1 | JURISDICTION OF ARBITRAL TRIBUNAL

A Project on

Jurisdiction of Arbitral Tribunal

Project Submitted to:

Ms. Adya Pandey

(Faculty: Alternate Dispute Resolution)

Project Submitted by:

Amitesh tirkey

Semester- VI

Section – “C”

Roll No. – 25

Submitted On: - 23 October, 2017

HIDAYATULLAH NATIONAL LAW UNIVERSITY , RAIPUR

(CHATTISGARH)
2 | JURISDICTION OF ARBITRAL TRIBUNAL

CERTIFICATE

This is to certify that the project work entitled “Jurisdiction of Arbitral Tribunal”
submitted to HNLU, Raipur, is record of an original work done by me under the
able guidance of Ms. Adya Pandey, Faculty Member, HNLU, Raipur.

Amitesh tirkey

Roll No- 25
3 | JURISDICTION OF ARBITRAL TRIBUNAL

ACKNOWLEDGEMENTS

I feel highly elated to work on the topic “Jurisdiction of Arbitral Tribunal”.

The practical realization of this project has obligated the assistance of many persons. I express
my deepest regard and gratitude for Ms. Adya Pandey, Faculty of Alternate Dispute Resolution.
Her consistent supervision, constant inspiration and invaluable guidance have been of immense
help in understanding and carrying out the nuances of the project report.

I would like to thank my family and friends without whose support and encouragement, this
project would not have been a reality.

I take this opportunity to also thank the University and the Vice Chancellor for providing
extensive database resources in the Library and through Internet.

Some printing errors might have crept in, which are deeply regretted. I would be grateful to
receive comments and suggestions to further improve this project report.

-Amitesh tirkey
Semester VI
Section C
4 | JURISDICTION OF ARBITRAL TRIBUNAL

CONTENTS

1. Introduction…………………………………………………………………….……5
1.1 Objectives……………………………………………………………………….7
1.2 Methodology…………………………………………………………………….7
2. Arbitral Tribunal to rule its own jurisdiction..........................……………………..8
3. Article 16: Competence of Arbitral Tribunal...............................…………...……10
3.1 Seperability of Arbitration agreement from the main contract..........................11
3.2 Procedure for determination of arbitrator’s jurisdiction....................................11
3.3 Effect of the lack of objection in the Arbitral proceeding..................................12
4. Competence of Arbitral tribunal to make a binding decision on its own jurisdiction..13
5. Jurisdiction of Arbitral Tribunal when the contract containing Arbitral clause is declared
void..................................................................................................................15
6. Loss of competence of Arbitral Tribunal to rule its own jurisdiction........................15
7. Conclusion.........................................................................................................20
8. Bibliography…………………………………………………………………………...22
5 | JURISDICTION OF ARBITRAL TRIBUNAL

INTRODUCTION

An arbitral tribunal (or arbitration tribunal) is a panel of one or more adjudicators which is
convened and sits to resolve a dispute by way of arbitration. The tribunal may consist of a sole
arbitrator, or there may be two or more arbitrators, which might include either a chairman or
an umpire. Typically, members selected to serve on the tribunal are professionals with expertise
in law and mediation, although some scholars have suggested that the ideal composition of an
arbitral tribunal should include at least one economist, particularly in cases that involve questions
of asset or damages valuation.1

The parties to a dispute are usually free to determine the number and composition of the arbitral
tribunal. In some legal systems, an arbitration clause which provides for two arbitrators (or any
other even number) is understood to imply that the appointed arbitrators will select an additional
arbitrator as a chairman of the tribunal, to avoid deadlock arising. Different legal systems differ
as to how many arbitrators should constitute the tribunal if there is no agreement.2

