Arbitration and Conciliation Act, 1996 PDF

SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 1 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- The Arbitration and Conciliation Act, 19961 (Arbitration and Conciliation Act, 1996) [Act 26 of 1996 as amended up to Act 3 of 2021] [Updated as on 1-10-2021] [16th August, 1996] CONTENTS PRELIMINARY 1. Short title, extent and commencement PART I ARBITRATION CHAPTER I GENERAL PROVISIONS 2. Definitions 3. Receipt of written communications 4. Waiver of right to object 5. Extent of judicial intervention 6. Administrative assistance CHAPTER II ARBITRATION AGREEMENT 7. Arbitration agreement 8. Power to refer parties to arbitration where there is an arbitration agreement 9. Interim measures, etc. by Court CHAPTER III COMPOSITION OF ARBITRAL TRIBUNAL 10. Number of arbitrators 11. Appointment of arbitrators 11-A. Power of Central Government to amend Fourth Schedule 12. Grounds for challenge SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 2 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- 13. Challenge procedure 14. Failure or impossibility to act 15. Termination of mandate and substitution of arbitrator CHAPTER IV JURISDICTION OF ARBITRAL TRIBUNALS 16. Competence of arbitral tribunal to rule on its jurisdiction 17. Interim measures ordered by arbitral tribunal CHAPTER V CONDUCT OF ARBITRAL PROCEEDINGS 18. Equal treatment of parties 19. Determination of rules of procedure 20. Place of arbitration 21. Commencement of arbitral proceedings 22. Language 23. Statements of claim and defence 24. Hearings and written proceedings 25. Default of a party 26. Expert appointed by arbitral tribunal 27. Court assistance in taking evidence CHAPTER VI MAKING OF ARBITRAL AWARD AND TERMINATION OF PROCEEDINGS 28. Rules applicable to substance of dispute 29. Decision-making by panel of arbitrators 29-A. Time limit for arbitral award 29-B. Fast track procedure 30. Settlement 31. Form and contents of arbitral award 31-A. Regime for costs 32. Termination of proceedings SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 3 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- 33. Correction and interpretation of award; additional award CHAPTER VII RECOURSE AGAINST ARBITRAL AWARD 34. Application for setting aside arbitral award CHAPTER VIII FINALITY AND ENFORCEMENT OF ARBITRAL AWARDS 35. Finality of arbitral awards 36. Enforcement CHAPTER IX APPEALS 37. Appealable orders CHAPTER X MISCELLANEOUS 38. Deposits 39. Lien on arbitral award and deposits as to costs 40. Arbitration agreement not to be discharged by death of party thereto 41. Provisions in case of insolvency 42. Jurisdiction 42-A. Confidentiality of information 42-B. Protection of action taken in good faith 43. Limitations PART I-A ARBITRATION COUNCIL OF INDIA 43-A. Definitions 43-B. Establishment and incorporation of Arbitration Council of India 43-C. Composition of Council 43-D. Duties and functions of Council 43-E. Vacancies, etc., not to invalidate proceedings of Council 43-F. Resignation of Members SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 4 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- 43-G. Removal of Member 43-H. Appointment of experts and constitution of Committees thereof 43-I. General norms for grading of arbitral institutions 43-J. Norms for accreditation of arbitrators 43-K. Depository of awards 43-L. Power to make regulations by Council 43-M. Chief Executive Officer PART II ENFORCEMENT OF CERTAIN FOREIGN AWARDS CHAPTER I NEW YORK CONVENTION AWARDS 44. Definition 45. Power of judicial authority to refer parties to arbitration 46. When foreign award binding 47. Evidence 48. Conditions for enforcement of foreign awards 49. Enforcement of foreign awards 50. Appealable orders 51. Saving 52. Chapter II not to apply CHAPTER II GENEVA CONVENTION AWARDS 53. Interpretation 54. Power of judicial authority to refer parties to arbitration 55. Foreign awards when binding 56. Evidence 57. Conditions for enforcement of foreign awards 58. Enforcement of foreign awards 59. Appealable orders SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 5 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- 60. Saving PART III CONCILIATION 61. Application and scope 62. Commencement of conciliation proceedings 63. Number of conciliators 64. Appointment of conciliators 65. Submission of statements to conciliator 66. Conciliator not bound by certain enactments 67. Role of conciliator 68. Administrative assistance 69. Communication between conciliator and parties 70. Disclosure of information 71. Cooperation of parties with conciliator 72. Suggestions by parties for settlement of dispute 73. Settlement agreement 74. Status and effect of settlement agreement 75. Confidentiality 76. Termination of conciliation proceedings 77. Resort to arbitral or judicial proceedings 78. Costs 79. Deposits 80. Role of conciliator in other proceedings 81. Admissibility of evidence in other proceedings PART IV SUPPLEMENTARY PROVISIONS 82. Power of High Court to make rules 83. Removal of difficulties 84. Power to make rules SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 6 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- 85. Repeal and savings 86. Repeal of Ordinance 27 of 1996 and saving 87. Effect of arbitral and related court proceedings commenced prior to 23rd October, 2015 THE FIRST SCHEDULE THE SECOND SCHEDULE THE THIRD SCHEDULE THE FOURTH SCHEDULE THE FIFTH SCHEDULE THE SEVENTH SCHEDULE THE EIGHTH SCHEDULE ——— Arbitration and Conciliation Act, 1996 [Act 26 of 1996 as amended up to Act 3 of 2021] [Updated as [16th August, on 1-10-2021] 1996] ——— An Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto Whereas the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985; And whereas the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice; And whereas the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980; And whereas the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation; And whereas the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations; And whereas it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules; Be it enacted by Parliament in the Forty-seventh Year of the Republic as follows:— Statement of Objects and Reasons.—The Statement of Objects and Reasons for this Bill are as follows:— The law on arbitration in India is at present substantially contained in three SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 7 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. It is widely felt that the 1940 Act, which contains the general law of arbitration, has become outdated. The Law Commission of India, several representative bodies of trade and industry and experts in the field of arbitration have proposed amendments to this Act to make it more responsive to contemporary requirements. It is also recognised that our economic reforms may not become fully effective if the law dealing with settlement of both domestic and international commercial disputes remains out of tune with such reforms. Like arbitration, conciliation is also getting increasing worldwide recognition as an instrument for settlement of disputes. There is, however, no general law on the subject in India. 2. The United Nations Commission on International Trade Law (UNCITRAL) adopted in 1985 the Model Law on International Commercial Arbitration. The General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice. The UNCITRAL also adopted in 1980 a set of Conciliation Rules. The General Assembly of the United Nations has recommended the use of these Rules in cases where the disputes arise in the context of international commercial relations and the parties seek amicable settlement of their disputes by recourse to conciliation. An important feature of the said UNCITRAL Model Law and Rules is that they have harmonised concepts on arbitration and conciliation of different legal systems of the world and thus contain provisions which are designed for universal application. 3. Though the said UNCITRAL Model Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and to define the law relating to conciliation, taking into account the said UNCITRAL Model Law and Rules. 4. The main objectives of the Bill are as under:— (i) to comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation; (ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration; (iii) to provide that the arbitral tribunal gives reasons for its arbitral award; (iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction; (v) to minimise the supervisory role of courts in the arbitral process; (vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes; (vii) to provide that every final arbitral award is enforced in the same manner as if it were a decree of the court; (viii) to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal; and (ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two International Conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award. 