Arbitrability Of Competition Law Disputes In India

The Competition Act does not specifically incorporate arbitration as a means of resolving antitrust law conflicts. This principle was further underscored in the Union of India v. Competition Commission of India.^[1] The Delhi High Court interjected in this issue, ultimately dismissing the argument presented by the parties that the dispute could be brought before an arbitral tribunal. The Court's decision firmly stated that the entitlement to initiate either an information or a legal proceeding before the CCI or a court holds an uncompromisable position. Consequently, this entitlement could not be subjugated by the presence of an arbitration provision in the contractual arrangement between the disputing parties.

Even the predecessor to the Competition Act, the Monopolies and Restrictive Trade Practices Act, 1969 the Apex court stated that remedies available under this act are in addition to the remedies available under the contract or arbitration laws.^[2]

At the same time, the ruling does not entirely deny the option of choosing arbitration in cases involving antitrust issues. Instead, it upholds the unhindered right to submit a challenge to the Competition Commission of India (CCI).

Application Of Test Formulated In Booz Allen & Vidya Droila Fourfold Test

• The Nature Of Rights Test Under Booz Allen

The Apex Court stated in Booz Allen^[3] that the question of the arbitrability will depend upon the nature of the rights involved. Therefore if the issue involves a right in rem that is a person's right against the world at large then the issue is not arbitrable. But if issues involve rights in personam then the issue is arbitrable.

The elements of right in personam and right in rem are both present in the competition law. Even though the right in rem is covered by section 19 of the act, such information must still be filed with the CCI if any market action violates the legislation. Then, the Office of the Directorate General conducts a thorough investigation, and if the report is conclusive, the commission issues a cease-and-desist order. Because anybody, regardless of injury suffered, may submit information to CCI adjudicators, Section 19 has a right in rem aspect. Additionally, any order imposed pursuant to this section has a considerable impact not only on the infringing party but also on consumers and retailers who have been harmed by the anti-competitive practices of the infringing party.

While on the other hand section 53N provides for the compensation claim for the aggrieved party. Since the claims are between private individuals which are determined in terms of the monetary claims or contractual remedies between parties they in no particular way affect the rights of the public in general. And one view can be that these claims are in nature of right in personam therefore one can say that they can be subjected to the arbitration as they meet the principle laid in the Booz Allen & Hamilton v. SBI Home Finance Ltd.

• The Fourfold Test of Vidya Droila

If we look at the four criteria outlined in the Vidya Droila v. Durga Trading Corporation,^[4] the first criterion is that a disagreement cannot be resolved through arbitration where the cause of action and the dispute's subject matter concern a right in rem. The second requirement is also met when the dispute's issue and cause of action both impact third-party rights. The first and second elements of the four-fold test won't be met if the disagreement relates to section 53N because the decision would be based on the parties' inter se rights.

The third requirement for a dispute not being arbitrable is that the cause of action and the dispute's subject matter relate to the state's sovereign duty. Even though these state functions are immune from the act's requirements according to section 54, private antitrust claims typically do not include inalienable or sovereign state functions.

The fulfilment of the fourth requirement, which is expressly non-arbitrable under the mandatory statute, would, however, constitute a significant obstacle. The topic would be covered under the next heading, which would address the issue of exclusive jurisdiction.

• The Aspect Of Exclusive Jurisdiction

The CCI has exclusive jurisdiction under Section 18 of the Competition Act and further the same is reinforced by the Preamble of the Act. According to Section 61, when a case is covered by CCI, civil courts are not supposed to rule on it. Through this statute, CCI has been given particular privileges and authority to handle conflicts involving competition law.

In Sameer Aggarwal v. CCI & Ors., the court agreed with the claim that CCI's inquiries are of a rem rather than personam nature.^[5] Additionally, a recent order issued by the CCI against TATA Motors reiterates that CCI functions are investigative rather than adjudicative, making the CCI more accessible to the public interest because NCLAT is an investigative body.

Bombay HC has clarified in Central Warehousing Corporation v. Frontpint Automotive Pvt. Ltd that provisions of the Arbitration Act should not take precedence over other laws thus potentially allowing certain disputes to be excluded from arbitration.^[6]

But at the same time even though the 4^th criterion of the Vidya Droila case is met still Apex Court still acknowledges that considerations such as the need to apply mandatory law, the public policy objective of the statute and the complexity of dispute do not preclude arbitration.

Therefore the creation of CCI as an exclusive forum should not be the sole factor to preclude arbitration in antitrust disputes.¹⁹

But considering the position of Indian courts they have strictly applied these criteria to hold disputes as non-arbitrable. Thus, the position of anti-trust disputes as non-arbitrable is likely to be held.

The Argument Of Non-Obstante Cause Under The Arbitration Act

Considering that section 5 of the arbitration act begins with a non-obstante clause and states that, notwithstanding anything in any other law, the jurisdiction of the Court is excluded where there is an arbitration agreement, one argument could be made that section 61 of the competition act cannot preclude arbitration. However, it was noted that Section 5 cannot be read in isolation as stated in Central Warehousing Corporation v. Fortpoint Automotive Pvt. Ltd.^[7] It must be contrasted with Section 2(3) of the Arbitration Act, which provides that any other law that prohibits the arbitration of specific issues is unaffected by the provisions of the Arbitration Act. Consequently, it is currently extremely improbable that the court will approve the arbitration of these disputes.

Taking Into Account The Second Look Doctrine Of The USA

In the USA taking into account the second look doctrine in the Mitsubishi v. Soler,^[8] the court allowed arbitration of antitrust disputes while at the same time obligation for arbitrator to apply antitrust law. This would mean that arbitrators can determine questions involving competition law but courts are empowered to take a second look at the contents of the arbitral award at the enforcement stage to verify that questions of competition law have been properly addressed. This concept originated in the US and is mirrored in the EU as well.

Even section 27 of the arbitration act can be employed in this respect this section allows an arbitral tribunal to seek assistance from the Court in taking evidence. Now arbitral tribunals can use it to consult the CCI when confronted with questions of competition law. This is an established practice in the EU and there the European Commission routinely acts as amicus curiae in arbitral proceedings involving competition law to protect the public's interest.

A Way Forward

At present, the only case in which the issue of arbitrability of the competition law disputes arose was Union of India v. Competition Commission of India^[9] where it was stated that the scope and focus of CCI is different from that of arbitral tribunal thus closing the door for the arbitration of competition law disputes. In contemporary circumstances, it is highly unlikely that competition law disputes would be arbitrable. At the same time, the position concerning the second look doctrine that originated in the US can be taken into account concerning competition law disputes

Within the European Union, arbitration has been recognized as a viable avenue for resolving competition law issues, yet the courts retain the authority to review arbitration decisions. India, while considering its stance on antitrust disputes and arbitration, could draw valuable insights from these international experiences. Learning from the US approach, India could weigh the possibility of allowing certain antitrust claims to be arbitrated while safeguarding against potential misuse or lack of expertise. Similarly, by observing the European Union's emphasis on public policy and court oversight, India could adopt measures to ensure that arbitration awards align with fundamental competition law principle. 

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