The doctrine of compétencecompétence in international commercial arbitration

HO CHI MINH UNIVERSITY OF LAW FACULTY OF INTERNATIONAL LAW *** NGUYEN VU THUY QUYNH Student ID 1751101030127 THE DOCTRINE OF COMPÉTENCE COMPÉTENCE IN INTERNATIONAL COMMERCIAL ARBITRATION BACHELOR’S TH[.]

NGUYEN VU THUY QUYNH

Student ID: 1751101030127

THE DOCTRINE OF COMPÉTENCE IN INTERNATIONAL COMMERCIAL ARBITRATION

The Author declares that the present thesis is the result of the Author’s own independent work and research, done under the supervision of PhD Le Thi Ngoc Ha

In any parts of the work where sources are used, these sources are listed in the bibliography and are clearly identified as references The Author shall take full responsibility for this declaration

COMMERCIAL ARBITRATION – ARBITRATORS’ POWER TO RULE

ON THEIR OWN JURISDICTION 1

1.1 International Commercial Arbitration 1

1.1.1 Definition and A Brief History of “Arbitration” 1

1.1.2 Definition of “International” 4

1.1.3 Definition of “Commercial” 7

1.1.4 Benefits of International Commercial Arbitration 9

1.2 The Arbitrators’ Power to Rule on Their Own Jurisdiction - “Compétence-Compétence” 12

1.2.1 The Jurisdiction of an Arbitral Tribunal and Its Power to Rule on Its Own Jurisdiction 12

1.2.2 Arbitrators’ Power to Rule on Their Own Jurisdiction: The Terminology Issue 16

1.2.3 The Foundation of the Arbitrators’ Compétence-Compétence 19

1.2.4 Variations in the Scope of an Arbitral Tribunal’s Power to Rule on Its Own Jurisdiction 22

1.3 Compétence-compétence and Its Interrelation with the Doctrine of Separability 26

1.3.1 The Doctrine of Separability in International Commercial Arbitration

26

1.3.2 The Interrelation between Compétence-Compétence and Separability 28 CHAPTER CONCLUSION 29

CHAPTER 2 VARIOUS APPROACHES TO THE DOCTRINE OF COMPETENCÉ-COMPETENCÉ IN INTERNATIONAL CONVENTIONS AND DIFFERENT NATIONAL REGIMES 31

1.1 The New York Convention on the Doctrine of Compétence-Compétence 31

1.1.1 Introduction 31

1.1.2 The Doctrine of Compétence-Compétence under the New York Convention 32

1.2.2 The Doctrine of Compétence-Compétence under the Model Law 37

1.2.3 Concluding Remarks 42

1.3 French Law on the Doctrine of Compétence-Compétence 42

1.3.1 The Legal Framework for International Commercial Arbitration in France 42 1.3.2 The Doctrine of Compétence-Compétence in France 44

1.3.3 Concluding Remarks 48

1.4 English Law on the Doctrine of Compétence-Compétence 49

1.4.1 The Legal Framework for International Commercial Arbitration in England 49 1.4.2 The Doctrine of Compétence-Compétence in England 51

1.4.3 Concluding Remarks 57

CHAPTER CONCLUSION 57

CHAPTER 3 THE VIETNAMESE APPROACH TO THE DOCTRINE OF COMPÉTENCE-COMPÉTENCE AND A PROPOSAL FOR REFORM 59

1.1 Vietnam on the Doctrine of Compétence-Compétence 59

1.1.1 Regulatory Framework for International Commercial Arbitration in Vietnam 59 1.1.2 The Doctrine of Compétence-Compétence in Vietnam 61

1.1.3 Concluding Remarks 66

1.2 A Proposal for Reform in Vietnam 67

CHAPTER CONCLUSION 68

THESIS CONCLUSION 70

BIBLIOGRAPHY 71

1996 Act 1996 English Arbitration Act

Decree 166 Decree No 116/1994/ND-CP on the Organization and

Activities of Economic Arbitration dated 05 September,

1994

et seq Et sequential, “and the following”

Ibid Ibidem, “in the same book or passage”

Between States and Nationals of Other States of 1965 (entered into force on 14 October 1966)

ISCID International Centre for the Settlement of Investment

Disputes LCA Law 54/2010/QH12 titled Law on Commercial Arbitration

dated 17 June 2010 Model Law UNCITRAL Model Law on International Commercial

Arbitration (1985), with amendments as adopted in 2006 NAL French New Arbitration Law, contained in Decree No

2011-48 of 13 January 2011, Article 2 amending the French Code of Civil Procedure (1981), Book IV, Title I New York

Convention

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (entered into force on 7 June 1959)

Ordinance No.08 Ordinance No 08/2003/PL-UBTVQH titled the Ordinance

on Commercial Arbitration dated 25 February 2003

Vice versa The other way around

at a remarkable rate Naturally, with international commerce comes international commercial disputes Basically, these are disputes that have a commercial nature and involve one or more foreign elements (the different nationalities of the parties, the contract needed to be executed in a foreign country, etc.) However, the resolution of international commercial disputes may not be an easy task, considering how in national court proceedings, the control exercised by a court is limited to national borders only As a result, a more effective alternative to court proceedings needed to emerge, thus the rise of ICA Basically, ICA offers business parties benefits that court litigation otherwise lacks

Nevertheless, for ICA to really prosper, it needs to be supported by a strong legal framework, with established rules and regulations designed to promote the efficacy of the arbitral process, as well as the recognition and enforcement of arbitration agreements and arbitral awards One of such rules, and arguably one of the most important, is the so-called doctrine of compétence-compétence This doctrine works by granting arbitrators the power to rule on their own jurisdiction, thus greatly enhancing arbitral efficacy an overall fairness of the arbitral process Nonetheless, despite being one of the most important, this doctrine is also one of the most contentious rules in ICA The doctrine is a recurring topic for discussion in legal scholarship In practice, countries have also taken diverging approaches to this doctrine, which further stirs up the discussion Yet, it appears that few have discussed the application of this doctrine within the legal framework for arbitration in Vietnam Consequently, given the importance of this topic in the context of ICA, the Author finds it necessary for there to be a more in-depth study into the theoretical framework and policy concerns behind the doctrine of compétence-compétence, as well as its varied recognition in prominent international arbitration documents and

Based on the Author’s research, there have been a considerable number of comparative studies on the topic of the doctrine of compétence-compétence in ICA Some of the most notable ones are as follows

Gaillard, E., and Savage, J., eds., Fouchard Gaillard Goldman on International

Commercial Arbitration, Hague: Kluwer Law International, 1999 – This book is an

important textbook for the study of ICA Being one of the most fundamental rules of ICA and of arbitration in general, the doctrine of compétence-compétence frequently comes up throughout the book and is particularly discussed at length in Chapter III

of the book In particular, the recognition, basis, and meaning of the doctrine of compétence-compétence is thoroughly considered on a comparative basis

Born, G., Chapter 6: International Arbitration Agreements and

Compétence-compétence, International Commercial Arbitration, Kluwer Law International, 2009

The book itself is also a quintessential for the study of ICA – The book has an entire chapter dedicated to the comprehensive study, at both a theoretical and practical level,

of the compétence-compétence doctrine

Gaillard, E., and Banifatemi, Y., Negative Effect of Compétence-compétence:

The Rule of Priority in Favour of the Arbitrators, Enforcement of Arbitration

Agreements and International Arbitral Awards: The New York Convention in Practice, 2008, pp.257-273 – This work touches upon the negative effect of the

doctrine of compétence-compétence and the policy considerations behind it In particular, the work refers to “the principle of compétence-compétence” and that such

a principle necessarily has a dual function: a positive and a negative

Park, W., The Arbitrator's Jurisdiction to Determine Jurisdiction, Boston University School of Law Public Law & Legal Theory Paper No 17-33, 2007 – This paper gives a fascinating perspective on the doctrine of compétence-compétence and its implications on arbitral jurisdiction The provides a thorough introduction into the

The study on the compétence-compétence doctrine in Vietnam on a comparative level is relatively limited It is rarely the main topic of but rather only forms a part of

a broader study on the topic of arbitration The most notable comparative study is one

by Le Thanh Hieu, and Ton Nu Thanh Binh, Compétence-compétence Doctrine in Vietnam – A Comparative Study, ALSA Academic Journal 2018, no AJLS 2018/19,

2018, 3-15 This piece is one of the rare works that focuses on the application of the doctrine of compétence-compétence in Vietnam It points out the shortcomings in the Vietnamese approach, provides a brief comparative study of the different approaches

to this doctrine in certain jurisdictions, and concludes by advancing several proposals

to tackle the problems of the Vietnamese approach Nevertheless, with the content of only 12 pages, this study can hardly be comprehensive