5. The Bill seeks to achieve the above objects. SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 8 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- Statement of Objects and Reasons Amending Act 3 of 2016.—The general law relating to arbitration is contained in the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). The Act, which is based on the UNCITRAL Model Law on International Commercial Arbitration, as adopted in 1985 by the United Nations Commission on International Trade Law (UNCITRAL), applies to both international as well to domestic arbitration. 2. The Act was enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. With the passage of time, some difficulties in the applicability of the Act have been noticed. Interpretation of the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act. With a view to overcome the difficulties, the matter was referred to the Law Commission of India, which examined the issue in detail and submitted its 176th Report. On the basis of the said report, the Arbitration and Conciliation (Amendment) Bill, 2003, was introduced in the Rajya Sabha on 22nd December, 2003. The said Bill was referred to the Department related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice for examination and report. The said Committee, submitted its report to the Parliament on 4th August, 2005, wherein the Committee recommended that since many provisions of the said Bill were contentious, the Bill may be withdrawn and a fresh legislation may be brought after considering its recommendations. Accordingly, the said Bill was withdrawn from the Rajya Sabha. 3. On a reference made again in pursuance of the above, the Law Commission examined and submitted its 246th Report on “Amendments to the Arbitration and Conciliation Act, 1996” in August, 2014 and recommended various amendments in the Act. The proposed amendments to the Act would facilitate and encourage Alternative Dispute Mechanism, especially arbitration, for settlement of disputes in a more user friendly, cost effective and expeditious disposal of cases since India is committed to improve its legal framework to obviate in disposal of cases. 4. As India has been ranked at 178 out of 189 nations in the world in contract enforcement, it is high time that urgent steps are taken to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered and reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration, so as to encourage investment and economic activity. 5. As Parliament was not in session and immediate steps were required to be taken to make necessary amendments to the Arbitration and Conciliation Act, 1996, to attract foreign investment by projecting India as an investor friendly country having a sound legal framework, the President was pleased to promulgate the Arbitration and Conciliation (Amendment) Ordinance, 2015. 6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the Arbitration and Conciliation (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely— (i) to amend the definition of “Court” to provide that in the case of international commercial arbitrations, the Court should be the High Court; (ii) to ensure that an Indian Court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India; (iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days; (iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 9 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- arbitration agreement and not other issues; (v) to provide that the arbitral tribunal shall make its award within a period of twelve months from the date it enters upon the reference and that the parties may, however, extend such period up to six months, beyond which period any extension can only be granted by the Court, on sufficient cause; (vi) to provide that a model fee Schedule on the basis of which High Courts may frame rules for the purpose of determination of fees of arbitral tribunal, where a High Court appoints arbitrator in terms of Section 11 of the Act; (vii) to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast track procedure and the award in such cases shall be made within a period of six months; (viii) to provide for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator; (ix) to provide that application to challenge the award is to be disposed of by the Court within one year. 7. The amendments proposed in the Bill will ensure that arbitration process becomes more user friendly, cost effective and lead to expeditious disposal of cases. 8. The Bill seeks to replace the aforesaid Ordinance. Statement of Objects and Reasons Amending Act 33 of 2019.—The Arbitration and Conciliation Act, 1996 (the said Act) was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. The said Act was amended by the Arbitration and Conciliation (Amendment) Act, 2015 to make arbitration process cost effective, speedy, with minimum court intervention. 2. The promotion of the institutional arbitration in India by strengthening Indian arbitral institutions has been identified critical to the dispute resolution through arbitration. Though arbitral institutions have been working in India, they have not been preferred by parties, who have leaned in favour of ad hoc arbitration or arbitral institutions located abroad. Therefore, in order to identify the roadblocks to the development of institutional arbitration, examine specific issues affecting the Indian arbitration landscape and also to prepare a road map for making India a robust centre for institutional arbitration both domestic and international, the Central Government constituted a High Level Committee under the Chairmanship of Justice B. N. Srikrishna, Former Judge of the Supreme Court of India. 3. The terms of reference of the Committee, inter alia, include,— (a) to examine the effectiveness of existing arbitration mechanism by studying the functioning and performance of arbitral institutions in India; (b) to devise a road map to promote institutional arbitration mechanisms in India; and (c) to evolve an effective and efficient arbitration eco-system for commercial dispute resolution and suggest reforms in the Arbitration and Conciliation Act, 1996. 4. The High Level Committee submitted its Report on 30th July, 2017. With a view to strengthen institutional arbitration in the country, the said Committee, inter alia, recommended for the establishment of an independent body for grading of arbitral institutions and accreditation of arbitrators, etc. The Committee has also recommended certain amendments to the said Act to minimise the need to approach the Courts for appointment of arbitrators. After examination of the said recommendations with a view to make India a hub of institutional arbitration for both domestic and international arbitration, it was decided to amend the Arbitration and SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 10 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- Conciliation Act, 1996. 5. Accordingly, a Bill, namely, the Arbitration and Conciliation (Amendment) Bill, 2018 was introduced in Lok Sabha on the18th July, 2018 and was passed by that House on the 10th August, 2018 and was pending in Rajya Sabha. However, the Sixteenth Lok Sabha was dissolved and the Bill got lapsed. Hence, the present Bill, namely, the Arbitration and Conciliation (Amendment) Bill, 2019. 6. The salient features of the Arbitration and Conciliation (Amendment) Bill, 2019, inter alia, are as follows— (i) to amend Section 11 of the Act relating to “Appointment of Arbitrators” so as to change the present system of appointment of arbitrators by the Supreme Court or High Court, to a system where the arbitrators shall be appointed by the “arbitral institutions” designated by the Supreme Court or High Court; (ii) in case where no graded arbitral institutions are available, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institutions; (iii) to insert a new Part 1-A to the Act for the establishment and incorporation of an independent body, namely, the Arbitration Council of India for the purpose of grading of arbitral institutions and accreditation of arbitrators, etc.; (iv) to amend Section 23 of the Act relating to “Statement of claim and defence” so as to provide that the statement of claim and defence shall be completed within a period of six months from the date the arbitrator receives the notice of appointment; (v) to provide that the arbitrator, the arbitral institutions and the parties shall maintain confidentiality of information relating to arbitral proceedings and also protect the arbitrator or arbitrators from any suit or other legal proceedings for any action or omission done in good faith in the course of arbitration proceedings; and (vi) to clarify that Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015, is applicable only to the arbitral proceedings which commenced on or after 23rd October, 2015 and to such court proceedings which emanate from such arbitral proceedings. 