Mar, 30 2024

The jurisdiction of an arbitral tribunal refers to its power to hear and resolve a dispute. This is determined by an agreement between the parties concerned. This is a crucial element of arbitration, allowing the parties to choose their jurisdiction, which is why it is the preferred choice among business giants. The primary source for determining jurisdiction is typically an arbitration agreement, which can be a clause in a contract or a distinct document. In most situations, the tribunal has the authority to determine its own jurisdiction, including the legality of the arbitration agreement.

Only the subjects addressed by the arbitration agreement are under the tribunal's purview. There are several characteristics of jurisdiction, including:

1. Subject Matter Jurisdiction: This focuses on the kind of cases that the court is capable of hearing. Each tribunal is authorised to hear a certain type of case depending on the laws and its status in the legal system. This accounts for specialisation of the court or its jurisdiction to hear only certain kind of cases.
2. Personal Jurisdiction: This concerns the court's authority over the parties concerned. An arbitral award is not enforceable unless the court has jurisdiction over the defendant. The usual methods used to determine this include serving the defendant with court documents inside the jurisdiction's boundaries or having a significant amount of interaction with the region.
3. Territorial jurisdiction: This relates to the venue—the physical place where the case will be heard. There are frequently regulations that specify the appropriate venue depending on the defendant's residence or the location of the events giving birth to the case. This can be useful for convenience and to ensure a fair trial for all sides granting them party autonomy as well.

In the India, The courts held the authority to determine whether an Arbitral Tribunal had jurisdiction prior to the 1996 Arbitration and Conciliation Act. Nevertheless, this was altered by Section 16 of the 1996 Act, which gave the Tribunal the authority to determine its own jurisdiction, including any challenges to the arbitration agreement's legality. To put it simply, Section 16 implies that the arbitral tribunal has the power to decide if it is competent to render a decision in the dispute. It may also make a decision regarding any challenges to the arbitration agreement's existence or legality.  It further recommends that until the Tribunal has rendered a verdict, courts refrain from becoming involved in this case. Nonetheless, there is a dispute over the Tribunal's decision-making authority and the possibility of legal challenges.d

Some of the relevant case laws related to Section 16 of the Arbitration and Conciliation Act, 1996, are discussed as follows:

Union of India v. East Coast Boat Builders & Engineers Ltd. (1998)

The Learned Delhi High Court, in this case, noted that if the arbitration tribunal rejects the plea challenging jurisdiction, the Court cannot interfere at that stage. The only remedy available to the party arises after the declaration of the final arbitral award.

M/s Uttam Singh Dugal v. M/s Hindustan Steel Ltd (1981)

In this case, it was held that the finding on the question of jurisdiction is not an interim award as no part of the dispute is decided. Thus, such a finding is not appealable.

S.B.P. & Co vs Patel Engineering Ltd. & Anr (2005)

The Hon’ble Supreme Court of India in this case observed that a remedy available to the party aggrieved is to challenge the award in accordance with Section 34 or Section 37 of the Act. Section 34 comes into play when the application against the jurisdiction is overruled and the arbitration proceedings are completed accordingly, and Section 37 provides for appeal when the application challenging the jurisdiction is allowed.