Interpretation of Section 8 and 11 of the Arbitration Act
The Supreme Court in the recent judgment of Vidya Drolia and Ors. vs. Durga Trading Corporation and Ors. MANU/SC/0939/2020 has interpreted Section 8 and 11 of the Arbitration Act as follows:-
“a. Sections 8 and 11 of the Act have the same ambit with respect to judicial interference.
b.Usually, subject matter arbitrability cannot be decided at the stage of Sections 8 or 11 of the Act, unless it’s a clear case of deadwood.
c. The Court, Under Sections 8 and 11, has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie (summary findings) case of non-existence of valid arbitration agreement, by summarily portraying a strong case that he is entitled to such a finding.
d. The Court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above, i.e., ‘when in doubt, do refer’.
e. The scope of the Court to examine the prima facie validity of an arbitration agreement includes only:
a. Whether the arbitration agreement was in writing? or
b. Whether the arbitration agreement was contained in exchange of letters, telecommunication etc?
c. Whether the core contractual ingredients qua the arbitration agreement were fulfilled?
d. On rare occasions, whether the subject-matter of dispute is arbitrable?”
