{"id":240196,"date":"2020-12-05T10:45:00","date_gmt":"2020-12-05T05:15:00","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=240196"},"modified":"2020-12-05T13:15:05","modified_gmt":"2020-12-05T07:45:05","slug":"section-11-after-2019-amendment-act-an-opportunity-to-strengthen-institutional-arbitration-in-india","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2020\/12\/05\/section-11-after-2019-amendment-act-an-opportunity-to-strengthen-institutional-arbitration-in-india\/","title":{"rendered":"Section 11 after 2019 Amendment Act \u2013 An Opportunity to Strengthen Institutional Arbitration in India \u00a0"},"content":{"rendered":"

I. INTRODUCTION<\/span><\/h3>\n

The 2019 Amendment Act[1]<\/a> marks India\u2019s shift towards institutional arbitration. Like previous amendments to the Arbitration and Conciliation Act, 1996[2]<\/a> (hereinafter \u201cACA\u201d) one of the objectives of the latest amendment is to make India an arbitration-friendly jurisdiction. This is one of those objectives which the previous amendments have failed to achieve.<\/p>\n

As per the latest amendment, the authority to appoint an arbitrator under Section 11 now vests with the arbitral institution. The amendment however does not comment on the \u2018Scope of Intervention\u2019 while appointing the arbitrator. Through this article, an attempt has been made to figure out what \u2018Scope of Intervention\u2019 would be in tune with the institutional arbitration regime in India.<\/p>\n

Section 11 has been one of the most debated subject-matters in Indian arbitration regime and has undergone changes in both the 2015 and 2019 Amendment Acts. This article shall talk about the circumstances leading to these amendments to determine what legislature, judiciary or arbitral institutions need to learn from the past and avoid with regard to Section 11 which would impede the progress of institutional arbitration in India.<\/p>\n

II. ARBITRATION AND CONCILIATION ACT, 1996<\/span><\/h3>\n

The legislature wanted to make the arbitration landscape in India more responsive to contemporary requirements. To bring the arbitration law in tune with the prevailing scenario of international arbitration, the 1996 Act was introduced which sought to:<\/p>\n

(i) reduce the judicial interference in the arbitral process; and<\/p>\n

(ii) expedite disposal of cases<\/p>\n

1. Interpretation of Section 11 prior to 2015 Amendment<\/strong><\/h3>\n

The Supreme Court in National Insurance Co. Ltd. v. Boghara Polyfab<\/em>[3]<\/a> relied on SBP & Co. v. Patel Engineering<\/em>[4]<\/a> and categorised the issues which can or cannot be decided by the court concerned while appointing the arbitrator under Section 11:<\/p>\n

\u201c22.1.<\/em> The issues (first category)<\/strong> which Chief Justice\/his designate will have to decide are: <\/em><\/p>\n

(a) Whether the party making the application has approached the appropriate High Court?<\/em><\/p>\n

\u00a0(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement?<\/em><\/p>\n

\u00a0<\/em>22.2. The issues (second category) <\/strong>which the Chief Justice\/his designate may choose to decide are:<\/em><\/p>\n

(a) Whether the claim is a dead (long barred) claim or a live claim? <\/em><\/p>\n

\u00a0(b) Whether the parties have concluded the contract\/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection?<\/em><\/p>\n

22.3. The issues (third category)<\/strong> which the Chief Justice\/his designate should leave exclusively to the arbitral tribunal are: <\/em><\/p>\n

(a) Whether a claim falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration)? <\/em><\/p>\n

\u00a0(b) Merits of any claim involved in the arbitration<\/em>.\u201d<\/p>\n

2. \u00adThwarting the objectives of the Act<\/strong><\/h3>\n

The Court in the aforementioned rulings expanded the scope of Section 11 and appeared to have gone against the intention of the legislature and objectives of the Act. Patel Engineering[5]<\/strong><\/a><\/em> and National Insurance[6]<\/strong><\/a><\/em> gave the court concerned power to not only determine the existence of the arbitration agreement but also the power to decide the preliminary issues (second category)<\/strong>. Thus, the Court\u2019s role no longer remained that of a \u2018facilitator\u2019 resulting in increased court intervention in the arbitral process and the Court\u2019s increased involvement essentially means slow disposal of cases.<\/p>\n