Although there have been many comparative studies on the doctrine of compétence-compétence on an international level, the number of studies with a focus

on the approach to the doctrine of compétence-compétence in Vietnam is notably scarce Thus, the Author believes that a comparative study in the form of a thesis on the doctrine of compétence-compétence in ICA with a critical assessment on the Vietnamese approach will be valuable to gain insights into how Vietnam conforms

to, or negates from, international practice with regard to arbitral jurisdiction in ICA

3 The Aim of the Thesis

The ultimate aim of the thesis is to be able to critically evaluate and identify the possible inadequacies in the Vietnamese approach to the doctrine of compétence-compétence in the context of ICA and how it can be improved using the experience drawn from the other approaches discussed in the study

In order to achieve this purpose, the thesis performs the following tasks:

Second, a comparative study into the different approaches to the doctrine of compétence-compétence under the selected international documents and national regimes Findings will be drawn, which shall provide a basis for the analysis and evaluation of the Vietnamese approach to the compétence-compétence doctrine Finally, an analysis of the Vietnamese approach will be presented, in which comparisons will be made with the previously analyzed approaches to reveal the limitations of the current approach in Vietnam Subsequently, based on the experiences learned from prior findings, suggestions to overcome the shortcomings

in the Vietnamese approach on the doctrine of compétence-compétence will be offered

4 Subject-matter and Scope of the Thesis

4.1 Subject-matter of the Thesis

The subject matter of the present thesis is the doctrine of compétence and, particularly, the extent to which this doctrine is endorsed within international documents and various legal frameworks, and especially within the Vietnamese legal framework

compétence-In particular, the research on the subject matter in the thesis shall be studied through the regulations and practices relating to the doctrine of compétence-compétence under the New York Convention, the Model Law, French arbitration law, English arbitration law, and Vietnamese arbitration law

4.2 Scope of the Thesis

The scope of the thesis is limited to the doctrine of compétence-compétence in ICA and its variations in scope of application as recognized and adopted in different

jurisdictions’ approach to the doctrine More specifically:

The analysis carried out in this thesis is limited to consensual arbitration between private parties Thus, statutory and other obligatory forms of arbitration, as

the definitions of the terms as provided for in the Model Law

Regarding the theoretical and conceptual aspects, the thesis is focused on the study of the basic concepts of ICA and arbitral jurisdiction, as well as several legal points of view about the foundation/theoretical framework and the various scopes of application of the compétence-compétence doctrine

On the comparative study of the different approaches to the doctrine of compétence-compétence, the Author focuses on the doctrine of compétence-compétence in the New York Convention, Model Law, the 1996 English Arbitration Act, the French 2011 New Arbitration Law, and the Vietnamese 2010 Law on Commercial Arbitration and its supplementing documents

5 Research Methodologies

This thesis uses primarily the following research methodologies

Synthesis - This methodology is used to synthesize legal documents and

scholarship opinions to clarify the theoretical basis and to have both an overall and in-depth understanding of the theoretical concepts discussed within the thesis The method is also be used to draw conclusions and experiences from legal analyses and comparisons Basically, this is the main method which is used throughout the three chapters of the thesis

Comparative analysis - The comparative analysis methodology is utilized

when conducting research and analyzing international legal documents such as treaties and national law of some countries on the doctrine This method will primarily be used in Chapters 2 and 3 of the thesis

Case Study - The methodology of case analysis is used to identify how certain

legal provisions or principles are applied in specific circumstances In other words, this method lends practical insights into the application of specific provisions or rules

throughout the thesis to examine and clarify the issues so that ultimately, the purpose

of the thesis can be achieved

6 The Significance of the Thesis

The doctrine of compétence-compétence is an important rule within the legal framework for ICA, and for arbitration in general Given the diverging approaches in different national legal orders and the constant debate between scholars on the scope

of the doctrine, many comparative studies have been undertaken to address the issues and evaluate the legitimacy of the different approaches in national arbitration laws Nevertheless, a thorough study on the recognition of the compétence-compétence doctrine within the jurisdiction of Vietnam has rarely been carried out Thus, this thesis fills that gap through a comparative study of the compétence-compétence doctrine in which the Vietnamese approach to this important doctrine is assessed and compared against other, more developed, arbitration legal frameworks The findings and suggestions drawn from this thesis will be particularly useful for legislators to consider when amending or supplementing the current provisions concerning the doctrine of compétence-compétence within the Vietnamese legal framework for arbitration

Furthermore, this thesis provides a simplified presentation of the concepts of arbitral jurisdiction and the doctrine of compétence-compétence in the context of ICA, which will be helpful for newly-started researchers in the field as well as for law students to better grasp the essence of these concepts

Finally, since this thesis is the first of the few studies which carefully analyzes the approach to the doctrine of compétence-compétence in Vietnam, it is hoped to provide a basis for the more in-depth studies into the doctrine itself and into the concept of arbitral jurisdiction in general

7 The Structure of the Thesis

Chapter 2 Various Approaches to the Doctrine of Competencé in International Conventions and Different National Regimes Chapter 3 The Vietnamese Approach to the Doctrine of Compétence- Compétence and A Proposal for Reform

Competencé-CHAPTER 1 COMPÉTENCE-COMPÉTENCE IN INTERNATIONAL COMMERCIAL ARBITRATION – ARBITRATORS’ POWER TO RULE ON THEIR OWN JURISDICTION

In the first Chapter of this thesis, the thesis shall begin by introducing the concept of international commercial arbitration (ICA) From such point of departure, the concept of arbitral jurisdiction and the widely recognized doctrine of compétence-compétence – the power of arbitrators to rule on their own jurisdiction will be explored and analyzed Finally, since the doctrine of compétence-compétence has frequently been conflated with the doctrine of separability (another important doctrine in modern ICA), the distinction between them will also be drawn In sum, Chapter 1 acts as a knowledge base to provide a strong foundation for the more intensive research into the doctrine of compétence-compétence in the following Chapters

1.1 International Commercial Arbitration

1.1.1 Definition and A Brief History of “Arbitration”

There is currently no single universally accepted definition of arbitration For example, in France, arbitration has traditionally been defined as:

…a device whereby the settlement of a question, which is of interest for

two or more persons, is entrusted to one or more other persons - the arbitrator or arbitrators - who derive their powers from a private

agreement, not from the authorities of a State, and who are to proceed

and decide the case on the basis of such an agreement.1 [emphasis added]

The German Federal Supreme Court - Bundesgerichtshof - has also defined

arbitration as:

…a private court based on party autonomy comprising one or more

arbitrators, to whom, by means of private agreement, the resolution of

1 Gaillard, E., and Savage, J., eds., Fouchard Gaillard Goldman on International Commercial Arbitration, Hague: Kluwer Law International, 1999, 9 (“Gaillard E, Savage J (1999), supra at fn.1”)

legal disputes is transferred instead of the [national] courts.2 [emphasis added]

Generally, although there are certain variations for the definition of

“arbitration”, it can be observed that virtually all authorities accept arbitration to be a consensual process where parties agree to submit their disputes to a private, non-governmental adjudicator to render a final and binding decision resolving the said disputes.3 Thus, the key characteristics of arbitration include: an agreement/consent

to arbitrate, non-governmental decision-makers - arbitrators, the existence of a dispute falling within the jurisdiction of the arbitrators, and a final and binding award rendered by the arbitrators (generally non-appealable) Essentially, arbitration is an effective form of ADR which derives its existence from the agreement of the parties and an alternative to litigation in courts, alongside other forms of ADR such as mediation and conciliation, expert determination, mini-trials, etc

Notably, arbitration had existed long before the establishment of any laws or courts In fact, arbitration can be traced back to “the beginning of recorded history”4

and can be found “in the most primitive society, as well as in modern civilization”.5One way or another, men had, for a long time, resorted to arbitration to resolve their disputes At first, there was no legal framework to govern the arbitral process Still, arbitration had been very common among members of various trade and specialist associations.6 The process was, and perhaps still largely is, relatively simple, parties having a dispute - two merchants, for example, make an agreement with each other

to submit their dispute to one or more private individuals - also known as

“arbitrator(s)” - to render a decision resolving the dispute after taking into account

2 Susler, O., Jurisdiction of Arbitration Tribunals: A Comparative Study, Doctor’s Thesis, La Trobe

University, 2012, p.11 (“Susler O (2012)”)

3 Born, G., International Arbitration: Law and Practice, Kluwer Law International, The Netherlands, 2012,

p.2 (“Born G (2012)”)

