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JURISDICTIONAL CHALLENGES TO ARBITRAL AWARDS IN INDIA
The final decision delivered by an arbitrator or arbitral tribunal is known as an “Arbitral Award.” While such awards are generally binding, there are specific grounds under Indian law where these can be challenged. One of the most significant grounds is a jurisdictional challenge, where a party claims that the tribunal acted beyond its authority or without legal basis.
Jurisdictional challenges serve a crucial function: they ensure that arbitration remains within its legal framework and is conducted fairly. Litigants must be cautious in these matters and should seek proper legal assistance to avoid the risk of unenforceable awards and lengthy litigation.
Why Jurisdictional Challenges Matter
- They uphold the rule of law in arbitral proceedings.
- Prevent tribunals from acting beyond agreed terms.
- Serve as a safeguard against procedural irregularities.
- Offer a legal remedy to set aside awards obtained without authority.
Key Jurisdictional Grounds for Challenge in India
1. Invalid Arbitration Agreement
An arbitration agreement forms the legal basis for any arbitral process. If this agreement is invalid due to being unwritten, forged, void, or non-compliant with Section 7 of the Act he tribunal has no jurisdiction. In Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd. [(2017) 7 SCC 678], the Supreme Court emphasized that choosing a seat confers exclusive jurisdiction to that court.
2. Non-Arbitrable Subject Matter
Some matters—such as criminal cases, matrimonial disputes, and insolvency are deemed non-arbitrable. Section 48(2) of the Act permits courts to refuse enforcement of awards if the subject matter is legally incapable of settlement by arbitration. The ruling in Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan & Ors [AIR 1999 SC 2102] affirms the tribunal’s ability to determine its jurisdiction under Section 16(1).
3. Unilateral Appointment of Arbitrator
Arbitral fairness demands equal participation in tribunal constitutions. A unilateral appointment, without mutual consent or adherence to agreed procedures, is void. In Telecommunication Consultants India Ltd v. Shivaa Trading [O.M.P. (COMM) 311 of 2022], the Delhi High Court held that such appointments render the award void ab initio. This aligns with the Supreme Court’s view in Bharat Broadband Network Ltd. v. United Telecom Ltd. [Civil Appeal No. 3972 of 2019].
4. Exceeding the Scope of Submission
Under Section 34(2)(a)(iv), an award can be set aside if it addresses issues not referred to arbitration. This occurred in Rulia Mal Amarchand v. Hindustan Petroleum Corporation Ltd. [AIRONLINE 2019 DEL 289], where the arbitrator ruled beyond the defined terms. Similarly, in Gujarat Composite Ltd. v. A Infrastructure Ltd., the court invalidated an award covering multiple transactions, only one of which had an arbitration clause.
5. Improper Jurisdiction Due to Wrong Seat or Venue
The “seat” of arbitration determines which court has jurisdiction over the arbitral process, while the “venue” is a logistical detail. In Arif Azim Co. Ltd. v. Micromax Informatics FZE [(2013) 9 SCC 32], the Supreme Court clarified this distinction. The Delhi High Court reinforced this in Devyani International Ltd. v. Siddhivinayak Builders and Developers [2017 SCC OnLine Del 11156], giving primacy to the seat clause over conflicting jurisdiction clauses. Similar views were echoed in Ayyappa Enterprises v. Sugam Vanijya Holdings [Arb. Application No. 208 of 2021].
Conclusion
Arbitration is increasingly favored as a faster and more flexible method of dispute resolution. However, when an arbitral tribunal acts beyond its authority, it can undermine the very purpose of arbitration.
Jurisdictional challenges serve as a vital legal safeguard, ensuring that proceedings stay within the agreed scope and protecting the rights and interests of all parties involved.
These challenges are not mere technicalities—they are essential to maintaining the legitimacy and enforceability of arbitral awards. At Astrea Legal, we bring deep expertise in navigating jurisdictional objections, helping our clients secure outcomes that are both legally sound and strategically aligned with their business goals.
Ref:
1 AIRONLINE 2019 DEL 289
2[(2017) 7 SCC 678],
3IR 1999 SUPREME COURT 2102
4 O.M.P. (COMM) 311 of 2022
5 Civil Appeal No. 3972 of 2019\
2013) 9 SCC 32
7 2017 SCC Online Del 11156
8 Order dated 20 September 2021 in Arb. Application No. 208 of 202
Author: Mr. Naren Raja / Ms. Ishika Preetam
Website: www.astrealegal.com Email: contact@astrealegal.com Contact: +91 9822720483, Disclaimer – This publication is provided for general information and does not constitute any legal opinion.This publication is protected by copyright. © 2024 Astrea Legal Associates LLP.
