Jurisdictional Issues: Arbitration

This practice note considers the arbitrability of claims in the context of international arbitration and provides guidance on the types of dispute that may raise arbitrability issues.

This note describes the most significant features of the arbitral process in Germany, including the German law regarding arbitration agreements, the duties and powers of the tribunal, the role of state courts, and the challenge and enforcement of awards.

A Practice Note describing the principles that apply in international arbitration when the tribunal's jurisdiction is challenged.

A quick guide to jurisdictional issues in key arbitral jurisdictions, based upon information in the PLC Arbitration multi-jurisdictional guide. Each country section is based on information provided between March - June 2012.

A draft ad hoc agreement conferring on the tribunal the power to rule finally on its jurisdiction.

A sample order for document production (also known as disclosure) in international arbitration.

An article highlighting the key arbitration-related developments in the Russian Federation in 2012/2013. 

The High Court has refused permission to serve an arbitration claim form out of the jurisdiction, refused to make an order appointing an arbitrator, and stayed English court proceedings pending a ruling by the Indian courts as to the location of the seat of the arbitral proceedings.

An examination of developments in international arbitration over the last five years in some of the key jurisdictions across the globe.

An article highlighting the key investment treaty arbitration related developments in 2010/2011. 

Competition law issues are raised in arbitrations with increasing regularity but it remains judicially undecided whether an arbitral tribunal has a duty, as opposed to a power, to raise and adjudicate competition law issues of its own motion.

The US Court of Appeals for the Third Circuit has held that ultra vires challenges to the formation of a contract with an arbitration clause are non-arbitrable.

We have published an article discussing the treatment of the "arbitration exclusion" in the recast of the Brussels Regulation.

The recast of Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation) has been published in the Official Journal. It will apply from 10 January 2015.

The United States Court of Appeals for the Eighth Circuit has affirmed a District Court’s denial of a request for a mandatory stay of litigation for resolution of a related arbitration, because the suit was not covered by the arbitration clause.

Sao Tome and Principe has acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

A table summarising the application of the kompetenz-kompetenz principle in France, India, Sweden, UK and US, based on information provided in the latest Arbitration multi-jurisdictional guide. The Arbitration guide answers key questions on arbitration law and practice from the perspective of leading practitioners.

Francisco M. Gutiérrez (Partner) and Federico Campolieti (Senior Associate), M. & M. Bomchil In a decision rendered on 25 October 2011, and published on 26 April 2012, the Federal Contentious-Administrative Court of Appeals, Chamber II, seated in Buenos Aires, declared its lack of jurisdiction to decide on a request for annulment against an arbitral tribunal's decision on jurisdiction. However, the Court of Appeals redirected the annulment application to the lower court (federal judge).

Stephan Wilske (Partner) and Claudia Krapfl (Associated Partner), Gleiss Lutz In a decision dated 4 April 2011, but only recently published, the Higher Regional Court of Frankfurt am Main held that a party who, in court proceedings, raises the objection of a valid arbitration agreement is barred from objecting to the jurisdiction of the arbitral tribunal in arbitration proceedings. This behaviour is contradictory and is in violation of the principle of good faith.

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP The United States District Court for the Middle District of Florida has found that an arbitrator, and not the court, must decide whether the actions of the parties prior to filing in court were sufficient to fulfill the conditions precedent to arbitration included in the parties’ arbitration agreement.

Priyanka Gandhi (Associate) and Neha Samant (Trainee), Juris Corp In a recent decision, the Supreme Court of India held that an appeal against an interim order passed by an arbitral tribunal seated outside India is not maintainable as the seat of arbitration was outside India and the arbitration proceedings were governed by foreign law. The court held that Part I of the Indian Arbitration and Conciliation Act 1996 was impliedly excluded.

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP The District Court for the Southern District of New York has found that an arbitral panel did not exceed its jurisdiction where the party resisting enforcement was only challenging the panel’s interpretation of the contract and calculation of damages, to which courts must defer, rather than challenging jurisdiction or arbitrability.

