Arbitration Law , Arbitrability explained: Dispute Capable of Being Settled Arbitration

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What does arbitrability mean? For an arbitration agreement to be enforceable, the subject matter has to be arbitrable, which means, it has to be permitted by the law to be arbitrated. As a result, arbitrability involves deciding which types of disputes can be settled by arbitration, and which must be resolved exclusively through national courts. In principle, an arbitral tribunal should be able to settle any dispute, just as well as a national court judge. However, many states prohibit the arbitration of some type of disputes, especially those not suited to the confidential nature of the arbitral process, as they are more suitable for litigation, rather than by a private arbitral tribunal. Therefore, Arbitrability varies by jurisdiction, as each country decides which matters can be resolved by arbitration, based on its own political, social, and economic policies, As a result, the arbitrability of a dispute is a matter of public policy of the state, in which the arbitration takes place. While most commercial disputes are now arbitrable, in most jurisdictions, some disputes fall outside the domain of arbitration, issues such as criminal matters, child custody, family disputes, the validity of patents, insolvency, and bankruptcy, are all not arbitrable. Therefore, it is against the law or the public policy of the local jurisdiction, to try to arbitrate disputes in these areas. If the issue of arbitrability arises, it is necessary to have regard to the relevant laws of the different states that are, or maybe, concerned. These laws are likely to include: the law governing the party involved, where the agreement is with a state or state entity; the law governing the arbitration agreement; the law of the seat of arbitration; and the law of the ultimate place of enforcement of the award. The concept of ‘arbitrability’ constitutes a ground to challenge an award, if ‘the subject matter of the dispute is not capable of settlement by arbitration. Thus, for example, in a jurisdiction where issues of bankruptcy were not considered to be arbitrable, if an arbitration of bankruptcy issues were held within that jurisdiction, and an arbitral award rendered, the losing party would probably be able to have the award set aside by the court in that jurisdiction.