Answer By law4u team
Under Indian law, the concept of arbitrability dictates which disputes can be referred to arbitration. Not all types of disputes are considered suitable for arbitration. Some disputes are explicitly or implicitly excluded from the scope of arbitration due to public policy, constitutional concerns, or their nature being inherently unsuitable for alternative dispute resolution mechanisms like arbitration. The Indian Arbitration and Conciliation Act, 1996 outlines certain categories of disputes that are non-arbitrable, where judicial intervention is required.
Which Disputes Are Non-Arbitrable Under Indian Law?
Family Law Disputes
Family law disputes, particularly those involving marriage, divorce, child custody, and maintenance, are generally considered non-arbitrable under Indian law. These issues pertain to personal rights and public interest and require judicial oversight.
Indian courts emphasize that matters of public policy, such as the welfare of children and the sanctity of marriage, cannot be delegated to arbitration.
Example: A dispute regarding child custody or alimony in a divorce case would generally not be arbitrable in India.
Criminal Disputes
Criminal cases, which involve violations of public law, cannot be arbitrated. The criminal justice system is designed to address offenses that affect society at large, and arbitration is not suited for the enforcement of criminal law.
Criminal cases often involve the State's role in prosecuting offenses, and such matters cannot be resolved through private arbitration.
Example: A case involving fraud, theft, or assault cannot be resolved by arbitration.
Disputes Involving Constitutional Rights
Constitutional matters involving the interpretation of fundamental rights guaranteed by the Indian Constitution are non-arbitrable because they concern public law and are adjudicated exclusively by the judiciary.
Judicial review of government actions or laws that violate constitutional principles is beyond the scope of arbitration.
Example: A dispute challenging the constitutionality of a law that violates the fundamental rights of citizens would not be arbitrable.
Employment Disputes (in Certain Cases)
Employment disputes involving workers' rights, labor law, and termination of employment may be non-arbitrable, especially if the dispute pertains to statutory rights that cannot be waived by the parties.
In India, industrial disputes are typically governed by labor laws (such as the Industrial Disputes Act, 1947), and the government is often a party. Such matters require intervention by labor tribunals or courts, and arbitration is not always suitable.
However, individual employment contracts or commercial contracts with employees can sometimes be arbitrated if they do not conflict with statutory rights.
Disputes Involving Public Policy
Public policy plays a significant role in determining the arbitrability of a dispute in India. Disputes that violate public policy, such as those involving illegal contracts, bribery, fraud, or corruption, are non-arbitrable.
Indian courts may refuse to enforce awards or allow disputes to proceed to arbitration if the underlying transaction involves activities that are illegal under Indian law.
Example: A dispute arising from a contract that involves money laundering or a fraudulent transaction would be non-arbitrable.
Competition Law and Antitrust Disputes
Disputes involving competition law or antitrust violations are generally non-arbitrable in India. Such matters involve the enforcement of laws that protect the public interest and cannot be waived by the parties.
For example, disputes involving price-fixing, monopolistic practices, or anti-competitive behavior are usually handled by competition commissions and cannot be arbitrated.
Example: A dispute concerning anti-competitive conduct or violation of anti-monopoly laws is non-arbitrable.
Disputes Involving Sovereign or State Acts
Sovereign acts or governmental actions performed in the exercise of sovereign powers are generally non-arbitrable. These include disputes arising from public contracts with the government where the subject matter relates to the exercise of state powers.
Arbitration cannot be used to resolve disputes related to issues like national security, sovereign immunity, or political issues involving the government.
Example: Disputes related to taxation or national security laws are non-arbitrable.
Disputes Involving Intellectual Property (In Some Cases)
While disputes related to intellectual property (IP), such as patents and trademarks, can often be arbitrated, certain matters are non-arbitrable when they involve public policy considerations, such as issues concerning public health or the public domain.
Example: A dispute over patent infringement may be arbitrated, but if the patent involves a medication that has significant public health implications, it may be non-arbitrable.
Example:
Scenario:
ABC Ltd., a company involved in the construction sector, enters into a commercial contract with XYZ Corp.. The contract includes a dispute resolution clause stating that disputes will be resolved through arbitration.
However, a criminal case is filed against XYZ Corp. for fraudulent practices related to the contract, and the matter is being investigated by the police.
ABC Ltd. attempts to initiate arbitration, but the Indian court rules that the matter is non-arbitrable, as the dispute involves criminal allegations and public law enforcement, which cannot be resolved by arbitration.
Conclusion:
Under Indian law, not all disputes are arbitrable. Categories of disputes such as family law, criminal offenses, constitutional matters, certain employment disputes, and matters involving public policy are generally non-arbitrable. The Indian Arbitration and Conciliation Act, 1996 distinguishes between arbitrable and non-arbitrable disputes, with courts intervening where necessary to ensure that matters falling under public interest, sovereign rights, or fundamental rights are not arbitrated. Arbitration is primarily suited for commercial and contractual disputes, but certain exceptions must be considered based on the subject matter of the dispute.
