I. The concept of arbitrability
Arbitrability indicates whether a dispute is “arbitrable”, i.e. capable of being settled by arbitration.1 Although arbitration is a private proceeding, the recognition and enforcement of a particular award may have an impact on any States involved.2 Certain matters may involve “public” rights and concerns, or interests of third parties, and in such circumstances the resolution of disputes via a private proceeding may be contested.3
American Safety Equip. Corp. v. J.P. Maguire, 391 F.2d 821 (2d Cir. 1968); BG Group Plc v. The Republic of Argentina, Final Award, 24 December 2007, para. 176; CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Tribunal on Objections to Jurisdiction, 17 July 2003, para. 27.
B. Objective and subjective arbitrability
Scholars readily distinguish between subjective and objective arbitrability. Subjective arbitrability (or “arbitrability ratione personae”) concerns certain individuals or entities that are considered to be unable to submit their disputes to arbitration due to their status or function, such as states or local authorities,4 (see also Jurisdiction Ratione personae). The objective arbitrability (or “arbitrability ratione materiae”) focuses on whether a certain subject-matter can be settled through arbitration (see also Jurisdiction Ratione materiae). According to Prof. Böckstiegel, in determining whether a matter is arbitrable one should consider that both criteria – i.e. subjective and objective arbitrability – supplement each other.5
II. Law applicable
In determining whether a dispute is “arbitrable”, a practitioner should look to relevant national or international law, depending upon where and at what stage of the proceedings the question arises (see also Applicable Law).6 As the ICSID Tribunal has pointed out, “arbitrability is governed by the law applicable to the arbitration or the arbitration clause”.7
A. Lex fori
Although addressing the issue of arbitrability, the UNCITRAL Model Law on International Commercial Arbitration (1985) with amendments as adopted in 2006 (“Model Law”), does not refer to the specific matters that are capable of settlement by arbitration.8 More specifically, Model Law Article 1, paragraph 5, provides that the Model Law shall not affect any provision of the lex fori regulating which disputes may not be submitted to arbitration, while Article 34, paragraph 2(b), stipulates that the arbitral award may be set aside only if, inter alia, the court finds that the subject matter is non-arbitrable under the law of the State.
Further, under Articles II and V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Arbitration Convention”), the law determining arbitrability serves as a basis for a court to refuse recognition and enforcement of an award; however, the New York Arbitration Convention does not address the question of the law determining arbitrability at the pre-award stage.9
B. The International Convention for the Settlement of Investment Disputes
III. Practical considerations
A. Effect on the validity of arbitration agreements
It is widely accepted that a non-arbitrable subject matter renders an arbitration agreement invalid,11 however it should also be noted that arbitrability is not a requirement for the valid conclusion of an arbitration agreement.12
SunReserve Luxco Holdings S.À.R.L, SunReserve Luxco Holdings II S.À.R.L and SunReserve Luxco Holdings III S.À.R.L v. Italian Republic, SCC Case No. V2016/32, Final Award, 25 March 2020, para. 400; Anatolie Stati and others v. Republic of Kazakhstan, SCC Case No. V116/2010, Memorandum Opinion of the US District Court for the District of Columbia and Order, 5 August 2016, para. 28.
B. Recent developments: Disputes arising from intra-EU Bilateral Investment Treaties
In recent years many tribunals have been faced with the question of whether they have jurisdiction in the context of disputes arising out of Intra-EU BITs (see also Intra-EU Claims as an Objection to Jurisdiction).13
Billiet, J. et al., International Investment Arbitration, A Practical Handbook, Maklu Publishers, 2016, p. 196.
Goode, R., Kronke, H. and McKendrick, E., Transnational Commercial Law, Oxford University Press, 2nd ed., 2015, para. 19.28.
Hanotiau, B., What Law Governs the Issue of Arbitrability, Arbitration International, Vol. 12, Issue 4, 1996.
Lew, J., Mistelis, L. and Kröll, S., Comparative International Commercial Arbitration, Kluwer, 2003, pp. 100, 130, 189, 193.
Mistelis, L. and Brekoulakis, S. (eds.), Arbitrability: International & Comparative Perspectives, Kluwer Law International, 2009, p. 10.
Muchlinski, P., Ortino, F. and Schreuer, C. (eds.), The Oxford Handbook of International Investment Law, Oxford University Press, 2008, p. 928.