Understanding the Role of Judicial Authority in Referring Parties to Arbitration Under Section 45 and 54 of The Arbitration and Conciliation Act

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Understanding the Role of Judicial Authority in Referring Parties to Arbitration Under Section 45 and 54 of The Arbitration and Conciliation Act

In recent years, the role of the judiciary has been expanded to include not only adjudicating cases but also conducting arbitration proceedings where matters can be resolved outside the traditional court setup. This step towards alternative dispute resolution has been legalized in India under the Arbitration and Conciliation Act. Sections 45 and 54 in particular, highlight the role of judicial authorities in referring parties to arbitration. In this article, the legal experts at SimranLaw will walk you through these complex legal issues, drawing upon years of experience and providing insights on multiple case laws and judgements.

Section 45 of the Arbitration and Conciliation Act

It is titled “Power of judicial authority to refer parties to arbitration” and mandates that any party can apply to a judicial authority for referring the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

1. Case Law: World Sport Group (Mauritius) Ltd. v MSM Satellite, 2014

   In this case, the Supreme Court held that in case an agreement containing an arbitration clause has been challenged, the duty of the judicial authority under section 45 is to refer parties to arbitration if such authority is satisfied that the agreement is neither null and void, nor inoperative or incapable of being performed, and that the disputes are within the scope of such agreement.

Section 54 – Assistance in Obtaining Evidence

Section 54 allows parties involved to request assistance from a competent court in obtaining evidence. It enables the arbitral tribunal or a party with the approval of the tribunal to apply for assistance to a competent court in order to take evidence from any person.

• Case Law: K.K. Modi v K.N. Modi, 1998

  In this judgement, the Supreme Court held that the courts have the power to do complete justice under article 142 of the Constitution of India, which is applicable for arbitration proceedings. This includes referring the parties to arbitration and ensuring that parties avail the facility of taking evidence as provided under Section 54.

The Interplay Between Sections 45 and 54

The sections taken together provide a synergy between courts and arbitration. Section 45 ensures that courts support arbitration by referring parties to such procedures if they find an enforceable arbitration clause. Section 54 provides assistance to the arbitral tribunal or the party in obtaining evidence.

• Case Law: Bharat Aluminium Co. v Kaiser Aluminium Technical Service, 2012

  The Supreme Court held that post the enforcement of the Act, Indian courts cannot intervene in foreign seated arbitrations, except for interim relief. This case demonstrated that the court’s role should be minimal in the arbitration process, thereby affirming the principles of Section 45 and 54.

Final Thoughts

The role of a judicial authority in referring parties to arbitration is of immense importance to sustain faith in arbitration as an effective alternative to traditional court proceedings. The sections discussed above not only cement judicial authority’s role but also ensure in maintaining the sanctity of the arbitration process. SimranLaw is committed to deciphering these complex laws to provide clarity and assistance in understanding the interplay between law and justice.