Arbitral tribunals are usually constituted (appointed) in two types of proceedings:

 ad hoc arbitration proceedings are those in which the arbitrators are appointed by the parties
without a supervising institution, relying instead on the procedural law and courts of the
place of arbitration to resolve any differences over the appointment, replacement, or
authority of any or all of the arbitrators; and
 institutional arbitration proceedings are those in which the arbitrators are appointed under the
supervision of professional bodies providing arbitration services, such as the American
Arbitration Association (which conducts international proceedings through its New York-
based division, the ICDR), the LCIA in London or the ICC in Paris. Although these
institutions (and many others) are headquartered in their respective cities, they are capable of
supervising the appointment of arbitral tribunals in nearly any country, avoiding the need for

1
J. Gregory Sidak, Economists as Arbitrators, 30 EMORY INT'L L. REV. 2105
(2016), https://www.criterioneconomics.com/economists-as-arbitrators.html; Joshua B. Simmons, Valuation in
Investor-State Arbitration: Toward a More Exact Science, 30 BERKELEY J. INT'L L. 196 (2012).
2
Under the UNCITRAL Model Law on International Commercial Arbitration (adopted by various countries around
the world), the default number is three (Article 10(2)). However, some countries have provided that the default
number is one (see for example, section 15(2) of the Arbitration Act 1996 of the United Kingdom).
6 | JURISDICTION OF ARBITRAL TRIBUNAL

the parties to involve local courts and procedures in the event of disagreement over the
appointment, replacement, or authority of any or all of the arbitrators.

Permanent tribunals tend to have their own rules and procedures, and tend to be much more
formal. They also tend to be more expensive, and, for procedural reasons, slower.3

Under Section 2(1) (d) of the Arbitration and Conciliation Act4, arbitral tribunal means a sole
arbitrator or a panel of arbitrators.

The parties are free to agree on a procedure on the appointment of an arbitrator.

In a panel or board of arbitrators the award of the majority will prevail.

The duties and powers of the arbitral tribunal include the following:

 To give ruling on the existence or validity of the arbitration agreement or on its own
jurisdiction.
 To order interim measures of protection.
 To determine the admissibility and the weight of evidence lead before the forum.
 To decide the dispute on merits as per the substantive law of the parties and according to
the terms of contract and usage of trade.
 To encourage voluntary dispute settlement through Alternative Dispute Resolution
(ADR) mechanisms including conciliation
 To deliver reasoned arbitral award.
 To determine the cost of arbitration and its apportionment among the parties.
 To render accounts of deposits to the parties and return unspent balance.

3
For example, all arbitral awards issued by the ICC have to be reviewed internally before being handed down,
which helps certainty and improves the quality of awards, but leads to delay and expense.
4
Arbitration and Conciliation Act, 1996.
7 | JURISDICTION OF ARBITRAL TRIBUNAL

OBJECTIVES

1. To study about the Competence of Arbitral Tribunal to make a binding decision on its
own jurisdiction.
2. To study about the Jurisdiction of Arbitral tribunal when contract containing arbitral
clause is declared void.
3. To study about the loss of competence of Arbitral Tribunal to rule its own jurisdiction

METHODOLOGY

The research method used for the completion of the project is descriptive method. Secondary and
electronic resources have been largely used to gather information and data about the topic. Books
and other references have lent a hand in making this project authoritative and accurate. Websites
and articles have also been referred to. Footnotes have been provided wherever required so as to
aid reference and give credit to the source of information.
8 | JURISDICTION OF ARBITRAL TRIBUNAL

ARBITRAL TRIBUNAL TO RULE ITS OWN JURISDICTION

Arbitration was devised as a method to circumvent the ills plague the process of civil litigation in
courts. In India it existed early on in the form of panchayats, which consisted of people who
were asked to decide on matters brought before them, and their decisions were accepted by the
parties to the dispute. The British, for the first time under their rule, made use of the principle of
arbitration in the Bengal regulations of 1772 and 1780. And in 1813 provisions regarding
arbitration of disputes were made applicable to immovable property. And in 1940, the
Arbitration Act was enacted, which repealed the Arbitration Act of 1899. These statutes aimed to
institutionalise the process of arbitration in India. But over a period of time it was found that the
Arbitration Act of 1940 was not enough to meet the needs of a fast- changing India. Therefore in
1996 it was replaced by the Arbitration and Conciliation Act.

