INTRODUCTION TO

INTERNATIONAL COMMERCIAL
ARBITRATION

SAPTARSHI DAS
ASSISTANT PROFESSOR OF LAW
DISCLAIMER
The slides are only for indicative
puposes and should not be used for
the purpose of any
assessments/examinations. The text
books, study materials and articles
have to be referred for the purpose of
examinations
INTERNATIONAL COMMERCIAL
ARBITRATION--- A PRIMER
I.C.A is an established method for resolving
transnational disputes which are
commercial in nature.
It is a private method of dispute
resolution, chosen by the parties as an
effective way of resolving the disputes
among them without recourse to the
courts of law.
I.C.A is a globally acclaimed method of
resolving the disputes among the parties
since it is held in place by complex
system of national laws and
international treaties. [ viz. the
The meaning of ‘
International’?
The term ‘ international’ is used to mark
the arbitrations which are purely domestic
and those which in some way transcend
national boundaries.
The arbitration is treated as international if
the nature of the dispute is such which
“involves the interests of international
trade”/business.
If one of the parties to the arbitration is a
person or a body corporate whose habitual
place of residence or of carrying out the
businesses must be in a foreign country.
Under the UNCITRAL Model Law :
An arbitration is international if:
(a) the parties to the arbitration agreement
have at the time of the conclusion of the
agreement their places of businesses in
different states or
(b) one of the following places is situated
outside the State in which the parties have
their businesses :
The place of arbitration is determined in or
pursuant to the arbitration agreement; any
place where a substantial part of the
Commercial Meaning
The concept of commercial contract is of
importance to the civil law as regards to
arbitration.
The meaning of the word ‘ commercial’ is
the kind of contract made by the
traders/merchants in the ordinary course of
their businesses.
The term commercial has a wide
interpretation so as to cover matters
arising from all the relationships of a
commercial nature which include any trade
transaction, distribution agreements etc.
SIGNIFICANT FEATURES OF
I.C.A
 Agreement to arbitrate –
 An agreement by the parties to submit to the
arbitration any dispute is a starting point of
international commercial arbitration.
 It is a testament that the parties have agreed to
resolve their disputes through arbitration and is the
legal source of powers to the power to the arbitral
tribunal.
 An arbitration agreement must be capable of
enforcement by law. An agreement testifies that the
parties have consented to resolve their disputes
by arbitration.
 An agreement serves as a basic source of powers for
the arbitral tribunal.
NEW YORK CONVENTION
Article II
 1. Each Contracting State shall recognize an agreement in
writing under which the parties undertake to submit to
arbitration all or any differences which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not, concerning a subject
matter capable of settlement by arbitration.
 2. The term “agreement in writing” shall include an arbitral
clause in a contract or an arbitration agreement, signed by the
parties or contained in an exchange of letters or telegrams.
 3. The court of a Contracting State, when seized of an action in
a matter in respect of which the parties have made an
agreement within the meaning of this article, shall, at the
request of one of the parties, refer the parties to arbitration,
unless it finds that the said agreement is null and void,
inoperative or incapable of being performed.
Choice of arbitrators :
Party autonomy is the foundational
pillar of arbitration. Therefore the
choice of a suitable arbitrator is a sine
qua non in the arbitration process.
The choice of the persons who
compose the arbitral tribunal is
extremely crucial and the most
decisive step for international
commercial arbitration.
This is because in most cases the
award rendered by an arbitration
tribunal is final and binding without
Decision of the arbitral tribunal :
The power to make binding decisions is of
fundamental importance to the arbitration
tribunal
The procedures must be followed in order
to arrive at a binding decision by the way of
arbitration.
Enforcement of the award : Once an
arbitration tribunal has made its award, it
has fulfilled its function and its existence
comes to an end.
ALTHOUGH arbitration is a result of
HYBRID NATURE OF THE
ARBITRATION PROCESS
I.C.A is an hybrid viz. it begins as a private
agreement between the parties. It
continues by the way of private
proceedings in which the wishes of the
parties are of great importance.
Although the arbitration begins as a private
agreement between the parties yet it ends
with an award which is final and binding
between the parties.
The award has a legal force which on
appropriate conditions, the courts of most
countries will recognize and enforce the
contract.
 UNCITRAL MODEL LAW ON
INTERNATIONAL COMMERCIAL
ARBITRATION
What is the Model Law?
It is a law prepared by the UNCITRAL on 21
June 1985 after the realization that
differences in national laws governing
international trade are creating hurdles to
the free flow of trade.
The UNCITRAL Model law has been
designated to assist the states to establish
their domestic law and modernize their
laws on arbitral procedure with due
consideration of the specific features and
the needs of international commercial
arbitration.
 The Model Law comprises 8 chapters, 36
Article 1 of the Model Law states the
substantive part of international
commercial arbitration which defines
arbitration as international if while
concluding the arbitration agreement, the
parties’ place of business were in different
States or one of the places is located
outside the state in which the party of the
agreement have their place of business, or
the place where the commercial
relationship has been performed, or where
the subject matter of the dispute has
occurred, or the parties to the arbitration
The Model Law talks about the arbitration
agreement, composition of the tribunal
( Chapter II).
It limits the interference of the court in the
process of arbitration, thereby only allowing
judicial intervention for the appointment of
arbitrators, challenge and termination of an
arbitrator, jurisdiction of an arbitral
tribunal, and the setting aside of an arbitral
award.
 It highlights the essence of the arbitration
clause or agreement that must be present if
parties to a dispute choose arbitration as a
It sets out the rules to be followed for the
pronouncement of the award, the
enforcement of the award, and the grounds
for challenging the award.
It limits the interference of the court in the
process of arbitration, thereby only allowing
judicial intervention for the appointment of
arbitrators, challenge and termination of an
arbitrator, jurisdiction of an arbitral
tribunal, and the setting aside of an arbitral
award.
It highlights the essence of the arbitration
clause or agreement that must be present
K.K.MODI v K.N.MODI
The Modi family divided into GROUP A (KN
Modi, Younger brother of MaiModi and his
sons) and GROUP B (Mai Modi’s
sons,including KK Modi),owned a number of
public limited companies.
Disputes arose between the twogroups and
to resolve these conflicts, many financial
institutions were called, including the one
who invested in the companies. A
memorandum of agreementwas signed
specifying that the consultation of all
matters will be done by the Chairman of
IFCI (Industrial Finance Corporation of India)
The Chairman of IFCI gave out its final
report, claiming it as its final decision in the
matter. He also gave out some directions to
both the groups in the same report. While
this report was not filed in the court, a
series of directions were given for the
implementation of the same by the
nominated chairman.
 On 18th May, 1996 Group B filed an arbitration petition
in the Delhi High Court Under section 33 of the
arbitration act, 1940. They challenged the legality and
validity of the directions issued by the chairman and
managing director of IFCI. They also filed a civil suit in
the Delhi High Court with similar arguments, except for
one paragraph Where they stated That they sought relief
Lets analyze the Clause
"Implementation will be done in
consultation with the financial institutions.
For all disputes, clarifications etc, in respect
of implementation of this agreement, the
same shall be referred to the Chairman,
IFCI or his nominees whose decisions will
be final and binding on both the groups."
Do you think it is arbitration or expert
determination?
ISSUES ?
Whether Clause 9 of the Memorandum of
Understanding dated 24th of January, 1989
constitutes an arbitration agreement; and
whether the decision of the Chairman, IFCI
dated 8th December, 1995 constitutes an
award?
Whether Suit No. 1394/1996 is an abuse of
the process of court?
The court declared that the clause did not
constitute an arbitration clause because
there is no mention of the disputes being
referred to the “arbitration” of an
“arbitrator”.
It ruled that “Under the Memorandum of
Understanding, all pending disputes in
respect of the rights of various members of
the Modi family forming part of either
Group A or Group B have been finally
settled and adjusted. Where it has become
necessary to split any of the existing
companies, this has also been provided for
A family settlement which settles disputes
within the family should not be lightly
interfered with especially when the
settlement has been already acted upon by
some members of the family.
Such settlements have to be viewed a little
differently from ordinary contracts and their
internal mechanism for working out the
settlement should not be lightly disturbed.
How to distinguish between arbitration
and Expert Determination?
First, there are the express words of the
disputes clause. If specific words such as
'arbitrator', 'arbitral tribunal', 'arbitration' or
the formula 'as an expert and not as an
'arbitrator' are used to describe the manner
in which the dispute resolved is to act, they
arelikely to be persuasive although not
always conclusive.
 Where there is no express wording, the court
will refer to certain guidelines. Of these, the
most important used to be, whether there was
an 'issue' between the parties such as the
value of an asset on which they had not taken
the judicial function of an arbitral tribunal
as opposed to the expertise of the
expert;....An arbitral tribunal arrives at its
decision on the evidence and submission of
the parties and must apply the law or if the
parties agree, on other consideration; an
expert, unless it is agreed otherwise,
makes his own enquiries, applies his own
expertise and decides on his own expert
opinion.
INOX RENEWABLES V JAYESH
ELECTRICALS
 On 28 January 2012, Jayesh Electricals Limited
(Jayesh Electricals) executed a purchase order
(PO) with one Gujarat Fluorochemicals Limited
(GFL). The PO contained an arbitration clause
which stipulated Jaipur as the “venue” of
