What is Doctrine of Competence-Competence and the role it plays in arbitration?
In German, it is referred to as the concept of “kompetenz–kompetenz-“. It is called “competence sur la competence” in French.
Kompetenz-kompetenz means an arbitral tribunal is allowed to make a decision on whether it has jurisdiction over an issue that needs to be settled and whether an arbitration agreement is valid. In line with the the principle of kompetenz-kompetenz, validity or expiry of an agreement that includes an arbitration clause does not necessarily mean that an arbitration agreement is invalid or has expired.
The doctrine of competence-competence, which holds that an arbitral tribunal may determine questions as to its own jurisdiction, is an important aspect of arbitration law. It is observe that if arbitrators could not determine questions as to their own jurisdiction, a recalcitrant respondent could easily frustrate the parties’ agreement to have their dispute decided by arbitration or at least create considerable delay by merely contesting the existence or validity of the arbitration agreement in court. Further observation also shows that such a situation would seriously undermine arbitration as an effective means of private dispute resolution and deprive it of its attraction.
The doctrine of competence-competence, is largely based on Article 16 of the UNCITRAL Model Law. Article 16(3) of the Model Law provides:
“If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award”.
Competence-competence concept in its layman terms simply means “nothing more than that arbitrators could, subject to later review, `look into their own jurisdiction without waiting for a court to do so,’ and need not `stop arbitral proceedings to refer a jurisdictional issue to judges[.]”‘ Rau, supra n. 36, at n.175 (quoting William W. Park, “The Arbitrability Dicta in First Options v. Kaplan: What Sort of Kompetenz– Kompetenz- Has Crossed the Atlantic?,” Arbitration Intl, vol. 12 (1996), pp. 137, 149.
The competence-competence approach is done to avoid additional costs and burdens often involved in standard court proceedings and its parties involved. See id. at n.226 “the marginal cost of having an arbitrator determine the scope of the arbitration clause is low, while allocating the determination to a court, another decision maker, requires an additional transaction and an extra cost”, quoting Steven Walt, “Decision by Division: The Contractarian Structure of Commercial Arbitration,” Rutgers Law Rev., vol. 51 (1999), pp. 369, 410; see also id. at n. 39 “In how many cases might the issue simply disappear during the course of arbitration? In some cases argument before the panel might well lead to a new perspective on the case for the parties, promoting early settlement. More often, perhaps, an interim arbitral ruling on jurisdiction-or for that matter a final award on the merits themselves– will simply obviate the need for further proceedings.”
Christian Herrera Petrus, “Spanish Perspectives on the Doctrines of Kompetenz-Kompetenz- and Separability: A Comparative Analysis of Spain’s 1988 Arbitration Act, American Rev. of Int’l Arbitration, vol. 11 (2000), pp. 397, 402 noted “that there is distinction in European arbitration law between minimalist approach to competence-competence, where arbitrators may rule on their own jurisdiction, but party may also apply to court for ruling, and more restrictive forms of competence-competence, where arbitrators must rule first on their jurisdiction, and court review of jurisdiction issues may only be obtained thereafter.”