|
In a word, Article 16 gives the arbitral tribunal considerable authority and responsibility to determine whether the objection justifies an interruption of the arbitral proceedings on the merits. It is a cornerstone of the Model law.
There is another key procedural issue: what happens if a party (such as B in the example above) initiates a court case and resists an attempt by the other party to take the matter to arbitration on the grounds that there is no valid arbitration agreement? Should it be possible for B to have that issue adjudicated in court (including possible appeal) before an arbitral tribunal is named and has an opportunity to rule on it, and to avoid any arbitral proceedings as long as the matter is before the judge(s)? If so, the result would be to allow B to avoid article 16 simply by getting into court before A has time to request arbitration.
The Model Law deals with this problem in a manner which ensures that A’s access to arbitration cannot by stymied in this fashion, and that the discretion granted by Article 16 to the arbitral tribunal cannot be neutralized by winning a race to the courthouse. Thus, Article 8 provides:
1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests no later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continues, and an award may be made, while the issues are pending before the court.
Of course this provision does not assume that the court case initiated by B will vanish instantly upon A’s request for arbitration. The court seized of the matter will not defer from the arbitral process unless it finds the arbitration agreement to be “null and void, inoperative or incapable of being performed”. An example of how the Model law works in this situation was given in a 1991 Hong Kong judgment dealing with an objection to the effect that no contract had been concluded because the purported representative of one party did not have requisite authority, and that this was known to the other party. The objecting party therefore asked the court not to name an arbitrator, having refused to do so itself. The court rejected this plea, reasoning that it did not have to be entirely satisfied at this stage, as a “threshold test” had been met to the effect that there was an agreement to arbitrate. The court noted that if the objection was raised before the arbitrators and decided by them, it could be fully considered by the court thereafter pursuant to Article 16.
However, in practice, those provisions have led to divergent results, in particular the question of the court’s terms of reference (1) in deciding whether to refer the parties to arbitration, (2) in considering whether the arbitration agreement was null and void, inoperative or incapable of being performed, and (3) where the respondent invoked the fact that an arbitration proceeding was pending or that an arbitral award had been issued. The Working Group expressed the view that those issues were of significant practical importance as they caused uncertainty and, potentially, delay in a number of States. They are currently preparing a study which examines how those issues have been dealt with by the courts and the extent to which interpretations diverge. Preliminary research indicates that although article 8 of the Model Law and article II(3) of the New York Convention are broadly similar they have tended to be interpreted differently in some respects in national courts. In considering the validity of the arbitration agreement, courts examining the issue in respect of article 8 have tended to limit themselves to a prime facie examination of the case, whereas courts examining the same issue under article II(3) have adopted the approach that they have “full power” to examine the arguments, including taking evidence if necessary, in order to examine not only compliance with formal requirements but also substantial validity.
|
