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II / 2. ANALYSIS (II) / ARTICLE II(1) / C. Scope of the 'agreement in writing' / c. 'Subject matter capable of settlement by arbitration' / §31
31. Some courts have determined that this issue should be resolved according to the law applicable to the arbitration agreement. In making this determination, they have referred to the conflict of laws rule in article V(1)(a) of the Convention, i.e., “the law to which the parties have subjected [the arbitration agreement] or, failing any indication thereon, under the law of the country where the award was made.”52 By analogy, courts have interpreted the expression “where the award was made” to mean “where the award shall be made”, i.e. by reference to the seat of arbitration. Swiss and Austrian courts have followed this approach.53
53. Federal Tribunal, Switzerland, 21 March 1995, 5C.215/1994/lit; Supreme Court, Austria, 17 November 1971, I Y.B. COM. ARB. 183 (1976).
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32. Other courts have assessed whether a dispute was capable of settlement by arbitration pursuant to their own system of law. In so doing, courts have followed three different approaches to conclude that the lex fori should apply to determine whether a dispute is capable of settlement by arbitration.
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33. First, a number of courts have relied on article V(2)(a) of the Convention which provides that whether the subject matter of a dispute is capable of settlement by arbitration is to be assessed pursuant to the law of the country where recognition and enforcement is sought. By analogy, the Italian Court of Cassation determined that the lex fori, that is, the law of the State of the court seized, should be applied to determine whether a dispute is capable of settlement by arbitration.54 Belgian courts have followed the same approach.55
54. Compagnia Generale Construzioni ‘COGECO’ S.p.A. v. Piersanti, Court of Cassation, Italy, 27 April 1979, XVI Y.B. COM. ARB. 229 (1996).
55. Colvi N.V. v. Interdica, Supreme Court, Belgium, 15 October 2004, C.02.0216.N.
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34. Second, in assessing whether a dispute is capable of settlement by arbitration and consequently deciding whether to refer the parties to arbitration pursuant to article II(3), courts in the United States have applied the Federal Arbitration Act, that is the lex fori, but without any reference to article V(2)(a).56 Hence, United States courts have recognized that disputes arising out of a Statute are capable of settlement by arbitration under the Convention. By way of example, disputes arising out of the Sherman Antitrust Act,57 the Securities Act and Exchange Act,58 the Jones Act on employment,59 and bankruptcy legislation60 were held to be capable of settlement by arbitration. United States courts have also accepted that disputes arising out of employment61 and distributorship contracts62 are capable of settlement by arbitration.63
56. Scherk v. Alberto-Culver Company, Supreme Court, United States of America, 17 June 1974, 73-781; Rhone Mediterranee Compagnia Francese v. Lauro, Court of Appeals, Third Circuit, United States of America, 6 July 1983, 82-3523.
58. Scherk v. Alberto-Culver Company, Supreme Court, United States of America, 17 June 1974, 73-781.
60. Société Nationale Algérienne Pour La Recherche, La Production and others v. Distrigas Corp., District Court, District of Massachusetts, United States of America, 17 March 1987, 86-2014-Y.
61. Lindo v. NCL, Ltd., Court of Appeals, Eleventh Circuit, United States of America, 29 August 2011, 10–10367; Jane Doe v. Princess Cruise Lines, LTD, a foreign corporation, d.b.a. Princess Cruises, Court of Appeals, Eleventh Circuit, United States of America, 23 September 2011, 10–10809.
62. Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, Court of Appeals, Third Circuit, United States of America, 17 July 1978, 77-2566, 77-2567; Travelport Global Distribution Systems B.V. v. Bellview Airlines Limited, District Court, Southern District of New York, United States of America, 10 September 2012, 12 Civ. 3483(DLC).
63. In so doing, courts have assessed whether, for each Statute, it was the congressional intent to have a specific category of disputes capable of settlement by arbitration: Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Supreme Court, United States of America, 2 July 1985, 437 U.S. 614. More generally, see GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION (2009), at 769 and 778.
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35. Third, French courts have rejected the application of a particular national law to assess whether or not a dispute is capable of settlement by arbitration. Relying on article VII of the Convention, the Paris Court of Appeal held that French law should apply because it was more favourable than article II, and that the principle of the validity of international arbitration agreements, which is a “substantive rule of French international arbitration law”, establishes the validity of any arbitration clause “irrespective of any reference to national law”.64 The Paris Court of Appeal expressly distinguished this principle from articles II and V of the Convention “which call, in particular, for the application of national laws to render the clause valid.”65 By way of example, a French court referred the parties to arbitration on the basis of an arbitration agreement contained in an employment contract notwithstanding the petitioner’s argument that employment disputes were not capable of settlement by arbitration. The court noted that the Convention applied since the employment contract was international and France had withdrawn its commercial reservation.66
64. Ste A.B.S. American Bureau of Shipping v Copropriété Maritime Jules Verne et autres, Court of Appeal of Paris, France, 4 December 2002, 2001/17293, upheld by Copropriété Maritime Jules Verne et autres v Société A.B.S. American bureau of shipping, Court of Cassation, France, 7 June 2006, 03-12.034.
