1115
Who Decides the Arbitrators'
Jurisdiction? Separability and
Competence-Competence in
Transnational Perspective
John J. Barceló III*
TABLE OF CONTENTS
I. INTRODUCTION .............................................................. 1116
II. THE "WHO DECIDES?" QUESTION AT DIFFERENT
STAGES OF THE COURT-ARBITRATION PROCESS............ 1118
III. DEFENDING PRIMA PAINT AND SEPARABILITY .............. 1119
A. Prima Paint and Ordinary Contract
Interpretation...................................................... 1119
B. Do First Options and Howsam Affect
Separability? ....................................................... 1121
IV. COMPETENCE-COMPETENCE ......................................... 1122
A. Positive and Negative Competence-Competence 1124
B. The Negative Effect Doctrine in
Transnational Law............................................. 1124
1. The French Approach............................ 1124
2. The 1961 Geneva Convention............... 1126
3. The UNCITRAL Model Law ................. 1127
4. The British Variation on the
Model Law.............................................. 1130
5. The German Variation on the
Model Law.............................................. 1131
6. The American Approach to Negative
Competence-Competence ...................... 1131
a. Domestic Arbitration ...................... 1131
b. International Arbitration ............... 1134
V. CONCLUSION.................................................................. 1136
________________________________________________________________
* John J. Barceló III, William Nelson Cromwell Professor of International and
Comparative Law, Cornell University Law School. Copyright  2003 by John J. Barceló
III. All rights reserved.
1116 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
I. INTRODUCTION
Separability and competence-competence1 are two of the best
known concepts in international commercial arbitration. They are
different, but often linked, because they share a common goal: to
prevent early judicial intervention from obstructing the arbitration
process. Both concepts address the question, "Who decides
arbitrability­courts or arbitrators?" but in different ways. I will
discuss those differences later in this comment.
In his excellent paper delivered at this Symposium, Everything
You Really Need to Know About "Separability" in Seventeen Simple
Propositions,2 Professor Rau focuses principally on separability. His
purpose is to defend separability in U.S. arbitration law from the
surprisingly common and even recent attacks leveled at it by U.S.
scholars and commentators.3 His defense is penetrating and
convincing.
This comment takes a different tack. It focuses primarily on
competence-competence and discusses the "who decides" problem
from a transnational perspective. Whereas the separability principle
has been adopted, with very much the same content, in most of the
worlďs legal orders,4 competence-competence functions differently
from country to country, though a general consensus may be
emerging. This comment focuses on competence-competence because
it is controversial and has more to say about the "who decides" issue.
I stress a transnational perspective out of the conviction that
international commercial arbitration can (and should) be studied, and
in fact is practiced, as a body of transnational law. One of the fielďs
most striking and fascinating features is that, in any given dispute,
the parties, their counsel, the arbitrators, and the applicable law are
generally drawn from several different national jurisdictions, and the
awarďs enforcement often involves legal proceedings in more than
one country. The field has transnational coherence, however, because
a surprisingly large number of countries apply the same major
principles and concepts. That uniformity derives principally from the
wide acceptance of the New York Convention5 and the influence of
________________________________________________________________
1. Kompetenz-Kompetenz in German, and compétence-compétence in French.
2. Alan S. Rau, Everything You Really Need to Know About "Separability" in
Seventeen Simple Propositions, Mar. 14, 2003 (paper delivered at this Symposium, to
be published in AM. REV. INŤL ARB.).
3. See id.
4. See id.; see also Sojuznefteexport v. JOC Oil, Ltd., 15 Y.B. COM. ARB. 384,
415-18 (1990) (Ct. App. Berm. 1990).
5. U. N. Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 [hereinafter New York
Convention]. The Convention and an up-to-date list of parties can be found at
2003] International Commercial ARBITRATION 1117
the UNCITRAL Model Law.6 The New York Convention now boasts
133 parties,7 and the Model Law has served as the paradigm for most
recently enacted national arbitration statutes.8
Of course there are areas of disuniformity, and they deserve
special attention. Variability can have advantages, for example, in
disclosing the potential benefits of mutations from the norm and in
allowing room for the expression of different national values and
cultures. Nevertheless, scholars and commentators can also be
expected to seek some form of informed consensus respecting the
most desirable direction the general uniformity in the field should
take. This comment strives for a modest contribution to that goal.
Section II introduces a simplifying framework and briefly
reviews well-known terrain: the policy concerns that underlie the
separability and competence-competence doctrines. Section III takes
up separability, in particular Professor Rau's penetrating defense of it
in U.S. law. Section IV turns to competence-competence, which
addresses the truly controversial aspects of the "who decides"
question in transnational arbitration law. Section V states a brief
conclusion.
When the United States adopts a modern arbitration statute
(which we can hope will be sooner rather than later)9 competencecompetence
will inevitably be on the agenda. What approach to the
doctrine should the United States take? As UNCITRAL continues to
review the efficacy of the Model Law in practice, should it consider
revising the Model Law's treatment of competence-competence? To
aid scrutiny of these issues, this comment seeks a better
understanding of how various legal orders approach the competencecompetence
principle and the policy justifications underlying the
differences.
http://www.un.or.at/uncitral. See also, UNCITRAL, Status of Conventions and Model
Laws, 36th Sess., U.N. Doc. A/CN.9/537 (2003).
6. U.N. Commission on International Trade Law [UNCITRAL], Model Law on
International Commercial Arbitration of 1985, U.N. GAOR, 40th Sess., Annex I, U.N.
Doc. A/40/17 (1985) [hereinafter Model Law], available at http://www.uncitral.org/
english/texts.
7. For a current list of parties, see the UNCITRAL website:
http://www.uncitral.org/english/status/status-e.htm.
8. Including the English Arbitration Act of 1996, reprinted in 36 I.L.M. 155
(1997); the German Arbitration Law of 1998 arts. 1025-66 ZPO; the Swedish
Arbitration Act of 1999, available at http://www.chamber.se/arbitration/english/laws/
skiljedomsla-gen_eng.html); the Indian Arbitration and Conciliation Act of 1996, in II
International Council for Commercial Arbitration, INTERNATIONAL HANDBOOK ON
COMMERCIAL ARBITRATION India: Annex I (Jan Paulsson, ed., 2000); and many others,
see UNCITRAL, Status of Conventions and Model Laws, 36th Sess., U.N. Doc.
A/CN.9/537 (2003) (listing 40 countries and 5 states of the United States as having
adopted legislation based on the Model Law).
9. See generally William Park, The Specificity of International Arbitration:
The Case for FAA Reform, 36 VAND. J. TRANSNAŤL L. 1243 (2003) (advocating
enactment of such a new, modern U.S. arbitration statute).
