Under the New York Convention, other international arbitration instruments, and most national arbitration regimes, parties enjoy broad autonomy to draft international arbitration agreements in the fashion they desire. The parties’ autonomy inevitably produces a wide range of different arbitration agreements. Arbitration clauses can be very short (a few words) or quite long (many pages); they may be drafted in various languages and with varying degrees of skill and linguistic proficiency; they may incorporate model clauses, either in whole or part, or start from scratch; they may provide for arbitration of no disputes, some contractual disputes, all contractual disputes, or virtually all disputes (contractual, tort, or otherwise) connected to their relationship; they may provide for either ad hoc or institutional arbitration; they may designate an arbitral seat; they may select the arbitrators, impose limitations on the identities of the arbitrators, or designate an appointing authority; and they may otherwise structure the arbitration process.1

The interpretation of the arbitration agreements that parties negotiate and draft is, in practice, frequently required and is of critical importance to the international arbitral process. Questions of interpretation often concern the scope of arbitration clauses, but can also include other topics (such as the incorporation of institutional rules). This chapter examines the interpretation of international arbitration agreements, focusing particularly on international commercial arbitration agreements.


The most frequent, and important, issue that arises in the interpretation of international arbitration agreements relates to the “scope” of the parties’ agreement; that is, what category of disputes or claims have the parties agreed to submit to arbitration? Disputes frequently arise concerning the application of arbitration agreements to particular contract claims or, even more commonly, non-contractual claims based upon tort or statutory protections.

1. Rules of Construction for International Arbitration Agreements

The following materials examine the issues that arise in connection with the interpretation of international arbitration agreements, particularly with regard to their scope. They also examine both the choice-of-law rules and the substantive principles of contract construction that arise in disputes over the interpretation of arbitration agreements.


708 F.2d 1458 (9th Cir. 1983)

NELSON, Circuit Judge. Defendant-appellant Ssangyong Construction Co. (“Ssangyong”) appeals the district court’s interlocutory order staying the action and sending to arbitration certain issues raised in a complaint filed by plaintiff-appellee Mediterranean Enterprises, Inc. (“MEI”). Ssangyong contends that the district court improperly interpreted the scope of the arbitration clause in a contract between the parties….

MEI, a California corporation, provides engineering services for modular housing projects in developing countries. In May, 1978, MEI was invited by the Saudi Arabian Royal Commission to bid on certain construction projects in Saudi Arabia. In connection with this invitation, MEI contacted Ssangyong, a Korean contractor. On September 9, 1978, in Los Angeles, MEI and Ssangyong signed a “Preliminary Agreement for Formation of a Joint Venture” (“the Agreement”). The arbitration clause in the Agreement provides as follows: “Any disputes arising hereunder or following the formation of joint venture [sic] shall be settled through binding arbitration pursuant to the Korean U.S. Arbitration Agreement, with arbitration to take place in Seoul, Korea.”

Subsequently, MEI and Ssangyong entered into an Agency Agreement … with Trac Enterprises, providing that Trac would serve as the agent of the joint venture in Saudi Arabia. The contemplated MEI-Ssangyong joint venture was never actually formed.… MEI alleges that Ssangyong used the Agreement merely to gain access to the Saudi projects, and wrongfully commenced the projects in association with Trac (named as a defendant [by MEI in its complaint]) rather than with MEI. Ssangyong claims that no breach occurred….

MEI commenced this action in district court. The complaint contains six counts against Ssangyong: breach of contract and breach of fiduciary duty (counts 1, 2 and 4), inducing and conspiracy to induce breach of contract [the Trac Agency Agreement] (count 7), quantum meruit (count 8), and conversion (count 9).… [T]he district court rejected MEI’s contention that Ssangyong had fraudulently inserted the words “arising hereunder or” in the arbitration clause … [Thereafter, following a hearing, the district court issued the following order concerning the scope of the arbitration clause:] “The issues raised by Counts 1, 2 and 4 of [MEI’s] Complaint against [Ssangyong] are found to be arbitrable and are ordered to arbitration between the said parties pursuant to paragraph 16 of the [Agreement].… “

Ssangyong argues that federal policy favors the enforcement of arbitration agreements, especially in international business transactions. MEI does not dispute the existence of such a federal policy, but counters by arguing that “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit,” quoting United Steel Workers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960). Both statements are sound and not at all irreconcilable. Ultimately, the issue of arbitrability “is to be determined by the contract entered into by the parties.” The task before this court remains one of contractual interpretation. Ssangyong argues that the arbitration clause “was designed to cover ‘any’ disputes between the parties.” MEI argues that the phrase “arising hereunder” means “arising under the contract itself” and was not intended to cover “matters or claims independent of the contract or collateral thereto.” Neither side points to, and additional research has not uncovered, cases in this circuit which define “arising hereunder” in the context of an arbitration agreement. However, we are persuaded by a line of cases from the Second Circuit that MEI’s interpretation is the more reasonable one.2

We interpret “arising hereunder” as synonymous with “arising under the Agreement.” The phrase “arising under” has been called “relatively narrow as arbitration clauses go.” Sinva, Inc. v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 253 F.Supp. 359, 364 (S.D.N.Y. 1966). In In re Kinoshita & Co., 287 F.2d 951, 953 (2d Cir. 1961), Judge Medina concluded that when an arbitration clause “refers to disputes or controversies ‘under’ or ‘arising out of’ the contract,” arbitration is restricted to “disputes and controversies relating to the interpretation of the contract and matters of performance.” Judge Medina reasoned that the phrase “arising under” is narrower in scope than the phrase “arising out of or relating to,” the standard language recommended by the [AAA]….

In Michele Amoruso e Figli v. Fisheries Dev. Corp., 499 F.Supp. 1074, 1080 (S.D.N.Y. 1980), the court discussed the Supreme Court’s interpretation of an arbitration clause, noting that “arising out of or relating to this agreement” had been labelled a “broad arbitration clause.” The court went on to say that in the case before it, “the clause is limited to differences or disputes ‘arising out of this Agreement’; notably, it omits reference to disputes ‘relating to’ the agreements. The omission is significant in the Second Circuit.” The omission should be significant in this circuit as well. The standard clause suggested in the U.S.-Korean Commercial Arbitration Agreement contains the phrase, “out of or in relation to or in connection with this contract, or for the breach thereof.” We have no difficulty finding that “arising under” is intended to cover a much narrower scope of disputes, i.e., only those relating to the interpretation and performance of the contract itself.

In light of our interpretation of the arbitration clause in the Agreement, we must next decide whether the district court properly sent “the issued raised by” counts 1, 2 and 4 to arbitration. This entails examining MEI’s complaint to determine the extent to which the counts against Ssangyong refer to disputes or controversies relating to the interpretation and performance of the contract itself. Counts 1, 2 and 4 alleging breach of the Agreement and breach of the fiduciary duty created by the Agreement, clearly fall within the scope of the arbitration clause, and are thus proper subjects for arbitration. However, counts 7, 8 and 9 appear to raise issues that are either primarily or wholly outside the scope of the arbitration clause. Count 7 alleges that Ssangyong induced and conspired to induce breach of the Trac Agency Agreement, a separate and distinct contract. Ssangyong’s alleged conduct appears to relate only peripherally to the MEI-Ssangyong Agreement, and could have been accomplished even if the Agreement did not exist. Count 7 therefore alleges activity and raises issues which are predominantly unrelated to the central conflict over the interpretation and performance of the Agreement.

Count 8 sets forth a claim in quantum meruit, which by its own terms rests on the theory that services were performed and accepted pursuant to an implied contract or “quasi-contract.” An action does not lie on an implied contract where there exists between the parties a valid express contract which covers the identical subject matter.… Thus, by definition, count 8 does not directly relate to the interpretation and performance of the Agreement itself.

Count 9 alleges that Ssangyong converted to its own use and benefit certain prequalification documents delivered by MEI. The Agreement provides only that each of the parties would bear his own costs at the prequalification stage. MEI’s claim that Ssangyong misappropriated these documents appears to raise issues largely distinct from the central conflict over the interpretation and performance of the Agreement itself.

By sending the “issues raised by” counts 1, 2 and 4 to arbitration, the district court authorized the arbitrator, in accordance with the expressed intention of the parties, to decide those issues relating to the interpretation and performance of the Agreement. Counts 1, 2 and 4 appear to be completely arbitrable. By deciding those issues necessary to resolve counts 1, 2 and 4, the arbitrator might well decide issues which bear in some way on the court’s ultimate disposition of counts 7, 8 and 9. Nothing in the district court’s order, or in this opinion would bar such a result. The arbitrator’s award, if it clearly exceeds the scope of his authority by deciding a matter not within the ambit of the arbitration clause, will not be given effect by the court. After the district court receives the results of the arbitration, it should proceed to adjudicate those issues which fall outside the scope of the arbitration clause….


(1998) 90 FCR 1 (Australian Fed. Ct.)

BEAUMONT J. [Disputes arose under a charter party, in which both contractual claims (for breach of the charter party’s terms) and non-contractual claims (for alleged breaches of statutory duties and misrepresentations in connection with concluding the charter party) were asserted. The Federal Court of Australia considered whether the non-contractual claims were within the scope of the arbitration agreement. The arbitration clause of the charter (clause 34) provides]:


         “Any dispute arising from this charter or any Bill of Lading issued hereunder shall be settled in accordance with the provisions of the Arbitration Act, 1950, and any subsequent Acts, in London, each party appointing an Arbitrator, and the two Arbitrators in the event of disagreement appointing an Umpire whose decision shall be final and binding upon both parties hereto. This Charter Party shall be governed by and construed in accordance with English Law. The Arbitrators and Umpire shall be commercial men normally engaged in the Shipping Industry….”


[T]he appellants have made a number of claims in the alternative, including the “Non-Contractual Claims” which are based on representations said to have been made in Australia by one Australian company to another in September 1995 as to the inspection system which had been adopted. These representations are said (a) to constitute misleading and deceptive conduct contrary to §52 of the Trade Practices Act 1974; (b) to have been made negligently; and (c) to involve the breach of a collateral warranty.

The words in the provision which are presently material are: “[a]ny dispute arising from this charter or any Bill of Lading issued hereunder….” Since the contract’s chosen proper law is English law, that law will govern its interpretation. It appears that there is no English authority on the words “arising from” in the present kind of context and that these are not terms of art or words that have a special or technical significance. In my opinion, for our purposes the key expression in the provision is the preposition “from.” In the present context this preposition is used to show the origin of something (see The Cambridge International Dictionary of English).

What was the origin of the “non-contractual claims”? In my opinion, their origin was the making of the specific representations alleged to have been made in September 1995 rather than the charter party or bill of lading.… [W]hilst the charter party and the bill of lading are background matters, their terms and their operation are not ingredients in the “Non-Contractual Claims.” In that sense, those claims are independent and free-standing.

This conclusion is reinforced by a consideration of the practicalities which the parties clearly had in mind. In choosing arbitrators with commercial backgrounds, the parties indicated a choice for the practical solution of disputes of the kind referred to the arbitrators. But to read clause 34 as contemplating a reference to such persons of a problem of considerable private international legal complexity, let alone the application of a foreign (Australian) law in the form of the Trade Practices legislation, would seem to contradict a desire for a practical outcome. We should not attribute such a bizarre intention to these parties. It is not likely that they intended to refer to these arbitrators in London any dispute however remotely connected with the charter party or the bill of lading and however special its legal characteristics in terms of English law. It appears that there is no counterpart of the Trade Practices Act in England. The consumer protection provisions in Part V of the Trade Practices Act were derived from American legislation and constitute an exhaustive code in the field covered.… In these circumstances, I need not consider the questions that would have arisen had I been of the view that clause 34 was, on its true construction, capable of applying to “Non-Contractual Claims.” …


EMMETT, J…. [W]here there is a dispute as to a claim in respect of conduct which is antecedent to the making of a contract, I do not consider that such a dispute can be said to arise from the contract in question. In relation to the Addendum Contract, for example, the conduct complained of by Hi-Fert was antecedent to and did not depend upon the contractual relationship that existed by reason of the Addendum Contract. That latter contractual relationship was induced by the conduct complained of. In the present case, the Non-Contractual Claims are not generated by the Charter Contract. They will not be resolved by examining the Charter Contract but by considering and assessing evidence external to it. They do not arise out of the Charter Contract nor do they arise from the Charter Contract….

