Invocation of writ jurisdiction

against decisions of designated

Arbitral Institutions: Prospects
and Consequences
Bar & Bench October 28 2019

Amit George and Rishabh Dheer

The Arbitration and Conciliation (Amendment) Act, 2019 (2019 Act) effects
a significant amendment in Section 11 of the Arbitration and Conciliation
Act, 1996 (Arbitration Act) and establishes a regime whereby applications
for appointment of arbitrators shall be heard by ‘designated’ arbitral
institutions chosen by the Supreme Court and the respective High Courts.
This amendment, which is yet to be notified, would entail disposal of
applications for appointment of arbitrators under Section 11 of the
Arbitration Act (‘application for appointment’) by the designated arbitral
institutions within a period of 30 days from the date of service of notice on
the opposite party.

The aforesaid regime raises various interesting issues for future

adjudication. One such critical issue would be of the prospective forums
for recourse, or the lack thereof, against any such decision of an arbitral
institution in allowing or rejecting an application for appointment. In this
context, the present article seeks to examine the possibility of the
invocation of writ jurisdiction before the concerned High Court.

As per the position prevailing under the un-amended Arbitration Act,

whenever an application for appointment was disposed of by the High
Court concerned in the case of domestic arbitration, no appeal against the
said order is permissible in law and only a special leave petition under
Article 136 of the Constitution of India would lie there-against. The
Constitution Bench of the Supreme Court in SBP & Co. v. Patel
Engineering Ltd.[1] settled the position in this regard. The reason that
prevailed with the majority in the aforesaid case to so hold was the
ultimate finding arrived at by the majority that deciding an application for
appointment represents an exercise of ‘judicial’ power as opposed to an
‘administrative’ power. The dissenting opinion authored by Justice C. K.
Thakker, however, held to the contrary, and noted that inasmuch as the
said power was ‘administrative’ in nature, a writ petition would lie there-
against. It is also relevant to make reference to another finding of the
majority wherein, on an ancillary note, it was held that the writ remedy
could not be invoked to assail an order or an award passed by an arbitral
tribunal inasmuch as the Arbitration Act provided a specific alternative
mechanism for challenge thereto in the form inter-alia of Section 37 and
Section 34.[2]

Further, under the un-amended Arbitration Act, with arbitral institutions

not having any statutory foundation, it has been the consistent view that
a writ petition would not lie against a decision taken by an arbitral
institution inasmuch as the said institution was not performing a
public/statutory function but a purely contractual one[3].

At this juncture, it is relevant to note that by the enactment of the

Arbitration and Conciliation (Amendment) Act, 2015 (‘2015 Act’), it was
specified under the amended Section 11(6B) that designation of an
arbitral institution by the Supreme Court or the concerned High Court
would not mean delegation of judicial power.[4] Therefore, on a co-joint
reading of the amendments introduced by the 2015 Act and the 2019 Act,
an arbitral institution seemingly exercises an independent function
directly attributable to the Arbitration Act which empowers it to dispose of
an application for appointment, divorced from the power of the
designating Court.
This newly established statutory regime, therefore, opens up the very real
possibility of the writ remedy being invoked against an arbitral
institution’s decision. The reasons for this are not far to seek.

Firstly, an arbitral institutions now performs an independent statutory

function; and not being a mirror-image of the designating Court, it could
therefore be argued that the decision of an arbitral institution in deciding
an application for appointment would be amenable to writ jurisdiction.
[5] On a related note, the Supreme Court in SREI Infrastructure
Finance Limited v. Tuff Drilling Private Ltd.[6], in the context of the
nature of power exercised by arbitral tribunals under the Arbitration Act,
held that even though arbitral tribunals are essentially private in nature, it
could not be lost sight of that they exercise powers which are granted to
them under a statute i.e., Arbitration Act, and thus, the following would be
the position in law:

