The Arbitration and Conciliation Act, 1996 covers domestic and international arbitration and the enforcement of foreign arbitral awards. An arbitral tribunal is a group of arbitrators chosen by the parties to settle disputes outside courts. The tribunal gets its authority from the arbitration agreement, as outlined in Section 7 of the Act. The Act gives parties freedom to choose arbitrators, the location, and the law to follow. Section 16 allows the tribunal to decide its own authority, reducing court involvement. Updates in 2015, 2019, and 2021 have made the process faster and easier to enforce. This article explains the jurisdiction of arbitral tribunal, the process, types of disputes it can handle, and important court cases.
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Nature of Disputes Referable to Arbitration
Not every dispute can go to arbitration. The Act doesn’t list which disputes cannot be arbitrated but court decisions have set clear limits. Disputes about rights in rem like property ownership or public rights, usually need to be settled in courts because they affect everyone. However, disputes about rights in personam, like those from contracts, are perfect for arbitration.
Examples of disputes that cannot be arbitrated include criminal cases, family matters like divorce or child custody, issues about wills and inheritance, bankruptcy cases, and company closure petitions.
Disputes under certain laws, like the Industrial Disputes Act, 1947, or anti-trust laws, may also be off-limits if they involve public policy. However, the Supreme Court in A. Ayyasamy v. A. Paramasivam (2016) said that fraud claims can sometimes be arbitrated if they are not too serious or don’t need a lot of evidence.
The arbitration agreement sets the jurisdiction of arbitral tribunal. A clear agreement can cover contract breaches, tort claims, or other remedies tied to the agreement. If the agreement doesn’t specify the law to use, the tribunal picks one based on the situation, as per Section 28. This flexibility makes arbitration a good alternative to court cases but parties must write clear agreements to avoid disputes about the tribunal’s authority.
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Section 16: Competence of the Arbitral Tribunal to Rule on Its Jurisdiction
Section 16 is a key part of the Arbitration and Conciliation Act, 1996, based on Article 16 of the UNCITRAL Model Law. It follows the Kompetenz-Kompetenz principle which means that the tribunal can decide if it has the authority to handle a case without courts stepping in right away. This section has several parts that explain how and when to challenge the tribunal’s authority.
Power to Decide Authority (Section 16(1))
The jurisdiction of arbitral tribunal allows it to decide if it has the authority to handle a case, including issues about whether the arbitration agreement exists, is valid, or covers the dispute. Importantly, the arbitration clause is treated as separate from the main contract (called the separability doctrine). This means even if the contract is invalid, the arbitration clause still works, so the tribunal can settle the dispute. The tribunal can choose to act on its own or when a party raises a concern. For example, if someone claims the agreement was forged, the tribunal can look into it and decide. This helps keep cases out of court and speeds up the process.
Raising Objections to Authority (Section 16(2))
If a party thinks the tribunal doesn’t have authority, they must say so no later than when they submit their defense statement. Joining in to pick arbitrators doesn’t stop them from raising this issue. This rule prevents parties from delaying the process by waiting to object. In U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd. (1996), the Supreme Court said that picking an arbitrator doesn’t stop a party from challenging the tribunal’s authority, ensuring fairness.
Objections to Overstepping Authority (Section 16(3))
If a party believes the tribunal is going beyond its authority during the process, they must object as soon as the issue comes up. This keeps the tribunal’s actions in check during the case and avoids surprises after the final decision.
Allowing Late Objections (Section 16(4))
The tribunal can accept late objections under subsections (2) or (3) if there’s a good reason for the delay. In S.N. Malhotra & Sons v. Airport Authority of India (2008), the Delhi High Court said that objections without a valid reason for being late could be rejected, encouraging parties to follow timelines.
Deciding on Objections and Moving Forward (Section 16(5))
The tribunal must decide on any objections to its authority. If it rejects the objection, the arbitration continues to a final award. This decision cannot be appealed right away, which supports the independence of arbitration.
Options After a Decision (Section 16(6))
If the tribunal rejects an objection, the party can challenge the final award later under Section 34, which allows awards to be set aside. There’s no direct appeal against the rejection because it’s not considered an award. However, if the tribunal accepts the objection and stops the arbitration, a party can appeal under Section 37, which lists orders that can be appealed.
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Judicial Involvement and Appeals on Jurisdiction of Arbitral Tribunal
The Act limits court involvement under Section 5 to keep arbitration independent. Under Section 11, courts can appoint arbitrators if parties can’t agree, but after the 2015 amendment, courts only check if an arbitration agreement exists at a basic level. The 2015 amendment also added timelines to speed things up.
Appeals under Section 37 are allowed only for specific orders, like when the tribunal stops the arbitration under Section 16(6). In Union of India v. East Coast Boat Builders & Engineers Ltd. (1998), the Supreme Court said courts cannot step in during the process if the tribunal rejects a jurisdiction objection; parties must wait until the final award. In M/s Uttam Singh Dugal v. M/s Hindustan Steel Ltd. (1981), the court clarified that a decision on jurisdiction is not an interim award, so it can’t be appealed under Section 37.
Recent changes show courts are more supportive of arbitration. The 2019 amendment created the Arbitration Council of India to promote institutional arbitration, which helps strengthen the tribunal’s authority. In 2023-2024, Supreme Court rulings have supported tribunal decisions unless they are clearly illegal, showing a pro-arbitration approach. For international arbitration, Section 2(2) says the Act applies when the arbitration is in India, but parties can choose a foreign location which affects the tribunal’s authority.
Changes from Amendments and Their Impact
The 2015 Amendment Act made big changes. Section 11 now requires courts to only check if an arbitration agreement exists at a basic level before appointing arbitrators. Section 17 was improved, letting tribunals issue temporary orders that are as enforceable as court orders. By safeguarding confidentiality, Section 42A strengthens the jurisdiction of arbitral tribunal, fostering trust in the arbitration process. The 2021 amendment addressed delays caused by COVID-19 but kept the same authority structure. These changes aim to make India a better place for arbitration and reduce court backlogs.
Summary
The jurisdiction of arbitral tribunal under the Arbitration and Conciliation Act, 1996, is a well-designed system that lets parties settle disputes efficiently while allowing checks through timely objections and limited court reviews. Section 16’s Kompetenz-Kompetenz principle ensures tribunals can manage their own authority, building trust in arbitration as an alternative to court cases. However, parties must write clear agreements and raise concerns quickly in order to avoid problems. With recent amendments and supportive court decisions, India’s arbitration system is growing stronger and aligning with global standards. Lawyers and legal experts should stay updated on these changes to use arbitration effectively. The tribunal’s authority supports the Act’s goals: speed, affordability, and fairness in resolving disputes.
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Jurisdiction of Arbitral Tribunal: FAQs
Q1. What is the jurisdiction of the tribunals?
Arbitral tribunals can resolve disputes agreed upon in the arbitration agreement, like contract issues, but not matters like property ownership or public rights, as per the Arbitration and Conciliation Act, 1996.
Q2. What is the jurisdiction of Section 9?
Section 9 allows courts to grant temporary relief, like asset protection or injunctions, before or during arbitration to support the tribunal’s process.
Q3. What is the place of arbitration jurisdiction?
The place of arbitration, chosen by the parties or tribunal, determines the procedural laws and courts that oversee the arbitration process.
Q4. Do arbitration tribunals have criminal jurisdiction?
No, arbitration tribunals cannot handle criminal cases, as these are reserved for courts due to their public nature.
