Scope of Arbitration in India: A Comprehensive Overview
Scope of Arbitration in India: A Comprehensive Overview
1. Introduction
Arbitration is a widely used alternative dispute resolution (ADR) mechanism in India.
It involves resolving disputes outside courts by an arbitrator or tribunal.
The legal framework is mainly governed by the Arbitration and Conciliation Act, 1996, which is modeled on the UNCITRAL Model Law.
Arbitration aims to offer speedy, cost-effective, and flexible resolution of disputes.
2. Scope Defined
The scope of arbitration in India includes:
(a) Types of Disputes Covered
Arbitration can be applied to civil disputes, including commercial, contractual, property, partnership, joint venture, and construction disputes.
Typically, matters relating to rights and obligations under contracts are arbitrable.
The parties must have agreed to arbitration either before or after the dispute arises.
(b) Exclusions from Arbitration
Certain matters are not arbitrable in India, as they involve public policy, criminal offences, or non-arbitrable disputes.
Examples include:
Criminal matters (as per B.K. Pavitra v. Union of India).
Matters affecting personal liberty.
Winding up of companies.
Custody of minors.
Revenue and tax disputes (generally non-arbitrable).
3. Legal Framework and Sections Defining Scope
| Section | Description |
|---|---|
| Section 7 | Arbitration agreement: defines the basis of arbitration. |
| Section 8 | Court’s power to refer parties to arbitration when there is a valid agreement. |
| Section 11 | Appointment of arbitrators. |
| Section 34 | Challenge and setting aside of arbitral awards on limited grounds (including public policy). |
4. Scope of Judicial Intervention
Courts have a limited role to play, mainly to:
Enforce arbitration agreements.
Appoint arbitrators if parties fail to do so.
Ensure procedural fairness.
Set aside awards only on narrow grounds like fraud, bias, violation of public policy.
The Supreme Court has consistently advocated minimal judicial interference to preserve arbitration's efficacy.
5. Important Case Laws
🏛️ Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc. (BALCO) (2012) 9 SCC 552
The Supreme Court held that arbitration applies only to disputes arising after the Arbitration Act, 1996 came into force.
Clarified “arbitral tribunal” has jurisdiction only over disputes falling under the arbitration agreement.
🏛️ ONGC Ltd. v. Western Geco International Ltd. (2014) 9 SCC 263
The Court ruled that arbitration clause must be respected.
Judicial interference should be limited to grounds specified under Section 34.
🏛️ S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618
Clarified the scope of public policy in setting aside arbitral awards.
Reinforced the pro-arbitration approach of Indian courts.
🏛️ National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267
Expanded the scope of public policy and grounds for setting aside arbitral awards.
Created some debate on the extent of judicial scrutiny.
6. Practical Scope
Arbitration is used in commercial contracts, construction disputes, joint ventures, insurance claims, technology agreements, and international trade.
It covers disputes arising from both domestic and international contracts.
7. Summary Table
| Aspect | Scope Explanation |
|---|---|
| Disputes Covered | Civil, commercial, contractual disputes |
| Exclusions | Criminal, public law matters, tax disputes, company winding-up |
| Judicial Role | Limited, mainly enforcing arbitration agreement and limited grounds for setting aside awards |
| Governing Law | Arbitration and Conciliation Act, 1996 |
| Key Principles | Party autonomy, minimal court intervention, enforcement of awards |
8. Conclusion
The scope of arbitration in India is broad and covers most civil and commercial disputes.
Arbitration promotes a speedy and less formal resolution outside courts.
Judicial interference is restricted, reinforcing the autonomy and finality of arbitration.
However, public policy exceptions limit the scope to maintain justice and fairness.
RELATED Blog
0 comments