Every state court. In a democratic society, with a

Every domestic system of law is designed to satisfy two basic needs; the regulation of human conduct and the peaceful settlement of disputes. In a modern society, the first is already achieved through law creating bodies, whereas the second is normally secured by dispute settlement mechanisms such as courts.
Academically there is a widespread assumption that in a successful legal system disputes should be avoided, or at least resolved quickly and peacefully. Everyone has a right to defend his/her rights and interest in a state court. This right is one of the most important human rights, protected by international and national legal instruments, which impose a duty on a state to establish a legal regime which would guarantee a possibility for each person whose rights or interests are infringed to defend such rights and interests in a state court. In a democratic society, with a respected rule of law, dispute resolution in state courts is not the only method of dispute settlement. One of the purposes of the United Nations, set out in Article 1 (1) is to “bring about by peaceful means, and in conformity of with the principles of justice and international law, adjustment or settlement of international disputes or situations which might lead to a breach of peace”. States must refrain from the threat or use of force against the territorial integrity or political independence, making Commercial arbitration an internationally recognised private dispute resolution method based on the parties’ consent to solve their dispute with this particular method, peacefully, privately and with more flexibility. 
Primarily commercial arbitration is a creature of a contract. If the parties wish to solve their disputes with commercial arbitration they must agree on such a dispute resolution method. By concluding a valid arbitration agreement the parties agree to submit their commercial dispute to arbitration, thereby waiving their right to a court access. An arbitration agreement is, therefore, a source of the arbitrators’ authority to solve the Parties’ dispute and generally the arbitrators exercise their jurisdiction until the arbitral award, is reached. 

The principle of competence-competence is central to international arbitration. This principle is embedded in Article 16 of the UNCITRAL Model Law. Competence-Competence was developed to make this means of dispute settlement more efficient and give further clarity to the parties involved. In other words, it was developed to avoid a situation where one party seeks to question the jurisdiction of the agreement by means of judicial intervention. The principle is internationally recognised in all developed national legal system, and is used to describe an international arbitral tribunal’s power to consider and decide disputes regarding its own jurisdiction.Therefore, state courts are generally not permitted to decide jurisdictional conflicts, but must await the arbitrator’s jurisdictional decision regarding its own competence. Nevertheless, despite being widely accepted, there are many areas regarding the application and interpretation of this principle, with regard to the:
“Jurisdictional competence between arbitral tribunals and state courts. This is particularly true in relation to the timing and binding nature of state court decisions on issues relating to jurisdictional matters in cases where an arbitration agreement exists”.

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Article 8(1) of the United Nations Commission on International Trade Law (UNCITRAL)provides that state courts must refer to arbitration a claim that is allegedly subject to arbitration “unless it finds that the said agreement is null and void, inoperative or incapable of being performed.” In other words, Article 8(1) grants state courts the power to decide on jurisdictional matters arising from an arbitration clause (eg, its existence, validity, legality and scope) before the arbitral tribunal renders its decision, supporting the principle of jurisdictional autonomy. 
The principle of jurisdictional autonomy of the arbitration agreement proclaims that the arbitration agreement itself is autonomous in relation to the contract from which it originates. Swiss courts have recognised this principle longer than most. In the Swiss case of K.K.S. c. M.S.A, the court relied upon juridical autonomy of the arbitration agreement, dismissing a challenge to the validity of an arbitration clause that was based on the ground that a fundamental mistake prevented the parties from reaching an agreement on the substantive contract. A challenge of this nature, concerning the validity of an arbitration agreement threatened to attack the whole basis on which the tribunal purports to act. A challenge may question the legality or proper execution of the agreement, or may claim there was a failure to observe requirements in the underlying contract with respect to assignment or time limits. The question is, does the invalidity of the main contract adversely affect an arbitration clause contained within? And what effect does this have on the doctrine of competence-competence? This question is open to a wide variety of opinions, which over the years have led to much conflict between courts and the Arbitration tribunal. Adopting competence-competence as an absolute principle here, could falsely bind parties to arbitration under an agreement which is null and void. 