4 Born, G., International Commercial Arbitration, Kluwer Law International, 2009, p.63 (“Born G (2009)”)

5 Emerson, F., History of Arbitration Practice and Law, 19 Clev St L Rev 155, 1970, p.156

6 Onyema, E., International commercial arbitration and the arbitrator’s contract, Routledge, 2010, p.2

(“Onyema E (2010)”) Examples of such trade associations are the Grain and Feed Trade Association; London Metal Exchange; The Federation of Oils, Feeds & Fats Associations; and The London Maritime Arbitrators Association

the facts and arguments of both sides That decision would then become final and binding on the parties, not because of the coercive power of any state authorities, but because the parties agreed for it to be so and this was what was expected of them in their community.7

Whilst there have been periods of lesser, as well as greater, judicial and legislative support for arbitration, the overriding needs of the business community in having an effective method to solve their commercial disputes, as well as the exceptional advantages of the arbitral process, have, in the end, prevailed over the hostility towards arbitration 8 Gradually, arbitration received more and more legislative support on the matter It was in 1923, following the end of World War I, that the first protocol – the 1923 Geneva Protocol - addressing arbitration was opened for signature.9 This was the first time the international community agreed upon a multilateral text on arbitration Subsequently, in 1959, what may be considered one

of the cornerstones for contemporary international arbitration10 - the 1958 New York Convention,11 took effect, allowing international arbitration to really become recognized as an established method of international dispute resolution Although the title of the New York Convention may mislead people to think that it only concerns the recognition and enforcement of arbitral awards, it actually imposes an obligation

on national courts around the world to recognize and enforce both arbitration agreements and arbitration awards 12 Years later, the 1985 Model Law was approved

7 See Onyema E (2010), supra at fn.7, p.2 “The disputing parties voluntarily complied with the arbitrator’s decision Such compliance resulted possibly from the fact that the disputing parties as members of the same trade association […] judged compliance more commercially expedient Each trade association also had ways

of ‘punishing’ a defaulting judgment debtor.”

8 For a more detailed discussion on the different shifts in attitude towards arbitration throughout history, see Born G (2009), supra at fn.4, pp.7 et seq

9 The Geneva Protocol recognized that each contracting State must acknowledge the validity of the

arbitration agreement The 1923 Geneva Protocol had two objectives: Its first and main objective was to ensure that arbitration clauses were enforceable internationally; the second and subsidiary objective was to ensure that arbitration awards made pursuant to such arbitration agreements would be enforced in the

territory of the states in which they were made

10 van den Berg, A., The New York Arbitration Convention of 1958, 1981, p.1 (“van den Berg (1981)”)

11 Information and updates on the status of the Convention can be found at:

https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2 , last accessed on 28 Jun 2022 At the time of writing, the Convention has more than 170 signatories

12 New York Convention, Article II

by a resolution of UNCITRAL, and later by a U.N General Assembly resolution in

1985 This piece of statutory instrument was designed with the intention of harmonizing and reforming the arbitration laws of different countries in the world.13

This was a major success, as the 1985 Model Law (both the original version and the

2006 version with amendments) has been increasingly adopted, or otherwise served

as a model for legislation, in many jurisdictions.14 It has been contended, and perhaps rightly so, that “if the New York Convention put international arbitration on the world stage, it was the Model Law that made it a star, with appearances in states across the world”.15

Throughout history, parties with disputes to be solved have frequently resorted

to arbitration for the advantages it brings over court litigation This method of dispute settlement, described as “informal and essentially private and consensual”,16 has come to be adopted by not only certain individuals or groups of individuals like dealers or merchants, but also by major corporations and states on an international scale.17 It is hence no surprise that, now, with the increase in the globalization of international trade and investment, arbitration has become the preferred method for dispute resolution In fact, in a survey conducted by White & Case in 2021, arbitration

- international arbitration more specifically, was chosen as the preferred method of solving cross-border disputes by 90% of the respondents.18

1.1.2 Definition of “International”

The term “international” in “international arbitration” is often used to distinguish the purely “national” or “domestic” arbitrations from those that, in one

13 Redfern & Hunter et al., Redfern and Hunter on International Arbitration, 2009, p.62, para.1.218

(“Redfern & Hunter et al (2009”)

14 Information and updates on the status of the Model law can be found at:

https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration , last accessed on 28 Jun 2022 28 Jun 2022 At the time of writing, legislation based on the Model Law has been adopted in 118 jurisdictions

15 Redfern & Hunter et al (2009), supra at fn.13, p 63, para 1.220

16 Redfern & Hunter et al (2009), supra at fn.13, p.2, para 1.05

17 Ibid

18 White & Case LLP and Queen Mary School of International Arbitration (2021), 2021 International

Arbitration Survey: Adapting arbitration to a changing world,

https://www.whitecase.com/publications/insight/2021-international-arbitration-survey , last accessed on 28 Jun 2022 More than 1,200 respondents took part in the survey (“White&Case survey (2021)”)

way or another, go beyond borders; or in other words, are “international” or

“transnational”.19 Simply put, international arbitration does not just stay within the sovereignty of a nation Furthermore, in reality, some states may have in place more restrictive rules to regulate domestic arbitrations since there will almost always be an element of consumer protection in the law governing domestic arbitration.20 Thus, in order not to disturb local regulation of domestic arbitration matters, in many national legal frameworks, states may adopt entirely different legislative and/or judicial regimes to regulate “international” or “foreign” arbitration agreements.21 In addition, although not provided for expressly, it can be inferred that the New York Convention only applies to arbitration agreements that have at least some “international” or

“foreign” elements, rather than purely domestic ones.22

Nonetheless, to date, there has been no general agreement on a single definition

of “international arbitration” For example, Born refers to international arbitration as:

… a means by which international disputes can be definitively resolved,

pursuant to the parties’ agreement, by independent, non-governmental decision-makers.23 [emphasis added]

At the same time, he also notes that “there are almost as many other definitions

of international arbitration as there are commentators on the subject”.24

Nevertheless, it has been said that the word “international” can be interpreted in three different ways: (i) the nature of the dispute being “foreign” or “international”, (ii) the nationality or place of business of the disputed parties being different, and (iii)

19 Judge Phillip Jessup was the first to coin the term “transnational law” in his Storrs Lecture on

Jurisprudence delivered in 1956 to describe law that regulates activities or actions that transcend national borders: see Jessup, Transnational Law, Yale University Press, 1956

20 Redfern & Hunter et al (2009), supra at fn.13, p 7, para 1.22

21 For example, many jurisdictions nowadays adopt or model its international arbitration law according to the Model Law In a few jurisdictions, however, an arbitration legislation can apply to both domestic and

international arbitrations For example, England’s enactment of the Model Law deleted provisions limiting the legislation’s application to “international” arbitrations, extending it to all arbitrations Even then, such legislation often has specific provisions that treat international and domestic arbitration differently with regard to particular subjects See the 1996 Act (English), section 2

22 See Born G (2009), supra at fn.4, pp 277 et seq

23 Born, G., International Commercial Arbitration: Commentary and Materials (Second Edition), Kluwer

Law International, The Hague, 2001, p.1 (“Born G (2001)”)

24 Ibid

a combination of the first two meanings, together with a reference to a choice of foreign place of arbitration.25 The third approach to the meaning of “international” has been adopted in the Model Law which, by virtue of Article 1(3), provides that, an arbitration is international if:

(a) The parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States;

of the dispute is most closely connected; or

(c) The parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.26

Here, it can be seen that the Model Law has adopted a rather broad approach to the definition of international arbitration Notably, Articles a(3)(b)(i) and 1(3)(c) allow the parties to turn an otherwise-domestic arbitration “international” by agreeing among themselves on a foreign seat of arbitration or that the subject matter of the arbitration agreement “relates to more than one country” This approach has been criticized as “too expansive” by some scholars.27 Regardless, ultimately, the question

of whether an arbitration is considered “international” will be subject to the provisions of the relevant national law

25 Redfern & Hunter et al (2009), supra at fn.13, p.8, para.1.28

26 UNICTRAL Model Law, Article 1(3)

27 See Born G (2009), supra at fn.4, pp.285-289 Similarly, see Gaillard E, Savage J (1999), supra at fn.1, pp.52-53, para.103

1.1.3 Definition of “Commercial”

Not all types of disputes can be brought to arbitration There are countries in which only disputes arising out of “commercial” contracts may be submitted to arbitration.28 It is more often the civil law countries that place greater importance on the distinction between commercial and non-commercial contracts.29 Hence, the use

of the term “commercial” in ICA reflects the distinction made in some countries between contracts that are “commercial” and those that are not.30