In the present case, the parties have chosen restricted language to describe those disputes which are to be settled by arbitration. The question is whether the Non-Contractual Claims can fairly be said to arise “from” the Charter Contract. The Alleged Representations, which are the basis of the Non-Contractual Claims, had nothing to do with the performance of the Charter Contract by WBC. WBC did not own or operate the Kiukiang Career. The Alleged Representations were concerned only with the question of extending the Charter Contract for the purposes of fixing the Kiukiang Career. The Charter Contract was no more than background to the making of the Alleged Representations which, having been acted upon, led to its terms being attracted to the arrangement relating to the Kiukiang Career. Accordingly, I consider that none of the Non-Contractual Claims arise from the Charter Contract. Therefore, they are not subject to clause 34.

MITSUBISHI MOTORS CORP. v. SOLER CHRYSLER-PLYMOUTH, INC. 473 U.S. 614 (1985) (also excerpted above at pp. 48692)

JUSTICE BLACKMUN. [Mitsubishi Motors Corporation (“Mitsubishi”) is a Japanese corporation that manufactures automobiles in Japan. Mitsubishi is a joint venture between Chrysler International (“CISA”), a Swiss corporation owned by Chrysler Corporation, and Mitsubishi Heavy Industries, a Japanese corporation. Soler Chrysler-Plymouth, Inc. (“Soler”), is a Puerto Rico corporation. Soler entered into a distributor agreement with CISA that provided for the sale by Soler of Mitsubishi-manufactured vehicles within a designated area. At the same time, CISA, Soler, and Mitsubishi entered into a sales procedure agreement (“sales agreement”) that provided for the direct sale of Mitsubishi products to Soler and governed the terms and conditions of such sales.

Paragraph VI of the Sales Agreement, labelled Arbitration of Certain Matters, provides:


         “All disputes, controversies or differences which may arise between [Mitsubishi] and [Soler] out of or in relation to Articles I-B through V of this Agreement or for the breach thereof, shall be finally settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association.”


Soler failed to maintain the sales volume specified in its agreements and requested that Mitsubishi delay or cancel shipment of several orders. Mitsubishi and CISA refused, and Mitsubishi later brought an action against Soler in the District of Puerto Rico under the FAA and the Convention. Mitsubishi sought an order to compel arbitration. Shortly after filing the complaint, Mitsubishi filed a request for arbitration before the Japan Commercial Arbitration Association seeking damages from Soler for breach of the parties’ sales agreement. Soler denied the allegations and counterclaimed against both Mitsubishi and CISA under the Sherman Act; the Puerto Rico competition statute; common law defamation rules; and the Puerto Rico Dealers’ Contract Act. In the counterclaim premised on the Sherman Act, Soler alleged that Mitsubishi and CISA had conspired to divide markets in restraint of trade.]3

At the outset, we address the contention raised in Soler’s cross-petition that the arbitration clause at issue may not be read to encompass the statutory counterclaims stated in its answer to the complaint. In making this argument, Soler does not question the Court of Appeals’ application of Paragraph VI of the Sales Agreement to the disputes involved here as a matter of standard contract interpretation.4 Instead, it argues that as a matter of law a court may not construe an arbitration agreement to encompass claims arising out of statutes designed to protect a class to which the party resisting arbitration belongs “unless [that party] has expressly agreed” to arbitrate those claims, by which Soler presumably means that the arbitration clause must specifically mention the statute giving rise to the claims that a party to the clause seeks to arbitrate….

We do not agree, for we find no warrant in the [FAA] for implying in every contract within its ken a presumption against arbitration of statutory claims. The [FAA]’s centerpiece provision makes a written agreement to arbitrate “in any maritime transaction or a contract evidencing a transaction involving commerce … valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. §2. The “liberal federal policy favoring arbitration agreements,”Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), manifested by this provision and the Act as a whole, is at bottom a policy guaranteeing the enforcement of private contractual arrangements: the Act simply “creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.”…

Accordingly, the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute. The court is to make this determination by applying the “federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” And that body of law counsels


         “that questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration…. The [FAA] establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.”


Thus, as with any other contract, the parties’ intentions control, but those intentions are generously construed as to issues of arbitrability. There is no reason to depart from these guidelines where a party bound by an arbitration agreement raises claims founded on statutory rights.… The [FAA] provides no basis for disfavoring agreements to arbitrate statutory claims by skewing the otherwise hospitable inquiry into arbitrability.

That is not to say that all controversies implicating statutory rights are suitable for arbitration. There is no reason to distort the process of contract interpretation, however, in order to ferret out the inappropriate. Just as it is the congressional policy manifested in the [FAA] that requires courts liberally to construe the scope of arbitration agreements covered by that Act, it is the congressional intention expressed in some other statute on which the courts must rely to identify any category of claims as to which agreements to arbitrate will be held unenforceable. For that reason, Soler’s concern for statutorily protected classes provides no reason to color the lens through which the arbitration clause is read. By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum. It trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration. We must assume that if Congress intended the substantive protection afforded by a given statute to include protection against waiver of the right to a judicial forum, that intention will be deducible from text or legislative history….


JUSTICE STEVENS, Dissenting…. [First,] as a matter of ordinary contract interpretation, there are at least two reasons why that clause does not apply to Soler’s antitrust claim against Chrysler and Mitsubishi. First, the clause only applies to two-party disputes between Soler and Mitsubishi. The antitrust violation alleged in Soler’s counterclaim is a three-party dispute. Soler has joined both Chrysler and its associated company, Mitsubishi, as counterdefendants…. Only by stretching the language of the arbitration clause far beyond its ordinary meaning could one possibly conclude that it encompasses this three-party dispute.

Second, the clause only applies to disputes “which may arise between MMC and BUYER out of or in relation to Articles I-B through V of this Agreement or the breach thereof….” Thus, disputes relating to only 5 out of a total of 15 Articles in the Sales Procedure Agreement are arbitrable. Those five Articles cover: (1) the terms and conditions of direct sales (matter such as the scheduling of orders, deliveries, and payment); (2) technical and engineering changes; (3) compliance by Mitsubishi with customs laws and regulations, and Soler’s obligation to inform Mitsubishi of relevant local laws; (4) trademarks and patent rights; and (5) Mitsubishi’s right to cease production of any products. It is immediately obvious that Soler’s antitrust claim did not arise out of Articles I-B through V and it is not a claim “for the breach thereof.” The question is whether it is a dispute “in relation to” those Articles….

The federal policy favoring arbitration cannot sustain the weight that the Court assigns to it. A clause requiring arbitration of all claims “relating to” a contract surely could not encompass a claim that the arbitration clause was itself part of a contract in restraint of trade. Nor in my judgment should it be read to encompass a claim that relies, not on a failure to perform the contract, but on an independent violation of federal law. The matters asserted by way of defense do not control the character, or the source, of the claim that Soler has asserted.5 Accordingly, simply as a matter of ordinary contract interpretation, I would hold that Soler’s antitrust claim is not arbitrable….

[Second,] until today all of our cases enforcing agreements to arbitrate under the [FAA] have involved contract claims. In one, the party claiming a breach of contractual warranties also claimed that the breach amounted to fraud actionable under §10(b) of the Securities Exchange Act of 1934. Scherk v. Alberto-Culver Co. But this is the first time the Court has considered the question whether a standard arbitration clause referring to claims arising out of or relating to a contract should be construed to cover statutory claims that have only an indirect relationship to the contract. In my opinion, neither the Congress that enacted the [FAA] in 1925, nor the many parties who have agreed to such standard clauses, could have anticipated the Court’s answer to that question.

On several occasions we have drawn a distinction between statutory rights and contractual rights and refused to hold that an arbitration barred the assertion of a statutory right. Thus, in Alexander v. Gardner Denver Co., 415 U.S. 36 (1974), we held that the arbitration of a claim of employment discrimination would not bar an employee’s statutory right to damages under Title VII of the Civil Rights Act of 1964 … notwithstanding the strong federal policy favoring the arbitration of labor disputes.… In view of the Court’s repeated recognition of the distinction between federal statutory rights and contractual rights, together with the undisputed historical fact that arbitration has functioned almost entirely in either the area of labor disputes or in “ordinary disputes between merchants as to questions of fact,” it is reasonable to assume that most lawyers and executives would not expect the language in the standard arbitration clause to cover federal statutory claims. Thus, in my opinion, both a fair respect for the importance of the interests that Congress has identified as worthy of federal statutory protection, and a fair appraisal of the most likely understanding of the parties who sign agreements containing standard arbitration clauses, support a presumption that such clauses do not apply to federal statutory claims….


[1974] 2 NZLR 246 (Wellington Ct. App.)

[excerpted above at pp. 14950]


XVII Y.B. Comm. Arb. 542 (1992) (Genoa Corte di Appello)

[excerpted above at pp. 33637]


[2007] UKHL 40 (House of Lords)

[excerpted above at pp. 20511]


6 Arb. Int’l 79 (German Bundesgerichtshof)

[excerpted above at pp. 19498]


XX Y.B. Comm. Arb. 41 (1995)

[excerpted above at pp. 29092]


Article 808-quater

In case of doubt, the arbitration agreement shall be interpreted in the sense that the arbitral jurisdiction extends to all disputes arising from the contract or from the relationships to which the agreement refers.


134 S.Ct. 1198 (2014)

[excerpted above at pp. 23347]


XXI Y.B. Comm. Arb. 681 (1996) (Vaud Tribunal Cantonal)

[excerpted above at pp. 35960]


    1. Scope of agreement to arbitrate. Even if the parties have concluded a valid agreement to arbitrate, that agreement may not encompass a particular dispute. One court put the issue as follows:


         “Imagine a contract for construction of a one room log cabin. The parties agreed that disputes over the glass used in the windows would be subject to arbitration. If the owner were to sue the builder on broad breach of contract and tort causes of action, alleging drafty walls, a leaky roof, and a complete lack of wooden flooring, it would defy logic to force the owner to submit the entire dispute to arbitration, when all he had agreed to arbitrate was disputes over window glass.”Mesquite Lake Assocs. v. Lurgi Corp., 754 F.Supp. 161 (N.D. Cal. 1991).


                Is there any doubt about the correctness of this reasoning? Might it not be more efficient to require parties to arbitrate disputes that are related to matters falling within their agreement to arbitrate, even if those disputes are not themselves covered by the arbitration agreement? What is wrong with that analysis?

    2. Rules of construction of scope of arbitration agreements. Rules of construction play an important role in the arbitral process; to a greater extent than many other contractual provisions, arbitration clauses are relatively formulaic and deal with unforeseen and fluid events. Most arbitration agreements provide “All disputes arising out of this contract shall be finally resolved by arbitration” or “All disputes and controversies relating to this contract shall be finally resolved by arbitration.” Applying these formulae to often unpredictable and complex facts seldom produces clear-cut results. Equally, it is trite to observe that most arbitration clauses are included in the parties’ contract relatively late in the negotiating process, without detailed consideration of their likely future impact.

                As a consequence, the parties’ contractual language will seldom expressly resolve issues relating to the coverage of an arbitration clause. Instead, general rules of interpretation and presumptions regarding the parties’ intent play an important role in ascertaining the meaning of such agreements. Recall the discussion of this issue in the Judgment of 27 February 1970. To what extent is it appropriate to attempt to formulate general rules of construction for international arbitration agreements? How would these rules apply in an international context? Do U.S. businessmen and lawyers have the same expectations and understandings as Peruvian, Singaporean or Czech businessmen and lawyers?

    3. Language of international arbitration agreements. To what extent does interpretation of the scope of an international arbitration agreement turn on the language of the agreement? Is the text of an agreement not the starting point for any interpretative analysis? Many courts have questioned efforts to distinguish between different linguistic formulations used in arbitration provisions. Note in particular the analysis in Fiona Trust, rejecting efforts at fine interpretation of arbitration agreements. Note also the approach in Mitsubishi Motors and the Judgment of 27 February 1970. Compare the approach in Ssangyong and Hi-Fert.