The Arbitration and Conciliation Act, 1996 provides the parties abundant freedom in matters
such as the matter of choosing the place of arbitration, fixing the number of arbitrators,
appointment of arbitrators etc. They are even free to determine the matters which they want to
submit to the arbitral tribunal formed by their choice. But sometimes a problem whether the
Arbitral tribunal has jurisdiction, may arise. One of the parties may claim that the Arbitral
Tribunal has no jurisdiction to decide the dispute between them. In fact this happened often
under the old Arbitration Act, 1940 where the mere allegation of the invalidity of the main
contract would provide jurisdiction to the courts to decide whether a valid arbitration agreement
existed between the parties to the dispute. And this delayed the process of arbitration a lot, thus
defeating the purpose of arbitration. Now, under the Arbitration and Conciliation Act, 1996
power has been given to the Arbitral Tribunal under Section 16 (1) to rule on its jurisdiction,
including ruling on any objections with respect to the existence or validity of the arbitration
agreement.

In most legal systems, the arbitral tribunal is able to rule upon its own jurisdiction (often referred
to as the doctrine of "Kompetenz-Kompetenz" in international law). Briefly, this enables the
arbitral tribunal to determine for itself whether:

1. an arbitration agreement is valid,

2. whether the tribunal has been properly constituted under applicable law, and
9 | JURISDICTION OF ARBITRAL TRIBUNAL

3. what matters are to be determined by the arbitration under the agreement.

The doctrine, although continental in origin, has been recognised at common law, and has now
been widely codified into national law.

The arbitration tribunal shall decide any challenge to the very existence or validity of the
arbitration agreement in question or decide any objection taken on the ground of lack of its
jurisdiction. Any party, including even those who have participated in the appointment of the
arbitrator, can take such objection or challenge latest with his defence statement.

Any objection that the arbitral tribunal is exceeding its authority must be taken at once during the
arbitration proceedings.
However, the arbitral tribunal can consider any of the aforesaid preliminary objections, even if
delayed, for good reasons.
In case such preliminary objection is overruled, the arbitral tribunal shall continue with
arbitration and make the award. The aggrieved party can now apply to the court for setting aside
the award re agitating the said preliminary objection amongst other grounds of challenge to the
award.
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ARTICLE 16: COMPETENCE OF ARBITRAL TRIBUNAL

JURISDICTION OF THE TRIBUNAL- KOMPETENZ

KOMPETENZ

Today, the right of the arbitrators to rule on their own jurisdiction is an almost fully
uncontroversial part of the well-established doctrine and practice in international arbitration. The
provision of Art.16 MAL in its basic idea now really reflects the globally harmonised approach
to the issue universally called Kompetenz Kompetenz. Practically all countries recognise the
right of the tribunal to decide on their jurisdiction, subject to the subsequent court control. This is
also demonstrated by some 20 cases collected in CLOUT, which all, without exception, assert
the right of arbitrators to rule on their own jurisdiction5. Yet, in certain details, the law is still
different, even in the countries that have adopted the MAL.

There is now a “wide consensus that the arbitral tribunal has the power to rule on all aspects of
its own jurisdiction”6. Reported decisions have showed that the courts recognise the right of the
arbitral tribunal to determine:

 whether arbitration agreement exists between the parties;7

 whether the matter in dispute comes within the scope of the arbitration agreement;8
 what is the proper interpretation of the arbitration agreement9;
 whether the arbitration agreement is valid or was terminated.10