In addition, this distinction can also be observed in the New York Convention, where Article I(3) of the Convention states that it only regulates commercial arbitrations.31 However, it did not give a specific explanation for what is meant by

“commercial” Instead, the Convention allowed its signatories to maintain a distinction between the rules applicable to commercial arbitration and non-commercial arbitration through what is known as the commercial reservation.32 Thus, for states that have entered the commercial reservation, it will be necessary to look into the law of those states to see the definition of the term “commercial” as adopted

by them As the New York Convention only applies to arbitration arising out of

“commercial” disputes, it is important to ensure that the matter in dispute is regarded

as having a “commercial” nature in such a state in order to seek recognition or enforcement of a foreign arbitral award in that state on the basis of the New York Convention.33

28 For instance, China is one major state that adopted the commercial reservation when it ratified the New York Convention in 1987 Similarly, Vietnam also adopts this commercial reservation Under Article 2 of the LCA, arbitrators only have the jurisdiction to solve: (1) disputes among parties which arise from commercial activities; (2) disputes among parties in which at least one of them conducts commercial activities; and (3)

other disputes among parties which are stipulated by law to be settled by arbitration

29 Susler O (2012), supra at fn.2, p.11

30 Redfern & Hunter et al (2009), supra at fn.13, p.11, para.1.35

31 New York Convention, Article I(3) Article I(3) of the New York Convention states: “When signing, ratifying or acceding to this Convention , any State may … declare that it will apply the Convention only

to differences arising out of legal relationships, whether contractual or not, which are considered as

commercial under the national law of the State making such declaration”

32 Out of 170 countries that have ratified the Convention, 56 countries have made commercial reservation Before being replaced by the New York Convention, the 1923 Geneva Protocol also contained a similar provision for commercial reservation

33 Redfern & Hunter et al (2009), supra at fn.13, p.11, para.1.37

Generally, it has been contended that in the context of international arbitration, the concept of international commerce means “all economic exchanges across national boundaries”.34 Similarly broad interpretation of the term “commercial” can

be found, for example, in the Model Law From its drafting history, it was evident that the drafters of the Model Law had considered defining the word “commercial”

in the main body of its provisions.35 However, they ended up inputting one as a footnote to Article 1(1).36 Basically, the wording shows that the drafters intended the application of the Model Law to cover a large number of disputes.37 However, the fact that this wording is only contained in a footnote suggests that it is merely a guide

to interpretation.38 When adopting the Model Law, legislators are free to implement the Model Law in any way which they see fit.39 Additionally, it is worth noting that this wide definition of the term "commercial" only applies to the scope of the Model Law and may not always be the case for states that do not adopt Model Law

Another interesting thing to note here is that the Model Law includes

“investment” among the types of transactions that can be considered “commercial”

in nature Yet, in practice, the reference to “commercial” is also regularly used to differentiate a given type of arbitration from “investment” arbitration 40 Nowadays, investment arbitration is a growing field of arbitration designed to resolve investment-related disputes between states and nationals of other states (private

34 Gaillard E, Savage J (1999), supra at fn.1, 35, 58

35 Summary records of the 306 th UNCITRAL meeting, available at

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/306meeting-e.pdf , last accessed

on 28 Jun 2022

36 Footnote to Article 1(1) of the Model Law states: The term ‘commercial’ should be given a wide

interpretation so as to cover matters arising from all relationships of a commercial nature, whether

contractual or not Relationships of a commercial nature include, but are not limited to, the following

transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road

37 Franco Ferrari, Friedrich Rosenfeld, and John Fellas (2021), International Commercial Arbitration: A Comparative Introduction, Edward Elgar Publishing, New York, p.17 (“Franco F et al (2021)”)

38 Gaillard E, Savage J (1999), supra at fn.1, 36, 62

39 Ibid

40 Redfern & Hunter et al (2009), supra at fn.13, p.12, para.1.38 Similarly, see Franco F et al (2021), supra

at fn.37, p.16

investors).41 A number of specialized bilateral and multilateral treaties have been put

in place to create a stable and enforceable regime for foreign investment One notable example is the ICSID Convention which provides a specialized dispute resolution mechanism for disputes arising out of foreign investments.42 Generally, investment arbitration can still be conducted under general institutional arbitration rules43 similar

to ICA However, if an investment dispute is subjected to ICSID arbitration, it will follow a specialized legal regime that differs considerably from that applicable to ICA under the New York Convention.44

Here, it is worth noting that the doctrine of compétence-compétence is the subject of the present thesis This doctrine is also recognized within the ICSID dispute resolution mechanism.45 However, given some of the more peculiar features in investment arbitration where one of the parties is a state, the scope of application/interpretation of this doctrine in ICSID arbitration can differ considerably from those existing in ICA between purely private parties Thus, in this thesis, the focus shall be limited to the study and analysis of rules and doctrines generally applicable to ICA between private, non-state parties only Investment arbitration and other forms of state arbitrations where a state is a party and is acting as a sovereign will only be discussed to the extent necessary for a particular argument

1.1.4 Benefits of International Commercial Arbitration

It is undisputed that ICA has flourished over the past several decades Certain features of arbitration, especially when done in an international setting, are deemed

to be superior to domestic court litigation, thus distinguishing arbitration as a preferred method of dispute resolution from court proceedings and other ADR

41 On investment arbitration, see Rudolf Dolzer, Christoph Schreuer, Principles of International Investment Law (First Edition), Oxford University Press, 2008

42 This treaty also created a specialized organization to deal with investment disputes which is called the International Centre for the Settlement of Investment Disputes - ICSID

43 For example, under UNCITRAL Arbitration Rules In this case, the New York Convention can be

applicable as a mechanism for recognition and enforcement

44 On the special features of ICSID arbitration, e.g., no court review of the arbitral award, see 11 Margaret

L Moses, The Principles and Practice of International Commercial Arbitration (Second Edition), Cambridge University Press, New York, 2012, pp 236 et seq (“Margaret L Moses (2012)”)

45 ICSID Convention, Article 41(1)

methods According to an empirical study into arbitration practices and trends worldwide conducted by White & Case in 2015,46 the top three most valuable characteristics of arbitration were: enforceability of awards, avoiding specific legal systems/national courts, and flexibility These advantages of international arbitration will be touched upon briefly below

Enforceability of arbitral awards is one of the most appreciated characteristics

of arbitration and has been consistently cited as a key advantage of international arbitration Thanks to international instruments such as the New York Convention, arbitral awards can easily be recognized and enforced virtually anywhere in the world

To date, no enforcement mechanisms for foreign court decisions and judgments have gotten close to the level of effectiveness offered by the New York Convention to foreign arbitral awards 47 As a result, with the reliable recognition and enforcement

of the New York Convention, arbitral awards are more likely to conclude the parties’ disputes and get enforced overseas than regular court judgments or any other methods

of ADR

Another central feature and advantage of arbitration is the possibility to avoid having a dispute resolved in a particular legal system or national court Parties may have a legitimate interest in avoiding certain legal systems and courts as this may save them significant costs and resources (e.g., appoint local counsels, become familiar with local practices, incur high translation costs), as well as protect them from the risk of being biased in national courts By choosing arbitration, especially

in an international setting, parties can benefit greatly from a neutral dispute settlement forum with a panel of expert and impartial arbitrators

46 White & Case LLP and Queen Mary School of International Arbitration survey (2015), 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, available at

https://arbitration.qmul.ac.uk/media/arbitration/docs/2015_International_Arbitration_Survey.pdf, last

accessed on 28 Jun 2022 (“White&Case survey (2015)”)

47 Born G (2012), supra at fn.3, pp 8-9 Court judgments are currently more difficult to enforce

internationally than arbitral awards Recently, the Convention of 2 July 2019 on the Recognition and

Enforcement of Foreign Judgements in Civil or Commercial Matters (the “Hague Judgments Convention”) was created with an aim to facilitate the cross-border recognition and enforcement of national court

judgments, much similar to the mechanism which the New York Convention offers to foreign arbitral

awards However, as the Hague Judgments Convention is yet to be in force, it remains to be seen whether this instrument can truly live up to its aim

One further advantage of arbitration is party autonomy and the procedural flexibility it allows to its users With arbitration, parties can flexibly tailor the procedures of the arbitration to their particular dispute Parties may agree on a variety

of different issues, from the venue of the hearing to the language of the proceedings Parties are also able to take part in the selection of arbitrators 48 Of course, the parties’ autonomy is still limited by the applicable domestic law(s) to the arbitration agreement,49 yet the degree of party autonomy in arbitration considerably exceeds that applicable in judicial proceedings

