Principle of competence-Competence

The principle of competence-competence along with the doctrine of separability is one of the most conceptual cornerstones1 of international arbitration. It works to ensure the effectiveness of arbitration agreement. This writing will introduce an overview of these concepts in aspect of its general features and consequences. Under the competence-competence principle, it is a general principle of international commercial arbitration that a tribunal is empowered to make a determination as to its own jurisdiction to deal with the substantive claims in dispute2. Accordingly, arbitrators can determine the effectiveness of arbitration clause, including its validity and scope of jurisdiction over the dispute. There are some possible consequences of the competence-competence principle: the arbitrators may have the power to continue to conduct arbitral proceeding despite one partys challenge to arbitration agreement. The competence-competence principle permits arbitrators to consider challenges to their jurisdiction and to continue to conduct the arbitration despite such challenges. In a broader way, the arbitrators also have the power to give official decision about challenge to arbitration agreement subject to juridical review or even no juridical review. It is important to recognize that the principle of competence-competence has both positive and negative effect. The positive effect is that it enables arbitrators to examine their own jurisdiction. It allows arbitrators to have to first opportunity to hear challenges to its jurisdiction and subsequently to come to decision prior to courts. On the other hand, this function as a negative effect restricts the role of the court to rule on the existence of arbitration agreement prior to the arbitral tribunals award on its jurisdiction. This negative effect generates a controversial question that at which stages of arbitral process courts may review of jurisdictional issuss. In practice, the acceptance of the principle competence-competence is not complete in national legal systems. The courts are actually empowered to rule on the jurisdiction of arbitral tribunal at any time during the arbitral process. There are some criticisms about this principle of competence-competence that there is no foundation for the arbitral tribunals power to rule on its own jurisdiction because arbitrators authority derives exclusively from the agreement of the parties. Thus, the arbitrators wont have enough power to decide on anything until an arbitral tribunal is established3. Practically, the arbitrators will never object to its jurisdiction due to the financial interest derived from fee earnings. In conclusion, the principle of competence-competence is one of the most important rules of international arbitration. Under this theory the arbitrators can determine the existence of the arbitration clause, its validity and scope, without the need to invoke the jurisdiction of a national
1

SEPARABILITY AND COMPETENCE-COMPETENCE IN INTERNATIONAL ARBITRATION: EX NIHILO NIHIL FIT? OR CAN SOMETHING INDEED COME FROM NOTHING? - ROBERT H. SMIT 2 The Competence-Competence Doctrine and the Enforcement of Arbitral Awards Herbert Smith 3 See Sphere Drake Insurance Ltd. v. All American Insurance Co., 256 F.3d 587, 591 (7th Cir. 2001)

court. However this principle has caused much controversy since it has both positive and negative effects in regard to the jurisdictional power of the arbitral tribunal and that of the court.