SC to clarify on new arbitration ordinance

The matter came up for intense scrutiny during the hearing of the case of appointment of the arbitration tribunal in the dispute between RIL and govt over the KG basin

The Supreme Court said on Monday it would clarify the impact of the ordinance seeking to amend the law on arbitration and conciliation, which took effect last month.

Earlier, the chief justice of India or his designate was empowered to refer disputes between Indian and foreign entities to arbitration and name the arbitrator if an application for it was received. And, in disputes between domestic companies, applications were to be moved before the chief justice of the respective high court or his designate. The ordinance drops the words ‘chief justice’ and transfers the power to the ‘court’. The existing law came into effect in 1986.

The SC on Monday took up the case on appointment of an arbitration tribunal in the  dispute between Reliance Industries and the government over the Krishna-Godavari basin.

Senior counsel Harish Salve for the company pointed out that the ordinance had changed the situation. The ordinance says the ‘court’ will deal with arbitration, not the chief justice or his delegate. More, the machinery to decide the modalities had not been specified. He asked the arbitration Bench of judge Ranjan Gogoi to throw light on this. The judge, designated by the chief justice to hear arbitration matters a year before, agreed to do so within a week.  

Another change has also reduced the role of the court. According to the amended law, once there is an arbitration clause in an agreement, disputes go directly to the arbitration tribunal. Arbitration in such cases is independent of SC involvement. Salve asked Gogoi to clarify this, too.

Another such area is whether the new law will cover existing disputes pending arbitration.

Solicitor General Ranjit Kumar, who opposed arbitration in the dispute with Reliance, agreed with Salve that some clarity on these matters was in order.

Fresh rules had to be framed to enforce the new provisions. He said that according to the new law, the power to hear applications for arbitration could be wielded not only by  the court but even by a “person or institution”.