Chapter 6: Disputes about the tribunal’s jurisdiction

6.4 It is perhaps worth considering the provisions of the 1996 Act against the historical background of the common law which preceded it.

6.5 The orthodox common law view, represented by the decision of the House of Lords in Heyman v Darwins 2 was that, although the arbitrator could take a provisional view as to whether he had jurisdiction to determine (for example) the validity of the main contract, his decision was not finally binding on the parties since he lacked the power to decide the scope and existence of his own jurisdiction. According to this traditional principle, such issues could only finally be determined by a different tribunal – usually the court.

6.6 It was clear, therefore, that the tribunal could not make a final and binding decision on the issue of the existence or scope of its own jurisdiction. Any such determination had to be made by another tribunal. Alternatively, the parties could enter a separate agreement conferring on the tribunal jurisdiction to determine its own jurisdiction in relation to the main dispute.

6.7 As a matter of practice, however, the common law always recognised that a tribunal must take a view as to the existence (or otherwise) of its own jurisdiction, and that it will usually make a provisional ruling on that issue. The common law position was explained by Devlin J in Christopher Brown v Genossenschaft Osterreichischer Waldbesitzer: 3

It is not the law that the arbitrators, if their jurisdiction is challenged or questioned, are bound immediately to proceed to act, or to refuse to act, until their jurisdiction has been determined by some court which has power to determine it finally. Nor is it the law that they are bound to go on without investigating the matter in dispute, leaving the question of their jurisdiction to be held over until it is determined by some court which had power to determine it. They might then be merely wasting their time and everybody else’s. They are not obliged to take either of these courses. They are entitled to inquire into the merits of the issue as to whether they have jurisdiction or not, not for the purpose of reaching any conclusion which will be binding upon the parties – because that they cannot do – but for the purposes of satisfying themselves as a preliminary matter about whether they ought to go on with the arbitration or not. If it became abundantly clear to them, on looking into the matter, that they obviously had no jurisdiction… then they might well take the view that they were not going to go on with the hearing at all. They are entitled, in short, to make their own inquiries in order to determine their own course of action, and the result of that inquiry has no effect whatsoever upon the rights of the parties.

6.8 The provisions of the 1996 Act (explained in detail below) build upon the common law position, by giving the tribunal competence to “rule” upon jurisdictional challenges, while recognising that any such ruling is subject to review by the courts. This reflects the key principle of party autonomy, and is intended to minimise the use of jurisdictional challenges as a delaying tactic. In practice, however, the right to challenge the tribunal’s ruling in court (by means of a full hearing) means that a determinedly recalcitrant party can still delay an arbitration by raising spurious jurisdictional challenges. Furthermore, although the provisions of the Act will govern most jurisdictional challenges, the court has recognised that it has, in addition, an inherent power to rule on jurisdictional issues, which it may choose to exercise even though the conditions for the exercise of its statutory powers are not satisfied. 4

6.12 This represents the most usual type of jurisdictional issue and arises where the defendant in the arbitration contends that there is no arbitration agreement at all, or that the arbitration agreement does not, on its true construction, extend to the disputes which the claimant has sought to refer to arbitration.

6.13 Sometimes this type of jurisdictional objection arises where the defendant denies the existence, or continued existence, of the “host” or “matrix” contract which contains the arbitration agreement. For example, challenges to the initial existence of the matrix contract may be founded upon allegations of lack of consensus, lack of consideration, or lack of authority. Challenges to the continued existence of the matrix contract may be based upon allegations of misrepresentation, non-disclosure, repudiation, fundamental breach, termination, mistake or frustration. The essence of such allegations is that although the contract was valid when it was made, it has ceased, or should cease, to exist because of supervening factors. The approach of the courts to the doctrine of separability (see further below) means that such challenges have only limited prospects of success. It is only if the relevant factors...