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Arbitration In India – Analysis
Part I of 4
 Santhosh  20 Jan 2025  864 Views 
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d conciliat ion act 1996 (Act 26 of 1996) is an
act t o consolidat e and amend India’s laws
relat ing t o domest ic and int ernat ional
commercial arbit rat ion. This act is based on
t he 1985 UNCITRAL Model law and was
enact ed t o consolidat e, define and amend
t he law in relat ion t o domest ic arbit rat ion,
Int ernat ional commercial arbit rat ion and
enforcement of foreign awards in India.

The Main object ives and aim of t he

arbit rat ion and conciliat ion act ,1996 is t o

a) Reduce t he supervisory role of t he

court .

b) Ensure t he speedy disposal of t he

case(especially commercial in nat ure)

WHAT ARE ARBITRAL?

The arbit rat ion and conciliat ion act didn’t

specify what mat t ers are arbit ral and what
are non arbit ral. The Hon’ble supreme court
of India in A. Ayyasamy vs A. Paramasivam
& Ors on 4 October, 2016: AIR 2016 SUPREME
COURT 4675, 2016 (10) SCC 386, 2016 held
t hat cert ain kinds of disput es may not be
capable of adjudicat ion t hrough t he means
of arbit rat ion. The court s have held t hat
cert ain kinds of disput es may not be
capable of adjudicat ion t hrough arbit rat ion.

Para 9 of t he Judgment

the Courts have held that certain

kinds of disputes may not be capable
of adjudication through the means of
arbitration. The Courts have held that
certain disputes like criminal offences
of a public nature, disputes arising out
of illegal agreements and disputes
relating to status, such as divorce,
cannot be referred to arbitration.
Following categories of disputes are
generally treated as non-arbitrable[4]:

(i) patent, trademarks and copyright;

(ii) anti-trust/competition laws;

(iii insolvency/winding up;

(iv) bribery/corruption;

(v) fraud;

(vi) criminal matters.

The mat t ers which fall exclusively wit hin t he

domain of public for a t hen t hat disput es
are non-arbit rable and cannot be referred
and adjudicat ed by t he arbit ral t ribunal.

In t he Booz-Allen & Hamilton Inc vs Sbi

Home Finance Ltd. & Ors on 15 April, 2011:
AIR 2011 SUPREME COURT 2507, 2011 (5) SCC
532 Hon’ble Supreme Court gave an very
good underst anding of arbit ral and non
arbit ral, The para 21 of t he Judgement
explains arbit rabilit y and it s t hree facet s of
arbit rabilit y

i) whether the disputes are capable of

adjudication and settlement by
arbitration? That is, whether the
disputes, having regard to their
nature, could be resolved by a private
forum chosen by the parties (the
arbitral tribunal) or whether they
would exclusively fall within the
domain of public fora (courts).

(ii) Whether the disputes are covered

by the arbitration agreement? That is,
whether the disputes are enumerated
or described in the arbitration
agreement as matters to be decided
by arbitration or whether the disputes
fall under the `excepted matters’
excluded from the purview of the
arbitration agreement.

(iii) Whether the parties have referred

the disputes to arbitration? That is,
whether the disputes fall under the
scope of the submission to the arbitral
tribunal, or whether they do not arise
out of the statement of claim and the
counter claim filed before the arbitral
tribunal. A dispute, even if it is capable
of being decided by arbitration and
falling within the scope of arbitration
agreement, will not be `arbitrable’ if it
is not enumerated in the joint list of
disputes referred to arbitration, or in
the absence of such joint list of
disputes, does not form part of the
disputes raised in the pleadings
before the arbitral tribunal.(PARA 21)

Now The Hon’ble Supreme court in t he

subsequent para 22 explains t he joint
list of disput es, which cannot be
referred t o arbit rat ion.

The well recognized examples of non-

arbitrable disputes are : (i) disputes
relating to rights and liabilities which
give rise to or arise out of criminal
offences;

(ii) matrimonial disputes relating to

divorce, judicial separation, restitution
of conjugal rights, child custody;

(iii) guardianship matters;

(iv) insolvency and winding up

matters;

(v) testamentary matters (grant of

probate, letters of administration and
succession certificate); and

(vi) eviction or tenancy matters

governed by special statutes where
the tenant enjoys statutory protection
against eviction (PARA 22).