The two aforementioned judgments conferred finality in light of sub-section (7) on the issues decided by the Court. Consequently, if a court would decide the existence of the arbitration agreement between the parties, the tribunal will have no power to decide that issue. It might have been the intention of the court to save the tribunal\u2019s time, and preventing it from deciding on the same issue again. However, the decision to confer the power on courts to decide preliminary or jurisdictional issues goes against the express wordings of Section 16 of the Act which recognises the Kompetenz-Kompetenz<\/em> principle.<\/p>\n

III. THE 2015 AMENDMENT ACT<\/span><\/h3>\n

In the wake of the Court\u2019s expanded scope of intervention, the Law Commission of India in its 246th<\/sup> Report[7]<\/a> suggested amendments to the Act. It sought to introduce Section 11(6-A), the discussion regarding which in the said Report is as follows:<\/p>\n

\u201cSection 11(6-A) of the amendment contemplates a two-step process<\/strong> to be adopted by a judicial authority when considering an application seeking the reference of a pending action to arbitration. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void (i.e. invalid). If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie. The amendment also envisages that there shall be a conclusive determination as to whether the arbitration agreement is null and void<\/strong><\/em>.\u201d<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (emphasis supplied)<\/p>\n

However, Section 11(6-A) as per the 2015 Amendment clarified that the Court\u2019s role under sub-sections (4), (5) or (6) of Section 11 is to \u201cconfine to the examination of the existence of an arbitration agreement<\/em>\u201d. Evidently, the section does not include prima facie \u201cexamination of validity\u201d in contrast to the Law Commission\u2019s suggestion that \u201conce the prima facie conclusion is that the agreement does not exist or if it is determined that agreement is null and void, such determination is conclusive\u201d.<\/p>\n

The 2015 Amendment Act\u2019s Statement of Objects and Reasons reiterated how interpretation of the provisions has caused delay in arbitral proceedings and encroachment upon the tribunal\u2019s powers. Thus, the intention behind the amendment is to remedy the situation by introducing sections to minimise court intervention and enable swift disposal of cases in user-friendly manner.<\/p>\n

We will now look if the interpretation provided by the Courts to Section 11(6-A) was consistent with the 2015 Amendment\u2019s objectives.<\/p>\n

1. Scope of Examination under Section 11 post 2015 Amendment<\/strong><\/h3>\n

In Duro Felguera, S.A. v. Gangavaram Port Limited,<\/em>[8]<\/a> two-Judge Bench of the Supreme Court provided literal interpretation to Section 11(6-A) to confine examination to the existence of an arbitration agreement and enumerated the factors to decide on the existence of such an agreement. The Court stated:<\/p>\n

\u201cFrom a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only into one aspect \u2013 the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple \u2013 it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement<\/em>.\u201d<\/p>\n

However, in United India Insurance v. Hyundai Engg. & Construction Co. Ltd.<\/em>,[9]<\/a> the Court while relying on Duro Felguera[10]<\/strong><\/a><\/em> came up with a different reasoning and held:<\/p>\n

\u201cSuffice it to say that appointment of arbitrator is a judicial power and is not mere an administrative function leaving some degree of judicial intervention; when it comes to the question to examine the existence of a prima facie arbitration agreement, it is always necessary to ensure that the dispute resolution process does not become unnecessarily protracted<\/em>.\u201d<\/p>\n

