One of the essential features of the Arbitration and Conciliation Act, 1996 is that the minimum intervention of the court in the arbitration proceedings. The Indian Legislature in conformity with Article 5 of the UNCITRAL Model Law on International Commercial Arbitration 1985 enacted Section 5 of the Act which eliminates the scope of judicial intervention and enumerates that “Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”.

After reading the wordings of the Section carefully, each and every word of the Section minimises the intervention of the judiciary in the arbitration proceedings.

The words “Not withstanding anything contained in any other law” connotes that even if there are provisions in any other law in force, which permit a judicial authority to intervene, the said authority shall not intervene unless the intervention is provided for in any of the provisions of Part I of this Act as stated supra. Such a prohibition on judicial intervention will however be applicable only to matter governed by Part I of the Act. Further the words “no judicial authority” are wide enough to apply to and cover not only the Court which has jurisdiction in to intervene in arbitration matters or proceedings but to any and all other judicial authority in so far as the matter in question is governed by Part I of this Act. Further the use of the word ‘shall’ takes away the discretion normally available to a judicial authority.

Further Part I of the Act provides judicial intervention in following among other cases which can be drawn under three groups i.e. before, during and after arbitration.

Section 8 – Power to refer the parties to arbitration.

Section 9 – Power to make interim orders.

Section 11 – Appointment of arbitrator in certain events.

Section 13 (5) – Procedure for challenging an arbitrator.

Section 14(2) – Power to decide on the termination of mandate of the arbitrator in the event of his inability to perform his functions.

Section 16 (6) – Competence of an arbitral tribunal.

Section 27 – Assistance in taking evidence.

Section 34 – Power to set aside an award.

Section 34(4) – Power to remit the award to the arbitration tribunal.

Section 36 – Enforcement of an award by way of decree.

Section 37 – Power to hear appeal only on certain specified matters.Section 37(3) – Power of Supreme Court to hear appeal.

Section 39 (2) (4) – Power of the Court to order delivery of an award on payment of costs of the arbitration and also power to make orders in respect of costs in the absence of sufficient provision concerning them in the award.

Section 41(2) – Reference of a dispute to arbitration in insolvency proceedings.

Section 43(3) – Power of the court to extend time with respect a dispute which may become time barred.

We will study few of the above mentioned sections to understand the intention of the legislatures.

Section 8 of the Act specifically provides the authority to the court to refer the matter before it to the arbitration. While doing so, it must satisfy itself that the matter before it contains an arbitration agreement and the parties have prefer the application pointing out the same, not later than submitting its statement of defense on merits. As such, commercial disputes arising out of the contracts (which contains the arbitration clause therein) can be attempted to be resolved through the arbitration mechanism. This saves precious judicial time and also aids in amicable resolution of dispute.

In addition to this, in relation to arbitration proceedings, the parties can approach the Court only for following two purposes:

(a) for any interim measure of protection or injunction or for any appointment of receiver etc. or

(b) for the appointment of an arbitrator in the event a party fails to appoint an arbitrator or if two appointed arbitrators fail to agree upon the third arbitrator.

In such an event, in the case of domestic arbitration, the Chief Justice of a High Court may appoint an arbitrator, and in the case of international commercial arbitration, the Chief Justice of the Supreme Court of India may appoint the arbitrator/s.

A court of law can also be approached if there is any controversy as to whether an arbitrator has been unable to perform his functions or has failed to act without undue delay or there is a dispute on the same. In such an event, the court may decide to terminate the mandate of the arbitrator and appoint a substitute arbitrator.

Furthermore, Section 34 of the Act also restricts the intervention by Courts and provides parameters / circumstances in which an Arbitral Award can be set aside by the Court.

For instance, an Arbitral Award can be set aside by the Court when:

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(vi) the court finds that:

• (a) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
• (b) the arbitral award is in conflict with the public policy of India.

The Arbitration and Conciliation (Amendment) Act, 2015 further curtails judicial intervention and limits the ambit of “public policy” by stating that an award is in conflict with public policy of India, only if-

i. the making of the Award was induced or affected by fraud or corruption; or

ii. it is in contravention with the fundamental policy of Indian Law; or

iii. it is in conflict with the most basic notions of morality or justice

In the case of McDermott International Inc. v. Burn Standards Co. Ltd., the Hon’ble Supreme Court upheld the grounds as enlisted for judicial intervention under Section 34 by stating that the 1996 Act makes provision for the supervisory role of Courts, for the review of the arbitral award only to ensure fairness. The Court further observed that intervention of the Court is envisaged in few circumstances only, like, in case of fraud or bias by the Arbitrators, violation of natural justice, etc. The Court cannot correct errors of the Arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the

provision aims 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.

The Act has only empowered the court with the supervisory role at minimum level. The Court cannot substitute its views over that of the arbitrators.

In the case of Ssangyong Engineering & Construction v. National Highways Authority of India, the Division Bench of Delhi High Court while dismissing Petition under Section 34 of the Act, opined that if a Contract can be interpreted in two ways, then it is not open for the Court to interfere with an arbitral award, just because the Court prefers the other view. In this case, the Appellant had challenged the order of Single Judge, wherein the Single Judge had dismissed the Appellant’s petition under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award. The Court in the case also observed that Court could not

substitute its view over that of the Arbitrators.

The Arbitral Tribunal may take the assistance of the court for recording the evidence of the witnesses of the parties. Under Section 27 of the Act an Arbitral Tribunal can take Court’s assistance in securing the attendance of witness or for the production of documents. The Act also extends the Court the authority to issue summons for examination of witnesses and for the production of documents.