FINAL AUTHORITY TO DETERMINE ARBITRABILITY OF SUBJECT LIES WITH THE ARBITRATOR

Prince Chadha v. Amardeep Singh: Final Authority to Determine Arbitrability of Subject Lies With the Arbitrator.

Petitioner: Prince Chadha

Respondent: Amardeep Singh

Court: Hon’ble High Court of Delhi

Date: April 2, 2024

Coram: Hon’ble Mr. Justice Prateek Jalan

Citation: ARB.P. 1361/

Facts:

1. On the January 2, 2008, an agreement to sell was executed between petitioner, Prince Chadha and respondent, Amardeep Singh. Subsequently, a dispute arose between the two parties with regards to the agreement.
2. As per the Clause 7 of the agreement, any future dispute between parties was to be settled by arbitration. The petitioner henceforth invoked the arbitration vide a letter dated September 15, 2022, proposing for a sole arbitrator. This was not reverted to by the respondent.
3. Upon failure to mutually appoint an arbitrator, the petitioner moved to High Court under Section 11(6) of the Arbitration & Conciliation Act, 1996 to seek appointment by the court itself.
4. The respondents claimed that there was no arbitration agreement as the same document was disputed. The respondent refused to agree that the same was signed by him.

ISSUE:

Whether the arbitral agreement was valid and effective if the document bears the signature of both parties & attestation by notary or any other essential requirement under Section 7(4)? Whether the scope of the court’s power under Section 11 of the Act extends to deal with cases that are prima-facie arbitrable?

 JUDGEMENT:

The Delhi High Court held that an agreement prima-facie existed and was valid when it contained the signature of the parties and attestation by a Notary Public. No other essential is required to prove the validity of the agreement. The court also held that the scope of Section 11 is limited in nature. The prime authority for deciding whether a dispute arising out of an agreement as arbitrable or not is the arbitrator lies with arbitrator. The scope of Court’s exercising power under Section 11 of the Arbitration & Conciliation Act is restricted to a prima facie examination of the existence of the agreement.

The court stated that it was clear that the court’s jurisdiction at the pre-reference stage is only to determine the prime facie existence of an arbitration agreement and the final adjudication, even on the question of arbitrability, is to be left to the arbitral tribunal being the parties chosen forum.

The court could interfere only when the dispute is ex-facie not arbitrable. The Court, thus, upheld the validity of the agreement and the petition and consequently appointed the requisite arbitrator. However, the court left the respondent’s contention on existence & maintainability of arbitrability claims open to be adjudicated by the arbitrator.

CONCLUSION:

The Delhi High Court expressly affirmed that an agreement signed by the parties and two witnesses along with attestment by notary is sufficient to uphold an agreement. The matter, hence, does not fall within the limited section of cases wherein the reference can be declined at this initial stage.

The scope of Section 11 of the Act has been reiterated to be limited, as held in various precedents. The Court held that arbitrability of a matter must be determined by the learned arbitrator if the concerned matter is prima facie arbitrable. The court under the power of Section 11(6) can determine arbitrability only in cases which are ex-facie non-arbitrable.