                Is it sensible to distinguish between formulations such as “arising under” and “in connection with” or “relating to”? Do you think that, in general, parties really intend different meanings to attach to these different terms? As a general rule, what presumption about the intended scope of an arbitration clause makes sense? That the parties wanted all disputes having some connection to their contractual relations and dealings to be arbitrated? Isn’t this consistent with arbitration’s promise of a single, efficient dispute resolution mechanism? Note the reasoning in Fiona Trust, Judgment of 27 February 1970, and ICC Case No. 6149. Note also the reasoning in Roose. On the other hand, if one does not pay attention to the specific wording of arbitration agreements, and draw distinctions between various phrases, how is one to ascertain the parties’ intentions?

    4. Authorities adopting restrictive interpretation of scope of arbitration agreement. Some authorities hold that arbitration clauses must be interpreted restrictively, resolving doubts about the coverage of particular disputes against coverage. See, e.g., Award in ICC Case No. 7920, XXIII Y.B. Comm. Arb. 80 (1998) (scope of arbitration clause is to be interpreted “strictly,” but validity of clause is governed by “principle of effectiveness”); Flood v. Country Mut. Ins. Co., 41 Ill. 2d 91, 94 (1968) (“clear language” required; “arbitration agreements will not be extended by construction or implication”); Shuffman v. Rudd Plastic Fabrics Corp., 407 N.Y.S.2d 565, 566 (N.Y. App. Div. 1978) (“If equivocal, the scope of a commercial arbitration clause must be read conservatively”). These state law rules are almost unanimously held to be preempted under the FAA. See supra pp. 5657, 36567; Progressive Cas. Ins. Co. v. CA Reaseguradora Nacional de Venezuela, 991 F.2d 42 (2d Cir. 1993).

                Consider the analyses in Ssangyong and Hi-Fert. What is the rationale for a restrictive interpretative approach to arbitration agreements? What do you make of the argument that, since arbitration involves a waiver of fundamental civil rights of access to judicial remedies, agreements to arbitrate should be interpreted narrowly?

    5. Neutral interpretation of scope of arbitration agreement. Other authorities have held that arbitration agreements should be interpreted without resort to either a “pro-arbitration” or “restrictive” presumption. See, e.g., Amco Asia Corp. v. Indonesia, Decision on Jurisdiction in ICSID Case No. ARB/81/1 of 25 September 1983, 23 I.L.M. 359 (1984) (“a convention to arbitrate is not to be construed restrictively, nor, as a matter of act, broadly or liberally. It is to be construed in a way which leads to find out and to respect the common will of the parties.”). Is the decision in Ssangyong an example of a neutral approach to interpretation of arbitration agreements? What is the rationale for interpreting arbitration agreements neither restrictively nor liberally, but simply in accordance with their language? How often is the language of arbitration agreements particularly instructive about their intended scope?

    6. “Pro-arbitration” bias of interpretation of international arbitration agreements. In a number of jurisdictions, national law provides that international arbitration agreements should be interpreted in light of a strong “pro-arbitration” presumption. Consider Mitsubishi, Fiona Trust, and Judgment of 27 February 1970. What approach does each of these decisions adopt to interpretation of arbitration agreements?

                Mitsubishi held that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Or, as the Court put it even more expansively in United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582-83 (1960), arbitration must be compelled unless the court can say with “positive assurance that the arbitration clause is not susceptible to an interpretation that covers the asserted dispute.” How does this standard compare to that in Fiona Trust? In the Judgment of 27 February 1970?

                Consider the approach of Article 808-quater of the Italian Code of Civil Procedure. How does this provision approach the interpretation of arbitration agreements?

    7. Rationale for “pro-arbitration” rules of interpretation. Do either national arbitration statutes or the New York Convention contain legislative provisions governing the interpretation of arbitration agreements? If not, then what authorizes national courts to develop presumptions governing the construction of international arbitration agreements? Does a presumption interpreting arbitration clauses expansively, in favor of arbitration, accord with the likely intent of private parties?

                Consider the rationale for a pro-arbitration rule of construction outlined in Fiona Trust. What exactly are the reasons for interpreting an arbitration clause expansively? Compare the analysis in Mitsubishi and First Options. How does this differ from that in Fiona Trust?

                What are the reasons in favor of “one-stop shopping”? Consider what happens to the parties’ disputes in Ssangyong (in particular, the final paragraphs of the opinion). Does this make commercial sense? Does it comport with the parties’ objectives in agreeing to arbitrate?

    8. “Pro-arbitration” bias in interpreting international arbitration agreements under New York Convention. Are there particular reasons for interpreting international arbitration agreements, as distinguished from domestic agreements to arbitrate, expansively? What would these reasons be? Note that U.S. judicial decisions under the New York Convention have adopted an especially broad federal pro-arbitration approach to interpretation, see, e.g., Sourcing Unlimited, Inc. v. Asimco Int’l, Inc., 526 F.3d 38, 45 (1st Cir. 2008) (“the policy in favor of arbitration is even stronger in the context of international business transactions”); Simula, Inc. v. Autoliv, Inc., 1999 U.S. App. LEXIS 8273 (9th Cir.) (“strong federal policy favoring arbitral dispute resolution … applie[s] with special force in the field of international contracts”); Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd, 139 F.3d 1061, 1065 (5th Cir. 1998) (“[presumption of arbitrability] applies with special force in the field of international commerce”). Is this approach justified?

    9. Interpretation of arbitration agreement with exceptions. What does it mean to interpret an arbitration agreement “expansively” or in a “pro-arbitration” manner? Suppose an arbitration agreement contains exclusions. For example, what if an arbitration clause provides that “all disputes relating to this contract, except for disputes under Article V hereof, shall be finally resolved by arbitration.” Should a “pro-arbitration” presumption still apply? Why?

                Note that the arbitration clause in Mitsubishi was drafted narrowly (“All disputes, controversies or differences which may arise between [Mitsubishi] and [Soler] out of or in relation to Articles I-B through V of this Agreement or for the breach thereof, shall be finally settled by arbitration….”). If the parties have drafted their arbitration clause narrowly, or with specified exception, why should they be presumed to have wanted an expansive arbitration agreement? Are the policies underlying a pro-arbitration rule of construction nonetheless applicable? Compare Louis Dreyfus Negoce SA v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001) (“Where the arbitration clause is narrow, a collateral matter will generally be ruled beyond its purview”); Chevron U.S.A., Inc. v. Consolidated Edison Co., 872 F.2d 534, 537-38 (2d Cir. 1989) (“even a narrow arbitration clause must be construed in light of the presumption in favor of arbitration”); Advanstar Commc’ns Inc. v. Beckley-Cardy, Inc., 1994 WL 176981, at *3 (S.D.N.Y.) (“A narrow arbitration clause must be construed in favor of arbitration”).

  10. Interpretation distinguished from validity or formation. When do “pro-arbitration” rules of interpretation apply? Consider BG Group and Nokia. What rules of construction and standards of proof are applied in each case? Recall the discussion regarding the standard of proof of a valid agreement to arbitrate. See supra pp. 36367, 37592.

                Recall the BG Group decision, excerpted above at pp. 23347. Did it present a question of interpretation of the “arbitration agreement”? Do the same considerations that apply to the scope of an arbitration agreement also apply to issues of formation?

  11. Relevance of generally applicable rules of contract interpretation. Aside from the “pro-arbitration” presumption of many developed national arbitration regimes, what rules of construction apply to arbitration agreements? What rules of construction were applied in First Options? Is there any reason that generally applicable rules of contract construction should not apply?

  12. Standard formulae in arbitration clauses. There are a limited number of fairly standard formulae used in arbitration clauses to describe the scope of such provisions. The most common formulae are examined below.

        (a)   “Relating to.” A number of lower courts have concluded that the phrase “relating to” extends an arbitration clause to a broad range of disputes. Pennzoil Exploration. & Prod. Co., 139 F.3d 1061 (“relating to” language in arbitration agreement is “broad”; clause not limited to claims under contract, and also reaches claims that “‘touch’ matters covered by” the contract); Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir. 1996) (“arising out of or relating to” parties’ agreement is “broad” language, covering “all disputes having a significant relationship to the consulting agreement regardless of whether those claims implicated the terms of the consulting agreement”).

        (b)   “In connection with.” Various authorities have commented on the “in connection with” formula, usually in ways that suggest it is broad. See Simula, Inc. v. Autoliv, Inc., 1999 U.S. App. LEXIS 8273 (9th Cir.) (“in connection” formula “must be interpreted liberally”); J.J. Ryan & Sons v. Rhone Poulenc Textile, SA, 863 F.2d 315, 321-22 (4th Cir. 1988) (clause covering “‘all disputes arising in connection with the present contract’ must be construed to encompass a broad scope of arbitrable issues.… It embraces every dispute between the parties having a significant relationship to the contract regardless of the label attached to the dispute.”).

        (c)   “Arising under.” The Ssangyong court holds that arbitration clauses using the formulation “arising under” are “narrow” and do not encompass various tort claims that do not directly involve application of the parties’ contractual commitments. Other courts have adopted similar positions. See Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir. 1982) (“An arbitration clause covering disputes arising out of the contract or business between the parties evinces a clear intent to cover more than just those matters set forth in the contract.”); Ashville Invs. Ltd v. Elmer Contractors Ltd [1988] 3 WLR 867 (English Ct. App.) (misrepresentation claims not caught by “arising under” language, but were covered by “in connection therewith”).

        (d)   “Arising out of.” National courts and arbitral tribunals are divided in their interpretations of “arising out of” clauses. Some courts have concluded that this formula is narrow, equating it with “arising under” provisions. Tracer Research Corp. v. Nat’l Environmental Servs. Co., 42 F.3d 1292 (9th Cir. 1994) (“The ‘arising out of’ language is of the same limited scope as the ‘arising under’ language” and does not reach misappropriation of trade secrets claim); Ethiopian Oilseeds & Pulses Corp. v. Rio Del Mar Foods Inc., [1990] 1 QB 86 (English High Ct.). Other authorities suggest that “arising out of” is broader than “arising under.” Am. Recovery Corp. v. Computerized Thermal Imaging, Inc. , 96 F.3d 88, 93 (4th Cir. 1996).

  13. Distinction between scope of arbitration clause and scope of related choice-of-law clause. As discussed above, it is common (and advisable) for international contracts to contain both an arbitration clause and a choice-of-law clause. See infra p. 983. The two provisions are closely related and must frequently be applied to the same issues. Nonetheless, as a practical matter, arbitration clauses and choice-of-law clauses are often drafted in differing terms. For example, choice-of-law clauses sometimes provide that the parties’ “agreement shall be governed by the law of State X,” while arbitration clauses often apply to “all disputes relating to” the parties’ agreement.

                It is generally well-settled that choice-of-law clauses and arbitration clauses may, if the parties so agree, have different scopes. S+L+HSp A v. Miller-St. Nazianz, Inc., 988 F.2d 1518 (7th Cir. 1993) (disputes excluded from contracts’ choice-of-law clause nonetheless subject to contract’s arbitration clause). Why would parties agree to such an arrangement? Should an agreement’s choice-of-law clause and its arbitration clause be presumed to have identical scopes, absent clear contrary evidence? Why?

  14. Application of arbitration agreements to statutory claims. Parties to international arbitration agreements frequently assert claims based on statutory protections under national law. As Mitsubishi illustrates, these claims often raise questions concerning the scope of the parties’ arbitration agreement.

        (a)   Arbitrability of statutory claims. As Mitsubishi illustrates, there is no absolute prohibition in most developed jurisdictions against the arbitration of non-contractual statutory claims. Note that Article II(1) of the New York Convention defines the Convention’s scope as extending to agreements to arbitrate “any differences which have arisen or which may arise between [the parties] in respect of a defined legal relationship, whether contractual or not.” That formulation clearly extends to non-contractual—and therefore statutory—claims. Does the decision in Hi-Fert question this conclusion?

                        As discussed below, national courts have also long held that some types of statutory claims are “nonarbitrable”—that is, that particular statutory rights cannot be the subject of a binding arbitration agreement. For a discussion of the nonarbitrability doctrine, see supra pp. 475510.

