Wednesday, 25 February 2015

Civil Court or Arbitration - Section 8 Application

Civil Court or Arbitration - Impact of Section 8 Application

Once an application is duly filed in terms of Section 8 of The Arbitration and Conciliation Act, 1996 before the civil court, what should be the approach of the court?

Latest Supreme Court Decision (2015):

Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of the Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first statement on the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement.

Points to Note :

1. Once an application in due compliance of Section 8 of the Arbitration Act is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted.

2. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statue, the civil court should first see whether there is ouster of jurisdiction in terms or compliance of the procedure under the special statute. The general law should yield to the special law – generalia specialibus non derogant. 

3. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court.

PS: We do not accept any liability arising out of use of above information. Users are advised to apply their own thoughts and experience in above case.

Case Number: 
CIVIL APPEAL NO. 2079 OF 2015 (Arising from S.L.P. (C) No. 20140/2014)

Case Title:
Sundaram Finance Limited and another Versus T. Thankam 

Hon'ble Justice M.Y. EQBAL
Hon'ble Justice KURIAN JOSEPH

Date of Judgement: 
20th February 2015

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