7. The Bill seeks to achieve the above objectives. ► External aids.—Model Law on International Commercial Arbitration adopted in 1985 and judgments and literature thereon cannot be taken to be a guide to the interpretation of the Arbitration and Conciliation Act, 1996, in particular Section 11 thereof, Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388. PRELIMINARY 1. Short title, extent and commencement.—(1) This Act may be called the Arbitration and Conciliation Act, 1996. (2) It extends to the whole of India: 2 [* * *] Explanation.—In this sub-section, the expression “international commercial conciliation” shall have the same meaning as the expression “international commercial arbitration” in clause (f) of sub-section (1) of Section 2, subject to the modification that for the word “arbitration” occurring therein, the word “conciliation” shall be substituted. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Date of Enforcement: The Act was brought into force w.e.f. August 22, 1996 [Vide Noti. No. G.S.R. 375(E), dated 22-8-1996]. STATE AMENDMENTS SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 11 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- Union Territory of Jammu and Kashmir.—In its application to the Union Territory of Jammu and Kashmir, in sub-section (1), omit the proviso and Explanation. [Vide S.O. 1123(E), dated 18-3-2020 (w.e.f. 18-3-2020)]. Union Territory of Ladakh.—In its application to the Union Territory of Ladakh, in sub-section (1), omit the proviso and Explanation. [Vide S.O. 3774(E), dated 23-10- 2020]. Part I ARBITRATION ► Regulation of Arbitrations.—Parts I and II are mutually exclusive of each other. Pt. I governs only arbitrations which have their juridical or legal seat within India (domestic arbitrations). Part II governs arbitrations which have their juridical or legal seat outside India (foreign arbitrations). Part I regulates domestic arbitrations at all four stages of an arbitration : (i) commencement of arbitration, (ii) conduct of arbitration, (iii) challenge to award, and (iv) recognition or enforcement of award. Part II however regulates foreign arbitrations only in respect of Stages (i) and (iv), and only to the extent provided therein. Thus, for foreign arbitrations covered by Part II, Stages (ii) and (iii) have to be regulated by arbitration law of country in which juridical seat of arbitration is located, Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810. Chapter I GENERAL PROVISIONS 2. Definitions.—(1) In this Part, unless the context otherwise requires,— (a) “arbitration” means any arbitration whether or not administered by permanent arbitral institution; (b) “arbitration agreement” means an agreement referred to in Section 7; (c) “arbitral award” includes an interim award; 3 [(ca) “arbitral institution” means an arbitral institution designated by the Supreme Court or a High Court under this Act;] (d) “arbitral tribunal” means a sole arbitrator or a panel of arbitrators; 4 [(e) “Court” means— (i) in the case of an arbitration other than international commercial arbitration, the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any Court of Small Causes; (ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;] (f) “international commercial arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is— (i) an individual who is a national of, or habitually resident in, any country other than India; or (ii) a body corporate which is incorporated in any country other than India; or (iii) 5 [* * *] an association or a body of individuals whose central management and control is exercised in any country other than India; or SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 12 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- (iv) the Government of a foreign country; (g) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting; (h) “party” means a party to an arbitration agreement. 6 [(i) “prescribed” means prescribed by rules made under this Act; (j) “regulations” means the regulations made by the Council under this Act;] (2) Scope.—This Part shall apply where the place of arbitration is in India. 7 [Provided that subject to an agreement to the contrary, the provisions of Sections 9, 27 and 8 [clause (b)] of sub-section (1) and sub-section (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognised under the provisions of Part II of this Act.] (3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. (4) This Part except sub-section (1) of Section 40, Sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder. (5) Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto. (6) Construction of references.—Where this Part, except Section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution, to determine that issue. (7) An arbitral award made under this Part shall be considered as a domestic award. (8) Where this Part— (a) refers to the fact that the parties have agreed or that they may agree, or (b) in any other way refers to an agreement of the parties, that agreement shall include any arbitration rules referred to in that agreement. (9) Where this Part, other than clause (a) of Section 25 or clause (a) of sub-section (2) of Section 32, refers to a claim, it shall also apply to a counter-claim, and where it refers to a defence, it shall also apply to a defence to that counter-claim. STATE AMENDMENTS Uttar Pradesh.—In its application to the State of Uttar Pradesh, in sub-section (1), for clause (e), the following clause shall be substituted, namely— “(e) ‘Court’ means the principal Civil Court of original jurisdiction in a district, which shall include the court of the Additional District Judge where so assigned by the District Judge and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to the decide the questions forming the subject -matter of the arbitration if the same had been the subject-matter of suit, or any Court of small causes.”. [Vide U.P. Act 16 of 2019, S. 4, dated 29-11-2019]. ► “Court”.—Jurisdiction conferred upon “court” Section 2(1)(e) which is limited to Part I of 1996 Act, confers jurisdiction upon courts where seat of arbitration is located within India. On the other hand, Section 47 which is in Part II of 1996 Act defines “court” as a court having jurisdiction over subject-matter of the award i.e. court within whose jurisdiction asset/person is located, against which/whom enforcement of foreign award (under Part II) is sought, Bharat Aluminium Co. v. SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 13 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810. ► Arbitration cases in India.—Foreign law firms/companies or foreign lawyers are not entitled to practise even foreign law or their own system of law and on diverse international legal issues in India as distinguished from Indian law in India. Any practice in India, whether it is of foreign law or Indian law, would be governed by Indian regulatory mechanism. Casual “fly in and fly out” visits to give advice on foreign law or their own system of law and on diverse international legal issues is permissible, so long as they did not amount to “practice”. Whether the visits were casual in nature or amounted to “practice” is a question of fact, Bar Council of India v. A.K. Balaji, (2018) 5 SCC 379. ► Termination of works contract.—Affirming the opinion expressed by Ganguly, J. in M.P. Rural Road Development Authority, (2012) 3 SCC 495, held, that in view of Section 2(d), the State Act will cover a dispute even after termination of the works contract. VA Tech Escher Wyass Flovel Ltd., (2011) 13 SCC 261, overruled, M.P. Rural Road Development Authority v. L.G. Chaudhary Engineers and Contractors, (2018) 10 SCC 826. ► Juridical or legal seat of arbitration.—Juridical or legal seat of arbitration once designated or determined, held, explaining and folllowing five-Judge Bench decision in BALCO, (2012) 9 SCC 552, exclusively determines which courts will have jurisdiction over the arbitration, as opposed to the place where whole or part of the cause of action arises. A&C Act, 1996 has accepted the territoriality principle in Section 2(2). Thus, once the seat of arbitration is designated or determined, the same operates as an exclusive jurisdiction clause as a result of which only the courts where the seat is located would have jurisdiction over the arbitration, to the exclusion of all other courts, even courts where part of the cause of action may have arisen. However, held, where it is found on the facts of a particular case that either no “seat” is designated by agreement, or has not been so determined by the Arbitral Tribunal, or the so-called “seat” is only a convenient “venue”, then there may be several courts where a part of the cause of action arises, that may have jurisdiction over the arbitration. Hence, an application under Section 9 of the A&C Act may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the “seat” of arbitration, and before such “seat” may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the A&C Act, BGS SGS SOMA JV v. NHPC Ltd., (2020) 4 SCC 234. ► Determination of seat of arbitration.