A Comparative Study on the Extent of Pre -Arbitration Intervention by Courts

Abstract

The 2006 International Arbitration Study had identified national court intervention as one of the major concerns for the participants in international arbitrations.^[1] When arbitral jurisdiction is challenged in court, the resolution of the original dispute is affected and delayed. Often one person not willing to arbitrate commences litigation and the other would try to invoke arbitration proceedings. If the claimant is opposing the defendant’s request then this becomes a dispute that would threaten the effectiveness of arbitral proceedings. So every country will have to address this and decide the parameters of court enquiry into such jurisdictional objections. International conventions only provide a limited guidance leaving it to individual countries. Every jurisdiction has to find an optimal balance between the interests of efficacy and legitimacy of arbitral procedure. Courts should be competent to rule on its own jurisdiction which would include existence, validity and applicability of agreement to arbitration. Now all countries have recognized the power of arbitrator to decide on its own jurisdiction. Thus there is an inherent tension between courts deciding an existence, validity and applicability of agreement and power of arbitrators to decide their own jurisdiction. The parameters of judicial intervention depends on the choice as to the balance between efficacy and legitimacy stated above. Once arbitration is established, courts’ jurisdiction gets displaced. So when legitimacy of arbitration is emphasized, courts perform a detailed enquiry on all issues on jurisdiction and agreement. But if efficacy of arbitration is given importance, then courts cannot run a parallel litigation on has to find an optimal balance between the interest of efficacy and that of legitimacy of arbitral procedure. Courts should be competent to rule on its own jurisdiction which would include existence, validity and applicability jurisdictional issues. Here preference of one alone can be a problem, so a balance has to be there between the two. This article intends to look into the courts’ review of arbitral jurisdiction in the international scenario when one relies on arbitration and often objects to it. Here at this pre-award stage, the arbitral jurisdiction is determined. The major issue is not whether courts have power to finalise arbitral jurisdiction, but whether arbitrators can primarily decide on such issue. So here it is seen how courts of different jurisdictions inquire into the matter of arbitral jurisdiction in proceedings concerning a substantive dispute in which one party invokes arbitration agreement against the court’s jurisdiction over the dispute. There can be three groups of legal systems. First grants arbitrators a priority to determine their own jurisdiction subjecting these decisions to subsequent review by courts. The second group opts for an early judicial determination of jurisdictional issue with no priority to arbitrators. The third group offers a middle solution in which priority shall or shall not be given depending on the facts of the case. Here it is intended to analyse and compare the relevant arbitration laws of India, Switzerland, Germany and England.

[1] International Arbitration Study:International Arbitration: Corporate Attitudes and Practices, 2006, pp. 6-7