Pre-Referral Examination On Validity Of Arbitration Agreements: In Search Of The Right Balance

Deep Mukherjee, Advocate, District Judge Court, Hooghly

ABSTRACT

In the realm of arbitration law, the courts have witnessed a significant evolution in their approach to examining the validity of arbitration agreements. The courts have primarily taken two core approaches while balancing party autonomy and determination of the existence of a valid arbitration agreement. While the traditional approach allows courts full discretion to rule on the presence and legality of arbitration agreements, the liberal approach confines the review to a prima facie level initially. The 2015 amendments to the Arbitration and Conciliation Act, 1996 introduced a new regime, notably altering Section 11 of the Act by incorporating subsection (6A). This amendment restricted the courts to a prima facie assessment of the existence of a valid arbitration agreement. Similar amendments to Sections 8 & 45 also seek to curtail judicial intervention by mandating arbitration referrals unless clear evidence disproves the existence or validity of an arbitration agreement. However, these amendments have not fully succeeded in achieving their desired objectives. It is felt that there is a need for balancing time and cost considerations concerning pre-referral examination in order to prevent parties from being prematurely compelled into arbitration without a valid arbitration agreement while also acknowledging the potential cost implications of lengthy court proceedings after which a party may eventually be required to submit before an arbitral tribunal.