Originally from The American Review of International Arbitration

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ABSTRACT

In 2021 and 2022, the American Arbitration Association (AAA) and the International Centre for Dispute Resolution (ICDR) amended their arbitration rules to address a “potential controversy” said to be caused by the Restatement of the U.S. Law of International Commercial and Investor-State Arbitration. The “potential controversy” is over whether the rules providing that arbitrators have “the power to rule on [their] own jurisdiction” should be interpreted as delegation clauses—that is, as “clearly and unmistakably” delegating exclusive authority to resolve jurisdictional challenges to the arbitrators instead of the court. Most courts have so interpreted the rules.

By contrast, the Restatement interprets the rules as codifying competence-competence doctrine rather than constituting delegation clauses. Under the Restatement interpretation, the rules make it clear that if a party challenges the arbitrators’ authority in arbitration, the arbitrators do not have to suspend the arbitration in order for a court to decide the challenge. But the rules do not exclude the authority of a court to decide jurisdictional challenges raised first in a court proceeding.

The 2021/2022 amendments, which added “without any need to refer such matters first to a court,” simply state what was already implicit in the rules: that the arbitrators’ authority to rule on their own jurisdiction in matters before them means the arbitrators do not “need to refer such matters first to a court.” As such, it reinforces rather than rejects the Restatement interpretation of the rules as codifying competence-competence doctrine rather than constituting delegation clauses.

I.   INTRODUCTION

The American Arbitration Association (AAA), and its international division, the International Centre for Dispute Resolution (ICDR), have amended their arbitration rules to address a “potential controversy” said to be caused by the Restatement of the U.S. Law of International Commercial and Investor-State Arbitration (Restatement).  At issue are the AAA/ICDR rules providing that arbitrators have jurisdiction to decide challenges to their own jurisdiction. Prior to amendment, Rule R-7(a) of the AAA’s Commercial Arbitration Rules provided that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”  Former Article 19 of the ICDR’s International Arbitration Rules was substantially similar.  In 2021 and 2022, the AAA/ICDR amended these rules by adding “without any need to refer such matters first to a court” at the end.

The “potential controversy” is over whether the AAA/ICDR rules should be interpreted as a delegation clause—that is, as “clearly and unmistakably” delegating exclusive authority to resolve jurisdictional challenges to the arbitrators instead of the court under First Options of Chicago, Inc. v. Kaplan.  Most courts have so interpreted the rules.  By contrast, the Restatement interprets the unamended AAA/ICDR rules (and other institutional arbitration rules with similar language) as codifying competence-competence doctrine rather than acting as delegation clauses.  That is, under the Restatement interpretation, the rules make it clear that if a party challenges the arbitrators’ authority in arbitration, the arbitrators do not have to suspend the arbitration in order for a court to decide the challenge but can rule on it themselves. But the unamended rules do not exclude the authority of a court to decide jurisdictional challenges raised in a court proceeding by delegating that authority instead to the arbitrators.