In arbitration, the jurisdiction of the arbitral tribunal is a fundamental concept that determines the scope of its authority to resolve disputes between parties from different countries or legal systems. It is essential for parties to understand and agree upon the jurisdiction of the arbitral tribunal before proceeding with arbitration, as it affects the enforceability of the final award rendered by the tribunal. Therefore, it is advisable for parties to carefully review the arbitration agreement and seek legal advice if necessary to ensure that the jurisdiction of the arbitral tribunal is clearly defined and in accordance with their expectations and requirements. Additionally, parties should also be aware that the jurisdiction of the arbitral tribunal may be challenged during the arbitration proceedings, and that such challenges can lead to delays and additional costs. Overall, parties should approach the issue of jurisdiction in international commercial arbitration with care and attention to detail, as it has significant implications for the outcome of the dispute resolution process. Furthermore, parties should also consider the applicable law and rules governing the arbitration proceedings when determining the jurisdiction of the arbitral tribunal.
- Arbitration is an alternative dispute resolution method provided in civil matters. It is a way in which a dispute is decided by private individuals appointed and not the judicial officers appointed to the courts and tribunals of the country directly. Arbitrators are quasi-judicial officers and private individuals. However, all the matters cannot be decided by way of arbitration. Such matters involve matters related to crimes, matrimony, insolvency and winding up, guardianship, tenancy, testamentary matters, trusts, etc. Generally speaking, matters involving right in personam may be submitted for arbitration, and matters concerning right in rem cannot be referred for arbitration.
Whenever a dispute arises between two parties and they decide to resolve the dispute through arbitration, an arbitral tribunal is to be set up. An “arbitral tribunal” means a sole arbitrator or a panel of arbitrators. Their task is to adjudicate and resolve the dispute and to provide an arbitral award.
Nature of disputes that can be referred to arbitration
- Some matters are specifically barred from being referred to arbitration for protecting public policy. Such matters include the winding up of a company, a declaration of insolvency, matrimonial disputes, testamentary disputes, criminal matters, or matters that are expressly excluded from the scope of arbitration.
- Arbitration starts with the arbitration agreement. A carefully drafted arbitration agreement gives the arbitration tribunal full power to decide matters not only expressed in the contract but also consider angles of tort & equity
- Resolving an issue, the arbitration tribunal uses the law agreed to by the parties for dispute resolution, or in the absence of any such agreement, it applies the law suitable to the circumstances in question.
Jurisdiction of arbitration tribunals
There is no inherent jurisdiction of an arbitral tribunal. Instead, its jurisdiction is derived from the agreement between the parties to decide a particular dispute by way of arbitration. Thus, the jurisdiction of an arbitral tribunal is not derived from any legislation. There is a high level of party autonomy. As a result, the arbitration tribunal enjoys the power to rule on its own jurisdiction, and section 16 of the Arbitration and Conciliation Act, 1996, envisages the same.
The relevant provision under the Act (Sec 16)
- Section 16 of the Arbitration and Conciliation Act provides the following provisions: The arbitral tribunal may regulate or direct on its own jurisdiction, which also incorporates any objection regarding the validity or existence of the arbitration agreement, and for that objective:
- An arbitration clause which is a term of a contract agreement must be deemed as an agreement free and autonomous of the other terms of the contract, and
- A decision of the arbitral tribunal declaring the contract as invalid does not necessitate ipso jure the invalidity of the arbitration clause.
- A plea which emanates that the arbitral tribunal doesn’t have jurisdiction shall not be made after the defence statement is submitted; however, a party shall not be prevented from making such a plea only because of his participation in the appointment of, or he appointed, an arbitrator.
- A plea claiming that the arbitral tribunal is surpassing the scope of its authority shall be made as soon as the matter alleged to be transcended the scope of its authority is made during the arbitral proceedings.
- In each of two cases referred to in sub-section (2) or sub-section (3), The arbitral tribunal may accept a delayed plea if it concludes with an opinion that the delay is justified.
- The arbitral tribunal shall determine the plea referred to in sub-section (2) or sub-section (3) and take up with arbitral proceedings where the arbitral tribunal takes a decision rejecting the plea.
- A party, if disgruntled by such an arbitral award, may make an application for rescinding such an arbitral award according to section 34.
Relevant case laws related to Section 16 of the Arbitration and Conciliation Act, 1996
In the case S.N. Malhotra & Sons. v. Airport Authority of India & Ors. (2008) Court observed that the legislature intended that the plea under Sections 16 (2) or 16 (3) must be raised at the earliest and it cannot be entertained at a later stage. The discretion of condonation of delay under Section 16 (4) is only available when the reason for such a delay is justified. If the delay is not considered justified by the arbitration tribunal, it may not admit the objection regarding jurisdiction or scope of authority. Thus, if a party has knowledge of any irregularity and he proceeds with the arbitration without raising an objection within the time limit, he shall be deemed to have waived his right to raise that grievance.
In the case Union of India v. East Coast Boat Builders & Engineers Ltd. (1998) , High court Delhi noted that 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.
In this case M/s Uttam Singh Dugal v. M/s Hindustan Steel Ltd (1981), it was held that the finding on the question of jurisdiction is not an interim award as no part of the dispute is decided. Thus, such a finding is not appealable.
In the case S.B.P. & Co vs Patel Engineering Ltd. & Anr (2005) The Hon’ble Supreme Court of India in observed that a remedy available to the party aggrieved is to challenge the award in accordance with Section 34 or Section 37 of the Act. Section 34 comes into play when the application against the jurisdiction is overruled and the arbitration proceedings are completed accordingly, and Section 37 provides for appeal when the application challenging the jurisdiction is allowed.
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. There can be no appeal of arbitral awards against the jurisdiction related to the merits of the arbitral award section 11 (7) declares that a resolution which is taken by the Chief justice or the person designated by him under section 11 (4) , section 11(5) or section (6) shall be final. It shows that a limit of the tribunal to reconsider its own jurisdiction when the Chief Justice has already considered and decided it. We can conclude that the arbitral tribunal is vested with the power to decide upon its own jurisdiction and scope of authority
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 email@example.com
Join our Whatsapp Group for latest Job Opening