Abstract
The Arbitrability of disputes under Indian Arbitration law is a crucial concept for business and individuals entering into contracts . It determines whether a dispute can be resolved through arbitration , a faster and more flexible alternative to traditional court proceedings. The instant article explores the meaning of arbitrability of disputes in Indian perspective. The article then maps the evolution of test of arbitrability by various courts based on the judgement.
Introduction
Arbitration governed by the Arbitration conciliation Act, 1996 is a key alternative dispute resolution mechanism in India. In international arbitration , it is well established that “disputes” refer only to issues that can be through arbitration . The concept of arbitrability addresses whether a specific disputes is capable of being settled through arbitration.
The process depends on the mutual agreement of the parties to resolve their disputes through arbitration , thereby waving their legal right adjudication by other courts or public forums.
Scope and meaning of arbitrability of disputes
The concept of arbitrability pertains to the inquiry of whether a specific disputes is capable of being resolved through the court’s. Some disputes are not considered arbitrable because they involve matters that are considered to be of public interest or beyond the scope of private resolution . Additionally, some legal systems may prohibit or restrict the use of arbitration to resolve certains types of disputes . This is based on the principle that certain disputes involve matters of public rights and involve third party interest or basically affects third party rights.
To determine whether disputes arising from a contract can be resolved through arbitration , such disputes generally considered arbitrable . It is crucial to consider the parties intention as expressed in the arbitration agreement . In other words, it concerns the types of disputes that can be subject to arbitration.
Two aspects of arbitrability of disputes in India
Objective aspects
The objective aspects of arbitrability of disputes refers to ” whether a particular type of disputes is capable of being resolved through arbitration as matter or public policy. The objective aspects of arbitrability is typically determined by national laws, international treaties , state’s social political economic policies and legal precedents.
However , the controversial point with respect to having public policy as one of the objective standards of arbitrability . Further , public policy of each country is not uniform and it also changes a lot with time and progress in society .
Subjective Aspects
The subjective element of determining arbitrability pertains to the extent of the “arbitration agreement ” between the parties and their mutual desire to resolve their dispute through arbitration , as specified in the agreement or contract . It deals with the parties shared commitment to refer their dispute to arbitration. The subjective aspect of arbitrability mainly focuses on construing the arbitration agreement and deciding whether the disputes fall under it’s purview .
The construction of the arbitration agreement may hinge on the language employed in the arbitration agreement and intention of parties .
Position of Indian laws on Arbitrability of disputes
The Arbitration and conciliation Act, 1996 stands as the main legal framework that oversees arbitration proceedings in India , and it is acknowledged by Indian law that certain disputes can be resolved through arbitration , an approach that is generally preferred for dispute resolution . According to the Act , an arbitration agreement is defined as mutual agreement between parties to resolve all or certain disputes as stated in section 2(3).
The Act also provides for the judicial intervention in the arbitration process in certain situations , such as appointment of arbitrators and the setting aside of arbitral awards. Thus, “Indian law recognizes the principle of arbitrability” of disputes and generally favours the resolution of disputes through arbitration while also ensuring that parties legal rights are protected.
Relevant case law’s on Arbitrability of disputes
There have been several important case laws in India that have dealt with the issue of arbitrability of disputes. Some of the following case laws are :
Videocon Industries limited v. Union of India
In this case supreme court held that the disputes arising out of contracts entered into by the government or it’s agencies where the public interest is involved ,are generally not arbitrable.
Indian oil corporation limited v. Raja transport private limited
In this case the supreme court held that the disputes arising out of or relating to the exercise of sovereign functions by the state , such as the grant of licenses , are not arbitrable.
These cases have helped to clarify the legal position on the arbitrability of disputes in India , and have provided guidance on the types of disputes that can and cannot be referred to arbitration.
Test for arbitrability of disputes in Booz Allen v. vidya Drolia case :
The supreme court of India has in these two landmark cases on arbitrability of disputes in India laid down some guidelines on determining what kind of disputes are arbitrable in India .
The common parameters listed in both the cases are following :
- Disputes with cause of action and subject matter relating to right in rem without any subordinate rights in personam within it cannot be arbitrated.
- Disputes with cause of action and subject matter which if decided will impact third party rights.
- Disputes with cause of action and subject matter relating to inalienable sovereign or public functions of the state cannot be arbitrated.
- Disputes expressly prohibited by certain legislation enacted from arbitration.
- Criminal laws matter , testamentary matters , guardianship matters , and matrimonial disputes are generally not arbitrable.
Judicial determination of arbitrability
The arbitrability of disputes depends not only on the term of the contract and the arbitration agreement but also on legislative intent and public policy.
Court examine the arbitrability of disputes at three key stages
References stages (section 8 and 11 of Arbitration and conciliation Act,1996)
At this stage , court’s make an initial determination on the arbitrability of the dispute. The scrutiny is generally primary facie , allowing the arbitral tribunal to reconsider the arbitrability issue if necessary.
During arbitral proceedings
The arbitral tribunal has the authority to rule on it’s own jurisdiction , including any challenges to the existence to the validity of the arbitration agreement
Post award stage (section 34 of the arbitration act)
After the arbitral award is rendered , court can set it aside if they find that the disputes subject matter cannot be settled by arbitration under Indian law.
Conclusion
Indian judicial trends reveal a steady move toward promoting arbitration as a preferred mode of dispute resolution. Courts have increasingly upheld party autonomy and reduced interference, distinguishing clearly between arbitrable and non-arbitrable matters. Landmark rulings like Booz Allen, Ayyasamy, and Vidya Drolia reflect this progressive shift. Overall, India’s evolving approach strengthens its position as an arbitration-friendly jurisdiction aligned with global standards.
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