JURISDICTION OF ARBITRAL TRIBUNAL
I.
Section 16(1) of the Arbitration and Conciliation Act, 1996, provides that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
Section 16(2) then lays down that a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
Section 16(3) provides that a plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
The arbitral tribunal may in either of the cases referred to in section 16(2) or section 16(3), admit a later plea if it considers the delay justified. [Section 16(4)]
The arbitral tribunal shall decide on a plea referred to in section 16(2) or section 16(3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. [Section 16(5)]
A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34 of the Act. [Section 16(6)]
A question as to jurisdiction arises when the arbitral tribunal is improperly constituted. It is open to the aggrieved party to require the arbitral tribunal to decide this question. Under the provision of section 16 of the Act, the arbitral tribunal may rule on its own jurisdiction. The arbitral tribunal may under the provisions of section 16 rule on any objection with respect to the existence or validity of the arbitration agreement.
In N.M. Varma and Co. Ltd. v. Alexandra Jute Mills Ltd., MANU/WB/0002/1989 : AIR 1989 Cal 6, it was held that the existence of a dispute is an essential condition and a prerequisite for assumption of jurisdiction by an arbitrator. Similarly, in Dilip Construction v. Hindustan Steel Ltd., MANU/MP/0059/1973 : AIR 1973 MP 261, it was held that the jurisdiction of an arbitrator depends not upon the existence of a claim or accrual of a cause of action, but upon the existence of a dispute. For the jurisdiction of the arbitral tribunal, there must be an arbitration agreement. In Waverly Jute Mill's case, MANU/SC/0004/1962 : AIR 1963 SC 90, it was observed that an agreement for arbitration is the very foundation on which the jurisdiction of the arbitrator to act rests, and where there is not in existence at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction.
In Ion Exchange (India) Ltd. v. Paramound Ltd., 2003 Arb WLJ 355 (Bom), an arbitrator appointed by one of the parties assumed jurisdiction as sole arbitrator of the parties. Objection was raised by the other party that the said arbitrator could not act as sole arbitrator of the parties. It was held that this question could properly be decided by the arbitral tribunal itself under section 16 of the Act, for the reason that the language of section 16 is not limited to the width of the jurisdiction of the arbitral tribunal but goes to the very root of its jurisdiction.
In Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SC 245, it was held by the Supreme Court that the question as to jurisdiction can be raised both by participation in the proceedings or by staying out of them. If raised in proceedings, it has to be done during continuation or at initiation.
An objection that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. However, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of an arbitrator.1
But the arbitral tribunal may admit an objection as to its jurisdiction at a later time if it considers that the delay is justified.2
II.
Section 17(1) of the Arbitration and Conciliation Act, 1996, provides that unless otherwise agreed by the parties, the arbitral tribunal may, at the
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1. Section 16(2).
2. Section 16(4).
request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.
Section 17(2) of the Act then lays down that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure under sub-section (1) of section 17.
Under the provisions of section 17, the arbitral tribunal may, if it considers it necessary in respect of the subject-matter of the dispute, order any interim measures of protection in respect of the detention, preservation or inspection of any property or thing which is the subject matter of dispute in arbitration. In cases where the applicant makes out a prima facie case that the defendant is about to remove his assets and bank balances out of the jurisdiction of the court or the tribunal, or is about to destroy the incriminating evidence against him, it is expedient to order immediate ex parte interim relief. But it is to be noted that an arbitral tribunal do not have the coercive power to enforce its order. It is therefore, dependant on the goodwill of the parties. If the tribunal's order is not honoured, the party seeking interim relief will have to apply to the Court under section 9 of the Act for an order of interim measure of relief.
An order of an arbitral tribunal granting or refusing to grant an interim measure of protection under section 17 is not final. Such an order is appealable under the provisions of section 37(2)(b) of the Act to the Court authorised by law to hear appeals from original decrees of the Court passing the order. A second appeal does not lie against the appellate court's order [section 37(3)]. However, a party aggrieved by the appellate court's order can appeal against it to the Supreme Court under Article 133 or Article 136 of the Constitution of India.
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