Interpretation And Application By Courts - Section 11(6a) Of The Arbitration And Conciliation Act, 1996

On the failure of the parties to mutually agree on the name of an arbitrator or appoint an arbitrator in terms of the arbitration agreement, such appointment can be made by the Supreme Court or High Court, on application of either party under Section 11(6) of the act.

Position before and after Section 11(6A)

The scope of power of the courts in appointing arbitrator has been the subject of wide judicial scrutiny. Sub-section 6A was inserted vide the amendment of 2015 [Arbitration and Conciliation (Amendment) Act, 2015] which specified that the courts while appointing an arbitrator, shall confine itself to the examination of the existence of an arbitration agreement. Prior to the amendment, the courts dealt with the applications for appointment of arbitrator by addressing only few preliminary issues such as jurisdiction of the arbitration, nature of claims, limitation period etc. [National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267]

Post the amendment and insertion of Section 11(6A), courts have since taken a minimum intervention approach by not going beyond the arbitration agreement in matters of appointment of arbitrator.

In Duro Felguera SA vs. Gangavaram Port Ltd. [(2017) 9 SCC 729] the Supreme Court held that as per Section 11(6A) of the Act, the court must only confine its examination to the existence of an arbitration agreement in order to minimise judicial intervention. The courts should and need only to investigate that the agreement between the parties contains a clause that provides for reference of disputes which have arisen between the parties to arbitration - "nothing more, nothing less".

It further clarified that the position taken in National Insurance case cannot continue post the insertion of Section 11(6A).

In Vidya Drolia v. Durga Trading Corpn. [(2021) 2 SCC 1], the Supreme Court made an in-depth analysis into the meaning of the words "existence of arbitration agreement" under Section 11(6A). The Court held that contextually an examination of existence of an arbitration agreement would also lead to an examination of its enforceability. Thus, an agreement must be statutorily valid, enforceable and binding in order to be treated as an agreement in existence. The Court further held that the arbitral tribunal has the primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability.

However again in Mohammed Masroor Shaikh vs. Bharat Bhushan Gupta [(2022) 4 SCC 156] the Apex Court held that when a dispute is prima facie arguable, the Court must refer the parties to arbitration and the question of non-arbitrability is to be left open to be decided by the arbitral tribunal.

Beyond the limited scope

On many occasions, the Courts have aken an expansive view in dealing with application under Section 11 of the said Act.

In United India Insurance Company Ltd. vs. Antique Art Exports Pvt. Ltd. [(2019) 5 SCC 362], the Court took a contradictory view and exceeded the scope of Section 11(6A) by holding that although an arbitration agreement existed between the parties, the dispute could not be referred to arbitration since there was no arbitral dispute within the scope of the agreement.

In DLF Home Developers Limited vs. Rajapura Homes Private Limited (2021 SCC OnLine SC 781) the Court held that limited jurisdiction and scope under 11(6A) does not denude the Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood.

Similar view was taken in Indian Oil Corporation Limited v. NCC Limited (2022 SCC OnLine SC 896) by the Supreme Court wherein it was held that where the arbitrability of the claims is very clear in view of the agreement between the parties, the court may base its decision on such considerations and arrive at the conclusion as to whether or not the arbitrator should be appointed and the dispute should be referred to arbitration.

There have been differing views in matter of scope of judicial intervention under Section 11 of the act. Though, the courts have given clear view on the point that the primary jurisdiction in adjudication of dispute lies with the arbitrator in matters of arbitration. However, preliminary assessment can be done by the courts when there is no ambiguity with respect to the arbitrability and non-arbitrability of the dispute in question.

Author: Tannishtha Singh, Legal Head, MCO Legals (Meharia & Company). Views are personal.