The Court then in Mayavati Trading v. Pradyuat Deb Burman<\/em>[11]<\/a> overruled the judgment in United India Insurance[12]<\/strong><\/a> <\/em>\u00a0stating that the judgment does not lay down the correct law and reaffirmed that \u201cSection 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment of Duro Felguera[13]<\/strong><\/a>.<\/em>\u201d Further, all the other preliminary objections\/questions are to be dealt with by the tribunal.[14]<\/a><\/p>\n

\u00a0<\/strong>2.\u2018Dual Test\u2019 by the Delhi High Court <\/strong><\/p>\n

In both Jindal Stainless Ltd. v. Damco India Pvt. Ltd.<\/em>[15]<\/a> and Ritika Diwan v. Supertech Ltd.<\/em>,[16]<\/a> the Delhi High Court reached the same conclusion that \u201cthe role of the Courts while considering an application under Section 11 is now confined to examining the existence of the arbitration agreement.\u201d<\/p>\n

However, post Ritika Diwan[17]<\/strong><\/a><\/em>, the Delhi High Court has provided a different interpretation to Section 11(6) in the judgments of Unique Reality Pvt. Ltd. v. RC Infra Developers <\/em>[18]<\/a>; Pave Infrastructure Pvt. Ltd. v. WAPCOS Ltd.<\/em>[19]<\/a> and Devi Fatehpuria v. Jugal Kishore Shyam Prakash and Co.<\/em>[20]<\/a><\/p>\n

In these aforestated three judgments post Ritika Diwan[21]<\/strong><\/a><\/em>, the Delhi High Court has held that the Court has to examine the \u201cexistence\u201d and \u201cvalidity\u201d of an arbitration agreement while deciding on a petition under Section 11(6).<\/p>\n

Insofar as the Supreme Court\u2019s interpretation of Section 11 or the \u2018Dual Test\u2019 applied by the Delhi High Court is concerned, what remains relevant to note is the inconsistency in judicial precedents. On one hand, the Supreme Court \u00a0tends to deviate from \u2018only examining the existence of an arbitration agreement\u2019 and on the other Delhi \u00a0High Court continues apply the dual test of \u2018existence\u2019 and \u2018validity\u2019 despite the clarification provided by the Supreme Court \u00a0in Mayavati Trading[22]<\/strong><\/a><\/em>.<\/p>\n

3.Continued judicial intervention<\/strong><\/h3>\n

The following judgments shall demonstrate that judicial intervention continued and the courts seem to have remained oblivious of the Kompetenz-Kompetenz<\/em> principle:<\/p>\n

3.1. Supreme Court Judgments<\/em><\/strong><\/h4>\n

In both, Oriental Insurance Company Ltd. v. Narbheram Power and Steel Private Ltd.[23]<\/strong><\/a><\/em> and United India Insurance[24]<\/strong><\/a>\u00a0 <\/em>the Supreme Court other than identifying the existence of the arbitration agreement, examined whether the conditions stipulated in the contract to give effect to the arbitration agreement have been fulfilled.<\/p>\n

In Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd<\/em>.,[25]<\/a> the Supreme Court was of the opinion that an application under Section 11 could be decided only if the arbitration clause or the contract containing the arbitration clause is sufficiently stamped. In light of sub-section (6-A) one could argue that examining the existence of an arbitration agreement does not include examining whether such agreement is sufficiently stamped.<\/p>\n

3.2. Delhi High Court Judgments<\/em><\/strong><\/p>\n

In\u00a0NCC Ltd. v. Indian Oil Corporation Ltd.<\/em>,[26]<\/a> it was stated that apart from examining the existence of an arbitration agreement, the Court\u2019s power of examination under Section \u00a0\u00a0\u00a011(6-A) extends to \u201ccorrelating the dispute between the parties with the arbitration agreement between the parties\u201d.<\/p>\n

In Brightstar Telecommunications v. Iworld Digital Solutions Pvt. Ltd.<\/em>,[27]<\/a> the Court took a very similar stance and stated that examination under Section 11(6-A) extends to \u201crelating the existence of arbitration agreement to the disputes, which the parties had anticipated that would arise in connection with and\/or in relation to the transactions that they had undertaken.\u201d<\/p>\n

