Section 16: The Tribunal Rules on Its Own Jurisdiction

In one line

An arbitral tribunal can decide for itself whether it has any power to decide, and an arbitration clause survives even if the contract containing it turns out to be void.

In exam wording: section 16 of the Arbitration and Conciliation Act 1996 embodies the doctrines of kompetenz-kompetenz and separability, empowering the arbitral tribunal to rule on its own jurisdiction, including on objections to the existence or validity of the arbitration agreement.

Two Latin-adjacent ideas, defined before they are used

Kompetenz-kompetenz, a German expression used untranslated in arbitration law, means competence as to competence: the tribunal's power to decide the extent of its own power. Without it, any respondent could paralyse an arbitration by saying "you have no jurisdiction" and forcing everybody to court before a word of evidence was heard.

Separability, sometimes called severability, means that an arbitration clause inside a contract is treated as an agreement separate from the rest of that contract. Without it, arbitration would collapse in exactly the cases where it is needed: if a party says the contract is void, and the arbitration clause is part of the contract, then the clause would be void too and there would be nobody to decide.

The two are related but distinct. Separability says the clause survives; kompetenz-kompetenz says the tribunal may decide whether it does.

Section 16(1): the power, and the two rules that make it work

The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose:

• (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
• (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

"Ipso jure" means by the law itself, automatically. So clause (b) is saying: even where the tribunal holds the main contract void, the arbitration clause does not automatically fall with it.

Notice how wide the power in the opening words is. The tribunal may rule on objections to the existence as well as the validity of the arbitration agreement. That is the counterpart of section 11(6A), which confines the court at the appointment stage to the existence of an agreement, and of In Re: Interplay, which sends the stamping objection to the tribunal.

Section 16(2) and (3): when an objection must be taken

Section 16(2): a plea that the tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of, an arbitrator.