In t he BOOZ ALLAN t he Hon’ble Supreme

court laid down, which mat t ers are non-
arbit rable.

Russell [23rd Edit ion, page 470, para 8.043]

merely observes t hat English law does
recognize t hat t here are mat t ers which
cannot be decided by means of arbit rat ion.

“In pract ice t herefore, t he quest ion has not

been whet her a part icular disput e is
capable of set t lement by arbit rat ion, but
whet her it ought t o be referred t o
arbit rat ion or whet her it has given rise t o an
enforceable award. No doubt for t his
reason, English law has never arrived at a
general t heory for dist inguishing t hose
disput es which may be set t led by
arbit rat ion from t hose which may not .

This law is also an inherit ance of English law.

COMMENCEMENT OF ARBITRAL
PROCEEDING AND COMPOSITION OF
ARBITRAL TRIBUNAL

The arbit ral proceedings is commenced

when t here is an arbit rat ion agreement or
arbit rat ion clause in t he agreement , which
is st ipulat ed under sect ion 7 of Arbit rat ion
and Conciliat ion act .

7. Arbitration agreement.—

(1) In this Part, “arbitration

agreement” means 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.

(2) An arbitration agreement may be

in the form of an arbitration clause in
a contract or in the form of a separate
agreement.

(3) An arbitration agreement shall be

in writing.

(4) An arbitration agreement is in

writing if it is contained in—

(a) a document signed by the parties;

(b) an exchange of letters, telex,

telegrams or other means of
telecommunication 1 [including
communication through electronic
means] which provide a record of the
agreement; or

(c) an exchange of statements of

claim and defence in which the
existence of the agreement is alleged
by one party and not denied by the
other.

(5) The reference in a contract to a

document containing an arbitration
clause constitutes an arbitration
agreement if the contract is in writing
and the reference is such as to make
that arbitration clause part of the
contract.

The t wo ways t he composit ion of arbit ral

t ribunal happens,

A) By giving not ice under sect ion 21 of t he

Arbit rat ion and Conciliat ion act .

21. Commencement of arbitral

proceedings.—Unless otherwise
agreed by the parties, the arbitral
proceedings in respect of a particular
dispute commence on the date on
which a request for that dispute to be
referred to arbitration is received by
the respondent.

B) By filing applicat ion before t he Hon’ble

High Court under sect ion 11 of t he said act ,
if t he not ice given by any one of t he part y is
not obeyed by eit her part y whom t he
not ice was given, t hen for appoint ment of
arbit rat or, in case of any failure, eit her part y
can approach Hon’ble High court under
sect ion 11(5) of t he act .

DOCTRINE OF KOMPETENZ KOMPETENZ(

Competence de la Competence)

Before 2015 Amendment in t he Arbit rat ion

and Conciliat ion act , t he provision of
sect ion 8(1) st ipulat es about t he exist ence
of arbit rat ion agreement , if court finds t hat
prima facie valid arbit rat ion agreement
exist , t hen only t he court can refer t he
part ies t o t he arbit rat ion t ribunal. This was
subst it ut ed by Act 3 of 2016 t he prima facie
valid agreement is not required t o be
examined by t he court . This Amendment is
brought by t he recommendat ion of law
commission and Hon’ble Supreme court in
various judgement s, due t o gross violat ion
of t he sect ion by t he subordinat e dist rict
judiciary. The court s prior work is t o refer t he
part ies t o arbit rat ion. The arbit ral t ribunal
has t he jurisdict ion over t he mat t er
concerning whet her t here is valid
agreement or not . (application under
section 8 of the act is filed to referring the
matter to arbitration tribunal , when a suit is
filed and pending in civil or commercial
court then if, either party may approach for
arbitration tribunal, if only arbitration
agreement or clause exists, for better
understanding refer section 8 of arbitration
and conciliation act.)