        (b)   “Pro-arbitration” rule of interpretation applicable to statutory claims. Mitsubishi held that the parties had clearly intended to arbitrate the antitrust claims asserted by Soler. Mitsubishi also rejected any presumption that an arbitration clause would not extend to statutory claims. On the contrary, Mitsubishi held that the FAA’s “pro-arbitration” rule of interpretation is fully applicable to statutory and other non-contractual claims. Mitsubishi, 473 U.S. at 626 (“There is no reason to depart from these [pro-arbitration] guidelines where a party bound by an arbitration agreement raises claims founded on statutory rights”). See also Good(e) Bus. Sys., Inc. v. Raytheon Co., 614 F.Supp. 428 (W.D. Wisc. 1985) (“there is no presumption against arbitration of statutory claims”); Singer v. Jefferies & Co., 571 N.Y.S.2d 680, 683 (N.Y. 1991) (“A court’s obligation under the [FAA] to liberally interpret and enforce arbitration agreements is not diminished when the underlying controversy involves a violation of a Federal statute”).

                        Are the foregoing decisions persuasive? Do you believe that parties ordinarily consider the existence and arbitrability of statutory claims—not based on the contract itself—when they include an arbitration provision in their agreement? Should “pro-arbitration” biases also apply to statutory claims? With any modifications? Compare Justice Stevens’ dissent in Mitsubishi and the court’s analysis in Hi-Fert.

  15. Arbitrability of tort claims. It is common for disputes to arise in international arbitration over the arbitrability of common law tort claims. In a footnote, Mitsubishi observed that the district court held that the parties’ arbitration clause did not cover common law defamation claims asserted against Mitsubishi and CISA by Soler. As a result, the parties’ arbitration clause failed to achieve the objective of consolidating all litigation in a single forum. How could the language of the parties’ arbitration agreement in Mitsubishi have been improved, so as to cover defamation claims?

        (a)   Arbitrability of tort claims. There is no general bar under the laws of most jurisdictions to inclusion of tort claims within the scope of an arbitration clause. See supra pp. 483502 and infra pp. 53132. In addition, it is frequently said that a party may not defeat an arbitration clause by casting its claims in tort, rather than contract. Ford v. NYLcare Health Plans of the Gulf Coast, Inc., 141 F.3d 243, 250-51 (5th Cir. 1998) (“Basing the arbitrability of an action merely on the legal label attached to it would allow artful pleading to dodge arbitration of a dispute otherwise ‘arising out of or relating to’ (or legally dependent on) the underlying contract. To avoid this contrivance, courts look at the facts giving rise to the action and to whether the action ‘could be maintained without reference to the contract’….”); Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 22 (2d Cir. 1995) (plaintiff cannot “’avoid the broad language of [an] arbitration clause by the casting of its complaint in tort’”).

        (b)   “Pro-arbitration” presumptions applicable to tort claims. As Mitsubishi indicates, the FAA’s “pro-arbitration” presumption is fully applicable to common law tort claims. Nylcare Health Plans, 141 F.3d at 250-51; Collins & Aikman Prods. Co., 58 F.3d at 22. The same conclusion applies under the analysis in Fiona Trust. How would the court in Hi-Fert Pty Ltd deal with this issue?

        (c)   Tort claims under particular arbitration agreements. Numerous decisions have held that particular tort claims were within the scope of particular arbitration agreements. See, e.g., Hicks v. Cadle Co., 355 F.Appx 186 (10th Cir. 2009) (claims for defamation and intentional infliction of emotional distress); Judgment of 16 November 1987, XVI Y.B. Comm. Arb. 585 (1991) (Italian Corte di Cassazione) (tort, unjust enrichment and restitution claims); Judgment of 3 May 1980, VIII Y.B. Comm. Arb. 394 (1983) (Yokohama Dist. Ct.) (tort claims); Partial Award in ICC Case No. 7319, XXIV Y.B. Comm. Arb. 141 (1999) (unfair competition claim).

                        On the other hand, tort claims have also frequently been held to fall outside the scope of the parties’ arbitration agreement. See, e.g., Cape Flattery Ltd v. Titan Maritime LLC, 647 F.3d 914, 924 (9th Cir. 2011) (“arising under” arbitration clause must be interpreted narrowly and does not encompass “tort claim based on Hawaii and maritime tort law”); N. Cal. Newspaper Guild Local 52 v. Sacramento Union, 856 F.2d 1381, 1383 (9th Cir. 1998) (clause “limit[ing] arbitrable disputes to those involving ‘application of’ the agreement” only covered disputes “involving construction of the substantive provisions of the contract”); Award in Italian Arbitration Association Case No. 41/92 of 1993, XXII Y.B. Comm. Arb. 178 (1997) (only claims under parties’ contract held arbitrable).

        (d)   What approach should be taken to arbitrability of tort claims? What is the right approach to determining whether tort claims are arbitrable? If parties’ arbitration clauses are generally silent, or if one questions the wisdom of fine distinctions between formulae such as “arising under” and “relating to,” what criteria can be used to decide whether the parties agreed to arbitrate a particular tort claim? For some efforts to articulate general presumptions, see Kroll v. Doctor’s Assocs., Inc., 3 F.3d 1167, 1170 (7th Cir. 1993) (“touchstone of arbitrability in such situations is the relationship of the tort alleged to the subject matter of the arbitration clause”); Aspero v. Shearson Am. Express, Inc., 768 F.2d 106, 109 (6th Cir. 1985) (claim “goes to the core” of parties’ contractual relations); Becker Autoradio (U.S.A.), Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39, 47 (3d Cir. 1978) (claim “derive[s] from the [contractual] relationship”). Consider also the general formulae in Roose and Article 808-quater of the Italian Code of Civil Procedure.

  16. Disputes arising after contract terminated. The fact that a dispute does not arise, and a party does not assert claims, until after the parties’ contract has terminated does not necessarily prevent the dispute from being arbitrated pursuant to an arbitration clause in the underlying (and expired) contract. A leading U.S. decision on the issue is Nolde Bros., Inc. v. Bakery & Confectionery Workers Union, 430 U.S. 243, 250 (1977), where the Court held that “the parties’ obligations under their arbitration clause survived contract termination when the dispute was over an obligation arguably created by the expired agreement.” This is arguably a consequence of the separability presumption, permitting the arbitration agreement to survive the underlying contract. Is there any reason to conclude, as a matter of interpretation, that the parties would not have intended their arbitration clause to survive and continue to provide a means of resolving disputes that arose during the course of their contractual dealings, even after those dealings conclude?

  17. Disputes arising before arbitration agreement is made. It is, of course, possible to conclude an arbitration agreement that applies to an existing dispute. Indeed, in earlier eras, so-called “submission agreements” were the only form of arbitration agreement that were enforceable. See supra pp. 1628, 18688.

                Parties sometimes enter into commercial contracts, containing ordinary arbitration clauses, which are later invoked with respect to disputes arising before the contract was made. This gives rise to interpretative questions as to whether the arbitration clause was intended to have retroactive application. See Zink v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 13 F.3d 330 (10th Cir. 1993) (rejecting “contention that an agreement to arbitrate a dispute must pre-date the actions giving rise to the dispute”); Whisler v. H.J. Meyers & Co., 948 F.Supp. 798 (N.D. Ill. 1996) (arbitration clause covers disputes arising “out of transactions that occurred prior to signing of agreement”). Is there any reason that an arbitration agreement should not be interpreted to apply to disputes pre-dating conclusion of the agreement to arbitrate?

  18. Disputes involving multiple agreements. As Ssangyong illustrates, disputes arise in which the parties have entered in a number of different agreements, each with (or without) a separate dispute resolution mechanism. This can create interpretative questions, as well as procedural quagmires, with parallel or overlapping arbitrations under different rules. Many national courts have in principle been willing to conclude that disputes under one agreement are arbitrable, if the parties have so agreed, under an arbitration provision of a different agreement. See, e.g., ARW Exploration Corp. v. Aguirre, 45 F.3d 1455 (10th Cir. 1995) (where 5 of 6 related agreements included arbitration clauses, disputes under 6th agreement could be arbitrated); Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, 585 F.2d 39 (3d Cir. 1978) (dispute over subsequent oral agreement subject to arbitration provision in prior written agreement); Hart Enter. Int’l, Inc. v. Anhui Provincial Imp. & Exp. Corp. , 888 F.Supp. 587 (S.D.N.Y. 1995) (arbitration clause in sales agreement applied to claims arising from subsequent settlement agreement (which did not contain an arbitration clause)); Judgment of 20 September 2011, 30(2) ASA Bull. 449, 454-55 (2012) (Swiss Fed. Trib.) (arbitration clause in contract extends to disputes under related contracts).

                On the other hand, the existence of a separate arbitration provision in a related agreement is presumably strong evidence that disputes under that agreement were meant to be arbitrated under its dispute resolution provisions—not those of some other contract. Nordin v. Nutri/Sys., Inc., 897 F.2d 339, 345 (8th Cir. 1990); Netherlands Curacao Co., NV v. Kenton Corp., 366 F.Supp. 744 (S.D.N.Y. 1973). Suppose that Contract A has an ICC arbitration clause and Contract B, which is closely related, has an AAA arbitration clause. Should disputes under the two contracts be regarded as subject to arbitration under either one of the individual contract’s arbitration clauses? Why or why not?

  19. Interpretation of “unlimited” arbitration agreements. Consider the arbitration clause at issue in Roose. Note that its literal terms provided for arbitration of all disputes between two named parties. Why didn’t the court give effect to those literal words? Suppose a dispute arose that had to do with a completely different, unrelated contract between the same parties; would the clause quoted above apply? Is the Roose court’s gloss on what the parties intended persuasive? Can you think of another gloss? Does there need to be a gloss? Compare the approach of Article 808-quater of the Italian Code of Civil Procedure.

  20. Interpretation of investment arbitration agreements. The rules of construction discussed above were developed in the context of international commercial arbitration agreements. Should the same rules apply in an investment arbitration? Suppose the question is whether a dispute is covered by Article 8 of the U.K./Bosnia-Herzegovina BIT or Article 25 of the ICSID Convention. Should those provisions be interpreted in a pro-arbitration fashion? What about an arbitration clause in an investment contract? A provision in national foreign investment legislation?

  21. Interpretation of inter-state arbitration agreements. To what extent do the rules of interpretation developed in commercial arbitration contexts apply to the interpretation of inter-state arbitration agreements? Note that there may not be the same presumption of one-stop shopping. What other structural differences are there in the inter-state and commercial contexts that arguably affect rules of construction?

2. Allocation of Competence to Interpret International Arbitration Agreements

The interpretation of international arbitration agreements also raises questions regarding the allocation of jurisdictional competence to decide disputes over the scope of such agreements. That is, who (a court or arbitral tribunal) decides disputes over the scope of an international arbitration agreement? The materials excerpted below explore this question.


514 U.S. 938 (1995)

[excerpted above at pp. 23033]


886 F.2d 469 (1st Cir. 1989)

TORRUELLA, Circuit Judge. The plaintiff appeals from a district court order refusing its request for a permanent stay of arbitration proceedings.… Apollo Computer, Inc. (“Apollo”) and Dicoscan Distributed Computing Scandinavia AB (“Dico”) entered into an agreement granting Dico, a Swedish company the right to distribute Apollo’s computers in four Scandinavian countries. Helge Berg and Lars Arvid Skoog, the defendants in this action, signed the agreement on Dico’s behalf in their respective capacities as its chairman and president. The agreement contained a clause stating that all disputes arising out of or in connection with the agreement would be settled in accordance with the [1988 ICC] Rules, and another clause that stated that the agreement was to be governed by Massachusetts law. The agreement also provided that it could not be assigned by Dico without the written consent of Apollo.

In September 1984, … Apollo notified Dico that it intended to terminate the agreement, effective immediately. Dico then filed for protection from its creditors under Swedish bankruptcy law and subsequently entered into liquidation, with its affairs being handled by its trustee in bankruptcy. The trustee assigned Dico’s right to bring claims for damages against Apollo to the defendants. In May 1988, the defendants filed a complaint and a request for arbitration with the ICC.… Apollo rejected arbitration, claiming that there was no agreement to arbitrate between it and the defendants, and that assignment of Dico’s contractual right to arbitrate was precluded by the agreement’s nonassignment clause. The ICC requested both parties to submit briefs on the issue. On December 15, 1988, the ICC’s Court of Arbitration decided that pursuant to its rules, the arbitrator should resolve the issue of arbitrability, and directed the parties to commence arbitration proceedings to resolve that issue and, if necessary, the merits.

