ARBITRAL TRIBUNAL TO RULE ON ITS OWN JURISDICTION
Arbitration was formulated as a strategy to evade the ills plague the procedure of civil litigation in courts. In India, it existed earlier only in panchayats, which comprised of individuals who were approached to settle on issues brought before them, and their decisions were acknowledged by the parties to the dispute.
The British, for the first time under their standard, utilized the guideline of arbitration in the Bengal regulations of 1772 and 1780. And, in 1813 legislations with respect to arbitration of disputes were made applicable to immovable property. And, in 1940, the Arbitration Act was sanctioned, which revoked the Arbitration Act of 1899. These rules aimed to regulate the procedure of arbitration in India. But over a period of time, it was discovered that the Arbitration Act of 1940 was insufficient to address the issues of an evolving India. Hence, in 1996 it was replaced by the Arbitration and Conciliation Act.
The Arbitration and Conciliation Act, 1996 gives the parties abundant freedom in issues, for example, the matter of choosing the place of arbitration, fixing the number of arbitrators, the appointment of arbitrators, etc. They are even allowed to decide the issues which they need to submit to the arbitral tribunal framed by their decision. In any case, once in a while, an issue of whether the Arbitral Tribunal has jurisdiction may emerge. One of the parties may claim that the Arbitral Tribunal has no purview to decide the dispute between them. In fact, this happened frequently under the old Arbitration Act, 1940 where the mere claim of the invalidity of the primary agreement would give jurisdiction to the courts to decide whether a legitimate arbitration agreement existed between the parties to the dispute. Furthermore, this postponed the procedure of arbitration a lot, accordingly defeating the purpose of the arbitration. Presently, under the Arbitration and Conciliation Act, 1996 power has been given to the Arbitral Tribunal under Section 16 (1) to rule on its jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement.