Notes on Arbitration Law and Non-Arbitrability

Key Cases on Arbitration and Non-Arbitrability

  • Vidya Drolia v. Durga Trading Corporation (2021)

  • Established a fourfold test for non-arbitrability:

    1. Dispute relates to actions in rem
    2. It affects third-party rights
    3. It involves the inalienable sovereign/public interest functions of the state
    4. It is expressly or by implication non-arbitrable under a specific statute

  • The court emphasized that it’s primarily the arbitral tribunal's duty to determine non-arbitability.

  • A. Ayyasamy v. A. Paramsivam

  • Examined issues of fraud in arbitration:

    • Fraud affects public interest → Non-arbitrable
    • Internal fraud where public interest isn’t involved → Arbitrable.

  • Rashid Raza v. Sadaf Khan

  • Cases involving fraud affecting public interest are non-arbitrable.

  • Avitel Post Studios Ltd. v. HSBC PI Holdings (Mauritius)

  • Followed the principles laid out in Rashid Raza. Internal fraud cases permitted arbitration.

  • Tenancy Issues

  • Tenancy disputes are generally arbitrable under specific statutes unless they pertain to sovereign functions.

  • Article 299

  • Contracts involving the state are arbitrable if the subject matter of the dispute is arbitrable.

  • Competition Commission of India cases

  • Typically not arbitrable due to having a distinct enforcement body.