English court rules on Singapore tribunal's jurisdiction
07 July 2013
In Golden Ocean Group Ltd v Humpuss Intermoda Transportasi TBK Ltd & anr  EWHC 1240, the Commercial Court delineated the scope of the principle that a tribunal can rule on its own jurisdiction, know as kompetenz-kompetenz, and affirmed the power of the English court to decide on the jurisdiction of an arbitral tribunal in the first instance.
Popplewell J set out the factors to be considered, where the existence or validity of an arbitration agreement is disputed, in deciding whether or not to respect the kompetenz-kompetenz rule of priority in favour of arbitrators determining their own jurisdiction.
- a declaration that the charterparty is between Golden Ocean and HIT;
- a declaration that there is no arbitration agreement between Golden Ocean and Genuine; and
- final injunction restraining Genuine from pursuing the Singapore arbitration.
The questions before the English court
Section 9 of the Arbitration Act 1996
- The party seeking the stay must show that an arbitration agreement has been concluded and that the issues in dispute fall within its scope. If the court cannot be satisfied on the written evidence before it that an agreement was concluded then it cannot grant a stay under s9. It is not sufficient for the applicant to show a good arguable case and the court must direct a trial of the issue before granting the stay if it is not satisfied that s9(1) is met. Alternatively, even if the applicant cannot satisfy s9(1), the court may exercise its inherent power to grant a stay in favour of the arbitrator’s power to examine the issue and determine his own jurisdiction.
- If it is shown that an agreement has been concluded, the court must grant a stay unless the party resisting it can satisfy the court that the agreement is null and void, inoperative or incapable of being performed. A stay will not be granted merely because the applicant can show an arguable case for validity. If the court is incapable of deciding on the written evidence before it whether the arbitration agreement is null and void, etc, then it may order a trial of the issue. Alternatively, if there is an arguable case in favour of validity then the court may consider that the respondent has failed to discharge its burden under s9(4) and grant the stay under s9 to let the arbitrator decide the question of validity.
No presumption in favour of kompetenz-kompetenz
Balance of convenience
- Related proceedings – the court is likely to decide the matter itself if this would avoid the risk of inconsistent judgments, such as in the present case where the parallel arbitrations were both concerned with the same question as to the validity of the addendum.
- Convenience – if the jurisdiction issue will likely fall to be determined by the court in any event, for example on enforcement, then this strongly militates in favour of the court deciding in the first instance to save costs and time. Similarly, if the matter cannot be decided without a lengthy and costly inquiry then the court may be more likely to defer to the arbitrator. The court is more likely to decide the matter itself where the question of jurisdiction can be confined to a circumscribed area of investigation that does not involve determining any issues in the substantive dispute.
- Prejudice – if a court decision on jurisdiction will necessarily involve deciding substantive matters then the court may prefer to decline to decide the issue to avoid causing prejudice. The court will balance the prejudice likely to be caused by such a determination against the potential prejudice of subjecting a party to an arbitration it hasn’t agreed to.
- The appropriate forum – if the arbitration agreement, the conclusion or validity of which is disputed, is governed by English law then, unless there is no real dispute as to legal principles or the foreign tribunal is as well placed as the English court to apply English law, this is a factor in favour of the court deciding in the first instance. The court will also consider the factors laid down by the House of Lords in Spiliada Maritime Corp v Cansulex  AC 460, such as the location of witnesses and evidence, to decide which is the most appropriate forum.
- The quality of the arbitration – the courts are more likely to defer to the arbitrator if it is satisfied that the party resisting the stay will not suffer prejudice in letting the arbitrator decide on his own jurisdiction. The supervisory jurisdiction of the courts of the seat, and the avenues of recourse they provide, will be an important consideration.
- Strength of each party’s case – although the court will not conduct a mini-trial on the written evidence, if a brief perusal reveals that one case is far stronger then this will be a factor in the decision whether to stay proceedings or direct a trial on jurisdiction.
Popplewell J decided that the risk of inconsistent awards in the London and Singapore arbitrations, the fact that English law governed the purported arbitration agreements, and that nuanced questions of the English law doctrine of mistake were at issue, made this an appropriate case for the English court to decide the validity of the addendum to the charterparty, notwithstanding that the investigation would be complex and costly. Popplewell J therefore granted the interim anti-arbitration injunction and gave directions for a trial of the issues.
This case summary is part of the Allen & Overy Litigation Review, a monthly update on interesting new cases and legislation in commercial dispute resolution. For more information please contact Sarah Garvey email@example.com, or tel +44 20 3088 3710.