Introduction

In this case the Supreme Court discussed the doctrine of kompetenze-kompetenze enshrined under Section 16 of the Arbitration and Conciliation Act, 1996 (A & C Act).

Facts

• The petitioner and respondent entered into an agreement and the petitioner was supposed to provide security until 27^th November 2019.
• A dispute arose regarding payment under the contract by the company (the Respondent) and the deduction of the security amount from bills.
• The petitioner asked for payment with interest through a legal notice and later requested the company to appoint a sole arbitrator for resolution of their dispute through arbitration, but the company did not provide any response.
• The petitioner suggested an arbitrator, but the company still did not reply.
• The petitioner then went to the High Court on 20^th September 2016, praying the HC to appoint an arbitrator under Section 11 of the A & C Act.
• The HC said the petitioner's claims were too late and is barred by limitation, so the court cannot appoint an arbitrator.
• The petitioners then referred to the SC through a Special Leave Petition.

Issue Involved

• Whether the HCwas justified in rejecting the application filed under Section 11 of A & C Act for reference to arbitration, on the ground that it was barred by limitation?

Observation

• The court relied on the principle of kompetenze-kompetenze where the arbitral tribunal itself determines its competence to hear a case.
• The SC said that the question of limitation period would be heard and decided by the arbitrator only and the HC erred by not appointing an arbitrator in the case.
• The SC appointed an arbitrator and fixed the seat of arbitration as mentioned in the agreement between the parties.
• The SC further observed that “The issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under Section 16 of the A & C Act, and not the HC at the pre-­reference stage under Section 11 of the A & C Act. Once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator”.

Conclusion

• By putting emphasis on the principle of kompetenze-kompentenze the SC set aside the judgment of the HC.

Notes

• The term "kompetenz-kompetenz" is a German phrase that translates to "competence-competence" in English.
• The principle of kompetenz-kompetenz refers to the competence of an arbitral tribunal to rule on its own jurisdiction, including the validity and scope of the arbitration agreement.
• Section 16 of the A & C Act, which is part of Indian arbitration law, addresses the competence of the arbitral tribunal to rule on its jurisdiction.