Worldwide: Whose Role Is It Anyway? Who Has Jurisdiction Over Contractual Pre-Conditions To Arbitration

Last Updated: 13 April 2017
Article by Peter Hirst

The scenario is not uncommon; a multi-tiered dispute resolution clause requires a step (or steps) to be taken by the disputing parties before arbitration can be commenced. The reality of how and when disputes arise can mean that adhering to that multi-step agreement is not always practical. When one party commences arbitration without completing a 'step', is it for the court, or an appointed arbitral tribunal, to determine whether that party is (or was) bound to fulfil the pre-condition? Is this a question of jurisdiction or of admissibility?

BG v Argentina

The issue has been considered from a US law perspective in an investor-state case, BG Group Plc v Republic of Argentina. The UK-Argentina bilateral investment treaty (BIT) requires any dispute to be referred to a local court for a period of 18 months before commencing arbitration. When a dispute arose, BG proceeded straight to arbitration, seated in Washington under the UNCITRAL Rules. The arbitral tribunal decided (for reasons specific to the case) that BG did not have to comply with the local litigation requirement and that they had jurisdiction over the dispute.

The dispute was heard at three levels:

  • District Court for the District of Columbia: Argentina petitioned the Court to vacate the award, arguing that the tribunal lacked jurisdiction because, amongst other reasons, BG had failed to adhere to the local litigation requirement. The Court dismissed the petition.
  • Court of Appeals for the D.C. Circuit: On appeal, that decision was reversed, the Court finding that the interpretation and application of the pre-condition was a matter for courts, not the arbitral tribunal. It found that, because of BG's failure to litigate the dispute in the Argentine Courts first, the arbitrators lacked authority to decide the dispute.
  • US Supreme Court: The appellate decision was overturned, the majority of the Court holding that the question was indeed one for the arbitrators to decide; it did not therefore consider the specific terms of the pre-condition. The Justices reasoned that the litigation requirement was a procedural matter arising as part of the arbitration and a matter for the tribunal to consider, applying US law. The question before the arbitrators was not whether the parties had agreed to arbitrate, but when they had agreed to arbitrate. Notably, the Supreme Court approached the issue as though the case before it was a standard contractual dispute, so there is no distinction to be drawn on the basis that the dispute was investor-state.

The key take-away from the BG case is that the US Supreme Court found fulfilment of the pre-condition to be a procedural matter and one of admissibility. The jurisdiction of the tribunal is not to be called into question for nonadherence to pre-conditions.

Could BG have been decided another way?

The opposing argument (articulated in the appellate court position in BG) is that, absent compliance with the pre-condition, the parties cannot be said to have agreed to submit to arbitration, a fundamental requirement of arbitration. The arbitral tribunal cannot therefore have authority to determine a matter which ultimately sits outside the scope of the arbitration agreement.

This is the approach adopted in a number of other jurisdictions where courts faced with a challenge centred on failure to adhere to a pre-condition will not treat the matter as one of admissibility. Instead the court will consider the interpretation and enforceability of the pre-condition within the bounds of a challenge to the tribunal's jurisdiction.

In England, for example, where the courts retain the power to examine or re-examine for themselves the tribunal's jurisdiction, a question arose as to whether the parties needed to engage in "friendly discussions" before referring the dispute to arbitration (Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm)). The High Court heard the challenge, noting that " is common ground that the application before the court is a re-hearing of the jurisdiction challenge." The High Court then went on to find that there had been an obligation to engage in "friendly discussions", in which case the condition precedent to arbitrate was enforceable. Similarly, in Switzerland where parties had agreed to follow a conciliation process but one party did not, the court accepted a challenge to the tribunal's jurisdiction. The Court considered the issue afresh, finding in favour of the party that brought the challenge, which led to a stay in the arbitration pending compliance (Case 4A_628/2015 (Swiss Supreme Court, 16 March 2016)).

While BG v Argentina certainly had its own factual and procedural peculiarities and is not without its critics, it could be said that the US approach adopted in BG is a forward-looking method of dealing with such quasi-jurisdictional issues. There may be a practical reason why it cannot or does not make sense to require adherence with a pre-condition to arbitrate and the tribunal should be able to decide that without its jurisdiction to hear the substantive dispute being challenged. It could be seen that in hearing challenges of this kind anew, national courts are undermining the arbitration process and stepping in where the question is simply one of admissibility and, therefore, procedure within the context of the arbitration. It allows pre-conditions which are maybe out of step with the circumstances of a dispute potentially to derail an otherwise valid attempt to arbitrate.

Tackling multi-tier clauses

If a party is faced with a multi-tier dispute resolution clause but, for justifiable reasons, wishes to by-pass possibly mandatory pre-conditions and resort to arbitration, advice as to the law in the seat of the arbitration should be obtained. The outcome will be different in many jurisdictions and might prevent a costly jurisdictional challenge in due course. As a practical point, ask yourself why, as a party to a contract, you would wish to oblige yourself by contract to negotiate. You have that right without the multi-tier dispute resolution clause!

Whose Role Is It Anyway? Who Has Jurisdiction Over Contractual Pre-Conditions To Arbitration

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.