Proceedings before arbitration court | In Principle

What happens when proceedings are initiated before a common court despite the existence of an arbitration clause?

Signing an arbitration clause means that the arbitral tribunal selected by the parties becomes empowered to resolve the matter instead of the common courts.

However, the common court will refuse to resolve a dispute covered by an arbitration clause only when one of the parties to the proceedings objects, asserting the arbitration clause as a defence.

This defence must be raised before the parties join issue on the merits of the case. Otherwise the common court can continue the proceedings and issue a judgment.

Can an arbitral tribunal assess the validity of an arbitration clause?

The arbitral tribunal may rule on its own jurisdiction, including any objections concerning the existence or validity of the arbitration agreement. Invalidity or termination of the underlying contract does not entail the invalidity of the arbitration clause.

An objection to the jurisdiction of the arbitral tribunal may be raised by the respondent no later than in the response to the statement of claim, unless another time limit was agreed by the parties. The party may raise the objection later if it did not know and could not have known of the grounds for objection or if the grounds appeared later.

The right to raise an objection is not excluded by the fact that a party has appointed or participated in the appointment of an arbitrator.

An objection that the arbitral tribunal is exceeding the scope of its authority should be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the proceedings.

In any case, the arbitral tribunal may admit a later objection if it considers the delay justified.

What happens when part of the case does not fall within the jurisdiction of the arbitral tribunal?

If the dispute has been brought before the arbitral tribunal and one of the parties is of the opinion that for some reason that court has no jurisdiction to resolve the dispute, it may raise this issue in the form of a defence of absence of jurisdiction of the arbitral tribunal.

This defence should be raised at the earliest possible stage of the proceedings. The code requires the defence to be raised no later than in the response to the statement of claim or other deadline specified by the parties in their agreement or in regulations to which the agreement refers. A party may raise an objection later if it did not know and in exercise of due diligence could not have learned of the grounds for the defence, or if the grounds arose only after the deadline. In any case, the arbitral tribunal may recognise the defence raised after the deadline if it considers that the delay was justified.

It can also happen that part of the party’s demand exceeds the arbitration clause, for example applying to a contract other than that covered by the clause. If a request exceeding the arbitration clause is submitted when the proceedings are already in progress, the arbitral tribunal will not have jurisdiction to rule on the request. It will not be empowered to resolve the dispute in this regard, and the other party may assert this by raising a relevant objection. It should do so immediately after the other party makes a request that exceeds the arbitration clause. If the lack of jurisdiction as to the specific request is detected only at a later stage despite due diligence, or if the arbitral tribunal has lost its jurisdiction in this regard only later, the party will be able to submit the objection at a later stage.

The arbitral tribunal rules on jurisdiction. In particular, the arbitral tribunal decides on the existence, validity and effectiveness of the arbitration clause. Therefore the appointment of an arbitrator by the party or the party’s involvement in the appointment of an arbitrator does not deprive the party of the right to challenge the jurisdiction of the arbitral tribunal.

What are the rules for proceedings before an arbitral tribunal?

Arbitration proceedings are generally governed by the principle of the autonomous will of the parties.

The parties designate the place of arbitration. If they fail to do so, the place of arbitration will be set by the arbitral tribunal. The designation of the place of arbitration is purely formal and is important for determining the national law to be applied in the arbitration as well as the state court that will have jurisdiction to exercise oversight over the proceedings. The location for arbitration hearings or other sessions is a different matter. Unless otherwise agreed by the parties, the arbitral tribunal is free to decide where sessions will be held.

The arbitral tribunal also determines the language or languages to be used in the proceedings. This determination, unless otherwise specified, applies to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal. The arbitral tribunal may order that any documentary evidence be accompanied by a translation into the language(s) of the arbitration.

The arbitral proceedings commence on the date when a request for the dispute to be referred to arbitration is received by the respondent. The request should indicate the parties, the substance of the dispute and the relevant arbitration agreement or clause. If the party seeking arbitration is required to appoint an arbitrator, the request should also include the name of the appointed arbitrator.

When the parties choose a permanent arbitration court, the proceedings commence at the time indicated in the institution’s arbitration rules. Typically proceedings are considered to be commenced when a demand for arbitration is filed with the arbitration institution along with the required number of copies.

A general rule is that the arbitral tribunal decides whether to hold oral hearings for the presentation of evidence or oral argument, or whether the proceedings will be conducted on the basis of documents and other materials. Unless the parties have agreed that no hearings shall be held, the arbitral tribunal is required to conduct a hearing if requested by a party.

The parties should be given sufficient advance notice of any hearing or session of the arbitral tribunal for the purpose of taking evidence.

Can the parties determine their own rules for proceedings?

Parties to an arbitration proceeding are free to set the rules of procedure. The only rules that cannot be altered are those concerning equal treatment of parties and the form and content of the award. In areas where the procedure is not governed by the parties’ agreement or applicable legal regulations, the arbitrators conduct the procedure as they deem fit.

What type of evidence can be presented before an arbitral tribunal?

The arbitral tribunal is not bound by any rules concerning types of evidence or procedures for taking evidence. Generally it may receive any evidence it considers necessary.

The arbitral tribunal may request the assistance of a court in taking evidence or undertaking any other actions that cannot be performed by the tribunal.

Is it possible to request interim relief in arbitration proceedings?

Interim relief may be sought in any civil case that is subject to consideration by a court or arbitral tribunal. Therefore, nothing precludes a state court from ordering interim measures if the parties submit the dispute to arbitration.

For interim relief, the parties should apply to the court that would have had jurisdiction to hear the case in the absence of the arbitration clause.

The arbitral tribunal may, at the request of a party that has substantiated the claim, order any interim measure it considers necessary in respect of the subject matter of the dispute. The arbitral tribunal may condition the measure on provision of appropriate security. In order to be enforceable, an order of the tribunal requires an enforcement clause issued by a court.