Lord Collins cites from the DTI Departmental Advisory Committee in its February 1994 report on a draft Arbitration Bill (the “Saville Report”), records the statutory position now accomplished (principally by sections 30, 32 and 67), and continues:
The consistent practice of the courts in England has been that they will examine or re-examine for themselves the jurisdiction of arbitrators.
This can arise in a variety of contexts, including a challenge to the tribunal's jurisdiction under section 67 of the 1996 Act, or in an application to stay judicial proceedings on the ground that the parties have agreed to arbitrate.
Thus in Azov Shipping Co v Baltic Shipping Co
19) Rix J decided that where there was a substantial issue of fact as to whether a party had entered into an arbitration agreement, then even if there had already been a full hearing before the arbitrator the court, on a challenge under section 67, should not be in a worse position than the arbitrator for the purpose of determining challenge.
This decision has been consistently applied at first instance
20) and is plainly right
Where there is an application to stay proceedings under section 9 of the 1996 Act, both in international and domestic cases, the court will examine the issue of whether there ever was an agreement to arbitrate
21).
So also where an injunction was refused restraining an arbitrator from ruling on his own jurisdiction in Geneva arbitration, the Court of Appeal recognised that the arbitrator could consider the question of his own jurisdiction, but that would only be a first step in determining that question, whether the subsequent steps took place in Switzerland or England
22)
This analysis, in my respectful opinion, usefully underscores the wider picture about the autonomy of the parties and the jurisdiction of arbitrators with power to investigate their own jurisdiction
…namely that, sooner or later, the question of substantive jurisdiction is likely to come before the court.
Where parties differ as to a matter as fundamental as whether they have agreed any contract, or any contract containing an arbitration clause, it is most unlikely that one or other of them will rest content with the decision of arbitrators as to either their jurisdiction or as to the parties' rights.
For one or other party is saying that there is simply no agreement that arbitrators can resolve their disputes.
In such circumstances, the issue of jurisdiction is likely to come before the courts sooner or later, and when it does, it will have to be decided by the court from first principles and in the light of facts which, whatever the investigation by the arbitrators, are yet to be determined on the evidence by the court.
That is the learning of Azov Shipping, approved by the Supreme Court in Dallah, where I said this:
This was perhaps a case where the parties might well have come to Court, either by agreement or upon the application by one side or the other for the Court to determine the issues of jurisdiction, on the ground that it was likely to produce substantial savings in cost and that there was good reason why the matter should be decided by the Court.
With hindsight it seems to me that even if the parties could not agree on that course, the Court would be persuaded to allow such a determination if, of course, the tribunal had given its own permission, which is a sine qua non in the absence of the agreement of the parties.
It might be assumed that the arbitrator may have been the more willing to give his agreement inasmuch as the question of jurisdiction in this case involved the prior question of whether Azov had ever become a party to the agreement as a whole…
I can quite see that there is an interest in encouraging parties to put their arguments on jurisdiction before the arbitrator himself under s30.
In many cases, and perhaps in the ordinary and normal case of such a challenge, where, for instance, there is simply an issue as to the width of an arbitration clause and no issue as to whether a party is bound to the relevant contract in the first place, the arbitrator's view may be accepted.
If it is not, a challenge to the court is likely to be a limited affair raising, essentially, a point of construction on the clause and thus no problem arises.
Where, however, there are substantial issues of fact as to whether a party has made the relevant agreement in the first place, then it seems to me that, even if there has been a full hearing before the arbitrators the Court, upon a challenge under s. 67, should not be placed in a worse position than the arbitrator for the purpose of determining that challenge…“
Thus, a question of jurisdiction may come before the court in a number of different situations.
It might arise where one party goes to court with a claim and the defendant seeks a stay for arbitration: the claimant may say there is no contract or no arbitration agreement, and the court will have to investigate that question for the purpose of dealing with the application to stay.
Or a party may commence an arbitration, and the other party may say there is no agreement or no agreement to arbitrate, in which case the matter is prima facie for the arbitrators to decide in the first instance pursuant to section 30.
In a plain case, the arbitrators may proceed to determine their own jurisdiction, but equally the parties may agree to come straight to court to determine the question, or the arbitrators may give permission for the issue to be taken to court and the court may agree to accept the issue at that stage.
Or the respondent in the arbitration may stand aloof, and come to court under section 72, or, following an award, under section 67.
Or, a party may start proceedings in another country and the defendant there then comes to the English court to ask it to uphold their arbitration agreement by granting an anti-suit injunction.
That is the equivalent of a party seeking a stay where an action is begun in England.
Where the action in breach or alleged breach of an arbitration agreement is begun in a foreign country, the respondent may or may not seek a stay there, but here he may ask for an anti-suit injunction.
There are further variations thrown up by the cases.
In some cases, it is reasonably plain that an arbitration agreement has been made, but there may be an issue as to its scope, or as to whether there has been a repudiation of it, or, as here, as to its surviving effectiveness.
In other cases, there is a factual dispute as to whether any agreement has ever been made in the first place, or a legal dispute as to whether an arbitration clause has been incorporated into the parties' contract.
Moreover in some cases, what is sought from the court is an interim injunction, which is among the subject-matters of section 44, and in other cases what is sought is a final injunction, which is not within section 44 but, subject to contrary agreement by the parties, may be within the powers of an arbitral tribunal in a final award
23).
Moreover, a distinction may have to be made between a declaration as to the existence or effectiveness of an arbitration agreement about which parties are in dispute, which is a form of final relief as to the parties' legal rights, and an anti-suit injunction which, at any rate in its interim form, is only intended to hold the ring until some tribunal, whether it is the court itself at some later date, or an arbitral tribunal, can grapple with the merits of the parties' dispute.