Generally, there are considerable benefits to ICA as a method of resolving transnational, cross-border disputes Nonetheless, just like everything else in life, it

is not perfect Historically, arbitration had been viewed as a relatively fast and cheap alternative to resolving disputes in court However, this may no longer hold true in modern arbitration As parties start to bring more litigation-style tactics and formality

to ICA, the costs involved and delays created escalate quickly.50 Still, one important thing to note about ICA is that it does not simply aim to resolve a dispute as quickly and cheaply as possible Rather, an arbitrator’s main duty is to deliver an accurate and reasonable award on the parties’ dispute after having properly evaluated both the facts and the law.51

In sum, despite not being a flawless means of dispute settlement, parties may arguably still find that arbitration - especially when done in an international context,

is worth the cost because of the many advantages it provides as compared to court litigation

48 For example, under Article 9.1 of the UNCITRAL Arbitration Rules, for a tribunal of three arbitrators, each party can appoint one arbitrator and the two chosen arbitrators will appoint the third arbitrator to act as the presiding arbitrator

49 Franco F et al (2021), supra at fn.37, p.14

50 This has been referred to as the “judicialisation” of international commercial arbitration, which can be observed most prominently in the US See Redfern & Hunter et al (2009), supra at fn.13, p.34, paras.1.118 et seq

51 Park, W., “Arbitration and Accuracy”, Journal of International Dispute Settlement, February 2010, 1(1),

p.27 “In the long run, little satisfaction will come from awards that are quick and cheap at the price of being systematically wrong”

1.2 The Arbitrators’ Power to Rule on Their Own Jurisdiction -

Normally, an arbitration agreement can appear in the form of a clause in the main commercial contract between the parties54 or in the form of a submission agreement.55 The difference between these two forms of arbitration agreement is the point at which each is entered into For arbitration clauses contained in commercial

contracts, they are drawn up and agreed before any dispute has arisen Here, although

the parties would naturally hope that no disputes arise, they agree in advance that if one did, it would be resolved by arbitration and not by the courts.56 In contrast,

submission agreements are a separate arbitration agreement submitted after a dispute

has arisen Submission agreements tend to be longer, as by this time, the parties already know the nature and circumstances of their dispute and in some cases the tribunal by whom they wish the dispute to be arbitrated.57 In practice, since it is often difficult to negotiate a submission agreement once a dispute has arisen, arbitration agreements dealing with future disputes (arbitration clauses) prevail 58

52 Lew, Mistelis and Kroll, Comparative international commercial arbitration, The Hague: Kluwer Law

International, New York, 2003, p.329, para.14-1 (“Lew, Mistelis and Kroll (2003)”) Here, the term

“jurisdiction” is used to indicate the arbitrator’s power to adjudicate a dispute between the parties and is used

in the same sense as mandate, competence, or authority

53 Synková, S., Courts' Inquiry into Arbitral Jurisdiction at the Pre-award Stage: A Comparative Analysis of the English, German and Swiss Legal Order, Springer, 2013, p.36 (“Synková, S (2013)”)

54 Known in French as a clause compromissoire

55 Known in French as a compromis

56 Redfern & Hunter et al (2009), supra at fn.13, p.13, para.1.41

57 Lew, Mistelis and Kroll (2003), supra at fn.52, p.100, para.6-4

58 Lew, Mistelis and Kroll (2003), supra at fn.52, p.101, para.6-5; Redfern & Hunter et al (2009), supra at fn.13, p.62, para.2.04

Nevertheless, regardless of which form an arbitration agreement takes, it is a rule that an arbitral tribunal may only resolve what the parties have agreed that it should resolve.59 In order words, the jurisdiction of an arbitral tribunal is limited by the scope of the parties’ arbitration agreement and it must not exceed its jurisdiction

by ruling on a matter that is not within the scope of the arbitration agreement

Another point to note is that although an arbitration agreement is a prerequisite for the establishment of arbitration, its effectiveness (in establishing the arbitrators’ jurisdiction) can only stretch to the extent authorized by the applicable domestic law(s).60 For instance, the validity of an arbitration agreement is judged based on the particular law applicable to the arbitration agreement.61 Moreover, an arbitral tribunal would only have jurisdiction to resolve issues that are considered arbitrable62 under the applicable national law(s).63 Consequently, the jurisdiction of arbitrators can be said to arise from “a complex mixture of the will of the parties, the law governing the arbitration agreement, the law of the place of arbitration, and the law of the place in which recognition or enforcement of the award may be sought”.64

As can be seen from the discussion above, the following points are of particular importance when considering the jurisdiction of an arbitral tribunal: (i) there exists

an arbitration agreement; (ii) such arbitration agreement is valid under the applicable law (e.g formal validity is met, not concluded as a result of fraud, misrepresentation

or duress); (iii) the dispute in question falls within the scope of the arbitration agreement; (iv) the subject matter is arbitrable under the applicable law (the

59 Redfern & Hunter et al (2009), supra at fn.13, p.335, para.5.91

60 For a more in-depth discussion on the legal nature of arbitration, see Synková, S (2013), supra at fn.53, pp.46 et seq

61 According to Article V(1)(a) of the New York Convention, an arbitral award could be refused recognition and enforcement if the arbitration agreement is invalid under “the law to which the parties have subjected it,

or failing any indication thereon, under the law of the country where the award was made”

62 The term “arbitrability” is generally used to determine whether or not the subject matter of the dispute is capable of being resolved by arbitration under the relevant national law as a matter of public policy

Nevertheless, in the U.S, various U.S courts and in particular the US Supreme Court, have occasionally used the term more broadly, i.e to include any question whether or not a particular dispute should be arbitrated See, e.g First Options of Chicago, Inc v Kaplan, 514 U.S 938 (1995), p.943 This thesis adopts the general (not the U.S’s) interpretation of the term

63 New York Convention, Article V(2)

64 Redfern & Hunter et al (2009), supra at fn.13, p.305, para.5.02

arbitrability question) Normally, arbitrators do not always have to make a full inquiry into these aspects of their jurisdiction Generally, by submitting themselves to arbitration without any jurisdictional challenges (e.g., by taking part in the appointment of arbitrators, presenting substantive arguments), the parties are deemed

to have consented to the arbitrators’ jurisdiction In such cases, the arbitrators would not have to make a full inquiry into whether they have jurisdiction or not.65

Nonetheless, oftentimes, an alleged party to arbitration, usually the defendant, may bring a challenge to the tribunal’s jurisdiction, arguing that the tribunal does not have jurisdiction to hear the dispute presented before it.66 Additionally, the party resisting arbitration may also bring such challenges to a national court to request a declaratory decision on jurisdiction or initiate court proceedings over the same dispute.67 Thus, the question of arbitral jurisdiction may come before an arbitral tribunal, or a national court; or in some cases, both

Normally, the issue of arbitral jurisdiction may arise at various stages First, it could arise in litigation proceedings before a national court, prior to the start of arbitration proceedings/the constitution of the arbitral tribunal (Stage 1) Here, one party could initiate court proceedings against another party, and the latter party may bring up the arbitration agreement between them to ask the court to decline jurisdiction in favor of arbitration if the arbitration agreement is found to be valid Second, the issue of arbitral jurisdiction may occur after arbitration proceedings have begun and one party challenges, as a preliminary matter before the arbitral tribunal, the tribunal’s jurisdiction to hear the dispute (Stage 2) Additionally, such a party may

65 One exception to this rule is that the arbitrators still need to consider the question of objective arbitrability – i.e., whether the said dispute, although agreed by the parties to be submitted to arbitration, is considered arbitrable according to the public policy of the relevant national law Arbitrators should decline jurisdiction if the matter referred to them is non-arbitrable

