Analysis of Section 42 on Section 8, 9 and 11 of the Arbitration and Conciliation Act | Law Optional Notes for UPSC PDF Download

Introduction

• Arbitration and conciliation aim to provide prompt resolutions for disputes, saving the time of the Court.
• Parties can seek recourse under the High/Supreme Court in specific situations or challenge an arbitral award, albeit with limited scope to maintain the efficiency of the process.

Power of Courts (Section 42)

• Section 42 grants Courts authority over arbitral proceedings, conferring exclusive jurisdiction to Courts with relevance to the subject matter.
• Parties possess the right to file interim applications where the cause of action originated concerning the suit.
• The 2015 Amendment, illustrated in the Indus Mobile Distribution Pvt. Ltd Vs Datawind Innovations Pvt. Ltd. case, emphasizes that when parties assign exclusive jurisdiction to Courts (the 'seat' of arbitration), it supersedes any other Courts even tangentially related to the subject matter.
• This section aligns with Sections 8, 9, and 11 of the Act, with Section 8 delineating specific aspects.

Judicial Authority's Role in Referring Parties to Arbitration

• Judicial authority has the power to refer parties to arbitration if both parties agree to it.

Limitations on Challenging Court's Power in Arbitration

• Once parties submit their initial statement to the courts, they are generally not allowed to later challenge that decision and opt for arbitration instead.

Sections Dealing with Arbitration Procedures

• Section 9 focuses on interim measures available to parties through the court.
• Section 11 pertains to the appointment of arbitrators.
  • Section 11(6) specifies that if parties cannot agree on an arbitrator, they can seek the High Court or Supreme Court's assistance in appointing one.

• Interpretation of Section 11 and Section 42

  • Before an amendment, questions arose regarding the application of Section 11 concerning Section 42.
  • The case of Rodemadan India Ltd. Vs. International Trade Expo Centre Ltd clarified that Section 11(6) does not grant power to the Supreme Court, emphasizing that the Chief Justice or designate is not considered a "Court" under this section.
  • In Union of India Vs. S.R. Constructions Company and Another, it was highlighted that a mere order under Section 11(6) does not automatically confer exclusive jurisdiction under Section 42, unless the court also has pecuniary jurisdiction over the matter.

The Supreme Court's Interpretation of Sections 8, 9, 11, and 42

• The Supreme Court made a distinction regarding the application of Sections 8, 9, 11, and 42 in the State of West Bengal vs. Associated Contractors case.
• They concluded that Sections 9 and 34 are under the purview of the Supreme Court, whereas Sections 8 and 11 fall outside its scope.

Interpretation of Section 2(1)(e)

• Section 2(1)(e) exhaustively defines "Court," stating that it includes the Principal Civil Court of original jurisdiction in a district or the High Court with original jurisdiction in the state.
• No other entities beyond this definition are considered as "Courts" under this section.
• Example: For instance, if a legal matter falls under the jurisdiction of a district court or a High Court, it would be considered within the purview of Section 2(1)(e).

Applicability of Section 42

• Section 42 is applicable only when an application is made under Part 1 of the Act and falls within the definition of Section 2(1)(e).
• Explanation: Applications under Section 42 are limited to specific scenarios that meet the criteria outlined in the law.

Exclusion of Sections 8 and 11

• Applications under Sections 8 and 11 are made to judicial authorities and Chief Justices, respectively, which do not fall under the definition of "Courts."
• Therefore, these applications are outside the scope of Section 42.
• Example: Since applications under Sections 8 and 11 are directed at specific legal entities rather than courts, they are not covered by Section 42.

2015 Amendment Changes

• The 2015 Amendment brought changes to Sections 11, including the replacement of "Chief Justice" with "High Court" and "Supreme Court."
• Section 8 remained largely unchanged by the amendment.
• Significance: The amendments highlight a distinction in the application of Sections 42, 9, and 11, as illustrated in the Indus Mobile case.

Importance of Seat in Arbitration Jurisdiction

• The choice of seat in arbitration plays a crucial role in determining the jurisdiction of a court over a dispute.
• Once the seat is decided as per the arbitration agreement, the chosen court holds exclusive jurisdiction over the matter.
• Interim measures under Section 9 can only be granted by the court where the seat is located.

Relevance of Section 42 in Arbitration Agreements

• Section 42 covers arbitration agreements and includes specific arbitral references.
• Sections 8 and 11 are considered to be outside the purview of Section 42, as highlighted by legal cases.
• In a case from 2014, the court did not apply the Amendment related to Section 42, emphasizing the jurisdiction of the courts.

Amendments and Judicial Interpretations

• Significant changes have been made to Sections 8, 11, and 42, albeit limited in scope.
• Post-2015, there have been no Supreme Court cases on these sections, with most decisions coming from High Courts.
• Given that arbitration law is evolving, more changes and judicial interpretations are expected in the future.

Basic Structure and Definition

• The basic structure and definition of these sections remain relatively stable but may undergo occasional amendments to avoid discrepancies with the law. These provisions are crucial in establishing a consistent framework for the Courts to adhere to, ensuring they do not overstep the authority of the arbitral tribunal.
• They establish precise guidelines that enable the Courts to intervene when necessary, while still upholding the autonomy of the arbitral tribunals. This harmony streamlines the resolution of disputes among parties, promoting faster and more efficient outcomes without ambiguity.