66. SA C.F.T.E. v Jacques Dechavanne, Court of Appeal of Grenoble, France, 13 September 1993.
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36. Article II(2) defines the “in writing” requirement. An “agreement in writing” includes67 “an arbitral clause in a contract, or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.”
67. On the bearing of the word “include”, see infra, para. 53 and the footnote 91.
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37. Prior to UNCITRAL addressing the issue, national courts had diverged on whether the more-favourable-rule principle embodied in article VII(1) of the Convention applied to the requirement that an arbitration agreement be “in writing” within the meaning of article II. In 2006, UNCITRAL confirmed that article VII(1) “should be applied to allow any interested party to avail itself of rights it may have, under the law or treaties of the country where an arbitration agreement is sought to be relied upon, to seek recognition of the validity of such an arbitration agreement.”68 Since then, national courts have more consistently enforced arbitration agreements pursuant to the less stringent formal requirements available under their national laws or treaties as provided for by article VII with respect to arbitral awards.69
68. Recommendation regarding the interpretation of article II, paragraph 2, and article VII, paragraph 1, of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958 (2006), Official Records of the General Assembly, Sixty-first Session, Supplement no. 17 (A/61/17), paras. 177-181 and Annex II, available at http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/A2E.pdf. The Travaux préparatoires to the Recommendation are contained in Official Records of the General Assembly, Fifty-sixth Session, Supplement No. 17 (A/56/17), para. 313; Ibid., Fifty-seventh Session, Supplement No. 17 (A/57/17), para. 183; and in U.N. documents A/CN.9/468, paras. 88-106; A/CN.9/485, paras. 60-77; A/CN.9/487, paras. 42-63; A/CN.9/508, paras. 40-50; A/CN.9/592, paras. 82-88; A/CN.9/WG.II/WP.118, paras. 25-33; A/CN.9/607; and A/CN.9/609, and its addenda 1 to 6.
69. For a more detailed analysis on the interaction between articles II and VII, see the commentary on article VII, paras. 31-35.
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38. The Convention provides that an “agreement in writing” may be either an “arbitral clause in a contract” or an “arbitration agreement”.
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39. Examples of “arbitral clauses in a contract” within the meaning of article II(2) have been found when the arbitration agreement is printed on the back of the contract.70
70. See supra para. 19. See also: Bayerisches Oberstes Landesgericht [BayObLG], Germany, 17 September 1998, BayObLG 4 Z Sch 1/98; Bundesgerichtshof [BGH], Germany, 25 May 1970, VII ZR 157/68; Oberlandesgericht [OLG] Schleswig, Germany, 30 March 2000, 16 SchH 05/99; Bundesgerichtshof [BGH], Germany, 12 February 1976, III ZR 42/74.
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4. Certain courts have reasoned by analogy to article I(1) that the Convention applies only to arbitration agreements providing for a seat in a State other than the State of the court seized with the dispute.5 This interpretation has been endorsed by certain commentators.6
5. Kaverit Steel and Crane v. Kone Corp., Alberta Court of Queen's Bench, Canada, 14 May 1991; Compagnie de Navigation et Transports SA v MSC Mediterranean Shipping Company SA, Federal Tribunal, Switzerland, 16 January 1995; Federal Tribunal, Switzerland, 21 March 1995, 5C.215/1994/lit; Federal Tribunal, Switzerland, 25 October 2010, 4 A 279 / 2010; X v Y, Federal Tribunal, Switzerland, 9 January 2008, 4A_436/2007.
6. Reinmar Wolff, Commentary on Article II, in NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS – COMMENTARY 85, at 99-104 (R. Wolff ed., 2012); ICCA’S GUIDE TO THE INTERPRETATION OF THE 1958 NEW YORK CONVENTION: A HANDBOOK FOR JUDGES (P. Sanders ed., 2011), at 19; Jean-François Poudret, Gabriel Cottier, Remarques sur l’application de l’Article II de la Convention de New York, 1995 ASA BULL. 383, at 384.
