Md. Mamonor Rashid :
Competence-competence is a central principle of international commercial arbitration: the tribunal has the competence to decide its own jurisdiction. This principle is embedded in Article 16 of the UNCITRAL Model Law. The doctrine of “Kompetenz-Kompetenz” was initially devised by the German Constitutional Court in the Maastricht Decision to confer on the arbitration tribunal with the authority to decide its jurisdictional question. The rationale behind this was the presumption that the parties also intended to submit this preliminary question to the arbitral tribunal.
The Arbitration Act 2001 has plainly analyzed the principle of “Competence-Competence”. Section 17 of the Arbitration Act 2001 has enumerated five jurisdictional questions on which the arbitral tribunal may exercise its power of “compétence de la compétence.” They are as follows: (a) whether there is in existence a valid arbitration agreement; (b) whether the arbitral tribunal is properly constituted; (c) whether the arbitration agreement is against public policy; (d) whether the arbitration agreement is incapable of being performed, and (e) what matters have been submitted to arbitration in accordance with the arbitration agreement.
The arbitral tribunal addresses the competence question upon the application for the same by either the parties, or suo moto. Thus, whatever the parties might have agreed otherwise, if, for instance, public policy issues arise concerning the arbitration agreement or generally in other respects, it seems incumbent on the arbitral tribunal to look into the matter in order to decide its own jurisdiction.”
Arbitration Act 2001 specifically deals with the timeframe, within which any jurisdictional objection of the arbitral tribunal may be raised, in the same measure as in the UNCITRAL Model Law. However, this provision might be in contradiction with any arbitration proceedings under the International Chamber of Commerce (ICC) taking place in Bangladesh under the ICC Rules 1998, according to which such jurisdictional objections may be raised throughout the proceedings and not just at the time of the submission of the statement of defense. In such a conflict the Bangladesh courts would prefer the lex fori, i.e. the Act of 2001, as the lex arbitri on the matter concerned over the parties’ chosen international institutional arbitration rules as the procedural law.
One may wonder whether with the tide of delocalization of international arbitration in the age of globalization the parties’ choice would still be subservient to the “jurisdictional or the arbitral forum theory of arbitration.” Bangladesh arbitration regime has made a protectionist measure against the arbitral tribunal’s decision regarding any objection as to jurisdiction by paving the way for the parties to go to the High Court Division of the Supreme Court to make the final call on the jurisdictional issues.
Under section-20 of Bangladesh Arbitration Act, 2001 the High Court Division may either on the application of any of the parties to the arbitration agreement, and/or after serving notice upon all other parties, determine any question as to the jurisdiction of the arbitral tribunal.
However, before the High Court Division takes into account any application on the matter it must be satisfied that, (a) the determination of the question is likely to produce substantial savings in costs; (b) the application was submitted without any delay; and (c) there is good reason why the matter should be decided by the Court. In addition, the application must contain the grounds to be determined by the High Court Division. Section 20 of the Act still preserves the arbitral tribunal’s authority to continue with the arbitration, despite such application to the High Court division, in order to expedite the dispute settlement process.
This is to minimize the delay by judicial intervention and to leave the parties to make up their minds as to what they want in the circumstances. Section 20(4) thus provides: “Unless otherwise agreed by the parties, where any application is pending before the High Court Division under this section, the arbitral tribunal shall continue arbitration proceedings and make an award.”
It is noteworthy that Section 20 of the Bangladesh Act has followed, in essence, Section 32 of the English Arbitration Act 1996. In contrast, The Indian Act, 1996 has left no half-way-house arrangement against the arbitral tribunal’s decision on the jurisdictional issues. Once the arbitral tribunal decides against a party’s plea against its jurisdiction, the party has no other option open to him but to wait until the arbitral tribunal makes an award.
The party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34 of the Indian Act 1996 which deals with setting aside an arbitral award. It is understandable that in order to minimize judicial intervention on the jurisdictional issues the Indian Act has allowed the arbitral tribunal to continue with the arbitral proceedings and make an award and the party aggrieved by the award to apply to the competent court for setting it aside.
Although aforesaid approach may ensure expeditious dispute resolution, it could hold a potential disadvantageous effect for the arbitral process if the award were to be set aside on jurisdictional issues, later, thus leading to a waste of precious time and resources of the parties.
Doctrine of Separability:
The provisions as to the principle of separability are contained in section 18 of Bangladesh Arbitration Act, 2001. It postulates that the validity of the arbitration agreement has to be determined on its own and has nothing to do with the principal agreement of which it is a part. In other words, the invalidity of the principal agreement should not affect the arbitration clause in which it is contained.
The provision of the English Arbitration Act 1996 on this matter deviates from the language of the Model Law. The English provision is more explicit that provides “an arbitration agreement which forms or was intended to form part of another agreement” shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement.” The theory of the separability of the arbitration clause seemingly loses its lustre when the validity of the arbitration clause is itself in issue as the courts in different countries have had to grapple with the issue whether the arbitral tribunal or the court has jurisdiction to decide it. The Bangladeshi Act authorizes the arbitral tribunal in broad terms to have jurisdictions on such issues.
(M. Rashid has pursued LLM on International Commercial Arbitration from University Utara Malaysia. He is an associate of CM&A LCP).
