Jurisdictional Challenges and Interim Measures – a review

Nigel Cooper Q.C.

Scope of this talk

The purpose of my short session will be to look at:

Challenges to the jurisdiction of the Tribunal

Interim measures to assist the arbitral process

Challenges to the Jurisdiction

Three Principal Issues:

Is the dispute within the scope of the arbitration agreement? (Question of Construction)

Is the arbitration agreement valid? (Separability)

Who decides? (Kompetenz Kompetenz)

Vee Networks Ltd. v. Econet Wireless International Ltd

Challenges to the JurisdictionConstruction:

Purposive approach – avoids narrow distinctions between different wordings of clauses

Starts from the position that assumes that commercial parties intended all disputes arising from their contract to be determined by the arbitration Tribunal

Matters such as whether contract can be rescinded for fraud/bribery/mis-representation likely to be within the scope of the clause.

Fiona Trust v Privalov [2008] 1 Lloyd’s Law Rep. 254

Challenges to the Jurisdiction

Separability

Principle that the arbitration agreement is a separate agreement from the underlying agreement in which it is found.

SIAC Rules 2010, Article 25.2; ICC Rules 2012, Article 6.3

Arbitration Act 1996, s. 7; Arbitration Act 2002, s.21(1)

If the underlying agreement is invalid, this will not affect the validity of the arbitration agreement

But what if there no agreement at all?

Challenges to the Jurisdiction of the Tribunal

Who decides?

International consensus now is that challenges to the jurisdiction should be dealt with primarily by the Tribunal or arbitral body chosen by the Tribunal

SIAC Rule 2010, article 25

ICC Rules 2012, article 6

Uncitral Arbitration Rules 2010, Article 23 (Model Law, Article 16)

Arbitration Act 1996 (UK), s.30 and s.32(3)

Challenge to the jurisdiction of the Tribunal

Bundesgerichtshof decision of 27 Feb 1970 (1990) Arbitration International vol 6, no. 1, p.79

“There is every reason to presume that reasonable parties will wish to have the relationships created by their contract and the claims arising therefrom, irrespective of whether their contract is effective or not decided by the same tribunal and not by two different tribunals

Challenge to the jurisdiction of the TribunalComandate Marine Corporation v. Pan Australia

Shipping [2008] 1 Lloyd’s Rep. 119, [2006] FCAFC 192 at para. 165:

“This liberal approach is underpinned by the sensible commercial presumption that the parties did not intend the inconvenience of having possible disputes from their transaction being heard in two places. … The benevolent and encouraging approach to consensual alternative non-curial dispute resolution assists in the conclusion that words capable of broad and flexible meaning will be given liberal construction and content. This approach conforms with a common sense approach to commercial agreements, in particular when the parties are operating in a truly international market and come from different countries and legal systems and it provides a appropriate respect for party autonomy.”

Challenge to the jurisdiction

Jurisdictional challenges before the Tribunal

Objections to be taken early – before first step in proceedings/statement of defence

May be dealt with as part of Award on merits or as Preliminary Issue

Note possibility of seeking injunctive relief from Tribunal if party seeking to uphold Tribunal’s jurisdiction

Challenge to the JurisdictionWhat if unwilling to submit to jurisdiction of the Tribunal

Ad hoc submission

Take no part in the arbitration and contest the jurisdiction of the Tribunal at the enforcement stage

Seek declaratory relief/injunctive relief from a national court

Interim MeasuresRange of measures but of particular note are:

Protection of the right to arbitrate;

Preservation of evidence/assets:Early disclosure;

Preservation of assets (freezing injunctions/disclosure of assets)

Common international arbitration rules enable Tribunal to grant such orders and provide a procedure for appointment of emergency arbitrator if needed

Interim Measures

Relief from national court:

May be accessible more quickly;

Effective against third parties;

Possibly greater deterrent effect;

But:Need to establish that relief from Tribunal not available/effective;

May require counter-security or only be available in case of urgency or with permission of the Tribunal (law of the seat)

Range of Measures

Uncitral Model Law – Article 26.2:Maintain or restore the status quo

Action to prevent or restrain action that cause current or imminent harm or prejudice arbitral process

Means of preserving assets

Preserving evidence

Harm not reparable by damages/reasonable prospect of success

Interim Measures

See also:

LCIA Rules, Article 25

SIAC Rules, Article 26

ICC Rules, Article 28

Note Rules generally provide that application to a judicial authority for interim measures will not be deemed incompatible with the agreement to arbitrate

Procedure

Difficulty with interim measures from Tribunal is the time associated with a consensual process

Major sets of arbitration rules therefore moving towards procedures such as procedure for appointment of an emergency arbitrator

Allows the appointment of an emergency arbitrator to grant urgent relief before the Tribunal has been constituted

Procedure

Parties’ consent to the emergency arbitrator procedure assumed from consent to the relevant arbitration rules as governing any dispute between the parties

Basic procedure:

Application by one party

Appointing authority makes appointment of emergency arbitrator from panel (typically within one day)

Procedure

Limited period for right of challenge to arbitrator (again typically one day)

Emergency arbitrator establishes timetable for decision (typically again within two days)

Same jurisdiction to make interim orders as Tribunal

Emergency Arbitrator may require security

Emergency Arbitrator’s jurisdiction revoked once Tribunal is appointed

Points to Note

Parties can opt out

Orders of Emergency Arbitrator subject to review by Tribunal

Emergency Arbitrator procedure does not prevent application to national court

Some doubts about the enforceability of an order by an Emergency Arbitrator under the New York Convention (is it a ‘final award’)

Examples

ICC Rules 2012, Article 29 and Appendix V

SIAC Rules 2010, Article 26 and Schedule 1

ICDR Rules 2009, Article 37

SCC Rules 2010, Appendix II

Expedited Procedures

Not concerned with interim measures per se but mechanism to enable swift resolution of dispute

May be limited to lower value disputes (see for example KCAB International Arbitration Rules 2011, Article 38)

Absence of procedure does not prevent the parties agreeing their own expedited timetable

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