This Article has been written by Ms. Namrata Sharma , a 3rd year LLB Student from Kc Law College
JURISDICTION OF ARBITRAL TRIBUNAL
Introduction of the Topic
WHAT IS ARBITRATION
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.It is less expensive and time-consuming than the procedures of court .It is consensual and parties only choose the Arbitrators . An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding. Arbitration is often faster than litigation in court.
Details of the Concept
ARBITRATION AGREEMENT
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. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Arbitration agreements are legally-binding if the case is disputed through binding arbitration. If the arbitration is non-binding, then you can pursue the case in court. If the arbitration is binding, then it is enforceable under law.
Matters Which May Be Referred to Arbitration
- Calculating damages in the event of a breach of contract.
- Question of validity of a marriage.
- Maintenance payable to the wife.
- Time barred claims.
- Matters of commercial nature.
Matters Which Cannot be Referred to as Arbitration
- Matrimonial matters such as divorce or restitution of conjugal rights.
- Industrial disputes.
- Insolvent matters.
- Rent disputes.
- Criminal matters.
- Matters relating to guardianship of minors.
- Winding-up petition.
Arbitral Tribunal
According to section 2(1)(d) of the Arbitration and Conciliation Act, 1996, an arbitral tribunal means a sole arbitrator or a panel of arbitrators. There should be an odd number of arbitrators present in the tribunal so that they can reach a fair decision.
ELEMENTS OF ARBITRATION
The agreement must fulfil all the essentials of a valid contract as provided under section 10 of the Indian Contract Act, 1872. The parties must be major, of sound mind, not disqualified by law, with free consent, and for lawful object and consideration.
Arbitral Award
An arbitration award is the award granted by the arbitrator in their decision. This award can be money one party has to pay to the other party. It can also be a non-financial award, such as stopping a certain business practice or adding an employment incentive. In simpler words, arbitral awards refer to the decision of an arbitral tribunal, whether in a domestic or international arbitration. For an arbitral award to be valid it must contain the following essential elements:
- The award shall be in writing.
- The award shall be signed by all the members of the arbitral tribunal.
- The award shall state the reasoning on which it is based.
- Date and place of arbitration should be mentioned on the award.
JURISDICTION OF ARBITRAL TRIBUNAL
- It provides that an arbitration tribunal is competent to rule on its own jurisdiction. The finding on the question of jurisdiction is not an interim award as no part of the dispute is decided.If the arbitration tribunal rejects the plea challenging jurisdiction, the Court cannot interfere at that stage. The only remedy available to the party arises after the declaration of the final arbitral award.
- A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
- A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
- The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.
- The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
- A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.
Section 16 deals with the Jurisdiction of the Arbitral Tribunal
Section 16(1) of the Act also empowers the arbitral tribunal to decide on the objections regarding the existence or validity of the arbitration agreement. The powers under Section 16 (1) are discretionary in nature, as it contains the expression “may rule,” which means that the arbitral tribunal may exercise this power on its own motion or at the request of a party.
Further, for determining the validity of the arbitration agreement following two things are specified:-
(a) Where an arbitration clause forms part of a contract, the said arbitration clause shall be considered an independent agreement, and it becomes self-sustaining. An arbitration clause, while being part of a contract, becomes independent of the other terms of the contract.
(b) Where the arbitration tribunal declares the contract null and void, the arbitration clause contained in that contract does not become invalid by itself.
Section 16 (2): Objection upon the jurisdiction
This sub-section lays down a two-fold provision:
(1) If any party wants to raise an objection regarding the jurisdiction of the arbitration tribunal, such objection shall be raised at the first instance, i.e., before or along with the submission defence statement but not later than that.
(2) A party who appointed or participated in the appointment of an arbitrator is not deprived of the right to raise such an objection.
In the case of UP Rajkija Nirman Nigam Ltd. v. Indure (P) Ltd. (1996), it was observed that a party will not be restricted from raising a plea/objection as to jurisdiction merely because he was a party to the appointment of the arbitrator.
Conclusion
We can conclude that the arbitral tribunal is vested with the power to decide upon its own jurisdiction and scope of authority. The decision of the tribunal in this regard is considered an interim order and not an award; thus, where the said application is allowed, the parties can appeal under Section 37 of the Act; when the plea is rejected, the tribunal is entitled to resume the proceedings, and the aggrieved party has to wait until the announcement of the final award. The arbitral agreement mainly determines the ambit of jurisdiction of the arbitral tribunal. There can be no appeal of arbitral awards against the jurisdiction related to the merits of the arbitral award. The arbitration started as a procedure to avoid the troubles of civil litigation. British Government spread it in India. An arbitral tribunal does not have statutory jurisdiction. The tribunal determines its own jurisdiction to adjust the needs of the parties. The arbitral agreement mainly determines the ambit of jurisdiction of the arbitral tribunal.
Case Laws and References
https://www.legalservicesindia.in
Aishwarya Says:
Law students often face problems, which they cannot share with their friends and families. We have started a column on our website Student’s Corner. In this column we are talking to several law students about the challenges that they face. Students who are interested in participating in the same, can fill this Google Form.
IF YOU ARE INTERESTED IN PARTICIPATING IN THE SAME, DO LET ME KNOW.
The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.
If you would also like to contribute to my website, then do share your articles or poems to aishwarya@aishwaryasandeep.com
Join our Whatsapp Group for latest Job Opening