Is It Compulsory For An Arbitral Tribunal To Decide An Objection To Its Jurisdiction At The Very Threshold?
Section 16 envisages the concept of Kompetenz-Kompetenz, in other words it is
recognition of the concept that the arbitral tribunal has the right to decide on
a challenge to its own jurisdiction brought forth by one of the parties to the
dispute. This provision is read in consonance with Section 5 of The Arbitration
& Conciliation Act, 1996. It effectively circumscribes the power of the Civil
Courts to interfere with the said function, except the specified avenues.
The 2015 Amendment of The Arbitration & Conciliation Act have effectively
narrowed down the areas, where the Court can interfere. This has effectively
broadened the horizons of Section 16 of The Arbitration & Conciliation Act,
1996. Issues such as limitation, accord and satisfaction have now been included
under the purview of Section 16 of The Arbitration & Conciliation Act, 1996.
Therefore, if a party wishes to throw a jurisdictional challenge to the arbitral
tribunal it has to prefer an application under Section 16 of The Arbitration &
Conciliation Act, 1996.
Section 16 of The Arbitration & Conciliation Act, 1996 deals with jurisdictional
challenges, & it can lead to the inference that adjudication under Section 16 is
of a preliminary nature, and therefore such application must be disposed of in
the initial stages of the adjudication itself. Such an inference can be drawn in
terms of sub-section (5) of Section 16, which is as follows:
The Arbitral Tribunal shall decide on a plea referred to in sub-section (2) or
sub-section (3) and where the arbitral tribunal rejects the plea, the arbitral
proceedings will continue and the award will be made.
The above mentioned observation can lead to the drawing of similarities between
Order 7 Rule 11 of The Code of Civil Procedure, 1908 and Section 16 of The
Arbitration & Conciliation Act, 1996. It is settled jurisprudence that once an
application is filed under Order 7 Rule 11 of the Code of Civil Procedure, 1908,
the Court is required to dispose of the same before proceeding with the Trial.
In R. K. Roja v. U. S. Rayudu & Anr. [(2016) 14 SCC 275] this issue has
The question which arises before us is whether it is mandatory for the arbitral
tribunal to decide on a challenge to its jurisdiction at the preliminary stage
before the trial can be proceeded with? A review of the jurisprudence on this
issue leads to a conclusive decision on this aspect.
The High Court of Delhi in the context of Section 16 of The Arbitration Act and
concluded with the following words:
39. Under Section 16 of the Act upon a challenge being made to the jurisdiction
of the arbitrator, the Arbitral Tribunal though is required to adjudicate the
same but there is nothing to show that the arbitrator is to first adjudicate the
same and can thereafter only proceed to adjudicate on the merits of the claim.
The Arbitral Tribunal in its jurisdiction is entitled to decide the said
challenge either as a preliminary issue or together with the entire matter.
It is significant that even in the event of the arbitrator deciding against the
challenge, no remedy therefore is provided and the challenge to such finding can
be made only after the arbitral award in accordance with Section 34 of the Act.
Thus, it cannot be said that any illegality has been committed by the arbitrator
in not deciding the challenge as a preliminary issue as sought for by the
In a recent judgement in Pankaj Arora v. AVV Hospitality LLP & Ors.
[MANU/DE/1405/2020], the High Court of Delhi has reiterated and elaborated upon
this procedural flexibility which is available to an Arbitral Tribunal in the
16. I am unable to read sub-section 5 of Section 16 as casting a mandate, on the
arbitrator, or the Arbitral Tribunal, to decide the objection, to its/his
jurisdiction, to adjudicate on any claim/counter claim, necessarily before
recording of evidence. No doubt, issues of jurisdiction are, ordinarily, to be
addressed at the outset. That, however, is more a rule of prudence than one of
inflexible procedure. Legally, so long as the said decision is taken prior to
the making of the final arbitral award, in my view, no infraction of Section 16
could be said to have occurred.
A bare reading of these provisions shows that the Arbitral Tribunal has the
discretion that it is not mandatory for the Arbitral Tribunal to adjudicate on a
jurisdictional challenge at the commencement of the proceedings; the tribunal
can postpone the adjudication of such challenge to a belated stage.
This belated stage can be extended up to the arbitral award itself, as long as
the jurisdictional challenge is adjudicated upon. It would be illuminating to
refer to the decision of the Supreme Court in the case of Maharshi Dayanand
University & Ors. v. Anand Coop. L/C Society Ltd. & Ors. [(2007) 5 SCC
295] wherein this aspect of the matter in relation to the discretion conferred
on an Arbitral Tribunal qua jurisdictional issues was discussed and it was held
11. [T]he arbitrator, in the first instance, has to decide whether the existence
of an arbitration agreement in terms of Section 7 of the Act is established and
also to decide whether the claim now made is a claim that comes within the
purview of Clause 25A of the tender conditions in case it is found to be an
agreement within the meaning of Section 7 of the Act. Only on deciding these two
aspects can the arbitrator go into the merits of the claim made by the
respondent. But we clarify that it does not mean, that he should treat these two
aspects as preliminary issues and decide them first; but only that he must
decide them without fail while proceeding to finally pronounce his award.
In conclusion we can thus say that the arbitral tribunal has unrestricted
jurisdiction to post-pone the adjudication of the challenge to the jurisdiction
of the arbitral tribunal at a later stage, as long as the objection to the
jurisdiction is adjudicated upon. The observations made by the Supreme Court in Kvaerner
Cementation India Limited v. Bajranglal Agarwal [(2012) 5 SCC 215] are
important in this regard
The petitioner who is a party to the arbitral proceedings may raise the question
of jurisdiction of the Arbitrator as well as the objection on the ground of
non-existence of any arbitration agreement in the so-called dispute in question
and such an objection being raised, the arbitrator would do well in disposing of
the same as a preliminary issue so that it may not be necessary to go into the
entire gamut of arbitration proceedings.
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