Author: Jack Graves*
Published: August 2012
Once upon a time, arbitration was seen as a means of avoiding courts in resolving parties’ contract disputes. Today, however, an arbitration agreement all too often simply leads to a second dispute over the forum for resolving the first. This often obstructive skirmish – on the border between litigation and arbitration – arguably presents the single greatest threat to the effectiveness of commercial, business-to-business arbitration today. This threat is particularly acute in the context of international commercial arbitration, where recalcitrant parties may seek to invoke the jurisdiction of a broad array of national courts, with a broad variety of views regarding the proper role of courts with respect to the arbitral process. The primary tool for dealing with the interaction between national courts and the arbitral process is the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)1 (the “New York Convention” or “Convention”).
For over 50 years, the New York Convention has served two principle purposes, each of which relates to the enforcement of agreements to arbitrate claims in lieu of bringing them in court. Article II generally requires national courts to defer to agreed upon arbitration proceedings, and Article III generally requires national courts to recognize and enforce any resulting arbitration awards. This article will focus on the former. To what extent are national courts precluded from exercising jurisdiction over matters at least arguably subject to arbitration? This question requires a review of the “negative” aspect of “competencecompetence.” While “positive” competence-competence provides an arbitral tribunal with the power to decide its own jurisdiction, the negative version goes further in precluding a court from addressing this same issue – at least as a preliminary matter. This negative version is subject to significant variation under different national arbitration laws. Thus, parties challenging the jurisdiction of arbitrators will often bring parallel challenges in court, adding to the overall cost of resolving the original dispute and reducing the efficiency of the arbitral …
*Professor of Law, Touro College Jacob D. Fuchsberg Law Center, New York. I thank Stacie Strong and the Center for the Study of Dispute Resolution for the opportunity to present this article at a works-in-progress conference held at the University of Missouri School of Law, and I thank the conference attendees for all of the wonderful feedback I received. I also thank my colleague, Meredith Miller, for her continuing willingness to listen to, read, and offer constructive commentary upon many of the ideas contained in this article.