Separability of the Arbitral Agreement, 3 Asian Intl
Arb. J. 163, 164-65 (2007).
208) As discussed below, Chinas approach to the competence-competence doctrine has not
thus far reflected a similar evolution, with the Chinese Arbitration Law continuing to
significantly restrict the arbitrators competence-competence. SeeChinese Arbitration
Law, Art. 20; 7.03[H].
209) See N. Kaplan, J. Spruce & M. Moser, Hong Kong and China Arbitration Cases and Materials
314 (1994) (under Chinese Joint Venture Law, joint venture contract not valid until
approved by government).
210) Chinese Arbitration Law, Art. 19. See also Chinese Contract Law, Art. 57 (The invalidation,
cancellation or discharge of a contract does not impair the validity of the contract
provision concerning the method of dispute resolution, which exists independently in the
contract.).
211) Jiangsu Materials Group Light Indus. & Weaving Co. v. Hong Kong Top-Capital Holdings Ltd
& Prince Dev. Ltd, [1998] 3 Gazette of the Supreme Peoples Court of the PRC 109-10
(Chinese Zuigao Fayuan), cited in Weixia, Chinas Search for Complete Separability of the
Arbitral Agreement, 3 Asian Intl Arb. J. 163, 168 (2007).
A Chinese commentator criticized the strong presumption the court gave to the
separability of the arbitration clause, suggesting that the court had not even
attempt[ed] to test whether the parties had expressed their true intentions in concluding
the arbitration agreement in the fraudulent contractual circumstances. Weixia, Chinas
Search for Complete Separability of the Arbitral Agreement, 3 Asian Intl Arb. J. 163, 169
(2007).
212) Beijing Higher Peoples Court, Economic Division, Provisional Regulations and Opinions on
Some Issues Regarding the Determination of An Application for Ascertaining the Validity of
An Arbitration Agreement, and Motions to Revoke An Arbitration Award 7 (December 1999),
cited in Weixia, Chinas Search for Complete Separability of the Arbitral Agreement, 3 Asian
Intl Arb. J. 163, 169 (2007).
213) Interpretation of the Supreme Peoples Court Concerning Several Matters on Application of
the Arbitration Law of the P.R.C., Art. 10 (In case a contract has been invalid or cancelled
after being formed, Paragraph 1 of Article 19 of the Arbitration Law shall apply to
determine the validity of the arbitration agreement.).
214) Chinese Arbitration Law, Art. 19.
54
215) Article 5 of the 2005 CIETAC Rules is broader than Article 19 of the Arbitration Law. Article
5(4) provides: An arbitration clause contained in a contract shall be treated as a clause
independent and separate from all other clauses of the contract, and an arbitration
agreement attached to a contract shall be treated as independent and separate from the
other parts of the contract. The validity of an arbitration clause or an arbitration
agreement shall not be affected by any modification, rescission, termination, transfer,
expiry, invalidity, ineffectiveness, revocation or non-existence of the contract. CIETAC
Arbitration Rules, Art. 5 (emphasis added). See also Beijing Arbitration Commission
Arbitration Rules, Art. 5 (similar formulation of separability).
216) Union of India v. Kishorilal Gupta & Bros., (1960) 1 SCR 493, 508 (Indian S.Ct.).
217) Indian Arbitration and Conciliation Act, Art. 16 (The arbitral tribunal may rule on its own
jurisdiction, including any objections with respect to the existence or validity of the
arbitration agreement. For that purpose, an arbitration clause which forms part of a
contract shall be treated as an agreement independent of the other terms of the
contract. A decision by the arbitral tribunal that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause.).
218) Brawn Labs. Ltd v. Fittydent Intl GmbH, (2000) DLT 204, 11 (Delhi High Ct.). The resulting
award was subsequently enforced by the Delhi High Court in Fittydent Intl GmbH v. Brawn
Labs. Ltd, [2010] CS(OS) 2447/2000 (Delhi High Ct.).
219) Firm Ashok Traders v. Gurumukh Das Saluja, [2004] ARBLR 141 SC, 13 (Indian S.Ct.).
220) See, e.g., P. Manohar Reddy & Bros. v. Maharashtra Krishna Valley Dev. Corp., (2009) 2 SCC
494 (Indian S.Ct.) (arbitration clause survived termination of contract by mutual assent);
Natl Agric. Coop. Mktg Fedn India Ltd v. Gains Training Ltd, (2007) 5 SCC 692 (Indian S.Ct.)
(arbitration clause was severable from contract and survived termination by mutual
agreement); Fittydent Intl GmbH v. Brawn Labs., Ltd, XXXV Y.B. Comm. Arb. 401 (Delhi High
Ct. 2010) (2010) (arbitration agreement was valid although underlying contract was null
and void).
221) India Household & Healthcare Ltd v. LG Household & Healthcare Ltd, AIR 2007 SC 1376, 1379
(Indian S.Ct.). See also M/S Magma Leasing & Fin. Ltd v. Potluri Madhavilata, AIR 2010 SC
488, 18 (Indian S.Ct.) (Merely because the contract has come to an end by its
termination due to the breach, the arbitration clause does not get perished nor rendered
inoperative; rather it survives for resolution of disputes arising in respect of or with
regard to or under the contract.).
222) Irish Arbitration Act, 2010, Art. 16(1) (adopting UNCITRAL Model Law).
223) Spanish Arbitration Act, 2011, Art. 22(1) (adopting UNCITRAL Model Law).
224) Singapore International Arbitration Act, 2012, 7(1) (adopting UNCITRAL Model Law).
225) Hong Kong Arbitration Ordinance, 2013, 34 (adopting UNCITRAL Model Law); Fung Sang
Trading Ltd v. Kai Sun Sea Prods. & Food Co., XVII Y.B. Comm. Arb. 289, 297 (H.K. Ct. First
Inst. 1991) (1992) (Article 16(1) enshrines the doctrine of separability); Lin Ming v. Chen
Shu Quan [2012] HKCFI 328, 28 (H.K. Ct. First Inst.) (citing Fung Sang Trading, Art 16(1) of
the Model Law enshrined the doctrine of separability which English law had partially
recognized since Heyman v. Darwins [1942] AC 356. Thus the arbitration clause is
separable from the contract containing it so that even if the contract is repudiated and
the repudiation is accepted, the arbitration clause survives the repudiation.).
226) Subway Sys. Australia Pty Ltd v. Ireland, [2013] VSC 550, 57 (Victoria S.Ct.); Altain Khuder
LLC v. IMC Mining Inc., [2011] VSC 1, 80 (Victoria S.Ct.) (The authorities are clear that an
arbitration agreement, contained in a broader agreement, is separable from the other
terms of that agreement.).
227) New Zealand Arbitration Act, Schedule 1, Art. 16(1) (adopting UNCITRAL Model Law).
228) Belgian Judicial Code, Art. 1690(1) (The arbitral tribunal may rule on its own jurisdiction,
including any objections with respect to the existence or validity of the arbitration
agreement. For that purpose, an arbitration agreement which forms part of a contract
shall be treated as an agreement independent of the other terms of the contract. A
decision by the arbitral tribunal that the contract is null and void shall not entail ipso
jure the invalidity of the arbitration agreement.).
229) Netherlands Code of Civil Procedure, Art. 1053 (An arbitration agreement shall be
considered and decided upon as a separate agreement; The arbitral tribunal shall have
the power to decide on the validity of the contract of which the arbitration agreement
forms part or to which the arbitration agreement is related.).
230) Swedish Arbitration Act, 3 (Where the validity of an arbitration agreement which
constitutes part of another agreement must be determined in conjunction with a
determination of the jurisdiction of the arbitrators, the arbitration agreement shall be
deemed to constitute a separate agreement.).
231) Italian Code of Civil Procedure, Art. 808(3) (The validity of the arbitration clause shall be
evaluated independently from the underlying contract; nevertheless, the capacity to
enter into the contract includes the capacity to agree to the arbitration clause.).
232) Portuguese International Arbitration Act, 2011, Art. 18(2) ([A]n arbitration clause that is
part of a contract is considered to be independent from other terms of such contract.),
Art. 18(3) ([A] decision by the arbitration tribunal finding the contract null does not imply
the nullity of the arbitration clause.); Judgment of 27 November 2008, Process 08B3522
(Portuguese Supremo Tribunal de Justia).
55
233) Turkish International Arbitration Law, Art. 4(4) (One cannot raise an objection to the
arbitration agreement on the basis that the main agreement is not valid; or that the
arbitration agreement pertains to a dispute that has not yet arisen.); Judgment of 24 May
2007, Case No. E.2007/193, K.2007/3494 (Turkish Yargitay), cited in Sral, Nearly A Decade
On: The Perception of International Arbitration Law by Turkish Courts, 26 Arb. Intl 421, 427
(2010).
234) Syrian Arbitration Law, Art. 11 (The arbitral clause is deemed to be an agreement that is
independent of the other terms of the contract. The expiration, nullity, repudiation,
revocation or termination of the contract shall not affect the arbitral clause therein,
provided such clause is valid per se, unless agreed otherwise by the parties.).
235) Indonesian Arbitration and ADR Law, Art. 10 (An arbitration agreement shall not become
null or void under any of the following circumstances: (a) the death of one of the parties,
(b) the bankruptcy of one of the parties, (c) novation, (d) the insolvency of one of the
parties, (e) inheritance, (f) effectivity of the requirements for the cancellation of the main
contract, (g) the implementation of the agreement is transferred to one or more third
parties, with the consent of the parties who made the agreement to arbitrate, or (h) the
expiration or voidance of the main contract.).
236) Scottish Arbitration Act, 2010, Art. 5 (Separability: (1) An arbitration agreement which
forms (or was intended to form) part only of an agreement is to be treated as a distinct
agreement. (2) An arbitration agreement is not void, voidable or otherwise unenforceable
only because the agreement of which it forms part is void, voidable or otherwise
unenforceable. (3) A dispute about the validity of an agreement which includes an
arbitration agreement may be arbitrated in accordance with that arbitration
agreement.).
237) Algerian Code of Civil and Administrative Procedure, Art. 458 bis 1, 3 (The validity of an
arbitration agreement cannot be challenged on the sole ground that the underlying
contract would be null and void.).
(2005) (citing Bolivian Law on Arbitration and Mediation, Art. 32; Brazilian Arbitration Law,
Art. 8; Chilean International Commercial Arbitration Law, Art. 16(1); Colombian Arbitration
Law, Art. 79; Costa Rican Arbitration Law, 2011, Art. 16(1); Ecuadorian Law on Arbitration
and Mediation, Art. 5; El Salvadoran Law on Mediation, Conciliation and Arbitration, Art.
30; Mexican Commercial Code, Art. 1432; Paraguay Law on Arbitration and Mediation, Art.
19; Peruvian Arbitration Law, Art. 41(2); Venezuelan Commercial Arbitration Law, Arts. 7,
25).
239) Judgment of 26 April 1980, VII Y.B. Comm. Arb. 340, 341 (Venice Corte dAppello) (1982).
240) Judgment of 2 July 1981, 1981 Foro it., Rep., voce Arbitrato no. 61 (Italian Corte di
Cassazione) (tribunal held that irrituale arbitration clause was not separable from main
contract, distinguishing it from rituale clause: In fact, contrary to a rituale arbitration
clause, the above arbitration clause, which is a secondary agreement whose basis and
purpose are linked to the main agreement in which it is included, cannot continue to
exist if the above mentioned invalidity causes exist, since those invalidity causes imply
that the source of the arbitrators power would indeed cease to exist.); Judgment of 21
December 1991, SpA Coveme v. Compagnie Franaise des Isolants, XVIII Y.B. Comm. Arb. 422,
425 (Bologna Corte dAppello) (1993) (arbitral clause is autonomous with respect to the
contract so that the nullity of the latter does not automatically affect the former).
241) Judgment of 27 November 2008, Process 08B3522, 6 (Portuguese Supremo Tribunal de
Justia).
242) Barnmore Demolition & Civil Engg Ltd v. Alandale Logistics Ltd, 2010 No. 5910P, 3 (Irish
High Ct.).
243) Judgment of 3 October 1936, AB Norrkpings Trikfabrik v. AB Per Persson, 1936 NJA 521, 524
(Swedish S.Ct.) (There is no evidence of circumstances that would not make the
arbitration clause in the agreement between the parties regardless of whether this
would otherwise be considered valid or not binding for [the claimant]. Therefore, and as
the arbitration agreement must be considered to include also a disputeabout [whether
the arbitration agreement is valid despite invalidity of main agreement], the [Swedish
Supreme Court] confirms the verdict of the [lower court].).
244) See, e.g., P. Manohar Reddy & Bros. v. Maharashtra Krishna Valley Dev. Corp., (2009) 2 SCC
494 (Indian S.Ct.); DHV BV v. Tahal Consulting Engrs Ltd, [2007] INSC 913 (Indian S.Ct.); Firm
Ashok Traders v. Gurumukh Das Saluja, [2004] ARBLR 141 SC (Indian S.Ct.); Fittydent Intl
GmbH v. Brawn Labs., Ltd, XXXV Y.B. Comm. Arb. 401 (Delhi High Ct. 2010) (2010); M/S
Hicare India Props. v. M/S Adidas India Mktg, [2010] ARB.P. 370/2009, 11-14 (Delhi High Ct.).
245) Cecrop Co. v. Kinetic Sciences Inc., [2001] BCSC 532 (B.C. Sup. Ct.); Brian Harper v. Kvaerner
Fjellstrand Shipping AS, XVIII Y.B. Comm. Arb. 358, 359- (B.C. S.Ct. 1991) (1993) (British
Columbia Legislature accepts the doctrine of separability).
246) Nexus Energy Corporate Pty Ltd v. Trident Australasia Pty Ltd, [2010] FCA 1328 (Australian
Fed. Ct.); Altain Khuder LLC v. IMC Mining Inc., [2011] VSC 1, 79 (Victoria S.Ct.) (there is a
presumption of separability; that an international arbitration agreement is separable
from the underlying commercial contract with which it is associated or is contained);
Resort Condominiums Intl Inc. v. Bolwell, XX Y.B. Comm. Arb. 628, 632 (Queensland S.Ct.
1993) (1995) (arbitration clause separable from terminated underlying contract); Ferris v.
Plaister, (1994) 34 NSWLR 474 (N.S.W. Ct. App.).
247) Judgment of 5 June 2009, Gasolinera San Isidro v. Compaia Espaola Distribuidora de
Petrleos, SAP M 10841/2009 (Madrid Audiencia Provincial).
56
248) Judgment of 12 April 2010, Elbex Video Ltd v. Tyco Bldg Servs., Ltd, XXXV Y.B. Comm. Arb. 409
(Israeli S.Ct.) (2010) (arbitration clause valid despite invalidity of underlying contract due
to failure of condition precedent).
249) Judgment of 27 August 1999, Camuzzi Argentina SA v. Sodigas Sur SA, La Ley 1999-ED, 185-
125 (Argentine Cmara Nacional de Apelaciones en lo Comercial); Judgment of 26
September 1988, Enrique C. Wellbers S.A.I.C. AG v. Extraktionstechnik Gesellschaft fr
Anlagenbau, La Ley 1989-E-302 (Argentine Cmara Nacional de Apelaciones en lo
Comercial) (recognizing separability of international arbitration clauses under Argentine
law).
250) Judgment of 2 May 2001, Limonta Floor Coverings SpA v. Deportes SRL, Case No. 87/2001,
LJU 125/2002 (Uruguayan Tribunal de Apelaciones).
251) There are a few anomalous exceptions among U.S. state courts, applying state law in
domestic matters. See, e.g., Shaffer v. Jeffery, 915 P.2d 910, 916-17 (Okla. 1996) (Oklahoma
law); B.A.P. LLP v. Pearman, 250 P.3d 332 (Okla. Civ. App. 2011) (same); New Orleans Private
Patrol Serv., Inc. v. Valiant Payroll Serv., Inc., 56 So.3d 1084, 1087-88 (La. Ct. App. 2011);
Wilson v. Mike Steven Motors, Inc., 2005 WL 1277948, at *5 (Kan. Ct. App.) (Kansas has not
favored applying the separability doctrine to contracts governed by the KUAA.); City of
Wamego v. L.R. Foy Constr. Co., 9 Kan.App.2d 168, 173 (Kan. Ct. App. 1984). These decisions
are preempted by the U.S. FAA insofar as they involve interstate or foreign commerce.
They are also anomalous and ill-reasoned.
252) See3.02[B][3]; 3.03[A][2][b].
253) BP Exploration Co. v. Govt of the Libyan Arab Repub., Ad Hoc Award on Merits of 10 October
1973, V Y.B. Comm. Arb. 143, 157 (1980) (Libyan legislation was effective to terminate the
BP concession, except in the sense that the BP concession forms the basis of the jurisdiction
of the Tribunal and of the rights of the Claimant to claim damages from the Respondent
before the Tribunal) (emphasis added).
254) Texaco Overseas Petroleum Co. v. Libyan Arab Repub., Preliminary Ad Hoc Award on
Jurisdiction of 27 November 1975, IV Y.B. Comm. Arb. 177, 179 (1979).
255) Libyan Am. Oil Co. (LIAMCO) v. Govt of the Libyan Arab Repub., Ad Hoc Award of 12 April
1977, VI Y.B. Comm. Arb. 89, 96 (1981).
256) Elf Aquitaine Iran v. Natl Iranian Oil Co., Preliminary Ad Hoc Award of 14 January 1982, XI
Y.B. Comm. Arb. 97, 20 (1986). See id. at 18 (It is a generally recognized principle of the
law of international arbitration that arbitration clauses continue to be operative, even
though an objection is raised by one of the parties that the contract containing the
arbitration clause is null and void.).
Y.B. Comm. Arb. 97 (1986).
258) See, e.g., Partial Award in ICC Case No. 13764, 20(1) ICC Ct. Bull. 108, 140 (2009) (The
separability of the arbitration agreement from the agreement in which it is to be found is
well known.); Final Award in ICC Case No. 7626, XXII Y.B. Comm. Arb. 132, 137 (1997); Interim
Award in ICC Case No. 7263, XXII Y.B. Comm. Arb. 92, 100 (1997) (recognizing principle of
severability of the arbitral clause from the contract as a whole, based on Swiss Law on
Private International Law and ICC Rules); Award in ICC Case No. 6367, discussed in Grigera
Nan, Choice-of-Law Problems in International Commercial Arbitration, 289 Recueil des
Cours 9, 54 (2001) (separability of arbitration agreement is internationally recognized);
Final Award in ICC Case No. 6268, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Awards 1991-1995 68, 71 (1997); Award in ICC Case No. 1526, 101 J.D.I. (Clunet) 915, 217
(1974) (It is also a rule, now generally admitted in international arbitration matters, or in
the process of being so admitted, thatthe arbitration agreement, whether it be entered
into specially or included in the legal contract to which it applies, apart from exceptional
circumstances, has a complete juridical independence, excluding the possibility that it
may be affected by the possible invalidity of the contract.); Preliminary Award in ICC Case
No. 1512, in S. Jarvin & Y. Derains (eds.), Collection of ICC Awards 1974-1985 33, 36 (1990); All-
Union Foreign Trade Assn Sojuznefteexport v. JOC Oil Ltd, Award in USSR Chamber of
Commerce & Industry Case of 9 July 1984, XVIII Y.B. Comm. Arb. 92 (1993); Award in Arbitral
Tribunal of the Netherlands Oils, Fats and Oilseeds Trade Association Case of 10 September
1975, II Y.B. Comm. Arb. 156 (1977); Award in Bulgarian Chamber of Commerce and Industry
Case No. 88/1972 of 23 June 1973, IV Y.B. Comm. Arb. 189 (1979).
259) Award in ICC Case No. 9480, discussed in Grigera Nan, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 55 (2001).
260) Final Award in ICC Case No. 8938, XXIV Y.B. Comm. Arb. 174, 176 (1999).
261) Preliminary Award in ICC Case No. 6401, 7(1) Mealeys Intl Arb. Rep. B-1, B-14 (1992).
57
262) See, e.g.,Final Award in ICC Case No. 7626, XXII Y.B. Comm. Arb. 132, 138-39 (1997) (The issue
before us, then, resolves into one of deciding whether or not the parties agreed to this
arbitration clause. This issue can only be resolved in the context of our more general
consideration as to whether one or both of the Agreements are binding on P and A, the
parties to this arbitration.); Partial Award on Jurisdiction and Admissibility in ICC Case No.
6474, XXV Y.B. Comm. Arb. 279, 306 (2000) (There are cases where [invalidity of the main
contract] may directly affect the validity of the arbitration clause, e.g. defects of consent
or the absence of authority of the signatories.); Pollux Marine Agencies v. Dreyfus, Award
in AAA Case No. 1569 of 3 August 1981, VIII Y.B. Comm. Arb. 171, 176 (1983) (An arbitration
clause is not severable when the existence of the contract from it is to be severed is in
dispute.); Elf Aquitaine Iran v. Natl Iranian Oil Co., Preliminary Ad Hoc Award of 14 January
1982, XI Y.B. Comm. Arb. 97, 103-04 (1986) (An arbitration clause may not always be
operative in cases where it is clearly indicated by facts and circumstances that there
never existed a valid contract between the parties.).
263) These circumstances are discussed in greater detail below. See3.03[A][2][b][ii](3), (fraud
in factum, signatories without capacity or power to sign underlying contract and contract
never existed).
264) 1955 ICC Rules, Art. 13(4) (Unless otherwise stipulated, the arbitrator shall not cease to
have jurisdiction by reason of an allegation that the contract is null and void or
nonexistent. If he upholds the validity of the arbitration clause, he shall continue to have
jurisdiction to determine the respective rights of the parties and to make declarations
relative to their claims and pleas even though the contract should be null and void or
non-existent.).
265) 1988 ICC Rules, Art. 6(4).
266) Article 6(4) of the 1998 ICC Rules and Article 6(9) of the 2012 ICC Rules provide: Unless
otherwise agreed, the Arbitral Tribunal shall not cease to have jurisdiction by reason of
any claim that the contract is null and void or allegation that it is non-existent, provided
that the Arbitral Tribunal upholds the validity of the arbitration agreement. The Arbitral
Tribunal shall continue to have jurisdiction to determine the respective rights of the
parties and to adjudicate their claims and pleas even though the contract itself may be
non-existent or null and void. 1998 ICC Rules Art. 6(4); 2012 ICC Rules, Art. 6(9). See M.
Bhler & T. Webster, Handbook of ICC Arbitration: Commentary, Precedents, Materials
6-89 to 6-103 (2d ed. 2008); Y. Derains & E. Schwartz, A Guide to the ICC Rules of
Arbitration 111-13 (2d ed. 2005); J. Fry, S. Greenberg & F. Mazza, The Secretariats Guide to
ICC Arbitration 3-281 to 3-286 (2012).
267) Hence, the provision requiring that the arbitral tribunal upholds the validity of the
arbitration agreement. SeeY. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration
113 (2d ed. 2005).
268) See3.02[B][3][f]; 3.03[A][2][a]; 7.02[B][1]; 7.03[A].
270) 1976 UNCITRAL Rules, Art. 21(2). See also S. Nappert, Commentary on the UNCITRAL
Arbitration Rules 2010 87-90 (2012). The answer should be clearly in the negative: there is
no conceptual difference for purposes of the Rules between a contract that is null and a
contract that is null and void.
271) See P. Binder, Analytical Commentary to the UNCITRAL Arbitration Rules 23-010 to 23-
014 (3d ed. 2013). The term null alone is broad enough to encompass all contractual
defects. One commentator noted that the term was given a wider interpretation in case
law than the former wording. See id. at 23-014. The new wording also aligns the English
version of the Rules with languages in other versions.
During the 2010 revisions, another change was suggested, but not adopted. The proposal
involved adding the words legal instrument after the word contract to avoid a
limitation in the types of disputes parties could submit to arbitration. This suggestion
was rejected, however, to avoid transposing a presumption that applied to commercial
contracts to international treaties. See ibid.
272) ICDR Rules, Art. 15(2); LCIA Rules, Art. 23(1); 2012 Swiss Rules, Art. 21(2); 2012 CIETAC Rules,
Art. 5(4); 2013 HKIAC Rules, Art. 19(2); 2013 SIAC Rules, Art. 25(2). These provisions are set
forth in 3.03[A][3].
273) See3.03[A][3]; 7.02[C].
274) See1.04[C][5].
275) See5.02[A]; New York Convention, Art. II(2); UNCITRAL Model Law, Art. 7(2); U.S. FAA, 9
U.S.C. 2.
276) See5.06[A][1]; New York Convention, Arts. II(1), (2); UNCITRAL Model Law, Art. 8(1); U.S. FAA,
9 U.S.C. 3, 4.
277) See4.02[A]; UNCITRAL Model Law, Art. 34(2)(a)(i); A. Briggs, Agreements on Jurisdiction and
Choice of Law 85-97 (2008).
278) See7.02[F]; UNCITRAL Model Law, Art. 16; A. Briggs, Agreements on Jurisdiction and Choice
of Law 66-70, 258-59 (2008). Compare Rimpac. Navigation Inc. v. Daehan Shipbldg Co. [2009]
EWHC 2941 (Comm) (English High Ct.) (declining to extend separability presumption to
jurisdiction agreements).
58
279) As noted above, there are (very) isolated domestic state court decisions in the United
States, which reject the separability presumption. See 3.02[B][3][j] n. 251. As also noted
above, these decisions are anomalous and preempted by the FAA insofar as foreign and
interstate commerce is concerned.
It is difficult to find commentators who dispute the existence and desirability of the
separability doctrine, even in domestic settings. For two exceptions, see Reuben, First
Options, Consent to Arbitration, and the Demise of Separability: Restoring Access to Justice
for Contracts with Arbitration Provisions, 56 S.M.U. L. Rev. 819, 878 (2003) ([The Supreme
Court] should repudiate separability, and make clear that the validity of an arbitration
provision in a container contract is contingent upon the validity of the container contract
itself, and that courts are to decide that issue.); Ware, Arbitration Laws Separability
Doctrine After Buckeye Check Cashing Inc. v. Cardegna, 8 Nev. L.J. 107, 119 (2007)
(separability doctrine should be repealed because [sic] I believe that no dispute should
be sent to arbitration unless the parties have formed an enforceable contract requiring
arbitration of that dispute).
280) Parties might choose to agree to arbitration only if their underlying contract and
commercial dealings were validly concluded and successfully underway, reserving
disputes about contract formation, validity and termination for litigation. This is very
unlikely, as a commercial matter, but possible. See Moseley v. Elec. & Missile Facilities,
Inc., 374 U.S. 167, 171 (U.S. S.Ct. 1963).
281) SeeEnglish Arbitration Act, 1996, 7; Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440
(U.S. S.Ct. 2006); Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 402 (U.S. S.Ct.
1967) (except where the parties otherwise intendarbitration clauses are separable from
the contracts in which they are embedded) (emphasis added); Harbour Assur. Co. (U.K.)
Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 92-93 (QB) (English High Ct.) (First,
there is the imperative of giving effect to the wishes of the parties.[I]t must be presumed
that the parties intended to refer all the disputes arising out of the particular transaction
to arbitration. Party autonomy therefore militates in favor of the full recognition of the
separability principle.) (emphasis added), affd, [1993] 3 All ER 897 (English Ct. App.);
Judgment of 27 February 1970, 6 Arb. Intl 79, 82 (German Bundesgerichtshof) (1990) (every
reason to presume that reasonable parties will wish); Judgment of 15 July 1975, Kokusan
Kinzoku Kogyo K.K. v. Guard-Life Corp., IV Y.B. Comm. Arb. 115, 122 (Japanese Saiko
Saibansho) (1979) (unless there is a special agreement between the parties). See also R.
David, Arbitration in International Trade 192 (1985) (recognizing contractual foundations of
separability presumption); Samuel, Separability and the U.S. Supreme Court Decision in
Buckeye v. Cardegna, 22 Arb. Intl 477, 485-86 (2006).
282) As noted above, legislative provisions in many jurisdictions (including Articles II and V(1)
(a) of the New York Convention, Articles 7 and 16 of the UNCITRAL Model Law and 2, 3
and 4 of the FAA) recognize, but do not dictate, the separability presumption. See3.02[A]
[2]; 3.02[B][3][b]-[c] & [e].
283) See authorities cited 3.02[B][3][a], pp. 362-65; 3.02[B][3][b], pp. 365-67; 3.02[B][3][c], p.
373; 3.02[B][3][d], p. 373; 3.02[B][3][e], pp. 375-78; 3.02[B][3][g], pp. 383-84; 3.03[E][h],
pp. 384-86; 3.02[B][3][e], pp. 386-87. See alsoReport of the Secretary-General on the
Preliminary Draft Set of Arbitration Rules for Optional Use in Ad Hoc Arbitration Relating to
International Trade, UNCITRAL, Eighth Session, U.N. Doc. A/CN.9/97, VI UNCITRAL Y.B. 163,
175 (1975) (separability doctrine can be considered to conform with the underlying
intentions of the parties); Klein, Du caractre autonome de la clause compromissoire,
notamment en matiere darbitrage international, 50 Rev. Critique de Droit Intl Priv 499,
507 (1961); A. Samuel, Jurisdictional Problems in International Commercial Arbitration 157-
58 (1989) (most that can usually be said is that the parties do not actively intend the fate
of the main contract to determine automatically that of the arbitral clause); Sanders,
Lautonomie de la clause compromissoire, in Hommage Frdric Eisemann 31, 33-35 (1978)
(separability presumption reflects parties intentions).
284) See3.02[B][2].
285) See3.02[B][2]; All-Union Foreign Trade Assn Sojuznefteexport v. JOC Oil Ltd, Award in USSR
Chamber of Commerce & Industry of 9 July 1984, XVIII Y.B. Comm. Arb. 92, 97 (1993)
(arbitration agreement is treated as a procedural contract and not as an element
(condition) of a material-legal contract); Judgment of 3 December 1986, 1987 NJW 651, 652
(German Bundesgerichtshof) (The arbitration agreement is a subcategory of the
procedural contract.); Judgment of 30 January 1957, 23 BGHZ 198, 200 (German
Bundesgerichtshof) (characterizing arbitration agreement as a contract of substantive
law governing procedural relations); Judgment of 7 October 1933, Tobler v.
Justizkommission des Kantons Schwyz, DFT 59 I 177, 179 (Swiss Federal Tribunal) (According
to settled case law of the Swiss Federal Tribunal the arbitration clause is not an
agreement of substantive law but of procedural nature.).
59
286) See3.02[B][2]; Westacre Invs. Inc. v. Jugoimport-SPDR Holdings Co. [1998] 4 All ER 570, 582
(QB) (English High Ct.) ([A]n agreement to arbitrate within an underlying contract is in
origin and function parasitic. It is ancillary to the underlying contract for its only function
is to provide machinery to resolve disputes as to the primary and secondary obligations
arising under that contract.); OK Petroleum AB v. Vitol Energy SA [1995] CLC 850, 857 (QB)
(English High Ct.) (ancillary and therefore separable nature of an arbitration clause); A.
Briggs, Agreements on Jurisdiction and Choice of Law 71-72 (2008) (Whether the term, or
contract in which the term is contained, is described as ancillary or as severable, the
consequence is that it is insulated from those arguments which would lead to the
termination of the principal contract.). Compare A. Samuel, Jurisdictional Problems in
International Commercial Arbitration 161 (1989) (one can think of other contract terms,
such as liquidated damages provisions, which, like the arbitral clause, perform the task of
putting into effect the principal terms of the contract, but of which one would not say that
they constituted agreements separate from that in which they appear).
287) See1.05; 3.02[B][2]; Westacre Invs. Inc. v. Jugoimport-SDPR Holdings Co. [1998] 4 All ER
570 (QB) (English High Ct.); Report of the Secretary-General on the Revised Draft Set of
Arbitration Rules, UNCITRAL, Ninth Session, U.N. Doc. A/CN.9/112/Add.1, VII Y.B. UNCITRAL
166, 174 (1976) (separability doctrine reflects the view that the arbitration clause,
although contained in, and forming part of, the contract, is in reality an agreement
distinct from the contract itself, having as its object the submission to arbitration of
disputes arising from or relating to the contractual relationship).
288) See3.02[B][2]. As discussed above, these distinct legal regimes range from specialized
rules of Roman law, to early English arbitration legislation (in 1698, 1833, 1854, 1889), to
the Geneva Protocol, and today to the UNCITRAL Model Law and New York Convention.
289) See4.02; 5.08[A]; 6.03[C][4].
290) See3.02[B]; 3.03[A][2] (especially for disputes regarding contract formation, ongoing
validity and effectiveness of contract); Mayer, Les limites de la sparabilit de la clause
compromissoire, 1998 Rev. arb. 359, 361 ([T]he choice-of-law clause escapes the nullity of
the contract because it is its very purpose to specify the applicable law according to
which the judge or arbitrator will decide whether the contract is void. And for the same
reason, the arbitration clause must be respected if it implies the parties will to confide
the question of whether the contract is valid or void to an arbitrator.); U.K. Department of
Trade and Industry, Consultation Document on Proposed Clauses and Schedules for an
Arbitration Bill, reprinted in 10 Arb. Intl 189, 227 (1994) (Whatever degree of legal fiction
underlying the doctrine, it is not generally considered possible for international
arbitration to operate effectively in jurisdictions where the doctrine is precluded.
[I]nternational consensus on autonomy has now grown very broad.).
291) See3.02[B]. See also Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 404 (U.S.
S.Ct. 1967) (separability presumption adopted in order that the arbitration procedure,
when selected by the parties to a contract, be speedy and not subject to delay and
obstruction in the courts); Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40, 26
(House of Lords) (golden rule that if the parties wish to have issues as to the validity of
their contract decided by one tribunal and issues as to its meaning or performance
decided by another, they must say so expressly); Harbour Assur. Co. (U.K.) Ltd v. Kansa
Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 93 (QB) (English High Ct.), affd, [1993] 3 All ER 897
(English Ct. App.); Judgment of 27 February 1970, 6 Arb. Intl 79, 82 (German
Bundesgerichtshof) (1990) (Above all, however, the parties to an arbitration agreement
will as a rule wish to avoid the unpleasant consequences of separate jurisdiction.); Rau,
Separability in the United States Supreme Court, 2006:1 Stockholm Intl Arb. Rev. 1, 3
(Consent to arbitration, then, allows [courts] to infer a willingness to arbitrate any
challenges made to the main agreement. Such a presumption is certainly reinforced here
by a concern to avoid collateral litigation intended to delay or to derail the arbitral
process.).
292) S. Schwebel, International Arbitration: Three Salient Problems 3-6 (1987). Compare Samuel,
Separability and the U.S. Supreme Court Decision in Buckeye v. Cardegna, 22 Arb. Intl 477,
486 (2006) (suggesting that parties do not in fact contemplate invalidity of main contract,
but affirming presumption or implied term imposed by law that the arbitration clause
will survive the invalidity of the main contract and vice versa. The idea is to produce a
sensible result whenever the parties have not considered the point. It is virtually
impossible to identify a reason not to have this presumption which the parties can always
exclude by agreement.).
293) See3.02[B][3].
294) See3.02[B][3]; 3.02[E].
295) See1.02[B][3] & [5].
296) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 93 (QB)
297) See3.02[A][2].
298) See5.01[B][2].
299) See, e.g., K.-P. Berger, International Economic Arbitration 121 (1993); L. Collins (ed.), Dicey
Morris and Collins on The Conflict of Laws 16-011 (15th ed. 2012) (general principle of
international commercial arbitration); J. Lew, L. Mistelis & S. Krll, Comparative
International Commercial Arbitration 106 (2003) (one of the true transnational rules of
international commercial arbitration).
60
300) SeeUNCITRAL Model Law, Art. 16(1); German ZPO, 1040(1); 2012 ICC Rules, Art. 6(9); Prima
Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967); Fiona Trust & Holding
Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.), affd, [2007] UKHL 40 (House
of Lords); Rent-A-Ctr, 130 S.Ct. at 2778. Compare U.R. Power GmbH v. Kuok Oils & Grains Pte
Ltd [2009] EWHC 1940, 33 (Comm) (English High Ct.) (recognizing distinction between
separability presumption and principle of competence-competence).
301) See3.02[B][3][a]-[b], [d], [f]-[g]; English Arbitration Act, 1996, 7; Swiss Law on Private
International Law, Arts. 178(2), (3); Japanese Arbitration Law, Art. 13(6).
302) See3.03[A] & [D].
303) See3.03[E]; 7.02[F]; 7.03[E][7][b].
304) See also3.03[A].
305) See W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 5.04
(3d ed. 2000). See also3.01.
306) See3.03[A].
307) See3.03[B]; 4.02[A].
308) See3.03[C].
309) See3.03[E].
310) See3.03[F].
311) See3.03[A][2][b][ii](1); 3.03[A][2][b][iv](1).
312) See3.03[A][2][b][ii](2); 3.03[A][2][b][iv](2).
Where challenges to and defects in the underlying contract do not affect the validity of
the separable arbitration agreement, an arbitral tribunal can consider such challenges
without controversy about its own jurisdiction and can render a binding award declaring
the underlying contract invalid without impugning the status of an associated arbitration
clause. Thus, the separability presumption provides one way to avoid the Catch-22
situation where a defect in the parties underlying contract would impeach the
arbitration agreement, preventing the arbitrators from either considering claims, or
rendering an award declaring, that such a defect existed. Nussbaum, The Separability
Doctrine in American and Foreign Arbitration, 17 N.Y.U. L.Q. Rev. 609, 609-10 (1940) (In
case the destruction of [the underlying contract] carries over to the arbitration
agreement, the arbitrators are deprived of their jurisdiction, and an award already
rendered would lose all legal effect. The arbitration clause, designed to facilitate
settlement of controversies might lead in such cases to duplication of proceedings
inasmuch as arbitration may be followed by a regular suit in the ordinary law courts.
Still worse, the mere fact that a defense, though unfounded, is raised, injects a disturbing
uncertainty into the proceedings itself; it may delay and even paralyze action especially
where legislative regulation is technically poor, or as it sometimes happens in the
international field, is difficult to ascertain.).
313) See also3.03[A][2][g], discussing the differences between the treatment of the
separability presumption under the English Arbitration Act, 1996, 7 and the Japanese
Arbitration Law, on the one hand, and the UNCITRAL Model Law, on the other hand.
314) See3.03[A][2][b][ii](2); 7.02[F].
315) See3.02[B][3]; 3.03[A]; W. Craig, W. Park & J. Paulsson, International Chamber of
Commerce Arbitration 5.04 (3d ed. 2000) (The motivating force behind the
establishment of the autonomy of the arbitration clause in international contracts is the
plain desire to uphold the validity of the agreement to arbitrate.).
316) See3.02[B][3]; 3.03[A].
317) See3.03[A]-[E].
318) See3.03[A][2][b][ii](3); 3.03[D].
319) See3.03[A][2][b][ii](1).
320) Leading international arbitration conventions confirm this. New York Convention, Art. II(2)
(arbitral clause in a contract); Geneva Protocol, Art. IV(1) (dispute regarding a contract
including an arbitration agreement).
321) See1.05[A]; 3.02[B][2].
322) See3.03[B]; 4.02.
323) See3.03[F]; 7.02[F].
324) See3.03[A] & [D].
325) See7.02[F].
326) See3.02[A][2].
327) See3.02[A][2]; 3.02[E].
328) See3.02[A][2].
329) See3.02[A][2].
330) European Convention, Art. V(3); 3.02[A][2].
331) See3.02[A][2].
332) See7.02[A][2]. As discussed below, properly analyzed, the competence-competence
doctrine does not depend on, or arise from, the separability presumption. See3.03[F].
Article V of the European Convention illustrates this by affirming the arbitrators authority
to consider challenges to both the underlying contract and the arbitration agreement.
European Convention, Art. V.
333) This issue is addressed in detail below in the context of the competence-competence
doctrine. See3.03[F]; 7.03[E].
334) See Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772 (U.S. S.Ct. 2010); Buckeye, 546 U.S. 440;
Prima Paint, 388 U.S. 395; 3.03[A][2][b][i].
61
335) See Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.),
affd, [2007] UKHL 40 (House of Lords); M/S Magma Leasing & Fin. Ltd v. Potluri
Madhavilata, AIR 2010SC 488, 18 (Indian S.Ct.); UNCITRAL Model Law, Art. 16(1); 2012 ICC
Rules, Art. 6(9); 3.03[A][2][a] & [c]; 7.02[F].
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 4-006 to 4-011 (3d ed.
337) UNCITRAL Model Law, Art. 16(1) (The arbitral tribunal may rule on its own jurisdiction,
agreement. For that purpose, an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the contract. A decision by
the arbitral tribunal that the contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.). See7.03[A].
338) See3.02[B][3][e].
339) H. Holtzmann & J. Neuhaus, A Guide to theUNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary 480 (1989); P. Binder,
International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions
4-009 to 4-010 (3d ed. 2009); 3.02[B][3][e]; 7.02[B][1]; 7.03[A].
340) See3.02[B][3][e].
341) See3.02[B][3][e]. Similarly, as also discussed above, the separability presumption set
forth in Article 16 has been applied to foreign-seated, as well as locally-seated,
arbitrations. See3.02[B][3][e].
342) See, e.g., Capital Trust Inv. Ltd v. Radio Design AB [2002] 1 All ER 514 (English Ct. App.)
(claim that underlying contract was voidable for misrepresentation did not affect validity
of arbitration clause); Vee Networks Ltd v. Econet Wireless Intl Ltd [2005] 1 Lloyds Rep. 192
(QB) (English High Ct.) (claim that underlying contract was ultra vires and void did not
affect validity of arbitration clause); Sonatrach Petroleum Corp. (BVI) v. Ferrell Intl Ltd
[2002] 1 All ER (Comm) 627 (Comm) (English High Ct.) (fact that some provisions of contract
were void for uncertainty did not affect validity of arbitration agreement); New World
Expedition Yachts LLC v. P.R. Yacht Builders Ltd, [2010] BCSC 1496 (B.C. S.Ct.) (fraud or
deceit relating to underlying contract did not affect arbitration clause); Cecrop Co. v.
Kinetic Sciences Inc., [2001] BCSC 532, 24-25 (B.C. Sup. Ct.) (ineffectiveness of underlying
contract, because effective date had not occurred, did not render arbitration agreement
ineffective: the evidence tends to show that the License Agreement never came into
effect and the plaintiff argues that the rights, duties and obligations of the parties did
not commence until after the development work had been completed. I am satisfied
however that the arbitration clausesubsists as a separate agreement despite the failure
of the parties to complete the work under the development plan. Therefore, it cannot be
determined that the arbitration agreement itself is null and void, inoperative or capable
of being performed because the Licensing Agreement itself never came into effect.);
Krutov v. Vancouver Hockey Club Ltd, [1991] CanLII 2077 (B.C. S.Ct.) (arbitration clause not
affected by failure of condition precedent to underlying contract); D.G. Jewelry Inc. v.
Cyberdiam Canada Ltd, [2002] O.J. No. 1465 (Ontario Super. Ct.) (same); NetSys Tech. Group
AB v. Open Text Corp., (1999) 1 B.L.R.3d 307 (Ontario Super. Ct.) (claim that underlying
contract was void on grounds of mistake did not impeach arbitration clause); Comandate
Marine Corp. v. Pan Australia Shipping Pty Ltd, [2006] FCAFC 192 (Australian Fed. Ct.) (fraud
or deceit relating to underlying contract did not affect arbitration clause); Walter Rau
Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, [2005] FCA 1102 (Australian Fed. Ct.)
(same); Subway Sys. Australia Pty Ltd v. Ireland, [2013] VSC 550, 57 (Victoria S.Ct.) (latter
provisions would be expected to survive the failure of the Franchise Agreement on the
basis of the doctrine of separability of arbitration clauses and their consequent survival,
regardless of the fate of the agreement in which they might be contained); Ferris v.
Plaister, (1994) 34 NSWLR 474 (N.S.W. Ct. App.) (claim that underlying contract is
fraudulently induced does not impeach arbitration clause); M/S Magma Leasing & Fin. Ltd
v. Potluri Madhavilata, AIR 2010 SC 488, 18 (Indian S.Ct.); P. Manohar Reddy & Bros. v.
Maharashtra Krishna Valley Dev. Corp., (2009) 2 SCC 494 (Indian S.Ct.); Judgment of 21
October 2005, Taiyo Ink Mfg Ltd v. Tamura Kaken Ltd, Hanrei Jiho No. 1926-127 (Tokyo Chiho
Saibansho) (validity of arbitration agreement not affected by validity of underlying
license agreement); Blue Ltd v. Jaribu Credit Traders Ltd, Civil Case No. 157 of 2008 (Nairobi
High Ct.) (arbitration clause not affected by failure of condition precedent to underlying
contract). See also3.03[A][2][a], [c] & [f].
343) See, e.g., Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct.
App.) (allegation that underlying contract was void for illegality did not affect validity of
arbitration agreement), affd, [2007] UKHL 40 (House of Lords); Globe Union Indus. Corp. v.
G.A.P. Mktg Corp., [1994] CanLII 186 (B.C. S.Ct.) (claim that underlying contract was illegal
does not affect arbitration clause); Fittydent Intl GmbH v. Brawn Labs., Ltd, XXXV Y.B.
Comm. Arb. 401 (Delhi High Ct. 2010) (2010) (rejecting claim that, because of lack of
required regulatory approval, nullity of underlying contract rendered arbitration clause
void: [E]ven assuming for the sake of arguments that the agreement dated 20 May 1994
between the parties was illegal and non-est, the same shall not own its own render the
arbitration clause invalid and it is still within the competence of the Arbitrator to decide
the validity of the same.).
62
344) See, e.g., Crestar Ltd v. Carr [1987] 2 FTLR 135 (English Ct. App.) (claim that underlying
contract had been terminated did not affect validity of arbitration agreement); Paul
Smith Ltd v. H & S Intl Holdings Inc. [1991] 2 Lloyds Rep. 127 (QB) (English High Ct.)
(arbitration clause applies to post-termination disputes); Cecrop Co. v. Kinetic Sciences
Inc., [2001] BCSC 532 (B.C. S.Ct.) (termination of underlying contract does not affect
arbitration clause); Siderurgica Mendes Jnior SA v. Icepearl, [1996] CanLII 2746 (B.C.
S.Ct.); Globe Union Indus. Corp. v. G.A.P. Mktg Corp., [1994] CanLII 186 (B.C. S.Ct.); Roy v.
Boyce, (1991) 57 B.C.L.R.2d 187 (B.C. S.Ct.); Harper v. Kvaerner Fjellstrand Shipping AS, [1991]
CanLII 1735 (B.C. S.Ct.); Rampton v. Eyre, [2007] ONCA 331 (Ontario Ct. App.); 9095-5378
Qubec Inc. v. Perform Environnement Inc., [2004] CanLII 7022 (Qubec Super. Ct.); NetSys
Tech. Group AB v. Open Text Corp., (1999) 1 B.L.R.3d 307 (Ontario Super. Ct.); OEMSDF Inc. v.
Europe Israel Ltd, [1999] O.J. No. 3594 (Ontario Super. Ct.); World LLC v. Parenteau Intl Inc.,
[1998] A.Q. No. 736 (Qubec Super. Ct.); Boart Sweden AB v. Nya Stromnes AB, (1988) 41
B.L.R. 295 (Ontario Super. Ct.).
345) Krutov v. Vancouver Hockey Club Ltd, [1991] CanLII 2077 (B.C. S.Ct.); OEMSDF Inc. v. Europe
Israel Ltd, [1999] O.J. No. 3594 (Ontario Super. Ct.); Campbell v. Murphy, (1993) 15 O.R.3d 444
(Ontario Super. Ct.) (repudiation of underlying contract did not affect arbitration clause);
Mind Star Toys Inc. v. Samsung Co., (1992) 9 O.R.3d 374 (Ontario Super. Ct.); Fung Sang
Trading Ltd v. Kai Sun Sea Prods. & Food Co., XVII Y.B. Comm. Arb. 289 (H.K. Ct. First Inst.)
(1992).
346) See3.03[A][2][a], [c] & [f]. See also Westacre Invs. Inc. v. Jugoimport-SPDR Holdings Co.
[1998] 4 All ER 570, 593 (QB) (English High Ct.) (There is no general rule that, where an
underlying contract is illegal at common law or by reason of an English statute, an
arbitration agreement, which is ancillary to that contract is incapable of conferring
jurisdiction on arbitrators to determine disputes arising within the scope of the
agreement including disputes as to whether illegality renders the contract
unenforceable.Whether such an agreement to arbitrate is capable of conferring such
jurisdiction depends upon whether the nature of the illegality is such that, in the case of
statutory illegality the statute has the effect of impeaching that agreement as well as the
underlying contract and, in the case of illegality at common law, public policy requires
that disputes about the underlying contract should not be referred to arbitration.).
347) See, e.g., Judgment of 20 July 2007, 26 Sch 3/06 (Oberlandesgericht Frankfurt) (citing
grounds for rescission that affected main contract as well as arbitration agreement);
O.D.C. Exhibit Sys. Ltd v. Lee, 41 B.L.R. 286 (B.C. S.Ct. 1988) (denying stay of litigation where
original contract held terminated and subsequent contract contained no arbitration
clause).
348) See U.S. FAA, 9 U.S.C. 2, 3, 4; 3.02[B][3][c].
349) See, e.g., 108 A.L.R. Fed. 179, 13(a)-(b), 29(c); 3.02[B][3][c].
350) See3.02[B][3][c]; 3.02[E].
351) Prima Paint, 388 U.S. 395; 3.03[A][2][b][i](1).
352) Buckeye, 546 U.S. 440; 3.03[A][2][b][i](2).
353) Rent-A-Ctr, 130 S.Ct. 2772.
355) Prima Paint, 388 U.S. at 404 (emphasis added). See also id. at 403-404 ([I]f the claim is
fraud in the inducement of the arbitration clause itself an issue which goes to the
making of the agreement to arbitrate the federal court may proceed to adjudicate it.
But the statutory language does not permit the federal court to consider claims of fraud in
the inducement of the contract generally.) (emphasis added). See3.03[A][2][b][ii].
356) Prima Paint, 388 U.S. at 402-04. As discussed above, in contrast to earlier lower court
authority, the Prima Paint opinion did not rely on 2 of the FAA and did not
unambiguously hold that the separability presumption was a rule of substantive federal
law. See3.02[B][3][c], p. 370.
357) Buckeye, 546 U.S. 440.
358) Cardegna v. Buckeye Check Cashing, Inc., 894 So.2d 860, 864-65 (Fla. S.Ct. 2005)
(arbitration provision contained in a contract which is void under Florida law cannot be
separately enforced while there is a claim pending in a Florida trial court that the
contract containing the arbitration provision is itself illegal and void ab initio.).
359) Buckeye, 546 U.S. at 447.
360) Buckeye, 546 U.S. at 447-48.
361) Buckeye, 546 U.S. at 445.
362) See3.02[B][3][c]. As discussed above, 2 and 4 also contain language that presumes the
separability of the arbitration agreement.
363) See3.01, p. 353. As discussed above, the presumptive separability of the arbitration
agreement can be overcome by agreement of the parties, although this seldom occurs.
See3.02[B][3][c].
364) Buckeye, 546 U.S. at 444.
365) Buckeye, 546 U.S. at 444.
366) Buckeye, 546 U.S. at 449 (emphasis added). The Court noted that its earlier decisions had
given effect to the separability presumption regardless whether a challenge alleged that
the underlying contract was void or voidable including in cases such as Southland Corp.
v. Keating, alleging fraud, misrepresentation, breach of contract, breach of fiduciary duty
and violation of the California Franchise Investment Law. Buckeye, 546 U.S. at 446
(quoting Southland Corp. v. Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1984)).
367) Buckeye, 546 U.S. at 447-48.
368) Buckeye, 546 U.S. at 446.
63
369) See Adams v. Suozzi, 433 F.3d 220, 227 (2d Cir. 2005) ([A contract is] void when, for
example, there was no meeting of the minds about essential terms or where there was
fraud in the factum. Voidable contracts are subject to rescission, but otherwise create
legal obligations. An agreement entered into through fraud in the inducement is an
example of a voidable contract. Only if a contract is void, and not voidable, can a
party challenge the enforceability of an arbitration clause without alleging a particular
defect with that clause. If a contract is void, a party wishing to avoid arbitration does
not have to challenge the arbitration clause specifically; if a contract is voidable, the
party must show that the arbitration clause itself is unenforceable.); Will-Drill Res., Inc. v.
Samson Res. Co., 352 F.3d 211, 216-17 (5th Cir. 2003); Sphere Drake Ins. Ltd v. Clarendon Natl
Ins. Co.,263 F.3d 26 (2d Cir. 2001) (If a party alleges that a contract is void and provides
some evidence in support, then the party need not specifically allege that the arbitration
clause in that contract is void, and the party is entitled to a trial on the arbitrability
issue.However, under the rule of Prima Paint, if a party merely alleges that a contract is
voidable, then, for the party to receive a trial on the validity of the arbitration clause, the
party must specifically allege that the arbitration clause is itself voidable); Sandvik AB v.
Advent Intl Corp., 220 F.3d 99 (3d Cir. 2000) (separability doctrine did not apply to
contract that plaintiff argued never existed because defendants agent did not have
authority to sign contract); Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d
1136, 1140 (9th Cir. 1991); Anderson v. Delta Funding Corp., 316 F.Supp.2d 554, 561 (N.D. Ohio
2004) (A contract deemed void ab initio threatens the existence of all provisions of a
contract, including embedded arbitration clauses, because a void contract lacks legal
stamina from its inception.). See Rau, Everything You Really Need to Know About
Separability in Seventeen Simple Propositions, 14 Am. Rev. Intl Arb. 1, 38 (2004) (I do like
using the phrase void ab initio. I like the gravitas that it imparts into an argument, and I
like the way it makes me feel like a substantial person, a keeper of the sacred
mysteries, a lineal descendant of Coke and Blackstone. I only wish I could do so with a
straight face. I only wish it had some relevance to this (or indeed any) problem. But alas it
doesnt.).
370) Buckeye, 546 U.S. at 446.
371) See3.02[B][3][c]; Prima Paint, 388 U.S. at 403-04. See also Rent-A-Ctr, 130 S.Ct. at 2778 (2
[of the FAA] states that a written provision to settle by arbitration a controversy is
valid, irrevocable, and enforceable without mention of the validity of the contract in
which it is contained. Thus, a partys challenge to another provision of the contract, or to
the contract as a whole, does not prevent a court from enforcing a specific agreement to
arbitrate.) (emphasis in original).
372) Section 4 provides, in relevant part: A party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement for arbitration may petition any
United States district court which, save for such agreement, would have jurisdictionof
the subject matter of a suit arising out of the controversy between the parties, for an
order directing that such arbitration proceed in the manner provided for in such
agreement.
373) Buckeye, 546 U.S. at 447-48.
374) Buckeye, 546 U.S. at 444 n.1.
375) Buckeye, 546 U.S. at 444 n.1 (emphasis added). See7.03[E][5][c].
376) The Court cited Chastain v. Robinson-Humphrey Co., 957 F.2d 851 (11th Cir. 1992) (dispute as
to whether contract was signed), Sandvik AB v. Advent Intl Corp., 220 F.3d 99 (3d Cir. 2000),
Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587 (7th Cir. 2001) (dispute as to authority
of agent), and Spahr v. Secco, 330 F.3d 1266 (10th Cir. 2003) (dispute as to mental
capacity).
377) Rent-A-Ctr, 130 S.Ct. at 2778.
378) Rent-A-Ctr, 130 S.Ct. at 2775.
379) Jackson v. Rent-A-Ctr, 581 F.3d 912, 917 (9th Cir. 2009).
380) Rent-A-Ctr, 130 S.Ct. at 2787 (Stevens. J., dissenting). See also3.02[B][3][c].
381) Rent-A-Ctr, 130 S.Ct. at 2779.
382) Rent-A-Ctr, 130 S.Ct. at 2779-80.
383) Rent-A-Ctr, 130 S.Ct. at 2778.
384) Rent-A-Ctr, 130 S.Ct. at 2782.
385) Buckeye, 546 U.S. at 446.
386) See3.03[A][2][b][i](2); 3.03[A][2][b][ii](3).
64
387) See, e.g., ITT Educ. Servs., Inc. v. Arce, 533 F.3d 342, 347 (5th Cir. 2008) (Under Prima Paint
and the structure and content of the arbitration clause, the clause should be considered
separable and any alleged finding of fraudulent inducement [of the underlying contract]
does not taint the validity of the arbitration clause as a whole.); Ferro Corp. v. Garrison
Indus., Inc., 142 F.3d 926 (6th Cir. 1998) ([T]he arbitration agreement is effectively
considered as a separate agreement which can be valid despite being contained in a
fraudulently induced contract.); Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 868-69 (7th
Cir. 1985) (objections to other parts of the contract, based on fraud or unconscionability
or mistake or whatever, need not spill over to the arbitration clause); Unionmutual Stock
Life Ins. Co. of Am. v. Beneficial Life Ins. Co., 774 F.2d 524, 528-29 (1st Cir. 1985) (In this case,
the arbitration clause is separable from the contract and is not rescinded by [a partys]
attempt to rescind the entire contract based on mutual mistake and frustration of
purpose.); Torrance v. Aames Funding Corp., 242 F.Supp.2d 862, 868-69 (D. Or. 2002)
(arbitration clause may be enforced even though the rest of the contract is later held
invalid by the arbitrator); Hodge Bros., Inc. v. DeLong Co., 942 F.Supp. 412, 416-17 (W.D.
Wis. 1996) (A party may not invalidate an arbitration clause by attacking the legality of
the underlying contract containing that clause.); Hydrick v. Mgt Recruiters Intl, Inc., 738
F.Supp. 1434 (N.D. Ga. 1990) ([I]f the arbitration clause is valid, the Court must enforce it,
even if the underlying contract might be declared invalid.).
There are contrary results in early decisions, since overruled by Buckeye. Compare Metro
Plan Inc. v. Miscione, 15 N.Y.S.2d 35 (N.Y. App. Div. 1939) (illegality/invalidity of underlying
mortgage instrument by reason of usury invalidates associated arbitration clause); In re
Cheney Bros., 219 N.Y.S. 96 (N.Y. App. Div. 1926) (If the contract was voided by fraud, the
arbitration provision therein falls.).
388) See, e.g., M.A. Mortenson Co. v. Saunders Concrete Co., 676 F.3d 1153, 1158 (8th Cir. 2012)
(Any challenge to the validity of the contract as a whole should be considered by an
arbitrator, not a court.) (citing Buckeye); Janiga v. Questar Capital Corp., 615 F.3d 735, 741
(7th Cir. 2011) (When faced with motions to stay suits or order arbitration, courts should
evaluate only the validity of the arbitration agreement; challenges to the validity of the
entire contract e.g., fraud in the inducement should be left to the arbitrator.); Arrigo
v. Blue Fish Commodities, Inc., 408 F.Appx. 480 (2d Cir. 2011) (compelling arbitration where
challenge went to incomprehensible clauses rendering contract unenforceable); Pan Am
Flight 73 Liaison Group v. Dave, 639 F.3d 1102, 1105 (D.C. Cir. 2011) (These [arguments raised
by the defendants] go to the validity of the underlying contract, not to the enforceability
of the arbitration clause. As such, they are properly left to the arbitrator.); Allen v.
Regions Bank, 389 F.Appx. 441, 445 (5th Cir. 2010) (If it is another provision of the
contract, or the contract as a whole, that is contested, the court may still require
arbitration of that dispute because the arbitration provision itself is not challenged.);
Brown v. Pac. Life Ins. Co., 462 F.3d 384, 396-97 (5th Cir. 2006) (Where claims of error,
fraud, or unconscionability do not specifically address the arbitration agreement itself,
they are properly addressed by the arbitrator, not a federal court.); Jeske v. Brooks, 875
F.2d 71, 75 (4th Cir. 1989) (We also reject [appellants] arguments that the arbitration
clause must be declared invalid on grounds that the customers agreement as a whole is
void due to overreaching, unconscionability and fraud, as well as lack of consideration.
Because the alleged defects pertain to the entire contract, rather than specifically to the
arbitration clause, they are properly left to the arbitrator for resolution.).
389) Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1263-64 (9th Cir. 2006).
390) Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 877 (11th Cir. 2005).
391) See5.06[C][1]; Solymar Invs., Ltd v. Banco Santander SA, 672 F.3d 981, 994 (11th Cir. 2012)
(Prima Paint requires reference to an arbitrator for a general challenge to a contract on
the grounds of fraud in the inducement.); Moran v. Svete, 366 F.Appx. 624 (6th Cir. 2010)
(compelling arbitration where challenge was based on fraudulently-induced underlying
contract); Highlands Wellmont Health Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d
568, 575 (6th Cir. 2003); ACE Capital Re Overseas, Ltd v. Cent. United Life Ins. Co., 307 F.3d 24,
29-30 (2d Cir. 2002); Sleeper Farms v. Agway, Inc., 211 F.Supp.2d 197, 203 (D. Me. 2002);
Coddington Enters., Inc. v. Werries, 54 F.Supp.2d 935, 942 (W.D. Mo. 1999), revd on other
grounds, 253 F.3d 1083 (8th Cir. 2001) (claims of fraudulent inducement cannot fairly be
limited to the making of the arbitration clause and are therefore for arbitral, not
judicial, determination); Acquaire v. Canada Dry Bottling, 906 F.Supp. 819, 825 (E.D.N.Y.
1995) (In order to avoid arbitration[plaintiffs] must allege fraud in the inducement not
of the contract generally but of the arbitration clause itself.); Vella v. Atl. Intl Fin., Inc.,
890 F.Supp. 321, 322 (S.D.N.Y. 1995) (compelling arbitration when there [was] no colorable
claim of fraud in the inducement of the arbitration clause itself, as distinct from the
contract generally).
65
392) See5.06[C][1]; Allen v. Regions Bank, 389 F.Appx. 441, 442, 445 (5th Cir. 2010) (claim that
contract was obtained through fraud for arbitrator to decide); Parkland Environmental
Group, Inc. v. Laborers Intl Union of N. Am., 390 F.Appx. 574 (7th Cir. 2010) (whether
employer misled employee into signing contract containing arbitration clause for
arbitration for arbitrator to decide); R.M. Perez & Assocs., Inc. v. Welch, 960 F.2d 534, 538
(5th Cir. 1992) (Under Prima Paint , the central issue in a case like this is whether the
plaintiffs claim of fraud relates to the making of the arbitration agreement itself or to the
contract as a whole. If the fraud relates to the arbitration clause itself, the court should
adjudicate the fraud claim. If it relates to the entire agreement, then the [FAA] requires
that the fraud claim be decided by an arbitrator.); Jeske v. Brooks, 875 F.2d 71, 75 (4th Cir.
1989) (We also reject [appellants] arguments that the arbitration clause must be
declared invalid on grounds that the customers agreement as a whole is void due to
overreaching, unconscionability and fraud.Because the alleged defects pertain to the
entire contract, rather than specifically to the arbitration clause, they are properly left to
the arbitrator for resolution.); Williams v. Waffle House, Inc., 2012 WL 3438666, at *3 (E.D.
La.) (claim that plaintiff was duped into signing contract to be resolved by arbitrator);
Friedman v. Yula, 679 F.Supp.2d 617, 626 (E.D. Pa. 2010) ([The] challenge falls squarely
within Buckeyes second category, a challenge to the contract as a whole and, therefore,
compels submission to arbitration.Any claim that the Joinder Agreement was
fraudulently induced must be directed to the arbitrator.); Fox Intl Relations v. Fiserv
Sec., Inc., 418 F.Supp.2d 718, 724 (E.D. Pa. 2006); Dillow v. Household Intl Inc., 2004 WL
5336055, at *3 (D. W.Va.) (The Court finds that the allegedly fraudulent
mischaracterization by Defendants goes to the nature of the contract generally, and not
solely to the Arbitration Riders. Accordingly, the impact of the alleged fraud is properly
determined by the arbitrator.); Giannone v. Ayne Inst., 290 F.Supp.2d 553, 564 (E.D. Pa.
2003) (The Giannones have not claimed that the alleged fraud induced them to agree to
arbitrate claims.Rather, they assert that the fraud affects the validity of the entire
contract, including the arbitration provision.[This] requires us to allow an arbitrator to
decide if the alleged fraud induced assent to the Contract.); Bank One, NA v. Coates, 125
F.Supp.2d 819, 829-30 (S.D. Miss. 2001).
393) See 5.06[C][3]; Hawkins v. Aid Assn for Lutherans, 338 F.3d 801, 808 (7th Cir. 2003)
(arbitration provision was not an independent contract requiring mutual assent or
consideration); Hellenic Lines, Ltd v. Louis Dreyfus Corp., 372 F.2d 753 (2d Cir. 1967); Cook v.
River Oaks Hyundai, Inc., 2006 U.S. Dist. LEXIS 21646, at *2 (N.D. Ill.); Cline v. H.E. Butt
Grocery Co., 79 F.Supp.2d 730, 732 (S.D. Tex. 1999) ([Plaintiffs] claim that [defendants]
promise was illusory is an attack on the [contract] as a whole, and not the arbitration
provision itself. Questions related to the enforcement of a contract as a whole are
properly referable to an arbitrator; it is only when an attack is made on the arbitration
clause itself that a court, rather than an arbitrator, should decide questions of validity.);
Axtell v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 744 F.Supp. 194, 196 (E.D. Ark. 1990)
(plaintiffs allegations of failure of consideration and overreaching go to the making of
the contract generally, and therefore are to be considered by the arbitrator); In re Palm
Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006).
There are contrary decisions, since overruled by Buckeye. See Gibson v. Neighborhood
Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997).
394) See5.06[C][12]; Buckeye, 546 U.S. at 447; M.A. Mortenson Co. v. Saunders Concrete Co., 676
F.3d 1153, 1158 (8th Cir. 2012) (challenge to legality of underlying contract as contrary to
New York lien laws was irrelevant as any challenge to the validity of the contract as a
whole should be considered by an arbitrator, not a court); Snowden v. Checkpoint Check
Cashing, 290 F.3d 631, 636 (4th Cir. 2002) (claims that loan agreement was usurious do not
relate specifically to the Arbitration Agreement and therefore are for arbitral
determination); Bess v. Check Express, 294 F.3d 1298 (11th Cir. 2002) (claims that usurious
and unlicensed loans were illegal did not concern arbitration agreement specifically
and arbitrator should decide those questions); Lawrence v. Comprehensive Bus. Servs.
Co., 833 F.2d 1159, 1162 (5th Cir. 1987) ([Defendants] do not challenge the legality of the
arbitration provision itself, but the legality of the entire contract. This court has applied
Prima Paint to hold an arbitration clause enforceable in spite of a claim that the gas sales
contract containing it was void from its inception because of the parties failure to
comply with a state statute regulating the sale of the states gas. We regard this case as
indistinguishable.); Mesa Operating Ltd Pship v. La. Intrastate Gas Corp., 797 F.2d 238, 244
(5th Cir. 1986) (enforcing arbitration clause, even when main contract may be void ab
initio); Nuclear Elec. Ins. Ltd v. Cent. Power & Light Co., 926 F.Supp. 428 (S.D.N.Y. 1996)
(claim that violations of Texas Insurance Code rendered insurance policies illegal related
to the entire policy and were for arbitral, not judicial, determination); Belship
Navigation Inc. v. Sealift, Inc., 1995 WL 447656 (S.D.N.Y.) (claim that contract violated
Cuban trade controls concerned entire agreement and for arbitrators to decide); Dewey v.
Wegner, 138 S.W.3d 591, 601-02 (Tex. App. 2004); Moncharsh v. Heily & Blas, 3 Cal.4th 1, 29-
30 (Cal. 1992).
66
395) See5.06[C][4]; Puleo v. Chase Bank USA, 605 F.3d 172, 192 (3d Cir. 2010) (Since the issue of
the class action waivers unconscionability is not an issue of arbitrability, and is not
reserved for the court by agreement, it should have been referred by the District Court to
the arbitrator.); Stinger v. Chase Bank USA,265 F.Appx. 224, 228 (5th Cir. 2008) (Whether
the contract as a whole is unconscionable must be determined through arbitration.);
Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 877 (11th Cir. 2005) (FAA does
not permit a federal court to consider claims alleging the contract as a whole was
adhesive); Madol v. Dan Nelson Auto. Group, 372 F.3d 997, 1000 (8th Cir. 2004) (plaintiffs
arguments that theirtransactions were generally unconscionable were subject to
resolution by an arbitrator, absent a showing by the plaintiffs that the DRA [dispute
resolution agreement], standing alone, was invalid); JLM Indus. v. Stolt-Nielsen SA, 387
F.3d 163, 170 (2d Cir. 2004); Ernst & Young Ltd v. Quinn, 2009 WL 3571573, at *10 (D. Conn.)
([R]espondents direct their allegations of unconscionability at the engagement letters as
a whole, not at the arbitration agreement provisions contained therein.Even if
respondents claims of unconscionability are colorable, those claims do not preclude this
court from compelling arbitration.); Flannery v. Tri-State Div., 402 F.Supp.2d 819, 825 (E.D.
Mich. 2005) (The unconscionability claim alone would be decided by an arbitrator under
the prevailing authority because it goes to the substance of the agreement.); Gutierrez v.
Academy Corp., 967 F.Supp. 945 (S.D. Tex. 1997); Brener v. Becker Paribas, Inc., 628 F.Supp.
442, 446 (S.D.N.Y. 1985); Universal Computer Consulting Holding, Inc. v. Hillcrest Ford
Lincoln-Mercury, Inc., 2005 WL 2149508, at *2 (Tex. App.) (Defenses, such as
unconscionability and fraudulent inducement, to the contract as [a] whole must be
referred to arbitration as long as the arbitration provision is valid.).
396) See5.08[A][4]; Solymar Invs., Ltd v. Banco Santander SA, 672 F.3d 981, 999 (11th Cir. 2012)
(challenges to Exchange Agreement based on failure to fulfill condition precedent
dismissed in favor of arbitration); Kawasaki Heavy Indus. Ltd v. Bombardier Recreational
Prods., Inc., 660 F.3d 988, 994 n.4 (7th Cir. 2011) ([F]ailure to fulfill a condition precedent
does not negate the fact that a contractual relationship exists, and thus arbitration is still
appropriate in such a situation.); Schacht v. Beacon Ins. Co., 742 F.2d 386 (7th Cir. 1984)
(question whether condition precedent to underlying contract is fulfilled is for
arbitrators); McIntyre v. Household Bank, 2004 WL 1088228, at *1 (N.D. Ill.) ([I]t is the
arbitrators role to consider any arguments about the validity or enforceability of the
entire contract, including the failure of a condition precedent.); Capitol Vial, Inc. v. Weber
Scientific, 966 F.Supp. 1108, 1111 (M.D. Ala. 1997) ([T]here is no stated condition precedent,
in the contract, to the operation of the arbitration clause itself. Prima Paint clearly
governs here.).
There are a few contrary results, particularly in older decisions, now overruled by
Buckeye. See Adams v. Suozzi, 433 F.3d 220, 227-28 (2d Cir. 2005) ([W]e see no reason why a
contract that does not exist due to failure of a condition precedent to formation is any
less void than any other contract that never comes into existence. [I]f thecondition
imposed by the [agreement] was not met, both the contract and any arbitration
agreements therein would never have existed.).
397) See5.06[C][2]; Janiga v. Questar Capital Corp., 615 F.3d 735, 742 (7th Cir. 2010) (arbitration
clause was still valid even though there may not have been any meeting of the minds as
to other terms of contract); Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 629 (6th Cir.
2004) (arbitration clause remains valid despite claim of mutual mistake with regard to
main contract); Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 868-69 (7th Cir. 1985)
(objections to other parts of the contract, based onmistake or whatever, need not spill
over to the arbitration clause); Williams v. Waffle House, Inc., 2012 WL 3438666, at *3 (E.D.
La.) ([Plaintiffs] argument that she signed the agreement under the mistaken impression
that she was taking a managerial role with corresponding managerial responsibilities
does not undermine the enforceability of the arbitration agreement.); Bratt Enters., Inc.
v. Noble Intl Ltd, 99 F.Supp.2d 874, 885 (S.D. Ohio 2000) (party claimed mutual mistake as
to terms of underlying contract, but there was no claim that there was any mutual
mistake in the negotiation of the arbitration clause itself).
67
398) See5.06[C][7]; N.J. Bldg Laborers Statewide Benefits Fund v. Am. Coring & Supply, 341
F.Appx. 816 (3d Cir. 2008) (whether contract expired and arbitration clause within it
became unenforceable was for arbitrator to decide); ACE Capital Re Overseas, Ltd v. Cent.
United Life Ins. Co., 307 F.3d 24 (2d Cir. 2002) (arbitral determination required of claims
that underlying contract was not properly terminated in accordance with its terms); Large
v. Conseco Fin. Servicing Corp., 292 F.3d 49, 56 (1st Cir. 2002) (enforcing arbitration clause
when main contract had been rescinded); In re Rarities Group, Inc., 434 B.R. 1, 8 (D. Mass.
2010) (An arbitration agreement generally lives on even when the agreement containing
it expires, such that disputes over a provision of that expired agreement remain
arbitrable.); Kuklachev v. Gelfman, 600 F.Supp.2d 437, 459 n.9 (E.D.N.Y. 2009) (Plaintiffs
argue that the arbitration clause is inapplicable here, because many of defendants
actions occurred after the expiration of the contract. A partys obligation under an
arbitration clause survives the expiration of an agreement when post-expiration action
infringes a right that accrued or vested under the agreement.) (quoting CPR (U.S.A.) Inc.
v. Spray, 187 F.3d 245, 255 (2d Cir. 1999)); Clifton D. Mayhew, Inc. v. Mabro Constr. Inc., 383
F.Supp. 192 (D.D.C. 1974); Ambulance Billing Sys., Inc. v. Gemini Ambulance Serv., Inc., 103
S.W.3d 507 (Tex. App. 2003) (dispute regarding whether a settlement agreement was
reached replacing or cancelling original agreement for arbitrators determination); Elgin
Silk Co. v. Bayers, N.Y. L.J. 1278 (14 June 1927) (N.Y. Sup. Ct. 1927) (cancellation of underlying
contract does not affect arbitration clause).
399) Pinpoint Enters. v. Barnett Fin. Servs., Inc., 2004 U.S. Dist. LEXIS 6630, at *9-10 (E.D. La.).
400) Sydnor v. Conseco Fin. Serv. Corp., 252 F.3d 302, 305 (4th Cir. 2001).
401) See, e.g., Ware, Arbitration Laws Separability Doctrine After Buckeye Check Cashing Inc. v.
Cardegna, 8 Nev. L.J. 107 (2007). See also Barnes, Buckeye, Bulls-Eye or Moving Target: The
FAA, Compulsory Arbitration, and Common Law Contract, 31 Vt. L. Rev. 141 (2006-2007); Rau,
Everything You Really Need to Know About Separability in Seventeen Simple Propositions,
14 Am. Rev. Intl Arb. 1, 17-18 (2004).
402) Rent-A-Ctr, 130 S.Ct. at 2772; Buckeye, 546 U.S. 440; Southland Corp. v. Keating, 465 U.S. 1
(U.S. S.Ct. 1984); Prima Paint, 388 U.S. 395. See7.03[E][7][b].
403) In re Checking Account Overdraft Litg., 674 F.3d 1252, 1256 (11th Cir. 2012) (A delegation
provision is severable from the rest of the arbitration agreement and must be challenged
specifically.); Valley Power Sys., Inc. v. Gen. Elec. Co., 2012 WL 665977, at *5 (C.D. Cal.)
([While plaintiff] asserts that the arbitration provision is unconscionable, [plaintiff] does
not specifically challenge the arbitration provisions express selection of the ICDR Rules,
which delegates the determination of enforceability issues to the arbitrators.
Accordingly, the Court finds that whether the arbitration provision is enforceable is a
determination to be made by the arbitrators.); Smith v. ComputerTraining.com Inc., 772
F.Supp.2d 850, 860 (E.D. Mich. 2011) (Plaintiffs have not challenged the validity of the
delegation clause. Thus, the determination of the validity, enforceability, arbitrability or
scope of this Arbitration Agreement, must be decided in arbitration.); Morocho v.
Carnival Corp., 2011 WL 147750, at *1 (S.D. Fla.) ([I]t was appropriate for this Court to
determine this issue [of the validity of the delegation provision] because Plaintiff has
framed his issues as challenges to the validity of the arbitration delegation clause itself,
as opposed to the entire Agreement and such issues are for the Court to resolve.);
Madgrigal v. AT&T Wireless Serv., 2010 WL 5343299, at *4 (E.D. Cal.) ([Rent-A-Center] makes
clear that where there has been delegation of gateway authority to the arbitrator, federal
courts may not address a challenge to the validity of the arbitration agreement unless
the challenge is specific to the delegation provision itself.).
68
404) See, e.g., Kuehn v. Citibank NA, 2012 WL 6057941, at *3 (S.D.N.Y.) ([I]n light of a delegation
agreement, a partys challenge to the arbitration agreement on unconscionability
grounds is a dispute that must be resolved by arbitration unless the party opposing
arbitration demonstrates that the delegation agreement itself is unenforceable.
Accordingly, a party seeking to avoid arbitration on unconscionability grounds must
demonstrate that the delegation agreement in particular, rather than the arbitration
agreement as a whole, is unconscionable.); Garcia v. Dell, 2012 WL 5928132, at *4 (S.D. Cal.)
(where an agreement to arbitrate includes an agreement that the arbitrator will
determine the enforceability of the agreement, the district court considers the challenge
if a party challenges the agreement that an arbitrator will determine the enforceability of
the agreement. However, if a party challenges the agreement that an arbitrator will
determine the enforceability of the agreement as a whole, the arbitrator considers the
challenge.); Dean v. Draughons Jr. College, Inc., 2012 WL 5398653, at *4 (M.D. Tenn.)
([C]ourts applying Rent-A-Center refuse to address challenges that are directed to the
arbitration agreement as a whole, which they refer to the arbitrator to decide.); Fox v.
Career Educ. Corp., 2012 WL 1205155, at *4 (E.D. Mo.) (None of plaintiffs arguments
challenge the provision of the arbitration clause delegating authority to an arbitrator to
resolve issues of arbitrability. Thus, it is for the arbitrator to determine the enforceability
of the arbitration clause.); Smith v. ComputerTraining.com Inc., 772 F.Supp.2d 850, 860
(E.D. Mich. 2011) (issue of arbitrability was delegated to arbitrator, where plaintiffs only
asserted defenses to enforcement of arbitration agreement as a whole, not to delegation
provision); Amway Global v. Woodward, 744 F.Supp.2d 657, 668 (E.D. Mich. 2010)
(Respondents have advanced various challenges to the enforceability of the parties
arbitration agreement as a whole,but they do not separately contest the enforceability
of the specific provisionthat empowers the arbitrator to decide jurisdictional and
arbitrability disputes. Under RentACenter, then, this delegation provisionis entitled
to enforcement under the FAA, and Respondents challenges to the validity of the parties
arbitration agreement as a whole were properly left for the arbitrator to decide.).
405) Buckeye, 546 U.S. at 447. See7.03[E][5][c].
406) Buckeye, 546 U.S. at 449 (emphasis added).
407) Salley v. Option One Mortg. Corp., 925 A.2d 115, 120 (Pa. 2007).
408) Puleo v. Chase Bank USA, 605 F.3d 172, 180 (3d Cir. 2010).
409) See, e.g., Quillion v. Tenet Healthsys. Philadelphia, Inc., 673 F.3d 221, 230 (3d Cir. 2012)
(Because [plaintiff] claims that the arbitration agreement specifically, is
unconscionable, the District Court did not err in addressing the validity of the agreement
to arbitrate.); Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1000
(9th Cir. 2010) (claim challenging validity of arbitration clause for reasons independent
of any reasons the remainder of the contract might be invalid is for court to decide);
Puleo v. Chase Bank USA, 605 F.3d 172, 188 (3d Cir. 2010) (The [plaintiffs] do not contest
the validity of the entire cardmember Agreement.Instead, they challenge the validity of
the arbitration provisions within a larger contract, apart from the validity of the contract
as a whole, a matter which the Arbitration Agreement cannot be read to refer to the
arbitrator.); Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006); Griffen v. Alpha Phi
Alpha, Inc., 2007 WL 707364, at *4 (E.D. Pa.) (because plaintiff challenges the substantive
unconscionability of the arbitration clause itself, the Court is permitted to decide [the]
validity of the clause); In re Frascella Enter., Inc., 349 B.R. 421, 428 (E.D. Pa. 2006); Rubin v.
Sona Intl Corp., 457 F.Supp.2d 191, 193 (S.D.N.Y. 2006) (Buckeye Check Cashing makes
clear that whether [a party] argues that the agreement is void or voidable, [it] may only
avoid arbitration if it can successfully challenge the validity of the arbitration clause
itself.); Alexander v. U.S. Credit Mgt, 384 F.Supp.2d 1003, 1008 (N.D. Tex. 2005); Lexington
Mktg Group, Inc. v. Goldbelt Eagle, LLC, 157 P.3d 470, 475 (Alaska 2007); Kirby v. Grand
Crowne Travel Network, LLC, 2007 WL 1732761, at *1 (Mo. Ct. App.); Alterra Healthcare Corp.
v. Estate of Linton ex rel. Graham, 953 So.2d 574, 577 (Fla. Ct. App. 2007) (Unconscionability
is clearly at issue in the present case and the provision limiting liability, being part of the
arbitration provision, pertains to the arbitration provision itself. Therefore, the trial court
had authority to determine the enforceability of the remedial limitations.); Bess v.
DirecTV, Inc., 2007 WL 2013613, at *7 (Ill. Ct. App.) (Given all the circumstances in the
present case, we conclude that the arbitration provisions is procedurally unconscionable
and that the procedural unconscionability is sufficient to invalidate the arbitration
provision.).
410) Washington v. William Morris Endeavor Entertainment, LLC, 2011 WL 3251504 (S.D.N.Y.)
(where party challenged delegation clause specifically, validity of delegation clause was
to be decided by court); Womack v. Career Educ. Corp., 2011 WL 6010912 (Mo. Ct. App.)
(where parties fail to confine their challenge to delegation clause, validity of delegation
clause is to be decided by arbitrator).
411) See authorities cited 3.03[A][2][b][ii](3), pp. 424-31; 7.03[E][5][c] p. 1173.
412) Moran v. Svete, 366 F.Appx. 624, 631 (6th Cir. 2010) (emphasis added).
413) Fox Intl Relations v. Fiserv Sec., Inc., 418 F.Supp.2d 718, 724 (E.D. Pa. 2006).
414) Fox Intl Relations, 418 F.Supp.2d at 724 (E.D. Pa. 2006). Of course, given the separability
presumption, there is nothing paradoxical about a conclusion that invalidity of the
underlying contract does not entail invalidity of the arbitration agreement. Rather, that is
one of the common, and inevitable, consequences of the presumption.
69
415) See5.06[C][1]; Prima Paint, 388 U.S. at 403-04 ([I]f the claim is fraud in the inducement of
the arbitration clause itself an issue which goes to the making of the agreement to
arbitrate the federal court may proceed to adjudicate it.) (emphasis added); Moran v.
Svete, 366 F.Appx. 624, 630 (6th Cir. 2010) ([I]f the claim is fraud in the inducement of the
arbitration clause itself an issue which goes to the making of the agreement to arbitrate
the federal court may proceed to adjudicate it. Otherwise, the statutory language does
not permit the federal court to consider claims of fraud in the inducement of the contract
generally.); R.M. Perez & Assocs., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir. 1992) (Under
Prima Paint, the central issue in a case like this is whether the plaintiffs claim of fraud
relates to the making of the arbitration agreement itself or to the contract as a whole. If
the fraud relates to the arbitration clause itself, the court should adjudicate the fraud
claim.).
416) See5.06[C][1]; R.M. Perez & Assocs., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir. 1992) (If the
fraud relates to the arbitration clause itself, the court should adjudicate the fraud claim.
If it relates to the entire agreement, then the [FAA] requires that the fraud claim be
decided by an arbitrator.); Nanosolutions, LLC v. Prajza, 793 F.Supp.2d 46, 54-55 (D.D.C.
2011); Cline v. H.E. Butt Grocery Co., 79 F.Supp.2d 730, 732 (S.D. Tex. 1999).
417) See5.06[C][3]; N.J. Bldg Laborers Statewide Benefit Funds v. Perfect Concrete Cutting, 2010
WL 2292102, at *2 (D.N.J.) (challenge based on the lack of mutuality of the arbitration
clause would be for the court); Tyson Foods, Inc. v. Archer, 147 S.W.3d 681 (Ark. 2004)
(court decides claim that arbitration agreement is void for lack of mutuality); Peleg v.
Neiman Marcus Group, Inc., 204 Cal.App.4th 1425 (Cal. Ct. App. 2012) (court decides
whether arbitration agreement was illusory and unenforceable); Richard Harp Homes, Inc.
v. Van Wyck, 2007 WL 2660213 (Ark. Ct. App.) (court decides claim that arbitration
agreement is void for lack of mutuality); Cored Panels, Inc. v. Meinhard Commercial Corp.,
420 N.Y.S.2d 731 (N.Y. App. Div. 1979) (same).
418) See5.04[D][8]; Clerk v. First Bank of Del., 735 F.Supp.2d 170 (E.D. Penn. 2010) (If[plaintiff]
has allegedduresswith respect to the arbitration clause itself, then judicial
consideration of these issues is mandated before arbitration of the state claims can be
compelled.); Acquaire v. Canada Dry Bottling, 906 F.Supp. 819, 826 (E.D.N.Y. 1995) (court
considers claim that arbitration clause was product of duress); Rust v. Drexel Firestone,
Inc., 352 F.Supp. 715 (S.D.N.Y. 1972) (same); ITT Commercial Fin. Corp. v. Tyler, 1994 WL
879497 (Mass. Super.) (same); Wheeler v. St. Joseph Hosp., 63 Cal.App.3d 345, 775 (Cal. Ct.
App. 1976) (same).
419) See5.06[C][2]; Gar Energy & Assocs. v. Ivanhoe Energy Inc., 2011 WL 6780927, at *8-9 (E.D.
Cal.) (considering claim that arbitration agreement was void for mistake because it
designated nonexistent arbitral institution).
420) See5.06[C][4]; Quilloin v. Tenet Healthsys. Philadelphia, Inc., 673 F.3d 221, 228 (3d Cir. 2012)
(challenge to arbitration agreement on grounds of unconscionability for court to decide);
Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1002 (9th Cir. 2010)
(unconscionability claims clearlymarshaled against the validity of the arbitration
clause alone, and[were] properly decided by the district court); Puleo v. Chase Bank
USA, 605 F.3d 172, 179 (3d Cir. 2010) (In stark contrast with the question of arbitration
procedure at issue in Howsam and the question of contractual interpretation discussed in
PacifiCare, when a party challenges the validity of an arbitration agreement by
contending that one or more of its terms is unconscionable under generally applicable
state contract law, a question of arbitrability is presented.); Nagrampa v. MailCoups, Inc.,
469 F.3d 1257, 1264 (9th Cir. 2006) (addressing unconscionability of arbitration
agreement); Doctors Assocs., Inc. v. Distajo, 107 F.3d 126 (2d Cir. 1997) (same); Clerk v. First
Bank of Del., 735 F.Supp.2d 170, 182 (E.D. Pa. 2010) (unconscionability challenge directed
specifically to arbitration agreement for court to decide); Griffen v. Alpha Phi Alpha, Inc.,
2007 WL 707364, at *4 (E.D. Pa.) (because plaintiff challenges the substantive
unconscionability of the arbitration clause itself, the Court is permitted to decide [the]
validity of the clause); Bruni v. Didion, 73 Cal.Rptr.3d 395, 410 (Cal. Ct. App. 2008) (a court
[not an arbitrator,] must decide whether there is a valid agreement to arbitrate between
the parties. Hence, if the party resisting arbitration is claiming that the arbitration clause
itself is unconscionable, a court must decide this claim.); Brower v. Gateway 2000, Inc.,
246 A.D.2d 246 (N.Y. App. Div. 1998).
421) See5.06[C][8]; Gar Energy & Assocs. v. Ivanhoe Energy Inc., 2011 WL 6780927, at *7-8 (E.D.
Cal.) (considering claim that arbitration agreement was void for impossibility because it
designated nonexistent arbitral institution).
70
422) See5.04[D][2]; Polimaster Ltd v. RAE Sys. Inc., 623 F.3d 832, 843 (9th Cir. 2010) (upholding
unusual clause that did not provide for choice of law, choice of procedural rules,
number of arbitrators, or method for appointment); Jain v. de Mere, 51 F.3d 686, 688 (7th
Cir. 1995) (upholding clause providing for arbitration by arbitrary commission without
mentioning rules, seat or other matters); Schulze & Burch Biscuit Co. v. Tree Top, Inc., 831
F.2d 709, 716 (7th Cir. 1987) (arbitration clause, which did not specify arbitrators, where
arbitration would take place, the applicable arbitration rules, was not too vague to be
enforced); Bauhinia Corp. v. China Natl Mach. & Equip. Imp. & Exp. Corp., 819 F.2d 247 (9th
Cir. 1987); Apple & Eve, LLC v. Yantai N. Andre Juice Co., 499 F.Supp.2d 245 (E.D.N.Y. 2007)
(rejecting argument that arbitration clause was void because it failed to specify seat
other than China and failed to designate arbitral institution); Vegter v. Forecast Fin.
Corp., 2007 WL 4178947 (W.D. Mich.) (rejecting argument that failure to specify institutional
rules or means for selecting arbitrators rendered arbitration clause invalid on
indefiniteness grounds); Zurich Am. Ins. Co. v. Cebcor Serv. Corp., 2003 WL 21418237, at *2
(N.D. Ill.) (the term arbitration in the Reinsurance Cover Note is a valid arbitration
agreement); CNA Reins. Co., Ltd v. Trustmark Ins. Co., 2001 WL 648948, at *6 (N.D. Ill.)
(phrase arbitration clause in a contract is sufficient to establish the parties agreement
to arbitrate).
423) See5.06[C][12]; Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1271-75 (9th Cir. 2006)
(collecting cases); John B. Goodman Ltd Pship v. THF Constr., Inc., 321 F.3d 1094 (11th Cir.
2003); Snowden v. CheckPoint Check Cashing, 290 F.3d 631 (4th Cir. 2002); Smith v. Legal
Helpers Debt Res. LLC, 2012 WL 2118132 (D.N.J.); Sheehan v. Centex Homes, 2011 WL 1100031,
at *3 (D. Haw.); Siderurgica del Orinoco (Sidor), CA v. Linea Naviera de Cabotage, CA, 1999 WL
632870 (S.D.N.Y.); Herwig v. Hahnaman-Albrecht, Inc., 1997 WL 72079, at *3 (N.D. Ill.) (court
deciding a motion to arbitrate under the FAA is limited to deciding only whether the
arbitration agreement itself is invalid, illegal or unenforceable and is not free to evaluate
the overall contract).
424) See5.06[C][13]; DAntuono v. Serv. Road Corp., 789 F.Supp.2d 308, 327 (D. Conn. 2011) ([t]o
the extent that Plaintiffs public policy arguments are targeted solely at the arbitration
clause, the Court believes it is appropriate to consider those arguments).
425) See5.08[A][4]Kemiron Atl., Inc. v. Aguakem Intl, Inc., 290 F.3d 1287, 1291 (11th Cir. 2002)
(court holds party not entitled to demand arbitration where it had not complied with
arbitration agreements requirement that the matter shall be mediated within fifteen
(15) days after receipt of notice and that [i]n the event the dispute cannot be settled
through mediation, the parties shall submit the matter to arbitration within ten [10] days
after receipt of notice.); Consolidated Edison Co. of NY v. Cruz Constr. Corp., 685 N.Y.S.2d
683, 684 (N.Y. App. Div. 1999) (parties duty to submit dispute and attempt to settle it for
30 days was condition precedent to arbitration); Jack Kent Cooke Inc. v. Saatchi, 635
N.Y.S.2d 611, 612 (N.Y. App. Div. 1995) (notice and 270-day negotiation requirements were
conditions precedent to arbitration); Belmont Constr., Inc. v. Lyondell Petrochem. Co., 896
S.W.2d 352 (Tex. Ct. App. 1995) (parties failure to complete mediation held to bar
commencement of arbitration); Sucher v. 26 Realty Assocs., 554 N.Y.S.2d 717, 718 (N.Y. App.
Div. 1990) (timing and notice requirements were conditions precedent to arbitration); NY
Plaza Bldg Co. v. Oppenheim, Appel, Dixon & Co., 479 N.Y.S.2d 217, 221 (N.Y. App. Div. 1984)
(notice requirement was a prerequisite to entry into the arbitration process); Rockland
County v. Primiano, 431 N.Y.S.2d 478, 481 (1980) (parties erected a prerequisite to the
submission of any dispute to arbitration, in effect a precondition to access to the arbitral
forum). Compare Intl Assn of Bridge, Structural Etc. v. EFCO Corp. & Constr. Prods., Inc.,
359 F.3d 954, 956-57 (8th Cir. 2004) (compliance with procedural prerequisites in
arbitration agreement is not a bar to commencement of arbitration, but instead is
substantive issue for arbitrators).
426) See5.06[C][7]; Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350, 1358-59 (Fed. Cir.
2004) (question of whether an arbitration agreement has expired is for the court to
decide, even if this requires interpretation of the language of the agreement); ACE
Capital Re Overseas, Ltd v. Cent. United Life Ins. Co., 307 F.3d 24 (2d Cir. 2002); Banque de
Paris et des Pays-Bas v. Amoco Oil Co., 573 F.Supp. 1464 (S.D.N.Y. 1983); Clifton D. Mayhew,
Inc. v. Mabro Constr. Inc., 383 F.Supp. 192 (D.D.C. 1974); In re Neutral Posture, Inc., 135
S.W.3d 725 (Tex. App. 2003) (whether parties agreement to arbitrate expired by its terms
concerns existence of agreement to arbitrate and, thus, an issue for judicial
determination); Ambulance Billing Sys., Inc. v. Gemini Ambulance Servs., Inc., 103 S.W.3d
507 (Tex. App. 2003); Annotation, Violation or Repudiation of Contract as Affecting Right to
Enforce Arbitration Clause Therein, 3 A.L.R.2d 383 (1949).
427) See, e.g., Stinger v. Chase Bank USA, 265 F.Appx. 224, 228 (5th Cir. 2008) (where both
arbitration agreement and underlying contract were challenged as unconscionable, court
considered whether arbitration agreement specifically was unconscionable); Adams v.
Suozzi, 433 F.3d 220, 227 (2d Cir. 2005) (If a contract is void, a party wishing to avoid
arbitration does not have to challenge the arbitration clause specifically.);Grynberg
Prod. Corp. v. British Gas, plc, 867 F.Supp. 1278, 1283-84 (E.D. Tex. 1994) (claim that
underlying contract never existed naturally encompassed claim that parties failed to
agree to submit dispute to arbitration).
428) Strotz v. Dean Witter Reynolds, Inc., 227 Cal.App.3d 208, 217 (Cal. Ct. App. 1990), revd on
other grounds, 58 Cal.Rptr.2d 875 (Cal. Ct. App. 1996).
71
429) Strotz, 227 Cal.App.3d at 217. See also Adams v. Suozzi, 433 F.3d 220, 227 (2d Cir. 2005)
(Only if a contract is void, and not voidable, can a party challenge the enforceability of
an arbitration clause without alleging a particular defect with that clause. If a contract is
void, a party wishing to avoid arbitration does not have to challenge the arbitration
clause specifically.).
430) Buckeye, 546 U.S. at 444, n.1.
431) The Buckeye Court cited cases involving disputes as to whether any contract was signed,
the authority of agents and mental capacity. See Buckeye, 546 U.S. at 444.
432) Rent-A-Ctr, 130 S.Ct. at 2778.
433) Rent-A-Ctr, 130 S.Ct. at 2778.
434) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2855-56 (U.S. S.Ct. 2010). See also
Telenor Mobile Commcns AS v. Storm LLC, 584 F.3d 396, 406 n.5 (2d Cir. 2009) ([Q]uestions
about whether a contract was ever madeare presumptively to be decided by the court
even without a specific challenge to the agreement to arbitrate.).
435) See3.02[B][3][c]; 3.03[A][2][b][i].
436) See3.03[A][2][b][i]; 7.03[E][5][a].
437) Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 855 (11th Cir. 1992) (emphasis in original).
See also Janiga v. Questar Capital Corp., 615 F.3d 735 (7th Cir. 2010) (claim that contract,
containing an arbitration clause, never existed is for judicial determination).
438) Will-Drill Res. Inc. v. Samson Res. Co., 352 F.3d 211, 219 (5th Cir. 2003).
439) See, e.g., Dedon GmbH v. Janus et Cie, 411 F.Appx. 361, 363 (2d Cir. 2011) (well-established
precedent that where a party challenges the very existence of the contract containing an
arbitration clause, a court cannot compel arbitration without first resolving the issue of
the contracts existence); Koch v. Compucredit Corp., 543 F.3d 460 (8th Cir. 2008) (whether
contract was validly assigned necessarily implicated existence of contract; thus, it was for
court to decide validity before referring to arbitration); Sanford v. Member Works, Inc.,
483 F.3d 956, 962 (9th Cir. 2007) (Issues regarding the validity or enforcement of a
putative contract mandating arbitration should be referred to an arbitrator, but
challenges to the existence of a contract as a whole must be determined by the court
prior to ordering arbitration.); Burden v. Check Into Cash of Ky., LLC, 267 F.3d 483, 488 (6th
Cir. 2001); Sandvik AB v. Advent Intl Corp., 220 F.3d 99, 106 (3d Cir. 2000) (we conclude
that the doctrine of severability presumes an underlying existent agreement); Three
Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140 (9th Cir. 1991) (reading
Prima Paint as limited to challenges seeking to avoid or rescind a contract not to
challenges going to the very existence of a contract that a party claims never to have
agreed to); Chavez v. Bank of Am., 2011 WL 4712204, at *4 (N.D. Cal.) (Here, the parties
disagree as to whether a contract was formed between Plaintiffs and Defendants.
Plaintiffs contend that they were not aware that any contract had been formed. The Court
finds that it, not the arbitrator, must decide this threshold issue.); Down to Earth
Landscaping v. N.J. Bldg, at Laborers Dist. Council Local 595, 2006 U.S. Dist. LEXIS 30113, at
*9 (D.N.J.). See7.03[E][5][c].
440) A number of decisions have required judicial determination of incapacity claims.
See7.03[E][5][c][ii]; Spahr v. Secco, 330 F.3d 1266, 1272 (10th Cir. 2003) (court must decide
whether party had sufficient mental capacity to enter into contract containing arbitration
agreement); Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 590-92 (7th Cir. 2001); MJR
Intl, Inc. v. Am. Arb. Assn, 596 F.Supp.2d 1090, 1096 (S.D. Ohio 2009) (In cases like this
one, involving disputes about whether a purported agent had the authority to bind a
nonsignatory principle to a contract containing an arbitration clause, federal courts have
repeatedly held that the court, not the arbitrator, must decide whether there is an
agreement to arbitrate.); Mariner Health Care, Inc. v. Ferguson, 2006 WL 1851250, at *7
(N.D. Miss.) (retaining case for judicial determination because purported agent had
neither actual, apparent, or statutory authority to bind [defendant] and her beneficiaries
to the arbitration agreement); Guang Dong Light Headgear Factory Co. v. ACI Intl, Inc.,
2005 WL 1118130, at *7 (D. Kan.) ([b]ecause the [mental incapacity] defense went to both
the enforceability of the entire contract and the specific arbitration provision, it placed
the making of the agreement to arbitrate in question); CitiFin., Inc. v. Brown, 2001 WL
1530352, at *5 (N.D. Miss.) ([T]he issue of John Browns mental incompetence goes directly
to the making of the arbitration agreement. If he could not read or understand the
arbitration agreement, he certainly could not consent to it.); In re Morgan Stanley &
Co.,293 S.W.3d 182, 192 (Tex. S.Ct. 2009) (Since a mental-incapacity defense goes to
whether an agreement was made, the court must decide it.); Rhymer v. 21st Mortg. Corp.,
2006 Tenn. App. LEXIS 800, at *3-4 (Tenn. Ct. App.); Am. Med. Techs., Inc. v. Miller, 149
S.W.3d 265, 270-71 (Tex. App. 2004).
441) These decisions adopt the theory that they impeach the whole contract generally, not the
arbitration clause specifically. See3.03[A][2][b][ii](2); 7.03[E][5][c][ii]; Primerica Life Ins.
Co. v. Brown, 304 F.3d 469, 472 (5th Cir. 2002) ([Defendants] capacity defense is a defense
to his entire agreement with [Plaintiff] and not a specific challenge to the arbitration
clause. Therefore, [Defendants] capacity defense is part of the underlying dispute
between the parties which, in light of Prima Paint and its progeny, must be submitted to
arbitration.); Shegog v. Union Planters Bank, 332 F.Supp.2d 945, 948 n.4 (S.D. Miss. 2004);
In re Steger Energy Corp., 2002 WL 663645, at *1 (Tex. App.) (requiring arbitration of claim,
where one party claimed to be incompetent at the time he signed the contracts in the
early stages of Alzheimers, on grounds that defense asserted relates to the contract as
a whole and did not specifically relate to the arbitration agreement itself).
72
442) Spahr v. Secco, 330 F.3d 1266, 1273 (10th Cir. 2003).
443) Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 472 (5th Cir. 2002).
444) See7.03[E][5][c]. A number of decisions have required judicial determination of duress
and lack of consent claims. See7.03[E][5][c], p. 1177; Sanford v. MemberWorks, Inc., 483
F.3d 956, 963 (9th Cir. 2007) (plaintiffs contention that she was not aware she was part of
membership program was issue of contract formation for judicial, not arbitral,
determination); Specht v. Netscape Commcns Corp., 306 F.3d 17, 32, 35 (2d Cir. 2002)
(plaintiffs may not be compelled to arbitrate their claims because, among other things,
license agreement was contract to which plaintiffs never assented); Chastain v.
Robinson-Humphrey Co., 957 F.2d 851, 855 (11th Cir. 1992) ([It] has never been[required
from] arbitrators to adjudicate a partys contention, supported by substantial evidence,
that a contract never existed at all.) (emphasis added); Three Valleys Mun. Water Dist. v.
E.F. Hutton & Co., 925 F.2d 1136 (9th Cir. 1991) (By contending that they never entered into
such contracts, plaintiffs also necessarily contest any agreements to arbitrate within the
contracts.); Kwan v. Clearwire Corp., 2012 WL 32380, at *10 (W.D. Wash.) (Because the
parties have stipulated to the existence of a genuine issue of material fact concerning
whether [plaintiff] assented to the arbitration clause contained with the TOS by clicking
on the I accept terms button on [defendants] website, the court is required to proceed
summarily to a trial thereof.).
Other decisions have required arbitration of claims of duress or lack of consent.
See7.03[E][5][c][ii], p. 1178; Villa Garcia v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 833
F.2d 545 (5th Cir. 1987) (alleged illiteracy goes to formation of the entire contract and is
therefore for arbitral, not judicial, determination); Estrategias en Accion SA v. Castle CRM,
LLC, 2010 WL 5095368 (S.D.N.Y.) (claim that parties evidenced mutual lack of intent to be
bound by the purported agreements attacked validity of agreement as a whole, not
arbitration clause, and was for arbitrator to decide); Johnnies Homes, Inc. v. Holt, 790
So.2d 956, 961 (Ala. 2001) (claim of illiteracy for arbitral, not judicial, resolution because it
bears upon [partys] comprehension of the entire contract, not just the arbitration
agreement).
445) Serv. Corp. Intl v. Lopez, 162 S.W.3d 801, 810 (Tex. App. 2005).
446) Flannery v. Tri-State Div., 402 F.Supp.2d 819, 825 (E.D. Mich. 2005). Likewise, U.S.
commentary takes divergent positions on these issues. Compare Bermann, The Gateway
Problem in International Commercial Arbitration, 37 Yale J. Intl L. 1, 33 (2012) (fraud, duress
and mistake claims should be left to arbitral, not judicial, resolution); Rau, Arbitral
Jurisdiction and the Dimensions of Consent, 24 Arb. Intl 199, 205 (2008) (because duress
vitiates consent to arbitration and leads to non-existence of arbitration agreement, it is
matter for courts); Ware, Arbitration Laws Separability Doctrine After Buckeye Check
Cashing, Inc. v. Cardegna, 8 Nev. L.J. 107, 124 (2007) (duress and fraud affect consent to
arbitration and should be for courts).
447) Most decisions have required judicial determination of forgery and related claims.
See7.03[E][5][c], p. 1177; Gregory v. Interstate/Johnson Lane Corp., 188 F.3d 501 (4th Cir.
1999) (forgery claims are for judicial resolution because they affect arbitration clause and
entire agreement); Hetchkop v. Woodlawn at Grassmere, Inc., 116 F.3d 28, 32, 34 (2d Cir.
1997) (where alleged surreptitious substitution of pages in contract, no assent if party
did not know and had no reasonable opportunity to know that a page with materially
changed terms had been substituted); Chastain v. Robinson-Humphrey Co., 957 F.2d 851,
853 (11th Cir. 1992) (forgery claims for judicial resolution); Jolley v. Welch, 904 F.2d 988 (5th
Cir. 1990) (forgery claims for judicial resolution); Opals on Ice Lingerie v. Bodylines, Inc.,
2002 WL 718850, at *3 (E.D.N.Y.) (if a partys signature were forged on a contract, it would
be absurd to require arbitration if the party attacking the contract as void failed to allege
that the arbitration clause itself was fraudulently obtained); Dougherty v. Mieczkowski,
661 F.Supp. 267, 275 (D. Del. 1987) (defendants cannot rely on a contract which plaintiffs
never signed and, on the record, never saw, to establish the existence of an agreement to
arbitrate).
Nonetheless, a few decisions have required arbitration of claims that a signature on the
underlying contract was forged. See7.03[E][5][c], p. 1178; Alexander v. U.S. Credit Mgt, 384
F.Supp.2d 1003, 1007 (N.D. Tex. 2005); AmSouth Bank v. Bowens, 351 F.Supp.2d 571, 575 (S.D.
Miss. 2005) (In the case at bar, the Bowenses do not deny that they have a contractual
relationship of some sort with AmSouth by virtue of having deposited funds with
AmSouth. However, the Bowenses take the position that they are not bound by any of the
provisions of the customer agreement, including the arbitration provision, inasmuch as
they never signed the agreement.[S]ince the Bowenses forgery allegation regards the
customer agreement as a whole and not just the arbitration clause of the customer
agreement, it is an issue that must be submitted to the arbitrator as part of the
underlying dispute.).
448) Sandvik AB v. Advent Intl Corp., 220 F.3d 99, 109 (3d Cir. 2000).
449) Alexander v. U.S. Credit Mgt, 384 F.Supp.2d 1003, 1007 (N.D. Tex. 2005) (emphasis added).
73
450) See, e.g., Sandvik AB v. Advent Intl Corp., 220 F.3d 99, 108 (3d Cir. 2000) (If [defendant] did
not bind itself to the JVA through [the party representatives] signature, as it contends,
when did it promise to go to arbitration? What is its consideration for Sandviks promise
to do the same?); Opals on Ice Lingerie v. Bodylines, Inc., 2002 WL 718850, at *3 (E.D.N.Y.)
(if a partys signature were forged on a contract, it would be absurd to require
arbitration); Nuclear Elec. Ins. Ltd v. Cent. Power & Light Co., 926 F.Supp. 428, 434 (S.D.N.Y.
1996) ([Where] a party claims that it never actually manifested assent to a contract
containing an agreement to arbitratethat party cannot be forced to arbitrate until it is
first establishedthat the party willingly manifested assent to the underlying contract.);
Kyung In Lee v. Pac. Bullion (N.Y.) Inc., 788 F.Supp. 155, 157 (E.D.N.Y. 1992) (If no agreement
arose between the parties, there can be no severable agreement to arbitrate.); Onvoy,
Inc. v. SHAL, LLC, 669 N.W.2d 344, 354 (Minn. 2003) ([P]arties may not be compelled to
arbitrate claims if they have alleged that the contract at issue never legally existed.
Therefore, allegations that a contract is void may be heard by a court, even if not
specifically directed to the arbitration clause, while allegations that a contract is
voidable must be sent to arbitration.).
451) See, e.g., Madura v. Countrywide Home Loans, Inc., 344 F.Appx. 509 (11th Cir. 2009) (alleged
forgery of signature on contract amounted to claim of fraudulent inducement, and was for
arbitrator to resolve); Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 591-92 (7th Cir.
2001) (if [the parties] have agreed on nothing else,they have agreed to arbitrate.
[S]ometimes the ambiguity is so important to the bargain that the promises are deemed
unenforceable.); Colfax Envelope Corp. v. Local No. 458-3M, Chicago Graphic Commcns
Intl Union, 20 F.3d 750, 754-55 (7th Cir. 1994) (despite apparent lack of meeting of minds
on underlying contract there was a meeting of the minds on the mode of arbitrating
disputes between the parties and parties had agreed to arbitrate their claims);
Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir. 1990) (judicial challenge to arbitration
clause rejected where parties signed draft agreement, including arbitration clause, which
was to be finalized).
452) Pollux Marine Agencies v. Louis Dreyfus Corp., 455 F.Supp. 211, 219 (S.D.N.Y. 1978).
453) Sandvik AB v. Advent Intl Corp., 220 F.3d 99, 108 (3d Cir. 2000) (emphasis added).
454) Repub. of Nicaragua v. Standard Fruit Co., 937 F.2d 469 (9th Cir. 1991).
455) Standard Fruit, 937 F.2d at 477 (quoting Sauer-Getriebe KG v. White Hydraulics, Inc., 715 F.2d
348, 350 (7th Cir. 1983)).
456) See3.03[C], p. 465 (discussing Sojuznefteexport v. JOC Oil Ltd). See also3.02[B][2], p. 359;
3.03[A][4], p. 454.
457) See, e.g., Snowden v. Checkpoint Check Cashing, 290 F.3d 631, 638 (4th Cir. 2002)
(allegations based on non-existence ab initio of underlying contract not enough to avoid
arbitration); Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 218 (5th Cir. 2003) (That
one of the parties later disputes the enforceability of that agreement does not change
the fact that at some point in time, the parties reached an agreement, and that
agreement included the decision to arbitrate disputes arising out of the agreement. The
existence of this agreement provides the arbitrator with the authority required to decide
whether the agreement will continue to exist.); Teledyne, Inc. v. Kone Corp., 892 F.2d 1404
(9th Cir. 1990) (rejecting challenge to arbitration clause where parties signed draft
agreement, including arbitration clause, which was to be finalized); Lawrence v.
Comprehensive Bus. Servs. Co., 833 F.2d 1159, 1162 (5th Cir. 1987) (arbitration clause [is]
enforceable in spite of [underlying] contract containing it [being] void from its
inception); Pinpoint Enters. v. Barnett Fin. Servs., Inc., 2004 U.S. Dist. LEXIS 6630 (E.D. La.)
(The underlying contract may be valid or invalid, legal or illegal, enforceable or void; but
where the parties have expressed their assent to an arbitration agreement, the Federal
Arbitration Act assigns the resolution of those legal challenges to the arbitrator.);
Johnston v. Beazer Homes Tex., LP, 2007 U.S. Dist. LEXIS 20519, at *8-10 (N.D. Cal.);
Alexander v. U.S. Credit Mgt, 384 F.Supp.2d 1003, 1007 (N.D. Tex. 2005); Sadler v. William
Chevrolet/Geo, Inc., 306 F.Supp.2d 788, 789-90 (N.D. Ill. 2004); Toray Indus. Inc. v. Aquafil
SpA, 17(10) Mealeys Intl Arb. Rep. D-1, D-2 (N.Y. Sup. Ct. 2002) (2002) (parties have agreed
to arbitrate because they actively negotiated the choice-of-law and arbitration clause
despite claim that there was only an agreement to agree, and no binding contract).
458) See3.03[B]; 4.02.
459) This appears to have been at least a part of the rationale in Standard Fruit, 937 F.2d at
477. See also authorities cited 3.03[A][5] pp. 457-64.
460) Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 591-92 (7th Cir. 2001).
461) Colfax Envelope Corp. v. Local No. 458-3M, Chicago Graphic Commcns Intl Union, 20 F.3d
750, 754-55 (7th Cir. 1994).
74
462) See5.04[D][7][d]; Cancanon v. Smith Barney, Harris, Upham & Co., 805 F.2d 998, 1000-01
(11th Cir. 1986) (Where misrepresentation of the character or essential terms of a
proposed contract occurs, assent to the contract is impossible. In such a case there is no
contract at all.); Dedon GmbH v. Janes et Cie, 2010 WL 4227309 (S.D.N.Y.) (parties had not
agreed to submit their disputes to arbitration where underlying Distribution Agreement
containing arbitration clause was never executed), affd, 411 F.Appx. 361 (2d Cir. 2011);
Williams v. MetroPCS Wireless, Inc., 2010 WL 62605 (S.D. Fla.) (motion to stay litigation
denied where party alleged that no contract was ever formed because of lack of assent to
that contract); Blythe v. Deutsche Bank AG, 2005 WL 53281, at *6 (S.D.N.Y.) (Because they
are mutually fraudulent, the consulting agreements are not merely voidable, but void ab
initio. The consulting agreements describe services that werenever rendered nor
intended to be rendered.The consulting agreements are therefore void, and the
arbitration clauses are not enforceable.); Opals on Ice Lingerie v. Bodylines, Inc., 2002 WL
718850, at *3 (E.D.N.Y.); Bahuriak v. Bill Kay Chrysler Plymouth, Inc., 2003 WL 105310 (Ill.
App.) (judicial determination of claim that underlying contract, and therefore
arbitration clause, was never formed). See also Nussbaum, The Separability Doctrine in
American and Foreign Arbitration, 17 N.Y.U. L.Q. Rev. 609, 610 (1940) (It is universally [sic]
recognised that on principle, invalidity of the main contract entails invalidity of the
arbitration agreement.); Svernlov & Carroll, What Isnt, Aint: The Current Status of the
Doctrine of Separability, 8(4) J. Intl Arb. 37 (1991) (Where it is alleged that no agreement
has been entered into, the application of the separability doctrine is more doubtful. If
the principal agreement was never entered into, the arbitration agreement contained
therein must be affected by the invalidity as well.).
463) See, e.g., Snowden v. Checkpoint Check Cashing, 290 F.3d 631, 638 (4th Cir. 2002)
(allegations based on non-existence of underlying contract not enough to avoid
arbitration); Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir. 1990); City of Wamego v.
L.R. Foy Constr. Co., 9 Kan.App.2d 168 (Kan. Ct. App. 1984) (repudiation of contract
included repudiation of arbitration clause: unless there is evidence of an independent
meeting of the minds on the issue of arbitration alone, the arbitration agreement cannot
stand as a separate contract); Toray Indus. Inc. v. Aquafil SpA, 17(10) Mealeys Intl Arb.
Rep. D-1 (N.Y. Sup. Ct. 2002) (2002).
464) H.R. 1837, S. 987, 112th Cong., 402(b)(1) (2011) (emphasis added). See Brin, The Arbitration
Fairness Act of 2009, 25 Ohio St. J. Disp. Res. 821 (2010); Lanctot, Reality Check: Is the United
States Arbitration Fairness Act of 2009 Likely to Cause Problems With International
Arbitration Beyond Theory?, 13 Vindobona J. 307 (2009).
465) See Drahozal, Buckeye Check Cashing and the Separability Doctrine, 1 Y.B. Arb. & Med. 55,
82 (2009).
466) Arbitration Fairness Act of 2013, S. 878, H. R. 1844, 113th Cong. (2013).
467) See1.04[A][1].
468) See Arbitration Fairness Act of 2013, S. 878, H.R. 1844, 113th Cong. (2013); H.R. 1863, 112th
Cong. (2011).
469) See3.03[A][2][b][i]-[ii].
470) Prima Paint,388 U.S. at 402. For a case where the parties did not intend their arbitration
agreement to be separable, see Moseley v. Elec. & Missile Facilities, Inc., 374 U.S. 167, 171
(U.S. S.Ct. 1963).
471) Buckeye, 546 U.S. at 445.
472) Buckeye, 546 U.S. at 446.
474) Buckeye, 546 U.S. at 445 (First, as a matter of substantive federal arbitration law, an
arbitration provision is severable from the remainder of the contract.); Rent-A-Ctr130
S.Ct. at 2778 ([A] partys challenge to another provision of the contract, or to the contract
as a whole, does not prevent a court from enforcing a specific agreement to arbitrate.).
475) See3.03[A][2][b][ii](2)-(3).
476) See3.03[A][2][b][ii](2).
477) For example, that both the price of goods sold is unconscionably high and that the
procedures prescribed in the arbitration agreement are unconscionably one-sided.
478) For example, that the superior bargaining power of one party and the absence of any
negotiation of the parties contract.
479) See3.03[A][2][b][ii](1) & (3); Buckeye, 546 U.S. at 444 n.1; Rent-A-Ctr, 130 S.Ct. at 2778.
480) See3.03[A][2][b][ii](3).
481) See Drahozal, Buckeye Check Cashing and the Separability Doctrine, 1 Y.B. Arb. & Med. 55,
72-73 (2009); Ware, Arbitration Laws Separability Doctrine After Buckeye Check Cashing Inc.
v. Cardegna, 8 Nev. L.J. 107, 125 (2007) (separability doctrine cannot accommodate a
principled distinction between the gun-point example and a misrepresentation case like
Prima Paint).
482) See3.03[A][2][b][ii](3). Specifically, a party may commit itself to an arbitration
agreement in the course of negotiations of the underlying contract, but not ultimately
consent to the underlying contract.
483) See3.03[A][2][b][ii](3). Specifically, an agent may have authority to conclude an
arbitration agreement, but not the authority to conclude the underlying contract.
484) See3.03[A][2][b][ii](3). Specifically, duress might be exerted with respect to the terms of
the underlying contract (e.g., with regard to price or warranties), but not with respect to
the arbitration agreement.
75
485) See3.03[A][2][b][ii](3). Specifically, bribery of a counter-partys agent might, in some
circumstances, vitiate that partys consent to the arbitration agreement, as well as the
486) See3.03[A][2][b][ii](3). Specifically, illegality of the underlying contract (e.g., the
highwaymans contract to divide stolen property) might, in some circumstances, vitiate
the validity of the arbitration agreement, as well as the underlying contract.
487) See3.03[A][2][b][ii](3). Specifically, mistake with regard to the identity of a counter-party
or fundamental content and character of a contract might, in some circumstances, vitiate
the validity of the arbitration agreement, as well as the underlying contract.
not bind itself to the JVA through [a representatives] signature, as it contends, when did it
promise to go to arbitration?); Different Drummer LLC v. Natl Urban League, Inc., 2012 WL
406907, at *4 (S.D.N.Y.) ([T]he court must resolve the question of the Contracts existence
here to resolve the question of arbitrability of the instant action. In other words, if it
appears that [the parties] formed a direct contract, which was never reduced to writing,
and thus, never contained an arbitration clause, the matter must remain with this
Court.); Dedon GmbH v. Janes et Cie, 2010 WL 4227309 (S.D.N.Y.) (parties had not agreed to
submit disputes to arbitration where underlying Distribution Agreement containing
arbitration clause was never executed), affd, 411 F.Appx. 361 (2d Cir. 2011); Blythe v.
Deutsche Bank AG, 2005 WL 53281, at *6 (S.D.N.Y.).
489) See3.03[A][2][b][ii](3).
490) See3.03[A][2][b][ii](3).
491) See3.03[A][2][b][ii](3).
492) See3.03[A][2][b][ii](1).
493) See3.03[A][2][b][ii](3).
494) See3.03[A][2][b][i]-[ii].
496) Buckeye, 546 U.S. at 444-47. See3.03[A][2][b].
497) In fact, as discussed below, it makes little sense to base the allocation of jurisdictional
competence on the existence of a challenge to the arbitration agreement itself, as U.S.
courts have done. Rather, it is more sensible to base the allocation of jurisdictional
competence on considerations of fairness and efficiency, with most jurisdictional
challenges being for initial resolution by the arbitrators. See7.03[I][3], p. 1232.
498) See3.03[A][2][b][ii](3).
499) See3.03[A][2][b][ii](3); 7.03[E][5][b].
500) See3.02[B][3][c]; 3.03[A][2][b]; 7.03[H].
501) As discussed below, decisions concerning the allocation of competence to consider
challenges to an arbitration agreement should turn on issues of efficiency (e.g., are
arbitral or judicial proceedings addressing a jurisdictional issue underway and
advanced?), fairness and likely party intent (e.g., does it appear that the objections to the
arbitration agreement are credibly founded?). See3.03[F]; 7.03. These issues are not
dependent on particular categories of contract law defenses. See3.03[F]; 7.03.
502) See3.03[A][2][b][i](2).
503) See7.03[E][5].
504) See7.03[E][1][b].
505) That is likely to be the case, for example, where only a claim of illegality, frustration,
unconscionability, or repudiation of the underlying contract is involved. These claims do
not, as a matter of law, ordinarily involve the arbitration clause. See3.03[A][2][b][i](1);
7.03[E][5][b][ii]; 7.03[E][5][c][ii].
506) See4.04[A][1][b][i]; 5.06[A][1].
507) See7.03[E][7]-[8].
508) See7.03[E]. As discussed in greater detail below, there is uncertainty under the FAA
concerning the consequences of an arbitral decision resolving a partys jurisdictional
challenge. See7.03[E][1][a]. The better, and more principled, view is that such decisions
are subject to judicial review with regard to the jurisdictional aspects of the tribunals
decision. See7.03[E][7]. Moreover, if an award holds that the parties underlying contract
was validly formed, and therefore that the associated arbitration clause is valid, the
jurisdictional aspect of this award is subject to de novo judicial review even if it involves
factual questions regarding the formation of the underlying contract. See7.03[E][7][c], p.
1196.
509) See7.02[A][1]; 7.02[B][2].
510) See Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.),
affd, [2007] UKHL 40 (House of Lords); Gross, Separability Comes of Age in England:
Harbour v. Kansa and Clause 3 of the Bill, 11 Arb. Intl 85, 88-91 (1995); D. Sutton, J. Gill & M.
Gearing, Russell on Arbitration 2-007 to 2-014, 2-070 (23d ed. 2007).
76
511) See Ashville Inv. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867, 873 (English Ct. App.) ([it] is
a principle of law that an arbitrator does not have jurisdiction to rule upon the initial
existence of the contract); Dalmia Dairy Indus. Ltd v. Natl Bank of Pakistan [1978] 2
Lloyds Rep. 223, 292 (English Ct. App.) ([W]e can find nothingto justify departure from
the logical conclusion that there is no difference in principle between a contract
containing an arbitration clause admittedly concluded but void for initial illegality and a
contract containing such a clause admittedly concluded but where it is alleged that
either the contract or the arbitration clause or both have become void because of
subsequent illegality.); Heyman v. Darwins Ltd [1942] AC 356, 366 et seq. (House of Lords)
(Viscount Simon, L.C.) (If the dispute is whether the contract which contains the clause
has ever been entered into at all, that issue cannot go to arbitration under the clause, for
the party who denies that he has ever entered into the contract is thereby denying that
he has ever joined in the submission.); 3.02[B][3][f]. See also Gross, Separability Comes of
Age in England: Harbour v. Kansa and Clause 3 of the Bill, 11 Arb. Intl 85, 88-91 (1995); D.
Sutton, J. Gill & M. Gearing, Russell on Arbitration 2-011 to 2-013 (23d ed. 2007).
512) Smith, Coney & Barrett v. Becker, Gray & Co. [1916] 2 Ch 86 (English Ct. App.).
514) See3.02[B][3][f].
515) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1992] 1 Lloyds Rep. 81, 92-93 (QB)
516) See Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897 (English Ct.
App.).
517) English Arbitration Act, 1996, 7. See U.K. Departmental Advisory Committee on Arbitration
Law, Report on the Arbitration Bill 43 (1996); 3.02[B][3][f].
518) Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co. [1993] 3 All ER 897 (English Ct. App.);
Westacre Invs. Inc. v. Jugoimport-SDPR Holdings Co. [1998] 4 All ER 570 (QB) (English High
Ct.); R. Merkin, Arbitration Law 5.43 (1991 & Update August 2013).
519) English Arbitration Act, 1996, 7 (emphasis added). The application of 7 by the English
courts is discussed below. See3.03[A][2][c].
520) SeeUNCITRAL Model Law, Art. 16(1) (emphasis added); 3.02[B][3][e].
521) See3.02[B][3][e].
522) See3.03[A][2][c]; Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40, 9, 10 (House of
Lords) (The principle of separability enacted in 7 means that the invalidity or rescission
of the main contract does not necessarily entail the invalidity or rescission of the
arbitration agreement. The arbitration agreement must be treated as a distinct
agreement and can be void or voidable only on grounds which relate directly to the
arbitration agreement. Of course there may be cases in which the ground upon which the
main agreement is invalid is identical with the ground upon which the arbitration
agreement is invalid.); R. Merkin, Arbitration Law 5.45 (1991 & Update August 2013); D.
Sutton, J. Gill & M. Gearing, Russell on Arbitration 2-012 (23d ed. 2007).
523) See, e.g., Soleimany v. Soleimany [1999] QB 785, 979 (English Ct. App.); Beijing Jianlong
Heavy Indus. Group v. Golden Ocean Group Ltd [2013] EWHC 1063 (Comm) (English High Ct.)
(invalidity of guarantees for illegality does not affect validity of arbitration clauses in
related charter-parties); JSC BTA Bank v. Ablyazov [2011] EWHC 587, 42-54 (Comm)
(English High Ct.) (applying separability presumption to uphold arbitration agreement
where agent acted beyond authority in signing underlying agreement, because this
rendered agreement merely voidable, not null and void); Entico Corp. Ltd v. United
Nations Educ. Scientific & Cultural Assn [2008] EWHC 531 (Comm) (English High Ct.)
(applying separability presumption where contracts existence was contested); Credit
Suisse First Boston (Europe) Ltd v. Seagate Trading Co. [1999] 1 Lloyds Rep. 784, 796-98 (QB)
(English High Ct.) (applying separability presumption but holding that fraud in formation
of underlying contract can permit conclusion that arbitration clause also was induced by
fraud); Westacre Invs. Inc. v. Jugoimport-SPDR Holdings Co., Ltd [1998] 4 All ER 570, 583 et
seq. (QB) (English High Ct.).
524) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891, 25 (English Ct. App.)
(emphasis added), affd, [2007] UKHL 40 (House of Lords). The Court of Appeal relied upon
the separability presumption to reach a conclusion regarding the allocation of
competence over asserted jurisdictional challenges. According to the court, 7 of the Act
codifies the principle that an allegation of invalidity of a contract does not prevent the
invalidity question being determined by an arbitration tribunal pursuant to the
(separate) arbitration agreement. Id. at 23.
525) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.)
(emphasis added), affd, [2007] UKHL 40 (House of Lords). Commentary relied upon by the
Court of Appeal (but not quoted) went on to say: The consequence of these arguments is
to limit the extent to which a jurisdiction agreement [or arbitration agreement] needs to
satisfy the provisions of a particular law in order to establish its prima facie validity. L.
Collins (ed.), Dicey Morris and Collins on The Conflict of Laws 12-099 (14th ed. 2006).
526) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.), affd,
77
527) Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords). For commentary,
see Huang & Lim, Corruption in Arbitration Law and Reality, 8 Asian Intl Arb. J. 1, 61-63
(2012); Paulsson, Arbitration Friendliness: Promises of Principle and Realities of Practice, 23
Arb. Intl 477 (2007); Pengellery, Separability Revisited: Arbitration Clauses and Bribery
Fiona Trust & Holding Corp v. Privalov, 24 J. Intl Arb. 5 (2007); Samuel, Agora: Thoughts on
Fiona Trust Separability and Construing Arbitration Clauses: The House of Lords Decision
in Premium Nafta and the Fiona Trust, 24 Arb. Intl 475 (2008); Style & Knowles, Agora:
Thoughts on Fiona Trust Fiona Trust: 10 Years on, the Fresh Start Entrenched, 24 Arb. Intl
489 (2008).
528) The House of Lords cited U.S. and German authority, including Prima Paint and the
German Bundesgerichtshofs Judgment of 27 February 1970. See Fiona Trust & Holding Corp.
v. Privalov [2007] UKHL 40, 14, 30-32 (House of Lords).
The Court of Appeal also cited to international authority. Fiona Trust & Holding Corp. v.
Privalov [2007] 1 All ER (Comm) 891, 27 (English Ct. App.) (The Supreme Court of the
United States has also held that a challenge to the existence of the jurisdiction
agreement based on fraud or duress must be based on facts specific to the clause and
cannot be sustained on the basis of a challenge on like grounds to the validity of the
contract containing it.) (quoting L. Collins (ed.), Dicey Morris and Collins on The Conflict of
Laws 12-099 (14th ed. 2006)). As noted above, the House of Lords also cited German, U.S.,
as well as other authority.
529) Fiona Trust & Holding Corp. [2007] UKHL 40, 17.
532) Fiona Trust & Holding Corp. [2007] UKHL 40, 18. The Law Lords also reasoned: It would
have been remarkable for him to enter into any charter without an arbitration agreement,
whatever its other terms had been. Id. at 19. See also ibid. (But 7 in my opinion means
that [the underlying contract and the arbitration agreement] must be treated as having
been separately concluded and the arbitration agreement can be invalidated only on a
ground which relates to the arbitration agreement and is not merely a consequence of the
invalidity of the main agreement.).
535) See3.03[A][2][b][i](2); 3.03[A][2][b][ii](2).
536) Fiona Trust & Holding Corp. [2007] UKHL 40, 17. Lord Hopes judgment adopted a similar
characterization: So, where the arbitration agreement is set out in the same document
as the main contract, the issue whether there was an agreement at all may indeed affect
all parts of it. Issues as to whether the entire agreement was procured by impersonation
or by forgery, for example, are unlikely to be severable from the arbitration clause. Id. at
34 See also Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891, 29
(English Ct. App.) (non est factum or the sort of mistake which goes to the question
whether there was any agreement ever reached), affd, [2007] UKHL 40 (House of Lords).
539) See3.03[A][2][b][ii](3).
540) Heyman v. Darwins Ltd [1942] AC 356, 366 (House of Lords).
541) See3.03[A][2][b][ii](3); 3.03[A][2][d]; 3.03[D].
542) See3.02[B][3][d].
544) See, e.g., Judgment of 25 November 1966, Socit des mines dOrbagnoux v. Fly Tox, 1967
Dalloz 359 (French Cour de cassation civ. 2e) (repudiation); Judgment of 7 May 1963, Ets
Raymond Gosset v. Carapelli, JCP G 1963, II, 13, 405 (French Cour de cassation civ. 1e)
(underlying agreement allegedly illegal because of lack of governmental approval);
Judgment of 21 February 1964, Meulemans, et Cie v. Robert, 92 J.D.I. (Clunet) 113 (Paris Cour
dappel) (1965). See alsoMayer, Les limites de la sparabilit de la clause compromissoire,
1998 Rev. arb. 359.
545) CompareJudgment of 10 July 1990, L et B Cassia Associes v. Pia Inv. Ltd, 1990 Rev. arb. 857,
859 (French Cour de cassation civ. 1e) (in international arbitration, the independent
existence of the arbitration clause finds a limitation in the non-existence of the
underlying contract) withJudgment of 6 December 1988, Socit Navimpex Centrala Navala
v. socit Wiking Trader, 1989 Rev. arb. 641, 644 (French Cour de cassation civ. 1e)
(According to the principle of the autonomy of the arbitration clause, it is permitted to
rely on such clause even though the [underlying] contract, signed by the parties, has
never come into force, if the dispute concerns the conclusion of such contract.).
546) Mayer, The Limits of Severability of the Arbitration Clause, in A. van den Berg (ed.),
the New York Convention 261, 264 (ICCA Congress Series No. 9 1999).
547) See Sanders, Lautonomie de la clause compromissoire, in Hommage Frdric Eisemann
31, 34 et seq. (1978). CompareE. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 410, 411 (1999).
548) See7.03[B].
549) Swiss Law on Private International Law, Art. 178(3); B. Berger & F. Kellerhals, International
and Domestic Arbitration in Switzerland 618-622a (2d ed. 2010). See3.02[B][3][b].
550) See3.02[B][3][b]; 4.02[A][2][b].
78
551) See, e.g.,Judgment of 9 June 1998, C. Srl v. L.S. SA, 16 ASA Bull. 653, 657 (Swiss Federal
Tribunal) (1998); Judgment of 7 October 1993, Tobler v. Justizkommission des Kantons
Schwyz, DFT 59 I 177 (Swiss Federal Tribunal); Judgment of 28 January 1938, DFT 64 I 39, 44
(Swiss Federal Tribunal); Judgment of 6 November 1936, DFT 62 I 230, 233 (Swiss Federal
Tribunal); Judgment of 2 January 1984, K. KG v. M. SA & M.G., 3 ASA Bull. 19 (Basel-Stadt
Appellationsgericht) (1985) (rejecting challenge to arbitration clause based upon mistake
as to underlying contract); Judgment of 14 April 1983, Carbomin SA v. Ekton Corp., XII Y.B.
Comm. Arb. 502 (Geneva Cour de Justice) (1987).
552) See, e.g., 3.02[B][3][b]; Judgment of 20 December 1995, DFT 121 III 495, 500 (Swiss Federal
Tribunal); Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119 II 380,
384 (Swiss Federal Tribunal); Judgment of 7 July 1962, DFT 88 I 100, 105 (Swiss Federal
Tribunal).
553) Judgment of 17 March 1939, DFT 65 I 19, 22 (Swiss Federal Tribunal).
554) See, e.g., B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland
622 (2d ed. 2010) (there are a number of situations in which notwithstanding the rule
established in PILS, Art. 178(3) and CCP, Art. 357(2) a specific defect does not only affect
the validity of the main contract, but ipso facto entails the nullity of the arbitration
agreement contained in it. In legal doctrine, these situations are described as the
phenomenon of identity of defect (Fehleridentitt).); P. Lalive, J.-F. Poudret & C.
Reymond, Le droit de larbitrage interne et international en Suisse Art. 178, 22 (1989)
([T]here are cases when such invalidity [of the underlying contract] may directly affect
the validity of the arbitration clause, e.g., defects of consent or the absence of authority
of the signatories. Theeffect of the invalidity of the main contract must be examined
separately when the arbitration clause comes under examination.); Wenger, in S. Berti et
al. (eds.), International Arbitration in Switzerland Art. 178, 77 (2000) (This does not of
course preclude that identical reasons might exist which impair the validity both of the
main contract and also of the arbitration agreement for instance capacity, deficiencies
of intent, lack of authority.).
555) See3.03[A][2][b][ii](3); 3.03[A][2][c]; 3.03[A][2][d].
556) See3.02[B][3][a]; Judgment of 27 February 1970, 6 Arb. Intl 79 (German Bundesgerichtshof)
(1990); Judgment of 30 April 1890, 1890 JW 202, 203 (German Reichsgericht) ([T]he
arbitration clause is not invalid because the main contract somehow appears to be
invalid. The arbitral tribunal is therefore competent to decide on validity of the main
contract.).
557) See, e.g.,Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, DFT 116 Ia 56 (Swiss
Federal Tribunal); Judgment of 18 February 2009, 11 Sch 07/08 (Oberlandesgericht
Dresden) (recognizing Czech award holding that, despite invalidity of underlying contract,
arbitration clause contained therein was valid); Judgment of 12 March 1998, XXIX Y.B.
Comm. Arb. 663, 666 (Hanseatisches Oberlandesgericht Hamburg) (2004); Judgment of 16
March 1977, III Y.B. Comm. Arb. 274 (Landgericht Hamburg) (1978).
558) See, e.g., Judgment of 27 November 2008, 2009 HmbSchRZ 5 (German Bundesgerichtshof);
Judgment of 23 May 1991, III ZR 144/90 (German Bundesgerichtshof) (threats or deceit
affecting underlying contract must have direct effect on arbitration clause); Judgment of
28 July 2005, XXXI Y.B. Comm. Arb. 673 (Oberlandesgericht Koblenz) (2006); Judgment of 12
March 1998, XXIX Y.B. Comm. Arb. 663 (Hanseatisches Oberlandesgericht Hamburg) (2004)
(nullity of the main contract, if there is such, does not affect the arbitration clause).
559) Judgment of 12 March 1998, XXIX Y.B. Comm. Arb. 663, 666 (Hanseatisches
Oberlandesgericht Hamburg) (2004).
560) See German ZPO, 1040(1) (The arbitral tribunal may rule on its own jurisdiction and in
this connection on the existence or validity of the arbitration agreement. For that
purpose, an arbitration clause which forms part of a contract shall be treated as an
agreement independent of the other terms of the contract.).
561) Berger, Germany Adopts the UNCITRAL Model Law, 1998 Intl Arb. L. Rev. 121; Bckstiegel,
An Introduction to the New German Arbitration Act Based on the UNCITRAL Model Law, 14
Arb. Intl 19 (1998); Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55
(2004); Schlosser, Arbitral Tribunals or State Courts: Who Must Defer to Whom?, in Arbitral
Tribunals or State Courts: Who Must Defer to Whom? 15, 27 (ASA Spec. Series No. 15 2001).
562) See, e.g., Rieder & Schoenemann, Korruptionsverdacht, Zivilprozess und Schiedsverfahren,
2011 NJW 1169, 1172; P. Schlosser, Das Recht der internationalen privaten
Schiedsgerichtsbarkeit 393 (2d ed. 1989) (In case the defect put forward with regard to
the main contract also affects the arbitration agreement itself, sure enough the
arbitration agreement cannot be upheld in isolation. If the issue is, whether the parties
have already finally agreed on the conclusion of an agreement, an arbitral tribunal
cannot bindingly decide this issue.); Schlosser, Der Grad der Unabhngigkeit einer
Schiedsvereinbarung vom Hauptvertrag, in Law of International Business and Dispute
Settlement in the 21st Century, Liber Amicorum Karl-Heinz Bckstiegel 697, 704, 706 (2001);
Schwab & Walter, Schiedsgerichtsbarkeit, 7 Aufl. Kap. 4Rz. 18 (Certain defects can apply
to both contracts,the arbitration agreement and the underlying contract, because of
deception, threat or mistake.). See also Judgment of 29 March 2012, 2012 SchiedsVZ 159
(Oberlandesgericht Mnchen).
563) See, e.g.,Judgment of 23 May 1991, III ZR 144/90 (German Bundesgerichtshof) (defects
affecting underlying contract must have direct effect on arbitration clause); J.-P.
Lachmann, Handbuch fr die Schiedsgerichtspraxis 542 (3d ed. 2008).
564) Judgment of 2 July 1981, 1981 Foro it., Rep. voce Arbitrato no. 61 (Italian Corte di
Cassazione).
79
565) Judgment of 21 December 1991, SpA Coveme v. Compagnie Franaise des Isolants, XVIII Y.B.
Comm. Arb. 422, 425 (Bologna Corte dAppello) (1993).
566) Judgment of 3 October 1936, AB Norrkpings Trikfabrik v. AB Per Persson, 1936 NJA 521
(Swedish S.Ct.). See Hobr, The Doctrine of Separability Under Swedish Arbitration Law,
Including Comments on the Position of American and Soviet Law, 68 SvJT 257 (1983).
567) Judgment of 24 March 1976, Hermansson v. AB Asfalbelaeggnigar, 1976 NJA 125 (Swedish
S.Ct.).
568) Swedish Arbitration Act, 3 (When ruling on the validity of an arbitration agreement
which forms part of another agreement, for the purpose of determining the jurisdiction of
the arbitrators, the arbitration agreement shall constitute a separate agreement.);
3.02[B][3][j]; 7.03[G].
569) See3.02[B][3][g]; Judgment of 15 July 1975, Kokusan Kinzoku Kogyo K.K. v. Guard-Life Corp.,
IV Y.B. Comm. Arb. 115, 122 (Japanese Saiko Saibansho) (1979).
115, 122 (Japanese Saiko Saibansho) (1979); Judgment of 3 May 1980, Kabushiki Kaisha
Ameroido Nihon v. Drew Chem. Corp., VIII Y.B. Comm. Arb. 394 (Yokohama Chiho Saibansho)
(1983) (where the arbitration clause stipulates that all disputeswhich may ariseout of
or in relation to or in connection with this Agreement shall be submitted to arbitration
the arbitration clause retains its validity even after the termination of the principal
contract).
571) Japanese Arbitration Law, Art. 13(6).
572) See3.02[B][3][h].
573) Provisional Measures and Opinion on Several Questions Regarding the Ruling on Cases
Requesting for the Validity of Arbitration Agreement and Setting Aside An Arbitral Award, 7
(Beijing Gaoji Fayuan) (1999), cited in Weixia, Chinas Search for Complete Separability of
the Arbitral Agreement, 3 Asian Intl Arb. J. 163, 169 (2007).
574) Judgment of 12 November 2003, XXXI Y.B. Comm. Arb. 620 (Chinese Zuigao Fayuan) (2006)
(where signature on underlying contract was forged through cutting-and-pasting,
arbitration agreement was void: arbitration agreement was entered into as a result of
fraud[and was] invalid under the applicable law of the place of arbitration).
575) Weixia, Chinas Search for Complete Separability of the Arbitral Agreement, 3 Asian Intl
Arb. J. 163, 171 (2007).
576) See, e.g., DHV BV v. Tahal Consulting Engrs Ltd [2007] INSC 913 (Indian S.Ct.) (upholding
arbitration agreement notwithstanding termination of underlying contract); Fittydent Intl
GmbH v. Brawn Labs., Ltd, XXXV Y.B. Comm. Arb. 401 (Delhi High Ct. 2010) (2010).
577) See, e.g., The Hub Power Co. v. Pakistan WAPDA, 16 Arb. Intl 439, 450-51 (Pakistan S.Ct.
2000) (2000).
578) See, e.g.,Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, [2005] FCA 1102, 89
(Australian Fed. Ct. 2005) (2006) (The arbitration clause is seen as constituting a
severable and separate agreement between the parties; claim that underlying contract
was fraudulently induced does not impeach arbitration clause); Resort Condominiums
Intl Inc. v. Bolwell, XX Y.B. Comm. Arb. 628, 632 (Queensland S.Ct. 1993) (1995) (although
underlying contract had been terminated, arbitration clause was separable and
remained enforceable after termination).
579) See, e.g.,Brian Harper v. Kvaerner Fjellstrand Shipping AS, XVIII Y.B. Comm. Arb. 358 (B.C.
S.Ct. 1991) (1993); Cecrop Co. v. Kinetic Sciences Inc., [2001] BCSC 532 (B.C. S.Ct.).
580) See, e.g., Clarence Holdings Ltd v. Prendos Ltd, [2000] DCR 404 (Auckland Dist. Ct.)
(termination of underlying contract did not affect arbitration clause: it must follow that a
purported repudiation of the contract by one party, even if later found to be legally valid,
cannot bring down with it an arbitration clause in that agreement).
581) See, e.g., Judgment of 6 December 1963, 1964 Neder. Juris. No. 43 (Netherlands Hoge Raad);
Judgment of 18 January 1967, 1967 Neder. Juris., No. 90 (Arnhem Gerechtshof); Judgment of 5
November 1952, 1953 Neder. Juris. No. 327 (Amsterdam Arrondissementsrechtbank)
(alleged fraud which resulted in voidness of underlying contract did not impeach
arbitration clause); Judgment of 19 December 1952, 1953 Neder. Juris. No. 328 (Amsterdam
Arrondissementsrechtbank) (invalidity of underlying contract on grounds that condition
precedent was not satisfied and did not impeach arbitration clause).
582) See, e.g.,Sojuznefteexport v. JOC Oil Ltd, XV Y.B. Comm. Arb. 384, 407 (Bermuda Ct. App.
1989) (1990).
583) See, e.g.,Judgment of 12 April 2010, Elbex Video Ltd v. Tyco Bldg Servs., Ltd., XXXV Y.B.
Comm. Arb. 409, 14 (Israeli S.Ct.) (2010) (It would be possible to think that where a
contract is voided, all of its sections are also voided, including the arbitration clause
within it. However, in the case of a void contract as well, there are situations in which the
arbitration clause is accorded independent life.).
584) See, e.g., Fung Sang Trading Ltd v. Kai Sun Sea Prods. & Food Co., XVII Y.B. Comm. Arb. 289
(H.K. Ct. First Inst. 1991) (1992) (arbitration clause is separable from the contract
containing it so that if the contract is repudiated and the repudiation is accepted the
arbitration clause survives the repudiation thus enabling the arbitrator to render an
award on the claim resulting from the alleged repudiation).
585) The Hub Power Co. v. Pakistan WAPDA, 16 Arb. Intl 439, 450-51 (Pakistan S.Ct. 1999) (2000).
80
not bind itself to the JVA through [its representatives] signature, as it contends, when did
it promise to go to arbitration?); Different Drummer LLC v. Natl Urban League, Inc., 2012
WL 406907 (S.D.N.Y.) ([T]he court must resolve the question of the Contracts existence
here to resolve the question of arbitrability of the instant action.[I]f it appears that [the
parties] formed a direct contract, which was never reduced to writing, and thus, never
contained an arbitration clause, the matter must remain with this Court.); Grynberg Prod.
Corp. v. British Gas, plc, 867 F.Supp. 1278, 1283-84 (E.D. Tex. 1994) (no agreement to
arbitrate where underlying contract was never executed).
587) 2010 UNCITRAL Rules, Art. 23(1). See also S. Nappert, Commentary on the UNCITRAL
Arbitration Rules 2010 87-90 (2012); T. Webster, Handbook of UNCITRAL Arbitration:
Commentary, Precedents, Materials 23-6 to 22-33 (2010).
588) 2012 ICC Rules, Art. 6(9) (Unless otherwise agreed, the Arbitral Tribunal shall not cease to
have jurisdiction by reason of any allegation that the contract is non-existent or null and
void, provided that the arbitral tribunal upholds the validity of the arbitration
agreement. The arbitral tribunal shall continue to have jurisdiction to determine the
parties respective rights and to decide their claims and pleas even though the contract
itself may be non-existent or null and void.). See also M. Bhler & T. Webster, Handbook
of ICC Arbitration: Commentary, Precedents, Materials 6-89 to 6-131 (2d ed. 2008); J. Fry,
S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 3-281 to 3-286 (2012).
589) ICDR Rules, Art. 15(2) (The Tribunal shall have the power to determine the existence or
validity of a contract of which an arbitration clause forms a part. Such an arbitration
clause shall be treated as an agreement independent of the other terms of the contract. A
decision by the tribunal that the contract is null and void shall not for that reason alone
render invalid the arbitration clause.).
590) LCIA Rules, Art. 23(1) (The Arbitral Tribunal shall have the power to rule on its own
jurisdiction, including any obligation to the initial or continuing existence, validity of
effectiveness of the Arbitration Agreement. For that purpose, an arbitration clause which
forms or was intended to form part of another agreement shall be treated as an
arbitration agreement independent of that other agreement. A decision by the Arbitral
Tribunal that such other agreement is non-existent, invalid or ineffective shall not entail
ipso jure the non-existence, invalidity or ineffectiveness of the arbitration clause.).
591) 2010 UNCITRAL Rules, Art. 23(1); 2012 Swiss Rules, Art. 21(2) (tracking UNCITRAL Rules); 2012
CIETAC Rules, Art. 5(4); 2013 HKIAC Rules, Art. 19(2); 2013 SIAC Rules, Art. 25(2) (tracking 1976
UNCITRAL Rules).
592) This is examined in greater detail below. SeeChapter 5et seq.
593) 2012 ICC Rules, Art. 6(9); LCIA Rules, Art. 23(1); 2013 SIAC Rules, Art. 25(2).
594) See7.02[F]; 7.03[E][5][b]-[c].
Commerce & Industry Case of 9 July 1984, XVIII Y.B. Comm. Arb. 92 (1993). The tribunal
reasoned: the arbitration agreement is treated as a procedural contract and not as an
element (condition) of a material-legal contract. The subject of an arbitration agreement
(clause) is distinguished from the subject of a material-legal contract.The subject of the
agreement is the obligation of the parties to submit the examination of a dispute
between a plaintiff and defendant to arbitration. Predominant in the literature is the
recognition of the autonomy of an arbitration agreement, its independence in relation to
the contract. Such is the point of view of the overwhelming majority of Soviet authors who
have expressed themselves on this subject. Id. at 97. The Soviet arbitral tribunals
decision was upheld by the Bermuda Court of Appeal, in a lengthy opinion that squarely
affirmed the presumption that arbitration clauses are separable from the underlying
contracts with which they are associated. Sojuznefteexport v. JOC Oil Ltd, XV Y.B. Comm.
Arb. 384, 407 (Bermuda Ct. App. 1989) (1990). SeeChapter 7.
596) SeeChapter 7 (especially 7.02[C]; 7.03).
597) Sojuznefteexport, XVIII Y.B. Comm. Arb. at 98.
599) Sojuznefteexport, XVIII Y.B. Comm. Arb. at 97-98.
602) See, e.g.,Interim Award in ICC Case No. 7263, XXII Y.B. Comm. Arb. 92, 100 (1997); Award in ICC
Case No. 6503, 122 J.D.I. (Clunet) 1022 (1995); Final Award in ICC Case No. 6248, XIX Y.B.
Comm. Arb. 124, 125 (1990) (principle of severability has long been recognizedwith
respect to main contracts which were found void); Award in ICC Case No. 5943, 123 J.D.I.
(Clunet) 1014 (1996); Interim Award in ICC Case No. 4145, XII Y.B. Comm. Arb. 97, 100 (1987);
Award in Bulgarian Chamber of Commerce and Industry Case No. 88/1972 of 23 June 1973, IV
Y.B. Comm. Arb. 189 (1979); Award in CMAP Case No. 9726 of 18 March 2003, XXVII Y.B. Comm.
Arb. 13, 16 (2003) (principle of autonomy of arbitration agreement applies even where
there is no underlying contract); Award in Arbitral Tribunal of the Netherlands Oils, Fats and
Oilseeds Trade Association Case of 10 September 1975, II Y.B. Comm. Arb. 156 (1977); Libyan
Am. Oil Co. (LIAMCO) v. Govt of the Libyan Arab Repub., Ad Hoc Award of 12 April 1977, VI Y.B.
Comm. Arb. 89, 96 (1981) (widely accepted in international law and practice that an
arbitration clause survives the unilateral termination by the State of the contract in
which it is inserted and continues in force even after that termination); Texaco Overseas
Petroleum Co. v. Libyan Arab Repub., Preliminary Ad Hoc Award on Jurisdiction of 27
November 1975, IV Y.B. Comm. Arb. 177 (1979); BP Exploration Co. v. Govt of the Libyan Arab
Repub., Ad Hoc Award on Merits of 10 October 1973, V Y.B. Comm. Arb. 143 (1980).
81
603) Interim Award in ICC Case No. 4145, XII Y.B. Comm. Arb. 97, 100 (1987).
604) Final Award in ICC Case. No. 10329, XXIX Y.B. Comm. Arb. 108, 115 (2004). See also Award in
ICC Case No. 11761, quoted in M. Buehler & T. Webster, Handbook of ICC Arbitration:
Commentary, Precedents, Materials 6-93 (3d ed. 2008) (rejecting argument that
termination of underlying contract terminated arbitration clause: it contradicts the well-
established doctrine of separability); Interim Award in ICC Case No. 9517, discussed in
Grigera Nan, Choice-of-Law Problems in International Commercial Arbitration, 289 Recueil
des Cours 9, 54 (2001) (termination of underlying contract did not terminate arbitration
clause: to return a negative answer would lead to the absurd result that the most serious
disputes arising in connection with the substantive contract could not be dealt with by
the chosen method of dispute resolution); Interim Award in ICC Case No. 7929, XXV Y.B.
Comm. Arb. 312, 316 (2000) (An arbitration clause constitutes a separate and autonomous
agreement between the parties, which survives any termination of the main agreement in
which it is contained, unless the arbitration agreement as such is expressly terminated.).
Y.B. Comm. Arb. 97, 103-04 (1986).
606) See, e.g.,Final Award in ICC Case No. 7626, XXII Y.B. Comm. Arb. 131, 138-39 (1997) (The issue
before us, then, resolves into one of deciding whether or not the parties agreed to this
arbitration clause. This issue can only be resolved in the context of our more general
consideration as to whether one or both of the Agreements are binding on P and A, the
parties to this arbitration.); Preliminary Award in ICC Case No. 6401, 7(1) Mealeys Intl Arb.
Rep. B-1, B-13 to B-14 (1992) (There may be instances where a defect going to the root of
an agreement between the parties affects both the main contract and the arbitration
clause.); Shackleton, Arbitration Without A Contract, 17(9) Mealeys Intl Arb. Rep. 25
(2002); Svernlov & Carroll, What Isnt, Aint: The Current Status of the Doctrine of
Separability, 8(4) J. Intl Arb. 37, 42 (1991) (The doctrine of separability as to voidable
agreements therefore seems well settled in international commercial arbitration
practice. Few cases have, however, considered the separability of an arbitration
agreement in a void contract. Comments by the sole arbitrator in Elf Aquitaine indicate
that separability would not be recognized in such a case. The number of cases discussing
initial invalidity is, however, clearly insufficient to make any generalizations, leading to
the conclusion that the question of the separability of arbitration clauses in agreements
alleged never to have been entered into is presently unresolved in international
commercial arbitration practice.).
607) See, e.g.,Final Award in ICC Case No. 10329, XXIX Y.B. Comm. Arb. 108, 115 (2004); Award in
ICC Case No. 6367, discussed in Grigera Nan, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 54 (2001) (arbitration agreement exists
and is valid even if underlying contract did not come into effect); Award in ICC Case No.
5943, 123 J.D.I. (Clunet) 1014 (1996); Interim Award in ICC Case No. 4145, XII Y.B. Comm. Arb.
97, 100 (1987); All-Union Foreign Trade Assn Sojuznefteexport v. JOC Oil Ltd, Award in USSR
Chamber of Commerce & Industry Case of 9 July 1984, XVIII Y.B. Comm. Arb. 92, 94-95 (1993);
Elf Aquitaine Iran v. Natl Iranian Oil Co., Preliminary Ad Hoc Award of 14 January 1982, XI
Y.B. Comm. Arb. 97, 102 (1986) (autonomy of an arbitration clause is a principle of
international law that has been consistently applied in decisions rendered in
international arbitrations); Texaco Overseas Petroleum Co. v. Libyan Arab Repub.,
Preliminary Ad Hoc Award on Jurisdiction of 27 November 1975, IV Y.B. Comm. Arb. 177, 179
(1979) (tribunal rejected argument by Libyan government that nationalization had
rendered concession agreements void and arbitration clauses within those concession
agreements were therefore also invalid).
608) The topic of competence-competence is discussed below. SeeChapter 7et seq.
609) See3.03.
610) See3.03[A][1]; 3.03[A][2][a]-[g].
611) See3.03[A][2][b][ii](3); 3.03[A][2][c]-[e].
612) Svernlov & Carroll, What Isnt, Aint: The Current Status of the Doctrine of Separability, 8(4)
J. Intl Arb. 37, 49 (1991). See also3.02[E]; Davis, A Model for Arbitration Law: Autonomy,
Cooperation and Curtailment of State Power, 26 Ford. Urb. L.J. 167, 195-96 (1999) (donning
their magicians robes, a majority of Justices [in Prima Paint] pretended that the fraud
arguably invalidating a contract has no effect on the validity of an arbitration clause
within the contract); Mayer, The Limits of Severability of the Arbitration Clause, in A. van
den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention 261 (ICCA Congress Series No. 9 1999); Ware,
Employment Arbitration and Voluntary Consent, 25 Hofstra L. Rev. 83, 131 (1996)
(separability doctrine is legal fiction that deprives arbitration of its consensual basis).
613) S. Schwebel, International Arbitration: Three Salient Problems 1 (1987) (describing critics).
614) See3.03[A]et seq.
615) See also3.03[A][2][b][ii].
616) Sandvik AB v. Advent Intl Corp., 220 F.3d 99 (3d Cir. 2000).
82
617) Examples where this has occurred are not uncommon and are discussed above.
See3.03[A][2][b][ii](3); 3.03[A][2][c]-[d]; Repub. of Nicaragua v. Standard Fruit Co., 937
F.2d 469, 477 (9th Cir. 1991); Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 591-92 (7th
Cir. 2001); Colfax Envelope Corp. v. Local No. 458-3M, Chicago Graphic Commcns Intl
Union, 20 F.3d 750, 754-55 (7th Cir. 1994); Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir.
1990); A. Samuel, Jurisdictional Problems in International Commercial Arbitration 174 (1989)
([I]t can happen that, during contractual negotiations, the arbitral clause is
unequivocally accepted by both parties and then a dispute arises as to whether
agreement was ever reached over the substantive contract. In such a situation, it is
submitted that the dispute concerned should be referred to arbitration for both
theoretical and practical reasons.). Equally, there will be many instances where the
parties did not conclude an arbitration agreement, separately and without regard to the
underlying contract. See3.03[A][2][b][ii](3).
618) See3.03[A][2][b][ii](2) & 7.03[E][5][b]-[c] (United States); 3.02[B][3][f] & 3.03[A][2][c]
(England); 3.02[B][3][a] & 3.03[A][2][f] (Germany); Buckeye Check Cashing Inc. v.
Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); Fiona Trust & Holding Corp. v. Privalov [2007] 1 All
ER (Comm) 891 (English Ct. App.), affd, [2007] UKHL 40 (House of Lords); Judgment of 23
May 1991, III ZR 144/90 (German Bundesgerichtshof).
619) See3.03[A][2][b][ii](2); 3.03[A][2][c]; 3.03[A][2][f].
620) See3.03[A][2][b][ii](2); 3.03[A][2][c]; 3.03[A][2][f]. There are certain defenses that cannot
readily be formulated, based upon the same facts, for both the underlying contract and
the arbitration agreement. These include unconscionability and indefiniteness, where, by
definition, different contractual provisions are at issue in challenges to the underlying
contract and arbitration agreement.
621) See3.03[A][2][b][ii](2); 3.03[A][2][c]; 3.03[A][2][f].
622) See3.03[A][2][b][ii](3); 3.03[A][2][c] & [g]; 3.03[C][2][f]-[g]; 5.04[D][7][d].
623) See3.03[A][2][b][ii](3); 3.03[A][2][c]; 3.03[A][2][f]; 5.04[D][8].
624) Fiona Trust & Holding Corp. [2007] UKHL 40, 17. See also Fiona Trust & Holding Corp. v.
Privalov [2007] 1 All ER (Comm) 891, 29 (English Ct. App.) (non est factum or the sort of
mistake which goes to the question whether there was any agreement ever reached),
affd, [2007] UKHL 40 (House of Lords).
625) See3.03[A][2][b][ii](3); 3.03[A][2][c] & [g].
626) See also3.03[A][2][b][ii](3); 3.03[A][2][c] & [g].
627) See3.03[A][2][b][ii](3). In principle, parties would not ordinarily choose to conclude an
arbitration agreement without, or in advance of, concluding an associated commercial
contract.
628) See3.02[B][3][f].
629) See3.03[A][5]; S. Schwebel, International Arbitration: Three Salient Problems 1 (1987).
630) See3.03[A][5]; S. Schwebel, International Arbitration: Three Salient Problems 1 (1987)
(describing critics).
631) See3.03[A][2][a]; 3.03[A][2][b][ii](3); 3.03[A][2][g]; 3.03[A][5]; 3.03[D]; 5.04[A]; 5.04[D]
[7][a]-[c]; 5.06[C][7].
632) Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40, 17 (House of Lords) (where party
claims forgery of signature on underlying contract the ground of attack is not that the
main agreement was invalid. It is that the signature of the arbitration agreement, as a
distinct agreement [7], was forged).
633) These various flaws are discussed in detail below. SeeChapter 5et seq.
634) See3.01; 3.03[A][2][a]-[b]; 3.03[B] & [F]. Issues of competence-competence are
discussed in greater detail below. SeeChapter 7et seq.
635) That is mandatorily required by Article II of the New York Convention and Article 8 of the
UNCITRAL Model Law (and equivalent provisions of other national arbitration statutes).
See3.03[A][2][b][iv]; 7.02[F]; 7.03[E][5][c].
636) SeeChapter 7et seq.
637) See7.03[E][5].
638) See3.03[A][2][b][ii](2) & 7.03[E] (United States); 3.02[B][3][f] & 7.03[F] (England);
Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); Fiona Trust &
Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.), affd, [2007] UKHL 40
(House of Lords).
639) See3.03[A][2][b][ii](2).
640) See3.03[A][2][b][ii](1); 3.03[A][2][b][iv]; 3.03[A][2][c] & [g].
641) See7.03[I][3].
642) See7.03.
643) See3.03[F]; 7.02[F]. This has consequences, most importantly, for the possibility of
judicial review of the arbitral award on questions regarding the validity or existence of
the underlying contract or arbitration agreement. See7.03[E][5]; 7.03[I].
644) See4.02[A]-[B].
645) See3.02[E]; 3.03[A][5].
646) There are limited instances in which the arbitration agreement is necessarily subject to a
different law than the underlying commercial contract. These involve the application of
the substantive legal rules of the New York Convention (or other international arbitration
conventions) to arbitration agreements. See2.01[A][1][a]; 4.04[A][1][b]. The terms of
these instruments are applicable only to agreements to arbitrate, and not to other types
of agreements.
647) See4.04[A][2][d]; 4.04[B][6][a].
83
648) See4.02; 4.04[B][1].
649) See4.04[A]-[B]; 4.04[B][6][d]; 5.06[A][2]; 6.05.
650) The choice-of-law issues that arise from international arbitration agreements are
discussed in detail below. SeeChapter 4. They are discussed separately in connection
with various substantive issues relating to international arbitration agreements (e.g.,
capacity, formation, validity). See4.04; 4.05; 4.06; 4.07.
651) See3.01; 4.02.
652) See1.02[A]; 1.05; 3.02[B][1]-[2]; 3.02[B][3][f].
653) SeeChapter 5et seq. As discussed above, one premise of historic rules denying effect to
arbitration agreements was the notion that such agreements were of a different nature
from, and subject to different legal rules than, other types of contracts. See1.01[A][4];
1.01[B][4]-[5]; 1.04[B][2].
654) See1.01[A][4] (Roman law); 1.01[B][5] (19th century U.S. law); 1.01[B][4] (19th century
French law).
655) See2.01[A]; 5.01[B].
656) See5.02[A][2] (especially 5.02[A][2][h]-[i]); New York Convention, Arts. II(1), (2); European
Convention, Art. I(2)(a).
657) See2.01[A]; 5.01[B][2]. New York Convention, Arts. II(1), (3); European Convention, Arts.
V(1), VI(2).
658) That is true, for example, under the UNCITRAL Model Law (see5.02[A][5][a]-[b]); in the
United States, where the FAA prescribes special rules with regard to the validity of
arbitration agreements (see5.01[C][2]; 5.02[A][5][c]); in Switzerland, where the Swiss Law
on Private International Law prescribes special rules regarding the form and validity of
international arbitration agreements (see5.01[C][3]; 5.02[A][5][d]); in England (see
5.01[B][5]; 5.02[A][5][e]); and in France (see 5.01[C][4]).
Commerce & Industry of 9 July 1984, XVIII Y.B. Comm. Arb. 92, 97-98 (1993); 7.02[D].
661) See4.02; Preston v. Ferrer, 552 U.S. 346, 363 (U.S. S.Ct. 2008); Sphere Drake Ins. Ltd v. All
Am. Ins. Co., 256 F.3d 587, 591-92 (7th Cir. 2001); Repub. of Nicaragua v. Standard Fruit Co.,
937 F.2d 469, 477 (9th Cir. 1991); Harbour Assur. Co. (U.K.) Ltd v. Kansa Gen. Intl Ins. Co.
[1992] 1 Lloyds Rep. 81 (QB) (English High Ct.), affd, [1993] 3 All ER 897 (English Ct. App.);
Judgment of 24 March 1976, Hermansson v. AB Asfalbelaeggnigar, 1976 NJA 125 (Swedish
S.Ct.).
662) See4.04[A][4][c].
663) See3.03[B]-[C].
664) See5.02et seq.
665) See5.02et seq.
666) See5.04[D][3]-[5].
667) See5.04[D][1]-[2].
668) See5.06[C][5].
669) See5.04[D][7].
670) See5.06[C][7].
671) See 5.06[C][6].
672) See5.06[C][7].
673) See5.06[C][8].
674) See3.03[A][2][b][ii](2).
675) The circumstances giving rise to such invalidity are discussed in detail below. See5.06.
676) There is substantial authority, under various national laws, that a partys repudiation of
its arbitration agreement brings that agreement to an end (at least if the counter-party
accepts the repudiation). See5.06[C][7].
677) There are limited circumstances in which the specific terms of the parties agreement to
arbitrate can become obsolete or impossible to perform. See5.06[C][8]. In many cases,
this will not result in the invalidity of the parties basic agreement to arbitrate, which can
be given effect through alternative terms. Nonetheless, there are circumstances in which
the parties agreement to arbitrate will become ineffective or incapable of being
performed. See5.06[C][8].
678) See3.02[B][3][c] & [i].
679) Schwebel, Anti-Suit Injunctions in International Arbitration: An Overview, in E. Gaillard
(ed.), Anti-Suit Injunctions in International Arbitration 13 (2005) (The contractual right of
an alien to arbitration of disputes arising under a contract to which it is party is a
valuable right, which often is of importance to the very conclusion of the contract.).
Under many national laws, the invalidity or illegality of a fundamental term of an
agreement can result in the invalidity of the overall agreement. See Restatement (Second)
Contracts 184(1) (1981) (If less than all of an agreement is unenforceable under the rule
stated in 178, a court may nevertheless enforce the rest of the agreement in favor of a
party who did not engage in serious misconduct if the performance as to which the
agreement is unenforceable is not an essential part of the agreed exchange.); German
BGB, 139 (If a part of an agreement is invalid, then the overall agreement is invalid, if it
cannot be assumed that it would have been concluded without the invalid part.).
680) See5.04[D][7][f].
681) See7.02[F].
84
2009). See also D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 453
(2d ed. 2013) (The doctrine of separability resolves the conundrum perceived by some of
how a tribunal possesses jurisdiction when the arbitration clause that allegedly confers
jurisdiction is part of a contract that is allegedly null.); Trukhtanov, The Proper Law of
Arbitration Agreement A Farewell to Implied Choice?, 2012 Intl Arb. L. Rev. 140, 142 ([A]
habit has grown of relying on separability for purposes far removed from preservation of
arbitrators jurisdiction in circumstances where the principal contract is ineffective,
invalid or non-existent. Separability is becoming almost a licence to ignore the rest of
the contract and view the arbitration clause as a free-standing agreement.).
683) See7.02[F].
684) See7.02[F].
685) SeeChapter 7et seq.
686) European Convention, Arts. V(3), VI(3) (national courts ordinarily shall stay their ruling on
the arbitrators jurisdiction until the arbitral award is made); 7.02[A][2].
687) UNCITRAL Model Law, Art. 16(1) (The arbitral tribunal may rule on its own jurisdiction,
agreement.); 3.02[B][3][e]; 7.02[B][1]; 7.03[A].
688) See3.02[B][3]; 7.03[I]et seq. discussing power of arbitral tribunals to consider
jurisdictional challenges to the existence and validity of the arbitration agreement itself.
689) As discussed below, these considerations include the view adopted in most developed
legal systems, that it is procedurally efficient to permit at least some challenges to
arbitral jurisdiction to be decided initially by the arbitrators. These factors also include
the general international acceptance by national legislatures and courts, as well as
business enterprises, of the principle that an arbitral tribunal possesses a separate
category of jurisdiction to address and decide issues concerning its own jurisdiction,
separable from its jurisdiction to resolve substantive disputes. This conception of the
separability of a tribunals jurisdiction is conceptually-related to the separability
doctrine, but involves additional and distinct considerations. See7.02[A]-[B] & [F].
690) See7.03[A][2][b]; 7.03[B][1].
691) See7.03[C]-[H].
692) See7.03.
693) Further, there will also be cases where the separability presumption and competence-
competence principle intersect: in particular, as discussed below, an arbitral tribunal
may be competent to initially consider allegations that impeach both the underlying
contract and the arbitration agreement. See3.03[A][2][b][i]-[ii]; 3.03[A][2][c], [e]-[f]. In
these cases, significant issues are raised regarding the preclusive effects of its award on
these matters. See7.03[A][5][b]; 7.03[E][7][a]; 7.03[I][5]. That is, if a tribunal considers a
claim that no underlying contract or arbitration agreement was ever formed, issues as to
the res judicata effect of the negative jurisdictional award will arise. In principle, the
tribunals negative jurisdictional award should be binding and preclusive on all the
parties.
85
Chapter 4: Choice of Law Governing International
Author Arbitration Agreements
A recurrent and vitally-important issue in the arbitral process is the choice of the law
governing an international arbitration agreement. This subject arises in most disputes over the
Publication existence, validity and interpretation of international arbitration agreements, and continues
International Commercial to produce unfortunate uncertainty. This Chapter first discusses the historic treatment of these
Arbitration (Second Edition) choice-of-law issues, and then addresses contemporary approaches and prospects for further
P 472
development. It separately addresses choice-of- law issues arising in connection with
issues of substantive validity, nonarbitrability, formal validity, capacity, authority and
Bibliographic reference interpretation of the arbitration agreement.
'Chapter 4: Choice of Law 4.01 INTRODUCTION
Governing International
Arbitration Agreements', in The choice of the law applicable to an international commercial arbitration agreement is a
Gary B. Born , International complex subject. The topic has given rise to extensive commentary, and almost equally
Commercial Arbitration extensive confusion. This confusion does not comport with the ideals of international
(Second Edition), 2nd edition commercial arbitration, which seeks to simplify, expedite and rationalize transnational
( Kluwer Law International; dispute resolution. (2) There have been encouraging developments over the past decade in a
Kluwer Law International 2014) number of quarters suggesting solutions to these uncertainties, but no generally-accepted
pp. 472 - 635 resolution has yet been finally achieved.
Analysis of the choice of the law governing an international arbitration agreement begins with
the separability presumption. As discussed above, an international arbitration agreement is
presumptively separable from the underlying contract with which it is associated. (3) As a
consequence, it is theoretically possible (and common in practice) for the parties arbitration
agreement to be governed by a different law than the one governing their underlying contract.
(4)
Identifying the law that governs a separable international arbitration agreement since it is
not necessarily the law governing the parties underlying contract has often proved to be a
complex and confusing process. Different national courts, arbitral tribunals and commentators
have developed and applied a multiplicity of choice-of-law rules to the substantive validity of
international arbitration agreements, ranging from the law chosen by the parties to govern
their underlying contract, to the law of the arbitral seat, to the law of the judicial enforcement
forum, to the law of the state with the closest connection or most significant relationship.
(5) These various choice-of-law rules, and the absence of any meaningful consensus with
respect to any of these rules, has often produced unfortunate uncertainty about the choice of
the law governing international arbitration agreements.
This uncertainty can be exacerbated by the possibility that different issues relating to
international arbitration agreements may be governed by different applicable laws. Thus,
different laws may apply to issues of formal validity, substantive validity, capacity,
interpretation, assignment and waiver of an international arbitration agreement, as well as to
issues of nonarbitrability. (6) Questions of characterization also raise difficult issues, as to
which few clear rules exist, further complicating choice-of-law analysis.
P 473
Moreover, questions regarding the choice of the law governing the arbitration agreement
routinely arise in multiple forums. These forums include the arbitral proceedings, judicial
enforcement forums requested to enforce the arbitration agreement (under Article II of the
New York Convention), judicial enforcement forum requested to annul the arbitral award and
judicial enforcement forums requested to recognize the arbitral award (under Articles III and V
of the Convention). Different forums may apply different choice-of-law rules, and reach
different results regarding the law applicable to the international arbitration agreement.
None of this complexity, or the uncertainties and costs it produces, comports with the ideals
and aspirations of the international arbitral process. In an effort to reduce these complexities,
some authorities and national courts have held that international arbitration agreements are
governed by uniform principles of international law, rather than by national law, or by a
specialized validation principle. These principles of international law provide a uniform set of
standards governing international arbitration agreements, designed both to reduce the
complexities and uncertainties of current conflict of laws analysis and to prescribe effective
substantive rules for the enforcement of international arbitration agreements.
Thus, as discussed below, it is well-settled that issues of formal validity of arbitration
agreements are subject to a uniform international rule, prescribed by Article II of the New York
Convention. This rule mandates a maximum international form requirement, which
Contracting States are required to apply in enforcement proceedings under both Articles II and
V of the Convention. (7)
Broadly comparable, if distinguishable, approaches have been taken with respect to the
substantive validity of international arbitration agreements. As discussed below, French
judicial decisions and commentary have held that the substantive validity of international
86
P 474 arbitration agreements is directly governed by pro-arbitration principles of substantive
international law. (8) U.S. courts have taken a similar, but less radical, approach, applying
international minimum standards to the substantive validity of arbitration agreements
governed by the New York Convention. (9)
In a conceptually-related approach, Swiss law has adopted a specialized validation principle
that gives effect to agreements to arbitrate in Switzerland if they satisfy any one of a number
of potentially-applicable national laws; (10) courts and legislatures in other jurisdictions have
either explicitly or implicitly adopted comparable validation principles, applying that
national law which will give effect to the parties international arbitration agreement. (11)
Moreover, as discussed in greater detail below, the better view of the New York Convention is
that Articles II and V(1)(a) mandate application of a validation principle to determination of
the substantive validity of international arbitration agreements. (12)
These various developments have not yet been universally accepted, but provide promising
avenues for reducing the confusion and uncertainty surrounding the choice of law applicable
to international arbitration agreements. In particular, they offer avenues for achieving the New
York Conventions pro-enforcement goals, as well as the objective intentions of parties to most
international commercial arbitration agreements.
4.02 CONSEQUENCES OF SEPARABILITY PRESUMPTION FOR CHOICE OF LAW

APPLICABLE TO INTERNATIONAL ARBITRATION AGREEMENTS
The starting point for analysis of the choice of the law governing international arbitration
agreements is the separability presumption. As discussed above, this presumption provides
that an international arbitration agreement is presumptively separable from the underlying
contract with which it is associated. (13)
One of the most direct consequences of the separability presumption is the possibility that the
parties arbitration agreement may be governed by a different law than the one governing
their underlying contract. (14) That is, although the parties underlying contract may be
governed expressly, or impliedly, by the laws of State A, the associated arbitration clause is
not necessarily governed by State As laws, and may instead be governed by the laws of State B
P 475
or by principles of international law. This result follows, almost inevitably, from the
separability presumption,which postulates two separable agreements, which can in principle
be governed by two different legal regimes. (15) As one arbitral award observed, an arbitration
clause in an international contract may perfectly well be governed by a law different from that
applicable to the underlying contract. (16)
The separability doctrine does not mean that the law applicable to the arbitration clause is
necessarily different from that applicable to the underlying contract. (17) It instead means that
differing laws may apply to the main contract and the arbitration agreement. Despite this
possibility, in many cases, the same law governs both the arbitration agreement and the
underlying contract. (18)
The possibility that a different substantive law will apply to the parties arbitration agreement
than to their underlying contract is not merely of academic interest. Rather, as discussed
below, the result in a large proportion of the cases where the law applied to the parties
arbitration clause was different from the law applicable to the underlying contract has been
that the arbitration clause was more readily upheld against challenges to its validity. (19) That
is, by applying a law other than that governing the parties underlying contract, national and
international tribunals have sought to safeguard international arbitration agreements against
challenges to their validity based on local (often idiosyncratic or discriminatory) law. (20) Like
the separability presumption itself, (21) this has contributed significantly to the enforceability
of international arbitration agreements and the efficacy of the arbitral process.
[A] Applicability of Different Laws to International Arbitration Agreement and

Underlying Contract
P 476 The effects of the separability presumption on the law applicable to international
arbitration agreements have been acknowledged in diverse sources. These authorities provide
that, where the arbitration agreement is separable from the underlying contract, it may be
governed by a different law from the underlying contract.
Early international arbitration conventions did not address the question of what law governed
the arbitration agreement in any detail. The Geneva Protocol provided that the courts of a
Contracting State were required, as a matter of international law, to recognize valid arbitration
agreements; the Protocol did so by prescribing, in Article I, a uniform international standard of
presumptive validity applicable specifically to (certain international) agreements to arbitrate.
(22) The Protocol did not either refer expressly to the possibility of choosing the law governing
arbitration agreements, provide expressly that such law might differ from the one governing
the underlying contract, or prescribe a rule for such a choice-of-law analysis. Instead, the
Protocol proceeded on the assumption that a different law applied to international arbitration
agreements than to the underlying contract, and suggested that this law was a uniform
international standard (prescribed by the Protocol itself).
The Geneva Convention took a somewhat different approach to the issue. It indirectly
87
addressed the law governing the arbitration agreement, providing that one condition for
recognition of an arbitral award was that the award has been made in pursuance of a
submission to arbitration which is valid under the law applicable thereto. (23) This provision
rested on the premise that an international arbitration agreement would be governed by a
particular law, apparently national in character, which would prima facie be selected by means
of a choice-of-law analysis (the law applicable thereto). (24) The Convention did not, however,
prescribe what this choice-of-law analysis was.
The New York Convention addressed the choice of the law governing an international
arbitration agreement more explicitly than either the Geneva Protocol or Convention. (25) As
discussed above, the New York Convention rests on the premise that the arbitration agreement
is a separable agreement, subject to specialized international rules of both substantive and
formal validity, which are set forth in Articles II(1), II(2) and II(3) of the Convention. (26) Like
P 477
Article I of the Geneva Protocol, Article II of the Convention does not expressly prescribe a
choice-of-law rule. Instead, Articles II(1) and II(3) set forth substantive international rules of
presumptive substantive validity, directly applicable to (and only to) international arbitration
agreements; in addition, Articles II(1), II(2) and II(3) prescribed specialized international rules
of formal validity, also applicable only to international arbitration agreements. (27) The
necessary consequence of these substantive standards of international law is that the
arbitration agreement will be subject, at least in part, to a different substantive legal regime
from the parties underlying contract.
Additionally, however, Article V(1)(a) of the Convention provides that an arbitral award may be
refused recognition where the said [arbitration] agreement is not valid under the law to which
the parties havesubjected it or, failing any indication thereon, under the law of the country
where the award was made. (28) As discussed elsewhere, Article V(1)(a) contemplates that
parties may select a particular law to govern only their arbitration agreement (the law to
which the parties have subjected it) and establishes a specialized choice-of-law rule
providing that, where the parties have not explicitly or implicitly selected a law to govern their
arbitration clause, that provision will be governed by the law of the country where the award
was made. (29)
The Convention does not expressly address the relationship between Article IIs substantive
international standards for the validity of arbitration agreements and Article V(1)(a)s choice-
of-law rules, envisioning application of national law rules to such agreements. It is clear,
however, that the purpose of these specialized choice-of-law provisions of Articles II and V was
to enhance the validity and enforceability of international commercial arbitration
agreements. As discussed in greater detail below, these provisions guarantee the presumptive
validity of international arbitration and seek to minimize the impact of parochial national
choice-of-law and substantive rules governing the formation and validity of such agreements.
(30) The essential point for present purposes is that these provisions of the Convention rest on
the premise that the international arbitration agreement is a separable contract, subject to a
specialized and sui generis international legal regime, not applicable to other contracts.
The European Convention is even more explicit in its treatment of the law applicable to the
arbitration agreement. Article VI(2) of the Convention provides a specialized set of choice-of-
law rules, applicable only to the validity of an arbitration agreement. (31) At the same time,
P 478
Article VII of the European Convention provides a separate regime for determination of
the law governing the substance of the dispute between the parties, including particularly
the law applicable to the parties underlying contract. (32) The explicit contemplation of these
provisions is that the parties arbitration clause is to be treated as a separable agreement,
which is subject to different conflict of laws rules, and therefore potentially a different
substantive legal regime, than the parties underlying contract. (33)
National arbitration legislation and judicial decisions in a number of leading jurisdictions
recognize, either expressly or impliedly, that the parties arbitration agreement is subject to
different choice-of-law rules, and may therefore be subject to different substantive laws, than
their underlying contract. A principal objective of applying different substantive laws to the
parties arbitration agreement than to their underlying contract has been to enhance the
enforceability of the former.
Like Article II of the New York Convention, Article 8 of the UNCITRAL Model Law does not
expressly address choice-of-law issues. Also like Article II, however, Article 8 sets forth a
substantive rule that international arbitration agreements are presumptively valid and
enforceable. (34) Additionally, Article 7 of the Model Law parallels Article II of the Convention,
prescribing a specialized form requirement for international arbitration agreements. (35)
Finally, like Article V of the Convention, Articles 34(2)(a)(i) and 36(1)(a)(i) of the Model Law
permit annulment or non-recognition of an arbitral award if a party to the arbitration
agreementwas under some incapacity; or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication thereon, under the law of [the
country where the award was made]. (36)
As with Articles II and V(1)(a) of the Convention, these provisions acknowledge the presumptive
separability of international arbitration agreements for choice-of-law purposes, and adopt
specialized substantive and choice-of-law rules applicable to the formal and substantive
88
P 479
validity of such agreements. (37) Consistent with these provisions, judicial authority in Model
Law jurisdictions has uniformly recognized that international arbitration agreements may
be, and often are, governed by a different law than that governing the underlying contract. (38)
[b] Swiss Law on Private International Law
The same basic approach is also followed in jurisdictions where there are separate statutory
choice-of-law and substantive rules that are applicable specifically and only to international
arbitration agreements, irrespective of the law governing the underlying contract. In particular,
Article 178(2) of the Swiss Law on Private International Law provides separate choice-of-law
and substantive rules applicable to international arbitration agreements providing for
arbitration in Switzerland. (39)
Most fundamentally, Article 178(2) prescribes a specialized choice-of-law regime applicable to
international arbitration agreements, but not to other types of agreements. Under Article
178(2), it is clear that the parties may select a law to govern their arbitration agreement which
differs from that applicable to their underlying contract, or that applicable choice-of-law rules
may result in the application of a different law to the arbitration agreement than to the
underlying contract. (40) As explained by the Swiss Federal Tribunal, [t]he principle of the
autonomy of the arbitral clausemeans, inter alia, that, in international commerce, the
arbitration agreement and the main contract can be subject to different laws. (41)
In addition, it is clear that under Article 178(2), different substantive legal rules will apply to
the arbitration clause than to the underlying contract. In particular, as discussed in greater
detail below, Article 178 applies an in favorem validitatis rule that an arbitration agreement
providing for arbitration in Switzerland will be valid if it satisfies any of three possibly
applicable laws (that chosen by the parties, that applicable to the underlying contract, or
Swiss law). (42) As one distinguished Swiss commentator observed:
P 480
With regard to material validity[Article 178(2)] contains a conflict rule, of an
alternative character, which indicates the policy of favor validitatis pursued by the Statute: the
arbitration convention is valid whenever it complies with the conditions laid down either by
the law chosen by the parties, or by the law governing the substance of the dispute (e.g., the
main contract) or by Swiss law. (43)
This approach rests upon the presumptive separability of the arbitration clause, which
provides the premise for the application of specially-selected choice-of-law and substantive
laws for the purpose of ensuring the more effective enforceability of international arbitration
agreements. Similarly, like the New York Convention and UNCITRAL Model Law, Article 178(1)
prescribes a special form requirement, applicable only to international arbitration
agreements. (44)
[c] French Code of Civil Procedure
French law also emphatically recognizes that a separable international arbitration agreement
can be and indeed must be governed by a different law from that governing the underlying
contract, and prescribes a specialized choice-of-law rule with regard to the substantive
validity of such agreements. As discussed elsewhere, French courts hold that international
arbitration agreements are autonomous from any national legal system, and are instead
directly subject to general principles of international law; this approach is avowedly pro-
arbitration, designed to give maximum legal effect to agreements to arbitrate. (45) Thus, the
Cour de cassations landmark Dalico decision held:
according to a substantive rule of international arbitration law, the arbitration clause is
legally independent from the main contract in which it is included or which refers to it and,
provided that no mandatory provision of French law or international public policy (ordre
public) is affected, that its existence and its validity depends only on the common intention of
the parties, without it being necessary to make reference to a national law. (46)
P 481 Other French authorities are to the same effect in affirming the existence of a specialized
conflict of laws and substantive legal regime applicable to international arbitration
agreements. (47)
[d] U.S. Federal Arbitration Act
The U.S. Federal Arbitration Act (FAA) does not expressly address the question of the law
applicable to international arbitration agreements. Nonetheless, as discussed elsewhere, 2 of
the domestic FAA prescribes a substantive rule of presumptive validity for arbitration
agreements, (48) which U.S. courts have interpreted as preempting a wide range of U.S. state
law restrictions on the parties autonomy to enter into valid agreements to arbitrate. (49)
Section 2, and the federal common law rules based upon it, set forth a specialized choice of
law and substantive legal regime, broadly comparable to that of the French Code of Civil
Procedure and Swiss Law on Private International Law, applicable to arbitration agreements.
The same analysis applies to 206 and 303 of the FAA, which implement the New York and
Inter-American Conventions. (50)
Consistent with this reasoning, U.S. courts have routinely held that international arbitration
clauses are governed by a different law than the underlying contract, typically applying either
U.S. federal common law rules derived from the New York Convention and the FAA (51) or the
law of the arbitral seat. (52)
P 482
89
P 482
Moreover, as discussed below, most U.S. courts have adopted an analysis of the
Convention which subjects international arbitration agreements to a different set of
substantive legal rules than other contractual provisions. (53) Among other things, the weight of
U.S. judicial authority holds that substantive rules of international law, derived from the
Convention, limit the application of national law to invalidate, or deny recognition to,
international arbitration agreements. (54) As with Swiss and French law, the avowed purpose of
these rules has been to enhance the enforceability of international arbitration agreements.
Other U.S. authorities have also held that a different law may apply to an arbitration
agreement than to the underlying contract. Section 218 of the American Law Institutes
Restatement (Second) Conflict of Laws explains:
the state whose local law governs the arbitration agreement will usually be the same as the
state whose local law would be applied to determine other issues relating to the [underlying]
contract. This will not, however, always be so. Situations will arise where the state of most
significant relationship with respect to the issue of arbitration is not the same as the state of most
significant relationship with respect to other issues relating to the [underlying] contract. (55)
As contemplated by 218, U.S. lower courts have frequently held that different state law rules
may apply to the parties arbitration agreement than to their underlying contract. (56)
[e] Other Common Law Jurisdictions
Arbitration legislation in most common law jurisdictions does not expressly address the law
applicable to international arbitration agreements. (57) Even absent statutory guidance, there
is judicial precedent to the same effect as Model Law, French and U.S. authority, holding that
P 483
the arbitration agreement may be governed by a different law than the underlying
contract. A leading English decision explains this principle as follows:
it is by now firmly established that more than one national system of law may bear upon an
international arbitration.[T]here is the proper law which regulates the substantive rights and
duties of the parties.Exceptionally, this may differ from the national law governing the
interpretation of the agreement to submit the dispute to arbitration. (58)
Similarly, citing with approval an earlier English decision, the Indian Supreme Court has
concluded:
[A]ll contracts which provide for arbitration and contain a foreign element may involve three
potentially relevant systems of law: (1) the law governing the substantive contract; (2) the law
governing the agreement to arbitrate and the performance of that agreement; (3) the law
governing the conduct of the arbitration. In the majority of the cases all three will be the same,
but (1) will often be different from (2) and (3) and occasionally, but rarely, (2) may also differ
from (3). That is exactly the case here. (59)
Other common law jurisdictions have reached similar conclusions, also holding that the
arbitration agreement may be governed by a law different from that of the underlying contract.
(60)
P 484
[f] Other Civil Law Jurisdictions
Judicial decisions from civil law jurisdictions also recognize that an arbitration clause may be
governed by a different substantive law than the underlying contract. A few national
arbitration statutes (including in Algeria, Spain and Sweden) adopt approaches to selecting
the law applicable to the arbitration agreement that are broadly similar to the specialized
choice-of-law regime applicable in Switzerland. (61) The common theme of these approaches
is that the substantive law governing the arbitration agreement is prescribed by specialized
choice-of-law rules, and that the substantive law applicable to the arbitration agreement may
well be different from that governing the parties underlying contract, including by virtue of the
parties choice. (62)
In a representative decision, the Supreme Court of Sweden held that an arbitration clause,
providing for arbitration in Stockholm, was subject to Swedish law with respect to issues of
validity, notwithstanding the parties express choice of Austrian law to govern their underlying
contract. (63) In so doing, the court avoided the application of principles of Austrian law which
would have invalidated the arbitration clause. The Court reasoned:
no particular provision concerning the applicable law for the arbitration agreement itself was
indicated. In such circumstances, the issue of the validity of the arbitration clause should be
determined in accordance with the law of the state in which the arbitration proceedings have
taken place, that is to say, Swedish law. (64)
To similar effect, the Venice Court of Appeals held that the arbitral clause is an autonomous
P 485 legal contract with respect to the contract in which it is included, which could be
governed by a different substantive law than the underlying contract. (65) Courts from other
civil law jurisdictions have reached similar conclusions. (66)
Some jurisdictions have enacted idiosyncratic legislation addressing the law governing an
international arbitration agreement. For example, Turkish legislation provides that the parties
choice of law governing the arbitration agreement will be given effect, but that, absent such a
choice, Turkish law will apply to the agreement. (67) Like other civil law jurisdictions, that
statutory rule acknowledges the separable character of the agreement to arbitrate, but, unlike
most other jurisdictions, also adopts a discriminatory conflict of laws rule, which is contrary to
90
Turkeys commitments under the New York Convention (as discussed below). (68)
International arbitral tribunals have also consistently recognized that an arbitration clause
may be governed by a different substantive law than the parties underlying contract, again
typically doing so to avoid invalidation of an agreement to arbitrate through application of
local (and idiosyncratic) rules of law. Numerous examples confirm this observation.
In the Final Award in ICC Case No. 6162, the tribunal applied Swiss law, as the law of the arbitral
seat, to the parties arbitration agreement; in doing so, it refused to apply the substantive law
selected by the parties choice-of-law clause to govern their underlying contract, which would
have invalidated the arbitration clause. (69) The tribunal in the Final Award in ICC Case No. 1507
reached a similar conclusion, stating that an arbitration clause in an international contract
may perfectly well be governed by a law different from that applicable to the underlying
contract. (70) Another ICC tribunal likewise observed that the sources of law applicable to
determine the scope and the effects of an arbitration clause providing for international
arbitration do not necessarily coincide with the law applicable to the merits of a dispute
submitted to such arbitration. (71)
P 486
Similarly, the tribunal in the Final Award in ICC Case No. 4381 examined thevalidity of the
arbitration agreement by reference to the shared intentions of the parties and international
commercial custom, without considering the law applicable to the underlying contract. (72)
This prompted one commentator to opine that a rule of arbitral jurisprudence was becoming
established namely, that the validity and scope of an arbitration agreement [are to be
assessed] independently of the law governing the contract and without reference to any
national law. (73) As with national courts decisions, the explicit purpose of the choice-of-law
analysis adopted by international arbitral tribunals has been to minimize the effect of
national laws that restrict the parties autonomy to enter into international arbitration
agreements and to facilitate the enforceability of such agreements.
[B] Multiplicity of Choice-of-Law Rules for Law Governing International Arbitration

Agreements
An unfortunate consequence of the separability presumption in the choice-of-law context has
been the development of a multiplicity of different approaches to choosing the law governing
the formation, validity and termination of international arbitration agreements. (74) National
courts, arbitral tribunals and commentators have adopted a wide variety of choice-of-law
approaches to issues of substantive validity, ranging from application of the law of the judicial
enforcement forum, (75) to the law of the arbitral seat, (76) to the law governing the underlying
contract, (77) to a closest connection or most significant relation standard, (78) to a
cumulative approach looking to the law of all possibly-relevant states. (79)
Other authorities have suggested even more esoteric choice-of-law rules, including the law of
P 487
the arbitrators residence or lex mercatoria. Commentators have variously identified
three, four, or as many as nine approaches to the choice of law governing international
arbitration agreements. (80)
This multiplicity of choice-of-law rules potentially applicable to the arbitration agreement
does not advance the purposes of the international arbitral process. (81) The existence of
multiple choice-of-law rules creates unfortunate uncertainties about the substantive law
applicable to arbitration agreements, as well as the risk of inconsistent results in different
forums.
In turn, this leads to uncertainty about the extent to which international arbitration
agreements can actually be relied upon to provide an effective means of resolving
international disputes. The multiplicity of choice-of-law rules also leads to delays and
expense, resulting from the need to engage in choice-of-law debates, before both arbitral
tribunals and national courts, when disputes arise concerning the formation or validity of
arbitration agreements. This is inconsistent with parties expectations of an efficient,
centralized dispute resolution mechanism in entering into international arbitration
agreements. (82)
Notwithstanding the uncertain state of their choice-of-law analyses, most national courts and
international arbitral tribunals have arrived at sensible results in resolving disputes over the
existence and validity of international arbitration agreements. In particular, as discussed
below, most national courts and arbitral tribunals have found ways to apply existing choice-of-
law doctrines so as to avoid the application of discriminatory or idiosyncratic national laws
P 488
and to instead uphold the validity of international arbitration agreements. (83)
Nonetheless, the analytical confusion about choice-of-law questions regarding the arbitration
agreement creates uncertainty, delay and the risk of inappropriate and unjust results, and
should be clarified.
4.03 ISSUES GOVERNED BY LAW APPLICABLE TO INTERNATIONAL

ARBITRATION AGREEMENTS
Preliminarily, a threshold inquiry in choice-of-law analysis is determining what issues are
governed by the law (or laws) applicable to an international arbitration agreement. These
issues potentially include: (a) formal validity of arbitration agreement; (b) capacity of parties
91
to conclude arbitration agreement; (c) authority of parties representatives to conclude
arbitration agreement; (d) formation and existence of arbitration agreement; (e) substantive
validity and legality of arbitration agreement; (f) nonarbitrability or objective arbitrability;
(g) identities of the parties to an arbitration agreement; (h) effects of arbitration agreement; (i)
means of enforcement of arbitration agreement; (j) interpretation of arbitration agreement; (k)
termination and expiration of arbitration agreement; (l) assignment of arbitration agreement;
and (m) waiver of right to arbitrate. (84)
This Chapter addresses the choice-of-law treatment of a number of these issues. It focuses in
particular on questions of formation, substantive validity and legality, form, termination,
capacity and authority. Choice of law with regard to questions of the effects and enforcement
P 489
of an arbitration agreement, (85) assignment, (86) interpretation (87) and waiver (88) raise
specific issues, which are addressed separately in subsequent Chapters dealing with each of
these topics.
National courts or arbitral tribunals will not necessarily apply the same law to all of the
foregoing issues, even when they arise in relation to the same arbitration agreement. For
example, one national law may apply to questions of capacity (e.g., the law of a partys
domicile), (89) while a different law applies to questions of form (e.g., the New York Convention)
(90) and substantive validity (e.g., the law selected by the parties or the law of the arbitral
seat). (91) Likewise, a different national law may apply to questions of waiver (e.g., the law of
the place where a party commences judicial proceedings, in violation of an arbitration
agreement) (92) and to questions of nonarbitrability (e.g., the law purporting to establish
objective nonarbitrability). (93)
It is also occasionally suggested that additional issues, beyond those identified above, are
governed by the law applicable to the parties arbitration agreement, including the procedural
law governing the arbitral proceedings (lex arbitri) or the law governing the arbitral award
(including form and publication). (94) In general, these suggestions fail to distinguish between
the various aspects of the international arbitral process. (95) Rather, as discussed below, it is
relatively non-controversial that different choice-of-law analyses, and potentially different
substantive laws, may apply to these issues than apply to the arbitration agreement. (96)
4.04 CHOICE-OF-LAW RULES APPLICABLE TO FORMATION AND

SUBSTANTIVE VALIDITY OF INTERNATIONAL ARBITRATION AGREEMENTS
One of the most important issues affected by choice-of-law analysis in the context of
international arbitration agreements is the law applicable to the formation and substantive
validity of such agreements. As a practical matter, this issue arises in a majority of the judicial
decisions and arbitral awards addressing choice-of-law questions in relation to international
arbitration agreements, and has important practical consequences for the efficacy of any
arbitration agreement. The following discussion considers: (a) the choice of law applicable to
questions of formation and substantive validity where no agreement selecting the law
governing the arbitration agreement exists; and (b) the choice of law applicable to those issues
where a choice-of-law agreement choosing the law governing the arbitration agreement has
been concluded.
P 490
[A] Choice of Law Applicable to Formation and Substantive Validity of
International Arbitration Agreements in Absence of Parties Agreement
Parties generally do not expressly specify the law applicable to international commercial
arbitration agreements. In relatively rare cases, involving large, highly complex transactions,
parties occasionally execute separate arbitration agreements, as free-standing contracts
that provide for the arbitration of disputes relating to other contracts or to an overall project.
(97) This sort of arbitration agreement will sometimes have its own choice-of-law clause,
specifically selecting the law applicable to the arbitration agreement itself. (98) Similarly,
more detailed arbitration provisions contained in commercial contracts sometimes include
choice-of-law clauses that are drafted to apply specifically to the arbitration agreement itself.
For example, such provisions may specify: This Article X shall be governed by the laws of Y.
(99)
For the most part, however, it is very unusual for parties to agree to choice-of-law clauses in
their arbitration agreement itself or otherwise that expressly apply to their arbitration
agreement. (100) Instead, international commercial contracts frequently contain choice-of-law
clauses which apply to the underlying contract generally, without specific reference to the
arbitration clause associated with that contract. (101) It is ordinarily only in these general
choice-of-law clauses that there will arguably be a choice of the law applicable to the
associated arbitration agreement. (102) Determining whether such choice-of-law provisions
apply to the separable arbitration agreement, and what law applies to the arbitration
agreement in the absence of any choice of law by the parties, is not straightforward and has
given rise to substantial uncertainty and controversy.
As detailed below, there is an unfortunate multiplicity of competing approaches to the choice
of the law governing international arbitration agreements in the absence of a choice-of-law
agreement by the parties. (103) This variety of divergent conflict of laws approaches produces
uncertainty, expense and confusion, which contrast markedly with the objectives of
international arbitration, which aims at providing an efficient, predictable mechanism for
P 491
resolving international disputes, notwithstanding the complexities of jurisdictional and
92
choice-of-law issues which exist in the international context. (104)
This confusion is not merely unfortunate, but also unnecessary. When the leading sources of
authority in the field are considered international arbitration conventions, national
legislation and arbitral awards the confusion that sometimes accompanies choice-of-law
questions can be seen to be largely unnecessary. These authorities point the way towards a
reasonably straightforward approach to choice-of-law issues, well-grounded in applicable
international instruments and well-suited to provide for the effective enforcement of
international arbitration agreements in accordance with the parties intentions and
expectations.
A number of international arbitration conventions, including the European Convention and the
New York Convention, contain substantive and choice-of-law rules that apply in the absence of
an agreement by the parties as to the law governing their arbitration agreement. These rules
include substantive rules, requiring the presumptive validity of international arbitration
agreements, and default choice-of-law rules, providing for selection of a national law in cases
where the parties have not expressly or impliedly chosen the law governing their arbitration
agreement; in general, these default rules have been interpreted to provide for application of
the substantive law of the place where the award will be made (i.e., the seat or place of
arbitration). (105) Importantly, this rule is not a complete answer to choice-of-law questions
arising from international arbitration agreements and must be supplemented by additional
principles, including international non-discrimination and validation principles, discussed
below. (106)
[a] Geneva Protocol and Geneva Convention
As noted above, neither the Geneva Protocol nor the Geneva Convention addressed the
question of the law applicable to the parties arbitration agreement. (107) Notwithstanding its
focus on international arbitration agreements, the Geneva Protocol was almost entirely silent
on the question of applicable law. (108) Instead, as noted above, Article I of the Protocol
provided a uniform rule of substantive international law, applicable to international
arbitration agreements regardless of the law chosen by the parties:
Each of the contracting states recognizes the validity of an agreement whether relating to
P 492
existing or future differences between parties subject respectively to the jurisdiction of
different contracting states by which the parties to a contract agree to submit to arbitration all
or any differences that may arise in connection with such contract relating to commercial
matters or to any other matter capable of settlement by arbitration, whether or not the
arbitration is to take place in a country to whose jurisdiction one of the parties is subject.
(109)
In contrast, the Geneva Convention assumed that the arbitration agreement might be subject
to a national law, in proceedings to recognize and enforce arbitral awards, and that this law
might be different from that governing the underlying contract. (110) As noted above, the
Convention required recognition of arbitral awards where the award has been made in
pursuance of a submission to arbitration which is valid under the law applicable thereto. (111)
The Convention did not, however, provide any choice-of-law rules that addressed the choice of
this national law, either where there was a choice-of-law agreement or otherwise.
The New York Convention contains more detailed provisions than either the Geneva Protocol or
Geneva Convention regarding the choice of law applicable to the substantive validity of
international arbitration agreements. The Convention combined elements from both the
Geneva Protocol and Geneva Convention, together with additional provisions that went beyond
either of its predecessors.
The New York Conventions treatment of the law governing international arbitration
agreements is complex. As discussed below, Article II(1) of the Convention, which deals with the
recognition and enforcement of arbitration agreements, does not expressly address the
question of the law applicable to the substantive validity of such agreements. (112) Thus,
Article II prescribes uniform rules of substantive international law, including a rule of
presumptive validity, applicable to all arbitration agreements falling within the Conventions
scope, (113) without expressly addressing choice-of-law issues.
The only express reference in the Convention to the law governing international arbitration
agreements is in Article V(1)(a), dealing with the recognition of arbitral awards. (114) Article V(1)
(a) provides a two-prong choice-of-law standard for selecting the law governing an
international arbitration agreement. Under this standard, an award may be denied recognition
P 493
if the arbitration agreement was not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the award was
made. (115)
Articles II and V(1)(a) have given rise to a wide range of divergent interpretations and
uncertainty. Nonetheless, although complex, the provisions of Articles II and V(1)(a) can be
reconciled, producing a consistent and effective legal regime for the recognition and
enforcement of international arbitration agreements.
93
As discussed below, the correct view of the Conventions choice-of-law rules is that the same
choice-of-law rules apply under both Articles II and V; this result is required to avoid
application of different legal rules at different stages of the arbitral process and by a
systematic interpretation of the Convention. Under this interpretation, Article IIs uniform
international rules of substantive validity apply in award recognition proceedings under
Article V, just as they apply in proceedings to enforce arbitration agreements under Articles
II(1) and II(3). At the same time, the national law selected by Article V(1)(a)s default choice-of-
law rule also applies, subject to Article IIs uniform international rules, in proceedings under
Article II to enforce the arbitration agreement. Finally, the primary choice-of-law rule selected
by Article V(1)(a) is a validation principle; this principle gives effect to the parties overriding
intention that their international arbitration agreement will be valid and effective, regardless
of the jurisdictional and choice-of-law complexities that attend other international contracts.
[i] Article II: Substantive International Rule of Presumptive Validity and Validation Principle
Paralleling the Geneva Protocol, Article II of the Convention prescribes a substantive
international rule of presumptive validity for international arbitration agreements. Articles
II(1) and II(3) of the Convention require Contracting States to recognize the material terms of
arbitration agreements and establish a rule of presumptive validity applicable to those
agreements. (116) This is a uniform, mandatory rule of substantive international law that
applies to all international arbitration agreements falling within the scope of the Conventions
coverage.
In particular, as discussed elsewhere, Article II prescribes international rules that mandatorily
allocate the burden of proof of invalidity of international arbitration agreements to the party
resisting enforcement (117) and require the application of generally-applicable, non-
discriminatory rules of contract law to issues of substantive validity. (118) These uniform
international rules apply regardless of the national law chosen by the parties (or a court) to
govern their international arbitration agreement. That is clear from the text of Articles II(1) and
II(3), both of which are expressed in mandatory and unqualified terms, (119) and neither of
which makes any provision for a choice-of-law rule that might override or alter this language.
P 494
Finally, as discussed in greater detail below, Article II also contemplates application of a
validation principle, pursuant to which an international arbitration agreement is valid and
enforceable if any national law potentially applicable to the agreement would uphold its
validity. (120) This validation principle gives effect to both the parties intentions and the
Conventions rule of presumptive validity, and is mandated by the Conventions pro-
enforcement objectives. (121) As discussed below, courts and legislatures in a number of
Contracting States have adopted the validation principle in the context of international
[ii] Article V(1)(a): Content of Article V(1)(a)s Choice-of-Law Rules
In addition to paralleling the Geneva Protocol, the New York Convention also paralleled the
Geneva Conventions treatment of the law applicable to an international arbitration
agreement, while also containing additional provisions. (123) In particular, as noted above,
Article V(1)(a) of the New York Convention provides that an award need not be recognized if the
arbitration agreement was not valid under the law to which the parties have subjected it or,
failing any indication thereon, under the law of the country where the award was made. (124)
Article V(1)(a)s two-part choice-of-law standard is superficially straightforward.
First, Article V(1)(a) provides for recognition of the parties autonomy and application of the
law chosen by the parties to govern their arbitration agreement. That basic rule, permitting the
parties to select the law governing the arbitration agreement, is discussed in greater detail
below. (125) Among other things, Article V(1)(a)s first prong gives effect to either an express or
an implied choice of law governing the arbitration agreement. (126)
Second, Article V(1)(a)s second prong provides a default choice-of-law rule, applicable in
cases where the parties have not expressly or impliedly chosen the law governing their
arbitration agreement. That default rule provides for application of the law of the arbitral seat
to the substantive validity of the arbitration agreement. (127)
Although its terms appear clear, Article V(1)(a)s default choice-of-law rule gives rise to
uncertainties in the context of enforcement of an arbitration agreement (as distinguished from
enforcement of an arbitral award). Most obviously, it is not self-evident how to apply the law of
the place the award was made in an action to enforce an arbitration agreement, which by
P 495 definition occurs well before any award is rendered. Of course, one could try to predict
where a future award will be made, which will ordinarily be the parties chosen arbitral seat.
(128) But, in some cases, the parties arbitration agreement specifies no arbitral seat, making it
difficult even to speculate about the place where an award might be made. (129)
In practice, parties often either select the seat of the arbitration in their arbitration agreement
(130) or agree to institutional rules providing a mechanism for selecting the arbitral seat early
in the arbitral process. (131) Accordingly, there should be few instances in practice where it will
be impossible to identify the place where the arbitral award will be made. (132) Nonetheless,
such cases exist (and parties or tribunals also sometimes change the seat of the arbitration, in
the course of the arbitral proceedings (133) ). The reality is that the text of Article V(1)(a)s
default rule, looking to the place where an award has been made, does not apply comfortably
in the context of proceedings to enforce arbitration agreements.
94
[iii] Article V(1)(a): Applicability to Enforcement of Arbitration Agreement
In part for the reasons outlined above, there has been considerable debate and uncertainty as
to whether Article V(1)(a)s choice-of-law rule applies at the stage of recognition of an
arbitration agreement (under Article II(1)), as well as at the stage of recognition of an arbitral
award (under Article V).
A few authorities have held that Article V(1)(a)s choice-of-law rule applies only in proceedings
to recognize and enforce arbitral awards; they reason that the absence of any choice-of-law
rule for the arbitration agreement in Article II(1) leaves courts and arbitral tribunals free to
ignore Article V(1)(a), and to apply different standards when deciding whether to recognize an
arbitration agreement. As one commentator summarized this analysis: the law to be applied
by a courtas contemplated by Art. II(3) of the New York Convention, has nothing to do with the
law to be applied by a court, in case of a request for enforcement, under Art. V(1)(a) of the
P 496
Convention. (134) Adopting this analysis, some courts have concluded that, at the stage of
deciding whether to recognize an arbitration agreement under Article II of the Convention,
national courts should apply their own substantive law, typically on the grounds that the issue
is whether their own jurisdiction was excluded. (135)
This analysis is unsatisfactory and wrong. There is little, if anything, to recommend applying
two different substantive laws of contractual validity to the same arbitration agreement, with
the choice-of-law rule and result varying depending on the point in time at which the issue is
considered. That plainly makes little sense, as a matter of logic, and squarely contradicts the
objective of predictability that underlies private international law and choice-of-law analysis
generally, (136) the international arbitration regime in particular (137) and the New York
Convention specifically. (138) Further, this analysis produces the highly undesirable result that
an arbitration agreement may be found valid (or invalid) at one stage of a dispute, and then
treated in the opposite manner at a later stage; that will inevitably result in delays and wasted
expense, as well as the possibilities of inconsistent decisions about the validity of the same
arbitration agreement.
Nor does it make sense to suggest that different national courts should be either encouraged
or permitted to apply their own local law to the question whether an arbitration agreement is
valid when presented with the question whether to stay or dismiss a parallel litigation. (139) In
P 497 fact, the opposite is true, particularly in interpreting an international instrument, such as
the Convention, designed to produce uniform results in different national courts. (140)
The international arbitral process aspires towards a maximally uniform approach by national
courts presented with disputes about the substantive validity of a particular international
arbitration agreement. A lack of uniformity on this issue would result in some courts referring
parties to arbitration, and others refusing to do so, under the same arbitration agreement; that
makes no sense and results in unnecessary litigation, forum shopping and uncertainty. Rather,
insofar as possible, it is much more desirable for all national courts to reach the same
conclusion as to the validity (or invalidity) of a particular arbitration agreement.
Consistent with this analysis, better-reasoned national court decisions (141) and commentary
(142) have concluded that the same choice-of-law rules should apply under the New York
Convention to selecting the law governing an arbitration agreements formation and
substantive validity at both the stage of enforcing the agreement and the stage of enforcing an
arbitral award. Specifically, these authorities have concluded that the choice-of-law rules
contained in Article V(1)(a) of the Convention are equally applicable under Article II(1) of the
Convention. (143) As one well-reasoned national court decision concluded:
[P]reliminary issues concerning the validity of an arbitration agreement may not be decided
P 498 according to the lex fori. Hence, where the New York Convention applies, reference should
be made, for all issues which concern the validity of an arbitration agreement and are not
regulated by the Convention itself, to the law to be determined according to Art. V(1)(a) of the
New York Convention. (144)
This result also comportswith the more recent and considered approach taken under Articles
VI(2) and IX of the European Convention. As discussed below, these provisions were drafted to
apply the same choice-of-lawrules to arbitration agreements at all stages at which the validity
of such agreements is considered. (145)
As a consequence, the proper view is that Article V(1)(a)s choice-of-law rules, giving effect to an
express or implied choice of law by the parties or, absent such choice, selecting the law of the
arbitral seat, applies in proceedings under Article II to recognize and enforce international
arbitration agreements. That ensures consistent treatment of international arbitration
agreements throughout the parties dispute and advances the goals of enforcement and
uniformity of the Convention.
[iv] Article V(1)(a): Default Rule Selecting Law of the Arbitral Seat
As discussed above, Article V(1)(a) prescribes a default choice-of-law rule, applicable in cases
where the parties have not expressly or impliedly chosen the law governing their international
arbitration agreement. That default rule provides for application of the law of the arbitral seat
to the substantive validity of the arbitration agreement. (146) This rule is apparent from the
language of Article V(1)(a), which provides that an award may be denied recognition if the
underlying arbitration agreement was not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the award
95
was made. (147) Commentary and court decisions are unanimous that Article V(1)(a)s default
rule, in the absence of a choice-of-law by the parties, is the law of the arbitral seat. (148)
P 499
The current draft of the ALIs Restatement (Third) U.S. Law of International Commercial
Arbitration adopts a formulation of U.S. choice-of-law rules that is contrary to Article V(1)(a) of
the Convention (and the weight of U.S. and other authority). The Restatement would prescribe a
default rule for the law governing the substantive validity of international arbitration
agreements that requires application of the law selected by a general choice-of-law clause in
the parties underlying contract. Under the proposed Restatement rule:
If the parties have not agreed upon a body of law to govern the arbitration agreement (either
expressly or impliedly), a general choice-of-law clause in the contract that includes the
arbitration agreement determines the applicable law. If the parties have not selected any law
to govern the arbitration agreement or to govern the contract generally, the law of the seat of
arbitration, without resort to its choice-of-law rules, governs the matters submitted to
arbitration. (149)
This formulation is ill-considered. In cases where the parties have not agreed upon a body of
law to govern the arbitration agreement (either expressly or impliedly), then Article V(1)(a)s
second prong expressly prescribes a mandatory international default rule. That default rule,
which was one of the Conventions major innovations, is the law of the arbitral seat, not the law
governing the underlying contract. It violates the Convention for national courts to reject this
default rule, in favor of either the law governing the underlying contract, the law of the
enforcement forum, or otherwise.
The Restatement approach is also very difficult to follow analytically. The only analytical route
to applying the law chosen by a general choice-of-law clause in the underlying contract to the
arbitration agreement would be on the basis that this was the parties implied (or express)
choice. However, that analysis would contradict the premise of the Restatement approach,
quoted above, which is that the parties have not chosen the law governing their arbitration
agreement either expressly or impliedly. More fundamentally, the Restatement approach
ignores the parties genuine intentions regarding the law governing their international
arbitration agreement, which, as discussed in detail above, are reflected in the validation
principle, not by arbitrary choice-of-law rules selecting either the law of the arbitral seat or
the law of the underlying contract. (150)
[v] Article V(1)(a): Effects of Default Choice-of-Law Rule on International Substantive Rules and
Validation Principle
Although Article V(1)(a)s default choice-of-law rule applies in proceedings to enforce
international arbitration agreements under Article II, that conclusion is subject to important
qualifications. These qualifications concern Article IIs substantive international rules and the
validation principle, applied in a number of jurisdictions and arguably required by Article II.
P 500
First, the applicability of Article V(1)(a)s choice-of-law rules at the stage of enforcing an
arbitration agreement does not affect the Conventions uniform international rules,
establishing the presumptive validity of international arbitration agreements and limiting the
grounds of invalidity of such agreements to internationally-neutral contract law defenses. (151)
As discussed above, Article II of the Convention allocates the burden of proof of invalidity to
the party resisting enforcement of the arbitration agreement and precludes application of
discriminatory or idiosyncratic national law rules to invalidate such agreements. (152) These
rules are mandatory substantive requirements of the Convention, that apply without regard to
the choice-of-law rules or national laws that are applied to an arbitration agreement. (153)
Second, as discussed below, Article II is properly interpreted as requiring application of a
validation principle, in order to give effect to the parties intentions and Article II(3)s rule of
presumptive validity of international arbitration agreements. (154) That validation principle
applies fully under Article V(1)(a): Article V(1)(a)s default rule applies only in the absence of a
choice of law, express or implied, by the parties. As discussed elsewhere, the validation
principle reflects the parties intentions in concluding an international arbitration agreement,
which are that their arbitration agreement will be valid and effective; those intentions are
given effect under Article V(1)(a)s first prong as an implied choice of law. (155)
Finally, from a structural perspective, Article V(1)(a) could not have the effect of precluding
application of a validation principle. As discussed elsewhere, Articles III and V of the
Convention require recognition of arbitral awards by Contracting States in specified cases,
P 501
(156) while setting out permissive grounds on which Contracting States may deny
recognition of arbitral awards in other cases. Article V does not, however, ever require non-
recognition of an award, including when one of Article V(1)s exceptions applies. (157) Rather, as
Article VII(1) makes clear, Article V(1)(a) permits, but does not require, non-recognition of an
award where the arbitration agreement is invalid under the law of the arbitral seat. (158)
As a consequence, nothing in Article V(1)(a) would prevent a Contracting State from applying a
validation principle (or other conflicts rule) to grant broader or more favorable recognition to
an arbitral award than that resulting under the choice-of-law rule contained in Article V(1)(a).
The same analysis applies when Article V(1)(a)s choice-of-law rules are applied in the context
of litigation over the validity of an arbitration agreement under Article II: Contracting States
may not deny recognition of an agreement that would be valid under Article V(1)(a)s choice-of-
law rule, but are free to recognize the validity of arbitration agreements through application of
96
another law (whether applied by reason of a validation principle or otherwise), even when
Article V(1)(a)s choice-of-law rule would not provide for this result.
The European Convention also contains provisions regarding the law applicable to
international arbitration agreements. Those provisions expressly recognize the parties
autonomy to select the law governing their international arbitration agreement. Thus, Article
VI(2) of the Convention provides that, when required to rule on the existence or validity of an
arbitration agreement, the courts of a Contracting State shall doso:
(a) under the law to which the parties have subjected their arbitration agreement; (b) failing
any indication thereon, under the law of the country in which the award is to be made; (c)
failing any indication as to the law to which the parties have subjected the agreement, and
where at the time when the question is raised in court the country in which the award is to be
made cannot be determined, under the competent law by virtue of the rules of conflict of the
court seized of the dispute. (159)
The same Article goes on to provide that [t]he courts may also refuse recognition of the
arbitration agreement if under the law of their country the dispute is not capable of
settlement by arbitration. (160)
In substance, the European Convention provides a similar choice-of-law approach to that of
Article V(1)(a) of the New York Convention, giving primary effect to the parties choice-of-law
P 502
agreement, with a default rule selecting the law of the arbitral seat, if the parties have not
selected any law governing their arbitration agreement. (161) In addition, the European
Convention specifies a further, default choice-of-law rule. (162) This rule is applicable in
circumstances where the parties have made no express or implied choice of law, and where it
is impossible to determine the arbitral seat in advance, but it provides nothing beyond the
statement that a court may apply its generally-applicable choice-of-law principles.
[d] Rome I Convention and Rome Regulation
Finally, the 1980 Rome Convention and subsequent Rome I Regulation also have potential
relevance to the choice of law applicable to some arbitration agreements. Nonetheless, the
importance of the Convention and Regulation for international arbitration agreements is
limited.
The Convention and Regulation are not of direct relevance to choosing the law applicable to
arbitration agreements because they expressly exclude such agreements from their scope.
(163) It has been suggested that this exclusion helped to marginalize the choice-of-law
approach to international arbitration agreements, in favor of direct application of
international standards, as applied by French courts. (164) That is misconceived.
The Rome Convention and Regulation excluded arbitration agreements from their scope
because of the special issues that they raised and the particular treatment that they required,
insofar as the choice of applicable national law was concerned. (165) The decision not to
address specialized questions of this nature, in a treaty and regulation of general application,
in no way implies approval or disapproval of any particular approach to selecting the law
applicable to international arbitration agreements.
Nor has there been any indication, since the Rome Convention was adopted in 1980, that
choice-of-law issues have become less important with regard to arbitration agreements. On
the contrary, both national courts and international arbitral tribunals continue routinely to
P 503
grapple with questions of what law applies to international arbitration agreements. (166)
In this regard, the basic choice-of-law principles motivating the provisions adopted in the
Rome Convention and Rome I Regulation (i.e., party autonomy and a closest connection
default rule) have been applied by both national courts and arbitral tribunals to the choice of
the law governing international arbitration agreements. (167)
Nonetheless, it is correct to say that the exclusion of arbitration agreements from the scope of
the Rome Convention and Regulation reflects the special character of those agreements, which
were recognized as a separable and distinct category of contracts. That recognition further
confirms one of the rationales of the separability presumption, as well as the consequences of
that presumption for choice-of-law analysis. (168) The Convention and Regulations exclusion of
arbitration agreements also reflects, and confirms, the fact that those agreements are properly
subject to specialized, sui generis choice-of-law rules, derived from Articles II and V(1)(a) of the
New York Convention, rather than generally-applicable choice-of-law rules applicable to other
contracts.
P 504
[e] U.N. Convention on Contracts for the International Sale of Goods
The United Nations Convention on Contracts for the International Sale of Goods (CISG) applies
to specified international sales contracts. (169) When the CISG applies to a contract, it arguably
also applies to the arbitration clause contained in that contract; the separability presumption
suggests the contrary, but some authorities have concluded that the CISG should nonetheless
apply to at least some aspects of arbitration clauses associated with international sales
contracts governed by the Convention.
A number of national courts have held that the CISG applies to questions of the formation of
arbitration clauses in international sales contracts. (170) Some authorities have also suggested
97
that the CISG applies to issues of formal validity, providing a less demanding rule of formal
validity than Article II of the New York Convention. (171) Other authorities reject or question this
view; (172) in the words of one commentator:
The CISG cannot be employed for relaxing the formal requirements of arbitration agreements.
The scope of the freedom from form principle under Article 11 CISG is limited to the formation
process of an agreement to arbitrate, while the requirements for its enforcement, both in the
course of the arbitral proceedings as well as for the purpose of enforcement and recognition,
are subject to non-unified national law. (173)
A few authorities suggest more generally that the CISG does not apply to arbitration
agreements at all, relying on the separability presumption. (174)
If the CISG is applied to international arbitration agreements, it should not affect the
P 505
applicability of the New York Conventions uniform international rules (of presumptive
validity and neutrality) or validation principle. These rules are specifically applicable to
international arbitration agreements and are not superseded or overridden by the CISGs
general choice-of-law and substantive principles.
Notwithstanding Articles II and V(1)(a) of the New York Convention, different national legal
systems have taken a wide variety of approaches to the choice of the law governing
international arbitration agreements, particularly where the parties have not expressly chosen
the law governing those agreements. These approaches have evolved significantly in the course
of the past century; they also continue to differ materially among different jurisdictions. The
same multiplicity of choice-of-law approaches is reflected in international arbitral awards
rendered during this period.
As discussed below, in the absence of a choice of law by the parties, a number of jurisdictions
now apply some variation of a most significant relation or closest connection standard in
selecting the law governing an international arbitration agreement. Under these standards,
courts and arbitral tribunals generally look alternatively to either the law of the arbitral seat
or the law chosen to govern the parties underlying contract as the most decisive connecting
factors for international arbitration agreements.
In addition, as discussed below, a number of leading jurisdictions including France,
Switzerland and many U.S. courts also look to the New York Convention, to general principles
of international law, or to national law to supplement this choice-of-law analysis. In so doing,
courts in these jurisdictions typically either apply a validation principle or rely on substantive
rules of international law to deny effect to discriminatory or idiosyncratic rules of national law.
The same approaches are reflected in international arbitral awards. These various approaches
reflect a proper interpretation of the Convention, giving effect to the provisions of Articles II(1)
and V(1)(a) and the Conventions pro-enforcement objectives. (175)
[a] Historic Application of Law of Judicial Enforcement Forum to Arbitration Agreement
The historic approach in many jurisdictions was that arbitration clauses were governed by the
law of the judicial enforcement forum. This choice-of-law rule often rested on the (historic)
characterization of the arbitration clause in some jurisdictions as a matter of remedies. (176)
As one U.S. court put it, in applying the law of the judicial enforcement forum:
Arbitration agreements relate to the law of remedies, and their enforcement, whether at
common law or under the broader provisions of the arbitration acts, is a question of remedy to
P 506 be determined by the law of the forum, as opposed to that of the place where the contract
was made or is to be performed. (177)
Application of the judicial enforcement forums standards for interpretation and enforcement
of the arbitration agreement was particularly well-established in common law jurisdictions. In
the United States, courts routinely declared that the law of the judicial enforcement forum
governed the validity of the arbitration agreement. (178) In the words of one court:
New York for conflicts purposes treats issues concerning arbitrability as part of its law of
remedies, so that New York local law would apply in the case at bar, rather than the law of
England or France which have greater contacts with the transactions involved here. (179)
The same approach was taken in early decisions in England and other common law
jurisdictions. (180) More recently, a few states appear to have adopted idiosyncratic rules
resuscitating application of local law to international arbitration agreements (often with the
objective of invalidating such agreements). (181)
P 507
[b] Criticism of Application of Law of Judicial Enforcement Forum to Arbitration Agreement
The application of the law of the judicial enforcement forum to an arbitration agreement
suffers from obvious deficiencies. As critics have pointed out, this approach meant that
different laws would necessarily apply to the arbitration agreement in different national
courts, inevitably producing a lack of uniformity and predictability. (182) This approach also
rested on an artificial characterization of the validity of an arbitration agreement as a purely
remedial matter, which does little to address the substance of the relevant choice-of-law
issues and interests. (183)
Moreover, even as a matter of abstract categorization, it is awkward at best to characterize the
98
validity of an arbitration agreement as simply a matter of remedies in the enforcement forum
(or, more accurately, fora). Rather, the validity of arbitration agreements concerns issues of
substantive contract law (e.g., consent, consideration, certainty, unconscionability, mistake,
fraud, duress, illegality) relevant to the formation and existence of the arbitration agreement,
which cannot properly or usefully be considered merely remedial in nature. (184)
An early (1931) Swiss Federal Tribunal decision adopted this analysis, rejecting the automatic
applicability of the judicial enforcement forums law in terms that could still readily be relied
on today:
It is true that the opinion [that] the validity of an arbitration clause must be appreciated
pursuant to the law of the state whose jurisdiction is excluded by that clause, has been
expressed several times in the German doctrine.[Some] authors considerthat the validity of
the arbitration agreement must generally be judged pursuant to the law of the place where the
contract is to deploy its effects. Now, the principal effect of an arbitration agreement is not to
exclude the jurisdiction of the state courts, but to transfer the right of decision to an arbitral
tribunal: this positive effect of the contract is legally realized in the state where the seat of the
arbitral tribunal is located pursuant to the contract. The negative effect, that is the exclusion
of the state courts jurisdiction, only constitutes a consequence of the positive effect.It shall
be added that, in international relations, an arbitration agreement normally excludes the
jurisdiction of the courts of several states, so that such a contract should fulfill the
requirements of the respective legislation of all these states, if the question of its validity,
examined as a result of a request for enforcement of the arbitral award, was to be decided
P 508 pursuant to the law of the state or states whose jurisdiction is excluded by that of the
arbitral tribunal. This would constitute an unsatisfactory legal situation. (185)
Other early civil law decisions were similar. (186)
Accordingly, the traditional application of the enforcement forums substantive law to
arbitration agreements was in due course abandoned, in favor of more nuanced, realistic
choice-of-law analyses. In particular, as detailed below, a number of authorities adopted
choice-of-law rules requiring application of either the substantive law of the arbitral seat (187)
or the substantive law chosen by the parties to govern their underlying contract (188) to govern
an international arbitration agreement. Few other serious alternatives to these two options
were developed when traditional choice-of-law analyses were applied.
[c] Choice-of-Law Rules Providing for Application of Substantive Law of Arbitral Seat to
Arbitration Agreement
Particularly in more recent decades, a number of jurisdictions, both common and civil law,
have applied the substantive law of the arbitral seat to the validity of international arbitration
agreements (again, absent agreement by the parties on the law applicable to the arbitration
agreement). This result conformed with the rule adopted by Article V(1)(a) of the New York
Convention (as discussed above), (189) but was also arrived at by independent choice-of-law
analysis in national courts.
The decision of one Swiss lower court is representative, holding that, in the absence of a
choice-of-law provision, the validity of the arbitral clause must be decided according to the law
P 509 of the seat of the arbitral tribunal. (190) This approach was also reflected in a 1994
decision of the Tokyo High Court, relying on the procedural character of the arbitration
agreement, which reasoned:
If the parties will is unclear we must presume, as it is the nature of arbitration agreements to
provide for given procedures in a given place, that the parties intend that the law of the place
where the arbitration proceedings are held will apply. (191)
Some countries have adopted the same approach by legislative enactment. Article 48 of the
Swedish Act provides:
Where the parties have not reached [a choice-of-law] agreement, the arbitration agreement
shall be governed by the law of the country in which, by virtue of the agreement, the
proceedings have taken place or shall take place. (192)
As discussed in greater detail below, English courts have also recently adopted a presumption
that the law governing an international arbitration agreement is that of the arbitral seat (after
abandoning the previous view, also of English courts, that the law chosen to govern the
underlying contract generally applied to the associated arbitration agreement). (193) As one
English Court of Appeal decision reasoned, an international arbitration agreement is more
likely to be governed by the law of the seat of arbitration than the law of the underlying
contract, because the arbitration agreement will normally have a closer and more real
connection with the place of the seat. (194)
As with national arbitration legislation and court judgments, a number of arbitral awards have
P 510
applied the substantive law, (195) or, occasionally, the choice-of-law rules, (196) of the
arbitral seat. A leading example of an arbitral decision applying the substantive law of the
arbitral seat to the arbitration agreement was the Interim Award in ICC Case No. 6149, where the
tribunal reasoned:
Ifthe proper law of the three arbitration agreements could not necessarily be derived from
the proper law of the three sales contracts themselves, the only other rule of conflicts of laws
whose application would seem appropriatewould be the application of the law where the
99
arbitration takes place and where the award is rendered. This conclusion would be supported
also by Art. V(1)(a) of the [New York Convention]. (197)
Other awards are to the same effect, applying the substantive law of the arbitral seat (absent a
different choice by the parties). (198)
The rationale for applying the substantive law of the arbitral seat to the arbitration agreement
is frequently not well-articulated. Some national court decisions and arbitral awards reason
that, by seating the arbitration in a particular state, the parties impliedly agreed that the
arbitration clause should be governed by the law of the seat. (199) As one national court
P 511
reasoned, [i]n the arbitral clause, New York is chosen as the place of arbitration, which
implies the choice for the law of New York as the law applicable to the arbitration, including
the question whether a valid arbitration agreement has been concluded. (200) Or, as a
frequently-cited arbitral award concluded: Except in cases where the parties make an express
choice concerning the law governing the arbitration agreement, the choice of the place of
arbitration generally implies a choice of the application of the arbitration law of that place.
(201)
On the other hand, other authorities, as well as the New York Convention and European
Convention, (202) do not appear to rely on the parties intent in providing for the application of
the law of the arbitral seat, and instead reflect at least in part the view that arbitration
agreements are procedural, and therefore almost inevitably subject to the law of the arbitral
seat. (203) Similarly, a limited number of contemporary awards apparently conclude that an
arbitral tribunal is obliged to apply the law of the arbitral seat, citing the procedural
character of the arbitration agreement. (204) In the words of one award that adopts this
rationale: As a matter of principle, because of its autonomous character the validity of the
arbitration clause is governed by the law in force in the country of the arbitral seat. (205)
A high point of the procedural approach to the law governing arbitration agreements was
P 512
reflected in resolutions adopted by the Institute of International Law ( Institut de Droit
International) in 1957 and 1959. These resolutions were adopted on the basis that it appears to
be of the greatest utility that the conflicts of laws to which private arbitration gives rise should
be submitted to a single system of private international law. (206) Among other things, the
resolution (first adopted in 1957, and reaffirmed in 1959) provided:
Parties shall be free in the arbitral agreement (submission or arbitral clause) to exercise their
free choice and to indicate the place where the arbitral tribunal must sit; this choice shall
imply that they intend to submit the private arbitration to the law of the seat of the country [of]
arbitration, to the extent indicated by the following provisions. If the parties have expressly
chosen the law applicable to the arbitral agreement, without settling the seat of the arbitral
tribunal, they shall be deemed tacitly to have agreed that the tribunal shall sit in the territory
of the country the law of which has been chosen by them. (207)
Despite its apparent affirmation of party autonomy, the International Law Institutes resolution
apparently provided that, where the parties seated the arbitration in one country, but agreed
that the law of another country should govern their arbitration agreement, the parties
selection of the arbitral seat should be overridden, in at least some circumstances. (208) In
effect, the resolution appeared to proceed from the assumption that the law of the seat was
required, as a matter of mandatory law, to govern the arbitration agreement. (209)
Over time, the approach apparently taken in the International Law Institutes resolution lost
favor. Requiring that the law of the arbitral seat govern the arbitration agreement, regardless
of the parties intentions, runs squarely counter to principles of party autonomy which affirm
the parties freedom to select the seat, the arbitral procedure and the law governing their
arbitration agreement. (210) The rigidity, and the basic internal incoherence, of such a
mandatory rule was also apparent from the 1957 International Law Institutes resolution, which
at once purported to affirm the parties autonomy to select the seat and applicable law, but
then apparently required disregarding the parties selection of the seat if it did not conform to
their choice of law.
As a consequence, national court decisions, arbitral awards and commentary increasingly
P 513
relied upon the theory that the parties impliedly intended that the law of the seat govern
their arbitration agreement. (211) As discussed in greater detail below, the parties implied
choice-of-law would in turn be given effect under Article V(1)(a)s first prong and parallel
provisions of national law, giving effect to the parties autonomy. (212)
An implied choice-of-law analysis frequently resulted in the application of the law of the seat,
but also permitted application of other laws in particular circumstances. For example, the
Swedish Supreme Court held that where no particular provision concerning the applicable law
for the arbitration agreement itself was indicated in the underlying contract, the validity of
the arbitration clause should be determined in accordance with the law of the state in which
the arbitration proceedings have taken place. (213) Likewise, German courts applied the
substantive law of the seat to the arbitration agreement unless the parties had chosen another
governing law. (214)
The implied choice-of-law theory for selecting the law of the arbitral seat was analytically
preferable to the procedural approach, and more in keeping with the principles of party
autonomy on which the international arbitral process is founded. (215) At the same time, as
discussed below, this analysis introduced heightened complexity and uncertainty into the
choice-of-law process, by requiring greater case-by-case consideration of the parties implied
100
intentions.
P 514
[d] Choice-of-Law Rules Providing for Application of Substantive Law Governing Underlying
Contract to Arbitration Agreement
In parallel to decisions applying the substantive law of the arbitral seat to the validity of the
arbitration agreement, other authorities adopted a different approach, applying the law
governing the parties underlying contract to this issue. As discussed in greater detail below,
this approach was particularly influential in cases where the parties included a choice-of-law
clause in their underlying contract, selecting the law governing that contract: in these
instances, a number of authorities held that the parties choice-of-law clause extended
either expressly or impliedly to the separable arbitration agreement. (216)
This analysis was adopted with particular clarity in English judicial decisions, which repeatedly
held that the law selected by the parties to govern their underlying contract was also
ordinarily applicable to the associated arbitration agreement. (217) In the words of one
decision, reflecting the historic approach of English courts:
Where the substantive contract contains an express choice of law, but the agreement to
arbitrate contains no separate express choice of law, the latter agreement will normally be
governed by the body of law expressly chosen to govern the substantive contract. (218)
The same basic analysis applying the substantive law governing the underlying contract to
the arbitration agreement was used even in the absence of a choice-of-law clause in the
As also discussed below, other national courts in both civil and common law jurisdictions
reached similar conclusions, (220) as did a substantial number of influential
P 515
commentators. (221) For example, Professor Goldman concluded that, although the arbitration
agreement could be governed by a different law than the underlying contract, practically
speaking, in most cases they are both governed by the same law, not because of their
interdependence which is denied but because their juridical location is, in fact, most
often the same. (222)
At the same time, a number of arbitral awards also looked to the substantive law governing the
parties underlying contract to provide the law applicable to the associated arbitration
agreement, particularly where the underlying contract contained an express choice-of-law
clause. (223) For example, the tribunal in the Final Award in ICC Case No. 6752 held that, where
the contract provided that in respect to what has not been expressly provided herein,
P 516
reference is to be made toItalian law, such a provision necessarily applies to the
arbitration agreement contained in the same article. (224) As with national court decisions,
these decisions typically rest on asserted interpretations of the parties choice-of-law clauses,
which were then given effect under Article V(1)(a)s first prong and principles of party
autonomy.
[e] Choice-of-Law Rules Providing for Application of Substantive Law of State With Closest
Connection or Most Significant Relationship to Arbitration Agreement
Over time, as with earlier approaches, shortcomings were identified in both of the traditional
choice-of-law analyses described above that is, application of the law of the arbitral seat or
of the law of the underlying contract to the arbitration agreement. Each of these analytical
approaches suffered from different, but equally grave, defects.
On the one hand, application of the law of the seat, based upon an exclusive focus on the
procedural aspects of the arbitration agreement, was analytically unsatisfactory. Most
fundamentally, this approach ignored the contractual character of arbitration agreements
(which might, but need not necessarily, have their most significant connection to the arbitral
seat). (225) Equally, there are instances where the arbitration agreement is integrally related to
the parties underlying contract as in the case of a corporate charter or real estate
transaction and application of the law governing that type of contract to the arbitration
clause is especially difficult to resist.
Automatic application of the law of the seat also mistakenly conflated the law governing the
arbitration agreement with the law governing the arbitral proceedings. Critics correctly
observed that the law governing the arbitral proceedings would not necessarily be the law of
the seat, and that in these circumstances it was at best anomalous to apply the law of the seat
to the arbitration agreement. (226) At the same time, an exclusive focus on the law of the
arbitral seat and procedure again disregarded the intimate connection (both textual and
functional) between the arbitration agreement and underlying contract.
On the other hand, an exclusive focus on the law governing the underlying contract, as applying
to the arbitration agreement, was also unsatisfactory. This analysis was in significant tension
with the basic premises of the separability presumption, which treated the parties underlying
contract as distinct from the arbitration agreement. (227) As a consequence, although a choice-
of-law clause governing the underlying contract might theoretically extend to the associated
arbitration agreement, this was not an inevitable consequence of such a clause: just as the
P 517
invalidity or termination of the parties underlying contract might not affect the
associated arbitration agreement, (228) so a choice of the law applicable to the underlying
contract (by agreement or otherwise) might not apply to the arbitration clause. (229)
An exclusive focus on the law governing the underlying contract was also difficult to square
101
with the fact that the parties chosen arbitral seat was often more closely connected to their
arbitration agreement than was the law they chose to govern their underlying contract. (230)
This was particularly true in cases where the local law of one of the parties home states
governed a contractual relationship, but the arbitration agreement provided for arbitration in
a neutral forum. (231) For example, the parties underlying contract might be expressly subject
to the national law of the place of performance (e.g., in a sales agreement), while the arbitral
seat might be located elsewhere, precisely to disassociate the arbitration agreement from the
host state.
Finally, an exclusive focus on the law governing the underlying contract was also very difficult
to square with the New York and European Conventions. As discussed above, both instruments
expressly adopted default choice-of-law rules that provided for application of the law of the
arbitral seat to the arbitration agreement, in the absence of contrary agreement. (232)
Accordingly, over the past several decades, authorities in a number of jurisdictions
increasingly rejected either an exclusive focus on the law of the arbitral seat or the law of the
underlying contract. Instead, these authorities turned to generally-applicable contemporary
choice-of-law criteria, (233) and particularly the most significant relationship and closest
connection standards. (234)
P 518 The influential Restatement (Second) Conflict of Laws, adopted in 1971 in the United States,
is representative. Section 218 of the Restatement (Second) impliedly rejects characterization of
the arbitration agreement as procedural, instead applying generally-applicable conflicts
rules for contracts to the formation and validity of arbitration agreements. (235) Thus, 218
provides that the validity of an arbitration agreement, and the rights created thereby, are to
be determined by applying the generally-applicable conflicts rules of 187 and 188. (236) In
turn, 187 and 188 gave effect to the parties contractual choice-of-law agreement or, failing
such agreement, provided for application of the law of the state with the most significant
relationship to the parties contract. (237)
The comments to 218 of the Restatement (Second) implied, but did not require, that the state
that will often have the most significant relationship to an agreement to arbitrate is that where
the arbitral seat is located. (238) Similarly, as discussed in greater detail below, U.S. courts
applying the Restatement (Second) have sometimes, but not consistently, concluded that the
law with the most significant relation to the arbitration agreement was the law of the seat
(absent contrary choice by the parties). (239)
Other national courts took similar approaches. As noted above, under English conflict of laws
rules, the law governing the arbitration agreement was historically presumed to be the law
governing the parties underlying contract. (240) More recently, however, English courts
abandoned this approach and instead have generally held that the parties selection of the
arbitral seat presumptively constitutes an implied choice of law governing the arbitration
agreement.
P 519
For instance, in a 2000 decision, the court held that a clause providing for arbitration in
London under the provisions of the English Arbitration Act, 1996, constituted an implied choice
of English law to govern the validity of the arbitration agreement (despite a general choice-of-
law clause in the underlying contract selecting New York law). (241) Other recent English
decisions have accorded similar weight to the law of the arbitral seat, holding that the arbitral
seats law presumptively governs the parties arbitration agreement. (242)
In effect, while conducting the analysis in terms of an inquiry into the parties implied intent,
English courts have begun to consider factors essentially identical to those relevant to a most
significant relationship or closest connection test. (243) Moreover, as discussed below, some
commentators have also concluded that English courts have in practice applied a validation
principle in choosing between the law of the underlying contract and arbitral seat. (244)
Similar approaches to that adopted in England have been followed in other jurisdictions. In
the Netherlands, for example, a court held that a choice of NewYork as the place of arbitration
implies the choice for the law of New York as the law applicable to the arbitration, including
P 520
the question whether a valid arbitration agreement has been concluded. (245) Again
paralleling developments in national courts, a number of contemporary arbitral awards also
attempted to apply either a closest connection or most significant relationship standard in
determining the validity of the arbitration agreement. (246)
[f] Criticism of Choice-of-Law Rules Selecting Substantive Law of State With Closest Connection
or Most Significant Relationship to Arbitration Agreement
Despite their adoption in leading jurisdictions, and some arbitral awards, the closest
connection/most significant relationship tests for international arbitration agreements have
also proven unsatisfying, much like their various predecessors. In practice, courts and tribunals
have encountered substantial difficulties determining what connecting factors are decisive in
selecting the law governing an arbitration agreement. In particular, it has proven difficult to
choose in a principled manner between the law of the arbitral seat and the law selected by the
parties to govern the underlying contract when these two formulae point in different
directions.
This is well-illustrated by a decision of the Hague Gerechtshof, which held that an arbitration
agreement was governed by the law with the closest connection to that agreement. (247) The
Court then proceeded to consider, variously, the law of the arbitral seat, the procedural law
102
governing the arbitral proceedings and the law that the parties had selected to govern their
underlying contract. Because all of these connecting factors pointed to the same applicable
law, the Court had little difficulty in applying that law to the arbitration agreement. (248)
Despite this, the Dutch courts inability to prioritize these various connecting factors made
clear how the closest connection standard provides little meaningful guidance in selecting
the law governing an arbitration agreement in anything but the most straightforward case. In
particular, it provides no real means of determining whether the law governing the underlying
contract or the law of the arbitral seat has the closer connection to the parties arbitration
agreement. (249)
P 521
The same shortcomings are apparent in analyses from other jurisdictions. Thus, English
judicial decisions have shifted, over the space of a decade, from a relatively absolute rule that
the law chosen to govern the underlying contract governs the arbitration agreement to an
almost equally strong presumption that the law of the arbitral seat governs the arbitration
agreement, notwithstanding a contrary choice-of-law agreement. (250) In reality, however,
neither of these two positions finds particularly cogent support in an objective analysis of
either the parties intentions or the closest relationship of their arbitration agreement as
confirmed by the English courts adoption of first one and then the opposite general
presumption regarding the parties supposed intentions.
As discussed above, the same ambivalence is reflected in the divergent results of U.S. lower
court decisions considering the law applicable to international arbitration agreements. These
decisions have variously interpreted general choice-of-law clauses as selecting or as not
selecting the law governing the arbitration agreement. (251) Likewise, these courts have
variously concluded that the state where the arbitral seat is located or, alternatively, the
state whose law governs the underlying contract has the most significant relationship with
the arbitration agreement. (252) Much like English courts, U.S. lower courts have been unable
to arrive at consistent and satisfying conclusions regarding the law governing the arbitration
agreement.
Similarly, a distinguished European commentator observed that application of the substantive
law of the arbitral seat to the arbitration agreement findssupport in the consideration that,
inasmuch as it may be said that the place of performance of the arbitration agreement is at
the seat of the arbitration, the law of the seat is the one having the closest connection with
such an agreement (according to a rule of conflict which has gained wide acceptance). (253)
P 522
Other distinguished commentators conclude, with equal conviction, that [s]ince the
arbitration clause is only one of many clauses in a contract, it would seem reasonable to
assume that the law chosen by the parties to govern the contract will also govern the
arbitration clause. (254)
Neither authority attempts, however, to explain why their favored solution the law of the
arbitral seat or the law of the underlying contract is closer or more significant than
alternative options. In reality, that is because these sorts of abstract assessments of closeness
and significance are arbitrary and unprincipled, ignoring the real objects of both international
arbitration agreements and the international and national legal regimes that seek to enforce
them.
[g] Cumulative Choice-of-Law Analysis and Miscellaneous Other Choice-of-Law Rules
In part because of these difficulties, some arbitral tribunals have applied a so-called
sequential or cumulative choice-of-law analysis, which looks to the rules under every
P 523
potentially applicable law. (255) The cumulative approach may appear comforting when
all possible alternatives yield the same result, but it again provides no meaningful guidance
when a true conflict exists. If the potentially-applicable substantive laws yield differing
results, then the cumulative approach does not assist at all in deciding which of the
potentially-applicable legal systems results should be preferred. (256)
Other arbitral awards and national decisions have either applied or considered other choice-
of-law standards, including general principles of international law, (257) the law of the place
where the arbitration agreement was concluded, (258) the seat of a domestic trade
organization which has published a standard form contract/arbitration agreement, (259) or the
law of the place where the arbitral award would likely require recognition and enforcement.
(260) In general, each of these various rules suffered from serious shortcomings, and therefore
attracted little attention or support.
P 524
[h] Mandatory Application of Choice-of-Law Rules of Arbitral Seat
Despite the foregoing diversity of choice-of-law rules, premised on the arbitrators freedom to
select a suitable choice-of-law rule, a substantial body of contemporary arbitral awards holds,
and continues to hold, that arbitrators are mandatorily required to apply the conflicts rules of
the arbitral seat to choose the substantive law governing the arbitration agreement. (261) In
the words of one award:
This is an arbitration having its seat in London, England. Accordingly, the Arbitral Tribunal
must apply English Arbitration Law the English Arbitration Act, 1996 to the question whether
it has jurisdiction. (262)
This conclusion has been particularly likely where the arbitral tribunal was seated in a
jurisdiction (like Switzerland) where the national arbitration statute prescribes a specialized
103
choice-of-law rule designed for and applicable to international arbitration agreements (like
Article 178 of the Swiss Law on Private International Law). (263)
Preliminarily, it is notable that this mandatory application of the choice-of-law rules of the
seat to the arbitration agreement contrasts with developments with regard to the substantive
law governing the merits of the parties dispute. (264) There, as discussed below, the trend in
recent years has been away from mandatory application of the choice-of-law rules of the
arbitral seat. (265)
The primary explanation for this difference has been the development of specialized choice-
of-law and substantive rules applicable to international arbitration agreements such as
under Swiss, (266) French (267) and U.S. (268) law. In most jurisdictions, no similar rules apply
with regard to choice-of-law questions affecting the substantive law governing the underlying
P 525 contract, permitting other choice-of-law rules to evolve in that area. (269) In contrast, the
specialized choice-of-law rules applicable to international arbitration agreements have
provided obvious candidates for mandatory application by arbitral tribunals particularly in
jurisdictions, like Switzerland, where they are contained within a mandatorily-applicable
national arbitration statute.
Nonetheless, the mandatory application of the law of the arbitral seat has little to recommend
it. It contradicts the basic choice-of-law rule in Article II(1) and V(1)(a) of the New York
Convention, giving effect to the parties autonomy, (270) as well as more general principles of
party autonomy in the choice-of-law context; (271) likewise, mandatory application of the law
of the arbitral seat also ignores the uniform international substantive standards imposed by
the New York Convention. This approach also ignores entirely the substantial arguments in
favor of selecting the law applicable to the parties underlying contract to apply to the
associated arbitration clause, in favor of an archaic analogy of the arbitral tribunal to a
national court. (272) None of these results is defensible or sensible.
[i] UNCITRAL Model Law
The UNCITRAL Model Law parallels the New York Convention in its treatment of the law
governing international commercial arbitration agreements. As discussed above, and
paralleling Article II of the Convention, Article 8 of the Model Law provides a rule of
presumptive validity, which allocates the burden of proof of invalidity of an international
arbitration agreement to the party resisting enforcement, (273) while requiring application of
generally-applicable contract law rules to the substantive validity of such agreements. (274)
These substantive rules are mandatorily applicable to all international arbitration agreements
falling within the Model Laws scope, regardless of the law applicable to other aspects of the
agreement. (275)
Paralleling Article V(1)(a) of the Convention, Articles 34(2)(a)(i) and 36(1)(a)(i) of the UNCITRAL
Model Law also provide that an arbitral award may be annulled or denied recognition if the
parties arbitration agreement is not valid under the law to which the parties have subjected
it or, failing any indication thereon, under the law of [the state where the award was made].
(276) These provisions adopt the same two-prong standard as that of Article V(1)(a) of the
Convention, giving effect to any express or implied choice-of-law by the parties and, failing
such agreement, prescribing a default rule, selecting the law of the arbitral seat.
P 526
Given the substantially identical text of the Convention and Model Law, the same analysis
that applies under Articles II and V of the Convention, including its treatment of the validation
principle, applies equally under the Model Law. (277) That is confirmed by the substantially
identical objectives of the two instruments, (278) and by the well-reasoned authority
concluding that the two instruments should be interpreted consistently and uniformly. (279)
[j] Choice of Law Applicable to Formation and Substantive Validity of International Arbitration
Agreements in U. S. Courts
Selecting the law applicable to an international arbitration agreement gives rise to particular
complexities under U.S. law, which warrant separate discussion. As discussed below, nothing in
the text of the FAAs first or second chapters directly addresses the question of what law is
applicable to the formation or substantive validity of an international arbitration agreement.
(280) In part because of this absence of legislative guidance, the relationship between U.S.
federal law (derived from the FAA and New York Convention) and U.S. state law (derived from
state contract law principles) gives rise to special difficulties.
Particularly to some foreign observers, (281) U.S. approaches to the choice of law applicable to
international arbitration agreements are often opaque, especially insofar as the relationship
between U.S. federal and U.S. state law is concerned. In recent years, however, increased
judicial and academic attention has been devoted in the United States to choice-of-law
questions under the FAA in the international arbitration context. (282) Moreover, as discussed
P 527
below, U.S. choice-of-law analysis with regard to international arbitration agreements
generally produces sensible results, using methods that are broadly similar to those in other
developed jurisdictions.
As a starting point, most contracts in the United States are governed by the laws of one of the
several States, rather than federal law. (283) There is no general federal legislation, and no
federal common law, dealing comprehensively with commercial contracts or issues of contract
law generally. (284) That is generally as true in the case of international business transactions
as it is in interstate and local transactions. (285)
104
Arbitration agreements are a significant exception to this general rule that state law governs
the interpretation, validity and enforcement of commercial contracts in the United States. As
discussed above, at the heart of the FAA is 2s provision that a written arbitration provision in
a contract involving interstate or foreign commerce shall be valid, irrevocable and
enforceable, subject only to a savings clause permitting non-enforcement on such grounds as
exist at law or in equity for the revocation of any contract. (286) The sections stated purpose
was to revers[e] centuries of judicial hostility to arbitration agreementsby plac[ing]
arbitration agreements upon the same footing as other contracts. (287)
As discussed below, 2 has been applied by U.S. courts in a substantial body of cases,
including particularly to issues concerning: (a) substantive validity, (b) formation, (c) formal
validity, and (d) interpretation of arbitration agreements. (288) Different rules have been
developed with regard to each of these various issues, with different approaches also being
taken by U.S. courts in domestic and international cases.
P 528
[i] Law Governing Substantive Validity of Domestic Arbitration Agreements Under Federal
Arbitration Act
With regard to the substantive validity of arbitration agreements, the U.S. Supreme Court has
repeatedly held that 2 of the domestic FAA creates a sui generis body of substantive federal
contract law, applicable to interstate and international arbitration agreements: Congress
declared a national policy favoring arbitration and withdrew the power of the states to require
a judicial forum for the resolution of claims which the contracting parties agreed to resolve by
arbitration. (289) As the Supreme Court has repeatedly held:
Section 2 [of the FAA] is a congressional declaration of a liberal federal policy favoring
arbitration agreements, notwithstanding any state substantive or procedural policies to the
contrary. The effect of the section is to create a body of federal substantive law of arbitrability,
applicable to any arbitration agreement within the coverage of the Act. (290)
Section 2 requires, as a matter of substantive federal law, that courts enforce privately
negotiated agreements to arbitrate, like other contracts, in accordance with their terms. (291)
In particular, Section 2 embodies the national policy favoring arbitration and places
arbitration agreements on equal footing with all other contracts. (292) This federal law is
binding in both federal and state courts, (293) and it preempts (or supersedes) inconsistent
state law. (294)
Applying this federal substantive law, U.S. courts have repeatedly refused to apply, and
instead held preempted, a wide variety of state law provisions which were aimed at rendering
arbitration clauses invalid. For example, U.S. courts have held that domestic state laws
forbidding the arbitration of particular categories of disputes (e.g., state securities law, tort
P 529
claims), (295) granting an administrative agency exclusive jurisdiction over certain types
of disputes, (296) imposing particular formal requirements (e.g., notice of arbitration clause
typed in underlined capital letters on the first page of the contract), (297) and mandating use
of particular arbitral procedures (298) are preempted by the FAA.
The overall consequence of 2 is to require enforcement of arbitration agreements in
accordance with generally-applicable rules of contract law. An essential element of 2 is its
savings clause, which provides that arbitration agreements shall be valid, irrevocable and
enforceable, save that they may be denied enforcement on such grounds as exist at law or in
equity for the revocation of any contract. (299) U.S. courts have interpreted this savings
provision to permit challenges to the validity or enforceability of arbitration agreements only
under neutral, generally-applicable contract law defenses (such as fraud, mistake, duress, or
vagueness) which also apply to other types of contracts. (300) As the Supreme Court recently
summarized the law:
The FAAplaces arbitration agreements on an equal footing with other contracts and requires
courts to enforce them according to their terms. Like other contracts, however, they may be
invalidated by generally applicable contract defenses, such as fraud, duress, or
unconscionability. (301)
Under this analysis, the FAA preempts discriminatory state (and foreign) law rules which single
out arbitration agreements for special burdens, disfavor, or requirements that do not apply to
other types of contracts. (302) Additionally, the FAA preempts state (and foreign) laws that
stand as an obstacle to the accomplishment of the FAAs objectives, (303) for example, by
imposing procedures that are incompatible with the objectives of arbitration.
Importantly, however, in the U.S. domestic context, the generally-applicable contract law rules
that ordinarily apply to arbitration agreements are provided by U.S. state law, subject to the
P 530 FAAs prohibition against state law rules that discriminate against arbitration agreements.
(304) Thus, as discussed below, U.S. courts have generally applied state law contract rules
regarding the validity of contracts to domestic arbitration agreements. (305) As a recent
Supreme Court decision held:
[G]enerally applicable contract defenses, such as fraud, duress, or unconscionability, may be
applied to invalidate arbitration agreements without contravening 2. Courts may not,
however, invalidate arbitration agreements under state laws applicable only to arbitration
provisions. (306)
Consistent with this, the overwhelming weight of U.S. judicial decisions apply U.S. state law
105
rules of contract validity, such as unconscionability, fraud, mistake, frustration, impossibility
and the like, to domestic arbitration agreements. (307) Similarly, U.S. courts have overruled
earlier authority holding that federal common law provides a general body of contract law
governing all aspects of the validity of domestic arbitration agreements. (308)
U.S. courts have not clearly resolved the question whether a general choice-of-law clause in
the parties underlying contract extends to the contracts arbitration clause in domestic cases,
P 531 with lower courts reaching inconsistent results. (309) Most courts have held, however, that
a choice-of-law clause, if applicable to the arbitration agreement, only chooses substantive
contract law rules and not rules of arbitration law, including rules regarding the allocation of
authority between arbitral tribunals and courts. (310)
[ii] Law Governing Substantive Validity of International Arbitration Agreements Under Federal
Arbitration Act
A broadly similar approach to that applicable under the domestic FAA applies to most
international arbitration agreements in U.S. courts. Given the universal character of the New
York Convention, most international arbitration agreements are governed in U.S. courts by
203 of the FAA. (311) U.S. courts have repeatedly held that federal common law, derived from
2 and 203 of the FAA, preempts state law rules which single out international arbitration
agreements for special disfavor or burdens, as is the case with domestic agreements. (312)
In addition, as discussed below, many U.S. courts have gone further with regard to
international arbitration agreements, as distinguished from domestic arbitration agreements,
holding that federal common law principles apply also to questions of contract validity (rather
P 532
than generally-applicable state law contract rules). (313) For example, in Marchetto v.
DeKalb Genetics Corp., the court cited 203 of the FAA in concluding that the validity of an
arbitration agreement is determined by reference to the [FAA] and the federal substantive law
of arbitrability. (314) In another courts words:
When we exercise jurisdiction under Chapter Two of the FAA, we have compelling reasons to
apply federal law, which is already well-developed, to the question of whether an agreement
to arbitrate is enforceable. (315)
The result of the foregoing developments has been that the substantive validity of
international arbitration agreements can ordinarily be challenged in U.S. courts only on the
basis of generally-applicable contract law defenses (such as fraud, mistake, impossibility,
unconscionability and the like), ordinarily prescribed by federal common law rules. As
discussed elsewhere, this is generally true even where the parties have included a choice-of-
law clause in their underlying contract, with most U.S. courts interpreting such provisions as
inapplicable to the arbitration agreement (316) or refusing to apply the law chosen by the
parties agreement if it imposes discriminatory or idiosyncratic prohibitions to agreements to
arbitrate. (317) Despite this general approach, a few U.S. courts have applied the law governing
the underlying contract to the arbitration agreement, almost always upholding the validity of
the arbitration agreement. (318)
[iii] Law Governing Formation of Domestic Arbitration Agreements Under Federal Arbitration Act
Until fairly recently, many U.S. courts generally applied substantive federal common law rules
derived from 2 of the domestic FAA to the formation of domestic arbitration agreements
P 533
without engaging in any meaningful choice-of-law analysis. (319) This conclusion
historically resulted from the view that Congress intended the FAA to preempt state (and
foreign) law in U.S. courts, which directly mandated substantive rules and obviated the need
for choice-of-law analysis. (320) As a consequence, federal courts applied judicially-fashioned
federal common law rules of contract formation, which provided a pro-enforcement legal
regime for domestic arbitration agreements. (321)
More recently, however, the U.S. Supreme Court has apparently held that, in the domestic
context, U.S. state law applies to questions concerning the formation (as distinguished from
the validity) of arbitration agreements. For example, the Supreme Court held in First Options of
Chicago, Inc. v. Kaplan, that federal as well as state courts should apply ordinary state-law
principles that govern the formation of contracts in determining the existence of an
agreement to arbitrate. (322) The Court has also concluded that [n]either [2 nor 3 of the FAA]
purports to alter background principles of state contract law regarding the scope of
agreements.[S]tate law, therefore, is applicable to determine which contracts are binding
under 2 and enforceable under 3. (323) Other recent U.S. domestic authorities under the FAA
are to the same effect. (324)
Although it is beyond the scope of this discussion, one may question whether this analysis is
well-considered as a matter of domestic U.S. law. A more coherent analysis, in better keeping
with the FAAs objectives, would be to characterize the question whether an arbitration
agreement exists, for purposes of the FAA, as a matter of federal law. This would further the
FAAs objectives of facilitating the arbitral process and ensuring that state (or foreign) law does
not obstruct the enforcement of arbitration agreements. More fundamentally, it is difficult to
P 534 understand how the FAA could effectively regulate the validity of arbitration agreements
without also regulating both what those agreements are (325) and how they are validly formed.
For the present, however, this appears to be a path not yet taken in the domestic U.S. context.
It remains to be seen whether the application of state law principles of contract formation will
impede the enforceability of domestic arbitration agreements in the United States.
106
[iv] Law Governing Formation of International Arbitration Agreements Under Federal Arbitration
Act
Despite the foregoing developments with regard to domestic U.S. arbitration agreements,
many U.S. lower courts have continued to apply substantive rules of federal common law to the
formation of international arbitration agreements that are subject to the New York Convention,
(326) as distinguished from domestic arbitration agreements. For example, a U.S. Court of
Appeals applied general principles of the law of contract formation to determine whether
the parties had validly concluded an international arbitration agreement. (327) Likewise, a
recent district court decision declared that, if an arbitration agreement meets the
requirements of either the FAA or N.Y. Convention, then those federal standards are the default
standards that a court must apply, even in the face of a general choice-of-law provision. (328)
Given the conclusion by many U.S. courts that 2 and 203 of the FAA establish a body of
substantive federal common law, applicable to the formation and validity of international
arbitration agreements, there have been few instances where the application of foreign law to
international arbitration agreements has been considered in U.S. litigation. Rather, in many
cases, U.S. courts have simply applied U.S. substantive federal common law contract
P 535
principles to determine the existence and validity of international arbitration
agreements, without considering or applying foreign law. (329) As one lower court put it:
[N]ormal conflict of laws rules should not be used to determine which law should govern the
validity of an arbitration clause when the parties are subject to the dictates of the Convention.
Neither the law of a foreign country, or the law of a particular state (or territory) can ever be
chosen only federal law is controlling. (330)
Despite this, not all U.S. courts adopt the approach of applying federal common law rules of
contract formation to international arbitration agreements. Extending the analysis set out for
domestic arbitration agreements in First Options, (331) some U.S. lower courts have applied the
same basic approach to international arbitration agreements subject to the NewYork
Convention as is applied to domestic arbitration agreements. These decisions have applied
U.S. state or foreign law rules of contract formation (and validity) to international arbitration
agreements. (332)
Those U.S. courts that have applied state or foreign law have generally done so after applying
traditional choice-of-law rules to select the law applicable to international arbitration
agreements. In doing so, these courts have encountered the same difficulties that most other
national courts have in selecting the law applicable to the existence and validity of
P 536 Some U.S. courts have applied the law of the arbitral seat, (334) while others have applied
the law governing the underlying contract, particularly where that contract contains a choice-
of-law clause. (335) Other U.S. courts have looked to the most significant relationship
standard of the Restatement (Second) Conflict of Laws, (336) but this has produced results that
are similar to those in other jurisdictions (with U.S. lower courts engaging in fairly unproductive
P 537
debates whether the law of the arbitral seat or the law governing the underlying contract
has the closer relationship to the arbitration agreement). (337)
The application of either the law of the arbitral seat or the law chosen by a general choice-of-
law clause remains a minority position in the United States. The better-reasoned decisions of
U.S. courts instead apply a judicially-fashioned body of federal common law, derived from the
New York Convention and Chapter 2 of the FAA, to questions of formation and validity of
international arbitration agreements, rather than looking to either state or foreign law. This
analysis bears significant parallels to French law, where courts apply international law
principles, and to Swiss law, where courts apply specialized choice-of-law and substantive
rules, in each case rather than a particular national law selected through a traditional choice-
of-law analysis. (338)
[v] Application of International Law Principles to Formation and Substantive Validity of
International Arbitration Agreement Under Federal Arbitration Act
In addition to the various choice-of-law analyses described above, the weight of U.S. federal
court authority in cases involving the formation or validity of international arbitration
agreements has applied substantive principles of international law, derived from Article II(3)
of the New York Convention, to the formation and validity of international arbitration
agreements. These decisions have held that Article II(3) prescribes uniform international
substantive rules of law that supersede discriminatory or idiosyncratic provisions of foreign (or
state) law applicable to international arbitration agreements.
For example, in Ledee v. Ceramiche Ragno, the U.S. Court of Appeals rejected a challenge to an
international arbitration agreement based upon a Puerto Rican law invalidating arbitration
agreements in automobile dealer contracts. (339) Relying on Article II(3) of the Convention, and
Chapter 2 of the FAA (implementing the Convention), the Court held that the null and void
formula under Article II(3) must be interpreted to encompass only those situations such as
fraud, mistake, duress, and waiver that can be applied neutrally on an international scale.
(340)
Similarly, in Rhone Mediterranee Compagnia Francese di Assicurazioni e Riassicurazioni v. Lauro,
the U.S. Court of Appeals rejected a challenge to an international arbitration agreement based
on its alleged invalidity under Italian law (the law of the arbitral seat). (341) The relevant
107
P 538 Italian legislation denied effect to arbitration agreements providing for an even number of
arbitrators, which the parties agreement arguably contemplated. Relying on Article II(3)
of the Convention, the Court held: an agreement to arbitrate is null and void only (1) when it is
subject to an internationally recognized defense such as duress, mistake, fraud or waiver, or (2)
when it contravenes fundamental policies of the forum state. (342) Likewise, another lower
court refused to give effect to a purported Italian law rule [that] appears to be a special
requirement governing agreements to arbitrate, but inapplicable to other contractual terms
and conditions. (343)
A number of other U.S. courts have adopted the same approach, looking to internationally-
applicable principles of neutrality and non-discrimination derived from Article II(3). These
decisions have relied on such principles to give effect to international arbitration agreements,
notwithstanding national law rules that either singled-out such agreements for particular rules
of invalidity or that imposed idiosyncratic limitations on the validity of such agreements. (344)
One U.S. decision declared:
it is well-established that it is not state law, but internationally-recognized defenses to
contract formation or public policy concerns of the forum nation, which make a valid agreement
to arbitrate the subject of the dispute unenforceable. (345)
U.S. courts have relied on both the language and objectives of the Convention in adopting this
interpretation of Article II(3). According to one court:
P 539 our interpretation of the Article II(3) proviso must not only observe the strong policy
favoring arbitration, but must also foster the adoption of standards which can be uniformly
applied on an international scale. (346)
Another decision reasoned that [t]he null and void clause must be read narrowly because the
signatory nations have declared a general policy of enforceability of agreements to arbitrate.
(347)
Applying this analysis, the course of U.S. judicial decisions during the past four decades has
been extremely favorable towards the enforcement of international arbitration agreements.
U.S. courts have repeatedly upheld the existence and validity of international arbitration
agreements, affording litigants a relatively high degree of ultimate certainty that their
arbitration agreements will be enforced in accordance with their terms in U.S. litigation.
Indeed, one lower U.S. court recently remarked that it was aware of:
no United States federal cases where a court has applied the law of the foreign country and
declared that an arbitration clause would be invalid under that countrys law. (348)
More recently, a number of U.S. lower courts have refused to apply national and state law rules
of unconscionability (349) and public policy (350) under Article II, on the basis that the rules at
issue were not internationally neutral.
P 540
There are occasional decisions by U.S. courts that do not adopt the foregoing approach to
Article II, but they are isolated and contrary to the decided weight of U.S. authority. One
example of such an exception was a lower court decision that applied Rhode Island law to the
validity of an international arbitration agreement, rather than Article IIs international
standards, because [t]he Convention relates to recognition of arbitral awards and not the
validity of arbitration agreements. (351) That conclusion, and its rationale, are plainly wrong:
the Convention, specifically Article II of the Convention, clearly does apply to international
Another example of an anomalous U.S. decision under the Convention is the Court of Appeals
decision in Sarhank Group v. Oracle Corp., which refused to recognize an arbitral award made
in Egypt. (353) There, the court rejected the tribunals decision, interpreting a choice-of-law
clause in the parties underlying contract to apply to the arbitration agreement and holding
that the non-signatory U.S. parent of the respondent in the arbitration had assented to the
contract and its arbitration agreement. Applying federal common law standards, the court
held that U.S. law governed questions regarding formation of an agreement to arbitrate by a
U.S. company. (354)
This decision reflects a parochial insistence on applying local law, notwithstanding a foreign
arbitral seat, (355) a choice-of-law clause selecting foreign law (356) and the absence of any
connection of the relevant contract to the United States. (357) Given the choice-of-law rule in
Article V(1)(a), it is very difficult to see what could justify this application of U.S. law.
Moreover, the Sarhank decision very unusually did not ignore the law that would have been
selected by the parties choice-of-law clause or by a traditional choice-of-law analysis in order
to give effect to the agreement to arbitrate (as is the case under Swiss, French and most U.S.
decisions); (358) rather, the court disregarded the law that would have been selected by
normal choice-of-law principles to invalidate an arbitration agreement. That is a serious
departure from the obligations imposed by the NewYork Convention (Articles V(1)(a) and II(3)),
(359) as well as the overwhelming weight of judicial authority in both the United States and
most other jurisdictions. (360)
P 541 [3] Application of Validation Principle to Formation and Substantive Validity of
International Arbitration Agreement
In part because of dissatisfaction with both historic choice-of-law standards and contemporary
108
closest connection/most significant relation or cumulative tests, (361) both national
legislatures and courts, as well as arbitral tribunals, have increasingly embraced a validation
principle. Rather than applying abstract connecting factors to select a system of national law
to govern an international arbitration agreement, this principle looks expressly to the
purposes of such agreements and the legal instruments for enforcing them, and provides for
application of the law of the jurisdiction that will give effect to the parties agreement to
arbitrate. The avowed purpose of this principle is to give effect to the parties genuine
commercial intentions and to establish a pro-arbitration enforcement regime, consistent with
the objectives of the New York Convention, that overcomes the complexities and uncertainties
of traditional choice-of-law analysis. As discussed below, this principle is not only consistent
with developments in national courts and arbitral tribunals, (362) but is also required by a
sound choice-of-law analysis and the terms of Article V(1)(a)s choice-of-law rules. (363)
As discussed above, there are fundamental deficiencies in both a choice-of-law rule selecting
the law of the arbitral seat and a choice-of-law rule selecting the law governing the underlying
contract. (364) There are also grave deficiencies in a general choice-of-law rule selecting the
law with the closest or most significant connection to a particular agreement. (365)
On the one hand, the fundamental defect in a general choice-of-law rule is that it mechanically
selects the law of a single jurisdiction, based on a particular criterion, with little regard for the
P 542 objectives or commercial expectations of the parties and the interests of the relevant
states. (366) That is true of both Article V(1)(a)s default choice-of-law rule, selecting the law of
the arbitral seat, (367) and the approach of some national courts, selecting the law specified
by a general choice-of-law clause in the parties underlying contract. (368)
The fundamentally arbitrary character of both of these rules is illustrated both by the
divergent approaches of different national courts to selecting a default choice-of-law rule
(with different courts selecting contradictory rules) (369) and by the disagreements within
particular national legal systems (e.g., English and U.S.) on the same issue. (370) In each case,
the law governing the arbitration agreement is dependent on a single connecting factor
either the arbitral seat or the law chosen by a general choice-of-law clause; in neither case,
however, is there a principled basis for preferring that connecting factor to other potentially
relevant connecting factors. Put simply, there is seldom any principled basis for concluding
that the choice of the arbitral seat is or is not a more meaningful connection, or better
indicator of the parties intentions, than the law chosen to govern the underlying contract or
vice versa.
On the other hand, the fundamental difficulty with the closest connection/most significant
relationship standards is their failure to provide effective guidance in determining what
factors qualify as closest or most significant in particular cases. Again, that is because these
standards look to relatively mechanical and fortuitous connecting factors and ignore both the
parties objectives and commercial expectations, in entering into international arbitration
agreements, and the interests of relevant legal systems. (371) Moreover, application of the
closest or most significant relationship standard generally leads to nothing more than
another unprincipled choice between the law of the arbitral seat and the law chosen to
govern the underlying contract. The most significant relationship standard adds nothing to this
choice beyond ex ante uncertainty about what it will be.
The validation principle provides a more principled approach, better-rooted in the parties
true intentions and the objectives of the New York Convention (and contemporary national
arbitration statutes), to the choice of the law governing international arbitration agreements.
An early example of a more considered analysis giving effect to the validation principle can be
found in a 19th century House of Lords decision, in Hamlyn & Co. v. Talisker Distillery. (372)
There, the parties agreed to a contract for the purchase of grain, to be performed entirely in
Scotland, with an arbitration clause providing for arbitration by two members of the London
Corn Exchange, or their umpire, in the usual way. (373) When disputes arose under the grain
purchase agreement, Scottish courts refused to dismiss a litigation, relying on provisions of
Scots law that invalidated any arbitration agreement that did not name the arbitrators. On
P 543 appeal, the House of Lords reversed, holding that the arbitration clause was subject to
English, not Scots, law, and that the agreement to arbitrate was valid under English law. (374)
Among other things, the House of Lords reasoned that the arbitration clause was governed by
English law (because of the parties reference to arbitrators sitting in England and drawn from
a commercial body in London of a conventional tribunal which is to act in the usual way, or,
in other words, in the manner which is customary in London (375) ). These connecting factors
were held to supersede the underlying contracts exclusive connection to Scotland. Equally
important, and of more enduring guidance, Lord Ashbourne reasoned that the arbitration
clause becomes mere waste paper if it is held that the parties were contracting on the basis of the
application of the law of Scotland, and that [i]t is more reasonable to hold that the parties
contracted with the common intention of giving entire effect to every clause, rather than of
mutilating or destroying one of the most important provisions. (376)
The House of Lords analysis, although dated, is well-reasoned. Properly conceived, the choice
of law governing an international arbitration agreement must be drawn, not from abstract
connecting factors, but from the commercial purposes of parties to international arbitration
agreements and from the underlying objectives of the international arbitral process. (377)
As discussed above, the parties purposes and commercial expectations in concluding an
international arbitration agreement are not connected abstractly to one particular national
109
jurisdiction. (378) That would generally be contrary to the essential nature and purpose of an
international arbitration agreement, which is inherently international in character, and to the
basic conception of contemporary international arbitration, which is also fundamentally
international in character. Instead, ascertaining the parties purposes and expectations in
entering into an international arbitration agreement requires reference to the parties
underlying objective of obtaining efficient resolution of international disputes, and, in
particular, of overcoming the peculiar jurisdictional and choice-of-law uncertainties that
ordinarily accompany transnational transactions. (379) These objectives are not served, and
are in fact frustrated, by formulaic, and ultimately arbitrary and unpredictable, application of
either the law of the arbitral seat or the underlying contract.
P 544
Rather, the law which rational commercial parties expect an international arbitration
agreement to be governed by (absent clear contrary language), and which most closely mirrors
and best accomplishes the purposes of such an agreement, is the law of the jurisdiction which
gives effect to the parties objectives in entering into that agreement. Absent contrary
language, the parties overriding objective in entering into an international arbitration
agreement is to make an agreement that is valid and enforceable (rather than mere waste
paper (380) ), and that provides an effective means of neutrally resolving international
disputes, without regard to differing national choice-of-law and substantive law rules. (381)
Where the parties have subjected their underlying contract to a law that would, if applied to
their arbitration agreement, invalidate that agreement, the separability presumption provides
sound analytical reasons not to apply that law to the parties arbitration agreement. As
discussed above, it makes no commercial sense to assume that the parties intended that the
law governing their underlying contract would also be extended to the presumptively separate
arbitration agreement, if the consequence thereof was to invalidate that agreement. (382)
Rather, in that case, the law of the arbitral seat would presumptively apply to the parties
Conversely, where the parties arbitration agreement would be invalid under the law of the
arbitral seat, there is every reason to apply the law governing the parties underlying contract
to give effect to the arbitration clause. Again, if parties select a law governing their underlying
contract which would give effect to their arbitration agreement, they cannot reasonably be
assumed to have intended that law not to extend to their arbitration agreement where such a
limitation would result in application of a law (that of the seat) which would invalidate their
agreement, and leave them facing all the uncertainties, expenses and other problems of
international litigation that the arbitration agreement was meant to avoid. (383)
For the same reasons, Article V(1)(a) of the New York Convention is fully consistent with, and
requires application of, the validation principle. When Article V(1)(a) provides for application
of the law to which the parties have subjected their arbitration agreement, (384) it permits
an implied choice of law. (385) In particular, Article V(1)(a) recognizes that parties ordinarily
intend that the law governing their international arbitration agreement is the law that makes
that agreement work and that will enforce it effectively. This conclusion is confirmed by the
pro-enforcement objectives of the Convention and by Article IIs rule of presumptive validity
(discussed above). (386)
Consistent with this analysis, numerous authorities have adopted the validation principle in
P 545
the context of international arbitration agreements, either expressly or in practice. As
discussed above, Article 178 of the Swiss Law on Private International Law adopts the
validation principle, providing that an agreement to arbitrate in Switzerland is valid if it
satisfies either the law chosen by the parties to govern the arbitration agreement, Swiss law or
the law applicable to the underlying dispute. (387) Similar legislation has been enacted in
Algeria and Spain. (388)
Likewise, a number of arbitral awards have applied some version of the validation principle.
Under this approach, where different potentially-applicable national laws have produced
different results with regard to the existence or validity of an arbitration agreement, arbitral
tribunals have applied that national law which will uphold the agreement. (389) This analysis
has been justified on the grounds that:
an arbitral clause has a closer relationship to the law that upholds its existence than to the
law that denies it. (390)
Although not generally so characterized in express terms, judicial decisions in a number of
developed jurisdictions are also properly understood as applying an unstated validation
P 546
principle. (391) As discussed above, national courts have consistently engaged in choice-
of-law analyses that select the law that gives effect to international arbitration agreements.
(392) When that is the law of the arbitral seat, the arbitral seats law is applied, and when it is
the law of the underlying contract, that law is applied.
In contrast, in very few cases does a developed courts choice-of-law analysis lead to
application of a law that invalidates the agreement to arbitrate when another potentially-
applicable law would validate the agreement. Moreover, in some jurisdictions, such as the
United States and France, the application of either international or federal common law
principles notwithstanding otherwise applicable national laws that would invalidate or
restrict the parties arbitration agreement can be seen as a variation of the validation
principle. (393)
Some national courts have also expressly cited a validation principle in addressing challenges
110
to the validity of international arbitration agreements. An Austrian judicial decision has
reasoned:
If the wording of the declaration of intent allows for two equally plausible interpretations, the
interpretation which favors the validity of the arbitration agreement and its applicability to a
certain dispute is to be preferred. (394)
Other authorities are to the same effect in approving a validation principle. A1989 Resolution
of the International Law Institute declared:
Where the validity of the agreement to arbitrate is challenged, the tribunal shall resolve the
issue by applying one or more of the following: the law chosen by the parties, the law indicated
by the system of private international law stipulated by the parties, general principles of
public or private international law, general principles of international arbitration, or the law
P 547 that would be applied by the courts of the territory in which the tribunal has its seat. In
making this selection, the tribunal shall be guided by the principle in favorem validitatis. (395)
Commentary which considers the issue, while limited in volume, also approves of the
validation principle. (396)
These authorities provide practical confirmation, from a wide range of differing perspectives,
of the analytical foundations of the validation principle. Long recognized in other contexts,
(397) the validation principle is peculiarly applicable in the context of international
arbitration agreements, which are entered into precisely to avoid the uncertainties and
choice-of-law complexities that otherwise attend transnational transactions. (398) Given the
particular, and very narrow, character of agreements to arbitrate, involving only exchanges of
promises to arbitrate disputes, it makes no commercial or logical sense to conclude that
parties would intentionally select a law to govern that agreement which would then invalidate
it.
Finally, application of a validation principle is entirely consistent with, and on a proper
analysis required by, the New York Convention. As discussed above, a validation principle rests
P 548 fundamentally on the parties intentions: it gives effect to the parties authentic and
objective intentions in concluding an international arbitration agreement, rather than
disregarding those intentions on the basis of formalistic choice-of-law and other analyses. (399)
As such, the validation principle is properly characterized as an implied choice-of-law by the
parties, which Contracting States are mandatorily required to apply under the first prong of
Article V(1)(a)s choice-of-law standard (discussed elsewhere). (400) In particular, where the
first prong of Article V(1)(a) applies, giving effect to an implied choice of law, there is no need
to, and no basis to, apply Article V(1)(a)s default rule (of the law of the arbitral seat).
This result is also consistent with the Conventions pro-enforcement objectives and with the
substantive international rule of presumptive validity, mandated by Articles II(1) and II(3) of
the Convention. (401) Those provisions require Contracting States to give effect to the material
terms of international arbitration agreements; (402) that includes the obligation to give effect
to the parties implied choice of the law that upholds their arbitration agreement. As
discussed below, the Conventions rule of presumptive validity, coupled with the absence of
any choice-of-law rule in Article II, is best effectuated by a validation principle, permitting
maximum effectuation of the enforceability of international arbitration agreements.
[4] Direct Application of International Law to Formation and Substantive Validity of
International Arbitration Agreement
Another reaction to deficiencies in traditional choice-of-law analyses has involved the direct
application of substantive rules of international law to international arbitration agreements.
Different national courts, arbitral awards and commentators have taken slightly different
routes to applying international law rules to international arbitration agreements, but the end
result has been largely similar. (403)
[a] Direct Application of International Law to Arbitration Agreement Under French Law
As discussed elsewhere, contemporary French judicial decisions have generally eschewed
traditional choice-of-law analyses. Instead, French courts have applied principles of
international law to the formation and validity of international arbitration agreements. (404)
French courts have for nearly two decades held that international arbitration agreements are
autonomous from any national legal system and, as a consequence, are directly subject to
general principles of international law. As discussed elsewhere, the Cour de cassations Dalico
P 549
decision held that according to a substantive rule of international arbitration law, the
existence and validity of an international arbitration agreement depends only on the common
intention of the parties, without it being necessary to make reference to a national law. (405)
Other French authorities are to the same effect, (406) as are decisions in a few other
jurisdictions which have adopted the approach of French courts. (407) Recent amendments to
the French Code of Civil Procedure left this line of authority undisturbed, with substantive
principles of international law continuing to apply to international arbitration agreements in
French courts. (408)
P 550 A substantial line of arbitral authority, particularly common in international arbitrations
seated in France, has similarly directly applied international law principles to the formation
and validity of international arbitration agreements. (409) In the words of one leading award,
the arbitration agreements existence and validity are to be ascertained, taking into account
111
the mandatory rules of national law and international public policy, in the light of the common
intention of the parties, without necessarily referring to a state law. (410) This line of choice-
of-law analysis parallels that adopted by French courts. (411)
[b] Application of International Minimum Standards Under U.S. Law
From a common law perspective, which nonetheless adopts an analysis comparable to that in
France, U.S. courts have held that the New York Convention gives rise to a substantive
international rule of non-discrimination. These U.S. decisions rest on the premise (discussed
above) that Article II of the Convention is self-executing (or directly-applicable) in national
courts and that it prescribes substantive rules of international law applicable to the
formulation and validity of international arbitration agreements, which preclude the
application of national law rules that discriminate against international arbitration
agreements or that adopt idiosyncratic rules of invalidity that are not applied neutrally on an
international scale. (412)
Thus, as discussed above, a U.S. appellate court rejected a challenge in Ledee v. Ceramiche
Ragno to an arbitration agreement based upon a Puerto Rican law invalidating arbitration
clauses in automobile dealer contracts. (413) Relying on Article II(3) of the Convention, the
court refused to apply the Puerto Rican law, reasoning:
by acceding to and implementing the [New York Convention], the federal government has
insisted that not even the parochial interests of the nation may be the measure of
interpretation. Rather, the clause [Article II(3)] must be interpreted to encompass only those
P 551
situations such as fraud, mistake, duress, and waiver that can be applied neutrally on an
international scale. (414)
Similarly, in Rhone Mediterranee, another U.S. appellate court rejected a challenge to an
arbitration agreement based on its alleged invalidity under Italian law (the law of the arbitral
seat). (415) Again relying on Article II(3) of the Convention, the court held:
an agreement to arbitrate is null and void only (1) when it is subject to an internationally
recognized defense such as duress, mistake, fraud, or waiver, (2) when it contravenes
fundamental policies of the forum state. The null and void language [in Article II(3) of the
Convention] must be read narrowly, for the signatory nations have jointly declared a general
policy of enforceability of agreements to arbitrate. (416)
The court continued:
signatory nations have effectively declared a joint policy that presumes the enforceability of
agreements to arbitrate. Neither the parochial interests of the forum state, nor those of states
having more significant relationships with the dispute, should be permitted to supersede that
presumption. The policy of the Convention is best served by an approach which leads to
upholding agreements to arbitrate. The rule of one state as to the required number of
arbitrators does not implicate the fundamental concerns of either the international system or
[judicial enforcement] forum, and hence the agreement is not void. (417)
A number of other U.S. lower courts have adopted the same approach, with the progeny of
Rhone Mediterranee and Ledee looking to substantive rules of international law, derived from
Article II(3) of the Convention, to give effect to international arbitration agreements,
notwithstanding rules of national law that either single out such agreements for the imposition
of rules of invalidity or that impose idiosyncratic limitations on the validity of such
agreements. (418)
[c] Future Directions: Direct Application of International Law Versus International Minimum
Standards
There are two principal interpretations of these U.S. decisions relying on Article II(3) of the
Convention. First, Article II(3) may incorporate a comprehensive body of substantive
international law which is directly applicable in national courts. This would parallel the
analysis of French courts, looking directly to international law for substantive contract law
standards, governing all aspects of the formation and validity of international arbitration
P 552
agreements (subject to a public policy exception). (419) It would also roughly parallel
U.S. judicial decisions adopting federal common law rules of contract formation and validity
for application to international arbitration agreements. (420)
Second, an alternative interpretation of Article II(3) would conclude that the provision permits
the application of generally-applicable contract law defenses (under applicable national law)
but imposes a substantive international prohibition against national law defenses which
discriminated against international arbitration agreements, which is again directly applicable
in national courts. This approach would parallel the application of the domestic FAA and its
preemptive effect on discriminatory state laws. (421) This approach would also retain an
important role for choice-of-law analysis, and the application of national law, but would
subject national law to reasonably demanding international limitations, designed to safeguard
the presumptive validity of the arbitration agreement and to ensure that idiosyncratic or
discriminatory national laws do not obstruct the formation and enforcement of international
Each of the foregoing approaches has significant merits and represents an important advance
in international arbitration law. Each of these approaches takes an important and
indispensable step in preventing parochial national legislation from frustrating both the
112
intentions of parties agreeing to international arbitration agreements and the intentions of
Contracting States that have ratified the Convention.
The more firmly-grounded of these two analyses interprets Article II(3) of the Convention as
imposing international limitations on national law rules governing the formation and
substantive validity of international arbitration agreements, as in Ledee, Rhone and their
progeny. At least at present, (422) this is more readily sustained than an approach based on
either customary international law or Article II(3) that seeks to rely on the existence of a
comprehensive, stand-alone body of international substantive contract law principles
governing international arbitration agreements. This conclusion is supported by several
related arguments.
First, the Ledee/Rhone analysis rests on the internationally-recognized terms of the
Convention, providing a firm textual basis for applying international law principles in national
courts. In the absence of an international treaty obligation, it is at best controversial to claim
the existence of independent principles of customary international law governing the
substantive validity and formation of commercial arbitration agreements (423) or to rely on
such principles to override national law rules applicable to arbitration agreements generally.
P 553 (424) Relying on Article II(3) of the Convention offers a more cogent and defensible
foundation for the application of international law principles than either customary
international law or general conceptions of international public policy.
As discussed above, international arbitration agreements have long and almost uniformly been
regarded as being governed by national law principles, selected through choice-of-law
principles. (425) Historically, such agreements were variously considered to be subject to the
national law of the judicial enforcement forum, the national law of the arbitral seat, the
national law governing the underlying contract, or the national law with the closest connection
to the arbitration clause: (426) the one uniform theme throughout this history, including
throughout virtually the entire 20th century, has been that it was always national law not
international law that was considered applicable to international arbitration agreements.
Indeed, as discussed above, both the New York and European Conventions expressly provide
for the application of national law not international law to determine at least elements of
the existence and substantive validity of international arbitration agreements. (427) That
history makes it very difficult to accept, at present, the direct application of international law
to all issues relating to the validity of international commercial arbitration agreements.
Additionally, it is unclear whether international law currently provides a recognized body of
substantive contract and other commercial law rules capable of affording business enterprises
the certainty and predictability that they require in international commercial transactions.
There is no general international convention or code, prescribing rules of international
contract law, which could be applied to international arbitration agreements. Nor is it easy to
P 554
conclude that there is widespread agreement on the substantive content of rules of
contract law, which might provide the basis for formulating general principles of law that could
be applied to international arbitration agreements. (428)
Nonetheless, there is much to recommend the idea that customary international law principles
could develop over time, to provide an internationally-recognized body of contract law
principles applicable to international commercial arbitration agreements. The development
of international law rules governing the formation and validity of investor-state arbitration
agreements (429) indicates the plausibility of the development of comparable rules for
international commercial arbitration agreements. Moreover, the constitutional status of the
New York Convention (discussed above) (430) leaves substantial scope for the development of
a comprehensive body of contract law applicable to international arbitration agreements.
For the time being, however, the development of a generally-accepted body of international
law, applicable to the contract and other commercial law issues raised by challenges to
international commercial arbitration agreements, remains aspirational. Particularly in areas
such as capacity, authority and corporate powers, it is difficult to conclude that a free-
standing body of substantive international commercial law, sufficient to provide a reliable
framework governing the formation and validity of international agreements, currently exists.
In turn, the absence of such a body of law provides a powerful argument against concluding
that international commercial arbitration agreements are governed by international, rather
than national, law.
Some authorities reason that there is no need for a system of contract law to govern
international arbitration agreements, which can be subject only to the common intention of
the parties, without it being necessary to make reference to a national law. (431) That analysis
falls of its own weight.
It makes no sense to speak of contracts governed only [by] the common intention of the
parties, without any reference to a national law. Parties intentions take legally-binding form
(i.e., become valid contracts) only by virtue of external legal regimes, as well as through
application of external legal rules (concerning issues of consent, duress, unconscionability,
certainty and definiteness, frustration, impossibility, repudiation, waiver and the like), which
have been developed over centuries. Dismissing such rules is both unwise (because it discards
P 555
accumulated learning and useful guidance) and disingenuous (because the same issues
addressed by these doctrines will in any event continue to arise and require analysis and
resolution).
113
Second, it is entirely justifiable and in fact essential to interpret Article II(3) of the
Convention as imposing international limitations on national law rules regarding the formation
and validity of arbitration agreements. As explained in decisions such as Ledee and Rhone,
Article II(3) requires that international arbitration agreements be enforced, except where they
are null and void, inoperative or incapable of being performed.
Article II(3)s rule of presumptive validity of international arbitration agreements, and
prescription of an international standard requiring the recognition and enforcement of
international arbitration agreements, would have little content or practical value if
Contracting States were free to adopt discriminatory or idiosyncratic national law rules that
made it impossible or difficult to validly form such agreements in the first place. Equally, such
rules of national law would contradict the fundamental objectives of the Convention to
promote the use and enforceability of international arbitration agreements. (432)
Given the Conventions purposes, Article II(3)s exception, permitting non-recognition of an
arbitration agreement that is null and void, inoperative or incapable of being performed, can
only sensibly be interpreted as prescribing at least a partial body of international standards
for the validity of international arbitration agreements. Under these standards, Article II(3)s
requirement that Contracting States recognize and enforce international arbitration
agreements would not permit a state to adopt legislation rendering all arbitration agreements,
or all international arbitration agreements, null and void or invalid. Nor would ArticleII(3)
permit a Contracting State to require local regulatory approval of all international arbitration
agreements as a condition of their validity.
In each case, such legislation would render Article II(3)s mandatory requirement that
international arbitration agreements be recognized meaningless. This contradicts the
Conventions basic purposes and cannot have been contemplated by its drafters, who instead
permitted non-recognition of arbitration agreements only in specified circumstances, (433)
pursuant to a uniform and mandatory international choice-of-law regime. (434)
This conclusion draws support from the text, structure and purposes of the Convention.
Textually, Article II(3) requires Contracting States to recognize arbitration agreements, and
refer the parties to arbitration, save where the said agreement is null and void, inoperative or
incapable of being performed. (435) It makes no sense from a drafting or structural
perspective to impose an international rule that mandatorily requires Contracting States to
recognize arbitration agreements, save in specifically identified circumstances, if those
circumstances are then left wholly undefined and subject to the discretion of Contracting
States.
P 556
Article II(3) does not require Contracting States to recognize arbitration agreements unless
they deem it unadvisable to do so, or unless national law precludes recognition, but rather
when those agreements are null and void, inoperable or incapable of being performed. The
specification of particular exceptions to an arbitration agreements validity in Article II(3)s
textual formula contemplates and requires substantive content and, particularly,
internationally-binding content (436) to give meaning to Article II(3)s text. (437)
The Conventions structure and purposes require the same result. The basic objective of
prescribing uniform international rules, in order to make international arbitration agreements
more readily enforceable, (438) demands that the circumstances in which such agreements will
be recognized be the subject of international standards. Leaving issues of substantive validity
entirely to national law would produce neither uniformity nor a reliable pro-enforcement
approach to arbitration agreements. Equally, it would be anomalous for the Convention to
prescribe a uniform international standard for the formal validity of arbitration agreements, as
it does, (439) and then leave issues of substantive validity wholly unaddressed by international
standards.
The proper content of Article II(3)s substantive international standards is suggested by the
analysis in Rhone, Ledee and their progeny, which requires recognition of the validity of
international arbitration agreements except where such agreements are invalid under
generally-applicable, internationally-neutral contract law defenses. Under this standard, a
Contracting State may not avoid its obligations to recognize and enforce international
arbitration agreements under Article II(3) by adopting special rules of national law that make
such agreements invalid (or null and void, inoperative or incapable of being performed).
P 557
(440) For example, national legislation that imposed unusual notice requirements (e.g.,
particular font or capitalization), consent requirements (e.g., that arbitration agreements be
specifically discussed and approved or established by heightened proof requirements),
regulatory approval requirements (e.g., executive or legislative approval), procedural
requirements (e.g., only institutional arbitration agreements are permitted), or invalidity rules
(e.g., arbitration agreements applicable to future disputes, fraud claims or tort claims are
invalid) would all be impermissible and ineffective under this interpretation of Article II(3).
Much the same analysis would apply if a Contracting State applied idiosyncratic national law
requirements, applicable to domestic arbitration agreements, but out-of-step with essentially
universal approaches of other Contracting States, to international arbitration agreements. For
example, this would preclude legislative requirements for particular arbitrator appointment
mechanisms (e.g., requirements for naming the arbitrator in the arbitration agreement),
qualifications of arbitrators (e.g., local nationality, religion), institutional arbitration
requirements (e.g., forbidding ad hoc arbitration agreements), or language requirements (e.g.,
requiring use of a specified language). These local requirements would not qualify as
114
internationally-neutral contract law defenses, but would instead constitute idiosyncratic local
rules. As the courts in Ledee and Rhone explained, these sorts of defenses contradict the
purposes of the Convention and should not be given effect in the context of international
These requirements of international neutrality and non-idiosyncrasy are derived from the
Conventions purposes of promoting uniform treatment of international arbitration agreements
and facilitating their enforcement. (442) Both purposes are frustrated by discriminatory or
idiosyncratic local laws which purport to invalidate agreements to arbitrate. Equally, the
obligation of Contracting States to perform their treaty obligations in good faith (pursuant to
the principle of pacta sunt servanda) (443) precludes states from maintaining discriminatory
rules of contractual invalidity that render arbitration agreements invalid, even when they
satisfy all of the requirements for substantive validity applicable to other types of contracts.
These obligations are particularly appropriate given the constitutional character of the
Convention, providing an international legal regime within which the efficacy of the
international arbitral process is encouraged and progressively extended. (444)
The Ledee/Rhone analysis gives appropriate meaning to ArticleII(3), by relying on it to hold
Contracting States to their treaty commitments and to supersede national law rules
discriminating against, or imposing idiosyncratic burdens on, international arbitration
agreements. At the same time, this analysis does not attribute a broader meaning to Article
II(3), by attempting to interpret the provision as establishing a complete body of substantive
contract law, governing all issues of capacity, authority, formation, consent, certainty,
P 558 mutuality, validity, illegality and termination of international arbitration agreements. At
least for the present, it is difficult to sustain such an interpretation of Article II(3), which
contains only a half-sentence requirement that arbitration clauses be enforced, save where
they are null and void, inoperable or incapable of being performed, without offering any real
textual basis for a comprehensive set of contract law principles. (445)
This analysis is not altered by the nonarbitrability doctrine, recognized in Articles V(2)(a) and
II(1) of the Convention. (446) As discussed below, the nonarbitrability doctrine permits the
application of a judicial enforcement forums mandatory prohibitions against the arbitration
of particular kinds of disputes (e.g., criminal, domestic relations) even where the parties
arbitration agreement is valid and otherwise enforceable. (447) Although the nonarbitrability
doctrine is an exceptional escape device, it is also best understood as subject to international
limitations derived from the Convention (as discussed below, requiring that local public
policies be specifically articulated and that nonarbitrability exceptions be narrowly-tailored
to achieve these policies). (448) In any event, the existence of the nonarbitrability doctrine,
permitting Contracting States an exceptional escape device for particular categories of
disputes, is not inconsistent with, and arguably confirms, the international character of the
obligations imposed by Article II.
Third, reliance upon Article II(3) fosters international uniformity and maximum enforceability
of international arbitration agreements, by imposing a treaty obligation on all Contracting
States to apply internationally-neutral, non-discriminatory contract law principles to such
agreements. This also means that not only leading arbitral centers, such as Switzerland,
England, France, the United States, Singapore and Hong Kong, but all Contracting States of the
Convention, are required to apply only internationally-neutral defenses thereby fostering a
uniform international approach to the enforcement of arbitration agreements which can be
developed over time through the evolution of textually-grounded customary international law
norms. This is more sensible than individual nations adopting individual views of international
(or national) law, based upon local legislation or policy, which would be the result of an
analysis not relying on the development of uniform international rules under the Convention.
[B] Choice-of-Law Agreements Governing Formation and Substantive Validity of