In Western Constructions v. Eden Buildcon<\/em>,[28]<\/a> the Court went to examine \u201cwhether the disputes between the parties fall within the ambit of arbitration clause\u201d and thereby did not refer the parties to arbitration.<\/p>\n

In Prime Market Reach Pvt. Ltd. v. Supreme Advertising Ltd.<\/em>,[29]<\/strong><\/em><\/a> the Court having examined the validity of the arbitration agreement in detail (as per requirements of Section 7), found it to be invalid and hence, refused to refer the parties to arbitration.<\/p>\n

\u00a0<\/strong>4. Aftermath of the 2015 Amendment<\/strong><\/h3>\n

Two circumstances arose in the aftermath of this amendment:<\/p>\n

(i) Courts\u2019 Interpretation of Section 11 of the Act was not consistent.<\/p>\n

(ii) Judicial interference in the arbitral process continued as the courts seem to have ignored the Tribunal\u2019s power to rule on its own jurisdiction.<\/p>\n

Consequently, the 2015 Amendment failed to achieve its objectives of minimal judicial intervention and user-friendly speedy disposal of cases. India still remains to be seen as an arbitration- unfriendly jurisdiction.<\/p>\n

\u00a0<\/strong>IV. REFLECTING ON THE ROLE OF THE LEGISLATURE AND THE COURT<\/span><\/h3>\n

The Supreme Court in Vidya Drolia v. Durga Trading Corpn. <\/em>[30]<\/a> noted:<\/p>\n

\u201cIt will be seen that though the 246th <\/sup>Law Commission Report[31]<\/a> speaks not only of \u201cexistence\u201d but also of an arbitration clause being null and void, this has not translated itself into the language of Section 11(6-A).\u201d<\/p>\n

It can be argued that despite the legislature\u2019s noble intentions, Section 11(6-A) has not been drafted with clarity or that the provision is not as elaborative as suggested by the Law Commission\u2019s\u00a0 246th<\/sup> Report or that the provision as suggested by the Law Commission was more in tune with objectives of the amendment.<\/p>\n

However, it remains of quintessential importance to discuss the role of the courts when faced with a situation where a defect appears in the provision or that provision has not been drafted with clarity or seems to be going against the intention of the legislature.<\/p>\n

Lord Denning once said that in the event when a defect emerges, a Judge should not simply fold his hands and blame the draftsman but must also consider the social conditions and give force and life to the intention of the Legislature. Lord Denning in Seaford Court Estates Ltd. v. Asher<\/em>[32]<\/a> said:<\/p>\n

\u201cA Judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the Judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give force and life to the intention of the legislature.\u201d<\/em><\/p>\n

In a similar vein, the Supreme Court in Collector of Customs v. Digvijaya Singhji Spinning & Weaving Mills<\/em>[33]<\/a> resorted to the principle of harmonious construction of the statues and said:<\/p>\n

\u201c\u2026where an alternative construction is open, that alternative should be chosen which is consistent with the smooth working of the system which the statute purports to regulate<\/em>.\u201d<\/p>\n

While the 1996 Act or the 2015 Amendment Act might not have been perfectly drafted Act, the Courts did not succeed either in their role to provide an interpretation to\u00a0 Section 11 which is best suited to give impetus to the intention of the legislature.<\/p>\n

V. THE 2019 AMENDMENT ACT<\/span><\/h3>\n

Wary of India\u2019s reputation as arbitration-unfriendly jurisdiction, the Ministry of Law and Justice set up a High Level Committee (HLC) under the Chairmanship of retired Justice of the Supreme Court, Jusice B.N. Srikrishna to suggest measures required for making India a hub of international and domestic arbitrations.<\/p>\n

Based on its terms of reference which involved studying the functioning of arbitral institutions and examining the effectiveness of arbitration mechanisms, the Committee was tasked with:<\/p>\n

