Arbitration is the most desired mechanism for resolving commercial disputes because of its convenience and versatility. The Arbitration and Conciliation Act of 1996 regulates arbitration in India and offers a dispute resolution system quickly. Section 42 is one of the provisions that have an essential role in determining the exclusive jurisdiction of courts in cases involving arbitration.
Section 42 of Arbitration and Conciliation Act, 1996
Section 42 of Arbitration and Conciliation Act of 1996 deals with the exclusive jurisdiction of the court in arbitration matters. Once a court receives arbitration matters, it acquires complete jurisdiction that covers all subsequent proceedings involving this arbitration.
The designated section functions to prevent parallel litigations across multiple courts and promote uniform judicial responses regarding arbitration issues.
Key Components of Section 42
The section can be broken down into four key elements:
1. Overriding Effect ("Notwithstanding Clause")
The section begins with a non-obstante clause ("Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force"), which means that this provision will override any conflicting provision in:
The Arbitration and Conciliation Act itself.
Any other law that may grant jurisdiction to another court.
2. Triggering of Exclusive Jurisdiction
If any application under Part I of the Arbitration Act (which deals with domestic arbitration) is filed before a particular court, then:
That court becomes the only court competent to deal with the arbitration matter.
3. Jurisdiction over "Arbitral Proceedings and Subsequent Applications"
The court before which an application is made will have exclusive jurisdiction over the following:
The arbitration proceedings.
Any future applications arising out of that agreement and arbitral process.
This means that no other court can entertain any application related to that arbitration.
4. Exclusion of Other Courts
Once a court is approached, no other court can hear issues pertaining to the same arbitration.
This avoids forum shopping, in which parties seek to transfer cases between courts in search of a better judgment.
Objective and Rationale
The primary purpose of Section 42 is to:
Prevent parallel proceedings in multiple courts regarding the same arbitration agreement.
Ensure consistency in arbitration-related decisions.
Avoid jurisdictional conflicts that could delay arbitration.
Uphold the principle of minimal judicial intervention in arbitration.
By giving exclusive jurisdiction to one court, it enhances the efficiency of dispute resolution.
Scope and Applicability
1. Applies only to domestic arbitrations under Part I of the Act.
2. Covers all applications related to the arbitration agreement, such as:
Appointment of arbitrators (Section 11)
Interim measures (Section 9)
Setting aside an arbitral award (Section 34)
Enforcement of awards (Section 36)
3. The section applies only when an application has already been made before a court.
Exceptions and Limitations
Not applicable to international arbitrations (covered under Part II of the Act).
Does not override the choice of seat in an arbitration agreement (Indus Mobile case).
This only applies when an application under Part I is filed. If no application is filed, multiple courts may theoretically have jurisdiction.
Important Judicial Interpretations related to Section 42 of Arbitration and Conciliation Act
Several court rulings have clarified the scope and effect of Section 42. Certainly, here are some notable case laws interpreting Section 42 of Arbitration and Conciliation Act, 1996, along with their facts, issues, and judgments:
1. Associated Contractors v. State of West Bengal (2015) 1 SCC 32
Facts:
An application under Section 9 (seeking interim measures) of the Arbitration Act was filed before the Calcutta High Court.
Subsequently, an application under Section 34 (seeking to set aside the arbitral award) was filed before the District Court, Jalpaiguri.
Issues:
Which court has the jurisdiction to entertain the application under Section 34: the Calcutta High Court (where the initial Section 9 application was filed) or the District Court, Jalpaiguri?
Judgment:
The Supreme Court held that as per Section 42, once an application under Part I of the Act is made to a particular court, that court alone has jurisdiction over all subsequent applications arising out of the arbitration agreement.
Therefore, the Calcutta High Court, being the court where the first application (under Section 9) was made, had exclusive jurisdiction to entertain the subsequent application under Section 34.
2. Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678
Facts:
The parties entered into an agreement designating Mumbai as the "seat" of arbitration.
An application under Section 11 (appointment of arbitrator) was filed before the Delhi High Court.
Issues:
Does the designation of a "seat" confer exclusive jurisdiction to the courts of that location, overriding Section 42?
Judgment:
The Supreme Court held that the moment the seat is designated, it is akin to an exclusive jurisdiction clause.
Thus, despite Section 42, the courts at the seat of arbitration (Mumbai, in this case) have exclusive jurisdiction over all arbitration-related matters.
3. Gurumahima Heights Cooperative Housing Society Ltd. v. Admirecon Infrastructure Pvt. Ltd. (2023 SCC OnLine Bom 2703)
Facts:
The respondent filed an application under Section 9 before the Principal District Court, Thane, which was disposed of on merits.
Subsequently, the appellant filed a Commercial Arbitration Petition before the Bombay High Court.
Issues:
Does the Bombay High Court have jurisdiction to entertain the subsequent application, or does Section 42 mandate that only the Principal District Court, Thane, has such jurisdiction?
Judgment:
The Bombay High Court held that in view of Section 42, once an application under the Arbitration Agreement is made to a particular court (Principal District Court, Thane), that court alone has jurisdiction over all subsequent applications arising out of the agreement.
Therefore, only the Principal District Court, Thane, had the requisite jurisdiction to entertain the subsequent Commercial Arbitration Petition.
Summing Up
Section 42 of Arbitration and Conciliation Act 1996 plays a vital role in keeping arbitration-related court proceedings bound to one jurisdiction and stopping efforts to select different courts. Its main purpose is to consolidate arbitration lawsuits in a single jurisdiction and create sharper jurisdictional understanding, thus making arbitration a faster dispute resolution alternative.
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FAQs on Section 42 of Arbitration and Conciliation Act, 1996
Q1. What is Section 42 of Arbitration and Conciliation Act?
Section 42 provides for the fact that after a court is approached with an arbitration matter, only such court has exclusive jurisdiction over all subsequent proceedings of that arbitration agreement.
Q2. Why is Section 42 significant?
It avoids forum shopping, upholds uniformity in judicial rulings, and simplifies arbitration-related legal proceedings by vesting jurisdiction in one court.
Q3. Whether Section 42 is applicable to foreign-seated arbitrations?
No, Section 42 is only applicable to domestic arbitrations under Part I of the Act. Foreign-seated arbitrations are covered under Part II.
Q4. Are parties free to select another court after presenting an application?
No, as soon as one party makes an arbitration-related application in a court, all subsequent applications shall be filed in the same court.
Q5. What if an arbitration agreement identifies a court's jurisdiction?
If an agreement names a court, parties shall go to that court for matters related to arbitration, and Section 42 supports its exclusive jurisdiction.