arbitration and clarified that any party
aggrieved by the arbitral award may seek
recourse before the “courts in the State of
Rajasthan”.
 Pursuant to a business transfer agreement
dated 30 March 2012, Inox Renewables Ltd
(Inox Renewables) took over the entire
business of GFL including the rights and
obligations under the PO. Jayesh Electricals was
Subsequently, disputes arose between the
parties. On 5 September 2014, Jayesh
Electricals approached the Gujarat High
Court at Ahmedabad for appointment of an
arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996 (the
Act). On a joint request made by the parties
for the appointment of a sole arbitrator, the
Gujarat High Court made the appointment
on 28 July 2018.
On 28 July 2018, the arbitrator appointed in
the matter passed an award directing Inox
Renewables to make certain payments to
Aggrieved by the portion of award directing
it to make payments to Jayesh Electricals,
Inox Renewables filed proceedings
challenging the Award under Section 34 of
the Act before the relevant Commercial
Court at Ahmedabad.
By an order dated 25 April 2019, the
Commercial Court dismissed Inox
Renewables’ petition mainly on the ground
that courts in Vadodara and not
Ahmedabad would have jurisdiction over
the matter. In reaching this conclusion, the
Commercial Court, it seems, relied on the
Inox Renewables challenged the aforesaid
order vide a Special Civil Application filed
before the Gujarat High Court under Article
227 of the Constitution of India. The
Gujarat High Court, however, refused to set
aside the order of the Commercial Court
and instead dismissed the Application by
an order dated 9 October 2019.
Inox Renewables carried the aforesaid
decision of the Gujarat High Court in appeal
before the Supreme Court.
Decision of SC
The Supreme Court, after referring to the
arbitrator’s observations in the award with
respect to the place of arbitration, found
that the parties had by mutual agreement
shifted the place or seat of the arbitration
from Jaipur to Ahmedabad. The Supreme
Court’s finding was based solely on the
contents of the arbitral award.
The Supreme Court rejected the
Respondent’s (Jayesh Electricals)
submission that the seat of arbitration
could have been changed only by a written
agreement. The Supreme Court noted that
The Court held that the moment the parties
chose Ahmedabad as the place or seat of
arbitration, it was akin to an exclusive
jurisdiction clause, thereby vesting the
courts at Ahmedabad with exclusive
jurisdiction to deal with the arbitration.
The Supreme Court observed that the
Rajasthan courts were vested with
jurisdiction only because parties had
originally chosen Jaipur as the seat of
arbitration. The Court clarified that once
the seat stood changed to Ahmedabad, the
courts at Rajasthan would cease to have
 ADVANTAGES AND
DISADVANTAGES OF
ARBITRATION
Advantages :
 The neutralityof the forum (that is, being
able to stay out of the other party’s court)
The likelihood of obtaining enforcement, by
virtue of the New York Convention, a treaty
to which over 140 countries are parties.
An arbitration award is generally easier to
enforce internationally than a national
court judgment because under the New
York Convention, courts are required to
enforce an award unless there are serious
procedural irregularities, or problems that
go to the integrity of the process.
CONFIDENTIALITY OF THE AWARD :
Confidentiality is provided in some
institutional rules, and can be expanded (to
cover witnesses and experts, for example)
by the parties’ agreement to require those
individuals to be bound by a confidentiality
agreement.
EXPERTISE : Parties also like being able to
choose arbitrators with particular subject
matter expertise. In addition, they like the
fact that there is less discovery in
arbitration, thereby generally resulting in a
shorter process than in a fullscale litigation,
DISADVANTAGES OF
ARBITRATION
LACK OF APPEAL : if an arbitrator has
rendered a decision that is clearlywrong on
the law or the facts, the lack of ability to
bring an appeal can be frustrating to a
party.
LACK OF COERCIVE POWERS OF THE
ARBITRATORS : arbitrators have no coercive
powers – that is, they do not have the
power to make someone do something by
being able to penalize them if they do not.
A court, for example, can impose a fine for
contempt if someone does not comply with
a court order. Arbitrators, on the other
An arbitrator may make an award based
upon broad principles of“justice” and
“equity” and not necessarily on rules of law
or evidence.
The standards used by an arbitrator are not
clear, because at times, arbitrators may
consider the “apparent fairness” of the
respective parties’ positions instead of
strictly following the law. This would result
in a less favorable outcome for the party
who is favored by a strict reading of the
law.
LEGAL AND REGULATORY
FRAMEWORK OF ARBITRATION
The arbitration agreement is the
underpinning for the regulatory framework
governing the private dispute resolution
process. If the arbitration agreement is not
valid, then there is no legal basis for
arbitration.
The substantive law of the contract, the law
governing the seat ( juridical seat of
arbitration), rules applicable to the
procedure of the arbitration are the laws to
be considered for arbitration.
One way to envision the regulatory
framework of arbitration is in the formof an
The point is facing down, and at that point
is the arbitration agreement, which affects
only the parties to it. This agreement is the
underpinning for the regulatory framework
governing the private dispute resolution
process.
If the arbitration agreement is not valid,
then there is no legal basis for arbitration.
On the pyramid above the arbitration
agreement, the framework expands in
terms of scope and applicability beyond the
immediate parties. At one step above are
the arbitration rules chosen by the parties.
At the next level of the pyramid are the
national laws. Both the arbitration law of
the seat of the arbitration (the lex arbitri)
and substantive laws will come into play,
and they are likely to be different national
laws.
Many countries have adopted as their
arbitration law the UNCITRAL Model Law on
International Commercial Arbitration. At the
next step above the national laws in the
regulatory pyramid is International
arbitration practice, which tends to be
utilized to various degrees in all arbitration.
Finally, at the top of the inverted pyramid
are any pertinent international treaties. For
most international commercial arbitrations,
the New York Convention will be the
relevant treaty because it governs the
enforcement of both arbitration
agreements and awards, and because so
many countries are parties to the
Convention.
The regulatory framework for international
commercial arbitration includes private
agreements, agreed-upon rules, and
international practice, as well as national
MODULE II
The slides are only for indicative
puposes and should not be used for
the purpose of any
assessments/examinations. The text
books, study materials and articles
have to be referred for the purpose of
examinations
ARBITRABILITY
Arbitrability concerns whether a type of a
dispute can or cannot be settled by
arbitration.
For international commercial arbitration to
take place there are two important
conditions – a dispute must be arbitrable
and there must be valid arbitration
agreement.
Arbitrability means the capability of a
dispute of being settled by arbitration.
 The term arbitrability is the classification of disputes into
ones which may be resolved by arbitration and ones
which may exclusively belong to the realm of the courts.
There are some disputes which are exclusively
Arbitral tribunals have been considered
capable of adjudicating every civil or
commercial dispute, which can be decided
by a civil court, subject to: (i) the dispute
being covered under the arbitration
agreement; (ii) the party/ parties to
the dispute referring the same to
arbitration and (iii) the disputes being
capable of adjudication and
settlement by arbitration.
Article II(1) of UNCITRAL Model Law
provides that each contracting state shall
recognize an arbitration agreement
“concerning a subject matter capable of
settlement by arbitration”
 Article V(2)(a) provides that an arbitral
award may be refused recognition and
enforcement if the “subject matter of
the difference is not capable of
settlement by arbitration under the
law of that country.”
There may be restrictions regarding the
capacity of a party to enter into arbitration
agreements, which means that certain
entities due to policy considerations, may
not be allowed to enter into arbitration
agreements or may require a special
authorisation to do so (“subjective
arbitrability”) or limitations based on the
subject matter (“objective arbitrability”).
Matters involving criminal law cases, family
matters, or disputes of a commercial nature
involving patents, antitrust and competition
laws, bribery, corruption and fraud etc. are
The most debatable issues regarding
arbitrability is which law governs the
determination of arbitrability.
The law governing the arbitrability of a
dispute may vary depending on whether it
is decided by an arbitral tribunal, which
will decide itself in accordance with
the principle of Kompetenz-
Kompetenz; by a State court to which one
of the parties has simultaneously submitted
the dispute; within a setting-aside
procedure; or in the context of an
enforcement procedure.
Tribunals have taken different approaches
in considering which law governs the
arbitrability of a dispute: the law of the
arbitration agreement; the law of the seat;
the law applicable to the dispute; the law of
one of the parties; and the law of the
place of enforcement.
 Arbitration tribunals generally determine
arbitrability with specific reference to the
law of the place of arbitration. If a
dispute is not arbitrable according to the
relevant rules contained in that law, the
award will be open to setting aside
procedures in that country and may also
WHAT IS AN ARBITRABLE
DISPUTE IN INDIA?
Booz Allen and Hamilton Inc v. SBI Home
Finance Ltd : the Supreme Court observed
that the question of arbitrability is to be
decided on the basis of the ‘nature of
rights’ involved in the dispute. If the
dispute involves a right in rem, i.e., a
person’s right against the world at
large, the dispute is not arbitrable. On the
other hand, if a dispute involves a right in
personam, i.e., rights against specific
individuals, such as in a contract, the
dispute is arbitrable
NON ARBITRABLE DISPUTES
 (1) disputes which give rise to or arise out
of criminal offences;
(2) matrimonial disputes
 (3) guardianship matters;
(4) insolvency and winding up matters;
(5) testamentary matters;
(6) eviction or tenancy matters.
 Sukanya Holdings Private Ltd. v. Jayesh H. Pandya
: claims cannot be bifurcated into arbitrable and
non-arbitrable claims and if a non-arbitrable claim
exists, the arbitrable claim cannot be arbitrated
as well.
Arbitrability of Fraud

