Eugene THONG Subject Matter Arbitrability Subject matter arbitrability, also called objective arbitrability or arbitrability ratione materiae,

usually refers to the question of whether the particular subject matter of a given dispute may be resolved by arbitration. Such a question arises due to the tension between two policies: the policy which aims to ensure that matters of public interest are adequately and appropriately addressed, traditionally in front of national courts; and the policy that promotes arbitration as an alternative means of dispute resolution. The concern regarding subject matter arbitrability can be found in various conventions and model laws, in greater or lesser degrees of precision. For example, it is found in broad terms in Art. II(1) of the New York Convention, which indicates that the subject matter must be capable of settlement by arbitration; whereas in Art. 34(2)(b)(i) and 36(1)(b)(i) of the UNCITRAL Model Law, it is specified that the subject-matter of the dispute should be capable of settlement by arbitration under the law of this State (my italics), that is, the law of the seat of arbitration. This demonstrates that there are various ancillary questions to be addressed pertaining to subject matter arbitrability aside from the substance of arbitrability itself. In view of this, I will discuss (I) when the question of subject matter arbitrability is raised, by whom, and in front of whom; and (II) the law governing the enquiry as to subject matter arbitrability; before analysing (III) the questions relating to the substance of subject matter arbitrability itself. I. When the question of subject matter arbitrability is raised, by whom, and in front of whom The question of subject matter arbitrability normally arises either at the start of the arbitration proceeding as a threshold issue, or after it, as a challenge to the award or its enforcement. In the former case, it is closely linked to other questions of jurisdiction, which might explain why the term arbitrability is also used in the US to designate the preliminary question of whether an arbitral tribunal has the authority to decide whether it has competence to rule over questions pertaining to its own jurisdiction. More precisely, though, there are four general cases where subject matter arbitrability might be raised: 1) at the beginning of the arbitration, by a contracting party, before the arbitral tribunal; 2) at the beginning of the arbitration, by a contracting party, before the national court of the seat of the arbitration; 3) after the arbitration, during the setting aside proceedings, by the losing party, before the national court of the seat of the arbitration; 4) after the arbitration, during the recognition and/or enforcement stage, by the losing party, before the State court deciding on the recognition and/or enforcement of the award. In the former two cases, when the question is raised at the start of (or even before) the arbitration proceedings, it should be noted that the kompetenzkompetenz principleand by implication the national arbitral procedural laws pertaining to this

Eugene THONG principlealso comes into play. This leads me to the next issue to be explored, which is the applicable law for the enquiry of subject matter arbitrability. II. Which law governs the enquiry as to subject matter arbitrability

There are two approaches regarding the applicable law. Firstly, there is the straightforward notion that both courts and arbitrators are to apply international public policy in deciding questions of subject matter arbitrability. Secondly, there is the national law approach, which, depending on the situation, might refer to the law governing the main contract; the law governing the arbitration agreement; the law of the seat of arbitration; or the law of the State of recognition and/or enforcement of the award. In general, it appears that the applicable law is usually the law of the seat of arbitration. However, there are national legal systems that leave the determination of subject matter arbitrability to the law governing the arbitration agreement. (At this point, it should also be noted that in practice the law governing the main contract is often the same as the law governing the arbitration agreement.) As for the law of the State of recognition and/or enforcement of the award, this only comes into the picture if the question of subject matter arbitrability is invoked at the recognition and/or enforcement stage. III. Substantive questions relating to subject matter arbitrability

There are three main approaches when it comes to the substance of subject matter arbitrability: 1) disputes perceived as involving public policy are excluded from resolution by arbitration; 2) disputes where one of the contracting parties has violated a rule of public policy are excluded from resolution by arbitration; 3) arbitral tribunals are allowed to hear disputes relating to public policy matters, but national courts are also allowed to review the public policy issue if an action is subsequently brought to enforce or set aside the award. This is somewhat akin to the way the kompetenz-kompetenz principle has come to be practised, where the arbitral tribunal has a role in deciding the dispute, but whose role does not preclude judicial review. This is especially since national judges have come to realise and understand that arbitral awards implicating questions of public policy will eventually be subject to their supervision at the recognition and/or enforcement stage anyway. Thus, although matters of public interest have traditionally been addressed via national courts, it has gradually been accepted that an exclusive consideration by the national courts is not the only way for these matters to be treated adequately. The two policies of addressing public interests and promoting arbitration are thereby reconciled.

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