—Mere expression “place of arbitration” in the arbitration clause, held, cannot by itself be the basis to determine the intention of the parties that they have intended that place as the juridical “seat” of arbitration. Intention of the parties as to the “seat” should be determined from reading all clauses in arbitration agreement as a whole, as to whether there are any clear indicia which indicate the seat of arbitration; and the conduct of the parties. Designation of “place of arbitration” in arbitration clause, plus significant indica determine seat of arbitration, Mankastu Impex (P) Ltd. v. Airvisual Ltd., (2020) 5 SCC 399. If the “subject-matter of the suit” is situated within the arbitral jurisdiction of two or more courts, the parties can agree to confine the jurisdiction in one of the competent courts. Seat of arbitration once determined, amounts to exclusive jurisdiction clause, Brahmani River Pellets Ltd. v. Kamachi Industries Ltd., (2020) 5 SCC 462. 3. Receipt of written communications.—(1) Unless otherwise agreed by the parties, — (a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and (b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it. (2) The communication is deemed to have been received on the day it is so delivered. SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 14 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- (3) This section does not apply to written communications in respect of proceedings of any judicial authority. 4. Waiver of right to object.—A party who knows that— (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object. 5. Extent of judicial intervention.—Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. ► “Judicial authority” specified therein.—Use of term “judicial authority” by legislature in all three sections, is firstly a clear recognition that judicial control of commercial disputes is no longer in the exclusive jurisdiction of courts. There are many statutory bodies and tribunals which would have adjudicatory jurisdiction in commercial matters. Hence, secondly it implies that policy of least intervention articulated in Section 5 is equally applicable to all “judicial authorities” that may have such adjudicatory jurisdiction over arbitrations. Clarified, that common use of term “judicial authority” in Sections 5, 8 and 45 does not in any way imply that Part I of 1996 Act is applicable to arbitrations which have their juridical seat outside India, Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC (Civ) 810. ► Recall of order.—Review by High Court for recalling its order appointing an arbitrator, permissible. Section 5 of the A&C Act i.e. interdiction of judicial intervention is not applicable in the absence of an arbitration agreement itself. A court of record envelops all such powers whose acts and proceedings are to be enrolled in a perpetual memorial and testimony. It was held that being a superior court of record, the jurisdiction to recall its own orders is inherent in the High Court, Municipal Corporation of Greater Mumbai v. Pratibha Industries Ltd., (2019) 3 SCC 203. ►Allegations of Fraud — When non-arbitrable.—Adopting two-fold test laid down in Rashid Raza, (2019) 8 SCC 710., held, allegations of fraud will be non-arbitrable only if either of the following two tests laid down are satisfied, and not otherwise, namely:— (1) does this plea of fraud permeate the entire contract and above all, the agreement of arbitration, rendering it void, or, (2) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain, Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., (2021) 4 SCC 713. 6. Administrative assistance.—In order to facilitate the conduct of the arbitral proceedings, the parties, or the arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or person. Chapter II ARBITRATION AGREEMENT 7. Arbitration agreement.—(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication 9 [including communication through electronic means] which provide a record of the agreement; or SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 15 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. ► Form of agreement.—Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such disputes shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement, Rukmanibai v. Collector, (1980) 4 SCC 556 : AIR 1981 SC 479. ► Arbitration clause.—Arbitration agreement clause mere use of the word “arbitration” or “arbitrator” in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. Such an agreement is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future, Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719. ► Arbitration agreement clause.—Agreement providing for settlement of disputes or differences by referring the same to “adjudication” or to “adjudicator” — Notwithstanding the use of the word adjudication, held, the wordings of the relevant clauses indicated that the parties intended to have their disputes resolved by arbitration, Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd., (2008) 10 SCC 308. Arbitration agreement clause, where the agreement postulated resolution of disputes through institutional arbitration, then notwithstanding the non-mention of the name of a specific institution therein, the same would be a valid arbitration clause, Nandan Biomatrix Ltd. v. D 1 Oils Ltd., (2009) 4 SCC 495. Arbitration clause contained in MoU, is an independent arbitration agreement and, even if MoU is terminated, arbitration agreement continues to remain and parties are entitled to invoke said clause and exercise option for appointment of arbitrator, Ashapura Mine-Chem Ltd. v. Gujarat Mineral Development Corpn., (2015) 8 SCC 193. If arbitration clause and procedure for appointment of arbitrator in original agreement is novated, and parties acted accordingly, clause in original agreement for appointment of arbitrator cannot be invoked, Larsen & Toubro Ltd. v. Mohan Lal Harbans Lal Bhayana, (2015) 2 SCC 461. Agreement between the parties giving an option to the parties to choose dispute resolution by “arbitration” or “court”, can be considered as a valid arbitration agreement, Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. v. Jade Elevator Components, (2018) 9 SCC 774. Arbitration agreement is not binding on a non-signatory who does not assent to arbitration agreement, even when the signatory and the non-signatory parties are constituents of a Group of Companies, Reckitt Benckiser (India) (P) Ltd. v. Reynders Label Printing India Private Ltd., (2019) 7 SCC 62. Agreement/clause providing for departmental appeal is not an agreement for resolution of disputes through arbitration. Reference of dispute or difference expressly or by necessary implication to an arbitrator in the agreement, is necessary, South Delhi Municipal Corpn. v. SMS AAMW Tollways (P) Ltd., (2019) 11 SCC 776. ► Arbitration agreement, when is binding on a non-signatory to such agreement.—The group of companies doctrine is intended to facilitate the fulfilment of a mutually held intent between the parties, where the circumstances indicate that the intent is to bind both signatories and non signatories. Further, the effort is to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory, Cheran Properties Ltd. v. Kasturi and Sons Ltd., (2018) 16 SCC 413. ► Interpretation of arbitration clause.—The parties are bound by the clauses enumerated in the policy and the court does not transplant any equity to the same by rewriting a clause. Further, an arbitration clause is required to be strictly construed and if a clause stipulates that under certain circumstances there can be no arbitration, and the circumstances are demonstrably clear then the SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 16 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- controversy pertaining to the appointment of arbitrator has to be put to rest, Oriental Insurance Co. Ltd. v. Narbheram Power & Steel (P) Ltd., (2018) 6 SCC 534. ► Incorporation of arbitration clause.—Though a general reference to an earlier contract (Two-contract case) is not sufficient for incorporation of an arbitration clause in the later contract, a general reference to a standard form contract (Single-contract case) would be enough for incorporation of the arbitration clause. M.R. Engineers & Contractors (P) Ltd., (2009) 7 SCC 696, inter alia, lays down that where the contract provides that the standard form of terms and conditions of an independent trade association or professional institution will bind the parties or apply to the contract, such standard form of terms and conditions including any provision for arbitration in such standard terms and conditions, shall be deemed to be incorporated by reference, Inox Wind Ltd. v. Thermocables Ltd., (2018) 2 SCC 519. ► Incorporation of arbitration clause by reference.