66 See Redfern & Hunter et al (2009), supra at fn.13, p.335, paras.5.92 et seq This can be done through a

partial or a total challenge Particularly, a partial challenge questions the jurisdiction of the tribunal with

regard to certain (but not all claims or counterclaims submitted to it (relating to the scope of the arbitration agreement) and “does not amount to a fundamental attack on the jurisdiction of the arbitral tribunal” In

contrast, a total challenge attacks the very foundation of the tribunal’s jurisdiction - i.e., the validity of the

arbitration agreement

67 Park, W., “The Arbitrator's Jurisdiction to Determine Jurisdiction”, Boston University School of Law Public Law & Legal Theory Paper Series, 2007, p.25 (“Park (2007)”)

also seek a court’s declaration as to the jurisdiction of the tribunal Finally, the problem could arise again during the judicial review of an arbitral award in the

annulment or recognition and enforcement stage (Stage 3) Basically, without an

established jurisdiction, the subsequent award rendered by the arbitral tribunal will risk being annulled or refused recognition and enforcement by a national court.68 Since both national courts and arbitrators may be presented with the question of arbitral jurisdiction, a question naturally arises as to who shall decide on the arbitrators’ jurisdiction if the jurisdiction of the arbitrators itself is challenged? Is it

to be determined by the arbitrators themselves; or, for example, a court of competent jurisdiction? Essentially, this question concerns the allocation of competence to consider jurisdictional challenges between national courts and arbitral tribunals, 69

which is commonly referred to as the “Who decides” question.70 This question arises most frequently in Stages 1 and 2 For Stage 3 – the post-award stage, the question occasionally arises and mostly concerns the various level of deference a court would grant to the review of an arbitral award upholding/(and in some cases, rejecting)

arbitral jurisdiction (i.e., whether to give no weight at all – de novo review; or to give

certain levels of deference whilst reviewing).71 The discussion in this thesis will focus mostly on this question in Stages 1 and 2 (the “pre-award” stage)

Nowadays, as will be explained below, it is widely recognized that an arbitral tribunal has the power to rule on its own jurisdiction (also known as “compétence-compétence”72 or “kompetenz-kompetenz”73).74 Essentially, this doctrine allows the arbitrators to determine their jurisdiction even when the very basis of their jurisdiction – i.e., the existence, validity, or scope of the arbitration agreement - is questioned,

68 Pursuant to Article V.1.a of the New York Convention, an award may be refused recognition and

enforcement if there were no valid arbitration agreement under the applicable law

69 Born G (2009), supra at fn.4, p.852

70 See e.g., Barceló, J., “Who Decides the Arbitrator's Jurisdiction Separability and Competence Competence

in Transnational Perspective” Vanderbilt Journal of Transnational Law, October 2003, 36(4), 1115-1136 (“Barceló J (2003)”)

71 Ibid, 1118

72 Based on French terminology, also referred to as “compétence de la compétence”

73 Based on German terminology

74 Born G (2009), supra at fn.4, p.855

thus eliminating the need to automatically resort to national courts for determination

in such cases This doctrine plays a special role in ICA as it aims to strengthen the jurisdiction of the arbitral tribunal and improve the efficacy of international arbitration It allows the arbitration proceedings to continue even in the face of an allegation to the very existence or validity of an arbitration agreement, thus avoiding unnecessary delay in the resolution of the parties’ dispute Moreover, it also reduces the likelihood that a recalcitrant party to arbitration could deliberately delay the arbitration proceedings by simply bringing up a jurisdictional challenge Indeed, depending on the circumstances, a jurisdictional challenge can turn out to be legitimate Still, the power to provisionally make such decisions should presumptively belong to the arbitrators, supposing they are able to reach decisions that are fair and protect the interests of society as well as those of the parties to the dispute.75 Furthermore, the purpose of the rule is by no means to leave the question

of the arbitrators’ jurisdiction entirely and solely in the hands of the arbitrators.76

Rather, this rule of law is made on the premise that by letting arbitrators consider and decide on challenges to their jurisdiction (subject to subsequent court review), time and money are saved, and fairer results are achieved.77

1.2.2 Arbitrators’ Power to Rule on Their Own Jurisdiction: The Terminology

Issue

The French term “compétence-compétence” and the German term kompetenz” are often used interchangeably to refer to the power of the arbitrators to determine their own jurisdiction However, it is worth noting that these expressions carry different, and sometimes contradictory, meanings with regard to this important power of the arbitrators.78 Thus, as a preliminary matter, it is helpful to consider the differences between these expressions

“kompetenz-75 Gaillard E, Savage J (1999), supra at fn.1, p.400, para.359

76 Ibid

77 Born G (2009), supra at fn.4, p.876

78 Born G (2009), supra at fn.4, p.853

Traditionally, it was the German term “kompetenz-kompetenz” (literally

“jurisdiction on jurisdiction”) which was used to refer to the rule that arbitrators have jurisdiction to consider and decide their own jurisdiction.79 In Germany, “kompetenz-kompetenz” was historically understood as recognizing an arbitral tribunal's jurisdiction to finally decide questions regarding its own jurisdiction, without the possibility of subsequent judicial review.80 Basically, before Germany adopted the Model Law in 1998, parties were free to grant the arbitrators the power to determine the existence, validity, and scope of the arbitration agreement in a final manner, subject to no subsequent review by national courts An agreement to grant the arbitrators such power was traditionally known as the “kompetenz-kompetenz clause” Yet, the origin of such an expression was never clear.81 Nevertheless, after Germany adopted the Model Law in 1998, the “kompetenz-kompetenz” clause became largely abandoned, and instead, it was stated that courts would always have the final word on arbitral jurisdiction.82 Later, several German cases have also been shown to be in support of this prohibition on the kompetenz-kompetenz clause.83

Consequently, although the German expression was initially used to indicate the

arbitrators’ power to be the sole judge of their own jurisdiction (i.e., to give a final

decision on arbitral jurisdiction), this approach is no longer recognized in German law This means that, currently, an arbitral tribunal’s decision on jurisdiction in Germany is provisional and shall always be subject to subsequent judicial review

On the other hand, the term “compétence-compétence” was understood in

France (and elsewhere) as referring to a tribunal's power to be the first one to render

a decision on its jurisdiction, subject always to subsequent judicial review.84 In France, the doctrine of compétence-compétence was first applied by French courts as

79 Gaillard E, Savage J (1999), supra at fn.1, p.396, para.651

80 Born G (2009), supra at fn.4, p.854

81 Gaillard E, Savage J (1999), supra at fn.1, p.396, para.651

82 See Draft law on the revision of arbitration law (Arbitration New Regulation Act - SchiedsVfG) (“Entwurf eines Gesetzes zur Neuregelung des Schiedsverfahrensrechts (Schiedsverfahrens-Neuregelungsgesetz - SchiedsVfG)”), Bundestags Drucksache 13/5274 of 12 July 1996 , p.26 Full text available at

https://dip.bundestag.de/vorgang/ /121501 , last accessed on 28 Jun 2022

83 See Born G (2009), supra at fn.4, p.908, fn.292

84 Born G (2009), supra at fn.4, p.854

early as 1949,85 and the doctrine first found its legislative recognition in Article 36(6)

of the Statute of the International Court of Justice.86 To date, the doctrine is set forth

at Article 1465 of the NAL87 for domestic arbitration and is applicable to international arbitration by virtue of Article 1506 of the same legislation Generally, compared to the German original expression, the French expression only allows arbitrators to be

the first (not the sole) judge of their own jurisdiction, and the arbitrators’ decision on

jurisdiction shall always be subject to subsequent judicial review

For many years, legal authors have referred to the “well-known principle of kompetenz-kompetenz” to describe the arbitrators’ power to rule on their own jurisdiction.88 However, in contemporary ICA, if the term “kompetenz-kompetenz” were to be understood like how it was originally used - i.e., to indicate the

“kompetenz-kompetenz clause” where arbitrators can be the final judge of their jurisdiction, such a doctrine would be “rejected in Germany, just as it is elsewhere”.89Thus, given the possible confusion associated with the German term, within the ambit

of this thesis, the French term “compétence-compétence” shall be used to describe an international arbitral tribunal's power to consider and decide disputes regarding its own jurisdiction in a non-final manner.90 The German term will, in principle, be used when it forms part of a quotation Regardless, these terms should be understood in a neutral manner, with no implications as to the precise timing, scope, and finality of a tribunal's jurisdiction to consider its own jurisdiction

85 Gaillard E, Savage J (1999), supra at fn.1, p.397, para.651 See also Tibergien v

Caulliez-Hannart, Supreme Court, Feb 22 1949, JCP, Ed G., Pt II, No 4899 (1949)

86 Lew, Mistelis and Kroll (2003), supra at fn.52, p.333, para.14–16

87 NAL, Article 1466 (“The arbitral tribunal has exclusive jurisdiction to rule on objections to its

Jurisdiction”) Full text available in both French and English at http://parisarbitration.com/en/materials/ , last accessed on 28 Jun 2022

88 Gaillard E, Savage J (1999), supra at fn.1, p.396, para.651

89 Gaillard E, Savage J (1999), supra at fn.1, p.396, para.651 But see Park (2007), supra at fn.67, pp.34 et seq with the American approach “In the United States, a clear line of judicial pronouncements holds that in

some situations arbitrators may rule on their own powers without subsequent de novo review by courts In the sense used by American courts, such grants of jurisdictional power are not legal fictions, but require evidence

of the parties’ real intent expressed in concrete language either in the main contract or in a separate

