27 - The Competence-Competence Principle’s Negative Effect

Summary

The negative effect doctrine discussed in this chapter deals with when, if ever, a state court will stay proceedings before it and refer disputants to the arbitrators for them to decide, in the first instance, whether an arbitration agreement between the parties (i) exists, (ii) is valid, and (iii) has a scope that covers the dispute in question. An affirmative answer on each of these points would mean that the dispute’s merits must be decided in arbitration. Thus, the negative effect issue concerns whether a decision on these three jurisdiction sub-issues should be decided with finality by the court itself at the outset, or, in the first instance, by the arbitrators themselves, with possible court review on jurisdiction delayed until later.The chapter discusses the dramatically different approaches to the negative effect issue followed in several leading arbitral jurisdictions: France, Germany, the U.S., Switzerland, the U.K., and Canada (Quebec).It also discusses the underlying policy issues at stake in the different national approaches to the doctrine.In conclusion the chapter offer’s the author’s view of a preferred approach to the negative effect issue.