[Apollo] sought a permanent stay of the arbitration … on the grounds that there is not an arbitration agreement between the parties.… [T]he district court denied the request to stay arbitration.… The district court first decided that the parties had explicitly agreed to have the issue of arbitrability decided by the arbitrator. Notwithstanding this conclusion, the court then proceeded to analyze the issue of arbitrability itself. It determined that Dico would have the right to seek arbitration of the underlying claims if it had pursued them on its own behalf. The only remaining issue, the court reasoned, was whether the agreement’s nonassignment clause prevented the defendants from asserting Dico’s right to arbitrate. The court ruled that it did not because, under Massachusetts law, a general nonassignment clause will be construed as barring only the delegation of duties, not the assignment of rights….

We … find that the parties contracted to submit issues of arbitrability to the arbitrator…. Both parties agree that under the [FAA], the general rule is that the arbitrability of a dispute is to be determined by the court. See Necchi v. Necchi Sewing Machine Sales Corp. , 348 F.2d 693, 696 (2d Cir. 1965) (Marshall, J.); AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649 (1986). Parties may, however, agree to allow the arbitrator to decide both whether a particular dispute is arbitrable as well as the merits of the dispute. See Necchi, 348 F.2d at 696.

In this case, the parties agreed that all disputes arising out of or in connection with their contract would be settled by binding arbitration “in accordance with the rules of arbitration of the International Chamber of Commerce.” Article 8.3 of the ICC’s [1988] Rules of Arbitration states:


         “Should one of the parties raise one or more pleas concerning the existence or validity of the agreement to arbitrate, and should the [International Court of Arbitration of the ICC] be satisfied of the prima facie existence of such an agreement, the [Court of Arbitration of the ICC] may, without prejudice to the admissibility or merits of the plea or pleas, decide that the arbitration shall proceed. In such a case, any decision as to the arbitrator’s jurisdiction shall be taken by the arbitrator himself.”


Article 8.4 of the ICC’s [1988] Rules of Arbitration states:


         “Unless otherwise provided, the arbitrator shall not cease to have jurisdiction by reason of any claim that the contract is null and void or allegation that it is inexistent provided that he upholds the validity of the agreement to arbitrate. He shall continue to have jurisdiction, even though the contract itself may be inexistent or null and void, to determine the respective rights of the parties and to adjudicate upon their claims and pleas.”


The contract therefore delegates to the arbitrator decisions about the arbitrability of disputes involving the existence and validity of a prima facie agreement to arbitrate. Both the ICC’s Court of Arbitration and the district court determined that a prima facie agreement to arbitrate existed. Therefore, they reasoned, Article 8.3 requires the arbitrator to determine the validity of the arbitration agreement in this specific instance—in other words, decide whether the arbitration agreement applies to disputes between Apollo and the assignees of Dico.

Apollo did not discuss this issue in its brief. At oral argument, it averred that Article 8.3 is inapplicable because no prima facie agreement to arbitrate exists between it and the defendants. We are unpersuaded by this argument. The relevant agreement here is the one between Apollo and Dico. The defendants claim that Dico’s right to compel arbitration under that agreement has been assigned to them. We find that they have made the prima facie showing required by Article 8.3. Whether the right to compel arbitration survives the termination of the agreement, and if so, whether that right was validly assigned to the defendants and whether it can be enforced by them against Apollo are issues relating to the continued existence and validity of the agreement.

Ordinarily, Apollo would be entitled to have these issues resolved by a court. By contracting to have all disputes resolved according to the Rules of the ICC, however, Apollo agreed to be bound by Articles 8.3 and 8.4. These provisions clearly and unmistakably allow the arbitrator to determine her own jurisdiction when, as here, there exists a prima facie agreement to arbitrate whose continued existence and validity is being questioned. The arbitrator should decide whether a valid arbitration agreement exists between Apollo and the defendants under the terms of the contract between Apollo and Dico. Consequently, without expressing any opinion on the merits of the issues raised by Apollo, we affirm the district court’s order denying a permanent stay of the arbitration proceedings.


    1. Respective roles of courts and arbitrators in interpreting international arbitration agreements. Compare the respective roles of the court and the arbitral tribunal in interpreting the scope of the arbitration agreements in Mitsubishi, Hi-Fert, and Ssan-gyong, on the one hand, and Apollo Computer, on the other. Is it the court or the arbitrator that decides the scope of the parties’ arbitration clause in each case? Are the first three decisions consistent with the fourth one? Note that Ssangyong holds that certain claims are outside the scope of the arbitration agreement and shall not be arbitrated. Would that result have been possible under the analysis in Apollo? Are there material differences between the arbitration agreements in the three cases that might explain the different approaches? Between the types of claims or disputes that are at issue?

    2. Rationale for allocations of competence to interpret scope of arbitration agreements. What is the rationale for a national court to interpret the scope of an international arbitration agreement? What is the rationale for the arbitral tribunal doing so? Suppose that the parties’ arbitration agreement specifically provides that the arbitrators are to resolve disputes about its scope. Then what result? Suppose that the validity of the arbitration agreement is conceded by both parties. In this case, haven’t the parties clearly agreed to arbitrate questions about the scope of the arbitrators’ competence? Is such an agreement not binding under Article II of the New York Convention and Article 8 of the UNCITRAL Model Law?

                Suppose, however, that the parties have not expressly agreed that the arbitrators will resolve disputes about the scope of their arbitration agreement. Is such an agreement nonetheless implied? Is not judicial interpretation of the scope of the parties’ arbitration agreement—in a national court, likely of one party—inconsistent with the basic purpose of international arbitration? If the parties have entered into a valid arbitration agreement, where the arbitrators will decide some significant category of disputes, is it not likely that they intended the arbitrators to decide where their competence ends? Would this be a sensible presumption?

    3. Allocation of competence under FAA to interpret scope of arbitration clause. Reread First Options and Apollo. How do they allocate competence to interpret the scope of an arbitration agreement?

        (a)   First Options ’presumption that questions of “arbitrability” are for judicial resolution. As discussed above, the Supreme Court held in First Options that disputes concerning “arbitrability questions” can in principle be dispatched to the arbitrator for decision, but that whether or not this will be ordered depends upon what the parties’ arbitration agreement was intended to mean and upon presumptions which apply to ascertaining the parties’ intent. See supra pp. 23033, 28083. The Court adopted a presumption in First Options that arbitration agreements do not ordinarily submit questions of arbitrability to the arbitrators. According to the First Options Court, only “clear and unmistakable” evidence will support a conclusion that “arbitrability” questions must be arbitrated. See supra pp. 28182. Note that Apollo (a pre-First Options decision) expressly adopted a similar presumption that disputes over the scope of an arbitration agreement are to be resolved by courts, not arbitrators, but then held that the presumption had been rebutted by virtue of the ICC Rules.

        (b)   Applicability of First Options’ presumption for judicial resolution of arbitrability questions to interpretation of scope of arbitration agreement. Should the First Options’ presumption in favor of judicial resolution of arbitrability questions apply to the interpretation of the scope of a concededly existent and valid arbitration agreement? Consider the rationale in First Options for the presumption. If the parties have agreed to arbitrate their disputes rather than litigate them, isn’t it more likely that they assumed that arbitrators would resolve questions about how far their arbitration clause reached? Recall that, in international transactions, parties often agree to arbitrate in order to avoid national court proceedings in either party’s home forum. See supra p. 111. Does this support a presumption that the scope of international arbitration agreements should be resolved by the arbitrators?

                        In Granite Rock Co. v. Int’l Bhd of Teamsters, 130 S.Ct. 2847 (2010), the U.S. Supreme Court made clear that the First Options presumptive allocation of competence applied to issues of interpretation of an arbitration agreement. The Court held: “Under that framework, a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute. To satisfy itself that such agreement exists, the court must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce. Where there is no provision validly committing them to an arbitrator, these issues typically concern the scope of the arbitration clause and its enforceability. In addition, these issues always include whether the clause was agreed to, and may include when that agreement was formed.” Id. at 2856 (emphasis in original). Similarly, most U.S. lower courts have held that First Options does apply to disputes about the scope of an arbitration clause, but have also frequently found that First Options’ presumption in favor of judicial resolution has been overcome, citing a variety of rationales (discussed below). See also Toledo Tech., Inc. v. INA Walzlager Schaeffer KG, 1999 WL 681557 (N.D. Ohio) (interpretation of arbitration clause subject to arbitration under First Options); Port Auth. of N.Y. &N.J. v. Office of the Contract Arbitrator, 660 N.Y.S.2d 408 (N.Y. App. Div. 1997) (same); In re Ras Sec. Corp., 674 N.Y.S.2d 303 (N.Y. App. Div. 1998) (same).

        (c)   Consequences of conclusion that parties agreed to arbitrate disputes regarding interpretation of scope of arbitration agreement. Recall the consequences, under the FAA, of a conclusion that the parties agreed to arbitrate a question of “arbitrability.” Under First Options, such an agreement authorizes the arbitrators to finally resolve the issue in question, subject to only very limited judicial review. See supra pp. 23033, 28081. Given these consequences, First Options required that agreements to arbitrate “arbitrability” questions require “clear and unmistakable” evidence. Does this rationale apply (or apply fully) to agreements to arbitrate disputes over interpretation?

    4. Application of First Options’ allocation of competence where institutional rules grant arbitrators power to interpret scope of parties’ arbitration agreement. As discussed above, leading institutional rules grant arbitral tribunals authority to determine challenges to their own jurisdiction, including disputes over the scope of an arbitration clause. See supra p. 271; 2012 ICC Rules, Art. 6; 2014 LCIA Rules, Art. 23.

        (a)   ICC Rules. As Apollo indicates, Article 8(3) of the 1988 ICC Rules provided that the ICC International Court of Arbitration would decide challenges to the “prima facie” jurisdiction of an ICC arbitral tribunal and that “any decision as to the arbitrator’s jurisdiction shall be taken by the arbitrator himself”; Article 8(4) provided that the arbitrator shall have jurisdiction notwithstanding claims that the parties’ contract is void or nonexistent. (Article 6 of the 2012 ICC Rules contains substantially identical provisions. See pp. 18485 of the Documentary Supplement.) Apollo interprets Articles 8(3) and 8(4) of the 1988 ICC Rules as delegating to the arbitrator the power to decide disputes over the scope of the arbitration agreement. Note that the 1998 and 2012 ICC Rules expressly provide that decisions on the scope of the arbitration agreement are for the arbitral tribunal to make. See also Qualcomm, Inc. v. Nokia Corp., 466 F.3d 1366, 1374 (Fed. Cir. 2006) (“the parties clearly and unmistakably intended to delegate arbitrability questions to an arbitrator as evidenced by their incorporation of the AAA Rules”); Contec Corp., 398 F.3d at 208; Shaw Group Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 118, 125 (2d Cir. 2003) (ICC arbitration clause “clearly and unmistakably evidences the parties’ intent to arbitrate questions of arbitrability”); Société Generale v. Raytheon European Mgt & Sys. Co., 643 F.2d 863, 869 (1st Cir. 1981); Daiei Inc. v. U.S. Shoe Corp., 755 F.Supp. 299, 303 (D. Haw. 1991). Compare J.J. Ryan & Sons v. Rhone Poulenc Textile SA, 863 F.2d 315, 318-19 (4th Cir. 1988) (directly considering scope of ICC arbitration clause without reference to Article 8); Butler Prods. Co. v. Unistrut Corp., 367 F.2d 733 (7th Cir. 1966); Andrew Martin Marine Corp. v. Stork-Werkspoor Diesel BV, 480 F.Supp. 1270 (D. La. 1979) (interpreting ICC clause broadly, but without reference to Article 8).