1.2.3 The Foundation of the Arbitrators’ Compétence-Compétence

There exists a great variety of opinions as to the foundation of the arbitrators’ power to rule on their own jurisdiction Nevertheless, of all the opinions reviewed in this thesis, none have pointed to the arbitration agreement as the basis for the doctrine

of compétence-compétence Naturally, if the foundation for the arbitrators’ jurisdiction to determine their own jurisdiction were to stem from the arbitration agreement, or even the arbitration rules chosen according to such an agreement, then when the arbitration agreement is deemed invalid, the basis for such power would be lost as well Thus, it would be somewhat contradictory to base the power of the tribunal to decide on its own jurisdiction on the agreement of the parties Here, it is helpful to be reminded that arbitral jurisdiction does not just depend solely on an arbitration agreement Rather, it is also “defined, restricted, and extended by the national laws of the jurisdictions where the arbitral award seeks to have legal effect”.91 Thus, there are other sources which this doctrine could be said to stem from Some of the varying opinions on the proper source(s) are listed below

According to Redfern and Hunter, the power of an arbitral tribunal to consider and decide its own jurisdiction is a power inherent in the tribunal’s appointment - one which is essential to ensure that the tribunal can carry out its task properly.92 Later in their analysis, they note that although the jurisdiction of the arbitrators itself is derived from the arbitration agreement, the arbitration agreement can only confer powers permissible under the law applicable to the arbitration agreement and the procedural

law of the arbitral seat - lex arbitri.93 Hence, aside from the applicable arbitration rules, it is important to also check the law of the arbitral seat to ascertain the scope of compétence-compétence allowed in accordance with the public policy at the seat.94 Similarly, Born opines that the universal affirmation of compétence-

compétence doctrine by international tribunals, irrespective of the lex arbitri, “lends

91 Synková, S (2013), supra at fn.53, p.64

92 Redfern & Hunter et al (2009), supra at fn.13, pp.339-340, para.5.104

93 Redfern & Hunter et al (2009), supra at fn.13, p.341, para.5.110

94 Ibid

support to the doctrine’s status as a general principle of international law and an inherent power (absent contrary agreement) of an arbitral tribunal”.95 Still, he does note that an arbitral tribunal’s compétence-compétence is derived from the applicable procedural law to the arbitration, be it national laws or international conventions.96

On a relatively similar note, Fouchard, Gaillard, and Goldman point out that […] the basis for the compétence-compétence principle lies not in the arbitration agreement, but in the arbitration laws of the country where the arbitration is held and, more generally, in the laws of all countries liable

to recognize an award made by arbitrators concerning their own jurisdiction.97

On the other hand, according to Lew, Mistelis, and Kroll, the basis for an arbitral tribunal’s compétence-compétence cannot stem from the arbitration agreement or the relevant provisions in different arbitration rules because for them to be applicable, the parties must have agreed on them.98 Accordingly, the authors point out that

“arbitration tribunals have traditionally assumed a right to rule on their own jurisdiction”.99 To support their point, they cite the arbitrator’s preliminary decision

on jurisdiction in the case TOPCO v Libya100 which described an arbitrator’s

competence to determine his own jurisdiction as “a customary rule”.101

Admittedly, these differences in opinion can create a certain degree of confusion

as to the foundation of the arbitrators’ power to decide on their own jurisdiction The various views listed above can be categorized roughly into three main sources: (i) the

inherent power of the tribunal, (ii) the lex arbitri, and/or the law(s) applicable to the

recognition and enforcement of the subsequent award, (iii) a customary rule

95 Born G (2009), supra at fn.4, p.871

96 Born G (2009), supra at fn.4, pp.874-875

97 Gaillard E, Savage J (1999), supra at fn.1, pp.400, para.658

98 Lew, Mistelis and Kroll (2003), supra at fn.52, p.332, para.14-14

99 Lew, Mistelis and Kroll (2003), supra at fn.52, p.333, para.14-18

100 Texaco Overseas Petroleum Company/California Asiatic Oil Company v The Government of the Libyan Arab Republic, Preliminary Award on Jurisdiction, 27 November 1975, cited in Lew, Mistelis and Kroll (2003), supra at fn.52, pp.333-334, para.14–18

101 Ibid

First of all, although the doctrine of compétence-compétence can be said to be widely recognized internationally, as will be shown below, the doctrine is not recognized uniformly.102 Thus, it seems rather unfit to denote the doctrine of compétence-compétence as a customary rule

Furthermore, commenting on these various approaches, Synková deems the proposition that the arbitrators’ inherent power is a source to be unsatisfactory.103

This is because unlike a judge of a national court deriving his/her inherent jurisdiction from the court’s very nature as the court of law, the inherent jurisdiction of an arbitrator stems from a different source - the parties’ agreement to arbitrate.104 This reasoning is justified; since for arbitration, no powers of the arbitrators can be

established based on the constitution of an arbitral tribunal per se Rather, the powers

of a tribunal can only come once it has confirmed jurisdiction - i.e., through a valid arbitration agreement Consequently, although the reasoning employed is different, this proposition has the same conceptual flaw as the one which states that the foundation for the arbitrators’ compétence-compétence comes from the arbitration agreement.105

It is important to note here that the arbitrators’ power to determine their jurisdiction has often been referred to as a legal fiction.106 A legal fiction, in principle, has to be imposed by the operation of some law.107 Normally, the arbitration law of

the arbitral seat - the lex arbitri would be of relevance here, since it generally governs

the “procedural” aspects of arbitration proceedings Nevertheless, the choice of an arbitral seat, in the majority of cases, is found in the parties’ agreement to arbitrate Thus, when the existence or validity of such agreement is contested, the law of the

102 See infra Chapter 1.2

by which a legal rule or institution is diverted from its original purpose to accomplish indirectly some other object”

107 Synková, S (2013), supra at fn.53, p.65

allegedly chosen seat on its own would not be a reliable-enough source for the arbitrators’ compétence-compétence To overcome this conceptual problem, perhaps

it would be most appropriate to base the arbitrators’ compétence-compétence on not

just the lex arbitri, but on “the totality of legal orders liable to recognize the

arbitration agreement and the ensuing arbitral award”.108

1.2.4 Variations in the Scope of an Arbitral Tribunal’s Power to Rule on Its

Own Jurisdiction

Nowadays, there is broad international consensus that an arbitral tribunal has the power to rule on its own jurisdiction, and this compétence-compétence doctrine can be found, either expressly or impliedly, in the majority of modern national arbitration statutes,109 international arbitration instruments,110 and arbitration rules.111

In the words of Fouchard, Gaillard, and Goldman, compétence-compétence is

“among the most important, and contentious, rules of international arbitration”.112

Here, it is interesting to note that although the compétence-compétence doctrine is generally recognized, its scope/content is not uniformly recognized among the different jurisdictions As Park posits, “this much-vexed principle possesses a chameleon-like quality that changes color according to the national and institutional background of its application”.113 Depending on the jurisdictions, different extents of priority and finality are attached to an arbitral tribunal’s power to determine its jurisdiction.114 In instances where an arbitral tribunal lacks jurisdiction, it is usually the national courts that step in Thus, it is often said the doctrine of compétence-compétence is closely related to the allocation of power between courts and arbitrators regarding the determination of arbitral jurisdictional challenges

108 Ibid These include the law of the seat and the laws of the potential countries of enforcement This is similar to the approach adopted in Gaillard E, Savage J (1999), supra at fn.1, pp.400, para.658

109 See, e.g the 1996 Act (English), section 30; Countries that have adopted the Model Law and included Article 16 of the Model Law in their statutes

110 See, e.g European Convention, Article V(3); ICSID Convention, Article 41(1)

111 See, e.g UNCITRAL Arbitration Rules (2010), Article 23; ICC Arbitration Rules (2021), Articles

6(3),(4),(5) and (9); LCIA Arbitration Rules (2020), Article 23(1)

112 Gaillard E, Savage J (1999), supra at fn.1, p.395, para.650

113 Park (2007), supra at fn.67, p.4

114 Born G (2009), supra at fn.4, pp.853-854

Some possible variations in the scopes of application of the compétence doctrine are outlined below (based on the degree of exclusivity of the arbitrators’ power)

compétence-a) Concurrent power between arbitrators and courts – the positive effect of the doctrine of competénce-compétence