“12. …The power and functions of arbitral tribunal are statutorily

regulated. The tribunals are special arbitration with institutional
mechanism brought into existence by or under statute to decide dispute
arising with reference to that particular statute or to determine
controversy referred to it. The tribunal may be a statutory tribunal or
tribunal constituted under the provisions of the Constitution of India.
Section 9 of the Civil Procedure Code vests into the Civil Court jurisdiction
to entertain and determine any civil dispute. The constitution of tribunals
has been with intent and purpose to take out different categories of
litigation into the special tribunal for speedy and effective determination
of disputes in the interest of the society. Whenever, by a legislative
enactment jurisdiction exercised by ordinary civil court is transferred or
entrusted to tribunals such tribunals are entrusted with statutory power.
The arbitral tribunals in the statute of 1996 are no different, they decide
the lis between the parties, follows Rules and procedure conforming to
the principle of natural justice, the adjudication has finality subject to
remedy provided under the 1996 Act.”
Secondly, as already noted hereinabove, in SBP & Co. (supra) the
majority view held writ proceedings to be non-maintainable against orders
of arbitral tribunals inasmuch as there were alternative provisions for
recourse there-against under the Arbitration Act. There exists no such
recourse against decisions of arbitral institutions under the Arbitration Act,
as amended, and therefore this would further strengthen the argument for
recourse to writ proceedings.

Thirdly, there is a surprising deletion, by the 2019 Act[7], of Section 11(7)

[8] of the Arbitration Act. The erstwhile Section 11(7), as further amended
by the 2015 Act, specifically provided for the finality of an order
passed inter-alia by an arbitral institution, and a corresponding bar to any
appeal against such an order. Therefore, under the changed regime which
will come into operation once the amendment is notified, there exists no
textual indication of a normative precept that grants finality to the
decision of an arbitral institution and ring-fences it from further
challenges.

The availability of a writ remedy against an order of an arbitral institution

deciding an application for appointment would open up the possibility of
judicial interference at an initial stage of the proceedings and the
consequent likely delays which can result therefrom, thus subverting the
very essence of speedy adjudication which is the fundamental motivating
factor of the 2015 Act and 2019 Act. To make matters worse, the 2019 Act
further seeks to delete[9] Section 11(6)(A)[10] of the Arbitration Act,
which had been introduced by the 2015 Act, and which provided for a very
limited scope of examination of the existence of an arbitration agreement
while deciding an application for appointment. There will be a deafening
silence in this regard in the Arbitration Act, once the amendment in
question is notified, potentially opening up avenues to challenge decisions
of arbitral institutions on various aspects such as accord and satisfaction,
limitation etc.
Though there are valid arguments to be made on either side of the debate
as to the availability of the writ remedy, or the lack thereof, against
decisions of arbitral institutions, it is quite evident that the said issue is
likely to witness significant contestation in the future. The 2019 Act, as it
stands today, offers little by way of clarity, and it would be advisable to
effect the requisite changes to provide some legislative guidance in this
regard before the amendment in question is formally notified.

The authors are Advocates practicing before the High Court of Delhi

[1] (2005) 8 SCC 618

[2] In the subsequent judgment in Lalitkumar V. Sanghavi v.

Dharamdas V. Sanghavi (2014) 7 SCC 255, the Supreme Court
disapproved of the view taken by certain High Courts that any order
passed by an arbitral tribunal was amenable for interference by the High
Court under Article 226 or 227 of the Constitution of India.

[3] Reference in this regard may be made to the decision of the High Court
of Delhi in Steel Authority of India Ltd. & Ors. v. Indian Council of
Arbitration & Ors. 2013 (4) Arb. LR 526 (Delhi).

[4] 11(6B): 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.

[5] It is otherwise well settled that statutory tribunals are amenable to

judicial review under Article 226 or Article 227 of the Constitution of India.
Reference in this regard may be made to Bharat Bank Ltd. v.
Employees of the Bharat Bank Ltd. (1950) SCR 459 and Gujarat
Steel Tubes Ltd. & Ors. v. Gujarat Steel Tubes Mazdoor Sabha &
Ors. (1980) 2 SCC 593.
[6] (2018) 11 SCC 470

[7] Through Section 3 (v) of the 2019 Act, which states that “sub-sections
(6A) and (7) shall be omitted”.

[8] 11 (7) A decision on a matter entrusted by sub-section (4) or sub-

section (5) or sub-section (6) to the Supreme Court or, as the case may
be, the High Court or the person or institution designated by such Court is
final and no appeal including Letters Patent Appeal shall lie against such
decision.

[9] Supra note 7.

[10] 11 [(6A): The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-section (5)
or sub-section (6), shall, notwithstanding any judgment, decree or order of
any Court, confine to the examination of the existence of an arbitration
agreement.