                        Is Apollo’s interpretation of the Articles 8(3) and 8(4) of the 1988 ICC Rules (equivalent to Articles 6(3)-(5) and 6(9) of 2012 ICC Rules) a fair reading of those provisions? Is any other interpretation plausible? Note again the consequence of concluding, under First Options, that the parties agreed to arbitrate disputes about the scope of their arbitration clause; such an agreement permits the arbitral tribunal to finally resolve the (jurisdictional) issue in question, subject to only minimal judicial review. Is this what the ICC Rules should be permitted as allowing?

        (b)   Other institutional arbitration rules. Compare Articles 6(3)-(5) and 6(9) of the 2012 ICC Rules and Article 23(1) of the LCIA Rules with Article 23(1) of the UNCITRAL Rules, excerpted at pp. 18485, 269 & 170 of the Documentary Supplement. Does the latter provision accomplish the same thing? Is this treatment of the issue of jurisdiction a reason for or against selecting such rules?

        (c)   Criticism of reliance on institutional arbitration rules under First Options. U.S. decisions relying on First Options and the ICC (and other) institutional rules to grant arbitral tribunals competence finally to resolve jurisdictional disputes have been criticized on the grounds that the rules are not intended to authorize arbitrators to make final and binding jurisdictional decisions. See Rau, Everything You Really Need to Know About “Separability” in Seventeen Simple Propositions, 14 Am. Rev. Int’l Arb. 1, 107-09 & n.323 (2003) (“It seems obvious that such a provision [like Art. 6 of the ICC Rules granting arbitrators competence to rule on their own jurisdiction] is meant to restate the notion of compétence/compétence and as such is deeply rooted in the premises and presuppositions of European procedural law—that is, it is apparently not intended in any way to amount to a final allocation of decision-making authority…. In an alien legal environment, seeing arbitration primarily as an extension of contract law and having only First Options to look to, American courts and commentators seem regularly to miss the point. So they have tended to view Art. 6 broadly as a grant to arbitrators—similar in effect to the … AAA Rules—of the power to make a binding determination of their own jurisdiction.”). Is that persuasive?

                        Consider the following:

                       “[T]he more appropriate analysis is that the First Options standard can be satisfied by the incorporation of institutional rules, like the ICC and UNCITRAL Rules, but only if those rules include both (a) an express grant of authority to decide jurisdictional issues; and (b) an express waiver of rights of recourse from the tribunal’s awards, and that this would only permit the arbitrators to finally resolve a jurisdictional dispute in cases involving challenges to the scope of the arbitrators’ jurisdiction.” G. Born, International Commercial Arbitration 1169 (2d ed. 2014).

                        Is this persuasive?

    5. Application of First Options where parties agree to “broad” arbitration clause. Some lower U.S. court decisions have distinguished between “broad” and “narrow” arbitration clauses. These courts have held that, under a “broad” clause, the arbitrator is granted authority to decide whether particular claims are subject to arbitration, while the latter requires a judicial determination: “Simply stated, a court should compel arbitration, and permit the arbitrator to decide whether the dispute falls within the clause, if the clause is ‘broad.’ In contrast, if the clause is ‘narrow,’ arbitration should not be compelled unless the court determines that the dispute falls within the clause. Specific words and phrases alone may not be determinative although words of limitations would indicate a narrower clause. The tone of the clause as a whole must be considered.” Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983). See Lebanon Chem. Corp. v. United Farmers Plant Food, Inc., 179 F.3d 1095 (8th Cir. 1999) (“court deciding arbitrability under a broad agreement [to arbitrate] leaves for the arbitrator the issue of whether the controversy in question relates to the agreement containing the arbitration clause, i.e., the scope of the clause.”); Paine Webber, Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996) (“broad” arbitration clause indicates that “parties intended to arbitrate issues of arbitrability”); Nationwide Gen. Ins. Co. v. Investors Ins. Co., 371 N.Y.S.2d 463, 467 (N.Y. 1975) (“[p]enetrating definitive analysis of the scope of the agreement must be left to the arbitrators”).

                If First Options were applicable, does the parties’ agreement on a “broad” arbitration clause constitute “clear and unmistakable” evidence of an intention to arbitrate disputes about the scope of their arbitration clause? Note that First Options’ requirement of “clear and unmistakable” evidence may not apply to disputes about the scope of an arbitration clause (as distinct from dispute about the existence of validity of an arbitration agreement). See supra pp. 53738.

    6. Application of First Options where parties’ underlying contract must be interpreted. Disputes about the scope of an arbitration clause can require interpretation of the parties’ underlying contract. For example, in determining whether a particular claim or dispute “arises from” or “relates to” a contract, it may be necessary to determine what substantive obligations the underlying contract imposes. It is almost universally acknowledged, however, that it is for the arbitrators to determine what substantive obligations an underlying contract imposes. Judicial resolution of such issues, for purposes of deciding disputes about the scope of an arbitration clause, threatens to encroach on the undisputed domain of the arbitrators.

                Some courts have relied on the foregoing analysis in remitting disputes over the scope of arbitration agreements to the arbitrators. See, e.g., Sharon Steel Corp. v. Jewell Coal & Coke Co., 735 F.2d 775 (3d Cir. 1984) (“[T]he Federal Arbitration Act gives the arbitrator the power to determine the scope of the arbitration clause as well as the substantive merits of the claim…. [A] case in which the scope of arbitrability affects the merits of the claim is a strong[] candidate for an arbitration.”); Nat’l R.R. Passenger Corp. v. Chesapeake & Ohio Ry. Co., 551 F.2d 136, 140 (7th Cir. 1977) (“‘When the judiciary undertakes to determine the merits of a grievance under the guise of interpreting the … (arbitration clause), it usurps a function which … is entrusted to the arbitration tribunal.’”), quoting United Steelworkers of Am. v. Am. Mfg Co., 363 U.S. 564, 569 (1960). Is this persuasive? Even if one does not grant the arbitrators competence to finally decide a scope dispute, doesn’t this analysis suggest that courts should allow arbitrators to initially consider such issues?

    7. Allocation of competence to decide scope of arbitration agreement under UNCITRAL Model Law. Consider the court’s analysis in Dalimpex, supra pp. 27677. What does the court hold with regard to its competence to decide disputes regarding the scope of an arbitration agreement prior to any arbitral decision? Is this interpretation supported by the language of the Model Law? Consider carefully the text of Articles 8 and 34(2) of the Model Law, excerpted at pp. 88 & 94 of the Documentary Supplement. How does the approach in Dalimpex differ from that in Apollo and First Options? Is the arbitrators’ interpretation of the scope of the arbitration agreement, following Apollo, subject to de novo judicial review? What about the arbitrators’ interpretation under Dalimpex?

    8. Allocation of competence to decide scope of arbitration agreement under prima facie jurisdiction standard. Recall the prima facie jurisdiction approach of French, Indian, and other courts to the allocation of competence to resolve challenges to the arbitrators’ jurisdiction. See supra pp. 27475, 27577. Is there any reason that this general approach should not apply to disputes over the scope of an arbitration clause? If there is a concededly valid arbitration clause (i.e., there is no claim that the clause is “manifestly null”), is there any basis for interlocutory judicial consideration of the scope of the arbitration agreement under French law? What are the consequences of an arbitral decision regarding the scope of the parties’ arbitration agreement under French law?

    9. Appropriate allocation of competence to decide disputes regarding scope of arbitration agreement. Which of the various approaches to the allocation of competence to decide disputes regarding the interpretation of international arbitration agreements is preferable? Should arbitrators ever be permitted to finally decide disputes regarding the scope of arbitration agreements? What if that is what the parties agree? How clear should the parties’ agreement on this issue need to be? Does Article II of the New York Convention permit a Contracting State to deny effect to an agreement to arbitrate disputes over the agreement’s scope?


As discussed above, several issues—other than those relating to the scope of such agreements—frequently recur in interpreting international arbitration agreements. In particular, disputes not infrequently arise as to whether an arbitration agreement is mandatory or optional and as to whether a party must exhaust pre-arbitration steps (such as negotiations) prior to commencing an arbitration.6 Excerpted below are materials that illustrate these issues.


XXVI Y.B. Comm. Arb. 167 (2001)

Claimant and defendant entered into a know-how/technology licensing contract in which the defendant granted Claimant a non-exclusive license to produce and sell six “contract products” in return for a series of payments. As licensor, defendant was obliged to provide claimant with specific documentation within three months of entering into the agreement. Claimant paid the initial sum. A disagreement arose concerning whether the documentation specified in the agreement was provided for.… The agreement provided for ICC arbitration and the application of Indian law. Arbitration was initiated in Zurich, Switzerland. [A] legal action initiated by claimant in a local court in India was dismissed pending the outcome of this arbitration….

As a preliminary matter, the arbitrators must address the contention made by defendant that claimant has not made any effort to settle the dispute amicably, as called for in … the Agreement, and that this arbitration has therefore been brought prematurely. In this connection, the arbitrators have considered the history of the relations between the parties, since the signature of the Agreement and the exchanges of correspondence, including claimant’s letter … expressing its dissatisfaction, and suggesting termination with compensation to be paid by defendant. This letter was presumably sent before receipt of defendant’s letter … restricting the use of the brand name, but after successive delays in getting a reply to earlier letters. After receiving defendant’s letter … claimant immediately replied to defendant, rejecting defendant’s proposal, and reiterating its desire to terminate with compensation. There were several further letters, with each party maintaining its position. Those positions were far apart, with little prospect of a compromise, and the defendant did not respond to claimant’s last proposal for a meeting in India. Again this background, claimant brought an action before the Indian Court, ostensibly to preclude defendant from entering into arrangements for the same products with the third parties. Thereafter, litigation having been commenced, the possibility of any amicable settlement was even more remote. This is particularly true in view of the length of time which had elapsed since the signature of the Agreement, the increasingly acrimonious exchanges of letters between the parties, and the large sums eventually demanded by claimant.

The arbitrators are of the opinion that a clause calling for attempts to settle a dispute amicably are primarily expression of intention, and must be viewed in the light of the circumstances. They should not be applied to oblige the parties to engage in fruitless negotiations or to delay an orderly resolution of the dispute. Accordingly, the arbitrators have determined that there was not obligation on the claimant to carry out further efforts to find an amicable solution, and that the commencement of these arbitration proceedings was neither premature nor improper….


2007 WL 2768256 (W.D. Tenn.)

JON P. MCCALLA, District Judge…. This case arises out of an asset purchase agreement (“the Agreement”) between Plaintiff, Gone to the Beach, LLC (“GTTB”), and Defendants Choicepoint Services, Inc. and its wholly owned subsidiary, Rapsheets Acquisition Corp. (collectively “Defendants”). The parties entered into the Agreement on March 31, 2004, whereby Plaintiff sold substantially all of the assets of its business to Defendants. According to the Agreement, Plaintiff was to receive $20,400,000 as a base price and an earnout payment not to exceed $15,000,000 based on the business’ financial performance in 2004. Defendants agreed to operate the business for the remainder of 2004 “in the ordinary course consistent with [Plaintiff’s] past practice.” On June 10, 2005, Defendants notified Plaintiff that the earnout payment would be only $27,858. Plaintiff contends that Defendants did not operate the business in accordance with the Agreement, and thereby diminished the value of the earnout payment….

The Agreement specifies that “[a]ny controversy, claim, or question of interpretation in dispute … arising out of or relating to this Agreement” must be settled by arbitration in Atlanta, Georgia. The Agreement further provides that if any calculations related to the earnout payment are disputed, they must be resolved by an audit firm in Birmingham, Alabama.

Plaintiff views Defendants’ alleged failure to abide by the terms of the Agreement as a matter of contract interpretation. Accordingly, on August 30, 2005, Plaintiff made a demand for arbitration in Atlanta, Georgia, and identified an arbitrator. According to Plaintiff, Defendants objected to arbitration, stating that they were only amenable to having an arbitrator determine whether the issues raised by Plaintiff were in fact arbitrable. Defendants contend that the only dispute between the parties concerns the amount of the earnout payment, and therefore, this is an accounting matter that should be resolved by the audit firm in Birmingham, rather than by arbitration. [Plaintiff filed the instant complaint [seeking a] declaratory judgment as to the arbitrability of the issues in this case. Both parties agree that this matter should either go to arbitration in Atlanta or to the audit firm in Birmingham….

