October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u (^33391)
Introduction
- This article attempts to look into the possibility of arbitrating
oppression and mismanagement (“O&M”) disputes in India.
Section 8 of the Arbitration and Conciliation Act (“Act”)
requires a judicial authority to refer the parties to arbitration
when an action which is the subject matter of an arbitration
agreement is brought before it upon the party’s application.
However, disputes relating to rights and liabilities which
give rise to or arise out of criminal offences, matrimonial
disputes, guardianship matters, insolvency and winding up,
testamentary matters, etc, are generally considered to be
outside the purview of arbitration^1. The position that arbitrators
cannot order winding up of a company despite the existence
of an agreement between the parties was taken by the Apex
Court as early as 1999 in Haryana Telecom (P.) Ltd. v. Sterlite
Industries India Ltd. [1999] 5 SCC 688. That power is conferred
on the Court by the Companies Act.
Criteria of Arbitrability - Booz Allen dictum
- What can be referred to an arbitrator is only that matter
which the arbitrator is competent to decide. The suit should be
in respect of ‘a matter’ which the parties have agreed to refer
and which comes within the ambit of arbitration agreement^2.
Consequently, where a suit is commenced as to a matter which
lies outside the arbitration agreement and is also between some
of the parties who are not parties to the arbitration agreement,
there is no question of application of S.8^2.
The Supreme Court in Booz Allen and Hamilton Inc. v. SBI
Home Finance Ltd. [2011] 5 SCC 532 case sought to expound
the concept of arbitrability.
‘Generally and traditionally all disputes relating to rights
in personam are considered to be amenable to arbitration;
and all disputes relating to rights in rem are required
to be adjudicated by courts and public tribunals, being
unsuited for private arbitration.’
pRiyaDaRsini tp
Arbitrating Oppression and
Mismanagement in India