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40. Regarding the “arbitration agreement”, an Australian court has confirmed that the Terms of Reference signed in arbitration proceedings under the auspices of the ICC International Court of Arbitration qualified as an “arbitration agreement” and an “agreement in writing” within the meaning of article II(2).71 In that case, one of the respondents in the arbitral proceedings had successfully objected to the jurisdiction of the arbitral tribunal. The arbitral tribunal then issued an award on costs in favour of that respondent who then sought to enforce the award. The appellant opposed enforcement on the grounds that the arbitral tribunal had found that there was no valid arbitration agreement binding the respondent. The Supreme Court of Queensland enforced the award, finding that the Terms of Reference signed by the parties to the arbitration proceedings constituted an “agreement in writing” within the meaning of article II.
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41. The distinction between an arbitration clause in a contract and a “submission agreement”,72 has lost most of its relevance in contemporary arbitral practice. In a 1994 decision, the United States Court of Appeals for the Fifth Circuit distinguished between an arbitral clause in a contract and an arbitration agreement. It ruled that, within the meaning of article II(2), while the former needed to be signed by the parties, no such requirement applied to the latter.73 This position was subsequently rejected by the United States Court of Appeals for the Second Circuit. It held that the signature requirement in article II(2) of the Convention applies to both contracts containing an arbitral clause and arbitration agreements, unless they are contained in an exchange of letters or telegrams.74
72. The expression “arbitration agreement” is sometimes used in a broader sense to include both arbitration clauses and submission agreements. See FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION (E. Gaillard, J. Savage eds., 1999), at 193-196.
73. Sphere Drake Insurance PLC v. Marine Towing, Court of Appeals, Fifth Circuit, United States of America, 23 March 1994, 93-3200. See also: Borsack v. Chalk & Vermilion Fine Arts, Ltd., District Court, South District of New York, United States of America, 7 August 1997, 96 CV 6587 (BDP).
74. Kahn Lucas Lancaster, Inc. v. Lark International Ltd., Court of Appeals, Second Circuit, United States of America, 29 July 1999, 97-9436. See also: Czarina, L.L.C. v. W.F. Poe Syndicate, Court of Appeals, Eleventh Circuit, United States of America, 4 February 2004, 03-10518; Moscow Dynamo v. Alexander M. Ovechkin, District Court, District of Columbia, United States of America, 18 January 2006, 05-2245 (EGS).
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42. Pursuant to article II(2), the requirement of an agreement in writing is met when an arbitral clause or an arbitration agreement is signed by the parties.
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44. Conversely, certain courts have refused to enforce arbitration agreements against parties that have not signed it.76 For example, the Chinese Supreme Court denied enforcement of an award on the ground that only one party had signed the contract containing the arbitration clause.77 Similarly, the Brazilian Superior Court of Justice refused to enforce an arbitration agreement because the parties had not signed the contract containing the arbitration agreement.78
78. Plexus Cotton Limited v. Santana Têxtil S/A, Superior Court of Justice, Brazil, 15 February 2006, SEC 967; Indutech SpA v Algocentro Armazéns Gerais Ltda., Superior Court of Justice, Brazil, 17 December 2008, SEC 978; Kanematsu USA Inc. v. ATS - Advanced Telecommunications Systems do Brasil Ltda., Superior Court of Justice, Brazil, 18 April 2012 , SEC 885.
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45. In the same vein, in Javor v. Francoeur, the Canadian Supreme Court of British Columbia refused to enforce an award rendered against the respondent because it had not signed the arbitration agreement. During the arbitral proceedings, the tribunal found that the respondent was the alter-ego of the corporate party which had signed the arbitration agreement and consequently ordered the respondent to participate in the arbitral proceedings. The court relied on the text of article II(2) of the British Columbia Foreign Arbitral Awards Act (which incorporates article II(2) of the Convention) and ruled that the purpose of the Act was to limit enforcement of awards to “part[ies] signatory to the [arbitration] agreement.” It held that since the respondent was not a named party or a signatory to the arbitration agreement, the award could not be enforced against it.79
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47. Under article II(2), an agreement will also meet the “in-writing” requirement if it is contained in an exchange of letters or telegrams. As noted by a German court, the essential factor in the exchange of documents requirement under the New York Convention is mutuality; that is, reciprocal transmission of documents.82
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48. The United States District Court for the District of Colombia has confirmed that one party’s unilateral conduct is insufficient to establish an “agreement in writing” within the meaning of article II(2) of the Convention.83 In that case, the counter-party never responded either explicitly or implicitly to the letters containing the arbitration agreements.