1118 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
II. THE "WHO DECIDES?" QUESTION AT DIFFERENT STAGES OF THE
COURT-ARBITRATION PROCESS
For purposes of analysis, this comment divides the courtarbitration
process into three stages. Stage 1 encompasses litigation,
generally at the outset of the dispute, over whether the court should
hear the dispute or send the parties to arbitration. Stage 2
encompasses decision making by arbitrators concerning whether to
hear the dispute or decline jurisdiction. Stage 3 encompasses court
review of an award (set-aside or recognition and enforcement)
respecting whether the arbitrators had good jurisdiction. The parties
may bypass Stage 1 altogether and go directly to Stage 2. Or Stage 1
and Stage 2 may proceed concurrently, with one party urging a court
to take jurisdiction and the other, an arbitral tribunal.
Stage 1 is generally the point at which judges and scholars ask
the "who decides" question. Who decides--court or arbitrator--
whether a dispute goes to arbitration or stays in court? If the parties
go directly to Stage 2, but one of them nevertheless challenges the
jurisdiction of the arbitral tribunal, the arbitrators will decide
whether they have jurisdiction. This, at a minimum, is what is meant
by competence-competence: the arbitrators are authorized to decide
their own jurisdiction, at least as an initial matter.
Sometimes the "who decides" question arises at Stage 3. The
arbitrators have decided they have jurisdiction, either in a
preliminary award or in the final award itself. When a court reviews
that award, in either a set-aside or a recognition and enforcement
proceeding, the court must decide how much weight to give the
arbitrators' decision upholding arbitral jurisdiction.10 They may give
it no weight at all (de novo review) or various levels of deference (from
affirming if the arbitrators' award is reasonable, to affirming if there
is any colorable justification for it, to affirming without second
guessing the arbitrators at all). Although the discussion below
occasionally deals with the "who decides" question at Stage 3, its
primary focus will be on Stage 1.
Stage 1 is crucial concerning whether arbitration is allowed to go
forward efficaciously or is obstructed by court intervention. At Stage
1, a party opposing arbitration may raise any of a series of legal
issues requiring court, rather than arbitrator, decision. These may
include any or all of the following claims: (1) the container contract is
invalid (for a reason that would not directly invalidate the arbitration
clause); (2) no arbitration agreement came into existence between the
parties; (3) an existing arbitration agreement is either formally
invalid (for example, not in writing) or materially invalid (for
________________________________________________________________
10. I do not discuss the issue of court review of a decision by arbitrators to
refuse jurisdiction. Although this is an important issue, it arises less frequently.
2003] International Commercial ARBITRATION 1119
example, violative of mandatory law); (4) a disputed issue is not
within the scope of the arbitration agreement; (5) mandatory law
prohibits a disputed issue, though within the scope of the parties'
arbitration agreement, to be arbitrated (a special type of material
invalidity respecting a specific issue fraught with public policy
concerns, such as (formerly) antitrust or securities fraud); (6) some
precondition for permissible arbitration has not been met (for
example, a time-limit on initiating arbitration); (7) the party seeking
arbitration has waived its right to arbitrate or is estopped from
claiming that right.
The greater the number of these claims required to be fully
litigated at Stage 1, the greater the potential for disruption of the
arbitration process­or, in other words, the greater the potential for an
obstructing party to frustrate a genuine agreement to arbitrate. Thus
at Stage 1, an extremely proarbitration legal order might send all of
these questions to the arbitrators, with no, or perhaps minimal
(prima facie), judicial scrutiny. But of course arbitration is not the
holy grail. Not all parties resisting arbitration are obstructionists. A
party should be entitled to its day in court unless it has agreed to
arbitrate. That is the competing value. A legal order must decide
what weight to give to these competing values and how to structure
the process to maximize overall value by reducing opportunities for
obstructionism while preserving legitimate claims for reasonably
prompt judicial decision. The doctrines of separability and
competence-competence operate at this tension point in a legal order.
III. DEFENDING PRIMA PAINT AND SEPARABILITY
A. Prima Paint and Ordinary Contract Interpretation
It is easy to see how the Prima Paint separability doctrine
relates to the "who decides" question, holding, in effect, that when
parties enter a main contract (container contract) and include in it a
broadly worded arbitration clause, a court will treat them as having
concluded two separate contracts, the container contract and an
arbitration agreement.11 This means that if a party challenges the
validity of the container contract (the first of the seven claims listed
above), a court should send that issue to the arbitrators as long as
nothing in the claim attacks the validity of the arbitration agreement
directly.
Articulated in this way, a challenge to the container contracťs
validity would not seem ipso facto to question the arbitrators'
________________________________________________________________
11. See generally Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395
(1967).
1120 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
jurisdiction. Separability discontents see such a claim as challenging
the legitimacy of arbitration, however, because they subscribe to the
logical proposition that if the container contract is invalid, everything
in it must also be invalid. "Nothing can come from nothing" is the
argument.
Professor Rau defends separability through a more sophisticated
line of analysis.12 His argument actually accepts that the containercontract-validity
issue bears on the arbitrators' jurisdiction, but for a
different reason than just articulated. Properly analyzed the claim
raises a question of the scope of the arbitration clause and the parties'
intent respecting scope. Did the parties intend to include within the
scope of their arbitration agreement a claim challenging the container
contracťs validity? Scope questions clearly implicate the arbitrators'
jurisdiction. Arbitrators have no jurisdiction over issues the parties
did not include within the scope of their arbitration agreement.
As Rau shows, answering the scope question requires a default
rule for interpreting a broadly worded arbitration agreement.13 The
separability doctrine chooses, as a default rule, presumptive inclusion
of the container-contract-validity question. Whereas Justice Fortas'
Prima Paint opinion expressly refers to proarbitration policy
considerations to justify separability,14 Rau shows that ordinary
notions of contract interpretation also support a default rule favoring
inclusion.15
A particularly good approach to choosing a default rule is to
select an outcome that rational parties in the same position as the
contracting parties would have chosen had they thought about the
specific issue. Rau argues that such an approach would send the
container-contract-validity dispute to the arbitrators for several
reasons, including these two: (1) Any decision on this issue is likely to
be closely intertwined with other merits-based issues in the container
contract that the parties clearly intended to have arbitrated, and (2)
it is efficient to have one decision making process, rather than a split
process (one stop adjudication).16 Thus, Rau is able to justify
separability with ordinary contract interpretation reasoning, not
sleight of hand or legal legerdemain, and not even proarbitration
policy considerations.17
________________________________________________________________
12. Rau, supra note 2.
13. Rau, supra note 2.
14. See Prima Paint, 388 U.S. at 404 (referring to the "clear congressional
purpose that the arbitration procedure, when selected by the parties to a contract, be
speedy and not subject to delay and obstruction in the courts").
