on Draft Text of a Model Law on International Commercial Arbitration (‘Analytical Commentary’)24 states that consistent with the purpose underlying Article 16(2): any objection, for example, to the validity of the arbitration agreement may not later be invoked as a ground for setting aside … or for … refusal of recognition of enforcement of an award … these provisions on grounds for setting aside or refusing recognition or enforcement would remain applicable and of practical relevance to those cases … where a party did not participate in the arbitration, at least not submit a statement or take part in hearings on the substance of the dispute. 25 In this regard, Professor Gary Born has said: The only exception to this requirement, that a party challenge the arbitrator’s positive jurisdictional ruling immediately (or within 30 days) under Article 16(3), is where a party does not participate at all in the arbitral proceedings; in this instance, the Singaporean court would permit a challenge to the final award under Article 34 of the Model Law. 26 It is notable that on appeal the Singapore Court of Appeal in First Media did not doubt Belinda Ang J on this point. Indeed, the Court of Appeal did not consider the position of non-participating parties at all. Given the fact that the point is not free from uncertainty, it would be preferable for Article 16(4), or an accompanying article, to make it abundantly clear that it is not intended to apply to non-participating parties. Section 72 of the United Kingdom Arbitration Act 1996 is an example of such a clarifying provision. Although that Act is not based on the Model Law, section 72 may provide some guidance for
drafters in New Zealand.27 Precluding Boycotting Parties A serious shortcoming of the present 16(4) is that it reflects a ‘one-size-fits-all’ approach to the rights of parties to an arbitration to set aside or resist enforcement of awards on jurisdictional grounds, in circumstances where they have not sought court review of a preliminary ruling on jurisdiction. As such, it over-reaches. I submit that a more nuanced approach is required. It is to be remembered that a Respondent may adopt various strategies following a preliminary ruling on jurisdiction. In particular it may: (1) reserve its rights and continue to participate in the arbitration (as occurred in First Media); (2) withdraw from (ie boycott) the arbitration following the adverse preliminary ruling;28 or (3) seek court review of the preliminary ruling under Article 16(3). There are good policy reasons why the first strategy should not be permitted. It is hardly conducive to promoting efficiency in the arbitration process. As Belinda Ang J noted: the general principles of international arbitration hold true, viz, it should not be open to a party to hold off bringing a jurisdictional challenge and, at the same time, participate in the arbitration on the merits in the expectation that it can revive its jurisdictional challenge at a later stage should it prove to be unsuccessful in the arbitration. Such behaviour is bound to make a mockery of the finality and effectiveness of arbitral awards on jurisdiction. 29 But it is not entirely clear why a Respondent who withdraws from an arbitration following an adverse preliminary ruling on jurisdiction30 should be shut out from setting aside the award under Article 34 (ie relying on an active remedy), let alone resisting enforcement of the award under Article 36 (ie relying on a passive remedy).