International Arbitration Agreements
P 559
Analysis of the law governing international arbitration agreements where the parties have
selected the law applicable to such an agreement builds on the choice-of-law analysis
outlined above. In particular, both substantive rules of international law and a validation
principle play a central role in the choice-of-law analysis in the presence of an agreement
selecting the law governing an international arbitration agreement.
Almost all contemporary authorities recognize the autonomy of parties to select the law
applicable to the formation and substantive validity of their international arbitration
agreement. This is a specific application of the more general autonomy of parties under most
contemporary legal regimes to agree upon the substantive law applicable to their commercial
relations. (449) This general principle applies with particular force to international arbitration
agreements, where party autonomy enjoys special status, (450) and is confirmed by both
international treaties and national arbitration legislation. (451)
Under most national legal systems, there are limits to the parties autonomy to select the law
applicable to their legal relations. (452) These types of restrictionsalso exist with regard to
agreements selecting the law applicable to international arbitration clauses. In general, the
limits on the parties autonomy to choose the law applicable to their international arbitration
agreement are expressed as nonarbitrability rules or as mandatory requirements directed
specifically at the validity of agreements to arbitrate. Both of these subjects are addressed in
greater detail in Chapter 6 below. (453)
115
Despite general acceptance of principles of party autonomy, a number of developed legal
systems also adopt additional choice-of-law rules, designed to maximize the enforceability of
international arbitration agreements, which are arguably in tension with principles of party
autonomy. In particular, as discussed above, a number of leading jurisdictions apply either a
validation principle (e.g., Switzerland) or international principles (e.g., France, United States)
in order to give effect to international arbitration agreements, including agreements that the
law chosen by the parties choice-of-law agreement would arguably invalidate. As discussed
below, this analysis is best explained as an effort to give effect to the parties true and
authentic intentions regarding their agreement to arbitrate, which are typically not expressed
in a choice-of-law clause that would invalidate that agreement. (454)
[1] Need for Conflict of Laws Analysis in Cases Involving Choice-of-Law Agreement
Preliminarily, the existence of a choice-of-law agreement by the parties selecting the law
applicable to an international arbitration agreement does not obviate the need for a conflict
P 560
of laws analysis. Rather, as in other contexts, (455) conflict of laws rules must be applied
to give effect to (or invalidate) and to interpret a putative choice-of-law agreement specifying
the law applicable to an arbitration clause. (456)
In turn, the need to apply some set of conflict of laws rules to choice-of-law agreements
inevitably requires selecting the appropriate conflicts rules. The same issue, of choice of
choice-of-law rules, arises in the context of the arbitral tribunals selection of the substantive
law governing the parties underlying dispute. (457)
As discussed above, a number of arbitral tribunals have held or assumed that the conflict of
laws rules of the arbitral seat will apply to select the substantive law applicable to an
international arbitration agreement; nonetheless, there is little uniformity on this issue, and
other arbitral tribunals apply different choice-of-law rules. (458) (In contrast, as in other
contexts, national courts have generally applied their own choice-of-law rules. (459) ) This
diversity in the choice of choice-of-law rules argues again in favor of an internationally-uniform
validation principle, as well as for application of uniform substantive rules of international
law.
The autonomy of parties to select the law governing their international arbitration agreement
is expressly recognized in leading arbitration conventions. (460) Indeed, these instruments
confirm the parties freedom to choose the law governing their arbitration agreements without
express qualifications for mandatory law limitations (although such limitations may fairly be
inferred). At the same time, as discussed elsewhere, the New York Convention and most other
international arbitration conventions also contain uniform international rules of substantive
validity, applicable to international arbitration agreements, which apply regardless of the law
chosen by the parties to govern their arbitration agreement. (461)
[a] Geneva Protocol and Geneva Convention
As noted above, neither the Geneva Protocol nor the Geneva Convention addressed the
question of the law applicable to the parties arbitration agreement, including the validity or
P 561
enforceability of agreements selecting the law applicable to the arbitration agreement.
(462) Instead, Article I of the Geneva Protocol provided only a uniform rule of substantive
international law, applicable to international arbitration agreements regardless of the law
chosen by the parties. (463) The Geneva Convention took a somewhat different approach,
assuming that the arbitration agreement might be subject to a national law in proceedings to
recognize and enforce arbitral awards. (464) The Convention did not, however, provide choice-
of-law rules addressing either the choice of that national law or the question whether parties
could select the law applicable to their international arbitration agreement.
As discussed above, the New York Convention combined elements from both the Geneva
Protocol and Geneva Convention, together with additional provisions that went beyond either
of its predecessors. (465)
[i] Article II: Substantive International Rule of Presumptive Validity
As discussed above, Articles II(1) and II(3) of the Convention prescribe a substantive
international rule of presumptive validity for international arbitration agreements. (466) In
particular, Article II mandatorily imposes the burden of proof of invalidity of international
arbitration agreements on the party resisting enforcement of the agreement (467) and requires
application of non-discriminatory rules of generally-applicable contract law to issues of the
arbitration agreements substantive validity. (468) As discussed above, these uniform
international rules apply regardless of the national law chosen by the parties to govern their
international arbitration agreement. (469)
[ii] Article II: Party Autonomy and Validation Principle
Article II(1)s requirement that Contracting States recognize international arbitration
agreements extends to the material terms of the parties agreement to arbitrate. Among other
things, that requirement includes the obligation to recognize the parties agreement on the law
governing their agreement to arbitrate; that obligation extends to both express and implied
116
choices of law. (470) The effect of Article II(1) is to require Contracting States to recognize and
enforce arbitration agreements which are valid under the law chosen by the parties, either
expressly or impliedly, to govern those agreements. (471)
The better view of the Convention is also that Article II contemplates application of a
P 562
validation principle, requiring Contracting States to apply the law of the state that would
give effect to the arbitration agreement. (472) As discussed above, that conclusion reflects the
parties implied choice and is supported by the pro-enforcement objectives of the Convention;
moreover, a validation principle is also the most appropriate means for giving effect to Article
IIs respect for the parties autonomy and mandatory international rule of presumptive
validity. (473)
There is arguably tension between a validation principle and principles of party autonomy,
particularly where the validation principle is applied to uphold an arbitration agreement that
would be invalid under the law selected by the parties. In practice, such tension rarely arises:
as a practical matter, parties generally do not expressly select the law applicable to the
arbitration agreement itself and, when they do so, they do not ordinarily select a law that
invalidates their arbitration agreement. (474)
In any event, in cases where the parties putative choice of law would invalidate their
agreement to arbitrate the proper analysis is that this choice does not constitute a genuine
indication of the parties intentions. Rather, the best way to effectuate the parties intentions,
in agreeing to arbitrate in an international transaction, is to uphold their arbitration
agreement by applying any potentially-applicable national law that would uphold that
agreement. It is this validation principle, rather than arbitrary application of choice-of-law
theories, that gives true effect to the parties intentions. As discussed in greater detail below,
that result is not only permitted by, but is in fact required by, principles of party autonomy
and Articles II and V(1)(a) of the Convention.
Finally, by virtue of Article VII(1) of the Convention, Article II only forbids non-recognition of
arbitration agreements based on a law other than that chosen by the parties. (475) Like Article
V(1)(a) of the Convention, Article II does nothing to forbid recognition of arbitration
agreements, including recognition of arbitration agreements as a result of application of a law
other than that chosen by the parties, if that is what national law would provide. (476) Indeed,
as discussed below, there is a substantial argument that Article II(3) contemplates application
of a validation principle, requiring Contracting States to apply the law of the state that would
give effect to the arbitration agreement, including when that is a law different from the law
chosen by the parties to govern their arbitration agreement. (477)
[iii] Article V(1)(a): Party Autonomy and Validation Principle
As discussed above, Article V(1)(a) of the Convention provides that an award need not be
recognized if the arbitration agreement was not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the award was
P 563 made. (478) The clear import of the first prong of Article V(1)(a)s choice-of-law standard is
that the validity of an international arbitration agreement is governed, at least at the stage of
recognizing an award, by the law (if any) selected by the parties. National courts (479) and
commentators (480) uniformly reach the same conclusion, holding that Article V(1)(a) does not
permit denying recognition of an award on the basis of a law different from that chosen by the
parties to govern the arbitration agreement. (As discussed below, Article V(1)(a) also provides a
default rule, in cases where parties have not selected an applicable law, providing for
application of the law of the arbitral seat. (481) )
Article V(1)(a) contains no requirement that the law chosen by the parties have a reasonable
relationship to the parties transaction, as applies to choice-of-law agreements in some legal
systems. (482) This is consistent with both the text of the Convention and with more general
choice-of-law rules in most jurisdictions. (483)
Article V(1)(a) also contains no requirement that the parties choice-of-law agreement be
express or clearly stated; rather, Article V(1)(a)s first prong applies equally to both express and
implied choices of law by the parties. (484) This conclusion is consistent with the treatment of
choice-of-law agreements in other contexts, including the Rome Regulation and ALI
P 564
Restatement (Second) Conflict of Laws; (485) it is also consistent with the text of Article V(1)
(a), which refers expansively to the existence of an indication by the parties of the applicable
law. (486)
It is important to note, however, that Article V(1)(a) has a specific, and limited, effect. Article
V(1)(a) establishes a prohibition against relying on laws other than that chosen by the parties
to deny recognition to an arbitral award, or, absent a choice of law, the law of the arbitral seat.
Article V(1)(a) does not forbid relying on laws other than that chosen by the parties (or, absent
choice, the law of the arbitral seat) to give effect to an arbitration agreement, but only the
opposite. (487)
In this respect, Article V(1)(a) serves the Conventions pro-enforcement objectives, and its
choice-of-law rule does not require application of the parties chosen law where doing so
would require invalidation of their agreement to arbitrate. Indeed, as discussed elsewhere,
Article II(3) of the Convention contemplates application of a validation principle, which would
in some circumstances give effect to an arbitration agreement even if it were invalid under the
law chosen by the parties. (488)
117
[iv] Applicability of Article V(1)(a)s Recognition of Party Autonomy at Stage of Recognition of
As discussed in greater detail above, some authorities have suggested that Article V(1)(a) of the
Convention applies only at the stage of recognition of an award, and not at earlier stages
(including decisions under Article II by national courts considering whether a litigation should
be stayed because of the parties arbitration agreement). (489) Under these analyses, Article
V(1)(a) is only applicable to define the circumstances when an award may be denied
recognition, and not when an arbitration agreement is valid. According to this interpretation of
the Convention, the questions whether an arbitration agreement is valid and whether a
national court litigation should be stayed in favor of arbitration, pursuant to Article II of the
Convention, require reference to choice-of-law rules other than those in Article V(1)(a). (490)
The weight of authority is to the contrary. That authority instead holds that the choice-of-law
standard set forth in Article V(1)(a) is applicable outside the specific context of recognition of
an award; in particular, this authority holds that Article V(1)(a)s standard is applicable when
P 565 national courts are required to consider whether to recognize an arbitration agreement
and refer claims to arbitration under that agreement pursuant to Article II of the Convention.
(491)
The better view is that the same choice-of-law and substantive rules are applicable to
international arbitration agreements under Articles II and V(1)(a). That means that Article IIs
rule of presumptive validity of international arbitration agreements, as well as its validation
principle, apply equally under Article V(1)(a). (492) Conversely, it means Article V(1)(a)s
prohibition against denying recognition of arbitration agreements under a law different from
that chosen by the parties also applies fully under Article II. (493)
These conclusions are necessary to avoid inconsistent treatment of the substantive validity of
international arbitration agreements in proceedings to recognize agreements (under Article II)
and proceedings to recognize awards (under Article V). As discussed above, it would make little
sense, and produce significant inefficiencies, to subject international arbitration agreements
to different choice-of-law rules, and therefore different substantive laws, at different points in
the course of a dispute. Rather, the same choice-of-law and substantive rules should apply to
the validity of international arbitration agreements under both Article II and Article V.
Importantly, as already discussed, both Article V(1)(a) and Article II impose obligations on
Contracting States to recognize arbitration agreements in specified circumstances, and do not
impose any obligation to deny recognition to arbitration agreements. Thus, nothing in either
Article forbids a Contracting State from applying a law other than that chosen by the parties to
give effect to an agreement to arbitrate; Article II and Article V(1)(a) only forbid Contracting
States from applying a law other than that chosen by the parties to deny effect to an
[v] Applicability of Choice-of-Law Agreement Where Party Challenges Existence or Validity of
Agreement
A choice-of-law agreement is effective to select the law governing the arbitration agreement
even if one party denies the validity or existence of the choice-of-law agreement. This
conclusion is consistent with general choice-of-law principles in both national and
international instruments. (495) Contrary conclusions by a few authorities (496) are mistaken.
P 566
[vi] Nonarbitrability and Mandatory Law Limitations on Party Autonomy Under New York
Convention
One notable absence from Article V(1)(a) is any reference to possible limitations on the parties
choice of law governing their arbitration agreement. (497) The absence of any such reference
does not imply that the Convention excludes, or forbids application of, limits on the parties
autonomy. Rather, these constraints are acknowledged elsewhere in the Convention, as
exceptional escape devices from the uniform substantive rules and choice-of-law regime
established by Articles II and V(1)(a).
As discussed in greater detail below, Article V(2)(a) of the Convention exceptionally allows non-
recognition of an award in an individual Contracting State where, under the laws of the judicial
recognition forum, parties may not validly agree to arbitrate a particular matter. (498) To the
same effect is Article II(1) of the Convention, providing exceptionally for non-recognition of
arbitration agreements in a particular Contracting State as to matters defined as non-
arbitrable under local mandatory law. (499)
The effect of Articles V(2)(a) and II(1) is to permit individual Contracting States to impose limits
on the enforceability of international arbitration agreements, notwithstanding the validity of
such agreements under the Convention and applicable law. By virtue of Article V(2)(a), and the
P 567
parallel terms of Article II(1), the Convention not only does not exclude, but affirmatively
gives effect (in exceptional circumstances) to, the general concept of such constraints on party
autonomy. (500) As discussed below, such constraints are extremely narrow, and subject to
international limitations, but, in principle, they are acknowledged by the Convention as
possible escape devices from the general substantive rules and choice-of-law regime
established by Articles II and V(1)(a). (501)
Importantly, however, the nonarbitrability exceptions of Article II(1) and V(2)(a) do not
provide for the invalidity of arbitration agreements. Rather, as discussed below, these
118
exceptions provide for the unenforceability of arbitration agreements as applied to particular
categories of disputes; the arbitration agreements are not rendered void or invalid, as a
consequence of Articles II(1) and V(2)(a), but Contracting States are instead permitted,
exceptionally, to deny enforcement of those agreements under local law in particular
circumstances. (502)
The European Convention also contains provisions regarding the law applicable to
international arbitration agreements. As discussed above, those provisions expressly recognize
the parties autonomy to select the law governing their international arbitration agreement.
(503)
Most national arbitration legislation confirms the freedom of contracting parties to select the
law governing their international arbitration agreements, applying the law chosen by the
parties to govern their arbitration agreement to issues of substantive validity. As with
international conventions, this autonomy is subject to limitations based on mandatory
national laws and public policies, but these limitations are exceptional and very narrow.
In addition, a number of leading national arbitration regimes adopt additional rules, which
supplement the parties autonomy to choose the law governing their arbitration agreement. As
detailed below, a number of national courts apply either substantive principles of
international law (U.S., French) or a validation principle (Swiss, Austrian, English) to give effect
to international arbitration agreements even where the parties appear to have chosen a
national law that would not do so. (504) This analysis rests on the conclusion that when parties
choice-of-law clauses select a law that invalidates their arbitration agreement (particularly a
P 568 general choice-of-law clause in their underlying contract), those clauses generally do not
reflect genuine or authentic selections of the law to govern their arbitration agreement.
As noted above, the UNCITRAL Model Law parallels the New York Convention in its treatment of
the parties autonomy to choose the law governing their arbitration agreement. (505) As
discussed above, Article 8 of the Model Law provides a rule of presumptive validity, which
requires imposing the burden of proof of invalidity of an international arbitration agreement
on the party opposing enforcement, (506) while requiring application of generally-applicable
contract law rules to the substantive validity of arbitration agreements. (507) As required by
the mandatory text of Article 8, these substantive rules are applicable to all international
arbitration agreements falling within the Model Laws scope, regardless of the law applicable
to other aspects of the agreement. (508)
The Model Law also provides, in Articles 34(2)(a)(i) and 36(1)(a)(i), that an arbitral award may
be annulled or denied recognition if the parties arbitration agreement is not valid under the
law to which the parties have subjected it or, failing any indication thereon, under the law of
[the state where the award was made]. (509) Like the Convention, (510) the first prong of the
choice-of-law standard prescribed by these provisions gives effect to the parties choice of law
governing their arbitration agreement. Also paralleling the Convention, this recognition of
party autonomy is subject to exceptional public policy and nonarbitrability escape devices
(set forth in Article 34(2)(b) and Article 36(1)(b)). (511)
There is no requirement under the Model Law that the parties chosen law have a reasonable
relationship to the parties transaction or that the choice-of-law agreement satisfy a clear
statement standard. (512) Rather, Articles 8, 34(2)(a)(i) and 36(1)(a)(i) all provide for
recognition of the parties choice of law governing their arbitration agreement regardless
whether the choice is express or implied.
Although there is limited precedent, national courts applying the Model Law (or similar
P 569
legislation) have consistently recognized the parties autonomy to choose the law
governing their international arbitration agreement. (513) As the English High Court has
explained, in a decision under Englands variation of the Model Law:
It is a general principle of English private international law that it is for the parties to choose
the law which is to govern their agreement to arbitrate and the arbitration proceedings, and
that English law will respect their choice.Parties freedom of choice includes freedom to
choose different systems of law to govern different aspects of their relationship. (514)
Similarly, in the more general words of the Canadian Supreme Court, [t]he parties to an
arbitration agreement are free, subject to any mandatory provisions by which they are bound,
to choose any place, form and procedures they consider appropriate. (515) Indeed, in virtually
no reported cases decided under the Model Law have mandatory law restrictions on this
autonomy been invoked to deny recognition of an international arbitration agreement. (516)
Finally, paralleling analysis under Article II of the Convention, the better view is that the Model
Law contemplates application of a validation principle, applying the national law that gives
effect to international arbitration agreements. National court authority in most jurisdictions
has not expressly adopted a validation principle under Article 8 of the Model Law. As
discussed below, however, the best explanation for judicial decisions in a number of
jurisdictions, including Model Law jurisdictions, is by reference to a validation principle. (517)
119
More fundamentally, application of a validation principle under the Model Law effectuates the
P 570
parties intentions, constituting an implied choice of law that is entitled to recognition
under Article 8, as well as under the first prong of the choice-of-law standards in Articles 34(2)
(a)(i) and 36(1)(a)(i). This again parallels analysis under Articles II and V of the Convention. (518)
The application of a validation principle is also supported by the general pro-enforcement
objectives of the Model Law and by the Model Laws character as a uniform international
legislative instrument. (519) Both aspects of the Model Law argue in favor of a uniform
validation principle, applicable in all Model Law jurisdictions, which would facilitate the
enforcement of international arbitration agreements. This conclusion is also supported by the
combination of Article 8s rule of presumptive validity and omission of any specific choice-of-
law rule. In the absence of any choice-of-law rule, Article 8s rule of presumptive validity is
best and most fully given effect by application of a validation principle, resulting in
application of the national law that upholds the validity of the parties agreement to arbitrate.
In the United States, choice-of-law analysis under the FAA is complex, particularly because of
the interplay of federal law (under the FAA) and state law principles. (520) As discussed above,
although there is a diversity of authority, the better view is that the FAA gives effect to the
parties autonomy to select the law governing an international arbitration agreement, but also
applies international principles of non-discrimination and validation to the substantive
validity of such agreements. (521)
In general terms, it is well-settled in case law under the FAA that parties are free to agree upon
the law governing their arbitration agreement (in both domestic and international settings).
(522) For example, in Volt Information Sciences, Inc. v. Stanford University, the U.S. Supreme
Court held that, because [a]rbitration under the [Federal Arbitration] Act is a matter of
consent, not coercion, and parties are generally free to structure their arbitration agreements
as they see fit, the parties were free to agree[] that their arbitration agreement [would] be
governed by the law of California, rather than by federal (or other) law. (523) Or, as one lower
U.S. court concluded:
[T]he Agreement contains a choice of law provision stating that New York law shall apply. The
parties choice of New York law will be honored. (524)
P 571
The Restatement (Second) Conflict of Laws similarly affirms the parties autonomy in this
respect, providing that the law applicable to the arbitration agreement will be that of the
state chosen by the parties, if they have made such a choice under the circumstances stated in
187. (525) U.S. courts have also emphasized that the parties contractual autonomy is subject
to application of (limited) exceptions for nonarbitrability and public policy. (526)
Despite this, the treatment of party autonomy to select the law applicable to international
arbitration agreements subject to the second chapter of the FAA is more complex. While
recognizing the parties autonomy to select the applicable law, U.S. courts have also applied
international non-discrimination and validation principles that give effect to international
arbitration agreements even when the substantive law apparently chosen by the parties would
produce a different result.
Thus, a number of lower U.S. courts have confirmed the parties freedom under the Convention
and FAA to select the law governing their international arbitration agreement. (527) As one
court explained:
The substantive law governing an agreement to arbitrate is susceptible to conflicts of law and
choice-of-law provisions. Where a transnational agreement contains both choice-of-law and
arbitration provisions and the law selected by the choice-of-law clause governs the arbitration
provision, courts should generally enforce the agreement to arbitrate in accordance with the
law selected by the parties. (528)
At the same time, however, U.S. courts have been very reluctant to conclude that the parties
P 572
have in fact agreed upon the application of a law that would deny effect to their
international arbitration agreement. (529) Indeed, as discussed in greater detail above, a
number of U.S. courts have refused to give effect to choice-of-law clauses (albeit choice-of-law
clauses contained in the parties underlying contract, rather than in the arbitration agreement
itself (530) ), instead applying federal common law standards to the formation and substantive
validity of international arbitration agreements. (531)
There is arguably tension between these holdings and principles of party autonomy, but they
are ultimately well-considered and consistent with the parties true intentions. The proper
explanation of these decisions is that the parties putative choice of a law that would
invalidate their agreement to arbitrate particularly when made in their underlying contract
does not constitute a genuine indication of the parties intentions. Rather, the best way to
effectuate the parties intentions, in agreeing to arbitrate, is to give effect to their arbitration
agreement by applying any potentially-applicable national law that would uphold that
agreement. As discussed above, it is this validation principle, rather than arbitrary application
of choice-of-law theories, that gives true effect to the parties intentions. That result is not only
P 573
permitted by, but is in fact required by, principles of party autonomy and Articles II and
V(1)(a) of the Convention.
[c] English Arbitration Act
120
English law has long affirmed the parties autonomy to select the law governing the arbitration
agreement. (532) One leading English decision explained, in holding that the parties may
select the law governing their arbitration agreement:
The parties may make an express choice of the law to govern their commercial bargain and
that choice may also be made of the law to govern their agreement to arbitrate. In the present
case it is my view thatthe parties have chosen the law of India not only to govern the rights
and obligations arising out of their commercial bargain but also the rights and obligations
arising out of their agreement to arbitrate. (533)
As noted above, the same result continues to apply under the English Arbitration Act, 1996.
(534) A recent English Court of Appeal decision held:
[T]he proper law of the arbitration agreement is to be determined in accordance with the
established common law rules for ascertaining the proper law of any contract. These require
the court to recognize and give effect to the parties choice of proper law, express or implied,
failing which it is necessary to identify the system of law with which the contract has the
closest and most real connection. (535)
English commentary is to the same effect. (536)
P 574
At the same time, English courts virtually never conclude that the parties have in fact
selected a law applicable to their arbitration agreement that would deny it effect. Rather,
English courts have in practice applied the law that gives effect to the parties arbitration
agreement, (537) on occasion referring expressly to a validation principle. (538) In this respect,
English courts have adopted an approach to the choice of law governing international
arbitration agreements that parallels that of U.S. courts under the FAA and the better view of
the UNCITRAL Model Law.
[d] Swiss Law on Private International Law
Swiss law also confirms the parties autonomy to select the law governing their international
arbitration agreement, albeit again with an important qualification. That qualification is
comparable to choice-of-law approaches in U.S. and English courts in international cases, and
to the better view of choice-of-law analysis under the UNCITRAL Model Law.
Article 178(2) of the Swiss Law on Private International Law provides that [a]s regards its
substance, an arbitration agreement shall be valid if it conforms either to the law chosen by
the parties or to the law governing the subject matter of the dispute, in particular the law
governing the main contract, or if it conforms to Swiss law. (539) That is, Swiss law will give
effect to the parties choice-of-law agreement, in the first instance, in order to uphold their
In addition, however, where the parties chosen law invalidates their agreement to arbitrate in
Switzerland, Swiss law will not give exclusive application to that choice; Article 178(2) will
instead require a Swiss court (or arbitral tribunal) to go on to look to either the law applicable
to the substance of the parties dispute or to Swiss law in order to uphold the arbitration
clause. This approach, discussed further below, could be characterized as effectively
constraining the parties autonomy to choose the law governing their arbitration agreement, by
effectively overriding a choice-of-law agreement that has the consequence of invalidating the
parties agreement to arbitrate. (541) On a more fundamental level, however, Article 178(2)
reflects the Swiss legislatures (correct) judgment that a putative choice-of-law agreement
selecting a law that invalidates the parties arbitration agreement is ordinarily not an
P 575
authentic choice, but rather a mistake that ought not be given effect in enforcing the
parties true agreement (which was to arbitrate). (542)
[e] French Code of Civil Procedure
Until the early 1990s, French courts applied the law chosen by the parties to govern their
arbitration agreement, without further analysis. (543) More recently, however, French courts
have adopted a more nuanced choice-of-law analysis.
Since the early 1990s, French courts have held that international arbitration agreements are
autonomous from any national legal system, and subject only to mandatory rules of French
law and of international public policy. (544) As one decision explained, [b]ecause of the
autonomy of international arbitration clauses, the scope and effects of an arbitration clause
are determined according to the common intention of the parties; it is unnecessary to refer to
the law of a State. (545)
In so doing, French law aims to give maximum effect to the parties agreement to arbitrate,
without regard to the idiosyncrasies of national law. (546) In many respects, the French
approach is comparable to that in both Switzerland and the United States where specialized,
pro-arbitration choice of law and substantive law govern the validity of international
arbitration agreements. (547) In each of these jurisdictions, a choice-of-law agreement
(particularly in the underlying contract) that invalidates the agreement to arbitrate will not
necessarily be given effect if the law of another jurisdiction connected to the agreement would
validate it. (548)
P 576 [f] Other Jurisdictions
Other jurisdictions also give effect to parties agreements on the law governing their
121
international arbitration agreement, while also frequently adopting validation or similar
principles. For example, the 1999 Swedish Arbitration Act provides that the validity of an
arbitration agreement is governed by the law selected by the parties or, failing any choice, the
law of the arbitral seat: Where an arbitration agreement has an international connection, the
agreement shall be governed by the law agreed upon by the parties. (549) Scotlands 2010
legislation takes a similar approach. (550) These statutory provisions directly address the
question of the law applicable to an international arbitration agreement, although without
express reference to a validation principle.
The Chinese Supreme Peoples Court has issued judicial interpretations of the Chinese
Arbitration Law which appear to parallel the literal texts of both the New York Convention and
UNCITRAL Model Law. Those interpretations provide:
[T]he law as agreed by the parties concerned shall apply to the examination over the validity
of foreign-related arbitration agreements; where the parties concerned have not agreed on the
applicable law but have agreed on the place of arbitration, the law of the place of arbitration
shall apply; and where neither the applicable law nor the place of arbitration is agreed or the
agreement on the place of arbitration is not clear, the law of the place where the court is
located shall apply. (551)
Chinese commentators suggest that the Supreme Peoples Court will generally give effect to
the parties choice of law governing the arbitration agreement. (552)
Finally, the Hague Conference on Private International Law has also affirmed the central
importance of the principle of party autonomy in the draft Hague Principles on the Choice of
Law in International Contracts. The Permanent Bureaus draft provides, in its preamble and
elsewhere, for an affirmation of the principle of party autonomy with limited exceptions.
P 577
(553) Although not applicable directly to arbitration agreements, (554) the draft Principles
provide further confirmation of the importance of party autonomy in selecting the law
applicable to such agreements.
[g] Idiosyncratic Approaches to Law Governing International Arbitration Agreements
A few jurisdictions have placed limitations on the parties freedom to select the law governing
their arbitration agreement. For example, Article 61 of the (former) 1988 Spanish Arbitration
Act provided that an international arbitration agreement would be governed by the legal
system chosen by the parties, provided that this law had some connection with the main legal
transaction or with the dispute. (555) Article 9(6) of the 2003 Spanish Arbitration Act
abandoned this approach and instead adopted a validation principle identical to that
contained in the Swiss Law on Private International Law. (556)
The 2001 Turkish International Arbitration Act provides that the validity of an arbitration
agreement is governed by the law selected by the parties as applicable to the arbitration
agreement, or failing any such choice, Turkish law. (557) This provision is retrograde and
impossible to reconcile with the New York Convention or the choice-of-law approaches in most
jurisdictions. As discussed in greater detail below, statutory application of the law of the
judicial enforcement forum is contrary to Article V(1)(a) of the Convention, and to parallel
provisions of most national arbitration statutes, which provide for application of the law of the
arbitral seat (as a default rule, absent contrary choice by the parties). (558) Turkeys statutory
application of local Turkish law as a default rule for the law governing international arbitration
agreements is both parochial and contrary to Article V(1)(a).
P 578 [4] Institutional Arbitration Rules
Most institutional arbitration rules do not specifically address the question of the law
applicable to the parties arbitration agreement. (559) One exception is found in the WIPO
Arbitration Rules, Article 59(c) of which adopts a validation principle providing that an
arbitration agreement shall be regarded as effective if it complies with the requirements of
the law chosen by the parties or the law of the arbitral seat. (560) In contrast, some national
trade associations arguably adopt different approaches, promulgating standard form contracts
and arbitration rules that implicitly adopt a specified national law applicable to both the
parties underlying contract and arbitration agreement. (561)
International arbitral awards generally give effect to parties choice-of-law agreements
selecting the law applicable to their arbitration clause. (562) In the words of one award:
In the case at hand, the arbitration agreement is submitted to English Law. Clause 22 provides
in its last sentence, directly following the sentence providing for arbitration: This contract
shall be governed by English Law. This choice also extends to the arbitration clause contained
in the contract. Irrespective of its separability there are no indications that the parties in the
P 579
present case wanted to submit the arbitration agreement to a different law than the main
contract. (563)
There are virtually no instances of awards refusing to give effect to agreements selecting the
law governing the arbitration agreement.
[6] Interpretation of Choice-of-Law Provision in Underlying Contract
Determining when parties have exercised their autonomy to choose the law governing their
122
arbitration agreement is often not straightforward, in part because of the separability
principle and in part because of customary drafting practices. In the vast majority of cases,
there will be no express choice of law governing the arbitration agreement, with any choice
being implied, usually on the basis of fairly equivocal and arbitrary analysis.
As discussed above, parties very rarely include specific provisions in their arbitration
agreement that select the law applicable to that agreement (as distinct from the parties
underlying contract). Rather, international commercial contracts ordinarily contain general
choice-of-law clauses which apply to the underlying contract, without specific reference to the
arbitration clause associated with that contract. (564) Determining whether such choice-of-law
provisions actually apply to the separable arbitration agreement is not straightforward and
has given rise to substantial uncertainty and controversy.
It is, of course, possible for general choice-of-law clauses to be drafted so as to more or less
literally encompass the arbitration clause contained in the parties contract, even though that
clause is separable. For example, parties can agree that: All of the provisions of this Contract
(Articles 1-21) shall be governed by the law of State X or All of the provisions of this Contract
including for the avoidance of doubt Article 10 (Arbitration) shall be governed by the law of
State X. In such cases, there would be relatively little doubt as a linguistic matter that the
parties choice-of-law agreement specifically applied to the arbitration clause, as well as to
Typically, however, choice-of-law clauses are drafted less specifically. A common approach is:
This Agreement will be governed by the laws of State X. (565) There has been substantial
controversy about the applicability of this sort of general choice-of-law clause in an underlying
contract to the associated arbitration agreement. Different authorities have arrived at
contradictory conclusions in interpreting these provisions.
P 580 [a] Authorities Applying Law Selected in Choice-of-Law Provision in Underlying Contract to
Arbitration Clause
Some authorities have interpreted general choice-of-law clauses as presumptively or
ordinarily extending to separable arbitration provisions contained within an underlying
contract. A number of arbitral awards reached this conclusion, relying on interpretations of
particular choice-of-law clauses. (566) In the words of one award: [I]t is reasonable and
naturalto submit the arbitration clause to the same law as the underlying contract. (567)
A number of judicial authorities from civil law jurisdictions have reached similar conclusions.
For example, according to one Dutch judicial decision:
[P]arties, in general, would prefer excluding special circumstances which do not arise in this
case to submit the validity of the arbitration clause to the same law to which they submitted
the main agreement of which the arbitration clause forms a part. (568)
Other civil law authorities are to the same effect, (569) including a Japanese decision that
reasoned:
[S]ince there was an agreement in the [underlying] contract making the law of Korea the
governing law, the law governing the validity of the relevant arbitration agreement was the law
of Korea. (570)
Likewise, a number of common law authorities have also concluded that a general choice-of-
P 581
law clause presumptively applies to the parties arbitration agreement. (571) For example,
the historic approach in England was that the law chosen by the parties to govern their
underlying contract also applied to the associated arbitration agreement (although, as
discussed below, this position has been substantially modified in more recent decisions (572) ).
In the words of one English decision adopting this view:
In the absence of exceptional circumstances, the applicable law of an arbitration agreement
is the same as the law governing the contract of which it forms a part. (573)
An Indian Supreme Court decision adopted a similar approach:
[W]here the proper law of the contract is expressly chosen by the parties, as in the present
case, such law must, in the absence of an unmistakable intention to the contrary, govern the
arbitration agreement which, though collateral or ancillary to the main contract, is
nevertheless a part of such contract. (574)
P 582
Substantial commentary from both common law and civil law authorities supports these
conclusions. (575) As discussed above, the Restatement (Third) U.S. Law of International
Commercial Arbitration adopts a similar conclusion. (576)
A number of the foregoing decisions and commentary treat the law chosen to govern the
underlying contract as only the law presumptively, generally, or ordinarily applicable to
the separable arbitration agreement. These authorities recognize the possibility, in principle,
that additional considerations or exceptional circumstances might argue for application of a
law different from that governing the underlying contract to the arbitration agreement. In
general, however, neither judicial decisions, arbitral awards, nor commentary provides
meaningful guidance as to what sorts of additional circumstances or considerations will
warrant overriding the presumption that the law chosen to govern the underlying contract also
governs the arbitration agreement.
123
[b] Authorities Refusing to Apply Law Selected in Choice-of-Law Provision in Underlying
Contract to Arbitration Clause
On the other hand, another substantial body of authority holds that a general choice-of-law
clause does not encompass an arbitration clause contained within the underlying contract.
Rather, these authorities conclude that a general choice-of-law clause applies only to the
parties underlying contract, and not to the separable arbitration agreement. That conclusion
is described as a consequence of the separability presumption, as well as the particular
characteristics of the arbitration agreement (e.g., ancillary agreement, distinct procedural
dispute resolution obligations, separate forum for performance (i.e., arbitral seat)). (577) These
factors are said to argue that a general choice-of-law clause in an underlying contract is
ordinarily not applicable to the associated arbitration agreement.
P 583
Consistent with this, a substantial number of authorities, again from both civil (578) and
common law (579) sources, have refused to apply a general choice-of-law clause in the parties
underlying contract to the arbitration agreement, particularly where the parties chosen law
would invalidate the arbitration clause. As one award reasoned:
Consent here falls to be tested by the law governing the agreement to arbitrate which, I hold,
is the Federal Arbitration ActI also hold that Federal Law governs the arbitration even though
the contract contains a State choice of law provision. State law governs the substantive law of
the contract but the arbitration clause is autonomous. (580)
A number of other arbitral awards are to the same effect. (581)
Similarly, a leading French commentary reasons that, because the parties may not have given
separate thought to the law applicable to an arbitration clause, it would therefore be going
too far to interpret such [general choice-of-law] clauses as containing an express choice as to
the law governing the arbitration agreement. (582) Another author concludes that the
autonomy of the arbitration agreement means that [e]ven where the parties have chosen the
law governing their contract it does not necessarily follow that this law applies to the
P 584 English judicial decisions have also moved substantially in the direction of rejecting the
application of a general choice-of-law clause to the arbitration agreement. As discussed
above, the traditional view under English law was that a general choice-of-law clause
presumptively extends to the associated arbitration agreement. (584) More recently, however,
English courts have adopted a contrary presumption, holding that the law applicable to the
arbitration agreement is prima facie that of the arbitral seat notwithstanding a general
choice-of-law clause specifying a different substantive law. (585)
Thus, one recent Court of Appeal decision reasoned: it would be rare for the law of the
(separable) arbitration agreement to be different from the law of the seat of the arbitration.
(586) English commentary has undergone the same evolution, or reversal, from a strong
presumption that the arbitration agreement is governed by the law chosen by the parties to
govern their underlying contract to a strong, contrary presumption that the arbitration
agreement is governed by the law of the arbitral seat. (587) As also noted above, English courts
have in practice applied a validation principle, refusing to apply the law selected by general
choice-of-law clauses where doing so would result in invalidation of the arbitration agreement.
(588)
[c] Approach of U.S. Courts to Choice-of-Law Provision in Underlying Contract
As noted above, U.S. courts have taken divergent approaches to the applicability of general
P 585
choice-of-law clauses in commercial contracts to associated international arbitration
agreements. There is no U.S. Supreme Court authority addressing the issue and lower court
decisions reach inconsistent results. (589)
Some U.S. courts conclude, usually without analysis, that a general choice-of-law clause in a
commercial contract applies to the associated arbitration agreement, and that the (state or
foreign) law selected by the choice-of-law clause governs the formation and validity of the
arbitration agreement. (590) In the words of one court:
Defendants claim that a choice-of-law clause does not govern questions of contract validity
where the ultimate issue is one of arbitrability.But where the parties have chosen the
governing body of law, honoring their choice is necessary to ensure uniform interpretation and
enforcement of that agreement and to avoid forum shopping.In short, if defendants wish to
invoke the arbitration clauses in the agreements at issue, they must also accept the Swiss
choice-of-law clauses that govern those agreements. (591)
Other U.S. courts have not applied choice-of-law provisions in underlying contracts to the
associated arbitration agreement, instead generally applying federal common law principles
derived from the FAA to the formation and validity of international arbitration agreements.
P 586
(592) As one court adopting this analysis reasoned: [A] general choice-of-law clause within
an arbitration provision does not trump the presumption that the FAA supplies the rules for
arbitration. (593) Some U.S. lower courts have adopted the same analysis, applying federal
common law principles to the question whether a non-signatory is bound by an international
Several U.S. courts have adopted a third approach, holding that they will apply the law chosen
in a choice-of-law provision in the underlying contract to the validity of the arbitration
124
agreement only where the clause expressly and unambiguously provides for this result. (595) In
the words of one court:
P 587
courts should apply federal arbitrability law absent clear and unmistakable evidence
that the parties agreed to apply non-federal arbitrability law. (596)
A number of courts adopting this analysis have held that a general choice-of-law clause in a
contract will not ordinarily be interpreted as incorporating state (or foreign) law governing
arbitration agreements (and will instead apply only to the law governing the parties
underlying commercial contract). (597) As one court put it, [a] general choice of law clause,
without more, does not show that the parties intended to incorporate state procedural rules on
arbitration. (598)
In a related context, the U.S. Supreme Court explained this approach to interpreting a choice-
of-law clause as selecting only rules of substantive law, not rules of arbitration law:
the best way to harmonize the choice-of-law provision with the [contracts] arbitration
provision is to read the laws of the State of New York [in the choice-of-law clause] to
encompass substantive principles that New York courts would apply, but not to include special
rules limiting the authority of arbitrators. Thus, the choice-of-law provision covers the rights
and duties of the parties, while the arbitration clause covers arbitration. (599)
This rationale, particularly its final sentence, presumptively excludes the parties arbitration
clause from the scope of their choice-of-law clause. (600)
P 588
U.S. courts are particularly likely to interpret a general choice-of-law clause as not
applying to an arbitration agreement when the putatively selected state or foreign law would
deny effect to the parties arbitration agreement. As one decision observed, [i]n cases where
courts have applied an agreements choice of law, such action would ensure uniform
interpretation and enforcement of that agreement andavoid forum shopping. (601) In
contrast, where the law selected by a general choice-of-law clause would deny effect to an
arbitration agreement, U.S. courts have typically refused to apply it. (602)
[d] Future Directions: Interpretation of Choice-of-Law Clause in Underlying Contract
The interpretation of general choice-of-law clauses in the parties underlying contract has
substantial practical importance for the law governing international arbitration agreements. In
practice, the overwhelming majority of cases do not involve choice-of-law clauses specifically
selecting the law applicable to the arbitration agreement and instead involve general choice-
of-law clauses applicable to the parties underlying contract. As discussed above, parties
ordinarily include only general choice-of-law provisions in their underlying contract, very
seldom choosing the law governing their arbitration agreements specifically. (603)
As the foregoing discussion indicates, there is little uniformity in the treatment of general
choice-of-law clauses in the parties underlying contract. National courts, arbitral tribunals
and commentators have adopted a variety of different approaches to the interpretation of
general choice-of-law clauses and, in particular, their application to the contracts arbitration
clause. Authorities range from decisions interpreting general choice-of-law provisions to
encompass the arbitration agreement (and therefore requiring application of the law
governing the underlying contract to the validity of the arbitration agreement) to decisions
excluding the arbitration agreement from the scope of general choice-of-law clauses (and
therefore generally requiring application of the law of the arbitral seat to the arbitration
agreement). (604) Other authorities take different approaches, with some decisions
presumptively excluding the arbitration agreement from the scope of a general choice-of-law
P 589 clause and other decisions presumptively including the arbitration agreement in the
scope of the choice-of-law clause. (605)
The diversity of approaches to interpreting general choice-of-law clauses is illustrated by the
evolution of decisions in both England and the United States. In England, as discussed above,
decisions have shifted from the historical view that a general choice-of-law clause virtually
always selected the law governing the arbitration agreement to what is nominally an almost
diametrically contrary presumption that the law governing the arbitration agreement is that of
the arbitral seat. (606) Likewise, U.S. courts have adopted, and continue to adopt, a range of
different and inconsistent approaches to the effect of a general choice-of-law clause on the
The divergent approaches to general choice-of-law clauses are undesirable, causing
substantial uncertainty, inconsistency of results and expense. The better approach to the
interpretation of general choice-of-law clauses, which should replace these divergent analyses,
is both more complex and more simple than most national court authority and commentary
acknowledge. As discussed below, the better interpretation of general choice-of-law clauses is
that the law chosen by such provisions extends to the parties separable arbitration agreement
when it would give effect to that agreement, but not otherwise. (608) This is a specific form of
validation principle, that gives proper effect to the parties true intentions.
It is correct, as some commentators have observed, that in agreeing to a general choice-of-law
clause, the parties will of course only very rarely have given thought to the law applicable to
the arbitration agreement. (609) Most parties, including parties represented by corporate
counsel, will not consciously consider matters such as the separability of the arbitration
clause, much less the possible application of different laws to the underlying contract and the
125
arbitration clause, when drafting their agreements.
Similarly, the connecting factors relevant to a commercial contract frequently provide little
decisive guidance in selecting the law applicable to the associated arbitration agreement. In
many cases, the connecting factors relevant to the arbitration agreement are materially
different from those for the underlying contract. The arbitration agreement involves the
parties obligations to resolve their disputes according to particular procedures, in a
particular place, according to a legal regime heavily influenced by the arbitral seat. (610) In
contrast, the underlying contract involves the parties obligations to do particular acts (e.g.,
deliver goods, provide services, lend money) in a particular place. In most instances, there is
P 590
no connection, and certainly no necessary connection, between the places of performance
of the underlying contract and the arbitration agreement. (611)
Where such a disconnection exists, it argues against interpreting a choice-of-law clause in the
underlying contract as being intended to apply to the associated arbitration agreement. The
reasons that led the parties to select a particular legal system for their underlying contract
have little or no application to their arbitration agreement.
On the other hand, there is a very plausible simplicity and attraction to the notion that an
arbitration clause is part of the parties contract and, when they agree to the law governing
that contract, their agreement necessarily includes the arbitration clause. Equally, applying
the same law to the parties arbitration agreement as to their underlying contract will
generally avoid complexities and uncertainties that may result from a contrary approach
(which will require characterizing different issues and demarcating the border between
them). (612)
Given these conflicting considerations concerning what legal system the parties might have
intended to select to govern their arbitration agreement, it is hardly surprising that authority
addressing the issue is starkly divergent. Unlike many issues in international arbitration,
national courts, arbitral tribunals and commentators have reached widely differing
conclusions regarding the interpretation and effects of a general choice-of-law clause.
As already discussed, this is graphically illustrated by the shifting approaches of the English
courts to the issue, the divergent conclusions of U.S. lower courts (613) and the equally
inconsistent views of academic commentators (614) on the subject. The reality is that it is very
difficult to identify a principled and clear answer to the question whether a general choice-of-
law clause should apply to the arbitration agreement or not. This difficulty is a particular
application of the more general difficulty, discussed in detail above, of choosing between the
law governing the underlying contract and the law of the arbitral seat in choice-of-law analysis
with respect to international arbitration agreements. (615)
Given this, it is both sensible and essential in interpreting a general choice-of-law clause to
have regard to the fundamental objectives of the arbitral process and the parties agreement
to utilize that process. (616) It advances analysis little, if at all, to discuss whether an
arbitration clause is part of the parties contract or not, or whether the parties intended their
choice-of-law clause to encompass the whole contract or not: these characterizations express
conclusions, not reasoned justifications for interpreting the parties agreement one way or
another.
Instead, in the absence of reliable evidence of other specific intentions, it is the objectives of
P 591 the arbitral process which should guide any interpretation of the parties arbitration
agreement and their choice of a law applicable to that agreement. In turn, as discussed above,
these objectives call for application of a validation principle, such as that adopted in Swiss
(and other) arbitration legislation and by U.S., English and other courts. (617)
As discussed above, parties agree to arbitrate in large part in order to obtain an efficient,
predictable and neutral means of resolving their disputes, which overcomes the peculiar
jurisdictional and choice-of-law complexities that otherwise affect international transactions.
(618) Given these objectives, the parties choice-of-law clause governing their underlying
contract should be applied to the parties arbitration agreement where it would give effect to
that agreement.
Parties can reasonably be presumed both to have intended that effect be given to their
international arbitration agreement and not to have considered the finer details of the
separability presumption when drafting their choice-of-law clause. Accordingly, where the law
chosen to govern the underlying contract will give effect to the parties arbitration agreement,
there is every reason to apply that law to the arbitration clause. Put differently, the possibility
that the parties intended a different law to apply to their presumptively separable arbitration
agreement than to their underlying contract would be negated in such circumstances by the
facial breadth of the choice-of-law clause, by the reduction of potential complexities resulting
from such an interpretation and by the likely absence of specific intentions to the contrary in
the parties minds.
Where, however, the law selected to govern the underlying contract would invalidate the
parties international arbitration agreement, a different conclusion follows. As noted above,
parties cannot reasonably be assumed to intentionally select or to desire a law governing their
arbitration agreement that would have the effect of invalidating or rendering ineffective that
agreements terms. (619)
Rather, in these circumstances, the separability presumption should be given effect and
126
should prevent the parties choice-of-law clause from being extended to the arbitration
clause, thereby invalidating it. This result accords priority to the parties agreement to
arbitrate, giving it effect in preference to extending the scope of a choice-of-law clause (with
the consequence of denying the arbitration agreements validity). (620) This result also seeks to
effectuate the parties genuine intentions and objectives, giving effect to their chosen
international dispute resolution mechanism, rather than interpreting their choice-of-law
agreement to invalidate that dispute resolution agreement.
This analysis conforms to the more developed national arbitration legislation that has
specifically addressed the question, including the Swiss Law on Private International Law and
P 592 the 2003 Spanish Arbitration Act. As discussed elsewhere, in both cases, national
legislatures have adopted a form of the validation principle, which looks to sources other than
the parties putative choice-of-law clause to give effect to the parties arbitration agreement.
(621)
This conclusion is also consistent with a close analysis of the results of most judicial and
arbitral authority on the question in developed jurisdictions, including particularly in the
United States and England. In practice, in virtually all cases, national courts and tribunals
have interpreted choice-of-law clauses so as to give effect to the parties arbitration
agreement. (622)
That means, in cases where the parties general choice-of-law clause validated the arbitration
agreement, it was applied to the arbitration agreement; (623) in contrast, where the underlying
choice-of-law clause would invalidate the arbitration agreement, it has not been applied to
the arbitration agreement. (624) This result is entirely appropriate. Precisely parallel to the
logic of the Swiss and Spanish legislatures, it reflects an objective interpretation of what
commercially reasonable parties, acting in good faith, intend to accomplish in entering into
Moreover, the foregoing analysis is also reflected in the rationales of at least some national
courts. In particular, as discussed above, U.S. courts have interpreted general choice-of-law
clauses narrowly (625) or have refused to give effect to choice-of-law clauses selecting foreign
law that will invalidate the parties agreement. (626) Likewise, some English decisions
P 593
expressly invoke a validation principle in selecting the law applicable to the arbitration
agreement. (627) French courts have achieved similar results through the application of
autonomous international principles. (628)
The foregoing analysis has not, to date, been widely accepted by commentators. As noted
above, most authorities apply traditional choice-of-law analysis mechanically, commenting
variously either that [i]n our opinion, it would therefore be going too far to interpret such
[choice-of-law clauses in an underlying contract] as containing an express choice as to the law
governing the arbitration agreement, (629) or that frequently a choice made in relation to the
law governing the merits can be interpreted to apply also to the arbitration agreement. (630)
In fact, these approaches sweep too broadly and abstractly, without proper regard to the
authentic intentions of the parties and purposes of the New York Convention, national
arbitration legislation and international arbitral process. Taking these considerations into
account requires a more nuanced analysis, that gives effect to the parties objectives in
agreeing to arbitrate and better advances the international arbitral process.
Like leading national arbitration statutes (Swiss, Spanish) and national judicial decisions (U.S.,
French), this approach applies a general choice-of-law provision in the underlying contract to
the arbitration clause if it will give effect to that clause, but not otherwise. Where a general
choice-of-law clause would invalidate the agreement to arbitrate, then it will not be extended
and the applicable law will instead be selected otherwise (pursuant to the choice-of-law rules
discussed below). Notably, this application of the validation principle is fully consistent with,
and indeed mandated by, respect for the parties autonomy and intentions. Application of the
law that gives effect to the parties arbitration agreement, rather than that selected by
arbitrary and mechanical application of traditional choice-of-law formulae, is in fact the true
effectuation of the parties intentions, as required by Articles II and V(1)(a) of the Convention.
[7] Application of Choice-of-Law Clause to Disputes Over Existence of Arbitration Agreement
Where one party denies that any arbitration agreement was validly formed, there is arguably
no basis for applying the law that the parties allegedly agreed upon to govern their
P 594
contract. (631) On the other hand, authority in more general choice-of-law contexts
rejects this view, holding that the formation of an agreement is governed by the law that would
apply if the agreement had existed. That is true under the Rome Convention and the Rome
Regulation, (632) the Restatement (Second) Conflict of Laws (633) and other authorities. (634)
In the context of international arbitration agreements specifically, Article V(1)(a) of the
Convention permits non-recognition of an arbitral award if the arbitration agreement is not
valid under the law to which the parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made. (635) This choice-of-law rule is
drafted to require application of the parties putatively chosen law where the validity of their
arbitration (and choice-of-law) agreement is challenged. This rule applies by its terms, and its
rationale, where one party denies that its actions gave rise to any arbitration agreement at all.
(636)
Similar considerations apply to claims of illegality. In principle, claims of illegality are subject
127
P 595 to the law governing the arbitration agreement (selected in the manner discussed elsewhere).
(637) Indeed, that is the result required by the choice-of-law rule contained in Article V(1)
(a) of the Convention, providing for application of the law chosen by the parties to govern their
arbitration agreement. (638) Nonetheless, choosing the law applicable to claims that an
arbitration clause is invalid on grounds of illegality also raises special issues.
There is a plausible argument that parties private choices of law should not be given effect to
circumvent otherwise applicable national (or foreign) law which would render an arbitration
agreement invalid. (639) For example, where mandatory trade sanctions or embargoes render
agreements to arbitrate illegal, (640) that result should arguably not be altered if the parties
agree to the application of a foreign states laws to govern their arbitration agreement. (Of
course, this result would apply only where the relevant national legislation renders the
agreement to arbitrate illegal (as distinguished from the underlying contract (641) ).)
Nonetheless, under Article V(1)(a), where parties have agreed to arbitrate under a specified law
which does not render their arbitration agreement invalid, but the mandatory law of another
state provides that the arbitration agreement is illegal, then the parties chosen law ought to
be applied: that is what the Convention mandates. Only in limited cases, where the parties
chosen law would give effect to foreign mandatory law, and the Convention would permit this,
(642) would the parties chosen law not be given effect. (643)
P 596
If the parties have not agreed on an applicable law, then, as discussed below, Article V(1)
(a)s default choice-of-law rule provides for the application of the law of the arbitral seat. (644)
Again, there may be instances where the law of the arbitral seat would give effect to otherwise
applicable mandatory laws of a different state insofar as the parties arbitration agreement is
concerned, (645) but this will be rare. In principle, the law of the seat should be applied
either under the validation principle (646) or otherwise to give effect to the arbitration
agreement. (647)
4.05 CHOICE OF LAW GOVERNING NONARBITRABILITY (648)

The nonarbitrability doctrine raises potentially complex choice-of-law questions in
determining what law(s) apply to determine whether a claim or dispute is non-arbitrable.
There is little agreement among national courts and commentators on the resolution of this
issue. As one despairing commentator remarked, [a]greement on the conclusion that there is
disagreement seems to be the only common denominator that one can find between
arbitrators, courts, and publicists regarding the question which is the applicable law on
arbitrability. (649)
Part of the difficulty in determining the choice of law applicable to questions of
nonarbitrability results from the fact that these questions can arise at different stages in the
arbitral process and in different fora: at least in principle, different choice-of-law
considerations may exist depending upon the procedural posture and forum of a dispute. For
example, in a judicial proceeding to enforce an arbitration agreement, the national court
might look either to its own law, the law of the arbitral seat, or the law governing the
arbitration agreement without considering the law in the place where any subsequent award
might be enforced. Conversely, a decision to enforce an award might look only to the law of the
judicial enforcement forum without considering whether the arbitration involved claims that
were not arbitrable under the law governing the arbitration agreement (or any other law).
P 597 In principle, several choices of law to govern nonarbitrability issues are possible: (a) the
law of the nation in which enforcement of an award is being or will eventually be sought; (b) the
law governing the substantive validity of the parties arbitration agreement; (c) the law of the
seat of the arbitration; (d) the law of the judicial forum where an arbitration agreement is
sought to be enforced; (e) the law that provides the basis for the relevant substantive claim
that is said to be non-arbitrable; or (f) a uniform international definition of nonarbitrability
derived from the New York Convention (or other relevant conventions). (650) As discussed
below, selecting from among these various options is not straightforward and there is, as yet,
little uniformity among national courts and other authorities in making this choice.
[A] Choice of Law Governing Nonarbitrability Under New York Convention

As discussed above, Article II of the New York Convention does not expressly address choice-of-
law questions regarding nonarbitrability. (651) Similarly, Article V(1)(a)s choice-of-law rule
offers no assistance as to the issue of nonarbitrability. (652) Nevertheless, as discussed below,
the Convention contains choice-of-law rules with respect to nonarbitrability.
[1] Article V(2)(a)s Exception for Local Nonarbitrability Rules
The subject of the law applicable to issues of nonarbitrability is addressed specifically in
Article V(2)(a), which provides that an award need not be recognized in a particular Contracting
State if the subject matter of the dispute is not capable of settlement by arbitration under the
law of that country. (653) Article V(2)(a) plainly contemplates that, at the time of enforcement
of an award, a state may exceptionally apply its own law to refuse recognition and
enforcement of an otherwise valid and binding award on nonarbitrability grounds; as noted
elsewhere, that is a form of escape mechanism which is available without regard to the
otherwise applicable choice-of-law rule set forth in ArticleV(1)(a). (654) Thus, if parties from
States A and B agree to arbitrate in State C (with the parties arbitration agreement being
governed by the law of State C) and an award is made in State C, which is then sought to be
128
P 598 enforced in State D, State D may apply its nonarbitrability standards to deny recognition to
the award. (655)
Article V(2)(a)s formula cannot be directly transposed to the stage of enforcing arbitration
agreements, as distinguished from arbitral awards. In particular, the fact that a state might
rely on its local public policies/nonarbitrability rules under ArticleV(2)s exception at the
award enforcement stage in no way suggests that other states should or may rely on those
same rules to decline enforcement of an arbitration agreement that is otherwise valid. That is,
if parties from States A and B agree to arbitrate in State C, over a dispute arising in States A
and B, then the fact that State D might regard the dispute as non-arbitrable in recognition
proceedings (under Article V(2)(a)) should have no bearing at all on how States A, B and C
regard the issue. Most national courts that have considered this possibility have specifically
rejected it. (656)
Some commentators have suggested that Article V(2)(a) can be applied by analogy at the
stage of enforcing an arbitration agreement, resulting in application of the national law of the
court where enforcement of the arbitration agreement is sought. (657) Similarly, some national
P 599
courts have held that the law of the judicial enforcement forum applies to determine
whether a dispute is non-arbitrable under Article II(1) in proceedings to enforce an arbitration
agreement. (658) The reasoning is that, since the Convention permits an exceptional reliance
on national nonarbitrability rules of the judicial enforcement forum at the award-enforcement
stage, it should be interpreted to permit the same reliance on the enforcements forums local
nonarbitrability rules at the agreement-enforcement stage.
To the same effect, Article VI(2) of the European Convention provides that national courts may
also refuse recognition of the arbitration agreement if under the law of their country the
dispute is not capable of settlement by arbitration. (659) This solution contemplates that the
national law of the judicial enforcement forum, at the stage of attempting to enforce an
arbitration agreement, will apply to questions of nonarbitrability. Properly understood, this
solution has considerable appeal: most importantly, it is consistent with the exceptional
character of nonarbitrability as a local escape device under Article V(2) of the Convention
and under more general private international law notions of public policy exceptions. (660)
This approach does not mean that the particular substantive nonarbitrability rules of the
judicial enforcement forum should be applied mechanically to issues of nonarbitrability. For
example, if parties from States A and B agree to arbitrate a dispute involving conduct in States
A and B in an arbitration seated in State C, then there is ordinarily no reason why the courts of
State C should apply the nonarbitrability rules applicable under the law of State C to the
parties dispute. If the parties legal claims arise under the laws of either State A or B and
concern activities in those states, then it makes no sense for State Cs laws to be applied to
render the parties dispute non-arbitrable. That is particularly true if the laws of States A and B
would permit arbitration of the dispute, so that every state with a material connection to the
underlying dispute would not only permit, but would require, that the dispute be arbitrated.
Indeed, if the nonarbitrability rules of the judicial enforcement forum (here, State C) are
examined carefully it is unlikely that they would, by their own terms, apply to the conduct at
issue in this example. There is ordinarily no reason why State C would have an interest in
rendering non-arbitrable matters that were arbitrable under the laws of states whose
substantive legislation and public policies were at issue. Nor, if State Cs laws purported to
render the dispute non-arbitrable, would there be any reason why other states should
recognize or give effect to such a choice (which would involve an exorbitant jurisdictional
claim).
The more difficult cases concern whether the judicial enforcement forum (State C) should give
effect to the nonarbitrability rules of states whose legislation is at issue in a particular dispute
P 600
(States A or B). In such cases, the better course is for the judicial enforcement forum not to
give effect to foreign nonarbitrability rules, but instead to recognize the otherwise valid
agreement to arbitrate. (661) This permits the state whose nonarbitrability rules are at issue to
allow litigation to proceed in local courts (subject to the Conventions limitations), with other
states being free to determine whether to give effect to either the resulting judgments or an
arbitral award. This is consistent with the character of the nonarbitrability doctrine as an
exceptional escape valve, which Contracting States may invoke locally, but which does not
bind other states.
[2] International Limits on Local Nonarbitrability Rules
Although nonarbitrability rules are defined in principle by national law, the NewYork
Convention is best interpreted as subjecting application of the nonarbitrability doctrine by
Contracting States to substantive international limitations. These limits leave considerable
scope for Contracting States to give effect to local legislative policies, but require that this be
done in a manner that is consistent with the basic structure and premises of the Convention.
In particular, for the reasons discussed below, Contracting States must treat the
nonarbitrability doctrine as an exceptional dispensation from the Conventions basic
structure, rules of substantive validity, choice-of-law regime and purposes. (662) In turn, that
imposes the obligation on Contracting States to adopt nonarbitrability exceptions only when
tailored to achieving specifically-defined, articulated public policies and only by means that
are non-discriminatory and not inconsistent with the practices of other Contracting States.
(663) Those limitations apply with particular force to commercial matters, which have
129
historically been treated as arbitrable (under the Geneva Protocol and most national
arbitration regimes). (664)
[B] Choice of Law Governing Nonarbitrability Under National Law

As noted above, there are a variety of possible choice-of-law approaches that might be used to
determine the law governing issues of nonarbitrability. Different states have adopted different
approaches to this issue.
One approach would be to apply the nonarbitrability rules of the arbitral seat. The theory
would be that, since the arbitration is to proceed in the territory of the seat, the law of that
jurisdiction should determine the threshold question whether the dispute is subject to
P 601
arbitration. (665) In fact, however, most courts have refused to apply the law of a foreign
arbitral seat to hold disputes non-arbitrable, typically rejecting this standard as anachronistic
and concluding that the seat does not necessarily have any connection to the parties
underlying dispute or claims. (666)
Another possible approach would be to apply the nonarbitrability rules of the judicial
enforcement forum where litigation over the arbitration agreement is pending (as discussed
above (667) ). In practice, most national courts have taken this approach, applying their own
law to the issue of nonarbitrability, without considering the possible impact of foreign law.
That is true of U.S., (668) French, (669) Swiss, (670) Dutch, (671) Belgian, (672) Italian, (673)
Austrian, (674) Swedish (675) and other (676) courts, and appears to be contemplated by the
UNCITRAL Model Law. (677) As one Italian decision reasoned:
P 602
[W]hen an objection for foreign arbitration is raised in [Italian] court proceedings
concerning a contractual dispute, the arbitrability of the dispute must be ascertained
according to Italian law as this question directly affects jurisdiction, and the court seized of the
action can only deny jurisdiction on the basis of its own legal system. This also corresponds to
the principles expressed in Arts. II and V of the [New York Convention]. (678)
The same approach (applying the law of the judicial enforcement forum) is also adopted by the
weight of academic commentary. (679) As already discussed, this is consistent with Article V(2)
(a) of the Convention. (680)
P 603 Another possible option is to apply the law governing the arbitration agreement to issues
of nonarbitrability. This has been urged by some commentators: The answer is that the
Arbitral Tribunal will decide the issue [of nonarbitrability] by application of the law which
governs the arbitration agreement. (681) This result has been (wrongly) attributed to the
principles adopted in Article VI(2) of the European Convention and to the notion that the
parties choice of applicable law should be given effect. (682) Other authorities also apply the
law of the arbitral seat. (683)
[C] Future Directions: Choice of Law Governing Nonarbitrability

None of the foregoing choice-of-law analyses for choosing the law governing issues of
nonarbitrability are capable of producing coherent or satisfactory results. Applying the
substantive nonarbitrability rules of the arbitral seat, the judicial enforcement forum, or the
state whose law governs the arbitration agreement produces mechanical results that do not
achieve any useful legislative purpose and that frustrate the parties objectives in agreeing to
arbitrate.
[1] Deficiencies in Current Choice-of-Law Analyses
The foregoing criticism is illustrated by the example (noted above) of parties from States A and
B agreeing to arbitrate a dispute concerning conduct in States A and B, giving rise to both
contractual and statutory claims under the law of State B, before an arbitral tribunal seated in
State C. (684) Suppose that proceedings to enforce the arbitration agreement with regard to
the statutory claims then arise in both States C and D, with the possibility of enforcement of
any award in State E being specifically identified. In these circumstances, it is very difficult to
P 604 see why: (a) the substantive nonarbitrability rules of States C or D, as the judicial
enforcement forums, should apply to claims arising under the law of State B, to claims
concerning transactions in States A and B, or to an arbitration seated in State C; or (b) why the
substantive nonarbitrability rules of State C, as the arbitral seat, should apply to claims arising
under the laws of State A and transactions concerning States A and B; or (c) why the substantive
nonarbitrability rules of State C, whose laws might putatively govern the arbitration
agreement, should apply; or (d) why the substantive nonarbitrability rules of State E, where the
award might be enforced, should apply at the stage of enforcing the arbitration agreement.
In each one of the foregoing cases, the laws of fora other than State B under whose laws the
relevant substantive claims were being asserted would be relied upon under conventional
choice-of-law rules to determine nonarbitrability. In many cases, this makes no sense or, at
best, is a partial answer.
Specifically, if the laws of State B permitted arbitration of the claims in question (under State
Bs laws) it is almost impossible to see why this should not be permitted in other states.
Certainly, the fact that the substantive nonarbitrability rules of States A, C, D and E would not
permit such claims to be arbitrated, if they were asserted under these states respective
national laws, should be irrelevant to how statutory claims under State Bs laws should be
treated: if State B permits (and perhaps even encourages or requires) such statutory claims to
130
be arbitrated, then it is almost inconceivable that another approach should be taken, based
on the laws of States A, C, D or E. (685)
On the other hand, if the laws of State B hold that the relevant statutory claims (under the laws
of State B) are non-arbitrable, then analysis becomes more difficult (and interesting). Although
there might be good reasons ultimately not to apply State Bs nonarbitrability rules in this
example, they certainly should be considered a result not provided for under the traditional
conflicts rules applying the law of the seat or arbitration agreement. The reason that State Bs
laws should be applied in these cases is that they purport directly to address the relevant
issues, for reasons of obvious importance to State B.
[2] Possible Applicability of Foreign Nonarbitrability Rules
A better approach to the foregoing choice-of-law issues involves taking into account the fact
that the nonarbitrability doctrine is in the nature of an exceptional escape device, closely akin
to a local public policy exception. (686) It is therefore useful to consider the choice-of-law
analysis that governs issues of nonarbitrability from the perspective of traditional conflict of
laws rules governing questions of public policy. These principles provide that a state will apply
P 605
either its own public policy or the public policy of another state with materially closer
connections to the issue at hand. (687)
Applying this analysis to the hypothetical set forth above, it would permit a State B court to
apply State Bs nonarbitrability standards to determine the arbitrability of State B statutory
law claims in an arbitration seated in State C; it would not require, but instead permit,
application by State Bs courts of State Cs nonarbitrability standards. At the same time,
traditional conflicts rules would provide for courts in States A, C, D and E to consider State Bs
nonarbitrability standards, depending upon the connection between the dispute and State B,
rather than their own nonarbitrability standards (which, as noted above, it makes no sense to
apply).
This approach has the important benefit that it does not require the nonarbitrability of claims
based upon a legal system that did not (and could not) have any reason for producing such a
result. That is, in the above example, State Cs legal system and nonarbitrability standards
have virtually no interest in rendering State Bs statutory claims nonarbitrable when State B
would itself permit these claims to be arbitrated.
Conversely, if State Bs laws provide that certain claims only be litigated, and not arbitrated,
then the attempted arbitration of those issues in other jurisdictions should require at least
some reference to State Bs laws, and not exclusive reliance on the laws of States A, C, D, or E.
Applying traditional choice-of-law analyses, the courts of States A, C, D and/or E should at least
consider the public policies and mandatory laws of State B in determining whether statutory
claims under State Bs laws are arbitrable.
The foregoing analysis would correspond to Article VII(1) of the New York Convention and to
similar provisions of 187 of the Restatement (Second) Conflict of Laws, where a court may take
into account the public policies and mandatory laws of other jurisdictions. (688) (Of course,
State Bs laws would only even potentially be given effect (subject to other limitations) where
they purported by their own terms to apply. (689) ) A few national court decisions have
adopted analyses that reflect these approaches. (690)
P 606 [3] Limitations on Application of Foreign Nonarbitrability Rules
The possibility that a foreign nonarbitrability rule might be applied in another state (or an
arbitration) does not mean that it necessarily will, or should, be applied. Only where the
foreign jurisdiction has a materially closer connection to the issues in question than other
jurisdictions and where the application of that jurisdictions laws would not be exorbitant
would it be legitimate even to consider applying its nonarbitrability rules. (691) In other cases,
there is no basis even to consider applying a foreign nonarbitrability rule.
Moreover, the fact that a foreign public policy is potentially applicable does not mean that
this public policy must be applied, particularly in the context of nonarbitrability exceptions
under the New York Convention. The forum court in a Contracting State has no obligation to
give effect to a foreign nonarbitrability rule and is only permitted to do so under Article V(2)(a)
when the foreign nonarbitrability rule gives rise to a violation of the nonarbitrability rules of
the judicial enforcement forum itself.
The forum court is also fully entitled to deny effect to a foreign nonarbitrability rule if it
conflicts with a mandatory law or public policy of the forum itself including specifically with
public policies of the forum that favor international arbitration. Thus, even if the laws of State
B provide that particular statutory claims under State Bs laws may not be resolved by
arbitration, State C courts may properly decide that State Cs public policy is to give broad
effect to international arbitration agreements, including with regard to particular categories of
disputes, and that State Bs nonarbitrability rules will therefore not be applied in State C. (692)
Application of the forum states pro-arbitration policy makes particular sense, given the
exceptional character of Article V(2)(a)s nonarbitrability provision as an escape device from
the generally-applicable choice-of-law regime of Article V(1)(a). (693) Under Article II(1),
Contracting States are permitted to rely on their own nonarbitrability standards to deny effect
to an arbitration agreement, in the same fashion that a Contracting State may rely on its own
P 607
nonarbitrability standards to deny recognition to an arbitral award under Article V(2)(a).
131
(694) Importantly, however, this is a local decision that should not affect mandatory
recognition of the arbitration agreement in other Contracting States, just as a decision denying
recognition to an award on nonarbitrability grounds under Article V(2)(a) does not affect
recognition of the award in other Contracting States. (695) In both instances, a state is
permitted to avail itself (within the non-discrimination limits noted above) of a local public
policy rule, but this will not ordinarily alter the effects of either the agreement or the award in
other states. (696)
Thus, it is only in very rare and exceptional cases that a foreign nonarbitrability rule should be
given effect by a national court (or arbitral tribunal). Consistent with this, the weight of
authority concludes that a court or tribunal should only take into account the nonarbitrability
rules of a foreign jurisdiction in extremely limited instances, generally involving a violation of
either international or local public policy or mandatory law. (697)
Although not ordinarily articulated in the foregoing terms, this analysis is consistent with
national court authority. As discussed above, national courts and arbitral tribunals have
generally refused to give effect to foreign nonarbitrability rules (e.g., Belgiums prohibition
against arbitration of distribution agreement terminations; Russias alleged prohibition
P 608 against arbitration of corporate law disputes; Italys alleged prohibition against
arbitration of tort and labor disputes). (698) In many cases, these decisions have cited the pro-
arbitration policies of the judicial enforcement (or arbitral) forum in denying effect to foreign
nonarbitrability rules.
At the same time, examples of cases where it could be appropriate for a court to give effect to
a foreign nonarbitrability rule can be hypothesized. For example, if an arbitral tribunal seated
in State A were requested to approve a merger of two State B companies under State Bs law,
or to issue a patent under State Bs law, there would be substantial grounds for such claims to
be denied as non-arbitrable by the arbitral tribunal or for the courts of State A to annul a
resulting award (or deny judicial assistance to the arbitral process). The involvement of State
A, even in the attenuated capacity of the arbitral seat, in an arbitral tribunals purported
issuance of administrative decisions affecting the rights of third parties under a foreign law
would provide sufficient grounds in State As public policy to refuse to permit claims for the
requested relief to proceed.
[4] Limitations on Interlocutory Decisions Regarding Nonarbitrability Claims
Beyond the foregoing, there is a substantial argument that courts should in almost all cases
simply enforce international arbitration agreements, regardless of whether foreign
nonarbitrability standards might suggest otherwise. For example, in the foregoing
hypotheticals, there is a powerful argument that State C and D courts should not give effect to
State Bs nonarbitrability standards in deciding whether to recognize an arbitration agreement
providing for arbitration of State Bs statutory claims in State C. The better course would be for
State C and D courts to give effect to the arbitration agreement (dismissing or staying any
litigation subject to that agreement), and leave determinations about State Bs
nonarbitrability Rules for the arbitral tribunal and State Bs courts, to be followed by the
award enforcement stage.
This approach would avoid the delays, expenses and uncertainties that would inevitably result
from national courts attempting to evaluate foreign nonarbitrability standards. This makes
particular sense given the extent to which nonarbitrability standards tend to be poorly
defined in national legislation (often being left to delicate judicial development) (699) and
bound up with local public policies (which may be difficult for foreign courts properly to
interpret or apply). (700) This approach would also give maximal effect to the objectives of the
P 609
Convention to render international arbitration agreements and awards readily and
uniformly enforceable (701) by limiting the effect of national legislation that is inconsistent
with these objectives save where specifically authorized by Article V(2)(a), being at the award
enforcement stage in the judicial enforcement forum.
As discussed below, this latter approach has been taken by a number of U.S. courts, in both
domestic and international cases. (702) A leading U.S. Supreme Court decision, PacifiCare
Health Systems, Inc. v. Book, held that questions of the nonarbitrability of certain Racketeer
Influenced and Corrupt Organization (RICO) Act claims in a domestic case should be
considered in the first instance by the arbitral tribunal. (703) The Court reasoned that since we
do not know how the arbitrator will construe the remedial limitations, the question [] whether
they render the parties agreements unenforceable, is better left for initial arbitral
The Supreme Court adopted the same analysis in Vimar Seguros v. M/V Sky Reefer, (705) where
it held that Carriage of Goods by Sea Act (COGSA) claims were arbitrable, notwithstanding
evidence that the arbitral tribunal (sitting in Japan) might not apply U.S. statutory COGSA
protections. The Vimar Court held that mere speculation that the foreign arbitrators might
apply Japanese law which, depending on the proper construction of COGSA, might reduce
respondents legal obligations, does not in and of itself render the claim non-arbitrable. (706)
The court therefore compelled arbitration, reserving for the stage of award enforcement
questions regarding nonarbitrability.
The same approach has been taken by U.S. lower courts in international cases, where they have
held that issues of U.S. statutory law and arbitrability should be submitted first to arbitration,
with the possibility of subsequent judicial review in recognition and enforcement proceedings.
P 610
132
P 610
(707) It has also been taken, in similar circumstances, by courts in other jurisdictions. (708)
This approach is even more sensible where a national court is presented with claims that a
dispute is non-arbitrable under foreign law (rather than the national courts own law).
[5] International Limits on Nonarbitrability Doctrine
As noted above, there are instances in which international principles, derived from the New
York Convention, limit the application of national law standards that purport to render
particular disputes non-arbitrable. These limits have not as yet been consistently formulated
in national judicial decisions or commentary, which have struggled with choice-of-law issues in
this context.
One possible analysis would be that Article II of the Convention should be interpreted,
consistent with the Conventions objectives of uniformity and constitutional character, (709)
as prescribing international standards of nonarbitrability. (710) That is, Article II(1) should be
construed as establishing a uniform international definition of those disputes whose subject
matter is capable of settlement by arbitration.
Under this view, Contracting States would be obliged to enforce arbitration agreements except
where they concerned a subject matter falling within Article II(1)s international definition of
nonarbitrability. Even if national law provided that a dispute was non-arbitrable, the
arbitration agreement would be enforceable with regard to that dispute if Article II(1)s
uniform international definition of nonarbitrability was not satisfied.
Although this approach has serious policy justifications, there is little direct textual basis for
interpreting Article II as establishing a uniform international standard of nonarbitrability. In
particular, Article II(1) provides nothing beyond the brief phrase not capable of settlement by
arbitration. It is difficult to derive specific international nonarbitrability rules (e.g., regarding
particular subjects such as consumer or competition disputes) from this abbreviated
reference.
P 611
The best textual basis for concluding that Article II(1) provides an international definition
of nonarbitrability is the absence of any reference to a choice-of-law rule or national forum in
Article II(1) in contrast to Article V(2)(a), which refers to the nonarbitrability standards of the
recognition forum. (711) Article II(1)s generalized reference to a category of disputes that are
not capable of settlement by arbitration, without any reference to national law, provides a
reasonably cogent basis for concluding that Article II(1) contemplates, and requires Contracting
States to respect, an international definition of non-arbitrable disputes: under this
interpretation, Contracting States could (if they chose) declare particular categories of
disputes non-arbitrable, provided that these categories of disputes fell within Article II(1)s
international definition of disputes that are not capable of settlement by arbitration.
This textual analysis would be supported by the history of the nonarbitrability exception. In
particular, the Geneva Protocol envisaged limitations on the nonarbitrability doctrine. It did
so by providing for the recognition and enforcement of agreements by which the parties to a
contract agree to submit to arbitration all or any differences that may arise in connection with
such contract relating to commercial matters or to any other matter capable of settlement by
arbitration, whether or not the arbitration is to take place in a country to whose jurisdiction
one of the parties is subject. (712)
The text of the Geneva Protocol fairly clearly contemplated that all arbitration agreements
relating to commercial matters would be enforceable, as well as agreements relating to any
other matter capable of settlement by arbitration. That suggests an international definition of
arbitrable matters, which includes at a minimum all commercial matters. Given that the New
York Convention was intended to expand upon the enforceability of international arbitration
agreements, improving the regime contained in the Geneva Protocol, (713) it would be odd to
conclude that the Convention was intended to permit Contracting States to withdraw various
commercial matters from the scope of Article II.
Nonetheless, Article II(1)s language strongly suggests that national law must play a leading role
in application of the nonarbitrability doctrine. Even assuming that the Convention prescribes
an international definition of nonarbitrability, it is very difficult to derive more than
international limitations on national law categories of nonarbitrability from Article II(1). Article
II(1) does not contain a general formula, defining what disputes are non-arbitrable, much less a
catalogue of specific nonarbitrability defenses (such as competition, consumer, employment,
or bankruptcy disputes).
More important, it is very difficult to reconcile the view that Article II prescribes a uniform
international catalogue of non-arbitrable disputes with Article V(2)(a)s clear textual
prescription that national law, and specifically the law of that country (i.e., the recognition
forum), will apply to questions of nonarbitrability at the award enforcement stage. (714) That
interpretation also makes structural sense, because the relatively clear intention of the
P 612 Conventions drafters was to treat the nonarbitrability doctrine as an exceptional escape
device for local public policies of particular Contracting States, not as a uniform international
standard to be applied in all states. (715)
Nonetheless, Article V(2)(a)s reference to the law of the recognition forum can be reconciled
with the view that the Convention imposes international limitations on nonarbitrability rules of
Contracting States. Under this view, Contracting States would be free to apply local rules of
nonarbitrability (as contemplated by Article V(2)(a)), but only subject to international
133
limitations requiring that such rules fall within an international definition of disputes not
capable of settlement by arbitration.
The Conventions drafting history also provides little direct support for a uniform international
rule of nonarbitrability (apart from the treatment of nonarbitrability in the Geneva Protocol).
As a representative example, the presidential statement accompanying the U.S. ratification of
the Convention made clear that national law definitions of nonarbitrability were
contemplated, observing that:
[T]he requirement that the agreement apply to a matter capable of settlement by arbitration
is necessary in order to take proper account of laws in force in many countries which prohibit
submission of certain questions to arbitration. In some of the United States, for example,
disputes affecting the title to real property are not arbitrable. (716)
The clear expectation of the United States, as well as other Contracting States, (717) was that
national law would play a leading role in application of the nonarbitrability doctrine.
The more persuasive interpretation of the Convention is that it does not prescribe either a
single, uniform international definition of nonarbitrability or a definition of nonarbitrability
that is based exclusively on national law. Rather, the Convention contemplates that both
national and international rules will be relevant to application of the nonarbitrability
doctrine. In particular, Article II(1) exceptionally permits Contracting States to single out
particular subjects as non-arbitrable, as defined by local law, but requires that this be done in
a manner that does not conflict with the Conventions basic structure and objectives, which
P 613 give rise to international limitations on national nonarbitrability rules. (718) The
Convention contains an escape valve for local public policies, but it must be seen as a
regulated, not wholly discretionary, escape device.
The foregoing results would effectuate the basic objectives of the Convention, while
acknowledging the exceptional right of individual Contracting States to declare particular
categories of disputes (e.g., bankruptcy, criminal) non-arbitrable pursuant to Article V(2)(a),
(719) even where the parties arbitration agreement is otherwise valid under the choice-of-law
rules of Article V(1)(a). Importantly, unlike the generally-applicable choice-of-law and
contractual validity rules under Article V(1)(a), Article V(2)(a)s nonarbitrability provision is an
exception, applicable only in the judicial enforcement forum, without broader effect on courts
in other Contracting States which remain bound by Article V(1)(a)s choice-of-law regime.
Under this approach, several international limitations would apply to a Contracting States
application of nonarbitrability exceptions. These exceptions are based on the Conventions
basic structure and are designed to ensure that the nonarbitrability exception does not
frustrate the objectives and premises of the Convention.
First, a Contracting State may only treat specific subjects as non-arbitrable on an exceptional
basis, in order to further discrete, articulated public policies. (720) Astate therefore cannot,
consistently with the Convention, declare all disputes or some broad category or categories
of issues (721) non-arbitrable. Similarly, the Convention would not permit a Contracting State
to declare, as an Australian administrative agency has done, that disputes over the alleged
unfairness of a contract were nonarbitrable, (722) or, as a Pakistani court has held, that all
fraud claims are nonarbitrable, (723) or, as an Indonesian court has held, that claims for
P 614
termination of a contract are nonarbitrable. (724) These nonarbitrability rules would
contradict the basic conception and nature of the nonarbitrability exception: they are not
exceptions, tailored to safeguard specific local public policies, but are instead general
rejections of the basic structure, purposes and commitments of the Convention to ensure the
enforceability of international arbitration agreements.
Rather, the Convention should be interpreted to permit a Contracting State to treat only a
specific category of disputes, where arbitration is incapable of safeguarding relevant
legislative objectives, as nonarbitrable. (725) The Convention requires that nonarbitrability
exceptions be narrowly-tailored to accomplish articulated national objectives and that they
interfere with the enforcement of arbitration agreements only insofar as necessary. (726) It also
requires Contracting States to apply nonarbitrability rules with restraint and as an exceptional
escape device, in order to avoid unnecessary conflict with the objectives of the Convention and
the basic commitment of all Contracting States to recognize and enforce international
Second, Contracting States would be precluded from adopting nonarbitrability rules that
discriminate against international arbitration agreements as compared to domestic
arbitration agreements or forum selection clauses. If a dispute is non-arbitrable under
domestic law, it could also be treated as nonarbitrable under the Convention, but
discriminatory rules of nonarbitrability could not be applied to international arbitration
agreements. Adopting such discriminatory rules is contrary to the basic objectives and
structural premises of the Convention, which are to treat international arbitration agreements
(and awards) at least as favorably as domestic ones. (727)
Thus, national law provisions providing that no subjects could be arbitrated in a foreign
arbitral seat, under foreign law, or before foreign arbitrators would be precluded by the
Convention; equally, a provision that certain disputes (e.g., consumer disputes or claims
P 615
against a bankrupt company) were not arbitrable abroad, although arbitrable
domestically, would be contrary to the Convention. Neither of these types of nonarbitrability
rules would be consistent with the Conventions basic premise that international arbitration
134
agreements will be treated no less favorably than domestic agreements.
Finally, the better view of the Convention is that a Contracting States application of
nonarbitrability exceptions must be consistent with the evolving practice of other states. This
was the underlying premise of the U.S. Supreme Court in Mitsubishi Motors, when it declared
that it will be necessary for national courts to subordinate domestic actions of arbitrability to
the international policy favoring commercial arbitration. (728) Other authorities are to the
same effect, in emphasizing the necessity for deference to the Conventions policies in
application of nonarbitrability rules. (729)
Under this analysis, Contracting States would be required to exercise restraint in applying
nonarbitrability exceptions, doing so only when necessary to effectuate vital local public
policies and only consistently with the approaches of other states to particular subjects. Thus,
Contracting States would not be permitted to adopt idiosyncratic nonarbitrability rules, out of
step with those in other jurisdictions. This limitation would serve to ensure that Contracting
States did not undercut their basic commitment to enforce international arbitration
agreements by adopting unusual or idiosyncratic nonarbitrability rules, and instead that the
Conventions constitutional status would be progressively enhanced over time as national
courts took steps to effectuate its policies.
On the other hand, as discussed above, the nonarbitrability exception is by its nature an
exception that permits individual states to give effect to local policies. There is therefore room
for real doubts as to whether a prohibition against idiosyncratic national laws is consistent
with the structure of the nonarbitrability doctrine as an escape device (under Article II(1)).
Nonetheless, the better view is that the Convention imposes structural limitations on the
extent to which individual Contracting States may exercise this exceptional right, in
contradiction to Article IIs basic commitments, in an idiosyncratic manner.
Even so, any limitation on use of the nonarbitrability doctrine ought to be applied only in
instances of a well-established consensus, shared by the substantial majority of Contracting
States, regarding the arbitrability of particular subjects (e.g., rules holding tort and fraud
claims arbitrable). (730) Where such a consensus exists, however, the Convention should be
P 616
interpreted as precluding individual Contracting States from escaping Article IIs basic
obligation to recognize and enforce international arbitration agreements.
4.06 CHOICE-OF-LAW RULES APPLICABLE TO FORMAL VALIDITY OF

The choice of law governing the form of international arbitration agreements has frequently
given rise to disputes. As discussed in greater detail below, the formal validity of international
arbitration agreements is governed in substantial part by uniform international rules, imposed
by international conventions (particularly the New York Convention). (731) The principal choice-
of-law issues arising in connection with the form of international arbitration agreements
concern the relation between these conventions and national laws, with secondary questions
arising in connection with the application of national law when the conventions standards are
not applicable.
[A] Choice of Law Governing Formal Validity of International Arbitration Agreements

Under International Arbitration Conventions
As discussed in detail below, Article II of the New York Convention establishes a uniform
substantive rule governing the formal validity of international arbitration agreements subject
to the Convention. (732) In particular, Articles II(1) and II(2) impose a writing requirement
which demands that international arbitration agreements be in writing and be signed by the
parties or contained in an exchange of letters or telegrams. (733) Article 1 of the Inter-
American Convention is similar, (734) as is Article I(2) of the European Convention. (735) These
requirements reflect a type of choice-of-law rule, with the provisions of the conventions
superseding otherwise applicable national law.
[1] Maximum Form Requirement Under New York Convention
It is almost universally accepted that the New York Conventions writing requirement
establishes a substantive requirement for formal validity of arbitration agreements which
P 617
Contracting States cannot replace or supplement with more demanding or stringent
national law rules of formal validity. (736) Put differently, Article II(2) adopts a maximum
standard for formal validity that precludes Contracting States from requiring additional or
more demanding formal requirements under national law. This standard is properly regarded
as a hybrid choice of law and substantive rule of law, applicable only to the form of
Thus, as discussed in greater detail below, in cases where the Convention is otherwise
applicable to an agreement to arbitrate, Article II(2)s formal requirements apply, superseding
more demanding national form requirements. (737) It is reasonably clear that Article II(2)s
maximum form requirement should apply in preference to all national form requirements,
including those of any national law selected by the parties to govern their arbitration
agreement. (738) The fact that the parties have agreed to a particular national law (particularly
in a general choice-of-law clause in their underlying contract) does not contract out of the
uniform international protections of the Convention, which are applicable in all Contracting
135
States; thus, if the parties do select a national law governing their arbitration agreement, that
choice is the specified national law (of a Contracting State) together with the Convention,
including Article II and its maximum form requirement.
[2] No Minimum Form Requirement Under New York Convention: Article VII(1) Preserves Less
Demanding Form Requirements
A more difficult choice-of-law question is presented by national arbitration legislation that
imposes less demanding form requirements on international arbitration agreements than
those under Article II. As discussed below, this is the case with most developed arbitration
legislation, which often permits either oral or tacit arbitration agreements, or imposes less
stringent writing requirements than under Article II(2). (739)
As discussed below, authority is divided on whether Article II(2) states a minimum form
requirement, which Contracting States are required to apply, even if national law permits a
less demanding form requirement. A number of national courts and some commentators have
concluded that Article II(2) states a minimum form requirement, from which Contracting
States cannot deviate. (740) On the other hand, the majority view among both courts and
commentators is that Article II(2) does not impose a minimum form requirement, but instead
P 618
permits Contracting States to apply a less demanding (or no) form requirement; that
interpretation relies on Article VII(1) of the Convention, which permits Contracting States to
recognize awards (and, by analogy, arbitration agreements). (741)
As discussed below, this latter view is clearly to be preferred. (742) That view is confirmed by
UNCITRALs recent adoption of a recommendation that accepted this interpretation of Article
VII(1) of the Convention in connection with its 2006 Revisions of the UNCITRAL Model Law. The
UNCITRAL Recommendation urges Contracting States to apply Article VII(1) of the Convention 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 of the
validity of such an arbitration agreement. (743) That recommendation reflects the better view
of the Convention, particularly given its developing constitutional status.
[3] No Minimum Form Requirement Under New York Convention: Article II(2) Is Non-Exclusive
A related question is whether Article II(2) is exclusive or non-exclusive. A number of authorities
hold that Article II(2) is non-exclusive, merely listing some examples of the types of arbitration
agreements that would satisfy Article II(1)s agreement in writing requirement, but not
excluding other types of agreements from also satisfying that writing requirement. Under this
analysis, Article II(2) contains an illustrative or non-exclusive list of arbitration agreements
which clearly satisfy the Conventions writing requirement, without prejudice to the
conclusion in particular cases that other types of agreements also constitute agreements in
writing which are subject to the Convention.
As discussed in detail below, authorities addressing this issue are divided, but the better view
is that Article II(2) is non-exclusive, and that other types of written agreements may satisfy
Article II(1) and thus fall within the Conventions protections. (744) Again, this is the view
adopted by an UNCITRAL Recommendation addressing the topic, which concludes by
P 619
recommending that article II, paragraph 2, of the [New York Convention] be applied
recognizing that the circumstances described therein are not exhaustive. (745)
It is important to note that this interpretation rests on the premise that Article II(1) sets forth
an international definition of agreement in writing that must be elaborated by national
courts and other authorities, but that, as it is elaborated, is binding on all Contracting States.
At the same time, as discussed below, Article VII of the Convention leaves national courts free
to give effect to arbitration agreements that do not satisfy Articles II(1) or II(2), including by
adopting less demanding national law standards of written arbitration agreements. (746)
[B] Choice of Law Governing Formal Validity Under National Arbitration Legislation
Choice-of-law issues concerning the formal validity of international arbitration agreements
arise infrequently. That is because of the central importance of the New York Conventions
formal requirements, whose uniform international form requirements largely eliminate the
need (and possibility) for choice-of-law analysis. Instead, in many cases, the only question is
whether the Conventions maximum form requirement applies, precluding application of
more demanding national form requirements.
Nonetheless, choice-of-law questions can arise in determining the law governing the formal
validity of an arbitration agreement when the directly-applicable substantive and choice-of-
law rules of the Convention (or another international convention) are inapplicable. This
possibility can arise when either non-Convention arbitration agreements (747) are involved or
when the Conventions formal requirements are not satisfied, but a court or tribunal concludes
that those requirements do not establish minimum standards; in each case, no uniform
international form requirement applies and choice-of-law rules must be applied to select the
applicable national legal system to prescribe a form requirement. (748) In these cases,
different choice-of-law approaches can be taken to the question of formal validity.
P 620
[1] Form Requirements of Judicial Enforcement Forum
First, questions of formal validity might be governed by the laws of the judicial enforcement
forum where litigation concerning the putative arbitration agreement is pending. Many
136
contemporary arbitration statutes contain definitions of a written arbitration agreement,
which are by their terms applicable to arbitration agreements providing for arbitration in
national territory.
Thus, as discussed in greater detail below, Article 7(2) of the original 1985 UNCITRAL Model Law
set forth a definition of a written arbitration agreement (amended in the 2006 revisions to the
Model Law). (749) Article 1(2) of the Model Law provides that this definition is applicable to any
agreement providing for arbitration within national territory, and that this definition is
applicable only to such agreements. (750) Similarly, English, Swiss, U.S., Dutch, Japanese and
other national arbitration statutes contain requirements for formal validity that appear
applicable to any litigation involving a putative agreement to arbitrate within national
territory, without the necessity for further choice-of-law analysis. (751) The same approach is
taken in France, where French conceptions of international law, generally-applicable to
international arbitration agreements, apply to the formal validity of such agreements. (752)
These provisions resolve the question of what form requirements apply at least in the first
P 621
instance (753) to arbitration agreements providing for arbitration within national
territory; they provide that the form requirements of the local arbitration legislation apply to
such agreements. Like many national arbitration statutes, (754) however, the Model Law does
not address the question of what form requirements apply if the arbitral seat is located
outside the territory of the national court. In these circumstances, recourse to generally-
applicable choice-of-law principles (including particularly those discussed below) is
necessary.
Courts in Model Law jurisdictions have nonetheless not infrequently applied Article 7 while
considering agreements which purported to provide for arbitration in a foreign jurisdiction.
(755) These decisions generally do not, however, address choice-of-law issues in any detail, and
there is little basis for automatically applying the law of the judicial enforcement forum to
issues of formal validity of the arbitration agreement. Rather, as discussed below, the better
analysis is to apply the law governing the substantive validity of the arbitration agreement,
together with the validation principle.
[2] Form Requirements of Jurisdiction Whose Law Governs Substantive Validity of Arbitration
Agreement
Second, questions of formal validity might be governed by the law applicable to the
substantive validity and formation of the arbitration agreement itself. (756) As one award,
adopting this approach, reasoned:
It is a generally accepted principle of private international law that the formation of and the
requirements as to the form of a contract are governed by that law which would be the proper
law of the contract, if the contract was validly concluded. (757)
This has the benefits of simplicity and consistency, which are of substantial importance given
P 622 the other uncertainties and complexities in choice-of-law analysis affecting international
arbitration agreements. (758) Further, in cases where the parties have selected the law
governing their arbitration agreement, application of this law to issues of form accords with
principles of party autonomy. (759)
[3] Specialized Choice-of-Law Rules for Formal Validity
Alternatively, issues of form might be subject to specialized choice-of-law rules. If the parties
have not selected any governing law, questions of form might be governed by the law of the
place where the arbitration agreement was executed. (760) This accords with historic
approaches to the choice of law applicable to the formal validity of ordinary contracts in many
jurisdictions. (761) Alternatively, questions of form might be governed by the law of the arbitral
seat. This approach was adopted in some early awards, (762) but has been rejected by more
recent, well-reasoned national court decisions. (763)
[4] Future Directions: Formal Validity and Validation Principle
As already discussed, national arbitration legislation does not provide material guidance in
selecting among the foregoing choice-of-law rules. (764) Absent legislative direction, the
proper choice-of-law analysis for questions of formal validity draws from the approaches taken
to questions of substantive validity and formation of arbitration agreements. (765)
The same considerations and objectives are equally applicable in both contexts, as well as the
desirability of uniformity and simplicity. Accordingly, questions of formal validity should be
subject to a validation principle, which upholds the validity of an international arbitration
agreement if it satisfies either the laws of the judicial enforcement forum, the laws governing
the substantive validity of the parties arbitration agreement, or the laws of the place where
the arbitration agreement was executed.
P 623 As discussed above, the validation principle accords with the underlying objective of the
international arbitration process, which is to provide simple, readily-enforceable dispute
resolution mechanisms notwithstanding the choice-of-law and jurisdictional complexities
inherent in transnational transactions. (766) It also accords with contemporary developments
in choice-of-law analysis applicable to form requirements in other contexts.
Thus, while inapplicable to arbitration agreements, Article 11 of the Rome I Regulation and
Article 9 of the Rome Convention adopt a validation principle with regard to matters of form,
137
upholding the formal validity of contracts that satisfy either the requirements of the law
governing the substantive validity of the contract or the law of the place the contract was
executed. (767) Similarly, authorities from a number of jurisdictions have adopted the
validation principle in relation to issues of formal validity concerning contracts generally. (768)
The draft Hague Principles on the Choice of Law in International Contracts adopt a similar
approach to issues of formal validity. (769)
The validation principle is particularly well-suited for application to questions of the form of
international arbitration agreements. As already discussed above, the purpose of such
agreements is to provide an effective, enforceable mechanism for resolving transnational
commercial disputes, notwithstanding the complexities arising from differences among
national legal systems. (770) Applying national form requirements to invalidate an agreement
of this character makes particularly little sense.
This is the result reached by the (relatively few) national court decisions that have considered
issues of formal validity which have not been resolved solely by reference to the New York
Convention. (771) It is also the result that is reached by those arbitral awards which have
considered the question, (772) although there are anomalous exceptions. (773) Well-reasoned
commentary is to the same effect. (774)
P 624 The application of the foregoing choice-of-law principles to issues of formal validity can
be briefly summarized. If an arbitration agreement provides for arbitration in a jurisdiction
that has adopted the UNCITRAL Model Law (or legislation with similar territorial limits), then
the question in the first instance is whether the agreement satisfies the form requirements of
Article 7 of the Model Law (or analogous provisions of other legislation). In this case, Article 1(2)
of the Model Law clearly provides for the recognition of the arbitration agreement if Article 7s
requirements are satisfied. (775)
Even if an arbitration agreement does not satisfy the form requirements of Article 7, it may
nonetheless fulfill the form requirements of the law which the parties have agreed will govern
that agreement or the law of the place where the agreement was made. In these
circumstances, the validation principle should permit the agreement to be upheld. (776) This
accords with the treatment of issues of formation and substantive validity, as well as with the
objectives of the international arbitral process. (777)
In cases where an arbitration agreement provides for arbitration in a place outside of national
territory, then the foregoing choice-of-law analysis remains applicable. That is, if the
agreement satisfies the formal requirements of either the legal regime selected by the parties
to govern their agreement, the place where the seat of the arbitration is located, or the judicial
enforcement forum, then its validity should be upheld.
In practical application, the foregoing analysis provides a resolution to issues of formal
validity if parties from States A and B agree to arbitrate in State C, while also agreeing that
their agreement to arbitrate is subject to the laws of State D. In this case, if the parties
arbitration agreement satisfies the form requirements of State Cs arbitration law, then it is
P 625
formally valid (regardless what State Ds law provides). If, however, the formal
requirements of State Cs law are not satisfied, then the agreement should nonetheless be
formally valid if it satisfies State Ds requirements of formal validity.
4.07 CHOICE-OF-LAW RULES APPLICABLE TO CAPACITY TO CONCLUDE

The choice-of-law rules applicable to the capacity to conclude international arbitration
agreements raise special issues. As discussed below, the New York Convention and other
international arbitration conventions refer to the need to apply choice-of-law rules applicable
to questions of capacity, but do not provide either such choice-of-law rules or substantive
rules governing the subject (in contrast to the approach to questions of formal validity). (778) As
a consequence, it is left almost entirely to national law to provide the choice-of-law rules that
apply to the capacity to conclude arbitration agreements, subject to the non-discrimination
provisions of the Convention.
[A] Choice-of-Law Rules Governing Capacity Under International Arbitration

Conventions
Article V(1)(a) of the Convention indirectly addresses the question of the law applicable to
capacity to conclude an international arbitration agreement. It provides that an award may be
denied recognition if the parties to the [arbitration agreement] were, under the law applicable
to them, under some incapacity. (779) The clear import of this provision is that national law
applies to determine questions of capacity, at least in the first instance. (780)
Relying on Article V(1)(a)s statement that capacity is determined under the law applicable to
the party, some commentators have suggested that the Convention contains a choice-of-law
rule selecting the law of the partys domicile or place of organization. (781) Other
P 626
commentators have concluded that Article V(1)(a) does not address the question of
applicable law, leaving it to national courts to apply their own conflict of laws rules in order to
resolve this issue. (782)
The better view is that Article V(1)(a) contemplates a different choice-of-law analysis for issues
of capacity than for those of substantive validity (by reason of Article V(1)(a)s references to two
138
separate choice-of-law rules for issues of capacity and issues of substantive validity). It is
difficult to see why the Conventions drafters would have prescribed a choice-of-law rule for
issues of substantive validity (which they did), (783) but not issues of capacity. Equally, Article
V(1)(a)s reference to the law applicable to them fairly clearly implies a reference to the
personal law of a party being either the law of a companys place of organization or the law of
the domicile (or state of nationality) of a natural person. (784)
[B] Choice of Law Governing Capacity Under National Arbitration Legislation

Like leading arbitration conventions, most national arbitration statutes do not address the
question of what law applies to questions of capacity to conclude international arbitration
agreements. Article 34(2)(a)(i) of the UNCITRAL Model Law provides for the annulment of
arbitral awards if a party to the arbitration agreementwas under some incapacity, but
without indicating what law applies to determine questions of capacity. (785) Many national
arbitration statutes are similar, failing to provide either choice-of-law rules applicable to
capacity or substantive rules of capacity. (786)
[1] Application of Law of Partys Domicile, Seat, or Place of Incorporation to Issues of Capacity
Most national courts and arbitral tribunals have looked to generally-applicable national
choice-of-law rules in dealing with questions of capacity. This has produced diverse results,
although most authorities have applied the personal law of the party to issues of capacity.
P 627
A few decisions have looked to the law governing the arbitration agreement or to
international principles. (787) In many cases, however, courts and tribunals have applied the
law of the domicile or principal place of business of the party in question. (788)
For example, in one early award, the tribunal applied French law to determine the powers of
the officers of a French company, apparently on the (unarticulated) basis that the powers of
corporate entities are governed by their national law of incorporation. (789) Similarly, an
arbitral tribunal seated in Switzerland concluded that, according to wide-spread practice,
the law of a partys own territory will determine questions of that partys capacity. (790)
To the same effect, the Swiss Federal Tribunal relied on general choice-of-law rules in holding
P 628
that the capacity of a bankrupt party was governed by its personal law (being its place of
incorporation). (791) Likewise, in an enforcement action, Germanys Bundesgerichtshof applied
German choice-of-law principles and concluded that the legal capacity of a seller was to be
ascertained according to its personal law. (792) Commentary is almost unanimous in adopting
the personal law of the party with regard to issues of capacity. (793)
Although there is general agreement on application of a partys personal law to issues of
capacity, there is disagreement about what constitutes a partys personal law. It is often
observed that national choice-of-law rules dealing with capacity differ from jurisdiction to
jurisdiction. In civil law jurisdictions, the capacity of natural persons is generally governed by
the law of their nationality, while in common law jurisdictions, capacity of natural persons is
governed by the law of their domicile. (794) Similarly, the capacity of juridical persons in civil
P 629 law jurisdictions is generally governed by the law of the seat of the entity, while in
common law jurisdictions the law of the place of incorporation is ordinarily applicable. (795)
This diversity of choice-of-law rules presents obvious problems for international arbitral
tribunals, because different national choice-of-law rules will provide for differing applicable
laws of capacity in many cases. Some authorities have suggested that the choice-of-law rules
of the arbitral seat should be applied to determine capacity to conclude an arbitration
agreement. (796) For example, the Institute of International Laws 1957 resolutions dealing with
arbitration declared that capacity to submit to arbitration shall be regulated by the law
indicated according to the rules of choice of law in force at the seat of the arbitral tribunal.
(797)
On the other hand, the arbitral seat may well be selected for reasons such as neutrality and
lack of connection to the transaction. (798) These reasons would make it anomalous to apply
the arbitral seats choice-of-law rules to select a national law that would render one (or both)
parties incompetent to conclude an arbitration agreement. That would be particularly true
where the choice-of-law rules of the seat would select a law that incapacitated a party, when
the law of both parties home jurisdictions did not.
[2] Application of Validation Principle to Issues of Capacity
The better approach, again, is to apply a validation principle, discussed above, to questions of
capacity (as well as to issues of substantive and formal validity (799) ). Where parties enter into
international transactions, calling by definition for activities affecting multiple states, their
contractual agreements should be given maximum effect, notwithstanding local law provisions
that would impede the enforceability of contractual arrangements in a domestic setting. As
one arbitral tribunal held:
[I]f a person has capacity either by the proper law of the contract or by the law of his domicile
and residence then the contract is valid, so far as capacity is concerned. (800)
That is, in a transaction affecting States A and B, with an arbitral seat in State C, the parties
P 630 capacity to enter into an arbitration agreement should be upheld where any of the laws of
States A, B, or C would reach this result. Taking a concrete (albeit unlikely) example, if an 18-
139
year-old from State A entered into an international arbitration agreement, when the age of
majority in State A was 21, the arbitration agreement should be given effect so long as either
State B or State C adopted an age of majority of 18 or younger. This approach is broadly similar
to that under French law where, consistent with general choice-of-law analysis, French courts
apply international law directly to the questions of authority and capacity. (801)
[3] Application of International Non-Discrimination Principles to Issues of Capacity
Additionally, where national legislatures have adopted restrictions on the capacity of parties
to conclude arbitration agreements, these limitations should be subject to the international
neutrality and non-discrimination requirements of the New York Convention (discussed above,
in the context of substantive validity of arbitration agreements). (802) For example, where a
state adopts restrictions on the capacity of local companies to enter into arbitration
agreements (e.g., limits on state entities capacity to conclude international arbitration
agreements), these restrictions should not be given effect as to agreements within the ambit of
the Convention. (803) Doing so would be inconsistent with the basic commitment of Contracting
States to the Convention to recognize and enforce international arbitration agreements, save
where they are null and void; as discussed above, this commitment overrides national law
rules that single out international arbitration agreements for special burdens or limitations or
that impose idiosyncratic domestic restrictions on such agreements. (804)
This rule is reflected, albeit in a specific application, in the Swiss Law on Private International
Law, followed by comparable judicial authority in other jurisdictions. As discussed below,
Article 177(2) provides that if a party to the arbitration is a state or an enterprise or
organization controlled by it, it cannot rely on its own law in order to contest its capacity to be
P 631
a party to an arbitration. (805) Article 177(2) reflects an approach whereby states may not
invoke their own legislation to escape their otherwise-valid agreements to arbitrate. (806)
The same neutrality rationale applies more generally to all questions of capacity. For example,
if a Contracting State to the Convention enacted legislation providing that no local corporation
would have the capacity to enter into an international arbitration agreement unless
unanimously approved at a shareholders meeting or validated by a local regulatory official,
that legislation should not be given effect.
On this analysis, provisions of national law purporting to discriminate between the capacity to
participate in local judicial or arbitral proceedings and the capacity to participate in foreign
or international arbitral proceedings (or to conclude agreements providing for such
participation) are not properly regarded as limitations on capacity and should not be given
effect. (807) As a Swiss court observed, albeit applying Swiss law:
[I]f [Portuguese law] prevented an insolvent Portuguese entity from appearing as a party in a
Portuguese arbitration, this would have no influence on its capacity to be a party in an
international arbitration seated in Switzerland. It is decisive in this respect that Portuguese
law affords the Appellant a legal personality through which it may be allocated rights and
obligations. (808)
The same analysis applies under the Conventions requirements of non-discrimination and
international neutrality.
4.08 CHOICE-OF-LAW RULES APPLICABLE TO AUTHORITY TO CONCLUDE

The same choice-of-law principles that apply to issues of capacity are also applicable to
related issues of agency and authority, where the question is whether a representative of a
putative party (e.g., an agent or officer of a company) had the authority to bind that party (e.g.,
a principal or corporation) to an international arbitration agreement. (809) Although there are
P 632
important distinctions between issues of authority and issues of capacity, there are sound
reasons to read Article V(1)(a)s treatment of capacity as extending to questions of agency and
authority, not merely to capacity in the narrow sense. These reasons include the Conventions
drafting style (being broadly-worded and constitutional, rather than narrowly or technically
expressed) (810) and its need to deal with a host of differing legal systems. Article V(1)(a)s
general approach to questions of capacity referring to the law applicable to the parties on
such issues also applies with equal logic to issues of agency and authority.
The most significant point, in each case, is that the Convention contemplates the application
of national laws to govern issues of agency and authority, as selected by applicable choice-of-
law rules (and as limited by the Conventions neutrality and non-discrimination requirements).
(811) Some commentators have suggested that issues of authority should be directly governed
by international principles, without reference to national law rules. (812) As with questions
regarding the substantive validity of the arbitration agreement, (813) however, this analysis
ignores the historic role of national law in international arbitration and the terms of the
Convention (and other international arbitration conventions). Rather, the appropriate analysis
is the selection of applicable national law, in accordance with choice-of-law rules
contemplated or provided by the Convention, but subjected to the international non-
discrimination protections of the Convention.
Consistent with the foregoing analysis, national courts and arbitral tribunals have almost
invariably applied national law to issues of representative power. In some instances, the law
governing the agency agreement has been held applicable to govern the agents authority to
P 633
140
P 633
conclude an agreement to arbitrate; more often, the law of the place where the agent
acted is applied. (814) Other authorities have simply applied the law governing the
substantive validity of the arbitration agreement. (815)
Particularly where a party has no knowledge of the terms of the agency agreement entered into
by its counter-party, it is difficult to accept that the party should be disadvantaged by the law
governing the agency agreement. In these circumstances, application of a validation principle,
permitting reliance on either the law governing the arbitration agreement or the place where
the agent acted, would be appropriate.
As discussed below, some domestic laws (e.g., France, (816) Austria, (817) Greece (818) ) limit
the powers of agents to enter into domestic arbitration agreements on behalf of their
principals. Even where selected by applicable choice-of-law rules, these limitations on agency
and authority should not be given effect in the context of international arbitration agreements.
They are inconsistent with the general requirement, imposed by Articles II(1) and II(3) of the
Convention, that national law not single out arbitration agreements for special burdens.
P 634
4.09 CHOICE-OF-LAW RULES APPLICABLE TO INTERPRETATION OF
Choice-of-law analysis is also necessary to select the law applicable to interpretation of an
international arbitration agreement. Many (but not all) jurisdictions apply the same law to the
interpretation of an arbitration agreement as to its formation and substantive validity. (819)
One of the few arguable exceptions to this rule is the UnitedStates, where some U.S. courts
have held that federal common law rules apply to issues of interpretation, but not necessarily
questions of formation and validity. (820) These issues are considered in detail below. (821)
P 635
References
1) For commentary, see Arzandeh & Hill, Ascertaining the Proper Law of an Arbitration Clause
Under English Law, 5 J. Private Intl L. 425 (2009); Bantekas, The Proper Law of the
Arbitration Clause: A Challenge to the Prevailing Orthodoxy, 27 J. Intl Arb. 1 (2010);
Bernardini, Arbitration Clauses: Achieving Effectiveness in the Law Applicable to the
Arbitration Clause, in A. van den Berg (ed.), Improving the Efficiency of Arbitration
Agreements and Awards: 40 Years of Application of the New York Convention 197 (ICCA
Congress Series No. 9 1999); Blessing, The Law Applicable to the Arbitration Clause, in A. van
den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention 168 (ICCA Congress Series No. 9 1999); O.
Chukwumerije, Choice-of-Law in International Commercial Arbitration (1994); L. Collins et
al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 16R-001, 16-008, 16-011-28
(15th ed. 2012); di Pietro, Applicable Laws Under the New York Convention, in F. Ferrari & S.
Krll (eds.), Conflict of Laws in International Arbitration 63 (2011); Dimolitsa, Issues
Concerning the Existence, Validity and Effectiveness of the Arbitration Agreement, 7(2) ICC
Ct. Bull. 14 (1996); Friedland & Hornick, The Relevance of International Standards in the
Enforcement of Arbitration Agreements Under the New York Convention, 6 Am. Rev. Intl
Arb. 149 (1995); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 385-741 (1999); Gertz, The Selection of Choice of Law Provisions
in International Commercial Arbitration: A Case for Contractual Dpeage, 12 Nw. J. Intl L.
Bus. 163 (1991); Graffi, The Law Applicable to the Validity of the Arbitration Agreement, in F.
Ferrari & S. Krll (eds.), Conflict of Laws in International Arbitration 19 (2011); Grigera Nan,
Choice-of-Law Problems in International Commercial Arbitration, 289 Recueil des Cours 9
(2001); Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391 (1996);
Heiskanen, Forbidding Dpeage: Law Governing Investment Treaty Arbitration, 32 Suffolk
Transnatl L. Rev. 367 (2009); Hook, Arbitration Agreements and Anational Law: A Question
of Intent?, 28 J. Intl Arb. 175 (2011); D. Joseph, Jurisdiction and Arbitration Agreements and
Their Enforcement 172-202 (2d ed. 2010); Lew, The Law Applicable to the Form and
Substance of the Arbitration Clause, in A. van den Berg (ed.), Improving the Efficiency of
Arbitration Agreements and Awards: 40 Years of Application of the New York Convention 114
(ICCA Congress Series No. 9 1999); G. Moss, International Commercial Arbitration 279-99
(1999); Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted by the
English Courts With Respect to the Proper Law of the Arbitration Agreement, 29 Arb. Intl 115
(2013); Petsche, International Commercial Arbitration and the Transformation of the
Conflict of Laws Theory, 18 Mich. St. J. Intl L. 453 (2010); Razumov, The Law Governing the
Capacity to Arbitrate, in A. van den Berg (ed.), Improving the Efficiency of Arbitration
Agreements and Awards: 40 Years of Application of the New York Convention 260 (ICCA
Congress Series No. 7 1996); Thorn & Grenz, The Effect of Overriding Mandatory Rules on the
Arbitration Agreement, in F. Ferrari & S. Krll (eds.), Conflict of Laws in International
Arbitration 187 (2011); Thrope, A Question of Intent: Choice of Law and the International
Arbitration Agreement, 54 Disp. Res. J. 16 (1999); Trukhtanov, The Proper Law of Arbitration
Agreement A Farewell to Implied Choice?, 2012 Intl Arb. L. Rev. 140.
2) See1.02.
141
4) See3.03[B]; 4.02[A]. This may result from either an express or implied choice of law by
the parties, where they intend different laws to govern their underlying contract and their
arbitration agreement, or from the application of conflict of laws rules, which results in
the application of different laws to the parties two agreements. See4.04.
5) See4.02[B].
6) See4.03. This is not significantly different from the choice-of-law analysis in other
contexts, where different laws may apply to different issues arising from a contractual
relationship. See, e.g., Restatement (Second) Conflict of Laws 188 (1971) (The rights and
duties of the parties with respect to an issue in contract are determined by the local law
of the state which, with respect to that issue, has the most significant relationship to the
transaction and the parties.); Rome Convention, Art. 3(1) (By their choice the parties can
select the law applicable to the whole or a part only of the contract.); Rome I Regulation,
Art. 3(1); Gertz, The Selection of Choice of Law Provisions in International Commercial
Arbitration: A Case for Contractual Dpeage, 12 Nw. J. Intl L. Bus. 163 (1991); Heiskanen,
Forbidding Dpeage: Law Governing Investment Treaty Arbitration, 32 Suffolk Transnatl L.
Rev. 367, 395-97 (2009) (discussing dpeage in international arbitration agreements);
Jayme, Betrachtungen zur dpeage im internationalen Privatrecht, in K. Kegel, H.-J.
Musielak & K. Schurig (eds.), Festschrift fr Gerhard Kegel zum 75 Geburtstag 253 (1987);
Reese, Dpeage: A Common Phenomenon in Choice of Law, 73 Colum. L. Rev. 58 (1973).
7) See5.02[A][2][d]; 26.05[C][1][e][iii].
8) See4.04[A][4][a]; Judgment of 8 July 2009, Socit dtudes et reprsentations navales et
industrielles v. Socit Air Sea Broker Ltd, 2009 Rev. arb. 529 (French Cour de cassation civ.
1e); Judgment of 30 March 2004, Rado v. Painvewebber, 2005 Rev. arb. 115 (French Cour de
cassation civ. 1e); Judgment of 21 May 1997, Renault v. V 2000, 1997 Rev. arb. 537 (French
Cour de cassation civ. 1e); Judgment of 20 December 1993, Municipalit de Khoms El Mergeb
v. Socit Dalico, 1994 Rev. arb. 116 (French Cour de cassation civ. 1e); Judgment of 7 April
2011, 2011 Rev. arb. 747 (Paris Cour dappel); Judgment of 18 November 2010, Rpublique de
Guine quatoriale v. SA Bank Guinea quatorial, 2010 Rev. arb. 980 (Paris Cour dappel);
Judgment of 25 November 1999, SA Burkinabe des ciments et matriaux v. Socit des
ciments dAbidjan, 2001 Rev. arb. 165 (Paris Cour dappel); Judgment of 17 December 1991,
Gatoil v. Natl Iranian Oil Co., 1993 Rev. arb. 281 (Paris Cour dappel).
9) See4.02[A][2][d]; 4.04[A][4][b]; Rhone Mediterranee Compagnia Francese di Assicurazioni
e Riassicurazioni v. Lauro, 712 F.2d 50, 53-54 (3d Cir. 1983); Ledee v. Ceramiche Ragno, 684
F.2d 184, 187 (1st Cir. 1982).
The same standards apply under the Inter-American Convention.
10) See4.04[B][3][d]; Swiss Law on Private International Law, Art. 178(2).
11) SeeSpanish Arbitration Act, 2011, Art. 9(6) (When the arbitration is international, the
arbitration agreement shall be valid and the dispute may be subject to arbitration if the
requirements stipulated by the law chosen by the parties to govern the arbitration
agreement, the law applicable to the substance of the dispute, or Spanish law, are
fulfilled.); Algerian Code of Civil and Administrative Procedure, Art. 458 bis 1, 3 (same);
Judgment of 26 August 2008, XXXIV Y.B. Comm. Arb. 404, 405 (Austrian Oberster
Gerichtshof) (2009) (If the wording of the declaration of intent allows for two equally
plausible interpretations, the interpretation which favors the validity of the arbitration
agreement and its applicability to a certain dispute is to be preferred.).
12) See4.04[A][1][b]. Similar conclusions apply with respect to issues of capacity.
See4.07[A].
14) See3.03[B].
15) See3.01; 3.03[B].
16) Final Award in ICC Case No. 1507, in S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral
Awards 1974-1985 215, 216 (1990) (emphasis added).
17) See, e.g.,Interim Award in ICC Case No. 4131, IX Y.B. Comm. Arb. 131, 132 (1984) (sources of
applicable law for determining the scope and the effects of an arbitration clause, which
is the basis of an international arbitration, are not necessarily the same as the law
applicable to the merits of the dispute referred to this arbitration) (emphasis added);
Judgment of 21 March 1995, XXII Y.B. Comm. Arb. 800, 803 (Swiss Federal Tribunal) (1997)
(arbitration agreement and the main contract can be subject to different laws)
(emphasis added).
142
18) See3.03[B]; 4.04[B][6][a]; Final Award in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37 (1998)
(applying choice-of-law clause in underlying contract to arbitration agreement); Final
Award in ICC Case No. 6752, XVIII Y.B. Comm. Arb. 54, 55-56 (1993) (applying general choice-
of-law clause to arbitration clause); Final Award in ICC Case No. 6379, XVII Y.B. Comm. Arb.
212, 215 (1992) (applying law governing underlying contract to arbitration agreement);
Final Award in ICC Case No. 5294, XIV Y.B. Comm. Arb. 137, 140-41 (1989) (applying Swiss law
to both arbitration agreement and underlying contract); Final Award in ICC Case No. 3572,
XIV Y.B. Comm. Arb. 111 (1989) (applying law chosen by parties to govern underlying
contract to arbitration agreement).
Under some national laws, notably French law, a different rule applies. As discussed
below, French law subjects international arbitration agreements to international law (and
not any national legal system), thereby requiring that such agreements be governed by a
different legal system from the parties underlying contract. See4.04[A][4][a]. A similar
approach has been adopted by some U.S. courts. See4.04[A][4][b].
19) See3.03[B].
20) See4.02[A][3].
21) See3.01; 3.02[E]; 3.03[C].
22) Geneva Protocol, Art. I (Each of the contracting states recognizes the validity of an
agreement whether relating to existing or future differences between parties subject
respectively to the jurisdiction of different contracting states by which the parties to a
contract agree to submit to arbitration all or any differences that may arise in connection
with such contract relating to commercial matters or to any other matter capable of
settlement by arbitration, whether or not the arbitration is to take place in a country to
whose jurisdiction one of the parties is subject.) (emphasis added).
23) Geneva Convention, Art. I(a) (emphasis added); 3.02[A][1].
24) Article I(a) also implied that the law governing the arbitration agreement could differ
from the law governing other aspects of the parties relations.
25) As noted above, some commentators have termed the Conventions choice-of-law
provisions its essential achievement (la grande conqute). Bredin, La Convention de
New York du 10 juin 1958 pour la reconnaissance et lexcution des sentences arbitrales
trangres, 87 J.D.I. (Clunet) 1003, 1020, 1029 (1960).
26) See3.02[A][2]; 5.02[A][2].
27) See2.01[A][1][a]; 4.04[A][1][b][i].
28) New York Convention, Art. V(1)(a). See also3.02[A][2]; 4.04[A][1][b].
29) See4.04[A][1][b]; 4.04[B][1]. See also Schramm, Geisinger & Pinsolle, Article II, in H.
Kronke et al. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global
Commentary on the New York Convention 37, 54 (2010); A. van den Berg, The New York
Arbitration Convention of 1958 126-28, 291-96 (1981).
Article V(1)(a) also provides for non-recognition where [t]he parties to the [arbitration
agreement] were, under the law applicable to them, under some incapacity. New York
Convention, Art. V(1)(a). See also26.05[C][2].This provision again prescribes a specialized
choice-of-law rule for issues of capacity to conclude arbitration agreements. See4.07[A].
30) See4.04[A][1][b][i].
31) European Convention, Art. VI(2). As discussed below, these rules provide for application of
the law chosen by the parties, or failing which, the law of the arbitral seat. See4.04[A][1]
[c]; Hascher, European Convention on International Commercial Arbitration of 1961:
Commentary, XX Y.B. Comm. Arb. 1006 (1995).
32) European Convention, Art. VII. These rules are discussed below. See4.04[A][1][c].
33) See also3.02[A][3].
34) See2.01[A][2]; 5.01[C][1].
35) See2.02[B]; 4.06[B][1].
36) UNCITRAL Model Law, Arts. 34(2)(a)(i), 36(1)(a)(i); 3.02[B][3][e]; 25.03[A][2]; 26.03[D]. See
P. Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law
Jurisdictions 7-011, 8-021 (3d ed. 2009); H. Holtzmann & J. Neuhaus, A Guide to
theUNCITRAL Model Law on International Commercial Arbitration: Legislative History and
Commentary 915-16, 1058-59 (1989).
37) See4.02[A][2][a]. That rule gives effect to the parties choice of law and, absent such a
choice, the law of the arbitral seat.
38) See, e.g., Recyclers of Australia Pty Ltd v. Hettinga Equip. Inc., [2000] 175 ALR 725 (Australian
Fed. Ct.) (applying Iowa law, selected by choice-of-law clause in underlying contract, to
validity of arbitration clause); Nirma Ltd v. Lurgi Energie und Entsorgung GmbH, XXVIII Y.B.
Comm. Arb. 790, 803 (Gujarat High Ct. 2002) (2003). See also Sulamrica Cia Nacional de
Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638 (English Ct. App.); AES Ust-
Kamenogorsk Hydropower Plant LLC v. Ust-Kamenogorsk Hydropower Plant JSC [2011]
EWCA Civ 647 (English Ct. App.); Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyds
Rep. 603 (QB) (English High Ct.); XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500, 506
(QB) (English High Ct.).
39) Swiss Law on Private International Law, Art. 178(2) (As regards its substance, an
arbitration agreement is valid if it conforms either to the law chosen by the parties, or to
the law governing the subject-matter of the dispute, in particular the main contract, or to
Swiss law.).
143
40) See B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 374
(2d ed. 2010); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitrage interne et
international en Suisse Art. 178, 15 (1989); Wenger, in S. Berti et al. (eds.), International
41) Judgment of 21 March 1995, XXII Y.B. Comm. Arb. 800, 803 (Swiss Federal Tribunal) (1997).
42) See4.02[A][2][b]; 4.04[B][3][d]; Judgment of 16 October 2003, 22 ASA Bull. 364, 387 (Swiss
Federal Tribunal) (2004); B. Berger & F. Kellerhals, International and Domestic Arbitration
in Switzerland 369 (2d ed. 2010) (The conflict of laws rule in PILS, Art.178(2) follows the
principle in favorem validitatis. It enables an arbitral tribunal to regard as valid an
arbitration agreement that would be invalid under the law chosen by the parties or under
the law applicable to the main contract, provided that it at least satisfies the substantive
requirements of Swiss law in relation to the conclusion of contracts.); J.-F. Poudret & S.
Besson, Comparative Law of International Arbitration 300 (2d ed. 2007) (In Switzerland,
Art. 178(2) [of the Swiss Law on Private International Law] establishes a conflict of law rule
in favorem validitatis which provides that the arbitration agreement is materially valid
providing it fulfils the requirements either of the law chosen by the parties, of the law
governing the merits of the dispute and notably the law applicable to the main
agreement, or finally those of Swiss law. Therefore, the arbitrator will have jurisdiction
providing the arbitration agreement is valid according to one of these three laws.);
Wenger, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 178, 22 (2000)
([Swiss law] widens the spectrum of laws to be taken into account from the point of view
of favor validitatis.).
43) Lalive, The NewSwiss Law on International Arbitration, 4 Arb. Intl 2, 10 (1988).
44) Swiss Law on Private International Law, Art. 178(1). See2.03[H]; 5.02[A][5][d].
45) See3.02[B][3][d]; 4.04[A][4][a]; 4.04[B][3][e].
Rev. arb. 116, 117 (French Cour de cassation civ. 1e) (emphasis added).
47) See4.04[A][4][a]; 4.04[B][3][e]; Judgment of 8 July 2009, Socit dtudes et
reprsentations navales et industrielles v. Socit Air Sea Broker Ltd, 2009 Rev. arb. 529
(French Cour de cassation civ. 1e); Judgment of 30 March 2004, Socit Uni-Kod v. Socit
Ouralkali, 2005 Rev. arb. 959 (French Cour de cassation civ. 1e); Judgment of 21 May 1997,
Renault v. V 2000, 1997 Rev. arb. 537 (French Cour de cassation civ. 1e); Judgment of 25
November 1999, SA Burkinabe des ciments et matriaux v. Socit des ciments dAbidjan,
2001 Rev. arb. 165 (Paris Cour dappel).
48) U.S. FAA, 9 U.S.C. 2; 1.04[B][1][e]; 2.01[A][2]; 5.01[C][2].
49) See1.04[B][1][e]; 4.04[A][3]; 4.04[B][3][b]; AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740,
1748 (U.S. S.Ct. 2011); Preston v. Ferrer, 552 U.S. 346, 359 (U.S. S.Ct. 2008); Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-48 (U.S. S.Ct. 2006); Allied-Bruce Terminix Cos.
v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995); Southland Corp. v. Keating, 465 U.S. 1 (U.S. S.Ct.
1984).
50) See1.04[B][1][e]; 4.04[B][3][b].
51) See4.04[A][2][j][ii]; 4.04[B][3][b]; Bridas SAPIC v. Govt of Turkmenistan, 447 F.3d 411 (5th
Cir. 2006); Intl Paper Co. v. Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417
n.4 (4th Cir. 2000) (FAA and New York Convention create a body of federal substantive
law of arbitrability, applicable to any arbitration agreement within the coverage of the
Act); Campaniello Imps., Ltd v. Saporiti Italia SpA, 117 F.3d 655 (2d Cir. 1997); Thomson-CSF
v. Am. Arbitration Assn, 64 F.3d 773 (2d Cir. 1995); Masefield AG v. Colonial Oil Indus., Inc.,
2005 WL 911770 (S.D.N.Y.).
A few U.S. courts have held that general choice-of-law clauses in the parties underlying
contract apply to the associated arbitration agreement, at least in some circumstances.
See, e.g., Cape Flattery Ltd v. Titan Maritime, LLC, 647 F.3d 914, 921 (9th Cir. 2011) (courts
should apply federal arbitrability law absent clear and unmistakable evidence that the
parties agreed to apply non-federal arbitrability law); GAR Energy & Assocs. v. Ivanhoe
Energy Inc., 2011 WL 6780927 (E.D. Cal.) (applying choice-of-law clause specifying
California law validity of arbitration agreement).
52) See4.04[A][2][j][iv]; Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, 364 F.3d 274, 292 n.43 (5th Cir. 2004); Nissho Iwai Corp. v. M/V Joy Sea, 2002 A.M.C.
1305, 1311 (E.D. La.) (applying English law where parties did select an English forum,
which is at least some evidence that English law was meant to govern); Bergesen v.
Lindholm, 760 F.Supp. 976, 981 n.9 (D. Conn. 1991).
53) See4.04[B][3][b].
54) See4.04[A][2][j][ii].
55) Restatement (Second) Conflict of Laws 218 comment b (1971) (emphasis added).
144
56) See Ulbrich v. Overstock.Com, Inc., 887 F.Supp.2d 924, 930 n.1 (N.D. Cal. 2012) (Thus, the
Courts ruling on the choice of law issue with respect to enforceability of the arbitration
agreement has no bearing on which states law will apply to the underlying claims.);
Authenment v. Ingram Barge Co., 878 F.Supp.2d 672, 679-80 (E.D. La. 2012) (applying
federal maritime law to validity of arbitration agreement and English law to substance of
dispute); Siglain v. Trader Publg Co., 2008 WL 3286974 (N.D. Cal.) (applying Virginia law to
enforceability of arbitration agreement and California law to substance of dispute);
Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 326 (Iowa 1977) (New York can
be seen as having the most significant relationship to the issue of the validity and effect
of the arbitration provisions of the contract, though Iowa had most significant
relationship to underlying contract); Marchant v. Mead-Morrison, 169 N.E. 386 (N.Y. 1929)
(arbitration clause subject to different law than underlying contract).
57) One exception is Scotland, where the Scottish arbitration statute provides: Where (a)
the parties to an arbitration agreement agree that an arbitration under that agreement is
to be seated in Scotland, but (b) the arbitration agreement does not specify the law
which is to govern it, then, unless the parties otherwise agree, the arbitration agreement
is to be governed by Scots law. Scottish Arbitration Act, 2010, 6.
Arbitration legislation in most other common law jurisdictions adopts the separability
presumption, see3.02[B][3], but does not further address the law governing the
58) Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd [1993] AC 334, 357-58 (House of
Lords). See also Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA
Civ 638, 11 (English Ct. App.) (It has long been recognised that in principle the proper
law of an arbitration agreement which itself forms part of a substantive contract may
differ from that of the contract as a whole.); Abuja Intl Hotels Ltd v. Meridien SAS [2011]
EWHC 87, 20, 22 (Comm) (English High Ct.) ([A]s the Tribunal rightly held, Nigerian law
is irrelevant to the validity of the arbitration agreement as it is governed by English law.
The fact that the Management Agreement is governed by Nigerian law does not mean that
the separable and distinct arbitration agreement is so governed.); C v. D [2007] EWCA Civ
1282, 24 (English Ct. App.); Naviera Amazonica Peruana SA v. Compania Internacional de
Seguros del Peru [1988] 1 Lloyds Rep. 116, 119 (English Ct. App.); Deutsche Schachtbau- und
Tiefbohrgesellschaft mbH v. Ras Al Khaimah Natl Oil Co. [1987] 2 Lloyds Rep. 246, 250
(English Ct. App.) (arbitration clause need not be governed by the same law as the
underlying contract), revd on other grounds, [1988] 2 Lloyds Rep. 293 (House of Lords);
Black Clawson Intl Ltd v. Papierwerke Waldhof Aschaffenburg AG [1981] 2 Lloyds Rep. 446,
483 (QB) (English High Ct.); L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of
Laws 16-012 (15th ed. 2012) (Although, in many cases, the law applicable to the main
contract will have a strong influence on the law applicable to the arbitration agreement,
this will not be so in every case.).
59) M.S. Dozco India P. Ltd v. M/S Doosan Infracore Co., [2010] INSC 839, 12-13 (Indian S.Ct.
2010) (quoting Naviera Amazonica Peruana SA v. Cia Internacional de Seguros del Peru
[1988] 1 Lloyds Rep. 116, 119 (English Ct. App.)). See also Natl Thermal Power Corp. v.
Singer Co., XVIII Y.B. Comm. Arb. 403, 405 (Indian S.Ct. 1992) (1993) (The proper law of the
arbitration agreement is normally the same as the proper law of the contract. It is only in
exceptional cases that it is not so even where the proper law of the contract is expressly
chosen by the parties. Where, however, there is no express choice of the law governing
the contract as a whole, or the arbitration agreement as such, a presumption may arise
that the law of the country where the arbitration is agreed to be held is the proper law of
the arbitration agreement. But that is only a rebuttable presumption.).
60) See, e.g., Klckner Pentaplast GmbH & Co. KG v. Advance Tech. (H.K.) Co., [2011] 4 HKLRD
262, 23-24 (H.K. Ct. First Inst.) (There is no doubt that the proper law of the contract and
the lex arbitri may be different.That is especially so where the law is chosen by the
parties.); Thyssen Canada Ltd v. Mariana Maritima SA, [2000] 3 FC 398, 22 (Canadian Fed.
Ct. App.) (As to the proper law of the arbitration agreement it is necessary to ask whether
the parties have expressly chosen the law which is to apply to the agreement. If so the
choice of law will prevail even if the chosen law differs from the law of the underlying
contract or the curial law.). Compare Comandate Marine Corp. v. Pan Australia Shipping
Pty Ltd, [2006] FCAFC 192 (Australian Fed. Ct.) (suggesting that, absent contrary choice, law
of judicial forum governs validity of arbitration agreement); Nottage & Garnett, Top
Twenty Things to Change in or Around Australias International Arbitration Act, 6 Asian Intl
Arb. J. 1, 9 n.26 (2010). See also BHP Billiton Ltd v. Oil Basins Ltd, [2006] VSC 402 (Victoria
S.Ct.).
61) See4.04[B][3][f]-[g].
145
62) SeeSwedish Arbitration Act, 48 (Where an arbitration agreement has an international
connection, the agreement shall be governed by the law agreed upon by the parties.
Where the parties have not reached such an agreement, the arbitration agreement shall
be governed by the law of the country in which, by virtue of the agreement, the
proceedings have taken place or shall take place. The first paragraph shall not apply to
the issue of whether a party was authorized to enter into an arbitration agreement or was
duly represented.); Spanish Arbitration Act, 2011, Art. 9(6) (When the arbitration is
international, the arbitration agreement shall be valid and the dispute may be subject to
arbitration if the requirements stipulated by the law chosen by the parties to govern the
arbitration agreement, the law applicable to the substance of the dispute, or Spanish
law, are fulfilled.); Algerian Code of Civil and Administrative Procedure, Art. 458 bis 1, 3
(adopting verbatim language of Article 178(2) of Swiss Law on Private International Law).
63) Judgment of 27 October 2000, Bulgarian Foreign Trade Bank, Ltd v. A.I. Trade Fin., Inc., XXVI
Y.B. Comm. Arb. 291, 293 (Swedish S.Ct.) (2001).
Y.B. Comm. Arb. 291, 293 (Swedish S.Ct.) (2001) (emphasis added).
65) Judgment of 26 April 1980, VII Y.B. Comm. Arb. 340, 341 (Venice Corte dAppello) (1982)
(recognizing award rendered in London).
66) Judgment of 3 March 1992, Socit Sonetex v. Socit Charphil et autre, 1993 Rev. arb. 273
(French Cour de cassation civ. 1e); Judgment of 4 August 1993, Owerri Commercial Inc. v.
Dielle Srl, XIX Y.B. Comm. Arb. 703 (Hague Gerichtshof) (1994); Judgment of 19 February
2004, 2005 SchiedsVZ 54 (Austrian Oberster Gerichtshof); Judgment of 22 September 1994, 2
Ob 566/94 (Austrian Oberster Gerichtshof). See also J.-F. Poudret & S. Besson, Comparative
Law of International Arbitration 179 (2d ed. 2007).
67) Turkish International Arbitration Law, Art. 4 (The validity of an arbitration agreement is
governed by the law selected by the parties to be applicable to the arbitration
agreement, or failing any choice, by Turkish law.).
68) See4.04[B][3][g].
69) Final Award in ICC Case No. 6162, XVII Y.B. Comm. Arb. 153, 160-62 (1992).
Awards 1974-1985 215, 216 (1990).
71) Interim Award in ICC Case No. 4131, IX Y.B. Comm. Arb. 131, 133 (1984). See alsoFinal Award in
ICC Case No. 7453, XXII Y.B. Comm. Arb. 107 (1997) (Michigan choice-of-law clause in
underlying contract not applicable to arbitration clause; instead, FAA applies); Award in
ICC Case No. 5730, 117 J.D.I. (Clunet) 1029, 1032 (1990); Preliminary Award in ICC Case No.
5505, XIII Y.B. Comm. Arb. 110, 116-17 (1988) (Parties may submit an arbitration agreement
to a law which is not the substantive law of the main contract.); Interim Award in ICC Case
No. 4504, 113 J.D.I. (Clunet) 1118 (1986).
72) Award in ICC Case No. 4381, 113 J.D.I. (Clunet) 1102, 1104 (1986). See alsoDallah Real Estate &
Tourism Holding Co. v. Ministry of Religious Affairs, Govt of Pakistan, Partial Award in ICC
Case No. 9987, 2(4) Intl J. Arab Arb. 337, 352 (2010) (By reason of the international
character of the Arbitration Agreement coupled with the choice, under the main
Agreement, of institutional arbitration under the ICC Rules without any reference in such
Agreement to any national law, the Tribunal will decide on the matter of its jurisdiction
and on all issues relating to the validity and scope of the Arbitration Agreementby
reference to those transnational general principles and usages reflecting the
fundamental requirements of justice in international trade and the concept of good faith
in business.).
73) Derains, Observation on Final Award in ICC Case No. 4381, in S. Jarvin, Y. Derains & J.-J.
Arnaldez (eds.), Collection of ICC Arbitral Awards 1986-1990 268 (1994).
74) The remaining sections of this Chapter focus first on the law applicable to the formation,
validity and termination of international arbitration agreements. Additional or separate
choice-of-law issues are raised with regard to form, capacity and authority with respect
to international arbitration agreements, which are discussed in greater detail below.
See4.06; 4.07; 4.08.
75) See4.04[A][2][a].
76) See4.04[A][2][c] & [h].
77) See4.04[A][2][d].
78) See4.04[A][2][e].
79) See 4.04[A][2][g].
146
80) Bernardini, Arbitration Clauses: Achieving Effectiveness in the Law Applicable to the
Agreements and Awards: 40 Years of Application of the New York Convention 197, 200-02
(ICCA Congress Series No. 9 1999) (the international arbitrator may take at least three
different approaches in order to determine the substantive law of the arbitration
clause); Blessing, The Law Applicable to the Arbitration Clause, in A. van Berg (ed.),
the New York Convention 168-69 ([I]n addition to the above four approaches [mentioned
by other commentators], five further solutions have been advocated in international
arbitration practice.All these nine solutions have also been advocated (and indeed
practiced) regarding arbitrability.Are we thus faced with a magnificent confusion?);
Lew, The Law Applicable to the Form and Substance of the Arbitration Clause, in A. van den
Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention 114, 141-44 (There are four main conflict rules for
determining the applicable law to govern the arbitration agreement.). See also4.04[A]
[2][g].
81) SeeJudgment of 21 March 1995, XXII Y.B. Comm. Arb. 800, 804 (Swiss Federal Tribunal)
(1997) (warning of danger that, due to application of different choice-of-law rules, an
arbitration agreement may, when relied upon [in a request for referral], cause under
certain circumstances the lack of jurisdiction of the courts according to the lex fori,
whereas the arbitral award based on that arbitration agreement may be denied
recognition because the agreement is invalid according to a foreign law). See also M.
Bhler & T. Webster, Handbook of ICC Arbitration: Commentary, Precedents, Materials 78-79
(2d ed. 2008) (domestic litigators may find it surprising that there is no clear answer to
this question of what law governs the arbitration agreement in the absence of a choice of
law by the parties); Graffi, The Law Applicable to the Validity of the Arbitration Agreement,
in F. Ferrari & S. Krll (eds.), Conflict of Laws in International Arbitration 19, 53 (2011) (To
simply put it, in no way a uniform criterion can be, or has been, found to assess the
substantive validity of an arbitration agreement and each jurisdiction tends to adopt a
unique and rather unpredictable approach to this issue.).
82) See1.02[B].
83) See4.04[A][2]; 4.04[B][3].
84) Different authorities identify different categories of issues that are potentially subject to
the law governing an international arbitration agreement. SeeJudgment of 23 July 2001,
XXXI Y.B. Comm. Arb. 825, 830 (Spanish Tribunal Supremo) (2006) (determining law
applicable to arbitration agreement is somewhat complex because the applicable law
splits into specific applicable laws for specific aspects: capacity, effects, etc.); Natl
Thermal Power Corp. v. Singer Co., XVIII Y.B. Comm. Arb. 403, 406 (Indian S.Ct. 1992) (1993)
(The validity, effect, and interpretation of the arbitration agreement are governed by its
proper law. Such law will decide whether the arbitration clause is wide enough to cover
the dispute between the parties. Such law will also ordinarily decide whether the
arbitration clause binds the parties even when one of them alleges that the contract is
void, or voidable or illegal or that such contract has been discharged by breach or
frustration. The proper law of arbitration will also decide whether the arbitration clause
would equally apply to a different contract between the same parties or between one of
those parties and a third party.); Bernardini, Arbitration Clauses: Achieving Effectiveness
in the Law Applicable to the Arbitration Clause, in A. van den Berg (ed.), Improving the
Convention 197, 198 (ICCA Congress Series No. 9 1999) (law governing arbitration agreement
applies to (i) the validity of the clause, including the arbitrability of future disputes; and
(ii) its scope of application, from both a subjective and an objective viewpoint); O.
Chukwumerije, Choice-of-Law in International Commercial Arbitration 34 (1994) (The law
governing the arbitration agreement applies to limited issues of consent (such as whether
or not the agreement was induced by fraud, misrepresentation, or undue influence), and
the interpretation, effect, and scope of an arbitration agreement.); L. Collins et al. (eds.),
Dicey, Morris and Collins on The Conflict of Laws 16R-001 (15th ed. 2012) (The material
validity, scope and interpretation of an arbitration agreement are governed by its
applicable law.).
85) See8.02[D].
86) See4.08; 10.02[A].
87) See9.02[D].
88) See5.06[C][6][h].
89) See4.07.
90) See4.06.
91) See4.04.
92) See5.06[C][6][h].
93) See4.05. Matters can be even more complex in federal systems, such as the United
States and Canada. In U.S. courts, U.S. federal law governs the validity and interpretation
of domestic arbitration agreements, while issues of formation may be governed by U.S.
state law. See 4.04[A][2][j].
94) See1.04[F] for a general overview of choice-of-law issues in international arbitration.
95) See1.04[F]; 11.05[A][1]; 19.01.
96) See11.05[A][2].
37 (4th ed. 2013). See also19.04.
147
98) The same is true for submission agreements, covering an existing dispute. G. Born,
International Arbitration and Forum Selection Agreements: Drafting and Enforcing
Appendix B (4th ed. 2013).
99) See In re Salander OReilly Galleries, 453 B.R. 106, 111 (Bankr. S.D.N.Y. 2011) (Channel
Islands law will apply to this agreement, including the Arbitration (Jersey) Law 1998.);
Judgment of 14 September 2000, XXVII Y.B. Comm. Arb. 265, 265 (German
Bundesgerichtshof) (2002); G. Born, International Arbitration and Forum Selection
Agreements: Drafting and Enforcing 88 (4th ed. 2013).
100) See, e.g., Bond, How to Draft An Arbitration Clause (Revisited), 1(2) ICC Ct. Bull. 14 (1990).
101) See, e.g., G. Born, International Arbitration and Forum Selection Agreements: Drafting and
Enforcing 160 (4th ed. 2013) (providing typical choice-of-law clause).
102) An implied choice-of-law agreement, as to the law governing the arbitration agreement,
may also be derived from the parties selection of the arbitral seat. See4.04[A][2][c] &
[e]. See also19.04[E][2], p. 2773.
103) See4.04[A][2].
104) See1.02[B].
105) New York Convention, Art. V(1)(a); European Convention, Art. VI(2); 4.04[A][1].
106) See4.04[A][3].
107) See1.01[C][1]-[2]; 4.02[A][1].
108) See1.01[C][1]. Article II of the Geneva Protocol provides: The arbitral procedure,
including the constitution of the tribunal, shall be governed by the will of the parties and
by the law of the country in whose territory the arbitration takes place. Geneva Protocol,
Art. II. As discussed below, this provision deals with the procedural law of the arbitration,
not the law governing the arbitration agreement. See11.03[C][1][a].
109) Geneva Protocol, Art. I (emphasis added). The Protocol also provided for the specific
performance of international arbitration agreements, requiring in Article IV that, where
an agreement subject to Article I existed, the courts of Contracting States shall refer the
parties on the application of either of them to the decision of the arbitrators. Geneva
Protocol, Art. IV (emphasis added). See also5.01[B][1].
110) See1.01[C][2]; 4.02[A][1]; Geneva Convention, Art. I(a).
111) Geneva Convention, Art. I(a) (emphasis added); 1.01[C][2]; 3.02[A][1].
112) See4.02[A][1].
113) See1.04[A][1][c][i]; 4.04[A][1][b][i].
114) See4.04[B][2][b][iii].
115) New York Convention, Art. V(1)(a) (emphasis added). See4.02[A][1].
116) See1.04[A][1][c][i]; 5.01[B][2].
117) See2.01[A][1][a]; 5.04[B][1].
118) See1.04[F][2]; 4.04[B][2][b][i].
119) New York Convention, Art. II(1) (Each Contracting State shall recognize), Art. II(3) (The
court of a Contracting Stateshallrefer the parties to arbitration). See8.02[A][1].
120) See4.04[B][2][b][ii].
121) See4.04[B][2][b][ii].
122) See4.04[A][3].
123) See2.01[A][1][a].
124) New York Convention, Art. V(1)(a). SeeNacimiento, Article V(1)(a), in H. Kronke et al. (eds.),
York Convention 205 (2010); Schramm, Geisinger & Pinsolle, Article II, in H. Kronke et al.
(eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on
the New York Convention 37, 54 (2010); A. van den Berg, The New York Arbitration
Convention of 1958 282-83 (1981) (describing drafting history of choice-of-law rule in
Article V(1)(a)).
125) See4.04[B][2][b][ii]-[iii].
126) See4.04[B][2][b][iii].
127) See4.04[B][2][b][iii].
128) See, e.g., Meadows Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036, 1041
(E.D.N.Y. 1991) (discussing possible enforcement fora).
129) See2.03[C][1][a][ii](2).
130) This is recommended by model institutional arbitration clauses and is common in
practice. See1.04[E][4]; 14.01[B].
131) The selection of an arbitral seat is provided for under all leading institutional rules.
See14.03[D]; 14.07.
132) The sensible, and proper, approach under Article V(1)(a) in these (relatively unusual)
circumstances is to apply a validation principle, giving effect to the arbitration
agreement if it would be valid under the law of any plausible future arbitral seat. As
discussed below, a validation principle provides the most appropriate means of giving
effect to Article IIs rule of presumptive validity of international arbitration agreements
and the Conventions pro-enforcement objectives. See4.04[A][3], p. 545. There is no
reason not to permit an arbitration to proceed if there appear to be reasonable
prospects that it will do so in a place where the resulting applicable law would uphold
the agreements validity. That gives effect to the parties agreement to arbitrate and
avoids assuming that the parties and arbitral tribunal will be unable to proceed in a
manner that ensures the validity of the arbitration agreement.
133) See14.07.
148
Agreements and Awards: 40 Years of Application of the New York Convention 197, 200 (ICCA
Congress Series No. 9 1999).
135) See, e.g., Changzhou AMEC E. Tools & Equip. Co. v. E. Tools & Equip., Inc., 2012 WL 3106620,
at *12 (C.D. Cal.) (in context of determining law applicable under Article V(2)(b), looking to
analysis under Article II(3) and noting that [s]ome district courts have applied domestic
state law to determine the issue of validity); Meadows Indem. Co. v. Baccala & Shoop Ins.
Servs., Inc., 760 F.Supp. 1036, 1042 (E.D.N.Y. 1991) (Art. II(3) does not incorporate Art. Vs
choice-of-law rule); Ferrara SpA v. United Grain Growers, Ltd, 441 F.Supp. 778, 780-81 n.2
(S.D.N.Y. 1977) (dicta that forums laws should apply, on grounds that New York
Conventions legislative history contemplates this and that it is consistentwith the view
that enforceability of an agreement to arbitrate relates to the law of remedies and is
therefore governed by the law of the forum), affd mem., 580 F.2d 1044 (2d Cir. 1978). See
also Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1281 (11th Cir. 2011) (This Circuit has also
uniformly cited or discussed Article II at the arbitration-enforcement stage and Article V
at the award-enforcement stage.).
136) Restatement (Second) Conflict of Laws 1, 6(2) (1971); B. Audit, Droit international priv
91 et seq. (4th ed. 2006); L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict
of Laws 4-034 (15th ed. 2012); M. Giuliano & P. Lagarde, Report on the Convention on the
Law Applicable to Contractual Obligations O.J. C 282 31/10/1980, 1 (The object [of the
Convention] was to eliminate the inconveniences arising from the diversity of the rules of
conflict, notably in the field of contract law.); M. Reimann, Conflict of Laws in Western
Europe A Guide Through the Jungle 109-12 (1995); E. Scoles et al., Conflict of Laws 3.57
(4th ed. 2004); S. Symeonides, Private International Law and the End of the 20th Century:
Progress or Regress? 43-45 (2000).
137) See1.02[B].
138) See1.04[A][1]; A. van den Berg, The New York Arbitration Convention of 1958 286 (1981)
(Conventions provisions must be deemed to be interrelated as the underlying purpose
is to attain as much uniformity as possible in the legal regime governing international
commercial arbitration; in principle, the Conventions text must be considered to
constitute a whole).
139) See, e.g., Blow, Das UN-bereinkommen ber die Anerkennung und Vollstreckung
auslndischer Schiedssprche, Zeitschrift fr Konkurs-, Treuhand- und
Schiedsgerichtswesen 1, 3-4 (1959); Contini, International Commercial Arbitration: The
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
8 Am. J. Comp. L. 283, 296 (1959) (courts will apply own law including conflict rules); Pisar,
The United Nations Convention on Foreign Arbitral Awards, 33 S. Cal. L. Rev. 14, 16 (1959)
(Article II(3) refers to national conflict of law rules only as last resort); T. Rede & R.
Hadenfeldt, Schweizerisches Schiedsgerichtsrecht 231 (2d ed. 1993).
140) See1.04[A][1].
141) See, e.g.,Judgment of 21 March 1995, XXII Y.B. Comm. Arb. 800, 804-05 (Swiss Federal
Tribunal) (1997); Judgment of 3 February 1990, Della Sanara Kustvaart Bevrachting &
Overslagbedrijf BV v. Fallimento Cap. Giovanni Coppola Srl, XVII Y.B. Comm. Arb. 542, 543
(Genoa Corte dAppello) (1992) (Considering the eadem ratio and the close connection
between [Arts. II(3) and V], the criteria for the evaluation of the arbitration clause which
are to be applied in enforcement proceedings must also be applied when the clause is
invoked in order to derogate from the jurisdiction of the national courts.).
142) See, e.g., J. Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration
6-32, 6-55 (2003) (Though these provisions [i.e., New York Convention, Art. V(1) and
UNCITRAL Model Law, Art. 36(1)(a)(i)] address the issue only from the perspective of the
annulment or enforcement judge, there is a strong argument in favor of applying the same
criteria at the pre-award stage.); McMahon, Implementation of the United Nations
Convention on Foreign Arbitral Awards in the United States, 2 J. Mar. L. & Comm. 735, 757
(1971) (same); A. van den Berg, The New York Arbitration Convention of 1958 126-28, 291-95
(1981) (Article II(3) should be read to incorporate Article V(1)(a)s choice-of-law rule: A
systematic interpretation of the Convention, in principle, permits the application by
analogy of the conflicts rules of Article V(1)(a) to the enforcement of the agreement.).
Compare Haas, Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
New York, June 10, 1958, in F.-B. Weigand (ed.), Practitioners Handbook on International
Arbitration (2d ed. 2009); Martiny, in K. Rebmann, F. Scker & R. Rixecker (eds.),
Mnchener Kommentar zum Einfuehrungsgesetz zum Brgerlichen Gesetzbuch Vorbem. Art.
3, 51 (5th ed. 2010); J. Robert, Larbitrage, Droit interne, Droit international priv 280 (5th
ed. 1983); van Houtte, Parallel Proceedings Before State Courts and Arbitral Tribunals, in
Arbitral Tribunals or State Courts: Who Must Defer to Whom? 35 (ASA Spec. Series No. 15
2001).
143) That conclusion is supported by the reference to Article II in Article V(1)(a)s recognition
provisions, reflecting the interrelation between the provisions. A. van den Berg, The New
York Arbitration Convention of 1958 127 (1981) (As Article V(1)(a) incorporates Article II
the agreement referred to in Article II Article II can be deemed to incorporate Article
V(1)(a).).
144) Judgment of 21 March 1995, XXII Y.B. Comm. Arb. 800, 804-05 (Swiss Federal Tribunal)
(1997).
145) See4.04[A][1][c].
149
146) See4.04[A][1][b][ii].
147) New York Convention, Art. V(1)(a). SeeNacimiento, Article V(1)(a), in H. Kronke et al. (eds.),
York Convention 205 (2010); Schramm, Geisinger & Pinsolle, Article II, in H. Kronke et al.
the New York Convention 37, 54 (2010); A. van den Berg, The New York Arbitration
Article V(1)(a)).
148) See, e.g., Judgment of 2 October 1931, DFT 57 I 295 (Swiss Federal Tribunal); Judgment of 24
November 1994, XXI Y.B. Comm. Arb. 635, 638 (Rotterdam Rechtbank) (1996); Judgment of
30 May 1994, XX Y.B. Comm. Arb. 745, 747 (Tokyo Koto Saibansho) (1995); Citation Infowares
Ltd v. Equinox Corp., (2009) 7 SCC 220, 15 (Indian S.Ct.); Natl Thermal Power Corp. v. Singer
Co., XVIII Y.B. Comm. Arb. 403, 405 (Indian S.Ct. 1992) (1993); W. Craig, W. Park & J. Paulsson,
International Chamber of Commerce Arbitration 5.05 (3d ed. 2000) (most national court
decisions under the New York Convention have applied the law of the country where the
award was rendered to the arbitration agreement); A. van den Berg, The New York
Arbitration Convention of 1958 124 (1981) (law governing the arbitration agreement is in
practice almost always the same law as the law governing the arbitral procedure). See
also11.01[C].
149) Restatement (Third) U.S. Law of International Commercial Arbitration 4-14, comment b
(Tentative Draft No. 2 2012). See also id. at 4-12, comment c.
150) See4.04[A][3].
151) See4.04[A][1][b].
152) See2.01[A][2]; Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005); Rhone
Mediterranee v. Lauro, 712 F.2d 50, 53 (3d Cir. 1983) (applying federal common law rules
and international principles derived from New York Convention); Hodgson v. Royal
Caribbean Cruises, Ltd, 706 F.Supp.2d 1248, 1256-61 (S.D. Fla. 2009) (The null-and-void
clause encompasses only those situationssuch as fraud, mistake, duress, and waiver
that can be applied neutrally on an international scale.) (quoting Bautista v. Star
Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005); Apple & Eve, LLC v. Yantai N. Andre Juice Co., 499
F.Supp.2d 245, 248 (E.D.N.Y. 2007) (The limited scope of the Conventions null and void
clause must be interpreted to encompass only those situations such as fraud, mistake,
duress, and waiver that can be applied neutrally on an international scale.), vacated
on other grounds, 610 F.Supp.2d 226 (E.D.N.Y. 2009).
153) The analysis in the text differs from that of some commentators who have suggested that
Article II imposes an international standard that displaces or replaces the choice-of-law
rules of Article V(1)(a) at the stage of enforcing agreements. Friedland & Hornick, The
Relevance of International Standards in the Enforcement of Arbitration Agreements Under
the New York Convention, 6 Am. Rev. Intl Arb. 149, 154 (1995) (Both the text of the
Convention and the travaux suggest strongly that Article Vs choice-of-law rules should
not be read into Article II, and that disputes under Article II should be resolved based on
a potentially different, international standard.). The correct analysis is that the
Conventions prohibition against discriminatory and idiosyncratic rules applies equally
under both Articles II and V, and is a substantive rule of law derived from the
Conventions purposes and structure not that different choice-of-law and substantive
rules apply under Articles II and V. See4.04[A][1][b], p. 494.
154) See4.04[A][3], p. 549.
155) See4.04[B][2][b][iii].
156) It is clear that Article V(1)(a)s choice-of-law rule displaces use of national choice-of-law
rules as a basis for denying recognition of an award. Judgment of 21 March 1995, XXII Y.B.
Comm. Arb. 800, 804 (Swiss Federal Tribunal) (The conflicts rules in Art. V(1)(a) of the New
York Convention must be applied, in order to determine the applicable material law,
rather than the conflict rules which would be otherwise applicable in the referral
State.). A Contracting State may only deny recognition of an award based on invalidity
or non-existence of the arbitration agreement by application of the choice-of-law rule set
forth in Article V(1)(a).
157) See26.03[B][6].
158) See4.04[A][1][b][iii]; 4.04[B][2][b][iv].
159) European Convention, Art. VI(2). For commentary, see Hascher, European Convention on
International Commercial Arbitration 1961: Commentary, XX Y.B. Comm. Arb. 1006, 1027-28
(1995); 1.04[A][2]; 4.02[A][1].
160) European Convention, Art. VI(2).
161) Unlike the New York Convention, the European Convention directly addresses the
question of the law applicable to the arbitration agreement, rather than doing so
indirectly, through provisions regarding recognition of arbitral awards or enforcement of
agreements to arbitrate. This is preferable to the New York Conventions indirect
approach, because, among other things, it avoids doubts as to whether the same law is
applicable to an arbitration agreement at the stage when it is recognized and at the
stage when the award is recognized. See4.04[A][1][b], pp. 493-94; 4.04[B][2][b], p. 565.
162) European Convention, Art. VI(2)(c).
150
163) Rome Convention, Art. 1(2)(d); Rome I Regulation, Art. 1(2)(e). See also H. Gaudemet-Tallon,
JurisClasseur Europe Trait, Fasc. 3200, 56 (1996); M. Giuliano & P. Lagarde, Report on the
Convention on the Law Applicable to Contractual Obligations, O.J. C 282 31/10/1980, Art. 1,
5; Le Vay Lawrence & Shakinovsky, Selecting A Forum and System of Law in International
Transactions A UK Perspective on the Rome and Brussels Conventions, 2 Intl Co. & Comm.
L.R. 189, 192 (1991); McGuiness, The Rome Convention: The Contracting Parties Choice, 1 San
Diego Intl L.J. 127, 139 (2000); R. Plender & M. Wilderspin, The European Contracts
Convention: The Rome Convention of the Choice of Law for Contracts 4-19 (2d ed. 2001).
165) M. Giuliano & P. Lagarde, Report on the Convention on the Law Applicable to Contractual
Obligations, O.J. C 282, 31/10/1980, Art. 1, 5; R. Plender & M. Wilderspin, The European
Contracts Convention: The Rome Convention of the Choice of Law for Contracts 4-20 (2d
ed. 2001).
166) See4.02[B]; 4.04[A].
167) See Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638, 9
(English Ct. App.) ([T]he proper law of the arbitration agreement is to be determined in
accordance with the established common law rules for ascertaining the proper law of any
contract. These require the court to recognise and give effect to the parties choice of
proper law, express or implied, failing which it is necessary to identify the system of law
with which the contract has the closest and most real connection.); Sonatrach Petroleum
Corp. (BVI) v. Ferrell Intl Ltd [2002] 1 All ER 627, 32 (Comm) (English High Ct.) (proper law
of the arbitration agreement is to be determined according to the general principles for
ascertaining the proper law of a contract: there can be an express choice of law or the
choice can be implied by reference to that body of law with which the arbitration
agreement has its closest and most real connection). See alsoJudgment of 21 September
2005, XXXI Y.B. Comm. Arb. 679, 683 (German Bundesgerichtshof) (2006) (closest
relationship); Judgment of 28 November 1963, 1964 NJW 591, 592 (German
Bundesgerichtshof) (party autonomy); Judgment of 2 April 1992, 1992 NJW 3107 (Landgericht
Kassel) (party autonomy); Judgment of 4 August 1993, Owerri Commercial Inc. v. Dielle Srl,
XIX Y.B. Comm. Arb. 703, 705 (Hague Gerechtshof) (1994) (in relation to law applicable to
arbitration agreement in absence of express choice: The court is of the opinionthat the
closest connection is with English law.); N. Blackaby et al. (eds.), Redfern and Hunter on
International Arbitration 3.94 to 3.108 (5th ed. 2009); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 16R-001 (15th ed. 2012) (The material validity, scope
and interpretation of an arbitration agreement are governed by its applicable law,
namely: (a) the law expressly or impliedly chosen by the parties; or, (b) in the absence of
such choice, the law which is most closely connected with the arbitration agreement.);
4.04[A][3].
168) See1.04[F][2]; 3.02. The Rome Conventions drafting history is also instructive. See M.
Giuliano & P. Lagarde, Report on the Convention on the Law Applicable to Contractual
Obligations, O.J. C 282 31/10/1980, 5 (UK delegate emphasized that an arbitration
agreement does not differ from other agreements as regards the contractual aspects and
that certain international Conventions do not regulate the law applicable to arbitration
agreements, while others are inadequate in this respect.Other delegationsopposed
the United Kingdom proposal, emphasizing particularly that any increase in the number
of conventions in this area should be avoided, that severability is accepted in principle
in the draft and the arbitration clause is independent, that the concept of closest ties is
difficult to apply to arbitration agreements, that procedural and contractual aspects are
difficult to separate, that the matter is complex and the experts proposals show great
divergences; that since procedural matters and those relating to the question whether a
dispute was arbitrable would in any case be excluded, the only matter to be regulated
would be consent;the [ICC] which, as everyone knows, has great experience in this
matter has not felt the need for further regulation.The Groupexcluded arbitration
agreements from the scope of the uniform rules.).
169) See M. Bridges, The Sale of Goods (2009); S. Krll et al. (eds.), The United Nations
Convention on Contracts for the International Sale of Goods (2011); I. Schwenzer (ed.),
Commentary on the UN Convention on the International Sale of Goods (3d ed. 2010).
170) See, e.g., Filanto SpA v. Chilewich Intl Corp., 789 F.Supp. 1229 (S.D.N.Y. 1992) (applying CISG
to formation of arbitration agreement in international sales contract); Judgment of 19 June
1997 (Landgericht Hamburg), available at www.cisg.law.pace.edu (applying CISG to
determine that arbitration agreement was validly formed); Judgment of 17 February 1998,
ATS 1451/1998, Legal Ground No. 5 (Spanish Tribunal Supremo) (applying CISG to
determine, in recognition action, that arbitration agreement was validly formed);
Judgment of 17 February 1998, ATS 1332/1998, Legal Ground No. 4 (Spanish Tribunal
Supremo) (applying CISG to determine, in recognition action, that arbitration agreement
was not validly formed).
171) Walker, Agreeing to Disagree: Can We Just Have Words? CISG Article 11 and the Model Law
Writing Requirement, 25 J. L. & Comm. 153, 163 (2005-2006) (arbitration agreements in
international sales contract governed by CISG are subject to CISG, including lack of form
requirement).
151
172) B. Piltz, Internationales Kaufrecht 106 (1993) (arbitration agreements in international sales
contract governed by CISG are subject to CISG, but not including issue of formal validity);
U. Schroeter, UN-Kaufrecht und Europisches Gemeinschaftsrecht: Verhltnis und
Wechselwirkungen 6, 40 (2005) (same).
173) Koch, The CISG as the Law Applicable to Arbitration Agreements, in C. Andersen & U.
Schroeter (eds.), Sharing International Commercial Law Across National Boundaries:
Festschrift for Albert H. Kritzer on the Occasion of His Eightieth Birthday 267, 276, 286
(2008).
174) Krll, Selected Problems Concerning the CISGs Scope of Application, 25 J. L. & Comm. 39, 42
(2005-2006) (CISG does not govern arbitration clause in international sales contract,
because of separability presumption).
175) See4.04[A][1][b], p. 494; 4.04[A][3], p. 545.
176) See G. Graham, To Validate Certain Agreements for Arbitration, H.R. Rep. No. 68-96, 1 (1924)
(Whether an agreement for arbitration shall be enforced or not is a question of
procedure to be determined by the law court in which the proceeding is brought and not
one of substantive law to be determined by the law of the forum in which the contract is
made.). See also1.05[A].
177) Theofano Maritime Co. v. 9,551.19 Long Tons of Chrome Ore, 122 F.Supp. 853, 858 (D. Md.
1954).
178) For U.S. authorities adopting the historic common law choice-of-law approach to
arbitration agreements, see Restatement (Second) Conflict of Laws 218, Reporters Note
(1971) (citing cases); G. Graham, To Validate Certain Agreements for Arbitration, H.R. Rep.
No. 68-96, 1 (1924); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 405 n.3 (2d
Cir. 1959) (For choice-of-law purposes it has been generally held that the forum is free to
apply its own remedy and is not compelled to enforce an arbitration agreement by
applying the law of the State with the controlling contracts.); Sinva, Inc. v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 253 F.Supp. 359, 364 (S.D.N.Y. 1966); Theofano Maritime Co. v.
9,551.19 Long Tons of Chrome Ore, 122 F.Supp. 853, 858 (D. Md. 1954); The Eros, 241 F. 186,
191 (E.D.N.Y. 1916) (general arbitration clausegoes to the remedy, not to the rights, of
the parties, andits effect is to be determined by the law of the forum), affd, 251 F. 45
(2d Cir. 1916); Aktieselskabet Korn-Og Foderstof Kompangniet v. Rederiaktiebolaget
Atlanten, 232 F. 403, 405 (S.D.N.Y. 1916) (Hand, J.) ([Arbitration clauses] do not affect to
touch the obligations of the parties, as surely they do not; they prescribe how the parties
must proceed to obtain any redress for their wrongs, which covers only remedies.), affd,
252 U.S. 313 (U.S. S.Ct. 1920); Meacham v. Jamestown, Franklin & Clearfield R.R., 211 N.Y.
346, 352 (N.Y. 1914) (An agreement thatdifferences arising under a contract shall be
submitted to arbitration relates to the law of remedies, and the law that governs
remedies is the law of the forum.); In re Gantt, 297 N.Y. 433, 438-39 (N.Y. 1948) (following
Meacham); Elec. Res. Prods. Inc. v. Vitaphone Corp., 171 A. 738, 747-48 (Del. Ch. 1934)
(following Meacham).
179) Sinva, Inc. v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 253 F.Supp. 359, 364 (S.D.N.Y. 1966)
(emphasis added).
180) Compare Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 210 (House of Lords) ([I]t is
argued that an agreement to refer disputes to arbitration deals with the remedy and not
with the rights of the parties, and that consequently the forum being Scotch the parties
cannot by reason of the agreement into which they have entered interfere with the
ordinary course of proceedings in the Courts of Scotland.).
181) See, e.g., Turkish International Arbitration Law, Art. 4 (The validity of an arbitration
agreement is governed by the law selected by the parties to be applicable to the
arbitration agreement, or failing any choice, by Turkish law.).
182) For criticism of the traditional view, see Foerster, Arbitration Agreements and the Conflict
of Laws: A Problem of Enforceability, 21 Arb. J. 129, 132 (1966); Lorenzen, Commercial
Arbitration International and Interstate Aspects, 43 Yale L.J. 716, 751-57 (1934). Compare
Restatement (Second) Conflict of Laws 218 (1971).
183) An enforcement forum might well have significant interests and policies which would be
implicated by enforcement or non-enforcement of an arbitration clause. However, these
interests could be taken into account by way of public policy and nonarbitrability
principles, without requiring wholesale application of the enforcement forums
substantive law to an agreement with no connection to that forum and as to which other
fora had substantially closer connections and interests in enforcement.
185) Judgment of 2 October 1931, DFT 57 I 295, 304 et seq. (Swiss Federal Tribunal).
186) See, e.g., Judgment of 15 April 1970, 1971 NJW 323, 324 (German Bundesgerichtshof) (The
rules of German private international law apply; the law governing the conclusion of an
[arbitration] agreement is therefore not always the lex fori.); Judgment of 17 November
1971, I Y.B. Comm. Arb. 183, 183 (Austrian Oberster Gerichtshof) (1976) (validity of the
arbitration agreement must be decided, failing a choice of law by the parties, under the
law of the country where the award was made); Judgment of 27 March 1954, 45 Rev.
Critique de Droit Intl Priv 511 (Italian Corte di Cassazione) (1956); P. Schlosser, Das Recht
der internationalen privaten Schiedsgerichtsbarkeit 249 et seq. (2d ed. 1989). See
alsoJudgment of 30 May 1994, XX Y.B. Comm. Arb. 745, 747 (Tokyo Koto Saibansho) (1995)
(extent to which an arbitration agreement bars litigation shall be determined in
principle by the law governing the arbitration agreement).
187) See4.04[A][2][c].
188) See4.04[A][2][d]; 4.06[B][2].
152
189) New York Convention, Art. V(1)(a). See4.04[A][2][c].
190) Judgment of 26 May 1994, XXIII Y.B. Comm. Arb. 754, 757 (Bezirksgericht Affoltern am Albis
1994) (1998) (emphasis added). See also Judgment of 2 October 1931, DFT 57 I 295 (Swiss
Federal Tribunal); Judgment of 24 November 1994, XXI Y.B. Comm. Arb. 635, 638 (Rotterdam
Rechtbank) (1996) (law applicable to the arbitration agreement is the law of the place of
arbitration); Citation Infowares Ltd v. Equinox Corp., (2009) 7 SCC 220, 15 (Indian S.Ct.)
(There is, in the absence of any contrary intention, a presumption that the parties have
intended that the proper law of [the] contract as well as the law governing [the]
arbitration agreement are the same as the law of the country in which the arbitration is
agreed to be held.); Natl Thermal Power Corp. v. Singer Co., XVIII Y.B. Comm. Arb. 403, 405
(Indian S.Ct. 1992) (1993) (Wherethere is no express choice of the law governing the
contract as a whole, or the arbitration agreement as such, a [rebuttable] presumption
may arise that the law of the country where the arbitration is agreed to be held is the
proper law of the arbitration agreement.); W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration 5.05 (3d ed. 2000) (most national court decisions
under the New York Convention have applied the law of the country where the award was
rendered to the arbitration agreement); A. van den Berg, The New York Arbitration
Convention of 1958 124 (1981).
191) Judgment of 30 May 1994, XX Y.B. Comm. Arb. 745, 747 (Tokyo Koto Saibansho) (1995)
(emphasis added).
192) Swedish Arbitration Act, 48 (emphasis added). The provision also contains a proviso,
making clear that this choice-of-law rule does not apply to questions of authorization or
representation. See4.08.
193) See4.04[A][2][e]. See also Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA
[2012] EWCA Civ 638, 18, 32 (English Ct. App.) (agreement to resolve disputes by
arbitration in London, and therefore in accordance with English arbitral law, does not
have a close juridical connection with the system of law governing the policy of insurance,
whose purpose is unrelated to that of dispute resolution; rather, it has its closest and
most real connection with the law of the place where the arbitration is to be held and
which will exercise the supporting and supervisory jurisdiction necessary to ensure that
the procedure is effective); Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation
Approach Adopted by the English Courts With Respect to the Proper Law of the Arbitration
Agreement, 29 Arb. Intl 115 (2013).
194) C v. D [2007] EWCA Civ 1282, 22, 26, 28 (English Ct. App.) (noting additional
considerations that pointed to English law as governing arbitration agreement).
195) See, e.g.,Final Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 245 (2010) (Given the
generally recognized principle of the autonomy of the arbitration clause on the one hand,
and the fact that the law applicable to the arbitration clause is rarely the subject of a
specific stipulation, on the other, most national courts decisions under the New York
Convention have applied the law of the country where the award was rendered.In the
case at hand, the arbitration clause does not contain any reference to the law applicable
to it. As a consequence thereof, the validity of the arbitration clause must be examined
under the law of the seat of the arbitration, namely Swiss law.); Interim Award in ICC Case
No. 6149, XX Y.B. Comm. Arb. 41, 44-45 (1995); Final Award in ICC Case No. 5294, XIV Y.B.
Comm. Arb. 137, 140 (1989) (arbitration clause is governed by lex fori of the arbitrator);
Interim Award in ICC Case No. 4504, 113 J.D.I. (Clunet) 1118 (1986); Final Award in ICC Case No.
1507, in S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 215, 216
(1990) (As a matter of principle, because of its autonomous character the validity of the
arbitration clause is governed by the law in force in the country of the arbitral seat.).
196) Award in ICC Case No. 5832, 115 J.D.I. (Clunet) 1198, 1198-99 (1988) (According to unanimous
Swiss doctrine, the validity of an arbitration agreement must be determined in virtue of
the law of the forum, which is the law of the Canton of Zurich as the law of the seat of the
arbitral tribunal.).
197) Interim Award in ICC Case No. 6149, XX Y.B. Comm. Arb. 41, 44-45 (1995).
198) See, e.g.,Final Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 245 (2010); Final
Award in ICC Case No. 6162, XVII Y.B. Comm. Arb. 153 (1992) (applying Swiss law, as law of
arbitral seat, to arbitration agreement; refusing to apply substantive law governing
underlying agreement); Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029, 1034 (1990)
(French law applies to arbitration agreement first of all, because it is the law of the
place of arbitration); Preliminary Award in ICC Case No. 5505, XIII Y.B. Comm. Arb. 110, 117
(1988) (law governing the arbitration clause itselfis mostly thought to be governed
either by the selected law or by the lex fori (the law of the place of arbitration).); Final
Award in ICC Case No. 5294, XIV Y.B. Comm. Arb. 137, 140-41 (1989) (applying law of arbitral
seat, not law governing underlying contract, to determine whether agreement to
arbitrate is binding); Interim Award in ICC Case No. 4472, 111 J.D.I. (Clunet) 946, 947 (1984)
(same).
153
199) See, e.g., Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 208 (House of Lords) (Where
the parties agree that any dispute arising out of their contract shall be settled by
arbitration by two members of the London Corn Exchange, or their umpire, in the usual
way, it seems to me that they have indicated as clearly as it is possible their intention
that the particular stipulation, which is a part of the contract between them, shall be
interpreted according to and governed by the law, not of Scotland, but of England.);
Bangladesh Chem. Indus. Corp. v. Henry Stephens Shipping Co. [1981] 2 Lloyds Rep. 389, 392
(English Ct. App.) (Lord Denning) (It seems to me as plain as can be that under the typed
clause the arbitration was to be in London and arbitration is to be in accordance with
the Arbitration Act, 1950 together with the usual consequence that [the arbitration
clause] is to be governed by English law.); Halpern v. Halpern [2006] EWHC 603, 55
(Comm) (English High Ct.), overruled on other grounds, [2007] EWCA Civ 291 (English Ct.
App.); Egon Oldendorff v. Liberia Corp. [1995] 2 Lloyds Rep. 64, 64 (QB) (English High Ct.)
(both arbitration clause and underlying contract were governed by English law where
arbitration clause provided: Any dispute arising under the Charter to be referred to
arbitration in London.).
200) Judgment of 28 September 1995, XXII Y.B. Comm. Arb. 762, 765 (Rotterdam
Arrondissementsrechtbank) (1997).
202) This rule gained substantial support from the New York Convention and the European
Convention. As discussed in detail above, both conventions adopted default rules
providing for the application of the substantive law of the arbitral seat to the substantive
validity and enforceability of an international arbitration agreement (where the parties
had not selected the law governing their arbitration agreement). See4.04[A][1][b]-[c];
New York Convention, Art. V(1)(a); European Convention, Art. VI(2).
203) Some courts appear to adopt this rationale. See, e.g., Judgment of 7 October 1933, Tobler v.
Justizkommission des Kantons Schwyz, DFT 59 I 177, 179 (Swiss Federal Tribunal) (According
to settled case law of the Swiss Federal Tribunal the arbitration clause is not an
agreement of substantive law but of procedural nature.); Judgment of 28 May 1915, Jrg v.
Jrg, DFT 41 II 534 (Swiss Federal Tribunal) (arbitration clause is procedural contract);
Judgment of 30 May 1994, XX Y.B. Comm. Arb. 745, 747 (Tokyo Koto Saibansho) (1995) (it is
the nature of arbitration agreements to provide for given procedures in a given place,
that the parties intend that the law of the place where the arbitration proceedings are
held will apply); Judgment of 10 April 1990, XVII Y.B. Comm. Arb. 568, 570 (Korean
Daebeobwon) (1992) (because the arbitration clause provided for arbitration in
accordance with the Arbitration Rules of the London Court of Arbitration, the afore-
mentioned agreement in writing did not need to be so specific as to stipulate expressly
the institution and the place of arbitration, as well as the proper law). CompareJudgment
of 4 August 1993, Owerri Commercial Inc. v. Dielle Srl, XIX Y.B. Comm. Arb. 703, 706 (Hague
Gerechtshof) (1994) (it is usual to make a connection with the so-called lex fori of the
arbitrators).
204) See, e.g., Award in ICC Case No. 5832, 115 J.D.I. (Clunet) 1198, 1198-99 (1988); Final Award in
ICC Case No. 5294, XIV Y.B. Comm. Arb. 137, 140 (1989); Interim Award in ICC Case No. 4504,
113 J.D.I. (Clunet) 1118 (1986); Partial Award in Hamburg Chamber of Commerce of 21 March
1996, XXII Y.B. Comm. Arb. 35, 36 (1997) (choice of German law can be inferredfrom the
agreement to refer disputes to a German arbitral tribunal).
Awards 1974-1985 215, 216 (1990).
206) Institute of International Law, II Annuaire de LInstitut de Droit International, Resolutions
on Arbitration in Private International Law (Amsterdam) 491 (1957) (emphasis added). See
alsoJ. Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration 6-72
(2003).
on Arbitration in Private International Law (Neuchtel) 394 (1959).
208) This follows from the provisions that selection of the arbitral seat shall imply selection
of the law governing the arbitration agreement and that the parties shall be deemed to
have agreed that the arbitration shall be seated in the state whose law they have
selected to govern the arbitration agreement.
Arbitration 424 (1999) (The Institute thus implicitly characterized the arbitration
agreement as procedural and applied a supposed principle that the arbitral procedure
was necessarily governed by the law of the country where the arbitration was held.).
210) See1.02[B][6]; 4.04[B]. This approach is equally inconsistent with the validation
principle (discussed below). See4.04[B][3].
154
211) See4.04[A][2][c]; Blessing, The Law Applicable to the Arbitration Clause, in A. van den Berg
(ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention 168 (ICCA Congress Series No. 9 1999) (There is a
strong tendency (also strengthened by the New York Convention) that the substantive
validity of the arbitration clause should be governed by the law of the place of
arbitration.); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 430 (1999) (In earlier decisions, some courts considered that
where the parties had chosen the seat of the arbitration, it could be inferred that they
intended to subject the arbitration agreement to the law of that place.). Compare L.
Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 16-019 (15th ed. 2012)
(If there is no express choice of the law to govern either the contract as a whole or the
arbitration agreement, but the parties have chosen the seat of arbitration, the contract
will frequently (but not necessarily) be governed by the law of that country on the basis
that the choice of the seat is to be regarded as an implied choice of the law governing the
contract.). See also4.04[A][2][e]; Trukhtanov, The Proper Law of Arbitration Agreement A
Farewell to Implied Choice?, 2012 Intl Arb. L. Rev. 140, 144 (shift from implied choice
approach to strong presumption in favor of law of seat is tacitlywell under way in
English courts).
212) See4.04[B][2][b][iii].
Y.B. Comm. Arb. 291, 293 (Swedish S.Ct.) (2001).
214) See, e.g., Judgment of 10 May 1984, 1984 NJW 2763, 2764 (German Bundesgerichtshof);
Judgment of 20 March 1980, 1980 NJW 2022, 2024 (German Bundesgerichtshof); Judgment of
7 January 1971, 1971 NJW 986 (German Bundesgerichtshof); Judgment of 18 February 2009, 11
Sch 07/08 (Oberlandesgericht Dresden); Geimer, in R. Zller (ed.), Zivilprozessordnung
1029, 17a et seq. (30th ed. 2013); J.-P. Lachmann, Handbuch fr die
Schiedsgerichtspraxis 269 et seq. (3d ed. 2008); Mnch, in G. Lke & P. Wax (eds.),
Mnchener Kommentar zur Zivilprozessordnung 1029, 32 (3d ed. 2008). But see Judgment
of 28 November 1963, 1964 NJW 591-92 (German Bundesgerichtshof) (parties typically
intend to subject arbitration clause to same law as main contract).
215) See1.02[B][6]; 4.04[B].
216) This is discussed in detail above. See4.04[A][3].
217) See4.04[A][3].
218) Sonatrach Petroleum Corp. (BVI) v. Ferrell Intl Ltd [2002] 1 All ER 627, 32 (Comm) (English
High Ct.). See Svenska Petroleum Exploration AB v. Lithuania [2005] EWHC 2437, 76-77
(Comm) (English High Ct.); Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyds Rep.
603 (QB) (English High Ct.) (arbitration clause requiring arbitration in London, contained
in contract governed by Arkansas law, was governed by Arkansas law); Tonicstar Ltd v. Am.
Home Assur. Co. [2004] EWHC 1234 (Comm) (English High Ct.) (arbitration clause in
reinsurance contract governed by English law was governed by English law despite its
severability). See also Arsanovia Ltd v. Cruz City 1 Mauritius Holdings [2012] EWHC 3702
(Comm) (English High Ct.) (choice-of-law clause in underlying contract (selecting Indian
law) was implied choice of law governing arbitration agreement despite London seat).
219) See4.04[A].
220) See4.04[A][3]; Judgment of 24 January 2003, XXX Y.B. Comm. Arb. 509, 515 (Hanseatisches
Oberlandesgericht Hamburg) (2005) (law applicable to the disputed legal relationship
[is] applied to the arbitration agreement where no choice of law had been made
specifically for the arbitration agreement); Judgment of 10 March 2000, Krauss Maffei
Verfahrenstechnik GmbH v. Bristol Myers Squibb, XXVI Y.B. Comm. Arb. 816 (Italian Corte di
Cassazione) (2001) (applying Italian law, governing underlying contract through Rome
Convention choice-of-law rules, rather than law of foreign arbitral seat). See also
Restatement (Third) U.S. Law of International Commercial Arbitration 4-14, comment b
(Tentative Draft No. 2 2012) (If the parties have not agreed upon a body of law to govern
the arbitration agreement (either expressly or impliedly), a general choice-of-law clause
in the contract that includes the arbitration agreement determines the applicable law. If
the parties have not selected any law to govern the arbitration agreement or to govern
the contract generally, the law of the seat of arbitration, without resort to its choice-of-
law rules, governs the matters submitted to arbitration.).
155
221) See, e.g., N. Blackaby et al. (eds.), Redfern and Hunter on International Arbitration 3.12
(5th ed. 2009) (Since the arbitration clause is only one of many clauses in a contract, it
would seem reasonable to assume that the law chosen by the parties to govern the
contract will also govern the arbitration clause.); Collins, The Law Governing the
Agreement and Procedure in International Arbitration in England, in J. Lew (ed.),
Contemporary Problems in International Arbitration 127 (1987) (The proper law of the
arbitration agreement is normally the same as the proper law of the contract of which it
forms a part.); B. Goldman, Arbitrage (droit international priv), in P. Francescakis (ed.),
Encyclopdie Dalloz Droit International 59 (1968) (in the absence of particular
circumstances, the safest and most often used, even if only implicitly, approach is
application, to arbitration agreement, of law chosen to apply to underlying contract);
Jarvin, The Sources and Limits of the Arbitrators Powers, in J. Lew (ed.), Contemporary
Problems in International Arbitration 52 (1987) (law selected by parties to govern
underlying contract applies to arbitration agreement, including interpretation); M.
Mustill & S. Boyd, Commercial Arbitration 63 (2d ed. 1989) (The starting point is to
determine the proper law of the contract in which the arbitration is embodied. As a
general rule the arbitration agreement will be governed by the same law, since it is part
of the substance of the underlying contract.); G. Petrochilos, Procedural Law in
International Arbitration 33 (2004) (The proper law of the agreement to arbitrate will,
absent countervailing circumstances, follow the proper law of the (main) contract.).
222) B. Goldman, Arbitrage (droit international priv), in P. Francescakis (ed.), Encyclopdie
Dalloz Droit International 59 (1968).
223) See, e.g.,Award in ICC Case No. 11869, XXXVI Y.B. Comm. Arb. 47, 51-52 (2011) (applying
parties choice of English law to both underlying contract and arbitration agreement,
where choice-of-law clause followed immediately after arbitration clause: Irrespective
of its separability there are no indications that the parties in the present case wanted to
submit the arbitration agreement to a different law than the main contract.); Award in
ICC Case No. 10044, discussed in Grigera Nan, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 93-94 (2001) (applying choice-of-law
rules of arbitral seat, England, to select law governing substantive validity of arbitration
agreement; holding that law selected by parties to apply to underlying contract also
presumptively applies to arbitration clause); Award in ICC Case No. 9987, Dallah Real
Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Govt of Pakistan, 2(4) Intl J.
Arab Arb. 370, 389 (2010) ([i]n the absence of any contrary express agreement, the proper
Law of the Arbitration Agreement shall be the same as that which is applicable to the
Main Agreement, such law being the Law of Pakistan which is the law that has the closest
connections/nexus with the agreement); Award in ICC Case No. 9480, discussed in Grigera
Cours 9, 55-56 (2001) (parties arbitration clause is presumptively governed by law
governing underlying contract); Final Award in ICC Case No. 6752, XVIII Y.B. Comm. Arb. 54,
55-56 (1993) (applying general choice-of-law clause to arbitration clause); Final Award in
ICC Case No. 6379, XVII Y.B. Comm. Arb. 212, 215 (1992) (applying law governing underlying
contract, not law of arbitral seat); Final Award in ICC Case No. 3572, XIV Y.B. Comm. Arb. 111
(1989) (applying law chosen by parties to govern underlying contract).
224) Final Award in ICC Case No. 6752, XVIII Y.B. Comm. Arb. 54, 56 (1993).
225) See1.05[A]; Chapters 5et seq. See alsoBantekas, The Proper Law of the Arbitration Clause: A
Challenge to the Prevailing Orthodoxy, 27 J. Intl Arb. 1, 8 (2010) (prevailing orthodoxy
according to which the law of the seat (the lex arbitri) determines the law of the
arbitration clause must no longer be viewed as engraved in stone).
Arbitration 424 (1999). For further discussion of the law applicable to the arbitral
proceedings, see11.01[B]; 11.03, pp. 1536-38; 11.04.
227) See3.02[E]. See also A. van den Berg, The New York Arbitration Convention of 1958 145-46
(1981).
229) Again, this is discussed above, see 4.02[B]. See also G. Born, International Commercial
Arbitration in the United States: Commentary and Materials 214-15 (1994); Preston v. Ferrer,
552 U.S. 346, 363 (U.S. S.Ct. 2008) ([T]he best way to harmonize the parties adoption of
the AAA rules and their selection of California law [in a choice-of-law clause for the entire
contract] is to read the latter to encompass prescriptions governing the substantive
rights and obligations of the parties, but not the States special rules limiting the
authority of arbitrators.); Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 64
(U.S. S.Ct. 1995) (choice-of-law clause encompass[es] substantive principle that New York
courts would apply, but does not include arbitration law).
230) Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 111-14 (2d ed. 2005); J. Lew,
L. Mistelis & S. Krll, Comparative International Commercial Arbitration 6-23 (2003).
231) See1.02[B][1].
232) See1.04[A][1]-[2]; 4.03[A][1][b]-[c].
156
233) See, e.g., Restatement (Second) Conflict of Laws 187-88, 218, comment a (1971); Judgment
of 4 August 1993, Owerri Commercial Inc. v. Dielle Srl, XIX Y.B. Comm. Arb. 703, 706 (Hague
Gerechtshof) (1994); Bernardini, Arbitration Clauses: Achieving Effectiveness in the Law
Applicable to the Arbitration Clause, in A. van den Berg (ed.), Improving the Efficiency of
Arbitration Agreements and Awards: 40 Years of Application of the New York Convention 197
(ICCA Congress Series No. 9 1999); Blessing, The Law Applicable to the Arbitration Clause, in
A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40
Years of Application of the New York Convention 168 (ICCA Congress Series No. 9 1999); Lew,
The Law Applicable to the Form and Substance of the Arbitration Clause, in A. van den Berg
(ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention 114 (ICCA Congress Series No. 9 1999).
234) See Rome Convention, Art. 4; Rome I Regulation, Art. 4; Interim Award in ICC Case No. 4367,
XI Y.B. Comm. Arb. 134 (1986) (citing closest relationship standard, although contract
contained choice-of-law clause); Judgment of 4 August 1993, Owerri Commercial Inc. v.
Dielle Srl, XIX Y.B. Comm. Arb. 703, 706 (Hague Gerechtshof) (1994) (The court is of the
opinionthat the closest connection is with English law.); L. Collins et al. (eds.), Dicey,
Morris and Collins on The Conflict of Laws 16-016-19 (15th ed. 2012); E. Gaillard & J.
et seq. (1999); J. Lew, L. Mistelis & S. Krll, Comparative International Commercial
235) Restatement (Second) Conflict of Laws 218, comment a (1971) (Whether a judicial action
may be maintained in violation of the provisions of an arbitration agreement should be
determined not by the local law of the forum but rather by the law selected by application
of [the generally-applicable choice-of-law principles in 187 and 188].) (emphasis added).
236) Restatement (Second) Conflict of Laws 218 (1971). The Restatement (Second) made it clear
that the relevant agreement on which this inquiry focused was the parties arbitration
agreement (as distinguished from their underlying contract). Id. at 218, comment b.
237) Restatement (Second) Conflict of Laws 188 (1971). Section 218, 219 provides that the
method of enforcing an arbitration agreement is determined by the law of the
enforcement forum, notwithstanding the applicability of 218s rules to the agreements
validity. Thus, under 219, the availability in a national court of an order compelling
arbitration, a stay of litigation, and/or damages for breach of an arbitration agreement
would be controlled by the forums law.
238) Restatement (Second) Conflict of Laws 218, comment b (1971) (Situations will arise where
the state of most significant relationship with respect to the issue of arbitration is not the
same as the state of most significant relationship with respect to other issues relating to
the contract. A possible example is where a contract whose principal elements are
located in state X provides for arbitration in state Y. Here it may be that, although X is
the state of most significant relationship with respect to most of the issues relating to the
contract Y is the state of most significant relationship with respect to the issue of
arbitration.). Compare Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 326
(Iowa 1977) (finding that New York can be seen as having the most significant relationship
to the issue of the validity and effect of the arbitration provisions of the contract,
although Iowa was state of most significant relationship with respect to underlying
contract).
239) See authorities cited 4.04[A][2][j], p. 537. Compare authorities cited 4.04[A][2][j], p. 537.
240) See4.04[A][2][d]; 4.04[A][3].
241) XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500, 508 (QB) (English High Ct.).
242) See, e.g., Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ
638, 18, 32 (English Ct. App.) (in case which turn[ed] primarily on the relative
importance to be attached to the parties express choice of proper law and their choice
of London as the seat of the arbitration, an agreement to resolve disputes by
arbitration in London, and therefore in accordance with English arbitral law, does not
have a close juridical connection with the system of law governing the policy of insurance,
whose purpose is unrelated to that of dispute resolution; rather, it has its closest and
most real connection with the law of the place where the arbitration is to be held and
which will exercise the supporting and supervisory jurisdiction necessary to ensure that
the procedure is effective); C v. D [2007] EWCA Civ 1282, 22, 26, 28 (English Ct. App.)
(international arbitration agreement is more likely to be governed by the law of the
seat of arbitration than the law of the underlying contract, because an arbitration
agreement will normally have a closer and more real connection with place of seat);
Abuja Intl Hotels Ltd v. Meridien SAS [2011] EWHC 87, 20-24 (Comm) (English High Ct.)
(the arbitration agreement provides for arbitration in London and is implicitly governed
by English law. It has its closest and most real connection with England because the seat
of the arbitration is here.); Halpern v. Halpern [2006] EWHC 603, 55 (Comm) (English
High Ct.) (The seat of the arbitration is a pointer to the law of the arbitration
agreement.), overruled on other grounds, [2007] EWCA Civ 291 (English Ct. App.). See also L.
(law of the seat of the arbitration will apply if the circumstances point to an implied
intention to choose the law of that place to govern the arbitration agreement).
157
243) Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638, 9
(English Ct. App.) ([T]he proper law of the arbitration agreement is to be determined in
accordance with the established common law rules for ascertaining the proper law of any
contract. These require the court to recognise and give effect to the parties choice of
proper law, express or implied, failing which it is necessary to identify the system of law
with which the contract has the closest and most real connection.); C v. D [2007] EWCA Civ
1282, 22 (English Ct. App.) (if there is no express law of the arbitration agreement, the
law with which that agreement has its closest and most real connection shall be
applied). See also Compagnie Tunisienne De Navigation SA v. Compagnie DArmement
Maritime SA [1971] AC 572 (in absence of positive indication of intention, proper law of
contract will be law of country with which contract has closest and most real connection).
244) Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted by the English
Courts With Respect to the Proper Law of the Arbitration Agreement, 29 Arb. Intl 115 (2013).
245) Judgment of 28 September 1995, XXII Y.B. Comm. Arb. 762, 765 (Rotterdam
Arrondissementsrechtbank) (1997).
246) See, e.g., Partial Award in ICC Case No. 6719, 121 J.D.I. (Clunet) 1071, 1072 (1994) (The court is
of the opinion that the national law which has the closest link with the question of
arbitrability [is] the law of the seat of the arbitration especially if the seat has been
mutually agreed on by the parties.); Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029,
1033-34 (1990); Interim Award in ICC Case No. 4367, XI Y.B. Comm. Arb. 134 (1986)
(considering argument for closest connection standard, although contract contained
express choice-of-law clause); Lew, The Law Applicable to the Form and Substance of the
247) Judgment of 4 August 1993, Owerri Commercial Inc. v. Dielle Srl, XIX Y.B. Comm. Arb. 703,
706 (Hague Gerechtshof) (1994).
706 (Hague Gerechtshof) (1994).
Arbitration 426, 434 (1999) (closest connection test gives rise to great uncertainty
because of difficulty in giving weight to various connecting factors). See also R. David,
Arbitration in International Trade 219-20 (1985) (The occasional pronouncements of the
courts [in respect of the law applicable to the arbitration agreement] cannot be
interpreted as an adhesion to a given doctrine and are only meant in general to explain
in a convenient manner how the court has arrived at a solution in the particular case.).
250) See4.04[A][2][e]. Compare C v. D [2007] EWCA Civ 1282, 22, 26, 28 (English Ct. App.)
(international arbitration agreement is more likely to be governed by law of the seat of
arbitration than the law of the underlying contract) and Abuja Intl Hotels Ltd v. Meridien
SAS [2011] EWHC 87, 20-24 (Comm) (English High Ct.) (arbitration agreement provides
for arbitration in London and is implicitly governed by English law) with Svenska
Petroleum Exploration AB v. Lithuania [2005] EWHC 2437, 76-77 (Comm) (English High Ct.)
(In the absence of exceptional circumstances, the applicable law of an arbitration
agreement is the same as the law governing the contract of which it forms a part.) and
Sonatrach Petroleum Corp. (BVI) v. Ferrell Intl Ltd [2002] 1 All ER (Comm) 627, 32 (Comm)
(English High Ct.) (Where the substantive contract contains an express choice of law, but
the agreement to arbitrate contains no separate express choice of law, the latter
agreement will be governed by the body of law expressly chosen to govern the
substantive contract.).
251) See4.04[A][2][d].
252) See4.04[A][2][e].
Congress Series No. 9 1999). See alsoDallah Real Estate & Tourism Holding Co. v. Ministry of
Religious Affairs, Govt of Pakistan, Partial Award in ICC Case No. 9987, 2(4) Intl J. Arab Arb.
337, 367 (2010) (we see no reason to apply the Pakistan Arbitration Acts to the present
Arbitration, the seat of which is not within Pakistan); Final Award in ICC Case No. 5485, XIV
Y.B. Comm. Arb. 156, 161 (1989) (Art. 26 [now Art. 35] of the ICC Rules of Arbitration
establishes that the arbitrators shall make every effort to make sure that the award is
enforceable at law. As the place of this arbitration is the city of Paris (France), the
Tribunal has examined French law (Nouveau Code de Procdure Civile, Arts. 1492 to 1497)
and ha[s] concluded that said law contains nothing which is in conflict with the full
validity and effectiveness of the arbitration clause in dispute.); Award in ICC Case No.
4392, cited S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 473, 474
(1990) (arbitrator must verify the validity of the arbitration agreement according to the
law in force at the seat of the arbitral tribunal); Interim Award in ICC Case No. 4145, XII
Y.B. Comm. Arb. 97, 99 (1987) (Shouldthe arbitral tribunal be of the opinion that there is
no precise applicable law clause in the Agreement, then Austrian Law would have to be
advanced as the law of the seat of arbitration.); J. Lew, L. Mistelis & S. Krll, Comparative
International Commercial Arbitration 6-69 to 6-71 (2003).
2009).
158
255) See, e.g., Award in ICC Case No. 8385, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.),
Collection of ICC Arbitral Awards 1996-2000 474 (2003) (all three systems [international,
New York and Belgian] recognize that, at least in some instances, the corporate veil may
be pierced); Final Award in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37, 38-40 (1998)
(cumulatively applying both German and French law to validity of arbitration clause and
issues of capacity); Interim Award in ICC Case No. 6149, XX Y.B. Comm. Arb. 41, 44-45 (1995);
Final Award in ICC Case No. 5485, XIV Y.B. Comm. Arb. 156, 160-62 (1989) (applying,
cumulatively, ICC Rules, arbitral seats law, law governing underlying contract and trade
usages); Interim Award in ICC Case No. 4695, XI Y.B. Comm. Arb. 149 (1986) (cumulative
application of possibly connected laws to uphold validity of arbitration agreement);
Award in ICC Case No. 953, III Y.B. Comm. Arb. 214, 215 (1978). See also Contractor (France) v.
Client (Country X), Final Award in ICC Case No. 7722, XXXII Y.B. Comm. Arb. 13, 27-28 (2007)
([M]any circumstances in this case lead us to find attachment to country X and its law as
most closely connected with the present hearing.In the present case, we note that the
country X law was specifically chosen as the proper law of the Contract. Besides the
chosen place of hearing is the capital city of country X, the place where the works were to
have been executed is country X, country X is domicile of the respondent, and it is
country X where the Contract was signed.). See also Judgment of 19 August 2008, DFT
4A_128/2008, 4.1.1 (Swiss Federal Tribunal) (The question as to the subjective bearing of
an arbitration agreement at issue is which parties are bound by the agreement and to
determine to what extent one or several third parties not mentioned there nonetheless
fall within its scope ratione personae relates to the merits and accordingly falls within
Art. 178(2) [of the SLPIL]. This question falls under Swiss law as it is not established that
the parties to the Contract would have submitted the arbitration agreement to another
law and the two other possibilities anticipated by that provision (i.e., the lex causae and
the lex fori) also lead to the application of that law.).
The same approach is also sometimes taken to the substantive law applicable to the
merits of the parties dispute. See19.03[D][3][d].
256) The cumulative approach differs analytically from the validation principle (discussed
elsewhere). The cumulative analysis does not validate the arbitration agreement based
upon its validity under a single national law, as with the validation principle.
See19.03[D][3][d]; B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland 372 (2d ed. 2010); Wenger, in S. Berti et al. (eds.), International Arbitration in
Switzerland Art. 178, 24 (2000). Instead, the cumulative analysis looks to all potentially-
applicable national laws, without providing guidance in the case of conflicts between
those various laws.
257) See, e.g.,Award in ICC Case No. 17050, 29 ASA Bull. 634, 34 (2011) ([I]t is unnecessary to
decide the issue of the law governing the arbitration agreement, since the Parties rights
and obligations flow directly from the contract (the Agreement), and the terms of the
arbitration agreement, referring to the ICC Rules.); Award in ICC Case No. 16655, 4(2) Intl J.
Arab Arb. 125, 185 (2012) (notwithstanding French choice-of-law clause, arbitrator may
decide arbitration agreements validity without applying any national law whatsoever in
compliance with the requirements of international public policy); Dallah Real Estate &
Tourism Holding Co. v. Ministry of Religious Affairs, Govt of Pakistan, Partial Award in ICC
Case No. 9987, 2(4) Intl J. Arab Arb. 337, 352 (2010) (those transnational general principles
and usages reflecting the fundamental requirements of justice in international trade and
the concept of good faith in business); Interim Award in ICC Case No. 4695, XI Y.B. Comm.
Arb. 149 (1986); Award in ICC Case No. 4381, 113 J.D.I. (Clunet) 1102, 1104 (1986) (validity of
arbitration clause can be determined without reference to any national law); Judgment of
9 May 1996, Socit Arabe des Engrais Phosphates et Azotes & Socit Industrielle dAcide
Phosphorique et dEngrais v. Gemanco Srl, XXII Y.B. Comm. Arb. 737, 741 (Italian Corte di
Cassazione) (1997) (The law governing the arbitration clause that is, the law governing
the arbitration agreement either by agreement of the parties or as lex fori is not
Tunisian law directly but, according to the arbitral award, lex mercatoria, a body of rules
of law based on the usages of international commerce.).
258) See Award in ICC Case No. 5730, 117 J.D.I. (Clunet) 1029, 1033 (1990).
Arbitration 428 (1999). See, e.g., Judgment of 10 April 1957, Myrtoon Steam Ship v. Agent
Judiciaire du Tresor, JCP G 1957, II, 10078 (Paris Cour dappel); Judgment of 9 December 1955,
Goldschmidt v. Viz et Zoon, 1956 Dalloz 217 (Paris Cour dappel).
260) SeeFinal Award in ICC Case No. 5485, XIV Y.B. Comm. Arb. 156, 162 (1989) (treating ICC Rules
as applicable law, but interpreting Rules as requiring tribunal to make every effort to
ensure that the award is enforceable at law, and therefore referring also to French law as
law of place of arbitration).
159
261) See, e.g.,Final Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 245 (2010) (In the
case at hand, the arbitration clause does not contain any reference to the law applicable
to it. As a consequence thereof, the validity of the arbitration clause must be examined
under the law of the seat of the arbitration, namely Swiss law.); Award in ICC Case No.
10044, discussed in Grigera Nan, Choice-of-Law Problems in International Commercial
Arbitration, 289 Recueil des Cours 9, 69 (2001) (applying law of arbitral seat to validity of
arbitration agreement because tribunal reasoned that this is mandatory for arbitrations
seated in England); Award in ICC Case No. 9548, discussed in Grigera Nan, Choice-of-Law
Problems in International Commercial Arbitration, 289 Recueil des Cours 9, 41-42 (2001)
(Article 178(2) of Swiss Law on Private International Law is mandatory choice-of-law rule
for arbitrations seated in Switzerland); Award in ICC Case No. 7373, discussed in Grigera
Cours 9, 71 (2001) (applying law of arbitral seat to validity of arbitration agreement
because tribunal reasoned that this is mandatory for arbitrations seated in the
Netherlands); Award in ICC Case No. 6476, discussed in Grigera Nan, Choice-of-Law
Problems in International Commercial Arbitration, 289 Recueil des Cours 9, 76 (2001)
(applying Article 178(3) of Swiss Law on Private International Law on grounds that it is
mandatorily applicable in arbitrations seated in Switzerland).
263) See authorities cited 4.02[A][2], p. 480; 4.04[B][3][d], p. 575.
264) See19.03[D][2].
265) See19.03[D][2].
266) See4.02[A][2][b].
267) See4.02[A][2][c].
268) See4.02[A][2][d]; 4.04[A][2][j]; 4.04[B][3][b].
269) See19.03[A].
270) See4.04[B][2][b][i].
271) See4.04[B][2][b][ii].
272) See4.04[A][2][c].
273) See2.01[A][2]; 4.04[B][3][a].
274) See2.01[A][2]; 4.04[B][3][a].
275) As discussed below, Article 8(1) is expressed in mandatory terms: A courtshallrefer
the parties to arbitration unless UNCITRAL Model Law, Art. 8(1). See4.04[B][3][a], p.
569.
276) UNCITRAL Model Law, Arts. 34(2)(a)(i), 36(1)(a)(i). See P. Binder, International Commercial
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 7-004, 8-021 (3d ed.
Commercial Arbitration: Legislative History and Commentary 915-16, 1058-59 (1989).
277) There is relatively limited judicial authority on the choice of law governing international
arbitration agreements in Model Law jurisdictions. UNCITRAL, 2012 Digest of Case Law on
the Model Law on International Commercial Arbitration 176 (2012) (Few cases discuss the
law governing the arbitration agreement in greater detail.).
278) See1.04[B][1][a].
279) See4.04[B][3][a].
280) See4.04[B][3][b]. The separate choice-of-law analyses applicable to the formal validity
and interpretation of international arbitration agreements in U.S. courts are discussed
elsewhere. See4.05[B]; 4.09.
281) See XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500, 507 (QB) (English High Ct.); N.
Blackaby et al. (eds.), Redfern and Hunter on International Arbitration 3.22 to 3.25 (5th
ed. 2009).
160
282) For U.S. decisions discussing the choice-of-law issues raised by international arbitration
agreements, see, e.g., Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1264 (11th Cir. 2011); Todd
v. S.S. Mut. Underwriting Assn (Bermuda) Ltd, 601 F.3d 329, 334 (5th Cir. 2010); Thomas v.
Carnival Corp., 573 F.3d 1113 (11th Cir. 2009); Certain Underwriters at Lloyds London v.
Argonaut Ins. Co., 500 F.3d 571 (7th Cir. 2007); Bridas SAPIC v. Govt of Turkmenistan, 447
F.3d 411 (5th Cir. 2006); Trippe Mfg Co. v. Niles Audio Corp., 401 F.3d 529 (3d Cir. 2005);
Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2d Cir. 2004); Bridas SAPIC v. Govt of
Turkmenistan, 345 F.3d 347 (5th Cir. 2003); InterGen NV v. Grina, 344 F.3d 134 (1st Cir. 2003);
Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 154-55 (3d Cir. 2001); U.S. Titan, Inc. v. Guangzhou
Zhen Hua Shipping Co., 241 F.3d 135, 146 (2d Cir. 2001); Intl Paper Co. v. Schwabedissen
Maschinen & Anlagen GmbH, 206 F.3d 411 (4th Cir. 2000); Smith/Enron Cogeneration LP v.
Smith Cogeneration Intl, Inc., 198 F.3d 88 (2d Cir. 1999); Becker Autoradio U.S.A., Inc. v.
Becker Autoradiowerk GmbH, 585 F.2d 39, 43 nn.8, 9 (3d Cir. 1978); FR 8 Singapore Pte Ltd v.
Albacore Maritime Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010); Coimex Trading (Suisse) SA v.
Cargill Intl SA, 2005 WL 1216227 (S.D.N.Y.); A.T. Cross Co. v. Royal Selangor(s) PTE, Ltd, 217
F.Supp.2d 229, 234-35 (D.R.I. 2002); W. of England Ship Owners Mut. Ins. Assn (Luxembourg)
v. Am. Marine Corp., 1992 WL 37700, at *4 (E.D. La.); Meadows Indem. Co. v. Baccala & Shoop
Ins. Servs., Inc., 760 F.Supp. 1036 (E.D.N.Y. 1991); Marchetto v. DeKalb Genetics Corp., 711
F.Supp. 936, 939-40 (N.D. Ill. 1989); Ferrara SpA v. United Grain Growers, Ltd, 441 F.Supp.
778, 781 (S.D.N.Y. 1977), affd mem., 580 F.2d 1044 (2d Cir. 1978).
For commentary, see Diamond, Choice of Law Clauses and Their Preemptive Effect Upon the
Federal Arbitration Act: Reconciling the Supreme Court With Itself, 39 Ariz. L. Rev. 35 (1997);
Friedland & Hornick, The Relevance of International Standards in the Enforcement of
Arbitration Agreements Under the New York Convention, 6 Am. Rev. Intl Arb. 149 (1995);
Malloy, Current Issues in International Arbitration, 15 Transnatl Law. 43, 48-52 (2002);
Thrope, A Question of Intent: Choice of Law and the International Arbitration Agreement, 54
Disp. Res. J. 16 (1999).
283) U.S.A. v. Little Lake Misere Land Co., 412 U.S. 580, 591 (U.S. S.Ct. 1973); Clearfield Trust Co. v.
US, 318 U.S. 363, 574-75 (U.S. S.Ct. 1943). See also1.04[B][1][e].
284) For commentary, see Aksen, Prima Paint v. Flood & Conklin: What Does It Mean?, 43 St.
Johns L. Rev. 1, 22-23 (1968); Drahozal, In Defence of Southland: Reexamining the
Legislative History of the Federal Arbitration Act, 78 Notre Dame L. Rev. 101 (2002); Furnish,
Commercial Arbitration Agreements and the Uniform Commercial Code, 67 Cal. L. Rev. 317
(1979); Hirshman, The Second Arbitration Trilogy: The Federalization of Arbitration Law, 71
Va. L. Rev. 1305 (1985); Ludington, Conflict of Laws as to Validity and Effect of Arbitration
Provision in Contract for Purchase or Sale of Goods, Products or Services, 95 A.L.R.3d 1145;
Sturges & Murphy, Some Confusing Matters Relating to Arbitration Under the United States
Arbitration Act, 17 L. & Contemp. Probs. 580 (1952).
285) Garvey & Heffelfinger, Towards Federalizing U.S. International Commercial Arbitration Law,
25 Intl Law. 209 (1991).
286) U.S. FAA, 9 U.S.C. 2; 1.04[B][1][e][ii]; 2.01[A][2]. The savings clause preserves otherwise
applicable state contract law dealing with issues of formation and validity of domestic
arbitration agreements, subject however to federal preemption of state laws that single
out domestic arbitration agreements for special disfavor. See1.04[B][1][e][iii]; Arthur
Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (U.S. S.Ct. 2009); Perry v. Thomas, 482 U.S. 483
(U.S. S.Ct. 1987).
287) Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 225-26 (U.S. S.Ct. 1987) (quoting
Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11 (U.S. S.Ct. 1974)).
288) See also1.04[B][1][e]et seq.; 9.02[D][1][a]et seq.
289) Southland Corp. v. Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1984). See also Preston v. Ferrer, 552
U.S. 346, 349 (U.S. S.Ct. 2008); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443
(U.S. S.Ct. 2006).
290) Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (U.S. S.Ct. 1983)
(emphasis added). See also AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1748 (U.S. S.Ct.
2011).
291) Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468, 478 (U.S. S.Ct. 1989). See also AT&T
Mobility, 131 S.Ct. at 1748; Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2776 (U.S. S.Ct. 2010)
(The FAArequires courts to enforce [arbitration agreements] according to their terms.);
Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395, 404 n.12 (U.S. S.Ct. 1967)
(Congress intended to make arbitration agreements as enforceable as other contracts,
but not more so).
292) Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (U.S. S.Ct. 2006).
293) See Preston v. Ferrer, 552 U.S. 346, 349 (U.S. S.Ct. 2008) (The Act, which rests on Congress
authority under the Commerce Clause,calls for the application, in state as well as
federal courts, of federal substantive law regarding arbitration.); Buckeye Check Cashing,
546 U.S. at 446 (this arbitration law applies in state as well as federal courts); Volt Info.,
489 U.S. at 477 n.6.
161
294) See Preston, 552 U.S. at 353 (The FAAs displacement of conflicting state law is now well-
established.); Buckeye Check Cashing, 546 U.S. at 447-49; Volt Info., 489 U.S. at 477 (The
FAA contains no express preemption provision, nor does it reflect a congressional intent
to occupy the entire field of arbitration. But even where Congress has not completely
displaced state regulation in an area, state law may nonetheless be preempted to the
extent that it actually conflicts with federal law.); Perry v. Thomas, 482 U.S. 483, 491 (U.S.
S.Ct. 1987).
295) Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 269, 272-73 (U.S. S.Ct. 1995); Southland
Corp. v. Keating, 465 U.S. 1, 10 (U.S. S.Ct. 1994).
296) See Preston, 552 U.S. at 349-50 (California law granting Labor Commissioner exclusive
jurisdiction over certain claims preempted by FAA).
297) Doctors Assocs., Inc. v. Casarotto, 517 U.S. 681, 683 (U.S. S.Ct. 1996) (Montanas first-page
notice requirement, which governs not any contract, but specifically and solely contracts
subject to arbitration, conflicts with the FAA and is therefore displaced by the federal
measure.).
298) AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1746 (U.S. S.Ct. 2011) (application of state
law unconscionability rule to require use of class action procedures, notwithstanding
parties agreement waiving such procedures, preempted by FAA).
299) U.S. FAA, 9 U.S.C. 2 (emphasis added); 1.04[B][1][e][ii]; 2.01[A][2].
300) Doctors Assocs., Inc., 517 U.S. at 687; Perry v. Thomas, 482 U.S. at 489 (Section 2,
therefore, embodies a clear federal policy of requiring arbitration unless the agreement
to arbitrateis revocable upon such grounds as exist at law or in equity for the
revocation of any contract.); Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1268 (9th Cir.
2006).
301) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2776 (U.S. S.Ct. 2010).
302) See, e.g., AT&T Mobility, 131 S.Ct. at 1748 (a court may not rely on the uniqueness of an
agreement to arbitrate as a basis for a state-law holding that enforcement would be
unconscionable, for this would enable the court to effect whatthe state legislature
cannot) (quoting Perry, 482 U.S. at 493 n.9); Doctors Assocs., Inc., 517 U.S. at 687.
303) AT&T Mobility, 131 S.Ct. at 1748 (Although 2s saving clause preserves generally
applicable contract defenses, nothing in it suggests an intent to preserve state-law rules
that stand as an obstacle to the accomplishment of the FAAs objectives.).
304) See1.04[B][1][e][ii]-[iv]; 4.04[A][2][j]; Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31
(U.S. S.Ct. 2009).
305) See4.04[A][2][j][iii].
306) Doctors Assocs., 517 U.S. at 687. See also Arthur Andersen, 556 U.S. at 630-31 (2 explicitly
retains an external body of law governing revocation.[S]tate law, therefore, is
applicable to determine which contracts are binding under 2 and enforceable under 3
if that law arose to govern issues concerning the validity, revocability, and enforceability
of contracts generally.) (emphasis in original); First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 944 (U.S. S.Ct. 1995) (When deciding whether the parties agreed to arbitrate a
certain matter (including arbitrability), courts generallyshould apply ordinary state-law
principles that govern the formation of contracts.).
307) See, e.g., AT&T Mobility, 131 S.Ct. at 1746 ([t]his saving clause [in FAA 2] permits
agreements to be invalidated by generally applicable contract defences, such as fraud,
duress, or unconscionability); Quilloin v. Tenet HealthSys. Philadelphia, Inc., 673 F.3d 221,
230 (3d Cir. 2012) (We generally apply state contract principles to determine whether an
arbitration agreement is unconscionable.); In re Checking Account Overdraft Litg., 685
F.3d 1269 (11th Cir. 2012) (applying South Carolina unconscionability law to arbitration
agreement); Bank of Am., NA v. UMB Fin. Servs., Inc., 618 F.3d 906, 912 (8th Cir. 2010) (state
contract law governs the threshold question of whether an enforceable arbitration
agreement exists between litigants).
308) See, e.g., Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 285 (9th Cir. 1988) ([The FAA]
governs our disposition of this case.The availability and validity of defenses against
arbitration are therefore to be governed by application of federal standards.), overruled
by Ticknor v. Choice Hotels Intl, Inc., 265 F.3d 931, 941-42 (9th Cir. 2001) (we must overrule
[Cohen] insofar as [it] hold[s] that state law adhesion contract principles may not be
invoked to bar arbitrability of disputes under the [FAA]).
309) Compare Halprin v. Verizon Wireless Servs., LLC, 2009 WL 1351456 (D.N.J.) (applying New
Jersey conflict of laws rules to determine whether to give effect to choice-of-law provision
specifying Virginia law) with Sphere Drake Ins. Ltd v. Clarendon Natl Ins. Co., 263 F.3d 26,
32 n.3 (2d Cir. 2001) (where contract specified that New York and New Jersey law would
apply to disputes arising from the contract; [court] consider[ed] New York and New
Jersey law, as appropriate, for questions relating to contract formation); Todd v. S.S. Mut.
Underwriting Assn, Ltd, 2011 WL 1226464, at *5 (E.D. La.) (Louisiana courts have held that
the validity of an arbitration agreement is determined by the law selected in the
agreement itself); Tierra Right of Way Servs., Ltd v. Abengoa Solar Inc., 2011 WL 2292007, at
*2 n.2 (D. Ariz.) (where contract specified that [t]his Agreement is made under and shall
be governed, construed, and interpreted according to the laws of the State of New York,
court held that the unconscionability analysis is guided by New York law).
162
310) See, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (U.S. S.Ct. 1995); Sovak
v. Chugai Pharm. Co., 280 F.3d 1266, 1270 (9th Cir. 2002) (general choice-of-law clause does
not override presumption of FAAs application); Roadway Package Sys., Inc. v. Kayser, 257
F.3d 287, 288-89 (3d Cir. 2001), overruled on other grounds, Hall St. Assocs., LLC v. Mattel,
Inc., 552 U.S. 576 (U.S. S.Ct. 2008); UHC Mgt Co. v. Computer Sciences Corp., 148 F.3d 992,
996-97 (8th Cir. 1998) (court would not interpret an arbitration agreement as precluding
the application of the FAA unless the parties intent that the agreement be so construed
is abundantly clear); Ferro Corp. v. Garrison Indus., Inc., 142 F.3d 926, 937 (6th Cir. 1998)
(contracts general choice-of-law provision selecting Ohio law did not evidence parties
unequivocal selection of Ohio law to determine scope of arbitration agreement); Alfa
Laval U.S. Treasury, Inc. v. Natl Union Fire Ins. Co. of Pittsburgh, PA, 857 F.Supp.2d 404, 416
(S.D.N.Y. 2012) (choice-of-law clause in arbitration agreement incorporates only chosen
states substantive rights and obligations, not the States allocation of power between
alternative tribunals); Jung v. Assn of Am. Med. Colleges, 300 F.Supp.2d 119, 152 (D.D.C.
2004) (Numerous courts of appeals have concluded that Mastrobuono requires that the
intent of the contracting parties to apply state arbitration rules or law to arbitration
proceedingsbe explicitly stated in the contract and thata general choice of law
provision does not evidence such intent.).
311) See1.04[B][1][e][ii], p. 154; 4.02[A][2][d]; U.S. FAA, 9 U.S.C. 203 (An action or proceeding
falling under the Convention shall be deemed to arise under the laws and treaties of the
United States. The district courts of the United Statesshall have original jurisdiction
over such an action or proceeding, regardless of the amount in controversy.). Where the
Inter-American Convention applies, 302 of the FAA governs. U.S. FAA, 9 U.S.C. 302
(Sections 202, 203, 204, 205, and 207 of this title shall apply to this chapter as if
specifically set forth herein, except that for the purposes of this chapter the Convention
shall mean the Inter-American Convention.).
Sections 203 and 302 implement the New York and Inter-American Conventions
respectively in the United States. See1.04[B][1][e][ii].
312) See, e.g., David L. Threlkeld & Co. v. Metallgesellschaft Ltd, 923 F.2d 245, 249-50 (2d Cir.
1991); Bakoss v. Certain Underwriters at Lloyds of London, 2011 WL 4529668, at *5 (E.D.N.Y.)
(application of federal law to enforceability of arbitration agreement).
313) See4.04[B][3][b]; Copape Produtos de Ptroleo Ltda v. Glencore Ltd, 2012 WL 398596
(S.D.N.Y.) (applying federal common law, comprised of generally-accepted principles of
contract law and Uniform Commercial Code, to determine existence and validity of
arbitration agreement); Nanosolutions, LLC v. Prajza, 793 F.Supp.2d 46, 54 n.5 (D.D.C. 2011)
([i]n cases arising under the New York Convention,there are compelling reasons to
apply federal law, which is already well-developed, to the question of whether an
agreement to arbitrate is enforceable) (quoting Smith/Enron Cogeneration LP, Inc. v.
Smith Cogeneration Intl, Inc., 198 F.3d 88, 96 (2d Cir. 1999); JSC Surgutneftegaz v. President
& Fellows of Harvard College, 2005 WL 1863676, at *3 (S.D.N.Y.); W. of England Ship Owners
Mut. Ins. Assn (Luxembourg) v. Am. Marine Corp., 1992 WL 37700, at *4 (E.D. La.) (applying
federal law, not Louisiana or English law, to decide whether arbitration agreement was
null and void); McDonnell Douglas Corp. v. Kingdom of Denmark, 607 F.Supp. 1016, 1018-
20 (E.D. Mo. 1985) (FAA and New York Convention set forth the relevant federal statutory
law governing the applicability and validity of arbitration clauses in international
commercial contracts); Antco Shipping Co. v. Sidermar SpA, 417 F.Supp. 207, 215 (S.D.N.Y.
1976) (applying federal public policy in analysis of whether arbitration agreement was
null and void).
314) Marchetto v. DeKalb Genetics Corp., 711 F.Supp. 936, 939 (N.D. Ill. 1989).
315) Smith/Enron Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 96 (2d Cir. 1999).
316) See4.04[B][3][b]; Preston v. Ferrer, 552 U.S. 346, 363 (U.S. S.Ct. 2008); Mastrobuono, 514
U.S. at 63-64.
317) See4.04[B][3][b]; 4.04[B][6][c].
318) See, e.g., Todd v. S.S. Mut. Underwriting Assn, Ltd, 2011 WL 1226464 (E.D. La.) (applying
state choice-of-law rules to validity of international arbitration agreement, which court
interpreted to require application of parties chosen English law); Bartlett Grain Co. v. Am.
Intl Group, 2011 WL 3274388 (W.D. Mo.) (applying English law as law governing underlying
insurance policy).
319) See, e.g., Gutfreund v. Weiner, 68 F.3d 554, 559 (2d Cir. 1995) (once a dispute is covered by
the [FAA], federal law applies to all questions of interpretation, construction, validity,
revocability, and enforceability) (quoting Coenen v. R.W. Pressprich & Co., 453 F.2d 1209,
1211 (2d Cir. 1972)); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir. 1987)
(applying federal substantive common law to determine whether party was bound by
arbitration agreement); Johnson Controls, Inc. v. City of Cedar Rapids, 713 F.2d 370, 375 (8th
Cir. 1983); Church v. Gruntal & Co., 698 F.Supp. 465, 467 (S.D.N.Y. 1988) (applying federal
substantive law to determination of existence and scope of arbitration agreement); Hall
v. Prudential-Bache Sec., Inc., 662 F.Supp. 468, 469 (C.D. Cal. 1987) (The issue of whether
an agreement to arbitrate is valid is determined by federal law.Federal law clearly
preempts state law on issues of arbitrability.); Lippus v. Dahlgren Mfg Co., 644 F.Supp.
1473, 1482 (E.D.N.Y. 1986) (Under the [FAA], federal law applies to all questions of
interpretation, construction, validity, revocability, and enforceability [of arbitration
agreements].) (quoting Coenen v. R.W. Pressprich & Co., 453 F.2d 1209, 1211 (2d Cir. 1972).
320) See4.04[B][3][b]; 4.04[B][6][c].
321) See authorities cited 4.04[B][3][b], p. 573.
163
322) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (U.S. S.Ct. 1995).
323) Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (U.S. S.Ct. 2009).
324) See, e.g., Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2856-57 (U.S. S.Ct. 2010)
(applying ordinaryprinciples that govern the formation of contracts in analyzing
arbitration agreements); Arthur Andersen, 556 U.S. at 631 (U.S. S.Ct. 2009) (applying
traditional principles of state law); Applied Energetics, Inc. v. NewOak Capital Mkts, LLC,
645 F.3d 522, 526 (2d Cir. 2011) (applying New York contract law principles in deciding
whether a contractual obligation to arbitrate exists); Will-Drill Res., Inc. v. Samson Res.
Co., 352 F.3d 211, 214 (5th Cir. 2003); Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)
(Because an agreement to arbitrate is a creature of contractthe ultimate question of
whether the parties agreed to arbitrate is determined by state law.); Fellerman v. Am.
Retirement Corp. Imperial Plaza Inc., 2010 WL 1780406, at *2 (E.D. Va.); Hojnowski v. Vans
Skate Park, 901 A.2d 381, 392 (N.J. 2006) (state contract-law principles generally govern a
determination whether a valid agreement to arbitrate exists); Anderson v. Ashby, 873
So.2d 168, 192 (Ala. 2003).
325) As discussed above, it is settled that U.S. federal law defines what constitutes an
arbitration agreement (as distinguished from a mediation or other ADR agreement)
under the FAA. See2.02[B]et seq.
326) See, e.g., InterGen NV v. Grina, 344 F.3d 134, 143 (1st Cir. 2003); Intl Paper Co. v.
Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417 n.4 (4th Cir. 2000) (FAA and
New York Convention create a body of federal substantive law of arbitrability,
applicable to any arbitration agreement within the coverage of the Act); David L.
Threlkeld & Co. v. Metallgesellschaft Ltd, 923 F.2d 245, 249-50 (2d Cir. 1991) (The
international business transactions at issue are governed by federal arbitration law.);
Glencore Ltd v. Degussa Engd Carbons LP, 848 F.Supp.2d 410, 435-36 (S.D.N.Y. 2012);
Copape Produtos de Ptroleo Ltda v. Glencore Ltd, 2012 WL 398596, at *4 n.33 (S.D.N.Y.);
Changzhou AMEC E. Tools & Equip. Co. v. E. Tools & Equip., Inc., 2012 WL 3106620, at *13 (C.D.
Cal.) (applying federal law to question whether parties consented to arbitration
agreement); JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL
1863676, at *2 (S.D.N.Y.); Coimex Trading (Suisse) SA v. Cargill Intl SA, 2005 WL 1216227, at
*1 (S.D.N.Y.) (determination whether there is an agreement to arbitrate depends on
federal, not state, law); Peter J. DaPuzzo v. Globalvest Mgt Co., 263 F.Supp.2d 714, 718-20
(S.D.N.Y. 2003); Filanto SpA v. Chilewich Intl Corp., 789 F.Supp. 1229, 1234-36 (S.D.N.Y. 1992)
(applying federal, not state, law). Compare 21 Williston on Contracts 57:56 (4th ed. 1990 &
Update 2013) ([The New York Convention and the FAA] create a body of federal
substantive law of arbitrability, applicable to any arbitration agreement. Generally
federal law, rather than the state of the forum and its conflict of laws rules, governs the
question whether an agreement to arbitrate was made.).
327) U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 146-47 (2d Cir. 2001).
328) Khan v. Parsons Global Servs., Ltd, 480 F.Supp.2d 327, 338 (D.D.C. 2007), revd on other
grounds, 521 F.3d 421 (D.C. Cir. 2008).
329) See, e.g., Bridas SAPIC v. Govt of Turkmenistan, 447 F.3d 411, 416 n.5 (5th Cir. 2006)
(applying federal common law to arbitration agreement despite English choice-of-law
clause and arbitral seat in Sweden); Sarhank Group v. Oracle Corp., 404 F.3d 657, 662 (2d
Cir. 2005) (rejecting argument that arbitration agreement was binding on U.S. non-
signatory under Egyptian law because [i]t is American federal arbitration law that
controls); Smith/Enron Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 96
(2d Cir. 1999) (applying federal law to enforceability of arbitration agreement); McDermott
Intl, Inc. v. Lloyds Underwriters of London, 944 F.2d 1199 (5th Cir. 1991); David L. Threlkeld &
Co. v. Metallgesellschaft Ltd, 923 F.2d 245, 249-50 (2d Cir. 1991); Genesco, Inc. v. T. Kakiuchi
& Co., 815 F.2d 840, 845 (2d Cir. 1987) (validity of arbitration agreement is determined
under federal law, which comprises generally accepted principles of contract law);
Rhone Mediterranee v. Lauro, 712 F.2d 50, 53-54 (3d Cir. 1983) (applying federal common
law, not parties chosen Italian law, to enforceability of arbitration agreement); Glencore
Ltd v. Degussa Engd Carbons LP, 848 F.Supp.2d 410, 435-36 (S.D.N.Y. 2012) (applying
federal common law to existence of agreement to arbitrate); Copape Produtos de Ptroleo
Ltda v. Glencore Ltd, 2012 WL 398596, at *4, n.33 (S.D.N.Y.) (applying federal law);
Nanosolutions, LLC v. Prajza, 793 F.Supp.2d 46, 54 n.5 (D.D.C. 2011); Apple & Eve, LLC v.
Yantai N. Andre Juice Co., 499 F.Supp.2d 245, 251 (E.D.N.Y. 2007) (no United States federal
cases where a court has applied the law of the foreign country and declared that an
arbitration clause would be invalid under that countrys law), vacated on other grounds,
610 F.Supp.2d 226 (E.D.N.Y. 2009); Khan v. Parsons Global Servs., Ltd, 480 F.Supp.2d 327,
338 (D.D.C. 2007) (following Ledee v. Ceramiche Ragno, 684 F.2d 184 (1st Cir. 1982)), revd on
other grounds, 521 F.3d 421 (D.C. Cir. 2008); Filanto SpA v. Chilewich Intl Corp., 789 F.Supp.
1229, 1236 (S.D.N.Y. 1992).
330) Rhone Mediterranee v. Lauro, 555 F.Supp. 481, 484 (D.V.I. 1982), affd, 712 F.2d 50 (3d Cir.
1983).
331) See4.04[A][2][j][iii].
332) See4.04[A][2][j][iv]. See also Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de
Venezuela, 991 F.2d 42, 46 (2d Cir. 1993) (Thus, while 2 of the [FAA] preempts state law
which treats arbitration agreements differently from any other contracts, it also
preserves general principles of state contract law as rules of decision on whether the
parties have entered into an agreement to arbitrate.).
333) These difficulties are outlined above. See4.04[A][2][e], pp. 517-18.
164
334) See, e.g., Steel Corp. of Philippines v. Intl Steel Servs., Inc., 354 F.Appx. 689, 692-93 (3d Cir.
2009) (presumption that law of arbitral seat will apply to arbitration agreement); Karaha
Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 292
n.43 (5th Cir. 2004) (Certain sections and comments of the Restatementsupport a
determination that Swiss law [i.e., law of the arbitral seat] applied to the arbitration
agreement.); AO Techsnabexport v. Globe Nuclear Serv. & Supply, Ltd, 656 F.Supp.2d 550,
558 (D. Md. 2009) (applying Swedish law, law of arbitral seat, to validity of arbitration
agreement), affd, 404 F.Appx. 793 (4th Cir. 2010); Nissho Iwai Corp. v. M/V Joy Sea, 2002
A.M.C. 1305, 1311 (E.D. La. 2002) (law of arbitral seat is implied choice of law governing
arbitration agreement); Spier v. Calzaturificio Tecnica, SpA, 71 F.Supp.2d 279, 283 (S.D.N.Y.
1999) (applying Italian law, as law of arbitral seat, to validity of arbitration agreement);
Bergesen v. Lindholm, 760 F.Supp. 976, 981 n.9 (D. Conn. 1991) (citing Second Restatement
for proposition that the parties selection of a location for arbitration may evidence an
intention that the law of this same location govern the contract as a whole).
335) See, e.g., Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51 (2d Cir. 2004) (if defendants wish to
invoke the arbitration clauses in the agreements at issue, they must also accept the Swiss
choice-of-law clauses that govern those agreements); Sphere Drake Ins. Ltd v. Clarendon
Natl Ins. Co., 263 F.3d 26, 32 n.3 (2d Cir. 2001) (FAA does not preempt choice-of-law
clause); Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42,
45-46 (2d Cir. 1993) (applying state contract law to formation of international arbitration
agreement); GAR Energy & Assocs. v. Ivanhoe Energy Inc., 2011 WL 6780927 (E.D. Cal.)
(applying generally-applicable state contract law to validity of arbitration agreement);
A.O.A. v. Doe Run Res. Corp., 2011 WL 6091724, at *2 (E.D. Mo.) (applying state contract law
to determine parties to international arbitration agreement); FR 8 Singapore Pty Ltd v.
Albacore Maritime Inc., 754 F.Supp.2d 628, 636 (S.D.N.Y. 2010) (applying parties chosen
English law in determining arbitrability); Frydman v. Cosmair, Inc., 1995 WL 404841, at *4
(S.D.N.Y.) (The court must look to the state law which governed the contract formation.
Since the contract in dispute here was formed in France between French citizens, French
law applies in the determination of whether it constitutes an agreement to arbitrate.).
336) See, e.g., Harrington v. Atl. Sounding Co., 2007 WL 2693529, at *3 (E.D.N.Y.) (The court will
apply New Jersey law, sincethat state has the most significant relationship to the
arbitration agreements and the employment relationship between the parties.), vacated
on other grounds, 602 F.3d 113 (2d Cir. 2010); Jureczki v. Banc One Texas, NA, 252 F.Supp.2d
368, 371 (S.D. Tex. 2003) (applying Texas law because state with the most significant
relationship to the arbitration clause is Texas [because plaintiffs] are Texas residents,
plaintiffs deposit account was opened and maintained in Texas, and the arbitration
clause at issue provides that the federal judicial district that includes [plaintiffs]
mailing address at the time the Claim is filed is the forum for arbitration); Owen v.
MBPXL Corp., 173 F.Supp.2d 905, 912-13 (N.D. Iowa 2001) (Iowa law had most significant
relationship to arbitration agreement because, among other reasons, agreement was
formed while employee was employed in Iowa); Specht v. Netscape, 150 F.Supp.2d 585
(S.D.N.Y. 2001) (California had most significant relationship to litigation where product
was designed by corporation with principal place of business in California and
distributed from website maintained in California), affd, 306 F.3d 17, 32, 35 (2d Cir. 2002);
Ferrara SpA v. United Grain Growers, Ltd, 441 F.Supp. 778, 781 (S.D.N.Y. 1977) (raising, but not
deciding, possible applicability of (a) federal standards of enforceability under Chapter 1
of the FAA, (b) a uniform body of international law embodied in the Convention, or (c)
New York law; suggesting that FAA standards would apply); I.S. Joseph Co. v. Toufic Aris &
Fils, 54 A.D.2d 665, 666 (N.Y. App. Div. 1976) (holding that as to arbitration agreement, New
York law has most significant contacts). See4.04[A][2][e].
337) Finally, as discussed above, other U.S. lower courts have adopted a third approach,
holding that a choice-of-law clause will be interpreted to select the law governing the
arbitration agreement where it is unmistakably clear that this was the parties intention.
See4.02[A][2][d], p. 482; Cape Flattery Ltd v. Titan Maritime, LLC, 647 F.3d 914, 921 (9th Cir.
2011) (courts should apply federal arbitrability law absent clear and unmistakable
evidence that the parties agreed to apply non-federal arbitrability law); Ario v.
Underwriting Members of Syndicate 53 at Lloyds, 618 F.3d 277, 293 (3d Cir. 2010); Westbrook
Intl, LLC v. Westbrook Techs., Inc., 17 F.Supp.2d 681, 684 (E.D. Mich. 1998).
338) See4.02[A][2][b]-[c]; 4.04[A][3]; 4.04[A][4][a].
339) Ledee v. Ceramiche Ragno, 684 F.2d 184 (1st Cir. 1982).
340) Ledee, 684 F.2d at 187.
341) Rhone Mediterranee v. Lauro, 712 F.2d 50, 53-54 (3d Cir. 1983).
342) Rhone Mediterranee, 712 F.2d at 53 (emphasis added).
343) Ferrara SpA v. United Grain Growers, Ltd, 441 F.Supp. 778, 781 (S.D.N.Y. 1977).
165
344) See, e.g., Aggarao v. MOL Ship Mgt Co., 675 F.3d 355, 373 (4th Cir. 2012); Bautista v. Star
Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005); Becker Autoradio U.S.A., Inc. v. Becker
Autoradiowerk GmbH, 585 F.2d 39, 43 n.8 (3d Cir. 1978) (U.S. court would not apply law of
state X [that] will not enforce, or gives very limited effect to arbitration clauses);
Alghanim v. Alghanim, 828 F.Supp.2d 636, 645-46 (S.D.N.Y. 2011); Matthews v. Princess
Cruise Lines, Ltd, 728 F.Supp.2d 1326, 1329-30 (S.D. Fla. 2010); Hodgson v. Royal Caribbean
Cruises, Ltd, 706 F.Supp.2d 1248, 1260 (S.D. Fla. 2009) (jurisdictional objection did not
present the kind of fraud falling under the scope of the Conventions null-and-void
clause, a fraud that can be applied neutrally on an international scale) (quoting
Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005); Apple & Eve, LLC v. Yantai N.
Andre Juice Co., 499 F.Supp.2d 245, 248-49 (E.D.N.Y. 2007), vacated on other grounds, 610
F.Supp.2d 226 (E.D.N.Y. 2009); Khan v. Parsons Global Servs., Ltd, 480 F.Supp.2d 327, 339-40
(D.D.C. 2007), revd on other grounds, 521 F.3d 421 (D.C. Cir. 2008); Prograph Intl, Inc. v.
Barhydt, 928 F.Supp. 983 (N.D. Cal. 1996); Technetronics, Inc. v. Leybold-Geaeus GmbH, 1993
WL 197028, at *6 (E.D. Pa.) (traditionally recognized international defenses such as fraud,
duress or mistake); W. of England Ship Owners Mut. Ins. Assn (Luxembourg) v. Am. Marine
Corp., 1992 WL 37700, at *4-5 (E.D. La.) (rejecting application of Louisiana law to
international arbitration agreement, which would have rendered agreement null and
void); Meadows Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036, 1043
(E.D.N.Y. 1991) (rejecting defendants argument that arbitration agreement was not
enforceable in arbitral seat because claims were non-arbitrable; applying emphatic
federal policy favoring arbitration); Marchetto v. DeKalb Genetics Corp., 711 F.Supp. 936,
939 (N.D. Ill. 1989) (rejecting claim that arbitration agreement was void under Italian law
because it applied to tort claims and because nonparties were sued: possibility that
Italian law might divest a panel of Italian arbitrators of jurisdiction is not
determinative); Dev. Bank of Philippines v. Chemtex Fibers Inc., 617 F.Supp. 55, 57 n.12
(S.D.N.Y. 1985); Antco Shipping Co. v. Sidermar SpA, 417 F.Supp. 207, 216 (S.D.N.Y. 1976)
(enforcement of arbitration agreement should be denied only where enforcement would
violate the forum states most basic notions of morality and justice).
345) Chloe Z Fishing Co. v. Odyssey Re (London) Ltd, 109 F.Supp.2d 1236, 1258-59 (S.D. Cal. 2000)
(emphasis added).
346) I.T.A.D. Assocs., Inc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir. 1981). See also Marchetto v.
DeKalb Genetics Corp., 711 F.Supp. 936, 939 (N.D. Ill. 1989) (court should reject challenges
to arbitration based in legal principles unique to a signatory nation).
347) Matthews v. Princess Cruise Lines, Ltd, 728 F.Supp.2d 1326, 1329-30 (S.D. Fla. 2010).
348) Apple & Eve, LLC v. Yantai N. Andre Juice Co., 499 F.Supp.2d 245, 251 (E.D.N.Y. 2007), vacated
on other grounds, 610 F.Supp.2d 226 (E.D.N.Y. 2009).
349) See, e.g., Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005) (rejecting application
of state-law principles of unconscionability in null and void analysis under Article II of
Convention); Estibeiro v. Carnival Corp., 2012 WL 4718978 (S.D. Fla.) (following Bautista and
rejecting unconscionability as defense under Article II of Convention); Matthews v.
Princess Cruise Lines, Ltd, 728 F.Supp.2d 1326, 1329-30 (S.D. Fla. 2010) (traditional
principles of procedural unconscionabilitydo not fit within the limited scope of
defenses to the enforceability of an arbitration agreement provided for by the
Convention); Lathan v. Carnival Corp., 2009 WL 6340059, at *2 (S.D. Fla.) (The Eleventh
Circuit also made it clear that state-law principles of unconscionability do not fit within
the limited scope of defenses allowed by the Convention.); Polychronakis v. Celebrity
Cruises, Inc., 2008 WL 5191104, at *3 n.2 (S.D. Fla.) (Plaintiff also seems to argue that the
agreement was unconscionable.The Court finds that this is not an affirmative defense
authorized by the Convention.); Khan v. Parsons Global Servs., Ltd, 480 F.Supp.2d 327, 339-
40 (D.D.C. 2007) (rejecting unconscionability as defense to enforceability of arbitration
agreement: By its very nature, the defense of unconscionability seeks to promote those
very tenets that are contrary to a finding of certainty, namely: policy, fairness, and
appeals to a courts discretion outside of the letter of the law.), revd on other grounds,
521 F.3d 421 (D.C. Cir. 2008).
350) See, e.g., Aggarao v. MOL Ship Mgt Co., 675 F.3d 355, 373 (4th Cir. 2012) (rejecting
application of public policy defense at arbitration enforcement stage because defense
cannot be applied neutrally on an international scale) (quoting Lindo v. NCL
(Bahamas), Ltd., 652 F.3d 1257, 1278 (11th Cir. 2011); Maxwell v. NCL (Bahamas), Ltd, 454
F.Appx. 709, 710 (11th Cir. 2011) (public policy is not a valid defense to enforcement of an
arbitration agreement because it cannot be applied neutrally throughout the world);
Dev. Bank of Philippines v. Chemtex Fibers Inc., 617 F.Supp. 55, 57 n.12 (S.D.N.Y. 1985) (it is
clear that the Convention does not contemplate the expression of local public policy as a
barrier to the arbitrability of claims).
351) A.T. Cross Co. v. Royal Selangor(s) PTE, Ltd, 217 F.Supp.2d 229, 234-35 (D.R.I. 2002).
352) See1.04[A][1][c][i], p. 108.
353) Sarhank Group v. Oracle Corp., 404 F.3d 657 (2d Cir. 2005).
354) Sarhank Group, 404 F.3d at 662.
355) Sarhank Group, 404 F.3d at 661.
356) Sarhank Group, 404 F.3d at 658. The choice-of-law clause in the underlying contract
provided for the application of Egyptian law (which was the law applied by the arbitral
tribunal).
357) Sarhank Group, 404 F.3d at 658. The dispute arose out of an agreement between two
Egyptian companies (one being a subsidiary of a U.S. company) concerning matters in
Egypt.
166
358) See4.02[A][2][b]-[d]; 4.04[A][2][d]; 4.04[A][4][a]-[b].
359) As discussed elsewhere, Article V(1)(a) requires giving effect to the parties choice of law
governing the arbitration agreement or, absent any agreement, the law of the arbitral
seat. See4.02[A][1]; 4.04[A][1][b]; 26.05[A]. The Sarhank courts decision violated Article
V(1)(a) by refusing to apply either of these choices. It is conceivable that the courts
decision might be defended on the grounds of public policy under Article V(2) of the
Convention, although the Sarhank court did not invoke public policy in its opinion. It is
difficult, however, to see how the misinterpretation (such as it was) of contract law
principles amounts to a violation of public policy.
360) See4.04[A][2] & [4].
361) See4.04[A][2][e] & [g].
362) See Arzandeh & Hill, Ascertaining the Proper Law of An Arbitration Clause Under English
Law, 5 J. Private Intl L. 425, 442-45 (2009); Blessing, The Law Applicable to the Arbitration
Clause, in A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and
Awards: 40 Years of Application of the New York Convention 168, 174 et seq. (ICCA Congress
Series No. 9 1999); Paulsson, Arbitrability, Still Through A Glass Darkly, in ICC, Arbitration in
the Next Decade 95, 102-04 (ICC Ct. Bull. Spec. Supp. 1999); Pearson, Sulamrica v. Enesa:
The Hidden Pro-Validation Approach Adopted by the English Courts With Respect to the
Proper Law of the Arbitration Agreement, 29 Arb. Intl 115 (2013).
363) For commentary on the validation principle in other choice-of-law contexts, see H.
Gaudemet-Tallon, JurisClasseur Europe Trait, Fasc. 3201, 102-04 (1996); M. Giuliano & P.
Lagarde, Report on the Convention on the Law Applicable to Contractual Obligations, O.J. C
282 31/10/1980, Art. 9; P. Nygh, Autonomy in International Contracts 119 (1999); R. Plender &
M. Wilderspin, The European Contracts Convention: The Rome Convention of the Choice of
Law for Contracts 10-09 et seq. (2d ed. 2001); Richman & Riley, The First Restatement of
Conflict of Laws on the Twenty-Fifth Anniversary of Its Successor: Contemporary Practice in
Traditional Courts, 56 Md. L. Rev. 1196, 1215-16 (1997) (discussing validation principle in
U.S. states usury laws); R. Weintraub, Commentary on the Conflict of Laws 371 (6th ed.
2010) (parties should be protected from unwise or uninformed choices when chosen law
would invalidate their bargain and objectively applicable law would sustain it).
364) See4.04[A][2][c]-[d].
365) See4.04[A][2][f]. Other choice-of-law methods that have enjoyed historical favor
including the cumulative approach, the remedial principle and the law of the arbitral
seat or underlying contract also suffer from grave shortcomings. See4.04[A][2][g]-[h].
366) See4.04[A][2][h].
367) See4.04[A][2][c].
368) See4.04[A][2][d].
369) See4.02[B].
370) See4.04[A][2][e], p. 519.
371) See1.02[B]; 1.03; 1.04[B][1].
372) Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 215 (House of Lords).
373) Talisker Distillery [1894] AC 202 at 203.
374) Talisker Distillery [1894] AC 202 at 214-16.
375) Talisker Distillery [1894] AC 202 at 213 (emphasis added). The House of Lords left open the
possibility that Scots courts could have refused to enforce an arbitration clause that was
tainted with immorality or in conflict with deeply-rooted and important
considerations of local policy.
376) Talisker Distillery [1894] AC 202 at 215 (emphasis added).
377) See1.02[B]; 1.03; 1.04[B][1]; 4.01.
In a related context, the U.S. Supreme Court adopted a similar approach to the validity
of an arbitration agreement (in a domestic context) in Mastrobuono. The Court rejected a
claim that the parties chosen law contained a provision forbidding the arbitration of
particular claims (for punitive damages), which was made applicable to the parties
arbitration agreement by reason of their choice-of-law agreement. Instead, relying on the
parties presumptive intention to arbitrate their disputes, the Court held that the parties
choice-of-law clause encompass[ed] substantive principles that New York courts would
apply, but not special rules limiting the authority of arbitrators. Mastrobuono v.
Shearson Lehman Hutton, Inc., 514 U.S. 52, 63-64 (U.S. S.Ct. 1995) (emphasis added).
Although not described as application of a validation principle, the Courts approach to
interpretation of the parties choice-of-law clause rested on the same policies.
378) See4.04[A][2][c], [e] & [h].
379) See1.02[B]; 4.04.
380) Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 215 (House of Lords).
381) See1.02[B][1]-[2]. For applications of the validation principle, see4.04[A][3].
382) See3.02[E].
383) See3.02[E].
384) See4.04[A][1][b][ii].
385) See4.04[A][1][b][ii].
386) See4.04[A][1][b][i]. In any event, as noted above, Article V(1)(a) is permissive, allowing
states to deny recognition to awards, but not requiring them to do so. See1.04[A][1][c][ii];
4.04[A][1][b][iv]. Nothing in Article V(1)(a) precludes national courts from recognizing
arbitral awards (or arbitration agreements) following application of the validation
principle.
167
387) Swiss Law on Private International Law, Art. 178. See4.04[A][3] for further discussion and
commentary. See alsoJudgment of 16 October 2003, 22 ASA Bull. 364, 387 (Swiss Federal
Tribunal) (2004); Lalive, The NewSwiss Law on International Arbitration, 4 Arb. Intl 2, 10
(1988) (With regard to material validityArt. 178 para. 2 contains a conflict rule, of an
alternative character, which indicates the policy of favor validitatis pursued by the
Statute: the arbitration convention is valid whenever it complies with the conditions laid
down either by the law chosen by the parties, or by the law governing the substance of
the dispute (e.g., the main contract) or by Swiss law.).
388) Spanish Arbitration Act, 2011, Art. 9(6) (adopting verbatim Article 178(2) of Swiss Law on
Private International Law); Algerian Code of Civil Procedure, Art. 458 bis 1, 3 (same).
SeeMantilla-Serrano, The New Spanish Arbitration Act, 21 J. Intl Arb. 367 (2004).
389) See, e.g.,Award in ICC Case No. 11869, XXXVI Y.B. Comm. Arb. 47, 57 (2011) (arbitration
agreements should be interpreted in a way that leads to their validity in order to give
effect to the intention of the parties to submit their disputes to arbitration); Partial
Award in ICC Case No. 7920, XXIII Y.B. Comm. Arb. 80 (1998) (applying validation principle
to uphold validity of ambiguous arbitration clause); Partial Award on Jurisdiction and
Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb. 279 (2000); Partial Award on
Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb. 279 (2000); Final
Award in ICC Case No. 6162, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection of ICC
Arbitral Awards 1991-1995 75, 84 (1997) (considering fact that Egyptian law governing
substantive dispute would have invalidated arbitration agreement); Final Award in ICC
Case No. 5485, XIV Y.B. Comm. Arb. 156 (1989); Preliminary Award in Zurich Chamber of
Commerce of 25 November 1994, XXII Y.B. Comm. Arb. 211 (1997). See alsoLew, The Law
Applicable to the Form and Substance of the Arbitration Clause, in A. van den Berg (ed.),
the New York Convention 114, 139-40 (ICCA Congress Series No. 9 1999).
Not all such awards rely expressly on the validation principle. For example, one award
upheld the validity of an arbitration clause by looking to the ICC Rules of Arbitration as
the source of law governing the arbitration agreement. Final Award in ICC Case No. 5485,
XIV Y.B. Comm. Arb. 156, 161 (1989).
390) Award in ICC Case No. 7154, 121 J.D.I. (Clunet) 1059, 1061 (1994).
391) See, e.g., 4.02[B]; 4.04[A][2]; Rhone Mediterranee v. Lauro, 712 F.2d 50, 54 (3d Cir. 1983)
(Neither the parochial interests of the forum state, nor those of states having more
significant relationships with the dispute, should be permitted to supersede that
presumption [that international arbitration agreements are valid]. The policy of the
Convention is best served by an approach which leads to upholding agreements to
arbitrate.); Farrell v. Subway Intl, BV, 2011 WL 1085017 (S.D.N.Y.) (refusing to apply choice-
of-law provision where doing so would invalidate arbitration agreement); Apple & Eve, LLC
v. Yantai N. Andre Juice Co., 499 F.Supp.2d 245, 251 (E.D.N.Y. 2007), vacated on other
grounds, 610 F.Supp.2d 226 (E.D.N.Y. 2009) (no United States federal cases where a court
has applied the law of the foreign country and declared that an arbitration clause would
be invalid under that countrys law); Westbrook Intl, LLC v. Westbrook Techs., Inc., 17
F.Supp.2d 681, 684 (E.D. Mich. 1998) (refusing to apply general choice-of-law clause to
validity of arbitration agreement, as applied to tort claims, absent clear statement that
this was intended; application of chosen law would have invalidated arbitration clause
as applied to dispute in question); XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500,
506-08 (QB) (English High Ct.) (giving effect to English law, as law of arbitral seat, which
validated agreement, rather than New York law, which appeared to invalidate it);
Judgment of 24 February 1994, Ministry of Public Works v. Socit Bec Frres, XXII Y.B.
Comm. Arb. 682 (Paris Cour dappel) (1997) (refusing to apply Tunisian law, under which
arbitration agreement would be void, in order to give effect to parties agreement);
Judgment of 16 October 2003, 22 ASA Bull. 364 (Swiss Federal Tribunal) (2004). See also
Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted by the English
392) See4.02[B]; 4.04[A][2].
393) See4.02[A][2][c]-[d]. See also Weissfisch v. Weissfisch [2006] EWCA Civ 218 (English Ct.
App.) (giving effect to arbitration agreement notwithstanding claim that agreement was
invalid under law of foreign arbitral seat; court left resolution of issue for foreign courts or
arbitral tribunal).
394) Judgment of 26 August 2008, XXXIV Y.B. Comm. Arb. 404, 405 (Austrian Oberster
Gerichtshof) (2009). See also Judgment of 5 February 2008, 10 Ob 120/07f (Austrian
Oberster Gerichtshof) (When interpreting an [arbitration agreement] the interpretation,
which leaves the validity of the expressly agreed arbitration agreementunaffected,
should be preferred); Fremuth-Wolf, in S. Riegler et al. (eds.), Arbitration Law of Austria:
Practice and Procedure 581, 40 (2007) (The [Austrian Oberster Gerichtshof] has thus
been very liberal in upholding arbitration agreements in case of doubt. If there are two
possible interpretation results, the one which validates the arbitration agreement is to
be favored.).
395) Institute of International Law, Santiago de Compostela, Resolution on Arbitration Between
States, State Enterprises or State Entities and Foreign Entities, 12 September 1989, Art. 4, XVI
Y.B. Comm. Arb. 236, 238 (1991) (emphasis added), cited Maniruzzaman, Choice of Law in
International Contracts: Some Fundamental Conflict of Laws Issues, 16(4) J. Intl Arb. 141,
155, n.94 (1999).
168
(3d ed. 2000); Derains, Determination de la lex contractus, in ICC, Lapport de la
jurisprudence arbitrale 1, 28 (1986) (law should presume that parties did not want to
locate their contractual relationship in a legal system which is not ready to welcome it as
it was originally conceived); Fouchard, Suggestions to Improve the International Efficacy
of Arbitral Awards, in A. van den Berg (ed.), Improving the Efficiency of Arbitration
(ICCA Congress Series No. 9 1999); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman
on International Commercial Arbitration 446 et seq. (1999); Hanotiau, The Law
Applicable to Arbitrability, in A. van den Berg (ed.), Improving the Efficiency of Arbitration
(ICCA Congress Series No. 9 1999); Nacimiento, Article V(1)(a), in H. Kronke et al. (eds.),
York Convention 205, 220, 227 (2010) (This presumption [in favor of the validity of the
arbitration agreement] is consistent with the generally applied principle that in the
interpretation of arbitration agreements, courts and tribunals should follow the parties
intention as closely as possible.Generally, common international practice is in favorem
validitatis of the arbitration clause.); Paulsson, Arbitrability, Still Through A Glass Darkly,
in ICC, Arbitration in the Next Decade 95, 102-04 (ICC Ct. Bull. Spec. Supp. 1999) (proposing
codification of validation principle in revised New York Convention); Wenger, in S. Berti et
al. (eds.), International Arbitration in Switzerland Art. 178, 22 (2000) (Swiss law is more
arbitration-friendly than the New York Convention: it widens the spectrum of laws to be
taken into account from the point of view of favor validitatis from two to three legal
systems, adding to the list the law applicable to the dispute.).
397) See4.04[A][3] n. 363.
398) See1.02[B]; 4.04[A]. The validation principle is related to, and complements,
international law rules against national laws that discriminate against international
arbitration agreements. See4.04[A][2]; 4.04[A][4][c]. As discussed below, these rules
(like the validation principle) often accept that arbitration agreements are governed in
principle by national law, but (in a manner broadly comparable to the validation
principle) subject the application of national law to international limits. See 4.04[A][4]
[b]. Alternatively, as under French law, international law is applied directly. See 4.04[A]
[4][a]. In both instances, the choice among national laws is made by way of principles
that take into account the particular characteristics and objectives of international
399) See4.04[A][2].
400) See4.04[B][2][b][iii].
401) See4.04[B][2][b][i].
402) See4.04[B][2][b][ii].
403) SeeBlessing, The Law Applicable to the Arbitration Clause, in A. van den Berg (ed.),
the New York Convention 168 (ICCA Congress Series No. 9 1999) (Instead of battling over
the primacy of one particular national law, a tendency is noticeable to apply de-
nationalized approaches.).
404) See4.02[A][2][c].
Rev. arb. 116, 117 (French Cour de cassation civ. 1e) (emphasis added). See4.02[A][2][c].
406) See, e.g., Judgment of 11 July 2006, Socit PT Andhika Lines v. Socit AXA, Case No. 03-
19838, JPC G 2006, IV, 2778 (French Cour de cassation civ. 1e) (common intention of parties
was to replace arbitration agreement by jurisdiction clause in favor of carriers place of
incorporation, resulting in nullity of arbitration agreement); Judgment of 21 May 1997,
Renault v. V 2000, 1997 Rev. arb. 537 (French Cour de cassation civ. 1e); Judgment of 7 April
2011, 2011 Rev. arb. 747 (Paris Cour dappel) (arbitration agreements validity depends on
common intent of parties; no reference to any national law needed); Judgment of 24
February 2005, Sidermetal v. Arcelor Intl Exp., 2005 Rev. arb. 787, 787 (Paris Cour dappel)
(arbitration agreement is not subject to any formal rule [regle de forme] but is subject to
a validity principle depending on the sole intention of the parties); Judgment of 10 June
2004, Bargues Agro Indus. SA v. Young Pecan Cie, XXX Y.B. Comm. Arb. 499, 502 (Paris Cour
dappel) (2005) (According to a substantive provision of French international arbitration
law, the parties intention suffices to validate an arbitration agreement. Hence, that
agreement does not fall under a national law because it is fully autonomous, also with
regard to form.); Judgment of 25 November 1999, SA Burkinabe des ciments et matriaux v.
Socit des ciments dAbidjan, 2001 Rev. arb. 165 (Paris Cour dappel); Judgment of 24
February 1994, Ministry of Public Works v. Socit Bec Frres, XXII Y.B. Comm. Arb. 682, 687
(Paris Cour dappel) (1997) (In international commercial arbitration, the principle of the
autonomy of the arbitration agreement is a principle of general application, being an
international substantive rule consecrating the legality of the arbitration agreement,
beyond all reference to a system of conflict of laws. The validity of the agreement is only
subject to the requirements of international public policy.); J.-L. Delvolv, J. Rouche & G.
Pointon, French Arbitration Law and Practice 91 (2003); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 436 (1999).
169
407) See, e.g.,Judgment of 22 March 1976, III Y.B. Comm. Arb. 283, 283 (Tunis Ct. First Inst.) (1978)
([I]t is generally accepted that international commercial relations are subject to their
own customs. It follows from there that the present question does no longer depend on
the personal law of the parties, but rather on the subject matter of the contract. The
latter is the result from the parties will, and constitutes their own law since the contract
is an international contract concluded in order to correspond to the needs of the parties
on the one hand hand [sic] and to international commercial customs on the other.).
408) Judgment of 8 July 2009, Socit dtudes et reprsentations navales et industrielles v.
Socit Air Sea Broker Ltd, 2009 Rev. arb. 529 (French Cour de cassation civ. 1e); Judgment
of 7 April 2011, 2011 Rev. arb. 747, 750 (Paris Cour dappel) (By virtue of a material rule of
international arbitration, applicable to an arbitration seated in France, the arbitration
agreement is legally independent from the underlying contract; then, its existence and
enforceability shall be assessed in light of the parties common will, subject to
international public policy, without it being necessary to make reference to a domestic
law.). See also Hook, Arbitration Agreements and Anational Law: A Question of Intent?, 28 J.
Intl Arb. 175, 180-81 (2011) (One of its most remarkable features is that, instead of relying
on a choice of law approach to determine the validity or existence of arbitration
agreements, French courts apply the so-called substantive validity method, combining
elements of the contractual and autonomous theory. The effect of the substantive validity
rule is to separate the arbitration agreement from any applicable law other than French
mandatory laws and international public policy. Consequently, because the arbitration
agreement exists independently from national laws, questions as to its formation or
validity must be resolved in accordance with French principles of international public
policy principles that, according to French law, are fundamental in an international
context.).
409) See, e.g.,Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Govt of
Pakistan, Partial Award in ICC Case No. 9987, 2(4) Intl J. Arab Arb. 337, 353 (2010) (assessing
validity and scope of arbitration agreement by reference to those transnational general
principles and usages reflecting the fundamental requirements of justice in international
trade and the concept of good faith in business); Final Award in ICC Case No. 9302, XXVIII
Y.B. Comm. Arb. 54 (2003) (arbitral tribunal seated in France applied international
principles, instead of national law, to substantive validity of arbitration clause); Final
Award in ICC Case No. 8938, XXIVa Y.B. Comm. Arb. 174, 176 (1999); Partial Award in ICC Case
No. 7920, XXIII Y.B. Comm. Arb. 80 (1998) (arbitral tribunal entitled to depart from national
law, and apply general principles of law, in determining validity of arbitration
agreement); Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1023 (1990); Interim Award in
ICC Case No. 4131, IX Y.B. Comm. Arb. 131, 134 (1984) (applying in particular, French case
law and adopting a result compatible with international public policy, particularly in
France); Award in ICC Case No. 2375, 103 J.D.I. (Clunet) 973 (1976).
411) See4.02[A][2][c].
412) See4.04[A][2][j].
413) Ledee v. Ceramiche Ragno, 684 F.2d 184 (1st Cir. 1982). See4.04[A][2][j][v].
414) Ledee, 684 F.2d at 187 (emphasis added).
415) Rhone Mediterranee v. Lauro, 712 F.2d 50 (3d Cir. 1983).
418) See authorities cited 4.04[A][2][j][v], pp. 538-40. The content of these international
prohibitions against discriminatory or idiosyncratic national laws is discussed below.
See4.04[A][4][c].
419) See4.02[A][2][c]; 4.04[A][4][a].
420) See4.02[A][2][d].
421) See4.04[A][2][j][i].
422) There are reasonable prospects for the development, over time, of international rules of
contract (and other commercial) law applicable to international commercial arbitration
agreements; at present, it is doubtful that a body of such rules exists with sufficient
clarity and comprehensiveness to provide a reliable framework for enforcing
international arbitration agreements. See19.06[C].
423) The basis for the principles of international law or international arbitration law cited
in French decisions, see4.02[A][2][c], is unclear, as is the legal nature and character of
these principles. It is doubtful that they can be justified as principles of customary
international law, but this appears to have been the contemplation of the French courts.
424) That is, absent some firm basis in international law for rules governing the formation and
validity of arbitration agreements, and some firm basis warranting the application of
such rules in preference to national law, it is difficult to justify overriding national law on
the basis of such principles.
425) See4.03et seq.
170
426) See4.04[A]. Citing a variety of reasons, most authorities have concluded that Article II
requires application of some national law to decide whether an arbitration agreement is
null and void under the New York Convention. Award in ICC Case No. 5730, 117 J.D.I.
(Clunet) 1029, 1032-33 (1990) (faithful to the traditional concept of even international
arbitration, this tribunal considers that to be effective, the arbitration agreement must
draw its force from an attachment to a legal order, even though the parties would be free
to choose the latter); B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland 311 (2d ed. 2010); Contini, International Commercial Arbitration: The United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 8 Am. J.
Comp. L. 283, 296 (1959) (since Article II(3) is silent, courts may make determination on
basis of forum law, including forum choice-of-law rules); J.-L. Delvolv, J. Rouche & G.
Pointon, French Arbitration Law and Practice 91 (2003); Graffi, Securing Harmonized
Effects of Arbitration Agreements Under the New York Convention, 28 Hous. J. Intl L. 663,
694-97 (2006); Pisar, The United Nations Convention on Foreign Arbitral Awards, 33 S. Cal. L.
Rev. 14, 16 (1959) (Article II(3) refers to national conflict of law rules); J.-F. Poudret & S.
Besson, Comparative Law of International Arbitration 180 (2d ed. 2007).
427) See4.04[A][1][b], pp. 493-94; 4.04[A][1][c], pp. 502-03. In particular, Article V(1)(a) of the
New York Convention expressly contemplates that international arbitration agreements
will be governed by either the national law chosen by the parties or the national law of
the arbitral seat (in the absence of a contrary choice by the parties). Likewise, Article
VI(2) of the European Convention provides that a court determining the existence or
validity of an arbitration agreement looks to the national law chosen by the parties, the
national law of the arbitral seat, or (where neither of the preceding can be determined)
the national law applicable under the courts own choice-of-law rules. See4.04[A][1]
[b]-[c].
428) The development of international commercial codes such as the UNIDROIT Principles of
International Contracts and the European Principles of Contract Law suggests that, in
time, a satisfactory international legal regime for arbitration agreements may evolve. At
present, however, it is difficult to conclude that such a regime exists. See Linarelli,
Analytical Jurisprudence and the Concept of Commercial Law, 114 Penn. St. L. Rev. 119, 137-
86 (2009) (discussing various sources of commercial law and questioning whether they
constitute a transnational legal order).
429) See Repub. of Ecuador v. Occidental [2005] EWCA Civ 1116, 30 (English Ct. App.)
(protection of investors at which the whole scheme is aimed is likely to be better served
if the agreement to arbitrate is subject to international law, rather than to the law of the
State against which an investor is arbitrating); C. Schreuer et al., The ICSID Convention: A
Commentary Art. 25, 250-51, 585 (2d ed. 2009) (noting methodological mix involving
treaty interpretation, statutory interpretation and general principles of contract law).
430) See1.04[A][1].
Rev. arb. 116, 117 (French Cour de cassation civ. le).
432) See1.04[A][1]; 2.01[A][1][a]; 4.04[A][1][b]; 4.04[B][2][b]; 5.01[B][2]; 8.02[A][1].
433) See1.04[A][1]; 4.04[A][1][b]; 5.01[B][2]; 5.04[B][1]; New York Convention, Art. II(3) (null
and void, inoperative or incapable of being performed).
434) See4.02[A][1]; 4.04[A][1][b]; New York Convention, Art. V(1)(a).
435) New York Convention, Art. II(3); 1.04[A][1]; 2.01[A][1][a].
436) Similar conclusions have been reached in well-reasoned authority under the European
Convention. SeeBenteler v. State of Belgium, Ad Hoc Award of 18 November 1983, 1989 Rev.
arb. 339 ([T]he legal concepts and terms used in the Convention in general have the same
meaning as they have in international commercial relations. It would in fact be contrary
to the very aims of the Convention to accept that its terms must be interpreted according
to concepts of domestic law, because such an interpretation would lead to the very sort
of difficulties which the authors of the Convention intended to avoid.).
437) Some commentators have relied on the absence of detailed specification of
international standards in Article II(3). A. van den Berg, The New York Arbitration
Convention of 1958 123 (1981) (question when an agreement is to be considered null and
void etc. may again depend on some municipal law because the Convention does not
give much guidance as to what should be understood by these words). This absence of
detailed specification is characteristic of the Conventions generally constitutional
drafting style, and is relevant to the nature of the international standards prescribed by
the Convention, and not whether or not such standards exist.
438) See1.04[A][1]; 4.04[A][1][b]; Glencore Ltd v. Degussa Engd Carbons LP, 848 F.Supp.2d 410,
422 (S.D.N.Y. 2012) (The goals of the Convention (and thus FAA chapter 2), were to unify
the standards by which agreements to arbitrate are observed internationallyand to
unify the standards by whicharbitral awards are enforced in the signatory countries.)
(quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 nn.15, 94 (U.S. S.Ct. 1974).
439) The existence of this standard, which is discussed below, is undisputed. See5.01[B][2]et
seq.
171
440) This analysis parallels that under the domestic FAA in the United States: [An arbitration
agreement] shall be valid, irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any contract. U.S. FAA, 9 U.S.C. 2. See AT&T
Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1746 (U.S. S.Ct. 2011) (under FAA 2, arbitration
agreements may be invalidated by generally applicable contract defenses,but not by
defenses that apply only to arbitration or that derive their meaning from the fact than an
agreement to arbitrate is at issue); Perry v. Thomas, 482 U.S. 483, 490 (U.S. S.Ct. 1987);
5.01[B][2].
441) See4.04[A][2][j][v]; 4.04[A][4][b].
442) See1.04[A][1]; 4.04[A][1][b].
443) Vienna Convention on the Law of Treaties, Arts. 26, 31(3) (1969); A. McNair, The Law of
Treaties 493 (1961).
444) See4.04[A][1][b].
445) That said, both French courts (applying international law) and U.S. courts (applying
federal common law) appear to have had significant success in developing common law
contract rules for international arbitration agreements. See4.04[B][3][e]; 4.04[A][4];
4.04[B][3][b]. Similarly, as noted above, arbitral tribunals (and courts) have developed
substantive rules of contract for investor-state arbitration agreements. See4.04[A][4][c].
These developments suggest that it may well be possible to develop principles of
international common law through further judicial (and arbitral) decisions, particularly in
light of the Conventions constitutional status. See1.04[A][1]. Still, the application of
such principles to subjects such as capacity, authority and illegality poses serious
challenges.
446) New York Convention, Arts. II(1), V(2)(a); 4.05[A][1]; 6.02[A].
447) See4.05[A][1]; 6.02[A].
448) See4.04[B][2][b][vi]; 4.05[A][1]; 6.02[A].
449) See19.04[A].
450) See1.02[B][6].
451) See4.04[B].
452) See19.04[C].
453) See6.01et seq.
454) See4.04[B][3][b], [d]-[e].
455) It is well-established in more general private international law contexts that a choice-of-
law agreement gives rise to conflict of laws issues and requires a particular type of
choice-of-law analysis. See Rome Convention, Art. 3(1); Rome I Regulation, Art. 3(1);
Restatement (Second) Conflict of Laws 187-88 (1971); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 32-124-25, 32-083 (15th ed. 2012). See also Wallis v.
AD Astra Recovery Servs., Inc., 2011 WL 745961, at *2 (E.D. Wis.) (applying Wisconsin conflict
of laws rules to determine whether to give effect to choice-of-law provision designating
Kansas law to govern arbitration clause); Halprin v. Verizon Wireless Servs., LLC, 2009 WL
1351456 (D.N.J.) (applying New Jersey conflict of laws rules to determine whether to give
effect to choice-of-law provision specifying Virginia law).
456) See authorities cited 4.04[A][2][e], pp. 518-20.
457) See19.01; 19.04[A].
458) See4.04[A][2][c]. Some decisions have applied cumulative choice-of-law analyses, which
consider the substantive laws selected by all potentially-applicable conflicts rules.
des Cours 9 (2001).
459) See4.04[A][2].
460) See New York Convention, Art. V(1)(a); European Convention, Art. VI(2); ICSID Convention,
Art. 42(1).
461) See4.04[A][1][b][i]; 4.04[B][2][b][i].
462) See1.01[C][1]-[2]; 4.02[A][1].
463) See4.04[A][1][a].
464) See1.01[C][2]; 4.02[A]; Geneva Convention, Art. I(a).
465) See1.04[A][1][a].
466) See1.04[A][1][c][i]; 5.01[B][2].
467) See2.01[A][1][a]; 5.04[B][1].
468) See4.04[A][1][b][i]; 5.01[B][2].
469) See4.04[A][1][b][i]; 9.05[A].
470) See1.04[A][1][c]; 4.04[A][1][b][i].
471) See1.04[A][1][c].
472) See4.04[A][1][b][i], p. 495; 19.04[A][6][d], pp. 2687-88.
473) See4.04[B][3]; 5.01[B][2].
474) See4.04[B][3].
475) See4.04[A][1][b][i].
476) See4.04[A][1][b][i] & [iii].
477) See4.04[A][1][b][v]; 4.04[A][3].
478) New York Convention, Art. V(1)(a) (emphasis added). See Nacimiento, in H. Kronke et al.
the New York Convention 205 (2010); Schramm, Geisinger & Pinsolle, Article II, in H. Kronke
et al. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary
on the New York Convention 37, 54 (2010); A. van den Berg, The New York Arbitration
Article V(1)(a)).
172
et seq. (5th ed. 2009) (under the New York Convention, an arbitration agreement is valid
if it is judged to be so either by the law chosen by the parties to govern that agreement
or, failing any such choice, by the law of the place of the arbitration); Nacimiento, Article
V(1)(a), in H. Kronke et al. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A
Global Commentary on the New York Convention 205, 223 (2010) (Article V(1)(a)explicitly
gives precedence to the parties choice of law for the arbitration agreement.); Patocchi
& Jermini, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 194, 68
(2000); Schramm, Geisinger & Pinsolle, Article II, in H. Kronke et al. (eds.), Recognition and
Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention
37, 54 (2010); A. van den Berg, The New York Arbitration Convention of 1958 267 (1981).
480) See, e.g., Four Seasons Hotels & Resorts, BV v. Consorcio Barr SA, 377 F.3d 1164, 1171 (11th
Cir. 2004); Yukos Capital SARL v. OAO Samaraneftegaz, 2012 WL 3055863, at *3 (S.D.N.Y.);
Changzhou AMEC E. Tools & Equip. Co. v. E. Tools & Equip., Inc., 2012 WL 3106620, at *9-10
(C.D. Cal.); Encyclopaedia Universalis, SA v. Encyclopaedia Britannica, Inc., 2003 WL
22881820, at *6 (S.D.N.Y.), affd in relevant part, 403 F.3d 85 (2d Cir. 2005); Henry v. Murphy,
2002 WL 24307, at *3 (S.D.N.Y.); Overseas Cosmos, Inc. v. NR Vessel Corp., 1997 WL 757041, at
*3 (S.D.N.Y.). See also 4.03[A][2]; 26.05[C][1][e][i].
481) See4.04[A][1][b][iv].
482) See4.04[A][2][e].
483) See4.04[B][3][a]-[e].
484) See Adolphsen, in T. Rauscher, P. Wax & J. Wenzel (eds.), Mnchener Kommentar
Zivilprozessordnung Art. V, 22 (3d ed. 2008); Hass, Convention on Recognition and
Enforcement of Foreign Arbitral Awards, New York 1958, in F.-B. Weigand (ed.), Practitioners
Handbook on International Arbitration Art. V, 18 (2002); Nacimiento, Article V(1)(a), in H.
Kronke et al. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global
Commentary on the New York Convention 205, 224 (2010).
485) See19.04[E][1].
486) Contrary commentary is unreasoned and unpersuasive. See A. van den Berg, The New York
487) See4.04[A][1][b][v]; Rhone Mediterranee v. Lauro, 712 F.2d 50, 52-54 (3d Cir. 1983) (Italian
law, applicable to underlying contract, not applied to invalidate arbitration agreement);
Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir. 1982) (Puerto Rican law,
applicable to underlying contract, not applied to invalidate arbitration agreement);
Farrell v. Subway Intl, BV, 2011 WL 1085017 (S.D.N.Y.); Apple & Eve, LLC v. Yantai N. Andre
Juice Co., 499 F.Supp.2d 245, 251 (E.D.N.Y. 2007) (compelling arbitration in China despite
inability to determine whether Chinese courts would enforce arbitration agreement,
noting that court could identify no United States federal cases where a court has
applied the laws of a foreign country and declared that an arbitration clause would be
invalid under that countrys law), vacated on other grounds, 610 F.Supp.2d 226, 231
(E.D.N.Y. 2009).
488) See4.04[B][2][b][ii]; 5.02[A][2][e].
489) See4.04[A][1][b][iii].
490) See authorities cited 4.04[A][1][b][iii], pp. 496-97.
491) See4.04[A][1][b][iii]. In any event, this issue should be of limited importance where
parties have made a choice of law governing their arbitration agreement because Article
V(1)(a) parallels the similar recognition of the parties autonomy in Article II(1). See
4.04[B][1][b]. Different considerations apply where the parties have not made a choice-
of-law agreement. See4.04[B][2][b][i]et seq. See also Schramm, Geisinger & Pinsolle,
Article V(1)(a), in H. Kronke et al. (eds.), Recognition and Enforcement of Foreign Arbitral
Awards: A Global Commentary on the New York Convention 37, 56 (2010).
492) See26.05[C][1][d].
493) See4.04[A][1][b][v]; 26.05[C][1][d].
494) As noted above, this is confirmed by Article VII(1) of the Convention. See4.04[A][1][b][v],p.
502.
495) Restatement (Second) Conflict of Laws 186-88; Rome I Regulation, Art. 10(1) (The
existence and validity of a contract, or of any term of a contract, shall be determined by
the law which would govern it under this Regulation if the contract or term were valid.),
Art. 10(2) (Nevertheless, a party, in order to establish that he did not consent, may rely
upon the law of the country in which he has his habitual residence if it appears from the
circumstances that it would not be reasonable to determine the effect of his conduct in
accordance with the law specified in paragraph 1.); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 834-40 (15th ed. 2012); Permanent Bureau, Hague
Conference on Private International Law, Consolidated Version of Preparatory Work
Leading to the Draft Hague Principles on the Choice of Law in International Contracts Art. 5
(2012) ((1) The consent of the parties as to a choice of law is determined by the law that
would apply if such consent existed. (2) Nevertheless, to establish that a party did not
consent to the choice of law, it may rely on the State where it has its place of business, if
under the circumstances it is not reasonable to determine that issue according to the law
specified in the preceding paragraph.).
173
496) See, e.g., Restatement (Third) U.S. Law of International Commercial Arbitration 4-12,
comment c (Tentative Draft No. 2 2012) (In cases in which a partys assent to the main
contract is challenged, using the law specified in a choice-of-law clause in the contract or
the law of the arbitral seat would be bootstrapping giving effect to a contract
provision when the partys assent to that contract provision is at issue.).
497) In virtually all private international law contexts, including in the selection of the
substantive law applicable to an underlying contract and the procedural law of the
arbitration, the parties autonomy is subject to constraints. See11.03[E][1]; 11.05[B];
19.03[B]; Restatement (Second) Conflict of Laws 187(2) (1971); Rome Convention, Arts. 3(3),
5(2), 6(1), 7; Rome I Regulation, Arts. 3(3), 9; G. Born & P. Rutledge, International Civil
Litigation in United States Courts 758-60 (5th ed. 2011); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 16-018 (15th ed. 2012). In particular, as discussed
below, the parties choice-of-law agreements are generally subject to constraints
imposed by public policy and mandatory laws. See19.03[B][6]. These same types of
constraints are, in principle, equally applicable to the parties autonomy to select the
law governing their international arbitration agreements.
498) See6.02[A]. Specifically, Article V(2)(a) provides that an award need not be recognized if
[t]he subject matter of the difference is not capable of settlement by arbitration under
the law of that country. New York Convention, Art. V(2)(a).
499) New York Convention, Art. II(1). See6.02[A].
500) Article V(2)(a) does so by allowing Contracting States to refuse recognition of awards
concerning certain non-arbitrable subjects, notwithstanding the fact that the parties
agreement to arbitrate such matters would be valid under the law which they selected to
govern their agreement.
501) See4.05[C][5]; 6.02[H].
502) See5.06[B][1].
503) European Convention, Art. VI(2). For commentary, see Hascher, European Convention on
International Commercial Arbitration 1961: Commentary, XX Y.B. Comm. Arb. 1006, 1027-28
(1995); 1.04[A][2]; 4.02[A][1].
504) See4.04[B][3][b], [d]-[e].
505) See4.02[A][2][a].
506) See1.04[B][1][a]; 5.04[B][2].
507) See2.01[A][2]; 5.06[C].
508) As discussed below, Article 8(1) is expressed in mandatory terms: A courtshallrefer
the parties to arbitration unless UNCITRAL Model Law, Art. 8(1). See8.03[B][1], p. 1273.
509) UNCITRAL Model Law, Arts. 34(2)(a)(i), 36(1)(a)(i). See P. Binder, International Commercial
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 7-004, 8-021 (3d ed.
Commercial Arbitration: Legislative History and Commentary 915-16, 1058-59 (1989).
510) See4.02[A][2][a].
511) See4.02[A][2][a]; 4.04[B]; 12.01[C]; 12.04[A][4]; 15.02[B]; 15.04[B]; 25.03[A]; 26.05[B].
512) See4.02[A][2][a].
513) See, e.g.,Judgment of 17 September 1998, XXIVa Y.B. Comm. Arb. 645, 646 (Bayerisches
Oberstes Landesgericht) (1999) (arbitration agreement is not invalid according to English
law, on which the parties agreed); W. Grain Cleaning & Processing v. Lashburn AG Ventures
Ltd, [2003] SKCA 60, 8 (Saskatchewan Ct. App.) (In this jurisdiction the first stepis to
ascertain if there has been a choice of law by the parties. This, if contractually binding
between the parties, is respected by the Court.); Citation Infowares Ltd v. Equinox Corp.,
(2009) 7 SCC 220, 15 (Indian S.Ct.) (parties have freedom to choosesubstantive law of
arbitration agreement as well as the procedural law governing the conduct of the
arbitration); Natl Thermal Power Corp. v. Singer Co., XVIII Y.B. Comm. Arb. 403, 406
(Indian S.Ct. 1992) (1993) (The parties have the freedom to choose the law governing an
international commercial arbitration agreementas well as the procedural law governing
the conduct of the arbitration.); Nirma Ltd v. Lurgi Energie und Entsorgung GmbH, XXVIII
Y.B. Comm. Arb. 790, 803 (Gujarat High Ct. 2002) (2003); Recyclers of Australia Pty Ltd v.
Hettinga Equip. Inc., [2000] 175 ALR 725 (Australian Fed. Ct.) (applying Iowa law, selected
by choice-of-law clause in underlying contract, to validity of arbitration clause).
514) XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500, 506 (QB) (English High Ct.). See also
AES Ust-Kamenogorsk Hydropower Plant LLC v. Ust-Kamenogorsk Hydropower Plant JSC
[2011] EWCA Civ 647, 189 (English Ct. App.) ([T]he parties autonomy in choosing an
English law arbitration agreement would, on English conflict of laws principles, prevail.);
Naviera Amazonica Peruana SA v. Compania Internacional de Seguros del Peru [1988] 1
Lloyds Rep. 116 (English Ct. App.).
515) Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, (Canadian S.Ct.).
516) For a decision applying the law chosen to govern the underlying contract to the
arbitration clause, see Aloe Vera of Am., Inc. v. Asianic Food (S) Pte Ltd, [2006] 3 SLR 174,
61 (Singapore High Ct.).
517) See4.04[B][3][c]-[e]; Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach
Adopted by the English Courts With Respect to the Proper Law of the Arbitration Agreement,
29 Arb. Intl 115 (2013).
518) See4.04[A][1][b].
519) See1.04[B][1][a].
520) See4.04[A][2][j].
521) See4.04[A][2][j][i], pp. 529-30.
174
522) The text of the FAA does not itself address the question of the law governing an
523) Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468, 470, 479 (U.S. S.Ct. 1989). The Volt
decision arose from a domestic case which involved the question whether the parties
choice-of-law clause, selecting California law, applied to issues relating to enforcement
of the parties arbitration agreement (specifically, the applicability of a California state
law provision permitting the stay of arbitral proceedings). Volt Info., 489 U.S. at 470-73.
Nonetheless, the Courts opinion more broadly addressed in dicta the autonomy of the
parties to select the law governing an arbitration agreement.
524) Coastal Caisson Corp. v. E.E. Cruz/NAB/Frontier-Kemper, 2007 WL 2285936, at *4 (S.D.N.Y.),
revd in part on other grounds, 346 F.Appx. 717, 720 (2d Cir. 2009).
525) Restatement (Second) Conflict of Laws 218, comment b (1971). As discussed below, 187
imposes limited public policy constraints on choice-of-law agreements. See4.04[B][7].
526) See CompuCredit Corp. v. Greenwood, 132 S.Ct. 665, 670-72 (U.S. S.Ct. 2012); Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (U.S. S.Ct. 1991); Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (U.S. S.Ct. 1985) (Having made the bargain
to arbitrate, the party should be held to it unless Congress itself has evinced an intention
to preclude a waiver of judicial remedies for the statutory rights at issue.); Meyer v. T-
Mobile U.S.A. Inc., 836 F.Supp.2d 994, 1004-05 (N.D. Cal. 2011); Will v. Parsons Evergreene,
LLC, 2008 WL 5330681, at *5 (D. Colo.); Wells v. Mobile County Bd of Realtors, Inc., 387 So.2d
140 (Ala. 1980). See4.04[A][2][j].
527) See, e.g., Telenor Mobile Commcns AS v. Storm LLC, 584 F.3d 396, 411 n.11 (2d Cir. 2009)
(giving effect to parties agreement that their contract would be governed by New York
law without giving effect to any conflicts of laws principleswhich would result in the
application of the laws of another jurisdiction); Motorola Credit Corp. v. Uzan, 388 F.3d 39,
51 (2d Cir. 2004) (with respect to interpretation of arbitration agreement, respecting the
parties choice-of-law is fully consistent with the purposes of the FAA); Intl Minerals &
Res., SA v. Pappas, 96 F.3d 586, 592 (2d Cir. 1996); Batson Yarn & Fabrics Mach. Group, Inc. v.
Saurer-Allma GmbH-Allgauer Maschinenbau, 311 F.Supp. 68, 77 (D.S.C. 1970) (There can be
no dispute that parties are free to select the applicable law governing rights created by
an arbitration agreement and the Court will give effect to such selection.); Necchi Sewing
Mach. Sales Corp. v. Carl, 260 F.Supp. 665, 667 (S.D.N.Y. 1966) (as a general proposition
parties are free to select the applicable law governing rights created by an arbitration
agreement); Kamaya Co. v. Am. Prop. Consultants, Ltd, 959 P.2d 1140, 1142 (Wash. Ct. App.
1998) (Although the FAA governs whether the parties agreed to arbitrate a particular
contractual dispute, the contracts choice-of-law provision is a pertinent factor that
courts must consider in applying the FAA.).
528) Mayakan v. Carnival Corp., 721 F.Supp.2d 1201, 1203 n.5 (M.D. Fla. 2010).
529) See4.04[A][2][j][iv]; Rhone Mediterranee v. Lauro, 712 F.2d 50, 52-54 (3d Cir. 1983) (Italian
law, applicable to underlying contract, not applied to invalidate arbitration agreement);
applicable to contract, not applied to invalidate arbitration agreement); Farrell v.
Subway Intl, BV, 2011 WL 1085017 (S.D.N.Y.) (refusing to apply choice-of-law provision
where doing so would invalidate agreements choice-of-forum provision); Apple & Eve, LLC
v. Yantai N. Andre Juice Co., 499 F.Supp.2d 245, 251 (E.D.N.Y. 2007) (compelling arbitration
in China despite inability to determine whether Chinese courts would enforce arbitration
agreement), vacated on other grounds, 610 F.Supp.2d 226, 231 (E.D.N.Y. 2009); Acosta v.
Norwegian Cruise Line, Ltd, 303 F.Supp.2d 1327 (S.D. Fla. 2003); Marchetto v. DeKalb
Genetics Corp., 711 F.Supp. 936, 938 (N.D. Ill. 1989) (refusing to deny effect to arbitration
clause allegedly invalid under law of foreign arbitral seat: underlying the Supreme
Courts willingness to enforce arbitration agreements is the assumption that signatory
nations to the Convention will honor arbitration agreements and reject challenges to
arbitration based on legal principles unique to the signatory nation).
530) The interpretation of choice-of-law clauses, including a choice-of-law clause in the
parties underlying contract that applies to the arbitration agreement, is discussed
below. See19.04.
175
531) See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct.
1985); Cape Flattery Ltd v. Titan Maritime, LLC, 647 F.3d 914, 921 (9th Cir. 2011) (We
therefore concludethat courts should apply federal arbitrability law absent clear and
unmistakable evidence that the parties agreed to apply non-federal arbitrability law.);
Ario v. Underwriting Members of Syndicate 53 at Lloyds, 618 F.3d 277, 288 (3d Cir. 2010)
(though the FAA allows parties to choose state-law arbitration standards, they cannot
opt out of the FAA); Bridas SAPIC v. Govt of Turkmenistan, 447 F.3d 411 (5th Cir. 2006);
Intl Paper Co. v. Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417 n.4 (4th Cir.
2000) (FAA and New York Convention create a body of federal substantive law of
arbitrability, applicable to any arbitration agreement within the coverage of the Act.
Because the determination of whethera nonsignatory[] is bound by the [contract]
presents no state law question of contract formation or validity, we look to the federal
substantive law of arbitrability to resolve this question.) (quoting Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (U.S. S.Ct. 1985); Smith/Enron
Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 96 (2d Cir. 1999); Campaniello
Imps., Ltd v. Saporiti Italia SpA, 117 F.3d 655 (2d Cir. 1997); Thomson-CSF v. Am. Arbitration
Assn, 64 F.3d 773 (2d Cir. 1995); FR 8 Singapore Pte Ltd v. Albacore Maritime Inc., 794
F.Supp.2d 449 (S.D.N.Y. 2011); Masefield AG v. Colonial Oil Indus., Inc., 2005 WL 911770
(S.D.N.Y.). See also Repub. of Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334 (S.D.N.Y.
2005), revd on other grounds, 638 F.3d 384, 391 n.6 (2d Cir. 2011).
A number of decisions arise in non-signatory contexts, involving issues of alter ego status,
estoppel, agency and the like. See4.08; 19.04[C]. Other U.S. lower court decisions apply
federal common law rules to the validity of international arbitration agreements.
See4.04[A][2][j][ii].
532) AES Ust-Kamenogorsk Hydropower Plant LLC v. Ust-Kamenogorsk Hydropower Plant JSC
[2011] EWCA Civ 647, 189 (English Ct. App.); Peterson Farms Inc. v. C&M Farming Ltd [2004]
1 Lloyds Rep. 603 (QB) (English High Ct.); XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep.
500, 506 (QB) (English High Ct.); R. Merkin, Arbitration Law 7.8 (1991 & Update August
2013) (an express termwill be regarded as conclusive even if the nominated law has no
connection with the underlying contract to which it relates, given the divisibility of the
arbitration agreement and the underlying contract); D. Sutton, J. Gill & M. Gearing,
Russell on Arbitration 2-094 (23d ed. 2007).
533) Union of India v. McDonnell Douglas Corp. [1993] 2 Lloyds Rep. 48, 50 (QB) (English High
Ct.) (emphasis added). Compare Channel Tunnel Group Ltd v. Balfour Beatty Constr. Ltd
[1992] 2 Lloyds Rep. 7, 15 (English Ct. App.) (5(2)(b) of English Arbitration Act, 1975
[replaced by 103(2)(b) of Arbitration Act, 1996], suggeststhat the validity of an
arbitration agreement is governed by the law which the parties have chosen).
534) AES Ust-Kamenogorsk Hydropower Plant LLC v. Ust-Kamenogorsk Hydropower Plant JSC
[2011] EWCA Civ 647, 189 (English Ct. App.) (In any event the parties autonomy in
choosing an English law arbitration agreement would, on English conflict of laws
principles, prevail.); Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyds Rep. 603
(QB) (English High Ct.) (parties agreed to Arkansas law to govern their contract and
arbitration agreement; tribunal was bound to apply that law); XL Ins. Ltd v. Owens Corning
[2000] 2 Lloyds Rep. 500, 506 (QB) (English High Ct.).
(English Ct. App.) (emphasis added).
536) L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 16-017 (15th ed.
2012); R. Merkin, Arbitration Law 7.8 to 7.12 (1991 & Update August 2013). See alsoEnglish
Arbitration Act, 1996, 103(2) (Recognition or enforcement of the award may be refused if
the person against whom it is invoked provesthat the arbitration agreement was not
valid under the law to which the parties subjected it.) (emphasis added); D. Sutton, J. Gill
& M. Gearing, Russell on Arbitration 2-094 (23d ed. 2007).
537) See Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted by the
English Courts With Respect to the Proper Law of the Arbitration Agreement, 29 Arb. Intl 115,
125 (2013) (A review of the case law shows that the courts have applied the law expressly
chosen by the parties to govern the underlying contract to the arbitration agreement
unless such application would lead to its invalidity.).
538) Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 215 (House of Lords). See19.04[A][6][d].
539) Swiss Law on Private International Law, Art. 178(2) (emphasis added). Swiss courts have
given effect to the general affirmation of the parties autonomy in Article 178(2). See,
e.g.,Judgment of 16 October 2003, 22 ASA Bull. 364, 387 (Swiss Federal Tribunal) (2004).
540) B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 374-77
(2d ed. 2010); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitrage interne et
international en Suisse Art. 178, 15 (1989); J.-F. Poudret & S. Besson, Comparative Law of
International Arbitration 300 (2d ed. 2007); Wenger, in S. Berti et al. (eds.), International
Arbitration in Switzerland Art. 178, 22, 25 (2000) (The PILS emphasizes the importance
of party autonomy by naming first the law chosen by the parties.) (emphasis in original).
541) See4.04[B][5].
176
ed. 2010); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitrage interne et
international en Suisse Art. 178, 15 (1989); Wenger, in S. Berti et al. (eds.), International
Arbitration in Switzerland Art. 178, 25-27 (2000) (If the agreement to arbitrate is valid
under Swiss law, it can therefore still be upheld even if it were invalid under the law
explicitly chosen by the parties.).
543) See, e.g., Judgment of 7 May 1963, Ets Raymond Gosset v. Carapelli, JCP G 1963, II, 13, 405
(French Cour de cassation civ. 1e) (upholding autonomy of arbitration clause); Judgment of
21 October 1983, Isover-Saint-Gobain v. Dow Chem. France, 1984 Rev. arb. 98, 100 (Paris
Cour dappel) (law applicable to the determination of the scope and the effects of the
arbitration clausedoes not necessarily coincide with the law applicable to the
substance of the dispute); Judgment of 25 January 1972, Quijano Aguero v. Marcel Laporte,
1973 Rev. arb. 158, 159 (Paris Cour dappel) (performance [of the arbitration agreement] is
not necessarily governed by the law governing [the underlying contract]).
544) See7.03[B]; Judgment of 30 March 2004, Socit Uni-Kod v. Socit Ouralkali, 2005 Rev.
arb. 959 (French Cour de cassation civ. 1e); Judgment of 20 December 1993, Municipalit de
Khoms El Mergeb v. Socit Dalico, 1994 Rev. arb. 116, 117 (French Cour de cassation civ. 1e)
(according to a substantive rule of international arbitration law, the arbitration clause is
legally independent from the main contract in which it is included or which refers to it
and, provided that no mandatory provision of French law or international public policy
(ordre public) is affected, that its existence and its validity depends only on the common
intention of the parties, without it being necessary to make reference to a national law);
J.-L. Delvolv, J. Rouche & G. Pointon, French Arbitration Law and Practice 91 (2003); J.-F.
Poudret & S. Besson, Comparative Law of International Arbitration 180 (2d ed. 2007).
545) Judgment of 31 May 2001, UNI-KOD sarl v. Ouralkali, XXVI Y.B. Comm. Arb. 1136, 1139 (Paris
Cour dappel) (2001), affd, Judgment of 30 March 2004, 2004 Rev. arb. 723 (French Cour de
cassation civ. 1e).
546) See3.02[B][3][d]; 4.04[A][4][a].
547) See4.02[A][2][b]-[d]; 4.04[A][3].
548) See4.04[A][3]-[4].
549) Swedish Arbitration Act, 1999, 48.
550) Scottish Arbitration Act, 2010, 6 (Wherethe parties to an arbitration agreement agree
that an arbitration under that agreement is to be seated in Scotland, butthe arbitration
agreement does not specify the law which is to govern it, then, unless the parties
otherwise agree, the arbitration agreement is to be governed by Scots law.).
551) Chinese Supreme Peoples Court, Judicial Interpretation on Several Issues in Applying the
Arbitration Law of the PRC (26 December 2005), [2006] Fa Shi No. 7. See, e.g., Davis Standard
Corp. v. Ningbo Elec. Co. Ltd, [2004] Minsi Tazi No. 13 (Chinese Zuigao Fayuan), discussed in
Weidong, Law Applicable to Arbitration Agreements in China, XI Y.B. Private Intl L. 255, 260-
61 (2009).
552) Weidong, Law Applicable to Arbitration Agreements in China, XI Y.B. Private Intl L. 255, 258
(2009). See, e.g., Nantong Gangzha Shipbldg Factory (China) v. IHDA Shipbldg Servs. BV
(Netherlands), [2006] Wuhai Fashangzi No. 81 (Chinese Zuigao Fayuan), discussed in
Weidong, Law Applicable to Arbitration Agreements in China, XI Y.B. Private Intl L. 258
(2009).
553) Permanent Bureau, Hague Conference on Private International Law, Consolidated Version
of Preparatory Work Leading to the Draft Hague Principles on the Choice of Law in
International Contracts, Preamble, 1 (2012) (These Principles set forth general rules
concerning choice of law in international commercial contracts. They affirm the principle
of party autonomy with limited exceptions). See also id. at Art. 2(1), comment (a) (The
Working Group unanimously considered that the primary role given to party autonomy in
the draft Hague Principles is in line with the widely accepted approach to the choice of
law in international commercial contracts around the world.).
International Contracts, Art. 1(3) (2012) (Hague Principles do not apply to arbitration
agreements).
555) Spanish Arbitration Act, 1988, Art. 61 (repealed). Compare Donovan, International
Commercial Arbitration and Public Policy, 27 N.Y.U. J. Intl L. & Pol. 645, 651 (1995) (At least
where the law chosen has some connection to the dispute and does not yield a result that
violates the fundamental public policy of the forum, courts will generally apply the
parties chosen law even though the forum would otherwise have jurisdiction to prescribe
rules governing the commercial relationships at issue.).
556) Spanish Arbitration Act, 2011, Art. 9(6). SeeSpanish Arbitration Act, 2011, Preamble III
(under revised Spanish Act, the arbitration agreement will be valid if it is governed by
any of the three legal regimes indicated in Article 9(6): the law chosen by the parties, the
law applicable to the substance of the dispute or Spanish law); Judgment of 23 July 2001,
XXXI Y.B. Comm. Arb. 825, 831 (Spanish Tribunal Supremo) (2006) (there is here a clear
submission to the substantive law of the specific AAA Rules and the laws of the State of
New York); Mantilla-Serrano, The New Spanish Arbitration Act, 21 J. Intl Arb. 367, 371 (2004)
(In international arbitration, the principle in favorem validitatis finds its fullest
expression in Article 9.6, which turns to the most favorable choice of law for establishing
validity of the arbitration agreement and arbitrability of the dispute.).
557) Turkish International Arbitration Law, Art. 4.
177
558) See11.05[G].
559) That is true of the ICC, ICDR, JCAA, HKIAC, SIAC, SCC and VIAC Rules. It is possible to
interpret the provisions of many institutional rules, governing the choice of law
applicable to the substance of the parties dispute, as extending to the law governing an
arbitration agreement. See, e.g., 2010 UNCITRAL Rules, Art. 35; 2012 ICC Rules, Art. 21; ICDR
Rules, Art. 28; 2012 Swiss Rules, Art. 33; 2013 HKIAC Rules, Art. 35(1); 2012 PCA Rules, Art.
35(1); 2010 SCC Rules, Art. 22; 2013 VIAC Rules, Art. 27. Nonetheless, this is not the most
straightforward reading of such provisions and has not attracted substantial attention in
practice.
560) WIPO Rules, Art. 59(c). See also 2012 CIETAC Rules, Art 5(3) (Where the law as it applies to
an arbitration agreement has different provisions as to the form and validity of the
arbitration agreement, those provisions shall prevail.).
561) See, e.g., 2012 LMAA Terms, Art. 6(a), (b) (In the absence of any agreement to the contrary
the partiesagree: (a) that the law applicable to their arbitration agreement is English;
and (b) that the seat of the arbitration is in England.); Award in Amsterdam Grain Trade
Association Case of 11 January 1982, VIII Y.B. Comm. Arb. 158, 160 (1983) (Article 16 of
Association of Dutch Producers of Edible Oils and Fats (VERNOF) conditions stipulated
that Dutch law applied to all sales contracts on VERNOF standard terms); Kulberg Fins.
Inc. v. Spark Trading DMCC, 628 F.Supp.2d 510, 514 (S.D.N.Y. 2009) (form contract of Grain
and Feed Trade Association (GAFTA) provides that contract shall be deemed to have
been made in England and to be performed in England,[and] shall be construed and
take effect in accordance with the laws of England.).
562) See, e.g., Award in ICC Case No. 10579, discussed in Grigera Nan, Choice-of-Law Problems
in International Commercial Arbitration, 289 Recueil des Cours 9, 45-46 (2001); Final Award
in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37, 38 (1998) (applying choice-of-law clause in
underlying contract to arbitration agreement); Final Award in ICC Case No. 6379, XVII Y.B.
Comm. Arb. 212, 215 (1992); Final Award in ICC Case No. 6363, XVII Y.B. Comm. Arb. 186 (1992);
Interim Award in ICC Case No. 4695, XI Y.B. Comm. Arb. 149 (1986); Award in ICC Case No.
4504, 113 J.D.I. (Clunet) 1118 (1986) (arbitration agreement was, as a result of parties
choice of law, subject to law different from that of underlying contract); Award in ICC Case
No. 4381, 113 J.D.I. (Clunet) 1102, 1103 (1986); Interim Award in ICC Case No. 4131, IX Y.B.
Comm. Arb. 131, 133 et seq. (1984); Final Award in ICC Case No. 3572, XIV Y.B. Comm. Arb. 111,
115 (1989).
563) Award in ICC Case No. 11869, XXXVI Y.B. Comm. Arb. 47, 51-52 (2011).
564) See4.04[A].
Enforcing 160 (4th ed. 2013). See also Brown, Choice of Law Provisions in Concession and
Related Contracts, 39 Modern L.R. 625, 638 (1976); P. Friedland, Arbitration Clauses for
International Contracts 183-84 (2d ed. 2007); Jaffey, Limitations in Choice of Law Provisions
A Comment, 40 Modern L.R. 440 (1977); J. Paulsson, N. Rawding & L. Reed, The Freshfields
Guide to Arbitration and ADR: Clauses in International Contracts 11-12 (3d ed. 2011).
566) See, e.g.,Award in ICC Case No. 11869, XXXVI Y.B. Comm. Arb. 47, 51-52 (2011) (applying
parties choice of English law to both underlying contract and arbitration agreement,
where choice-of-law clause followed immediately after arbitration clause); Award in ICC
Case No. 10579, discussed in Grigera Nan, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 45-46 (2001) (alternative holding that
choice-of-law clause in underlying contract applies to arbitration agreement); Final
Award in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37, 38 (1998) (applying choice-of-law
clause in underlying contract to arbitration agreement); Final Award in ICC Case No. 6379,
XVII Y.B. Comm. Arb. 212, 215 (1992) (applying law governing underlying contract, not law of
arbitral seat, to arbitration clause); Final Award in ICC Case No. 3572, XIV Y.B. Comm. Arb.
111, 115 (1989) (concluding that law applicable to underlying contract also governed
arbitration clause).
567) Final Award in ICC Case No. 6840, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.), Collection
of ICC Arbitral Awards 1991-1995 467, 469 (1997).
706 (Hague Gerechtshof) (1994) (emphasis added).
569) See, e.g.,Judgment of 12 February 1976, II Y.B. Comm. Arb. 242 (German Bundesgerichtshof)
(1977) (assuming without analysis that law of underlying contract governed arbitration
clause); Judgment of 7 April 1989, 1990 RIW 585, 586 (Oberlandesgericht Mnchen) (same).
Compare Judgment of 8 July 2003, DFT 129 III 675, 679 (Swiss Federal Tribunal) ([A]ccording
to Article 178(2) [of the Swiss Law on Private International Law], the arbitration agreement
is valid provided it conforms to the law chosen by the parties, to the law applicable to
the dispute, in particular, that applicable to the principal contract, or to Swiss law. The
first alternative comes into play only if the parties have chosen a law for their arbitration
agreement deviating from the law applicable to the principal contract. Since this is not
true in the present case and the principal contract according to the choice of law by the
parties is subject to Swiss law, the latter applies with regard to the validity of the
arbitration agreement.).
570) Judgment of 28 August 2007, 1991 Hanrei Jiho No. 89 (Tokyo Chiho Saibansho).
178
571) See, e.g., Telenor Mobile Commcns AS v. Storm LLC, 584 F.3d 396 (2d Cir. 2009) (applying
parties chosen law of underlying contract to arbitration agreement); Motorola Credit
Corp. v. Uzan, 388 F.3d 39 (2d Cir. 2004) (same); FR 8 Singapore Pte Ltd v. Albacore Maritime
Inc., 794 F.Supp.2d 449, 458 (S.D.N.Y. 2011) (The tenuous connections to the United States
in this case make it unlikely that the [contract] signatories viewed the federal common
law of this country as the background principle that would govern their corporate
separateness; it seems much more likely that the English choice-of-law evinces an
understanding that the English idea of corporate separateness would serve as the
relevant background principle.); CCP Sys. AG v. Samsung Elecs. Corp., 2010 WL 2546074
(D.N.J.) (applying parties chosen law of underlying contract to question of whether non-
signatories were bound by arbitration agreement); Aastha Broadcasting Network v.
Thaicom Public Co., [2011] O.M.P. 528/2011, 31 (Delhi High Ct.) (Where the proper law of
contract is expressly chosen by the parties, such law must, in the absence of an
unmistakable intention to the contrary, govern the arbitration agreement.); Recyclers of
Australia Pty Ltd v. Hettinga Equip. Inc., [2000] 175 ALR 725 (Australian Fed. Ct.) (applying
Iowa law, selected by choice-of-law clause in underlying contract, to validity of
arbitration clause). See also R. Merkin, Arbitration Law 7.12 (1991 & Update August 2013)
(choice-of-law clause for the entire agreement [i.e., including the underlying contract] is
likely to be construed as expanding to the arbitration clause).
572) See4.04[B][6][b].
573) Svenska Petroleum Exploration AB v. Lithuania [2005] EWHC 2437, 76 (Comm) (English
High Ct.). See also Tonicstar Ltd v. Am. Home Assur. Co. [2004] EWHC 1234, 11 (Comm)
(English High Ct.) ([I]t seems to me clear that the proper law of the whole contract is
English law.I do not consider that the applicable law of the arbitration agreement is
different from the applicable law of the reinsurance contract into which it has been
incorporated.); Sonatrach Petroleum Corp. (BVI) v. Ferrell Intl Ltd [2002] 1 All ER (Comm)
627, 32 (Comm) (English High Ct.) (Where the substantive contract contains an express
choice of law, but the agreement to arbitrate contains no separate express choice of law,
the latter agreement will normally be governed by the body of law expressly chosen to
govern the substantive contract.); Union of India v. McDonnell Douglas Corp. [1993] 2
Lloyds Rep. 48, 50 (QB) (English High Ct.) (it is my view that by art. 11 the chosen parties
have chosen the law of India not only to govern the rights and obligations arising out of
their commercial bargain but also the rights and obligations arising out of their
agreement to arbitrate).
574) Natl Thermal Power Corp. v. Singer Co., XVIII Y.B. Comm. Arb. 403, 406-07 (Indian S.Ct.
1992) (1993). See also M/S Indtel Tech. Servs. Pvt. Ltd v. W.S. Atkins Rail Ltd, (2008) 10 SCC
308, 24 (Indian S.Ct.) (it is fairly well-settled that when an arbitration agreement is
silent as to the law and procedure to be followed in implementing the arbitration
agreement, the law governing the said agreement would ordinarily be the same as the
law governing the contract itself).
(5th ed. 2009) (Since the arbitration clause is only one of many clauses in a contract, it
would seem reasonable to assume that the law chosen by the parties to govern the
contract will also govern the arbitration clause. If the parties expressly choose a
particular law to govern their agreement, why should some other law which the parties
have not chosen be applied to one of the clauses in the agreement, simply because it
happens to be the arbitration clause?); M. Bhler & T. Webster, Handbook of ICC
Arbitration: Commentary, Precedents, Materials 78 (2d ed. 2008) (strong tendency to
assume that the choice-of-law made by the parties [for the underlying contract] is
equally applicable to the arbitration agreement); Nacimiento, Article V(1)(a), in H. Kronke
on the New York Convention 205, 223 (2010) (if no particular choice is made as to the
arbitration agreement, it will be presumed that the law governing the main contract
applies to the arbitration clause as well); J.-F. Poudret & S. Besson, Comparative Law of
International Arbitration 178 (2d ed. 2007) (several authors and courts presume that the
parties also intended to submit the arbitration agreement to the law chosen for the
contract).
(Tentative Draft No. 2 2012) (If the parties have not agreed upon a body of law to govern
the arbitration agreement (either expressly or impliedly), a general choice-of-law clause
in the contract that includes the arbitration agreement determines the applicable law. If
the parties have not selected any law to govern the arbitration agreement or to govern
the contract generally, the law of the seat of arbitration, without resort to its choice-of-
law rules, governs the matters submitted to arbitration.). See4.04[A][1][b][iv].
577) See1.04[F][2]; 3.02[B]et seq. (especially 3.02[B][2], pp. 359-60).
578) See, e.g.,Final Award in ICC Case No. 6162, XVII Y.B. Comm. Arb. 153, 160-62 (1992) (applying
Swiss law, as law of arbitral seat, to arbitration agreement; refusing to apply substantive
law governing underlying agreement); Final Award in ICC Case No. 1507, in S. Jarvin & Y.
Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 215, 216 (1990) (applying law of
arbitral seat, rather than law selected by choice-of-law clause in underlying contract);
Judgment of 7 April 2011, 2011 Rev. arb. 747 (Paris Cour dappel); Judgment of 27 October
2000, Bulgarian Foreign Trade Bank, Ltd v. A.I. Trade Fin., Inc., XXVI Y.B. Comm. Arb. 291
(Swedish S.Ct.) (2001).
179
579) See, e.g., Rhone Mediterranee v. Lauro, 712 F.2d 50, 52-54 (3d Cir. 1983) (Italian law,
applicable to contract, not applied to invalidate arbitration agreement); Farrell v.
Subway Intl, BV, 2011 WL 1085017 (S.D.N.Y.) (refusing to apply choice-of-law provision
where doing so would invalidate arbitration agreement); Westbrook Intl, LLC v. Westbrook
Techs., Inc., 17 F.Supp.2d 681, 684 (E.D. Mich. 1998) (refusing to apply general choice-of-law
clause to validity of arbitration agreement, as applied to tort claims, absent clear
statement that this was intended; application of chosen law would have invalidated
arbitration clause as applied to dispute in question); Prograph Intl, Inc. v. Barhydt, 928
F.Supp. 983, 989 (N.D. Cal. 1996); Technetronics, Inc. v. Leybold-Geaeus GmbH, 1993 WL
197028, at *6 (E.D. Pa.); W. of England Ship Owners Mut. Ins. Assn (Luxembourg) v. Am.
Marine Corp., 1992 WL 37700, at *4 (E.D. La.).
580) Final Award in ICC Case No. 7453, XXII Y.B. Comm. Arb. 107, 111 (1997).
581) See, e.g.,Award in ICC Case No. 16655, 4(2) Intl J. Arab Arb. 125, 185 (2012) (The Parties have
not expressly chosen a law governing the arbitration clause. Even if the Parties chose in
Article 19 of the Distribution Agreement French Law to govern the subject-matter of the
dispute, by virtue of a substantive rule of international arbitration, the arbitration clause
is legally independent from the main Agreement containing it (autonomy of the
arbitration clause) and French Law does not automatically apply to said arbitration
clause.); Award in ICC Case No. 4381, 113 J.D.I. (Clunet) 1102, 1104 (1986) (arbitration clause
is not subject to law governing underlying contract; validity of arbitration clause can be
determined without reference to any national law).
584) See4.04[A][2][d].
585) See, e.g., Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ
638, 29, 30 (English Ct. App.); Arsanovia Ltd v. Cruz City 1 Mauritius Holdings [2012] EWHC
3702 (Comm) (English High Ct.); XL Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500, 508
(QB) (English High Ct.) (English law governed validity of arbitration agreement providing
for London as arbitral seat, despite general choice-of-law clause selecting New York law).
586) C v. D [2007] EWCA Civ 1282, 26 (English Ct. App.). See also Trukhtanov, The Proper Law of
Arbitration Agreement A Farewell to Implied Choice?, 2012 Intl Arb. L. Rev. 140, 142 (Prior
to C v D, judicial and academic orthodoxy was that it would be exceptional for the proper
law of an arbitration agreement to differ from the law applicable to the substantive
contract, of which the former is an adjunct and part and parcel. C v D took the reverse
approach that it would be rare for the law of the (severable) arbitration agreement to be
different from the law of the seat of the arbitration.).
For an indication of the continuing difficulties encountered by English courts in dealing
with this issue, see Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012]
EWCA Civ 638, 25 (English Ct. App.) (Much attention has been paid in recent cases to the
closest and most real connection, but, for the reasons given earlier, it is important not to
overlook the question of implied choice of proper law, particularly when the parties have
expressly chosen a system of law to govern the substantive contract of which the
arbitration agreement forms part.).
587) Compare L. Collins (ed.), Dicey, Morris and Collins on The Conflict of Laws 16-017 (14th ed.
2006) (If there is an express choice of law to govern the contract as a whole, the
arbitration agreement will also be governed by that law.) (emphasis added) with L.
(If there is an express choice of law to govern the contract as a whole, the arbitration
agreement may also be governed by that law.) (emphasis added).
588) See4.04[A][3]; Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted
by the English Courts With Respect to the Proper Law of the Arbitration Agreement, 29 Arb.
Intl 115 (2013).
589) Lower courts have commented on the lack of clear authority on the issue. See, e.g., Cape
Flattery Ltd v. Titan Maritime, LLC, 647 F.3d 914, 918 (9th Cir. 2011) (Neither the Supreme
Court nor [the Ninth Circuit] has decided whether federal arbitrability law allows
contracting parties to agree to apply a non-federal law of arbitrability to interpret a
given arbitration agreement. If the parties can agree to apply a non-federal arbitrability
law, it is also undecided how courts should determine whether the parties have so
agreed.); Farrell v. Subway Intl BV, 2011 WL 1085017, at *3 (S.D.N.Y.) (noting split in
authority regarding whether to apply federal common law or parties chosen substantive
law to determine validity of arbitration agreement); FR 8 Singapore Pte Ltd v. Albacore
Maritime Inc., 754 F.Supp.2d 628, 634 (S.D.N.Y. 2010) (applying choice-of-law clause to
arbitration agreement, although [w]here the choice of law in a Convention case is
between the law specified by the choice-of-law clause and federal common law, Second
Circuit precedent has been less than crystal clear).
180
590) See4.04[A][2][j][ii]; Homa v. Am. Express Co., 558 F.3d 225, 227-32 (3d Cir. 2009); Telenor
Mobile Commcns AS v. Storm LLC, 584 F.3d 396 (2d Cir. 2009) (applying parties chosen law
to question whether signatory to arbitration agreement had apparent authority to bind
principal); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 50 (2d Cir. 2004); Sphere Drake Ins.
Ltd v. Clarendon Natl Ins. Co., 263 F.3d 26, 32 n.3 (2d Cir. 2001); Intl Minerals & Res., SA v.
Pappas, 96 F.3d 586, 592 (2d Cir. 1996); Bartlett Grain Co. v. Am. Intl Group, 2011 WL 3274388
(W.D. Mo.) (applying English law as law governing underlying insurance policy); Todd v. S.S.
Mut. Underwriting Assn, Ltd, 2011 WL 1226464, at *5 (E.D. La.); Tierra Right of Way Servs., Ltd
v. Abengoa Solar Inc., 2011 WL 2292007 (D. Ariz.) (applying law chosen by parties to govern
underlying contract (New York) to determine validity of arbitration clause); CCP Sys. AG v.
Samsung Elecs. Corp., 2010 WL 2546074, at *7-8 (D.N.J.) (applying choice-of-law clause to
arbitration agreement); FR 8 Singapore Pte Ltd v. Albacore Maritime Inc., 754 F.Supp.2d
628, 634 (S.D.N.Y. 2010); Di Martino v. Dooley, 2009 WL 27438 (S.D.N.Y.) (applying law
chosen by parties to govern underlying contract to determine whether non-signatory was
bound by arbitration agreement); Bolden v. FedEx Ground Package Sys., Inc., 60 So.3d 679,
684-85, 689 (La. Ct. App. 2011).
591) Motorola Credit, 388 F.3d at 50-51.
592) See4.04[A][2][j][ii]; In re Am. Express Fin. Advisors Sec. Litg., 672 F.3d 113, 127 (2d Cir. 2011)
(The FAA creates a body of federal substantive law of arbitrability, applicable to any
arbitration agreement within the coverage of the Act.) (quoting Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (U.S. S.Ct. 1983); Century Indem. Co. v. Certain
Underwriters at Lloyds, 584 F.3d 513, 522 (3d Cir. 2009) (The [FAA]creates a body of
federal substantive law establishing and governing the duty to honor agreements to
arbitrate disputes.); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845-46 (2d Cir. 1987)
(applying federal common law to determine whether party validly agreed to arbitration
in an agreement governed by Convention); Authenment v. Ingram Barge Co., 878 F.Supp.2d
672 (E.D. La. 2012) (despite English choice-of-law clause, courts choice-of-law analysis
resulted in application of federal maritime law to determine whether non-signatory was
bound by arbitration agreement); Changzhou AMEC E. Tools & Equip. Co. v. E. Tools &
Equip., Inc., 2012 WL 3106620 (C.D. Cal.) (noting decisions in which courts addressing law
applicable to arbitration agreement did not apply foreign choice-of-law provision);
Maritima de Ecologia, SA de CV v. Sealion Shipping Ltd, 2011 WL 1465744 (S.D.N.Y.) (despite
parties choice of English law to govern dispute, courts conflict of laws analysis resulted
in application of federal law to determine existence of a binding arbitration agreement
between parties); Powertrain Prod. Sys., LLC v. Nemak of Canada Corp., 2009 WL 3757106, at
*3 (E.D. Mich.) (issue of arbitrability must be initially addressed by looking to the federal
law of the United States (i.e., the [FAA]) even though the parties in this case agreed that
the arbitration is to be conducted in accordance with the Arbitration Act of Canada);
Storm LLC v. Telenor Mobile Commcns, 2006 WL 3735657, at *8 n.4 (S.D.N.Y.) (The weight of
the authority suggests that in [cases under the New York Convention], federal law governs
the issue of whether the parties have agreed to arbitrate.) (emphasis in original);
Borsack v. Chalk & Vermilion Fine Arts, Ltd, 974 F.Supp. 293, 299 n.5 (S.D.N.Y.1997) (where
jurisdiction is alleged under chapter 2 of the [FAA] the issue of enforceability and validity
of the arbitration clause is governed by federal law); Rhone Mediterranee v. Lauro, 555
F.Supp. 481, 484 (D.V.I. 1982) (Neither the law of a foreign country, or the law of a
particular state (or territory) can ever be chosen only federal law is controlling.), affd,
712 F.2d 50 (3d Cir. 1983).
593) Johnson v. Gruma Corp., 614 F.3d 1062, 1066 (9th Cir. 2010).
594) See, e.g., Sourcing Unlimited, Inc. v. Asimco Intl, Inc., 526 F.3d 38, 41, 46-47 (1st Cir. 2008)
(applying federal common law to determine whether non-signatory was bound by
arbitration agreement on estoppel theory); InterGen NV v. Grina, 344 F.3d 134, 143-44 (1st
Cir. 2003); Intl Paper Co. v. Schwabedissen Maschinen & Anlagen GmbH, 206 F.3d 411, 417
n.4 (4th Cir. 2000) (FAA and New York Convention create a body of federal substantive
law of arbitrability, applicable to any arbitration agreement within the coverage of the
Act. Because the determination of whethera signatory[] is bound by the [contract]
presents no state law question of contract formation or validity we look to the federal
substantive law of arbitrability to resolve this question.) (quoting Moses H. Cone
Memorial Hosp. v. Mercury Constr. Corp., 103 S.Ct. 927, 927 (U.S. S.Ct. 1983); Smith/Enron
Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d. 88, 96 (2d Cir. 1999) (applying
federal law to arbitration clause in contract containing Texas choice-of-law clause).
181
595) See, e.g., Ario v. Underwriting Members of Syndicate 53 at Lloyds, 618 F.3d 277, 289 (3d Cir.
2010) ([a]lthough Voltaddressed only the domestic FAA, the principles undergirding
those decisions apply to the [New York] Conventions implementing legislation; holding
that parties may agree to apply state law standards to international arbitration
agreement, but must use clear and unambiguous language to do so); Johnson v. Gruma
Corp., 614 F.3d 1062, 1067 (9th Cir. 2010) (where parties clearly agree to application of
state law, courts must apply state standard); Doctors Assocs., Inc. v. Distajo, 107 F.3d 126,
131 (2d Cir. 1997) (even the inclusion in the contract of a general choice-of-law clause
does not require application of state law to arbitrability issues, unless it is clear that the
parties intended state arbitration law to apply on a particular issue); Freaner v. Valle,
2011 WL 5596919, at *4 (S.D. Cal.) (refusing to apply general choice-of-law provision to
question of arbitrability without clear and unmistakable evidence of parties intent);
Volk v. X-Rite, Inc., 599 F.Supp.2d 1118, 1125 (S.D. Iowa 2009) (Agreements generic choice-
of-law provisions applying Michigan law do not displace the FAA because the parties do
not make their intent to use state arbitration law abundantly clear); Westbrook Intl,
LLC v. Westbrook Techs., Inc., 17 F.Supp.2d 681, 684 (E.D. Mich. 1998).
596) Cape Flattery Ltd v. Titan Maritime, LLC, 647 F.3d 914, 920 (9th Cir. 2011).
597) See, e.g., Alfa Laval U.S. Treasury, Inc. v. Natl Union Fire Ins. Co. of Pittsburgh, PA, 857
F.Supp.2d 404, 417 (S.D.N.Y. 2012) (general choice-of-law clause in contract, even choice-
of-law clause in arbitration agreement that designates New York state law as governing
procedure, administration, interpretation or construction of arbitration agreement does
not unequivocally overcome the rule that general choice-of-law clauses incorporate only
the chosen states substantive rights and obligations, [but] not the States allocation of
power between alternative tribunals); Javier v. Carnival Corp., 2010 WL 3633173, at *3 (S.D.
Cal.) (with respect to arbitrability, the Seafarer Agreements choice of Panama law is
irrelevant); Saturn Telecomms. Servs., Inc. v. Covad Commcns Co., 560 F.Supp.2d 1278,
1282 (S.D. Fla. 2008) (Parties may, of course, specify in a contract the rules under which
arbitration will be conducted. In this case, however, the parties made no express
provision in the BIA Agreement regarding the rules which would govern the arbitration. As
a result, the FAA applies.); Mech. Power Conversion, LLC v. Cobasys, LLC, 500 F.Supp.2d
716, 719 (E.D. Mich. 2007) (applying federal common law to determine validity of
arbitration agreement despite general choice-of-law clause selecting Michigan law); Sea
Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432 F.Supp.2d 1305, 1312 (S.D. Fla. 2006)
([T]he Agreement here contains choice-of-law and arbitration provisions that both
reference foreign law. While these designations are relevant to the substantive law to be
used, and the location of arbitration, they say nothing, and mean nothing, as to the
threshold issue of arbitrability. Federal law controls my interpretation of whether the
Arbitration Clause covers the dispute in this case.); Chloe Z Fishing Co. v. Odyssey Re
(London) Ltd, 109 F.Supp.2d 1236, 1252 (S.D. Cal. 2000).
598) BioMagic, Inc. v. Dutch Bros. Enters., LLC, 729 F.Supp.2d 1140, 1146 (C.D. Cal. 2010). The
court relied on the common sense principle that a generic choice of law clause doesnt
show agreement to be bound by the arbitration law, as opposed to the substantive law,
of the chosen jurisdiction. Id. at 1148.
599) Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63-64 (U.S. S.Ct. 1995).
600) Although Mastrobuono was a state law case, the same analysis applies, and similar
results have been reached by lower courts, in international cases. See4.04[A][2][j][ii].
601) Farrell v. Subway Intl, BV, 2011 WL 1085017, at *3 (S.D.N.Y.) (quoting Motorola Credit, 388
F.3d at 50-51).
602) See, e.g., Campaniello Imps., Ltd v. Saporiti Italia SpA, 117 F.3d 655, 668-69 (2d Cir. 1997)
(applying federal law to arbitration clause in contract containing Italian choice-of-law
clause); Rhone Mediterranee v. Lauro, 712 F.2d 50, 52-54 (3d Cir. 1983) (Italian law,
applicable to contract, not applied to invalidate arbitration agreement); Becker
Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39, 43 (3d Cir. 1978); FR 8
Singapore Pte Ltd v. Albacore Maritime Inc., 794 F.Supp.2d 449 (S.D.N.Y. 2011) (applying
parties choice-of-law clause, except in cases where it conflicts with federal law
concerning issues related to tribunals authority); Farrell v. Subway Intl, BV, 2011 WL
1085017, at *3 (S.D.N.Y.) (applying federal common law rather than contractual choice-of-
law clause to avoid invalidating parties arbitration agreement).
603) See4.04[A].
604) See4.04[B][6][a]-[c].
605) See4.04[B][6][a]-[c].
606) See4.04[A][2][e]; Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach
Adopted by the English Courts With Respect to the Proper Law of the Arbitration Agreement,
29 Arb. Intl 115 (2013).
607) See4.04[B][6][c].
608) See4.04[B][7], pp. 596-97.
Arbitration 425 (1999). See also Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52,
59-63 (U.S. S.Ct. 1995).
610) See1.04[F][3]; 3.03[B]; 4.03; 4.04[A][2][c]; 11.01[B]; 11.03.
611) See4.04[A][2][e].
182
612) There may also be cases where the reasons for choosing the law governing the underlying
contract will also apply with regard to the law governing the arbitration agreement (e.g.,
a neutral, developed legal system). See4.04[A][2][c]; 4.04[B][6].
613) See4.04[B][6][c].
614) See4.04[B][6].
615) See4.04[B][6].
616) These objectives are detailed above. See1.02[B].
617) See4.04[A][3].
618) See1.02[B].
619) See4.04[A][3].
620) See also Preston v. Ferrer, 552 U.S. 346, 363 (U.S. S.Ct. 2008) ([T]he best way to harmonize
the parties adoption of the AAA rules and their selection of California law [in a choice-of-
law clause for the entire contract] is to read the latter to encompass prescriptions
governing the substantive rights and obligations of the parties, but not the States
special rules limiting the authority of arbitrators.) (quoting Mastrobuono, 514 U.S at 63-
64).
621) See4.02[A][2][b] & [f]; Swiss Law on Private International Law, Art. 178(2); Spanish
Arbitration Act, 2003, Art. 9(6).
622) See4.04[B][6][b].
623) See, e.g.,Final Award in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37, 38 (1998); Final Award in
ICC Case No. 6379, XVII Y.B. Comm. Arb. 212, 215 (1992); Final Award in ICC Case No. 3572, XIV
Y.B. Comm. Arb. 111, 115 (1989).
624) See authorities cited 4.04[A][3]-[4]; Final Award in ICC Case No. 7453, XXII Y.B. Comm.
Arb. 107 (1997); Final Award in ICC Case No. 6162, XVII Y.B. Comm. Arb. 153 (1992); Final Award
in ICC Case No. 1507, in S. Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-
1985 215 (1990); Preston v. Ferrer, 552 U.S. 346, 363 (U.S. S.Ct. 2008); Mastrobuono v.
Shearson Lehman Hutton, Inc., 514 U.S. 52, 59-63 (U.S. S.Ct. 1995); Rhone Mediterranee v.
Lauro, 712 F.2d 50 (3d Cir. 1983); Ledee v. Ceramiche Ragno, 684 F.2d 184 (1st Cir. 1982); ITAD
Assocs., Inc. v. Podar Bros., 636 F.2d 75 (4th Cir. 1981); Westbrook Intl, LLC v. Westbrook
Techs., Inc., 17 F.Supp.2d 681 (E.D. Mich. 1998); Prograph Intl, Inc. v. Barhydt, 928 F.Supp.
983, 989 (N.D. Cal. 1996); Technetronics, Inc. v. Leybold-Geaeus GmbH, 1993 WL 197028 (E.D.
Pa.); W. of England Ship Owners Mut. Ins. Assn (Luxembourg) v. Am. Marine Corp., 1992 WL
37700 (E.D. La.); Sulamrica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA
Civ 638, 29-30 (English Ct. App.) (parties did not intend the arbitration agreement to
be governed by that system of law [which would allow one party to unilaterally determine
validity of contract]); Judgment of 27 October 2000, Bulgarian Foreign Trade Bank, Ltd v.
A.I. Trade Fin., Inc., XXVI Y.B. Comm. Arb. 291 (Swedish S.Ct.) (2001).
625) See4.04[A][2][j][ii]; Preston v. Ferrer, 552 U.S. 346, 363 (U.S. S.Ct. 2008); Mastrobuono, 514
U.S. at 59-63; Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432 F.Supp.2d 1305, 1311-
13 (S.D. Fla. 2006).
626) See4.04[A][2][j][v]; 4.04[A][4][b]; Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 154 (3d Cir. 2001);
Rhone Mediterranee, 712 F.2d at 52-54; Ledee, 684 F.2d at 186-87.
627) See4.04[A][3]; Hamlyn & Co. v. Talisker Distillery [1894] AC 202, 215 (House of Lords);
Pearson, Sulamrica v. Enesa: The Hidden Pro-Validation Approach Adopted by the English
See4.04[B][6][b].
628) See4.04[A][4]; Judgment of 20 December 1993, Municipalit de Khoms El Mergeb v. Socit
Dalico, 1994 Rev. arb. 116, 117 (French Cour de cassation civ. 1e).
630) J. Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration 6-59
(2003). See also Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391, 394
(1996) (It is therefore generally considered that the parties have submitted their
arbitration agreement to the same domestic law as the main agreement.).
631) See, e.g., Glencore Ltd v. Degussa Engd Carbons LP, 848 F.Supp.2d 410, 424-25 (S.D.N.Y.
2012) (Glencores principal basis for applying New York law, the choice-of-law provision
in 11, is part of the very same provision of the [contract] to which Evonik claims it is not
bound. To rely on the choice-of-law clause would therefore amount to bootstrapping.);
Repub. of Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334 (S.D.N.Y. 2005), revd on other
grounds, 638 F.3d 384, 391 n.6 (2d Cir. 2011); Javier v. Carnival Corp., 2010 WL 3633173, at *3
(S.D. Cal.) ([O]bviously, the Seafarer Agreements choice of Panama law is irrelevant. To
proceed otherwise and actually consult Panamanian law on contract formation would be
to treat the Seafarer Agreement as a valid agreement.). See also W. Craig, W. Park & J.
Paulsson, International Chamber of Commerce Arbitration 5.07 (3d ed. 2000) (That the
parties may themselves determine what law applies to the question of the validity of
their agreement to arbitration may appear somewhat like Baron von Munchhausen lifting
himself out of a bog by his own pigtail.).
632) Rome Convention, Art. 8; Rome I Regulation, Art. 10(1); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 32R-106, 32-108 (15th ed. 2012) (The effect of the
[Rome] Regulation is to refer questions relating to the existence of a contract to the
putative governing law.); M. Giuliano & P. Lagarde, Report on the Convention on the Law
Applicable to Contractual Obligations, O.J. C 282 31/10/1980, Art. 8 (this provision is also
applicable with regard to the existence and validity of the parties consent as to the law
applicable).
183
633) Restatement (Second) Conflict of Laws 218, comment a (1971) (Arbitration agreements
are one kind of contract. The choice of law rules applicable to contracts in general should
also be applicable to them. So much has never been doubted with respect to issues
relating to their validity.).
634) See, e.g., Motorola Credit Corp. v. Uzan, 388 F.3d 39, 50 (2d Cir. 2004) (choice-of-law clause
in a contract will apply to disputes about the existence or validity of that contract); In re
IS Joseph Co. (Toufic Aris & Fils), 388 N.Y.S.2d 1 (N.Y. App. Div. 1976); In re Elec. & Missile
Facilities, Inc., 236 N.Y.S.2d 594 (N.Y. Sup. Ct. 1962); Midgulf Intl Ltd v. Groupe Chimique
Tunisien [2010] EWCA Civ 66, 56 (English Ct. App.) (it is a well established principle of
English private international law that questions relating to the existence and terms of a
contract are governed by the putative proper law); Compania Naviera Micro SA v. Shipley
Intl, Inc., The Parouth [1982] 2 Lloyds Rep. 351, 353 (English Ct. App.); Egon Oldendorff v.
Liberia Corp. [1995] 2 Lloyds Rep. 64 (QB) (English High Ct.) (validity of putative arbitration
clause determined in accordance with putative proper law); L. Collins et al. (eds.), Dicey,
Morris and Collins on The Conflict of Laws 32R-106, 32-110-13 (15th ed. 2012); R. Merkin,
Arbitration Law 7.6.1 (1991 & Update August 2013) (The validity of an agreement to
arbitrate must, under English conflict of laws rules, be tested by reference to the law
which assuming the validity of the clause would have applied to it.).
635) See4.04[A][1][b].
636) As noted above, this is consistent with the approach under other choice-of-law systems.
See4.04[A][2].
637) See4.04[A]-[B]; Restatement (Second) Conflict of Laws 202 (1971) ((1) The effect of
illegality upon a contract is determined by the law selected by application of the rules of
187-188. (2) When performance is illegal in the place of performance, the contract will
usually be denied enforcement.); Ralli Bros. v. Compaia Naviera Sota y Aznar [1920] 2 KB
287 (English Ct. App.); Tamil Nadu Elec. Bd v. St-CMS Elec. Co. Private Ltd [2007] EWHC 1713,
35-37 (Comm) (English High Ct.) (The parties have agreed to arbitration in accordance
with English law and it is by that law alone that the ambit of the arbitration provision can
be determined, as a matter of construction. To delve into the proper law of the
[underlying contract] to seek for any provision mandatorily applicable by that law to the
issue of jurisdiction, is impermissible.); L. Collins et al. (eds.), Dicey, Morris and Collins on
The Conflict of Laws 32-190-93 (15th ed. 2012).
638) See 4.04[A][1][b].
639) See19.04[B][1]; Kreindler, Aspects of Illegality in the Formation and Performance of
Contracts, in A. van den Berg (ed.), International Commercial Arbitration: Important
Contemporary Questions 209 (ICCA Congress Series No. 11 2003). See also Y. Derains, Les
commissions illicites 65-68 (ICC Publication No. 480/2 1992); El-Kosheri & Leboulanger,
Larbitrage face la corruption et aux trafics dinfluence, 1984 Rev. arb. 3; Lalive, Ordre
public transnational (ou rellement international) et arbitrage international, 1986 Rev. arb.
329.
640) Judgment of 7 May 1994, Fincantieri-Cantieri Navali Italiani SpA v. Ministry of Defence,
Armament & Supply Directorate of Iraq, XXI Y.B. Comm. Arb. 594 (Genoa Corte dAppello)
(1996) (holding that arbitration agreement between Italian seller and Iraqi buyer violated
EU trade sanctions against Iraq, and was therefore unenforceable).
641) SeeChapters 3et seq.; 5.06[C][12][a].
642) The application of any foreign mandatory law would be subject to the Conventions non-
discrimination requirements. See4.04[B][2][b].
643) See4.04[B][2][b][ii]; Rome Convention, Arts. 3(3), 7(1); Rome I Regulation, Arts. 3(3), 9;
Restatement (Second) Conflict of Laws 187(2) (1971). As discussed below, most developed
conflict of laws rules provide for the application of foreign mandatory laws and public
policies in limited instances where the concerned foreign state has a very substantial
relationship to the relevant conduct or transaction. See19.04[B][2] & [5]. See also
des Cours 9, 85 (2001) (one wonders if in particular most likely exceptional
circumstances, international Arbitral Tribunals should not take into account and possibly
apply lois de police, not belonging to the laws or rules of law normally governing the
arbitration clause, when judging on its jurisdiction (most likely in connection with
arbitrability issues)).
644) See4.04[B][2][b][iii].
645) Rome Convention, Arts. 3(3), 7(1); Rome I Regulation, Arts. 3(3), 9; Restatement (Second)
Conflict of Laws 187(2) (1971).
646) See4.04[B][2][b][iii].
647) Of course, the state whose laws purport to render the arbitration agreement invalid may
deny recognition of the arbitral award. See4.02[A][1]; 4.04[A][1][b].
648) For commentary, see Arfazadeh, Arbitrability Under the New York Convention: The Lex Fori
Revisited, 17 Arb. Intl 73 (2001); Grigera Nan, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9 (2001); Hanotiau, Larbitrabilit, 296
Recueil des Cours 29 (2002); Hanotiau, The Law Applicable to Arbitrability, in A. van den
Application of the New York Convention 146 (ICCA Congress Series No. 9 1999); Hanotiau,
What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391 (1996); L. Mistelis & S.
Brekoulakis (eds.), Arbitrability: International and Comparative Perspective (2009);
Paulsson, Arbitrability, Still Through A Glass Darkly, in ICC, Arbitration in the Next Decade 95
(ICC Ct. Bull. Spec. Supp. 1999); A. van den Berg, The New York Arbitration Convention of
1958 152 (1981).
184
649) Bckstiegel, Public Policy and Arbitrability, in P. Sanders (ed.), Comparative Arbitration
Practice and Public Policy in Arbitration 177, 184 (ICC Congress Series No. 3 1987). See also
JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676, at *3 n.5
(S.D.N.Y.) (It is not clear under Article II whether the enforcing jurisdictions law applies
to questions of enforceability or whether some other law controls such as the law of the
place of arbitration, the substantive law to be applied to the dispute, or general
principles of law.).
650) See generally Arfazadeh, Arbitrability Under the New York Convention: The Lex Fori
Revisited, 17 Arb. Intl 73 (2001); Blessing, The Law Applicable to the Arbitration Clause, in A.
van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years
of Application of the New York Convention 168-69 (ICCA Congress Series No. 9 1999).
651) See4.04[A][1][b]. In particular, Article II(1) provides that arbitration agreements need
only be recognized as applied to matters that are capable of settlement by arbitration,
without indicating what law governs this issue.
652) See4.02[A][1]; 4.04[A][1][b]. The applicability of the choice-of-law provisions in Articles
V(1)(a) and V(2)(a) at the stage of enforcing an arbitration agreement (as distinguished
from an arbitral award) is disputed. As discussed above, the correct view is that Article
Vs choice-of-law provisions apply in determining the validity of an arbitration
agreement. See4.04[A][1][b][iii].
653) New York Convention, Art. V(2)(a) (emphasis added); A. van den Berg, The New York
654) See4.04[A][4]; 6.02[A]. As discussed above, Article V(1)(a)s choice-of-law rules are
generally-applicable rules of contractual validity, which are designed to have universal
application. See4.02[A][1]; 4.04[A][1][b][ii].
655) As discussed below, denying recognition to an award where a dispute is categorized as
non-arbitrable under local law would not always (or even often) be appropriate.
See4.05[A][2]; 4.05[C][3]. For example, if, under the laws of Russia, employment disputes
are non-arbitrable, and Russian courts are requested to enforce a French award, granting
relief under U.S. employment laws (which are arbitrable under both French and U.S. law),
in a dispute having no connection to Russia, it is difficult to conceive why Russian courts
ought not enforce the award in these circumstances, irrespective of Russian
nonarbitrability standards. Of course, different considerations would apply if the French
award had involved the application of Russian employment laws, which Russian law
treated as non-arbitrable; there, ArticleV(2)(a) would sensibly permit Russian courts to
deny enforcement of the award (while leaving others Contracting States free to recognize
it). The appropriate course, therefore, is that a state would apply its nonarbitrability
standards insofar as claims arising under its own laws are concerned, but would not
attempt to apply or transpose those standards to claims based on other nations laws.
See4.05[C][3].
656) See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n.14 (U.S. S.Ct. 1974); Meadows
Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036, 1042 (E.D.N.Y. 1991)
(rejecting argument that, under Article V(2), law of state where enforcement of award will
be sought governs nonarbitrability); Rhone Mediterranee v. Lauro, 555 F.Supp. 481, 485
(D.V.I. 1982), affd, 712 F.2d 50 (3d Cir. 1983); Judgment of 4 October 1985, XIV Y.B. Comm.
Arb. 618 (Brussels Cour dappel) (1989). See also G. Haight, Convention on the Recognition
and Enforcement of Foreign Arbitral Awards: Summary Analysis of Record of United Nations
Conference 27-28 (1958); Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl
391, 399-401 (1996); J. Lew, L. Mistelis & S. Krll, Comparative International Commercial
Arbitration 9-33 (2003) (tribunals have been reluctant to deny jurisdiction on the basis
that the dispute is not arbitrable under the law of the possible place of enforcement or
even another interested country).
657) SeeJudgment of 15 October 2004, XXXI Y.B. Comm. Arb. 587, 591 (Belgian Cour de cassation)
(2006) (The lex fori that is applied when assessing arbitrability at the stage of recognition
and enforcement also determines whether a dispute is arbitrable in the context of an
objection of lack of jurisdiction); Judgment of 20 September 1999, Matermaco SA v. PPM
Cranes, Inc., XXV Y.B. Comm. Arb. 673, 675 (Brussels Tribunal de Commerce) (2000) (The
similarity between [Article] II(1) and [Article] V(2)(a) and a consistent interpretation of the
Convention require that the arbitrable nature of a dispute be determinedunder the
same law, that is, the lex fori.); Arfazadeh, Arbitrability Under the New York Convention:
The Lex Fori Revisited, 17 Arb. Intl 73, 76 (2001); C. Reithmann & D. Martiny, Internationales
Vertragsrecht 2380 (7th ed. 2010); A. van den Berg, The New York Arbitration Convention of
1958 152 (1981) (it must be presumed that for the enforcement of the arbitration
agreement also the lex fori governs the question of arbitrability).
658) Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1266 (11th Cir. 2011); In re U.S. Lines, Inc., 197
F.3d 631, 639 (2d Cir. 1999); Alghanim v. Alghanim, 828 F.Supp.2d 636, 658 (S.D.N.Y. 2011)
(Art. II(1) of the Conventioncontemplates exceptions to arbitrability grounded in
domestic law.) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 639 n.21 (U.S. S.Ct. 1985)); Judgment of 16 November 2006, Case No. C.02.0445.F
(Belgian Cour de cassation) (The arbitrable nature of a dispute must be decided,
whenever the question is raised, under the law of the judge seized, since this nature
decides when State courts and tribunals will validly lack jurisdiction.).
659) European Convention, Art. VI(2) (emphasis added).
660) See4.04[A][4]; 4.04[B][2][b][vi]; 6.02[A].
661) This is also the course that many national courts have taken. See4.05[B]; 4.05[C][3];
6.02[A].
185
662) See4.05[C][5]; 6.02[A]. This was recognized in the U.S. Supreme Courts decisions in
Scherk and Mitsubishi Motors. See4.05[C][3]; Scherk, 417 U.S. 506; Mitsubishi Motors Corp.,
473 U.S. 614.
663) See4.05[C][5].
664) See6.02[A].
Arbitration 655 (1999); Kaufmann-Kohler & Lvy, in H. Peter, N. Jeandin & J. Kilborn (eds.),
The Challenges of Insolvency Law Reform in the 21st Century 257, 260 (2006) (In principle,
an arbitrator sitting in an international arbitration in Switzerland will not apply any
prohibition or restriction of arbitrability existing under a different legal system.).
666) See, e.g., JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676
(S.D.N.Y.); Meadows Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036, 1041-
42 (E.D.N.Y. 1991); Marchetto v. DeKalb Genetics Corp., 711 F.Supp. 936 (N.D. Ill. 1989). See
also Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391, 395 (1996) (As
a matter of principle, the arbitrability of a dispute should not be decided by application
of the law of the seat of the arbitration.).
667) See4.05[A][1].
668) See, e.g., Cape Flattery Ltd v. Titan Maritime LLC, 647 F.3d 914, 920 (9th Cir. 2011) (applying
U.S. federal law to nonarbitrability issues and English law to substantive issues);
Powertrain Prod. Sys., LLC v. Nemak of Canada Corp., 2009 WL 3757106, at *3 (E.D. Mich.)
(applying U.S. federal law to nonarbitrability issues and Canadian law to substantive
issues); Westbrook Intl, LLC v. Westbrook Techs., Inc., 17 F.Supp.2d 681, 687 (E.D. Mich.
1998) (the law of the forum court should apply to determine arbitrability); Meadows
Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036 (E.D.N.Y. 1991); Marchetto
v. DeKalb Genetics Corp., 711 F.Supp. 936, 939 (N.D. Ill. 1989) (refusing to consider argument
that Italian fraud claims were non-arbitrable under Italian law).
Similarly, in Mitsubishi and Scherk, the U.S. Supreme Court looked exclusively to U.S. law
to determine whether antitrust and securities claims were capable of settlement by
arbitration in international disputes albeit while attaching considerable importance to
the New York Convention and international character of the parties transactions. Scherk
v. Alberto-Culver Co., 417 U.S. 506 (U.S. S.Ct. 1974); Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614 (U.S. S.Ct. 1985). Notably, however, both Scherk and Mitsubishi
involved the arbitrability of U.S. statutory claims. It is not clear from the Courts opinions
(which did not address choice-of-law issues), what nations law the Mitsubishi and Scherk
Courts would have looked to if foreign statutory claims were at issue. The likely result is
that nonarbitrability arguments based on foreign law would be rejected by U.S. courts
and left for foreign courts to apply. See4.04[A][2][j][v].
669) See, e.g.,Judgment of 12 February 1985, 1986 Rev. arb. 47 (French Cour de cassation soc.); E.
670) See, e.g., Swiss Law on Private International Law, Art. 177(1); Judgment of 16 October 2003,
22 ASA Bull. 364 (Swiss Federal Tribunal) (2004); Judgment of 8 July 2003, DFT 129 III 675
(Swiss Federal Tribunal); Judgment of 16 May 1995, 14 ASA Bull. 667 (Swiss Federal
Tribunal) (1996); Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119
II 380 (Swiss Federal Tribunal); Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal
Tribunal); Brtsch & Petti, The Arbitration Agreement, in E. Geisinger & N. Voser (eds.),
International Arbitration in Switzerland: A Handbook for Practitioners 25, 37-39 (2d ed.
2013); F. Knoepfler & P. Schweizer, Arbitrage international 265 (2003).
671) See, e.g.,Judgment of 24 November 1994, XXI Y.B. Comm. Arb. 635 (Rotterdam Rechtbank)
(1996) (refusing to consider possible nonarbitrability of dispute under law of third state
(other than arbitral seat or enforcement forum), when that law was not relied on in
arbitral proceedings).
672) See, e.g., Judgment of 16 November 2006, Case No. C.02.0445.F, 8 (Belgian Cour de
cassation) (Article II(3) and V(1) or (2) of the New York Convention do not exclude to apply
the lex fori to the matter of the disputes arbitrability at the stage of the denial of
jurisdiction, they do not oblige to submit this question exclusively to the law applicable
to the contract.); Judgment of 20 September 1999, Matermaco SA v. PPM Cranes, Inc., XXV
Y.B. Comm. Arb. 673 (Brussels Tribunal de Commerce) (2000) (refusing to stay litigation,
based on agreement to arbitrate in Belgium, because Belgian law provided for
nonarbitrability of dispute). CompareJudgment of 5 October 1994, Socit Van Hopplynus v.
Socit Coherent Inc., XXII Y.B. Comm. Arb. 637, 639-40 (Brussels Tribunal de Commerce)
(1997) (rejecting argument that Article V(2)(a) of the New York Convention expressly refers
to the lex fori for the evaluation of the dispute in the phase of the recognition of the
award and considers, in the name of a consistent interpretation of the Convention, that
the arbitrability of the dispute must be evaluated under the same law when an objection
to jurisdiction is raised before a court; holding that nonarbitrability is governed by law
governing arbitration agreement, and specifically law selected by parties).
186
673) See, e.g.,Judgment of 27 April 1979, VI Y.B. Comm. Arb. 229 (Italian Corte di Cassazione)
(1981) (dispute between Italian company and Italian employee, employed in Saudi
Arabia, not subject to arbitration in Saudi Arabia, because employment dispute is non-
arbitrable under Italian law); Judgment of 7 May 1994, Fincantieri-Cantieri Navali Italiani
SpA v. Ministry of Defence, Armament & Supply Directorate of Iraq, XXI Y.B. Comm. Arb. 594
(Genoa Corte dAppello) (1996); Judgment of 18 July 1987, XVII Y.B. Comm. Arb. 534, 535
(Bologna Tribunale) (1992) (Italian law applies to review arbitrability).
674) See, e.g., F. Schwarz & C. Konrad, The Vienna Rules: A Commentary on International
Arbitration in Austria 27-059 (2009).
675) See, e.g., Arkhangelskoe Geologodobychnoe Predpriyatie v. Archangel Diamond Corp., Case
No. T-2277-04 (Svea Ct. App.) (annulling negative jurisdictional ruling by arbitrators, which
held that Swedish-seated tribunal lacked jurisdiction because Russian Subsoil Law
prohibited arbitration of parties dispute; holding that question whether dispute was
arbitrable should be determined under Swedish law, since this issue had closer
connection to law governing arbitration agreement than law governing merits of dispute
(i.e., Russian law) and fact that dispute was not arbitrable under Russian law did not
affect courts conclusion).
676) See, e.g., Casaceli v. Natuzzi SpA, [2012] FCA 691 (Fed. Ct. Australia) (raising but not
deciding whether law governing nonarbitrability is substantive law governing contract or
law of judicial enforcement forum).
677) UNCITRAL Model Law, Arts. 1(5), 34(2)(b)(i). See alsoSwiss Law on Private International Law,
Art. 177; German ZPO, 1030.
678) Judgment of 7 May 1994, Fincantieri-Cantieri Navali Italiani SpA v. Ministry of Defence,
Armament & Supply Directorate of Iraq, XXI Y.B. Comm. Arb. 594, 598-99 (Genoa Corte
dAppello) (1996).
679) See Brekoulakis, Part I Fundamental Observations and Applicable Law, in L. Mistelis & S.
Brekoulakis (eds.), Arbitrability: International and Comparative Perspectives 99, 100
(prominence of lex fori as the most relevant law to determine arbitrability remains
unquestionable); G. Haight, Convention on the Recognition and Enforcement of Foreign
Arbitral Awards: Summary Analysis of Record of United Nations Conference 28 (1958); J. Lew,
L. Mistelis & S. Krll, Comparative International Commercial Arbitration 9-17 (2003) (each
national court determines the arbitrability of a dispute according to its own law);
Nacimiento, Article V(1)(a), in H. Kronke et al. (eds.), Recognition and Enforcement of
Foreign Arbitral Awards: A Global Commentary on the New York Convention 205, 220-21
(2010) (Under the Convention, arbitrability is thus governed by the law of the enforcing
court and not by the law applicable to the arbitration agreement.); A. van den Berg, The
New York Arbitration Convention of 1958 153 (1981) (all courts [have] decided the question
of arbitrability exclusively under their own law and [have] not take[n] account of the law
of the country where the arbitration was to take place or was taking place).
680) See4.05[A][1].
681) Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391, 393-94 (1996).
682) Hanotiau, What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391, 393-94 (1996).
683) See, e.g.,Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 250 (2010) (applying Swiss
law to question of nonarbitrability because Switzerland was seat of thearbitration, and
thereforethe law according to which the issue of arbitrability must be decided); Partial
Award in ICC Case No. 8910, 127 J.D.I. (Clunet) 1085 (2000) (applying law of French arbitral
seat to arbitrability of claims and rejecting nonarbitrability claim based upon foreign
law, where no showing had been made that French international public policy contained
similar rule); Award in ICC Case No. 8594, discussed in Grigera Nan, Choice-of-Law
Problems in International Commercial Arbitration, 289 Recueil des Cours 9, 80 (2001)
(applying law of Swiss arbitral seat to arbitrability of claims); Partial Award in ICC Case
No. 8420, XXV Y.B. Comm. Arb. 328, 331 (2000) (arbitrability of this litigation is governed
by the lex arbitri); Award in ICC Case No. 4604, 112 J.D.I. (Clunet) 973 (1985) (arbitration
clause and issue of nonarbitrability are governed by law of arbitral seat (Switzerland),
not law governing underlying contract). See also Grigera Nan, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 81 n.63 (2001) (It is
according to the lex arbitri that the arbitrability of a claim is more currently decided
upon.); J. Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration 9-
29 (2003) (In the majority of cases,[arbitral] tribunals determine the arbitrability of a
dispute on the basis of the provisions of the place of arbitration [(lex loci arbitri)].).
684) See4.05[A][1].
685) For example, in a securities dispute involving statutory protections under the laws of
State B, which State B affirmatively channels into arbitration, it is very difficult to see
why State Bs policies should be denied effect in an arbitration seated in another State.
686) See4.05[A][1], p. 598; 6.02[A], p. 946.
687) See6.02[A]; 19.04[B][5]; Rome Convention, Arts. 3(3), 7(1); Rome I Regulation, Arts. 3(3), 9;
Restatement (Second) Conflict of Laws 187(2)(b) (1971).
187
688) See Rome I Regulation, Art. 9(3) (Effect may be given to the overriding mandatory
provisions of the law of the country where the obligations arising out of the contract have
to be or have been performed, in so far as those overriding mandatory provisions render
the performance of the contract unlawful. In considering whether to give effect to those
provisions, regard shall be had to their nature and purpose and to the consequences of
their application or non-application.); Rome Convention, Art. 7(1) (When applying under
this Convention the law of a country, effect may be given to the mandatory rules of the
law of another country with which the situation has a close connection, if and in so far as,
under the law of the latter country, those rules must be applied whatever the law
applicable to the contract. In considering whether to give effect to these mandatory
rules, regard shall be had to their nature and purpose and to the consequences of their
application or non-application.). See also Restatement (Second) Conflict of Laws 187(2)
(1971); M. Giuliano & P. Lagarde, Report on the Convention on the Law Applicable to
Contractual Obligations, O.J. C 282 31/10/1980, Art. 7, 3 (the judge must be given a power
of discretion, in particular in the case where contradictory mandatory rules of two
different countries both purport simultaneously to be applicable to one and the same
situation, and where a choice must necessarily be made between them); 19.04[B][5]
[b]-[c].
689) SeeFinal Award in ICC Case No. 6379, XVII Y.B. Comm. Arb. 212 (1992) (when deciding validity
of arbitration clause, judge of third state, like arbitrator sitting in third state, is not to
consider that Belgian law would apply beyond what is required by its explicit purposes,
when doing so might result in conflict between Belgian law and another law claiming
application).
690) See, e.g., Judgment of 23 May 2012, DFT 4A_654/2012, 3.4 (Swiss Federal Tribunal) (case
law of the Federal Tribunal considered the possibility to reject the arbitrability of a
specific matter to the extent that foreign provisions provide for the mandatory
jurisdiction of State Courts and should be taken into consideration from the point of view
of public policy).
691) For example, in the example outlined above, if State Bs statutory laws were purportedly
applicable to conduct occurring entirely in State A, with no material effects in State B,
then there would be no justification for applying State Bs nonarbitrability rules.
692) For examples of decisions adopting this approach, see Ledee v. Ceramiche Ragno, 684 F.2d
184 (1st Cir. 1982); JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL
1863676 (S.D.N.Y.) (refusing to consider argument that issues of Russian internal corporate
governance were non-arbitrable under Russian law); Marchetto v. DeKalb Genetics Corp.,
711 F.Supp. 936, 939 (N.D. Ill. 1989) (refusing to consider argument that Italian fraud claims
were non-arbitrable under Italian law). See alsoPartial Award in ICC Case No. 8420, XXV
Y.B. Comm. Arb. 328 (2000) (tribunal sitting in Switzerland refused to apply Italian
nonarbitrability rules regarding labor disputes).
693) See4.04[A][4]; 4.04[B][2][b][vi]; 6.02[A]. This analysis also ensures that idiosyncratic
nonarbitrability rules with regard to particular issues, or sweeping nonarbitrability rules,
do not frustrate the Convention and its objectives.
694) See26.03[B][1].
695) See26.03[B][6].
696) See Scherk v. Alberto-Culver Co., 417 U.S. 506, 515-16 (U.S. S.Ct. 1974); Quintette Coal Ltd v.
Nippon Steel Corp., (1990) 50 B.C.L.R.2d 207, 27 (B.C. Ct. App.) (it will be necessary for
national courts to subordinate domestic notions of arbitrability to the international
policy favoring commercial arbitration); W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration 5.07 (3d ed. 2000) ([S]uch an objection is particularly
difficult to accept when the rule of nonarbitrability is allegedly derived from a national
law other than the one stipulated as applicable to the substance of the dispute but
even when it is the same law it is doubtful that a rule of nonarbitrability, even if it can be
shown that it would be applied by national courts with respect to internal transactions,
should be effective in an international context.Another way of putting it is that the
effect of domestic legislation should be attenuated if not neutralized with respect to
international transactions to which they were not intended to apply (or in the context of
which the domestic legislation may violate international law, which is preeminent even
within the national sphere), while the security of contractual stipulations requires an
especially high degree of recognition, free of national protectionism, in an international
context.).
188
697) See19.04[B][5]; 25.02; 26.03; A. Bucher & P.-Y. Tschanz, International Arbitration in
Switzerland 76 (1988) (Swiss courts should treat disputes as non-arbitrable where
parties agree upon Swiss arbitration only for the purpose of avoiding mandatory court
jurisdiction of such foreign legal system for matters such as antitrust, labor relations or
exchange controls); B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland 257 (2d ed. 2010) (arbitrators sitting in Switzerland need to observe
foreign mandatory rules on arbitrability only to the extent that there are sound reasons
to believe that, by rendering a decision on the merits, they would breach fundamental
legal principles, making the award simply incompatible with transnational legal and
moral values); Vischer, in D. Girsberger et al. (eds.), Zrcher Kommentar zum IPRG Art. 177,
22 (2d ed. 2004) (courts should disregard foreign nonarbitrability provisions unless they
form part of international public policy). ContraJudgment of 23 June 1992, DFT 118 II 353,
358 (Swiss Federal Tribunal) (Since the legislator has chosen an arbitrability criterion
depending on the nature of the clause and not on the law applicable to it, there is in
principle no necessity to take into consideration foreign law restrictions and prohibitions
concerning the arbitrability of the dispute.); P. Lalive, J.-F. Poudret & C. Reymond, Le
droit de larbitrage interne et international en Suisse Art. 177, 3-5 (1989).
698) See, e.g.,Partial Award in ICC Case No. 8420, XXV Y.B. Comm. Arb. 328 (2000) (tribunal sitting
in Switzerland refused to apply Italian nonarbitrability rules regarding labor disputes);
Final Award in ICC Case No. 6379, XVII Y.B. Comm. Arb. 212 (1992) (refusing to give effect to
Belgian nonarbitrability rule because parties had chosen Italian law to govern arbitration
agreement, and under Italian law, arbitration clause was valid); JSC Surgutneftegaz v.
President & Fellows of Harvard College, 2005 WL 1863676 (S.D.N.Y.) (refusing to consider
argument that issues of Russian internal corporate governance were non-arbitrable under
Russian law); Marchetto v. DeKalb Genetics Corp., 711 F.Supp. 936, 939 (N.D. Ill. 1989)
(refusing to consider argument that Italian fraud claims were non-arbitrable under Italian
law).
699) See6.03[C].
700) See6.03[C]; A. van den Berg, The New York Arbitration Convention of 1958 153 (1981) (A
court is less suitedfor deciding on the arbitrability under the law of another country.).
701) See1.04[A][1]; 4.02[A][1].
702) See6.03[C][4].
703) PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (U.S. S.Ct. 2003).
704) PacifiCare Health Sys., 538 U.S. at 407.
705) Vimar Seguros y Reaseguros, SA v. M/V Sky Reefer, 515 U.S. 528 (U.S. S.Ct. 1995).
706) Vimar Seguros, 515 U.S. at 541 (emphasis added).
707) See Aggarao v. MOL Ship Mgt Co., 675 F.3d 355, 373 n.16 (4th Cir. 2012) (ordering arbitration
despite plaintiffs argument that he would be denied U.S. statutory remedy if Philippine
law were applied by arbitral tribunal: [i]t is possible that the Philippine arbitrator(s) will
apply United States law with respect to the Jones Act and Seamans Wage Act claims, or
that Aggarao will be able to effectively vindicate the substance of those claims under
Philippine law and obtain an adequate remedy); Lindo v. NCL (Bahamas), Ltd, 652 F.3d
1257, 1269 (11th Cir. 2011) (even if a contract expressly says that foreign law governs
courts should not invalidate an arbitration agreement at the arbitration-enforcement
stage on the basis of speculation about what the arbitrator will do, as there will be a later
opportunity to review any arbitral award); Lim v. Offshore Specialty Fabricators, Inc., 404
F.3d 898, 907-08 (5th Cir. 2005) (rejecting plaintiffs argument that Fair Labor Standards
Act claims were rooted in United States law and were incapable of resolution by
foreign arbitration, noting that Filipino arbitral tribunal could resolve such claims);
Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999) ([I]t is possible that the
Swiss Tribunal might apply U.S. antitrust law to the dispute.Moreover, even if Swiss law
is applied to the dispute, there has been no showing that it will not provide Simula with
sufficient protection.); George Fischer Foundry Sys., Inc. v. Adolph H. Hottinger
Maschinenbau GmbH, 55 F.3d 1206, 1210 (6th Cir. 1995) (Mitsubishi stands for the
proposition that arbitration should go forward even if there is a chance that United
States antitrust statutory rights will not be fully recognized.[B]ecause the Zurich
[arbitral] tribunal has yet to decide what law it will apply, this case is not ripe for
review.); Rhone Mediterranee v. Lauro, 712 F.2d 50 (3d Cir. 1983) (enforcing arbitration
agreement despite argument that it violated Italian law, law of arbitral forum); JSC
Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676 (S.D.N.Y.)
(arbitral tribunal to consider arguments regarding public policy and internal corporate
governance); In re Hops Antitrust Litg., 655 F.Supp. 169, 173 (E.D. Mo. 1987). But see Thomas
v. Carnival Corp., 573 F.3d 1113, 1120-26 (11th Cir. 2009) (declining to compel arbitration
under agreement with foreign choice-of-law and foreign choice-of-forum clauses because
agreement functioned as prospective waiver of plaintiffs U.S. statutory rights).
708) Thyssen Canada Ltd v. Mariana Maritima SA, [2000] 3 FC 398, 23 (Canadian Fed. Ct. App.)
(refusing to consider issues of Romanian law, allegedly requiring nonarbitrability of
dispute subject to arbitration in London: It is not the role of this Court in proceedings
initiated under the federal Commercial Arbitration Act to make determinations as to the
proper law of a particular contract.[I]t is for the arbitration panel in London to
determine the proper law of the contract(s).).
709) See1.04[A][1]; 4.04[A][1][b].
189
710) Consistent with this, some commentators have asserted that when examining the
objective arbitrability of an international dispute, a court must apply its conception of
international public policy. E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 559 (1999). Although leaving scope to national
courts, the foundation of this analysis is a conception of an international public policy
which would be binding on individual Contracting States.
711) See6.02[A], p. 946.
712) Geneva Protocol, Art. I (emphasis added).
713) See1.04[A][1].
714) See4.05[A][1]; 6.02[A].
715) See4.04[A][1][b]; 4.05[A][1]; 6.02[A].
716) Senate Executive Document E, 90th Cong., 2d Sess. 19 (1968). This statement is
nonetheless clearly confused, among other things because U.S. state law restrictions on
arbitrability are preempted by the FAA. See4.04[A][2][j].
717) SeeSummary Record of the Fifteenth Meeting, U.N. Doc. E/CONF.26/SR.15, 3 (1958)
(Yugoslavia would in fact be able to apply the provisions of the Convention only to
awards made in other contracting countries and connected with commercial disputes.),
4 ([The United Kingdoms representative] failed to see why countries which wished to
distinguish between commercial and other disputes should be unable to formulate a
reservation to that effect.), 7 (It was essential [for Peru] to include a reservation
regarding reciprocity inasmuch as the legislation of some States placed such broad
matters as property laws, inheritances and civil status outside the scope of arbitration.
The reciprocity clause would therefore appear to be a minimum condition which would
have to be accepted if the Convention was to be realistic.).
Reservations were not ultimately permitted but on ratification several states took the
opportunity afforded by Article I(3) to declare that they would apply the Convention only
to differences arising out of legal relationships, whether contractual or not, which are
considered as commercial under the national law of the State making such declaration.
718) As discussed elsewhere, there are instances in which international law principles derived
from the Convention limit the application of national law standards that purport to
invalidate international arbitration agreements. See4.04[A][1][b], pp. 494-95; 5.01[B][2],
p. 642. Specifically, Article II(3) of the Convention is best interpreted as giving rise to
prohibitions against discriminatory and idiosyncratic national laws with regard to the
substantive validity of international arbitration agreements: this rule precludes
Contracting States from applying rules of substantive validity that discriminate against
either arbitration agreements generally or international arbitration agreements (as
compared to domestic arbitration agreements), or from applying idiosyncratic rules of
domestic law to international arbitration agreements. See4.04[A][1][b], pp. 494-95.
Under this analysis, the same rules of formation, mistake, illegality, fraud,
unconscionability, impossibility and the like must be applied to arbitration agreements
as to other contracts, and states cannot disfavor international arbitration agreements as
compared with domestic ones.
720) This is compelled by Article II(1)s treatment of nonarbitrability as an exception to the
general rule of presumptive validity of international arbitration agreements and its
objective of enhancing the enforceability of international arbitration agreements.
See1.04[A][1]. Article II(1)s nonarbitrability provision is an exceptional deviation from
the international rule of presumptive validity of arbitration agreements, and must
therefore be applied consistently with its basic character.
721) For example, a Contracting State should not be permitted to treat all contract disputes
or tort claims as non-arbitrable. Equally, a Contracting State should not be permitted to
treat all future disputes as non-arbitrable. See2.03[E]-[F].
722) Metrocall Inc. v. Elec. Tracking Sys. Pty Ltd, [2000] NSWIRComm 136 (N.S.W. Indus.
Relations Commn). See6.04. That is true even where statutory protections restricted the
right of parties to conclude unfair contracts in particular industrial sectors.
723) The Hub Power Co. v. Pakistan WAPDA (Pakistan S.Ct. 2000), 16 Arb. Intl 439 (2000).
See6.04.
724) Himpurna Cal. Energy Ltd v. PT (Persero) Perusahaan Listruik Negara, Final Ad Hoc Award of
4 May 1999, XXV Y.B. Comm. Arb. 13, 31-32 (2000); 6.04.
725) Examples of such disputes include granting or revocation of intellectual property rights
or declaration of bankruptcy. See6.04.
726) Questions would arise as to how carefully-tailored or specifically-articulated a particular
nonarbitrability rule was required to be under the Convention. Given the Conventions
constitutional terms, the resolution of such questions would be a developing process, as
Contracting States continue to gain confidence in the arbitral process and jointly demand
more specifically-articulated justification for nonarbitrability rules.
190
727) See1.04[A][1]. See alsoJudgment of 5 October 1994, Socit Van Hopplynus v. Socit
Coherent Inc., XXII Y.B. Comm. Arb. 637 (Brussels Tribunal de Commerce) (1997) (refusing to
apply nonarbitrability rule of local (Belgian) law, citing fact that Belgian courts would
permit choice-of-forum clause selecting foreign courts involving same claims); van
Houtte, Larbitrabilit de la rsiliation des concessions de vente exclusive, in vander Elst
(ed.), Mlanges offerts Raymond Vander Elst 821 (1986) (rejecting approach whereby
Belgian court acceptsthat its foreign colleagues ignore the Law of 1961 [regarding
nonarbitrability of certain distribution terminations] but does not tolerate that foreign
arbitrators do the same).
For the same reasons, a Contracting State could not adopt nonarbitrability rules that
conflict with the basic premises of the Convention. For example, a state could not treat
all future disputes or all noncontractual disputes as non-arbitrable. In each case, it is a
basic premise of the Convention, reflected in the Conventions text, that arbitration
agreements applying to these categories of disputes will be enforceable. See2.03[E]-[F].
728) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639 (U.S. S.Ct. 1985).
See6.03[A]; 6.03[C][4].
729) See, e.g., Hodgson v. Royal Caribbean Cruises, Ltd, 706 F.Supp.2d 1248, 1256 (S.D. Fla. 2009)
(The null and void language must be read narrowly, for the signatory nations have
jointly declared a general policy of enforceability of agreements to arbitrate.); JSC
Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676 (S.D.N.Y.);
Marchetto v. DeKalb Genetics Corp., 711 F.Supp. 936, 939 (N.D. Ill. 1989); Quintette Coal Ltd v.
Nippon Steel Corp., (1990) 50 B.C.L.R.2d 207 (B.C. Ct. App.).
730) It is less clear whether the arbitrability of competition or antitrust claims would
constitute such a consensus, forbidding a Contracting State from treating antitrust or
competition claims as non-arbitrable. See6.04[A]. The possibility of the development of
further international constraints derived from the constitutional character of the
Conventions language, structure and objectives is discussed below. See6.04[A]; 11.03.
731) See4.06[A]; 5.02[A][2].
732) See4.06[A][1]. As discussed below, the uniform international standards contained in
Article II of the Convention regarding the formal validity of the arbitration agreement are
not applicable to the substantive validity of the agreement. See4.06[A][1]; A. van den
Berg, The New York Arbitration Convention of 1958 177 (1981) ([T]he uniform rule character
of Article II(2) concerns only the form of the arbitration agreement. It does not concern
other aspects of the validity of the arbitration agreement also called the substantial
validity which aspects have, in principle, to be judged under the applicable law.)
(emphasis in original).
733) New York Convention, Art. II(2). The contents of this uniform substantive rule are
discussed below. See5.02[A][2].
734) Inter-American Convention, Art. 1; 5.02[A][4].
735) European Convention, Art. I(2); 5.02[A][3].
736) See5.02[A][2][d].
737) See5.02[A][2][d].
738) A. van den Berg, The New York Arbitration Convention of 1958 287 (1981). Compare Patocchi
& Jermini, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 194, 67
(2000); A. Samuel, Jurisdictional Problems in International Commercial Arbitration 82-84
(1989). See alsoJudgment of 7 February 1984, Tradax Exp. SA v. Amoco Iran Oil Co., XI Y.B.
Comm. Arb. 532, 533-34 (Swiss Federal Tribunal) (1986) (It results from the text of the
Convention itselfthat Art. II contains rules of uniform applicability which, in cases where
the Convention is applicable, replace national law. It is therefore exclusively in the light
of these treaty provisions that the question of the validity of the arbitration clause in
question must be resolved.).
739) This includes, for example, the UNCITRAL Model Law, the U.S. FAA, English Arbitration Act,
1996, French Code of Civil Procedure and Swiss Law on Private International Law.
See5.02[A][5].
740) See5.02[A][2][d]-[e].
741) See5.02[A][2][e].
742) See5.02[A][2][e], pp. 672-73.
743) Report of the UNCITRAL on the Work of Its Thirty-Ninth Session, Recommendation
Regarding the Interpretation of Article II, Paragraph 2, and Article VII, Paragraph 1, of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, U.N. Doc.
A/61/17, Annex II (2006); Revised Articles of the Model Law on International Commercial
Arbitration of the United Nations Commission on International Trade Law and the
Recommendation Regarding the Interpretation of Article II, Paragraph 2, and Article VII,
Paragraph 1, of the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, UN General Assembly Resolution No. 61/33, Annex II (2006).
744) See5.02[A][2][f], pp. 675-76. See also Schramm, Geisinger & Pinsolle, Article II, in H. Kronke
on the New York Convention 37, 75-76 (2010) (While courts in certain jurisdictions apply
Article II(2) liberally, others follow a strict approach. Under the liberal approach, Article
II(2) constitutes a non-exhaustive list of ways to satisfy the in writing requirement,
whereas under the strict approach, Article II(2) defines the writing requirement
exhaustively.).
191
745) Report of the UNCITRAL on the Work of Its Thirty-Ninth Session, Recommendation
Regarding the Interpretation of Article II, Paragraph 2, and Article VII, Paragraph 1, of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, U.N. Doc.
A/61/17, Annex 2 (2006).
746) See1.04[A][1]; 2.01[A][1][a]; 4.04[B][2][b]; 5.01[B][2]; 25.02[B]; 26.03[B][5]. Article VII is
also applicable if Article II(2)s list is interpreted as exclusive. See Landau, The
Requirement of A Written Form for An Arbitration Agreement: When Written Means Oral,
in A. van den Berg (ed.), International Commercial Arbitration: Important Contemporary
Questions 19, 73 (ICCA Congress Series No. 11 2003) (If the word include in Article II(2)
indicates an exhaustive criteria, the question arises as to whether national courts may
apply their own more liberal laws (where these exist) under Article VII(1) of the
Convention, rather than the stricter requirements of the Convention.).
747) See2.01et seq. (especially 2.01[B][1]); 2.03et seq. for a discussion of the Conventions
jurisdictional requirements.
748) See2.03. Of course, even if national law (as distinguished from the Convention) upholds
the formal validity of an arbitration agreement by applying less stringent requirements
than Article II of the Convention, the Convention and its obligations concerning
recognition and enforcement of awards will remain applicable. See1.04[A][1][c].
749) In the original 1985 text, UNCITRAL Model Law, Article 7(2) provided: An agreement is in
writing if it is contained in a document signed by the parties or in an exchange of letters,
telex, telegrams or other means of telecommunication which provide a record of the
agreement, or in an exchange of statements of claim and defence in which the existence
of an agreement is alleged by one party and not denied by another. See also H.
Holtzmann & J. Neuhaus, A Guide to theUNCITRAL Model Law on International Commercial
Arbitration: Legislative History and Commentary 260-64 (1989); 5.02[A][5][a]. The 2006
Revisions of the Model Law provided new (and reduced) form requirements, also
contained in Article 7. See5.02[A][5][a].
750) UNCITRAL Model Law, Art. 1(2) (The provisions of this lawapply only if the place of
arbitration is in the territory of this State.). As discussed elsewhere, Article 1(2) generally
provides that most provisions of the Model Law apply only to agreements to arbitrate
within the territory of the national jurisdiction. See2.03; 2.04[B]; 11.03.
751) U.S. FAA, 9 U.S.C. 1; English Arbitration Act, 1996, 5(3); Swiss Law on Private International
Law, Arts. 176(1), 178(1); Swiss Code of Civil Procedure, Arts. 353(1), 358; Netherlands Code
of Civil Procedure, Art. 1021; Japanese Arbitration Law, Art. 13.
As noted below, these national law provisions tend to be more liberal than the form
requirements in Article II(2) of the New York Convention. See5.02[A][5].
752) See, e.g.,Judgment of 24 November 2011, EGPC v. NATGAS, 2012 Rev. arb. 134 (Paris Cour
dappel); Judgment of 18 November 2010, Rpublique de Guine quatoriale v. SA Bank
Guinea quatorial, 2010 Rev. arb. 980 (Paris Cour dappel) (appellant cannot rely on
formal requirements for arbitration agreement imposed by its domestic law); Judgment of
10 June 2004, Bargues Agro Indus. SA v. Young Pecan Cie, XXX Y.B. Comm. Arb. 499, 502
(Paris Cour dappel) (2005) (According to a substantive provision of French international
arbitration law, the parties intention suffices to validate an arbitration agreement.
Hence, that agreement does not fall under a national law because it is fully autonomous,
also with regard to form.).
753) Even if an arbitration agreement providing for arbitration within national territory does
not satisfy applicable form requirements of local legislation (e.g., Article 7(2) of the 1985
UNCITRAL Model Law), there remains the question whether the agreement should be
deemed valid if it satisfies the form requirements of other jurisdictions (e.g., the law
selected by the parties to govern their arbitration agreement). As discussed below, under
the validation principle, the answer to this question should be in the affirmative.
See4.06[B][4], pp. 623-24.
754) U.S. FAA, 9 U.S.C. 1; English Arbitration Act, 1996, 5; Swiss Law on Private International
Law, Arts. 176(1), 178(1); Swiss Code of Civil Procedure, Arts. 353(1), 358; Belgian Judicial
Code, Art. 1681.See P. Binder, International Commercial Arbitration and Conciliation in
UNCITRAL Model Law Jurisdictions 2-003 (3d ed. 2009); H. Holtzmann & J. Neuhaus, A
Guide to theUNCITRAL Model Law on International Commercial Arbitration: Legislative
History and Commentary 258 (1989).
755) Thyssen Canada Ltd v. Mariana Maritima SA, [2000] 3 FC 398 (Canadian Fed. Ct. App.);
Nanisivik Mines Ltd v. Canarctic Shipping Co., [1994] 2 FC 662 (Canadian Fed. Ct. App.);
Dongnam Oil & Fats Co. v. Chemex Ltd, [2004] FC 1732 (Canadian Fed. Ct.); Ferguson Bros. of
St. Thomas v. Manyan Inc., [1999] O.J. No. 1887 (Ontario Super. Ct.); Schiff Food Prods. Inc. v.
Naber Seed & Grain Co., [1996] CanLII 7144 (Saskatchewan Q.B.).
756) See, e.g.,Judgment of 20 January 1987, Socit Bomar Oil NV v. Entreprise Tunisienne
dActivits Ptrolires, 1987 Rev. arb. 482 (Paris Cour dappel), revd on other grounds,
Judgment of 11 October 1989, 1990 Rev. arb. 134 (French Cour de cassation civ. 1e);
Judgment of 27 March 1962, Compagnie Marchande de Tunisie v. Costa de Marfil, JPC G 1963,
II, 13036 (Paris Cour dappel); Judgment of 29 September 1959, Goldschmidt v.
Cottaropoulos, 88 J.D.I. (Clunet) 168 (Aix-en-Provence Cour dappel) (1961); O. Lando,
Contracts, III International Encyclopedia of Comparative Law 102 (1977).
757) Economy Forms Corp. v. Islamic Repub. of Iran, Award in IUSCT Case No. 55-165-1 of 14 June
1983, 3 Iran-U.S. C.T.R. 42, 47-48 (1983).
192
758) See4.02[B]; Judgment of 21 September 2005, XXXI Y.B. Comm. Arb. 679 (German
Bundesgerichtshof) (2006) (suggesting that formal requirements applicable to arbitration
agreement were governed by law selected by parties choice-of-law agreement).
759) See4.04[B] (especially 4.04[B][3]; 4.04[B][6][d]et seq.).
760) Award in ICC Case No. 5832, 115 J.D.I. (Clunet) 1198 (1988).
761) Restatement (Second) Conflict of Laws 199(2) (1971) (Formalities which meet the
requirements of the place where the parties execute the contract will usually be
acceptable.); Rome Convention, Art. 9(4) (specifying, as alternative grounds, the law of
the country where the act was done); Rome I Regulation, Art. 4; Judgment of 18 April 1865,
D.P., I, 342 (1865) (French Cour de cassation req.).
762) See, e.g., Award in ICC Case No. 4392, 110 J.D.I. (Clunet) 907 (1983).
763) Judgment of 20 January 1987, Socit Bomar Oil NV v. Entreprise Tunisienne dActivits
Ptrolires, 1987 Rev. arb. 482 (Paris Cour dappel), revd on other grounds, Judgment of 11
October 1989, 1990 Rev. arb. 134 (French Cour de cassation civ. 1e). CompareLew, The Law
Applicable to the Form and Substance of the Arbitration Clause, in A. van den Berg (ed.),
the New York Convention 141-42 (ICCA Congress Series No. 9 1999).
764) See4.06[B][1].
765) See4.04[A][4][c]; 4.04[B][6][d].
766) See4.04[A][4][c]; 4.04[B][6][d].
767) Rome I Regulation, Art. 11(3) (contract is formally valid if it satisfies formal requirements
of the law of the country where the person by whom it was done has his habitual
residence at that time); Rome Convention, Art. 9(4); M. Giuliano & P. Lagarde, Report on
the Convention on the Law Applicable to Contractual Obligations, O.J. C 282 31/10/1980, Art.
9.
768) Swiss Law on Private International Law, Art. 124 (A contract is formally valid if it conforms
either to the law applicable to the contract or to the law of the place the contract was
executed.); Judgment of 28 May 1963, JCP 1964, II, 13347, 1 (French Cour de cassation civ.
1e) (The locus regit actum rule does not prevent international contracts to be passed in
France in a form determined by the foreign law governing their substance.); L. Collins et
al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 16-023 to 16-026 (15th ed.
2012). See also Restatement (Second) Conflict of Laws 188, comment b (1971).
International Contracts, Art. 9(1) (2012) (The contract is formally valid if it is formally valid
under the law chosen by the parties, but this shall not exclude the application of any
other law which is to be applied by a court or arbitral tribunal to support formal
validity.).
770) See1.02[B].
771) SeeJudgment of 26 March 1991, Comit populaire de la Municipalit dEl Mergeb v. Socit
Dalico contractors, 1991 Rev. arb. 456 (Paris Cour dappel).
772) See, e.g.,Final Award in ICC Case No. 6162, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.),
Collection of ICC Arbitral Awards 1991-1995 75, 83-84 (1997) (although lack of writing might
render arbitration agreement void under law governing substantive validity of
agreement, arbitrators upheld agreement on grounds it was valid under law of arbitral
seat); Award in ICC Case No. 5832, 115 J.D.I. (Clunet) 1198 (1988).
773) See A UK Ltd v. B SpA, 25 ASA Bull. 755, 761 (2007) (in arbitration seated in Switzerland,
with English law chosen to govern substance of dispute, arbitrator applied Swiss law to
determine validity of arbitration agreement: When examining whether an arbitration
clause is formally valid one must exercise caution.For an arbitration clause to be valid
there must be (a) an express common will of the parties to submit the dispute in question
to an arbitral tribunal; (b) a determinable dispute or disputes covered by the clause; and
(c) written evidence of a mutual acceptance by the parties to submit themselves to
arbitration; arbitrator concluded that agreement was not formally valid under Article
178(2) of Swiss Law on Private International Law).
774) See, e.g., Lew, The Law Applicable to the Form and Substance of the Arbitration Clause, in A.
van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years
of Application of the New York Convention 139 (ICCA Congress Series No. 9 1999) (concluding
that, in practice, when faced with choice-of-law issue, arbitrators have assessed formal
validity of arbitration clause under whichever law, when applied, would validate
arbitration clause); Mayer, Lautonomie de larbitre international dans lapprciation de sa
propre comptence, 217 Recueil des Cours 319, 114 et seq. (1989).
775) See4.06[B][1].
776) See4.06[B][1]. Compare Landau, The Requirement of A Written Form for An Arbitration
Agreement: When Written Means Oral, in A. van den Berg (ed.), International
Commercial Arbitration: Important Contemporary Questions 19, 67 (ICCA Congress Series
No. 11 2003) (if an arbitration agreement is valid under its own applicable law in respect
of form, it is unlikely to be defeated by Article II(2), [but] national courts do not always
take this approach).
777) See4.04[A][4][c]; 4.04[B][6][d].
778) See5.03[B].
779) New York Convention, Art. V(1)(a) (emphasis added).
193
780) That is what most commentary concludes. See, e.g., E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 454 (1999);
Heiskanen, Forbidding Dpeage: Law Governing Investment Treaty Arbitration, 32 Suffolk
Transnatl L. Rev. 367, 379-81 (2008-2009) ([I]ssues such as capacity seem more
appropriately resolved by reference to the personal law of the party in question, i.e., the
law governing the partys nationality or domicileor the place of incorporation or
principal place of business orthe public lawof the state in question.); J. Lew, L.
Mistelis & S. Krll, Comparative International Commercial Arbitration 6-51 (2003); A. van
den Berg, The New York Arbitration Convention of 1958 276-77 (1981) (The drafters of the
Convention left open the question how the law applicable to a party also referred to as
the personal law is to be determined. The question must therefore be resolved by
means of the conflict of laws rules of the law of the court before which the enforcement of
the arbitral awards is sought.The phrase in Article V(1)(a) gives a half-way conflict rule
since what is to be considered as the personal law is still to be determined by the
conflict rules of the forum.).
781) W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 5.02 n.3
(3d ed. 2000).
2009); A. van den Berg, The New York Arbitration Convention of 1958 276 (1981).
783) See4.02[A][1]; 4.04[A][1][b]; 4.04[B][2][b].
784) See4.02[A][1].
785) Article 34(2)(a)(i) omits reference to the New York Conventions phrase the law
applicable to them. UNCITRAL Model Law, Art. 34(2)(a)(i). See alsoUNCITRAL Model Law,
Art. 36(1)(a); H. Holtzmann & J. Neuhaus, A Guide to theUNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary 915-16 (1989).
Section 1059(2)(1)(a) of the UNCITRAL-based German ZPO refers to the law applicable to
the parties, but without specifying how that law is to be selected.
786) English Arbitration Act, 1996, passim; French Code of Civil Procedure, passim. Similarly,
the U.S. FAA does not contain provisions dealing expressly with questions of capacity. See
U.S. FAA, passim.
in International Commercial Arbitration, 289 Recueil des Cours 9, 98-99 (2001) (declining to
apply national law to issues of capacity; holding that international principles insulate
arbitration agreement from national laws directly or indirectly restricting access to
international arbitration). See alsoItalian Code of Civil Procedure, Art. 808 (The validity
of the arbitration clause shall be evaluated independently from the underlying contract;
nevertheless, the capacity to enter into the contract includes the capacity to agree to the
arbitration clause.); Svenska Petroleum Exploration AB v. Lithuania (No. 2) [2006] EWCA
Civ 1529, 7 (English Ct. App.) (applying Lithuanian law to conclude that Lithuania was
bound by arbitration agreement, which specified application of Lithuanian law
supplemented, where required, by [international rules] if they do not contradict
Lithuanian law); Judgment of 10 April 1990, XVII Y.B. Comm. Arb. 568 (Korean Daebeobwon)
(1992) (applying English law, as law of arbitral seat and law governing underlying contract,
to question of agents capacity); L. Collins et al. (eds.), Dicey, Morris and Collins on The
Conflict of Laws 16-027 n.59 (15th ed. 2012) (The answer should depend on the law
governing the arbitration agreement, rather than the law of the State concerned, but
Arbitration Act 1996, s.103(2)(a) (and the corresponding provision in the New York
Convention) suggest otherwise in the context of enforcement.).
788) See, e.g., Award in ICC Case No. 9899, discussed in Grigera Nan, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 99-100 (2001) (applying law
of corporate seat to issues of corporate capacity to commence arbitration); Award in ICC
Case No. 7373, discussed in Grigera Nan, Choice-of-Law Problems in International
Commercial Arbitration, 289 Recueil des Cours 9, 98-99 (2001) (The question of capacity
and power of authority to sign a contract is generally governed by the law of the domicile
or the national law of the concerned person. This solution is followed in nearly all
countries of both the Civil and the Common Law systems.); Interim Award in ICC Case No.
7337, XXIVa Y.B. Comm. Arb. 149, 151 (1999) (legal capacity of a party is determined
according to the law at its place of domicile); Award in ICC Case No. 6476, discussed in
des Cours 9, 100-01 (2001) (wide-spread practiceregards questions of capacity as
relating to status and the personal law); Award in ICC Case No. 5803, discussed in Grigera
Cours 9, 105 n.94 (2001) (capacity matters are, in general, governed by local law (lex
domicilii)); Award in ICC Case No. 4381, 113 J.D.I. (Clunet) 1102, 1106 (1986) (each partys
capacity to agree to arbitration is governed by that partys personal law); Judgment of 5
May 1976, V Y.B. Comm. Arb. 217, 218 (Swiss Federal Tribunal) (1980) (all problems
concerning the legal status of a legal entity are governed by the law of the State in which
it has its seat and from which it derives its legal capacity); Judgment of 23 April 1997,
Dalmine SpA v. M & M Sheet Metal Forming Mach. AG, XXIVa Y.B. Comm. Arb. 709 (Italian
Corte di Cassazione) (1999) (applying Italian law to issue of capacity of general manager
to conclude arbitration agreement for Italian company).
789) Award in ICC Case No. 2694, 105 J.D.I. (Clunet) 985, 986 (1978).
790) Partial Award on Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb. 279
(2000).
194
791) Judgment of 31 March 2009, Vivendi SA v. Deutsche Telekom AG, 28 ASA Bull. 104, 109 (Swiss
Federal Tribunal) (2010). See also Aebi & Frey, Impact of Bankruptcy on International
Arbitration Proceedings A Special Case Does Not Make A General Rule, 28 ASA Bull. 113
(2010); Karrer, The Swiss Federal Supreme Court Got It Wrong, Wrong, Wrong and Wrong A
Fourth Time, 28 ASA Bull. 111 (2010); Naegeli, Bankruptcy and Arbitration What Should
Prevail? The Impact of Bankruptcy on Pending Arbitral Proceedings, 2010 Austrian Y.B. Intl
Arb. 193.
792) Judgment of 23 April 1998, XXIVa Y.B. Comm. Arb. 928, 930 (German Bundesgerichtshof)
(1999).
793) See, e.g., Brtsch & Petti, The Arbitration Agreement, in E. Geisinger & N. Voser (eds.),
International Arbitration in Switzerland: A Handbook for Practitioners 25, 40 (2d ed. 2013)
(According to the Swiss Federal Tribunal, the issue of capacity is to be determined under
the law applicable by operation of the general conflict of law rules governing the
capacity of persons and entities (Articles 35-36 and 154-155 of the [Swiss Law on Private
International Law])as opposed to the special conflict of law rule of Article 178(2) of the
[Swiss Law on Private International Law].); B. Berger & F. Kellerhals, International and
Domestic Arbitration in Switzerland 328 (2d ed. 2010) ([T]he capacity to be a party to an
arbitration is not governed by the special conflict of laws rule of Art. 178(2) [of the Swiss
Law on Private International Law]. Instead, it is determined by the law applicable by
operation of the general conflict of laws rules of the [Swiss Law on Private International
Law] governing the legal capacity of individuals and legal entities.[Based upon the]
closest-connection test of Art.187(1) the capacity of legal entities will thus normally be
governed by the law of the place of incorporation.); Blessing, Drafting An Arbitration
Clause, in M. Blessing (ed.), The Arbitration Agreement Its Multifold Critical Aspects 32, 44
(ASA Spec. Series No. 8 1994) (Capacity matters are normally governed by the lex
incorporationis, i.e., the domestic law of each party.); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 461 (1999)
(discussing French Civil Code, Art. 1837); Mantilla-Serrano, International Arbitration and
Insolvency Proceedings, 11 Arb. Intl 51, 63 (1995) (Regarding matters concerning the
capacity of the insolvent party (or its representatives) to pursue the arbitration, the
arbitrators consistently refer such issues to the personal law of the party, which for
corporations is generally the law of the place of incorporation.); P. Lalive, J.-F. Poudret &
C. Reymond, Le droit de larbitrage interne et international en Suisse Art. 178, 19 (1989)
(For arbitrations taking place in Switzerland one might be tempted to apply the
alternative connecting factor of Art. 178(2) of [the Swiss Law on Private International Law]
favoring the material validity of the arbitration agreement. The majority of authors rightly
reject this solution and submit that capacity is governed by the personal law.).
794) See, e.g., Restatement (Second) Conflict of Laws 198(b) (1971); Foustoucos, Conditions
Required for the Validity of An Arbitration Agreement, 5(4) J. Intl Arb. 113, 117 (1988); A. van
den Berg, The New York Arbitration Convention of 1958 276-77 (1981). Compare L. Collins et
al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 32R-168 (15th ed. 2012) (The
capacity of an individual to enter into a contract is governed by the law of the country
with which the contract is most closely connected or by the law of his domicile and
residence.).
795) See, e.g., Restatement (Second) Conflict of Laws 302(b) (1971); Foustoucos, Conditions
Required for the Validity of An Arbitration Agreement, 5(4) J. Intl Arb. 113, 117 (1988); E.
796) See also the discussion above of awards holding that the conflicts rules of the arbitral
seat are mandatorily-applicable in arbitral proceedings. See4.04[A][2][c], pp. 510-11.
on Arbitration in Private International Law (Neuchtel) 396 (1959). See4.04[A][2][c].
798) See4.04[A][3]; 4.04[B][6][d]; 4.05[C].
799) See4.04[A][3], pp. 543-45; 4.06[B][4], pp. 623-24.
800) Restatement (Second) Conflict of Laws 198 (1971) ((1) The capacity of the parties to
contract is determined by the law selected by application of the rules of 187-188. (2)
The capacity of a party to contract will usually be upheld if he has such capacity under
the local law of the state of his domicil.); Award in ICC Case No. 7373, discussed in Grigera
Cours 9, 98-99 (2001). See also L. Collins et al. (eds.), Dicey, Morris and Collins on The
Conflict of Laws 30R-020 (15th ed. 2012) ((1) The capacity of a corporation to enter into
any legal transaction is governed both by the constitution of the corporation and by the
law of the country which governs the transaction in question. (2) All matters concerning
the constitution of a corporation are governed by the law of the place of incorporation.).
195
801) SeeJudgment of 10 June 2004, Bargues Agro Indus. SA v. Young Pecan Cie, XXX Y.B. Comm.
Arb. 499, 502 (Paris Cour dappel) (2005) (Since arbitration clauses are thus independent
of national provisions, the lack of capacity of the representative of one of the parties to
conclude an arbitration agreement is not evaluated pursuant to a national law, but
rather directly by the court when examining the facts of the case, [to determine] whether
the other party could legitimately and in good faith believe that this power was not
lacking.). See alsoJudgment of 8 July 2009, Socit dtudes et reprsentations navales et
industrielles v. Socit Air Sea Broker Ltd, 2009 Rev. arb. 529 (French Cour de cassation civ.
1e); Judgment of 18 November 2010, Rpublique de Guine quatoriale v. SA Bank Guinea
quatorial, 2010 Rev. arb. 980 (Paris Cour dappel); Judgment of 22 March 1976, III Y.B.
Comm. Arb. 283, 283 (Tunis Ct. First Inst.) (1978) ([I]t is generally accepted that
international commercial relations are subject to their own customs.[The] present
question does no longer depend on the personal law of the parties, but rather on the
subject matter of the contract. The latter is the result from the parties will, and
constitutes their own law since the contract is an international contract concluded in
order to correspond to the needs of the parties on the one hand hand [sic] and to
international commercial customs on the other.).
802) See4.04[A][1][b]; 4.04[B][2][b]; 4.08; 11.03[B]; 12.02[A]; 12.04[A][4]; 12.04[B][7];
15.02[A].
803) See5.03[D].
804) See1.04[A][1].
805) Swiss Law on Private International Law, Art. 177(2). See also5.03[D].
806) Judgment of 13 October 1992, 11 ASA Bull. 68, 78 (Swiss Federal Tribunal) (1993) ([Article
177(2)] follows from the principle of good faith which applies just as much to a state
participating in international economic transactions as it does to private persons. The
intent of this provision is to avoid that the state uses its legislative power to its
advantage in its agreements with private persons and thereby frustrates the arbitral
proceedings.).
807) For a similar analysis under Swiss law, seeJudgment of 16 October 2012, DFT 4A_50/2012,
3.1.2.5 (Swiss Federal Tribunal) (When the foreign entity is a legal person according to
its status at the place of incorporation, it is also capable of standing as a party in an
international arbitration seated in Switzerland. Possible limitations of the legal status as
a person or a legal entity that are specific to the arbitral proceedings and leave the legal
personality of the foreign entity untouched, are fundamentally irrelevant from the point
of view of the capacity to be a party to an arbitration seated in Switzerland.).
808) Judgment of 16 October 2012, DFT 4A_50/2012, 3.2 (Swiss Federal Tribunal).
809) These subjects are sometimes confused with matters of capacity, but are more correctly
considered as issues of authority or corporate power. See5.03[E][3]; Restatement
(Second) Conflict of Laws 292 (1971); Devaud, La Convention darbitrage signe par un
reprsentant sans pouvoirs, 23 ASA Bull. 2, 3-5 (2005).
810) See1.04[A][1].
811) See4.04[A][4][c]; 4.04[B][6][d]. See also A. van den Berg, The New York Arbitration
Convention of 1958 226 (1981) (New York Convention does not provide a solution for the
question under which law the form of the authorization to conclude an arbitration
agreement is to be judged).
813) See4.04[A][4][c].
814) See Restatement (Second) Conflict of Laws 292(2) (1971); Judgment of 4 September 2003,
XXX Y.B. Comm. Arb. 528 (Oberlandesgericht Celle) (2005); Rees & Flesch, Agency and
Vicarious Liability in Conflict of Laws, 60 Colum. L. Rev. 764, 767-68 (1960). See alsoFinal
Award in ICC Case No. 6850, XXIII Y.B. Comm. Arb. 37 (1998) (sole arbitrator considered
chosen law governing underlying contract (French law) and law of place of incorporation
of company (Germany) to conclude that two agents were not bound personally by
arbitration clause in contract they signed on behalf of company that lacked legal
personality at time of signing); Judgment of 23 April 1997, Dalmine SpA v. M & M Sheet
Metal Forming Mach. AG, XXIVa Y.B. Comm. Arb. 709, 710 (Italian Corte di Cassazione) (1999)
(determination of authority of representatives who executed agreement was issue of
capacity, governed by law of partys domicile, not law of arbitration agreement: In the
New York Convention provision at issue [Article V(1)(a)], capacity means not only the
capacity of a physical person to perform an act, but any capacity, both a legal capacity
to perform an act with an eye towards so-called special legal incapacities and the
capacity of physical and legal persons.); Razumov, The Law Governing the Capacity to
Arbitrate, in A. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and
Awards: 40 Years of Application of the New York Convention 260 (ICCA Congress Series No. 7
1996).
815) Award in GMAA of 8 November 2005, XXXI Y.B. Comm. Arb. 66 (2006) (holding that authority
of partys representative to enter into arbitration agreement was governed by law
governing arbitration agreement, not law of partys or representatives domicile); Derains,
Observation on Final Award in ICC Case No. 4381, in S. Jarvin, Y. Derains & J.-J. Arnaldez
(eds.), Collection of ICC Arbitral Awards 1986-1990 268, 271 (1994).
816) See5.03[E][3]; French Code of Civil Procedure, Art. 1989 (agent cannot act beyond the
scope of its mandate: the power to settle disputes does not confer a power to enter into
arbitration agreements).
196
817) See5.03[E][3]; Austrian Civil Code, 1008 (agents exercising contractual authority require
special power of attorney to conclude arbitration agreement, except in cases involving
specified commercial contexts); G. Zeiler, Schiedsverfahren 577-618 ZPO idF des
SchiedsRG 2006 584, 28 et seq. (2006) (agents power to enter into arbitration
agreement on behalf of principal must be in writing). See also Oberhammer,
Rechtspolitische Schwerpunkte der Schiedsrechtsreform, in B. Kloiber et al. (eds.), Das neue
Schiedsrecht Schiedsrechts-nderungsgesetz 2006 93, 106 et seq. (2006); A. Reiner, The
New Austrian Arbitration Law Arbitration Act 2006 73 et seq. (2006).
It is not anticipated that this provision will be amended in upcoming revisions to the
Austrian arbitration laws (Schiedsrechts-nderungsgesetz 2012, 3/51 ME), despite serious
opposition expressed by Austrian practitioners. See C. Koller, Abschluss durch
Schiedsvereinbarungen durch rechtsgeschaeftliche Vertreter-Problemfelder de lege lata,
ecolex 878 (2011).
818) See5.03[E][3]; Greek Code of Civil Procedure, Art. 217(2).
819) See9.05[B].
820) See9.05[A].
821) See9.05.
197
KluwerArbitration
198
KluwerArbitration
Chapter 6: Nonarbitrability and International Arbitration
Author Agreements
P 943
This Chapter addresses nonarbitrability as a basis for challenging the enforceability of
an international arbitration agreement. The nonarbitrability doctrine applies to categories of
Publication subjects or disputes which are deemed by a particular national law to be incapable of
International Commercial resolution by arbitration, even if the parties have otherwise validly agreed to arbitrate such
Arbitration (Second Edition) matters. This Chapter first considers the treatment of the nonarbitrability doctrine in
international arbitration conventions, including distinctions between the nonarbitrability
doctrine and rules of contractual validity, illegality and public policy exceptions. Second, the
Bibliographic reference Chapter considers the treatment of the nonarbitrability doctrine under national law, including
the historical evolution of the doctrine in leading jurisdictions. The Chapter then considers the
'Chapter 6: Nonarbitrability application of the nonarbitrability doctrine in a variety of specific contexts, including
and International Arbitration antitrust, securities regulation, corruption, intellectual property, bankruptcy or insolvency,
Agreements', in Gary B. Born , consumer, employment, corporate disputes and other settings. Finally, the Chapter considers
International Commercial various choice-of-law, procedural and related issues arising from application of the
Arbitration (Second Edition), nonarbitrability doctrine.
2nd edition ( Kluwer Law
International; Kluwer Law 6.01 INTRODUCTION
International 2014) pp. 943 -
1045 Arbitration legislation or judicial decisions in many states provide that particular categories of
disputes are not capable of settlement by arbitration, or nonarbitrable. In some
jurisdictions, this defense is referred to as objective arbitrability, or arbitrability ratione
materiae, (2) while, in other jurisdictions, it is termed the nonarbitrability doctrine. (3) Both
international arbitration conventions (including the New York Convention) and national law
provide that agreements to arbitrate such nonarbitrable matters need not be given effect,
even if they are otherwise valid, (4) and that arbitral awards concerning such matters also
need not be recognized. (5)
The nonarbitrability doctrine has deep roots and a reasonably well-defined character, both
historically and in different contemporary national legal systems. In one commentators words:
All jurisdictions put limits on what can be submitted to arbitration. Customary law in Homeric
Greece as in modern Papua Guinea would allow a dispute arising from a killing to be settled by
arbitration; butnot sacrilege in Greece, nor adultery in parts of Papua New Guineaor in
Rome. (6)
P 944
The New York Convention and other international arbitration conventions recognize, and
permit Contracting States to apply, nonarbitrability exceptions of this nature. Although the
better view is that the Convention imposes international limits on Contracting States
applications of the nonarbitrability doctrine (as discussed elsewhere), (7) the types of claims
that are nonarbitrable differ from nation to nation. Among other things, typical examples of
nonarbitrable subjects in different jurisdictions include selected categories of disputes
involving criminal matters; domestic relations and succession; bankruptcy; trade sanctions;
certain competition claims; consumer claims; labor or employment grievances; and certain
intellectual property matters. (8)
As these examples suggest, the types of disputes which are nonarbitrable nonetheless almost
always arise from a common set of considerations. The nonarbitrability doctrine rests on the
notion that some matters so pervasively involve public rights and concerns, or interests of
third parties, which are the subjects of uniquely governmental authority, that agreements to
resolve such disputes by private arbitration should not be given effect. This rationale was
summarized, in evocative terms, by one U.S. appellate court:
A claim under the antitrust laws is not merely a private matter.Anti-trust violations can
affect hundreds of thousands perhaps millions of people and inflict staggering economic
damage.We do not believe Congress intended such claims to be resolved elsewhere than in
the courts. (9)
The court explained that the relevant statute, the Sherman Act, is designed to promote the
national interest in a competitive economy and equated a private litigant asserting antitrust
claims under the provisions of the Act with an agent of the government, reasoning thus, the
plaintiff asserting his rights under the Act has been likened to a private attorney-general who
protects the publics interest. (10) Other explanations of the rationale for the doctrine are
similar. (11)
As discussed elsewhere, the nonarbitrability doctrine contemplates a peculiar, and limited,
type of unenforceability of valid arbitration agreements. When an arbitration agreement is
invalid for lack of consent, noncompliance with form requirements, duress, or mistake, then the
agreement is invalid: the agreement is not binding or enforceable upon the parties in any
1
circumstances. In contrast, as discussed in greater detail below, the nonarbitrability doctrine
provides that an otherwise valid arbitration agreement may not be given effect as applied to a
particular dispute or subject matter. (12) The focus of analysis is on the particular dispute
or claim, not on the terms of the parties arbitration agreement.
P 945
6.02 NONARBITRABILITY IN INTERNATIONAL ARBITRATION
CONVENTIONS
The nonarbitrability doctrine has long been acknowledged in international arbitration
conventions. Article 1 of the Geneva Protocol provided for the recognition of international
arbitration agreements concerning commercial matters orany other matter capable of
settlement by arbitration. (13) This formulation served as a basis for subsequent international
arbitration treaties. (14) Similarly, the Geneva Convention provided for recognition of arbitral
awards where the subject matter of the award is capable of settlement by arbitration under
the law of the country in which the award is sought to be relied upon. (15)
[A] New York Convention: Articles II(1) and V(2)(A)