—Arbitration agreement need not necessarily be in the form of a clause in substantive contract itself and it could be an independent agreement; or it could be incorporated by reference either from a parent agreement, or by reference to a standard form contract, Giriraj Garg v. Coal India Ltd., (2019) 5 SCC 192. ► Striking down of arbitration clause.—A claim which is frivolous can be dismissed with exemplary costs. Further, a “deposit-at-call” of 10% of the amount claimed, which could amount to large sums of money, was without any direct nexus to the filing of frivolous claims, as it applied to all claims (frivolous or otherwise) made at the very threshold. Further, the clause led to a wholly unjust result of a party who had lost an arbitration being entitled to forfeit such part of the deposit as falling proportionately short of the amount awarded as compared to what was claimed. Further, deterring a party to an arbitration from invoking this alternative dispute resolution process by a pre-deposit of 10% would discourage arbitration, contrary to the object of de-clogging the court system, and would render the arbitral process ineffective and expensive, ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board, (2019) 4 SCC 401. ► Validity of arbitration agreement.—Signing of arbitration agreement is not mandatory, when such agreement satisfies the test of being in writing, Caravel Shipping Services (P) Ltd. v. Premier Sea Foods Exim (P) Ltd., (2019) 11 SCC 461. 8. Power to refer parties to arbitration where there is an arbitration agreement.—10 [(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. 11 [Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that court.] (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. STATE AMENDMENTS Union Territory of Jammu and Kashmir.—In its application to the Union Territory of Jammu and Kashmir, after Section 8, insert the following sections, namely:— SECTIONS 8-A and 8-B “8-A. Power of the court, seized of petitions under Sections 9 or 11 of the Act, to SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 17 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- refer the dispute to Mediation or Conciliation.—(1) If during the pendency of petitions under Sections 9 or 11 of the Act, it appears to the court, that there exists elements of a settlement which may be acceptable to the parties, the court may, with the consent of parties, refer the parties, for resolution of their disputes, to,— (a) mediation; or (b) conciliation. (2) The procedure for reference of a dispute to mediation is as under— (a) where a dispute has been referred for resolution by recourse to mediation, the procedure framed under that Act shall apply; (b) in case of a successful resolution of the dispute, the Mediator shall immediately forward the mediated settlement to the referral court; (c) on receipt of the mediated settlement, the referral court shall independently apply its judicial mind and record a satisfaction that the mediated settlement is genuine, lawful, voluntary, entered into without coercion, undue influence, fraud or misrepresentation and that there is no other legal impediment in accepting the same; (d) the court shall record a statement on oath of the parties, or their authorised representatives, affirming the mediated settlement as well as a clear undertaking of the parties to abide by the terms of the settlement; (e) if satisfied, the court shall pass an order in terms of the settlement; (f) if the main petition, in which the reference was made is pending, it shall be disposed of by the referral court in terms thereof; (g) if the main petition, in which the reference was made stands disposed of, the mediated settlement and the matter shall be listed before the referral court, which shall pass orders in accordance with clauses (iii), (iv) and (v); (h) such a mediated settlement, shall have the same status and effect as an arbitral award and may be enforced in the manner specified under Section 36 of the Act. (3) With respect to reference of a dispute to conciliation, the provisions of Part II of this Act shall apply as if the conciliation proceedings were initiated by the parties under the relevant provision of this Act. 8-B. Power of the court, seized of matters under Sections 34 or 37 of the Act, to refer the dispute to Mediation or Conciliation.—(1) If during the pendency of a petition under Section 34 or an appeal under Section 37 of the Act, it appears to the court, that there exists elements of a settlement which may be acceptable to the parties, the court may, with the consent of parties, refer the parties, for resolution of their disputes, to:— (a) mediation; or (b) conciliation. (2) The procedure for reference of a dispute to mediation is as under:— (a) where a dispute has been referred for resolution by recourse to mediation, the procedure framed under the Act shall apply; (b) in case of a successful resolution of the dispute, the Mediator shall immediately forward the mediated settlement to the referral court; (c) on receipt of the mediated settlement, the referral court shall independently apply its judicial mind and record a satisfaction that the mediated settlement is genuine, lawful, voluntary, entered into without coercion, undue influence, fraud or misrepresentation and that there is no other legal impediment in accepting the same; (d) the court shall record a statement on oath of the parties, or their authorized representatives, affirming the mediated settlement, a clear undertaking of the SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 18 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- parties to abide by the terms of the settlement as well as statement to the above effect; (e) if satisfied, the court shall pass an order in terms of the settlement; (f) if the main petition, in which the reference was made is pending, it shall be disposed of by the referral court in terms thereof; (g) if the main petition, in which the reference was made stands disposed of, the mediated settlement and the matter shall be listed before the referral court, which shall pass orders in accordance with clauses (iii), (iv) and (v); (h) such a mediated settlement, shall have the status of a modified arbitral award and may be enforced in the manner specified under Section 36 of the Act. (3) With respect to reference of a dispute to conciliation, the provisions of Part III of the Act, shall apply as if the conciliation proceedings were initiated by the parties under the relevant provision of this Act.” [Vide S.O. 1123(E), dated 18-3- 2020 (w.e.f. 18-3-2020)]. Union Territory of Ladakh.—In its application to the Union Territory of Ladakh, after Section 8, insert,— “8-A. Power of Court, seized of petition under Section 9 or Section 11 to refer dispute to mediation or conciliation.—(1) If during the pendency of petition under Section 9 or 11, it appears to the Court, that there exists elements of a settlement which may be acceptable to the parties, the Court may, with the consent of parties, refer the parties, for resolution of their disputes, to,— (a) mediation; or (b) conciliation. (2) The procedure for reference of a dispute to mediation shall be as under:— (a) where a dispute has been referred for resolution by recourse to mediation, the procedure framed under this Act shall apply; (b) in case of a successful resolution of the dispute, the Mediator shall immediately forward the mediated settlement to the referral court; (c) on receipt of the mediated settlement, the referral court shall independently apply its judicial mind and record a satisfaction that the mediated settlement is genuine, lawful, voluntary, entered into without coercion, undue influence, fraud or misrepresentation and that there is no other legal impediment in accepting the same; (d) the Court shall record a statement on oath of the parties, or their authorised representatives, affirming the mediated settlement as well as a clear undertaking of the parties to abide by the terms of the settlement; (e) if satisfied, the Court shall pass an order in terms of the settlement; (f) if the main petition, in which the reference was made is pending, it shall be disposed of by the referral Court in terms thereof; (g) if the main petition, in which the reference was made stands disposed of, the mediated settlement and the matter shall be listed before the referral Court, which shall pass orders in accordance with clauses (c), (d) and (e); and (h) such a mediated settlement, shall have the same status and effect as an arbitral award and may be enforced in the manner specified under Section 36. (3) With respect to reference of a dispute to conciliation, the provisions of Part II of this Act shall apply as if the conciliation proceedings were initiated by the parties under the relevant provision of this Act. 8-B. Power of Court, seized of matters under Section 34 or Section 37, to refer dispute to mediation or conciliation.