Can a mere allegation

of fraud make a dispute
non-arbitrable?
Allegations of fraud
are frequently made in
the heat of the battle
although less
 A. Ayyasamy v. A.
Paramasivam and Others
The parties to the proceedings were
brothers and partners in a partnership firm
carrying on the business of running a hotel.
Certain disputes relating to the business
arose between the parties. In spite of the
partnership deed containing an arbitration
clause, the respondents filed a civil suit
against one of the partners (the appellant)
before the local District Court seeking a
declaration that they, as partners, were
entitled to participate in the administration
of the hotel and sought a permanent
injunction against the appellant from
The appellant moved an application under
Section 8 of the Arbitration and Conciliation
Act, 1996 (Act) raising an objection to the
maintainability of the civil suit on the
ground that the partnership deed contained
an arbitration clause and thus it was
mandatory for the disputes to be referred
to arbitration.
The application was opposed by the
respondents on the ground that acts of
fraud were attributable to the appellant and
hence the dispute could not be adjudicated
by the arbitral tribunal. The fraud alleged,
Issue?
whether the mere allegation of fraud by
one party against the other would be
sufficient to exclude the subject matter of
the dispute from arbitration.?
The SC held that mere allegation of fraud
simplicitor would not be a ground to nullify
the effect of an arbitration agreement
between the parties.
 Only in those cases where the courts, while
dealing with Section 8 of the Act, find that
there are very serious allegations of fraud
which make a clear case of criminal offence or
where allegations of fraud are so complicated
that it becomes absolutely essential that such
complex issues can be decided only by a civil
court on the appreciation of the voluminous
evidence, should the court avoid the arbitration
agreement by dismissing a Section 8
The judgment is a departure from the
principle of arbitrability of fraud when it
comes to foreign seated arbitration vis-à-vis
domestic arbitration where the SC has held
that in the case of arbitrations covered by
New York Convention, the Court can decline
to make a reference only if it comes to the
conclusion that the arbitration agreement is
null and void and not on the ground of
fraud.
VIDYA DROLIA v Durga
Trading Corporation
In Vidya Drolia, a three judge bench of the
Supreme Court was answering a reference
made by a two judge bench of the Supreme
Court which was deciding an appeal against
a Calcutta High Court order appointing an
arbitrator in a dispute between a landlord
and tenant under Section 11 of the
Arbitration Act.
The Supreme Court has now propounded a
four-fold test to determine when a subject-
matter is not arbitrable.
FOUR FOLD TEST OF
ARBITRABILITY
 relates to actions in rem, that do not pertain to
subordinate rights in personam that arise from rights in
rem;

