Objection to Jurisdiction Through the Lens of the English Arbitration Act

Introduction

The doctrine of competence competence (Kompetenz-Kompetenz) is applied to describe the power of an arbitral tribunal to consider and decide disputes regarding its jurisdiction. This is universally recognized in all arbitration rules and is considered a conceptual cornerstone of arbitration since it facilitates expeditious settlement of disputes. 

This update analyzes the legal concept of competence-competence doctrine under English law. To improve clarity and ease of discussion, the main concept is defined first, and then its application in the English Arbitration Act is analyzed. This article takes a clear look at the key features of the English Arbitration Act 1996 in relation to challenging an arbitral tribunal’s jurisdiction pre-award. 

Principle of competence competence under the English Arbitration Act

UNCITRAL Model Law is a notable example where competence competence principle is clearly defined. In accordance with Article 16(3), “the arbitral tribunal may rule on a plea that the arbitral tribunal does not have jurisdiction either as a preliminary question or in an award on the merits” and that, in the event of an action to set aside a partial award concerning jurisdiction “the arbitral tribunal may continue the arbitral proceedings and make an award.”

From a practical point of view, the scope of the principle of competence-competence and the power of the court to determine the jurisdiction should be clarified. Hence, there are still grey areas regarding the application of this doctrine. Competence competence, a legally established principle, is addressed in English arbitration law (AA 1996, s 30.1). This provision is similar to the French and Swedish arbitration laws. To be exact, article s.30(1)sets out a special regime for AA provides that:

Unless otherwise agreed by the parties, the arbitral tribunal may rule on its substantive jurisdiction, that is, as to: 

(a) whether there is a valid arbitration agreement,

(b) whether the tribunal is properly constituted, and 

(c) what matters have been submitted to arbitration in accordance with the arbitration agreement.

Based on the above, the tribunal would rule on the matter in an award on jurisdiction or deal with the objection in its award on its merits. The Arbitration Act contains a clear definition of substantive jurisdiction. As it is clear from the wording of the article, parties are free to agree that the tribunal should not be entitled to rule on its jurisdiction. However, in practice, it rarely happens.

Objecting to the substantive jurisdiction of the tribunal

 Pursuant to AA 1996, sections 31–32, “parties wishing to object to the substantive jurisdiction of the tribunal on the basis that:

  • There is no valid arbitration agreement and/or
  •  The tribunal has not been properly constituted and/or
  •  The matters submitted to arbitration do not accord with the arbitration agreement, may: raise the objection with the tribunal directly (AA 1996, s 31) or make an application to the court (AA 1996, s 32)

Furthermore, under section 32 of the Act, parties can request a determination regarding an arbitral tribunal’s jurisdiction from the court (following an application of a party on notice to the other party). Of course, it is possible only if the parties agree or the arbitral tribunal grants permission. It is worth mentioning that any party to the relevant arbitration can refer to the English Arbitration Act, s 32 and accordingly, it is not only used by respondents. 

How and when to object to the tribunal’s jurisdiction? 

If the parties intend to object to the substantive jurisdiction of the tribunal, the jurisdiction should be raised not later than the time they take the first step to contest the merits of any matter about which they challenge the tribunal’s jurisdiction. Yet, one should not consider appointing an arbitrator as a first step in the arbitration proceedings. This is in line with the English Arbitration Act 6, s 31(1), and case law.[i] This article is considered mandatory. Hence, parties cannot exclude it.

By way of illustration, the time of the objection is addressed in the A v B case.[ii] The link between section 31(1) of the AA and article 23.3 of the London Court of International Arbitration (LCIA) Arbitration Rules are discussed in this case. According to the LCIA rules:

“An objection by a Respondent that the Arbitral Tribunal does not have jurisdiction shall be raised as soon as possible”. However, in interpreting Article 31 (1) of AA, the court stated that the objection should be raised no later than submitting the statement of defence. Hence, LCIA does not provide a stricter regime in this regard.”

With regard to the timing of the objection, it should be pointed out that in the Hussmann case, the tribunal has stated that if there is a justified delay, it would admit an objection later than the time considered in the Arbitration Act 1996 and LCIA arbitration rules.

