The basic vice that Article 16(4) seeks to correct is inefficiency and wasted costs. Where a boycotting party clearly and promptly exits the arbitration, inefficiencies are unlikely to flow. In such cases, the rationale for Article 16(4) does not support barring a boycotting party from challenging or resisting enforcement of a later final award on the grounds of lack of jurisdiction. In my view, Article 16(3) (and by extension the proposed Article 16(4)) should only have a preclusive effect in relation to parties who continue to participate in an arbitration following a preliminary ruling on jurisdiction. Conversely, Article 16(3) should not have a preclusive effect in relation to non-participating or boycotting parties. In light of the above, I submit that the proposed Article 16(4) be further amended as follows and that a new Article 16(5) be introduced: (4) To avoid doubt, and subject to paragraph (5), it is declared that the failure to pursue a request made under paragraph (3) in a timely manner operates as a waiver of any right to later object to a ruling of the Arbitral Tribunal as to its jurisdiction. (5) Paragraph (4) applies only to a party that takes an active step in the arbitration following the publication by the Arbitral Tribunal of a preliminary ruling on jurisdiction (emphasis added). Conclusion In summary: (a) the revised formulation of Article 16(4) in the Final Report does not substantially differ from its original version contained in the Bill; (b) the Final Report asserts, without supporting reasoning, that Article 16(4) would not apply to parties that choose not to participate in the arbitration. This assumption is somewhat questionable. The revised Article 16(4) would benefit from an accompanying provision that makes it absolutely clear that the preclusive effect of Article 16(4) does not apply to non-participating parties; (c) moreover, and perhaps most significantly, the revised Article 16(4) over-reaches by applying to boycotting parties. Article 16(3) should only have a preclusive effect in relation to parties who continue to participate in an arbitration following a preliminary ruling on jurisdiction.
About the author
Albert Monichino, QC
Albert Monichino practises as a barrister, arbitrator and mediator practicing in Australia. He has over 20 years experience. He is a Chartered Arbitrator and is accredited as an advanced mediator. He was appointed Senior Counsel in 2010. He has a general commercial litigation practice in the superior Court of Australia, and also in commercial arbitrations (domestic and international). Types of matters handled include: • Construction and engineering disputes (e.g. acting as senior junior counsel for Fluor in the Fluor v Anaconda arbitration, 2001 – 2003, involving claims exceeding $A1billion); • Fnancial services and investment disputes; • Contractual disputes; • Minority shareholder and joint venture disputes; and • Intellectual property disputes.