 affects third party rights, have erga omnes effect,

require centralized adjudication, and mutual adjudication
would not be appropriate;

 relates to inalienable sovereign and public interest

functions of the State; and

 is expressly or by necessary implication non-arbitrable

under a specific statute.
ARBITRATION AGREEMENT
An arbitration agreement is the raison
d’être of an arbitration proceeding. It is
only through an arbitration agreement that
parties can submit their issues to be
adjudicated by the arbitral tribunal.
an arbitration agreement is formed when
two parties enter into a contract and agree
in writing that any disputes arising between
them out of that contract will have to be
resolved without going to the courts and
with the assistance of a neutral person: a
third party appointed by both of the
parties, known as the Arbitrator, who would
ARBITRATION AGREEMENT
 7. Arbitration agreement. —

 (1) In this Part, “arbitration agreement” means

an agreement by the parties to submit to
arbitration all or certain disputes which have
arisen or which may arise between them in
respect of a defined legal relationship, whether
contractual or not.

 (2) An arbitration agreement may be in the

form of an arbitration clause in a contract or in
the form of a separate agreement.
 (4) An arbitration agreement is in writing if it is
contained in—

 (a) a document signed by the parties;

 (b) an exchange of letters, telex, telegrams or other

means of telecommunication which provide a record of
the agreement; or

 (c) an exchange of statements of claim and defence in

which the existence of the agreement is alleged by one
party and not denied by the other.

 (5) The reference in a contract to a document containing

an arbitration clause constitutes an arbitration
FORMS OF ARBITRATION
AGREEMENT
A standalone separate Arbitration
Agreement ..... A separate arbitration
agreement can be formed in addition and
reference to the operative agreement
between the parties.
An Arbitration Clause : Arbitration clause
can be formed in the operative agreement
as to the section of the agreement that
deals with the rights and options of the
parties in the event of a legal dispute
arising out of the contract. An arbitration
clause is construed as an arbitration
agreement.
EXAMPLE : ANY DISPUTE ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR
BREACH OF IT SHALL BE FINALLY AND
EXCLUSIVELY RESOLVED BY THE
ARBITRATION UNDER THE RULES OF
THE LCIA THEN IN EFFECT
Submission Agreement
A submission agreement is less common
than an arbitration clause.
 A submission agreement will contain
details of the dispute and the issues
between the parties, and record that it is
being referred to arbitration.
Submission agreements can be made
during litigation to remove the dispute from
the jurisdiction of the court provided the
Court of First Instance has not issued its
judgment yet and, the pleadings stage is
still taking place.
SAMPLE SUBMISSION
AGREEMENT
 We, the undersigned parties, hereby agree that the following
dispute shall be referred to and finally determined by
arbitration in accordance with the UNCITRAL
 Arbitration Rules:

 [brief description of the dispute]

 The arbitral tribunal shall consist of [a sole arbitrator / three

arbitrators].

 The place of arbitration shall be [specify town and country].

 The language to be used in the arbitral proceedings shall be

[specify language].

 The dispute referred to arbitration shall be decided in

accordance with the law of [specify jurisdiction].
Submission agreements allow arbitration to
take place after the dispute has arisen.
For a number of reasons, however,
including oversight at the contracting
phase or, simply, changed circumstances,
parties may not have included an
arbitration clause in a contract under which
a dispute has arisen.
The purpose of a submission agreement is
to define and specify the scope of
arbitration so as to enable the court – later
on – to ensure that the arbitral award was
issued within the limits specified by the
 AUTONOMY IN AN
ARBITRATION AGREEMENT
Doctrine of Separability
Even though the arbitration clause is most
often contained within the contract
between the parties, under most laws and
rules it is nonetheless considered a
separate agreement.
This doctrine of separability permits the
arbitrators to hear and decide the dispute
even if one side claims, for example, that
the contract is terminated, or never existed
in the first place, or is invalid because it
was fraudulently induced.
 ‘the validity of the arbitration clause does not
depend on the validity of the contract as a
whole. By surviving the demise of the main
contract, the arbitration clause constitutes the
necessary agreement of the parties that any
disputes between them should be referred to
arbitration.’[ REDFERN & HUNTER]
 the separability presumption means that an
arbitration agreement can be governed by a
different national law from that (or those)
applicable to the parties’ underlying contract.
The leading explanation for this result is the
separability presumption, which postulates two
separable agreements of differing characters,
S.16 OF THE ARBITRATION
AND CONCILIATION ACT 1996
 “The arbitral Tribunal may rule on its own
jurisdiction, including ruling on any objections
with respect to the existence or validity of the
arbitration agreement, and for that purpose-

 (a) an arbitration clause which forms part of a

contract shall be treated as an agreement
independent of the other terms of the contract;
and

