Arbitration was created as a technique to avoid the difficulties associated with civil litigation in courts. It first appeared in India in the form of panchayats, which were made up of individuals who were requested to rule on issues brought before them, and whose decisions were accepted by the parties to the dispute. The British were the first to adopt the notion of arbitration, since laws relating to dispute arbitration were applied to immovable property in the Bengal regulations of 1772 and 1813, and the Arbitration Act of 1899 was abolished by the Arbitration Act of 1940.
These legislation were primarily intended to institutionalise the arbitration system in India. However, it became obvious after a while that the Arbitration Act of 1940 was incapable of meeting the needs of a quickly changing India. As a result, in 1996, the Arbitration and Conciliation Act was enacted to replace it. It is based on the UN Model Legislation in order to bring our law into compliance with the law adopted and obtained by the United Nations Commission on International Trade Law (UNCITRAL). The Act’s purpose is to update and consolidate rather than to be exhaustive. It has a significantly broader reach than the 1940 Act. It seeks local arbitration as well as the execution of international arbitral rulings.
Jurisdiction of arbitration tribunals
It would be incorrect to assert that an arbitral panel possesses statutory jurisdiction. To meet the needs of the parties, the tribunal establishes its jurisdiction. The arbitral agreement primarily establishes the arbitral tribunal’s scope of jurisdiction. The focal point of party-autonomy asserts that when two parties have the right to resolve their disputes on their own, they have the right to demonstrate that right to any third party, in order to determine overt that fight.
As a consequence, it is essential to consider a well-drafted agreement since it results in granting the tribunal entire authority to decide questions pertaining to jurisdiction. Section 17 of the Arbitration and Conciliation Act of 1996 expressly stipulates the authority to decide particular topics.
- Appointment of a guardian for a person of unsound mind or of minor age during the arbitration procedure
- The arbitration subject matter’s safety/security/ confinement/provisional injunction
Competence of the arbitral tribunal
The Arbitration Act of 1940 lacked such provisions that allowed the Arbitral Tribunal to manage its own jurisdiction, and it was up to the court to analyse and decide on the arbitral tribunal’s authority. However, Section 16 of the Arbitration and Conciliation Act of 1996 empowers the Arbitral Tribunal to consider its own jurisdiction. Section 16 (1) of the Act states that the arbitral tribunal has the authority to govern or direct its own jurisdiction, which includes any challenge to the legality or existence of the arbitration agreement.
The notion of competence-competence is included into Section 16 of the Arbitration and Conciliation Act. It has two facets: the first represents that the tribunal may decide on its jurisdiction without the assistance of the courts, and the second reflects the courts’ unwillingness to settle this question before the tribunal has decided on it. However, problems about the binding impact of arbitral tribunal rulings must be addressed, as well as whether these decisions may be contested in court.
The Hon’ble Delhi High Court observed in Union of India vs. M/s. East Coast Boat Builders & Engineers Ltd. that it was clear from the scheme of the act that the legislature did not grant appeal against the order under Section 16(5) where the arbitral tribunal decides rejects a plea that it has no jurisdiction. The goal appears to be that the arbitral tribunal shall proceed with the arbitral proceedings and render an award without delay or intervention at any level of the arbitral procedure owing to the court’s supervisory function.
Arbitration began as a way to sidestep the difficulties of civil litigation. It was widely disseminated throughout India by the British government. The Arbitration Act of 1940 sought to institutionalise the arbitration system in India. The Arbitration and Conciliation Provision of 1996 later altered this act. An arbitral tribunal lacks statutory jurisdiction. To meet the requirements of the parties, the tribunal sets its own jurisdiction. The arbitral agreement primarily establishes the arbitral tribunal’s scope of jurisdiction. Arbitral awards cannot be appealed against the jurisdiction based on the arbitral award’s merits. Section 11(7) declares that a decision made by the Chief Justice or a person designated by him under Sections 11(4), 11(5), or 11(6) is final. It demonstrates that the tribunal’s ability to review its own jurisdiction is limited when the Chief Justice has already weighed and decided on it.
 Union of India vs. M/s. East Coast Boat Builders & Engineers Ltd.
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