Drawing on the Geneva Protocol, Article II(1) of the New York Convention provides that an
international arbitration agreement shall be recognized if it concern[s] a subject matter
capable of settlement by arbitration. (16) Similarly, Article V(2)(a) of the Convention provides
that an award need not be recognized or enforced if [t]he subject matter of the difference is not
capable of settlement by arbitration under the law of the country where recognition is sought.
(17) Together, these provisions permit the assertion of nonarbitrability defenses to the
recognition and enforcement of otherwise valid and binding international arbitration
agreements and awards under the Convention.
The drafting history of Article V(2)(a) provides limited guidance in interpreting the provision.
The initial drafts of what became Article V(2)(a) referred to the subject matter of the award,
paralleling the Geneva Convention, which used the same formula. (18) That provision was
subsequently revised to refer in the final version of Article V(2)(a) to [t]he subject matter of the
difference. These changes do not appear to have a material impact on interpretation of the
Convention. (19)
More significant is the Geneva Protocols treatment of all commercial matters as arbitrable,
with the possibility of certain additional categories of non-commercial disputes also being
P 946
regarded as arbitrable. This is different from the view generally taken of the New York
Convention, which is that both commercial and other types of subject matter may be
categorized as nonarbitrable, depending on national law. (20)
[B] European and Inter-American Conventions

Other international arbitration conventions contain nonarbitrability provisions that are almost
identical to those in the New York Convention. Article VI(2) of the European Convention
provides: The courts may also refuse recognition of the arbitration agreement if under the law
of their country the dispute is not capable of settlement by arbitration. (21) Consistent with the
exceptional character of the nonarbitrability doctrine, Article VI(2) provides only a limited
recognition of the doctrine, in those courts where under the law of their country, the dispute
is nonarbitrable.
In contrast, Article 5(2)(a) of the Inter-American Convention does not refer to nonarbitrability in
the context of arbitration agreements and provides only for the non-recognition of arbitral
awards where the subject of the dispute cannot be settled by arbitration under the law of that
State. (22) The Convention does not expressly provide for the non-recognition of arbitration
agreements in such circumstances; on the contrary, Article 1 provides broadly that an
agreement in which the parties undertake to submit to arbitral decision any differences that
may arise or have arisen between them with respect to a commercial transaction is valid, (23)
without reference to any nonarbitrability exception. (24)
[C] Subject Matter Is Not Capable of Settlement By Arbitration

It is not entirely clear what the Geneva Protocol, New York Convention and European
Convention mean when they refer to a subject matter or dispute not capable of settlement by
arbitration. As a factual and logistical matter, it would be possible to settle almost any
dispute by arbitration: different cultures have arbitrated all manner of disputes, including
criminal, family, inheritance, intellectual property and other matters. There might be
situations where indispensable evidence was physically unavailable, preventing any
meaningful decision, or where none of the parties could participate in arbitral proceedings.
Even these (very) unusual circumstances would not, however, fall comfortably within the
exception in Article V(2)(a) of the New York Convention for subjects not capable of settlement
P 947 by arbitration and would instead more readily be covered by Article II(3)s exception for
arbitration agreements that are incapable of being performed. (25)
Instead, Article V(2)(a)s exception for subjects that are not capable of settlement by
arbitration has almost uniformly been applied where there is a legal (as distinguished from a
factual or practical) impediment to resolution of a dispute by arbitration. That is, most
authorities hold that a matter is not capable of settlement by arbitration where national law
forbids or restricts the arbitrability of particular claims or disputes. (26) This is also consistent
2
with the Geneva Protocol, which provided for the recognition of arbitration agreements
concerning commercial matters orany other matter capable of settlement by arbitration
(27) a formula fairly clearly directed at legal incapability, particularly given historic
national law rules regarding the arbitrability of commercial and non-commercial matters. (28)
[D] Distinction Between Nonarbitrability and Substantive Invalidity of Arbitration

Agreement
A rule of nonarbitrability under the New York Convention (and parallel national arbitration
legislation) is distinguishable in important ways from a rule of substantive invalidity of an
arbitration agreement. (29) There are a number of key differences between the two rules.
First, the two types of rules arise from different types of legal sources. Issues of substantive
validity are defined by generally-applicable contract law principles (i.e., unconscionability,
fraud, frustration, mistake), while issues of nonarbitrability are defined by legislation directed
specifically at application of the arbitration agreement to particular types of disputes (i.e.,
certain categories of consumer, bankruptcy, or criminal legislation) without regard to the terms
of the parties agreement. Rules of substantive validity are derived from (and, under the New
York Convention, must be derived from (30) ) generally-applicable principles of contract
formation and validity, while rules of nonarbitrability are based on specific statutory
enactments directed at agreements to arbitrate which, exceptionally, need not be generally-
applicable rules of contract law.
P 948
Second, a decision that a particular dispute is nonarbitrable is fundamentally different in
character from a decision that an agreement to arbitrate is invalid. Application of a rule of
contractual invalidity generally results in the arbitration agreement being held invalid,
including as applied to all categories of disputes: an unconscionable or forged arbitration
agreement is invalid no matter what issues a party seeks to arbitrate. In contrast, a rule of
nonarbitrability generally results in a valid agreement to arbitrate being unenforceable as it is
applied to a particular dispute or category of disputes: an agreement to arbitrate franchise
disputes can be valid, but claims for termination of the franchise contract falling within that
arbitration agreement can nonetheless be nonarbitrable. (31)
Finally, the same distinction that applies to rules of substantive validity and nonarbitrability
must also be drawn between rules regarding capacity and nonarbitrability. In some
jurisdictions, national law invalidates all (or some categories of) arbitration agreements
concluded by certain categories of persons. Examples include minors, bankrupt parties,
consumers and employees. (32) These types of legislative provisions are properly regarded as
capacity limitations or rules of contractual invalidity, invalidating the arbitration agreement
entirely, rather than prohibitions against the arbitration of particular categories of disputes.
P 949
[E] Distinction Between Nonarbitrability and Illegality of Arbitration Agreement
The nonarbitrability doctrine is also closely related to, but distinguishable from, the illegality
of the arbitration agreement. As discussed above, there are limited circumstances in which an
agreement to arbitrate will be illegal and unenforceable. (33) In many instances, legislation
forbidding the enforcement of arbitration agreements will properly be categorized as an
application of the nonarbitrability principle: the legislation will forbid arbitration of a
particular category of disputes (i.e., franchise, domestic relations, or insolvency matters). (34)
These cases do not in fact involve illegality of the arbitration agreement, but rather rules that
render the arbitration agreement unenforceable as applied to particular claims (that is, these
categories of claims are not capable of settlement by arbitration).
In contrast, true examples of illegal arbitration agreements are very rare and will involve
cases where the parties seek to use arbitration as a means to accomplish an illegal purpose
(i.e., money laundering) or where arbitration agreements are subject to generally-applicable
legal prohibitions (i.e., trade sanctions). In these instances, national criminal legislation will be
applied to a particular arbitration agreement and the results that it seeks to produce in
specific circumstances. The agreement to arbitrate will be illegal and can be denied
enforcement. (35)
[F] Distinction Between Nonarbitrability and Mandatory Law or Public Policy

The nonarbitrability doctrine under the New York Convention is also closely related to but
distinguishable from principles of mandatory law and public policy. (36) As discussed
elsewhere, most developed legal systems treat a limited set of legal rules, based on
fundamental public policies, as mandatory: despite general acceptance of party autonomy,
parties are ordinarily not permitted to derogate by agreement from the content of these rules,
or their underlying public policies, whether with regard to their choice of substantive law, (37)
their choice of the procedural law of the arbitration, (38) or their choice of arbitral procedures.
(39)
In certain respects, the doctrine of public policy (or mandatory law) parallels the
nonarbitrability doctrine: despite the parties general autonomy to agree to arbitrate their
disputes, their agreements to arbitrate may be unenforceable in some jurisdictions as applied
to certain, limited categories of issues. Thus, the nonarbitrability doctrine rests on legal rules
that, much like the public policy doctrines invalidation of private agreements, preclude
recognition of an arbitration agreement or award, notwithstanding an otherwise valid
3
agreement and arbitral proceeding. In both instances, the rationale rests on the premise that
there are unacceptable conflicts between the award or arbitration agreement and basic public
policies and legal norms of a particular state, which that state is permitted, exceptionally, to
invoke to justify non-recognition of an otherwise valid award or agreement. As noted
elsewhere, classic examples include certain issues arising in criminal, domestic relations,
bankruptcy, real property and governmental sanctions matters. (40)
Nonetheless, the concepts of nonarbitrability and public policy or mandatory law are
distinguishable in vitally-important respects. In particular, although public policies or
mandatory laws require that particular substantive rules be applied, they do not necessarily
preclude the arbitrability of those mandatory law claims; indeed, in the vast majority of cases,
mandatory law and public policy claims and defenses are arbitrable. (41)
P 950 As discussed below, the arbitrability of particular types of claims, including mandatory
law claims, is a question of legislative intent (and conflict of laws). (42) If a legislature does not
preclude arbitration of a mandatory law provision, then agreements to arbitrate such matters
will be valid and enforceable. That is, merely because a dispute involves matters of mandatory
law or public policy does not necessarily mean that the dispute is nonarbitrable and in
practice mandatory law claims are frequently arbitrated. (43) An early decision of the Paris
Cour dappel explained this reasoning clearly, concluding:
[T]he impact of public policy on the arbitrability of a dispute does not cause arbitrators to be
prohibited from applying mandatory rules, but only from hearing cases which, because of their
subject-matter, can only be heard by courts. (44)
P 951
Virtually all other national court decisions are to the same effect, and have resulted in
decisions holding that a wide range of mandatory law claims or defenses are arbitrable,
including antitrust, securities, trade sanctions, insolvency, corruption and the like. (45)
The foregoing conclusions are reflected in the provisions of Article V of the New York
Convention. Apart from other grounds for non-recognition of arbitral awards, Article V(2) of the
Convention sets forth two exceptional bases for non-recognition the public policy of the
enforcement forum (in Article V(2)(b)) and the nonarbitrability rules of the enforcement forum
(in Article V(2)(a)). (46) Thus, Article V(2)(a) of the Convention provides for the non-recognition
of awards dealing with nonarbitrable matters (i.e., matters not capable of settlement by
arbitration), (47) while Article V(2)(b) provides that awards need not be recognized if doing so
would be contrary to the public policy of the state where recognition is sought. (48) The
separate treatment of issues of public policy and nonarbitrability within Article V(2)s escape
provisions, rather than under the general provisions of Article V(1), both reflects and confirms
their common, and exceptional, character.
At the same time, however, Article V(2) treats public policy and nonarbitrability in separate
subsections. This reflects the fact that public policy objections to an award are also distinct
and separate from the nonarbitrability doctrine. That is consistent with applications of the two
principles: the public policy doctrine provides that certain results reached by arbitral awards
contradict public policy and cannot be recognized, while the nonarbitrability doctrine
provides that the arbitral process itself cannot be used to produce a binding decision in
particular cases (regardless what its results are). (49)
[G] No Interlocutory Judicial Decision On Mandatory Law

P 952 As discussed elsewhere, national court decisions over the past several decades have held
that a wide range of mandatory law claims are arbitrable, with courts referring the parties to
arbitration while reserving the possibility of a judicial second look in annulment, recognition,
or other proceedings. (50) Among other things, antitrust or competition law claims, securities
law claims, corruption defenses, insolvency disputes and a wide range of other mandatory law
issues have been referred to arbitration under Article II of the Convention. (51)
In doing so, most courts have held that, if it is unclear whether the arbitral tribunal will
actually apply mandatory national law, then the proper course is not to assume that the
tribunal will refuse to consider the mandatory law claims, in a manner that violates those
mandatory laws or public policies, but is instead to stay litigation and allow the arbitration to
proceed. (52) The U.S. Supreme Court adopted this approach in the classic Mitsubishi Motors
case, involving mandatory provisions of the U.S. antitrust laws, notwithstanding the fact that
the case involved an agreement to arbitrate in Japan and a Swiss choice-of-law provision;
despite these contractual provisions, the Supreme Court proceeded on the assumption that
the arbitral tribunal would give appropriate effect to the U.S. antitrust laws. (53)
The Supreme Court adopted a similar approach in an analogous context (involving the U.S.
Carriage of Goods by Sea Act (COGSA), reasoning that mere speculation that the foreign
arbitrators might apply Japanese law which might reduce respondents legal obligations,
does not in and of itself render a COGSA claim nonarbitrable. (54) The Court recently adopted
a similar view, in a related context, requiring arbitration of a domestic RICO claim:
[S]ince we do not know how the arbitrator will construe the remedial limitations, the
questions whether they render the parties agreements unenforceable and whether it is for
courts or arbitrators to decide enforceability in the first instance are unusually abstract[,
requiring submission of the matter to arbitration]. (55)
Under this analysis, the proper role of courts is not to attempt to predict what the arbitral
4
tribunal will or will not do with regard to antitrust (or other mandatory law) claims, but instead
to permit the arbitration to proceed and then consider a resulting award in recognition,
annulment or other proceedings. This is consistent with the approach, outlined above,
generally taken by courts towards claims that arbitration agreements are illegal or contrary
P 953 to public policy; under that approach, courts will permit the arbitral proceeding to go
forward and reserve judicial review until the award has been made, when courts can
consider whether the arbitrators decision violates applicable mandatory or criminal law or
public policies. (56) In one courts words, the mere possibility that
the foreign arbitrators might apply [foreign] law which, depending on the proper construction
of [the federal statute in issue], might reduce respondents legal obligations, does not provide
an adequate basis upon which to declare the relevant arbitration agreement unenforceable.
(57)
Other national courts have reached comparable conclusions. (58)
There are some contrary judicial decisions, which instead refuse to enforce arbitration
agreements, at least when coupled with foreign choice-of-law provisions that arguably exclude
applicable mandatory statutory protections. (59) For example, a recent Belgian decision held a
dispute involving a mandatory Belgian statutory protection for Belgian distributors
nonarbitrable absent evidence that the arbitral tribunal would apply Belgian law:
The Belgian judge, in order to decide the validity of the arbitration agreement, must set the
law chosen by the parties aside and apply immediately the law of 27 July 1961, according to
P 954 which the dispute is not capable of arbitration if proof/evidence is given that arbitrators
are obliged to apply not Belgian law but a foreign law. (60)
Decisions of this nature are exceptions to the general (and correct) rule adopted by national
courts, which is to defer to the arbitral process, rather than assuming that the arbitrators
award will violate applicable mandatory laws or public policies. (61) Indeed, the better view is
that Article II of the New York Convention requires such an approach, as one aspect of
Contracting States obligations to refer parties to arbitration. (62)
[H] International Limits On Nonarbitrability Doctrine

As discussed above, Articles II(1) and V(2)(a) of the New York Convention contemplate that
Contracting States may exceptionally apply their own law to refuse enforcement of an
otherwise valid and binding arbitration agreement or award on nonarbitrability grounds. That
is a form of escape valve which is available without regard to the generally-applicable
choice-of-law rule set forth in Article V(1)(a) of the Convention for arbitration agreements. (63)
Importantly, as also discussed elsewhere, the Convention should also be interpreted to subject
application of the nonarbitrability doctrine by Contracting States to international limitations.
In particular, consistent with the nonarbitrability doctrines status as an exceptional
dispensation from the Conventions basic structure, choice-of-law regime and purposes,
Contracting States should be permitted to adopt nonarbitrability exceptions only when
narrowly-tailored to achieve specifically-defined, articulated public policies which are not
inconsistent with state practice under the Convention. (64) Consistent with these limits, and as
discussed below, courts in most Contracting States have applied the nonarbitrability
exception only rarely in international settings.
[I] Conditional Nonarbitrability

The draft Restatement (Third) U.S. Law of International Commercial Arbitration has proposed, in
a tentative draft, a category of conditionally nonarbitrable matters. This proposal is difficult
to reconcile with existing authority, in the United States or elsewhere, and the rationale for the
proposal contradicts important principles prescribed by the New York Convention and
authority in most developed jurisdictions.
The draft Restatement contains a comment on the subject of nonarbitrability explaining that:
P 955 The Restatement recognizes two broad and analytically distinct categories of
nonarbitrability. The first includes matters that are by law categorically, or per se,
nonarbitrable. The second category comprises matters that are arbitrable only if certain
conditions are satisfied, and thus are characterized by conditional arbitrability. (65)
The Restatement identifies issues relating to the time or form of the arbitration agreement as
examples of so-called conditional arbitrability as in cases involving post-dispute arbitration
agreements or separately signed arbitration agreements. (66) The Restatement apparently
envisages particular categories of disputes that would be arbitrable if they were the subject of
a conspicuous or separately signed arbitration agreement, but not if they were the subject of
an agreement not satisfying these form requirements.
The Restatement goes on to justify this treatment of conditional arbitrability on the basis that
it would assertedly permit application of the recognition or enforcement forums local law:
In treatment of questions of conditional arbitrability under this Section, the Restatement
excludes characterization of them as questions of capacity, formal validity, or other categories
that might lead to application of a law other than that of the United States. (67)
The Restatement analysis is ill-considered and illustrates why it is important to give effect to
5
the distinction in the New York Convention (and UNCITRAL Model Law) between issues of
substantive validity and nonarbitrability. In fact, the Restatements examples of conditional
nonarbitrability raise issues of substantive validity specifically, the timing and form of
arbitration agreements and not issues of nonarbitrability. These issues do not concern the
nonarbitrability of particular subject matters or types of issues, as required by the
Convention (in Articles II(3) and V(2)(a)) and Model Law (in Articles 34(2)(b)(i) and 36(1)(b)(i));
rather, these issues involve classic validity requirements for the arbitration agreement itself. It
is precisely for that reason that these requirements must be governed by the Conventions
uniform choice-of-law rules applicable to issues of validity, and not recharacterized as issues
of nonarbitrability.
The Restatements acknowledgment that issues of conditional arbitrability are intended to
exclude characterization of particular matters as issues of validity, because this might lead
to application of a law other than that of the United States is frank, but contrary to the
Conventions uniform choice-of-law regime. That regime cannot properly be circumvented by
recharacterizing issues of substantive or formal validity as issues of nonarbitrability. Doing so
P 956 would undermine one of the Conventions central accomplishments, as well as the
Conventions overall efficacy. No other state has adopted the notion of conditional
arbitrability and there is no justification for U.S. courts, historically at the forefront of
implementing the Convention, to follow such a course.
6.03 NONARBITRABILITY IN NATIONAL ARBITRATION LEGISLATION

National arbitration legislation and judicial decisions have long provided that there are limits,
albeit relatively undemanding ones, on the subject matters and disputes that may be subject
to an enforceable agreement to arbitrate. As discussed below, these limits differ from state to
state, although they all arise from a common set of concerns regarding the use of arbitration to
resolve public disputes entailing the exercise of uniquely governmental authority.
The nonarbitrability limits that exist under national law have evolved materially over time,
with historic skepticism about the arbitral process ability to resolve particular categories of
disputes eroding substantially in recent decades. This erosion has progressed to the point that
most developed jurisdictions now impose only very few and limited restrictions on the subjects
that may be arbitrated. As discussed below, that is particularly true in international (as
distinguished from domestic) matters, where national courts have generally required clear
statements of legislative intention before concluding that a particular subject matter is
nonarbitrable.
[A] Nonarbitrability: International Versus Domestic

Preliminarily, it is essential in considering nonarbitrability issues to distinguish between
matters which are nonarbitrable in a domestic context and those which are nonarbitrable in
an international context. In many jurisdictions, nonarbitrability rules are materially broader in
domestic than in international matters. (68) As the U.S. Supreme Court reasoned, in one early
decision adopting a narrow view of nonarbitrability under the New York Convention, it is
necessary for national courts to subordinate domestic notions of arbitrability to the
international policy favoring commercial arbitration. (69)
Under this analysis, the fact that a particular matter is nonarbitrable in a domestic setting
under a particular national law does not necessarily mean that it will be nonarbitrable in an
international setting; rather, local nonarbitrability rules are often interpreted as applicable
only in domestic matters. The rationale for this conclusion has been that, in international
cases, national conceptions of public policy and mandatory law should be moderated, in light
of the existence of competing public policies of other states and the shared international
policy of encouraging the resolution of international commercial disputes through arbitration.
Consistent with this, and as discussed below, U.S., (70) French (71) , Swiss (72) and other national
P 957 courts, (73) as well as a substantial body of commentary, (74) have distinguished between
the rules of nonarbitrability in international and domestic contexts.
In general, the question whether a particular international dispute is or is not arbitrable will
be a question of national law, with the international character of the dispute affecting the
interpretation and application of local law. (75) Nonetheless, as discussed elsewhere, there are
instances in which the New York Convention limits the extent to which Contracting States may
treat particular subjects as nonarbitrable. (76)
[B] Nonarbitrability: Clear Statement of Legislative Intent

In general, national courts have required a clear and express statement of legislative intention
before concluding that a subject is nonarbitrable in an international setting. In the words of
the U.S. Supreme Court, in one representative decision, [w]e must assume that if Congress
intended the substantive protection afforded by a given statute to include protection against
waiver of the right to a judicial forum, that intention will be deducible from text or legislative
history (77) and claims will be treated as arbitrable unless Congress expressly directed a
contrary result. (78) The Court has also refused to imply (or deduce) nonarbitrability from a
statutory scheme and has required the party resisting arbitration to prove that Congress
intended to preclude a waiver of judicial remedies. (79)
Likewise, the Canadian Supreme Court has held that, [i]f Parliament had intended to exclude
P 958
6
arbitration in copyright matters, it would have clearly done so. (80) Citing this conclusion,
a well-reasoned dissenting opinion, in another Canadian decision, reasoned similarly that:
It is now settled that if a legislature intends to exclude arbitration as a vehicle for resolving a
particular category of legal disputes, it must do so explicitly. Arbitration in and of itself is no
longer considered contrary to public order, and courts ought not to read in the exclusion of
arbitration if the legislature has not clearly provided that it is to be excluded. (81)
This general approach has been followed in other jurisdictions (82) and reflects the policies of
restraint adopted by national courts under Article V(2)(a) and the Conventions international
limits on the nonarbitrability exception. Among other things, legislative provisions requiring
that particular classes of claims or disputes be resolved in specified courts or by prescribed
procedures do not render those claims or disputes nonarbitrable. (83)
[C] National Arbitration Legislation

National arbitration legislation adopts a variety of different approaches to the subject of
nonarbitrability. Nonetheless, as detailed below, the unifying theme of these legislative
instruments is the treatment of nonarbitrability as an exception, which is narrowly applied
based upon a clear statement of legislative intention, with particular reserve being utilized in
international cases.
[1] UNCITRAL Model Law: No Definition of Arbitrability
The UNCITRAL Model Law does not contain provisions prescribing any particular category of
disputes as nonarbitrable. (84) That reflects in part the recognition that, as a matter of
principle, almost any dispute is capable of resolution by arbitration, (85) and in part, the
recognition that there is not yet any uniform or model international principle that would
clearly designate particular disputes as nonarbitrable. (86) Instead, paralleling Article V(2) of
the New York Convention, the Model Law exceptionally leaves to individual legislatures and
P 959 judiciaries in particular jurisdictions the articulation of nonarbitrability provisions
(subject to international limits imposed by the New York Convention). (87)
Thus, Article 1(5) of the Model Law provides that this Law shall not affect any other law of this
State by virtue of which certain disputes may not be submitted to arbitration. (88) In effect,
the Model Law recognizes the possibility for states to characterize, as a matter of national law,
specified categories of disputes as nonarbitrable outside the four corners of their
international arbitration statute. As discussed below, this is the approach that a number of
states adopt, imposing exclusions from the general scope of their arbitration legislation either
on the basis of other statutes or judicial decisions interpreting such statutes. (89)
[2] Swiss and German Arbitration Legislation: Broad Definitions of Arbitrability
Many civil law systems impose some sort of statutory restriction on the subject-matter of valid
international arbitration agreements. As discussed below, recent legislation tends to define
arbitrable subjects very broadly, while earlier statutory limitations tend to be somewhat more
restrictive in their definitions of arbitrable matters. (90) In both instances, however, most
provisions are drafted in broad terms, that leave much to case-by-case judicial interpretation.
Thus, Article 177(1) of the Swiss Law on Private International Law provides that any dispute
involving an economic interest can be the subject-matter of an arbitration. (91) The term used
in Article 177(1) property or economic interest (vermgensrechtlicher Anspruch) is not
given a statutory definition, but was intended to be interpreted liberally. (92) As intended,
Swiss courts have interpreted Article 177(1) broadly, to permit arbitration of any claims that
P 960 have pecuniary value for the parties. (93) As noted above, Article 177 provides for a more
liberal conception of arbitrability in international matters than that which applies in domestic
matters. (94)
Similarly, the 1998 German version of the UNCITRAL Model Law adopts the Swiss approach and
provides that any claim for an economic interest (vermgensrechtlicher Anspruch) is
arbitrable in arbitrations seated in Germany (absent contrary statutory provisions). (95) As with
the Swiss approach, this formulation is intended to be interpreted expansively (and to limit
the scope of the nonarbitrability doctrine in Germany). (96)
A variation of this approach is to provide for the arbitrability of any matter subject to the
parties free disposition. (97) That leaves for judicial resolution the question of what parties
are free to dispose of, but the legislative intention is again to narrowly limit the scope of the
nonarbitrability doctrine.
It is difficult to see how these provisions do not, at least read literally, and not qualified by
other legislation, effectively render all commercial, and virtually all non-criminal, disputes
arbitrable: even issues such as divorce and marital status or a declaration of bankruptcy
involve pecuniary value. Nevertheless, it is very unlikely that disputes regarding marital status
or a bankrupts status would be deemed arbitrable under existing law, (98) even in
P 961 international matters. (99) Equally, as discussed below, civil law jurisdictions retain
nonarbitrability rules in specific contexts involving consumers, employees, securities
purchasers, or distributors (often in response to local political considerations) which clearly
involve pecuniary value. (100)
[3] France: Evolution of Nonarbitrability Doctrine
7
In France, existing statutory restrictions on the arbitrability of disputes date to the 19th
century and, read literally, would impose significant limitations on the arbitrability of disputes
concerning public policy matters. With regard to domestic arbitration, Article 2059 of the
French Civil Code provides that all persons may submit to arbitration those rights which they
are free to dispose of, while Article 2060(1) provides that [o]ne may not enter into arbitration
agreements in matters of status and capacity of the persons, in those relating to divorce and
judicial separation or to disputes concerning public bodies and institutions and more
generally in all matters in which public policy is concerned. (101)
Read literally, the language of this latter provision is problematic, most obviously because all
areas which concern public policy is an undefined, potentially expansive field, while the mere
fact that an issue concerns public policy (however that term is defined) extends this category
even more widely (and unpredictably). (102) Competition, securities law and intellectual
property, as well as disputes involving state entities and regulated industries, all concern
public policy in various ways as do most claims in tort/delict. Nonetheless, the suggestion
that all such matters are nonarbitrable does not accord with either the New York Convention or
French decisions over the past several decades. (103)
Consistent with this, French judicial decisions progressively dispensed with the
nonarbitrability provisions of Articles 2059 and 2060 in international matters (in the context of
what one commentator correctly termed a progressive elaboration of a specific liberal regime
of international arbitration, as opposed to domestic arbitration (104) ). In 1961, the Orlans
P 962 Cour dappel held that a claim for breach of contract, where the defense relied on a
legislative trade embargo, was nonarbitrable, on the grounds that this dispute concerns
public policy, and the arbitration agreement is void [sic] whenever the resolution of the
arbitration entails interpreting and applying a rule of public policy. (105) This approach
adopted a broad view of the nonarbitrability doctrine, apparently treating any dispute
requiring interpretation and application of public policy standards as nonarbitrable which
could readily include most or all antitrust, securities law, trade controls, intellectual property
and similar matters.
Over time, French courts rejected the foregoing view. (106) The Paris Cour dappel held, only a
few years later, that:
[A]lthough it is forbidden to enter into arbitration agreements concerning disputes
implicating public policy, that rule does not mean that every case which in some respect
depends on regulations based on public policy will be held nonarbitrable on those grounds.
(107)
Subsequently, French courts concluded that Articles 2059 and 2060 of the Civil Code do not
apply to international arbitration agreements. (108) Thereafter, in 1991, the Paris Cour dappel
held that, in the international context, claims of illegality and violations of public policy could
be arbitrated, including where they involved the validity of the parties contract. The Court
reasoned:
[I]n international arbitration, an arbitratoris entitled to apply the principles and rules of
public policy and to grant redress in the event that those principles and rules have been
disregarded.[A]s a result, except in cases where the nonarbitrability is a consequence of the
subject-matter in that it implicates international public policy and absolutely excludes the
jurisdiction of the arbitrators because the arbitration agreement is void an international
arbitrator, whose functions include ensuring that international public policy is complied with,
is entitled to sanction conduct which is contrary to the good faith required in relations
between partners in international trade. (109)
P 963 The same analysis was applied by the Paris Cour dappel in 1993, which upheld the validity
of an international arbitration agreement as applied to civil claims arising under EU
competition law:
[I]f the character of the economic policy of Community competition law rules prohibits
arbitrators from granting injunctions or levying fines, they may nonetheless assess the civil
consequences of conduct held to be illegal with respect to public order rules that can be
directly applied to the parties relations. (110)
More recently, French courts have repeatedly upheld the arbitrability of competition law (and
other public law) claims in emphatic terms. (111)
The result of the past four decades judicial developments in France has been a substantial
retrenchment of nonarbitrability limits in the international context. (112) Notwithstanding
potentially expansive (and archaic) nonarbitrability provisions of the Civil Code, and almost
equally expansive historic judicial interpretations of those provisions, French courts have
progressively narrowed the scope of nonarbitrable matters. The end result is that they have
apparently categorized matters as nonarbitrable only where mandatory statutory text
expressly requires this result. Nothing in the recent revisions of the French arbitration
legislation have altered this result.
[4] U.S. Federal Arbitration Act: Evolution of Nonarbitrability Doctrine
Developments in the United States over the past several decades have been very similar to
those in France, albeit with their own accent. The text of the FAA does not address the subject
of arbitrability, either directly or by implication. (113) Both historically and today, questions
P 964
8
P 964 whether or not a particular dispute is arbitrable under U.S. law turn almost entirely on judicial
interpretation of other statutes (e.g., antitrust, securities, or bankruptcy legislation), most
of which do not expressly address issues of arbitrability.
Until the 1980s, federal law in the United States treated a substantial number of claims as
nonarbitrable. The U.S. Supreme Courts first modern treatment of the nonarbitrability
doctrine was Wilko v. Swan. (114) There, an investor brought a damages action in a federal
district court against his brokers for alleged misrepresentations under the federal securities
laws. The Supreme Court rejected the defendants application to stay the action, based upon
an arbitration clause, reasoning that Congress has enacted the Securities Act to protect the
rights of investors and has forbidden a waiver of any of those rights, by means of a specific
statutory anti-waiver provision. (115) The Court concluded that:
[r]ecognizing the advantages that prior agreements for arbitration may provide for the
solution of commercial controversies, we decide that the intention of Congress concerning the
sale of securities is better carried out by holding invalid such an agreement for arbitration of
issues arising under the Act. (116)
Relying on Wilko, U.S. lower courts fashioned a variety of applications of the nonarbitrability
doctrine during the 1960s and 1970s, predominantly in domestic cases, designed to protect
perceived U.S. public values or legislative objectives. Claims touching on patent rights were
deemed to involve the public interest, and thus to be inappropriate for arbitration. (117)
Likewise, courts concluded that a wide variety of other federal statutory claims, including
federal antitrust, (118) Racketeer-Influenced and Corrupt Organizations Act (RICO), (119)
P 965 bankruptcy, (120) Carriage of Goods by Sea Act (COGSA) (121) and race discrimination
(122) claims, were too important to be left to private arbitration.
In many of these cases, the U.S. courts emphasized the public rights at issue and the
perceived inability of the arbitral process satisfactorily to resolve disputes concerning such
rights. (123) In one particularly expansive formulation of the approach of U.S. courts to the
subject of nonarbitrability, although arbitration is well suited to resolving contractual
disputesit cannot provide an adequate substitute for a judicial proceeding in protecting the
federal statutory and constitutional rights. (124)
Although many of these decisions occurred in the domestic context, U.S. courts generally
applied the same nonarbitrability principles to international arbitration agreements. (125) In
one lower courts words:
[T]o permit arbitration by an international tribunal of a Sherman Act claim would be
particularly inappropriate considering the public interest in private enforcement of the
antitrust laws. These factors, uncertainty as to the scope of the arbitration clause and
utilization of a foreign tribunal, were not present in [other case law]. (126)
During the 1970s and 1980s, however, U.S. courts moved decisively to limit the nonarbitrability
doctrine in a wide range of areas, beginning with international arbitration agreements, but
subsequently extending to the domestic context (as also occurred at the same time in France
(127) ). In Scherk v. Alberto-Culver Co., decided in 1974, the U.S. Supreme Court distinguished
Wilko and held that claims under the federal securities laws were arbitrable, provided they
arose from an international transaction. (128) Thereafter, in Mitsubishi Motors Corp. v. Soler
P 966 Chrysler-Plymouth, Inc., the Court held that federal antitrust claims were also arbitrable,
again provided that they arose from an international transaction. (129)
In both cases, the Court stressed the importance of the United States (and other Contracting
States) commitment to the New York Convention:
A parochial refusal by the courts of one country to enforce an international arbitration
agreement would not only frustrate [the Conventions] purposes, but would invite unseemly
and mutually destructive jockeying by the parties to secure tactical litigation advantages.
(130)
Likewise, the Court in Mitsubishi Motors emphasized the utility of forum-selection clauses in
international transactions. (131) It also stressed that adaptability and access to expertise are
hallmarks of arbitration, (132) and that there is no reason to assume at the outset of the
dispute that international arbitration will not provide an adequate mechanism (133) to
enforce the U.S. antitrust laws. Using language that has subsequently been repeatedly cited by
proponents of international arbitration, the Court reasoned:
The utility of the [New York] Convention in promoting the process of international commercial
arbitration depends upon the willingness of national courts to let go of matters they normally
would think of as their own. (134)
As a consequence, the Court declared that it will be necessary for national courts to
subordinate domestic notions of arbitrability to the international policy favoring commercial
arbitration. (135)
Given these considerations, the U.S. Supreme Courts Mitsubishi Motors opinion formulated a
P 967 demanding standard for holding a statutory claim nonarbitrable: We must assume that if
Congress intended the substantive protection afforded by a given statute to include protection
against waiver of the right to a judicial forum, that intention will be deducible from text or
legislative history. (136) The Court also said that claims will be deemed arbitrable unless
Congress expressly directed a contrary result. (137) (This general approach of restraint and
9
confidence in the international arbitral process has also found favor outside the United States,
(138) as well as in better-reasoned academic commentary. (139) )
More recently, the U.S. Supreme Court expressly overruled Wilko v. Swan, holding that claims
either domestic or international under both RICO legislation and the Securities Exchange Act
are arbitrable. (140) In another decision, after remarking that [i]t is by now clear that statutory
claims may be the subject of an arbitration agreement, (141) the Court held that claims under
the Age Discrimination in Employment Act are arbitrable. (142) Similarly, with little debate,
lower U.S. courts have extended Mitsubishi beyond international matters and permitted the
arbitration of antitrust claims in purely domestic matters. (143)
There have been occasional statutory enactments by Congress, adopting express
nonarbitrability rules for particularly categories of disputes, but these are typically both
narrowly-limited and domestically-focused. Typical examples include provisions in a motor
vehicle franchise contract, limited types of claims by employees of certain public companies,
and consumer lending agreements. (144)
P 968 In sum, as in France, the past four decades have witnessed a substantial evolution of the
nonarbitrability doctrine in the United States. In contrast to a relatively expansive, judicially-
created nonarbitrability doctrine in the early 1970s, most categories of statutory (and other)
claims are now treated as arbitrable by U.S. courts, and a claim will only be deemed
nonarbitrable under the FAAs statutory regime where federal legislation expressly requires
this result. (145) This is particularly true in international contexts, but also increasingly
applicable in domestic settings.
[5] Other Jurisdictions
Legislation in other developed jurisdictions adopts broadly comparable approaches to the
topic of nonarbitrability, with only a few exceptions. The English Arbitration Act, 1996, is
entirely silent concerning the subject of nonarbitrability. Although few reported cases have
addressed the issue, English courts have generally had little sympathy for attempted
nonarbitrability arguments: in one recent decision, the court affirmed the arbitrability of
competition law claims in unhesitating, almost dismissive, terms. (146) The English Court of
Appeal has also rejected arguments that minority shareholder claims under the Companies Act
are nonarbitrable. (147)
Decisions in other developed jurisdictions are broadly comparable in their treatment of
nonarbitrability issues. (148) For example, in Canada, a 2001 decision of the Qubec Court of
Appeal held that claims under the Canadian Copyright Act were nonarbitrable, relying on a
grant of jurisdiction over copyright claims to the Canadian federal courts and the public
P 969 policies reflected in the Copyright Act. (149) On appeal, however, the Canadian Supreme
Court reversed, holding in emphatic terms that claims under the Copyright Act were arbitrable,
and declaring: If Parliament had intended to exclude arbitration in copyright matters, it
would have clearly done so. (150)
Likewise, a Swedish court reasoned that, under the Swedish Arbitration Act:
[A]n arbitration award is invalid if it includes an assessment of an issue that, according to
Swedish law, may not be settled by arbitrators (nonarbitrable). The fact that there in are
mandatory provisions in a certain area, however, does not automatically imply that disputes in
this area are nonarbitrable. As regards international disputes relating to foreign legislation, it
should be determined from case to case whether the applicable foreign law is of such a nature
that a settlement of the case in a Swedish court would not be accepted. When it comes to an
economic-political regulation in a foreign state, there is often no reason to have the
mandatory rules affect settlement possibilities in Sweden and therefore arbitrability
according to Swedish law. This opinion is in line with a tendency internationally to accept that
an international dispute may be resolved by arbitration proceedings even if a similar national
dispute would fall outside the arbitration area. (151)
Some national arbitration legislation similarly limits the scope of nonarbitrability defenses,
particularly in international cases. In New Zealands enactment of the Model Law,
nonarbitrability is statutorily-framed in very limited terms: Any dispute which the parties
have agreed to submit to arbitration under an arbitration agreement may be determined by
arbitration unless the arbitration agreement is contrary to public policy or, under any other
law, such a dispute is not capable of determination by arbitration. (152) Likewise, Article 806
of the Italian Code of Civil Procedure provides that:
The parties may have disputes which have arisen between them decided by arbitrators
provided the subject matter does not concern rights which may not be disposed of, except in
case of express prohibition by law. Disputes provided for in Article 409 [certain labor disputes]
may be decided by arbitrators only if so provided by law or by collective labor contracts or
agreements. (153)
P 970 Again, this is a narrow definition of the nonarbitrability doctrine, reflecting contemporary
confidence in the arbitral process. Other national arbitration legislation in developed
jurisdictions is similar to these statutory approaches. (154)
Arbitral tribunals have reached similar conclusions. In one well-publicized arbitration, an
Indonesian party argued that Indonesian law provided for the nonarbitrability of claims of
termination of a contract, absent an express and specific waiver of recourse to national courts.
10
(155) Not surprisingly, the argument was rejected out of hand by the arbitral tribunal as
extraordinarily perverse. (156)
Despite the overwhelming weight of authority, particularly in recent years, there are occasional
decisions holding particular matters nonarbitrable. One Australian decision held a claim that
contractual licensing arrangements between two parties were unfair, in breach of 106 of the
then Australian Trade Practices Act, 1986, was not capable of settlement by arbitration. (157)
The Australian decision (by an administrative appellate tribunal) reasoned that:
[T]he subject matter of the proceedings under [the Industrial Relations Act] concerns the
fairness of the licensing agreement having regard to its alleged representations and the
provisions dealing with the termination of the agreement. We are satisfied that this is not a
matter that iscapable of settlement by arbitration.An unfair contract is defined firstly as
P 971 a contract which is unfair, harsh or unconscionable, but also includes contracts which are
against the public interest or which provides remuneration less than that available to an
employee or which are designed to avoid an industrial instrument[, which are not capable of
application by arbitral tribunals]. (158)
This reasoning is an anomaly, reminiscent of 19th century decisions, denying the parties
autonomy to resolve their disputes by arbitration, and contrary to both modern conceptions of
arbitrability and the obligations imposed by Article II of the New York Convention. (159) In
contrast, more recent Australian decisions have held that Trade Practices Act claims were to
be referred to international arbitration. (160)
A similarly misconceived conclusion was reached by a Pakistani decision, holding that all
claims of fraud are nonarbitrable. (161) Again, that decision is contrary to Pakistans
commitments under the New York Convention, which requires the recognition and enforcement
of international arbitration agreements as applied to differences whether contractual or not.
(162) That formulation makes clear the Conventions requirement that the nonarbitrability
doctrine be applied as an exception, based on and tailored to advance specific and
articulated local public policies. (163)
Finally, a recent, and anomalous, English High Court decision suggested that claims under
mandatory provisions of EU law are nonarbitrable. (164) That decision has attracted well-
reasoned criticism and is clearly out-of-step with the weight of both European and English
authority; it is unlikely that the decision will survive more considered review by English trial
and appellate courts. (165) The decision nonetheless reflects the enduring allure of the
nonarbitrability doctrine, and generalized notions of public policy, even in developed
jurisdictions which have otherwise generally confined the doctrine to narrow settings.
P 972
6.04 APPLICATIONS OF NONARBITRABILITY DOCTRINE
There is a substantial body of national case law and international arbitral authority addressing
claims of nonarbitrability in different contexts. As already outlined, judicial and legislative
decisions over the past several decades have progressively narrowed the scope of the
nonarbitrability doctrine and the subjects which are considered to be nonarbitrable. (166) This
reflects growing experience of national courts with, and confidence in, the international
arbitral process, which is increasingly regarded as capable of settling virtually every type of
transnational commercial or civil dispute; it also reflects the continuing commitment of
national courts, in almost all jurisdictions, to effective and robust application of the New York
Convention in international commercial settings.
As discussed above, in many cases, national legislation does not expressly address the subject
of nonarbitrability particularly in international matters. (167) U.S. and EU
antitrust/competition laws are leading examples, where neither statutory instrument makes
any reference to arbitration. (168) In these circumstances, national courts must resolve issues
of nonarbitrability by reference to implied legislative intent and the competing policies of the
New York Convention (and national arbitration legislation) and a particular regulatory regime.
In doing so, courts in different jurisdictions have typically considered a common core of
recurrent factors. These include the public values or public interests at issue, (169) the
extent to which arbitral procedures (as distinguished from judicial or administrative
procedures) are suited to resolution of the dispute, (170) whether such disputes involve
unacceptable, systemic disparities of bargaining power between the parties, (171) the effect of
P 973 a decision on third party rights, (172) the ability of an arbitral tribunal to grant
legislatively-mandated relief (173) and (most generally) legislative intent. (174) In the words of
one representative expression of these views:
Arbitral procedures, while well suited to the resolution of contractual disputes, make
arbitration a comparatively inappropriate forum for the final resolution of rights created by
Title VII. This conclusion rests first on the special role of the arbitrator, whose task is to
effectuate the intent of the parties rather than the requirements of enacted legislation.Other
facts may [also] render arbitral processes comparatively inferior to judicial processes in the
protection of Title VII rights. Among these is the fact that the specialized competence of
arbitrators pertains primarily to the law of the shop, not the law of the land.Moreover, the
factfinding process in arbitration usually is not equivalent to judicial factfinding. The record of
the arbitration proceedings is not as complete; the usual rules of evidence do not apply; and
rights and procedures common to civil trials, such as discovery, compulsory process, cross-
examination, and testimony under oath, are often severely limited or unavailable.Indeed, it
11
is the informality of arbitral procedure that enables it to function as an efficient, inexpensive,
and expeditious means for dispute resolution. This same characteristic, however, makes
arbitration a less appropriate forum for final resolution of Title VII issues than the federal
courts. (175)
The premise of contemporary nonarbitrability analysis, however, is that arbitral tribunals have
the competence to consider and satisfactorily decide disputes involving public law claims
reflecting important national and international public policies. (176) Moreover, national courts
have held with increasing clarity and conviction that nonarbitrability is an exception to
Article II of the New York Convention, which should be interpreted very narrowly with
particular care being taken to prevent tendencies towards local parochialism from
undermining the Conventions purposes. Again, the U.S. Supreme Court captured these
perspectives well when it reasoned in Mitsubishi:
There is no reason to assume at the outset of the dispute that international arbitration will
P 974 not provide an adequate mechanism.The utility of the Convention in promoting the
process of international commercial arbitration depends upon the willingness of national
courts to let go of matters they normally would think of as their own.[W]e decline to subvert
the spirit of the United States accession to the Convention by recognizing subject matter
exceptions where Congress has not expressly directed the courts to do so. (177)
This analysis is best considered as reflecting a mandatory obligation, arising from the structure
and purposes of the Convention (i.e., utility of the Convention and spirit of the United States
accession), rather than a purely voluntary decision. As discussed above, that obligation
requires Contracting States to treat nonarbitrability as an exceptional defense, requiring a
specific and clearly-articulated justification in mandatory local public policy. (178) Consistent
with this view, most recent national judicial decisions have been unwilling to hold matters
nonarbitrable in international cases absent clear and specific legislative direction. As detailed
below, this legislative direction is not present in the vast majority of settings.
[A] Antitrust and Competition Claims

The development of the nonarbitrability doctrine in the context of competition law claims is a
paradigm for the doctrines broader application. During the early decades after such
legislation was enacted, U.S. (179) and European (180) courts consistently held that antitrust
claims were nonarbitrable, as did (less clearly) arbitral tribunals. (181) One U.S. court
explained the nonarbitrability of antitrust claims as follows:
The reasoning is fourfold: (1) governance of the realm of antitrust law, so vital to the successful
functioning of a free economy, is delegated by statute to both government and private parties,
the latter being given special incentive to supplement efforts of the former, the work of both
being equally the grist of judicial decisions, (2) the strong possibility that contracts which
generate antitrust disputes may be contracts of adhesion militates against automatic
P 975 forum determination by contract; (3) antitrust issues are an understatement prone to be
complicated, and the evidence extensive and diverse, and, we may add, the economic data
subject to rigorous analysis dictated by a growing and increasingly sophisticated
jurisprudence, with the subject correspondingly ill-adapted to strengths of the arbitral
process, i.e., expedition, minimal requirements of written rationale, simplicity, resort to basic
concepts of common sense and simple equity; and (4) the notion, suggestive of the proposition
that issues of war and peace are too important to be vested in the generals, that decisions as
to antitrust regulation of business are too important to be lodged in arbitrators chosen from
the business community particularly those from a foreign community that has had no
experience with or exposure to our law and values. (182)
This general approach prevailed for nearly half a century, following the enactment of the FAA,
in the United States, and for several decades following the enactment of modern competition
laws in Europe. In the mid-1980s, however, judicial and legislative attitudes began to shift. This
occurred in parallel in a number of developed jurisdictions, including the United States, the
European Union, France and elsewhere.
[1] U.S. Antitrust Laws
As discussed above, in Mitsubishi Motors, the U.S. Supreme Court held that, in international
matters, federal antitrust claims could be validly subjected to an arbitration agreement. (183)
Refusing to follow a uniform body of U.S. lower court authority holding antitrust claims
nonarbitrable in the domestic context, (184) the Supreme Court held that, absent clear
legislative direction, it would not conclude that statutory antitrust claims were nonarbitrable
P 976
in the international context. (185) In the wake of Mitsubishi, U.S. courts have repeatedly
held antitrust claims arbitrable in both international and domestic cases. (186)
The Mitsubishi Court nonetheless acknowledged the public importance of antitrust claims. It
made clear that U.S. courts would take a second look at an arbitral tribunals decision
applying the antitrust laws at the stage of award enforcement, concluding that: Having
permitted the arbitration to go forward, the national courts of the United States will have the
opportunity at the award enforcement stage to ensure that the legitimate interest in the
enforcement of the antitrust laws has been addressed. (187) The content of this second look
doctrine is discussed below. (188)
Of course, arbitrators may not exercise uniquely governmental or administrative functions,
12
either under the U.S. antitrust laws or otherwise. An arbitral tribunal may not purport to
approve (or disapprove) a merger, grant antitrust immunity from governmental prosecution or
civil suits, or conduct a criminal investigation. These are matters reserved to governmental
regulatory authorities (e.g., the U.S. Department of Justices Antitrust Division), and cannot be
the subject of arbitral authority.
[2] EU Competition Laws
In parallel with developments in the United States, a series of judicial decisions in Europe
during the past three decades held that EU competition claims are arbitrable (subject to
P 977 subsequent judicial review). Early judicial decisions and arbitral awards raised questions
regarding the arbitrability of EU competition claims. (189) As in the United States, however,
attitudes shifted substantially in the late 20th century.
In Eco Swiss China Time Ltd v. Benetton Intl NV, (190) the European Court of Justice (ECJ) made
clear in dicta that an arbitration agreement could validly be given effect with respect to EU
competition claims (subject to judicial review of any resulting award). (191) More explicitly,
national court decisions in France, Switzerland, Germany, Italy, Sweden and England have
repeatedly held that EU and Member State competition law claims may validly and enforcably
be the subject of an international arbitration agreement. (192) In the words of a leading
decision of the Swiss Federal Tribunal:
P 978 The Swiss judge or arbitrator who has to decide on the validity of a contractual
agreement concerning markets in the European Union examines this issue in the light of Art. 81
Rome Treaty [Art. 85 of the former Rome Treaty]. He must do so notwithstanding the fact that
the parties agreed on the application of Swiss law to their contractual relationship. (193)
At the same time, both the ECJ and Member States courts have emphasized that arbitral
awards deciding EU competition law claims will be subject to subsequent judicial review, (194)
analogous to that under Mitsubishis second look doctrine in the United States. (195)
[3] Other National Competition Laws
Likewise, decisions outside the United States and the EU have rejected arguments that
particular competition law claims are nonarbitrable, including in Australia, New Zealand and
Canada. (196) As one court reasoned with respect to Australias competition law:
[T]here is no reason in principle why the parties to a commercial contract cannot agree to
submit to arbitration disputes which have arisen between them in relation to their rights and
obligations under the Trade Practices Act. Indeed, it is consistent with the modern policy of
encouragement of various forms of alternative dispute resolution, including arbitration,
mediation and conciliation, that courts should facilitate, rather than impede, agreements for
the private resolution of all forms of dispute, including disputes involving claims under
statutes such as the Trade Practices Act. (197)
P 979 In contrast, there are virtually no reported contemporary decisions holding competition
claims nonarbitrable.
[4] Arbitral Awards
Consistent with developments in national courts, arbitral tribunals have uniformly affirmed
their power to entertain and decide competition law disputes. (198) Indeed, there appears to
be no reported instance in the past three decades where an arbitral tribunal has held that an
antitrust or competition law claim is nonarbitrable.
[5] Second Look Doctrine and Judicial Review of Arbitral Awards
At the same time they have recognized the arbitrability of antitrust/competition law claims,
national courts have emphasized that arbitral awards dealing with antitrust or competition
law issues will be subject to subsequent judicial review. As noted above, in Mitsubishi Motors,
the U.S. Supreme Court adopted a so-called second look doctrine, reasoning that [h]aving
permitted the arbitration to go forward, the national courts of the United States will have the
opportunity at the award enforcement stage to ensure that the legitimate interest in the
enforcement of the antitrust laws has been addressed. (199) Likewise, in Eco Swiss, the ECJ
made clear that Article 81 of the EU Treaty is a matter of public policy and that:
[A] national court to which application is made for annulment of an arbitration award must
grant that application if it considers that the award in question is in fact contrary to Article 81
EC (ex. Art 85) where its domestic rules of procedure require it to grant an application for
annulment founded on failure to observe national rules of public policy. (200)
In this context, the ECJ held that the ordinary courts may have to examine those questions [of
Community law], in particular during review of the arbitration award, which may be more or
less extensive depending on the circumstances. (201)
P 980 In both the United States and EU, national courts thus retain the opportunity to take a so-
called second look at the application of the competition laws by the arbitrators. (202) The
nature and extent of this subsequent judicial review is unsettled: in particular, it is unclear to
what extent national courts can (or must) reexamine the substantive merits of the arbitrators
decisions on competition law matters. This issue is discussed below. (203)
A potentially contrary approach has been adopted by the Swiss Federal Tribunal, which has
13
held that review of an award made in Switzerland in an annulment proceeding will not
consider the correctness of the arbitrators resolution of issues of mandatory law (at least
where EC competition law is concerned). In the Federal Tribunals words:
There can be no doubt any longer: the provisions of any competition law whatsoever are not
part of the essential and largely recognized values, which, according to the conception
prevailing in Switzerland, should form the basis of every legal system. Therefore, the violation
of such a provision does not trigger the application of SLPIL, Art. 190(2)(e) [providing for
annulment of awards made in Switzerland]. (204)
It is unclear, however, whether Swiss courts would adopt the same approach to awards made in
Switzerland applying mandatory provisions of the applicable law chosen by the parties or of
Swiss mandatory law (as distinguished from EC or EU law). (205)
P 981 [6] Advance Waivers of Antitrust and/or Competition Law Claims
Some national courts have also indicated that they may not give effect to dispute resolution
arrangements that produce advance waivers of statutory antitrust and competition law
protections. In Mitsubishi Motors, the U.S. Supreme Court reasoned in a footnote that
in the event the choice-of-forum and choice-of-law clauses operated in tandem as a
prospective waiver of a partys right to pursue statutory remedies for antitrust violations, we
would have little hesitation in condemning the agreement as against public policy. (206)
The Courts apparent rationale was that parties could validly agree to submit their antitrust
claims to international arbitration, but not to entirely waive those claims in advance. As
discussed below, most subsequent U.S. decisions have concluded that this qualification
concerning advance waivers of statutory rights is relatively narrow and does not sanction
expansive application of notions of nonarbitrability or public policy. (207)
[a] No Interlocutory Judicial Decision on Mandatory Law
First, most U.S. courts have held that, if it is unclear whether the arbitral tribunal will actually
apply U.S. antitrust (or other mandatory U.S.) laws, then the appropriate course is to stay U.S.
litigation and allow the arbitration to proceed, rather than assuming that the arbitrators will
not consider antitrust claims. (208) As noted above, Mitsubishi Motors involved an agreement
to arbitrate in Japan and a Swiss choice-of-law provision, but the Supreme Court nonetheless
proceeded on the assumption that the arbitral tribunal would give appropriate effect to
mandatory U.S. antitrust law. (209)
Applying this analysis, U.S. lower courts have generally refused to entertain claims that an
arbitral tribunal (including a foreign-seated tribunal) will violate U.S. public policy or
mandatory law by refusing to apply U.S. statutory protections. (210) There are some contrary
P 982 U.S. lower court authorities, but these are exceptions to the general (and correct) rule
adopted by U.S. courts. (211) Other courts have reached decisions similar to that of the
majority U.S. position. (212)
[b] Effect of Waiver of U.S. Statutory Rights
Second, despite language in Mitsubishi condemning advance waivers of U.S. statutory rights,
U.S. courts have also generally upheld agreements to arbitrate notwithstanding choice-of-law
provisions that concededly provide for the application of a foreign substantive law (to the
exclusion of U.S. antitrust or other statutory protections). In these cases, it is not uncertain, but
instead conceded (or entirely clear), that a foreign arbitral tribunal will not apply U.S.
statutory protections, and U.S. courts have considered whether, nonetheless, to give effect to
the agreement to arbitrate and choice-of-law provision.
U.S. courts have frequently given effect to arbitration agreements, even when combined with
conceded waivers of U.S. statutory protections, but have generally done so only after
considering the content of the foreign law chosen by the parties choice-of-law agreement and
concluded that it is broadly similar to U.S. law. That is best illustrated by a series of U.S. lower
court decisions upholding the enforceability of arbitration and foreign choice-of-law
agreements that had the conceded effect of excluding more favorable U.S. federal securities
law protections. (213) In enforcing contractual dispute resolution provisions that had the effect
of excluding otherwise applicable U.S. federal law, the U.S. courts emphasized that the
selected foreign law provided comparable substantive protections to those of U.S. law. (214)
The same analysis has been adopted in other statutory contexts, with a number of U.S. courts
holding that waivers of U.S. statutory rights would be upheld, provided that the parties chosen
law provided broadly similar protections to those available under U.S. law. (215) Lower court
authority, although limited, suggests that the same result would apply to U.S. federal antitrust
claims. (216)
P 983 The U.S. Supreme Court recently held that neither the U.S. antitrust laws nor other federal
legislation invalidated a waiver of rights to assert antitrust claims in a class arbitration or
litigation. The Court concluded that [t]he antitrust laws do not evinc[e] an intention to
preclude a waiver of class-action procedure. (217)
The Court also rejected the argument that the waiver of rights to assert claims in a class
arbitration effectively waived a parties right to pursue its antitrust rights, by imposing
financial obstacles that made pursuit of antitrust claims untenable. (218) The Court recognized
14
that, in some circumstances, an arbitration agreement might effectively preclude assertion of
federal statutory rights and indicated, in those circumstances, that the agreement would be
unenforceable. (219) But the Court confined such cases narrowly to contractual prohibitions on
pursuit of claims or unrealistic fees, (220) and did not extend it to cases involving waivers of
class actions rights. (221)
[c] Effect of Waiver or Loss of Statutory Damage Claims
Third, it is unclear how U.S. courts will treat arbitration agreements or awards involving claims
for statutory damages in excess of compensatory damages (i.e., treble damages under the U.S.
antitrust or RICO legislation). In Shearson/American Express Inc. v. McMahon, (222) the U.S.
Supreme Court rejected the argument that RICO claims were nonarbitrable because of the
P 984 availability of treble damages in a civil RICO action. It was not clear, however, whether the
Court concluded that treble damage claims could be pursued in arbitration or that they could
not be; the Court held only that the availability of compensatory damages in arbitration
sufficed to permit enforcement of the arbitration agreement.
In subsequent decisions, the Supreme Court has made clear, however, that the decision
whether or not to award treble damages (or similar sorts of relief) is in the first instance for the
arbitrators, subject to later judicial review in an annulment or recognition action. (223) As
noted above, under this analysis, U.S. courts are not to deny effect to arbitration agreements
based upon the possibility that arbitrators may not apply mandatory U.S. statutory
protections or award treble (or other) damages required by mandatory U.S. law. (224)
Moreover, lower U.S. courts have suggested that the unavailability of the same remedies in
arbitral proceedings as may be available in U.S. litigation, does not prevent recognition of an
award. (225)
*****
The result of the foregoing developments in most developed jurisdictions has generally been
to confine the nonarbitrability doctrine, in the context of antitrust or competition law claims,
to those matters as to which regulatory bodies are plainly assigned exclusive jurisdiction (e.g.,
granting exemptions from antitrust laws, approving mergers or other transactions). As to the
civil law consequences of competition law violations between individual parties, it is now
almost universally recognized that such matters may validly be submitted to international
arbitration. National courts also generally hold that subsequent judicial review of awards
dealing with public policy and mandatory law claims is necessary, but the extent and nature of
this review remains unsettled. (226)
[B] Securities Claims

Securities issuances and transactions are highly-regulated in most developed jurisdictions and
frequently include provisions forbidding or limiting waivers of applicable judicial or
administrative remedies. (227) As a consequence, disputes involving securities laws and
regulations have not infrequently raised nonarbitrability issues.
[1] U.S. Securities Law
P 985 The most extensive decisions concerning the arbitrability of securities law claims are in
the United States, where the case law mirrors developments in the antitrust/competition
fields. As discussed above, the U.S. Supreme Courts 1953 decision in Wilko v. Swan held that
statutory claims for securities law violations were nonarbitrable:
When the security buyer, prior to any violation of the Securities Act, waives his right to sue in
court, he gives up more than would a participant in other business transactions. The security
buyer has a wider choice of courts and venue. He thus surrenders one of the advantages the Act
gives him. (228)
The Wilko Court also criticized the procedures available in an arbitration of securities law
claims, declaring, in terms reminiscent of language used by some 19th century judicial critics
of arbitration, that the arbitral tribunal would receive no judicial instructions on the law, that
their award may be made without explanation of their reasons and without a complete record
of their proceedings, and that judicial power to vacate an award is limited. (229)
Despite this, only two decades later, the U.S. Supreme Court held in Scherk v. Alberto-Culver
Co. that a statutory federal securities law claim was arbitrable, at least in an international
arbitration subject to the New York Convention. The Court reasoned that, while a domestic
securities buyer might be waiving procedural advantages in agreeing to arbitrate, in the
context of an international contract,these advantages become chimerical sincean opposing
party may by speedy resort to a foreign court block or hinder access to the American court of
the purchasers choice. (230) As discussed above, the Court also stressed the significance of
the New York Convention and the damage that expansive applications of the nonarbitrability
doctrine by national courts would cause to the Conventions objectives. (231)
Paralleling developments in the antitrust field, (232) Scherk was followed by subsequent U.S.
Supreme Court decisions overruling Wilko v. Swan, even in the purely domestic context. Thus,
the Court declared in Rodriquez de Quijas v. Shearson/American Express Inc. that Wilko had
reflected the old judicial hostility to arbitration which could no longer be accepted. (233) U.S.
courts have similarly held that so-called RICO claims, in both international and domestic
settings, are arbitrable. (234)
P 986
15
P 986 [2] Advance Waivers of U.S. Securities Claims
As noted above, U.S. courts have held in many contexts that the determination whether or not
an arbitration agreement and choice-of-law provision operate to violate U.S. public policy is
to be made after an arbitral award is rendered. (235) U.S. courts decline to hold particular
claims or disputes nonarbitrable based upon the possibility that the arbitrators will not apply
U.S. statutory protections, or will not apply adequate foreign protections. Rather, they
generally hold that the arbitration should proceed and that a decision regarding possible
violations of U.S. public policy or mandatory law protections be made subsequently in an
enforcement or annulment proceeding. (236)
Despite this general approach, U.S. courts have considered a series of cases in which U.S.
securities purchasers agreed to arbitration seated in England, subject exclusively to English
law (which was interpreted to exclude statutory U.S. securities law protections). The result of
these choice-of-law provisions was to substitute less expansive English common law fraud
principles for more expansive statutory U.S. protections. U.S. decisions considering these
arrangements almost unanimously concluded that the combination of arbitration/choice-of-
law provisions did not render the dispute nonarbitrable or otherwise violate U.S. public policy.
(237)
Central to most of these courts analyses, however, was a conclusion that the foreign law
selected by the parties to govern their dispute would provide available remedies and
potential damages recoveries [sufficient] to deter deception of American investors. (238)
Where foreign law fails to provide such remedies (with respect to transactions otherwise
subject to the U.S. federal securities laws), (239) some U.S. courts have suggested that they
P 987 would decline to give effect to an arbitration/choice-of-law clause which excludes U.S.
statutory provisions. (240) The weight of authority holds, however, that the appropriate course
is to permit the arbitrators to decide the parties dispute (including interpreting any
applicable choice-of-law clause and mandatory national laws) and reserve issues of public
policy until award annulment and recognition. (241)
[3] Other National Securities Laws
Under German law, arbitration agreements in securities transactions involving merchants,
including securities professionals and state entities are valid and the underlying securities law
claims are arbitrable. (242) Historically, a series of German judicial decisions held that
securities disputes involving non-merchants were arbitrable provided that the arbitral seat
was in Germany and that German law was applicable; in contrast, agreements to arbitrate
under foreign law in a foreign arbitral seat were apparently unenforceable on the grounds that
mandatory German securities laws could be disregarded without German judicial review. (243)
In 2002, German securities legislation was amended to provide that arbitration agreements
involving consumers are valid only if concluded after the dispute has arisen. (244) The new
German legislation was designed to end discrimination against foreign tribunals. It has,
however, been criticized on the grounds that the different treatment of existing and future
disputes is incompatible with Article II(1) of the New York Convention. (245)
The German Bundesgerichtshof has nonetheless upheld the German securities legislation,
reasoning that it should be characterized as addressing issues of capacity and that Articles II
and V(1)(a) permit application of the personal law of a party to questions of capacity. (246)
Accordingly, the Court held that an agreement by a German consumer to arbitrate future
P 988 securities disputes outside Germany, although presumptively governed by the law of the
arbitral seat, can be invalidated under German law, on the theory that German law governs the
capacity of a German consumer to conclude an arbitration agreement.
As discussed above, however, it is very difficult to characterize prohibitions against the
arbitration of particular categories of future disputes as capacity limitations; such
prohibitions are, instead, properly regarded as nonarbitrability restrictions. That
characterization permits German courts to deny recognition of agreements to arbitrate, but
not on the basis of a generally-applicable rule of capacity (that would be applicable in other
Contracting States under Articles II and V(1)(a)); rather, recognition would be denied on the
basis of an exceptional German nonarbitrability rule, applicable only in German courts.
Moreover, there is a substantial argument that Article II(1) does not permit Contracting States
to differentiate between existing and future disputes, whether in nonarbitrability rules or
otherwise, and that the German legislation violates this structural requirement of the
Convention.
[C] Corruption and Bribery (247)

Disputes involving claims of corruption, bribery, or similar illegality have long raised issues of
arbitrability. In the same fashion as antitrust and securities claims, however, the scope of the
nonarbitrability doctrine as applied to corruption claims has progressively narrowed in the
past several decades. Apart from the adjudication of criminal and administrative liability, and
the imposition of associated sanctions, civil claims of corruption, bribery and related
wrongdoing are now capable of settlement by arbitration under virtually all legal systems.
As discussed above, early judicial decisions frequently concluded that challenges to the
legality of the parties underlying contract also implicated the associated arbitration clause,
requiring judicial resolution of the dispute. (248) Similarly, arbitral tribunals historically
16
evidenced considerable reluctance to resolve matters involving claims of corruption or
bribery.
An early arbitral award by a well-known Swedish arbitrator (Gunnar Lagergren) apparently
declined jurisdiction over a claim for commissions owed to an agent who had been retained to
bribe Latin American government officials. Lagergren relied on general principles denying
arbitrators the power to entertain disputes of this nature, rather than a specific national law,
reasoning:
P 989 It cannot be contested that there exists a general principle of law recognized by civilized
nations that contracts which seriously violate bonos mores or international public policy are
invalid or at least unenforceable and that they cannot be sanctioned by courts or arbitrators.
(249)
Accordingly, Lagergren held that parties who ally themselves in an enterprise of the present
nature must realize that they have forfeited any right to ask for assistance of the machinery of
justice (national courts or arbitral tribunals) in settling their disputes, (250) and concluded
jurisdiction must be declined in this case. (251)
More recent awards and national court decisions have correctly rejected Lagergrens analysis
and acknowledged the competence of arbitrators to resolve claims of illegality, including
bribery and corruption. Accordingly, arbitral tribunals have frequently considered disputes
where one party claims that the parties underlying contract was tainted by, or invalid because
of, illegality, or that it is not obligated to perform an illegal contract. (252) Rather than
dismissing such disputes on jurisdictional or nonarbitrability grounds, tribunals have
ordinarily entertained illegality/corruption claims and made awards on the merits, either
upholding those claims or rejecting them. (253)
National courts have also generally made clear that arbitral tribunals may consider and
P 990 resolve claims of corruption, bribery and related illegality. (254) A recent decision of the
English Court of Appeal held that this was a logical corollary of the separability presumption.
The Court reasoned that if arbitrators can decide that a contract is void for initial illegality,
there is no reason why they should not decide whether a contract has been procured by
bribery. (255) Similarly, the Swiss Federal Tribunal has held that an arbitral tribunal is
empowered to examine, as a preliminary question, whether criminal acts were committed that
affected the main contract. (256)
One exception to this approach is a Pakistani Supreme Court judgment, which apparently
concluded that claims of fraud could not be arbitrated. (257) That decision will hopefully not
survive Pakistans ratification of the New York Convention, and clearly contradicts the
Conventions requirements that applications of the nonarbitrability doctrine be narrowly-
tailored to achieve specific and non-idiosyncratic local public policies. (258) On any view, a
prohibition against the arbitrability of fraud or tort claims must be considered inconsistent
with state practice under the Convention (where virtually all Contracting States permit
arbitration of such claims) and with the Conventions structural requirements that the
nonarbitrability doctrine be applied with restraint, as an exception to the Conventions
policies. (259)
[D] Intellectual Property Claims (260)

Patent, copyright and trademark claims have also raised questions of nonarbitrability,
because of the states substantial involvement in granting and regulating such intellectual
property rights. As with competition, securities and corruption claims, (261) the past several
decades have witnessed a progressive retrenchment of historic nonarbitrability principles in
the intellectual property field. This is graphically illustrated by the establishment of the
P 991 institutional arbitration mechanism of the World Intellectual Property Organization
(WIPO), specifically for the arbitration of intellectual property claims. (262)
The most delicate arbitrability issues in this context arise with claims concerning the validity
of patents, copyrights, or trademarks, aspects of which are deemed nonarbitrable in many
jurisdictions. In Europe, EU law provides that disputes directly concerning the validity or
existence of registered intellectual property rights are nonarbitrable, instead being subject to
the exclusive jurisdiction of specified national courts. (263) Aside from this core area of
nonarbitrability, disputes involving patent and other intellectual property claims are
generally arbitrable in the EU. (264) Swiss law is similar in permitting a broad range of
intellectual property claims to be arbitrated. (265)
In the United States, the historic position was that patent disputes were nonarbitrable. (266) In
1983, however, federal legislation was enacted which reversed this position and provided that
patent disputes (including issues of validity, infringement and ownership) are arbitrable. (267)
Outside the patent context, U.S. lower courts have also held that copyright disputes (including
issues of validity, infringement and ownership) (268) and trademark issues (269) are arbitrable.
P 992 Similarly, in a landmark 2003 ruling, the Supreme Court of Canada overturned a Qubec
Court of Appeal decision and held that intellectual property matters, including particularly
copyright issues, are arbitrable. (270) The Court correctly held that the lower courts contrary
ruling was inconsistent with the trend in case law and legislation, which has been, for several
decades, to accept and even encourage the use of civil and commercial arbitration,
particularly in modern western legal systems, both common law and civil law. (271) The Court
concluded: If Parliament had intended to exclude arbitration in copyright matters, it would
17
have clearly done so. (272)
Arbitral tribunals have reached similar results in deciding the scope of the nonarbitrability
doctrine as applied to intellectual property disputes. Most tribunals have had little difficulty
concluding that they have the competence to resolve disputes about the performance of
contracts concerning intellectual property rights (e.g., patent, copyright and trademark
licenses). (273) On the other hand, arbitrators have occasionally shown reluctance to resolve
disputes involving the validity or existence of intellectual property rights. (274)
Nonetheless, in principle, there is no reason that issues of patent, copyright and trademark
validity cannot be resolved by arbitration but only insofar as the parties to the arbitration
are concerned. An arbitral tribunal obviously cannot effect registrations of intellectual
property rights or invalidate a patent generally, thereby affecting the rights of the public or
third parties. There is no reason, however, that an arbitral tribunal cannot apply rules of
intellectual property law in other contexts to decide claims between the contracting parties
P 993 that a particular intellectual property right is invalid or does not exist. Indeed,
determining the validity or invalidity, and legal effects, of intellectual property rights as
between the parties to the arbitration is fundamental to the tribunals mandate of resolving
their dispute in accordance with applicable law and cannot properly be disregarded or
omitted.
[E] Trade Sanctions, Embargoes and Controls

It is also sometimes argued that disputes implicating national or international trade sanctions,
embargoes, or export controls are nonarbitrable. Some early national court decisions
contained broad language suggesting that any dispute requiring consideration of trade
regulations was nonarbitrable. (275) As in other fields, however, most contemporary national
courts and arbitral tribunals have rejected this view and concluded that arbitrators may
consider the consequences of trade regulations and embargoes for the parties contracts. (276)
Of course, even under this view, arbitral tribunals may not purport to impose administrative or
criminal sanctions associated with trade embargoes or regulations.
A striking example of the decline of the nonarbitrability doctrine in this field involves claims
under U.S. law requesting U.S. governmental regulatory investigation of allegedly unfair trade
practices. (277) Although the investigation is conducted by an administrative agency (rather
than a private party), with the power to impose administrative sanctions, the statute allows
investigations to be suspended pursuant to an agreement to arbitrate between the parties;
P 994 (278) several authorities have concluded that an international arbitration agreement
renders a request for an administrative investigation arbitrable. (279)
[F] Bankruptcy and Insolvency (280)

Parties to international arbitration agreements sometimes end up in some form of bankruptcy
or insolvency, either in their home jurisdiction or elsewhere. (281) In most jurisdictions, only
national courts (often specialized courts) have the authority to commence, administer and
wind-up bankruptcy proceedings, including proceedings that liquidate a bankrupt company,
reschedule its liabilities, operate it under some form of receivership or administration, or
distribute pro rata payments to designated creditors and owners. Disputes concerning these
core bankruptcy functions are almost universally considered nonarbitrable, whether in
domestic or international arbitrations, under the laws of developed jurisdictions. (282)
It is much more controversial, however, whether and when disputes merely involving a
bankrupt entity as a party, or raising questions of bankruptcy law (e.g., the continued effect of
a contract), may be resolved in arbitration. Different national legislative regimes and judicial
decisions have reached different conclusions about these types of disputes. In many such
P 995 cases, the desirability of a centralized, usually pro-debtor, forum for resolving all
disputes involving the bankrupt entity is weighed against that entitys preexisting commitment
to resolve disputes by international arbitration, with different legal systems adopting different
resolutions of these competing interests. Again, however, the weight of authority, particularly
in recent years, supports narrow nonarbitrability rules in this context.
[1] National Legislation Imposing Absolute Prohibition Against Arbitration by Insolvent
Entities
In some jurisdictions, the bankruptcy of a party is treated as an issue of the continued validity
and efficacy of the bankrupt entitys arbitration agreement, while in other jurisdictions it is
treated as a matter of nonarbitrability. As noted above, in a few states (e.g., Latvia, Poland),
local law purportedly invalidates all arbitration agreements to which a bankrupt entity is
party. (283) These national law rules can be characterized as either rules of substantive
validity, having the effect of invalidating a previously-valid arbitration agreement, or as rules
of capacity, having the effect of withdrawing the insolvent entitys capacity. (284)
Other national bankruptcy legislation adopts a somewhat different approach. Under Dutch law,
any monetary claim against the bankrupt must mandatorily be resolved in special bankruptcy
proceedings, rather than arbitration, apparently reflecting a rule of nonarbitrability. (285)
Similarly, in Italy, all monetary claims against an insolvent company must be brought
exclusively in a specialized bankruptcy court. (286) Slightly differently, in Portugal, the effects
of arbitration agreements to which an insolvent entity is party, and which may affect the
validity of that partys estate, are suspended during the bankruptcy proceedings. (287) A few
P 996
18
P 996
other jurisdictions also appear to impose automatic stays of arbitral proceedings, or
similar suspensions, involving a party that has entered insolvency. (288)
[2] National Legislation Imposing No Prohibitions Against Arbitration by Insolvent Entities
In other jurisdictions, the bankruptcy or insolvency of a party does not affect its obligations
under preexisting arbitration agreements, which remain binding on the company and any
bankruptcy trustee or administrator. That is the case in Switzerland, at least with regard to
international arbitration agreements. (289) Likewise, aside from core bankruptcy issues,
contractual disputes involving a bankrupt company remain subject to arbitration, pursuant to
the bankrupts preexisting arbitration agreements, in France (290) and Germany. (291)
P 997
Even where an insolvent partys arbitration agreement remains valid following
commencement of bankruptcy proceedings, and even if disputes involving the insolvent entity
are arbitrable, it is sometimes argued that, any arbitral proceedings should be stayed as a
discretionary matter. (292) In some jurisdictions, public policy is relied upon as a basis for
requiring a mandatory stay of arbitration against the insolvent/bankrupt party. (293) Other
jurisdictions leave decisions whether to stay arbitral proceedings to the arbitral tribunals
discretion. (294)
[3] National Legislation Providing Case-by-Case Rules Regarding Arbitration by Insolvent
Entities
In a number of jurisdictions, courts adopt what is best described as a case-by-case approach,
considering the circumstances of particular insolvent parties and the arbitration agreements
and proceedings to which they are party. That is true, for example, in Spain, where Spanish
insolvency legislation provides that arbitration agreements may be suspended during the
P 998 pendency of the insolvency on the order of the bankruptcy court. (295) Similarly, in
England, the trustee for the bankrupt entitys affairs is granted the power to disclaim the
bankrupts contracts; alternatively, a bankruptcy tribunal is granted discretion to require that
otherwise arbitrable disputes be decided in judicial proceedings in the context of bankruptcy
proceedings. (296)
Likewise, in Singapore, the Court of Appeal recently held that if arbitration of a dispute would
affect the substantive rights of other creditors, or arise from the operation of the statutory
provisions of the insolvency regime per se, then the dispute would be nonarbitrable;
conversely, the dispute would be arbitrable when it does not. (297) On the other hand, the
court also observed that, with respect to disputes resolved pursuant to pre-insolvency
agreement to arbitrate, then there would generally be no reason not to give effect to the
parties agreement:
[I]n instances where the agreement is only to resolve the prior private inter se disputes
between the company and another party there will usually be no good reason not to observe
the terms of the arbitration agreement. [A]llowing a creditor to arbitrate his claim against an
insolvent company in such circumstances does not undermine the insolvency regimes
underlying policy aims. (298)
The clearest example of a jurisdiction requiring case-by-case analysis of particular bankruptcy
and arbitration proceedings, in order to determine whether to give effect to the arbitration
agreement, is the United States. Under U.S. law, companies seeking bankruptcy protection
generally remain bound by their preexisting international arbitration agreements. In general,
the automatic stay provision of U.S. federal bankruptcy law suspends all legal proceedings
against the putatively bankrupt company, subject to court approval to permit particular
proceedings to continue. (299) In deciding whether to permit particular proceedings to go
forward, U.S. courts generally require debtors to perform their arbitration agreements, (300)
P 999 particularly as to claims that do not involve core bankruptcy jurisdiction. (301) One
frequently-cited U.S. lower court decision explained this approach, ordering an insolvent party
to honor its international arbitration agreement on the basis that:
In weighing the strong public policy favoring international arbitration with any countervailing
potential harm to bankruptcy policy upon the present facts, the Court finds the scales weighed
in favor of arbitration.no major bankruptcy issues will be implicated in valuing contract
damages and the international arbitration panel requires no special expertise to accomplish
their task. While international arbitration will require a temporary and limited incursion into
the Bankruptcy Courts exclusive jurisdictional bailiwick, no bankruptcy policies will suffer
adverse impact. Conversely, the very image of the United States in the international business
community stands to be tarnished. It is important and necessary for the United States to hold
its domiciliaries to their bargains and not allow them to escape their commercial obligations
by ducking into statutory safe harbors. (302)
P 1000 Nevertheless, there are exceptions, where U.S. courts have refused to compel arbitration
on the grounds that arbitral proceedings against the debtor would conflict with the purposes of
the Bankruptcy Code. (303) In an influential decision, In re United States Lines, Inc., (304) the
Second Circuit attempted to prescribe generally-applicable Rules for the treatment of
arbitration agreements involving an insolvent company. In so doing, the Court articulated a
pro-arbitration standard in determining whether the automatic stay should be lifted in order
to allow an arbitration involving the debtor to proceed.
Among other things, the United States Lines Court held that the [FAA] as interpreted by the
Supreme Court dictates that an arbitration clause should be enforced unless doing so would
19
seriously jeopardize the objectives of the [Bankruptcy] Code. (305) The Court also held:
even a determination that a proceeding is core will not automatically give the bankruptcy
court discretion to stay arbitrationnot all core bankruptcy proceedings are premised on
provisions to the Code that inherently conflict with the Federal Arbitration Act; nor would
arbitration of such proceedings necessarily jeopardize the objectives of the Bankruptcy Code.
(306)
Consistent with this approach, a number of U.S. lower courts have conducted case-by-case
analyses as to whether the circumstances of particular bankruptcy proceedings, and particular
arbitrations, justified overriding the parties agreement to arbitrate; even in so-called core
P 1001 bankruptcy proceedings, a case-by-case assessment of the needs of the bankruptcy
process for a particular insolvent party is required to overcome an otherwise valid arbitration
agreement. (307)
Lower courts have also held that a particular showing of need is required to overcome an
international, as distinguished from a domestic, arbitration agreement. In the words of one
court, [w]ith respect to international agreements, the Court has less discretion to deny
motions to arbitrate than it does with respect to domestic agreements. (308)
Under U.S. bankruptcy law, the bankruptcy trustee or debtor in possession may assume or
reject any executory contracts that is, contracts with substantial obligations remaining
unperformed on both sides that it has with creditors. (309) There is scant authority as to
whether a debtor or trustee remains bound by an arbitration agreement when the trustee
rejects the executory contract containing that arbitration agreement. Some lower courts have
held that the arbitration agreement survives the rejection of the contract, (310) basing their
P 1002 decision on long-standing principles that rejection of an executory contract does not
alter the substantive rights of the parties. (311) With respect to a nonexecutory contract,
meaning one that is fully performed at least on one side, the trustee does not have a choice to
reject the contract and remains bound to the debtors pre-petition obligations, including any
arbitration agreement contained within the nonexecutory contract. (312)
[4] Effect of Foreign Insolvency Legislation on Arbitrations Seated Abroad
International arbitral proceedings occasionally present the question whether rules in an
insolvent partys home jurisdiction, providing for the invalidity of arbitration agreements or
nonarbitrability of claims of an insolvent entity, should be given effect in other jurisdictions.
For example, if a Polish (or Portuguese) company agrees to arbitrate in Switzerland (or
England) then Polish (or Portuguese) bankruptcy legislation will likely be invoked in Swiss (or
English) arbitral proceedings and, potentially, annulment or similar Swiss (or English) judicial
proceedings. Although different courts have reached different results, both national courts and
arbitral tribunals have generally been reluctant to give automatic effect to foreign bankruptcy
legislation that forbids arbitration by an insolvent party.
A representative approach was that of the English Court of Appeal in an arbitration, seated in
England, involving an insolvent Polish entity which argued that, under Polish law, it lacked the
capacity to continue to arbitrate. (313) (As noted above, Polish bankruptcy legislation provides
that [a]n arbitration agreement concluded by the bankrupt shall lose its force from the date
of the declaration of bankruptcy and pending proceedings shall be subject to discontinuance.
(314) ). The English court upheld the arbitral tribunals refusal to discontinue arbitral
proceedings against the insolvent Polish entity; the English court reasoned that the Polish
legislation addressed issues of capacity and that the applicable EU Insolvency Regulation
provided for application of English, not Polish, law to the capacity of a party to English-seated
arbitral proceedings. (315) The English court concluded that, under English law, the Polish
company retained its capacity to arbitrate, notwithstanding Polish legislation allegedly
withdrawing that capacity. (316)
In contrast, the Swiss Federal Tribunal reached (largely) the opposite result, in an arbitration
P 1003 seated in Switzerland involving the same insolvent Polish entity, which again argued that
it no longer possessed the capacity to participate in arbitral proceedings. (317) The
P 1004 Federal Tribunal reasoned, based on the expert evidence submitted to it, that the Polish
insolvency legislation should be characterized as a matter of capacity, to which (under Article
V(1)(a) of the Convention and Swiss law) the insolvent companys personal law was applicable.
(318) Upholding the arbitral tribunals similar conclusion, the Federal Tribunal held that, in the
case of a Polish company, its personal law was Polish law, which denied it capacity to
participate in arbitral proceedings. (319)
The decision of the Swiss Federal Tribunal attracted a measure of criticism, (320) reflected in
part by the observation by a Swiss practitioner that [t]he Swiss Federal Supreme Court got it
wrong, wrong, wrong, and wrong a fourth time. (321) In a subsequent decision, involving
application of Portugals insolvency legislation (providing for effects arguably similar to that of
Polands legislation), the Swiss Federal Tribunal emphasized that its interpretation of the
Portuguese bankruptcy law was narrowly limited, (322) and refused to characterize Portuguese
law as withdrawing Portuguese companies capacity to participate in arbitral proceedings.
(323) According to the Federal Tribunal:
When the foreign entity is a legal person according to its status at the place of incorporation,
it is also capable of standing as a party in an international arbitration seated in Switzerland.
Possible limitations of the legal status as a person or a legal entity that are specific to the
20
arbitral proceedings and leave the legal personality of the foreign entity untouched, are
fundamentally irrelevant from the point of view of the capacity to be a party to an arbitration
seated in Switzerland.[I]f Art. 87 p-IL [the relevant provision of the Portuguese Insolvency
Law] prevented an insolvent Portuguese entity from appearing as a party in a Portuguese
arbitration, this would have no influence on its capacity to be a party in an international
arbitration seated in Switzerland. It is decisive in this respect that Portuguese law affords the
Appellant a legal personality through which it may be allocated rights and obligations. (324)
The Federal Tribunal instead applied Swiss law (as the law of the arbitral seat) to the
substantive validity of the arbitration agreement, requiring an insolvent Portuguese party to
honor its agreement to arbitrate in Switzerland. (325) This subsequent holding of the Swiss
Federal Tribunal, like that of the English Court of Appeal, reflects the general reluctance of
national courts to give automatic effect to foreign bankruptcy legislation purporting to
invalidate international arbitration agreements.
In the United States, courts have held that the so-called automatic stay provisions of the
Bankruptcy Act apply only to actions that affect property of a debtor that is within the
territorial jurisdiction of the United States. Although there is scant authority, U.S. courts have
held that the automatic stay does not provide broad anti-suit injunctive relief affecting
P 1005 property around the world. (326) On the other hand, U.S. courts have stayed recognition
and enforcement proceedings of foreign awards against the U.S. assets of a party subject to
foreign bankruptcy proceedings. (327)
[5] Arbitral Awards
In practice, most international arbitral tribunals have proceeded with arbitrations
notwithstanding the pendency of bankruptcy proceedings involving one of the parties in that
partys home jurisdiction. (328) Tribunals have usually rejected arguments, based on national
insolvency law, that the arbitration agreement became invalid or that the arbitration could
not proceed, (329) often requiring at a minimum clear and convincing evidence that a foreign
law applicable to a party prohibits its continuing participation in bankruptcy proceedings and
that this law should be recognized. (330)
Tribunals have also generally been reluctant to stay arbitral proceedings based on a pending
P 1006 insolvency involving one of the parties: Even in circumstances in which the suspension
seems mandatory, if the other party with full awareness of the relevant particulars requests
to proceed with the arbitration, the arbitrator should refuse to suspend the proceedings, for no
one knows best what suits the partys interests than the party itself. (331) Arbitral awards are
almost uniformly consistent with this view. (332)
[6] Future Directions: Insolvency and Nonarbitrability
The correct analysis of the effects of the bankruptcy of a party on an international arbitration
agreement, and application of the nonarbitrability doctrine in these circumstances, is
complex. The insolvency of parties in these circumstances presents both choice-of-law and
nonarbitrability issues.
Where the law governing the bankruptcy provides for the invalidity of the bankrupts
arbitration agreements, a choice-of-law analysis is necessary. In general, only where the law
governing the bankruptcy also governs the arbitration agreement, and provides for its
invalidity, or (less clearly) the incapacity of the bankrupt party, will the agreement potentially
be invalid. That is, where a bankruptcy law does not govern either the substantive validity of
the arbitration agreement or the capacity of the insolvent entity, then there is no basis for
applying it to suspend or terminate the arbitral proceedings or invalidate the arbitration
agreement.
The better view is also that the effects of bankruptcy or insolvency legislation should generally
not be characterized as issues of capacity, governed by the personal law of a party (typically,
the law of the insolvent partys home jurisdiction). As discussed above, the scope of the
concept of capacity for purposes of the New York Convention should not be governed by
national law, but rather by a uniform international definition of the concept; (333) under that
international definition, the consequences of insolvency should not be regarded as affecting
the capacity of a party, but rather should be characterized as an issue concerning the
substantive validity of that partys contractual rights and obligations.
This conclusion avoids the undesirable possibility that every Contracting State would be free,
P 1007 through application of local insolvency legislation, to invalidate the international
arbitration agreements of local parties which would materially undercut the purposes of the
Convention and frustrate parties legitimate commercial expectations. This analysis is
consistent with that of the Swiss Federal Tribunal, discussed above, holding that Portuguese
bankruptcy legislation which putatively prevented an insolvent Portuguese entity from
appearing as a party in a Portuguese arbitrationwould have no influence on its capacity to be
a party in an international arbitration seated in Switzerland. (334)
Even where a foreign bankruptcy law governed an arbitration agreement, the applicable
bankruptcy law would be required to be consistent with the New York Conventions
prohibitions against discriminatory legislation. In particular, a law singling out only arbitration
agreements (or, worse, only international arbitration agreements), but not other contracts, for
invalidity or similar consequences in bankruptcy would contradict these prohibitions and be
precluded by Article II of the Convention. (335) The better view is that the Convention requires,
21
consistent with the practice of most states, a reasoned, case-by-case analysis of the needs of a
particular insolvency proceeding and the impact of enforcement of an arbitration agreement
on those proceedings, before the agreement to arbitrate may be denied effect. (336) Moreover,
again consistent with the weight of better-reasoned national court authority, there should be a
strong presumption in cases involving international arbitration agreements that such
agreements will be given effect. (337)
Exceptionally, a state might, consistent with the nonarbitrability exception in Articles II(1) and
V(2)(a) of the Convention, treat some or all of the disputes involving the bankrupt party as
nonarbitrable and deny effect to the arbitration agreement or arbitral award in its own courts.
This would not, however, require other states to give effect to such results, although they may
exceptionally do so for reasons of their own public policy. (338) This result is consistent with
the approach of most arbitral tribunals, which continue arbitral proceedings, notwithstanding
foreign bankruptcy laws, leaving open the possibility of non-recognition of the arbitral award
in the state whose bankruptcy legislation and proceedings are at issue. (339)
[G] Employment and Labor Disputes (340)

P 1008 There is substantial diversity among states in their treatment of agreements to arbitrate
employment and labor disputes. Some states regard arbitration as unsuitable for labor or
employment-related disputes, and hold agreements to arbitrate such disputes unenforceable,
while other states consider that arbitration is superior to judicial and other forms of dispute
resolution for labor disputes and both enforce and encourage agreements to arbitrate in
employment settings.
[1] Jurisdictions Treating Labor Disputes as Nonarbitrable
Historically, many national legal systems treated various sorts of employment-related claims
as nonarbitrable. Despite the evolution of the nonarbitrability doctrine in other contexts, that
remains the case in many European jurisdictions, including Belgium, (341) Italy, (342) England
(343) and France. (344) Similar legislation exists in other jurisdictions. (345)
P 1009 For example, despite the general approach of French courts to the allocation of
jurisdictional competence, it appears to be settled law that it is for French courts, not arbitral
tribunals, initially to determine whether or not a dispute involves a nonarbitrable employment
matter. In the words of a recent Cour de cassation decision, the competence-competence
principle, pursuant to which it is for the arbitrator to decide by priority on his own jurisdiction,
does not apply in employment matters. (346)
[2] Jurisdictions Treating Labor Disputes as Arbitrable
In contrast, a very different approach is taken in the United States and a few other
jurisdictions. In these jurisdictions, arbitration of labor or employer-employee disputes is
often not merely permitted but sometimes affirmatively encouraged.
In general, U.S. federal law and policy has long encouraged arbitration of many labor disputes,
(347) as a specialized mode of dispute resolution regarded by both U.S. legislative and judicial
authorities as superior in many respects to that of litigation, while imposing only narrow
nonarbitrability limits on some forms of employer-employee disputes. (348) Thus, 1 of the U.S.
FAA excludes from the Acts coverage agreements arising from a limited range of employment
relations involving contracts of employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce. (349) Consistent with its text, this
exclusion has been held to apply only to employees engaged in transportation industries. (350)
Thus, the U.S. Supreme Court has repeatedly upheld the validity and enforceability of
arbitration agreements in the domestic employment context, declaring that mere inequality
P 1010 in bargaining poweris not a sufficient reason to hold that arbitration agreements are
never enforceable in the employment context. (351) Consistent with this, U.S. courts have also
routinely held that a wide variety of domestic employment-related claims are arbitrable,
including claims under the Employee Retirement Income Security Act, (352) the Age
Discrimination in Employment Act, (353) the Fair Labor Standards Act, (354) legislation
protecting seamen, (355) employment discrimination claims under Title VII (356) and
employment discrimination or wage claims under state law. (357)
P 1011 As discussed above, several U.S. lower courts have held that 1s exclusion for
transportation workers applies only to domestic U.S. workers and not to international
employment relations. (358) Relying on the analysis of the New York Convention in Mitsubishi
Motors and Scherk, these decisions have held that the U.S. ratification of the Convention
contemplated abandoning domestic rules of nonarbitrability in the international context. (359)
Thus, holding that an arbitration agreement in a foreign seamans contract was enforceable
under the Convention, a U.S. appellate court declared:
[T]he language of the Convention, the ratifying language, and the [provisions of the FAA]
implementing the Convention do not recognize an exception for seamen employment
contracts. On the contrary, they recognize that the only limitation on the type of legal
relationship falling under the Convention is that it must be considered commercial, and we
conclude that an employment contract is commercial. (360)
Some U.S. lower courts have imposed procedural limits on domestic arbitration agreements
that employees are required to accept as part of an employment relationship. (361) Even
22
under this approach, where employment contracts are negotiated, procedural matters are
generally left to the parties agreement (subject to general unconscionability and procedural
regularity safeguards). (362)
P 1012 The National Labor Relations Board (an administrative agency responsible for
administering various U.S. labor laws) recently adopted a regulation forbidding the inclusion
of class action waivers in arbitration agreements contained in employment contracts. (363) The
NLRB reasoned that the class action waivers unfairly restricted statutory rights granted to
employees by U.S. federal labor laws. The NLRAs decision was overturned, however, by a
number of U.S. courts of appeals, reasoning that it was contrary to the FAAs requirement that
arbitration agreements, including in employment contracts, be enforced in accordance with
their terms. (364)
In part because of concerns about the fairness of employment (and consumer) arbitration,
legislative proposals have been made in the U.S. Congress to amend the FAA to treat some or
all types of consumer (and employment) disputes as nonarbitrable. As discussed above,
proposals have been made to preclude mandatory agreements to arbitrate future consumer
disputes. The most recent of these efforts was titled the so-called Arbitration Fairness Act of
2013. (365) Among other things, these legislative proposals would amend the FAA to provide
that no predispute arbitration agreement shall be valid or enforceable if it requires
arbitration of an employment dispute, consumer dispute or civil rights dispute. (366) It is
uncertain whether these proposals will ever be adopted, even in the purely domestic context,
in the United States; (367) if they were, however, these proposals would reverse the historic
treatment of domestic labor and employment disputes in the United States and would
generally make agreements to arbitrate such disputes unenforceable.
A few other jurisdictions also permit arbitration of at least some types of labor disputes. That
includes Germany, (368) the Netherlands, (369) Switzerland (370) and Hong Kong. (371)
[H] Consumer Claims (372)

P 1013 As with employment disputes, different national legal systems take significantly different
approaches towards the arbitration of consumer disputes. Consumer disputes are defined
generally as disputes between a consumer (or a non-merchant) and a merchant or commercial
party, sometimes with a limited amount in controversy. (373)
In broad outline, U.S. law currently recognizes the validity of agreements to arbitrate between
consumers and businesses and permits the arbitration of both existing and future consumer
disputes, subject to restrictions based on principles of unconscionability and due notice. In
contrast, many other jurisdictions forbid or regulate (through statutory provisions) agreements
to arbitrate future consumer disputes. Even in jurisdictions that do not give general effect to
consumer arbitration agreements, however, there is considerable diversity in the treatment of
such provisions.
[1] U.S. Federal Arbitration Act
In the United States, the FAA clearly extends to agreements between consumers and
merchants; there is nothing in 2, 3 or 4 of the FAA that excludes consumer transactions or
agreements from the general scope of the rule that arbitration agreements are presumptively
enforceable. Consistent with that statutory text, the U.S. Supreme Court has repeatedly and
unambiguously upheld both the validity of such agreements and the arbitrability of consumer
claims. (374)
P 1014 Most recently, but illustratively, the Court took the unusual step of summarily reversing a
decision of a state supreme court which held, as a matter of public policy in West Virginia,
that predispute arbitration agreements in nursing home contracts were unenforceable as
applied to claims concerning personal injury or wrongful death in West Virginia. (375) The
Supreme Court declared that [t]he [FAAs] text includes no exception for personal-injury or
wrongful-death claims, (376) and emphatically reiterated its prior holdings, that the FAA
precludes state law rules purporting to hold particular categories of disputes, including
consumer disputes, nonarbitrable. (377)
Despite this, some U.S. lower courts have criticized, and sought to limit, the arbitrability of
consumer disputes. According to one especially sweeping critique:
The reality that the average consumer frequently loses his/her constitutional rights and rights
of access to the court when he/she buys a car, household appliance, insurance policy, receives
medical attention or gets a job rises as a putrid odor which is overwhelming to the body
politic. (378)
Academic commentary is also frequently critical of rules giving effect to predispute arbitration
agreements in the context of consumer and employee claims. (379) Among other things, some
commentators have observed that even the most conspicuous forms of arbitration clause will
seldom actually be considered, much less understood and negotiated, by consumers:
To the extent that one does not understand the terms of the agreement, requiring the same to
be printed in bold letters is like yelling at a deaf man. (380)
Consistent with this criticism, some U.S. lower courts have invoked the unconscionability
doctrine or related principles to impose heightened standards of notice (381) or procedural
P 1015 fairness (382) on the terms of arbitration agreements in consumer contracts. These
23
decisions do not challenge the basic arbitrability of consumer disputes, but seek to protect
presumptively less sophisticated parties against perceived overreaching or systemic bias. This
has been particularly true in disputes involving federal statutory claims (almost exclusively in
purely domestic settings). (383) Applying this analysis, U.S. courts require an arbitration
agreement to be both substantively and procedurally unconscionable in order to find them
void, but employ a sliding scale approach such that the more substantively oppressive the
contract term, the less evidence of procedural unconscionability is required to come to the
conclusion that the term is unenforceable, and vice versa. (384)
Some U.S. states have also sought to exclude certain types of consumer contracts from state
laws that otherwise favor arbitration. For example, Texas, Massachusetts, Montana and Georgia
prohibit arbitration for consumer contracts which involve consideration less than a certain
P 1016 dollar amount (385) or particular types of contracts. (386) These types of state law
provisions are very likely preempted by the FAA in both domestic and international settings in
the United States. (387)
As discussed above, in part because of concerns about the fairness of consumer arbitration,
legislative proposals have been made in the U.S. Congress to amend the FAA to treat some or
all types of consumer (and employment) disputes as nonarbitrable. Legislation rendering
claims by consumers nonarbitrable has been adopted in specific areas, including financial
services for consumers (388) and warranty protections for consumer products. (389)
In addition, as discussed above, more general proposals have been made to preclude
mandatory agreements to arbitrate future consumer disputes, including the so-called
Arbitration Fairness Act of 2013. (390) Among other things, these proposals would amend the
FAA to provide that no predispute arbitration agreement shall be valid or enforceable if it
requires arbitration of[a] consumer dispute. (391) It is uncertain whether these proposals will
ever be adopted, even in the purely domestic context, in the United States. If they were
adopted, as previously proposed and without limitations with respect to international
arbitration agreements, they would raise significant questions about U.S. compliance with its
obligations under the New York Convention. (392)
Those legislative proposals have also prompted U.S. arbitral institutions to review their
institutional rules and policies with the aim of ensuring fair procedures in consumer (and
employment) disputes. A leading example of these developments is the AAAs Consumer Due
Process Protocols, which set out procedural guidelines for fair and efficient consumer
P 1017 arbitration. (393) Among other things, the AAAs protocols provide for conducting
proceedings at a reasonable cost, in reasonably convenient locations, within a reasonable
time and without delay, taking into account the right of each party to be represented by a
spokesperson of their choosing. In contrast, other arbitral institutions did not adopt
comparable protocols and, in some cases, their procedures and awards encountered
considerable judicial and other skepticism. (394)
U.S. legislative and regulatory proposals for nonarbitrability or invalidity rules in the context
of consumer arbitration agreements have generally recognized the limitations imposed by the
New York Convention. Thus, most versions of the Arbitration Fairness Act excluded
international arbitration agreements, subject to the New York and Inter-American Conventions,
from the legislations coverage. (395)
Consistent with this approach, the U.S. Federal Reserve Board recently excluded international
arbitration agreements (subject to chapters 2 and 3 of the FAA) from the scope of federal
regulations of arbitration agreements in retail foreign exchange transactions. (396) The federal
regulations forbid binding predispute arbitration agreements in specified foreign exchange
transactions with consumers, but, at the (well-considered) urging of the U.S. Department of
State, excluded arbitration agreements subject to the New York and Inter-American
Conventions. (397)
[2] EU Consumer Regulations
In Europe, statutory protections either forbid or regulate the use of arbitration clauses
covering future disputes in consumer contracts. (398) Under the EUs Unfair Terms in Consumer
Contracts Directive, the provisions of standard form consumer contracts are subject to
P 1018 statutory fairness requirements. (399) Among other things, the Directive provides that a
provision is prima facie unfair, and therefore invalid, if it requir[es] the consumer to take
disputes exclusively to arbitration not covered by legal provision. (400) Although the critical
phrase, by legal provision, is not defined, various EU Member States have implemented this
provision by adopting legislation that deems arbitration clauses in standard form contracts
unfair (and therefore invalid) if they require binding arbitration of future disputes involving
claims for less than specified sums (e.g., approximately $10,000). (401)
The European Court of Justice has held that the Directive represents EU public policy and that
national courts must ensure that the Directives purposes are achieved. (402) A Member State
court may (and arguably must) address the fairness of a consumer contract term even if the
consumer does not raise the issue, and the court must address the terms fairness if the
consumer raises the issue. (403) Moreover, if the Directive renders an arbitration agreement
contained in a consumer contract unenforceable, the arbitral tribunal apparently must hold
the agreement unenforceable, even if the consumer does not raise the issue. (404)
In the words of the ECJ:
24
the result sought by Article 6 of the Directive whichrequires the Member States to ensure
that consumers are not bound by unfair terms, could not be achieved if the court seized of an
action for annulment of an arbitration award was unable to determine whether that award was
void solely because the consumer did not plead the invalidity of the arbitration agreement in
the course of the arbitration proceedings.the Directive must be interpreted as meaning that
a national court seized of an action for annulment of an arbitration award must determine
whether the arbitration agreement is void and annul that award where that agreement
P 1019 contains an unfair term, even though the consumer has not pleaded that invalidity in the
course of the arbitration proceedings, but only in that of the action for annulment. (405)
On a Member State level, different jurisdictions have adopted a variety of different
approaches towards consumer arbitration agreements. French law historically imposed
relatively strict statutory prohibitions on domestic arbitration clauses between persons
involved in commercial activities (commerants) and individuals who are not involved in these
activities (so-called acte (contrat) mixte, or mixed agreements). (406) It is now accepted
that these domestic prohibitions on arbitration do not apply in the context of international (as
distinguished from domestic) consumer contracts. (407) In a comparable approach, Swedish
legislation provides for the nonarbitrability of consumer arbitration agreements as to defined
categories of future disputes, together with an express provision that the exception is
inapplicable where contrary to Swedens international obligations (in particular, the New York
Convention). (408)
German (409) and Austrian (410) law contain specialized rules regarding the arbitration of
future consumer disputes, recognizing the validity of such provisions apparently as to
P 1020 both future and existing disputes only if they are recorded in a separate arbitration agreement
signed by the consumer (as is the case in some U.S. state legislation (411) ). Other European
jurisdictions have similar types of statutory provisions. (412)
A different approach is adopted under English law, where consumer arbitration agreements
(whether they relate to present or future disputes) are invalid if they are either below a
specified monetary sum (roughly $10,000) or if they are unfair. (413) This unfairness standard
in turn requires inquiry into the substantive fairness of a provisions terms and the drafting
history of the provisions. (414)
[3] Other Jurisdictions
Other jurisdictions also adopt a variety of different approaches to the arbitration of consumer
claims. In New Zealand, an arbitration agreement will be enforceable against a consumer only
if the consumer, by separate written agreement, certifies that, having read and understood
the arbitration agreement, the consumer agrees to be bound by it and the arbitration
agreement discloses that he or she is waiving various protections. (415) As with German and
Austrian law, this approach parallels that of various U.S. states (likely preempted by the FAA
(416) ), which require specific evidence of informed consent to arbitration provisions on the
part of consumers. (417)
In contrast, Qubec recently adopted amendments to its Consumer Protection Act, providing
flatly that [a]ny stipulation that obliges the consumer to refer a dispute to arbitrationis
prohibited. (418) British Columbia legislation adopts a similar approach to agreements to
arbitrate future consumer disputes, (419) which has been upheld by Canadian courts. (420)
P 1021 In the words of the Canadian Supreme Court, 172 of the British Columbia Business Practices
and Consumer Protection Act offers remedies different in scope and quality from those
available from an arbitrator and constitutes a legislative override of the parties freedom to
choose arbitration. (421) That decision drew a well-reasoned dissent, which concluded:
Access to justice in Canada no longer means access just to the public court system.
Historically, judges were reluctant to relinquish their grasp on dispute resolution, and they
even viewed alternative dispute resolution as antithetical to the parties interests. This era is
gone. It is the role of the legislature, not the courts, to limit access to alternative dispute
resolution mechanisms. Unlike several other provinces, British Columbia has not limited the
resolution of consumer disputes to a single procedural regime. On the contrary, it has left room
for arbitration and allowed arbitrators to exercise broad remedial powers, subject to the
agreement of parties to a dispute. Given the current structure of consumer protection
legislation in British Columbia, submitting a consumers dispute with their mobile phone
service provider to arbitration is entirely consistent with the important public purposes of
protecting consumers, vindicating their rights and promoting access to justice. (422)
Ontario courts have reached similar conclusions. (423)
In yet another variation, Japans Arbitration Law provides that consumer arbitration
agreements are valid, but that, for the time being, consumers may cancel their agreements to
arbitrate future disputes with businesses prior to the first oral hearing of the arbitral tribunal
(or if the consumer is the claimant). (424) Alberta has taken this suggestion a step further,
recognizing the validity of predispute consumer arbitration agreements which have been
approved in advance by consumer protection regulatory authorities. (425)
P 1022 [4] Future Directions: Arbitrability of Consumer Disputes
The arbitration of consumer disputes raises special concerns, both because of the
presumptively gross disparity of sophistication and bargaining power of the parties during
contract formation and the procedural challenges of implementing the cost-effective
25
resolution of disputes involving modest financial stakes. These concerns are partially reflected
in the various invalidity and nonarbitrability rules in Europe, and elsewhere, as well as in
legislative proposals in the United States. (426) The differing natures of these concerns are not,
however, always clearly addressed or implemented in legislative and judicial responses.
First, a number of national law statutory provisions regarding consumer arbitration are not
properly characterized as nonarbitrability rules. Rather, statutes such as the Qubec
legislation and EU Regulation are rules of contractual validity, that purport to invalidate all of
certain defined categories of agreements (rather than to forbid their enforcement as to certain
categories of disputes).
There are reasons to doubt both the wisdom of these national rules of contractual invalidity
and their compatibility with Article II of the New York Convention. In particular, there is a
compelling argument that the blanket invalidation of all predispute consumer arbitration
agreements (as in Qubec) is contrary to Article IIs requirements of neutrality for rules of
contractual validity. (427) Indeed, as discussed above, precisely these concerns have resulted
in exceptions to U.S., Swedish and other legislation for consumer transactions containing
This sort of invalidity rule applies regardless of the terms of a consumer arbitration agreement
(including where it is entirely even-handed or even pro-consumer) and the extent of
negotiation or inequality of bargaining power (including where an arbitration agreement is
specifically negotiated or where a consumer in fact has equal or greater bargaining power
and sophistication than a merchant). (429) It is doubtful that a blanket rule of invalidity of
agreements to arbitrate of this sort comports with the Conventions requirement that
agreements to arbitrate be subject to the same rules of validity as other categories of
contracts: it is obvious that consumers are, as a general matter, able to conclude binding sale
and purchase, financial and other contracts and it is difficult to see why, subject to
unconscionability defenses, consumers ought not also be able to conclude valid arbitration
agreements.
There are less blunt, more nuanced means of addressing concerns about unequal bargaining
power or sophistication than blanket invalidity rules. For example, English legislation
P 1023 (adopting a case-by-case inquiry into the fairness of particular agreements over a
specified monetary value), German and Austrian legislation (permitting consumer arbitration
agreements in separate instruments) and Alberta legislation (permitting regulatory-approved
consumer arbitration agreements), adopt approaches to contractual invalidity which are less
susceptible to challenge under the New York Convention. These legislative solutions are by no
means perfect, but provide more constructive and proportionate mechanisms for addressing
concerns about consumer protection and unequal bargaining power than blanket prohibitions
on consumer arbitration agreements.
Second, a separate, but related, set of concerns about consumer arbitration agreements
involves the process by which consumer disputes are arbitrated. In particular, restrictions on
the arbitrability of consumer disputes often arise from concerns that such disputes cannot, as
a financial matter, realistically be arbitrated effectively or fairly by consumers (owing to costs
of filing fees, location of the arbitral seat, etc.) or that businesses will enjoy systemic
advantages over consumers (e.g., because they are repeat players). These are legitimate
concerns and can provide valid grounds for either nonarbitrability rules or due process
requirements for fair arbitral procedures. Such nonarbitrability and contractual validity rules
would need to be tailored towards the objective of safeguarding the ability of consumers to
pursue their claims in an effective and affordable manner, but in principle would be permitted
by the Convention. (430)
It is important to note that litigation of consumer disputes in national courts raises serious
procedural challenges, particularly in international transactions (where issues of jurisdiction,
language and enforcement may make small claims uneconomic to pursue). (431) In many
instances, preserving recourse to national courts may therefore offer little of real benefit to
consumers, while inhibiting the development of mechanisms that would provide better
alternatives. Of course, it makes little sense to forbid parties from agreeing to arbitrate if the
alternatives which they are required to pursue suffer from the same (or worse) defects.
A more constructive approach would be to develop neutral, efficient arbitral procedures
capable of resolving consumer and similar disputes in a fairer, more cost-effective manner
P 1024 than currently available in national courts. (432) Indeed, some skeptics of the arbitral
process as applied to consumers have recognized this possibility. (433) A goal of developing
means of arbitration for consumer disputes, which address concerns about the fairness of the
arbitral process, is suggested by Albertas consumer protection legislation, which permits
regulatory-approved consumer arbitration agreements, and by Japans arbitration legislation,
which does not invalidate consumer arbitration agreements outright, but rather permits, for
the time being, consumers to cancel consumer arbitration agreements. (434)
Consistent with this, some arbitral institutions have adopted specialized rules tailored to
encourage cost-effective resolution of smaller disputes, which are well-suited for consumer
and employment disputes, including (as noted above) the due process protocols of the AAA.
(435) This includes rules regarding class action arbitrations, which offer possible avenues for
relief which may be unavailable to consumers under many national legal systems. (436) It also
includes protocols for handling consumer and employment claims in a fair manner. (437)
26
Empirical studies of these sorts of neutral procedural regimes, and accompanying protections,
suggest that they are effective in providing efficient and fair mechanisms for resolving
consumer disputes. (438) The procedural protections that these regimes prescribe are a
critical step towards overcoming mistrust of the arbitral process in this context. (439)
A related set of proposals involve online dispute resolution, aimed at providing an efficient
mechanism for resolving low monetary value disputes involving consumers. A UNCITRAL
working group is exploring mechanisms for providing online dispute resolution for consumer
disputes and is currently developing draft procedural rules for a binding dispute resolution
process combining mediation and arbitration. (440) This initiative has the merit of addressing
directly the fundamental problem of most consumer disputes, namely the difficulty of
P 1025 providing a cost-effective means of fairly resolving a dispute with low monetary value
(and, often, a commercially unsophisticated party).
[I] Natural Resources

Many developing nations historically viewed international arbitration with considerable
reserve and occasional hostility. (441) Among other things, international arbitration was seen
as dominated by Western or capital-exporting interests and arbitrators, supposedly
inadequately-sensitive to the policies and needs of developing countries, and unacceptably
expensive for non-Western entities. (442) In particular, these voices have urged that disputes
involving significant sovereign interests (like natural resource development projects) be
deemed nonarbitrable. (443)
Courts and legislatures in most developed countries have consistently rejected claims that
disputes involving issues of sovereignty or natural resources are inherently nonarbitrable.
(444) In the United States, the Foreign Sovereign Immunities Act contains detailed provisions
concerning the enforcement of arbitration agreements and awards against foreign states,
including in matters involving natural resources. (445) Further, federal legislation was enacted
in 1988 (446) to ensure that the act of state doctrine was not applied to prevent enforcement of
arbitral awards against foreign states in U.S. courts. (447)
P 1026 Legislation and judicial decisions in other developed jurisdictions are similar. For
example, the European Convention on State Immunity (448) and national legislation in most
European jurisdictions, (449) provides for the recognition and enforcement of international
arbitration agreements and arbitral awards against foreign states, again in matters involving
natural resources. Similar legislation has been enacted in other developed states. (450) In
recent years, many developing states have also rejected historic notions of nonarbitrability in
the context of concession agreements and natural resources projects, both through widespread
acceptance of bilateral and multilateral investment treaties (451) and enactment of national
legislation. (452)
[J] Carriage of Goods By Sea

The carriage of goods by sea is regulated by a framework of international treaties and national
legislation, generally designed to ensure that shippers are provided with adequate remedies
in specified forums against shipping enterprises. (453) This regulatory framework has resulted
in claims that arbitration agreements, customarily included in ocean shipping contracts, are
unenforceable on nonarbitrability or related public policy grounds.
In Vimar Seguros y Reaseguros, SA v. M/V Sky Reefer, the U.S. Supreme Court rejected lower
court authority holding that claims under the U.S. Carriage of Goods by Sea Act (COGSA) were
nonarbitrable. (454) The Court held that COGSA does not forbid selection of [a] foreign
[arbitral] forum, reasoning, much like the Mitsubishi Court in the antitrust context, (455) that
arbitration is merely a procedural mechanism which does not compromise COGSAs
substantive statutory protections. (456) The Vimar Court also concluded that it was improper
for U.S. courts to speculate about the substantive decisions that arbitral tribunals might reach,
including as to whether or not they would apply mandatory U.S. COGSA protections: mere
P 1027
speculation that the foreign arbitrators might apply Japanese law which, depending on
the proper construction of [the U.S. Carriage of Goods by Sea Act], might reduce respondents
legal obligations, does not in and of itself render a COGSA claim nonarbitrable. (457)
Consistent with this, U.S. lower courts have virtually always upheld agreements to arbitrate
COGSA claims, including in circumstances where a combination of a foreign choice-of-law
clause and arbitration agreement appeared likely to exclude the application of statutory
COGSA protections. (458) There are contrary results under the so-called Carmack Amendment,
with a few lower courts holding that the Amendment mandatorily requires disputes to be
resolved in statutorily-specified U.S. judicial districts. (459)
There is limited authority from other jurisdictions. Some national courts have suggested less
receptive views towards the enforceability of forum selection agreements as applied to claims
by shippers against ocean shippers, but these decisions do not appear to apply to arbitration
agreements. (460) A few other decisions have, however, refused to enforce arbitral awards on
the grounds that COGSA claims are nonarbitrable. (461) These decisions are ill-considered and
inconsistent with the New York Conventions objectives.
[K] Corporate Governance (462)

P 1028 Arbitration of corporate governance disputes between shareholders or between a
27
company and its officers, directors, or shareholders is sometimes claimed to involve
nonarbitrable matters. In almost all jurisdictions, such claims have been rejected, save for
unusual cases involving requests for relief that cannot be granted by arbitral tribunals (such as
liquidation or winding up of a company, disqualification of a director, or, in some instances,
invalidation of a shareholders resolution).
The approach towards corporate governance disputes in the United States is representative.
Historically, U.S. courts viewed agreements to arbitrate corporate disputes with disfavor,
holding them unenforceable on various grounds (including that they did not really involve
disputes, that they were non-justiciable and that they interfered with statutorily-mandated
corporate governance rules). (463) More recently, U.S. courts abandoned that hostility, first
with closely-held corporations (464) and later more widely, with U.S. courts now holding
broadly that disputes regarding corporate matters are arbitrable under the FAA. As one court
put it, [t]he FAA does not carve out disputes relating to the internal affairs of corporations as
an exception to the general enforceability of arbitration agreements. (465)
P 1029 German courts followed a similar pattern. Historically, there was disagreement regarding
the arbitrability of the validity of shareholder resolutions, which was eventually resolved in
favor of arbitrability, provided that all shareholders in the company were party to the
arbitration. (466) Other types of disputes among shareholders to a German company are in
principle arbitrable. (467) Given these developments, the leading German arbitral institutions
(DIS) recently adopted specialized arbitration rules governing corporate disputes. (468)
Decisions in other jurisdictions reach similar results, including in England, (469) Austria, (470)
Switzerland, (471) Canada (472) and elsewhere. (473) In a few jurisdictions, legislation provides
P 1030 for the validity and enforceability of agreements to arbitrate contained in corporate
constitutive instruments (e.g., articles of association). (474) Moreover, UNCITRAL has
undertaken efforts to clarify and confirm the arbitrability of intra-corporate disputes. (475)
Despite this general principle, many jurisdictions appear to disfavor agreements to arbitrate
in the constitutive instruments of public companies (with large numbers of public
shareholders). As discussed below, for example, in the United States, the Securities and
Exchange Commission has an informal policy of discouraging the registration of securities
whose documentation includes mandatory arbitration provisions. (476) Despite that, there are
a number of U.S.-registered securities, virtually all by non-U.S. companies, that include
mandatory arbitration agreements. (477) It is unusual, but not unheard of, in other jurisdictions,
for corporate charters of publicly-traded companies to contain arbitration agreements. (478)
[L] Trust Disputes

The arbitrability of disputes arising from trusts paralleled that of corporate law disputes.
Historically, trust disputes were frequently treated as nonarbitrable. (479) More recently,
however, courts in a number of jurisdictions have upheld the arbitrability of trust disputes in a
variety of contexts. (480)
[M] Distributorship and Commercial Agent Claims

Legislation in some jurisdictions provides statutory protections for distributors or commercial
agents, typically by requiring payment of specified amounts in the event of termination of
their distributorship, agency, or franchise. In some cases, these statutory regimes are
accompanied by provisions requiring that all claims under such legislation be resolved under
local law, in local courts. The compatibility of these statutory provisions with the New York
Convention is subject to serious doubts.
P 1031 In the United States, some state laws purport to invalidate agreements to arbitrate in
distributorship agreements (481) and franchise agreements. (482) These legislative provisions
are almost always preempted, even in purely domestic settings, by the FAA. (483) In contrast,
U.S. federal law renders certain disputes involving motor vehicle franchises (484)
nonarbitrable.
In Europe, a few jurisdictions have adopted restrictions on the validity of arbitration
agreements as applied to certain categories of distribution agreements. A leading example of
such legislation is Belgiums Law of 27 July 1961, granting legal protections to exclusive sales
distributors, based in Belgium, against unilateral termination of their franchise. (485)
An early Belgian judicial decision appeared to interpret the Law of 27 July 1961 as permitting
arbitration of distributorship termination claims, provided that the arbitral tribunal would
apply Belgian law. (486) More recently, the Belgian Cour de cassation apparently concluded
that the Law rendered claims by Belgian distributors against foreign principals nonarbitrable
absent evidence that the arbitral tribunal would apply Belgian law. (487) The court reasoned
that the New York Convention permitted it to apply Belgian law, as the law of the forum, to
issues of nonarbitrability, (488) and concluded:
Articles 4 and 6 of the Law of 27 July 1961, intending to give to the distributor a legal
protection, are mandatory rules applicable whatever the law chosen by the parties if the
distribution agreement in dispute produces its effects in Belgium. As a consequence of these
provisions, a dispute related to the termination of an exclusive distribution agreement
producing effects on the whole or on a part of the Belgian territory is not capable of arbitration
when the parties agreed on arbitration before the end of their agreement and when the
arbitration agreement aims to or produces the effect of applying a foreign law.The Belgian
28
judge, in order to decide the validity of the arbitration agreement, must set the law chosen by
P 1032
the parties aside and apply immediately the law of 27 July 1961, according to which the
dispute is not capable of arbitration if proof/evidence is given that arbitrators are obliged to
apply not Belgian law but a foreign law. (489)
These decisions are retrograde and contrary to the Convention. The Belgian Cour de cassations
refusal to permit the arbitration to proceed, and speculation that the arbitrators would not
apply mandatory Belgian law, contradicts the approach of courts in other jurisdictions (490)
and the Conventions requirement to enforce valid agreements to arbitrate (with resulting
awards being subject to non-recognition). (491)
Other authorities have refused to give effect to the provisions of Law of 27 July 1961. An arbitral
tribunal that considered the effect of the Belgian legislation held that it was ineffective to
invalidate an arbitration agreement in a sales distribution agreement (covering Belgium,
Luxembourg and Zaire), where the place of arbitration was Germany. (492) The tribunal
reasoned that the parties had chosen Italian law to govern their disputes, and their arbitration
agreement, and that, under Italian law, the arbitration clause was valid. (493)
That conclusion is well-considered, if imprecisely phrased. As discussed above, the
nonarbitrability doctrine is an exceptional escape device, which permits courts of Contracting
States to deny enforcement of otherwise valid arbitration agreements, based on local law.
(494) Importantly, these decisions are not interpretations of the Conventions uniform
international rules nor decisions about the validity of the arbitration, but are instead simply
exceptional refusals to enforce an otherwise valid arbitration agreement. (495) These refusals
are, however, escape devices which Contracting States are permitted to adopt by Article II(1)
and V(2)(a), but which neither other Contracting States nor arbitral tribunals are permitted,
much less required, to adopt. Thus, while Articles II(1) and V(2)(a) may exceptionally permit
Belgian courts to rely on the Law of 27 July 1961 in some circumstances, arbitral tribunals
seated outside Belgium, and courts in other Contracting States, are not required, or even
permitted, to adopt the same view.
P 1033 A German appellate decision considered comparable issues under 89b of the German
Commercial Code, which guarantees statutory protections to certain commercial agents. Like
the Belgian Cour de cassation, the German court held that the combined effect of a foreign
choice-of-law clause (selecting California law) and foreign arbitration agreement (specifying a
California seat) rendered the arbitration agreement unenforceable, because it might
compromise or nullify the protections afforded by 89b. (496) Again, that is an ill-considered
and parochial decision, which violates Germanys obligations under the New York Convention:
by preempting the arbitral process, and denying enforcement of an otherwise valid arbitration
agreement based on speculation about the arbitral process, the German court disregarded the
mandatory requirements of Article II(3) and the weight of authority in other Contracting States.
(497)
[N] Fraud Claims

The overwhelming weight of authority holds that claims of fraud, fraudulent inducement,
intentional misrepresentation and the like are capable of settlement by arbitration. (498)
These decisions are consistent with Article II(1) of the New York Convention, providing for
recognition of agreements to arbitrate disputes whether contractual or not a formulation
that is most readily directed towards, and certainly encompasses, disputes involving claims of
fraud. (499)
There are only a few contrary decision which are inconsistent with both the Convention and the
conclusions of most national courts. For example, as discussed above, both Indian and
Pakistani decisions have held that all claims of fraud are nonarbitrable. (500) Again, that
decision is contrary to both states commitments under Article II of the Convention. As detailed
above, national law rules holding that all fraud claims are contrary to the Conventions
requirement that the nonarbitrability doctrine be applied as an exception, based on and
tailored to advance specific and articulated local public policies. (501) That is particularly true
where the national law rule applies to commercial disputes, between commercial parties, and
where the almost unanimous weight of state practice is to treat fraud claims as arbitrable.
[O] Miscellaneous Other Claims

P 1034 National courts and arbitral tribunals have also considered the arbitrability of a wide
range of other claims that can only be briefly catalogued. Courts and arbitral tribunals have
generally upheld the arbitrability of claims involving product liability claims, (502) insurance
regulatory disputes, (503) construction liens, (504) import regulations, (505) whistleblower
protections, (506) real property issues, (507) relations between lawyers and clients, (508)
P 1035 succession disputes, (509) tax disputes (510) and miscellaneous other subjects. (511) On the
other hand, as noted above, a few categories of claims have been held nonarbitrable,
including certain franchise disputes, (512) issues concerning some categories of publicly-
registered titles and security interests, (513) some constitutional issues, (514) issues of family
law and succession, (515) claims under international conventions regarding the carriage of
goods by road, (516) retail lease disputes (517) and issues concerning the status of states under
international law. (518)
[P] State Law Claims in United States
29
Many of the U.S. Supreme Courts nonarbitrability decisions, including those in Scherk,
Mitsubishi, Vimar and PacifiCare, concerned arguments that claims under particular U.S. federal
statutes were nonarbitrable. (519) U.S. state statutes and judicial decisions also sometimes
P 1036 purport to render certain types of claims nonarbitrable. That is true, for example, under
various U.S. state laws with respect to tort claims, (520) real estate claims, (521) insurance
claims, (522) labor disputes (523) and consumer claims. (524)
The U.S. Supreme Court has summarily rejected arguments under both the domestic FAA and
the New York Convention that state law may properly preclude arbitration of particular
categories of claims. In a 1984 decision, Southland Corp. v. Keating, (525) the Court considered a
California state statute that invalidated certain arbitration agreements relating to franchise
investments. The California Supreme Court had held that, notwithstanding the parties
agreement to arbitrate, the state statute rendered the agreement unenforceable. (526) The
U.S. Supreme Court rejected that view, holding that Congress intended to foreclose state
legislative attempts to undercut the enforceability of arbitration agreements. (527) The Court
left open the possibility of asserting general contract defenses such as fraud to avoid
enforcement of an arbitration agreement. (528)
Not long thereafter, in Perry v. Thomas, (529) the Supreme Court again rejected a claim that
state employment law rendered a claim nonarbitrable. The Court held that the FAA preempted
a California statute requiring judicial resolution of claims for wages. Emphasizing the
unmistakable conflict between the two legislative regimes, the Court concluded that under
the Supremacy Clause, the state statute must give way. (530)
Similarly, in Allied-Bruce Terminix Co. v. Dobson, the Supreme Court again held that the FAA
preempts state laws purporting to render particular claims or disputes nonarbitrable (in
P 1037 this case, all agreements to arbitrate future disputes). (531) That conclusion has been
repeatedly cited in subsequent Supreme Court decisions, which emphatically affirmed that
the FAA preempted state law nonarbitrability rules. (532) Lower U.S. court decisions have held
that a wide range of other state legislative efforts to foreclose or limit arbitration of particular
categories of claims are preempted by the FAA. (533)
Most recently, the Supreme Court took the relatively unusual step of summarily reversing a
decision of a state supreme court (the Supreme Court of Appeals of West Virginia) which held,
as a matter of public policy in West Virginia, that predispute arbitration agreements were
unenforceable as applied to claims concerning personal injury or wrongful death in West
Virginia. (534) The Supreme Court held
The West Virginia courts interpretation of the FAA was both incorrect and inconsistent with
clear instruction in the precedents of this Court. The FAA provides that a written provision in
a contract evidencing a transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transactionshall be valid, irrevocable, and
contract. The statutes text includes no exception for personal-injury or wrongful-death claims.
It requires courts to enforce the bargain of the parties to arbitrate. (535)
The Court concluded by holding that [t]hat rule resolves these cases: West Virginias
prohibition against predispute agreements to arbitrate personal-injury or wrongful-death
claims against nursing homes is a categorical rule prohibiting arbitration of a particular type
of claim, and that rule is contrary to the terms and coverage of the FAA. (536) The Courts
P 1038 decision reflects both the U.S. federal policy in favor of arbitration and the enduring allure of
nonarbitrability and antiarbitration positions, notwithstanding clear and emphatic national
policies to the contrary.
6.05 CHOICE OF LAW GOVERNING NONARBITRABILITY

The nonarbitrability doctrine raises potentially complex choice-of-law questions in
determining what law(s) apply to determine whether a claim or dispute is nonarbitrable. These
issues arise under both the New York Convention (in particular, Article V(2)(a)) and national
arbitration legislation. Related to these choice-of-law issues is the question whether the New
York Convention places international limits on the ability of Contracting States to apply
nonarbitrability exceptions to disputes under international arbitration agreements. The
choice-of-law issues under the nonarbitrability doctrine and related questions of the
Conventions international limits are discussed in detail above. (537)
6.06 FUTURE DIRECTIONS: NONARBITRABILITY DOCTRINE

The past three decades have witnessed a substantial evolution and maturation of the
nonarbitrability doctrine. During the 1950s and 1960s, judicial decisions in a number of states
adopted expansive interpretations of national regulatory regimes that rendered important
categories of commercial disputes entirely or partially nonarbitrable. (538) This departed from
the historic autonomy of business enterprises to resolve their commercial business disputes
through the arbitral process, as reflected in the Geneva Protocols provisions for the
arbitrability of all commercial disputes and in state practice. (539) The expansive
application of judicially-created nonarbitrability rules also contradicted the objectives of
the New York Convention and most national arbitration legislation. (540)
More recently, national legislatures and courts in most jurisdictions have adopted more
restrained views of the nonarbitrability doctrine, abandoning mistrust of the arbitral process
30
and reaffirming the vital role of party autonomy, particularly in international commercial
matters. (541) This evolution has been reflected in U.S., European, Asian and other national
court decisions (542) and in legislative enactments (543) from all parts of the world.
Some commentators have criticized the evolution, and substantial diminution, of the
nonarbitrability doctrine over the past three decades. They have urged that a-legality
informs the arbitral decisional law of the United States Supreme Court and the French courts
P 1039 alike, and warned that [l]aw will be generated within the confines of a fully privatized
system that is unaccountable to any public organization or process. (544)
That criticism is misconceived, on multiple grounds, in the international context. It ignores the
fact that the demise of the nonarbitrability doctrine has occurred exclusively in the field of
private rights of action, almost always in commercial disputes between business entities: (545)
it is hardly surprising, nor proper ground for objection, that national courts and legislatures
have been prepared to give effect to agreements between sophisticated business parties for
the resolution of commercial disputes regarding these types of rights by arbitration. On the
contrary, this is precisely consistent with historic respect, and contemporary need, for party
autonomy in commercial matters. (546) It is also consistent with how commercial disputes
were historically treated (as evidenced by the Geneva Protocols provisions regarding
commercial disputes (547) ).
The foregoing criticism also rests fundamentally on the (incorrect) perception that
international arbitral procedures are suspect or defective means to resolve public law claims.
(548) This premise is not sustainable, and contradicts the policies underlying both the New
York Convention and modern arbitration legislation, judicial decisions in almost all developed
jurisdictions and the experience of several decades of contemporary international arbitration
practice. (549)
In fact, as compared with national courts as forums for international litigation, international
arbitration offers significant benefits for private parties (including efficiency, neutrality and
P 1040 the enhanced enforceability of any final decision). (550) Practical experience with
international arbitral tribunals and procedures, dealing with complex factual and legal issues,
since the 1970s, leaves no serious doubt as to the competence of tribunals to deal with such
issues no less competently and fairly than national courts; indeed, arbitral tribunals typically
offer benefits of enhanced neutrality, technical or legal expertise and commercial or
regulatory experience. And, even if one ignored these benefits, enforcement of national court
decisions applying local mandatory laws is seldom practicable: in the context of an
international contract,these advantages become chimerical sincean opposing party may by
speedy resort to a foreign court block or hinder access to the American court of the purchasers
choice. (551) Given these considerations, there is no legitimate reason to distrust the arbitral
process in cases involving commercial disputes between business entities, and on the
contrary, substantial reason to facilitate and give effect to arbitration as a dispute resolution
mechanism.
Moreover, even outside the context of commercial parties (e.g., with consumers and
employees), international arbitration has the potential to provide benefits of cost, speed and
enforceability that are not readily replicated in most national courts. Moreover, many
consumer and employment disputes involve commercial issues, which are squarely within the
traditional areas of competence and expertise of arbitral tribunals. Insofar as concerns about
one-sided or unfair arbitral procedures are concerned, these are readily addressed by
application of principles of unconscionability, duress and guarantees of equal opportunity in
the arbitral proceedings. The reality is that, in many instances, arbitration of consumer and
employment disputes provide more efficient and beneficial results for consumers and
employees than traditional litigation processes. (552)
The foregoing criticisms of the contemporary disavowal of the nonarbitrability doctrine also
omit consideration of the continuing role of national courts in reviewing arbitral awards
(including the second look doctrine adopted in both U.S. and EU decisions (553) ), which
provides a material restraint on arbitral decision-making. At the same time, these critiques
neglect the broad (and expanding) role of regulatory enforcement authorities and regulatory
standards in contemporary international commercial affairs, which provide appropriate
mechanisms for safeguarding public interests. (554)
P 1041 Developments over the past decade also raise fundamental questions about the proper
scope of the nonarbitrability doctrine, as distinguished from the public policy doctrine. As
discussed elsewhere, there are now more than 3,000 bilateral and multilateral investment
treaties in force, pursuant to which most states have undertaken to arbitrate a vast range of
disputes with foreign investors, often affecting public interests and third party rights in
profound ways. (555) At the same time, national laws and institutional arbitration rules have
provided for the arbitration of class action claims, (556) small claims by consumers and
employees, (557) human rights claims, (558) tax claims, (559) claims involving financial
institutions and instruments, (560) intellectual property claims (561) and other new (562)
categories of disputes. (563)
The question raised by the extension of arbitration to investor-state, tax, intellectual property,
human rights and similar disputes is what the continuing role of the nonarbitrability doctrine
should be. In principle, the notion that a dispute is not capable of settlement by arbitration
should be applied exceptionally, with great restraint and as a last resort, particularly in
commercial settings: (564) as the use of the arbitral process in diverse fields demonstrates, the
31
arbitral process is entirely capable of resolving a wide range of international disputes.
Indeed, the flexibility of the arbitral process can often make it more capable than many
national litigation regimes for resolving particular categories of international disputes.
There are important categories of cases in which the nonarbitrability doctrine is appropriate.
These include, for example, requests that an arbitral tribunal declare a company bankrupt,
impose a criminal sentence, approve a merger, or issue similar administrative acts. These
decisions necessarily dictate the rights and obligations of third parties and involve the
exercise of prosecutorial or administrative discretion which must reside in democratically-
accountable decision-makers and regulatory authorities. Matters of this nature are not
ordinarily capable of settlement by arbitration, which is a consensual process between
specified parties.
Beyond such matters, however, the nonarbitrability doctrine should only rarely be applied in
international matters, and virtually never in commercial settings. The experience of the past
decades, in multiple contexts and jurisdictions, is that arbitration provides a neutral, workable
and fair dispute resolution mechanism for almost all types of disputes. Inadequacies in the
arbitral process can, in most instances, be addressed through the application of traditional
contract law principles (e.g., unconscionability, duress), through application of public policy
doctrines in the context of recognition and enforcement of awards, or through well-tailored
legislative or regulatory efforts aimed at improving the arbitral process (as with Albertas
P 1042 legislation for regulatory approval of predispute consumer arbitration agreements (565) ).
What neither the New York Convention nor the objectives of contemporary national arbitration
legislation contemplate is the wholesale nonarbitrability of important categories of
international disputes or the application of idiosyncratic rules designed to favor local parties
at the expense of foreign entities.
When the nonarbitrability doctrine is applied, it must be within the limits imposed by Article
II(3) and Article V(2)(a) of the New York Convention. The nonarbitrability doctrine is an
exception, contrary to the uniform choice-of-law regime established by Article V(1)(a) and
contrary to the Conventions objectives, which should be applied with restraint, in a narrowly-
tailored and non-idiosyncratic fashion, (566) and generally not on an interlocutory basis (e.g.,
prior to a final arbitral award). (567) Moreover, consistent with an appropriate choice-of-law
analysis, national courts should not apply foreign nonarbitrability rules (save in unusual cases),
and should instead give effect to Article V(1)(a)s choice-of-law regime. (568) Even if a state is
permitted to adopt local nonarbitrability rules as an escape device, other Contracting States
generally should not give such rules effect. (569)
6.07 SUA SPONTE CONSIDERATION OF NONARBITRABILITY ISSUES BY