—(1) If during the pendency of a petition under Section 34 or an appeal under Section 37, it appears to the Court, that there exist SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 19 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- elements of a settlement which may be acceptable to the parties, the court may, with the consent of parties, refer the parties, for resolution of their disputes, to— (a) mediation; or (b) conciliation. (2) The procedure for reference of a dispute to mediation shall be as under:— (a) where a dispute has been referred for resolution by recourse to mediation, the procedure framed under this Act shall apply; (b) in case of a successful resolution of the dispute, the Mediator shall immediately forward the mediated settlement to the referral Court; (c) on receipt of the mediated settlement, the referral Court shall independently apply its judicial mind and record a satisfaction that the mediated settlement is genuine, lawful, voluntary, entered into without coercion, undue influence, fraud or misrepresentation and that there is no other legal impediment in accepting the same; (d) the Court shall record a statement on oath of the parties, or their authorised representatives, affirming the mediated settlement as well as a clear undertaking of the parties to abide by the terms of the settlement; (e) if satisfied, the Court shall pass an order in terms of the settlement; (f) if the main petition, in which the reference was made is pending, it shall be disposed of by the referral Court in terms thereof; (g) if the main petition, in which the reference was made stands disposed of, the mediated settlement and the matter shall be listed before the referral Court, which shall pass orders in accordance with clauses (c), (d) and (e); (h) such a mediated settlement, shall have the status of a modified arbitral award and may be enforced in the manner specified under Section 36. (3) With respect to reference of a dispute to conciliation, the provisions of Part III of this Act, shall apply as if the conciliation proceedings were initiated by the parties under the relevant provision of this Act.” [Vide S.O. 3774(E), dated 23-10- 2020]. ► Allegations of fraud.—Mere allegations of fraud are not sufficient for not referring dispute for arbitration, Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC 678. ► Non-arbitrability — Meaning of, explained and discussed in detail.— Arbitration being a matter of contract, the parties are entitled to fix boundaries so as to confer and limit jurisdiction and legal authority of arbitrator and though the arbitration agreement may be valid, yet Arbitral Tribunal, in view of the will of the parties expressed in arbitration agreement, may not have jurisdiction to adjudicate the dispute. There is a difference between a non-arbitrable claim and non-arbitrable subject-matter : the former may arise on account of scope of the arbitration agreement and also when the claim is not capable of being resolved through arbitration; while generally non-arbitrability of the subject-matter would relate to non-arbitrability in law. Though the A&C Act, 1996 recognises and accepts that certain disputes or subjects are not capable of being resolved by arbitration vide Section 2(3) and Section 34(2)(b)(i), it is left to the courts ex visceribus actus i.e. from the very essence of the Act and within its four corners, to formulate the principles for determining non- arbitrability. Exclusion from arbitrability is predominantly a matter of case law, Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. ► Fourfold test to determine non-arbitrability.— Propounding a fourfold test, held, that the subject-matter of a dispute in an arbitration agreement is not arbitrable when : (1) the cause of action and subject-matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem; (2) the cause of action and subject-matter of the dispute affects third-party rights, have erga omnes effect i.e. where rights or obligations are owed towards all, require centralised adjudication, and mutual adjudication would not be appropriate and enforceable; (3) the cause of action and subject-matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 20 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- unenforceable; (4) the subject-matter of the dispute is expressly or by necessary implication non- arbitrable as per mandatory statute(s). The aforesaid fourfold test has to be applied with care and caution. These tests are not watertight compartments : they dovetail and overlap, albeit when applied holistically and pragmatically, will help and assist in determining and ascertaining with great degree of certainty when as per law in India, a dispute or subject-matter is non-arbitrable. Only when the answer is in the affirmative that the subject-matter of the dispute would be non-arbitrable, Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. ► Subject-matters which are arbitrable.— Applying the fourfold test to determine non- arbitrability, held, landlord-tenant disputes under Transfer of Property Act 1882 are arbitrable and TPA does not forbid nor foreclose arbitration. However, further held, landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations arising under the rent control legislation in question, Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. ► Subject-matters which are non-arbitrable.— Applying the fourfold test to determine non- arbitrability, held, insolvency, intra-company disputes, grant and issue of patents and registration of trade marks, criminal cases, matrimonial disputes, probate and testamentary matters, are non- arbitrable. Disputes within the purview of the Recovery of Debts and Bankruptcy Act, 1993 and SARFAESI Act, 2002, are non-arbitrable, Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. ► Cancellation of written instrument/agreement.— Adjudication of cancellation of written instrument/agreement under Section 31 of the Specific Relief Act, 1963 is arbitrable and relief of cancellation of written instrument is grantable by Arbitral Tribunal, as proceedings under Section 31 of the SRA are in personam in nature. Registration/non-registration of private document is not relevant for determining whether the action started under Section 31(1) is in personam or in rem. Deccan Paper Mills Co. Ltd. v. Regency Mahavir Properties, (2021) 4 SCC 786. 9. Interim measures, etc. by Court.—12 [(1)] A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court:— (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:— (a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. 13 [(2) Where, before the commencement of the arbitral proceedings, a court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the court may determine. (3) Once the arbitral tribunal has been constituted, the court shall not entertain an SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 21 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- application under sub-section (1), unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.] ► Interim relief.—Under Section 9, an interim measure can be allowed in favour of a party who moves such application either before the commencement of the arbitration proceedings, or during the pendency of the arbitral proceedings, and even after the making of the arbitral award but before it is enforced in accordance with Section 36. Thus, an interim arrangement, can be made under Section 9, not only before and during the pendency of the arbitral proceedings, but also after the arbitral award has been pronounced. Further, the continuation of relief, would depend on the nature of the prayer made by the appellant, when such application was filed, Ultratech Cement Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2018) 15 SCC 210. ► Application for interim relief, post constitution of Arbitral Tribunal — Entertainability of. —Section 9(3) has two limbs: the first limb prohibits an application under Section 9(1) from being entertained once an Arbitral Tribunal has been constituted while the second limb carves out an exception to that prohibition, if the Court finds that circumstances exist, which may not render the remedy provided under Section 17 efficacious. There is no reason why the Court should continue to take up applications for interim relief, once the Arbitral Tribunal is constituted and is in seisin of the dispute between the parties, unless there is some impediment in approaching the Arbitral Tribunal, or the interim relief sought cannot expeditiously be obtained from the Arbitral Tribunal, Arcelormittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., (2022) 1 SCC 712. ► Court which would have jurisdiction to grant interim measures.