The doctrine of competence competence (Kompetenz-Kompetenz) is applied in order to describe the power of an arbitral tribunal to consider and decide disputes regarding its own jurisdiction. This is universally recognized in all arbitration rules and is considered as a conceptual cornerstone of arbitration since it facilitates expeditious settlement of disputes.
In one of the previous articles published on LegaMart blog, specific features of the Arbitration Act 1996 in relation to the impartiality and independence of the arbitrators were explained. This update analyzes the legal concept of competence-competence doctrine under the 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 the challenging an arbitral tribunal’s jurisdiction pre-award. Needless to say, the issue of challenging an award on the basis that the tribunal lacks substantive jurisdiction is also discussed.
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 gray 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 own 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.”
In view of the foregoing, the tribunal would rule on the matter in an award on jurisdiction or deal with the objection in its award on the 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 own 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 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 with regard to 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 clearly addressed in 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 is 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”. In interpreting Article 31 (1) of AA, the court stated that the objection should be raised not later than the submission of 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.[iii]
One might ask about when the said application must be made. In fact, identification of the time one party loses the right to object that the tribunal lacks substantive jurisdiction at the beginning of the arbitration proceedings is extremely important.
Important sections of the English Arbitration Act
To answer this critical question, considering the fact that section 73 is about the “Loss of the right to object”, it is understood that both section 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 itself that all elements are met unless the parties are in agreement. 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, ss 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, s 9 while if the party has not taken part in the arbitration proceedings, section s 72 is applicable.
Last but not least, Brexit would affect arbitration in the UK. For instance, it seems that it would change the London arbitration market and also impact the English arbitration law (the Arbitration Act 1996).
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 to 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 the determination of a preliminary point of jurisdiction before any award is made.