Arbitrability in finance and banking

This chapter focuses on the arbitrability of banking and finance disputes, both domestic and international in character. We set out by identifying the general rule in the developed world, which favours arbitration of all contractual disputes and thereafter attempt to identify any exceptions, where applicable. We then examine statutory limitations to arbitrability in the developing world. It would be impossible to survey the legal systems of all States, thus we restrict our analysis to a representative sample, including Saudi Arabia and Gulf States, as well as India, with a view to ascertaining special rules on arbitrability stemming from Islamic traditions and jurisprudence, particularly in the banking field. In the case of the latter, we highlight the particular problems associated with bringing to arbitration disputes arising out of the payment of interest, setting out the doctrinal basis for its prohibition in Islamic law in contrast with its contemporary usage between Muslim businesses and the employment of arbitration. Moreover, the permissibility of consumer banking arbitration and the invocation of immunity in business transactions are examined. Equally, our analysis of financial transactions is limited to only those that that give rise to non-arbitrability, particularly franchise and commercial agency agreements, securities transactions, corporate disputes, warrantee and broker agreements.