Arbitration and Conciliation Act, 1996: s.11 – Whether the High Court was justified in rejecting the application filed under s.11 for reference to arbitration, on the ground that it was barred by limitation – Arbitration agreement between the parties – Dispute arose between them – Petitioner sent notices calling upon the Respondent to nominate a Sole Arbitrator in terms of the arbitration clause – Respondent did not respond to the notices – Petitioner filed application under s.11 invoking the default power of the High Court to make the appointment of a sole arbitrator – High Court held that the claims of the Petitioner were barred by limitation, and therefore an arbitrator could not be appointed under s.11 of the Act – Hence the instant special leave appeal – Held: Notice of Arbitration was issued on 09.03.2016 – Since the invocation took place after s.11 was amended by the 2015 Amendment Act, which came into force on 23.10.2015, the amended provision is applicable to the instant case – In view of the legislative mandate contained in s.11(6A), the Court is required only to examine the existence of the arbitration agreement – All other preliminary or threshold issues were left to be decided by the arbitrator under s.16, which enshrines the Kompetenz-Kompetenz principle – The doctrine of “Kompetenz-Kompetenz”, also referred to as “Compétence-Compétence”, or “Compétence de la recognized”, implies that the arbitral tribunal is empowered and has the competence to rule on its own jurisdiction including determining all jurisdictional issues, and the existence or validity of the arbitration agreement – This doctrine is intended to minimize judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties – In view of the provisions of s.16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator – Thus, the issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under s.16, and not the High Court at the pre-reference stage under s.11 of the Act – In the instant case, the issue of limitation was raised by the Respondentcompany to oppose the appointment of the arbitrator under s.11 before the High Court – The issue of limitation being a jurisdictional issue, the same has to be decided by the tribunal under s.16, which is based on Article 16 of the UNCITRAL Model Law which enshrines the Kompetenze principle – The order of High Court is, therefore, set aside – Retired judge of Supreme Court appointed as the Sole Arbitrator – Parties directed to appear before the Arbitrator on 02.12.2019 – Matter disposed of – Doctrine of kompetenz-kompetenz.
Doctrines/Principles: Doctrine of kompetenz-kompetenz – Applicability of, exception – Held: The doctrine is subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception – This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract – The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement – s.7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified – If an arbitration agreement is not valid or non-existent, the arbitral tribunal cannot assume jurisdiction to adjudicate upon the disputes – Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement – Article V(1)(a) of the New York Convention also states that recognition and enforcement of an award may be refused if the arbitration agreement ‘is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made’ – Arbitration law – Contract Act, 1872 – s.7.
ITW Signode India Ltd. v. Collector of Central Excise (2004) 3 SCC 48 : [2003] 5 Suppl. SCR 751; NTPC v. NORTHERN COAL FIELD LTD.
Siemens Atkein Gesell Schaft (2007) 4 SCC 451 : [2007]
3 SCR 399 ; M/s. Indian Farmers Fertilizers
Cooperative Ltd. v. Bhadra Products (2018) 2 SCC
534 : [2018] 1 SCR 848 – relied on.
SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC
618 : [2005] 4 Suppl. SCR 688 ; National Insurance Co. v. Boghara Polyfab (P) Ltd. (2009) 1 SCC 267 : [2008] 13 SCR 638 ; Union of India & Ors. v. Master Construction Co., (2011) 12 SCC 349 : [2011] 5 SCR
853 ; Duro Felguera S.A. v. Gangavaram Port Limited (2017) 9 SCC 729 : [2017] 10 SCR 285; Dresser Rand SA v. Bindal Agro-Chem Ltd. (2006) 1 SCC 751 :
[2006] 1 SCR 308 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.