Sunday, 23 December 2018

Critically evaluate the incorporation into the New York Convention of the restriction that only the courts of the seat of an arbitration can annul an award. Are the policies of the Convention served by this limitation, and what would be the consequences if no such limitation existed?

Article V of the New York Convention states that one ground for an award not being recognised is that “The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made”. Therefore, an annulment by a court not of the seat of arbitration would, under this ground, still be valid. 

The aim of the New York Convention is to promote the enforcement of arbitration awards in different countries to where the arbitration award was made. This is necessary for international arbitration to work. I will now consider the aforementioned restriction in Article V in the light of this aim of the Convention.
Positive aspects to the restriction:
1.     The role of foreign courts is to enforce not to annul:
In order for international arbitration to work, foreign courts must uphold the arbitration awards made in other jurisdictions. If they didn’t then the arbitration award would be undermined. However, a foreign court annulling an arbitration award goes far beyond this and actually results in foreign arbitration awards being undermined, which is the opposite of what is intended.
2.     It prevents ‘annulment shopping’:
If the restriction was not in place, a party could apply to different foreign courts for annulment until they found one willing to annul the award. This would undermine the finality of arbitration awards and thus international arbitration itself.
3.     It respects the parties’ intentions:
It is arguable that the parties impliedly chose to subject themselves to the law of the country where the arbitration took place, as this is the law which conferred power on the arbitrators. Thus, the only law which can annul the award is that law which was chosen.

Negative aspects to the restriction:
1.     A denationalised view of awards:
Some are of the view that the law of the country in which the arbitration award was made has no special claim to the arbitration agreement, and it is free for other legal systems to give recognition to such agreements, and confirm of annul them in their laws as they see fit. It is true that they can do this, but this is not an argument against why they should be restricted from doing this by the New York Convention.
2.     Fairness:

One could argue that a foreign court should be able to annul the award if it is manifestly unfair. However, this is a separate issue from the one at hand, and should be dealt with elsewhere. It should simply be the case that such annulments are ineffective from the start, and so the question of subsequent annulment does not even arise.

Tuesday, 4 December 2018

Critically compare the doctrines of competence-competence adopted by American and French courts. Which is superior?

The principle of competence competence in arbitration law is the principle that arbitrators have power to rule on their own jurisdiction. It has a positive and a negative aspect; the positive aspect to the principle is that an arbitrator can proceed with an arbitration and rule on its own jurisdiction even if the validity of the arbitration agreement is challenged in court. The negative aspect is that the courts should not make a judgement regarding the arbitrators’ jurisdiction until the arbitrators have had the opportunity to do so.
I will take the question of ‘which doctrine of competence competence is stronger?’ to mean ‘under which legal system does the arbitrator have the most power to rule on its own jurisdiction?’.

The doctrine of competence-competence is not mentioned in the US Federal Arbitration Act. It is a doctrine developed by the judiciary, and is intrinsically linked to the doctrine of separability, which is also a construct of the judiciary.
The doctrine of separability in the arbitration context holds that an arbitration clause in a contract is a distinct entity from the rest of the contract. The case of Rent-A-Center, West, Inc. v. Jackson used this concept to shape the current doctrine of competence competence in the USA. In this case, Jackson argued that an arbitrator could not logically be empowered to review its jurisdiction by the very agreement that was being contested. It was held that the arbitration or ‘delegation’ clause was separate to the rest of the contract, and a clause which empowered the arbitrator to determine its own authority would remain valid unless it was this clause and not rest of the agreement which was challenged as being invalid. This case was a strong affirmation of the positive aspect to the principle of competence competence.

In France, Article 1448 of the Civil Procedure Code was introduced by decree in 2011 and this article affirmed the existence of a principle of competence competence with both a positive and negative aspect. It held that an arbitrator has priority over a judge to determine his own jurisdiction, with the judge being unable to do this unless the arbitration agreement is manifestly void or the arbitral tribunal is not yet in existence. The parties are not able to alter this position by agreement; it is a compulsory rule of law. Article 1465 confirms this position by stating that “The arbitral tribunal has exclusive jurisdiction to rule on objections to its jurisdiction”.

Which doctrine is superior?
The French doctrine is superior as it has a positive and negative aspect, a dual effect, which clearly gives the arbitrator more power to determine its jurisdiction than the courts, whereas the US doctrine does not give the arbitrators as much power as this to determine its own jurisdiction.