“[T]he question of arbitrability … is undeniably an issue for judicial determination.” AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649.… [The Court cited Buckeye, supra pp. 20105, and reasoned that the decision] involved a general arbitration agreement, similar to the general arbitration clause in this case.… In Certain Underwriters at Lloyd’s London v. Westchester Fire Ins. Co., 489 F.3d 580 (3d Cir. 2007), the issue … was “whether an arbitrator or a court should decide whether coverage disputes under essentially identical insurance contracts should be arbitrated separately … or collectively….” As is the case here, the question was “’not whether the parties wanted a judge or an arbitrator to decide whether they agreed to arbitrate a matter but rather ‘what kind of arbitration proceeding the parties agreed to.’” Id. at 587 (quoting Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 [(2003)]). The Third Circuit held that this question should be resolved by the arbitrator. Similarly the … Fourth Circuit has held that “only when there is a question regarding whether the parties should be arbitrating at all” is there a question of arbitrability for the court to address. Dockser v. Schwartzberg, 433 F.3d 421, 426 (4th Cir. 2006).

In this case the parties agree that the only issue for the court to resolve is not whether arbitration is appropriate, but what kind of arbitration is required under the contract. This issue of contract interpretation is not properly before the court. Accordingly, the Court DENIES both Motions for Summary Judgment and DISMISSES Plaintiff’s claims without prejudice for determination by the arbitrator….


442 F.Supp. 907 (S.D.N.Y. 1978)

[excerpted above at pp. 43133]


134 S.Ct. 1198 (2014)

[excerpted above at pp. 23347]


    1. Procedural requirements of arbitration agreement. Arbitration agreements not infrequently contain various procedural steps that are to be followed prior to or contemporaneous with commencement of the arbitration. For example, arbitration agreements often require that, prior to commencing arbitration, the parties attempt to resolve their disputes in good faith negotiations or to mediate their differences. See Figuera, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14(1) ICC ICArb. Bull. 82 (2003); Berger, Law and Practice of Escalation Clauses, 22 Arb. Int’l 1 (2006); G. Born, International Commercial Arbitration 278-81, 916-18 (2d ed. 2014). Other arbitration clauses impose contractual time-limits on the commencement of arbitral proceedings (e.g., arbitration must be commenced within three months of a dispute arising).

    2. Multi-tiered arbitration agreements or escalation clauses. Parties sometimes include a “multi-tier” dispute resolution procedure in their contracts. “Escalation clauses provide that, in the event of a dispute between the parties, dispute resolution is to proceed through a sequence of ‘multi-step levels’ of dispute resolution processes. Arbitral proceedings will not be initiated until the end of such sequences. As a preliminary phase to arbitral proceedings, informal discussions or formal negotiations between technicians or decision-makers at management level, mediation proceedings, expert adjudication by a ‘Dispute Review Expert’ (DRE), a ‘Dispute Adjudication Board’ (DAB) or a ‘Dispute Review Board’ (DRB) will usually be agreed upon. The clauses thereby combine adversarial procedures with proceedings derived from the artillery of Alternative Dispute Resolution resulting in a system of multi-tiered dispute resolution tailor-made for each contract.” Berger, Law and Practice of Escalation Clauses, 22 Arb. Int’l 1 (2006). Consider, for example, the following:


         The Parties agree to make all reasonable efforts to settle any dispute arising out of or relating to this Agreement by referring such dispute to their respective senior managers for a period of not less than 30 days following receipt of written notice describing such dispute from any other Party. In the event that the dispute is not resolved during such 30 day period, the Parties agree to submit such dispute to arbitration under [the ICC Rules].



         The parties shall use their best efforts to resolve all disputes relating to this Agreement by amicable negotiations. If either party gives notice to the other party that a dispute has arisen, and the parties are unable within thirty (30) days of such notice to resolve the dispute, then it shall be referred to [the Vice-President for Sales] of Seller and [the Vice-President for Quality Control] of Buyer. If these officers are unable within thirty (30) days to resolve the dispute, then it shall be referred to the [Chief Executive Officers] of Seller and Buyer. If the Chief Executive Officers of Seller and Buyer are unable within thirty (30) days to resolve the dispute, then either party may submit the dispute to arbitration in accordance with the provisions of Article X hereof.



         In the event any disputes arise between the Parties relating to this Agreement, X’s and Y’s Project Managers shall use their best good faith efforts to reach a reasonable, equitable and mutually agreed upon resolution of the item or items in dispute. In the event that the Project Managers cannot so resolve the disputed item(s) within fifteen days, the Parties shall use their best good faith efforts to agree, within a further ten day period, upon an appropriate method of non-judicial dispute resolution, including mediation or arbitration. In the event that the Parties shall decide that any disputed item(s) shall be resolved by arbitration, such arbitral proceedings shall be governed by the [ICC Rules].


                As ICC Case No. 8445 illustrates, these types of procedural requirements can give rise to questions of interpreting the arbitration agreement and ascertaining the consequences of non-compliance with its procedural provisions.

    3. Is an agreement to negotiate enforceable? Is an agreement to negotiate possible future disputes enforceable? Is it anything more than an “agreement to agree,” which is unenforceable in many legal systems? See G. Born, International Commercial Arbitration 918-23 (2d ed. 2014). Consider:


         “There is then no bargain except to negotiate, and negotiations may be fruitless and end without any contract ensuing; yet even then in strict theory, there is a contract (if there is good consideration) to negotiate, though in the event of repudiation by one party the damages may be nominal, unless a jury think that the opportunity to negotiate was of some appreciable value to the injured party” Hillas & Co. Ltd v. Arcos Ltd [1932] All ER494, 505-07 (House of Lords).


                Is this persuasive? For a more recent, and representative, view, consider:


         “An obligation to undertake discussions about a subject in an honest and genuine attempt to reach an identified result is not incomplete. It may be referable to a standard concerned with conduct assessed by subjective standards, but that does not make the standard or compliance with the standard impossible of assessment. Honesty is such a standard…. The assertion that each party has an unfettered right to have regard to any of its own interests on any basis begs the question as to what constraint the party may have imposed on itself by freely entering into a given contract. If what is required by the voluntarily assumed constraint is that a party negotiate honestly and genuinely with a view to resolution of a dispute with fidelity to the bargain, there is no inherent inconsistency with negotiation, so constrained. To say, as Lord Ackner did [in describing the historic common law rule], that a party is entitled not to continue with, or withdraw from, negotiations at any time and for any reason assumes that there is no relevant constraint on the negotiation or the manner of its conduct by the bargain that has been freely entered into. Here, the restraint is a requirement to meet and engage in genuine and good faith negotiations.” United Group Rail Servs. Ltd v. Rail Corp. N.S.W., [2009] NSWCA 177, ¶65 (N.S.W. Ct. App.).


                Which approach to agreements to negotiate is more appropriate? Assuming that an agreement to negotiate is enforceable, should it be regarded as mandatory or merely precatory? If an agreement to negotiate is enforceable, what obligation does it impose—an obligation to discuss or an obligation to agree upon a particular result? See G. Born, International Commercial Arbitration, 922-28 (2d ed. 2014). If the former, is such an “obligation” really likely to have been intended to be mandatory?

                Consider the following:


         “The better view would be to acknowledge more explicitly and consistently the imperfect and aspirational character of agreements to negotiate and the importance of ensuring parties access to justice. Adopting this analysis would limit the treatment of pre-arbitration procedural requirements as “conditions precedent” or “jurisdictional bars” to very rare cases, where the parties’ agreement permits no other characterization. This would allow pre-arbitration procedural requirements to serve their intended objectives—of facilitating amicable settlement—without frustrating the adjudicative process of resolving parties’ disputes.” Born & Scekic, Pre-Arbitration Procedural Requirements: “A Dismal Swamp “, in Liber Amicorum in Honour of Charles Brower (forthcoming 2015).


                Is that persuasive?

    4. Is compliance with procedural requirements in arbitration agreement a jurisdictional requirement? It is sometimes argued that the claimant’s failure to comply with the procedural requirements of the arbitration agreement constitutes a jurisdictional defect which denies an arbitral tribunal authority to proceed with the arbitral proceedings (or that constitutes a repudiation of the arbitration agreement). See, e.g., Varady, The Courtesy Trap Arbitration “If No Amicable Settlement Can Be Reached” 14(4) J. Int’l Arb. 5 (1997). Suppose, for example, the claimant in an arbitration pursuant to the clauses quoted in the preceding Note fails to conduct the contemplated negotiations, mediation, or other pre-arbitration dispute resolution steps. What is the consequence of this non-compliance? If the claimant nonetheless commences an arbitration without having complied with provisions to negotiate or mediate, must the arbitration be dismissed?

                Consider the tribunal’s conclusion in ICC Case No. 8445. Although the award does not reproduce the parties’ dispute resolution agreement, that agreement provided that the parties would negotiate in good faith before commencing an arbitration—something that did not occur. What are the consequences of such non-compliance with dispute resolution procedures set forth in an agreement to arbitrate? Should the answer depend on the language of the arbitration agreement? Should a provision for negotiations or conciliation be regarded as mandatory? Note the statement in ICC Case No. 8445 that the provisions for pre-arbitration negotiation “are primarily expression of intention.” What does that mean? What if the provision is drafted in mandatory terms (“the parties shall meet and negotiate”)? Assuming that a mandatory obligation of this character is breached, is dismissal of an arbitration the appropriate remedy? What other remedies might exist?

                What if the right to arbitrate is conditioned on compliance with an obligation to negotiate (“only if the parties are unable to resolve their dispute through good faith negotiations after 30 days, then either party may refer the dispute to arbitration …”)? If the parties have agreed that no arbitration may be commenced prior to completion of specified dispute resolution mechanisms, does an arbitral tribunal have the authority to proceed with the arbitration?

                What if the parties’ agreement is silent or ambiguous about the consequences of non-compliance with obligations to negotiate or conciliate? What should the parties be assumed to have intended? That the arbitral tribunal should have competence to fashion an appropriate remedy? See also Judgment of 15 March 1999, 20 ASA Bull. 373, 374 (Kassationsgericht Zurich) (2002) (obligation to mediate was substantive obligation, but did not prevent procedural commencement of arbitration); Int’l Ass’n of Bridge, Structural v. EFCO Corp., 359 F.3d 954, 956-57 (8th Cir. 2004) (compliance with procedural prerequisites in arbitration agreement is not condition for arbitration, but substantive issue for the arbitrators). For different approaches, compare Judgment of 6 July 2000, 2001 Rev. arb. 749 (French Cour de cassation) (claim inadmissible because contractual conciliation not pursued); HIM Portland, LLC v. De-Vito Builders, Inc., 317 F.3d 41 (1st Cir. 2003) (“Because the parties intentionally conditioned arbitration upon either party’s request for mediation, we conclude that [claimant’s] failure to request mediation precludes it from compelling arbitration”); White v. Kampner, 641 A.2d 1381, 1385 (Conn. 1994) (“trial court correctly interpreted the contractual language to require satisfaction of the provisions of the mandatory negotiation clause as a condition precedent to arbitration, and correctly determined that this arbitrability issue was one for the courts to determine”).

    5. Futility of negotiations or mediation. Suppose the claimant does not comply with a mandatory obligation to negotiate (or conciliate/mediate), but claims that doing so would have been futile. Does that affect the consequences resulting from non-compliance? Consider the tribunal’s reasoning in ICC Case No. 8445. Note its observation that the clause “should not be applied to oblige the parties to engage in fruitless negotiations or to delay an orderly resolution of the dispute.” See Cumberland & York Distrib. v. Coors Brewing Co., 2002 WL 193323, at *4 (D. Me.) (even where the contract included “a term requiring mediation … as a condition precedent to arbitration,” court held that “surely a party may not be allowed to prolong resolution of a dispute by insisting on a term of the agreement that, reasonably construed, can only lead to further delay”).

    6. Pre-arbitration procedural requirements in investment arbitration. Many BITs contain arbitration procedural requirements that arguably must be satisfied before an arbitration may be commenced under the BIT.

