Who Decides First? The Real Battle Before Arbitration Begins

Introduction

In our previous guide, “The Right Kind of Arbitration Clause,” we explored how a well-drafted clause guided by the 5W framework (Who, What, Where, When, Why) becomes the first line of defence in a commercial contract. But drafting is only the beginning. When a dispute arises, the key question is: who has the authority to decide which forum (place or authority) will resolve the dispute? An arbitral tribunal or court? In other words, does the dispute go to arbitration (be resolved by an arbitral tribunal), or does a judicial court hear it?

This question introduces us to the doctrine of Kompetenz-Kompetenz. The second shield that preserves arbitration from undue delay.

Courts, Tribunals, and Arbitral Tribunals: What's the Difference?

Difference Between Tribunals and Courts Courts are constitutional bodies vested with inherent judicial powers to adjudicate disputes across a wide spectrum of civil and criminal matters. They follow established procedural rules and possess the authority to interpret and safeguard fundamental rights. Tribunals, on the other hand, are statutory or quasi-judicial bodies created by specific legislation to resolve particular types of disputes, often with technical or specialised subject matter. While courts maintain broader jurisdiction and traditional judicial independence, tribunals typically aim for faster resolution and subject expertise, operating under more flexible procedures.

Structure of the Indian tribunal system:

What is an Arbitral Tribunal?

An arbitral tribunal is a panel which often comprises one or more impartial arbitrators constituted specifically to resolve disputes arising under an arbitration agreement. Unlike courts, arbitral tribunals derive their authority from the mutual consent of the parties involved. They conduct private proceedings in accordance with agreed procedures (or the institutional rules chosen), rendering binding decisions (“awards”) that are enforceable like court judgments. Arbitral tribunals are commonly engaged in areas such as commercial, contractual, and cross-border disputes where parties prefer confidentiality and subject-matter expertise.

Why Choose an Arbitral Tribunal and Not Courts?

Parties often choose arbitral tribunals instead of courts because arbitration offers several strategic advantages:

● Speed and Efficiency: Arbitration can bypass the lengthy backlog and formalism of courts.

● Expertise: Parties can select arbitrators with technical or industry-specific knowledge vital to resolving complex disputes.

● Privacy and Confidentiality: Proceedings are not open to public scrutiny, making them attractive for sensitive commercial cases.

● Party Autonomy: Arbitration allows for customisation of the dispute resolution process, ranging from appointment of arbitrators to procedural flexibility.

● Cross-border Resolution: For international disputes, arbitral awards are more easily enforceable in foreign jurisdictions under conventions like the New York Convention.

● Finality: Limited grounds for challenge or appeal mean quicker closure of disputes.

Why “Who Decides First?” Shapes Every Dispute

Commercial disputes rarely begin with facts; they begin with a contest over forum, i.e., who gets to decide where and how the case will be resolved. Before any evidence is argued, parties often clash over whether the arbitration clause should apply and whether the arbitral tribunal or the court holds this primary power.

This single issue impacts:

● the pace of the proceedings

● the cost of the dispute

● the strategic leverage of parties, and

● even the outcome of the dispute.

Understanding this doctrine is paramount to preventing disputes from any undue delay at the start.

The Doctrine of Kompetenz-Kompetenz: “Who Decides Jurisdiction?”

Originating in German arbitration law, Kompetenz-Kompetenz means the arbitral tribunal has the first authority to decide questions about its own jurisdiction, including the existence or validity of the arbitration agreement, the scope of arbitrability, and more. Under Indian law and global standards (UNCITRAL Model Law, 1985), tribunals decide first. Courts intervene only when statute permits, thereby minimising cost, time and forum shopping.

Why Kompetenz-Kompetenz Matters in Practice

Businesses and parties frequently resist arbitration by alleging:

● The contract is void (invalid)

● The clause is unclear

● This dispute isn’t arbitrable.

Previously, such objections could delay or completely derail arbitration. Now, with Kompetenz-Kompetenz:

● Delay tactics lose their force

● Proceedings advance faster

● Focus remains on the substance and not the procedure (arbitration process) For lawyers, this doctrine is a powerful tool. For business leaders, it protects continuity and cost.

We see it in:

• Constitutional Law: Parliament versus the Hon’ble Supreme Court on the power to define and protect the Basic Structure of the Constitution.

• Competition Law: The Competition Commission of India (which regulates competition across all sectors) versus the specialised regulators that oversee individual sectors (for instance, Telecom Regulatory Authority of India (TRAI), Reserve Bank of India (RBI), Central Electricity Regulatory Commission (CERC)), each competing to determine which forum sets the rules for overlapping cases.

• International Law: Domestic Courts versus treaty-based arbitral tribunals (for instance, International Centre for Settlement of Investment Disputes (ICSID) or the Permanent Court of Arbitration (PCA), etc.), where states and investors contest the locus standi (right of the person to bring a case to court; place to stand) for decision-making on cross-border disputes.

This pattern reveals a universal legal dynamic: power to decide jurisdiction is foundational in every field. Courts, tribunals, and regulators each want the steering wheel. It is not about technicalities, but about who sets the course.

Practical Takeaways for Professionals

1. Let the tribunal decide first- Indian law mandates that jurisdictional objections must be raised before the tribunal.

2. Avoid premature court battles- Rushing to court increases delay, cost, and strategic disadvantage.

3. Use the doctrine proactively- Kompetenz-Kompetenz ensures arbitration stays efficient and prevents procedural derailment.

4. Recognise the recurring pattern of jurisdictional control- leverage this knowledge in contracts, litigation, and regulatory dealings.

5. Consult expert arbitration counsel- complex jurisdictional issues require specialized guidance, thereby saving time and cost in the long run.

Why This Matters for Professionals

This doctrine is commercially significant, not merely academic. It ensures that disputes:

● Prevents the other party from dragging you into early court proceedings

● Stabilises and shortens the dispute process

● Protects operational timelines and cash flow

● Minimises business disruption. When tribunals take charge early, businesses stay focused on growth and avoid the uncertainty of prolonged litigation.

Closing Thought

A robust arbitration clause is your first shield. The Kompetenz-Kompetenz doctrine is your second. Together, they ensure disputes move with clarity, discipline, and commercial efficiency. Understanding who decides first is more than procedural awareness. It is strategic foresight that keeps individuals and organisations ahead of the curve, no matter the forum or field.

“Ask not just ‘what happens if there’s a dispute’, but ‘who decides?’- for that’s where your strategy begins.”

References:

1. The Right Kind of Arbitration Clause: A Practical Guide for Every Business Professional,https://www.dissent.one/post/the-right-kind-of-arbitration-clause-a-pract ical-guide-for-every-business-professional (Nov. 18, 2025)

2. UNCITRAL Model Law on International Commercial Arbitration, U.N. Doc. A/40/17, Annex I (June 21, 1985).

3. The Arbitration and Conciliation Act, No. 26 of 1996, Acts of Parliament, 1996 (India).