 (b) a decision by the arbitral Tribunal that the

contract is null and void shall not entail ipso
jure the invalidity of the arbitration clause
National Agricultural Co-op Marketing Federation
of India Ltd. v. Gains Trading Ltd
The plaintiff (National Agricultural Ltd.) and
the defendants (Gains Trading Ltd.) entered
into an agreement, according to which the
defendants had agreed to purchase a
certain amount of the plaintiff’s products.
It was alleged by the plaintiffs that the
defendants failed to take the delivery of the
cargo due to which the plaintiffs suffered
losses that were to be paid by the
defendants.
The defendants refused to pay the same
which led to the initiation of the court
action. The contract contained an
ISSUE?
Whether an arbitration clause would come
to an end if the contract containing such
clause is repudiated?
RULING OF THE SUPREME
COURT
The Supreme Court held that an arbitration
clause is a collateral term that is related to
the dispute resolution and not the
performance.
The Court also observed that even if the
contract is repudiated or comes to an end
still the arbitration clause would survive for
the resolution of the disputes which arise
out of or in connection with the main
contract.
 CHOICE OF LAWS IN
ARBITRATION AGREEMENTS
What are the different laws in
arbitration agreements?
law governing the contract
law governing the arbitration agreement
( curial law/lex arbitri)
law governing the arbitral proceedings
the law governing the land of enforcement
of arbitral award.
LAWS GOVERNING
ARBITRATION AGREEMENTS
The arbitration agreement is a contract &
will be devoid of all legal effects unless and
until there is a system of laws in place to
govern the dispute
The lex arbitri is the law chosen by the
parties to govern arbitral procedure,
or the procedural law governing the
conduct of the arbitration.
It comprises the rules which govern the
conduct of an arbitration agreement and
the rules governing the interim measures.
An arbitration agreement is separate from
the main contract and therefore the law
governing the arbitration clause is separate
from the underlying contract.
In an I.C.A; the parties are free to choose
their own laws for arbitration, therefore if a
tribunal fails to comply with the express
choice made by the parties it commits a
gross irregularity in the conduct of the
arbitration proceedings.
Article V(1) (d) of the NYC 1958 provides
that the court may refuse to enforce an
award where the arbitral procedure was not
The Law Applicable to the Merits
of the Dispute [“lex contractus”]
The lex contractus, or governing law of the
contract, is the substantive law which
applies to the merits of the parties’ dispute.
The lex contractus governs the existence,
validity and interpretation of the main
contract.
It is essential for parties in contracts with
an international element to include a
governing law to enhance predictability
and avoid the cost and wasted time of
arguing over the applicable law, should a
dispute arise.
The Law Governing the
Arbitration (“lex arbitri”)
The lex arbitri (also called the “procedural
law” of the arbitration, the “curial law”) is a
body of national rules that sets the general
framework for the conduct of an
international arbitration.
It regulates the important matters relating
to the process of arbitration.
The lex arbitri normally does not specify in
detail how an arbitration is to be
conducted, however the detailed arbitral
procedure is determined mainly by the
applicable institutional rules.
The Law Applicable to the
Arbitration Agreement Itself
This law governs the existence, validity and
interpretation of the arbitration agreement
itself.
Where the seat of arbitration is in a
different jurisdiction from the law governing
the contract, a failure to specify the law
applicable to the arbitration agreement
may lead to inconsistent outcomes before
domestic courts.
Where the seat of arbitration is in a
different jurisdiction from the law governing
the contract, a failure to specify the law
applicable to the arbitration agreement
The Law of the Place of Enforcement of an
Award (“lex executionis”)
The arbitrator has to take into account the
procedures and practices of the court of the
court of the executing country in arbitration
proceedings
Different nations have different rules and
policies of enforcement. [ Public policy of
one nation differs from that of the other]
An award may not be enforced by the
domestic court if it is not in conjunction
with the domestic law of that place.
SEAT THEORY OF
ARBITRATION
The 'Seat' of arbitration is the 'situs' of
arbitration, the place where the arbitration
is anchored.
The seat of arbitration defines the curial
law or procedural law governing the
arbitration and also determines which
court(s) will exercise supervisory
jurisdiction over such arbitration. [for
instance, if the seat of arbitration is chosen
as Riyadh, then the arbitration must be
Shari’a compliant, without the awarding of
interest]
 It will also typically determine the procedure governing
SEAT THEORY
The concept of ‘seat’ is governed by the
law of the place wheren it is being
conducted.
The law of the seat of arbitration can play a
fundamental part in the arbitration process.
Law of the seat of arbitration may allow the
concerned national courts to appoint an
arbitral tribunal where the provisions as
given in the arbitration agreement are not
working.
A seat of arbitration is the “situs” of
arbitration which means the place where
the arbitration will take place.
The term “seat” connotes the center of
gravity of the arbitration proceedings.
It is a place where the arbitration is
anchored ( determination of
jurisdiction)
The seat of arbitration governs the law and
also determine the grounds on which the
award can be challenged.
The award of an arbitration can be
SEAT v VENUE
The Seat of Arbitration may well be quite
independent of the place or the venue
where the hearings or other parts of the
arbitral process occur or take place.
The selection of the Seat determines the
law governing the Arbitration procedure
and often, more importantly, the process
and rights relating to enforcement of the
arbitration award.
Venue is just a geographical location. Any
place could be chosen as a venue.
Sulamérica case SULAMERICA CIA NACIONAL DE
SEGUROS S.A. v. ENESA ENGENHARIA S.A. [2012]
EWCA Civ 638
It evolved around the construction of one of
the largest hydro-electric facilities in the
world known as the ‘Jirau’, situated in
Brazil.
In March 2011 certain incidents occurred
which led the insured to make claims under
the policies, but the insurers declined
liability on the grounds that the losses were
uninsured or excluded by express terms of
the policies and that there had been a
material alteration in the circumstances
disclosed to them at inception of which
they had not been notified as required by
Lets look at the terms
“7. Law and Jurisdiction
It is agreed that this Policy will be governed
exclusively by the laws of Brazil.
Any disputes arising under, out of or in
connection with this Policy shall be subject
to the exclusive jurisdiction of the courts of
Brazil.”
 12. Arbitration
 In case the Insured and the Insurer(s) shall fail to agree as to the
amount to be paid under this Policy through mediation as above, such
dispute shall then be referred to arbitration under ARIAS Arbitration
Rules. The Arbitration Tribunal shall consist of three arbitrators, one to
be appointed by the Insured, one to be appointed by the Insurer(s) and
the third to be appointed by the two appointed arbitrators. The Tribunal
shall be constituted upon the appointment of the third arbitrator.
 The arbitrators shall be persons (including those who have retired) with
