PRELIMINARY STAGES OF ARBITRATION

Arbitrability: One of the preliminary issues must be considered at the outset of any arbitration is that of arbitrability, i.e. whether the dispute in question is capable of being resolved in arbitration, or whether it must be submitted to the courts. This is generally prescribed by national laws in each jurisdiction, and reflects each state’s public policy considerations. For example, in many jurisdictions, criminal offences are not arbitrable, some insolvency issues may be reserved for the courts of the place of incorporation of the relevant company and some competition and antitrust issues may not be resolved through arbitration.

In England & Wales, the Arbitration Act provides that both contractual and non-contractual disputes may be resolved through arbitration (s.6(1)). Commercial disputes arising under a valid arbitration agreement are generally arbitrable. While the Arbitration Act does not provide a list of non-arbitrable matters, matters which are deemed non-arbitrable under English law include criminal and family law issues.

Jurisdiction: The principle that the tribunal can only resolve the disputes which the parties have mandated the tribunal to resolve arises from the consensual nature of arbitration, and the fact that the authority of the arbitral tribunal is derived from the agreement entered into by the parties to an arbitration.

Challenges to an arbitral tribunal’s jurisdiction by the respondent to an arbitration claim are relatively common. A party may argue that there is no valid arbitration agreement, that it is not bound by the arbitration agreement, that the dispute itself or some part of it is not arbitrable, or that the claim is time-barred.

Where challenges to jurisdiction are raised by one of the parties, it is generally accepted in international arbitration that the tribunal itself has inherent (at least initial) power to decide itself whether or not it has jurisdiction to hear the claims. Most arbitration institutions and national laws contain express provisions confirming that the tribunal can rule on its own jurisdiction – s.30 of the Arbitration Act, for example, establishes such power in English law.

However, if the tribunal exceeds its jurisdiction, the resulting award will be in danger of being set aside or refused enforcement by a competent court. Section 67 of the Arbitration Act provides for an appeal against an award on grounds of jurisdiction. In two recent cases (Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The Pacific Champ) [2013] EWHC 470 (Comm); Lisnave Estaleiros Navais SA v Chemikalien Seetransport GmbH [2013] EWHC 338 (Comm)), the English High Court set aside the arbitration awards under s.67 on the grounds of the tribunals’ lack of substantive jurisdiction: in Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The Pacific Champ) [2013] EWHC 470 (Comm), the Court found that there was no binding agreement between the parties and, accordingly, no arbitration agreement; in Lisnave Estaleiros Navais SA v Chemikalien Seetransport GmbH [2013] EWHC 338 (Comm), the Court concluded that an arbitration clause was not incorporated into the agreement in question through a prior course of dealings between the parties.

The jurisdiction of a tribunal may be protected or challenged through the use of an anti-suit injunction. Anti-suit injunctions may be divided into two categories: as injunctions restraining arbitration proceedings, and injunctions restraining parallel court proceedings. The latter is more common in practice, since the aim is to give effect to an arbitration agreement between the parties. The relatively recent case of Gazprom OAO (C-536/13) EU:C:2015:316; last accessed January 2016) confirms that EU Member States are obliged to recognise anti-suit injunctions issued by arbitral tribunals, but not those issued by the courts of other Member States. This follows on from the West Tankers case, which established that the courts of one Member State cannot restrict the courts of another Member State from ruling on their own jurisdiction. The ECJ ruled that restraining another Member State in this way ran against the mutual trust principle at the core of Brussels Regulation 44/2001.

Appointment of the Tribunal: The constitution of the arbitral tribunal is one of the key preliminary issues in any international commercial arbitration. The parties will usually set out the number of arbitrators on the panel in the arbitration agreement. In the absence of such a provision, most institutional rules will include a default position. For example, art.12 of the 2012 ICC Rules provides that a sole arbitrator will be appointed where the parties have not agreed upon the number of arbitrators, save where the dispute is such as to warrant the appointment of three arbitrators.

It is customary for international commercial entities to provide for a three-arbitrator panel in their commercial agreements, where each party appoints an arbitrator, and the chairman is selected by the parties’ appointees (or, absent agreement between them, by the institution selected). The ability to appoint an arbitrator is one of the key attractions of international arbitration, because it allows the parties to choose an arbitrator with appropriate competence and expertise, who understands the issues in dispute.

It is inevitable, therefore, that arbitral tribunals will often consist of individuals with varied cultural, commercial and legal backgrounds. Often panels will consist of lawyers from both civil and common law jurisdictions, who may have different views on the procedural issues likely to arise in the course of the proceedings, such as document disclosure (see below).