Competence-Competence, Delegation, and the AAA/ICDR Rules

In 2021 and 2022, the American Arbitration Association (AAA) and the International Centre for Dispute Resolution (ICDR) amended their arbitration rules to address a “potential controversy” said to be caused by the Restatement of the U.S. Law of International Commercial and Investor-State Arbitration. The “potential controversy” is over whether the rules providing that arbitrators have “the power to rule on [their] own jurisdiction” should be interpreted as delegation clauses—that is, as “clearly and unmistakably” delegating exclusive authority to resolve jurisdictional challenges to the arbitrators instead of the court. Most courts have so interpreted the rules. By contrast, the Restatement interprets the rules as codifying competence-competence doctrine rather than constituting delegation clauses. Under the Restatement interpretation, the rules make clear that if a party challenges the arbitrators’ authority in arbitration, the arbitrators do not have to suspend the arbitration in order for a court to decide the challenge. But the rules do not exclude the authority of a court to decide jurisdictional challenges raised first in a court proceeding. The 2021/2022 amendments, which added “without any need to refer such matters first to a court,” simply state what was already implicit in the rules: that the arbitrators’ authority to rule on their own jurisdiction in matters before them means the arbitrators do not “need to refer such matters first to a court.” As such, it reinforces rather than rejects the Restatement’s interpretation of the rules as codifying competence-competence doctrine rather than constituting delegation clauses.