Scope of Enquiry by the Court as to Existence of an Arbitration Agreement at the Pre-Arbitral Stage: An Indian Arbitration Law Perspective

Author: Mr. Manish Dembla, Partner, Kochhar & Co.

In the past few years, the Indian Government has realised that its justice delivery system especially in respect of commercial disputes needs to keep pace with India’s economic growth. Though the Indian Arbitration and Conciliation Act, 1996 (“Act”) is based on the UNCITRAL principles, judicial decisions had virtually obliterated the original intent of the Act and gravely undermined its avowed objective of expeditious dispute resolution. In fact, in certain kind of agreements, the author had started advising his clients not to incorporate arbitration clauses.

In order to resurrect arbitration as an efficient and preferred method of dispute resolution, the Law Commission of India in its 246th Report had suggested sweeping changes to the Act. Pursuant to the said Report, the Act was amended with effect from 23rd October 2015.

One of the significant amendments was insertion of sub-section (6A) in Section 11 of the Act which provided that at the stage of appointment of an arbitrator, the judicial authority exercising the power of appointment is to confine itself to the examination of the existence of an arbitration agreement. However, the judicial decisions which followed have been contrary to the intent of the amendment and have diluted this provision.

This article attempts to trace the history of the exercise of judicial power at the stage of appointment of arbitrators and offers a critical analysis of the most recent judgment of the Supreme Court on the issue in Garware Wall Ropes v. Coastal Marine Constructions & Engineering Ltd(“Garware Wall Ropes”)