\u201c(a) suggesting measures to encourage Institutional Arbitration in India;<\/em><\/p>\n

\u00a0(b) recommending amendments to the ACA and other laws to encourage international commercial arbitration; <\/em><\/p>\n

(c) devising an action plan for implementation of the law to encourage speedy arbitrations<\/em>.\u201d<\/p>\n

\u00a0<\/em>Based on the recommendations of the Report submitted by the High Level Committee, Parliament introduced the 2019 Amendment Act. The amendments contained in the Act which are pertinent to our discussion are as follows:<\/p>\n

(a) The establishment and incorporation of an independent & autonomous body, namely, the \u201cArbitration Council of India\u201d;<\/p>\n

(b) An amendment to Section 11 of the Act i.e. \u201cAppointment of Arbitrators\u201d.<\/p>\n

Through the amendment, sub-sections (6-A) and (7) have been repealed. Since the amendment focused on strengthening institutional arbitration in India, under the amended Section 11(6) of the ACA the appointment of arbitrators shall be done by the arbitral institution:<\/p>\n

\u201c\u2026the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be.<\/em>\u201d<\/p>\n

The amendment did not provide clarification on:<\/p>\n

(i) What shall be the scope of examination of by the arbitral institution while entertaining an application for appointment of arbitrator?<\/p>\n

(ii) Whether the orders passed by the Tribunal shall be amenable to challenge?<\/p>\n

Detailed rules are required to be framed regarding these unaddressed issues in the amendment. These open questions pose a serious threat to the step of encouraging institutional arbitration in India. The legislature must clarify the scope of examination and intervention by the arbitral institutions to ensure that the institutions do not interfere with the tribunal\u2019s power.<\/p>\n

Earlier, we observed the how confusion regarding the scope of examination under Section 11 led to inconsistency in judicial precedents and increased judicial interference with the arbitral process. While the legislature\u2019s amendment is a step forward to reduce the court interference with arbitral process, the expanded scope of examination by the arbitral institution could still be oblivious of the Kompetenz-Kompetenz<\/em> principle.<\/p>\n

It is crucial to learn from the past and avoid the situations which arose earlier. It is highly important that the scope of examination while appointing the arbitrator must be such which is best suited to strengthen institutional arbitration and improve India\u2019s reputation as an arbitration friendly jurisdiction.<\/p>\n

1. Approach of the global institutions<\/strong><\/h3>\n

The HLC in its Report referred to the QMUL Survey<\/em>[34]<\/a> which had stated that the International Chamber of Commerce Court (ICC Court), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC) and the Arbitration Institute of the Stockholm Chambers of Commerce (SCC) are the five most preferred arbitral institutions worldwide.<\/p>\n

To find out the best-suited approach while entertaining an application under Section 11, we will compare the approach or the scope of examination undertaken by these five most preferred arbitral institutions while appointing an arbitrator or registering a case. Apart from these institutions, we shall also see the approach of ICSID which could be guiding factor for BIT arbitrations.<\/p>\n

1.1.<\/strong> ICC Arbitration Rules[35]<\/a><\/strong><\/h4>\n
\n

\u201cArticle 6. Effect of the Arbitration Agreement.\u2014<\/em><\/strong><\/p>\n

(1)-(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/p>\n

(4) In all cases referred to the Court under Article 6(3)\u2026The arbitration shall proceed if and to the extent that the Court is prima facie<\/strong> satisfied that an arbitration agreement under the Rules may exist.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/em><\/p>\n

    \n
  1. In all matters decided by the Court under Article 6(4), any decision as to the jurisdiction of the arbitral tribunal, except as to parties or claims with respect to which the Court decides that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself<\/strong><\/em>.\u201d<\/li>\n<\/ol>\n

    1.2.\u00a0 HKIAC Arbitration Rules[36]<\/a><\/strong><\/p>\n

    \u201cArticle 11 \u2013 HKIAC\u2019s Prima Facie Power to Proceed <\/em><\/strong><\/p>\n