A client filling a arbitration application under English arbitration act

Important sections of the English Arbitration Act

To answer this critical question, considering that section 73 is about the “Loss of the right to object”, it is understood that both sections 32 and 73 must be read together. Importantly, the application of a party under section 32 must meet the requirements under this article, and the court must satisfy that all elements are met unless the parties agree. Practically speaking, recourse to the English court under section 32(2) is rare since the requirements set out under this section are hard to be met. The basic requirements are as follows:

 (a) “it is made with the agreement in writing of all the other parties to the proceedings, or

 (b) it is made with the permission of the tribunal, and the court is satisfied –

 (i) that the determination of the question is likely to produce substantial savings in costs,

 (ii) that the application was made without delay, and

 (iii) that there is a good reason why the matter should be decided by the court”.

Additionally, as mentioned earlier, a challenge to the jurisdiction of the tribunal is addressed in AA 1996, section 31 or 32. However, there is a marked difference between challenging the validity of an arbitration agreement and challenging the jurisdiction. Here, if arbitral proceedings have commenced, the relevant section is AA 1996, section 9, while if the party has not taken part in the arbitration proceedings, section section 72 is applicable. 

Last but not least, Brexit would affect arbitration in the UK. For instance, it seems it would change the London arbitration market and impact the English arbitration law (the Arbitration Act 1996). 

What is the recourse when aggrieved by the decision of the Arbitral Tribunal in English arbitration law?

When the Arbitral Tribunal makes a decision, the aggrieved party can appeal the same in a court of law. Under section 69, the court has the power to confirm, vary, set aside or remit the award to the tribunal for reconsideration, in whole or in part.

Additionally, Section 67, 68 and 69 of the Arbitration Act empowers an aggrieved party to take recourse to a court of law by obtaining orders to set aside the arbitration award. In exercising its power to set aside the award, the court must be satisfied that it would be inappropriate to remit the matters to the tribunal for reconsideration. Some of the grounds that the court will consider before setting the matter aside include: –

  • Lack of substantive jurisdiction on the part of the tribunal. Lack of jurisdiction can be drawn where either the arbitration agreement is invalid, the tribunal is not properly constituted, or the issues in question are not in accordance with the arbitration agreement. A party can only be successful on this ground if it proves to the court that it was not aware of its jurisdiction in question at the time of the arbitration proceeding.
  • Serious irregularities in the arbitration proceeding. Some serious forms of irregularities are listed under section 68(2) of the Arbitration Act. Some forms include; – excess of power by the tribunal, award obtained by fraud and irregularity in the conduct of proceedings.
  • Where a question of law was raised during the arbitration proceedings, such that the decision of the tribunal on the said question of law is wrong or it concerns a question of general public importance open to serious doubt.
  • Where the court is satisfied that it is just and proper in all the circumstances to hear the appeal.

What are the circumstances under which no objection can be raised by the arbitral tribunal in English arbitration law?

Two arbitrators discussing the case

Under Sections 31 and 73 of the English Arbitration Act 1996, the Act prescribes the circumstances in which a party may lose the right to object to the arbitral tribunal. The said provisions provide; -. 

Section 31(1); – “An objection that the arbitral tribunal lacks substantive jurisdiction at the outset of the proceedings must be raised by a party not later than the time he takes the first step in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal’s jurisdiction”. 

Further, Section 73; – If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this part, any objection— 

(a) that the tribunal lacks substantive jurisdiction, 

(b) that the proceedings have been improperly conducted, 

(c) that there has been a failure to comply with the arbitration agreement or with any provision of this part, or 

(d) that there has been any other irregularity affecting the tribunal or the proceedings,

 he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not, with reasonable diligence, have discovered the grounds for the objection.

Concluding remarks about the English Arbitration Act

As mentioned earlier, pursuant to section 30 of the English Arbitration Act, a tribunal can inquire as to a preliminary matter as to whether they ought to continue with arbitration or not. It can be understood that when challenging the jurisdiction of a tribunal, both sections 31 and 32 of the Act should be considered. 

Where there is an objection to the substantive jurisdiction of a tribunal, the procedures set out under section 31 of the Arbitration Act must be followed. According to the commentary on the Act, as an alternative course, an application would be made to the court pursuant to section 32 for determining a preliminary point of jurisdiction before any award is made. 

If you want to make an arbitration application or are aggrieved by the arbitral tribunal, then it’s important to discuss your case, the relief you seek, and any difficulties you may encounter with a professional lawyer.

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