—The seat of arbitration alone and not the place of cause of action determines the jurisdiction of courts over the arbitration, when such seat is found to be designated or determined. However, an application under Section 9 may be preferred before a court in which part of the cause of action arises in a case where parties have not agreed on the “seat” of arbitration, and before such “seat” may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2), BGS SGS SOMA JV v. NHPC Ltd., (2020) 4 SCC 234. Chapter III COMPOSITION OF ARBITRAL TRIBUNAL 10. Number of arbitrators.—(1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. (2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator. ► Validity.—Arbitration agreement specifying even number of arbitrators cannot be a ground to render arbitration agreement invalid, M.M.T.C. Ltd. v. Sterlite Industries (India) Ltd., (1996) 6 SCC 716. 11. Appointment of arbitrators.—(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. 14 [(3-A) The Supreme Court and the High Court shall have the power to designate, arbitral institutions, from time to time, which have been graded by the Council under Section 43-I, for the purposes of this Act: Provided that in respect of those High Court jurisdictions, where no graded arbitral institution are available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Fourth Schedule: Provided further that the Chief Justice of the concerned High Court may, from time SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 22 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- to time, review the panel of arbitrators.] (4) If the appointment procedure in sub-section (3) applies and— (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, 15 [the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be.] (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree 16 [the appointment shall be made on an application of the party in accordance with the provisions contained in sub-section (4).] (6) Where, under an appointment procedure agreed upon by the parties,— (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, 17 [the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be] to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (6-A) 18 [* * *] 19 [(6-B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.] (7) 20 [* * *] 21 [(8) 22 [The arbitral institution referred to in sub-sections (4), (5) and (6)], before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of Section 12, and have due regard to— (a) any qualifications required for the arbitrator by the agreement of the parties; and (b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.] (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, 23 [the arbitral institution designated by the Supreme Court] may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) 24 [* * *] 25 [(11) Where more than one request has been made under sub-section (4) or sub- section (5) or sub-section (6) to different arbitral institutions, the arbitral institution to which the request has been first made under the relevant sub-section shall be competent to appoint. (12) Where the matter referred to in sub-sections (4), (5), (6) and (8) arise in an international commercial arbitration or any other arbitration, the reference to the SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 23 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- arbitral institution in those sub-sections shall be construed as a reference to the arbitral institution designated under sub-section (3-A). (13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the arbitral institution within a period of thirty days from the date of service of notice on the opposite party. (14) The arbitral institution shall determine the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal subject to the rates specified in the Fourth Schedule. Explanation.—For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) where parties have agreed for determination of fees as per the rules of an arbitral institution.]. ► Arbitral proceedings.—The arbitration clause provides that each party shall nominate one arbitrator and the two arbitrators shall then appoint an umpire before proceeding with the reference. The arbitration agreement is valid as it satisfies the requirement of Section 7 of the New Act of 1996. Section 11(3) requires the two arbitrators to appoint the third arbitrator or the umpire. There can be no doubt that the arbitration agreement in the instant case accords with the implied condition contained in para 2 of the First Schedule to the Arbitration Act, 1940 requiring the two arbitrators, one each appointed by the two sides, to appoint an umpire not later than one month from the latest date of their respective appointments. There is no dispute that the arbitral proceeding in the instant case commenced after the New Act came into force and, therefore, the New Act applies. In view of the terms in the arbitration agreement that the two arbitrators would appoint the umpire or the third arbitrator before proceeding with the reference, the requirement of sub-section (1) of Section 10 is satisfied and sub-section (2) thereof has no application. The agreement satisfies the requirement of Section 7 of the Act and, therefore, is a valid arbitration agreement. The appointment of arbitrators must, therefore, be governed by Section 11 of the New Act, M.M.T.C. Ltd. v. Sterlite Industries (India) Ltd., (1996) 6 SCC 716. ► Confining of jurisdiction of Courts.—The jurisdiction of Court under Sections 11(4)/11(6) confined only to “existence of an arbitration agreement” vide introduction of Section 11(6-A), leaving all other preliminary issues to be decided by arbitrator. There is legislative overruling of SBP & Co., (2005) 8 SCC 618 and Boghara Polyfab (P) Ltd., (2009) 1 SCC 267, thereby on this point, Garware Wall Ropes Ltd. v. Coastal Marine Constructions And Engineering Ltd., (2019) 9 SCC 209. ► Appointment of arbitrator.—Before exercising power under Section 11(6) to make appointment of an arbitrator, Court has to determine existence of arbitrable dispute/enforceable claim between parties to the contract as per terms of the contract. Such determination is limited only for purpose of decision on question of arbitrability and nothing beyond, Kss Kssiipl Consortium v. Gail (India) Ltd., (2015) 4 SCC 210. Appointment of arbitrator contrary to procedure agreed upon in arbitration agreement, not permissible. There must be strict compliance with agreement procedure by parties and institutions nominated in agreement procedure. Appointment as fait accompli, does not bar/oust jurisdiction of court unless it is in compliance with agreement procedure, Walter Bau Ag v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800. Appointment of arbitrator in exercise of power under Section 11(6), not permissible when an arbitrator is already appointed by one of the parties to the agreement in terms of arbitration agreement. Appointment of arbitrator by office/post, as opposed to by name is permissible when agreement permits such appointment, S.P. Singla Constructions (P) Ltd. v. State of H.P., (2019) 2 SCC 488. Appointment of arbitrator in exercise of power under Section 11(6) is not permissible when an arbitrator in terms of the arbitration agreement already stands appointed. Section 11(6) of the Act has application only when a party or the person concerned had failed to act in terms of the arbitration agreement and Section 15(2) only means that the appointment of the substitute arbitrator must be done according to the original agreement or provision applicable to the appointment of the SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 24 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- arbitrator at the initial stage, Rajasthan Small Industries Corpn. Ltd. v. Ganesh Containers Movers Syndicate, (2019) 3 SCC 282. Appointment of arbitrator is not permissible in the absence of an arbitral dispute. Appointment of arbitrator is a judicial power and is not a mere administrative function, thus leaving room for some degree of judicial intervention. When it comes to the question to examine existence of prima facie arbitration agreement, it is always necessary to ensure that the dispute resolution process does not become unnecessarily protracted, United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362. Where allegations of fraud are leveled against party seeking appointment are “simple allegations” not falling within