The Issue of 'Arbitrability' in the Context of International Commercial Arbitration (Part 1)

• Jurisdiction: South Africa
• Published date: 25 May 2019
• Date: 25 May 2019
• Author: Marna Lourens
• Pages: 363-383
• Citation: (1999) 11 SA Merc LJ 363

The Issue of 'Arbitrability' in the

Context of International Commercial

Arbitration (Part 1)*

MARNA LOURENS**

University of Stellenbosch

1 Introduction

The issue of arbitrability is increasingly fashionable in international

arbitration today: The importance of this concept may be attributed to

the success of arbitration in the international business arena as the

preferred method of settling international commercial disputes. It is

generally agreed that the predominant reasons for this growth of

the resolution of disputes by arbitration are a desire for a neutral dispute

resolution forum, the confidentiality and privacy of the arbitral

procedure, and because arbitration proceedings are generally speedier

than those of the courts.

2

The South African arbitration community has

up to now displayed comparatively little interest in this growing concern

regarding the issue of the arbitrability of disputes.

3

The problem of 'arbitrability' must be viewed in the light of the jealous

guarding by state courts of certain areas of the law for their exclusive

jurisdiction. 'Arbitrability', therefore, creates a fine balance between, on

the one hand, the public interest of the state in the determination of

certain categories of disputes exclusively through its courts, and, on the

other hand, the desire of contracting parties to have their disputes

resolved in private. Within the contractual boundary of the consent

reached by contracting parties, an arbitrator is empowered to hear a

certain dispute with respect to identified individuals, simultaneously

considering the fundamental public interests of jurisdictions that directly

or indirectly provide support to the arbitral process.

4

It has been stated in

this regard that

'[a]n agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of

forum-selection clause that posits not only the situs of suit but also the procedure to be

used in resolving the dispute. The invalidation of such an agreement in the case before us

would . . . reflect a "Parochial concept that all disputes must be resolved under our laws

* This article has been adapted from a study project presented in part fulfilment of the

requirements for the degree of Master of Laws at the University of Stellenbosch (1998) under

the supervision of Prof DW Butler.

** BLC LLB (Pret) LLM (Stell). Lecturer, Department of Mercantile Law, University of

Stellenbosch.

This is illustrated by the fact that in 1996 two issues of the journal

Arbitration International

were virtually entirely devoted to the issue of arbitrability.

See A Kirry 'Arbitrability: Current Trends in Europe' (1996) 12

Arbitration International

373.

3

See par 2.3 below for a discussion of the current South African law.

See WW Park 'The Arbitrability Dicta in

First Options v Kaplan:

What Sort of Kompetenz-

Kompetenz Has Crossed the Atlantic?' (1996) 12

Arbitration International

137 at 139.

363

(1999) 11 SA Merc LJ 363

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364



(1999) 11 SA Merc LJ

and in our courts". . . . We cannot have trade and commerce in world markets and

international waters exclusively on our terms, governed by our laws, and resolved in our

courts.'

5

Many states have changed their negative attitude towards arbitration

over the years and presently display a much more supportive role

towards the rights of individuals to select private dispute resolution even

where the public interest might appear to be compromised by the nature

of the dispute.

6

Arbitrability' means different things to different people. Redfern and

Hunter define the issue correctly as 'whether a dispute is capable of

settlement by arbitration under the applicable law' and stress that 'it

should not be confused with the question of whether a particular dispute

does or does not fall within the scope of the arbitration agreement'? By

contrast, a wider meaning is often given to the term by the courts to

explain 'arbitrability' in the United States of America,

8

namely that

'the question of arbitrability — whether [an] agreement creates a duty for the parties to

arbitrate a particular grievance — is undeniably an issue for judicial determination'.

9

In an examination of the current trends in Europe pertaining to

arbitrability, the basic question perceived to be in issue is whether the

dispute that is submitted to arbitration, is capable of settlement by

arbitration.

10

For the purposes of this article, the term 'arbitrability' will mainly be

used in its narrow sense as referring to the arbitrability of disputes, and

the issue therefore concerns whether a dispute is capable of settlement by

arbitration or whether it can be decided only by a court of law.

11

A distinction is sometimes drawn between subjective arbitrability and

objective arbitrability.

12

Subjective arbitrability entails the capacity of a

party to conclude arbitration agreements,

13

for example, a minor, or, in

Scherk v Alberto-Culver Co

417 US 506 (1974), quoted in JT McLaughlin 'Arbitrability:

Current Trends in the United States' (1996) 12

Arbitration International

113 at 114.

6

See Editorial 'Arbitrability Special Issue' (1996) 12

Arbitration International

iii.

7

See Alan Redfern & Martin Hunter

Law and Practice of International Commercial Arbitration

2 ed (1991) at 138.

8

See William W Park 'Private Adjudicators and the Public Interest: The Expanding Scope of

International Arbitration' (1986) 12

Brooklyn J of International Law

629 at 630 who defines

'arbitrability' with reference to the non-arbitrability of public-law claims because of their subject-

matter. In a later article Park discusses the scope for misunderstanding through arbitrability being

used to cover several elements of the arbitrator's power to hear the dispute: see Park op cit note 4

at 143.

9

See CE Alfaro & F Guimarey 'Who Should Determine Arbitrability? Arbitration in a

Changing Economic and Political Environment' (1996) 12

Arbitration International

415 at 421.

The authors refer to the Court's interpretation of the question of arbitrability in

AT & T

Technologies Inc v Communications Workers of America

475 US 643 (1986). See also par 4.4.2

below.

10

See Kirry op cit note 2 at 373 .

11

See KH Bockstiegel 'Public Policy and Arbitrability' (1983) 3

ICC A [New York Arbitration]

Congress Series

(1986) 178 at 182.

12

Which refers to the fact that the subject-matter of the dispute must be arbitrable: see

B Hanotiau 'What Law Governs the Issue of Arbitrability?' (1996) 12

Arbitration International

391.

13

The seemingly clear dividing line between both is that arbitrability answers the question

what

can be arbitrated and that 'capacity' answers the question

who

can arbitrate: see Bockstiegel op cit

note 11 at 181; Kirry op cit note 2 at 381.

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