INTRODUCTION
Arbitration, one of the forms of Alternative Dispute Resolution (ADR), is a process of settlement between the parties without the intervention of courts. The disputes are heard by a neutral party and pass a final decision i.e., arbitral award. Arbitration in India existed in the form of Panchayats since earlier times. During the British period, several attempts were made to introduce Arbitration in India. As stated with the Bengal Regulations enacted in 1772, the Regulation of 1787 also included rules for referring suits to Arbitration with the consent of parties. In 1973, a regulation was enacted to promote certain Arbitration categories and encourage people to act as arbitrators. Indian Arbitration Act, 1940 was passed which governed the arbitral proceedings in India till 1966. In 1966, the Arbitration and Conciliation Act was passed with a focus on domestic arbitration, and International Arbitration and Foreign Awards. Currently, Arbitration in India is regulated by the Arbitration and Conciliation Act of 1966 [1](hereinafter 1966 Act). Section 2(1) of the 1966 Act sardines arbitration as “ ‘Arbitration’ means any arbitration whether or not administered by a permanent arbitral institution.” This means that any arbitration in India will come under the ambit of the Arbitration and Conciliation Act, of 1996 irrespective of its nature. The statute is broadly based on UNCITRAL Model Law on Arbitration, 1885.[2]
CAPABILITY OF ARBITRAL TRIBUNAL TO RULE ON SELF-JURISDICTION
“Section 16 of the 1966 Act empowers the Arbitral Tribunal to rule on its ‘own’ Jurisdiction.” The competence of the Arbitral Tribunal to decide its jurisdiction is adopted from the doctrine of Kompetenz-Kompetenz.[3] “The doctrine of Kompetenz Kompetenz implies that the arbitral tribunal is empowered and has the competence to rule on its jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement.”[4] This doctrine aims to reduce the court intervention so that the arbitral process is not stopped at the beginning. Section 16 of the Act, 1996 is correlated with Article 16 of UNCITRAL Model Law. The difference between Section 16 of the 1996 Act and Article 16 of UNCITRAL Model Law is, that in Article 16 arbitrator can decide the jurisdiction in an award on merit or as an initiatory/ preliminary question. If the issue of jurisdiction is decided as a preliminary question then Article 16 (3) empowers the party to challenge the decision of the arbitral tribunal in the court. But, section 16 of the 1996 Act does not authorize the Arbitral Tribunal to rule on the jurisdiction as a preliminary question. Also, section 16 does not permit to challenge the decision of jurisdiction of the Arbitral Tribunal on the preliminary issue before a court.
According to section 16 (1), “the Arbitration Tribunal may rule on its jurisdiction only if both parties have agreed to arbitration to resolve the dispute if may arise.” The parties should have an Arbitration Agreement to invoke the proceedings in Arbitral Tribunal. Section 7 of the 1966 Act, defines ‘arbitration agreement’ as an “agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.” In the judgment of Pradeep V. Naik vs. Sulakshana A. Naik, it was held by the Bombay High Court that the dispute regarding the existence and validity of the arbitration agreement can only be decided by the arbitrator.[5]
IMPARTIALITY OF ARBITRATOR
Neutrality or fairness of the arbitrator is the key feature of arbitration. Section 12 of the 1966 Act sets out the requirement of unbias and independent arbitrators.[6] In the case of Perkins Eastman Architects DPC v. HSCC (India) Ltd[7], where the Managing Director (MD) of one party was given authority to act as an arbitrator was opposed by the Apex court stating that the arbitrator was biased because he had a close relationship with one of the parties. The party can raise the issue regarding the impartiality of the arbitrator. But section 16(2) states that the party should not be prevented from raising the issue of competence merely because it has appointed the arbitrator.
An award given by the arbitral tribunal can be challenged in the court under section 34 of the 1996 Act. Section 34 set grounds for setting aside arbitral awards.[8] The invalidity of the arbitration agreement and the biases of the arbitrator are some grounds for challenging the arbitral award. If the court finds a valid reason for challenging the arbitral award then it can order for setting aside the award. According to section 16(6), “a party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award per section 34.”
ROLE OF COURTS
The courts play an important yet limited role in deciding the jurisdiction of the arbitral tribunal. According to the judgment by the Supreme Court in the case of Booz-Allen v. SBI Home Finance[9], section 8 of the Act lays down latent grounds for the competence of the Arbitral Tribunal. Also, in the case of Haryana Telecom v. Sterlite Industries[10], it was held that the competence of an arbitral tribunal could be one of the grounds for the grant of reference under section 8. Also, section 11 empowers courts to intervene in arbitral proceedings in a limited manner. According to section 11, the courts only have to view whether there exists a valid ‘Arbitration Agreement.’ If there is an arbitration agreement between the parties then the court refers it to the Arbitral Tribunal.[11]
CONCLUSION
The competence of the arbitral tribunal is an essential principle that reinforces the freedom and effectiveness of Arbitration. It is said that the competence of the Arbitral Tribunal holds very crucial importance in the sphere of dispute resolution. The doctrine of Kompetenz-Kompetenz strengthens the tribunal’s authority to decide preliminary jurisdictional issues.[12] The courts in India play a very restricted role in reviewing the decision regarding the jurisdiction of the arbitral tribunal. The 1996 Act allows the arbitral tribunal to rule on its jurisdiction which authorizes parties to engage in an arbitration with confidence.
In this fast-growing world where legal proceedings take a long time, the competence of the arbitral tribunal offers a ray of hope to make sure that the conflicts can be resolved as immediately as possible. The importance of the Arbitral Tribunal is a keystone in India as well as in the whole world where Arbitration is considered an essential facet of dispute resolution.
Author(s) Name: Mahi Jaiswal (ILS Law College)
References:
[1] Rahul Saraswat and Aditi Nandanwar, ‘Section 16 of the Arbitration and Conciliation Act,1996- A Model Law Approach in India?’ (IndiaCorpLaw, 28 October 2019) < https://indiacorplaw.in/2019/10/section-16-arbitration-conciliation-act-1996-model-law-approach-india.html>
[2] Rahul Saraswat and Aditi Nandanwar, ‘Section 16 of the Arbitration and Conciliation Act,1996- A Model Law Approach in India?’ (IndiaCorpLaw, 28 October, 2019) < https://indiacorplaw.in/2019/10/section-16-arbitration-conciliation-act-1996-model-law-approach-india.html>
[3] UNCITRAL Model Law 1985, article 16 (1).
[4] PC Markanda, Law Relating to Arbitration and Conciliation, [10th edn, Generic 2020]
[5] Pradeep V. Naik v. Sulakshana A. Naik [2006] 3 ARBLR 177 Bom.
[6] Arbitration and Conciliation Act, s 12.
[7] Perkins Eastman Architects DPC & Anr v. HSCC (India) Limited [2019] Arb app. 32 of 2019.
[8] Arbitration and Conciliation Act, s 34.
[9] Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. & Ors. [2002] Civ 5440 of 2002.
[10] Haryana Telecom Ltd vs Sterlite Industires (India) Ltd [1999] 5 SCC 688
[11] Arbitration and Conciliation Act, s 11.
[12] Rahul Saraswat and Aditi Nandanwar, ‘Section 16 of the Arbitration and Conciliation Act,1996- A Model Law Approach in India?’ (IndiaCorpLaw, 28 October, 2019) < https://indiacorplaw.in/2019/10/section-16-arbitration-conciliation-act-1996-model-law-approach-india.html>