the realm of public domain, test for distinguishing a “simple allegation” from a “serious allegation” are, namely : (1) does the plea of fraud permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (2) whether allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain, Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710. Conjoint reading of Section 21 of principal Act (i.e. as it stood prior to Amendment Act, 2015) and Section 26 of Amendment Act leaves no manner of doubt that the provisions of the 2015 Amendment Act shall not apply to such of the arbitral proceedings which have commenced in terms of the provisions of Section 21 of the principal Act unless the parties otherwise agree, Union of India v. Parmar Construction Co., (2019) 15 SCC 682. Commencement of Limitation period for filing application for appointment of arbitrator is from date on which agreement procedure for appointment of arbitrator can be said to have “failed” in terms of Sections 11(6)(a), (b) or (c). Commencement of said limitation period on the expiry of the notice period stipulated in notice invoking arbitration, when the other side fails to make the appointment within the period stipulated in the notice i.e. period of limitation will begin to run from the date when there is failure to appoint the arbitrator. Mere exchange of letters or mere settlement discussions is not sufficient for extending the period of limitation. Rejection of arbitration proceedings by the other side at a subsequent time i.e. post expiry of such limitation period or writing of reminder letters to the other side does not extend the limitation period. Secunderabad Cantonment Board v. B. Ramachandraiah&Sons, (2021) 5 SCC 705, (See also BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738.) ► Appointment of arbitrator and jurisdiction of arbitrator.—Law summarised regarding exercise of power under Section 11 before 2015 Amendment and after Amendment. Doctrine of kompetenz-kompetenz and its limitations, explained. Consideration of preliminary objections such as limitation, etc. by Court at pre-reference stage, after insertion of Section 11(6-A) is not permissible. After the insertion of Section 11(6-A), issue of limitation, which is a jurisdictional issue, held, is to be decided by arbitrator, Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455. ► Appointment of arbitrator by court.—When agreement specifically provides for appointment of named arbitrators, appointment should be in terms of agreement, unless there are exceptional reasons for departing from agreement procedure for appointment of arbitrator, as per settled principles, Union of India v. Pradeep Vinod Construction Co., (2020) 2 SCC 464. The court should first appoint the arbitrators in the manner provided for in the arbitration agreement but where the independence and impartiality of the arbitrator(s) appointed/nominated in terms of the arbitration agreement is in doubt, or where the Arbitral Tribunal appointed in the manner provided in the arbitration agreement has not functioned and it becomes necessary to make fresh appointment, the Chief Justice or his designate in the given circumstances after assigning cogent reasons in appropriate cases may resort to an alternative arrangement to give effect to the appointment of independent arbitrator under Section 11(6), Union of India v. Parmar Construction Co., (2019) 15 SCC 682. Furnishing of discharge voucher (by insured to insurer in this case) is not an absolute bar to invocation of arbitration agreement, when the same is alleged to have been given under economic duress. An application under Section 11(6) is in the form of a pleading which merely seeks an order of the Court, for appointment of an arbitrator and it cannot be conclusive of the pleas or contentions that the claimant or the party concerned can take in the arbitral proceedings. Therefore, at this SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd. Page 25 Saturday, February 26, 2022 Printed For: Mr. Rahul IAS SCC Online Web Edition: http://www.scconline.com © 2022 EBC Publishing Pvt.Ltd., Lucknow. ----------------------------------------------------------------------------------------------------------------------------------------------------------- stage, the Court which is required to ensure that an arbitrable dispute exists, has to be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive (read : arbitration) proceeding, Oriental Insurance Co. Ltd. v. Dicitex Furnishing Ltd., (2020) 4 SCC 621. ► Appointment of third arbitrator.—Concern of the Court is to ensure neutrality, impartiality and independence of the third arbitrator. Choice of the parties has little, if anything, to do with the choice of the Chief Justice of India or his nominee in appointing the third arbitrator. It is true that even at the stage of exercising its jurisdiction under Section 11(6) at the final stage, the Chief Justice of India or his nominee can informally enquire about the preference of the parties. But it is entirely up to the Chief Justice of India, whether to accept any of the preferences or to appoint the third arbitrator not mentioned by any of the parties. In making such a choice, the Chief Justice of India will be guided by the relevant provisions contained in the Arbitration Act, the UNCITRAL Model Laws and the UNCITRAL Rules, where the parties have included the applicability of the UNCITRAL Model Laws/UNCITRAL Rules by choice, Reliance Industries Ltd. v. Union of India, (2014) 11 SCC 576. ► Reference of dispute for arbitration.—If the party which executes discharge agreement/discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practised by the other party but is not able to establish such a claim or appears to be lacking in credibility, then it is not open to the courts to refer the dispute to arbitration at all, ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd., (2018) 3 SCC 373. When there was no arbitration agreement between the parties, reference of dispute for arbitration in the absence of a written memo/joint application is not permissible, even when the counsel of the parties consent to the same. For reference of the parties to arbitration, oral consent given by the counsel without a written memo of instructions does not fulfil the requirement under Section 89 CPC, Kerala SEB v. Kurien E. Kalathil, (2018) 4 SCC 793. ► Section 11(6-A) [as inserted by 2015 Amendment Act w.e.f 23-10-2015] and Section 11 [as would come into force upon effectuation of Section 3 of 2019 Amendment Act].—Effect of 2015 Amendment Act as fortified, broadened and deepened by 2019 Amendment Act, held, is to legislatively overrule the position of law as prevailing prior to 2015 Amendment Act, that Court in addition to examination of existence of arbitration agreement, could also go into preliminary questions such as stale claims, accord and satisfaction having been reached, etc. Hence, SBP & Co., (2005) 8 SCC 618 and Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 and other rulings of Supreme Court following these judgments on this point, stand legislatively overruled on this point by the 2015 Amendment Act. Thus, the position of law that prevails after the insertion of Section 11(6- A) is that Supreme Court or, as the case may be, the High Court, while considering any application under Sections 11(4) to 11(6) is to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by arbitrator. Determining “existence of arbitration agreement”, held, has correctly been explained in paras 48 & 59 of Duro Felguera, SA, (2017) 9 SCC 729, to mean that “all that needs to be done, is to see if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement”, Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714. ► Validity of arbitration agreement.—Arbitration clause in document/agreement/conveyance compulsorily required to be stamped, but which is not duly stamped, is not enforceable, even post introduction of Section 11(6-A). Law laid down in SMS Tea Estates, (2011) 14 SCC 66, held, is in no way affected by introduction of Section 11(6-A), as said decision does not fall in expression “notwithstanding any judgment, decree or order of any Court” contained in Section 11(6-A). This is so, firstly, as enquiry by Court as to whether compulsorily stampable document, which contains arbitration clause, is duly stamped or not, is only an enquiry into whether such arbitration agreement exists in law, as it would not “exist” as a matter of law until such document is duly stamped. Secondly, it is enjoined by the provisions of the Stamp Act to first impound such document and see that stamp duty and penalty (if any) is paid before the agreement, as a whole, can be acted upon. Further, Stamp Act applies to such document as a whole and it is not possible to bifurcate the SCC O

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