ARBITRAL TRIBUNAL
A few authorities have raised the question whether arbitral tribunals may (or must)
independently raise issues of nonarbitrability and public policy, even if the parties have not
done so. For example, as discussed above, Judge Lagergren sua sponte raised the question of
corruption, which had not been identified or relied upon by the parties, reasoning:
[B]oth parties affirmed the binding effect of their contractual undertakings and my
competence to consider and decide their case in accordance with the terms of reference.
However, in the presence of a contract in dispute of the nature set out hereafter, condemned
by public policy, decency and morality, I cannot in the interest of the administration of justice
avoid examining the question of jurisdiction on my own motion. (570)
A few other awards are to the same effect, affirming the arbitral tribunals right (and
responsibility) to raise issues of nonarbitrability or illegality ex officio. (571)
P 1043 Notwithstanding the importance of party autonomy in international arbitration, and the
tribunals mandate to resolve those disputes which are submitted to it (but not others), (572)
these decisions are correct. The arbitral tribunals adjudicative mandate is to resolve the
disputes that are submitted to it in accordance with applicable law including applicable
mandatory law (573) and to render an award on such matters that is binding and enforceable.
Where the parties contract raises issues of illegality, violations of public policy or mandatory
law, or performance of administrative functions, then the tribunals mandate must necessarily
include consideration of those issues insofar as they would affect its decision or the
enforceability of its award. For an obvious example, the parties request that the tribunal
decide whether to grant a patent or declare a party bankrupt should not prevent the tribunal
from considering sua sponte whether or not such claims are arbitrable; equally, if granting one
partys substantive claims (or defenses) would violate applicable mandatory criminal,
competition, intellectual property, other laws, then the tribunal both can and must consider
those mandatory law issues on its own motion. (574) Of course, as discussed elsewhere, it is an
essential element of the arbitrators mandate and the parties procedural rights that any sua
sponte consideration of nonarbitrability or similar issues by a tribunal be accompanied by
notice to the parties and an opportunity to be heard on the issue. (575)
6.08 JUDICIAL SUPERVISION OF ARBITRAL CONSIDERATION OF PUBLIC

LAW CLAIMS
Application of the nonarbitrability doctrine can give rise to procedural issues concerning the
32
relation between arbitral proceedings and national court litigation. Under most leading
arbitration statutes, national courts are generally forbidden from intervening in or considering
interlocutory challenges to ongoing arbitrations, save in the most exceptional circumstances.
P 1044 (576) Nevertheless, some lower U.S. courts have ordered the parties to submit U.S. statutory
claims to arbitration and to furnish periodic reports on the progress of the arbitration.
(577) Such judicial supervision has occurred even with respect to arbitrations seated outside
the United States. (578)
This sort of judicial supervision of an ongoing arbitration is generally contrary to Article II of
the Convention. As discussed below, Article II(3) requires Contracting States to refer the
parties to arbitration, and does not admit of ongoing judicial supervision of the arbitral
proceedings. (579) The same rule of judicial non-interference is set forth in the UNCITRAL Model
Law (in Article 5) (580) and other national arbitration laws. (581) Where a claim is capable of
settlement by arbitration, the proper role of national courts is to refer the parties to
arbitration; if the arbitrators misconduct themselves, or render an award that violates the
concerned states public policy, Article V permits that states courts to deny recognition (or to
annul an award made locally) but the Convention does not allow for judicial supervision of
ongoing arbitral proceedings.
Consistent with this analysis, U.S. courts have more recently rejected requests that they
decline to order or delay ordering arbitration until it is clear that the arbitral tribunal will hear
claims that are allegedly nonarbitrable under the law of the arbitral seat. As discussed above,
they have instead held that doubts about the arbitral process should be resolved in favor of
arbitration, with any objections being reserved for consideration in challenges to the tribunals
award. (582) The same rationale precludes judicial supervision of the consideration of public
P 1045 law claims in the arbitral proceedings.
References
33
1) For commentary, see H. Arfazadeh, Ordre public et arbitrage international lpreuve de la
mondialisation 79-109 (2d ed. 2006); Arfazadeh, Arbitrability Under the New York
Convention: The Lex Fori Revisited, 17 Arb. Intl 73 (2001); Baker & Stabile, Arbitration of
Antitrust Claims: Opportunities and Hazards for Corporate Counsel, 48 Bus. L. 395 (1993);
Bedell, Harrison & Grant, Arbitrability: Current Developments in the Interpretation and
Enforceability of Arbitration Agreements, 13 J. Cont. L. 1 (1987); Beechey, Arbitrability of Anti-
Trust/Competition Law Issues Common Law, 12 Arb. Intl 179 (1996); Blessing, Arbitrability
of Intellectual Property Disputes, 12 Arb. Intl 191 (1996); Bckstiegel, Public Policy and
Arbitrability, in P. Sanders (ed.), Comparative Arbitration Practice and Public Policy in
Arbitration 177 (ICCA Congress Series No. 3 1987); Borris, Arbitrability of Corporate Law
Disputes in Germany, 2012 Intl Arb. L. Rev. 161; Brekoulakis, Arbitrability and Conflict of
Jurisdictions: The (Diminishing) Relevance of Lex Fori and Lex Loci Arbitri, in F. Ferrari & S.
Krll (eds.), Conflict of Laws in International Arbitration 117 (2011); Buzbee, When Arbitrable
Claims Are Mixed With Nonarbitrable Ones: Whats A Court to Do?, 39 S. Tex. L. Rev. 663
(1998); Carbonneau, Liberal Rules of Arbitrability and the Autonomy of Labor Arbitration in
the United States, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability: International &
Comparative Perspectives 143 (2009); Carbonneau, Shattering the Barrier of Inarbitrability,
22 Am. Rev. Intl Arb. 573 (2011); Carbonneau, The Exuberant Pathway to Quixotic
Internationalism: Assessing the Folly of Mitsubishi, 19 Vand. J. Transnatl L. 265 (1986);
Carbonneau & Janson, Cartesian Logic and Frontier Politics: French and American Concepts
of Arbitrability, 2 Tul. J. Intl & Comp. L. 193 (1994); Dharmananda, Arbitrability:
International and Comparative Perspectives, 5 Asian Intl Arb. J. 223 (2009); Gruner,
Accounting for the Public Interest in International Arbitration: The Need for Procedural and
Structural Reform, 41 Colum. J. Transnatl L. 923 (2003); Hanotiau, Larbitrabilit, 296
Recueil des Cours 29 (2002); Hanotiau, The Law Applicable to Arbitrability, in A. van den
Application of the New York Convention 146 (ICCA Congress Series No. 9 1999); Hanotiau,
What Law Governs the Issue of Arbitrability?, 12 Arb. Intl 391 (1996); Hanotiau & Capresse,
Arbitrability, Due Process, and Public Policy Under Article V of the New York Convention, 25 J.
Intl Arb. 721 (2008); Kerr, Arbitrability of Securities Claims in Common Law Nations, 12 Arb.
Intl 171 (1996); Kirry, Arbitrability: Current Trends in Europe, 12 Arb. Intl 373 (1996); Klein,
Arbitrability of Company Law Disputes, 2007 Austrian Arb. Y.B. 29; Kleinheisterkamp, The
Impact of Internationally Mandatory Laws on the Enforceability of Arbitration Agreements, 3
World Arb. & Med. Rev. 91 (2009); Landi & Rogers, Arbitration of Antitrust Claims in the
United States and Europe, 13-14 Concorrenza e Mercato 455 (2005-2006); Lowenfeld, The
Mitsubishi Case: Another View, 2 Arb. Intl 178 (1986); McLaughlin, Arbitrability: Current
Trends in the United States, 12 Arb. Intl 113 (1996); Mourre, Arbitration and Criminal Law:
Reflections on the Duties of the Arbitrator, 22 Arb. Intl 95 (2006); Mourre, Arbitrability of
Antitrust Law From the European and US Perspectives, in G. Blanke & P. Landolt (eds.), EU
and US Antitrust Arbitration: A Handbook for Practitioners 3 (2011); Park, Arbitrability and
Tax, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability: International & Comparative
Perspectives 179 (2009); Park, Private Adjudicators and the Public Interest: The Expanding
Scope of International Arbitration, 12 Brooklyn J. Intl L. 629 (1986); Quinke, Objective
Arbitrability: Article V(2)(a), in R. Wolff (ed.), New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards: Commentary 380 et seq. (2012); Rau, The Arbitrator
& Mandatory Rules of Law, 18 Am. Rev. Intl Arb. 51 (2007); Smit, Mandatory Law in
Arbitration, 18 Am. Rev. Intl Arb. 155 (2008); Smit, Mitsubishi: It Is Not What It Seems to Be,
4(3) J. Intl Arb. 7 (1987); Sterk, Enforceability of Agreements to Arbitrate: An Examination of
the Public Policy Defense, 2 Cardozo L. Rev. 481 (1981); van Otterloo, Arbitrability of
Corporate Disputes: A Cross-Jurisdictional Analysis (unpublished paper 2013); Wai,
Transnational Private Law and Private Ordering in A Contested Global Society, 46 Harv. Intl
L.J. 471 (2005); Youssef, The Death of Inarbitrability, in L. Mistelis & S. Brekoulakis (eds.),
Arbitrability: International and Comparative Perspectives 47 (2009).
ed. 2010); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 5-59 et seq. (1999); J. Lew, L. Mistelis & S. Krll, Comparative
International Commercial Arbitration 9-35 et seq. (2003).
3) U.S. courts have also occasionally used the term arbitrable more broadly to include any
question whether or not a particular dispute should be arbitrated. For example, some
U.S. courts have treated questions about the scope of the arbitration clause or
compliance with predispute conditions to commencing arbitration as issues of
arbitrability. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (U.S. S.Ct. 1995);
7.03[E][2], pp. 1132-34. This terminology is imprecise, even in the U.S. context, and should
be avoided in international settings.
4) See6.02; 6.03.
5) See Id.
6) D. Roebuck & B. de Fumichon, Roman Arbitration 104-05 (2004). See also D. Roebuck,
Mediation and Arbitration in the Middle Ages: England 1154-58 (2012) (various crimes,
including murder, subject to arbitration).
7) See4.05[A][2]; 6.02[H].
8) See6.04et seq.
9) Am. Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 826-27 (2d Cir. 1968).
10) Am. Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 826 (2d Cir. 1968).
34
11) See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 646-50 (U.S. S.Ct.
1985) (Stevens, J., dissenting); Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728,
744 (U.S. S.Ct. 1981); Alexander v. Gardner-Denver Co., 415 U.S. 36, 58 (U.S. S.Ct. 1974);
6.03[C][4]; 6.04.
12) See6.02[D]. This is consistent with the text of the New York Convention and most national
arbitration legislation. New York Convention, Arts. II(1) & V(2)(a) (subject matter of the
difference is not capable of settlement by arbitration) (emphasis added); European
Convention, Art. VI(2) (dispute is not capable of settlement by arbitration) (emphasis
added); UNCITRAL Model Law, Art. 1(5) (certain disputes may not be submitted to
arbitration) (emphasis added).
13) Geneva Protocol, Art. I(1) (emphasis added).
14) A. van den Berg, The New York Arbitration Convention of 1958 368 (1981); 1.01[C][1]; 5.01[B]
[1].
15) Geneva Convention, Art. 1(b).
17) New York Convention, Art. V(2)(a).
18) Report of the Committee on the Enforcement of International Arbitral Awards, 28 March
1955, U.N. Doc. E/AC.42/4/Rev.1, 2 (Art. IV(a)).
19) Also during the negotiations, the French delegation proposed omitting Article V(2)(a)
entirely, on the basis that it might be used to apply purely domestic rules to
international awards. ECOSOC, Consideration of the Draft Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, U.N. Doc. E/Conf.26/SR.11, 7 (1958) (French
delegate). That proposal was, however, not accepted by the New York Conference.
20) See6.02[C].
22) Inter-American Convention, Art. 5(2) (emphasis added).
24) The Inter-American Convention has not yet been frequently applied, but the effect of its
text is to require recognition of arbitration agreements even if they may concern matters
that cannot be resolved by arbitration, while permitting states subsequently to refuse
recognition of resulting awards on this ground. This is a sensible result, consistent with
the approach taken by courts in developed nations towards many other issues relating to
the validity of arbitration agreements. See26.05[C][10]. On the other hand, there is at
least a credible argument that a nonarbitrability exception could be implied into Article
1.
25) See5.06[B][1][e].
26) See Arfazadeh, Arbitrability Under the New York Convention: The Lex Fori Revisited, 17 Arb.
Intl 73 (2001); Bckstiegel, Public Policy and Arbitrability, in P. Sanders (ed.), Comparative
Arbitration Practice and Public Policy in Arbitration 177 (ICCA Congress Series No. 3 1987);
Hanotiau, Larbitrabilit, 296 Recueil des Cours 29 (2002); Mourre, Arbitration and Criminal
Law: Reflections on the Duties of the Arbitrator, 22 Arb. Intl 95 (2006); Schramm, Geisinger
& Pinsolle, in H. Kronke et al. (eds.), Recognition and Enforcement of Foreign Arbitral
Awards: A Global Commentary on the New York Convention Art. II, 68 (2010) (a subject
matter is arbitrable when there is no mandatory jurisdiction of a national court); A. van
den Berg, The New York Arbitration Convention of 1958 152-54, 368-75 (1981).
27) Geneva Protocol, Art. I.
28) See1.01[B].
29) See5.06; Arfazadeh, Arbitrability Under the New York Convention: The Lex Fori Revisited, 17
Arb. Intl 73, 79-80 (2001) (clear distinction that arbitration laws draw between
arbitrability, on the one hand, and the validity of the arbitration clause, on the other
hand); Quinke, Objective Arbitrability: Article V(2)(a), in R. Wolff (ed.), New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards: Commentary 382-83 (2012).
30) See5.06[B][1][a].
31) Similarly, an arbitration agreement in a joint venture agreement may generally be valid,
including as applied to contract, tort and some competition claims, but may be
unenforceable as applied to certain nonarbitrable disputes under competition or
intellectual property legislation (e.g., where regulatory actions are required).
See6.04[A] & [D].
32) See5.03[C].
33) See5.06[C][12].
34) See6.04.
35) See5.06[C][12].
36) As discussed below, there is a close relationship between principles of mandatory law
and public policy. See19.04[B]. A mandatory law is typically a statutory (or
constitutional) directive, reflecting fundamental public policies, that dictates particular
rules and results, regardless of the parties agreement. See19.04[B][1]. A public policy is
the legislative or other policy that underlies such mandatory laws, or that finds
independent recognition in judicial decisions (particularly in common law systems).
See19.04[B][1]. See also Cheng, New Tools for An Old Quest: A Commentary on
Kleinheisterkamp, The Impact of Internationally Mandatory Laws on the Enforceability of
Arbitration Agreements, 3 World Arb. & Med. Rev. 121 (2009); Kleinheisterkamp, The Impact
of Internationally Mandatory Laws on the Enforceability of Arbitration Agreements, 3 World
Arb. & Med. Rev. 91 (2009); Rau, Comment: Mandatory Law and the Enforceability of
Arbitration Agreements, 3 World Arb. & Med. Rev. 133 (2009).
35
37) See19.04[B][4].
38) See11.05[B][2][b].
39) See 15.04.
40) See5.06[C][13]; 6.04; 26.05[C][9][h].
41) See5.06[C][13].
42) See6.03[B]. In practice, legislatures not infrequently couple rules of mandatory law with
nonarbitrability rules, typically in an effort to ensure the enforcement of such rules.
See6.03[C].
43) For example, competition or securities law claims involve matters of public policy and/or
mandatory law, but will generally be arbitrable. See6.04[A]-[B]; Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27 (U.S. S.Ct. 1985); Judgment of 20 March
2008, Jacquetin v. SA Intercaves, 2008 Rev. arb. 341 (Paris Cour dappel); Judgment of 19
May 1993, Socit Labinal v. Socits Mors et Westland Aerospace, 1993 Rev. arb. 645 (Paris
Cour dappel); Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal Tribunal) (Iraq
sanctions were mandatory laws for arbitrators to apply); Final Award in Chamber of
National and International Arbitration of Milan of 23 September 1997, XXIII Y.B. Comm. Arb.
93 (1998).
44) Judgment of 16 February 1989, Socit Almira Films v. Pierrel, 1989 Rev. arb. 711, 714-15
(Paris Cour dappel). See also, Mitsubishi Motors, 473 U.S. 614; Judgment of 20 March 2008,
Jacquetin v. SA Intercaves, 2008 Rev. arb. 341 (Paris Cour dappel); Judgment of 12
September 2002, Macron et SARL Intl Display Design v. Socit Cartonnages de Pamfou,
2002 Rev. arb. 1045, 1047 (Paris Cour dappel); Judgment of 20 September 1995, Socit
Matra Hachette v. Socit Reteitalia, 1996 Rev. arb. 87, 90-91 (Paris Cour dappel);
Judgment of 7 December 1994, Socit V 2000 v. Socit Project XL 220 ITD, 1996 Rev. arb.
245, 249 (Paris Cour dappel); Judgment of 14 October 1993, Socit Aplix v. Socit Velcro,
1994 Rev. arb. 164, 167 (Paris Cour dappel) (arbitrability of a dispute is not excluded
solely because public policy rules are applicable to this dispute; in international
arbitration, an arbitrator decides on its own jurisdiction with regard to arbitrability of the
dispute, taking into account the rules of international public order, has the power to
apply these rules and principles and order sanctions for violation of these rules, subject
to subsequent control by the annulment judge.); Judgment of 19 May 1993, Socit Labinal
v. Socits Mors et Westland Aerospace, 1993 Rev. arb. 645 (Paris Cour dappel); Judgment
of 29 March 1991, Socit Ganz v. Socit Nationale des Chemins de Fer Tunisiens, 1991 Rev.
arb. 478, 480 (Paris Cour dappel) (in international arbitration, an arbitratoris entitled
to apply rules of [international] public policy and to grant redress in the event that those
rules have been disregarded); Judgment of 5 July 2006, Terra Armata Srl v. Tensacciai
SpA, 25 ASA Bull. 618, 623-24 (Milan Corte dAppello) (2007); Judgment of 13 September
2002, 2004 Rev. arb. 105 (Milan Corte dAppello); Judgment of 9 November 1990,
Condominiums Mont Saint-Sauveur Inc. v. Constrs. Serge Sauv Lte, [1990] R.J.Q. 2783, 2789
(Qubec Cour dappel) (there are rules of public order that can be applied in
arbitrations as easily and as appropriately as they are by courts.The fact that these
regulations are of public order does not deprive the arbitrators of their jurisdiction to
hear the disputes or require that they be heard by the ordinary courts.); Mourre,
Arbitrability of Antitrust Law From the European and US Perspectives, in G. Blanke & P.
Landolt (eds.), EU and US Antitrust Arbitration: A Handbook for Practitioners 3, 11 (2011)
(There is nowadaysa general consensus that arbitrators have the power to apply
mandatory rules, either principally or incidentally, and to draw the civil consequences of
a violation of said rules, under the control of the judge who will be called upon to assess
the awards validity and/or enforceability.). Certain national arbitration statutes
expressly recognize this. See, e.g., Qubec Civil Code, Art. 2639, 2 (An arbitration
agreement may not be opposed on the ground that the rules applicable to settlement of
the dispute are in the nature of rules of public order.).
45) See, e.g., Mitsubishi Motors, 473 U.S. at 626-27; Scherk v. Alberto-Culver Co., 417 U.S. 506,
515-16 (U.S. S.Ct. 1974); Judgment of 20 March 2008, Jacquetin v. SA Intercaves, 2008 Rev.
arb. 341, 341 (Paris Cour dappel) ([A]rbitrators decide on their jurisdiction in relation to
arbitrability with regard to international public policy and have authority to apply
principles and rules arising from the latter, as well as to sanction their eventual violation;
arbitrability is not excluded solely because public policy regulation is applicable to the
legal relationship subject of the dispute.); Judgment of 19 May 1993, Socit Labinal v.
Socits Mors et Westland Aerospace, 1993 Rev. arb. 645, 645 (Paris Cour dappel)
([A]rbitrability of a dispute is not excluded solely because public policy regulation is
applicable to the legal relationship subject of the dispute; in international arbitration,
arbitrators decide on their jurisdiction in relation to arbitrability of the dispute with
regard to international public policy, and have authority to apply principles and rules
arising from the latter, as well as to sanction their eventual violation, subject to control
by the annulment judge.); Judgment of 19 July 2004, II ZR 65/03 (German
Bundesgerichtshof) (arbitrability does not depend on whether award might violate
mandatory rules of law); Judgment of 23 December 2004, Can Taulina SL v. Totalfinalelf
Espaa (Total Spain SA), AAP M 11350/2004 (Madrid Audiencia Provincial) (application of
mandatory rules of EU competition law does not render dispute nonarbitrable;
arbitrators are bound to apply those rules).
46) New York Convention, Art. V(2); 26.05[C][9]-[10].
47) New York Convention, Art. V(2)(a); 26.05[C][10].
48) New York Convention, Art. V(2)(b); 26.05[C][9].
36
49) See 25.02[C][8][b]-[d]. See also Quinke, Objective Arbitrability: Article V(2)(a), in R. Wolff
(ed.), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards:
Commentary 386-88 (2012).
50) See6.04[A][1] & [5].
51) See6.04[A]-[C] & [F].
52) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999); George Fischer
Foundry Sys., Inc. v. Adolph H. Hottinger Maschinenbau GmbH, 55 F.3d 1206, 1210 (6th Cir.
1995) (rejecting (on ripeness grounds) argument that rules governing Zurich arbitration
proceeding would serve as prospective waiver of statutory rights to treble damages
because it is not clear what law the Zurich tribunal will apply). See also Life of Am. Ins.
Co. v. Aetna Life Ins. Co., 744 F.2d 409 (5th Cir. 1984).
53) See6.04[A].
54) Vimar Seguros y Reaseguros, SA v. M/V Sky Reefer, 515 U.S. 528, 541 (U.S. S.Ct. 1995)
55) Pac. Health Sys., Inc. v. Book, 538 U.S. 401, 407 (U.S. S.Ct. 2003).
56) See5.06[C][13][d].
57) Dziennik v. Sealift, Inc., 2010 WL 1191993, at *7 (E.D.N.Y.) (quoting Vimar Seguros y
Reaseguros, SA v. M/V Sky Reefer, 515 U.S. 528, 541 (U.S. S.Ct. 1995)). See also Aggarao v.
MOL Ship Mgt Co.,675 F.3d 355, 373 (4th Cir. 2012) (Aggarao is not entitled to interpose his
public policy defense, on the basis of the prospective waiver, doctrine until the second
stage of the arbitration-related court proceedings the award-enforcement stage.);
Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999) ([I]t is possible that the
Swiss Tribunal might apply U.S. antitrust law to the dispute.Moreover, even if Swiss law
is applied to the dispute, there has been no showing that it will not provide Simula with
sufficient protection.); Suzlon Structure, Ltd v. Pulk, 2010 WL 3540951 (S.D. Tex.) (staying
litigation of RICO claims notwithstanding fact that parties choice of (English) law might
preclude assertion of RICO claims in foreign-seated arbitration).
58) SeeJudgment of 2 June 2004, 2005 Rev. arb. 674, 677 (Paris Cour dappel); Casaceli v. Natuzzi
SpA, [2012] FCA 691, 31-33 (Australian Fed. Ct.) (rejecting argument that arbitral tribunal
seated in Italy would not apply mandatory Australian law, citing expert evidence that:
an arbitral tribunal sitting in Italy and deciding under the Rules of the Milan Arbitration
Chamber a dispute involving the market of a third country would consider the
applicability of the mandatory rule of that country, even if the law governing the merits of
the dispute chosen by the parties were a different law.First, as a matter of policy, it is
recognized that arbitration should not be perceived as a means to avoid or circumvent
the appliucation of such mandatory rules. Secondly, arbitrators must consider the
enforceability of their awards in countries where the parties wish [to seek
enforcement].).
59) See, e.g., Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1292 (11th Cir. 2011) (Barkett,
dissenting) (null and void standard in Article II provides a public policy defense at the
arbitration agreement enforcement stage); Judgment of 17 May 2006, 7 U 1781/06, 1556
(Oberlandesgericht Mnchen) (combined effect of foreign choice-of-law clause (selecting
California law) and foreign arbitration agreement (specifying California seat) rendered
arbitration agreement unenforceable, because it might compromise or nullify protections
afforded by 89b of German Commercial Code); Judgment of 16 November 2006, Case No.
C.02.0445.F, 9 (Belgian Cour de cassation); Judgment of 22 December 1988, Gutbrod Werke
GmbH v. Usinorp de Saint-Hubert et Saint Hubert Gardening, 1988 Journal des Tribunaux
458 (Belgian Cour de cassation) (an arbitration clause could only be valid if it specified
that the arbitrators are obligated to apply Belgian law [and] that, if that is not the case,
the clause could not stand). See also Kleinheisterkamp, The Impact of Internationally
Mandatory Laws on the Enforceability of Arbitration Agreements, 3 World Arb. & Med. Rev.
91, 99-103 (2009); 5.06[C][13][d].
60) Judgment of 16 November 2006, Case No. C.02.0445.F, 9 (Belgian Cour de cassation).
61) Compare Quinke, Objective Arbitrability: Article V(2)(a), in R. Wolff (ed.), New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards: Commentary
386-88 (2012) (national court may refuse to recognize arbitration agreement where there
is reasonable certainty, but not reasonable threat, that arbitral tribunal will not apply
mandatory law).
62) See 4.05[C][4], pp. 609-10.
63) See4.05[A][1]; 6.02[A]. As discussed above, Article V(1)(a)s conflicts rules are generally-
applicable rules with universal application. See4.04[A][1][b]; 4.04[B][2][b].
64) See4.05[A][2].
65) Restatement (Third) U.S. Law of International Commercial Arbitration 4-17, comment a
(Tentative Draft No. 2 2012).
Note a (Tentative Draft No. 2 2012) (Conditional arbitrability often entails issues of timing
or form. For example, arbitrability may depend on post-dispute consent having been
given or on a predispute agreement to arbitrate having been conspicuous or separately
signed, or a cooling off period having passed.).
(Tentative Draft No. 2 2012).
68) See6.03[C][2] (Switzerland); 6.03[C][3] (France); 6.03[C][4] (United States).
69) Mitsubishi Motors, 473 U.S. at 639.
37
70) See6.03[C][4]; Mitsubishi Motors, 473 U.S. 614; Scherk, 417 U.S. at 515-16; Safety Natl Cas.
Corp. v. Certain Underwriters at Lloyds, London,587 F.3d 714, 730-32 (5th Cir. 2009); Antillean
Marine Shipping Corp. v. Through Transp. Mut. Ins., Ltd, 2002 U.S. Dist. LEXIS 26363, at *7-8
(S.D. Fla.) (rejecting nonarbitrability objection under McCarran-Ferguson Act, which does
not apply to international insurance contracts made under the Convention);
Assuranceforeningen Skulld (Gjensidig) v. Apollo Ship Chandlers, Inc., 847 So.2d 991, 993
(Fla. Dist. Ct. App. 2003) (rejecting nonarbitrability objection under McCarran-Ferguson Act
because the parties dispute involves foreign commerce).
71) See6.03[C][3]; Judgment of 29 March 1991, Ganz v. Socit Nationale des Chemins de Fers
Tunisiens, 1991 Rev. arb. 478 (Paris Cour dappel); Judgment of 20 June 1969, Impex v.
Malteria Adriatica, 1969 Rev. arb. 95 (Paris Cour dappel).
72) See6.03[C][2]; Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal Tribunal).
73) See 6.03[C][5].
Arbitration 575 (1999); Mourre & Radicati di Brozolo, Towards Finality of Arbitral Awards:
Two Steps Forward and One Step Back, 23 J. Intl Arb. 171 (2006); J.-F. Poudret & S. Besson,
Comparative Law of International Arbitration 326, 342, 348 (2d ed. 2007); A. van den
Berg, The New York Arbitration Convention of 1958 153 (1981) (the field of nonarbitrable
matters in international cases maybe smaller than that in domestic ones).
75) See6.03[A] & [C].
76) See4.05[A][2].
78) Mitsubishi Motors, 479 U.S. at 639-40 n.21. See also Shearson/Am. Express, Inc. v. McMahon,
482 U.S. 220, 226-27 (U.S. S.Ct. 1987).
79) Rodriquez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 483 (U.S. S.Ct. 1989). See
also CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (U.S. S.Ct. 2012) (rejecting claim that
Credit Repair Organization Act rendered CROA claims nonarbitrable: Had Congress
meant to prohibit these very common [arbitration] provisions in the CROA, it would have
done so in a manner less obtuse than what respondents suggest. When it has restricted
the use of arbitration in other contexts, it has done so with a clarity that far exceeds the
claimed indications in the CROA.).
80) Editions Chouette Inc. v. Desputeaux, 2003 SCC 17, 46 (Canadian S.Ct.).
81) Seidel v. TELUS Commcns Inc., 2011 SCC 15, 103 (Canadian S.Ct.) (Lebel, J., dissenting).
82) See authorities cited 6.03[C][4], pp. 967-68; 6.03[C][5], pp. 969-70; Larsen Oil & Gas Pte
Ltd v. Petroprod Ltd, [2011] SGCA 21 (Singapore Ct. App.) ([W]e accept that there is
ordinarily a presumption of arbitrability where the words of an arbitration clause are
wide enough to embrace a dispute, unless it is shown that parliament intended to
preclude the use of arbitration for the particular type of dispute in question (as
evidenced by the statutes text or legislative history), or that there is an inherent conflict
between arbitration and the public policy considerations involved in that particular type
of dispute.); Rinehart v. Welker, [2012] NSWCA 95, 167 (N.S.W. Ct. App.) (it is only in
extremely limited circumstances that a dispute which the parties have agreed to refer to
arbitration will be held to be nonarbitrable).
83) See, e.g., BWV Invs. Ltd v. Saskferco Prods. Inc., [1994] CanLII 4557 (Saskatchewan Ct. App.);
Union Charm Dev. Ltd v. B&B Constr. Co., [2001] HKCFI 779 (H.K. Ct. First Inst.).
84) SeeUNCITRAL Model Law, Art. 1(5). See also K.-P. Berger, The New German Arbitration Law in
International Perspective 7 (2000); Sanders, UNCITRALs Model Law on International
Commercial Conciliation, 23 Arb. Intl 105 (2007).
85) See6.02[C].
86) See4.05[A][2].
87) See4.05[A][2].
88) UNCITRAL Model Law, Art. 1(5). See H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL
Model Law on International Commercial Arbitration: Legislative History and Commentary 26
(1989).
89) See6.04.
90) See6.03[C][2]et seq.
91) Swiss Law on Private International Law, Art. 177(1). See, e.g., Judgment of 15 March 1993, DFT
119 II 271, 275 (Swiss Federal Tribunal); Judgment of 23 June 1992, DFT 118 II 353 (Swiss
Federal Tribunal) (Art. 177(1) of SLPIL reflects legislative intention to permit easier access
to international arbitration); B. Berger & F. Kellerhals, International and Domestic
Arbitration in Switzerland 192 et seq. (2d ed. 2010); Kaufmann-Kohler & Lvy, Insolvency
and International Arbitration, in H. Peter, N. Jeandin & J. Kilborn (eds.), The Challenges of
Insolvency Law Reform in the 21st Century 257 (2006); Vischer, in D. Girsberger et al. (eds.),
Zrcher Kommentar zum IPRG Art. 177, 9 (2d ed. 2004).
92) Report of the Swiss Federal Council (Bundesrat) of 10 November 1982 Regarding the Private
International Law Act, (1983) Bundesblatt 301; Final Report of the Expert Committee on the
Draft Bill for the Private International Law Act, SSIR 13, 46-47 Zurich (1979.
Article 177(1) applies generally, as a matter of Swiss law, to any international arbitration
seated in Switzerland. Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal Tribunal);
Briner, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 177, 11 (2000)
(Arbitrability is therefore governed by the lex arbitri without any consideration for the
possibly stricter rules of the lex causae or of the national law of the parties.).
38
93) SeeJudgment of 23 June 1992, DFT 118 II 353, 767 (Swiss Federal Tribunal) (Article 177(1)
covers all claims which have an either active or passive financial value for the parties or,
in other words, all rights which, at least as far as one of [the parties] is concerned, can be
appreciated in money). See Baron & Liniger, A Second Look at Arbitrability: Approaches to
Arbitration in the United States, Switzerland and Germany, 19 Arb. Intl 27 (2003).
94) Compare Swiss Code of Civil Procedure, Art. 354 (in domestic matters: Any claim over
which the parties may freely dispose may be the object of an arbitration agreement).
SeeJudgment of 23 June 1992, DFT 118 II 353, 767 (Swiss Federal Tribunal) (Art. 177 PIL does
not subordinate the arbitrability of a dispute to the fact that the parties can freely
dispose of the related right, so that it is erroneous to equate the nature patrimoniale [i.e.,
pecuniary value], in the sense of this provision, to the freedom to dispose mentioned in
Art. 5 CIA.These are two distinct criteria. The legislator voluntarily left aside the second
of the two, which would presuppose a conflict-of-laws solution since, in international
matters, the definition of the nature of legal relationships submitted to arbitration
requires examination of the material law applicable to them.).
95) See German ZPO, 1030 I(1) (Any claim involving an economic interest
(vermgensrechtlicher Anspruch) can be the subject of an arbitration agreement. An
arbitration agreement not involving an economic interest shall have legal effect to the
extent that the parties are entitled to include a settlement on the issue.).
96) See K.-P. Berger, The New German Arbitration Law in International Perspective 7 (2000)
(notion of arbitrability implemented in both acts is extremely liberal); Bundestags-
Drucksache No. 13/5274 of 12 July 1996, reprinted in K.-P. Berger, The New German
Arbitration Law 140, 179 (1998). A number of German statutory provisions that previously
excluded certain categories of disputes from arbitration have been expressly repealed.
Article 91 of the Act Against Restraints on Competition was repealed with the result that
all antitrust claims are now arbitrable.
97) French Code of Civil Procedure, Art. 2059; Spanish Arbitration Act, 2011, Art. 2(1). See also
Austrian ZPO, 582 ([A]ny claim involving an economic interest that lies within the
jurisdiction of the courts of law can be the subject of an arbitration agreement. An
arbitration agreement on claims which do not involve an economic interest shall be
legally effective insofar as the parties are capable of concluding a settlement on the
issue in dispute.).
98) For case law involving arbitration of divorce matters, see, e.g., Cohoon v. Cohoon, 784
N.E.2d 904 (Ind. 2003); Kelm v. Kelm, 749 N.E.2d 299 (Ohio 2001); Faherty v. Faherty, 477 A.2d
1257 (N.J. 1984); Kirshenbaum v. Kirshenbaum, 929 P.2d 1204 (Wash. Ct. App. 1997); Judgment
of 3 December 1986, 1987 NJW 651 (German Bundesgerichtshof); Judgment of 8 February
1995, 1996 NJW-RR 500 (Landgericht Giessen).
99) Huber, Schiedsvereinbarungen im Scheidungsrecht, 2004 SchiedsVZ 280, 281. The concept
of allowing disputes in connection with divorce to be settled by arbitration has thoughtful
proponents in a number of jurisdictions. See, e.g., B. Berger & F. Kellerhals, International
and Domestic Arbitration in Switzerland 207 (2d ed. 2010); McGuane, Model Marital
Arbitration Act: A Proposal, 14 J. Am. Acad. Matrimonial Law 393, 396 (1997); Schlissel, A
Proposal for Final and Binding Arbitration of Initial Custody Determinations, 26 Fam. L.Q. 71,
73, 76-79 (1992); Vischer, in D. Girsberger et al. (eds.), Zrcher Kommentar zum IPRG Art. 177,
11 (2d ed. 2004); Wagner, Schiedsgerichtsbarkeit in Scheidungssachen, in Festschrift
Schlosser 1025, 1035-48 (2005).
100) See6.04[B][3] (securities disputes under German law); 6.04[H][2] (consumer disputes
under EU law); 6.04[M], pp. 1017-34 (distributorship claims in Belgium and Germany).
101) French Civil Code, Arts. 2059, 2060(1). These provisions are essentially preserved from the
1806 Code of Civil Procedure. E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
102) J.-P. Gridel, Notions Fondamentales de Droit et Droit Franais, Introduction, Mthodologie,
Synthses 7-8 (1992); Level, Larbitrabilit, 1992 Rev. arb. 213, 219.
103) See4.05[A]; 6.03[C][3].
104) Mourre, Arbitrability of Antitrust Law From the European and US Perspectives, in G. Blanke
& P. Landolt (eds.), EU and US Antitrust Arbitration: A Handbook for Practitioners 3, 7-8
(2011).
105) Judgment of 15 May 1961, Jean Tardits et Cie v. Jydsk Andels Foderstof Forretning, 89 J.D.I.
(Clunet) 140, 148 (Orlans Cour dappel) (1962). The Court held that claims for breach of
contract raised issues that could only be resolved by interpreting and applying rules of
French economic public policy, which governed the performance of the contract, which
were nonarbitrable.
106) For a disapproving U.S. account of the erosion of the French nonarbitrability doctrine, see
Carbonneau & Janson, Cartesian Logic and Frontier Politics: French and American Concepts
of Arbitrability, 2 Tul. J. Intl & Comp. L. 193, 194 (1994).
107) Judgment of 21 February 1964, Meulemans et Cie v. Robert, 92 J.D.I. (Clunet) 113, 116 (Paris
Cour dappel) (1965). The Court held that a claim for damages, where an export license
had not been obtained, was arbitrable, provided that it did not concern the legality of
the underlying transaction. See also Judgment of 11 October 1954, 1982 Dalloz 388 (French
Cour de cassation) (tort claims may be arbitrable); Judgment of 28 November 1950, Tissot
v. Neff, 1950 Bull. civ. No. 316, 154 (French Cour de cassation); Judgment of 11 December
1981, Bureau de recherches gologiques et minires v. Socit Patina Intl NV, 1982 Rev. arb.
311 (Paris Cour dappel) (tort claims arbitrable).
39
108) See Judgment of 20 June 1969, Impex v. Malteria Adriatica, 1969 Rev. arb. 95 (Paris Cour
dappel).
109) Judgment of 29 March 1991, Ganz v. Socit Nationale des Chemins de Fers Tunisiens, 1991
Rev. arb. 478, 13-14 (Paris Cour dappel). Applying this analysis, the Court concluded
that the allegation of fraud or spoliation [was] not in itself such as to exclude the
jurisdiction of the arbitral tribunal. Id. at 480.
110) Judgment of 14 October 1993, Socit Aplix v. Socit Velcro, 1994 Rev. arb. 164 (Paris Cour
dappel) (arbitrators may apply EC competition law provisions and, where appropriate,
award relief for wrongful conduct); Judgment of 19 May 1993, Socit Labinal v. Socits
Mors et Westland Aerospace, 1993 Rev. arb. 645, 650 (Paris Cour dappel).
111) SeeJudgment of 18 November 2004, SA Thals Air Dfense v. GIE Euromissile, 2004 Rev. arb.
986 (Paris Cour dappel) (2005). See alsoJudgment of 4 June 2008, SNF v. Cytec, 2008 Rev.
arb. 473 (French Cour de cassation civ. 1e); Judgment of 20 March 2008, Jacquetin v. SA
Intercaves, 2008 Rev. arb. 341, 341 (Paris Cour dappel) ([A]rbitrators decide on their
jurisdiction in relation to arbitrability with regard to international public policy and have
authority to apply principles and rules arising from the latter, as well as to sanction their
eventual violation; arbitrability is not excluded solely because public policy regulation is
applicable to the legal relationship subject of the dispute.); Judgment of 23 March 2006,
SNF v. Cytec, 2007 Rev. arb. 100 (Paris Cour dappel); Judgment of 12 September 2002,
Macron & SARL IDD v. SCAP, 2003 Rev. arb. 173 (Paris Cour dappel).
112) For a good discussion, seeE. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 560, 567 (1999); Mourre, Arbitrability of Antitrust
Law From the European and US Perspectives, in G. Blanke & P. Landolt (eds.), EU and US
Antitrust Arbitration: A Handbook for Practitioners 3, 6-8 (2011).
113) The only exception to this is 9 U.S.C. 15, which provides that the U.S. Act of State doctrine
does not permit non-enforcement of arbitration agreements or awards. U.S. FAA, 9 U.S.C.
15.
114) See Wilko v. Swan, 346 U.S. 427 (U.S. S.Ct. 1953).
115) The Court relied principally on the text of U.S. securities legislation, which provides: Any
condition, stipulation, or provision binding any person acquiring any security to waive
compliance with any provision of this subchapter or of the rules and regulations of the
Commission shall be void. 15 U.S.C. 77n.
116) Wilko, 346 U.S. at 438.
117) See, e.g., Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir. 1976); Tire & Rubber Co. v. Jefferson
Chem. Co., 182 U.S.P.Q. 70 (2d Cir. 1974); Zip Mfg Co. v. Pep Mfg Co., 44 F.2d 184, 186 (D. Del.
1930); Diematic Mfg Corp. v. Packaging Indus. Inc., 381 F.Supp. 1057 (S.D.N.Y. 1974). In 1982
and 1984, U.S. legislation rendering most categories of patent disputes arbitrable was
enacted. 35 U.S.C. 294. See6.04[D], p. 992.
118) See, e.g., Lake Commcns, Inc. v. ICC Corp., 738 F.2d 1473 (9th Cir. 1984); Univ. Life Ins. Co. v.
Unimarc Ltd, 699 F.2d 846 (7th Cir. 1983); Cobb v. Lewis, 488 F.2d 41 (5th Cir. 1974);
Helfenbein v. Intl Indus., Inc., 438 F.2d 1068 (8th Cir. 1971); Am. Safety Equip. v. J.P. Maguire,
391 F.2d 821 (2d Cir. 1968). Compare6.04[A][1].
119) SA Mineracao da Trindade-Samitri (Brazil) v. Utah Intl Inc., 576 F.Supp. 566 (S.D.N.Y. 1984).
6.04[C].
120) See, e.g., Crawford v. Halsey, 124 U.S. 648 (U.S. S.Ct. 1888); Zimmerman v. Contl Airlines,
Inc., 712 F.2d 55, 59-60 (3d Cir. 1983) ([B]ecause of the importance of bankruptcy
proceedings in general, and the need for the expeditious resolution of bankruptcy
matters in particular, we hold that the intentions of Congress will be better realized if the
Bankruptcy Reform Act is read to impliedly modify the [Federal] Arbitration Act. Thus,
while a bankruptcy court would have the power to stay proceedings pending arbitration,
the use of this power is left to the sound discretion of the bankruptcy court.); Allegaert v.
Perot, 548 F.2d 432 (2d Cir. 1977) (bankruptcy claims not arbitrable where trustee asserts
claims for the benefit of the estates creditors, who would not be bound by arbitration
agreement, rather than on behalf of the bankrupt); Fallick v. Kehr, 369 F.2d 899, 904-06 (2d
Cir. 1966). Compare6.04[F][2], pp. 997-98.
121) See, e.g., State Establishment for Agric. Prod. Trading v. M/V Wesermunde, 838 F.2d 1576
(11th Cir. 1988) (declining to enforce foreign arbitration clause, reasoning that such
enforcement would violate COGSA). See6.04[J].
122) Alexander v. Gardner-Denver Co., 415 U.S. 36 (U.S. S.Ct. 1974) ([C]ollective bargaining
agreement could not waive covered workers rights to a judicial forum for causes of action
created by Congress.).
123) See6.04[A][1], pp. 976-77; 6.04[F][3]; Alexander, 415 U.S. at 57 ([O]ther facts may still
render arbitral processes comparatively inferior to judicial processes in the protection of
Title VII rights. Among these is the fact that the specialized competence of arbitrators
pertains primarily to the law of the shop, not the law of the land.). Compare6.04[K].
124) McDonald v. City of W. Branch, 466 U.S. 284, 290 (U.S. S.Ct. 1984). For an early, somewhat
excited, argument in favor of a broad nonarbitrability doctrine, see Kronstein, Business
Arbitration Instrument of Private Government, 54 Yale L.J. 36 (1944).
125) See, e.g., State Establishment for Agric. Prod. Trading v. M/V Wesermunde, 838 F.2d 1576
(11th Cir. 1988) (declining to enforce international arbitration agreement to COGSA
claims); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155 (1st Cir. 1983),
affd, 473 U.S. 614 (U.S. S.Ct. 1985); N.V. Maatschappij Voor Industriele Waarden v. A. O.
Smith Corp., 532 F.2d 874 (2d Cir. 1976).
126) Societe Nationale Pour La Recherche etc. v. Gen. Tire & Rubber Co., 430 F.Supp. 1332, 1332
(S.D.N.Y. 1977).
40
127) See6.03[C][3].
128) See Scherk, 417 U.S. at 515-16.
129) See Mitsubishi Motors, 473 U.S. 614. For some of the considerable commentary on
Mitsubishi, see Allison, Arbitration of Private Antitrust Claims in International Trade: A Study
in the Subordination of National Interests to the Demands of A World Market, 18 N.Y.U. Intl
L. & Pol. 361 (1986); Carbonneau, The Exuberant Pathway to Quixotic Internationalism:
Assessing the Folly of Mitsubishi, 19 Vand. J. Transnatl L. 265 (1986); Cloud, Mitsubishi and
the Arbitrability of Antitrust Claims: Did the Supreme Court Throw the Baby Out With the
Bathwater?, 18 L. & Poly Intl Bus. 341 (1986); Fox, Mitsubishi v. Soler and Its Impact on
International Commercial Arbitration, 19 J. World Trade L. 579 (1985); Lipner, International
Antitrust Laws: To Arbitrate or Not to Arbitrate, 19 Geo. Wash. J. Intl L. & Econ. 395 (1985);
McLendon, Subject-Matter Arbitrability in International Cases: Mitsubishi Motors Closes the
Circle, 11 N.C.J. Intl L. & Com. Reg. 81 (1986); Posner, Arbitration and the Harmonization of
International Commercial Law: A Defense of Mitsubishi, 39 Va. J. Intl L. 647 (1999); Radicati
di Brozolo, Antitrust: A Paradigm of the Relations Between Arbitration and Mandatory Rules:
A Fresh Look at the Second Look, 2004 Intl Arb. L. Rev. 23; Rau, The Arbitrator &
Mandatory Rules of Law, 18 Am. Rev. Intl Arb. 51 (2007); Smit, Mandatory Law in
Arbitration, 18 Am. Rev. Intl Arb. 155 (2008); Smit, Mitsubishi: It is Not What It Seems to Be,
4(3) J. Intl Arb. 7 (1987).
130) Scherk, 417 U.S. at 517-18.
133) Mitsubishi Motors, 473 U.S. at 636. The Court reasoned that the tribunalshould be bound
to decide [the parties] dispute in accord with the national law giving rise to the claim.
473 U.S. at 636-37.
134) Mitsubishi Motors, 473 U.S. at 639 n.21.
137) Mitsubishi Motors, 473 U.S. at 639-40 n.21. See also Shearson/Am. Express Inc. v. McMahon,
482 U.S. 220, 226-27 (U.S. S.Ct. 1987).
138) See authorities cited 6.03[C][3], pp. 963-634; 6.03[C][5], pp. 969-70; Carbonneau &
Janson, Cartesian Logic and Frontier Politics: French and American Concepts of Arbitrability,
2 Tul. J. Intl & Comp. L. 193, 194 (1994) (study of United States, French and other European
court opinionsclearly demonstrates that the dilution of arbitrability in United States
law is also occurring in France and other European civil law jurisdictions); Radicati di
Brozolo, Antitrust: A Paradigm of the Relations Between Arbitration and Mandatory Rules: A
Fresh Look at the Second Look, 2004 Intl Arb. L. Rev. 23.
Arbitration 575 (1999); Mourre & Radicati di Brozolo, Towards Finality of Arbitral Awards:
Two Steps Forward and One Step Back, 23 J. Intl Arb. 171 (2006); J.-F. Poudret & S. Besson,
Comparative Law of International Arbitration 326, 342, 348 (2d ed. 2007).
140) See, e.g., Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220 (U.S. S.Ct. 1987); Rodriguez
de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477 (U.S. S.Ct. 1989) (overruling Wilko v.
Swan, 346 U.S. 427 (U.S. S.Ct. 1953)).
141) Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (U.S. S.Ct. 1991).
142) Gilmer, 500 U.S. at 26. See also 14 Penn Plaza LLC v. Pyett,556 U.S. 247, 258-60, 274 (U.S.
S.Ct. 2009) ([A] collective-bargaining agreement that clearly and unmistakably requires
union members to arbitrate [ADEA] claims is enforceable as a matter of federal law.).
143) See6.04[A][1]; Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1266 (11th Cir. 2011); Kowalski v.
Chicago Tribune Co., 854 F.2d 168 (7th Cir. 1988) (antitrust claim arbitrable in domestic
context).
144) See, e.g., 15 U.S.C. 1226(a)(2) (motor vehicle franchise contract disputes nonarbitrable
except where post-dispute agreement to arbitrate exists); Dodd-Frank Wall Street Reform
and Consumer Protection Act, 748 (No predispute arbitration agreement shall be valid
or enforceable, if the agreement requires arbitration of a dispute arising under this
section.), 921(a) (adding similar provisions to 15(o) to Securities Exchange Act of 1934
and 205(f) to Investment Advisers Act of 1940), 922(c) (adding similar provision to 18
U.S.C. 1514A(e), applicable to whistle-blower claims of employees of publicly registered
companies and nationally recognized statistical rating organizations), 1057(d)
(prohibiting predispute arbitration agreements that affect employee protection rights of
person employed by entity subject to CFPB regulation), 1414 (amending 129C of Truth in
Lending Act to prohibit predispute arbitration agreements with respect to residential
mortgage loans and home equity loans).
145) For a somewhat exaggerated assessment, see Rau, The Culture of American Arbitration and
the Lessons of ADR, 40 Tex. Intl L.J. 449, 452 (2005) (I thinkthe category of inarbitrable
disputes is now a null set.). See alsoShore, The United States Perspective on
Arbitrability, in L. Mistelis & Brekoulakis (eds.), Arbitrability: International & Comparative
Perspectives 69 (2009).
146) See ET Plus SA v. Jean-Paul Welter [2005] EWHC 2115, 51 (Comm) (English High Ct.) (no
realistic doubt that such competition or antitrust claims are arbitrable).
41
147) Fulham Football Club (1987) Ltd v. Richards [2011] EWCA Civ 855, 78 (English Ct. App.)
(nothing in the scheme of these provisions whichma[de] the resolution of the
underlying dispute inherently unsuitable for determination by arbitration on grounds of
public policy). See also Re Vocam Europe Ltd [1998] BCC 396 (Ch) (English High Ct.)
(summarily rejecting arguments that disputes concerning minority shareholder rights
under 459 of the English Companies Act, 1985, are nonarbitrable).
148) See, e.g., Judgment of 19 April 2012, 6Ob42/12p (Austrian Oberster Gerichtshof)
(arbitrability of claim regarding resolution of limited liability companys annual general
meeting not affected by need for factual findings regarding third party); Judgment of 5
October 1994, Socit Van Hopplynus v. Socit Coherent Inc., XXII Y.B. Comm. Arb. 637
(Brussels Tribunal de commerce) (1997) (upholding arbitrability of disputes concerning
termination of distributorship despite mandatory character of Belgian Law on
Termination of Exclusive Distributorships); Lightsource Tech. Australia Pty Ltd v. Pointsec
Mobile Tech. AB, [2011] ACTSC 59 (A.C.T. S.Ct.) (statutory claims arbitrable in principle);
Judgment of 22 October 1976, SA Tradax Exp. v. Spa Carapelli, III Y.B. Comm. Arb. 279
(Florence Corte dAppello) (1978) (tort claims may be arbitrable, even if facts could also
provide grounds for criminal liability).
149) Desputeaux v. Editions Chouette (1987) Inc., [2001] J.Q. No. 1510 (Qubec Ct. App.), revd,
[2003] 1 S.C.R. 178 (Canadian S.Ct.). The Court of Appeal also cited Article 2639 of the
Qubec Civil Code, which provides: [A] dispute regarding status and legal capacity of
natural person, family matters or other questions involving public policy [cannot be
submitted to arbitration]. However, the arbitration agreement should not be barred from
application because the applicable rules to decide on the dispute have a public policy
character. Qubec Civil Code, Art. 2639.
150) Editions Chouette Inc. v. Desputeaux, 2003 SCC 17, 46 (Canadian S.Ct.). See also Seidel v.
TELUS Commcns Inc., 2011 SCC 15 (Canadian S.Ct.) (Lebel, J., dissenting) (It is now settled
that if a legislature intends to exclude arbitration as a vehicle for resolving a particular
category of legal disputes, it must do so explicitly. Arbitration in and of itself is no longer
considered contrary to public order, and courts ought not to read in the exclusion of
arbitration if the legislature has not clearly provided that it is to be excluded.).
151) Judgment of 15 November 2005, Archangelskoe Geologodobychnoe Predpriyatie v.
Archangel Diamond Corp., Case No. T-2277-04, 7 (Svea Ct. App. 2005).
152) New Zealand Arbitration Act, Art. 10(1).
153) Italian Code of Civil Procedure, Art. 806. Italian courts have interpreted the exceptions in
Article 806 of the Italian Code of Civil Procedure narrowly. See M. Rubino-Sammartano,
International Arbitration Law 104 (1990). See alsoFinal Award in Chamber of National and
International Arbitration of Milan of 23 September 1997, XXIII Y.B. Comm. Arb. 93 (1998)
(issues involving mandatory provisions of Italian law are arbitrable).
154) See, e.g., Norwegian Arbitration Act, 9 (Disputes concerning legal relations in respect of
which the parties have an unrestricted right of disposition may be determined by
arbitration.); Chinese Arbitration Law, Art. 3 (permitting arbitration of [c]ontractual
disputes and other disputes over rights and interests in property and making exception
only for (1) marital, adoption, guardianship, support and succession disputes; (2)
administrative disputes that laws require to be handled by administrative authorities.);
Japanese Arbitration Law, Art. 13(1) (arbitration agreement valid when its subject matter
is a civil dispute that is capable of being settled by the parties); Malaysian Arbitration
Act, 4 (Any dispute which the parties have agreed to submit to arbitration under an
arbitration agreement may be determined by arbitration unless the arbitration
agreement is contrary to public policy.The fact that any written law confers jurisdiction
in respect of any matter on any court of law but does not refer to the determination of
that matter by arbitration shall not, by itself, indicate that a dispute about that matter is
not capable of determination by arbitration.); South African Arbitration Act, 2 (making
exception only for (a) any matrimonial cause or any matter incidental to any such cause;
or (b) any matter relating to status); Argentine National Code of Civil and Commercial
Procedure, Art. 736 (Any issues but for those mentioned in Article 737 [i.e., issues
excluded by law from compromise and settlement] can be submitted to the decision of
arbitrators.); Latvian Civil Procedure Law, Art. 487(1) ([A] dispute, the adjudication of
which may infringe the legal rights or interests of a person that is not a party to the
arbitration agreement [is not arbitrable].). See also S. Wang, Resolving Disputes in the PRC
78 (1996) (Except for the disputes specified by Article 3 of the [Chinese] Arbitration Law,
it is established that any types of commercial disputes, including trademark disputes,
patent disputes, competition disputes, and security disputes, which were previously
considered to be sensitive, are now arbitrable under the Arbitration Law.).
155) Himpurna Calif. Energy Ltd v. PT (Persero) Perusahaan Listruik Negara, Final Ad Hoc Award
of 4 May 1999, XXV Y.B. Comm. Arb. 13, 30-31 (2000).
156) Himpurna Calif. Energy Ltd v. PT (Persero) Perusahaan Listruik Negara, Final Ad Hoc Award
of 4 May 1999, XXV Y.B. Comm. Arb. 13, 30-31 (2000). See alsoFinal Award in Chamber of
National and International Arbitration of Milan of 18 March 1999, XXV Y.B. Comm. Arb. 382
(2000) (upholding arbitrability of extracontractual claims).
157) Metrocall Inc. v. Elec. Tracking Sys. Pty Ltd, [2000] NSW IR Comm. 136 (N.S.W. Indus.
Relations Commn).
158) Metrocall Inc. v. Elec. Tracking Sys. Pty Ltd, [2000] NSW IR Comm. 136, 54 (N.S.W. Indus.
Relations Commn).
42
159) As discussed below, the New York Convention is best understood as imposing structural
limits on a Contracting States ability to declare subjects nonarbitrable, requiring that
the nonarbitrability doctrine be applied as an exception, based on specific and
articulated local public policies. See4.05[A][2]; 25.04[G]; 26.05[C][10]. A decision
reserving to national courts or administrative agencies determinations whether a
particular contract was unfair contradicts these limitations, by establishing an
overbroad rule of nonarbitrability, rather than an exception grounded in specific public
policies. That result is particularly true given the long-standing and unquestioned
competence of arbitral tribunals to apply doctrines such as unconscionability or changed
circumstances in contractual settings.
160) See, e.g., Comandate Mardoine Corp. v. Pan Australia Shipping Pty Ltd, [2006] FCAFC 192
(Australian Fed. Ct.); Transfield v. Pac. Hydro Ltd, [2006] VSC 175 (Victoria S.Ct.).
161) The Hub Power Co. v. Pakistan WAPDA, 16 Arb. Intl 439 (Pakistan S.Ct. 2000) (2000);
6.04[N]. See also Oyugi v. Law Socy of Kenya, Civil Case No. 482 of 2004 (Nairobi Law Cts.)
(Nairobi High Ct. 2005) (tort claims nonarbitrable under Kenyan law).
162) New York Convention, Art. II(1); 6.04[N].
163) See4.05[A][2].
164) See Accentuate Ltd v. Asigra Inc. [2009] EWHC 2655, 89 (Comm) (English High Ct.)
(suggesting that arbitration clause would be null and void and inoperative within the
meaning of Article 9(4) of the Arbitration Act, in so far as it purported to require the
submission to arbitration of questions pertaining to mandatory provisions of EU law).
165) See Global Legal Group, International Comparative Legal Guide to: International Arbitration
2012 253 (9th ed. 2012); Weiniger & Byrne, Mandatory Rules, Arbitrability and the English
Court Gets It Wrong, 2010 Paris J. Intl Arb. 201.
166) See6.03[C].
167) See6.03[C].
168) See6.04[A][1]-[2].
169) See, e.g., Wilko, 346 U.S. at 435 n.18 (Weproceed to the question decided below,
namely, whether the 1933 Act evidences a public policy which forbids referring the
controversy to arbitration.); Judgment of 18 July 1987, XVII Y.B. Comm. Arb. 534 (Bologna
Tribunale) (1992). See also Kronstein, Business Arbitration Instrument of Private
Government, 54 Yale L.J. 36 (1944).
170) See, e.g., Wilko, 346 U.S. at 438 (Congress has afforded participants in transactions
subject to its legislative power an opportunity generally to secure prompt, economical
and adequate solution of controversies through arbitration if the parties are willing to
accept less certainty of legally correct adjustment.Recognizing the advantages that prior
agreements for arbitration may provide for the solution of commercial controversies, we
decide that the intention of Congress concerning the sale of securities is better carried
out by holding invalid such an agreement for arbitration of issues arising under the Act.)
(emphasis added); Mitsubishi Motors, 473 U.S. at 640 (Stevens, J., dissenting); Alexander,
415 U.S. at 58.
171) See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155, 162 (1st Cir.
1983) (strong possibility that contracts which generate antitrust disputes may be
contracts of adhesion), affd, 473 U.S. 614, 646-50 (U.S. S.Ct. 1985).
172) See, e.g., Zimmerman v. Contl Airlines, Inc., 712 F.2d 55, 59-60 (3d Cir. 1983) ([B]ecause of
the importance of bankruptcy proceedings in general, and the need for the expeditious
resolution of bankruptcy matters in particular, we hold that the intentions of Congress
will be better realized if the Bankruptcy Reform Act is read to impliedly modify the
[Federal] Arbitration Act.); Benton v. Singleton, 40 S.E. 811 (Ga. 1902) (While the law
favors the submission to arbitration of disputes arising between individuals over private
matters as to which they alone are concerned, the submission to arbitrators of questions
in which the public at large is interested, is not only discountenanced but positively
forbidden.).
173) See, e.g., Alexander, 415 U.S. at 53 (The arbitrator, however, has no general authority to
invoke public laws that conflict with the bargain between the parties.); Harrington v.
Brown, 1865 WL 4687, at *1 (Mass.) ([A]rbitrators to whom a matter in dispute and also all
accounts outstanding between parties have been submitted have no authority to award
concerning the costs of a criminal prosecution instituted by one of the parties against the
other, and growing out of the matter in dispute; since this was a matter in which the
Commonwealth was concerned, it would be against public policy to permit these parties
to settle the question of liability as a private question between them.); Wyatt v. Benson,
23 Barb. 327 (N.Y. Sup. 1857) (A religious corporation, not having the power to sell its real
estate without the consent of the supreme court, cannot submit the question of sale to
any other tribunal.).
174) See Mitsubishi Motors, 473 U.S. at 627.
175) Alexander, 415 U.S. at 58. But see Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 233
(U.S. S.Ct. 1987) (the mistrust of arbitration that formed the basis for the Wilko opinion in
1953 is difficult to square with the assessment of arbitration that has prevailed since that
time).
176) See19.04[B][3] for a discussion of arbitrators power to consider and decide claims based
on mandatory laws and public policy. See also19.04[B][4].
177) Mitsubishi Motors, 473 U.S. at 636, 639 n.21.
178) The grounds for these international obligations are discussed above. See4.05[C][5];
6.02[A].
43
179) See, e.g., Lake Commcns, Inc. v. ICC Corp., 738 F.2d 1473 (9th Cir. 1984); Univ. Life Ins. Co. v.
Unimarc Ltd, 699 F.2d 846 (7th Cir. 1983); Cobb v. Lewis, 488 F.2d 41 (5th Cir. 1974);
Helfenbein v. Intl Indus., Inc., 438 F.2d 1068 (8th Cir. 1971); Am. Safety Equip. Corp. v. J.P.
Maguire & Co., 391 F.2d 821 (2d Cir. 1968). See also Baxter Intl, Inc. v. Abbott Labs., 315 F.3d
829, 835 (7th Cir. 2003) (Cudahy, J., dissenting) (For some considerable time not long in
the past,antitrust disputes were not arbitrable.).
180) See, e.g.,Judgment of 18 July 1987, XVII Y.B. Comm. Arb. 534 (Bologna Tribunale) (1992) (the
nullity of the [arbitration] clause concerns the clauses conflict with imperative provisions
[of EC competition law] and cannot, thereforebe capable of settlement by arbitration).
181) See, e.g., Award in ICC Case No. 1397, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.),
Collection of ICC Arbitral Awards 1974-1985 179, 181 (although considering EU competition
law claims to evaluate challenge to validity of contract, tribunal reasoned: a dispute
relating essentially to the validity or nullity of a contract under Article 85 of the Treaty of
Rome would be beyond the jurisdiction of an arbitrator and no arbitration agreement
could substitute a private judge for a public judge to resolve a dispute concerning public
policy in se and per se). Compare Final Award in ICC Case No. 7673, 6(1) ICC Ct. Bull. 57
(1995); Final Award in ICC Case No. 7097, International Commercial Arbitration in Europe 38
(ICC Ct. Bull. Spec. Supp. 1993); Award in ICC Case No. 4604, 112 J.D.I. (Clunet) 973 (1985);
Award in ICC Case No. 2811, 106 J.D.I. (Clunet) 984 (1979).
182) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 723 F.2d 155 (1st Cir. 1983), affd,
473 U.S. 614, 646-50 (U.S. S.Ct. 1985).
183) See Mitsubishi Motors, 473 U.S. at 626-27. The Court explained that concerns of
international comity, respect for the capacities of foreign and international tribunals,
and sensitivity to the need of the international commercial system for predictability in
the resolution of disputes require that we enforce the parties agreement, even assuming
that a contrary result would be forthcoming in a domestic context. Id. at 629. See6.04[A].
184) See Mitsubishi Motors, 473 U.S. at 628-29, 655-56 (Stevens, J., dissenting) (citing lower court
decisions); 6.03[C][4], pp. 966-68.
185) See Mitsubishi Motors, 473 U.S. at 627-28. The Courts decision provoked a vigorous dissent
by Justice Stevens. Among other things, Justice Stevens reasoned:
The Courts repeated incantation of the high ideals of international arbitration creates
the impression that this case involves the fate of an institution designed to implement a
formula for world peace. But just as it is improper to subordinate the public interest in
enforcement of antitrust policy to the private interest in resolving commercial disputes,
so is it equally unwise to allow a vision of world unity to distort the importance of the
selection of the proper forum for resolving this dispute.In my opinion, the elected
representatives of the American people would not have us dispatch an American citizen
to a foreign land in search of an uncertain remedy for the violation of a public right that is
protected by the Sherman Act. This is especially so when there has been no genuine
bargaining over the terms of the submission, and the arbitration remedy provided has
not even the most elementary guarantees of fair process. Consideration of a fully
developed record by a jury, instructed in the law by a federal judge, and subject to
appellate review, is a surer guide to the competitive character of a commercial practice
than the practically unreviewable judgment of a private arbitrator. Id. at 665-66
(Stevens, J., dissenting).
186) See, e.g., Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1266 (11th Cir. 2011) (international
antitrust claim arbitrable); TradeComet.com LLC v. Google, Inc., 435 F.Appx. 31 (2d Cir.
2011); JLM Indus. v. Stolt-Nielsen SA, 387 F.3d 163, 181 (2d Cir. 2004) (international antitrust
claim arbitrable notwithstanding its asserted complexity); Seacoast Motors of Salisbury,
Inc. v. DaimlerChrysler Motors Corp., 271 F.3d 6, 11 (1st Cir. 2001) (domestic antitrust claims
arbitrable); Kotam Elecs., Inc. v. JBL Consumer Prods., Inc., 93 F.3d 724, 728 (11th Cir. 1996);
George Fischer Foundry Sys., Inc. v. Adolph H. Hottinger Maschinenbau GmbH, 55 F.3d 1206,
1210 (6th Cir. 1995) (international antitrust claim arbitrable even if there is a chance that
United States antitrust statutory rights will not be fully recognized); Sanjuan v. Am. Bd of
Psychiatry & Neurology, 40 F.3d 247, 250 (7th Cir. 1994) (Producers may agree to arbitrate
their antitrust disputes certainly so for international transactionsand likely so for
domestic transactions.); Nghiem v. NEC Elecs. Inc., 25 F.3d 1437, 1441-42 (9th Cir. 1994)
(domestic antitrust claims arbitrable); Swensens Ice Cream Co. v. Corsair Corp., 942 F.2d
1307, 1310 (8th Cir. 1991) (suggesting, without deciding, that domestic as well as
international antitrust claims are arbitrable); HCI Techs., Inc. v. Avaya, Inc., 446 F.Supp.2d
518, 525 (D. Va. 2006) (same); In re Currency Conversion Fee Antitrust Litg., 265 F.Supp.2d
385, 410 (S.D.N.Y. 2003); Automated Tech. Machs., Inc. v. Diebold, 2002 U.S. Dist. LEXIS 9146
(D. La.); Acquaire v. Canada Dry Bottling, 906 F.Supp. 819, 837 (E.D.N.Y. 1995); Hough v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 757 F.Supp. 283, 286 (S.D.N.Y. 1991), affd, 946
F.2d 883 (2d Cir. 1991); Cindys Candle Co. v. WNS Inc., 714 F.Supp. 973 (N.D. Ill. 1989); In re
Hops Antitrust Litg., 655 F.Supp. 169 (E.D. Mo. 1987) (requiring arbitration of antitrust
claims against foreign defendants); Genna v. Lady Foot Intl, Inc., 1986 WL 1236 (E.D. Pa.)
(domestic antitrust claim arbitrable).
188) See6.04[A][5].
44
189) See, e.g.,Judgment of 28 April 1992, XVIII Y.B. Comm. Arb. 143, 144 (Swiss Federal Tribunal)
(1993); Judgment of 18 July 1987, XVII Y.B. Comm. Arb. 534 (Bologna Tribunale) (1992). See
also Bensaude, Defining the Limits of Scrutiny of Awards Based on Alleged Violations of
European Competition Law, 22 J. Intl Arb. 239 (2005); de Groot, The Impact of the Benetton
Decision on International Commercial Arbitration, 20 J. Intl Arb. 365 (2003); Dempegiotis,
EC Competition Law and International Arbitration in Light of EC Regulation 1/2003, 25 J. Intl
Arb. 365 (2008); Dhunr, EC Competition Law and National Arbitration Procedure, 2000:1
Stockholm Arb. Rev. 24; Komninos, Arbitration and EU Competition Law, in J. Basedow, S.
Francq & L. Idot (eds.), International Antitrust Litigation Conflict of Laws and Coordination
191, 192 (2012); Landi & Rogers, Arbitration of Antitrust Claims in the United States and
Europe, 13-14 Concorrenza e Mercato 455 (2005-2006); Liebscher, Arbitration and EC
Competition Law The New Competition Regulation: Back to Square One?, 2003 Intl Arb. L.
Rev. 84; Liebscher, European Public Policy After Eco Swiss, 10 Am. Rev. Intl Arb. 81 (1999);
Radicati di Brozolo, Arbitration and Competition Law: The Position of the Courts and of
Arbitrators, 27 Arb. Intl 1 (2011).
190) Eco Swiss China Time Ltd v. Benetton Intl NV, Case No. C-126/97, [1999] E.C.R. I-3055 (E.C.J.).
191) One commentator has concluded that Eco Swiss extends Mitsubishi, which held that
claims arising out of competition laws may be arbitrated, by holding that they must be
arbitrated and if they are not, any award is subject to challenge, presumably not only in
an action to annul under domestic law but also in an action under the New York
Convention. von Mehren, The Eco-Swiss Case and International Arbitration, 19 Arb. Intl 465
(2003) (emphasis in original). See alsoBlanke, Defining the Limits of Scrutiny of Awards
Based on Alleged Violations of European Competition Law, 23 J. Intl Arb. 249 (2006); Zekos,
Eco Swiss China Time Ltd v. Benetton International NV Courts Involvement in Arbitration,
17(2) J. Intl Arb. 91 (2000).
192) See, e.g., ET Plus SA v. Jean-Paul Welter [2005] EWHC 2115, 51 (Comm) (English High Ct.)
(There is no realistic doubt that such competition or anti-trust claims are arbitrable;
the issue is whether they come within the scope of the arbitration clause, as a matter of
its true construction.); Judgment of 4 June 2008, SNF v. Cytec, 2008 Rev. arb. 473 (French
Cour de cassation civ. 1e) (confirming award where arbitrators applied EU competition
law); Judgment of 18 November 2004, SA Thals Air Dfense v. GIE Euromissile, 2004 Rev.
arb. 986 (Paris Cour dappel); Judgment of 14 October 1993, Socit Aplix v. Socit Velcro,
1994 Rev. arb. 164 (Paris Cour dappel); Judgment of 19 May 1993, Socit Labinal v. Socit
Mors et Westland Aerospace, 1993 Rev. arb. 645, 650 (Paris Cour dappel) (competition
disputes arbitrable in international matters); Judgment of 13 November 1998, XXV Y.B.
Comm. Arb. 511 (Swiss Federal Tribunal) (2000); Judgment of 28 April 1992, XVIII Y.B. Comm.
Arb. 143 (Swiss Federal Tribunal) (1993) (EU competition law claim arbitrable); Judgment
of 21 December 1991, SpA Coveme v. Compagnie Franaise des Isolants, XVIII Y.B. Comm.
Arb. 422 (Bologna Corte dAppello) (1993) (EU competition claims arbitrable); Swedish
Arbitration Act, 1(3) (arbitrators may rule on the civil law effects of competition law as
between the parties). See also B. Berger & F. Kellerhals, International and Domestic
Arbitration in Switzerland 212 et seq. (2d ed. 2010); Khn, Arbitrability of Anti-Trust
Disputes in the Federal Republic of Germany, 3 Arb. Intl 230 (1987); Landi & Rogers,
Arbitration of Antitrust Claims in the United States and Europe, 13-14 Concorrenza e
Mercato 455 (2005-2006); Mourre, Arbitrability of Antitrust Law From the European and US
Perspectives, in G. Blanke & P. Landolt (eds.), EU and US Antitrust Arbitration: A Handbook
for Practitioners 3, 35-42 (2011); von Segesser & Schramm, Swiss International Arbitration
Act (Chapter 12: International Arbitration), 1989, in L. Mistelis (ed.), Concise International
Arbitration 911, 915 (2010) (arbitral tribunal must decide upon the (in)validity of the
contract under antitrust law, regardless of the state authorities exclusive
competence).
193) Judgment of 8 March 2006, DFT 132 III 389, 398 (Swiss Federal Tribunal).
194) See6.04[A][5]; Eco Swiss China Time Ltd v. Benetton Intl NV, Case No. C-126/97, [1999]
E.C.R. I-3055 (E.C.J.); Judgment of 4 June 2008, SNF v. Cytec, 2008 Rev. arb. 473 (French Cour
de cassation civ. 1e); Judgment of 23 March 2006, SNF v. Cytec, 2007 Rev. arb. 100 (Paris
Cour dappel); Landi & Rogers, Arbitration of Antitrust Claims in the United States and
Europe, 13-14 Concorrenza e Mercato 455 (2005-2006).
195) See6.04[A] (especially 6.04[A][5]).
196) See, e.g., Recyclers of Australia Pty Ltd v. Hettinga Equip. Inc., (2000) 175 ALR 725 (Australian
Fed. Ct.); Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., 12(7) Mealeys Intl Arb. Rep. C-1
(Australian Fed. Ct. 1997) (1997) (rejecting argument that claims under Australian Trade
Practices Act are nonarbitrable); Stericorp. Ltd v. Stericycle Inc., XXXI Y.B. Comm. Arb. 549,
556 (Victoria S.Ct. 2005) (2006) (disputes under Australian Trade Practices Act are
arbitrable); IBM Australia Ltd v. Natl Dist. Serv. Ltd, (1991) 22 NSWLR 466 (N.S.W. S.Ct.)
(Australian antitrust claim arbitrable); New Zealand v. Mobil Oil New Zealand Ltd, XIII Y.B.
Comm. Arb. 638, 651-54 (Wellington High Ct. 1987) (1988) (New Zealand competition law
claims arbitrable); Beechey, Arbitrability of Anti-Trust/Competition Law Issues Common
Law, 12 Arb. Intl 179 (1996).
45
197) Francis Travel Mktg Pty Ltd v. Virgin Atl. Airways Ltd, [1996] 131 FLR 422, 428 (N.S.W. Ct.
App.). See also Comandate Marine Corp. v. Pan Australia Shipping Pty Ltd, [2006] FCAFC 192,
240 (Australian Fed. Ct.) (There is nothing inimical to Australian public policy or to the
terms of the Trade Practices Act in commercial parties agreeing to commercial
arbitration.There is no relevant Australian statutory provisionthat might affect its
operation.The Trade Practices Act is not being undermined; rather, another law of the
Parliament [i.e., the Australian International Arbitration Act] is in operation.).
198) See, e.g., Final Award in ICC Case No. 8423, XXVI Y.B. Comm. Arb. 153 (2001) (considering but
rejecting argument that non-competition clause violated EC competition law); Final
Award in ICC Case No. 7673, 6(1) ICC Ct. Bull. 57 (1995); Partial Award in ICC Case No. 7146,
XXVI Y.B. Comm. Arb. 119 (2001) (considering but rejecting claims that agreements violated
EC competition law); Final Award in ICC Case No. 7097, International Commercial Arbitration
in Europe 38 (ICC Ct. Bull. Spec. Supp. 1993); Award in ICC Case No. 4604, 112 J.D.I. (Clunet)
973 (1985); Award in CAS Case No. 98/200 of 20 August 1999, XXV Y.B. Comm. Arb. 393 (2000)
(considering and partially granting claims based on EU competition laws); Final Award in
Chamber of National and International Arbitration of Milan of 23 September 1997, XXIII Y.B.
Comm. Arb. 93 (1998) (issues involving mandatory provisions of Italian law are arbitrable).
200) Eco Swiss China Time Ltd v. Benetton Intl NV, Case No. C-126/97, [1999] E.C.R. I-3055, 3
(E.C.J.).
201) Eco Swiss China Time Ltd v. Benetton Intl NV, Case No. C-126/97, [1999] E.C.R. I-3055, 32
(E.C.J.). See alsoJudgment of 4 June 2008, SNF v. Cytec, XXXIII Y.B. Comm. Arb. 489, 493
(French Cour de cassation civ. 1e) (in case involving award applying EU competition law to
supply agreement between French company and Dutch company, lower courts decision
was within the limits of its powers, that is, without reviewing the merits of the arbitral
award [the court] reviewed the awards in light of the application of the community rules
on competition, [and] correctly held that their recognition and enforcement were not
contrary to international public policy.); Judgment of 18 November 2004, SA Thals Air
Dfense v. GIE Euromissile, 2004 Rev. arb. 986 (Paris Cour dappel) (issues of EC
competition law are arbitrable but subject to review by national courts applying national
and EU law); Judgment of 24 March 2005, Mktg Displays Intl Inc. v. VR Van Raalte Reclame
BV, XXXI Y.B. Comm. Arb. 808, 820 (Hague Gerechtshof) (2006) (refusing to recognize award
made in United States, under Michigan law, because it violated EU competition laws);
Bensaude, Thals Air Defence BV v. GIE Euromissile: Defining the Limits of Scrutiny of
Awards Based on Alleged Violations of European Competition Law, 22 J. Intl Arb. 239 (2005).
202) See Radicati di Brozolo, Antitrust: A Paradigm of the Relations Between Arbitration and
Mandatory Rules: A Fresh Look at the Second Look, 2004 Intl Arb. L. Rev. 23.
From a procedural perspective, it is not clear that particular courts will necessarily have
an opportunity to take a second look at an arbitrators antitrust decision. For example,
awards made outside the United States, but dealing with the U.S. antitrust laws,
ordinarily will be subject to review in an annulment action only where they were made,
and not in United States courts. See22.04. The prevailing party may seek enforcement of
the award outside the United States, and not in U.S. courts. Ultimately, the sole
opportunity for a second look might be in a renewed antitrust action in U.S. courts, where
the prevailing party in the arbitration would be obliged to raise the award as preclusive.
203) See26.05[C][10][g].
204) Judgment of 8 March 2006, DFT 132 III 389, 398 (Swiss Federal Tribunal). See also Judgment
of 1 February 2002, 20 ASA Bull. 337, 348 (Swiss Federal Tribunal) (2002); Judgment of 13
November 1998, XXV Y.B. Comm. Arb. 511, 513 (Swiss Federal Tribunal) (2000); N.
Shelkoplyas, The Application of EC Law in Arbitration Proceedings 313-15 (2003) (It is
submitted that non-application or incorrect application of EC competition law cannot by
itself be contrary to public policy because, if it were, there should be a corresponding
positive obligation on arbitrators to enforce certain laws, which there is not.).
205) Judgment of 19 April 1994, DFT 120 II 155, 167 (Swiss Federal Tribunal) (the arbitral tribunal
is required, in all cases, to respect the public policy of the domestic law that it is obliged
to apply).
206) Mitsubishi Motors, 473 U.S. at 637 n.19.
207) See6.04[A][6][b].
208) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999); George Fischer
Foundry Sys., Inc. v. Adolph H. Hottinger Maschinenbau GmbH, 55 F.3d 1206, 1210 (6th Cir.
1995) (rejecting (on ripeness grounds) argument that rules governing Zurich arbitration
would serve as prospective waiver of statutory rights to treble damages because it is not
clear what law the Zurich tribunal will apply). See also Life of Am. Ins. Co. v. Aetna Life Ins.
Co., 744 F.2d 409 (5th Cir. 1984).
209) See6.02[G].
210) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999) ([I]t is possible that
the Swiss Tribunal might apply U.S. antitrust law to the dispute.Moreover, even if Swiss
law is applied to the dispute, there has been no showing that it will not provide Simula
with sufficient protection.); Suzlon Structure, Ltd v. Pulk, 2010 WL 3540951 (S.D. Tex.)
(staying litigation of RICO claims notwithstanding fact that parties choice of (English) law
might preclude assertion of RICO claims in foreign-seated arbitration); Dziennik v. Sealift,
Inc., 2010 WL 1191993, at *7 (E.D.N.Y.).
46
211) See, e.g., Lindo v. NCL (Bahamas), Ltd, 652 F.3d 1257, 1292 (11th Cir. 2011) (Barkett,
dissenting) (null and void standard in Article II provides a public policy defense at the
arbitration agreement enforcement stage); 6.02[G], p. 954.
212) See, e.g., Casaceli v. Natuzzi SpA, [2012] FCA 691, 31-33 (Australian Fed. Ct.) (rejecting
argument that arbitral tribunal seated in Italy would not apply mandatory Australian
law).
213) See, e.g., Richards v. Lloyds of London, 135 F.3d 1289, 1295 (9th Cir. 1998); Haynsworth v. The
Corp., 121 F.3d 956, 969 (5th Cir. 1997); Allen v. Lloyds of London, 94 F.3d 923, 929 (4th Cir.
1996); Bonny v. Socy of Lloyds, 3 F.3d 156, 162 (7th Cir. 1993). Roby v. Corp. of Lloyds, 996
F.2d 1353 (2d Cir. 1993).
214) See6.04[B][2]. See also Stein, Thomas v. Carnival Corporation: Has the Eleventh Circuit Set
International Arbitration Off Course?, 27 J. Intl Arb. 529, 535 (2010) (suggesting that
Mitsubishi would invalidate choice-of-law/choice-of-forum clause only if there were
evidence that the law and seat of arbitration were chosen specifically to prevent
pursuing U.S. statutory claims).
215) See, e.g., Hiotakis v. Celebrity Cruises Inc., 2011 WL 2148978, at *7 (S.D. Fla.) (plaintiffs
failure to make any showing regarding Greek law, including the recognition or foreign
statutory causes of action such as the Wage Act and the remedies available to seamen
seeking overtime wages, and the opportunity for review of arbitral awards, preclude this
Court from making the finding that the public policy affirmative defense voids the
arbitration provisions); Williams v. Royal Caribbean Cruises, Ltd, 2011 WL 1467179, at *2
(S.D. Fla.) ([a]n arbitration clause is null and void as a matter of public policy where it
deprives the plaintiff of a U.S. statutory right; compelling arbitration of plaintiffs Jones
Act claims in St. Vincent or the Bahamas, after invalidating Norwegian choice-of-law
provision and requiring application of U.S. law); Shaw v. Carnival Cruise Lines, 2011 WL
2160617 (S.D. Fla.) (compelling arbitration in Panama, after severing Bahamian choice-of-
law clause with respect to plaintiffs Jones Act claims and requiring application of U.S.
law); Suzlon Infrastructure, Ltd v. Pulk, 2010 WL 3540951 (S.D. Tex.); Cardoso v. Carnival
Corp., 2010 WL 996528, at *4 (S.D. Fla.) (the appropriate remedy is to sever the
Panamanian choice-of-law provision from the agreement to arbitrate); Mosqueda v.
Offshore Specialty Fabricators, Inc., 2010 WL 1416786, at *2 (S.D. Tex.) (A party seeking to
avoid an international arbitration clause on public policy grounds must meet a heavy
burden of proof.).
216) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 n.4 (9th Cir. 1999) (even if Swiss law is
applied to the dispute, there has been no showing that it will not provide Simula with
sufficient protection).
217) Am. Express Co. v. Italian Colors Rest., 133 S.Ct. 2304, 2309 (U.S. S.Ct. 2013) (quoting
Mitsubishi Motors, 473 U.S. at 628).
218) Am. Express, 133 S.Ct. at 2311 (U.S. S.Ct.) (The class-action waiver merely limits arbitration
to the two contracting parties. It no more eliminates those parties right to pursue their
statutory remedy than did federal law before its adoption of the class action for legal
relief in 1938. Or, to put it differently, the individual suit that was considered adequate to
assure effective vindication of a federal right before adoption of class-action
procedures did not suddenly become ineffective vindication upon their adoption.).
219) Am. Express, 133 S.Ct. at 2310 (Mitsubishi Motors expressed a willingness to invalidate, on
public policy grounds, arbitration agreements that operat[e]as a prospective waiver
of a partys right to pursue statutory remedies) (emphasis in original).
220) Am. Express, 133 S.Ct. at 2310 ([T]he exception finds its origin in the desire to prevent
prospective waiver of a partys right to pursue statutory remedies. That would certainly
cover a provision in an arbitration agreement forbidding the assertion of certain
statutory rights. And it would perhaps cover filing and administrative fees attached to
arbitration that are so high as to make access to the forum impracticable.) (emphasis in
original).
221) Am. Express, 133 S.Ct. at 2311 (the fact that it is not worth the expense involved in proving
a statutory remedy does not constitute the elimination of the right to pursue that
remedy) (emphasis in original).
222) See Shearson/Am. Express Inc. v. McMahon, 482 U.S. 220, 240-41 (U.S. S.Ct. 1987).
223) See, e.g., PacifiCare, 538 U.S. 401; Vimar Seguros, 515 U.S. 528; Larrys United Super, Inc. v.
Werries, 253 F.3d 1083, 1086 (8th Cir. 2001) ([Whether waiver of punitive damages] violates
the public policy underlying RICOs treble damages provision is a matter for the
arbitrators in the first instance.).
224) See, e.g., Life of Am. Ins. Co. v. Aetna Life Ins. Co., 744 F.2d 409, 412 (5th Cir. 1984) (declining
to decide in 4 proceeding whether treble damages were awardable under state law:
Until arbitration establishes that Life of America is entitled to damages but must be
denied treble damages, its asserted rights under Texas law have not been impaired.);
6.04[A][6][a]. Compare PPG Indus., Inc. v. Pilkington plc, 825 F.Supp. 1465 (D. Ariz. 1993)
([T]he Court directs that any damages determination, or arbitral award, made by the
arbitrators shall be determined according to U.S. antitrust law irrespective of any conflict
that may exist between those laws and the laws of England.).
225) See4.05[C][4]; Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723 (9th Cir. 1999) (remedies in a
foreign forum need not be identical).
226) See also26.05[C][9][j].
47
227) See U.S. Securities Act of 1933, 15 U.S.C. 77n; German Securities Exchange Act, 28,
replaced by German Securities Trading Act, 37h; German Securities Exchange Act, 53,
61. See Kerr, Arbitrability of Securities Claims in Common Law Nations, 12 Arb. Intl 171
(1996); van Houtte, Arbitration Involving Securities Transactions, 12 Arb. Intl 405 (1996).
228) Wilko, 346 U.S. at 435. See6.03[C][4], p. 965.
229) Wilko, 346 U.S. at 436. See1.01[B]; 6.03[C][4], p. 965.
230) Scherk, 417 U.S. at 518.
231) See Scherk, 417 U.S. at 516-17; 6.03[C][4], pp. 966-67.
232) See6.04[A]; Scherk, 417 U.S. 506.
233) See Rodriquez de Quijas v. Shearson/Am. Express Inc.,490 U.S. 477, 484 (U.S. S.Ct. 1989).
234) See PacifiCare, 538 U.S. 401; JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 174 (2d Cir.
2004) ([T]here is nothing in the text of the RICO statute that even arguably evinces
congressional intent to exclude civil RICO claims from the dictates of the Arbitration
Act.); Vento v. Crithfield, 2012 WL 3758432, at *4 (D.V.I.) (Courts have held that the civil
claims brought under the [RICO] Actare arbitrable.); Tech. in Pship, Inc. v. Rudin, 894
F.Supp.2d 274, 277-78 (S.D.N.Y. 2012).
235) See6.04[A][5]; PacifiCare, 538 U.S. 401.
236) See PacifiCare, 538 U.S. 401; Vimar Seguros, 515 U.S. at 541 (mere speculation that the
foreign arbitrators might apply Japanese law which, depending on the proper
construction of COGSA, might reduce respondents legal obligations, does not in and of
itself render a COGSA claim nonarbitrable) (emphasis in original); Aggarao v. MOL Ship
Mgt Co.,675 F.3d 355, 373 (4th Cir. 2012) (Aggarao is not entitled to interpose his public
policy defense, on the basis of the prospective waiver, doctrine until the second stage of
the arbitration-related court proceedings the award-enforcement stage.).
237) See, e.g., Richards v. Lloyds of London, 135 F.3d 1289, 1295 (9th Cir. 1998) (en banc);
Haynsworth v. The Corp., 121 F.3d 956, 969 (5th Cir. 1997); Allen v. Lloyds of London, 94 F.3d
923, 929 (4th Cir. 1996); Bonny v. Socy of Lloyds, 3 F.3d 156, 162 (7th Cir. 1993); Roby v. Corp.
of Lloyds, 996 F.2d 1353 (2d Cir. 1993). See also S.K.I. Beer Corp. v. Baltika Brewery, 612 F.3d
705, 712 (2d Cir. 2010) (speculation as to application of U.S. law by foreign court did not
justify non-enforcement of forum selection clause).
Some U.S. commentary has been critical of the Lloyds decisions, arguing that they
undermine the protections of the U.S. securities laws and ignore the anti-waiver
provisions of those laws. Eck, Turning Back the Clock: A Judicial Return to Caveat Emptor
for U.S. Investors in Foreign Markets, 19 N.C. J. Intl & Com. Reg. 313 (1994); McConnaughay,
The Risks and Virtues of Lawlessness: A Second Look at International Commercial
Arbitration, 93 N.W. U. L. Rev. 453 (1999).
238) Roby v. Corp. of Lloyds, 996 F.2d 1353, 1365 (2d Cir. 1993). See also Allen v. Lloyds of
London, 94 F.3d 923, 929 (4th Cir. 1996); Bonny v. Socy of Lloyds, 3 F.3d 156, 162 (7th Cir.
1993).
239) Like most other mandatory national laws, the U.S. federal securities laws apply only to
conduct falling within their jurisdictional scope (i.e., having sufficient connections to the
United States). G. Born & P. Rutledge, International Civil Litigation in United States Courts
709-23 (5th ed. 2011).
240) See, e.g., Cardoso v. Carnival Corp., 2010 WL 996528, at *3 (S.D. Fla.) (Panamanian choice-of-
law clause was, in tandem with Philippines arbitration clause, unenforceable as applied
to Jones Act claims: foreign choice-of-law and arbitration clauses can if enforced in
tandem constitute a prospective waiver of statutory rights in violation of public policy;
ordering: Paragraph 8 [i.e., the parties choice of law clause] is hereby STRICKEN from
Plaintiffs Seafarers Agreement and shall be treated by the parties as null and void.).
241) See6.02[G].
242) See Judgment of 26 February 1991, XI ZR 349/89 (German Bundesgerichtshof) (recognizing
Dutch award against German company on liability under futures contract); Zimmer, in E.
Schwark & D. Zimmer (ed.), Kapitalmarktrechtskommentar 37h WpHG, nn.1 et seq. (4th ed.
2010).
243) See Judgment of 6 June 1991, 1991 NJW 2215 (German Bundesgerichtshof). This is only true to
the extent that German securities law applies to protect the consumer in question. See,
e.g., Judgment of 21 September 1993, 1993 NJW-RR 1519 (German Bundesgerichtshof)
(German national residing in Italy not protected by German securities law and therefore
arbitration agreement with national providing for arbitration in New York under New York
law held valid).
244) See German Wertpapierhandelsgesetz (Securities Trading Act), 37h. See Judgment of 9
March 2010, 2010 RIW 391 (German Bundesgerichtshof) (denying enforcement of
arbitration clause in consumer contract); Judgment of 16 June 2008, I-9 U 17/08
(Oberlandesgericht Dsseldorf) (same).
245) See Lehmann, Wertpapierhandel als schiedsfreie Zone? Zur Wirksamkeit von
Schiedsvereinbarungen nach 37h WpHG, 2003 SchiedsVZ 219.
246) See Judgment of 8 June 2010, 2011 SchiedsVZ 46 (German Bundesgerichtshof) (German
Securities Trading Act, 37h is limitation on capacity and New York Convention allows
application of partys personal law to issues of capacity).
48
247) For commentary, see Kosheri & Leboulanger, Larbitrage face la corruption et aux trafics
dinfluence, 1984 Rev. arb. 3; Kreindler, Aspects of Illegality in the Formation and
Performance of Contracts, in A. van den Berg (ed.), International Commercial Arbitration:
Important Contemporary Questions 209 (ICCA Congress Series No. 11 2003); Lalive, Ordre
public transnational (ou rellement international) et arbitrage international, 1986 Rev. arb.
329,336-41; Mourre, Arbitration and Criminal Law: Jurisdiction, Arbitrability and Duties of the
Arbitral Tribunal, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability: International &
Comparative Perspectives 207 (2009); Mourre, Arbitration and Criminal Law: Reflections on
the Duties of the Arbitrator, 22 Arb. Intl 95, 98 (2006); Rosell & Prager, Illicit Commissions
and International Arbitration: The Question of Proof, 15 Arb. Intl 329 (1999); Wetter, Issues of
Corruption Before International Arbitral Tribunals: The Authentic Text and True Meaning of
Judge Gunnar Lagergrens 1963Award in ICC Case No. 1110, 10 Arb. Intl 277 (1994).
248) See3.02; Heyman v. Darwins Ltd [1942] AC 356 (House of Lords). As also discussed above,
these decisions have been overtaken by the separability doctrine. See3.02[B][3].
249) Award in ICC Case No. 1110, 10 Arb. Intl 282, 293 (1994).
250) Award in ICC Case No. 1110, 10 Arb. Intl 282, 293 (1994). See also Wetter, Issues of Corruption
Before International Arbitral Tribunals: The Authentic Text and True Meaning of Judge
Gunnar Lagergrens 1963Award in ICC Case No. 1110, 10 Arb. Intl 277 (1994).
251) Award in ICC Case No. 1110, 10 Arb. Intl 282, 293 (1994). To avoid any misunderstanding, the
arbitrator also declared [i]n concluding that I have no jurisdiction, guidance has been
sought from general principles denying arbitrators jurisdiction to entertain disputes of
this nature rather than from any national rules on arbitrability. Ibid.
Some commentators have suggested that Lagergren might have rejected the claimants
request for relief on substantive, rather than jurisdictional, grounds (noting Lagergrens
references that the claims were non-justiciable). Mourre, Arbitration and Criminal Law:
Reflections on the Duties of the Arbitrator, 22 Arb. Intl 95, 98 (2006). This would have been
the more appropriate result, but is very difficult to reconcile with much of the language of
the award.
252) See, e.g.,Partial Award on Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm.
Arb. 279 (2000) (dispute involving claims of corruption and illegality is arbitrable
(applying Swiss law)); Partial Award in ICC Case No. 6286, XIX Y.B. Comm. Arb. 141 (1994);
Interim Award in ICC Case No. 4145, XII Y.B. Comm. Arb. 97 (1987) (rejecting claim of
illegality as unsubstantiated).
253) See generally Schwartz, The Domain of Arbitration and Issues of Arbitrability: The View From
the ICC, in Tenth Joint ICC/AAA/ICSID Colloquium on International Arbitration 4 n.6 (1998).
254) See, e.g., JLM Indus. v. Stolt-Nielsen SA, 387 F.3d 163, 175 (2d Cir. 2004); Genesco, Inc. v. T.
Kakiuchi & Co., 815 F.2d 840, 854 (2d Cir. 1987); Altshul Stern & Co. v. Mitsui Bussan Kaisha,
385 F.2d 158, 159 (2d Cir. 1967); Repub. of the Philippines v. Westinghouse Elec. Corp., 821
F.Supp. 292, 298 (D.N.J. 1993); Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House
of Lords); Westacre Inv. v. Jugoimport-SPDR Holding Co. Ltd [1992] 2 Lloyds Rep. 65 (1999)
(English Ct. App.); Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119
II 380, 384 (Swiss Federal Tribunal); Judgment of 22 October 1976, III Y.B. Comm. Arb. 279,
280 (Florence Corte dAppello) (1978); Sarawak Shell v. PPES Oil & Gas, (1998) Arb. & Disp.
Res. L.J. 356 (Kuala Lumpur Ct. App.). See also6.02[G].
U.S. courts have consistently held that private damages claims under the Racketeer
Influenced and Corrupt Organizations Act (RICO), which frequently involve claims of
corruption and comparable alleged wrongdoing, are arbitrable. See Kerr-McGee Refining
Corp. v. M/T Triumph, 924 F.2d 467 (2d Cir. 1991); Khn, RICO Claims in International
Arbitration and Their Recognition in Germany, 11(2) J. Intl Arb. 37 (1994); 6.02[G], p. 953.
255) Fiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ 20, 29 (English Ct. App.), affd,
256) Judgment of 19 February 2007, DFT 133 III 139, 142 (Swiss Federal Tribunal).
257) The Hub Power Co. v. Pakistan WAPDA, 16 Arb. Intl 439 (Pakistan S.Ct. 2000) (2000).
258) See4.05[A][2]; 6.02[H].
259) That is particularly true in light of Article II(1)s requirement that international arbitration
agreements be recognized as to differences whether contractual or not, which plainly
contemplates recognition of arbitration agreements as applied to non-contractual fraud
claims. See2.02[A], p. 241.
260) For commentary, see Blessing, Arbitrability of Intellectual Property Disputes, 12 Arb. Intl
191 (1996); Caron, The World of Intellectual Property and the Decision to Arbitrate, 19 Arb.
Intl 441 (2003); Certilman & Lutzker, Arbitrability of Intellectual Property Disputes, in T.
Halket (ed.), Arbitration of International Intellectual Property Disputes 55 (2012); T. Cook &
A. Garcia, International Intellectual Property Arbitration 49 (2010); Derains, Lexprience de
la Cour darbitrage de la Chambre de Commerce Internationale en matire de proprit
industrielle, 1977 Rev. arb. 40; Fortunet, Arbitrability of Intellectual Property Disputes in
France, 26 Arb. Intl 281 (2010); Lew, Intellectual Property Disputes and Arbitration, Final
Report of the Commission on International Arbitration, 9(1) ICC Ct. Bull. 37 (1998); Mantakou,
Arbitrability and Intellectual Property Disputes, in L. Mistelis & S. Brekoulakis (eds.),
Arbitrability: International & Comparative Perspectives 263 (2009); Plant, Binding
Arbitration of U.S. Patents, 10(3) J. Intl Arb. 79 (1993); Simms, Arbitrability of Intellectual
Property Disputes in Germany, 15 Arb. Intl 193 (1999); Extracts From ICC Awards on
Intellectual Property Rights Part I, 4(2) ICC Ct. Bull. 70 (1993).
261) See6.04[A]-[C].
49
262) See1.04[C][5][l].
263) See EC Regulation 44/2001, Art. 22(4); EC Regulation 1215/2012, Art. 24(4). See alsoT. Cook &
A. Garcia, International Intellectual Property Arbitration 65 (2010); Derains, Lexprience de
la Cour darbitrage de la Chambre de Commerce Internationale en matire de proprit
industrielle, 1977 Rev. arb. 40, 45; Simms, Arbitrability of Intellectual Property Disputes in
Germany, 15 Arb. Intl 193 (1999); Voit, in H.-J. Musielak (ed.), Kommentar zur
Zivilprozessordnung 1030, 3 (9th ed. 2012).
264) See Interim Award in ICC Case No. 6097, 4(2) ICC Ct. Bull. 76 (1993) (tribunal seated in
Geneva declares German patent null and void, but emphasizes that award was only
binding on parties and could not serve as basis for revocation of patent and had no erga
omnes effect); Judgment of 28 February 2008, Hidravlika DOO v. SA Diebolt, 2008 Rev. arb.
167 (Paris Cour dappel) (disputes regarding exploitation of patents, relating to
interpretation or execution of patent license, are arbitrable); Judgment of 24 March 1994,
Deko v. Dingler, 1994 Rev. arb. 515 (Paris Cour dappel) (upholding award concerning
patent and license rights); Bundestags-Drucksache No. 13/5274 of 12 July 1996, reprinted in
K.-P. Berger, The New German Arbitration Law 140 (1998); Fortunet, Arbitrability of
Intellectual Property Disputes in France, 26 Arb. Intl 292 (2010); Papenberg, The
Arbitrability of Intellectual Property Disputes in Germany, in WIPO & AAA, Worldwide Forum
on the Arbitration of Intellectual Property Disputes 81 (1994).
265) See B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 210
et seq. (2d ed. 2010); Blessing, Arbitrability of Intellectual Property Disputes, 12 Arb. Intl 191
(1996) (patent and trademark validity issues arbitrable under Swiss law); Wenger, in S.
Berti et al. (eds.), International Arbitration in Switzerland Art. 177, 15 (2000).
266) See Lear, Inc. v. Adkins, 395 U.S. 653, 677 (U.S. S.Ct. 1969) (The national policy expressed in
the patent laws, favoring free competition and narrowly limiting monopoly, cannot be
frustrated by private agreements among individuals, with or without the approval of the
state.).
267) 35 U.S.C. 294 authorizes arbitration of disputes as to validity and infringement of a U.S.
patent pursuant to a written agreement between the parties. In addition, 35 U.S.C. 135(d)
provides statutory authorization for arbitration of any aspect of a U.S. patent
interference contest. For U.S. decisions, see In re Med. Engg Corp., 1992 WL 217763 (Fed.
Cir.) (patent infringement dispute arbitrable); Rhone-Poulenc Specialities Chiniques v. SCM
Corp., 769 F.2d 1569 (Fed. Cir. 1985) (patent infringement claim arbitrable). See alsoPlant,
Binding Arbitration of U.S. Patents, 10(3) J. Intl Arb. 79 (1993).
268) See, e.g., McMahan Sec. Co. v. Forum Capital Mkts, 35 F.3d 82 (2d Cir. 1994) (complex
copyright issues arbitrable); Folkways Music Publrs, Inc. v. Weiss, 989 F.2d 108 (2d Cir.
1993) (copyright ownership arbitrable); Saturday Evening Post Co. v. Rumbleseat Press, Inc.,
816 F.2d 1191 (7th Cir. 1987) (copyright validity arbitrable); Kamakazi Music Corp. v. Robbins
Music Corp., 684 F.2d 228 (2d Cir. 1982); Pegasus Intl Inc. v. Champagne, 2012 WL 5616095
(W.D. La.) (compelling arbitration of copyright infringement claim); Danisco A/S v. Novo
Nordisk A/S, 2003 U.S. Dist. LEXIS 1842 (S.D.N.Y.) (staying action for patent infringement on
basis of arbitration agreement); LDS Inc. v. Metro Canada Logistics, 28 F.Supp.2d 1297 (D.
Kan. 1998) (copyright infringement claims arbitrable).
269) See, e.g., Caras Notions, Inc. v. Hallmark Cards, Inc., 140 F.3d 566, 571-72 (4th Cir. 1998);
Necchi Sewing Mach. Sales Corp. v. Necchi SpA, 369 F.2d 579 (2d Cir. 1966) (trademark
dispute arbitrable); Alexander Binzel Corp. v. Nu-Tecsys Corp., 1992 WL 26932 (N.D. Ill.)
(same); Givenchy SA v. William Stuart Indus. (Far East) Ltd, 1986 WL 3358 (S.D.N.Y.); Saucy
Susan Prod., Inc. v. Allied Old English, 200 F.Supp. 724 (S.D.N.Y. 1961). See also Aerojet-Gen.
Corp. v. Mach. Tool Works, Oerlikon-Buehrle, Ltd, 895 F.2d 736 (Fed. Cir. 1990) (trade secrets
dispute arbitrable), overruled on other grounds, Holmes Group, Inc. v. Vornado Air
Circulation Sys., Inc., 535 U.S. 826 (U.S. S.Ct. 2002).
270) Editions Chouette Inc. v. Desputeaux, 2003 SCC 17 (Canadian S.Ct.). See alsoBoivin &
Mariani, Highest Court Rules in Favour of Broad Interpretation of Arbitrability, 20 J. Intl Arb.
507 (2003).
273) See, e.g., Partial Award in ICC Case No. 6709, in J.-J. Arnaldez, Y. Derains & D. Hascher (eds.),
Collection of ICC Arbitral Awards 1991-1995 435, 437 (1997) ([French law] gives the national
courts exclusive jurisdiction over disputes involving public policy, i.e., the issuance,
cancellation or validity of patents; yet it is nevertheless clear that disputes relating to
the exploitation of a patent remain beyond doubt arbitrable.); Award in ICC Case No.
4491, 112 J.D.I. (Clunet) 966 (1985); Award in ICC Case No. 2048, discussed in Derains,
Lexprience de la Cour darbitrage de la Chambre de Commerce Internationale en matire
de proprit industrielle, 1977 Rev. arb. 40, 45; IBM Corp. v. Fujitsu Ltd, Award in AAA Case
No. 13T-117-0636-85 of 15 September 1987, 4(4) J. Intl Arb. 153 (1987).
274) See, e.g., Interim Award in ICC Case No. 6097, 4(2) ICC Ct. Bull. 76 (1993) (award regarding
patent invalidity described by arbitral tribunal as having no erga omnes effects); Award in
ICC Case No. 1912, discussed in Derains, Lexprience de la Cour darbitrage de la Chambre
de Commerce Internationale en matire de proprit industrielle, 1977 Rev. arb. 40, 46.
275) Judgment of 15 May 1961, Jean Tardits et Cie v. Jydsk Andels Foderstof Forretning, 89 J.D.I.
(Clunet) 140 (Orlans Cour dappel) (1962). As discussed above, the court held that claims
for breach of contract raised issues that could only be resolved by interpreting and
applying rules of French economic public policy, which governed the performance of the
contract, which were nonarbitrable. See6.03[C][3], pp. 962-63.
50
276) See6.03[C][3]-[4]; Belship Navigation Inc. v. Sealift, Inc., 1995 WL 447656 (S.D.N.Y.);
Judgment of 21 February 1964, Meulemans et Cie v. Robert, 92 J.D.I. (Clunet) 113 (Paris Cour
dappel) (1965); Judgment of 13 November 1998, XXV Y.B. Comm. Arb. 511 (Swiss Federal
Tribunal) (2000); Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal Tribunal); Partial
Award in ICC Case No. 6719, 121 J.D.I. (Clunet) 1071, 1074 (1994) (The mere fact that the
nature of the dispute may lead the arbitrator to apply various rules of law implicating
public policy does not mean that the dispute becomes nonarbitrable as a result. The
arbitrator must comply with the rules of international public policy, but he need not
decline jurisdiction.). See also Moitry, Larbitre international et lobligation de boycottage
impose par un Etat, 118 J.D.I. (Clunet) 349 (1991). CompareJudgment of 7 May 1994,
Fincantieri-Cantieri Navali Italiani SpA v. Ministry of Defence, Armement & Supply
Directorate of Irak, XXI Y.B. Comm. Arb. 594 (Genoa Corte dAppello) (1996) (holding
dispute regarding arms supply agreement nonarbitrable because of UN and EU
regulations forbidding delivery of arms to Iraq); Judgment of 15 June 2006, Legal Dept of
the Ministry of Justice of the Repub. of Irak v. Socits Fincantieri Cantieri Navali Italiani,
Finmeccanica et Armamenti e Aerospazio, 2007 Rev. arb. 87, 89-90 (Paris Cour dappel)
(refusing to recognize decision of Genoa Corte dAppello: [A court] decision which
concludes, after review on the merits, that arbitration clauses contained in contracts
between the Iraqi government and the companiesare unenforceable because of
embargo regulations enacted by the UN Resolution 661 of 1990, has been rendered by an
incompetent court, and such decision cannot be recognized in France.).
277) See19 U.S.C. 1337. Section 1337 authorizes the International Trade Commission to conduct
an administrative investigation into alleged unfair trade practices and impose regulatory
sanctions.
278) See19 U.S.C. 1337(c).
279) See Brand, International Trade Law and the Arbitration of Administrative Law Matters:
Farrel Corp. v. U.S. International Trade Commission, 31 Colum. J. Transnatl L. 181 (1993).
280) For commentary, see Baizeau, Arbitration and Insolvency: Issues of Applicable Law, in C.
Mller & A. Rigozzi (eds.), New Developments in International Commercial Arbitration 97-
120 (2009); Kaufmann-Kohler & Lvy, Insolvency and International Arbitration, in H. Peter,
N. Jeandin & J. Kilborn (eds.), The Challenges of Insolvency Law Reform in the 21st Century
257 (2006); Kaufmann-Kohler, Lvy & Sacco, The Survival of the Arbitration Agreement and
Arbitration Proceeding in Cases of Cross Border Insolvency: An Analysis From the Swiss
Perspective, 2010 Paris J. Intl Arb. 371, 383; Krll, Arbitration and Insolvency: Selected
Conflict of Laws Problems, in F. Ferrari & S. Krll (eds.), Conflict of Laws in International
Arbitration 211 (2011); Kurt, Comment: An Unstoppable Mandate and An Immovable Policy:
The Arbitration Act and the Bankruptcy Code Collide, 43 UCLA L. Rev. 999 (1996); Landolt,
Switzerland: Supreme Court Should Recalibrate Its Review Following Bankruptcy Case
Decision, Global Arb. Rev. (23 October 2009); V. Lazic, Insolvency Proceedings and
Commercial Arbitration (1998); Liebscher, Insolvency and Arbitrability, in L. Mistelis & S.
Brekoulakis (eds.), Arbitrability: International & Comparative Perspectives 165 (2009);
Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51
(1995); Naegeli, The Impact of Bankruptcy on A Pending Arbitral Proceeding: Comments on A
Recent Decision of the Swiss Federal Supreme Court, 14(2) Arb. News 57 (2009); Rosell &
Prager, International Arbitration and Bankruptcy: United States, France and the ICC, 18 J.
Intl Arb. 417 (2001); Soo, Impact of Insolvency on Hong Kong Arbitration, 3 Intl L. Rev. 103
(2000); Vidal, Arbitration and Insolvency Proceedings: Comments on ICC Awards and Other
Recent Decisions, 20(1) ICC Ct. Bull. 51 (2009); Wagner, When International Insolvency Law
Meets International Arbitration, 3 Disp. Res. Intl 56 (2009); Westbrook, The Coming
Encounter: International Arbitration and Bankruptcy, 67 Minn. L. Rev. 595 (1983).
281) See Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51
(1995) (roughly 5% of awards and proceedings studied at ICC during selected periods
involved issues relating to some form of insolvency).
282) See Kaufmann-Kohler & Lvy, Insolvency and International Arbitration, in H. Peter, N.
Jeandin & J. Kilborn (eds.), The Challenges of Insolvency Law Reform in the 21st Century 257,
262-63 (2006); Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11
Arb. Intl 51, 65 (1995) (quoting from unpublished award: only those issues that have a
direct connection with the insolvency proceedings, that is the issues that arise out of the
application of rules particular to those proceedings are nonarbitrable); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration 143 (1989) (an arbitrator
cannot officially declare someone bankrupt).
283) Latvian Civil Procedure Law, Art. 487(8) (disputes regarding the rights and obligations of
persons that have been declared insolvent before the making of the award by the arbitral
tribunal are not arbitrable). Compare Polish Bankruptcy Law, Arts. 142, 147 (An
arbitration agreement concluded by the bankrupt shall lose its force from the date of the
declaration of bankruptcy and pending proceedings shall be subject to discontinuance.).
See also Syska (Elektrim SA) v. Vivendi Universal SA [2009] EWCA Civ 677 (English Ct. App.)
(considering Polish Bankruptcy Law); Judgment of 31 May 2009, 28 ASA Bull. 104 (Swiss
Federal Tribunal) (2010).
284) See5.06[C][11].
285) See Netherlands Bankruptcy Act, Art. 122; Lazic, Arbitration and Insolvency Proceedings:
Claims of Ordinary Bankruptcy Creditors, 3.3 E.J.C.L., at 4.3.2.2.1 (1999), available at
www.ejcl.org ([T]he wording of Art. 122 [of Netherlands Bankruptcy Act] seems to imply
that an arbitration agreement concluded prior to the bankruptcy may not be successfully
invoked by or against the trustee (or another party contesting the claim).).
51
286) See, e.g., Award in ICC Case No. 12421, 20 ICC Ct. Bull. 88 (2009) (pursuant to Italian
Bankruptcy Law, Art. 52, all monetary claims against insolvent company must be brought
exclusively in Bankruptcy Court). For claims that do not seek a declaration that the
insolvent party owes a debt, the arbitration clause remains valid. See, e.g.,Judgment of 13
February 1991, Adda Officine Elettromeccaniche e Meccaniche v. Alsthom Atlantique SA, XXI
Y.B. Comm. Arb. 580, 6 (Lodi Tribunale) (1996). In addition, Italian Bankruptcy Law
provides that the trustee may terminate any contract of the bankrupt party that has not
been fully performed; if he does so, arbitral proceedings which are already pending
cannot be continued. Italian Bankruptcy Law, Art. 83bis.
287) See Portuguese Bankruptcy Law, Art. 87 (Without prejudice to provisions contained in
applicable international treaties, the efficacy of arbitral agreements relating to disputes
that may potentially affect the value of the insolvency estate and to which the insolvent
is party shall be suspended.). As discussed below, such legislation will not necessarily be
given effect in foreign-seated arbitrations (or judicial proceedings in a foreign arbitral
seat). SeeJudgment of 16 October 2012, 31 ASA Bull. 354 (Swiss Federal Tribunal) (2013)
(Portuguese Law on Insolvency, Art. 87, did not result in incapacity of insolvent entity to
be party to Swiss-seated arbitration).
288) See, e.g., French Bankruptcy Law, Art. 47 (all proceedings, including arbitration, stayed by
commencement of French bankruptcy proceeding); Austrian Insolvency Act, 7 (arbitral
proceedings stayed by commencement of insolvency proceedings).
289) See, e.g.,Judgment of 16 October 2012, 31 ASA Bull. 354 (Swiss Federal Tribunal) (2013)
(where law of place of incorporation of company does not deprive it of legal capacity in
insolvency proceedings, company may participate in arbitral proceedings seated in
Switzerland; restrictions (other than those relating to companys capacity) that law of its
place of incorporation may impose on such arbitral proceedings are irrelevant); Judgment
of 8 December 2009, DFT 136 III 107 (Swiss Federal Tribunal); Judgment of 9 April 1991, DFT
117 II 94 (Swiss Federal Tribunal) (dicta); Judgment of 9 July 1986, 5 ASA Bull. 203 (Valais Ct.
App.) (1987); Judgment of 8 October 1981, 1 ASA Bull. 27 (Jura Ct.) (1983). Contra Judgment of
26 October 1907, DFT 33 II 648, 653 et seq. (Swiss Federal Tribunal) (arbitration clause
nullified by declaration of bankruptcy).
290) See, e.g.,Judgment of 6 May 2009, Jean X. v. Intl Co. for Commercial Exchanges (Income),
XXXV Y.B. Comm. Arb. 353 (2010) (French Cour de cassation civ. 1e) (legal proceedings
against insolvent party should be stayed until claimant has filed its claim with liquidator;
thereafter, proceedings should be limited to validation and quantification of claim);
Judgment of 5 February 1991, Socit Almira Films v. Pierrel, 1991 Rev. arb. 625 (French Cour
de cassation civ. 1e), Note, Idot (The principles of the halting of individual claims by
creditors, of the exclusion of the debtor and of the interpretation of actions in the case of
bankruptcy are a matter of both internal and international public policy.); Judgment of 8
March 1988, Socit Thinet v. Labrely, 1989 Rev. arb. 473 (French Cour de cassation civ. 1e);
Judgment of 12 January 1993, Rpublique de Cte dIvorie v. Norbert Beyrard, 1994 Rev. arb.
685 (Paris Cour dappel) (ICC arbitral tribunal seated in Paris may proceed with
arbitration notwithstanding bankruptcy of party in home jurisdiction). See alsoRosell &
Prager, International Arbitration and Bankruptcy: United States, France and the ICC, 18 J.
Intl Arb. 417, 422 (2001) (It is widely recognized under French jurisprudence and doctrine
that principles of comity and equality of creditors require that all proceedings, including
arbitrations, be stayed by virtue of the commencement of a French bankruptcy
proceeding. However, pursuant to Article 48 of the French Bankruptcy Law, proceedings
are only stayed until a creditor has filed a declaration of its claim. Thereafter, the
proceedings may continue, and, in practice, proceedings, including international
arbitrations, can often be resumed quite quickly. However, the object of the arbitration is
generally considered to be transformed. Article 48 of the French Bankruptcy Law
provides, in pertinent part, that the continuation of the proceedings leads only to the
validation of debts and the quantifying of their amount.Therefore, although the arbitral
tribunal may still decide the case, it is generally considered that the purpose of the
arbitral award in these circumstances should be solely to liquidate the amount of the
claim, rather than order its payment.).
52
291) See, e.g.,Judgment of 20 November 2003, 2004 ZInsO 88 (German Bundesgerichtshof) (It is
generally accepted that the insolvency trustee is bound by an arbitration agreement
concluded by the debtor [prior to the commencement of insolvency proceedings].);
Judgment of 28 February 1957, 24 BGHZ 15, 18 (German Bundesgerichtshof) (The trustee in
bankruptcy is boundby an arbitration agreement concluded by the common debtor.);
Judgment of 9 July 1932, RGZ 137, 109, 111 (German Reichsgericht) (The legal validity [of an
arbitration agreement] is not destroyed by the commencement of insolvency
proceedings, it rather is extended to the trustee in bankruptcy. The Insolvency Act
assumes that the trustee in bankruptcy is generally bound by the legal situation as it
exists when the [insolvency] proceedings are commenced.); Judgment of 25 September
1998, 11 Sch 01/98 (Oberlandesgericht Dresden). See also Hanefeld, Chapter 7 (Germany),
in F.-B. Weigand (ed.), Practitioners Handbook on International Arbitration 500-01 (2009)
(The German courts have always affirmed the binding effect [of an arbitration agreement
upon the trustee in bankruptcy]. The trustee in bankruptcy is regarded in analogy to a
successor of the debtor. It is well-established that the successor is bound by arbitration
agreements which his predecessor concluded. As a result, the insolvency of a party leaves
the arbitration agreement intact.); K.-H. Schwab & G. Walter, Schiedsgerichtsbarkeit 16-
49 (7th ed. 2005) ([The arbitration proceedings] are not affected by insolvency.).
Under German law, if a party becomes unable to fund its share of the arbitration, it is
entitled to terminate the arbitration agreement; however, its counter-party has the right
(but not the duty), before termination may be effected, to pay all the costs of the
arbitration. Judgment of 12 November 1987, 1988 NJW 1215 (German Bundesgerichtshof).
292) Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51,
56-58 (1995) (describing various cases of mutually-agreed consent to stay arbitration
pending insolvency proceedings).
293) This appears to be the case in France. SeeJudgment of 2 June 2004, Socit Gaussin v.
Socit Alstom Power Turbomachs., 2004 Rev. arb. 593 (French Cour de cassation com.)
([T]he public policy principle of stay of individual proceedings by creditors precludes
referral of creditors claims to arbitral tribunal where such claims arose prior to judgment
initiating insolvency proceedings.); Judgment of 4 February 1992, Socit Saret v. SBBM,
1992 Rev. arb. 663 (French Cour de cassation com.); Judgment of 5 February 1991, Socit
Almira Films v. Pierrel, 1991 Rev. arb. 625 (French Cour de cassation civ. 1e) ([T]he
principles of stay of individual proceedings by creditors, of dispossession of the debtor,
and of interruption of the case in the event of bankruptcy are matters of both domestic
and international public policy: they apply even where the arbitration, while being held
in France, is not subject to French law.); Judgment of 7 April 2011, 2011 Rev. arb. 747 (Paris
Cour dappel).
294) See Judgment of 29 December 1967, DFT 93 III 84, 89 (Swiss Federal Tribunal), discussed in
Kaufmann-Kohler & Lvy, Insolvency and International Arbitration, in H. Peter, N. Jeandin
& J. Kilborn (eds.), The Challenges of Insolvency Law Reform in the 21st Century 257, 270
(2006).
295) See Spanish Insolvency Act, Art. 52(1) (The commencement of an insolvency proceeding,
by its own, does not affect the mediation agreements or arbitration agreements entered
into by the insolvent. When a court understands that such agreements could undermine
the insolvency proceeding, they can order the suspension of their effects without
prejudice of the established international treaties.).
296) See English Insolvency Act, 1986, 349A(3) (trustee may affirm arbitration agreement;
failing affirmance, bankruptcy court has discretion to decide whether to refer matter to
arbitration under agreement); Burn & Grubb, Insolvency and Arbitration in English Law,
2005 Intl Arb. L. Rev. 124, 126-27 (discussing procedure).
297) Larsen Oil & Gas Pte Ltd v. Petroprod Ltd, [2011] SGCA 21, 46, 50 (Singapore Ct. App.)
([T]he insolvency regimes objective of facilitating claims by a companys creditors
against the company and its pre-insolvency management overrides the freedom of the
companys pre-insolvency management to choose the forum where such disputes are to
be heard. The courts should treat disputes arising from the operation of the statutory
provisions of the insolvency regime per se as nonarbitrable even if the parties expressly
included them within the scope of the arbitration agreement.).
298) Larsen Oil & Gas Pte Ltd v. Petroprod Ltd, [2011] SGCA 21, 51 (Singapore Ct. App.).
299) 11 U.S.C. 362(a).
53
300) See, e.g., In re Eber, 687 F.3d 1123, 1130 n.6 (9th Cir. 2012); Whiting-Turner Contracting Co. v.
Elec. Mach. Enters., Inc., 479 F.3d 791, 796 (11th Cir. 2007) (In general, bankruptcy courts do
not have the discretion to decline to enforce an arbitration agreement relating to a non-
core proceeding.However, even if a proceeding is determined to be a core proceeding,
the bankruptcy court must still analyze whether enforcing a valid arbitration agreement
would inherently conflict with the underlying purposes of the bankruptcy code.); MBNA
Am. Bank, NA v. Hill, 436 F.3d 104 (2d Cir. 2006) (reversing bankruptcy court and
remanding with directions to stay proceedings in favor of arbitration of core claim); In re
Mor-Ben Ins. Mkts Corp., 73 B.R. 644 (9th Cir. B.A.P. 1987); In re Morgan, 28 B.R. 3 (9th Cir.
1983); Hart Ski Mfg Co. v. Maschinenfabrik Hennecke, 711 F.2d 845 (8th Cir. 1983);
Fotochrome, Inc. v. Copal Co., 517 F.2d 512 (2d Cir. 1975); In re Salander-OReilly Galleries,
LLC, 475 B.R. 9, 26 (S.D.N.Y. 2012); In re SW BACH & Co., 425 B.R. 78, 90-92 (Bankr. S.D.N.Y.
2010); Cibro Petroleum Prods., Inc. v. City of Albany, 270 B.R. 108, 126 (S.D.N.Y. 2001)
(reversing bankruptcy courts denial of motion to compel arbitration of core matter
because arbitration of dispute would not jeopardize an underlying purpose of the
Bankruptcy Code). Contra Vesta Fire Ins. Corp. v. New Cap Reins. Corp., 2000 U.S. Dist.
LEXIS 1257 (S.D.N.Y.) (staying arbitration of claims against bankrupt); Bigelow v. Green Tree
Fin. Serv. Corp., 2000 WL 33596476 (E.D. Cal.) (compelling arbitration as court perceived no
adverse effects on purposes of Bankruptcy Code from compelling arbitration); In re
Beckemeyer, 206 B.R. 466 (Bankr. W.D. Tenn. 1997) (staying adversary proceeding before
Bankruptcy Court, based on parties arbitration agreement, after concluding that debtor
would suffer little prejudice from being required to participate); In re R.M. Cordova Intl,
Inc., 77 B.R. 441 (Bankr. D.N.J. 1987) (same).
301) See, e.g., In re Eber, 687 F.3d 1123, 1130 n.6 (9th Cir. 2012) ([G]enerally, bankruptcy judges
do not have discretion to refuse to compel arbitration of non-core matters because they
are generally only tangentially related to a bankruptcy case.); MBNA Am. Bank, NA v. Hill,
436 F.3d 104, 108 (2d Cir. 2006) (in resolving conflicts between Bankruptcy Code and FAA,
courts distinguish between claims over which bankruptcy judges have discretion to
refuse arbitration and those that they must send directly to arbitration. Bankruptcy
courts generally do not have discretion to refuse to compel arbitration of non-core
bankruptcy matters, or matters that are simply related to bankruptcy cases);
Crysen/Montenay Energy Co. v. Shell Oil Co., 226 F.3d 160, 166 (2d Cir. 2000) (The
unmistakable implication is that bankruptcy courts generally do not have discretion to
decline to stay non-core proceedings in favor of arbitration, and they certainly have
authority to grant such a stay.) (emphasis in original); Hays & Co. v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 885 F.2d 1149 (3d Cir. 1989); In re Salander-OReilly Galleries, LLC, 475
B.R. 9, 26 (S.D.N.Y. 2012) (As to non-core proceedings, bankruptcy courts usually do not
have the discretion to refuse to compel arbitration, as the strong national policy favoring
the enforcement of arbitration agreements, generally trumps the lesser interest of
bankruptcy courts in adjudicating non-core proceedings that could otherwise be
arbitrated.); In re Barneys Inc., 206 B.R. 336 (S.D.N.Y. 1997); In re United States Lines, Inc.,
199 B.R. 465 (S.D.N.Y. 1996); In re Spectrum Info. Tech., Inc., 183 B.R. 360 (Bankr. E.D.N.Y.
1995); In re Hupp Indus., Inc., 157 B.R. 360, 362 (N.D. Ohio 1993) ([S]ubmission ofnoncore
matters to arbitration presents no conflict with the Bankruptcy Code).
302) Societe Nationale Algerienne Pour La Recherche v. Distrigas Corp., 80 B.R. 606, 614 (D. Mass.
1987).
303) See, e.g., In re Gandy, 299 F.3d 489, 498-99 (5th Cir. 2002) (where dispute intimately
implicates a central purpose of the Bankruptcy Code and claims appear to represent
very nearly the entirety of Debtors bankruptcy estate, dividing case such that some
claims be sent to arbitration would be of disservice to the parties and defeat the
purposes of the Bankruptcy Code.); Ins. Co. of N. Am. v. NGC Settlement Trust & Asbestos
Claims Mgt Corp., 118 F.3d 1056, 1069 (5th Cir. 1997) ([W]here the cause of action at issue is
not derivative of the pre-petition legal or equitable rights possessed by the debtor but
rather is derived entirely from the federal rights conferred by the Bankruptcy Code, a
bankruptcy court retains significant discretion to assess whether arbitration would be
consistent with the purpose of the Code, including the goal of centralized resolution of
purely bankruptcy issues, the need to protect creditors and reorganizing debtors from
piecemeal litigation, and the undisputed power of a bankruptcy court to enforce its own
orders.); In re SW BACH & Co.,425 B.R. 78, 90-92 (Bankr. S.D.N.Y. 2010) (distinguishing
between core claims which were procedural garden variety pre-petition contract
disputes dubbed core because of how the dispute arises or gets resolved and
substantive claims that are not based on the parties pre-petition relationship, and
involve rights created under the Bankruptcy Code are core for substantive reasons, and
are usually not arbitrable); Braniff Airways, Inc. v. United Air Lines, Inc., 33 B.R. 33 (Bankr.
N.D. Tex. 1983); Coar v. Brown, 29 B.R. 806 (Bankr. N.D. Ill. 1983).
304) In re United States Lines, Inc., 197 F.3d 631 (2d Cir. 1999).
305) In re United States Lines,197 F.3d 631, 640 (2d Cir. 1999). See also Harwood, Bankruptcy
Arbitration and the Unwilling Debtor, 48 Disp. Res. J. 28 (1993); Kurt, Comment: An
Unstoppable Mandate and An Immovable Policy: The Arbitration Act and the Bankruptcy
Code Collide, 43 UCLA L. Rev. 999 (1996); Rosell & Prager, International Arbitration and
Bankruptcy: United States, France and the ICC, 18 J. Intl Arb. 417 (2001); Ware, ADR Meets
Bankruptcy: Cross-Purposes or Cross-Pollination? Bankruptcy Laws Treatment of Creditors
Jury-Trial and Arbitration Rights, 17 Am. Bankr. Inst. L. Rev. 479 (2009).
306) See In re United States Lines, Inc., 197 F.3d 631, 640 (2d Cir. 1999) (quoting Ins. Co. of N. Am.
v. NGC Settlement Trust & Asbestos Claims Mgt Corp., 118 F.3d 1056, 1067 (5th Cir. 1997)).
54
307) See, e.g., MBNA Am. Bank, NA v. Hill, 436 F.3d 104, 108 (2d Cir. 2006) (court may deny
motion to compel arbitration only when there is a severe conflict between FAA and
Bankruptcy Code); AmeriCorp, Inc. v. Hamm, 2012 WL 1392927, at *3-4 (M.D. Ala.) ([T]he
party opposing arbitration[must] meet its burden of showing that arbitration of the core
proceeding inherently conflicts with the Bankruptcy Code.); In re Garrido Jimenez, 455 B.R.
51, 71 (D.P.R. 2011) ([W]here a conflict exists between the Bankruptcy Code and the FAA, a
bankruptcy court retains discretion to decide whether and when to compel arbitration if
the at-issue proceeding is core.); In re Rarities Group, Inc., 434 B.R. 1 (D. Mass. 2010) (For
both core and non-core claims, then, a bankruptcy court must still analyze whether
enforcing a valid arbitration agreement would inherently conflict with the underlying
purposes of the Bankruptcy Code.); In re Bethlehem Steel Corp., 390 B.R. 784, 794 (Bankr.
S.D.N.Y. 2008) (preferential transfer claims brought under 11 U.S.C 547 are clearly core
proceedings; In core proceedings, a further determination is needed to show that
arbitrating the dispute would severely conflict with relevant provisions of the Bankruptcy
Code. If a severe conflict is found, then the court can properly conclude that, with
respect to the particular Code provision involved, Congress intended to override the
Arbitration Acts general policy favoring enforcement of arbitration agreements.).
308) In re Bethlehem Steel Corp., 390 B.R. 784, 794 (Bankr. S.D.N.Y. 2008). See also In re JSC BTA
Bank, 434 B.R. 334, 340 (Bankr. S.D.N.Y. 2010) (denying debtors motion to stay foreign
arbitral proceedings having no connection to the United States; [Chapter 15] stays
actions against a foreign debtor within the United States and applies in other countries
only to the extent that such actions affect property of the debtor that is within the
territorial jurisdiction of the United States.The automatic stay does not afford broad
anti-suit injunctive relief to the debtor entity outside the territorial jurisdiction of the
United States upon entry of an order of recognition in a chapter 15 case.[A] broadly
expansive interpretationwould improperly centralize global control of dispute
resolution within an ancillary case in the United States that is meant to support, not
supplant, a main proceeding in a foreign jurisdiction.); In re Nu-Kote Holding, Inc., 257
B.R. 855, 863 (Bankr. M.D. Tenn. 2001) (considering whether arbitration provision was
international as factor in compelling arbitration).
309) See11 U.S.C. 365(a). Rejection of an executory contract gives rise to potential breach of
contract claims. See Stewart Foods, Inc. v. Broecker, 64 F.3d 141, 144 (4th Cir. 1995) (The
rejection of an executory contract constitutes a breach of the contract, and a partys
damages resulting from that rejection are treated as a pre-petition claim and receive the
priority provided to general unsecured creditors.). See also11 U.S.C. 365(g)(1).
310) See, e.g., In re Fleming Cos., 2007 WL 788921, at *3 (D. Del.) (holding that an arbitration
clause in a rejected contract survives the rejection); Societe Nationale Algerienne Pour La
Recherche v. Distrigas Corp., 80 B.R. 606, 609 (D. Mass. 1987) (where rejection of executory
contract is itself a breach of that contract, arbitration clause may be considered
separable and survives rejection of contract in which it appears).
311) Megafoods Stores, Inc. v. Flagstaff Realty Assocs., 60 F.3d 1031, 1034 (3d Cir. 1995). Accord
Cinicola v. Scharffenberger, 248 F.3d 110, 119 n.8 (3d Cir. 2001).
312) See Hays & Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149, 1153-55 (3d Cir.
1989) (trustee is bound by arbitration clause contained in nonexecutory contract when
standing in shoes of debtor; claims which derive not from any claims debtor would have
had but rather from powers established by Bankruptcy Code are not subject to
arbitration); Cohen v. Ernst & Young LLP, 372 B.R. 530, 540 (Bankr. S.D. Ga. 2007) ([A]s the
party asserting these causes of action derived from the Debtors, the Trustee stands in the
shoes of the Debtors and is subject to the same defenses that could have been asserted
against the Debtors had they brought the causes of action, including exposure to the
arbitration clauses.).
313) Syska & Elektrim SA v. Vivendi Universal SA [2009] EWCA Civ 677 (English Ct. App.).
314) Polish Bankruptcy Law, Arts. 142, 147. See5.06[C][11].
315) See Syska & Elektrim SA v. Vivendi SA [2009] EWCA Civ 677 (English Ct. App.).
316) See Syska & Elektrim SA v. Vivendi SA [2009] EWCA Civ 677 (English Ct. App.).
317) SeeJudgment of 31 March 2009, Vivendi SA v. Deutsche Telekom AG, 28 ASA Bull. 104 (Swiss
Federal Tribunal) (2010) (confirming award of arbitral tribunal holding that bankruptcy of
Polish company deprived company of capacity to arbitrate, under Article 142 of Polish
Bankruptcy Law, and that Polish law of capacity applied in arbitration seated in
Switzerland). See also Landolt, Switzerland: Supreme Court Should Recalibrate Its Review
Following Bankruptcy Case Decision, Global Arb. Rev. (23 October 2009); Naegeli, The
Impact of Bankruptcy on A Pending Arbitral Proceeding: Comments on A Recent Decision of
the Swiss Federal Supreme Court, 14(2) Arb. News 57, 58 (2009).
318) Judgment of 31 March 2009, Vivendi SA v. Deutsche Telekom AG, 28 ASA Bull. 104, 108 (Swiss
Federal Tribunal) (2010). In contrast to the English decision, cited above, the EU
Insolvency Regulation was not applicable in the Swiss proceedings, leaving the choice of
law governing capacity to Swiss law, which was held to provide for application of the
personal law of the Polish company (Polish law). Ibid.
55
319) In contrast to the English Court of Appeal, the arbitral tribunal refused to interpret the EU
Insolvency Regulation to require application of the law of the arbitral seat to issues of
capacity. See Award in ICC Case No. 12421, 20(1) ICC Ct. Bull. 88, 89 (2009) (We have
misgivings about the meaning and effect of Article 15 of the Insolvency Regulation. In the
first place, it is not clear that an arbitration is a lawsuit pending: the phrase might only
refer to court proceedings which are pending.).
In any event, as noted above, the Swiss arbitral tribunal and Swiss Federal Tribunal
concluded that the EU Insolvency Regulation was inapplicable in a Swiss-seated
arbitration.
320) See Kaufmann-Kohler, Lvy & Sacco, The Survival of the Arbitration Agreement and
Arbitration Proceeding in Cases of Cross Border Insolvency: An Analysis From the Swiss
Perspective, 2010 Paris J. Intl Arb. 371, 383 (disagreeing with Swiss Federal Tribunals
characterization of Polish Bankruptcy Law as addressing subjective capacity and
instead concluding that it points to issues of substantive validity of the arbitration
agreement and the conduct of the arbitration proceedings).
321) Karrer, Views on the Decision by the Swiss Supreme Court of March 31, 2009, Vivendi. v.
Deutsche Telekom ., 28 ASA Bull. 111, 111 (2010).
322) Judgment of 16 October 2012, 31 ASA Bull. 354, 362-63 (Swiss Federal Tribunal) (2013) (The
Vivendi judgment must rather be seen in the specific context of Polish law and the legal
writing developed thereunder, as expressed in the legal opinions of Polish law professors.
It may neither be generalized nor extend the observations made there as to Polish law to
other legal orders.). See alsoNaegeli, The Capacity of A Bankrupt Party to Be or Remain A
Party to International Arbitral Proceedings: A Landmark Decision of the Swiss Federal
Supreme Court, 31 ASA Bull. 372, 380 (2013).
323) Judgment of 16 October 2012, 31 ASA Bull. 354, 366 (Swiss Federal Tribunal) (2013). See
alsoNaegeli, The Capacity of A Bankrupt Party to Be or Remain A Party to International
Arbitral Proceedings: A Landmark Decision of the Swiss Federal Supreme Court, 31 ASA Bull.
372, 379 (2013).
324) Judgment of 16 October 2012, 31 ASA Bull. 354, 366 (Swiss Federal Tribunal) (2013).
325) Judgment of 16 October 2012, 31 ASA Bull. 354, 366 (Swiss Federal Tribunal) (2013)
(Portuguese Law on Insolvency, Art. 87, did not result in incapacity of insolvent entity to
be party to Swiss-seated arbitration). The Swiss Federal Tribunals subsequent decision
did not address many of the choice of law arguments raised in its decision involving
Polands insolvency legislation which had characterized that legislation as involving
issues of capacity. See6.04[F][4].
326) See, e.g., In re JSC BTA Bank, 434 B.R. 334 (Bankr. S.D.N.Y. 2010) ([automatic stay provision]
stays actions against a foreign debtor within the United States and applies in other
countries only to the extent that such actions affect property of the debtor that is within
the territorial jurisdiction of the United States.The automatic stay does not afford
broad anti-suit injunctive relief to the debtor entity outside the territorial jurisdiction of
the United States upon entry of an order of recognition in a chapter 15 case.[A] broadly
expansive interpretationwould improperly centralize global control of dispute
resolution within an ancillary case in the United States that is meant to support, not
supplant, a main proceeding in a foreign jurisdiction.). See also In re Atlas Shipping A/S,
404 B.R. 726 (Bankr. S.D.N.Y. 2009) (party argued that the automatic stay applicable in
this Chapter 15 case extends only to debtors property in the U.S. and not to the London
arbitrations but court did not reach issue (or stay London arbitration)).
327) In re Ashapura Minechem Ltd, 480 B.R. 129 (Bankr. S.D.N.Y 2012) (staying recognition of
foreign award under U.S. automatic stay provision against debtor in bankruptcy
proceedings in India); In re Nortel Networks Corp., 445 B.R. 370 (Bankr. D. Del. 2011) (same).
328) The ICC (and most other arbitral institutions) will continue to administer arbitrations that
are conducted against allegedly insolvent parties, notwithstanding arguments that
insolvency terminates or discharges the arbitration agreement. See Mantilla-Serrano,
International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51, 53-54 (1995); Vidal,
Arbitration and Insolvency Proceedings: Comments on ICC Awards and Other Recent
Decisions, 20(1) ICC Ct. Bull. 51 (2009); Fry, Extracts From ICC Arbitral Awards: Arbitration and
Insolvency Proceedings, 20(1) ICC Ct. Bull. 71 (2009).
56
329) See, e.g.,Interim Award in ICC Case No. 7337, XXIVa Y.B. Comm. Arb. 149, 154 (1999) ([T]he
bankruptcy estate is bound by the agreement to arbitrate in the exclusive distributorship
contract.Consequently, he has jurisdiction to try claimants claims against [the
bankruptcy estate], although any award on the merits in favour of claimant would be
binding on the bankruptcy estate only as the basis for claimants dividend as a creditor
in the bankruptcy.); Award in ICC Case No. 6192, excerpted in Mantilla-Serrano,
International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51, 65 (1995) (rejecting
argument that trustee for bankrupt company could not assert claim in arbitration); Award
in ICC Case No. 5877, excerpted in Mantilla-Serrano, International Arbitration and
Insolvency Proceedings, 11 Arb. Intl 51, 67 (1995) (rejecting argument that claimant could
not pursue arbitration against insolvent company, and could instead proceed only
against its insolvency trustees); Award in ICC Case No. 4415, 111 J.D.I. (Clunet) 952 (1984)
(tribunal proceeds with arbitration notwithstanding respondent being declared bankrupt
and stricken from company register in home jurisdiction); Award in ICC Case No. 2139, 102
J.D.I. (Clunet) 929 (1975) (same). See also W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration 5.07 (3d ed. 2000) (it is not certain that an
international arbitrator would be bound by domestic laws or decisions requiring the
discontinuation of arbitral proceedings involving a bankrupt company).
330) See, e.g., Award in ICC Case No. 7563, 121 J.D.I. (Clunet) 1054 (1994) (international public
policy would preclude enforcement of award against an insolvent party for duration of
bankruptcy proceedings); Award in ICC Case No. 7205, 122 J.D.I. (Clunet) 1031 (1995); Partial
Award in ICC Case No. 6697, 1992 Rev. arb. 135, 141 ([T]he fact that one of the parties is
subject to bankruptcy proceedings is not in itself sufficient to render a dispute
nonarbitrable per se. The only disputes which are excluded are those which have a
direct link with the bankruptcy proceedings, namely those disputes arising from the
application of rules specific to those proceedings.); Award in ICC Case No. 6057, 120 J.D.I.
(Clunet) 1016 (1993) (bankruptcy proceedings in France do not affect pending arbitral
proceedings in Syria; tribunal relied on Syrian law, as applicable law, which does not
recognize French bankruptcy proceedings). Contra Award in ICC Case No. 9163, 2003 Rev.
arb. 227, 230 ([T]he insolvency law of the country where the insolvency proceedings take
place has all the characteristics of a mandatory rule of law to which the arbitral tribunal
must have regard, by reason of this laws close links with the dispute and the legitimate
interests that it purports to safeguard. The place of the arbitration and the laws
applicable to the merit or the arbitral procedure matter little.).
331) Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Intl 51, 57
(1995). The same author rejects the applicability of lis pendens principle in arbitral
proceedings. Id. at 61. See also27.03.
332) See, e.g., Award of 2003 in ICC Case No. 11876, 20 ICC Ct. Bull. 85 (2009) (In light of the
above mentioned French doctrine and case law, we consider that the commencement of
liquidation proceedings in relation to the Respondent [a French company] cannot
deprive us, the Arbitral Tribunal [seated in England], of jurisdiction); Interim Award in ICC
Case No. 7337, XXIVa Y.B. Comm. Arb. 149, 153 (1999) (with regard to bankrupt Swedish
company: Although an arbitration may be pursued against the debtor, the bankruptcy
estate is the proper law to all post-bankruptcy legal proceedings as it has assumed, by
universal succession, all rights and obligations of the debtor.); Award in ICC Case No. 6057,
120 J.D.I. (Clunet) 1016 (1993) (regardless of French law, arbitral tribunal, sitting in
Damascus and applying Syrian law, considers that its missionis not to be affected by a
Courts decision rendered subsequently in France which, without more, is not intended to
produce effects outside France), quoted in Mantilla-Serrano, International Arbitration
and Insolvency Proceedings, 11 Arb. Intl 51, 58 (1995); Award in ICC Case No. 4415, 111 J.D.I.
(Clunet) 952 (1984); Award in ICC Case No. 2139, 102 J.D.I. (Clunet) 929 (1975); Award in ICC
Case No. 1350, 102 J.D.I. (Clunet) 931 (1975).
333) See5.03[B].
334) Judgment of 16 October 2012, 31 ASA Bull. 354, 366 (Swiss Federal Tribunal) (2013).
See6.04[F][4].
335) See4.05[C][5].
336) See6.04[F][3].
337) See6.04[F][3].
338) For a more detailed discussion of this choice-of-law analysis, see4.05[B].
339) See6.02[G].
57
340) For commentary, seeAubert, Larbitrage en droit du travail, 18 ASA Bull. 2 (2000); Bingham,
Emerging Due Process Concerns in Employment Arbitration: A Look at Actual Cases, 47 Lab.
L.J. 113 (1996); Bingham, Employment Arbitration: The Repeat Player Effect, 1 Empl. Rts. &
Employ. Poly J. 189 (1997); Carbonneau, Liberal Rules of Arbitrability and the Autonomy of
Labor Arbitration in the United States, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability:
International & Comparative Perspectives 143 (2009); Castellane, Arbitration in Employment
Relationships in France, 26 J. Intl Arb. 293 (2009); Cole, Incentives and Arbitration: The Case
Against Enforcement of Executory Arbitration Agreements Between Employers and
Employees, 64 U.M.K.C.L. Rev. 449 (1996); Courtois-Champenois, LArbitrage des litiges en
droit du travail: la redcouverte dune institution franaise en disgrce, 2003 Rev. arb.
349; Craver, The Use of Non-Judicial Procedures to Resolve Employment Discrimination
Claims, 11 Kan. J.L. & Pub. Poly 141 (2001); Estreicher, Predispute Agreements to Arbitrate
Statutory Employment Claims, 72 N.Y.U. L. Rev. 1352 (1997); Johnson & Wildhaber,
Arbitrating Labor Disputes in Switzerland, 27 J. Intl Arb. 631 (2010); Kirry, Arbitrability:
Current Trends in Europe, 12 Arb. Intl 373 (1996); Nickson, Closing U.S. Court to Foreign
Seamen: The Judicial Excision of the FAA Seamens Arbitration Exemption From the New York
Convention Act, 41 Tex. Intl L.J. 103 (2006); Rogers, The Arrival of the Have-Nots in
International Arbitration, 8 Nev. L.J. 341 (2007); Sternlight, Is the U.S. out on A Limb?
Comparing the U.S. Approach to Mandatory Consumer and Employment Arbitration to That
of the Rest of the World, 56 U. Miami L. Rev. 831 (2002); St. Antoine, Mandatory Arbitration
of Employee Discrimination Claims: Unmitigated Evil or Blessing in Disguise?, 15 T.M. Cooley
L. Rev. 1 (1998).
341) SeeBelgian Judicial Code, Art. 1676(5).
342) SeeItalian Code of Civil Procedure, Art. 806; Judgment of 30 April 1980, V Y.B. Comm. Arb.
342 (Genoa Pretore) (1980).
343) See U.K. Employment Rights Act, 1996, 203(1)(b); Clyde & Co. LLP v. Bates van Winkelhof
[2011] EWHC 668 (Comm) (English High Ct.) (claims under Employment Rights Act, 1996 are
nonarbitrable).
344) French courts have consistently held employment disputes nonarbitrable on the basis of
Article L1411-4 of the French Employment Code. Article L1411-4 provides that Conseil des
prudhommes [i.e., type of court specialized in employment disputes] has exclusive
jurisdiction, regardless of the amount claimed, to rule on the disputes arising out of the
performance or termination of employment contracts; any agreement to the contrary is
without effect. See, e.g.,Judgment of 30 November 2011, Conseil v. Serant, 2012 Rev. arb.
433 (French Cour de cassation soc.); Judgment of 28 June 2005, Socit Taiphoon Ltd v.
Bobinet, 2005 Rev. arb. 799 (French Cour de cassation soc.) (dispute involving international
employment contract is nonarbitrable, regardless of law applicable to employment
contract); Judgment of 9 October 2001, SA Kis France v. Lopez-Alberdi, 2002 Rev. arb. 347
(French Cour de cassation soc.) (same); Judgment of 16 February 1999, Socit Chateau Tour
Saint Christophe v. Asthom, and Judgment of 4 May 1999, Picquet v. Socit Sacinter, 1999
Rev. arb. 290 (French Cour de cassation soc.) (dispute involving international employment
agreement is nonarbitrable; arbitration agreement is not null and void, but cannot be
enforced against employee); Judgment of 12 February 1985, 1986 Rev. arb. 47 (French Cour
de cassation soc.); Judgment of 10 January 2012, Serant v. Socit Deloitte Conseil, 2012
Rev. arb. 337 (Paris Cour dappel).
One lower court decision held that an arbitration agreement in an international
employment agreement is valid and enforceable. SeeJudgment of 13 September 1993, XX
Y.B. Comm. Arb. 656 (Grenoble Cour dappel) (1995) (arbitration agreement included in an
international individual employment agreement is valid).
345) See, e.g., Japanese Arbitration Law, Supplementary Provisions, Art. 4 (for the time being,
agreements to arbitrate certain individual labor-related disputes shall be null and
void); Libyan Code of Civil Procedure, Art. 740; Judgment of 18 March 2010, Xerox
Comercio e Indstria LTDA v. Mario de Castro Guimaraes Neto, Case No. TST-RR-79500-
61.2006.5.05.0028 (Brazilian Tribunal Superior do Trabalho) (although collective labor
disputes are arbitrable, individual labor disputes (involving claims for rescission of a
labor contract) are nonarbitrable).
346) Judgment of 30 November 2011, Socit Deloitte Conseil v. Serant, 2012 Rev. arb. 333, 337
(French Cour de cassation soc.).
347) See United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593 (U.S. S.Ct. 1960); T.
Bornstein, A. Gosline & M. Greenbaum, Labor and Employment Arbitration1.04 (2007);
Corada, The Arbitral Imperative in Labor and Employment Law, 47 Cath. U. L. Rev. 919 (1998);
Nolan & Abrams, American Labor Arbitration: The Early Years, 35 Fla. L. Rev. 373 (1983);
Nolan & Abrams, American Labor Arbitration: The Maturing Years, 35 Fla. L. Rev. 557 (1983).
348) See generally T. Bornstein, A. Gosline & M. Greenbaum, Labor and Employment
Arbitration1.01, 45.01 (2007); Carbonneau, Liberal Rules of Arbitrability and the Autonomy
of Labor Arbitration in the United States, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability:
International & Comparative Perspectives 143 (2009); Corrada, The Arbitral Imperative in
Labor and Employment Law, 47 Cath. U. L. Rev. 919 (1998); Malin & Ladenson, Privatizing
Justice: A Jurisprudential Perspective on Labor and Employment Arbitration From the
Steelworkers Trilogy to Gilmer, 44 Hastings L.J. 1187 (1993).
349) U.S. FAA, 9 U.S.C. 1.
58
350) See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 107 (U.S. S.Ct. 2001) (As for the residual
exclusion of any other class of workers engaged in foreign or interstate commerce, it
would be rational for Congress to ensure that workers in general would be covered by the
FAA, while reserving for itself more specific legislation for transportation workers.). It is
unclear what scope of commerce Congress envisaged in 1925, and in particular whether 1
excluded only a limited class of specialized transportation workers or, instead, most
employees engaged in what was considered at the time to be the full reach of interstate
commerce (e.g., transportation).
351) Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (U.S. S.Ct. 1991).
352) See, e.g., Woods v. Texas Aggregates, LLC, 459 F.3d 600, 603-04 (5th Cir. 2006) (ERISA claims
arbitrable); Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005);
Chappel v. Lab. Corp. of Am., 232 F.3d 719, 726 (9th Cir. 2000) (ERISA claims arbitrable);
Kramer v. Smith Barney, 80 F.3d 1080 (5th Cir. 1996) (same); Pritzker v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 7 F.3d 1110, 1117 (3d Cir. 1993) (Th[e] duty to enforce arbitration
agreements is not diminished when a party bound by an agreement raises a claim
founded upon statutory rights[, such as ERISA]); Bird v. Shearson Lehman/Am. Express,
Inc., 926 F.2d 116 (2d Cir. 1991); The Peruvian Connection, Ltd v. Christian, 977 F.Supp. 1107,
1113-14 (D. Kan. 1997) (Having conceded that an arbitrator is competent to decide
sophisticated breach of fiduciary duty claims under ERISA, [defendant] cannot be heard
to assert this case is somehow beyond the competence of an arbitrator.); Bevere v.
Oppenheimer, 862 F.Supp. 1243 (D.N.J. 1994); Fox v. Merrill Lynch & Co., 453 F.Supp. 561
(S.D.N.Y. 1978).
353) See, e.g., 14 Penn Plaza LLC v. Pyett,556 U.S. 247, 258-60, 274 (U.S. S.Ct. 2009) ([A]
collective-bargaining agreement that clearly and unmistakably requires union members
to arbitrate [ADEA] claims is enforceable as a matter of federal law.); Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (U.S. S.Ct. 1991); Patterson v. Tenet Healthcare,
Inc.,113 F.3d 832, 837 (8th Cir. 1997) (Title VII claims, like ADEA claims, are subject to
individual consensual agreements to arbitrate.).
354) See, e.g., Albertsons, Inc. v. United Food & Commercial Workers Union,157 F.3d 758, 762 (9th
Cir. 1998) ([U]nder the FAA the employees individual agreement to arbitrate all disputes
was enforceable with respect to disputes over claims covered by the FLSA.); Kuehner v.
Dickinson & Co.,84 F.3d 316, 319-20 (9th Cir. 1996); Bell v. S.E. Pa. Transp. Auth., 2012 WL
4479272, at *6 (E.D. Pa.) ([An] FLSA claim required arbitration when the plaintiff alleged
certain activities were considered work under the FLSA.); DeLock v. Securitas Sec. Servs.
USA, Inc., 883 F.Supp.2d 784, 788 (E.D. Ark. 2012) (Nothing in the FLSAs text or legislative
history indicates that Congress excepted those claims from the FAAs mandate to enforce
arbitration agreements according to their terms); DAntuono v. Serv. Road Corp., 789
F.Supp.2d 308, 319 (D. Conn. 2011).
355) See Estibeiro v. Carnival Corp., 2012 WL 4718978, at *5 (S.D. Fla.) (Plaintiff maintains that a
2008 amendment to the Jones Act, which deleted the statutes venue provision, renders
the Bermuda forum selection clause unlawful and contrary to public policy and, as such,
Jones Act claim is inarbitrable. This argument has been expressly rejected by the
Eleventh Circuit.); Lazarus v. Princess Cruise Lines, Ltd, 2011 WL 6070294, at *2 (S.D. Fla.).
356) See, e.g., Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2d Cir. 2011) (Title VII claims
arbitrable); Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1364 (11th Cir. 2005) (same);
EEOC v. Luce, Forward, Hamilton & Scripps, 345 F.3d 742, 744 (9th Cir. 2003) (same);
Patterson v. Tenet Healthcare, Inc.,113 F.3d 832, 837 (8th Cir. 1997) (Title VII claims, like
ADEA claims, are subject to individual consensual agreements to arbitrate); DeGroff v.
Mascotech Forming Techs. Fort Waynes, Inc., 179 F.Supp.2d 896, 907 (N.D. Ind. 2001)
(Agreements that require arbitration of statutory claims, including discrimination and
retaliation claims under Title VII, are generally enforceable under the FAA.); Alford v.
Dean Witter Reynolds, Inc., 939 F.2d 229 (5th Cir. 1991) (Title VII claims arbitrable); Johnson
v. Hubbard Broadcasting, Inc., 940 F.Supp. 1447 (D. Minn. 1996) (same); Cherry v. Wertheim
Schroder, 868 F.Supp. 830 (D.S.C. 1994) (same).
357) See, e.g., Perry v. Thomas, 482 U.S. 483 (U.S. S.Ct. 1987) (claim for wages under state law,
forbidding arbitration of such claims, arbitrable under FAA); Patterson v. Tenet
Healthcare, Inc., 1996 WL 33674550 (W.D. Mo.) (employees claims under Title VII and
Missouri Human Rights Act subject to arbitration); Fletcher v. Kidder, Peabody & Co., 601
N.Y.S.2d 686 (N.Y. 1993) (state employment discrimination claims held arbitrable);
Rembert v. Ryans Family Steak Houses, Inc., 596 N.W.2d 208, 230 (Mich. App. 1999) (state
statutory employment discrimination claims held arbitrable so long as arbitral process is
fair and employee waives no substantive statutory rights or remedies).
358) See2.03[B][2]; 6.04[G][2]; Thomas v. Carnival Corp., 573 F.3d 1113, 1117 (11th Cir. 2009);
Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1155-59 (9th Cir. 2008); Bautista v. Star
Cruises, 396 F.3d 1289, 1300 (11th Cir. 2005); Francisco v. Stolt Achievement MT, 293 F.3d 270,
274-75 (5th Cir. 2002).
359) See Bautista, 396 F.3d at 1300; Francisco, 293 F.3d at 274-75.
360) Francisco, 293 F.3d at 274. See also Lobo v. Celebrity Cruises, Inc., 488 F.3d 891, 894 (11th Cir.
2007) (dismissing claim brought under Seamens Wage Act and enforcing arbitration
agreement contained in employment agreement because Congress intent when
implementing New York Convention was to promote uniform enforcement of arbitration
agreements, despite the potential presence of parochial policies present in other parts
of the U.S. Code; court noted, to nullify the arbitration provision here would hinder the
purpose of the Convention and subvert congressional intent). The commercial
requirement under the Convention is discussed above. See2.03[B][1]-[2]).
59
361) See, e.g., Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1 (1st Cir. 1999)
(employer did not provide employee with rules explaining what disputes were subject to
arbitration); Cole v. Burns Intl Sec. Servs., 105 F.3d 1465 (D.C. Cir. 1997) (arbitration
agreement, required as condition of employment, cannot validly require former
employee to pay any portion of arbitrators fees); Prudential v. Lai, 42 F.3d 1299 (9th Cir.
1994) (in deciding whether arbitration clause waived claims for civil action over sexual
harassment and discrimination, notice of waiver required); Geiger v. Ryans Family Steak
Houses, Inc., 134 F.Supp.2d 985, 998 (S.D. Ind. 2001) (employment arbitration agreement
consisting of three separate documents, one of which was not given to employee; not
sufficient to apprise employee of rights and obligations regarding arbitration); Prevot v.
Phillips Petroleum Co., 133 F.Supp.2d 937, 940-41 (S.D. Tex. 2001) (English-language
arbitration agreements unconscionable where they were not translated for non-English-
speaking employees and employees were pressured into signing them); Hoffman v. Aaron
Kamhi, Inc., 927 F.Supp. 640 (S.D.N.Y. 1996) (in deciding whether arbitration clause
encompassed employees statutory claims, court required that clause put employee on
notice of waiver of such claims).
362) See, e.g., Semcken v. Genesis Med. Interventional, Inc., 2004 WL 2203561 (N.D. Cal.)
(arbitration clause in negotiated, executed employment agreement fully enforceable);
15.02; 15.03[C].
363) D.R. Horton, Inc., Case No. 12CA25764, 357 NLRB No. 184 (N.L.R.B. 2012), 2012 WL 36274
(agreement waiving employees right to bring class action unlawfully restricts
employees Section 7 right [under National Labor Relations Act] to engage in concerted
action for mutual aid or protection, notwithstanding the [FAA], which generally makes
employment-related arbitration agreements judicially enforceable).
364) Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013) (given the absence of any contrary
congressional command from the FLSA that a right to engage in class actions overrides
the mandate of the FAA in favor of arbitration, we reject Owens invitation to follow the
NLRBs rationale in D.R. Horton and join our fellow circuits that have held that arbitration
agreements containing class waivers are enforceable in claims brought under the FLSA).
365) Arbitration Fairness Act of 2013, H.R. 1844, S. 878, 113th Cong. (2013-2014).
366) Arbitration Fairness Act of 2013, H.R. 1844, S. 878, 402(a), 113th Cong. (2013-2014).
367) See1.04[B][1][e][iii]; 3.03[A][2][b][iii].
368) See German Labor Court Act, 101 (providing, as a statutory exception to arbitrability
pursuant to German ZPO, 1030(3), for detailed system for arbitration regarding collective
wage agreements); Hanefeld, Germany, in F.-B. Weigand (ed.), Practitioners Handbook on
International Arbitration 475, 7 (2d ed. 2009).
Other employment disputes are not arbitrable under German law. See Trittmann &
Hanefeld, 1030 Arbitrability, in K.-H. Bckstiegel, S. Krll & P. Nacimiento (eds.),
Arbitration in Germany: The Model Law in Practice 121 (2007).
369) See Meijer & Lazic, Netherlands, in F.-B. Weigand (ed.), Practitioners Handbook on
International Arbitration 617, 9.54 (2d ed. 2009).
370) SeeJohnson & Wildhaber, Arbitrating Labor Disputes in Switzerland, 27 J. Intl Arb. 631
(2010); Karrer & Straub, Switzerland, in F.-B. Weigand (ed.), Practitioners Handbook on
371) See, e.g., Paquito Lima Buton v. Rainbow Joy Shipping Ltd Inc., [2008] HKCFA 30 (H.K. Ct. Fin.
App.).
372) For commentary, see Alderman, Consumer Arbitration: The Destruction of the Common Law,
2 J. Am. Arb. 1 (2003); Alqudah, Enforceability of Arbitration Clauses in Online Business-to-
Consumer Contracts, 28 J. Intl Arb. 67 (2011); Bates, A Consumers Dream or Pandoras Box:
Is Arbitration A Viable Option for Cross-Border Consumer Disputes?, 27 Ford. Intl L.J. 823
(2004); Drahozal & Friel, Consumer Arbitration in the European Union and the United States,
28 N.C. J. Intl L. & Comm. Reg. 357 (2002); Drahozal & Zyontz, Private Regulation of
Consumer Arbitration, 79 Tenn. L. Rev. 289 (2012); Rogers, The Arrival of the Have-Nots in
International Arbitration, 8 Nev. L.J. 341 (2007); Saumnier, Consumer Arbitration in the
Evolving Canadian Landscape, 113 Penn St. L. Rev. 1203 (2009); Schwartz, Enforcing Small
Print to Protect Big Business: Employee and Consumer Rights Claims in An Age of Compelled
Arbitration, 1997 Wisc. L. Rev. 33; Sternlight, Panacea or Corporate Tool?: Debunking the
Supreme Courts Preference for Binding Arbitration, 74 Wash. U. L.Q. 637 (1996); Stipanowich,
The Arbitration Fairness Index: Using A Public Rating System to Skirt the Legal Logjam and
Promote Fairer and More Effective Arbitration of Employment and Consumer Disputes, 60 U.
Kan. L. Rev. 985 (2012); Ware, Arbitration and Unconscionability After Doctors Associates,
Inc. v. Casarotto, 31 Wake Forest L. Rev. 1001 (1996).
373) See, e.g., Bates, A Consumers Dream or Pandoras Box: Is Arbitration A Viable Option for
Cross-Border Consumer Disputes?, 27 Ford. Intl L.J. 823 (2004); Drahozal & Friel, Consumer
Arbitration in the European Union and the United States, 28 N.C. J. Intl L. & Comm. Reg. 357
(2002); Rogers, The Arrival of the Have-Nots in International Arbitration, 8 Nev. L.J. 341
(2007); Ware, Arbitration and Unconscionability After Doctors Associates, Inc. v. Casarotto,
31 Wake Forest L. Rev. 1001 (1996).
60
374) See Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (U.S. S.Ct. 2000) (mobile home financing
agreement); Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995) (consumer
contract for pest control); Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477
(U.S. S.Ct. 1989) (brokerage agreement); Walton v. Rose Mobile Homes, LLC, 298 F.3d 470,
477 (5th Cir. 2002) (Magnuson-Moss Warranty Act claims arbitrable: consumers can still
vindicate their rights under warranties in an arbitral forum); In re Marcia L. Pate, 198 B.R.
841 (Bankr. S.D. Ga. 1996) (FAA preempts Georgia state statutory bar against arbitration
clauses in consumer transactions); Borowiec v. Gateway 2000, Inc., 808 N.E.2d 957, 967 (Ill.
2004) (Magnuson-Moss Warranty Act does not indicate congressional intent to bar
arbitration of written warranty claims); In re Am. Homestar of Lancaster, Inc., 50 S.W.3d
480 (Tex. 2001) (same).
Most U.S. state laws also give effect to arbitration clauses in consumer contracts. Cole,
Uniform Arbitration: One Size Fits All Does Not Fit, 16 Ohio St. J. Disp. Res. 759, 787 (2001).
375) Marmet Health Care, Inc. v. Brown, 132 S.Ct. 1201 (U.S. S.Ct. 2012).
376) Marmet Health Care, 132 S.Ct. at 1203.
377) Marmet Health Care, 132 S.Ct. at 1203-04 (West Virginias prohibition against predispute
agreements to arbitrate personal-injury or wrongful-death claims against nursing homes
is a categorical rule prohibiting arbitration of a particular type of claim, and that rule is
contrary to the terms and coverage of the FAA.).
378) In re Knepp, 229 B.R. 821, 827 (N.D. Ala. 1999). The same court sua sponte raised the validity
of the arbitration clause in question and held it unconscionable. Ibid.
379) See Carrington, Regulating Dispute Resolution Provisions in Adhesion Contracts, 35 Harv. J.
Legis. 225 (1998); Carrington & Haagen, Contract and Jurisdiction, 1996 Sup. Ct. Rev. 331;
Schwartz, Enforcing Small Print to Protect Big Business: Employee and Consumer Rights
Claims in An Age of Compelled Arbitration, 1997 Wisc. L. Rev. 33; Sternlight, Panacea or
Corporate Tool?: Debunking the Supreme Courts Preference for Binding Arbitration, 74
Wash. U. L.Q. 637 (1996).
380) Baum, Medical Malpractice Arbitration: A Patients Perspective, 61 Wash. U. L.Q. 123, 148
n.198 (1983).
381) See Campbell v. Gen. Dynamics Govt Sys. Corp., 407 F.3d 546, 558-59 (1st Cir. 2005) (email
notification of new arbitration requirement failed to put employee on notice that there
was a new, unilateral contract which required arbitration of disputes, where no reply to
the email was required and typical personnel decisions were communicated in paper);
Specht v. Netscape Commcns Corp., 306 F.3d 17 (2d Cir. 2002) (where reasonable person
would not have had notice of existence of license terms containing arbitration clause
because terms were not immediately visible upon acceptance of offer, arbitration clause
not part of contract); Hudyka v. Sunoco, Inc., 474 F.Supp.2d 712, 717-19 (E.D. Pa. 2007)
(email notification to employee of new arbitration requirement gave insufficient notice
where terms of arbitration agreement were not clearly set forth in email, employer could
not prove that employee received email notification, and employee did not receive
arbitration program booklet containing definite terms); Klocek v. Gateway 2000, Inc., 104
F.Supp.2d 1332 (D. Kan. 2000); Reedy v. Cincinnati Bengals, Inc., 758 N.E.2d 678 (Ohio Ct.
App. 2001) (subsequent document containing arbitration agreement did not constitute
part of contract between parties and dispute was therefore not arbitrable); Brower v.
Gateway 2000, Inc., 246 A.D.2d 246, 254 (N.Y. App. Div. 1998) (ICC clause in domestic U.S.
contract unconscionable).
382) See5.06[C][4], pp. 861-64.
383) See Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 90 (U.S. S.Ct. 2000) (arbitration
agreement may be invalid if it preclude[s] litigantfrom effectively vindicating her
statutory rights in the arbitral forum because of, e.g., costs or waiver of non-waivable
remedies); Dale v. Comcast Corp., 498 F.3d 1216, 1223 (11th Cir. 2007) (class action waiver in
arbitration agreement held unconscionable as it precluded state claims based on federal
statute); Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006) (denial of class action
arbitration of antitrust claims prevented plaintiffs from vindicating statutory rights;
provision held invalid and was severed); Rosenberg v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 170 F.3d 1, 21 (1st Cir. 1999) (Our conclusion that a union waiver of employee
rights to a federal judicial forum for employment discrimination claims must be clear
and unmistakable means that, absent a clear waiver, it is not appropriateto find an
agreement to arbitrate.).
384) Cicle v. Chase Bank USA, 583 F.3d 549, 553-54 (8th Cir. 2009).
Some decisions hold that a contract may be procedurally unconscionable if it is a
standard form contract whose terms the consumer has no opportunity to negotiate. See
Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 893 (9th Cir. 2002) (The [arbitration
agreement] is procedurally unconscionable because it is a contract of adhesion: a
standard-form contract, drafted by the party with superior bargaining power, which
relegates to the other party the option of either adhering to its terms without
modification or rejecting the contract entirely.); Harold Allens Mobile Home Factory
Outlet, Inc. v. Butler, 825 So.2d 779 (Ala. 2002); Ware, Arbitration and Unconscionability
After Doctors Associates, Inc. v. Casarotto, 31 Wake Forest L. Rev. 1001 (1996).
61
385) SeeGeorgia Code Annotated 9-9-2(c)(5) ($25,000); Montana Code Annotated, 27-5-114
($5,000); Texas Civil Practice & Remedies Code Annotated 171.002(a)(2) ($50,000).
In Texas, for a consumer contract over $50,000, an arbitration clause will only be enforced
if signed by each party to the contract and signed by each partys attorney. Texas Civil
Practice & Remedies Code Annotated 171.002(b)(2).
386) See Massachusetts Lemon Law, Massachusetts General Laws Ch. 90, 7N1/2 (providing for
compulsory fast-track arbitration, at consumers request, of consumer claims against
automobile manufacturers, with arbitrators appointed by Secretary of Consumer Affairs;
consumer may accept award or sue de novo in state court).
387) See1.04[B][1][e][iv]; Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (U.S. S.Ct. 1995);
Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477 (U.S. S.Ct. 1989) (brokerage
agreement).
388) See Dodd-Frank Wall Street Reform and Consumer Protection Act, 921 ((o) Authority to
Restrict Mandatory Predispute Arbitration The Commission, by rule, may prohibit, or
impose conditions or limitations on the use of, agreements that require customers or
clients of any broker, dealer, or municipal securities dealer to arbitrate any future
dispute between them arising under the Federal securities laws, the rules and regulations
thereunder, or the rules of a self-regulatory organization if it finds that such prohibition,
imposition of conditions, or limitations are in the public interest and for the protection of
investors.).
389) See Magnuson-Moss Warranty Act, 15 U.S.C. 2301-2312 (allowing warrantors to require
that consumers attempt to resolve claims by alternative dispute resolution mechanisms,
but providing that any decisions be non-binding and that consumer be permitted to
assert claims in court if dissatisfied).
390) Arbitration Fairness Act of 2013, H.R. 1844, S. 878, 113th Cong. (2013-2014). See6.04[G][2].
391) Arbitration Fairness Act of 2013, H.R. 1844, S. 878, 402(a), 113th Cong. (2013-2014).
392) See1.04[B][1][e][iii]; 3.03[A][2][b][iii].
393) See AAA, Consumer Due Process Protocol. Judicial Arbitration and Mediation Services
(JAMS) has adopted a set of Streamlined Arbitration Rules and Procedures, which
apply upon agreement of the parties or if the claim is worth less than $250,000. See JAMS
Streamlined Arbitration Rules and Procedures, available at www.jamsadr.com.
394) For example, the National Arbitration Forum (NAF), a provider of consumer debt
collection arbitration administration services, did not adopt the AAA Protocols. The NAF
was prosecuted by the Attorney General of the State of Minnesota and is no longer
administering consumer arbitrations. See Salzwedel & Wells, National Arbitration Forum
Settlement With Minnesota Attorney General, 1(4) State AG Tracker (2009).
395) The Arbitration Fairness Act would not have amended FAA Chapter 2 of the FAA. See
Arbitration Fairness Act of 2011, H.R. 1873, S. 987, 112th Cong. (2011-2012); Arbitration
Fairness Act of 2009, H.R. 1020, S. 931, 111th Cong. (2009-2010); Arbitration Fairness Act of
2007, H.R. 3010, S. 1782, 110th Cong. (2007-2010).
396) See Board of Governors of the Federal Reserve System, Retail Foreign Exchange
Transactions (Regulation NN),78 Fed. Reg. 21019 (9 April 2013).
397) See Board of Governors of the Federal Reserve System, Retail Foreign Exchange
Transactions (Regulation NN),78 Fed. Reg. 21019 (9 April 2013) (The Department of State
has advised that transactions between the foreign branch or office of a banking
institution and a U.S. customer could be cross-border transactions subject to the New
York and Panama Conventions. These Conventions, implemented in the United States by
chapters 2 and 3 of the Federal Arbitration Act (FAA), create treaty obligations to enforce
international commercial arbitration agreements and to recognize and enforce
international commercial arbitral awards. The Board is amending section 240.16 to
provide that it will not apply to transactions covered by chapters 2 or 3 of the FAA.).
398) See Commission Recommendation on the Principles Applicable to the Bodies Responsible
for Out-of-Court Settlement of Consumer Disputes (98/257/CE), 1998 O.J. (L 115) 31 (access
to courts is a fundamental right that knows no exceptionswhereas out of court
procedures cannot be designed to replace court procedures; whereas therefore, use of
the out of court alternative may not deprive consumers of their right to bring the matter
before the courts unless they expressly agree to do so, in full awareness of the facts and
only after the dispute has materialized).
399) See EU Directive 93/13/EEC.
400) See EU Directive 93/13/EEC, Annex 1(q) (Requiring the consumer to take disputes
exclusively to arbitration not covered by legal provision.).
401) See Office of Fair Trading, Unfair Contract Terms Guidance 17.2 to 17.3 (2001) (United
Kingdom); German ZPO, 1031(5) (Arbitration agreements to which a consumer is a party
must be contained in a document which has been personally signed by the parties. No
agreements other than those referring to the arbitral proceedings may be contained in
such a document; this shall not apply in the case of a notarial certification.); Swedish
Arbitration Act, 6 (Where a dispute between a business enterprise and a consumer
concerns goods, services, or any other products supplied principally for private use, an
arbitration agreement may not be invoked where such was entered into prior to the
dispute.).
402) See Asturcom Telecomunicaciones SL. v. Cristina Rodrguez Nogueira, Case No. C-40/08,
[2009] E.C.R. I-9579 (E.C.J.); Elisa Mara Mostaza Claro v. Centro Mvil Milenium SL, Case No.
C-168/05, [2006] E.C.R. I-10421 (E.C.J.).
62
403) See Asturcom Telecomunicaciones SL v. Cristina Rodrguez Nogueira, Case No. C-40/08
[2009], E.C.R. I-9579 (E.C.J.); Elisa Mara Mostaza Claro v. Centro Mvil Milenium SL, Case No.
C-168/05, [2006] E.C.R. I-10421 (E.C.J.).
404) See Elisa Mara Mostaza Claro, [2006] E.C.R. I-10421 (arbitrators must terminate arbitral
proceedings ex officio under E.U. Unfair Contract Terms Directive even if consumer
appears in proceedings). This would apparently contemplate that challenges to the
validity or enforceability of arbitration agreements would be submitted to the arbitrators
in the first instance. See also Bermann, Navigating EU Law and the Law of International
Arbitration, 28 Arb. Intl 397, 416-17 (2012).
405) Elisa Mara Mostaza Claro v. Centro Mvil Milenium SL, Case No. C-168/05, [2006] E.C.R. I-
10421 (E.C.J.).
406) These prohibitions do not apply to arbitration agreements entered into to resolve an
existing dispute. SeeJudgment of 25 February 2010, Guichard v. AGPM, 2011 Rev. arb. 139
(French Cour de cassation civ. 1e).
Further, French courts held that this prohibition did not apply where the individual not
involved in commercial activities had waived the right to invoke it. SeeJudgment of 21
November 2002, Gromelle v. Institut international des techniques dorganisation, 2004 Rev.
arb. 287 (French Cour de cassation civ. 2e) (participation in arbitration without
reservation is waiver of right to invoke nullity of arbitration agreement in an acte mixte).
407) See, e.g.,Judgment of 12 May 2010, El Assidi v. Socit Nest, 2010 Rev. arb. 391 (French Cour
de cassation civ. 1e); Judgment of 5 January 1999, M. Zanzi v. J. de Coninck, 1999 Rev. arb.
260 (French Cour de cassation civ. 1e); Judgment of 7 December 1994, V 2000 v. Project XJ
220 ITD, 1996 Rev. arb. 245 (Paris Cour dappel).
408) SeeSwedish Arbitration Act, 6 (Where a dispute between a business enterprise and a
consumer concerns goods, services, or any other products supplied principally for private
use, an arbitration agreement may not be invoked where such was entered into prior to
the dispute.The first paragraph shall not apply where the dispute concerns an
agreement between an insurer and a policy-holder concerning insurance based on a
collective agreement or group agreement and handled by representatives of the group.
Nor shall the first paragraph apply where Swedens international obligations provide to
the contrary.).
409) See German ZPO, 1031(5) (Arbitration agreements to which a consumer is a party must
be contained in a document which has been personally signed by the parties. No
agreements other than those referring to the arbitral proceedings may be contained in
such a document; this shall not apply in the case of a notarial certification.); Msch,
Schiedsvereinbarungen mit Verbrauchern, in B. Bachmann et al. (eds.),
Grenzberschreitungen: Beitrge zum Internationalen Verfahrensrecht und zur
Schiedsgerichtsbarkeit; Festschrift fr Peter Schlosser zum 70. Geburtstag 529, 534-35, 539
(2005).
410) See Austrian ZPO, 617 ((2) Arbitration agreements to which a consumer is a party must
be contained in a document signed personally by him. This document must not contain
any agreements other than those relating to the arbitral proceedings. (3) In arbitration
agreements between an entrepreneur and a consumer, the consumer shall, prior to
concluding the arbitration agreement receive written legal advice on the relevant
differences between arbitral and court proceedings.); Riegler, in S. Riegler et al. (eds.),
Arbitration Law of Austria: Practice and Procedure 617, 8-15, 23 (2007). See
alsoJudgment of 22 July 2009, 3 Ob 144/09m (Austrian Oberster Gerichtshof) (although
violations of consumer protection law might constitute a violation of Austrian public
policy in some cases, conclusion of arbitration agreements with consumers are not public
policy violations if they are negotiated separately).
411) See6.04[H][1].
412) See, e.g., Italian Civil Code, Arts. 1341, 1342 (requiring separate signature on arbitration
agreement); Slovenian Arbitration Law, Arts. 45(1), (2) (requiring separate signature on
arbitration agreement; agreement valid only if concluded with respect to dispute that
has already arisen); Mauritius Arbitration Act, Art. 8 (same).
413) English Arbitration Act, 1996, 89-91; U.K. Unfair Terms in Contracts Regulations, Reg. 5, SI
1999 No. 2083. These sections are mandatory rules that apply whatever the law
applicable to the arbitration agreement. English Arbitration Act, 1996, 89(3).
414) See, e.g., Director Gen. of Fair Trading v. First Commercial Bank plc [2002] 1 AC 401 (House of
Lords) (unfairness resulting from lack of good faith in relation to predispute consumer
arbitration clause can be either substantive or procedural); Bryen & Langley Ltd v. Boston
[2005] EWCA Civ 973 (English Ct. App.) (determining whether consumer arbitration
agreement is substantively unfair involves consideration of both fairness of arbitration
provision itself and whether term was imposed on consumer); Heifer Intl Inc. v.
Christiansen [2007] EWHC 3015 (QB) (English High Ct.).
415) New Zealand Arbitration Act, 11. Brazilian legislation is broadly similar. SeeBrazilian
Arbitration Law, Art. 4(2) (In adhesion contracts, the arbitration clause will only be valid
if the adhering party initiates arbitral proceedings or if it expressly agrees to arbitration
by means of an attached written document, or if it signs or initials the corresponding
contractual clause, inserted in boldface type.).
416) See6.04[H][1].
417) See6.04[H][2].
418) Qubec Consumer Protection Act, 11. The Act permits post-dispute agreements to
arbitrate consumer claims. Ibid.
63
419) See British Columbia Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2,
172.
420) See Seidel v. TELUS Commcns Inc., 2011 SCC 15 (Canadian S.Ct.) (actions under British
Columbia Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 are not
arbitrable because clear intention of the legislature is to supplement and multiply the
efforts of the Director under the BPCPA to implement province-wide standards of fair
consumer practices by enlisting the efforts of a whole host of self-appointed private
enforcers; to the extent the arbitration clause purports to take away a right, benefit or
protection conferred by the BPCPA, it will be invalid, and to that extent, [a consumer] will
retain her individual cause of action under the BPCPA in the Supreme Court of British
Columbia).
421) Seidel v. TELUS Commcns Inc., 2011 SCC 15, 40 (Canadian S.Ct.).
422) Seidel v. TELUS Commcns Inc., 2011 SCC 15, 54 (Canadian S.Ct.) (Lebel, J., dissenting) (We
endorse the view that a clear statement of legislative intent is necessary for a court to
conclude that a particular category of disputes cannot be submitted to arbitration. To
hold otherwise would be to revert to the former judicial hostility towards arbitration, and
to the pre- Zodiak view that there is a right to bring an action in the public court system
that cannot be waived.).
423) See Ontario Consumer Protection Act, S.O. 2002, c. 30, 7, 8; Griffin v. Dell Canada Inc.,
[2010] ONCA 29 (Ontario Ct. App.) (applying Ontario Consumer Protection Act to deny
enforcement of arbitration clauses (which included class action waivers) in consumer
contracts). See also Saunier, Consumer Arbitration in the Evolving Canadian Landscape, 113
Penn. St. L. Rev. 1203 (2009).
424) See Japanese Arbitration Law, Supplementary Provisions, Art. 3. As discussed above,
Japanese legislation adopts a similar approach to employee-employer arbitration
agreements. See6.04[G][1].
425) See Alberta Fair Trading Act, 16.
426) See6.04[H][1].
427) See5.06[B][1], p. 1021.
428) See6.04[H][1]-[2]; Board of Governors of the Federal Reserve System, Retail Foreign
Exchange Transactions (Regulation NN),78 Fed. Reg. 21019 (9 April 2013); Swedish
Arbitration Act, 6 (Nor shall the first paragraph apply where Swedens international
obligations provide to the contrary.).
429) It is clear that most national law rules providing for the invalidity of consumer arbitration
agreements are addressed towards concerns about unequal bargaining power and
sophistication of the parties during the contract formation process. That is the reason
that these invalidity rules apply generally to predispute agreements to arbitrate, and not
to post-dispute arbitration agreements.
430) See4.05 (especially 4.05[A][2]). A rule providing for the nonarbitrability of claims
beneath a specified monetary threshold (as in the EU) is arguably a reasonably well-
tailored mechanism for denying effect to arbitration agreements that would make it
uneconomical for consumers to pursue their claims. As discussed below, however, a
preferable approach would be to develop arbitral mechanisms that provide more
efficient and effective ways of resolving consumer claims than national courts.
Nonetheless, given the widespread existence of nonarbitrability rules in the context of
consumer disputes, it is difficult to characterize such rules as idiosyncratic. See6.04[H].
431) See Dam, Class Actions: Efficiency, Compensation, Deterrence and Conflict of Interests, 4 J.
Legal Studies 47 (1975); Matthews & Stewart, Online Arbitration of Cross-Border: Business to
Consumer Disputes, 56 U. Miami L. Rev. 1111 (2002).
432) See Rogers, The Arrival of the Have-Nots in International Arbitration, 8 Nev. L.J. 341 (2007);
Ware, Arbitration and Unconscionability After Doctors Associates, Inc. v. Casarotto, 31
Wake Forest L. Rev. 1001 (1996). In Spain, since 1993, consumers have been permitted to
submit disputes with merchants at no cost to the Juntas Arbitrales de Consumo, a
domestic arbitration body whose role is to supervise consumer arbitrations. See Kirry,
Arbitrability: Current Trends in Europe, 12 Arb. Intl 373 (1996).
433) Matthews & Stewart, Online Arbitration of Cross-Border, Business to Consumer Disputes, 56
U. Miami L. Rev. 1111, 1136 (2002) (As the difficulty inherent in applying domestic laws to
electronic commerce has become more apparent, many consumer groups have changed
sides on the issue and are now in favor of establishing fair procedural standards for
international arbitration.) (citing Bureau of Consumer Protection, Federal Trade
Commission, Consumer Protection in the Global Electronic Marketplace: Looking Ahead
(2000)).
434) See6.04[H][3], p. 1022; Japanese Arbitration Law, Supplementary Provisions, Art. 3.
435) For example, the AAA has enacted a separate set of procedures for consumer-related
disputes between individual consumers and businesses where the business has a
standardized, systematic application of arbitration clauses with customers and the
product is for personal use. See AAA, Consumer Due Process Protocol; AAA, Supplementary
Procedures for Consumer-Related Disputes.
436) See10.08.
437) See, e.g., AAA, Due Process Protocol for Mediation and Arbitration of Statutory Disputes
Arising out of the Employment Relationship; AAA, Due Process Protocol for Mediation and
Arbitration of Consumer Disputes; National Academy of Arbitrators, Guidelines on
Arbitration of Statutory Claims Under Employer-Promulgated Systems.
64
438) Drahozal & Zyontz, Private Regulation of Consumer Arbitration, 79 Tenn. L. Rev. 289 (2012)
(concluding that AAAs enforcement of its Consumer Due Process Protocol is effective).
439) ICC, Guidelines for Arbitrating Small Claims Under the ICC Rules of Arbitration, 14(1) ICC Ct.
Bull. 29 (2003); AAA, Supplementary Procedures for Consumer-Related Disputes (2005).
440) Report of Working Group III (Online Dispute Resolution) on the Work of Its Twenty-Sixth
Session (Vienna, 5-9 November 2012), U.N. Doc. A/CN.9/762, 15 (2012).
441) See1.04[B][2]; 5.01[C][5]. This hostility was particularly pronounced in many communist
and other totalitarian states. See, e.g., Osakwe, A Soviet Perspective on Foreign Sovereign
Immunity: Law and Practice, 23 Va. J. Intl L. 13 (1982); Peoples Republic of China: Aide
Mmoire of the Ministry of Foreign Affairs (2 February 1983), 22 Intl Legal Mat. 81 (1983).
442) See1.04[B][2]; Kassis, The Questionable Validity of Arbitration and Awards Under the Rules
of the International Chamber of Commerce, 6(2) J. Intl Arb. 79 (1989); Sornarajah, The
UNCITRAL Model Law: A Third World Viewpoint, 6(4) J. Intl Arb. 7 (1989).
443) Sornarajah, The UNCITRAL Model Law: A Third World Viewpoint, 6(4) J. Intl Arb. 7, 16 (1989).
444) J. Dellapenna, Suing Foreign Governments and Their Corporations 241-43, 460-63 (2d ed.
2003); Fox, States and the Undertaking to Arbitrate, 37 Intl & Comp. L.Q. 1, 4 (1988);
Kessedjian, Court Decisions on Enforcement of Arbitration Agreements and Awards, 18 J. Intl
Arb. 1 (2001); Meyer-Fabre, Enforcement of Arbitral Awards Against Sovereign States, A New
Milestone: Signing ICC Arbitration Clause Entails Waiver of Immunity From Execution Held
French Court of Cassation in Creighton v. Qatar, 15(9) Mealeys Intl Arb. Rep. 48 (2000);
Moury, Lincidence de la stipulation dune clause compromissoire sur limmunit
dexcution de lEtat tranger, 2001 Dalloz 2140.
445) 28 U.S.C. 1605(a)(1), 1605(a)(6), 1610(c), 1610(d); J. Dellapenna, Suing Foreign States and
Their Corporations 241-43, 460-63 (2d ed. 2003); Turck, French and US Courts Define Limits
of Sovereign Immunity in Execution and Enforcement of Arbitral Awards, 17 Arb. Intl 327
(2001).
446) In the early 1980s, one lower U.S. court held that, even where the Foreign Sovereign
Immunities Act permits enforcement, the act of state doctrine does not allow the
enforcement of an arbitral award concerning claims of expropriation. In Libyan Am. Oil Co.
(LIAMCO) v. Socialist Peoples Libyan Arab Jamahirya, 482 F.Supp. 1176 (D.D.C. 1980),
vacated mem., 684 F.2d 1032 (D.C. Cir. 1981), the district court denied enforcement of an
arbitration award after concluding that the expropriation dispute between the parties
underlying the award was within the scope of the act of state doctrine. The lower court
decision in LIAMCO was plainly wrong. Following submissions from the U.S. Government,
the opinion was vacated. See 684 F.2d 1032 (D.C. Cir. 1981). The FAA was nonetheless
amended to ensure that the error was not repeated. U.S. FAA, 9 U.S.C. 15.
447) See U.S. FAA, 9 U.S.C. 15 (Enforcement of arbitral agreements, confirmation of arbitral
awards, and execution upon judgments based on orders confirming such awards shall not
be refused on the basis of the Act of State Doctrine.).
448) European Convention on State Immunity, Arts. 12(1), 17(1); Blessing, Sovereign Immunity
and Transnational Arbitration, 3 Arb. Intl 28 (1987).
449) See, e.g., U.K. State Immunity Act, 1978, 9(1); French Code of Civil Procedure, Art. 1514;
Bowett, The State Immunity Act 1978, 1978 Cambridge L.J. 37; Mann, The State Immunity Act
1978, 50 Brit. Y.B. Intl L. 43 (1979); Judgment of 6 June 2000, Creighton Ltd v. Gouvernement
de lEtat du Qatar, 2001 Rev. arb. 114 (French Cour de cassation civ. 1e). See also Turck,
French and US Courts Define Limits on Sovereign Immunity in Execution and Enforcement of
Arbitral Awards, 17 Arb. Intl 327, 327-32 (2001).
450) See, e.g., Australian Foreign States Immunities Act, 2010, 17; Singapore State Immunity
Act, 11; South African Foreign States Immunity Act, 10.
451) See1.04[A][6]; C. Schreuer et al., The ICSID Convention: A Commentary Art. 25, 427 (2d ed.
2009).
452) See K.-H. Bckstiegel, Acts of State and Arbitration (1997); Idornigie, The Principle of
Arbitrability in Nigeria Revisited, 21 J. Intl Arb. 279 (2004); Kroeger, Kautz & Acikel, Turkey
Revisited: Developments in Energy Project Arbitration in the Context of Bilateral Investment
Treaties and ICSID, 14(9) Mealeys Intl Arb. Rep. 32 (1999); Reddy & Nagaraj, Arbitrability:
The Indian Perspective, 19 J. Intl Arb. 117 (2002). But see Judgment of 17 July 2001, Etat
Libanais v. Socit FTML, 2001 Rev. arb. 855 (Libyan Conseil dtat) (arbitration clause in
administrative contract held invalid).
453) See T. Schoenbaum, Admiralty and Maritime Law 837-50 (5th ed. 2011).
454) Vimar Seguros y Reaseguros, SA v. M/V Sky Reefer, 515 U.S. 528 (U.S. S.Ct. 1995).
455) See6.04[A], pp. 975-76.
456) See Vimar Seguros, 515 U.S. at 536.
457) Vimar Seguros, 515 U.S. at 541.
458) See, e.g., Ambraco, Inc. v. Bossclip BV, 570 F.3d 233 (5th Cir. 2009) (rejecting claim that
forum selection clause violated public policy because English courts would supposedly
not apply COGSA, pursuant to parties choice-of-law clause); Mitsui & Co. v. Mira M/V, 111
F.3d 33, 36 (5th Cir. 1997) (extending Vimar to forum selection clauses); Am. Home Assur. Co.
v. M/V Hanjin Marseilles, 2004 U.S. Dist. LEXIS 9705, at *8-9 (S.D.N.Y.) (collecting U.S. cases
showing that [s]ince [Vimar], courts have consistently held that forum selection clauses
(including foreign arbitration clauses) in bills of lading are valid under COGSA).
459) See Smallwood v. Allied Van Lines, Inc., 660 F.3d 1115 (9th Cir. 2011) (arbitration clauses are
unenforceable under Carmack Amendment, which affords shippers right to sue in one of
Amendments enumerated judicial districts, unless he or she agrees to arbitrate
elsewhere after dispute arises).
65
460) See Judgment of 30 May 1983, 1983 NJW 2772 (German Bundesgerichtshof) (agreement on
exclusive jurisdiction of foreign court in maritime freight agreement is, pursuant to 662
of German Commercial Code, invalid if it relieves carrier of mandatory liability under
Hague Rules).
461) Dampskibsselskabet Norden AS v. Beach Bldg & Civil Group Pty Ltd, [2012] FCA 696
(Australian Fed. Ct.) (denying recognition of two awards on ground that arbitration clause
was void under Carriage of Goods by Sea Act).
462) For commentary, see Borris, Arbitrability of Corporate Law Disputes in Germany, 2012 Intl
Arb. L. Rev. 161; Caprasse, Objective Arbitrability of Corporate Disputes Belgium and
France, in C. Klaassen et al. (eds.), Onderneming en ADR 79 (2011); Cohen & Staff, The
Arbitration of Trust Disputes, 7 J. Intl Tr. & Corp. Plan. 203 (1999); Herzfeld, Prudent
Anticipation? The Arbitration of Public Company Shareholder Disputes, 24 Arb. Intl 297
(2008); Kraft, German Federal Court of Justice Refines the Criteria for the Admissibility of
Arbitration Clauses, 2010 Intl Arb. L. Rev. 13; Meijer & Guzman, The International
Recognition of An Arbitration Clause in the Articles of Association of A Company, in C.
Klaassen et al. (eds.), Onderneming en ADR 117 (2011); Note, Madrid Update Corporate
Battles: The Amendment of Dispute Resolution Clauses in Company Bylaws, 23(2) Mealeys
Intl Arb. Rep. 21 (2008); Note, Madrid Update: Arbitration Clause in Organizations By-Laws,
23(5) Mealeys Intl Arb. Rep. 26 (2008); Pilar Perales Viscasillas, Arbitrability of (Intra-)
Corporate Disputes, in L. Mistelis & S. Brekoulakis (eds.), Arbitrability: International &
Comparative Perspectives 273 (2009); Quinke, Schiedsklauseln in SPE-Satzungen, 2011
GmbHR R168; Ravanides, Arbitration Clauses in Public Company Charters: An Expansion of
the ADR Elysian Fields or A Descent Into Hades?, 18 Am. Rev. Intl Arb. 371 (2007); Shell,
Arbitration and Corporate Governance, 67 N.C. L. Rev. 517 (1989).
463) See, e.g., In re Burkin, 1 N.Y.2d 570 (N.Y. 1956) (disputes over corporate management and
control are nonjusticiable), superseded by statute, N.Y. Civ. Prac. L. & R. 7501); Long
Park, Inc. v. Trenton-New Brunswick Theatres Co., 297 N.Y. 174 (N.Y. 1948) (agreement to
arbitrate corporate disputes unenforceable because it sterilizes corporate board),
superseded by statute, N.Y. Bus. Corp. Law 620(b); In re Fletcher, 237 N.Y. 440 (N.Y. 1924)
(agreement among shareholders in close corporation to determine transfer price of
shares unenforceable because valuation is not controversy subject to arbitration),
superseded by statute, Act of April 15, 1952, ch. 757, 1952 N.Y. Laws 1632. See also Shell,
Arbitration and Corporate Governance, 67 N.C. L. Rev. 517 (1988-1989).
464) Shell, Arbitration and Corporate Governance, 67 N.C. L. Rev. 517, 525-26 (1988-1989)
(Although arbitration of shareholder claims is a novelty for the public corporation, this
dispute resolution system is well established in the context of another class of corporate
entities, that of the privately held or close corporation.).
465) JSC Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676, at *4
(S.D.N.Y.). See Stewart v. Mitchell Madison Group, LLC, 1999 U.S. Dist. LEXIS 3711 (S.D.N.Y.);
James & Jackson LLC v. Willie Gary LLC,906 A.2d 76 (Del. 2006); In re Peter Herrero, 562
N.Y.S.2d 665 (N.Y. App. Div. 1990) (corporate dissolution dispute arbitrable); Banores v.
Riviere, 1999 Conn. Super. LEXIS 1985 (Conn. Sup. Ct.) (statutory claims arbitrable in
shareholder dispute); Faustini v. Faustini Food Servs., Inc., 1996 Conn. Super. LEXIS 2949
(Conn. Sup. Ct.) (corporate dissolution dispute arbitrable). See also Shell, Arbitration and
Corporate Governance, 67 N.C. L. Rev. 517 (1989).
Early U.S. decisions had generally held corporate governance disputes nonarbitrable on
various grounds. See, e.g., In re Burkin, 136 N.E.2d 862 (N.Y. 1956) (dispute over removal of
director nonarbitrable); In re Ades, 177 N.Y.S.2d 582, 584 (N.Y. Sup. 1958) (same); In re
Scuderi, 39 N.Y.S.2d 422, 423 (N.Y. Sup. 1943) (validity of directors election nonarbitrable);
Kessler, Arbitration of Intra-Corporate Disputes Under New York Laws, 19 Arb. J. 1 (1964).
466) Judgment of 6 April 2009, 2009 NJW 1962 (German Bundesgerichtshof) (disputes concerning
validity of shareholders resolution in limited liability company are arbitrable, provided
arbitral procedures provide for participation of all shareholders and company and
preclude contradictory awards); Judgment of 29 March 1996, 1996 NJW 1753 (German
Bundesgerichtshof) (suggesting that corporate disputes are arbitrable, provided arbitral
procedures provide for participation of all shareholders and company and preclude
contradictory awards). See also Borris, Arbitrability of Corporate Law Disputes in Germany,
2012 Intl Arb. L. Rev. 161 (main source of debate in this area has been the issue of
synchronising the mandatory inter omnes effect of the arbitral award with the right of all
parties bound by the arbitral award to participate in the arbitral proceedings); Borris,
Die Schiedsfhigkeit gesellschaftsrechtlicher Streitigkeiten in der Aktiengesellschaft, 2010
NZG 481; Geimer, in R. Zller (ed.), Zivilprozessordnung 1030, 9 (29th ed. 2012).
467) Geimer, in R. Zller (ed.), Zivilprozessordnung 1030, 1, 8 et seq. (30th ed. 2013).
468) 2009 DIS Supplementary Rules for Corporate Law Disputes. See Borris, Die Ergnzenden
Regeln fr gesellschaftsrechtliche Streitigkeiten der DIS, 2009 SchiedsVZ 299.
469) See, e.g., Fulham Football Club (1987) Ltd v. Richards [2011] EWCA Civ 855, 28 (English Ct.
App.) (claim for unfair prejudice or breach of fiduciary duty by director arbitrable;
there is no express provision in either the [English Arbitration Act, 1996 or the English
Companies Act, 2006] which excludes arbitration as a possible means of determining
disputes of this kind); Re Vocam Europe Ltd [1998] BCC 396 (Ch) (English High Ct.).
470) See, e.g., Judgment of 10 July 2007, 4 Ob 108/07v (Austrian Oberster Gerichtshof); Judgment
of 19 October 1989, 7 Ob 681/89 (Austrian Oberster Gerichtshof).
66
471) See, e.g., Judgment of 8 December 2009, DFT 136 III 107 (Swiss Federal Tribunal) (implicitly
assuming arbitrability of derivative suits).
472) See, e.g., Investissement Charlevoix Inc. v. Gestion Pierre Gingras Inc., [2010] QCCA 1229
(Qubec Ct. App.); 1640895 Ontario, Inc. v. Harvey, [2009] ONCA 76 (Ontario Ct. App.); Acier
Leroux Inc. v. Tremblay, [2004] CanLII 28564 (Qubec Ct. App.).
473) See, e.g., Judgment of 19 April 2012, No. 6Ob42/12p (Austrian Oberster Gerichtshof) (claim
regarding resolution of limited liability companys annual general meeting arbitrable).
Compare Judgment of 26 November 2010, Silver Lining Fin. v. Perstorp Waspik, 2011 NJ 55
(Dutch Hoge Raad) (claims involving validity of shareholder resolutions capable of
settlement by arbitration); Judgment of 21 January 2011, Case No. T 2375-08 (Svea Ct. App.)
(validity of decision to remove member of board of company (and related consultancy
agreement) is arbitrable); Colombian Code of Commerce, Art. 194; Ukrainian Commercial
Procedural Code, Art. 6(1) (corporate disputes nonarbitrable); Bernardini, The Problem of
Arbitrability in General, in E. Gaillard & D. di Pietro (eds.), Enforcement of Arbitration
Agreements and International Arbitral Awards: The New York Convention in Practice 503
(2008) (Italy). See also Powell Duffryn plc v. Wolfgang Petereit, Case No. C-0214.89, [1992]
E.C.R. I-1745 (E.C.J.) (jurisdiction clause in companys articles of association binding on
shareholders).
474) See, e.g., Austrian ZPO, 581(2); Finnish Arbitration Law, 4.
475) Report of UNCITRAL on the Work of Its Thirty-Ninth Session, Supp. No. 17, U.N. Doc. A/61/17,
183 (2006); Report of Working Group II (Arbitration) on the Work of Its Forty-Fourth
Session, U.N. Doc. A/CN.9/592 (2006), 89-95.
476) See Ravanides, Arbitration Clauses in Public Company Charters: An Expansion of the ADR
Elysian Fields or A Descent Into Hades?, 18 Am. Rev. Intl Arb. 371 (2007); Sockol, A Natural
Evolution: Compulsory Arbitration of Shareholder Derivative Suits in Publicly Traded
Corporations, 77 Tul. L. Rev. 1095, 1111 (2003); 10.07.
477) Ravanides, Arbitration Clauses in Public Company Charters: An Expansion of the ADR Elysian
Fields or A Descent Into Hades?, 18 Am. Rev. Intl Arb. 371, 389-407 (2007).
478) Some major corporations nonetheless include such provisions in their articles of
association. See, e.g., Articles of Association of Royal Dutch Shell plc (adopted on 17 May
2005), as amended by written resolution on 18 July 2005, Arts. 152-54, reprinted in Herzfeld,
Prudent Anticipation? The Arbitration of Public Company Shareholder Disputes, 24 Arb. Intl
297, 326-29 (2008).
479) See In re Jacobovitz Will, 295 N.Y.S.2d 527, 529 (Nassau County Surety Ct. 1968); Merediths
Estate, 266 N.W. 351 (Mich. 1936); Schoneberger v. Oelze, 96 P.3d 1078, 1082-83 (Ariz. Ct. App.
2004). See also Strong, Arbitration of Trust Disputes: Two Bodies of Law Collide, 45 Vand. J.
Transnatl L. 1157 (2012).
480) See, e.g., Rachal v. Reitz, 2013 WL 1859249 (Tex. S.Ct.) (upholding validity of arbitration
clause in trust); Strong, Arbitration of Trust Disputes: Two Bodies of Law Collide, 45 Vand. J.
Transnatl L. 1157 (2012); Strong, Mandatory Arbitration of Internal Trust Disputes: Improving
Arbitrability and Enforceability Through Proper Procedural Choices, 28 Arb. Intl 591 (2012).
481) See Puerto Rico Dealers Act, 10 L.P.R.A. 278; Arkansas Code Annotated 16-108-201.
482) See6.03[C][4]; California Corporations Code 31512 (rendering void any provision which
purported to bind a franchisee to waive compliance with any provision of Californian
franchise law).
483) The U.S. Supreme Court has held that these types of provisions conflict with 2 of the FAA
and hence violate the Supremacy Clause. See Southland Corp. v. Keating, 465 U.S. 1 (U.S.
S.Ct. 1984).
484) See6.03[C][4], p. 968; Motor Vehicle Franchise Contract Arbitration Fairness Act, 15 U.S.C.
1226.
485) See Belgian Law of 27 July 1961, as amended by Belgian Law of 13 April 1971 (titled Law on
the Unilateral Rescission of Exclusive Sales Concessions Concluded for an Unlimited
Period of Time), Art. 4 (The aggrieved grantee, at the time of the termination of a
concession of sale taking effect in whole or in part in the Belgian territory, can in any case
bring an action against the grantor in Belgium, either before the judge of his own
domicile, or before the judge of the domicile or the seat of the grantor. If the case is
brought before a Belgian court, it will exclusively apply Belgian law.); 6.03[C][2].
486) Judgment of 18 June 1976, Audi NSU v. Adelin Petit SA, 1979 Journal des Tribunaux 626
(Belgian Cour de cassation).
487) See Judgment of 16 November 2006, Case No. C.02.0445.F (Belgian Cour de cassation)
(dispute governed by Belgian law regarding distributors nonarbitrable).
488) See Judgment of 16 November 2006, Case No. C.02.0445.F, 9 (Belgian Cour de cassation) (A
consistent interpretation of the New York Convention, in particular of Articles II and V(2)
(a) requires determining whether the dispute is arbitrable under the lex fori, whenever
the question is raised.).
489) Judgment of 16 November 2006, Case No. C.02.0445.F, 9 (Belgian Cour de cassation). See
also Judgment of 22 December 1988, Gutbrod Werke GmbH v. Usinorp de Saint-Hubert et
Saint Hubert Gardening, 1988 Journal des Tribunaux 458 (Belgian Cour de cassation) (an
arbitration clause could only be valid if it specified that the arbitrators are obligated to
apply Belgian law [and] that, if that is not the case, the clause could not stand);
Arbitration Agreements, 3 World Arb. & Med. Rev. 91, 94-99 (2009).
490) See6.02[G].
491) See2.01[A][1][a].
492) SeeFinal Award in ICC Case No. 6379, XVII Y.B. Comm. Arb. 212 (1992).
67
493) SeeFinal Award in ICC Case No. 6379, XVII Y.B. Comm. Arb. 212, 215-16 (1992).
CompareKeutgen & Dal, National Report for Belgium (2007), in J. Paulsson (ed.),
International Handbook on Commercial Arbitration 1, 9 (1984 & Update 2007) (Arbitration
is also possible regarding exclusive distributorship contracts. However, one must note
that when a dispute concerns a unilateral termination of an exclusive distributorship
contract of unspecified (indeterminate) duration in Belgium, the Law of 27 July 1961
allocates important indemnities to the concessionaire. For such disputes, one can have
recourse to arbitration when the dispute arises and even when it has not yet arisen and
one can also conclude an arbitration agreement but in such cases the arbitrator will have
to apply Belgian law.).
494) See4.05[C][5].
495) See4.05[C][5].
496) Judgment of 17 May 2006, IHR 2006, 166, 167-68 (Oberlandesgericht Mnchen). See also
Arbitration Agreements, 3 World Arb. & Med. Rev. 91, 99-103 (2009).
497) See1.04[A][1][c][i]. See also Quinke, Schiedsvereinbarungen und Eingriffsnormen, 2007
SchiedsVZ 246; Rau, Comment: Mandatory Law and the Enforceability of Arbitration
Agreements, 3 World Arb. & Med. Rev. 133 (2009); Ruehl, Extending Ingmar to Jurisdiction
and Arbitration Clauses: The End of Party Autonomy in Contracts With Commercial Agents?,
2007 Eur. Rev. Private L. 891.
498) See, e.g., Westacre Inv. Inc. v. Jugoimport-Spdr Holding Co. [1999] 3 All ER 864 (English Ct.
App.) (award enforced despite alleged illegality of consulting fee); Judgment of 8 July
2010, La Socit Doga v. HTC Sweden AB, Case No. 09-67013 (French Cour de cassation) (tort
claims under mandatory French law held arbitrable); Agrawest & AWI v. BMA, [2005] PESCTD
36 (P.E.I. S.Ct.).
499) New York Convention, Art. II(1). See9.02[F][1].
500) See, e.g., Radhkrishnan v. M/S Maestro Engrs, Civil Appeal No. 7019 of 2009, 6 (Indian
S.Ct. 2009) (apparently holding claims nonarbitrable because they involved complex
allegations of fraud and serious misconduct, requiring that dispute must be tried in
court and the Arbitrator could not be competent to deal with such matters which
involved an elaborate production of evidence to establish the claims relating to fraud
and criminal misappropriation); The Hub Power Co. v. Pakistan WAPDA, 16 Arb. Intl 439
(Pakistan S.Ct. 2000) (2000); 6.03[C][5].
501) See4.05[C][5].
502) See, e.g., Kreindler, The Arbitration Clause: The Validity of An Arbitration Clause in Matters
of Product Liability, in The Arbitration Agreement: Its Multifold Critical Aspects 123 (ASA
Spec. Series No. 8 1994); Thornburg, Contracting With Tortfeasors: Mandatory Arbitration
Clauses and Personal Injury Claims, 67 Law & Contemp. Prob. 253, 256-60 (2004) (discussing
cases). See also Ling Wo Leong v. Kaiser Found. Hosp., 788 P.2d 164, 169 (Haw. 1990)
(enforcing clause in health care plan calling for binding arbitration of [a]ny claims for
damages for personal injuryarising out of the rendition of or failure to render services
under this contract); Doyle v. Giuliucci, 401 P.2d 1, 3 (Cal. 1965) (The arbitration provision
in such contracts [for medical care] is a reasonable restriction, for it does no more than
specify a forum for the settlement of disputes.).
503) Compare Safety Natl Cas. Corp. v. Certain Underwriters at Lloyds, London, 587 F.3d 714 (5th
Cir. 2009) (relying on Convention to uphold arbitration agreement despite state insurance
regulation invaliding agreement); Bennett v. Liberty Natl Fire Ins. Co., 968 F.2d 969 (9th Cir.
1992); Life of Am. Ins. Co. v. Aetna Life Ins. Co., 744 F.2d 409 (5th Cir. 1984); Antillean Marine
Shipping Corp. v. Through Transp. Mut. Ins., Ltd, 2002 U.S. Dist. LEXIS 26363, at *7-8 (S.D.
Fla.) (rejecting nonarbitrability objection under McCarran-Ferguson Act, which does not
apply to international insurance contracts made under the Convention); Philipps v.
Lincoln Natl Health & Cas. Ins. Co., 774 F.Supp. 1297 (D. Colo. 1991); Triton Lines, Inc. v.
Steamship Mut. Underwriting Assn, 707 F.Supp. 277 (S.D. Tex. 1989) (McCarran-Ferguson Act
does not create exception to FAA permitting state nonarbitrability statute to render
agreement to arbitrate unenforceable); Assuranceforeningen Skulld (Gjensidig) v. Apollo
Ship Chandlers, Inc., 847 So.2d 991, 993 (Fla. Dist. Ct. App. 2003) (rejecting nonarbitrability
objections under McCarran-Ferguson Act because the parties dispute involves foreign
commerce) with Stephens v. Am. Intl Ins. Co., 66 F.3d 41, 45-46 (2d Cir. 1995) (FAA does not
preempt antiarbitration provisions under McCarran-Ferguson Act); Washburn v. Corcoran,
643 F.Supp. 554 (S.D.N.Y. 1986) (relying on McCarran-Ferguson Act and New York statute to
hold claims by state insurance liquidators nonarbitrable); Corcoran v. Ardra Ins. Co., 566
N.Y.S.2d 575 (N.Y. 1990) (New York Convention and FAA do not require arbitration of claims
by state insurance liquidator).
504) See, e.g., BWV Invs. Ltd v. Saskferco Prods. Inc., [1994] CanLII 4557 (Saskatchewan Ct. App.);
Automatic Sys. Inc. v. Bracknell Corp., [1994] CanLII 1871 (Ontario Ct. App.).
505) See Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Tech., Inc., 369 F.3d
645 (2d Cir. 2004) (compelling arbitration of claims for moral damages under Brazilian
import/export regulations).
506) See, e.g., Orcutt v. Kettering Radiologists, Inc., 199 F.Supp.2d 746 (S.D. Ohio 2002) (False
Claims Act whistle-blower claims arbitrable). Contra Nguyen v. City of Cleveland, 121
F.Supp.2d 643 (N.D. Ohio 2000) (False Claims Act claims nonarbitrable).
68
507) See, e.g., Archangelskoe Geologodobychnoe Predpriyatie v. Archangel Diamond Corp., Case
No. T-2277-04 (Svea Ct. App.) (dispute over Russian real property rights arbitrable
notwithstanding Russian Subsoil Law); Judgment of 26 May 2011, Russian Gazette No. 5498
(Russian Const. Ct.) (upholding arbitrability of real estate disputes (including disputes
over transfers and security interests)). Compare Judgment of 22 February 2008, Alloys
Trading Ltd v. AvangardTorgRos LLC, Case No. A56-44076/2007 (Russian N.W. Dist. Fed. Arb.
Ct.) (disputes over real estate in Russia held nonarbitrable).
508) See, e.g., Jean Estate v. Wires Jolley LLP [2009] ONCA 339 (Ontario Ct. App.) (fact that
Solicitors Act grants Superior Court jurisdiction does not mean that disputes arising
between solicitor and client cannot be submitted to arbitration).
509) See, e.g., Karrer & Straub, Switzerland, in F.-B.Weigand, Practitioners Handbook on
International Commercial Arbitration 825, 12.33 (2d ed. 2009); Lazi & Meijer,
Netherlands, in F.-B. Weigand, Practitioners Handbook on International Commercial
Arbitration 617, 9.54 (2d ed. 2009).
510) See, e.g.,Final Awards in ICC Case Nos. 6515 and 6516, XXIVa Y.B. Comm. Arb. 80, 84 (1999)
(dispute over contractual allocation of Greek taxes did not implicate Greek sovereignty
and was arbitrable); Park, Income Tax Treaty Arbitration, 10 George Mason L. Rev. 803
(2001). Compare Carbonneau & Sheldrick, Tax Liability and Inarbitrability in International
Commercial Arbitration, 1 J. Transnatl L. & Poly 23, 38 (1992).
511) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723-24 (9th Cir. 1999) (Lanham Act);
Doctors Assocs., Inc. v. Distajo, 107 F.3d 126, 133 (2d Cir. 1997) (Lanham Act); Saari v. Smith
Barney, Harris Upham & Co., 968 F.2d 877 (9th Cir. 1992) (Employee Polygraph Protection
Act claim is arbitrable).
512) See15 U.S.C. 1226(a)(2) (motor vehicle franchise contract disputes nonarbitrable except
where post-dispute agreement to arbitrate exists).
513) See, e.g., Judgment of 9 March 2006, N.K. Belavia v. O.J.S.C. Aviakompaniya Sibir, Case No.
04-786/2006 (Russian W. Siberian Dist. Fed. Arb. Ct.) (disputes over title to aircraft held
nonarbitrable).
514) See, e.g., Union of India v. Tantia Constr. Private Ltd, [2011] INSC 410, 27 (Indian S.Ct.)
(holding at least some constitutional claims nonarbitrable in domestic dispute: the
constitutional powers vested in the High Court or the Supreme Court cannot be fettered
by any alternative remedy available to the authorities).
515) SeeFrench Civil Code, Art. 2060 (divorce and separation claims nonarbitrable); Quinke,
Objective Arbitrability: Article V(2)(a), in R. Wolff (ed.), New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards: Commentary 396 (2012) (divorce
and child custody issues not arbitrable in Germany; matrimonial claims arbitrable).
Compare A.I. v. M.T. [2013] EWHC 100, 33 (Fam) (English High Ct.) (court granted parties
request to refer all issues (including those relating to financial settlement, status of
parties marriage and care and parenting of children) to arbitration by Jewish religious
court (New York Beth Din): it was an integral aspect of the process of arbitration that it
took place under the auspices of the Beth Din. It was a profound belief held by both
parties, and their respective extended families, that the marriage which had been
solemnised in accordance with the tenets of their faith should be dissolved within those
tenets).
516) AB Bofors-Uva CAV Ltd v. AB Skandia Transp. [1982] 1 Lloyds Rep. 410 (Comm.) (English
High Ct.) (refusing to recognize arbitration agreement that was contrary to Convention on
Contracts for the International Carriage of Goods by Road; interpreting Convention as
requiring express provision that the tribunal shall apply the Convention, which
arbitration agreement failed to do).
517) Subway Sys. Australia Pty Ltd v. Ireland, [2013] VSC 550, 63 (Victoria S.Ct.) ([T]he effect of
s 94 of the [Retail Leases Act 2003] is to render a dispute to which s 94applies, a matter
which may not be the subject of arbitration in Victoria.).
518) See, e.g., Repub. of Serbia v. Imagesat Intl BV [2009] EWHC 2853 (Comm) (English High Ct.)
(question whether state is successor state is not nonarbitrable).
519) See6.03[C][4].
520) SeeArkansas Code Annotated 16-108-201(b)(2); Iowa Code Annotated 679A.1(2)(c); Kansas
State Annotated 5-401(c) (recognized as preempted by FAA in Skewes v. Shearson
Lehman Bros., 829 P.2d 874, 874 (Kan. 1992)); South Carolina Code Annotated 15-48-10(b)
(4); Texas Civil Practice & Remedies Code Annotated 171.002(a)(3)(c) (recognized as
preempted by FAA in In re Nexion Health at Humble, Inc., 173 S.W.3d 67, 69 (Tex. 2005)).
521) See Louisiana Revised State Annotated 22:868 (A. No insurance contract delivered or
issued for delivery in this state and covering subjects located, resident, or to be
performed in this stateshall contain any condition, stipulation, or agreement:(2)
Depriving the courts of this state of the jurisdiction of action against the insurerAny such
condition, stipulation, or agreement in violation of this Section shall be void, but such
voiding shall not affect the validity of the other provisions of the contract.); Michigan
Franchise Investment Law, Michigan Compiled Laws Annotated 600.5005; Montana Code
Annotated 27-5-114(2)(b) (when consideration for real estate is less than $5000); Ohio
Revised Code Annotated 2711.01(B)(1).
522) SeeArkansas Code Annotated 16-108-201(b)(2) (recognized as preempted by Federal Crop
Insurance Act in IGF Ins. Co. v. Hat Creek Pship, 76 S.W.3d 859, 866 (Ark. 2002)); Kansas
State Annotated 5-401(c)(3).
523) See Perry v. Thomas, 482 U.S. 483 (U.S. S.Ct. 1987); Iowa Code Annotated 679A.1(2)(b);
Kansas State Annotated 5-401(c)(2) (recognized as preempted by FAA in Lewis v. Circuit
City Stores, Inc., 500 F.3d 1140, 1151-52 (10th Cir. 2007)).
69
524) See6.04[H][1]; Cole, Uniform Arbitration: One Size Fits All Does Not Fit, 16 Ohio St. J. Disp.
Res. 759, 787 (2001).
525) See Southland Corp. v. Keating, 465 U.S. 1 (U.S. S.Ct. 1984).
526) See Keating v. Superior Court of Alameda County, 645 P.2d 1192, 1203-04 (Cal. 1982).
527) Southland, 465 U.S. at 16.
528) Southland, 465 U.S. at 16 n.11.
529) Perry, 482 U.S. 483.
530) Perry, 482 U.S. at 488.
531) Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 269-71 (U.S. S.Ct. 1995) (preempting
Alabama statute invalidating agreements to arbitrate future disputes). The state statute,
Alabama Code 8-1-41(3), provided: The following obligations cannot be specifically
enforced:(3) An agreement to submit a controversy to arbitration.
532) Preston v. Ferrer, 552 U.S. 346 (U.S. S.Ct. 2008) (FAA preempts state law granting exclusive
jurisdiction over particular claims to state administrative agency); Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); Mastrobuono v. Shearson Lehman
Hutton, Inc., 514 U.S. 52 (U.S. S.Ct. 1995).
533) See4.02[A][2][d]; Safety Natl Cas. Corp. v. Certain Underwriters at Lloyds, London, 587 F.3d
714, 723-25 (5th Cir. 2009); Lewis v. Circuit City Stores, Inc., 500 F.3d 1140, 1151-52 (10th Cir.
2007) (FAA preempts Kansass statute rendering disputes between an employer and
employee nonarbitrable); S+L+H SpA v. Miller-St. Nazianz, Inc., 988 F.2d 1518 (7th Cir. 1993)
(Wisconsin Fair Dealership Laws prohibition on arbitration of certain disputes
preempted); Saturn Distrib. Corp. v. Williams, 905 F.2d 719 (4th Cir. 1989); Sec. Indus. Assn v.
Connolly, 883 F.2d 1114 (1st Cir. 1989); JSC Surgutneftegaz v. President & Fellows of Harvard
College, 2005 WL 1863676, at *3 (S.D.N.Y.) (it must be public policy as a matter of federal,
not state, law); In re Marcia L. Pate, 198 B.R. 841 (Bankr. S.D. Ga. 1996) (FAA preempts
Georgia state statutory bar against arbitration clauses in consumer transactions); Wells
Fargo Auto Fin., Inc. v. Wright, 698 S.E.2d 17 (Ga. App. 2010) (FAA preempted state law
purportedly invalidating arbitration agreement contained in vehicle purchase contract);
In re Nexion Health at Humble, Inc., 173 S.W.3d 67, 69 (Tex. 2005) (FAA preempts provision
of Texas statute rendering tort claims nonarbitrable if arbitration agreement not signed
by counsel); Skewes v. Shearson Lehman Bros., 829 P.2d 874, 874 (Kan. 1992) (FAA preempts
Kansas statute rendering tort claims nonarbitrable).
534) Marmet Health Care, Inc. v. Brown, 132 S.Ct. 1201 (U.S. S.Ct. 2012).
535) Marmet Health Care, 132 S.Ct. at 1203-04.
536) Marmet Health Care, 132 S.Ct. at 1204.
537) See4.05.
538) See6.03[C]; 6.04.
539) See1.01[B]; 1.01[C][1].
540) See1.04[A][1]; 1.04[B][1].
541) See6.03[C].
542) See6.03[C]; 6.04.
543) See6.03[C].
544) Carbonneau & Janson, Cartesian Logic and Frontier Politics: French and American Concepts
of Arbitrability, 2 Tul. J. Intl & Comp. L. 193, 222 (1994). See also Abraham & Montgomery,
The Lawlessness of Arbitration, 9 Conn. Ins. L.J. 355 (2003); McConnaughay, The Risks and
Virtues of Lawlessness: A Second Look at International Commercial Arbitration, 93 N.W. U.
L. Rev. 453 (1999); Park, Private Adjudicators and the Public Interest: The Expanding Scope of
International Arbitration, 12 Brooklyn J. Intl L. 629 (1986); Silberman, International
Arbitration: Comments From A Critic, 13 Am. Rev. Intl Arb. 9, 12, 18 (2002) (Broader
protection for mandatory laws in the context of international arbitration could give
greater integrity in the process; Important legal issues whether they fall within the
public or private sphere deserve public attention and debate. Arbitration of certain
private disputes may be appropriate, but particular issues in the private sector have
public resonance and should be left to the formal adjudication processes of courts that
are entrusted with those responsibilities and accountability.).
545) As discussed above (and in greater detail below), U.S., EU and other nonarbitrability
decisions have all concerned private rights to enforce, inter alia, competition, securities,
trade and other statutory rights, without affecting the authority of regulatory agencies to
enforce the same statutory provisions. See6.04[A]-[B] & [E].
546) Considered from an historical perspective, many of the statutory rights which are
involved in disputes over nonarbitrability arise from modern legislation, such as
competition, securities, intellectual property, consumer, civil rights, employment and
similar statutory regimes. Suggestions that such rights were historically nonarbitrable,
and have recently become arbitrable, are therefore confused. See e.g., Baxter Intl, Inc. v.
Abbott Labs., 315 F.3d 829 (7th Cir. 2003) (Cudahy, J., dissenting) (For some considerable
time not long in the past, the law of the land was that antitrust disputes were not
arbitrable.). In fact, such rights were historically nonexistent and only recently became
either litigable or arbitrable.
547) See1.01[C][1].
548) See1.04[B][2].
549) See6.03; 6.04.
550) See1.02[B].
552) See also Drahozal & Zyontz, Private Regulation of Consumer Arbitration, 79 Tenn. L. Rev. 289
(2012).
70
553) See6.04[A][5].
554) See Fox, Antitrust and Regulatory Federalism: Races Up, Down, and Sideways, 75 N.Y.U. L.
Rev. 1781 (2000) (discussing increasing antitrust regulation globally); Prentice, The
Inevitability of A Strong SEC, 91 Cornell L. Rev. 775, 778 (2006) (It was reasonably clear
before the Enron scandal, and is even clearer now, that substantial federal government
regulation of securities transactions in the United States will continue.); Waller,
Prosecution by Regulation: The Changing Nature of Antitrust Enforcement, 77 Ore. L. Rev.
1383 (1998) (explaining increasingly regulatory nature of U.S. antitrust enforcement
efforts). See also Baxter Intl, Inc. v. Abbott Labs., 315 F.3d 829, 832 (7th Cir. 2003) (Treating
Baxter as bound (vis--vis Abbott) by the tribunals conclusion that the license (as
construed to provide strong exclusivity) is lawful does not condemn the public to tolerate
a monopoly. If the three-corner arrangement among Baxter, Maruishi and Abbott really
does offend the Sherman Act, the United States, the FTC, or any purchaser of sevolufrane
is free to sue and obtain relief.).
555) See1.04[A][4]-[6].
556) See10.08.
557) See6.04[G][2]; 6.04[H].
558) See Alford, Arbitrating Human Rights, 83 Notre Dame L. Rev. 505 (2008).
559) See 6.04[O]; Park, Income Tax Treaty Arbitration, 10 Geo. Mason L. Rev. 803 (2001).
560) See6.04[K].
561) See6.04[D]; T. Cook & A. Garcia, International Intellectual Property Arbitration, passim
(2010).
562) Born, A New Generation of International Adjudication, 61 Duke L.J. 775 (2012).
563) See 6.04[O] for discussion of the arbitrability of domestic relations disputes.
564) As discussed above, such restraint is required by the New York Convention. See4.05[A];
6.02[H].
565) See6.02[G]; 6.04[H][3].
566) See4.05[A]; 6.02[H].
567) See6.02[G].
568) See4.05[C][3].
569) Equally, it is critical, in assessing asserted applications of the nonarbitrability doctrine,
to ascertain clearly whether or not such rules are intended to apply in international, as
distinguished from domestic, matters. As discussed above, a recurring feature of
decisions over the past several decades has been recognition that domestic
nonarbitrability rules often do not apply to international disputes. See6.03[A].
570) Award in ICC Case No. 1110, 10 Arb. Intl 282, 291 (1994). See also6.04[C].
571) See, e.g., Final Award in ICC Case No. 8423, XXVI Y.B. Comm. Arb. 153, 154 (2001) (The first
issue for the Arbitral Tribunal is whether disputes concerning the application of
community competition law are arbitrable. As community law pertains to international
public policy, the Arbitral Tribunal must examine this issue ex officio, even if the parties
do not raise an objection.); Award in ICC Case No. 7539, 123 J.D.I. (Clunet) 1030 (1996). See
also Mourre, Arbitration and Criminal Law: Reflections on the Duties of the Arbitrator, 22
Arb. Intl 95 (2006).
572) See26.05[C][4][c].
573) See19.04[B].
574) National law in some jurisdictions may require an arbitrator to do more than raise
nonarbitrability issues sua sponte. Ottolenghi, National Report for Israel (1984), in J.
Paulsson (ed.), International Handbook of Commercial Arbitration 1, 5 (1984) (arbitrator
required to report suspected criminal activity to Attorney General). See13.04[A][5].
575) See15.04[B][3].
576) The principle of judicial non-interference in arbitral proceedings is discussed below.
See15.06.
577) See, e.g., Cole v. Burns Intl Sec. Servs., 105 F.3d 1465, 1482 (D.C. Cir. 1997) (conditioning
arbitrability of Title VII dispute on various procedural safeguards in arbitration
proceedings, including more than minimal discovery, punitive damages and employees
exemption from paying arbitrators fees); Rodriguez v. Sim, 2009 WL 975457, at *4 (N.D.
Cal.) (compelling arbitration in compliance with the [FAA] and the California Code of Civil
Procedure, and the FAAs mandatory and permissive rights to discovery with the
employer bear[ing]any cost of the arbitration that the employee would not have
incurred had the claim been filed in court).
578) See PPG Indus., Inc. v. Pilkington plc, 825 F.Supp. 1465 (D. Ariz. 1993); MEL v. Gotaas-Larsen
Shipping Corp., 837 F.Supp. 1207 (S.D. Fla. 1993) (requiring reports every three months on
progress of arbitration of federal securities law claims in London).
579) See8.03[B]-[C]; 15.06.
580) See8.03[A][2]; 8.03[C]; UNCITRAL Model Law, Art. 5.
581) See8.03[A][2]; 8.03[C].
582) See6.02[G]; Howard v. Anderson, 36 F.Supp.2d 183, 187 (S.D.N.Y. 1999) ([G]iven defendants
desire to arbitrate this case and reach a resolution that will be enforced by the Court,
they should make every effort to ensure that Howard is afforded all of her statutory rights.
However, if Howard is unable to vindicate her rights in the arbitral forum, she will have
recourse to the Court.).
71
Chapter 7: International Arbitration Agreements and
Author Competence-Competence
P 1046
An issue of central importance to the international arbitral process is the authority of an
arbitral tribunal to consider and decide disputes over the arbitrators own jurisdiction,
Publication including disputes over the existence, validity, legality and scope of the parties arbitration
International Commercial agreement. This question is the subject-matter of the so-called competence-competence
Arbitration (Second Edition) doctrine (also referred to as Kompetenz-Kompetenz or jurisdiction to decide jurisdiction).
(2) The competence-competence doctrine is closely related to rules regarding the allocation of
jurisdictional competence between arbitral tribunals and national courts.
Bibliographic reference This Chapter first discusses the historical development and current status of the competence-
'Chapter 7: International competence doctrine. Second, the Chapter explores the parallel competence of arbitral
Arbitration Agreements and tribunals and national courts to consider challenges to the jurisdiction of the arbitrators, and
Competence-Competence', in the allocation of jurisdictional competence between arbitrators and national courts under
Gary B. Born , International international arbitration conventions and national arbitration legislation. Among other things,
Commercial Arbitration the Chapter considers the timing of judicial and arbitral consideration of challenges to an
(Second Edition), 2nd edition arbitral tribunals jurisdiction and the preclusive effects of judicial and arbitral decisions on
( Kluwer Law International; one another. Finally, the Chapter addresses the procedural issues arising within the arbitral
Kluwer Law International 2014) process itself from arbitrators exercise of their competence-competence, including the timing
pp. 1046 - 1252 of jurisdictional challenges and jurisdictional decisions by the arbitrators.
7.01 INTRODUCTION
The competence-competence doctrine provides, in general terms, that international arbitral
P 1047 tribunals have the power to consider and decide disputes concerning their own
jurisdiction. The doctrine is closely related to the allocation of competence to consider and
decide jurisdictional disputes between arbitral tribunals and national courts.
As discussed below, virtually all national legal systems recognize the competence-competence
principle. (3) Despite this broad international acceptance of the competence-competence
doctrine, there is almost equally broad disagreement and uncertainty concerning the
doctrines application and precise consequences. With unusual diversity, leading legal systems
take widely divergent approaches to the effects of the arbitral tribunals competence-
competence and the related allocation of jurisdictional competence between arbitrators and
Preliminarily, before examining these various approaches, there is the issue of terminology.
The principle that arbitrators have jurisdiction to consider and decide the existence and
extent of their own jurisdiction is variously referred to as the competence-competence
doctrine, the Kompetenz-Kompetenz doctrine, the jurisdiction-competence principle, or
the who decides question. (5) It is critical to appreciate that these various formulae can have
very different, and sometimes contradictory, applications, depending on the national legal
system and other circumstances in which they are used.
Most importantly, as discussed below, different jurisdictions (and authors) attach different
meanings with respect to both chronological priority and finality to an arbitral tribunals
P 1048
exercise of its competence-competence. In particular, some national legal systems
provide for the arbitrators to initially decide jurisdictional issues (subject to subsequent
judicial review), without the possibility of interim judicial consideration and decisions on
those issues; (6) in contrast, other legal systems permit interim or interlocutory judicial
decisions on jurisdictional objections prior to any arbitral consideration or resolution of these
issues. (7) Similarly, some legal regimes accord a tribunals decision on its own jurisdiction no
or virtually no deference or preclusive effects in subsequent judicial proceedings, while other
systems accord the arbitrators jurisdictional decisions extremely broad preclusive effects in
later litigation, at least in some circumstances. (8)
Thus, as discussed below, some jurisdictions (e.g., France, India) provide that an arbitral
tribunal generally has competence-competence to initially decide virtually all jurisdictional
disputes (sometimes referred to as the positive effects of competence-competence or
positive competence-competence), subject to eventual judicial review. National courts in
these jurisdictions are generally not permitted to consider jurisdictional objections on an
interlocutory basis, but must await the arbitrators initial jurisdictional decisions. (9) This
latter limitation on the interlocutory competence of national courts is sometimes referred to
as the negative effects of competence-competence or negative competence. (10)
Other jurisdictions (e.g., Sweden, China) provide that an arbitral tribunal has competence-
competence to consider jurisdictional challenges, but that interlocutory judicial consideration
of the same challenges are permitted at any time, including prior to an arbitral tribunals
jurisdictional decision. (11) These jurisdictions recognize the arbitrators positive competence-
competence, but do not accord significant negative effects to that competence-competence.
Yet other legal systems adopt various middle grounds (e.g., UNCITRAL Model Law, United
72
States, England), recognizing the arbitrators positive competence-competence, but
permitting interlocutory judicial consideration of jurisdictional issues in some, but not all,
circumstances. As detailed below, these legal systems adopt different treatments of
jurisdictional objections depending on the nature of the parties arbitration agreement, the
nature of the jurisdictional objection to that agreement and the efficiencies and equities of
particular cases. (12)
Similar variations also exist with respect to the effects of an arbitral tribunals jurisdictional
P 1049
decision about its own jurisdiction. In Germany, where the formula originated, (13) the
competence-competence doctrine was historically understood as recognizing an arbitral
tribunals jurisdiction to finally decide questions regarding its own jurisdiction, without the
possibility of subsequent judicial review (so-called definite or real Kompetenz-Kompetenz).
(14) In contrast, competence-competence is understood in many jurisdictions as referring to a
tribunals power preliminarily to render a decision on its jurisdiction, but subject to a measure
of subsequent judicial review. (15)
Many legal systems afford different measures of judicial deference to arbitrators jurisdictional
determinations, depending on the parties agreement. In some jurisdictions, agreements
granting arbitrators authority to finally decide jurisdictional disputes (without subsequent
judicial review) will be given effect; (16) in a few jurisdictions, parties do not appear to be able
validly to agree to grant arbitrators competence to finally decide their own jurisdiction. (17)
Given these divergent understandings of the various formulae associated with a tribunals
power to decide on its own jurisdiction, it is important to use such phrases with care. It would
likely be best, in these circumstances, not to use historic formulae, such as Kompetenz-
Kompetenz, competence-competence, or negative competence-competence, which may
inevitably create confusion. A neutral and more international term, such as jurisdictional
competence, would likely be more transparent and less likely to cause confusion.
Nonetheless, at least for the time being, the terms are so deeply engrained in the language
and literature of international arbitration that it is difficult to abandon them and adopt yet
another label. Given this, existing formulae (such as Kompetenz-Kompetenz or competence-
competence) can continue to be used, but this should be done without assumptions about the
precise timing, scope and consequences of a tribunals jurisdiction to consider its own
jurisdiction, which are defined in different ways in different legal systems. In the following
discussion, the term competence-competence is used to describe an international arbitral
tribunals power to consider and decide disputes regarding its own jurisdiction, principally
because this is the most likely phrase to avoid implications that an award concerning
P 1050 jurisdictional matters is insulated from any subsequent judicial review (as with the
Kompetenz-Kompetenz doctrine and the who decides formulation).
7.02 POWER OF INTERNATIONAL ARBITRAL TRIBUNALS TO CONSIDER AND

DECIDE DISPUTES CONCERNING THEIR JURISDICTION
The competence-competence doctrine is almost universally accepted in international
arbitration conventions, national legislation, judicial decisions, institutional rules and
international arbitral awards. (18) Authority in each of these sources recognizes with relative
unanimity some version of a competence-competence doctrine. As a consequence, the basic
proposition that an international arbitral tribunal presumptively possesses jurisdiction to
consider and decide on its own jurisdiction must be considered a universally-recognized
principle of international arbitration law. (19) That is confirmed by the almost complete
absence of any authority denying the power of arbitral tribunals to consider and decide
jurisdictional challenges, subject to subsequent judicial review. It is also confirmed by long-
P 1051 standing recognition of the competence-competence doctrine in the related fields of
state-to-state (20) and investment (21) arbitration.
As also discussed below, however, there is little international consensus on the proper timing
of arbitral and judicial decisions on jurisdiction or the consequences of permitting an arbitral
tribunal to decide initially on its own jurisdiction. Different national legal systems accord
significantly different approaches to these (and other) jurisdictional matters.