Differing opinions in different countries, with regard to competence-competence, leads to each country having their own interpretation on arbitration. In the case of West Tankers, a dispute arose after a vessel, chartered by West Tankers to Erg Petroli SpA (ERG) was involved in a collision in Italy. In accordance to the charter agreement, ERG proceeded to arbitration against West Tankers in London. Because of this, ERG’s insurers (RAS) commenced court proceedings in Italy to recover the sum of money paid out to ERG after the collision. In response to this, West Tankers approached the English court for an anti-suit injunction, making reference to the fact the dispute arose out of the agreement, which was subject to the Arbitration clause. Initially the High Court favoured the anti-suit injunction however on appeal the House of Lords referred the case to the ECJ. 
The key question here was whether the anti-suit injection was consistent with the Brussels I Regulation for a member state court to restrain a party from commencing or continuing proceedings in another member state on the ground that those proceedings were in breach of an arbitration agreement . Under examination, the ECJ found that the proceedings did not fall within the ‘arbitration exception’ of the Brussels I Regulation. The reasoning behind this was that the subject matter of the proceedings in Italy was for damages and therefore the Italian Court had jurisdiction to decide whether it could hear the issue. This meant it was not within the English Court’s powers to grant an anti-suit injunction to prevent the Italian court from exercising its power. Before being able to understand the link between this case and adopting the principle of competence-competence as absolute, the fears of this case must be analysed. One such fear has particular relevance, that being torpedo actions.
Torpedo actions is a technique aimed at preventing proceedings from being heard in one member state by first commencing proceedings in another member state, where the judicial system is notoriously slow (Italy, Belgium) or takes a favouring standpoint to the position one party is in. The Brussels I Regulation states that  if proceedings are brought before one court, they cannot be held elsewhere at one time, which will delay an action and therefore prolong the time of the dispute. This directly undermines the purpose of arbitration. Although the doctrine of mutual trust is in place to respond to this worry, many critics fear the decision in West Tankers was another step in legitimising a policy that will cause a rise in bad faith torpedo action. Furthermore, the ECJ did not allow the anti-suit injunction as it was incompatible with the regulation, basing its decision on the “first-courtseized” rule as mentioned above. Consequently, the Italian court had authority to rule on its jurisdiction and therefore also on the validity of the arbitration clause replied upon by West Tankers. This result damages the fundamental principles of arbitration and undermines the doctrine in question. While modern arbitration laws try adhere to the ‘competence-competence’ principle, it is in the majority of cases subject to the judicial control of national courts of the place of arbitration. Therefore, what will happen if a party before or after the initiation of arbitration proceedings submits a claim to a foreign court alleging that the arbitration agreement is invalid? Both the New York Convention and UNICITRAL Model Law provide that in such a case, the court seized of its matter will decide on whether the arbitration agreement is void or not. It will do so in accordance with its domestic law and not in accordance with the law of the designated place of arbitration. As a result, the party which relied on the jurisdiction of an arbitral tribunal subject only to the control of the courts of the place of arbitration may, like in West Tankers be drawn into a dispute in foreign courts, arguing on the validity of the arbitration agreement in accordance to foreign law. This undermines the core concept of arbitration, creating an issue which could’ve been central to the reasoning of including an arbitration clause. It could therefor be argued that granting an anti-suit injunction by the supervisory court could’ve prevented this outcome.
Arguing that adopting Competence-Competence as an absolute principle would’ve prevented this, through the principles negative effect, applying the anti-suit injunction and therefore barring the court from ruling on anything but the validity of the award would have reduced the need for the use of the slow, inefficient system that is litigation and adhered to the purpose of arbitration agreement, that being to avoid litigation. The decision of the ECJ, though criticised, was consistent with European law and the Regulation, which highlights a key area where conflict between arbitral tribunals and courts is ripe. In order to conclude on whether or not the adoption of competence-competence an absolute principle would prevent such issues requires an examination of both the positive and negative effects of the doctrine.