15. Rau, supra note 2.
16. Rau, supra note 2.
17. Professor Rau of course acknowledges that pro-arbitration policy supports
the separability doctrine. See Rau, supra note 2.
2003] International Commercial ARBITRATION 1121
B. Do First Options and Howsam Affect Separability?
Surprisingly, at least one separability discontent, Professor
Reuben, sees First Options18 and perhaps even Howsam19 as
prefiguring Prima Painťs demise.20 Rau will have none of this and
argues cogently and convincingly that First Options poses no threat
to Prima Paint.21 I would add that Howsam, in particular, marches in
the opposite direction--that is, in the direction of giving more, not
less, power to the arbitrators.
Recall that First Options holds questions of "arbitrability" to be
presumptively for courts, not arbitrators.22 A dispute is "arbitrable" if
the parties have agreed to arbitrate it. Thus, issues of the existence,
validity, and scope of the arbitration agreement are all "arbitrability"
questions--presumptively for courts.
How could such a decision challenge Prima Paint? As Professor
Rau says, Reuben's argument seems to require one to assume in
advance that Prima Paint is wrong.23 The reasoning might be as
follows. If the container contract is invalid, everything in it, including
the arbitration clause is invalid. Hence, if the container contract is
invalid, the arbitrators have no jurisdiction. Thus, the validity of the
container contract is an "arbitrability" question presumptively for the
court. If this is in fact the reasoning, it is circular and unpersuasive.
But Professor Reuben can be read as saying something different.
First Options requires actual, not implied, consent to arbitrate. Hence
First Options undercuts Prima Paint because Prima Paint relies on
implied consent to arbitrate.24 This reasoning, however, misses an
important part of the First Options holding. First Options states
expressly that the presumption is reversed on questions of scope. If
the parties have agreed on a broad arbitration clause, an issue
arguably includable within its scope is to be included unless the
parties clearly exclude it. Thus the scope question--an arbitrability
issue--is in fact decided by a court, but the court must use a
presumption favoring inclusion. That is precisely what Prima Paint
did in adopting the separability doctrine.
How Howsam can be seen as threatening Prima Paint is more
obscure to me. Professor Reuben seems to reason as follows. Howsam
clarifies what the arbitrability concept in First Options means. After
________________________________________________________________
18. First Options of Chicago v. Kaplan, 514 U.S. 938 (1995).
19. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002).
20. See Richard C. Reuben, First Options, Consent to Arbitration, and the
Demise of Separability: Restoring Access to Justice for Contracts with Arbitration
Provisions, 56 SMU L. REV. 819, 870-72 (2003).
21. Rau, supra note 2.
22. First Options, 514 U.S. at 943.
23. See Rau, supra note 2.
24. See Reuben, supra note 20, at 860-61.
1122 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
Howsam we know that the following questions are classified as
"procedural arbitrability" issues: whether a time limit for bringing a
claim has been observed (the precise issue in Howsam) and whether a
party has waived its right to arbitrate.25 Howsam holds that these
are special "gateway" questions going presumptively to arbitrators,
not to courts. This clarification reinforces, however, the need for
"actual consent" on "substantive arbitrability" issues--that is,
questions respecting whether there really is an agreement to
arbitrate. Such issues go presumptively to courts and presumably
include the container-contract-validity issue.26
Here, though, we are led back to the question discussed above
under First Options of how the container-contract-validity issue is to
be seen as an arbitrability question presumptively for courts. Because
the container-contract-validity issue is actually one of scope, First
Options reverses the presumption and sends the issue to the
arbitrators. That, of course, describes the Prima Paint separability
outcome. Like First Options, Howsam poses no threat to Prima Paint.
Indeed, Howsam is surely proarbitration in outlook. It
empowers arbitrators, at the expense of courts, and not the other way
around. The Supreme Courťs steady march in a proarbitration
direction can be traced from Prima Paint, to Mitsubishi,27 to Sky
Reefer,28 to First Options (the reverse presumption on scope) to
Howsam. Whether that march will carry the Court to a robust
competence-competence doctrine is more doubtful. The discussion at
the end of the next section addresses that issue.
IV. COMPETENCE-COMPETENCE
Whereas separability sends only the first of the seven issues
listed in Section II to the arbitrators, competence-competence may
send the other six issues to them as well, following no, or only prima
facie, judicial scrutiny. Under a robust competence-competence
doctrine even issues of the existence and validity of the arbitration
agreement may go initially to the arbitrators. Competencecompetence
thus addresses the "who decides" question on a broader
scale and is more central to resolving the policy tension between
protecting arbitration from obstruction, on one hand, and preserving
legitimate disputes over arbitrator jurisdiction for a prompt court
________________________________________________________________
25. Howsam's treatment of waiver is technically dictum. Howsam v. Dean
Witter Reynolds, Inc., 537 U.S. 79, 79-80 (2002).
26. See Reuben, supra note 20, at 860-82.
27. See generally Mitsubishi Motors Corp. v. Soler, 473 U.S. 614 (1985); Scherk
v. Alberto-Culver Co., 417 U.S. 506 (1974).
28. See generally Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515
U.S. 528 (1995).
2003] International Commercial ARBITRATION 1123
hearing, on the other. Competence-competence is also the more
controversial of the two "who decides" doctrines. Whereas separability
is universally accepted, competence-competence is controversial and
has spawned a range of different national responses.
At several points Professor Rau dismisses competencecompetence--not
his principal focus--as merely a question of
timing.29 By that he means that even if one allows arbitrators to
decide their own jurisdiction at the outset, courts are not completely
displaced. They will have the final say at the award enforcement
stage, Stage 3, and judicial review at that stage may be de novo.
Although this observation is technically correct, I believe it
undervalues the importance of competence-competence.
Even if Stage 3 review is available on a de novo basis, whether
courts or arbitrators are the preferred decision makers at Stage 1
impacts the effectiveness of arbitration. To the extent that courts are
preferred outright and without qualification, parties opposing
arbitration have an incentive to raise as many of these Stage 1
judicial questions as possible. This can tie up arbitration significantly
and charge courts with decisions that may preempt the merits.
Moreover, the availability of de novo judicial review at Stage 3 does
not truly undercut a number of consequences that flow from early
arbitrator decision making. First, if the arbitrators' award is
convincing, there may never be a Stage 3. The losing party may
prefer to pay or negotiate a settlement. Second, even if Stage 3 review
is de novo, a court will not confront a tabula rasa. A well-reasoned
award can strongly influence the judicial outcome. Third, and
perhaps most important, in international arbitration an award set
aside at the seat may nevertheless be enforced in another
jurisdiction.30 Thus, it matters whether courts stay their hand at
Stage 1 and allow arbitrators to proceed to an award.