not less than ten years’ experience of insurance or reinsurance within
the industry or as lawyers or other professional advisers serving the
industry.
 Where a party fails to appoint an arbitrator within 14 days of being
called upon to do so where the two party-appointed arbitrators fail to
appoint a third within 28 days of their appointment, then upon
application ARIAS (UK) will appoint an arbitrator to fill the vacancy. At
any time prior to the appointment by ARIAS (UK) the party or
arbitrators in default may make such appointment.
 The Tribunal may at its sole discretion make such orders and directions
as it considers to be necessary for the final determination of the
matters in dispute. The tribunal shall have the widest discretion
Sulamérica then initiated the arbitration
proceedings to take place in London under
the ARIAS Rules, pursuant to the arbitration
agreement in their insurance policy.
Enesa subsequently initiated proceedings
in the courts of Brazil as per an exclusive
jurisdiction clause which was present in the
policy.
 Sulamérica then sought an interim anti-
suit injunction in the courts of England in
an attempt to prevent Enesa from pursuing
the proceedings in Brazil with regards to
the arbitration happening.
 Enesa contended that the policy was
expressed to be under the laws of Brazil
and within the exclusive jurisdiction of the
courts of Brazil.
Additionally, they contended that since the
parties’ locations of risk as well as the
events in question were all situated in
Brazil, and only the seat of arbitration was
They also contended that since the
contract to which the arbitration agreement
was part of was an adhesion contract, only
Enesa was allowed to initiate arbitration
proceedings, as per the laws of Brazil.
Sulamérica’s submissions were that, since
the seat of arbitration was expressly stated
to be London, the law with which the
arbitration agreement had the closest and
most real connection was that of English
laws.
Two Pronged approach to
seat
Firstly, it cannot be assumed that the law of
the contract will be applied to the
arbitration agreement.
Secondly, to determine the applicable law,
there should be a ‘three stage enquiry’
which enquires into
(i) express choice,
(ii) implied choice and
 (iii) the closest and most real connection.
Three step test
The first stage of the test looks into
whether an express choice of law is in place
and what it states. In cases where an
express choice of law is mentioned with
respect to the contract as a whole and not
specifically the arbitration agreement, one
cannot simply assume that the law of
the contract extends to the arbitration
proceedings as well. [ doctrine of
separability]
The second stage of the test enquires into
the implied choice of law. This is achieved
by studying the facts and circumstances
surrounding the case. In determining the
implied choice of law, factors such as place
of business of the parties, nationality of
parties, etc. are considered, thereby
making this stage of the test quite similar
to the third stage.
 In the absence of an express choice of law,
the implied choice is given equal
importance and is considered to be a true
or real choice of law.
JUDGMENT
The verdict of the Sulamérica case
established the significance of seat of
arbitration over any other factors.
Here, even though Brazil had the closest
and most real connection with various
aspects of the case and parties involved,
the governing law was decided to be that of
the law of the seat of arbitration, i.e.,
English laws
This also emphasizes the importance of a
neutral, third party country in the
governance of the arbitral proceedings.
Can the courts of the seat
always have a say on the
award?
The third stage of the test enquires into the
closest and most real connection when
determining the governing law of the
arbitration agreement. What usually
happens in this stage is that the law of the
seat of arbitration is considered to be the
governing law of the arbitration agreement.
Monolocal theory
The monolocal theory holds that an arbitral
award derives its legal validity exclusively
from the legal order of the seat.
The first is a state positivist understanding
of law: only those norms and rules formally
laid down by states are considered law
The second is the territorial sovereignty of
states: each state is entitled to approve or
disapprove of the activities carried out
within its territory
Multilocal
Theory/DELOCALIZED
ARBITRATION
 The multilocal theory holds that the validity of
the arbitral award derives not only from the
seat, but from all legal orders in which
recognition and enforcement of the award are
sought
 The source of the award’s validity derives from
a national legal system.
 ‘no sovereign enjoys an exclusive right to deal
with the award’
 Accordingly, in contrast to the monolocal
theory, the views of the seat court under the
multilocal theory are not of special
significance. An enforcement court is entitled
to reach its own view on the validity of the
‘Delocalization’---- the award may be
accepted by the legal order of an
enforcement jurisdiction although it is
independent of the country of its
origin.
Why should awards be
delocalized? -----
It protects the parties against the
local pecularities of law and the courts
of the seat..
If an award is set aside at the seat on
parochial grounds — for example, that
witnesses were not properly sworn in as
required by local law or that the parties
failed to appoint an odd number of
arbitrators. [ JAN PAULSON].
The state of enforcement has at least
an equal ‘title’ to the seat to judge the
validity of an arbitral award
It is the state of enforcement that must
authorise the seizure and sale of the award
debtor’s assets than the State which is no
more than host the arbitral proceedings.
The enforcement courts have a stronger
title to determine the validity of the award.
NEW YORK CONVENTION &
SEAT
 Article V (l)(e) of the NYC :
 (i) has not yet become binding on the
parties or
(ii) has been set aside or suspended.
Article V (1)(e) further requires that the
setting aside or suspension of the award be
ordered by a competent authority of the
country in which, or under the law of which,
the award was made.
American Approach
The Amercian approach has been primarily
been deferential to the seat.
The US approach has been a clear
expression of the monolocal theory.
The American Courts give primacy to the
theory of the seat and provide that the
Article V of the NYC provides a carefully
crafted framework in which seat of the
courts have a primary jurisdiction and the
enforcement courts have a secondary
jurisdiction.
What approach should the
Courts take?
Should it be
deferential to the
seat?
OR
Should it take an
independent stand?
French Approach
The French courts have been less
deferential to the setting aside of the
decisions at the seat to the point that the
decisions are virtually ignored.
The French Courts have an independent
streak and will not enforce an award if it is
not anchored in the legal order of the seat.
The French Courts reason that the decisions
of the seat do not have any legal force as
they are merely the expression of the
state sovereignity.
It can be seen that enforcement courts
have taken very different approaches to
decisions at the seat of arbitration.
This is attributable not only to the
ambiguity of the Convention on the role of
the seat, but also to the influence of
particular theories of international
arbitration.
 Union of India v. Hardy
Exploration and Production
(India) Inc.,
In this case, the parties had entered into a
production sharing contract containing an
arbitration agreement.
The arbitration agreement provided that