Leading international arbitration conventions either implicitly or explicitly recognize and give
effect to the competence-competence doctrine. That is most obviously true with regard to the
European Convention, but also applies to the New York and Inter-American Conventions.
[1] New York Convention
It is frequently said that the New York Convention does not deal with the subject of
competence-competence. (22) It is correct that nothing in the text of the Convention expressly
requires (or forbids) application of the competence-competence doctrine or addresses the
scope of an arbitral tribunals competence-competence. Nonetheless, it does not follow that
the Convention is irrelevant to issues of competence-competence.
P 1052
Despite the absence of express language on the topic in the New York Convention, it is
clear that Articles II(3) and V(1) of the Convention recognize that both arbitral tribunals and
courts may consider and decide disputes about the arbitrators jurisdiction. In particular,
Articles V(1)(a) and V(1)(c) of the Convention contemplate that an arbitral tribunal may have
73
made an award notwithstanding jurisdictional objections and will have addressed explicitly
or implicitly issues of the existence or validity of the arbitration agreement (Article V(1)(a))
(23) and the scope of the arbitration agreement (Article V(1)(c)), (24) with the arbitrators
award(s) on these issues being subject to subsequent judicial review in a recognition action.
The premise for such judicial review is the possibility that the arbitrators will have themselves
considered, ordinarily without prior judicial determination, jurisdictional disputes. (25)
Indeed, the Convention should be interpreted as requiring Contracting States to permit
(absent contrary agreement by the parties) arbitral tribunals to consider and make non-
binding decisions regarding their own jurisdiction. If a Contracting State were to forbid arbitral
tribunals from even considering their own jurisdiction (which virtually no state appears to have
done (26) ), this would seriously impede the arbitral process (27) and would contradict the
Conventions premise that arbitrators will explicitly or implicitly make decisions on
jurisdictional disputes in their awards. In this sense, the Convention prescribes recognition of
the competence-competence of arbitrators in international arbitral proceedings. (28)
At the same time, Articles II(3) and V(1) also expressly permit judicial consideration and
resolution of jurisdictional disputes, with Article II(3) appearing to contemplate the possibility
of interlocutory judicial determinations of such matters prior to any arbitral award. Article II(3)
does so by providing that a court shall refer parties to an arbitration agreement to arbitration
unless it finds that the said agreement is null and void, inoperative or incapable of being
P 1053 performed. (29) A court cannot make such a finding unless the court (it) considers and
decides (finds) the relevant jurisdictional issues. Taken together, these provisions make it
reasonably clear that, under the Convention, both arbitral tribunals and national courts may
consider and decide jurisdictional disputes, but the Conventions provisions do not supply
further guidance as to the allocation of tribunals and courts respective powers to address
these issues. (30)
The language of Article II(3) (31) has apparently led Swiss courts to suggest that the Convention
requires, at least where the arbitral seat is abroad, that national courts make an immediate,
final determination of jurisdictional objections that are presented to them. (32) This analysis is
not persuasive.
The Convention does not require that a court in a Contracting State decide finally at any
particular time whether or not there is a valid arbitration agreement: instead, the Convention
merely requires (in Article II(3)) that a national court refer the parties to arbitration, subject to
an exception for cases where the court finds that there is no valid arbitration agreement. (33) If
a court chooses to refer parties to arbitration without first deciding (in either a binding or
preliminary manner) whether or not the arbitration agreement is invalid, that in no way
violates the Convention. Indeed, the Swiss courts interpretation of the Convention would result
in the arbitration legislation and judicial practice in France, India, Hong Kong, Germany,
England, the United States and other countries which do not require a final interlocutory
P 1054
judicial decision on jurisdiction in all cases (34) being in violation of the Convention.
That is not a plausible result.
In the precise reverse of the Swiss approach, a few commentators have suggested that the
Convention permits only prima facie interlocutory judicial review, requiring that all other
jurisdictional disputes be referred for initial decision by the arbitrators. (35) This is also wrong.
The Convention does not contain or suggest either a prima facie or a full review standard. As
discussed above, Article II(3) of the Convention specifically provides for national courts to refer
parties to arbitration if those courts find that the arbitration agreement is valid; (36) it is not
possible to interpret that text as excluding full judicial review of jurisdictional objections. That
is particularly true given the fact, also discussed below, that interpreting the Convention as
requiring prima facie review would be contrary to the historic (and contemporary) approach to
competence-competence in a substantial majority of all Contracting States, including many
UNCITRAL Model Law states, the United States, England, Switzerland, Germany, China, Japan
and numerous other Asian, African and Latin American states. (37)
Nonetheless, the Convention does bear on the allocation of jurisdictional competence between
courts and arbitrators in some cases. As discussed below, there are circumstances in which
arbitration agreements clearly provide an arbitral tribunal with jurisdiction to consider and
finally decide questions regarding their own jurisdiction. (38)
The clearest example is where parties to an arbitral proceeding may choose to submit existing
challenges to the existence, validity, legality, or scope of a preexisting arbitration agreement
to the arbitral tribunal for final resolution, either by way of an express submission agreement
or otherwise (by waiver or implied agreement); (39) in these instances, there is a clear and non-
controversial agreement providing the arbitral tribunal with jurisdiction to consider and finally
decide disputes about the existence and scope of its jurisdiction. At least arguably, some
arbitration agreements and institutional arbitration rules provide for the same result
(although, as discussed below, this is a matter of interpretation of the agreement and rules in
question). (40)
In cases involving these sorts of agreements to arbitrate particular jurisdictional issues,
Articles II(1) and II(3) of the New York Convention require Contracting States to recognize such
P 1055
agreements (like other agreements to arbitrate) and to refer the parties to such
agreements to arbitration. (41) In so doing, the Convention imposes an obligation to enforce
agreements submitting jurisdictional disputes to arbitration and thereby gives explicit effect
74
to one application of the competence-competence doctrine. (42)
There is another aspect of Article II(3) of the Convention that arguably bears on the treatment
of competence-competence. As noted above, Article II(3) provides that a national court, which
is seized of an action in a matter in respect of which the parties have made an arbitration
agreement, shall refer the parties to arbitration, unless it finds that the said agreement is null
and void, inoperative or incapable of being performed. (43) This language is most naturally
read as establishing an exception to the general obligation to refer parties to arbitration only
in cases where the parties arbitration agreement is null and void, inoperative, or incapable of
being performed and not in cases where the scope of the arbitration agreement allegedly does
not encompass the parties dispute. (44) This interpretation is supported by the text of Article
V(1)(c), which, in contrast to Article II (and Article V(1)(a)), uses language directed to the scope
of the arbitration agreement. (45)
If this interpretation of Article II(3) were accepted, it would mean that national courts faced
with jurisdictional objections based solely on the scope of an admittedly existent and valid
arbitration agreement would be required to refer the parties to arbitration for initial
P 1056 determination of the scope of the arbitration clause. (46) As discussed in detail below,
although there is as yet little authority addressing the argument, sound policy reasons support
this result. (47)
Finally, the New York Convention expressly contemplates subsequent judicial consideration of
arbitral determinations of jurisdiction. The Convention does so in Articles V(1)(a) and V(1)(c),
which permit non-recognition of arbitral awards where the recognition court finds that there
was no valid arbitration agreement or that the award exceeded the scope of the matters
submitted to arbitration. (48)
The Convention does not expressly address the character of the judicial consideration of
jurisdictional issues decided by the arbitrators or the preclusive effects of arbitrators
jurisdictional awards (i.e., whether judicial review of a jurisdictional award is de novo or
whether it accords the arbitrators jurisdictional determination some measure of deference).
Instead, the Convention leaves the preclusive effects of jurisdictional awards generally to
Contracting States; the scope and character of judicial consideration of the arbitrators
jurisdictional determinations in different legal systems is discussed in detail below. (49) The
critical point for present purposes, however, is that the Convention specifically contemplates
the possibility of judicial review of arbitrators jurisdictional decisions in at least some cases.
[2] European Convention
Unlike the New York Convention, the European Convention expressly addresses the
competence-competence doctrine and the allocation of jurisdictional competence between
courts and arbitrators. Article V(3) of the European Convention provides:
Subject to any subsequent judicial control provided for under the lex fori, the arbitrator whose
jurisdiction is called in question shall be entitled to proceed with the arbitration, to rule on his
own jurisdiction and to decide upon the existence or the validity of the arbitration agreement
or of the contract of which the agreement forms part. (50)
Article V(3) recognizes the competence-competence doctrine in several respects. It does so by
providing that the arbitral tribunal shall be entitled to proceed with the arbitration, to
rule on [its] own jurisdiction, and to decide upon the existence or the validity of the
arbitration agreement when the tribunals jurisdiction is challenged. This affirmative authority
to consider and resolve disputes concerning the tribunals own jurisdiction is the essence of
the competence-competence doctrine and the concept of positive competence-competence.
Article V(3) goes on to establish a general presumption of priority regarding the timing of
P 1057 decisions concerning an arbitral tribunals jurisdiction. It does so by providing that
judicial decisions concerning the tribunals jurisdiction will generally only occur after the
arbitrators first consider the issue (with the text of Article V(3) providing that a tribunals
jurisdictional award is thereafter subject to any subsequent judicial control). This is
confirmed by Article V(2) of the Convention, which provides that challenges to an arbitrators
jurisdiction shall be raised during the arbitration proceedings, and by Article V(2), which
then refers to subsequent court proceedings. (51)
This general presumption is made most explicit by Article VI(3), which provides that national
courts shall not resolve the question whether an arbitration agreement is non-existent or null
and void or had lapsed, prior to a jurisdictional award by the arbitrators, unless there are
good and substantial reasons to the contrary. (52) The final phrase of Article VI(3) allows
national courts, where particular reasons of efficiency or fairness demand, to consider
jurisdictional objections on an interlocutory basis, prior to any arbitral determination. Article
VI(3)s basic allocation of competence and timing is, however, the reverse, with the arbitral
tribunal presumptively being permitted initially to consider and resolve the jurisdictional
issue, prior to any judicial consideration of the issue.
Article V(3) of the European Convention therefore goes substantially beyond the New York
Convention, by establishing a general rule of law which expressly grants international arbitral
tribunals jurisdiction to consider challenges to their own jurisdiction, and which also provides
that disputes concerning a tribunals jurisdiction will presumptively be decided first by the
tribunal, in an exercise of its competence-competence, and only exceptionally by national
courts in an interlocutory judicial proceeding. These rules apply, at least in principle, to all
75
arbitration agreements governed by the European Convention and to all types of jurisdictional
challenges to the arbitrators jurisdiction (e.g., validity, legality and existence of the
arbitration agreement, as well as to scope of the arbitration agreement).
It is nowhere stated expressly, but nonetheless appears clear, that the competence-
competence doctrine recognized in Article V(3) of the European Convention is subject to
contrary agreement by the parties. If parties were to agree that the arbitrators would not have
competence-competence, or that immediate interlocutory judicial consideration of
jurisdictional objections was required, then Article V(3) would not require a contrary result. As
discussed in detail elsewhere, arbitration is fundamentally a creature of contract and the
powers of an arbitral tribunal are subject to the parties disposition; (53) where the parties
exclude competence-competence from the tribunals jurisdiction, Article V(3) would not
override their agreement. (54)
Finally, the European Convention acknowledges the existence of subsequent judicial control,
in Article V(3), but does not address the scope or character of that review. In particular, the
Convention does not prescribe either de novo review or any particular level of deference to
jurisdictional determinations by arbitral tribunals.
P 1058 [3] Inter-American Convention
The Inter-American Convention also recognizes and gives effect to the competence-
competence doctrine. Article 3 of the Convention provides that, absent contrary agreement,
arbitrations shall be conducted pursuant to the IACAC Rules. (55) In turn, Article 21(1) of the
IACAC Rules provides that [t]he arbitral tribunal shall have the power to rule on objections
that it has no jurisdiction, including any objections with respect to the existence or validity of
the arbitration clause or of the separate arbitration agreement. (56) By incorporating this
provision, Article 3 of the Convention expressly prescribes recognition of the competence-
competence principle.
Nothing in the Convention precludes parties from agreeing to a different treatment of the
tribunals competence-competence (including by incorporating different institutional rules).
Additionally, nothing in the Convention expressly addresses the scope of judicial review of
arbitrators jurisdictional awards or the preclusive effects of those awards. (57)
The ICSID Convention also confirms (and provides for) the arbitrators competence-
competence. Article 41(1) of the Convention provides that [t]he Tribunal shall be the judge of
his own competence. (58) As noted above, this follows general principles of international law
in both commercial and state-to-state arbitration. (59) At the same time, the ICSID Secretariat
performs an unusually extensive review of Requests for Arbitration aimed at confirming the
existence of a prima facie jurisdictional base before an arbitration may proceed under the
ICSID Rules. (60)

Arbitration legislation in virtually all jurisdictions, from every region of the world, recognizes
and gives effect to some version of the competence-competence doctrine. When the Model
Law was adopted in 1985, the UNCITRAL Secretariat expressed its view that the principle of
P 1059 competence-competence was somewhat controversial. (61) It is very doubtful that this
statement was accurate when made, (62) and it certainly cannot be accepted today.
As detailed below, with only very limited exceptions, which are widely criticized, legislation
and judicial practice in all major and most other jurisdictions accept some version of the
competence-competence doctrine. (63) Similarly, as already discussed, all leading
international arbitration conventions also recognize, to at least some extent, the competence-
competence doctrine. (64) And, as discussed below, arbitral awards and institutional
arbitration rules adopt the same approach. (65)
It therefore can no longer properly be said that the principle that an arbitrator can consider
and decide his or her own jurisdiction is controversial. Rather, the competence-competence
doctrine is almost universally accepted as a foundation of international arbitration. The only
topic that remains subject to (mostly constructive) debate is the allocation of jurisdictional
competence between courts and arbitral tribunals, including particularly the timing and
character of judicial consideration of jurisdictional issues and the deference to be accorded by
national courts to any decision on jurisdiction by the arbitrators. (66)
Under virtually all national arbitration regimes, the arbitral tribunals competence-
competence to consider jurisdictional objections, subject to subsequent judicial review, is
presumed. (67) Absent an express contrary agreement, the arbitrators are held to have the
authority to consider and preliminarily decide, subject to subsequent judicial review, disputes
regarding their own jurisdiction. (68) This presumption is derived from the basic objectives of
the arbitral process and the inherent powers and mandate of an adjudicatory tribunal. (69) The
presumption may be altered by the parties, to either deny the arbitrators competence-
competence or to permit the arbitrators finally to resolve jurisdictional disputes (without
judicial review), but doing so requires an express affirmative agreement to exclude the
arbitrators presumptive competence-competence, which virtually never occurs in practice.
[1] UNCITRAL Model Law
76
As discussed below, the UNCITRAL Model Law expressly authorizes arbitrators to consider, and
make awards regarding, their own jurisdiction. (70) Article 16 of the Model Law is entitled
Competence of arbitral tribunal to rule on its jurisdiction, and is contained in Chapter IV of
P 1060 the Model Law, which is in turn entitled Jurisdiction of Arbitral Tribunal. (71) Article 16
expressly grants arbitrators competence-competence to consider challenges to their own
jurisdiction, including challenges to the existence and validity of the arbitration agreement.
(72) It is clear that Article 16 explicitly recognizes the arbitrators authority to consider and
decide disputes concerning their own jurisdiction; that conclusion applies regardless whether
or not the parties arbitration agreement contains express provisions to this effect.
[2] U.S. Federal Arbitration Act
In the United States, the text of the FAA does not expressly address the subject of the
arbitrators competence-competence. (73) Nonetheless, as discussed in greater detail below,
U.S. courts have repeatedly held that arbitral tribunals have the inherent power to consider
their own jurisdiction, subject to later judicial review, (74) and may also be granted the
competence to make binding awards finally determining their own jurisdiction. (75)
The leading authority on the arbitrators competence-competence in the United States is First
Options of Chicago, Inc. v. Kaplan, where the U.S. Supreme Court considered the question of
who court or arbitrator has the primary authority to decide whether a party has agreed to
arbitrate. (76) In answering that question, the Court declared:
the question who has the primary power to decide arbitrability turns upon what the parties
agreed about that matter. Did the parties agree to submit the arbitrability question itself to
arbitration? (77)
The First Options Courts analysis states a general principle applicable in both domestic and
international cases in U.S. courts (and which, as discussed below, is also adopted in a number
of other jurisdictions). (78) Specifically, the Courts analysis provides that the nature and scope
P 1061
of the arbitral tribunals competence-competence is, in significant part, dependent on the
terms of the parties arbitration agreement. That is, as with Article II of the New York
Convention and Article V(3) of the European Convention, (79) parties may either grant the
arbitrators competence-competence or reserve jurisdictional decisions solely to national
courts. As also discussed below, even absent express agreement, U.S. courts have held that
arbitrators presumptively have the jurisdiction to consider and decide, subject to subsequent
judicial review, questions concerning their own jurisdiction. (80)
[3] French Code of Civil Procedure
The French Code of Civil Procedure expressly recognizes the competence-competence of
arbitral tribunals in both domestic and international cases. Article 1465 of the revised Code of
Civil Procedure provides: The arbitral tribunal has exclusive jurisdiction to rule on objections
to its jurisdiction. (81) French courts have also emphatically upheld the arbitrators
competence-competence. (82) As one early French decision declared, [t]he principle is that
the judge hearing a dispute has jurisdiction to determine his own jurisdiction. This necessarily
implies that when that judge is an arbitrator, whose powers derive from the agreement of the
parties, he has jurisdiction to examine the existence and validity of such agreement. (83)
[4] Swiss Law on Private International Law
The Swiss Law on Private International Law provides, in Article 186(1), that [t]he arbitral
P 1062
tribunal shall decide on its own jurisdiction. (84) Swiss courts have repeatedly upheld the
arbitrators competence-competence, in both domestic and international matters, in explicit
terms. (85)
[5] English Arbitration Act
The English Arbitration Act, 1996 expressly provides for the arbitrators competence-
competence, in terms paralleling the UNCITRAL Model Law. (86) English courts have also
repeatedly affirmed the competence-competence doctrine. (87) Thus, a recent decision of the
U.K. Supreme Court declared broadly that the principle that a tribunal in an international
commercial arbitration has the power to consider its own jurisdiction is no doubt a general
principle of law. (88)
[6] Other National Arbitration Legislation Recognizing Competence-Competence Doctrine
Arbitration legislation in virtually all other jurisdictions also expressly recognize versions of
the competence-competence doctrine. In Europe, that is true under arbitration statutes in
Belgium, (89) the Netherlands, (90) Italy (91) and Sweden, (92) as well as in jurisdictions that
have adopted the Model Law. (93) Arbitration legislation and judicial decisions in Singapore,
P 1063
(94) Hong Kong, (95) Japan, (96) Korea, (97) India, (98) Australia, (99) New Zealand (100) and
the Caribbean (101) also uniformly affirm the principle of competence-competence. Similarly,
a number of African jurisdictions have adopted the competence-competence doctrine. (102)
[7] National Arbitration Legislation Not Recognizing Competence-Competence Doctrine
Despite almost universal acceptance of the competence-competence principle, authorities
from a few countries are reserved, or even hostile, to the doctrine. In general, these views are
confined to a limited number of jurisdictions, often reflecting very dated doctrine and
77
frequently not contained in statutory language or judicial authority. (103)
For example, Indonesias arbitration legislation does not expressly recognize the doctrine of
competence-competence, and there is Indonesian judicial authority suggesting that
jurisdictional objections must be resolved by national courts. (104) Chinas Arbitration Law
P 1064
continues to raise doubts regarding the arbitrators competence-competence, with
authority to resolve jurisdictional disputes generally being reserved to Chinese courts and
arbitral institutions (as distinguished from arbitral tribunals). (105) Somewhat differently, in
Israel and South Africa, arbitral tribunals apparently have the power to consider and decide
jurisdictional issues only if the parties to the arbitration expressly authorize them to do so.
(106)
In Latin America, the arbitrators competence-competence was historically unsettled. (107)
Particularly in recent years, however, many Latin American countries have adopted legislation
codifying the principle of competence-competence. (108)
Historically, some Venezuelan decisions imposed significant limits on arbitrators
competence-competence, (109) with the effect that they could be said to deny or at least
P 1065 weaken the authority of arbitrators to decide on their own jurisdiction. (110) In the words
of one commentator, these decisions let Mr. Calvo in through the back door. (111)
Recently, however, the Supreme Court of Venezuela appeared to abandon its historic hostility
to the competence-competence doctrine. Rejecting the Venezuelan position outlined above,
the Court recognized the negative effect of competence-competence, (112) holding that the
organs of the judiciary are only allowed to perform a prima facie, formal, preliminary and
summary exam or verification of the validity, efficacy and enforceability of an arbitration
agreement that is limited to corroborate that the arbitration agreement is in writing. (113) It
remains to be seen whether this view will endure, but it appears to reflect robust approval of
the competence-competence doctrine (and a limited view of interlocutory judicial authority to
consider jurisdictional challenges).
A few U.S. state courts have also suggested, in domestic consumer matters, that arbitral
tribunals have no competence to consider challenges to the arbitration agreement (or to
proceed with the arbitration), and must instead suspend the arbitral proceedings pending
interlocutory judicial resolution of the jurisdictional dispute. (114) These decisions are
anomalous and preempted by the FAA (where it applies, in both interstate and international
matters).
[C] Institutional Arbitration Rules

Like contemporary national legislation, institutional rules also almost uniformly recognize the
competence-competence of arbitral tribunals. The 2010 UNCITRAL Rules are representative,
providing in Article 23(1) that:
The arbitral tribunal shall have the power to rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. (115)
Similarly, the 2012 ICC Rules provide:
In all matters decided by the Court under Article 6(4), any decision as to the jurisdiction of the
P 1066 arbitral tribunal, except as to parties or claims with respect to which the Court decides
that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself. (116)
Other institutional rules incorporate similar principles of competence-competence. (117)
One of the few exceptions to this approach are the CIETAC Rules, which provide for
consideration of jurisdictional disputes by the arbitral institution (CIETAC), rather than by the
arbitral tribunal; CIETAC can delegate that authority to the tribunal, but is not required to do
so. (118) The CIETAC approach, which is consistent with the Chinese Arbitration Laws treatment
of competence-competence, (119) is idiosyncratic and has very little to recommend it; it is also
subject to internal review at CIETAC. (120)
There is, of course, almost inescapable circularity to provisions of institutional rules that
purport to grant arbitrators power to consider and decide disputes concerning the existence or
validity of an arbitration agreement. If the parties have not validly agreed to any arbitration
agreement at all, then they also have necessarily not agreed to institutional arbitration rules
incorporating the competence-competence doctrine. (121) In these circumstances, provisions
in institutional rules cannot confer any authority upon an arbitral tribunal to exercise
competence-competence. Rather, a tribunals competence-competence can only be derived
from national or international law (such as the express provisions of Article V(3) of the
P 1067
European Convention or Article 16(1) of the UNCITRAL Model Law and the implied terms of
Articles II and V of the New York Convention).
[D] International Arbitral Awards

International arbitral tribunals almost uniformly embrace the competence-competence
doctrine, both as a matter of national law and a general principle of international law. Absent
clear agreement by the parties to the contrary, arbitral tribunals virtually always conclude
that they have the power to consider and decide the extent of their own jurisdiction. (122) (Of
course, that does not mean that arbitral tribunals necessarily will exercise this authority to
uphold their own jurisdiction merely that tribunals affirm their power to consider such
78
issues.)
Thus, in TOPCO v. Libya, the arbitrator declared that: he did havecompetence [to rule on his
own jurisdiction] by virtue of a traditional rule followed by international case law and
unanimously recognized by the writing of legal scholars. (123) The same approach was
historically adopted in inter-state arbitrations, where a 19th century award declared in
unequivocal terms that: the doubt respecting the authority of the commissioners to settle
their own jurisdiction was absurd; and that they must necessarily decide upon cases being
within or without, their competency. (124)
More recently, in institutional awards, tribunals have explained that [t]he principle of
competence-competence is widely recognized by doctrine and jurisprudence, (125) and that,
[i]n accord with the familiar principle of Kompetenz-Kompetenz, Art. 8(3) of the ICC Rules gives
this tribunal authority to determine its own jurisdiction. (126) A very substantial body of other
published awards uniformly reach the same conclusions, both where the parties arbitration
agreement expressly confers competence-competence on the arbitrators (127) and otherwise.
(128)
P 1068
The competence-competence doctrine has been affirmed by international tribunals
regardless of the applicable law of the arbitral seat (or otherwise). The universality of
tribunals conclusions regarding competence-competence lends support to the doctrines
status as a general principle of international law and an inherent power (absent contrary
agreement) of an arbitral tribunal. (129) This is confirmed by the virtually complete absence of
any contemporary arbitral award, under any legal system, denying the existence of an
international arbitral tribunals competence-competence. (130) This principle has particular
importance in the international context, where the presumptive expectation and desire of
commercial parties is to avoid litigation in one anothers home courts, and instead to have
their disputes including their jurisdictional disputes resolved in a neutral forum. (131)
[E] Positive and Negative Effects of Competence-Competence

It is sometimes said that the arbitrators competence-competence has both positive and
negative effects or consequences. The positive effect of competence-competence is that the
arbitral tribunal has the power to consider and decide jurisdictional objections; the negative
effect of competence-competence is the exclusion of judicial authority to decide jurisdictional
P 1069
objections, at least until the arbitral tribunal has made a jurisdictional award. (132) In the
words of one judicial decision:
the principle of competence-competence allows arbitral tribunals to rule on its own
jurisdiction, [with the doctrine having] two sides, a positive side, that translates in the power of
the arbitral tribunal to rule on its own jurisdiction, and a negative side, according to which
national courts should refrain from reviewing in parallel and with the same degree of detail,
the validity, efficacy or enforceability [of the arbitration agreement] as the arbitral tribunal.
(133)
The positive and negative aspects of competence-competence are related to the more general
concept of the positive and negative effects of the agreement to arbitrate (discussed in detail
below). (134) Importantly, however, there are essential differences between these two settings,
which raise doubts about the usefulness of the concept of negative competence-competence.
In the case of an arbitration agreement where there is no challenge to the agreements
existence or validity, neither the positive nor negative effects of the arbitration agreement are
controversial: there is little basis for questioning the proposition that an agreement to
arbitrate positively gives the arbitral tribunal authority to decide those matters that are
submitted to arbitration, nor the proposition that an arbitration agreement negatively
excludes the jurisdiction of national courts over those matters that have been submitted to
arbitration (until the arbitral tribunal makes a decision, at which point that decision will be
subject to judicial review). (135)
P 1070
In contrast, in the case of a challenge to the existence or validity of the arbitration
agreement, both the positive and negative effects of competence-competence are more
problematic. An arbitral tribunals positive competence to consider and decide its own
jurisdiction is universally accepted in all developed legal systems. (136) Nonetheless, this
positive competence-competence is not readily derived from the parties agreement to
arbitrate, whose existence or validity is itself disputed in this scenario; in cases involving
challenges to the existence, validity or enforceability of the putative arbitration agreement,
the tribunals competence-competence is better understood as deriving from national law and
international arbitration conventions. (137)
The same conclusion applies, with even greater force, to the negative effects of an arbitral
tribunals competence-competence. It is impossible to rest the exclusion of national court
authority on an agreement to arbitrate whose existence or validity is challenged and which
may ultimately prove to be non-existent or invalid; in these cases, there is simply no
agreement on which to base any negative effects, that would deprive a national court of
jurisdiction it otherwise possessed. (138) Rather, the exclusion of national court jurisdiction
again derives from the terms of national arbitration legislation and international arbitration
instruments, which are the basis for concluding that a national court lacks or may not exercise
jurisdictional competence it would otherwise possess. (139)
79
[F] Relation Between Competence-Competence Doctrine and Separability
Presumption
As discussed above, it is sometimes said that the competence-competence principle is
derived from, or dependent on, the separability presumption. (140) In particular, many
national arbitration statutes and institutional rules contain provisions whose text links the
separability presumption with the competence-competence of arbitral tribunals, (141) while
commentators sometimes make the same connection. (142)
P 1071 Thus, as noted above, Article 16(1) of the UNCITRAL Model Law provides: [t]he arbitral
tribunal may rule on its own jurisdiction, including any objections with respect to the existence
or validity of the arbitration agreement; Article 16(1) then immediately goes on to provide
that [f]or that purpose, an arbitration clause which forms part of a contract shall be treated as
an agreement independent of the other terms of the contract. (143) The suggestion of this text,
at least implicitly, is that it is the separability of the arbitration clause which explains the
tribunals power to rule on its own jurisdiction. (144)
Similarly, leading institutional rules link the separability doctrine with the principle that the
arbitrator has jurisdiction to decide his own jurisdiction. Article 23(1) of the 2010 UNCITRAL
Rules provides that [f]or that purpose [dealing with the arbitral tribunals competence to
consider its own jurisdiction], an arbitration clause that forms part of a contract shall be
treated as an agreement independent of the other terms of the contract. (145) As with the
Model Law, the implication is that the separability of the arbitration clause is the basis for the
tribunals competence-competence. As one source stated this proposition: competence-
competence (i.e., competence to decide its own jurisdiction)derives from the separability of
Despite these authorities, and as discussed above, it is conceptually wrong to explain the
competence-competence doctrine by reference to the separability presumption. The
separability presumption concerns the substantive existence and validity of the arbitration
agreement, while the competence-competence doctrine concerns a tribunals power to
consider and decide jurisdictional issues when the existence, validity, or scope of the
P 1072
arbitration agreement is challenged. (147) There are circumstances (discussed below)
where the two principles intersect, (148) but they are analytically distinct concepts.
The competence-competence doctrine provides that an arbitral tribunal may consider and
decide (at least provisionally, and subject to some level of judicial review) challenges to its
own jurisdiction. (149) As discussed below, under the competence-competence principle, a
tribunal may have competence-competence regardless whether the arbitration agreement is
separable from the underlying contract and regardless whether the arbitration agreement
itself is challenged. (150)
There are instances in which the separability presumption has consequences for the
arbitrators competence-competence. In many cases, purported challenges to the arbitrators
jurisdiction will in fact be nothing more than challenges to the existence, validity, or legality of
the parties underlying contract. (151) In these circumstances, the separability presumption
provides an explanation for the conclusion that the arbitral tribunal may consider and decide
such challenges.
Specifically, because the separability presumption provides that a separable arbitration
clause is generally not affected by defects relating only to the underlying contract, an arbitral
tribunal plainly possesses jurisdiction to consider and decide the existence of such defects.
(152) In these instances, however, the arbitrators are not exercising competence to decide
challenges to their own competence (i.e., competence-competence); rather, because of the
separability doctrine, there is simply no challenge to either the arbitration agreement or the
arbitrators competence to be considered. Because the arbitration agreement is not
impeached in these circumstances, and because the arbitrators are only asked to consider
claims regarding the parties underlying contract, no issues of the arbitrators jurisdiction or
competence-competence arise. (153) Rather, there is simply an unchallenged agreement to
arbitrate a dispute about the underlying contract, with that dispute clearly being subject to
arbitration. (154)
Importantly, however, the competence-competence doctrine also (or, more accurately,
instead) applies in cases where the existence, validity, or legality of the arbitration agreement
itself, not the underlying contract, is in fact challenged. (155) In these cases, the separability of
the arbitration clause does nothing at all to explain the arbitral tribunals power to consider
P 1073 challenges to its own jurisdiction: even though the arbitral clause is separable from the
underlying contract, that arbitral clause itself is subject to challenge and therefore cannot be a
basis for the tribunals power to decide its own jurisdiction.
Accordingly, as these cases show, the jurisdiction of an international arbitral tribunal to
consider and resolve issues concerning its own jurisdiction must be derived from sources other
than the presumption that the arbitration clause is separable from the underlying contract.
That is, an arbitral tribunals competence-competence to consider challenges to the existence
or validity of any arbitration agreement is derived from the applicable law governing the
arbitral tribunals authority, rather than merely the separability doctrine. Although not
frequently addressed in detail, this conclusion is supported by well-reasoned commentary,
(156) as well as at least some national court authority. (157)
80
Simply put, the competence-competence doctrine cannot generally be a result of the
agreement to arbitrate because, by virtue of a challenge to the existence or validity of that
agreement, there is no contractual basis for the competence-competence doctrine. There is a
claim that such a contractual basis exists but there is an equally valid denial of any such basis,
and until there is an adjudication upholding that claim, there is no agreement on which to
base the arbitrators competence-competence.
A contractual basis for the arbitrators competence-competence can only exist in cases
involving challenges to something other than the existence or validity of the arbitration
agreement (e.g., challenges to the scope of the arbitration agreement); in those cases, the
P 1074 competence-competence doctrine can rest on the adjudicatory character of the
arbitrators authority, which includes as one of its inherent attributes the power to consider
challenges to the extent of the tribunals authority. (158) Importantly, however, unless the
existence or validity of the arbitration agreement is either undisputed or upheld by
adjudication, the disputed agreement to arbitrate and its (disputed) characteristics cannot
provide a basis for the arbitrators competence-competence.
Instead, the competence-competence of the arbitrators is dependent in many cases (in
particular, all cases involving challenges to the validity or existence of the agreement to
arbitrate) on the positive force of national, and international, law. Those external legal rules
provide that international arbitral tribunals have the authority to consider and to decide
(provisionally, subject to varying measures of judicial review) disputes regarding their own
jurisdiction. Thus, as discussed above, under most national legal systems, this authority is
granted even when the existence or validity of the parties arbitration agreement itself is
challenged, (159) and the results of the exercise of this authority generally subsist even after an
arbitral tribunal concludes that no valid arbitration agreement exists between the parties.
(160) Some international legal regimes grant the same authority. (161) It is these statutory (and
treaty) grants of authority that are the basis for the arbitrators competence-competence in
most cases.
The reason that contemporary national arbitration statutes and (some) international
arbitration conventions grant arbitral tribunals this sort of competence-competence is
because of the needs of the arbitral process and the basic conception of that process that
virtually all developed legal systems share. (162) Specifically, the courts and legislatures of
developed states have concluded, almost uniformly, that: (a) the arbitral process is facilitated,
greater efficiencies are realized and justice is better served if an arbitral tribunal is permitted
to consider and decide objections to its own jurisdiction, even if only in a non-binding fashion;
(163) and (b) parties agreements to arbitrate disputes about arbitral jurisdiction should be
recognized and enforced, like other agreements to arbitrate. (164)
The first of these two principles is a specialized rule, established by positive national or
international law, that applies regardless whether there is valid arbitration agreement. This
rule of law is based on the premise that time and money are saved, and fairer results
P 1075
achieved, if arbitrators are able to consider and decide (if only provisionally) challenges
to their own jurisdiction. (165) This rule applies to permit arbitrators to consider and
(provisionally) decide jurisdictional disputes regardless whether the parties have entered
into a valid arbitration agreement. The rule exists not by virtue of an arbitration agreement
(whose own existence or validity is challenged, and is thus of uncertain validity, by most
jurisdictional objections), but by virtue of positive statutory or other national and international
law that confers certain powers on a putatively-competent arbitral tribunal. This rule of
competence-competence is a fundamental aspect of the international legal regime for
international commercial arbitration and plays a highly important role in the arbitral process.
The second of the two foregoing principles is simply an application of the general rule, under
all international arbitration conventions and national arbitration statutes, that arbitration
agreements must be recognized and enforced. (166) Indeed, as discussed elsewhere, this
conclusion is mandated by the New York Convention, which requires giving effect to
agreements to arbitrate, including agreements to arbitrate jurisdictional challenges to an
arbitration agreement. (167) The consequence of this principle is that, where an arbitration
agreements existence and validity are not disputed, the Convention and national law require
giving effect to that agreement, including its provisions regarding the arbitrators competence.
An intrinsic aspect of the arbitrators competence is the authority to resolve jurisdictional
disputes, particularly disputes regarding the scope of the arbitration agreement. As discussed
below, it is inherent in the adjudicatory function for the adjudicator to resolve disputes about
the extent of his or her authority; that authority is powerfully confirmed, in the case of
international arbitral tribunals, by the universally-recognized competence-competence
principle (discussed above). (168) Where the parties have concededly agreed to arbitrate, that
agreement presumptively includes the authority to resolve disputes about the scope of the
arbitrators jurisdiction. In these cases, the parties unchallenged arbitration agreement,
recognized and enforced by the Convention and national law, provides a basis for the
competence-competence doctrine.
Additionally, as also discussed below, an agreement to arbitrate jurisdictional disputes can
confer a heightened form of competence-competence on the arbitrators, granting the tribunal
the authority not just to decide particular jurisdictional objections, but to decide them finally,
with little or no subsequent judicial review of the arbitrators jurisdictional determination.
(169) Again, where they have been concluded, it is these agreements, given effect by the New
81
York Convention and national law, that provide the basis for the tribunals competence-
competence.
P 1076
7.03 ALLOCATIONS OF JURISDICTIONAL COMPETENCE IN DIFFERENT
NATIONAL LEGAL REGIMES
As discussed above, there is a broad international consensus that international arbitral
tribunals have the competence, or jurisdiction, to consider disputes concerning their own
competence, and to exercise such competence-competence to make awards deciding such
disputes. (170) As a practical matter, international arbitral tribunals routinely entertain and
make decisions concerning jurisdictional issues; this includes challenges to both the existence,
validity, or legality of the parties underlying contract and to the existence, validity, legality, or
scope of their arbitration agreement itself. (171)
Despite this general consensus about the basic principle of competence-competence, there
are a wide variety of different approaches under different legal systems to the implementation
of this principle. In particular, national legal systems differ substantially in their treatment of
the allocation of competence to consider jurisdictional challenges between national courts
and arbitral tribunals and the appropriate role of national courts in considering such
jurisdictional challenges. Among other things, different national legal systems take very
different approaches to the timing of judicial consideration of challenges to an arbitral
tribunals jurisdiction (e.g., is interlocutory judicial consideration of jurisdictional challenges
available and, if so, when) and to the scope and character of judicial review of jurisdictional
decisions by arbitral awards (e.g., in an annulment or recognition proceeding).
The principal approaches to the subjects of competence-competence and the allocation of
jurisdictional competence under leading national legal regimes are outlined below. The
principal points of discussion are the UNCITRAL Model Law, the French New Code of Civil
Procedure, the Swiss Law on Private International Law, the FAA, the English Arbitration Act and
the Swedish Arbitration Act.
[A] Allocation of Jurisdictional Competence Under Uncitral Model Law

As detailed below, the UNCITRAL Model Law provides expressly for the competence-
P 1077
competence of international arbitral tribunals, (172) and for an allocation of jurisdictional
competence between arbitral tribunals and national courts. (173) The Model Laws provisions
on jurisdictional competence have been described as both an innovative and sensible
compromise, (174) and the worst of all worlds and likely to deter anyone from submitting a
dispute to arbitration under the Model Law. (175) At the same time, the text of the Model Law
appears not conclusively to resolve many of the most significant issues that arise in connection
with the allocation of jurisdictional competence between arbitral tribunals and national
courts. (176)
In particular, there is uncertainty regarding a number of aspects of the Model Laws basic
structure for jurisdictional challenges. This uncertainty includes: (a) the standard of review that
a court should employ in considering an interlocutory jurisdictional objection under Article 16
(prior to the making of any jurisdictional award by the tribunal), and particularly whether the
court should perform (i) a prima facie review, or (ii) a full review, of the jurisdictional
objection; (b) the standard of judicial review that a court should employ in reviewing a
jurisdictional decision by the arbitral tribunal under Article 16 or Article 34; (c) whether
different treatments of competence-competence are appropriate in (i) cases involving
challenges to the existence, validity, or legality of an arbitration agreement, and alternatively,
(ii) cases involving disputes about the scope of an arbitration agreement; (d) whether parties
may agree to final arbitral determination of issues of jurisdiction which would otherwise be
subject to judicial determination; and (e) the availability of judicial review for negative
jurisdictional decisions, in which an arbitral tribunal denies its own competence to decide the
parties substantive claims. As discussed below, neither the text nor legislative history of the
Model Law, nor judicial authority applying the Model Law, provide clear answers to most of
these questions. (177)
[1] Arbitrators Competence-Competence Under UNCITRAL Model Law
The Model Law provides express recognition of the arbitrators competence-competence,
together with a procedural framework for exercising this authority. Article 16(1) of the Model
Law does so explicitly, providing:
P 1078
The arbitral tribunal may rule on its own jurisdiction, including any objections with
respect to the existence or validity of the arbitration agreement. (178)
Article 16(3) goes on to provide that the arbitral tribunal may rule on an objection that it lacks
jurisdiction either as a preliminary question or in an award on the merits; the choice between
these two alternatives is left to the tribunals discretion. (179)
If the tribunal rules affirmatively on the jurisdictional issue as a preliminary matter, Article
16(3) provides that any party may request, within thirty days after having received notice of
that ruling, judicial review of the arbitrators jurisdictional decision. (180) Article 16(3) then
provides that, while such a request [for judicial review] is pending, the arbitral tribunal may
continue the arbitral proceedings and make an award. (181) Taken together, and consistent
with the New York Convention, (182) these provisions contemplate that arbitrators may hear
82
challenges to their own jurisdiction and make a decision regarding such disputes, subject to
immediate judicial review of the jurisdictional award a process aimed at allowing speedy
and relatively decisive resolution of jurisdictional disputes. (183)
National courts in Model Law jurisdictions have consistently recognized that Article 16 confirms
the arbitrators positive competence-competence. (184) Commentary is to the same effect.
(185) There are no serious contrary views.
P 1079
[2] Interlocutory Judicial Consideration of Objections to Arbitrators Jurisdiction Under
UNCITRAL Model Law
Despite its recognition of the arbitrators competence-competence, the UNCITRAL Model Law
also provides for the possibility of interlocutory judicial resolution of jurisdictional disputes.
There are a variety of approaches to the character of interlocutory judicial consideration of
jurisdictional objections that are available under the Model Law, with different jurisdictions
taking different approaches to the issue; some courts provide for full (or independent) judicial
consideration of jurisdictional disputes while other courts provide only for prima facie judicial
review. (186)
[a] Article 8 of UNCITRAL Model Law: Interlocutory Judicial Consideration of Jurisdictional
Disputes
Operating in parallel to Article 16s recognition of the arbitrators competence-competence,
Article 8(1) of the Model Law provides that a national court, which is presented with a claim
that is allegedly subject to arbitration, shall refer the parties to arbitration unless it finds that
the agreement is null and void, inoperative or incapable of being performed. (187) Article 8(2)
goes on to provide that, if judicial proceedings pursuant to Article 8(1) are initiated, arbitral
proceedings may nevertheless be commenced or continued, and an award made, while the
issue is pending before the court. (188) In turn, Article 16(3) and, arguably, Articles 34(2)(a)(i)
and (iii) provide for judicial review of jurisdictional decisions by arbitral tribunals. (189)
The text of Article 8 makes it reasonably clear that an interlocutory judicial decision on
jurisdictional issues is potentially available under the Model Law prior to any decision by an
arbitral tribunal on such issues. As noted above, that is evident from Article 8(1), which
provides that a court shall refer the parties to arbitration, unless it finds that the agreement is
null and void, inoperative or incapable of being performed a formulation that almost
inevitably indicates a judicial application of these standards. (190) The possibility of
interlocutory judicial consideration of jurisdictional issues is also evident from Article 8(2)s
proviso that arbitral proceedings may continue even after an action in national court has been
brought under Article 8(1) to resolve jurisdictional disputes. (191)
P 1080
Thus, the basic structure of the Model Law is: (a) to permit arbitral tribunals to consider
and decide jurisdictional issues in an award (in an exercise of the arbitrators competence-
competence under Article 16(1)), (b) with any jurisdictional ruling subject to very prompt
subsequent judicial review (under Article 16(3) or, arguably, Article 34), but also (c)
interlocutory judicial consideration of jurisdictional issues available prior to, or in parallel
with, any arbitral decision (under Article 8(1)), while (d) the arbitral proceedings continue
notwithstanding judicial review of the jurisdictional ruling (under Article 8(2) (192) ). This
approach makes it entirely possible that a national court may decide jurisdictional issues
before the arbitral tribunal itself does so, and that such judicial decisions may at least
potentially preempt the tribunals jurisdictional decision. (193)
The Model Law apparently adopts the foregoing approach for all jurisdictional issues
concerning the existence, validity, or legality of the arbitration agreement. That is, an arbitral
tribunal possesses competence-competence irrespective of the nature of the jurisdictional
challenge to the arbitration agreement. (194) For example, an arbitral tribunal possesses
jurisdiction to consider its own jurisdiction even where a party denies the existence of any
contract at all with its counter-party (and either thereby or separately denies ever having been
party to any arbitration agreement at all); (195) a tribunal also possesses competence-
competence in other cases, including challenges to the validity or legality of the arbitration
agreement and to the scope of the agreement.
The opening sentence of Article 16(1) makes clear that the existence and validity of the
arbitration agreement are jurisdictional issues; that sentence refers to the arbitrators
authority to decide any jurisdictional objections, including any objections with respect to the
existence or validity of the arbitration agreement. Courts in Model Law jurisdictions have
affirmed this conclusion. (196)
Whether the definition of jurisdiction for purposes of Article 16(1) extends to issues other than
the existence, validity and scope of the arbitration agreement depends in part on the meaning
of Article 16(1)s use of the word including (in the provisions first sentence). One court held
that an arbitral tribunals ruling that it lacked authority to issue interim measures was a
jurisdictional decision, which could be reviewed under Article 16(3). (197) Other courts have
held that disputes over the location of the arbitral seat (198) and the validity of an arbitration
P 1081
clause providing for arbitration administered by one institution but governed by the rules
of another institution (199) were jurisdictional issues for purposes of Article 16(3).
Some Model Law courts have concluded that Article 8(1) does not allow for interlocutory
judicial consideration of jurisdictional issues unless the court is seized of an action dealing
with the merits of the dispute. (200) Other courts have apparently permitted interlocutory
83
jurisdictional challenges under Article 8(1) even in the absence of an underlying action on the
merits in national court (i.e., permitting a party directly (and only) to seek a judicial decision
on disputed jurisdictional issues under Article 8). (201)
[b] Prima Facie Versus Full Judicial Consideration of Interlocutory Jurisdictional Challenges
Under UNCITRAL Model Law
When a party seeks an interlocutory judicial determination of jurisdictional objections, prior to
any arbitral decision on the subject, there is uncertainty regarding the standard of judicial
review that should be applied by a court under the Model Law. As discussed below, the text of
the Model Law, and many judicial authorities in Model Law states, strongly suggest that full
judicial review of the jurisdictional objection is appropriate, at least in some circumstances. In
contrast, as also discussed below, some Model Law judicial authority, and some aspects of the
Model Laws drafting history, suggest that only prima facie interlocutory judicial consideration
is ever appropriate. (202)
[i] Full Judicial Consideration of Interlocutory Jurisdictional Challenges Under UNCITRAL Model
Law
The text of Article 8(1) fairly clearly suggests that, at least in some circumstances, full judicial
consideration of most jurisdictional issues is appropriate and arguably required in
interlocutory judicial challenges to an arbitral tribunals jurisdiction. Article 8(1) provides that,
where a suit is brought in a matter which is the subject of an arbitration agreement, the
national court shallrefer the parties to arbitration, unless it finds that the agreement is
null and void, inoperative, or incapable of being performed. (203) This requires that claims be
referred to arbitration unless the court finds that the relevant arbitration agreement is null
and void, inoperative, or incapable of being performed.
Although it is possible to interpret Article 8s formula, referring to cases where a court finds
that the agreement is null to mean finds on a prima facie basis that the agreement may not
be null or finds that the agreement is arguably not null, these are not natural readings. The
P 1082
ordinary meaning of the language used strongly implies that the courts mission under
Article 8(1) includes making a determination (i.e., a find[ing]) whether or not the agreement is
valid. (204)
At the same time, Article 8(2) recognizes the difficulty of prescribing precise, generally-
applicable formulae for the procedural conduct of parallel judicial and arbitral proceedings
regarding jurisdiction. It does so by granting the arbitral tribunal discretion (i.e., the tribunal
may continue the arbitration) to proceed with arbitral proceedings pending a judicial
challenge to jurisdiction. (205) As discussed below, similar considerations apply, in the
converse situation, to a national courts decision whether and how to consider an interlocutory
jurisdictional challenge. (206)
The drafting history of the Model Law also points in the direction of permitting full
interlocutory judicial consideration of at least some jurisdictional objections. The most direct
evidence is the fact that the Laws drafters rejected a proposal that would have expressly
provided, in what is now Article 8(1), for national courts to refer claims to arbitration, save
where a court finds that the agreement is manifestly null and void. (207) The rejection of this
language was particularly significant given that it was precisely parallel to the text of the then
recently-adopted 1981 French New Code of Civil Procedure, which provided for only prima facie
judicial review. (208) Rejection of a proposal that would have replicated this approach
confirms the natural meaning of the language of Article 8(1) as permitting full, not prima facie,
judicial review. (209)
P 1083
Nonetheless, some commentators have argued that the Model Laws legislative history is
either inconclusive or supportive of a mandatory prima facie judicial review standard in all
cases. This interpretation rests on the existence, in early drafts of the Model Law (including at
the time the prima facie review standard was rejected), of a provision in what was then Article
17 of the Model Law, permitting a party resisting arbitration to apply for a judicial declaration
that no valid arbitration agreement existed. (210) In particular, this analysis rests on the
subsequent deletion of these provisions of Article 17 and the explanation that:
the prevailing view was in favor of deleting article 17 since it might have adverse effects
throughout the arbitral proceedings by opening the door to delaying tactics and obstruction
and because it was not in harmony with the principle underlying article 16 that it was initially
and primarily for the arbitral tribunal to decide on its competence, subject to ultimate court
control. (211)
Contrary to some suggestions, (212) this language is at best inconclusive, and more likely
irrelevant, in making a choice between full versus prima facie judicial consideration. The
essential point is that the rejection of Article 17s provision allowing respondents to seek
judicial declarations regarding arbitral jurisdiction did not have any effect on (current) Article
8(1)s terms or, equally important and more obviously, on the civil litigation systems of states
that adopt the Model Law: a respondent who wishes to commence litigation, exercising its
general right of access to the courts, is free to do so, and it is Article 8(1) that defines the
judicial mandate in those circumstances (and not the former Article 17 or current Article 16).
As already discussed, Article 8(1) does not require prima facie judicial consideration in such
actions an approach which, as noted above, was expressly considered and rejected (213)
P 1084
but instead permits full judicial consideration. (214) Equally critically, the deletion of the
84
former Article 17 and the accompanying drafting explanation quoted above (215) are in no
way decisive or even relevant as to the meaning of Article 8(1). On the contrary, the text quoted
above is specifically directed to the principle underlyingarticle 16 that it was initially and
primarily for the arbitral tribunal to decide on its competence, subject to ultimate court
control. (216)
The essential point here is that the Model Law like most arbitration legislation (217) sought
in the combined provisions of Articles 8 and 16 to balance the competing alternatives of initial
judicial and arbitral determination of jurisdiction; ignoring the text of Article 8, based upon
the purpose of only Article 16, is to assume ones own conclusion. (218) The most direct
evidence in the drafting history, therefore, remains the rejection of the proposal to amend
Article 8(1) to require prima facie, rather than full, interlocutory judicial consideration: that
drafting choice was specifically focused on the full review and prima facie jurisdiction
standards, and it deliberately rejected the latter.
At the same time, however, it is equally important to note that neither Article 8(1) nor any other
provision of the Model Law requires full interlocutory judicial review to be exercised in every
case. Nothing in Article 8(1) would prevent a court, if it concluded that a respondent was
engaging in dilatory tactics or that it would be efficient or just to permit an initial
jurisdictional award by the arbitrators, from conducting only a prima facie interlocutory
judicial review. Indeed, the procedural discretion afforded to the arbitrators with regard to
jurisdictional matters under Article 8(2) (and Article 16(3)) should logically apply with equal
force in national court proceedings. (219) Consistent with this, and as discussed in greater
P 1085
detail below, a substantial body of judicial authority in Model Law jurisdictions recognizes
the power of national courts to stay litigation of jurisdictional issues pending arbitral
Not surprisingly, given the statutory text and drafting history, the weight of better-reasoned
national court authority in UNCITRAL Model Law jurisdictions has interpreted Article 8(1) as
permitting full judicial consideration (rather than only prima facie review) in either all or some
cases involving interlocutory challenges to the existence, validity, or legality of the arbitration
agreement (but not as to the scope of that agreement, which is treated differently (221) ). That
is the case with judicial decisions in Germany, (222) New Zealand, (223) Australia, (224) England,
P 1086
(225) Austria, (226) Ireland (tentatively), (227) Spain, (228) Croatia, (229) Mexico, (230)
Kenya, (231) Uganda, (232) Canada (although authority is divided), (233) and Hong Kong
(although authority is divided, with the weight of authority to the contrary). (234)
P 1087
[ii] Prima Facie Judicial Consideration of Interlocutory Jurisdictional Challenges Under
UNCITRAL Model Law
Despite the foregoing analysis, a number of other courts in Model Law states have reached the
opposite result, particularly in cases involving disputes over the scope of the arbitration
agreement, holding that only prima facie interlocutory judicial review is appropriate in
determining whether to refer a matter to arbitration. (235) This includes decisions in India,
(236) Bermuda, (237) Canada (although, as noted above, authority is divided) (238) and Hong
Kong (again, authority is divided). (239)
P 1088
Thus, a prima facie approach was adopted as to issues of scope and the identities of the
parties to the arbitration agreement in Gulf Canada Resources Ltd v. Arochem Intl Ltd, where
the British Columbia Court of Appeal held that:
it is not for the court on an application for a stay of proceedings to reach any final
determination as to the scope of the arbitration agreement or whether a particular party to
the legal proceedings is a party to the arbitration agreement, because those are matters
within the jurisdiction of the arbitral tribunal. Only where it is clear that the dispute is outside
the terms of the arbitration agreement, or that a party is not a party to the arbitration
agreementshould the court reach any final determination.Where it is arguable that the
dispute falls within the terms of the arbitration agreement or where it is arguable that a party
to the legal proceedings is a party to the arbitration agreement then, in my view, the stay
should be granted and those matters left to be determined by the arbitral tribunal. (240)
The courts holding was limited by its terms to questions of the scope of an arbitration clause
and the identity of the parties, and did not extend to questions of the existence or validity of
any arbitration agreement at all. In subsequent decisions, Canadian courts have also generally
applied a prima facie approach in interlocutory disputes over the scope of the arbitration
agreement, (241) while often applying a full judicial review standard to interlocutory disputes
over the existence of a valid arbitration agreement. (242) A few other Canadian decisions seem
to take into account the apparent strength of a jurisdictional objection, only finally resolving
jurisdictional objections which are clear-cut, while referring other issues to arbitration. (243)
On a close analysis, the general (albeit by no means unanimous) approach of Canadian courts
P 1089
to Article 8 appears to have been that a court has discretion to determine whether it is
wiser to apply a prima facie or a full judicial review, depending upon the issues involved (e.g.,
validity/existence versus scope) and the strength of the arguments for and against the
existence and applicability of an arbitration agreement. (244) Canadian courts have also held,
in some cases, that parallel judicial and arbitral proceedings on jurisdictional issues are
permissible. (245)
At the same time, other approaches also have been adopted by Canadian courts. For example,
85
in Dell Computer Corp. v. Union des Consommateurs, the Canadian Supreme Court considered
whether, under Qubecs version of the Model Law, a challenge to the validity and legality of
an arbitration clause (in a consumer contract) should be resolved in the first instance by
Canadian courts or by the arbitral tribunal. (246) The court held that, where only issues of law
were involved, full interlocutory judicial review is required, but that where issues of fact or
issues of mixed law and fact are concerned, prima facie judicial review is appropriate. (247)
Thus, the court in Dell Computer adopted a general rule that in any case involving an
arbitration clause, a challenge to the arbitrators jurisdiction must be resolved first by the
arbitrator, and that a court should depart from the rule of systematic referral to arbitration
only if the challenge to the arbitrators jurisdiction is based solely on a question of law. (248)
The court justified this approach on the grounds of:
the courts expertise in resolving such questions [of law],the fact that the court is the forum
to which the parties apply just when requesting referral and,the rule that an arbitrators
decision regarding his or her jurisdiction can be reviewed by a court. (249)
Other Canadian decisions, applying the Model Law, have adopted a similar approach, referring
jurisdictional disputes which are primarily factual to arbitration, while permitting
interlocutory judicial consideration of disputes which involve primarily legal considerations.
(250) In contrast, some Canadian decisions have suggested that the Dell Computer approach is
P 1090
not generally-applicable outside Qubec (where special statutory recognition of the
arbitrators competence-competence is said to exist). (251)
Hong Kong courts appear to have adopted a prima facie judicial review standard more
generally, including in cases involving disputes over the existence and validity of the
arbitration agreement. In Pacific Crown Engineering Ltd v. Hyundai, the Hong Kong Court of
Appeal held that [t]he proper test is therefore is there a prima facie or plainly arguable case
that the parties were bound by an arbitration clause, (252) a holding that the same court has
subsequently reaffirmed. (253)
Lower Hong Kong courts have generally applied this standard, again in cases involving
challenges to the validity or existence of arbitration agreements, as well as challenges to the
scope of the arbitration agreement. In Pacific International Lines Pte Ltd v. Tsinlien Metals and
Minerals Co., (254) for example, the claimant initiated arbitration pursuant to an arbitration
agreement contained in a charter party. The defendant refused to participate in the arbitral
proceedings, and the claimant applied to the Hong Kong High Court for appointment of an
arbitrator. Rejecting the argument that there was no valid arbitration agreement, the Court
ordered the defendant to appoint an arbitrator, because it was:
satisfied that there is a plainly arguable case to support the proposition that there was an
arbitration agreement which complies with Art. 7 of the Model Law, [and therefore] should
proceed to appoint the arbitrator in the full knowledge that the defendants will not be
precluded from raising the point before the arbitrator and having the matter reconsidered by
the court consequent upon that preliminary ruling. (255)
Other Hong Kong courts have also explicitly adopted the prima facie standard of interlocutory
judicial review under Article 8(1), including in cases involving disputes over the existence and
P 1091
validity of the arbitration agreement. (256) They have reasoned that [i]f the judgment
were to go into the matter more deeply, [the court] would in effect be usurping the function of
the arbitrator. (257)
A few Hong Kong lower court decisions adopt a standard of full judicial review, particularly in
cases involving challenges to the validity or existence of the arbitration agreement. (258) The
better view of these cases is that the applicable standard of review did not affect their results
and that they do not reflect any real departure from the Court of Appeals adoption of the
prima facie standard.
Finally, a recent decision of the Indian Supreme Court apparently also adopts a prima facie
standard for all jurisdictional objections, including issues of formation, validity and scope. In
Shin-Etsu Chemical Co. v. Aksh Optifibre Ltd, the Court held:
Undoubtedly, an international commercial arbitration involves huge expenses, particularly
where the parties have subjected the contract to a foreign law. But, that cannot be a deterrent
to this Court from pronouncing on the correct approach to be adopted under Sect. 45 of the Act
[equivalent to Article 8 of the Model Law]. In fact,adopting a final and determinative
approach under Sect. 45 may not only prolong proceedings at the initial stage but also
correspondingly increase costs and uncertainty for all the parties concerned. Finally, having
regard to the structure of the Act, consequences arising from particular interpretations,
judgments in other jurisdictions, as well as the opinion of learned authors on the subject, I am
of the view that, the correct approach to be adopted under Sect. 45 at the pre-reference stage,
is one of a prima facie finding by the trial court as to the validity or otherwise of the arbitration
agreement. (259)
P 1092
Among other things, the Court relied on decisions in Canada and Hong Kong (discussed
above) adopting an interlocutory prima facie analysis. (260) Notwithstanding the Shin-Etsu
decision, where Indian courts are requested to appoint an arbitrator, it appears that they will
conduct full interlocutory judicial consideration as to whether there is a valid agreement to
arbitrate. (261)
Some UNCITRAL Model Law decisions have suggested that courts have discretion to decide
86
whether or not to refer a jurisdictional dispute to arbitration, depending on considerations of
efficiency and equity in particular cases. (262) In the words of one (dissenting) opinion, [a]
British Columbia court must grant a stay of proceedings unless it concludes that the arbitration
agreement is void, inoperative or incapable of being performed. However, the fact that a
court can rule on its jurisdiction does not mean that it is required to do so. (263)
Or, as another Canadian decision reasoned:
Article 16(1) of the Model Law is, in my view, permissive in that it give[s] the arbitration
tribunal the authority to rule on its jurisdiction but, in doing so, does not oust the jurisdiction
of this Court to rule on the issue. Moreover, where as here, it is necessary to determine, as a
preliminary matter, the substance or the gist of the plaintiffs claim in order to determine
whether the parties agreed to arbitrate that issue and where, as here, that preliminary
determination is not a matter with respect to which an arbitration tribunal would have any
special expertise or other advantage over this Court, I find that it is necessary for this Court to
make that preliminary finding. (264)
Finally, some courts have relied on the absence, in Article 1(2) of the Model Law (specifying the
P 1093
territorial scope of the Law), of any reference to Article 16 to hold the prima facie
approach inapplicable where the arbitral seat is abroad. (265) On the other hand, in some
cases involving a foreign arbitral seat, courts in Model Law jurisdictions have applied the
prima facie approach. (266)
[c] Potentially Different Treatment of Challenges to Existence, Validity, or Legality of
Arbitration Agreement and to Scope of Arbitration Agreement Under UNCITRAL Model Law
Another area of uncertainty under the Model Law is whether the same treatment should be
accorded by arbitral tribunals and national courts to all jurisdictional objections, regardless
whether they are directed towards (a) the existence, validity, or legality of an arbitration
agreement, or (b) the scope of an arbitration agreement. This is an issue that has received
limited attention, but that has important practical and analytical consequences.
A convincing argument can be made, based on the text of the Model Law, that an interlocutory
judicial decision on jurisdictional issues under Article 8(1) is contemplated only in
circumstances where the existence or validity of the arbitration agreement is challenged, as
distinguished from a jurisdictional challenge concerning the scope of an admittedly valid
agreement. That is indicated (but not conclusively) by Article 8(1)s requirement that a court
refer the parties to an action to arbitration unless it finds that the agreement is null and void,
inoperative or incapable of being performed; (267) in contrast, Article 8(1) does not appear to
permit a court to retain jurisdiction over a dispute because it concludes that a claim falls
outside the scope of the arbitration agreement. (268) According to this interpretation, in cases
where only a dispute about the scope of a valid, operative arbitration agreement is concerned,
then Article 8(1) requires that the court refer the parties to arbitration without resolving that
type of jurisdictional objection (save, arguably, where it is manifest that no possible
interpretation of the arbitration clause would encompass the claims). (269)
P 1094 This textual distinction finds support in the language of Articles 8, 34 and 36 of the Model
Law. Both Article 34(2)(a)(iii) and Article 36(1)(a)(iii) make express reference to awards which
deal[] with a dispute not contemplated by or not falling within the terms of the submission to
arbitration. (270) Comparable text, referring to the scope of the arbitration agreement, is
conspicuously missing from Article 8 of the Model Law, which refers only to claims concerning
the existence and validity of arbitration agreements (null and void, inoperable or incapable of
being performed). Articles 34(2)(a)(i) and 36(1)(a)(i) then refer separately to awards where the
underlying arbitration agreement was not valid a textual reference that corresponds to that
in Article 8 and not to awards that exceed the scope of the arbitration agreement or the
arbitrators jurisdiction. From a textual perspective, therefore, the Model Law provides
considerable support for an interpretation that would leave disputes over the scope of an
arbitration clause to the arbitral tribunal, subject only to subsequent judicial review under
Articles 16, 34 or 36.
The foregoing interpretation of Article 8(1) rests on the distinction between a jurisdictional
challenge that denies the existence or validity of any arbitration agreement at all, and one
that accepts the existence of a valid arbitration agreement, but disputes its scope. Under this
interpretation, the former category of jurisdictional objections would be for full interlocutory
judicial consideration, while the latter would be for initial determination by the arbitrators (or,
arguably, only prima facie interlocutory judicial review). (As discussed above, the same textual
distinction is made by Articles II(3) and V(1)(c) of the New York Convention. (271) )
Also arguing for this interpretation is the fact that jurisdictional objections based on the scope
of the arbitration agreement are far more limited in nature and in consequences than disputes
involving the existence or validity of the agreement, and proceed from a fundamentally
different starting point regarding the parties relations and obligations. The former category of
jurisdictional objection starts from a shared premise that the parties made a commitment to
arbitrate with one another, before a tribunal in an agreed manner, about at least some
category of disputes, but that they now disagree regarding the precise scope of their tribunals
jurisdiction.
This differs fundamentally from a dispute as to whether the parties ever made any agreement
with one another or whether an arbitral tribunal can validly do anything at all or even is an
87
arbitral tribunal. Deciding jurisdictional objections about the scope of the arbitration
agreement is also inextricably intertwined with the tribunals conceded mandate of
P 1095 interpreting and applying the parties underlying contract and the provisions of applicable
law. (272) Given these characteristics of jurisdictional objections based upon the scope of
the arbitration clause, it makes eminent sense that the Model Law would not provide for
interlocutory judicial consideration of such issues, but would instead provide for the arbitral
tribunal first to issue a jurisdictional award.
This interpretation of the Model Law has been adopted in at least some national court
decisions. In Rio Algom Ltd v. Sammi Steel Co. Ltd, (273) the purchaser referred a post-
acquisition dispute to arbitration under a share purchase agreement. The seller refused to
participate in the arbitration and commenced an action before the Ontario courts challenging
the jurisdiction of the arbitral tribunal as outside the scope of the arbitration clause. The
Ontario appellate court ordered the parties to arbitrate, reasoning:
jurisdiction and scope of authority are for the arbitrator to determine in the first instance,
subject to later recourse to set aside the ruling or award. The role of the court before
arbitration appears to be confined to determining whether the arbitration clause is null and
void, inoperative or incapable of being performed (Art. 8) if not, it is mandatory to send the
parties to arbitration. (274)
Other Canadian decisions adopt similar analyses, holding that it is generally for the arbitral
tribunal to determine the scope of the arbitration agreement (save where it is clear that a
dispute falls outside that agreement), while it is for the courts to determine the existence and
validity of the arbitration agreement. (275) A few Canadian decisions have reached contrary
conclusions, but they are less convincingly reasoned. (276)
In sum, the text and the purposes of the Model Law support a distinction between
jurisdictional objections based on the alleged non-existence, invalidity, or illegality of the
arbitration agreement (where immediate judicial determination on the merits is permitted)
and jurisdictional objections based upon the scope of a concededly valid arbitration
agreement (where interlocutory judicial determination is not permitted, save in instances
where it is manifest that the arbitration clause does not encompass the matter in question).
P 1096 That distinction also finds support in the weight of better- reasoned national court
authority in Model Law jurisdictions, albeit not uniformly applied or clearly articulated.
[3] Agreements to Finally Resolve Jurisdictional Disputes by Arbitration Under UNCITRAL
Model Law
Another area of uncertainty under the Model Law is the effect, if any, of agreements to finally
resolve jurisdictional objections by arbitration. Parties not infrequently agree (in a valid
arbitration agreement) that they will submit any disputes about the scope of their arbitration
agreement to the arbitral tribunal for resolution. Such an agreement gives rise to questions as
to: (a) the parties right to seek interlocutory judicial determination of jurisdictional objections
under Article 8(1), and (b) the standard of subsequent judicial review of a jurisdictional award.
There is little precedent on these subjects under the Model Law and what authority exists is
divided. As discussed below, German authorities reason (wrongly) that, under Germanys
enactment of the Model Law, the traditional German conception of Kompetenz-Kompetenz has
been abrogated and cannot be adopted even by express agreements granting arbitrators the
power to make final determinations of their own jurisdiction. (277) In contrast, English courts
have interpreted Englands variation of the Model Law as permitting agreements that grant
arbitral tribunals the power to make final jurisdictional decisions. (278) The latter view is
clearly preferable, for reasons elaborated below. (279)
It might be argued that Articles 8 and 16 of the Model Law do not expressly provide for the
possibility of contrary agreements by the parties, in contrast to many other provisions of the
Model Law, which expressly confer power on the parties to reach agreement on a particular
matter or are qualified by the proviso unless otherwise agreed by the parties. (280) Despite
these textual provisions, the absence of express confirmation of the parties autonomy in
Articles 8 and 16 is not decisive.
It is beyond dispute that parties could deny an arbitral tribunals competence-competence
under Article 16(1), or could regulate the timing and procedures of a tribunals consideration
and disposition of jurisdictional issues under Article 16(3), or could alter the remedies
available for breach of an agreement to arbitrate under Articles 8(1) and 8(2). There can be no
serious doubt but that parties could, as part of their general procedural autonomy, (281)
validly agree to these aspects of the arbitrators mandate. More fundamentally, there is no
adequate justification for denying the parties autonomy with regard to fundamental aspects of
P 1097
the arbitral process (i.e., disposition of jurisdictional disputes) absent clear statutory
language. The silence of Articles 8 and 16 provides no such language.
Finally, an agreement to arbitrate jurisdictional disputes does not divest courts of all authority
under Article 8, but instead merely affects the nature of the issues presented for judicial
review. Specifically, the reviewing court would be charged with considering whether there was
a valid agreement to arbitrate jurisdictional disputes, rather than with deciding the merits of
those jurisdictional disputes themselves.
[4] Availability of Judicial Review of Jurisdictional Decisions by Arbitral Tribunal Under
UNCITRAL Model Law
88
Article 16(3) of the Model Law provides that arbitral tribunals may consider and render
decisions on challenges to their own jurisdiction (including claims that the arbitration
agreement was non-existent, invalid, or illegal or that it did not encompass some or all of the
parties disputes or claims). Article 16(3) provides:
The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a
preliminary question or in an award on the merits. (282)
Article 16(3) also provides for relatively prompt judicial review of arbitrators jurisdictional
rulings:
If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may
request, within thirty days after having received notice of that ruling, the court specified in
article 6 to decide the matter, which decision shall be subject to no appeal; while such a
request is pending, the arbitral tribunal may continue the arbitral proceedings and make an
award. (283)
Although superficially straightforward, Article 16(3) gives rise to some significant uncertainties.
[a] Characterization of Arbitral Tribunals Jurisdictional Ruling Under Article 16(3) of UNCITRAL
Model Law
First, Article 16(3) does not expressly prescribe the form or character of an arbitral tribunals
jurisdictional decision and, in particular, does not address the question whether a preliminary
decision solely on jurisdictional grounds by an arbitral tribunal under Article 16(3) is an
P 1098
award. (284) On the contrary, Article 16(3) provides that the arbitral tribunal may rule
on a jurisdictional objection either as a preliminary question or in an award on the merits.
That text at least arguably implies that a preliminary decision rul[ing] on jurisdiction is not
an award (given the different terminology used in Article 16(3) for the two types of decisions).
The characterization of the arbitrators jurisdictional ruling is of importance because only
awards are subject to recognition and enforcement (under Articles 35 and 36 of the Model
Law and Article V of the New York Convention). (285) If the arbitrators decision on jurisdiction
is only a procedural ruling, it is not subject to the pro-enforcement regime of the Model Law
and Convention that applies to awards and cannot be recognized and enforced as an award.
The better reading of the Model Law is that an arbitral tribunals jurisdictional decision under
Article 16(3) should be characterized as an award (regardless whether it is a positive or
negative jurisdictional decision). It is true that characterizing a jurisdictional ruling as an
award is in tension with the text of Article 34, which provides that the only recourse against an
award is set forth exclusively in Article 34 (thus arguably not catering for the review of
jurisdictional rulings that is available under Article 16(3)). (286) A few national court decisions
(in Singapore and Hong Kong) have adopted this view of the Model Law. (287)
The more persuasive view, however, is that Articles 16(3) and 34 can, and should, be read
together. The general terms of Article 34 impliedly permit the expedited judicial review that is
provided for by the specific terms of Article 16(3), while Article 34 provides the substantive and
choice-of-law standards that must be applied under Article 16(3). (288) The two provisions not
P 1099 only can be reconciled, but failing to do so would leave each partially incomplete. A
systematic interpretation prevents these deficiencies, while giving effect to the Model Laws
objectives of ensuring prompt judicial review, and subsequent enforcement, of arbitrators
decisions.
At the same time, a systematic interpretation permits the same standards to be applied to
judicial review of jurisdictional rulings by arbitral tribunals regardless whether they are made
in preliminary rulings (under Article 16(3)) or reserved for the tribunals final award (and
judicial review under Articles 34(2)(a)(i) and (iii)). Indeed, it would be anomalous, at best, to
conclude that a jurisdictional ruling in a final award is (part of) an award, but that a
preliminary jurisdictional ruling is not an award.
[b] Characterization of Judicial Decision Under Article 16(3) of UNCITRAL Model Law
Second, and relatedly, Article 16(3) also does not expressly prescribe the form or character of a
courts decision reviewing an arbitral tribunals ruling on jurisdictional objections, instead
providing that the court shall decide the matter, making a decision. Article 16(3) does not
provide, at least in express terms, for setting aside or annulment of the arbitrators
jurisdictional decision; moreover, as noted above, Article 16(3) prescribes a different time
period for seeking judicial review than that applicable to annulment under Article 34. (289)
The characterization of a courts decision under Article 16(3) arguably has implications for the
standard of review applicable when a court reviews the arbitrators jurisdictional decision. A
decision is arguably an independent and de novo process that accords no (or little)
deference to the arbitrators jurisdictional ruling, while annulment or setting aside arguably
implies a measure of deference in the course of judicial review of the arbitrators ruling. This is
of some practical significance: although most courts hold in annulment settings that de novo
judicial consideration of jurisdictional objections is appropriate, they also (properly) afford a
measure of defence to arbitrators factual and legal conclusions on jurisdiction). (290)
Again, the better view of the Model Law is that judicial decisions rejecting arbitrators
jurisdictional rulings are properly characterized as annulment or setting aside decisions.
This systematic interpretation of the Model Law ensures that decisions by reviewing courts on
89
jurisdictional issues are characterized in the same manner regardless whether the arbitral
tribunal makes a preliminary jurisdictional ruling or includes its jurisdictional decision in a
final award.
P 1100
[c] Availability of Judicial Review of Arbitrators Negative Jurisdictional Ruling Under
Article 16(3) of UNCITRAL Model Law
Third, the Model Law also does not expressly address the availability of judicial review of an
arbitral tribunals negative jurisdictional determination (i.e., awards holding that there is no
valid arbitration agreement or that the parties dispute falls outside the scope of such an
agreement). As noted above, Article 34(2)(a) contains provisions (subparagraphs (i) and (iii))
that obviously apply to positive jurisdictional determinations; (291) Article 16(3) is similar,
expressly applicable to positive jurisdictional decisions. (292) By their terms, none of these
provisions apply to negative jurisdictional determinations. The drafting history of the Model
Law is also inconclusive regarding the availability (and scope) of judicial review of negative
jurisdictional decisions. (293)
There is little national court authority in Model Law states regarding the availability or scope
of judicial review of negative jurisdictional determinations by arbitral tribunals. One
problematic exception is a 2002 decision of the German Bundesgerichtshof, also discussed
below, holding that there is no possibility of judicial review of a negative jurisdictional award.
(294)
The Bundesgerichtshofs decision is supported as a textual matter by the absence of express
language in the Model Law that would provide a basis, or mechanism, for annulling a negative
jurisdictional determination. (295) It is contradicted, however, by the grave unfairness and
inefficiency that would attend such a result (also discussed below). (296) It is also contradicted
by decisions providing for judicial review of negative jurisdictional awards in other
P 1101
jurisdictions that are based on the UNCITRAL Model Law, (297) as well as judicial decisions
and national arbitration legislation in non-Model Law jurisdictions (including Switzerland,
(298) Belgium, (299) Sweden, (300) France, (301) England, (302) the United States (303) and Italy
(304) ).
The Bundesgerichtshofs decision considered an arbitral tribunals ruling, in an instrument
unhappily titled partial procedural arbitral ruling interim decision, (305) where the tribunal
held that it lacked jurisdiction. The Bundesgerichtshof first held that the tribunals decision
was in fact an award however it might have been titled by the arbitrators because it was
an exercise of the tribunals competence-competence to determine its own jurisdiction. (306)
In reaching the foregoing conclusion, the German court correctly rejected the views of Professor
Sanders that arbitrators issuing a negative ruling declare that they are not in a position to
render an award. (307) Professor Sanders view misconceives the nature of the competence-
competence doctrine, which provides that arbitrators do have the power to consider and
decide jurisdictional objections (308) and thus, that they are in a position to render an
award on such objections, whether positively or negatively. In particular, Professor Sanders
view ignores the fact that national (and international) legal regimes grant an arbitral tribunal
the power to consider and decide jurisdictional issues, specifically, in Article 8 of the Model
Law and its counterpart in 1040(1) of the German ZPO. The fact that the exercise of this power
P 1102
results in a determination of no jurisdiction in no way contradicts or undermines the
existence of this power, but is rather an inevitable consequence of it. (309)
Despite the foregoing, the Bundesgerichtshofs 2002 decision then went on to hold that there
was no basis under German law to annul a negative jurisdictional award. The court held that, in
principle, a negative jurisdictional award could be annulled under 1059 of the ZPO (the
equivalent to Article 34 of the Model Law). (310) But the court then concluded that there were
no substantive grounds under 1059(2) (and, by analogy, Article 34(2) of the Model Law) for
annulling an award because it reached an incorrect negative jurisdictional determination. (311)
The court acknowledged, of course, that an award that contained a separate defect under
1059(2) (or Article 34(2)) could be annulled on those grounds (e.g., a defect in arbitral
procedures or constitution of the tribunal or a public policy violation). But the
Bundesgerichtshof reasoned that there was no basis for either de novo or any other substantive
review of an arbitral tribunals determination that it lacked jurisdiction. (312)
In support of this conclusion, which is subject to serious criticisms, the Bundesgerichtshof
adopted an archaic rationale that is badly out of step with both Germanys adoption of the
Model Law and international developments over the past several decades. Specifically, the
Bundesgerichtshof reasoned that there was no real need for judicial review of a negative
jurisdictional determination, because such a decision merely returned the parties to their
lawful judge, being national courts. (313)
This is a profoundly unsatisfactory conception of international arbitration. It is contradicted by
the frequency with which commercial parties choose arbitration to resolve their international
business disputes, (314) by the powerful pro-arbitration policies underlying the New York
Convention and the Model Law (315) and by the incongruities of referring to a lawful judge in
international disputes (where there are inevitably multiple potentially lawful judges, which is
precisely one of the reasons that parties agree to arbitrate such disputes). (316)
P 1103
For similar reasons, it is impossible to accept the conclusion that the German
Bundesgerichtshof is correct, on the theory that [t]he parties will be free to pursue their
90
claim before the state court as there is a binding decision (by the arbitral tribunal) that the
arbitration agreement is invalid so that there will be no defenceagainst the court
proceedings. (317) That ignores the fact that, where parties agree to arbitrate, having access to
a national court is unsatisfactory; that is particularly true in international matters, where
access to one partys home court may be particularly inappropriate or unacceptable. (318)
Although the text of the UNCITRAL Model Law (and particularly Article 34(2)) does not provide
expressly for judicial review of negative jurisdictional determinations, such review can readily
be accommodated by the Model Law. (319) In particular, Article 34(2)(a)(iv) provides for
annulment of awards where the arbitral procedure was not in accordance with the agreement
of the parties. (320) Although directed towards circumstances where a tribunal fails to follow
specified procedures set forth in the parties arbitration agreement, (321) there is no reason
why Article 34(2)(a)(iv)s text does not also apply to cases where a tribunal fails entirely to give
effect to the agreed dispute resolution procedure of arbitration by wrongfully declining
jurisdiction.
It would be ironic, and contrary to the purposes of the Model Law and the interests of justice,
to provide less judicial review of a wrongful refusal to give any effect to the procedures
specified by an arbitration agreement, than a refusal to apply only a particular procedural
aspect of that agreement: a tribunals failure to provide any arbitral procedures at all is a
failure to conduct the arbitral procedure in accordance with the agreement of the parties.
The sensible, and better, interpretation of the Model Law is that a negative jurisdictional
award can be reviewed and annulled under Article 34(2)(a)(iv).
Finally, the Model Laws drafting history suggests that a ruling by the arbitral tribunal that it
lacked jurisdiction was final as regards its proceedings since it was inappropriate to compel
arbitrators who had made such a ruling to continue the proceedings. (322) Courts in several
Model Law jurisdictions have reached similar conclusions. (323) These conclusions misconceive
the role of the arbitral tribunal: if a reviewing court in the arbitral seat concludes that an
P 1104 arbitration agreement is valid, then the arbitrators are fully capable of reconsidering
(324) their prior decision and proceeding to hear the merits of the case (just as a lower court
that has been reversed on appeal can do so).
[d] Exclusivity of Judicial Review of Preliminary Jurisdictional Ruling Under Article 16(3) of
UNCITRAL Model Law
Fourth, there is uncertainty whether a party that contests the arbitral tribunals jurisdiction
must, after a positive jurisdictional ruling by a tribunal under Article 16(3), immediately
challenge that ruling under Article 16(3) or, alternatively, whether it may wait until a final
award is made and challenge the tribunals jurisdiction in a subsequent annulment action
under Article 34. The better view, which is strongly supported by Article 16(3)s text and the
Model Laws purposes, is that a party must challenge the tribunals jurisdictional ruling within
the 30 day time period allowed under Article 16(3) and, if it does not, then it will not be
permitted subsequently to do so in an annulment action under Article 34.
This is the clear import of the text of Article 16(3) which, by laying out a path to challenge the
arbitrators positive jurisdictional ruling, impliedly requires that this path be taken, failing
which the ruling will be binding. This analysis has been adopted by the weight of national court
authority in Model Law jurisdictions. Relying in part on statutory language modifying Article
16(3), (325) a German Bundesgerichtshof decision held that an award-debtor is required to
challenge a positive jurisdictional ruling under Article 16(3), failing which the ruling will be
final and binding:
The intent of the provision in Section 1040 of the ZPO [Article 16 of the Model Law] is to ensure
that the issue of jurisdiction is, as a rule, clarified at an early stage of the proceedings.
Accordingly, the arbitral tribunals decision is no longer subject to review in the proceedings to
set aside the arbitration award or to grant execution unless a petition for a court decision has
been filed pursuant to Section 1040(3) sentence 2 of the ZPO [Article16(3) of the Model Law].
Otherwise, the arbitration proceedings would stand, as intended by the establishment of the
interim award pursuant to Section 1040(3) sentence 1 of the ZPO [Article 16(3)].Within the
scope of Section 1040 ZPO, the arbitral tribunal is granted the power to decide on its own
jurisdiction. If its interim award is not appealed, then that remains the case, even for
proceedings before the state court to set aside the award and to grant execution. (326)
P 1105
Courts in other Model Law jurisdictions have reached similar conclusions. A Singapore
High Court decision followed the German Bundesgerichtshofs analysis, reasoning:
The simple point is this: if a party fails to appeal or decides not to appeal an award on
jurisdiction, the award will be treated as final between the parties and the hearing on the
merits will proceed on the basis (and not simply the assumption) that the tribunal has
jurisdiction. Challenging such an award on jurisdictional grounds is thus excluded from the
grounds which a party may invoke at the setting-aside or the enforcement stage if the party
has chosen not to bring an appeal under Art 16(3) of the Model Law. There is no avenue under
the Model Law to participate in a hearing on the merits under protest without having lodged an
appeal under Art 16(3) if a party wishes to properly and effectively retain its right to raise an
objection to the tribunals jurisdiction. There are no passive remedies when it comes to
challenging jurisdiction under the IAA a party wishing to oppose a jurisdictional award must
act. (327)
91
The only exception to this requirement, that a party challenge the arbitrators positive
jurisdictional ruling immediately (or within 30 days) under Article 16(3), is where a party does
not participate at all in the arbitral proceedings; in this instance, the Singaporean court would
permit a challenge to a final arbitral award under Article 34 of the Model Law. (328)
Other courts have adopted similar interpretations of the Model Law, holding that a party must
challenge an arbitral tribunals positive jurisdictional ruling under Article 16(3), rather than
awaiting a final award and challenging jurisdiction under Article 34. (329) Although these
decisions do not address the point, they presumably permit an exception where a party does
not participate in the arbitral process at all.
P 1106
The interpretation of the Model Law adopted by German, Singaporean, Hong Kong and
other courts is well-considered. It makes little sense to permit a party to hold back a
jurisdictional challenge, and proceed to the merits of the parties dispute, and then
subsequently to challenge the tribunals jurisdictional ruling in annulment proceedings. Article
16(3) was designed specifically to permit prompt and binding resolution of jurisdictional
challenges, in order to ensure efficiency and finality, and it would contradict these purposes to
allow a party to reserve jurisdictional challenges to the award on the merits.
Finally, questions sometimes arise regarding the parties freedom to exclude judicial review
under Article 16(3). The better view is clearly in the affirmative, consistent with the parties
general procedural autonomy. Adopting this view, one court held that Article 16(3) is not
mandatory and that the parties had validly excluded interlocutory judicial intervention by
agreeing to institutional rules that did not provide for such intervention. (330)
[5] Standard of Judicial Review of Jurisdictional Rulings by Arbitral Tribunal Under UNCITRAL
Model Law
The Model Law also does not expressly address the standard of judicial review that will apply
to either positive or negative jurisdictional awards. This issue has given rise to divergent views
among national courts and commentators.
[a] Standard of Judicial Review of Positive Jurisdictional Rulings by Arbitral Tribunal Under
UNCITRAL Model Law
The text of Article 16(3) arguably implies de novo judicial review (by providing that the
dissatisfied party may request the court specified in Article 6to decide the matter). (331)
Equally, the language of Articles 34(2)(a)(i) and (iii), which permit the annulment of awards on
jurisdictional grounds, also arguably implies de novo judicial review (by simply stating the
grounds on which an award may be set aside, without any reference to deference to arbitral
P 1107
determinations). (332) In several cases, courts have assumed without analysis that interim
jurisdictional decisions by arbitral tribunals will be fully reviewed under Article 16(3). (333)
On the other hand, nothing in the Model Law expressly resolves this issue or prescribes the
standard of judicial review of jurisdictional awards. As an eminent commentator on the Model
Law explained regarding the drafting process, it proved difficultto reach agreement on the
scope of court review. (334)
In the absence of statutory guidance, courts in Model Law jurisdictions have generally adopted
a de novo standard of review in proceedings under Articles 16(3) and 34(2)(a), at least insofar as
issues of law (as distinguished from fact) are concerned. (335) Thus, a Singaporean court
rejected the argument that, in an application under Article 16(3), a court could only consider
the arguments presented to the arbitral tribunal. The court reasoned that a hearing under
Article 16(3) is not an appeal, that the parties were free to put forward new arguments and that
a court acting under Article 16(3) was free to makean independent determination of the
issue of jurisdiction and is not constrained in any way by the findings or the reasoning of the
tribunal. (336) Similarly, a recent Canadian decision explained that, in determining whether
an arbitral tribunal exceeded the scope of its jurisdiction, the standard of review of the award
the court is to apply is correctness, in the sense that the tribunal had to be correct in its
determination that it had the ability to make the decision it made. (337)
Nonetheless, as discussed below, most courts have accorded a substantial degree of deference
to arbitrators factual determinations and legal conclusions in annulment (and recognition)
P 1108
proceedings. (338) The same Canadian court that held that the standard of review of
arbitrators jurisdictional rulings under Article 16(3) was correctness, also held that [c]ourts
are warned to limit themselves in the strictest terms to intervene only rarely in decisions
made by consensual, expert, international arbitration tribunals, including on issues of
jurisdiction. (339) Similarly, another Model Law decision held that parties objecting to an
arbitral tribunals jurisdiction must overcome a powerful presumption that the tribunal
acted within its powers, while also reasoning that the standard of review applicable under
Article 16(3) ought to beone of reasonableness, deference [and] respect. (340)
Deference to the arbitrators ruling is particularly true where the arbitral tribunal has
conducted extensive fact-finding (especially involving witness credibility), has particular
expertise in the commercial sector at issue, or has particular expertise in the applicable law
(especially when the reviewing court does not). In all these circumstances, although the
annulment decision is made on a de novo basis, it makes no sense to ignore the arbitrators
jurisdictional analysis and conclusions.
Similarly, the Model Law does not address the question whether different standards of judicial
92
review apply to awards depending on the jurisdictional issues addressed in those awards. For
example, it may be common ground between the parties that they have entered into a valid
arbitration agreement and that the arbitral tribunal has competence-competence to
determine the scope of that arbitration agreement; in contrast, one party may deny that it
ever entered into any contract (either underlying contract or arbitration agreement) with its
alleged counter-party or that the purported arbitral tribunal has any jurisdiction whatsoever
over it. These different scenarios both raise the question of what standard of judicial review
should apply to the jurisdictional determination and whether different standards should apply
in the two different scenarios.
The text of the Model Law provides no express guidance in dealing with the foregoing issues. It
is noteworthy, however, that Article 34 of the Model Law contains two separate provisions
dealing separately with annulment based upon the lack of a valid arbitration agreement
(Article 34(2)(a)(i)) and based upon an award that exceeds the scope of the arbitration
agreement (Article 34(2)(a)(iii)). (341) That structure at least impliedly suggests that the two
categories of jurisdictional awards may be treated differently. (342)
Finally, as discussed below, it is clear that the burden of proof under Articles 34(2)(a)(i) and (iii)
is on the award-debtor to demonstrate that an arbitral tribunal lacked jurisdiction. (343) This
P 1109
allocation of the burden of proof differs, at least in states where courts consider
jurisdictional objections on the merits, from the treatment of challenges to the existence of an
arbitration prior to the making of any jurisdictional award. (344) This shifting of the burden of
proof can have important consequences, both as a formal and a practical matter.
[b] Standard of Judicial Review of Negative Jurisdictional Rulings by Arbitral Tribunal Under
UNCITRAL Model Law
The same analysis applies to judicial review of negative jurisdictional rulings as to positive
ones. A de novo standard of review is applicable to negative, as well as positive, jurisdictional
rulings; there is no reason that the standard of review should differ in the two settings.
Similarly, the same deference to the arbitrators fact-finding and industry or legal expertise is
also applicable; again, there is no reason that a tribunals superior access to the facts or
expertise should be given less weight in one setting than the other.
[B] Allocation of Jurisdictional Competence Under French Law

French law has adopted an influential approach towards competence-competence issues, with
its central element often referred to as the prima facie jurisdiction standard. This approach
has been followed (in some respects) in Switzerland, India, Hong Kong, Canada and elsewhere.
(345)
[1] Arbitrators Competence-Competence Under French Law
As noted above, French courts historically recognized the broad competence-competence of
arbitral tribunals. (346) As one early judicial decision held: The principle is that the judge
hearing a dispute has jurisdiction to determine his own jurisdiction. This necessarily implies
that when that judge is an arbitrator, whose powers derive from the agreement of the parties,
he has jurisdiction to examine the existence and validity of such agreement. (347) That
principle was codified, and extended to include an innovative form of so-called negative
competence-competence, by the statutory frameworks for international arbitration provided
by the 1981 and 2011 Decrees. (348)
P 1110 [2] No Interlocutory Judicial Consideration of Jurisdictional Objection Unless Arbitration
Agreement is Manifestly Null or Inapplicable Under French Law
Under the French approach to the allocation of jurisdictional competence, arbitral tribunals
seated in France may consider jurisdictional objections and, conversely, national courts
generally may not do so prior to a jurisdictional award by the tribunal. (349) This rule is
expressly motivated by concerns about delaying tactics, which are often at issue where a
respondent in potential or actual arbitral proceedings institutes a judicial challenge to the
tribunals jurisdiction. (350)
The general rule under French law of arbitral priority in deciding jurisdictional issues is subject
to two principal exceptions: (a) a court will consider whether there is prima facie evidence of
an arbitration agreement if the arbitral process has not yet been commenced; and (b) a court
will consider whether or not the arbitration agreement is patently void if it is requested to
provide assistance to the arbitral process (e.g., to appoint an arbitrator). Once the arbitral
process commences, however, a French court will refer the parties to a dispute to arbitration,
without conducting any inquiry at all into the existence, validity or scope of an arbitration
agreement. (351) This allocation of competence to resolve jurisdictional objections was
codified by the 2011 Decree. (352)
P 1111 The newly-revised Article 1465 of the French Code of Civil Procedure, like previous
provisions of French arbitration legislation, expressly authorizes a domestic French arbitral
tribunal to rule on its own jurisdiction. (353) The same principle is made applicable to
international arbitrations seated in France, or subject to French law, by Article 1506 of the
Code. (354) Article 1465 grants arbitral tribunals competence to consider and decide disputes
over their own competence (the so-called positive aspect of competence-competence). This
power is affirmatively granted by French statute to all arbitral tribunals seated in France,
93
without requiring that the parties agreement independently confer such authority. (355)
Additionally, the new Article 1448(1) provides that French courts must decline jurisdiction over
disputes that have already been submitted to arbitration unless the arbitration agreement is
manifestly void or manifestly not applicable. (356) This principle, which reflects the so-called
negative effect of competence-competence, was held by French courts to apply in
international arbitrations under the 1981 Decree (357) (now confirmed by Article 1506 of the
revised French Code of Civil Procedure). (358) Accordingly, once an arbitration has been
commenced, a court must refer disputes putatively encompassed by the arbitration
P 1112
agreement to arbitration, without conducting any inquiry into either the merits of such
disputes or the existence, validity, legality, or scope of the arbitration agreement. (359)
In addition, Articles 1448(1) and 1455 of the revised Code also provide that even if a dispute
has not yet been submitted to arbitration, French courts must decline jurisdiction if the
dispute is subject to an arbitration agreement that is not manifestly void or manifestly not
applicable. (360) This statutory provision preserves a series of decisions rendered during the
1990s by French courts, (361) which extended the negative effects of a putative arbitration
P 1113
agreement under the then-applicable provisions of Frances arbitration legislation (i.e.,
the former Article 1458 of the 1981 Decree (362) ). Indeed, French courts went further and held
that, even when called upon to provide judicial assistance in aid of the arbitral process (for
example, by appointing an arbitrator), they will only make a prima facie inquiry as to whether
there is a valid arbitration agreement. (363) Again, this case law has been codified by Article
1455 of the revised French Code. (364)
Accordingly, the general rule in France is that parties may not obtain judicial resolution of
jurisdictional disputes until after an arbitral tribunal has ruled on the issue. This rule
apparently applies to all categories of jurisdictional objections, including challenges to the
existence and validity of an arbitration agreement, as well as to the scope of an admittedly
valid arbitration clause, and challenges raising purely legal (rather than factual) issues. (365)
French courts apply the French version of prima facie jurisdiction regardless whether the
arbitral seat is in France or abroad. (366)
Despite the foregoing approach, a recent Cour de cassation decision holds that the
competence-competence principle, pursuant to which it is for the arbitrator to decide by
priority on his own jurisdiction, does not apply in employment matters. (367) This appears to
be the only exception, however, to the general rule of arbitral priority in resolving
jurisdictional disputes under French law.
[3] Judicial Review of Arbitrators Jurisdictional Decision Under French Law
Following a tribunals jurisdictional award, the parties to an arbitration seated in France are
able to obtain judicial review of the tribunals determination in a French court under Article
1520 of the revised French Code of Civil Procedure. It is clear that the review of a jurisdictional
P 1114 award by French courts is de novo. (368) As the Cour de cassation has declared: it is for
the court to construe the contract in order to determine itself whether the arbitrator ruled in
the absence of an arbitration clause, (369) and there is
no limitation to the capacity of its [i.e., Paris Cour dappel] jurisdiction to seek in right and
facts all the elements concerning the defects in question; that in particular, it is within its
powers to interpret the contract in order to determine itself if the arbitrator ruled without
It appears to be settled that French courts have the same power to review negative
jurisdictional determinations by an arbitral tribunal as is available for positive
determinations. (371)
[4] Agreements to Resolve Jurisdictional Disputes by Arbitration Under French Law
Finally, it is unclear what the effect under French law is of an arbitration agreement that
confers on the arbitral tribunal the power finally to decide jurisdictional disputes. In principle,
for the reasons discussed elsewhere, such an agreement should be treated like other
arbitration agreements that is, given effect to preclude judicial consideration of the
jurisdictional issues to which it applies and to preclude any subsequent judicial review of the
P 1115
merits of the jurisdictional issues decided by the arbitral tribunal. (372) The general
emphasis on party autonomy under French arbitration law (373) argues strongly for this
conclusion. Nonetheless, French courts have not yet clearly addressed the issue and it is
uncertain whether they would adopt this view, given the terms of French arbitration legislation.
In particular, Article 1448 of the revised French Code of Civil Procedure provides that parties
may not, by agreement, alter the limitations on interlocutory judicial consideration of
jurisdictional issues prescribed by the Code. (374) Neither Article 1448 nor any other provision
of the revised French Code of Civil Procedure extends this rule of unenforceability to the
reverse situation, where parties seek to grant an arbitral tribunal greater competence-
competence than ordinarily applicable. There is, however, a material possibility that French
courts will conclude that the statutory allocation of jurisdictional competence in the Decree is
mandatory, in all respects, and that agreements providing for jurisdictional disputes to be
finally resolved by the arbitrators are unenforceable. That result would be unfortunate and
contrary to Frances commitments under the New York Convention (Article II of which requires
giving effect to all international arbitration agreements, including agreements to arbitrate
jurisdictional disputes).
94
[C] Allocation of Jurisdictional Competence Under Swiss Law
Swiss authorities have recognized some version of the competence-competence doctrine for
more than a century. The doctrine was applied by courts in Switzerland prior to the adoption
of the Swiss Law on Private International Law, under both the 1969 Cantonal Concordat (375)
and much earlier. (376)
P 1116
[1] Arbitrators Competence-Competence Under Swiss Law
The Swiss Law on Private International Law expressly provides for the competence-
competence of international arbitral tribunals seated in Switzerland in Article 186(1): [t]he
arbitral tribunal shall decide on its own jurisdiction. (377) Article 186(3) also requires that [a]s
a rule the arbitral tribunal shall decide on its jurisdiction by preliminary award. (378)
These provisions of the Swiss Law on Private International Law make it clear that arbitrators
may consider and decide upon their own jurisdiction and leave little doubt that arbitral
proceedings on the merits of the parties dispute may continue notwithstanding a partys
jurisdictional objections. (379) Recent amendments to the Swiss Law on Private International
Law also confirmed the authority of arbitral tribunals to continue with the arbitral
proceedings, including consideration of jurisdictional issues, notwithstanding pending
proceedings on the same jurisdictional matters in a foreign court. (380)
[2] Interlocutory Judicial Consideration of Jurisdictional Objections Under Swiss Law
At the same time that Swiss law recognizes the arbitrators positive competence-competence,
Article 7 of the Swiss Law on Private International Law provides that [i]f the parties have
concluded an arbitration agreement covering an arbitrable dispute, a Swiss court seized of it
P 1117
shall decline jurisdiction unless(b) the court finds that the arbitral agreement is null and
void, inoperative or incapable of being performed. (381) This language parallels Article 8 of
the UNCITRAL Model Law and, read literally, would appear to grant parties access to
interlocutory judicial determinations of jurisdictional objections (i.e., the court finds that the
arbitral agreement is null and void etc.); the text of Article 7 would not appear to require
parties to proceed with jurisdictional objections before the arbitral tribunal prior to the
outcome of a challenge to the arbitrators jurisdiction in a Swiss court. (382)
Nonetheless, a series of decisions by the Swiss Federal Tribunal during the mid-1990s
interpreted Articles 7 and 186 of the Swiss Law on Private International Law as limiting the
judicial role, prior to the arbitrators jurisdictional award, to ascertaining the prima facie
existence and validity of an agreement to arbitrate where the arbitral seat was in Switzerland
(but not where the arbitral seat was abroad). (383) This approach partially parallels that of the
French courts (as described above). (384)
Under this analysis, Swiss courts have engaged in interlocutory judicial determinations of
jurisdictional issues only on a prima facie basis, in relation to all categories of jurisdictional
objections, provided that the putative arbitral seat would be in Switzerland. (385) As a recent
Swiss Federal Tribunal decision described this analysis:
The state court assessing an arbitration agreement in favor of an arbitral tribunal having its
seat in Switzerland may and shall accordingly proceed to a summary review as to whether or
not it excludes the courts jurisdiction for the claim it is seized of. This means that the court
P 1118
may accept jurisdiction only when it is obvious that there is no valid arbitration
agreement between the parties. Therefore it is enough for the defendant to prevail if the
jurisdiction of the state court appears to be superseded prima facie by the arbitration clause.
(386)
In contrast, where the putative arbitral seat would be outside of Switzerland, Swiss courts have
not applied a prima facie standard, and have instead conducted a de novo interlocutory
inquiry into the merits of jurisdictional objections. (387) Legislation to alter this approach, and
apply a prima facie jurisdictional standard in cases of arbitrations seated abroad, has been
proposed to the Swiss Parliament, but not adopted. (388)
The reason for distinguishing between arbitrations seated in Switzerland and those abroad lies
in the ability of Swiss courts to review any ultimate jurisdictional determination. (389) Swiss
courts reason that, where an arbitration is seated abroad, staying interlocutory Swiss judicial
review of jurisdictional objections may mean that no such review by a Swiss court will ever
occur: specifically, the award will be subject to annulment only in foreign courts (in the foreign
P 1119
arbitral seat) (390) and may then be recognized and enforced in that or another foreign
court, (391) with Swiss courts never being provided an opportunity to review the tribunals
jurisdictional determination. (392) In these circumstances, the Swiss courts would have denied
a party access to (Swiss) justice, based solely on a prima facie review of the arbitration
agreement, without ever confirming that such an agreement actually existed; this is seen as
unwise and contrary to Swiss principles of access to justice. (393)
[3] Agreements to Resolve Jurisdictional Disputes by Arbitration Under Swiss Law
It is unclear how Swiss courts would treat an agreement that the arbitral tribunal shall finally
resolve jurisdictional disputes. On the one hand, many Swiss commentators conclude that the
allocations of competence-competence in Articles 186 and 190(2) of the Swiss Law on Private
International Law are mandatory and not capable of being varied by agreement. (394)
As discussed below, however, Article 192 of the Swiss Law on Private International Law provides
95
that non-Swiss parties may waive the right to seek annulment of an award, or to exclude some
of the generally-applicable grounds for annulment. (395) The effect of this provision would
appear to be to allow the arbitral tribunal to make a final decision on its own jurisdiction in at
least some cases. (396) That is consistent with the approach of Swiss courts towards the
consequences of submitting jurisdictional objections to an arbitral tribunal without reservation
which is generally to waive objections to the tribunals jurisdictional determination. (397)
P 1120
[4] Judicial Review of Arbitrators Jurisdictional Decision Under Swiss Law
As under Article 16(3) of the UNCITRAL Model Law, an arbitral award on jurisdiction is
immediately appealable (to the Swiss Federal Tribunal) under Article 190 of the Swiss Law on
Private International Law. (398) Under Swiss law, judicial review of an award on jurisdictional
issues is generally limited to matters of law (and not factual findings by the arbitrators). (399)
As to legal matters, the Swiss Federal Tribunal is free to examine certain preliminary issues of
substantive law, but only insofar as they need to be resolved in order to rule on the jurisdiction
or lack of jurisdiction of the arbitral tribunal. (400) As the text of Article 190(2)(b) makes clear,
judicial review is available for negative, as well as positive, jurisdictional awards. (401)
[D] Allocation of Jurisdictional Competence Under German Law

The German approach to the allocation of jurisdictional competence in international
arbitration is based on the UNCITRAL Model Law, which Germany adopted in 1998. Nonetheless,
German legislation and judicial decisions have adopted several particularities, which warrant
separate treatment.
[1] Arbitrators Competence-Competence Under German Law
As noted above, Germany was the original source of the Kompetenz-Kompetenz doctrine,
which was understood as authorizing the parties to grant arbitrators the ultimate power to
determine their own jurisdiction. (402) Historically, German courts held that parties to an
arbitration agreement are free to stipulate that it should be for the arbitrators to make a
binding decision on the existence, the validity and scope of an arbitration agreement. (403) In
P 1121
adopting the UNCITRAL Model Law, Germany confirmed the arbitrators positive
competence-competence, codified in Article 16 of the Model Law. Thus, new 1032 of the
German ZPO provides for the arbitrators positive competence-competence in terms identical
to those of Article 16. (404)
In addition, however, in adopting the Model Law, Germany introduced a number of relatively
unique amendments to Article 16 and the allocation of jurisdictional competence. These
amendments, and subsequent German judicial decisions, alter the approach to competence-
competence under German law and establishing a sui generis jurisdictional regime. (405)
[2] Interlocutory Judicial Consideration of Jurisdictional Objections Under German Law
The German legislation adopting Article 16 of the Model Law introduced additional provisions
addressing the question of when parties may obtain judicial consideration of jurisdictional
disputes. Under the German legislative approach, the level of interlocutory judicial review of
jurisdictional objections depends upon the time at which an application for judicial
intervention is sought, but in general permits interlocutory judicial consideration of
jurisdictional objections. (406)
Specifically, 1032(2) of the German ZPO provides that [p]rior to the constitution of the
arbitral tribunal, an application may be made to the court to determine whether or not
arbitration is admissible. (407) The courts assessment of the jurisdictional challenge at this
stage is on the merits of the jurisdictional question, rather than a mere inquiry into whether
P 1122
there is a prima facie basis for jurisdiction. (408) This both parallels and contrasts with the
approach under the French Code of Civil Procedure: Article 1448(1) of the French Code
distinguishes between the allocation of jurisdictional competence before and after
commencement of an arbitration (as with 1032), but it permits only prima facie review prior to
commencement of the arbitration, while 1032 authorizes full judicial review. (409)
After an arbitral tribunal has been constituted, the parties rights under German law with
regard to jurisdictional challenges are altered: once the tribunal is constituted, 1032(2) ceases
to apply and a party can obtain an interlocutory judicial determination of a jurisdictional
objection only by commencing an action on the merits, i.e., by initiating court proceedings
relating to the same subject matter that is before the tribunal. If the other party then objects
to the jurisdiction of the court by invoking the arbitration agreement in the court proceedings
(1032(1) of the German ZPO), the court must decide on the question whether there is a valid
arbitration agreement. The weight of German authority holds that the courts decision will not
be of a prima facie character, but will be binding both on the parties and on the arbitral
tribunal. (410) Again, this contrasts with the French approach, where no judicial consideration
of jurisdictional challenges is permitted after an arbitration is commenced, (411) and the Hong
Kong and Indian approaches, where only prima facie interlocutory judicial consideration is
available. (412)
While one of the above actions is pending before a German court, the arbitral tribunal may
continue proceedings and decide on questions of its jurisdiction. Once a positive jurisdictional
award, or a final award, has been issued, its annulment can be sought in a German court on the
basis that the tribunal lacked jurisdiction. (413)
96
[3] Agreements to Resolve Jurisdictional Disputes by Arbitration Under German Law
With regard to parties agreements to submit jurisdictional disputes to arbitration for final
resolution, it is said that the new German legislation has the effect that the parties will no
longer be authorized to exclude the competence of the German courts and the arbitrators
P 1123
decision on his competence is always provisional. (414) Ironically, barely two years after
the U.S. Supreme Court adopted at least this aspect of the German Kompetenz-Kompetenz
doctrine (in the First Options decision discussed below (415) ), German law was apparently
trading places and abandoning Germanys historical approach. (416)
[4] Judicial Review of Arbitrators Jurisdictional Decisions Under German Law
Section 1040(3) of the German ZPO provides (like Article 16(3) of the Model Law) that, following
a preliminary affirmative jurisdictional award by the tribunal, immediate and expedited
judicial review may be sought and obtained from an appellate court (1062(1)). As with the
Model Law, the object of this provision is to obtain prompt judicial resolution of any
jurisdictional disputes. (417) It seems clear that the standard of judicial review of a positive
jurisdictional award, upholding the tribunals competence, is de novo. (418)
As discussed above, German courts have held that there is no possibility for any judicial review
of negative jurisdictional determinations by an arbitral tribunal. In particular, a 2002 decision
of the German Bundesgerichtshof held that the lower courts had properly rejected an
application to annul an arbitral tribunals decision that there was no valid arbitration
agreement. (419)
In denying any grounds for judicial review of a negative jurisdictional award, the
Bundesgerichtshof unwisely departed from approaches in many other developed jurisdictions
and the pro-arbitration objectives of the New York Convention and Model Law. (420) In contrast
to the German approach, most other legal regimes provide for the same degree of judicial
review of all jurisdictional determinations by arbitral tribunals, whether positive or negative.
P 1124
(421) That accords with principles of equal treatment of the parties, as well as with the
position of arbitration as a preferred or at least co-equal means of international dispute
resolution.
[E] Allocation of Jurisdictional Competence Under U.S. Law

Unlike the UNCITRAL Model Law, and the French, German and Swiss arbitration legislation, the
text of the FAA in the United States provides only limited guidance concerning the
competence-competence doctrine. In the absence of statutory guidance, U.S. courts have
developed a substantial body of case law that addresses various aspects of the competence-
competence doctrine. (422) This case law provided the basis for the U.S. Supreme Courts 1995
decision in First Options of Chicago, Inc. v. Kaplan, (423) and a series of subsequent Supreme
Court decisions, which collectively articulate the current U.S. approach to the competence-
competence doctrine, applicable in both domestic and international cases.
The approach to issues of competence-competence adopted in First Options and other U.S.
decisions is very complex. It requires a lengthier discussion, and produces more challenging
and uncertain results, than does the same subject in most other jurisdictions.
The U.S. approach to the allocation of jurisdictional competence rests on the premise that,
where a party challenges the existence, validity, or scope of an arbitration agreement, it is
ordinarily entitled to interlocutory judicial resolution of its objection by a U.S. court. As a
consequence, the separability presumption plays a significant role in the allocation of
jurisdictional competence in U.S. courts; it does so by defining what disputes are jurisdictional
(or, in the words of some U.S. courts, gateway) issues, and therefore subject to interlocutory
judicial resolution, and what disputes are not jurisdictional, and therefore subject to resolution
by the arbitrators. In addition, the U.S. approach to the allocation of jurisdictional
competence attributes decisive importance to the parties agreement, holding that
agreements to finally resolve jurisdictional disputes by arbitration will be given effect; in
practice, U.S. courts have frequently held that parties have concluded such agreements,
providing for final arbitral resolution of jurisdictional disputes, with very limited judicial
review.
The First Options decision, and its progeny, has provoked a substantial degree of commentary
P 1125
in the United States and elsewhere, more often critical than positive. (424) Despite this
criticism, the First Options analysis provides important insights into issues of competence-
competence, which have useful applications outside the United States.
Particularly in recent years, however, the U.S. approach to competence-competence has
created an analytical framework of such complexity that lower courts (and commentators) are
often unable efficiently and predictably to resolve individual jurisdictional disputes. (425) A
simpler, more pragmatic analysis would better conform to both party expectations and the
objectives of the FAA. That is particularly true with regard to the allocation of jurisdictional
competence in international cases, with arbitration agreements subject to the New York
Convention, where the existing U.S. approach is difficult to reconcile with the needs of the
international arbitral process and requirements of the Convention.
[1] Federal Arbitration Act: Statutory Provisions
As noted above, the FAA contains only limited statutory provisions addressing the subject of
97
arbitral jurisdiction. Those provisions which do exist are contained in 3, 4 and 10 of the FAA,
which apply generally to international arbitration agreements that are subject to the New York
Convention (and the Inter-American Convention), as well as to domestic arbitration
agreements.
Legislation has been introduced in a number of recent Congresses which would amend the FAA
and specifically address issues of competence-competence. Some of those proposed
amendments would reverse the effects of recent U.S. Supreme Court decisions concerning
arbitral jurisdiction, generally to extend the scope of interlocutory judicial authority over
jurisdictional disputes and to limit the preclusive effects of arbitrators jurisdictional awards;
those proposals have not been enacted and the prospects for their future adoption appear
limited. (426) As a consequence, there remains, and is likely to remain, very limited statutory
treatment of the subject of competence-competence and the allocation of jurisdictional
competence under the FAA.
P 1126 [a] No Express Statutory Recognition of Arbitrators Competence-Competence in
Federation Arbitration Act
Initially, unlike the UNCITRAL Model Law, and most other arbitration statutes, the text of the
FAA does not affirmatively grant an arbitral tribunal competence-competence to consider
challenges to its own jurisdiction. There is no equivalent in the FAA to either Article 16 of the
Model Law, Article 1448 of the French Code of Civil Procedure, or Article 186 of the Swiss Law on
Private International Law. Conversely, nothing in the text of the FAA purports affirmatively to
prevent an arbitral tribunal from preliminarily considering whether an arbitration agreement
is valid or applicable to the parties dispute.
Despite the absence of legislative guidance, it is nonetheless clear that the positive
competence-competence of arbitral tribunals is fully recognized under U.S. law. That is clear
from a long line of U.S. judicial decisions, as discussed in greater detail below. (427)
[b] 3 and 4 of Federal Arbitration Act: Interlocutory Judicial Resolution of Jurisdictional
Issues
Although it is silent regarding the arbitrators positive competence-competence, the FAAs text
does expressly address the interlocutory judicial consideration of objections to an arbitrators
jurisdiction. Thus, 3 and 4 of the FAA provide that an action in U.S. courts must be stayed,
and the parties referred to arbitration, (428) only upon [the court] being satisfied that the issue
involved in such suit or proceeding is referable to arbitration under such an [arbitration]
agreement (429) and upon [the court] being satisfied that the making of the agreement for
arbitration or the failure to comply therewith is not in issue. (430) Section 4 of the FAA goes on
to provide that, [i]f the making of the arbitration agreement or the failure, neglect, or refusal
to perform the same be in issue, the court shall proceed summarily to the trial thereof. (431)
This statutory language has the effect, even more explicitly than that of Article 8 of the
UNCITRAL Model Law, (432) of granting U.S. courts competence to consider, on an interlocutory
basis, jurisdictional disputes regarding the existence and validity of the putative agreement to
arbitrate.
U.S. courts historically interpreted the FAA as providing the possibility of interlocutory judicial
resolution of disputes over arbitral jurisdiction. Thus, interpreting specialized domestic
arbitration legislation similar to the FAA, the U.S. Supreme Court held in AT&T Technologies,
Inc. v. Communications Workers of America that the question of arbitrability whether [an]
P 1127
agreement creates a duty for the parties to arbitrate a particular grievance is undeniably
an issue for judicial determination. (433) Explaining one of its earlier decisions, (434) the Court
reasoned that:
Under our decisions, whether or not the company was bound to arbitrate, as well as what
issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract
entered into by the parties.The duty to arbitrate being of contractual origin, a compulsory
submission to arbitration cannot precede judicial determination that the collective bargaining
agreement does in fact create such a duty. (435)
Historically, most decisions under the FAA expressly or impliedly reached the same conclusion
as AT&T Technologies, affording the parties the right to interlocutory judicial resolution of
claims that an arbitration agreement was non-existent, invalid, or inapplicable and permitting
such judicial resolution to occur prior to any arbitral determination of the issue. (436) As a
more recent decision, by a well-respected U.S. judge, explained the FAAs approach:
[A] person who has not consentedcant be packed off to a private forum. Courts have
jurisdiction to determine their jurisdiction not only out of necessity (how else would
jurisdictional disputes be resolved?) but also because their authority depends on statutes
rather than the parties permission. Arbitrators lack a comparable authority to determine their
own authority because there is a non-circular alternative (the judiciary) and because the
parties do control the existence and limits of an arbitrators power. No contract, no power.
(437)
By international standards, the approach reflected in AT&T and similar authorities is a
relatively conservative view of the allocation of competence of jurisdictional disputes, which
provided for full interlocutory judicial consideration and disposition of disputes over arbitral
jurisdiction.
P 1128
98
P 1128
[c] 10 of Federal Arbitration Act: Judicial Review of Arbitrators Jurisdictional
Determination
The text of the FAA briefly addresses the subject of judicial review of jurisdictional issues
following an arbitral award. In particular, 10 of the domestic FAA provides for consideration of
jurisdictional issues by U.S. courts in vacatur (annulment) actions.
Thus, 10(a)(4) provides for vacatur of an award if the arbitrators exceeded their powers,
expressly contemplating judicial consideration of challenges to the arbitrators jurisdiction,
albeit without addressing issues concerning the scope of judicial review of jurisdictional issues
or the preclusive effects of the arbitrators jurisdictional award. (438) As discussed in greater
detail below, U.S. courts historically held that the scope of judicial review under 10(a)(4) was
de novo, with U.S. courts reconsidering whether the parties had concluded a valid agreement
to arbitrate, applicable to the parties dispute, without deference to the arbitrators
jurisdictional decision. (439)
Sections 207 and 304 of the FAA also contemplate judicial consideration of jurisdictional
objections in actions to recognize foreign awards, under the New York and Inter-American
Conventions, again without addressing the scope of judicial review. (440) As discussed below,
U.S. courts have generally held that the jurisdictional determinations in foreign and non-
domestic awards, under the Convention, are subject to de novo judicial review, ordinarily with
minimal deference to the arbitrators decisions. (441)
[d] Revised Uniform Arbitration Act
As discussed above, a number of U.S. states have adopted the Revised Uniform Arbitration Act.
(442) Although seldom applicable to international arbitration agreements, the Act reflects U.S.
approaches to the allocation of jurisdictional competence between courts and arbitral
P 1129
tribunals. In particular, 6(b) of the Act provides that [t]he court shall decide whether an
agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, while
6(d) provides, [i]f a party to a judicial proceeding challenges the existence of, or claims that
a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may
continue pending final resolution of the issue by the court, unless the court otherwise orders.
(443)
In one courts words, the Revised Act allows an objecting party to seek judicial determination
of the scope of consent either before, during or after an arbitration. (444) Like the FAA, this is
again a conservative view of arbitral authority, permitting full interlocutory judicial
consideration and disposition of disputes over arbitral jurisdiction, without any guarantee of,
or preference for, initial arbitral consideration of jurisdictional issues.
[2] U.S. Supreme Court Decisions Under Federal Arbitration Act: First Options and Its Progeny
The allocation of competence over jurisdictional disputes under the domestic FAA was
addressed in detail in the U.S. Supreme Courts 1995 decision in First Options of Chicago, Inc. v.
Kaplan. (445) The Courts First Options opinion, and subsequent Supreme Court decisions
applying the First Options analysis, provide the basis for the allocation of competence between
arbitrators and courts to resolve jurisdictional disputes under Chapter 1 of the FAA (dealing
with domestic arbitrations, not subject to the New York or Inter-American Conventions). (446)
P 1130
[a] First Options of Chicago, Inc. v. Kaplan
First Options arose from a domestic commercial contract (a workout agreement), containing a
concededly existent and valid arbitration agreement, between First Options of Chicago and MK
Investments. (447) After disputes arose, First Options asserted claims in an arbitration against
MK Investments, and also against Mr. and Mrs. Kaplan, who were individual shareholders and
officers in MK Investments. The Kaplans appeared before the tribunal and argued that they
were not bound by the arbitration agreement between First Options and MK Investments, but
the tribunal rejected their jurisdictional objections. (448)
The Kaplans subsequently sought to vacate the award against them, claiming that it exceeded
the arbitrators jurisdiction under 10(a)(4) of the domestic FAA. In response, First Options
argued that, by appearing in the arbitration to contest jurisdiction, the Kaplans had accepted
the arbitrators jurisdiction to finally determine their own jurisdiction and that, as a
consequence, there was no basis for vacatur under 10(a)(4). (449) The District Court rejected
the Kaplans arguments and confirmed the award; on appeal, the Court of Appeals reversed,
holding that the award against the Kaplans was subject to vacatur. (450) A unanimous Supreme
Court affirmed, in an opinion by Justice Breyer.
Ironically, and although not acknowledged by the Supreme Court, its analysis in First Options
closely tracked the historic approach of German courts to the question of competence-
competence. (451) Perhaps more ironically, as noted above, the German legislature was in the
process, at the moment First Options was decided, of abandoning its historic Kompetenz-
Kompetenz approach (permitting binding agreements to arbitrate jurisdictional objections) in
favor of a modified version of the UNCITRAL Model Law, which prescribed in mandatory terms
the allocation of jurisdictional competence between arbitral tribunals and national courts.
(452) Irony aside, the First Options decision adopted or confirmed a number of important
propositions relating to the U.S. view of competence-competence. The most important of these
are summarized below.
99
First, the Courts opinion in First Options accepts, albeit largely impliedly, the proposition that
the FAA recognizes the competence-competence of an arbitral tribunal to consider its own
jurisdiction. Although the tribunal in First Options had considered and decided the parties
jurisdictional dispute (subject to judicial review under the FAA), the Supreme Court did not in
any way suggest that the tribunal had acted improperly or beyond its authority in doing so;
that was true notwithstanding the Courts ultimate conclusion that there was no agreement by
the Kaplans to submit their jurisdictional objections to resolution by arbitration (or to
arbitrate anything at all). Despite this, and the ultimate vacatur of the tribunals award against
the Kaplans under 10 of the FAA, First Options neither held nor implied that the tribunals
P 1131
consideration of jurisdictional objections had in any way been inappropriate or outside its
authority; the tribunals jurisdictional decision was merely wrong and subject to vacatur. (453)
Second, the First Options opinion held that, absent contrary agreement, the rule under the FAA
is that challenges to the arbitrators jurisdiction which the Court unhappily termed
arbitrability questions (454) are presumptively for interlocutory determination. The Court
cited the principle that a party can be forced to arbitrate only those issues it specifically has
agreed to submit to arbitration, an issue which it thought parties would reasonablyhave
thought a judge, not an arbitrator, would decide. (455) The Court went on to explain that if
the parties did not agree to submit the arbitrability question itself to arbitration, then the
court should decide that question just as it would decide any other question that the parties
did not submit to arbitration, namely independently; (456) the Court also cited its holding, in
earlier decisions, that the FAAs basic purpose is to ensure judicial enforcement of privately
made agreements to arbitrate. (457)
Although not quoted by the Court, its analysis rested squarely on the text of 3 and 4 of the
domestic FAA, providing that upon [the court] being satisfied that the making of the
agreement for arbitration or the failure to comply therewith is not in issue. (458) The text of
3 and 4 is most readily read, as the First Options Court concluded, as providing for initial
judicial resolution of jurisdictional challenges that are asserted by a party in proceedings
under the FAA, and as not providing for either a stay of litigation or order compelling
arbitration unless the court itself is satisfied that the existence or validity of the arbitration
is not in issue.
Third, despite this default rule, the Court held that the parties were free to agree to a different
allocation of competence to decide questions of arbitrability and, in particular, to agree that
arbitrability questions would be finally resolved by an arbitral tribunal. According to the First
Options Court:
Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to
arbitrate that dispute,so the question who has the primary power to decide arbitrability
P 1132 turns upon what the parties agreed about that matter. Did the parties agree to submit the
arbitrability question itself to arbitration? (459)
The Court held that, where parties agreed to submit a jurisdictional dispute a so-called
arbitrability question to final resolution by arbitration, then that dispute should be
referred to arbitration, just as any other dispute, which the parties had agreed to arbitrate,
should be referred to arbitration: arbitration is simply a matter of contract between the
parties; it is a way to resolve those disputes but only those disputes that the parties have
agreed to submit to arbitration. (460)
Fourth, First Options also indicated that, if an arbitration agreement granted arbitrators the
power to consider and finally decide their own jurisdiction, then the arbitrators resulting
jurisdictional award would be subject to the same highly deferential standard of judicial
review that is applicable under the FAA to the merits of other awards. In the Courts words:
Did the parties agree to submit the arbitrability question itself to arbitration? If so, then the
courts standard in reviewing the arbitrators decision about that matter should not differ from
the standard courts apply when they review any other matter that parties have agreed to
arbitrate. (461)
The First Options Court went on to explain, [i]f, on the other hand, the parties did not agree to
submit the arbitrability question itself to arbitration, then the court should decide that
question just as it would decide any other question that the parties did not submit to
arbitration, namely independently. (462)
Fifth, the First Options Court also set forth two presumptions for determining whether an
agreement to arbitrate jurisdictional disputes exists: (a) proving the existence of an agreement
to arbitrate disputes about an arbitral tribunals jurisdiction requires clear and
unmistakable evidence; and (b) the scope of an existent arbitration agreement should be
interpreted broadly, in favor of arbitrability. (463) In the Courts words:
Courts should not assume that the parties agreed to arbitrate arbitrability unless there is
clea[r] and unmistakabl[e] evidence that they did so. In this manner the law treats silence or
ambiguity about the question who (primarily) should decide arbitrability differently from the
way it treats silence or ambiguity about the question whether a particular merits-related
P 1133 dispute is arbitrable because it is within the scope of a valid arbitration agreement for in
respect to this latter question the law reverses the presumption. (464)
Put differently, the First Options Court held that parties would be presumed not to have agreed
to submit jurisdictional disputes to final resolution by the arbitrators, and that clear evidence
100
would be required to overcome this presumption. The Court contrasted its approach to
determining the existence of an agreement to arbitrate so-called arbitrability questions
which requires clear evidence demonstrating such an agreement to arbitrate (465) with its
approach to determining the substantive scope of a concededly valid arbitration clause
which requires interpreting all doubts regarding the scope of the arbitration agreement in
favor of arbitration, as well as clear evidence that the parties did not intend to arbitrate a
particular dispute. (466)
Finally, applying the foregoing analysis to the facts of the First Options case, the Court
concluded that there was insufficient evidence to justify the trial courts holding that the
Kaplans had agreed to arbitrate their objections to the tribunals jurisdiction. The Supreme
Court rejected the conclusion of the District Court, which had held that the Kaplans were bound
by the tribunals jurisdictional determination because they had submitted their jurisdictional
arguments to the arbitrators without reservation. The Supreme Court concluded that there was
no evidence showing that the Kaplans clearly agreed to have the arbitrators decide (i.e., to
arbitrate) the question of arbitrability. (467) In particular, merely arguing the arbitrability
issue to an arbitrator does not indicate a clear willingness to arbitrate that issue, i.e., a
willingness to be effectively bound by the arbitrators decision on the point, but such action
on the contrary indicated that the Kaplans did not want the arbitrators to have binding
authority over them. (468)
[b] Howsam v. Dean Witter Reynolds, Inc.
As noted above, First Options led to a series of subsequent Supreme Court decisions,
attempting to clarify the Courts analysis. These decisions have only been partially successful.
P 1134 In Howsam v. Dean Witter Reynolds, Inc., (469) the Supreme Court considered whether the
application of contractual time limits for asserting claims in an arbitration, contained in
institutional arbitration rules, (470) were matters for resolution by the arbitrators or by courts.
A lower court had concluded that the application of contractual time limits presented a
question of the underlying disputes arbitrability [and that, under First Options,] the
presumption is that a court, not an arbitrator, will ordinarily decide an arbitrability
question. (471) The Supreme Court reversed, holding that the interpretation and application of
contractual time limits was presumptively an issue for the arbitrators, not for a court, to
decide.
The Courts reasoning in Howsam sought to explain, more generally, its analysis of the
allocation of jurisdictional competence in First Options, considering when jurisdictional issues
(referred to as gateway issues) should be resolved by courts and when they should be
referred to arbitration. The Court began by restating First Options premise that gateway or
arbitrability issues were ordinarily for interlocutory judicial consideration:
The question whether the parties have submitted a particular dispute to arbitration, i.e., the
question of arbitrability, is an issue for judicial determination [u]nless the parties clearly and
unmistakably provide otherwise. [First Options, supra]. We must decide here whether
application of the [contractual] time limit provision falls into the scope of this last-mentioned
interpretive rule. (472)
The Howsam Court then addressed how the First Options analysis should be applied, and
specifically, whether the presumption of judicial (not arbitral) competence should be applied
to contractual time limits for asserting a claim in arbitration. The Court explained, as a matter
of principle, that:
Linguistically speaking, one might call any potentially dispositive gateway question a
question of arbitrability, for its answer will determine whether the underlying controversy will
proceed to arbitration on the merits. The Courts case law, however, makes clear that, for
purposes of applying the interpretive rule, the phrase question of arbitrability has a far more
limited scope. The Court has found the phrase applicable in the kind of narrow circumstance
where contracting parties would likely have expected a court to have decided the gateway
matter, where they are not likely to have thought that they had agreed that an arbitrator would
P 1135 do so, and, consequently, where reference of the gateway dispute to the court avoids the
risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.
(473)
Following from this focus on the parties likely expectations (i.e., whether the parties would
likely have expected a court to have decided the gateway matter), the Court developed more
specific applications of these observations:
a gateway dispute about whether the parties are bound by a given arbitration clause raises a
question of arbitrability for a court to decide. Similarly, a disagreement about whether an
arbitration clause in a concededly binding contract applies to a particular type of controversy
is for the court. See, e.g., [AT&T Technologies, supra] (holding that a court should decide
whether a labor-management layoff controversy falls within the arbitration clause of a
collective-bargaining agreement).At the same time the Court has found the phrase question
of arbitrability not applicable in other kinds of general circumstance where parties would
likely expect that an arbitrator would decide the gateway matter. Thus procedural questions
which grow out of the dispute and bear on its final disposition are presumptively not for the
judge, but for an arbitrator, to decide. [John Wiley, supra] (holding that an arbitrator should
decide whether the first two steps of a grievance procedure were completed, where these
101
steps are prerequisites to arbitration). So, too, the presumption is that the arbitrator should
decide allegation[s] of waiver, delay, or a like defense to arbitrability. (474)
With these statements of principle, the Howsam Court then held that issues of contractual time
limitations for asserting claims in arbitration were properly categorized like procedural
requirements and waiver (475) as matters presumptively for arbitral determination, rather
than for interlocutory judicial consideration. Among other things, the Supreme Court reasoned
that arbitral tribunals would have greater comparative expertise than courts in applying
contractual terms, such as time limitations (particularly where these were incorporated from
institutional arbitration rules). (476) The Court also referred to the provisions of the relevant
NASD arbitration rules, which granted the arbitral tribunal jurisdiction to interpret and
determine the applicability of all provisions under those rules. (477)
Accordingly, the Court held that, [i]n the absence of any statement to the contrary in the
arbitration agreement, it is reasonable to infer that the parties intended the agreement to
P 1136
reflect that understanding. (478) Thus, although issues that were arguably jurisdictional
were involved, (479) the Howsam Court held that contractual time bars were presumptively for
initial arbitral, rather than judicial, determination.
[c] Green Tree Financial Corp. v. Bazzle
The next in the Supreme Courts post- First Options decisions was Green Tree Financial Corp. v.
Bazzle, (480) where the Court considered whether a court, or the arbitrators, should decide
whether an arbitration agreement permitted class arbitrations. (481) The case produced a
badly splintered series of opinions (4-1-3-1), with no single Justice commanding a majority of
the Court. The precedential force of the various opinions in Bazzle is uncertain, given
subsequent decisions by the Court (particularly in Stolt-Nielsen SA v. AnimalFeeds International
Corp. and AT&T v. Concepcion, discussed below). (482)
Four Justices in Bazzle held that it was for the arbitral tribunal to decide whether the parties
arbitration agreement provided for class arbitration. (483) Citing the respective competencies
of courts and arbitral tribunals, they reasoned:
The question here whether the contracts forbid class arbitration does not fall into [the]
narrow exception [identified in First Options for presumptive judicial determination]. It
concerns neither the validity of the arbitration clause nor its applicability to the underlying
dispute between the parties. Unlike First Options, the question is not whether the parties
wanted a judge or an arbitrator to decide whether they agreed to arbitrate a matter. Rather the
relevant question here is what kind of arbitration proceeding the parties agreed to. That
question does not concern a state statute or judicial procedures. It concerns contract
interpretation and arbitration procedures. Arbitrators are well situated to answer that
question. (484)
The plurality opinion also noted that the parties arbitration agreement broadly submitted all
disputes relating to the contract to arbitration, apparently concluding that this would have
constituted an agreement to arbitrate questions concerning class arbitration regardless of the
First Options presumption: Given these considerations, along with the arbitration contracts
sweeping language concerning the scope of the questions committed to arbitration, this matter
of contract interpretation should be for the arbitrator, not the courts, to decide. (485)
Justice Stevens concurred in the pluralitys conclusion in Bazzle, thereby producing a majority
P 1137
result. Justice Stevens concurring opinion indicated that the pluralitys rationale was
arguably correct, but rested his analysis on U.S. state law principles. (486) On this basis, a
majority of the Court directed that the dispute concerning class arbitration be submitted to
arbitration so that the arbitrator may decide the question of contract interpretation thereby
enforcing the parties arbitration agreements according to their terms. (487)
In contrast, three other Justices held that the question whether the parties arbitration
agreement permitted class arbitration was presumptively for interlocutory judicial
determination. They reasoned that the parties agreement as to how the arbitrator should be
selected is much more akin to the agreement as to what shall be arbitrated, a question for the
courts under First Options, than it is to allegations of waiver, delay, or like defenses to
arbitrability, which are questions for the arbitrator under Howsam. (488) These Justices then
(judicially) interpreted the parties arbitration agreement as forbidding class arbitration. (489)
[d] Stolt-Nielsen SA v. AnimalFeeds International Corp.
In Stolt-Nielsen SA v. AnimalFeeds International Corp., (490) the Supreme Court revisited and
appears to have substantially abandoned much of its earlier (splintered) decision in Bazzle.
Stolt-Nielsen arose from a dispute between Stolt-Nielsen, an ocean shipping company, and
various of its shipping customers, including AnimalFeeds. (491) In the wake of Bazzle,
AnimalFeeds brought a class arbitration against Stolt-Nielsen (and other ocean shipping
companies) asserting antitrust claims, based on allegedly illegal price fixing by ocean
shippers. (492) The arbitration agreement in question was contained in the underlying
AnimalFeeds/Stolt-Nielsen shipping contract; the arbitration clause was silent on whether
class arbitration was permitted. (493)
Proceeding on the basis of the Courts analysis in Bazzle, the parties submitted the question of
whether their arbitration clause provided for class arbitration to the arbitral tribunal which
held that, although silent, it did. (494) Stolt-Nielsen then moved to vacate the award, on the
102
basis that the arbitrators exceeded their jurisdiction, arguing that it had not agreed to class
arbitration. (495) The district court agreed, holding that the arbitrators had acted in manifest
P 1138 disregard of the law by misconstruing the parties arbitration clause to permit class
arbitration. (496) On appeal, the Court of Appeals reversed, reinstating the arbitrators
ruling permitting class arbitration. (497)
In turn, the Supreme Court reversed the Court of Appeals, upholding the district courts vacatur
of the tribunals award and declaring that no class arbitration was authorized by the parties
arbitration agreement. Writing for the Court, Justice Alito pointedly observed that the opinion
in Bazzle had been only a plurality, which there was no need in the present case to revisit.
(498)
In vacating the underlying award, the Stolt-Nielsen Court reasoned that the arbitrators had
relied on public policy considerations rather than the parties agreement or applicable law
and, thereby, exceeded their authority (which the Court thought extended only to issues of
contract interpretation). (499) The Stolt-Nielsen Court concluded by reconsidering the question
addressed by the arbitrators and holding that, in cases where arbitration agreements are
silent regarding class arbitration, no class arbitration may be ordered. (500)
[e] Rent-A-Center, West, Inc. v. Jackson
In Rent-A-Center, West, Inc. v. Jackson, the U.S. Supreme Court took its First Options analysis of
agreements to arbitrate jurisdictional issues one step further (or, in some commentators
views, backwards). (501) The Court also coined a new phrase, applicable to agreements to
resolve jurisdictional issues (or gateway issues) finally by arbitration namely, delegation
agreements.
The plaintiff in Rent-A-Center, a former employee of Rent-A-Center, had concluded an
arbitration agreement with his employer that provided for arbitration of all past, present or
future employment disputes including claims for violation of any federal law. (502) The
arbitration agreement also provided:
The Arbitrator, and not any federal, state or local court or agency, shall have exclusive
authority to resolve any dispute relating to the interpretation, applicability, enforceability or
formation of this Agreement including, but not limited to any claim that all or any part of this
Agreement is void or voidable. (503)
After Jackson filed employment claims in U.S. federal court, Rent-A-Center sought to compel
arbitration; it argued that Jacksons claims that the arbitration agreement was unenforceable
on unconscionability grounds were for the arbitrators (not the court) to decide. The Ninth
Circuit disagreed, acknowledging that the parties agreement clearly assigned arbitrability
decisions to the arbitrator, but reasoning that, where a party challenges an arbitration
P 1139
agreement as unconscionable, and thus asserts that he could not meaningfully assent to
the agreement, the threshold question of unconscionability is for the court. (504)
The Supreme Court reversed, holding that, under the parties agreement, challenges to the
unconscionability of the arbitration agreement were for the arbitral tribunal. Writing for the
Court, Justice Scalia first categorized the parties agreement submitting arbitrability questions
to the arbitrator (which, following the parties submissions, he termed a delegation provision)
as an independent arbitration agreement, (505) which, under Prima Paints separability
doctrine, was separable from the parties broader agreement to arbitrate. (506) After treating
the delegation provision as separable from the rest of the arbitration agreement, Justice
Scalia then applied the standards articulated in Prima Paint and Buckeye Check Cashing, which
require parties challenging an arbitration agreement to challenge the arbitration agreement
specifically, rather than just challenging the larger agreement containing the arbitration
provision. (507) Applying this analysis, the Rent-A-Center Court concluded that unless Jackson
challenged the delegation provision specifically, which he had not, we must treat it as valid
under 2, and must enforce it under 3 and 4, leaving any challenge to the validity of the
Agreement as a whole for the arbitrator. (508) On the other hand, the Court also held that, if a
challenge specifically to the validity of the delegation agreement were made, then it would be
for interlocutory judicial (not arbitral) determination but, as already noted, Jackson made no
such specific challenge. (509)
The Court also considered Jacksons argument that the parties agreement to arbitrate
arbitrability disputes (i.e., the so-called delegation agreement) did not satisfy First Options
requirement for clear and unmistakable evidence that the parties agreed to arbitrate such
issues. (510) Jackson acknowledged that the language of the arbitration clause did grant the
P 1140
arbitrator broad authority to decide jurisdictional disputes, but argued that it is not
clear and unmistakable that his agreement to that text was valid, because of the
unconscionability claims he asserted. (511)
Justice Scalia rejected that argument, holding that Jackson mistakes the subject of the First
Options clear and unmistakable requirement: It pertains to the parties manifestation of
intent, not the agreements validity. (512) According to the Rent-A-Center Court, as long as the
text of the parties agreement provides for resolution of jurisdictional disputes by arbitration,
those disputes must be submitted to arbitration (regardless whether that agreement is valid
and binding as a matter of law).
Justice Stevens, writing for the dissent, took issue with the Courts categorization of the
delegation provision as an arbitration agreement within an arbitration agreement. (513) The
103
dissent would have instead applied First Options and asked whether the arbitration
agreement at issue clearly and unmistakably evince petitioners and respondents intent to
submit questions of arbitrability to the arbitrator. (514) The dissent concluded that the claim
of unconscionability undermine[d] any suggestion that [the plaintiff] clearly and
unmistakably assented to submit questions of arbitrability to the arbitrator. (515) (As
discussed above, however, the Court rejected the suggestion that First Options requires clear
and unmistakable evidence that the delegation to the arbitrator be valid and effective.
Instead, the Court held that determining whether an arbitration agreement clearly and
unmistakably submits arbitrability questions to the arbitrators concerns solely the language
of the parties agreement (i.e., their intent), and not that agreements validity or enforceability.
(516) )
[f] Granite Rock Co. v. International Brotherhood of Teamsters
The Supreme Courts most recent consideration of arbitral jurisdiction was in Granite Rock Co.
v. International Brotherhood of Teamsters. (517) There, the Court restated the proper framework
for deciding when disputes are arbitrable under our precedents. (518)
The Granite Rock case presented the question whether a dispute regarding the date on which a
P 1141 collective bargaining agreement between the parties had been formed, and therefore the
date on which the arbitration agreement had been formed, fell within the scope of the
arbitration clause in that agreement. Reversing the Court of Appeals, the Supreme Court held
that it did not.
The Supreme Court first recited the general rule, under the FAA, that jurisdictional disputes are
for judicial, not arbitral, decision:
It is well settledthat whether parties have agreed to submi[t] a particular dispute to
arbitration is typically an issue for judicial determination. It is similarly well settled that
where the dispute at issue concerns contract formation, the dispute is generally for courts to
decide. (519)
The Court went on to reemphasize the proper framework for resolving jurisdictional disputes
under the FAA, also quoted above:
Under that framework, a court may order arbitration of a particular dispute only where the
court is satisfied that the parties agreed to arbitrate that dispute. To satisfy itself that such
agreement exists, the court must resolve any issue that calls into question the formation or
applicability of the specific arbitration clause that a party seeks to have the court enforce.
Where there is no provision validly committing them to an arbitrator, these issues typically
concern the scope of the arbitration clause and its enforceability. In addition, these issues
always include whether the clause was agreed to, and may include when that agreement was
formed. (520)
The Court noted that neither party argues that the arbitrator should decide this question [i.e.,
the parties dispute over the scope and formation of their arbitration agreement], (521) and
therefore did not apply the First Options analysis. As discussed below, the Court went on to
hold (rather clearly wrongly) that the parties arbitration clause did not encompass disputes
over the date on which the underlying collective bargaining agreement had been formed and
therefore refused to order arbitration of such disputes. (522)
[3] Applicability of First Options and Its Progeny to International Arbitration Agreements
First Options and its progeny all involved domestic arbitration agreements; their facts did not
raise international issues or concern the New York or Inter-American Conventions. Nonetheless,
U.S. lower courts have consistently applied the basic principles of the First Options analysis to
P 1142
international arbitration agreements. (523) As one lower court reasoned: We recognize
that First Options is a domestic arbitration case, but the international nature of the present
litigation does not affect the application of First Options principles. (524) Or, as another lower
court put it:
Under both the Convention and United States arbitration law, this court cannot compel [a
party] to arbitrate without first concluding that it has made a valid and binding arbitration
agreement with [its counter-party], and that any such agreement is not null and void,
inoperative or capable of being performed. (525)
The same conclusion applies in the context of judicial review of arbitral awards:
First Options holds that a court which is asked to enforce an arbitration award, at the request
of a party opposing enforcement, may determine independently the arbitrability of the
dispute. Although First Options arose under the FAA, the Courts reasoning in the case is based
on the principle that arbitration is simply a matter of contract between the parties; it is a way
to resolve those disputes but only those disputes that the parties have agreed to submit to
arbitration.This rationale is not specific to the FAA. It is a crucial principle of arbitration
generally, including in the international context. Indeed, even international laws and rules of
arbitration that traditionally grant arbitrators more leeway to decide their own jurisdiction
have allowed a party objecting to the validity of the agreement to arbitrate to seek judicial
review of an arbitral panels decision that it has jurisdiction under the alleged agreement.
(526)
Moreover, in applying First Options, U.S. courts have also drawn no distinction between
104
P 1143 international arbitration agreements specifying foreign arbitral seats and agreements with
domestic U.S. seats. U.S. courts have applied the First Options analysis in both cases, (527)
and generally reasoned broadly that there is no reason that the First Options analysis should
not apply in all international cases. (528)
The foregoing result is broadly consistent with the text of the FAA. Nonetheless, this approach
requires closer attention to the language and purposes of the FAA than most lower courts have
devoted, and is subject to important qualifications.
The foundations for the approach to the allocation of jurisdictional competence in the United
States, in First Options and otherwise, are 3 and 4 of the domestic FAA. Importantly, those
provisions do not apply directly to international arbitration agreements subject to the New
York and Inter-American Conventions, and are instead only made applicable through 208
and 306 of the FAA. In turn, as discussed above, 208 and 306 provide that [c]hapter 1 [of the
FAA] applies to actions and proceedings brought under this chapter to the extent that chapter
is not in conflict with this chapter or the Convention as ratified by the United States. (529)
Although 3 and 4 of the domestic FAA are in principle made applicable to international
arbitration agreements (by 208 and 306), there is a substantial argument that they are in
conflict with the New York Convention (and Inter-American Convention) in important respects.
As a consequence, the allocation of jurisdictional competence adopted in First Options and its
progeny for domestic matters should not automatically apply under the Convention, and
should instead be applied in light of the Conventions purposes and international setting.
Specifically, 3 and 4 of the domestic FAA rest on the premise that, when the existence or
validity of an arbitration agreement is challenged in a U.S. court, then that court will resolve
the jurisdictional dispute (rather than referring the jurisdictional dispute to arbitration). That
result follows from the language of 3 and 4, providing that an action in U.S. courts must be
stayed, and the parties referred to arbitration, (530) only upon [the court] being satisfied that
the issue involved in such suit or proceeding is referable to arbitration under such an
[arbitration] agreement, (531) and that, [i]f the making of the arbitration agreement or the
failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily
to the trial thereof. (532)
These provisions make a substantial degree of sense in a domestic context, where there is only
a choice between resolution of a jurisdictional dispute by a U.S. court and an arbitral tribunal.
Although other approaches to the allocation of jurisdictional competence can reasonably be
P 1144
envisaged, (533) this allocation provides a simple resolution, which over time will match
parties expectations, in a purely domestic setting.
Different considerations apply, however, in international cases. Most fundamentally, the
allocation of competence in international cases does not involve only a choice between the
arbitral tribunal and the U.S. courts, as is true in domestic cases. Instead, the allocation of
competence in international cases involves a choice between the arbitral tribunal and a
variety of national courts; this necessarily requires determining which of two (or more)
potentially available national courts should resolve a jurisdictional dispute. In turn, this
argues decisively for national courts to defer, in particular cases, to either a foreign court (e.g.,
in the putative arbitral seat) or the arbitral tribunal. (534) If national courts did not, in
international cases, adopt this approach, there would inevitably be a multiplicity of judicial
proceedings, and potentially inconsistent results, addressing the same jurisdictional dispute,
which would be both inefficient and contrary to the Conventions objectives of uniformity. (535)
Interpreting 3 and 4 of the FAA as requiring U.S. courts to resolve jurisdictional disputes
arising from international arbitration agreements would, therefore, be in conflict with the
Convention within the meaning of 208 (and 306). The Convention rests on the premise of 149
Contracting States, committed to recognize and enforce international arbitration agreements
in accordance with uniform international standards, in order to facilitate the international
arbitral process. (536) As the U.S. Supreme Court emphasized in another context in Mitsubishi
Motors Corp. v. Soler-Chrysler Plymouth, Inc., the Conventions objectives cannot be achieved
unless national courts exercise a degree of restraint: The utility of the [New York] Convention
in promoting the process of international commercial arbitration depends upon the
willingness of national courts to let go of matters they normally would think of as their own.
(537)
Precisely the same analysis applies in determining whether 3 and 4 should be applied to
require U.S. courts to resolve a jurisdictional dispute, arising in connection with an
international arbitration agreement subject to the Convention. Rather than automatically
resolving such disputes, both the Convention and the international setting of international
arbitration agreements instead argue decisively for U.S. courts to exercise restraint and, in
appropriate circumstances, permit either an arbitral tribunal or foreign court (typically, that in
the putative arbitral seat) initially to consider and resolve the jurisdictional disputes. Of
course, U.S. courts would retain ultimate responsibility to consider and resolve such
jurisdictional disputes, but, in appropriate cases, they would make this decision only after
either the arbitrators or a foreign court had first considered the issue.
Some U.S. courts have adopted this analysis, holding that it is appropriate to stay
P 1145
interlocutory U.S. judicial consideration of jurisdictional objections where an international
arbitration subject to the New York Convention is concerned. (538) According to one lower
court:
105
it is apparent that making a judicial determination on arbitrability, prior to an action seeking
recognition or enforcement of an awardis inconsistent with the purposes of the FAA and the
New York Convention. (539)
Other courts have reached similar conclusions, indicating a willingness to defer to pending
jurisdictional proceedings before arbitral tribunals. (540)
Some authorities have held that the New York Convention requires a prima facie review
standard (which would be incorporated as a matter of U.S. law by 208 of the FAA). (541) This
analysis correctly recognizes that international arbitration agreements can require a different
allocation of jurisdictional competence than domestic agreements, but its suggested approach
is ill-advised. As discussed above, it is wrong to conclude that the Convention imposes a prima
facie standard of review for international arbitration agreements; nothing in the text of Article
II, or the Conventions drafting history, supports such a conclusion. (542)
Moreover, the suggested approach would generally result in U.S. courts conducting prima facie
judicial review of jurisdictional challenges to arbitration agreements providing for foreign
arbitral seats, (543) while generally providing for full judicial review of U.S.-seated arbitrations.
Ironically, this approach would be almost exactly the reverse of that adopted in Switzerland,
requiring U.S. judges to deny parties access to U.S. courts, based on a prima facie jurisdictional
review, in circumstances where it is very possible that no subsequent U.S. judicial review of the
arbitrators jurisdictional award would occur. As noted above, it is precisely to avoid this result
that Swiss courts require full judicial review of arbitration agreements providing for foreign
arbitral seats, while affording only prima facie judicial review to those seated in Switzerland.
(544) It would be ill-considered for U.S. courts to reverse this approach.
P 1146 Rather, the better view is that the Convention leaves Contracting States with a substantial
degree of freedom to decide whether to resolve jurisdictional disputes under Article II, while
imposing a general obligation, recognized in Mitsubishi, of restraint in the exercise of national
jurisdiction. Notably, that obligation of restraint is also reflected in the better-reasoned
domestic authority under the FAA.
Thus, as discussed below, there is a substantial body of authority under the domestic FAA
holding that U.S. courts have the inherent authority to stay proceedings pending resolution of a
pending arbitration. (545) As a consequence, even where 3 and 4 provide for judicial
resolution of a particular issue, U.S. courts retain authority in domestic cases to defer to the
arbitrators (or another court). The same rationale applies with substantially greater force
under the Convention, for the reasons discussed above.
As also discussed below, the better view is that, in applying 3 and 4 and the First Options
analysis to international arbitration agreements, subject to the New York (or Inter-American)
Convention, U.S. courts should adopt a lis pendens analysis, that takes into account the
efficiencies and equities of particular cases. This analysis would result in U.S. courts resolving
(finally) jurisdictional disputes in some cases, but deferring to an initial decision by the
arbitrators (or a foreign court) in other cases, depending on a pragmatic assessment of what
would be fairest and most efficient in particular cases.
Finally, the Convention gives added weight, in international cases, to First Options holding that
agreements to arbitrate jurisdictional disputes must be given effect. As discussed above,
Article II of the Convention requires that Contracting States recognize and enforce
international arbitration agreements; that obligation extends to agreements to arbitrate
jurisdictional disputes. (546) That obligation is given effect by 208 and 306 of the FAA,
requiring recognition and enforcement of agreements on the allocation of jurisdictional
competence.
As discussed below, Article II of the Convention has particular importance in cases involving
challenges to the scope of an international arbitration agreement. In those cases, there is no
challenge to the validity of the parties agreement to arbitrate, including their agreement to
arbitrate jurisdictional disputes. (547) As a consequence, as discussed below, the Convention
(like the FAA) requires that those disputes, over the scope of the arbitration agreement, be
referred initially to arbitration.
[4] Arbitrators Competence-Competence Under Federal Arbitration Act
As discussed above, the FAA does not provide expressly for the arbitrators competence-
competence. (548) It is nonetheless clear, as also discussed above, that the FAA recognizes the
arbitrators authority to consider and resolve (subject to subsequent judicial review)
jurisdictional disputes. (549) Indeed, where parties have concluded an agreement submitting
P 1147 jurisdictional disputes to arbitration, U.S. courts give effect to that agreement and subject
the arbitrators jurisdictional determination to little or no substantive review. (550)
In the context of international arbitration agreements, this recognition of the arbitrators
competence-competence is required by 208 and 306 of the FAA and the New York and Inter-
American Conventions. In particular, as discussed above, the New York Convention should be
interpreted as requiring Contracting States (absent contrary agreement by the parties) to
permit arbitral tribunals to consider and make non-binding decisions regarding their own
jurisdiction. Sections 208 and 306 of the FAA incorporate this recognition of the arbitrators
presumptive competence-competence, requiring U.S. courts to recognize and give effect to
that competence-competence.
106
[5] Allocation of Jurisdictional Competence Between Arbitral Tribunals and Courts Under
Federal Arbitration Act
U.S. courts have produced a very large body of authority, primarily in domestic cases,
attempting to apply 3, 4 and 10(a)(4) of the FAAs first chapter and the Supreme Courts
analysis of arbitrability questions. The resulting standards for the allocation of jurisdictional
competence between arbitral tribunals and courts under the domestic FAA are, to put it
mildly, complex.
In considering the allocation of jurisdictional competence, U.S. courts have distinguished
between different types of jurisdictional disputes, and particularly between matters
concerning: (a) the scope of the arbitration agreement; (b) the validity or enforceability of the
arbitration agreement; (c) the validity or enforceability of the underlying contract; (d) the
existence of the arbitration agreement and the existence or formation of the underlying
contract; and (e) questions of arbitral procedure. The allocation of competence to resolve
jurisdictional objections under the domestic FAA is influenced significantly by the type of
jurisdictional or other objection that is raised.
[a] Presumptive Availability of Interlocutory Judicial Resolution of Jurisdictional Disputes
Under Federal Arbitration Act
As discussed above, the presumptive rule under the domestic FAA is that either party is free to
seek, and entitled to obtain, interlocutory judicial resolution of disputes over the existence,
validity, or scope of arbitration agreements. As also discussed above, that conclusion follows
from the language of 3 and 4 of the FAA, providing that litigation can be stayed, and
arbitration can be compelled, only upon [the court] being satisfied that the issue involved in
such suit or proceeding is referable to arbitration under such an [arbitration] agreement, (551)
and upon [the court] being satisfied that the making of the agreement for arbitration or the
failure to comply therewith is not in issue. (552)
P 1148 These provisions have given rise to a default rule under the FAA, permitting parties to
obtain de novo judicial consideration of jurisdictional or arbitrability disputes, including
disputes over the existence, validity and scope of the putative arbitration agreement. As the
Supreme Court has described:
a court may order arbitration of a particular dispute only where the court is satisfied that the
parties agreed to arbitrate that dispute. To satisfy itself that such agreement exists, the court
must resolve any issue that calls into question the formation or applicability of the specific
arbitration clause that a party seeks to have the court enforce. Where there is no provision
validly committing them to an arbitrator, these issues typically concern the scope of the
arbitration clause and its enforceability. In addition, these issues always include whether the
clause was agreed to, and may include when that agreement was formed. (553)
Or, as a lower court explained more generally:
The default rule, in the absence of express contractual terms to the contrary, is that it is for
the court to decide the validity and scope of an arbitration clause, and for the arbitrator to
decide all matters within the scope of a valid clause. When a substantive question falls within
the scope of an arbitration clause, procedural questions ancillary to the substantive one are by
default for the arbitrator to decide. (554)
As discussed above, this default rule has been applied in both domestic and international
cases. (555)
Nonetheless, as also discussed above, this default rule can be altered by agreement, granting
arbitrators the authority to finally decide jurisdictional disputes. As the Supreme Court has
explained:
We have recognized that parties can agree to arbitrate gateway questions of arbitrability,
such as whether the parties have agreed to arbitrate or whether their agreement covers a
particular controversy. This line of cases merely reflects the principle that arbitration is a
matter of contract. (556)
The Courts analysis has also been relied on to determine the level of judicial review
applicable to arbitrators jurisdictional decisions. In the words of one lower court:
absent clear and unmistakable evidence that contracting parties intended an arbitrator
(rather than a court) to resolve questions of arbitrability, courts should independently decide
whether an arbitration panel has jurisdiction over the merits of any particular dispute. (557)
P 1149
A number of U.S. lower courts have applied this analysis, permitting parties to agree to
finally resolve jurisdictional disputes by arbitration, in both vacatur and recognition contexts.
(558)
Where parties have not agreed to resolve jurisdictional disputes by arbitration, the FAA
presumptively provides for a full evidentiary hearing and trial of such disputes. As noted
above, 4 of the FAA expressly deals with the power of a U.S. court to hear jurisdictional
disputes in domestic cases, providing:
The court shall hear the parties, and upon being satisfied that the making of the agreement
for arbitration or the failure to comply therewith, is not in issue, the court shall make an order
directing the parties to proceed to arbitration in accordance with the terms of the agreement.
107
If the making of the arbitration agreement or the failure, neglect, or refusal to perform the
same be in issue, the court shall proceed summarily to the trial thereof. (559)
In cases involving challenges to the existence, validity, or scope of arbitration agreements, and
no First Options agreement to arbitrate jurisdictional disputes, U.S. courts have frequently
permitted U.S.-style discovery relating to jurisdictional issues (so-called jurisdictional
discovery) (560) and conducted a full evidentiary hearing before resolving the jurisdictional
dispute. (561) On some occasions, as discussed below, U.S. courts have discretionarily stayed
consideration of a jurisdictional challenge, pending the arbitrators consideration of the
P 1150
parties jurisdictional (and other) claims. (562) Where no stay is granted, however, judicial
consideration of jurisdictional objections under 4 of the FAA is frequently protracted and
expensive. (563)
In practice, application of the foregoing general principles has presented numerous
interpretative difficulties, producing numerous, often divergent, lower court decisions. These
decisions have often involved application of the separability presumption (in order to
determine whether a dispute involves arbitrability questions that are presumptively for
judicial resolution).
[b] Allocation of Jurisdictional Competence to Resolve Disputes Concerning Validity or
Enforceability of Arbitration Agreement Under Federal Arbitration Act
There is a substantial body of U.S. lower court decisions applying First Options and its progeny
to disputes over the validity or enforceability of arbitration agreements. This authority is
complex and sometimes confusing.
Preliminarily, challenges to the validity or enforceability of the arbitration agreement must be
distinguished from challenges to the validity or enforceability of the underlying contract; this
of course results from application of the separability presumption. (564) Similarly, challenges
to the validity or enforceability of an arbitration agreement must be distinguished from
challenges to the formation or existence of that agreement. As the Court explained in Rent-A-
Center, [t]he issue of the agreements validity is different from the issue whether any
agreement between the parties was ever concluded. (565) This section considers only the
allocation of competence under the FAA in disputes concerning the validity or enforceability of
the arbitration agreement; the allocation of competence in disputes concerning the existence
of the arbitration agreement itself are discussed in the following section. (566)
[i] Disputes Concerning Validity or Enforceability of Arbitration Agreement Under Federal
Arbitration Act: Default Rule
The U.S. Supreme Court has made clear albeit in dicta that disputes concerning the validity
or enforceability of an arbitration agreement are presumptively for judicial (not arbitral)
P 1151
determination. (567) Thus, the Court declared in Granite Rock that courts should order
arbitration of a dispute only where the court is satisfied that neither the formation of the
parties arbitration agreement nor (absent a valid provision specifically committing such
disputes to an arbitrator) its enforceability or applicability to the dispute is in issue. (568)
U.S. lower courts have adopted this analysis, repeatedly holding that claims that an
arbitration agreement (as distinguished from the underlying contract (569) ) is illegal (570) or
invalid (571) are for judicial determination. In the words of one lower court:
P 1152 when a plaintiffs legal challenge is that a contract as a whole is unenforceable, the
arbitrator decides the validity of the contract, including derivatively the validity ofthe
arbitration clause.However, when a plaintiff argues that an arbitration clause, standing
alone, is unenforceable for reasons independent of any reasons the remainder of the contract
might be invalid that is a question to be decided by the court. (572)
This default rule has been applied by U.S. lower courts in cases involving a wide range of
jurisdictional challenges to the validity or enforceability of arbitration agreements, including
disputes involving claims of fraud, (573) duress, (574) unconscionability (575) and lack of
mutuality, (576) in each case where the claim is directed specifically at the arbitration
agreement itself. One lower court summarized this analysis as follows:
When the crux of the complaint is not the invalidity of the contract as a whole, but rather the
P 1153
arbitration provision itself, then the federal courts must decide whether the arbitration
provision is invalid and unenforceable. (577)
The same approach has been taken to claims that the arbitration agreement has terminated or
expired, (578) or that the arbitration clause is invalid because its existence was concealed or
misrepresented. (579)
There is very little contrary authority: where a party specifically challenges the validity of an
arbitration agreement itself, U.S. courts almost always consider and resolve the jurisdictional
challenge themselves on an interlocutory basis. The only exceptions are, as discussed below,
where parties have agreed to arbitrate jurisdictional disputes (as contemplated by First
Options) (580) and in cases where U.S. courts exercise their discretionary authority to stay
proceedings pending the arbitral tribunals resolution of jurisdictional issues. (581) Other than
these two exceptions, U.S. courts will, if requested by a party, almost uniformly consider and
resolve challenges to the validity or enforceability of arbitration agreements on an
interlocutory basis.
108
[ii] Disputes Concerning Validity or Enforceability of Underlying Contract Under Federal
In contrast, where there is only a challenge to the validity or legality of the underlying contract,
and no challenge to the existence, validity, or legality of the associated arbitration clause
itself, U.S. courts have required arbitration of that claim. (582) This application of the
P 1154
separability presumption has been consistently affirmed by the U.S. Supreme Court first
in Prima Paint Corp. v. Flood & Conklin Mfg Co., (583) then in Buckeye Check Cashing, Inc. v.
Cardegna, (584) and most recently in Rent-A-Center, West, Inc. v. Jackson. (585)
U.S. lower courts have repeatedly applied the separability presumption in holding that claims
regarding the validity or enforceability of the underlying contract do not impeach the
separable arbitration clause and are for decision by the arbitrators. That approach has been
adopted in diverse settings, including in cases involving claims that the underlying contract
had been fraudulently induced, (586) was invalid by reason of unilateral or mutual mistake,
P 1155
(587) was invalid for lack of consideration, (588) was unconscionable, (589) was terminated,
abandoned, or rescinded, (590) was invalid for failure of a condition precedent, (591) was
illegal, (592) or lacked mutuality. (593)
P 1156 As discussed below, lower courts have reached less consistent results in addressing claims
that arguably involve the existence or formation of the parties contract, such as claims that
the contract was procured by duress (594) or was void or invalid for lack of capacity. (595) In
P 1157
these cases, some courts have held that the objection is directed to the underlying
contract (and is therefore for resolution by the arbitrators) and other courts have concluded
that the objection necessarily impeaches the arbitration agreement (and is therefore for
judicial resolution).
As discussed above, the U.S. Supreme Court held in Buckeye Check Cashing, Inc. v. Cardegna
(596) that claims that both the underlying contract and the arbitration agreement are invalid
or illegal were for initial resolution by the arbitrators: because respondents challenge the
[underlying] Agreement, and not specifically its arbitration provisions, those provisions are
enforceable apart from the remainder of the contract, and should therefore be considered by
an arbitrator, not a court. (597) The Court also held that a challenge to the validity of the
contract as a whole and not specifically to the arbitration clause, must go to the arbitrator.
(598) Consistent with this analysis, U.S. courts have generally held that claims of invalidity,
illegality, or termination will be for judicial determination only when they are specifically
directed at the arbitration agreement itself, and not when they are directed generally at both
the underlying contract and the arbitration agreement. (599)
It is not entirely clear whether these holdings should be understood as involving a
determination of the substantive validity of the agreement to arbitrate (i.e., that the
arbitration agreement is valid unless it is specifically challenged) or, in contrast, a
determination of an initial allocation of jurisdictional competence (i.e., the arbitrators should
preliminarily resolve issues of substantive validity of the arbitration clause unless it is
specifically challenged). This distinction can have significant practical consequences: if only
a specific challenge to an arbitration agreement can impeach its substantive validity, then a
wide range of challenges (to both the arbitration agreement and the underlying contract) will
never be grounds for invalidating the arbitration agreement. On the other hand, if the absence
of a specific challenge to the arbitration agreement only means that the arbitrators may
initially decide the validity of the arbitration agreement, then either the arbitrators or a court
P 1158
in a vacatur action could subsequently determine that the arbitration agreement was
invalid based on a challenge generally to both it and the underlying contract.
There is a plausible argument that the Supreme Courts decisions in Prima Paint, Buckeye
Check Cashing and their progeny only concern the sequence of arbitral and judicial decisions,
not the substantive validity of the arbitration agreement. Under this view, the Supreme Court
did not hold that, where a challenge does not specifically impeach the arbitration clause, the
clause is valid (because it has not been challenged). Rather, under this analysis, even if a
challenge was not directed specifically at the arbitration agreement, it would remain open
for later decision whether a particular challenge in fact impeached the arbitration clause (with
this issue then being resolved by the arbitrators and judicially in a subsequent vacatur
proceedings). (600) If this approach were adopted, the Courts decisions in Buckeye Check
Cashing and its progeny would only have held that it was more efficient and fairer for such
jurisdictional challenges to be resolved in the first instance by the arbitrators, subject to
subsequent judicial review. (601)
In contrast, however, there is a more substantial argument that the Supreme Courts decision
in Buckeye Check Cashing does mean precisely that challenges to both the underlying contract
and the arbitration agreement do not impeach the substantive validity of the arbitration
agreement. On this analysis, challenges to both the underlying contract and arbitration clause
must be submitted to arbitration, for a final decision by the arbitrators, precisely because
there is no jurisdictional challenge that impeaches the validity of the arbitration clause in
these cases. This conclusion has been adopted by both commentary (602) and a substantial
number of lower court decisions. (603) In contrast, there appear to be no reported lower court
P 1159 decisions holding that an arbitral award may be vacated on jurisdictional grounds, based
on a challenge not directed specifically to the arbitration agreement.
It is very likely that this latter interpretation was, in fact, the Courts intended holding in
Buckeye Check Cashing. In addition to the conclusions of most lower courts and commentators,
109
this result would be consistent with the Courts characterization of the separability
presumption as a substantive rule of law (including under the FAA (604) ), which defines when
there is a challenge to the arbitration agreement at all.
Similarly, as discussed above, the text of 3 and 4 of the domestic FAA explicitly links a
courts interlocutory consideration of a jurisdictional challenge to the question whether the
validity of the arbitration agreement is in issue; that formula, particularly as applied in
Prima Paint and Buckeye Check Cashing, appears fairly clearly to require treating the
separability presumption as a substantive rule of validity, not as merely a procedural or
sequencing mechanism. As a consequence, when a U.S. court concludes that a jurisdictional
objection is not directed specifically at the arbitration agreement, it is concluding that there
is no substantive challenge to the validity of the arbitration agreement. In turn, that conclusion
means that the validity of the arbitration agreement will virtually always be upheld (because
the only asserted grounds for challenging the agreement do not in fact do so and because any
other available challenge will have been waived).
[iii] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement by
Arbitration Under Federal Arbitration Act
Notwithstanding the presumption that disputes over the validity or enforceability of an
arbitration agreement are for interlocutory judicial determination, First Options makes it clear
that parties may reverse this default rule by clear[ly] and unmistakabl[y] agreeing to submit
such disputes to arbitration. (605) Applying First Options clear and unmistakable evidence
standard, U.S. lower courts have routinely concluded that disputes over the validity or
enforceability of arbitration agreements have been submitted by the parties to arbitration.
(606)
P 1160 [iv] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement
by Arbitration Under Federal Arbitration Act: General Principles
As discussed above, the Supreme Courts basic holding in First Options was that parties may
agree to finally resolve arbitrability issues by arbitration, provided that there is clear and
unmistakable evidence of that agreement. In the Courts words, the decisive issue is whether
the parties have agree[d] to submit the arbitrability question itself to arbitration, or agreed
to arbitrate arbitrability, which requires clea[r] and unmistakabl[e] evidence that the
parties concluded such an agreement.
The First Options formula has given rise to significant questions of interpretation. In particular,
U.S. courts and commentators have struggled with determining precisely what the Supreme
Courts references to clear and unmistakable evidence of an agreement to arbitrate
arbitrability disputes requires.
First, it is unclear what constitutes clear and unmistakable evidence of an agreement to
arbitrate jurisdictional issues. On the one hand, there are substantial grounds for arguing that,
under the First Options analysis, a jurisdictional objection directed to the existence or validity
of the agreement to arbitrate will virtually always require judicial determination; the rationale
for this conclusion is that, absent clear and unmistakable evidence of a valid agreement to
arbitrate, there can be no clear and unmistakable evidence of an agreement to arbitrate
jurisdictional issues. As one lower court reasoned, a contract cannot give an arbitral body any
power, much less the power to determine its own jurisdiction, if the parties never entered into
it. (607)
A number of U.S. lower courts reached conclusions consistent with this analysis, holding that
jurisdictional disputes must be submitted to arbitration under First Options only where there is
clear and unmistakable evidence of a valid agreement to arbitrate those disputes. (608) On
this analysis, a jurisdictional dispute will virtually never be subject to final resolution by
arbitration if one party asserts a non-frivolous objection to the validity of the arbitration
agreement; challenges to the validity of an agreement, based on unconscionability, fraud,
P 1161
mistake, duress, illegality and the like would all be grounds for concluding that there is
not clear and unmistakable evidence of an agreement to arbitrate jurisdictional disputes.
Nonetheless, the U.S. Supreme Court has apparently rejected this conclusion. As discussed
above, the Court held in Rent-A-Center, West, Inc. v. Jackson that First Options requirement for
clear and unmistakable evidence of an agreement to arbitrate jurisdictional objections does
not require considering challenges to the validity of such an agreement; (609) rather, the Court
declared that the clear and unmistakable evidence standard applies only to the parties
manifestation of their intentions to arbitrate jurisdictional objections, regardless of the
validity of their resulting agreement. In the Courts words, the subject of the First Options
clear and unmistakable requirementpertains to the parties manifestation of intent, not the
agreements validity. (610)
Since the Rent-A-Center decision, lower courts have applied this restatement of the First Option
formula. (611) In the words of one court: the subject of theclear and unmistakable
requirement pertains to the parties manifestation of intent, not to the agreements validity.
(612) As a consequence, a challenge to the validity of the parties alleged agreement to
arbitrate arbitrability disputes will not suffice to prevent submission of those disputes to
arbitration; only a challenge to the parties manifestation of intent will be grounds for not
submitting arbitrability disputes to arbitration. In practice, only a challenge to the wording of
the parties agreement to arbitrate (for example, on the basis that the parties language does
110
not encompass jurisdictional disputes or clearly and unmistakably require submission of such
disputes to arbitration) will suffice to prevent application of First Options. As a practical
matter, this substantially expands the range and number of cases in which a First Options
agreement to submit jurisdictional disputes to arbitration will be found, including to most
cases involving institutional arbitration agreements (as discussed below (613) ).
Second, disputes have arisen regarding the content of the agreement to arbitrate jurisdictional
disputes that First Options contemplates. In particular, there has been uncertainty whether the
First Options analysis requires, on the one hand, an agreement merely to arbitrate
P 1162
jurisdictional disputes or, on the other hand, an agreement to finally resolve jurisdictional
disputes by arbitration (with some indication that the arbitrators jurisdictional decision will
not be subject to judicial review).
Some commentary has concluded that the latter type of agreement is required, reasoning that
merely agreeing to arbitrate a jurisdictional dispute does not alter the arbitrators general
competence-competence or suggest that the arbitrators have been granted essentially
unreviewable authority to decide their own jurisdiction. (614) According to one commentator:
Where the First Options presumption is overcome it must be because there is a court that is
satisfied that the parties had agreed to entrust this question of consent to the arbitrator, and
that they were willing to be bound by this arbitrators award. (615)
This analysis is well-reasoned, but it is inconsistent with the weight of lower court authority
interpreting what the Supreme Court required under First Options. Most U.S. lower courts have
held that First Options and its progeny only require evidence of an agreement to arbitrate that
includes jurisdictional issues, (616) not a waiver of judicial review of arbitral decisions on
jurisdictional issues. (617) According to these decisions, once such an agreement to arbitrate
jurisdictional disputes exists, then the arbitrators awards on the substantive merits of those
jurisdictional disputes are subject to only de minimis judicial review (under the FAAs manifest
disregard standard) in the same way that awards on the merits of other arbitrable disputes
are reviewed. (618)
The Supreme Courts various opinions in First Options and its progeny do not provide
substantial guidance in determining whether this lower court authority is likely to endure. On
the one hand, the Court required in First Options that the parties have indicate[d] a clear
willingness to arbitrate that issue, i.e., a willingness to be effectively bound by the arbitrators
decision on the point. (619) That language suggests, albeit not particularly conclusively, that
what is required by First Options is an agreement that the arbitrators finally decide
jurisdictional disputes, without subsequent judicial review not just consider and decide
jurisdictional disputes. On the other hand, other formulations in First Options and its progeny
P 1163
suggest a more limited requirement, that the parties agree[d] to submit the arbitrability
question itself to arbitration, (620) or agreed to arbitrate arbitrability (621) all without
suggesting a further requirement of a specific agreement that the arbitrators be authorized to
finally decide arbitrability issues or that judicial review of the arbitrators jurisdictional
decision be waived. (622)
It is unclear, from the text of the Courts decisions, which of these alternative interpretations it
intended or is likely to adopt in the future. As a practical matter, the tenor of the Courts
decisions in Rent-a Center and Stolt-Nielsen suggest that the Court will likely prefer the latter
interpretation, not requiring a waiver of judicial review or agreement to resolve jurisdictional
disputes finally by arbitration.
Despite this, the better view of the FAA (and First Options) is that reversing the default rule that
jurisdictional objections are for judicial resolution generally requires an agreement that
jurisdictional disputes be finally resolved by arbitration, not just an agreement that
jurisdictional disputes are subject to arbitration. A contrary conclusion would, simultaneously,
ignore both the competence-competence doctrine and the parties expectations about
judicial review of jurisdictional decisions by the arbitrators. This is particularly true in
international settings, but also applies domestically.
As discussed in detail above, the competence-competence doctrine provides that arbitrators
in international settings virtually always have the authority to consider and decide
jurisdictional issues. (623) As the U.K. Supreme Court recently, and correctly, observed, the
principle that a tribunal in an international commercial arbitration has the power to consider
its own jurisdiction is no doubt a general principle of law. (624) Thus, at least in international
cases, parties virtually always agree to arbitrate arbitrability: the arbitrators competence-
competence to consider and resolve jurisdictional disputes is presumptively an integral and
fundamental part of their adjudicatory mandate.
Although it is beyond the scope of this Treatise, the same conclusion should apply in domestic
U.S. matters. The competence-competence to consider jurisdictional challenges is an inherent
aspect of any adjudicatory body, and there is no suggestion in the FAA or in U.S. judicial
authority that, absent a First Options agreement, arbitrators in the United States lack the
authority to consider jurisdictional challenges; as discussed above, it is clear that any such
suggestion would be unfounded. (625)
P 1164
Despite the presumptive and ubiquitous character of the competence-competence
doctrine, it is also clear that parties generally expect that arbitrators jurisdictional decisions
will be subject to judicial review. (626) That is evident from the provisions of the New York
Convention (providing in Articles V(1)(a) and V(1)(c) for judicial review of arbitrators
111
jurisdictional determinations), (627) the UNCITRAL Model Law (providing for similar judicial
review in Articles 34(2)(a)(i) and (iii) and 36(1)(a)(i) and (iii)), (628) and other national
arbitration legislation (all uniformly providing for judicial review of jurisdictional decisions by
arbitral tribunals). (629) Indeed, as one English decision correctly concluded, [i]t is self-
evidentthat an arbitral tribunal cannot be the final arbitrator of the question of jurisdiction;
this would provide a classic case of pulling oneself up by ones own boot straps. (630)
Given this, the only type of agreement that can properly satisfy the First Options standard
should be an agreement authorizing the arbitrators to finally resolve jurisdictional disputes,
without subsequent judicial review of that jurisdictional decision. It is only that type of
agreement that would overcome the parties expectation that jurisdictional disputes will be
subject to judicial determination, notwithstanding the arbitrators competence-competence.
An agreement that the arbitrators may consider and resolve jurisdictional disputes exists in
almost every case, by virtue of the arbitrators competence-competence, and cannot be
sufficient to overcome the presumption of access to judicial determination of jurisdictional
disputes.
Conversely, it would make no sense that there must be some special agreement, established
by clear and unmistakable evidence, doing no more than grant the arbitrators power to
consider jurisdictional challenges. That would be like suggesting that the arbitrators require a
special agreement to decide on the arbitral procedures, the choice of applicable substantive
law, the quantum of damages and the like. As already noted, the arbitrators competence-
competence is an inherent aspect of their adjudicative mandate and function.
Thus, determining whether the parties have agreed to submit jurisdictional disputes, or some
kinds of jurisdictional disputes, to resolution by arbitration within the meaning of First Options
requires more careful attention to the language of their agreement and their likely intentions.
In general, the relevant issue should not be whether the parties have agreed to submit
P 1165 jurisdictional disputes to arbitration but whether they agreed to submit such disputes for
final resolution by arbitration: the focus of analysis must be on the parties waiver of judicial
review and acceptance of the arbitrators jurisdictional decision as final and binding.
Where parties specifically agree that the arbitrators decision on jurisdictional issues shall be
final and binding, not subject to judicial review, that agreement would fairly clearly satisfy the
First Options requirement for clear and unmistakable evidence of an agreement to finally
resolve jurisdictional disputes by arbitration. It is less clear how to treat an agreement that the
arbitrators authority extends to resolving jurisdictional disputes and that the arbitrators
decisions generally will not be subject to judicial review; the better view is that this sort of
formula should also satisfy the First Options standard. The parties general waiver of recourse
from the arbitrators decisions should be sufficient, without a requirement for a specific waiver
with respect to jurisdictional awards. (631) On the other hand, general statements that the
arbitral award will be final or binding should not be sufficient to waive the possibility of
judicial review (as discussed in greater detail below (632) ).
Finally, there is no basis for concluding that the arbitrators jurisdictional decision is not
subject to judicial review without resolving a partys challenge to the validity (or existence) of
the arbitration agreement. In particular, the fact that the parties supposedly manifest[ed
their] intention (633) to finally resolve jurisdictional disputes by arbitration cannot provide a
satisfactory basis for concluding that a valid agreement to that effect exists. Absent a judicial
determination that the parties in fact validly submitted their jurisdictional dispute to final
resolution by arbitration, the arbitrators decision cannot itself finally determine the parties
rights: the contrary view is nothing more than the classic case of Baron Munchhausen pulling
himself from the swamp by his own bootstraps or ponytail. If a party disputes the validity of
the agreement to arbitrate jurisdictional disputes, then it must be entitled to a judicial
determination of that objection.
Thus, it is generally only in the case of disputes about the scope of the arbitration agreement
that the First Options analysis can properly apply. (634) In these cases, there is concededly a
valid agreement to arbitrate, granting the arbitrators the authority specified in that
agreement; if that authority includes the power to finally resolve disputes about the scope of
the arbitrators jurisdiction, the parties agreement should be given full effect, under both First
Options and the FAA. In practice, as described below, this will typically arise in cases involving
agreements to arbitrate in accordance with institutional rules, containing both broad, express
grants of competence-competence and waivers of judicial review. (635)
P 1166
[v] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement
by Arbitration Under Federal Arbitration Act: Effects of Institutional Arbitration Rules
Many institutional arbitration rules contain provisions that grant arbitrators competence to
resolve disputes over their own jurisdiction and that provide for the finality of arbitral
decisions. A number of U.S. lower courts have considered the effects of these provisions under
the First Options analysis and, in particular, whether these provisions constitute clear and
unmistakable evidence of an agreement to arbitrate disputes over the validity and
enforceability of the arbitration agreement.
For example, Article 6(5) of the 2012 ICC Rules provides that any decision as to the jurisdiction
of the arbitral tribunal, except as to parties or claims with respect to which the Court decides
that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself, (636)
while making clear that the jurisdictional issues identified for arbitral decision include pleas
112
concerning the existence, validity or scope of the arbitration agreement. (637) The ICC Rules
also include a finality provision, pursuant to which parties undertake to treat ICC awards as
final and binding, without seeking recourse from the awards. (638) Many other institutional
arbitration rules, including the UNCITRAL Rules, contain broadly similar provisions. (639)
Even before First Options, a number of lower U.S. courts held that arbitration agreements
incorporating various institutional rules conferred jurisdiction on the arbitrators to finally
decide jurisdictional challenges. (640) Although there are a few exceptions, (641) that
conclusion has been reached even more frequently since First Options was decided; U.S. lower
courts have almost uniformly interpreted different sets of institutional arbitration rules as
satisfying the Supreme Courts requirement for clear and unmistakable evidence of an
agreement granting the arbitrators authority to finally resolve jurisdictional disputes. (642)
P 1167
According to one U.S. court, when parties explicitly incorporate rules [in an arbitration
clause] that empower an arbitrator to decide issues of arbitrability, the incorporation serves
as clear and unmistakable evidence of the parties intent to delegate such issues to an
arbitrator. (643) Or, as another lower court decision concluded:
The Court is persuaded that the prevailing rule across jurisdictions is that incorporation by
reference of rules granting the arbitrator the authority to decide questions of arbitrability
P 1168
especially the AAA rules is clear and unmistakable evidence that the parties agreed to
submit arbitrability questions to the arbitrators. (644)
Although these principles have generally been applied in the context of disputes over the
scope of arbitration agreements, (645) a number of decisions have also applied them to claims
that an arbitration agreement is invalid or unenforceable. (646)
As discussed above, some commentators have questioned these results, on the grounds that
most institutional rules do not expressly provide that the arbitrators may resolve jurisdictional
challenges finally, without possibility of judicial review. (647) As discussed above, this analysis
is well-reasoned, but it is contrary to the weight of lower court authority. Most lower courts
have held that the First Options analysis requires evidence of an agreement to arbitrate
jurisdictional issues, not a waiver of judicial review of arbitral decisions regarding
jurisdictional issues. Under these decisions, once such an agreement to arbitrate particular
jurisdictional disputes exists, then the arbitrators jurisdictional decisions are subject to
judicial review only under the FAAs de minimis manifest disregard standard, in the same way
as awards resolving other arbitrable disputes. (648)
As discussed above, the Supreme Courts opinions in First Options and its progeny do not
provide substantial guidance in determining whether this lower court authority is likely to
endure. (649) Viewed only on the basis of existing authority, the most likely result in future
P 1169
Supreme Court decisions would be upholding the approach of lower courts, concluding
that the incorporation of institutional arbitration rules with express competence-competence
provisions is sufficient to provide arbitrators with the authority under First Options finally to
resolve disputes over the scope, validity and (arguably) formation of arbitration agreements.
Despite this, the more appropriate analysis is that the First Options standard can be satisfied
by the incorporation of institutional rules, like the ICC and UNCITRAL Rules, but only if those
rules include both (a) an express grant of authority to decide jurisdictional issues; and (b) an
express waiver of rights of recourse from the tribunals awards, and that this would only permit
the arbitrators to finally resolve a jurisdictional dispute in cases involving challenges to the
scope of the arbitrators jurisdiction.
As discussed above, in these cases there is a concededly valid arbitration agreement that
grants the arbitrators jurisdiction to finally resolve scope disputes; that agreement can be
given effect (because its validity is not disputed) and it in turn requires that the arbitrators
decision about the scope of the arbitration agreement be given final and binding effect. (650)
That agreement falls within the proper scope of First Options and is entitled to recognition and
enforcement under the FAA, as well as Article II of the New York Convention.
On the other hand, the better analysis is that in cases where a party challenges the validity (or
existence) of the arbitration agreement, then judicial consideration of the validity of the
agreement to arbitrate jurisdictional disputes should be required under the FAA. If a party
denies having validly concluded an agreement to arbitrate arbitrability issues, then it is
impossible to see how arbitration of those jurisdictional issues can be required under 3 and
4 of the FAA. As discussed above, the FAA only permits orders compelling arbitration where the
validity of the arbitration agreement is not in issue: where a party denies the validity of an
agreement to arbitrate jurisdictional issues, there is no basis for concluding that arbitration
can be compelled merely because of an invalid manifestation of intent. (651)
[vi] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement by
Arbitration Under Federal Arbitration Act: Effects of Broad Arbitration Clause
Historically, a number of U.S. judicial decisions distinguished between broad and narrow
arbitration clauses. (652) As discussed below, many courts have held that, under a broad
clause, the arbitrator is granted jurisdiction to decide the scope of the parties arbitration
agreement, while a narrow clause reserves such power to the courts. (653) Additionally, a few
courts also appear to have suggested that broad clauses will also satisfy the First Options
P 1170
requirement for clear and unmistakable evidence of an agreement to arbitrate disputes
over the validity or existence of the arbitration agreement. (654)
113
It is doubtful that these decisions are consistent with either the First Options requirement of
clear and unmistakable evidence of an agreement to arbitrate arbitrability issues or the
requirements of the FAA. For all of the reasons discussed above, an alleged agreement to
arbitrate jurisdictional disputes should not satisfy First Options, even when express, where one
party challenges the validity of that agreement. (655) That analysis applies even more
decisively in the case of an implied agreement (via a broad arbitration clause) to arbitrate
arbitrability disputes.
Finally, it is in fact very doubtful that a broad arbitration agreement should ever be regarded
as an agreement to finally resolve jurisdictional disputes by arbitration. A broad arbitration
agreement does not address the finality of the arbitrators decision at all and therefore should
not satisfy the First Options requirement for clear and unmistakable evidence of an agreement
to finally resolve jurisdictional disputes by arbitration.
Indeed, it is difficult to see how a broad arbitration agreement would satisfy any view of the
First Options requirement for clear and unmistakable evidence of an agreement to arbitrate
jurisdictional disputes: it would at best be an implied agreement to arbitrate jurisdictional
disputes, not meaningfully different from the vast bulk of agreements to arbitrate. It is
impossible to see how this could displace the parties general expectation that disputes about
the validity of arbitration agreements will be the subject of judicial resolution.
[vii] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement by
Arbitration Under Federal Arbitration Act: Effects of Submission of Jurisdictional Dispute to
Arbitrators
U.S. courts have almost uniformly held that the submissions of jurisdictional objections and
arguments to an arbitral tribunal, without a reservation of rights to seek judicial review, does
not constitute an agreement to resolve such disputes finally by arbitration. As discussed
above, First Options itself involved the (Kaplans) submission of jurisdictional objections to the
arbitrators (without reservations). (656) Nonetheless, the Supreme Court held that merely
arguing the arbitrability issue to an arbitrator does not indicate a clear willingness to arbitrate
that issue, i.e., a willingness to be effectively bound by the arbitrators decision on the point,
P 1171 but such action on the contrary indicated that the respondents did not want the
arbitrators to have binding authority over them. (657)
Subsequent U.S. lower court decisions have applied the same rule, generally holding that the
submission of jurisdictional objections to an arbitral tribunal does not constitute an
agreement to finally resolve those objections by arbitration. (658) Other courts have held that
a party is not required to initiate litigation or otherwise seek an interlocutory judicial
resolution of objections to an arbitral tribunals jurisdiction in order to avoid submitting to the
tribunals jurisdiction. (659)
A few decisions are to the contrary, requiring that parties reserve their rights to seek judicial
review of the arbitrators decision when submitting jurisdictional objections to an arbitral
tribunal. (660) U.S. courts have also generally held that signature of Terms of Reference or
similar documents submitting jurisdictional disputes to an arbitral tribunal constitutes an
agreement to finally resolve such disputes by arbitration (absent an express reservation of
objections to the tribunals competence). (661)
[viii] Agreements to Resolve Disputes Over Validity or Enforceability of Arbitration Agreement by
Arbitration Under Federal Arbitration Act: Other Agreements to Arbitrate Jurisdictional Disputes
Under First Options
U.S. lower courts have considered a variety of other asserted agreements to arbitrate
jurisdictional disputes under First Options. These alleged agreements have been based on the
parties conduct relating to non-binding dispute resolution, (662) correspondence to the
P 1172 tribunal during its formation, (663) signatures of representatives signing on behalf of a
principal (664) and other non-signatories to the arbitration agreement. (665) Most such claims
are rejected.
[c] Allocation of Jurisdictional Competence to Resolve Disputes Concerning Formation and
Existence of Arbitration Agreement Under Federal Arbitration Act
Disputes over the formation and existence of the underlying contract and arbitration
agreement (as distinguished from the validity or legality of these agreements) must also be
considered separately. This is true with respect both to the default rule applicable to
resolution of challenges to the existence of any arbitration agreement and to the possibility of
an agreement to arbitrate such challenges.
[i] Disputes Concerning Formation or Existence of Arbitration Agreement Under Federal Arbitration
Act: Default Rule
As discussed above, the U.S. Supreme Court has fairly clearly declared that disputes over the
formation and existence of the parties underlying contract (and, of course, the arbitration
clause itself) are presumptively for judicial resolution. (666) The Court reserved decision in
Buckeye on the applicability of the separability presumption in cases where the issue is
whether any agreement between the alleged obligor and obligee was ever concluded. (667)
The Court also went out of its way to note that its decision did not address the correctness of
cases which hold that it is for courts to decide whether the alleged obligor ever signed the
114
contract, whether the signor lacked authority to commit the alleged principal and whether the
signor lacked the mental capacity to assent. (668)
The Court extended this analysis in Granite Rock Co. v. International Brotherhood of Teamsters,
where it held that [i]t iswell settled that where the dispute at issue concerns contract
formation, the dispute is generally for courts to decide. (669) The Granite Rock Court also
reasoned:
a court may order arbitration of a particular dispute only where the court is satisfied that the
parties agreed to arbitrate that dispute. To satisfy itself that such agreement exists, the court
must resolve any issue that calls into question the formationof the specific arbitration clause
P 1173
that a party seeks to have the court enforce.[T]hese issues always include whether the
clause was agreed to, and may include when that agreement was formed. (670)
The Supreme Courts opinion in Granite Rock also considered when (and not whether) the
parties agreement containing an arbitration clause had been ratified. (671) The Court held that
the question of when the parties had signed the underlying contract (of which the arbitration
clause was a part) was a question for judicial resolution: (672)
For purposes of determining arbitrability, when a contract is formed can be as critical as
whether it was formed. That is the case where, as here, the date on which an agreement was
ratified determined the date the agreement was formed, and thus determines whether the
agreements provisions were enforceable.This formation date question requires judicial
resolution here because it relates to Locals arbitration demand in such a way that the District
Court was required to decide theratification date in order to determine whether the parties
consented to arbitrate the matters covered by the demand. (673)
Lower courts have routinely held that disputes regarding the formation or existence of the
parties arbitration agreement are for interlocutory judicial resolution. (674) In one courts
words, explaining its refusal to defer to an ICC arbitral tribunal in a dispute concerning the
existence of an arbitration agreement, the refusal of a U.S. court to decide the issue on an
interlocutory basis would abdicat[e] [the courts] undoubted responsibility to decide the
question of arbitrability. No less an authority than the United States Supreme Court has ruled,
again and again, that where some evidence supports the proposition that no agreement to
arbitrate exists, this question is not to be submitted to arbitrators. (675)
P 1174
[ii] Disputes Concerning Formation or Existence of Underlying Contract Under Federal
Importantly, the foregoing conclusion applies equally in (a) cases where a party challenges
only the formation or existence of the arbitration agreement, and (b) cases where a party
challenges the formation and existence of both the arbitration agreement and the underlying
contract. That follows from the Supreme Courts analysis in both Buckeye and Rent-A-Center,
which, as discussed above, distinguishes between challenges to the formation of the
underlying contract and challenges to the contracts validity. (676)
Thus, in Rent-A-Center, the Court declared that [t]he issue of the agreements validity is
different from the issue whether any agreement between the parties was ever concluded.
(677) Similarly, in Granite Rock, the Court described its decision in Buckeye as distinguishing
[the] treatment of the generally non-arbitral question whether an arbitration agreement was
ever concluded from the question whether a contract containing an arbitration clause was
illegal when formed, which question we held to be arbitrable in certain circumstances. (678)
These observations were consistent with earlier lower court authority, which had also
frequently held that challenges to the existence of the underlying contract necessarily
impeached the arbitration clause contained within that agreement (and were therefore for
interlocutory judicial decision). (679)
Consistent with this, a substantial number of lower U.S. courts have required judicial
determination of claims that the underlying contract (or a signature on it) was forged, (680)
P 1175
that the underlying contract was never formed, (681) that the underlying contract was the
result of duress, (682) that a party lacked capacity to conclude a contract, (683) or that an
agent who executed the underlying contract lacked authority. (684)
P 1176 Thus, if a partys signature were forged on a contract, it would be absurd to require
arbitration if the party attacking the contract as void failed to allege that the arbitration
clause itself was fraudulently obtained. (685) Moreover:
In casesinvolving disputes about whether a purported agent had the authority to bind a
nonsignatory principle to a contract containing an arbitration clause, federal courts have
repeatedly held that the court, not the arbitrator, must decide whether there is an agreement
to arbitrate. (686)
At the same time, however, other U.S. lower courts have reached almost entirely opposite
conclusions in cases involving similar facts. Thus, U.S. courts have also required arbitration of
P 1177
claims that a party to a contract containing an arbitration agreement lacked capacity,
(687) that a condition precedent to the effectiveness of the underlying contract was not
fulfilled, (688) that the underlying contract was procured by duress (689) and that there was a
forgery of documents or signatures. (690)
As discussed above, reconciling these various U.S. decisions regarding the allocation of
jurisdictional competence is difficult and, in some instances, impossible. (691) In turn, that
115
confusion raises serious questions as to the usefulness of an analytical approach, like that of
the U.S. Supreme Court, that links the allocation of jurisdictional competence tightly to the
categorization of jurisdictional challenges (as directed specifically or only at the agreement
P 1178 to arbitrate). As discussed in greater detail below, the inability of lower courts to apply these
distinctions in a consistent and predictable manner suggests that the distinctions are
inherently arbitrary and unworkable; at the same time, as discussed below, these distinctions
do little to address the actual policy objectives that arise from the allocation of competence
to resolve jurisdictional disputes. (692)
[iii] Agreements to Submit Disputes Over Formation or Existence of Arbitration Agreements to
Resolution by Arbitration Under Federal Arbitration Act
Despite the presumptive approach to disputes over the formation or existence of arbitration
agreements, the First Options analysis permits parties to agree to resolve such disputes by
arbitration, provided that they do so in clear and unmistakable terms. Indeed, First Options
itself dealt with the scenario where a party claimed that no arbitration agreement existed,
denying that it ever entered into such an agreement. (693)
Many lower U.S. courts have held that challenges to the existence of any arbitration agreement
are necessarily subject to judicial determination. (694) In one courts words:
if the dispute is over the very existence of the agreement to arbitrate, a district court, and not
the arbitrator must decide if the arbitration clause, indeed, the entire agreement is
enforceable against the parties. (695)
P 1179 The rationale of these decisions is that, where a party denies that it has concluded any
agreement at all, there cannot be clear and unmistakable evidence of an agreement to
arbitrate arbitrability issues; any such evidence, in the form of the putative arbitration
agreement, is disputed and cannot satisfy First Options requirement for clear and
unmistakable evidence.
These decisions represent the better view of First Options and the FAA: if a party denies that it
ever executed or assented to any agreement, including any arbitration agreement, then it is
very difficult to see how that disputed agreement could deprive a party of its rights of access
to public courts. (696) On this view, even the existence of language in institutional rules, (697)
or a putative arbitration clause providing explicitly that all disputes concerning the existence
of this arbitration agreement shall be finally decided by the arbitral tribunal, would not
provide clear (or even solid) evidence of an agreement to arbitrate such issues: absent
judicial resolution of challenges to their validity, those words could have no binding legal
significance.
Despite this analysis, as discussed above, the U.S. Supreme Court elaborated on First Options
requirement for clear and unmistakable evidence of an agreement to arbitrate jurisdictional
disputes in Rent-A-Center, West, Inc. v. Jackson. There, the Court held that the subject of the
First Options clear and unmistakable requirementpertains to the parties manifestation of
intent, not the agreements validity. (698) Applying that reasoning, the Court held that the
clear and unmistakable evidence requirement did not apply to a claim that the parties
arbitration agreement was unconscionable. (699)
There is a plausible argument that the Rent-A-Center analysis applies generally to any
jurisdictional challenge (including challenges to an arbitration agreements existence). The
Court does not expressly limit its emphasis on the parties manifestation of intent to particular
categories of jurisdictional disputes and, read literally, its holding applies to all arbitrability
disputes. If that view is adopted, then arbitration agreements incorporating institutional rules
would generally constitute agreements to arbitrate challenges to the existence or validity of
the underlying agreement to arbitrate, within the meaning of First Options. A few lower courts
have apparently adopted this conclusion. (700)
The better reading of the Courts language in Rent-A-Center, however, is that it applies only to
challenges to the validity of an arbitration agreement, and not to challenges to the formation
P 1180 or existence of such an agreement. That conclusion is consistent with the Rent-A-Center
Courts statement that the First Options standard is not directed to issues of validity which
are specifically distinguished elsewhere in the Rent-A-Center opinion from issues of formation
(701) and by the Courts focus on the parties manifestation of intent which would permit
inquiry into claims that no arbitration agreement was intended to be concluded. This
interpretation is also consistent with the conclusion, set forth above, that the FAA should not
be permitted to deny a party the possibility of obtaining judicial determination of objections
to the existence of any arbitration agreement. (702)
[d] Allocation of Jurisdictional Competence to Resolve Disputes Concerning Scope of
Arbitration Agreement Under Federal Arbitration Act
In practice, the most frequent basis for jurisdictional objections is the argument that particular
disputes fall outside the scope of the parties arbitration agreement. (703) The default rule
under the FAA is that scope disputes are for judicial resolution, but U.S. courts have frequently
held that the parties agreement reverses this rule (as contemplated by First Options),
submitting the dispute for final resolution by arbitration. As discussed below, these results are
appropriate, although for different reasons than those often relied upon by U.S. courts.
[i] Disputes Concerning Scope of Arbitration Agreement Under Federal Arbitration Act: Default
116
Rule
The Courts decisions in Howsam and Granite Rock treat objections based on the scope of an
arbitration clause as jurisdictional issues which are presumptively subject to interlocutory
judicial determination. Thus, the Court explained (in dicta) in Howsam that a disagreement
about whether an arbitration clause in a concededly binding contract applies to a particular
type of controversy is presumptively for judicial determination. (704) Similarly, the Court said
in Granite Rock that [i]t is well settledthat whether parties have agreed to submi[t] a
particular dispute to arbitration is typically an issue for judicial determination. (705)
P 1181
Lower courts in the United States also routinely hold that disputes about the scope of the
arbitration agreement are presumptively for interlocutory judicial resolution. (706) In the
words of one lower court decision:
Determining the scope of an arbitration provision falls within the category of gateway
matters which the Supreme Court has instructed us that courts and not arbitrators should
decide. (707)
It is fair to question whether this rule is either well-reasoned or consistent with the Supreme
Courts other decisions in the field. Interpretation of the scope of an arbitration clause is often
intimately-intertwined with substantive interpretation of the parties underlying contract a
matter concerning the merits of the parties dispute which is unmistakably committed to the
arbitrators decision under the FAA (and other national arbitration legislation); that argues
strongly for reserving any judicial decision until the arbitrators have had the opportunity to
interpret the underlying contract. (708)
The Supreme Courts analysis in Howsam and related decisions also argues for initially
referring the interpretation of the scope of the arbitration clause to the arbitrators, rather than
allowing interlocutory judicial consideration of these issues. In considering whether a
particular type of dispute should be resolved by the courts or the arbitrators, the Court has
placed emphasis on the parties likely expectations (particularly in Howsam): a question of
arbitrability exists only in narrow circumstances where parties would likely have expected
a court to have decided the gateway matter, where they are not likely to have thought that
they had agreed that an arbitrator would do so. (709)
This analysis argues strongly for referring disputes over the scope of an admittedly valid
arbitration clause to arbitration: parties who have indisputably agreed to resolve their
disputes by the neutral mechanism of international arbitration would expect to have an
arbitral tribunal decide the precise reach of that arbitration agreement. (710) In this regard, a
P 1182
plurality of the Court in Bazzle correctly observed that issues of contract interpretation
and arbitration procedure were ordinarily for arbitral determination; (711) that reasoning
applies with even greater force to issues concerning the scope of the arbitration clause.
Nonetheless, the language cited above in Howsam and Granite Rock makes it fairly clear that
disputes over the scope of the arbitration agreement are, at least for the time being,
presumptively for judicial, not arbitral, determination under the FAA. (712) Similarly, U.S. lower
courts have consistently held that disputes over the scope of arbitration agreements are
presumptively for judicial resolution. (713) There are very few contrary decisions (and these
decisions are out of step with the Supreme Courts fairly clear pronouncements on the subject).
(714)
[ii] Disputes Concerning Scope of Arbitration Agreement Under Federal Arbitration Act:
Agreements to Resolve Disputes Over Scope of Arbitration Agreement by Arbitration
On the other hand, it is equally clear that the presumption that scope disputes are for judicial
decision is a rebuttable one under the First Options analysis which leaves the parties free to
agree that particular objections will be submitted to arbitration. (715) Indeed, this
presumption can be comparatively easily overcome in the context of scope disputes,
notwithstanding First Options clear and unmistakable evidence standard. (716) As discussed
below, there are a variety of ways in which this may occur under the First Options analysis.
P 1183
[iii] Disputes Concerning Scope of Arbitration Agreement Under Federal Arbitration Act:
Institutional Rules and Scope of Arbitration Agreement
Parties in many international commercial arbitrations have been held by U.S. courts to have
submitted disputes over the scope of their arbitration clause to the arbitrators for resolution.
That is in large part because the terms of most institutional arbitration rules expressly provide
that jurisdictional questions are for arbitral resolution, while also including waivers of judicial
review of arbitral awards which have been held to satisfy the clear and unmistakable
agreement on arbitral jurisdiction contemplated by First Options dicta. (717)
As discussed above, the UNCITRAL, ICC, ICDR, SCC, VIAC, SIAC, HKIAC, AAA and other institutional
arbitration rules provide both that the arbitrators competence extends to resolving
jurisdictional challenges and that the arbitrators decisions will be final and binding. (718) As
also discussed above, both before and since First Options, U.S. courts have generally
interpreted these provisions as granting arbitrators authority to finally resolve jurisdictional
disputes. (719)
More specifically, with very few exceptions, U.S. courts have relied upon the provisions of
institutional arbitration rules in permitting arbitral tribunals to finally resolve disputes over
the scope of a concededly existent and valid arbitration clause. One lower court explained this
117
conclusion as follows:
parties may overcome the First Options presumption by entering into a separate agreement
thatexpressly incorporates the provisions of an [arbitral institution] that requires questions
of arbitrability to be decided in arbitration. (720)
As also discussed above, some commentators have criticized these results, reasoning that
institutional arbitration rules do not generally provide for a final resolution of jurisdictional
disputes by arbitrators (instead, providing only for the arbitrators positive competence-
competence, without separately providing that the arbitrators jurisdictional determination
will be final and not subject to judicial review). (721) In the case of disputes over the scope of
the arbitration agreement, this criticism does not reflect the better view (or the weight of lower
court authority).
It is correct, as discussed above, that the proper interpretation of First Options should require
clear and unmistakable evidence of an agreement to finally resolve jurisdictional disputes by
arbitration. (722) In the case of scope objections, however, most institutional rules should be
interpreted as granting arbitrators the authority to finally resolve such disputes.
P 1184
Where parties have concededly concluded a valid arbitration agreement, submitting
some disputes to arbitration, and where the jurisdictional dispute involves interpretation of
the parties underlying contract, the reasonable expectation of most parties in international
disputes is that the (neutral) arbitral tribunal (concededly selected by the parties) will finally
resolve disputes about the scope of the tribunals authority. This provides a neutral dispute
resolution mechanism, rather than litigation in one partys home courts; it also provides an
efficient means of dispute resolution, given both the general procedural advantages of
international arbitration (723) and the likelihood that other disputes will be subject to an
arbitral tribunals jurisdiction (making it particularly efficient for the tribunal to hear related
matters). (724) Thus, where parties expressly grant arbitrators the power in institutional rules
to resolve jurisdictional disputes, and agree that the arbitrators awards will not be subject to
recourse or judicial review, that agreement should forbid interlocutory judicial consideration
of scope disputes; it should also result in final and binding resolution of the scope dispute. As
already discussed, this is consistent with the weight of lower court authority on this issue. (725)
Finally, even if one concluded that the general provisions of institutional arbitration rules,
providing that the arbitral tribunals award would not be subject to recourse, was not sufficient
to constitute a waiver of judicial review of the arbitrators jurisdictional decision, this should
not affect the initial allocation of jurisdictional competence. That is, where parties agree to
institutional arbitration rules specifically providing the arbitral tribunal with competence-
competence over scope disputes, then U.S. (and other national) courts should ordinarily defer
to the arbitrators initial resolution of scope disputes even if they subsequently reviewed the
arbitrators jurisdictional decision. The parties express adoption of a grant of competence-
competence to resolve jurisdictional disputes, under an admittedly valid arbitration
agreement, should weigh heavily in a U.S. courts decision whether or not to consider and
decide a scope dispute on an interlocutory basis. (726)
[iv] Disputes Concerning Scope of Arbitration Agreement Under Federal Arbitration Act: Broad
Arbitration Clauses
Historically, a number of U.S. judicial decisions distinguished between broad and narrow
arbitration clauses. (727) These courts have held that, under a broad clause, the arbitrator is
granted jurisdiction to decide the scope of the parties arbitration agreement, while a narrow
clause reserves such power to the courts. (728) As described by one U.S. court:
P 1185 a court should compel arbitration, and permit the arbitrator to decide whether the
disputes falls within the clause, if the clause is broad. In contrast, if the clause is narrow,
arbitration should not be compelled unless the court determines that the dispute falls within
the clause. Specific words and phrases alone may not be determinative although words of
limitation would indicate a narrower clause. The tone of the clause as a whole must be
considered. (729)
Although it is not yet entirely clear, it appears that this rule has survived, and likely been
confirmed by, First Options and its progeny. In particular, Howsam relied on the existence of a
broad arbitration clause in concluding that the parties had agreed to arbitrate jurisdictional
P 1186
issues. (730) Lower courts appear to adopt this conclusion, (731) as do some commentators.
(732) In one courts words, [t]his clause is as broad an arbitration provision as one can
imagine and clearly and unmistakably evidences the parties intention to have the arbitrator
determine its scope. (733)
The distinction between broad and narrow arbitration clauses is similar to the distinction
which is arguably drawn in Articles 8, 34 and 36 of the UNCITRAL Model Law between
challenges to the existence of any arbitration agreement and jurisdictional objections based
on the scope of the arbitration clause. (734) Under the broad/narrow distinction, a U.S. court
will ordinarily refer jurisdictional disputes concerning the scope of the arbitration clause to
arbitration just as Article 8(1) ordinarily provides for arbitral consideration of jurisdictional
challenges based on the scope of the arbitration clause. (735)
In both cases, this result would be based upon the considerations discussed above: where
commercial parties have admittedly entered into a valid, broadly-drafted arbitration
agreement, whose continued validity is not disputed, then it is most consistent with their
118
expectations, and with an efficient arbitral process, for the arbitral tribunal to resolve
P 1187 disputes about the scope of its jurisdiction. (736) Only where an arbitration agreement is
narrowly-drafted, to encompass only a specific dispute or limited category of disputes,
would interlocutory judicial resolution of scope disputes arguably be contemplated.
Finally, referring disputes over the scope of an arbitration agreement to the arbitrators makes
particular sense. That is because these disputes are (unlike most other jurisdictional issues)
inescapably intertwined with the substantive interpretation of the underlying contract and the
parties rights thereunder matters which are plainly for the arbitral tribunal to resolve under
the parties arbitration agreement. (737)
Despite this, there is an important difference between permitting arbitrators initially to
resolve scope disputes, on the basis of a broad arbitration clause, and permitting arbitrators
finally to resolve such disputes, without subsequent judicial review. Only where the parties
arbitration agreement expressly waived the possibility of recourse from, or judicial review of,
the arbitrators award (or the arbitrators jurisdictional rulings) should the arbitrators be
permitted to finally resolve disputes about the scope of the arbitration agreement.
[e] Allocation of Jurisdictional Competence to Decide Procedural Disputes Under Federal
Arbitration Act
A critical issue under the FAA is the characterization of disputes as concerning jurisdictional
issues (or, in the terminology of the U.S. Supreme Court, arbitrability or gateway issues), as
distinguished from other types of issues (including procedural and substantive issues). That
is because the First Options presumption that an issue is for judicial, rather than arbitral,
resolution applies to arbitrability or gateway issues, not to other types of issues. (738)
As discussed above, the U.S. Supreme Court considered this issue in Howsam, holding that the
application of a time bar, contained in institutional arbitration rules, was not an arbitrability
issue, for presumptive judicial resolution, but instead a procedural or contractual
interpretation issue, presumptively for arbitral resolution. The Howsam Court then addressed
how the First Options analysis should be applied, and specifically, whether the presumption of
judicial (not arbitral) competence should be applied to contractual time limits for asserting a
claim.
The Howsam Court reasoned that [l]inguistically speaking, one might call any potentially
dispositive gateway question a question of arbitrability, but that for purposes of applying
the interpretive rule, the phrase question of arbitrability has a far more limited scope. (739)
In particular, an arbitrability or gateway issue applies only to
the kind of narrow circumstance where contracting parties would likely have expected a court to
have decided the gateway matter, where they are not likely to have thought that they had agreed
that an arbitrator would do so, and, consequently, where reference of the gateway dispute to
P 1188
the court avoids the risk of forcing parties to arbitrate a matter that they may well not
have agreed to arbitrate. (740)
More specifically, a gateway dispute concerns whether the parties are bound by a given
arbitration clause or a disagreement about whether an arbitration clause in a concededly
binding contract applies to a particular type of controversy is for the court. (741) In contrast, a
gateway dispute does not concern either procedural questions which grow out of the
dispute and bear on its final disposition, or claims of waiver, delay, or a like defense to
arbitrability. (742)
U.S. lower courts have applied these general observations to a wide variety of issues,
frequently characterizing particular issues as procedural, substantive, or as otherwise not
falling within the Supreme Courts definition of gateway or arbitrability issues. For example,
lower courts have held that claims involving statute of limitations defenses, (743) the alleged
non-satisfaction of conditions precedent to arbitration, (744) waiver (745) and
P 1189
unconscionability (746) do not constitute gateway issues and are therefore
presumptively for arbitral resolution, not judicial resolution. U.S. lower courts have also
generally held that alleged non-compliance with procedural requirements for commencement
of an arbitration, such as requirements to negotiate in good faith and cooling off periods are
for arbitral, not judicial, determination. (747)
These results are consistent with decisions in other legal regimes, generally holding that claims
regarding time limits on commencement of arbitral proceedings, statutes of limitations, and
requirements for cooling off periods or good faith negotiations are issues of admissibility,
rather than jurisdiction. (748) Under this analysis, an arbitral tribunals resolution of disputes
over time limits, statutes of limitations and similar pre-arbitration requirements will not be
subject to material judicial review (instead, being treated like other substantive issues in the
arbitration).
[6] Discretionary Stay of Litigation Concerning Jurisdictional Challenges by U.S. Courts
It is also important to note an element of the allocation of jurisdictional competence under
the FAA which is often neglected. (749) That element involves a U.S. courts discretionary power
to stay judicial proceedings, pending arbitration, where there is no valid arbitration
P 1190 agreement binding (all of) the parties to the litigation. (750) As one lower court observed,
[i]f a mandatory stay under section 3 is not applicable, a court may still exercise its discretion
to stay litigation, even as to claims involving non-signatories, pending the outcome of
119
arbitration, as a means of controlling and managing the docket. (751)
The same use of discretionary authority to stay litigation is most frequently used where all of
the claims in a litigation are not subject to arbitration, (752) or where the court has not yet
determined whether a valid arbitration agreement exists. (753) One lower court explained this
authority as follows:
P 1191
When a case includes both arbitrable and non-arbitrable claims, the district court has
discretion either to stay all the claims or to stay only the arbitrable claims and proceed with
the non-arbitrable claims. (754)
The exercise of this discretionary authority by U.S. courts is dependent on a range of factors,
including the respective efficiencies of proceeding with the arbitration and litigation, the
prejudice to the parties of either course, the timing and credibility of the jurisdictional
challenge, the applicable law and nature of the dispute (e.g., factual or legal) and other
matters. (755) A U.S. lower court described the decision whether to grant a discretionary stay as
follows:
The power to stay proceedings is incidental to the power inherent in every court to control the
disposition of the causes on its docket with the economy of time and effort for itself, for
counsel and for litigants. How this can best be done calls for the exercise of judgment, which
must weigh competing interests and maintain an even balance. (756)
As discussed above, this is the approach that the Supreme Court took in PacifiCare, where it
held that the arbitral tribunal should be permitted to decide the preliminary question
whether contractual liability limitations validly prohibited an award of RICO treble damages,
which would arguably have rendered the arbitration agreement invalid. (757) This decision
rested on the premise that it was not only appropriate, but required, for a court to allow an
arbitral tribunal to make an initial determination of an issue of legality or validity of the
arbitration agreement that would ultimately be for judicial determination under the First
Options analysis. (758)
As discussed above, it is particularly appropriate to stay interlocutory U.S. judicial
consideration of jurisdictional objections where an international arbitration subject to the New
York Convention or Inter-American Convention is concerned. (759) Thus, some lower courts have
relied on the purposes of the FAA and the New York Convention (760) to stay consideration of
jurisdictional disputes, pending arbitral resolution of them. Other courts have reached similar
conclusions, indicating a willingness to defer to pending jurisdictional proceedings before
P 1192
arbitral tribunals. (761) This approach rests on notions of comity and efficiency, akin to
those arising in the lis pendens context, but attaching special significance to the purposes of
the Convention and the international setting of international arbitration agreements. (762)
On the other hand, a few U.S. courts have indicated the opposite view, according no deference
to ongoing arbitral proceedings. The fact that Janus has already commenced an arbitration is
of no moment. (763) These decisions are ill-considered, at least in the international context:
where there are multiple possible forums for judicial consideration of jurisdictional disputes,
in different national courts, the better view is that U.S. (and other national) courts should
consider the availability of these forums, and the arbitral proceeding, in determining whether
to consider the jurisdictional dispute on an interlocutory basis.
[7] Judicial Review of Jurisdictional Determinations by Arbitral Tribunal Under Federal
Arbitration Act
The FAA provides for judicial review of both negative and positive jurisdictional decisions by
arbitral tribunals. The basic principle under the FAA is that courts will review jurisdictional
awards, both positive and negative, de novo. Nonetheless, this default rule is subject to the
First Options analysis, providing that parties may agree to finally resolve jurisdictional
disputes by arbitration, in which case any judicial review of the arbitrators jurisdictional
decision will be de minimis, no different from that applicable to the arbitrators substantive
resolution of the merits of the parties dispute.
[a] Judicial Review of Jurisdictional Awards Under Federal Arbitration Act: Positive and
Negative Awards Subject to Review
Judicial review is available equally under the FAA for both negative and positive jurisdictional
awards. Thus, under 10(a)(4), either a negative or positive jurisdictional award can be vacated
on the grounds that the tribunal either exceeded its powers or imperfectly executed its
powers by failing to produce any award at all. (764)
U.S. courts have consistently interpreted 10(a)(4) as permitting review of both positive and
P 1193
negative jurisdictional decisions. Where the parties have agreed to arbitrate jurisdictional
issues (under First Options), then there will be no scope for judicial review of either positive or
negative jurisdictional determinations, save under the general manifest disregard standard
historically applied in vacatur (annulment) actions by U.S. courts; (765) that standard should
apply equally, however, to both positive and negative jurisdictional determinations, either of
which could in principle be in manifest disregard of the law.
On the other hand, where no agreement to arbitrate jurisdictional disputes exists (within the
meaning of First Options), then the tribunals award will be subject to vacatur under 10 of the
domestic FAA. Section 10 permits vacatur for excess of authority, (766) which plainly includes
awards that are made on the basis of a non-existent or invalid arbitration agreement. (767)
120
The same conclusion should apply to negative jurisdictional rulings, when a tribunal wrongly
declines jurisdiction; in these cases, 10(a)(4) authorizes vacatur because the arbitrators
imperfectly executed their powers and failed to make a final award. (768) Where an
arbitration agreement submits disputes to an arbitral tribunal and the arbitrators refuse, on
jurisdictional grounds, to resolve those disputes then, if those jurisdictional grounds are wrong,
the tribunal has imperfectly executed its mandate by failing to fulfill its mandate at all. In
that case, 10(a)(4) provides for vacatur of the negative jurisdictional award, allowing
resubmission of the dispute to a new tribunal. U.S. courts have not addressed this issue with
any frequency, but it is clearly the better view of 10(a)(4). (769)
P 1194
[b] Judicial Review of Jurisdictional Determinations Under Federal Arbitration Act: Default
Rule
The general rule under 10(a)(4) of the FAA is one of de novo judicial review of arbitrators
jurisdictional decisions: [i]fthe parties did not agree to submit the arbitrability question
itself to arbitration, then the court should decide that questionindependently. (770) The
Supreme Court made this clear in First Options, holding that, if the parties did not agree to
submit the arbitrability question itself to arbitration, then the court should decide that
question just as it would decide any other question that the parties did not submit to
arbitration, namely independently. (771)
The same analysis has been adopted with regard to foreign arbitral awards and recognition
under the Convention:
Under the rule of First Options, a party that opposes enforcement of a foreign arbitration
award under the Convention on the grounds that the alleged agreement containing the
arbitration clause on which the arbitral panel rested its jurisdiction was void ab initio is
entitled to present evidence of such invalidity to the district court, which must make an
independent determination of the agreements validity and therefore the arbitrability of the
dispute. (772)
Thus, if the arbitrators have not been granted the power to finally resolve jurisdictional
disputes, then their award will be subject to an action to vacate under 10(a)(4) of the FAA;
most authorities hold that judicial review under 10(a)(4) is de novo, affording no deference to
the tribunals jurisdictional findings or conclusions. (773)
P 1195
Although not addressed in First Options or its progeny, lower U.S. courts have been
reluctant to review interim jurisdictional awards (when they are positive). (774) This differs
from the approach under the UNCITRAL Model Law, (775) where immediate judicial review is
required. This reluctance of U.S. courts to provide greater jurisdictional certainty for the
parties is unfortunate and does not facilitate an efficient arbitral process. (776)
[c] Judicial Review of Jurisdictional Determinations Under Federal Arbitration Act: Agreement
to Resolve Jurisdictional Disputes by Arbitration
The default rule of de novo review of jurisdictional determinations under 10(a)(4) of the FAA is
not always applicable. As noted above, First Options held that, if an arbitration agreement
clearly and unmistakably grants arbitrators the power to consider and decide disputes
regarding their own jurisdiction, then the tribunals resulting jurisdictional decision will be
subject to the same highly deferential standard of judicial review applicable to other awards
under the FAA. (777)
Thus, if the arbitrators have been granted the power to finally decide jurisdictional objections
under the First Options analysis, then any jurisdictional determination (positive or negative)
will be subject solely to a manifest disregard review. (778) U.S. lower courts have frequently
applied this highly deferential standard of judicial review to both awards made in the United
States (779) and foreign awards. (780)
P 1196 [8] Future Directions: Allocation of Jurisdictional Competence Under Federal Arbitration
Act
The current approach to the allocation of competence between U.S. courts and arbitral
tribunals over jurisdictional disputes is unsatisfactory. That approach produces an enormous
volume of litigation, applying exceptionally complex and uncertain rules and yielding results
that have little relationship to considerations of fairness, efficiency, or the other objectives of
the FAA.
The better approach under the FAA would be to expressly recognize the arbitrators positive
competence-competence over jurisdictional disputes, subject to subsequent judicial review,
and, except where otherwise agreed, to inquire on a case-by-case basis into the desirability of
interlocutory judicial resolution of such disputes. Under this approach, which would be broadly
analogous to that under Article VI(3) of the European Convention, U.S. courts would conduct a
pragmatic assessment of efficiencies and equities in particular cases, rather than apply
absolute Rules for the allocation of jurisdictional competence.
This analysis would generally provide a rebuttable presumption entitling parties to obtain
interlocutory judicial resolution of jurisdictional objections to the existence or validity of the
arbitration agreement; that presumption would be fairly readily reversed where it would be
more efficient or fair to stay litigation, pending the outcome of arbitral proceedings. This
analysis would also generally provide a rebuttable presumption that jurisdictional objections
121
based on the scope of the arbitration agreement would be initially referred to arbitration.
Parties would remain free, as under First Options, to agree to alternative allocations of
jurisdictional competence, including by granting arbitrators competence to finally resolve
jurisdictional disputes.
As noted above, the current approach to the allocation of competence over jurisdictional
disputes under the FAA suffers from serious shortcomings. The U.S. approach to arbitral
jurisdiction involves the application of an elaborate set of rules, including rules governing the
separability presumption, (781) distinctions between the existence and validity of
arbitration agreements, (782) and the First Options requirement for clear and unmistakable
evidence of an agreement to finally resolve arbitrability disputes by arbitration, (783) as well
as numerous refinements of these rules. (784) The complexity of these rules has produced an
enormous quantity of litigation (as indicated by the number of U.S. decisions discussed in the
preceding section, particularly as compared to the volume of decisions in other jurisdictions);
P 1197
in many cases, these litigations also involve costly evidentiary proceedings, including
discovery, hearings, witness testimony and extensive briefing. (785)
The U.S. approach to arbitral jurisdiction has also been characterized by uncertain (and
shifting) legal standards. U.S. lower courts have reached (and continue to reach) widely
divergent results on multiple questions relating to the First Options analysis and the
separability presumption (including when the parties have clearly and unmistakably agreed
to arbitrate arbitrability issues, (786) whether the validity or the existence of an agreement
is challenged (787) and whether a jurisdictional challenge is directed specifically to an
arbitration agreement (788) ). As a consequence, decisions under the FAA regarding arbitral
jurisdiction are frequently unpredictable, in turn contributing to the volume of litigation in U.S.
courts.
Moreover, the rules and formulae that U.S. courts have applied are largely disconnected from
the objectives of a judicious and sensible allocation of jurisdictional competence. The
allocation of jurisdictional competence ought to produce predictable results that facilitate
efficient, fair and expert resolutions of jurisdictional disputes: competence should be
allocated, and sequenced, in a manner that produces the most efficient, expert and fair
results. In fact, however, none of the formulae applied by U.S. courts has much, if anything, to
do with these objectives. These formulae instead consider abstract questions, susceptible of
formalistic and arbitrary answers (for example, as to whether the parties have clearly and
unmistakably manifested an intention to arbitrate a jurisdictional dispute or whether the
existence, rather than the validity, of an arbitration agreement has been challenged).
None of these various aspects of the allocation of jurisdictional competence under the FAA
serves the arbitral process, either domestically or internationally. Instead, the approach
currently adopted under the FAA causes significant expenses and delays at the outset of the
arbitral process, which appear to be materially worse than those in most other legal systems.
The shortcomings in the rules applied by U.S. courts to the allocation of competence over
jurisdictional disputes under the FAA concern both the default rules applicable to
interlocutory judicial consideration of jurisdictional disputes and the First Options approach to
agreement to resolve jurisdictional disputes finally by arbitration. These shortcomings are
discussed below, together with proposals for addressing them. In general, the proposals for
reform rely on 208 and 307 of the FAA, together with the provisions and objectives of the New
York Convention (and Inter-American Convention).
P 1198
[a] Interlocutory Judicial Consideration of Jurisdictional Disputes Under Federal
It is very difficult to justify making interlocutory judicial consideration of jurisdictional
objections depend on the separability presumption in the context of international arbitration
agreements. Under the current U.S. default rule, developed in domestic cases, U.S. courts will
generally consider jurisdictional objections, on an independent or de novo basis, whenever
there is a challenge to the existence, validity, or scope of the arbitration agreement, (789) as
well as a challenge to the existence of the underlying contract. (790)
In many instances, U.S. courts will consider jurisdictional objections without regard to the
nature of the issues (e.g., applicable law, legal basis for jurisdictional challenge), (791) without
regard to the existence of pending arbitral proceedings or foreign judicial proceedings
considering the same jurisdictional issue, (792) without regard to how advanced pending
arbitral proceedings might be (793) and without regard to the location of the arbitral seat. (794)
In one lower courts words, [t]he fact that [one party] has already commenced an arbitration is
of no moment. (795) As a consequence, U.S. courts will frequently engage in full evidentiary
and legal consideration of jurisdictional issues regardless of the existence of arbitral
proceedings, including well-advanced arbitral proceedings before a foreign-seated arbitral
tribunal whose members are expert in the law governing the putative arbitration agreement
which have already engaged in significant fact-finding.
The current U.S. default rule for judicial consideration of jurisdictional disputes is inefficient
and unjust in international contexts. It makes little practical sense for U.S. courts to undertake
initial consideration of jurisdictional objections that are governed by foreign law, particularly
when an arbitral tribunal has already been constituted (and, even more so, begun to consider
those same objections) in a foreign arbitral seat; doing so deprives the U.S. court of the benefit
of the expertise, both legal and commercial, of the arbitral tribunal. Moreover, allowing one
122
party to litigate the jurisdictional dispute in U.S. courts, when the United States is not the
arbitral seat, creates incentives for procedural gamesmanship, risks of multiplicitous and
inconsistent national court decisions and interference with the parties selection of the
arbitral seat.
All of these shortcomings are particularly acute in the case of disputes only involving the scope
of the arbitration agreement. In those cases, the arguments for permitting the arbitral tribunal,
at least initially, to interpret the arbitration agreement are especially compelling. Disputes
over the scope of the arbitration agreement involve a concededly valid arbitration agreement,
consensually selecting a neutral tribunal with unchallenged authority to interpret the parties
P 1199
underlying contract, which is often a key element in disputes over the scope of the
arbitration agreement; again, the arbitral tribunal will often include members who are
qualified and expert in the law governing the underlying contract, usually also having relevant
commercial expertise. It makes very little sense for U.S. (or other) courts to ignore the views of
the arbitrators regarding the scope of the arbitration agreement in these circumstances.
Indeed, doing so, in cases involving broad arbitration clauses, contradicts the obligation of
U.S. courts under the New York Convention (and FAA) to recognize valid arbitration agreements
(which, in such cases, clearly extend to questions of scope).
The better approach in deciding whether to resolve a jurisdictional objection on an
interlocutory basis, already reflected in a (limited) number of U.S. lower court decisions, would
be to give substantial weight to a lis pendens analysis that would build on the basic approach
that U.S. courts take to discretionary stays in domestic matters: (796) the decision whether to
consider a jurisdictional dispute on an interlocutory basis should involve a pragmatic
assessment of efficiencies and equities in particular cases, rather than automatically requiring
judicial consideration of all jurisdictional objections.
Under this analysis, courts would begin with the statutory text of 3 and 4 of the FAA. Those
sections provide, in domestic settings, for a stay of litigation or order compelling arbitration if
the existence of the arbitration agreement is not in issue and, where the making of the
arbitration agreement or the failure, neglect, or refusal to perform the same [are] in issue, for
the court to decide the issue. (797) Under these statutory provisions, the presumptive rule in
cases involving challenges to the existence or validity of the arbitration agreement would be
to allow interlocutory judicial resolution of the jurisdictional disputes. That basic statutory rule
would provide the starting point in international cases, under the New York Convention and
Inter-American Convention, by virtue of 208 and 307 of the FAA.
That presumptive right to judicial resolution of jurisdictional objections is consistent with the
statutory provisions regarding stays under 3, as well as those regarding trials under 4. It
would apply in cases involving challenges to the existence or formation of the arbitration
agreement (which plainly involve the making of the arbitration agreement) and should also
apply in cases involving challenges to the validity of the arbitration agreement (which is fairly
encompassed in the reference to the arbitration agreement, meaning, a valid arbitration
agreement).
Consistent with the statutory text of 3 and 4, however, this presumption would not apply to
jurisdictional objections based on the scope of the arbitration agreement. Sections 3 and 4
refer only to the making of the arbitration agreement but not to the scope of the
agreement. As a consequence, there would be no presumptive right to interlocutory judicial
resolution of jurisdictional objections based on the scope of the arbitration agreement under
the FAA. Rather again, consistent with the language of 3 and 4 such jurisdictional
objections should presumptively be referred to arbitration for initial consideration and
resolution (subject to subsequent judicial review): in these cases, the making of the arbitration
P 1200
agreement would not be in issue and, as a consequence, an order compelling arbitration
or staying litigation would presumptively be available. (798)
Importantly, however, 3 and 4 would only provide the presumptive starting point for
allocations of jurisdictional competence in international cases; in addition, 208 and 307
require giving effect to the provisions and objectives of the New York and Inter-American
Conventions when applying 3 and 4 to arbitration agreements subject to the Convention. As
discussed above, the New York Convention is an essentially universal charter for international
commercial arbitration, which commits all Contracting States to recognize and enforce
international arbitration agreements in accordance with uniform international standards. (799)
As the U.S. Supreme Court declared in Mitsubishi Motors Corp., the purposes of the Convention,
and U.S. ratification of the Convention, cannot be realized unless national courts exercise
restraint in asserting jurisdiction: The utility of the [New York] Convention in promoting the
process of international commercial arbitration depends upon the willingness of national
courts to let go of matters they normally would think of as their own. (800)
As discussed above, the same reasoning applies in determining whether U.S. courts should, or
may, automatically apply the default rules of 3 and 4 to resolve a jurisdictional dispute
concerning an international arbitration agreement subject to the Convention. That reasoning
argues decisively against U.S. courts automatically resolving all such disputes, which would
conflict with the Conventions objectives and international setting, (801) and, instead, argue
decisively for U.S. courts exercising restraint and, in appropriate cases, permitting either an
arbitral tribunal or foreign court initially to consider and resolve the jurisdictional disputes.
(802) Consistent with this analysis, a number of U.S. lower courts have also stayed interlocutory
U.S. judicial consideration of jurisdictional objections where an international arbitration
123
subject to the New York Convention is concerned. (803)
P 1201 Under this analysis, in international cases subject to the Convention, U.S. courts would
allocate jurisdictional competence by applying not only the domestic default rules under 3
and 4, but also a lis pendens analysis to consider the character of the jurisdictional challenge,
whether an arbitral tribunal had been constituted, the arbitral seat, the law applicable to the
arbitration agreement, the extent to which the jurisdictional issue had already been presented
to the arbitral tribunal, the apparent strength of the jurisdictional objection and any other
relevant factors. Under this analysis, a court would consider whether a jurisdictional challenge
involved purely legal issues (particularly under U.S. law), where an interlocutory U.S. judicial
decision would generally be more appropriate, or instead involved factual or contractual
issues (particularly specialized questions of industry custom or the like), or questions of foreign
law, where an arbitral tribunal may have specific legal, linguistic, commercial, or other
expertise. (804) Additionally, a court would take account of timing and efficiency
considerations. If an arbitral tribunal has not been constituted, and doing so would require
substantial time and money, then the court could more appropriately consider a jurisdictional
challenge on an interlocutory basis, whereas, if a tribunal had been constituted and was
already considering the jurisdictional issues when litigation is commenced, then it would more
likely be appropriate to stay proceedings pending arbitral resolution. (805)
A similarly flexible approach is available under Article VI(3) of the European Convention. As
discussed above, Article VI(3) contemplates that courts will stay judicial consideration of
jurisdictional disputes and allow arbitral tribunals to resolve such disputes in the first
instance, subject to an exception for cases where there are good and substantial reasons to
the contrary. (806) As with the approach proposed above under the FAA, the European
Conventions approach allows courts to make case-by-case determinations regarding the
appropriateness of interlocutory judicial consideration of jurisdictional issues, taking into
account issues of efficiency, fairness and the like, rather than applying a single, mechanical
formula in all circumstances.
In practice, the approach proposed above would result in most jurisdictional disputes
regarding only the scope of the arbitration agreement being referred to arbitration; only in
unusual cases, where referring a scope dispute to arbitration would be inefficient or unfair,
would it be appropriate for a court initially to decide the dispute. This approach rests on the
premise that resolutions of questions of scope are often inextricably linked to the substance of
the parties underlying contract and legal obligations, (807) and are therefore appropriate for
arbitral resolution. (808)
P 1202 This treatment of scope disputes also rests on the premise that a party who has
indisputably agreed to arbitrate certain matters has both less basis for complaining about
being denied access to national courts and greater expectations that disputes about the scope
of its arbitration agreements will be subject to arbitral resolution. (809) Moreover, as noted
above, this approach finds support in the text of 3 and 4, which establish default rules with
respect to disputes over the making of the arbitration agreement but not over its scope
leaving U.S. courts broader discretion to address the allocation of jurisdictional competence,
even in domestic cases. In these circumstances, the parties expectations as to the dispute
resolution forum (pursuant to a concededly valid arbitration agreement) and the desirability
of centralizing dispute resolution in a single neutral forum argue strongly for initial arbitral
resolution of jurisdictional disputes.
In contrast, cases involving objections to the existence or validity of the arbitration agreement
would be subject to the presumption that either party could obtain interlocutory judicial
resolution of the dispute. In these cases, although 3 and 4 would not exclude application of
a lis pendens analysis, permitting a discretionary stay of litigation, parties have a presumptive
right to immediate judicial resolution of their jurisdictional objection. Absent a contrary
showing, that presumptive right to judicial consideration and resolution of the objection
should provide the starting point for the courts analysis. As discussed below, that is consistent
with the preferred approach to the allocation of jurisdictional competence more generally in
international cases. (810)
Nonetheless, where an arbitral tribunal had already been constituted and was already
considering, or able promptly to hear, the jurisdictional dispute, that dispute would ordinarily
be referred initially to arbitration. Similarly, where a jurisdictional dispute involved issues of
foreign law, industry or trade practice, or fact-finding that were within the arbitrators
expertise, the dispute would again ordinarily be appropriately referred to arbitration for an
initial decision. Likewise, where the putative arbitral seat was located abroad, and issues of
foreign law were predominant, it would again often be appropriate to defer initial resolution of
the jurisdictional dispute to the arbitral tribunal or courts in the arbitral seat.
In all of these cases, there would generally be significant benefits in terms of efficiency (i.e.,
the ability to obtain an expeditious decision in one forum, as compared to the other) and
expertise (i.e., the ability to obtain expert views regarding relevant legal and commercial
issues). In contrast, in arbitrations where no arbitral tribunal would be available to hear the
jurisdictional dispute, or issues of U.S. law predominated, expeditious, interlocutory judicial
resolution would ordinarily be appropriate. In all cases, considerations of efficiency and
fairness would be paramount.
Importantly, the approach proposed above distinguishes between the allocation of
interlocutory jurisdictional competence and the standard of review for an arbitral
P 1203
124
P 1203
tribunals jurisdictional award. Under the current U.S. approach to arbitral jurisdiction,
jurisdictional issues (variously referred to as gateway or arbitrability issues) are for
independent judicial resolution, without deference to arbitral decisions on the issue; non-
jurisdictional issues (variously referred to as substantive, merits, or procedural issues) are
for arbitral resolution, with virtually no judicial review. Moreover, under the current approach
to the FAA, jurisdictional issues are for immediate interlocutory judicial resolution, while non-
jurisdictional issues must be referred to arbitration.
In contrast, under the approach proposed above, courts (and arbitral tribunals) would make
determinations regarding the timing of judicial consideration of jurisdictional issues based on
considerations of efficiency and fairness, without thereby automatically prescribing a standard
of review for jurisdictional determinations by arbitrators. Thus, the fact that a jurisdictional
dispute was referred to arbitration for initial determination would not require, or even suggest,
that the arbitral tribunals determination was not subject to de novo judicial review.
Rather, as with the prima facie approach in France, Hong Kong, India and elsewhere, U.S. courts
would have de novo authority independently to review jurisdictional awards; the initial
reference of jurisdictional disputes to arbitration would be a procedural decision, in the
nature of lis pendens, not a substantive decision that the arbitral tribunal had authority finally
to resolve the issue. U.S. courts would be free to allow arbitrators to initially resolve
jurisdictional disputes, without being bound by their decisions, and instead being able to draw
as appropriate on the arbitrators conclusions regarding, for example, foreign law, industry
practice and the like.
[b] Agreements to Resolve Jurisdictional Disputes by Arbitration Under Federal Arbitration Act:
First Options
The current approach to agreements to resolve jurisdictional disputes under the FAA also has
serious shortcomings. There are multiple such flaws.
First, the U.S. Supreme Courts current approach has been applied to permit arbitral tribunals
to make final and unreviewable jurisdictional decisions based simply on clear and
unmistakable manifestations of intention to resolve jurisdictional disputes by arbitration. As
the Supreme Court held in Rent-A-Center, the arbitrators jurisdictional decision will be
unreviewable even in the absence of a valid and binding agreement to that effect, provided
only that the parties manifested their intention to submit jurisdictional disputes to final
resolution by arbitration. Among other things, that would require deferring entirely to the
arbitrators jurisdictional decision where, for example, the parties manifestation of intent is
unconscionable, mistaken, procured by fraud, procured by duress, or otherwise invalid. (811)
That treatment of agreements to resolve jurisdictional disputes by arbitration is impossible to
P 1204 justify. As discussed above, (812) and recognized by First Options itself, (813) granting an
arbitral tribunal authority to finally determine its own jurisdiction, without subsequent judicial
review, is an extraordinary and controversial conclusion (which some states forbid entirely
(814) ). Concluding that such authority can be conferred without the requirement of a valid and
binding agreement to that effect, and only on the basis of a manifestation of intent, is
indefensible. Absent a clear, valid and enforceable agreement to the contrary, no party should
be subject to arbitral jurisdiction without the possibility of judicial consideration of its
jurisdictional objections. By omitting any such requirement, the Supreme Court ignored the
essential principles of both party autonomy and consent as the foundation for the arbitral
process.
Second, the Supreme Courts formulation in First Options of the requirement for clear and
unmistakable evidence of an agreement to resolve jurisdictional disputes by arbitration has
produced substantial and unnecessary confusion. As discussed above, the Supreme Court
reasoned in First Options that the decisive question was whether the parties agree[d] to
submit the arbitrability question itself to arbitration? (815) ; declared that [c]ourts should not
assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and
unmistakabl[e] evidence that they did so (816) ; and inquired whether the parties had clearly
agreed to have the arbitrators decide (i.e., to arbitrate) the question of arbitrability. (817)
Based on these declarations, numerous lower courts have held variously that institutional
arbitration rules expressly granting arbitrators competence-competence (818) and broad
arbitration clauses (819) satisfy the First Options standard, thereby authorizing the arbitrators
to make an almost entirely unreviewable jurisdictional decision. (820)
This approach is again deeply flawed. It begins by failing to take account of the doctrine of
competence-competence.
Under that doctrine, accepted in the United States and virtually every other legal system, an
arbitral tribunals inherent adjudicative authority includes the competence to consider and
decide jurisdictional challenges (subject to subsequent judicial review). (821) It therefore
makes no sense, as First Options arguably contemplates, and most U.S. lower courts have held,
to inquire whether the parties have agreed to arbitrate arbitrability questions. In fact, as
discussed above, parties to arbitration agreements (virtually (822) ) always agree to arbitrate
arbitrability questions; they do so simply by virtue of the putative arbitration agreement,
giving rise to the tribunals competence-competence, recognized by the FAA and virtually all
other legal systems as an inherent feature of an adjudicative body. (823)
P 1205
The real, and proper, question is therefore instead whether the parties have agreed to
125
arbitrate jurisdictional disputes without the possibility of subsequent judicial review. As
discussed above, the Supreme Courts First Options opinion acknowledged this requirement,
albeit in equivocal language. (824)
Thus, as also discussed above, the Court declared that merely arguing the arbitrability issue
to an arbitrator does not indicate a clear willingness to arbitrate that issue, i.e., a willingness
to be effectively bound by the arbitrators decision on the point, but such action instead
indicated that a party did not want the arbitrators to have binding authority over them. (825)
Whatever its intended meaning, many U.S. lower courts have ignored this requirement for an
agreement to be bound by the arbitrators jurisdictional determination, and inquired solely
whether the parties agreed to arbitrate jurisdictional disputes frequently finding this
requirement satisfied.
Again, these results are generally indefensible. It is bad enough to permit unreviewable
jurisdictional decisions based only on a manifestation of intent; doing so based on a
manifestation of intent merely to arbitrate a jurisdictional dispute is impossible to justify.
Rather, what should be required under the FAA is a clear and unmistakable agreement, which
is valid and enforceable, to finally resolve jurisdictional disputes by arbitration without
subsequent judicial review. (826) Only an agreement of this character, and specificity, is
sufficient to warrant denying a party access to independent judicial consideration of
jurisdictional issues.
In practice, this standard would mean that arbitral tribunals would generally have the
authority to finally decide jurisdictional disputes only in the cases of disputes over the scope
of the arbitration agreement. Only in these cases would there be a valid agreement (as
distinguished from merely a manifestation of intent) to resolve disputes finally by arbitration.
In other cases, involving challenges to the existence or validity of the arbitration agreement,
courts would be required to decide whether there was any valid arbitration agreement at all; if
no valid arbitration agreement existed at all, then there would necessarily be no agreement
finally to resolve jurisdictional disputes by arbitration.
In many cases, institutional arbitration rules would provide a valid basis for submitting scope
disputes to final resolution by the arbitrators. As discussed above, many institutional rules
include both broad provisions granting arbitrators positive competence-competence over
jurisdictional disputes and finality provisions, making the arbitrators jurisdictional rulings
final and binding without the possibility of judicial recourse; the ICC Rules are the best
example of this, (827) but other institutional rules are comparable. (828) Where parties agree
to such institutional rules, they accept the arbitrators final resolution of scope disputes.
In contrast, where a party challenged the existence or validity of an arbitration agreement,
P 1206
institutional rules (including the ICC Rules) would provide no basis for concluding that the
parties conferred final authority on the arbitrators to decide such jurisdictional objections.
Rather, a party objecting to the tribunals jurisdiction would deny having concluded any valid
arbitration agreement and the alleged incorporation of the ICC Rules would be irrelevant until
that jurisdictional objection was judicially resolved.
Despite these conclusions, courts could and should give weight in allocating jurisdictional
competence to the fact that parties agreed to arbitrate pursuant to institutional arbitration
rules, providing a largely autonomous procedural regime generally detached from national
court supervision and expressly granting arbitrators competence-competence. Even if these
rules did not constitute a binding and valid agreement to finally resolve jurisdictional disputes
by arbitration, they can properly be considered as important factors in a lis pendens analysis,
arguing for initial resolution of jurisdictional disputes by arbitration (rather than in national
courts).
Finally, in contrast to current practice under the FAA, (829) broad arbitration agreements
would not generally be sufficient to grant the arbitrators final authority to resolve
jurisdictional disputes, including scope disputes. A broad arbitration agreement does not
expressly, or impliedly, suggest that the arbitrators have unreviewable authority to decide
jurisdictional disputes; such a clause merely grants the arbitrators broad competence, without
addressing the existence or character of judicial review (of jurisdictional determinations or
otherwise). Accordingly, even in the case of scope disputes, a broad arbitration agreement
should not permit the arbitral tribunal finally to resolve jurisdictional objections (save where
that agreement is combined with a waiver of all recourse against the arbitrators decisions).
[F] Allocation of Jurisdictional Competence Under English Law

As with Germany, English law has modified the UNCITRAL Model Law to adopt a sui generis
approach towards competence-competence issues. The English Arbitration Act, 1996,
prescribes an approach to the allocation of jurisdictional competence that is broadly similar
to that under the FAA in the United States, generally providing for interlocutory judicial
consideration of jurisdictional issues, but permitting parties to agree to alternative solutions.
Prior to the English Arbitration Act, 1996, arbitral tribunals were free under English law to
consider jurisdictional objections, (830) but an English court would also consider and resolve
interlocutory challenges to an arbitrators jurisdiction that were presented to it (including
where one party sought to litigate the underlying suit or to obtain an antiarbitration
P 1207
injunction). (831) The Arbitration Act, 1996, adopted an approach to competence-
competence issues that was significantly different from historic practice. Under the revised
126
Act: (a) unless otherwise agreed, an arbitral tribunal may consider and make a decision on its
own jurisdiction, (832) subject to subsequent judicial review; (833) and (b) parties have
available several possibilities for obtaining immediate, interlocutory judicial resolution of
jurisdictional disputes. (834)
[1] Arbitrators Competence-Competence Under English Law
As discussed above, the English Arbitration Act expressly provides for the arbitrators
competence-competence. Section 30(1) of the Act provides:
Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive
jurisdiction, that is, as to (a) whether there is a valid arbitration agreement; (b) whether the
tribunal is properly constituted; and (c) what matters have been submitted to arbitration in
accordance with the arbitration agreement. (835)
English courts have repeatedly affirmed the competence-competence doctrine, holding, for
example, in Dallah Real Estate v. Government of Pakistan, that:
[T]he principle that a tribunal in an international commercial arbitration has the power to
consider its own jurisdiction is no doubt a general principle of law. It is a principle which is
connected with, but not dependent upon, the principle that the arbitration agreement is
separate from the contract of which it normally forms a part. (836)
Other English decisions recognize the arbitrators competence-competence in similar terms.
(837)
P 1208
The Act clearly contemplates that the arbitrators competence-competence entitles them
not only to consider, but also to render a decision on, their own jurisdiction (subject to
subsequent judicial review). Indeed, the Court of Appeal observed in Fiona Trust & Holding
Corp. v. Privalov that it will, in general, be right for the arbitrators to be the first tribunal to
consider whether they have jurisdiction to determine the dispute. (838)
[2] Allocation of Jurisdictional Competence Between Arbitral Tribunals and Courts Under
English Law
Notwithstanding its recognition of the arbitrators competence-competence, the English
Arbitration Act also generally gives a party the right (absent contrary agreement) to obtain
interlocutory judicial resolution of jurisdictional objections. (839) The Act provides several
mechanisms by which interlocutory judicial review of jurisdictional disputes can be obtained:
(a) a party who participates in arbitral proceedings (under protest) may seek interlocutory
judicial determination of a jurisdictional objection, provided however that the parties to the
arbitration agree or the arbitral tribunal permits and the court approves; (840) (b) a party who
participates in arbitral proceedings (under protest) may challenge any resulting award on
jurisdictional grounds with de novo judicial review; (841) and (c) a party who refuses to
participate in the arbitration in any manner may either (i) seek immediate judicial
determination of its jurisdictional objections, (842) or (ii) challenge any resulting award with de
novo review by the English courts of issues of substantive jurisdiction. (843)
P 1209
English law is clear in that parties can obtain interlocutory judicial resolution of
objections to the jurisdiction of an arbitral tribunal. In the words of a recent English lower court
decision:
[D]espite the doctrine of Kompetenz-kompetenz or competence-competence (i.e., the ability
of an arbitral tribunal to determine its own jurisdiction even where challenged), the English
court retains the jurisdiction to determine the issue as to whether there was ever an agreement
to arbitrate.The Act does not require a party who maintains that there is no arbitration
agreement to have that question decided by an arbitral tribunal. (844)
As a consequence of this principle, it is critical under English law (as under the FAA in the
United States), to determine whether or not a party has challenged the arbitration agreement
itself, as distinguished from the underlying contract: it is only in the former case that a
challenge to the arbitrators jurisdiction, subject to interlocutory judicial resolution, will be
present. In turn, this requires application of the separability presumption, in order to
determine whether a party has in fact challenged the arbitration agreement. (845)
Where a party challenges only the existence, validity, or legality of the underlying contract,
and not the arbitration clause, any jurisdictional objection must ordinarily be submitted to
arbitration. (846) As the House of Lords and English Court of Appeal held in Fiona Trust, the
arbitration clause, being a severable agreement, is not directly impeached by whatever
ground is used to attack the invalidity of the contract in which the arbitration clause is
contained. (847)
P 1210 Rather, as discussed above, a party must specifically challenge the arbitration
agreement and advance a special reason that impeaches the arbitration clause in
particular. (848) In this regard, the House of Lords has emphasized that the doctrine of
separability requires direct impeachment of the arbitration agreement before it can be set
aside, and that this is an exacting test. (849) According to the Law Lords, the jurisdictional
challenge must be based on facts which are specific to the arbitration agreement, and
[a]llegations that are parasitical to a challenge to the validity of the main agreement will not
do. (850) Unless these standards, for a challenge specifically to the arbitration agreement,
are satisfied, no jurisdictional objection will be involved and there will be no basis for
127
interlocutory judicial consideration of the challenge (which will instead be an element of the
parties substantive dispute, for resolution by the arbitrators as part of the parties dispute on
the merits).
Finally, even where a party commences litigation before an arbitration is initiated, English
courts will not necessarily decide jurisdictional objections (and may instead decide, as a
matter of discretion, to refer them to arbitration). (851) As the same lower court explained:
If the court decides that the arbitrators should decide the issue [of a jurisdictional challenge],
and therefore, ex hypothesi, is not satisfied as to the existence of such an agreement [to
arbitrate], then the stay is granted pursuant to the inherent jurisdiction.The court looks for
the most economical way to decide where the real dispute should be resolved. That seems to
me to be the correct approach here. But that is a matter of discretion, not jurisdiction. (852)
For example, where a party challenges only the scope of an admittedly valid arbitration
agreement, or where the validity of the arbitration agreement is bound up with issues relating
to the merits of the parties dispute, English courts may refer these issues to arbitration in the
first instance. (853) As one court explained:
P 1211
The Arbitration Act does not require a party who maintains that there is no arbitration
agreement to have that question decided by an arbitral tribunal.[N]ormally a court would
first have to be satisfied that there is an arbitration agreement before [granting a stay of
litigation].There will however be cases where it would be right to defer the decision,
particularly, for example, if the determination of whether or not a contract was made also
embraces the determination of the scope of the contract and its ingredients.[I]n [certain]
cases it may be appropriate to leave the matter to be decided by an arbitrator. [Such a
course] is likely to be adopted only where the court considers that it is virtually certain that
there is an arbitration agreement or if there is only a dispute about the ambit or scope of the
Conversely, where only (limited) documentary evidence is involved, English courts have
considered jurisdictional objections to the validity of arbitration agreements on an
interlocutory basis, rather than referring such disputes to arbitration. (855)
This approach parallels that adopted by the better-reasoned authority under the FAA and First
Options analysis, regarding disputes about the scope of the arbitration clause, (856) as well as
under the UNCITRAL Model Law, distinguishing between issues of scope and validity, on the
one hand, and between challenges to the arbitration agreement specifically and the
underlying contract, on the other. (857) As with U.S. authority, the English approach also
introduces a discretionary element into the treatment of jurisdictional objections depending,
for example, on the courts initial appraisal of the strength of the jurisdictional objection. (858)
If a party participates in arbitral proceedings, and challenges the tribunals jurisdiction, it
must do so in a timely fashion (as prescribed in the English Arbitration Act); failure to do so will
result in waiver of the objection. (859) If an arbitral tribunal decides upon its own jurisdiction,
then its award will be subject to review under 67 of the Arbitration Act, provided the matter
has been raised before the arbitrators during the proceedings. (860)
P 1212 [3] Agreements to Finally Resolve Jurisdictional Disputes by Arbitration Under English Law
Although the issue has been infrequently presented, it also appears that parties are permitted
under English law to agree to alternative resolution of jurisdictional objections, including that
the arbitral tribunal should have competence-competence to make a binding determination
of jurisdiction (in the First Options sense), subject to limited or no judicial review. (861) In the
words of one English court, it is of course always open to the parties in effect to contract out of
this regime by means of an ad hoc reference to the tribunal of the issue whether it had
substantive jurisdiction. That involves conduct amounting to an agreement that the tribunal
should be given not merely the competence identified in section 30(1) but jurisdiction
conclusively to determine the issue of substantive jurisdiction. (862)
[4] Judicial Review of Arbitrators Jurisdictional Determinations Under English Law
Except where the parties have agreed otherwise, judicial review of arbitrators jurisdictional
determinations is de novo. (863) As one English court recently held, a challenge such as is
made under section 67 is indeed a complete rehearing [rather than limited review suitable for
an appellate process]. (864) Or, in the words of another English decision, in an action to review
a jurisdictional decision:
The Court is not in any way bound or limited to the findings made in the award or to the
evidence adduced before the arbitrator; it does not review the decision of the arbitrator but
makes its own decision on the evidence before it. (865)
P 1213 It is reasonably clear from the text of the Act that both positive and negative jurisdictional
awards are subject to judicial review under 67. (866)
[G] Allocation of Jurisdictional Competence Under Swedish Arbitration Act

Under the Swedish Arbitration Act, the arbitrators competence-competence to consider
jurisdictional challenges is expressly recognized, but parties are granted the right to seek full
interlocutory judicial consideration of all jurisdictional objections at any time. (867) That is
made explicit by 2 of the Swedish Act, which provides:
128
The arbitrators may rule on their own jurisdiction to decide the dispute. The aforesaid shall
not prevent a court from determining such a question at the request of a party. (868)
As the Swedish Supreme Court has explained,
Under Section 2(1) [of the Swedish Arbitration Act], the arbitrators may rule on their own
jurisdiction to decide the dispute. Such a ruling does not, however, prevent a court, at the
request of a party during the arbitral proceedings, from ruling on the jurisdictional issue. The
courts decision on the matter will have legal force and be binding on the arbitrators. (869)
The Swedish judicial review is de novo, not prima facie. (870)
It is unclear whether Swedish courts would give effect to a First Options-type agreement to
resolve jurisdictional disputes by arbitration, although the legislative text provides a fairly
P 1214
clear basis for doing so. (871) The Swedish Arbitration Act expressly provides that an
arbitral tribunals positive jurisdictional rulings are only provisional, and subject to
subsequent judicial review. (872) That review is available, however, only at the conclusion of
the arbitral proceedings and is not available as an interim positive jurisdictional award. (873)
[H] Allocations of Jurisdictional Competence Under Other National Arbitration

Legislation
Other national legislation is similar to the Swedish model in mandatorily providing for full
interlocutory judicial review of all jurisdictional objections at any time. That is the case in
China, where Article 20 of the Chinese Arbitration Law provides:
If a party challenges the validity of the arbitration agreement, he may request the arbitration
commission to make a decision or apply to the Peoples Court for a ruling. If one party requests
the arbitration commission to make a decision and the other party applies to the Peoples
Court for a ruling, the Peoples Court shall give a ruling. (874)
As noted above, even where an interlocutory judicial decision is not sought (or provided), the
Chinese Arbitration Law also adopts a restrictive view of the competence-competence
doctrine, providing that jurisdictional rulings may be made by arbitral institutions
(arbitration commissions, under the Law), rather than arbitral tribunals. (875)
A similar approach to that under Article 20 of the Chinese Arbitration Law to interlocutory
judicial resolution of jurisdictional issues is apparently adopted in Japan, (876) Israel, (877) and
South Africa. (878) In each of these states, parties apparently have an essentially absolute right
to an interlocutory judicial determination of jurisdictional objections, rather than being
required to await or seek an initial arbitral decision.
[I] Future Directions: Allocation of Jurisdictional Competence Between National

Courts and Arbitral Tribunals
P 1215
The wide diversity of legislative and judicial approaches in developed legal systems to
the competence-competence doctrine and the allocation of jurisdictional competence is
relatively unusual in the field of international commercial arbitration. This diversity contrasts
with the approach to many other basic aspects of the legal regime for international
arbitration, where there is broad consensus among developed (and many other) states. Given
this diversity, it is appropriate to consider in some detail the advantages and disadvantages of
the different national law approaches to these issues. This is of relevance for both legislative
reform purposes and, where statutory text will fairly permit, judicial interpretation of existing
legislative provisions. (879)
[1] Circumstances in Which Competence-Competence Exists: Arbitrators Presumptive
Competence-Competence
The differences between most national laws in their treatment of the question whether arbitral
tribunals will possess competence-competence, defined broadly and in its positive sense, are
relatively modest. Virtually every national legal regime recognizes the principle that arbitral
tribunals have the power to consider and decide jurisdictional disputes and that this power
exists irrespective of any agreement expressly conferring it on the arbitrators. (880) Put
differently, there need not be any arbitration agreement expressly granting competence-
competence in order for such power to exist, by virtue of the force of applicable national law
and, where the existence of a valid arbitration agreement is not challenged, the parties
implied intentions.
Virtually no authorities support the notion that, when presented with a challenge to its
jurisdiction, an arbitral tribunal must cease work and await judicial resolution of the
jurisdictional challenge. (881) Indeed, this would be contrary to the arbitrators mandate to
promptly resolve the parties dispute. (882) The absurdity of such a result was forcefully stated
by an early English judicial decision (which, otherwise, took a relatively restricted view of an
arbitral tribunals competence-competence):
It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are bound
immediately to refuse to act until their jurisdiction has been determined by some court which
has the power to determine it finally. Nor is it the law that they are bound to go on without
investigating the merits of the challenge and to determine the matter in dispute, leaving the
question of their jurisdiction to be held over until it is determined by some Court which had
P 1216
129
P 1216
power to determine it. They might then be merely wasting their time and everybody
elses. They are not obliged to take either of those courses. (883)
Consistent with this, international authority overwhelmingly provides that the arbitral tribunal
may presumptively consider and at least provisionally decide disputes concerning the
tribunals jurisdiction. (884) This is true regardless whether or not the parties arbitration
agreement expressly or impliedly provides such authority, because the power to consider
jurisdictional issues is presumptively an inherent power of an adjudicative body, including an
arbitral tribunal, unless the parties have agreed to the contrary. (885) This authority is derived
from national arbitration legislation which almost uniformly recognizes the arbitrators
presumptive competence-competence.
As also discussed above, the competence-competence of international arbitral tribunals is
expressly mandated in the European Convention, (886) and implicitly required by the New
York (and Inter-American) Convention, which rest on the assumption that arbitral tribunals will
make jurisdictional decisions. (887) This virtually uniform acceptance of the jurisdictional
competence of international arbitrators gives the competence-competence doctrine the
status of a general principle of international law, binding on national courts and arbitral
tribunals (absent contrary agreement). (888) This principle does not address the allocation of
jurisdictional competence between national courts and arbitral tribunals, but instead merely
confirms the arbitrators authority to consider and render decisions on challenges to their own
jurisdiction.
It appears very likely that most legal systems would also provide that, if the parties agreed
that an arbitral tribunal would not have competence-competence even to consider
jurisdictional objections, then that agreement would be given effect. (889) Such an agreement
P 1217
would be very unusual (and ill-advised), but arbitration is fundamentally a creature of
contract, and the parties agreement that particular categories of disputes be excluded from
arbitral consideration is ordinarily respected without question. (890) There is no reason to
think that jurisdictional issues would be treated any differently. On the contrary, it would be
particularly appropriate for disputes about the arbitrators jurisdiction to be resolved
judicially if that is what the parties have agreed. (891)
The competence-competence doctrine is based on the positive provisions of national and
international law, (892) and is not generally a consequence of the parties arbitration
agreement. (893) As discussed above, competence-competence issues involve challenges to,
and determinations regarding, the existence, validity and legality of arbitration agreements. It
is almost universally accepted that the putative agreement to arbitrate cannot itself be the
source of rules regarding competence to resolve disputes regarding the existence, validity, or
legality of that same agreement. (894) Rather, it is national (and international) law that
provide the source for the competence-competence doctrine in these cases: it is the claim
that an arbitration agreement exists which makes principles of national and international law
applicable, but in most cases it is those national law rules, not the parties agreements, that
provide the arbitrators competence-competence. (895)
A few critics have questioned the wisdom of the competence-competence doctrine. According
to one writer:
Kompetenz-Kompetenz and separability cannot be satisfactorily rationalized under the strict
technical arguments of the leading treatises. Their role can be better appreciated in political
terms as indispensable in empowering arbitration with the capacity to function effectively as a
medium disempowering national laws to be displaced by alternative legal regimes. (896)
This criticism is misconceived. The competence-competence doctrine is not the product of
technical arguments, nor a medium for disempowering national laws.
On the contrary, the competence-competence doctrine is a product of an almost universally-
adopted legislative consensus, affirmed in both international instruments (e.g., the European
and New York Conventions) and national legislation (the UNCITRAL Model Law and most other
national arbitration statutes). The doctrine therefore does not disempower national laws, but
on the contrary is the result of applying the express terms of those laws, which affirm the
P 1218
doctrine. Equally, no arbitral award or jurisdictional determination is effective unless and
until recognized by a national court, again, applying national law, rather than disempowering
it.
As discussed above, the reason that international arbitration conventions and national
arbitration statutes grant arbitral tribunals competence-competence is because the parties
intentions so require (where they have made a valid arbitration agreement), because the
arbitral process is facilitated and greater efficiencies are realized (whether or not the parties
have made an agreement) and because justice is better served if an arbitral tribunal is
permitted to consider and decide jurisdictional objections (again, regardless whether or not
the parties have validly agreed to arbitrate). (897) More fundamentally, international
arbitration conventions and national legislation have adopted these rules of competence-
competence in order to facilitate the arbitral process, in turn as a central means of
encouraging international commerce (898) and guaranteeing the liberty of private parties to
order their commercial affairs. (899) In so doing, national legislatures have hardly acted to
disempower national law, but rather to protect the individual freedom upon which developed
national legal systems rest.
130
[2] Agreements to Finally Resolve Jurisdictional Issues by Arbitration
National approaches differ in their treatment of the parties autonomy to grant an arbitral
tribunal the power finally to resolve jurisdictional disputes. Under the First Options analysis in
the United States, parties may agree to finally resolve jurisdictional disputes by arbitration,
which creates a form of enhanced competence-competence. (900) The same result applies
under English law. (901) The UNCITRAL Model Law is equivocal on the issue, although the
central role of party autonomy in the Laws structure suggests that Model Law courts will arrive
at results similar to those in the United States and England. (902)
This approach is not, however, a unanimous view: the German legislature apparently abolished
Germanys historic position adopting this approach to the Kompetenz-Kompetenz doctrine in
1998, instead providing that parties were mandatorily prohibited from agreeing to arbitrate
jurisdictional disputes in a binding manner. (903) French law also arguably rejects the
enforceability of agreements to finally resolve jurisdictional disputes by arbitration. (904)
P 1219
Particularly given the fundamentally consensual character of international arbitration,
there is no reason that parties agreements to arbitrate jurisdictional disputes should not be
given the same effect as agreements to arbitrate other types of issues. Indeed, such arbitration
agreements are subject to mandatory recognition and enforcement under Article II of the New
York Convention, no differently from other arbitration agreements. (905)
In the most simple illustration, if parties to a pending arbitration expressly agree that the
arbitral tribunal finally resolve an existing dispute about the scope (or validity) of their
arbitration agreement, rather than having this dispute litigated in one or more national courts,
then there is no reason that this agreement to arbitrate should not be given full effect. That
agreement is motivated by precisely the same considerations as other agreements to arbitrate
(i.e., a desire for neutral, expert, efficient and centralized proceedings) (906) and it serves both
public and private interests to give effect to this agreement in the same manner as other
arbitration agreements. Indeed, as discussed above, the parties agreement to arbitrate
jurisdictional disputes is entitled to recognition under Article II of the New York Convention
(and analogous provisions of national law), again, in the same manner as any other agreement
to arbitrate. (907)
From this conclusion, it is only a small, and irresistible, step to the conclusion that an
agreement to submit future jurisdictional disputes to arbitration is valid. Where, for example,
parties agree that the arbitrators shall resolve finally, without subsequent judicial recourse,
any disputes relating to the agreement, including any disputes concerning the scope of this
arbitration agreement, there is no reason to deny effect to the parties agreement. Again, such
an agreement is inspired by the same objectives, and protected by the same legal regimes, as
other arbitration agreements. (908)
One may quite fairly debate when parties should be held to have in fact concluded an
agreement to resolve jurisdictional disputes finally by arbitration. In particular, one may fairly
question whether parties ordinarily or presumptively intend to arbitrate some or all
jurisdictional disputes and whether they ordinarily intend arbitral determinations of
jurisdiction to be final, without the possibility of judicial review. (909)
Thus, one might conclude that courts should impose some requirement for a clear statement of
the intention to finally resolve jurisdictional disputes by arbitration. That is the rationale of
the U.S. Supreme Court in First Options, which required clear and unmistakable evidence of
P 1220
an agreement to resolve jurisdictional issues by arbitration, (910) on the grounds that
parties may not expect to arbitrate jurisdictional issues. (911) That conclusion does not
contradict the parties autonomy to agree to arbitrate jurisdictional disputes, but instead rests
on recognition of such autonomy and prescribes an interpretative rule to ascertain how that
autonomy has been exercised. (912)
As discussed above, an agreement to finally resolve jurisdictional disputes by arbitration
should be found only in limited circumstances. In particular, merely agreeing to arbitrate
jurisdictional disputes (for example, by incorporating institutional arbitration rules granting
the arbitrators competence-competence or by agreeing to a broad arbitration clause) would
generally be insufficient to constitute an agreement to finally resolve such disputes by
arbitration; rather, a waiver of judicial review of an arbitral tribunals jurisdictional ruling
should require clear and unambiguous language that no recourse may be sought from such a
ruling. (913) Only in these circumstances should arbitrators be permitted the exceptional
authority to finally determine their own jurisdiction, without the possibility of judicial review.
[3] Interlocutory Judicial Consideration of Jurisdictional Issues
Virtually all legal systems agree that judicial (as distinguished from arbitral) resolution of
jurisdictional disputes must ultimately be available (absent contrary agreement). As one
English court correctly reasoned, [i]t is self-evidentthat an arbitral tribunal cannot be the
final arbitrator of the question of jurisdiction;this would provide a classic case of pulling
oneself up by ones own boot straps. (914)
Nonetheless, there are significant differences in the allocation of jurisdictional competence
between national courts and arbitral tribunals, and in particular, the time at which, and the
way in which, judicial consideration of jurisdictional disputes should occur. As discussed
above, national approaches range across a spectrum, with French, Indian and (some) Hong
Kong courts permitting only very limited interlocutory judicial consideration of any
131
jurisdictional objections (typically on a prima facie basis); U.S., English, German, and (some)
Canadian courts, as well as the UNCITRAL Model Law, permitting full interlocutory judicial
P 1221 consideration in some, but not all, cases, depending upon the nature of the jurisdictional
objection and considerations of efficiency and fairness; (915) and Swedish and Chinese
courts permitting full interlocutory judicial consideration of jurisdictional issues in almost all
circumstances.
There are serious reasons arguing in favor of each of the various national approaches which
have been adopted to the allocation of jurisdictional competence between national courts
and arbitral tribunals. There is also no perfect approach to the subject.
Nonetheless, for the reasons detailed below, the better approach would be to consider the
allocation of competence over jurisdictional objections as an issue of efficiency, fairness and
institutional competence in a manner akin to the use of the lis pendens doctrine in common
law jurisdictions (916) and similar to the approach adopted by the European Convention. (917)
That is, in deciding whether or not full interlocutory judicial consideration of jurisdictional
issues should be available, decisive weight should be accorded to a case-by-case assessment
of questions of efficiency, fairness and institutional competence, rather than to abstract
categorization of judicial and arbitral competence over specified categories of disputes:
the question should be, in each case, which forum judicial or arbitral can most efficiently,
competently and fairly make the initial jurisdictional determination? This approach would be
applicable, in particular, to the allocation of jurisdictional competence under the UNCITRAL
Model Law, whose text and purposes are fully consistent with the proposal.
It is ultimately unsatisfactory to define the nature and timing of interlocutory judicial review of
jurisdictional issues solely through absolute rules or abstract categorizations of different types
of jurisdictional objections to the existence, validity, or scope of arbitration agreements. (918)
This conclusion is suggested by the unusual level of disagreement among leading states on this
subject, with numerous national legal systems adopting such absolute categorizations and
Rules for the allocation of jurisdictional competence but with all of these various
categorizations differing significantly from one another. Thus, some states provide that full
judicial consideration is always available (Sweden/China) and others provide that it is never
available (France/India), while yet other states conclude that all disputes concerning solely
legal issues (Canada), or that all challenges directed specifically at the arbitration
agreement or at the formation of the underlying contract (United States/England) (919) are
for full interlocutory judicial consideration.
None of these categorizations is ultimately a satisfactory way of achieving the objectives of
rules allocating competence over jurisdictional objections. As noted above, these objectives
P 1222
are: (a) ensuring that interlocutory judicial consideration of jurisdictional challenges does
not produce unnecessary delays in the arbitral process; (920) (b) avoiding unnecessary waste
and cost of arbitral proceedings when no jurisdiction exists; (921) (c) obtaining the benefits of
an initial decision by the decision-maker with the greatest institutional competence; (922) and
(d) not obligating parties who never agreed to arbitrate to participate in arbitral proceedings,
while also not obligating parties who agreed to arbitrate to participate in judicial proceedings.
(923) This final factor has particular force in international matters, where the parties
presumptive desire to avoid litigation in one anothers home courts underscores the
importance of giving effect to valid arbitration agreements. (924)
None of the various allocations of jurisdictional competence adopted by different national
legal regimes provide satisfactory means of achieving the foregoing objectives. In particular, it
is arbitrary and often wasteful and/or unfair to require full interlocutory judicial consideration
of all jurisdictional objections (Sweden/China), which can result in delays to the arbitral
process and preempt an initial decision by the presumptively more competent and more
neutral decision-maker. Equally serious difficulties exist when full interlocutory judicial
consideration is never permitted for any jurisdictional objection (France/India), which can
result in the unnecessary costs and delays of lengthy arbitral proceedings; that is particularly
true where no arbitral tribunal has yet been constituted and jurisdictional issues are
subsequently not resolved until a final award on the merits, thus forcing a party to participate
in a lengthy proceeding to which it may never have agreed.
The same conclusion applies to rules providing for interlocutory judicial consideration of
jurisdictional objections raising purely legal issues (Canada) or jurisdictional objections
directed specifically at the arbitration clause or at the existence of the underlying contract
(England/United States): neither of these rules produces results that are tailored towards
avoiding unnecessary costs and delays or towards protecting parties from being required to
participate in arbitral proceedings to which they never consented or judicial proceedings out
of which they contracted. Equally, some of these standards are difficult and unsatisfying to
P 1223
apply in practice, as most graphically illustrated by the substantial number of
irreconcilable U.S. judicial decisions reaching contradictory conclusions in identical
circumstances. (925)
The better approach to the allocation of jurisdictional competence is instead to accord
decisive weight to the relevant efficiencies and equities in a case-by-case assessment of
individual cases, guided by several general presumptions. These presumptions would provide
guidance for decision-making, but could be rebutted in particular cases.
First, jurisdictional challenges based on the scope of the arbitration clause should
presumptively be for the arbitrators initial decision, (926) with either no or only prima facie
132
interlocutory judicial review. This approach would parallel that under the UNCITRAL Model Law
and in better-reasoned U.S. and English decisions. (927) As discussed above, under these
regimes, objections based on the scope of the arbitration clause are generally referred to
arbitration or subjected to a form of prima facie judicial review (provided that there is not also
a challenge to the validity of the arbitration agreement). (928)
As already detailed, this approach rests on the theory that resolution of questions of scope are
often inextricably linked to the substance of the parties underlying contract and legal
obligations, (929) and are therefore appropriate for arbitral resolution. (930) It also rests on the
notion that a party who has indisputably agreed to arbitrate some matters has both less basis
for complaining about being denied access to national courts and greater expectations that
disputes about the scope of its arbitration agreements will be subject to arbitral resolution.
(931) In these particular circumstances, the policy rationales underlying the prima facie
approach to judicial consideration in France, Switzerland, Hong Kong and India (932) may
appropriately be given effect. In particular, the desirability of effectuating the parties
expectations as to the dispute resolution forum (pursuant to a concededly valid arbitration
agreement) and of centralizing dispute resolution in a single neutral forum are all advanced by
this approach.
This approach to scope disputes also finds support in the text of the Convention, the UNCITRAL
Model Law and many other national arbitration statutes (including the FAA). As discussed
P 1224
above, Articles II(1) and II(3) of the Convention address issues of formation and validity of
the arbitration agreement, providing that parties must be referred to arbitration except where
the arbitration agreement is null and void, inoperative or incapable of being performed.
(933) Article II makes no similar reference to refusing to refer a dispute to arbitration because
the parties dispute falls outside the scope of the arbitration agreement. (934) The distinction
between disputes over existence and validity, on the one hand, and disputes over scope, on
the other hand, is also reflected in Articles V(1)(a) and V(1)(c), referring separately to the two
types of jurisdictional objections; notably, Article V(1)(a)s language parallels that of Article II,
while Article V(1)(c) has no such counterpart. (935)
The same differences exist in the statutory language of Articles 8, 34 and 36 of the UNCITRAL
Model Law. As discussed above, that language parallels Articles II and V of the Convention,
producing the same dichotomy between validity/existence disputes and scope disputes. (936)
Other national arbitration legislation is similar, including the FAA in the United States. (937)
These differences in the categorization and treatment of the two kinds of disputes provides
decisive confirmation for a different approach to the allocation of jurisdictional competence
over scope disputes.
In general, the better course would be to provide for no interlocutory judicial consideration of
jurisdictional objections based upon the scope of the arbitration agreement. This avoids
judicial interpretations of the parties underlying contract (which, while essential to most
scope disputes, is undeniably the arbitrators function). It also avoids the risk, in international
cases, of unnecessary involvement by the parties respective home courts in resolving disputes
where the parties have concededly agreed to arbitration. Nonetheless, if cabined, prima facie
judicial review of jurisdictional objections, particularly where this was shown to produce
efficiencies, would also have advantages (of avoiding the costs of arbitrating disputes that are
manifestly outside the scope of the arbitrators jurisdiction). (938)
Second, if the validity or legality of only the parties underlying contract, and not their
separable arbitration agreement, is challenged, then there will be no jurisdictional objection
and no issue of competence-competence will arise. (939) In these cases, there is no question
but that the arbitral tribunal has the competence finally to decide the status of the underlying
contract, without thereby raising any jurisdictional issues. The same analysis applies to other
issues that fall entirely within the arbitrators competence, such as procedural issues arising
P 1225
in the course of the arbitration (940) and issues relating to the admissibility of claims
(rather than to the arbitrators jurisdiction). (941) Again, these matters do not raise questions of
competence-competence, and are instead simply issues that the arbitrators are required to
decide in the course of fulfilling their underlying mandate.
Third, the better view is that interlocutory judicial decisions on non-frivolous jurisdictional
challenges directed specifically at the existence, validity, or enforceability of the arbitration
agreement should presumptively be available to parties that promptly seek such decisions.
This presumption should be readily rebuttable, in cases where efficiency, fairness, or other
considerations so argue, but it should be the starting-point for analysis. This is a delicate issue,
which can be fairly resolved in different ways, but this is the least-unsatisfactory approach.
Initially, parties should not lightly be required to arbitrate a dispute, and therefore denied
access to national courts, if they have not agreed to do so; that conclusion applies to the
arbitration of jurisdictional objections, as much as to the arbitration of other issues. (942) As
discussed above, the right of access to public courts and judicial remedies is fundamental in
most legal systems and should be denied, or delayed, only in compelling circumstances. (943)
On the other hand, where a party has in fact agreed to arbitrate an international commercial
dispute, then it also ought not lightly be required to litigate that dispute, and denied access to
the parties agreed dispute resolution mechanism. Again, that conclusion applies as fully to
issues of jurisdiction, which fall within the arbitrators competence-competence, as to other
issues. As discussed above, the New York Convention, the UNCITRAL Model Law and most
national arbitration legislation compel this result. (944)
133
The inescapable dilemma in allocating jurisdictional competence in this setting is that one
does not know, ex ante, whether the parties have in fact agreed to arbitrate anything at all.
That conclusion will not be arrived at until after the parties have obtained a final resolution of
their jurisdictional dispute. The allocation of jurisdictional competence will therefore
necessarily result in some parties with valid arbitration agreements being required to litigate
their jurisdictional objections, rather than arbitrate them with only subsequent judicial review,
and in requiring other parties, not bound by any arbitration agreement, being required to
arbitrate their jurisdictional objections, rather than litigate them. The inevitable reality is that
no allocation of jurisdictional competence will treat all parties in precisely the manner that
they are entitled to be treated.
In these circumstances, the least-unsatisfactory approach is to adopt a rebuttable
presumption that parties are entitled to obtain an interlocutory judicial decision on non-
frivolous jurisdictional challenges directed specifically to the existence, validity, or
enforceability of the arbitration agreement. This presumption reverses the prima facie
jurisdiction standard applied in France, India and a few other states, in which any non-
P 1226
frivolous jurisdictional dispute is for initial decision by the arbitral tribunal. Instead,
under this approach, non-frivolous jurisdictional objections will be presumptively for initial
decision by a national court.
The justification for this approach is that, in choosing between the rights of public access and
the rights under a (disputed) arbitration agreement, the former should be entitled to priority:
absent a valid agreement to arbitrate, parties have the right to adjudication of their disputes,
including jurisdictional disputes, in national courts. In circumstances of uncertainty, the
presumptive starting point should be that a party is entitled to seek immediate resolution of
its jurisdictional objection in a public court.
The foregoing conclusion is consistent with the weight of international authority. The New York
Convention provides that (absent contrary agreement) a court is obliged to refer parties to
arbitration unless it finds that the said agreement is null and void, inoperative or incapable of
being performed. (945) This language and the Conventions drafting history envisage that
courts will consider and finally decide the merits of jurisdictional objections relating to the
existence and validity of the arbitration agreement prior to referring parties to arbitration.
(946) The text and the drafting history of Article 8 of the UNCITRAL Model Law are to the same
effect. (947) Not surprisingly, it was the overwhelming practice, until French judicial decisions
first rendered during the 1990s, for courts to determine jurisdictional objections on the merits
when they were presented by the parties. (948)
It has been suggested that the negative effect of the competence-competence principle is
that national courts may not, or should not, consider jurisdictional issues until after an arbitral
award. (949) This suggestion confuses the negative effect of a valid agreement to arbitrate with
the purported negative effect of a disputed agreement to arbitrate. Where there is an
undisputed agreement to arbitrate, or where a court finds that there is such an agreement,
then the negative effect of that agreement is to require courts to refer the matter to
arbitration. (950)
However, where one party denies the existence of a valid agreement to arbitrate, then it is
inaccurate to speak of the negative effect of any such agreement; at most, one can speak of
the disputed negative effects of a disputed arbitration agreement. These purported effects
are not sufficient to provide a legally-binding bar against interlocutory judicial determination
of a partys jurisdictional objections. At most, these purported effects can be relevant to the
procedural question of how arbitral and judicial consideration of jurisdictional objections
should most sensibly be structured.
P 1227
It is also sometimes suggested that postponing judicial consideration of jurisdictional
issues until after a jurisdictional award assists in centralizing judicial determination of
jurisdictional issues in the courts of the arbitral seat. (951) This is again mistaken in the context
of challenges to the existence, validity, or enforceability of the arbitration agreement. (952)
Where a party denies that there is any valid arbitration agreement, the objective of
centralizing judicial consideration in the putative arbitral seat rests on what are at best
illusory legs: if there is no arbitration agreement, then there is also no arbitral seat in which
disputes should be centralized. Rather, the putative arbitral seat is merely the place that
one party claims (over the other partys objections) that disputes should be resolved. (953)
That putative place has no necessarily legitimate centralizing function.
Despite this, the presumption that a party should be entitled to obtain interlocutory judicial
resolution of non-frivolous jurisdictional objections should be neither irrebuttable nor
particularly difficult to rebut. In international commercial matters, the right of access to
public courts is an attenuated one.
As discussed above, in international commercial disputes, access to public courts in fact
means (contested) access to multiple public courts, in the parties respective home
jurisdictions, which in turn risk the issuance of inconsistent decisions and face significant
difficulties in rendering enforceable judgments. (954) Conversely, for many international
transactions, arbitration is the preferred, default means of dispute resolution certainly
preferred to one partys home courts. (955) As a consequence, denying a party access to public
courts, and requiring it to arbitrate, entails very different considerations in an international
context than a purely domestic setting.
134
It is also important to note that denying a party the right to interlocutory judicial resolution of
jurisdictional objections in fact means delaying, not actually denying, judicial consideration
and resolution of those objections. There is no question of preventing a party from obtaining
P 1228
judicial resolution of jurisdictional objections; there is only a question of timing and
sequence. (956) Again, this argues for permitting parties to rebut the presumption of
interlocutory judicial resolution of challenges to the existence or validity of the arbitration
agreement.
Moreover, it is also important that the parties ability to obtain interlocutory judicial
resolution of a jurisdictional objection based on the existence, validity, or scope of the
arbitration agreement need not materially obstruct the arbitral process. Under the proposal
outlined above, the availability of interlocutory judicial consideration is a presumption, and
where a party seeks such consideration belatedly or in a manner calculated to obstruct the
arbitral process, it may and should be denied.
As illustrated by the approaches adopted under UNCITRAL, U.S. and English legislation (as well
as the Swedish approach), interlocutory judicial resolution of jurisdictional challenges also
does not require that the arbitrators suspend the arbitral proceedings (either on jurisdiction or
the merits) merely because judicial consideration of jurisdictional objections is pending. (957)
An arbitral tribunal would have the discretion to suspend its proceedings, if it concluded that
this was fair and cost-effective, but it would not be required to do so. Thus, a request for an
interlocutory judicial determination of jurisdiction should not ordinarily delay the arbitration,
save where the arbitral tribunal itself concluded that this was the efficient approach to take.
(958)
Fourth, as noted above, the general availability of full interlocutory judicial consideration of
jurisdictional objections directed at the existence, validity, or enforceability of the arbitration
clause itself should only be presumptive. For the reasons outlined above, there is no
compelling reason categorically to prefer either rights of judicial access or rights to enforce the
arbitration agreement. As a consequence, decisions about the timing and sequence of arbitral
and judicial decisions should be based in large part on considerations of efficiency and equity
in particular cases.
Under this approach, the decision whether to grant a stay of judicial consideration of
jurisdictional objections will depend on a pragmatic assessment of factors such as the location
of the arbitral seat (e.g., is it domestic or foreign?), any prejudice to the parties from either
granting or not granting a stay, the relative efficiencies of judicial and arbitral decisions (e.g.,
how advanced is the arbitration? the litigation?), the timing of a jurisdictional challenge and
the likelihood that it is a delaying tactic (e.g., was the jurisdictional challenge made before or
after the arbitration is filed? was the jurisdictional challenge filed at the 11th hour?), the
apparent strength and level of substantiation of the jurisdictional challenge (e.g., is the
jurisdictional argument vague and unsubstantiated? specific and supported by evidence?), the
existence of related claims in the arbitral or judicial proceedings and the relative
P 1229
competencies of the courts and arbitrators (e.g., are only factual or contractual issues
relevant? are foreign legal issues, as to which the arbitral tribunal has greater expertise than
the relevant national court, involved?).
This analysis permits a more sensitive and cost-effective approach to the allocation of
jurisdictional competence than that adopted by the French, Canadian and Swedish/Chinese
models, as well as that of most U.S. and English judicial decisions. All of these jurisdictions
impose solutions based on abstract categorizations of different types of jurisdictional
objections, with little or no consideration of the underlying policy objectives of allocating
jurisdictional competence which should be to resolve jurisdictional disputes efficiently,
expertly and neutrally. The alternative approach recommended above contemplates direct
consideration of these policy objectives, in particular cases, which should produce more
sensible and fair results than most existing rules.
Notably, the approach recommended above is broadly comparable to that taken by the
European Convention. Article VI(3) of the Convention adopts a rebuttable presumption for
initial arbitral consideration of jurisdictional objections, with the possibility of interlocutory
judicial consideration in exceptional cases. (959) This is the reverse presumption from that
proposed above, but nonetheless rests on the basic principle that there should be case-by-
case consideration of issues of efficiency and equity in particular cases. That same approach,
expanded beyond just exceptional cases, is adopted in the proposal outline above.
There are seeds of this analysis in the treatment of competence-competence in other national
legal regimes. As discussed above, although not emphasized in the commentary, the Model
Law, U.S. and English approaches to competence-competence permit national courts to stay
interlocutory judicial determination of a jurisdictional issue, pending the arbitrators award on
the matter, as a discretionary matter, depending on considerations of efficiency and equity in
particular cases; that is particularly true in international matters (as reflected in experience
under the FAA in the United States). (960) Courts in other jurisdictions have also frequently
adopted a pragmatic approach to the efficiencies and equities of interlocutory judicial
consideration of jurisdictional issues in particular cases. (961)
Indeed, the variable treatment under French and German law of competence-competence
when a tribunal has been constituted and when it has not been constituted (962) reflects an
P 1230
effort to take issues of efficiency and fairness into account. They do so, however, by
relatively blunt, abstract rules (interlocutory judicial consideration is permitted before the
135
arbitral tribunal is constituted, but not after), which ignore or obscure the relevant efficiencies
and equities in particular cases.
The consideration of issues of efficiency and fairness can produce substantially different
allocations of jurisdictional competence in different circumstances. Thus, where a
jurisdictional objection that appears weak is raised in court at a late stage (e.g., after the
tribunal is constituted and the parties have begun to address the jurisdictional objections in
the arbitral proceedings), and would cause substantial inconvenience to one party, the
presumption in favor of full interlocutory judicial consideration would generally be overcome.
That would be particularly true where the existence or validity of the arbitration agreement
was governed by foreign law (i.e., foreign to the relevant judicial forum), as to which the arbitral
tribunal had expertise. Where only some of these factors were involved, then courts would
have discretion to determine whether or not to engage in full judicial consideration of the
jurisdictional objection, based on their assessment of the equities and efficiencies of the case.
Conversely, where a well-articulated and substantiated jurisdictional objection to the
existence or validity of the putative arbitration agreement is raised in litigation, prior to
constitution of an arbitral tribunal, then it would often be sensible for the court to resolve the
objection on the merits. As one English court correctly explained, interlocutory judicial
consideration of a jurisdictional objection in these circumstances will be the cost-effective
thing to do, because:
to send the matter off to the arbitrators now would require the extra cost of the constitution of
the arbitral body (three arbitrators), a mechanism for the determination of the points by them
(whether by oral hearing or not) and a possible appeal back to this court at the end. That
hardly seems sensible. (963)
Other courts, as well as soundly-reasoned commentary, have made similar observations about
the efficiencies of early judicial jurisdictional determinations, at least in some circumstances.
(964)
P 1231
Arbitral proceedings can require months before a tribunal is constituted, can last several
years before a final award is issued and can cost very substantial amounts of money and other
resources. (965) If arbitral proceedings have not (or have only recently) been commenced, and
judicial determination of the existence of an arbitration agreement is postponed until after an
arbitral award is rendered, the substantial costs of the arbitration may be wasted and
substantial time will have been unnecessarily expended. (966) These considerations apply
with particular force where no or few factual disputes are present and where the relevant legal
issues are governed by the law of the relevant judicial forum.
Different constellations of procedural settings, jurisdictional objections, applicable laws and
other circumstances can call for materially different allocations of jurisdictional competence.
At bottom, and as a consequence, the allocation of jurisdictional competence between
national courts and arbitral tribunals should be treated as a matter akin to issues of lis
pendens. Both arbitral tribunals and national courts have the competence to consider
jurisdictional objections, and the timing and nature of their respective decision-making
processes and decisions should rest on considerations of efficiency, fairness and competence,
rather than being defined by absolute categorizations. This approach better achieves the goals
of the arbitral process, and the objectives of commercial parties, than other allocations of
jurisdictional competence.
[4] Judicial Review of Positive Jurisdictional Awards
There are also differences among national legal regimes in the level of judicial review of
arbitral awards upholding the tribunals jurisdiction. In some countries, including France and
Germany, de novo judicial review is conducted on all factual and legal issues involved in a
jurisdictional award. (967) In other legal systems, including particularly the United States and
England, different levels of judicial review will apply to jurisdictional awards depending upon
the terms of the parties arbitration agreement: in some cases, the same minimal judicial
P 1232
review will apply to jurisdictional awards as that applicable in the case of arbitral awards
on the merits of the parties dispute, and in other cases, de novo judicial review will apply.
(968)
Thus, in the United States, First Options and its progeny hold that a tribunals positive
jurisdictional award will be subject to minimal judicial review under the FAA if the parties have
agreed to arbitrate jurisdictional disputes. As discussed above, this approach is often said to
be different from the more demanding scrutiny applicable to jurisdictional awards under most
national legal regimes, (969) and has frequently been criticized on the grounds that it grants
arbitrators unduly wide authority to determine their own jurisdiction. (970) This criticism is
misplaced and, upon analysis, the differences between First Options and other approaches to
judicial review of jurisdictional awards are less significant than often asserted.
The essential holding of First Options, properly interpreted, is that a tribunals jurisdictional
award will be subject to minimal judicial review where (but only where) the parties have
agreed to finally resolve jurisdictional issues by arbitration. Where such an agreement exists, it
is not merely appropriate, but required by the New York Convention and the basic principles of
most national arbitration legislation, that arbitrators jurisdictional rulings be subject to the
same de minimis judicial review as other arbitral awards in recognition proceedings. (971)
Where parties have agreed to finally resolve a jurisdictional dispute by arbitration, the arbitral
136
tribunals award on such issues is indistinguishable from, and entitled to the same
presumptive validity and judicial deference as, a determination on the merits.
An agreement to arbitrate jurisdictional issues, and a resulting award, is no different, as to
issues of validity and enforceability, than an agreement to arbitrate non-jurisdictional issues,
and a resulting award. (972) Thus, if parties entered into a separate post-dispute submission
agreement, in which they agreed for the arbitral tribunal to finally decide a jurisdictional issue
of capacity or duress, there is no reason to doubt that this particular arbitration agreement
would be valid and enforceable and that the merits of the resulting award (on issues of
capacity or duress) would be subject to minimal judicial review. (973) The same conclusion
applies with equal force to a predispute contractual arbitration agreement. (974) Again, this is
P 1233
a simple application of the New York Convention and provisions of national law regarding
annulment and recognition of arbitral awards. (975)
It is sometimes argued that arbitrators determinations of their own jurisdiction are suspect,
because arbitrators are usually private practitioners, of some sort, engaged in the business of
providing services for a fee. Some authorities suggest that the prospect of earning fees from an
arbitration will influence arbitrators to uphold, rather than reject, their own jurisdiction. (976)
This analysis also notes that, in many nations, judges and other governmental authorities are
forbidden from having a personal financial interest in the outcome of their decisions, (977) a
prohibition which is supposedly contradicted by the arbitrators competence-competence. As
one national court judge put it:
Our deference to arbitrators has gone beyond the bounds of common sense. I cannot
understand the process of reasoning by which any court can leave to the unfettered discretion
of an arbitrator the determination of whether there is any duty to arbitrate. I am even more
mystified that a court could permit such unrestrained power to be exercised by the very
person who will profit by deciding that an obligation to arbitrate survives, thus ensuring his
own business. It is too much to expect even the most fair-minded arbitrator to be impartial
when it comes to determining the extent of his own profit. We do not let judges make decisions
which fix the extent of their fees, see Tumey v. Ohio, 273 U.S. 510 (1927). How, then, can we shut
our eyes to the obvious self-interest of an arbitrator? (978)
This analysis rests on faulty premises, and therefore reaches a mistaken conclusion.
It is of course true that arbitrators are often professionals who earn money from the
arbitrations they conduct, and that they very often desire and affirmatively welcome
business, in the form of arbitral appointments. It is not true, however, that an arbitrators
financial incentives are aligned with upholding his or her own jurisdiction and it is particularly
not true that the arbitrators incentives are to ignore the law or facts in order to (wrongly)
uphold his or her own jurisdiction.
Under many institutional arbitration rules, and sometimes in ad hoc international cases, an
arbitrator will be compensated based in significant part on the amount in dispute. (979) As a
consequence, there will very frequently be instances in which an arbitrator can in fact
maximize his or her short-term income by denying jurisdiction, following an evidentiary
P 1234
hearing, rather than by upholding jurisdiction. Among other things, proceeding to the
merits of a complex technical dispute may very well be time-consuming and relatively
unrewarding as compared to other matters, while the economic return from an early
jurisdictional dismissal may produce materially higher hourly returns on the case in question.
More fundamentally, an arbitrators medium- and longer-term incentives are to render
objective and correct decisions, which win the respect of the parties, their counsel, the
arbitral institution and others. An arbitrators reputation, with both parties and appointing
authorities, is materially damaged by overreaching on jurisdictional issues, particularly if it
results in an award being annulled or denied recognition in public proceedings. (980) Even
putting aside arbitrators professional obligations, purely monetary considerations argue
strongly against skewing jurisdictional determinations one way or the other.
Most fundamentally, any assessment of international arbitrators incentives cannot be
conducted in a vacuum, but must be compared to those affecting national court judges. In this
regard, it bears repetition that it is precisely because of the parties mistrust of the potential
incentives and potential biases of national court judges that they agree to international
arbitration in the first place. (981) The possible incentive of national courts to favor local
businesses, employers, or state entities is a more serious systemic concern, sometimes by a
very substantial margin, than possible (improper) financial calculations of an arbitrator. (982)
As a consequence, there is no reason to skew analysis of competence-competence questions in
the context of international arbitrations by reference to the arbitrators supposed financial
incentives. Those incentives seldom point significantly in one direction in the short-term, and
instead ordinarily point decidedly in the direction of relative objectivity, particularly as
compared to the alternatives, in the longer-term.
It remains essential, however, that there be appropriate judicial review of arbitral
determinations of their own jurisdiction in all cases save those where the parties have
submitted such issues to the tribunal for final resolution. The character and level of such
review should vary, depending on the character of the issues addressed by the arbitrators.
Where a tribunal makes a decision regarding the validity or existence of the arbitration
P 1235
agreement, however, that determination should virtually (983) always be subject to de
137
novo judicial review as to issues of law. (984) Whatever the interim or interlocutory allocation
of jurisdictional competence may be, it is essential that the parties be entitled to a judicial
resolution of their jurisdictional objections, which in turn requires de novo consideration of
legal issues.
Nonetheless, although different approaches are possible, the better view is that annulment
and recognition courts should generally give substantial weight to factual findings of arbitral
tribunals, particularly in cases involving issues of trade practice, industry custom and the like.
As discussed below, this is both efficient and fair (in that it promotes accuracy in the
annulment courts decision-making). (985)
Equally, where a tribunal makes a decision concerning the validity or existence of the
underlying contract, which at the same time addresses and resolves an independent
jurisdictional objection, this determination should also ultimately be subject to judicial
review. In particular, the arbitrators decision regarding the separability of the arbitration
agreement should not be grounds for dispensing with all judicial review of a jurisdictional
award, including review of the application of that presumption in the particular case. Rather, it
is essential that there be judicial review of arbitral decisions concluding that an asserted
jurisdictional objection was not in fact directed at the arbitration agreement; this conclusion
should be subject to judicial review in the same manner as decisions about the validity or
existence of the arbitration agreement itself.
[5] Judicial Review of Negative Jurisdictional Awards
Finally, as discussed above, there are differences in some legal systems in the availability of
judicial review of arbitral awards denying the existence, validity, or applicability of an
arbitration agreement, and awards upholding the arbitrators jurisdiction. Under German (986)
and Dutch (987) law, and arguably under the Model Law, (988) a negative jurisdictional award is
not subject to judicial review (save on procedural, public policy and other generally-
applicable grounds). In contrast, under French, English, Swiss, U.S. and most other developed
legal systems, a negative jurisdictional award is subject to the same degree of judicial review
as a positive jurisdictional determination. (989)
For the reasons discussed above, the majority approach to negative jurisdictional decisions by
P 1236
arbitral tribunals is clearly superior. There is no reason to think that negative
jurisdictional decisions merely return the parties to their lawful or natural judges. (990) On
the contrary, in international disputes, negative jurisdictional decisions mean that the parties
are denied a neutral, efficient and presumptively commercially-expert forum, which both
commercial practice (991) and national arbitration legislation (992) favors as a means of
international dispute resolution. A negative jurisdictional decision typically forces parties to
litigate in non-neutral national courts, often in parallel or multiplicitous proceedings, which
are unlikely to produce enforceable decisions.
Accordingly, there is no less reason to afford more limited judicial review for such decisions
than the level of review applicable to positive jurisdictional determinations. That approach is
readily accomplished under most national arbitration statutes, (993) and can in particular be
accommodated by Article 34(2)(a)(iv) of the UNCITRAL Model Law, on the rationale discussed
above. (994) It is much preferable to the German and Dutch models, which should be rejected.
(995) (As discussed below, an arbitral tribunal should also be held to have the power to award
costs in the context of a negative jurisdictional award, as a consequence of its competence-
competence and of the implied submission of the party (unsuccessfully) invoking the arbitral
tribunals authority.) (996)
7.04 CHOICE OF LAW GOVERNING COMPETENCE-COMPETENCE ISSUES

Issues of competence-competence and the allocation of jurisdictional competence between
arbitrators and national courts give rise to choice-of-law questions. In particular, questions
arise as to whether the tribunals competence-competence and the allocation of jurisdictional
competence between arbitrators and national courts are governed by the law of the judicial
forum where the relevant court sits, by the substantive law governing the arbitration
agreement, or by some other law.
Virtually all national courts have assumed, without detailed analysis, that questions of an
arbitral tribunals competence-competence are governed by the law of the judicial
enforcement forum. As discussed above, Article 8 of the UNCITRAL Model Law provides for the
presumptive substantive validity of international arbitration agreements, and the specific
enforceability of such agreements, save where a national court determines that the agreement
is null and void, regardless where the arbitral seat is located. (997) At the same time, the Model
Laws competence-competence provision (in Article 16) is applicable only to arbitration
agreements providing for a local arbitral seat. (998) Despite this, courts in Model Law states
P 1237
apply Article 16s regime to issues of competence-competence without serious
consideration of other possibilities, both where the arbitration is seated locally and otherwise.
(999)
Similarly, U.S. courts appear to have consistently applied the FAA in determining the
respective roles of courts and arbitrators, albeit without analysis. (1000) Arbitral awards are to
the same effect (applying the competence-competence regime of the arbitral seat). (1001)
In principle, this is the correct choice-of-law approach to issues of competence-competence.
138
Where there is no applicable agreement to arbitrate jurisdictional issues, then issues of
competence-competence appear properly to be subject to the law of the judicial enforcement
forum: as discussed above, the competence-competence principle and the allocation of
jurisdictional competence between arbitrators and courts are matters of applicable national
and international arbitration legislation, and not generally the parties arbitration agreement.
(1002) This allocation of competence is properly considered as akin to principles of lis pendens
and is ordinarily governed by the law of each judicial enforcement forum.
On the other hand, if the parties have agreed to finally resolve a jurisdictional issue by
arbitration (typically, an issue of scope), then that agreement will ordinarily be subject to the
law governing the arbitration agreement and the New York Convention. (1003) In that case, as
P 1238
noted above, the issue of competence-competence is not solely a matter of national law,
but is instead subject to the protections of Articles II(1) and II(3) of the Convention. (1004) That
is, Article II of the Convention then prescribes a rule affecting the question of competence-
competence that would supersede contrary national law. (1005)
7.05 TIMING AND PROCEDURAL DISPOSITION OF JURISDICTIONAL DISPUTES

BY ARBITRAL TRIBUNAL
Where parties assert jurisdictional challenges before the arbitral tribunal, some mechanism
for presenting and resolving the issue within the arbitral proceedings themselves is required.
The procedural disposition and timing for resolving jurisdictional objections is generally a
matter within the tribunals procedural judgment (subject to the parties agreement and any
applicable institutional rules or national law). (1006) There are no uniform international rules
governing how arbitral tribunals handle the procedural aspects of jurisdictional objections,
(1007) and the diversity of the contexts in which such issues arise may make any such general
rules less desirable than case-by-case decisions.
[A] Requirements to Raise Jurisdictional Objection At Outset of Arbitration and

Waiver of Jurisdictional Objections
Most national laws and institutional arbitration rules require that challenges to the arbitrators
jurisdiction be raised early in the arbitral proceedings, failing which they will be deemed
waived. (1008) Under the UNCITRAL Model Law, a jurisdictional challenge must be asserted by
a party not later than when submitting his first statement on the substance of the dispute.
(1009) Other national arbitration statutes are generally similar, (1010) as is U.S. judicial
P 1239
authority under the FAA. (1011) There are national laws that take different approaches,
apparently permitting jurisdictional objections to be raised at any point in the arbitral
proceedings, but these are exceptional. (1012)
Institutional rules also provide that parties must raise their jurisdictional objections early in
the arbitral proceeding. The 2010 UNCITRAL Rules are representative, requiring that a
jurisdictional objection shall be raised not later than in the statement of defence or, with
respect to a counterclaim, or a claim for the purpose of a set-off, in the reply to the counter-
claim or to the claim for the purpose of a set-off. (1013) Other institutional rules are similar.
(1014) An arbitral tribunal has the authority, however, to accept a belated jurisdictional
objection in appropriate circumstances (although failing to timely raise such objections will
affect their credibility and may lead to estoppel issues). (1015)
Arbitral tribunals have not infrequently held that failure to comply with these various
provisions results in waiver of the jurisdictional objection. (1016) Similarly, as discussed
P 1240
below, national courts have consistently been prepared to reject jurisdictional defenses to the
recognition or confirmation of an award on grounds of waiver. (1017)
[B] Provisions of National Law Regarding Procedural Disposition of Jurisdictional

Objections
As discussed above, national law in the arbitral seat may affect a tribunals procedural
disposition of a jurisdictional dispute. (1018) Under most arbitration legislation (and
institutional rules) an arbitral tribunal is generally free to either: (a) decide the issue of
jurisdiction as a preliminary issue, and issue an interim award confined to jurisdiction, or (b)
consider the question of jurisdiction together with the merits.
For example, the UNCITRAL Model Law provides that a tribunal may decide jurisdictional
issues either as a preliminary question or in an award on the merits. (1019) In other legal
systems, national law may require or prefer early decision of jurisdictional issues (as in
Switzerland, Germany and elsewhere). (1020) In any case, under most legal systems, the parties
are in principle free to agree upon the timing of a jurisdictional award. (1021) Absent such
agreement, the arbitral tribunal possesses broad discretion to determine the timing of a
jurisdictional ruling (consistent with the tribunals general procedural discretion). (1022)
[C] Provisions of Institutional Rules Regarding Procedural Disposition of

Jurisdictional Objections
Despite the possibility to do so, the parties arbitration agreement will not ordinarily address
questions regarding the timing or procedural disposition of decisions on jurisdictional
objections (which will hardly have been considered by the parties in making their agreement).
139
On the other hand, institutional rules sometimes do prescribe procedures for dealing with
jurisdictional objections after they have been made.
P 1241
The ICC Rules provide (relatively unusually (1023) ) for a preliminary institutional
challenge which can be made to the arbitral tribunals jurisdiction. (1024) Under Article 6(4) of
the 2012 ICC Rules, a party may challenge the prima facie jurisdiction of an ICC arbitral
tribunal before the ICC International Court of Arbitration. (1025) A challenge under Article 6(4)
will be sustained only where there is no prima facie evidence of an agreement to arbitrate,
which could reasonably be established before the arbitral tribunal. (1026)
The purpose of Article 6(4) is to weed out spurious requests for arbitration, without requiring
the considerable expense and effort that is entailed in appointing a tribunal and preparing
replies or counterclaims. (1027) Even if the ICC Court rejects a challenge to prima facie
jurisdiction, that ruling has no effect on the right of a party to renew its challenge before the
arbitral tribunal or elsewhere. (1028)
P 1242 The ICSID Rules also provide a roughly-comparable mechanism for an initial, quasi-
administrative assessment of jurisdiction. Rule 46 of the ICSID Rules provides [t]he Secretary-
General shall register the request unless he finds, on the basis of the information contained in
the request, that the dispute is manifestly outside the jurisdiction of the Centre. He shall
forthwith notify the parties of registration or refusal to register. The ICSID Secretariats review
is ex parte, conducted before the Request for Arbitration is served on the respondent.
Nevertheless, the Secretariats review is very thorough (and at least as time-consuming); it
typically will involve several exchanges of correspondence, as well as oral consultations,
between the ICSID Secretariat and counsel for the claimant. (1029) As with the ICC, the arbitral
tribunal retains full authority to find jurisdiction absent, even if a request has been registered.
(1030)
In contrast to the ICC and ICSID Rules, most institutional rules provide for challenges to arbitral
jurisdiction to be resolved in the first instance by the arbitrators themselves, rather than by an
arbitral institution. (1031) The same is true of ad hoc arbitration rules (such as the UNCITRAL
Rules). (1032)
[D] Arbitral Tribunals Authority to Consider Jurisdictional Objections

Notwithstanding Interlocutory Judicial Consideration of Same Issues
An arbitral tribunal is generally not required to stay or suspend its consideration of
jurisdictional objections, on either lis pendens or other grounds, based on the pendency of
proceedings on the same jurisdictional issues in national courts. Rather, as discussed in detail
below, an arbitral tribunal is free to consider and decide a jurisdictional objection even if
litigation on the same issue is pending in national courts. (1033) This is made explicit by some
national arbitration legislation (1034) and, in other jurisdictions, by national court authority.
(1035)
P 1243
Equally, although rarely occurring, an international arbitral tribunal is in principle
entitled to continue to consider jurisdictional issues, notwithstanding the decision of a
national court (including in the arbitral seat) holding that no valid agreement to arbitrate
exists. As discussed below, the New York Convention provides arbitral tribunals with
independent authority and obligations to consider their own jurisdiction, notwithstanding the
conclusions of national courts (including courts in the arbitral seat). (1036)
Questions also arise as to the effect of parallel judicial proceedings and decisions on the
tribunals proceedings and award. In particular, questions arise as to whether an arbitral
tribunal is bound, in deciding issues of jurisdiction, by national court decisions purportedly
deciding the same issues of jurisdiction. This issue arises with regard to both courts in the
arbitral seat and foreign courts, outside the arbitral seat. These issues are discussed in detail
below. (1037)
[E] Arbitral Tribunals Procedural Disposition of Jurisdictional Objections

As a consequence of the competence-competence doctrine, the most common forum for
jurisdictional challenges is in proceedings before the arbitral tribunal. The procedures and
timetable for an arbitral tribunals consideration of jurisdictional objections can raise difficult
issues. In particular, tribunals must decide whether to consider and resolve a jurisdictional
objection as a preliminary matter or, alternatively, to consider jurisdictional issues together
with the merits. There is no single, generally-applicable answer to this question.
In some cases, jurisdictional issues will not be particularly fact-intensive. They will involve the
application of disputed legal issues to agreed facts. In those cases, jurisdictional
determinations can be made principally through written submissions, with a hearing for oral
argument on legal issues if the parties desire. In other cases, there will be significant factual
disputes for example, when there is a dispute as to whether or not the parties agreed orally
to an unexecuted written instrument, whether one entity is the alter ego of another, or whether
there was duress, mistake, or fraud. (1038) Here, disclosure, evidentiary submissions and
hearings may well be required. (1039)
Assuming that applicable law (or the parties agreement) does not require a different result,
the approach that the tribunal takes to the timing of jurisdictional submissions and decisions
will often be a matter of judgment that frequently depends on the desire(s) of the parties, the
P 1244
140
P 1244 complexity of the case, the need for prompt resolution and the extent to which jurisdictional
issues are intertwined with the merits of the parties dispute. (1040) (As discussed above,
in some states, the applicable national arbitration law may require or prefer early decision on
jurisdictional issues. (1041) )
The desirability of a preliminary jurisdictional ruling also depends on the character of the
parties underlying dispute (on the merits). A ruling on jurisdiction as a preliminary question
was held by one court to be desirable where the case on the merits was difficult and likely to
be costly. (1042) Conversely, it may be preferable to reserve decision on the jurisdictional issue
where that issue is intertwined with a substantive issue. (1043)
Although no absolute rules can be prescribed, the more appropriate course for the arbitral
tribunal is generally to conduct at least some preliminary, independent inquiry into
jurisdictional objections. If it appears that a credible, good faith jurisdictional challenge has
been raised, it is ordinarily appropriate to provide the parties with an opportunity to submit
legal argument and evidence on the challenge (i.e., written submissions and witness
statements); it will often also be appropriate to schedule an evidentiary hearing, at which
witness testimony and legal argument can be heard. (1044)
P 1245
This course permits the parties to fully address (and the tribunal to fully consider)
jurisdictional objections and, if jurisdiction is lacking, avoids the expense of presenting the
case on the merits. (1045) It also avoids forcing a party, who may not be subject to a tribunals
jurisdiction, to litigate the merits of its claims in what may be an illegitimate forum.
If, after either written submissions or an evidentiary hearing, it becomes clear that the issue of
jurisdiction is interconnected with the merits, a ruling on jurisdiction can be reserved. (1046) In
some cases, it may be appropriate for the timetable for submissions on jurisdiction to run in
parallel with a timetable for submissions on the merits; particularly in cases where delays in
substantive decisions are likely to cause damage, this procedural approach reduces the delays
and unfairness that may result from preliminary consideration of jurisdictional objections.
On the other hand, there may be instances in which it is clear from the outset that
jurisdictional issues cannot readily be separated from the merits, and where efficiency argues
strongly for presenting jurisdictional and merits issues simultaneously. In these cases, arbitral
tribunals can (and usually do) combine jurisdictional issues with merits issues, and reserve
decision on such issues for a final award. (1047)
P 1246
Some commentators have attempted to formulate a general cost-benefit calculation for
determining when to address jurisdictional objections as a preliminary matter. (1048) These
efforts are helpful in structuring analysis, but it is important also to give effect to the less
quantifiable, but real, costs of requiring a party who disputes the tribunals jurisdiction to
litigate a case on the merits before having its jurisdictional objections resolved by any
decision-maker.
If the arbitrators do conduct preliminary jurisdictional proceedings, they will thereafter
usually issue an interim ruling upholding their jurisdiction, (1049) or a final decision declining
jurisdiction. (1050)
The arbitral tribunals jurisdictional decision will generally be subject to judicial review after it
P 1247 has been notified to the parties, under applicable national law in the country where the
award was made (as in the case of Article 16(3) of the UNCITRAL Model Law). (1051) In addition,
a party may also resist enforcement of the award in the national courts where the prevailing
party seeks to enforce it (subject to possible requirements that it first have challenged the
jurisdictional ruling under the law of the arbitral seat (e.g., Article 16(3) of the Model Law)).
(1052)
In principle, an arbitral tribunal is free to continue the arbitral proceedings on the merits of
the parties dispute following a positive jurisdictional award, notwithstanding a pending action
to annul the jurisdictional award. (1053) Article 16(3) of the Model Law provides expressly for
this possibility. A Bermudan court nonetheless held that the arbitral tribunal should normally
wait for a judicial decision on jurisdiction before considering the merits, in order to save time
and costs (while recognizing that this approach would only be feasible if an immediate judicial
hearing was available). (1054) The decision whether or not to proceed to consider the merits of
the parties dispute, following a positive jurisdictional ruling, is a procedural ruling that is
within the arbitrators procedural discretion, which should not be subject to judicial review.
(1055)
If a tribunal reserves the jurisdictional decision until its final award (combining jurisdiction
and merits in that award), then any positive (or negative) jurisdictional decision must be
challenged in an annulment action under Article 34 of the UNCITRAL Model Law or equivalent
provisions of national law. The applicable standards for such challenges are discussed in
detail below. (1056)
[F] Waiver of Jurisdictional Objections: NoEx OfficioJurisdictional Determinations By

Arbitral Tribunal
It is a common feature of almost all national arbitration regimes that objections to the
existence, validity, or scope of an arbitration agreement must be affirmatively raised by a
party that wishes to challenge the arbitrators jurisdiction. There is no basis (save for very rare
exceptions (1057) ) for an arbitral tribunal to sua sponte declare that it lacks jurisdiction or that
141
the parties arbitration agreement is invalid. Just as parties may waive an arbitration
P 1248 agreement, by proceeding with a dispute in national courts, (1058) so they may also waive
defects in an arbitration agreement, by proceeding with a dispute in arbitration. (1059) It
is not the arbitrators mandate to prevent such waivers from occurring.
This principle is set forth in Article 16(1) of the UNCITRAL Model Law, which requires that a
plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the
submission of the statement of defense. (1060) The Model Laws drafting history indicates that
a partys failure to raise a jurisdictional objection in a timely manner precludes it from
challenging the validity of the arbitration agreement in subsequent annulment proceedings
(under Article 34) or recognition and enforcement proceedings (under Articles 35 and 36). (1061)
Courts in Model Law jurisdictions have reached the same conclusion. (1062) Other national
arbitration legislation and judicial authority is similar. (1063)
Where a party fails to comply with this requirement, it will generally be held to have waived its
jurisdictional objections and submitted to the arbitral tribunals jurisdiction, either impliedly
or expressly. (1064) That is particularly true where a party takes part in formal steps in the
arbitral procedure (other than selecting an arbitrator), such as executing terms of reference or
agreeing to procedural timetables, without registering its jurisdictional objections. (1065)
It is generally not the responsibility of the arbitral tribunal independently to identify or raise
possible jurisdictional defects in the arbitration agreement. If the parties consider it in their
interests to raise jurisdictional objections, they are free to do so; if not, they are free to
proceed without objections.
On the other hand, the parties are also free to agree, subsequent to the dispute having arisen,
to resolve their dispute through arbitration (even if they had not previously agreed to do so).
Only where the arbitration agreement might conflict with mandatory national law, (1066) or in
a default proceeding, (1067) does the arbitral tribunal have any obligation to raise possible
jurisdictional defects ex officio.
P 1249
Nonetheless, it is ordinarily not a breach of an arbitrators mandate to ex officio raise the
possible existence of a jurisdictional defect, provided that he or she is acting in an
independent and impartial manner. (1068) It would, however, be a breach of an arbitrators
mandate to make an ex officio jurisdictional determination without notice to the parties:
instead, the parties must be given an opportunity to decide whether or not they wish to
proceed with a jurisdictional objection and, if so, to be heard on the matter. It would be a
serious violation of the parties procedural rights for a tribunal to make a purely sua sponte
jurisdictional decision regarding the existence, validity, or scope of the arbitration agreement
without notifying the parties or obtaining their views. (1069)
[G] Jurisdictional Consequences of Contesting Arbitrators Jurisdiction in Arbitral