5
2. CLOUT cases 13; 18; 20; 27; 101; 114; 127; 147; 148; 182; 357; 367; 369; 373; 382; 392; 403; 441 (from various
jurisdictions: see the UNCITRAL website, www.uncitral.org. for full details).
6
Statement from the Draft Digest of Case Law on the UNCITRAL Model Law on International Commercial
Arbitration, Pre-publication presented at Cologne RIZ/DIS Conference on March 3–4, 2005, para.99 (‘‘Draft
Digest’’).
7
. e.g. Supreme Court (Bermuda), January 21, 1994, Skandia International Insurance Co v Mercantile & General
Reinsurance Co (CLOUT case 127); Court of Appeal (Hong Kong), July 7, 1995 (CLOUT case 109)
8
Ontario Court of Justice, General Division (Canada), March 1, 1991, Rio Algom Ltd v Sammi Steel Co (CLOUT case
18); Ontario Court (Canada), April 30, 1992, Mind Star Toys Inc v Samsung Co Ltd (CLOUT case 32); British Columbia
Supreme Court (Canada), November 17, 1995, Continental Commercial Systems Corp v Davies Telecheck
International Inc (CLOUT case 357); Skandia International Insurance, n.5 above
9
Continental Commercial Systems Corp, n.6 above.
10
e.g. Skandia International Insurance, n.5 above; Ontario Court (Canada), January 30, 1992, Kanto Yakin Kogyo
Kabushiki-Kaisha v Can-Eng Manufacturing Ltd (CLOUT case 369).
11 | JURISDICTION OF ARBITRAL TRIBUNAL

Separability of the arbitration agreement from the main contract

The doctrine of separability (or severability), reflected in the last two sentences of Art.16(1), is
now also a part of the universal consensus among arbitration practitioners, accepted by most
legal systems of the world. This is also reflected by the court decisions from the CLOUT
collection.11Courts have widely recognised that arbitral agreements have a fate independent of
the main contract, so that invalidity or termination of the main contract does not necessarily
affect validity and binding force of the arbitration clause. For example it was recognised that
arbitrators may find that the main contract is null and void ab initio, even owing to fraudulent
behaviour of a party or the parties, but that arbitral clause contained in the contract continues to
be operative, providing arbitrators with authority to decide on the consequences of the nullity of
the main contract.12

Procedure for determination of the arbitrators’ jurisdiction

Time-limit for the pleas as to the lack of jurisdiction

Although arbitrators have authority to rule on their jurisdiction, they cannot do it on their own
initiative. A plea as to the lack of jurisdiction has to be submitted by the respondent in due
time—under Art.16(2) not later than the statement of defence. Belated objections regularly
cannot be taken into account, as the lack of objection has to be construed as the waiver of the
right to object and conclusion of a valid arbitration agreement. Still, the arbitrators have the right
to admit the plea if the delay in their submission is considered justified. Under one reported case,
it seems that the court held that the plea has to be sufficiently substantiated: an allegation that

11
See British Columbia Supreme Court (Canada), November 22, 1991, Krutov v Vancouver Hockey Club Ltd (CLOUT
case 19); High Court of Hong Kong (Hong Kong), October 29, 1991, Fung Sang Trading Ltd v Kai Sun Sea Products
and Food Company Ltd (CLOUT case 20); Camara Nacional de Apelaciones en lo ´ Commercial (Argentina),
September 26, 1988, Enrique C. Wellbers SAIC AG v Extraktionstechnik Gesellschaft fur¨ Anlagenbau MBM (CLOUT
case 27); Mind Star Toys Inc v Samsung Co Ltd, n.6 above; British Columbia Supreme Court (Canada), November 18,
1994, Globe Union Industrial Corp v G.A.P. Marketing Corp (CLOUT case 114); British Columbia Supreme Court
(Canada), September 13, 1991, Harper v Kvaerner Fjellstrand Shipping AS (CLOUT case 349); Ontario Superior Court
of Justice (Canada), July 29, 1999, NetSys Technology Group AB v Open Text Corp (CLOUT case 367); Ontario Court
(Canada), August 9, 1993, Campbell v Murphy (CLOUT case 368).
12
Supreme Court NSW, Australia, August 17, 1994, Ferris v Plaister and Stap v Plaister
12 | JURISDICTION OF ARBITRAL TRIBUNAL

arbitration agreement does not exist because the party was not successor to the main contract was
held to be a substantive defence that precluded later procedural objections as to the jurisdiction.13

