Source: http://www.inhouselawyer.co.uk/wgd_question/what-is-the-approach-of-local-courts-towards-a-party-commencing-litigation-in-apparent-breach-of-an-arbitration-agreement-2/
Timestamp: 2019-11-17 18:05:59
Document Index: 25709058

Matched Legal Cases: ['Art. 1656', 'Art, 7', 'in dubio', 'Art. 8', 'Art. 7', 'art. 7']

Art. 1656 of the NCCC states that the arbitration agreement obliges the parties to comply with what has been agreed therein and excludes the competence of judicial courts over disputes submitted to arbitration, except when the arbitral tribunal has not yet been constituted or the agreement appears to be manifestly null or inapplicable. In case of doubt, the arbitration agreement shall have the fullest possible effects.
Based on these principles, Argentine courts practice is that if the respondent to a court proceeding proves that the dispute brought by the claimant is covered by a valid arbitration agreement, the court shall declare its lack of jurisdiction and refer the matter to arbitration – either seated in Argentina or abroad, provided that Argentine rules on prorogatio fori are observed. The court does not have any discretionary power to act otherwise.
The court proceedings may be terminated if the other party objects on the grounds that there is an arbitration clause. This objection must be raised no later than in the first action of court proceedings., otherwise the court proceeds with the civil litigation.
If a party commences court proceedings in the jurisdiction in breach of the arbitration agreement, the court has the power to grant a stay on an application by the party against whom legal proceedings are brought (s.9(1)). The courts are also empowered to issue anti-suit injunctions where a party has commenced court proceedings in another jurisdiction, except in cases where the litigation is commenced before a European court which is within the regime of the Brussels Regulation or the Lugano Convention.
Pursuant to s 6(1) of the IAA, where a party to an arbitration agreement institutes proceedings in any court against another party to the same agreement in relation to any matter within the scope of their agreement to arbitrate, ‘any party to the agreement may, at any time after appearance and before delivering any pleading or taking any other step in the proceedings, apply to that court to stay the proceedings so far as the proceedings relate to that matter’. In such a case, s 6(2) of the IAA provides that the relevant court ‘shall make an order, upon such terms or conditions as it may think fit, staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed’. At s 6(3), the IAA further clarifies that, where such an order has been made, ‘the court may, for the purpose of preserving the rights of parties, make such interim or supplementary orders as it may think fit in relation to any property which is the subject of the dispute to which the order under that subsection relates’.
Under the Arbitration Law, the court is required to refuse jurisdiction if the parties in dispute are bound by an arbitration agreement. While in theory the court is obliged to do so ex officio, in practice the respondent may need to invoke a jurisdictional challenge based on the existence of an arbitration agreement. The court may assume jurisdiction even when an arbitration agreement exists between the parties in dispute if the cause of action is, in the court’s view, outside the scope of the arbitration agreement.
Egyptian courts are under a legal obligation to dismiss litigation with respect to disputes subject to an arbitration agreement if the defendant, at the commencement of the proceedings, advances a plea pertaining to the existence of an arbitration agreement. (article 13.1) In this respect, it is worth noting that article 13.1 of the EAL, which partially reproduces article 8 of the UNCITRAL Model law, has excluded the ‘referral exception’ whereby the state court may accept to decide over jurisdiction if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. This entails that the arbitral tribunal enjoys the priority to decide its competence over state courts. However, the court is not under an obligation to reject the case ex officio for the mere existence of an arbitration agreement; the defendant must raise its objection at the commencement of the proceedings. This is principally due to the fact that an arbitration agreement is not constitutive of public policy. In the absence of a plea by the defendant in litigation, parallel proceedings will be conducted before the arbitral tribunals and the courts and decisions will be rendered irrespective of the parties’ prior agreement to arbitrate. In the event that the two decisions are contradictory, the successful party in the arbitration may elevate the conflict to the Supreme Constitutional Court in accordance with the law.
According to article 1424 of the Commerce Code, the judge to whom a dispute is submitted on a matter that is subject of an arbitration agreement, shall refer the parties to arbitration at the time any of them request it, unless that it is proven that this agreement is null, ineffective or impossible to execute.
Nigerian courts consider arbitration agreements to be binding on the parties and have been consistent in holding parties bound by their arbitration agreements. See M. V. Lupex v NOC & S Ltd. (2003) 15 NWLR (Pt. 844) 469. Where a party to an arbitration agreement commences an action in court with respect to any matter that is the subject of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance or before delivering any pleadings or taking any other steps on the proceedings, apply to the court for an order of stay of proceedings. If the court is satisfied that there is no reason why the matter should not be referred to arbitration in accordance with the arbitration agreement and that the applicant is still willing and ready to submit to arbitration, the court may order a stay of proceedings. See sections 4 and 5, ACA. In May 2017, the Chief Justice of Nigeria in collaboration with the National Judicial Institute issued a policy statement and directives mandating Nigerian courts to insist on enforcing arbitration agreements.
Arbitration agreements are enforceable in Norway. The Norwegian courts will dismiss claims or actions subject to arbitration at a party’s request, provided that the request is made before or at the latest when reviewing the merits of the claim or action. The party which asserts that the claim or action is subject to arbitration must prove the existence of the arbitration agreement.
If one of the parties claims that the arbitration agreement is void, the court has jurisdiction to decide on its validity (and the rest of the case, provided that the agreement is actually declared void). However, if arbitral proceedings are already commenced when the action is brought before an ordinary court, the court will dismiss the action, unless it is clear that the arbitration agreement is void. If the arbitral tribunal has declared that it has jurisdiction, the decision can be appealed to the ordinary courts.
If a party filed its claim with the court first, and the other party timely asserted its right to arbitration under the agreement, the court would dismiss the claim on jurisdictional grounds, if the court determines that the parties have agreed to arbitration.
According to Art, 7 of the LAM, when the parties have agreed to arbitration, the judges must be inhibited from knowing the lawsuit, except for the exceptions provided in the LAM. This article also provides that the principle in dubio pro arbitri, whereby, in cases of doubt, judges must be in favor of the dispute being resolved in arbitration.
Art. 8 of the LAM provides that, (i) parties may give up in writing by mutual agreement to the arbitration agreement; (ii) if the claim is filed before the judges, and the defendant responds to the claim without alleging the existence of an arbitration agreement, it will be understood that the parties have given up to the arbitration agreement and the judges will now be competent to hear the dispute. These are the only exceptions referred to in Art. 7.
At least with regard to arbitral tribunals seated in Switzerland, Swiss court practice has established principles favouring arbitration over state court litigation. As per the "negative effect" of "Kompetenz-Kompetenz", if the jurisdiction of the state court seized is contested based on the existence of an arbitration agreement, the state court ought to refer the matter for review to the arbitral tribunal stipulated in the arbitration agreement in question, unless the arbitration agreement on its face appears to be invalid and incapable of being performed by the parties (art. 7 PILA). Thus, if an arbitration agreement provides for an arbitral tribunal seated in Switzerland, a state court seized by a party will only summarily examine whether the alleged arbitration agreement is invalid and/or not covering the dispute.