The doct rine was first arisen in t he UNCITRAL

model law on Int ernat ional Commercial
Arbit rat ion. The Art icle 16(1) of t he model
and Art icle 23(1) of t he arbit rat ion rules
bot h dict at e t hat t he arbit ral t ribunal shall
have t he power t o rule on it s own. Then, it
evolved in India by t he recommendat ion of
Law Commission 246th report and which
was referred by many supreme court
judgment s. The doct rine is int ended t o
minimize judicial int ervent ion, so t he arbit ral
process is not t hwart ed.

Therefore, Indian Arbit rat ion and

Conciliat ion act is based on t he doct rine of
Kompet ence- Kompet ence, t he arbit rat ors
are empowered t o make a final ruling as t o
t heir jurisdict ion wit h no subsequent review
of t he decision by any court . According t o
sect ion 16 of t he Arbit rat ion and
Conciliat ion act st ipulat es t hat t he arbit ral
t ribunal has compet ence t o rule on it s
jurisdict ion wit hout any int erference from
t he judicial aut horit y.

SETTING ASIDE OF ARBITRAL AWARD ,

APPEALS AND ENFORCEMENT OF ARBITRAL
AWARD

The arbit ral award can be set aside by t he

court by filing pet it ion under sect ion 34 of
t he act .The agrived part y can approach
court and t he court can set aside t he
arbit ral award by t he following grounds.

1) The arbit rat ion agreement is not

valid under t he law.

2) The not ice under sect ion 21 is not

properly given t o t he part y (ie. Not
given proper not ice)

3) The mat t er is not arbit ral in nat ure

and so.

Appeal is st ipulat ed under Chapt er 9 of t he

act and sect ion 37 of t he act , normally
appeal from t he award lies t o t he superior
court of nat ure of order passed in t he
subordinat e court , it is same like hierarchy
of civil court .

37. Appealable orders.—(1) 2

[Notwithstanding anything contained
in any other law for the time being in
force, an appeal] shall lie from the
following orders (and from no others)
to the Court authorised by law to hear
appeals from original decrees of the
Court passing the order, namely:— 3
[(a) refusing to refer the parties to
arbitration under section 8; (b)
granting or refusing to grant any
measure under section 9; (c) setting
aside or refusing to set aside an
arbitral award under section 34.]

(2) Appeal shall also lie to a court

from an order of the arbitral tribunal—
(a) accepting the plea referred to in
sub-section (2) or sub-section (3) of
section 16; or (b) granting or refusing
to grant an interim measure under
section 17. (3)

No second appeal shall lie from an

order passed in appeal under this
section, but nothing in this section
shall affect or takeaway any right to
appeal to the Supreme Court.

The Enforcement of t he award happens by

filing an Execut ion pet it ion under Order 21 of
Civil Procedure Code read wit h 36 of t he
Arbit rat ion and Conciliat ion act .

The above discussion provides a concise

gist and summary of t he law. This overview
has endeavoured t o encapsulat e t he
fundament al principles, concept s t hat
underpin t his complex and mult ifacet ed
area of arbit rat ion and conciliat ion act .
However, it is essent ial t o not e t hat t he
pract ical applicat ion and enforcement of
t hese act are equally crucial aspect s t hat
warrant furt her examinat ion. In t he next
part of t his discussion, we will delve int o t he
nuances of enforcement , jurisdict ion et c.

(AUTHOR – Adv Sant hosh. A, is an Advocat e

Pract icing before Dist rict and sessions
Court s in Coimbat ore, Madurai and Debt
Recovery Tribunals, Tax Tribunals and can
be cont act ed at
san24jot @gmail.com)REFERENCE

1. Booz-Allen & Hamilton Inc vs Sbi Home

Finance Ltd. & Ors on 15 April, 2011: AIR 2011
SUPREME COURT 2507, 2011 (5) SCC 532 .

2. A. Ayyasamy vs A. Paramasivam & Ors

on 4 October, 2016: AIR 2016 SUPREME
COURT 4675, 2016 (10) SCC 386, 2016.

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Author Bio

Name: Santhosh
Qualificat ion: LL.B / Advocate
Company: N/A
Locat ion: Coimbatore, Tamil Nadu,
India
Member Since: 28 Jul 2024 | Tot al
Post s: 2

I am Adv A Santhosh practicing before the

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