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49. In the context of an investment arbitration dispute, the United States Court of Appeals for the Second Circuit has confirmed that the requirement of an exchange of documents within the meaning of article II of the Convention is fulfilled by an offer to arbitrate contained in a bilateral investment treaty and its subsequent acceptance by an investor in the Request for Arbitration.84
84. Republic of Ecuador v. Chevron Corp. (US), Court of Appeals, Second Circuit, United States of America, 17 March 2011, 10–1020–cv (L), 10–1026 (Con). See also Ministry of Defense of the Islamic Republic of Iran v. Gould Inc., Gould Marketing, Inc., Hoffman Export Corporation, and Gould International, Inc., Court of Appeals, Ninth Circuit, United States of America, 23 October 1989, 88-5879 / 88-5881 for the Iran-US Claims Tribunal Statutes qualifying as an “agreement in writing”.
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5. Other commentators have suggested that article II was meant to apply to the recognition and enforcement of all arbitration agreements irrespective of the seat. A commentator, for example, points out that the proposal by Israel (which was further modified by Italy) to introduce a general reservation clause enabling States not to apply article II in certain situations had been rejected during the Conference. Accordingly, this would leave no doubt as to the intention of the drafters of the New York Convention that article II should cover both domestic and international situations without any limitations.7 Another early commentator of the Convention also took the view that article II, unlike the 1923 Geneva Protocol on Arbitration Clauses does not require the parties to be subject to the jurisdiction of different Contracting States, thereby giving the provision a general application.8 Other commentators have suggested that the New York Convention did not intend to incorporate any territorial limitations on the scope of application on arbitration agreements falling within the scope of article II.9
7. Eugenio Minoli, L’Italie et la Convention de New York pour la reconnaissance et l’exécution des sentences arbitrales étrangères, in INTERNATIONAL ARBITRATION LIBER AMICORUM FOR MARTIN DOMKE 199, at 203 (P. Sanders ed., 1967). See also the Travaux Préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Twenty-first Meeting, E/CONF.26/SR.21, at 14, the comments by the representative of Norway that “a reservation to the effect that the Convention would apply to disputes of an international character was essential” and by the representative of Italy that “his proposal was designed to ensure that the Convention would not apply to disputes which were not international.”
8. Frédéric-Edouard Klein, Autonomie de la volonté et arbitrage (suite et fin), 1958 R.C.D.I.P. 479, at 491.
9. See, e.g., Philippe Fouchard, La levée par la France de sa réserve de commercialité pour l'application de la Convention de New York, 1990 REV. ARB. 571, reasoning that given France’s withdrawal of the commercial reservation, article II applies to all arbitration agreements.
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50. Even though article II(2) only makes express reference to “an exchange of letters or telegrams”, it is widely accepted that article II(2) covers any exchange of documents and is not limited to letters and telegrams. Most courts recognize that an arbitration agreement contained in an exchange of documents or other written communications, whether physical or electronic, satisfies the requirement of article II(2).85
85. For an exchange of telexes and faxes, see: Compagnie de Navigation et Transports SA v MSC Mediterranean Shipping Company SA, Federal Tribunal, Switzerland, 16 January 1995; C S.A. v E. Corporation, Court of Justice of Geneva, Switzerland, 14 April 1983, 187. For an exchange by emails with a confirmation by fax, see: Great Offshore Ltd v Iranian Offshore Engineering & Construction Co, Supreme Court, Civil Appellate Jurisdiction, India, 25 August 2008, Arbitration Petition No. 10 of 2006.
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51. By way of example, a Canadian court ruling upon the validity of an arbitration agreement under article V(1)(a) has confirmed that an “agreement in writing” under article II(2) can take various forms and should be given a functional and pragmatic interpretation.86
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52. Indeed, at its thirty-ninth session in July 2006, UNCITRAL expressly recommended that article II(2) be applied “recognizing that the circumstances described therein are not exhaustive”.87 As further confirmation, at the same session, UNCITRAL amended the Model Law on International Commercial Arbitration to clarify that “the requirement that an arbitration agreement be in writing is met by an electronic communication […]”.88 In accordance with the UNCITRAL Recommendation, a recent Spanish decision has held that the list of documents set out in article II is not exhaustive and therefore an arbitration agreement concluded by electronic means of communications fulfils the “in-writing” requirement.89
87. Recommendation regarding the interpretation of article II, paragraph 2, and article VII, paragraph 1, of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958 (2006), para. 1. Official Records of the General Assembly, Sixty-first Session, Supplement No. 17 (A/61/17), paras. 177-181 and Annex II, available at http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/A2E.pdf. As early as 2005, the United Nations Convention on the Use of Electronic Communications in International Contracts prepared by UNCITRAL provided that it applies, pursuant to its article 20, to the use of electronic communications in connection with the formation or performance of an agreement falling under the New York Convention. See the Resolution 60/21 adopted by the General Assembly on 23 November 2005 on the United Nations Convention on the Use of Electronic Communications in International Contracts, available at http://www.uncitral.org/pdf/english/texts/electcom/06-57452_Ebook.pdf.
