The fast track process in adjudicating the dispute by the arbitration
proceedings has created a craze in most of the parties to get their dispute
resolved through the arbitration irrespective of getting trapped in the court
procedure for so many years. But the crux of the arbitration is that it can only
adjudicate those matters which are between two parties and not the matters in
which there is large involvement of the public.
Competition law matters for
example is associated with the larger public interest and hence it is believed
that adjudication of the competition law disputes through arbitration
proceedings will harm public interest. But Section 53 N of the Competition Act,
2002 clears that any aggrieved party can also individually claim for the
compensation from the appellate tribunal. This provision has thrown a light that
competition law is not a rigid act but the matters can be adjudicated by the
This paper analyses how the landlord-tenant dispute which
was the long standing debate on the issue that the matter involves the provision
of the Transfer of Property Act, 1882 is also associated with the Competition
law as the interest is attached by the public at large but how the arbitration
can be a medium to solve this dispute. Also the paper has done a comparative
analysis between India and USA on the arbitrability of competition law.
Arbitration and competition law is regarded as the opposite poles of the magnet.
The disputes which arises between the two parties in mostly contractual
agreement cases gets resolved through arbitration. Whereas, in the competition
law cases are resolved by the courts since they affect the public at large.
Hence, arbitration is more adaptable in cases which involves disputes among the
private parties but then it comes to acknowledging the disputes larger in the
public context then the difficulty arises and arbitrability of the subject
matter comes into question.
In the case of Eco Swiss China Time Ltd. vs. Benetton International N.V
the European Court of Justice upheld:
The authority of the arbitral tribunal
that the competition law disputes matter can also be heard and adjudged by this
forum. The arbitration which is part of the alternative dispute resolution
procedure is fast track mechanism to adjudicate the dispute and pass the award.
Most of the competition law matters are from a very long time pending before the
National Company Law Appellate Tribunal (NCLAT) as from 2017 onward there is a
transition of the matters from Competition Appellate Tribunal (COMPAT) to NCLAT as
the government of India decided to merge both the forums. So the people tend to
solve those long pending competition law disputes through arbitration as it is
being marked as the best mechanism for resolving the disputes in a specified
time limit of 12 months.
But the major drawback that is existing in the arbitrability of competition law
disputes is that the Competition Act isn't providing any alternative mechanism
so that the adjudication can take place through dispute resolution procedure
both the forums i.e. Competition Commission of India (CCI) or NCLAT isn't
possess any statutory powers by which they can direct the parties to use such
Why disputes arise and their arbitrariness to solve the dispute
There are certain aspects under the Competition act which significantly
constitutes public interest such as cartel activities or other anti-competitive
agreements which fall within the ambit of Section 2(c) and Section
3 respectively of the Competition Act, 2002 which lead the competition law
dispute to arise.
There are certain ways like cartel, price fixing, market sharing, bid rigging by
which the undertakings are making an agreements among themselves who are engaged
in the similar kind of business in the marketplace and as a result they indulge
in an unfair means of conducting business and this is affecting the fair
competition in the market.
This led the dispute to arise in the public at large and hence such right in rem
are non-arbitrable as in the case of Booz-Allen & Hamilton Inc. v. SBI Finance
, it was stated by the apex court that:
Matters involving right in personam are
arbitrable while those involving right in rem are non-arbitrable.
The fact that
despite involving only right in personam in certain situation, Indian courts
have time and again discouraged the arbitration adjudication in the competition
law claims. The Bombay High Court in the case of Kingfisher Airlines Ltd. v.
Captain Prithvi Malhotra
, stated that:
that even if a dispute involves 'action in personam' it would still be
non-arbitrable if its resolution is reserved for public forums as a matter of
Section 61 of the Competition Act,
2002 empowers the:
Competition Commission of India (CCI) or the NCLAT to handle
all the disputes in relation to the competition law and hence civil courts are
restricted from entertaining the matters under the competition law disputes.
Moreover, there is also Section 2(3) of the Arbitration Act, 1996which clearly
specifies that arbitration shall not take place in certain dispute matters
which are subject to other laws for the time being in force.
But for the first time in India the courts dealt with the issue of arbitrability
of competition law disputes. In the case of Union of India v. Competition
Commission of India
, the Delhi High Court has ruled upon the issue of
maintainability of the proceedings before the:
Competition Commission of India where an arbitration agreement exist between the
parties to contract.
Arbitrability in Tenancy Disputes
The dispute remaining between the landlords - tenants from several years which
are coming within the ambit of public policy under the umbrella of right in rem was
in question that the tenancy matter is not arbitrable. The difference between
right in rem and right in personamwas observed and it was held by the apex court
in Booz Allen & Hamilton Inc. v. SBI Finance Ltd.
The right in rem is a
right which can be exercisable against the world at large as contrasted from a
right in personam which is an interest protected solely against specific
individuals. All disputes which are related to rights in rem are required to be
adjudicated by courts and public tribunals being unsuited for arbitration.
But the Hon'ble Supreme Court after analysing the catena of precedents in the
tenancy dispute cases has solved this historical jurisprudence in the case of Vidya Drolia v.
Durga Trading Corpn
. as the court held that:
Landlord-tenant disputes are arbitrable except when they are covered by the
specific forum created by the rent control laws. There is nothing in the
Transfer of Property Act to show that a dispute as to determination of a lease
arising under Section 111 of the Transfer of Property Act cannot be decided by
The apex court in the above case thrown light on the doctrine of
competence-competence which means that it is the arbitral tribunal only in the
first place to be given the primary authority to adjudicate upon the issues of
non-arbitrability as the arbitral tribunal has jurisdiction to consider and
decide any disputes regarding its own jurisdiction. The thumb rule was set in
this judgement that in the doubtful matters where the validity of
the arbitration agreement cannot be determined that matter should directly be
referred to the arbitration.
