London Maritime Arbitration
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CHAPTER 6
Disputes about the tribunal’s jurisdiction
A. Introduction
6.1 An arbitrator’s jurisdiction is the power conferred on him to determine the dispute between the parties and to make final decisions which are binding on them. This power derives from the arbitration agreement between the parties and from the steps, such as appointment, which are taken pursuant to that agreement to refer the dispute to arbitration. If the tribunal lacks jurisdiction, then any award which it makes will be without effect, and the costs incurred in the arbitration will be wasted. 6.2 Challenges to the tribunal’s jurisdiction raise a logical problem. How can an arbitrator make a binding ruling to the effect that he has no power to bind the parties? If the agreement containing the arbitration clause is void or ineffective, from where does the tribunal derive jurisdiction to rule that this is the case? English law historically took a strictly logical approach precluding the tribunal from ruling on its jurisdiction. Many other legal systems (and the UNCITRAL Model Law) preferred to enable the tribunal to rule on jurisdictional disputes. This was achieved mainly by the doctrine of kompetenz-kompetenz under which a tribunal is allowed to rule on its jurisdiction, and also the concept of separability under which the arbitration agreement remains effective notwithstanding challenges to the validity of the contract in which it is contained. These doctrines are now considered as being more consistent with the parties’ choice to arbitrate than the strictly logical approach. The 1996 Act largely adopted the doctrines of kompetenz-kompetenz and separability. This means that in most cases the tribunal will make an initial ruling on a dispute about its jurisdiction, although the issue may ultimately be decided by the court. 6.3 In practice, challenges to jurisdiction are relatively common, and are sometimes employed as a means of delaying arbitral proceedings or seeking to evade an obligation to arbitrate. The DAC recognised this1 and the 1996 Act contains provisions designed to limit the use of such tactics.Page 78
Common law background
6.4 It is perhaps worth considering the provisions of the 1996 Act against the historical background of the common law which preceded it. 6.5 The orthodox common law view, represented by the decision of the House of Lords in Heyman v Darwins 2 was that, although the arbitrator could take a provisional view as to whether he had jurisdiction to determine (for example) the validity of the main contract, his decision was not finally binding on the parties since he lacked the power to decide the scope and existence of his own jurisdiction. According to this traditional principle, such issues could only finally be determined by a different tribunal – usually the court.In Heyman v Darwins, the parties concluded an agency agreement whereby the claimants would sell quantities of steel on behalf of the defendant steel manufacturers. The contract contained an arbitration clause. The defendants discovered that, contrary to the agreement, the claimants had been selling steel in circumstances which might expose them to possible claims from purchasers and therefore stopped providing steel to the claimants. The claimants commenced court proceedings seeking a declaration that the defendants had repudiated the agreement. The defendants obtained a stay of those proceedings on the ground that the claim should, in accordance with the terms of the contract, be referred to arbitration. In granting this relief, the court drew a distinction between challenges based on the premise that the contract was void ab initio (over which the tribunal would have no jurisdiction) and those based on the assertion that the contract was merely voidable (which fell within the tribunal’s remit). Viscount Simon summarised the position thus: “… if one party to the alleged contract is contending that it is void ab initio… the arbitration clause cannot operate, for, on this view, the clause itself is also void”.