SC suggests amendments in Arbitration Act regarding appealability

The Supreme Court has opined that amendments to Section 11(7) and 37 of the Arbitration and Conciliation Act might be necessary so that the orders passed u/s 11 and 8 can have the same appealability.

Section 8 deals with the power of a court to refer parties to the arbitration. This Section was amended in 2015 and now states that the Court should not send the matter for arbitration unless prima facie there is a valid arbitration agreement.

Section 37 was also amended in 2015 and allowed for appeal against an order refusing reference.

The Law Commission made the aforesaid recommendations of India.

However, Section 37 was not amended to allow an appeal against an order refusing arbitrator’s appointment u/s 11 even though the Commission recommended this as well.

In Vidya Drolia vs Durga Trading Corporation, the Supreme Court held that the courts have to be satisfied under Section 11 and Section 8 that there is a valid arbitration agreement.

Even though a finding against the existence of an arbitration agreement is appealable u/s 8, the same finding is not appealable u/s 11. 

The Bench suggested that the parliament should amend Section 37 and Section 11(7) so orders made under 11 and 8 can be brought on par.

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Hon’ble Court made the above-mentioned observations while considering an SLP against an order of a Single Bench of Delhi High Court that appointed an arbitrator u/s 11(6) of the Act.

The Apex court further observed that question regarding the validity of an arbitration agreement has to be left to the arbitrator.

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