________________________________________________________________
29. Rau, supra note 2.
30. Note also that if arbitration is to take place outside of the territory of the
court ordering the parties to arbitrate, the country where the ordering court sits will
not exercise set-aside jurisdiction. Set-aside jurisdiction is generally vested in the
courts of the seat of arbitration. Thus, even if the ordering courťs law provides for de
novo review, that law will not apply in a set-aside proceeding. The final award will also
not necessarily come within the ordering courťs jurisdiction, because the award
creditor may choose to seek recognition and enforcement elsewhere. Cf. Compagnie de
Navigation et Transports SA v. Mediterranean Shipping Co. SA, 21 Y.B. INŤL ARB.
690, 694-95 (DTF 1996) (holding that court review at Stage 1 should be complete and
not merely prima facie, when arbitration is to take place outside of Switzerland--i.e.,
when New York Convention Article II(3) applies). See also, Willam Park, The
Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz-Kompetenz Has
Crossed the Atlantic?, 12 ARB. INŤL 137, 150-51 (1996) (discussing Compagnie de
Navigation et Transports and explaining the result as apparently based on a Swiss
courťs inability to guarantee itself a role in judicial review when arbitration takes
place outside of Switzerland).
1124 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
A. Positive and Negative Competence-Competence
Most discussions of competence-competence, especially in U.S.
literature, treat only the positive aspect of the doctrine, which is a
simple and uncontroversial notion. It means that, at Stage 2,
arbitrators are empowered to rule on their own jurisdiction; they are
not required to stay the proceeding to seek judicial guidance.
The doctrine has another, much more consequential aspect,
known as the negative effect of competence-competence. It originated
in French law, which is well known for its proarbitration character.31
The negative effect doctrine holds that in order to allow arbitrators to
rule on their own jurisdiction at Stage 2 as an initial matter, court
jurisdiction at Stage 1 should be constrained.
The core challenge underlying the doctrine is to find the right
amount of and context for court restraint. A legal order needs the
right balance between avoiding arbitration-obstructing tactics at
Stage 1 and protecting parties from being forced to arbitrate without
their legitimate and genuine consent. Because this is a complex issue,
a number of procedural permutations have surfaced in different
countries--primarily in Europe. The next subsection first discusses
the leading approaches and the justifications for them and then closes
with an assessment of where U.S. law stands on these issues.
B. The Negative Effect Doctrine in Transnational Law
1. The French Approach32
The negative competence-competence principle was codified in
French law with the 1981 enactment of Article 1458 of French New
Code of Civil Procedure:
Whenever a dispute submitted to an arbitral tribunal by virtue of an
arbitration agreement is brought before the court of the state, such
court shall decline jurisdiction. If the arbitral tribunal has not yet been
seized of the matter, the court should also decline jurisdiction unless
the arbitration agreement is manifestly null.33
Although Article 1458 concerns domestic arbitration in France, the
principle has been extended by court decision to international
arbitration.
The French approach turns on two principal considerations.
First, if an arbitration tribunal has already been seized of the matter,
the French court will refuse jurisdiction and leave questions
________________________________________________________________
31. See discussion of the French approach supra Section IV.B.
32. See generally FOUCHARD, GAILLARD, GOLDMAN, ON INTERNATIONAL
COMMERCIAL ARBITRATION  661-88 (Emmanuel Gaillard & John Savage eds., 1999).
33. See generally id.  672.
2003] International Commercial ARBITRATION 1125
respecting the arbitration agreemenťs existence, validity and scope to
the arbitrators.34 Second, if an arbitration tribunal has not been
seized, the court will undertake a limited scrutiny of those questions
and will retain jurisdiction only if the arbitration agreement is
manifestly null. Thus, if the court finds prima facie existence, validity
and scope, it will refer the parties to arbitration. After an award is
rendered--that is, at Stage 3--French courts will review the
arbitrators' jurisdiction de novo.35
The primary policy justification for this approach is to prevent a
party from obstructing or delaying arbitration.36 The French doctrine
allows greater court scrutiny if a party goes to court before the case
has been presented to arbitrators, on the theory that such a party is
more likely to be acting in good faith with legitimate concerns about
the arbitrators' jurisdiction.37 But even here, initial court review is
only to establish a prima facie case for arbitration. If this prima facie
test is met, or if an arbitral tribunal is already seized, the arbitrators
themselves must be the first to give full consideration to
jurisdictional challenges. Since most arbitration statutes and
institutional rules provide for the arbitrators to render a preliminary
award on jurisdiction,38 in most cases such a preliminary award will
not be long in coming. Such an early award on jurisdiction can then
be the subject of annulment proceedings at the seat of arbitration. If
the seat is in France, the annulment review will be de novo.
Thus, in the vast majority of cases the arbitral process will go
forward, but parties with a legitimate basis for objecting to the
________________________________________________________________
34. See generally id.  661-88.
35. Concerning international awards in French law, recognition and
enforcement will be rejected "[i]f there is no valid arbitration agreement or the
arbitrator ruled on the basis of a void or expired agreement. . . ." N.C.P.C. art. 1052
(Fr.), reprinted in Jean-Louis Devolve, ARBITRATION IN FRANCE: THE FRENCH LAW OF
NATIONAL AND INTERNATIONAL ARBITRATION 86 (1982). See also Arab Republic of
Egypt v. Southern Pacific Properties, Ltd. & Southern Pacific Properties (Middle East),
Ltd., 23 INŤL LEGAL MAŤL 1048, 1061 (1984) (setting aside an award because the court
found de novo that Egypt was not a party to the arbitration agreement).
36. See Gaillard, supra note 32,  679-80. A second policy reason underlying
the French approach is to preserve the exclusive jurisdiction of the courts of appeal in
France for review of arbitral awards. The negative competence-competence doctrine
delays de novo judicial review until Stage 3, and in France that review occurs before
the courts of appeal. If at Stage 1 French courts took jurisdiction for full (not just prima
facie) review of an arbitration agreemenťs existence and validity, such a review would
take place initially before a first instance court, not a court of appeal. See Gaillard,
supra note 32,  681. This policy consideration is apparently shared by Switzerland,
see id., but may not be of much concern in many jurisdictions.
37. See Gaillard, supra note 32,  680.
38. Respecting arbitration statutes, see Model Law, supra note 6, art. 16(3).
Respecting institutional rules, see American Arbitration Association International
Rules of 2001, art. 15(3), available at http://www.adr.org/ftp; Arbitration Rules of the
London Court of International Arbitration of 1998, art. 23.3, available at
http://www.lcia-arbitration.com/lcia.
