Jurisdiction of Arbitral Tribunal under the Arbitration And Conciliation Act, 1996
Arbitration, as a dispute resolution mechanism, is regulated by the Arbitration and Conciliation Act, 1996. The Act makes provisions on domestic arbitration as well as international commercial arbitration and conciliation.
This Article shall examine the provisions of the Act, as it relates to the jurisdiction of an Arbitral tribunal. To be specific, we shall be considering the subject matter jurisdiction of an arbitral tribunal, i.e. types of matters which an arbitral tribunal can or cannot settle.
Our discourse shall flow in the following order:
- General Jurisdiction of an Arbitral Tribunal under the Arbitration and Conciliation Act, 1996
- Non-Arbitral Matters under the Arbitration and Conciliation Act, 1996
The existence of a dispute triggers the validity of a reference of such dispute to arbitration. In Kotumal Pokardas v. Adam Haji Pir Mohamed, AIR 1939 Sind 357, the Court held “that the existence of a dispute is essential to the validity of a reference to arbitration. The system of introducing arbitration clauses in contracts as been devised by the mercantile men to suit their needs, and they have found it highly beneficial; they have been naturally anxious to establish trade control over transactions of the trade as completely as possible.”
In order to settle the dispute submitted before it, an arbitral tribunal is expected to be fair, efficient and capable of determining the specific issues submitted for settlement by the parties. The Arbitration and Conciliation Act, directs that the arbitral tribunal can deploy mediation and conciliation techniques for the settlement of the arbitral dispute.
Generally, disputes of a civil nature are qualified as arbitrable disputes. Thus, an arbitral tribunal has the general jurisdiction to determine a civil dispute submitted to it. Consequently, where a dispute is of a criminal nature, parties cannot submit such dispute for arbitration. Even if they do, the arbitral tribunal is ousted from exercising its jurisdiction for the determination of such dispute.
Although civil disputes are generally arbitrable, the law, in certain circumstances, stipulates that certain civil subject matters cannot be settled through arbitration. In Wazir Chand Mahajan v. Union of India AIR 1967 SC 990, the Supreme Court decided to the effect that arbitrators are imbued with the power to decide whether a claim to be made in reference to arbitration is barred or not.
The Arbitration and Conciliation Act, 1996, has however, specified civil disputes which cannot be settled through Arbitration.
We shall proceed to look at the necessary provisions of the Act which relates to our discourse.
2.0 General Jurisdiction of an Arbitral Tribunal Under the Arbitration and Conciliation Act, 1996
Generally, under the Arbitration and Conciliation Act, persons who are parties to a recognized legal relationship, whether contractual or not, can refer their disputes, arising from such relationship, to arbitration.
A legal relationship is one which is recognized by the law and to which there are rights and imposed obligations, the performance of which the law recognizes, and the breach of which the law grants remedy.
Therefore, the following subject matters are, generally, arbitrable under the Arbitration and Conciliation Act:
- Civil matters, which form the subject of civil litigation, affecting private rights.
- Civil matters which require the determination of a question of law and/or facts
- Civil matters which require the determination of a pure question of law. In such cases the parties to the arbitration will be bound by the award.
- Even matters which are not of civil nature, in so far as they are not of criminal nature.
However, the submission of any of the aforementioned matters for arbitration is subject to the limitation imposed by the provision of section 2(3) of the Arbitration and Conciliation Act, 1996. Section 2(3) of the Act recognizes the limitation placed by any existing Statute, where the Statute specifies that a subject matter can only be settled by litigation or a specified tribunal.
3.0 Non-Arbitral Matters under the Arbitration and Conciliation Act, 1996
According to section 2(3): “Provisions of Part I which apply to Arbitration which take place in India, shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.”
Thus, where a Statute indicates that the subject matter under the said Statute is to be settled other than by arbitration, e.g. by litigation in court or through specified tribunals, such subject matter cannot be submitted to arbitration. It may however, be observed that these applies to arbitration which takes place in India.
Consequently, some disputes which cannot be resolved through arbitration are as follows:
- Disputes on, or relating to, dissolution or winding up of an incorporated company under the Companies Act, 1956
- Industrial disputes
- Disputes relating to criminal proceedings, except on issues relating to compoundable offences
- Charitable Trusts disputes
- Matrimonial Causes, except the issues involved pertain to settlement of terms of separation or divorce
- Disputes involving questions on the validity of a Will
- Disputes relating to claim for recovery of Octroi duty
- Disputes on or relating to possession of leased premises under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
- Disputes involving or relating to title to immovable/real property in a foreign country
- Disputes under the Monopolies and Restrictive Trade Practices Act, 1969
- Disputes under section 92 of the Code of Civil Procedure, 1908, i.e. Public Charities
- Insolvency disputes
- Disputes relating to the appointment of guardian
Because of these matters cannot be referred to arbitration, where parties erroneously do so, the arbitral tribunal cannot validly exercise its jurisdiction to determine these matters. If the arbitral tribunal erroneously does so, its actions are void, and an exercise in futility.
It is important to note that the above list is not exhaustive. The legislation can always make new rules which ousts the jurisdiction of an arbitral tribunal a specified civil dispute.
Civil disputes arising from a legal relationship, are generally arbitrable under the Arbitration and Conciliation Act, 1996. Thus, matters of a criminal nature are not arbitrable. However, section 2(3) of the Act imposes a limitation to the effect that, where an existing statute stipulates that a subject matter cannot be referred to an arbitration, the provisions of the Arbitration and Conciliation Act shall not apply to such subject matter. In this vein, the jurisdiction of the arbitral tribunal cannot be exercised for the settlement of the civil disputes falling under section 2(3).