The competition law disputes are considered as disputes being heated up in the
public at large (right in rem). Landlord-tenant dispute is also a matter of
right in rem but such matter is emerged from the personal disputes and the
adjudication in such dispute is not having any effect in the public at large.
International Scenario: US perceptive in Arbitrability in competition law
Competition law norms help to protect the public at large and also to enforce
contractual provisions which potent opportunity for highly lucrative
arbitration. The competition law disputes are governance of the public policies
which opens the door for arbitration tribunals,which aid the courts to resolve
disputes between two private parties may also be arbitrated. Legal system
considering competition law to be arbitrable as compliance with the relevant
competition law that is completely independent of arbitrability.
arbitration clause is not adhered to competition law, then probably it will be
considered invalid and unenforceable in nature which has caused effect due to
lack of arbitrability. The US analysis of whether an agreement is
anticompetitive uses the joint notions of a 'rule of reason' and 'per se'
illegality. As such, it has been stated that there are two complementary
categories of antitrust analysis.
Rule of Reason: According to the Sherman Antitrust Act 1890, it states to
restrict the business practices against the anticompetitive agreements which
outlaws the monopolization or conspiracy in restraint of trade. It could not be
a successful enactment because of narrow judicial interpretations which
constitutes trade or commerce among the states and also attempt to monopolize by
US department of justice. In this case, Continental T.V., Inc. v. GTE
Sylvania Inc., The analysis distinguishes between restraints with an
anticompetitive effect (or resulting in conduct likely to cause such injury)
that are harmful to the consumer, and restraints stimulating competition that
are in the consumer's best interest.
Later, Robinson Patman Act 1936, was designed to protect small retailers from
anti-competitive practises pursued by large business chains and discount stores.
An example of the anti-competitive practices is fixing minimum prices for
certain retail products. Examining through different critiques of US antitrust
policy is the common theme that government interference in the operation of the
free market does no harm.
Rule of per se: Per se means by itself
, it states that onus proof is not
required, committing an act by person will be liable for violation. In this
case, General Leaseways v. National Truck Leasing Assn
, 'if the elimination of
competition is apparent on a quick look, without undertaking the kind of
searching inquiry, the practice is illegal per se'. A plaintiff has less
responsibility to analyse the market where the restraint is deemed per se
anticompetitive. In the case of National Soc. of Professional Engineers v.
U.S. the law, however, isn't entirely clear to what extent a plaintiff must
define the relevant market.
Arbitration of Antitrust Claims: Opportunities and Hazards for corporate
Antitrust law raised in arbitration into a sword through party claim injunction
relief of anticompetitive damages resulted in violation of contractual
obligations, therefore they don't interfere but supplement the antitrust
authorities. Resolving antitrust issues requires specific facts and data
intensive assessments. International Arbitration tribunals helps to resolve
private litigants access to the documents and the public interest promoting
effective decision making.
In context to the US antitrust law, Clayton Act 1914, Section 3 strengthens
monopoly or attempts to create a monopoly, preventing the business from
carrying out a sale, lease, contract or create monopoly in its specific
industry. The agencies reserve the right to reject or approve a merger
transaction depending on their findings.
In Mitsubishi Motor Corp. v. Soler Chrysler Plymouth, Soler
Mitsubishi had conspired to divide markets in restraint of trade and had
coercively tried to replace Soler as a distributor. The U.S. Supreme Court noted
that the arbitration clause between the parties was broad enough to provide for
the arbitration of all disputes, controversies and differences between the
parties in relation to the agreement.
Antitrust claims can be submitted to an
arbitration proceedings in an international contract and it should be given full
effect and adjudication of such disputes shall be done by arbitrators who are
acquainted or experts in competition law.
Thus far, in India, there has not been a substantive decision on the
arbitrability of competition law disputes. A general view has prevailed that an
arbitral tribunal is well within its competence to decide issues in personam but
should not decide rights in rem
. It is important to note that parties would
almost never intend to refer purely antitrust claims to a tribunal. If the
objective of the arbitral tribunal is to seek contractual remedies and the scope
is limited to contract, with antitrust issues involved and also competition act
doesn't allow for damages or compensation sought by the parties during the
arbitrations. This is in concord with international practices which allows arbitrability in competition law disputes.
In India, the approach of cases are followed by different courts. A uniform
approach to resolve disputes submitted to multiple forums. Crucially, the
factor of competition law will be fully enforced by the arbitral tribunal
because of the efficient influential power for drafting the arbitration clause
which is in connection with the interpretation, application and performance of
On the other side, if there is a rare occurrence of arbitration clause
into unenforceability because of repulsion to competition law. Considering the
development, one with work experience ensuring highly skilled, knowledgeable may
act as arbitrators in respect of competition claim, in case if the complaint
by the interest of parties hampered, Competition commission of India is
different from contractual provision which are dealt before the arbitral
tribunal. Few rulings of the US Department of justice has clearly stated in favour of arbitrability the statutory rights mechanism in resolving disputes
recourse of civil courts.Written By:
- Aayush Sinha - 4th Year B.A. LLB, Bharati Vidyapeeth New Law
- Sakshi Kothari - Amity Law School, Gwalior