    11.1 The arbitration shall proceed if and to the extent that HKIAC is satisfied, prima facie<\/strong>, that an arbitration agreement under these Procedures may exist. Any question as to the jurisdiction of the arbitral tribunal shall be decided by the arbitral tribunal<\/strong> once constituted.<\/em><\/p>\n

    11.2 \u00a0HKIAC\u2019s decision pursuant to Article 11.1 is without prejudice to the admissibility or merits of any party\u2019s pleas<\/em>.\u201d<\/p>\n

    1.3.\u00a0\u00a0\u00a0\u00a0\u00a0 LCIA Arbitration Rules[37]<\/a><\/strong><\/p>\n

    \u201cArticle 23. Jurisdiction and Authority <\/em><\/strong><\/p>\n

    23.1 The Arbitral Tribunal shall have the power to rule upon its own jurisdiction<\/strong> and authority, including any objection to the initial or continuing existence, validity, effectiveness or scope of the Arbitration Agreement.<\/em>\u201d<\/p>\n

    1.4.\u00a0\u00a0\u00a0\u00a0\u00a0 SIAC Arbitration Rules, 2016[38]<\/a><\/strong><\/p>\n

    \u201cArticle 28. Jurisdiction of the Tribunal<\/em><\/strong><\/p>\n

    28.1 \u00a0If any party objects to the existence or validity of the arbitration agreement or to the competence of SIAC\u2026the Court shall decide if it is prima facie<\/strong> satisfied that the arbitration shall proceed. The arbitration shall be terminated if the Court is not so satisfied. Any decision by the Registrar or the Court that the arbitration shall proceed is without prejudice to the power of the Tribunal to rule on its own jurisdiction.<\/em><\/p>\n

    28.2 \u00a0The Tribunal shall have the power to rule on its own jurisdiction<\/strong>, including any objections with respect to the existence, validity or scope of the arbitration agreement. An arbitration agreement which forms part of a contract shall be treated as an agreement independent of the other terms of the contract<\/em>.\u201d<\/p>\n

    Identical Clauses are present in Article 25 of SIAC Investment Rules, 2017.<\/p>\n

    1.5.\u00a0\u00a0\u00a0\u00a0\u00a0 SCC Arbitration Rules[39]<\/a><\/strong><\/p>\n

    \u201cArticle 11. Decisions by the Board<\/em><\/strong><\/p>\n

    The Board takes decisions as provided under these Rules, including deciding:<\/em><\/p>\n

    (i) \u00a0whether the SCC manifestly lacks jurisdiction<\/strong> over the dispute pursuant to Article 12 (i); <\/em><\/p>\n

    \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0*\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/em><\/p>\n

    Article 12. Dismissal<\/em><\/strong><\/p>\n

    The Board shall dismiss a case, in whole or in part, if: <\/em><\/p>\n

    (i) \u00a0the SCC manifestly lacks jurisdiction<\/strong> over the dispute;…<\/em>\u201d<\/p>\n

    1.6.<\/strong>\u00a0\u00a0\u00a0\u00a0\u00a0 ICSID Convention[40]<\/a><\/strong><\/h4>\n

    \u201cSection 1 <\/em><\/strong>Request for Arbitration<\/em><\/strong><\/p>\n

    Article 36<\/em><\/strong><\/p>\n

    (1)-(2)\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/strong><\/em><\/p>\n

    (3) The Secretary-General shall register the request unless he finds, on the basis of the information contained in the request, that the dispute is manifestly outside<\/strong> the jurisdiction of the Centre. He shall forth-with notify the parties of registration or refusal to register.<\/em><\/p>\n

    \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/em><\/p>\n

    Section 3\u00a0\u00a0 Powers and Functions of the Tribunal<\/em><\/strong><\/p>\n

    Article 41<\/em><\/strong><\/p>\n

    (1) The Tribunal shall be the judge of its own competence<\/strong>. <\/em><\/p>\n

