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Competence-Competence under Arbitration Act


Competence-Competence
Competence-Competence

Content:-




Jurisdiction of an Arbitral Tribunal


The jurisdiction of an arbitral tribunal refers to its authority or competence to adjudicate a specific dispute. It's a fundamental principle of arbitration, reflecting its consensual nature.



In India, this principle is enshrined in the Arbitration and Conciliation Act, 1996 (1996 Arbitration Act), which is largely based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 (Model Law).



While the Act doesn't explicitly define jurisdiction, the Supreme Court has described it as a multifaceted concept, covering issues concerning the existence, validity, and scope of an arbitration agreement.

 
 

Competence-Competence and Separability


Section 16 of the 1996 Arbitration Act embodies two crucial principles: competence-competence and separability. These principles are fundamental to maintaining the autonomy of the arbitral process and provide a procedural framework for the exercise of jurisdiction by an arbitral tribunal.



  1. Competence-Competence: This principle grants the arbitral tribunal the authority to rule on its own jurisdiction, including objections regarding the existence or validity of the arbitration agreement. It emphasises the tribunal's ability to determine its own jurisdiction independently. 



Key points under competence-competence include:


  • The arbitration clause is considered separate from the rest of the contract, ensuring that challenges to the contract's legality or validity do not affect the arbitration agreement.


  • Even if the contract is deemed null and void, the arbitration clause remains valid unless explicitly invalidated by the tribunal.


  • Parties must raise objections to jurisdiction no later than the submission of the statement of defence, but participation in the appointment of an arbitrator does not preclude raising such objections.


  • The tribunal can address jurisdictional challenges promptly during proceedings and may admit delayed pleas if justified.


  • If the tribunal rejects a jurisdictional challenge, it continues with the arbitration and issues an award.


  • Parties aggrieved by the tribunal's decision on jurisdiction can apply for setting aside the arbitral award.



  1. Separability: This principle ensures that the arbitration agreement is independent of the underlying contract. It aims to preserve the parties' intent to resolve disputes through arbitration despite challenges to the contract's legality or validity. The arbitral tribunal, empowered by competence-competence, can address such challenges and decide on its jurisdiction.



The Supreme Court has clarified that while separability maintains the arbitration agreement's validity despite issues with the underlying contract, competence-competence empowers the tribunal to adjudicate on jurisdictional challenges, ensuring the parties' intent to arbitrate is upheld throughout the process.


Allocation of Jurisdictional Competence Between Arbitral Tribunals and National Courts


In India, the allocation of jurisdictional competence between arbitral tribunals and national courts varies depending on the stage of the arbitration process.



Referral to Arbitration: When a dispute subject to an arbitration agreement is brought before a judicial authority, the other party can request the court to refer the matter to arbitration. This can be done under two provisions of the 1996 Arbitration Act:


  • Section 8: Applicable to domestic arbitrations governed by Part I of the Act.


  • Section 45: Applicable to foreign-seated arbitrations falling under Part II of the Act.



These provisions empower the courts to refer parties to arbitration if there's a valid arbitration agreement, and one party initiates legal proceedings contrary to that agreement.



Appointment of Arbitrators: The procedure for appointing arbitrators can also involve judicial intervention if parties fail to agree on the appointment. Under Section 11 of the Arbitration Act, if the parties cannot agree on the appointment, either party may request the court (or arbitral institution, as per the 2019 Amendment) to appoint an arbitrator.



Anti-arbitration Injunctions: In some cases, parties may seek anti-arbitration injunctions from national courts to restrain the other party from proceeding with arbitration. However, Indian courts generally uphold the principle of party autonomy and enforce arbitration agreements, making such injunctions less common.



Review of Arbitral Tribunal's Jurisdictional Decision: Parties aggrieved by an arbitral tribunal's decision on its own jurisdiction can challenge it before the courts. Section 34 of the Arbitration Act allows parties to apply for setting aside an arbitral award, which includes challenging the tribunal's jurisdiction.

 
 


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