- The Law Commission has proposed a reform of the Arbitration Act 1996 to simplify the process for challenging an arbitration tribunal’s substantive jurisdiction.
- The main thrust of the proposed reform is to ensure that, where the tribunal has already ruled on its jurisdiction, and the objecting party participated in the process, then any subsequent challenge to an award under s. 67 (that is, due to a lack of substantive jurisdiction) should be by way of review only and not a full rehearing.
- The aim is to reduce the risk of unfair or wasteful repetition that can potentially result from a full rehearing. The ability to introduce new arguments or evidence, or have old evidence reheard, would be limited to exceptional situations only.
- The reform also proposes clarifying that the s. 32 right to ask the court to decide the question of the tribunal’s jurisdiction is available only if the tribunal has not already ruled on its own jurisdiction. The idea is to delineate more clearly the two separate tracks – under s. 67 and s. 32 – for making a jurisdictional challenge.
- While the principles behind the reform are sound, the details of the proposed changes arguably create procedural uncertainties, which may lead to new areas ripe for dispute, and leave it open for some parties to gain an unfair tactical advantage by gaming the process.
In this third instalment of our series of articles dealing with the proposed reforms to the Arbitration Act 1996 (the Act) by the Law Commission, we examine the proposed reforms to challenging substantive jurisdiction of arbitration tribunals under s. 67 of the Act (retrospective challenge to arbitration awards on the basis of a lack of jurisdiction) and s. 32 of the Act (a prospective request for the court to rule on the tribunal’s jurisdiction).
Current law on challenging the jurisdiction
The underlying principle is simple – a tribunal can decide the matters put to it only if it has substantive jurisdiction. It will have substantive jurisdiction if three conditions are met: (i) there is a valid arbitration agreement; (ii) the tribunal is properly constituted; and (iii) the matters it has been asked to decide have been submitted to arbitration in accordance with the arbitration agreement.1
Under the Act all tribunals have the competence to rule on their own jurisdiction.2 However, where one party believes that the tribunal lacks substantive jurisdiction, it can challenge it in one of three ways:
- under s. 32 of the Act, it is possible to ask the English court to decide whether the tribunal has substantive jurisdiction or not, provided that both parties agree to this, or the tribunal permits it despite the other party’s objection;
- under s. 72(1) of the Act, the party can seek a declaration or injunction from the court, but only if they take no part in the arbitral proceedings; and
- under s. 67 of the Act, the party can challenge the tribunal’s award on the basis that the tribunal lacked substantive jurisdiction.
Notably, the Supreme Court decision in Dallah3 confirmed that jurisdictional challenges under s. 67 should proceed by way of a full rehearing. This is even if there had already been a full hearing on jurisdictional issues before the tribunal, in which case the court should disregard the tribunal’s own findings on the question of jurisdiction.