    (2) Any objection by a party to the dispute that that dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal, shall be considered by the Tribunal which shall determine whether to deal with it as a preliminary question or to join it to the merits of the dispute.<\/em>\u201d<\/p>\n<\/blockquote>\n

    2. Similar Approach by global institutions<\/strong><\/p>\n

    The \u2018scope of examination\u2019 that all of these institutions undertake has two similar facets:<\/p>\n

    (i) Acknowledgement of the tribunal\u2019s power (Kompetenz-Kompetenz<\/em>) as all of the aforementioned institutions have given the tribunals the power to rule on their own jurisdiction; and<\/p>\n

    (ii) Checking whether the institution manifestly lacks jurisdiction<\/em><\/strong> or in other words prima facie<\/em><\/strong> examination of whether the arbitration should proceed.<\/p>\n

    \u00a0<\/strong>VI.CONCLUSION<\/span><\/h3>\n

    The approach followed by these institutions is not entirely new to the Indian arbitration regime. In fact, the scope of examination under Section 11as suggested by 246th<\/sup> Law Commission Report was similar to the approach followed by these institutions while registering or deciding whether arbitral process should move forward. The suggested amendment of Section 11 in 246th<\/sup> Report involved examining whether prima facie <\/em>arbitration agreement exists – If prima facie no agreement exists, arbitration shall not move forward and if the agreement prima facie<\/em> exists, the arbitration shall move forward and the tribunal shall have the power to rule on its jurisdiction including the arbitration agreement. This approach while dealing with an application for appointment of an arbitrator is consistent with the intention of the legislature to reduce<\/p>\n

    Firstly, refusing to appoint an arbitrator if the arbitral institution is not prima facie<\/em> satisfied that an arbitration agreement exists is plausible conclusion. Certainly, prima facie<\/em> satisfaction by the appointing authority indicates a lower threshold of scrutiny, lower than what the tribunal would require to satisfy itself of the existence of a valid arbitration agreement when it rules on its jurisdiction. Therefore, it is most plausible to conclude that an arbitration agreement which fails to pass the scrutiny of the lower threshold should not be expected to pass the higher threshold required by the tribunal.<\/p>\n

    The prima facie<\/em> satisfaction can be said to be similar to the examination under the English Arbitration Act for appointment of an arbitrator which requires that the court would see if there is \u201cgood arguable case\u201d that the tribunal had jurisdiction to hear the issue.[41]<\/a><\/p>\n

    Secondly, the prima facie<\/em> satisfaction is more consistent with Kompetenz-Kompetenz<\/em> principle as it gives the tribunal the power to rule on its jurisdiction even when the arbitration agreement has passed the initial lower threshold.<\/p>\n

    Lastly, the prima facie<\/em> test would lead to speedy disposal of cases and result in weeding-out the cases which have failed to pass this lower threshold test ultimately saving the tribunal\u2019s time.<\/p>\n

    \n

    *<\/a> 4th<\/sup> Year, BALLB. (Hons.), Maharashtra National Law University, Nagpur.<\/p>\n

    [1]<\/a> Arbitration and Conciliation (Amendment) Act, 2019<\/a><\/p>\n

    [2]<\/a> Arbitration and Conciliation Act, 1996<\/a><\/p>\n

    [3]<\/a>(2009) 1 SCC 267<\/a><\/p>\n

    [4]<\/a>(2005) 8 SCC 618<\/a><\/p>\n

    [5]<\/a> (2005) 8 SCC 618<\/a><\/p>\n

    [6]<\/a> (2009) 1 SCC 267<\/a><\/p>\n

    [7]<\/a> Law Commission of India, 246th<\/sup> Report on Amendments to the Arbitration and Conciliation Act, 1996<\/p>\n

