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Olympus Superstructures Pvt. LTD v. Meena Vijay Khetan

Section 16 of the Arbitration and Conciliation Act gives an arbitral tribunal the power to rule on its own jurisdiction. This includes ruling on objections to the existence or validity of an arbitration agreement. The tribunal can treat an arbitration clause as separate from the rest of the contract. Even if the tribunal finds the contract as a whole invalid, this does not invalidate the arbitration clause. Section 16 allows a party to raise objections to the tribunal's jurisdiction any time before submitting its statement of defense. Section 17 allows an arbitral tribunal to grant interim measures like those a court can provide under Section 9. The tribunal can grant interim relief during or after the arbitration but before the award is enforced. Section

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529 views

Olympus Superstructures Pvt. LTD v. Meena Vijay Khetan

Section 16 of the Arbitration and Conciliation Act gives an arbitral tribunal the power to rule on its own jurisdiction. This includes ruling on objections to the existence or validity of an arbitration agreement. The tribunal can treat an arbitration clause as separate from the rest of the contract. Even if the tribunal finds the contract as a whole invalid, this does not invalidate the arbitration clause. Section 16 allows a party to raise objections to the tribunal's jurisdiction any time before submitting its statement of defense. Section 17 allows an arbitral tribunal to grant interim measures like those a court can provide under Section 9. The tribunal can grant interim relief during or after the arbitration but before the award is enforced. Section

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Syed renoba
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 ENROLLMENT NO.

: GU17R0389 [6th Sem]


 SUBJECT: ADR
 ANSWERS OF THE QUESTION DATED 02/04/2020

Q.NO.1: Discuss the power of the arbitrator to rule on his own jurisdiction under section
16 of the Arbitration and Conciliation Act, 1996.

Section 16 of the Arbitration and Conciliation Act, 1996, confers power on the arbitral tribunal
to rule on its own jurisdiction. The provisions of Section 16 corresponds to Article 16 of the
UNIVITRAL Model Law.

Arbitral tribunal is vested with powers under Section 16(1) to rule on its own jurisdiction,
including ruling on any objections with respect to the existence or validity of the arbitration
agreement and for that purpose,-

i. An arbitration clause which forms part of a contract is to be treated as an agreement


independent of the other terms of the contract; and
ii. Even the arbitral tribunal holds that the contract is null and void, it shall not entail ipso
jure the invalidity of arbitration clause.
[Olympus Superstructures Pvt. Ltd v. Meena Vijay Khetan]

In Gas Authority of India Ltd. V. Keti Constructions (I) Ltd.,2007 SCC 38, the Court held that
the expression used in Section 16(1) of the Act that the ‘arbitral tribunal may rule’ on any
objection to the existence or validity of the arbitration agreement shows that the Arbitral
Tribunal’s authority under section 16 of the Act is not confined to the width of the jurisdiction,
but goes to the very root of its jurisdiction and there is no impediment in contending before the
arbitral tribunal that it had been wrongly constituted.

In Hindustan Petroleum Corporation Ltd. V. Pinkcity Midway Petroleums, AIR 2003 SC 2881,
the Petroleum Company stopped supply to its dealer who had allegedly indulged in short supply
and tampering of sales etc. the dealership agreement amongst other provisions, empowered the
company to stop supply in case of breach of any clause in the agreement. Therefore the Court
held that the action taken by company was in exercise of contractual power and dispute arising
out of such action was referable to arbitration under section 16 of the ACT, and it was mandatory
for Civil Court to refer the dispute to arbitration. The Court further ruled that section 16(1)
empowers the arbitral tribunal to rule on its own jurisdiction including rule on any objection with
respect to existence or validity of arbitration agreement. The provisions of section 16(1) clearly
provide that if there is any objection as to the applicability of the arbitration clause to the facts of
the case, the same will have to be raised before concerned arbitral tribunal and the Civil Court
has no jurisdiction to embark upon an inquiry in regard to applicability of the arbitration clause
to the facts of the case.

Section 16(2) provides plea to raise objections to jurisdiction but no time limit is prescribed. The
arbitral tribunal itself may move motion relation to question of jurisdiction, however under the
section the parties have also vested rights to raise objections to jurisdiction but ‘not later than the
submission of the statement of defence’. A party shall not be deprived of such right to raise
objections to jurisdiction merely on the ground that he has appointed or participated in
appointment of arbitrator. Thus, an aggrieved party has an opportunity to raise a jurisdictional
plea before an arbitral tribunal even after the appointment of an arbitrator.

Q.NO.2: What are the conditions under which interim measures can be taken by arbitral
tribunal under section 17? What is the difference and interplay between section 9 and 17?

Section 17 provides that the arbitral tribunal shall have power to grant all kinds of interim
measures which the Court is empowered to grant under S9 of the Act. Such interim measures can
be granted by the arbitral tribunal during the arbitral proceedings or at any time after making the
arbitral award, but before it is enforced under S36 of the Act.

Under S17 (1), arbitral tribunal will have the power to following interim measures:

i. Appointment of a guardian for a minor or person of unsound mind;


ii. Measures protecting goods, or amount of money, or property which is subject matter of
the dispute; and
iii. Interim junction or appointment of receiver and such other measures for protection.
Once the arbitral tribunal is constituted, the Courts cannot entertain applications for interim
measures unless there are circumstances where the interim award or the order passed by the
arbitral tribunal may not render the remedy required.

 Difference between section 9 and section 17

Section 9 of the Act provides for the making of the interim measures by the Court in certain
matters.

Section 17 on other hand empowers arbitral tribunal to order interim measures for the protection
of the subject matter of the dispute.

 Interplay between section 9 and section 17

The 2015 amendment made wide-ranging changes to Section 9 and 17. More powers have now
been given to an arbitral tribunal, not only as to the scope of the interim reliefs, but also as to the
enforceability. A new sub-section (3) has been added to S9 which states that once the arbitral
tribunal has been constituted, the Courts will not ordinarily entertain an application under S9
(excluding circumstances in which a S17 may not be efficacious).

[Sundaram Finance v. NEPC (1992) 2 SCC 479, M.D., A.W.H.O. V. Sumangal (2004) 9 SCC
619; and Firm Asok Traders v. Gurmukhdas Saljua (2004) 1 SCR 404]

Court held, Post the amendment Act, the arbitral tribunal now has wider powers of enforcement.
Moreover, an application under S17 can now be made “at any time after the making of the
arbitral award but before it is enforced in accordance with S36,” which appears to be conferring
such powers to the tribunal even after the award. Indeed, now S9 petitions can be files “before”
the arbitral tribunal is seized of the matter. For “during” and “after” scenarios, it appears that any
petition under S9 may, at the very least, be open to a challenge on maintainability under S9 (3)
read with S17.

However, S9 of the Act has more expansive scope wherein the orders of the Court may bind
third parties. Contrariwise, orders flowing from the Arbitral tribunal under S17 may only bind
parties to the arbitration and may not bind any third parties.

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