Proceedings
An important practical issue concerns the jurisdictional consequences (if any) of contesting the
arbitrators jurisdiction in the arbitral proceedings. In what circumstances (again, if any) does
such conduct amount to an acceptance of the tribunals competence-competence and a
waiver of any right to challenge a resulting jurisdictional award? The issue is most pointed in
the United States and England, where the FAA and English Arbitration Act, 1996, have
respectively been held to give effect to agreements to arbitrate jurisdictional objections.
(1070)
The leading U.S. authority is First Options, discussed above. (1071) There, the Kaplans made
written submissions to the arbitrator asserting that they were not bound by the arbitration
agreement in question. (1072) Moreover, the Kaplans submissions did not specifically
challenge the arbitrators power to decide the question whether they were bound by the
disputed arbitration clause. These actions raised the question whether the Kaplans conduct
amounted to acceptance of the arbitrators jurisdiction finally to determine their own
jurisdiction.
The U.S. Supreme Court held in First Options that the Kaplans conduct did not clearly evidence
that they had agreed to arbitrate, with final effect, the question of whether they were bound by
the arbitration clause. (1073) Other U.S. courts generally also hold that parties who raise
P 1250
jurisdictional objections in arbitral proceedings do not thereby submit themselves to the
tribunals competence-competence by pursuing those objections before the tribunal. (1074)
Nonetheless, as a practical matter, it is not prudent for a party to appear before a U.S. (or
other) arbitral tribunal without expressly reserving its objections to the arbitrators
competence-competence. Within the United States, First Options may not extend far beyond
its facts, (1075) and a partys jurisdictional submissions to a tribunal could well constitute
evidence of an implied agreement to arbitrate jurisdictional issues. (1076)
P 1251 Outside the United States, national law may regard the submission of jurisdictional
arguments to an arbitral tribunal, without a reservation of rights, as a submission to the
tribunals ruling. National courts have held, in a variety of fact-specific settings, that the
presentation of jurisdictional objections to the arbitral tribunal, without reservations as to the
tribunals competence, may constitute a submission of those objections to arbitration. (1077) A
decision of the Swiss Federal Tribunal is representative:
[H]e who addresses the merits without reservation in contradictory arbitral proceedings
142
involving an arbitral matter thereby recognizes the jurisdiction of the arbitral tribunal and
definitely loses the right to challenge the jurisdiction of the tribunal. (1078)
On the other hand, national courts have generally been reluctant to conclude that the parties
have in fact agreed that jurisdictional disputes will be decided finally by the arbitrators. (1079)
For example, a partys signature of the ICC Terms of Reference, which identify a jurisdictional
objection, has been held not to constitute acceptance of the arbitrators competence-
competence to finally determine jurisdictional objections, without possibility of subsequent
judicial review. (1080) Similarly, a partys submission of jurisdictional objections to the ICC
Court, under Article 6 of the ICC Rules, has been held not to constitute a submission of
jurisdictional disputes to arbitration. (1081) Again, however, particular care should be taken to
avoid inadvertent submissions to a tribunals competence finally to resolve jurisdictional
P 1252
challenges (without later judicial review).
References
1) For commentary, see Aeberli, Jurisdictional Disputes Under the Arbitration Act 1996: A
Procedural Route Map, 21 Arb. Intl 253 (2005); Alfaro & Guimarey, Who Should Determine
Arbitrability?, Arbitration in A Changing Economic and Political Environment, 12 Arb. Intl
415 (1996); Bachand, Kompetenz-Kompetenz, Canadian Style, 25 Arb. Intl 431 (2009);
Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie Review of the Arbitral
Tribunals Jurisdiction?, 22 Arb. Intl 463 (2006); Barcel, Who Decides the Arbitrators
Jurisdiction? Separability and Competence-Competence in Transnational Perspective, 36
Vand. J. Transnatl L. 1115 (2003); Bermann, The Gateway Problem in International
Commercial Arbitration, 37 Yale J. Intl L. 1 (2012); Boo, Ruling on Arbitral Jurisdiction Is
That An Award?, 3 Asian Intl Arb. J. 125 (2007); Branson, The Enforcement of International
Commercial Arbitration Agreements in Canada, 16 Arb. Intl 19 (2000); Chang, Inherent
Power of the Arbitral Tribunal to Investigate Its Own Jurisdiction, 29 J. Intl Arb. 171 (2012);
Dassule, Le contrle de la comptence arbitrale par le juge anglais avant la sentence, 2003
Rev. arb. 65; de Cosso, The Comptence-Comptence Principle, Revisited, 24 J. Intl Arb.
231 (2007); Derains, Arbitrators Contract and Competence-Competence, 2011 Paris J. Intl
Arb. 425; Dimolitsa, Separability and Kompetenz-Kompetenz, in A. van den Berg (ed.),
the New York Convention 217 (ICCA Congress Series No. 9 1999); Fortier, Delimiting the
Spheres of Judicial and Arbitral Power: Beware, My Lord, of Jealousy, 80 Can. Bar Rev. 143
(2001); Gaillard & Banifatemi, Negative Effect of Competence-Competence: The Rule of
Priority in Favor of the Arbitrators, in E. Gaillard & D. di Pietro (eds.), Enforcement of
Arbitration Agreements and International Arbitral Awards: The New York Convention in
Practice 257 (2008); Gaillard, Leffet ngatif de la comptence-comptence, in Etudes de
procdure et darbitrage en lhonneur de Jean-Franois Poudret 387 (1999); Gee, The
Autonomy of Arbitrators and Fraud Unravels All, 22 Arb. Intl 337 (2006); Goldman, The
Complementary Roles of Judges and Arbitrators in Ensuring That International Commercial
Arbitration Is Effective, in ICC, International Arbitration: 60 Years of ICC Arbitration A Look
at the Future 255 (1984); Gotanda, An Efficient Method for Determining Jurisdiction in
International Arbitrations, 40 Colum. J. Transnatl L. 11 (2001); Graffi, Securing Harmonized
Effects of Arbitration Agreements Under the New York Convention, 28 Hous. J. Intl L. 663
(2006); Hanotiau, Consent to Arbitration: Do We Share A Common Vision?, 27 Arb. Intl 539
(2011); Herrera Petrus, Spanish Perspectives on the Doctrine of Kompetenz-Kompetenz and
Separability: A Comparative Analysis of Spains 1988 Arbitration Act, 11 Am. Rev. Intl Arb.
397 (2000); Kaufmann-Kohler, How to Handle Parallel Proceedings: A Practical Approach to
Issues Such as Competence-Competence and Anti-Suit Injunctions, 2 Disp. Res. Intl 110
(2008); Kierstead, Reference to Arbitration Under Article 8 of the UNCITRAL Model Law: The
Canadian Approach, 31 Can. Bus. L.J. 98 (1999); Lew, Does National Court Involvement
Undermine the International Arbitration Process, 24 Am. U. Intl L. Rev. 489 (2008-2009);
Mayer, Lautonomie de larbitre international dans lapprciation de sa propre
comptence, 217 Recueil des Cours 319 (1989); Park, The Arbitrators Jurisdiction to
Determine Jurisdiction, in A. van den Berg (ed.), International Arbitration 2006: Back to
Basics? 55 (ICCA Congress Series No. 13 2007); Park, Determining Arbitral Jurisdiction:
Allocation of Tasks Between Courts and Arbitrators, 9 Arb. & Disp. Res. L.J. 19 (2000); Park,
The Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz-Kompetenz Has
Crossed the Atlantic?, 12 Arb. Intl 137 (1996); Pavic, (In)Appropriate Compromise Article
16(3) of the Model Law and Its Progeny, in S. Krll (ed.), International Arbitration and
International Commercial Law: Synergy, Convergence and Evolution 387 (2011); Pierce,
Down the Rabbit Hole: Who Decides Whats Arbitrable?, 21 J. Intl Arb. 289 (2004); Racine,
Review of Arbitrators Jurisdiction Under French Law: The Lessons of the Abela Case, 2011
Paris J. Intl Arb. 443; Rau, Arbitral Power and the Limits of Contract: The New Trilogy, 22
Am. Rev. Intl Arb. 435 (2011); Rau, Understanding (And Misunderstanding) Primary
Jurisdiction, 21 Am. Rev. Intl Arb. 47 (2010); Rau, Arbitral Jurisdiction and the Dimensions
of Consent, 24 Arb. Intl 199 (2008); Rau, Everything You Really Need to Know About
Separability in Seventeen Simple Propositions, 14 Am. Rev. Intl Arb. 1 (2004); Rau, The
Arbitrability Question Itself, 10 Am. Rev. Intl Arb. 287 (1999); Reisberg, The Rules Governing
Who Decides Jurisdictional Issues: First Options v. Kaplan Revisited, 20 Am. Rev. Intl Arb.
159 (2010); Reuben, First Options, Consent to Arbitration and the Demise of Separability:
143
Restoring Access to Justice for Contracts With Arbitration Provisions, 56 S.M.U. L. Rev. 819
(2003); Rosen, Arbitration Under Private International Law: The Doctrines of Separability
and Competence de la Competence, 17 Ford. Intl L.J. 599 (1993-1994); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration (1989); Schlosser, Arbitral
Tribunals or State Courts: Who Must Defer to Whom?, in Arbitral Tribunals or State Courts:
Who Must Defer to Whom? 15 (ASA Spec. Series No. 15 2001); P. Schlosser, Das Recht der
internationalen privaten Schiedsgerichtsbarkeit 553-58 (1989); Schlosser, The
Competence of Arbitrators and of Courts, 8 Arb. Intl 189 (1992); S. Schwebel, International
Arbitration: Three Salient Problems (1987); Sheppard, The Moth, the Light and the United
States Severability Doctrine, 23 J. Intl Arb. 479 (2006); I. Shihata, The Power of the
International Court to Determine Its Own Jurisdiction (1965); Smit, Separability and
Competence-Competence in International Arbitration: Ex Nihilo Nihil Fit? Or Can Something
Indeed Come From Nothing?, 13 Am. Rev. Intl Arb. 19 (2002); Smit, The Arbitration Clause:
Who Determines Its Validity and Its Personal and Subject Matter Reach?, 6 Am. Rev. Intl
Arb. 395 (1995); Susler, The Jurisdiction of the Arbitral Tribunal: A Transnational Analysis of
the Negative Effect of Competence, 6 Macquarie J. Bus. L. 119 (2009); Svernlov & Carroll,
What Isnt, Aint: The Current Status of the Doctrine of Separability, 8(4) J. Intl Arb. 37
(1991); Walsh, The UNCITRAL Arbitration Rules and First Options: Failing to Clearly and
Unmistakably Evince the Intent to Arbitrate Issues of Arbitrability, 2(3) World Arb. & Med.
Rev. 87 (2008); Ware, Arbitration Laws Separability Doctrine After Buckeye Check Cashing
Inc. v. Cardegna, 8 Nev. L.J. 107 (2007); Welser, Pitfalls of Competence, 2007 Austrian Arb.
Y.B. 3; Wyss, First Options of Chicago, Inc. v. Kaplan: A Perilous Approach to Kompetenz-
Kompetenz, 72 Tulane L. Rev. 351 (1997).
2) The different terminology that is used to describe an arbitral tribunals jurisdiction (or
competence) to decide on its own jurisdiction (or competence) is discussed below.
See7.01.
3) See7.02; Final Award in ICC Case Nos. 6515 and 6516, XXIVa Y.B. Comm. Arb. 80 (1999)
(One thing nevertheless remains clear,which is that the Kompetenz-Kompetenz
belongs to the arbitral tribunal. This is one of the most basic principles in international
commercial arbitration.); P. Binder, International Commercial Arbitration and
Conciliation in UNCITRAL Model Law Jurisdictions 4-006 (3d ed. 2009) (Modern
international commercial arbitration embraces this principle and the arbitrators right
to rule on his own jurisdiction is one of the reasons why arbitration has flourished so
greatly over the past decades.); Park, Determining Arbitral Jurisdiction: Allocation of
Tasks Between Courts and Arbitrators, 9 Arb. Disp. Res. L.J. 19 (2000); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration 178 (1989) (if there is one
thing over which modern writers on arbitration seem to agree, it is that arbitrators must
be allowed to rule on their own jurisdiction); Schlosser, Arbitral Tribunals or State
Courts: Who Must Defer to Whom?, in Arbitral Tribunals or State Courts: Who Must Defer to
Whom? 15, 27 (ASA Spec. Series No. 15 2001); S. Schwebel, International Arbitration: Three
Salient Problems 1-60, passim (1987); UNCITRAL, 2012 Digest of Case Law on the Model Law
on International Commercial Arbitration 78 (2012) (The affirmation in Article 16(1) of the
power enjoyed by arbitral tribunals to rule on their own jurisdiction echoes provisions
found in virtually all modern international arbitration statutes and rules, and reflects
what is widely considered to be one of the most basic principles of international
commercial arbitration.).
4) See7.03 (detailing differing jurisdictional allocations under UNCITRAL Model Law, U.S.,
German, French, Swiss, Swedish, Chinese and other legislative regimes).
5) See, e.g., First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (U.S. S.Ct. 1995) (who
decides); Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower
Plant LLP [2013] UKSC 35, 40 (U.K. S.Ct.) (principle of Kompetenz-Kompetenz or, in an
anglicised version suggested by Lord Sumption, jurisdiction-competence); Goldman,
The Complementary Roles of Judges and Arbitrators in Ensuring That International
Commercial Arbitration Is Effective, in ICC, International Arbitration: 60 Years of ICC
Arbitration A Look at the Future 255, 263 (1984); Park, The Arbitrators Jurisdiction to
Determine Jurisdiction, in A. van den Berg (ed.), International Arbitration 2006: Back to
Basics? 55 (ICCA Congress Series No. 13 2007); Wetter, The Importance of Having A
Connection, 3 Arb. Intl 329 (1987).
6) See7.03[A][3] (H.K., India); 7.03[B][2] (France).
7) See7.03[E][1][b] (United States); 7.03[F][2] (England); 7.03[G] (Sweden); 7.03[H] (China).
8) See7.03[A][5] (Model Law); 7.03[B][3] (France); 7.03[E][7] (United States).
9) See7.03[B][2].
10) See Gaillard & Banifatemi, Negative Effect of Competence-Competence: The Rule of
Priority in Favor of the Arbitrators, in E. Gaillard & D. di Pietro (eds.), Enforcement of
Arbitration Agreements and International Arbitral Awards: The New York Convention in
Practice 257 (2008); Gaillard, Leffet ngatif de la comptence-comptence, in Etudes de
procdure et darbitrage en lhonneur de Jean-Franois Poudret 387 (1999).
11) See7.03[G].
12) See7.03[A][3] (Model Law); 7.03[E][7] (United States); 7.03[F][4] (England).
144
13) See3.02[B][3][a]; Judgment of 26 May 1988, 1988 NJW-RR 1526, 1527 (German
Bundesgerichtshof); Judgment of 5 May 1977, 1977 NJW 1397, 1400 (German
Bundesgerichtshof); Judgment of 3 March 1955, 1955 BB 552, 552 (German
Bundesgerichtshof); Nussbaum, The Separability Doctrine in American and Foreign
Arbitration, 17 N.Y.U. L.Q. Rev. 609, 610-11 (1940); P. Schlosser, Das Recht der
internationalen privaten Schiedsgerichtsbarkeit 546 (2d ed. 1989).
14) See7.03[D]; Berger, Germany Adopts the UNCITRAL Model Law, 1998 Intl Arb. Rev. 121, 122;
P. Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit 553-54 (2d
ed. 1989) (The situation where an arbitral award is no longer revisable by state courts,
not even with regard as to whether the arbitral tribunal rightfully accepted its
jurisdiction, can be referred to as definite Kompetenz-Kompetenz.). As discussed below,
Germany appears to have abandoned this approach to competence-competence in
conjunction with adopting the UNCITRAL Model Law.
15) See7.03[B]; M. de Boissson, Le droit franais de larbitrage interne et international 79,
248-53 (2d ed. 1990); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
16) See7.03[E][7][c] (United States); 7.03[F][3] (England); First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 942 (U.S. S.Ct. 1995).
17) See7.03[D][3] (Germany).
18) The competence-competence principle has deep historical roots. An early opinion on
the subject of competence-competence, rendered by Lord Chancellor Loughborough in
relation to disputes under Jays Treaty of 1794, reasoned: the doubt respecting the
authority of the commissioners to settle their own jurisdiction was absurd.[T]hey must
necessarily decide upon cases being within, or without their competency. Award in Case
of the Betsey of 13 April 1797, cited in J. Moore, History and Digest of the International
Arbitrations to Which the United States Has Been A Party 327 (1898). See alsoMemorandum
on Arbitral Procedure, Prepared by the Secretariat, U.N. Doc. A/CN.4/35, II Y.B. I.L.C. 157,
165 (1950) (it seems well-established that the tribunal has the right to judge as to its
own powers (comptence de la comptence)); 7.01; 7.02[A]-[D].
19) See, e.g.,Final Award in ICC Case Nos. 6515 and 6516, XXIV Y.B. Comm. Arb. 80, 84 (1999)
(One thing nevertheless remains clearwhich is that the kompetenz-kompetenz
belongs to the arbitral tribunal. This is one of the most basic principles in international
commercial arbitration, not to say international arbitration.); Award in ICC Case No.
1526, 101 J.D.I. (Clunet) 915 (1974) (It is a rule admitted in international arbitration
matters that in the absence of a contrary decision of State procedural law, the arbitrator
is judge of his own jurisdiction.); Committee on International Commercial Arbitration,
International Law Association, Final Report on Lis Pendens and Arbitration 4.11 (2006) (An
arbitral tribunal is deemed to have an inherent power to determine its own jurisdiction.
This is referred to as competence-competence (i.e., competence to decide its own
jurisdiction).). See also7.02[A][1] & [3]; 7.02[D].
20) See Award in Case of the Betsey of 13 April 1797 (Lord Chancellor Loughborough), cited in J.
Moore, History and Digest of the International Arbitrations to Which the United States Has
Been A Party 327 (1898) (doubt respecting the authority of the commissioners to settle
their own jurisdiction was absurd; and that they must necessarily decide upon cases
being within or without, their competency); 1907 Convention for the Pacific Settlement
of International Disputes (1907 Hague Convention), Art. 73 (The Tribunal is authorized
to declare its competence in interpreting the Compromis, as well as the other Treaties
which may be invoked, and in applying the principles of law.); ILC Model Rules on
Arbitral Procedure, 1958, Art. 1(3) (If the arbitral tribunal has already been constituted,
any dispute concerning arbitrability shall be referred to it.), Art. 9 (The arbitral
tribunal, which is the judge of its own competence, has the power to interpret the
compromis and the other instruments on which that competence is based.);
Memorandum on Arbitral Procedure, Prepared by the Secretariat, U.N. Doc. A/CN.4/35, II
Y.B. I.L.C. 157, 165 (1950) (it seems well established that the tribunal has the right to
judge as to its own powers (comptence de la comptence)).
21) The ICSID Convention confirms (and provides for) the arbitrators competence-
competence. Article 41(1) of the Convention provides that [t]he Tribunal shall be the
judge of his own competence. ICSID Convention, Art. 41(1). Authorities interpreting the
Convention affirm the principle of competence-competence. SeeL. Reed, J. Paulsson & N.
Blackaby, Guide to ICSID Arbitration 85 (2004); C. Schreuer et al., The ICSID Convention: A
Commentary Art. 41, 1 (2d ed. 2009). See also Inceysa Vallisoletana SL v. Repub. of El
Salvador, Award in ICSID Case No. ARB/03/26 of 2 August 2006, 2006 WL 4491473, 148;
Pan Am. Energy LLC & BP Argentina Exploration Co. v. Argentine Repub., Decision on
Preliminary Objections in ICSID Case No. ARB/03/13 of 27 July 2006, 2006 WL 2479770; ICSID
Additional Facility Rules, Rule 45(1) (The Tribunal shall have the power to rule on its
competence.).
22) SeeJudgment of 2 May 2005, Case No. C/1043/2005-15SP (Geneva Ct. First Inst.) (negative
effect of the competence-competence principle is not consecrated by the New York
Convention (Article II(3))); Bachand, Does Article 8 of the Model Law Call for Full or Prima
Facie Review of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463, 470-71 (2006); A. van
den Berg, The New York Arbitration Convention of 1958 131, 145-46 (1981).
145
23) See26.05[C][1]; New York Convention, Art. V(1)(a) (Recognition and enforcement of the
award may be refused, [if](a) The parties to the agreement referred to in Article II were,
under the law applicable to them, under some incapacity, or the said agreement is not
valid under the law to which the parties have subjected it or, failing any indication
thereon, under the law of the country where the award was made.).
24) See26.05[C][4]; New York Convention, Art. V(1)(c) (Recognition and enforcement of the
award may be refused, [if](c) The award deals with a difference not contemplated by or
not falling within the terms of the submission to arbitration, or it contains decisions on
matters beyond the scope of the submission to arbitration). Article V(1)(c) refers to the
submission to arbitration, rather than to the arbitration agreement. The reference is
most specifically directed towards the claims submitted by the parties to the arbitral
tribunal, but also extends to the scope of the underlying agreement to arbitrate.
See7.02[A][1]; 26.05[C][4][a]. This is consistent with the use of the term in the Geneva
Convention. See Geneva Convention, Art. I(a); 3.02[A][1].
25) If jurisdictional objections have not been raised in the arbitral proceedings, then they
will ordinarily be waived in subsequent recognition proceedings under the Convention.
See7.05[A].
26) Two possible exceptions are Indonesia and Venezuela. See7.02[B][7].
27) Under such a rule, parties could effectively nullify agreements to arbitrate and arbitral
proceedings, simply by raising a jurisdictional objection. Arbitral tribunals might
nonetheless continue with the arbitration, but in practice many arbitral proceedings
would be suspended until a (judicial) jurisdictional determination was made, in order to
avoid the wasted monetary and other costs of arbitral proceedings.
28) The same conclusion applies under the substantially identical Inter-American
Convention.
30) Some authorities have concluded that Article II(3) of the New York Convention requires
national courts generally to allow arbitral tribunals to make initial jurisdictional
determinations. See, e.g., F. Bachand, Lintervention du juge Canadien avant et durant un
arbitrage commercial international 178-79, 183 (2005); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 662, 677 (1999).
This view is difficult to accept. The Convention only impliedly recognizes the arbitrators
competence-competence, see7.02[A][1], and does not prescribe an independent,
general rule requiring national courts to permit the initial exercise of such power by
arbitral tribunals. On the contrary, as discussed below, Articles II(1) and II(3) are better
interpreted as contemplating (but not requiring) interlocutory judicial determination of
jurisdictional objections. See7.02[A][1]. See also Dell Computer Corp. v. Union des
Consommateurs, 2007 SCC 34, 71-73 (Canadian S.Ct.).
31) As discussed in greater detail below, Article II(3) is drafted in mandatory terms,
requiring that national courts refer parties to arbitration. See8.02[A][1]; 8.03
(especially 8.03[A][1]).
32) Judgment of 29 April 1996, Found. M v. Banque X, 14 ASA Bull. 527, 530-31 (Swiss Federal
Tribunal) (1996); Judgment of 16 January 1994, 13 ASA Bull. 503, 507 (Swiss Federal
Tribunal) (1995) (if the arbitral tribunal has its seat abroad, the Swiss state court judge
before who the existence of an arbitration clause is claimed must rule on this defense
with full judicial consideration, and [he must do so] in particular with regard to the
defense deduced from Art. II(3) of the New York Convention, without being entitled to
restrict himself to a prima facie examination).
In contrast, as discussed below, where the arbitration agreement provides for a tribunal
having its seat in Switzerland, the national courts decision on the tribunals jurisdiction
is not necessarily final: the national court may either confine itself to a summary
examination of the arbitration agreement, or it may stay the national court proceedings
until the arbitral tribunal has rendered its decision on its jurisdiction. SeeJudgment of 29
April 1996, Found. M v. Banque X, 14 ASA Bull. 527, 530-31 (Swiss Federal Tribunal) (1996);
Judgment of 16 January 1994, 13 ASA Bull. 503, 507 (Swiss Federal Tribunal) (1995);
Judgment of 2 May 2005, 23 ASA Bull. 739 (Geneva Ct. First Inst.) (2005); 7.03[C].
33) New York Convention, Art. II(3). See2.01[A][1][a]; 5.01[B][2]; 8.02[A][1]; 8.03 (especially
8.03[A][1]). See also Dell Computer Corp. v. Union des Consommateurs, 2007 SCC 34, 73
(Canadian S.Ct.).
34) As discussed below, French, Indian, Hong Kong, German, English and U.S. arbitration laws
provide for either initial prima facie judicial review, or similar approaches, in all or a
considerable range of cases. See7.03[A][3] (Model Law); 7.03[B][2] (France); 7.03[E][1]
[b] (United States); 7.03[F][2] (England). If the Swiss interpretation of Article II(3) were
accepted, all of these approaches would be in violation of the Convention.
35) Barcel, Who Decides the Arbitrators Jurisdiction? Separability and Competence-
Competence in Transnational Perspective, 36 Vand. J. Transnatl L. 1115, 1135 (2003); A. van
den Berg, The New York Arbitration Convention of 1958 155, 169 (1981).
36) See5.01[B][2].
37) See7.03[A][3]; 7.03[C]; 7.03[E][5]; 7.03[F].
38) See7.03[A]; 7.03[C]-[E] (especially 7.03[E][1]).
39) The arbitral tribunals jurisdiction in those instances is discussed below. See7.03[A][4];
7.03[I][3].
146
40) See7.02[C].
41) See7.03[I][2]; 8.02[A][1]; 8.03 (especially 8.03[A][1]). Commentary frequently overlooks
this aspect of the New York Convention. SeeE. Gaillard & J. Savage (eds.), Fouchard
Gaillard Goldman on International Commercial Arbitration 654 (1999) (As the 1958 New
York Convention only deals with the conditions for recognition and enforcement of
awards, it does not cover the competence-competence principle.); A. van den Berg, The
New York Arbitration Convention of 1958 131 (1981) (Convention does not regulate the
concurrence of the arbitrators view on his competence to decide on the merits of the
dispute with that of the court).
42) In the absence of an agreement to arbitrate jurisdictional disputes, it is correct that the
Convention does not address the allocation and exercise of competence to decide
disputes regarding the existence, validity, or legality of arbitration agreements. See
also7.02[A][1]; 7.03[I][3]; Dell Computer Corp. v. Union des Consommateurs, 2007 SCC 34,
71-73 (Canadian S.Ct.) (The New York Convention does not expressly require the
adoption of either of these schools of thought.).
44) This interpretation is discussed in greater detail below, in the context of the UNCITRAL
Model Law, which uses language paralleling that of Article II(3). See7.03[A][3] & [7].
45) New York Convention, Art. V(1)(c) (The award deals with a difference not contemplated
by or not falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to arbitration.). See
alsoReport of the Committee on the Enforcement of International Arbitral Awards, U.N.
Doc. E/2704, 39 (1955) (expression submission to arbitration was used in a broad
sense, and was intended to include not only an arbitration clause in a contract, but also
a specific compromis); 7.02[A][1]; 26.05[C][4][e].
46) This interpretation of Article II(3) would leave national courts free, under Article V(1)(c),
to deny recognition of an award that exceeded the scope of the arbitration agreement.
See New York Convention, Art. V(1)(c); 26.05[C][4][e]. See also25.04[A][6][b]. In this
regard, it is noteworthy that Article V(1) deals separately with non-recognition based on
the absence of a valid arbitration agreement (Article V(1)(a)) and on exceeding the scope
of the arbitration agreement (Article V(1)(c)). See26.05[C][4][e]; 26.05[C][4].
47) See 7.03[A][4]; 7.03[E][7][a]; 7.03[F]. At the same time, most national courts have
routinely considered disputes concerning the scope of the arbitration agreement in
interlocutory judicial proceedings, which is inconsistent with the foregoing
interpretation. The practice of national courts with regard to disputes concerning the
scope of the arbitration agreement is discussed below. See7.03[A][4]; 7.03[E][7][a].
48) See26.05[C][1][a] (Article V(1)(a)); 26.05[C][4][c][ii] (Article V(1)(c)).
49) See26.05[C][1][f].
50) European Convention, Art. V(3). See Hascher, European Convention on International
Commercial Arbitration of 1961 Commentary, XX Y.B. Comm. Arb. 1006, 1024 (1995);
1.04[A][2].
51) European Convention, Art. V(2) (emphasis added).
53) See1.01[A][2]; 1.02.
54) See also7.03[I][2].
56) IACAC Rules, Art. 21(1).
57) These issues are addressed below. See25.02[B]-[C]; 26.03[B][3] & [C][1]; 26.05[C][1][f] ;
27.01[B].
58) ICSID Convention, Art. 41(1). SeeL. Reed, J. Paulsson & N. Blackaby, Guide to ICSID
Arbitration 85 (2004); C. Schreuer et al., The ICSID Convention: A Commentary Art. 41, 1
(2d ed. 2009). See also Inceysa Vallisoletana SL v. Repub. of El Salvador, Award in ICSID
Case No. ARB/03/26 of 2 August 2006, 2006 WL 4491473, 148; Pan Am. Energy LLC & BP
Argentina Exploration Co. v. Argentine Repub., Decision on Preliminary Objections in ICSID
Case No. ARB/03/13 of 27 July 2006, 2006 WL 2479770; ICSID Additional Facility Rules, Rule
45(1) (The Tribunal shall have the power to rule on its competence.).
59) See7.01.
60) C. Schreuer et al., The ICSID Convention: A Commentary Art. 41, 11 (2d ed. 2009).
61) SeeReport of the Secretary-General on the Analytical Commentary on Draft Text of A Model
Law on International Commercial Arbitration, U.N. Doc. A/CN.9/264, Art. 16, 1, XVI Y.B.
UNCITRAL 104, 121 (1985) (Kompetenz-Kompetenzis an essential and widely accepted
feature of modern international arbitration but, at present, is not yet recognized in all
national laws.); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary 479 (1989).
62) See7.02.
63) See7.02[B][7]; 7.03.
64) See7.01.
65) See7.02[C]-[D].
66) See7.03 (especially 7.03[E][8]).
67) This is similar in concept to the presumptive separability of the arbitration agreement.
See7.03[E][8].
68) See7.02[B]; 7.03[E][6]; 7.03[H].
69) See7.02[B] & [D].
70) See7.03[A].
147
71) See Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie Review of the
Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463 (2006).
72) See7.03[A][1]. See alsoReport of the Secretary-General on the Analytical Commentary on
Draft Text of A Model Law on International Commercial Arbitration, U.N. Doc. A/CN.9/264,
Art. 16, 1, XVI Y.B. UNCITRAL 104 (1985) (Article 16 adopts the important principle that
it is initially and primarily for the arbitral tribunal itself to determine whether it has
jurisdiction, subject to ultimate court control.); H. Holtzmann & J. Neuhaus, A Guide to
the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and
Commentary 478, 479 (1989).
73) Section 4 of the FAA arguably deals with the arbitral tribunals competence-
competence, and it expressly deals with the power of a U.S. court to hear jurisdictional
disputes in domestic cases, when providing [t]he court shall hear the parties, and upon
being satisfied that the making of the agreement for arbitration or the failure to comply
therewith, the court shall make an order directing the parties to proceed to arbitration
in accordance with the terms of the agreement.If the making of the arbitration
agreement or the failure, neglect, or refusal to perform the same be in issue, the court
shall proceed summarily to the trial thereof. U.S. FAA, 9 U.S.C. 4; L. Edmonson (ed.),
Domke on Commercial Arbitration 15.02 (3d ed. & Update 2013); Park, The Specificity of
International Arbitration: The Case for FAA Reform, 36 Vand. J. Transnatl L. 1241, 1277
(2003).
74) See7.03[E].
75) See7.03[E][2] & [10].
77) First Options, 514 U.S. at 943 (emphasis in original).
78) See7.03[E][2].
79) See7.02[A][1]-[2].
80) See7.03[E][4].
81) French Code of Civil Procedure, Art. 1465. The same recognition of the arbitrators
competence-competence was also provided by the former French New Code of Civil
Procedure. See Diallo, Commentaire sous Cass., civ. 1e, 28 Novembre 2006, 134 J.D.I.
(Clunet) 1255 (2007); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
82) See, e.g.,Judgment of 12 May 2010, El Assidi v. Socit Nest & Socits SYS APS, 2010 Rev.
arb. 391, 391 (French Cour de cassation civ. 1e) ([c]onsidering the principle of
competence-competence, it belongs to the arbitrators, in priority, to determine their
own competence under the supervision of the annulment judge); Judgment of 17 October
1956, Kohorn v. Dimitrov, JCP G 1956 II, 9647 (Seine Tribunal civil) (Since the arbitrators
must verify first whether the arbitral agreement gives them jurisdiction on the case
brought before them, they have to assure themselves of the existence of the agreement,
its validity and its scope.).
83) Judgment of 29 November 1968, Impex v. P.A.Z., 1968 Rev. arb. 149, 155 (Colmar Cour
dappel).
84) Swiss Law on Private International Law, Art. 186(1). See Heini, in D. Girsberger et al. (eds.),
Zrcher Kommentar zum IPRG Art. 186, 4 (2d ed. 2004); Wenger, in S. Berti et al. (eds.),
International Arbitration in Switzerland Art. 186, 2 (2000). See also Swiss Code of Civil
Procedure, Art. 359(1) (If the validity of the arbitration agreement, its content, its scope
or the proper constitution of the arbitral tribunal is challenged before the arbitral
tribunal, the tribunal shall decide on its own jurisdiction by way of an interim decision
or in the final award on the merits.); Swiss Cantonal Concordat, Art. 8(1) (If the validity
of the arbitration agreement or its content or scope are disputed before the arbitral
tribunal, that tribunal shall in an interlocutory order or final award determine its own
jurisdiction.) (repealed).
85) Judgment of 16 October 2001, DFT 128 III 50, 59 (2011) (Swiss Federal Tribunal) (It is
reserved namely to the arbitral tribunal in compliance with the principle competence-
competence based in Article 186(1) to state its own competence.); Judgment of 20
December 1995, DFT 121 III 495 (1995) (Swiss Federal Tribunal); Judgment of 20 October
2009, 109 Bltter fr Zrcherische Rechtsprechung 77, 78 (2010) (Zurich S.Ct.) (The
arbitral tribunal adjudicates upon [validity and exact scope of the arbitration
agreement] based on the so called competence-competence conceded by Article
186(1).).
86) English Arbitration Act, 1996, 30; R. Merkin, Arbitration Law 9.6 to 9.9 (1991 & Update
August 2013).
87) See, e.g., Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 96, 103, 104 (U.K. S.Ct.);
Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords); AES Ust-
Kamenogorsk Hydropower Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011]
EWCA Civ 647, 78-83 (English Ct. App.); Nomihold Sec. Inc. v. Mobile Telesys. Fin. SA
[2012] EWHC 130, 59 (Comm) (English High Ct.).
148
88) Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 96, 103, 104 (U.K. S.Ct.). See also
Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP
[2013] UKSC 35, 35 (U.K. S.Ct.) (Section 30 reflects the principle of Kompetenz-
Kompetenz. In short, any tribunal convoked to determine a dispute may, as a
preliminary, consider and rule upon the question whether the dispute is within its
substantive jurisdiction, without such ruling being binding on any subsequent review of
its determination by the court.However, a tribunal cannot by its preliminary ruling that
it has substantive jurisdiction to determine a dispute confer upon itself a substantive
jurisdiction which it does not have.).
89) Belgian Judicial Code, Art. 1690(1).
90) Netherlands Code of Civil Procedure, Art. 1052(1).
91) Italian Code of Civil Procedure, Art. 817(1).
92) Swedish Arbitration Act, 2; 7.03[G].
93) See, e.g., German ZPO, 1040(1); Austrian ZPO, 592(1); Spanish Arbitration Act, 2011, Art.
22(1).
94) UNCITRAL Model Law, Art. 16(1); Singapore International Arbitration Act, 2012, 3(1);
Hwang, Boo & Lai, National Report for Singapore (2011), in J. Paulsson (ed.), International
Handbook on Commercial Arbitration 1, 10 (1984 & Update 2011).
95) Hong Kong Arbitration Ordinance, 2013, 34; Kenon Engg Ltd v. Nippon Kokan Koji
Kabushiki Kaisha, [2004] HKCUI 512 (H.K. Ct. App.); Fung Sang Trading Ltd v. Kai Sun Sea
Prod. & Food Co. Ltd, XVII Y.B. Comm. Arb. 289, 292 (H.K. Ct. First Inst. 1991) (1992); Kaplan
& Morgan, National Report for Hong Kong (2013), in J. Paulsson (ed.), International
Handbook on Commercial Arbitration 1, 28-29 (1984 & Update 2013).
96) Japanese Arbitration Law, Art. 23.
97) Korean Arbitration Act, Art. 17; Kim, Morrison & Shin, National Report for Republic of
Korea (2012), in J. Paulsson (ed.), International Handbook on Commercial Arbitration 1, 8,
22 (1984 & Update 2012).
98) Indian Arbitration and Conciliation Act, Art. 16(1).
99) Australian International Arbitration Act, 2011, 16; Pryles, National Report for Australia
(2012), in J. Paulsson (ed.), International Handbook on Commercial Arbitration 1, 13-14, 26
(1984 & Update 2012).
100) New Zealand Arbitration Act, Schedule 1, Art. 16(1).
101) British Caribbean Bank Ltd v. Attorney Gen. of Belize, [2013] CCJ 4, 23 (AJ) (Caribbean Ct.
Justice) (under the doctrine of kompetenz-kompetenz, the arbitrators are competent to
determine their jurisdiction although the effective exercise of that jurisdiction remains
subject to the inherent competence of the court to decide).
102) See, e.g., Algerian Code of Civil and Administrative Procedure, Art. 458 bis 7; Egyptian
Arbitration Law, Art. 22; Nigerian Arbitration and Conciliation Decree, 22; Judgment of 9
June 2009, Sobhy Hussein Ahmed v. Suez Gulf, 1(3) Intl J. Arab Arb. 71 (2009) (Cairo Ct.
App.); A. Falach, The International Comparative Legal Guide to International Arbitration
2007 479 (Algeria), 487 (Egypt), 504 (Nigeria) (2007).
103) See Shalakany, Arbitration and the Third World: A Plea for Reassessing Bias Under the
Specter of Neoliberalism, 41 Harv. Intl L.J. 419, 430, 440 (2000) (Kompetenz-Kompetenz
and separability cannot be satisfactorily rationalized under the strict technical
arguments of the leading treatises. Their role can be better appreciated in political
terms as indispensable in empowering arbitration with the capacity to function
effectively as a medium disempowering national laws to be displaced by alternative
legal regimes.).
104) See Mills, National Report for Indonesia (2011), in J. Paulsson (ed.), International
Handbook on Commercial Arbitration 1, 35 (1984 & Update 2006) (The principle of
competence-competenceis not specifically covered in the Arbitration Law and lower
courts reportedly disregard arbitration agreements in practice); Schaefer & Mulyana,
Indonesias New Arbitration Law: Salient Features and Aberrations in the Application, 2002
Intl Arb. L. Rev. 41, 42 (The fundamental arbitration law principles of the Model Law are
also found in the new Indonesian arbitration law, with the notable exception regarding
an arbitrators Kompetenz-Kompetenz.).
105) Chinese Arbitration Law, Art. 20; 7.03[H], p. 1215.
106) See Lane & Harding, National Report for South Africa (2010), in J. Paulsson (ed.),
International Handbook on Commercial Arbitration 1, 9, 19-20 (1984 & Update 2010); L.
Mistelis, L. Shore & H. Smit (eds.), 1A National Arbitration Laws ISR C4 (2d ed. 2010). See
also Gotanda, An Efficient Method for Determining Jurisdiction in International Arbitrations,
40 Colum. J. Transnatl L. 11, 22 (2001).
107) On the historic lack of acceptance of the competence-competence principle in Latin
American legislation, see Garro, Enforcement of Arbitration Agreements and Jurisdiction of
Arbitral Tribunals in Latin America, 1(4) J. Intl Arb. 293, 303-09 (1984); Grigera Nan,
Arbitration in Latin America: Overcoming Traditional Hostility, 5 Arb. Intl 137, 150-51 (1989);
Layton, Changing Attitudes Toward Dispute Resolution in Latin America, 10(2) J. Intl Arb.
123, 130 (1993).
149
(2005); N. Blackaby, D. Lindsey & A. Spinillo (eds.), International Arbitration in Latin
America 41-42 (Argentina), 70 (Brazil), 169 (Mexico) (2003); J. Kleinheisterkamp,
International Commercial Arbitration in Latin America 230-32 (2005); Wald, Lvolution de
larbitrage au Brsil, in Global Reflections on International Law, Commerce and Dispute
Resolution, Liber Amicorum Honour of Robert Briner 903, 908 (2005) (Subject to some rare
exceptions certain being justified [Brazilian] case law has acknowledged that the
arbitrator has the power to rule on his own competence.). See also Judgment of 28
October 2009, Harz und Derivate v. Akzo Nobel Coating SA (Argentine Cmara Nacional de
Apelaciones en lo Commercial) (applying competence-competence doctrine and
holding that arbitral tribunal had jurisdiction to decide validity and scope of arbitration
agreement); Judgment of 26 September 1988, Enrique C. Wellbers SAIC AG v.
Extraktionstechnik Gesellschaft fr Anlagenbau, La Ley 1989-E-302 (Buenos Aires Cmara
Nacional de Apelaciones en lo Comercial) (all questions between the parties, including
that of whether or not the main contract was overtaken by a supervening nullity, were
within the scope of the broad and all-encompassing wording of the arbitration clause
and therefore to be determined by the arbitrators themselves).
109) See Nidera Argentina SA v. Alvarez de Canale, Elena G. La Ley, No. 24, advance sheet of 2
February 1990 (Argentine Corte Suprema de Justicia), cited in Grigera Nan, Competing
Orders Between Courts of Law and Arbitral Tribunals: Latin American Experiences, in Global
Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in
Honour of Robert Briner 335, 341 (2005) (Kompetenz-Kompetenz principle is effectively
neutralized, since arbitrators have to wait for the so called jurisdictional conflict to be
finally determined by a court of law before they can proceed); Grigera Nan, Competing
Orders Between Courts of Law and Arbitral Tribunals: Latin American Experiences, in Global
Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in
Honour of Robert Briner 335, 337 (2005) (despite the letter of the recent Venezuelan
Arbitration Act (Article 25), clearly adopting the Kompetenz-Kompetenz principle, the
right of the arbitral tribunal to decide on its own jurisdiction is trumped by the self-
assumed powers of the Venezuelan judiciary to decide first on the validity, meaning,
scope and effects of the arbitration agreement).
110) Grigera Nan, Competing Orders Between Courts of Law and Arbitral Tribunals: Latin
American Experiences, in Global Reflections on International Law, Commerce and Dispute
Resolution, Liber Amicorum in Honour of Robert Briner 335 (2005).
111) See Blackaby & Noury, International Arbitration in Latin America, 2005 Latin Law. Rev. 5.
112) Judgment of 3 November 2010, Alfredo De Jesus O., Astivenca Astilleros de Venezuela CA v.
Oceanlink Offshore III AS, Case No. 1067 (Venezuelan Tribunal Supremo de Justicia)
([T]he principle of competence-competence allows arbitral tribunals to rule on their
own jurisdiction.[I]t is affirmed that it has two sides, a positive side, that translates in
the power of the arbitral tribunal to rule on its own jurisdictionand a negative side,
according to which national courts should refrain from reviewing in parallel and with the
same degree of detail, the validity, efficacy or enforceability [of the arbitration
agreement] as the arbitral tribunal.).
Oceanlink Offshore III AS, Case No. 1067 (Venezuelan Tribunal Supremo de Justicia).
114) See, e.g., MBNA Am. Bank, NA v. Christianson, 659 S.E.2d 209, 215 (S.C. Ct. App. 2008), affd,
2010 S.C. Unpub. LEXIS 3 (S.C.); MBNA Am. Bank, NA v. Credit, 132 P.3d 898, 900 (Kan. 2006);
MBNA Am. Bank, NA v. Kay, 888 N.E.2d 288, 291-92 (Ind. Ct. App. 2008).
115) 2010 UNCITRAL Rules, Art. 23(1). The original 1976 UNCITRAL Rules were similar. See 1976
UNCITRAL Rules, Art. 21(1) (The arbitral tribunal shall have the power to rule on
objections that it has no jurisdiction, including any objections with respect to the
existence or validity of the arbitration clause or of the separate arbitration
agreement.). See also D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A
Commentary 450-55 (2d ed. 2013).
116) 2012 ICC Rules, Art. 6(5). The ICC Rules historically recognized the arbitrators
competence-competence. See 1998 ICC Rules, Art. 6(2) (any decision as to the
jurisdiction of the Arbitral Tribunal shall be taken by the Arbitral Tribunal itself); J. Fry,
S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 86 (2012).
150
117) See, e.g., 2013 AAA Rules, Rule 7(a) (The arbitrator shall have the power to rule on his or
her own jurisdiction, including any objections with respect to the existence, scope or
validity of the arbitration agreement or to the arbitrability of any claim or
counterclaim.); ICDR Rules, Art. 15(1) (The tribunal shall have the power to rule on its
own jurisdiction, including any objections with respect to the existence, scope or validity
of the arbitration agreement.); LCIA Rules, Art. 23(1) (The Arbitral Tribunal shall have
the power to rule on its own jurisdiction, including any objection to the initial or
continuing existence, validity or effectiveness of the Arbitration Agreement.); 2012 Swiss
Rules, Art. 21(1) (The arbitral tribunal shall have the power to rule on any objections to
its jurisdiction, including any objection with respect to the existence or validity of the
arbitration clause or of the separate arbitration agreement.); BAC Rules, Art. 6(4);
BCICAC Rules, Art. 15(1); 2011 CRCICA Rules, Art. 23(1) (The arbitral tribunal shall have the
power to rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement.); 2013 DIA Rules, Art. 16(1); DIFC-LCIA
Rules, Art. 23(1); 2013 HKIAC Rules, Art. 19(1); ICAC Rules, Art. 5(1) (The issue of the ICAC
jurisdiction in a particular case shall be decided by the arbitral tribunal examining the
case.); 2011 JAMS Rules, Art. 17; 2011 KCAB Rules, Art. 19(1); 2013 KLRCA Rules, Art. 23(1);
2013 SHIAC Rules, 6(1); 2013 SIAC Rules, Art. 25(2); 2013 VIAC Rules, Art. 24(2) (The arbitral
tribunal shall decide on its own jurisdiction.); WIPO Rules, Arts. 36(a), (b).
118) 2012 CIETAC Rules, Art. 6(1) (CIETAC shall have the power to determine the existence and
validity of an arbitration agreement and its jurisdiction over an arbitration case. CIETAC
may, where necessary, delegate such power to the arbitral tribunal.). See alsoChinese
Arbitration Law, Art. 20; 7.03[H].
119) Chinese Arbitration Law, Art. 20. See7.03[H], p. 1215.
120) Gu & Zhang, The China Style Commission-Oriented Competence on Arbitral Jurisdiction:
Analysis of Chinese Adaptation Into Globalisation, 2006 Intl Arb. L. Rev. 185, 196
(discussing CIETAC Rules, Art. 6(1), providing for CIETAC to consider jurisdictional
objections, subject to review by Peoples Court).
121) See7.02[C]; 7.03[E][7][b]; 7.03[I][2]. The analysis is different with regard to questions
regarding the scope of an admittedly valid arbitration agreement. See7.03[E][7][a].
122) See7.03[I][2], n. 726 for cases where arbitral tribunals have made negative jurisdictional
decisions.
123) Texaco Overseas Petroleum Co. v. Libyan Arab Repub., Preliminary Ad Hoc Award on
Jurisdiction of 27 November 1975, IV Y.B. Comm. Arb. 177, 179 (1979). The Texaco Overseas
generalization is overbroad, in that it presumes that the parties arbitration agreement
does not withhold competence-competence from the arbitral tribunal.
124) Award in Case of the Betsey of 13 April 1797 (Lord Chancellor Loughborough), cited in J.
Moore, History and Digest of the International Arbitrations to Which the United States Has
Been A Party 327 (1898).
126) Final Award in ICC Case No. 6268, XVI Y.B. Comm. Arb. 119, 122 (1991).
in International Commercial Arbitration, 289 Recueil des Cours 9, 44 (2001) (There is
substantial agreement that in international commercial arbitration the arbitrator
should, in ordinary circumstances, have the power to determine his or her jurisdiction
without prior recourse to the courts.); Interim Award in ICC Case No. 7929, XXV Y.B. Comm.
Arb. 312 (2000) (The principle of competence/competence is an accepted legal
principle; This is one of the most basic principles in international commercial
arbitration, not to say international arbitration.); Award in ICC Case No. 7878, discussed
in Grigera Nan, Choice-of-Law Problems in International Commercial Arbitration, 289
Recueil des Cours 9, 53 (2001) (competence-competence is general rule of the law of
international arbitration); Final Award in ICC Case Nos. 6515 and 6516, XXIVa Y.B. Comm.
Arb. 80, 84 (1999) (the kompetenz-kompetenz belongs to the arbitral tribunal); Partial
Award on Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb. 279
(2000) (It is therefore not disputed, nor can it be disputed, that the Arbitral Tribunal has
jurisdiction over its own jurisdiction (under the so-called principle of Kompetenz-
Kompetenz, recognized by Swiss law), and that it is called upon to decide on the various
objections raised by the defendant as to jurisdiction and admissibility.); Final Award in
ICC Case No. 6437, 8(1) ICC Ct. Bull. 63 (1997); Final Award in ICC Case No. 6162, XVII Y.B.
Comm. Arb. 153 (1990); Final Award in ICC Case No. 5485, XIV Y.B. Comm. Arb. 156, 159 (1989)
(in international commercial arbitration the arbitrators have the authority to
determine their own jurisdiction); Final Award in ICC Case No. 5460, XIII Y.B. Comm. Arb.
104 (1988); Final Award in ICC Case No. 5294, XIV Y.B. Comm. Arb. 137 (1990); Partial Award
in ICC Case No. 4862, in S. Jarvin, Y. Derains & J.-J. Arnaldez (eds.), Collection of ICC Arbitral
Awards 1986-1990 508-09 (1994); Interim Award in ICC Case No. 4695, XI Y.B. Comm. Arb. 149
(1986); Award in ICC Case No. 4381, 113 J.D.I. (Clunet) 1102, 1103 (1986); Award in ICC Case
No. 3987, 111 J.D.I. (Clunet) 943 (1984); Partial Award in ICC Case No. 3896, 110 J.D.I. (Clunet)
914 (1983); Award in ICC Case No. 2558, 104 J.D.I. (Clunet) 951 (1977); Award in ICC Case No.
2476, 104 J.D.I. (Clunet) 936 (1977); Award in ICC Case No. 1526, 101 J.D.I. (Clunet) 915, 915
(1974) (It is a rule admitted in international arbitration matters that in the absence of a
contrary decision of State procedural law, the arbitrator is judge of his own
jurisdiction.).
151
128) Econet Wireless Ltd v. First Bank of Nigeria, Ad Hoc Award of 2 June 2005, XXXI Y.B. Comm.
Arb. 49, 52 (2006) (primary responsibility to determine the extent of the Tribunals
jurisdiction lies with the Tribunal itself); Texaco Overseas Petroleum Co. v. Libyan Arab
Repub., Preliminary Ad Hoc Award on Jurisdiction of 27 November 1975, IV Y.B. Comm. Arb.
177, 179 (1979); Award in Case of the Betsey of 13 April 1797 (Lord Chancellor Loughborough),
cited in J. Moore, History and Digest of the International Arbitrations to Which the United
States Has Been A Party 327 (1898).
129) See7.01.
130) National court decisions are similarly uniform. See7.01. For one exception, see Judgment
of 11 January 2006, Contradiction 51/2005, S.C.J.N. (Mexican Corte Suprema de Justicia)
(Jurisdiction to take cognizance of the nullity suit of an arbitration agreement covered
by the first paragraph of Article 1424 of the Commerce Code is within the jurisdiction of
the court and not the arbitration tribunal.), discussed in De Cosso, The Comptence-
Comptence Principle, Revisited, 24 J. Intl Arb. 231 (2007).
131) See1.02[B][1].
132) See7.02[B][1]; 7.02[E], n. 16; 7.03[A][1]; 7.03[B] & [G]. See also Gaillard, Leffet ngatif
de la comptence-comptence, in Etudes de procdure et darbitrage en lhonneur de Jean-
Franois Poudret 387 (1999); Gaillard & Banifatemi, Negative Effect of Competence-
Competence: The Rule of Priority in Favor of the Arbitrators, in E. Gaillard & D. di Pietro
(eds.), Enforcement of Arbitration Agreements and International Arbitral Awards: The New
York Convention in Practice 257 (2008); Jarrosson, Les principales tendances du nouveau
droit franais de larbitrage international, 4 IproLex 812 (2011); Kaufmann-Kohler, How to
Handle Parallel Proceedings: A Practical Approach to Issues Such as Competence-
Competence and Anti-Suit Injunctions, 2 Disp. Res. Intl 110 (2008); Perret, Parallel Actions
Pending Before An Arbitral Tribunal and A State Court: The Solution Under Swiss Law, in
Arbitral Tribunals or State Courts: Who Must Defer to Whom? 65, 66 (ASA Spec. Series No.
15 2001); Susler, The Jurisdiction of the Arbitral Tribunal: A Transnational Analysis of the
Negative Effect of Competence, 6 Macquarie J. Bus. L. 119 (2009); Welser, Pitfalls of
Competence, 2007 Austrian Arb. Y.B. 3.
Oceanlink Offshore III AS, Case No. 1067 (Venezuelan Tribunal Supremo de Justicia). See
also ThaiLao Lignite (Thailand) Co. v. Govt of the Lao Peoples Democratic Repub., 2011
WL 3516154, at *19 (S.D.N.Y.) (The parties dispute concerning review of jurisdiction and
arbitrability turns in part on application of the doctrine of competence-competence.
This doctrine, recognized in many international jurisdictions, allows arbitrators to
decide arbitrability and the scope of their own jurisdiction in the first instance, rather
than requiring the parties to adjourn the arbitration and resolve the arbitrability issue
in court. In other words, the arbitral panel is considered competent to make the initial
determination of its own competence to decide the merits of the dispute.) (citing China
Minmetals Materials Imp. & Exp. Co. Ltd v. Chi Mei Corp., 334 F.3d 274, 287-88 (3d Cir.
2003)).
134) See8.02; 8.03.
135) See8.02; 8.03.
136) See7.02.
137) See7.02[A]-[B].
138) As discussed elsewhere, it is important not to conflate the competence-competence
doctrine (which is based on national and international legislative provisions) with the
separability presumption (which is based on the parties intentions). See3.03[F];
7.02[F].
139) See8.03[A][1]-[2].
140) See3.03[F].
141) UNCITRAL Model Law, Art. 16(1); 2010 UNCITRAL Rules, Art. 23; 2012 ICC Rules, Art. 6; LCIA
Rules, Art. 23; German ZPO, 1040(1); 2011 CRCICA Rules, Art. 23(1). See3.02[B] & [D].
142) See3.03[F]; L. Edmonson (ed.), Domke on Commercial Arbitration 12.03 (3d ed. & Update
2013); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 416 (1999) (That principle is often presented as the corollary of
the principle of the autonomy of the arbitration agreementwhile the two principles are
closely linked and have a similar objective, they only partially overlap.); Goldman, The
Complementary Roles of Judges and Arbitrators in Ensuring That International Commercial
Arbitration Is Effective, in ICC, International Arbitration: 60 Years of ICC Arbitration A Look
at the Future 255, 263 (1984) ([I]t is still the case that the Kompetenz-Kompetenz can
appear as a second consequence of the autonomy of the arbitration agreement. In
addition, it confers on the arbitrator the power to define the objective and the limits of
his jurisdiction in the situation where these matters are the subject of a controversy
between the parties, the validity of the main contract, or that of the arbitration
agreement, not being challenged.); Graffi, Securing Harmonized Effects of Arbitration
Agreements Under the New York Convention, 28 Hous. J. Intl L. 663, 700 (2006); Graffi, The
Law Applicable to the Validity of the Arbitration Agreement, in F. Ferrari & S. Krll (eds.),
Conflict of Laws in International Arbitration 19, 25 (2011) (concept of autonomy is strictly
connected with the principle of competence-competence becauseboth theories
purport to ring-fence arbitration against judicial control mechanisms).
143) UNCITRAL Model Law, Art. 16(1); 7.02[B][1]; 7.03[A][1].
152
144) See H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary 480 (1989); 3.02[B][3][e], pp.
376-77.
145) 2010 UNCITRAL Rules, Art. 23. See also 1976 UNCITRAL Rules, Art. 21 (For the purposes of
Article 21 [dealing with the arbitral tribunals competence to consider its own
jurisdiction], an arbitration clause which forms part of a contract and which provides for
arbitration under these Rules shall be treated as an agreement independent of the
other terms of the contract.); D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A
Commentary 450-55 (2d ed. 2013).
In contrast, Article 6 of the 2012 ICC Rules provides more circumspectly that [u]nless
otherwise agreed, the arbitral tribunal shall not cease to have jurisdiction by reason of
any allegation that the contract is non-existent or null and void, provided that the
arbitral tribunal upholds the validity of the arbitration agreement. The arbitral tribunal
shall continue to have jurisdiction to determine the parties respective rights and to
decide their claims and pleas even though the contract itself may be non-existent or
null and void. 2012 ICC Rules, Art. 6(9).
146) Committee on International Commercial Arbitration, ILA, Final Report on Lis Pendens and
Arbitration 4.11 (2006).
The report also characterizes the competence-competence doctrine as a legal fiction.
Ibid. That is also wrong; the competence-competence doctrine is in no way a legal
fiction, but rather a basic element of any adjudicatory bodys competence, which
inherently includes the competence to consider and decide jurisdictional objections.
That is not a fiction but a fundamentally important attribute of an adjudicatory tribunal,
conferred and given legally-binding effect by both international and national law.
See7.03.
147) See3.03[E]; 3.03[F].
148) See7.02[F].
149) See7.01; 7.03[A][3]; 7.03[H].
150) See7.03[A][2]; 7.03[A][4][a]; 7.03[B]; 7.03[E][5].
151) See5.01; 5.04[D]et seq.
152) Even in such cases, however, the separability presumption only provides that defects in
the underlying contract do not necessarily affect the related arbitration agreement.
See3.03[D]. In those instances where a defect in the underlying contract does affect the
arbitration clauses validity or existence, the separability doctrine does nothing to
explain the tribunals jurisdiction to consider and resolve disputes concerning such
defects.
153) Alternatively, if one reasons that a challenge to the underlying contract may impeach
the arbitration clause (depending on further analysis), then the doctrine does little or
nothing to explain the tribunals competence, which must instead be explained by
reference to the competence-competence doctrine. See3.03[D].
154) See3.03[D]. That is a straightforward application of Article II(3) of the New York
Convention, Article 8 of the UNCITRAL Model Law and comparable legislation in other
jurisdictions.
155) See7.03[A][2]; 7.03[E][5][a]; 7.03[I][1].
156) See, e.g., J. Carter & J. Fellas, International Commercial Arbitration in New York 215 (2010)
(It is important to stress that the separability presumption is distinct from the doctrine
of Kompetenz-Kompetenz.); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
International Commercial Arbitration 416-17, 658 (1999) (basis for the competence
competence principle lies not in the arbitration agreement, but in the arbitration laws
of the country where the arbitration is held, and more generally, in the laws of all
countries liable to recognize an award made by arbitrators concerning their own
jurisdiction); Park, Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts
and Arbitrators, 9 Arb. Disp. Res. L.J. 19, 27-28 (2000) (Comptence-comptence analysis
should not be confused with the principle of separability, by which the validity of an
arbitration clause is determined independently of the validity of the basic commercial
contract in which it is encapsulated.Separability and comptence-comptence
intersect only in the sense that arbitrators who rule on their own jurisdiction (like courts
deciding whether to allow an arbitration to go forward) will look to the arbitration clause
alone, not to the entirety of the contract.); Svernlov & Carroll, What Isnt, Aint: The
Current Status of the Doctrine of Separability, 8(4) J. Intl Arb. 37 (1991) (competence-
competence problem is distinct from the issue of separability); U.K. Departmental
Advisory Committee on Arbitration Law, Report on the Arbitration Bill 43 (1996) (it
seems to us that the doctrine of separability is quite distinct from the question of the
degree to which the tribunal is entitled to rule on its jurisdiction, so that, unlike the
Model Law, we have dealt with the latter elsewhere in the Bill).
153
157) See, e.g., China Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 287-88
(3d Cir. 2003) (describing competence-competence doctrine as derived from parties
contract); Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 84, 96, 103, 104 (U.K.
S.Ct.) (separability presumption is a principle which is connected with, but not
dependent upon, the principle that the arbitration agreement is separate from the
contract of which it normally forms a part); Vee Networks Ltd v. Econet Wireless Intl Ltd
[2005] 1 Lloyds Rep. 192 (QB) (English High Ct.) (competence-competence has a different
statutory basis from severability presumption under English Arbitration Act, 1996); Fung
Sang Trading Ltd v. Kai Sun Sea Prods. & Food Co. Ltd, XVII Y.B. Comm. Arb. 289, 299 (H.K.
Ct. First Inst. 1991) (1992).
158) See7.02; Award in Case of the Betsey of 13 April 1797 (Lord Chancellor Loughborough),
cited in J. Moore, History and Digest of the International Arbitrations to Which the United
States Has Been A Party 327 (1898).
159) See7.03[A][2] & [4]; 7.03[B]; 7.03[E][5].
160) See7.03[A][5]; 7.03[C]; 7.03[I][5].
161) As discussed above, recognition of the arbitrators competence-competence is required
by leading international arbitration conventions, most explicitly the European
Convention and the ICSID Convention. See European Convention, Art. V(3); ICSID
Convention, Art. 41(1); 7.02[A][2] & [4]. Additionally, as discussed above, insofar as the
parties have entered into a valid arbitration agreement submitting particular
jurisdictional issues to arbitration, then Article II of the New York Convention also bears
on issues of competence-competence, by requiring recognition of the parties
agreement to arbitrate such issues. See7.02[A][1].
162) See7.03[I][1].
163) See7.03[I][1].
164) See7.03[I][2].
165) See7.03[I][1].
166) See2.01[A][1]; 5.01[B][1]; 7.02; 7.03[I][1]; 8.03[A].
167) See2.01[A][1]; 5.01[B][1]; 7.02[A][1]; 7.03[I][1]; 8.03.
168) See7.03[I][1].
169) See7.03[I][2].
170) See7.01.
171) See, e.g., PartialAward in ICC Case No. 10623, 21 ASA Bull. 59, 82 (2003) (effectiveness and
scope of two potentially conflicting arbitration agreements); Interim Award in ICC Case
No. 7929, XXV Y.B. Comm. Arb. 312 (2000) (existence and scope of arbitration agreement);
Final Award in ICC Case No. 6437, 8(1) ICC Ct. Bull. 63 (1997); Interim Award in ICC Case No.
4472, 111 J.D.I. (Clunet) 946 (1984) (existence or validity of arbitration agreement); Interim
Award in ICC Case No. 4367, XI Y.B. Comm. Arb. 134 (1986) (scope of arbitration
agreement); Award in ICC Case No. 3987, 111 J.D.I. (Clunet) 943 (1984) (scope of arbitration
agreement); Victor Pey Casado y Fundacin Presidente Allende v. Repblica de Chile, Award
in ICSID Case No. ARB/98/2 of 8 May 2002, 2002 WL 32828407; Elf Aquitaine Iran v. Natl
Iranian Oil Co., Preliminary Ad Hoc Award of 14 January 1982, XI Y.B. Comm. Arb. 97, 104
(1986) (validity of arbitration agreement).
172) UNCITRAL Model Law, Art. 16(1); 7.03[A][1], p. 1078. The Model Law also adopts the
separability presumption in the same provision of Article 16. UNCITRAL Model Law, Art.
16(1); 3.02[B][3][e], p. 376. Accordingly, where a claim is made that the underlying
contract was invalid or illegal, this does not necessarily implicate the arbitration
agreement and in these instances may be for the arbitral tribunal (not a national court)
to decide. See3.03[D].
173) UNCITRAL Model Law, Arts. 8, 16.
Commercial Arbitration: Legislative History and Commentary 303 n.5, 486-87 (1989). See
also I. Dore, The UNCITRAL Framework for Arbitration in Contemporary Perspective 128 et
seq. (1993).
175) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 26 (1989).
176) For an indication of the uncertainties surrounding the Model Law in this regard, see
Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie Review of the Arbitral
Tribunals Jurisdiction?, 22 Arb. Intl 463, 463-65 (2006) (summarizing divergent national
court decisions and commentary); Kierstead, Reference to Arbitration Under Article 8 of
the UNCITRAL Model Law: The Canadian Approach, 31 Can. Bus. L.J. 98 (1999); Krll,
Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55 (2004).
177) See7.03[A][1]; Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie Review
of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463 (2006); H. Holtzmann & J. Neuhaus,
A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative
History and Commentary 303 n.5, 486-87 (1989).
178) UNCITRAL Model Law, Art. 16(1). The text of Article 16 was not altered in the 2006
Revisions to the Model Law.
Commercial Arbitration: Legislative History and Commentary 486 (1989); P. Sanders, The
Work of UNCITRAL on Arbitration and Conciliation 97 (2d ed. 2004). See also7.03[A][5][b].
182) See7.02[A][1], p. 1053.
154
183) The Model Laws provisions are intended to prevent applications for interlocutory
judicial review from delaying the arbitral process. H. Holtzmann & J. Neuhaus, A Guide to
the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and
Commentary 484-86 (1989); UNCITRAL, Explanatory Note by the UNCITRAL Secretariat on
the 1985 Model Law on International Commercial Arbitration 26 (2006) ([A]rticle 16(3)
allows for immediate court control in order to avoid waste of money and time. However,
three procedural safeguards are added to reduce the risk and effect of dilatory tactics:
short time-period for resort to court (30 days), court decision not appealable, and
discretion of the arbitral tribunal to continue the proceedings and make an award while
the matter is pending before the court.).
184) See, e.g., Judgment of 13 January 2005, 2005 NJW 1125 (German Bundesgerichtshof);
Judgment of 30 October 2008, 2009 MDR 465 (Hanseatisches Oberlandesgericht Bremen);
Kanto Yakin Kogyo Kabushiki-Kaisha v. Can-Eng Mfg Ltd, [1992] C.C.L. 8978 (Ontario Super.
Ct.); Fuang Sang Trading Ltd v. Kai Sun Sea Prod. & Food Co. Ltd, [1992] 1 HKLR 40, 26
(H.K. High Ct.) (It is also to be noted that the UNCITRAL Arbitration Rules which have
been adopted by the Hong Kong International Arbitration Centre and are in wide use
throughout the world do give the arbitral tribunal power to rule on objections that it
has no jurisdiction.).
185) See, e.g., Bachand, Kompetenz-Kompetenz, Canadian Style, 25 Arb. Intl 431 (2009);
Barcel, Who Decides the Arbitrators Jurisdiction? Separability and Competence-
Competence in Transnational Perspective, 36 Vand. J. Transnatl L. 1115 (2003); Branson,
The Enforcement of International Commercial Arbitration Agreements in Canada, 16 Arb.
Intl 19 (2000). Compare Carducci, The Arbitration Reform in France: Domestic and
International Arbitration Law, 28 Arb. Intl 125 (2012).
186) See Barnmore Demolition & Civil Engg Ltd v. Alandale Logistics Ltd, [2010] No. 5910P (Irish
High Ct.) (citing discussion of divergent interpretations of Articles 8 and 16 of Model Law
in G. Born, International Commercial Arbitration 881 (2009)).
189) UNCITRAL Model Law, Arts. 16(3), 34(2)(a)(i), (iii).
190) UNCITRAL Model Law, Art. 8(1) (emphasis added). See A. Broches, Commentary on the
UNCITRAL Model Law on International Commercial Arbitration Art. 16, 13-18 (1990); J.
Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration 14-40 to
14-48 (2003). See also7.03[A][4].
Work of UNCITRAL on Arbitration and Conciliation 74 (2d ed. 2004).
192) Article 8(2) allows arbitration proceedings to be continued even where an application to
refer a case to arbitration is pending. This delegates to the arbitral tribunal, rather than
the court, the decision whether the arbitration should proceed while an Article 8
application is pending.
193) As discussed below, there may be more instances in which an arbitral tribunal does not
accept the jurisdictional determination of a court in the arbitral seat, either terminating
or continuing arbitral proceedings despite a contrary judicial ruling. See8.04[A];
27.03[B].
194) The treatment of jurisdictional objections based on the scope of the arbitration
agreement under the Model Law is discussed below. See7.03[A][4].
195) See7.03[A][3]. For example, a party may deny that it ever signed (or otherwise
consented to) any agreement at all with its putative counter-party.
196) See, e.g., PT Tugu Pratama Indonesia v. Magma Nusantara Ltd, [2003] SGHC 204
(Singapore High Ct.).
197) Quintette Coal Ltd v. Nippon Steel Corp., [1988] CanLII 2923 (B.C. S.Ct.).
198) Ace Bermuda Ins. Ltd v. Allianz Ins. Co. of Canada, [2005] ABQB 975 (Alberta Q.B.).
199) Insigma Tech. Co. Ltd v. Alstom Tech. Ltd, [2009] SGCA 24 (Singapore Ct. App.).
200) El Nino Ventures Inc. v. GCP Group Ltd, [2010] BCSC 1859 (B.C. S.Ct.); Dens Tech-Dens, kg v.
Netdent-Techs. Inc., [2008] QCCA 1245 (Qubec Ct. App.).
201) Jean Estate v. Wires Jolley LLP, [2009] ONCA 339 (Ontario Ct. App.).
202) See7.02[B][1].
203) UNCITRAL Model Law, Art. 8(1). The text of Article 8(2), providing that a tribunal may
continue the arbitration while judicial proceedings under Article 8(1) are pending, less
clearly suggests an expectation that these judicial proceedings would be on the merits
thereby requiring a specific authorization for arbitral proceedings to continue rather
than merely prima facie.
204) Commentary suggesting that the text of Article 8(1) provides no clear answer to the
standard of interlocutory judicial consideration of jurisdictional issues is inconsistent
with the fairly decisive text of the provision. Bachand, Does Article 8 of the Model Law
Call for Full or Prima Facie Review of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463,
463 (2006).
205) The exercise of this discretion by arbitral tribunals is discussed below. See7.05[E].
206) See7.03[I][3].
Commercial Arbitration: Legislative History and Commentary 303 (1989); Report of the
Working Group on International Contract Practices on the Work of Its Fifth Session, U.N.
Doc. A/CN.9/233, XIV UNCITRAL Y.B. 60, 67 (1983) (emphasis added).
155
208) French New Code of Civil Procedure (1981), Art. 1458 (repealed). SeeE. Gaillard & J.
(1999); 7.03[B]. The Model Laws drafting history recorded the intended objective of the
(rejected) proposal: In support of that idea it was pointed out that it would correspond
with the principle to let the arbitral tribunal make the first ruling on its competence,
subject to later control by a court. Report of the Working Group on International Contract
Practices on the Work of Its Fifth Session, U.N. Doc. A/CN.9/233, XIV UNCITRAL Y.B. 60, 67
(1983).
209) SeeReport of the UNCITRAL on the Work of Its Eighteenth Session, U.N. Doc. A/40/17, XVI
Y.B. UNCITRAL 3, 14-15 (1985) (Article 8: Arbitration agreement and substantive claim
before court: It was suggested that paragraph (2) could be read to apply only if the
arbitral proceedings had commenced prior to the commencement of the judicial
proceedings. The Commission agreed that the text of paragraph (2) should be amended
so as to make clear that a party was not precluded from initiating arbitral proceedings
by the fact that the matter had been brought before a court. There was a divergence of
opinion in the Commission as to whether the text should be amended so as to preclude
the possibility that proceedings might go forward concurrently in both the arbitral
tribunal and the court. Under one view, if the arbitral proceedings had already
commenced, the court should normally postpone its ruling on the arbitral tribunals
jurisdiction until the award was made. That would prevent the protraction of arbitral
proceedings and would be in line with article VI(3) of the European Convention. Under
another view, once the issue as to whether the arbitration agreement was null and void
was raised before the court, priority should be accorded to the court proceedings by
recognizing a power in the courts to stay the arbitral proceedings or, at least, by
precluding the arbitral tribunal from rendering an award. The prevailing view was to
leave the current text of paragraph (2) unchanged on that point. Permitting the arbitral
tribunal to continue the proceedings, including the making of an award, while the issue
of its jurisdiction was before the court contributed to a prompt resolution of the
arbitration. It was pointed out that expenses would be saved by awaiting the decision of
the court in those cases where the court later ruled against the jurisdiction of the
arbitral tribunal. However, it was for that reason not recommendable to provide for a
postponement of the courts ruling on the jurisdiction of the arbitral tribunal.
Furthermore, where the arbitral tribunal had serious doubts as to its jurisdiction, it
would probably either proceed to a final determination of that issue in a ruling on a
plea referred to in article 16(2) or, in exercising the discretion accorded to it by article
8(2), await the decision of the court before proceeding with the arbitration.).
210) Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie Review of the Arbitral
Tribunals Jurisdiction?, 22 Arb. Intl 463, 472-73 (2006) (citing Article 17 of then-prevailing
draft and H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary 485 (1989)).
211) Report of the Working Group on International Contract Practices on the Work of Its
Seventh Session, U.N. Doc. A/CN.9/246, XV UNCITRAL Y.B. 189, 195 (1984).
212) See, e.g.,Rio Algom Ltd v. Sammi Steel Co. Ltd, XVIII Y.B. Comm. Arb. 166 (Ontario Super.
Ct. 1991) (1993); Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie
Review of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463, 473 (2006) (there seems to
be no way around the conclusion that Article 8(1) must be interpreted as calling at
least as a general rule for prima facie review of arbitral jurisdiction); E. Gaillard & J.
(1999).
213) See7.03[A][2][b][i], p. 1083.
214) See7.03[A][2][b][i], p. 1082.
215) See7.03[A][2][b][i], p. 1084.
216) Report of the Working Group on International Contract Practices on the Work of Its
Seventh Session, U.N. Doc. A/CN.9/246, XV UNCITRAL Y.B. 189, 195 (1984) (emphasis
added). It is also noteworthy that the quoted explanation refers to the principle that
arbitrators initially and primarily will decide jurisdictional objections; even putting
aside the limitation to Article 16, the reference to primarily would appear to
contemplate exceptions which readily (and principally) refers to situations where
Article 8(1) is involved.
217) See7.03[D] & [F] for the efforts in the English Arbitration Act, 1996, and the German ZPO,
to balance and reconcile parallel tracks for seeking determination of jurisdictional
objections. See also7.03[E] (similar efforts of U.S. courts).
218) It has been suggested that reading Article 8(1) to permit full judicial review would
seriously imperil the internal coherence of the Model Law. Bachand, Does Article 8 of
the Model Law Call for Full or Prima Facie Review of the Arbitral Tribunals Jurisdiction?, 22
Arb. Intl 463, 473 (2006). That argument again assumes its own conclusion: the Model
Laws internal coherence depends on what standard of review Article 8(1) provides for. A
foundation of the Model Law was the awareness that parties would bring litigation in
national courts, which would require judicial determination of some sort of jurisdictional
objections. That is the whole point of Article 8(1) (like Article II of the New York
Convention). See7.03[A][3]. It is the inevitable existence of such proceedings, which also
produce judicial determinations of jurisdictional objections under Article 8(1), that
results in any internal incoherence.
156
219) This approach also conforms to the Model Laws drafting history, where there was a clear
recognition of the risks of delaying tactics, which could justify the prima facie judicial
review approach in such circumstances. Report of the UNCITRAL on the Work of Its
Eighteenth Session, U.N. Doc. A/40/17, XVI Y.B. UNCITRAL 3, 15 (1985).
220) See, e.g., Fibreco Pulp Inc. v. Star Shipping A/S, [2000] 257 N.R. 291 (Canadian Fed. Ct.
App.) (staying litigation pending arbitration of dispute among some, but not all,
litigants); CTA Intl Pty Ltd v. Sichuan Changhong Elec. Co. Ltd, [2002] VSC 374, 16
(Victoria S.Ct.) (staying litigation because it seems to me very likely that as a matter of
construction all disputes between parties are within scope of arbitration clause);
Dalimpex Ltd v. Janicki, (2003) 64 O.R.3d 737 (Ontario Ct. App.) (staying litigation against
non-parties to arbitration agreement on discretionary grounds because outcome would
be affected by award in dispute between parties to arbitration agreement); Kaverit Steel
& Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 651 (Alberta Ct. App. 1992) (1994)
(where dispute involved claims subject to arbitration and claims (and parties) not
subject to arbitration agreement, staying all proceedings pending arbitration: In
modern commercial disputes, it is almost inevitable that many parties will be involved
and very unlikely that all parties will have an identical submission.The Convention
cannot reasonably be taken as having abandoned any attempt at arbitration when this
problem arises.); Paladin Agric. Ltd v. Excelsior Hotel (H.K.) Ltd, [2001] 2 HKC 215 (H.K. Ct.
First Inst.) (staying litigation involving non-party pending arbitration of related
disputes). See also Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34
(Canadian S.Ct.).
221) See7.03[A][4]; Canadian Natl Railway Co. v. Lovat Tunnel Equip. Inc., (1999) 174 D.L.R.4th
385 (Ontario Ct. App.) (correct interpretation of arbitration clause required reference to
arbitration and stay of proceedings).
222) See, e.g.,Judgment of 13 January 2009, XI ZR 66/08 (German Bundesgerichtshof); Judgment
of 31 May 2007, III ZR 22/06 (German Bundesgerichtshof); Judgment of 1 March 2007, III ZR
164/06 (German Bundesgerichtshof); Judgment of 25 January 2007, VII ZR 105/06 (German
Bundesgerichtshof); Judgment of 12 January 2006, III ZR 214/05 (German
Bundesgerichtshof); Judgment of 19 July 2004, II ZR 65/03 (German Bundesgerichtshof);
Judgment of 4 October 2001, III ZR 281/00 (German Bundesgerichtshof); Judgment of 14
September 2000, III ZR 33/00 (German Bundesgerichtshof); Judgment of 7 October 2002,
2003 NJW-RR 354 (Bayerisches Oberstes Landesgericht).
These decisions are based in part on the text of 1032(2) of the German ZPO, which
provides that, prior to the constitution of the arbitral tribunal, a party may apply to a
court for a decision on the validity of the arbitration agreement. See also Geimer, in R.
Zller (ed.), Zivilprozessordnung 1032, 14 (30th ed. 2013); K. Lionnet & A. Lionnet,
Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit 3 III 3 b) (3d ed.
2005); Wagner, in F.-B. Weigand (ed.), Practitioners Handbook on International Arbitration
7.39 (2d ed. 2009). See7.03[D].
223) Yawata Ltd v. Powell, [2000] DCR 334 (Wellington Dist. Ct.).
224) See, e.g., Electra Air Conditioning BV v. Seeley Intl Pty Ltd, [2008] FCAFC 169 (Australian
Fed. Ct.); APC Logistics Pty Ltd v. C.J. Nutracon Pty Ltd, [2007] FCA 136 (Australian Fed. Ct.);
Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559
(Australian Fed. Ct. 2005) (2006) (granting stay in part; rejecting argument that
arbitration agreement was void because one party had been struck off companies
register and then been reinstated); Recyclers of Australia Pty Ltd v. Hettinga Equip. Inc.,
[2000] 175 ALR 725 (Australian Fed. Ct.) (court applied Iowa law in deciding whether
precontractual representations were subject to arbitration); Hi-Fert Pty Ltd v. Kiukiang
Maritime Carriers Inc., [1998] FCA 1485 (Australian Fed. Ct.); Wes Trac Pty Ltd v. Eastcoast
OTR Tyres Pty Ltd, [2008] NSWSC 894 (Equity) (N.S.W. S.Ct.); Francis Travel Mktg Pty Ltd v.
Virgin Atl. Airways Ltd, [1996] NSWSC 104 (N.S.W. S.Ct.).
225) See, e.g., Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 104 (U.K. S.Ct.) (English
court is entitled (and indeed bound) to revisit the question of the tribunals decision on
jurisdiction if the party resisting enforcement seeks to prove that there was no
arbitration agreement binding upon it under the law of the country where the award was
made); Broda Agro Trade Ltd v. Alfred C Toepfer Intl GmbH [2010] EWCA Civ 1100, 40
(English Ct. App.); A v. B [2010] EWHC 3302, 25 (Comm) (English High Ct.) (Supreme Court
has recently determined conclusively that a challenge such as is made under section 67
is indeed a complete rehearing [rather than limited review suitable for an appellate
process]); Peoples Ins. Co. of China, Hebei Branch v. Vysanthi Shipping Co. [2003] 2 Lloyds
Rep. 617 (QB) (English High Ct.). See also El Nasharty v. J. Sainsbury plc [2004] 1 Lloyds
Rep. 309, 29 (English High Ct.) (it would require the case to be an exceptional [one]
before the Court would leave it to the arbitrator if the Court were uncertain on the
material before it whether or not there was an arbitration agreement).
226) Rechberger, Die Zustndigkeit des Schiedsgerichts, in C. Liebscher et al. (eds.),
Schiedsverfahrensrecht I, 6/23 (2012) (As a result of the objection, the court has to
thoroughly examine the existence of the alleged arbitration agreement, i.e., not only by
means of a prima facie examination.); A. Reiner, The New Austrian Arbitration Law 584 n.
52 (2006) (Jurisdictional review by the national courts is not limited in scope.). See also
Judgment of 8 November 2011, 3 Ob 191/11a (Austrian Oberster Gerichtshof).
157
227) Barnmore Demolition & Civil Engg Ltd v. Alandale Logistics Ltd, [2010] No. 5910P (Irish
High Ct.) (particularly strong case that courts should give full judicial consideration,
not just prima facie review, to whether arbitration agreement exists under Article 8 of
Model Law; concluding, however, that issue did not need to be finally resolved in current
case).
228) See, e.g., Judgment of 5 October 2006, D. Andrs v. Dez Carrillo SL, AAP IB 659/2006 (Palma
de Mallorca Audiencia Provincial); Judgment of 2 February 2006, AC 15/2006 (Asturias
Audiencia Provincial); Judgment of 2 November 2005, Clnica Columbia SA v. RMN San
Antonio SL, AJM BI 67/2005 (Bilbao Juzgado de lo Mercantil); Judgment of 28 May 2002
(Barcelona Juzgado de Primera Instancia), cited in Lpez de Argumedo Pieiro &
Menndez de la Cuesta Lamas, La Intervencin Judicial en el Arbitraje: Anlisis de
Jurisprudencia Espaola Reciente, 2010:8 Spanish Arb. Rev. 53, 58.
229) See, e.g.,Judgment of 21 May 2007, Berica v. Grupa Gava, CLOUT Case No. 1070 (Croatian
High Comm. Ct.).
230) See, e.g., Judgment of 11 January 2006, Tesis Jurisprudencial 25/2006, Contradiccin de
tesis 51/2005-PS (Mexican Nacion Suprema Corte de Justicia); Judgment of 19 May 2005,
Serv. Admin. de Emergencia SA de CV v. ADT Sec. Servs. SA de CV, Case No. R.C. 14/2005
(Tercer Tribunal Colegiado en Materia Civil); Judgment of 1 July 2004, Desarrollos
Empresariales SA de CV v. Grupo Radio Centro SA de CV, Case No. R.C. 222/2004 (Dcimo
Segundo Tribunal Colegiado en Materia Civil).
231) See, e.g., Very Rev. Peter Karanja v. Alice Wahito Ndegwa, Civil Case No. 908 of 2006
(Nairobi High Ct.); Livingstone Kamadi Obuga v. Uhuru Kenyatta, Civil Case No. 1159 of
2006 (Nairobi High Ct.).
232) See, e.g., E. & S. African Trade v. Hassan Basajjabalaba, [2007] UGCommC 30 (Uganda High
Ct.); Fulgensius Mungereza v. Africa Cent., [2004] UGSC 9 (Mengo S.Ct.).
233) See, e.g., Stella-Jones Inc. v. Hawknet Ltd, [2002] F.C.J. (Quicklaw) No. 777 (Canadian Fed.
Ct. App.) (no arbitration agreement); Thyssen Canada Ltd v. Mariana Maritime SA, [2000] 3
F.C. 398 (Canadian Fed. Ct. App.) (court required to consider if arbitration clause had
been incorporated into contract); Nanisivik Mines Ltd v. Canarctic Shipping Ltd, [1994] 2
F.C. 662 (Canadian Fed. Ct. App.) (arbitration clause in charter party does not bind
parties to associated bill of lading; lower court erred in referring claim to arbitration).
See also H & H Marine Engine Serv. Ltd v. Volvo Penta of the Ams. Inc., [2009] BCSC 1389
(B.C. S.Ct.) (refusing to apply prima facie approach because applicable institutional rules
did not grant arbitral tribunal power to rule on jurisdiction).
234) See, e.g., Thorn Sec. (H.K.) Ltd v. Cheung Fee Fung Cheung Constr. Co., [2005] 1 HKC 252 (H.K.
Ct. App.) (no arbitration agreement); Tommy C.P. Sze & Co. v. Li & Fung (Trading) Ltd,
[2002] HKCU LEXIS 1634 (H.K. Ct. First Inst.); Westo Airconditioning Ltd v. Sui Chong Constr.
& Engg Co., [1998] 1 HKC 254 (H.K. Ct. First Inst.) (finding valid arbitration agreement);
Fustar Chem. Ltd v. Sinochem Liaoning Hong Kong Ltd, [1996] 2 HKC 407 (H.K. Ct. First Inst.)
(considering and rejecting argument that arbitration agreement had been repudiated
and granting stay of proceedings).
As discussed below, other Hong Kong authorities appear to apply a prima facie
jurisdiction standard. See7.03[A][2][b][ii].
235) Some commentators conclude that the Model Law provides for only prima facie judicial
review. See, e.g., Bachand, Does Article 8 of the Model Law Call for Full or Prima Facie
Review of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463, 473 (2006); Branson, The
Enforcement of International Commercial Arbitration Agreements in Canada, 16 Arb. Intl
19 (2000); Fortier, Delimiting the Spheres of Judicial and Arbitral Power: Beware, My Lord,
of Jealousy, 80 Can. Bar Rev. 143 (2001); Marquis, La comptence arbitrale: une place au
soleil ou lombre du pouvoir judiciaire, 21 RDUS 303 (1990). See also S. Greenberg, C. Kee
& J.-R. Weeramantry, International Commercial Arbitration: An Asia-Pacific Perspective
4.121 (2011) (Neither the New York Convention nor the Model Law stipulates whether
the court should investigate the validity of an arbitration agreement. On one
interpretation of these provisions, they appear to conflict with the competence
competence rule.).
236) Shin-Etsu Chem. Co. Ltd v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747, 784 (Indian S.Ct.
2005) (2006) (judicial consideration of validity of arbitration agreement would have to
be determined by the trial court after arriving at the prima facie satisfaction that there
exists an arbitration agreement, which is not null and valid, inoperative or incapable of
being performed). See7.03[A][3].
237) Skandia Intl Ins. Co. v. Al Amana Ins. & Reins. Co., XXIV Y.B. Comm. Arb. 615, 26
(Bermuda S.Ct. 1994) (1999) (I think that from a prima [facie] assessment of the evidence
it can be inferred that there exists arbitration agreements.).
158
238) See, e.g., Dalimpex Ltd v. Janicki, (2003) 64 O.R.3d 737 (Ontario Ct. App.); Kingsway Fin.
Servs. Inc. v. 118997 Canada Inc., REJB 1999-15989 (Qubec Ct. App. 1999); Gulf Canada Res.
Ltd v. Arochem Intl Ltd, (1992) 66 B.C.L.R.2d 113, 114 (B.C. Ct. App.).
Some commentators have suggested that other Canadian decisions adopt a prima facie
standard, citing Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643 (Alberta
Ct. App. 1992) (1994) and Kvaerner Enviropower Inc. v. Tanar Indus. Ltd, (1994) 24
Alta.L.R.3d 365 (Alberta Ct. App.). This analysis appears flawed: these decisions instead
generally apply a standard of full judicial review, while holding that, in some
circumstances, it may be appropriate to stay court proceedings regarding related, but
nonarbitrable, disputes. As discussed below, the Canadian Supreme Court recently
adopted a different approach in Dell Computer Corp. v. Union des Consommateurs, 2007
SCC 34 (Canadian S.Ct.), holding that certain jurisdictional disputes (involving only legal
issues) required full judicial review and that other jurisdictional disputes (involving
factual or mixed legal and factual issues) required only prima facie review. See7.03[A]
[3].
239) See, e.g., New Sound Indus. Ltd v. Meliga (H.K.) Ltd, [2005] HKCU 66 (H.K. Ct. App.) (staying
litigation after stating prima facie standard but apparently applying full judicial review
as to scope of arbitration agreement); Pac. Crown Engg Ltd v. Hyundai Engg & Constr.
Co., [2003] 3 HKC 659 (H.K. Ct. First Inst.); Paladin Agric. Ltd v. Excelsior Hotel (H.K.) Ltd,
[2001] 2 HKC 215 (H.K. Ct. First Inst.) (applying prima facie standard to claim that
arbitration agreement was rescinded); Nanhai W. Shipping Co. v. Hong Kong United
Dockyards Ltd, [1996] 2 HKC 639 (H.K. Ct. First Inst.); Pac. Intl Lines Pte Ltd v. Tsinlien
Metals & Minerals Co., XVIII Y.B. Comm. Arb. 180, 185 (H.K. Ct. First Inst. 1992) (1993).
240) Gulf Canada Res. Ltd v. Arochem Intl Ltd, (1992) 66 B.C.L.R.2d 113, 39-40 (B.C. Ct. App.).
241) Cie Natl Air France v. Libyan Arab Airlines [2000] R.J.Q. 717 (Qubec S.Ct.) (decision as to
scope of arbitration agreement for arbitrators, with judicial review in action to recognize
award); Contl Commercial Sys. Corp. v. Davies Telecheck Intl, Inc., [1995] B.C.J. No. 2440
(B.C. S.Ct.) (disputes over scope of arbitration agreement referred to arbitration except
where arbitration clause clearly does not apply); Dancap Prod. Inc. v. Key Brand
Entertainment, Inc., [2009] ONCA 135, 32 (Ontario Ct. App.) (It is now well-established in
Ontario that the court should refuse to grant a stay under art. 8(1) of the Model Law
where it is arguable that the dispute falls within the terms of an arbitration
agreement.); NetSys Tech. Group AB v. Open Text Corp., (1999) 1 B.L.R.3d 307 (Ontario
Super. Ct.) (issue of scope of arbitration agreement is for arbitrators to resolve in light of
pro-arbitration policies of Model Law).
242) See authorities cited 7.03[A][2][b][i], p. 1082 n. 204; Dalimpex Ltd v. Janicki, (2003) 64
O.R.3d 737 (Ontario Ct. App.) (referring disputes over scope of arbitration clause to
arbitration under prima facie analysis; definitively deciding that a valid arbitration
agreement continued to exist, while acknowledging that, in some circumstances, this
could also be subject to prima facie review).
243) See, e.g., Miramichi Pulp & Paper Inc. v. Canadian Pac. Bulk Ship Servs. Ltd, (1992) 58 F.T.R.
81 (Canadian Fed. Ct.); Dalimpex Ltd v. Janicki, (2003) 64 O.R.3d 737, 22, 38 (Ontario Ct.
App.) (questions of scope and identity of parties should ordinarily be subject to prima
facie review; also reasoning it may be preferable to leave any issue related to the
existence or validity of the arbitration agreement for the arbitral tribunal to determine
in the first instance under Article 16); City of Prince George v. A.L. Sims & Sons Ltd, (1995)
9 B.C.L.R.3d 368 (B.C. Ct. App.); ABN Amro Bank Canada v. Krupp MaK Maschinenbau
GmbH, (1994) 135 D.L.R.4th 130 (Ontario Super. Ct.) (where jurisdictional objection
involved merits of dispute, court referred matter to arbitration). Compare Traff v.
Evancic, (1997) 15 B.C.L.R.3d 85 (B.C. S.Ct.).
244) See7.03[A][3].
245) T1T2 Ltd Pship v. Canada, (1994) 23 O.R.3d 67 (Ontario Super. Ct.); ABN Amro Bank Canada
v. Krupp MaK Maschinenbau GmbH, (1994) 135 D.L.R.4th 130 (Ontario Super. Ct.).
246) Dell Computer Corp. v. Union des Consommateurs, 2007 SCC 34 (Canadian S.Ct.).
247) Dell Computer Corp., [2007] SCC 34, 68-89.
248) Dell Computer Corp., [2007] SCC 34, 84. On the other hand, [i]f the challenge requires
the production and review of factual evidence, the court should normally refer the case
to arbitration because according to the court, arbitrators have, for this purpose, the
same resources and expertise as courts. Id. at 85.
249) Dell Computer Corp., [2007] SCC 34, 84.
250) Seidel v. TELUS Commcns Inc., [2011] SCC 15, 29 (Canadian S.Ct.) (any challenge to an
arbitrators jurisdictionshould first be determined by the arbitrator, unless the
challenge involves a pure question of law, or one of mixed fact and law that requires for
its disposition only superficial consideration of the documentary evidence in the
record) (quoting Dell Computer Corp., [2007] SCC 34, 84); Unifund Assur. Co. v. Ins. Corp.
of British Columbia, [2003] 2 S.C.R. 63 (Canadian S.Ct.) (same); Jean Estate v. Wires Jolley
LLP, [2009] ONCA 339, 40 (Ontario Ct. App.) ([T]he 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 the arbitrator, the desire to avoid
multiple legal disputes over the jurisdiction of the arbitral tribunal, and the interest of
finality.).
159
251) In H & H Marine Engine Serv. Ltd v. Volvo Penta of the Ams., [2009] BCSC 1389 (B.C. S.Ct.),
the British Columbia Supreme Court limited the applicability of the general rule
adopted in Dell Computer. It reasoned that the Canadian Supreme Courts analysis in
Dell Computer was rooted in a particular legal context, namely the Qubec Civil Code,
which incorporates the competence-competence principle. The British Columbia court
held that, in these circumstances, a high degree of deference to the arbitrators
authority is appropriate, but that in other legal contexts, the Dell Computer rule may not
apply: the refined prima facie analysis test in Dell should be applied in all cases in
which the competence/competence principle forms part of the governing legal
framework. Id. at 54.
252) Pac. Crown Engg Ltd v. Hyundai, [2003] 3 HKC 659, 12 (H.K. Ct. App.).
253) PCCW Global Ltd v. Interactive Commcns Serv. Ltd, [2006] HKCA 434 (H.K. Ct. App.). The
Court held that it was bound to and would adopt the same approach as that in Pacific
Crown. The Court of Appeal arguably adopted a different approach in Thorn Sec. (H.K.)
Ltd v. Cheung Fee Fung Cheung Constr. Co., [2005] 1 HKC 252 (H.K. Ct. App.) (apparently
applying a full review standard to hold there was no arbitration agreement), but its
result would likely also have obtained under a prima facie standard. In any case, the
Court of Appeals subsequent decision in PCCW Global appears to resolve matters.
254) Pac. Intl Lines Pte Ltd v. Tsinlien Metals & Minerals Co., XVIII Y.B. Comm. Arb. 180 (H.K. Ct.
First Inst. 1992) (1993).
255) Pac. Intl Lines Pte Ltd v. Tsinlien Metals & Minerals Co., XVIII Y.B. Comm. Arb. 180, 185 (H.K.
Ct. First Inst. 1992) (1993).
256) See, e.g., New Sound Indus. Ltd v. Meliga (H.K.) Ltd, [2005] HKCU 66 (H.K. Ct. App.); Paladin
Agric. Ltd v. Excelsior Hotel (H.K.) Ltd, [2001] 2 HKC 215 (H.K. Ct. First Inst.); Nanhai W.
Shipping Co. v. Hong Kong United Dockyards Ltd, [1996] 2 HKC 639 (H.K. Ct. First Inst.); ICC
Chem. v. Zhuhai Minerals, [1996] 2 HKC 64, 66 (H.K. Ct. First Inst.).
257) Private Co. Triple V Inc. v. Start (Universal) Co. Ltd, [1995] 3 HKC 129, 132 (H.K. Ct. App.)
(Whilst, clearly, the judge had to make a judgment as to whether there existed an
underlying agreement to arbitrate, he could do no more than to form a prima facie
review.).
258) See, e.g., Thorn Sec. (H.K.) Ltd v. Cheung Fee Fung Cheung Constr. Co., [2005] 1 HKC 252 (H.K.
Ct. App.); Tommy C.P. Sze & Co. v. Li & Fung (Trading) Ltd, [2002] HKCU LEXIS 1634 (H.K. Ct.
First Inst.); Westo Airconditioning Ltd v. Sui Chong Constr. & Engg Co., [1998] 1 HKC 254
(H.K. Ct. First Inst.) (finding valid arbitration agreement); Fustar Chem. Ltd v. Sinochem
Liaoning Hong Kong Ltd, [1996] 2 HKC 407 (H.K. Ct. First Inst.) (same).
259) Shin-Etsu Chem. Co. Ltd v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747, 783-84 (Indian
S.Ct. 2005) (2006).
In a dissenting opinion, Judge Sabharwal reasoned:
It may be noted that both approaches [i.e., prima facia and full] have their own
advantage and disadvantage. The approach whereby the court finally decides on merits
on the issue of existence and validity of the arbitration agreement results in a certain
degree of time and cost avoidance. It may prevent parties to wait for several months or
in some cases years before knowing the final outcome of the dispute regarding
jurisdiction. It will often take that long for the arbitrators and then the courts to reach
their decisions. The same considerations of cost and time explain the position taken in
English Law which under 32(2) of the 1996 English Arbitration Act provides that the
parties may agree (or, if the parties fail to agree, the arbitral tribunal may agree) that it
would be more efficient to have the question resolved immediately by the courts.
The dissent also referred to Swiss and French arbitration statutes and judicial decisions
in Ontario and Hong Kong providing for a limited prima facie review. Nevertheless, the
dissent distinguished these decisions and statutes from the circumstances in India.
260) Shin-Etsu Chem. Co. Ltd v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747, 778-82 (Indian S.Ct.
2005) (2006), citing Rio Algom Ltd v. Sammi Steel Co. Ltd, XVIII Y.B. Comm. Arb. 166
(Ontario Super. Ct. 1991) (1993); Pac. Intl Lines Pte Ltd v. Tsinlien Metals & Minerals Co. Ltd,
XVIII Y.B. Comm. Arb. 180 (H.K. Ct. Fin. App. 1992) (1993).
261) SBP v. Patel Engg Ltd, [2005] 8 SCC 618 (Indian S.Ct.) (where Indian court appoints
arbitrator, it will determine whether valid arbitration agreement exists on merits).
262) See, e.g., Miramichi Pulp & Paper Inc. v. Canadian Pac. Bulk Ship Servs. Ltd, [1992] 58 F.T.R.
81 (Canadian Fed. Ct.); CTA Intl Pty Ltd v. Sichuan Changhong Elec. Co. Ltd, [2002] VSC 374
(Victoria S.Ct.); ABN Amro Bank Canada v. Krupp MaK Maschinenbau GmbH, (1994) 135
D.L.R.4th 130 (Ontario Super. Ct.) (where jurisdictional objection involved merits of
dispute, court referred matter to arbitration).
263) Seidel v. TELUS Commcns Inc., [2011] SCC 15, 113 (Canadian S.Ct.) (Lebel, J., dissenting).
160
264) Harrison v. UBS Holding Canada Ltd, [2013] NBQB 125, 26-27 (New Brunswick Q.B.). See
also Patel v. Kanbay Intl Inc., [2008] ONCA 867, 18 (Ontario Ct. App.) (While the case
law suggests that any final determination as to the scope of the arbitration agreement is
better left to the arbitration tribunal (since the question of jurisdiction is itself within
the jurisdiction of that tribunal), where it is clear that the matter does not fall within the
arbitration agreement, the court should make that finding and decline to make the
referral to arbitration.); Finkelstein v. Bisk, [2004] O.J. No. 4365, 2 (Ontario Ct. App.)
(affirming trial courts decision to decide existence of arbitration clause, rather than
refer issue to arbitration: The motion judge could have exercised her discretion in
favour of staying the action and allowing the Beis Din [arbitrators] to decide whether the
parties had agreed to arbitrate any dispute arising out of their agreement. However, we
see no error in principle in the manner in which she exercised her discretion in the
circumstances of this case. The question of whether the parties had agreed to arbitrate
did not turn on any matter with respect to which the arbitrator had special expertise or
some other advantage over the motion judge.).
265) H & H Marine Engine Serv. Ltd v. Volvo Penta of the Ams. Inc., [2009] BCSC 1389 (B.C. S.Ct.);
Deco Auto. Inc. v. GPA Gesellschaft fr Pressenautomation GmbH, [1989] O.J. No. 1805
(Ontario Dist. Ct.).
266) See, e.g., Dancap Prod. Inc. v. Key Brand Entertainment Inc., [2009] ONCA 135 (Ontario Ct.
App.); Dalimpex Ltd v. Janicki, (2003) 64 O.R.3d 737 (Ontario Ct. App.); EDF (Servs.) Ltd v.
Appleton & Assocs., [2007] CanLII 36078 (Ontario Super. Ct.); PCCW Global Ltd v. Interactive
Commcns Serv. Ltd, [2006] HKCA 434 (H.K. Ct. App.).
267) UNCITRAL Model Law, Art. 8(1). See7.03[A][2].
268) On the contrary, Article 8(1) refers to [a] court before which an action is brought in a
matter which is the subject of an arbitration agreement. This language appears to
require only that the matters at issue in the judicial action also be the subject of an
arbitration agreement. This standard can be interpreted in various ways, but appears
less demanding than, for example, a formulation that would have required a court
before which a claim is brought which is subject to arbitration under an arbitration
agreement. UNCITRAL Model Law, Art. 8(1). This language permits a court to decline to
refer matters to arbitration if they have nothing at all to do with issues within the scope
of the arbitration clause; other matters, which arguably come within the scope of the
arbitration clause (e.g., they concern a matter which is the subject of an arbitration
agreement), would be referred to the arbitrators for interpretation of the arbitration
clause.
269) As noted above, the court would arguably have the power to decline to refer disputes
that unambiguously fell outside the arbitral agreement. See7.03[A][4].
270) UNCITRAL Model Law, Arts. 34(2)(a)(iii), 36(1)(a)(iii). As noted above in the context of the
New York Convention, the term submission to arbitration is most specifically directed
towards the claims that the parties have submitted to the arbitral tribunal in a
particular arbitration. In addition, however, the term also extends, both literally and
logically, to the parties underlying agreement to arbitrate, pursuant to which they first
submit disputes to arbitration. See7.02[A][1]; 25.02[C][7][c]; 26.05[C][4][e]; Report of
the Committee on the Enforcement of International Arbitral Awards, U.N. Doc. E/2704, 39
(1955) (in context of New York Convention, the expression submission to arbitration was
used in a broad sense, and was intended to include not only an arbitration clause in a
contract, but also a specific compromis).
271) See7.02[A][1].
272) This is because the scope of the arbitration clause (which typically applies to disputes
arising out of or relating to the parties underlying agreement (see9.02[E])) is
ordinarily defined by and dependent upon the substantive meaning of, and rights and
obligations under, the parties commercial agreement. See7.03[E][7][a]; 7.03[I][3].
273) Rio Algom Ltd v. Sammi Steel Co. Ltd, XVIII Y.B. Comm. Arb. 166 (Ontario Super. Ct. 1991)
(1993).
274) Rio Algom Ltd v. Sammi Steel Co. Ltd, XVIII Y.B. Comm. Arb. 166, 171 (Ontario Super. Ct.
1991) (1993).
275) See, e.g., Dancap Prods. Inc. v. Key Brand Entertainment, Inc., [2009] ONCA 135, 32
(Ontario Ct. App.); Cecrop Co. v. Kinetic Sciences Inc., [2001] BCSC 532 (B.C. Sup. Ct.);
NetSys Tech. Group AB v. Open Text Corp., (1999) 1 B.L.R.3d 307 (Ontario S.Ct.); OEMSDF Inc.
v. Europe Israel Ltd, [1999] O.J. No. 3594 (Ontario Super. Ct.); Gulf Canada Res. Ltd v.
Arochem Intl Ltd, (1992) 66 B.C.L.R.2d 113 (B.C. Ct. App. 1992); Raydon Underwriting Mgt Co.
v. N. Am. Fid. & Guarantee Ltd, [1994] No. 108 (Bermuda S.Ct.) (court refers parties to
arbitration where jurisdictional dispute turned on interpretation of underlying contract).
276) See, e.g., Methanex New Zealand Ltd v. Fontaine Navigation SA, [1998] 2 F.C. 583 (Canadian
Fed. Ct. 1998); Ocean Fisheries Ltd v. Pac. Coast Fishermens Mut. Marine Ins. Co., [1997] 125
F.T.R. 20 (Canadian Fed. Ct.). Compare Dell Computer Corp. v. Union des Consommateurs,
2007 SCC 34 (Canadian S.Ct.).
277) See7.03[D].
278) See, e.g., LG Caltex Gas Co. v. China Natl Petroleum Co. [2001] EWCA Civ 788 (English Ct.
App.) (requiring express agreement to grant tribunal power to finally decide own
jurisdiction); Vee Networks Ltd v. Econet Wireless Intl Ltd [2005] 1 Lloyds Rep. 192, 198
(QB) (English High Ct.); Astro Valiente Compania Naviera v. Pakistan Ministry of Food &
Agric. [1982] 1 All ER 823 (QB) (English High Ct.) (parties submitted question whether
arbitration clause had been validly incorporated to ad hoc arbitration).
161
279) See7.03[F][3], p. 1213.
280) See, e.g., UNCITRAL Model Law, Arts. 10, 11(2), 13(1), 17, 19, 20(1).
281) See7.03[A][4][d], p. 1107.
Some national arbitration legislation omits the Model Laws provision for immediate
judicial review of the arbitrators jurisdictional decision. See, e.g., Greek Law 2375/1999,
Art. 16(3); Peruvian Legislative Decree Regulating Arbitration, Art. 41(4); Oman Act on
Arbitration, Art. 22(3).
284) Boo, Ruling on Arbitral Jurisdiction Is That An Award?, 3 Asian Intl Arb. J. 125, 127-30
(2007); Pavic, (In)Appropriate Compromise Article 16(3) of the Model Law and Its Progeny,
in S. Krll (ed.), International Arbitration and International Commercial Law: Synergy,
Convergence and Evolution 387, 387-410 (2011), 393 (if there is an area of arbitration law
where confusion reigns, it is the way in which arbitration decisions are labelled).
An arbitral tribunal may decide not to render a preliminary decision only on
jurisdiction, instead reserving its jurisdictional ruling to the merits of the dispute, in
which case the jurisdictional ruling would be contained in an award. See7.05[B].
285) See17.03[A].
286) See22.02[E][2][a][i]. That reading is consistent with authorities holding that
jurisdictional decisions are not awards and are instead procedural orders.
See22.02[B][3][f]; Uzelac, Jurisdiction of the Arbitral Tribunal: Current Jurisprudence and
Problem Areas Under the UNCITRAL Model Law, 2005 Intl Arb. L. Rep. 154, 156.
287) See, e.g., Intl Research Corp. plc v. Lufthansa Sys. Asia Pac. Pte Ltd, [2012] SGHC 226,
111 et seq. (Singapore High Ct.) (it would seem that an arbitral tribunals ruling on
jurisdiction positive or negative is not a decision on the substance of the dispute,
and cannot be characterized as an award); PT Asuransi Jasa Indonesia (Persero) v. Dexia
Bank SA, [2006] SGCA 41, 65 (Singapore Ct. App.) ([A] decision of a tribunal on a
preliminary question such as jurisdiction would not dispute of the substance of the
dispute, and, hence, would not be an award for the purposes of the Act.Article 16(3) of
the Model Law does not admit a pure ruling on the preliminary question of jurisdiction
as an award.); The Inc. Owners of Tak Tai Bldg v. Leung Yau Bldg Ltd, [2005] HKCA 87
(H.K. Ct. App.); Brunswick Bowling & Billiards Corp. v. Shanghai Zhonglu Indus. Co. Ltd,
[2009] HKCFI 94, 111 (H.K. Ct. First Inst.); Weltime Hong Kong Ltd v. Ken Forward Engg Ltd,
[2001] HKCFI 831 (H.K. Ct. First Inst.).
288) See, e.g., Judgment of 18 January 2007, III ZB 35/06 (German Bundesgerichtshof)
(jurisdictional ruling is award that may be recognized).
As discussed below, it is appropriate under the New York Convention, as well as the
Model Law, for courts to afford the factual and legal decisions of arbitral tribunals on
jurisdictional issues a measure of deference. See7.03[A][5][a]. It is therefore both
appropriate and necessary for courts to review jurisdictional rulings for both substantive
correctness (e.g., is the jurisdictional ruling correct?) and for procedural defects (under
Articles 34(2)(a)(ii) and (iv)), public policy objections (under Article 34(2)(b)(ii)) and
otherwise. That is particularly true where the parties have agreed that the arbitrators
will finally resolve jurisdictional disputes. See7.03[I][3]. Given this, it is incorrect to
suggest that the sole issue in review an arbitral tribunals jurisdictional ruling under
Article 16(3) would appear to be whether or not the jurisdictional ruling was correct,
regardless of procedural missteps. Pavic, (In)Appropriate Compromise Article 16(3) of
the Model Law and Its Progeny, in S. Krll (ed.), International Arbitration and International
Commercial Law: Synergy, Convergence and Evolution 387, 393 (2011).
289) A few jurisdictions have modified the Model Law to include provisions making it clear
that decisions under Article 16(3) are annulment decisions under (or equivalent to)
Article 34. Austrian ZPO, 611; Spanish Arbitration Act, 2011, Art. 22(2) (arbitrators
[jurisdictional] decision may only be challenged by bringing an application to set the
award aside); Tunisian Arbitration Code, Art. 61(3). See also Judgment of 1 October 2008,
Prev. 350/08 (Serbian S.Ct.) (jurisdictional decision by tribunal under Article 30(2) of
Serbian Law on Arbitration (equivalent to Article 16(3) of Model Law) should apply
criteria under Article 58 of Serbian Law on Arbitration (equivalent to Article 34 of Model
Law)). In contrast, most national arbitration legislation retains the Model Laws silence
on the issue.
290) See7.03[A][5][a], pp. 1108-09.
291) Article 34(2)(a)(i) applies in cases where a party to the arbitration agreement lacked
capacity or where the arbitration agreement was not valid. Article 34(2)(a)(iii) applies in
cases where a tribunal exercised jurisdiction exceeding the terms of the arbitration
agreement and the parties claims in the arbitration. See25.03[A].
293) Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 60-61 (2004) (In
light of the drafting history, it is not completely clear what type of court review was
intended by the majority [of the delegations involved in drafting the Model Law].).
162
294) Judgment of 6 June 2002, 2003 SchiedsVZ 39 (German Bundesgerichtshof); 7.03[D][1];
7.03[I][5]. See also Judgment of 30 August 2002, 11 Sch 02/00 (Hanseatisches
Oberlandesgericht Hamburg); Kremer & Weimann, Die Aufhebbarkeit von
Schiedssprchen, insbesondere Zwischen- oder Teilschiedssprchen ber den
Anspruchsgrund Widerspruch zu Prinzipien der Prozesskonomie?, 2007 SchiedsVZ 238,
240.
The German Bundesgerichtshofs 2002 decision is contrary to an earlier, and well-
reasoned, decision of a Hamburg appellate court. Judgment of 4 September 1998, 2000
NJW-RR 806 (Hanseatisches Oberlandesgericht Hamburg). See also Krll, Recourse
Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55 (2004); Voit, Die Entscheidung
des Schiedsgerichts ber die eigene Unzustndigkeit als Prfstein der dogmatischen
Grundlagen des Schiedsverfahrensrechts, in Festschrift fr Musielak 595 (2004).
295) See also Dimolitsa, Separability and Kompetenz-Kompetenz, in A. van den Berg (ed.),
the New York Convention 217, 232 (ICCA Congress Series No. 9 1999); A. Samuel,
Jurisdictional Problems in International Commercial Arbitration 218 (1989).
296) See7.03[A][5]; 7.03[E][8].
297) Judgment of 13 December 1994, CLOUT Case 147, reported at www.uncitral.org/clout
(Moscow City Ct.).
298) Swiss Law on Private International Law, Art. 190(2)(b) (Action for setting aside the award
may only be initiated(b) where the arbitral tribunal has wrongly declared itself to have
or not to have jurisdiction.); B. Berger & F. Kellerhals, International and Domestic
Arbitration in Switzerland 674 (2d ed. 2010); Wenger, in S. Berti et al. (eds.), International
299) Belgian Judicial Code, Art. 1690(4) (The arbitral tribunals decision that it has
jurisdiction may only be contested together with the award on the merits and in the
course of the same procedures. At the request of one of the parties, the Court of First
Instance may also rule on the merits of the arbitral tribunals decision that it lacks
jurisdiction.).
300) Swedish Arbitration Act, 27; Hobr, Arbitration Reform in Sweden, 17 Arb. Intl 351, 358
(2001).
301) Judgment of 26 October 1995, Socit Nationale des Chemins de Fer Tunisiens v. JM Voith,
AG, 1997 Rev. arb. 553 (Paris Cour dappel); 7.03[B].
302) English Arbitration Act, 1996, 67(1)(a) (judicial power to set aside award as to
substantive jurisdiction); D. Sutton, J. Gill & M. Gearing, Russell on Arbitration 5-062, 8-
064 (23d ed. 2007); 7.03[F][4].
303) See Barcel, Who Decides the Arbitrators Jurisdiction? Separability and Competence-
Competence in Transnational Perspective, 36 Vand. J. Transnatl L. 1115 (2003); 7.03[E][7]
[a].
304) Rubino-Sammartano, Italy, in F.-B. Weigand (ed.), Practitioners Handbook on
305) The tribunals negative jurisdictional determination was denominated Teil-Prozess-
Schiedsspruch Zwischenentscheid (Partial Procedural Arbitral Ruling Interim
Decision), which is as difficult to understand in German as in English. See Krll, Recourse
Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 62-63 (2004).
306) See Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 63-64
(2004).
307) P. Sanders, Quo Vadis Arbitration? 185 (1999).
308) See7.01, p. 1048.
309) This is confirmed in Germany by the legislative history of the German ZPO. See Krll,
Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 64 n.34 (2004).
Moreover, it makes little sense for an arbitral tribunals negative jurisdictional
determination, ending the arbitral proceeding, to be rendered in a different form,
thereby creating the possibility of different possibilities of preclusive effects and
judicial review, than other forms of arbitral decisions terminating the arbitration. See
Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 64-65 (2004)
(noting possibility that negative jurisdictional ruling might not have preclusive effect if
not an award).
310) Judgment of 6 June 2002, 2003 SchiedsVZ 39 (German Bundesgerichtshof).
A Canadian court has also held that, although an arbitral tribunals negative
jurisdictional decision is subject to review under Article 34, a review of the merits of that
decision would not be permitted because an arbitral decision is not invalid because it
wrongly decided a point of fact and law. Bayview Irrigation Dist. #11 v. United Mexican
States, [2008] CanLII 22120, 63 (Ontario Super. Ct.).
312) Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 65-67 (2004).
314) See1.03.
315) See1.02[B][2].
163
316) See1.02[B]. See also Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb.
Intl 55, 66-67 (2004); K. Lionnet & A. Lionnet, Handbuch der internationalen und
nationalen Schiedsgerichtsbarkeit 3 III 5 c) (2) (3d ed. 2005); Mnch, Case Note on
Judgment of 6 June 2002 (German Bundesgerichtshof), 2003 SchiedsVZ 41, 42; Voit, Die
Entscheidung des Schiedsgerichts ber die eigene Unzustndigkeit als Prfstein der
dogmatischen Grundlagen des Schiedsverfahrensrechts, in Festschrift fr Musielak 595
(2004).
317) Huber, in K.-H. Bckstiegel, S. Krll & P. Nacimiento (eds.), Arbitration in Germany: The
Model Law in Practice 1040, 47 (2007).
318) See1.02[B][1], p. 73-74.
319) Krll, Recourse Against Negative Decisions on Jurisdiction, 20 Arb. Intl 55, 60-61 (2004).
320) UNCITRAL Model Law, Art. 34(2)(a)(iv).
321) See25.03[A][2].
322) Official Records of the General Assembly, Fortieth Session, Supplement No. 17, U.N. Doc.
A/40/17, Annex I, 163 (1985).
323) PT Asuransi Jasa Indonesia (Persero) v. Dexia Bank SA, [2006] SGCA 41 (Singapore Ct. App.);
Kenon Engg Ltd v. Nippon Kokan Koji Kabushiki Kaisha, [2003] HKCFI 568 (H.K. Ct. First
Inst.); Fung Sang Trading Ltd v. Kai Sun Sea Prods. & Food Co. Ltd, [1991] HKCFI 190 (H.K. Ct.
First Inst.); Sebhan Enters. Ltd v. Westmont Power (Kenya) Ltd, Civil Case No. 239 of 2005
(Nairobi High Ct. 2006).
324) The preclusive effects of the decision of a court in the arbitral seat on jurisdictional
issues are discussed below. See26.05[C][1][f].
325) See7.03[D][2]. As noted above, 1040 of the German ZPO modifies Article 16(3) of the
Model Law by adding the phrase Grounds for setting aside shall not be taken into
account, if at the time when the application for a declaration of enforceability is served,
an application for setting aside based on such grounds has been finally rejected.
Grounds for setting aside under section 1059 subs. 2, no. 1 shall also not be taken into
account if the time-limits set by section 1059 subs. 3 have expired without the party
opposing the application having made an application for setting aside the award. German
ZPO, 1040 (emphasis added).
326) Judgment of 27 March 2003, III ZB 83/02 (German Bundesgerichtshof).
327) Astro Nusantara Intl BV v. PT Ayunda Prima Mitra, [2012] SGHC 212, 151 (Singapore High
Ct.).
328) Astro Nusantara Intl BV, [2012] SGHC 212, 133 (One way in which a party may challenge
the jurisdiction of a tribunal is simply to step out of the arbitral regime and boycott the
proceedings altogether. If this course of action is chosen (and this course is not without
risk), then the rules for appeal which would apply to parties within the arbitral regime
would no longer apply to the boycotting party. Arguably, the boycotting party would
then be able to apply to set aside the award under Art 34(2)(a)(i) on jurisdictional
grounds. The jurisdictional award would not be final vis--vis the boycotting party, and
the opposing party would have ample notice of this from the boycotting partys absolute
refusal to participate.), 140 (A party is not obliged to appeal under Art 16(3), but if it
chooses not to appeal, it is taken to accept the finality of the award on jurisdiction; if a
party does not raise a timely objection to jurisdiction in accordance with the (then draft)
Art 16(2) of the Model Law, then the party cannot raise the same objection to jurisdiction
under Arts 34 and 36. The only exception is where a party has boycotted the proceedings
altogether.).
329) See, e.g., Judgment of 27 March 2003, III ZB 83/02 (German Bundesgerichtshof); Judgment
of 4 September 2003, 8 Sch 11/02, 31 (Oberlandesgericht Celle) (2005) (holding, in
recognition case under Convention, that party could raise jurisdictional objection to
recognition of foreign award, but distinguishing from recognition of award in locally-
seated arbitration in which failure to institute proceedings against the arbitral
tribunals decision would have precluded the defence of an invalid arbitration
agreement); Re/Max Platine Inc. v. Groupe Sutton-Actuel Inc., [2008] QCCA 1405 (Qubec
Ct. App.); Imprimerie Rgionale ARL Lte v. Ghanotakis, [2004] CanLII 23270, 18 (Qubec
Super. Ct.) (where party does not challenge arbitrators positive jurisdictional ruling
pursuant to equivalent of Article 16(3) of Model Law, the exception of res judicata must
be upheld in respect of the competence of arbitral tribunal); Lefebvre v. Les Habitations
dAngoulme, [2000] J.Q. No. 2733 (Qubec Super. Ct.); Pich v. Guilde des Musiciens du
Qubec, [1998] J.Q. No. 4896 (Qubec Super. Ct.); Tlbec Lte v. Socit Hydro-Qubec,
[1997] J.Q. No. 1431 (Qubec Super. Ct.); China Nanhai Oil Joint Serv. Corp. Shenzhen Branch
v. Gee Tai Holdings Co. Ltd, [1995] 2 HKLR 215, 224 (H.K. High Ct., S.Ct.) (A similar view is
discernable from the Model Law. Art 16 requires parties to raise a plea that the arbitral
tribunal does not have jurisdiction not later than the submission of a statement to
defence. The tribunal may admit a later plea if it considers the delay justified but, if not,
then clearly the party is estopped from raising the point. Similarly, under Art 16(3) if the
tribunal rules that it has jurisdiction any party may request within 30 days, the court to
decide the matter. It seems to follow from this that if you do not seek the view of the
court, then you cannot raise the matter subsequently at [the] enforcement stage.);
Judgment of 27 October 2004, Case No. U-III/669/2003 (Croatian Const. Ct.). Compare Tan
Poh Leng Stanley v. Tang Boon Jek Jeffrey, [2000] SGHC 260 (Singapore High Ct.).
330) Compagnie Nationale Air France v. Mbaye, [2003] CanLII 35834 (Qubec Ct. App.).
164
331) UNCITRAL Model Law, Art. 16(3) (emphasis added). Several states that have adopted the
Model Law have omitted Article 16(3), providing for immediate interlocutory judicial
review of jurisdictional awards. See, e.g., Bulgarian Law on International Commercial
Arbitration, Arts. 20, 47; Tunisian Arbitration Code, Art. 61(3).
332) UNCITRAL Model Law, Arts. 34(2)(a)(i), (iii).
333) Judgment of 15 October 1999, 28 Sch 17/99 (Kammergericht Berlin); Judgment of 10 January
2002, 2 Sch 4/01 (Hanseatisches Oberlandesgericht Bremen); Canadian Ground Water
Assn v. Canadian Geoexchange Coalition, [2010] QCCS 2597 (Qubec Super. Ct.); 9095-5378
Qubec Inc. v. Perform Environnement Inc., [2004] CanLII 7022 (Qubec Super. Ct.); Guilde
des Musiciens du Qubec v. Pich, [1998] J.Q. No. 4896 (Qubec Super. Ct.); Judgment of 13
July 2009, ERG Petroleos v. Realesser, Case No. 289/2009 (Madrid Audiencia Provincial);
Pemex Exploracin v. Corp. Mexicana de Mantenimiento Integral SA de CV, SAP M
10840/2009 (Mexican Juzgado Noveno de Distrito en Materia Civil en el Distrito Federal);
Assumption Sisters of Nairobi Registered Trustee v. Standard Kebathi, Civil Case No. 497 of
2004 (Nairobi High Ct.).
334) A. Broches, Commentary on theUNCITRAL Model Law on International Commercial
Arbitration Art. 16, 31 (1990). See also H. Holtzmann & J. Neuhaus, A Guide to the
UNCITRAL Model Law on International Commercial Arbitration: Legislative History and
Commentary 524 (1989) (in travaux prparatoires of Article 16(3), French rapporteur
indicated that recourse should be as limited as possible); 7.03[A][4][b].
335) See, e.g., United Mexican States v. Cargill, Inc., [2011] ONCA 622, 35 (Ontario Ct. App.)
(Accepting that courts should interfere only sparingly or in extraordinary cases, the
court must have some basis to test whether the panel acted beyond its jurisdiction.
Normally, where the issue is one of pure jurisdiction, the correctness standard would
apply, implying possible consideration of, but no deference to, the decision of the
tribunal under review.); Insigma Tech. Co. Ltd v. Alstom Tech. Ltd, [2008] SGHC 134
(Singapore High Ct.) (de novo review of arbitrators jurisdictional decision under Article
16(3)); PT Tugu Pratama Indonesia v. Magma Nusuntara Ltd, [2003] SGHC 204 (Singapore
High Ct.) (same); Downer Constr. (NZ) v. Silverfield Dev. Ltd, [2008] 2 NZLR 591 (Auckland Ct.
App.) (same); Assumption Sisters of Nairobi Registered Trustee v. Standard Kebathi, [2008]
eKLR (Nairobi High Ct.) (same). See also26.05[C][1][f][ii].
336) PT Tugu Pratama Indonesia v. Magma Nusantara Ltd, [2003] SGHC 204, 18 (Singapore
High Ct.). See also Christian Mut. Ins. Co. v. Ace Bermuda Ins. Ltd, [2002] Bda LR 56
(Bermuda Ct. App.).
337) United Mexican States v. Cargill, Inc., [2011] ONCA 622, 42 (Ontario Ct. App.).
338) See26.05[C][1][f][ii].
339) United Mexican States, [2011] ONCA at 622.
340) Ace Bermuda Ins. Ltd v. Allianz Ins. Co. of Canada, [2005] ABQB 975, 53 (Alberta Q.B.). See
also PT Tugu Pratama Indonesia v. Magma Nusantara Ltd, [2003] SGHC 204 (Singapore
High Ct.).
341) UNCITRAL Model Law, Arts. 34(2)(a)(i), (iii). The same treatment applies to recognition
under Article 36. SeeUNCITRAL Model Law, Arts. 36(1)(a)(i), (iii).
342) That structure also conforms to the analysis, outlined above and elaborated below, that
a tribunals competence-competence with regard to the scope of an admittedly valid
arbitration agreement should be treated differently from its competence-competence
with regard to the existence, validity, or legality of any arbitration agreement.
See7.03[A][4]; 7.03[I][3].
343) UNCITRAL Model Law, Art. 34(2)(a)(i), (iii); 25.05[A][1]; 26.03[D][1][a]; 26.03[D][3][c];
26.03[D]. Again, the same treatment applies to recognition under Article 36.
SeeUNCITRAL Model Law, Arts. 36(1)(a)(i), (iii).
344) See5.04[B][2].
345) See7.03[A][2][b][ii] (India, H.K.); 7.03[C] (Switzerland); 7.03[D] (Germany).
346) Even before the 1981 and 2011 Decrees, reforming French arbitration law, French courts
had recognized the principle of competence-competence in broad terms in
international arbitrations. See Judgment of 22 February 1949, Caulliez-Tibergien v.
Caulliez-Hannart, JCP G 1949 II, 4899 (French Cour de cassation com.); Judgment of 17
October 1956, Kohorn v. Dimitrov, JCP G 1956 II, 9647 (Seine Tribunal civil) (Since the
arbitrators must verify first whether the arbitral agreement gives them jurisdiction on
the case brought before them, they have to assure themselves of the existence of the
agreement, its validity and its scope.). See also J.-L. Dlvolv, J. Rouche & G. Pointon,
French Arbitration Law and Practice 76, 93 n.173 (2d ed. 2009); E. Gaillard & J. Savage
(eds.), Fouchard Gaillard Goldman on International Commercial Arbitration 655 (1999).
347) Judgment of 29 November 1968, Impex v. PAZ, 1968 Rev. arb. 149, 155 (Colmar Cour
dappel).
348) French New Code of Civil Procedure (1981); Decree No. 2011-48 of 13 January 2011
reforming the law governing arbitration.
165
349) As noted above, French courts have applied the separability doctrine since at least 1963.
See3.02[B][3][d]. As a consequence, most challenges to the parties underlying contract,
including challenges based upon illegality, fraud and initial invalidity, do not impeach
the arbitration agreement and are therefore for the arbitral tribunal (not a French court)
to resolve, subject to eventual judicial review of the award. See, e.g.,Judgment of 18 May
2011, Socit LABM Carabes v. GTT, 2011 Rev. arb. 583 (French Cour de cassation civ. le)
(competence of arbitral tribunal not affected by invalidity of underlying contract but
only by manifest nullity or inapplicability of arbitration agreement); Judgment of 3
February 2010, SNDA v. Dipeyre, Pourvoi No. 09-12669 (French Cour de cassation civ. 1e)
(arbitrator has priority to rule on his own jurisdiction and French courts must deny
jurisdiction when presented with arbitration clause, unless arbitration agreement is
manifestly void or inapplicable); Judgment of 11 February 2009, 2009 Rev. arb. 155
(French Cour de cassation); Judgment of 25 November 2008, Tavagliavini v. Les Pains du
Sud, 2008 Rev. arb. 681, 682 (French Cour de cassation civ. 1e) (only obstacle to the
primary comptence of the arbitrator [to rule upon his own jurisdiction] is the nullity or
manifest inapplicability of the arbitration agreement; as a consequence of its autonomy
with regard to the main contract in which it is included, [the arbitration agreement] is
not affected by the invalidity of that contract); Judgment of 9 July 2008, 2008 Rev. arb.
680 (French Cour de cassation civ. le). See3.03[A][2][d].
350) See, e.g., Call, Application par la Cour des principes de validit de la clause
compromissoire et de comptence-comptence, JCP G 2006, II, 10182; Gaillard, Leffet
ngatif de la comptence-comptence, in Etudes de procdure et darbitrage en lhonneur
de Jean-Franois Poudret 387, 399 (1999); Gaillard, Les manoeuvres dilatoires des parties et
des arbitres dans larbitrage commercial international, 1990 Rev. arb. 759.
For criticism of this approach, see A. Samuel, Jurisdictional Problems in International
Commercial Arbitration 191 (1989) (It is difficult to know how void an arbitral clause must
be to be manifestement nulle.; There isno reason why a court, which has to deal with
the case anyway, cannot resolve there and then any outstanding disputes about the
validity or applicability of the arbitral clause.).
351) See generallyE. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 668-88 (1999).
352) Decree No. 2011-48 of 13 January 2011 reforming the law governing arbitration. For
commentary, see7.03[B][2].
353) French Code of Civil Procedure, Art. 1465 (The arbitral tribunal has exclusive jurisdiction
to rule on objections to its jurisdiction.).
Prior to 2011, the applicable provision of French law was Article 1466 of the French New
Code of Civil Procedure (1981 Decree), which provided: If, before the arbitrator, one of
the parties challenges the principle or scope of the arbitrators jurisdiction, the
arbitrator shall rule on the validity or scope of his or her jurisdiction. See M. de
Boissson, Le droit franais de larbitrage interne et international 250 (2d ed. 1990); J.-L.
Dlvolv, J. Rouche & G. Pointon, French Arbitration Law and Practice 93-94 nn.172, 173 (2d
ed. 2009); Jarrosson & Pellerin, Le droit franais de larbitrage aprs le dcret du 13 janvier
2011, 2011 Rev. arb. 5.
354) French Code of Civil Procedure, Art. 1506(3).
355) Although not expressly addressed, parties would presumably be free to exclude from
the tribunals mandate the power to consider and resolve jurisdictional disputes. This
would be unlikely, but not inconceivable, in practice. Cf. Judgment of 5 January 1999,
Zanzi v. de Coninck, 1999 Rev. arb. 260 (French Cour de cassation civ. 1e); E. Gaillard & J.
(1999).
356) French Code of Civil Procedure, Art. 1448(1) (When a dispute subject to an arbitration
is manifestly void or manifestly not applicable.).
357) Judgment of 8 July 2010, 2010 Rev. arb. 515 (French Cour de cassation civ. 1e); Judgment of
12 May 2010, El Assidi v. Socit Nest & Socits SYS APS, 2010 Rev. arb. 391 (French Cour
de cassation civ. 1e); Judgment of 28 June 1989, Eurodif v. Islamic Repub. of Iran, 1989 Rev.
arb. 653 (French Cour de cassation civ. 1e); Judgment of 8 December 2009, Lebanon v. KSA,
2(2) Intl J. Arab Arb. 235, 249 (2010) (Paris Cour dappel) (it is the arbitrators role to rule
in priority on his own competence, that only an invalidity or manifest non-applicability
is of a kind to create an obstacle to arbitral competence to rule on its existence, the
validity and the scope of the arbitration agreement). See M. de Boissson, Le droit
franais de larbitrage interne et international 597 (2d ed. 1990); Gaillard, Leffet ngatif
de la comptence-comptence, in Etudes de procdure et darbitrage en lhonneur de Jean-
Franois Poudret 387 (1999).
358) French Code of Civil Procedure, Art. 1506(2). See Jarrosson, Les principales tendances du
nouveau droit franais de larbitrage international, 4 IproLex 812 (2011). The revised
French Code also provides that parties may not, by agreement, alter the allocation of
jurisdictional competence prescribed by Article 1448. See French Code of Civil
Procedure, Art. 1448(3) (any contractual provision contrary to [Article 1448] is
unenforceable).
166
359) See, e.g.,Judgment of 4 November 2010, X v. Socit Lehimosa, 2010 Rev. arb. 976 (French
Cour de cassation civ. 1e); Judgment of 9 June 2010, Socit Evekas v. Socit Macifila,
2010 Rev. arb. 396 (French Cour de cassation civ. 1e); Judgment of 4 June 2009, Socit
Inos European Holding Ltd v. Socit UOP NV, 2009 Rev. arb. 652, 652 (French Cour de
cassation civ. 1e) (it is for the arbitrator, and not the court, to rule primarily upon the
validity and scope of his [mandate]); Judgment of 8 April 2009, Corema v. Gefu
Kuchenboss GmbH, 2009 Rev. arb. 434, 434 (French Cour de cassation civ. 1e) (arbitrator
is primarily competent to rule upon the expiry of the arbitration agreement); Judgment
of 5 January 1999, Zanzi v. de Coninck, 1999 Rev. arb. 260, 261 (French Cour de cassation
civ. 1e); Judgment of 6 July 1995, Socit Recape v. Socit CSF, 2005 Rev. arb. 801 (French
Cour de cassation civ. 1e); Judgment of 10 May 1995, Coprodag v. Dame Bohin, 1995 Rev.
arb. 617, 618 (French Cour de cassation civ. 2e) (arbitral tribunal alone has jurisdiction
to rule on the validity or limits of its appointment, provided that question has been
brought before it), Note, Gaillard; Judgment of 29 March 2010, Repub. of Equatorial
Guinea v. Fitzpatrick Equatorial Guinea, Case No. 10-52825 (Paris Tribunal de Grande
Instance) (rejecting request for antiarbitration injunction application because once
arbitral tribunal is formed, only arbitrators have power to deal with their own
jurisdiction).
360) French Code of Civil Procedure, Art. 1455 (If an arbitration agreement is manifestly void
or manifestly not applicable, the judge acting in support of the arbitration shall declare
that no appointment need be made.).
361) See, e.g.,Judgment of 26 January 2011, 2011 Rev. arb. 283 (French Cour de cassation civ.
1e); Judgment of 6 October 2010, Socit Blonde gntique v. SCEA Plante Moulet, 2010
Rev. arb. 971 (French Cour de cassation civ. 1e); Judgment of 8 December 2009, Socit
Bara v. Socit Prodim, 2010 Rev. arb. 177 (French Cour de cassation civ. 1e) (since no
arbitration agreement was inserted in a first contract between the parties, the
arbitration agreement included in a second contract between the same parties was
manifestly inapplicable to the dispute arising out of the first contract so that the Court
was entitled to rule upon his own jurisdiction); Judgment of 12 November 2009, Trioplast
SMS v. St. Germaine, Case No. 1120 (French Cour de cassation); Judgment of 11 July 2006,
Socit PT Andhika Lines v. Socit AXA, 2006 Rev. arb. 981 (French Cour de cassation civ.
1e); Judgment of 11 July 2006, Socit Natl Broadcasting Co. v. Bernadaux, JCP G 2006, II,
10182 (French Cour de cassation civ. 1e); Judgment of 5 January 1999, Zanzi v. de Coninck,
1999 Rev. arb. 260 (French Cour de cassation civ. 1e); Judgment of 24 June 1998, Coprodag
v. Dame Bohin, unreported decision (French Cour de cassation civ. 2e) (if a doubt could
have remained regarding the nature of the relationship between the parties, the
assessment could exclusively be made by the arbitral tribunal, as long as this doubt
prevented, by its existence, the contested clause to be considered as manifestly null);
Judgment of 15 June 2006, Legal Dept of the Ministry of Justice of the Repub. of Iraq v.
Fincantieri, XXXI Y.B. Comm. Arb. 635, 639 (Paris Cour dappel) (2006) (When there is an
arbitration agreement, even when the arbitral tribunal has not been seized, the state
court must find that it lacks jurisdiction unless a summary examination allows it to hold
that the clause is null and void or manifestly inapplicable. The arbitrator has priority
and may decide on his own competence to decide on the validity and efficacy of the
arbitration clause.); Judgment of 3 October 1996, Logic Groupe Concept v. Logi Concept,
1997 Rev. arb. 433 (Grenoble Cour dappel); Judgment of 7 December 1994, V 2000
(Formerly Jaguar France) v. Project XJ 220 ITD, 1996 Rev. arb. 245 (Paris Cour dappel),
affd, Judgment of 21 May 1997, 1997 Rev. arb. 537 (French Cour de cassation civ. 1e). See
also Diallo, Commentaire sous Cass. civ. 1e, 28 Novembre 2006, 134 J.D.I. (Clunet) 4 n.24
(2007) (the competence-competence principle [is] a material rule of French arbitration
law which is only limited by the nullity or manifest inapplicability of the arbitration
agreement).
362) French New Code of Civil Procedure (1981 Decree), Art. 1458 ((1) Where a dispute
submitted to an arbitral tribunal by virtue of an arbitration agreement is brought before
a national court, such court shall decline jurisdiction. (2) If the arbitral tribunal has not
yet been seized of the matter, the court shall also decline jurisdiction unless the
arbitration agreement is manifestly void.) (repealed).
363) See authorities cited 7.03[B], p. 1114 nn. 366-67.
365) See J.-L. Dlvolv, J. Rouche & G. Pointon, French Arbitration Law and Practice 77, 93, n.174
(2d ed. 2009); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 672 (1999). See alsoJudgment of 8 July 2010, Doga v. HTC, 2010
Rev. arb. 680 (French Cour de cassation civ. 1e) (scope of arbitration agreement);
Judgment of 17 March 2010, Socit Pac. Auto v. Socit KAL, 2010 Rev. arb. 385 (French
Cour de cassation civ. 1e) (scope of arbitration agreement); Judgment of 12 November
2009, Socit St. Germaine v. Socit Trioplast AB, 2009 Rev. arb. 929 (French Cour de
cassation civ. 1e); Judgment of 8 April 2009, Corema v. Gefu Kuchenboss GmbH, 2009 Rev.
arb. 434 (French Cour de cassation civ. 1e) (expiry of arbitration agreement); Judgment of
11 February 2009, Socit Afitex v. Socit Laviosa, 2009 Rev. arb. 235 (French Cour de
cassation civ. 1e) (expiry of arbitration agreement); Judgment of 14 November 2007,
Socit SIAL v. Socit Vinexpo, 2007 Rev. arb. 931 (French Cour de cassation civ. 1e)
(contradiction between arbitration agreement and forum selection clause in contract).
366) Judgment of 7 June 2006, 2007 Rev. arb. 945 (French Cour de cassation); Judgment of 15
June 2006, 2007 Rev. arb. 87 (Paris Cour dappel).
167
367) Judgment of 30 November 2011, Socit Deloitte Conseil v. Serant, 2012 Rev. arb. 333, 336
(French Cour de cassation soc.).
368) SeeJudgment of 6 October 2010, Fondation Albert Abela Family v. Fondation Joseph Abela
Family, 2010 Rev. arb. 969, 969 (French Cour de cassation civ. 1e) (annulment judge
reviews the arbitral tribunals award on jurisdiction, regardless of whether it is positive
or negative, by enquiring into all the legal and factual elements [of the dispute]
enabling him to determine the scope of the arbitration agreement); Judgment of 6
January 1987, S. Pac. Props. Ltd v. Rpublique Arabe dEgypte, 26 Intl Legal Mat. 1004, 1006
(1987) (French Cour de cassation civ. 1e) (there is no restriction upon the power of the
court to examine as a matter of law and in consideration of the circumstances of the
case, elements pertinent to the grounds in question including jurisdictional objections);
Diallo, Commentaire sous Cass. civ. 1e, 28 Novembre 2006, 134 J.D.I. (Clunet) 4 n.24 (2007)
(If it is for the arbitrator to rule upon the existence and scope of [the parties] consent
[to arbitration]; the award rendered on this issue can be contested by any party at the
stage of annulment or enforcement proceedings.); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 1605 (1999).
369) Judgment of 6 January 1987, S. Pac. Props. Ltd v. Rpublique Arabe dEgypte, 26 Intl Legal
Mat. 1004, 1006 (1987) (French Cour de cassation civ. 1e). See alsoJudgment of 16 June
1988, Socit Swiss Oil Corp. v. Socit Petrogab & Rpublique du Gabon, 1989 Rev. arb.
309 (Paris Cour dappel).
370) Judgment of 6 January 1987, S. Pac. Props. Ltd v. Rpublique arabe dEgypte, 26 Intl Legal
Mat. 1004, 1006 (1987) (French Cour de cassation civ. 1e). See also J.-L. Dlvolv, J. Rouche
& G. Pointon, French Arbitration Law and Practice 173 (2009); Mayer, Lautonomie de
larbitre international dans lapprciation de sa propre comptence, 217 Recueil des Cours
319, 339-42 (1989).
371) See, e.g.,Judgment of 6 October 2010, Fondation Albert Abela Family v. Fondation Joseph
Abela Family, 2010 Rev. arb. 969, 969 (French Cour de cassation civ. 1e) (annulment judge
reviews the arbitral tribunals award on jurisdiction, regardless of whether it is positive
or negative, by enquiring into all the legal and factual elements [of the dispute]
enabling him to determine the scope of the arbitration agreement); Judgment of 26
March 2009 2010 Rev. arb. 533 (Paris Cour dappel); Judgment of 26 October 1995, Socit
Nationale des Chemins de Fer Tunisiens v. J.M. Voith AG, 1997 Rev. arb. 553 (Paris Cour
dappel); Judgment of 16 June 1988, Socit Swiss Oil Corp. v. Socit Petrogab &
Rpublique du Gabon, 1989 Rev. arb. 309, 313 (Paris Cour dappel) ([T]his power of review,
which is given to the court under Article 1502(1) [of the 1981 Decree] in the case where the
arbitrators hold that they have jurisdiction over the case, cannot be denied to the court
in a casewhere the arbitrators have denied jurisdiction. To hold the contrary would
mean granting different guarantees to the parties.); Call, Application par la Cour des
principes de validit de la clause compromissoire et de comptence-comptence, JCP G
2006, II, 10182; Chevalier, Le contrle entier de lincomptence arbitrale: reconnaissance et
limites, JCP G 2010, 1028 n.42.
372) See7.03[A][5]; 7.03[I][2]; Mayer, Lautonomie de larbitre international dans lapprciation
de sa propre comptence, 217 Recueil des Cours 319, 340 (1989) (We must make a
distinction between, on the one hand, an agreement quite commonplace today by
which an arbitrator may rule on his jurisdiction [referring to the ICC Rules], and on the
other hand, an agreement by which the arbitrators decision on this issue is shielded
from any judicial control. The latter type of agreement must be explicit and we
practically never come across it.).
373) See1.02[B][6]; J.-L. Dlvolv, J. Rouche & G. Pointon, French Arbitration Law and Practice
54-56 (2d ed. 2009); E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on
374) See French Code of Civil Procedure, Art. 1448(3) (any contractual provision contrary to
[Article 1448] is unenforceable).
375) Swiss Cantonal Concordat, 1969, Art. 8(1), now replaced by the Swiss Code of Civil
Procedure, Article 359(1), entered into force on 1 January 2011. See W. Habscheid, Das
Problem der Kompetenz-Kompetenz des Schiedsgerichts, 78 Schweiz. Juristenzeitung 321,
327 (1982) (explaining rationale for Swiss rule permitting interlocutory judicial decisions
on validity of arbitration clause); P. Jolidon, Commentaire du Concordat Suisse sur
larbitrage 185 (1984); P. Lalive, J.-F. Poudret & C. Reymond, Le droit de larbitrage interne
et international en Suisse Art. 186, 1 et seq. (1989). Compare A. Bucher & P.-Y. Tschanz,
International Arbitration in Switzerland 139 et seq. (1988).
376) As noted above, Swiss courts have applied a separability presumption since at least the
late 19th century. See3.02[B][3][b], pp. 365-66. This presumption has been statutorily
confirmed in Article 178(3) of the Swiss Law on Private International Law. See3.02[B][3]
[b], p. 366. As a consequence, most challenges to the validity or legality of the parties
underlying contract, including challenges based upon fraud, illegality and initial
invalidity, do not impeach the arbitration agreement and are therefore for the arbitral
tribunal (not a Swiss court) to resolve. See, e.g.,Judgment of 20 December 1995, DFT 121 III
495 (1995) (Swiss Federal Tribunal); G. Kaufmann-Kohler & B. Stucki, International
Arbitration in Switzerland: A Handbook for Practitioners 28 (2004). See3.03[A][2][e], p.
448.
168
379) Article 186(3) admits of the possibility, if only exceptionally, that a decision as to
jurisdiction will not be taken as a preliminary decision, but will instead be reserved
until a decision on the merits. See B. Berger & F. Kellerhals, International and Domestic
Arbitration in Switzerland 650 (2d ed. 2010); Karrer & Straub, in F.-B. Weigand (ed.),
Practitioners Handbook on International Arbitration 12.36 (2d ed. 2009); Wenger, in S.
Berti et al. (eds.), International Arbitration in Switzerland Art. 186, 46 (2000) ([The
arbitral tribunal] can deal with the jurisdiction issue at a later stage in the proceedings
either in an interim decision, which might also deal with other questions of a
procedural or substantive nature or after dealing with the whole dispute in the final
award. The statute leaves it to the discretion of the arbitral tribunal to choose the best
time.) (emphasis in original).
380) Swiss Law on Private International Law, Art. 186(1 bis) ([The arbitral tribunal] shall
decide on its jurisdiction notwithstanding an action on the same matter between the
same parties already pending before a State court or another arbitral tribunal, unless
serious reasons require a stay of the proceedings.). For comments on the provision, see
B. Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 650 (2d
ed. 2010); Besson, Le recours contre la sentence arbitrale internationale selon la nouvelle
LTF (aspects procduraux), 25 ASA Bull. 2 (2007); Mller, Neues aus der schweizerischen
Gesetzgebung zur internationalen und nationalen Schiedsgerichtsbarkeit, 24 ASA Bull. 647
(2006). See also27.03[B][2][d].
381) Swiss Law on Private International Law, Art. 7. The text of Article 7 parallels that of Article
8 of the UNCITRAL Model Law and Article II of the New York Convention. See7.02[A][1];
7.03[A].
382) This was also the predominant view of Swiss commentary. P. Lalive, J.-F. Poudret & C.
Reymond, Le droit de larbitrage interne et international en Suisse Art. 186, 16 (1989); F.
Vischer, L. Huber & C. Oser, Internationales Vertragsrecht 1461 (2000); Volken, in D.
Girsberger et al. (eds.), Zrcher Kommentar zum IPRG Art. 7, 26 (2d ed. 2004); Wenger, in
S. Berti et al. (eds.), International Arbitration in Switzerland Art. 186, 9 (2000) (If the
state court was seized first, the arbitral tribunal shall stay its proceedings until there is
a binding decision on the plea of arbitration.).
383) See, e.g.,Judgment of 6 August 2012, DFT 4A_119/2012, 3.2 (Swiss Federal Tribunal)
(When a jurisdictional defense based on the arbitration agreement is raised before the
state court and the arbitral tribunal has its seat in Switzerland, the state courts power
of review is limited, according to the case law of the Federal Tribunal. The court must
deny jurisdiction unless a summary review of the arbitration agreement leads to the
conclusion that it is void, inoperative, or incapable of being performed. This ensures
that the decision of the arbitral tribunal as to its own jurisdiction is not prejudged by the
decision of the state court.); Judgment of 29 April 1996, Found. M v. Banque X, 14 ASA Bull.
527 (Swiss Federal Tribunal) (1996); Judgment of 16 January 1995, Compagnie de Navigation
et Transps. SA v. Mediterranean Shipping Co., XXI Y.B. Comm. Arb. 690, 696 (Swiss Federal
Tribunal) (1996). See also Perret, Parallel Actions Pending Before An Arbitral Tribunal and A
State Court: The Solution Under Swiss Law, in Arbitral Tribunals or State Courts: Who Must
Defer to Whom? 65, 66 (ASA Spec. Series No. 15 2001).
384) See7.03[B]. In contrast to the Swiss approach, French courts appear to adopt a prima
facie jurisdictional review regardless whether the arbitral seat is within France or
abroad.
385) See, e.g.,Judgment of 6 August 2012, DFT 4A_119/2012, 3.3 (Swiss Federal Tribunal) (The
issue of the substantive scope of the arbitration clause may also be reviewed later in
the framework of an appeal against the award according to Art. 190(2)(b), which is why
the state court has limited power of review as to the assessment of an arbitration
defense as well.); Judgment of 13 September 2004, 23 ASA Bull. 145, 150 (Swiss Federal
Tribunal) (2005); Judgment of 29 April 1996, Found. M v. Banque X, 14 ASA Bull. 527 (Swiss
Federal Tribunal) (1996); Judgment of 19 April 1994, United Arab Emirates v. Westland
Helicopters Ltd, DFT 120 II 155 (Swiss Federal Tribunal); Judgment of 25 August 2004, 23
ASA Bull. 540, 541 (Zurich S.Ct.) (2005); Mayer, Die berprfung internationaler
Schiedsvereinbarungen durch staatliche Gerichte berlegungen zu BGE 121 III 38 und BGE
122 III 139, 13 ASA Bull. 361, 365-79 (1995); Poudret & Cottier, Remarques sur lapplication
de larticle de la Convention de New York (ATF du 16 janvier 1995), 13 ASA Bull. 383 (1995).
See alsoPoudret, Le pouvoir dexamen du juge suisse saisi dune exception darbitrage, 23
ASA Bull. 401, 403 (2005); Wenger & Schott, in H. Honsell et al. (eds.), Internationales
Privatrecht Art. 186, 7a (2d ed. 2007).
386) Judgment of 6 August 2012, DFT 4A_119/2012, 3.2 (Swiss Federal Tribunal). The same
decision explained the rationale for limited interlocutory judicial review as follows:
Limited judicial review by the state court at this stage is justified because in the
framework of an appeal against the award the state court may subsequently review
freely whether or not the arbitral tribunal rightly assumed or denied jurisdiction.
Judgment of 6 August 2012, DFT 4A_119/2012, 3.2 2012 (Swiss Federal Tribunal).
169
387) See, e.g.,Judgment of 6 August 2012, DFT 4A_119/2012 (Swiss Federal Tribunal); Judgment
of 16 January 1995, Compagnie de Navigation et Transps. SA v. Mediterranean Shipping Co.,
XXI Y.B. Comm. Arb. 690, 696 (Swiss Federal Tribunal) (1996); Judgment of 13 May 2005,
Rpublique et Canton de Genve, 24 ASA Bull. 128, 131 (Geneva Cour dappel) (2006).
It has been suggested that the addition of Article 186(1 bis) to the Swiss Law on Private
International Law implies the applicability of a prima facie standard for arbitration
agreements with non-Swiss seats. Wenger & Schott, in H. Honsell et al. (eds.),
Internationales Privatrecht Art. 186, 7b (2d ed. 2007). Nonetheless, the Swiss Federal
Tribunal has emphatically reaffirmed the principle of de novo judicial review in cases
involving foreign seats. See Judgment of 25 October 2010, DFT 4A_279/2010 (Swiss Federal
Tribunal).
388) A proposal to amend Article 7 of the Swiss Law on Private International Law has been
under consideration by the Swiss Parliament since 2008. The amendment would require
state courts to stay proceedings (including jurisdictional proceedings) until the arbitral
tribunal decided upon its jurisdiction, unless the court finds on a prima facie basis that
the parties have not entered into an arbitration agreement, irrespective of whether the
tribunals seat is located in Switzerland or abroad. SeeTschanz, De lopportunit de
modifier lart. 7 LDIP, 28 ASA Bull. 478 (2010). By adopting the proposal, Switzerland
would follow France in recognizing the second half of the negative effect of
competence-competence. Gaillard, La reconnaissance, en droit suisse, de la seconde
moiti du principe deffet ngatif de la comptence-comptence, in G. Aksen et al. (eds.),
International Law, Commerce and Dispute Resolution, Liber Amicorum in Honour of Robert
Briner 311 (2005). For criticism of the proposal, see Berger, Kritische Gedanken zur Revision
von Art. 7 IPRG im Lichte eines praktischen Beispiels, 29 ASA Bull. 33 (2011).
Two committees have been organized to study the proposed amendment to the Swiss
Law on Private International Law (being the Kommission fr Rechtsfragen des
Nationalrats (or Commission of the National Council) and Kommission fr Rechtsfragen
des Stnderats (or Commission of the Cantons Council)). Both bodies recommended
rejecting the proposed amendment.
389) As discussed above, the arbitration provisions of the Swiss Law on Private International
Law apply only to arbitration agreements providing for arbitration in Switzerland.
See2.04[B], p. 347; 7.03[C].
390) See11.03[C][1][a]; 11.03[C][2][c]; 22.04.
391) See22.01; 22.03.
392) Judgment of 16 January 1995, Compagnie de Navigation et Transps. SA v. Mediterranean
Shipping Co., XXI Y.B. Comm. Arb. 690, 696 (Swiss Federal Tribunal) (1996).
393) Judgment of 16 January 1995, Compagnie de Navigation et Transps. SA v. Mediterranean
Shipping Co., XXI Y.B. Comm. Arb. 690 (Swiss Federal Tribunal) (1996). Compare Mayer, Die
berprfung internationaler Schiedsvereinbarungen durch staatliche Gerichte
berlegungen zu BGE 121 III 38 und BGE 122 III 139, 14 ASA Bull. 361, 374 (1996) (prima facie
review proposed where seat is abroad).
ed. 2010); Wenger & Schott, in H. Honsell et al. (eds.), Internationales Privatrecht Art. 186,
3 (2d ed. 2007).
395) Swiss Law on Private International Law, Art. 192; 25.07[A][1], pp. 3365-66.
396) See Patocchi & Jermini, in H. Honsell et al. (eds.), Internationales Privatrecht Art. 192, 24
(2d ed. 2007); Wenger, in S. Berti et al. (eds.), International Arbitration in Switzerland Art.
186, 3 & Art. 192, 25 (2000). See also Judgment of 11 February 2010, DFT 4A_444/2009
(Swiss Federal Tribunal) (dismissing challenge of jurisdictional award upholding arbitral
tribunals power to decide on its own jurisdiction).
397) See, e.g.,Judgment of 3 January 2011, DFT 4A_386/2010, 5.2 (Swiss Federal Tribunal)
([H]e who addresses the merits without reservation in contradictory arbitral
proceedings involving an arbitral matter thereby recognizes the jurisdiction of the
arbitral tribunal and definitely loses the right to challenge the jurisdiction of the
tribunal. However, the respondent may state its position on the merits in an alternate
way, only for the case in which the defense of lack of jurisdiction would be rejected,
without thus tacitly accepting the jurisdiction of the arbitral tribunal.); Mller-Chen &
Egger, in T. Sutter-Somm, F. Hasenbhler & C. Leuenberger (eds.), Kommentar zur
Schweizerischen Zivilprozessordnung (ZPO) Art. 359, 35 et seq. (2d ed. 2010); Wenger &
Schott, in H. Honsell et al. (eds.), Internationales Privatrecht Art. 186, 48 et seq. (2d ed.
2007).
398) SeeSwiss Law on Private International Law, Art. 190(2)(b). In contrast to uncertainty under
the Model Law (see7.03[A][4][a]), an arbitral tribunals preliminary jurisdictional
decision is expressly denominated an award, and subject to judicial review and
recognition. Swiss Law on Private International Law, Arts. 186(1), 190(2)(b).
399) See Swiss Law on Federal Tribunal, Arts. 77(2), 105(1). See alsoJudgment of 9 June 2009, DFT
4A_94/2009 (Swiss Federal Tribunal) (although tribunals jurisdictional decision is
subject to de novo review (reviewed freely), review is based upon tribunals factual
findings); Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119 II 380,
383 (Swiss Federal Tribunal) (Swiss arbitration regime would be seriously compromised
if judicial review enabled Swiss Federal Tribunal freely to review the findings of fact
made by the arbitral tribunal in the same way as an appeal court).
170
400) Judgment of 2 September 1993, Natl Power Corp. v. Westinghouse, DFT 119 II 380, 384
(Swiss Federal Tribunal). See alsoJudgment of 17 August 1995, 14 ASA Bull. 673 (Swiss
Federal Tribunal) (1996) (de novo review of arbitrators jurisdictional findings).
401) Swiss Law on Private International Law, Art. 190(2)(b) (Action for setting aside the award
may only be initiated(b) where the arbitral tribunal has wrongly declared itself to have
or not to have jurisdiction.). See alsoJudgment of 9 June 2009, DFT 4A_94/2009 (Swiss
Federal Tribunal) (holding that arbitral tribunal wrongly declined jurisdiction and lower
court wrongly assumed jurisdiction).
402) See3.02[B][3][a], p. 362; Berger, Germany Adopts the UNCITRAL Model Law, 1998 Intl Arb.
L. Rev. 121, 122; P. Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit
556 (2d ed. 1989).
403) Judgment of 26 May 1988, 1988 NJW-RR 1526, 1527 (German Bundesgerichtshof). See also
Judgment of 5 May 1977, 1977 NJW 1397, 1400 (German Bundesgerichtshof); Judgment of 3
March 1955, 1955 BB 552 (German Bundesgerichtshof); K. Lionnet & A. Lionnet, Handbuch
der internationalen und nationalen Schiedsgerichtsbarkeit 3 III 5 a) (3d ed. 2005); P.
Schlosser, Arbitral Tribunals or State Courts: Who Must Defer to Whom?, in Arbitral
Tribunals or State Courts: Who Must Defer to Whom? 27 (ASA Spec. Series No. 15 2001); P.
Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit 556 (2d ed.
1989).
404) German ZPO, 1032.
405) German judicial authority thus far appears to confirm this view. Judgment of 13 January
2005, 2005 NJW 1125 (German Bundesgerichtshof); Judgment of 30 October 2008, 2009
MDR 465 (Hanseatisches Oberlandesgericht Bremen); Judgment of 31 May 2007, IPRspr
2007, Nr 218, 614, 615 (Oberlandesgericht Celle). Cf. Judgment of 23 February 2006, 2006
SchiedsVZ 161, 164 (German Bundesgerichtshof).
406) See Schlosser, in F. Stein & M. Jonas (eds.), Kommentar zur Zivilprozessordnung 1040, 2
(22d ed. 2002) (arbitrators do not necessarily have first word on jurisdictional issues
under new German legislation).
407) German ZPO, 1032(2); Judgment of 13 January 2005, 2005 NJW 1125, 1126 (German
Bundesgerichtshof) (where party challenges validity of arbitration agreement, German
courts may consider challenge on interlocutory basis); Geimer, in R. Zller (ed.),
Zivilprozessordnung 1032, 23 (30th ed. 2013); J.-P. Lachmann, Handbuch fr die
Schiedsgerichtspraxis 662 et seq. (3d ed. 2008); Wagner, in F.-B. Weigand (ed.),
Practitioners Handbook on International Arbitration 7.43 (2d ed. 2009).
408) Berger, Germany Adopts the UNCITRAL Model Law, 1998 Intl Arb. L. Rev. 121, 122;
Schlosser, La nouvelle lgislation allemande sur larbitrage, 1998 Rev. arb. 291, 298; Voit,
in H.-J. Musielak (ed.), Kommentar zur Zivilprozessordnung 1032, 14 (9th ed. 2012);
Wagner, in F.-B. Weigand (ed.), Practitioners Handbook on International Arbitration 7.39
(2d ed. 2009).
It appears that this provision may be invoked to prevent an adverse party from starting,
or proceeding with, constitution of the arbitral tribunal. Judgment of 10 February 1999,
RPS 2/1999, Supp. 11 Betriebsberater 38/1999 (Oberlandesgericht Hamm). Nonetheless,
1032(3) permits an arbitral tribunal to be constituted and an arbitration to proceed
notwithstanding the pendency of an action challenging the existence, validity, legality,
or scope of the arbitration agreement in a German court.
409) See7.03[B].
410) See, e.g., Judgment of 7 October 2002, 2003 NJW-RR 354 (Bayerisches Oberstes
Landesgericht). See also Geimer, in R. Zller (ed.), Zivilprozessordnung 1032, 14 (30th
ed. 2013); K. Lionnet & A. Lionnet, Handbuch der internationalen und nationalen
Schiedsgerichtsbarkeit 3 III 3 b) (3d ed. 2005); Wagner, in F.-B. Weigand (ed.),
Practitioners Handbook on International Arbitration 7.39 (2d ed. 2009).
411) See7.03[B].
412) See 7.03[A][2][b][ii], pp. 1087-88.
413) German ZPO, 1059(2).
414) K.-P. Berger, The New German Arbitration Law in International Perspective, 26 Forum Intl 9
(2000). See also Judgment of 13 January 2005, III ZR 265/03 (German Bundesgerichtshof)
(agreement granting arbitrators power to finally decide jurisdictional dispute not valid);
Habscheid, Zur Kompetenz-Kompetenz nach dem neuen Schiedsrecht, in Festschrift Peter
Schlosser 247 (2005); Kremer & Weimann, 2007 SchiedsVZ 238, 240; Krll, Recourse Against
Negative Decisions on Jurisdiction, 20 Arb. Intl 55 (2004); Mnch, in T. Rauscher, P. Wax &
J. Wenzel (eds.), Mnchener Kommentar zur Zivilprozessordnung 1040, 51 (3d ed. 2008)
(arbitration agreement providing for Kompetenz-Kompetenz ineffective because it
violates mandatory law); Voit, in H.-J. Musielak (ed.), Kommentar zur Zivilprozessordnung
1040, 2 (9th ed. 2012). Contra Geimer, in R. Zller (ed.), Zivilprozessordnung 1059, 8
(30th ed. 2013) (parties are able to waive judicial review of issues affecting private
interests); Rau, The Arbitrability Question Itself, 10 Am. Rev. Intl Arb. 287, 349 (1999) (I
confess I am hard put to understand why the Model Law should be thought to have any
bearing whatever on this question.).
415) See7.03[E][2].
416) Not all German authorities agree with general statements that German law does not
permit agreements to resolve jurisdictional disputes finally by arbitration. SeeJudgment
of 24 June 1999, XXIX Y.B. Comm. Arb. 687, 688 (Schleswig-Holsteinisches
Oberlandesgericht) (2004) (no reason to doubt the validity of the Kompetenz-
Kompetenz clause agreed on by the parties after their dispute arose).
171
417) Geimer, in R. Zller (ed.), Zivilprozessordnung 1040, 8 (30th ed. 2013). It is doubtful
whether this provision, whatever its practical merits, is consistent with Article VI(3) of
the European Convention, requiring presumptive suspension of judicial proceedings on
jurisdictional issues if arbitral proceedings are underway. See7.02[A][2], p. 1058.
418) Geimer, in R. Zller (ed.), Zivilprozessordnung 1040, 8 (30th ed. 2013); Wagner, in F.-B.
Weigand (ed.), Practitioners Handbook on International Arbitration 7.39 (2d ed. 2009).
419) Judgment of 6 June 2002, 2003 SchiedsVZ 39 (German Bundesgerichtshof). As noted above,
the decision is contrary to an earlier lower court decision, reasoning in dicta that
judicial review of a negative jurisdictional award would be available in an annulment
action. See Judgment of 4 September 1998, 2000 NJW-RR 806 (Hanseatisches
Oberlandesgericht Hamburg). See also Voit, Die Entscheidung des Schiedsgerichts ber die
eigene Unzustndigkeit als Prfstein der dogmatischen Grundlagen des
Schiedsverfahrensrechts, in Festschrift fr Musielak 595 (2004); 7.02[B][6].
420) See7.03[A][4][c]; 7.03[E][7][a].
421) See7.03[A][4][c] (citing cases).
422) As noted above, U.S. courts have long applied the separability presumption, which has
statutory roots in the FAA. See3.02[B][3][c]. As a consequence, most challenges to the
parties underlying contract, including challenges based upon illegality, fraud and initial
invalidity, do not impeach the arbitration agreement under the FAA and are therefore
for the arbitral tribunal (not a U.S. court) to resolve, subject to eventual judicial review
of the award. See 3.02[B][2][c], p. 367; Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440 (U.S. S.Ct. 2006).
423) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995).
424) See, e.g., Bermann, The Gateway Problem in International Commercial Arbitration, 37
Yale J. Intl L. 1 (2012); Park, The Arbitrators Jurisdiction to Determine Jurisdiction, in A. van
den Berg (ed.), International Arbitration 2006: Back to Basics? 55 (ICCA Congress Series
No. 13 2007); Park, Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts
and Arbitrators, 9 Arb. & Disp. Res. L.J. 19 (2000); Park, The Arbitrability Dicta in First
Options v. Kaplan: What Sort of Kompetenz-Kompetenz Has Crossed the Atlantic?, 12 Arb.
Intl 137 (1996); Philipp, Is the Supreme Court Bucking the Trend? First Options v. Kaplan in
Light of European Reform Initiatives in Arbitration Law, 14 B.U. Intl L.J. 119 (1996); Reuben,
First Options, Consent to Arbitration and the Demise of Separability: Restoring Access to
Justice for Contracts With Arbitration Provisions, 56 S.M.U. L. Rev. 819 (2003); Ware,
Arbitration Laws Separability Doctrine After Buckeye Check Cashing Inc. v. Cardegna, 8
Nev. L.J. 107 (2007); Wyss, First Options of Chicago, Inc. v. Kaplan: A Perilous Approach to
Kompetenz-Kompetenz, 72 Tulane L. Rev. 351 (1997).
Other commentators are less critical. See Rau, Arbitral Jurisdiction and the Dimensions of
Consent, 24 Arb. Intl 199 (2008); Rau, Arbitral Power and the Limits of Contract: The New
Trilogy, 22 Am. Rev. Intl Arb. 435 (2011); Rau, Everything You Really Need to Know About
Separability in Seventeen Simple Propositions, 14 Am. Rev. Intl Arb. 1 (2004); Reisberg,
The Rules Governing Who Decides Jurisdictional Issues: First Options v. Kaplan Revisited, 20
Am. Rev. Intl Arb. 159 (2010).
425) See7.03[E][8], p. 1197; Reisberg, The Rules Governing Who Decides Jurisdictional Issues:
First Options v. Kaplan Revisited, 20 Am. Rev. Intl Arb. 159, 159 (2010) ([T]he rules that
govern the who is to decide question once were well defined. Today, however, there
exists significant confusion as to how a court is to decide which forum, the court or the
arbitrator, has the jurisdiction to decide this threshold issue.).
426) See1.04[B][1][e][iii], p. 160; Brin, The Arbitration Fairness Act of 2009, 25 Ohio St. J. Disp.
Res. 821 (2010); Lanctot, Reality Check: Is the United States Arbitration Fairness Act of
2009 Likely To Cause Problems With International Arbitration Beyond Theory?, 13
Vindobona J. 307 (2009); Moora, Arbitration Fairness Act of 2009 Introduced, 15(3) Disp.
Res. Mag. 30 (2009). See also Davis, A Model for Arbitration Law: Autonomy, Cooperation
and Curtailment of State Power, 26 Fordham Urb. L.J. 167 (1999) (criticizing severability
doctrine by arguing that compelling arbitration too early deprives resisting party of
freedom of contract).
427) See, e.g., PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 407 (U.S. S.Ct. 2003); Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. S.Ct. 2002); Invista Srl v. Rhodia, SA, 625 F.3d
75 (3d Cir. 2010); Oil, Chem. & Atomic Workers v. Am. Petrofina Co., 759 F.2d 512, 515 (5th
Cir. 1988); Butler Prods. Co. v. Unistrut Corp., 367 F.2d 733 (7th Cir. 1966). See also7.03[E]
[4].
428) See3.02[B][3][c]; 3.03[A][2][b]; 8.02; 8.03[C][1]; U.S. FAA, 9 U.S.C. 3, 4, 206.
429) U.S. FAA, 9 U.S.C. 3 (emphasis added).
432) See7.03[A][2].
433) AT&T Techs., Inc. v. Commcns Workers of Am., 475 U.S. 643, 649 (U.S. S.Ct. 1986) (emphasis
added). The Courts decision involved 301(a) of the domestic Labor Management
Relations Act, whose arbitration provisions generally parallel the FAA.
434) John Wiley & Sons v. Livingston, 376 U.S. 543, 547 (U.S. S.Ct. 1964).
172
435) AT&T Techs., 475 U.S. at 649 (emphasis added) (quoting John Wiley & Sons, 376 U.S. at
544). See also Moseley v. Elec. & Missile Facilities, Inc., 374 U.S. 167 (U.S. S.Ct. 1963);
Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241 (U.S. S.Ct. 1962) (whether or not the
company was bound to arbitrate, as well as what issues it must arbitrate, is a matter to
be determined by the Court on the basis of the contract entered into by the parties);
Drake Bakeries, Inc. v. Local 50, Am. Bakery & Confectionery Workers Intl, 370 U.S. 254,
256 (U.S. S.Ct. 1962) (issue of arbitrability is a question for the courts and is to be
determined by the contract entered into by the parties).
436) See, e.g., Dean Witter Reynolds, Inc. v. McCoy, 995 F.2d 649, 650 (6th Cir. 1993) (questions
of whether certain parties are contractually bound to arbitrate and what issues may be
arbitrated are for the courts to decide; a party cannot be forced to arbitrate the
arbitrability issue.); Intl Assn of Machinists v. Gen. Elec. Co., 865 F.2d 902, 904 (7th Cir.
1989) (arbitrator is not the judge of his own authority); Becker Autoradio U.S.A., Inc. v.
Becker Autoradiowerk GmbH, 585 F.2d 39, 44 n.10 (3d Cir. 1978) (The question of the
arbitrability of a dispute is, of course, a question for the court to decide.).
437) Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 591 (7th Cir. 2001) (Easterbrook, J.).
438) U.S. FAA, 9 U.S.C. 10(a)(4). See25.04[A][6][a].
439) See7.03[E][5][a]; DK Joint Venture 1 v. Weyand, 2011 WL 3342270 (5th Cir.) (vacating award
against non-signatories; affording arbitral tribunals jurisdictional decision no deference
and rejecting argument that non-signatories were subject to arbitration agreement on
agency grounds); Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133, 140 (2d
Cir. 2007) (The authority of the arbitral panel is established only through the contract
between the parties who have subjected themselves to arbitration, and a panel may not
exceed the power granted to it by the parties in the contract.Where the arbitrator goes
beyond that self-limiting agreement between consenting parties, it acts inherently
without power, and an award ordered under such circumstances must be vacated.)
(citing, inter alia, U.S. FAA, 9 U.S.C. 10(a)(4)); Amedeo Hotels Ltd v. N.Y. Hotel & Motel
Trades Council, AFL-CIO, 2011 WL 2016002, at *5-7 (S.D.N.Y.) (vacating award in part
against non-signatory; reviewing arbitral tribunals jurisdictional decision de novo where
parties had not submitted arbitrability question to arbitration).
440) U.S. FAA, 9 U.S.C. 207, 304. See26.03[C][1]; 26.05[C][1][f][i].
441) See7.03[E][5][a]; Sarhank Group v. Oracle Corp., 404 F.3d 657 (2d Cir. 2005) (de novo
judicial review of awards jurisdictional holding); Czarina ex rel Halvanon Ins. v. W.F. Poe
Syndicate, 358 F.3d 1286, 1293 (11th Cir. 2004) (under United States and international
law, a court asked to confirm an award should review an arbitration panels conclusion
that the parties agreed to arbitrate, unless the parties have agreed to submit this
question to the arbitration panel); China Minmetals Materials Imp. & Exp. Co. v. Chi Mei
Corp., 334 F.3d 274 (3d Cir. 2003).
442) See1.04[B][1][e][iv].
443) Revised Uniform Arbitration Act, 6(b), (d) (2000).
444) Grad v. Wetherholt Galleries, 660 A.2d 903, 908 (D.C. 1995).
445) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. S.Ct. 1995).
446) The First Options decision has been the subject of extensive commentary. See Barnes,
Buckeye, Bulls-Eye or Moving Target: The FAA, Compulsory Arbitration, and Common Law
Contract, 31 Vt. L. Rev. 141 (2006-2007); Bermann, The Gateway Problem in International
Commercial Arbitration, 37 Yale J. Intl L. 1 (2012); Dulic, First Options of Chicago, Inc. v.
Kaplan and the Kompetenz-Kompetenz Principle, 2 Pepp. Disp. Res. L.J. 77 (2002); Gotanda,
An Efficient Method for Determining Jurisdiction in International Arbitrations, 40 Colum. J.
Transnatl L. 11 (2001); Harper, The Options in First Options: International Arbitration and
Arbitral Competence, 771 PLI/Comm. 127 (1998); Park, Determining Arbitral Jurisdiction:
Allocation of Tasks Between Courts and Arbitrators, 9 Arb. & Disp. Res. L.J. 19 (2000); Park,
The Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz-Kompetenz Has
Crossed the Atlantic?, 12 Arb. Intl 137 (1996); Park, The Specificity of International
Arbitration: The Case for FAA Reform, 36 Vand. J. Transnatl L. 1241, 1276-80 (2003); Park,
The Arbitrators Jurisdiction to Determine Jurisdiction, in A. van den Berg (ed.),
International Arbitration 2006: Back to Basics? 55 (ICCA Congress Series No. 13 2007); Rau,
Arbitral Power and the Limits of Contract: The New Trilogy, 22 Am. Rev. Intl Arb. 435 (2011);
Rau, Separability in the United States Supreme Court, 2006:1 Stockholm Intl Arb. Rev. 1;
Reisberg, The Rules Governing Who Decides Jurisdictional Issues: First Options v. Kaplan
Revisited, 20 Am. Rev. Intl Arb. 159 (2010); Reuben, First Options, Consent to Arbitration
and the Demise of Separability: Restoring Access to Justice for Contracts With Arbitration
Provisions, 56 S.M.U. L. Rev. 819 (2003); Smit, The Arbitration Clause: Who Determines Its
Validity and Its Personal and Subject Matter Reach?, 6 Am. Rev. Intl Arb. 395 (1995); Wyss,
First Options of Chicago, Inc. v. Kaplan: A Perilous Approach to Kompetenz-Kompetenz, 72
Tulane L. Rev. 351 (1997).
447) First Options, 514 U.S. at 938.
450) Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503 (3d Cir. 1994).
451) See3.02[B][3][a]; 7.03[D].
452) See7.03[D].
173
453) The Supreme Court concluded that the arbitrators might have erred in their
jurisdictional decision, and therefore that the arbitrators determination of the
substantive claims against the Kaplans might have been outside the arbitrators
authority. But the Court nowhere suggested that by considering and deciding the
jurisdictional objections, the arbitrators had exceeded their authority.
454) From an international perspective, the U.S. Supreme Courts use of the phrase
arbitrability in this context is unfortunate: in most jurisdictions, the term
arbitrability refers to the opposite of nonarbitrability that is, the existence of
legislative prohibitions against arbitrating particular categories of disputes. See6.02et
seq. In contrast, in First Options and other decisions, the U.S. Supreme Court has used the
term to refer to the question whether or not a particular dispute was subject to a valid
arbitration agreement including the existence, validity, continued force and scope of
such an agreement and not specifically to the absence of legislative prohibitions
against arbitrating particular claims. The potential for confusion, at least in an
international context, is unfortunate, but need not interfere with the substance of
analysis.
455) First Options, 514 U.S. at 944-45.
457) First Options, 514 U.S. at 944-45 (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213,
219-20 (U.S. S.Ct. 1985)).
458) U.S. FAA, 9 U.S.C. 4.
459) First Options, 514 U.S. at 943. For criticism of this premise, see Smit, The Arbitration
Clause: Who Determines Its Validity and Its Personal and Subject Matter Reach?, 6 Am. Rev.
Intl Arb. 395, 396 (1995) (It is quite well possible for the law to provide that, arbitration
being favored as it is, when there is an arbitration agreement and the question is who is
bound by it, the arbitrators named pursuant to the arbitration agreement will have the
authority to decide that question without being second guessed by the courts.).
461) First Options, 514 U.S. at 943 (emphasis in original). The Court cited AT&T Technologies
and Warrior & Gulf Newspapers for the proposition that parties may agree to arbitrate
arbitrability. The Court went on to reason that, where this occurred, the court should
give considerable leeway to the arbitrator, setting aside his or her decision only in
certain narrow circumstances. See, e.g., U.S. FAA, 9 U.S.C. 10. For a discussion of the
scope of judicial review of jurisdictional awards under the FAA, see7.03[E][7].
463) First Options, 514 U.S. at 944-45.
464) First Options, 514 U.S. at 945 (emphasis in original). The Court reasoned that the latter
question arises when the parties have a contract that provides for arbitration of some
issues. And, given the laws permissive policies in respect to arbitration, one can
understand why the law would insist upon clarity before concluding that the parties did
not want to arbitrate a related matter. 514 U.S. at 944-45 (emphasis in original). The
Court continued: On the other hand, the former question the who (primarily) should
decide arbitrability question is rather arcane. A party often might not focus upon that
question or upon the significance of having arbitrators decide that scope of their own
powers. And, given the principle that a party can be forced to arbitrate only those issues
it specifically has agreed to submit to arbitration, one can understand why courts might
hesitate to interpret silence or ambiguity on the who should decide arbitrability point
as giving the arbitrators that power, for doing so might too often force unwilling parties
to arbitrate a matter they reasonably would have thought a judge, not an arbitrator,
would decide. First Options, 514 U.S. at 944-45.
466) According to the Court, the lawinsist[s] upon clarity before concluding that the parties
did not want to arbitrate a related matter. First Options, 514 U.S. at 945 (emphasis in
original).
469) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. S.Ct. 2002).
Prior to Howsam, U.S. lower courts had reached divergent results with respect to the
arbitrability of disputes over contractual time limits. Compare Dean Witter Reynolds, Inc.
v. Howsam, 261 F.3d 956 (10th Cir. 2001) (for court) and J.E. Liss & Co. v. Levin, 201 F.3d 848
(7th Cir. 2000) (same) with PaineWebber, Inc. v. Elahi, 87 F.3d 589 (1st Cir. 1996) (for
arbitrator) and Smith Barney Shearson, Inc. v. Boone, 47 F.3d 750 (5th Cir. 1995) (same).
470) Section 10304 of the applicable National Association of Securities Dealers (NASD) Code
of Arbitration Procedure provided that no dispute shall be eligible for submission
where six (6) years have elapsed from the occurrence or event giving rise to the dispute.
471) Howsam, 537 U.S. at 82.
472) Howsam, 537 U.S. at 82.
473) Howsam, 537 U.S. at 83-84 (emphasis added).
474) Howsam, 537 U.S. at 84 (citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460
U.S. 1 (U.S. S.Ct. 1983)).
475) See5.06[C][6][h]; 5.06[B]; 7.03[E][2][c].
476) Howsam, 537 U.S. at 85 (arbitrators, who are comparatively more expert about the
meaning of their own rule, are comparatively better able to interpret and to apply it).
174
477) Howsam, 537 U.S. at 83-84 (emphasis added). It is unclear why the terms of the parties
arbitration agreement should apply to the initial question of what interpretative
presumption should apply to that agreement (e.g., the presumptions of judicial or of
arbitral jurisdiction, identified in First Options). The Court apparently considered the
terms of the parties arbitration agreement relevant to the more general question of the
parties expectations about whether particular questions would be for judicial or
arbitral review. Howsam, 537 U.S. at 85.
478) Howsam, 537 U.S. at 85.
479) In many legal systems, time bars would not generally be considered jurisdictional, but
rather an element of the substance of the dispute. See 5.06[C][14][d]. Howsam involved
contractual time bars, which were at least arguably jurisdictional, but which nonetheless
did not implicate the existence of an agreement to arbitrate.
480) Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (U.S. S.Ct. 2003).
481) Class arbitrations are thus far a largely domestic U.S. phenomenon, which are discussed
below. See10.06.
482) See7.03[E][2][d]; AT&T v. Concepcion, 131 S.Ct. 1740 (U.S. S.Ct. 2011); Stolt-Nielsen SA v.
AnimalFeeds Intl Corp., 130 S.Ct. 1758, 1762 (U.S. S.Ct. 2010).
483) Bazzle, 539 U.S. at 444.
484) Bazzle, 539 U.S. at 452-53 (emphasis in original).
485) Bazzle, 539 U.S. at 453.
486) Bazzle, 539 U.S. at 454.
487) Bazzle, 539 U.S. at 453.
488) Bazzle, 539 U.S. at 547 (Rehnquist, C.J., dissenting).
489) Bazzle, 539 U.S. at 547 (Rehnquist, C.J., dissenting). Justice Thomas reached the same
conclusion, relying on his long-standing view that the FAA did not preempt state law
(and therefore deferring to a state court judgment in the case). Bazzle, 539 U.S. at 460
(Thomas, J., dissenting).
490) Stolt-Nielsen SA v. AnimalFeeds Intl Corp., 130 S.Ct. 1758, 1762 (U.S. S.Ct. 2010).
491) Stolt-Nielsen, 130 S.Ct. at 1764.
496) Stolt-Nielsen SA v. AnimalFeeds Intl Corp., 435 F.Supp.2d 382 (S.D.N.Y. 2006), revd, 548
F.3d 98 (2d Cir. 2009).
497) Stolt-Nielsen SA v. AnimalFeeds Intl Corp., 548 F.3d 98 (2d Cir. 2009).
498) Stolt-Nielsen, 130 S.Ct. at 1772. Justice Alito went out of his way to note that Justice
Stevens concurring opinion in Bazzle did not accept the pluralitys analysis.
499) Stolt-Nielsen, 130 S.Ct. at 1767-68.
500) Stolt-Nielsen, 130 S.Ct. at 1775-76.
501) Rent-A-Ctr, W., Inc. v. Jackson,130 S.Ct. 2772, 2774 (U.S. S.Ct. 2010).
502) Rent-A-Ctr, W., 130 S.Ct. at 2775.
503) Rent-A-Ctr, W., 130 S.Ct. at 2772.
504) Rent-A-Ctr, W., 130 S.Ct. at 2776 (quoting Jackson v. Rent-A-Ctr, 581 F.3d 912, 917 (9th Cir.
2009)).
505) Rent-A-Ctr, W., 130 S.Ct. at 2778.
506) Quoting Buckeye, Justice Scalia observed that, as a matter of substantive federal
arbitration law, an arbitration provision is severable from the remainder of the
contract. Rent-A-Ctr, W., 130 S.Ct. at 2778 (quoting Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 445 (2006)). He went on to reason that the fact that the larger
agreement, in which the so-called delegation provision appeared, was itself an
arbitration agreementmakes no difference. Id. at 2779.
507) Rent-A-Ctr, W., 130 S.Ct. at 2778. This line of cases originated with Prima Paint Corp. v.
Flood & Conklin Mfg Co., 388 U.S. 395 (1967). In Prima Paint, the alleged fraud that
induced the whole contract equally induced the agreement to arbitrate which was part
of that contract, but the Court nonetheless require[d] the basis of challenge to be
directed specifically to the agreement to arbitrate before the court [would] intervene.
Ibid.
508) Rent-A-Ctr, W., 130 S.Ct. at 2779 (emphasis added). It is doubtful that the separability
presumption can properly be applied in the same manner to the arbitration agreement
and delegation agreement as it can to the underlying contract and the arbitration
agreement. The delegation agreement is an intrinsic part of the arbitration agreement,
integrally linked to its procedural and dispute resolution function; a clear-cut
separation of the two is difficult to justify on the basis of an analogy to the separability
of the underlying substantive contract and the arbitration agreement.
509) Rent-A-Ctr, W., 130 S.Ct. at 2778.
510) Rent-A-Ctr, W., 130 S.Ct. at 2778 n.1.
511) Rent-A-Ctr, W., 130 S.Ct. at 2778 n.1.
512) Rent-A-Ctr, W., 130 S.Ct. at 2778 n.1 (emphasis in original).
175
513) Justice Stevens asserted: The Courts decision today goes beyond Prima Paint. Its breezy
assertion that the subject matter of the contract at issue in this case, an arbitration
agreement and nothing more makes no differenceis simply wrong. This written
arbitration agreement is but one part of a broader employment agreement between the
parties, just as the arbitration clause in Prima Paint was but one part of a broader
contract for services between those parties. Thus, that the subject matter of the
agreement is exclusively arbitration makes all the difference in the Prima Paint
analysis. Rent-A-Ctr, W., 130 S.Ct. at 2781-82.
514) Rent-A-Ctr, W., 130 S.Ct. at 2784 (Stevens, J., dissenting).
515) Rent-A-Ctr, W., 130 S.Ct. at 2784 (Stevens, J., dissenting).
516) Rent-A-Ctr, W., 130 S.Ct. at 2778 n.1 (Stevens, J., dissenting).
517) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847 (U.S. S.Ct. 2010). Although the
case involved a labor dispute, the Court held (consistent with prior precedent) that the
same analysis applied to the analysis of arbitration agreements in both commercial and
labor settings. Id. at 2855, 2858.
518) Granite Rock Co., 130 S.Ct. at 2855-56.
519) Granite Rock Co., 130 S.Ct. at 2855-56 (quoting Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83 (U.S. S.Ct. 2002)).
520) Granite Rock Co., 130 S.Ct. at 2856 (emphasis in original).
521) Granite Rock Co., 130 S.Ct. at 2857 n.5.
522) Granite Rock Co., 130 S.Ct. at 2862. See7.03[E][5][c][i], p. 1174.
523) See, e.g., Dedon GmbH v. Janus et Cie, 411 F.Appx. 361, 363 (2d Cir. 2011) (courts should
order arbitration of a dispute only where the court is satisfied that neither the formation
of the parties arbitration agreement norits enforceability or applicability to the
dispute [are] in issue); Repub. of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011)
(refusing to stay pending BIT arbitration; by incorporating UNCITRAL Rules in arbitration
agreement, parties clearly and unmistakably intended for arbitrators to determine
arbitrability questions); Bechtel do Brasil Construes Ltda v. UEG Araucria Ltda, 638
F.3d 150 (2d Cir. 2011) (applying First Options analysis); Telenor Mobile Commcns AS v.
Storms LLC, 584 F.3d 396, 406 (2d Cir. 2009) (applying First Options analysis); ThaiLao
Lignite (Thailand) Co. v. Govt of the Lao Peoples Democratic Repub., 2011 WL 3516154, at
*14-15 (S.D.N.Y.) (Although arbitrability is not listed as a ground for a challenge in Article
V of the Convention, United States courts often review the arbitrability when deciding a
petition for confirmation of an award. In fact, the Supreme Court has held that, in
general, the issue of arbitrability is presumptively to be decided by a court, and not the
arbitrator.); Safra Natl Bank of N.Y. v. Penfold Inv. Trading, Ltd, 2011 WL 1672467, at *2
(S.D.N.Y.) (question of whether a given dispute is arbitrable is decided by the Courts,
but all other disputes concerning the application of the arbitration agreement are
referred to the arbitrators); Tricon Energy, Ltd v. Vinmar Intl, Ltd, 2011 WL 4424802, at *7
(S.D. Tex.) ([If] the parties did not agree to submit the arbitrability question itself to
arbitration, then the court should decide that question just as it would decide any other
question that the parties did not submit to arbitration, namely, independently.); Crystal
Power Co. v. Coastal Salvadoran Power Co., 2011 WL 4902987, at *3 (S.D. Tex.); QPro Inc. v.
RTD Quality Servs. USA, Inc., 761 F.Supp.2d 492 (S.D. Tex. 2011); Solymar Invs., Ltd v. Banco
Santander SA, 2011 WL 1790116 (S.D. Fla.); De Beers Centenary AG v. Hasson, 751 F.Supp.2d
1297 (S.D. Fla. 2010); Halcot Navigation Ltd Pship v. StoltNielsen Transp. Group, BV, 491
F.Supp.2d 413 (S.D.N.Y. 2007); Am. Life Ins. Co. v. Parra, 25 F.Supp.2d 467, 474, 476 (D. Del.
1998).
524) Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 155 (3d Cir. 2001).
525) Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *6 (S.D.N.Y.).
526) China Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 289 (3d Cir. 2003).
527) For decisions applying First Options to agreements specifying foreign arbitral seats, see,
e.g., Fantastic Sams Franchise Corp. v. FSRO Assn Ltd, 683 F.3d 18, 25 (1st Cir. 2012); Repub.
of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011); Marie v. Allied Home Mortg. Corp.,
402 F.3d 1, 14 (1st Cir. 2005); China Minmetals, 334 F.3d at 289; Stiles v. Home Cable
Concepts, Inc., 994 F.Supp. 1410, 1414 (M.D. Ala. 1998).
528) China Minmetals Materials, 334 F.3d at 289 (This rationale is not specific to the FAA. It is
a crucial principle of arbitration generally, including in the international context.);
Dedon GmbH v. Janus et Cie, 2010 WL 4227309 (S.D.N.Y.).
529) U.S. FAA, 9 U.S.C. 208, 306.
530) See3.02[B][3][c]; 3.03[A][2][b]; 8.02[C]; 8.03[C][1]; U.S. FAA, 9 U.S.C. 3, 4, 206.
533) For example, the French/Indian prima facie jurisdiction rule. See7.03[B].
534) For example, if the United States is not the putative arbitral seat and has only modest
connections to the parties dispute, there is little reason for U.S. courts to resolve the
jurisdictional dispute.
535) See1.04[A][1].
536) See1.04[A][1][e].
537) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639 n.21 (U.S. S.Ct.
1985).
538) See8.04[A].
539) URS Corp. v. Lebanese Co. for the Dev. & Reconstr. of Beirut Cent. Dist. SAL, 512 F.Supp.2d
199, 208 (D. Del. 2007).
176
540) See, e.g., Burnham Enter., LLC v. DACC Co. Ltd, 2013 WL 68923 (M.D. Ala.) (any decision as to
jurisdiction of arbitral tribunal shall be taken by tribunal; staying litigation pending
resolution of jurisdictional issues); Greenwood v. Mepamsa, SA, 2011 WL 4801359 (D. Ariz.)
(staying motion to dismiss claims in favor of arbitration pending ICCs resolution of
jurisdictional issues); Oriental Repub. of Uruguay v. Chem. Overseas Holdings, Inc., 2006
U.S. Dist. LEXIS 2261 (S.D.N.Y.) (staying litigation where arbitral tribunal is considering
arbitrability); Andersen Consulting Bus. Unit Member Firms v. Andersen Worldwide Societe
Coop., 1998 U.S. Dist. LEXIS 3252, at *21 (S.D.N.Y.) ([T]he jurisdictional issue of whether
the ICC arbitration is the proper forum is itself subject to resolution before the ICC. The
ICC should decide whether these issues are properly litigated in the pending ICC
arbitration, in another ICC arbitration, or in another forum under the Swiss Intercantonal
Convention.).
541) Barcel, Who Decides the Arbitrators Competence and Jurisdiction? Separability and
Competence-Competence in Transnational Perspective, 36 Vand. J. Transnatl L. 1115, 1134-
35 (2003).
542) See1.04[A][1].
543) As discussed above, many arbitration agreements subject to the New York Convention in
U.S. courts will be agreements providing for foreign arbitrations. See2.03[C][2][b]. In
addition, the Convention will also apply to non-domestic arbitrations, which are sited
in the United States, see2.03[C][2][b].
544) See7.03[C].
545) See7.03[E][6].
546) See7.03[E][5][b][viii].
547) See7.03[E][5][d].
548) See7.03[E][1][a].
549) See7.03[E][1][a].
550) See7.03[E][2][a]; 7.03[E][5][b][iv].
551) U.S. FAA, 9 U.S.C. 3.
552) U.S. FAA, 9 U.S.C. 4.
553) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2856 (U.S. S.Ct. 2010) (emphasis
added).
554) Natl Cas. Co. v. First State Ins. Group, 430 F.3d 492, 499-500 (1st Cir. 2005).
555) See7.03[E][3].
556) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2777 (U.S. S.Ct. 2010).
557) Solvay Pharms., Inc. v. Duramed Pharms., Inc., 442 F.3d 471, 477 (6th Cir. 2006).
558) See, e.g., Sarhank Group v. Oracle Corp., 404 F.3d 657, 661 (2d Cir. 2005) (Under American
law, whether a party has consented to arbitrate is an issue to be decided by the Court in
which enforcement of an award is sought. An agreement to arbitrate must be voluntarily
made, and the Court decides, based on general principles of domestic contract law,
whether the parties agreed to submit the issue of arbitrability to the arbitrators.); Local
Union No. 898 v. XL Elec., Inc., 380 F.3d 868, 870 (5th Cir. 2004); Bridas SAPIC v. Govt of
Turkmenistan, 345 F.3d 347, 354 n.4 (5th Cir. 2003) (independent review of whether the
arbitration panel had jurisdictionrepresents a departure from the typically deferential
review afforded arbitral decisions pursuant to the federal policy favoring arbitration).
560) See, e.g., Aker Kvaerner/IHI v. Natl Union Fire Ins. Co. of La., 2010 WL 5071082 (W.D. La.)
(ordering jurisdictional discovery to determine whether arbitration agreement existed);
Brennan v. Bally Total Fitness, 153 F.Supp.2d 408, 417 (S.D.N.Y. 2001) (ordering
jurisdictional discovery in connection with courts decision on validity of arbitration
agreement); Ex Parte Horton Family Housing, Inc., 882 So.2d 838, 841 (Ala. 2003) (Though
rare in a proceeding on a motion to compel arbitration, discovery is allowed in certain
circumstances. We have fashioned an exception where substantial evidence to defeat
the motion may exist, but the opposing party is unable or virtually unable to obtain the
necessary evidence except through discovery.) (emphasis in original) (quoting Ex parte
Greenstreet, 806 So.2d 1203, 1208 (Ala. 2001)).
561) See, e.g., Grant v. House of Blues New Orleans Rest. Corp., 2011 WL 1596207 (E.D. La.)
(holding that more complete evidentiary record, possibly including trial, was necessary
to resolve whether parties had entered into arbitration agreement); Brennan v. Bally
Total Fitness, 153 F.Supp.2d 408, 416 (S.D.N.Y. 2001) (In addition, a jurisdictional hearing
may be necessary if the proffered evidence is so conflicting and the record is rife with
contradictions.) (quoting Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145
(1st Cir. 1995)); PMC, Inc. v. Atomergic Chemetals Corp., 844 F.Supp. 177, 181 (S.D.N.Y. 1994)
(ordering trial on question whether purchase order constituted binding contract
obligating plaintiff to submit to arbitration).
562) See7.03[E][6].
563) See, e.g., SBRMCOA, LLC v. Bayside Resort, Inc., 707 F.3d 267, 273 (3d Cir. 2013) (remanding
to lower court for further discovery on formation of agreement); Solymar Inv., Ltd v.
Banco Santander SA, 672 F.3d 981, 985 (11th Cir. 2012); Microchip Tech. Inc. v. U.S. Philips
Corp., 367 F.3d 1350, 1359 (Fed. Cir. 2004) (remanding to lower court for further fact
finding); Tehran-Berkeley Civil & Environmental Engrs v. Tippetts-Abbett-McCarthy, 816
F.2d 864, 869 (2d Cir. 1987) (lower court should have held evidentiary hearing on
formation of arbitration agreement).
564) See3.03[D].
177
565) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 n.2 (U.S. S.Ct. 2010). See also Buckeye
Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444, n.1 (U.S. S.Ct. 2006) (distinguishing
question whether an arbitration agreement was ever concluded from question whether
a contract containing an arbitration clause was illegal); Dialysis Access Ctr, LLC v. RMS
Lifeline, Inc., 638 F.3d 367, 382 (1st Cir. 2011) (distinguishing dispute over existence from
dispute over validity of arbitration agreement).
566) See7.03[E][5][c].
567) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 82 (U.S. S.Ct. 2002); First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 938 (U.S. S.Ct. 1995); 7.03[E][2].
568) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2857-58 (U.S. S.Ct. 2010)
(emphasis added). The Court also observed that [w]here there is no provision validly
committing them to an arbitrator, [the issues for judicial determination] typically
concern the scope of the arbitration clause and its enforceability. Granite Rock Co., 130
S.Ct. at 2856 (emphasis added).
569) As discussed below, claims of illegality and invalidity of the underlying contract are
subject to the separability presumption, and generally for the arbitrators to decide.
See3.03[A][2][b][ii][3].
570) See5.06[C][12][b]; Nagrampa v. Mailcoups, Inc., 469 F.3d 1257, 1271-75 (9th Cir. 2006)
(collecting cases); John B. Goodman Ltd Pship v. THF Constr., Inc., 321 F.3d 1094 (11th Cir.
2003); Snowden v. CheckPoint Check Cashing, 290 F.3d 631 (4th Cir. 2002); Bess v. Check
Express, 294 F.3d 1298 (11th Cir. 2002); Lawrence v. Comprehensive Bus. Servs. Co., 833 F.2d
1159 (5th Cir. 1987); Mesa Operating Ltd Pship v. La. Intrastate Gas Corp., 797 F.2d 238 (5th
Cir. 1986); Smith v. Legal Helpers Debt Res. LLC, 2012 WL 2118132 (D.N.J.); Sheehan v. Centex
Homes, 2011 WL 1100031, at *3 (D. Haw.); Siderurgica del Orinoco (Sidor), CA v. Linea
Naviera de Cabotage, CA, 1999 WL 632870 (S.D.N.Y.); Herwig v. Hahnaman-Albrecht, Inc.,
1997 WL 72079, at *3 (N.D. Ill.) (court deciding a motion to arbitrate under the FAA is
limited to deciding only whether the arbitration agreement itself is invalid, illegal or
unenforceable and is not free to evaluate the overall contract); Nuclear Elec. Ins. Ltd v.
Cent. Power & Light Co., 926 F.Supp. 428 (S.D.N.Y. 1996); Belship Navigation Inc. v. Sealift,
Inc., 1995 WL 447656 (S.D.N.Y.).
571) See3.03[D]; 5.06[C]; Schneider v. Kingdom of Thailand, 688 F.3d 68, 72 (2d Cir. 2012) (in
the absence ofclear and unmistakable evidence [to submit jurisdictional issues to
arbitration], questions of arbitrability are presumptively resolved by the court,
regardless of whether they are related to scope or formation); Puleo v. Chase Bank USA,
NA, 605 F.3d 172, 179 (3d Cir. 2010) (In stark contrast with the question of arbitration
procedure at issue in Howsam and the question of contractual interpretation discussed
in PacifiCare, when a party challenges the validity of an arbitration agreement by
contending that one or more of its terms is unconscionable under generally applicable
state contract law, a question of arbitrability is presented.); Bridge Fund Capital Corp. v.
Fastbucks Franchise Corp., 622 F.3d 996, 1000 (9th Cir. 2010); Nagrampa v. Mailcoups, Inc.,
469 F.3d 1257, 1257 (9th Cir. 2006); Anders v. Hometown Mortg. Servs., Inc., 346 F.3d 1024
(11th Cir. 2003); Tricon Energy, Ltd v. Vinmar Intl, Ltd, 2011 WL 4424802 (S.D. Tex.) (under
First Options, when party challenges jurisdictional basis of arbitrators award on grounds
that arbitration agreement was void ab initio, district court must independently
determine validity of arbitration agreement); Aker Kvaerner/IHI v. Natl Union Fire Ins.
Co. of La., 2010 WL 5071082, at *4 (W.D. La.) (basic principle that it is for the courts to
decide whether the parties have agreed to arbitrate); Phelps v. U.S. Metals Group, 2010
WL 816609, at *5 (N.D. Ohio) ([D]istrict courts may consider only claims concerning the
validity of the arbitration clause itself, as opposed to challenges to the validity of the
contract as a whole.Once the district court determines that a valid agreement to
arbitrate exists, challenges to other distinct parts of the contract are to be resolved by
the arbitrator.); Keeton v. Wells Fargo Corp., 987 A.2d 1118, 1122 (D.D.C. 2010) (A challenge
that the clause is unconscionable disputes its validity, not its scope, and it is up to the
courts, not arbitrators, to adjudicate the validity of an arbitration clause.); Griffen v.
Alpha Phi Alpha, Inc., 2007 WL 707364, at *4 (E.D. Pa.) (because plaintiff challenges the
substantive unconscionability of the arbitration clause itself, the Court is permitted to
decide [the] validity of the clause); Cline v. H.E. Butt Grocery Co., 79 F.Supp.2d 730, 732
(S.D. Tex. 1999) (it is only when an attack is made on the arbitration clause itself that a
court, rather than an arbitrator, should decide questions of validity); Salley v. Option
One Mortg. Corp., 925 A.2d 115, 120 (Pa. 2007) (courts may consider, in the first instance,
only those challenges that are directed solely to the arbitration component itself).
572) Bridge Fund Cap. Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1000 (9th Cir. 2010).
573) See5.06[C][1]; R.M. Perez & Assocs., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir. 1992) (If the
fraud relates to the arbitration clause itself, the court should adjudicate the fraud claim.
If it relates to the entire agreement, then the [FAA] requires that the fraud claim be
decided by an arbitrator.); Nanosolutions, LLC v. Prajza, 793 F.Supp.2d 46, 54-55 (D.D.C.
2011); Cline v. H.E. Butt Grocery Co., 79 F.Supp.2d 730, 732 (S.D. Tex. 1999).
574) See5.04[D][8]; Clerk v. First Bank of Del., 735 F.Supp.2d 170 (E.D. Penn. 2010) (If
[plaintiff] has allegedduresswith respect to the arbitration clause itself, then judicial
consideration of these issues is mandated before arbitration of the state claims can be
compelled.); Acquaire v. Canada Dry Bottling, 906 F.Supp. 819, 826 (E.D.N.Y. 1995) (court
considers claim that arbitration clause was product of duress); Rust v. Drexel Firestone,
Inc., 352 F.Supp. 715 (S.D.N.Y. 1972) (same); ITT Commercial Fin. Corp. v. Tyler, 1994 WL
879497 (Mass. Super.) (same); Wheeler v. St. Joseph Hosp., 63 Cal.App.3d 345, 775 (Cal. Ct.
App. 1976) (same).
178
575) See5.06[C][4]; Quilloin v. Tenet Health Sys. Philadelphia, 673 F.3d 221, 228 (3d Cir. 2012)
(challenge to arbitration agreement on grounds of unconscionability for court to decide);
Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1002 (9th Cir. 2010)
(unconscionability claims clearlymarshaled against the validity of the arbitration
clause alone, and separate from Plaintiffs fraudulent inducement claims. [were]
properly decided by the district court); Puleo v. Chase Bank USA, NA, 605 F.3d 172, 172
(3d Cir. 2010); Nagrampa v. Mailcoups, Inc., 469 F.3d 1257, 1264 (9th Cir. 2006) (addressing
unconscionability of arbitration agreement); Doctors Assocs., Inc. v. Distajo, 107 F.3d 126
(2d Cir. 1997) (same); Doctors Assocs., Inc. v. Stuart, 85 F.3d 975 (2d Cir. 1996) (same);
Hellenic Lines, Ltd v. Louis Dreyfus Corp., 372 F.2d 753 (2d Cir. 1967) (same); DAntuono v.
Serv. Road Corp., 789 F.Supp.2d 308, 327 (D. Conn. 2011) (To the extent that Plaintiffs
public policy arguments are targeted solely at the arbitration clause, the Court believes
it is appropriate to consider those arguments); Clerk v. First Bank of Del., 735 F.Supp.2d
170, 182 (E.D. Pa. 2010) (unconscionability challenge directed specifically to arbitration
agreement for court to decide); Bruni v. Didion, 73 Cal.Rptr.3d 395, 410 (Cal. Ct. App. 2008)
(a court[, not an arbitrator,] must decide whether there is a valid agreement to
arbitrate between the parties. Hence, if the party resisting arbitration is claiming that
the arbitration clause itself is unconscionable, a court must decide this claim.); Brower
v. Gateway 2000, Inc., 246 A.D.2d 246 (N.Y. App. Div. 1998).
576) See5.06[C][5]; Day v. Fortune HiTech Mktg, 2012 WL 588768, at *4 (E.D. Ky.); N.J. Bldg
Laborers Statewide Benefit Funds v. Perfect Concrete Cutting, 2010 WL 2292102, at *2
(D.N.J.) (challenge based on the lack of mutuality of the arbitration clause would be for
the court); Tyson Foods, Inc. v. Archer, 147 S.W.3d 681 (Ark. 2004) (court decides claim
that arbitration agreement is void for lack of mutuality); Peleg v. Neiman Marcus Group,
Inc., 204 Cal.App.4th 1425 (Cal. Ct. App. 2012) (court decides whether arbitration
agreement was illusory and unenforceable); Richard Harp Homes, Inc. v. Van Wyck, 2007
WL 2660213 (Ark. Ct. App.) (court decides claim that arbitration agreement is void for
lack of mutuality); Stevens/Leinweber/Sullens v. Holm. Dev. & Mgt, Inc., 795 P.2d 1308
(Ariz. Ct. App. 1990) (same); Cored Panels, Inc. v. Meinhard Comm. Corp., 420 N.Y.S.2d 731
(N.Y. App. Div. 1979) (same).
577) Morga & Medlin Ins. Agency v. QBE Ins. Corp., 2012 WL 2499952, at *5 (E.D. Cal.).
578) See5.06[C][7]; Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350, 1358-59 (Fed. Cir.
2004) (question of whether an arbitration agreement has expired is for the court to
decide, even if this requires interpretation of the language of the agreement); ACE
Capital Re Overseas, Ltd v. Cent. United Life Ins. Co., 307 F.3d 24 (2d Cir. 2002);
Unionmutual Stock Life Ins. Co. of Am., 774 F.2d 524, 528-29 (1st Cir. 1985); Clifton D.
Mayhew, Inc. v. Mabro Constr. Inc., 383 F.Supp. 192 (D.D.C. 1974); Banque de Paris et des
Pays-Bas v. Amoco Oil Co., 573 F.Supp. 1464 (S.D.N.Y. 1983); In re Neutral Posture, Inc., 135
S.W.3d 725 (Tex. App. 2003) (whether parties agreement to arbitrate expired by its terms
concerns existence of agreement to arbitrate and, thus, an issue of substantive
arbitrability for judicial determination); Ambulance Billing Sys., Inc. v. Gemini Ambulance
Servs., Inc., 103 S.W.3d 507 (Tex. App. 2003); Annotation, Violation or Repudiation of
Contract as Affecting Right to Enforce Arbitration Clause Therein, 3 A.L.R.2d 383 (1949).
579) See5.06[C][7]; Campaniello Imp. Ltd v. Saporiti Italia SpA, 117 F.3d 655 (2d Cir. 1997) (claim
that arbitration clause was fraudulently procured for judicial determination); Cancanon
v. Smith Barney, Harris, Upham & Co., 805 F.2d 998, 1000 (11th Cir. 1986) (where
misrepresentation of the character or essential terms of a proposed contract occurs,
assent to the contract is impossible. In such a case there is no contract at all); Willis v.
Nationwide Debt Settlement Group, 2012 WL 1093618, at *14 (D. Or.) (court rejected claim
that arbitration agreement was unconscionable because it was, inter alia, hidden or
obscured, and compelled arbitration); Prevost v. Islands Mech. Contractor, Inc., 2010 WL
2772662, at *3 (D.V.I.) (court to decide whether alleged misrepresentation regarding
meaning of arbitration agreement rendered agreement invalid); Boyd v. Allied Home
Mortg. Capital Corp., 523 F.Supp.2d 650, 654-55 (N.D. Ohio 2007) (plaintiffs failed to show
that arbitration agreement was hidden, lied about, or finely printed); Lynch v.
Cruttenden & Co., 22 Cal.Rptr.2d 636, 639 (Cal. Ct. App. 1993) (representation that the
documents did not affect the Lynches rights is equivalent to a representation that the
documents are not contracts, a deception as to the nature and effect of the
documents).
580) See7.03[E][2][a].
581) See7.03[E][6].
582) See3.02[B][3][c].
583) Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967); 3.03[A][2][b][i].
584) Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); 3.03[A][2][b][i];
5.06[C][1].
179
585) In Rent-A-Center, the Court took the Prima Paint analysis one step further by requiring
that the party seeking judicial determination of a gateway issue specifically impeach
the provision granting the arbitral tribunal power to determine preliminary issues and
not just the arbitration agreement generally. See Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct.
2772, 2777-78 (U.S. S.Ct. 2010). See also Nitro-Lift Techs., LLC v. Howard, 133 S.Ct. 500, 501
(U.S. S.Ct. 2012) (It is a matter of great importancethat state supreme courts adhere to
a correct interpretation of the legislation. Here, the Oklahoma Supreme Court failed to
do so. By declaring the noncompetition agreements in two employment contracts null
and void, rather than leaving that determination to the arbitrator in the first instance,
the state court ignored a basic tenet of the Acts substantive arbitration law. The
decision must be vacated.).
586) See3.03[A][2][b]; Dialysis Access Ctr, LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir.
2011) (given that Appellants have not specifically challenged the validity of the
Arbitration Clause and have only challenged the validity of the [Agreement] as a whole,
the Arbitration Clause is severable from the [Agreement as a whole] and considered
valid, irrevocable, and enforceable under Section 2 of the FAA); Masco Corp. v. Zurich
Am. Ins. Co., 382 F.3d 624, 629-30 (6th Cir. 2004) (arbitrators to resolve question of
fraudulent inducement of underlying contract); Ace Capital Re Overseas, Ltd v. Cent.
United Life Ins. Co., 307 F.3d 24, 29-30 (2d Cir. 2002) (same); Ferro Corp. v. Garrison Indus.,
Inc., 142 F.3d 926, 933 (6th Cir. 1998) (arbitration agreement is effectively considered as
a separate agreement which can be valid despite being contained in a fraudulently
induced contract); In re Oil Spill by Amoco Cadiz, 659 F.2d 789, 794 (7th Cir. 1981) (claim
of fraud in the inducement of a contract is a matter for arbitration); Nanosolutions, LLC
v. Prajza, 793 F.Supp.2d 46, 54-55 (D.D.C. 2011) (refusing to consider a claim of fraud in
inducement of contract as a whole, which is reserved for arbitrator, as opposed to claim
of fraud in inducement of arbitration clause specifically an issue which goes to the
making of the agreement to arbitrate and is reserved for court); Sheehan v. Centex
Homes, 2011 WL 1100031, at *5-6 (D. Haw.); Doug Brady, Inc. v. N.J. Bldg Laborers Statewide
Funds, 2009 WL 349147, at *3 (D.N.J.) (FAA reserves other void arguments, such as fraud
in the execution, for arbitration rather than adjudication, so long as the arbitration
clause itself is not the crux of the dispute); Acquaire v. Canada Dry Bottling, 906 F.Supp.
819, 825 (E.D.N.Y. 1995).
587) See3.03[A][2][b]; 5.06[C][2]; Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 629 (6th Cir.
2004) ([T]he mutual mistakeargumentamounts to an attack on the underlying
liability, and only derivatively on the obligation to arbitrate. Therefore, under Prima
Paint, the general arbitration provision still applies.); Unionmutual Stock Life Ins. Co. of
Am., 774 F.2d 524, 528-29 (1st Cir. 1985) (In this case, the arbitration clause is separable
from the contract and is not rescinded by [a partys] attempt to rescind the entire
contract based on mutual mistake and frustration of purpose.); Matterhorn, Inc. v. NCR
Corp., 763 F.2d 866, 868-69 (7th Cir. 1985) (objections to other parts of the contract,
based onmistake or whatever, need not spill over to the arbitration clause); Diaz v.
Jack in the Box, Inc., 2011 WL 1789964, at *1 (D. Or.); Minnacca, Inc. v. Singh, 2009 WL
6635208 (W.D.N.C.) (requiring parties to arbitrate claims relating to unilateral and
mutual mistake of fact concerning underlying contract); Bratt Enters., Inc. v. Noble Intl
Ltd, 99 F.Supp.2d 874, 885-86 (S.D. Ohio 2000) (arbitrators to consider claim of mutual
mistake as to terms of underlying contract, where there was no claim that there was any
mutual mistake in the negotiation of the arbitration clause itself); Griffin v. Linden, 2011
WL 1434659, at *5 (Ky. Ct. App.) (although the court must decide whether the parties
agreed to arbitrate, whether the underlying contract is invalid, whether because of fraud
or mutual mistake, is to be decided by the arbitrator).
588) See3.03[A][2][b]; 5.06[C][3]; Hawkins v. Aid Assn for Lutherans, 338 F.3d 801, 808 (7th Cir.
2003) (addition of the arbitration provision was not an independent contract requiring
mutual assent or consideration); Lawrence v. Comprehensive Bus. Serv. Co., 833 F.2d 1159
(5th Cir. 1987); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064 (2d Cir. 1972);
Hellenic Lines, Ltd v. Louis Dreyfus Corp., 372 F.2d 753 (2d Cir. 1967); Wynne v. Am. Express
Co., 2010 WL 3860362, at *6 (E.D. Tex.) (argument that entire contract, rather than
arbitration agreement specifically, was illusory must be left for the arbitrator to decide
because it unquestionably addresses the validity of the entire contract); Collectacheck,
Inc. v. Check Collection & Recovery, Inc., 2009 WL 2475192, at *2 (D. Colo.) (arguments that
theagreement as a whole is void due tolack of considerationpertain to the entire
contract, rather than specifically to the arbitration clause and are properly left to the
arbitrator for resolution) (quoting Jeske v. Brooks, 875 F.2d 71, 75 (4th Cir. 1989)); Cook v.
River Oaks Hyundai, Inc., 2006 U.S. Dist. LEXIS 21646, at *2 (N.D. Ill.); Campbell v. Sterling
Jewelers, Inc., 2005 WL 991771, at *2 (N.D. Ill.); Cline v. H.E. Butt Grocery Co., 79 F.Supp.2d
730, 732 (S.D. Tex. 1999) (Questions related to the enforcement of a contract as a whole
are properly referable to an arbitrator; it is only when an attack is made on the
arbitration clause itself that a court, rather than an arbitrator, should decide questions
of validity. The arbitration clause itself is supported by valid consideration: each party
promised to relinquish their legal right to have a judicial forum adjudicate their
disputes.); Seymour v. Gloria Jeans Coffee Bean Franchising Corp., 732 F.Supp. 988, 995-96
(D. Minn. 1990); Miller v. Cotter, 448 Mass. 671, 684 n.16 (2007); In re Palm Harbor Homes,
Inc., 195 S.W.3d 672, 676 (Tex. 2006). But see Gibson v. Neighborhood Health Clinics, Inc.,
121 F.3d 1126, 1130 (7th Cir. 1997).
180
589) See3.03[A][2][b]; 5.06[C][4]; Gore v. Alltel Commcns, LLC, 666 F.3d 1027, 1036-37 (7th Cir.
2012) (unconscionability was issueproperly resolved by the arbitrator in the first
instance because [plaintiff] attack[ed] as unconscionable the entire[a]greement, not
just the arbitration clause itself); Jenkins v. First Am. Cash Advance of Georgia, LLC, 400
F.3d 868, 877 (11th Cir. 2005) (FAA does not permit a federal court to consider claims
alleging the contract as a whole was adhesive); Madol v. Dan Nelson Auto. Group, 372
F.3d 997, 1000 (8th Cir. 2004) (plaintiffs arguments that theirtransactions were
generally unconscionable were subject to resolution by an arbitrator, absent a showing
by the plaintiffs that the DRA [dispute resolution agreement], standing alone, was
invalid); Solymar Invs., Ltd v. Banco Santander SA, 2011 WL 1790116, at *10 (S.D. Fla.)
(claims of adhesion, unconscionability, waiver of judicial remedies without knowledge,
and lack of mutuality of obligation are to be decided in arbitration) (quoting Benoay v.
PrudentialBache Sec., Inc., 805 F.2d 1437, 1441 (11th Cir. 1986)); Amway Global v.
Woodward, 744 F.Supp.2d 657, 665 (E.D. Mich. 2010); Gutierrez v. Academy Corp., 967
F.Supp. 945 (S.D. Tex. 1997) (unconscionability challenge directed at entire agreement
are for arbitral, not judicial, determination); Axtell v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 744 F.Supp. 194, 196 (E.D. Ark. 1990) (plaintiffs allegations of failure of
consideration and overreaching go to the making of the contract generally, and
therefore are to be considered by the arbitrator).
590) See3.03[A][2][b]; 5.06[C][7]; ACE Capital Re Overseas, Ltd v. Cent. United Life Ins. Co., 307
F.3d 24 (2d Cir. 2002); Estrategias en Accion SA v. Castle CRM, LLC, 2010 WL 5095368
(S.D.N.Y.) (allegation that by failing to perform under contract parties demonstrated
mutual lack of intent to be bound by the purported agreements, concerned validity of
agreement as a whole, not arbitration clause, and was for arbitrator to decide); Clifton D.
Mayhew, Inc. v. Mabro Constr. Inc., 383 F.Supp. 192 (D.D.C. 1974); Ambulance Billing Sys.,
Inc. v. Gemini Ambulance Servs., Inc., 103 S.W.3d 507, 514-15 (Tex. App. 2003) (arbitrators
to decide dispute regarding whether a settlement agreement was reached replacing or
cancelling original agreement).
591) See 3.03[A][2][b][ii]; Solymar Invs., Ltd v. Banco Santander, Ltd, 2011 WL 1790116, at *9-10
(S.D. Fla.) (challenge to existence or formation of contract based on failure of condition
precedent is for arbitrator, not court, to decide); Christian Mut. Life Ins. Co. v. Penn Mut.
Life Ins., 163 F.Supp.2d 260 (S.D.N.Y. 2001) (claim that underlying contract was subject to
condition precedent, which was allegedly not satisfied, is for arbitrators, not court, to
resolve); Capitol Vial, Inc. v. Weber Scientific, 966 F.Supp. 1108 (M.D. Ala. 1997); Rainbow
Inv., Inc. v. Super 8 Motels, Inc., 973 F.Supp. 1389, 1390 (M.D. Ala. 1997) (failure of condition
precedent to underlying contract does not fall into that narrow, but hazily defined class
of cases where not merely the enforceability, but the initial formation or existence of a
contract, including a disputed arbitration clause, is legitimately brought into question,
and must be decided by the court).
592) See 3.03[A][2][b][ii]; 5.06[C][12][b]; Buckeye Check Cashing v. Cardegna, 546 U.S. 440
(U.S. S.Ct. 2006) (claim that underlying contract was void for illegality did not impeach
arbitration clause); Southland Corp. v. Keating, 465 U.S. 1 (U.S. S.Ct. 1984) (same);
Snowden v. CheckPoint Check Cashing, 290 F.3d 631, 637 (4th Cir. 2002) (claims that loan
agreement was usurious do not relate specifically to the Arbitration Agreement and
are therefore for arbitral, not judicial, determination); Bess v. Check Express, 294 F.3d
1298, 1305 (11th Cir. 2002) (claims that usurious and unlicensed loans were illegal did not
concern the arbitration agreement specifically and an arbitrator should decide those
questions); Lawrence v. Comprehensive Bus. Servs. Co., 833 F.2d 1159 (5th Cir. 1987) (claim
that contract is illegal is for arbitrators); Mesa Operating Ltd Pship v. La. Intrastate Gas
Corp., 797 F.2d 238 (5th Cir. 1986); Siderurgica del Orinoco (Sidor), CA v. Linea Naviera de
Cabotage, CA, 1999 WL 632870 (S.D.N.Y.); Nuclear Elec. Ins. Ltd v. Cent. Power & Light Co.,
926 F.Supp. 428 (S.D.N.Y. 1996) (claim that violations of Texas Insurance Code rendered
insurance policies illegal and unenforceable related to the entire policy and were for
arbitral, not judicial, determination); Belship Navigation Inc. v. Sealift, Inc., 1995 WL
447656 (S.D.N.Y.) (claim that contract violated Cuban trade controls concerned entire
agreement and is for arbitrators); Wolitarsky v. Blue Cross of Cal., 61 Cal.Rptr.2d 629, 631
(Cal. Ct. App. 1997) (claim of illegality went to substantive provisions of agreement and
not arbitration clause).
593) See3.03[A][2][b][ii](1), pp. 421-23; Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d
868, 877 (11th Cir. 2005) (If[the partys] claims oflack of mutuality of obligation
pertain to the contract as a whole, and not to the arbitration provision alone, then these
issues should be resolved in arbitration.); Amway Global v. Woodward, 744 F.Supp.2d
657, 665 (E.D. Mich. 2010) (lack of mutuality of obligation challenge directed to contract
as a whole was for arbitral determination).
181
594) See3.03[A][2][b][ii](3), p. 427; Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999)
(fraud in the inducement and economic duress of the 1995 Agreement as a wholeare
questions for the arbitrator); Hill v. Wackenhut Servs. Intl, 865 F.Supp.2d 84, 97 (D.D.C.
2012) (While Plaintiffs attempt to frame their duress challenge as one directed at the
arbitration provisionthe alleged duress in this case instead relates to the employment
agreement as a whole. If so, the question of duress should be resolved in arbitration.)
(emphasis in original); Holmes v. Westport Shipyards, Inc., 2004 WL 3007087, at *3 (S.D.
Fla.) (Any claim of fraud or duressin the formation of the arbitration agreement is a
matter of judicial consideration. Allegations of unconscionability in the contract as a
whole, however, are matters to be resolved in arbitration. Thus, [plaintiffs] claim bars
arbitration only if it goes to the arbitration clause itself and not the whole contract.);
Wright v. SFX Entertainment Inc., 2001 WL 103433, at *3 (S.D.N.Y.) (If on the other hand,
[plaintiffs] claims of adhesionpertain to the contract as a whole, and not to the
arbitration provision alone, then these should be resolved in arbitration.); Dale v.
Prudential-Bache Sec. Inc., 719 F.Supp. 1164, 1169 (E.D.N.Y. 1989) (Even if plaintiffs
alleged misunderstanding would void the agreement, a claim of fraudulent inducement,
duress or unconscionability involves the formation of the entire contract and must be
determined by the arbitrator.). Compare7.03[E][5][c][ii].
595) See3.03[A][2][b][ii](3), pp. 426-27; Sommers v. Cuddy, 2009 U.S. Dist. LEXIS 30126, at *9 (D.
Nev.) (in raising defense of mental incapacity, it is clearthat Plaintiffs are challenging
the enforcement of the contract as a whole and not just the arbitration provision).
Compare7.03[E][5][c][ii]. See also Restatement (Third) U.S. Law of International
Commercial Arbitration 4-12, comment e (Tentative Draft No. 2 2012) (Uncertainty
remains, however, as to whether challenges to the main contract on grounds such as
duress and lack of capacity affect the existence of the main contract or only its
validity.).
596) Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (U.S. S.Ct. 2006); 3.03[A][2][b][i](2);
3.03[A][2][b][iv].
597) Buckeye Check Cashing, 546 U.S. at 446 (emphasis added); 3.03[A][2][b][i](2).
598) Buckeye Check Cashing, 546 U.S. at 449 (emphasis added).
599) See3.03[A][2][b]. See, e.g., Brown v. Pac. Life Ins. Co., 462 F.3d 384, 396-97 (5th Cir. 2006);
Nagrampa v. Mailcoups, Inc., 469 F.3d 1257, 1263-64 (9th Cir. 2006); Mesa Operating LP v.
Louisiana Intrastate Gas Corp., 797 F.2d 238 (5th Cir. 1986) (alleged illegality of underlying
contract for failure to obtain state regulatory approval); Island Territory of Curacao v.
Solitron Devices, Inc., 489 F.2d 1313 (2d Cir. 1973); Solymar Invs. v. Banco Santander, 2011
WL 1790116, at *11 (S.D. Fla.) (court referred dispute over underlying contract to
arbitration where plaintiff alleged fraudulent inducement of both contract and
arbitration agreement but did not substantiate its fraud claims as to latter); Rubin v.
Sona Intl Corp., 457 F.Supp.2d 191, 193 (S.D.N.Y. 2006); Torrance v. Aames Funding Corp.,
242 F.Supp.2d 862, 868-69 (D. Or. 2002) (arbitration clause may be enforced even though
the rest of the contract is later held invalid by the arbitrator); Solar Planet Profit Corp. v.
Hymer, 2002 WL 31399601, at *2 (N.D. Cal.) (arbitration clause in a voidable contract
remains valid; only if the contract never existed or if there is some defect in the
formation of the arbitration clause itself will that clause be invalid); Hodge Bros., Inc. v.
DeLong Co., 942 F.Supp. 412, 417 (W.D. Wisc. 1996); Hydrick v. Mgt Recruiters Intl, Inc., 738
F.Supp. 1434, 1435 (N.D. Ga. 1990) (if the arbitration clause is valid, the Court must
enforce it, even if the underlying contract might be declared invalid); Brown v. Wells
Fargo Bank, NA, 85 Cal.Rptr.3d 817, 833 (Cal. Ct. App. 2008).
600) See3.03[A][2][b]; 7.03[E][1][b]; Ware, Arbitration Laws Separability Doctrine After
Buckeye Check Cashing Inc. v. Cardegna, 8 Nev. L.J. 107 (2007).
601) Importantly, as discussed below, this characterization of the Courts holding in Buckeye
Check Cashing would mean that the arbitral award on questions of the validity of the
underlying contract would be subject to subsequent judicial review on, inter alia,
jurisdictional grounds. See 7.03[E][9][b]; 7.03[E][8][b].
602) See, e.g., Friedman, Arbitration Provisions: Little Darlings and Little Monsters, 79 Fordham
L. Rev. 2035, 2062, 2065 (2011) (arbitrators decide unconscionability challenges to both
entire contract and arbitration clause, subject only to narrow post-award review); Rau,
Arbitral Power and the Limits of Contract: The New Trilogy, 22 Am. Rev. Intl Arb. 435 (2011);
Rau, Separability in the United States Supreme Court, 2006:1 Stockholm Intl Arb. Rev. 1,
9.
182
603) See, e.g., Parkland Environmental Group, Inc. v. Laborers Intl Union of N. Am., Laborers
Local 477, 390 F.Appx. 574, 576 (7th Cir. 2010) ([Plaintiff] claims that it is specifically
challenging the arbitration clause, but its argument is not particularized to the
arbitration clause: the challenge to the arbitration clause stands or falls with the
contract at a whole, and so it was subject to, and resolved by, arbitration. Thus, the
district court correctly limited its review to the scope of the arbitration clause.); Masco
Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 629 (6th Cir. 2004) ([T]he mutual mistake
argumentamounts to an attack on the underlying liability, and only derivatively on the
obligation to arbitrate. Therefore, under Prima Paint, the general arbitration provision
still applies.); Amway Global v. Woodward, 744 F.Supp.2d 657, 668 (E.D. Mich. 2010)
(arbitrators decisions on jurisdictional issues were subject to highly deferential review
(i.e., U.S. FAA 10 and manifest disregard), where Respondents challenged
enforceability of the parties arbitration agreement as a wholebut they [did] not
separately contest the enforceability of theprovisionthat empower[ed] the arbitrator
to decide jurisdictional and arbitrability disputes); Doug Brady, Inc. v. N.J. Bldg Laborers
Statewide Funds, 2009 WL 349147, at *4 (D.N.J.) (plaintiffs claims challenging arbitration
clause as well as entire contract, do not provide grounds for denying a motion to
compel arbitration; accordingly, in the aftermath of arbitration, the same argument
does not provide grounds for vacating the award).
604) Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 440 (U.S. S.Ct. 2006) (as a matter of
substantive federal arbitration law, an arbitration provision is severable from the
remainder of the contract) (emphasis added).
605) See7.03[E][2][a].
606) See, e.g., Repub. of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011) (agreeing to
arbitrate pursuant to UNCITRAL Rules provides clear and unmistakable evidence that
parties intended arbitral tribunal to decide arbitration agreements validity); Gannon
Intl, Ltd v. Blocker, 2011 WL 111885 (E.D. Mo.) (SIAC Rules allow arbitral tribunals to
decide their own jurisdiction, including claims of invalidity of arbitration agreement;
tribunal had jurisdiction to decide whether non-signatories were bound by arbitration
agreement and whether agreement was valid); Wilson v. Career Educ. Corp., 2011 WL
6012172, at *2 (E.D. Mo.) ([w]hen an arbitration clause contains a clear and unmistakable
agreement to arbitrate issues of arbitrability, as here, issues of the clauses
enforceability will be for the arbitrator to decide); Jasper Contractors, Inc. v. E
Claim.com, LLC, 2012 WL 2847636, at *6 (La. Ct. App.) (by incorporating AAA Rules, parties
clearly and unmistakably gave arbitrator the power to decide challenges to the validity
of the arbitration clauserather than allowing the district court to decide the issue, as
would otherwise be the case).
607) China Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 285-89 (3d Cir.
2003).
608) See, e.g., George v. Lebeau, 455 F.3d 92, 93-94 (2d Cir. 2006); Wash. Mut. Fin. Group, LLC v.
Bailey, 364 F.3d 260, 264 (5th Cir. 2004); China Minmetals Materials Imp. & Exp. Co. v. Chi
Mei Corp., 334 F.3d 274, 285-89 (3d Cir. 2003) (although arbitration agreement
incorporated CIETAC Rules, which empower arbitrators to determine validity of
arbitration agreement, court, rather than arbitrators, should decide challenge to
arbitration agreements existence); Mirra Co. v. Sch. Admin. Dist. No. 35, 251 F.3d 301, 304
(1st Cir. 2001); DAntuono v. Serv. Road Corp., 789 F.Supp.2d 308 (D. Conn. 2011); Telenor
Mobile Commcns AS v. Storm, 524 F.Supp.2d 332, 351 (S.D.N.Y. 2007) (because validity of
arbitration agreement is at issue, court, rather than arbitrators, must decide
jurisdictional dispute, even though arbitration agreement incorporated UNCITRAL
Rules); MI Installers & Furniture Serv. v. N.Y.C. Dist. Council of Carpenters Pension Fund,
476 F.Supp.2d 387, 390 (S.D.N.Y. 2007); Guang Dong Light Headgear Factory Co. v. ACI Intl,
Inc., 2005 WL 1118130, at *1, *7-8 (D. Kan.) (arbitrators were not competent to determine
validity of arbitration agreement, notwithstanding incorporation of institutional rules);
Celanese Corp. v. BOC Group plc, 2006 U.S. Dist. LEXIS 88191, at *6-7 (N.D. Tex.). See
authorities cited 7.03[E][7][a] & [c].
609) As discussed below, the Rent-A-Center Court also held that a challenge to the existence
or validity of an agreement to arbitrate jurisdictional disputes must be directed
specifically to that agreement, and not generally to the validity and existence of the
arbitration agreement generally. See7.03[E][2][e]; 7.03[E][5][c][iii].
610) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 n.1 (U.S. S.Ct. 2010) (emphasis in
original).
611) See, e.g., In Re Checking Account Overdraft Litg. MDL No. 2036, 674 F.3d 1252, 1256 (11th
Cir. 2012); Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 393-94 (2d Cir. 2011)
(jurisdictional issues should be decided by the courts unless there is clear and
unmistakable evidence from the arbitration agreementthat the parties intended that
[they] be decided by the arbitrator.) (emphasis in original) (quoting Bell v. Cendant
Corp., 293 F.3d 563, 566 (2d Cir. 2012)); ThaiLao Lignite (Thailand) Co. v. Govt of the Lao
Peoples Democratic Rep., 2011 WL 3516154 (S.D.N.Y.); Repub. of Iraq v. ABB AG, 769
F.Supp.2d 605 (S.D.N.Y. 2011); Mercury Telco Group, Inc. v. Empresa de Telecomunicaciones
de Bogota SA ESP, 670 F.Supp.2d 1350, 1355 (S.D. Fla. 2009) (Court finds clear and
unmistakable evidence of the parties intent to delegate the issue of arbitrability of the
claims to an arbitrator.).
612) In Re Checking Account Overdraft Litg. MDL No. 2036, 674 F.3d 1252, 1256 (11th Cir. 2012)
(emphasis added).
183
613) See7.05[C].
614) Rau, Everything You Really Need to Know About Separability in Seventeen Simple
Propositions, 14 Am. Rev. Intl Arb. 1, 107-09 (2004).
615) Rau, Everything You Really Need to Know About Separability in Seventeen Simple
Propositions, 14 Am. Rev. Intl Arb. 1, 97 (2004) (emphasis added). See also Restatement
(Third) U.S. Law of International Commercial Arbitration 414, Reporters Note e
(Tentative Draft No. 2 2012) ([T]he provisions [of most institutional rules] do not
prescribe any particular standard of review or measure of deference to the tribunal on
questions of the matters submitted to arbitration when the question comes
subsequently before a court. Accordingly, they do not show that the parties clearly
agreed to have the arbitrators decide (i.e., to arbitrate) the question of arbitrability.
Instead, the language must not only grant the arbitral tribunal the authority to resolve
such questions, but must also indicate that the tribunals determination is final and
entitled to deference by the courts.) (quoting First Options, 514 U.S. at 946).
616) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (U.S. S.Ct. 1995); Howsam v.
Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002).
617) Such waivers have sometimes been held unenforceable under the FAA. See 25.02[F][6].
618) See25.04[F][6].
619) First Options, 514 U.S. at 946 (emphasis added).
620) First Options, 514 U.S. at 943. See also Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2777
(U.S. S.Ct. 2010) (An agreement to arbitrate a gateway issue is simply an additional,
antecedent agreement the party seeking arbitration asks the federal court to enforce,
and the FAA operates on this additional arbitration agreement just as it does on any
other.) (emphasis added).
621) First Options, 514 U.S. at 944. Similarly, the First Options opinion referred to cases where
the parties clearly agreed to have the arbitrators decide (i.e., to arbitrate) the question
of arbitrability. First Options, 514 U.S. at 946.
622) Critics might also cite the FAAs statutory provisions for judicial review of jurisdictional
determinations, arguing that they mandatorily apply. U.S. FAA, 9 U.S.C. 10(a)(4); New
York Convention, Arts. V(1)(a), (c). Similar arguments are made under the UNCITRAL
Model Law. See7.03[A].
623) See7.02.
624) Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 96, 103, 104 (U.K. S.Ct.).
625) See7.03[E][2][a].
626) The First Options Court treated the possibility that the parties agreed to finally resolve
jurisdictional disputes by arbitration as an unusual event, outside the ordinary
contemplation of most parties. The Court reasoned: On the other hand, the former
question the who (primarily) should decide arbitrability question is rather arcane. A
party often might not focus upon that question or upon the significance of having
arbitrators decide that scope of their own powers. And, given the principle that a party
can be forced to arbitrate only those issues it specifically has agreed to submit to
arbitration, one can understand why courts might hesitate to interpret silence or
ambiguity on the who should decide arbitrability point as giving the arbitrators that
power, for doing so might too often force unwilling parties to arbitrate a matter they
reasonably would have thought a judge, not an arbitrator, would decide. First Options,
514 U.S. at 944-45.
627) See26.05[C][4][c][ii]; 26.05[C][1][a].
628) See25.04[A][1]; 26.05[C][1][a].
629) See25.04; 26.05[B].
630) Peoples Ins. Co. of China, Hebei Branch v. Vysanthi Shipping Co. [2003] 2 Lloyds Rep. 617,
622 (QB) (English High Ct.).
631) Compare Restatement (Third) U.S. Law of International Commercial Arbitration 414,
Reporters Note e (Tentative Draft No. 2 2012) (the language must not only grant the
arbitral tribunal the authority to resolve such questions, but must also indicate that the
tribunals determination is final and entitled to deference by the courts).
632) See25.07[A][2].
original).
634) Parties can also agree to submit an existing dispute about the validity or existence of an
arbitration agreement to arbitration, in a new arbitration agreement. That occurs
infrequently but, when it does, should be subject to recognition under Article II of the
New York Convention and most national arbitration legislation.
635) See7.03[E][5][b][v].
636) 2012 ICC Rules, Art. 6(5).
637) 2012 ICC Rules, Art. 6(3).
638) 2012 ICC Rules, Art. 34(6) (Every award shall be binding on the parties. By submitting the
dispute to arbitration under the Rules, the parties undertake to carry out any award
without delay and shall be deemed to have waived their right to any form of recourse
insofar as such waiver can validly be made.). See25.07[A].
639) See institutional rules cited and quoted 7.02[C].
184
640) See, e.g., Apollo Computer v. Berg, 886 F.2d 469 (1st Cir. 1989); Socit Gnrale de
Surveillance v. Raytheon European Mgt & Sys. Co., 643 F.2d 863 (1st Cir. 1981); Seaboard
Coast Line R. Co. v. Natl Rail Passenger Corp., 554 F.2d 657 (5th Cir. 1977); Butler Prods. Co.
v. Unistrut Corp., 367 F.2d 733 (7th Cir. 1966); Daiei Inc. v. U.S. Shoe Corp., 755 F.Supp. 299,
303 (D. Haw. 1991) (where the parties have specifically contracted to submit issues of
arbitrability to the arbitrator, this agreement will be enforced); Andrew Martin Marine
Corp. v. Stork-Werkspoor Diesel BV, 480 F.Supp. 1270 (E.D. La. 1979) (interpreting ICC
arbitration agreement broadly).
641) See, e.g., Dedon GmbH v. Janus et Cie, 411 F.Appx. 361, 363 (2d Cir. 2011) (agreement to ICC
Rules did not constitute clear and unmistakable agreement to arbitrate jurisdictional
objection); Oracle Am., Inc. v. Myriad Group AG, 2012 WL 146364 (N.D. Cal.) (incorporation
of UNCITRAL Rules did not clearly and unmistakably demonstrate parties intent to alter
general presumption that arbitrability should be decided by court rather than
arbitrator).
642) See, e.g., Schneider v. Kingdom of Thailand, 688 F.3d 68, 73 (2d Cir. 2012) (parties
adoption of the UNCITRAL rules providing [in Article 21] that the tribunal has the power
to rule on objections that it has no jurisdiction is clear and unmistakable evidence of
their intent to arbitrate issues of arbitrability); Petrofac, Inc. v. DyncDermott Petroleum
Operations Co., 687 F.3d 671 (5th Cir. 2012) (incorporation of AAA Rules was clear and
unmistakable evidence that parties intended to arbitrate jurisdictional issues); Frontera
E. Georgia Ltd v. Arar, Inc., 483 F.Appx. 896 (5th Cir. 2012) (same); Repub. of Ecuador v.
Chevron Corp., 638 F.3d 384, 394-95 (2d Cir. 2011); Fadal Mach. Ctrs, LLC v. Compumach.,
Inc., 461 F.Appx. 630 (9th Cir. 2011); Qualcomm, Inc. v. Nokia Corp., 466 F.3d 1366, 1374
(Fed. Cir. 2006) (parties clearly and unmistakably intended to delegate arbitrability
questions to an arbitrator as evidenced by their incorporation of the AAA Rules); Contec
Corp. v. Remote Solutions, Co., 398 F.3d 205, 208 (2d Cir. 2005); Shaw Group Inc. v.
Triplefine Intl Corp., 322 F.3d 115, 118, 125 (2d Cir. 2003) (ICC arbitration clause clearly
and unmistakably evidences the parties intent to arbitrate questions of arbitrability);
Gwathmey Siegel Kaufman & Assocs. Architects, LLC v. Rales, 2012 WL 2247938 (S.D.N.Y.)
(incorporation of AAA Rules was clear and unmistakable evidence that parties intended
to arbitrate jurisdictional issues); Sonera Holding BV v. Cukurova Holding AS, 2012 WL
3925853 (S.D.N.Y.) (same with regard to ICC Rules); Diwan v. EMP Global LLC, 2012 WL
252430 (D.D.C.); QPro Inc. v. RTD Quality Servs. USA, Inc., 761 F.Supp.2d 492 (S.D. Tex. 2011)
(agreeing to arbitrate under AAA or ICC Rules indicates clear and unmistakable intent to
delegate arbitrability to arbitrators); Thai-Lao (Thailand) Lignite Coal Ltd v. Govt of Lao
Peoples Democratic Rep., 2011 WL 3516154 (S.D.N.Y.) (clause provided for UNCITRAL Rules
arbitration, conferring competence-competence on tribunal, which provide clear and
unmistakable evidence of agreement to arbitrate scope dispute); Rafferty v. Xinhua Fin.
Ltd, 2011 U.S. Dist. LEXIS 9628 (S.D.N.Y.) (arbitrator, not court, decides whether particular
disputes are within scope of admittedly valid arbitration clause, when (1) the language
of the clause is broad, encompassing any and all disputes or any controversy, and (2)
parties have agreed to arbitrate under institutional rules that authorize arbitrators to
resolve jurisdictional disputes; either (1) or (2) is probably sufficient as clear and
unmistakable evidence of intent to submit scope disputes to arbitration); Nazar v.
Wolpoff & Abramson, LLP, 2007 U.S. Dist. LEXIS 11027, at *12-13 (D. Kan.) (Because the
credit agreements at issue in this case explicitly incorporate procedural rules [from the
National Arbitration Forum] that empower the arbitrator to decide the threshold issue of
arbitrability, the court views this as yet additional clear and unmistakable evidence
that the parties intended to delegate to the arbitrator the issue of whether defendant
Wolpoff & Abramson falls within the scope of the arbitration provision.); Avue Techs.
Corp. v. DCI Group, LLC, 2006 U.S. Dist. LEXIS 24513, at *13-18 (D.D.C.) (even under the
clear and unmistakable evidence standard, the arbitration agreement need not
specifically state that the arbitrator has the primary authority to decide the
arbitrability of the issues if the AAA rules as a whole are incorporated by reference); JSC
Surgutneftegaz v. President & Fellows of Harvard College, 2005 WL 1863676, at *6 (S.D.N.Y.)
(incorporation of the AAA Rules serves as clear and unmistakable evidence of the
parties submission of arbitrability to the arbitrator); Sleeper Farms v. Agway, Inc., 211
F.Supp.2d 197, 200 (D. Me. 2002) (AAA Rules constitute clear and unmistakable
delegation of scope-determining authority to an arbitrator); Brandon, Jones, Sandall,
Zeide, Kohn, Chalal & Musso, PA v. MedPartners, Inc., 203 F.R.D. 677, 685 (S.D. Fla. 2001)
(AAA Rules grant arbitrators power to decide regarding the arbitrability of a matter);
Andersen Consulting Bus. Unit Member Firms v. Andersen Worldwide Societe Coop., 1998
U.S. Dist. LEXIS 3252, at *21 (S.D.N.Y.) ([T]he jurisdictional issue of whether the ICC
arbitration is the proper forum is itself subject to resolution before the ICC. The ICC
should decide whether these issues are properly litigated in the pending ICC arbitration,
in another ICC arbitration, or in another forum under the Swiss Intercantonal
Convention.).
643) Contec Corp. v. Remote Solutions, Co., 398 F.3d 205, 208 (2d Cir. 2005).
644) Way Servs., Inc. v. Adecco N. Am., LLC, 2007 U.S. Dist. LEXIS 44206, at *9-17 (E.D. Pa.).
645) See7.03[E][5][d][iii].
185
646) See, e.g., Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 394 (2d Cir. 2011) (Ecuador
agreed to resolve investment disputes through arbitration under the UNCITRAL [R]ules
[and] Article 21 of those [R]ules states that the arbitrator shall have the power to rule on
objections that it has no jurisdiction, including any objections with respect to the
existence or validity of thearbitration agreement.Therefore, Ecuador consented to
sending challenges to the validity of the arbitration agreement to the arbitral panel.);
Wal-Mart Stores, Inc. v. PT Multipolar Corp., 1999 U.S. App. LEXIS 31578, at *5-6 (9th Cir.)
(Article 21(2) of [the] UNCITRAL [Rules] gives the arbitral tribunal the power to
determine whether it has jurisdiction over a dispute and the power to rule on objections
that it has no jurisdiction, including any objections with respect to the existence or
validity of the arbitration clause or separate arbitration agreement.[T]he parties
agreed to abide by a system in which the tribunal rules on objections to its jurisdiction
and the arbitrator, rather than the district court, should decide whether the parties
disputes are arbitrable.); Diwan v. EMP Global LLC, 2012 WL 252430 (D.D.C.) (parties
delegated questions of arbitrability to arbitrator by incorporating UNCITRAL Rules in
arbitration agreement); Gannon Intl, Ltd v. Blocker, 2011 WL 111885 (E.D. Mo.) (SIAC Rules
are clear and unmistakable evidence of agreement to arbitrate jurisdictional dispute,
including claims about the validity of the arbitration agreement); Grynberg v. BP plc, 585
F.Supp.2d 50, 54-55 (D.D.C. 2008) (Incorporation of Rule R-8(a) [of AAA Commercial Rules]
constitutes clear and unmistakable evidence that the parties intended to submit the
threshold question of arbitrability to the arbitrator himself.).
Note e (Tentative Draft No. 2 2012) (A number of caseshave founda clear and
unmistakable agreement in the parties incorporation of arbitration rules granting the
arbitrators the authority to determine their own jurisdiction.The Restatement rejects
those cases as based on a misinterpretation of the institutional rules being applied.);
Rau, Everything You Really Need to Know About Separability in Seventeen Simple
Propositions, 14 Am. Rev. Intl Arb. 1, 97 (2004). See7.03[E][5][b][iv].
648) See authorities cited 7.03[E][5][b][iv].
649) See7.03[E][5][b][iv].
650) See7.03[E][5][b][iv].
651) See7.03[E][2]-[3].
652) This distinction is derived from a reference to broad arbitration clauses in the U.S.
Supreme Courts decision in Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395
(U.S. S.Ct. 1967).
653) See7.03[E][5][d][iv].
654) See, e.g., Bechtel do Brasil Construes Ltda v. UEG Araucria Ltda, 638 F.3d 150 (2d Cir.
2011) (broad and unqualified arbitration clauses evince parties intent to arbitrate all
issues); John Hancock Life Ins. Co. v. Wilson, 254 F.3d 48, 55 (2d Cir. 2001) (parties may
overcome the First Options presumption by entering into a separate agreement that (1)
employs the any and all language); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir.
1996) (The meaning of the first of these provisions is plain indeed: any and all
controversies are to be determined by arbitration.That provision expressly includes
the category of disputes regarding the construction of the Agreement such as whether
it incorporates the NASD Code.).
655) See7.03[E][5][b][iv].
656) See7.03[E][2][a].
658) Dedon GmbH v. Janus et Cie, 411 F.Appx. 361 (2d Cir. 2011) (if party participates in
arbitration to decide issues of arbitrability, it does not forfeit its right to object to
jurisdiction in subsequent recognition proceedings); Nagrampa v. MailCoups, Inc., 469
F.3d 1257, 1277 (9th Cir. 2006); Opals on Ice Lingerie v. Bodylines Inc., 320 F.3d 362, 369 (2d
Cir. 2003) (Further, to the extent that Bodylines participated in the arbitration hearings
in order to resolve the question of arbitrability itself, such participation does not
constitute waiver.).
659) See, e.g., Zarecor v. Morgan Keegan & Co., 2011 WL 5592861 (E.D. Ark.) (award debtor did
not waive right to contest arbitrators jurisdiction by not seeking an injunction enjoining
arbitration).
660) Abondolo v. Jerry WWHS Co., 829 F.Supp.2d 120, 128 (E.D.N.Y. 2011); S & G Flooring, Inc. v.
N.Y.C. Dist. Council of Carpenters Pension Fund, 2009 WL 4931045, at *5 (S.D.N.Y.) (A
simple statement of reservation of rights is not enough, however, but rather a forceful
objection is necessary to indicate an unwillingness to submit to arbitration.); Halcot
Navigation Ltd Pship v. StoltNielsen Transp. Group, BV, 491 F.Supp.2d 413, 418-19
(S.D.N.Y. 2007) (court found clear and unmistakable evidence of waiver of arbitrability
because plaintiff requested arbitral tribunal to determine arbitrability of dispute with
only general reservation of rights).
661) See5.04[D][7][g].
662) Mass. Highway Dept v. Perini Corp., 83 Mass.App.Ct. 96, 102 (Mass. 2013) (we will not
construe CA/Ts silence, vagueness, or unresponsiveness regarding the issue of the DRBs
authority to make binding decisions on arbitrability as constituting clear and
unmistakable evidence of such intent).
663) GMC v. Pamela Equities Corps., 146 F.3d 242, 249 (5th Cir. 1998) (examining whether letter
from attorney to arbitrator, amounted to agreement to submit issue to arbitrator,
despite fact parties arbitration agreement did not do so).
186
664) Roe v. Ladymon, 318 S.W.3d 502, 510-17 (Tex. App. 2010) (agent did not clearly and
unmistakably agree[] the arbitrator could decide whether he is bound to arbitrate
claims against him individually when he executed agreement on behalf of principle;
issue of arbitrability was for court to decide).
665) Petrobras Am., Inc. v. Vicinay Cadenas, SA, 2013 WL 466596, at *5 (S.D. Tex.) (precise issue
is whether to even apply the contract containing the arbitration clause a contract to
which Petrobras is a non-signatory).
666) See7.03[E][2][a].
667) Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 444 n.1 (U.S. S.Ct. 2006) (emphasis
added); 3.03[A][2][b].
668) Buckeye Check Cashing, 546 U.S. at 444 n.l.
669) Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2855-56 (U.S. S.Ct. 2010) (quoting
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002)) (emphasis added).
671) Granite Rock Co., 130 S.Ct. at 2847. In Granite Rock, the parties had ultimately ratified a
contract containing an arbitration clause, but the dispute centered around the effective
ratification date.
672) Granite Rock Co., 130 S.Ct. at 2860-61.
674) See, e.g., Schneider v. Kingdom of Thailand, 688 F.3d 68, 72 (2d Cir. 2012) (However,
whether the district court properly declined to determine independently whether the
tollway project involved approved investments does not turn on whether that question
was one of scope or formation. It turns on whether there was clear and unmistakable
evidence of the parties intent to commit that question to arbitration. For in the absence
of such clear of unmistakable evidence, questions of arbitrability are presumptively
resolved by the court, regardless of whether they are related to scope or formation.);
Dialysis Access Ctr, LLC v. RMS Lifeline, Inc., 638 F.3d 367, 377 (1st Cir. 2011) (courts enforce
[arbitration agreement] according to its terms unless the party resisting arbitration
specifically challenges the enforceability of the arbitration clause itself, or claims that
the agreement to arbitrate was never concluded); Nagrampa v. MailCoups, Inc., 469 F.3d
1257, 1264 (9th Cir. 2006) (When the crux of the complaint is not the invalidity of the
contract as a whole, but rather the arbitration provision itself, then the federal courts
must decide whether the arbitration provision is invalid and unenforceable under 9
U.S.C. 2 of the FAA.); Rainbow Inv., Inc. v. Super 8 Motels, Inc., 973 F.Supp. 1387, 1389
(M.D. Ala. 1997) (initial formation or existence of a contract, including a disputed
arbitration clause, is legitimately brought into question, and must be decided by the
court).
675) Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *10 (S.D.N.Y.), affd, 411 F.Appx. 361 (2d
Cir. 2011).
676) See3.03[A][2][b]; 7.03[E][2][e].
677) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 n.2 (U.S. S.Ct. 2010).
678) Granite Rock Co., 130 S.Ct. at 2856 (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 444 n.1 (U.S. S.Ct. 2006). See id. at 2855-56 (in domestic labor arbitration, where
dispute concerns contract formation, the dispute is generally for courts to decide).
679) See, e.g., Jolley v. Welch, 904 F.2d 988 (5th Cir. 1990) (forgery claims for judicial
resolution); Interocean Shipping Co. v. Natl Shipping & Trading Corp., 462 F.2d 673, 676
(2d Cir. 1972) ([t]here can be no doubt that the question of the very existence of the
charter party which embodies the arbitration agreement requires judicial resolution
under 4); In re Kinoshita & Co., 287 F.2d 951, 953 (2d Cir. 1961) (if it was claimed that
there had at no time existed as between the parties any contractual relation whatever,
a trial of this issue would be required); Solymar Inv. Ltd v. Banco Santander SA, 2011 WL
1790116, at *6 (S.D. Fla.) (contract formation disputes over a contract incorporating an
arbitration clause are decided by the courts of law in the first instance); Kyung In Lee v.
Pac. Bullion (N.Y.), Inc., 788 F.Supp. 155, 157 (E.D.N.Y. 1992) (if a partys signature were
forged on a contract, it would be absurd to require arbitration); Dougherty v.
Mieczkowski, 661 F.Supp. 267, 275 (D. Del. 1987) (defendants cannot rely on a contract
which plaintiffs never signed and, on the record, never saw, to establish the existence of
an agreement to arbitrate).
680) See, e.g., Sphere Drake Ins. Ltd v. All Am. Ins. Co., 256 F.3d 587, 590-91 (7th Cir. 2001)
(person whose signature was forged has never agreed to anything); Gregory v.
Interstate/Johnson Lane Corp., 188 F.3d 501 (4th Cir. 1999); Am. Family Life Ass. Co. of
Columbus v. Biles, 2011 WL 4014463, at *7 (S.D. Miss.) (Where a party opposes arbitration
on the basis of a forged signature, the challenge goes to the very existence of [the]
agreement and therefore is an issue that the court must decide before it may compel
arbitration.); Solymar Invs., Ltd v. Banco Santander SA, 2011 WL 1790116, at *10 (S.D. Fla.)
(formation challenges are for court to decide, including challenges based upon a forged
signature to an arbitrable contract); Brooks v. Robert Larson Auto. Group, Inc., 2009 WL
2853452 (W.D. Wash.) (court would compel arbitration only after determining whether
plaintiffs signature on agreement was forged); Dassero v. Edwards, 190 F.Supp.2d 544, 557
(W.D.N.Y. 2002) (same). See also3.03[A][2][b].
187
681) See, e.g., Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 392 (2d Cir. 2011) (court must
first resolve[] the question of the very existence of the contract embodying the
arbitration clause); Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 215 (5th Cir. 2003)
(court to resolve question whether parties assented to contract); Sandvik AB v. Advent
Intl Corp., 220 F.3d 99, 107 (3d Cir. 2000) ([b]ecause under both the [New York
Convention] and the FAA a court must decide whether an agreement to arbitrate exists
before it may order arbitration, the District Court was correct in determining that it must
decide whether Hueps signature bound Advent before it could order arbitration);
Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 855, 856 (11th Cir. 1992) (Prima Paint has
never been extended to require arbitrators to adjudicate a partys contention,
supported by substantial evidence, that a contract never existed at all; the district
court should proceed immediately to a trial on the issue of whether or not [the plaintiff]
is bound by the arbitration language in the customer agreements); ThreeValleys Mun.
Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 (9th Cir. 1991) ([B]ecause an
arbitrators jurisdiction is rooted in the agreement of the parties, a party who contests
the making of a contract containing an arbitration provision cannot be compelled to
arbitrate the threshold issue of the existence of an agreement to arbitrate. Only a court
can make that decision.); Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *7 (S.D.N.Y.)
(But here it is undisputed that Dedon did not sign the Distribution Agreement, and it
does not agree with Janus contention that the Agreement otherwise came into being.
Therefore, there is no way around it: this court not only has clear jurisdiction to decide
the issue of whether an agreement to arbitrate was ever made, but it is required to
decide that issue.), affd, 411 F.Appx. 361 (2d Cir. 2011); De Beers Centenary AG v. Hasson,
751 F.Supp.2d 1297 (S.D. Fla. 2010); Toledano v. OConnor, 501 F.Supp.2d 127, 140 (D.D.C.
2007) (This circuit haslong treated disputes over the formation of an agreement to
arbitrate i.e., whether the parties ever agreed to submit anything to arbitration in the
first place as properly before the district court.) (quoting Natl R.R. Passenger Corp. v.
Boston & Maine Corp., 850 F.2d 756, 761 (D.C. Cir. 1988)); PMC, Inc. v. Atomergic Chemetals
Corp., 844 F.Supp. 177, 181 (S.D.N.Y. 1994) (before a party can be required to submit to
arbitration, it is entitled to a judicial determination of the threshold question of whether
it ever entered into an agreement which obliges it to consent to arbitration). See
also3.03[A][2][b].
682) See, e.g., Quilloin v. Tenet Health Sys. Philadelphia, 673 F.3d 221, 228 (3d Cir. 2012)
(plaintiff may bring a challenge to court claiming that an agreement to arbitrate is
unenforceable based on any of the generally applicable contract defenses, such as
fraud, duress, or unconscionability); Clerk v. First Bank of Del., 735 F.Supp.2d 170, 182
(E.D. Pa. 2010) (If[plaintiff] has allegedduresswith respect to the arbitration clause
itself, then judicial consideration of these issues is mandated before arbitration of the
claims can be compelled.) (quoting Benoay v. Prudential-Bache Sec., Inc., 805 F.2d 1437,
1441 (11th Cir. 1986)); Flannery v. Tri-State Div., 402 F.Supp.2d 819, 825 (E.D. Mich. 2005)
(The Court finds that the plaintiffs claim of duress challenges the existence of the
contract itself, and therefore relates to all the clauses and provisions in it, including the
arbitration clause. The argument that the arbitration clause is invalid and
unenforceable, therefore, is not barred by the rule in Prima Paint.). See also3.03[A][2]
[b].
683) See, e.g., Spahr v. Secco, 330 F.3d 1266, 1273 (10th Cir. 2003) (court decides defense of
mental incapacity); Hosp. Dist. No. 1 v. Cerner Corp., 2012 WL 996932, at *1 (D. Kan.) (issue
of a partys mental capacity to enter into a contract generally, which contract contains
an arbitration provision, is one for the Court in the first instance); Amirmotazedi v.
Viacom, Inc., 2011 U.S. Dist. LEXIS 23667, at *16-17 (D.D.C.) (Plaintiff challenges the
making of the Arbitration Agreement on the grounds of intoxication.Because this
mental capacity defense goes to the formation, or the making of the Arbitration
Agreement, under 4 of the FAA it must be decided by this Court.); Guang Dong Light
Headgear Factory Co. v. ACI Intl, Inc., 2005 U.S. Dist. LEXIS 8810, at *28 (D. Kan.) (with
regard to mental incapacity defense, [b]ecause the defense went to both the
enforceability of the entire contract and the specific arbitration provision, it placed the
making of the agreement to arbitrate in question); CitiFin., Inc. v. Brown, 2001 WL
1530352, at *5 (N.D. Miss.) ([I]ssue of John Browns mental incompetence goes directly to
the making of the arbitration agreement. If he could not read or understand the
arbitration agreement, he certainly could not consent to it. Under Prima Paint, if an issue
goes to the making of the agreement to arbitrate the federal court may proceed to
adjudicate it.) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404
(U.S. S.Ct. 1967)); Estate of Grimm v. Evans, 2010 WL 3432210, at *3 (Colo. App.) ([court]
therefore conclude[s] that the trial court was required to determine whether [the
claimant] lacked the mental capacity to enter into a contract when he signed the
[arbitration] agreement); In re Morgan Stanley & Co., 293 S.W.3d 182, 192 (Tex. 2009)
([s]ince a mental-incapacity defense goes to whether an [arbitration] agreement was
made, the court must decide it); H&S Homes, LLC v. McDonald, 823 So.2d 627 (Ala. 2001)
(minor allegedly lacked capacity); Rhymer v. 21st Mortg. Corp., 2006 Tenn. App. LEXIS
800, at *3-4 (Tenn. Ct. App.); Am. Med. Tech., Inc. v. Miller, 149 S.W.3d 265, 270-71 (Tex. App.
2004).
188
684) See, e.g., Bd of Trustees of the City of Delray Beach Police & Firefighters Retirement Sys. v.
Citigroup Global Mkts Inc., 622 F.3d 1335, 1342 (11th Cir. 2010) (question whether agent
lacked actual or apparent authority to enter into arbitration agreement is issue [] for
[the court], not an arbitrator, to resolve,unless the parties have clearly delegated to
the arbitrator responsibility for this determination); Sphere Drake Ins. Ltd v. All Am. Ins.
Co., 256 F.3d 587, 590-91 (7th Cir. 2001) (court to resolve claims that person whose name
was written on a contract [was written] by a faithless agent who lacked authority to make
that commitment; An agents lack of authority is a ground that prevents the
enforcement of any contract; does it not follow that judges must determine whether the
agent had authority?); Sphere Drake Ins. Ltd v. Clarendon Natl Ins. Co., 263 F.3d 26 (2d
Cir. 2001) (same); Sandvik AB v. Advent Intl Corp., 220 F.3d 99, 108 (3d Cir. 2000) ([T]he
validity of the arbitration clause as a contractderives from [the putative agents]
authority to bind Advent and there does not appear to be any independent source of
the validity of the arbitration clause once the underlying contract is taken off the table.
If [the putative agents] signature is not binding, there is no arbitration clause.);
Solymar Inv. Ltd v. Banco Santander SA, 2011 WL 1790116, at *10 (S.D. Fla.) (A legitimate
formation challenge exists, for instance, where a party claims that a person who
purportedly entered into [a contract] did not have authority to do so.Other examples
include formation challenges based upon a forged signature to [a contract], or because
an imposter purported to be an agent of that party with authority to bind it, or because
the party was fraudulently told the contract was something other than what it actually
was, or because the party did not intend to manifest assent but was physically forced to
do so.); City of Westfield v. Harris & Assocs. Painting, Inc., 567 F.Supp.2d 252, 256 (D. Mass.
2008) (Since [claimant] contends its officials did not have the authority to consent to
the agreement where [Massachusetts law] had not been complied with, the question of
the contracts validity is a matter for judicial review rather than arbitration.); Mariner
Health Care, Inc. v. Ferguson, 2006 WL 1851250, at *7 (N.D. Miss.) (purported agent had
neither actual, apparent, or statutory authority to bind [defendant] and her
beneficiaries to the arbitration agreement; retaining case for judicial determination);
Hojnowski v. Vans Skate Park, 901 A.2d 381 (N.J. 2006) (parent had authority to bind minor
to arbitration clause); Global Travel Mktg, Inc. v. Shea, 908 So.2d 392 (Fla. 2005) (same).
See also5.04[D][7][b].
685) Opals on Ice Lingerie, Designs by Bernadette, Inc. v. Bodylines, Inc., 2002 WL 718850, at *3
(E.D.N.Y.).
686) MJR Intl, Inc. v. Am. Arbitration Assn, 596 F.Supp.2d 1090, 1096 (S.D. Ohio 2009).
687) See, e.g., Sommers v. Cuddy, 2009 WL 873983, at *3 (D. Nev.) (plaintiffs argument
concerning lack of mental capacity to enter into any agreements challenged contract as
whole, and not just arbitration provision, thus making it an issue for arbitrator to
decide); Shegog v. Union Planters Bank, NA, 332 F.Supp.2d 945, 948 n.4 (S.D. Miss. 2004);
In re Steger Energy Corp., 2002 WL 663645, at *1 (Tex. App.) (one party claimed he was
incompetent at the time he signed the contracts in the early stages of Alzheimers;
court required arbitration of claim on grounds that the defense asserted relates to the
contract as a whole and does not specifically relate to the arbitration agreement
itself). See also5.04[D][7][b].
688) See, e.g., Schacht v. Beacon Ins. Co., 742 F.2d 386 (7th Cir. 1984) (question whether
condition precedent to underlying contract is fulfilled is for arbitrators); Solymar Invs.,
Ltd v. Banco Santander SA, 2011 WL 1790116 (S.D. Fla.) (challenges to validity and
enforceability of arbitration clause based on failures of conditions precedent to
contract were for arbitrators to decide); McIntyre v. Household Bank, 2004 WL 1088228,
at *1 (N.D. Ill.) (arbitrators role to consider any arguments about the validity or
enforceability of the entire contract, including the failure of a condition precedent);
Rainbow Inv., Inc. v. Super 8 Motels, Inc., 973 F.Supp. 1387, 1389 (M.D. Ala. 1997) (claim that
agreement never went into effect due to failure of a condition precedent did not
contradict existence of arbitration agreement). See also3.03[A][2][b].
689) See, e.g., Villa Garcia v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 833 F.2d 545 (5th Cir.
1987) (alleged illiteracy goes to formation of the entire contract and is therefore for
arbitral, not judicial, determination); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu,
637 F.2d 391 (5th Cir. 1981) (duress and undue influence); Eisenberger v. Chesapeake
Appalachia, LLC, 2010 WL 457139, at *3 (M.D. Pa.) (challenges to validity of contract based
on defenses such asduressgo to the contract as a whole and are subject to
arbitration); Johnnies Homes, Inc. v. Holt, 790 So.2d 956, 961 (Ala. 2001) (since claim of
illiteracy bears upon [partys] comprehension of the entire contract, not just the
arbitration agreement it is for arbitral, not judicial, resolution); Sidley Austin Brown &
Wood, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 864-65 (Tex. App. 2010) (allegations of
economic duress challenging contract as a whole were subject to arbitration); Serv. Corp.
Intl v. Lopez, 162 S.W.3d 801, 810 (Tex. App. 2005) ([D]uressissue relates to the contract
as a whole and not solely the arbitration provision. It is therefore an issue to be decided
in arbitration.). See also5.04[D][7][b].
189
690) See, e.g., Carter v. Affiliated Computer Servs., Inc., 2010 WL 5572078, at *2 (W.D. Ark.) (court
err[ed] in favor of compelling arbitration of question whether a signature binding a
party to arbitration is a forgery); Regions Bank v. Britt, 2009 WL 3766490, at *2 (S.D. Miss.)
(where party relied on contract to file suit in court, he could not avoid arbitration
pursuant to arbitration clause contained in same contract by alleging fraud or forgery);
Alexander v. U.S. Credit Mgt, Inc., 384 F.Supp.2d 1003, 1007 (N.D. Tex. 2005) (challenges
claiming that as a whole a contract is illegal, is void as a matter of law, contains
forged signatures, or was induced by fraud will generally not serve to defeat an
arbitration clause) (emphasis in original); AmSouth Bank v. Bowens, 351 F.Supp.2d 571,
575 (S.D. Miss. 2005) (since the Bowenses forgery allegation regards the customer
agreement as a whole and not just the arbitration clause of the customer agreement, it
is an issue that must be submitted to the arbitrator as part of the underlying dispute);
Hall v. Shearson Lehman Hutton, Inc., 708 F.Supp. 711 (D. Md. 1989) (arbitrator to resolve
whether one party forged other partys signature on agreement containing arbitration
clause). See also3.03[A][2][b].
691) See3.03[A][2][b].
692) See7.03[E][8][a].
693) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 940-41 (U.S. S.Ct. 1995).
694) See7.03[E][7][b]; United Steel v. TriMas Corp., 531 F.3d 531, 538 (7th Cir. 2008) ([A] party
who contests the making of a contract containing an arbitration provision cannot be
compelled to arbitrate the threshold issue of the existence of an agreement to
arbitrate.Once the existence of the agreement to arbitrate is established, questions
about the enforceability of the underlying contract are left to the arbitrator, even when
a party attempts to rescind or avoid the contract in which the arbitration clause is
embedded.) (quoting Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136,
1140-41 (9th Cir. 1991)); Sanford v. MemberWorks, Inc., 483 F.3d 956 (9th Cir. 2007)
(question of existence of arbitration agreement, as distinguished from validity, is for
court, rather than arbitrator); Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 215 (5th
Cir. 2003) (court to resolve question whether parties assented to contract); Bank of Am.,
NA v. Diamond State Ins. Co., 38 F.Appx. 687, 689 (2d Cir. 2002) ([w]hile the arbitration
provisions state that issues concerning the formation and validity of the contracts shall
be submitted to arbitration, it is not clear that this includes the question of the very
existence of the contract); In re Lehman Bros. Sec. & ERISA Litg., 706 F.Supp.2d 552, 557-
58 (S.D.N.Y. 2010) (issues as to the existence and validity of an agreement to arbitrate
always are for courts, not for arbitrators); Sleeper Farms v. Agway, Inc., 211 F.Supp.2d 197
(D. Me. 2002) (scope of arbitrability is an issue for arbitrators, but question whether
parties entered into agreement to arbitrate for judicial determination); A.T. Cross Co. v.
Royal Selangor(s) PTE, Ltd, 217 F.Supp.2d 229, 234 (D.R.I. 2002) (when plaintiff contends
that no arbitration agreement was reached, the court, not an arbitrator, must determine
the validity of the arbitration agreement); Brown v. Wells Fargo Bank, NA, 85 Cal.Rptr.3d
817, 833 (Cal. 2008) (A contract fraudulently induced is voidable; but a contract
fraudulently executed is void, because there never was an agreement.If the entire
contract is void ab initio because of fraud, the parties have not agreed to arbitrate any
controversy. Thus, claims of fraud in the execution are to be resolved by the trial
court, not an arbitrator.) (quoting Rosenthal v. Great W. Fin. Sec. Corp., 58 Cal.Rptr.2d
875, 888 (Cal. 1996)). See also Ware, Arbitration Laws Separability Doctrine After Buckeye
Check Cashing Inc. v. Cardegna, 8 Nev. L.J. 107, 114 (2007) (First Options should be read as
holding that courts, not arbitrators, rule on assent and agency arguments [and] that the
separability doctrine does not apply to contract-formation arguments).
695) Gregory v. Interstate/Johnson Lane Corp., 188 F.3d 501, 1999 WL 674765, at *7 (4th Cir.
1999).
696) See7.03[E][2].
697) See7.03[E][7][a].
original).
699) Rent-A-Center, 130 S.Ct. at 2778 n.1.
700) Terminix Intl Co., LP v. Palmer Ranch Ltd Pship, 432 F.3d 1327, 1332 (11th Cir. 2005) (By
incorporating the AAA Rulesinto their agreement, the parties clearly and unmistakably
agreed that the arbitrator should decide whether the arbitration clause is valid.); Haire
v. Smith, Currie & Hancock LLP, 2013 WL 751035, at *6 (D.D.C.) (incorporation of AAA Rules
was clear and unmistakable evidence that the parties intended for an arbitrator that
there is clear and unmistakable evidence that the parties intended for an arbitrator to
decidethe continued validityof the arbitration provision); Senior Servs. of Palm
Beach LLC v. ABCSP Inc., 2012 WL 2054971, at *3 (S.D. Fla.) (Court will grant the Motion
and dismiss this action to allow the arbitrator to determine whether the arbitration
clause is unconscionable).
701) Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 n.2 (U.S. S.Ct. 2010). The Court also held
that a challenge to the validity of an agreement to arbitrate jurisdictional disputes must
be directed specifically to the validity of that agreement (the so-called delegation
provision), and not broadly to the general arbitration agreement or underlying
contract. Id. at 2778. Where such a specific challenge is made, it is for interlocutory
judicial determination. Id. at 2779-80. See also M.A. Mortenson Co. v. Saunders Concrete
Co., 676 F.3d 1153, 1157 (8th Cir. 2012) (challenging party in arbitration disputes must
attack the validity of the specific arbitration provision sought to be enforced).
702) See7.03[E][3].
190
703) The interpretation of international arbitration agreements is discussed below. See9.01.
704) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (U.S. S.Ct. 2002).
705) Granite Rock, 130 S.Ct. at 2855-56 (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S.
79, 83 (U.S. S.Ct. 2002)). See also ibid. (A court may order arbitration of a particular
dispute only where the court is satisfied that the parties agreed to arbitrate that
disputeto satisfy itself that such an agreement exists, the court must resolve any issue
that calls into question the formation or applicability of the specific arbitration clause
that a party seeks to have a court enforce.).
706) See, e.g., Doe v. Princess Cruise Lines, Ltd, 657 F.3d 1204 (11th Cir. 2011) (court decides
whether a concededly valid arbitration clause encompassed plaintiffs claims); In Re
Am. Express Fin. Advisors Sec. Litg., 2011 WL 5222784, at *12-13 (2d Cir.) (determination
whether plaintiffs claims survived settlement agreement is question of arbitrability
that is reserved to the court, not arbitrators; relying on fact that settlement agreement
revoked [defendants] consent to arbitrate certain claims and district court was
granted exclusive jurisdiction to enforce settlement); Ehleiter v. Grapetree Shores, Inc.,
482 F.3d 207, 216 (3d Cir. 2007); Dockser v. Schwartzberg, 433 F.3d 421, 426 (4th Cir. 2006);
Employers Ins. Co. of Wasau v. Century Indem. Co., 443 F.3d 573, 577 (7th Cir 2006); Marie v.
Allied Home Mortg. Corp., 402 F.3d 1, 10 (1st Cir. 2005); JLM Indus., Inc. v. Stolt-Nielsen SA,
387 F.3d 163, 171 (2d Cir. 2004).
707) Doe v. Princess Cruise Lines, Ltd, 657 F.3d 1204, 1213 (11th Cir. 2011) (citing Anders v.
Hometown Mortg. Servs., Inc., 346 F.3d 1024, 1027 (11th Cir. 2003)).
708) See7.03[A][4]; 7.03[I][3]. See also Natl R.R. Passenger Corp. v. Conrail, 892 F.2d 1066, 1071
(D.C. Cir. 1990) (It is precisely so that an arbitrator may interpret and apply those terms
that the parties agreed to arbitration; court should not intervene before the arbitrator
has determined what the contract means); Ericksen, Arbuthnot, McCarthy, Kearney &
Walsh, Inc. v. 100 Oak St., 673 P.2d 251 (Cal. 1983). See also Smit, The Arbitration Clause:
Who Determines Its Validity and Its Personal and Subject Matter Reach?, 6 Am. Rev. Intl
Arb. 395, 397 (1995). Compare AT&T Techs., Inc. v. Commcns Workers of Am., 475 U.S. 643,
650 (U.S. S.Ct. 1986).
709) Howsam, 537 U.S. at 84.
710) This is consistent with practice in state-to-state arbitrations. See7.02[A].
711) Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (U.S. S.Ct. 2003). See Lumbermens Mut.
Cas. Co. v. Broadspire Mgt Servs., Inc., 623 F.3d 476, 477 (7th Cir. 2010); Lagstein v. Certain
Underwriters at Lloyds, London, 607 F.3d 634, 643 (10th Cir. 2010); JPD, Inc. v. Chronimed
Holdings, Inc., 539 F.3d 388, 392 (6th Cir. 2008); Cohen v. Chase Bank, NA, 679 F.Supp.2d
582 (D.N.J. 2010); Municipality of San Juan v. Corporacin Para El Fomento Economico De
La Ciudad Capital, 597 F.Supp.2d 247 (D.P.R. 2008).
712) See7.03[E][4]; 7.03[E][5]; Howsam, 537 U.S. 79.
713) See, e.g., Dialysis Access Ctr, LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir. 2011)
(Whether or not a dispute is arbitrable is typically a question for judicial
determination.); Alfa Laval U.S. Treasury, Inc. v. Natl Union Fire Ins. Co. of Pittsburgh, PA,
857 F.Supp.2d 404, 408-09 (S.D.N.Y. 2012) (To determine whether a dispute is arbitrable
under the FAA, a court must determinewhether the particular dispute sought to be
arbitrated falls within the scope of the arbitration agreement.); Copape Produtos de
Ptroleo Ltda v. Glencore Ltd, 2012 WL 398596 (S.D.N.Y.); MediVas, LLC v. Marubeni Corp.,
2011 WL 768083 (S.D. Cal.).
714) See, e.g., Montgomery v. Applied Bank, 848 F.Supp.2d 609, 618 (S.D. W.Va. 2012)
(Questions concerning the scope of an arbitration clause are to be left to the arbitrator,
unless it can be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute.) (quoting Winston
Salem Mailers Union 133, CWA v. Media Gen. Operations, Inc., 55 F.Appx. 128, 133 (4th Cir.
2003)); Baltimore County Fraternal Order of Police Lodge No. 4 v. Baltimore County, 57 A.3d
425, 437 (Md. 2012) (ambiguity in scope of arbitration clause meant determination was
for arbitral tribunal in first instance); Smola v. Greenleaf Orthopedic Assoc., 982 N.E.2d
936, 940 (Ill. App. Ct. 2012) (same).
715) See7.03[E][2][a].
716) See also Rau, Everything You Really Need to Know About Separability in Seventeen
Simple Propositions, 14 Am. Rev. Intl Arb. 1, 105-07 (2004).
717) As discussed above, there is a substantial argument that the dicta in Howsam and other
decisions concerning scope disputes was ill-considered. See7.03[E][7][a]. Even if that
dicta is given effect, however, First Options presumption in favor of judicial authority
should be readily overcome in many cases involving disputes over the scope of
arbitration clauses.
718) See7.03[E][5][b][v].
719) See7.03[E][5][b][v].
720) John Hancock Life Ins. Co. v. Wilson, 254 F.3d 48, 55 (2d Cir. 2001).
721) See7.03[E][7][b].
722) See7.03[E][5][b][iv].
723) See1.02[B][7].
724) See7.03[E][2][a].
725) See7.03[E][5][b][v].
726) See7.03[E][8][a].
191
727) This distinction is derived from a reference to broad arbitration clauses in the U.S.
Supreme Courts decision in Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395,
402 (U.S. S.Ct. 1967).
728) See, e.g., PaineWebber, Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996) (broad arbitration clause
encompassing any and all controversies indicates that parties intended to arbitrate
issues of arbitrability); Hornbeck Offshore (1984) Corp. v. Coastal Carriers Corp., 981 F.2d
752 (5th Cir. 1993) (if the clause is broad, the action [in state court] should be stayed and
the arbitrators permitted to decide whether the dispute falls within the clause); Sedco,
Inc. v. Petroleos Mexicanos Mexican Natl Oil Co., 767 F.2d 1140, 1145 (5th Cir. 1985);
McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 522 (2d Cir. 1980); Acevedo
Maldonado v. PPG Indus., Inc., 514 F.2d 614, 616-17 (1st Cir. 1975) (under broad arbitration
clause, arbitrator must ultimately pass on the outer boundaries of what is arbitrable);
Gestetner Holdings, plc v. Nashua Corp., 784 F.Supp. 78 (S.D.N.Y. 1992); CAE Indus. Ltd v.
Aerospace Holdings Co., 741 F.Supp. 388, 392 (S.D.N.Y. 1989); Nationwide Gen. Ins. Co. v. Inv.
Ins. Co., 371 N.Y.S.2d 463, 467 (N.Y. 1975) ([p]enetrating definitive analysis of the scope of
the agreement must be left to the arbitrators); Bd of Educ. of Plainedge v. Plainedge
Fedn of Teachers, 645 N.Y.S.2d 489, 490 (N.Y. App. Div. 1990) (scope of broad arbitration
clause is an issue to be resolved by arbitration and not by courts); Matter of Arbitration
Between Jefferson-Lewis-Hamilton-Herkimer-Oneida Boces, 645 N.Y.S.2d 834, 834 (N.Y.
App. Div. 1998) (broad arbitration clause requires that issues concerning the scope of
the agreementare matters for the arbitrator to decide); In re RAS Sec. Corp., 674
N.Y.S.2d 303 (N.Y. App. Div. 1998) (scope of arbitration clause subject to arbitration); Port
Auth. of N.Y. & N.J. v. Office of the Contract Arbitrator, 660 N.Y.S.2d 408 (N.Y. App. Div.
1997) (scope of arbitration clause subject to arbitration under First Options); Pepsi-Cola
Metro. Bottling Co. v. Columbia-Oxford Beverages, Inc., 474 N.Y.S.2d 127 (N.Y. App. Div.
1984).
729) Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983).
730) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (U.S. S.Ct. 2002).
192
731) See, e.g., Bechtel do Brasil Construes Ltda v. UEG Araucria Ltda, 638 F.3d 150 (2d Cir.
2011); JSC Surgutneftegaz, 2006 U.S. App. LEXIS 3846, at *3-4 (2d Cir.) (extremely broad
terms of the Deposit Agreements arbitration clause plainly evince an intent to have the
question of arbitrability decided by an arbitrator; conclusion is further demonstrated
by the incorporation of the rules of the [AAA]); Pedcor Mgt Co. Welfare Benefit Plan v.
Nations Personnel of Tex., Inc., 343 F.3d 355, 359 (5th Cir. 2003) (because scope of the
arbitration agreement itself was broad, and the issue there concerned only the kind of
arbitration proceeding, this matter of contract interpretation should be for the
arbitrator, not the courts, to decide); Shaw Group Inc. v. Triplefine Intl Corp., 322 F.3d
115, 124-25 (2d Cir. 2003) (because the parties arbitration agreement is broadly worded
to require the submission of all disputes concerning the Representation Agreement to
arbitration, and because it provides for arbitration to be conducted under the rules of
the ICC, which assign the arbitrator initial responsibility to determine issues of
arbitrability, we conclude that the agreement clearly and unmistakably evidences the
parties intent to arbitrate questions of arbitrability); John Hancock Life Ins. Co. v.
Wilson, 254 F.3d 48, 55 (2d Cir. 2001) (parties may overcome the First Options
presumption by entering into a separate agreement that (1) employs the any and all
language); Lebanon Chem. Corp. v. United Farmers Plant Food, Inc., 179 F.3d 1095, 1101
(8th Cir. 1999) (A court deciding arbitrability under a broad agreement [to arbitrate]
leaves for the arbitrator the issue of whether the controversy in question relates to the
agreement containing the arbitration clause, i.e., the scope of the clause.); Ferro Corp. v.
Garrison Indus., Inc., 142 F.3d 926, 937 (6th Cir. 1998) ([A]rbitration clause is
conspicuously broad, as it applies to all controversies and claims arising out of or
relating to this Agreement. Given this broad language, the Court does not believe that
the parties intended to incorporate Ohio law, or invoke the power of courts, to
determine the scope of the arbitration agreement.); Todd v. SS Mut. Underwriting Assn,
Ltd, 2011 WL 1226464, at *9 (E.D. La.) (given broad arbitration provision, this Court is
required to stay the action and allow the arbitrators to determine whether the dispute
falls within the clause); Bayme v. GroupArgent Sec., LLC, 2011 WL 2946718, at *4 (S.D.N.Y.)
(broad language of the submission agreement, encompassing essentially any and all
claims that the parties could bring, was evidence of clear and unmistakable intent to
submit the arbitrability question to arbitration); DAntuono v. Serv. Road Corp., 789
F.Supp.2d 308, 319 n.4 (D. Conn. 2011) (A referral of any and all controversies reflects
such a broad grant of power to the arbitrators as to evidence the parties clear inten[t]
to arbitrate the issues of arbitrability.) (quoting Shaw Group Inc. v. Triplefine Intl Corp.,
322 F.3d 115, 121 (2d Cir. 2003)); Scan-Optics, LLC v. Mavel, 2006 U.S. Dist. LEXIS 79552, at *7
(D. Conn.) (A broad arbitration clause is sufficient to require arbitration for questions of
arbitrability.); Oriental Repub. of Uruguay v. Chem. Overseas Holdings, Inc., 2006 U.S.
Dist. LEXIS 2261, at *16 (S.D.N.Y.) (broadly drafted arbitration clause may evidence the
parties intention to arbitrate the issue of arbitrability); Bridgewater Assocs., Inc. v.
Oberoi, 2005 U.S. Dist. LEXIS 25324, at *14 (S.D.N.Y.) (under Connecticut law, super
broad language in an arbitration clause is sufficient to demonstrate that the parties
intended the question of arbitrability to be determined by the arbitrator); Bd of Educ.
of Deer Park v. Deer Park Teachers Assn, 2010 WL 4009060, at *2 (N.Y. App. Div.) (If [an]
arbitration clause is broad enough to encompass the subject matter of a dispute, [t]he
question of the scope of the substantive provisions of the contract is itself a matter of
contract interpretation and application, and hence it must be deemed a matter for
resolution by the arbitrator.). But see Carson v. GiantFood, Inc., 175 F.3d 325, 330 (4th Cir.
1999) (broad arbitration clauses that generally commit all interpretive disputes
relating to or arising out of the agreement do not satisfy the clear and unmistakable
test).
732) Barcel, Who Decides the Arbitrators Jurisdiction? Separability and Competence-
Competence in Transnational Perspective, 36 Vand. J. Transnatl L. 1115, 1121-22 (2003);
Rau, Everything You Really Need to Know About Separability in Seventeen Simple
Propositions, 14 Am. Rev. Intl Arb. 1, 118 (2004).
733) Bell v. Cendant Corp., 293 F.3d 563, 565 (2d Cir. 2002).
734) See7.03[A][4].
735) See7.03[A][4].
736) See7.03[E][7][a]. An important difference, however, is that, under the Model Law, the
arbitrators determination of scope disputes would arguably be subject to de novo
judicial review, seeUNCITRAL Model Law, Art. 34(2)(a)(iii); 7.03[A][2][b]; 7.03[A][4][b],
while the arbitrators award with regard to scope issues under the FAA would be subject
only to manifest disregard review, see7.03[E][2] & [5]; 7.03[E][8][b][a]. This difference is
material, but should not be overstated in the particular context of scope disputes,
because judicial review under Article 34(2)(iii) should also treat the arbitrators
interpretation of the underlying contract as final, thereby constraining significantly any
judicial review of a scope decision. See25.04[A][6][b].
737) See7.03[E][7][a].
738) See7.03[E][2][a].
739) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-84 (U.S. S.Ct. 2002) (emphasis
added).
740) Howsam, 537 U.S. at 83-84 (emphasis added).
741) Howsam, 537 U.S. at 84.
742) Howsam, 537 U.S. at 84 (citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24-25 (U.S. S.Ct. 1983)).
193
743) See, e.g., Bechtel Do Brasil Construcoes LTDA v. UEG Araucaries Ltda, 2011 U.S. App. LEXIS
5840 (2d Cir.) (time-bar issues are for arbitral tribunal, not court, in New Yorkseated
international arbitration, notwithstanding fact that New Yorks arbitration law (Section
7502(b) of N.Y. C.P.L.R.) permits application to court for stay of arbitration on ground that
claim would be time-barred in New York litigation).
744) See, e.g., Lumbermens Mut. Cas. Co. v. Broadspire Mgt Servs., Inc., 623 F.3d 476, 481 (7th
Cir. 2010) ([issue] is a procedural question about a condition precedent to arbitration
and is for the arbitrator to address); Dealer Computer Servs., Inc. v. Old Colony Motors,
Inc., 588 F.3d 884, 887 (5th Cir. 2009) (Payment of fees is a procedural condition
precedent that the trial court should not reviewarbitrators should decide whether
parties met the conditions precedent to the obligation to arbitrate.); Cody v. Darden
Rests., 2013 WL 170367, at *2 (E.D.N.Y.) (it is clearly established that procedural
questions which grow out of the dispute and bear on its final disposition are
presumptively not for the judge, but for an arbitrator, to decide, including whether
prerequisites such as time limits, notice, laches, estoppel, and other conditions
precedenthave been met) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
84-85 (U.S. S.Ct. 2002)); City of Cottonwood v. James L. Fann Contracting, Inc., 179 Ariz. 185,
190 (Ariz. App. 1994) (whether a procedural condition has been met does not call into
question the existence of the agreement but, instead, affects how that agreement will be
interpreted andis therefore an issue for the arbitrator).
In addition, in Howsam the Supreme Court favorably quoted the comments to the
Revised Uniform Arbitration Act of 2000 for the proposition that, in the absence of an
agreement to the contrary, issues of substantive arbitrability, i.e., whether a dispute is
encompassed by an agreement to arbitrate, are for a court to decide and issues of
procedural arbitrability, i.e., whether prerequisites such as time limits, notice, laches,
estoppel, and other conditions precedent to an obligation to arbitrate have been met,
are for the arbitrators to decide. Howsam, 537 U.S. at 85. See Revised Uniform
Arbitration Act 6, comment 2 (2000).
745) See, e.g., Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 394 (2d Cir. 2001) ([P]rocedural
questions which grow out of the dispute and bear on its final disposition are
presumptively not for the judge, but for an arbitrator to decide.Both waiver and
estoppel generally [are] for the arbitrator.); Doctors Assocs., Inc. v. Distajo, 66 F.3d 438,
454 (2d Cir. 1995) (questions of waiver,[are] properly resolved by the arbitrators, not
the district court).
Compare In re Pharmacy Ben. Managers Antitrust Litg., 700 F.3d 109, 117 (3d Cir. 2012)
(waiver of the right to arbitrate based on litigation conduct remains presumptively an
issue for the court to decide); Plaintiffs sholders Corp. v. S. Farm Bureau Life Ins. Co.,
486 F.Appx. 786, 789 (11th Cir. 2012) (questions regarding waiver based on litigation
conduct are presumptively for the courts not the arbitrators to decideabsent clear
and unmistakable evidence to the contrary); JPD, Inc. v. Chronied Holdings, Inc., 539 F.3d
388, 393-94 (6th Cir. 2008) ([u]nlike contractually-based waiver, courts have long
decided whether conduct inconsistent with reliance on an arbitration agreement waives
a defendants ability to seek an arbitration); City of Morris v. Duininck Bros., Inc., 531
N.W.2d 208, 210 (Minn. Ct. App. 1995) (These waiver issues, which focus on the
preliminary steps of arbitrating the contract dispute, are procedural questions for the
arbitrator to determine, not for the trial court.).
746) See, e.g., County of El Paso, Texas v. Jones, 2010 WL 417408, at *6 (W.D. Tex.) ([plaintiffs]
procedural unconscionability claim is a question for the arbitrator, and the Court cannot
justify a finding that the arbitration clause was invalid); Holmes v. Westport Shipyards,
Inc., 2004 WL 3007087, at *3 (S.D. Fla.) (Any claim of fraud or duressin the formation of
the arbitration agreement is a matter of judicial consideration. Allegations of
unconscionability in the contract as a whole, however, are matters to be resolved in
arbitration. Thus, [plaintiffs] claim bars arbitration only if it goes to the arbitration
clause itself and not the whole contract.); Smith v. H.E. Butt Grocery Co., 18 S.W.3d 910,
912 (Tex. App. 2000) (Whether the terms and conditions of an arbitration agreement are
themselves unconscionable is a matter that must be submitted to the designated
arbitrator.).
747) See5.08[C][2].
748) See5.08[C][1].
749) See Rau, Separability in the United States Supreme Court, 2006:1 Stockholm Intl Arb.
Rev. 1, 9 (The Continental notion of competence-competence nothing more than a
timing mechanism, after all is largely irrelevant in American practice.).
194
750) See8.03[C][4]. See, e.g., Waste Mgt, Inc. v. Residuos Industriales Multiquam, 372 F.3d 339,
343 (5th Cir. 2004) (several factors emerge for invoking 3 on the application of a non-
signatory: 1) the arbitrated and litigated disputes must involve the same operative facts;
2) the claims asserted in the arbitration and litigation must be inherently inseparable;
and 3) the litigation must have a critical impact on the arbitration); Alghanim v.
Alghanim, 2011 WL 5978350, at *10-11 (S.D.N.Y.) (staying litigation against non-signatories
pending arbitral proceedings between related parties); Maritima de Ecologia, SA de CV v.
Sealion Shipping Ltd, 2011 WL 1465744 (S.D.N.Y.) (no written arbitration agreement
between parties; granting discretionary stay because arbitration of related matters
would have significant bearing on litigation); Futurewei Techs. Inc. v. E. Oliver Capital
Group, LLC, 2010 WL 1856418, at *3 (E.D. Tex.) (When a plaintiff brings claims against
multiple defendants and some claims are referred to arbitration, the remaining claims
may be stayed pending arbitrationwhen the suit against the non-signatory relies upon
the same operative facts and is inherently inseparable from the claims against a
signatory, the district court may grant a stay pending arbitration at its discretion if
proceeding would thwart the federal policy in favor of arbitration.); Hughes, Hooker &
Co. v. Am. Steamship Owners Mut. Protection. & Indem. Assn, Inc., 2005 WL 1384055, at *6
(S.D.N.Y.) (A stay of proceedings as to one defendant pending arbitration between that
defendant and the plaintiffs may be extended to the remaining defendants pursuant to
a district courts inherent power to control its docket.).
751) Suzlon Infrastructure, Ltd v. Pulk, 2010 WL 3540951, at *4 (S.D. Tex.).
752) See, e.g., Esab Group, Inc. v. Zurich Ins. plc, 2012 WL 2697020, at *16 (4th Cir.) (as to
nonarbitrable claims, the decision to stayis discretionary); Branch v. Ottinger, 2012 WL
2527023, at *3 (11th Cir.) (same); Volkswagen of Am., Inc. v. Suds of Peoria, Inc., 474 F.3d
966, 971-72 (7th Cir. 2007); Klay v. PacifiCare Health Sys., Inc., 389 F.3d 1191, 1204 (11th Cir.
2004); Am. Recovery Corp. v. Computerized Thermal Imaging, 96 F.3d 88, 97 (4th Cir. 1996)
(citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n.23 (U.S. S.Ct.
1983)); Maritima de Ecologia, SA de CV v. Sealion Shipping Ltd, 2011 WL 1465744, at *5
(S.D.N.Y.) (discretionary stay warranted because outcome of arbitration had significant
bearing on parties dispute, none of the parties would be prejudiced and duplicative
litigation would be avoided); Suzlon Infrastructure, Ltd v. Pulk, 2010 WL 3540951 (S.D.
Tex.) (discretionary stay of litigation pending arbitration of related claims); Toledano v.
OConnor, 501 F.Supp.2d 127, 154 (D.D.C. 2007) (claims against nonarbitrating party
qualify for a discretionary stay pending arbitration because they are premised on
identical facts and legal theories as theclaims against the arbitrating parties); Elli v.
Genmab, Inc., 2006 WL 2927622, at *8 (D.N.J.); The Original Calzone Co. v. Offidani, 223
F.Supp.2d 353 (D. Mass. 2002) (staying litigation on claims not subject to arbitration
pending arbitration of claims that were subject to arbitration); Cent. Jersey Freightliner,
Inc. v. Freightliner Corp., 987 F.Supp. 289, 300-01 (D.N.J. 1997) (Given the factual
intertwining of plaintiffs arbitrable and non-arbitrable claims, the Court, in its
discretion, will stay litigation of the non-arbitrable claims pending arbitration.); Allied
Fire & Safety Equip. Co. v. Dick Enters., 886 F.Supp. 491, 498 (E.D. Pa. 1995) (court has
discretion to stay proceedings pending arbitration where arbitrable claims
predominate or where arbitrable claims will have some effect on nonarbitrable claims);
Mut. Benefit Life Ins. Co. v. Zimmerman, 783 F.Supp. 853, 876 (D.N.J. 1992) (decision to stay
litigation of non-arbitrable claims pending the outcome of arbitration is one left to the
district courtas a matter of its discretion to control its docket), affd, 970 F.2d 899 (3d
Cir. 1992).
753) See, e.g., Qualcomm, Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006) (If the court
finds that the assertion of arbitrability is not wholly groundless, then it should stay the
trial of the action pending a ruling on arbitrability by an arbitrator. If the district court
finds that the assertion of arbitrability is wholly groundless, then it may conclude that
it is not satisfied under 3, and deny the moving partys request for a stay.);
Bensadoun v. Jobe-Riat, 316 F.3d 171 (2d Cir. 2003); Univ. of Chicago v. Faculty Assn of the
Univ. of Chicago Lab. Sch., Local 2063, 2011 WL 13470, at *3 (N.D. Ill.) (court in its
discretion stays therequest for declaratory relief pending completion of the
arbitrationon both arbitrability and the merits); Mahnke v. Executive Tans, 2007 WL
2340056, at *4 (D. Minn.); Oltchim, SA v. Velco Chems., Inc., 348 F.Supp.2d 97, 101 (S.D.N.Y.
2004) (staying U.S. judicial proceedings, concerning validity of arbitration agreement,
pending outcome of arbitration: Whether ultimately [the arbitration] resolves every
aspect of the dispute between the parties is something that remains to be seenbut
some significant portion of the dispute between the parties, if not all disputes, is likely
to be resolved by the Romanian arbitration.); Gallo v. Youbet.com, Inc., 2012 WL 470426,
at *6 (Cal. Ct. App.) (court should stay proceedings pending arbitrators determination of
his or her own jurisdiction, unless it is clear that the claim of arbitrability is wholly
groundless).
754) In re First Alliance Mktg, Co., 280 B.R. 240, 244 (C.D. Cal. 2002).
755) See, e.g., Volkswagen of Am., Inc. v. Suds of Peoria, Inc., 474 F.3d 966, 972 (7th Cir. 2007);
AgGrow Oils, LLC v. Natl Union Fire Ins. Co., 242 F.3d 777 (8th Cir. 2001); Morrie Mages &
Shirlee Mages Found. v. Thrifty Corp., 916 F.2d 402 (7th Cir. 1990), abrogated on other
grounds, 103 F.3d 524, 530 (7th Cir. 1996); U.S. v. Bencor-Petrifond, 2007 U.S. Dist. LEXIS
42900, at *6-7 (D. Ind.); Hikers Indus. v. William Stuart Indus., 640 F.Supp. 175, 178 (S.D.N.Y.
1986); Janmort Leasing, Inc. v. Econo-Car Intl, Inc., 475 F.Supp. 1282, 1293 (E.D.N.Y. 1979).
756) Nederlandse Erts-Tankersmaatschappij, NV v. Isbrandtsen Co., 339 F.2d 440, 441-42 (2d Cir.
1964).
195
757) PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 407 (U.S. S.Ct. 2003). See4.05[C][4].
758) PacifiCare Health Sys., 538 U.S. at 407.
759) See7.03[E][3]; 7.03[E][5][a][i].
199, 208 (D. Del. 2007).
761) See, e.g., Limonium Maritime, SA v. Mizushima Marinera, SA, 201 F.3d 431 (2d Cir. 1999)
(lower court refused to make ruling on existence of arbitration agreement for non-
signatories until after arbitration for signatories was complete); Burnham Enters., LLC v.
DACC Co. Ltd, 2013 WL 68923 (M.D. Ala.) (any decision as to jurisdiction of arbitral tribunal
shall be taken by tribunal; staying litigation pending resolution of jurisdictional issues);
Greenwood v. Mepamsa, SA, 2011 WL 4801359 (D. Ariz.) (staying motion to dismiss claims
in favor of arbitration pending ICCs resolution of jurisdictional issues); Oriental Repub. of
Uruguay v. Chem. Overseas Holdings, Inc., 2006 U.S. Dist. LEXIS 2261 (S.D.N.Y.) (staying
litigation where arbitral tribunal considered jurisdictional issues); Andersen Consulting
Bus. Unit Member Firms v. Andersen Worldwide Societe Coop., 1998 WL 122590, at *7
(S.D.N.Y.) ([T]he jurisdictional issue of whether the ICC arbitration is the proper forum is
itself subject to resolution before the ICC. The ICC should decide whether these issues
are properly litigated in the pending ICC arbitration, in another ICC arbitration, or in
another forum under the Swiss Intercantonal Convention.).
762) See1.02[B][1].
763) Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *6 (S.D.N.Y.), affd, 411 F.Appx. 361 (2d Cir.
2011).
764) U.S. FAA, 9 U.S.C. 10(a)(4).
765) See1.04[B][1][e]; 25.05[A][1][a].
766) U.S. FAA, 9 U.S.C. 10(a)(4).
767) See25.03[B]; DK Joint Venture 1 v. Weyand, 649 F.3d 310, 315 (5th Cir. 2011) (arbitrator had
exceeded his authority in rendering an award against [defendants] individually[since]
by signing the contract as an agent[they] did not become personally bound by the
terms of that contract, including the arbitration clause); Local Union No. 898 v. XL Elec.,
Inc., 380 F.3d 868, 870 (5th Cir. 2004); Hasbro, Inc. v. Catalyst USA, Inc., 367 F.3d 689, 692
(7th Cir. 2004) (with few exceptions, as long as the arbitrator does not exceed [her]
delegated authority, her award will be enforced); Geneva Sec., Inc. v. Johnson, 138 F.3d
688, 692 (7th Cir. 1998) ([I]t is sufficient for the appellants to show that [the defendants]
submitted an ineligible claim for arbitration, and that the arbitration panel may have
relied upon that claim in fashioning its award. Accordingly, we hold that the panel
exceeded its powers in issuing an award that relied upon an investment not eligible for
arbitration.); Amedeo Hotels Ltd v. N.Y. Hotel & Motel Trades Council, AFL-CIO, 2011 WL
2016002, at *5-7 (S.D.N.Y.); Octagon, Inc. v. Richards, 2010 WL 3932272, at *5 (E.D. Va.);
Melun Indus., Inc. v. Strange, 898 F.Supp. 990, 993 (S.D.N.Y. 1990). See also Katz v. Feinberg,
167 F.Supp.2d 556 (S.D.N.Y. 2001) (vacating award for excess of jurisdiction where arbitral
tribunal redetermined valuation by appraiser, notwithstanding contractual provision
that valuation would not be subject to arbitration).
768) U.S. FAA, 9 U.S.C. 10(a)(4) (In any of the following cases the United States court in and
for the district wherein the award was made may make an order vacating the award
upon the application of any party to the arbitration(4) where the arbitrators exceeded
their powers, or so imperfectly executed them that a mutual, final, and definite award
upon the subject matter submitted was not made.).
769) See, e.g., Fisher v. Gen. Steel Domestic Sales, LLC, 2011 WL 5240372, at *4 (D. Colo.) (while I
have the authority to vacate the arbitrators award under 9 U.S.C. 10(a)(4), I find that
remanding the matter back to the arbitrator is more appropriate as I conclude that the
arbitrator failed to make a final determination on a material, threshold issue).
770) Amway Global v. Woodward, 744 F.Supp.2d 657, 663 (E.D. Mich. 2010) (upholding
arbitrators rulings on jurisdiction under deferential standard of review after concluding
parties agreed to arbitrate jurisdictional dispute).
771) See7.03[E][2][a]; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (U.S. S.Ct. 1995).
772) China Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 289 (3d Cir. 2003).
196
773) U.S. FAA, 9 U.S.C. 10(a)(4); DK Joint Venture 1 v. Weyand, 649 F.3d 310 (5th Cir. 2011)
(vacating award against non-signatories; affording arbitral tribunals jurisdictional
decision no deference and rejecting argument that non-signatories were subject to
arbitration agreement on agency grounds); Porzig v. Dresdner, Kleinwort, Benson, N. Am.
LLC, 497 F.3d 133, 140 (2d Cir. 2007) (Where the arbitrator goes beyond that self-limiting
agreement between consenting parties, it acts inherently without power, and an award
ordered under such circumstances must be vacated.); Czarina ex rel Halvanon Ins. v.
W.F. Poe Syndicate, 358 F.3d 1286, 1293 (11th Cir. 2004) (under United States and
international law, a court asked to confirm an award should review an arbitration
panels conclusion that the parties agreed to arbitrate, unless the parties have agreed
to submit this question to the arbitration panel); Amedeo Hotels Ltd v. N.Y. Hotel &
Motel Trades Council, AFL-CIO, 2011 WL 2016002, at *5-7 (S.D.N.Y.) (reviewing arbitral
tribunals jurisdictional decision de novo where parties had not submitted arbitrability
question to arbitration); Octagon, Inc. v. Richards, 2010 WL 3932272, at *5 (E.D. Va.) (court
independently determined that claims were subject to arbitration and confirmed
award); URS Corp. v. Lebanese Co. for Dev. & Reconstr. of Beirut Cent., 512 F.Supp.2d 199,
207 (D. Del. 2007) (First Options held that a court reviews an arbitrators arbitrability
decision independently when there is not clear and unmistakable evidence that the
parties agreed to submit that question to arbitration. In contrast, if the parties clearly
agreed that the arbitrability question is within the province of the arbitrator, then the
standard of review applied by the court is more deferential.); Roe v. Ladymon, 318
S.W.3d 502, 517-18 (Tex. App. 2010) (reviewing arbitrators jurisdictional finding de novo
without deference to the arbitrators prior decision on the issue). See also Sarhank
Group v. Oracle Corp., 404 F.3d 657 (2d Cir. 2005) (de novo review of awards jurisdictional
decision).
774) See, e.g., Transportacion Maritima Mexicana, SA v. Companhia de Navegacao Lloyd
Brasileiro, 636 F.Supp. 474 (S.D.N.Y. 1983).
775) See7.03[A][4].
776) Some other national laws do not permit interlocutory judicial review of a positive
jurisdictional award (postponing this until a final award). Netherlands Code of Civil
Procedure, Art. 1052. This rule is ill-considered. See also Rau, The Culture of American
Arbitration and the Lessons of ADR, 40 Tex. Intl L.J. 449, 463 (2005) (preliminary arbitral
award on jurisdictional matters alone may expedite matters by making the question
ripe for immediate review); UNCITRAL, Summary Record of the Eighth Meeting of the
Committee of the Whole (II), Ninth Session, U.N. Doc. A/CN.9/9/C.2/SR.8, 5, 32 (1976)
(pleas as to the arbitrators jurisdiction should be decided as a preliminary question,
not during the final award; if the arbitrators ultimately decided that they did not have
jurisdiction, unnecessary expenses would have been incurred).
777) See7.03[E][2][a]. According to the First Options Court, if the parties agreed to arbitrate
jurisdictional issues, then the courts standard in reviewing the arbitrators decision
about that matter should not differ from the standard courts apply when they review any
other matter that parties have agreed to arbitrate. First Options, 514 U.S. at 943. The
Court cited AT&T Technologies and Warrior & Gulf Newspapers for the proposition that
parties may agree to arbitrate arbitrability. The Court went on to reason [t]hat is to
say, the court should give considerable leeway to the arbitrator, setting aside his or her
decision only in certain narrow circumstances. First Options, 514 U.S. at 943. See, e.g.,
U.S. FAA, 9 U.S.C. 10.
778) See7.03[E][2]; 25.05[A][1][a]; U.S. FAA, 9 U.S.C. 10(a)(4).
779) See, e.g., Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 674-75
(5th Cir. 2012) (confirming award and affording arbitral tribunals jurisdictional findings
exceedingly deferential review (under FAA 10(a)(4)), where parties had agreed to
arbitrate arbitrability); Apache Bohai Corp. LDC v. Texaco China BV, 480 F.3d 397, 401 (5th
Cir. 2007); Alliance Bernstein Inv. v. Schaffran, 445 F.3d 121 (2d Cir. 2006) (jurisdictional
dispute for arbitral tribunal to resolve); Thai-Lao (Thailand) Lignite Coal Ltd v. Govt of
Lao Peoples Democratic Rep., 2011 WL 3516154 (S.D.N.Y.) (clause provided for UNCITRAL
Rules arbitration, conferring competence-competence on tribunal, which provide clear
and unmistakable evidence of agreement to arbitrate scope dispute).
780) See, e.g., Invista SARL v. Rhodia SA, 2010 U.S. App. LEXIS 21950 (3d Cir.) (U.S. court holds
that arbitral award declining jurisdiction over non-signatory moots U.S. action to compel
non-signatory to arbitrate); JSC Surgutneftegaz v. President & Fellows of Harvard College,
167 F.Appx. 266, 267-68 (2d Cir. 2006).
781) See3.02[B][3][c].
782) See5.04[C].
783) See7.03[E][2][a].
784) See7.03[E][5][e].
785) See, e.g., Tehran-Berkeley Civil & Environmental Engrs v. Tippetts-Abbett-McCarthy, 888
F.2d 239, 241-42 (2d Cir. 1989) (second appeal of existence of arbitration clause after first
remand for evidentiary hearing on issue); SMG Swedish Mach. Group, Inc. v. Swedish
Mach. Group, Inc., 1991 WL 10662, at *5 (N.D. Ill.) ([T]he Court must therefore proceed
summarily to the trial thereof. Pursuant to basic principles of contract law, the parties
may introduce at the hearing extrinsic evidence concerning the intent of the parties.).
786) See7.03[E][5][c][iii].
787) See3.03[A][2][b][i](2).
788) See7.03[E][5][c][ii].
197
789) See7.03[E][5][c][i].
790) See7.03[E][5][c][ii].
791) See7.03[E][1][b].
792) See7.03[E][1][c].
793) See7.03[E][1][d].
794) See7.03[E][3].
795) Dedon GmbH v. Janus et Cie, 2010 WL 4227309, at *6 (S.D.N.Y.), affd, 411 F.Appx. 361 (2d Cir.
2011).
796) See7.03[E][6].
797) U.S. FAA, 9 U.S.C. 3, 4.
798) See AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1744-45 (U.S. S.Ct. 2011) (Thomas, J.,
dissenting) (Reading 2 and 4 harmoniously, the groundsfor the revocation
preserved in 2 would mean grounds related to the making of the agreement. This
would require enforcement of an agreement to arbitrate unless a party successfully
asserts a defense concerning the formation of the agreement to arbitrate, such as fraud,
duress, or mutual mistake. Contract defenses unrelated to the making of the agreement
such as public policy could not be the basis for declining to enforce an arbitration
clause.).
799) See1.04[A][1][e].
800) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639 n.21 (U.S. S.Ct.
1985).
801) See1.04[A][1][e].
802) See7.03[E][6].
803) See, e.g., Burnham Enters., LLC v. DACC Co. Ltd, 2013 WL 68923 (M.D. Ala.) (staying motion
to dismiss pending arbitration of jurisdictional issues); Greenwood v. Mepamsa, SA, 2011
WL 4801359 (D. Ariz.) (staying motion to dismiss claims in favor of arbitration pending
ICCs resolution of jurisdictional issues); URS Corp. v. Lebanese Co. for the Dev. & Reconstr.
of Beirut Cent. Dist. SAL, 512 F.Supp.2d 199, 208 (D. Del. 2007); Oriental Repub. of Uruguay
v. Chem. Overseas Holdings, Inc., 2006 U.S. Dist. LEXIS 2261 (S.D.N.Y.) (staying litigation
where arbitral tribunal considers jurisdictional issues); Andersen Consulting Bus. Unit
Member Firms v. Andersen Worldwide Societe Coop., 1998 U.S. Dist. LEXIS 3252, at *21
(S.D.N.Y.) ([T]he jurisdictional issue of whether the ICC arbitration is the proper forum is
itself subject to resolution before the ICC. The ICC should decide whether these issues
are properly litigated in the pending ICC arbitration, in another ICC arbitration, or in
another forum under the Swiss Intercantonal Convention.).
804) Consideration of the nature and legal basis of the jurisdictional challenge draws on the
approach of some Canadian courts to the allocation of jurisdictional competence under
the UNCITRAL Model Law. See7.03[A][2][b][i].
805) Consideration of the existence of an arbitral tribunal draws on the approach of French
arbitration law, which requires referring jurisdictional disputes to the arbitrators
whenever a tribunal has already been constituted. See7.03[B][2].
806) European Convention, Art. VI(3). See7.02[A][2].
807) See9.02[E]. Virtually all arbitration agreements are formulated to cover disputes or
claims connected to, relating to, or arising from the parties contract. In order to
determine the scope of the arbitration clause, it is generally necessary to determine the
substantive meaning and extent of the parties contractual (and, sometimes,
extracontractual) rights.
808) Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452-53 (U.S. S.Ct. 2003) (That question does
not concern a state statute or judicial procedures. It concerns contract interpretation
and arbitration procedures. Arbitrators are well situated to answer that question.);
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (U.S. S.Ct. 2002) (arbitrators, who are
comparatively more expert about the meaning of their own rule, are comparatively
better able to interpret and to apply it).
809) See7.03[A][4].
810) See7.03[I][3].
811) See7.03[E][2][e], p. 1141; Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct. 2772, 2778 n.1 (U.S. S.Ct.
2010) (It pertains to the parties manifestation of intent, not the agreements validity.)
812) See7.03[E][5][b][iv].
813) See7.03[E][2][a].
814) See7.03[D][3].
818) See7.03[E][5][b][iv], p. 1141.
819) See7.03[E][5][b][vi].
820) See7.03[E][5][b][iv].
821) See7.02.
822) As discussed above, in rare cases parties may deny arbitrators any competence-
competence. See7.03[A][3]. In practice, such examples virtually never occur.
823) See7.02.
824) See7.03[E][2][a]. See also First Options, 514 U.S. at 943.
825) First Options, 514 U.S. at 946 (emphasis added).
826) See7.03[E][5][b][iv].
827) See7.02[C].
198
828) See7.02[C].
829) See7.03[E][5][d][iv].
830) Willcock v. Pickfords [1979] 1 Lloyds Rep. 244 (English Ct. App.); Christopher Brown Ltd v.
Genossenschaft sterreichischer Waldbesitzer Holzwirtschaftsbetriebe [1954] 1 QB 8, 12-13
(QB) (English High Ct.). At common law, English courts did not distinguish clearly between
the principle of competence-competence and separability and often regarded the two
principles as closely intertwined. See Jureidini v. Natl British & Irish Millers Ins. Co. Ltd
[1915] AC 499 (House of Lords).
831) See Gross, Competence of Competence: An English View, 8 Arb. Intl 205 (1992); Harris,
Report on the Arbitration Act 1996, 23 Arb. Intl 437 (2007); R. Merkin, Arbitration Law 9.1
to 9.5 (1991 & Update August 2013); D. Sutton, J. Gill & M. Gearing, Russell on Arbitration
5-062, 8-064 (23d ed. 2007).
832) English Arbitration Act, 1996, 30, 31. The scope of the tribunals power to decide upon
its own jurisdiction under 30(1) includes: (a) whether there is a valid arbitration
agreement; (b) whether the tribunal is properly constituted; and (c) what matters have
been submitted to arbitration in accordance with the arbitration agreement. See Albon
v. Naza Motor Trading Sdn Bhd [2007] EWHC 1879 (Ch) (English High Ct.); Aeberli,
Jurisdictional Disputes Under the Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl
253, 260-65 (2005); R. Merkin, Arbitration Law 9.6 to 9.7 (1991 & Update August 2013).
833) English Arbitration Act, 1996, 30(2), 67. The parties may also waive their jurisdictional
objections, including by participating in the arbitration without protest or by raising
their jurisdictional objection late. English Arbitration Act, 1996, 31(2), 73(1)(a). See
Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 96, 103, 104 (U.K. S.Ct.); Broda
Agro Trade Ltd v. Alfred C Toepfer Intl GmbH [2010] EWCA Civ 1100, 40 (English Ct. App.);
A v. B [2010] EWHC 3302, 25 (Comm) (English High Ct.); D. Sutton, J. Gill & M. Gearing,
Russell on Arbitration 5-069 (23d ed. 2007).
834) English Arbitration Act, 1996, 31, 32, 66(3), 67, 72. See7.03[F][4].
835) English Arbitration Act, 1996, 30; R. Merkin, Arbitration Law 9.6 to 9.9 (1991 & Update
August 2013).
836) Dallah Real Estate v. Govt of Pakistan [2010] UKSC 46, 84, 96, 103, 104 (U.K. S.Ct.).
837) See Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords); Noble Denton
Middle E. v. Noble Denton Intl Ltd [2010] EWHC 2574, 8, 9 (Comm) (English High Ct.);
Albon v. Naza Motor Trading Sdn Bhd [2007] EWHC 1879 (Ch) (English High Ct.); Peoples Ins.
Co. of China, Hebei Branch v. Vysanthi Shipping Co. [2003] 2 Lloyds Rep. 617, 622 (QB)
(English High Ct.) (It is self-evidentthat an arbitral tribunal cannot be the final
arbitrator of the question of jurisdiction;this would provide a classic case of pulling
oneself up by ones own boot straps. However, giving a tribunal power to rule on its own
jurisdiction means that the parties cannot delay valid arbitration proceedings
indefinitely by making spurious challenges to the jurisdiction of the arbitral tribunal.);
Vale do Rio Doce Navegacoa SA v. Shanghai Bao Steel Ocean Shipping Co. [2000] EWHC
205 (Comm) (English High Ct.).
839) Aeberli, Jurisdictional Disputes Under the Arbitration Act 1996: A Procedural Route Map, 21
Arb. Intl 253, 254-56 (2005); D. Sutton, J. Gill & M. Gearing, Russell on Arbitration 5-067
(23d ed. 2007).
This requires the party that wishes to obtain immediate judicial determination under
72 not to take any step at all in the arbitral proceedings (even under protest and even
including such matters as nomination of an arbitrator). Broda Agro Trade Ltd v. Alfred C
Toepfer Intl GmbH [2010] EWCA Civ 1100, 40 (English Ct. App.); Caparo Group Ltd v. Fagor
Arrasate Sociedad Coop. [2000] Arb. & Disp. Res. L.J. 254 (QB) (English High Ct.) (letter to
ICC Secretariat disputing jurisdiction constitutes step in arbitration precluding reliance
on 72).
840) English Arbitration Act, 1996, 32. Section 32(2)(b) prescribes preconditions that must be
satisfied before court approval is granted. Permission will only be granted where: (a) the
determination of the question by the court is likely to produce a substantial saving in
costs; (b) the application has been made without delay; and (c) there is a good reason
why the matter should be decided by the court. See Aeberli, Jurisdictional Disputes Under
the Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl 253, 273-76 (2005); R. Merkin,
Arbitration Law 9.26 to 9.27 (1991 & Update August 2013).
841) English Arbitration Act, 1996, 31, 66(3), 67. It is clear that this applies to jurisdictional
objections to the validity of the arbitration agreement. English Arbitration Act, 1996,
30(1)(a). It is not clear how objections relating to the scope of the arbitration agreement
are dealt with.
842) English Arbitration Act, 1996, 72 (immediate judicial determination). See Aeberli,
Jurisdictional Disputes Under the Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl
253, 254-56 (2005); R. Merkin, Arbitration Law 9.29 to 9.34 (1991 & Update August 2013);
D. Sutton, J. Gill & M. Gearing, Russell on Arbitration 5-067 (23d ed. 2007). See also Broda
Agro Trade Ltd v. Alfred C Toepfer Intl GmbH [2010] EWCA Civ 1100, 40 (English Ct. App.).
199
843) English Arbitration Act, 1996, 66(3), 67 (challenge to award); Dallah Real Estate v. Govt
of Pakistan [2010] UKSC 46, 104 (U.K. S.Ct.) (English court is entitled (and indeed
bound) to revisit the question of the tribunals decision on jurisdiction if the party
resisting enforcement seeks to prove that there was no arbitration agreement binding
upon it under the law of the country where the award was made); Broda Agro Trade Ltd
v. Alfred C Toepfer Intl GmbH [2010] EWCA Civ 1100, 40 (English Ct. App.); A v. B [2010]
EWHC 3302, 25 (Comm) (English High Ct.) (Supreme Court has recently determined
conclusively that a challenge such as is made under section 67 is indeed a complete
rehearing [rather than limited review suitable for an appellate process]).
844) Excalibur Ventures LLC v. Texas Keystone Inc. [2011] EWHC 1624, 57 (English High Ct.);
Gaffney, Non-Party Autonomy: Displacing the Negative Effect of the Principle of
Competence-Competence in England? A Comment on Excalibur Ventures LLC v. Texas
Keystone Inc & Ors, 29 J. Intl Arb. 107 (2012).
845) As noted above, English courts historically applied various versions of the separability
presumption, which has been statutorily confirmed in 7 of the English Arbitration Act,
1996. See3.03[A][2][c]. As a consequence, most challenges to the parties underlying
contract, including challenges based on illegality and initial invalidity, do not impeach
the arbitration agreement and are therefore for the arbitral tribunal (not an English
court) to resolve, subject to eventual judicial review of the award. See3.03[A][2][c]; Fiona
Trust & Holding Corp. v. Privalov [2007] EWCA Civ 20, 29 (English Ct. App.) (If arbitrators
can decide whether a contract is void for initial illegality, there is no reason why they
should not decide whether a contract has been procured by bribery, just as much as
they can decide whether a contract has been procured by misrepresentation or non-
disclosure.), affd, [2007] UKHL 40 (House of Lords).
846) Fiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ 20 (English Ct. App.), affd, [2007]
UKHL 40 (House of Lords).
[2007] UKHL 40 (House of Lords). See also3.03[A][2][c]; Vee Networks Ltd v. Econet
Wireless Intl Ltd [2005] 1 Lloyds Rep. 192, 197 (QB) (English High Ct.) (if the matrix
contract were illegal and void, that matter of illegality could be conclusively
determined by the arbitrator unless the agreement to arbitrate was also independently
rendered illegal and void by the legislation in question).
849) Fiona Trust [2007] UKHL 40, 35.
850) Fiona Trust [2007] UKHL 40, 35.
851) Al-Naimi v. Islamic Press Agency Inc. [2000] 1 Lloyds Rep. 522 (English Ct. App.); Nissan
(U.K.) Ltd v. Nissan Motor Co. Ltd, unreported decision of 31 July 1991 (English Ct. App.);
Claxton Engg Serv. Ltd v. TXM Olajs Gzkutat KFT [2010] EWHC 2567 (English High Ct.);
Birse Constr. Ltd v. St. David Ltd [1999] B.L.R. 194, 196-97 (QB) (English High Ct.); R. Merkin
& L. Flannery, Arbitration Act 1996 36 et seq. (4th ed. 2008). Compare El Nasharty v. J.
Sainsbury plc [2004] 1 Lloyds Rep. 309, 29 (English High Ct.) (it would require the case
to be an exceptional [one] before the Court would leave it to the arbitrator if the Court
were uncertain on the material before it whether or not there was an arbitration
agreement).
852) Excalibur Ventures LLC v. Texas Keystone Inc. [2011] EWHC 1624, 67 (English High Ct.).
853) See English Civil Procedure Rules 1998, R62.8(3) (Where a question arises as to whether
(a) an arbitration agreement has been concluded; or (b) the dispute which is the subject-
matter of the proceedings falls within the terms of such an agreement, the court may
decide that question or give directions to enable it to be decided and may order the
proceedings to be stayed pending its decision.); R. Merkin & L. Flannery, Arbitration Act
1996 41 (4th ed. 2008).
854) Birse Constr. Ltd v. St. David Ltd [1999] B.L.R. 194, 196-97 (QB) (English High Ct.) (emphasis
added). See Al-Naimi v. Islamic Press Agency Inc. [2000] 1 Lloyds Rep. 522 (English Ct.
App.); Nissan (U.K.) Ltd v. Nissan Motor Co. Ltd unreported decision of 31 July 1991 (English
Ct. App.) (granting discretionary stay of litigation involving non-parties to arbitration
where arbitration would resolve many significant issues in litigation).
855) Claxton Engg Servs. Ltd v. TXM Olajs Gzkutat KFT [2010] EWHC 2567, 17 (English High
Ct.) (In the circumstances of this case, where Claxton is contending that the contract is
subject to an exclusive English court jurisdiction clause, and TXM is contending that it is
subject to a Hungarian arbitration agreement, and both parties have agreed that the
matter is capable of being resolved on the basis of the written evidence before me,
without cross-examination or further evidence, it seems to me to be wholly appropriate
that this court should resolve the threshold issue [of whether there is a valid arbitration
agreement].).
856) See7.03[E][7][a].
857) See7.03[A][4].
858) See7.03[F][2].
859) English Arbitration Act, 1996, 31(2), (3), 73(1)(a). See also25.04.
200
860) English Arbitration Act, 1996, 67, 73(1); Aeberli, Jurisdictional Disputes Under the
Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl 253, 254-56 (2005); D. Sutton, J.
Gill & M. Gearing, Russell on Arbitration 8-054 to 8-065 (23d ed. 2007).
Under 73(1) of the Act, a party may lose its right to raise jurisdictional objections
before the tribunal or the court where it participates or continues to participate in the
arbitration without raising such objections in a timely fashion.
861) See, e.g., LG Caltex Gas Co. v. China Natl Petroleum Co. [2001] EWCA Civ 788 (English Ct.
App.) (requiring express agreement to grant tribunal power to decide own jurisdiction
finally); Vee Networks Ltd v. Econet Wireless Intl Ltd [2005] 1 Lloyds Rep. 192, 198 (QB)
(English High Ct.); Astro Valiente Compania Naviera v. Pakistan Ministry of Food & Agric.
[1982] 1 All ER 823 (Comm) (English High Ct.) (parties submitted question whether
arbitration clause had been validly incorporated to ad hoc arbitration).
862) Vee Networks Ltd v. Econet Wireless Intl Ltd [2004] EWHC 2909, 26 (Comm) (English High
Ct.).
863) See Metal Distribs. (U.K.) Ltd v. ZCMM Inv. Holdings plc [2005] EWHC 156 (Comm) (English
High Ct.); Amec Civil Engg Ltd v. Sec. of State for Transp. [2004] EWHC 2339 (TCC) (English
High Ct.); Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyds Rep. 603 (QB) (English
High Ct.); Peoples Ins. Co. of China, Hebei Branch v. Vysanthi Shipping Co. [2003] 2 Lloyds
Rep. 617, 622 (QB) (English High Ct.); Electrosteel Castings Ltd v. Scan-Trans Shipping &
Chartering Sdn Bhd [2002] EWHC 1993 (Comm) (English High Ct.).
864) A v. B [2010] EWHC 3302, 25 (Comm) (English High Ct.).
866) English Arbitration Act, 1996, 67(1)(a) (judicial power to set aside any award of the
arbitral tribunal as to its substantive jurisdiction); D. Sutton, J. Gill & M. Gearing, Russell
on Arbitration 5-062, 8-064 (23d ed. 2007).
867) Swedish Arbitration Act, 2. See Hobr, Arbitration Reform in Sweden, 17 Arb. Intl 351,
357-58 (2001); Seppl, Comment on Section 2 of theSwedish Arbitration Act of 1999Dealing
With the Right of Arbitrators to Rule on Their Own Jurisdiction, in L. Heuman & S. Jarvin
(eds.), TheSwedish Arbitration Act of 1999Five Years On: A Critical Review of Strengths and
Weaknesses 45 (2006).
868) Swedish Arbitration Act, 2.
869) Judgment of 12 November 2010, Case No. 2301-09, 5 (Swedish S.Ct.). Some Swedish
authorities suggest that interlocutory judicial consideration of jurisdictional issues is
appropriate only when an award is unlikely to be made promptly. SeeJudgment of 12
November 2010, Case No. 2301-09, 12 (Swedish S.Ct.) (a party should in a case such
as the present be entitled to initiate an action under Section 2 of the Arbitration Act
concerning the arbitrators jurisdiction prior to the issuance of an arbitral award, at
least in situations where the award may not reasonably be expected in the near future).
870) SeeJudgment of 12 November 2010, Case No. 2301-09, 5 (Swedish S.Ct.) (The second
paragraph of [Section 2(1) of the Swedish Arbitration Act] states that a decision by the
arbitrators to the effect that they are competent to try the case is not binding and that
the issue of jurisdiction may also come under review in a challenge action against the
award.); Sekolec & Eliasson, The UNCITRAL Model Law on Arbitration and the Swedish
Arbitration Act: A Comparison (court may and should already at this stage engage in a
full consideration of the validity and scope of the arbitration agreement, irrespective of
whether the arbitral tribunal has had any opportunity to determine the question or
not), reprinted in L. Heuman & S. Jarvin (eds.), TheSwedish Arbitration Act of 1999Five
Years On: A Review of Strengths and Weaknesses 14 (2006).
871) Swedish Arbitration Act, 4 (A court may not, over an objection of a party, rule on an
issue, which, pursuant to an arbitration agreement, shall be decided by arbitrators.).
872) Swedish Arbitration Act, 2. The Act appears to contemplate judicial review for both
negative and positive jurisdictional rulings. Hobr, Arbitration Reform in Sweden, 17 Arb.
Intl 351, 357-58 (2001).
873) Judgment of 12 November 2010, 2301-09, 13 (Swedish S.Ct.) (In the current case the
arbitrators ruled on their jurisdiction in an Award on Jurisdiction. This is not an arbitral
award which can be challenged under Section 34 of the Arbitration Act. In the Swedish
terminology it is a decision on jurisdiction during an ongoing arbitration (cf. Section 27(3)
of the Act).).
874) Chinese Arbitration Law, Art. 20 (emphasis added). As discussed above, Chinese courts
have also, at least historically, adopted restrictive views of the separability
presumption. See Jiangsu Materials Group Light Indus. & Weaving Co. v. (H.K.) Top-Capital
Holdings Ltd & (Canada) Prince Dev. Ltd, 3 Gaz. of the Supreme Peoples Court 109 (1998)
(Chinese Zuigao Fayuan) (court invalidated arbitration clause based on fraud affecting
underlying contract); 3.02[B][3][h].
875) See7.02[C].
876) Japanese Arbitration Law, Arts. 14, 23.
877) L. Mistelis, L. Shore & H. Smit (eds.), 1A National Arbitration Laws ISR C4 (2d ed. 2010).
878) Lane & Harding, National Report for South Africa (2010), in J. Paulsson (ed.), International
Handbook on Commercial Arbitration 1, 19-20 (1984 & Update 2010).
879) For example, Article 8 of the UNCITRAL Model Law. See7.03[A][3].
201
880) See7.02[B][1]; 7.03[A][1] (UNCITRAL Model Law); 7.03[B][1] (France); 7.03[C][1]
(Switzerland); 7.03[D][1] (Germany); 7.03[E][5][b][i] (United States); 7.03[F][1] (England);
7.03[H] (other); A. Samuel, Jurisdictional Problems in International Commercial
Arbitration 178 (1989) (if there is one thing over which modern writers on arbitration
seem to agree, it is that arbitrators must be allowed to rule on their own jurisdiction).
881) As noted above, the arbitrators authority to consider challenges to their own
jurisdiction was recognized in early state practice. See7.02[A].
882) See13.04[A][4].
883) Christopher Brown Ltd v. Genossenschaft sterreichischer Waldbesitzer
Holzwirtschaftsbetriebe [1954] 1 Q.B. 8, 12-13 (English Ct. App.). See also Park, Determining
Arbitral Jurisdiction: Allocation of Tasks Between Courts and Arbitrators, 8 Am. Rev. Intl
Arb. 133, 140 (1997) (In its simplest formulation, competence-competence means no
more than that arbitrators can look into their own jurisdiction without waiting for a court
to do so. In other words, when one side says that the arbitration clause is invalid, there
is no need to halt proceedings and refer the question to a judge.).
884) See7.01. See alsoUNCITRAL Model Law, Art. 16(1); European Convention, Arts. V(2), (3);
Swiss Law on Private International Law, Art. 186(3); Swedish Arbitration Act, 2; Chinese
Arbitration Law, Art. 20.
885) See7.02[A]; 7.03[A][1]; 7.03[B]; 7.03[E][6]; 7.03[F]-[G]. As also discussed above, there
are virtually no jurisdictions that do not recognize an arbitral tribunals authority to
consider jurisdictional challenges. See7.03[G].
886) See European Convention, Art. VI(3); 7.02[A].
887) See New York Convention, Arts. II(1), II(3), V(1)(A); 7.02[A].
888) See7.01; 7.03[A][3]; 7.03[E]. This result is most clear where there is a concededly valid
arbitration agreement and disputes concerning the scope of the agreement. It
nonetheless extends, under the New York (and Inter-American) Convention, to cases
where a party challenges the existence or validity of any agreement to arbitrate. Even in
these cases, and absent contrary agreement, the Convention would not permit a
Contracting State to forbid arbitrators from even considering challenges to their
jurisdiction: as discussed above, the structure of the Convention and terms of Article V(1)
(a) presuppose the existence of competence-competence on the part of arbitral
tribunals to consider jurisdictional challenges.
889) See7.03[E].
890) See7.03[E]; 9.01et seq.
891) As discussed below, there is anecdotal evidence that arbitrators may take more
expansive views of their own jurisdiction than national courts would. See9.01.
892) See7.01.
893) See7.03[E][3].
894) This is not true, however, where a concededly valid post-dispute or other agreement to
arbitrate jurisdictional disputes exists or where disputes regarding the scope of a
concededly existent and valid agreement to arbitrate are concerned. See7.03[A][4];
7.03[E][7][a].
895) It is national and international law that provide the basis for the competence-
competence doctrine in most cases, because there are cases where the validity of an
arbitration agreement is not challenged and, in those circumstances, it is the
agreement, given effect by national and international law, that is the basis for the
arbitrators competence-competence. See7.02[F].
896) Shalakany, Arbitration and the Third World: A Plea for Reassessing Bias Under the Specter
of Neoliberalism, 41 Harv. Intl L.J. 419, 430, 440 (2000).
897) See7.02[F].
898) See1.02[B][2]; 1.03.
899) See1.03.
900) See7.03[E][1]; 7.03[E][8][b].
901) See7.03[F][3]. It appears that Swiss courts would reach similar results to those in the
United States and England on this issue. See7.03[C]; A. Samuel, Jurisdictional Problems
in International Commercial Arbitration 180 (1989) (Parties may confer competence-
competence on the arbitrator by making a separate agreement from that on which his
authority, to decide the case on the merits, was alleged to depend. In this way, the
validity of the first agreement could be put beyond challenge in the courts save as
concerns questions of public policy, but the second agreement would be open to attack
in the same way as any other arbitral agreement. This is accepted as the position in
most developed legal regimes.).
902) See3.03[A][2][a].
903) See7.03[D].
904) See7.03[B][4].
905) See7.02[A][1]; 8.02.
906) See8.02[B].
907) See7.02[A][1]; 7.03[A][4]; 7.03[C]-[D]; 7.03[E][2] & [10]; 7.03[F].
908) Nor would it be plausible to suggest that agreements to arbitrate future jurisdictional
disputes are invalid. A distinction between existing and future disputes contradicts the
basic terms of all modern arbitration conventions and legislation (see2.03[F]; 5.01[B]),
and is wholly unnecessary as a means of ensuring adequate consent to an agreement to
arbitrate.
202
909) Moreover, parties arguably have different intentions with regard to the arbitration of
different categories of jurisdictional disputes. In particular, parties might ordinarily
intend that disputes over the scope of a concededly valid arbitration agreement would
be subject to arbitration, while arguably not intending that disputes over the validity or
existence of any arbitration agreement itself would be arbitrated. See7.03[E][8][a].
910) See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (U.S. S.Ct. 1995); 7.03[E][2]
[a]; 7.03[E][7]. See also Mayer, Lautonomie de larbitre international dans lapprciation
de sa propre comptence, 217 Recueil des Cours 319, 340 (1989).
911) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-84 (U.S. S.Ct. 2002); 7.03[E][2][b].
English courts adopt a very similar requirement. LG Caltex Gas Co. v. China Natl
Petroleum Co. [2001] EWCA Civ 788 (English Ct. App.); 7.03[F][3].
912) The precise degree of clarity that should be required of an agreement to arbitrate
jurisdictional disputes is complex. It is discussed above in the context of the U.S. FAA.
See7.03[E][7][c].
913) See7.05[F].
622 (QB) (English High Ct.). See also Park, Determining Arbitral Jurisdiction: Allocation of
Tasks Between Courts and Arbitrators, 8 Am. Rev. Intl Arb. 133, 134 (1997) (absent
arbitration agreement, the officious intermeddlers who gave their opinion on the
matter would be no more than any of the thousands of men and women who pass
through New Yorks Grand Central Station each morning).
915) As discussed above, some legal systems adopt different approaches to disputes
concerning (a) the scope, (b) the validity, and (c) the existence or formation, of an
agreement to arbitrate. See7.03[A][2][b][ii].
916) See27.03 for a discussion of the lis pendens doctrine in international arbitration. See
also G. Born & P. Rutledge, International Civil Litigation in United States Courts 547-67 (5th
ed. 2011).
917) See7.02[A][2].
918) Jurisdictional challenges based upon the scope of the arbitration agreement raise
separate issues, which are discussed below. See7.03[I][3].
919) The difficulties with the U.S. (and English) approach are also well-illustrated by the great
number of irreconcilable lower court decisions dealing with issues of competence-
competence in U.S. courts. See7.03[E][7][c].
920) See Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967); Peoples Ins.
Co. of China, Hebei Branch v. Vysanthi Shipping Co. [2003] 2 Lloyds Rep. 617, 622 (QB)
(English High Ct.) (giving a tribunal power to rule on its own jurisdiction means that the
parties cannot delay valid arbitration proceedings indefinitely by making spurious
challenges to the jurisdiction of the arbitral tribunal); Dell Computer Corp. v. Union des
Consommateurs, 2007 SCC 34, 70 (Canadian S.Ct.) (preventing delaying tactics);
Gaillard, Les manoeuvres dilatoires des parties et des arbitres dans larbitrage commercial
international, 1990 Rev. arb. 759.
921) See Dell Computer Corp., [2007] SCC 34, 69 (concern to avoid a duplication of
proceedings); Shin-Etsu Chem. Co. Ltd v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747,
783-84 (Indian S.Ct. 2005) (2006) (degree of time and cost avoidance).
922) See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (U.S. S.Ct. 2002) (U.S. S.Ct. 2002)
(arbitrators, who are comparatively more expert about the meaning of their own rule,
are comparatively better able to interpret and to apply it); Dell Computer Corp., [2007]
SCC 34, 84 (courts expertise in resolving such [purely legal] questions).
923) See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (U.S. S.Ct. 1995)
(emphasizing need to avoid forcing unwilling parties to arbitrate a matter they
reasonably would have thought a judge, not an arbitrator, would decide).
924) See1.02[B][1].
925) See7.03[E][7][c].
926) As discussed above, where the parties have agreed to arbitrate disputes over the scope
of their arbitration clause, any interlocutory judicial review would be inappropriate and
the arbitral tribunal would have the power to finally decide such disputes. See7.03[E][7]
[c].
927) See7.03[A][4]; 7.03[E][7][a]; 7.03[F]. This approach contrasts significantly with the
treatment in these legal regimes of claims of non-existence or invalidity of the
arbitration agreement. See7.03[A][4]; 7.03[E][7][b]; 7.03[F].
928) See7.03[A][4]; 7.03[E][7][a]; 7.03[F].
929) See9.02[E]. As noted above, most arbitration agreements encompass disputes
connected to, relating to, or arising from the parties contract. In order to
determine the scope of these arbitration clauses, it is generally necessary to determine
the substantive meaning and extent of the parties contractual rights which is clearly
an issue for the arbitral tribunal to decide.
930) See7.03[E][2][c]; Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452-53 (U.S. S.Ct. 2003)
(That question does not concern a state statute or judicial procedures. It concerns
contract interpretation and arbitration procedures. Arbitrators are well situated to
answer that question.).
931) See7.03[A][4].
932) See7.03[A][3]; 7.03[B].
933) See7.02[A][1]; New York Convention, Art. II(3). See also New York Convention, Art. II(1)
(not capable of settlement by arbitration).
203
934) The nearest that Article II comes to such a reference is Article II(3)s provision for
reference to arbitration if a court is seized of an action in a matter in respect of which
the parties have made an arbitration agreement. That language is not readily
interpreted as a reference to the scope of an arbitration agreement, and instead
requires only a general connection between the national court litigation and the
935) See7.02[A][1]; New York Convention, Arts. V(1)(a), V(1)(c).
936) See7.03[A][2][c]; UNCITRAL Model Law, Arts. 8, 34, 36.
937) See7.03[E][2][f]; U.S. FAA, 9 U.S.C. 3, 4.
938) For example, if no arbitral tribunal had been constituted and there were reasons for
expedition (e.g., a rapid decision of the parties dispute was necessary to avoid
economic damage to one or both parties), then interlocutory judicial review would often
be sensible.
939) See3.03[E]; 3.03[A][2][b]; 3.03[F]; 7.03[E][7][b].
940) See5.08[E].
941) See5.08[C][1].
942) See7.03[E][7][b].
943) See5.04[C][1].
944) See7.02[A][1]; 7.03[A][2][c].
945) New York Convention, Art. II(1) (emphasis added); 7.02[A][1].
946) See7.02[A][1].
947) See7.02[A][1].
948) See the French and Swiss authorities cited 7.02[A][1], p. 1054. See alsoJudgment of 10
March 2000, Krauss Maffei Verfahrenstechnik GmbH v. Bristol Myers Squibb, XXVI Y.B.
Comm. Arb. 816, 819 (Italian Corte di Cassazione) (2001) ([a]n agreement for foreign
arbitration, which may remove a dispute from the Italian courts, undoubtedly allows for
a preliminary decision on jurisdiction where the Italian court is seized with a dispute
concerning a relationship for which the parties concluded an international arbitration
agreement).
Arbitration 672 (1999). See also Bachand, Does Article 8 of the Model Law Call for Full or
Prima Facie Review of the Arbitral Tribunals Jurisdiction?, 22 Arb. Intl 463 (2006).
950) As discussed below, this is the effect of Article II of the New York Convention and of most
national arbitration legislation. See8.02[A].
Arbitration 681(1999).
952) As discussed below, the fact that the court at the seat of an arbitration can review a
jurisdictional award in an action to annul the award does not mean that other courts will
be disabled from engaging in such review, in actions to enforce the award. See26.03[D].
Parties frequently raise jurisdictional defenses under the Convention when enforcement
actions are brought against them outside the arbitral seat. See ibid. See also Dallah Real
Estate v. Govt of Pakistan [2010] UKSC 46, 96, 103, 104 (U.K. S.Ct.). Delaying the time of
judicial consideration therefore does little, even theoretically, to centralize judicial
consideration of jurisdictional issues.
953) Even legal regimes which seek to postpone judicial consideration of jurisdictional issues
until after any arbitral award permit applications to national courts to determine
whether there is prima facie evidence of an arbitration agreement. See7.03[B]-[C]; E.
Arbitration 672 (1999). This recognizes that it would be unacceptable to adopt an
approach requiring a party to arbitrate jurisdictional objections where it is obvious that
no arbitration agreement exists. Nonetheless, an approach permitting judicial review of
prima facie evidence of an arbitration agreement is also difficult to accept, both in
principle and in practice: judicial resolution of even the limited question of prima facie
evidence will often require significant effort and potential delay, yet produce a decision
providing only modest guidance, while doing little to prevent wasted effort in arbitral
proceedings.
954) See1.02[B][2].
955) See1.02[B][1].
956) If anything, it is access to the parties (arguably) agreed dispute resolution mechanism,
of arbitration, that is denied by interlocutory judicial resolution of jurisdictional
objections: where a national court decides a jurisdictional dispute initially, without
consideration by the arbitral tribunal, the arbitrators will frequently be denied any
opportunity ever to consider the jurisdictional issues contrary to the parties putative
agreement.
957) See7.03[C]; 7.03[E][6]; 7.03[G].
958) National court proceedings may impose costs on the parties, but these are not a
decisive consideration and can in principle be recovered under cost-recovery provisions
in the relevant courts (or, less frequently, related arbitral proceedings). See23.08.
959) European Convention, Art. VI(3); 7.02[A][2]. A roughly analogous approach is adopted by
recent amendments to the Swiss Law on Private International Law with regard to the
application of lis pendens in arbitral proceedings. See27.03[B][2][d].
960) See7.03[A][3]; 7.03[E][8]; 7.03[F].
204
961) As discussed above, and notwithstanding 2 of the Swedish Arbitration Act, Swedish
courts have sometimes considered whether interlocutory judicial consideration would
be efficient and equitable (by reference to the expected time required for an award on
the merits). See7.03[G]. See alsoJudgment of 8 July 1996, 18 ASA Bull. 384 (Italian Corte di
Cassazione) (2000) (Italian courts must stay proceedings regarding arbitrators
jurisdiction in deference to arbitration).
962) See7.03[B][2]; 7.03[D][2]. See also Bermann, The Gateway Problem in International
Commercial Arbitration, 37 Yale J. Intl L. 1, 9 (2012) ([A] party resisting arbitration should
be permitted to bring a gateway issue to court only prior to the start of the arbitration.
Any benefits of allowing judicial recourse after that point in time are outweighed by the
costs in terms of delay, disruption, and eventual derailment of the arbitral process.).
963) Law Debenture Trust Corp. plc v. Elektrim Fin. BV [2005] EWHC 1412, 36 (Ch) (English High
Ct.).
964) Shin-Etsu Chem. Co. Ltd v. Aksh Optifibre Ltd, XXXI Y.B. Comm. Arb. 747, 760 (Indian S.Ct.
2005) (2006) (Sabharwal, J., dissenting) (The traditional approach has been to allow a
court, where a dispute has been brought despite an arbitration agreement, to fully rule
on the existence and validity of the arbitration agreement. This approach would ensure
that the parties are not proceeding on an invalid arbitration agreement as this would be
a fruitless exercise involving much time and expenditure.). See also Bachand, Does
Article 8 of the Model Law Call for Full or Prima Facie Review of the Arbitral Tribunals
Jurisdiction?, 22 Arb. Intl 463, 464 et seq. (2006); Mayer, Lautonomie de larbitre
international dans lapprciation de sa propre comptence, 217 Recueil des Cours 319, 346
(1989); Rau, The Culture of American Arbitration and the Lessons of ADR, 40 Tex. Intl L.J.
449, 462 (2005) ([T]he choice between these polar mechanisms is at bottom a matter of
cost/benefit analysis: Is it best, as we have tended to assume, that the question of
arbitrability be resolved with finality as soon as possible thereby obviating an
extended procedure that might turn out in the end to have been pointless? Or is it best,
instead, to allow the arbitration to proceed preventing delay and obstructive tactics
by recalcitrant persons?); A. Samuel, Jurisdictional Problems in International Commercial
Arbitration 190 (1989) ([P]re-arbitration applications to court to resolve jurisdictional
questionsdo have a great deal of merit. They enable jurisdictional problems to be
resolved in one hearing rather than two.It is true that such applications delay the
making of the final award, but the time lost at the start of the arbitration is made up for
by the fact that the courts ruling will usually prevent the jurisdictional question being
raised during the arbitration and any subsequent setting-aside proceedings.).
965) See1.02[B][7]; 23.08[A][1].
966) It is of course possible for an arbitral tribunal to render a preliminary decision on
jurisdiction, which may reduce significantly wasted costs and uncertainties. See7.03[A]
[3]; 7.05[B]. However, tribunals are not infrequently reluctant to adopt this approach,
because it can entail its own delays in the arbitral process and because it may be
unclear whether jurisdictional issues can be resolved neatly as a preliminary issue. And,
in any event, if a tribunal is prepared to render a preliminary decision on jurisdiction, it
is entirely able to do so under the UNCITRAL/U.S. approach, with the resulting award
then being available to the national court where judicial consideration of jurisdiction
issues is being pursued.
967) See7.03[B][3]; 7.03[D][4]. In Switzerland, the arbitrators legal conclusions and
rationales are subject to de novo judicial review, but factual conclusions are not.
See7.03[C][4].
968) That is the case under U.S. and English law. See7.03[E][7][a]; 7.03[F][4]. For an
anomalous decision suggesting that a positive jurisdictional award was not an award,
seeJudgments of 26 January 1999 and 1 March 1999, XXVI Y.B. Comm. Arb. 755 (Colombian
Corte Suprema de Justicia de Colombia) (2001) (award determining that arbitration
agreement is valid is not subject to recognition because it is not an award, since it
supposedly does not dispose of parties dispute).
969) See, e.g., E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration 787 (1999); Park, The Arbitrability Dicta in First Options v. Kaplan:
What Sort of Kompetenz-Kompetenz Has Crossed the Atlantic?, 12 Arb. Intl 137 (1996).
970) See, e.g., Park, The Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz-
Kompetenz Has Crossed the Atlantic?, 12 Arb. Intl 137 (1996); Ware, Arbitration Laws
Separability Doctrine After Buckeye Check Cashing Inc. v. Cardegna, 8 Nev. L.J. 107 (2007).
971) See7.02[A][1]; 7.03[F][4]; 8.02.
972) See7.02[A][1].
973) Of course, there could in principle be second-level jurisdictional issues, as to whether or
not the tribunals jurisdictional award was itself within the scope of the parties
submission agreement or whether the submission agreement was valid. The resolution of
these issues would be subject to de novo judicial review.
974) See7.03[E][7][a]; 7.03[F][2]; 8.02.
975) See8.02; UNCITRAL Model Law, Arts. 34, 36.
205
976) See, e.g., Trafalgar Shipping Co. v. Intl Milling Co., 401 F.2d 568, 573 (2d Cir. 1968)
(Moreover, it is not likely that arbitrators can be altogether objective in deciding
whether or not they ought to hear the merits. Once they have bitten into the enticing
fruit of controversy, they are not apt to stay the satisfying of their appetite after one
bite.); Park, Bridging the Gap in Forum Selection: Harmonizing Arbitration and Court
Selection, 8 Transnatl L. & Contemp. Probs. 19, 50 (1998) (Presumably arbitrators will be
more likely than courts to find jurisdiction, since arbitrators get paid if they hear a
dispute.).
977) Cf. Tumey v. Ohio, 273 U.S. 510 (U.S. S.Ct. 1927) (due process clause requires vacating
conviction where judges income was affected by outcome of case).
978) Ottley v. Sheepshead Nursing Home, 688 F.2d 883, 898 (2d Cir. 1982) (Newman, J.,
dissenting).
979) See13.06[A]; Gotanda, Setting Arbitrators Fees An International Survey, 33 Vand. J.
Transnatl L. 779 (2000).
980) G. Petrochilos, Procedural Law in International Arbitration 135 (2004) (an arbitrator is the
first person to have an interest in preserving his professional reputation by acting
impartially. Otherwise, the market will, in due course, starve him of arbitral
appointments).
981) See1.02[B][1].
982) Even apart from this, many national court judges operate within a framework of
incentives relating to docket control and case disposition which also affect their
decisions on matters of arbitral jurisdiction. See, e.g., McArthur, The Strange Case of
American Civil Procedure and the Missing Uniform Discovery Time Limits, 24 Hofstra L. Rev.
865, 976 n.318 (1996) (Judges interests diverge in many ways from the practicing bars.
Unlike their peers in private practice, judges do not earn more money for enduring a
larger docket. Their incentive is to worry about caseloads: most judges have access to
data that rank them and their fellow judges by case disposition. The stress of judging
surely mounts as the backlog of undisposed cases grows.).
983) The exception is where the parties (unusually, when there is a challenge to the existence
or validity of the arbitration agreement) submit to the tribunals jurisdiction to decide
its own jurisdiction. See7.02[A][1]; 7.03[A][5]; 7.03[F][2].
984) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 182 (1989) (it is
clear that an arbitrator never has the right to decide definitively on his own
jurisdiction). See also26.03[D].
985) See7.03[A][5][a].
986) See7.03[A][2][b]; 7.03[D]; Judgment of 6 June 2002, 2003 SchiedsVZ 39 (German
Bundesgerichtshof); Judgment of 30 August 2002, 11 Sch 02/00 (Hanseatisches
Oberlandesgericht Hamburg); Krll, Recourse Against Negative Decisions on Jurisdiction,
20 Arb. Intl 55 (2004); Voit, Die Entscheidung des Schiedsgerichts ber die eigene
Unzustndigkeit als Prfstein der dogmatischen Grundlagen des Schiedsverfahrensrechts,
in Festschrift fr Musielak 595 (2004).
987) Netherlands Code of Civil Procedure, Art. 1052(5) (Unless the parties have agreed
otherwise, the court shall have jurisdiction to try the case if the arbitral tribunal
declares that it lacks jurisdiction.); A. van den Berg et al., Netherlands Arbitration Law 83
(1993).
988) See7.03[A][4]. See also S. Koussoulis, Jurisdictional Problems in International Arbitration
59-62 (2000) (distinction between positive and negative jurisdictional awards in Greek
law).
989) See7.03[B]; 7.03[E][7]; 7.03[F].
990) As German courts have (mistakenly) reasoned. See7.03[D].
991) See1.02[B].
992) See1.02[B]et seq.
993) See7.03[A][5]; 7.03[C].
994) See7.03[A].
995) In practice, there are few national court decisions annulling negative jurisdictional
awards. Mayer, Lautonomie de larbitre international dans lapprciation de sa propre
comptence, 217 Recueil des Cours 319, 320 (1989) (judicial decisions vacating negative
jurisdictional awards are rare).
996) See23.08.
997) UNCITRAL Model Law, Arts. 1(3), 8; 5.01[B].
998) UNCITRAL Model Law, Arts. 1(3), 16; 7.02[B][1]; 7.03[A].
999) See7.03[A][3]; Judgment of 10 May 2001, XXVIII Y.B. Comm. Arb. 247 (German
Bundesgerichtshof) (2003); United Labs., Inc. v. Abraham, [2002] CanLII 17847 (Ontario
Super. Ct.); Globe Union Indus. Corp. v. G.A.P. Mktg Corp., [1995] 2 W.W.R. 696 (B.C. S.Ct.);
China Merchants Heavy Indus. Co. Ltd v. JGC Corp., [2001] HKCA 248 (H.K. Ct. App.);
Judgment of 13 December 1994, CLOUT Case No. 147, reported at www.uncitral.org/clout
(Moscow City Ct.).
206
1000) See Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432 F.Supp.2d 1305, 1309 (S.D. Fla.
2006) (applying FAAs pro-arbitration policy to compel arbitration in Western Australia);
Best Concrete Mix Corp. v. Lloyds of London Underwriters, 413 F.Supp.2d 182 (E.D.N.Y.
2006) (applying FAA and compelling arbitration in London); Nakamura Trading Co. v.
Sankyo Corp., 2006 WL 1049608, at *1 (N.D. Ill.) (citing FAAs pro-arbitration policy to
compel arbitration in Japan); Ibeto Petrochem. Indus., Ltd v. M/T Beffen, 412 F.Supp.2d
285, 291, 293 (S.D.N.Y. 2005) (citing FAAs pro-arbitration policy to compel arbitration in
London while enjoining concurrent lawsuit in Nigeria); Boston Telecomms. Group, Inc. v.
Deloitte Touche Tohmatsu, 278 F.Supp.2d 1041, 1043 (N.D. Cal. 2003) (The federal
substantive law of arbitrability establishes a clear federal policy favoring arbitration;
dismissing suit in favor of arbitration in Canada).
English courts have taken the same approach with regard to the English Arbitration Act,
1996. See Vee Networks Ltd v. Econet Wireless Intl Ltd [2005] 1 Lloyds Rep. 192 (QB)
(English High Ct.) (tribunals competence-competence to determine own jurisdiction
considered on basis of English law as law of seat); ABB Lummus Global Ltd v. Keppel Fels
Ltd [1999] 2 Lloyds Rep. 24 (QB) (English High Ct.) (32 of English Arbitration Act, 1996,
applies to all arbitrations seated in England even where parties have chosen another
law as curial law of arbitration).
in International Commercial Arbitration, 289 Recueil des Cours 9, 41-42 (2001) (tribunal
seated in Switzerland determines that it has competence-competence under Swiss law);
Award in ICC Case No. 9184, discussed in Grigera Nan, Choice-of-Law Problems in
International Commercial Arbitration, 289 Recueil des Cours 9, 42 (2001) (Swiss-seated
arbitral tribunal reasons the applicable arbitration law in the present matter is as a
mandatory rule the Swiss Private International Law Statute and therefore tribunal has
competence-competence under Article 186); Econet Wireless Ltd v. First Bank of Nigeria,
Ad Hoc Award of 2 June 2005, XXXI Y.B. Comm. Arb. 49, 52 (2006) (jurisdictional debate is
to be resolved under the lex arbitri).
1002) See7.03[E][3]; 7.03[H].
1003) See7.03[H].
1004) See7.02[A][1]; 8.02[A].
1005) Further, insofar as determining the validity of an agreement to arbitrate jurisdictional
issues is concerned, the applicable national law would appear to be that governing the
arbitration agreement, not the law of the judicial forum. See4.04.
1006) See generallyChapters 15et seq. for a discussion of arbitral procedures.
1007) Gotanda, An Efficient Method for Determining Jurisdiction in International Arbitrations, 40
Colum. J. Transnatl L. 11, 13-14 (2001) (describing differing approaches).
1008) See5.02[A][5][h]; 5.02[A][7]; 5.02[A][8]; 5.04[C][2][g]. See also26.05[C][3][e].
1010) See, e.g., English Arbitration Act, 1996, 31(2) (Any objection during the course of the
arbitral proceedings that the arbitral tribunal is exceeding its substantive jurisdiction
must be made as soon as possible after the matter alleged to be beyond its jurisdiction
is raised.), 31(3) (The arbitral tribunal may admit an objection later than the time
specified in subsection (1) or (2) if it considers the delay justified.); Swiss Law on Private
International Law, Art. 186(2) (Any objection to [the arbitral tribunals] jurisdiction must
be raised prior to any defense on the merits.); German ZPO, 1040(2) (A plea that the
arbitral tribunal does not have jurisdiction shall be raised not later than the submission
of the statement of defense. A party is not precluded from raising such a plea by the fact
that he has appointed, or participated in the appointment of, an arbitrator. A plea that
the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is raised during the arbitral
proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers
that the party has justified the delay.); Japanese Arbitration Law, Art. 23(2); Russian
Arbitration Law, Art. 16(2); Brazilian Arbitration Law, Art. 20; Egyptian Arbitration Law, Art.
22(2).
207
1011) As First Options, 514 U.S. 938, suggests, a party can waive its right to challenge an
arbitrators jurisdiction, either by agreement or by implication. In First Options, the
Kaplans were argued to have made such a waiver by contesting the arbitrators
jurisdiction over them, without separately denying his power to render a jurisdictional
award. Although that claim was rejected, other conduct may constitute a waiver of
jurisdictional objections.
For lower U.S. court decisions considering claims that jurisdictional objections were
waived, see Jones Dairy Farm v. Local No. 8-1236, United Food & Commercial Workers Intl,
AFL-CIO, 760 F.2d 173 (7th Cir. 1985); Fortune, Alsweet & Eldridge, Inc. v. Daniel, 724 F.2d
1355, 1357 (9th Cir. 1983) (party may not submit a claim to arbitration and then challenge
the authority of the arbitrator to act after receiving an unfavorable result); Exportkhelb
v. Maistros Corp., 790 F.Supp. 70 (S.D.N.Y. 1992) (partys failure to argue in arbitration that
counterclaim was not arbitrable because of prior judicial order waives its jurisdictional
objection); Am. Constr. Mach. & Equip. Corp. v. Mech. Constr. of Pakistan, Ltd, 659 F.Supp.
426 (S.D.N.Y. 1987) (signing terms of reference in ICC arbitration is waiver); Cobec
Brazilian Trading Etc. v. Isbrandtsen, 524 F.Supp. 7, 9 (S.D.N.Y. 1980) (challenge should
have been raisedwhen [adverse party] moved to compel arbitration); Jarrell v. Wilson
Warehouse Co., 490 F.Supp. 412 (M.D. La. 1980) (partys arbitration of dispute, without
objecting to tribunals jurisdiction, is waiver of jurisdictional objections). See
also25.04[A][8].
1012) See, e.g., Mller, National Report for Finland (2008), in J. Paulsson (ed.), International
Handbook on Commercial Arbitration 1, 17 (1984 & Update 2008).
1014) ICDR Rules, Art. 15(3); LCIA Rules, Art. 23(2); ICSID Rules, Rule 27 (Waiver. A party which
knows or should have known that a provision of the Administrative and Financial
Regulations, of these Rules, of any other rules or agreement applicable to the
proceeding, or of an order of the Tribunal has not been complied with and which fails to
state promptly its objections thereto, shall be deemed subject to Article 45 of the
Convention to have waived its right to object.); BAC Rules, Art. 6(1); BCICAC Rules, Art.
15(2); 2013 DIA Rules, Art. 16(2); DIFC-LCIA Rules, Art. 23(2); 2011 JAMS Rules, Art. 17(2); 2011
KCAB Rules, Art. 19(3); 2013 KLRCA Rules, Art. 23(2); 2013 SHIAC Rules, Art. 6(1); 2013 SIAC
Rules, Art. 25(3). The ICC Rules are silent on this issue.
1015) SeeUNCITRAL, Summary Record of the Eighth Meeting of the Committee of the Whole (II),
Ninth Session, U.N. Doc. A/CN.9/9/C.2/SR.8, 4-5, 27-30 (1976) (deleting sentence in
former Article 21(3) providing that [w]here delay in raising a plea of incompetence is
justified under the circumstances, the arbitrators may declare the plea admissible as
unnecessary, given tribunals general discretion).
1016) SeeACD Tridon Inc. v. Tridon Australia Pty Ltd, XXIX Y.B. Comm. Arb. 533, 542-43 (N.S.W.
S.Ct. 2002) (2004); Judgment of 15 May 2003, Czech Repub. v. CME Czech Repub. BV, Case
No. T 8735-01 (Svea Ct. App.), reprinted and discussed in S. Jarvin & A. Magnusson (eds.),
International Arbitration Court Decisions 663, 678-79 (2006).
1017) See26.05[C]
1018) See7.05.
1019) UNCITRAL Model Law, Art. 16(3). See also Aeberli, Jurisdictional Disputes Under the
Arbitration Act 1996: A Procedural Route Map, 21 Arb. Intl 253, 265 (2005).
1020) Swiss Law on Private International Law, Art. 186(3) ([t]he arbitral tribunal shall, in
general, decide on its own jurisdiction by a preliminary decision); German ZPO, 1040(3)
(If the arbitral tribunal considers that it has jurisdiction, it rules on a plea referred to in
subsection 2 of this section [plea to jurisdiction] generally by means of a preliminary
ruling.); Slovenian Arbitration Law, Art. 19(3).
1021) SeeEnglish Arbitration Act, 1996, 31(4); B. Berger & F. Kellerhals, International and
Domestic Arbitration in Switzerland 650 (2d ed. 2010); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 1252 (1999); R.
Merkin, Arbitration Law 9.27 (Update August 2013); Werner, in S. Berti et al. (eds.),
International Arbitration in Switzerland Art. 186, 48 et seq. (2000).
1022) See, e.g., AOOT Kalmneft v. Glencore Intl AG [2001] CLC 1805 (Comm) (English High Ct.)
(arbitral tribunals decision to reserve jurisdictional ruling until merits is matter for
tribunals discretion, subject to annulment only where no reasonable tribunal could
reach such a decision); 15.03.
1023) The UNCITRAL, ICDR and LCIA Rules do not have any counterpart to this procedure.
Rather, jurisdictional challenges are left for resolution by the arbitral tribunal itself. Of
course, as discussed in detail below, it is not uncommon for one party to the arbitration
agreement to commence litigation in a national court in derogation of the agreement.
SeeChapter 8.
1024) The HKIAC Rules and SCC Rules adopt a similar provision. See 2013 HKIAC Rules, Art. 19(4);
2010 SCC Rules, Art. 10; Ramsj & Strmberg, Manifest Lack of Jurisdiction? A Selection of
Decisions of the Arbitration Institute of the Stockholm Chamber of Commerce Concerning
the Prima Facie Existence of An Arbitration Agreement (2005-2009), 2009:2 Stockholm Intl
Arb. Rev. 55.
208
1025) Article 6(3) of the 2012 ICC Rules provides: If any party against which a claim has been
made does not submit an answer, or raises one or more pleas concerning the existence,
validity or scope of the arbitration agreement or concerning whether all of the claims
made in the arbitration may be determined together in a single arbitration, the
arbitration shall proceed and any question of jurisdiction or of whether the claims may
be determined together in that arbitration shall be decided directly by the arbitral
tribunal, unless the Secretary General refers the matter to the Court for its decision
pursuant to Article 6(4). Article 6(4) of the 2012 ICC Rules provides: In all cases referred
to the Court under Article 6(3), the Court shall decide whether and to what extent the
arbitration shall proceed. The arbitration shall proceed if and to the extent that the
Court is prima facie satisfied that an arbitration agreement under the Rules may exist.
1026) The Court need only conclude that an arbitration agreement may exist. 2012 ICC Rules,
Art. 6(4). A challenge to the ICCs prima facie jurisdiction is generally made in
correspondence to the ICC Secretariat (addressed to the ICC Counsel assigned to the
case), with copies to opposing counsel. Oral submissions (of either argument or witness
testimony) are not permitted. W. Craig, W. Park & J. Paulsson, International Chamber of
Commerce Arbitration12.01 (3d ed. 2000); Y. Derains & E. Schwartz, A Guide to the ICC
Rules of Arbitration 79-80, 83-103 (2d ed. 2005).
The revision of the ICC Rules in 1998 extended the Courts prima facie jurisdictional
review authority from the existence or validity to the existence, validity or scope of
the arbitration agreement. At the same time, the 1998 revisions articulated the prima
facie jurisdiction standard in less rigorous terms. The pre-1998 version of the ICC Rules
provided that the ICC Court needed to be satisfied of the prima facie existence of such
an agreement, while the 1998 and 2012 Rules require only that the Court is prima facie
satisfied that an arbitration agreement under the Rules may exist. (emphasis added).
For examples of cases where Requests for Arbitration were rejected on prima facie
jurisdictional grounds, see Dimolitsa, Issues Concerning the Existence, Validity and
Effectiveness of the Arbitration Agreement, 7(2) ICC Ct. Bull. 14, 15-16 (1996).
1027) W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration 11.01 to
11.02 (3d ed. 2000); Rau, The Culture of American Arbitration and the Lessons of ADR, 40
Tex. Intl L.J. 449, 466 (2005) (Article 6 of ICC Rules is deeply rooted in the premises and
presuppositions of French procedural law that is, it is apparently not intended in any
way to amount to a final allocation of decision-making authority).
1028) In principle, a party is free to seek a judicial determination that a valid arbitration
agreement exists (and applies to the parties dispute) notwithstanding a prior decision
by the ICC Court under Article 6(4). See W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration12.03 (3d ed. 2000); Y. Derains & E. Schwartz, A Guide
to the ICC Rules of Arbitration 103 n.145 (2d ed. 2005).
1029) C. Schreuer et al., The ICSID Convention: A Commentary Art. 36, 22-37, 48-56 (2d ed.
2009).
1030) C. Schreuer et al., The ICSID Convention: A Commentary Art. 41, 1-9 (2d ed. 2009).
1031) See ICDR Rules, Art. 15(1); 2013 AAA Rules, Rule 7; LCIA Rules, Art. 23(1); 2012 Swiss Rules,
Art. 21(1).
1033) See27.03[A]. See also8.04[C].
1034) See, e.g., UNCITRAL Model Law, Arts. 8(1), (2), 16(3); French Code of Civil Procedure, Art.
1465 (The arbitral tribunal has exclusive jurisdiction to rule on objections to its
jurisdiction.), Art. 1448(1) (When a dispute subject to an arbitration agreement is
brought before a court, such court shall decline jurisdiction, except if an arbitral
tribunal has not yet been seized of the dispute and if the arbitration agreement is
manifestly void or manifestly not applicable.); Swiss Law on Private International Law,
Art. 186(1)(bis) ([The arbitral tribunal] shall decide on its jurisdiction notwithstanding an
action on the same matter between the same parties already pending before a State
court or another arbitral tribunal, unless serious reasons require a stay of the
proceedings.).
1035) See7.03[D]; 27.03[B][2][b]. See also8.04[C]; Dedon GmbH v. Janus et Cie, 2010 WL
4227309 (S.D.N.Y.) (proceeding to decide arbitrability issues concurrently with ICC
arbitral tribunal seated in London where party opposing arbitral jurisdiction had not
sought a stay of arbitral proceedings from a court of competent authority), affd, 411
F.Appx. 361 (2d Cir. 2011); T1T2 Ltd Pship v. Canada, (1994) 23 O.R.3d 67 (Ontario Super.
Ct.); ABN Amro Bank Canada v. Krupp MaK Maschinenbau GmbH, (1994) 135 D.L.R.4th 130
(Ontario Super. Ct.).
1036) See27.02[B][3][a].
1037) See27.02[B][3]; 27.03[B].
1038) These grounds for challenging the existence, validity, or legality of an arbitration
agreement are discussed above. See5.04.
1039) See, e.g.,Partial Award in ICC Case No. 4402, IX Y.B. Comm. Arb. 138 (1984).
209
1040) See Glamis Gold, Ltd v. U.S.A., in Procedural Order No. 2 in NAFTA Case of 31 May 2005,
reprinted in D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary 460-61
(2d ed. 2013) (identifying factors relevant to determining whether to hear jurisdiction as
preliminary issue); Methanex Corp. v. U.S.A., in Partial Award on Jurisdiction in NAFTA Case
of 7 August 2002, 14(6) WTAM 109, 146, 37 (2002) (The discretion whether to choose the
general or the exceptional procedure lies with the arbitration tribunal; and the exercise
of that discretion is not confined to economic factors: e.g., where jurisdictional issues
are intertwined with the merits, it may be impossible or impractical to decide the
former without also hearing argument and evidence on the latter.); D. Caron & L. Caplan,
The UNCITRAL Arbitration Rules: A Commentary 457-58 (2d ed. 2013) (Article 23(3) places
decision when to rule on jurisdiction within tribunals discretion; Any decision [on when
to decide jurisdictional objections] must consider the substantiality of the objection, the
cost in time and money to the parties of such a preliminary ruling (e.g., whether such a
ruling would entail written filings or an oral hearing), and the practicality of bifurcating
the proceedings to address jurisdiction preliminarily, especially where jurisdictional
issues are intertwined with the merits.); W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration 523 (3d ed. 2000) (Article 16 gives the arbitral tribunal
considerable authority and responsibility to determine whether the objection justifies
an interruption of the arbitral proceedings on the merits. It is a cornerstone of the Model
Law.).
1041) See7.05[B]; Swiss Law on Private International Law, Art. 186(3).
1042) Fung Sang Trading Ltd v. Kai Sun Sea Prods. & Food Co. Ltd, [1991] HKCFI 190 (H.K. Ct. First
Inst.).
Arbitration, U.N. Doc. A/CN.9/264, Art. 16, 11 (1985).
1044) For a reasoned consideration of the relative benefits and costs of different procedural
dispositions of jurisdictional objections, see Aoot Kalmneft v. Glencore Intl AG [2001] 1
Lloyds Rep. 128 (QB) (English High Ct.). See also Glamis Gold, Ltd v. U.S.A., in NAFTA
Procedural Order No. 2 of 31 May 2005, reprinted in D. Caron & L. Caplan, The UNCITRAL
Arbitration Rules: A Commentary 460-61 (2d ed. 2013) (primary motive for the creation of
a presumption in favor of the preliminary consideration of a jurisdictional objection was
to ensure efficiency in the proceedings); Blessing, The ICC Arbitral Process, Part III: The
Procedure Before the Arbitral Tribunal, 3(2) ICC Ct. Bull. 18, 27 (1992) (where jurisdictional
issues can be sufficiently isolated and are not dilatory preliminary decision on
jurisdiction is preferred); Gotanda, An Efficient Method for Determining Jurisdiction in
International Arbitrations, 40 Colum. J. Transnatl L. 11 (2001).
For awards considering whether or not to bifurcate proceedings or provide for partial
awards, seePartial Award in ICC Case No. 5073, XIII Y.B. Comm. Arb. 53 (1988); Partial Award
in ICC Case No. 3790, XI Y.B. Comm. Arb. 119 (1986); Wintershall AG v. Govt of Qatar, Partial
Ad Hoc Award of 5 February 1988, XV Y.B. Comm. Arb. 30 (1990).
1045) See, e.g., InterimAward in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 314 (2000) ([I]n
general, the arbitral tribunal should decide on its jurisdiction by means of a
preliminary decision. We have considered very carefully whether or not we should give
such a preliminary decision in this case. It would certainly accord with the wishes of the
defendant that we should do so. It might also be helpful to the parties in deciding
whether or not to continue with proceedings before two different tribunals, which are
concerned with the same business relationship and which presumably must traverse
much of the same ground.); Partial Award in ICC Case No. 4402, IX Y.B. Comm. Arb. 138
(1984); D. Bishop, J. Crawford & W. Reisman, Foreign Investment Disputes: Cases, Materials
and Commentary 1407 (2005) (While it is often appropriate to deal with all the points at
issue collectively, the arbitral tribunal might decide to take them up in a particular
order. The order may be due to a point being preliminary relative to another (e.g., a
decision on the jurisdiction of the arbitral tribunal is preliminary to consideration of
substantive issues).); Schneider, Lean Arbitration: Cost Control and Efficiency Through
Progressive Identification of Issues and Separate Pricing of Arbitration Services, 10 Arb.
Intl 119, 131-32 (1994) ([T]here are considerable disadvantages in waiting with the
identification of decisive preliminary issues [such as jurisdiction] until the end of the
proceedings. Not knowing which of the possibly relevant issues will be found decisive,
the parties must argue and produce their evidence for all of them. In some cases, this
can lead to massive waste of time and efforts. It is submitted that a major, if not the
principal, source of wastage and dissatisfaction with many international commercial
arbitrations lies in an inadequate focusing on the issues which finally are found to be
decisive. It is in this area that probably the largest potential for improving cost control
and efficiency can be found.).
1046) See, e.g., Impregilo SpA v. Islamic Repub. of Pakistan, Decision on Jurisdiction in ICSID Case
No. ARB/03/3 of 22 April 2005, 12 ICSID Rep. 242 (2007); Tradex Hellas SA v. Albania, Award
in ICSID Case No. ARB/94/2 of 29 April 1999 and Decision on Jurisdiction of 4 December 1996,
XXV Y.B. Comm. Arb. 221 (2000); Catherine Etezadi v. Islamic Repub. of Iran, Award in IUSCT
Case No. 554-319-1 of 23 March 1994, 30 Iran-US C.T.R. 22 (1994); Final Award in Chamber of
National and International Arbitration of Milan of 18 March 1999, XXV Y.B. Comm. Arb. 382
(2000).
210
1047) Tradex Hellas SA v. Albania, Award in ICSID Case No. ARB/94/2 of 29 April 1999 and Decision
on Jurisdiction of 24 December 1996, XXV Y.B. Comm. Arb. 221 (2000) (deciding several
jurisdictional issues and reserving remainder for merits); Socit Ouest Africaine des
Btons Industriels v. Repub. of Senegal, Decision on Jurisdiction in ICSID Case No. ARB/82/1
of 1 August 1984, 2 ICSID Rep. 175 (1994) (deciding one jurisdictional issue and reserving
another for merits phase); W. Craig, W. Park & J. Paulsson, International Chamber of
Commerce Arbitration 364 (3d ed. 2000).
1048) Gotanda, An Efficient Method for Determining Jurisdiction in International Arbitrations, 40
Colum. J. Transnatl L. 11, 34-42 (2001).
1049) Partial Award in ICC Case No. 9787, XXVII Y.B. Comm. Arb. 181 (2002) (upholding
jurisdiction); Impregilo SpA v. Islamic Repub. of Pakistan, Decision on Jurisdiction in ICSID
Case No. ARB/03/3 of 22 April 2005, 12 ICSID Rep. 242 (2007) (upholding jurisdiction on
one claim); Second Interim Award in NAI Case of 23 July 2001, XXIX Y.B. Comm. Arb. 133
(2004) (rejecting further jurisdictional objections); First Interim Award in NAI of 6 April
2000, XXIX Y.B. Comm. Arb. 133 (2004) (rejecting jurisdictional objections).
There are numerous instances of such interim awards rejecting jurisdictional objections.
SeePartial Award in ICC Case No. 12363, 24 ASA Bull. 462, 470 (2006); Interim Award on
Jurisdiction in ICC Case of 31 July 2000, 19 ASA Bull. 276, 284 (2001); Interim Award in ICC
Case No. 7929, XXV Y.B. Comm. Arb. 312 (2000) (upholding arbitration agreement); Interim
Award in ICC Case No. 7337, XXIVa Y.B. Comm. Arb. 149 (1999) (same); Partial Award in ICC
Case No. 7319, XXIVa Y.B. Comm. Arb. 141 (1999) (same); Saipem SpA v. The Peoples Repub.
of Bangladesh, Decision on Jurisdiction and Recommendation on Provisional Measures in
ICSID Case No. ARB/05/07 of 21 March 2007 (upholding jurisdiction); El Paso Energy Intl
Co. v. Argentine Repub., Decision on Jurisdiction in ICSID Case No. ARB/03/15 of 27 April
2006 (same); Bayindir Insaat Turizm Ticaret Ve Sanayi AS v. Islamic Repub. of Pakistan,
Decision on Jurisdiction in ICSID Case No. ARB/03/29 of 14 November 2005, 2005 WL
3598900 (same); Plama Consortium Ltd v. Repub. of Bulgaria, Decision on Jurisdiction in
ICSID Case No. ARB/03/24 of 8 February 2005, 20 ICSID Rev.-For. Inv. L.J. 262 (2005) (same);
FEDAX NV v. Repub. of Venezuela, Decision on Jurisdiction in ICSID Case No. ARB/96/3 of 11
July 1997, 37 Intl Legal Mat. 1378, 1381-87 (1998); S. Pac. Prop. Ltd v. Arab Repub. of Egypt,
Decision on Jurisdiction in ICSID Case No. ARB/84/3 of 27 November 1985 and 14 April 1988,
XVI Y.B. Comm. Arb. 16, 19-39 (1991); Amco Asia Corp. v. Repub. of Indonesia, Award on
Jurisdiction in ICSID Case No. ARB/81/1 of 25 September 1983, 23 Intl Legal Mat. 351, 353
(1984) (legal objections to jurisdiction raised by Respondent were to be dealt with as a
preliminary matter).
1050) There are also numerous instances of final awards upholding jurisdictional objections.
Final Award in ICC Case No. 9762, XXIX Y.B. Comm. Arb. 26, 38 (2004); Final Award in ICC
Case No. 6829, XIX Y.B. Comm. Arb. 167 (1994) (denying jurisdiction relating to all but one
contract in dispute); Interim Award in ICC Case No. 6648, XXIII Y.B. Comm. Arb. 30 (1998)
(although titled an Interim Award, tribunal held that it did not have jurisdiction to
resolve dispute because the contractual authority to arbitrate stemmed from a contract
to which one entity in the dispute was not a party); Impregilo SpA v. Islamic Repub. of
Pakistan, Decision on Jurisdiction in ICSID Case No. ARB/03/3 of 22 April 2005, 12 ICSID
Rep. 242 (2007) (upholding jurisdictional objections to some claims); SGS Socit Gn. de
Surveillance SA v. Islamic Repub. of Pakistan, Decision on Objections to Jurisdiction in
ICSID Case No. ARB/01/13 of 6 August 2003, 18 ICSID Rev.-For. Inv. L.J. 301 (2003)
(upholding some jurisdictional objections); Tradex Hellas SA v. Albania, Award in ICSID
Case No. ARB/94/2 of 29 April 1999 and Decision on Jurisdiction 24 December 1996, XXV Y.B.
Comm. Arb. 221 (2000) (tribunal considered and rejected most objections to its
jurisdiction, while joining one objection to merits; final award rejected claim on
remaining jurisdictional grounds).
1051) See7.03[A][4]; 25.02[C][3]; 25.03[A].
1052) See 26.03[D][3]; 26.05[C][4][e]. In some cases, as in Switzerland and under the
UNCITRAL Model Law, interlocutory judicial review of an interim award on jurisdiction is
possible. See7.03[A][1]; 7.03[C].
1053) See7.03[A][2]; 7.03[D]; UNCITRAL Model Law, Art. 16(3); German ZPO; 1040. See
also27.03[B][2][b].
1054) Christian Mut. Ins. Co. v. Ace Bermuda Ins. Ltd, [2002] Bda LR 56 (Bermuda Ct. App.). In this
case, the arbitral tribunal dismissed a jurisdictional objection and its decision was
challenged under Article 16(3); the tribunal nonetheless continued the proceedings and
made an award on the merits before the Article 16(3) application was heard. The
tribunals final award (on the merits) was subsequently challenged under Article 34, on
both jurisdictional and other grounds. The court stayed the Article 16(3) application and
the jurisdictional objection was considered in the annulment proceedings under Article
34.
1055) See17.03[A].
1056) See25.04.
1057) As discussed elsewhere, these exceptions arise exclusively from public policy or
mandatory national law requirements. See6.03; 25.03[A][2]; 26.05[C][9][m]; 26.05[C]
[9].
1058) See5.06[C].
211
1059) See5.02[A][5][h]; 5.04[C][2]; 7.05; 25.04[A][8]; 26.05[C][9][m]; A. Samuel, Jurisdictional
Problems in International Commercial Arbitration 197 (1989) (court is only required to
decline jurisdiction, on the grounds that a valid and applicable arbitral agreement
exists, if one of the parties asks it to do so).
1060) UNCITRAL Model Law, Art. 16(1). See7.05[A]; 25.04[A][8].
Arbitration, U.N. Doc. A/CN.9/264, Art. 16, 8, 9. That conclusion would not apply where
public policy or nonarbitrability objections were raised in an annulment proceeding.
Analytical Commentary on Draft Text of A Model Law on International Commercial
Arbitration, U.N. Doc. A/CN.9/264, Art. 16, 10 (1985).
1062) See, e.g.,Judgment of 4 September 2003, 8 Sch 11/02 (Oberlandesgericht Celle); Judgment
of 21 February 2002, 10 Sch 08/01 (Oberlandesgericht Naumburg); Judgment of 20
December 2001, 1 Sch 16/01 (Oberlandesgericht Stuttgart); Judgment of 10 February 1995,
CLOUT Case 148 (Moscow City Ct.).
1063) English Arbitration Act, 1996, 30(1). See also7.03[H].
1064) See 7.04[A]; 26.05[C][3][e].
1065) See 7.04[A]; 26.05[C][3][e]. See also Judgment of 21 February 2002, 10 Sch 08/01, 11.2.c
(Oberlandesgericht Naumburg) (without undue delay means that party must present
its objection either at next oral hearing or, if no such hearing is scheduled, in immediate
written submission).
1066) See 5.05[C][12]-[13]; 7.03[A][1]; 7.03[C]; 19.03[B]6].
1067) See15.08[HH]; 23.01[E]; 25.02[C][2][c]; 26.05[C][4].
1068) See12.05; Larsen v. The Hawaiian Kingdom, Ad Hoc Award of 5 February 2001, 119 I.L.R.
566, 577-79 (2001) (arbitral tribunal sua sponte raises jurisdictional issue).
1069) See 25.02[C][2][c]; 26.05[C][4]; Judgment of 4 July 1996, III ZR 14/95 (German
Bundesgerichtshof); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary 479 (1989); K.
Lionnet & A. Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit
3 III 5 b) (2) (3d ed. 2005).
1070) See7.03[E][1]; 7.03[E][7][a]; 7.03[F].
1071) See7.03[E][1].
1073) In First Options, the Kaplans were the owners and managers of the company that was
party to the arbitration, and therefore understandably present, at least as shareholders,
at the arbitral proceedings. The case might be different where third parties, with no
comparable involvement, made submissions to a tribunal.
1074) See, e.g., Crossville Med. Oncology, PC v. Glenwood Sys., LLC, 2012 WL 2401722, at *4 (6th
Cir.) (when a party objects to the arbitrators authority to decide the arbitrability
issuehe has a right to judicial determination of the issue unless he and the other party
have clearly and unmistakably agreed otherwise); Dedon GmbH v. Janus et Cie, 411
F.Appx. 361 (2d Cir. 2011) (party who repeatedly objects to arbitrators jurisdiction, while
arguing arbitrability issue to arbitrator, does not evince clear willingness to arbitrate
that issue and does not waive its right to have court decide arbitrability issues); Sarhank
Group v. Oracle Corp., 404 F.3d 657, 661-62 (2d Cir. 2005) ([m]erely by arguing non-
arbitrability to the arbitrators and then to the Egyptian courts does not amount to
consent by Oracle to having the arbitrators decide the issue); Four Seasons Hotels &
Resorts, BV v. Consorcio Barr SA, 377 F.3d 1164, 1171 (11th Cir. 2004) (party who
participated in arbitration while objecting to arbitrators jurisdiction did not waive
ability to contest arbitrators jurisdiction in annulment action); Bridas SAPIC v. Govt of
Turkmenistan, 345 F.3d 347, 355 (5th Cir. 2003) (participation in arbitration under protest
did not waive objections to jurisdiction); Opals on Ice Lingerie, Designs by Bernadette, Inc.
v. Bodylines, Inc., 320 F.3d 362, 368 (2d Cir. 2003); China Minmetals Materials Exp. & Imp.
Co. v. Chi Mei Corp., 334 F.3d 274 (3d Cir. 2003); Davis v. Chevy Chase Fin. Ltd, 667 F.2d 160,
167 (D.C. Cir. 1981); Zarecor v. Morgan Keegan & Co., 2011 WL 5592861 (E.D. Ark.) (party does
not waive right to contest arbitrability by not seeking an injunction enjoining
arbitration). See also26.05[C][3][e].
1075) See, e.g., Hart Enters. Intl, Inc. v. Anhui Provincial Imp. & Exp. Corp., 888 F.Supp. 587, 589
(S.D.N.Y. 1995) (In First Options[,]the disputes concerned an agreement that was
embodied in four separate but related documents. Only one of the four documents
contained an arbitration clause.); Inv. Mgt & Research, Inc. v. Hamilton, 727 So.2d 71, 77
(Ala. 1999); Council of Smaller Enters. v. Gates, McDonald & Co., 687 N.E.2d 1352, 1356 (Ohio
1998) (The key factor in First Options that distinguishes it from this case is that in First
Options, the parties resisting arbitration had not personally signed the document
containing the arbitration clause.).
212
1076) See, e.g., Cleveland Elec. Illuminating Co. v. Utility Workers Union, Local 270, 440 F.3d 809,
813-14 (6th Cir. 2006) (Cleveland Electric submitted the question of arbitrability to the
arbitrator for his determination, and we can find nothing in the record to indicate that
Cleveland Electric wanted to reserve the question of arbitrability for the court. The
district court found, and this court agrees, that Cleveland Electric waived the issue of
who had the power to decide the arbitrability of the retirees grievance by submitting
the matter to arbitration without reservation.); Waveland Capital Partners, LLC v.
Tommerup, 840 F.Supp.2d 1243, 1248-49 (D. Mont. 2012) (Where a party has notice of a
specific claim, and agrees to submit all aspects of that dispute to arbitration, yet does
not reserve its right to challenge the arbitrators jurisdiction, it has clearly and
unmistakably agreed to arbitrate the general arbitrability of the dispute.); Halcot
Navigation Ltd v. Stolt-Nielsen Transp. Group, 491 F.Supp.2d 413, 418-19 (S.D.N.Y. 2007)
(presenting jurisdictional objections to arbitral tribunal was clear and unmistakable
agreement to arbitrate these objections, absent express reservation of objections to
tribunals jurisdiction to decide jurisdiction: What Halcots position essentially amounts
to is enabling it to create a win-win outcome for itself, as a means of having it both ways,
allowing the arbitrability issue to proceed to the arbitrators and accepting the result if
favorable to Halcot or rejecting it if unfavorable and litigating the matter in court.);
Halley Optical Corp. v. Jagar Intl Mktg Corp., 752 F.Supp. 638 (S.D.N.Y. 1990) (party bound
by arbitrators jurisdictional determination after having resisted jurisdiction before
arbitral tribunal: to find otherwise would allow a party to participate in the arbitration
with the assurance that if it loses it may later challenge whether it had ever agreed to
arbitrate). See also26.05[C][3][e].
1077) See, e.g., Caparo Group Ltd v. Fagor Arrasate Sociedad Coop. [2000] Arb. & Disp. Res. L.J.
254 (QB) (English High Ct.) (letter to ICC Secretariat disputing jurisdiction constitutes
step in arbitration precluding reliance on 72); Sim Swee Joo Shipping Sdn Bhd v.
Shirlstar Container Transp. Ltd [1994] C.L.C. 188, 191 (QB) (English High Ct.) (plaintiff took
part in the arbitration proceedings over a long period, and argued before [the
arbitrator] the very points on which they now seek to rely in order to deny [the
arbitrators] jurisdiction, without protesting, or making any reservation in respect of, [the
arbitrators] jurisdiction to decide such points; [t]here is in such circumstances a clear
inference of an ad hoc submission or of a waiver of any objection to the scope of any
jurisdiction which the arbitrator otherwise had).
1078) Judgment of 3 January 2011, DFT 4A_386/2010, 5.2 (Swiss Federal Tribunal).
1079) See, e.g.,Judgment of 3 January 2011, DFT 4A_386/2010, 5.2 (Swiss Federal Tribunal)
(respondent may state its position on the merits in an alternate way, only for the case
in which the defense of lack of jurisdiction would be rejected, without thus tacitly
accepting the jurisdiction of the arbitral tribunal).
1080) See, e.g.,Judgment of 12 July 1984, X Y.B. Comm. Arb. 113 (Paris Cour dappel) (1985) (Terms
of Reference do not constitute new submission agreement); W. Craig, W. Park & J.
Paulsson, International Chamber of Commerce Arbitration 290-91 (3d ed. 2000). Compare
CBS Corp. v. WAK Orient Power & Light Ltd, 168 F.Supp.2d 403 (E.D. Pa. 2001) (by signing
Terms of Reference, defining arbitral tribunals jurisdiction to include identity of parties
to arbitration, respondent agreed to submission of this issue to arbitration; rejecting
defense to recognition under Article V(1)(c)).
1081) Excalibur Ventures LLC v. Texas Keystone Inc. [2011] EWHC 1624, 61 (English High Ct.) (I
reject Excaliburs argument that by making plain their jurisdictional objections to the
ICC, the Gulf Defendants have in some way submitted to the jurisdiction of the ICC, or
that Article 6(2) of the ICC Rules in some way precludes this application. The question of
submission to the jurisdiction of the arbitrators depends on whether, on an objective
analysis, the Gulf Defendants intended to take part in any part of the ICC process. From
the evidence before me, I am satisfied that the Gulf Defendants have made it clear that
they do not recognise the jurisdiction of the ICC.).
213
KluwerArbitration
214
KluwerArbitration
Chapter 8: Effects and Enforcement of International
Author Arbitration Agreements
Gary B. Born (IAI profile) International arbitration agreements have potentially significant consequences for the parties
legal rights. This Chapter examines these legal effects, including both the negative effect of
denying parties the right to pursue litigation in national courts and the positive effect of
obligating them to arbitrate their disputes in good faith. The Chapter also discusses the
Publication different mechanisms for enforcing these obligations under leading legal systems. Finally, the
International Commercial Chapter addresses the related subjects of antisuit and antiarbitration injunctions.
Arbitration (Second Edition)
8.01 INTRODUCTION
A valid international arbitration agreement produces important legal effects for its parties, as
Bibliographic reference well as for national courts and arbitrators. (1) These effects of arbitration agreements are both
'Chapter 8: Effects and positive and negative: the positive effects include the obligation to participate and cooperate
Enforcement of International in good faith in the arbitration of disputes pursuant to the parties arbitration agreement,
Arbitration Agreements', in while the negative effects include the obligation not to pursue the resolution of disputes that
Gary B. Born , International are subject to arbitration in national courts or similar legal forums. (2) These obligations were
Commercial Arbitration well described in an early Swiss judicial decision:
(Second Edition), 2nd edition [T]he principal effect of an arbitration clause is not the exclusion of jurisdiction of state
( Kluwer Law International; courts, but the transfer of the right of adjudication to an arbitral tribunal: This positive effect
Kluwer Law International 2014) legally arises in the state where the arbitral tribunal is sitting according to the agreement. The
pp. 1253 - 1316 negative effect, i.e., the exclusion of jurisdiction of state courts is nothing but a consequence of
the positive effect. (3)
The positive and negative effects of agreements to arbitrate are affected significantly by the
means of enforcement of those agreements under applicable international conventions and
national arbitration legislation. As discussed above, during some historical periods, arbitration
agreements were rendered ineffective because they were not susceptible of enforcement
P 1253
through orders for specific performance and because monetary damages were difficult to
quantify and provided inadequate disincentives for breaches. (4)
Contemporary arbitration regimes have fundamentally altered this, making it possible, in
varying degrees, to obtain orders of specific performance from national courts of both the
negative and positive obligations imposed by arbitration agreements. (5) These remedies vary
among national legal systems, but, in developed jurisdictions, provide effective means of
enforcing international arbitration agreements. Those means of enforcement include stays of
litigation, orders to compel arbitration, antisuit injunctions, actions for monetary damages and
non-recognition of judgments obtained in breach of a valid arbitration agreement.
8.02 POSITIVE LEGAL EFFECTS OF INTERNATIONAL ARBITRATION