1126 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
arbitrators' jurisdiction will have an opportunity, after only moderate
delay, to make their case to a judge. Presumably those with
principally obstructionist motives, who might consider such
jurisdictional challenges at Stage 1 cost-justified, could reach a
different conclusion at Stage 3--especially in the face of a wellreasoned
award.
A problem arises, however, where the arbitrators take advantage
of the discretion arbitration statutes and institutional rules generally
accord them and delay their decision on jurisdiction until the final
award. They might do so, for example, either out of lack of sensitivity
to the consequences of delaying judicial review or because the
questions involved are so intertwined with the merits that a full
proceeding is needed to resolve them. Even considering the possibility
that the arbitrators might not rule on jurisdiction until the final
award, one might still prefer the French solution. In the first place,
such cases presumably will not be plentiful. But even where they
arise, the party resisting arbitration for sound reasons presumably
will ultimately prevail before a court most of the time. In many legal
systems the prevailing party will be able to recoup the arbitration
and litigation costs against the losing party. (A special rule allowing
this result would seem appropriate in legal systems that would not
normally allow it.) The party preferring arbitration who ultimately
loses will of course suffer the wasted cost of the arbitral proceeding,
but one might argue that this is the concomitant risk of proceeding
with arbitration in the face of a strong jurisdictional challenge.39
2. The 1961 Geneva Convention40
If parties to an arbitration agreement have their habitual
residence or seat in a contracting party to the 1961 Geneva
Convention on International Commercial Arbitration,41 a version of
the negative competence-competence doctrine, going part way toward
the French approach, will apply. Article VI(3) of that convention
provides:
Where either party to an arbitration agreement has initiated
arbitration proceedings before any resort is had to a court, courts of
Contracting States subsequently asked to deal with . . . the question
________________________________________________________________
39. It is worth noting in this context that the 1996 English Arbitration Act
approach to negative competence-competence, discussed more fully in Section IV below,
would have the advantage of allowing a party favoring arbitration but concerned about
such risks to agree with the party opposing arbitration to have the matter resolved in
advance by a court.
40. European Convention on International Commercial Arbitration of 1961,
484 U.N.T.S. 349.
41. As of February 2002, there were 28 parties to the 1961 Geneva Convention.
An up-to-date list of state parties can be found at http://untreaty.un.org/
ENGLISH/bible/englishintrnetbible/partI/chapterXXII/treaty2.asp.
2003] International Commercial ARBITRATION 1127
whether the arbitration agreement was non-existent or null and void or
had lapsed, shall stay their ruling on the arbitrator's jurisdiction until
the arbitral award is made, unless they have good and substantial
reasons to the contrary.42
On its face this provision is not as aggressive in favoring
arbitration as is the French approach. No negative competencecompetence
effect arises at all if a court proceeding occurs before
arbitration is initiated. The logic here must be that such first-filed-incourt
cases are more likely to involve legitimate objections to arbitral
jurisdiction, rather than dilatory or obstructionist tactics. The latter
are more likely to surface and seem cost-justified to a respondent
fishing for a defense or hoping for delay after arbitration is initiated.
Given this reasoning, the 1961 Geneva Convention trigger point
(initiation of arbitral proceedings)43 seems more rational than that of
French Article 1458 (when the arbitrators are seized).44 From the
French perspective one might argue that considerable delay could
follow the mere initiation of arbitration because empanelling
arbitrators is often time-consuming. This could delay any preliminary
award on jurisdiction and corresponding court review. The countering
consideration is that even if a party has initiated arbitral
proceedings, Article VI(3) seems to authorize prima facie court
scrutiny of the agreemenťs existence and validity.45 If a court cannot
find even a prima facie arbitration agreement binding the parties,
that would surely be "a good and substantial reason" for a court to
proceed to the merits.46 In France, even prima facie scrutiny is barred
if arbitrators have been seized,47 but in such cases a preliminary
award on jurisdiction should generally not be far behind.
3. The UNCITRAL Model Law
Two different provisions of the Model Law are relevant to the
negative competence-competence doctrine­Article 8(1) and Article
16.48 Article 8(1) deals directly with a judicial decision at Stage 1
respecting the existence of a valid arbitration agreement:
A court before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party so requests not
later than when submitting his first statement of the substance of the
dispute, refer the parties to arbitration unless it finds that the
________________________________________________________________
42. European Convention on International Commercial Arbitration of 1961,
484 U.N.T.S. 349, art. VI(3) (1961)
43. See id.
44. N.C.P.C. art. 1458.
45. European Convention on International Commercial Arbitration of 1961,
supra note 40, art. VI(3).
46. See Gaillard, supra note 32,  674.
47. N.C.P.C. art. 1458.
48. Model Law, supra note 6, arts. 8(1), 16.
1128 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
agreement is null and void, inoperative or incapable of being
performed.49
On its face the language "unless it finds that the agreement is
null and void, inoperative or incapable of being performed" could be
read to authorize a full judicial determination of the arbitration
agreemenťs existence and validity. The legislative history
significantly buttresses that view. During the early 1980s, after
enactment of the 1981 revision of the French Code of Civil Procedure,
the Model Law drafters specifically refused to add the word
"manifestly" before "null and void."50 The intent of that proposed
addition was to limit the court to a prima facie finding that a valid
arbitration agreement exists. The drafters apparently preferred,
however, for the court to "settle" the issue before referring the parties
to arbitration.51
One consideration cuts the other way and introduces the
possibility of ambiguity. It is the way in which Article 8(1) tracks
identically the wording of the New York Convention, Article II(3):
"unless [the court] finds that the said [arbitration] agreement is null
and void, inoperative, or incapable of being performed."52 One of the
leading commentators on the drafting of the New York Convention
has observed that the pro-enforcement bias of the Convention should
lead courts construing Article II(3) to accept the arbitration
agreemenťs invalidity "in manifest cases only."53 Indeed, Swiss
courts have apparently interpreted language in the 1987 Swiss
Private International Law Act, virtually identical to New York
Convention Article II(3), as requiring only a prima facie verification
of the arbitration agreemenťs existence and validity at Stage 1.54
________________________________________________________________
49. Model Law, supra note 6, art. 8(1).
50. HOWARD M. HOLTZMANN & JOSEPH E. NEUHAUS, A GUIDE TO THE
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION: LEGISLATIVE
HISTORY AND COMMENTARY 303 (1989).
