INTRODUCTION
In
the last two posts (Post - I and Post - II), we had discussed the case of Oil and Natural Gas
Corporation Ltd. (ONGC) v. Discovery Enterprises Pvt. Limited (DEPL) &
Another, 2022 SCC OnLine SC 522, and the following issues: -
1.
Can a Non-Signatory be bound by an Arbitration Agreement?
ANSWER - A non-Signatory may indeed
be bound by an Arbitration Agreement. To read more, click here.
ANSWER – Six conditions have been spelt
out by the Supreme Court. To read more about them click here.
On this post, we will discuss another very pertinent
question that was raised by the Court in the present case, that is: -
What
is Section 37 of the Arbitration Act, and does it include the power to
adjudicate on an issue relating to jurisdiction of an Arbitral Tribunal?
WHAT IS SECTION 37?
Section 37 deals with appealable orders and
provides that an appeal can lie from the following orders/decisions: -
a. An Order passed under Section 8 that refuses to
refer the parties to arbitration where there is an Arbitration Agreement; or
b. An Order passed under Section 9, before or
during Arbitral Proceedings but before passing of the Arbitral Award, granting
or refusing any kind of interim protection to any of the parties; or
c. Orders setting aside or refusing to set aside
an Arbitral Award under Section 34; or
d. An Interim Award passed under Section 16 (2)
and 16 (3) by the Arbitral Tribunal that holds that the Arbitral Tribunal does
not have jurisdiction or holds that the Arbitral Tribunal exceeded its scope of
authority; or
e. An Order passed under Section 17 applying to
Arbitral Tribunals and granting or refusing any interim measure or protection
to any of the parties.
It is with respect to Point (d) i.e., Order
passed under Section 16 relating to lack of jurisdiction, that the Court
was concerned with in the present case. Noteworthy it is that Section 16 also
provides that in case an Arbitral Tribunal rejects a plea under S. 16 (2) and
(3), it may continue with the Arbitral Proceedings and pass its Final Award.
According to the Court, the expression “arbitral
award” is defined in Section 2(1)(c) to include an interim award, and in a
case where a plea is rejected by the Arbitral Tribunal relating to its lack of
jurisdiction, the Arbitral Tribunal may continue with the Arbitral Proceedings and
pass its Final Award. Such Final Award can be challenged by the parties under
Section 34 on the grounds spelt out therein.
However, where a plea is accepted by the Arbitral
Tribunal that it lacks jurisdiction, such an Interim Award would be amenable to
the Appellate Jurisdiction of the Court under Section 37. Basically, “the
decision of the tribunal that it lacks jurisdiction is not conclusive because
it is subject to an appellate remedy under Section 37(2)(a).” “In
the exercise of this appellate power, the court must be mindful of the fact
that the statute has entrusted the arbitral tribunal with the power to rule on
its own jurisdiction with the purpose of facilitating the efficacy of arbitration
as an institutional mechanism for the resolution of disputes.”
Thus, the Courts must remain cautious that the broad
approach under Section 34, which is of non-interference with the Arbitral Award,
is not easily trifled with, when hearing the Appeals under Section 37. In the
present case, the Interim Award of the Arbitral Award held that it lacked
jurisdiction to investigate the JDIL Company and hence, such a decision was
appealable.
CONCLUDING REMARKS
In the present case, we saw a web of appeals,
petitions, awards and interim awards, that was deftly woven by the parties.
Such deftness arises from the fact that the parties were not only aware of
their rights under the Arbitration Act but were also financially capable to
invoke them. As I said in my earlier post that such is not the case with most
of the litigants. Even during the Arbitral Proceedings, it is often seen that
the parties become financially destitute and even if they have the will power
to challenge, their financial situation does not allow them to take advantage
of the scheme of the Arbitration Act. Nevertheless, I concur with the reasoning
of the Court in the present case on all the issues. It is quite an informative
judgment and for anyone wants to learn the intricacies of the Arbitration Act,
it would be a suitable exercise to read this Judgment.
To read all the posts relating to this case.
Please click below: -
POST – I - CAN A NON-SIGNATORY BE BOUND BY ANARBITRATION AGREEMENT?
POST – II – PUBLIC POLICY AND SECTION 34 OFARBITRATION ACT
POST – III – SECTION 37 OF THE ARBITRATION ACT ANDTHE ISSUE OF JURISDICTION
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