18 March 2014

Arbitration – Separate application under Section 8 not required

The Delhi High Court has held that separate application under Section 8 of the Arbitration and Conciliation Act, 1996 is not necessary. Rejecting the contention that a matter is not required to be referred to arbitration in case neither party files an application for reference of dispute to an arbitrator under said Section 8, the court held that there is no requirement of a request for reference to arbitration as long as the arbitration agreement has been furnished. It was held that as long as a party invokes arbitration not later than when submitting his first statement on the substance of the dispute, the same is enough to bring the bar of Section 8 into play and the judicial authority/court then ceases to have jurisdiction. The defendant in the present case had neither made any prayer, nor in its preliminary objections in the written statement, sought reference to arbitration. Decision in the case of Arti Jethani was held as contrary to the mandate of Section 8 requiring the party before the court to only bring to its notice that the suit is subject to arbitration agreement.

The High Court, in its order dated 3-3-2014 in CS(OS) 461/2011, also observed that civil disputes which are otherwise subject matter of arbitration agreement do not become non-arbitrable merely because the actions of the party also constituted offence and FIR of the said offence was lodged. Reliance on Supreme Court Judgement in the case of Booz Allen and Hamilton Inc. [(2011) 5 SCC 532] was rejected by the high court here while it observed that the Apex Court had only held that arbitral tribunal cannot decide criminality and that same does not affect arbitrability.


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