Effect of the lack of objection in the arbitral proceedings

The courts had an opportunity to evaluate the effect of lack of objections as to the jurisdiction of
the tribunal in the arbitral proceedings on subsequent setting aside proceedings. A German court
held that a party regularly loses its right to raise the lack or invalidity of the arbitration
agreement in the setting aside proceedings if there was no objection to jurisdiction in the arbitral
proceedings.14As stated by the same court, failure to raise this objection amounts to conclusion
of the new arbitration agreement by passive behaviour of the party. This seems to be a generally
accepted position, both under MAL Rules and under some national arbitration laws.15

However, the courts in various jurisdictions had expressed diverging views as to the
consequences of cases in which objection to jurisdiction was raised in the arbitral proceedings,
but the preliminary decision of arbitrators was not attacked under MAL 16(3) before the
competent court. In one Singapore case, the court held that a party was not prevented from
submitting an application for the setting aside of the award on the basis of lack of jurisdiction
simply because the party did not challenge arbitral decision on jurisdiction under before a
competent court.16German courts, on the contrary, held that this was a necessary prerequisite for
the successful raising of this ground in setting aside proceedings.17

13
Moscow City Court (Russia), February 10, 1995 (CLOUT Case 148).
14
Highest Regional Court—Oberlandesgericht Stuttgart (Germany), 1 Sch 16/01, December 20, 2001
15
See expressly Croatian Law on Arbitration, Art.6(8): ‘‘A valid arbitration agreement shall be deemed to exist if
the plaintiff files the claim to arbitration and that the defendant fails to object to jurisdiction of the arbitral tribunal
in his statement of defense in which he raised issues related to the substance of the dispute’’. In MAL, Art.7(2) may
lead to similar conclusion, although its wording refers, somewhat misleading, to (written) form of the agreement
(and the request of allegation by one party that the agreement exists).
16
High Court (Singapore), November 30, 2000, Tan Poh Leng Stanely v Tang Boon Jek Jeffrey
17
Federal Supreme Court—Bundesgerichtshof (Germany), III ZB 83/02, March 27, 2003
13 | JURISDICTION OF ARBITRAL TRIBUNAL

COMPETENCE OF ARBITRAL TRIBUNAL TO MAKE A

BINDING DECISION ON ITS OWN JURISDICTION

There was no provision under the Arbitration Act of 1940 which allowed the Arbitral Tribunal to
make a decision on its own jurisdiction and it was the job of the court to decide on the
jurisdiction of the arbitral tribunal. But under Section 16 of the Arbitration and Conciliation Act,
1996 the Arbitral Tribunal has been granted the power to make a ruling on its own jurisdiction.
Section 16 (1) of the Arbitration and Conciliation Act states that the Arbitral Tribunal may rule
on its own jurisdiction, including ruling on any objection with respect to the existence or validity
of the arbitration agreement.

Section 16 of the Arbitration and Conciliation Act incorporates the principle of competence-
competence. It has two aspects: first, that the tribunal may decide on its jurisdiction without
support from the courts and secondly, that the courts are prevented from determining this issue
before the tribunal has made a determination on this issue.

In the case of Union of India vs. M/s. East Coast Boat Builders & Engineers Ltd.18, it was
stated:

“From the scheme of the Act it is apparent that the legislature did not provide appeal against the
order under section 16(5) where the arbitral tribunal takes a decision rejecting the plea that the
arbitral tribunal has no jurisdiction. The intention appears to be that in such case, the arbitral
tribunal shall continue with the arbitral proceedings and make an award without delay and
without being interfered in the arbitral process at that stage by any court in their supervisory
role."

In the case of Nav Sansad Vihar Coop. Group Housing Society Ltd. (Regd.) vs. Ram Sharma
and Associates19, it was stated that if a plea is rejected by the Arbitral Tribunal under section
16(5) of the Arbitration and Conciliation Act the arbitral proceedings shall continue, an award
shall be given and the aggrieved party shall have to wait till the giving out of the award and there
is no separate remedy against such order.