Here, arbitrators possess concurrent power with the courts to decide on jurisdictional challenges (subject to subsequent judicial review) and reserve the power to continue with arbitral proceedings despite one party’s challenge to the arbitration agreement Simply put, at its most basic level, the compétence-compétence doctrine permits an arbitrator to rule on its own jurisdiction and continue with the arbitration of dispute even when one party claims that the arbitration agreement is invalid or non-existent The arbitration proceedings need not be halted

to await a court decision on challenges to arbitral jurisdiction This is known as the

“positive effect” of the competénce-compétence doctrine,115 which is said to lie at the heart of the doctrine and is firmly recognized in the majority of national arbitration laws and international legislation.116 Here, the main focus is on enhancing the jurisdiction of arbitral tribunals – i.e., it does not affect the jurisdiction of national courts to concurrently consider the same challenge.117 An arbitral tribunal’s ruling on its own jurisdiction (be it in the form of an interim or final award) would, nevertheless,

be subject to judicial review under otherwise-applicable standards of review.118 Still, this concurrent jurisdiction may result in parallel proceedings, and subsequently, conflicting decisions on the same issue of arbitral jurisdiction One might say that this

115 Gaillard E, Savage J (1999), supra at fn.1, p.406, para.671 The positive effect of the

compétence-compétence doctrine: challenging the existence or validity of the arbitration agreement will not prevent the arbitral tribunal from proceeding with the arbitration, ruling on its own jurisdiction and, if it retains

jurisdiction, making an award on the substance of the dispute, all without waiting for the outcome of any court action aimed at setting aside the award deciding the jurisdiction issue

116 Brekoulakis, S., “The Negative Effect of Compétence-Compétence: The Verdict has to be Negative”,

Queen Mary University of London, School of Law Legal Studies Research Paper, 2009, No 22/2009, supra

at fn.75, p.239 (“Brekoulakis (2009), supra at fn.115”)

117 Ibid, 13

118 Born G (2001), supra at fn.24, p.86

problem could be solved by reference to the doctrine of res judicata.119 Yet, it is worth

noting that the international res judicata effect of international arbitral awards is not

generally accepted.120 Eventually, it would be up to the decision makers (arbitrators and courts) to decide on the desirability of staying its own proceedings.121

b) Arbitrators are the first judge of their own jurisdiction – the negative effect

of the doctrine of compétence-compétence

Here, arbitrators have exclusive power to be the first to rule on challenges to the arbitration agreement, subject to subsequent judicial review Understood more broadly, this doctrine could grant arbitrators the exclusive power to be the first judges

of their jurisdiction Accordingly, this interpretation not only enhances the jurisdiction of the tribunal, but also restricts the jurisdiction of the courts National courts would have to refrain from considering the jurisdictional challenges aimed at the arbitration agreement until the arbitrators have had a chance to do so In other words, generally, national courts can only subsequently review the awards on jurisdiction rendered by the arbitrators (interim or final) under otherwise-applicable standards of review This is commonly referred to as the “negative effect” of the compétence-compétence doctrine,122 which imposes a rule of chronological priority

in favor of the arbitrators over the courts with regard to the determination of arbitral jurisdiction Basically, proponents of the negative effect of the doctrine of compétence-compétence are of the view that the doctrine has a dual effect: the positive effect which confers such a power on the arbitrators (as explained above), and the negative effect – a necessary consequence on the part of national courts,

119 Brekoulakis (2009), supra at fn.115, supra at fn.75, p.258 According to Black’s Law Dictionary, 9th edition, 1425, “res judicata” can be understood as “An affirmative defense barring the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series

of transactions and that could have been but was not raised in the first suit”

120 See Brekoulakis, S., The Effect of an Arbitral Award and Third Parties in International Arbitration: Res

Judicata Revisited, American review of International Arbitration, 2005, 16(1)

121 Ibid at fn.119

122 Gaillard, E., and Banifatemi, Y., Negative Effect of Compétence-compétence: The Rule of Priority in Favour of the Arbitrators In: Gaillard E, Pietro DD (eds), Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice, London, 2008, 257-273, p.259 at fn.4 (“Gaillard E and Banifatemi Y (2008)”) “This terminology was originally suggested by Emmanuel Gaillard

in 1994” See also Gaillard E, Savage J (1999), supra at fn.1, pp.401 et seq

which entails that they “should not, in parallel and with the same degree of scrutiny, rule on the same issue, at least at the outset of the arbitral process”.123 As a result of this effect, courts are generally required to limit their review of the arbitration

agreement at the pre-award stage (Stages 1 and 2 as described above) to only a prima

facie 124 determination that the agreement is not “null and void, inoperative or incapable of being performed”,125 or in some cases, to not perform a review at all during this stage.126 The policy considerations for this rule of chronological priority are said to be “the prevention of delaying tactics by the parties and the centralization

of litigation concerning the existence and validity of the arbitration agreement”.127

Currently, much of the controversy surrounding the doctrine of compétence focuses on this negative effect.128

compétence-c) Arbitrators are the first and final judge of their own jurisdiction

Here, arbitrators have exclusive power to rule on the challenges to the arbitration agreement, subject to very minimal or no judicial review This is arguably the broadest scope of compétence-compétence, where arbitrators can be seen as both the first and final judge of the challenge to its jurisdiction Technically, such an approach is thinkable if the parties’ specific agreement to grant arbitrators such an exclusive power is recognized by the relevant jurisdiction(s).129 Nevertheless, in most countries, the courts retain the last word on whether or not to exclude their jurisdiction

123 Gaillard E and Banifatemi Y (2008), supra at fn.121, p.259

124 According to Black’s law Dictionary, 9 th edition, p.1310, “prima facie” means “At first sight; on first

appearance but subject to further evidence or information” (adv.), or “Sufficient to establish a fact or raise a presumption unless disproved or rebutted” (adj.)

125 Gaillard E and Banifatemi Y (2008), supra at fn.121, p.259

126 For example, under the European Convention and French law, once an arbitral tribunal is constituted and arbitration proceedings are in session, courts are generally not allowed to review the arbitration agreement The French approach to the compétence-compétence doctrine will be discussed more in-depth in Chapter 2.3

127 Gaillard E and Banifatemi Y (2008), supra at fn.121, p.260

128 Gaillard E, Savage J (1999), supra at fn.1, p.406, para.671

129 In the U.S, for example, courts may give deference to an arbitrator’s jurisdictional decision upon finding that “the jurisdictional question” has clearly been given to the arbitrators through the parties’ agreement See, e.g, First Options of Chicago, Inc v Kaplan, 514 U.S 938 (1995), 1943 See also William Park (1996), “The Arbitrability Dicta in First Options v Kaplan: What Sort of Kompetenz-Kompetenz Has Crossed the

Atlantic?”, 12 Arb Int 137, 143 et seq However, in Germany, this approach has been long abandoned See also, Park (2007), supra at fn.67, pp.29 et seq

and uphold arbitrators’.130 Consequently, it is perhaps safe to say that this approach would be a rather rare occurrence in practice

Since third variation is a rather rarity, the discussion will be focused on the first two variations when divergent approaches adopted by various legal jurisdictions are

examined later on in Chapter 2

1.3 Compétence-compétence and Its Interrelation with the Doctrine of

Separability

1.3.1 The Doctrine of Separability in International Commercial Arbitration

As previously mentioned, there are typically two forms of arbitration agreement: arbitration clauses contained in the main contracts and submission agreements Generally, as a submission agreement is a separate piece of agreement, the performance of the submission agreement is independent of the performance of substantive obligations under the main contract.131 However, in reality, most arbitration agreements are contained in the form of an arbitration clause inserted in the main contract between the parties.132 This raises the question of whether an arbitration clause inserted in, for example, a sales contract between the parties can be considered an agreement autonomous and separable from this underlying contract This is an issue, because prior to the introduction of the separability doctrine, parties may allege the termination, invalidity, or non-existence of the underlying contract in disputes arising out of contractual relationships Accordingly, if the arbitration clause was deemed to simply be a part of the contract, where the allegations are justified, the arbitration clause would have to share the fate of the main contract As arbitrators’ jurisdiction must be based on a valid arbitration agreement, in this case, the arbitrators would no longer have the jurisdiction to hear the parties’ dispute and the matter would then have to be referred to state courts, despite the parties’ wish to have it resolved

130 Lew, Mistelis and Kroll (2003), supra at fn.52, p.339, para.14-32 See also, Park (2007), supra at fn.67, p.54

131 Lew, Mistelis and Kroll (2003), supra at fn.52, p.101, para.6-7

132 Ibid, para 6-8; Margaret L Moses (2012), supra at fn.44, p.19