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Arbitrability

The term arbitrability is basically classification of disputes into ones which may be resolved by arbitration and ones which belong exclusively to the realm of courts.

Existence of a dispute may not be sufficient for settlement by arbitration; it must also be a dispute that, in the words of the New York Convention, is capable of settlement by arbitration. Certain national laws may treat certain disputes as being more suitable for determination by their own public courts of law, rather than by a private arbitral tribunal. For instance, a dispute over matrimonial status may be regarded by the national law of a particular state as not being 'capable' of settlement by arbitration although it would be more accurate to say that it is not permissible to settle the dispute by arbitration.

The concept of arbitrability was first addressed by the Hon'ble Supreme Court in Booz Allen v. SBI Home Finance Limited[1] where the Court laid down the “Test of arbitrability” and held disputes concerning rights in personam to be amenable to arbitration; and rights in rem to be adjudicated by courts and public tribunals.

Actions in person am refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property.

Therefore, every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication.


Categories of dispute for which questions of arbitrability arise and that are categorized as “non-arbitrable” include (but not limited to):
  • Antitrust and competition laws
  • Bribery and corruption
  • Corporate governance disputes
  • Fraud & other criminal offences
  • Insolvency & winding up
  • Matrimonial disputes and Guardianship matters
  • Natural resources
  • Patents, trademarks, and copyright
  • Securities transactions
  • Tenancy disputes
  • Trust Deed and the Trust Act matters

While matters like criminal offences and matrimonial disputes may not be subject matter of resolution by arbitration, it has, however, been held that if in respect of facts relating to a criminal matter, for instance a physical injury, if there is a right to damages for personal injury, then such a dispute can be referred to arbitration.[2] Similarly, a husband and wife may, refer to arbitration the terms on which they shall separate, because they can make a valid agreement between themselves on that matter.

In broad terms most commercial disputes are now arbitrable under the laws of most countries and issues of public consequences are not.

End-Notes:
  1. Booz Allen and Hamilaton v. SBI Home Finance Limited and others (2011) 5 SCC 532
  2. Keir v. Leeman (1846) 9 Q.B, 371

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