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ARBITRABILITY OF DISPUTES: DHARAMVIR KHOSLA AND OTHERS V. ASIAN HOTELS (NORTH) LTD.
INTRODUCTION
Arbitral tribunals have traditionally been regarded as capable of adjudicating any civil or commercial dispute that can be decided by a civil court, provided that the following conditions are met: I the conflict is covered by the arbitration agreement; (ii) the party or parties to the dispute refer the dispute to arbitration; and (iii) the disputes are capable of adjudication and settlement by arbitration. However, the most controversial issue in the argument over arbitrability has been "subject-matter arbitrability," or whether the conflicts can adjudicate and settle by arbitration. Several conflicts in India have been deemed "non-arbitral" in the past because the dispute's subject matter is not susceptible to settlement by arbitration under Indian law.
It was in the 2011 judgment [1], the SC laid down the test for determining whether a subject matter is arbitral or not. The Court established the "Test of Arbitrability". It concluded that conflicts involving (i) rights in personam to be compliant with arbitration and (ii) rights in rem should be decided by courts and public tribunals.
FACTS OF THE CASE
Plaintiff filed a lawsuit and an interim application for a decree of declaration seeking an irrevocable, perpetual license in favour of the Plaintiff in respect of space/shops/premises at the Hyatt Hotel Regency, as well as an injunction declaring the Defendant's purported revocation of the license as illegal and void. The plaintiff claimed that the license agreement created the nature of ownership therein. To this, the defendants raised objections with regards to the maintainability of the suit, citing an arbitration clause in the license agreement.
ISSUE
- Can an objection be made under Sec.8 of the Act without having to apply?
- Whether the court can determine if an issue under the revised sec.8 is arbitral after an objection has been filed?
- Would it be possible for the Court to send special legislation cases or in rem disputes to arbitration?
DECISION AND ANALYSIS
Regarding the first issue, the Court examined the Parasramka Holdings Pvt. Ltd. vs Ambience Pvt. Ltd[2] and Anr case explicitly held that no formal application under Section 8 was required. This was true as long as a written declaration was submitted, contesting the suit's maintainability in light of the arbitration clause in the agreement. In the present case, the court recognised that the defendant raised maintainability before filing the written statement under Sec.8. This objection was taken.
Coming to the second issue, the court noted that unlike sec.11 of the act, sec.8 would compel the court to consider whether the matter is arbitral or not. It further cleared that the newly amended legislation curtailed judicial intervention. The court cited the case of Emaar MGF Land Limited v. Aftab Singh[3] to further direct that unlike sec.11 of the Act, sec. Eight would require the court to check if the case is arbitral or not.
So, while deciding the third issue, the court relied on many previous judgments to show that certain disputes were not arbitral. Decisions were reviewed that rendered arbitrating decisions in rem or special legislation such as the Consumer Protection Act, 1986. Decisions were reviewed that rendered in rem arbitrating decisions or special laws such as the Consumer Protection Act of 1986 unlawful. Except for these issues, it was indicated that the rest of the case might be referred to arbitration.
CONCLUSION
The court saw that nothing prevented it from allowing the dispute and referred the case for arbitration under the amended sec.8.
LINKS REFERRED:
https://kanoonsangrah.com/dharamvir-khosla-v-asian-hotels-north-ltd/
[1] Booz Allen and Hamilton v. SBI Home Finance Limited and others, (2011) 5 SCC 532.
[2] CS (SO) No. 125/2017.
[3] (2019) 12 SCC 751.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.
- INTRODUCTION
- FACTS AND ISSUE
- DECISION AND CONCLUSION