AGREEMENTS: OBLIGATION TO ARBITRATE IN GOOD FAITH
The most fundamental objective and effect of an international arbitration agreement is to
obligate the parties to participate cooperatively and in good faith in the resolution of their
disputes by arbitration pursuant to that agreement. As discussed above, this obligation is a sui
generis one requiring parties whose underlying commercial or other relations have
deteriorated to the point of litigation to cooperate together, in good faith, in an adjudicatory
procedure that will finally resolve their disputes, either for or against one of the parties. (6)
The basis and content of this positive obligation, which is in many respects a unique and
striking one, are detailed below.
[A] Sources of Positive Obligation to Arbitrate

The positive obligations imposed by an arbitration agreement are not expressly recognized in
either international conventions or most national legislation. Those instruments instead
generally focus on the negative effects of the arbitration agreement (i.e., forbidding litigation
of arbitrable disputes in national courts) or the remedies for breaches of arbitration
agreements (i.e., referring the parties to arbitration). (7) Nonetheless, the positive obligation to
arbitrate disputes is a necessary implication from the language of the relevant conventions
and legislation, which forms one of the foundations of the international arbitral process.
More fundamentally, the positive obligation to arbitrate has its source in the parties
agreement to arbitrate, which courts are required to recognize and enforce under both the New
York Convention and most contemporary national arbitration legislation. In agreeing to
arbitrate, the parties do not merely negatively waive their access to judicial remedies, but
also affirmatively commit themselves to participating in the resolution of their disputes
P 1254
through the arbitral process. This positive obligation to participate cooperatively and in
good faith in a mutually-established, adjudicative dispute resolution process is central to the
arbitration agreement and to the arbitral process itself.
1
[1] Positive Obligation to Arbitrate Under International Arbitration Conventions
The positive obligations imposed by an arbitration agreement are only implicitly recognized in
leading international conventions. Both Article 1 of the Geneva Protocol and Article II(1) of the
New York Convention require Contracting States to recognize written agreements by which
parties undertake to submit to arbitration specified disputes. (8) In the words of Article II(1)
of the Convention, Contracting States shall recognize an agreement in writing under which the
parties undertake to submit to arbitration all or any differences. (9)
The premise of Article I of the Geneva Protocol and Article II(1) of the New York Convention is
that the parties obligation to arbitrate includes, most importantly, the affirmative duty to
accept the submission of their disputes to arbitration (undertake to submit) and to
participate cooperatively and in good faith in arbitral proceedings to resolve such disputes. In
agreeing to arbitrate, the parties do not merely negatively waive their legal rights or access to
judicial remedies, (10) but instead agree to participate affirmatively in the resolution of their
disputes through the arbitral process, which has sui generis characteristics. (11) This positive
obligation to participate in a mutually-established, adjudicative dispute resolution process is
at the foundation of the arbitration agreement.
The positive obligation to arbitrate is dealt with under the Geneva Protocol, New York
Convention and other international arbitration conventions by giving effect to the parties
agreement that is, by requiring recognition of that agreement rather than by stating a
generally-applicable and abstract obligation to arbitrate. This approach to the positive duty
to arbitrate is consistent with the basic consensual and contractual character of the
international arbitral process. (12)
This approach is confirmed by Article IV(1) of the Geneva Protocol and Article II(3) of the New
York Convention. The former provides that, where a valid arbitration agreement exists, the
P 1255 courts of Contracting States shall refer the parties on the application of either of them to
the decision of the arbitrators. (13) Similarly, Article II(3) of the New York Convention provides:
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. (14)
Again, Article IV(1) and Article II(3) provide mechanisms for giving effect to the undertakings
contained in arbitration agreements, rather than imposing any free-standing or independent
obligation to arbitrate. In so doing, these provisions implement both the positive effects (i.e.,
the parties shall be directed to proceed with (referred to) arbitration), as well as the
negative effects (i.e., the parties shall not be permitted to proceed with litigation in national
courts), of the arbitration agreement.
Other leading international arbitration conventions are to the same effect as the New York
Convention. Article 1 of the Inter-American Convention provides that an agreement by parties
to submit to arbitral decision their differences shall be treated as valid. (15) That language
rests on the premise that the parties arbitration agreement includes a positive obligation to
submit their disputes to arbitration (instead of pursuing other means of dispute resolution),
and not merely a negative waiver or relinquishment of access to judicial remedies. The
European Convention also impliedly recognizes the positive obligation to participate in
arbitral proceedings, setting forth reasonably detailed provisions regarding the constitution of
tribunals and consideration of jurisdictional objections. (16)
Of course, an arbitration agreement does not require an aggrieved party to commence an
arbitration or to assert claims in arbitration, nor does it forbid a party from seeking or
accepting negotiated solutions to a dispute. Rather, an arbitration agreement requires a party,
if an arbitration is initiated by one of the parties to the arbitration agreement, to participate
in the arbitral process cooperatively and in good faith (i.e., the positive effects of arbitration
agreements), and to forego litigating such disputes (i.e., the negative effects of arbitration
agreements).
[2] Positive Obligation to Arbitrate Under National Arbitration Legislation
The parties positive obligation to participate in arbitrating their differences is also impliedly
recognized in national legal systems, which generally parallel and implement the approaches
taken to this issue by the New York Convention. Thus, as detailed above, Article 7(1) of the
P 1256 UNCITRAL Model Law defines an arbitration agreement as an agreement by the parties to
submit to arbitration all or certain disputes. (17) Similarly, Article 8(1) of the Model Law
provides:
A court before which an action is brought in a matter which is the subject of an arbitration
agreement shall, if a party so requests refer the parties to arbitration. (18)
As with the New York Convention, these provisions do not create free-standing duties to
arbitrate, but instead give effect to the parties contractual obligations to submit to the
resolution of their disputes by arbitration (rather than national court litigation) and to
participate affirmatively and cooperatively in the arbitration to which the parties are referred.
Other national arbitration legislation similarly deals with the positive obligation to arbitrate.
(19)
[B] Content of Positive Obligation to Arbitrate
2
The content of the positive obligation to arbitrate is dealt with under the Convention and
national arbitration legislation by giving effect to the parties agreement that is, by requiring
recognition of that agreement rather than by stating a generally-applicable and abstract
obligation to arbitrate. This approach to the positive duty to arbitrate is consistent with the
contractual character of the arbitral process.
As discussed elsewhere, the contents of an agreement to arbitrate are almost entirely matters
of the parties choice. (20) Party autonomy is one of the essential characteristics and enduring
attractions of international arbitration. This autonomy, and hence the contents of the positive
obligation to arbitrate, extend to the disputes to be arbitrated, (21) the parties to the
arbitration, (22) the mode of constituting the arbitral tribunal, (23) the selection of the arbitral
seat, (24) the language of the arbitration, (25) the arbitral procedures (26) and the choice of the
applicable law(s). (27)
Importantly, the positive obligation to participate in the resolution of disputes by arbitration
P 1257
also necessarily includes more general duties to participate in good faith and
cooperatively in the arbitral process. This follows both from the nature of the arbitral process
and from the general rule of pacta sunt servanda. (28)
As noted above, an arbitration agreement is not merely a negative undertaking not to litigate,
but a positive obligation to take part in a sui generis process which requires a substantial
degree of cooperation (e.g., in constituting a tribunal, paying the arbitrators, agreeing upon an
arbitral procedure, obeying the arbitral procedure (notwithstanding the absence of direct
coercive powers of the arbitral tribunal) and complying with the award). (29) When a party
agrees to arbitrate, it impliedly, but necessarily, agrees to participate cooperatively in all of
these aspects of the arbitral process.
As already noted, one of the fundamental characteristics and attractions of arbitration is the
parties freedom to design cooperatively the arbitral process and procedure. (30) That
freedom is mirrored by the implied contractual responsibility of the parties to take part in this
cooperative process, and in the other aspects of the arbitral process. Simply put, an
agreement to arbitrate necessarily entails a commitment to cooperate in good faith in the
arbitral process, with both the arbitral tribunal and other parties to the arbitration, in
resolving the parties disputes in a fair, objective and efficient manner. (31)
These positive obligations are buttressed by the obligation to perform contractual obligations
in good faith crystallized in the pacta sunt servanda doctrine which is recognized both
P 1258
internationally and in all developed national legal systems. (32) At the same time, as
discussed elsewhere, the New York Convention itself imposes duties of good faith on the
parties in connection with agreements to arbitrate. (33)
In some jurisdictions, these obligations are expressly prescribed in national arbitration
legislation. For example, 40 of the English Arbitration Act, 1996, provides that:
(1) The parties shall do all things necessary for the proper and expeditious conduct of the
arbitral proceedings. (2) This includes (a) complying without delay with any determination of
the tribunal as to procedural or evidential matters, or with any order or directions of the
tribunal, and (b) where appropriate, taking without delay any necessary steps to obtain a
decision of the court on a preliminary question of jurisdiction or law. (34)
A few other national arbitration statutes are similar, in including express provisions regarding
the positive obligations to arbitrate in good faith. (35)
Even absent such statutory provisions, national courts and other authorities have uniformly
recognized the positive obligations imposed by agreements to arbitrate. Consistent with the
pacta sunt servanda principle, and the basic character of an arbitration agreement, (36)
national courts have repeatedly emphasized that an agreement to arbitrate imposes
obligations to make use of, and participate cooperatively in, the contractual arbitral process.
For example, it is well settled under English law that there is an implied term in an agreement
to arbitrate that the parties must cooperate in accordance with the applicable arbitral rules in
the conduct of the arbitration. In a leading decision, the House of Lords reasoned as follows:
the obligation is, in my view, mutual: it obliges each party to cooperate with the other in taking
P 1259 appropriate steps to keep the procedure in the arbitration moving, whether he happens to
be the claimant or the respondent in the particular dispute[I]t is in my view a necessary
implication from their having agreed that the arbitrator shall resolve their dispute that both
parties, respondent as well as claimant, are under a mutual obligation to one another to join in
applying to the arbitrator for appropriate directions to put an end to the delay. (37)
A Swiss Federal Tribunal decision adopted similar conclusions, emphasizing the parties
obligations of good faith:
One of the aims of arbitration is to come to a fast resolution of the disputes submitted to it.
The parties who agree to arbitration are bound by the rules of good faith to avoid any conduct
which might delay without absolute necessity the normal conduct of the arbitral proceedings.
(38)
Other national courts have formulated this duty of good faith cooperation in similar terms, (39)
as has the weight of commentary. (40) For example, a U.S. court held that [p]arties to an
arbitration agreement are under a duty to act in good faith each owes to the other the
obligation to make a fair effort to carry out the provisions of the arbitration agreement and to
3
accomplish the real object of the contract. (41) As another U.S. court reasoned, the underlying
purpose of arbitration, i.e., efficient and swift resolution of disputes without protracted
litigation, could not be achieved but for good faith arbitration by the parties. (42)
P 1260
Arbitral tribunals have adopted similar conclusions regarding the parties obligation to
arbitrate in good faith. (43) In the words of one tribunal, [a]ccording to good faith, the parties
to an international arbitration must in particular facilitate the proceedings and abstain from
all delaying tactics. (44) Similarly, several ICC awards have held that there is a contractual
obligation between the parties to pay the advance on costs for the arbitrators fees and
expenses. (45) As one authority concluded, based on a review of these awards:
The parties cannot agree to refer their dispute to arbitration and at the same time retain the
freedom not to do whatever needs to be done to make arbitration possible, as they would then
be in breach of their obligation to act in good faith. In fact, although this obligation is
specifically laid down in Article 30(3) of the [1998] ICC Rules, it is inherent in any arbitration
agreement. (46)
The parties obligations to arbitrate in good faith are of particular importance because of the
special nature of an agreement to arbitrate. It is a sui generis contractual provision designed to
operate only when contracting parties have fallen into disputes and then to regulate and
P 1261 require consensual resolution of those disputes in a binding and cooperative manner. In
these circumstances, obligations of good faith are particularly important. (47)
The precise contours of the obligation to participate cooperatively and in good faith in the
arbitral process are unsettled. The duty of good faith cooperation in the arbitral process has
been held to include participating in the constitution of the arbitral tribunal, (48) paying the
arbitrators fees and any required advances, (49) cooperating with the arbitrators in relation to
P 1262 procedural matters, (50) not obstructing or delaying the arbitral process, (51) obeying
confidentiality obligations relating to the arbitration, (52) complying with disclosure requests,
orders and awards, (53) appointing arbitrators (54) and establishing the procedural Rules for
the arbitration. (55) The duty of cooperation may well also include complying (and causing a
partys counsel to comply) with applicable ethical obligations governing the conduct of
counsel in the arbitral proceedings. (56) As with most other aspects of the arbitral process,
these obligations to participate in the arbitral process are the subject of party autonomy, and
can be altered or elaborated by contract.
[C] Remedies for Breach of Positive Obligation to Arbitrate

The remedies available for breach of the positive obligations of an international arbitration
agreement are complicated. As discussed below, the New York Convention (and other
authorities) make it clear that the negative effects of an arbitration agreement are capable of
P 1263 being enforced, principally given effect through orders directing specific performance.
That is, a national court will give effect to the parties commitment not to litigate their
disputes by dismissing or staying actions purporting to pursue such litigation (57) or by antisuit
injunctions enjoining parties from pursuing litigation in breach of the parties agreement to
arbitrate. (58) On the other hand, the remedies to enforce the positive effects of arbitration
agreements (e.g., the obligations to participate cooperatively and in good faith in the
arbitration) are less clear.
As noted above, Article II(3) of the New York Convention and Article 8(1) of the UNCITRAL Model
Law provide that, if a valid arbitration agreement exists, courts in Contracting States shall
refer the parties to arbitration. (59) The wording of that phrase fairly strongly suggests an
obligation on national courts affirmatively to order or direct the parties to proceed with the
arbitration of their dispute (rather than merely an obligation, like that arguably provided in
Article II(1), (60) not to permit litigation to proceed).
Despite that, virtually none of the Conventions Contracting States or Model Laws adherents
enforce arbitration agreements by way of orders directing a party specifically to perform the
positive aspects of such agreements. (61) Rather, the consistent approach is only to dismiss or
stay litigation brought in breach of an agreement to arbitrate, and not to affirmatively order or
compel participation by a party in arbitral proceedings.
The absence of judicial authority, in many jurisdictions, to order a party to perform its positive
obligation to arbitrate can be traced to historic English common law hostility to arbitration
agreements, and in particular to the rule that arbitration agreements were not specifically
enforceable. Thus, a 1911 English appellate decision held:
The parties could not be compelled to go to arbitration. They cannot now; but an appeal to
the courts can be stopped and that indirectly enforces the arbitration clause. Therefore the
status of an arbitration clause in England is that it will not be specifically enforced, but by
proper proceedings you can prevent the other party from appealing to the English courts in
respect of any matter which by contract ought to be decided by arbitration. (62)
In effect, the English court held that it would give effect to the negative obligations of an
agreement to arbitrate (i.e., by refusing to permit litigation of an arbitrable dispute) but that it
would not directly enforce the positive obligations of that agreement (i.e., by ordering a party
affirmatively to arbitrate). The same position is almost uniformly followed today by
Contracting States to the New York Convention.
P 1264 The only major exception to this approach is the United States, where the FAA provides for
4
the issuance of orders compelling arbitration (under 4, 206 and 303 of the FAA). (63) These
provisions empower a U.S. court to grant what amounts to an injunction requiring a party to
arbitrate pursuant to its arbitration agreement. (64) In the words of one U.S. lower court, a
request for affirmative relief under 4 (or 206 and 303) is simply a request for an order
compelling specific performance of part of a contract. (65)
U.S. courts have explained (rightly) that there are important differences between a stay of
litigation and an order affirmatively compelling arbitration:
The first merely arrests further action by the court itself in the suit until something outside the
suit has occurred; but the court does not order that it shall be done. The secondaffirmatively
orders that someone do (or refrain from doing) some act outside the suit. (66)
Pursuant to 4, 206 and 303 of the FAA, U.S. courts have frequently ordered recalcitrant
parties to international arbitration agreements to comply with their positive arbitration
P 1265 obligations. (67) In so doing, they have emphasized that the issuance of such an order is
not a matter of discretion, but a mandatory legal right (guaranteed by the FAA) on the part of
the party invoking the arbitration clause:
So long as the parties are bound to arbitrate and the district court has personal jurisdiction
over them, the court is under an unflagging, nondiscretionary duty to grant a timely motion to
compel arbitration and thereby enforce the New York Convention as provided in chapter 2 of
the FAA, even though the agreement in question requires arbitration in a distant forum. (68)
As discussed above, (69) the FAA applies equally in this regard to agreements to arbitrate in
the United States and agreements to arbitrate abroad. Thus, U.S. courts have issued orders
compelling arbitration in arbitrations seated in both the United States and in other countries.
(70)
P 1266
The grant of an affirmative order compelling arbitration is (again, correctly) characterized
by U.S. courts as a matter of specific performance of the parties agreement to arbitrate. (71)
Some commentators have remarked that specific performance isnot an appropriate
remedy for breach of an arbitration agreement and that it is not practical to force a party to
take part in arbitration proceedings. (72) That conclusion is not correct.
It is, in fact, eminently practical in many cases to direct parties to take part in arbitration
proceedings: that is the most important point of arbitration agreements, and orders to compel
a party to arbitrate merely crystallize such agreements and enhance their enforcement
mechanisms, as with orders requiring specific performance of other contractual obligations.
Moreover, the experience with orders to compel arbitration in the United States is that they
are, in practice, of real efficacy in ensuring compliance with arbitration agreements. This
results from the existence of contempt of court sanctions for failure to comply with such
orders. (73) The availability of such enforcement mechanisms can be especially important in
the international context, where courts in some countries may not reliably give effect to the
negative effects of arbitration agreements, thus making orders enforcing the positive
obligation of an arbitration agreement significantly more important than in purely domestic
contexts. (74)
Nonetheless, ordering arbitration in a foreign arbitral seat arguably creates the risk of judicial
intrusion in the arbitral process or of conflicts between the courts order and the laws of the
seat. For example, arbitration might be compelled in a foreign seat pursuant to an agreement
specifying procedures that violate the arbitral seats law. (75)
Moreover, in most international arbitrations, orders compelling arbitration could potentially
be issued by the courts of several nations, creating the risk of conflicting or inconsistent orders.
P 1267 Inconsistent obligations would be an even greater risk if national courts purported in such
orders to select an arbitral seat, (76) to appoint or remove arbitrators in a foreign arbitration,
(77) or to specify the arbitral rules. (78) These possibilities would also conflict with one of the
principal objectives of international arbitration, being to minimize the role of national courts
in dispute resolution (particularly the role of national courts outside the seat). (79) Given these
potential conflicts, it would arguably be preferable for national courts outside the seat simply
to stay litigation on the merits of an arbitrable dispute and let arbitration take its course
(whether in contested proceedings or in a default scenario), rather than to affirmatively
compel arbitration.
Although there is force to this observation, it ultimately misses the essential point. The point is
that an order compelling arbitration need not and, in virtually all cases, should not specify
the applicable rules or other procedural aspects of a foreign arbitration. (80) In most
instances, it violates the competence-competence doctrine, (81) prohibitions against judicial
interference in the arbitral process (82) and the primary supervisory competence of the courts
of the arbitral seat, (83) for foreign courts to address such procedural issues. As discussed
elsewhere, there is virtually never any justification for making such orders. (84)
Similarly, as discussed below, the scope of a partys positive obligation to submit disputes to
arbitration is defined by the scope of its arbitration agreement. (85) A party is obligated to
arbitrate only those disputes which it has agreed to arbitrate, not others; conversely, an
arbitral tribunal only has jurisdiction over those disputes which the parties have submitted to
it, not others. (86)
As discussed above, however, under most national laws, an arbitral tribunals jurisdiction
presumptively includes competence-competence to decide disputes regarding the tribunals
5
own jurisdiction, particularly where interpretation of the scope of the arbitration clause is
concerned (generally subject to subsequent judicial review). (87) Accordingly, where an order
compelling arbitration is issued, it ordinarily should not address the scope of the arbitration
agreement, nor issues of nonarbitrability, because doing so would intrude on the arbitral
P 1268
tribunals competence. (88) Rather, a court should merely compel arbitration in accordance
with the parties arbitration agreement without defining the scope or procedural terms of
that agreement (which are for arbitral determination in the first instance).
Given these qualifications, the real issue is whether or not a national court order simply
directing a party to arbitrate in accordance with its arbitration agreement, as interpreted and
applied by the arbitral tribunal, is desirable and appropriate which it usually is, particularly
where a local arbitral seat is involved. That is for the simple reason that such an order
enhances compliance with agreements to arbitrate and gives better effect to the parties
positive obligations under such agreements. (89) And, where the judicial order does no more
than require arbitration in accordance with an arbitration agreement, without purporting to
intrude into the arbitral process, it causes little or no harm, again particularly where a local
seat is involved.
Nonetheless, as already noted, most states do not presently provide for specific performance
of the positive obligations of arbitration agreements. Instead, the only real mechanism for
enforcing such obligations is an indirect one: this enforcement mechanism takes the form of
authorizing a kind of self-help, whereby the non-defaulting party may unilaterally commence
and proceed with the arbitration without its counter-partys participation.
Under most national laws (and institutional rules), a party is permitted to proceed with an
arbitration, even if its counter-party defaults by failing to appoint an arbitrator and otherwise
refusing to participate. (90) In these circumstances, as discussed below, some national laws
either permit the non-defaulting party to nominate the defaulting partys co-arbitrator, (91) to
designate the non-defaulting partys co-arbitrator to serve as sole arbitrator, (92) or to apply to
national courts for judicial appointment of an arbitrator, (93) as well as unilaterally to pay the
arbitrators fees (subject to reallocation in the arbitrators final award). (94) Accordingly, when
a party fails to participate in an arbitration, its counter-party is generally able to proceed
unilaterally to constitute a tribunal and obtain a default award which in turn provides a
substantial incentive for the counter-partys participation in the arbitration. (95)
Nonetheless, affirmative compliance with agreements to arbitrate is much preferable to a
default proceeding. Even if tolerated, default proceedings lack the benefits of the adversary
process and are distinctly unsatisfactory procedures. Much preferable is actual compliance
with the arbitration agreement, which is made more likely by the availability of judicial orders
compelling arbitration in accordance with the parties agreement.
P 1269
[D] Choice of Law Governing Positive Obligation to Arbitrate
There is little authority on the law applicable to the parties positive obligation to arbitrate
pursuant to their arbitration agreement. In principle, the existence and scope of such
obligation would be governed by the law applicable to the substantive validity of the
agreement to arbitrate. (96) As discussed below, however, the remedies available judicially to
enforce such positive obligation to arbitrate will be governed by the law of the judicial
enforcement forum. (97)
8.03 NEGATIVE LEGAL EFFECTS OF INTERNATIONAL ARBITRATION

AGREEMENTS: OBLIGATION NOT TO LITIGATE ARBITRABLE DISPUTES
An international arbitration agreement also has negative effects, which are almost precisely
the mirror-image of its positive effects. That is, with regard to virtually all of the disputes that
a party is obligated positively to resolve by arbitration, a comparable negative obligation
exists forbidding litigation of such matters. (98) As discussed below, this obligation is set forth
in and enforced by international arbitration conventions and national legislation.
[A] Sources of Negative Obligation Not to Litigate Arbitrable Disputes

As discussed above, international conventions and most national legislation focus on the
negative effects of the arbitration agreement (i.e., forbidding litigation of arbitrable disputes
in national courts), rather than the agreements positive effects. Both the New York Convention
and most national arbitration legislation expressly recognizes the negative effects of
arbitration agreements and makes express provision for enforcing those negative obligations.
More fundamentally, the negative obligations imposed by an agreement to arbitrate have
their source in the parties agreement. Like the positive obligations of an arbitration
agreement, courts are required to recognize and enforce these negative obligations under both
the New York Convention and most contemporary arbitration legislation. Importantly, it is the
parties arbitration agreement that is both the source of those negative obligations and the
ultimate touchstone for defining the content and scope of those obligations.
P 1270 [1] Negative Obligation Not to Litigate Arbitrable Disputes Under International Arbitration
Conventions
As discussed above, Articles II(1) and II(3) of the New York Convention provide for Contracting
States to recognize agreements to arbitrate and to refer the parties to arbitration. (99)
6
Where the parties have agreed to submit disputes to arbitration, these provisions recognize
and enforce the negative effects of that agreement, by requiring either the stay (i.e.,
suspension) of national court litigation of arbitrable disputes or the dismissal of such
litigation. (100) As discussed below, any other action by a national court, dealing with the
substance of any arbitrable dispute, is contrary to the obligation to refer the parties to
arbitration. (101) As with the positive obligations of agreements to arbitrate, the ultimate
source of the negative obligation not to litigate an arbitrable dispute is the parties arbitration
agreement itself which is then recognized and given effect by Article II of the Convention.
[2] Negative Obligation Not to Litigate Arbitrable Disputes Under National Arbitration
Legislation
Most developed national arbitration legislation gives effect to the negative obligations
imposed by arbitration agreements in ways paralleling those under the New York Convention.
Article 8(1) of the Model Law is representative, requiring that courts refer the parties to
arbitration. (102) Article 8(1) impliedly precludes a national court from entertaining a dispute
on the merits if the parties have agreed to arbitrate it, and instead requires that the parties be
P 1271 referred to arbitration. As with Article II(3) of the Convention, Article 8 applies to
agreements providing for arbitration seated abroad, as well as locally. (103) Other national
arbitration legislation is similar. (104)
[B] Content of Negative Obligation Not to Litigate Arbitrable Disputes

The content of the negative obligations imposed by an agreement to arbitrate is dealt with
under the Convention and national arbitration legislation by giving effect to the parties
agreement that is, by requiring recognition and enforcement of that agreement. Like the
approach to the positive duty to arbitrate, this treatment of the negative obligations of an
agreement to arbitrate is consistent with the contractual character of the arbitral process.
The most fundamental negative obligation of an arbitration agreement is the commitment not
to litigate disputes that are subject to arbitration; that obligation is paralleled by the
(obvious) exclusivity of the agreement to arbitrate, which requires that all arbitrable disputes
be resolved in, and only in, arbitral proceedings. The scope of the negative obligation not to
litigate arbitrable disputes is generally the mirror image of the scope of the positive
obligation to arbitration: put simply, disputes which must be arbitrated, may not be litigated.
(105) In general, it is clear that the negative effects of the arbitration agreement apply
regardless whether or not an arbitration has been commenced. (106)
There are circumstances, in some legal systems, where the negative effects of an arbitration
agreement extend more broadly than their positive effects. This is true in particular with
respect to jurisdictional issues, where in some states, national courts will not resolve
jurisdictional disputes that are being considered by the arbitral tribunal. As discussed above,
however, these so-called negative effects of the competence-competence of the arbitral
tribunal are ordinarily the consequence of national arbitration legislation (or international
conventions), which allocate jurisdictional authority to the arbitral tribunal and deny it to
P 1272 [1] Obligation Not to Litigate Arbitrable Disputes
Article 8(1) of the UNCITRAL Model Law is representative of national arbitration legislations
treatment of the negative effects of an arbitration agreement. As discussed above, Article 8(1)
imposes an obligation identical to that in Article II of the New York Convention, requiring that
courts refer the parties to arbitration. (108) This provision impliedly precludes a national
court from entertaining a dispute on the merits, if the parties have agreed to arbitrate it, and
instead requires that the parties be referred to arbitration.
National courts have consistently held that the obligation imposed by Article 8(1) is
mandatory, and not a matter of discretion. (109) A Canadian court concluded that [t]he
wording of article 8 is mandatory, (110) while a Singaporean court held that Article 8 of the
Model Law requires a mandatory stay of proceedings unless the court is satisfied that the
arbitration agreement is null and void, inoperative or incapable of being performed. I think
this position is correct. (111)
Commentary is to the same effect: Art. 8(1) is a mandatory provision: when the conditions for
its application are fulfilled the court has no discretion, but must refer the parties to
P 1273 arbitration. (112) As with Article II(3) of the New York Convention, Article 8 applies to
international arbitration agreements providing for arbitration seated abroad, (113) as well as
locally. (114)
Other leading national arbitration regimes are similar. As one court reasoned, under the FAA in
the United States:
Contracts to arbitrate are not to be avoided by allowing one party to ignore the contract and
resort to the courts. Such a course could lead to prolonged litigation, one of the very risks the
parties, by contracting for arbitration, sought to eliminate. (115)
Courts in other jurisdictions have adopted the same rationale. (116)
Importantly, the predicate of this approach is that parties to arbitration agreements are
P 1274 themselves mandatorily prohibited from litigating arbitrable disputes. Efforts to do so, by
7
pursuing litigation of arbitrable disputes, are per se violations of a partys negative obligation
not to litigate disputes that are subject to arbitration. (117) Just as the obligations of national
courts, under the Convention and Model Law are mandatory, so the obligations of parties
under their agreements to arbitrate are mandatory.
[2] Exclusivity of Arbitration
Although arbitration clauses typically do not provide expressly that all disputes shall be
resolved by arbitration, to the exclusion of national courts, this negative obligation is the
undisputed meaning of virtually all arbitration agreements. (118) One of the fundamental
purposes of international arbitration agreements is to centralize the parties disputes in a
single forum for final resolution (119) an objective that would be entirely frustrated if parallel
national court proceedings were permitted. Indeed, as discussed below, it is virtually never
even argued that an arbitration agreement is non-exclusive, permitting national court
litigation to proceed in parallel to the arbitration. (120)
A partys commencement of litigation on claims, subject to an arbitration agreement, is
therefore a breach of that agreement and, in particular, its negative obligations. (121) That
breach, like other violations of contractual obligations, entitles the non-breaching party to
P 1275 relief, which under contemporary international arbitration conventions and national
legislation includes specific enforcement through a stay or dismissal of the litigation, and
exposes the breaching party to contractual liability. (122)
The obligation not to litigate disputes that are subject to arbitration is expansive and applies
to all forms of litigation of the merits of the parties dispute. German courts have held, for
example, that the obligation not to litigate arbitrable disputes under Article 8 applies not only
to ordinary civil actions, but also to summary proceedings (Urkundenprozess). (123) Other forms
of dispute resolution, including actions in administrative tribunals and other quasi-judicial
forums, would also be subject to Article II of the Convention and Article 8 of the Model Law,
provided that they involved consideration and resolution of the parties underlying dispute.
In contrast, applications seeking the liquidation of a company have been found not to be
actions for the purposes of Article 8 of the Model Law. (124) Similarly, actions seeking
provisional relief or assistance in evidence-taking in aid of arbitration do not constitute
actions under Article 8 (and are instead specifically permitted by Articles 9, 17 and 27 of the
Model Law). (125) These actions do not involve decisions on the merits of the parties
underlying dispute and instead, exceptionally, seek to protect the parties rights so that their
dispute can be resolved in arbitral proceedings, pursuant to their arbitration agreement.
[3] Scope of Negative Obligations Under Arbitration Agreements
As already discussed, the negative effects of an arbitration agreement are almost precisely the
mirror-image of the positive effects. In the words of one Swiss decision: the principal effect of
an arbitration agreement is not to exclude the jurisdiction of the State courts, but to transfer
the right of decision to an arbitral tribunal. The negative effect, that is the exclusion of the
State courts jurisdiction, only constitutes a consequence of the positive effect. (126) Other
authorities are to the same effect. (127)
Accordingly, insofar as an arbitral tribunal is vested with jurisdiction to hear particular
P 1276 substantive disputes, then national courts must cease to exercise parallel jurisdiction to
decide such disputes (save for their statutorily-prescribed roles in supporting the arbitral
process or reviewing an award in an action to either annul it or recognize it (128) ). Where one
jurisdictional ambit stops (e.g., the national courts) then the other (e.g., the arbitral tribunals)
begins. (129)
Nonetheless, there are circumstances concerning jurisdictional issues where national law
extends the negative obligations of the arbitration agreement beyond this ambit. In principle,
insofar as a tribunal possesses jurisdiction to decide disputes regarding its own jurisdiction
(competence-competence), then national courts may be divested of power to decide such
disputes (save for their defined roles in reviewing the eventual arbitral award). (130)
Beyond this, however, many legal systems recognize even broader competence on the part of
arbitral tribunals in jurisdictional matters. Indeed, many legal systems affirmatively grant
arbitrators the authority to consider and resolve jurisdictional disputes even in the absence of
an agreement to that effect.
As discussed in detail above, national legal systems differ in their approaches to competence-
competence. (131) In some systems (e.g., France, India and Hong Kong), courts will defer any
decision on a tribunals competence to resolve jurisdictional issues, including challenges to
the existence or validity of any arbitration agreement at all, until an award has been issued on
the issue, and then decide the issue de novo. (132) In other systems (e.g., United States and
England), courts will defer to a tribunals jurisdictional competence if the parties have agreed
to arbitrate jurisdictional issues (and then will not review the arbitrators jurisdictional
decision), and will defer to a tribunals competence-competence in other circumstances
depending on the nature of the jurisdictional objection and considerations of efficiency and
equity. (133)
Although these various treatments of competence-competence differ, many of them share the
characteristic of giving effect in some circumstances to the negative obligations of a putative
agreement to arbitrate even where that agreements existence or validity is disputed. (134) As
8
P 1277 discussed above, this cannot properly be regarded as enforcement of one of the negative
obligations imposed by an arbitration agreement, but is instead the result of external,
statutorily-prescribed allocations of jurisdictional competence. (135)
[C] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable Disputes
As discussed above, some national courts historically refused to stay litigation of arbitrable
disputes, either holding that arbitration agreements were revocable or not subject to specific
performance. (136) In contrast, under virtually all contemporary national legal systems, the
principal remedies for breach of an international arbitration agreements negative obligation
not to litigate arbitrable disputes are either a mandatory stay (i.e., suspension) of the
improperly-commenced litigation or dismissal of that litigation. In addition, a variety of other
remedies are also available for enforcing the negative obligations of an agreement to
arbitrate, including discretionary stays, antisuit injunctions, refusals to recognize judgments
and damages actions.
[1] Mandatory Stay of Litigation
As discussed above, Article II(3) of the New York Convention provides for the dismissal or stay
of proceedings in national courts brought in breach of an agreement to arbitrate. (137) Article
II(3) does not leave national courts with any discretion to deny a dismissal or stay of local
judicial proceedings where an arbitration agreement is enforceable under the Convention.
Rather, it mandatorily requires that national courts shall refer parties to arbitration. (138) As
P 1278 discussed above, this obligation applies equally to arbitration agreements providing for
an arbitral seat in the state where litigation is (wrongfully) initiated and for an arbitral seat
located abroad. (139)
Some national legislation expressly provides for a stay of litigation brought in violation of a
valid arbitration agreement. That is the case in all leading common law systems including the
United States, (140) England, (141) Canada, (142) Singapore, (143) Hong Kong, (144)
P 1279 Malaysia, (145) New Zealand (146) and Kenya. (147) In all of these jurisdictions, the obligation to
stay litigation is mandatory, not discretionary. (148) (In addition, as discussed above, some
national courts also exercise a discretionary power to stay litigation pending arbitral
proceedings even when not mandatorily required (for example, because a dispute involves
nonparties to an arbitration agreement or disputes not within the arbitration agreement). (149)
)
In other countries (principally civil law jurisdictions, including France, (150) Switzerland, (151)
P 1280 Germany, (152) the Netherlands (153) and Belgium (154) ), legislation requires courts to
decline jurisdiction over arbitrable disputes. In these states, courts do not merely stay
pending litigations, but dismiss them entirely.
Whether through a stay or a dismissal of litigation, it is the mandatory obligation and uniform
practice of national courts in developed jurisdictions to refuse to hear the merits of claims,
initiated in litigation, which are properly subject to arbitration. As one national court put it:
A district court must stay proceedings if it is demonstrated that the parties have agreed in
writing to arbitrate the issues underlying the district court proceeding.The Act leaves no
room for the exercise of discretion by a district court, but instead mandates that district courts
shall direct the parties to proceed to an arbitration on issues as to which an arbitration
agreement has been signed. (155)
A stay or dismissal of litigation is akin to an order of injunctive relief granting specific
performance of the obligations imposed by arbitration agreements, and particularly the
negative obligation not to pursue litigation in national courts. Indeed, the introduction of this
obligation on national courts to order specific performance of the negative duties imposed by
international arbitration agreements, which were historically often not enforceable in this
manner, (156) was one of the central achievements of the Geneva Protocol, the New York
Convention and modern arbitration statutes. (157)
P 1281 Obtaining a dismissal or stay of litigation is often sufficient to give effect to the parties
arbitration agreement, because it effectively forces a claimant into the arbitral process. As one
court has remarked, [t]he concept [of statutory provisions providing for a stay or suspension of
litigation] seems to be that a power to grant a stay is enough without the power to order that
the arbitration proceed, for, if a stay be granted, the plaintiff can never get relief [on his
claims] unless he proceeds to arbitration. (158)
It is well-settled that a court will not refer the parties to arbitration sua sponte or ex officio. As
discussed above, the right to arbitrate may be waived (including by not raising the existence of
an arbitration agreement or seeking an order staying litigation or referring the parties to
arbitration). (159) Consistent with this, courts in Model Law (160) and other (161) jurisdictions
have repeatedly held that an order to refer parties to arbitration will only be made at the
request of a party.
[2] Dismissal of Litigation
It is sometimes suggested that common law and civil law jurisdictions take different
approaches to the question whether a national court is divested of jurisdiction by an
arbitration agreement, with civil law regimes answering affirmatively and common law systems
permitting dual arbitral and judicial jurisdiction. (162) This analysis rests on the observation
P 1282
9
P 1282
that civil law courts typically dismiss a litigation for lack of jurisdiction when presented
with a valid arbitration agreement, (163) while common law courts typically stay the
litigation while retaining jurisdiction (164) (although even common law courts sometimes
dismiss proceedings). (165)
From an international perspective, this is largely a question of semantics, rather than
substance. In both civil and common law jurisdictions, the substantive effect of the courts
action is to forbid the plaintiff from proceeding on the merits of its claims in national courts,
whose role is then limited to reviewing a subsequent award (or, in rare instances, providing
ancillary judicial assistance in aid of the arbitral process). (166) From this perspective, and for
the most part, there is no real difference between the civil law dismissal and the common law
stay.
Nonetheless, there may be circumstances in which national law will accord different legal
consequences to a stay, as contrasted to a dismissal. For example, issues concerning rights of
appeal from the first instance courts decision, the effect of the litigation on statutes of
limitations, liability for legal costs and similar issues may be treated differently under local
P 1283 law depending on whether a litigation is stayed or dismissed. These are matters of local
procedural law, not regulated by the New York Convention (or other international arbitration
conventions), which differ among jurisdictions. Nonetheless, they obviously may have
important practical consequences in particular cases.
[3] Arguable Exceptions to Mandatory Stays or Dismissals of National Court Litigation
A number of national court decisions have considered arguments that litigation proceedings
should not be stayed or dismissed, despite the existence of a valid arbitration agreement.
These arguments have relied on a variety of domestic grounds, often focused on principles of
judicial economy or case management.
In the United States, courts have considered arguments that, when a dispute involves both
arbitrable claims and claims that are not subject to arbitration, then the litigation should
proceed under an intertwining doctrine. (167) The theory suggested that it is more efficient to
hear all claims in a single proceeding and, since the entire dispute cannot be arbitrated, a
litigation involving all claims should be permitted to proceed. (168)
U.S. courts have correctly held that this doctrine is inapplicable under the New York
Convention, which mandatorily requires national courts to refer arbitrable claims to
arbitration. (169) The same result applies in the United States under the domestic FAA, which
requires district courts [and state courts] to compel arbitration of pendent arbitrable claims
when one of the parties files a motion to compel, even where the result would be the possibly
inefficient maintenance of separate proceedings in different forums. (170)
P 1284 U.S. courts have also considered, and consistently rejected, arguments that litigation
involving arbitrable disputes should be permitted to proceed because it includes nonparties
to the arbitration agreement. (171) (Indeed, as discussed below, U.S. courts have taken the
opposite approach, frequently issuing discretionary stays of litigation involving nonparties to
an arbitration, pending the outcome of related arbitrations. (172) )
Similarly, Australian, Israeli and other courts have considered arguments that, where a dispute
involves parties that have agreed to arbitrate their claims, as well as additional parties that
have not done so, the entire dispute should be litigated. (173) As with U.S. authority, this
position has been rejected in international matters, on the grounds that the New York
Convention applies regardless of arguments of convenience or judicial economy. (174)
Canadian courts have adopted the same approach, (175) albeit after some false steps. (176) A
P 1285 few national courts have shown reluctance to give effect to arbitration agreements where
litigation involves nonparties as well as parties, but these decisions are ill-considered and in
the minority. (177)
It is also clear under the Model Law (in Article 8(2)) and other national arbitration legislation
that an arbitration may be commenced, and pursued, notwithstanding the prior initiation of
national court litigation. Article 8(2) contradicts the notion of a first filed rule of priority, as
applied to parallel litigations and arbitrations, by recognizing the authority of the arbitral
tribunal to continue with the arbitral proceedings, notwithstanding the initiation of litigation
subject to Article 8(2). (178)
In some jurisdictions, local law places material obstacles in the path of obtaining a stay or
dismissal of litigation based on the parties agreement to arbitrate. For example, Spanish
legislation provides that a stay of litigation must be requested through the general provisions
of the Spanish Civil Procedure Act. This requires that any jurisdictional objection be made
within 10 days a potentially impossible, and certainly very impractical time deadline in
international matters. (179) This approach vitiates the effect of Article II(3) of the New York
Convention and would contradict its terms and purpose in circumstances where a partys
ability to invoke its arbitration rights was materially compromised.
[4] Discretionary Stays of Related Litigation
In some legal systems, national courts will stay litigation of issues or disputes that are merely
related to matters which are properly being arbitrated, even if the litigation is not
encompassed (or necessarily encompassed) by the arbitration agreement. Discretionary stays
can be available in these legal systems in a number of different circumstances.
10
First, as discussed above, a discretionary stay may be available in the case of jurisdictional
disputes, where some national courts (e.g., United States and England) will stay judicial
consideration of such issues for reasons of efficiency even where the parties have not agreed to
P 1286 arbitrate matters of jurisdiction. (180) As also noted above, a roughly comparable
approach is taken under the European Convention, where courts are required in principle to
permit initial arbitral consideration of jurisdictional issues, subject to a discretionary
possibility of judicial resolution of such matters in exceptional circumstances. (181)
Second, a discretionary stay may be available where the parties to the litigation are not all
parties to the arbitration agreement, but are nonetheless affiliated or contractually connected
with parties to the arbitration agreement. (182) As noted above, U.S. courts in particular have
frequently issued such discretionary stays. (183) Courts in other jurisdictions have taken similar
approaches, (184) albeit less frequently.
Third, there may be disputes between parties to an arbitration which are not encompassed by,
but are related to, a dispute that is subject to the arbitration agreement. Again, U.S. courts
have frequently issued discretionary stays of litigation of such disputes, pending arbitral
P 1287 resolution of the related dispute. (185) Courts in other jurisdiction have also taken this
approach, including both Model Law (186) and other jurisdictions. (187)
In each of these categories of cases, national courts have stayed litigation of disputes that are
not (or are arguably not) subject to arbitration on the grounds that it would be more efficient,
fairer and supportive of the arbitral process to do so. These courts have not held that a stay of
litigation is mandatory, but rather that granting a stay makes practical sense as a matter of
discretion and judicial economy. In so doing, these courts have generally relied upon an
inherent judicial power, not granted or required by the New York Convention or by national
legislation that implements the Convention. (188)
Consistent with this, U.S. and other courts have frequently exercised inherent judicial power to
stay actions brought by persons not party to an arbitration agreement, actions involving
nonarbitrable claims and actions involving disputes over the existence or validity of any
arbitration agreement. (189) This is not, strictly speaking, a direct result of the negative effects
of an arbitration agreement, but can be regarded as an indirect or ancillary result of the
arbitration agreements negative obligations, where national courts voluntarily take steps to
rationalize their dockets in light of the existence of other dispute resolution mechanisms.
P 1288 [5] Non-Recognition of Judgments
If a party pursues litigation in breach of a valid arbitration agreement (and if there is no waiver
of the right to arbitrate by its counter-party), then the resulting judgment should not be
entitled to recognition. (190) Indeed, it would violate the New York Convention for a
Contracting State to recognize and enforce a judgment obtained in breach of a valid
agreement to arbitrate, that has not been waived and that is subject to the Convention.
Contracting States are committed under Articles II(1) and II(3) of the Convention to recognizing
valid arbitration agreements and to referring parties to such agreements to arbitration. (191)
Where a national court judgment is obtained in breach of an agreement protected by the
Convention, a Contracting State would violate these commitments by giving effect to that
judgment, rather than ordering the parties to arbitrate their disputes, as they promised to do
and as Article II requires.
The Singapore High Court expressed the foregoing rationale very directly, albeit in a case
involving breach of an antisuit injunction enforcing an arbitration agreement. The Singapore
court reasoned that if cl[ause] 19 is an arbitration agreement [as the court concluded it was],
continuation of the proceedings in the Colombo High Court would constitute a breach by Sri
Lanka of her obligations under [Article II of the New York Convention]. (192) Thus:
By virtue of [the parties agreement, the respondent] had agreed to submit disputes to
arbitration in Singapore upon election by any party and the plaintiffs have so elected. In the
circumstances it would be manifestly against public policy to give recognition to the foreign
judgment at the behest of the defendants who have procured it in breach of an order
emanating from this Court. (193)
Similarly, Swiss courts have held that they will not recognize foreign judgments that are
obtained in an action that breached Article II of the Convention. In one decision, the Swiss
Federal Tribunal refused to annul an arbitral award on the grounds that it allegedly conflicted
with a foreign judgment, reasoning among other things that the foreign judgment had been
issued on the basis of proceedings conducted in breach of a valid arbitration agreement and
Article II of the Convention. (194) The court explained:
P 1289 A foreign state court which, notwithstanding the presence of the conditions of Art. II of the
[New York] Convention, does not refer the parties to arbitration but takes the dispute into its
own hands lacks thus indirect jurisdiction [necessary for recognition of a foreign judgment] and
its decision cannot be recognized in Switzerland, unless the lack of jurisdiction of the arbitral
tribunal is determined by the tribunal itself or in the context of a review by a state court. (195)
The decision (and similar decisions by the Swiss Federal Tribunal) are discussed in greater
detail below. (196)
Other national courts have also made it clear that they will not recognize and enforce foreign
judgments rendered in breach of a valid international arbitration agreement. In particular,
11
both U.S. (197) and English (198) courts have refused to recognize foreign judgments made in
violation of a valid arbitration agreement.
It has been suggested that EC Regulation 44/2001 does not permit EU Member States to deny
recognition to other Member State judgments, even when obtained in breach of a valid
arbitration agreement protected by the New York Convention (and/or the European
Convention). If this argument were accepted, it would constitute a grave impediment to the
international arbitral process and a clear violation of Contracting States obligations under
Article II of the New York Convention. The argument has thus far, correctly, been rejected in
England. (199)
P 1290 [6] Antisuit Injunctions (200)
As noted above, a partys ability to obtain a stay of litigation is not always sufficient to
effectively enforce an arbitration agreement in the international context. (201) That is because
a party may be able to pursue litigation of the underlying dispute in a national court which
does not honor, or fully honor, its undertakings pursuant to the New York Convention. (202) In
that event, a stay of the underlying litigation in one (or several) national courts, which do honor
the Convention, may be only a partial, and ultimately ineffective, remedy for enforcing the
international arbitration agreement.
Accordingly, some states permit additional means of enforcement of the negative obligation to
refrain from litigating disputes that are subject to arbitration. These remedies are
characteristically available only in common law jurisdictions, where national courts may be
prepared to issue antisuit injunctions to prohibit the filing or prosecution of litigation in a
foreign forum. (203) Antisuit orders are directed against the parties to a foreign litigation (and
not the foreign court itself), but are intended to have the effect of precluding the litigation
from proceeding in the foreign court. (204)
[a] Antisuit Injunctions Under English Law
English courts have long exercised the power to enjoin foreign litigations which are brought in
violation of an arbitration agreement. (205) Under English law, an antisuit injunction may
ordinarily be granted against the prosecution of a foreign litigation if it is established that (a)
the English forum has a sufficient interest in, or connection with, the matter in question, (b) the
foreign proceeding causes sufficient prejudice to the applicant, and (c) the antisuit injunction
P 1291 would not unjustly deprive the claimant in the foreign court of a legitimate advantage.
(206) One English court decision affirmed the existence of this power in emphatic terms, in the
context of a foreign litigation brought in breach of an arbitration agreement, reasoning:
in my judgment there is no good reason for diffidence in granting an injunction to restrain
foreign proceedings [brought in violation of an arbitration agreement] on the clear and simple
ground that the defendant has promised not to bring them.I cannot accept the proposition
that any Court would be offended by the grant of an injunction to restrain a party from invoking
a jurisdiction which he had promised not to invoke and which it was its own duty to decline.
(207)
English courts have also given consideration to notions of comity, as justifying the withholding
of an antisuit injunction against parties to a foreign litigation. (208) Nonetheless, as a matter of
principle, proceedings resulting from a partys unexcused breach of its negative obligation not
P 1292 to litigate a dispute that is encompassed by a valid arbitration agreement are subject,
under English law, to an antisuit injunction. (209) (As discussed below, however, within the
European Union, where EC Regulation 44/2001 applies, the English courts historic antisuit
authority may not be exercised as to proceedings in other EU Member State courts. (210) )
In England, most antisuit injunctions have been issued to prevent the litigation of claims that
are properly subject to arbitration. Nonetheless, an English court issued an injunction against
an award-debtors pursuit of foreign litigation aimed at challenging an English arbitral award.
(211) English courts have also issued antisuit injunctions against a third party to the arbitration
proceedings. (212) It is also clear that English courts will issue injunctions against
commencement of foreign court proceedings regardless whether or not an arbitration has been
commenced. (213)
[b] Antisuit Injunctions in Other Common Law Jurisdictions
Courts in other common law jurisdictions, including Singapore, Canada, Bermuda and Australia,
have also issued antisuit injunctions to enforce the negative obligations of an arbitration
agreement. (214) The Singapore High Court explained the rationale for antisuit orders as
follows:
[An antisuit injunction] is entirely consistent with the principle that parties be made to abide
by their agreement to arbitrate. Furthermore, the New York Arbitration Convention obliges
state parties to uphold arbitration agreements and awards. Such an agreement is often
contravened by a party commencing an action in its home courts. Once this Court is satisfied
that there is an arbitration agreement, it has a duty to uphold that agreement and prevent any
breach of it. (215)
As in England, this analysis is likely to result in the issuance of an antisuit injunction restraining
P 1293 pursuit of foreign litigation simply upon the showing that a party has commenced
litigation in breach of a valid, applicable arbitration agreement. The Singaporean approach
12
forthrightly holds parties to their commitments to arbitrate, and rests on the obligation, under
the New York Convention, of Contracting States to enforce arbitration agreements. (216)
Parenthetically, the willingness of many common law jurisdictions to issue antisuit injunctions
to enforce the negative obligations of an arbitration agreement stands in some tension with
the refusal of these jurisdictions to issue orders compelling arbitration. (217) A substantial
argument can be made that antisuit injunctions, which interfere more directly with foreign
courts jurisdiction, should be more (not less) difficult to obtain than orders compelling
arbitration yet the former are more readily available than the latter in many jurisdictions.
[c] Antisuit Injunctions Under U.S. Law
U.S. courts have also been prepared to grant antisuit injunctions prohibiting parties from
proceeding with foreign litigation in violation of a valid arbitration agreement, but subject to
significantly greater conditions and restrictions than in England, Singapore and most other
common law jurisdictions. In general, U.S. courts have been reluctant to grant antisuit
injunctions, even where parties have commenced foreign litigation in violation of their
agreement to arbitrate, except in compelling cases where there is a special need for such
relief.
There is no question but that U.S. courts have the authority to enjoin parties from proceeding
with foreign litigation of disputes that are subject to arbitration. In one courts words, [t]he
power of federal courts to enjoin foreign litigation in favor of arbitration iswell-established.
(218) Exercising this authority, U.S. courts have not infrequently issued antisuit injunctions
directing parties not to proceed with litigation in a foreign court in violation of an arbitration
agreement. (219)
The preliminary requirements that must be satisfied in order to obtain an antisuit injunction
P 1294 from a U.S. court are demonstrating that: (a) the parties to the foreign litigation are the
same as those bound by the arbitration agreement, and (b) the disputes at issue in the foreign
litigation would be resolved by the arbitration. (220) In addition, consistent with general U.S.
law on equitable relief, U.S. courts have also required additional showings of (c) irreparable
injury or grave hardship to the party seeking relief, (221) and (d) evidence that the (U.S.)
forums public policy warrants a grant of injunctive relief. (222)
Applying these general principles, U.S. lower courts have formulated a variety of different
standards for when an antisuit injunction may be granted to restrain foreign litigation. Some
U.S. courts grant such relief based merely upon a showing of serious inconvenience or risk of
inconsistent judgments, (223) while others are more demanding and require a clear showing
that the foreign litigation would threaten the jurisdiction or public policies of the U.S. forum.
(224) Courts applying the latter standard tend to regard wasted costs and efforts, arising from a
parallel litigation brought in violation of an arbitration agreement, as insufficient grounds for
issuing antisuit relief. In contrast, courts applying the former standard are more likely to issue
P 1295 antisuit injunctions based on the wasted time and expense, and procedural unfairness,
caused by litigation in breach of an arbitration agreement.
Even U.S. courts that are ordinarily reluctant to issue antisuit injunctions will sometimes do so
where foreign litigation is brought in violation of the parties agreement to arbitrate, based on
U.S. policies favoring international arbitration:
The enjoining forums strong public policy in favor of arbitration, particularly in international
disputes, would be threatened if [the respondent] were permitted to continue to pursue the
[action in its home courts], particularly in light of the courts decision herein granting [the
plaintiffs] motion to compel arbitration. (225)
Applying this analysis, one recent lower court reasoned broadly that [w]hen a foreign court has
issued an order prohibiting the arbitration proceedings that the parties have agreed to [U.S.
courts have held that] little else is required to authorize an injunction. (226)
In approaching the question of antisuit injunctions, U.S. courts afford significant weight to a
partys participation in the arbitral process and the results of that process. Where parties
refuse to participate in, and instead seek to frustrate, the arbitral proceedings (i.e., by seeking
antiarbitration injunctions), U.S. courts are much more likely to issue antisuit injunctions
against the litigation. (227) Where parties participate in the arbitral process, while also
commencing litigation in foreign courts challenging the arbitration agreement, U.S. courts are
less likely to enjoin the foreign proceeding, at least until the arbitral tribunal makes an award.
(228)
P 1296 Some U.S. courts have also granted antisuit injunctions to prevent litigation from
undermining the relief granted by an award which it had already confirmed. (229) Other U.S.
courts have refused to enjoin foreign proceedings aimed at frustrating enforcement of an
arbitral award, even where such proceedings were commenced outside the arbitral seat and in
clear violation of the New York Convention. (230)
[d] Antisuit Injunctions in Civil Law Jurisdictions
In contrast to the common law approach, civil law courts have generally refused to grant
antisuit orders, including to enforce arbitration agreements. (231) In most instances, civil law
courts are not even requested to order antisuit injunctive relief, because it is clear that no such
remedy is available.
13
As a general matter, there are grave reservations about antisuit injunctions in many civil law
systems. In one action, a German court declared that an English antisuit injunction, aimed at
restraining proceedings brought in Germany in violation of an arbitration clause, was a
violation of German public policy:
such injunctions constitute an infringement of the jurisdiction of Germany because the
German courts alone decide, in accordance with the procedural laws governing them and in
accordance with existing international agreements, whether they are competent to adjudicate
on a matter or whether they must respect the jurisdiction of another domestic or a foreign
court (including arbitration courts).These rights are safeguarded by the Germany procedural
codes and, in many respects, by the [German Constitution]. The courts must give effect to these
rights. Instructions from foreign courts to the parties concerning the manner in which the
proceedings are to be conducted and their subject-matter are likely to impede the German
courts in fulfilling this task. (232)
P 1297 The Court upheld the refusal of the relevant German authorities to effect service of English
process on the respondent in Germany (as had been requested under the Hague Service
Convention). (233)
In a case referred by the House of Lords to the European Court of Justice, the ECJ largely upheld
the view of most civil law courts with respect to the general impermissibility of antisuit
injunctions, at least when issued within the context of the EU (albeit not in relation to
arbitration). (234) According to the court:
Any injunction prohibiting a claimant from bringing such an action must be seen as
constituting interference with the jurisdiction of the foreign court which, as such, is
incompatible with the system of the [Brussels] Convention. (235)
Despite their historic reservations, some civil law jurisdictions have in recent years issued
antiarbitration orders (albeit, as discussed below, improperly). (236) Given this, it is possible
that the same rationale would support an antisuit order, even in civil law jurisdictions that
have historically rejected this form of relief.
[e] Antisuit Injunctions and Council Regulation (EC) 44/2001
European Union legislation, and particularly EC Regulation 44/2001, have been interpreted as
forbidding Member State courts from granting antisuit injunctions against proceedings
brought, in violation of a valid arbitration clause, in another EU Member State. This question
had been the subject of a number of decisions by the English courts, upholding the contrary
view that EU law did not forbid intra-EU antisuit injunctions, but had remained unresolved by
the European Court of Justice. (237) The ECJ finally addressed that question in 2009, holding
that courts in EU Member States were not permitted to issue antisuit injunctions against
P 1298 proceedings in other Member States, even when those proceedings were brought in
violation of a valid arbitration agreement. (238)
The starting point for considering the availability of antisuit injunctions in the EU has been the
rule established by the ECJ, applying Regulation 44/2001 (and, previously, the Brussels
Convention), that a Member State court may not enjoin a party from pursuing litigation in
another Member States courts, even when this litigation is in breach of an exclusive forum
selection clause. (239) This rule requires consideration whether the same prohibition against
antisuit injunctions applies within the EU to orders enjoining litigation in violation of
arbitration (as distinguished from forum selection) agreements. Although there are obvious
parallels between the two scenarios, Regulation 44/2001 contains a so-called arbitration
exception, (240) which arguably excludes measures taken to enforce arbitration agreements
from the effects of the Regulation. (241) The scope of this exception, as applied to antisuit
injunctions against proceedings in EU Member State courts, was considered and ultimately
resolved in the long-running West Tankers litigation.
The West Tankers dispute arose when West Tankers chartered one of its vessels to Erg, an
Italian shipper, pursuant to a charterparty that was governed by English law and that provided
for arbitration in London. During the term of the charter, the West Tankers vessel collided with
a jetty owned by Erg in Syracuse, Italy, resulting in substantial damage and even more
substantial litigation. (242)
In subsequent proceedings, Erg both obtained an insurance payment from its insurers (Allianz
and Generali) and commenced arbitral proceedings in London, pursuant to the charterparty, to
recover excess sums from West Tankers; in response, Ergs insurers initiated litigation in Italy
P 1299 (exercising their right of subrogation) against West Tankers to recover the sums they had
paid to Erg. (243) The insurers relied on a European litigation tactic labelled the Italian
torpedo, in which proceedings are initiated in Italian courts (where binding decisions cannot
be expected for at least ten years) in order to obtain settlement leverage. (244)
West Tankers objected to the jurisdiction of the Italian courts, relying on the charterpartys
arbitration agreement (which bound the insurers, whose right of subrogation placed them in
Ergs shoes). In order to avoid the Italian torpedo, and in an effort to proceed with arbitration
under the parties agreement, West Tankers also sought an antisuit injunction from the English
courts (in the arbitral seat) against the insurers continuation of the Italian litigation in breach
of the arbitration agreement. (245)
The English lower courts granted the requested injunction, relying on the arbitration
14
exception to EC Regulation 44/2001 to hold that the Regulation did not prohibit antisuit
injunctions in aid of arbitration against proceedings in other EU Member State courts. On
appeal, the English Court of Appeal reasoned that Regulation 44/2001 forbid antisuit
injunctions to enforce forum selection clauses, but that the situation was different for
injunctions to enforce arbitration agreements:
At least as regards those anti-suit injunctions granted in respect of breach of jurisdiction
clauses, and therefore within the ambit of Regulation 44/2001, this approach is no longer
permissible following the decision in Turner v. Grovit.However, the reasoning in that decision is
inapplicable to anti-suit injunctions in respect of cases involving breach of arbitration
agreements which fall outside the scope of that Regulation.Accordingly, it is to be concluded
from the authorities binding on this court, that whatever terminology is adopted offended,
P 1300 affronted or contrary to comity evidence that the foreign court would treat the order
as an impermissible exercise of jurisdiction by the English courts is, as a matter of English
conflicts rules, not in itself any reason to withhold such an order to procure compliance with an
agreement to arbitrate. (246)
On appeal, the House of Lords requested a preliminary ruling from the ECJ on the question
whether it is consistent with Regulation 44/2001 for a Member State court to enjoin
proceedings in another Member State on the basis of an arbitration agreement. (247)
In response, on 10 February 2009, the ECJ ruled that it would be incompatible with Regulation
44/2001 for a Member State court to issue an order to restrain a person from commencing
proceedings before the courts of another Member State on the ground that such proceedings
would be contrary to an arbitration agreement. (248) The ECJ reasoned that, if by means of an
antisuit injunction, the court of a Member State were prevented from examining the validity or
the effects of the arbitration agreement, the antisuit injunction could be used as a tool to bar
parties access to an EU Member State court. (249) The Court also rejected the argument that
the arbitration exception to Regulation 44/2001 permitted the antisuit injunction, declaring:
if, because of the subject-matter of the dispute, that is, the nature of the rights to be
protected in proceedings, such as a claim for damages, those proceedings come within the
scope of Regulation No 44/2001, a preliminary issue concerning the applicability of an
arbitration agreement, including in particular its validity, also comes within its scope of
application.[T]he verification, as an incidental question, of the validity of an arbitration
agreement which is cited by a litigant in order to contest the jurisdiction of the court before
which he is being sued pursuant to the Brussels Convention, must be considered as falling
within its scope. (250)
There have been several post- West Tankers decisions, where English courts have suggested
that, notwithstanding the existence of a valid arbitration agreement, they are barred by
Regulation 44/2001 from issuing an antisuit injunction against proceedings in another EU
Member State in violation of the arbitration agreement. (251) At the same time, English courts
have also held that antisuit injunctions in support of arbitration are still available where
proceedings have been brought in breach of an arbitration agreement in a non-EU state. (252)
P 1301 The ECJs decision in the West Tankers case has attracted widespread criticism. (253)
Commentators have criticized the Courts reasoning, as well as the fact that its decision
undercuts the parties expectation that courts in the arbitral seat will enforce agreements to
arbitrate and impedes enforcement of the New York Convention. In the words of one critic:
the real concern with the West Tankers decision is that as much as the ECJ might like the idea
of uniform courts (trusting one another), uniform procedures and uniform quality of decision
making across the Member States, that is far from being the case at present, so the system is
open to inefficiency and exploitation. (254)
Critics also argued that the West Tankers rule makes Europe a less attractive location as an
arbitral seat, because of the unavailability of antisuit injunctions (and the risk of dilatory
litigation in a number of EU jurisdictions). (255)
P 1302 In response to these criticisms, a variety of proposals for reform have emerged from
different EU bodies none of which propose perpetuating the current West Tankers approach.
The EU initiated a consultation process on reforming Regulation 44/2001, which included
proposals to delete the arbitration exception or to grant exclusive jurisdiction to the courts of
the EU Member State in the arbitral seat. (256) The European Parliament also published a draft
report in April 2010, which was followed by a European Commission draft report in December
2010. (257)
In June 2012, the EU Council proposed that the current arbitration exception be retained and a
new recital added to Regulation 44/2001 which would detail the scope of the arbitration
exception. In November 2012, the European Parliament voted in favor of the proposed reform
of Council Regulation (EC) on jurisdiction, recognition and enforcement of judgments in civil
and commercial matters (recast Regulation). Most recently, in December 2012, the EU Council
of Ministers adopted the recast regulation which has now been published in the Official
Journal. (258) The recast Regulation will replace the existing EC Regulation 44/2001 on 10
January 2015.
The recast Regulation provides that decisions on the existence, validity and scope of
international arbitration agreements do not fall within the scope of the Regulation (including
its rules with respect to jurisdiction, lis pendens and preclusion). (259) The recast Regulation
15
also makes clear that it does not supersede or alter the obligations of EU Member States under
the New York Convention. (260) Under the recast Regulation (and particularly 12 of the
P 1303 Preamble) a Member State may recognize an arbitral award, under the New York Convention,
notwithstanding a decision by another Member State court holding that there was no valid
arbitration agreement. (261) Nonetheless, it appears that West Tankers prohibition against
antisuit injunctions against proceedings in other EU Member State courts remains applicable
under the recast Regulation (because antisuit injunctions would bar nationals of EU states
access to Member State courts). (262) It is unclear whether the recast Regulation would require
a Member State court to recognize the judgment of another Member State court on the
substance of the parties dispute, notwithstanding the existence of a valid arbitration
agreement covering the issue in dispute; the better view is that the judgment (in violation of
the New York Convention) could be denied recognition. (263)
[f] Future Directions: Antisuit Injunctions in International Arbitration
Despite the controversy that the subject has caused, antisuit injunctions are, in appropriate
circumstances, an effective means of enforcing the negative obligations imposed by
international arbitration agreements. They are not inconsistent with the New York Convention
(because they enforce, rather than breach, international arbitration agreements) and, used
appropriately, offer important benefits.
Where a party brings suit in a national court, in clear breach of the negative obligations of an
international arbitration agreement, and other mechanisms for enforcing the parties
agreement and the obligations of the New York Convention are not adequate, an antisuit
injunction should presumptively be available. (264) In general, consistent with the reasoning of
Singaporean courts, (265) the uncured breach of the agreement to arbitrate through the
commencement of litigation should, without more, be sufficient to justify an antisuit injunction.
In principle, the foreign forum where litigation in violation of the Convention is pending should
be given an opportunity to dismiss wrongfully-commenced litigation, and refer the parties to
arbitration. Nonetheless, where this does not occur, courts in other Contracting States
P 1304 may, and in most circumstances should, enforce arbitration agreements and the Convention
through the use of antisuit injunctions.
[7] Damages for Breach of Obligation Not to Litigate Arbitrable Disputes
Another means of enforcing the negative effects of an arbitration agreement is to award
damages for breaches of the parties undertaking in their agreement not to litigate disputes
that have been submitted to arbitration. Indeed, in historical contexts when arbitration
agreements were not capable of specific performance, damages were the only remedy that
parties could obtain for their breach. (266) It was frequently (and correctly) remarked,
however, that damages for breach of an arbitration agreement are an uncertain and
inadequate means of enforcement. (267) That is in large part because calculating the quantum
of damages is difficult and speculative. (268)
Nevertheless, while inadequate when considered alone, damages for breach of an arbitration
agreement can be an appropriate supplementary means of enforcing arbitration agreements,
by increasing the disincentives for such conduct. A few contemporary judicial decisions in the
P 1305 United States, (269) England (270) and Switzerland (271) have either awarded damages for
the breach of an arbitration agreement or indicated that the possibility for doing so existed.
Nonetheless, some contemporary judicial decisions deny the existence of a right to damages
for breaches of arbitration agreements (ironically, effectively resurrecting the historic hostility
to arbitration agreements, but in reverse form). (272)
8.04 COURT ORDERS ENJOINING ARBITRATION: ANTI-ARBITRATION

INJUNCTIONS (273)
Some national courts have issued injunctive relief similar in concept to antisuit injunctions
against foreign litigation, forbidding a party from pursuing arbitral proceedings on the grounds
that the parties arbitration agreement was either invalid or did not cover the claims asserted
before the arbitrators. Both the standards for issuing such antiarbitration injunctions and the
effects of such orders on arbitral tribunals raise complex issues.
[A] Antiarbitration Injunctions Issued By National Courts

An antiarbitration injunction is essentially an antisuit injunction or order, issued against a
party (or arbitrators) to preclude the initiation or continuation of an arbitration. Typically,
antiarbitration injunctions are purportedly justified on the grounds that there is no valid
arbitration agreement, and that one party is therefore entitled to an order preventing an
illegitimate process from going forward. In many cases, antiarbitration injunctions are part of
deliberately obstructionist tactics, typically pursued in sympathetic local courts, aimed at
disrupting the parties agreed arbitral mechanism.
It was formerly said that there is little authority on the topic of antiarbitration injunctions.
P 1306 (274) That is no longer true. There is a substantial body of such authority, with a number of
national court decisions in both common law and civil law jurisdictions enjoining (or refusing to
enjoin) international arbitral proceedings. In particular, common law courts have not
infrequently affirmed their authority to enjoin international arbitrations, including foreign-
seated arbitrations, on the grounds that no valid or enforceable arbitration exists and that
16
permitting the arbitration to proceed would be oppressive or inequitable.
Courts in the United States have long exercised injunctive power to order parties not to
proceed with an arbitration, particularly in domestic matters. (275) In the words of one court,
rejecting the argument that the FAA prohibits injunctions barring arbitrations: it should follow
[from FAAs power to compel arbitration] that the court should have a concomitant power to
enjoin arbitration where arbitration is inappropriate and [a] failure to [order the arbitration
to be suspended] would frustrate the goals of arbitration, since there would be delay and
increased expense as the parties litigated in both fora. (276) One U.S. court suggested, in a
domestic context, that it would be obligated, not just authorized, to enjoin an arbitration
brought on the basis of an invalid arbitration agreement. (277)
Although U.S. lower courts have most frequently enjoined domestic arbitrations, they have also
done so in a number of international cases subject to the New York Convention, (278) including
P 1307 in some cases involving foreign-seated arbitrations. (279) In doing so, most U.S. courts
have given little, if any, attention to the consistency of antiarbitration injunctions with the
Convention. The U.S. Supreme Court has also not yet considered the issue.
Although asserting the power to grant antiarbitration injunctions against foreign-seated
arbitrations, U.S. courts have been relatively reserved in doing so, issuing such relief only in
exceptional cases. This can be explained in part by the fact that the FAA implements a strong
public policy in favor of arbitration and in part by the relatively cautious approach that U.S.
courts take towards antisuit injunctions generally. (280)
In particular, U.S. courts have generally declined to issue injunctive relief against participation
in arbitral proceedings that are subject to the New York Convention, generally citing principles
of comity and deference to the supervisory authority of foreign courts. (281) Other U.S. courts
have gone further and held that they lack the power to enjoin a foreign arbitration subject to
the New York Convention; in the words of one lower court, the FAA does not authorize an
injunction against a foreign arbitral proceeding. (282)
English courts have adopted a comparable approach to that of U.S. courts, asserting the power
P 1308 to issue antiarbitration injunctions, but expressing great reluctance actually to do so. (283)
Despite these reservations, English courts have issued antiarbitration orders against both
English-seated international arbitrations (284) and foreign-seated arbitrations. (285) For
example, in one recent case involving the former category, an English lower court enjoined the
continuation of an English-seated international arbitration, on the grounds that an earlier
English court decision had held that no valid arbitration agreement bound the parties to the
arbitration. (286) The English court dismissed the argument that its action violated the United
Kingdoms obligations under the New York Convention, reasoning:
No question therefore arises of the court failing to comply with obligations undertaken
pursuant to the New York Convention. In my judgment, it would be invidious to leave it to the
arbitrators to decide whether they should give preference to their own earlier decision over
that of the supervisory court on precisely the same subject matter. The supervisory court has
held in proceeding between [the parties] that there is no basis upon which the arbitrators have
been invested with jurisdiction to determine the dispute between those parties. That should
be an end of the matter. (287)
English courts have emphasized that injunctions against a foreign-seated arbitration are
P 1309 rarely-granted, (288) but have nonetheless occasionally exercised the authority to issue
such injunctive relief. One English decision enjoined a Texas-seated arbitration, opining:
in exceptional cases, for example where the continuation of the foreign arbitration
proceedings may be oppressive or unconscionable so far as the applicant is concerned, the
court may exercise its power under s37 to grant such an injunction. Those circumstances
include the situation where the very issue is whether or not the parties consented to a foreign
arbitration, or where, for example, there is an allegation that the arbitration agreement is a
forgery. (289)
More recently, an English court enjoined a Hungarian-seated arbitration on the grounds that
the validity of the putative arbitration agreement could be readily determined in English
proceedings and that there was, in addition to the alleged Hungarian arbitration agreement,
an alleged English forum selection clause. (290)
Other common law courts have also issued antiarbitration injunctions, including arbitrations
seated abroad, sometimes without the restraint generally exhibited by U.S. and English courts.
Thus, Canadian courts have also claimed (and exercised) the authority to issue antiarbitration
injunctions against international arbitrations (including arbitrations seated abroad). (291)
Similarly, courts in Hong Kong, (292) India, (293) Pakistan, (294) Bangladesh (295) and the
P 1310 Caribbean (296) have issued antiarbitration injunctions against international arbitral
proceedings, including arbitrations seated abroad. At the same time, however, these decisions
have emphasized the exceptional character of antiarbitration injunctions, particularly when
issued against parties to foreign-seated arbitrations:
the jurisdiction to grant anti-arbitration injunctions is wholly exceptional. It must be
exercised with caution and such injunctions will only be granted if the arbitral proceedings are
vexatious or oppressive oran abuse of the legal arbitral process. (297)
Despite these authorities, courts in a number of jurisdictions (particularly with civil law
systems) refuse to issue antiarbitration injunctions. That includes courts in France, Switzerland
17
and elsewhere. (298)
It is also sometimes said that antisuit (and antiarbitration) injunctions are unknown in civil law
jurisdictions. (299) That is no longer true: courts in Brazil, (300) Ethiopia, (301) and Indonesia
(302) have issued injunctions against foreign-seated arbitrations, often in circumstances
involving arbitrations against state-related entities or the states themselves.
P 1311
[B] Future Directions: Anti-Arbitration Injunctions Under New York Convention
Antiarbitration injunctions against arbitrations that are putatively subject to the New York
Convention are very difficult to reconcile with the obligations imposed on Contracting States
by the Convention. Although the grounds for criticizing antiarbitration injunctions are complex,
they argue strongly against the legitimacy, as well as the wisdom, of such orders.
Some critics have challenged the legitimacy of any antiarbitration injunction, on the grounds
that such relief: appears to violate conventional and customary international law,
international public policy and the accepted principles of international arbitration. (303) At
first impression, this criticism appears to sweep too broadly.
It can be argued that, in principle, there is nothing in the New York Convention (or
international law generally) that forbids national courts from enjoining a party from
proceeding with purported arbitral proceedings in the absence of a valid arbitration
agreement: the Convention arguably protects valid arbitration agreements, not nonexistent or
invalid agreements. Under this view, issuance of an antiarbitration injunction against an
arbitration pursuant to a valid arbitration agreement, which is protected by the Convention, is
a breach of Articles II(3) and III of the Convention (304) but other antiarbitration orders would
not be.
Similarly, it is difficult to accept the apparent view of Swiss courts (and some other
authorities) that antiarbitration injunctions are irreconcilable with the principle of
competence-competence. (305) One Swiss court explained this rationale as follows:
These anti-suit injunctions do not hurt principles of international public law because they
respect States sovereignty. However, they may contradict arbitration principles and the
negative effect of the competence-competence principle, according to which courts cannot
decide about the jurisdiction of an arbitrator after he has already ruled on it. Even if the
P 1312 negative effect of the competence-competence principle is not consecrated by the New
York Convention (Article II(3)), the doctrine considers that using an anti-suit injunction is
contestable.[T]he petitioners cannot by a request for interim reliefrequest this court to
grant an anti-suit injunction, which is contrary to the Swiss legal system. (306)
It is doubtful, however, that the competence-competence doctrine can itself be sufficient to
justify a prohibition against antiarbitration injunctions in international matters. That is
because in most jurisdictions, national law permits courts to consider interlocutory
jurisdictional disputes: if the court exercises this (legitimate) authority and then concludes
that there is no valid arbitration agreement, it is impossible to see why, if only a single legal
system is concerned, an antiarbitration injunction would not be appropriate notwithstanding
the competence-competence doctrine.
Despite these considerations, a different analysis is necessary in an international matter
subject to the New York Convention. There, the decisive point is that there are multiple
national forums to consider and legitimately decide jurisdictional objections which, for the
reasons outlined below, makes it inappropriate for one state to preempt such decisions by
issuing antiarbitration orders unilaterally forbidding any arbitration at all.
The better view is that issuance of an antiarbitration injunction against an arbitration subject
to the New York Convention is generally contrary to the basic legal framework for international
arbitration established by the Convention; that conclusion applies regardless whether the
antiarbitration order is issued by a court in the arbitral seat or otherwise. As discussed
elsewhere, this regime involves no supranational authority to interpret and give effect to the
Conventions provisions regarding international arbitration agreements (and awards). (307)
Rather, individual Contracting States are responsible for carrying out the Conventions
provisions regarding the recognition of arbitration agreements and awards, including, the
responsibility to do so when other Contracting States have failed properly to fulfill their
obligations under the Convention (308) (such as, when a Contracting State wrongfully purports
to deny recognition of an arbitration agreement or to wrongfully annul an award on
jurisdictional grounds). (309)
What the New York Conventions structural regime implies is that Contracting States should not
interfere with the ability of one another to give effect to their respective obligations under the
Convention. (310) That is, a state should not take steps to prevent another Contracting State
from recognizing agreements to arbitrate or arbitral awards, merely because it would not itself
accord recognition to the agreement or award; put differently, a Contracting State should not,
through unilateral injunctive orders, preclude or hinder other Contracting States from
P 1313 considering jurisdictional issues under the Convention and from complying with their
obligations under the Convention. (311) That is particularly true given the provisions of Article
VII of the Convention, which guarantee parties the right to more favorable national and treaty
treatment than that guaranteed by the Convention itself. (312)
It is thus not the competence-competence doctrine or the existence of obligations to recognize
18
arbitration agreements, standing alone, that preclude a Contracting State from issuing
antiarbitration injunctions against international arbitrations seated in other Contracting
States. Rather, it is the multilateral international legal framework under the Convention, in
which all Contracting States have mutual obligations to recognize and enforce arbitration
agreements, that argues cogently against the issuance of antiarbitration injunctions enjoining
international arbitral proceedings and award enforcement, even though such injunctions might
well be permissible and sensible in domestic matters. (313)
In any event, even if the power to enjoin arbitral proceedings were recognized in principle to
exist, that authority should be exercised with the utmost circumspection and only in rare
circumstances. In particular, injunctions against international arbitral proceedings subject to
the New York Convention (seated either locally or abroad) ought in principle never be issued
on anything other than jurisdictional grounds (e.g., the absence of a valid arbitration
agreement): claims that an arbitral tribunal is considering meritless or time-barred claims, or
that an arbitration is duplicative and vexatious, are not proper grounds for issuing an
antiarbitration injunction or otherwise interfering with the arbitral process. Indeed, issuing
antiarbitration orders on such grounds clearly violates principles of judicial non-interference
in the arbitral process, embodied in both the New York Convention and national arbitration
legislation. (314)
Even where one party denies the existence of a valid arbitration agreement, an antiarbitration
injunction should virtually never be issued (even assuming, contrary to the arguments above,
the power to do so under the Convention is acknowledged). That is because of the risk of
interfering with the arbitral tribunals assessment of its own jurisdiction or with other national
courts assessment of the validity of the arbitration agreement (particularly courts in the
arbitral seat). In virtually all instances, such determinations should be permitted to be made
by the arbitral tribunal, subject to review by courts of the arbitral seat. (315)
P 1314 Moreover, any determination that a particular dispute is nonarbitrable or the subject of
mandatory national law or public policy (within the meaning of Article V(2) of the New York
Convention) ought never to be grounds for enjoining an arbitration. Rather, in this event, a
national court can permit litigation of the putatively nonarbitrable dispute to proceed before
it and can refuse to recognize any arbitral award dealing with the subject, without the
necessity for issuing antiarbitration injunctive relief. That approach avoids purporting to
impose individual national conceptions of nonarbitrability and public policies on foreign
states. (316) Such an imposition would be inconsistent with the New York Conventions
treatment of these matters as exceptional escape devices from individual Contracting States
obligations to give effect to valid arbitration agreements and awards, but not as grounds for
more generally denying recognition to such agreements and awards in other states. (317)
Where the parties have agreed to arbitrate jurisdictional objections (318) then it is per se
forbidden for national courts to issue an antiarbitration injunction (again, even if one assumes
that such injunctions are permitted in some cases). An antiarbitration order can only even
arguably be legitimate where the underlying agreement to arbitrate is nonexistent, invalid, or
inapplicable conclusions which the parties agreement to arbitrate jurisdictional disputes
forbids a national court from reaching.
[C] Effect of Anti-Arbitration Injunctions On Arbitral Tribunals

When a national court issues an antiarbitration injunction, delicate issues arise as to the
arbitral tribunals authority to continue with the arbitration. A number of tribunals have
refused to give effect to or comply with antiarbitration injunctions, reasoning that the
arbitrators have an independent obligation to determine their own jurisdiction. (319) One
tribunal explained this rationale as follows:
we are of the view that it would be improper, in light of our primary duty to the parties, to
observe the injunctions issued by those courts [in the arbitral seat], which have already
significantly delayed these proceedings, given that they have the effect of frustrating the
P 1315 parties agreement to submit disputes to international arbitration.[T]he Arbitral Tribunal
will continue to prosecute these arbitral proceedings in accordance with its duty to the
parties, in a manner consistent with their arbitration agreement. (320)
This reasoning was adopted by another tribunal, which refused to comply with an
antiarbitration injunction issued by a court located in the arbitral seat (Indonesia), at the
behest of the respondent (the Republic of Indonesia), instead moving the situs of the arbitral
hearings to another state and continuing with the arbitration. (321) The tribunal correctly
reasoned that the purported injunction violates the Republic of Indonesias undertakings [in
the parties arbitration agreement], and that to prevent an arbitral tribunal from fulfilling its
mandate in accordance with procedures formally agreed by the Republic of Indonesia is a
denial of justice. (322) Less persuasively, the tribunal also denied that there was any conflict
(or, in its words, struggle) between the Indonesian courts and the Arbitral Tribunal: to the
contrary[t]he Jakarta Courts injunction purported to forbid pursuit of the arbitration [but] the
jurisdiction of that court is perforce limited to Indonesian territory. (323) Because the tribunal
conducted hearings outside Indonesia there was, in the tribunals view, no breach of the
Indonesian injunction. (324)
The same rationale that supports an arbitral tribunals refusal to comply with an
antiarbitration injunction, whether by a court in the arbitral seat or otherwise, also justifies a
tribunals refusal to stay the arbitral proceedings on lis pendens grounds pending litigation of
19
the parties jurisdictional dispute in a national court. (325) Indeed, as discussed below, even
where the parallel litigation involves jurisdictional challenges to the arbitral tribunals
authority, it has an independent right and obligation to itself proceed to consider and
P 1316 decide the jurisdictional challenges. (326)
References
1) The effects of arbitration agreements on the rights and duties of international arbitrators
are discussed below. See13.02[F]; 13.04[B].
2) The negative effects of an arbitration agreement include the waiver of rights of access to
public courts. As discussed above, these rights are accorded constitutional or statutory
protections in many jurisdictions. See5.01[D].
3) Judgment of 2 October 1931, DFT 57 I 295 (Swiss Federal Tribunal), quoted in van Houtte,
Parallel Proceedings Before State Courts and Arbitral Tribunals, in Arbitral Tribunals or
State Courts: Who Must Defer to Whom? 35, 42 (ASA Spec. Series No. 15 2001).
4) See1.01[B][3] & [5]; 5.01[A]; 8.03[C][7]; 8.03[C][6]; Schiffahrtsgesellschaft Detlev von
Appen GmbH v. Voest Alpine Intertrading GmbH [1997] 2 Lloyds Rep. 279 (English Ct. App.).
5) See1.01[C]; 2.01[A][1]; 8.02[C]; 8.03[C].
6) See1.01[B]; 1.02; 2.02.
7) See1.04[A]-[B]; 2.01[A][1]; 5.01[B]; 8.03.
8) Geneva Protocol, Art. I; New York Convention, Art. II(1). Article 1 of the Geneva Protocol
requires Contracting States to recognize: the validity of an agreementby which the
parties to a contract agree to submit to arbitration all or any differences that may arise in
connection with such contract. Geneva Protocol, Art. I (emphasis added).
10) As discussed above, an agreement to arbitrate does entail the relinquishment of access
to otherwise available judicial forums. See5.01[C], pp. 652-56; 8.03et seq. At the same
time, unlike a release of claims or a waiver of (for example) jury trial rights, an agreement
to arbitrate also entails an affirmative obligation to proceed with dispute resolution in a
different, defined manner. See8.01et seq.
11) See1.05, pp. 214-18; 2.02et seq. for a discussion of a definition of arbitration and
15.01[A]-[B], pp. 2123-30; 15.07, pp. 2197-2210 for a description of the arbitral process.
12) See1.02[A]; 1.02[B][3]; 1.04; 2.02.
13) Geneva Protocol, Art. IV(1) (emphasis added); 1.01[C][1]; 5.01[B][1].
14) New York Convention, Art. II(3) (emphasis added). Article II(3)s phrase refer the parties to
arbitration was based on the language of Article IV(1) of the Geneva Protocol, and was
included in the New York Convention without detailed discussion. See A. van den Berg,
The New York Arbitration Convention of 1958 129 (1981) (use of phrase refer the parties to
arbitration was continued in the New York Convention without any discussion); 1.01[C]
[1], pp. 65-6; 2.01[A], pp. 230-33; 5.01[B][2], pp. 640-43.
16) European Convention, Arts. IV, V. See1.04[A][2]; 2.01[A][1][b]; 5.01[B].
17) UNCITRAL Model Law, Art. 7(1) (emphasis added). See2.02[B].
18) UNCITRAL Model Law, Art. 8(1) (emphasis added). SeeBeraudo, Case Law on Articles 5, 8,
and 16 of the UNCITRAL Model Arbitration Law, 23 J. Intl Arb. 101 (2006); P. Binder,
International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions
2-080 to 2-094 (3d ed. 2009); Cobb, Domestic Courts Obligation to Refer Parties to
Arbitration, 17 Arb. Intl 313 (2001); I. Dore, The UNCITRAL Model Law on International
Commercial Arbitration: Legislative History and Commentary 302 (1989); Sanders,
UNCITRALs Model Law on International and Commercial Arbitration: Present Situation and
Future, 21 Arb. Intl 443, 446 (2005). See2.01[A][2]; 5.01[C][1].
19) U.S. FAA, 9 U.S.C. 4; English Arbitration Act, 1996, 9; Swiss Law on Private International
Law, Art. 7; Spanish Arbitration Act, 2011, Art. 11(1); Singapore International Arbitration Act,
2012, Schedule 1, Art. 8; Hong Kong Arbitration Ordinance, 2013, Art. 20(1); Chinese
Arbitration Law, Art. 5; Japanese Arbitration Law, Art. 14; Costa Rican Arbitration Law, 2011,
Art. 8(1).
20) See1.01[A][2]; 1.02 (especially 1.02[B][3]); 1.04[E]; 2.02.
21) See9.01; 9.02[A]-[B] & [G].
22) See10.01[A].
23) See12.01[A].
24) See14.01[B]; 14.03[A]et seq.
25) See11.05[B][2][a].
26) See 15.01[A]et seq.
27) See 4.04[B]et seq.; 19.04[A].
28) See alsoDimolitsa, Arbitration Agreements and Foreign Investments: The Greek State, 5(4) J.
Intl Arb. 17, 39 (1988) (international principle of the inviolability of the arbitration
agreement is actually just a special application of the principle of pacta sunt servanda
which, together with the parallel application of good faith, is strictly applied to
arbitration agreements).
30) See1.02[B][6]; 15.02.
20
31) See Cremades, Good Faith in International Arbitration, 6 World Arb. & Med. Rev. 217 (2012);
E. Gaillard & J. Savage (eds.), Fouchard Gaillard Goldman on International Commercial
Arbitration 1165 (1999); Hanotiau, Complex Multicontract-Multiparty Arbitration, 14 Arb.
Intl 369, 374 (1998) (basic principle of international commercial arbitration that the
parties have the duty to cooperate in good faith in the performance of their agreement as
well as in the arbitral proceedings); Peters, International Dispute Settlement: A Network
of Cooperational Duties, 14 Eur. J. Intl L. 1, 9 (2003) (While the dispute itself implies
disagreement and non-cooperation, some kind of cooperation, in procedure or in
substance, between the parties is needed for its resolution. Without cooperation, no
settlement. Therefore a general, customary law-based duty of cooperation with a view to
a settlement is inherent in the obligation to settle disputes peacefully.); J.-F. Poudret &
S. Besson, Comparative Law of International Arbitration 375 (2d ed. 2007).
32) See, e.g.,Final Award in ICC Case No. 5485, XIV Y.B. Comm. Arb. 156, 167 (1989); Himpurna Cal.
Energy Ltd v. PT (Persero) Perusahaan Listruik Negara, Final Ad Hoc Award of 4 May 1999,
XXV Y.B. Comm. Arb. 13, 58-59 (2000) (fundamental principle of pacta sunt servanda forms
the bedrock of the civil law of obligations everywhere); Judgment of 8 March 2006, DFT
132 III 389, 392 (Swiss Federal Tribunal); Hebei Imp. & Exp. Corp. v. Polytek Engg Co., [1999]
1 HKLRD 665, 690 (H.K. Ct. Final App.); China Nanhai Oil Joint Serv. Corp. Shenzhen Branch v.
Gee Tai Holdings Co., XX Y.B. Comm. Arb. 671, 675-76 (H.K. Ct. First Inst. 1994) (1995) (partys
obligation to arbitrate in good faith); Dimolitsa, Giving Evidence, in L. Lvy & V. Veeder
(eds.), Arbitration and Oral Evidence 11, 16 (2004) (parties obligation to act fairly in the
contractual relationship is extended into the dispute).
33) See5.02[A][2][i]; 5.02[A][5][h]; Hebei Imp. & Exp. Corp. v. Polytek Engg Co., [1999] 1 HKLRD
665, 690 (H.K. Ct. Final App.); China Nanhai Oil Joint Serv. Corp. Shenzhen Branch v. Gee Tai
Holdings Co., XX Y.B. Comm. Arb. 671, 676 (H.K. Ct. First Inst. 1994) (1995) (on a true
construction of the Convention there is indeed a duty of good faith imposed by its
terms); A. van den Berg, The New York Arbitration Convention of 1958 185 (1981) (principle
of good faith may be deemed enshrined in the Conventions provisions).
34) English Arbitration Act, 1996, 40.
35) See, e.g., French Code of Civil Procedure, Art. 1464 (Both parties and arbitrators shall act
diligently and in good faith in the conduct of the proceedings.); Scottish Arbitration Act,
2010, Schedule 1, Rule 25 (The parties must ensure that the arbitration is conducted (a)
without unnecessary delay, and (b) without incurring unnecessary expense.); Victoria
Commercial Arbitration Act, 2011, 24B(3) (A party must not willfully do or cause to be
done any act to delay or prevent an award being made.); Peruvian Arbitration Law, Art.
38 (The parties are obliged to observe the good faith principle in all their actions and
interventions during the arbitral proceedings and to cooperate with the arbitral tribunal
in the development of the arbitration.); Kenyan Arbitration Act, 19A (The parties to
arbitration shall do all things necessary for the proper and expeditious conduct of the
arbitral proceedings.).
36) Draft on Arbitral Procedure Prepared by the International Law Commission at Its Fourth
Session, U.N. Doc. A/CN.4/59, Art. 1(3) (1952) (The undertaking [to arbitrate] constitutes a
legal obligation which must be carried out in good faith, whatever the nature of the
agreement from which it results.), Art. 15(2) (The parties shall cooperate with one
another and with the tribunal in the production of evidence and comply with the
measures ordered by the tribunal for this purpose.). See also Peters, International
Dispute Settlement: A Network of Cooperational Duties, 14 Eur. J. Intl L. 1 (2003).
37) Bremer Vulkan Schiffbau und Maschinenfabrik v. S. India Shipping Corp. [1981] AC 909, 983,
986 (House of Lords) (emphasis added).
38) Judgment of 10 May 1982, DFT 108 Ia 197, 201 (Swiss Federal Tribunal).
39) See8.02[B] (especially p. 1258 n. 32).
40) See Bdard & Kalantirsky, Arbitrating in Good Faith and Protecting the Integrity of the
Arbitral Process, 2010 Paris J. Intl Arb. 737; B. Berger & F. Kellerhals, International and
Domestic Arbitration in Switzerland 1044 et seq. (2d ed. 2010); Cremades, Good Faith in
International Arbitration, 6 World Arb. & Med. Rev. 217 (2012); E. Gaillard & J. Savage (eds.),
Fouchard Gaillard Goldman on International Commercial Arbitration 627-34 (1999); R.
Merkin, Arbitration Law 16.1, 16.8 et seq. (1991 & Update August 2013); Peters,
International Dispute Settlement: A Network of Cooperational Duties, 14 Eur. J. Intl L. 1, 9
(2003) (general duty to cooperate in dispute settlement); Reymond, Note sur lavance
des frais de larbitrage et sa rpartition, in J. Haldy, J.-M. Rapp & P. Ferrari (eds.), Etudes de
procedure et darbitrage en lhonneur de Jean-Francois Poudret 498 (1999) (parties
obligation to act in good faith to contribute to the organization and furtherance of the
arbitration results from [the arbitration agreement]. This means that the arbitration
agreement, in addition to the principal obligation to arbitrate the dispute, gives rise to
implicit rights and obligations to an extent necessary to perform the agreement.).
41) Niazi v. St. Paul Mercury Ins. Co., 121 N.W.2d 349, 356 (Minn. 1963). Compare Community
Duerlein v. N.J. Auto. Full Ins. Underwriting Assn, 619 A.2d 664, 667 (N.J. Super. Ct. App. Div.
1993); Partners Designs, Inc. v. City of Lonsdale, 697 N.W.2d 629, 635 n.4 (Minn. Ct. App.
2005); R.M. Bennett Heirs v. Ontario Iron Co., 426 N.W.2d 921, 924 (Minn. Ct. App. 1988).
21
42) Relia Star Life Ins. Co. of N.Y. v. EMC Natl Life Co., 564 F.3d 81, 87 (2d Cir. 2009). See also
Instinet Corp. v. Archipelago Sec., LLC, 2003 WL 22721404, at *8 (N.Y. Sup. Ct.)
([petitioners] failure or refusal to make a timely forum selection, followed by its
capricious insistence upon a perverse choice of forum, is conspicuously meant to delay
the arbitration procedures interminably and, in effect, to deny arbitration where it was
agreed upon, in violation of its obligation of good faith and fair dealing).
43) See, e.g., Unreported Award, excerpted in Habegger, Document Production: An Overview of
Swiss Court and Arbitration Practice, in ICC, Document Production in International
Arbitration 21, 28-29 (2006) (parties disclosure obligations correspond[] to a generally
acknowledged procedural rule in international arbitration deriving from the obligation of
the parties to cooperate in good faith in the proceedings); Partial Award in ICC Case No.
3896, 110 J.D.I. (Clunet) 914 (1983) (parties have obligation of good faith not to unduly
delay arbitral proceedings); Award in ICC Case No. 1434, 103 J.D.I. (Clunet) 978 (1976)
(parties have obligation to cooperate in evidence-taking by tribunal).
44) Award in ICC Case No. 8486, XXIVa Y.B. Comm. Arb. 163, 171 (1999).
45) See, e.g., Unreported Partial Award in ICC Case No. 13139 of 20 December 2004 (In the view
of the Arbitral Tribunal, the agreement to arbitrate is a separate contract which differs in
its nature from the contract on the merits inasmuch as it is a contract of a procedural
nature, but it is a contract nevertheless, giving rise to a procedural obligation to provide
the advance on costs.[TheRespondent] accordingly had an obligation to make the
advance, unless it is excused from this.As a matter of legal doctrine, the Arbitral
Tribunal finds the conclusion inescapable that if a contractual obligation, even if it is a
procedural contractual obligation, has been breached, it has jurisdiction to issue
immediately a Partial Award in favour of the party that substituted itself for the
defaulting party.); Interim Award in ICC Case of 26 March 2002, 21 ASA Bull. 802, 807-08
(2003); Unreported Partial Award in ICC Case No. 11330, cited Secomb, Awards and Orders
Dealing With the Advance on Costs in ICC Arbitration: Theoretical Questions and Practical
Problems, 14(1) ICC Ct. Bull. 59, 63 (2003) (Arbitral Tribunal concludes that the parties in
arbitrations conducted under the ICC Rules have a mutually binding obligation to pay the
advance on costs as determined by the ICC Court, based on Art. 30-3 ICC Rules which by
reference forms part of the parties agreement to arbitrate under such Rules); Partial
Award in ICC Case No. 10671, 19 ASA Bull. 285 (2001); Award in ICC Case No. 10526, 126 J.D.I.
(Clunet) 1179 (2001). See generally W. Craig, W. Park & J. Paulsson, International Chamber of
Commerce Arbitration 14.02 et seq. (3d ed. 2000) (By agreeing to ICC arbitration the
parties have bound themselves to abide by the Rules. This clearly includes the payment
of advances on costs, which is the obligation of both parties.); Y. Derains & E. Schwartz, A
Guide to the ICC Rules of Arbitration 343 (2d ed. 2005) (The parties are nevertheless
generally considered, under Article 30(3), to have an obligation, during the course of the
arbitration, to share equally in the payment of the advance fixed by the Court.);
Secomb, Awards and Orders Dealing With the Advance on Costs in ICC Arbitration:
Theoretical Questions and Practical Problems, 14(1) ICC Ct. Bull. 59 (2003).
46) Fadlallah, Payment of the Advance to Cover Costs in ICC Arbitration: The Parties Reciprocal
Obligations, 14(1) ICC Ct. Bull. 53, 55-56 (2003).
47) See1.02[B]; 1.05; 2.02et seq.
48) See, e.g.,Natl Iranian Oil Co. v. State of Israel, Partial Award of 10 February 2012, discussed
in Scherer & Baizeau, Swiss Federal Supreme Court Confirms NIOC vs. Israel Award No
Review of French Court Decision to Appoint Arbitrator in Order to Avoid International Denial
of Justice, 31 ASA Bull. 400, 402 (2013) (agreement to arbitrate imposes obligation on party
to nominate arbitrator); Safond Shipping Sdn Bhd v. E. Asia Sawmill Corp., [1993] HKCFI 151,
19 (H.K. Ct. First Inst.) (All the time and expense have been caused by (a) the
defendants flagrant breach of its contractual obligations to arbitrate any dispute that
may arise andto appoint an arbitrator when called to do so and (b) its complete
defiance of these proceedings brought simply to give effect to the agreed dispute
resolution mechanism.); China Ocean Shipping Co. v. Mitrans Maritime Panama SA, XX Y.B.
Comm. Arb. 282 (H.K. Ct. First Inst. 1993) (1995); Uganda Post Ltd v. R.4 Intl Ltd, [2009]
UGCADER 5 (Uganda Ctr Arb. Disp. Res.) (parties have mutual obligation to participate in
constitution of arbitral tribunal); Henry Muriithi Mvungu v. Bruno Rosiello, Misc. Civil Case
No. 264 of 2006 (Nairobi High Ct.) (parties obligated to suggest possible candidates for
arbitrator); 12.01[A]; 12.01[C][2].
22
49) See, e.g.,Judgment of 19 December 1996, Socit Qualiconsult v. Groupe Lincoln, 1998 Rev.
arb. 121 (Paris Cour dappel). See also Gaillard, Refusal By A Party (a) to Make Advance
Deposits for the Costs of the Arbitration, and (b) to Submit A Statement of Defence, in A. van
den Berg (ed.), Preventing Delay and Disruption of Arbitration 104 (ICCA Congress Series No.
5 1990); A. Reiner, Das neue sterreichische Schiedsrecht SchiedsRG 2006 593, 101
(2006) (arbitration agreement and the parties duties of co-operation and advancing the
proceedingsmean that the parties have a substantive legal obligation to pay their share
of the prepayment on costs, in the absence of an agreement to the contrary); Reymond,
Note sur lavance des frais de larbitrage et sa rpartition, in J. Haldy, J.-M. Rapp & P.
Ferrari (eds.), Etudes de procedure et darbitrage en lhonneur de Jean-Francois Poudret 498
(1999) (general obligation to further the advancement of the arbitration results in the
parties reciprocal duty to cover the fees of the arbitration, not only when the final award
is executed, which is self-evident, but already by abiding to the arbitrators demand [to
make such payment] as the proceedings progress and as determined by the arbitrator
himself); Wenger, in S. Berti et al. (eds.), International Arbitration in Switzerland Art. 178,
71 (2000) (arbitration agreement contains the implicit obligation that each party make
an advance payment towards the prospective costs of the arbitral proceedings in the
amount ordered by the arbitral tribunal). Compare Juiceme, LLC v. Booster Juice LP, 730
F.Supp.2d 1276, 1281 (D. Or. 2010) (defendants failure to pay arbitration costs did not
constitute failure, neglect, or refusal of another to arbitrate under a written agreement
for purposes of FAA); J.-F. Poudret & S. Besson, Comparative Law of International
Arbitration 443 (2d ed. 2007) (concluding, with doubtful correctness, that parties
obligation to remunerate the arbitrators results from the contract with the arbitrators
and is not part of the main dispute submitted to arbitration); 13.06.
50) See, e.g., Judgment of 21 November 2003, DFT 130 III 66, 72 (Swiss Federal Tribunal)
(parties are required pursuant to the obligation to act in good faith and the prohibition
of abuse of rights, which is also valid in procedural law to raise any objection they have
with respect to the jurisdiction or the composition of the arbitral tribunal at the earliest
possible stage.); English Arbitration Act, 1996, 40 ((1) The parties shall do all things
necessary for the proper and expeditious conduct of the arbitral proceedings. (2) This
includes (a) complying without delay with any determination of the tribunal as to
procedural or evidential matters) (emphasis added); D. Caron & L. Caplan, The UNCITRAL
Arbitration Rules: A Commentary 671 (2d ed. 2013) (There are few more disruptive forces in
arbitration than a partys unwillingness to engage in the proceedings); Gaillard,
Unjustified Failure of A Party to Comply With Directions of the Tribunal Relating to Timely
Written Submissions and Presentation of Evidence Law and Court Decisions in Civil Law
Countries, in A. van den Berg (ed.), Preventing Delay and Disruption of Arbitration 203 (ICCA
Congress Series No. 5 1990) (By entering into an arbitration agreement, both parties have
agreed to cooperate in the arbitration procedure); G. Petrochilos, Procedural Law in
International Arbitration 216 (2004) (parties are under a duty to cooperate in good faith
with each other and the tribunal in order to formulate precise rules of conduct);
13.06[B].
51) See, e.g., Niazi v. St. Paul Mercury Ins. Co., 121 N.W.2d 349, 356 (Minn. 1963); Paal Wilson &
Co. A/S v. Partenreederei Hannah Blumenthal [1983] 1 AC 854, 887 (House of Lords) (mutual
obligation of co-operation between both parties to arbitration agreement); Bremer
Vulkan Schiffbau und Maschinenfabrik v. S. India Shipping Corp. [1981] AC 909, 983 et seq.
(House of Lords) (there are mutual obligations to be implied into the parties agreement
not to obstruct or frustrate the purpose of the agreement); Judgment of 18 February 1983,
DFT 109 Ia 81, 83 (Swiss Federal Tribunal) (one of the purposes of arbitration is to enable
the rapid settlement of disputes, so that the parties are bound pursuant to the rules of
good faith to avoid anything which could delay without absolute necessity the normal
course of the arbitration procedure); Judgment of 10 May 1982, DFT 108 Ia 197, 201 (Swiss
Federal Tribunal). See also Peters, International Dispute Settlement: A Network of
Cooperational Duties, 14 Eur. J. Intl L. 1, 22 (2003) (doctrine of non-frustration of
adjudication is an important corollary to obligations to cooperate).
52) SeeChapter 20.
53) See Unreported Award, excerpted in Habegger, Document Production: An Overview of Swiss
Court and Arbitration Practice, in ICC, Document Production in International Arbitration 21,
28-29 (2006) (parties disclosure obligations correspond[] to a generally acknowledged
procedural rule in international arbitration deriving from the obligation of the parties to
cooperate in good faith in the proceedings); Award in ICC Case No. 1434, 103 J.D.I. (Clunet)
978 (1976) (parties have obligation to cooperate in evidence-taking by tribunal); Draft on
Arbitral Procedures Prepared by the International Law Commission at Its Fourth Session,
U.N. Doc. A/CN.4/59, Arts. 1(3), 15(2) (1952); Chapter 16.
54) Natl Iranian Oil Co. v. State of Israel, Partial Award of 10 February 2012, discussed in
Scherer & Baizeau, Swiss Federal Supreme Court Confirms NIOC vs. Israel Award No
Review of French Court Decision to Appoint Arbitrator in Order to Avoid International Denial
of Justice, 31 ASA Bull. 400, 402 (2013) (agreement to arbitrate imposes obligation on party
to nominate arbitrator).
23
55) See Peters, International Dispute Settlement: A Network of Cooperational Duties, 14 Eur. J.
Intl L. 1, 16 (2003) (good faith relates to all stages of the settlement procedure). U.S.
courts have found breaches of arbitration agreements where one party is responsible for
prescribing the procedural rules for the arbitration, and it adopts biased or unfair rules.
See, e.g., Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938-39 (4th Cir. 1999) (employer
materially breached arbitration agreement by promulgating rules so egregiously unfair
as to constitute a complete default of its contractual obligation to draft arbitration rules
and to do so in good faith); Penn v. Ryans Family Steakhouses, Inc., 95 F.Supp.2d 940, 948
(N.D. Ind. 2000) (same).
56) See21.03[C][1], p. 2285 n. 260 (party sanctioned for misconduct of counsel in arbitration).
57) See8.03[C].
58) See8.03[C][6].
59) See8.02[C].
60) Article II(1) of the Convention requires only that courts of Contracting States recognize
agreements to arbitrate. New York Convention, Art. II(1); 2.01[A][1][a]; 5.01[B][2].
(5th ed. 2009); Samuels, Arbitration Statutes in England and the US, 8 Arb. & Disp. Res. L.J. 2
(1999); A. van den Berg, The New York Arbitration Convention of 1958 129-39 (1981)
(meaning of the expression in its technical procedural sense must be deemed to be the
court directive staying the court proceedings on the merits; [s]uch a court directive is
unknown in the majority of countries).
62) Pena Copper Mines Ltd v. Rio Tinto Co. [1911-13] All ER 209, 214 (English Ct. App.).
63) U.S. FAA, 9 U.S.C. 4, 206, 303 (A court having jurisdiction under this chapter may direct
that arbitration be held in accordance with the agreement at any place therein provided
for, whether that place is within or without the United States. Such court may also
appoint arbitrators in accordance with the provisions of the agreement.). SeeG. Born,
International Commercial Arbitration: Commentary and Materials 380 (2d ed. 2001).
Some commentators have suggested that 206 does not contemplate orders compelling
arbitration. A. van den Berg, The New York Arbitration Convention of 1958 130 (1981) (thrust
of Section 206 is not the compulsion to arbitrate but rather the possibility for a United
States court to direct that arbitration can be held in another country). This is not
consistent with either the statutory language or U.S. historical practice, or with U.S.
judicial applications of the provision. See8.02[C], pp. 1265-67.
64) U.S. FAA, 9 U.S.C. 4 applies to any United States district court which, save for [the
arbitration] agreement, would have jurisdiction under title 28, in a civil action or in
admiralty of the subject matter of a suit arising out of the controversy between the
parties. See also Vaden v. Discover Bank, 556 U.S. 49, 71 (U.S. S.Ct. 2009) (Under the FAA,
state courts as well as federal courts are obliged to honor and enforce agreements to
arbitrate.).
65) Joseph Muller Corp. v. Commonwealth Petrochems., Inc., 334 F.Supp. 1013, 1018 (S.D.N.Y.
1971). See also Slatnick v. Deutsche Bank AG, 2006 U.S. Dist. LEXIS 94836, at *15 (S.D. Cal.)
(A motion to compel arbitration is simply a suit in equity seeking specific performance
of that contract.) (quoting Lopez v. Charles Schwab & Co., 13 Cal.Rptr.3d 554 (Cal. Ct. App.
2004)); Fujian Pac. Elec. Co. v. Bechtel Power Corp., 2004 U.S. Dist. LEXIS 23472, at *12-13
(N.D. Cal.) (petition to compel arbitration is simply a suit in equity seeking specific
performance of that contract).
66) Kulukundis Shipping Co. S/A v. Amtorg Trading Corp., 126 F.2d 978, 987 (2d Cir. 1942).
67) See, e.g., Answers in Genesis of Kentucky, Inc. v. Creation Ministries, 556 F.3d 459 (6th Cir.
2009); Sourcing Unlimited, Inc. v. Asimco Intl, Inc., 526 F.3d 38 (1st Cir. 2008); Bautista v.
Star Cruises, 396 F.3d 1289 (11th Cir. 2005); Paramedics Electromedicina Comercial, Ltda v.
GE Med. Sys. Info. Techs. Inc., 369 F.3d 645 (2d Cir. 2004); Smith/Enron Cogeneration LP v.
Smith Cogeneration Intl, Inc., 198 F.3d 88, 99 (2d Cir. 1999); Riley v. Kingsley Underwriting
Agencies, Ltd, 969 F.2d 953 (10th Cir. 1992); David L. Threlkeld & Co. v. Metallgesellschaft
Ltd, 923 F.2d 245 (2d Cir. 1991); Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822 (2d Cir.
1990); J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, SA, 863 F.2d 315 (4th Cir. 1988); Sedco,
Inc. v. Petroleos Mexicanos Mexican Natl Oil Co., 767 F.2d 1140 (5th Cir. 1985); Sauer-
Getriebe KG v. White Hydraulics, Inc., 715 F.2d 348 (7th Cir. 1983); Rhone Mediterranee v.
Achille Lauro, 712 F.2d 50 (3d Cir. 1983); Becker Autoradio U.S.A., Inc. v. Becker
Autoradiowerk GmbH, 585 F.2d 39 (3d Cir. 1978); Hughes, Hooker & Co. v. Am. Steamship
Owners Mut. Protection & Indem. Assn, Inc., 2005 WL 1384055 (S.D.N.Y.); Magsino v.
Spiaggia Maritime, Ltd, 2004 WL 2578922 (E.D. La.); Boston Telecomms. Group, Inc. v.
Deloitte Touche Tohmatsu, 278 F.Supp.2d 1041 (N.D. Cal. 2003); Marubeni Corp. v. Mobile
Bay Wood Chip Ctr, 2003 WL 22466215 (S.D. Ala.); Antillean Marine Shipping Corp. v. Through
Transp. Mut. Ins., Ltd, 2002 WL 32075793 (S.D. Fla.); Federico v. Charterers Mut. Assur. Assn
Ltd, 158 F.Supp.2d 565 (E.D. Pa. 2001); Chloe Z Fishing Co. v. Odyssey Re (London) Ltd, 109
F.Supp.2d 1236 (S.D. Cal. 2000); Siderius, Inc. v. Compania de Acero del Pacifico, SA, 453
F.Supp. 22 (S.D.N.Y. 1978); Ferrara SpA v. United Grain Growers, Ltd, 441 F.Supp. 778 (S.D.N.Y.
1977), affd mem., 580 F.2d 1044 (2d Cir. 1978); Star-Kist Foods, Inc. v. Diakan Hope, SA, 423
F.Supp. 1220 (C.D. Cal. 1976); Antco Shipping Co. v. Sidermar SpA, 417 F.Supp. 207 (S.D.N.Y.
1976).
24
68) InterGen NV v. Grina, 344 F.3d 134, 142 (1st Cir. 2003). See also id. at 141 (it clearly appears
that enforcing arbitration clauses under the New York Convention is an obligation, not a
matter committed to district court discretion). See alsoSlinger Mfg Co. v. Nemak, XXXIV
Y.B. Comm. Arb. 976, 978 (E.D. Wis. 2008) (2009) (if the Court identifies an arbitrable issue,
it must issue a stay).
69) See2.04[B].
70) See14.08[B][2], pp. 2111-15; Viator v. Dauterive Contractors, Inc., 638 F.Supp.2d 641 (E.D.
La. 2009) (ordering parties to arbitrate in England); Invista N. Am. SARL v. Rhodia
Polyamide Intermediates SAS, 503 F.Supp.2d 195, 207 (D.D.C. 2007) (ordering parties to
arbitrate in Switzerland); Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432 F.Supp.2d
1305, 1319 (S.D. Fla. 2006) (ordering parties to arbitrate in Australia); Ibeto Petrochem.
Indus., Ltd v. M/T Beffen, 412 F.Supp.2d 285, 293 (S.D.N.Y. 2005) (ordering parties to
arbitrate in England); Acosta v. Norwegian Cruise Line, Ltd, 303 F.Supp.2d 1327, 1332 (S.D.
Fla. 2003) (ordering parties to arbitrate in the Philippines); Marubeni Corp. v. Mobile Bay
Wood Chip Ctr, 2003 WL 22466215, at *19 (S.D. Ala.) (ordering parties to arbitrate in
Alabama); Boston Telecomms. Group, Inc. v. Deloitte Touche Tohmatsu, 278 F.Supp.2d 1041,
1049 (N.D. Cal. 2003) (ordering parties to arbitrate in Canada); Clarendon Natl Ins. Co. v.
Lan, 152 F.Supp.2d 506, 524 (S.D.N.Y. 2001) (ordering parties to arbitrate in New York); Hart
Enter. Intl, Inc. v. Anhui Provincial Imp. & Exp. Corp., 888 F.Supp. 587, 591 (S.D.N.Y. 1995)
(ordering parties to arbitrate in China); Evans & Sutherland Computer Corp. v. Thomson
Training & Simulation, 1994 U.S. Dist. LEXIS 15496, at *19 (S.D.N.Y.) (ordering parties to
arbitrate in New York); Filanto SpA v. Chilewich Intl Corp., 789 F.Supp. 1229, 1241 (S.D.N.Y.
1992) (ordering parties to arbitrate in Russia); Star-Kist Foods, Inc. v. Diakan Hope, SA, 423
F.Supp. 1220, 1223 (C.D. Cal. 1976) (ordering parties to arbitrate in England).
As discussed below, the power of U.S. courts to order a party to arbitrate outside the
United States depends on whether the New York (or Inter-American) Convention applies.
If not, then a number of U.S. courts have held that the domestic FAA does not permit a
U.S. district court to compel arbitration outside its district (and, therefore, outside the
United States). U.S. FAA, 9 U.S.C. 4; 14.08[B][1]. See also Jain v. de Mere, 51 F.3d 686, 690
(7th Cir. 1995); Bauhinia Corp. v. China Natl Mach. & Equip. Imp. & Exp. Corp., 819 F.2d 247,
250 (9th Cir. 1987); Energy Transp. Ltd v. MV San Sebastian, 348 F.Supp.2d 186, 200 (S.D.N.Y.
2004); Tolaram Fibers, Inc. v. Deutsche Engg Der Voest-Alpine Industrieanlagenbau GmbH,
1991 U.S. Dist. LEXIS 3565, at *4 (M.D.N.C.); Capitol Converting Co. v. Curioni, 1989 WL 152832
(N.D. Ill.); Oil Basins, Ltd v. Broken Hill Proprietary Co., 613 F.Supp. 483, 488 (S.D.N.Y. 1985).
71) See, e.g., Prima Paint Corp. v. Flood & Conklin Mfg Co., 388 U.S. 395 (U.S. S.Ct. 1967);
Commercial Metals Co. v. Balfour, Guthrie & Co., 577 F.2d. 264 (5th Cir. 1978); Natl R.R.
Passenger Corp. v. Missouri R.R. Co., 501 F.2d 423, 425-26 (8th Cir. 1974) (Congress provided
in 9 U.S.C. 4 an abbreviated procedure for obtaining specific enforcement of arbitration
agreements.); Spear v. Cal. State Auto Assn, 831 P.2d 821, 824 (Cal. 1992) (an application
to compel arbitration is in essence a suit in equity to compel specific performance of a
contract); Crawford v. Feldman, 604 N.Y.S.2d 585 (N.Y. App. Div. 1993); State of W. Va. ex
rel. Ranger Fuel Corp. v. Lilly, 267 S.E.2d 435 (W. Va. 1980).
72) J. Lew, L. Mistelis & S. Krll, Comparative International Commercial Arbitration 7-84
(2003).
73) See, e.g., InterGen NV v. Grina, 344 F.3d 134, 142 (1st Cir. 2003) (court may enforce order
compelling arbitration by holding recalcitrant party in contempt); U.S. Titan, Inc. v.
Guangzhou Zhen Hua Shipping Co., 2003 U.S. Dist. LEXIS 25536 (S.D.N.Y.); Lifescan, Inc. v.
Premier Diabetic Serv., 2001 U.S. Dist. LEXIS 7117 (N.D. Cal.); Sternlight, Forum Shopping for
Arbitration Decisions: Federal Courts Use of Antisuit Injunctions Against State Courts, 147 U.
Pa. L. Rev. 91, 177 (1998) (Once the federal court has issued an order compelling
arbitration, parties would risk sanctions such as contempt of court by refusing to follow
the order.).
74) This is consistent with early English common law authority, which was the source of the
general prohibition against injunctions ordering a party to arbitrate. See8.02[C], p. 1264
n. 62; Pena Copper Mines Ltd v. Rio Tinto Co. [1911-13] All ER 209, 214 (English Ct. App.).
75) E.g., Rhone Mediterranee v. Achille Lauro, 712 F.2d 50 (3d Cir. 1983) (arbitration before two
arbitrators alleged to violate Italian law).
76) As discussed below, this is not a merely hypothetical risk. See14.08[B], pp. 2106-19.
77) This is also not a hypothetical possibility. See12.06[D], pp. 1938-39.
78) See15.06.
79) See1.02[B][1] & [6]; 15.02; 15.06.
80) The nature of these limitations on national court authority is discussed in detail below.
See15.06, pp. 2189-97.
81) See7.02.
82) See15.06.
83) See11.03[D]; 11.03[C].
84) See15.06.
85) See9.02[A]-[B].
86) See9.02[A]-[B].
87) See7.03[A][2][c]; 7.03[E][5][b]; 7.03[I][3].
25
88) See7.03[I][3], pp. 1225-; 9.05[C], pp. 1399-1401; 9.06[B], pp. 1402-03. As discussed above,
even if the parties arbitration agreement does not grant the arbitrators authority to
definitively decide disputes regarding the scope of the arbitration clause, this issue is
intertwined with interpretation of the underlying contract (see9.05[C], pp. 1399-1401;
9.02[E], pp. 1345-53) and should therefore generally be left for initial decision by the
arbitral tribunal.
89) See8.02[C].
90) See15.08[HH].
91) See12.03[B][1].
92) See12.03[B][2][a], p. 1692; English Arbitration Act, 1996, 17. See also Veeder, Laws and
Court Decisions in Common Law Countries and the UNCITRAL Model Law, in A. van den Berg
(ed.), Preventing Delay and Disruption of Arbitration 169, 170-71 (ICCA Congress Series No. 5
1991).
93) See12.03[B][2][b]; French Code of Civil Procedure, Art. 1451(3); Portuguese Law on
Voluntary Arbitration, 2011, Art.10(4); Spanish Arbitration Act, 2011, Art. 15(2)(b).
94) See15.08[T] & [HH].
95) As discussed below, default awards are in principle enforceable under most international
and national arbitration regimes. See 15.08[HH], pp. 2297-2300; 23.01[F], pp. 3027-28;
26.05[C][3][d], p. 3530.
96) See4.04et seq.
97) See8.02[C], pp. 1263-69. See also8.03[A], pp. 1271-72; 8.03[C][1]-[2], pp. 1278-84
(negative obligations).
98) There are very limited exceptions to this principle, involving provisional measures and
jurisdictional issues, where there is the possibility of concurrent jurisdiction in both
national courts and an arbitral proceeding. See7.03[I][3]; 17.02[E]; 17.04[C][4];
27.03[B]-[D].
99) See2.01[A][1]; 8.02[A][1]; New York Convention, Arts. II(1), (3).
100) See8.03[C][1]; 27.03[D].
101) See8.03[B][3]; 15.06; Answers in Genesis of Kentucky, Inc. v. Creation Ministries, 556 F.3d
459, 469 (6th Cir. 2009) (The language of [Article II(3)] and its statutory incorporation
provide for no exceptions. When any party seeks arbitration, if the agreement falls within
the [New York Convention], we must compel the arbitration unless the agreement is null
and void, inoperative, or incapable of being performed.); InterGen NV v. Grina, 344 F.3d
134, 141 (1st Cir. 2003); I.T.A.D. Assocs., Inc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir. 1981)
(Article II(3) clearly mandates the referral ofdispute to arbitration unless one of the
enumerated exceptions is applicable); McCreary Tire & Rubber Co. v. CEAT SpA, 501 F.2d
1032, 1037 (3d Cir. 1974) (There is nothing discretionary about Article II(3) of the
Convention.); Arabian Homes for Foreign Trade v. M/V Grain Trader, 1996 WL 54412, at *1-2
(E.D. La.) (court must grant stay where New York Convention applies); Lonrho Ltd v. Shell
Petroleum Co., IV Y.B. Comm. Arb. 320, 321 (Ch) (English High Ct. 1978) (1979) (effect of
Section I [of the English Arbitration Act, 1975, implementing Article II(3)] is to deprive the
court of any discretion whether a claim within a non-domestic arbitration agreement
should be arbitrated or litigated.The Section is mandatory.); Judgment of 7 September
2005, XXXI Y.B. Comm. Arb. 791, 794-95 (Israeli S.Ct.) (2006) (Article II(3) of the Convention
states in mandatory language that the court shallrefer the parties to arbitration, unless
one of the exceptions listed in the section is present. It appears that the manner in which
both provisions were drafted leads to a single conclusion: that if one of the three
exceptions mentioned in Article II(3) does not appear, the court is as a rule required to
order a stay of the proceedings); A. Samuels, Jurisdictional Problems in International
Commercial Arbitration 195 (1989) (Where the New York Convention applies, it is clear that
the court has no discretion as to whether to stay proceedings brought in breach of a valid
arbitral agreement.).
103) See2.03[B][2][a].
104) See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (U.S. S.Ct. 1985) (terms of 3 leave
no place for the exercise of discretion by a district court, but insteadmandate that
district courts shall direct the parties to proceed to arbitration on issues as to which an
arbitration agreement has been signed); Asghar v. Legal Servs. Commn [2004] EWHC 1803
(Ch) (English High Ct.) (investigation by Legal Services Commission stayed in respect of all
matters which under contract should be referred to arbitration); 1.03[B][1][b] et seq.
105) Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP
[2013] UKSC 35 (U.K. S.Ct.) (The negative aspect of an arbitration agreement is a feature
shared with an exclusive choice of court clause. In each case, the negative aspect is as
fundamental as the positive.).
[2013] UKSC 35, 22 (U.K. S.Ct.) (case-law also contains no support for JSCs argument that
the negative aspect of an arbitration agreement is enforceable only when an arbitration
is on foot or proposed).
107) See7.02[E].
108) See8.02[A].
26
109) See, e.g., Nanisivik Mines Ltd v. F.C.R.S. Shipping Ltd, [1994] 2 FC 662, 8 (Canadian Ct. App.)
(In both its ordinary meaning and in light of the object and purpose of the Act, shall
clearly means must not may.); Miramichi Pulp & Paper Inc. v. Canadian Pac. Bulk Ship
Servs. Ltd, [1992] 58 F.T.R. 81, 16 (Canadian Fed. Ct.); BC Navigation SA v. Canpotex
Shipping Servs. Ltd, [1987] 16 F.T.R. 79, 4 (Canadian Fed. Ct.) ([Article 8] imposes an
imperative duty upon the Court to refer to the parties to arbitration); City of Prince
George v. A.L. Sims & Sons Ltd, [1995] W.W.R. 503, 58 (B.C. Ct. App.); Kaverit Steel & Crane
Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 645 (Alberta Ct. App. 1992) (1994) (I am of the
view that the statute commands that what may go to arbitration shall go. No convenience
test limits references.); PetroKazakhstan Inc. v. Lukoil Overseas Kumkol BV, [2005] ABQB
789, 56 (Alberta Q.B.) ([C]ourts in this jurisdiction are required not to intervene in
matters governed by arbitration: UNCITRAL Model Law on International Commercial
Arbitration, Article 8(1).Accordingly, it would be inappropriate for this Court to make any
determination of Lukoils claims of breach of contract.); Cangene Corp. v. Octapharma AG,
[2000] W.W.R. 606, 13 (Manitoba Q.B.); Coop Intl Pte Ltd v. Ebel SA, XXVI Y.B. Comm. Arb.
831, 840 (Singapore High Ct. 1998) (2001) (Art. 8 of the Model Law requires a mandatory
stay of proceedings unless the court is satisfied that the arbitration agreement is null and
void, inoperative or incapable of being performed.); New Sound Indus. Ltd v. Meliga (H.K.)
Ltd, [2005] HKCA 7 (H.K. Ct. App.); Daily Win Engg Ltd v. Owners of Greenwood Terrace, XXX
Y.B. Comm. Arb. 168 (H.K. Ct. First Inst. 2001) (2005); F & D Bldg Servs. Engg Co. v. Chevalier
(E & M Contracting) Ltd, XXX Y.B. Comm. Arb. 164 (H.K. Ct. First Inst. 2001) (2005).
110) Dalimpex Ltd v. Janicki, (2003) 228 D.L.R.4th 179, 20 (Ontario Ct. App.).
111) Coop Intl Pte Ltd v. Ebel SA, XXVI Y.B. Comm. Arb. 832, 839 (Singapore High Ct. 1998) (2001).
112) See A. Broches, Commentary on the UNCITRAL Model Law on International Commercial
Arbitration Art. 8, 3 (1990). See alsoBeraudo, Case Law on Articles 5, 8, and 16 of the
UNCITRAL Model Arbitration Law, 23 J. Intl Arb. 101 (2006); P. Binder, International
Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions 2-087 (3d
ed. 2009); I. Dore, The UNCITRAL Framework for Arbitration in Contemporary Perspective 106
(1993); H. Holtzmann & J. Neuhaus, A Guide to the UNCITRAL Model Law on International
Work of UNCITRAL on Arbitration and Conciliation 73 (2d ed. 2004) (In the case the validity
[of the arbitration agreement] is not contested, the court will refer the parties to
arbitration.).
113) See2.03[B][2][a], pp. 322-46; 2.04[B]; UNCITRAL Model Law, Art. 1(2); Coop Intl Pte Ltd v.
Ebel SA, XXVI Y.B. Comm. Arb. 832, 847 (Singapore High Ct. 1998) (2001) (Article 8 is not
restricted to agreements providing for arbitration in that State and, thus, helps to give
universal recognition and effect to the commercial arbitration agreements). See also
Nanisivik Mines Ltd v. Canarctic Shipping Co., [1994] 113 D.L.R.4th 536, 8 (Canadian Ct.
App.) (court had no discretion in the circumstances but to refer the claim to arbitration
in London); Dalimpex Ltd v. Janicki, (2003) 228 D.L.R.4th 179, 20-21 (Ontario Ct. App.)
(Article 8s requirements mandatory where arbitration was to be held in Poland); D.G.
Jewelry Inc. v. Cyberdiam Canada Ltd, (2002) 21 C.P.C.5th 174, 28-29 (Ontario Super. Ct.)
(staying claims so that parties could arbitrate in, among other places, Toronto); China
Merchants Heavy Indus. Co. v. JGC Corp., [2001] 3 HKC 580, 585 (H.K. Ct. App.) (affirming
decision to stay proceedings pursuant to Hong Kong version of Article 8 and refer dispute
to arbitration in Japan); Tai Hing Cotton Mill Ltd v. Glencore Grain Rotterdam BV, [1995]
HKEC 424 (H.K. Ct. App.) (staying proceedings in Hong Kong in favor of arbitration in
Liverpool); Comandate Marine Corp. v. Pan Australia Shipping Pty Ltd, [2006] FCAFC 192
(Australian Fed. Ct.) (requiring lower court to refer parties to arbitration in London).
114) See2.03[B][2][a], pp. 322-46; 2.04[B]; New Sound Indus. Ltd v. Meliga (H.K.) Ltd, [2005]
HKCA 7 (H.K. Ct. App.); Aggressive Constr. Co. v. Data-Form Engg Ltd, [2009] HKCFI 854 (H.K.
Ct. First Inst.); Pac. Crown Engg Ltd v. Hyundai Engg & Constr. Co., [2003] 3 HKLRD 440 (H.K.
Ct. First Inst.); Getwick Engrs Ltd v. Pilecon Engg Ltd, [2002] 10-20 HKCU 1 (H.K. Ct. First
Inst.); Leviathan Shipping Co. v. Sky Sailing Overseas Co., [1998] 4 HKC 347, 354 (H.K. Ct. First
Inst.) (referring parties to arbitration in Hong Kong); Comtec Components Ltd v. Interquip
Ltd, [1998] HKEC 104 (H.K. Ct. First Inst.).
115) Southland Corp. v. Keating, 465 U.S. 1, 7 (U.S. S.Ct. 1984). See also Dean Witter Reynolds, Inc.
v. Byrd, 470 U.S. 213, 218 (U.S. S.Ct. 1985) (terms of 3 leave no place for the exercise of
discretion by a district court, but insteadmandate that district courts shall direct the
parties to proceed to arbitration on issues as to which an arbitration agreement has been
signed).
27
116) See, e.g., Asghar v. Legal Servs. Commn [2004] EWHC 1803 (Ch) (English High Ct.)
(investigation by Legal Services Commission stayed in respect of all matters which under
contract should be referred to arbitration); Judgment of 2 October 1931, DFT 57 I 295, 305
(Swiss Federal Tribunal) (negative effect [of arbitration] is the exclusion of the State
courts jurisdiction). See G. Petrochilos, Procedural Law in International Arbitration 27
(2004) (in truth, an arbitration agreement is principally a derogation clause (excluding
the jurisdiction of all courts in the world), whereas a forum-selection clause is primarily a
prorogation clause (enlarging the jurisdiction of the designated court)); A. van den Berg,
The New York Arbitration Convention of 1958 152 (1981) (main effect of an arbitration
agreement is the exclusion of the competence of the courts in favour of arbitration).
It is inaccurate to characterize the main effect or principal purpose of an arbitration
agreement as its negative consequences. The better characterization is that the positive
and negative effects of the arbitration agreement are co-equal and complementary:
neither is sensible without the other and both play fundamentally important roles in
ensuring fair, efficient resolution of the parties disputes.
117) See, e.g., A. Sanderson & Son v. Armour & Co. [1922] SLT 285, 290 (House of Lords) (If the
parties have contracted to arbitrate, to arbitration they must go.); WSG Nimbus Pte Ltd v.
Bd of Control for Cricket in Sri Lanka, [2002] 3 SLR 603, 86 (Singapore High Ct.) (if clause
19 is an arbitration agreement, continuation of the proceedings in the Colombo High
Court would constitute a breach by Sri Lanka of her obligations under [Article II of the
New York Convention]); Michaelson & Blanke, Anti-Suit Injunctions and the Recoverability
of Legal Costs as Damages for Breach of An Arbitration Agreement, 74(1) Arb. 12, 18 (2008)
(An exclusive jurisdiction or arbitration clause contains an implied negative obligation
not to litigate in any other forum.); Wessel & North Cohen, In Tune With Mantovani: The
Novel Case of Damages for Breach of An Arbitration Agreement, 2001 Intl Arb. L. Rev. 65,
68 (Thus, when a party to an arbitration agreement commences a substantive legal
action in any other forum on a matter that is within the arbitration agreement, there must
logically be a breach of that partys contractual obligation to resolve disputes by
arbitration.).
118) Some institutional arbitration rules contain provisions indicating the exclusivity of the
arbitral process. See, e.g., 2012 ICC Rules, Art. 34(6) (By submitting the dispute to
arbitration under the Rules, the parties undertake to carry out any award without delay
and shall be deemed to have waived their right to any form of recourse insofar as such
waiver can validly be made.); LCIA Rules, Art. 23(4); 2012 CIETAC Rules, Art. 47(9); DIFC-
LCIA Rules, Art. 23(4); 2013 SIAC Rules, Art. 28(9).
119) See1.02[B][2].
120) See9.04, pp. 1393-94. See also Pena Copper Mines Ltd v. Rio Tinto Co. [1911] All ER 209, 212
(English Ct. App.) (arbitration agreement entails probably an express negative, but
certainly an implied negativethat they will not sue in a foreign court).
121) Gabbanelli Accordions & Imp., LLC v. Gabbanelli, 575 F.3d 693, 695 (7th Cir. 2009) (A person
who having agreed to arbitrate instead brings a suit has broken his contract, and the
breach can be pleaded as a defense to his suit.); Versatile Housewares & Gardening Sys.,
Inc. v. Thill Logistics, Inc., 819 F.Supp.2d 230, 239 (S.D.N.Y. 2011) (clause creates an
obligation on the parties to bring all actions falling within the clauses scope, including
this action, in the chosen forum, and that [plaintiff] consequently breached this
obligation by bringing this action in [another forum]) (emphasis in original); Cent. Reserve
Life Ins. Co. v. Marello, 2000 WL 1474106, at *2 (E.D. Pa.) (Filing a lawsuit based on
arbitrable claims constitutes such a breach.), affd, 281 F.3d 219 (3d Cir. 2001).
122) See8.03[C][1]-[2], pp. 1278-79.
123) See, e.g.,Judgment of 31 May 2007, III ZR 22/06 (German Bundesgerichtshof); Judgment of 12
January 2006, III ZR 214/05 (German Bundesgerichtshof).
124) See, e.g., Sanpete Builders (S) Pte Ltd, [1989] SLR 164 (Singapore High Ct.); Re S. Materials
Holding (H.K.) Co., [2008] HKCFI 98 (H.K. Ct. First Inst.); Hoo Cheong Bldg Constr. Co. v. Jade
Union Inv. Ltd, [2004] HKCFI 21 (H.K. Ct. First Inst.); Liu Man Wai v. Chevalier (H.K.) Ltd, [2002]
HKCFI 399 (H.K. Ct. First Inst.); In re Mech Power Hong Kong China Ltd, [1996] HKCFI 307
(H.K. Ct. First Inst.).
125) See17.04[E]; Timoney Tech. Ltd v. ADI Ltd, [2007] VSC 402 (Victoria S.Ct.) (existence of
arbitration agreement did not prevent court from ruling on application seeking
disclosure of documents in aid of arbitration).
126) Judgment of 2 October 1931, DFT 57 I 295, 305 (Swiss Federal Tribunal).
127) See, e.g., InterGen NV v. Grina, 344 F.3d 134, 141 (1st Cir. 2003); Judgment of 8 August 1990,
XVII Y.B. Comm. Arb. 545, 547 (Italian Corte di Cassazione) (1992) (referring to effects of
arbitration agreement: its positive effects, i.e., referral of the dispute to arbitrators, and
its negative effects, i.e., exclusion of court jurisdiction in the Contracting States);
Sanders, Arbitration Law in Western Europe: A Comparative Survey, in M. Domke (ed.),
International Trade Arbitration: A Road to World-Wide Cooperation 137-38 (1958) (The
existence of an arbitration agreement deprives the court of its jurisdiction. Courts lose
their competence when the defendant relies on an arbitration agreement.).
128) See27.02[B][3][b].
129) As noted above, there is an exception to this principle in the case of provisional
measures, as to which concurrent jurisdiction exists. See8.03, p. 1270; 17.02[E], pp. 2457;
17.04[C][4], pp. 2545-47.
130) See7.03[I][3]; 8.03.
131) See7.03et seq.
28
132) See7.03[B] & [E].
133) See7.03[E]-[F]. Alternatively, Article VI(3) of the European Convention provides a
variation of this approach, requiring general deference to the arbitrators jurisdiction,
subject to an exception permitting discretionary interlocutory judicial consideration of
jurisdictional issues. European Convention, Art. VI(3); 7.02[A][2], pp. 1057-58.
134) Where an admittedly valid agreement to arbitrate jurisdictional disputes exists, different
considerations apply. As discussed above (see8.04[B]), courts should not be free to
engage in judicial consideration of jurisdictional issues where the parties have agreed to
arbitrate such matters (thus giving effect to the negative obligations of the agreement to
arbitrate matters of jurisdiction); in the absence of such an agreement, courts have
discretion not to engage in judicial consideration of such issues, even though the courts
would in principle be competent to do so, where reasons of efficiency and fairness argue
for an arbitral determination.
135) See3.03[F]; 7.02[F]. Most clearly, the French rule requiring judicial referral of all
jurisdictional objections to arbitration, after arbitral proceedings have commenced,
reflects a legislative preference regarding the proper allocation of initial competence
over, and the best forum for initial consideration of, such objections. See7.03[B].
136) See1.01[B][2] & [5]; 5.01[C][5]. In other jurisdictions, only a discretionary stay of
litigation was historically available for arbitration agreements providing for a foreign
arbitral seat. See R. Merkin, Arbitration Law 8.43 to 8.68 (1991 & Update August 2013).
137) See2.01[A][1]; 8.02[A][1].
138) See2.01[A][1][a]; 5.01[B]; 8.03[A][1]; Answers in Genesis of Kentucky, Inc. v. Creation
Ministries, 556 F.3d 459, 469 (6th Cir. 2009) (nothing discretionary about Article II(3) of the
Convention) (quoting McCreary Tire & Rubber Co. v. CEAT SpA, 501 F.2d 1032, 1037 (3d Cir.
1974)); InterGen NV v. Grina, 344 F.3d 134, 141 (1st Cir. 2003) (Given this regime, it clearly
appears that enforcing arbitration clauses under the New York Convention is an
obligation, not a matter committed to district court discretion.); Smith/Enron
Cogeneration Ltd, Pship v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 93 (2d Cir. 1999) (The
purpose behind this drafting choice is clear: the courts of a signatory to the Convention
should abide by its goal of enforcing international agreements to arbitrate disputes.);
Phoenix Bulk Carriers Ltd v. Oldendorff Carriers GmbH & Co., 2002 WL 31478198, at *2
(S.D.N.Y.) (this court must compel arbitration unless the making of the arbitration
agreement is in question); CanWest Global Commcns Corp. v. Mirkaei Tikshoret Ltd, 804
N.Y.S.2d 549, 562-63 (N.Y. Sup. Ct. 2005); The Rena K [1979] QB 377, 392-93 (QB) (English High
Ct.) (Section 1 of the Arbitration Act 1975, giving effect to [Article II(3) of the Convention],
compels the recognition and enforcement of convention (i.e., non-domestic) arbitration
agreements by requiring a court, except in certain specified cases, to stay any legal
proceedings brought in respect of a matter referred to arbitration under such
agreement.); Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., 86 FCR 374, 393 (Australian
Fed. Ct. 1998) (the Court must stay the proceedings and refer the parties to arbitration).
See A. van den Berg, The New York Arbitration Convention of 1958 135 (1981) (The
mandatory character of the referral by a court to arbitration pursuant to Article II(3) is an
internationally uniform rule.).
139) See2.03[C][1][a]; McMahon, Implementation of the United Nations Convention on Foreign
Arbitral Awards in the United States, 2 J. Mar. L. & Comm. 735, 748-49 (1971); Paulsson, The
New York Convention in International Practice Problems of Assimilation, in The New York
Convention of 1958 100, 103-04 (ASA Spec. Series No. 9 1996); A. van den Berg, The New York
Arbitration Convention of 1958 135-37 (1981). The only conditions are that the arbitration
agreement satisfy the jurisdictional requirements of the New York Convention
(see2.01[B]et seq.) and that it be valid and binding (seeChapter 5).
140) U.S. FAA, 9 U.S.C. 3 (If any suit or proceeding be broughtupon any issue referable to
arbitration under an agreement in writing for such arbitration, the court in which such suit
is pending, upon being satisfied that the issue involved in such suit or proceeding is
referable to arbitration under such agreement, shall on application of one of the parties
stay the trial of the action until such arbitration has been had in accordance with the
terms of the agreement.); Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (U.S. S.Ct.
1985); Hughes, Hooker & Co. v. Am. Steamship Owners Mut. Protection & Indem. Assn, Inc.,
2005 WL 1384055, at *4 (S.D.N.Y.) (district court has no discretion to deny a stay if a valid
agreement to arbitrate exists and the claims at issue come within the scope of that
agreement); Double Sunrise Inc. v. Morrison Mgt Specialists Inc., 149 F.Supp.2d 1039, 1045
(N.D. Ill. 2001); State v. Philip Morris USA, Inc., 2006 WL 3490937 (N.C. Super. Ct.).
141) English Arbitration Act, 1996, 9(4) (court shall grant a stay unless satisfied that the
arbitration agreement is null and void, inoperative, or incapable of being performed);
Fiona Trust & Holding Corp. v. Privalov [2007] EWCA Civ 20, 37 (English Ct. App.) ([if
arbitration agreement exists] stay must be granted, in the light of the mandatory shall in
section 9(4)), affd, [2007] UKHL 40 (House of Lords); Capital Trust Inv. Ltd v. Radio Design
TJ AB [2002] EWCA Civ 135 (English Ct. App.); Halki Shipping v. Sopex Oil [1998] 1 Lloyds Rep.
465 (English Ct. App.); Thames Valley Power Ltd v. Total Gas & Power Ltd [2005] EWHC 2208,
38 (QB) (English High Ct.) (Provided the applicant has acknowledged the legal
proceedings and has not taken any step in them to answer the substantive claim, the
court is bound to grant him a stay unless the Arbitration Agreement is null and void,
inoperative or incapable of being performed.).
29
142) Alberta International Commercial Arbitration Act, 7; Ontario International Commercial
Arbitration Act 9; GreCon Dimter Inc. v. J. R. Normand Inc., [2005] SCC 46 (Canadian S.Ct.);
Fibreco Pulp Inc. v. Star Shipping A/S, [2000] CanLII 15323 (Canadian Ct. App.); Dalimpex Ltd
v. Janicki, (2003) 228 D.L.R.4th 179 (Ontario Ct. App.); Automatic Sys. Inc. v. Bracknell Corp.,
[1994] CanLII 1871 (Ontario Ct. App.); Nanisivik Mines Ltd v. F.C.R.S. Shipping Ltd, [1994] 2 F.C.
662 (Ottawa Ct. App.); Tanar Indus. Ltd v. Kvaerner Enviropower Inc., [1994] ABCA 346
(Alberta Ct. App.); Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 645
(Alberta Ct. App. 1992) (1994); Gulf Canada Res. Ltd v. Arochem Intl Ltd, [1992] CanLII 4033
(B.C. Ct. App.). See also Nanisivik Mines Ltd v. Canarctic Shipping Co., [1994] 2 FC 662
(Canadian Ct. App.); Dongnam Oil & Fats Co. v. Chemex Ltd, [2004] FC 1732 (Canadian Fed.
Ct.); Arbella SA v. Aghia Markella, [1995] FCJ No. 723 (Canadian Fed. Ct.); Miramichi Pulp &
Paper Inc. v. Canadian Pac. Bulk Ship Servs. Ltd, [1992] CarswellNat 1219 (Canadian Fed.
Ct.); Coopers & Lybrand Ltd (Trustee) for BC Navigation SA (Bankrupt) v. Canpotex Shipping
Servs. Ltd, [1987] 16 F.T.R. 79 (Canadian Fed. Ct.).
143) Singapore International Arbitration Act, 2012, 6(2) (The court to which an application
has been made in accordance with subsection (1) shall make an order, upon such terms or
conditions as it may think fit, staying the proceedings unless it is satisfied that the
arbitration agreement is null and void, inoperative or incapable of being performed.);
Tjong Very Sumito v. Antig Invs. Pte Ltd, [2009] 4 SLR(R) 732, 743 (Singapore High Ct.) (If the
applicant can show that there is an applicable arbitration agreement, then the court
must grant a stay of proceedings.) (emphasis added); Coop Intl Pte Ltd v. Ebel SA, XXVI
Y.B. Comm. Arb. 832, 839 (Singapore High Ct. 1998) (2001) (Art. 8 of the Model Law requires
a mandatory stay of proceedings unless the court is satisfied that the arbitration
agreement is null and void, inoperative or incapable of being performed.).
144) Hong Kong Arbitration Ordinance, Arts. 20(1), (5); Tai Hing Cotton Mill Ltd v. Glencore Grain
Rotterdam BV, [1995] HKCA 626 (H.K. Ct. App.); Lin Meng v. Chen Shu Quan, [2012] HKCFI 328,
25 (H.K. Ct. First Inst.) (Once the conditions of [Article 8] are satisfied, a stay of the legal
action is mandatory); Rondabosh Intl Ltd v. China Ping An Ins. (H.K.) Co., [2009] HKCFI
1198, 5 (H.K. Ct. First Inst.); Ocean Park Corp. v. Proud Sky Co., [2007] HKCFI 1221 (H.K. Ct.
First Inst.); Good Year Profl Serv. Co. v. Penta-Ocean Constr. Co., [2002] HKCFI 786 (H.K. Ct.
First Inst.); F & D Bldg Servs. Engg Co. v. Chevalier (E & M Contracting), [2001] 3 HKCFI 824
(H.K. Ct. First Inst.); Glencore Intl AG v. Bright China Intl Ltd, [1998] HKCFI 878 (H.K. Ct. First
Inst.); Orienmet Minerals Co. v. Winner Desire Ltd, [1997] HKCFI 299 (H.K. Ct. First Inst.).
145) CMS Energy SDN RHB v. Poson Corp., [2008] MLJ 561, 562 (Malaysian High Ct.) (Under
section 10(1) of the [Arbitration Act 2005] the Court shall stay all proceedings before it in
respect of matter which is the subject of an arbitration agreement).
146) Pathak v. Tourism Transp. Ltd, [2002] 3 NZLR 681 (Auckland High Ct.).
147) Mugoya Constr. & Engg Ltd v. Natl Social Sec. Fund Bd of Trustees, Civil Suit 59 of 2005
(Nairobi High Ct. 2005).
148) See authorities cited 2.01[A][1][a], pp. 230-33; 5.01[B][2], pp. 640-43; 8.03[A][1], p. 1271 n.
101; 8.03[C][1], pp. 1279-80 nn. 140-47.
A few courts have suggested (wrongly) that the obligation to refer parties to arbitration is
only discretionary. See Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., 12(7) Mealeys Intl
Arb. Rep. C-1 (Australian Fed. Ct. 1997) (1997); CTA Intl Pty Ltd v. Sichuan Changhong Elec.
Co., [2002] VSC 374, 17 (Victoria S.Ct.) (dicta referring to Australian International
Arbitration Act, 1974, 7, which omitted only from text of local enactment of Article 8);
Australian Granites Ltd v. Eisenwerk Hensel Bayreuth Dipl.-Ing. Burkhardt GmbH, [2001]
1QdR 461 (Queensland S.Ct. 1998); M. Jacobs, International Commercial Arbitration in
Australia: Law and Practice 8.70 (1992). See also Governors Balloon Safaris Ltd v. Skyship
Co. County Council of Trans Mara, Civil Case No. 461 of 2008 (Nairobi High Ct.) (suggesting
that court may exercise discretion in choosing whether to stay litigation if it is in the
interest of justice and judicial process).
149) See7.03[E][6]; 7.03[I][3]; 9.02; 10.01[A].
150) French Code of Civil Procedure, Art. 1448(1) (When a dispute subject to an arbitration
is manifestly void or manifestly not applicable.) (emphasis added); E. Gaillard & J.
(1999).
151) Swiss Law on Private International Law, Art. 7 (if, in an arbitrable dispute, the parties
have concluded an arbitration agreement, the Swiss court must decline jurisdiction
unless) (emphasis added); Judgment of 6 August 2012, 4A_119/2012, 3.2 (Swiss Federal
Tribunal) (When a jurisdictional defense based on the arbitration agreement is raised
before the state courtthe court must deny jurisdiction unless a summary review of the
arbitration agreement leads to the conclusion that it is void, inoperative, or incapable of
being performed.This ensures that the decision of the arbitral tribunal as to its own
jurisdictionis not prejudged by the decision of the state court.); Volken, in D. Girsberger
et al. (eds.), Zrcher Kommentar zum IPRG Art. 7 n.47 (2d ed. 2004) (In case it has been
established that there is a binding arbitration agreement concerning an arbitrable
dispute, a Swiss judge who is nevertheless addressed with a claim, has to deny his
jurisdiction).
30
152) German ZPO, 1032(1) (a court before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if the respondent raises an objection prior to
the beginning of the oral hearing on the substance of the dispute, reject the action as
inadmissible unless the court finds that the arbitration agreement is null and void,
inoperative or incapable of being performed); Geimer, in R. Zller (ed.),
Zivilprozessordnung 1032, 1(f) (28th ed. 2010).
153) Netherlands Code of Civil Procedure, Art. 1022 (court seized of a dispute in respect of
which an arbitration agreement has been concluded shall declare that it has no
jurisdiction if a party invokes the existence of the said agreement before submitting a
defense, unless the agreement is invalid) (emphasis added).
154) Belgian Judicial Code, Art. 1682(1) (The Court before which is brought a dispute that is
also the object of an arbitration agreement shall declare itself without jurisdiction at the
request of a party, unless the arbitration agreement is invalid with regard to this dispute
or has ceased to exist.) (emphasis added).
155) Danisco A/S v. Novo Nordisk A/S, 2003 U.S. Dist. LEXIS 1842, at *2 (S.D.N.Y.). See also
Amizola v. Dolphin Shipowner, SA, 354 F.Supp.2d 689, 697 (E.D. La. 2004) (Because all of
the elements to compel arbitration are met, the motion to stay the litigation and to
compel arbitration is granted.); A. Sanderson & Son v. Armour & Co. 1922 SLT 285 (House
of Lords) (If the parties have contracted to arbitrate, to arbitration they must go.);
Capital Trust Inv. Ltd v. Radio Design TJ AB [2002] EWCA Civ 135, 54 (English Ct. App.) (On
an application under [9] the court shall grant a stay unless satisfied that the arbitration
agreement is null and void, inoperative, or incapable of being performed.); Union of
India v. Lief Hoegh & Co., IX Y.B. Comm. Arb. 405, 410 (Gujarat High Ct. 1982) (1984) (I do
not thinkthat there is any discretion which the Court enjoins when it is called upon to
decide whether the proceedings in the suit pertaining to a contract containing a foreign
arbitral clause should be stayed under Sect. 3 of the Foreign Awards Amendment Act
except in those contingencies which are specified in Sect. 3 itself. The said contingencies
are that the agreement is null and void, inoperative or incapable of being performed, or
in fact there is no dispute between the parties pertaining to the matter agreed to be
referred under the agreement.); Judgment of 7 September 2005, XXXI Y.B. Comm. Arb. 791,
794-95 (Israeli S.Ct.) (2006).
156) See1.01[B][4]-[5].
157) See1.01[C]; 1.04[A][1]; 2.01[A][1][a]; 5.01[B].
158) The Anaconda v. Am. Sugar Refining Co., 322 U.S. 42, 45 (U.S. S.Ct. 1943). See also Standard
Magnesium Corp. v. Fuchs, 251 F.2d 455, 458 (10th Cir. 1957) (If the agreement provides
that where one party refuses or fails to submit to arbitration, that an arbitrator may be
appointed and that the arbitration may proceed ex parte, and further provides for the
procedure to be followed in such an ex parte proceeding, there is no occasion to invoke
the remedy of 4. Such a remedy is necessary only in those cases where one party refuses
to participate in the arbitration and a court order is necessary in order for the arbitration
to proceed ex parte.).
159) See8.03[C][1].
160) See, e.g., United Labs., Inc. v. Abraham, [2002] CanLII 17847 (Ontario Super. Ct.); Judgment of
5 October 2006, D. Andrs v. Dez Carrillo SL, Case No. 399/2006 (Palma de Mallorca
Audiencia Provincial); Kolinker Indus. Equip. Ltd v. Longhill Indus. Ltd, [2004] HKDC 65 (H.K.
Dist. Ct.); Judgment of 17 April 2007, Hrvatsko Mirovinsko Osiguranje v. EDIS, Case No. XLVII
P-6756/04-3 (Croatian High Comm. Ct.); Judgment of 29 April 2001, Case No. VTS RH, P-
5168/01 (Croatian High Comm. Ct.).
161) See, e.g., In re Pharm. Ben. Managers Antitrust Litg., 700 F.3d 109, 116 (3d Cir. 2012); Marzano
v. Proficio Mortg. Ventures, LLC, 2013 WL 1789779, at *15 (N.D. Ill. 2013) (Absent a request to
compel arbitration and a showing that Plaintiffs have refused to arbitrate, this Court will
not compel arbitration sua sponte.); Lopardo v. Lehman Bros., Inc., 548 F.Supp.2d 450, 457
(N.D. Ohio 2008) (court may not sua sponte force parties to enforce an arbitration
agreement); Walker & Zanger (W. Coast) Ltd v. Stone Design SA, 4 F.Supp.2d 931 (C.D. Cal.
1997) (refusing to reverse default judgment because respondent failed to invoke
arbitration clause); Standard Tallow Corp. v. KILMgt A/S, 901 F.Supp. 147 (S.D.N.Y. 1995)
(finding parties agreement to arbitrate valid but refusing to provide relief because
respondents had not filed petition to compel arbitration); Mercury Ins. Group v. Super. Ct.
of San Bernardino County,965 P.2d 1178, 1185 (Cal. 1998) (A trial court is not obligated to
force [the parties] to contractual arbitration sua sponte. Indeed, from all that appears, it
is not authorized to do so.); Dalian Hualiang Enter. Group Co. v. Louis Dreyfus Asia Pte Ltd,
[2005] SGHC 161, 17 (Singapore High Ct.) ([A] court before which an action is brought in a
matter which is the subject of an arbitration agreement shall, if a party so requests not
later than when submitting his first statement on the substance of the dispute, refer the
parties to arbitration) (emphasis added).
162) Veeder, Laws and Court Decisions in Common Law Countries and the UNCITRAL Model Law,
in A. van den Berg (ed.), Preventing Delay and Disruption of Arbitration 169, 170-71 (ICCA
163) See8.03[C][1], pp. 1280-81; Sanders, Arbitration Law in Western Europe: A Comparative
Survey, in M. Domke (ed.), International Trade Arbitration: A Road to World-Wide
Cooperation 137-38 (1958) (The existence of an arbitration agreement deprives the court
of its jurisdiction. Courts lose their competence when the defendant relies on an
arbitration agreement.).
31
164) See8.03[C][1], pp. 1278-82; Contl Cas. Co. v. Am. Nat. Ins. Co., 417 F.3d 727, 732 n.7 (7th Cir.
2005) (proper course of action when a party seeks to invoke an arbitration clause is to
stay the proceedings pending arbitration rather than to dismiss outright); Bushley v.
Credit Suisse First Boston, 360 F.3d 1149, 1153 n.1 (9th Cir. 2004) (preferring stay of litigation
over dismissal); Lloyd v. Hovensa, LLC, 369 F.3d 263, 268-69 (3d Cir. 2004) (plain language
of 3 affords a district court no discretion to dismiss a case where one of the parties
applies for a stay pending arbitration); Precision Press Inc. v. MLP U.S.A., Inc., 620
F.Supp.2d 981, 995 (N.D. Iowa 2009) (plain text of 3 provides a district court no authority
to dismiss a case); Boateng v. Gen. Dynamics Corp., 473 F.Supp.2d 241, 252 (D. Mass. 2007)
(Defendants urge the Court to dismiss in favor of arbitration. The Court declines to do so.
Among other things, given the possibility that the arbitrator may conclude that
arbitration was in fact waived, and therefore may return the case to this Court, the Court
elects to stay the proceedings pending arbitration.); Doleman & Sons v. Ossett Corp.
[1912] 3 KB 257, 267 (English Ct. App.).
165) See, e.g., Sourcing Unlimited, Inc. v. Asimco Intl Inc., 526 F.3d 38, 48 (1st Cir. 2008) (Given
the history of this case and the delay occasioned, dismissal of the underlying complaint
is appropriate. There is no basis for the district court to supervise an arbitration which
will occur in China.); Alford v. Dean Witter Reynolds, 975 F.2d 1161, 1164 (5th Cir. 1992) (The
weight of authority clearly supports dismissal of the case when all of the issues raised in
the district court must be submitted to arbitration.); Acosta v. Fair Isaac Corp., 669
F.Supp.2d 716, 724 (N.D. Tex. 2009) (dismissing action with prejudice because all claims
were subject to valid arbitration agreement); RoadTechs Inc. v. MJ Highway Tech., Ltd, 79
F.Supp.2d 637, 640 (E.D. Va. 2000) (it is within the district courts discretion whether to
dismiss or stay an action after referring it to arbitration); SATCOM Intl Group plc v.
ORBCOMM Intl Partners, LP, 49 F.Supp.2d 331, 337 n.4 (S.D.N.Y. 1999) ([T]here was
previously an open question as to whether the court that orders arbitration under the
Convention must dismiss the action or may retain jurisdiction in aid of arbitration.
Nonetheless, it now appears that the Court may retain jurisdiction and stay the action
under its inherent power to control its docket.), affd, 205 F.3d 1324 (2d Cir. 1999).
166) See Chamois v. Countrywide Home Loans, 2003 WL 23022033, at *5 (S.D.N.Y.) (electing to
stay litigation pending arbitration, rather than dismiss it, because granting a stay, which
is an unappealable interlocutory order, is preferable to dismissing an action because
[u]nnecessary delay of the arbitral process through appellate review is disfavored)
(quoting Salim Oleochem. v. M/V Shropshire, 278 F.3d 90, 93 (2d Cir. 2002)). See also Ibeto
Petrochem. Indus., Ltd v. M/T Beffen, 412 F.Supp.2d 285, 292 (S.D.N.Y. 2005) (same).
167) Some U.S. lower courts adopted a so-called intertwining doctrine, which provided that
[w]hen arbitrable and nonarbitrable claims arise out of the same transaction, and are
sufficiently intertwined factually and legally, [a] district courtmay in its discretion deny
arbitration as to the arbitrable claims and try all the claims together in federal court.
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 216-17 (U.S. S.Ct. 1984).
168) See Gergel v. High View Homes, LLC, 996 P.2d 233, 234 (Colo. App. 1999) (The purpose of the
intertwining doctrine is to prevent inconsistent determinations by different forums. If the
factual and legal issues are inextricably intertwined, then the claims must not be severed
because severance could result in an arbitrator infringing upon a courts duty to decide
the non-arbitrable claim.), overruled, Ingold v. AIMCO/Bluffs, LLC Apts, 159 P.3d 116, 125
(Colo. S.Ct. 2007) (The intertwining doctrine unreasonably interferes with the parties
decision to arbitrate their disputes, because it allows the trial court to negate the effect
of an arbitration clause without a statutory basis for doing so.).
169) See, e.g., Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898 (5th Cir. 2005); Sedco, Inc.
v. Petroleos Mexicanos Mexican Natl Oil Co., 767 F.2d 1140 (5th Cir. 1985); Minn. Supply Co.
v. Mitsubishi Caterpillar Forklift Am. Inc., 2011 WL 4590410 (D. Minn.) (FAAs mandate of
enforcement of arbitration agreements requires arbitration even if it results in inefficient
piecemeal proceedings in different fora); Wellman, Inc. v. Square D Co., 620 S.E.2d 86 (S.C.
Ct. App. 2005).
170) Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (U.S. S.Ct. 1985). See also KPMG LLP v.
Cocchi, 132 S.Ct. 23, 24 (U.S. S.Ct. 2011) (per curiam) ([The FAA] has been interpreted to
require that if a dispute presents multiple claims, some arbitrable and some not, the
former must be sent to arbitration even if this will lead to piecemeal litigation.From
this it follows that state and federal courts must examine with care the complaints
seeking to invoke their jurisdiction in order to separate arbitrable from nonarbitrable
claims. A court may not issue a blanket refusal to compel arbitration merely on the
grounds that some of the claims could be resolved by the court without arbitration.).
For an anomalous U.S. lower court decision, in unusual circumstances, staying arbitration
of disputes concededly subject to arbitration, see Oracle Am., Inc. v. Myriad Group AG, C
10-05604 SBA (N.D. Cal. 2012) (ordering stay of arbitration of claims subject to arbitration
on grounds that there was some uncertainty as to precisely what claims were
arbitrable).
171) Baggesen v. Am. Skandia Life Assur. Corp., 235 F.Supp.2d 30 (D. Mass. 2002); Bro Tech Corp.
v. European Bank for Reconstr. & Dev., 2000 U.S. Dist. LEXIS 17049 (E.D. Pa.).
32
172) See8.03[C][4], p. 1287; In re Cotton Yarn Antitrust Litg., 505 F.3d 274, 293 n.12 (4th Cir. 2007);
AgGrow Oils, LLC v. Natl Union Fire Ins. Co., 242 F.3d 777 (8th Cir. 2001); Toledano v.
OConnor, 501 F.Supp.2d 127, 154 (D.D.C. 2007); Axa Equitable Life Ins. Co. v. Infinity Fin.
Group, LLC, 608 F.Supp.2d 1330 (S.D. Fla. 2009); Sunopta, Inc. v. Abengoa Bioenergy New
Techs., Inc., 2008 WL 782656 (E.D. Mo.); Filson v. Radio Advertising Mktg Plan, LLC, 553
F.Supp.2d 1074 (D. Minn. 2008); Geo Vantage of Ohio, LLC v. Geovantage, Inc., 2006 U.S. Dist.
LEXIS 63496 (S.D. Ohio); Ballard v. Corinthian Colleges, Inc., 2006 U.S. Dist. LEXIS 57699
(W.D. Wash.); MPA Constr., Inc. v. XL Specialty Ins. Co., 349 F.Supp.2d 934 (D. Md. 2004);
Humbarger v. Law Co., 2002 U.S. Dist. LEXIS 4702 (D. Kan.); The Nissan Fire & Marine Ins. Co.
v. Fortress Re, Inc., 2002 U.S. Dist. LEXIS 19542, at *15 (M.D.N.C.) (granting discretionary stay
of trial proceedings, but not discovery).
173) Dodwell & Co. v. Moss Sec., XIX Y.B. Comm. Arb. 615 (Australian Fed. Ct.) (1990). See also CTA
Intl Pty Ltd v. Sichuan Changhong Elec. Co., [2002] VSC 374 (Victoria S.Ct.) (granting
discretionary stay of all litigation where some or most claims were clearly subject to
arbitration); Judgment of 7 September 2005, XXXI Y.B. Comm. Arb. 791, 795 (Israeli S.Ct.)
(2006) (existence [in a national court litigation] of a party who is not a party to the
arbitration agreement, does not make the existing arbitration agreement between the
other parties, whether in whole or in part, null and void, inoperative or an agreement
incapable of being performed).
174) See authorities cited 2.01[A][1][a], pp. 230-33; 5.01[B][2], pp. 640-43; 7.03, p. 1271 n. 101;
8.03[C][1], pp. 1278-82.
175) Fibreco Pulp Inc. v. Star Shipping A/S, [2000] CanLII 15323 (Canadian Ct. App.); Canada (AG)
v. Marineserve MG Inc., [2002] NSSC 147 (Nova Scotia S.Ct.); TheCity of Prince George v. A.L.
Sims & Sons Ltd, [1995] CanLII 2487 (B.C. Ct. App.); BWV Invs. Ltd v. Saskferco Prods. Inc.,
[1994] CanLII 4557 (Saskatchewan Ct. App.); Kaverit Steel & Crane Ltd v. Kone Corp., [1992]
ABCA 7 (Alberta Ct. App.); Boart Sweden AB v. NYA Stromnes AB, (1988) 41 B.L.R. 295
(Ontario Super. Ct.). Canadian courts have also held that where the parties have agreed to
arbitrate some, but not all, of the disputes between them, they will stay litigation of all
such matters pending outcome of the arbitral proceedings. Nanisivik Mines Ltd v. F.C.R.S.
Shipping Ltd, [1994] 2 F.C. 662 (Ottawa Ct. App.).
176) In one Canadian decision, the court held that arbitration would not be required in a
dispute where some, but not all, parties to a Canadian litigation were subject to an
arbitration agreement. The Court reasoned, incorrectly, that all of these issues will have
to be faced again when either party brings its recognition and enforcement application.
Kaverit Steel & Crane Ltd v. Kone Corp., XVIII Y.B. Comm. Arb. 346, 352 (Alberta Q.B. 1991)
(1993). That decision was reversed on appeal. Kaverit Steel & Crane Ltd v. Kone Corp., XIX
Y.B. Comm. Arb. 643 (Alberta Ct. App. 1992) (1994). See also Socit du Port Ferroviaire de
Baie-Comeau Hauterive v. Jean Fournier Inc., [2010] QCCA 2161 (Qubec Ct. App.) (holding
that courts have discretionary power to require that all claims be resolved in single forum
and may either refer all parties to arbitration or refer no party to arbitration (if it
appears preferable that all claims be resolved in litigation)); Socit de Cognration de
St-Flicien, Socit en Commandite/St-Felicien Cogeneration LP v. Indus. Falmec Inc., [2005]
QCCA 441 (Qubec Ct. App.); Socit Asbestos Limite v. Charles Lacroix, [2004] CanLII 21635
(Qubec Ct. App.); Dcarel Inc. v. Concordia Project Mgt Ltd, Case No. J.E. 96-1612 (Qubec
Ct. App. 1996); Location Imafa, Sec v. Fedex Ground Package Sys. Ltd, [2010] QCCS 2829
(Qubec Super. Ct.). See Griffin v. Dell Canada Inc., (2010) 64 B.L.R.4th 199 (Ontario Ct. App.)
(in domestic case where 70% of class action claimants were consumers, whose arbitration
agreements were held unenforceable under Consumer Protection Act, 2002, court refuses
to stay litigation of claims by remaining 30% of non-consumer claimants on grounds of
efficiency).
177) See, e.g.,Sopac Italiana SpA v. Bukama GmbH, II Y.B. Comm. Arb. 248 (Milan Tribunale)
(1977); Governors Balloon Sararis Ltd v. Skyship Co. County Council of Trans, Civil Case No.
461 of 2008 (Nairobi High Ct.).
179) Cairns, The Spanish Application of the UNCITRAL Model Law on International Commercial
Arbitration, 22 Arb. Intl 573, 584 (2006).
180) See7.03[E][6]; 7.03[F].
181) See7.02[A][2]; European Convention, Art. VI(3) (Where either party to an arbitration
agreement has initiated arbitration proceedings before any resort is had to a court,
courts of Contracting States subsequently asked to deal with the same subject-matter
between the same partiesshall stay their ruling on the arbitrators jurisdiction until the
arbitral award is made, unless they have good and substantial reasons to the contrary.).
182) See cases cited 8.03[C][4], pp. 1287-88 nn. 183-88. See also Alghanim v. Alghanim, 828
F.Supp.2d 636, 664 (S.D.N.Y. 2011) (where arbitrable and nonarbitrable claims arise out of
same set of facts, discretionary stay of litigation is usually appropriate); Fibreco Pulp Inc.
v. Star Shipping A/S, [1998] F.C.J. No. 297 (Canadian Fed. Ct.) (discretionary stay of litigation
involving nonparties, for reasons of judicial economy); Kvaerner Enviropower Inc. v. Tanar
Indus. Ltd, (1994) 24 Alta. L.R.3d 365 (Alberta Ct. App.); Condominiums Mont St.-Sauveur Inc.
v. Les Constr. Serge Sauve Ltee, [1990] R.J.Q. 2783 (Qubec Ct. App.).
33
183) As U.S. courts have concluded, a stay of litigation under 3 of the FAA can only bind
persons that are party to an arbitration agreement. See IDS Life Ins. Co. v. Sun Am., Inc.,
103 F.3d 524, 530 (7th Cir. 1996); Coastal (Bermuda) Ltd v. E.W. Saybolt & Co., 761 F.2d 198,
203 (5th Cir. 1985) (3 cannot be the source of the district courts authority to stay a claim
between [nonparties]); Am. Home Assur. Co. v. Vecco Concrete Constr. Co., 629 F.2d 961,
964 (4th Cir. 1980); C. Itoh & Co. v. Jordan Intl Co., 552 F.2d 1228 (7th Cir. 1977); Sam Reisfeld
& Son Imp. Co. v. SA Eteco, 530 F.2d 679 (5th Cir. 1976); Hilti, Inc. v. Oldach, 392 F.2d 368 (1st
Cir. 1968); Nederlandse Erts-Tankersmaatschappij NV v. Isbrandtsen Co., 339 F.2d 440 (2d
Cir. 1964); A.O.A. v. Doe Run Res. Corp., 2011 WL 6091724, at *5 (E.D. Mo.) (Even if a stay is
not mandatory under the theory of direct-benefits estoppel, it could still be granted as a
discretionary matter.); Alghanim v. Alghanim, 828 F.Supp.2d 636 (S.D.N.Y. 2011); Armco
Steel Co. v. CSX Corp., 790 F.Supp. 311 (D.D.C. 1991); Dale Metals Corp. v. Kiwa Chem. Indus.
Co., 442 F.Supp. 78, 81-82 (S.D.N.Y. 1977) (stay is appropriate even though it affects parties
who are not bound to arbitrate). Compare Am. Shipping Line, Inc. v. Massan Shipping
Indus., Inc., 885 F.Supp. 499 (S.D.N.Y. 1995) (refusing to stay litigation of nonarbitrable
claims, on grounds that, although common issues were involved, nonparty to arbitration
would not be bound by award); Montauk Oil Transp. Corp. v. SS Mut. Underwriting Assn
(Bermuda) Ltd, 859 F.Supp. 669 (S.D.N.Y. 1994) (refusing to stay action pending arbitration,
where action involved nonparty).
184) Fibreco Pulp Inc. v. Star Shipping A/S, [1998] F.C.J. No. 297 (Canadian Fed. Ct.); Navionics Inc.
v. Flota Maritima Mexicana SA, [1989] 26 F.T.R. 148 (Canadian Fed. Ct.); Kvaerner
Enviropower Inc. v. Tanar Indus. Ltd, (1994) 24 Alta.L.R.3d 365 (Alberta Ct. App.).
185) See, e.g., Am. Recovery Corp. v. Computerized Thermal Imaging, 96 F.3d 88 (4th Cir. 1996)
(decision to stay nonarbitrable claims is at trial courts discretion); Collins Radio Co. v. Ex-
Cell-O Corp., 467 F.2d 995, 1000 (8th Cir. 1972) (granting discretionary stay of litigation of
two nonarbitrable claims pending arbitration of related claim); Maritima de Ecologia, SA
de CV v. Sealion Shipping Ltd, 2011 WL 1465744 (S.D.N.Y.) (granting discretionary stay
pending arbitration of issues that would have significant bearing on litigation); Cobra N.
Am., LLC v. Cold Cut Sys. Svenska, 639 F.Supp.2d 1217 (D. Colo. 2008) (granting discretionary
stay of actions related to ongoing arbitration in Sweden because arbitral tribunals
decision would likely be helpful to national court); Chempower, Inc. v. Robert McAlpine,
Ltd, 849 F.Supp. 459, 461 (S.D. W.Va. 1994) (it is true that the arbitrators findings will not
be binding as to those not parties to the arbitration, [but] considerations of judicial
economy and avoidance of confusion and possible inconsistent results nonetheless
militate in favor of granting a stay of the entire action) (quoting Am. Home Assur. Co. v.
Vecco Concrete Constr. Co., 629 F.2d 961, 964 (4th Cir. 1980)); Home Life Ins. Co. v. Kaufman,
547 F.Supp. 833, 835 (S.D.N.Y. 1982) (ordering stay of litigation of nonarbitrable issues
where: the party seeking the stay can demonstrate that he will not hinder the
arbitration; that the arbitration will be concluded within a reasonable time; and that the
delay will not work an undue hardship on the party opposing the stay). But see Armco
Steel Co. v. CSX Corp., 790 F.Supp. 311, 316 (D.D.C. 1991) (presumption that the arbitration
and the lawsuit will each proceed in its normal course) (quoting Pensacola Constr. v. St.
Paul Fire & Marine Ins. Co., 705 F.Supp. 306, 308 (W.D. La. 1988).
186) See, e.g., Simmonds Capital Ltd v. Eurocom Intl Ltd, [1998] 144 F.T.R. 230 (Canadian Fed.
Ct.) (confirming inherent authority to stay claims not subject to arbitration, pending
related arbitration, but declining to exercise power); Contl Res. Inc. v. E. Asiatic Co., XX
Y.B. Comm. Arb. 278 (Canadian Fed. Ct. 1994) (1995).
187) See, e.g.,Judgment of 7 July 1987, 1988 Rev. arb. 649 (Paris Cour dappel); E. Gaillard & J.
(1999) (Paris Court of Appeals was asked to set aside the arbitrators decision not to stay
proceedings pending the outcome of an action to set aside their interim award on
jurisdiction).
188) See, e.g., In re Cotton Yarn Antitrust Litg., 505 F.3d 274, 293 n.12 (4th Cir. 2007) (In some
casesit may be advisable to stay litigation among the nonarbitrating parties pending
the outcome of the arbitration. That decision is one left to the district courtas a matter
of its discretion to control its docket.) (quoting Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 20 n.23 (U.S. S.Ct. 1983)); Natl Iranian Oil Co. v. Mapco Intl, Inc.,
983 F.2d 485, 491 (3d Cir. 1992); Webb v. R. Rowland & Co., 800 F.2d 803, 808 (8th Cir. 1986);
Nederlandse Erts-Tankersmaatschappij NV v. Isbrandtsen Co., 339 F.2d 440 (2d Cir. 1964);
Fibreco Pulp Inc. v. Star Shipping A/S, [1998] F.C.J. No. 297 (Canadian Fed. Ct.); Navionics Inc.
v. Flota Maritima Mexicana SA, [1989] 26 F.T.R. 148 (Canadian Fed. Ct.); Kvaerner
Enviropower Inc. v. Tanar Indus. Ltd, (1994) 24 Alta.L.R.3d 365 (Alberta Ct. App.).
189) See cases cited 7.03[E][6], pp. 1190-93; 8.03[C][4], p. 1287 n. 183.
190) Some national courts have raised this issue without deciding it. See Philip Alexander Sec.
& Futures Ltd v. Bamberger [1996] CLC 1757 (English Ct. App.); Aggeliki Charis Compania
Maritime SA v. Pagnan SpA (The Angelic Grace) [1995] 1 Lloyds Rep. 87, 94 (English Ct. App.).
191) See1.04[A][1]; 2.01[A][1][a]; 5.01[B][2]; New York Convention, Arts. II(1), (3). See
also26.05[C][8][b].
192) WSG Nimbus Pte Ltd v. Bd of Control for Cricket in Sri Lanka, [2002] 3 SLR 603, 86
(Singapore High Ct.).
193) WSG Nimbus Pte Ltd, [2002] 3 SLR 603, 65.
34
194) Judgment of 19 December 1997, Compaia Minera Condesa SA et Compaia de Minas
Buenaventura SA v. BRGM-Prou SAS, DFT 124 III 83, 86-87 (Swiss Federal Tribunal). See
Geisinger & Lvy, Lis Alibi Pendens in International Commercial Arbitration, in ICC, Complex
Arbitrations 53, 56, n.15 (ICC Ct. Bull. Spec. Supp. 2003); Perret, Parallel Actions Pending
Before An Arbitral Tribunal and A State Court: The Solution Under Swiss Law, in Arbitral
Tribunals or State Courts: Who Must Defer to Whom? 65, 70-72 (ASA Spec. Series No. 15
2001).
195) Judgment of 19 December 1997, Compaia Minera Condesa SA et Compaia de Minas
Buenaventura SA v. BRGM-Prou SAS, DFT 124 III 83, 86-87 (Swiss Federal Tribunal).
The Swiss Federal Tribunal based its ruling on dictum in one of its previous decisions
holding that the lis pendens provision of Article 9 of the Swiss Law on Private International
Law could also be applied by analogy to arbitral proceedings. Judgment of 20 December
1995, DFT 121 III 495 (Swiss Federal Tribunal). See27.02[B][2]. The application of the
priority principle under Article 9 to cases of parallel proceedings between a foreign court
and an arbitral tribunal sitting in Switzerland was subsequently confirmed by the Swiss
Federal Tribunal in the Fomento decision. Judgment of 14 May 2001, Fomento de
Construcciones y Contratas SA v. Colon Container Terminal SA, DFT 127 III 279 (Swiss Federal
Tribunal); See27.02[B][2]; 27.03[B][2][d].
196) See27.02[B][2]; 27.03[B][2][d].
197) CBS Corp. v. WAK Orient Power & Light Ltd, 168 F.Supp.2d 403 (E.D. Pa. 2001) (WAKs
expressed intention to attempt to obtain and register in the courts of the United States of
America, without leave of this court, a foreign judgment arising from a subject matter
relating to the arbitral award would run afoul of this courts judgment enforcing the
Arbitral Award as well as the fundamental principles undergirding the Convention.); Am.
Constr. Mach. & Equip. Corp. v. Mechanised Constr. of Pakistan, Ltd, 828 F.2d 117 (2d Cir.
1987).
198) Tracomin SA v. Sudan Oil Seeds [1983] Lloyds Rep. 384 (English Ct. App.).
199) See, e.g., Through Transp. Mut. Ins. Assn (Eurasia) Ltd v. New India Assur. Assn Co. [2004]
EWCA Civ 1598 (English Ct. App.); Aggeliki Charis Compania Maritima SA v. Pagnan SpA (The
Angelic Grace) [1995] 1 Lloyds Rep. 87, 94 (English Ct. App.); L. Collins et al. (eds.), Dicey,
Morris and Collins on The Conflict of Laws 16-093 (15th ed. 2012).
200) For commentary, see Bedard & Mascarenhas, Comverse, Inc.: Methodological Issues in
Anti-Suit Injunctions, 22(2) Mealeys Intl Arb. Rep. 1 (2007); Collins, Anti-Suit Injunctions
and the Arbitration Process, in Arbitral Tribunals or State Courts: Who Must Defer to Whom?
85 (ASA Spec. Series No. 15 2001); E. Gaillard (ed.), Anti-Suit Injunctions in International
Arbitration (2005); Hascher, Injunctions in Favor of and Against Arbitration, 21 Am. Rev. Intl
Arb. 189 (2010); Phull, U.S. Anti-Suit Injunctions in Support of International Arbitration: Five
Questions American Courts Ask, 28 J. Intl Arb. 21 (2011); Smith & Freeman, Anti-Suit
Injunctions in Europe: Another Advantage of Arbitration, 20(3) Mealeys Intl Arb. Rep. 45;
Stacher, You Dont Want to Go There Antisuit Injunctions in International Commercial
Arbitration, 23 ASA Bull. 640 (2005).
201) See8.02[C].
202) See5.01[C][5].
203) See generally G. Born & P. Rutledge, International Civil Litigation in United States Courts
567 (5th ed. 2011); L. Collins et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws
12-090 to 12-092 (15th ed. 2012). The standards for obtaining an antisuit injunction vary
from jurisdiction to jurisdiction, but typically require a showing of an identity of parties
and issues, in the domestic and foreign forums, together with some showing of
oppression, violation of public policy, or the like. Ibid.
204) G. Born & P. Rutledge, International Civil Litigation in United States Courts 567 (5th ed.
2011). Arbitral tribunals also occasionally issue antisuit injunctions. See17.02[G][4][j].
205) Pena Copper Mines Ltd v. Rio Tinto Co. [1911-13] All ER 209, 212 (English Ct. App.) (enjoining
English party not to proceed with suit in Spain against Belgian party in violation of
arbitration agreement: It is beyond all doubt that this Court has jurisdiction to restrain
the Rio Tinto Co. from commencing or continuing proceedings in a foreign court if those
proceedings are in breach of contract.); Collins, Anti-Suit Injunctions and the Arbitration
Process, in Arbitral Tribunals or State Courts: Who Must Defer to Whom? 85 (ASA Spec.
Series No. 15 2001).
206) See Airbus Indus. GIE v. Patel [1998] 1 Lloyds Rep. 631 (House of Lords).
35
207) Aggeliki Charis Compania Maritime SA v. Pagnan SpA (The Angelic Grace) [1995] 1 Lloyds
Rep. 87, 96 (English Ct. App.). See also Sulamrica Cia Nacional De Seguros SA v. Enesa
Engenharia SA [2012] EWCA Civ 638 (English Ct. App.) (injunction restraining Brazilian
litigation based on English arbitration agreement); AES Ust-Kamenogorsk Hydropower
Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA 647 (English Ct. App.)
(injunction restraining Kazakhstan litigation based on English arbitration agreement),
affd, [2013] UKSC 35, 23 (U.K. S.Ct.) (Both prior to the Arbitration Act 1996 and indeed
subsequently until the present case the negative aspect was well recognised, and it
was well established that the English courts would give effect to it, where necessary by
injuncting foreign proceedings brought in breach of either an arbitration agreement or an
exclusive choice of court clause. Further, such relief was treated as the counterpart of the
statutory power to grant a stay of domestic proceedings to give effect to an arbitration
agreement.); Midgulf Intl Ltd v. Groupe Chimiche Tunisien [2010] EWCA Civ 66 (English Ct.
App.) (issuing antisuit injunction against proceedings in Tunisia); Starlight Shipping Co. v.
Tai Ping Ins. Co. [2007] EWHC 1893 (QB) (English High Ct.) (issuing antisuit injunction to
prevent litigation of merits of dispute in Chinese courts before jurisdictional challenges
could be considered by arbitral tribunal in English-seated arbitration); C v. D [2007] EWHC
1541, 53 (Comm) (English High Ct.) (issuing antisuit injunction against action in U.S. courts
to annul award made in England, where insurance policy was governed by New York law
but disputes were to be finally and fully determined in London, England under the
provisions of the English Arbitration Act; no right to seek to annul award in New York:
Such a challenge usurps the function of the English court which has power to grant
injunctions to protect its own jurisdiction and the integrity of the arbitration process. In
such a case there is an infringement of the legal right of [the Claimant] (both contractual
and statutory rights) under English law and an abuse of the process of this court in the
usurpation of its exclusive jurisdiction to supervise arbitrations with their seat in this
country.); Elektrim SA v. Vivendi Universal SA [2007] EWHC 571, 52 (Comm) (English High
Ct.) (court has jurisdictionto grant an injunction to restrain a party from engaging in
court proceedings in another jurisdiction, in breach of an English arbitration clause); XL
Ins. Ltd v. Owens Corning [2000] 2 Lloyds Rep. 500 (QB) (English High Ct.); Toepfer Intl
GmbH v. Coc. Cargill France [1997] 2 Lloyds Rep. 98 (QB) (English High Ct.).
208) World Pride Shipping Ltd v. Daiichi Chuo Kisen Kaisha [1984] 2 Lloyds Rep. 489, 498 (QB)
(English High Ct.) ([T]he American court has not yet ruled on the joint motion for
continuance [of litigation].It seems to me that in those circumstances it would be much
better that the [U.S.] District Court should itself rule on the motion for continuance and, if
it thinks fit, stay all further proceedings on [the counterclaim]rather than I should seek
to preempt, and perhaps even seem to dictate the decision of a foreign Court.); L. Collins
et al. (eds.), Dicey, Morris and Collins on The Conflict of Laws 1-008 (15th ed. 2012). See
also U&M Mining Zambia Ltd v. Konkola Copper Mines plc [2013] EWHC 260 (Comm) (English
High Ct.) (refusing to issue antisuit injunction to restrain action in Zambian courts for
interim relief, notwithstanding existence of English arbitration).
209) See, e.g., Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyds Rep. 509, 48 (English Ct. App.)
(party suing in the non-contractual forum must show strong reasons for [breaching the
arbitration agreement] or he faces the prospect of an injunction being granted against
him); 8.03[C][6][a].
210) See8.03[C][6][e].
211) C v. D [2007] EWHC 1541 (Comm) (English High Ct.).
212) Joint Stock Asset Mgt Co. Ingosstrakh-Invs. v. BNP Paribas SA [2012] EWCA Civ 644 (English
Ct. App.).
[2013] UKSC 35, 48 (U.K. S.Ct.) (Where an injunction is sought to restrain foreign
proceedings in breach of an arbitration agreement whether on an interim or a final
basis and whether at a time when arbitral proceedings are or are not on foot or proposed
the source of the power to grant such an injunction is to be found not in section 44 of the
1996 Act, but in section 37 of the 1981 [Senior Courts] Act. Such an injunction is not for the
purposes of and in relation to arbitral proceedings, but for the purposes of and in
relation to the negative promise contained in the arbitration agreement not to bring
foreign proceedings, which applies and is enforceable regardless of whether or not
arbitral proceedings are on foot or proposed.).
214) See WSG Nimbus Pte Ltd v. Bd of Control for Cricket in Sri Lanka, [2002] 3 SLR 603
(Singapore High Ct.); Skandia Intl Ins. Co. v. Al Amana Ins. & Reins. Co., XXIV Y.B. Comm.
Arb. 615, 615 (Bermuda S.Ct. 1994) (1999) (this Court has jurisdiction to restrain foreign
legal proceedings brought in breach of an arbitration agreement).
215) WSG Nimbus Pte Ltd, [2002] 3 SLR 603, 637. See also Tjong Very Sumito v. Antig Invs. Pte Ltd,
[2009] 4 SLR(K) 732 (Singapore Ct. App.).
216) The Singaporean approach rests on the view that the New York Convention affirmatively
obligates states to enjoin litigations brought in violation of valid arbitration agreements,
referring to a duty to uphold [such] agreement[s]. WSG Nimbus Pte Ltd, [2002] 3 SLR 603,
637.
217) See8.02[C].
218) Amaprop Ltd v. Indiabulls Fin. Servs. Ltd, 2010 WL 1050988, at *4 (S.D.N.Y.).
36
219) See, e.g., LAIF X SPRL v. Axtel, SA de CV, 390 F.3d 194 (2d Cir. 2004); Paramedics
Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645 (2d Cir.
2004); Travelport Global Distribution Sys. BV v. Bellview Airlines Ltd, 2012 WL 3925856
(S.D.N.Y.); Stolt Tankers BV v. Allianz Seguros, SA, 2011 WL 2436662 (S.D.N.Y.); Amaprop Ltd
v. Indiabulls Fin. Servs. Ltd, 2010 WL 1050988 (S.D.N.Y.) (granting motion to compel
arbitration and antisuit injunction, where respondent had procured ex parte orders
enjoining arbitration in its home courts, which were not arbitral seat); Comverse, Inc. v.
Am. Telecomms., Inc. Chile SA, 2006 U.S. Dist. LEXIS 76791 (S.D.N.Y.) (declining to issue
antisuit injunction against proceedings before Chilean antitrust authorities); Affymax, Inc.
v. Johnson & Johnson, 420 F.Supp.2d 876 (N.D. Ill. 2006); SG Avipro Fin. Ltd v. Cameroon
Airlines, 2005 U.S. Dist. LEXIS 11117 (S.D.N.Y.); Empresa Generadora de Electricidad ITABO, SA
v. Corporacin Dominicana de Empresas Elctricas Estatales, 2005 WL 1705080 (S.D.N.Y.);
Ibeto Petrochem. Indus., Ltd v. M/T Beffen, 412 F.Supp.2d 285 (S.D.N.Y. 2005); Pepsico Inc. v.
Oficina Cent. de Asesoria y Ayuda Tecnica, 945 F.Supp. 69 (S.D.N.Y. 1996) (rejecting
application for antisuit injunction). See also Bedard & Mascarenhas, Comverse, Inc.:
Methodological Issues in Anti-Suit Injunctions, 22(2) Mealeys Intl Arb. Rep. 1 (2007).
220) Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645,
652 (2d Cir. 2004). See also Answers in Genesis of Kentucky Inc. v. Creation Ministries, 556
F.3d 459, 471 (6th Cir. 2009) (determination to order antisuit injunction should depend on
whether an injunction is necessary to protect the jurisdiction of a federal court or if
allowing the foreign litigation to continue would allow a party to evade the forums
important policies) (quoting Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1355-57 (6th
Cir.1992)); China Trade & Dev. Corp. v. MV Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987)
(agreeing with general approach of first inquiring (1) whether the parties to both suits are
the same and (2) whether resolution of the case before the enjoining court would be
dispositive of the enjoined action). See generallyPhull, U.S. Anti-Suit Injunctions in
Support of International Arbitration: Five Questions American Courts Ask, 28 J. Intl Arb. 21
(2011).
221) Empresa Generadora de Electricidad ITABO, SA v. Corporacin Dominicana de Empresas
Elctricas Estatales, 2005 WL 1705080 (S.D.N.Y.).
222) LAIF X SPRL v. Axtel, SA de CV, 390 F.3d 194 (2d Cir. 2004); Paramedics Electromedicina
Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 654 (2d Cir. 2004); Stolt
Tankers BV v. Allianz Seguros, SA, 2011 WL 2436662, at *5 (S.D.N.Y.) (granting antisuit
injunction where foreign litigation would frustrate the general federal policy of
promoting arbitration; foreign court would not apply the Carriage of Goods by Sea Act, so
that the outcomes could be inconsistent; and adjudication of the same issues in two
separate actions would result in inconvenience, inconsistency, and a possible race to
judgment); Ibeto Petrochem. Indus., Ltd v. M/T Beffen, 412 F.Supp.2d 285 (S.D.N.Y. 2005).
223) See, e.g.,Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335
F.3d 357 (5th Cir. 2003); MacPhail v. Oceaneering Intl, Inc., 302 F.3d 274 (5th Cir. 2002);
Kaepa, Inc. v. Achilles Corp., 76 F.3d 624 (5th Cir. 1996); Philips Med. Sys. Intl BV v.
Bruetman, 8 F.3d 600 (7th Cir. 1993); Seattle Totems Hockey Club, Inc. v. Natl Hockey
League, 652 F.2d 852 (9th Cir. 1981); Cargill, Inc. v. Hartford Accident & Indem. Co., 531
F.Supp. 710 (D. Minn. 1982).
224) See, e.g., Answers in Genesis of Kentucky Inc. v. Creation Ministries, 556 F.3d 459, 471 (6th Cir.
2009); Goss Intl Corp. v. Man Roland Druckmaschinen AG, 2007 U.S. App. LEXIS 14306 (8th
Cir.); Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, 361 F.3d 11 (1st Cir. 2004);
Stonington Partners v. Lernout & Hauspie Speech Prods. NV, 310 F.3d 118 (3d Cir. 2002); Gen.
Elec. Co. v. Deutz AG, 270 F.3d 144 (3d Cir. 2001); Gau Shan Co. v. Bankers Trust Co., 956 F.2d
1349 (6th Cir. 1992); China Trade & Dev. Corp. v. MV Choong Yong, 837 F.2d 33 (2d Cir. 1987);
Compagnie des Bauxites de Guinea v. Ins. Co. of N. Am., 651 F.2d 877, 887 (3d Cir. 1981); Laker
Airways v. Sabena, Belgian World Airways, 731 F.2d 909 (D.C. Cir. 1984); Bailey Shipping Ltd v.
Am. Bureau of Shipping, 2013 WL 5312540 (S.D.N.Y.) (declining to issue antisuit injunction
against foreign litigation of claim that was related to disputes in arbitration; court held
that arbitration would not be dispositive of claim in foreign litigation).
225) SG Avipro Fin. Ltd v. Cameroon Airlines, 2005 U.S. Dist. LEXIS 11117, at *3 (S.D.N.Y.). See also
Ibeto Petrochem. Indus., Ltd v. M/T Beffen, 475 F.3d 56, 64-65 (2d Cir. 2007) (citing pro-
arbitration policy to compel arbitration in London while enjoining concurrent lawsuit in
Nigeria); Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369
F.3d 645, 654 (2d Cir. 2004) (invoking policy of liberal enforcement of arbitration
clauses[which] applies with particular force in international disputes; relying on fact
that Brazilian party filed Brazilian litigation as a tactic to evade arbitration);
Smith/Enron Cogeneration LP v. Smith Cogeneration Intl, Inc., 198 F.3d 88, 90, 99 (2d Cir.
1999) (citing pro-arbitration policy to compel arbitration in New York, while enjoining
concurrent lawsuit in the Dominican Republic); Amaprop Ltd v. Indiabulls Fin. Servs. Ltd,
2010 WL 1050988, at *6 (S.D.N.Y.) (orders issued by the Indian courts have derailed the
arbitration proceedings the parties agreed toand frustrated U.S. policy favoring
enforcement of arbitration agreements); Affymax, Inc. v. Johnson & Johnson, 420
F.Supp.2d 876, 884 (N.D. Ill. 2006); Suchodolski Assocs., Inc. v. Cardell Fin. Corp., 2006 U.S.
Dist. LEXIS 83169, at *4 (S.D.N.Y.).
226) Amaprop Ltd v. Indiabulls Fin. Servs. Ltd, 2010 WL 1050988, at *6 (S.D.N.Y.) (quoting Storm
LLC v. Telenor Mobile Commcns AS, 2006 WL 6167978, at *26 (S.D.N.Y.)).
37
227) See, e.g., Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369
F.3d 645, 654 (2d Cir. 2004); Wal-Mart Stores, Inc. v. PT Multipolar Corp., 1999 U.S. App.
LEXIS 31578 (9th Cir.) (affirming antisuit injunction against Indonesian proceedings in
violation of arbitration agreement); Amaprop Ltd v. Indiabulls Fin. Servs. Ltd, 2010 WL
1050988 (S.D.N.Y.) (granting antisuit injunction where party seeking to litigate rather than
arbitrate had obtained antiarbitration injunction, initially on ex parte basis, from foreign
court); Storm, LLC v. Telenor Mobile Commcns AS, 2006 U.S. Dist. LEXIS 90978, at *26
(S.D.N.Y.). See alsoPhull, U.S. Anti-Suit Injunctions in Support of International Arbitration:
Five Questions American Courts Ask, 28 J. Intl Arb. 21 (2011).
228) See, e.g., LAIF X SPRL v. Axtel, SA de CV, 390 F.3d 194 (2d Cir. 2004); Empresa Generadora de
Electricidad ITABO, SA v. Corporacin Dominicana de Empresas Elctricas Estatales, 2005 WL
1705080, at *8 (S.D.N.Y.).
229) See, e.g.,Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500
F.3d 111 (2d Cir. 2007) (upholding antisuit injunction against foreign litigation that could
frustrate foreign arbitral award and U.S. judgment recognizing that award); Suchodolski
Assocs., Inc. v. Cardell Fin. Corp., 2006 U.S. Dist. LEXIS 83169 (S.D.N.Y.).
230) Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357,
368 (5th Cir. 2003) (multiple judicial proceedings on the same legal issues are
characteristic of the confirmation and enforcement of international arbitral awards under
the Convention). Compare the approach of English courts 8.03[C][6][a], p. 1293.
231) See Gaillard, Il est interdit dinterdire: rflexions sur lutilisation des anti-suit injunctions
dans larbitrage commercial international, 2004 Rev. arb. 47; G. Petrochilos, Procedural
Law in International Arbitration 105 (2004) (Orders enjoining a party from continuing with
proceedings commenced by that party in another forum (commonly called antisuit
injunctions) are peculiar to Anglo-American common law systems). But see
Hausmaninger, in H.W. Fasching & A. Konecny (eds.), Kommentar zu den
Zivilprozessgesetzen 585, 33 et seq., 593 45 et seq. (2d ed. 2007); F. Schwarz & C.
Konrad, The Vienna Rules: A Commentary on International Arbitration in Austria 2-066
(2009) ([T]here is in principle a statutory basis for [antisuit injunctions] in Section 585
ZPO. This provision expressly allows parties to apply to the state courts for interim
measures of protection even where the subject matter of their dispute (and hence the
protective measure sought) falls within the scope of an existing arbitration agreement. In
principle, therefore, parties could arguably base their request for an anti-suit injunction
on Section 585 ZPO.).
232) Judgment of 10 January 1996, Re the Enforcement of An English Anti-Suit Injunction, 3 VA
11/95, [1997] I.L.Pr. 320 (Oberlandesgericht Dsseldorf).
233) Judgment of 10 January 1996, Re the Enforcement of An English Anti-Suit Injunction, 3 VA
11/95, [1997] I.L.Pr. 320, 323-24 (Oberlandesgericht Dsseldorf). The German court also
reasoned: Quite apart from this, the sovereignty of Germany would also be generally
infringed if, as in the present case, a foreign court issued instructions to the parties to an
action before a German court as to how they are to act or to enter appearance and what
applications they are to make. Judicial proceedings are guaranteed to be duly conducted
in accordance with the rule of law only if the parties and their representatives are able,
without any restriction, to place before the court all the facts they consider necessary for
assessment by the court and to make the applications required by the procedural
situation, and no further demonstration of this is necessary.
234) Turner (Gregory Paul) v. Grovit (Felix Freed Ismail), Harada Ltd & Changepoint SA, Case No.
C-159/02, [2004] E.C.R. I-3565, 27 (E.C.J.). See alsoGaillard, Il est interdit dinterdire:
reflxions sur lutilisation des anti-suit injunctions dans larbitrage commercial
international, 2004 Rev. arb. 47 (antisuit injunctions ignore principle of competence-
competence).
C-159/02, [2004] E.C.R. I-3565, 27 (E.C.J.).
236) See8.04[A]. Moreover, the French Cour de cassation recently held that an antisuit
injunction issued to prevent the breach of a choice of court clause did not contravene
French international public policy. Judgment of 14 October 2009, 12 J.D.I. (Clunet) 40
(French Cour de cassation civ.).
237) See, e.g., W. Tankers Inc. v. Ras Riunione Adriatica di Sicurta, The Front Comor [2005] 2
Lloyds Rep. 257 (QB) (English High Ct.); Through Transp. Mut. Ins. Assn (Eurasia) Ltd v. New
India Assur. Assn Co. [2004] EWCA Civ 1598 (English Ct. App.).
238) Allianz SpA v. W. Tankers Inc., Case No. C-185/07, [2009] E.C.R. I-633 (E.C.J.).
C-159/02, [2004] E.C.R. I-3565 (E.C.J.). See Collins, Parallel Proceedings and the Italian
Torpedo; Still Firing After All These Years, 2 Transnatl Disp. Mgt (2010); Hartley, The
European Union and the Systematic Dismantling of the Common Law of Conflict of Laws, 54
Intl & Comp. L.Q. 813, 823 (2005).
240) Council Regulation (EC) No. 44/2001 of 22 December 2000, Art. 1(2)(d) (Regulation shall
not apply toarbitration).
38
241) Marc Rich & Co. AG v. Societ Italiana Impianti PA, Case No. C-190/89, [1991] E.C.R. I-3855,
18 (E.C.J.) (The international agreements, and in particular the abovementioned New
York Convention on the recognition and enforcement of foreign arbitral awardslay down
rules which must be respected not by the arbitrators themselves but by the courts of the
Contracting States. Those rules relate, for example, to agreements whereby parties refer a
dispute to arbitration and the recognition and enforcement of arbitral awards. It follows
that, by excluding arbitration from the scope of the Convention on the ground that it was
already covered by international conventions, the Contracting Parties intended to
exclude arbitration in its entirety, including proceedings brought before national
courts.).
242) See Allianz SpA v. W. Tankers Inc., Case No. C-185/07, [2009] E.C.R. I-663 (E.C.J.); W. Tankers
Inc. v. RAS Riunione Adriatica di Sicurta SpA (The Front Comor) [2007] UKHL 4 (House of
Lords); W. Tankers Inc. v. Allianz SpA (The Front Comor) [2012] EWCA Civ 27 (English Ct.
App.); W. Tankers Inc. v. Allianz SpA [2012] EWHC 854 (Comm) (English High Ct.); W. Tankers
Inc. v. Allianz SpA (The Front Comor) [2011] EWHC 829 (Comm) (English High Ct.); W. Tankers
Inc. v. RAS Riunione Adriatica Sicurta Spa [2007] EWHC 2184 (Comm) (English High Ct.); W.
Tankers Inc. v. RAS Riunione Adriatica di Sicurta SpA (The Front Comor) [2005] EWHC 454
(Comm) (English High Ct.).
243) Allianz SpA v. W. Tankers Inc., C-185/07, [2009] E.C.R. I-663 (E.C.J).
244) See Collins, Parallel Proceedings and The Italian Torpedo; Still Firing After All These Years, 2
Transnatl Disp. Mgt (2010). See also Natl Grid Elec. Transmission plc v. ABB Ltd [2009]
EWHC 1326, 25 (Ch) (English High Ct.); SDL Intl Ltd v. Centre de Co-operation
Internationale en Recherche Agronomique pour le Developpement [2001] CLC 903, 25 (Ch)
(English High Ct.) (sometimes, apparently, called the Italian torpedoa stratagem
sometimes adopted inlitigation, which involves undertaking proceedings in Italy
(where, allegedly, proceedings take a very long time to come trial) thereby frustrating a
speedier trial in a jurisdiction such as England); Goshawk Dedicated Ltd v. Life
Receivables Ireland Ltd, [2008] I.L.Pr. 50, 6.3 (Irish High Ct.) (It has been asserted in
commentaries that a tactic, colourfully described as the Italian Torpedo, was available
to parties who wished to delay proceedings by the simple expedient of commencing, at
the earliest possible date, a form of proceedings in the Italian courts thus freezing the
possibility of any other proceedings being commenced, or progressed, elsewhere within
the European Union during the prolonged period that the Italian court was likely to take
to determine that it did not have jurisdiction.); Stothers, Gardner & Hinchliffe, Forum
Shopping and Italian Torpedoes in Competition Litigation in the English Courts, 4(2) Global
Comp. Litg. Rev. 67 (2011); Tumbridge, European Anti-Suit Injunctions in Favour of
Arbitration A Sea Change?, 21(5) Intl Comp. & Comm. L. Rev. 177, 180 (2010); Wolff,
Tanking Arbitration or Breaking the System to Fix It? A Sink Or Swim Approach to Unifying
European Judicial Systems: The ECJ in Gasser, Turner, and West Tankers, 15 Colum. J. Eur. L.
Online 65, 69 (2009) (Since its ratification, potential defendants in commercial litigations
have exploited Brussels I by pre-emptively seising Belgian and Italian courts, infamous
for their overloaded dockets and lethargic deliberations, in order to paralyse or
torpedo lawsuits for up to several years.).
245) W. Tankers Inc. v. RAS Riunione Adriatica di Sicurta, The Front Comor [2005] 2 Lloyds Rep.
257, 4851 (QB) (English High Ct.).
391 (House of Lords).
248) Allianz SpA v. W. Tankers Inc., Case No. C-185/07, [2009] E.C.R. I-663 (E.C.J.).
249) Allianz SpA v. W. Tankers Inc., Case No. C-185/07, [2009] E.C.R. I-663, 31 (E.C.J.). See also id.
at 58 (Advocate Generals Opinion).
250) Allianz SpA v. W. Tankers Inc., Case No. C-185/07, [2009] E.C.R. I-663, 26 (E.C.J.). See also id.
at 53, 54 (Advocate Generals Opinion).
251) See DHL GBS (U.K.) Ltd v. Fallimento Finmatica SpA [2009] EWHC 291 (Comm) (English High
Ct.); Youell v. La Reunion Aerienne [2008] EWHC 2493 (Comm) (English High Ct.).
252) AES UST-Kamenogorsk Hydropower Plant LLP v. UST-Kamenogorsk Hydropower Plant JSC
[2011] EWCA Civ 647 (English Ct. App.) (issuing antisuit injunction to restrain proceedings
brought in Kazakhstan), affd, [2013] UKSC 35 (U.K. S.Ct.); Midgulf Intl Ltd v. Groupe
Chimique Tunisien [2010] EWCA Civ 66 (English Ct. App.) (issuing antisuit injunction to
restrain proceedings brought in Tunisia); Shashoua v. Sharma [2009] EWHC 957, 36
(Comm) (English High Ct.) (This does not however mean that the rationale for [the West
Tankers] decision, which is binding in Member States, applies to the position between
England on the one hand and a country which is not a Member State.).
253) See Blohlvek, West Tankers as A Trojan Horse With Respect to the Autonomy of
Arbitration Proceedings and the New York Convention 1958, 27 ASA Bull. 646 (2009); Clifford
& Browne, Lost at Sea or A Storm in A Teacup? Anti-Suit Injunctions After Allianz SPA v. West
Tankers Inc., 2009 Intl Arb. L. Rev. 12; Markus & Giroud, A Swiss Perspective on West
Tankers and Its Aftermath: What About the Lugano Convention? 28 ASA Bull. 230 (2010);
Merkin, Anti-Suit Injunctions: The Future of Anti-Suit Injunctions in Europe, 9:4 Arb. Law
Monthly 1 (2009); Noussia, Antisuit Injunctions and Arbitration Proceedings: What Does the
Future Hold?, 26 J. Intl Arb. 311 (2009); Rainer, The Impact of West Tankers on Parties
Choice of A Seat of Arbitration, 95 Cornell L. Rev. 431 (2010).
39
254) Clifford & Browne, Lost at Sea or A Storm in A Teacup? Anti-Suit Injunctions After Allianz
SPA v. West Tankers Inc., 2009 Intl Arb. L. Rev. 12, 19-22. See also Hales & Rogerson, The
Award and the Courts Chronicle of A Death Foretold? West Tankers and the Demise of the
Anti-Suit Injunction in Arbitration, 2010 Austrian Y.B. Intl Arb. 170, 190 (The practical
consequences of the casesimply do not appear to have been properly appreciated by
Advocate General Kokott or the ECJ. The ECJ has put the efficiency of arbitration at risk.
This brief judgment has caused a great deal of concern. It will continue to do so well into
the future as it [sic] implications are far-reaching and still emerging. Whether one agrees
with West Tankers or not, it is difficult to imagine 35 more damaging paragraphs to
arbitration than the ECJs decision in this case.).
255) Clifford & Browne, Lost at Sea or A Storm in A Teacup? Anti-Suit Injunctions After Allianz
SpA v. West Tankers Inc., 2009 Intl Arb. L. Rev. 12, 21 ([T]he availability of anti-suit
injunctions is unlikely to affect the choice of seat for the vast majority of parties. Zurich,
Geneva, Stockholm and Paris have all flourished as arbitration centres without their
courts granting anti-suit injunctions as a matter of course. The ECJs decision therefore
seems unlikely to impact the popularity of London, which still has a myriad of features to
commend it to those selecting a seat for arbitration.); L. Collins et al. (eds.), Dicey, Morris
and Collins on The Conflict of Laws 11-097 (15th ed. 2012); Materna, An Unnecessary
Consternation: An Analysis of the Future of EU Arbitration in the Wake of the West Tankers
Decision, 11 Pepp. Disp. Res. L.J. 571 (2011).
Other commentators argue that the detrimental effect of West Tankers on the
attractiveness of London as an arbitral seat may not be substantial. Carducci, Arbitration,
Anti-Suit Injunctions and Lis Pendens Under the European Jurisdiction Regulation and the
New York Convention, 27 Arb. Intl 171 (2011); Noussia, Antisuit Injunctions and Arbitration
Proceedings: What Does the Future Hold?, 26 J. Intl Arb. 311 (2009); Santomauro, Sense and
Sensibility: Reviewing West Tankers and Dealing With Its Implications in the Wake of the
Reform of EC Regulation 44/2001, 6 J. Priv. Int. L. 281 (2010).
256) European Commission, Green Paper on the Review of Council Regulation (EC) No 44/2001 on
Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial
Matters 7 (2009). See also George, Guest Editorial: Hess, Should Arbitration and European
Procedural Law Be Separated or Coordinated? (14 February 2010), available at
conflictoflaws.net; Houtte, Why Not Include Arbitration in the Brussels Jurisdiction
Regulation?, 21 Arb. Intl 509 (2005).
257) See Draft Report on the implementation and review of Council Regulation (EC) No 44/2001,
27 April 2010 (proposing retention of arbitration exception); 2010 Final Proposal of the
Commission Comm 774/3 (proposing retention of arbitration exception, with proviso that
Member States courts must stay proceedings where there is an arbitration agreement in
dispute and tribunal has been or is in process of being constituted or related
proceedings have commenced within Member State designated as arbitral seat); 2011
Draft Report of the Committee of Legal Affairs of the European Parliament (proposing
retention of arbitration exception).
258) See Regulation (EU) No 1215/2012 on Jurisdiction and the Recognition and Enforcement of
Judgments in Civil and Commercial Matters (recast) (EU Regulation No. 1215/2012);
Camilleri, Recital 12 of the Recast Regulation: A New Hope?, 62 Intl & Comp. L.Q. 899
(2013).
259) EU Regulation No. 1215/2012, Preamble 12 (A ruling given by a court of a Member State
as to whether or not an arbitration agreement is null and void, inoperative or incapable
of being performed should not be subject to the rules of recognition and enforcement
laid down in this Regulation, regardless of whether the court decided on this as a
principal issue or as an incidental question.).
260) EU Regulation No. 1215/2012, Preamble 12 (Nothing in this Regulation should prevent
the courts of a Member State, when seised of an action in a matter in respect of which the
parties have entered into an arbitration agreement, from referring the parties to
arbitration, from staying or dismissing the proceedings, or from examining whether the
arbitration agreement is null and void, inoperative or incapable of being performed, in
accordance with their national law.); EU Regulation No. 1215/2012, Art. 73(2) (nothing in
Recast Regulation affects application of New York Convention).
261) Camilleri, Recital 12 of the Recast Regulation: A New Hope?, 62 Intl & Comp. L.Q. 899, 908
(2013) (concluding that Recast Regulation does not require arbitral tribunal seated in
Member State to give effect to judgment of another Member State regarding validity of
arbitration agreement: the very fact that Recital 12 states that the determination of a
Member State court that an arbitration agreement is invalid is not a judgment which is
subject to the [Regulations] recognition and enforcement regime means that it is not one,
under English conflict of laws rules, which the arbitral tribunal must recognize).
262) See, e.g., Camilleri, Recital 12 of the Recast Regulation: A New Hope?, 62 Intl & Comp. L.Q.
899, 905-06 (2013) (concluding that Recast Regulation continues to prohibit antisuit
injunctions, based on arbitration agreement, against litigation in other EU Member
States).
263) Camilleri, Recital 12 of the Recast Regulation: A New Hope?, 62 Intl & Comp. L.Q. 899, 909-
10 (2013) (concluding that Recast Regulation does not require EU Member State courts to
recognize substantive judgment on merits of parties dispute by another Member State
court where recognition court concludes that foreign arbitral award on same issues was
entitled to recognition under New York Convention).
40
264) An antisuit injunction should generally not be available where the foreign litigation is
based upon a local public policy or nonarbitrability rule (seeChapter 6) that is consistent
with the Convention (see4.05[A][2], p. 601; 4.05[C][5], pp. 611-17) and which does not seek
to interfere with or enjoin the arbitral process. In the latter case, an antisuit injunction
would not only properly be available, but would be appropriate.
265) See8.03[C][6][b].
266) This was the position in much of the United States prior to the FAA. See1.01[B][5]; Red
Cross Line v. Atl. Fruit Co., 264 U.S. 109, 118 (U.S. S.Ct. 1924) (agreement to arbitrate was
legal in New York and damages were recoverable for a breach thereof); Payton v. Hurst
Eye, Ear, Nose & Throat Hosp., 318 S.W.2d 726, 731 (Tex. App. 1958) (under Texas common
law, a party could not compel an arbitrationand is relegated to a suit for damages for
any breach of the arbitration clause). But see Munson v. Straits of Dover SS Co., 102 F. 926,
928 (2d Cir. 1900) (declining to order more than nominal damages for breach of
arbitration agreement: dispute resolution by litigation is theoretically at least, the
safest and best devised by the wisdom and experience of mankind); Restatement (First)
Contracts 550 (1932) (only nominal damages for breach of agreement to arbitrate).
267) See1.01[B][5]. See also Riggs v. MySpace, Inc., 444 F.Appx. 986, 987 (9th Cir. 2011) (The
district court properly dismissed Riggss promissory fraud breach of contract claim,
arising from MySpaces alleged breach of an arbitration clause in its Terms of Use,
because Riggs failed to allege any legally cognizable damages.); Price v. Cushman &
Wakefield, Inc., 829 F.Supp.2d 201, 218 (S.D.N.Y. 2011) (even assuming without deciding
that Plaintiff had a right to arbitration, and that C & W breached the Employment
Contract by denying him that right, Plaintiff has failed to prove an essential element of a
breach-of contract-action, namely, that any damages resulted from the breach.).
268) OT Africa Line Ltd v. MAGIC Sportswear Corp. [2005] EWCA Civ 710, 33 (English Ct. App.)
(damages will not be easily calculable and can indeed only be calculated by comparing
the advantages and disadvantages of the respective fora. This is likely to involve an even
graver breach of comity than the granting of an antisuit injunction.).
269) See, e.g., Ball v. Versar, Inc., 454 F.Supp.2d 783 (S.D. Ind. 2006); Indosuez Intl Fin., BV v.
Nacional Reserve Bank, 758 N.Y.S.2d 308 (N.Y. App. Div. 2003); Allendale Mut. Ins. Co. v.
Excess Ins. Co., 992 F.Supp. 278 (S.D.N.Y. 1998); Lab. Corp. of Am. Inc. v. Upstate Testing
Labs., Inc., 967 F.Supp. 295, 299 (N.D. Ill. 1997); Taylor v. Bevinco Bar Sys., 1997 U.S. Dist.
LEXIS 22098 (D. Ariz.).
270) See, e.g., Schiffahrtsgesellschaft Detlev von Appen GmbH v. Voest Alpine Intertrading GmbH
[1997] 2 Lloyds Rep. 279 (English Ct. App.); Mantovani v. Caparelli SpA [1980] 1 Lloyds Rep.
375 (English Ct. App.); CMA CGM SA v. Hyundai Mipo Dockland Ltd [2008] EWHC 2791 (Comm)
(English High Ct.) (upholding award where tribunal awarded damages for breach of
agreement to arbitrate). See also Dutson, Breach of An Arbitration or Exclusive Jurisdiction
Clause: The Legal Remedies if It Continues, 16 Arb. Intl 89 (2000); Wessel & North Cohen, In
Tune With Mantovani: The Novel Case of Damages for Breach of An Arbitration Agreement,
2001 Intl Arb. L. Rev. 65.
271) Judgment of 11 February 2010, 4A_444/2009 (Swiss Federal Tribunal) (tribunals
declaration permitting recovery of damages for breach of arbitration clause (by bringing
proceedings in national court) did not violate Swiss public policy and was within
tribunals jurisdiction).
272) See, e.g., Wells v. Entre Computer Ctrs, Inc., 915 F.2d 1566, at *3 n.3 (4th Cir. 1990) (court
aware of no case in which a court has awarded damages because a plaintiff brought suit
in a forum other than the one to which it had contractually agreed); RGC Intl Investors,
LDC v. ARI Network Servs., 2004 WL 189784 (D. Del.); Sheffield United Football Club Ltd v. W.
Ham United Football Club plc [2008] EWHC 2855, 22 (Comm) (English High Ct.) (However,
it is well established that the remedy of damages is not regarded as an adequate remedy
for breach of an arbitration clause.); Starlight Shipping Co. v. Tai Ping Ins. Co. [2007] EWHC
1893, 12 (Comm) (English High Ct.) (Damages would, for all the reasons given in the
authorities, be an inadequate remedy for breach of such a clause since its very nature
requires the parties to have their disputes determined in arbitration. A party to such an
agreement should not be put to the trouble of having disputes determined elsewhere in a
manner contrary to the express contract between the parties.).
273) For commentary, see Clavel, Exceptional Circumstances Allowing English Courts to Issue
Injunctions Restraining Foreign Arbitration Proceedings, 2012 Paris J. Intl Arb. 359; E.
Gaillard (ed.), Anti-Suit Injunctions in International Arbitration (2005) (including
contributions from Baum, de Boissson, Fouchard, Gaillard, Greenwood, Lvy, Lew,
Schneider and Schwebel).
274) See, e.g., Schwebel, Anti-Suit Injunctions in International Arbitration: An Overview, in E.
Gaillard (ed.), Anti-Suit Injunctions in International Arbitration 6 (2005) (Scholarly analysis
of the subject of anti-suit injunctions in respect of arbitration is surprisingly scarce.).
41
275) See, e.g., Citigroup Global Mkts, Inc. v. VCG Special Opportunities Master Fund Ltd, 590 F.3d
30, 40 (2d Cir. 2010); In Re Y & A Group Sec. Litg., 38 F.3d 380, 382 (8th Cir. 1994) (relying in
part on All Writs Act in concluding that [n]o matter what, courts have the power to defend
their judgments as res judicata, including the power to enjoin or stay subsequent
arbitrations); Hull v. Norcom, Inc., 750 F.2d 1547 (11th Cir. 1985); Farrell v. Subway Intl, BV,
2011 U.S. Dist. LEXIS 29833, at *6 (S.D.N.Y.) (citing power to compel arbitration under 206:
It would followthat the court should have a concomitant power to enjoin arbitration
where arbitration is inappropriate; a failure to do so would frustrate the goals of
arbitration, since there would be delay and increased expense as the parties litigated in
both fora); Jock v. Sterling Jewelers, Inc., 2010 U.S. Dist. LEXIS 132759, at *10-11 (S.D.N.Y.)
([A]s a necessary incident to its power to compel arbitration proceedings under 4 of the
FAA, it may preserve the integrity of those proceedings by enjoining later-filed
arbitrations that arise out of the same controversy. Any other conclusion would impede
rational application of 4 of the FAA, as well as fundamentally limit the power of a court
to enforce its own judgments.); John Hancock Distribs. Inc. v. Saponaro, 901 F.Supp. 194
(E.D. Pa. 1995) (enjoining arbitration of six putatively time-barred claims, while requiring
arbitration of other claims); L.F. Rothschild & Co. v. Katz, 702 F.Supp. 464 (S.D.N.Y. 1988)
(asserting power to enjoin arbitration).
276) SATCOM Intl Group plc v. ORBCOMM Intl Partners, LP, 49 F.Supp.2d 331, 342 (S.D.N.Y. 1999),
affd, 205 F.3d 1324 (2d Cir. 1999).
277) PaineWebber Inc. v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990) (If a court determines that a
valid arbitration agreement does not exist or that the matter at issue clearly falls outside
of the substantive scope of the agreement, it is obliged to enjoin arbitration.).
278) In re U.S. Lines, Inc., 197 F.3d 631, 639 (2d Cir. 1999) (In the bankruptcy setting,
congressional intent to permit a bankruptcy court to enjoin arbitration is sufficiently
clear to override even international arbitration agreements.); Tai Ping Ins. Co. v. M/V
Warschau, 731 F.2d 1141, 1143-44 (5th Cir. 1984); Societe Generale de Surveillance, SA v.
Raytheon European Mgt & Sys. Co., 643 F.2d 863, 868 (1st Cir. 1981) (to enjoin a party from
arbitrating where an agreement to arbitrate is absent is the concomitant of the power to
compel arbitration where it is present); Masefield AG v. Colonial Oil Indus., Inc., 2005 WL
911770 (S.D.N.Y.) (preliminary injunction against ICC arbitration, subject to New York
Convention, seated in United States).
279) See, e.g., Tai Ping Ins. Co. v. M/V Warschau, 731 F.2d 1141, 1143-44 (5th Cir. 1984) (enjoining
London-seated arbitration); Societe Generale de Surveillance, SA v. Raytheon European
Mgt & Sys. Co., 643 F.2d 863, 868 (1st Cir. 1981) (enjoining Swiss-seated arbitration); Oracle
Am., Inc. v. Myriad Group AG, C 10-05604 SBA (N.D. Cal. 2012) (enjoining international
arbitration, seated in either London or San Francisco, as to particular claims on grounds
that court had previously held that arbitration clause excluded those claims and arbitral
tribunal had no authority to consider those claims); Raytheon Engrs & Constructors, Inc. v.
SMS Schloemann-Siemag AG, 2000 WL 420866 (N.D. Ill.) (apparently enjoining foreign
arbitration, subject to New York Convention); Am. Life Ins. Co. v. Parra, 25 F.Supp.2d 467 (D.
Del. 1998) (apparently enjoining foreign arbitration, subject to New York Convention);
8.04[A].
280) See8.03[C][6][c]. See also Contl Cas. Co. v. AXA Global Risks (U.K.) Ltd, 2010 WL 1268038
(W.D. Mo.); Cobra N. Am., LLC v. Cold Cut Sys. Svenska, 639 F.Supp.2d 1217, 1228-29 (D. Colo.
2008) (expressing skepticism regarding legality and wisdom of issuing injunctions
enjoining arbitrations in foreign states); URS Corp. v. Lebanese Co. for the Dev. & Reconstr.
of Beirut Cent. Dist. SAL, 512 F.Supp.2d 199, 210 (D. Del. 2007) (comity and the purposes of
the New York Convention do not support issuing an injunction against a foreign arbitral
proceeding).
281) See, e.g., Diwan v. EMP Global LLC, 841 F.Supp.2d 246, 249 (D.D.C. 2012) (denying injunction
to stay arbitration; holding that plaintiff failed to show that allowing arbitration
proceedings to begin before determining arbitrability would constitute per se
irreparable injury, where parties delegated questions of arbitrability to arbitrator by
incorporating UNCITRAL Rules in arbitration agreement and claims were not clearly and
indisputably outside of the boundaries of the arbitration agreement); S & T Oil Equip. &
Mach., Ltd v. Juridica Invs. Ltd, 2011 WL 864837 (S.D. Tex.) (denying plaintiffs application
for temporary restraining order staying pending foreign arbitral proceeding, on grounds
that plaintiff had not shown likelihood of success on claim that arbitration agreement
was invalid); Murphy Oil USA, Inc. v. SR Intl Bus. Ins. Co., 2007 WL 2752366 (W.D. Ark.)
(denying antiarbitration injunction against English arbitration; relying on principles of
international comity and New York Convention); Gen. Elec. Co. v. Deutz AG, 270 F.3d 144 (3d
Cir. 2001) (comity precluded injunction, barring Deutz from appealing foreign arbitral
tribunals ruling on issue of arbitrability and from taking further steps in arbitration
thereafter). See also Repub. of Ecuador v. Chevron Corp., 638 F.3d 384, 391 (2d Cir. 2011)
(we need not resolve the question of whether federal courts have the power to stay
arbitration under the FAA (or any other authority) in an appropriate case).
199, 208 (D. Del. 2007) (French courts have primary jurisdiction over the pending
arbitration [seated in France] and this court declines to extend its jurisdiction over those
extraterritorial waters by enjoining the ongoing arbitration in France).
42
283) Cetelem SA v. Roust Holding Ltd [2005] 2 Lloyds Rep. 494 (English Ct. App.) (English courts
retain residual power to issue antiarbitration injunction, as to both English and foreign
arbitrations); Allied Marine Ltd v. Vale do Rio Doce SA [1985] 1 WLR 925 (English Ct. App.)
(same); Elektrim SA v. Vivendi Universal SA [2007] EWHC 571 (QB) (English High Ct.) (same);
Intermet FZCO v. Ansol Ltd [2007] EWHC 226 (Comm) (English High Ct.) (same); Claxton Engg
Servs. Ltd v. TXM Olaj-Es Gazkutato Kft [2011] EWHC 345, 48 (Comm) (English High Ct.)
(rare and exceptional cases in which it is appropriate to grant an anti-arbitration
injunction).
284) See, e.g., Repub. of Kazakhstan v. Istil Group Inc. [2007] EWHC 2729 (Comm) (English High
Ct.); Huyton SA v. Peter Cremer GmbH & Co. [1999] 1 Lloyds Rep. 620 (Comm) (English High
Ct.). See also27.03[B][3].
285) Excalibur Ventures LLC v. Texas Keystone Inc. [2011] EWHC 1624, 54 (Comm) (English High
Ct.) (enjoining arbitration seated in New York on grounds that claimants had sought same
relief in English courts: It is clear that the English courts have jurisdiction under s37 of
the Senior Courts Act 1981 to grant injunctions restraining arbitrations where the seat of
the arbitration is in a foreign jurisdiction, although it is a power that is only exercised in
exceptional circumstances and with caution.); Claxton Engg Servs. Ltd v. TXM Olaj-Es
Gazkutato Kft [2011] EWHC 345, 48 (Comm) (English High Ct.) (granting antiarbitration
injunction against arbitration in Hungary on grounds that there was no valid arbitration
agreement and there was an exclusive English jurisdiction clause: I am satisfied this is
one of those rare and exceptional cases in which it is appropriate to grant an anti-
arbitration injunction.).
286) See Repub. of Kazakhstan v. Istil Group Inc. [2007] EWHC 2729 (Comm) (English High Ct.)
(granting antiarbitration injunction to prevent continuation of arbitral proceedings
seated in England where English court had previously annulled arbitrators jurisdictional
award upholding existence of valid arbitration agreement). See also Clavel, Exceptional
Circumstances Allowing English Courts to Issue Injunctions Restraining Foreign Arbitration
Proceedings, 2012 Paris J. Intl Arb. 359.
287) Repub. of Kazakhstan v. Istil Group Inc. [2007] EWHC 2729, 46 (Comm) (English High Ct.).
The inconsistency of this decision with the New York Convention is discussed below.
See27.03[B][3].
Ct.) (An English court will be particularly slow to restrain arbitration proceedings where
there is an agreement for the arbitration to have its seat in a foreign jurisdiction and the
parties have unquestionably agreed to the foreign arbitration clause. That is because,
given the priority to be accorded to the parties choice of arbitration, and the limited
nature of the courts powers to intervene under the provisions of the Arbitration Act 1996,
the court should not simply apply the same approach as for the grant of the normal anti-
suit injunction.).
Ct.) (continuation of such proceedings by Excalibur would be unconscionable,
oppressive, vexatious or otherwise an abuse of the due process of the court, and [] the
grant of such an injunction is necessary to protect the Gulf Defendants legitimate interest
in continuing the proceedings in England which is the natural forum for the litigation).
290) Claxton Engg Serv. Ltd v. TXM Olajs Gzkutat KFT [2010] EWHC 2567, 17 (Comm)
(English High Ct.) (In the circumstances of this case, where Claxton is contending that the
contract is subject to an exclusive English court jurisdiction clause, and TXM is contending
that it is subject to a Hungarian arbitration agreement, and both parties have agreed that
the matter is capable of being resolved on the basis of the written evidence before me,
without cross-examination or further evidence, it seems to me to be wholly appropriate
that this court should resolve the threshold issue [of whether there is a valid arbitration
agreement].).
291) Lac damiante du Canada Ltee v. Lac damiante du Qubec Ltee, [1999] R.J.Q. 970 (Qubec
Ct. App.) (enjoining foreign arbitration on grounds that right to arbitrate had been waived;
rejecting contrary jurisdictional determination by arbitral tribunal); Shackleton, Note on
Lac dAmiante du Canada Ltee v. Lac dAmiante du Qubec Ltee (Qubec Ct. App.), 2000
Intl Arb. L. Rev. N-6.
292) Lin Meng v. Chen Shu Quan, [2012] HKCFI 328 (H.K. Ct. First Inst.).
293) N. Radhakrishnan v. Maestro Engrs, (2009) 3 SCALE 403 (Indian S.Ct.); MSM Satellite
(Singapore) Pte Ltd v. World Sports Group (Mauritius) Ltd, [2010] (112) Bom LR 4292 (Bombay
High Ct.) (issuing antiarbitration injunction against Singapore seated arbitration on
grounds that allegations of fraud and corruption involved issues of Indian public policy);
Union of India v. Dabhol Power Co., Suit No. 1268 of 2003 (Delhi High Ct.). See alsoSattar,
National Courts and International Arbitration: A Double-Edged Sword?, 27 J. Intl Arb. 51
(2010). But see CDC Fin. Servs. (Mauritius) Ltd v. BPL Commcns, (2003) 12 SCC 140, 144
(Indian S.Ct.).
It is unclear whether decisions permitting injunctions against foreign-seated arbitrations
survive the Indian Supreme Courts decision in Bharat Aluminium v. Kaiser Aluminium, C.A.
No. 7019/2005 (Indian S.Ct. 2012), holding that Indian courts lack the power to annul
awards made outside India. See17.04[C][8][d], p. 2557; 22.02[E][1][a][i][5], p. 2954.
43
294) SGS v. Pakistan, 19 Arb. Intl 182 (Pakistan S.Ct. 2002) (2003); The Hub Power Co. v. Pakistan
WAPDA, 16 Arb. Intl 439 (Pakistan S.Ct. 2000) (2000). See Kerr, Concord and Conflict in
International Arbitration, 13 Arb. Intl 121, 137 (1997) (describing Pakistani antisuit
injunctions against arbitrations seated in Singapore and England).
295) Saipem SpA v. Peoples Repub. of Bangladesh, Decision on Jurisdiction in ICSID Case No.
ARB/05/07 of 21 March 2007 (Bangladesh court purported to revoke authority of ICC
tribunal).
296) British Caribbean Bank Ltd v. Attorney Gen. of Belize, [2013] CCJ 4 (AJ) (Caribbean Ct. Just.).
297) Dunkeld Intl Inv. Ltd v. Attorney Gen., C.A. No. 24 of 2011 (Belize Ct. App.) (reversing grant
of antiarbitration injunction). See also Lin Meng v. Chen Shu Quan, [2012] HKCFI 328, 53
(H.K. Ct. First Inst.) (I am content to assume that there is jurisdiction to grant an
injunction to restrain the continuance of [a locally-seated] arbitrationbut that such
jurisdiction must be exercised very sparingly and with great caution); British Caribbean
Bank Ltd v. Attorney Gen. of Belize, [2013] CCJ 4, 37, 39 (AJ) (Caribbean Ct. Just.) (Court
exercises heightened vigilance when asked to restrain international arbitration because
the parties have contracted to arbitrate their dispute; once the validity of the
arbitration bargain has been established the court will only grant an injunction to
restrain the arbitration if it is positively shown that the arbitration proceedings would be
oppressive, vexatious, inequitable, or an abuse of process.).
298) See, e.g., Judgment of 29 March 2010, Repub. of Equatorial Guinea v. Fitzpatrick Equatorial
Guinea, Case No. 10-52825 (Paris Tribunal de grande instance) (once arbitral tribunal is
formed, only arbitrators have power to deal with their own jurisdiction; rejecting request
for antiarbitration injunction application); Judgment of 5 April 2012, DFT 138 III 304, 311 et
seq., 5.3.1 (Swiss Federal Tribunal); Judgment of 2 May 2005, 23 ASA Bull. 728, 733 et seq.
(Geneva Tribunal) (2005); BTA Bank v. Ukrsotsbank, 39/305 of 17 March 2010 (Ukrainian
High Comm. Ct.).
299) Gaillard, The Misuse of Anti-Suit Injunctions, N.Y. L.J. (1 August 2002).
300) Judgment of 19 April 2012, Energia Sustentvel do Brasil S/A v. SulAmerica Companhia
Nacional de Seguros S/A, TJ-SP Appeal No. 0304979-49.2011.8.26 (So Paulo Tribunal de
Justia); Judgment of 3 June 2003, Companhia Paranaense de Energia (Copel) v. UEG
Arauncria Ltda, 21 R.D.B.A. 421 (Paran Tribunal de Justia). See alsoDos Santos,
Arbitration in Brazil, 21 J. Intl Arb. 453 (2004); Filho & Lee, Brazils New Public-Private
Partnership Law: One Step Forward, Two Steps Back, 22 J. Intl Arb. 419 (2005). Compare
Judgment of 6 April 2010, FAT Ferroatlantica SL v. Zeus Minerao Ltda, Interlocutory App.
No. 0002546-67.2010.805.0000-0 (Bahia Tribunal de Justia) (vacating antiarbitration
injunction).
301) PartialAward in ICC Case No. 10623, 21 ASA Bull. 59 (2003). See alsoN. Blackaby et al. (eds.),
Redfern and Hunter on International Arbitration 7.59 (5th ed. 2009).
302) Unreported Judgment of 1 April 2002, Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara v. Karaha Bodas Co. (Jakarta Central Dist. Ct.) (forbidding enforcement of Swiss
award against state-related entity and purporting to impose $500,000 per day penalty for
attempts to enforce).
(ed.), Anti-Suit Injunctions in International Arbitration 5 (2005). See also Gaillard, The
Misuse of Anti-Suit Injunctions, N.Y. L.J. (1 August 2002); G. Petrochilos, Procedural Law in
International Arbitration 105 (2004) (It is far from settled that such injunctions should be
regarded as a proper remedy at all, in particular under the New York Convention.).
(ed.), Anti-Suit Injunctions in International Arbitration 10 (2005) ([T]he issuance by a court
of an antisuit injunction that, far from recognizing and enforcing an agreement to
arbitrate, prevents or immobilizes the arbitration that seeks to implement that
agreement, is inconsistent with the obligations of the State under the New York
Arbitration Convention. It is blatantly inconsistent with the spirit of the Convention. It
may be said to be inconsistent with the letter of the Convention as well, at any rate if the
agreement to arbitrate provides for an arbitral award made in the territory of another
State.).
305) See Bachand, Must An ICC Tribunal Comply With An Anti-Suit Injunction Issued by the Courts
of the Seat of Arbitration? Comment on Salini Costruttori SpA v. Ethiopia, 20(3) Mealeys
Intl Arb. Rep. 47 (2005); B. Berger & F. Kellerhals, International and Domestic Arbitration in
Switzerland 616 (2d ed. 2010); Gaillard, The Misuse of Anti-Suit Injunctions, N.Y. L.J. (1
August 2002); Stacher, You Dont Want to Go There Antisuit Injunctions in International
Commercial Arbitration, 23 ASA Bull. 640 (2005).
306) Judgment of 2 May 2005, 23 ASA Bull. 728, 734 (Geneva Tribunal) (2005).
307) See1.04[A][1].
308) See1.04[A][1]; 2.01[A][1][a]; 5.01[B][1].
309) See8.03[C][6], pp. 1291-1304 (antisuit injunctions); 8.03[C][5], pp. 1305-06 (non-
recognition of foreign judgments); 27.02[B]; 27.03[B].
310) A state is of course free to permit litigation on the merits of the parties claims to
proceed, if it concludes that there is no valid arbitration agreement. It is also free to
withhold support to what it regards as an illegitimate process (e.g., in supporting
constitution of the tribunal or assisting in the taking of evidence). It is conceivable that
an arbitration conducted as part of a criminal enterprise should be treated differently, in
order to prevent criminal acts from being committed or continued.
311) Thus, it would plainly be improper for a state to enjoin a party from taking steps to have
an award, annulled by that court, recognized in other jurisdictions. See22.04[C]; 25.11.
44
312) See1.04[A][1].
313) This also draws support from the general principle of judicial non-interference in the
arbitral proceedings, discussed in 15.06[A]. This principle is directed towards arbitral
proceedings pursuant to a valid arbitration agreement, but nonetheless reflects the basic
premise of the Convention that judicial intervention will be directed towards either
permitting a litigation to proceed on the merits (after concluding that there is no valid
arbitration agreement) or annulling or denying recognition to an arbitral award but not
otherwise intervening in the arbitral process.
314) For a discussion of the principle of judicial non-interference in the arbitral proceedings,
see15.06.
315) For this reason, among others, the Indian, Pakistani and Indonesian antiarbitration orders
noted above were inappropriate. See8.04[A]. It would also appear that they were
violations of the New York Convention, by virtue of forbidding the arbitration of disputes
that were subject to a valid arbitration agreement.
316) See4.05[A][1]; 4.05[C][5]; 6.01; 6.06; 11.03[C][1][c][vi]; 12.01[B][2]; 15.04[A]; 22.02[E]
[2][b]; 25.02[A]-[B] for a discussion of the role of national law and public policy in
determining the scope of nonarbitrability under Articles II and V of the New York
Convention.
317) See4.04[B][2][b][vi]; 4.05[A][1]; 25.02[A]-[B]; 26.05[C][8][b]; 26.05[C][9][e].
318) See7.03[I][1].
319) See, e.g., PartialAward in ICC Case No. 10623, 21 ASA Bull. 59 (2003); Decision in Unidentified
ICC Case, discussed in Y. Derains & E. Schwartz, A Guide to the ICC Rules of Arbitration 106
n.155 (2d ed. 2005) (tribunal proceeded with arbitration notwithstanding Ghanaian court
order, in arbitral seat, holding disputes nonarbitrable and enjoining arbitration); Saipem
SpA v. Peoples Repub. of Bangladesh, Decision on Jurisdiction in ICSID Case No. ARB/05/07
of 21 March 2007 (ICC tribunal ignored injunction by Bangladeshi court); Himpurna Cal.
Energy Ltd v. Repub. of Indonesia, Interim Ad Hoc Award of 26 September 1999 and Final
Award of 16 October 1999, XXV Y.B. Comm. Arb. 109 (2000) (refusing to comply with
antiarbitration injunction issued by courts of arbitral seat). See alsoJudgment of 16 July
2002, 21 ASA Bull. 120 (Swiss Federal Tribunal) (2003) (refusing to recognize Jamaican
antiarbitration injunction and ordering stay of Swiss arbitration on grounds that
arbitration should be conducted in Jamaica).
320) PartialAward in ICC Case No. 10623, 21 ASA Bull. 59, 99 (2003).
321) SeeHimpurna Cal. Energy Ltd v. Repub. of Indonesia, Interim Ad Hoc Award of 26 September
1999 and Final Award of 16 October 1999, XXV Y.B. Comm. Arb. 109 (2000). See also14.04[B]
[2].
322) Himpurna Cal. Energy Ltd v. Repub. of Indonesia, Interim Ad Hoc Award of 26 September
1999 and Final Award of 16 October 1999, XXV Y.B. Comm. Arb. 109, 73 (2000) (reciting
Procedural Order of 7 September 1999).
323) Himpurna Cal. Energy Ltd v. Repub. of Indonesia, Interim Ad Hoc Award of 26 September
1999 and Final Award of 16 October 1999, XXV Y.B. Comm. Arb. 109, 114 (2000).
324) This conclusion is far from clear. It is common in many jurisdictions for in personam
injunctions to have extraterritorial effect. G. Born & P. Rutledge, International Civil
Litigation in United States Courts 567-88 (5th ed. 2011). It is difficult to imagine that the
Indonesian court took a different view. The real basis for the tribunals decision was that
its independent assessment that a valid arbitration agreement bound the parties and
that the Indonesian courts contrary conclusion was illegitimate.
325) See27.03, pp. 3792-3809 for a discussion of the lis pendens doctrine in this context. As
discussed above, most national arbitration legislation recognizes the power of arbitrators
to continue with an arbitration notwithstanding a pending jurisdictional challenge in
national courts. See7.03[A], pp. 1076-78; 7.03[E][2], pp. 1142-47.
326) See8.04[C]; 27.03[B].
45
KluwerArbitration
46
KluwerArbitration
Chapter 9: Interpretation of International Arbitration
Author Agreements
Gary B. Born (IAI profile) This Chapter examines the interpretation of international arbitration agreements. The Chapter
first addresses the rules of construction which are applied in different legal systems in
interpreting the scope of arbitration agreements. Second, the Chapter considers the choice of
the law applicable to the interpretation of international arbitration agreements. Third, the
Publication Chapter addresses a number of recurrent interpretative issues that arise with respect to
International Commercial international arbitration agreements in practice. Finally, the Chapter considers issues of
Arbitration (Second Edition) competence-competence to decide disputes over the scope of international arbitration
agreements.
Bibliographic reference 9.01 INTRODUCTION

