WEEK X

JURISDICTION OF ARBITRAL
TRIBUNALS
SECTION 17 & 18
© Amit Jyoti S. Gomber
 Section 16: Competence of Arbitral Tribunal To Rule on its Jurisdiction
 Non-derogable provision
 S. 16 is divided into following six parts:
Ω Sub-section (1): Doctrine of ‘Kompetenz-Kompetenz’ and
‘Separability’;
Ω Sub-section (2): Time limit for submission of a plea of lack of jurisdiction
of the tribunal;
Ω Sub-section (3): Plea that the arbitral tribunal is exceeding the scope of
its authority, must be raised forthwith during the arbitral proceedings;
Ω Sub-section (4): To admit delayed plea, if delay is justified, is discretion
of the arbitral tribunal;
Ω Sub-section (5): If tribunal rejects the plea, it will continue with the
proceedings and make the award;
Ω Sub-section (6): The party aggrieved by such an arbitral award, may
challenge it under S. 34
 DOCTRINE OF KOMPETENZ – KOMPETENZ S. 16(1)
 Also referred to as “Compétence – Compétence” or “Compétence de la
recognized”;
 It is doctrine that empowers the arbitral tribunal to rule on its own
jurisdiction in the first instance.
 S. 8 and S. 16: If a JA is moved under S. 8 before the constitution of the
tribunal, the JA would confine itself to render a finding whether prima
facie a valid arbitration agreement exists, and therefore refer the parties
to arbitration.
 S. 11(6A) and S. 16: If the arbitral tribunal has been constituted by the
SC/HC under S. 11(4), (5) &(6) then SC/HC will only examine the
existence of the arbitration agreement and refer parties to arbitration
 Pre-amendment, as per SBP case: Where the jurisdictional issues are
decided u/ S. 8 or 11 before a reference is made to the tribunal u/S. 16
then S. 16 cannot be held to empower the Arbitral Tribunal to ignore the
decision given by the JA or the CJ before the reference to it was made
 Scope and Jurisdiction of the Arbitral Tribunal
 The expression jurisdiction of the arbitral tribunal to rule on
its own jurisdiction means to see as to:
a) Whether there exists a valid arbitration agreement;
b) Whether the tribunal is properly constituted; and
c) What matters have been submitted to arbitration in
accordance with the arbitration agreement.
Therefore, the questions as to the existence, legality, validity
and arbitrability of the substantive contract, in the first instance,
have all to be decided by the arbitral tribunal.
 DOCTRINE OF SEPARABILITY OF THE
ARBITRATION CLAUSE
S. 16(1)
 The doctrine of Separability and Kompetenz-Kompetenz are related, but
distinct;
 Doctrine of Separability implies that the agreement to arbitrate is separate
from, and independent of the main contract;
 Allegations of contractual invalidity made against the main contract, do not
necessarily affect the validity of the arbitral clause;
 Party alleging invalidity of the arbitration clause must establish it directly;
 By surviving the demise of the main contract, the arbitration clause
constitutes the necessary agreement of the parties that any disputes between
them should be referred to arbitration.
 SWISS TIMING LTD. VS. ORGANIZING COMMITTEE,
COMMONWEALTH GAMES 2010, DELHI (2014)

