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Jurisdiction and the doctrine of Kompetenz Kompetenz

A tribunal should reflect on the existence and scope of its jurisdiction. Ordinarily, where there are concerns about the arbitrator’s jurisdiction, the parties will raise them. Parties who fail to raise jurisdictional objections timeously forfeit their right to do so at a later stage. However, even if none of the parties object to its jurisdiction, the tribunal may wish to determine the position. For example, a tribunal will want to satisfy itself that the referral to arbitration is bona fide. The tribunal may also want to establish if the dispute referred to it falls within the purview of the arbitration clause.

ARBITRATION INSIGHTS: WITH JACOB MUTEVEDZI

Frequently, the tribunal will have accepted its appointment prior to ascertaining its jurisdiction but once it is in a position to do so, the tribunal may decide to evaluate for itself whether it has jurisdiction. This is achieved by examining the arbitration agreement, the notice of arbitration and any other documentation relevant to the issue. If the tribunal is satisfied that it has jurisdiction it will proceed to hear the dispute. A party who objects to a tribunal’s jurisdiction is entitled to insist on a ruling on that question by the tribunal and is entitled to approach the High Court to determine the issue.

If the tribunal finds that it lacks jurisdiction, it will advise the parties to enable them to properly explore the issue, and if necessary, the parties can agree to an ad hoc arbitration to clothe the tribunal with the requisite jurisdiction. The tribunal may rule on its own jurisdiction, that is:

i) whether there is a valid arbitration agreement;

ii) whether the tribunal is properly constituted; and

iii) what matters have been submitted to arbitration in accordance with the arbitration agreement.

Consequently, a tribunal that is not satisfied that it has jurisdiction should inform the parties and propose a ruling on the issue. The parties are normally afforded an opportunity to make submissions before a ruling is made.

The doctrine of Kompetenz Kompetenz

As indicated in earlier articles, jurisdiction precedes a tribunal’s powers and the exercise of powers by an arbitrator presupposes the inherence of jurisdiction. However, statute has conferred an unusual jurisdiction on a tribunal which only arises if its jurisdiction is challenged. This is the competence to determine and rule on its own jurisdiction and is known as the doctrine of Kompetenz Kompetenz. According to Gaillard, E. and Savage, J. (eds.), Gaillard Fouchard Goldman on International Commercial Arbitration, Kluwer Law International, (1999: 651) the term Kompetenz Kompetenz originated from German legal terminology.

According to the Kompetenz Kompetenz doctrine, an arbitral tribunal has jurisdiction to consider and decide any disputes regarding its own jurisdiction,

subject to, in certain circumstances, subsequent judicial review. In Zimbabwe, Kompetenz Kompetenz has been codified in the Arbitration Act [Chapter 7:15] which incorporates the UNICITRAL Model Law. Article 16 (1) of the Model Law empowers an arbitral tribunal to rule on its own jurisdiction including any objections with respect to the existence or validity of an arbitration agreement. Article 16 (2) entitles the tribunal to rule on a jurisdictional plea either as a preliminary point or in an award on the merits. However, a tribunal’s decision is subject to appeal in the High Court within 30 days of the notification of the hearing. The decision of the High Court is not appealable.

No discourse on Kompetenz Kompetenz is complete without mentioning the doctrine of Separability. These principles function hand in glove. In his article,

“Separability and Competence-competence in International Arbitration: Ex Nihilo Nihil Fit? Or Can Something Indeed Come Out of Nothing”, 13, (1-4) American Review of international Arbitration, (2002) RH Smit describes Separability and Kompetenz Kompetenz as the “conceptual cornerstones” of international arbitration. Essentially, they both assist in answering the important question of who decides the jurisdiction of the arbitrator and seek to prevent premature judicial intervention in arbitral proceedings.

Separability basically provides that an arbitration agreement is separate from the main contract and it is not affected by the invalidity, resolution,
termination or even non-existence of the main agreement. SM Schwebel, in his article called The Severability of the Arbitration Agreement in International

Arbitration: Three Salient Problems, Cambridge, Grotius publications, (1987:5), observes that: “When the parties to an agreement containing an arbitration clause enter into an agreement, they conclude not one but two agreements, the arbitral twin of which survive any birth defects or acquired disability of the principal agreement.”

On the other hand, Kompetenz Kompetenz empowers the arbitral tribunal to decide on its jurisdiction. As O Susler points out in, “The Jurisdiction of the Arbitral Tribunal: A Transnational Analysis of the Negative of Competence-Competence”, 6 Macquarie Journal of Business Law (2009: 126), “The Competence-competence principle enables the tribunal to rule that an arbitration agreement is invalid and to issue an award that it lacks jurisdiction without contradicting itself.”

At this point, it should suffice to point out that that Kompetenz Kompetenz and separability are complementary doctrines. The principle of separability enables a tribunal to continue with the arbitral proceedings in the event that the validity of the main agreement is challenged. However, if it is the validity of the arbitration agreement itself that is directly challenged then the doctrine of Kompetenz Kompetenz is the one that enables the arbitral tribunal to proceed.

In practice, where an arbitral tribunal considers that it does have jurisdiction and insists on proceeding with the referral, a party who persists with a jurisdictional objection has various courses of action available to him:

i) he can refuse to take part in the arbitration and challenge the award after it has been made or resist its enforcement;

ii) he may seek a ruling from the arbitral tribunal on the question of jurisdiction in terms of Article 16 of the Model Law; and

iii) He may seek a determination from the High Court on the preliminary question of the arbitrator’s jurisdiction in terms of Article 16 (3) of the Model Law.

l Jacob Mutevedzi is a commercial lawyer and partner at Clairwood Chambers Attorneys and writes in his personal capacity. He can be contacted @ jmutevedzi@gmail.com

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