Arbitrability In International Arbitration

Determining whether a dispute is arbitrable involves analyzing the arbitration agreement's scope, supported by international conventions like the New York Convention and UNCITRAL Model Law. Variations in national laws on arbitrability highlight potential challenges in enforcement across jurisdictions.
UK Litigation, Mediation & Arbitration
To print this article, all you need is to be registered or login on Mondaq.com.

One of the most complex things to advise on as counsel or determine as the tribunal, is whether a particular dispute may be determined by arbitration.

The first place to look is the arbitration agreement and ensure that the terms of the arbitration agreement itself is sufficiently broad to cover a particular dispute. The tribunal's jurisdiction is essentially derived from the arbitration agreement. But a consideration of the arbitration agreement may not be the final word on the matter, because the ability to arbitrate a particular dispute may also be affected by legislation and public policy of different jurisdictions. Certain types of disputes may be inarbitrable because under national law those types of dispute are incapable of being resolved by arbitration as they are the reserve of the national court. This can lead to uncertainty and conflict because what may be deemed as arbitrable under one country's laws may be inarbitrabal under another's.

There is not an internationally established definition of what is arbitrable. This can vary from State to State.

The sources of the concept of arbitrability are to be found in the New York Conventions and the UNCITRAL Model Law.

The New York Convention (Art 11(1)) states:

"Each Contracting State shall recognise 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 relationship, whether contractual or not, concerning subject matter capable of settlement by arbitration"1

"Recognition and enforcement of an arbitral award may also be refused if the competent authority of the county in which recognition and enforcement is sought finds that: (a) the subject matter of the difference is not capable of settlement by arbitration under the law of that country..." (Art V(2)(a))

The UNCITRAL Model Law states (Arts 34 (2)(b)(i) and 36 (1)(b)(i):

"An arbitral award may be set aside ...only if.. the court finds that the ...subject mater of the dispute is not capable of settlement by arbitration under the law of this State"

"Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused...if the court finds that the subject matter of the dispute is not capable of settlement by arbitration under the law of this state."

If the laws of the State where the arbitration is seated does not permit a particular type of dispute to be settled by arbitration, then the Tribunal will not have jurisdiction. In such instances application can be made to the Tribunal or the State's court to stop the arbitration.

But there can be instances where the dispute is capable of being settled by arbitration in the State in which the arbitration is seated but not in the State where enforcement is intended. In such a case recognition and enforcement of an award may be refused in the State in which enforcement may be sought.

There may be a conflict between what may be subject to arbitration in the State of the arbitral seat and the State where enforcement is to take place. This is illustrated by two cases involving Indian companies. There was an arbitration agreement which required ICC arbitration seated in Singapore. However, under Indian law corporate oppression disputes are not arbitrable and two courts in India made restraining orders to restrain the arbitration seated in Singapore and to prevent the enforcement of an anti-suit injunction issued by the Singapore court.2

It is impossible to provide a comprehensive list of disputes that may be inarbitrable, but here are some examples: In the UK a requirement that disputes in consumer contracts should be subject to arbitration may be deemed an unfair contract term under the Unfair Contract Terms Act; the EU has pronounced that investor disputes involving EU states are not arbitrable; and as mentioned above India has reserved to its national courts matters involving corporate oppression.

Though with the vast majority of disputes there will be no issue as to arbitrability, it is worth checking before commencing an arbitration because the public policy on the arbitrability of disputes does vary from State to State. Considerable sums in costs may be expended in dealing with challenges based on arbitrability and it would be frustrating in the extreme to obtain an award that may not be recognised and enforced in the State of intended enforcement.

Footnotes

1 Emphasis added.

2 Anupam Mittal v People Interactive (India) Pvt Ltd (2)

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.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More