18
76 (1998) DLT 958, 1998 (47) DRJ 333, ILR 1998 Delhi 797
19
2000(4) AD (Delhi) 614
14 | JURISDICTION OF ARBITRAL TRIBUNAL

But under section 37(2) of the Arbitration and Conciliation Act a decision of the tribunal
accepting the plea that it does not have jurisdiction or is exceeding its scope of authority is
appealable. In the case of Pharmaceutical Products of India Ltd. vs. Tata Finance Ltd.20, it was
stated:

“Where the Arbitral Tribunal decides to reject the plea regarding its jurisdiction, sub-section (5)
clearly empowers the Tribunal to continue with the arbitral proceedings and make an arbitral
award. Sub-section (5) provides for the manner in which such an arbitral award may be
challenged. It provides that such an award can only be challenged in accordance with section 34.
On the other hand, if the Arbitral Tribunal decides to accept the plea that it has no jurisdiction,
then such an order is appealable under section 37(2) of the Act."

Thus we see that when the Arbitral Tribunal decides to reject a plea regarding its jurisdiction
then the order made regarding its jurisdiction is not appealable but when the Arbitral tribunal
decides to accept the plea that it has no jurisdiction then such an order is appealable under
section 37(2) of the Arbitration and Conciliation Act.

20
2002 (6) Bom CR 168, (2002) 4 BOMLR 344, 2003 41 SCL 259 Bom
15 | JURISDICTION OF ARBITRAL TRIBUNAL

JURISDICTION OF ARBITRAL TRIBUNAL WHEN

CONTRACT CONTAINING ARBITRATION CLAUSE
DECLARED VOID
There may be instances when the arbitration agreement may not be made as a separate
agreement. Instead, it may be embedded, or inserted, as a clause, in the contract between the
parties. And it may happen that the agreement or the contract between the parties is declared
void or illegal.

In the case of Jawaharlal Burman vs. Union of India21, it was stated:

“It is, therefore, theoretically possible, that a contract may come to an end and the arbitration
contract may not. It is also theoretically possible that the arbitration agreement may be void and
yet the contact may be valid; and in that sense there is a distinction between the arbitration
agreement and the contract of which it forms a part; but, in the present case, the challenge to the
contract itself involves a challenge to the arbitration agreement; if there is a concluded contract
the arbitration agreement is valid. If there is not a concluded contract the arbitration agreement is
invalid, indeed, we apprehend that in a very large majority of cases where the arbitration
agreement is a part of the main contract itself, challenge to the existence or validity of one would
mean a challenge to the existence or validity of the other."

Then in the case of Waverly Jute Mills Co. Ltd. Vs. Raymon and Co. (India) Ltd., it was stated:

“A dispute as to the validity of a contract could be the subject-matter of an agreement of

arbitration in the same manner as a dispute relating to a claim made under the contract. But such
an agreement would be effective and operative only when it is separate from and independent of
the contract which is impugned as illegal. Where, however, it is a term of the very contract
whose validity is in question, it has, as held by us in Khardah Co. Ltd. case, no existence apart
from the impugned contract and must perish with it."

21
1962 AIR 378, 1962 SCR (3) 769
16 | JURISDICTION OF ARBITRAL TRIBUNAL

In the case of Jaikishan Dass Mull vs. Luchhiminarain Kanoria & Co.,22 it was stated by the
court:

“Now there can be no doubt that if a contract is illegal and void, an arbitration clause, which is
one of the terms thereof, must also perish along with it. As pointed out by Viscount Simon, L.C.
in Heyman vs. Darwins Ltd. 23“ if one party to the alleged contract is contending that it is void
ab initio, the arbitration clause cannot operate, for on this view the clause itself is void". The
arbitration clause being an integral part of the contract cannot stand, if the contract itself is held
to be illegal."

But the position has changed now. The Arbitration and Conciliation Act was enacted in 1996.
And Section 16 (1) of this Act states that the arbitration clause if inserted in a contract shall be
considered to be an independent from the rest of the contract and a decision by the Arbitral
Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration
clause.

