Alan Scott Rau
University of Texas at Austin - School of Law; University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business
World Arbitration and Mediation Review, 2013
U of Texas Law, Public Law Research Paper No. 403
Energy Center Research Paper No. 2013-06
This paper was prepared for a presentation at the Institute for Transnational Arbitration/American Society of International Law program on “Gateway Issues in International Arbitration.”
It is quite common, in the case law and the secondary literature, to focus discussions in terms of “gateway” or “threshold” challenges to the arbitration of a commercial dispute. Like most metaphors, this is rife with ambiguity: The notion of a “gateway” may, purely as a semantic matter, direct us to distinguish between issues that must be resolved before a party can be permitted to proceed and fully adjudicate the “merits” of the dispute -- issues that may after all include such things as the non-payment of fees, or the untimely making of an application -- and those that need not be. Or alternatively, it may ask us to distinguish between issues that must be resolved before a party may even invoke arbitral jurisdiction -- and those that may instead be left to the arbitrators themselves. And even within this second category, it is still frequently unclear whether: (1) the metaphor of a “gateway” is being used to evoke what is a logically prior prerequisite to arbitral jurisdiction -- asking us, that is, to distinguish between those issues that (whenever raised) will condition the ultimate validity of an award -- and those that do not; or whether (2) the term is being used, instead, to evoke what is merely chronologically prior to arbitral proceedings -- asking us, that is, to distinguish between those issues that (whoever will have the final word on the subject) must be resolved before a party is permitted even to have access to the arbitral tribunal -- and those that need not be.
These last two questions are often conflated, but ought best be kept distinct. I discuss the question of timing and chronology, which is largely a matter of efficiency, but only the former question, I think, is truly challenging. The inquiry is thus into the allocation of decisionmaking authority between courts and arbitrators. This question -- the respective roles of courts and arbitral tribunals -- is, in one form or another, the foundational, primal question around which our whole law of arbitration revolves.
It is obligatory these days to begin and end every discussion with the Supreme Court’s decision in First Options, and in particular Justice Breyer’s suggestion there that parties may entrust arbitrators with the power to decide jurisdictional questions -- and if they have done so “clearly and unmistakably,” the tribunal’s decision on the subject will be entitled to the same deference as is any arbitral award. It seems fair to say that Justice Breyer’s discussion has often been overread. And in practice, and in positive law, the supposed lessons have now become marginalized -- have dwindled into insignificance -- to the point that to invoke them begins increasingly to sound hollow and perfunctory. This is why any requirement of “clear statement” -- even if in theory made necessary by Justice Breyer’s taxonomy -- is here so routinely and trivially satisfied.
This impression is reinforced by the common practice of fleshing out agreement through the use of institutional rules. Contractual incorporation of the Rules of the AAA -- adopted precisely to take advantage of the hint dropped by Justice Breyer -- is now routinely deemed to constitute party agreement to the arbitrability of “jurisdictional disputes.” This common reading has now become a default rule that treats a reference to the Rules as a simple “term of art” denoting the choice of a particular scheme for the allocation of power. And while the backstory, and the preconceptions, underlying other commonly-used bodies of institutional rules are entirely different, it was inevitable that U.S. courts have been led to treat all these facially-similar rules as identical.
If this is troubling in theory, one cannot avoid the impression that it doesn’t seem to make much of a difference in result. The point is illustrated nicely by two very recent decisions of our Second Circuit, the Thai-Lao and Schneider/Kingdom of Thailand cases. Reading them, it is hard to avoid the conclusion that in where U.S. arbitration law appropriately governs the agreement, the rules of arbitral institutions -- however they are construed -- are as likely as not to amount to a makeweight; it does no great harm to assume that they may be properly treated in the end as tangential to any actual decision. What seems “overdetermined” is that even if the challenges in such cases -- such as the right of a non-signatory to compel arbitration, or the existence of an approved investment under a BIT -- is somehow to be construed as “jurisdictional” (which I very much doubt) -- U.S. law will properly, and through a default rule methodology, allocate the decision to arbitrators. The implication is that even transnational cases will be expected to remain within the framework of the present complex structure of our common law -- notwithstanding the siren calls of “international consensus.”
Number of Pages in PDF File: 62
Keywords: arbitration, arbitrability, ADR, dispute resolution, jurisdiction, consent, international arbitration
JEL Classification: K12, K33, K40, K41
Date posted: March 31, 2013 ; Last revised: December 10, 2013