the “venue of conciliation or arbitration
proceedings… unless the parties otherwise
agree, shall be Kuala Lumpur…” and that
“[a]rbitration proceedings shall be
conducted in accordance with the
UNCITRAL Model Law on International
Commercial Arbitration of 1985…”
The disputes arose between the parties and
the case was taken to the court at Kuala
What should the court do?
Union of India sought to challenge the
award under the Indian Arbitration and
Conciliation Act, 1996 before the Delhi High
Court.
It contended that the arbitration agreement
did not specify the seat of arbitration and
referred to the venue of arbitration only.
Therefore, Kuala Lumpur was merely the
venue and New Delhi was the seat of
arbitration. Hardy Exploration argued
otherwise.
The Supreme Court held that the parties
had not chosen the seat of arbitration and
the arbitral tribunal had also not
determined the seat of arbitration. It
further held that the choice of Kuala
Lumpur as the venue of arbitration did not
imply that Kuala Lumpur had become the
seat of arbitration.
According to the Supreme Court, the venue
could not by itself assume the status of the
seat; instead a venue could become the
seat only if “something else is added to it
as a concomitant”. The Supreme Court
BGS SGS SOMA JV vs. NHPC
Ltd.
The petitioner was awarded a contract by
the respondent for constructing a large
hydropower project in Assam and
Arunachal Pradesh.
 Clause 67.3 of the contract provided for
dispute resolution, and the arbitration
agreement stated, ‘Arbitration Proceedings
shall be held at New Delhi/Faridabad, India
and the language of the arbitration
proceedings and that of all documents and
communications between the parties shall
be English.
Disputes arose between the parties and an
arbitral tribunal was constituted. Between
August 2011 and August 2016, 71 sittings
of the arbitral tribunal took place at New
Delhi. The arbitral tribunal delivered a
unanimous award in favour of the petitioner
in Delhi on 26 August 2016.
Aggrieved by the award, the respondent
filed an application under section 34 of the
Arbitration and Conciliation Act, 1996 (ACA
1996) seeking to set aside the award
before the court at Faridabad.
 The petitioner filed an application seeking a return of the
Thereafter, the Respondent filed an appeal
under ACA 1996, s 37 read with section
13(1) of the Commercial Courts Act, 2015,
before the Punjab & Haryana High Court.
The High Court passed a judgment in
favour of the respondent, where it held that
the appeal filed was maintainable, and that
Delhi was only a convenient venue where
arbitral proceedings were held and not the
seat of the arbitration proceedings.
The High Court held that Faridabad courts
would have jurisdiction on the basis of the
cause of action having arisen in part in
Faridabad. Aggrieved by the order of the
High Court, the petitioner filed a special
leave petition before the Supreme Court.
ISSUES?
Whether the appeal before the High Court
under ACA 1996, s 37 was maintainable?
Whether the designation of a ‘seat’ is akin
to an exclusive jurisdiction clause?
What is the test to determine the ‘seat’ of
arbitration?
JUDGMENT
If a named place is identified in the
arbitration agreement as the “venue” of
“arbitration proceedings”, the use of the
expression “arbitration proceedings”
signifies that the entire arbitration
proceedings (including the making of the
award) is to be conducted at such place, as
opposed to certain hearings. In such a
case, the choice of venue is actually a
choice of the seat of arbitration.
In contrast, if the arbitration agreement
contains language such as “tribunals are to
meet or have witnesses, experts or the
parties” at a particular venue, this suggests
that only hearings are to be conducted at
such venue. In this case, with other factors
remaining consistent, the chosen venue
cannot be treated as the seat of arbitration.
If the arbitration agreement provides that
arbitration proceedings “shall be held” at
a particular venue, then that indicates
arbitration proceedings would be anchored
at such venue, and therefore, the choice of
The above tests remain subject to there
being no other “significant contrary indicia”
which suggest that the named place would
be merely the venue for certain
proceedings and not the seat of arbitration.
In the context of international arbitration,
the choice of a supranational body of rules
to govern the arbitration (for example, the
ICC Rules) would further indicate that the
chosen venue is actually the seat of
arbitration. In the context of domestic
arbitration, the choice of the Indian
Arbitration and Conciliation Act, 1996 would
 ARBITRAL TRIBUNAL &
ARBITRATION PROCEEDINGS
ARBITRATOR APPOINTMENTS
Choosing arbitrators who will preside over
the proceedings and issue an award is
perhaps the most important thing a lawyer
does with respect to resolving the client’s
dispute.
The skill, experience, and knowledge of the
arbitrators will have a significant impact on
the quality of the process and of the award.
In addition, arbitrators are fundamentally
more powerful than judges, because
unlike judges, their decision usually cannot
be overturned on the basis of fact or law.
How many Arbitrators?
Should we have one, two or three
arbitrators?
A number of considerations should affect
the decision whether to choose one
arbitrator or three.
With one arbitrator, the main advantages
are that the costs will be less, and that it
will be easier to schedule hearings.
Moreover, the process should move more
quickly, because a sole arbitrator can make
decisions without the necessity of
conferring with colleagues at any stage of
the arbitration.
In international arbitrations, however, there
is frequently a preference for three
arbitrators, particularly if the amount of
money at stake justifies the cost.
Although it is more expensive to have three
arbitrators, they will bring more to the table
in terms of their experience and knowledge
than one arbitrator alone.
In addition, it is generally believed that the
award is more likely to be within the
parties’ expectations when considered by
three arbitrators, and that unusual or
inexplicable awards are less likely to occur.
Qualifications of the
arbitrator?
What should be qualification of the
arbitrators?
Should it be necessary to specify the
qualifications of the arbitrators?
What should the parties choose as far as
the arbitrators are concerned?
One of the advantages of arbitration is that
parties can choose decisionmakers who
have knowledge and experience in the area
that is the subject of the dispute.
[ preferably not a random judge]
Arbitrators must make many decisions that
require an understanding of the law, such
as questions of contract interpretation or
validity.
The ability to be fluent in a particular
language, or sometimes in two languages,
may be important to the parties.
Choosing the Presiding
Arbitrator
Once the party-appointed arbitrators have
both been chosen, the next step is to
choose the chair.
Normally the two coarbitrators make this
choice in consultation with the parties who
appointed them.
Suppose you are the party? What qualities
will you look in your arbitrator?
Appointment of arbitrators
Choosing arbitrators who will preside over
the proceedings and issue an award is
perhaps the most important thing a lawyer
does with respect to resolving the client’s
dispute.
The skill, experience, and knowledge of the
arbitrators will have a significant impact on
the quality of the process and of the award.
In addition, arbitrators are fundamentally
more powerful than judges, because unlike
judges, their decision usually cannot be
overturned on the basis of fact or law.
How Many Arbitrators?

