THE SC SUGGESTED THAT PARLIAMENT SHOULD AMEND THE ARBITRATION ACT REGARDING APPEALABILITY

10th March 2021

The Supreme Court opined that amendments to sections 11(7) and 37 of the Arbitration and Conciliation Act might be necessary so that orders passed u/s 11 and 8 can have the same appealability. Sec 8 deals with the power of the court to refer a case to arbitration, which was amended in 2015. After the amendment, the court cannot make such reference unless prima facie there is a valid arbitration agreement or clause in an agreement.

Sec 37 was also amended in 2015 to appeal against an order refusing to refer to cases U/s 8. However, no amendment was made to section 37 to allow an appeal against the order refusing arbitrator’s appointment u/s 11 of the Act, even after recommendation by the Law Commission of India

The Supreme Court held in the case of Vidya Drolia Vs Durga Trading Corporation that the courts have to be satisfied u/s 8 and 11 that there is an arbitration agreement between the parties. The court further suggested that the parliament should amend sec 11(7) and 37. And the question regarding the validity of an arbitration agreement depends on the arbitrator.

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Author: Papiha Ghoshal