The negative effect doctrine discussed in this chapter deals with when, if ever, a state court will stay proceedings before it and refer disputants to the arbitrators for them to decide, in the first instance, whether an arbitration agreement between the parties (i) exists, (ii) is valid, and (iii) has a scope that covers the dispute in question. An affirmative answer on each of these points would mean that the dispute’s merits must be decided in arbitration. Thus, the negative effect issue concerns whether a decision on these three jurisdiction sub-issues should be decided with finality by the court itself at the outset, or, in the first instance, by the arbitrators themselves, with possible court review on jurisdiction delayed until later.The chapter discusses the dramatically different approaches to the negative effect issue followed in several leading arbitral jurisdictions: France, Germany, the U.S., Switzerland, the U.K., and Canada (Quebec).It also discusses the underlying policy issues at stake in the different national approaches to the doctrine.In conclusion the chapter offer’s the author’s view of a preferred approach to the negative effect issue.

The notion of a “separable” arbitration agreement--- presuming that the validity and ambit of an arbitration clause are to be judged independently from that of the overall contract between the parties---is the cornerstone of the arbitration law of virtually every state. Such a rule functions to protect the agreement to arbitrate from assertions (often raised in bad faith and for purposes of delay) that the overall agreement is subject to some infirmity that necessarily “taints” the submission to arbitration as well; the impact of the rule is that such assertions fall to be decided, not by courts, but by the arbitral tribunal itself.Despite frequent objections that this allocation of authority is not “logical”---that every part of a contract must stand or fall together---the rule of “separability” is best understood as a sensible default rule respecting the probable expectation of contracting parties (who were unlikely to have contemplated that a claim, say, of fraud, and a claim going to the merits of a cause of action, would fall to be adjudicated by different decisionmakers). Application of “separability” grounded in challenges based on fraud is in fact entirely intuitive; other sorts of challenges (perhaps suggesting a failure of any consensus whatever between the parties) may be more difficult.Still, the fil conducteur is clear enough, and jurisprudence across national lines remarkably consistent.

Bulgaria has traditionally been an arbitration-friendly jurisdiction, both for domestic and international disputes.1 Arbitration as a means of dispute resolution was first implemented in Bulgaria at the end of the nineteenth century with the first Civil Procedure Act (1892). At this time arbitration was used mainly to solve commercial disputes between merchants with the assistance of local and national chambers of commerce. In the first half of the twentieth century, arbitration was widely used to resolve both civil and commercial cases, and the arbitrators had extensive powers, including resolving disputes ex aequo et bono. Also during this period, the first reported international commercial arbitration proceedings involving Bulgarian parties occurred, mainly in the international trade and infrastructure construction sectors. Throughout the socialist period (1944–1989), arbitration was allowed only in respect of legal disputes between Bulgarian socialist organisations (i.e., state-owned entities engaged in industry and trade, such as industrial plants, foreign trade enterprises, tourist companies, state-owned banks, etc.) and foreign enterprises or entities, and it was the privileged dispute resolution mechanism for such disputes. The existence of this sort of arbitration allowed Bulgarian practitioners to conserve and develop their knowledge in the field during the socialist period. In particular, the Arbitration Court at the Bulgarian Chamber of Commerce and Industry allowed some prominent scholars and practitioners to regularly engage in domestic and international arbitration proceedings and to develop, as a follow up, domestic legislation and academic materials on the topic.

The popular image of the American legal system is that it is run amok with litigation-happy disputants. Whether this is true from an empirical perspective is debatable, but in fact American federal law and policy favors arbitration as the country’s preferred means of dispute resolution. This is a longstanding position dating back to the enactment of the 1925 Federal Arbitration Act (FAA). However, the history of this Act and its implementation has been inconsistent. It was forgotten at one point as individual American states enacted statutes to limit the use of mandatory arbitration in consumer contracts. Eventually, the US Supreme Court recognized the FAA as prevailing law and voided state laws limiting the use of arbitration under the federal preemption doctrine.1 In more recent times, the US Supreme Court expanded the scope of private arbitration clauses to include statutory claims, such as in the areas of antitrust, collective bargaining, and civil rights. Even more recently, it has begun to limit the availability of arbitration by placing restrictions on class action arbitration.