Concept of Arbitrability of Arbitration Agreements in India
“Arbitration is the grease that helps economies flow and brings us benefits around the world.”
—David W. Rivkin[1]
1. Introduction
Arbitration is a dynamic dispute resolution technique. An arbitrator’s powers normally derive from the arbitration agreement. With increasing number of cross border transactions and international trade contracts, arbitrability of arbitration agreement holds a prominent place in resolution of international and domestic arbitrations.
2. Effect given to an arbitration agreement by court
Traditionally the parties move to court when the dispute relating to an arbitration agreement arises. So the question that needs to be dealt with is how does a court give effect to an arbitration agreement? It can be dealt in parts.
2.1 Where one party wants to institute arbitration and another one is uncooperative, court may pass order compelling arbitration.
2.2 Where litigation is initiated over a claim falling within the scope of arbitration agreement, court may dismiss the suit on grounds of lack of jurisdiction.
2.3 Depending on the law of the seat, the Court may even have powers to support the arbitral tribunal - witnesses, documents, opinions.[2]
However, question is when can parties approach court even in presence of an arbitration agreement? In other words, what makes a dispute non-arbitrable?
3. The Golden Rule
The Golden Rule is that if the dispute is covered by an Arbitration agreement, the said dispute should be resolved by Arbitration. Ordinarily every civil or commercial dispute whether based on contract or otherwise which is capable of being decided by a civil court is in principle capable of being adjudicated upon and resolved by arbitration subject to the dispute being governed by the arbitration agreement.[3]However, there are exceptions to this Rule. There are several scenarios and circumstances, which might render the dispute non-arbitrable.
4. Arbitrability
Arbitrability can be found in UNCITRAL Model Law, which permits the courts of the seat to set aside an arbitral awards on the grounds that the subject matter of the dispute is not capable of resolution by arbitration under the law of the State.[4] The term arbitrability has different meanings in different contexts. The three facets of arbitrability, relating to the jurisdiction of the arbitral tribunal, are as under: [5]
4.1 Whether the disputes are capable of adjudication and settlement by arbitration?
That is, whether the disputes, having regard to their nature, could be resolved by a private forum chosen by the parties (the arbitral tribunal) or whether they would exclusively fall within the domain of public fora (courts).[6]
4.2 Whether the disputes are covered by the arbitration agreement?
That is, whether the disputes are enumerated or described in the arbitration agreement as matters to be decided by arbitration or whether the disputes fall under the excepted matters excluded from the purview of the arbitration agreement.[7]
4.3 Whether the parties have referred the disputes to arbitration?
That is, whether the disputes fall under the scope of the submission to the arbitral tribunal, or whether they do not arise out of the statement of claim and the counter claim filed before the arbitral tribunal.[8]
