Arbitration is a process where the contracting parties seek to resolve their disputes by mediation, which is prescribed in the agreement, to avoid the lengthy procedure of the Court. The new Arbitration and Conciliation Act, 1996 minimized the intervention of the Court and it provided that final award passed is binding on parties and is enforceable as if it were a decree, if it is not set aside on challenge under Section 36 of the Act.

Under the New Act 1996, Section 9 empowers the Court to order a party to take interim measure or protection when an application is made. Besides Section 17 gives power to the Arbitral Tribunal to order interim measures unless the agreement prohibits such power. Hence, the violation of Court orders under Section 9 surely attracts the civil contempt[1] of the Court under section 2 of the Contempt of Courts Act, 1971. But, Arbitral Tribunal is not a Court.[2] Moreover,  under Section 17 of the Arbitration and Conciliation Act, an arbitrator is not bound by the principles of the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872. Therefore, it has no power to punish a disobedient party for contempt of its orders. Even, the Supreme Court of India has expressly affirmed that in catena of cases[3]. But, the decisions of the Supreme Court fail to take notice of Section 27 (5) of the Arbitration and Conciliation Act, which expressly confers the power on the arbitral tribunal to punish for its contempt.

Section 27 (5) specifies that “[P]ersons failing to attend in accordance with such process, or making any other fault, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences is suits tried before the Court”.

In a case titled Sri Krishan v. Anand[4], the Delhi High Court held that under Section 27 (5) of the Arbitration and Conciliation Act, any person failing to comply with the order of the arbitral tribunal would be deemed to be “making any other default” or “guilty of any contempt to the arbitral tribunal during the conduct of the proceedings”.

Accordingly, the remedy of aggrieved party in a case of disobedience of the order of the arbitral tribunal is to apply to the tribunal for making a representation to the Court to meet out such punishment to the disobedient party, as would have been warranted for contempt of Court. The arbitral tribunal should make such a representation to the Court only upon being satisfied that the defaulter is in default or in contempt.

[1] Civil Contempt means wilful disobedience to any judgement , decree, direction, order, writ or other process of a Court or wilful breach of an undertaking given to a Court.

[2] The definition of “Court” under Section 2 of the Evidence Act expressly excludes an arbitrator.

[3] MD, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd., Appeal (civil)  1725 of 1997; Sundaram Finance Ltd. v. NEPC India Ltd., Appeal (civil)  141-143 of 1999

[4] (2009) 3 ArbLR 447 (Del)

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