Arbitrability under the New York Convention

Arbitrability, as stated in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention), relates to the question of whether a dispute is ‘concerning a subject matter capable of settlement by arbitration’. A subject matter is not capable of settlement by arbitration where it is reserved for determination by a court, to the exclusion of arbitration.This is also referred to as ‘objective arbitrability’, as opposed to ‘subjective arbitrability’, which relates to the capacity of parties to submit a dispute to arbitration.

The question of whether a matter has been reserved for determination by a court must be answered by reference to national law, as it is for each country to determine those matters that should be resolved exclusively by a court or other tribunal. There is no ‘autonomous’ concept of arbitrability that applies internationally. Typical types of disputes that may be considered non-arbitrable to varying degrees in different jurisdictions are those where it is considered that the state has a monopoly, or concerning rights in rem that are enforceable against third parties or the world at large.

This may include criminal matters, matters affecting personal status, insolvency, employment disputes and certain types of intellectual property (IP) matters.

Over time, the scope of subject matters that are considered to be non-arbitrable as a whole has reduced, diminishing the effect of arbitrability as a doctrine.Already in 2009, one commentator declared that the concept of arbitrability ‘has virtually died in real arbitral life’.As a result, it is no longer helpful to speak of entire subject matters that are not capable of being arbitrated. It is more accurate to consider whether the exercise of jurisdiction by an arbitral tribunal in relation to the claims made in a specific case would conflict with the exclusive jurisdiction of a court or other competent authority under applicable law.

In addition, when deciding on arbitrability, many courts draw a distinction between domestic and international cases, since the rationale of exclusive judicial determination does not apply in the same way to domestic and international disputes.This further limits the types of international disputes considered to be non-arbitrable.

Although public policy considerations often underpin national laws limiting the arbitrability of certain types of disputes, public policy is a separate ground for the setting aside of arbitral awards under the United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration (the UNCITRAL Model Law) and for refusal of enforcement under the New York Convention.Indeed, some commentators are of the view that public policy considerations are now of limited relevance to the issue of arbitrability.

Courts in some jurisdictions treat arbitrability as a condition of validity of an arbitration agreement,while others consider it a requirement for the jurisdiction of the arbitral tribunal. Some jurisdictions mix these two approaches, depending on the circumstances of the case. This will affect whether an issue of arbitrability is referred for decision by the arbitral tribunal or if arbitration is refused by the court.

In general, the question of the contractual validity of an arbitration agreement is separate to arbitrability of a subject matter, and is dealt with separately under the UNCITRAL Model Law and the New York #Convention. A finding of invalidity of the arbitration agreement is determined by reference to rules of contract formation and validity, resulting in an arbitration #agreement that is invalid for all types of disputes. A finding of non-arbitrability of a dispute, on the other hand, may be based on an arbitration agreement that is otherwise valid for different types of disputes.

• courtesy Global Arbitration Review