Weissfisch v Julius,

An English court should exercise great caution before restraining an arbitrator from determining his own jurisdiction where the parties agreed to a foreign seat and governing law. Such restraint would ordinarily infringe the principles of international arbitration reflected in the New York Convention and the Arbitration Act 1996.

The principle of Kompetenz-Kompetenz permits an arbitrator to consider an objection based on his own alleged bias or incompetence. His determination is only the first step where it remains subject to review by the supervisory courts at the seat. An English injunction may exceptionally be justified, but special circumstances must be established for interim restraint pending resolution of a jurisdictional challenge.

The claimant sought a declaration that an arbitration agreement governed by Swiss law and providing for a Geneva seat was void. He also sought to restrain the appointed arbitrator, a solicitor who had previously acted for the parties, from continuing to act. The agreement contained extensive waivers addressing the arbitrator’s prior professional relationships and permitted him to use information acquired through those relationships.

David Steel J dismissed an application for an interim injunction restraining the arbitrator from determining his own jurisdiction pending the High Court’s determination of applications challenging the English court’s jurisdiction and seeking a stay. The Court of Appeal granted permission to appeal and immediately heard the appeal. The central issue was whether the foreign-seated arbitrator should be restrained on an interim basis from conducting the jurisdiction hearing.

1. Appeal dismissed. The Court granted permission to appeal but upheld David Steel J’s refusal of an interim injunction. No special circumstances justified restraining the arbitrator from holding a hearing on his own jurisdiction before the High Court determined the pending stay and jurisdiction applications.

2. The parties, with independent legal advice, had expressly selected Swiss law and Geneva as the arbitral seat. The natural consequence was that questions concerning the validity of the unusual arbitration clauses would ordinarily be resolved in Switzerland under Swiss law. That allocation of supervisory responsibility accorded with the principles of international arbitration reflected in the New York Convention and the Arbitration Act 1996.

3. By virtue of section 2(2) of the Arbitration Act 1996, sections 30, 32, 67 and 72 did not apply to this foreign-seated arbitration. Sections 9 and 44, by contrast, expressly permitted specified English assistance concerning a foreign arbitration. Even if section 37 of the Supreme Court Act supplied jurisdiction to grant the requested injunction, that jurisdiction required great caution because restraint would interfere with the authority of the courts at the chosen seat.

4. Kompetenz-Kompetenz may require an arbitrator to determine an objection that he lacks competence because of alleged bias. It was therefore not inherently objectionable for the arbitrator to consider matters involving his own prior dealings with the parties. His ruling would be only the first stage: it would remain open to review by the Swiss supervisory courts or to further consideration in England if the judge hearing the pending applications so ruled.

5. An English court may exceptionally restrain an arbitrator acting under an agreement for arbitration seated abroad. Whether exceptional circumstances ultimately existed was reserved for the judge hearing the substantive stay and jurisdiction applications. The claimant had established none warranting interim restraint, particularly because participation in the jurisdiction hearing would neither affirm the arbitration agreement nor prevent a subsequent challenge.

1. Court of Appeal (Civil Division): Permission to appeal was granted, but the appeal was dismissed: [2006] EWCA Civ 218.
2. High Court, Queen’s Bench Division (Commercial Court): David Steel J dismissed the claimant’s application for an interim injunction on 12 January 2006. No neutral or report citation is stated.