Grounds of Challenging Arbitrability

Contents  hide 

1 What is the meaning of arbitrability?

2 The three aspects of arbitrability are as follows:

3 What makes a dispute non – arbitrable?

4 Some of such examples are:

5 Grounds of challenging arbitrability

6 Conclusion

7 Related

What is the meaning of arbitrability?

• Arbitrability determines whether a certain dispute can or cannot be settled by arbitration. In practical terms, arbitrability answers the question of whether a subject matter of a claim is or not reserved to be the sphere of domestic courts, under the provision of national laws. “Arbitrability” refers to whether or not arbitrators have the authority to rule on a dispute. This, in turn, depends on whether certain parties have agreed to have certain disputes between them resolved through arbitration. Thus, there is potential, in any dispute, a question of whether the parties did agree to arbitrate and how the issue lays the question if the parties did agree to arbitrate, what they agreed to.

The term arbitrability can have different meaning in different context.

The three aspects of arbitrability are as follows:

• Whether the disputes are capable of adjudication and settlement by arbitration?

That is, whether the disputes are such in nature that they can be resolved by the arbitral tribunal chosen by the parties or by the court of law.

• Whether the disputes are covered by the arbitration agreements?

That is, whether the arbitration agreement has a provision regarding resolution of the disputes by arbitration or whether the disputes fall under the expected matters excluded from the purview of the arbitration agreement.

• Whether the disputes have been referred to arbitration by the parties?

That is, whether the disputes fall under the scope of the submission to the arbitral tribunal, or whether they do not arise out of the statement of claim and the counter claim filed before the arbitral tribunal.

What makes a dispute non – arbitrable? 

Grounds of Challenging Arbitrability

• The courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. Disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, cannot be refer to arbitration. The golden rule is that if the dispute is cover by an arbitration agreement, the said dispute should be resolved by arbitration. Ordinarily every civil or commercial disputes whether base on contract or otherwise which is capable of being decide by a civil court is in principal capable of being adjudicate upon and resolve by arbitration subject to the dispute being govern by the arbitration agreement.

Some of such examples are:

•  Disputes relating to rights and liabilities which give rise to or arise out of criminal offenses 
• Matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody
• Guardianship matters
• Insolvency and winding up matters 
• Testamentary matters 
• Cases arising out of trust deed and the trust act 

Grounds of challenging arbitrability

• Disputes are not capable of settlement by arbitral process

If the dispute is not arbitrable, the arbitral tribunal is limit in its jurisdiction and the claim must instead be submit to domestic courts as there may restrictions regarding the capacity of parties to enter into arbitration agreements.

• The award is in conflict with the public policy of India

There are certain disputes which are sensitive in nature or which involves such sensitive public policy issues that are left exclusively to the jurisdiction of domestic courts by domestic law.

• The parties to the agreement are under some incapacity 

Arbitrability can be challenged when there is incapacity of the parties, that is the parties should be attain the age of majority according to law to which they are subject and must be of sound mind and must not be disqualified by law from contracting .

• The award is void 

If the arbitrator is not validly appoint or lacks the necessary qualifications or the parties did not make any binding arbitration agreement or the matters in dispute fell outside the scope of the agreement then the award will be entirely void and its arbitrability can be challenged.

• The award contains decisions on matters beyond the scope of the arbitration agreement. Can be a valid ground to challenge arbitrability along with the fact that, The composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement as it is a key factor while resolving the disputes through arbitration.

• The award has set aside or suspended by the competent. Authority of the country in which it was made, in such situation it is not possible to resolve the dispute. Through arbitration as it is not competent to be resolve by the authority.

• The subject matter of dispute cannot settled by arbitration under Indian law 

Arbitration is a form of alternative dispute resolution (ADR);this method is efficient as well as effective but in certain cases the dispute cannot be solved by arbitration considering different policies of different countries, In such situation resort to domestic law is the best possible solution.

• The enforcement of the award would be contrary to Indian public policy 

To ensure the enforceability, arbitration tribunal determines arbitrability with specific reference to law of the place of arbitration.

Conclusion 

Arbitration is one of the most efficient as well as effective methods of dispute resolution. And is widely use all over the world, it is cost-efficient, time-saving. And reduces the burden on the courts, but there are certain conditions. Where the arbitrability can be challenge depending upon the jurisdiction of the arbitral tribunal or the capacity of the disputes. Being adjudicate by arbitration or whether the fact that the parties have referred the disputes to arbitration. These grounds that challenge the arbitrability, to resolve this adequate. Vetting of the arbitration agreement at the time it is necessary. And taking extra caution in following the statutory rules and regulations must be ensured.