There are two effects of the principle of competence-competence, positive and negative. The positive effect aims to allow court rulings and tribunal rulings to coherently work alongside each other, permitting the arbitral tribunal from ruling on its own jurisdiction where the validity has been questioned. “The relevant arbitral tribunal need not halt the proceedings just because one side questions its authority”. In contrast, the negative effect is more controversial and rests on the notion that arbitral tribunal should have a “chronological priority to rule on its jurisdiction before the courts”. In other words, the negative effect bars a court from reviewing the merits of the dispute when deciding on the existence or validity of the arbitration agreement prior to the arbitral tribunal.  Clearly these two effects are open to interpretation which again has led legal systems to have varying approaches to the interpretation and implication of the competence-competence principle. Many laws and international instruments rely on a stay of litigation in support of a valid arbitration agreement until the award is given. Because of this, the approach in for example England, may be different to the approach in Brazil, Hong Kong or Switzerland. This alone may cause conflict when retrospective parties bind together with the inclusion of an arbitration clause. The view in Hong Kong is “arbitrators should not pull down the shutters on the arbitral process as soon as one party objects to the jurisdiction of the tribunal. The arbitrator can rule on the question as to whether he (or her) has jurisdiction”. However as seen above a number of states (such as Switzerland) do not accept the rule when the validity of the arbitration agreement itself is in dispute. The argument is that where the validity of the arbitration agreement itself is questioned by one of the parties, the consensus of the parties needed for a valid arbitration is lacking and that it is only court that could determine the consensual basis of the agreement as highlighted in Heymans v Darwins Ltd. If the dispute is to whether the contract with the clause has ever been entered into, that issue cannot go to arbitration as the party is denying they ever submitted to arbitration. Here the negative manifestation of competence-competence is clearly highlighted. As mentioned earlier, every person has the right to defend his or her rights and interest in a state court. If the arbitration agreement is believed to be void, or inoperable “access to justice is vital and no litigant can be barred from approaching a court”. This is the key challenge that prevents competence-competence from being adopted as an absolute principle. The need to find the correct balance between a courts restraint from intervening and protecting parties from being forced to arbitrate in situations where there is fraud or no legitimate genuine consent. If the parties have agreed to arbitrate, courts must refrain from deciding on such matter and should return the issue to the tribunal.
Competence-competence is based on the presumption that the parties agree to submit there disputes to arbitrators, who’s powers decide all aspects of the dispute, including jurisdiction, while the court retains the power to control the decision but not to take their place. The efficiency of the arbitration proceedings should however not prevail over the fundamental right of a party to apply to a court.

It is believed that party autonomy and arbitral autonomy lead to increased commercial confidence, thus encourage stability in dispute resolution, whereas court intervention could lead to long delays, tactical manoeuvring and inefficiency: completely contradicting the sole purpose of arbitration. Therefor it is clear to see why parties would be more willing to conform to an arbitration agreement which encompassed both the positive and negative effects of competence-competence, as the arbitrator has final authority to rule on their competence. However, many laws and international instruments rely on a stay of litigation in support of a valid arbitration agreement and until the award is given, even in cases where litigants chose in favour of arbitral autonomy, at the most crucial time in the process, (that is the referral or application for interim relief, or enforcement of arbitral award), this autonomy may be denied or endorsed by the court at this time, in order to safeguard procedural due process or for the interests of the parties involved.
Variations between a more and less aggressive forms of Competence-Competence are possible. A state court’s right to review an arbitral award may remain entirely intact, but the permitted level of this review may be restricted to prima facie powers of review at the tail end of the arbitration rather than full review of jurisdiction up front; or the court may be compelled to defer to the arbitral tribunal through all different stages of the arbitration proceedings. However it would be impossible to get an accurate picture just by studying source materials from a single jurisdiction. A careful, open construction of the arbitration agreement safeguards the legitimate expectations of the ordinary business people, with the assumption that a valid arbitration agreement evicts the jurisdiction of national courts. Nonetheless, caution is in order. When negative competence-competence goes as far as a presumption of validity of the arbitration agreement in question, it leaves a vacuum that enables an arbitral tribunal to elude the reasonable intervention of a responsible supervisory court. A presumption of validity is generally not the best way in which to establish validity.