Arbitral Jurisdiction and the Dimensions of 'Consent'
Alan Scott Rau
University of Texas at Austin - School of Law; University of Texas at Austin - The Kay Bailey Hutchison Center for Energy, Law & Business
U of Texas Law, Law and Econ Research Paper No. 103
Arbitration International, Forthcoming
A recurring problem in any legal system is to determine the respective roles of courts and arbitrators in deciding whether to refer a dispute to arbitration. To say, as we always do, that "arbitration is a matter of contract" merely provides the point of departure: For surely it is possible to characterize every objection to arbitration as implicating the jurisdiction of the arbitrators; even an otherwise unexceptional arbitration agreement can be cabined about with limitations and conditions that may well be thought to go to the power of the arbitrator to act.
The Supreme Court has tried on, with a conspicuous lack of success, the concept of "arbitrability" as a way of formulating the distinction between
- true issues of arbitral jurisdiction - which by definition are entrusted to a court for a final determination, and
- other objections to dispute resolution by arbitration - including other "threshold issues" which may preclude consideration of the merits.
But it seems far preferable instead to look at the critical question of "consent" as one of degree, testing the presence of "consent" in terms of a series of concentric circles: In the core, inner circle, one would ask the critical question, "did the parties agree to arbitrate anything at all, at any time?" After that, the only relevant inquiry is the precise scope of the submission - that is, how far the parties were willing to go in entrusting their affairs to "their" arbitrators. And as we move from the core to the periphery, absolutism with respect to "consent" may well be tempered, and insistence on a strict requirement of "consent" become progressively less appropriate - or more properly perhaps, deference to arbitral determinations respecting "consent" become progressively more appropriate.
As this is an expanded version of a paper originally presented at a symposium dealing with multiple parties in arbitration, I spend a considerable amount of time focusing on this problem: Here the tension between the two pillars of arbitration - autonomy and agreement, on one side, and final and efficient dispute resolution, on the other - is particularly marked.
Given the critical nature of consent, it will rarely be possible to force a non-signatory to an agreement into an arbitration proceeding against his will: These are the cases that seem to belong in our core, inner circle, in which the inquiry into "consent" must be rigorous and de novo, and a matter reserved for the courts. By contrast, once an individual has in fact made himself a party to an arbitration agreement, the question begins to look rather different: There is a strong analogy here to the problem of determining the scope, the coverage, of an undoubted agreement to arbitrate: Here American courts have clearly been moving towards a routine presumption that this is something that may fairly be left to the arbitrators themselves - entrusting them with the final decision on the matter. This is the effect, among other things, of the Supreme Court's recent holding in Pacificare, and changes in widely-used institutional rules. A similar presumption may be warranted when the analogous question is posed - when, that is, we ask, "who is the appropriate party to the proceeding?"
Number of Pages in PDF File: 86
Keywords: arbitration, FAA, federal common law, dispute resolution, multiple parties, litigation
JEL Classification: K12, K33, K41
Date posted: July 22, 2007 ; Last revised: June 1, 2010