    (August 2014)<\/p>\n

    [8]<\/a> (2017) 9 SCC 729<\/a><\/p>\n

    [9]<\/a> (2018) 17 SCC 607<\/a><\/p>\n

    [10]<\/a> (2017) 9 SCC 729<\/a><\/p>\n

    [11]<\/a>(2019) 8 SCC 714<\/a><\/p>\n

    [12]<\/a> (2018) 17 SCC 607<\/a><\/p>\n

    [13]<\/a> (2017) 9 SCC 729<\/a><\/p>\n

    [14]<\/a> Uttrakhand Kalyan Nigam v. Northern Coal Field Ltd., <\/em>(2020) 2 SCC 455<\/a><\/p>\n

    [15]<\/a>2016 SCC OnLine Del 6368<\/a><\/p>\n

    [16]<\/a>2019 SCC OnLine Del 11255<\/a><\/p>\n

    [17]<\/a> Ibid<\/p>\n

    [18]<\/a>Arb. Petition No. 432 of 2019<\/p>\n

    [19]<\/a>Arb. Petition No. 574 of 2019<\/p>\n

    [20]<\/a>Arb. Petition No. 339 of 2019<\/p>\n

    [21]<\/a> 2019 SCC OnLine Del 11255<\/a><\/p>\n

    [22]<\/a> (2019) 8 SCC 714<\/a><\/p>\n

    [23]<\/a>(2018) 6 SCC 534<\/a><\/p>\n

    [24]<\/a> (2018) 17 SCC 607<\/a><\/p>\n

    [25]<\/a> (2019) 9 SCC 209<\/a><\/p>\n

    [26]<\/a>2019 SCC OnLine Del 6964<\/a><\/p>\n

    [27]<\/a>2018 SCC OnLine Del 13071<\/a><\/p>\n

    [28]<\/a>2019 SCC OnLine Del 11465<\/a><\/p>\n

    [29]<\/a>Arb. Petition No. 434 of 2019, decided on 17-12-2019.<\/p>\n

    [30]<\/a>2019 SCC Online SC 358<\/a><\/p>\n

    [31]<\/a> 246th<\/sup> Report \u00a0on Amendments to the Arbitration and Conciliation Act, 1996<\/p>\n

    [32]<\/a>[1949] 2 KB 481<\/p>\n

    [33]<\/a>1961 AIR 1549<\/a><\/p>\n

    [34]<\/a> \u20182015 International Arbitration Survey: Improvements and Innovations in International Arbitration\u2019, Queen Mary University of London and White & Case LLP (2015), available at http:\/\/www.arbitration.qmul.ac.uk\/docs\/164761.pdf<\/a>.<\/p>\n

    [35]<\/a> Rules of Arbitration of the International Chamber of Commerce<\/p>\n

    [36]<\/a> HKIAC, Procedures for Administration of Arbitration under the UNCITRAL Arbitration Rules<\/p>\n

    [37]<\/a> London Court of International Arbitration Rules<\/p>\n

    [38]<\/a>Singapore International Arbitration Centre Rules, 2016<\/p>\n

    [39]<\/a>Arbitration\u00a0 Rules\u00a0 of\u00a0 the\u00a0 Arbitration\u00a0 Institute\u00a0 of\u00a0 the\u00a0 Stockholm\u00a0 Chamber\u00a0 of\u00a0 Commerce, 2017<\/p>\n

    [40]<\/a> Convention\u00a0 on\u00a0 the\u00a0 Settlement\u00a0 of\u00a0 Investment\u00a0 Disputes\u00a0 between\u00a0 States\u00a0 and\u00a0 Nationals\u00a0 of\u00a0 Other States<\/p>\n

    [41]<\/a>Silver Dry Bulk Co. Ltd. v. Homer Hulbert Maritime Co. Ltd., [2017] EWHC 44 (Comm).<\/p>\n","protected":false},"excerpt":{"rendered":"

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2018 for introduction in Parliament. It is a part of the efforts of the Government to encourage institutional arbitration for settlement of disputes and make India a centre of robust Alternative Dispute Resolution (ADR) mechanism. 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