51. Id.
52. The New York Convention states:
The court of a Contracting State, when seized of an action in a matter in
respect of which the parties have made an agreement within the meaning of
this article, shall, at the request of one of the parties, refer the parties to
arbitration, unless it finds that the said agreement is null and void, inoperative
or incapable of being performed.
New York Convention, supra note 5, art. II(3)
53. "Having regard to the `pro-enforcement bias' of the Convention, the words
[of Article II(3)] should be construed narrowly, and the invalidity of the arbitration
agreement should be accepted in manifest cases only." ALBERT J. VAN DEN BERG, THE
NEW YORK ARBITRATION CONVENTION OF 1958 155 (1981).
54. See Gaillard, supra note 32,  675 (citing at n.136 Swiss Fed. Trib., Apr. 29,
1996, Fondation M. v. Banque X., 1996 BULL. ASA 527, and the note by C.U. Mayer at
361; 1996 REV. SUISSE DR. INT. ET DR. EUR. 586, and observations by F. Knoepfler).
2003] International Commercial ARBITRATION 1129
Model Law Article 16 deals more directly with the competencecompetence
principle. Whereas, Article 16(1) codifies the positive
competence-competence concept,55 Articles 16(3) and 8(2) go further
and adopt at least a partial negative competence-competence
doctrine. Article 16(3) reads:
The arbitral tribunal may rule on a plea . . . [that it does not have
jurisdiction] either as a preliminary question or in an award on the
merits. If the arbitral tribunal rules as a preliminary question that it
has jurisdiction, any party may request, within thirty days after having
received notice of that ruling, the court specified in article 6 to decide
the matter, which decision shall be subject to no appeal; while such a
request is pending, the arbitral tribunal may continue the arbitral
proceedings and make an award.56
Article 8(2) reads: "Where an action . . . [in a matter that is subject to
an arbitration agreement] has been brought, arbitral proceedings
may nevertheless be commenced or continued, and an award may be
made, while the issue is pending before the court."57
These provisions certainly do not codify a French-version,
negative competence-competence doctrine. At the same time,
however, they clearly accommodate it. The legislative history shows
that the doctrine was controversial.58 The adopted text was a
compromise.59 Article 8(2) allows arbitral proceedings to go forward,
despite court consideration of the arbitrators' jurisdiction.60 Thus, the
court might be encouraged to defer to the arbitrators entirely or to
give the arbitration agreement only prima facie scrutiny at Stage 1.
Article 16(3) further encourages this outcome by allowing, even
encouraging, arbitrators to rule on their jurisdiction as a preliminary
question and providing for rapid, unappealable judicial review of that
decision. Indeed, in jurisdictions that have adopted the Model Law,
some courts seem to have read the negative competence-competence
principle into Article 16.61
________________________________________________________________
55. "The arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement." Model
Law, supra note 6, art. 16(1).
56. Model Law, supra note 6, art. 16(3).
57. Model Law, supra note 6, art. 8(2).
58. See Report of the United Nations Commission on International Trade Law
on the Work of Its Eighteenth Session, U.N. GAOR, 40th Sess. Supp. No. 17, Annex, at
1 U.N. Doc. A/40/17 (1985), reprinted in 1 MODEL ARB. L. Q. REP. 101, 134 (1995). Some
participants favored the French approach under which a court should stay its
consideration of the arbitrators' jurisdiction if the arbitration were underway (to avoid
dilatory tactics). Others felt that a court seized of the jurisdiction issue should decide it
(to avoid the cost of proceedings lacking jurisdiction). Id.
59. See HOLTZMANN & NEUHAUS, supra note 50, at 486.
60. Model Law, supra note 6, art. 8(2).
61. See Pacific Inťl Lines Ltd. v. Tsinlien Metals & Minerals Co., 18 Y.B. INŤL
ARB. 180, 185-86 (S.C. H.K. 1992) (interpreting Article 16 as requiring that the court
give only a prima facie consideration to whether a valid arbitration agreement exists,
leaving to the arbitrators a full examination of that issue). See also Rio Algom Ltd. v.
1130 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
4. The British Variation on the Model Law62
The British Arbitration Act of 1996, which is based on the Model
Law, contains the standard Model Law Article 8(1) provision
requiring a court to stay legal proceedings "unless satisfied that the
arbitration agreement is null and void, inoperative, or incapable of
being performed."63 The negative competence-competence issue here
concerns whether "unless satisfied" entails only a prima facie review.
Indeed, it seems arguable that "unless satisfied" is closer to "unless it
is manifest" than is the Model Law terminology "unless it finds."64
The true innovation in the British Act occurs in Sections 30-32.65
Like the Model Law, the British Act allows the arbitrators to render a
decision on jurisdiction either in a preliminary award or in the final
award.66 To deal with the difficulty noted above concerning the
possibility that arbitrators might abuse that discretion and refuse to
render a preliminary award, and thus delay judicial review, the
British Act allows the parties by agreement to force the arbitrators to
decide jurisdiction preliminarily.67 The party opposing arbitration
could have no objection to such a procedure. Thus, the party favoring
arbitration but concerned about wasteful proceedings would control,
in effect, whether to insist on an early arbitrator decision on
jurisdiction followed by rapid court review.
The British Act also protects the legitimate interests of the party
opposing arbitration.68 Even before the arbitrators render a decision
on jurisdiction, a party may petition a court for an immediate
determination of the jurisdictional issues. The court must render a
decision if the arbitrators agree to the petition (or alternatively if all
the parties agree). The arbitrators will presumably agree only if they
conclude that dilatory tactics are not involved and the issue is truly a
close question. If only the arbitrators have agreed, but not the other
party or parties, then the court itself must also be satisfied that there
are good reasons for it to intervene.69
Sammi Steel Co., 18 Y.B. INŤL ARB. 166, 170-71 (Ont. Ct. Justice 1991) (stating in
dictum that Model Law Articles 8 and 16 mean that the arbitrators are to decide the
arbitration agreemenťs existence and validity in the first instance, with court review
to follow).
62. For a discussion favoring the French, over the British, approach to negative
competence-competence, see Gaillard, supra note 32,  682.
63. Arbitration Act, 1996, § 9(4) (Eng.), reprinted in 36 I.L.M. 155 (1997).
64. Model Law, supra note 6, art. 8(1).
65. Arbitration Act §§ 30-32.
66. Arbitration Act § 30(1), (2).
67. Arbitration Act § 31(5).
68. Arbitration Act § 32(1).
69. Arbitration Act § 32(1), (2).
2003] International Commercial ARBITRATION 1131
5. The German Variation on the Model Law
The German law of Kompetenz-Kompetenz prior to the new 1998
German Arbitration Act was relatively unique, or at least arguably
so.70 Some commentators maintain that during the pre-1998 period if
the parties expressly provided in the arbitration clause that the
arbitrators had the power to decide their own jurisdiction, then this
provision would exclude all judicial scrutiny of the question, even at
Stage 3.71 Whether or not this was ever an accurate description of
German law, it is certainly not an accurate description today because
the 1998 German Arbitration Act is now based on the Model Law.
