BY JACOB MUTEVEDZI
According to Mistelis and Brekoulakis (2009) the concept of arbitrability “involves the simple question of what types of issues can and cannot be submitted to arbitration and whether specific classes of disputes are exempt from arbitration proceedings”. When practitioners mention arbitrability, they are referring to objective arbitrability (arbitrability “ratione materiae”). In simple terms, objective arbitrability relates to the question of which matters can or cannot be submitted to arbitration. Depending on the jurisdiction, specific classes of disputes cannot be resolved by arbitration on account of public policy or on the basis that they are not covered by the arbitration agreement.
In Zimbabwe, arbitrability is governed by section 4 of the Arbitration Act [Chapter 7:15] (“the Act”). Section 4 (1) restates the concept of party autonomy in the following terms:
“(1) Subject to this section, any dispute which the parties have agreed to submit to arbitration may be determined by arbitration.”
Section 4 (2) of the Act enumerates the matters that are not capable of resolution by arbitration and those matters which can only be referred to arbitration if the courts expressly allow parties leave to do so. Section 4 (2) provides as follows:
“(2) The following matters shall not be capable of determination by arbitration—
(a) an agreement that is contrary to public policy; or
(b) a dispute which, in terms of any law, may not be determined by arbitration; or
(c) a criminal case; or
(d) a matrimonial cause or a matter relating to status, unless the High Court gives leave for it to be determined by arbitration; or
(e) a matter affecting the interests of a minor or an individual under a legal disability, unless the High Court gives leave for it to be determined by arbitration; or
(f) a matter concerning a consumer contract as defined in the Consumer Contracts Act [Chapter 8:03], unless the consumer has by separate agreement agreed thereto.
It is imperative to understand that there also exists the concept of subjective arbitrability (arbitrability “ratione personae”). Subjective arbitrability refers to whether a party to the arbitration agreement has authority to conclude that agreement. In the absence of such authorisation, the party has no capacity to conclude that arbitration agreement. This usually arises in disputes involving states and their agencies, or disputes involving parties linked in complex corporate arrangements and in certain multi-party and multi-contract disputes. In practice, objective and subjective arbitrability are complementary. Both must be examined in order to determine whether an arbitration agreement is valid and whether arbitration is admissible.
What then, is the basis of non-arbitrability? Article II (1) of the New York Convention provides an exception to the presumptive obligation of Contracting States, to afford arbitration agreements recognition. Municipal courts have no obligation to refer disputes to arbitration if such disputes are not “capable of settlement by arbitration”. In similar vein, Article V(2)(a) of the New York Convention provides that an award will not be recognised if “the subject matter of the difference is not capable of settlement by arbitration under the law of the state where recognition is sought.” These two provisions constitute the basis of non-arbitrability defences to both arbitration agreements and awards, under the New York Convention.
International arbitration statutes in most states prescribe certain categories of claims as incapable of resolution by arbitration. Article 1(5) of the Model Law, for example, provides that specified types of disputes may be treated as non-arbitrable.
People often enquire if there is any distinction between arbitrability and mandatory rules and public policy. Arbitrability, on the one hand, and public policy and mandatory rules, on the other, are similar in two respects. Firstly, all these notions are crafted to afford protection to some form of public or state interest. Secondly, both comprise grounds for nullifying an award or refusing to enforce it.
However, notwithstanding these similarities, the two notions have one important difference. The impact of public policy on the arbitrability of a dispute does not bar arbitrators from applying mandatory rules, but only from hearing cases which, because of their subject-matter, can only be heard by the courts. Simply put, arbitrability alludes to the arbitrators’ ability to determine a dispute. Once a dispute turns out to be non-arbitrable, the arbitral tribunal is barred from even deciding it. However, arbitral tribunals can and frequently determine disputes which are the subject of mandatory rules or public policies.
What law, then, applies to questions of arbitrability? Which law should be applied when assessing questions of arbitrability? This question is dealt with in Article V(2)(a) of the New York Convention, which provides that an award need not be recognised in a Contracting State if “the subject matter of the dispute is not capable of settlement by arbitration under the law of that country”. Article 36(1)(b)(i) of the UNCITRAL Model Law contains a similar provision.
It is clear, therefore, that the arbitrability of any given dispute is determined by the applicable laws of individual countries. By virtue of the concept of party autonomy, parties have broad latitude to submit all manner of disputes to arbitration; however that autonomy is limited by national laws which regulate the nature of matters capable of resolution by arbitration.
The restrictions imposed by national laws are varied. These limitations may concern themselves with the capacity of a party to conclude an arbitration agreement. Certain institutions, for example states or state entities, on account of policy considerations, may be barred from concluding arbitration agreements. Other limitations may be based on the subject matter. For example, a statute may prescribe that disputes over the custody of minor children are not capable of resolution by arbitration.
If a dispute is non-arbitrable, the arbitration agreement is a nullity. As a result, the arbitral tribunal would lack jurisdiction and the award might not be recognised and enforced. To ensure enforceability of their arbitral awards, arbitrators should generally determine arbitrability with specific reference to the law of the place of arbitration.
- Jacob Mutevedzi is a commercial lawyer and partner at Clairwood Chambers Attorneys and writes in his personal capacity. He can be contacted at +263775987784 or at email@example.com