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Alexander
Posted by Mr. Alexander G. on Feb 2nd, 2017 7:32am

 

The issue of whether the court must first be satisfied that the arbitral tribunal has jurisdiction before it will exercise powers under subsection 10(1) has been the subject of legal debate in England.  These cases provide some guidance. Section 18 of the English Arbitration Act, which is similar to section 10 in Ontario, is said to be a "gateway" provision which means that it provides a way of getting an arbitration started, or at least prevents arbitral proceedings from being aborted by a failure in the agreed appointments process, but does so without requiring the final determination of issues affecting the arbitral tribunal's jurisdiction which are better decided in some other way, for example by the tribunal (applying the competence-competence principle) or by the court: Noble Denton Middle East v Noble Denton International Ltd [2010] EWHC 2574 (Comm), [2011] 1 Lloyd's Rep 387, at  para. 6 (“Noble Denton”). For that reason it has been held that when there is an issue whether a tribunal would have jurisdiction, the court has power to make the orders listed in section 18(3) of that Act if the claimant can satisfy the test of showing a good arguable (or possibly just arguable) case: Noble Denton at paras. 10 to 12. This legal approach to deciding whether a court can exercise the power of appointment under the Act was recently confirmed in Silver Dry Bulk Company Ltd v Homer Hulbert Maritime Company Ltd [2017] EWHC 44 (Comm) (“Silver Dry Bulk”).   However, these cases stand in contradiction to Vale Do Rio Doce Navegacao S.A. v Shanghai Bao Steel Ocean Shipping Co Ltd [2000] EWHC 205 (Comm), [2000] 2 Lloyd's Rep 1, at para. 57, where it was held that a court on an application for an appointment under section 18 might not wish to get embroiled in a trial of the question of whether there was an arbitration agreement, but merely enquire whether there was sufficient on the material before it to enable it to appoint an arbitrator and then leave the arbitration tribunal constituted after the exercise of the court's powers to make the determination. These cases also stand in contradiction to  The Lapad [2004] EWHC 1273 (Comm), [2004] 2 Lloyd's Rep 109, where it was said that the court must determine the question of jurisdiction.  Without a valid arbitration agreement, the court has no power to exercise the power of appointment.   The term "good arguable case", for the purposes of the English Arbitration Act, means a case which is somewhat more than merely arguable but need not be one which appears more likely than not to succeed.  This is a relatively low threshold which retains flexibility for the court to do what is just, while excluding those cases where the jurisdictional merits are so low that reluctant respondents ought not to be put to the expense and trouble of having to decide how to deal with arbitral proceedings where it is very likely that the tribunal has no jurisdiction. Crossing the threshold of "good arguable case" means that the court has power to make one of the orders listed in section 18(3) of the English Arbitration Act.  


 

 


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