Courts Can't Act Mechanically While Referring A Dispute To Arbitrator, Says Supreme Court: ELP Analysis

ELP Update

Section 11 (6-A)2 of the of the Arbitration and Conciliation Act, 1996 (Act) provides that the court shall 'confine to the examination of the existence of an arbitration agreement' while determining an application under sections 11 of the Act.

Recently, the Supreme Court observed that courts are obliged to apply their mind to core preliminary issues within the framework of section 11(6-A) of the Act.

It held:

• The Supreme Court or the high court, as the case may be, is not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen arbitrator.

• On the contrary, courts are obliged to apply their mind to the core preliminary issues, albeit, within the framework of Section 11(6-A) of the Act.

• Such a review, is not intended to usurp the jurisdiction of the arbitral tribunal but is aimed at streamlining the process of arbitration.

• Therefore, even when an arbitration agreement exists, it would not prevent the court to decline a prayer for reference if the dispute in question does not correlate to the said agreement.

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