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP The District Court for the Southern District of New York has found that where one provision in an arbitration clause included the term New York, the parties clearly intended arbitration to take place in New York. This was the case even though the parties failed to specify in another provision whether arbitration would be in New York or London, and relied on the federal policy favouring arbitration to enjoin proceedings in Brazil.

PD Dr. Nathalie Voser (Partner) and Dr. Petra Rihar (Associate), Schellenberg Wittmer (Zurich) In a German-language decision dated 18 April 2011, published on 8 June 2011, the Swiss Supreme Court dismissed an appeal to set aside an award by the Court of Arbitration for Sport (CAS) for lack of jurisdiction, stating that a reference to an arbitration clause contained in the statutes of an association suffices to establish CAS' jurisdiction.

Andrew Robertson (Partner), Piper Alderman In a decision dated 1 April 2011, the New South Wales Supreme Court has held that a dispute relating to patents was arbitrable and that the arbitrator had jurisdiction to resolve disputes even on facts which had not yet occurred.

PD Dr. Nathalie Voser (Partner) and Anya George (Associate), Schellenberg Wittmer (Zurich) In a French-language decision of 19 April 2011, published on 16 May 2011, the Swiss Supreme Court upheld the decision of an arbitral tribunal which had found that it had jurisdiction to hear the claims of a third party beneficiary in relation to a dispute opposing promisor and promisee.

Nicholas Peacock (Partner) and Chris Ross (Senior Associate), Herbert Smith LLP The Singapore High Court dismissed an originating summons filed by one of the parties to prevent an arbitration from proceeding on the basis that the parties had concluded a settlement agreement. The High Court held that the jurisdiction to determine whether a dispute exists or whether a settlement had been reached by the parties lies with the arbitral tribunal.

PD Dr. Nathalie Voser (Partner) and Eliane Fischer (Associate), Schellenberg Wittmer (Zurich) In a recent French-language decision dated 11 January 2011 and published on 1 February 2011, the Swiss Supreme Court rejected challenges to the jurisdiction of the Court of Arbitration for Sport (CAS). It held that a letter of default threatening to bring the dispute before a state court did not amount to a tacit waiver of arbitration. Further, it confirmed that the principle of "good faith" which is one of the principles constituting substantive public policy (ordre public) is to be understood in the same way as under Article 2 of the Swiss Civil Code.

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), Leah Witters (Associate), White & Case LLP The Second Circuit Court of Appeals has held that courts must decide whether a valid contract exists even when the party contesting the agreement to arbitrate has requested an arbitral body to decide the issue.

Ruth Byrne and Joanne Greenaway, Herbert Smith LLP In Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100, the Court of Appeal confirmed that section 72 of the Arbitration Act 1996 is not restricted to arbitral proceedings concerning the substantive jurisdiction of the arbitrators. Section 72 entitles a person "who takes no part in [arbitral] proceedings" to challenge the tribunal's jurisdiction by proceedings in court.

An update on the European Parliament's Committee on Legal Affairs' draft report on the review of the Brussels Regulation, which rejects the proposal to abolish the arbitration exclusion in the Regulation.

Ruth Byrne (Solicitor Advocate) and  Joanne Greenaway (Professional Support Lawyer), Herbert Smith LLP The English Court of Appeal has considered whether a judgment to which the Brussels Regulation applied gave rise to an issue estoppel in proceedings in the Commercial Court.

An update on Broda Agro Trade (Cyprus) Limited v Alfred C Toepfer International GmbH [2009] EWHC 3381 (Comm), which concerned the meaning of "taking part" in arbitration proceedings for the purposes of section 72 of the Arbitration Act 1996.

Ruth Byrne (Solicitor Advocate), Herbert Smith LLP In a recent judgment,  the English High Court dismissed an application by Serbia to challenge an arbitral award for lack of substantive jurisdiction under section 67 of the Arbitration Act 1996 on the ground that Serbia had conferred substantive jurisdiction on the arbitrator by virtue of the Terms of Reference.