88. Article 7(4) (Option I) of the UNCITRAL Model Law on Arbitration (1985), with amendments as adopted on 7 July 2006.
89. High Court of Justice of Cataluña, Spain, 15 March 2012, RJ 2012/6120.
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53. Relying on the wording “include” in article II(2), certain commentators have also considered that the circumstances described in article II(2) are not exhaustive.90
90. See, for example, Toby Landau, Salim Moollan, Article II and the Requirement of the Form, in ENFORCEMENT OF ARBITRATION AGREEMENTS AND INTERNATIONAL ARBITRAL AWARDS – THE NEW YORK CONVENTION 1958 IN PRACTICE 189, at 244-247 (E. Gaillard, D. Di Pietro eds., 2008); Gabrielle Kaufmann-Kohler, Arbitration Agreements in Online Business to Business Transactions, in LIBER AMICORUM K.-H. BOCKSTIEGEL 355 (2001), at 358-362. In fairness, taken in isolation, this argument is not determinative as it is not supported by the Convention other official languages. For instance, the French uses the expression “On entend par “convention écrite” (…)” which does not suggest a non-exhaustive list but rather a definition of the “agreement in writing”.
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54. Where the arbitration agreement is contained in an exchange of documents, the text of article II(2) does not, on its face, require the parties’ signature on the agreement to arbitrate.
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55. The Swiss Federal Tribunal has confirmed that when the arbitration agreement is contained in an exchange of documents, the signature requirement does not apply.91 Similarly, ruling upon Section 7 of the Indian Arbitration Act of 1996 (which mirrors article II(2) of the Convention), the Supreme Court of India has upheld an arbitration agreement contained in an unsigned contract exchanged between parties.92 This approach has been followed in many jurisdictions.93
91. Compagnie de Navigation et Transports SA v MSC Mediterranean Shipping Company SA, Federal Tribunal, Switzerland, 16 January 1995; Tradax Export SA v Amoco Iran Oil Company, Federal Tribunal, Switzerland, 7 February 1984.
93. Not Indicated v. Not Indicated, Supreme Court, Austria, 21 February 1978, X Y.B. COM. ARB. 418 (1985), at 418-419; Standard Bent Glass Corp. v. Glassrobots OY, Court of Appeals, Third Circuit, United States of America, 20 June 2003, 02-2169. See also, at the award enforcement stage: Landgericht [LG] Zweibrücken, Germany, 11 January 1978, 6.0 H 1/77; Oberlandesgericht [OLG] Schleswig, Germany, 30 March 2000, 16 SchH 05/99.
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56. By contrast, a limited number of decisions have refused to enforce an unsigned arbitration agreement that had been exchanged via telexes.94
94. See e.g., Oleaginosa Moreno Hermanos Sociedad Anonima Comercial Industrial Financeira Imobiliaria y Agropecuaria v. Moinho Paulista Ltd, Superior Court of Justice, Brazil, 17 May 2006, SEC 866, upheld by Oleaginosa Moreno Hermanos Sociedad Anónima Comercial Industrial Financeira Imobiliaria y Agropecuaria v Moinho Paulista Ltda., Superior Court of Justice, Brazil, 7 March 2007, Motion for Clarification on SEC 866.
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57. The travaux préparatoires and the wording of article II(2) support the approach that the signature requirement does not apply to an exchange of documents. The drafters of the New York Convention sought to adopt a flexible “in-writing” requirement in order to reflect business reality.95 For this reason, a distinction was drawn between “an arbitral clause [...] or an arbitration agreement signed by the parties” “or” “contained in an exchange of letters or telegrams”.
95. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Comments by Governments and Organizations on the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, E/2822/Add.4 (United Kingdom); Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Thirteenth Meeting, E/CONF.26/SR.13 (Representative of the Hague Conference on Private International Law); Travaux préparatoires, Report of the Committee on the Enforcement of International Arbitral Awards, E/AC.42/SR.7 (Sweden, India); Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Ninth Meeting E/CONF.26/SR.9, (Representative of Germany, at 3).
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58. Where there is an agreement in writing as defined under article II(1) and (2), article II(3) requires national courts to refer the parties to arbitration, if requested to do so by at least one party, unless the court finds that the agreement is null and void, inoperative or incapable of being performed.
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