In a general standing, the compendium
of explanations regarding the essence of arbitration have been amalgamated and
classified into four distinctive theories: the jurisdictional theory, the
contractual theory, the hybrid theory (or alternatively, the mixed theory) and
the autonomous theory. The jurisdictional theory is constructed on the wide-ranging
administrative powers of states to control any international commercial
arbitrations within their jurisdiction, whereas the contractual theory contends
that international commercial arbitration derives from a legal arbitration
agreement amongst the parties and that, consequently, arbitration ought to be directed
in accordance with the parties’ requirements. The hybrid theory is positioned
at the midpoint of the jurisdictional and contractual theories and hence, it is
a compromise between the two. It argues that international commercial
arbitration has an equally contractual and jurisdictional personality. The
autonomous theory, which has been advanced more recently, rejects the conventional
attitude and places prominence on the purpose of international commercial
arbitration as a whole. Instead of positioning arbitration into the current
legal context, the autonomous theory circumscribes arbitration as a purely
autonomous establishment, which should not be controlled by the laws of the
place of arbitration. As a consequence, parties should have unconstrained
autonomy to choose the manner in which the arbitration shall be directed.1

3.1 – The Jurisdictional Theory

The jurisdictional theory petitions
the importance of the administrative authority of states, chiefly those of the
place of arbitration. Though the jurisdictional theory does not disagree with
the notion that an arbitration derives its source within the parties’
arbitration agreement, it upholds that the legitimacy of arbitration
agreements, as well as arbitration procedures, must be controlled by national
laws and the lawfulness of an arbitral award is indicated by the laws of the
seat and the jurisdiction wherein the recognition or enforcement is requested. Advocates
of the jurisdictional theory support that all arbitration practices have to be controlled
by the rules of law selected by the parties, if there are any, and those rules
of law in force in the place of arbitration. They correspondingly deem that
arbitrators bear semblance to judiciaries of domestic courts since the
arbitrators’ authorities are consequential from the states by means of the
rules of law. Similarly, arbitrators are required to employ the rules of law of
a specific state to resolve the disputes presented to them. Additionally, the
awards prepared by the arbitrators are considered as possessing the equivalent significance
and validity as a judgment delivered by judges convening in a domestic court.
As a result, they argue that the awards will be administered by the court where
the recognition or enforcement is requested in the same way as judgments made
by the courts. Furthermore, supporters of the jurisdictional theory emphasise,
in concise terms, the importance of the seat of arbitration, namely Dr. Mann. The foundation of Dr. Mann’s reasoning is
that each self-governing state is eligible to endorse or condemn the actions that
occur in its region.2 Considering the correlation between arbitration
and the domestic courts where the arbitration is located or the courts where
recognition or enforcement of the arbitral awards is requested, the
jurisdictional theory postulates a solid foundation for the domestic courts implementing
administrative control over the arbitration proceedings.3

According to the jurisdictional theory, the courts in the jurisdiction where
recognition or enforcement is requested similarly possess a regulatory authority
throughout the matter of arbitrability at the period of recognition or
enforcement. In accordance with Article V(2) of the Convention, the courts retain
the option to reject the recognition or enforcement of an arbitral award if it discovers
that “the subject matter of the difference is not capable of settlement by
arbitration under the law of that country”4 or
“recognition or enforcement of the award would be contrary to the public policy
of that country.”5
An equivalent approach has similarly been embraced in the United States Supreme
Court, which established the national rule supporting arbitration in the Mitsubishi6
case. The Mitsubishi case concerned an anti-trust conflict which was
barred from being resolved via arbitration in a domestic case.  Justice Blackmun pointed out the reason as to
why The United States Supreme Court implemented the arbitration agreement
pertaining to this case: “the national courts of the United States will have
the opportunity at the award-enforcement stage to ensure that the legitimate
interest in the enforcement of the anti-trust laws has been addressed.”7
Moreover, the “Convention reserves to each signatory country the right to
refuse enforcement of an award where the recognition or enforcement of the
award would be contrary to the public policy of that country.”8 In
accordance with this reasoning, it can be asserted that the association between
the courts and arbitration is essentially regulatory, which is in line with the
jurisdictional theory.9

1 Julian Lew, Contemporary Problems in International
Arbitration (1st edn, Springer Science + Business Media
Dordrecht 1987).

2 Francis A. Mann, ‘Lex Facit Arbitnim’ (1983) 2(3)
Arbitration International 245.

3 Lew (no. 2).

4 Convention on the Recognition and Enforcement of Arbitral Awards, Art

5 Ibid.

6 Mitsubishi Motors v Soler Chrysler-Plymouth (1985) 473 U.S. 614.

7 Ibid.

8 Ibid.

9 Ihab Amro, Recognition and Enforcement of Foreign
Arbitral Awards in Theory and in Practice: A Comparative Study in Common Law
and Civil Law Countries (1st edn, Cambridge Scholars Publishing

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