The National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI) have indicated their concern about the introduction or maintenance of certain dispute resolution provisions in articles of association of publicly traded companies. However, the position of the NAPF and the ABI is potentially controversial, and is not necessarily substantiated when the empirical record is examined.

The decision in The Rompetrol Group NV v Romania (ICSID Case No. ARB/06/3) relates to a preliminary objection to the jurisdiction of an ICSID tribunal in relation to a claim arising under a bilateral investment treaty (BIT). The respondent claimed that the claimant company was, in effect, owned and controlled by a domestic national and that the investment funds were from a domestic source. Accordingly, although the claimant was incorporated under Dutch law, its "real and effective" nationality was Romanian. Therefore the matter did not fall within the scope of the ICSID Convention.The tribunal dismissed this objection. The ICSID Convention allowed contracting parties wide latitude to agree the criteria on which nationality would be determined. When interpreting a treaty, Article 31 of the Vienna Convention requires the terms to be given their "ordinary meaning". In this case, the BIT provided that nationality of a company could be determined solely by the law under which it was constituted. The terms of the BIT were clear and unambiguous and there was no principle of international law that would override them.

In Noble Assurance Company and another v Gerling-Konzen [2007] EWHC 253 (Comm) the court considered whether to continue an anti-suit injunction restraining the defendant from pursuing proceedings in Vermont, brought in breach of a London arbitration agreement. The court considered that the defendant's conduct had been vexatious, oppressive and an abuse of process and/or unconscionable. The defendant had had the opportunity to raise the allegations made in the Vermont proceedings before the arbitral tribunal and had decided not to. Further, the Vermont proceedings were based on a false reading of the award. The judge emphasised the importance of avoiding the appearance of interfering with a foreign court. Instead of continuing the anti-suit injunction, he made a declaration confirming the scope and validity of the award, on the basis that this might best serve the ends of justice, by providing a basis on which the Vermont proceedings could be dismissed.

Drafting notes to accompany the ad hoc agreement on jurisdiction.

In Beijing Jianlong Heavy Industry Group v Golden Ocean Group and others [2013] EWHC 1063 (Comm), the Commercial Court considered the validity of the arbitration clauses contained in guarantees that were unenforceable for illegality.

The Argentine National Commercial Court of Appeals has considered whether a party had waived its right to settle a dispute through arbitration, on the ground that it intervened in a pre-judicial mediation.

In a German-language decision 4A_244/2012 of 17 January 2013, published on 26 February 2013, the Swiss Supreme Court set aside an award of the Court of Arbitration for Sport (CAS), on the ground that the arbitral tribunal lacked competence to resolve the dispute submitted to it.

In Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm), the court considered what was the governing law of an arbitration agreement, where the substantive law of the underlying agreement was governed by Indian law, but the seat of the arbitration was London.

On 4 October 2012, the Constitutional Court of the Russian Federation issued a ruling upon consideration of the inquiry questioning constitutionality of certain Russian legislative provisions which allow the arbitration of a wide range of civil disputes and could be interpreted as allowing arbitration of consumer disputes. The Constitutional Court found no violation of the Constitution in such provisions and confirmed arbitrability of consumer disputes in general.

Brendan Green (Associate), Herbert Smith LLP In a decision dated 17 November 2011, the Grenoble Court of Appeal upheld the decision of the Commercial Court to decline jurisdiction over a dispute involving an agency contract that contained an arbitration clause.  In doing so, the Court of Appeal found that the arbitration clause was valid despite provisions of Spanish law (the governing law of the contract) that would have arguably invalidated it.