In a commercial arbitration, usually either

one or three arbitrators are appointed. A
number of considerations should affect the
decision whether to choose one arbitrator
or three. With one arbitrator, the main
advantages are that the costs will be
less, and that it will be easier to
schedule hearings. Moreover, the
process should move more quickly,
because a sole arbitrator can make
decisions without the necessity of
conferring with colleagues at any
stage of the arbitration. In international
Although it is more expensive to have three
arbitrators, they will bring more to the table
in terms of their experience and
knowledge than one arbitrator alone.
In addition, it is generally believed
that the award is more likely to be
within the parties’ expectations when
considered by three arbitrators, and that
unusual or inexplicable awards are less
likely to occur.
If the dispute is particularly large and
complex, three arbitrators may be more
likely to arrive at a better, more
comprehensive understanding than one
arbitrator. In addition, when parties are
from different countries and cultures, there
is a comfort level provided when each party
is able to select one arbitrator who
generally comes from a similar background.
The various arbitral rules have different
resolutions as to the number of arbitrators
if the parties have not agreed as to the
number. Some rules willdefault to a sole
arbitrator, unless the matter seems
particularly complex. [LCIA RULES]
Others default to three arbitrators,
regardless of the circumstances.[UNCITRAL
RULES]
Qualifications

Lawyers or Non lawyers : Although it is not

necessary to have a law degree to be an
arbitrator, parties generally choose an
arbitrator who is also a lawyer.
Arbitrators must make many decisions that
require an understanding of the law, such
as questions of contract interpretation or
validity.
 If there are three arbitrators, however,
parties might want to have one who is a
lawyer, usually the chair, and one or two
who are individuals with experience in the
field. In a construction arbitration, for
Language Fluency : The ability to be fluent
in a particular language, or sometimes in
two languages, may be important to the
parties. An arbitrator lacking fluency in the
language of the arbitration may not
understand some of the critical issues
necessary to the resolution of the dispute.
 Specifications and Requirements : Qualifications
that are agreed upon by the parties can be spelled out
in the arbitration clause. The parties could assert, for
example, that all arbitrators must speak French, must
have experience in the construction industry, and that
the language of the arbitration will be French.
 Arbitrators are expected to be independent and
impartial. They are also expected to be neutral, which
could include the requirements of independence and
impartiality, but may also refer to nationality. There is
generally an expectation that the presiding arbitrator,
or a sole arbitrator, will not have the same nationality
as either of the parties. Institutional rules may
specifically provide for national neutrality
HOW TO SELECT ARBITRATORS?
Method of Selection : The arbitrator
selection procedure can vary, depending
upon the parties’ agreement, and upon the
institutional rules. If parties do not state in
their arbitration clause how they want to
select arbitrators, but they choose rules to
govern the process, the selection will take
place according to the institutional rules.
How Many Arbitrators?
In a commercial arbitration, usually either
one or three arbitrators are appointed. A
number of considerations should affect the
decision whether to choose one arbitrator
or three. With one arbitrator, the main
advantages are that the costs will be less,
and that it will be easier to schedule
hearings.
While it is generally a good idea to specify
in the arbitration clause whether the
parties want one or three arbitrators, a
party may not know at the beginning of the
dispute whether the dispute will be
The various arbitral rules have different
resolutions as to the number of arbitrators
if the parties have not agreed as to the
number. Some rules will default to a sole
arbitrator, unless the matter seems
particularly complex. [LCIA Rules]
APPOINTMENT OF
ARBITRATORS
11 Appointment of arbitrators. —
(1) A person of any nationality may be an
arbitrator, unless otherwise agreed by the
parties.
(2) Subject to sub-section (6), the parties
are free to agree on a procedure for
appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in
sub-section (2), in an arbitration with three
arbitrators, each party shall appoint one
arbitrator, and the two appointed
arbitrators shall appoint the third arbitrator
who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-
section (3) applies and—
(a) a party fails to appoint an arbitrator
within thirty days from the receipt of a
request to do so from the other party; or
(b) the two appointed arbitrators fail to
agree on the third arbitrator within thirty
days from the date of their appointment,
the appointment shall be made, upon
request of a party, by the Chief Justice or
any person or institution designated by
him.
(5) Failing any agreement referred to in
sub-section (2), in an arbitration with a sole
arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of
a request by one party from the other party
to so agree the appointment shall be made,
upon request of a party, by the Chief
Justice or any person or institution
designated by him.
(6) Where, under an appointment
procedure agreed upon by the parties,—
(a) a party fails to act as required under
that procedure; or
(b) the parties, or the two appointed
arbitrators, fail to reach an agreement
expected of them under that procedure; or
(c) a person, including an institution, fails
to perform any function entrusted to him or
it under that procedure, a party may
request the Chief Justice or any person or
institution designated by him to take the
necessary measure, unless the agreement
(7) A decision on a matter entrusted by
sub-section (4) or sub-section (5) or sub-
section (6) to the Chief Justice or the
person or institution designated by him is
final.
(8) The Chief Justice or the person or
institution designated by him, in appointing
an arbitrator, shall have due regard to—
(a) any qualifications required of the
arbitrator by the agreement of the parties;
and
(b) other considerations as are likely to
secure the appointment of an independent
(9) In the case of appointment of sole or
third arbitrator in an international
commercial arbitration, the Chief Justice of
India or the person or institution designated
by him may appoint an arbitrator of a
nationality other than the nationalities of
the parties where the parties belong to
different nationalities.
(10) The Chief Justice may make such
scheme 1 as he may deem appropriate for
dealing with matters entrusted by sub-
section (4) or sub-section (5) or sub-section
(6) to him.
(11) Where more than one request has
been made under sub-section (4) or sub-
section (5) or sub-section (6) to the Chief
Justices of different High Courts or their
designates, the Chief Justice or his
designate to whom the request has been
first made under the relevant sub-section
shall alone be competent to decide on the
(12) (a) Where the matters referred to in
sub-sections (4), (5), (6), (7), (8) and (10)
arise in an international commercial
arbitration, the reference to ‘‘Chief Justice''
in those sub-sections shall be construed as
a reference to the ‘‘Chief Justice of India''.
(b) Where the matters referred to in sub-
sections (4), (5), (6), (7), (8) and (10) arise
in any other arbitration, the reference to
“Chief Justice” in those sub-sections shall
be construed as a reference to the Chief
Justice of the High Court within whose local
limits the principal Civil Court referred to in
Is the power of the Chief
Justice administrative or
judicial?
By looking at Section 11---- Can we infer
the powers of the Chief Justice to be an
administrative power?

Or can we say that it is a judicial power

Intial Interpretations of the
SC
"Under the 1996 Act appointment of
arbitrator/s is made as per the provision of
Section 11 which does not require the Court
to pass a judicial order appointing
arbitrator/s” ( Sundaram Finance Ltd v.
NEPC India Ltd.)
 "It is now well settled that petition under Article 136 can
lie for challenging a judgment, decree, determination,
sentence or order in any cause of matter passed or
made by any court or tribunal in the territory of India. As
the learned Chief Justice or his designate under Section
11(6) of the Act acts in administrative capacity as held
by this Court in the aforesaid decision it is obvious that
this order is not passed by any court exercising any
judicial function nor it is a tribunal having trappings of a
Konkan Railway Corporation
Ltd & Ors v. Mehul
Construction Co
Held that the that the order of the Chief
Justice or his designate in exercise of the
power under S.11 of the Act was an
administrative order and that such an order
was not amenable to the Jurisdiction of the
Supreme Court under Article 136.

Konkan Railway Corporation
Ltd Anr v. Rani Construction
Pvt. Ltd.
"It appears that the Chief Justice or his
nominee, acting under Section 11 of the
Arbitration and Conciliation Act, 1996, have
decided contentious issues arising between
the parties to an alleged arbitration
agreement and the question that we are
called upon to decide is whether such an
order deciding issues is a judicial or an
administrative order?"

"In conclusion, we hold that the order of the
Chief Justice or his designate under Section
11 nominating an arbitrator us not an
adjudicatory order and the Chief Justice or
his designate is not a tribunal. Such an
order cannot properly be made the subject
of a petition for special leave to appeal
under Article 136. The decision of the three
Judge Bench in Konkan Railway Corporation
& Ors v. Mehul Construction Co. is affirmed
S.B.P. & Co v. Patel
Engineering & Anr
What is the nature of the function of the
Chief Justice or his designate under S. 11
(6) of the Arbitration and Conciliation Act,
1996?
What is the scope and power of the Chief
Justice under S. 11?
JUDGMENT
The power exercised by the Chief Justice of
the High Court or the Chief Justice of India
under S. 11(6) of the Act is not an
administrative power. It is a judicial power.
The power under S. 11(6) of the Act, in its
entirety, could be delegated, by the Chief
Justice of the High Court only to another
judge of that court and by the Chief Justice
of India to another judge of the Supreme
Court.
In case of designation of a judge of the
High Court or of the Supreme Court, the
power that is exercised by the designated,
The Chief Justice or the designated judge
will have the right to decide the preliminary
aspects as indicated in the earlier part of
this judgment. These will be, his own
jurisdiction, to entertain the request, the
existence of a valid arbitration agreement,
the existence or otherwise of a live claim,
the existence of the condition for the
exercise of his power and on the
qualifications of the arbitrator or
arbitrators.
The Chief Justice or the judge designated
would be entitled to seek the opinion of an
Designation of a district judge as the
authority under S. 11(6) of the Act by the
Chief Justice of the High Court is not
warranted on the scheme of the Act.
Once the matter reaches the arbitral
tribunal or the sole arbitrator, the High
Court would not interfere with orders
passed by the arbitrator or the arbitral
tribunal during the course of the arbitration
proceedings and the parties could approach
the court only in terms of Section 37 of the
Act or in terms of S. 34 of the Act.
Since an order passed by the Chief Justice
of the High Court or by the designated
judge of that court is a judicial order, an
appeal will lie against that order only under
Article 136 of the Constitution of India to
the Supreme Court.
There can be no appeal against an order of
the Chief Justice of India or a judge of the
Supreme Court designated by him while
entertaining an application under S. 11(6)
of the Act.
EFFECT OF PATEL ENGG JUDGEMENT: Does
it create an absurdity in law
who should decide whether there is an
arbitration agreement or not. Should it be
decided by the Chief Justice or his
designate before making an appointment of
arbitrator under S.11 or the arbitrator who
is appointed under S.11 of the Act?
After the SBP Judgement, the same has to
be decided by the Chief Justice or his
nominees.
Wont it make the judicial process too
much prolonged in that case?
Isn’t the judgment absurd : Since the
CJ can delegate his powers to an