The new German statute's major variation from the Model Law
respecting negative Kompetenz-Kompetenz arises in Section 1032(2),
which is the German equivalent of Model Law Article 8.72 Under
1032(2) a German court may only decide the arbitrators' jurisdiction
if requested to do so before "the arbitral tribunal is constituted." In
this respect it follows the French approach.73 On the other hand, at
least one commentator has maintained that when a court is properly
seized of the jurisdictional issue, it is to make a full determination,
not merely a prima facie one, as required in French law.74
Section 1040 of the new German statute essentially follows the
provisions of Model Law Article 16.75 One difference is that the
German law expressly states a preference for the arbitrators to decide
their jurisdiction in an interim award. That award would of course be
subject to immediate set-aside proceedings.
6. The American Approach to Negative Competence-Competence
a. Domestic Arbitration
First Options and Howsam are the leading cases delimiting the
American approach to negative competence-competence, though the
________________________________________________________________
70. See Klaus P. Berger, The New German Arbitration Law in International
Perspective, 26 FORUM INTERNATIONALE 8-9 (2000).
71. See id.; see also, Gaillard, supra note 32, at 396-97 (citing other
authorities); Klaus P. Berger, Germany Adopts the UNCITRAL Model Law, 1 INŤL
ARB. L. REV. 121, 122 (1998).
72. § 1032 Nr. 2 ZPO (F.R.G.).
73. There is not much practical difference between the German triggering point
(constitution of the arbitral tribunal), § 1032 Nr. 2 ZPO, and the French one (when the
arbitral tribunal is seized of the matter). N.C.P.C. art. 1458 (Fr.).
74. See Peter Schlosser, La nouvelle législation allemande sur ľarbitrage, 1998
REV. ARB. 291, 298.
75. § 1040 ZPO (F.R.G.).
1132 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
opinions do not use this terminology.76 These precedents deal with
domestic arbitration in the United States. The discussion in the
following subsection will address whether the distinction between
domestic and international arbitration is important. First Options
rules that arbitrability questions--such as the arbitration
agreemenťs existence and validity--are presumptively for courts.77
But it also reverses that presumption on scope issues because in case
of doubt a merits-based issue goes to arbitration. Howsam clarifies
that "procedural arbitrability" issues, such as time limits on a claim
and waiver, are also presumptively for arbitrators.78
That First Options was decided at Stage 3 is of no consequence.
By holding that a court should review existence and validity
questions de novo, First Options implicitly held (one could call it
dictum) that at Stage 1 courts should decide those issues before
sending the dispute to the arbitrators. Howsam, which arose at Stage
1, certainly treats First Options as having so decided.
From these decisions, one can draw several conclusions
respecting the content of a U.S. negative competence-competence
doctrine. First, the presumption in First Option is rebuttable. Though
this is true,79 it should not be misunderstood. One can imagine a
future litigant arguing rebuttal in any of the following situations: (1)
the parties include a competence-competence clause in the arbitration
agreement; (2) they agree to be bound by the rules of an arbitration
institution, rules that incorporate the competence-competence
principle;80 (3) they agree to arbitrate in a Model Law jurisdiction and
hence implicitly include the Model Law's competence-competence
provisions in their agreement. In each of these cases a rebuttal claim
would amount to bootstrapping.81 Where a party directly attacks the
arbitration agreement itself, a court must find that the agreement
exists and is valid before its provisions can have effect.82
________________________________________________________________
76. See generally First Options of Chicago v. Kaplan, 514 U.S. 938 (1995);
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002).
77. First Options, 514 U.S. at 944.
78. Howsam, 537 U.S. at 84-85.
79. At least the First Options Court calls its rule one of "presumptive"
preference for court jurisdiction. Technically of course this is dictum. See Park, supra
note 30, at 141-42 (labeling this aspect of First Options as dictum).
80. See UNCITRAL Arbitration Rules G.A. Res. 98, U.N. GAOR, 21st Sess.
Supp. No. 17, U.N. Doc. A/RES/31/98 art. 21 (1976); American Arbitration Association
International Rules of 2001, art. 15 (2001), available at http://www.adr.org; London
Court of International Arbitration Rules of 1998 art. 23 (1998), available at
http://www.lcia-arbitration.com/lcia/arb/uk.htm.
81. Professor Park reaches this conclusion in Park, supra note 30, at 147.
82. It is interesting that French commentators have not tried to explain the
French doctrine as deriving from the parties' agreement, but rather from national
arbitration law at the arbitral seat or where recognition and enforcement is sought. See
Gaillard, supra note 32,  658. Presumably the point should be stated even more
2003] International Commercial ARBITRATION 1133
A non-bootstrapping rebuttal of the First Options presumption
could presumably take place in two scenarios. Scenario One would
occur if, after a dispute arises, involving both a merits-based and a
related arbitrability dispute, the parties enter into an agreement to
submit the entire dispute to arbitration. Scenario Two would occur
where the parties enter a general agreement (perhaps called a
"Memorandum to Agree") containing an arbitration clause
committing them to arbitrate all disputes, including arbitrability
issues, arising out of or related to their obligation to negotiate in good
faith for the formation of future agreements containing arbitration
clauses.83
A second conclusion from First Options is that absent rebuttal of
the anti-arbitration presumption--and any such rebuttal will surely
be very rare--existence and validity questions will not be subject to a
negative competence-competence doctrine in the United States. This
conclusion is not affected by whether one party has initiated arbitral
proceedings or whether arbitrators have been seized of the matter.
Court jurisdiction to decide arbitrability at Stage 1 will also be full
and not limited by a prima facie standard.
A third conclusion is that scope questions, though involving
arbitrability, will as a practical matter go to the arbitrators. Perhaps
a better way of putting the consequence of First Options' reverse
presumption on scope questions is that a court will almost always
decide to include a disputed merits-based issue and hence will send
that merits-based issue to the arbitrators. But, once the arbitrators
get the dispute, they would presumably be entitled to reopen and
decide the scope issue for themselves, though it seems highly unlikely
that they would decide to exclude a merits-based issue that a U.S.
court had previously found includable.84
Fourth, because of Howsam, "procedural arbitrability" issues are
subject to a negative competence-competence outcome that is
probably stronger than would be obtained under the French doctrine.
broadly to include the arbitration law of a country called upon to enforce the
arbitration agreement, even if the arbitral seat is not in that country.