 Facts: 11/3/2010 - A Swiss company entered into an agreement

with the Respondent for providing timing, score, result systems
and supporting services required to conduct the Commonwealth
Games in India.
 Swiss Timing alleged that the Organizing Committee had
defaulted in making the payments due under the Contract and
therefore Swiss Timing invoked arbitration under clause 38 of the
Contract and nominated their arbitrator.
 Organizing Committee failed to nominate its arbitrator, and now
Swiss Timing has approached the SC under Section 11 of the Act
for constitution of the arbitral tribunal.
 Objections raised by the Organizing Committee:
a) Under the Contract the parties had warranted that they would not indulge in
corrupt practices to induce the execution of the Contract but Swiss Timing
had procured the Contract by indulging in corruption and hence, the Contract
was void ab -initio and there was no basis for invoking the arbitration.
b) To establish corruption during execution of the Contract, Organizing
Committee sought to rely on the pending criminal proceedings initiated
against Mr. Suresh Kalmadi (the then Chairman of the Organizing
Committee) and other officials on the allegations of corruption, cheating and
commission of other fraudulent acts.
c) Organizing Committee placed reliance on the N. Radhakrishnan case
wherein it was held that allegations of fraud and serious malpractices cannot
be dealt with properly in arbitration.
d) Since the criminal proceedings were pending in the trial court, simultaneous
continuance of the arbitration could result in conflicting decisions between
the two forums causing unnecessary confusion.
 Held:
a) The judgment in the N. Radhakrishnan case did not lay down the
correct law, it is per incuriam as it failed to duly consider the earlier
judgments of the Court in Hindustan Petroleum Corp case and Anand
Gajapathi Raju case, wherein it has been held that a civil court is
obligated to direct parties before it to arbitration where there exists an
arbitration agreement between such parties. Also in N.
Radhakrishnan, the Court did not consider S. 16 whereby arbitration
clause is treated as independent from the underlying contract.
b) The courts should adopt a least interference policy in keeping with the
general principle under S. 5 of the Act. On co-joint reading of Ss. 5
and 16 it was held that all matters including the issue as to whether
the main contract was void / voidable can be referred to arbitration.
c) Where a court may conclude that a contract is void without receiving
any evidence, the court would be justified in declining a reference to
arbitration, though such cases would not be common.
d) In cases where the defense taken is that a contract is voidable, it
would not be possible to decline reference to arbitration. Such
cases would include unsoundness of mind, coercion, fraud,
undue influence and misrepresentation.
e) Allegations that the Contract has been executed by corrupt
means would have to be established in a proper forum on the
basis of the oral and documentary evidence, produced by the
parties, in support of their respective claims. A mere claim of the
Contract being void would not suffice.
f) Defense of the contract being void is routinely taken to delay
reference to arbitration and that such grounds should be
summarily rejected unless there is clear indication of reasonable
chance of success.
g) The possibility of conflicting decisions is not a bar against
simultaneously proceeding with arbitration and criminal
proceedings.
h) If the criminal proceedings result in an acquittal, it would
leave little ground for challenging the validity of the
underlying contract. Thereby any denial of reference at this
stage would unnecessarily delay the arbitration.
i) However, if the award in arbitration was made in favour of the
Petitioner, the Respondent would be at liberty to resist
enforcement on the ground of subsequent conviction of the
officials in criminal proceedings.
 TIME LIMIT FOR RAISING OBJECTION ON
JURISDICTION
S.16(2) – 16(4)
 A plea before that arbitral tribunal that it does not have jurisdiction
shall be raised no later than the submission of the statement of
defence.
 Such a challenge can be taken even though the party may have
participated in the appointment of the arbitrator;
 The plea that the arbitral tribunal is exceeding the scope of its
authority, has to be raised as soon as the matter alleged to be
beyond the scope of its authority during the arbitral proceedings.
 If the objection is not raised within the time prescribed, it would be
deemed to have been waived in terms of S. 4;
 EXCEPTION: Tribunal may entertain the plea even at a later date,
if it considers the same to be justified.
 MCDERMOTT INT’L INC. VS. BURN STANDARD CO.
LTD. (2006)
Can a party challenge the award to be set aside under S. 34 on
the ground that the arbitrator had no jurisdiction to make an
award, when no objection was raised under S. 16?
 Under S. 16, the party questioning the jurisdiction of the arbitrator
has an obligation to raise the said question before the arbitrator.
Such a question of jurisdiction could be raised if it is beyond the
scope of his authority. It is required to be raised during the
arbitration proceedings or soon after initiation thereof. The
jurisdictional question is required to be determined as a preliminary
ground. A decision thereupon by the arbitrator would be the subject-
matter of challenge under S. 34. If the arbitrator opined that he had
no jurisdiction an appeal there against can be made under S.37.
 The Act makes provision for the supervisory role of courts, for the
review of the arbitral award only to ensure fairness. Intervention of the
court is envisaged in few circumstances only. The court cannot correct
the errors of the arbitrators. It can only quash the award leaving the
parties free to begin the arbitration again if it is desired.
 The scheme of the Act is, therefore aimed at keeping the supervisory
role of the court at minimum level and this can be justified as parties
to the agreement make a conscious decision to exclude the court’s
jurisdiction by opting for arbitration as they prefer the expediency and
finality offered by it.
 Thus, If the plea of the lack of jurisdiction is not taken before the
tribunal under S. 16 then it cannot be permitted to be raised in
proceedings under S. 34 for setting aside the award, unless good
reasons are shown.
 SECTION 16(5) AND SECTION 16(6)
 U/S. 16(5): Arbitral Tribunal is empowered to decide the objections that the
tribunal does not have the jurisdiction, or is exceeding the scope of its
authority u/S. 16(2) and (3);
 Where the Tribunal rejects the plea, it will continue with the arbitration
proceedings, and make the arbitral award as provided u/S. 16(5). The party
aggrieved by the arbitral award can challenge the same under S. 34, as per
S. 16(6);
 Where the Tribunal accepts the plea, it will not proceed with the arbitration
proceedings and a direct appeal is maintainable under S. 37(2)(a).
 SECTION 17: INTERIM MEASURES BY ARBITRAL
TRIBUNAL
 Non-Derogable provision
 The tribunal may order such interim measures of protection in respect of the
subject-matter of the dispute is the party applies: during the arbitral
proceedings or at any time after the making of the arbitral award but before it
is enforced as per S.36;
 Interim measures that can be ordered by the Arbitral Tribunal are listed
under S.17(1) [similar to interim measures by Court u/S.9]
 The Arbitral Tribunal shall have the same power for making orders, as the
court.
 Order of the Tribunal, granting or refusing to grant an interim measure is
not final. It can be appealed under S. 37(2)(b) but such appeal can only
be made during the subsistence of the arbitration proceedings.