This Article has been written by Ms. Sejal Dhakad, 1st year BBA LLB Student at Indian Institute of Management Rohtak.
Introduction
Alternative Dispute Resolution includes arbitration (ADR). It alludes to resolving conflicts out of Court by negotiation between two or more parties. It is a procedure whereby a neutral third party is chosen to serve as an arbitrator and makes a formal determination that resolves a legal dispute between parties without the need for it to go to Court. The arbitration is governed by the Arbitration and Conciliation Act, 1996, the process in India. To maintain uniformity, it is based on the UNCITRAL model law. The Arbitration and Conciliation (Amendment) Bill, 2015, was recently introduced to change it after it was passed by the Indian Parliament in 1996.
Provisions made pursuant to the 1996 Arbitration and Conciliation Act:
Sections 16 and 17 of Chapter IV of the Act deal with the jurisdiction of an arbitral tribunal. The Act’s Section 16 addresses the arbitral tribunal’s ability to decide on its own jurisdiction and conveys that it is independent in determining its own jurisdiction and immune from judicial interference in any case relating to arbitration.
Section 16- Power of arbitral tribunal to decide whether it has jurisdiction:
The arbitral tribunal may make decisions regarding its own jurisdiction, including decisions regarding any challenges to the arbitration agreement’s validity or existence.
- When the validity of an arbitration clause is contested before the tribunal, it will be viewed as a separate agreement from the other terms of the contract.
- The arbitration clause will remain in effect even in the event that the arbitral tribunal finds the contract to be void and unenforceable.
If there is a claim that the arbitral tribunal lacks jurisdiction, it cannot be made after the statement of defence has been submitted. Such a claim may be made by even an arbitrator. However, in accordance with subsection 4 of section 16 of the Act, the arbitral tribunal may accept a later plea if there is any delay and the delay is justified. As soon as the topic claimed to be outside the scope of the arbitral tribunal’s authority is brought up during the arbitral proceedings, a defence that the arbitral tribunal is doing so must be raised. The arbitral tribunal must make a decision regarding the aforementioned plea; in the event that it does, the arbitral processes must continue, and an arbitral award must be made. According to section 34 of the Act, which is titled “Application for setting aside an arbitral award,” a party that feels wronged by such an arbitral judgement may request that the arbitral award be set aside.
In the case of Centrotrade Minerals and Metals v. Hindustan Copper Ltd. (2006), the Supreme Court ruled that anyone from the outside or anyone involved in the proceedings could raise any question regarding the jurisdiction. However, if the request is made by the party, it must be made at the beginning or during the course of the proceedings. In the Case of Union of India vs M/S East Coast Boat Builders and Engineers ltd 1998 Held that The Act’s organisational structure makes it clear that the legislators did not provide a provision for an appeal against an order made under section 16(5) where the arbitral tribunal decides to reject the claim that it lacks jurisdiction. The objective appears to be that the arbitral panel will proceed with the arbitration without interruption at that point and issue an award without delay from any court acting in its supervisory capacity.
The party that was wronged by an arbitral judgement filed a writ petition under Article 226 in the instance of the Indian Constitution in the case of Saurashtra Chemicals Ltd. vs Hon’ble Mr. Justice K. 2005 The Court made the following rulings;
Considering the purpose and statement of the Arbitration Act of 1996 and Section 16 of the Act, in the event that the Arbitral Tribunal determines that it has jurisdiction in an application According to Act’s Section 16, the Arbitral Tribunal shall proceed with the arbitration and shall declare the award, which shall be subject to challenge only at the stage of Section 34 of the Arbitration Act of 1996, and the petition under Article 226 of the Act shall be dismissed.
Section 17: Provisional measures mandated by the arbitral tribunal:
A party may ask the arbitral tribunal to appoint a guardian for a child or someone who isn’t mentally capable for the purposes of the arbitration or as arbitral proceedings or as a temporary measure of protection in any of the following situations during the arbitral proceedings or at any time after the arbitral award has been made but before it is enforced;
- The preservation, temporary storage, or sale of any goods covered by the arbitration agreement.
- Securing the arbitrator’s award of the disputed amount.
- The holding, preserving, or inspecting of any property or thing that is the subject of the arbitration dispute or about which there may be a dispute, and allowing anyone to enter any land or building owned by any party for any of the aforesaid purposes, or allowing any samples to be taken, observations to be made, or experiments to be tried, as may be practical or essential to get all the information needed.
- A temporary restraining order or the appointment of a receiver.
- Whatever further temporary safeguards that the arbitral tribunal may deem appropriate and reasonable.
The arbitral tribunal will have the same authority to issue orders on any proceedings before it as the Court does. Any order made by the arbitral tribunal pursuant to this provision will be enforced in accordance with the Code of Civil Procedure, 1908, similar to how it would have been made by the Court, in accordance with subsection 2 of the section, if any orders have been passed in an appeal under the Act’s “Appealable orders” section 37.
The Hon’ble Delhi High Court held in the case of Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) vs Ram Sharma and Associates that if the Arbitral Tribunal rejects a claim under Section 16(5) of the Arbitration and Conciliation Act, the arbitration process will proceed, and the award will be made; in the interim, the aggrieved party will have to wait until the award is made public, and there is no right of appeal. Nonetheless, under Section 37(2) of the Arbitration and Conciliation Act, the tribunal’s decision to accept the argument that it lacks jurisdiction or is acting outside of its authority is appealable and triable. In the matter of Pharmaceutical Products of India Ltd. v. Tata Finance Ltd., the Hon’ble Bombay High Court stated that Section 16(5) of the Arbitration and Conciliation Act plainly gives the Arbitral Tribunal the authority to continue the arbitration procedures and proclaims an arbitral award. A method to contest an arbitral award is provided by Section 16(5). It specifies that any challenge to such an award must be made in accordance with Section 34. While this judgement might be appealed to the Arbitration and Conciliation Act’s Section 37(2) if the Arbitral Tribunal decides to accept the argument that it lacks jurisdiction.
Conclusion
The arbitral tribunal is capable, independent and exempt from judicial interference in any arbitration-related dispute. It also has the flexibility to select its own jurisdiction. The arbitral tribunal has the discretion to accept or reject a plea; in either case, the proceedings will proceed and the decision will be regarded as an arbitral award. Any party who feels wronged by an arbitral award may submit an application in accordance with The 1996 Arbitration and Conciliation Act’s Section 34.
References
- JURISDICTION OF ARBITRATION – Sbhambriadvocates
- Jurisdiction of the Arbitral Tribunal – legalbites.in
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