'Chapter 9: Interpretation of International arbitration agreements are creatures of contract. (1) Parties are almost entirely
International Arbitration free to draft their arbitration clauses in whatever way they choose. As a consequence, like
Agreements', in Gary B. Born , other contracts, arbitration agreements vary widely in language, length, sophistication and
International Commercial quality. (2) Inevitably, like other types of contracts, arbitration agreements give rise to
Arbitration (Second Edition), frequent questions of interpretation, particularly concerning the scope of the matters referred
2nd edition ( Kluwer Law to arbitration. In the words of one commentator, there is an irritatingly large quantity of court
International; Kluwer Law litigation relating to the width of arbitral clauses. (3)
International 2014) pp. 1317 - To a substantial extent, developed national legal systems have formulated specialized rules
1403 for interpreting international arbitration agreements, specifically designed to facilitate the
arbitral process. These interpretative principles generally provide for liberal construction of
arbitration agreements, both to allow an expansive dispute resolution mechanism and to
prevent drafting errors or ambiguities from frustrating the parties agreement to arbitrate.
Nonetheless, where the parties have excluded a particular matter from the scope of their
arbitration agreement, it is elementary that arbitration is simply a matter of contract
between the parties; it is a way to resolve those disputes but only those disputes that the
parties have agreed to submit to arbitration. (4)
P 1317
In addition to disputes over the scope of arbitration clauses, arbitration agreements also
give rise to other interpretative issues. These include disputes over the arbitral procedures,
applicable institutional rules, arbitral seat and similar issues. (5) As with questions of scope,
these disputes essentially require interpreting the parties arbitration agreement, in order to
ascertain their intentions.
As noted above, disputes over the interpretation of arbitration agreements raise particular
issues of competence-competence, which are often resolved in favor of arbitral determination
of such disputes. (6) As also noted above, the interpretation of arbitration agreements raises
choice-of-law questions. (7) Both of these issues are also addressed below.
9.02 SCOPE OF ARBITRATION AGREEMENT

The most frequent issue that arises in the interpretation of international arbitration
agreements concerns the scope of the parties agreement. That is, what category of disputes,
disagreements, or claims have the parties agreed to arbitrate? In practice, as discussed below,
disputes about the scope of an arbitration clause generally concern questions of whether the
language of the parties agreement extends to all contractual claims under a particular
contract (or, instead, only a specified subset of such claims); whether noncontractual claims
(i.e., tort, delict, breach of noncontractual or statutory protections) are subject to arbitration;
or whether claims under separate, but related, contracts are subject to arbitration.

International arbitration conventions do not expressly address questions concerning
interpretation of the scope of arbitration agreements. The New York Convention acknowledges
the necessity of interpreting the scope of an arbitration agreement, and provides in Article V(1)
(c) for the non-recognition of awards that exceed the scope of the agreement to arbitrate. (8)
The Convention does not, however, expressly prescribe any rules governing the interpretative
process. (9)
The Inter-American Convention and the European Convention take the same approach as the
New York Convention. (10) The ICSID Convention is similar (in omitting express rules regarding
the interpretation of arbitration agreements). (11)
P 1318
Despite this, and as discussed below, the basic pro-arbitration objectives of the New
York Convention and other leading international arbitration conventions have been relied
upon by national courts in developing liberal rules of construction of international arbitration
agreements. (12) In many jurisdictions, courts hold that the parties intentions, in concluding an
agreement to arbitrate in an international commercial setting, are presumptively to resolve all
1
disputes related to their business relationship in a single, centralized proceeding, rather than
in separate and potentially inconsistent proceedings. (13) In the words of one national court
decision: any doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration. (14)
The better view is that this rule of interpretation is prescribed, as a matter of international
law, by the Conventions pro-arbitration objectives and by Article IIs requirement that
Contracting States recognize and enforce international arbitration agreements. As discussed in
detail below, a liberal rule of interpretation, based on a presumption favoring centralized
one-stop dispute resolution, is mandated by the parties intentions: rational
businesspersons, acting in good faith, do not desire their disputes to be resolved in
multiplicitous proceedings that impose costs, delays and the risks of inconsistent results, but
instead desire a single, centralized forum for resolving their disputes. (15) Articles II(1) and II(3)
of the Convention require courts of Contracting States to give effect to these presumptive
intentions (absent contrary agreement by the parties).
This pro-arbitration rule of interpretation, and the authorities discussed below, are applicable
generally to arbitration agreements subject to the Convention. In particular, this rule of
interpretation is applicable both in disputes over recognition of arbitration agreements under
Article II and in disputes over recognition of arbitral awards under Article V(1)(c). (16) In both
contexts, the overwhelming weight of national court decisions is consistent with the existence
of this rule of construction.

Like the New York Convention, national arbitration legislation recognizes the need for
interpreting the scope of arbitration agreements, but generally without prescribing any
specific rules of construction. There are a few exceptions to this approach, where national
arbitration legislation contains provisions dealing expressly with the interpretation of
arbitration agreements, but these are unusual. (17)
The UNCITRAL Model Law is representative of most national legislation in its approach to the
interpretation of international arbitration agreements. Article 8 of the Model Law provides for
the dismissal or suspension of litigation of a matter which is the subject of an arbitration
P 1319
agreement, referring to matters falling within the arguable scope of the parties
arbitration agreement. (18) Articles 34(2)(a)(iii) and 36(1)(a)(iii) of the Model Law (concerning
recognition and annulment of awards) are similar, contemplating that determinations need to
be made as to what matters the parties have and have not agreed to submit to arbitration.
Nonetheless, none of these provisions further address issues of construction of the arbitration
agreement. (19)
Other national arbitration statutes are similar to the Model Law, recognizing the need for
interpretation of arbitration agreements, but not specifying rules of construction or
interpretation. That is true under the U.S. FAA, the French Code of Civil Procedure, the Swiss
Law on Private International Law, the Japanese Arbitration Law and almost all other modern
arbitration legislation. (20)
As with the New York Convention, the pro-arbitration policies underlying the UNCITRAL Model
Law and most other contemporary arbitration statutes speak in favor of liberal approaches to
the interpretation of arbitration agreements. The legislative policies underlying modern
arbitration statutes all argue decisively for expansive interpretation of international
arbitration agreements, in order both to give effect to the parties intentions and to maximize
the efficiency and efficacy of the arbitral process. (21)
[C] Applicability of General Rules of Contract Interpretation to International

Arbitration Agreements
As a consequence of the silence of international conventions and national legislation, the
interpretation of international arbitration agreements has in most cases been a matter for
P 1320 national courts and arbitral tribunals. The starting point for interpretation has ordinarily
been general principles of national contract law. (22) In addition, as discussed below, the pro-
arbitration policies of the New York Convention and other international arbitration
conventions, as well as the similar policies of national legislation, have significantly influenced
the interpretation of such agreements. (23)
It is almost uniformly held or assumed that generally-applicable rules of contract construction
apply to the interpretation of international arbitration agreements. Arbitral tribunals routinely
refer to general canons of contract interpretation, often not derived from any single national
legal system, in determining the meaning and scope of arbitration agreements. (24) As one
well-reasoned award held: an arbitral tribunal should construe the validity and scope of an
arbitration clause in accordance with the general principles of the interpretation of contracts,
i.e., seeking the real and common intent of parties, based on the wording of the clause, and the
principle of confidence or good faith. (25)
Similarly, national courts in both common law and civil law jurisdictions almost uniformly
begin their analysis of the scope of an international arbitration agreement by applying
ordinary rules of contract interpretation. (26) Applying the UNCITRAL Model Law, a well-
reasoned Singaporean appellate decision concluded:
P 1321
2
P 1321 An arbitration agreementshould be construed like any other commercial agreement.
The fundamental principle of documentary interpretation is to give effect to the intention of
the parties as expressed in the document.A commercially logical and sensible construction
was to be preferred over another that was commercially illogical. (27)
Similarly, in the words of one Australian court, [a]rbitration clauses are contractual
provisionsand are governed by the ordinary rules of contractual interpretation. (28)
Likewise, the Swiss Federal Tribunal has held that [t]he interpretation of an arbitration clause
follows the general principles applicable to the interpretation of private declarations of will.
(29) Commentary adopts the same approach to interpretation of international arbitration
agreements. (30)
There is substantial authority holding that the object of interpretation of an agreement to
arbitrate is ascertaining the parties genuine intentions. (31) As one U.S. decision held, as with
any other contract, the parties intentions control, (32) while a civil law decision observed:
the interpretation of arbitration agreements follows the general principles of interpretation of
private declarations of intent. The actual meeting of the minds is decisive in such respect.
Should it be not possible to derive such actual intention, the arbitration agreement is to be
interpreted objectively. That is, the declarations of intention will be interpreted according to
P 1322
how the recipient of such declarations could understand them in the exercise of his good
faith. (33)
The rules of contract interpretation generally-applicable to international arbitration
agreements include the canons of construction that are familiar in other contractual settings
such as the specific prevailing over the general, giving effect to all parts of the parties
agreement, ut res magis valeat quam pereat, principles of good faith, the contra proferentem
rule and common usage of terms at the time of the agreement.
A number of courts and arbitral tribunals have interpreted arbitration agreements by
reference to the canon of construction that seeks to give effect to all parts of the parties
agreement. In the words of one authority, an arbitration agreement should be interpreted in
accordance with the cardinal principle of contract construction: that a document should be
read to give effect to all its provisions to render them consistent with each other. (34) Other
authorities are to the same effect. (35) Notwithstanding the separability presumption, this rule
of construction requires considering, and giving effect to, the terms of the underlying contract
when interpreting the separable arbitration clause. (36)
National courts and arbitral tribunals have also frequently applied the rules that the specific
prevails over the general. (37) As one authority concluded, [a]n age-old precept of contract
interpretation requires that agreements be interpreted as a whole to give meaning to all
terms, but when provisions conflict so that all cannot be given full weight, the more specific
clauses are deemed to reflect the parties intentions a specific provision controls a general
one, (38) while a frequently-cited arbitral award held that [u]nder the rule of interpretation
lex specialis derogat legi generali the more specific provision takes precedence over the more
general one. (39)
Other authorities cite principles of good faith in interpreting arbitration agreements. (40) As
P 1323 one award put it, any convention, including conventions to arbitrate, should be construed
in good faith, that is to say by taking into account the consequences of the commitments the
parties may be considered as having reasonably and legitimately envisaged. (41) Or, as the
Swiss Federal Tribunal has repeatedly held, one must seek the presumed intention of the
contracting parties, whose declarations are to be interpreted in accordance with the rules of
good faith. (42)
National courts and arbitral tribunals have also applied the contra proferentem rule. (43) In the
words of one U.S. court, numerous courts have employed the tenet of contra proferentem in
construing ambiguities in arbitration agreements against the drafters. (44) Other authorities
have emphasized, however, that the contra proferentem canon of construction is one of last
resort and generally of limited assistance in construing agreements to arbitrate. (45) Indeed, in
the United States, courts have held that the rule is displaced by the presumption (discussed
below) that arbitration agreements will be interpreted expansively. (46)
In interpreting international arbitration agreements, other authorities have applied the ut res
magis valeat quam pereat rule (47) and have given effect to the common usage of terms at the
P 1324 time of the agreement. (48) In principle, other generally-applicable rules of contract
construction are also applicable to the interpretation of arbitration agreements.
One recurrent interpretative issue is the extent to which the parties post-contractual conduct
or statements can be used to interpret an arbitration agreement. As a general matter, different
legal systems adopt different approaches to this question, with, for example, English and Swiss
courts generally excluding post-contractual conduct/statements, (49) and many other courts
and tribunals admitting such materials. (50) When it is admitted, such evidence can be
particularly compelling where a party has claimed in one forum that disputes are subject to
arbitration, and then subsequently objects to an arbitral tribunals jurisdiction. (51)
[D] Presumptions Regarding Scope of International Arbitration Agreement

To a greater extent than many other contractual provisions, arbitration clauses are relatively
standard and formulaic, (52) but must inevitably deal with often unforeseen and widely varying
3
circumstances and claims. As a consequence, contractual language will frequently not
specifically resolve or address issues relating to the coverage of an arbitration clause. Indeed,
the parties (and their legal advisers) will frequently not have consciously considered whether
their arbitration agreement would apply to particular types of disputes or claims.
P 1325 Instead, general rules of interpretation and presumptions regarding the parties intent
play an important and often decisive role in determining the meaning of such agreements. (53)
These presumptions seek to identify the reasonable, good faith intentions of commercially
reasonable parties and to further the purposes of international arbitration agreements and
contemporary national arbitration legislation. This use of presumptions of this character in
order to interpret arbitration agreements has long been a feature of developed legal systems.
[1] Pro-Arbitration Presumptions Regarding Scope of International Arbitration Agreement
In a substantial majority of all jurisdictions, national law provides that international
arbitration agreements should be interpreted in light of a pro-arbitration presumption.
Derived from the policies of leading international arbitration conventions and national
arbitration legislation, and from the parties likely objectives, this type of presumption
provides that a valid arbitration clause should generally be interpreted expansively and, in
cases of doubt, extended to encompass disputed claims. That is particularly true where an
arbitration clause encompasses some of the parties disputes and the question is whether it
also applies to related disputes, so that all such controversies can be resolved in a single
proceeding (rather than in multiple proceedings in different forums).
[a] U.S. Federal Arbitration Act
In the United States, the U.S. Supreme Court and lower federal courts have repeatedly and
emphatically applied an unusually strong presumption that parties to an arbitration
P 1326 agreement intended to resolve all their disputes by arbitration. (54) In one leading
decision involving an international arbitration agreement, the Court declared that any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration. (55) Or, as
the Supreme Court put it even more expansively in another decision, arbitration must be
compelled unless the court can say with positive assurance that the arbitration clause is not
susceptible to an interpretation that covers the asserted dispute. (56)
The stated rationale for the foregoing presumption rests on the FAAs pro-arbitration
objectives and on the parties objective, good faith intentions. One court reasoned that there is
a statutory policy of rapid and unobstructed enforcement of arbitration agreements,
requiring a liberal reading of arbitration agreements, (57) while another court observed that
questions of arbitrability must be addressed with a healthy regard for the federal policy
favoring arbitration. (58) Lower U.S. courts have consistently followed this vigorously pro-
arbitration rule of interpretation, emphasizing the importance of federal policies favoring
arbitration as a means of dispute resolution. (59)
U.S. judicial decisions involving international arbitration agreements under the New York
Convention have adopted an especially broad approach to interpretation, expressly
P 1327 distinguishing international cases from purely domestic ones. (60) One court remarked
that the pro-arbitration rule of interpretation applies with special force in the field of
international commerce, (61) while another court commented that the policy in favor of
arbitration is even stronger in the context of international business transactions. (62)
Although not always at the forefront of U.S. judicial reasoning, the true rationale for the FAAs
robust pro-arbitration presumption in interpreting international arbitration agreements is that
it reflects the expectations and intentions of commercial parties, while advancing important
public policies. In particular, the pro-arbitration presumption rests on the premise that
business people who conclude international arbitration agreements ordinarily intend
arbitration to provide a single, centralized mechanism for finally resolving all of the disputes
under their commercial contracts, rather than leaving those disputes to national courts
(including the national courts of their counterparties); reasonable commercial parties also do
not want, or intend, to incur the expense, delay and uncertainty of multiplicitous proceedings
in different forums or of jurisdictional disputes. (63)
At the same time, the FAAs pro-arbitration presumption also serves important public interests
when applied to international arbitration agreements. In particular, the presumption
facilitates a fair, efficient and neutral means of dispute resolution in international commercial
matters, thereby reducing the peculiar risks and uncertainties that otherwise exist for
international trade and commerce. (64)
P 1328 It is clear that the pro-arbitration rule of interpretation applies equally to international
arbitrations seated in the United States (65) and arbitrations seated abroad. (66) This pro-
arbitration rule of interpretation has also generally been held to apply equally to both
narrow and broad, arbitration clauses. (67) In one courts words, even a narrow arbitration
clause must be construed in light of the presumption in favor of arbitration. (68)
In contrast, other U.S. lower courts have held either that the pro-arbitration presumption of
arbitrability does not apply to narrow arbitration agreements, (69) or that it applies with less
force. (70) As one decision in this latter line of authority held, the strong federal presumption
in favor of arbitrability applies with greater force when an arbitration clause is a broad one.
(71)
P 1329
4
P 1329 The pro-arbitration presumption under the FAA has also been held to apply equally to
both contractual and noncontractual (i.e., tort, statutory) claims. (72) The U.S. Supreme Court
rejected the suggestion that the pro-arbitration rule of interpretation applied only to
contractual claims, reasoning that [t]here is no reason to depart from the [pro-arbitration]
guidelines where a party bound by an arbitration agreement raises claims founded on
statutory rights. (73)
Despite the FAAs presumption regarding the scope of arbitration agreements, the language
and circumstances of the parties arbitration agreement remain the foundation of U.S.
decisions concerning the scope of those agreements. (74) The FAAs pro-arbitration
presumption is important, but it cannot operate in the absence of contractual language and,
where the language of the parties agreement indicates an intention to exclude particular
matters from arbitration, that intention will be given effect.
The pro-arbitration rule of interpretation adopted by U.S. courts applies only to interpreting
the scope of an existent arbitration agreement, and not to determining whether any valid
arbitration agreement exists at all. The U.S. Supreme Court made this clear in First Options of
P 1330 Chicago v. Kaplan, (75) and lower U.S. courts have almost uniformly adopted the same
distinction, holding that the federal policy favoring arbitration is most applicable in
determining the scope of arbitration agreements, rather than whether an arbitration
agreement actually exists. (76) As discussed above, U.S. courts approach the question whether
or not an arbitration agreement actually exists by applying generally-applicable contract law
principles, often without relying on the same pro-arbitration presumption used in
interpreting the scope of an existent agreement. (77)
[b] Swiss Law on Private International Law
Most other national arbitration regimes also take pro-arbitration approaches to the
interpretation of international arbitration clauses, albeit usually not with precisely the same
strong presumption in favor of arbitration as that applied by U.S. courts. Thus, Swiss courts and
commentators have concluded that arbitration agreements are subject to basic rules of
contract interpretation, in principle no different from those applicable to other types of
agreements. (78) In the words of the Swiss Federal Tribunal, [t]he interpretation of an
arbitration clause follows the general principles applicable to the interpretation of private
declarations of will. (79)
In addition, there is also authority under Swiss law for a pro-arbitration presumption in
interpreting the scope of arbitration agreements. (80) The Swiss Federal Tribunal has held that,
P 1331 if it is established that an arbitration clause exists, there is no reason to interpret that
clause restrictively, and that it must instead be assumed that the parties wish for an
embracing jurisdiction of the arbitral tribunal, given that they have concluded an arbitration
agreement. (81) More recently, the Federal Tribunal explained:
In accordance with good faith, it must therefore be assumed that at the time they entered
into the contract concerning this set of facts the Parties wanted to submit all claims to one
type of procedure and did not want different jurisdictions. (82)
Arbitral tribunals have adopted the same approach when applying Swiss law. (83)
As with the approach adopted by U.S. courts, this pro-arbitration rule of interpretation under
Swiss law applies only to interpreting the scope of an existent arbitration agreement, and not
to determining whether a valid arbitration agreement exists. On the contrary, as discussed
above, Swiss courts generally apply a relatively strict standard of proof to the issue of the
existence of a valid arbitration agreement. (84)
[c] Germany
Like U.S. and Swiss authorities, German courts have held that valid arbitration agreements
should be liberally interpreted. A decision of the Hamburg Oberlandesgericht declared in
case of doubt an arbitration clause is not to be interpreted restrictively, but rather
P 1332 extensively. (85) The courts rationale was that a comprehensive settlement of the
parties dispute is preferable to piecemeal, multiplicitous litigation. Another leading German
decision reasoned that a liberal construction of arbitration clauses is required, because, [i]f
the parties choose to resolve their disputes by arbitration as opposed to by state courts, they
have certain motives and reasons for doing so, and this intention must be presumed to extend
to disputes that frequently arise under the contractual relationship in question. (86)
[d] English Arbitration Act
Likewise, English judicial authority has recently abandoned traditional, sometimes restrictive,
modes of construction, (87) and adopted an approach similar to that in the United States,
Switzerland and Germany. In the words of a 2007 English Court of Appeal decision in Fiona Trust
& Holding Corp. v. Privalov, subsequently affirmed by the House of Lords, any jurisdiction or
arbitration clause in an international commercial contract should be liberally construed. (88)
As the court explained:
we consider that the time has now come for a line of some sort to be drawn and a fresh start
made at any rate for cases arising in an international commercial context. Ordinary
businessmen would be surprised at the nice distinctions drawn in the cases and the time taken
up by argument in debating whether a particular case falls within one set of words or another
5
very similar set of words. If businessmen go to the trouble of agreeing that their disputes be
heard in the courts of a particular country or by a tribunal of their choice they do not expect
(at any rate when they are making the contract in the first place) that time and expense will be
taken in lengthy argument about the nature of particular causes of action and whether any
particular cause of action comes within the meaning of the particular phrase they have chosen
in their arbitration clause.[I]t seems to us any jurisdiction or arbitration clause in an
international commercial contract should be liberally construed. (89)
P 1333 As with decisions in other jurisdictions, (90) the English court relied on the desirability of
one-stop dispute resolution, particularly in international matters, in affirming a relatively
broad pro-arbitration rule of interpretation. In the House of Lords words:
The proposition that any jurisdiction or arbitration clause in an international commercial
contract should be liberally construed promotes legal certainty. It serves to underline the
golden rule that if the parties wish to have issues as to the validity of their contract decided by
one tribunal and issues as to its meaning or performance decided by another, they must say so
expressly. Otherwise they will be taken to have agreed on a single tribunal for the resolution of
all such disputes. (91)
Subsequent English decisions have emphasized this expansive approach to the interpretation
of arbitration agreements. (92)
Thus, under English law, fine distinctions between different formulae used in many arbitration
clauses are now treated as relatively unimportant to commercial entities, (93) and the more
significant consideration is the parties desire for a single neutral, competent and efficient
dispute resolution forum.
[e] Other Jurisdictions
Decisions in other jurisdictions have also invoked pro-arbitration policies, of varying degrees
of intensity, in concluding that various types of claims were within the scope of the arbitration
P 1334 agreement. (94) This is true in both common law and civil law jurisdictions; it is also true in
virtually all UNCITRAL Model Law jurisdictions. Indeed, considered more broadly, there are
very few developed jurisdictions which do not adopt a pro-arbitration approach to
interpretation of international arbitration agreements.
Historically, Australian courts adopted a presumptively narrow view of the intended scope of
arbitration agreements, often drawing fine distinctions between different wording in model
arbitration clauses. (95) Particularly in more recent decisions, Australian courts have adopted
a limited pro-arbitration rule of interpretation, while expressing doubts about some of the
more expansive U.S. statements of pro-arbitration presumptions. (96) In the words of a recent
Australian Federal Court decision, arbitration agreements are governed by the ordinary rules
of contract interpretation and a liberal approach to their meaning should be given, without
any policy attempting to restrict their scope. Rather:
The courts will assume that the parties did not intend the inconvenience of having possible
disputes from their transaction being heard in two places.[But] there is no legal rule that a
dispute necessarily falls within an arbitration clause unless the court can be persuaded with
positive assurance that the clause is not susceptible of any meaning that would include the
dispute with the clause. (97)
Canadian authorities have also abandoned a historical approach of interpreting arbitration
P 1335 agreements narrowly and now embrace a more liberal approach to interpretative issues.
(98) According to a Canadian appellate decision, applying the UNCITRAL Model Law:
The law [of Ontario] also includes a relatively recent, and clear, shift in policy towards
encouraging parties to submit their differences to consensual dispute resolution mechanisms
outside of the regular court stream.At the very least, where the language of the arbitration
clause is capable of bearing two interpretations, and one of those interpretations fairly
provides for arbitration, the courts should lean towards honoring that option. (99)
Austrian courts have also adopted a pro-arbitration approach to the interpretation of
international arbitration agreements under Austrias version of the UNCITRAL Model Law. (100)
In the words of the Austrian Oberster Gerichtshof,
What disputes are covered by an arbitration agreement depends on the intention of the
parties, which is to be interpreted within the limits set by the wording of the agreement. If no
common intention of the parties can be determined, the purpose of the agreement is decisive.
If the wording of the declaration of intent allows for two equally plausible interpretations, the
interpretation which favors the validity of the arbitration agreement and its applicability to a
certain dispute is to be preferred. (101)
Authorities from Singapore (102) and Hong Kong, (103) also under the Model Law, are to the
P 1336 same effect. In the words of one Singaporean decision: we agree that the preponderance
of authority favours the view that arbitration clauses should be generously construed such that
all manner of claims, whether common law or statutory, should be regarded as falling within
their scope unless there is good reason to conclude otherwise. (104) Decisions in other
jurisdictions also adopt broad approaches to the interpretation of international arbitration
agreements. (105)
Similarly, arbitral awards have generally applied a pro-arbitration presumption in
6
interpreting international arbitration agreements. In the words of one award applying the
UNCITRAL Rules, there is a tendencynot only to a non-restrictive but even to an expansive
view of international arbitration[] [clauses]. (106) Or, as another tribunal held, interpretation
of an arbitration agreement goes beyond the requirements of a strict literal interpretation. To
the contrary, when the parties insert an arbitration agreement in their contract, one should
presume that their intent was to establish an effective machinery for the settlement of
disputes. (107)
Recent amendments to the Italian Code of Civil Procedure codify a pro-arbitration rule of
interpretation, making Italy one of the first jurisdictions to legislatively address this issue.
(108) There is much to commend the Italian legislative approach, which other jurisdictions can
be expected to follow.
P 1337 In sum, courts in almost all jurisdictions, as well as most arbitral awards, have adopted a
pro-arbitration rule of construction, interpreting arbitration agreements expansively. This
rule of interpretation effectuates the parties likely intentions, as well the objectives of the
New York Convention and most national arbitration legislation.
[2] Restrictive Presumptions Regarding Scope of International Arbitration Agreement
Not all authorities or national laws adopt the pro-arbitration approach to the interpretation
of arbitration agreements that prevails in the United States, Switzerland, Germany, Canada,
England, Italy and elsewhere. On the contrary, a few authorities (almost exclusively older ones)
have held that arbitration clauses must be interpreted restrictively, resolving doubts about
particular disputes against coverage by the clause. The restrictive presumption is generally
explained on the grounds that arbitration is a derogation from otherwise available access to
civil justice and the natural judge of the contract, and that such derogations must be
construed narrowly, (109) or that the arbitral process suffers from various deficiencies, and
therefore should not be encouraged. (110)
For example, one decision of the Paris Cour dappel interpreted the phrase all disputes
related to the interpretation of the contract as not encompassing disputes concerning the
performance of the contract. (111) A few French commentators have also concluded that
international arbitration agreements must be interpreted restrictively. (112) Historically,
Australian, Canadian and Italian judicial decisions were similar, until the legislative
developments discussed above adopting a pro-arbitration approach to interpretation. (113) As
one relatively recent Italian decision reasoned:
P 1338 Agreements derogating from the jurisdiction of state courts must be interpreted
restrictively and in case of doubt it must be deemed that those courts have jurisdiction.
Hence, a contractual clause in the main contract which derogates from Italian jurisdiction in
favor of a foreign arbitrator does not extend to disputes concerning related contracts. (114)
Likewise, under some early U.S. state court decisions, arbitration agreements were construed
narrowly with respect to their scope. (115) According to one New York court, [t]he agreement to
arbitrate must be express, direct, and unequivocal as to the issues or disputes to be submitted
to arbitration. (116) These state law rules have almost uniformly been held preempted (or
superseded) by the FAA where international or interstate commerce is involved. (117)
A limited number of (usually older) arbitral awards have also applied restrictive presumptions
to the interpretation of the scope of arbitration agreements. These awards have concluded
that arbitration clauses must be interpreted strictly or restrictively. (118)
P 1339 These conclusions are out of step with both the ordinary intentions of commercial parties
and more recent authority, from both arbitral tribunals and national courts. (119) In many
jurisdictions, these sorts of conclusions have been expressly rejected by more recent authority,
either legislative (120) or judicial. (121) These decisions are also contrary to the better view of
the New York Convention and the pro-arbitration rule of construction mandated by Article II.
(122)
[3] No Pro-Arbitration or Restrictive Presumption
Another body of authorities have held that international arbitration agreements should be
interpreted without resort to either a pro-arbitration or a restrictive presumption. These
authorities have instead sought to ascertain the parties precise intentions, by reference to the
language and circumstances of the arbitration agreement, without relying on any external,
arbitration-specific rules of construction.
Although recent decisions have adopted a different approach, English courts historically did
not appear to rely on either pro-arbitration or antiarbitration presumptions. Rather,
English courts traditionally placed significant emphasis on the precise wording of arbitration
clauses, drawing relatively fine distinctions between slightly different verbal formulae. (123)
Judicial interpretation of particular formulae in previous cases, although not necessarily
binding, were frequently referred to and relied on. (124) As discussed above, however, English
courts have more recently adopted a fundamentally different approach, embracing a pro-
arbitration rule of interpretation of the scope of arbitration agreements in international
commercial transactions. (125)
Similar to the historic English approach, a few older international arbitral awards also refused
to apply either a pro-arbitration or antiarbitration presumption. For example, a 1983 ICSID
P 1340
award reasoned that a convention to arbitrate is not to be construed restrictively, nor, as
7
a matter of fact, broadly or liberally. It is to be construed in a way which leads to find out and
to respect the common will of the parties. (126) Another award concluded that there is no
valid reason, why, under either Swiss law or under general principles, [an arbitration clause]
should be given either a restricted interpretation or an extensive interpretation. (127)
[4] Interpretation of Arbitration Agreements in Specialized Institutional Settings
As discussed elsewhere, there are numerous specialized arbitral institutions, generally
associated with particular markets or trade associations. (128) Examples include the
commodities, shipping and construction industries. (129) The arbitrations arising under such
institutional rules are often highly-technical, trade proceedings.
A substantial argument can be made that otherwise applicable arbitration-specific
interpretative presumptions should not be applied to model arbitration clauses incorporating
such institutional rules. The rationale would be that parties to such arbitration clauses
ordinarily consider arbitration as only involving a technical inquiry into a relatively limited set
of contractual disputes, and not broader issues.
On the other hand, many of the considerations favoring one-stop dispute resolution and
disfavoring fine distinctions between different formulae used in standard arbitration clauses
apply with equal force in this context. There is little authority concerning this argument,
although it underscores the general point that rules of construction must be applied to
particular contractual relations between particular parties, as a means of discerning, not
overriding, the parties true intentions.
[5] Interpretation of Arbitration Clauses With Exceptions or Limited Scope
As discussed above, some courts have declined to apply pro-arbitration interpretative
presumptions where an arbitration clause contains exceptions. (130) Similarly, other
authorities have suggested that the rationale for pro-arbitration interpretative
P 1341 presumptions does not apply where an arbitration clause is limited in scope or subject to
exceptions:
In contradistinction [to arbitration clauses] expert determination clauses generally
presuppose that the parties intended certain types of dispute to be resolved by expert
determination and other types by the court (or if there is an arbitration clause by arbitrators).
The rationale of Fiona Trust does not therefore apply, as the parties have agreed to two types
of dispute resolution procedure for disputes which might arise under the agreement.There is,
therefore, no presumption in favour of giving a wide and generous interpretation to the
jurisdiction of the expert conferred by the expert determination clause as the reasoning in
Fiona Trust is inapplicable. (131)
There is some force to this approach, including if extended to arbitration agreements, but it is
ultimately unpersuasive.
Every arbitration clause is by its nature limited (whether to a particular transaction, contract,
or aspect of a contract). The decisive point in interpreting any such clause is that the parties
choice of arbitration to resolve some set of disputes should presumptively be interpreted as
including related disputes, and thus ensuring a single dispute resolution forum (rather than
multiple forums), save where the parties agree to the contrary. Put simply, the fact that the
parties defined a limited arbitral jurisdiction does not suffice to negate the reasons for
interpreting the scope of that agreement liberally, given the gains in efficiency and fairness
from doing so, rather than narrowly. (132)
The foregoing rationale is consistent with the better-reasoned authority on the topic (cited
above). (133) As one court put it, [t]he alternative dispute resolution clause at issueapplies
only to disagreements over the amount due for any Production Lease Payment to be paid
hereunder, [y]et we bear in mind the strong federal policy favoring arbitration [a]nd we note
that any doubts must be resolved in favor of arbitration. (134) This analysis is correct and best
achieves the parties objective, good faith intentions in international arbitration.
P 1342 [6] Future Directions: Presumptions Regarding Scope of International Arbitration
Agreement
It is fundamental that the scope of an agreement to arbitrate is a matter of contract, subject to
the parties will, which will be given effect by Article II of the New York Convention and the
provisions of national arbitration statutes. The starting points for interpreting arbitration
agreements are generally-applicable principles of contract law and canons of contract
interpretation.
It is nonetheless perfectly appropriate, and indeed necessary, to adopt arbitration-specific
presumptions in construing the scope of international arbitration agreements. It is correctly
observed that parties typically address dispute resolution provisions at the end of contractual
negotiations and usually devote little attention to their terms. (135) Even where counsel are
involved, they frequently incorporate model clauses recommended by leading arbitral
institutions, (136) with limited independent evaluation or consideration of questions of scope.
Even where such issues are considered, including by counsel, it is very difficult to deal with
issues of the scope of an arbitration clause in advance and in the abstract: identifying how
particular verbal formulae (such as disputes arising under) apply to unforeseen future
controversies is difficult to accomplish in the abstract. In these circumstances, overly close
8
attention to the specific wording of arbitration agreements can be misleading and artificial.
(137) This is well-illustrated by the lack of real analytic clarity or guidance provided by judicial
decisions attempting to parse the formulae used in arbitration clauses. (138)
The more reliable and authentic expression of the parties intentions is their choice of
international arbitration to resolve their disputes. As discussed above, that choice carries with
it a presumptive desire for a single, neutral, efficient and competent dispute resolution
mechanism, in order to avoid jurisdictional disputes and multiplicitous litigations. (139) These
expectations are materially advanced through an expansive interpretation of the scope of
international arbitration agreements. At the same time, such an approach also serves the
P 1343 public interest by avoiding costly and unproductive litigation (the irritatingly large
quantity of court litigation, (140) noted above) over the scope of arbitration agreements and
by encouraging international commerce (by facilitating the efficacy and efficiency of the
arbitral process).
Accordingly, in most cases, the better approach to the interpretation of international
arbitration agreements is a robust pro-arbitration presumption in favor of encompassing all
disputes relating to the parties contract within their arbitration agreement. Although this
presumption should not be used to rewrite the parties agreement, in all cases of doubt about
the scope of an international arbitration agreement, such clauses should be interpreted
liberally to include, rather than to exclude, disputes and to ensure insofar as possible that all
of the parties disagreements are resolved in a single forum, rather than in multiple, possibly
contradictory proceedings.
A pro-arbitration presumption is particularly but not only appropriate in instances where
the parties have agreed to arbitrate their disputes under a contract and the question is
whether noncontractual disputes related to the same contract also fall within the scope of the
arbitration clause. In these circumstances, very few business men or women would conceive
that different forums should decide different parts of their dispute, with the ensuing
duplication of effort, expense and possibility of inconsistent results. (141) In the words of a
well-reasoned Singaporean appellate decision:
The underlying basis for a generous approach towards construing the scope of an arbitration
clause is the assumption that commercial parties, as rational business entities, are likely to
prefer a dispute resolution system that can deal with all types of claims in a single forum.
(142)
Consistent with this analysis, the strong presumption in virtually all commercial settings
should be that the parties desired a single dispute resolution mechanism before one decision-
maker for all disputes relating to their agreement.
As discussed above, some courts have refused to apply pro-arbitration interpretative
presumptions where an arbitration clause contains exceptions or is limited in scope. (143) As
also discussed above, however, the better view is to the contrary; any arbitration agreement is,
by its nature, limited in scope (in terms of parties, subject matter and the like). There is no
reason to abandon the efficiencies and pragmatic assessment of commercial motivations in
cases where parties have specifically limited the scope, or excluded matters from the scope,
of their arbitration agreement. The pro-arbitration approach to interpreting international
arbitration agreements should generally extend equally, and with equal force, to both
P 1344 contractual and noncontractual claims, including tort, breach of fiduciary duty, statutory
and similar claims. Commercial parties are interested in efficient resolution of all of their
disputes, in a single proceeding capable of producing an enforceable result, regardless of the
legal characterization of those claims. This is consistent with both the rationale for the pro-
arbitration rule of interpretation and the weight of national court authority. (144)
The pro-arbitration interpretative approach should also apply equally to disputes under
related agreements, particularly when those agreements do not contain different dispute
resolution provisions. Where only one in a series of contracts, or in several related contracts,
contains an arbitration agreement, that agreement should ordinarily be interpreted to
encompass disputes over related contracts; absent contrary indications, this is consistent with
the parties reasonable expectations and facilitates efficient, neutral dispute resolution. More
difficult are cases involving related contracts with divergent arbitration (or other dispute
resolution) provisions where, as discussed below, it is often difficult to conclude that parties
intended for all disputes to be resolved in a single contractual forum. (145)
[E] Formulae Used to Define Scope of International Arbitration Agreement

There are a limited number of fairly standard formulae used in arbitration agreements to
describe the scope of such provisions. The most common terms cover (a) all or any; (b)
disputes, differences, claims, or controversies; (c) arising out of, in connection with,
under, or relating to; (d) the parties agreement, contract, the works, or some broader
set of contractual arrangements between the parties.
These various formulae are generally used, in varying ways, in the model clauses
recommended by leading arbitral institutions and by commentators. (146) For example, the
model ICC arbitration clause provides: All disputes arising out of or in connection with the
present contract shall be finally settled under the [ICC Rules] by one or more arbitrators
appointed in accordance with said Rules. (147) Similarly, the recommended clause
accompanying the UNCITRAL Rules provides: Any dispute, controversy or claim arising out of or
9
relating to this contract, or the breach, termination or invalidity thereof, shall be settled by
arbitration in accordance with the UNCITRAL Arbitration Rules. (148)
The intent of leading model international arbitration clauses is to apply expansively to all
disputes relating to a particular contract, regardless of legal formulation. (149) That is
P 1345 consistent with the practical objective of commercial parties, which is to obtain a single,
neutral and expert forum for efficiently resolving their disputes. As already discussed, fine
distinctions in wording are artificial, or worse, obscure the underlying commercial purposes of
agreements to arbitrate. (150)
Inevitably, disputes have arisen about the phrases used in leading model arbitration clauses,
producing a variety of national court (and arbitral) decisions interpreting each of them. The
precedential weight of these authorities is open to much doubt, even within a single legal
system.
Some courts have rightly observed that a particular verbal formulation may have very different
intended meanings in different sets of contractual circumstances. (151) Other courts have
correctly questioned whether it is realistic or accurate to draw fine distinctions between
different verbal formulae, which most parties will not have appreciated or intended: (152)
indeed, the notion that business men or women compare different formulae, such as arising
out of, relating to, or in connection with, is difficult to accept in most settings. As one court
remarked, these linguistic differences are largely semantic, (153) and there is no substantive
difference in the present context between the phrases relating to, in connection with or
arising from. (154)
Nonetheless, previous judicial and arbitral decisions interpreting particular phrases or
language can still be relevant, and sometimes decisive, in subsequently construing other
agreements. That is particularly true in jurisdictions that have not adopted pro-arbitration
P 1346 presumptions or rules of interpretation, but is also true elsewhere, when disputes are on
the border of the scope of an arbitration agreement. The interpretation of each aspect of
formulae commonly used in international arbitration agreements is discussed below.
[1] All or Any Disputes
Some arbitration clauses provide for arbitration of all or any disputes or differences
without any further qualification or description. For example, an agreement may simply
provide [a]ll disputes shall be decided by arbitration. In contrast, other arbitral clauses refer
only to disputes (as in, Disputes relating to this contract).
Various authorities have interpreted the all disputes or any disputes formulae broadly,
usually concluding that they extend to all disputes having any plausible factual or legal
relation to the parties agreement or dealings. (155) The use of the words all or any may also
argue in favor of a tribunals competence-competence over issues of interpretation, (156) and
in favor of broad remedial authority. (157)
It is unclear, however, why the addition of the word all or any should materially affect the
analysis. A simple reference to disputes should not be interpreted to mean some or most
P 1347 disputes; it ordinarily means all or any disputes even if that is not said explicitly.
Arguably, the qualifier (any or all) serves to underscore the parties intentions, but, given
the formulaic nature of arbitration clauses, even that hypothesis is doubtful.
[2] Disputes, Differences and Claims
Most arbitration clauses provide for arbitration of all disputes or differences, (158) while
some clauses also (or instead) refer to claims or controversies. (159) These formulations
encompass any sort of disagreement, dispute, difference, or claim that may be asserted in
arbitral proceedings. This view was recently adopted by a Court of Appeal decision in
Singapore, which held that [m]ost arbitration clauses provide for arbitration of all disputes
or differences, while some clauses also (or instead) refer to claims or controversies. These
formulations encompass any sort of disagreement, dispute, difference, or claim that may be
asserted in arbitral proceedings. (160)
As discussed above, leading international arbitration conventions and national arbitration
legislation apply only to agreements to arbitrate disputes. (161) Some national courts have
held that a dispute or difference does not exist unless there is really a controversy between
the parties (which led to sterile analyses of pre-litigation correspondence). (162) Similarly,
some courts have examined the substantive merits of the parties positions, holding that a
dispute did not exist where one partys position was indefensible. (163)
As also discussed above, these various narrow constructions of when a dispute or
disagreement exists are ill-conceived, whether as a matter of statutory construction or
contractual interpretation. (164) Rather, the terms dispute, difference and controversy
should all be given expansive interpretations, whether used in statutory or contractual
provisions, to cover any circumstance where one party demands something and the other party
refuses, fails, or is unable to provide it. More recently, most national courts have sensibly
adopted broad interpretations of these and similar terms, rejecting efforts to argue that no
P 1348 dispute really exists because the parties do not really disagree or because one party has
allegedly adopted an indefensible position. (165)
[3] Relating To
10
Courts in almost all jurisdictions have concluded that the phrase relating to extends an
arbitration clause to a broad range of disputes. Although formulations vary, U.S. courts have
repeatedly concluded that the relating to formula encompasses noncontractual, as well as
contractual, claims and that it reaches any disputes that touch or have a factual relationship
to the parties contract. (166) In the words of one U.S. decision, the phrase arising out of or
relating to the parties contract is a broad clause, which encompasses all disputes having a
significant relationship to the [parties underlying contract] regardless of whether those claims
implicated the terms of the consulting agreement. (167)
English (168) and Canadian (169) courts have also interpreted the phrase relating to broadly;
the same holds true for Swiss, (170) French (171) and other decisions. (172) There are
P 1349 virtually no contrary authorities and the term relating should ordinarily be interpreted very
expansively, as encompassing any matter, dispute, or claim having any material connection to
the parties contract or their actions under that contract.
[4] In Connection With
National courts from a wide variety of jurisdictions around the world have also concluded that
the phrase in connection with is broad. Thus, U.S., (173) English, (174) Canadian, (175) Indian,
(176) Hong Kong, (177) Australian, (178) Swiss (179) and Israeli (180) courts have all interpreted
the phrase in connection with liberally.
P 1350 For example, the Swiss Federal Tribunal adopted the following analysis of an in
connection with formula:
When an arbitration clause is worded in such a way that it also encompasses the disputes in
connection with the contract, it must be understood, in good faith, as meaning that the parties
did not wish to submit the claims resulting from their contractual relationship in various legal
respects to an arbitral tribunal on the one hand and otherwise to the state courts. In
accordance with the presumed intent of the Parties, it must be assumed that they wanted to
refer all claims arising from the facts contained in the contract or concerning them directly to the
exclusive jurisdiction of the arbitral tribunal. (181)
Likewise, a U.S. court held that all disputes arising in connection with the present contract
must be construed to encompass a broad scope of arbitrable issues.It embraces every
dispute between the parties having a significant relationship to the contract regardless of the
label attached to the dispute. (182) Similarly, arbitral tribunals have interpreted the term in
connection with broadly. (183)
Nonetheless, there are some exceptions. For example, a Canadian decision, rendered with
regard to the ICCs model clause (All disputes arising out of or in connection with the present
contract), reasoned: A dispute meets the test set by the submission if either claimant or
defendant relies on the existence of a contractual obligation as a necessary element to create
the claim, or to defeat it. (184) The courts analysis apparently limits the scope of an in
connection clause to disputes in which a contractual claim or defense is either asserted or an
element of one partys case; it thereby appears to exclude noncontractual (tort or statutory)
claims in which neither party relies upon the terms of the contract. This interpretation is more
restrictive than that of most other authorities considering the scope of the in connection
formula.
P 1351 [5] Arising Under
Authorities have reached divergent interpretations of agreements to arbitrate all disputes
arising under a contract. Some national courts have concluded that arbitration clauses using
the formulation arising under are broad (comparable to relating to or in connection with)
while others have held that the formulation is narrow.
The latter approach was adopted in England, where courts historically interpreted the arising
under formula as limited to claims based on the parties contract. Among other things, some
English courts concluded that the arising under formula did not encompass various tort
claims that did not directly involve application of the parties contractual commitments, (185)
or claims based on precontractual representations or post-contractual commitments. (186)
Following older English authority, Australian courts also adopted a narrow interpretation of the
arising under formula, holding that it did not reach tort claims. (187)
As discussed above, more recent English and Australian authority has abandoned these
distinctions, at least with regard to international arbitration agreements. (188) Decisions from
other jurisdictions are similar. (189)
Some U.S. lower courts have also interpreted the arising under formula narrowly, although
neither consistently nor particularly restrictively. Although some older U.S. judicial decisions
held that the phrase is narrow, and does not encompass noncontractual claims, (190) in recent
years, U.S. courts more often have reached the opposite conclusion, holding that the arising
under phrase is broad. (191)
P 1352 Despite this well-reasoned trend among U.S. lower courts, the U.S. Supreme Court recently
adopted a contrary view in a domestic matter. In Granite Rock Co. v. Intl Bhd of Teamsters, the
Supreme Court held that the phrase arising under this agreement was relatively narrow and
that it did not encompass disputes over the date on which the parties underlying contract was
ratified. (192) This decision, which appears to have been influenced by considerations of
domestic labor law, is ill-considered and unreasoned (based on no apparent analysis or
11
authority). The Courts decision does not reflect either the weight of international authority in
commercial cases or the parties presumptive intentions in international commercial settings,
and it should not be followed in those settings.
[6] Arising Out Of
Authorities have also adopted differing interpretations of arising out of clauses. Some older
U.S. judicial decisions concluded that the formula is narrow, equating it with arising under
provisions. (193) Other, and more recent, U.S. decisions have held that arising out of is a
broader formulation than arising under. (194)
P 1353
Likewise, in contrast to their interpretation of the arising under formula (as discussed
immediately above), English courts have held that arising out of language ordinarily
extended to tort claims which relate to the parties contractual dealings and obligations. (195)
Similarly, German (196) and Swiss (197) courts have given such formulae a broad interpretation.
Viewed broadly, the fairly clear trend in contemporary national court decisions is in favor of
liberal interpretations of the arising out of formula, consistent with the more general pro-
arbitration rule of interpretation.
[7] Arising From
A few decisions have considered arbitration clauses providing for arbitration of disputes
arising from the parties contract. Most decisions have suggested that the formula is broad,
(198) without addressing in detail how it differs from arising under or arising out of
formulae.
P 1354 [8] Broad Versus Narrow Arbitration Clauses
Some U.S. courts have distinguished between broad and narrow clauses. Different U.S.
courts have accorded these two formulae different definitions, and have attached different
consequences to each categorization. Among other things, some courts have indicated that a
broad, but not a narrow, clause will attract a pro-arbitration rule of construction (199)
and/or grant the arbitrators competence-competence to decide disputes over the scope of the
clause. (200) Other U.S. lower courts have attached more complicated results to the
broad/narrow distinction. (201)
P 1355 The better view is that a sharp distinction between broad and narrow clauses is
difficult to justify. There is some force to the notion that a clause which is broadly-drafted
confirms a tribunals competence-competence to decide scope disputes. (202) Beyond this,
however, the general pro-arbitration presumption like other rules of contract interpretation
should ordinarily apply equally to both broad and narrow clauses. (203) Similarly, it is difficult
to justify a categorical or abstract distinction between broad and narrow clauses. In reality
there is a spectrum of arbitration agreements, the scope of which ranges from very broad to
very narrow, making it largely artificial to categorize such provisions as either broad or
narrow.
[9] Exceptions or Exclusions From Arbitration Agreements
In some instances, arbitration clauses contain exceptions to the general scope of the
agreement to arbitrate. For example, as discussed below, parties sometimes choose to
exclude particular contractual obligations (e.g., payment obligations, intellectual property
rights, technical matters) from the scope of the arbitration clause, (204) instead subjecting
these obligations to either specialized dispute resolution provisions (e.g., expert
determination) or a choice-of-court clause. (205)
In these instances, where an arbitration agreement contains exclusions or exceptions, some
courts have sometimes declined to interpret the arbitration clause broadly. (206) In one
courts words, [w]here the arbitration provision is narrowly crafted, we cannot presume, as we
P 1356 might if it were drafted broadly, that the parties here agreed to submit all disputes to
arbitration. (207) (The same rationale is sometimes applied where the parties enter into
related or parallel contracts. (208) )
This approach is mistaken, for the reasons discussed above. Every agreement to arbitrate is
limited and the fact that the parties have specified particular exceptions does not mean that
generally-applicable presumptions regarding centralization, efficiency and fairness do not
apply. (209)
[F] Applicability of International Arbitration Agreements in Commonly-Recurring

Factual Circumstances
There is a variety of specific factual or legal contexts in which questions about the scope of
international arbitration agreements recur with particular frequency. These typically concern
various types of legal claims or contractual settings, such as the applicability of an arbitration
clause to a noncontractual (or statutory) claim, to various types of contractual claims, and to
multi-contract and multi-party disputes. The most frequent examples of these issues are
discussed below.
[1] Applicability of Arbitration Agreements to Non-Contractual Claims
There is no prohibition in most jurisdictions either common law (210) or civil law (211)
P 1357
12
against the arbitration of noncontractual claims, such as tort, delict, statutory, fiduciary,
restitution, unjust enrichment and similar claims not based on contractual provisions. On the
contrary, as discussed above, Article II(1) of the New York Convention defines an arbitration
agreement as including differences arising from a relationship whether contractual or not,
and imposes international obligations to recognize the presumptive validity of such
agreements. (212)
This formulation is paralleled in many national arbitration statutes, which also make clear that
noncontractual claims may be the subject of valid arbitration agreements. (213) As one
Canadian decision observed:
The Convention and Actcover both contractual and non-contractual commercial
relationships. They thus extend their scope to liability in tort so long as the relationship that
creates liability is one that can fairly be described as commercial. In my view, a claim that a
corporation conspired with its subsidiaries to cause harm to a person with whom it has a
commercial relationship raises a dispute arising out of a commercial legal relationship,
whether contractual or not. (214)
Although the language of Article II(1) of the New York Convention and equivalent provisions of
national arbitration legislation acknowledges that noncontractual claims may be the subject of
valid arbitration agreements, (215) these provisions offer no direct guidance in interpreting
particular arbitration clauses to determine whether they in fact encompass tort claims. These
provisions do however, imply that noncontractual claims should be treated no less favorably
with regard to interpretation than contractual claims. (216)
Questions frequently arise as to whether particular noncontractual claims are within the scope
P 1358 of an arbitration clause. Although providing for the arbitrability of noncontractual claims,
nothing in the New York Convention (or other international arbitration treaties), or in most
national arbitration statutes, directly addresses this interpretative question.
National courts have generally approached the question whether a particular noncontractual
claim falls within an arbitration clause on a case-by-case basis. In so doing, they have
generally applied the pro-arbitration presumptions, and other generally-applicable rules of
construction, that are used in other contexts (and that are discussed above (217) ).
Lower U.S. courts have frequently addressed cases where termination of a contract, or other
conduct relating to the parties basic contractual relationship, leads to tort claims (such as
fraud, defamation, negligence, or unfair competition). The pro-arbitration presumption under
the FAA is generally-applicable to tort claims. (218) In the words of one court:
The arbitrability analysis must focus on the factual allegations in the complaint rather than
the legal causes of action asserted. Courts must examine the substance of claims, shorn of
their labels. The mere fact that a complaint alleges a tort claim, rather than one for breach of
contract, does not make the claim any less arbitrable. (219)
In addition, it is frequently said that a party may not defeat an arbitration clause by casting its
claims in tort, rather than contract. (220) As one lower court reasoned:
P 1359 Basing the arbitrability of an action merely on the legal label attached to it would allow
artful pleading to dodge arbitration of a dispute otherwise arising out of or relating to (or
legally dependent on) the underlying contract. To avoid this contrivance, courts look at the
facts giving rise to the action and to whether the action could be maintained without
reference to the contract. (221)
Taking this approach, a number of U.S. decisions have held on particular facts that various tort
claims were within the scope of particular arbitration agreements. (222) In other cases, tort
claims have been held to fall outside the scope of the parties arbitration agreement. (223)
P 1360 Similarly, claims for punitive or exemplary damages based on noncontractual causes of
action have been held to fall within particular arbitration agreements. (224)
Authorities from other jurisdictions have also held various tort claims to fall within the scope of
particular arbitration clauses. That is true of both international arbitral awards (225) and
P 1361 national court decisions. (226) In the words of one Italian judicial decision, holding that
the parties arbitration clause encompassed tort, unjust enrichment and restitution claims:
all disputes directly or indirectly arising under the contract fall within the scope of the
arbitration clause, i.e., not only disputes concerning a modification of the original contractual
stipulations, alternative performance, or restitution claims for undue payment, but also
disputes in which the [claim] does not directly arise under the contract, but which as in
claims for undue enrichment and settlement ensue from the execution of the contract. (227)
On the other hand, depending on the facts and contractual language, other arbitral awards
P 1362 (228) and judicial decisions (229) have held that particular noncontractual claims fall the
scope of the parties arbitration agreement. As in the United States, courts in other
jurisdictions have rejected efforts by parties to cloak their claims in noncontractual guise to
avoid the effect of an arbitration agreement. As an Australian decision reasoned:
The courts will presume that the parties did not intend the inconvenience of having possible
disputes from their transaction being heard in two places. This may be seen to be especially so
in circumstances where disputes can be given different labels, or placed into different
juridical categories, possibly by reference to the approaches of different legal systems. (230)
13
Some authorities have attempted to develop general standards for determining whether tort
claims fall within the scope of an arbitration agreement. These efforts seek to articulate
standards applicable where the parties arbitration clauses are silent, or state only general
formulae such as all disputes, arising under and relating to.
Among other things, these authorities have considered whether noncontractual claims involved
significant aspects of [parties contractual] relationship, (231) go to the core of parties
contractual relations, (232) are intertwined factually and legally with contractual claims, (233)
derive from the [contractual] relationship, (234) have a sufficiently close connection [to] the
transaction, (235) or greatly overlap with contractual claims. (236) Recent Italian legislation
adopts a similar approach, providing that an arbitration clause will presumptively be
interpreted to encompass all disputes arising from the contract or from the relationship to
which the agreement refers. (237)
These formulae all usefully capture the core concept that the focus of analysis should be on
the underlying factual setting and actions, as well as on the parties presumed desire for
efficient, centralized and fair proceedings. This approach makes particular sense in
international contexts, where different types of claims and causes of action are characterized
in different ways: applying the text of arbitration clauses to these various formal
categorizations is arbitrary and distracts attention from the underlying commercial substance
of the parties dispute and intentions.
P 1363 [2] Applicability of Arbitration Agreements to Claims Based on Statutory Protections
Particularly in common law jurisdictions, it is sometimes argued that statutory claims are not
subject to the parties arbitration agreement. (238) This argument is seldom encountered in the
same terms in civil law systems, where most claims are statutory in some sense.
Both common law and civil law courts have frequently concluded that particular statutory
claims are within the scope of the parties arbitration agreement. That is particularly true in
the United States, (239) but also in other jurisdictions. (240) Nonetheless, on specific facts,
some courts and arbitral tribunals have held that various statutory claims were not within the
scope of the parties arbitration agreement. (241)
P 1364 The U.S. Supreme Court has held that the application of arbitration clauses to statutory
claims should generally be subject to no different rules of interpretation than contractual
claims. The Court declared in Mitsubishi Motors that [t]here is no reason to depart from these
[pro-arbitration interpretative] guidelines where a party bound by an arbitration agreement
raises claims founded on statutory rights. (242) Other U.S. courts have affirmed that reasoning.
(243)
Similarly, a number of U.S. courts have also said that the scope of an arbitration clause is
determined by reference to the factual allegations underlying the parties claims, regardless of
the legal labels attached to the claims. (244) U.S. courts have also held that an arbitration
agreement may encompass statutory claims that relate to the parties contract
notwithstanding the fact that no interpretation of the contract is required in order to resolve
the statutory claim. (245)
On the other hand, some national courts have remarked that an arbitration clause is no doubt
designed primarily to cover claims for breach of contract. (246) For example, a Singaporean
decision interpreted an arbitration agreement relatively narrowly, to exclude bankruptcy-
related claims:
The commencement of insolvency proceedings results in the companys management being
displaced by a liquidator or judicial manager. Since avoidance claims can only be pursued by
the liquidators or judicial managers of insolvent companies, there is no reason to objectively
believe that a companys pre-insolvency management would ordinarily contemplate including
P 1365 avoidance claims within the scope of an arbitration agreement. [A]rbitration clauses
should not ordinarily be construed to cover avoidance claims in the absence of express
language to the contrary. (247)
A few other authorities have held that particular statutory claims are outside the scope of
individual arbitration agreements. (248)
More broadly, one recent Australian decision rejected the application of a broadly-drafted
arbitration agreement to a statutory claim, holding that this is not what the parties would have
likely intended:
In choosing arbitrators with commercial backgrounds, the parties indicated a choice for the
practical solution of disputes of the kind referred to the arbitrators. But to read [the parties
agreement] as contemplating a reference to such persons of a problem of considerable private
international legal complexity, let alone the application of a foreign (Australian) law in the
form of the Trade Practices legislation, would seem to contradict a desire for a practical
outcome. We should not attribute such a bizarre intention to these parties. (249)
This observation is both dated (reflecting an era when regulation and private rights of action
under statutory protections were less pervasive) and misconceived (ignoring the fact that
businesses enter into arbitration agreements to resolve all their disputes with one another,
relating to their transaction, regardless of legal characterization). (250) Certainly, there is no
reason to think that the parties will not select arbitrators with the appropriate appreciation of
issues of private international legal complexity where that is what the dispute calls for.
14
As already noted, the better view is that of the U.S. Supreme Court in Mitsubishi Motors,
affirming the applicability of pro-arbitration interpretative rules to all claims or disputes,
regardless of their legal basis: There is no reason to depart from the [pro-arbitration]
guidelines where a party bound by an arbitration agreement raises claims founded on
statutory rights. (251) That conclusion correctly reflects the presumptive intentions of
commercial parties that conclude international arbitration agreements, which, as discussed
above, is to resolve all of their disputes in a single, efficient and neutral proceeding.
P 1366 [3] Applicability of Arbitration Agreements to Disputes Concerning Performance or
Interpretation of Contract
Arbitration clauses are sometimes drafted ill-advisedly, to refer only to disputes concerning
the interpretation or construction of the parties contract. This formulation is sometimes
borrowed from the context of choice-of-law clauses, where it also unhappily appears. (252)
Some national courts have interpreted clauses referring only to disputes about the
interpretation of the parties contract as excluding claims for breach of contract. (253) Other
courts and tribunals have reached more expansive conclusions, holding that the parties could
not have intended to submit only contract disputes about interpretation (and not performance
or the like) to arbitration. (254) Where clauses refer to disputes concerning performance and
interpretation of the contract, courts are obviously more likely to read the provision
expansively. (255)
[4] Applicability of Arbitration Agreements to Disputes Concerning Existence, Validity, or
Legality of Contract
A related issue is whether an arbitration agreement extends to disputes concerning the
existence, validity, or legality of the underlying contract. This is a related, but distinguishable
issue from that addressed by the competence-competence doctrine, which concerns the
allocation of competence between national courts and arbitrators to consider challenges to
the arbitration agreement. (256) Rather, this question involves the scope of the arbitration
P 1367 agreement and, in particular, whether the agreement to arbitrate encompasses disputes
about the existence or validity of the parties underlying contract.
Some institutions model arbitration clauses extend to disputes concerning the validity or
existence of the underlying contract, (257) leaving no question as to the arbitrators jurisdiction
to consider such matters. For example, the LCIAs model clause provides for arbitration of
[a]ny dispute arising out of or in connection with this contract, including any question
regarding its existence, validity or termination. (258)
Even absent such language, the weight of authority holds that arbitration agreements
presumptively extend to questions regarding the existence, validity and termination of the
underlying contract. (259) Both common law (260) and civil law (261) courts have reached this
conclusion.
P 1368 Addressing this issue, one English court declared that there is a golden rule that if the
parties wish to have issues as to the validity of their contract decided by one tribunal and
issues as to its meaning or performance decided by another, they must say so expressly. (262)
The German Bundesgerichtshof reached the same conclusion in a classic 1970 decision, holding
that, [i]n cases of doubt, the clause that an arbitral tribunal shall decide upon differences and
disputes arising out of a contract means that the arbitral tribunal must also decide whether or
not the contract is valid and which consequences its invalidity might have. (263)
Arbitral awards are to the same effect. As one recent ICC award reasoned:
The validity as to substance of the arbitration clause contained in the Framework Agreement
shallbe examined under Swiss law. Pursuant to Swiss case law, when the existence of an
arbitration clause is established, as it is the case here, there is no ground for a restrictive
interpretation. Quite to the contrary, one has to consider that the parties want that the arbitral
tribunal be vested with a general jurisdiction, and, in case of doubt, that they did not intend to
refer to arbitration only their disputes relating to the implementation of their respective
obligations, but also the ones concerning the validity of the agreement that embodies such
obligations. (264)
This approach is well-reasoned: it is essential in order to provide a single, centralized forum
for dispute resolution, as parties presumptively desire, (265) and to prevent tactical
obstruction of the arbitral process. Consistent with this, very few decisions hold that arbitral
clauses do not extend to disputes concerning the validity, existence, or termination of the
P 1369 Despite this, and as discussed above, the U.S. Supreme Court recently adopted a contrary
view in a domestic case Granite Rock Co. v. Intl Bhd of Teamsters. The Court held that the
phrase arising under this agreement was relatively narrow and did not extend to the
question of the date on which the parties underlying contract had come into effect (through
ratification). (267) As discussed above, the decision is ill-considered and neither reflects the
weight of international authority in commercial cases nor draws reliable conclusions about
parties presumptive intentions in international commercial settings.
[5] Applicability of Arbitration Agreements in Multi-Contract Contexts
Disputes sometimes arise where the parties have entered into a number of different
15
agreements, either simultaneously or consecutively, each with (or sometimes without) a
separate dispute resolution mechanism. This can create procedural difficulties, with the
potential for parallel or overlapping arbitrations and litigations under different dispute
resolution clauses. (268) It also gives rise to questions of whether an arbitration clause in one
contract applies to disputes under the provisions of another contract.
International commercial agreements sometimes provide expressly for a single, unitary
dispute resolution mechanism to govern all of the parties various contractual relations. (269) If
such a global dispute resolution provision exists, either in a stand-alone agreement (providing
an arbitration mechanism for disputes in a series of related substantive contracts) or as a
clause in a single umbrella agreement, then application of the clause to disputes arising under
several contracts is not controversial: there is no reason that an arbitration clause in one
contract cannot encompass disputes or claims under another contract, provided that this is
what the parties agreed. Frequently, however, the parties drafting efforts lack this foresight,
and disputes arise regarding the scope and interaction of overlapping or parallel dispute
resolution provisions.
If multiple contracts exist between two or more parties, which do not contain a single dispute
P 1370 resolution mechanism, numerous national courts (270) and arbitral tribunals (271) have
nonetheless been willing to conclude in principle that disputes under one contract are
arbitrable under an arbitration provision of a different contract. This is the commercially-
sensible result, which typically effectuates the true intentions of reasonable parties.
Nonetheless, the extent to which this result will apply in particular cases depends on the terms
of the parties agreements and the nature of their dispute.
One recurrent factual setting arises when the same parties enter into a series of contracts
related to a single project or enterprise, only some of which contain dispute resolution
provisions. In these cases, the question arises whether an arbitration clause in one agreement
extends to disputes under other agreements.
This is a question of the parties intent, but, in largely fact-specific decisions, courts have
endeavored to construe the parties contracts in a commercially-sensible manner that, insofar
as possible, permits a single, centralized dispute resolution mechanism. So long as the parties
to the relevant contracts are the same, and the contracts all relate to a single project, or
P 1371 course of dealing, U.S., (272) French, (273) English, (274) Swiss, (275) German (276) and other
courts have generally been willing to hold that an arbitration clause in one agreement extends
to related agreements, provided that the other agreements do not contain inconsistent
arbitration or forum selection clauses. This has included cases involving both oral agreements
(277) and side agreements, (278) ancillary to a principal contract; it has also included cases
involving amendments to an underlying contract. (279)
One commentator has described the decisions of national courts in this context as follows:
the courts have uniformly concluded that if two agreements between the same parties are
closely connected and one finds its origin in the other, or is the complement or the
implementation of the other, the absence of an arbitration clause in one of the contracts does
P 1372 not prevent disputes arising from the two agreements from being submitted to an arbitral
tribunal and decided together. (280)
Arbitral tribunals have generally reached very similar results, (281) including in cases where
multiple contracts contain identically-worded arbitration clauses. (282)
Despite this, in situations where the relevant agreements lack a sufficiently close commercial
or temporal relationship, or involve distinct matters, then an arbitration clause in one contract
is likely to be held inapplicable to disputes under the other contract. (283) As one arbitral
P 1373 tribunal reasoned, in holding that an ICC arbitration clause in an agency contract did not
encompass disputes under two subsequent assistance agreements between the same parties:
the two secondary contractsrepresent neither a fulfillment nor an amendment of the
previous contractual relationship i.e., the agency agreement, but something completely new,
which gives the parties different duties and obligations which are not directly connected with
the agency. One thing is to promote the sale of products, another thing is renting premises
and personnel for carrying out a contract of saleas well as taking care of shipments and
customs clearances. (284)
Of course, the ultimate touchstone is the intentions of the parties and the language of the
arbitration clause, which may address the matter either expressly or by implication (by being
drafted in either particularly broad or deliberately narrow terms).
Greater difficulties arise, in any factual situation, if the identities of the parties to related
contracts differ (as can often occur in construction projects, joint ventures, insurance settings
and other scenarios). In these circumstances, except where all parties can be bound through
non-signatory principles to an arbitration agreement, (285) there is little prospect for applying
an arbitration clause in one agreement to disputes under a different contract with different
parties. (286)
Similarly, the existence of separate arbitration provisions in related agreements has generally
been held to be strong evidence that disputes under the various agreements were meant to be
arbitrated under different dispute resolution provisions not those of some other contract.
(287) This is particularly true where different contracts contain different arbitration clauses
(e.g., one ICC clause and the other an AAA clause; one Swiss arbitral seat and one Tokyo seat).
16
(288) Even where an identical arbitration clause (e.g., a model clause from a leading
institution) is simply repeated verbatim in multiple contracts, it is sometimes said not to be
the same clause, giving rise to the possibility of separate arbitrations (and arbitral tribunals)
under each separate substantive contract, with each arbitration limited to a single, specific
agreement. Arbitral tribunals have generally sought to avoid this latter result, (289) at least
where different contracts involve the same parties. (290)
P 1374 Similar issues arise when one or more of a related group of contracts contain(s) a forum
selection clause, and other contract(s) contain(s) an arbitration clause. In these cases, and
absent contrary indication, some courts have sought to give broad effect to arbitration clauses,
refusing to conclude that the forum selection clause overrides or qualifies them. (291) One
court justified this conclusion with the following reasoning:
the scope of the arbitration clause as an expression of the will of the parties is far wider than
that of a jurisdiction clause, in that it has the effect of vesting the arbitrators with the power to
judge, thereby excluding the intervention of State Courts, whereas the jurisdiction clause only
designates the court which is territorially competent to decide the disputes. (292)
It is debatable whether the courts minimization of the significance of a forum selection clause
is universally applicable: in many cases, the contractual choice of particular national courts
has substantial commercial and legal importance, and should not necessarily be subjugated to
a parallel arbitration agreement. (293) Thus, many arbitral tribunals appear to have concluded
that the inclusion of a forum selection clause in one agreement, and an arbitration clause in a
related agreement, will ordinarily signify the parties expectation for separate dispute
resolution mechanisms. (294) Similarly, indications that two contracts were intended to be
P 1375 treated separately (for example, in their merger or integration provisions) have
sometimes been relied upon in holding that the arbitration clause in one agreement does not
cover disputes under the other contract. (295)
[6] Applicability of Arbitration Agreements in Context of Successive Contracts
A closely-related factual scenario involves successive contracts between the same or similar
parties (as distinguished from related contracts entered into at or around the same time).
Where one, but not all, of the successive contracts contains an arbitration clause, questions
can arise as to whether such a clause extends to disputes under subsequent (or earlier)
contracts. As in other contexts, arbitral tribunals and courts have looked to the language and
relationship of the parties agreements in order to determine their intent, while generally
presuming that the parties desired a single, sensible and efficient dispute resolution
mechanism. (296)
French courts have held that an arbitration clause in the earlier of two or more related
agreements extends to disputes under later contracts, notwithstanding the absence of any
dispute resolution provision in such contracts, provided there is a sufficiently close connection
P 1376 between the agreements. (297) Courts in the U.S., (298) Germany (299) and Switzerland
(300) have generally adopted the same approach, frequently applying the arbitration clause in
one contract to either earlier or subsequent related contracts between the same parties. (301)
Similarly, international arbitral awards have also frequently interpreted the arbitration
provisions of particular contracts as extending to related agreements. (302)
A recurrent question is whether disputes under a settlement agreement, that lacks an
arbitration clause, will be subject to an arbitration agreement in the preceding contract (out of
which disputes arose). Some courts have held, in general, that the preexisting arbitration
clause presumptively applies to disputes under subsequent agreements, that attempt to
resolve disagreements under the earlier contracts. (303) One arbitral award declared broadly
P 1377 that the survival of the arbitration clause in case of a settlement or novation agreement,
as a matter of principle, is a general rule of arbitration law. (304)
In contrast, a few decisions have held that disputes under subsequent settlement agreements,
which fully and finally resolved all disputes between the parties, and terminated the parties
prior contract, were not subject to arbitration clauses contained in earlier contracts, on the
rationale that those arbitration provisions had been terminated or were inapplicable. (305)
Likewise, some decisions have concluded that agreements to arbitrate disputes in connection
with particular transactions or events do not extend more broadly. (306)
Another recurrent question is whether the arbitration provision in a contract applies to
disputes arising under oral agreements allegedly concluded in the course of performance of
the underlying contract or the resolution of disputes under that contract. The better view is
clearly that the arbitration agreement should generally encompass ancillary or related oral
agreements that the parties make in the course of performing a broader underlying contract.
As one English court reasoned:
Those agreements [i.e., oral agreements] frequently do not have their own provisions for
dispute resolution, including adjudication. If the officious bystander had asked such parties
what dispute resolution methods applied, I consider that they would invariably assume that
those in the underlying contract would apply. The idea that different or no provisions applied
P 1378 to such additional changed obligations would, in my judgment, be an impossible situation
and make adjudication unworkable for such projects. (307)
Other authority is to the same effect. (308)
17
[7] Applicability of Arbitration Agreement Following Termination of Underlying Contract
The mere fact that a dispute does not arise, and a party does not assert claims, until after the
parties underlying contract has terminated does not necessarily prevent the dispute from
being arbitrated pursuant to a separable arbitration clause in the underlying (and expired)
contract. It is settled law in many jurisdictions that termination of the parties underlying
contract does not necessarily or ordinarily terminate the parties arbitration agreement. As
discussed above, this is a consequence of the separability presumption which permits the
arbitration agreement to survive the underlying contract. (309)
The consequences of termination of the parties underlying contract for an arbitration clause
are in principle a question of the parties intentions. In this regard, it is at least theoretically
possible that, upon termination of their underlying contract, parties would wish for their
arbitration agreement: (a) to terminate for all purposes (including resolution of preexisting
disputes); (b) to terminate for purposes of most or all future disputes, but not for purposes of
preexisting disputes, including disputes about termination of the parties underlying contract;
or (c) not to be affected at all. In most cases, neither the parties arbitration clause nor their
underlying contract will address these issues. As with other matters of construction,
determining the effect of termination of the parties underlying contract on the arbitration
clause will ordinarily be dependent on the application of presumptions based on the parties
likely intentions and sound policy, which enable one to choose among the foregoing
interpretations. (310)
In principle, pro-arbitration rules of construction should apply to the temporal scope of
arbitration agreements. (311) Consistent with this, most authorities have concluded that
termination of an underlying contract does not affect the existence or applicability of an
arbitration clause insofar as pre-termination disputes are concerned.
P 1379 A leading U.S. Supreme Court decision on the issue in a domestic context is Nolde Bros.,
Inc. v. Bakery & Confectionary Workers Union, where the Court held that the parties
obligations under their arbitration clause survived contract termination when the dispute was
over an obligation arguably created by the expired agreement. (312) As the Supreme Court
explained in a subsequent decision, the arbitration clause of a terminated agreement will
generally apply to cases where a dispute involves facts and occurrences that arose before
expiration, where an action taken after expiration infringes a right that accrued or vested
under the agreement, or where, under normal principles of contract interpretation, the
disputed contractual right survives expiration of the remainder of the agreement. (313)
U.S. lower courts have consistently applied these standards, holding generally that there is a
presumption that an arbitration clause survives termination of the underlying contract,
absent clear evidence to the contrary. (314) In the words of one lower court: [a]n arbitration
provision in a contract survives the termination of that contract unless the parties expressly or
clearly imply an intent to override this presumption. (315)
Numerous national court decisions (in France, (316) Switzerland (317) and elsewhere (318) ) have
P 1380 considered whether particular arbitration agreements were applicable, notwithstanding
termination of the parties underlying agreement, typically upholding application of the clause
to pre-termination and termination disputes. Arbitral awards have reached similar
conclusions, with one award holding [t]he fact that the contract was terminated cannot render
inoperative the arbitration agreement concluded between the parties for the resolution of
disputes arising out of this contract. (319)
These results are sensible: only where the parties expressly provide for such a result, should
termination of a contract be interpreted to terminate an associated arbitration agreement
with regard to either preexisting disputes (known or unknown) or to disputes relating to the
termination itself. Indeed, because contractual disputes often result in or otherwise involve
termination of the underlying commercial contract, the efficacy and objectives of arbitration
agreements would be materially impaired if they terminated or expired upon termination of
A different result has been reached by both common law (320) and civil law (321) authorities
with regard to unrelated post-termination disputes (except where specific substantive
P 1381 obligations survive termination of the main contract). Again, absent contrary agreement, this
makes commercial sense: termination of the parties underlying contract should also be
interpreted to terminate the arbitration agreement with regard to future disputes that are
unrelated to the prior contract or the termination itself. (322)
Courts nonetheless sometimes conclude that arbitration agreements apply to at least some
post-termination conduct. (323) If, in terminating an agreement, parties adopt a different
dispute resolution mechanism from that in their original agreement, then courts will be more
likely to find that an arbitration clause in that agreement has also been terminated. (324)
[8] Applicability of Arbitration Agreements to Preexisting Disputes
It is, of course, possible to conclude an arbitration agreement which applies to an existing
dispute. (325) Indeed, in earlier eras, so-called submission agreements which provided for
arbitration of existing disputes were the only types of arbitration agreements that were
enforceable in some jurisdictions. (326)
More frequently, parties enter into commercial contracts, containing ordinary arbitration
18
clauses, which are later invoked with respect to disputes arising before the contract was made.
This gives rise to interpretative questions, as to whether the arbitration clause was intended to
have retroactive application. In the United States, courts routinely enforce retroactive
arbitration agreements whenthis is consistent with the parties intentions. (327)
P 1382 On particular facts, however, courts have declined to order arbitration of disputes arising
before the contract containing the arbitration clause was entered into on the grounds that the
parties had not intended their arbitration agreement to encompass such disputes. (328) It is
debatable whether otherwise applicable pro-arbitration rules of interpretation apply, at
least with full force, where parties have singled out a particular, existing dispute for
arbitration.
[9] Applicability of Arbitration Agreements to Statute of Limitations Issues
There should be no serious question that international arbitration agreements virtually always
extend to statute of limitations (or prescription, time bar, or similar) issues. That is the result
in the overwhelming majority of all international cases, where it is seldom even argued that a
tribunal lacks jurisdiction over statute of limitations questions raised by the parties
underlying claims. Nonetheless, parties occasionally advance such arguments, which are
virtually always rejected. (329)
[G] Scope of International Arbitration Agreement and Scope of Choice-of-Law Clause

As discussed above, it is common (and advisable) for international commercial contracts to
contain both an arbitration clause and a choice-of-law clause. (330) The two provisions are
closely-related and must frequently be applied to the same issues. Nonetheless, as a practical
matter, arbitration clauses and choice-of-law clauses are often drafted in differing terms. For
example, choice-of-law clauses not infrequently provide that the parties agreement shall be
governed by the law of State X, while arbitration clauses often apply to all disputes relating
to the parties agreement. (331)
P 1383 It is well-settled that choice-of-law and arbitration clauses may, if the parties so agree,
have different scopes. (332) In practice, however, such differences are usually not intended,
particularly where the parties agree to subject their contract to the neutral law of a third
country forum (e.g., London, Switzerland, New York). Accordingly, it is ordinarily appropriate to
avoid fine distinctions between the language of choice-of-law and arbitration clauses, and to
interpret them as consistently as possible with one another. Nonetheless, where the parties
language or surrounding circumstances compel such a conclusion, arbitration agreements and
choice of law clauses will be interpreted as having different scopes. (333)
In some jurisdictions, however, a choice-of-law clause arguably cannot validly encompass at
least certain mandatory law issues, or tort or similar claims, because of public policy
considerations. (334) In these instances, there will almost inevitably be differences in the
effective scope of arbitration and choice-of-law clauses. The existence of mandatory law or
public policy restrictions on the scope of choice-of-law agreements does not affect the scope
or validity of the arbitration agreement and the arbitrators are in principle able to apply the
relevant national mandatory law rules. (335)
[H] Exceptions to Scope of International Arbitration Agreements

Even where the parties have agreed to arbitration, there may be claims or disputes that one
party does not want submitted to arbitration. In these circumstances, arbitration clauses can
P 1384 be drafted with exceptions for specified disputes or categories of issues. (336) The validity
of such provisions is generally undisputed and, in appropriate contexts, carefully-drafted
exceptions may serve important commercial purposes.
Nonetheless, exceptions to the scope of arbitration agreements should be used and drafted
cautiously, because they can lead to jurisdictional disputes and other uncertainties. (337) As
discussed above, the existence of exceptions in an arbitration agreement should not generally
affect otherwise applicable pro-arbitration rules of interpretation. (338) Nonetheless, some
authorities take contrary views and, even where such rules of interpretation apply, disputes
over the scope of exceptions can create uncertainties and delays.
[1] Validity of Intellectual Property Rights
Some intellectual property owners wish to preclude any arbitral consideration of disputes
concerning the ownership, and validity of their intellectual property rights or, more broadly,
concerning their intellectual property rights generally. (339) Aside from issues of
nonarbitrability, (340) this is largely because of uncertainties about the availability of interim
relief and the mistaken perception that arbitrators may lack the expertise to correctly and
efficiently resolve complex intellectual property disputes. (341) Exceptions of this sort
frequently are drafted along the following lines:
All disputes arising out of or relating to this Agreement, except Licensed Mark Disputes (as
defined below), shall be finally resolved by arbitration in accordance with [identify
institutional rules]. Licensed Mark Disputes shall constitute all disputes relating to the
Licensors ownership of, the validity of, or the registration of any Licensed Mark. (342)
P 1385 Courts have upheld, without serious question, the validity of arbitration agreements
containing exceptions of this character. (343)
19
[2] Injunctive Relief for Intellectual Property Rights
Licensors of intellectual property also sometimes wish to expressly retain the right to seek
immediate judicial remedies against unauthorized uses of their property by licensees. Among
other things, licensors may insist on preserving their ability to obtain preliminary injunctive
relief from national courts in the place where unauthorized use of their property occurs, rather
than first proceeding through an arbitration and then enforcing the award locally. As discussed
below, both national law and institutional rules frequently permit parties to seek provisional
measures in aid of arbitration from national courts, notwithstanding their agreement to
arbitrate. (344) In many cases, this will offer sufficient procedural protection for intellectual
property right licensors.
Nonetheless, parties sometimes wish to ensure further flexibility to seek injunctive relief in
national courts against unauthorized use of intellectual property rights, using language along
the following lines:
Any violation of Article [X] hereof [relating to trademarks, patents] would cause irreparable
injury to [Licensor]. [Licensor] may, in addition to any other rights under this Agreement and
notwithstanding the arbitration agreement contained in this Article [XX], seek specific
performance of Article [X] and any other available injunctive relief in any court of competent
jurisdiction against any violation of such Article [X]. (345)
In general, exceptions such as these may create more problems than benefits. They may
conflict with the parties chosen institutional arbitration rules, or applicable law, while making
parallel proceedings more likely. Nevertheless, there is little serious question as to their
validity.
P 1386
[3] Payment Obligations
Parties sometimes seek to exclude payment obligations from the scope of arbitration clauses.
The theory underlying this approach is that arbitral proceedings will take several months to
get underway and that some arbitrators may be more likely than national courts to adopt
Solomonic decisions that dilute contractually crisp payment obligations. (346) Financial
institutions in particular sometimes exclude payment obligations from the parties arbitration
agreement. For example, one partys payment obligations can be placed in a single article of
the underlying contract, which can then be excluded from the scope of the arbitration clause:
With the exception of Buyers payment obligations under Article [X] hereof, all claims,
controversies, disputes and disagreements arising under or relating to this Agreement shall be
finally resolved by arbitration.
The enforceability of such provisions is not subject to serious doubts. (347) In general, however,
experienced advisers counsel against this approach. The jurisdictional and other uncertainties
that result from such a bifurcated dispute resolution scheme usually outweigh any potential
benefits. Of course, if payment (or other) obligations are excluded from an arbitration
agreement, then a separate forum selection agreement for such disputes is usually
appropriate.
P 1387
[I] Arbitrators Remedial Authority
There is a substantial body of authority holding that particular arbitration clauses, and
arbitration agreements in general, confer broad remedial authority on arbitrators. As also
discussed below, these authorities typically reason that parties intend arbitral tribunals to
possess expansive authority to adopt commercially-sensible and practical resolutions of the
parties dispute, without narrow or formalistic limits. (348)
9.03 INTERNATIONAL ARBITRATION AGREEMENTS INCORPORATING

INSTITUTIONAL ARBITRATION RULES
As discussed elsewhere, arbitration agreements frequently incorporate institutional
arbitration rules. It is settled law in most jurisdictions that such incorporations are permitted
and in principle valid and binding. (349) Indeed, this is the whole purpose of such rules and the
manner in which they are invariably used.
[A] Incorporation of Institutional Rules

When parties agree to arbitrate under institutional rules, they are deemed to have
incorporated those rules into their agreement, and are therefore bound by such rules as a
contractual matter. (350) As one French decision concludes, [the rules chosen in an arbitration
agreement] serve as the parties procedural law. (351)
P 1388 In general, there are few disputes about the language that will be effective to incorporate
institutional rules. The most reliable and secure language for doing so is typically the model
arbitration clause recommended by particular institutions. (352) In general, arbitration
agreements providing for disputes to be resolved or settled under, pursuant to, in
accordance with, or as provided by a particular set of institutional arbitration rules should
be sufficient to incorporate the relevant institutions rules. (353) There are occasional contrary
national court decisions, but they are ill-considered. (354)
[B] Arbitral Institutions Authority to Interpret Institutional Rules
20
Many institutional rules grant the administering institution the power to interpret and apply
its rules, typically with an exclusion of judicial review. (355) Courts have generally afforded
arbitral institutions broad discretion in interpreting institutional rules and have given effect to
P 1389 such interpretations. (356) In the words of one U.S. decision, [w]herethe parties have
adopted [particular institutional arbitration] rules, the parties are also obligated to abide by
the [relevant arbitral institutions] determinations under those rules. (357)
[C] Applicable Version of Institutional Rules

A recurrent issue is what version of an institutions rules the parties have incorporated. The
issue arises because, as discussed above, arbitral institutions periodically revise their
institutional rules in light of practical experience. (358)
A number of institutional arbitration rules contain provisions expressly addressing this issue,
consistently providing that the applicable version of institutional rules is that in force at the
time an arbitration is commenced. (359) Where such provisions exist, they will be given effect
(unless the parties have otherwise agreed in their arbitration agreement).
The 2010 version of the UNCITRAL Rules takes a more complicated approach. Article 1(2) of the
2010 UNCITRAL Rules provides that: The parties to an arbitration agreement concluded after
15 August 2010 shall be presumed to have referred to the Rules in effect on the date of
commencement of the arbitration, unless the parties have agreed to apply a particular version
of the rules This language provides expressly for application of the version of the UNCITRAL
Rules in force at the time an arbitration is commenced, but only for arbitrations pursuant to
arbitration agreements concluded after 15 August 2010; for arbitrations commenced prior to
that date, the UNCITRAL Rules are silent (and, arguably, suggest the contrary rule by negative
implication). (360)
P 1390 If the parties agreement and institutional rules are silent regarding the applicable
version of the rules, the general rule is that the version of the institutional rules in force at the
time the arbitral proceedings have been commenced will apply. As one Singaporean decision
explained:
the principle to be applied in both cases is the same: where rules are mainly procedural, the
rules in force at the time of commencement of arbitration will apply. In this case, the
arbitration agreement referred to the SIAC rules for the time being in force. The parties did not
contract to adopt the SIAC rules in force at the time of the contract. As such, the rules to be
applied are the rules in force at the time the matter is referred to arbitration: viz. the SIAC
Rules 2007. (361)
Other authorities, from a range of jurisdictions, are to the same effect. (362)
P 1391
[D] Amendments to Institutional Rules
Some arbitration agreements only partially incorporate institutional rules, or purport to alter
generally-applicable institutional rules. (363) For example, an arbitration agreement may only
select an arbitral institution as appointing authority (and not generally incorporate its rules),
(364) or only select the institutions procedural rules (and not the institution as appointing
authority), (365) or incorporate some (but not all) provisions of a set of procedural rules. Great
care should be taken in drafting provisions that purport to alter applicable institutional rules,
both because such rules typically reflect tested, reliable procedures (366) and because ill-
considered alterations may have pathological results that could invalidate the entire
agreement to arbitrate. (367)
In general, the parties specifically negotiated agreement will prevail over general
institutional rules. (368) On the other hand, courts should be slow to conclude that the parties
intended to alter the provisions of institutional rules that they have incorporated absent clear
language to this effect (given the difficulties and unexpected results such changes can
produce). (369)
P 1392
9.04 EXCLUSIVITY OF ARBITRATION AGREEMENT
Another important conceptual and practical issue in the interpretation of an arbitration
agreement is whether arbitration is intended to be the parties exclusive remedy, or whether it
is only a permissive option that leaves either party free to resort to litigation in national courts
or other forums. At least in theory, an arbitration agreement might be non-exclusive. (370)
That is, like a non-exclusive forum selection clause, (371) an arbitration agreement might
permit either party to commence binding arbitration, but not forbid the other party from also
pursuing other forms of dispute resolution (such as litigation in national courts). (372)
It is extremely unlikely that parties would intend an arbitration agreement to be non-exclusive
(and, if they did so, it would almost always be very unwise). As discussed above, parties enter
into international arbitration agreements in large part to avoid the necessity of litigating in
national courts and to avoid the expense, delay and uncertainty of multiplicitous litigation in
different jurisdictions. (373) A non-exclusive agreement to arbitrate would accomplish none
of these objectives, and would in fact contradict them.
Similarly, the basic assumption of the New York Convention, and other leading international
arbitration instruments, is that arbitration agreements are exclusive. Thus, Article II(3) of the
Convention provides that national courts shall refer the parties to arbitration if they have
21
made a valid arbitration agreement covering their dispute. (374) As discussed above, other
international conventions and national legislation are to the same effect. (375) In each
instance, the prevailing assumption is that, if the parties have agreed to arbitrate certain
disputes, they have also agreed not to litigate those disputes. (376)
Accordingly, even assuming parties might validly agree to the contrary, national courts and
arbitral tribunals invariably either hold or assume that international arbitration agreements
are exclusive, precluding litigation of arbitrable matters in national courts. (377) Indeed, the
P 1393 matter is considered so well-established that it is virtually never litigated. (It is
occasionally argued that an agreement to arbitrate is not a waiver of rights to particular local
procedural or other protections (e.g., the right in the United States to a jury trial); these
arguments are virtually always summarily rejected. (378) )
As a matter of contract, there would seem to be nothing that would forbid parties from
entering into a non-exclusive arbitration agreement, however ill-advised it may appear. Such
an arrangement might be appropriate in intellectual property agreements or in loan
documentation where one party might wish to be able to pursue claims against the other in
both one certain forum (arbitration) and also in any other available jurisdiction. In most cases,
however, it would be very unusual, and likely equally ill-advised, for parties to desire
arbitration as a non-exclusive means of dispute resolution.
Indeed, as discussed above, there are doubts as to whether a non-exclusive agreement to
arbitrate would even constitute an arbitration agreement under applicable national and
international legal regimes, at least where the results of the arbitral process were not binding.
(379) It is also unclear what status a putative award would have if rendered following a non-
exclusive arbitral process. In particular, it is unclear whether such an award would be final and
binding (like most awards) or merely advisory and non-binding (given the non-exclusive
character of the arbitral process). (380) In the latter case, it would be unclear whether the
parties agreement, and resulting decision, constituted an arbitration agreement or award
under applicable national arbitration legislation. (381)
9.05 CHOICE OF LAW APPLICABLE TO INTERPRETATION OF ARBITRATION

AGREEMENT
The interpretation of arbitration agreements raises choice-of-law issues. Assuming that the
parties have not otherwise agreed, possible options for the law governing construction of an
arbitration clause include: (a) the law of the state where judicial enforcement proceedings are
pending; or (b) the law chosen by the parties to apply to, or the law otherwise applicable to,
P 1394
[A] Law of Judicial Enforcement Forum
Few courts or arbitral tribunals have addressed the question of what law governs
interpretation of an international arbitration agreement in any detail. Many courts have either
not considered the question of applicable law (simply interpreting arbitration agreements by
reference to general principles of law) or have without explanation applied the law of the
judicial enforcement forum. (383)
In the United States, for example, there is a substantial body of precedent holding that federal
common law derived from the FAA applies to the interpretation of international arbitration
agreements by U.S. courts. In Mitsubishi Motors Corp. v. Soler Chrysler, for example, the U.S.
Supreme Court cited the existence of a body of federal substantive law and used this body of
law to interpret an arbitration agreement plainly governed by foreign law. (384)
Notwithstanding a choice-of-law clause in the underlying contract selecting Swiss law, the
Court reasoned:
The first task of a courtis to determine whether the parties agreed to arbitrate that dispute.
The court is to make this determination by applying the federal substantive law of
arbitrability, applicable to any arbitration agreement within the coverage of the Act. And that
body of law counsels that questions of arbitrability must be addressed with a healthy regard
for the federal policy favoring arbitration.The Arbitration Act establishes that, as a matter of
federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor
of arbitration, whether the problem at hand is the construction of the contract language itself
or [otherwise]. (385)
The Supreme Court applied federal law (and the FAAs pro-arbitration presumption) (386)
notwithstanding the fact that the arbitration agreement in question provided for arbitration in
Japan and was governed by either Japanese or Swiss law. (387)
Other U.S. decisions have generally followed the course adopted in Mitsubishi, holding that the
FAA governs the interpretation of arbitration agreements in U.S. courts, (388) including in
P 1395 international cases, (389) and including where the parties agreement contains a choice-
of-law clause selecting non-U.S. law. (390) As one lower court reasoned:
It is true that, if the parties agree that certain disputes will be submitted to arbitration and
that the law of a particular jurisdiction will govern the resolution of those disputes, federal
courts must effectuate that agreement. However, whether a particular dispute is within the
class of those disputes governed by the arbitration and choice of law clause is a matter of
federal law. (391)
22
Despite this, a few lower U.S. court decisions appear to apply, or lean towards applying, foreign
P 1396 law to the interpretation of the parties arbitration agreement. (392) These courts have
reasoned that the parties choice-of-law agreement applies, among other things, to issues of
interpretation of the scope of their arbitration clause and that this choice should be given
effect. (393) There does not thus far appear to be any clear weight of authority in lower U.S.
court decisions on the issue.
The better view is to apply the pro-arbitration interpretative rule regardless of the national
law applicable to the parties agreement to arbitrate. That is because, as discussed above, a
pro-arbitration rule of interpretation is mandated by the New York Convention, Article II of
which mandates giving effect to the parties presumptive intentions. (394) This uniform
international rule applies regardless what law is applicable to the parties agreement to
arbitrate. (395) Accordingly, as with Article IIs rule of presumptive validity of international
arbitration agreements, (396) the pro-arbitration interpretative canon applies regardless of
the law applicable to the parties arbitration agreement.
[B] Law Governing Substantive Validity of Arbitration Agreement

A number of other national courts have applied the law governing the substantive validity of
the arbitration agreement to issues of interpretation, typically without detailed discussion.
Under Swiss law, the construction of international arbitration agreements is subject to the law
governing the substantive validity of the agreement. (397) Similarly, German courts appear to
hold that the law governing the substantive validity of an arbitration agreement governs its
P 1397 interpretation. (398) Courts in other jurisdictions have adopted the same approach, (399)
as has the weight of commentary on the subject. (400)
[C] Future Directions: Choice of Law Governing Interpretation of International

It is relatively clear that the interpretation of international arbitration agreements should not
be governed by the law of the judicial enforcement forum, as some national courts have held.
Rather, if a national law is to be applied, the interpretation of an international arbitration
agreement should generally be subject to the law applicable to the existence and substantive
validity of that agreement. (401)
This approach would produce more uniform results than application of the law of the judicial
enforcement forum (which would vary depending on where litigation is brought) and would in
most cases more closely accord with the parties intentions. This result is also consistent with
most choice-of-law authorities in other contexts. For example, the Rome Convention and Rome
I Regulation provides that all questions concerning the interpretation of an agreement are
governed by the law applicable to that agreement. (402) Other choice-of-law authorities are
similar. (403)
P 1398 At the same time, the general and increasing international acceptance of pro-arbitration
interpretative presumption should make the choice of law governing the interpretation of
arbitration agreements less important in the future. As discussed above, most jurisdictions
have adopted a pro-arbitration rule of construction of international arbitration agreements,
(404) reducing materially the practical significance of choice of law questions on this issue.
Finally, the better view is that Article II of the New York Convention mandates an international
rule of construction of arbitration agreements subject to the Convention. As discussed above,
that rule requires interpreting international arbitration agreements expansively, not
restrictively, and as resolving all doubts in favor of encompassing disputes within the parties
agreement to arbitrate. (405) That uniform international rule applies without regard to the
substantive law otherwise applicable to the interpretation of the arbitration agreement.
9.06 ALLOCATION OF COMPETENCE TO DECIDE DISPUTES OVER SCOPE OF

INTERNATIONAL ARBITRATION AGREEMENT
Disputes about the validity and scope of arbitration agreements raise questions concerning
the allocation of competence between national courts and arbitral tribunals over the
resolution of such disputes. As discussed above, different legal systems have adopted different
resolutions of this issue. (406)
[A] Allocation of Jurisdictional Competence to Decide Scope Disputes

The argument that arbitrators, rather than national courts, should in the first instance resolve
disputes over the scope of the arbitration agreement is more compelling than for almost any
other jurisdictional issue. (407) Where the parties accept that there is an existent, valid
arbitration agreement, and the issue is whether this agreement extends to particular disputes
or claims, then the case for initial arbitral resolution of this issue (subject to judicial review at
the award enforcement stage) is overwhelming, absent contrary indication of the parties
intent.
This is because it will ordinarily be most efficient for the arbitral tribunal to resolve disputes
over the scope of an arbitration clause, rather than face prospects of multiple and conflicting
national court decisions. Equally important, most decisions about the scope of an arbitration
clause are inextricably intertwined with the interpretation of the parties underlying contract
23
P 1399 (because the arbitration clause invariably will encompass disputes relating to or arising
under the parties underlying contract, which in turn requires ascertaining the
substantive scope and content of the contract). (408)
Accordingly, it is the arbitral tribunal that is the authoritative decision-maker for one critical
aspect of the jurisdictional determination (indeed, often the most important aspect of this
determination). It almost inevitably follows that the parties should, absent contrary indication,
be understood as having granted the tribunal the power to determine the scope of its own
jurisdiction; indeed, until the arbitrators have interpreted the underlying contract, it is very
difficult or impossible for a court to determine the scope of the arbitration clause. (409)
National courts have not always reached results consistent with the analysis. The U.S. Supreme
Court held in Howsam v. Dean Witter Reynolds and subsequent decisions that a disagreement
about whether an arbitration clause in a concededly binding contract applies to a particular
type of controversy is presumptively for interlocutory judicial determination. (410) Although
some U.S. courts have granted discretionary stays of judicial consideration of scope disputes,
(411) other U.S. decisions have undertaken interlocutory judicial consideration of disputes
regarding the scope of the arbitration agreement. (412) In contrast, courts in other jurisdictions
have permitted arbitral tribunals to make preliminary jurisdictional decisions regarding the
scope of the arbitration agreement, typically subject to subsequent judicial review in
annulment proceedings. (413)
P 1400 In a substantial number of commercial cases, particularly in the United States, arbitral
tribunals are held to have an alternative type of competence-competence, with more decisive
consequences. In particular, as discussed above, U.S. courts have held that typical institutional
arbitration rules constitute agreements granting the arbitrators the power finally to decide
disputes regarding the scope of the arbitration agreement. (414) Similarly, some U.S. courts
have also held that broad arbitration agreements, as distinguished from narrow
agreements, grant the arbitrators power to finally resolve scope issues. (415) In both of these
categories of cases, an arbitral tribunals decision regarding the scope of an arbitration
agreement is subject to only minimal subsequent U.S. judicial review. (416) Although courts in
other states typically recognize the validity of agreements to arbitrate jurisdictional disputes,
(417) there is little authority outside the United States applying this principle in the context of
scope disputes.
[B] Relationship Between Allocation of Jurisdictional Competence and Rules of

Interpretation
In some jurisdictions, there is a relationship between competence-competence principles and
rules for interpreting arbitration agreements. That relationship is not always clearly
acknowledged, but can be of substantial importance.
As discussed elsewhere, when presented with the question of whether an arbitration
agreement exists and encompasses a dispute presented to them, some national courts do not
P 1401 consider these issues on the merits, but instead perform only a prima facie review. (418)
Under the French Code of Civil Procedure, French courts only conduct a prima facie review of
claims that a dispute does not fall within the scope of the parties arbitration agreement. (419)
Similarly, under the UNCITRAL Model Law, better-reasoned judicial decisions have held that
interpretation of the scope of the arbitration clause is for the arbitral tribunal (subject to
subsequent judicial review), and not for interlocutory judicial determination. (420)
Likewise, some U.S. courts have suggested that the FAAs pro-arbitration rules of construction
are in part a means of allocating the competence of courts and arbitrators in interpreting the
scope of arbitration agreements. These courts have presumed that arbitration agreements are
very broad for purposes of deciding whether to refer a dispute to arbitration, but subject to the
arbitral tribunals (and an enforcing courts) ultimate power to adopt a narrower interpretation
of the clause. (421)
In any of the foregoing circumstances, a national courts interlocutory interpretation of the
arbitration clause in deciding whether to refer a dispute to arbitration is a procedural,
preliminary view, not dispositive of the merits of what the agreement actually provides; these
interpretations are only addressed to the question of who should decide this issue in the first
instance. Where national court decisions of this character are involved, they do not present
definitive interpretations of the parties agreement and are instead applications of the
competence-competence doctrine.
On the other hand, as discussed elsewhere, many national courts interpretations of arbitration
clauses will ordinarily be binding decisions on the merits, with preclusive effects. (422) They
will not be mere procedural steps, or prima facie determinations, but final interpretations of
the substantive scope of the arbitration agreement. The same will generally be true with
regard to judicial decisions in actions to annul or recognize an award, where the courts
interpretation of the arbitration agreement will be on the merits. (423)
In considering the appropriate standards to be applied to issues of interpretation by national
courts, and the consequences of interlocutory judicial decisions, it is essential to have regard
to the foregoing issues. Failure to do so will result in applying inappropriate legal standards,
either to interpretation of the parties arbitration agreement or the preclusive effect of a
judicial decision on the arbitrators award. (424)
Finally, it is also clear that the presumptions discussed above regarding the scope of
24
arbitration agreements are applicable both in proceedings to recognize and enforce
P 1402 arbitration agreements (under Article II of the New York Convention and Article 8 of the
UNCITRAL Model Law (and parallel provisions of other national arbitration legislation)) and
proceedings to recognize and enforce arbitral awards. Most of the authorities cited in this
Chapter involve proceedings to recognize and enforce arbitration agreements, but equivalent
authorities exist in the context of arbitral awards (as discussed in detail below (425) ). Indeed,
as discussed below, national courts are generally particularly deferential to arbitrators
determinations regarding the scope of the parties arbitration agreement in award annulment
P 1403 and recognition proceedings. (426)
References
1) See1.01[A][2]; 1.02; 1.04[E].
2) See5.04[D][1][a].
3) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 123-24 (1989).
4) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (U.S. S.Ct. 1995) (emphasis added).
See Czarina ex rel Halvanon Ins. v. W.F. Poe Syndicate, 358 F.3d 1286, 1291 (11th Cir. 2004)
(arbitration is a creature of contract and thus the powers of an arbitrator extend only as
far as the parties have agreed they will extend); Walkinshaw v. Diniz [2000] 2 All ER
(Comm) 237 (QB) (English High Ct.); Sonatrach Petroleum Corp.(BVI) v. Ferrell Intl Ltd [2002]
1 All ER (Comm) 627 (QB) (English High Ct.); Judgment of 3 October 2000, Nejapa Power Co.
LLC v. CEL, 19 ASA Bull. 796, 798 (Swiss Federal Tribunal) (2001) (Among other
prerequisites, an arbitral tribunal has jurisdiction only in case the dispute is within the
scope of the arbitration agreement.).
5) See5.05[C] (rules); 5.05[C]; 11.05[B][4](procedures); 14.07(seat).
6) See7.03[E][5][d]; 7.03[I][3]. See also9.06[A].
7) See4.09, pp. 635. See also9.05.
8) New York Convention, Art. V(1)(c) (difference not contemplated by or not falling within
the terms of the submission to arbitration). See26.05[C][4]. Article V(1)(c) uses the
phrase submission to arbitration rather than arbitration agreement, and likely was
intended to refer, in the first instance, to either the parties submissions to the arbitral
tribunal or their post-dispute submission agreement. See7.03[A][2][c]. The provision
nonetheless also encompasses the parties underlying arbitration agreement, which
limits the scope of issues that may be submitted to arbitration. See also7.03[A][2][c];
25.04[F][3][a]; 26.05[C][4].
9) Articles II(1) and II(3) of the Convention require giving effect to the parties agreement
regarding the scope of those disputes that they wish (and do not wish) to submit to
arbitration. New York Convention, Arts. II(1), (3); 1.04[A][1][c]; 2.01[A][1][a]; 5.01[B][2].
10) Inter-American Convention, Art. 5(1)(c); European Convention, Arts. V(1), IX(1)(c).
11) ICSID Convention, Art. 52(1)(b); C. Schreuer et al., The ICSID Convention: A Commentary
52.130 et seq. (2d ed. 2009).
12) See9.02[D][1].
13) See9.02[D][1].
14) Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (U.S. S.Ct. 1985).
15) See9.02[D][1].
16) See25.02[B] (annulment of awards); 26.05[C][4][c][ii] (recognition of awards).
17) See, e.g., Italian Code of Civil Procedure, Art. 808-quater, added by Italian Legislative
Decree of 2 February 2006; 9.02[D][1][e].
18) UNCITRAL Model Law, Art. 8(1) (A court before which an action is brought in a matter
which is the subject of an arbitration agreement shall refer the parties to arbitration).
19) UNCITRAL Model Law, Art. 34(2)(a)(iii) (award deals with a dispute not contemplated by
or not falling within the terms of the submission to arbitration, or contains decisions on
matters beyond the scope of the submission to arbitration), Art. 36(1)(a)(iii). See25.04[F];
26.05[C][4].
25
20) U.S. FAA, 9 U.S.C. 3 (If any suit or proceeding be brought upon any issue referable to
arbitrationthe court in which such suit is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to arbitration under such an agreement,
shallstay the trial of the action.) (emphasis added); French Code of Civil Procedure, Art.
1448 (When a dispute subject to an arbitration agreement is brought before a court, such
court shall decline jurisdiction) (emphasis added); Swiss Law on Private International
Law, Art. 7 (If the parties have made an arbitration agreement concerning an arbitrable
dispute) (emphasis added); Belgian Judicial Code, Art. 1681(1) (The Court before which
is brought a dispute that is also the object of an arbitration agreement shall declare itself
without jurisdiction) (emphasis added); Austrian ZPO, 584(1) (A court before which an
action is brought in a matter which is the subject of an arbitration agreement shall reject
the claim) (emphasis added); Swedish Arbitration Act, 4(1) (A court may not, over an
objection of a party, rule on an issue which, pursuant to an arbitration agreement, shall be
decided by arbitrators.) (emphasis added); Hong Kong Arbitration Ordinance, 2013, 20(1);
Chinese Arbitration Law, Art. 5; Japanese Arbitration Law, Art. 14 (A court before which an
action is brought in respect of a civil dispute which is the subject of an arbitration
agreement shall, if the defendant so requests, dismiss the action) (emphasis added);
Korean Arbitration Act, Art. 9; Indian Arbitration and Conciliation Act, Art. 8(1); Russian
Arbitration Law, Art. 8 (A court in which an action is brought in a matter which is the
subject of an arbitration agreement shallstay its proceedings and refer the parties to
arbitration.) (emphasis added).
21) See9.02[D][1].
22) See9.02[C]. This is similar to the rules governing the substantive validity of the
arbitration agreement. See5.04[A][3]; 5.06[A][3].
23) See9.02[D].
24) See, e.g., PartialAward in ICC Case No. 10623, 21 ASA Bull. 59, 82, 106 (2003) (relying on
generally accepted principle of contract interpretationthat contracts should be
interpreted as a whole, so that their provisions make sense together); Partial Award in
ICC Case No. 7920, XXIII Y.B. Comm. Arb. 80, 80 (1998) (applying general principles of
contract interpretation to reach[] the same result as other methods of analysis);
PreliminaryAward in ICC Case No. 2321, I Y.B. Comm. Arb. 133 (1976); Amco Asia Corp. v.
Repub. of Indonesia, Award on Jurisdiction in ICSID Case No. ARB/81/1 of 25 September 1983,
23 Intl Legal Mat. 351 (1983); Award in ICAC Case No. 217/2001 of 6 September 2002, UNILEX
(UNIDROIT Principles), available at www.unilex.info (applying general principles of
contract interpretation of Article 431 of Russian Civil Code to arbitration agreement);
McCollough & Co., Inc. v. Ministry of Post, Tel. & Tel., Award in IUSCT Case No. 225-89-3 of 22
April 1986, XII Y.B. Comm. Arb. 316, 318 (1987) (When there is an apparent difference of
meaning between two equally authentic texts of a contract, drawn up in two languages,
one first should try, in accordance with general principles of contract interpretation, to
construe the contract in such a way as to reconcile the two texts.); Interim Award on
Jurisdiction in VIAC Case No. SCH-5024 of 5 August 2008, 2(2) Intl J. Arab Arb. 341, 344 (2010)
(general principles of interpretation of contracts under civil law).
25) Interim Award in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000).
26) See, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 (U.S. S.Ct. 1995);
Fleetwood Enters. Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002); EEOC v. Franks
Nursery & Crafts, Inc., 177 F.3d 448, 460 (6th Cir. 1999) (Because courts are to treat
agreements to arbitrate as all other contracts, they must apply general principles of
contract interpretation to the interpretation of an agreement covered by the FAA.);
Haviland v. Goldman, Sachs & Co., 736 F.Supp. 507, 509 (S.D.N.Y. 1990) (Arbitration
agreements are contractual obligations which are governed by general principles of
contract interpretation.); Judgment of 25 October 2010, DFT 4A_279/2010 (Swiss Federal
Tribunal); Judgment of 27 January 2010, DFT 4A_562/2009 (Swiss Federal Tribunal);
Judgment of 22 January 2008, 26 ASA Bull. 549, 555 (Swiss Federal Tribunal) (2008) (The
interpretation of an arbitration clause follows the general principles applicable to the
interpretation of private declarations of will.); Judgment of 21 November 2003, DFT 130 III
66 (Swiss Federal Tribunal); Judgment of 13 January 2009, 2009 SchiedsVZ 122 (German
Bundesgerichtshof) (general principles of interpretation, logic and common sense);
Judgment of 8 February 1991, 1991 NJW-RR 602 (Oberlandesgericht Mnchen); Judgment 30
March 2009, XXXV Y.B. Comm. Arb. 325, 327 (2010) (Austrian Oberster Gerichtshof).
27) Insigma Tech. Co. Ltd v. Alstom Tech. Ltd, [2009] 3 SLR(R) 936, 30, 33 (Singapore Ct.
App.).
28) Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559, 564
(Australian Fed. Ct. 2005) (2006).
29) Judgment of 22 January 2008, 26 ASA Bull. 549, 555 (Swiss Federal Tribunal) (2008). See
alsoJudgment of 6 August 2012, 30(4) ASA Bull. 864, 872 (Swiss Federal Tribunal) (2012)
([I]nterpretation of an arbitration agreement follows the general principles applicable
to the interpretation of private declarations of intention. The factually concurring
intention of the parties is mainly decisive in this respect. If it cannot be established, the
arbitration clause must be interpreted objectively, i.e., the presumed intention of the
parties must be ascertained as it could and should have been understood, in good faith,
by the receiver of the declaration in view of all circumstances. The time of conclusion of
the contract is decisive in this respect and the subsequent conduct of the parties is
irrelevant to an interpretation based on the principle of reliance.).
26
30) See, e.g., J-L. Delvolv, G-H. Pointon & J. Rouche, French Arbitration Law and Practice: A
Dynamic Civil Law Approach to International Arbitration 111 (2d ed. 2009); K. Hober,
International Commercial Arbitration in Sweden 102 (2011) (The interpretation of an
arbitration agreement is based on the same principles that apply to agreements in
general.); Mnch, in G. Lke & P. Wax (eds.), Mnchener Kommentar zur
Zivilprozessordnung 1029, 105 (3d ed. 2008); F. Schwarz & C. Konrad, The Vienna Rules: A
Commentary on International Arbitration in Austria 1-093 (2009); Wenger, in S. Berti et al.
(eds.), International Arbitration in Switzerland Art. 178, 49 (2000).
31) See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (U.S.
S.Ct. 1985) (as with any other contract, the parties intentions control, but those
intentions are generously construed as to issues of arbitrability); Interim Award in ICC
Case No. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000) (in accordance with the general
principles of the interpretation of contracts, i.e., seeking the real and common intent of
parties, based on the wording of the clause, and the principle of confidence or good
faith); Amco Asia Corp. v. Repub. of Indonesia, Award on Jurisdiction in ICSID Case No.
ARB/81/1 of 25 September 1983, 23 Intl Legal Mat. 351, 359 (1983) (taking into account the
consequences of their commitments the parties may be considered as having reasonably
and legitimately envisaged).
32) Stolt-Nielsen SA v. Animal Feeds, 130 S.Ct. 1758, 1773-74 (U.S. S.Ct. 2010).
33) Judgment of 29 February 2008, 26 ASA Bull. 376, 379 (Swiss Federal Tribunal) (2008).
34) Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (U.S. S.Ct. 1995).
35) See, e.g., Hudson v. ConAgra Poultry Co., 484 F.3d 496, 503 (8th Cir. 2007); Energy Transp.,
Ltd v. MV San Sebastian, 348 F.Supp.2d 186, 203 (S.D.N.Y. 2004) (cardinal doctrines of
contract interpretation instruct courts to read a contractual document in a manner that
confers meaning on all of its terms and renders the terms consistent with one another);
Award in ICC Case No. 3460, 108 J.D.I. (Clunet) 939 (1981); Award in ICC Case No. 3380, VII Y.B.
Comm. Arb. 116 (1982); Award in ICC Case No. 1434, 103 J.D.I. (Clunet) 978, 982 (1976)
(prefer[ring] the interpretation which gives meaning to the words, rather than that which
renders them useless or nonsensical); Kuwait v. Am. Independent Oil Co., Ad Hoc Award of
24 March 1982, 21 Intl Legal Mat. 976 (1982).
36) Award in ICC Case No. 5754, excerpted in W. Craig, W. Park & J. Paulsson, International
Chamber of Commerce Arbitration 90 (3d ed. 2000) (The [arbitration] clause must always
be interpreted as part of, and in the light of, the particular contract in which it appears.).
37) See, e.g.,Dr. Horst Reineccius v. Bank for Intl Settlements, Partial Award in PCA Case of 22
November 2002, XXVIII Y.B. Comm. Arb. 100, 130 (2003) (Insofar as the lex specialis in this
caseprovides an answer to the questions arising in this case, the Tribunal would not be
permitted to turn to international law.).
38) Karnette v. Wolpoff & Abramson, LLP, 444 F.Supp.2d 640, 646 (E.D. Va. 2006).
39) Final Award in ICC Case No. 5946, XVI Y.B. Comm. Arb. 97, 102 (1992).
40) See, e.g., InterimAward in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000) (principle
of confidence or good faith); Judgment of 27 January 2010, 29 ASA Bull. 396, 401-02 (Swiss
Federal Tribunal) (2011) (If the real intention of the parties cannot be ascertained, the
arbitration agreement must be construed in an objective manner in order to establish
the meaning that the parties must have intended to attribute to their declarations of will,
in good faith and taking into account the overall circumstances of the case.); Judgment of
6 November 2009, DFT 4A_358/2009 (Swiss Federal Tribunal) (in accordance with general
Swiss principles of contractual interpretation, the arbitration clausehad to be
construed in a way how the parties could and should have understood it in good faith,
taking into account the overall circumstances of the case); Judgment of 22 January 2008,
26 ASA Bull. 549 (Swiss Federal Tribunal) (2008).
41) eskoslovenska obchodn banka, AS v. Slovak Repub., Decision on Jurisdiction in ICSID Case
No. ARB/97/4 of 24 May 1999, 14 ICSID Rev.-For. Inv. L.J. 251, 263 (1999).
42) Judgment of 5 December 2008, 27 ASA Bull. 762, 769 (Swiss Federal Tribunal) (2009).
43) See, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 (U.S. S.Ct. 1995);
Shaw Group Inc. v. Triplefine Intl Corp., 322 F.3d 115, 121 (2d Cir. 2003); Judgment of 7
February 2002, SA Alfac v. Socit Irmac Importaco, commrcia e industria Ltda, 2002 Rev.
arb. 413 (Paris Cour dappel); Judgment of 1 February 1979, Techniques de lIngnieur v.
Sofel, 1980 Rev. arb. 97, 98 (Paris Tribunal de grande instance); Aamco Transmissions Inc.
v. Kunz, [1991] 97 Sask.R. 5 (Saskatchewan Ct. App.); Award in ICC Case No. 8261, 4 Unif. L.
Rev. 170 (1999); Amco Asia Corp. v. Repub. of Indonesia, Award on Jurisdiction in ICSID Case
No. ARB/81/1 of 25 September 1983, 23 Intl Legal Mat. 351 (1983); First Travel Corp. v.
Islamic Repub. of Iran, Award in IUSCT Case No. 206-34-1 of 3 December 1985, XII Y.B. Comm.
Arb. 257 (1987); Sykes, The Contra Proferentem Rule and the Interpretation of International
Commercial Arbitration Agreements: The Possible Uses and Misuses of A Tool for Solutions
to Ambiguities, 8 Vindobona J. Intl Comm. L. & Arb. 65 (2004).
44) Paul Revere Variable Annuity Ins. Co. v. Kirschhofer, 226 F.3d 15, 25 (1st Cir. 2000).
45) C. Liebscher & A. Fremuth-Wolf (eds.), Arbitration Law and Practice in Central and Eastern
Europe 2.11 to 2.12 (2008) (Finally, if all efforts fail, the contra proferentem rule
applies).
46) Hudson v. ConAgra Poultry Co., 484 F.3d 496, 503 (8th Cir. 2007) (This general principle of
contract interpretation [i.e., contra proferentem] is, however, displaced in this context by
the more specific rule requiring that any doubts concerning the scope of arbitrable issues
be resolved in favor of arbitration.); Falcone Bros. Pship v. Bear Stearns & Co., Inc., 699
F.Supp. 32, 34 (S.D.N.Y. 1988) (same).
27
47) See, e.g., Partial Award in ICC Case No. 7710, 128 J.D.I. (Clunet) 1148 (2001) (applying
principle of ut res magis valeat quam pereat to interpretation of arbitration agreement);
Judgment of 4 June 2009, Socit Naphtachimie v. Socit UOP NV, Case No. 08-13983
(French Cour de cassation civ. 1e); Judgment of 5 December 2008, 27 ASA Bull. 762, 769
(Swiss Federal Tribunal) (2009) (If the parties intention is to refer their disputes to
arbitration, then the principle ut res magis valeat quam pereat requires the arbitration
clause to be interpreted and construed so that it could have effect.).
48) See, e.g.,Final Award in ICC Case No. 6955, XXIV Y.B. Comm. Arb. 107, 123-25 (1999); Ad Hoc
Award of 29 May 1979, VII Y.B. Comm. Arb. 81 (1982). But see Decision in Case No. DEC 12-A1-
FT, Request for Decision Regarding Four Issues of Dispute Arising in Connection With the
Establishment and Operation of the Security Account Provided for in the Algiers Declaration,
Case A/1 (Issues I, III, IV) of 3 August 1982, 1 Iran-US C.T.R. 189 (1981) (tribunal found trade
usage conflicted with terms of agreement and upheld language of agreement).
49) Judgment of 5 December 2008, 27 ASA Bull. 762, 770 (Swiss Federal Tribunal) (2009) (court
will not have to consider only the wording and the factual matrix in which the parties
expressed their intention, but also the circumstances which preceded or prevailed at the
time of the making of the agreement, to the exclusion of subsequent conduct); H. Beale
(ed.), Chitty on Contracts 12-126 (31st ed. 2012) (Subsequent actions are therefore
inadmissible to interpret a written agreement, although there are certain exceptions to
this rule.).
50) Filanto SpA v. Chilewich Intl Corp., 789 F.Supp. 1229, 1241 (S.D.N.Y. 1992) (in determining
the intent of a party[,] due consideration is to be given to any subsequent conduct of the
parties); U.N. Convention on Contracts for the International Sale of Goods, Art. 8(3); U.S.
UCC 2-208; Restatement (Second) Contracts 202(4) (1981) (Where an agreement involves
repeated occasions for performance by either party with knowledge of the nature of the
performance and opportunity for objection to it by the other, any course of performance
accepted or acquiesced in without objection is given great weight in the interpretation of
the agreement.).
For international arbitral awards considering the parties post-contractual conduct in
interpreting an arbitration agreement, see Award in ICC Case No. 7792, 122 J.D.I. (Clunet)
993, 996 (1995); Saudi Arabia v. Arabian Am. Oil Co. (Aramco), Ad Hoc Award of 23 August
1958, 27 I.L.R. 117, 198 (1963).
51) See, e.g., Award in ICC Case Nos. 7604 and 7610, in J.-J. Arnaldez, Y. Derains & D. Hascher
(eds.), Collection of ICC Arbitral Awards 1996-2000 510 (2003); In Re Transrol Navegacao SA,
782 F.Supp. 848 (S.D.N.Y. 1991); Judgment of 30 April 2009, III ZB 91/07 (German
Bundesgerichtshof) (Where a party in proceedings before a state court has prevailed in
the argument, that an arbitral tribunal and not the state court had jurisdiction, it is as a
general rule not open to that party to claim in subsequent arbitral proceedings that the
state court is competent to hear a case; such contradictory conduct by a party
constitutes an attempt to deprive its opponent of legal protection under either
procedure and thus practically to deprive the latter of all its rights.The objection [to the
arbitral tribunals jurisdiction] is therefore denied pursuant to the principle of good
faith.). This scenario can also sometimes be addressed under estoppel principles.
See10.02[K].
52) As discussed above, most arbitral institutions have adopted model or recommended
arbitration clauses, which are widely used in commercial practice. See1.04[E][9].
53) See, e.g., First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (U.S. S.Ct. 1995);
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (U.S. S.Ct. 1985);
Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords); Judgment of 20
December 1995, DFT 121 III 495 (Swiss Federal Tribunal); Walter Rau Neusser Oel und Fett AG
v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559 (Australian Fed. Ct. 2005) (2006).
28
54) See, e.g., First Options, 514 U.S. at 945 (in domestic case, FAA insist[s] upon clarity before
concluding that the parties did not want to arbitrate a related matter); AT&T Techs., Inc.
v. Commercial Workers, 475 U.S. 643, 650 (U.S. S.Ct. 1986) (in domestic case, [i]n the
absence of any express provision excluding a particular grievance from arbitration, we
think only the most forceful evidence of a purpose to exclude the claim from arbitration
can prevail) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S.
574, 584-85 (U.S. S.Ct. 1960)); Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24-25 (U.S. S.Ct. 1983) (in domestic case, the [FAA] establishes that, as a matter of
federal law, any doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration, whether the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like defense to arbitrability); PRM
Energy Sys., Inc. v. Primeenerby LLC, 592 F.3d 830, 836 (8th Cir. 2010) (any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration,
including the construction of the contract language itself); Indus. Wire Prods., Inc. v.
Costco Wholesale Corp., 576 F.3d 516, 521 (8th Cir. 2009) (we interpret arbitration clauses
liberally and resolve any doubts in favor of arbitration); Century Indem. Co. v. Certain
Underwriters at Lloyds, 584 F.3d 513, 524 (3d Cir. 2009) (presumption of arbitrability in
the sense that an order to arbitrate the particular grievance should not be denied unless
it may be said with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the dispute); Collins & Aikman Prods. Co. v. Bldg Sys., Inc., 58
F.3d 16, 19 (2d Cir. 1995) (Accordingly, federal policy requires us to construe arbitration
clauses as broadly as possible.); Alghanim v. Alghanim, 828 F.Supp.2d 636, 646 (S.D.N.Y.
2011); Tigra Tech. v. Techsport Ltd, 2011 WL 2710678, at *2 (C.D. Cal.); Kuklachev v. Gelfman,
600 F.Supp.2d 437, 457 (E.D.N.Y. 2009). See also authorities cited 9.02[D][1][a]; J. Carter &
J. Fellas (eds.), International Commercial Arbitration in New York 26 (2010).
56) United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (U.S. S.Ct.
1960).
57) Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 nn.27, 23 (U.S. S.Ct.
1983).
The U.S. Supreme Court has also reasoned that the FAA was enacted to replace judicial
indisposition to arbitration with a national policy favoring arbitration and plac[ing]
arbitration agreements on equal footing with all other contracts. Hall St. Assocs. LLC v.
Mattel, 128 S.Ct. 1396, 1402 (U.S. S.Ct. 2008). See also J. Carter & J. Fellas (eds.),
International Commercial Arbitration in New York 5 (2010).
58) Balen v. Holland Am. Line Inc., 583 F.3d 647, 652 (9th Cir. 2009).
59) See, e.g., Ford Motor Co. v. Ables, 207 F.Appx. 443, 446 (5th Cir. 2006) (we are mindful that
due regard must be given to the federal policy favoring arbitration, and ambiguities as
to the scope of the arbitration clause itself must be resolved in favor of arbitration)
(quoting Volt Info. Sciences, Inc. v. Stanford Univ., 489 U.S. 468, 475-76 (U.S. S.Ct. 1989));
Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (there is an emphatic federal
policy in favor of arbitral dispute resolution); David L. Threlkeld & Co. v.
Metallgesellschaft Ltd, 923 F.2d 245, 250-51 (2d Cir. 1991) (federal policy strongly favors
arbitration as an alternative dispute resolution process); Sedco, Inc. v. Petroleos
Mexicanos Mexican Natl Oil Co., 767 F.2d 1140, 1145 (5th Cir. 1985); Kuklachev v. Gelfman,
600 F.Supp.2d 437, 457 (E.D.N.Y. 2009); Mercury Telco Group, Inc., v. Empresa de
Telecommunicaciones de Bogota, 670 F.Supp.2d 1350, 1355 (S.D. Fla. 2009) (strong federal
policy favoring arbitration); Belcourt v. Grivel, SLR, 2009 WL 3764085, at *1 (D. Utah) (a
liberal federal policy favoring arbitration agreements) (quoting Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (U.S. S.Ct. 1983)); Lloyds Underwriters v.
Netterstrom, XXXIV Y.B. Comm. Arb. 1156, 1160 (Fla. Ct. App.) (2009) ([FAA] establishes a
national policy favoring arbitration). Compare McDonnell Douglas Fin. Corp. v. Pa. Power
& Light Co., 858 F.2d 825, 831 (2d Cir. 1988) (federal policy alone cannot be enough to
extend the application of an arbitration clause far beyond its intended scope).
29
60) See, e.g., Mitsubishi Motors, 473 U.S. 614. Century Indem. Co. v. Certain Underwriters at
Lloyds, 584 F.3d 513, 523 (3d Cir. 2009) (The strong federal policy favoring arbitration
applies with special force in the field of international commerce.); Balen v. Holland Am.
Line Inc., 583 F.3d 647, 652 (9th Cir. 2009) (The Supreme Court has consistently recognized
the emphatic federal policy in favor of arbitral dispute resolution, a policy that applies
with special force in the field of international commerce.) (quoting Mitsubishi Motors,
473 U.S. at 631)); Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440, 450 (3d Cir.
2003) (federal policy in favor of arbitration applies with special force in the field of
international commerce); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 720 (9th Cir. 1999)
(strong federal policy favoring arbitral dispute resolutionapplie[s] with special force in
the field of international contracts); J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, SA, 863
F.2d 315 (4th Cir. 1988); Socit Generale de Surveillance v. Raytheon European Mgt & Sys.
Co., 643 F.2d 863 (1st Cir. 1981); SEI Societa Esplosivi Industriali SpA v. L-3 Fuzing &
Ordnance Sys.,843 F.Supp2d 509, 515 (D. Del. 2012) (Review of the scope of arbitration
should favor arbitration, unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the asserted
dispute.) (quoting Battaglia v. McKendry, 233 F.3d 720, 727 (3d Cir. 2000)); Tigra Tech. v.
Techsport Ltd, 2011 WL 2710678, at *2 (C.D. Cal.) (the most minimal indication of the
parties intent to arbitrate must be given full effectin international disputes); Belcourt
v. Grivel, SLR, 2009 WL 3764085, at *1 (D. Utah) (presumption is even stronger in the
context of international commercial arbitration agreements; arbitration agreements
covered by the New York Convention are enforced more stringently than analogous
domestic agreements); Prograph Intl Inc. v. Barhydt, 928 F.Supp. 983, 989 (N.D. Cal. 1996)
(broad construction of arbitration clauses in international agreements); Meadows
Indem. Co. v. Baccala & Shoop Ins. Servs., Inc., 760 F.Supp. 1036, 1041 (E.D.N.Y. 1991).
61) Penzoil Exploration & Prod. Co. v. Ramco Energy Ltd, 139 F.3d 1061, 1065 (5th Cir. 1998).
62) Sourcing Unlimited, Inc. v. Asimco Intl, Inc., 526 F.3d 38, 45 (1st Cir. 2008); David L.
Threlkeld & Co. v. Metallgesellschaft Ltd, 923 F.2d 245, 248 (2d Cir. 1991).
63) See1.02[B][2]. The U.S. Supreme Court has also explained that the question of whether
the parties intended a particular type of dispute to be subject to arbitration arises when
the parties have a contract that provides for arbitration[In these circumstances,] [a]nd
given the laws permissive policies in respect to arbitration,one can understand why the
law would insist upon clarity before concluding that the parties did not want to arbitrate
a related matter. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945 (U.S. S.Ct. 1995).
64) See1.04.
65) See, e.g., First Options, 514 at 945; Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24-25 (U.S. S.Ct. 1983); United States Fire Ins. Co. v. Natl Gypsum Co., 101 F.3d
813, 816 (2d Cir. 1996); Fleck v. E.F. Hutton Group, Inc., 891 F.2d 1047 (2d Cir. 1989).
66) See, e.g., Mitsubishi Motors, 473 U.S. at 640; Repub. of Nicaragua v. Standard Fruit Co., 937
F.2d 469, 478-80 (9th Cir. 1991); Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd, 432
F.Supp.2d 1305, 1309 (S.D. Fla. 2006); Best Concrete Mix Corp. v. Lloyds of London
Underwriters, 413 F.Supp.2d 182 (E.D.N.Y. 2006); Nakamura Trading Co. v. Sankyo Corp.,
2006 WL 1049608, at *1 (N.D. Ill.); Ibeto Petrochem. Indus., Ltd v. M/T Beffen, 412 F.Supp.2d
285, 291, 293 (S.D.N.Y. 2005); Boston Telecomm. Group, Inc. v. Deloitte Touche Tohmatsu, 278
F.Supp.2d 1041, 1043 (N.D. Cal. 2003).
67) See, e.g., Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1320 n.23 (11th Cir. 2002)
(rejecting argument that presumption in favor of arbitrability should not be applied to
narrow arbitration clauses); Manifest Corp. v. Random House, Inc., 2007 WL 1974911, at *7
(D. Or.); Advanstar Commcns Inc. v. Beckley-Cardy, Inc., 1994 WL 176981, at *3 (S.D.N.Y.) (A
narrow arbitration clause must be construed in favor of arbitration.); Gestetner Holdings
plc v. Nashua Corp., 784 F.Supp. 78, 81 (S.D.N.Y. 1992) (narrow arbitration clause subject
to FAAs pro-arbitration rules of interpretation: even a narrow arbitration clause must be
construed in light of the presumption in favor of arbitration).
68) Chevron U.S.A., Inc. v. Consolidated Edison Co., 872 F.2d 534, 537-38 (2d Cir. 1989).
69) See, e.g., Local 827, Intl Bhd of Elec. Workers, AFL-CIO v. Verizon New Jersey, Inc., 458 F.3d
305, 310 (3d Cir. 2006) (distinguishing narrow arbitration clause, where court refused to
apply the presumption of arbitrability, from broad arbitration clauses, where court
applied the presumption); Cummings v. FedEx Ground Package Sys., Inc., 404 F.3d 1258,
1261 (10th Cir. 2005) (Where the arbitration clause is narrow, a collateral matter will
generally be ruled beyond its purview. Where the arbitration clause is broad, there arises
a presumption of arbitrability and arbitration of even a collateral matter will be ordered
if the claim alleged implicated issues of contract construction or the parties rights and
obligations under it.); Hartford Aircraft Lodge 743 v. Hamilton Sundstrand Corp., 403
F.Supp.2d 200, 208 (D. Conn. 2005) (A broad arbitration clause gives rise to a
presumption of arbitrability for any claim that implicates issues of contract construction
or the parties rights and obligations under it. If an arbitration clause is narrow, a
dispute will generally be arbitrable only if it concerns an issue that is on its face within
the purview of the clause.).
30
70) See, e.g., United Steel, Paper & Forestry v. E.I. Dupont De Nemours & Co., 2009 WL 1910973,
at *213 (3d Cir.) (The presumption in favor of arbitrability applies with particular force
when an arbitration clause is broad.); Intl Assn of Machinists & Aerospace Workers v.
ISP Chems. Inc., 261 F.Appx. 841, 845-46 (6th Cir. 2008) (In cases involving broad
arbitration clauses, the presumption of arbitrability is particularly applicable.); Title
Setters & Title Finishers v. Spring St. Dev. Urban Renewal, LLC, 2007 WL 922286, at *6
(E.D.N.Y.) (Although where to place this arbitration clause along the broad-narrow
spectrum is difficult, this clause is sufficiently broad to justify a presumption that
disputes concerning the CBA are arbitrable.); GMAC Commercial Corp. v. Niagara Mohawk
Power Corp., 1990 WL 64535, at *2 (S.D.N.Y.) (When a clause is deemed narrow, the policy
in favor of arbitration does not have the strong effect which it would if the court were
considering a broad arbitration clause.).
71) Kuklachev v. Gelfman, 600 F.Supp.2d 437, 460 (E.D.N.Y. 2009).
72) See, e.g., Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477 (U.S. S.Ct. 1989);
Southland Corp. v. Keating, 465 U.S. 1, 15 (U.S. S.Ct. 1984); Roby v. Corp. of Lloyds, 996 F.2d
1353 (2d Cir. 1993); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840 (2d Cir. 1987); Singer v.
Jefferies & Co., 571 N.Y.S.2d 680, 683 (N.Y. 1991) (A courts obligation under the [FAA] to
liberally interpret and enforce arbitration agreements is not diminished when the
underlying controversy involves a violation of a Federal statute.).
74) See, e.g., China Auto Care, LLC v. China Auto Care (Caymans), 859 F.Supp.2d 582, 588
(S.D.N.Y. 2012) (In determining whether a particular claim falls within the scope of the
parties arbitration agreement, we focus on the factual allegations in the complaint
rather than the legal causes of action asserted.); Bolden v. FedEx Ground Package Sys.,
Inc., 60 So.3d 679, 689 (La. Ct. App. 2011) (arbitration clause limited to disputes regarding
termination or constructive termination of agreement but no others; despite
presumption of arbitrability, court held that [w]hen parties so tailor the arbitration
clause that it is applicable only in a clearly defined situation, it indicates that the
parties intended to limit the arbitrable issues to those specified. Where an arbitration
provision is narrowly crafted, a court cannot presume, as it might if the provision were
drafted broadly, that the parties agreed to submit all disputes to arbitration. Parties are
not bound to arbitrate on an all-or-nothing basis but may choose to submit discrete
issues to the arbitrator.); Taha v. Tires Plus, 2011 WL 2293330, at *3-4 (D.N.J.) (when
interpreting arbitration agreement, [t]he polestar of construction is the intention of the
parties to the contract as revealed by the language used, taken as an entirety; and, in the
quest for the intention, the situation of the parties, the attendant circumstances, and the
objects they were thereby striving to attain are necessarily to be regarded.); Philips v.
Newell Co., 1997 WL 181191, at *3 (S.D.N.Y.) ([A] court is constrained by the principle that
arbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit. Thus, although even a
narrow arbitration clause must be construed in light of the presumption in favor of
arbitration, the court is not free to disregard the explicit boundaries set by the
agreement to arbitrate.); Rinaldo v. Schaad, 2010 WL 5349009, at *7 (N.J. Super. Ct. App.
Div.) (Basic contract principles apply when a court interprets an arbitration clause,
because a submission to arbitration is essentially a contract, and the parties are bound
to the extent of that contract. Courts are generally obligated to enforce contracts based
on the intent of the parties, the express terms of the contract, surrounding circumstances
and the underlying purpose of the contract.) (quoting Local 462, Intl Bhd of Teamsters v.
Charles Schaefer & Sons, Inc., 539 A.2d 295, 298 (N.J. Super. Ct. App. Div.)).
75) See Granite Rock Co. v. Intl Bhd of Teamsters, 130 S.Ct. 2847, 2851 (U.S. S.Ct. 2010) ([pro-
arbitration] presumption should be applied only where it reflects, and derives its
legitimacy from, a judicial conclusion (absent a provision validly committing the issue to
an arbitrator) that arbitration of a particular dispute is what the parties intended
because their express agreement to arbitrate was validly formed, is legally enforceable,
and is best construed to encompass the dispute); Rent-A-Ctr, W., Inc. v. Jackson, 130 S.Ct.
2772, 2777-78 (U.S. S.Ct. 2010); First Options, 514 U.S. at 944-45.
76) DeMarco Cal. Fabrics, Inc. v. Nygard Intl Ltd, 1990 U.S. Dist. LEXIS 3842, at *9 (S.D.N.Y.). See
also Kristian v. Comcast Corp., 446 F.3d 25, 35 (1st Cir. 2006) ([G]enerally speaking, the
presumption in favor of arbitration applies to the resolution of scope questions. A scope
question arises when the parties have a contract that provides for arbitration of some
issues and it is unclear whether a specific dispute falls within that contract.); United
Steelworkers of Am. v. Titan Tire Corp., 204 F.3d 858, 860 (8th Cir. 2000) (we must first
consider whether a valid agreement to arbitrate exists.If a valid agreement exists, we
then consider the scope of the agreement.); Teamsters Local Union No. 688 v. Indus. Wire
Prods., Inc., 186 F.3d 878, 881 (8th Cir. 1999) (when an arbitration clause exists in a
contract, there is a presumption of arbitrability); Chevron U.S.A., Inc. v. Consolidated
Edison Co., 872 F.2d 534, 537 (2d Cir. 1989); Heinhuis v. Venture Assocs. Inc., 1991 U.S. Dist.
LEXIS 8190 (E.D. La.); Astor Chocolate Corp. v. Mikroverk, Ltd, 704 F.Supp. 30, 33 n.4 (E.D.N.Y.
1989). But see Repub. of Nicaragua v. Standard Fruit Co., 937 F.2d 469 (9th Cir. 1991); Filanto
SpA v. Chilewich Intl Corp., 789 F.Supp. 1229 (S.D.N.Y. 1992).
77) See5.04[A][3], pp. 740-41; 5.04[B][2], pp. 746-48. As also discussed above, a number of
U.S. decisions have adopted different presumptions in considering the existence or
validity of international arbitration agreements, requiring either reduced or heightened
standards of proof. See5.04[C], pp. 754-55.
31
78) Judgment of 25 October 2010, DFT 4A_279/2010 (Swiss Federal Tribunal); Judgment of 27
January 2010, DFT 4A_562/2009 (Swiss Federal Tribunal); Judgment of 5 December 2008, 27
ASA Bull. 762, 770 (Swiss Federal Tribunal) (2009) (arbitration agreement construed
according to laws in force in Switzerland on the interpretation of contracts); Judgment of
29 February 2008, 26 ASA Bull. 376, 379 (Swiss Federal Tribunal) (2008); Wenger, in S. Berti
et al. (eds.), International Arbitration in Switzerland Art. 178, 49 (2000) (The parties
expressions of intent with regard to the arbitration agreement are interpreted pursuant
to Article 1 et seq.); Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, 1990 Rev.
arb. 921, 923 (Swiss Federal Tribunal). See alsoGabriel & Wicki, Vorvertragliche
Schiedszustndigkeit, 27 ASA Bull. 236, 243 (2009).
79) Judgment of 22 January 2008, 26 ASA Bull. 549, 555 (Swiss Federal Tribunal) (2008).
80) Judgment of 19 May 2003, 22 ASA Bull. 344, 348 (Swiss Federal Tribunal) (2004). See also B.
Berger & F. Kellerhals, International and Domestic Arbitration in Switzerland 422 (2d ed.
2010).
81) Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, 1990 Rev. arb. 921, 923 (Swiss
Federal Tribunal) (If it is certain that there isan arbitration clause, then there are no
longer grounds for an especially restrictive interpretation.). See alsoJudgment of 20
September 2011, 30(2) ASA Bull. 449 (Swiss Federal Tribunal) (2012) (once the parties
consent to an arbitration clause has been established, the scope of that clause should
not be interpreted too restrictively); Judgment of 3 January 2011, DFT 4A_386/2010, 29 ASA
Bull. 688 (Swiss Federal Tribunal) (2011); Judgment of 27 January 2010, DFT 4A_562/2009
(Swiss Federal Tribunal); Judgment of 8 July 2003, DFT 129 III 675, 681 (Swiss Federal
Tribunal) (one has to take into account the parties wishes to have disputes resolved by
arbitral tribunal); T. Rede & R. Hadenfeldt, Schweizerisches Schiedsgerichtsrecht 74 (2d
ed. 1993) (it corresponds to the interest of reasonable parties to assume that they
generally wanted embracing jurisdiction of an arbitral tribunal if they entered into an
arbitration agreement).
82) Judgment of 6 August 2012, 30(4) ASA Bull. 864, 874-75 (Swiss Federal Tribunal) (2012).
83) SeeFinal Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 246 (2010) (Pursuant to
Swiss case law, when the existence of an arbitration clause is established, as it is the case
here, there is no ground for a restrictive interpretation. Quite to the contrary, one has to
consider that the parties want that the arbitral tribunal be vested with a general
jurisdiction, and, in case of doubt, that they did not intend to refer to arbitration only
their disputes relating to the implementation of their respective obligations, but also the
ones concerning the validity of the agreement that embodies such obligations.); Partial
Award in ICC Case No. 12363, 24 ASA Bull. 462, 466 (2006) (under Swiss law, there is a
presumption that in case of doubt, an arbitral tribunal has all-encompassing
jurisdiction; in the absence of any express limitation contained in the arbitration
clause, a broad interpretation of the same should prevail upon a narrow one); Interim
Award in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 319 (2000) (discussing Sonatrach v.
K.C.A. Drilling Ltd and noting that, under Swiss law, whilst arbitrators should adopt a
cautious approach as to the existence of an arbitration clause, they may construe any
such clause in accordance with normal principles of interpretation).
84) See5.04[C][1], pp. 752-54.
85) Judgment of 17 February 1989, XV Y.B. Comm. Arb. 455, 464 (Oberlandesgericht Hamburg)
(1990). See also Judgment of 4 October 2001, 2002 NJW-RR 387 (German Bundesgerichtshof);
Judgment of 10 December 1970, 1971 BB 369 (German Bundesgerichtshof); Judgment of 25
September 2006, 2006 OLGR Mnchen 906 (Oberlandesgericht Mnchen); J.-P. Lachmann,
Handbuch fr die Schiedsgerichtspraxis 472 (3d ed. 2008).
86) Judgment of 8 February 1991, 1991 NJW-RR 602, 603 (Oberlandesgericht Mnchen). See also
Judgment of 30 August 2011, 34 SchH 8/11 (Oberlandesgericht Mnchen); Judgment of 23
September 2010, 2011 DStR 1243 (Oberlandesgericht Kln); Judgment of 4 November 1993,
1994 NJW-RR 425, 426 (Landgericht Mnchengladbach) (if valid arbitration agreement
exists, scope of disputes falling under it is to be interpreted widely); Judgment of 17
February 1989, XV Y.B. Comm. Arb. 455, 464 (Oberlandesgericht Hamburg) (1990); Voit, in
H.-J. Musielak (ed.), Kommentar zur Zivilprozessordnung 1029, 23 (9th ed. 2012) (Which
disputes are covered by the arbitration agreement is to be determined through
interpretation. It is generally considered, that the parties want to refer a dispute in its
totality to the arbitral tribunal.).
87) As discussed below, English courts historically did not apply any pro-arbitration
assumption and instead tended to draw relatively fine, technical distinctions between
different formulae commonly encountered in arbitration clauses. See9.02[D][3], pp.
1340-41.
88) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891, 18 (English Ct. App.),
affd, [2007] UKHL 40 (House of Lords). See Delaney & Lewis, The Presumptive Approach to
the Construction of Arbitration Agreements and Separability English Law Post Fiona Trust
and Australian Law Contrasted, 31 U. N.S.W. L.J. 341 (2008).
89) Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891, 17-18 (English Ct.
App.), affd, [2007] UKHL 40 (House of Lords).
90) See9.02[D][1][a], pp. 1326-1331.
32
(English Ct. App.) (It would be unusual for parties to a contract of this kind [i.e., an
insurance contract] to establish separate and distinct procedures for resolving what in
many cases are likely to be different aspects of the same dispute, and there is no
indication that they had that in mind.); Barclays Bank plc v. Nylon Capital LLP [2011]
EWCA Civ 826, 27 (English Ct. App.) (The rationale for the approach in Fiona Trust is that
parties should normally be taken, as sensible businessmen, to have chosen one forum for
the resolution of their disputes. As arbitration will usually be an alternative to a court for
the resolution of all the disputes between the parties, it would not accord with the
presumed intention of sensible businessmen to draw fine distinctions between similar
phrases to allow a part of the dispute to be outside the arbitration and allocated to the
court.); Enercon GmbH v. Enercon (India) Ltd [2012] EWHC 689, 63 (Comm) (English High
Ct.) (All agreements including an arbitration agreement should be construed to accord
with business common sense. In my view, there is no business common sense to construe
the arbitration agreementin a manner which would simply deprive the arbitrators of an
important discretion that they possess to hear evidence in a convenient geographical
location.); Ulysess Compania Naviera SA v. Huntingdon Petroleum Servs., The Ermoupolis
[1990] 1 Lloyds Rep. 160, 164 (QB) (English High Ct.) (Clearly, the matters to be proved,
and therefore the potential issues, greatly overlap. That such closely related claims
should be subject to different forms of dispute resolution, arbitration and litigation,
possibly in different jurisdictions, would, in my view, hold no attraction for the
reasonable businessman versed in the business of shipping.).
93) See9.02[D][3]; 9.02[D][5].
(3d ed. 2000) ([T]here must be a heavy presumption in favor of arbitrability. If anything is
clear, it is that the very existence of the arbitration clause proves that the parties wanted
disputes arising under it to be resolved in the manner provided.); J. Lew, L. Mistelis & S.
Krll, Comparative International Commercial Arbitration 7-61 to 7-62 (2003) (In older
decisions the jurisdictional effect of arbitration agreements sometimes led to a
restrictive interpretation. In todays arbitration-friendly climate the opposite view
prevails.), 7-66 ([T]here is a strong tendency to favour a broad interpretation of
arbitration clauses. [A]rbitration agreements without an express limitation should in
general be interpreted to cover all claims in connection with a contract, irrespective of
whether they are claims in contract, in tort or of statutory nature.). ContraE. Gaillard & J.
(1999) (It is equally inappropriate to resort to a general principle of interpretation in
favorem validitatis or in favorem jurisdictionis, whereby arbitration agreements are to be
interpreted extensively.A mere allegation that an arbitration agreement exists will not
raise a presumption that the allegation is well-founded by virtue of a supposed principle
of favorem validitatis.).
95) See Hi-Ferty Pty Ltd v. Kiukiang Maritime Carriers Inc., [1998] FCA 1485 (Australian Fed. Ct.)
(contrasting expressions arising from, arising out of and arising in connection with,
and interpreting arbitration clause covering disputes arising from the charter as
encompassing only claims for breach of contract and not other precontractual and
noncontractual claims).
Detailed reviews of this jurisprudence and the fine distinctions that emerged can be
found in Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb.
559 (Australian Fed. Ct. 2005) (2006).
96) See, e.g.,Stericorp. Ltd v. Stericycle Inc., XXXI Y.B. Comm. Arb. 549, 556 (Victoria S.Ct. 2005)
(2006) (arbitration agreements are not to be read narrowly); United Group Rail Servs. Ltd
v. Rail Corp. New South Wales, [2009] NSWCA 177, 3 (N.S.W. Ct. App.) (That clause is to be
read liberally as required by the common law of Australia.So reading the clause, it can
be seen to require the totality of likely disputes between the parties to be dealt with by
the clause.); Francis Travel Mktg Pty Ltd v. Virgin Atl. Airways Ltd, [1996] 39 NSWLR 160, 165
(N.S.W. Ct. App.) (When parties to a commercial contract agree, at the time of making the
contract, and before any disputes have yet arisen, to refer to arbitration any dispute or
difference arising out of the agreement, their agreement should not be construed
narrowly. They are unlikely to have intended that different disputes should be resolved
before different tribunals, or that the appropriate tribunal should be determined by fine
shades of difference in the legal character of individual issues, or by the ingenuity of
lawyers in developing points of argument.).
97) Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559, 564
(Australian Fed. Ct. 2005) (2006).
98) Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643 (Alberta Ct. App. 1992)
(1994) (arguably rejecting pro-arbitration rule of construction).
99) Onex Corp. v. Ball Corp., (1994) 12 B.L.R.2d 151, 158-60 (Ontario Super. Ct.). See also
Dalimpex Ltd v. Janicki, (2003) 64 O.R.3d 737 (Ontario Ct. App.) (Where an arbitration
clause is capable of bearing two interpretations, and one of those interpretations fairly
provides for arbitration, the courts should lean towards that option.); Canadian Natl
Railway Co. v. Lovat Tunnel Equip. Inc., (1999) 174 D.L.R.4th 385 (Ontario Ct. App.); Duferco
Intl Inv. Holding (Guernsey) Ltd v. Pan Fin. Ins. Co., [1996] O.J. No. 549 (Ontario Super. Ct.);
Crystal Rose Home Ltd v. Alberta New Home Warranty Programme, (1994) 27 Alta.L.R.3d 122
(Alberta Q.B.).
33
100) See Judgment of 5 February 2008, 10 Ob 120/07f (Austrian Oberster Gerichtshof) (When
interpreting an arbitration and court agreement the interpretation, which leaves the
validity of the expressly agreed arbitration agreementunaffected, should be
preferred). See alsoJudgment of 26 August 2008, XXXIV Y.B. Comm. Arb. 404, 405 (Austrian
Oberster Gerichtshof) (2009) (If the wording of the declaration of intent allows for two
equally plausible interpretations, the interpretation which favors the validity of the
arbitration agreement and its applicability to a certain dispute is to be preferred.); A.
Fremuth-Wolf, in S. Riegler et al. (eds.), Arbitration Law of Austria: Practice and Procedure
581, 48 (2007) (The OGH has been generous in subsuming disputes under an
arbitration agreement and has favoured an extensive interpretation of the scope of
arbitration agreements.); F. Schwarz & C. Konrad, The Vienna Rules: A Commentary on
International Arbitration in Austria 1-094 to 1-096 (2009) ([t]he interpretation of an
arbitration agreement should be in favour of the jurisdiction of the arbitral tribunal; [i]n
case of two equal possibilities of interpretation, the interpretation that favours the
validity and application of the arbitration agreement should be given preference).
101) Judgment of 26 August 2008, XXXIV Y.B. Comm. Arb. 404, 405 (Austrian Oberster
Gerichtshof) (2009).
102) See, e.g., Tjong Very Sumito v. Antig Inv. Pte Ltd, [2009] SGCA 41, 24 (Singapore Ct. App.)
(it is only in the clearest of cases that the court ought to make a ruling on the
inapplicability of an arbitration agreement).
103) See Judgment of 14 July 2011, Klckner Pentaplast GmbH & Co. v. Advance Tech., [2011]
HKEC 941, 17 (H.K Ct. First Inst.) (It is illogical to think that businessmen entering into a
distributorship agreement, containing an arbitration provision, would have intended that
a question of quality of goods would not be determined by the same tribunal that would
determine complaints of the breach of the MoU. I am accordingly satisfied that the
dispute falls within the scope of the arbitration agreement.).
104) Larsen Oil & Gas Pte Ltd v. Petroprod Ltd, [2011] SGCA 21, 19 (Singapore Ct. App.) (citing G.
Born, International Commercial Arbitration 1083 (2009)).
105) See, e.g., Judgments of 24 May 2000 and 31 May 2000, CLOUT Case 370, U.N. Doc.
A/CN.9/SER.C/ABSTRACTS/33, 8 (Zimbabwe High Ct.) (court should not be astute in trying
to reduce the ambit of the arbitration clause).
106) Wintershall AG v. Govt of Qatar, Partial Ad Hoc Award of 5 February 1988, 28 Intl Legal Mat.
795, 811 (1989). See alsoFinal Award in ICC Case No. 14046, XXXV Y.B. Comm. Arb. 241, 246
(2010) (Pursuant to Swiss case law, when the existence of an arbitration clause is
established, as it is the case here, there is no ground for a restrictive interpretation.
Quite to the contrary, one has to consider that the parties want that the arbitral tribunal
be vested with a general jurisdiction.); Final Award in ICC Case No. 12745, XXXV Y.B. Comm.
Arb. 40, 27 (2010) (discussing French Civil Code principles of interpretation, including
Article 1157, which provides that when a provision may have two meanings, it should
rather be understood in the meaning that will let it produce some effect than in such
meaning where it would be of no effect, and noting that [s]uch interpretation rulesare
common sense guidelines to which judges and arbitrators will normally give considerable
respect); Partial Award in ICC Case No. 12363/ACS, 24 ASA Bull. 462, 466 (2006) (noting,
under Swiss law, there is a presumption that in case of doubt, an arbitral tribunal has
all-encompassing jurisdiction and deciding that it is the view of Swiss law that in the
absence of any express limitation contained in the arbitration clause, a broad
interpretation of the same should prevail upon a narrow one); Award in ICC Case No.
9288, discussed in Grigera Nan, Choice-of-Law Problems in International Commercial
Arbitration, 289 Recueil des Cours 9, 122 (2001) (Swiss tribunal applies most favorable rule
of interpretation available, by analogy to Article 178(2) of Swiss Law on Private
International Law). Award in CAM Case No. 2310 of 4 May 2011, in A Contribution by the ITA
Board of Reporters (2011) (sole arbitrator adopted expansive interpretation of arbitration
clause: in order to respect the will of the parties, the clause shall be interpreted so that
any dispute is submitted to arbitration).
International Commercial Arbitration, 289 Recueil des Cours 9, 89-90 (2001).
108) Italian Code of Civil Procedure, Art. 808-quater, added by Italian Legislative Decree of 2
February 2006 (In case of doubt, the arbitration agreement shall be interpreted in the
sense that the arbitral jurisdiction extends to all disputes arising from the contract or
from the relationships to which the agreement refers.).
109) See, e.g., Award in ICC Case No. 4392, 110 J.D.I. (Clunet) 907, 908 (1983). See also5.01[D].
110) Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., [1998] FCA 1485 (Australian Fed. Ct.) (In
choosing arbitrators with commercial backgrounds, the parties indicated a choice for the
practical solution of disputes of the kind referred to the arbitrators. But to read [the
parties agreement] as contemplating a reference to such persons of a problem of
considerable private international legal complexity, let alone the application of a
foreign (Australian) law in the form of the Trade Practices legislation, would seem to
contradict a desire for a practical outcome. We should not attribute such a bizarre
intention to these parties.). This reasoning is confused and impossible to accept.
34
111) Judgment of 25 January 1972, Marcel Quijano Aguero v. Laporte, 1973 Rev. arb. 158 (Paris
Cour dappel). See also Judgment of 11 March 1986, Compagnie dassurance La Zurich v.
Bureau central franais, 1986:1 Gaz. Pal. 298 (Paris Cour dappel) (The arbitration
agreement must be strictly interpreted as it departs from the norm and in particular
from the usual rules as to the jurisdiction of the courts.). Compare Judgment of 13 March
1978, Hertzian v. Electronska Indus., 1979 Rev. arb. 339, 340-41 (French Cour de cassation)
(arbitration clause for all disputes arising during performance [of the contract]
encompasses disputes arising from termination of contract).
112) R. David, Larbitrage commercial international en droit compar 272 (1968-69); Derains,
Chronique des sentences arbitrales, 108 J.D.I. (Clunet) 943 (1981); Derains & Schaf, Clauses
darbitrage et groupes de socits, 1985 Intl Bus. L.J. 231; Derains, Observations Cour
dappel de Paris 10 March 1995 Tardivel v. SA Cejibe, 1996 Rev. arb. 125. CompareE.
Arbitration 480 (1999) ([T]his principle [of restrictive interpretation] is generally
rejected in international arbitration.The interpretation of arbitration agreements by
French courts has, likewise, never been strict or restrictive.It is equally inappropriate to
resort to a general principle of interpretation.).
113) See, e.g.,Judgment of 10 March 2000, Krauss Maffei Verfahrenstechnik GmbH v. Bristol Myers
Squibb, XXVI Y.B. Comm. Arb. 816, 821 (Italian Corte di Cassazione) (2001) (if there is a
doubt as to the scope of the clause, a restrictive interpretation must be preferred, which
affirms the jurisdiction of the [Italian] courts), confirming, Judgment of 28 July 1998,
Glencore Intl AG v. Soc. Comm. Alluminio Nord, 1998 Foro it., Rep. voce Arbitrato No. 68
(Italian Corte di Cassazione). See also9.02[D][1][e].
Italian courts also held that referring a dispute to foreign arbitrators entails a derogation
from the jurisdiction of Italian courts, and, if there is a doubt as to the scope of the
clause, a restrictive interpretation should be preferred. See Judgment of 28 July 1998,
Glencore Intl AG v. Soc. Comm. Alluminio Nord, 1998 Foro it., Rep. voce Arbitrato No. 68
(Italian Corte di Cassazione); Judgment of 24 October 1979, 1979 Giustizia Civile Mass. 2444
(Italian Corte di Cassazione).
114) Judgment of 19 May 2009, Louis Dreyfus Commodities v. Cereal Mangimi srl, XXXIV Y.B.
Comm. Arb. 649, 651 (Italian Corte di Cassazione) (2009).
It is difficult to reconcile this reasoning with the 2006 amendment to the Italian
arbitration legislation. See9.02[D][1][e]; Italian Code of Civil Procedure, Art. 808-quater,
added by Italian Legislative Decree of 2 February 2006.
115) See, e.g., Daimler Chrysler Corp. v. Franklin, 814 N.E.2d 281, 285 (Ind. Ct. App. 2004)
([p]arties are only bound to arbitrate those issues that by clear language they have
agreed to arbitrate); State ex rel. City Holding Co. v. Kaufman, 609 S.E.2d 855 (W. Va. 2004)
(stock option disputes not included in scope of arbitration clause); Terminex Intl Co. v.
Michaels, 668 So.2d 1013, 1015 (Fla. Ct. App. 1996) (ambiguity as to whether personal injury
claims were covered by arbitration clause in contract for termite extermination should
be resolved against coverage); A.F.C.O. Metals, Inc. v. Local Union 580, 638 N.Y.S.2d 585
(N.Y. 1995); Shuffman v. Rudd Plastic Fabrics Corp., 407 N.Y.S.2d 565, 566 (N.Y. App. Div.
1978) (If equivocal, the scope of a commercial arbitration clause must be read
conservatively); Allstate Ins. Co. v. Cook, 21 Ariz.App. 313 (Ariz. Ct. App. 1974); Flood v.
Country Mut. Ins. Co., 41 Ill.2d 91, 94 (Ill. 1968) (clear language required; arbitration
agreements will not be extended by construction or implication).
116) Gangel v. De Groot, 393 N.Y.S.2d 698, 699 (N.Y. 1977).
117) See1.04[B][1][e][ii]; 1.04[B][1][e][iii]; 1.04[B][1][e][iv]; 2.01[A][2]; 4.04[A][2][j]; 5.01[C]
[2]; DiMercurio v. Sphere Drake Ins. plc, 202 F.3d 71 (1st Cir. 2000); KKW Enters. Inc. v. Gloria
Jeans Gourmet Coffees Franchising Corp., 184 F.3d 42, 49 (1st Cir. 1999); Progressive Cas. Ins.
Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42 (2d Cir. 1993).
118) See, e.g.,Partial Award in ICC Case No. 7920, XXIII Y.B. Comm. Arb. 80, 81 (1998) (concluding
that scope of arbitration clause is to be interpreted strictly, but validity of clause is
governed by principle of effectiveness); PreliminaryAward in ICC Case No. 2321, I Y.B.
Comm. Arb. 133, 133 (1976) (I agree so far with the defendants that an arbitration clause
may have, as to its scope, to be interpreted strictly.); Award in ICC Case No. 2138, in S.
Jarvin & Y. Derains (eds.), Collection of ICC Arbitral Awards 1974-1985 242 (1990) (arbitral
clause must be interpreted restrictively).
119) See9.02[D][1].
120) The amendment to the Italian Code of Civil Procedure is the leading example. See9.02[D]
[1][e].
121) See, e.g., Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct.
App.) (we consider that the time has now come for a line of some sort to be drawn and a
fresh start made), affd, [2007] UKHL 40, 17 (House of Lords); Walter Rau Neusser Oel und
Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559, 564 (Australian Fed. Ct. 2005)
(2006); Onex Corp. v. Ball Corp., (1994) 12 B.L.R.2d 151, 158-60 (Ontario Super. Ct.).
122) See9.02[A].
35
123) Overseas Union Ltd v. AA Mut. Intl Ins. Co. Ltd [1988] 1 FTLR 421, 425 (QB) (English High Ct.)
(The question is always one of construction, giving the words of the arbitration clause
their natural and proper meaning in the circumstances of the case.). See alsoRenusagar
Power Co. v. Gen. Elec. Co. & Intl Chamber of Commerce, X Y.B. Comm. Arb. 431, 433 (Indian
S.Ct. 1984) (1985) (Whether a given disputecomes within the scope or purview of an
arbitration clauseis a question of what the parties intend to provide and what language
they employ.).
124) Astro Vencedor Compania Naviera SA of Panama v. Mabanaft GmbH, The Damianos [1971] 2
All ER 1301, 1305 (English Ct. App.); Overseas Union Ltd v. AA Mut. Intl Ins. Co. Ltd [1988] 1
FTLR 421 (QB) (English High Ct.); D. Joseph, Jurisdiction and Arbitration Agreements and
Their Enforcement 4.46 to 4.48 (2005) ([I]t is necessary to considerwhich disputes fall
within the ambit of the agreement. This is a matter of construction and ought to be
resolved by arriving at the parties presumed mutual intention using ordinary principles
of construction.); R. Merkin, Arbitration Law 5.39, 5.61 (1991 & Update August 2013).
125) See9.02[D][1][d]; Fiona Trust & Holding Corp. v. Privalov [2007] 1 All ER (Comm) 891
(English Ct. App.), affd, [2007] UKHL 40 (House of Lords).
126) Amco Asia Corp. v. Repub. of Indonesia, Award on Jurisdiction in ICSID Case No. ARB/81/1 of
25 September 1983, 23 Intl Legal Mat. 351, 359 (1983). See also InterimAward in ICC Case No.
7929, XXV Y.B. Comm. Arb. 312, 316 (2000) (interpretation of an arbitration clause, like
that of any clause in a contract, depends primarily upon the wording of that clause);
Interim Award in ICC Case No. 4145, XII Y.B. Comm. Arb. 97, 100 (1987) (endorsing
interpretation, based on the investigation of the real intention of the parties, [that] has
nothing to do with extensive or restrictive interpretation) (emphasis added).
127) Partial Award on Jurisdiction and Admissibility in ICC Case No. 6474, XXV Y.B. Comm. Arb.
279, 310 (2000).
128) See1.02[B][6], pp. 84-86.
129) See, e.g., AAA Construction Industry Arbitration Rules; ARIAS Procedures for the Resolution
of U.S. Insurance Reinsurance Disputes; Scottish Construction Arbitration Code, Chartered
Institute of Arbitrators Scottish Branch; SMA Arbitration Rules.
130) See9.02[D][1][a]. Some courts have gone further and held that exceptions must be
narrowly interpreted. See BAE Sys. Aircraft Controls, Inc. v. Eclipse Aviation Corp., 224 F.R.D.
581, 586 (D. Del. 2004) (compelling arbitration despite exception for use or disclosure of
confidential information); Judgment of 29 February 1996, 1996 OLGR Bremen 139
(Oberlandesgericht Bremen).
131) Barclays Bank plc v. Nylon Capital LLP [2011] EWCA Civ 826, 28 (English Ct. App.). See also
Negrin v. Kalina, 2010 WL 2816809, at *5 (S.D.N.Y.) (The parties use of precise language in
the arbitration clause suggests an intent to limit arbitration to a particular subset of
disputes.).
132) Where disputes regarding the dividing line between arbitration and other dispute
resolution mechanisms are concerned, an expansive interpretation of the arbitration
clause may be inappropriate. Where parties have deliberately opted for parallel dispute
resolution mechanisms, that intention should be given effect.
133) As noted above, many U.S. courts have correctly reasoned that the existence of
exceptions to an arbitration clause does not imply that the general affirmative scope of
the clause is intended to be narrow. See9.02[D][1][a]; Roso-Lino Beverage Distrib., Inc. v.
Coca-Cola Bottling Co., 749 F.2d 124, 126 (2d Cir. 1984) (rejecting argument that existence
of two contractual exceptions to arbitration agreement implies that agreements scope
was intended to be narrow); Acquaire v. Canada Dry Bottling, 906 F.Supp. 819, 836 (E.D.N.Y.
1995) (same). See also Mnch, in G. Lke & P. Wax (eds.), Mnchener Kommentar zur
Zivilprozessordnung 1029, 111 (3d ed. 2008) (given presumption that parties desire a
comprehensive decision, any exclusions must be carefully drafted).
134) Inhalation Plastics, Inc. v. Medex Cardio Pulmonary, Inc., 2010 WL 2640401, at *4 (6th Cir.).
See also Mitsui O.S.K. Lines, Ltd v. Qingdao JmsLogistics Co., 2011 WL 1362159 (N.D. Cal.)
(court liberally interpreted parties arbitration clause and exclusions).
135) See Baker & Stabile, Arbitration of Antitrust Claims: Opportunities and Hazards for
Corporate Counsel, 48 Bus. Law. 395, 413 (1993) (arbitration clauses often included in
agreements almost as afterthoughts); Rogers, Fit and Function in Legal Ethics: Developing
A Code of Conduct for International Arbitration, 23 Mich. J. Intl L. 341, 403-04 (2002) (Often,
arbitration agreements are an afterthought thrown into a contract by corporate attorneys
who have little experience with arbitration and are hoping that the possibility of a
dispute is distant and improbable.).
44-65 (4th ed. 2013).
137) See Griffin v. Semperit of Am., Inc., 414 F.Supp. 1384 (S.D. Tex. 1976); Fiona Trust & Holding
Corp. v. Privalov [2007] 1 All ER (Comm) 891 (English Ct. App.) (If business men go to the
trouble of agreeing that their disputes be heard in the courts of a particular country or by
a tribunal of their choice they do not expect (at any rate when they are making the
contract in the first place) that time and expense will be taken in lengthy argument about
the nature of particular causes of action and whether any particular cause of action
comes within the meaning of the particular phrase they have chosen in their arbitration
clause.), affd, [2007] UKHL 40 (House of Lords).
138) For good examples of bad analysis, see, e.g., Good(e) Bus. Sys., Inc. v. Raytheon Co., 614
F.Supp. 428 (W.D. Wis. 1985); Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., [1998] FCA
1485 (Australian Fed. Ct.).
139) See1.02[A][2].
36
140) A. Samuel, Jurisdictional Problems in International Commercial Arbitration 123-24 (1989);
9.01.
141) See9.02[D]; Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords);
Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, 1990 Rev. arb. 921, 922 (Swiss
Federal Tribunal); Judgment of 17 February 1989, XV Y.B. Comm. Arb. 455, 464
(Oberlandesgericht Hamburg) (1990).
142) Larsen Oil & Gas Pte Ltd v. Petroprod Ltd, [2011] SGCA 21, 20 (Singapore Ct. App.). See also
Tjong Very Sumito v. Antig Inv. Pte Ltd, [2009] SGCA 41, 24 (Singapore Ct. App.) (only in
the clearest of cases that the court ought to make a ruling on the inapplicability of an
arbitration agreement).
143) See9.02[D][5].
144) See9.02[D][1].
145) See9.02[F][5].
40-42, 47-61 (4th ed. 2013).
147) Standard ICC Arbitration Clauses, available at www.iccarbitration.org (emphasis added).
See also J. Fry, S. Greenberg & F. Mazza, The Secretariats Guide to ICC Arbitration 448
(2012).
148) 2010 UNCITRAL Rules, Annex, Model Arbitration Clause for Contracts (emphasis added).
See also T. Webster, Handbook of UNCITRAL Arbitration 879 (2010).
149) See, e.g., J.J. Ryan Sons, Inc. v. Rhone Poulenc Textile, SA, 863 F.2d 315, 321 (4th Cir. 1988)
(The International Chamber of Commerces recommended clause which provides for
arbitration of [a]ll disputes arising in connection with the present contract must be
construed to encompass a broad scope of arbitrable issues. The recommended clause
does not limit arbitration to the literal interpretation or performance of the contract. It
embraces every dispute between the parties having a significant relationship to the
contract regardless of the label attached to the dispute.); Bond, How to Draft An
Arbitration Clause (Revisited), 1(2) ICC Ct. Bull. 14, 17 (1990); Y. Derains & E. Schwartz, A
Guide to the ICC Rules of Arbitration 387 (2d ed. 2005) ([the standard ICC arbitration
clause] is broadly worded in order to embrace all disputes arising out of or in connection
with the contract, which will confer the widest possible jurisdiction on the Arbitral
Tribunal).
The same is true for the UNCITRAL Model Arbitration Clause. See T. Webster, Handbook of
UNCITRAL Arbitration 609 (2010) (The [UNCITRAL] Model Arbitration Clause provides an
example of a very broad agreement to arbitrate.).
150) See9.02[D].
151) See, e.g., Seifert v. United States Home Corp., 750 So.2d 633, 636 (Fla. 1999) (Not
surprisingly, courts have given different meaning to clauses on the basis of the actual
terminology used.); Medanic v. Citicorp Inv. Servs., 954 So.2d 1210 (Fla. Dist. Ct. App. 2007);
Harbour Assur. Co. (UK) Ltd v. Kansa Gen. Intl Ins. Co. Ltd [1993] 3 All ER 897 (English Ct.
App.); Ashville Invs. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.);
Overseas Union Ltd v. AA Mut. Intl Ins. Co. Ltd [1988] 1 FTLR 421, 425 (QB) (English High Ct.)
(reported decisions in earlier cases, even of high authority, cannot necessarily be
binding in later cases, unless exceptionally the relevant words and all the relevant
circumstances are the same in both cases).
152) See, e.g., Louis Dreyfus Negoce SA v. Blystad Shipping & Trading Inc., 252 F.3d 218, 225 (2d
Cir. 2001); D. Joseph Long v. Louis L. Silver & Hertz Herson & Co., LLP, 248 F.3d 309, 315 (4th
Cir. 2001); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 848, 854 (2d Cir. 1987); Stamford
Holding Co. v. Clark, 2003 U.S. Dist. LEXIS 4542, at *16-17 (D. Conn.); Fiona Trust & Holding
Corp. v. Privalov [2007] UKHL 40 (House of Lords); Lombard N. Cent. plc v. GATX Corp. [2012]
EWHC 1067 20 (Comm) (English High Ct.) (refusing to introduce semantic distinction
between a difference and a dispute reminiscent of the fussy distinctions deprecated
in Fiona Trust); J.-P. Lachmann, Handbuch fr die Schiedsgerichtspraxis 339 (3d ed. 2008);
Schlosser, in F. Stein & M. Jonas (eds.), Kommentar zur Zivilprozessordnung 1029, 18 (22d
ed. 2002).
153) J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, SA, 863 F.2d 315, 321 (4th Cir. 1988).
154) Roby v. Corp. of Lloyds, 996 F.2d 1353, 1361 (2d Cir. 1993).
37
155) See, e.g., Award in ICAC Case No. 252/2010 of 31 August 2011, 2(4) Intl Comm. Arb. Vestnik
(2011) (arbitration agreement covering all disputes, controversies or claims, arising out
of the present contract or in connection therewith, including disputes in relation to its
performance, breach, termination or invalidity encompasses claims for unjust
enrichment arising out of termination of agreement); Bechtel Do Brasil Construcoes LTDA
v. UEG Araucaria LTDA, 638 F.3d 150, 155-56 (2d Cir. 2011) (broadly interpreting clause
covering any dispute, controversy or claim arising out of or relating to the Contract); Mgt
& Tech. Consultants SA v. Parsons-Jurden Intl Corp., 820 F.2d 1531, 1534-35 (9th Cir. 1987)
(An agreement to arbitrate any dispute without strong limiting or excepting language
immediately following it logically includes not only the dispute, but the consequences
naturally flowing from it here, the amount of additional compensation.); Alghanim v.
Alghanim, 2011 WL 5978350, at *4-5 (S.D.N.Y.) (broadly interpreting clause covering any
claim or controversy arising out of or relating to the agreement, and characterizing it as
paradigm of a broad clause); Tadeusz Kowalewski v. Rudolf Samandarov, 590 F.Supp.2d
477, 491 (S.D.N.Y. 2008) (broadly interpreting clause covering any claim or controversy
whatsoever between parties); Aggeliki Charis Compania Maritima SA v. Pagnan SpA (The
Angelic Grace) [1994] 1 Lloyds Rep. 168, 174 (QB) (English High Ct.); Astro Vencedor
Compania Naviera SA of Panama v. Mabanaft GmbH, The Damianos [1971] 2 All ER 1301
(English Ct. App.); In re Hohenzollern Aktien Gesellschaft fr Locomotivbahn & City of
London Contract Corp. [1886] 54 LT 596, 597 (English Ct. App.) (all disputes means all
disputes that may arise between the parties in consequence of this contract having been
entered into); Forwood & Co. v. Watney [1880] LJQB 447 (QB) (English High Ct.); Judgment
of 6 March 1996, Socit Farhat Trading Co. v. Socit Daewoo, 1997 Rev. arb. 69 (French
Cour de cassation civ. 1e); Judgment of 26 August 2008, XXXIV Y.B. Comm. Arb. 404, 406
(Austrian Oberster Gerichtshof) (2009) (It follows from the legal situation described
above that arbitration agreements concluded in respect of all disputes arising out of a
contract also apply, for instance, to claims for damages based on an alleged breach of
contract, claims for unjust enrichment or tort claims, as long as the (concretely) damaging
behavior and a breach of contract are, in the narrowest sense, one event.).
156) See9.06[A], pp. 1399-1401.
157) Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 61 n.7 (U.S. S.Ct. 1995) (Were we
to confine our analysis to the plain language of the arbitration clause, we would have
little trouble concluding that a contract clause which bound the parties to settle all
disputes through arbitration conducted according to rules which allow any form of just
and equitable remedy or relief was sufficiently broad to encompass the award of
punitive damages.).
158) 2010 UNCITRAL Rules, Annex, Model Arbitration Clause (dispute, controversy or claim);
2012 ICC Rules, Standard and Suggested Clauses, Arbitration Clause (disputes); LCIA
Rules, Model Clause (dispute); ICSID Rules, Model Clauses (disputes); 2012 CIETAC
Rules, Model Clause (dispute); 2013 HKIAC Rules, Suggested Clauses (dispute,
controversy, difference or claim); Japan-American Trade Arbitration Agreement
(disputes, controversies, or differences); 2010 SCC Rules (dispute, controversy or
claims); 2013 SIAC Rules, Model Clause (dispute); 2013 VIAC Rules, Annex I, Model Clause
(disputes).
159) 2013 AAA Rules, Standard Arbitration Clause (controversy or claim); ICDR International
Dispute Resolution Procedures, Model Clause (same).
160) Tjong Very Sumito v. Antig Inv. Pte Ltd, [2009] SGCA 41, 50 (Singapore Ct. App.) (quoting G.
Born, International Commercial Arbitration 1092 (2009)).
161) See2.03[D].
162) See2.03[D]; Guangdong Agric. Co. v. Conagra Intl (Far E.) Ltd, [1992] HKCFI 247 (H.K. Ct.
First Inst.); M. Mustill & S. Boyd, Commercial Arbitration 123 (2d ed. 1989).
The English Arbitration Act, 1996, has effectively overruled these decisions under English
law. English Arbitration Act, 1996, 82(1). See2.03[D].
163) See Guangdong Agric. Co. v. Conagra Intl (Far E.) Ltd, [1992] HKCFI 247 (H.K. Ct. First Inst.).
164) See9.02[D][2].
165) See, e.g., Public Serv. Elec. & Gas Co. v. Local 94 IBEW, 140 F.Supp.2d 384, 395 (D.N.J. 2001);
Caithness P.I. Corp. v. Prod. Inc., 1992 WL 266316 (D. Kan.); Cales v. Armstrong World Indus.,
Inc., 2003 WL 1798671, at *15-21 (Ohio Ct. App.); Collins (Contractors) Ltd v. Baltic Quay Mgt
(1994) Ltd [2004] EWCA Civ 1757, 38 (English Ct. App.) (whether there is a dispute does
not depend upon the strength or weakness of the defendants case on the merits of the
dispute); Judgment of 29 March 2011, Jean Pierre G. v. Socit Expanso Investissements,
Case No. 10/01240 (Bordeaux Cour dappel) (broad interpretation of difficulties);
Judgment of 11 April 1996, OIP v. Pyramide, 1996 Rev. arb. 467 (Paris Cour dappel); Orkney
Islands Council v. Charles Brand Ltd, [2002] SLT 100, 102-03 (Scottish Ct. Sess.).
Similarly, the term conflict has been interpreted expansively. See Nanosolutions, LLC v.
Prajza, 793 F.Supp.2d 46, 57 (D.D.C. 2011).
38
166) See, e.g., Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd, 139 F.3d 1061, 1068 (5th Cir.
1998) (relating to language in arbitration agreement is broad; clause not limited to
claims under contract, and also reaches claims that touch matters covered by
contract); Swensens Ice Cream Co. v. Corsair Corp., 942 F.2d 1307, 1309 (8th Cir. 1991); In re
Kinoshita & Co., 287 F.2d 951, 953 (2d Cir. 1961); Nokia Corp. v. AU Optronics Corp. (In re TFT
LCD (Flat Panel) Antitrust Litg.), 2011 WL 2650689, at *5 (N.D. Cal.) (relating to interpreted
broadly to cover all disputes touching contractual relationship between parties,
including antitrust claims); Tigra Tech. v. Techsport Ltd, 2011 WL 2710678, at *2 (C.D. Cal.)
(any dispute arising from or relating to this Agreement is broad, covering disputes that
touch[ed] matters related to underlying contract); McDonnell Douglas Corp. v. Kingdom
of Denmark, 607 F.Supp. 1016, 1019 (E.D. Mo. 1985) (relating to is generally regarded as
broad rather than narrow language); Overseas Union Ltd v. AA Mut. Intl Ins. Co. Ltd [1988]
1 FTLR 421 (QB) (English High Ct.). See also PPG Indus., Inc. v. Pilkington plc, 825 F.Supp.
1465 (D. Ariz. 1993) (involving isexpansive and carries the same meaning here as
relating to).
167) Am. Recovery Corp. v. Computerized Thermal Imaging, 96 F.3d 88, 93 (4th Cir. 1996). See
also Doe v. Princess Cruise Lines, Ltd, 657 F.3d 1204, 1218 (11th Cir. 2011) (arbitration
agreement (any and all disputesrelating to or in any way arising out of or connected
with) was broad, but not limitless; court required that claims be foreseeable or have
some direct relationship to performance of duties under contract).
168) See, e.g., Ashville Invs. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.); X Ltd
v. Y Ltd [2005] EWHC 769, 39 (TCC) (English High Ct.) (The phrase relating to the contract
embraces claims for misrepresentation or negligent misstatement, which cause a party to
enter into the contract); Overseas Union Ltd v. AA Mut. Intl Ins. Co. Ltd [1988] 1 FTLR 421
(QB) (English High Ct.). Compare Printing Mach. Co. v. Linotype & Mach. Ltd [1912] Ch 566
(Ch) (English High Ct.) (in relation to does not encompass rectification claim); Lawson v.
Wallasey Local Bd [1883] 11 QBD 229 (English Div. Ct.). See also Fiona Trust & Holding Corp.
v. Privalov [2007] UKHL 40 (House of Lords).
169) See, e.g., Easier to Read Tel. Directory Inc. v. Sun Media Corp., [2010] ONSC 3492 (Ontario
S.Ct.) (relating to interpreted broadly); Woolcock v. Bushert, (2004) 50 B.L.R.3d 85, 23
(Ontario Ct. App.) (The words relating to enjoy a wide compass.); Kaverit Steel & Crane
Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643 (Alberta Ct. App. 1992) (1994); Microcell Solutions
Inc. v. ASP Wirelessnet Inc., [2005] CanLII 7121 (Ontario Super. Ct.).
170) See, e.g.,Judgment of 20 September 2011, 30(2) ASA Bull. 449, 454-55 (Swiss Federal
Tribunal) (2012) (clause covering any dispute relating to contract extends to disputes
under other contracts); Judgment of 20 December 1995, DFT 121 III 495 (Swiss Federal
Tribunal); Judgment of 15 March 1990, Sonatrach v. K.C.A. Drilling Ltd, 1990 Rev. arb. 921,
923 (Swiss Federal Tribunal). See also B. Berger & F. Kellerhals, International and Domestic
Arbitration in Switzerland 465-68 (2d ed. 2010).
171) See, e.g.,Judgment of 26 January 2011, Janin v. Socit Encore Orthopedics, 2011 Rev. arb.
283, 283 (French Cour de cassation civ. 1e) (any dispute relating to the validity of the
contract encompasses claims of misrepresentation during precontractual negotiations);
Judgment of 8 July 2010, La Socit Doga v. HTC Sweden AB, 2010 Rev. arb. 513, 514 (French
Cour de cassation civ. 1e) (any dispute or claim arising out of or relating to the contract
covers tort claims for abusive termination of commercial relationship); Judgment of 2 May
1967, 1967 Bull. civ. No. 207 (French Cour de cassation civ. 2e) (arbitration clause covering
all disputes relating to agency contract applicable to disputes regarding sales under
contract by one of parties to third company); Judgment of 8 March 1990, 1990 Rev. arb. 675
(Paris Cour dappel).
172) See, e.g.,Origin Energy Res. Ltd v. Benaris Intl NV, XXX Y.B. Comm. Arb. 371, 378 (Tasmania
S.Ct. 2002) (2005) (arising out of or relating toprovide an extremely wide ambit of the
type, or category, of matter to be settled by arbitration). Compare Allergan Pharm. Inc. v.
Bausch & Lomb Inc., [1985] 7 ATPR 40-636 (N.S.W. Dist. Reg. 1985) (clause covering disputes
arising out of or relating to contract does not reach events that were merely part of
background of contract).
173) See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 720 (9th Cir. 1999) (in connection
formula must be interpreted liberally); Prograph Intl Inc. v. Barhydt, 928 F.Supp. 983,
989 (N.D. Cal. 1996); Good(e) Bus. Sys., Inc. v. Raytheon Co., 614 F.Supp. 428, 429 (W.D. Wisc.
1985) (plain meaning of the phrase arising in connection with suggests broader scope
for arbitration clause than phrase such as arising out of or arising under, which seem to
limit clause to disputes concerning contract itself). Compare Acquaire v. Canada Dry
Bottling, 906 F.Supp. 819, 835 (E.D.N.Y. 1995) (clause covering disputes concerning the
interpretation or application of agreement is broad). See also Note, Arbitration Clause
Drafting: Court Examines Meaning of In Connection With, 26(10) Mealeys Intl Arb. Rep. 19
(2011).
174) See, e.g., Ashville Invs. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.) (in
connection with encompasses claim for rectification); Lonrho Ltd v. Shell Petroleum Co.
Ltd, IV Y.B. Comm. Arb. 320 (Ch) (English High Ct. 1978) (1979).
175) See, e.g., Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 648 (Alberta Ct.
App. 1992) (1994) (arising out of or in connection with extends beyond rights and duties
created by the contract).
176) See, e.g.,Renusagar Power Co. v. Gen. Elec. Co. & Intl Chamber of Commerce, X Y.B. Comm.
Arb. 431, 434 (Indian S.Ct. 1984) (1985) (arising in connection with is language of the
widest amplitude and content).
39
177) See, e.g., Tommy C.P. Sze & Co. v. Li & Fung (Trading) Ltd, [2002] HKCU LEXIS 1634, 55 (H.K.
Ct. First Inst.) (in any way connected therewith are very wide words). See also S.
Greenberg, C. Kee & J. Weeramantry, International Commercial Arbitration: An Asia-Pacific
Perspective 4.128 to 4.138 (2011).
178) See, e.g.,Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb.
559, 568-69 (Australian Fed. Ct. 2005) (2006) (arising out of has wide meaning and is
synonymous with in connection with).
179) See, e.g.,Judgment of 6 August 2012, 30(4) ASA Bull. 864 (Swiss Federal Tribunal) (2012)
(holding, in prima facie review context, that claims under one contract could be resolved
under arbitration clause in another contract, where clause extended to all disputes in
connection with second contract); Judgment of 29 February 2008, 26 ASA Bull. 376, 380
(Swiss Federal Tribunal) (2008); Judgment of 21 September 2007, 26 ASA Bull. 742, 752-53
(Swiss Federal Tribunal) (2008) (in connection with [the contract] covers any disputes
which related to this agreement; noting large scope of the arbitration agreement).
180) Elbex Video Ltd v. Tyco Bldg Servs., XXXV Y.B. Comm. Arb. 409, 411 (Israeli S.Ct. 2010) (2010)
(arbitration clause was drafted in a very broad manner and according to its language it
applies to any dispute arising out of or in connection with agreement).
181) Judgment of 6 August 2012, 30(4) ASA Bull. 864, 874-75 (Swiss Federal Tribunal) (2012)
(emphasis added).
182) J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, SA, 863 F.2d 315, 321-22 (4th Cir. 1988).
183) See Final Award in ICC Case No. 12502, XXXIV Y. B. Comm. Arb. 130, 157 (2009) (arbitration
clause, which refers broadly to all disputes in connection with the contract, must be
understood to encompass, inter alia, all disputes as to the negotiation and conclusion of
the Agreement).
184) Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 648 (Alberta Ct. App. 1992)
(1994).
185) Compare Chimimport plc v. G. DAlesio SAS, The Paola DAlesio [1994] 2 Lloyds Rep. 366
(QB) (English High Ct.); Ashville Invs. Ltd v. Elmer Contractors Ltd [1988] QB 488 (English Ct.
App.) (misrepresentation claims not encompassed by arising under language, but
covered by words in connection therewith); Woolf v. Collis Removal Serv. [1948] 1 KB 11,
18 (English Ct. App.) (dicta).
186) See, e.g., Fillite (Runcorn) Ltd v. Aqua-Lift (1989) 45 BLR 27 (English Ct. App.) (arising under
clause does not extend to question whether pre-contractual statements were
incorporated into contract); Leif Hoegh & Co. v. Maritime Mineral Carriers Ltd, The Marques
de Bolarque [1982] 1 Lloyds Rep. 68 (QB) (English High Ct.) (arising under clause does not
extend to question whether parties entered into new contract); R. Merkin, Arbitration Law
5.70 (1991 & Update August 2013).
187) Recyclers of Australia Pty Ltd v. Hettinga Equip. Inc., [2000] 175 ALR 725 (Australian Fed. Ct.).
See also Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Inc., [1998] FCA 1485 (Australian Fed.
Ct.). For a Canadian case, see Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb.
643 (Alberta Ct. App. 1992) (1994).
188) See9.02[D][1][d]; Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords);
Walter Rau Neusser Oel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb. 559,
568-69 (Australian Fed. Ct. 2005) (2006) (noting width of the phrase arising out of in this
context and its synonymity with the expression in connection with).
189) See, e.g.,Origin Energy Res. Ltd v. Benaris Intl NV, XXX Y.B. Comm. Arb. 371, 378 (Tasmania
S.Ct. 2002) (2005) (The parties have employed the termsarising out of or relating to the
agreement. These terms provide an extremely wide ambit of the type, or category, of
matter to be settled by arbitration.).
190) See, e.g., Cape Flattery Ltd v. Titan Maritime LLC, 647 F.3d 914, 922-24 (9th Cir. 2011)
(holding that arising under formula must be interpreted narrowly, encompassing only
those disputes relating to interpretation and performance of contract itself); United
Steelworkers of Am. v. Duluth Clinic, Ltd, 413 F.3d 786, 789-90 (8th Cir. 2005); Lebanon Chem.
Corp. v. United Farmers PlantFood, Inc., 179 F.3d 1095, 1101 (8th Cir. 1999) (holding
arbitration clause narrow that required arbitration of all disputes arising from a
contract started or concluded under these Rules); Tracer Research Corp. v. Natl
Environmental Servs. Co., 42 F.3d 1292 (9th Cir. 1994) (misappropriation of trade secrets
claim not within scope of arbitration agreement covering disputes arising hereunder);
Shah v. Santander Consumer USA, Inc., 2011 WL 5570791 (D. Conn.) (arbitration clause that
covers disputes arising under an agreement should be interpreted narrowly, but clause
that covers disputes relating to, in connection with, arising out of or arising from
should be interpreted broadly); Bristol-Myers Squibb Co. v. SR Intl Bus. Ins. Co. Ltd, 354
F.Supp.2d 499 (S.D.N.Y. 2005) (dispute[s] arising under policy does not encompass
fraudulent inducement); Coffman v. Provost Umphrey Law Firm, LLP, 161 F.Supp.2d 720, 725
(E.D. Tex. 2001) (clause providing for arbitration of any dispute or claim arising under this
partnership agreement held to be narrow); Good(e) Bus. Sys., Inc. v. Raytheon Co., 614
F.Supp. 428 (W.D. Wisc. 1985) (arising under and arising out of are narrower than in
connection with).
40
191) See, e.g., Dialysis Access Ctr, LLC v. RMS Lifeline, Inc., 638 F.3d 367, 380-81 (1st Cir. 2011);
Schoenduve Corp. v. Lucent Techs. Inc., 442 F.3d 727 (9th Cir. 2006) (agreement covering
any dispute arising out of or relating to reached claims based on quasi-contract or
estoppel); ACE Capital Re Overseas, Ltd v. Cent. United Life Ins. Co., 307 F.3d 24, 26 (2d Cir.
2002); Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir. 1982),
overruled on other grounds, Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (U.S. S.Ct. 1985)
(An arbitration clause covering disputes arising out of the contract or business between
the parties evinces a clear intent to cover more than just those matters set forth in the
contract.); Boylan v. Logan, 2000 WL 1676963 (Conn. App. Ct.) (fraud in inducement of
contract covered by clause covering disputes arising out of or related to contract).
Compare Titan Marine, LLC v. Cape Flattery Ltd, 647 F.3d 914 (9th Cir. 2011) (arising under
construed narrowly); PRM Energy Sys., Inc. v. Primeenerby LLC, 592 F.3d 830, 837 (8th Cir.
2010) (arising under is somewhat narrower than arising out of or related to; even
though the clause here may be somewhat narrower, it includes no limiting language and
is generally broad in scope and encompasses tort claims).
192) Granite Rock Co. v. Intl Bhd of Teamsters,130 S.Ct. 2847, 2862 (U.S. S.Ct. 2010).
193) See, e.g., Lebanon Chem. Corp. v. United Farmers PlantFood, Inc., 179 F.3d 1095, 1101 (8th
Cir. 1999) (arbitration clause covering disputes arising from a contract started or
concluded under these Rules held narrow); Tracer Research Corp. v. Natl Environmental
Servs. Co., 42 F.3d 1292, 1295 (9th Cir. 1994) (the arising out of language is of the same
limited scope as the arising under language and does not reach misappropriation of
trade secrets); Texaco, Inc. v. Am. Trading Transp. Co., 644 F.2d 1152, 1154 (5th Cir. 1981)
(arising out of clause evidences restrictive language); Reddam v. KPMG LLP, 2004 WL
3761875, at *6 (C.D. Cal.) (arbitration clauses containing the phrases arising from or
arising out of are usually construed narrowly); Auchter Co. v. Zagloul, 949 So.2d 1189,
1194 (Fla. Dist. Ct. App. 2007) (arising out of has been interpreted by [Floridas] Supreme
Court as intended to encompass virtually all disputes between the contracting parties,
including related tort claims) (quoting Seifert v. US Home Corp., 750 So.2d 633, 637 (Fla.
1999)). See also Britton v. Co-op Banking Group, 4 F.3d 742, 749 (9th Cir. 1993) (Brunetti, J.,
dissenting) (discussing arising under and arising out of clauses).
194) See, e.g., Louis Dreyfus Negoco SA v. Blystad Shipping & Trading, Inc., 252 F.3d 218 (2d Cir.
2001) (distinguishing between arising under and arising from); Am. Recovery Corp. v.
Computerized Thermal Imaging, 96 F.3d 88, 93 (4th Cir. 1996); Sweet Dreams Unlimited, Inc.
v. Dial-A-Mattress, Intl, Ltd, 1 F.3d 639, 642 (7th Cir. 1993) (any dispute between
contracting parties that is in any way connected with their contract could be said to
arise out of their agreement and thus be subject to arbitration under a provision
employing this language); Shah v. Santander Consumer USA, Inc., 2011 WL 5570791, at *4-6
(D. Conn.) (compelling arbitration of collateral matters that implicate[d] rights and
obligations created by parties agreement, reasoning that arising from language in
arbitration agreement should be interpreted broadly); Sheehan v. Centex Homes, 2011 WL
1100031, at *8 (D. Haw.) (interpreting arising out of language, broadly in context of
underlying contract as a whole; plaintiffs allegations need only touch matters covered
by underlying contract); Kuklachev v. Gelfman, 600 F.Supp.2d 437, 460 (E.D.N.Y. 2009) (The
phrase arising from, as opposed to arising under, in an arbitration clause suggests a
broad scope.) (quoting ACE Capital Re Overseas Ltd v. Cent. United Life Ins. Co., 307 F.3d 24,
32 (2d Cir. 2002)).
195) See, e.g., The Eschersheim [1976] 2 Lloyds Rep. 1 (House of Lords) (negligence claim
covered by arising out of); Empresa Exportadora de Azucar v. Industria Azucarera
Nacional SA, The Playa Larga & The Marble Island [1983] 2 Lloyds Rep. 171 (English Ct.
App.); Fahem & Co. v. Mareb Yemen Ins. Co. [1997] 2 Lloyds Rep. 738 (QB) (English High Ct.)
(tort claims covered by arising out of); Ulysses Compania Naviera SA v. Huntingdon
Petroleum Servs., The Ermoupolis [1990] 1 Lloyds Rep. 160, 164 (QB) (English High Ct.)
(conversion claim covered by arising in any way whatsoever out of); Paczy v. Haendler &
Natermann GmbH [1979] FSR 420 (QB) (English High Ct.) (employees breach of obligation
not to misuse confidential information covered by clause encompassing disputes arising
out of or in connection with employment contract).
These authorities are of limited significance following decisions like that of the House of
Lords in Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 (House of Lords), adopting
an expansive rule of construction of arbitration agreements. See9.02[D][1][d].
196) See Judgment of 24 September 1985, 1986 NJW 2202, 2203 (Oberlandesgericht Frankfurt) (all
disputes arising out of this contract included disputes relating to promissory notes
referred to in contract).
197) See Judgment of 7 July 1962, DFT 88 I 100 (Swiss Federal Tribunal); T. Rede & R.
Hadenfeldt, Schweizerisches Schiedsgerichtsrecht 74 (2d ed. 1993).
198) See, e.g., Shah v. Santander Consumer USA, Inc., 2011 WL 5570791, at *4-6 (D. Conn.)
(compelling arbitration of collateral matters that implicate[d] rights and obligations
created by parties agreement, reasoning that arising from language in arbitration
agreement should be interpreted broadly); Kuklachev v. Gelfman, 600 F.Supp.2d 437, 460
(E.D.N.Y. 2009) (The phrase arising from, as opposed to arising under , in an arbitration
clause suggests a broad scope) (quoting ACE Capital Re Overseas Ltd v. Cent. United Life
Ins. Co., 307 F.3d 24, 32 (2d Cir. 2002)).
41
199) See9.02[D][1][a]; Century Indem. Co. v. Certain Underwriters at Lloyds, 584 F.3d 513, 556
(3d Cir. 2009) (Where the arbitration provision is narrowly drafted, we cannot presume,
as we might if it were drafted broadly, that the parties here agreed to submit all disputes
to arbitration.); Genesis of Kentucky, Inc. v. Creation Ministries Intl, 556 F.3d 459, 470 (6th
Cir. 2009) (where a dispute involves a broadly written arbitration clause only an express
provision excluding a specific dispute, or the most forceful evidence of a purpose to
exclude the claim from arbitration, will remove the dispute from consideration by the
arbitrators) (quoting Highlands Wellmont Health Network, Inc. v. John Deere Health Plan,
Inc., 350 F.3d 568, 577 (6th Cir. 2004)); Collins & Aikman Prods. Co. v. Bldg Sys., Inc., 58 F.3d
16, 20 (2d Cir. 1995) ([A] court should decide at the outset whether the arbitration
agreement is broad or narrow. If broad, then there is a presumption that the claims are
arbitrable. The clause in this case, submitting to arbitration any claim or controversy
arising out of or relating to the agreement, is the paradigm of a broad clause. Thus,
these claims are presumptively arbitrable.); Alghanim v. Alghanim, 2011 WL 5978350, at
*12 (S.D.N.Y.); Mercury Telco Group, Inc. v. Empresa de Telecommunicaciones de Bogota, 670
F.Supp.2d 1350, 1355 (S.D. Fla. 2009) (When the Court faces a broad arbitration clause, as
it does here, it should follow the presumption of arbitration and resolve doubts in favor
of arbitration.) (quoting Solvay Pharm., Inc. v. Duramed Pharm., Inc., 442 F.3d 471, 482
n.10 (6th Cir. 2006)); Kuklachev v. Gelfman, 600 F.Supp.2d 437, 460 (E.D.N.Y. 2009) (The
strong federal presumption in favor of arbitrability applies with greater force when an
arbitration clause is a broad one.); Bank of Am., NA v. Diamond State Ins. Co., 2002 WL
31720328, at *2 (S.D.N.Y.).
200) See7.03[E][5][d][iv].
201) See, e.g., United Steelworkers of Am. v. Duluth Clinic, Ltd, 413 F.3d 786, 788-89 (8th Cir.
2005) (If the clause is narrow, then the court determines whether the dispute involves an
agreement collateral to the agreement containing the arbitration clause. Only if the
clause is broad does the court analyze whether the dispute relates to the subject matter
of the agreement.); Cummings v. FedEx Ground Package Sys., Inc., 404 F.3d 1258, 1262
(10th Cir. 2005); Louis Dreyfus Negoce SA v. Blystad Shipping & Trading Inc., 252 F.3d 218,
223 (2d Cir. 2001) (To determine whether a particular dispute falls within the scope of an
agreements arbitration clause, a court should undertake a three-part inquiry. First,
recognizing there is some range in the breadth of arbitration clauses, a court should
classify the particular clause as either broad or narrow.Next, if reviewing a narrow
clause, the court must determine whether the dispute is over an issue that is on its face
within the purview of the clause, or over a collateral issue that is somehow connected to
the main agreement that contains the arbitration clause.Where the arbitration clause is
narrow, a collateral matter will generally be ruled beyond its purview.Where the
arbitration clause is broad, there arises a presumption of arbitrability, and arbitration
of even a collateral matter will be ordered if the claim alleged implicates issues of
contract construction or the parties rights and obligations under it.); Hornbeck Offshore
(1984) Corp. v. Coastal Carriers Corp., 981 F.2d 752, 754-55 (5th Cir. 1993) (This circuit
distinguishes between broad and narrow arbitration clauses. If the clause is broad, the
action should be stayed and the arbitrators permitted to decide whether the dispute
falls within the clause. On the other hand, if the clause is narrow, the matter should not
be referred to arbitration or the action stayed, unless the court determines that the
dispute falls within the clause.); Buell Door Co. v. Architectural Sys., Inc., 2002 WL 1968223,
at *4 (N.D. Tex.).
202) See7.03[E][5][d][iv].
203) This is discussed above. See9.02[D][1][a]; 9.02[D][2]; 9.02[D][6].
204) See9.02[H], pp. 1384-87.
205) See1.02[A][1]; G. Born, International Arbitration and Forum Selection Agreements: Drafting
206) See, e.g., United Steel Workers of Am., AFL-CIP, CLC v. Century Aluminum of Kentucky, 157
F.Appx. 869, 873 (6th Cir. 2005) (express provision excluding an issue from arbitration
which allows a court to say with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute rebuts the presumption
of arbitrability) (quoting AT&T Techs., Inc. v. Commercial Workers, 475 U.S. 643, 650 (U.S.
S.Ct. 1986)); Louis Dreyfus Negoce SA v. Blystad Shipping & Trading Inc., 252 F.3d 218, 225
(2d Cir. 2001) (When parties use expansive language in drafting an arbitration clause,
presumably they intend all issues that touch matters within the main agreement to be
arbitrated, while the intended scope of a narrow arbitration clause is obviously more
limited.); Cornell Univ. v. UAW Local 2300, 942 F.2d 138, 140 (2d Cir. 1991) (where collective
bargaining agreement limited arbitration to disputes relating directly to its terms, claim
arising under other terms is not arbitrable); Rochdale Village, Inc. v. Public Serv.
Employees Union, Local No. 80, 605 F.2d 1290, 1295 (2d Cir. 1979) (if an arbitration clause
covers only employee grievances, the court should not compel arbitration of questions of
contract termination); Zenger-Miller, Inc. v. Training Team, GmbH, 757 F.Supp. 1062, 1067
(N.D. Cal. 1991) (arbitration clause referring to [a]ny controversy or claim arising out of, or
related to, amounts due and owing under this Agreement was interpreted restrictively to
encompass only fee disputes; all other substantive issues held to be covered by choice
of forum clause contained in same agreement) (emphasis in original); Bolden v. FedEx
Ground Package Systems, Inc., 60 So.3d 679, 689 (4th Cir. 2011) (arbitration clause limited
to disputes regarding termination or constructive termination of agreement but no
others was considered narrowly crafted and interpreted restrictively). See also9.02[D]
[5]; 9.02[E][8], pp. 1355-56 n. 201.
42
207) Local 827, Intl Bhd of Elec. Workers, AFL-CIO v. Verizon New Jersey, Inc., 458 F.3d 305, 310
(3d Cir. 2006). See also Century Indem. Co. v. Certain Underwriters at Lloyds, 584 F.3d 513,
556 (3d Cir. 2009).
208) See Seaboard Coast Line R. Co. v. Trailer Train Co., 690 F.2d 1343, 1351 (11th Cir. 1982)
(refusing to extend arbitration clause in license agreement to related lease because
license agreement was limited in scope and its arbitration clause does not encompass
this distinct and separate dispute between the parties, which has no support in the
provisions of license agreement); Brennan v. Global Safety Labs, Inc., 2008 WL 2234830, at
*8-9 (N.D. Okla.) (refusing to extend narrow arbitration clauses contained in three
ancillary agreementsto all disputes related to the subject matter of the acquisition
transaction; holding that Acquisition Agreement containing choice-of-forum clause was
subject to litigation alone).
209) See9.02[D][5].
210) See, e.g., Hudson v. ConAgra Poultry Co., 484 F.3d 496, 503 (8th Cir. 2007) (tort claims are
arbitrable); Telecom Italia, SpA v. Wholesale Telecom Corp., 248 F.3d 1109, 1114 (11th Cir.
2001) (The longstanding rule is that where the arbitration clause is broad, the tort claim
will be arbitrable if the claim is either directly or indirectly related to the subject matter of
the contract.) (emphasis in original); Ford v. NYLCare Health Plans of Gulf Coast, Inc., 141
F.3d 243, 250-51 (5th Cir. 1998); Fleck v. E.F. Hutton Group, Inc., 891 F.2d 1047, 1049-52 (2d
Cir. 1989); In re Oil Spill by Amoco Cadiz et al., 659 F.2d 789, 794 (7th Cir. 1981);
Sojuznefteexport v. JOC Oil Ltd, XV Y.B. Comm. Arb. 384, 427 (Bermuda Ct. App. 1989) (1990)
(even claims in tort which have a close connection with the contract may be claims
arising out of or in connection with the contract); 2.03[E].
211) See, e.g.,Judgment of 8 July 2010, La Socit Doga v. HTC Sweden AB, Case No. 09-67013
(French Cour de cassation) (tort claims are arbitrable; character of tort claims as
mandatory French law does not prevent their arbitrability); Judgment of 16 June 1976,
Dame Krebs v. Milton Stern, 1977 Rev. arb. 269 (French Cour de cassation civ. 1e); Judgment
of 11 December 1981, Bureau de recherches gologiques et minires v. Socit Patina Intl
NV, 1982 Rev. arb. 311 (Paris Cour dappel); Judgment of 11 October 1954, 1982 Dalloz 388
(French Cour de cassation); Judgment of 23 June 1992, DFT 118 II 353 (Swiss Federal
Tribunal); Judgment of 17 March 1976, DFT 102 Ia 493, 504-08 (Swiss Federal Tribunal);
Judgment of 24 November 1965, 1965 NJW 300 (German Bundesgerichtshof); Judgment of 20
April 1977, IV Y.B. Comm. Arb. 261 (Landgericht Hamburg) (1979); Judgment of 16 November
1987, XVI Y.B. Comm. Arb. 585 (Italian Corte di Cassazione) (1991) (arbitration clause
encompassed tort, unjust enrichment and restitution claims); Judgment of 3 May 1980,
Kabushiki Kaisha Ameroido Nihon v. Drew Chem. Corp., VIII Y.B. Comm. Arb. 394 (Yokohama
Chiho Saibansho) (1983) (arbitration clause encompassed tort claims). See also Gonzalez,
The Treatment of Tort in ICC Arbitral Awards, 13(2) ICC Ct. Bull. 39 (2002).
212) New York Convention, Art. II(1). See1.01[C][1]. Other international and national arbitration
instruments are similar. See European Convention, Art. I(1)(a); Inter-American Convention,

Combine PDF

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Combine PDF

Uploaded by

Copyright:

Available Formats

KluwerArbitration

[A] Historical Development of International Arbitration Between States

[B] Historical Development of Commercial Arbitration

[C] Development of Contemporary Legal Framework for International Arbitration

1.02 OBJECTIVES OF INTERNATIONAL COMMERCIAL ARBITRATION

1.03 INCREASING USE OF INTERNATIONAL COMMERCIAL ARBITRATION

1.04 OVERVIEW OF CONTEMPORARY LEGAL FRAMEWORK FOR

[A] International Arbitration Conventions

[B] Overview of National Arbitration Legislation

[C] Overview of Leading International Arbitration Institutions and Rules

[D] Overview of International Guidelines and Harmonization

[E] Overview of Elements of International Arbitration Agreements

[F] Overview of Choice of Law in International Commercial Arbitration

[A] Leading Theories of Arbitration

[B] Future Directions: the Jurisprudential Character of International Arbitration

[A] ICCA Yearbook of Commercial Arbitration and ICC Handbooks

[B] Mealeys International Arbitration Report

[D] Revue Arbitrage

[E] Arbitration International

[F] ASA Bulletin

[G] Collections of ICC Arbitral Awards

[H] International Legal Materials

[I] Fouchard Gaillard Goldman on International Commercial Arbitration

[J] Redfern and Hunter On International Arbitration

[K] Commentary On International Chamber of Commerce Arbitration

[L] Commentary On New York Convention

[M] Guide to the UNCITRAL Model Law On International Commercial Arbitration

[N] Domke On Commercial Arbitration

[O] Smits Guides to International Arbitration

[P] Awards of Iran-United States Claims Tribunal (1576)

[Q] International Arbitration Law Databases

[R] Kluwer Arbitration and Kluwer Arbitration Blog

[S] Global Arbitration Review

[T] Transnational Dispute Management and OGEMID

[U] Swedish Arbitration Portal (1584)

[V] Draft Ali Restatement of International Commercial Arbitration Law

421) See1.01[B][2], [5]-[6].

1418) 2010 IBA Rules on the Taking of Evidence, Art. 2(1).

[A] Presumptive Validity of International Arbitration Agreements

[B] Jurisdictional Requirements for Contemporary International Arbitration

2.02 DEFINITION OF AGREEMENT TO ARBITRATE

[A] Definition of Agreement to Arbitrate in International Arbitration Conventions

[B] Definitions of Agreement to Arbitrate in National Arbitration Legislation

[C] Definitions of Agreement to Arbitrate in National Judicial Decisions and

[D] Future Directions: How Should Arbitration Be Defined?

[E] Arbitration Before A Natural Person

2.03 OTHER JURISDICTIONAL REQUIREMENTS AFFECTING LEGAL REGIME

[A] Defined Legal Relationship

[B] Commercial Relationship

[C] International or Foreign Arbitration Agreements

[D] Disputes or Differences

[E] Disputes Whether Contractual or Not

[G] Reciprocity Requirement

[H] Writing and Other Form Requirements

2.04 RELEVANCE OF ARBITRAL SEAT TO LEGAL FRAMEWORK GOVERNING

[A] International Arbitration Conventions

[B] National Arbitration Legislation

[A] International Arbitration Conventions

[B] National Arbitration Legislation

[C] International Arbitral Awards

[D] Institutional Arbitration Rules

[E] Future Directions: Separability Presumption and Its Basis

[A] Consequences of Separability Presumption: Non-Existence, Invalidity, Illegality,

[B] Consequences of Separability Presumption: Potential Applicability of Different