Section 16: The Tribunal Rules on Its Own Jurisdiction

Two halves and both are examinable. The deadline is the statement of defence, which is earlier than most students expect. And the saving is important: taking part in appointing an arbitrator is not a submission to jurisdiction.

Section 16(3): a plea that the tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope is raised during the proceedings.

The distinction between the two pleas is worth stating. Sub-section (2) says the tribunal should never have been hearing this at all. Sub-section (3) says the tribunal has jurisdiction but is straying outside it, which can only be known when the straying happens, so the timing rule is different.

Section 16(4): the tribunal may admit a later plea in either case if it considers the delay justified.

Section 16(5) and (6): what happens next, and the asymmetry

Section 16(5): the tribunal shall decide on a plea under sub-section (2) or (3), and where it rejects the plea, continue with the arbitral proceedings and make an arbitral award.

Section 16(6): a party aggrieved by such an award may apply to set it aside under section 34.

Here is the asymmetry, and it is the single most examinable feature of section 16. Compare what happens depending on which way the tribunal rules:

Why the asymmetry? Because the two situations threaten different things. If the tribunal wrongly says it has jurisdiction, the only cost of waiting is that an arbitration proceeds which may later be undone, and letting the objector run to court immediately would reward delay. If the tribunal wrongly says it has no jurisdiction, the arbitration is dead and the parties' agreement is defeated with no award to attack later, so an immediate appeal is the only remedy that works.

Note the consequence for section 13 too. Chapter 290 shows the same structure: an unsuccessful challenge to an arbitrator produces no immediate remedy either, and the award is attacked under section 34. The Act is consistent about not letting preliminary objections stop an arbitration.

A worked example

Ganesh's company is taken to arbitration by a supplier. It wants to say three things: the contract was never validly executed because the signatory had no authority; even if it was, the claim is outside the arbitration clause because the clause covers only "disputes as to quality"; and in any event the supplier is now claiming damages for defamation, which the clause plainly does not cover.

Where are these raised? All before the tribunal, not in court. Section 16(1) lets the tribunal rule on its own jurisdiction including objections to the existence or validity of the arbitration agreement.

When? The first two are pleas that the tribunal lacks jurisdiction and must be raised not later than the statement of defence, under section 16(2). The third is a plea that the tribunal is exceeding the scope of its authority and must be raised as soon as the defamation claim is raised, under section 16(3).

Does it matter that Ganesh's company appointed its own arbitrator? No. Section 16(2) expressly saves the plea: a party is not precluded merely because it appointed or participated in appointing an arbitrator.

The tribunal rejects all three. Can the company go to court now? No. Under section 16(5) the tribunal continues and makes an award, and under section 16(6) the remedy is an application to set aside under section 34.

Suppose instead the tribunal accepts the first plea and holds there is no arbitration agreement. Now the supplier has an immediate remedy: an appeal under section 37(2)(a), because the tribunal has accepted a plea referred to in section 16(2).

And the argument that the contract is void for want of authority? Even if the tribunal accepted it, section 16(1)(b) means the arbitration clause does not automatically fall with the contract. The clause is treated as an independent agreement under section 16(1)(a).

What beginners get wrong

Separability does not make the arbitration clause invulnerable. It means the clause is treated as a separate agreement, so it survives the contract's invalidity. If the attack goes to the clause itself, for example that it was never agreed at all, that is a different argument, and section 16 lets the tribunal decide it.

The deadline for a jurisdictional plea is the statement of defence, not the first hearing or the end of evidence.

Appointing an arbitrator is not submission to jurisdiction. Section 16(2) says so expressly.

There is no immediate remedy against a rejection, only against acceptance. Getting this the wrong way round is the commonest error on this section.

Section 16 is not a court's power. It is the tribunal's. Section 11(6A) is the parallel limit on the court.

Quick revision

• 16(1): the tribunal may rule on its own jurisdiction, including on the existence or validity of the arbitration agreement. (a) an arbitration clause in a contract is an agreement independent of the other terms; (b) a decision that the contract is null and void does not ipso jure invalidate the arbitration clause.
• 16(2): a plea of no jurisdiction not later than the statement of defence; participation in the appointment does not preclude it.
• 16(3): a plea of exceeding the scope as soon as the matter arises. 16(4): a later plea may be admitted if the delay is justified.
• 16(5): on rejecting a plea, the tribunal continues and makes an award. 16(6): the remedy is section 34.
• The asymmetry: rejection gives no immediate remedy; acceptance is appealable at once under section 37(2)(a).

Test yourself

1. What are kompetenz-kompetenz and separability, and where are they in the Act? Kompetenz-kompetenz is the tribunal's power to rule on its own jurisdiction, in the opening words of section 16(1). Separability is the treatment of an arbitration clause as an agreement independent of the contract containing it, in section 16(1)(a), reinforced by section 16(1)(b), under which a holding that the contract is null and void does not ipso jure invalidate the clause.

2. By when must a plea that the tribunal has no jurisdiction be raised? Not later than the submission of the statement of defence, under section 16(2), although the tribunal may admit a later plea under section 16(4) if it considers the delay justified.

3. A party appointed its own arbitrator and now says there was never a valid arbitration agreement. Is it too late? Not on that ground alone. Section 16(2) provides that a party shall not be precluded from raising the plea merely because he has appointed, or participated in the appointment of, an arbitrator. The statement-of-defence deadline still applies.

4. The tribunal rejects a jurisdictional objection. What can the objector do immediately? Nothing. Under section 16(5) the tribunal continues and makes an award, and under section 16(6) the objector may then apply to set the award aside under section 34.

5. The tribunal accepts the objection and holds it has no jurisdiction. What follows? The claimant has an immediate right of appeal under section 37(2)(a), because there is no award to attack later and the arbitration would otherwise simply end.