In the case of Olympus Superstructures vs. Meena Vijay Khaitan,24 it was stated:

“It will be noticed that under the Act of 1996 the arbitral tribunal is now invested with power
under sub-section (1) of section 16 to rule on its own jurisdiction including ruling on any
objection with respect to the existence or validity of the arbitration agreement and for that
purpose, the arbitration clause which forms part of the contract and any decision by the arbitral
tribunal that the contract is null and void shall not entail ipso jure affect the validity of the
arbitration clause. This is clear from clause (b) of section 16(1) which states that a decision by
the arbitral tribunal that the main contract is null and void shall not entail ipso jure the invalidity
of the arbitration clause."

And in the case of National Agricultural Coop. Marketing Federation India Ltd. vs. Gains
Trading Ltd.,25 it was stated that a decision that the contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause.

22
AIR 1974 SC 1579, (1974) 2 SCC 521
23
[1942] AC 356
24
2000 101 CompCas 51 Bom
25
2007 (5) SCC 692
17 | JURISDICTION OF ARBITRAL TRIBUNAL

Thus we see that though the invalidity of the main clause affected the validity of the arbitration
clause inserted in it earlier, now the law has changed after insertion of Section 16(1) into the
Arbitration and Conciliation Act, 1996. And now the invalidity of the main contract does not
result in the invalidity of the arbitration clause inserted in it, ipso jure because of the application
of the doctrine of separability, which results in the arbitration clause being treated as independent
from the main contract.
18 | JURISDICTION OF ARBITRAL TRIBUNAL

LOSS OF COMPETENCE OF ARBITRAL TRIBUNAL TO RULE

ON ITS OWN JURISDICTION

There may be certain instances when the Arbitral Tribunal may lose the competence to rule on its
jurisdiction.

Section 11(6) of the Arbitration and Conciliation Act states that a party may request the Chief
Justice or his designate to take required steps when under an appointment procedure agreed to by
the parties, one of them fails to act as required under the procedure, or the parties or the two
arbitrators fail to reach an agreement expected of them under the procedure, or a person or
institution fails to perform a function entrusted to him under such procedure. And section 11(7)
states that a decision taken by the Chief justice or his designate under section 11(4), section
11(5) or section 11(6) shall be final. Which means that the arbitral tribunal cannot look into the
question of its own jurisdiction when the Chief Justice has looked into it earlier.

In the case of Konkan Railway Corporation Ltd. vs. Rani Construction Pvt. Ltd. ,it was stated
by the court that the constitution of the Arbitral tribunal by the Chief Justice may be challenged
before the Arbitral Tribunal on the ground of being in violation of the Act. It was observed by
the court:

“It might also be that in a given case the Chief Justice or his designate may have nominated the
arbitrator though the period of thirty days had not expired. If so, the Arbitral Tribunal would
have been improperly constituted and be without jurisdiction. It would then be open to the
aggrieved party to require the Arbitral tribunal to rule on its jurisdiction. Section 16 provides for
this. It states that the Arbitral Tribunal may rule on its own jurisdiction."

But in the case of SBP and Co. vs. Patel Engineering Ltd. 26,it was stated that the Arbitral
tribunal could not rule on its own jurisdiction once it had been appointed by the Chief Justice. It
was stated:

“The question, in the context of sub-section (7) of Section 11 is, what is the scope of the right
conferred on the Arbitral Tribunal to rule upon its own jurisdiction and the existence of the
arbitration clause, envisaged by section 16(1), once the Chief Justice or the person designated by

26
2005 8 SCC 618
19 | JURISDICTION OF ARBITRAL TRIBUNAL

him had appointed an arbitrator after satisfying himself that the conditions for the exercise of
power to appoint an arbitrator are present in the case. Prima facie, it would be difficult to say that
in spite of the decision of the Chief Justice, the Arbitral tribunal can still go behind that decision
and rule on its own jurisdiction or on the existence of an arbitration clause.

