Ms. Bhumi Agrawal
Final year student, B.B.A.LL.B.,
New Law College, BVP, Pune
The Arbitration and Conciliation Act, 1996 has undergone various amendments over time. The Act demands changes overtime with developments made throughout the globe. The Act was introduced with a motive to encourage outside the court settlement and to make India a hub for International Arbitration just like Singapore and Hong Kong in Asia. The Act also aims to establish lesser court intervention which seems like a distant dream in some scenarios. Due to lack of awareness, people still opt to approach the court and the belief of people to get justice still lies with the court.
The attempt to make courts lesser involved in the arbitration proceedings was made by the legislation by introducing the Kompetenz-kompetenz Doctrine under section 16 of the Act. The doctrine will be further discussed in detail by the author in this article.
What is Kompetenz-Kompetenz doctrine?
Kompetenz-kompetenz, also known as, competence-competence is a jurisdictional doctrine that empowers a legal body, mainly an adjudicating authority to exercise upon the issues before it. It provides to the authority the jurisdiction to decide the matter before it.
Scope of the doctrine in India
The arbitration Act 1996 repealed the previous Arbitration Act, 1940 which provided that for any arbitration clause to be valid and in effect, the contract in which it is contained must also be valid. In other words, if the contract is declared to be null and void, the arbitration clause will also be declared null and void. The current 1996 Act, however, explicitly provides for separability doctrine under section 16(a) of the Act which provides that the arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.
Section 16 of the Act further provides for the competence of the tribunal to rule its jurisdiction. In simple words, the section empowers the arbitral tribunal to address the issues concerning its jurisdiction, keeping it very clear that the parties need not have to approach the court. Additionally, the tribunal is empowered to examine the validity of the arbitration agreement. This section implies the preliminary intention of the legislature to keep courts lesser involved in the arbitration proceedings was not to thwart the arbitration proceeding merely because an objection was raised by one of the parties in the court.
In the case of Olympus Infrastructures Pvt. Ltd. v. Meena Vijay Khetan, it has been held that the arbitral tribunal is empowered to decide upon the matters of its jurisdiction as well as on the question pertaining to the validity of the arbitration agreement, as per section 16(1) of the Act, the tribunal can decide the validity of the agreement even if the contract whose part the arbitration clause was, is declared to be null and void.
Therefore, it can be said that the Arbitration Act, 1996 provides for both Separability as well as Kompetenz-kompetenz Doctrine.
However, in the case of Chloro Controls(I) P.Ltd vs Severn Trent Water Purification in the Apex Court, the judges made remarks regarding the negative effect of the doctrine as the doctrine make the sole arbitrator judge in the case and rules out the court from their jurisdiction. The idea should be to make the arbitrators first judge to decide the issue at hand and not to deprive the courts of their jurisdiction. The court should have the power to review the awards made.
As mentioned by Prof. Stavros Brekoulakis, the aim to introduce the doctrine was to make arbitral tribunals more powerful rather than curtailing the powers of national courts.
Scope of doctrine in Investment treaty Arbitration
The Arbitration Act of India mainly provides for commercial arbitration. The Delhi High Court in the case of Union of India V. Vodafone group has held that investment arbitration is outside the scope of Arbitration and Conciliation Act, 1996 as the latter only deals with commercial Arbitrations. The Delhi High Court in the matter of Union of India V. Khaitan holdings, involving the investment treaty arbitration upheld the Kompetenz-Kompetenz doctrine. The court herein upheld the decision of the court in Vodafone case and further held that though the courts can exercise jurisdiction over the BIT arbitration under the provisions of Civil Procedure Code, 1908 but the Arbitral tribunal establishes through this BIT arbitration has the power to exercise any issue or jurisdictional claims arising out of this investment treaty.
Through this decision of the court, it can be established that constant efforts have been put in by the judiciary as well to practice lesser judicial intervention in commercial arbitration as well as investment arbitration.
The Singapore High Court in Malini Ventura v Knight Capital Pte Ltd & others upheld the doctrine of Kompetenz-Kompetenz. In this case, one of the parties approached the court to put a stay on the proceedings of the arbitration, claiming that no arbitration agreement exists between the parties. The court held that the respondent party only needs to establish a prima facie case regarding the existence of the arbitration agreement. Furthermore, when the prima facie case is established, it is left upon the tribunal to decide upon the validity of the arbitration agreement. Through this decision, it was recognized by the court that the tribunal can not only decide its jurisdiction but also has the power to look into the validity and existence of an arbitration agreement.
From the above discussion, it would not be wrong to say that this doctrine is the very essence of any arbitration proceeding as it strives to give independence to the arbitral tribunal. It is also very evident that the favourable side of the doctrine weighs more than the unfavourable one. Through this doctrine only, courts have concluded to grant independence in arbitration proceedings to the arbitral tribunal.
Disclaimer: Kindly note that the views and opinions expressed are of the author, and not Law Colloquy.