        (a)   Cooling off periods. Many BITs contain provisions regarding pre-arbitration “cooling off” periods, during which negotiations or conciliation of the parties’ dispute must be sought. For example:

                       “Disputes between the Contracting Parties concerning the interpretation or application of this Agreement shall, as far as possible, be settled amicably or through consultations, mediation or conciliation. Should the Contracting Parties agree on a controversial issue, a written understanding shall be drafted and approved by the Contracting Parties.” Agreement between the United Mexican States and the Republic of Austria on the Promotion and Protection of Investments (2001), Art. 20.

                       “(1) Any investment dispute shall form the subject of a written notification, accompanied by a sufficiently detailed memorandum which will be submitted by one of the Parties to such investment dispute, to the other Party. Such dispute shall preferably be settled amicably by direct consultation between the Parties to the dispute or through pursuit of local, non-judicial or administrative remedies. In the absence of such settlement the dispute shall be submitted to conciliation between the Contracting Parties to this Agreement through diplomatic channels. (2) If any such dispute cannot be settled within six months of a written notification being submitted by one party to the dispute to the other party as provided for in paragraph I of this Article, such dispute shall at the request of either party to the dispute be submitted to conciliation or arbitration by [ICSID] under the [ICSID Convention]. (3) In the event of disagreement as to whether conciliation or arbitration is the more appropriate procedure, the national or company affected shall have the right to choose. (4) Each Contracting Party hereby irrevocably consents to submit to the Centre any legal dispute arising between that Contracting Party and a national or company of the other Contracting Party concerning an investment of the latter in the territory of the former….” Agreement Between the Belgo-Luxembourg Economic Union and the Democratic Socialist Republic of Sri Lanka for the Promotion and Protection of Investments (1984), Art. 10.

                       “(1) Before a disputing investor may submit a claim to arbitration, the disputing parties shall first hold consultations in an attempt to settle a claim amicably. (2) Consultations shall be held within 30 days of the submission of the notice of intent to submit a claim to arbitration, unless the disputing parties otherwise agree.” Agreement between the Government of Canada and the Government of the Republic of Peru for the Promotion and Protection of Investments (2007), Art. 25.

                What are the consequences of non-compliance with a negotiation requirement or a cooling-off period (e.g., a request for arbitration is filed less than six months before notice of a dispute is given)? Should non-compliance result in dismissal of the arbitration or is it merely a procedural infraction that can be dealt with through other procedural directions (e.g., delay in procedural time-table; order to negotiate)?

                Further, is an agreement to negotiate enforceable? Intended to be mandatory? Consider also Article 7(3)(a) of the U.S.-Haiti BIT, excerpted above at p. 512; Articles 11(1) and (2) of the Spain-Algeria BIT, excerpted above at pp. 51213; and Article 23 of the 2012 U.S. Model BIT, available at www.state.gov/e/eb/ifd/bit. Contrast with Investment Chapter of Agreement Between Japan and the Republic of Singapore for a New-Age Economic Partnership, Art. 82(2) (“In the event of an investment dispute, such investment dispute shall, as far as possible, be settled amicably through consultations between the parties to the investment dispute”). Should the consequences for non-compliance with procedural requirements differ between these various provisions? Why?

                Most BIT awards have rejected claims that non-compliance with these sorts of procedural requirements for negotiations during a “cooling off” period constitutes jurisdictional defects requiring dismissal of arbitral proceedings. See, e.g., Spyridon Roussalis v. Romania, Award in ICSID Case No. ARB/06/1 of 7 December 2011, ¶335-337; Abaclat v. Argentine Repub., Decision on Jurisdiction and Admissibility in ICSID Case No. ARB/07/5 of 4 August 2011, ¶564-565; Salini Costruttori v. Morocco, Decision on Jurisdiction in ICSID Case No. ARB/00/4 of 23 July 2001, 42 I.L.M. 609, 612 (2003); Am. Mfg & Trading v. Repub. of Zaire, ICSID Award No. ARB/93/1 of 21 February 1997, 36 I.L.M. 1531, 1545 (1997); Schreuer, Travelling the BIT Route, of Waiting Periods, Umbrella Clauses and Forks in the Road, 5 J. World Inv. & Trade 231, 235 (2004). Is there any reason to treat pre-arbitration obligations to negotiate or conciliate in the investment context differently from in the commercial context?

        (b)   Local litigation requirements. Other BITs contain provisions requiring claims to be litigated in local courts for specified periods before they are submitted to arbitration under the BIT. Consider, for example, Article 8 of the U.K.-Argentina BIT, at issue in BG Group.

                What should the consequences of non-compliance with a local litigation requirement be? Should non-compliance be a “jurisdictional” defect, requiring dismissal of the arbitration, or a “procedural” infraction or issue of “admissibility,” that does not require (or permit) dismissal of the arbitration?

                Consider the discussion of this issue by the Court and Chief Justice Roberts’s dissent in BG Group. Which analysis is more persuasive? Why?

    7. Allocation of competence to interpret procedural requirements of arbitration clause. Suppose one party claims that an arbitration agreement bars commencement of arbitral proceedings, because the agreement’s procedural requirements have not been satisfied. Are such objections for a national court, or an arbitral tribunal, to resolve? Do such objections involve questions of interpretation of the arbitration agreement or substantive defenses? Or both?

    8. Allocation of competence to interpret procedural requirements of arbitration clause under UNCITRAL Model Law. Does anything in the Model Law address the question of non-compliance with pre-arbitration procedural requirements? Consider Articles 7, 8, and 16, excerpted at pp. 8790 of the Documentary Supplement. To what sources should courts in Model Law jurisdictions look in interpreting procedural requirements in arbitration agreements and deciding the consequences of non-compliance with such requirements?

    9. Allocation of competence to interpret procedural requirements of arbitration clause under FAA. U.S. courts have generally refused to consider claims that procedural requirements imposed by an arbitration clause were satisfied, reasoning that this issue is one for the arbitrators. See Paine Webber v. Elahi, 87 F.3d 589 (1st Cir. 1996) (timeliness of arbitration under institutional rules is issue for arbitral tribunal); Int’l Ass’n of Machinists v. Gen. Elec. Co., 865 F.2d 902, 904 (7th Cir. 1989) (“arbitrator is not the judge of his own authority—though … there is an exception: the arbitrator, like any other adjudicator, is empowered to decide whether the parties have taken whatever procedural steps are required to preserve their right to arbitrate a particular dispute”); Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 149 (5th Cir. 1987) (“question of compliance with procedural prerequisites to arbitration under a bargaining agreement is for the arbitrator”); Town Cove Jersey City Urban Renewal, Inc. v. Procida Constr. Corp., 1996 WL 337293, at *2 (S.D.N.Y.) (“Whether or not a condition precedent to arbitration has been satisfied is a procedural matter for the arbitrator to decide.”). Consider the application of this principle in BG Group. Is it persuasive?

  10. Disputes over appropriate institutional rules or appointing authority. Consider the issue presented in Astra Footwear and Gone to the Beach. The parties had agreed to arbitrate, but they disagreed over the content of their agreed arbitral procedure. Who should decide such disputes—a national court or an arbitral tribunal? Compare OEMSDF Inc. v. Europe Israel Ltd, [1999] O.J. No. 3594 (Ontario Super. Ct.) (court considers and decides question whether arbitration agreement provides for LCIA or ICC arbitration). If the arbitral tribunal is to resolve disputes over the arbitral procedures, which one? Suppose that, in Gone to the Beach, the two alternative dispute resolution mechanisms were (a) an AAA arbitration; and (b) an ICC arbitration. If interpretation of the parties’ arbitration agreement is for the arbitral tribunal, which arbitral tribunal? Must such disputes be resolved by a court? What did Gone to the Beach decide? What did Astra Footwear decide? Which is preferable? How is the dispute resolution agreement in Gone to the Beach different from an agreement allegedly providing for two different forms of institutional arbitration?

  11. Non-compliance with time-limits for asserting claims or commencing arbitration. Some arbitration provisions contain time-limits for the assertion of claims or the initiation of arbitrations. Consider the following:


         “All disputes arising out of or relating to this Agreement may be submitted to arbitration under [the ICC Rules] within 12 months of the date on which such dispute arises.”


                What is the consequence of non-compliance with such a provision? Consider Judgment of 17 August 1995, 14 ASA Bull. 673 (1996) (Swiss Fed. Trib.) (annulling award where arbitrators had held that claim had been brought within contractually specified 30-day period after dispute arose; court concluded that dispute had arisen earlier than tribunal held, and therefore held that the arbitrators exceeded their jurisdiction). If claim is asserted outside a contractually specified period for bringing claims, is that a jurisdictional or a substantive issue? If, for example, the arbitrators wrongly conclude that a claim is not time-barred by an applicable statute of limitations, is that an excess of jurisdiction? Or is it a mistake in applying the substantive law applicable to the parties’ dispute? See infra pp. 1160, 121718.

  12. Allocation of competence to decide disputes over time-limits for asserting claims or commencing arbitration. Who should decide claims that an arbitration has not been commenced within contractually agreed time-limits—the arbitral tribunal or a national court? Is such a claim a jurisdictional challenge (affecting the arbitrators’ jurisdictional authority) or a substantive defense (not affecting the arbitrators’ jurisdictional authority, but instead how they exercise that authority)? If an arbitral tribunal decides a claim that an arbitration was commenced outside of contractually permitted time periods, what level of scrutiny should apply to its decision in a subsequent annulment or non-recognition action? See infra pp. 115969, 119899, 121118.

1. See supra pp. 8490; Bockstiegel, The Role of Party Autonomy in International Arbitration, 54(2) Disp. Resol. J. 24 (1997); G. Born, International Commercial Arbitration 204-10 (2d ed. 2014); Zhang, Party Autonomy and Beyond: An International Perspective of Contractual Choice of Law, 20 Emory Int’l L. Rev. 511 (2006).

2. The cases cited by Ssangyong in support of its broad interpretation are unpersuasive. Most cited cases involved arbitration clauses which were drafted in broader terms and intended to cover a broader spectrum of disputes than the clause involved here. See, e.g., Griffin v. Semperit of Am., Inc., 414 F.Supp. 1384, 1387 (S.D. Tex. 1978) (clause read “[a]ny controversy or claim arising out of or relating to this agreement”); Acevedo Maldonado v. PPG Indus., Inc., 514 F.2d 614, 616 (1st Cir. 1975) (same); Altshul Stern & Co., v. Mitsui Bussan Kaisha, Ltd, 385 F.2d 158, 159 (2d Cir. 1967) (clause read “any dispute … arising out of or relating to this contract or the breach thereof”).

3. The District Court found that the arbitration clause did not cover the fourth and six counterclaims, which sought damages for defamation, or the allegations in the seventh counterclaim concerning discriminatory treatment and the establishment of minimum-sales volumes. Accordingly, it retained jurisdiction over those portions of the litigation. In addition, because no arbitration agreement between Soler and CISA existed, the court retained jurisdiction, insofar as they sought relief from CISA, over the first, second, third, and ninth counterclaims, which raised claims under the Puerto Rico Dealers’ Contracts Act, the federal Automobile Dealers’ Day in Court Act, the Sherman Act, and the Puerto Rico competition statute, respectively. These aspects of the District Court’s ruling were not appealed and are not before this Court.

4. Soler does suggest that, because the title of the clause referred only to “certain matters,” and the clause itself specifically referred only to “Articles I-B through V,” it should be read narrowly to exclude the statutory claims. Soler ignores the inclusion within those “certain matters” of “[a]ll disputes, controversies or differences which may arise between [Mitsubishi] and [Soler] out of or in relation to [the specified provisions] or for the breach thereof.” Contrary to Soler’s suggestion, the exclusion of some areas of possible dispute from the scope of an arbitration clause does not serve to restrict the reach of an otherwise broad clause in the areas in which it was intended to operate. Thus, insofar as the allegations underlying the statutory claims touch matters covered by the enumerated articles, the Court of Appeals properly resolved any doubts in favor of arbitrability.”

5. Even if Mitsubishi can prove that it did not violate any provision of the contract, such proof would not necessarily constitute a defense to the antitrust claim….

6. Berger, Law and Practice of Escalation Clauses, 22 Arb. Int’l 1 (2006); G. Born, International Commercial Arbitration 278-81, 916-18 (2d ed. 2014); Figuera, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14(1) ICC ICArb. Bull. 82 (2003).

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