Stephan Wilske (Partner) and Claudia Krapfl (Associated Partner), Gleiss Lutz In a decision dated 19 May 2011, but only recently published, the Federal Court of Justice explained that the formal requirements for arbitration agreements with consumers, contained in section 1031 paragraph 5 of the German Code of Civil Procedure, are mandatory. The court held that if the requirements within that section are not met and the defendant consumer purports to rely on the arbitration agreement, this will not cure the non-compliance with the formal requirements. Rather, the arbitration agreement is invalid and the state courts are competent to decide on the dispute.

H Jayesh (Founding Partner), Priyanka Gandhi (Associate) and Sreyash Basu Dasgupta (Associate), Juris Corp In a recent decision, the Supreme Court of India dismissed a petition under section 9 of the Arbitration and Conciliation Act 1996, on the ground that application of Part I of the Act had been impliedly excluded.

In JSC BTA Bank v Ablyazov and others [2011] EWHC 587 (Comm) Christopher Clarke J considered whether the court should determine issues relating to the validity of an arbitration agreement in the context of a stay application brought pursuant to section 9 of the Arbitration Act 1996.

In Cosco Bulk Carrier Co Ltd v Armada Shipping SA and another [2011] EWHC 216 (Ch) (11 February 2011), the High Court considered whether arbitration proceedings should be stayed under the Cross-Border Insolvency Regulations 2006 (SI 2006/1030) and whether Swiss main insolvency proceedings constituted the appropriate venue for deciding the underlying dispute.

In A v B [2010] EWHC 3302 (Comm) (16 December 2010), the Commercial Court has clarified the requirements for pursuing an application for security under section 70(7) of the Arbitration Act 1996.

Polina Permyakova (Senior Associate), Delphi  On 12 November 2010, the Swedish Supreme Court confirmed jurisdiction of Swedish courts to rule on the Russian Federation’s request for a declaratory judgment concerning the arbitral tribunal’s lack of jurisdiction in the Yukos arbitration. The Supreme Court also confirmed that the Russian Federation’s request complied with the requirements regarding declaratory claims under the Swedish Procedural Code.

In Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100, the Court of Appeal upheld the judge's decision on the scope of section 72 of the Arbitration Act 1996.

An update on LIDL GmbH v Just Fitness Limited and another [2010] EWHC 39 (Ch), which concerned the rules of estoppel in the context of arbitration.

An update on Roger Shashoua and others v Mukesh Sharma [2009] EWHC 957 (Comm), in which the court considered the impact of the West Tankers decision in English/Indian proceedings. NB: On 13 January 2010, Rix LJ granted permission to appeal this decision on the limited basis "as to whether the anti-suit injunction ordered below is entitled to extend, expressly or in effect, to preventing Mr Sharma defending, in India or elsewhere under the provisions of Article 5 of the New York Convention or equivalent provisions in national law, the enforcement or recognition of awards obtained against him or to be obtained against him by the respondents herein, or is entitled to render the ability of making such defence conditional upon a successful application to the English court." See Shashoua & Anor v Sharma [2010] EWCA Civ 15.

In Hussein Nuaman Soufraki v The United Arab Emirates (ICSID Case no ARB/02/7), an award had been rendered by a tribunal in which it declined jurisdiction to hear the substantive claim because it found that the claimant was not of Italian nationality, notwithstanding certificates of nationality provided by the Italian authorities, and therefore could not avail himself of the ICSID arbitration provisions in the Bilateral Investment Treaty between Italy and the United Arab Emirates. The claimant brought annulment proceedings. The annulment committee refused by majority to annul the award, noting that in matters of jurisdiction of an international tribunal, a state does not have the last word concerning the interpretation of its national law. Whilst the certificates of nationality were prima facie evidence of nationality they did not provide conclusive proof. However, in a dissenting opinion, one member of the committee disagreed with some of the majority's findings, in particular as to the treatment of certificates of nationality. He concluded that the tribunal should have taken Italian law to be conclusive on this issue. The decision and dissenting opinion provide a useful summary of ICSID jurisprudence relating to issues of jurisdiction based on alleged nationality of one of the parties and weight to be given to national laws of the parties.