Note that the pre-1998 German Kompetenz-Kompetenz doctrine seems to have had
a bootstrapping aspect to it. Apparently inclusion of a Kompetenz-Kompetenz clause in
the arbitration agreement excluded all judicial scrutiny. After enactment of the 1998
German Arbitration Act adopting the Model Law approach to competence-competence,
the German Institute of Arbitration (DIS) deleted the Kompetenz-Kompetenz provision
from its model arbitration clause. See Klaus P. Berger, Germany Adopts the
UNCITRAL Model Law, 1 INŤL ARB. L. REV. 121, 122 (1998).
83. Cf. Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 471 (9th Cir.
1991). The case would have been more clearly on point had the "Memorandum of
Intent"--which might or might not have formed an agreement--been undeniably a
binding contract.
84. Because the case is likely to be so rare, I have not attempted to analyze
how a U.S. court at Stage 3 would react to an award excluding a merits-based issue
that under the First Options' reverse presumption would be includable.
1134 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
Howsam concludes that such issues--for example, time limits on
claims and possible waiver or estoppel issues--are presumptively for
the arbitrators at Stage 1. Howsam reasons that the parties are to be
understood as intending this. Thus, one could presumably conclude
that, at Stage 3, the arbitrators' conclusions will be subject only to
deferential and not de novo court review. In France, Stage 3 review
would presumably be de novo.
Note that the Howsam "procedural arbitrability" issue might be
seen as simply an example of a scope problem. The parties accept that
they have an existing and valid arbitration agreement and disagree
only over whether the "procedural arbitrability" issue is itself
arbitrable. In other words, is the issue within the scope of the
arbitration agreement. Howsam's presumption of arbitrability for
"procedural arbitrability" questions accords fully, of course, with First
Options' reverse presumption for questions of scope. The only
difference--and not one of any evident import--is that First Options
sends a merits-based issue to the arbitrators, whereas Howsam sends
a "gateway" issue to them. Thus, in Howsam the arbitrators are
empowered to decide whether or not to hear the merits-based issue.
As stated above, their decision on this "gateway" issue is presumably
subject only to deferential review at Stage 3.
In sum, U.S. domestic arbitration law does not contain a robust
negative competence-competence doctrine. Questions of the existence
and validity of an arbitration agreement are for full, non-truncated
decision by courts at Stage 1, whether or not arbitrators have been
previously seized of the dispute. Would this conclusion be different if
the dispute involved international arbitration subject to the New
York Convention?
b. International Arbitration
First Options and Howsam involved domestic arbitration arising
under Chapter 1 of the Federal Arbitration Act (FAA). Technically,
these cases involved an interpretation of FAA section 3,85 which
provides:
If any suit . . . be brought in any of the courts of the United States upon
any issue referable to arbitration under an agreement in writing for
such arbitration, the court . . ., upon being satisfied that the issue
involved in such suit . . . is referable to arbitration under such an
agreement, shall on application of one of the parties . . . [refer the
parties to arbitration].86
If the suit involves international arbitration subject to the New York
Convention, however, then Chapter 2 of the FAA would apply. An
________________________________________________________________
85. This is true of First Options by implication, because it arose at Stage 3.
86. United States Federal Arbitration Act of 1925, 9 U.S.C.A § 3 (2003).
2003] International Commercial ARBITRATION 1135
agreement to arbitrate would fall under the New York Convention for
the purposes of a U.S. proceeding, if (1) the agreement contemplates
an award in a New York Convention country other than the United
States or (2) although the seat of arbitration is within the United
States, the United States does not regard the arbitration as
domestic.87 Though these provisions raise complex questions, case (1)
is relatively straightforward. If the arbitration is to take place in a
Convention country other than the United States the New York
Convention applies.
In such a case, the "who decides" question technically turns on
interpretation of New York Convention Article II(3).88 This is because
FAA Section 201 incorporates the Convention into U.S. law,89 and
Section 208 provides that FAA Chapter 1 applies only to the extent
that it is not inconsistent with the Convention.90 In other words, the
Convention has priority.
The relevant language of the New York Convention Article II(3)
is as follows:
The court of a Contracting State, when seized of an action in a matter
in respect of which the parties have made an agreement within the
meaning of this article, shall, at the request of one of the parties, refer
the parties to arbitration, unless it finds that the said agreement is null
and void, inoperative, or incapable of being performed.91
How should a U.S. court interpret the language "unless it finds that
the said agreement is null and void, inoperative or incapable of being
performed"? Recall that at least one leading commentator has argued
that this language should be understood as calling for only a prima
facie determination of the existence and validity of an arbitration
agreement.92 If the Supreme Court accepts that interpretation in a
future case, the U.S. law of negative competence-competence would
approach that of the French, at least respecting international
arbitration.
Such an outcome is not impossible to imagine. The U.S. Supreme
Court has frequently been more receptive to proarbitration
arguments respecting international, as opposed to domestic,
agreements.93 An important consideration is that these agreements
are commercial and involve sophisticated, generally well-advised
parties. The desire for uniformity of interpretation under the New
________________________________________________________________
87. See New York Convention, supra note 5, art. I(1) ("It shall also apply to
arbitral awards not considered as domestic awards in the State where their recognition
and enforcement is sought.")
88. New York Convention, supra note 5, art. II(3).
89. Federal Arbitration Act. § 201.
90. Federal Arbitration Act § 208.
91. New York Convention, supra note 5, art. II(3).
92. See VAN DEN BERG, supra note 53, at 155, 169.
93. See, e.g., Mitsubishi Motors Corp. v. Soler, 473 U.S. 614, 615 (1985); Scherk
v. Alberto-Culver Co., 417 U.S. 506, 519 (1974).
1136 VANDERBILT JOURNAL OF TRANSNATIONAL LAW [Vol. 36:1115
York Convention could also influence the Court, but perhaps only if
more countries than at present subscribe to the prima facie
interpretation.
V. CONCLUSION
The more likely path to a more robust negative competencecompetence
doctrine in U.S. law is through legislation overhauling
the outmoded Federal Arbitration Act. In any such legislative
undertaking, valuable lessons can be drawn from the various
approaches to the negative competence-competence doctrine in other
jurisdictions discussed above. A legislative solution would allow a
nuanced and balanced approach, including provisions favoring
preliminary awards on jurisdiction, rapid, perhaps non-appealable,
judicial review of such decisions, and the flexibility seen in the
British approach allowing the arbitrators or the parties to call upon
judges for assistance in an appropriate case. The upshot then is
another call for a modern United States arbitration statute.