What Is The Power Of The Court In Arbitration?
Arbitration has gained popularity during the last 10 years, both domestically and internationally. Either before or after a dispute emerges the parties may agree to arbitrate it. This makes it possible for the dispute to be resolved quickly and discreetly. However, the arbitration process needs minimal intervention from the courts to succeed. When it comes to interfering with arbitration proceedings, the Indian judiciary has a poor reputation. This has proven to be a major obstacle to several things, including getting foreign direct investment and having India chosen as a suitable venue for international commercial arbitrations.
Given this, the Parliament passed the Arbitration and Conciliation Act, of 1996 (henceforth referred to as the “act”), which guarantees a constant limitation on the unjustified engagement of judicial authorities in arbitration processes. The most convincing proof of this can be found in Section 5 of the Act. By Section 5 of the Arbitration and Conciliation Act of 1996, no judicial authority shall intervene in matters governed by this Part or anything covered by any other currently enacted legislation, unless specifically provided in this Part.
Section 8: The Court’s Authority to Send Parties to Arbitration
The ability of the court to order parties to arbitration is covered in Section 8. It says that if a party to the arbitration agreement or anyone claiming through or under him applies by the date of submission of his first statement on the substance of the dispute, the judicial authority before which an action is brought in a matter that is the subject of an arbitration agreement shall unless it finds that prima facie, refer the parties to arbitration. According to section 8(2), the application mentioned in sub-section (1) must be submitted with either the original arbitration agreement or a duplication that has been duly certified.
If either the original arbitration agreement or a certified copy thereof is not available to the party applying for the reference to arbitration and the other party has retained the original arbitration agreement or certified copy, the party applying for arbitration under subsection (1) must apply along with a copy of the arbitration agreement and a petition asking the court to order the other party to produce the original arbitration agreement. Even though a matter is pending before the judicial authority and an application has been made under subsection (1), Section 8(3) allows arbitration to be started, and continued, and an arbitral award to be granted.
When a lawsuit is filed in a civil court and the basis of the case is a contract in which the parties had freely and voluntarily agreed to settle their disagreement through arbitration, the court has a responsibility to send the parties to arbitration if the requirements of section 8 are met. The stance of Section 8 of the Act is further demonstrated when contrasted to Article 8 of the UNCITRAL Model Law. By Article 8, a court may opt not to send parties to arbitration if it finds that the arbitration agreement is void, inoperative, or incapable of being implemented. Section 8’s deviation demonstrates how extensive the statutory law is.
In section 8, “judicial authority” is referred to broadly, and the words “unless it deems that the agreement is null and void, inoperative, and incapable of being performed” are not present. This disparity makes it very clear that the legislators intended to expedite the arbitration process and avoid unnecessary judicial intervention by intentionally granting judicial courts less authority over Section 8 applications. This clause has created a great deal of confusion since our courts have frequently construed it differently even though the issue is so clear.
Courts have applied the literal interpretation approach, interpreting section 8 as intended and sending the matter to arbitration where all conditions are met, regardless of the circumstances at hand. There have, however, been instances where the courts have rejected references, arbitrarily interpreted a passage, totally ignored valid precedents, and otherwise strayed from the acceptable line of precedents. In addition, the deviation is not the only problem; in one instance, the SC even went so far as to create a few exceptions to the norm, which is, in my opinion, completely wrong. If such exclusions had been necessary, the legislature would have included them in the statute itself.
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