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International Commercial Arbitration
Villanova University School of Law
Gotanda, John Y.

Steps to take when enforcing Arb. Agreement under NY Conv. Art. II (1) and (3):
A—Must first decide whether arbitrability questions are to be decided by cts. or arbitrators
B—What law governs the formation, validity, and legality of the alleged arb. agreement
C—After conflict of laws questions resolved, must consider issues of K formation, validity, and legality under applicable law
 
 
 
 
Questions Prof. told us to think about for each case:
1.      Who has authority to decide on the formation of underlying K? (Arbitrators)
2.      Who has the authority to decide on the formation of the arbitration agreement? (Cts.—F.A.A Chapters One and Two)
3.      What is the meaning of First Options requirement of “clear and unmistakable evidence” that the parties meant to create a binding arb. agreement?
4.      Which law applies to the question of the formation of the arb. agreement?
5.      What standard of proof is required to prove the formation of the arb. agreement?
6.      Valid if mentioned in standard forms? (UCC 2-207 says that terms are what the parties “agreed” upon; defined broadly)
7.       What do you do if the arb. agreement is indefinite/ambiguous/ or internally inconsistent/incoherent? (Stike it, fix it, Who fixes it?)
8.      Can an arb. agreement be formed by conduct? (no writing?)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEPARABILITY & WHO DECIDES EXISTENCE & VALIDITY: (pg. 1-3)
 
Separability of the Arb. Agreement from Rest of K
All Union case—pg. 59—(USSR Chamber of Commerce Arb. Commission)
Soviet Union formality requirement of 2 specific signatures on export K’s to be valid
Bermuda comp. argued that since the signatures were missing on the K, and thus the underlying K was invalid, then all clauses, including the arbitration clause, invalid
R—Court held that b/c of the arbitration clause’s procedural content, it is independent from the underlying K
àIf K invalid, Arb. Clause not necessarily so (this is well accepted in arb. law; see, for example, pg. 1027, Art. 21, (3)
Here, did not need the 2 signatures to create the “Arb. Agreement.” Though seems like a mere “clause,” really an independent contract/agreement!
R—Arb. Agreement can be recognized as invalid only when
(1)-defects in will (mistake, duress, fraud, etc.)
(2)-breach of the legal requirements relating to the content and form of arb. Agreements
 
WHO SHOULD HAVE THE AUTHORITY TO DECIDE WHETHER A PARTY ENTERED INTO AN ARB. AGREEMENT (Existence), AND IF SO WHETHER THE ARB. AGREEMENT IS VALID (Validity)?
 
 
                        Existence:
·        Elements of formation of an arb. agreement
·        Must be proved by plaintiff
·        Generally K formation law
–so in the United States—offer, acceptance, and consideration (look at it in terms of the “bargain”
 
                        Validity:
·        Affirmative Defenses such as: fraud, duress, mistake, illegality, unconscionability, incapacity, public policy
·        Pled and proved by defendant
 
 
**Most international arb. rules & laws say that the arbitrator has the authority to decide it’s own jurisdiction, so they can decide questions of both existence and validity (see Competence-Competence below for examples)
 
**U.S. view is that Existence & Validity are

bjections w/ respect to the existence or validity of the arb. agreement; shall have the power to determine the existence or the validity of the [underlying K]  
—Swiss Statute—pg. 1034, Art. 186, (1, 3)—The arbitral tribunal shall . . . decide on its jurisdiction by a preliminary decision. 
 
—ICC Rules—pg. 1061, Art. 6, (2)—If any party raises one or more pleas concerning the existence, scope, or validity of the arb. agreement, the (Arbitrator) may decide . . . that the arbitration shall proceed if it is prima facie satisfied that an arbitration agreement under the Rules may exist. Same!
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Case No. 5294—pg. 78—Validity
Again, who makes the decision about the scope & validity of the arbitration agreement?
 
Here, the ICC itself decided the question based on its own rules; see before, ICC Rules, pg. 1061, Art. 6 (2)
Their decision—the arb. agreement used the same language that the ICC uses. Just a small mistake as to where the ICC was actually located—Very Pro-Arbitration; if find the hook, you’re going
Counter argument—should an arbitrator really be able to decide its own jurisdiction when the document does not even name the arbitrator (said a mistake, but what if not a mistake?