Section 16 cannot be held to empower the Arbitral tribunal to ignore the decision given by the
judicial authority or the Chief justice before the reference to it was made. The competence to
decide does not enable the Arbitral tribunal to get over the finality conferred to an order passed
prior to its entering upon the reference by the very statute that creates it."

This case overruled the judgment given in the case of Konkan Railway Corporation Ltd. vs.
Rani Construction Pvt. Ltd .27

Thus we see that if the Chief Justice or his designate has looked into the existence of the
arbitration clause and on its jurisdiction then the Arbitral Tribunal cannot look into the question
of its jurisdiction. It would in such a case be barred from looking into the matter of its
jurisdiction.

27
2000 (8) SCC 159
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CONCLUSION
The decision of the Arbitral tribunal rejecting a plea regarding its jurisdiction is not appealable
but its decision regarding acceptance of plea about having no jurisdiction is appealable. And the
invalidity of the main contract no longer affects the arbitration clause which is considered from
the main contract. And when the Chief Justice has already looked into the question of
jurisdiction the Arbitral Tribunal cannot look into its jurisdiction once again.

India has in place a modern, an efficient Arbitration Act. There have been some decisions which
are not in tune with the letter or spirit of the Act. Hopefully, these would be addressed by the
judiciary in the near future and continuing popularity of arbitrations would be served by a truly
efficient ADR mechanism

The form of the arbitral decision on jurisdiction as a preliminary question under

MAL 16(3) and its effects

The main problem is with the form of the separate decision on jurisdiction in the arbitral process,
if such a decision is made prior to the award on the merits, based on the discretionary right of
arbitrators to resolve the jurisdictional challenge as a preliminary matter. Here, the MAL does
not provide clear guidance, and basically leaves the determination to national procedural laws
and/or practices. Apparently, there is a trend in international arbitration to expand the circle of
decisions that are entitled ‘‘arbitral awards’’ from decisions on the substance of the dispute to
procedural matters, usually those that end the proceedings, but sometimes also to those that are
regarded to be of any greater importance

Availability of the remedies against negative arbitral decisions on jurisdiction

Another area of ambiguities is concerned with the availability of remedies in cases in which the
arbitrators have issued decisions rejecting their jurisdiction. One classic approach would consider
these decisions as irrefutable, inter alia because no one can force the arbitrators to arbitrate if
they are convinced that they have no jurisdiction. However, as this is a final decision, the
pressure of dissatisfied parties led to emergence of court decisions that expressed the opposite
view—once relying on the formal reasons (form of the award), another time relying on alleged
procedural rights to seek court review at least in respect of the procedural correctness of the
arbitral decision-making. In our opinion, although one can well understand the dissatisfaction of
21 | JURISDICTION OF ARBITRAL TRIBUNAL

the parties who were convinced that they had right to arbitrate their disputes, this additional
controllability is not necessary, and may ultimately prolong and complicate the process, without
bringing substantial benefits for the parties. If arbitrators pronounced that they are not competent
to arbitrate, the most efficient and logical next step is to turn immediately to the second closest
match—to another arbitration or to the competent state court. Arbitrators that were reluctant to
rule on the substance of the dispute in the first round will, most likely, remain to be reluctant
even if—for procedural reasons or otherwise—a court authority finds it necessary to strike down
their decision
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BIBLIOGRAPHY

SITES VISITED:

 http://kluwerarbitrationblog.com/category/jurisdiction-of-the-arbitral-tribunal/
 http://www.alanuzelac.from.hr/pubs/B23ALR_jurisdiction_fin.pdf
 https://ipba.org/media/fck/files/Arbitration%20in%20India.pdf
 http://www.icaindia.co.in/icanet/rules/commercialarbitration/arbitration&conciliation/cha
pter6b4.htm
 https://www.lawteacher.net/free-law-essays/commercial-law/arbitral-tribunal-to-rule-its-
own-jurisdiction-commercial-law-essay.php