Jurisdiction Challenge In Arbitration Agreement

Where the question of sovereign immunity from jurisdiction becomes more pregnant is in the presence of sovereigns from the former (or current) communist obedience (e.g., the Tatneft case above). A point of reference in this regard is the People`s Republic of China, which historically — and still today — officially claims absolute sovereignty, both in terms of jurisdiction and enforcement. While the distinction acta jure gestionis/acta jure imperii is widely accepted in determining which act of a State should be immune from prosecution (or which property should be immune from enforcement), some States, such as China, strictly adhere to the principle of absolute immunity. In FG Hémisphere, China stated that “China`s consistent and principled position is that a state and its property enjoy absolute immunity before foreign courts, including absolute immunity from jurisdiction and enforcement, and has never applied what is known as the principle or theory of `restrictive immunity`[34] (i.e., immunity related only to royal privileges and not to commercial acts). In its recent decision M/s Lion Engineering Consultants v. Status of M.P. &Ors. (“Lion”) has held that a party who has not ruled on a legal challenge before the arbitral tribunal under section 16 of the Arbitration and Conciliation Act 1996 (“Act”) would still have the right to do so. Under the traditional approach, a court`s decision of nullity is taken into account at the seat of arbitration and the arbitral award is not considered enforceable in any jurisdiction. In other words, the decision of the Court of Main Jurisdiction removes from any other court, at a universal level, jurisdiction to rule on applications for enforcement of the same arbitral award. This position or variation of it is the most widespread.

For example, in 2017 at Pemex v. Committa, the Luxembourg Court of Appeal refused to impose a $300 million ICC award against mexican oil and gas company Pemex on the grounds that the arbitral award had been overturned at headquarters. It did so when the United States Court of Appeals had previously ruled for the second circle that the arbitral award was enforceable despite its annulment in Mexico. [2] The grounds for refusing enforcement or annulment of an international arbitral award are essentially uniformly modelled in accordance with the New York Convention, whether in other international instruments or in national law. Although the authors acknowledge some distinctions, the reference to judicial challenges will focus on articulating the related foundations of the New York Convention for the purposes of this chapter, which will be supplemented only if deemed useful in the light of recent developments in arbitration practice. [19] The relevant language relates only to “a difference that has not been contemplated or that does not fall within the scope of the conditions for filing arbitration proceedings.” [33] Libyan American Oil Co. (LIAMCO) v Socialist People`s Republic of Libya, Svea Court of Appeal (18 June 1980), 62 ILR 225 (in these terms: “Libya, which, moreover, as a sovereign State, has extensive rights to Sweden`s immunity from jurisdiction, has waived the right to immunity by accepting the arbitration clause provided for in Article 28 of the Concession Agreement”). It is important to remember that just because a party can raise a legal challenge does not mean they should or will.

It may be that, although a party considers that a case is not the subject of an arbitration agreement, the same party would prefer that the case be decided by arbitration in any event and therefore waive its right to challenge jurisdiction on specific grounds. Such a waiver must be confirmed in writing. [30] In Cargill International S.A. vs. M/T Pavel Dybenko (991 F.2d 1012, 1018 (2d Cir. In 1993), the Second Circuit Court of Appeals stated: “If the so-called arbitration agreement exists, it meets the conditions of factual jurisdiction under the New York Convention and the FSIA.” In Creighton Ltd v. . .