04 March 2019, Monday

Can parties be referred to arbitration suo moto by courts? (Madras High Court)

Convinio Shopping Nine 2 Nine v. Olympia Opaline Owners Association

Court: Madras High Court | Case Number: CRP (NPD) No. 811 of 2019 | Citation: 2019 SCC OnLine Mad 646 | Bench: PT Asha J | Date: 04 March 2019

Can a court, on an action brought by one of the parties to an arbitration agreement, refer the parties to arbitration on its own? The Madras High Court said no. Its reasons:

  1. Section 8 of the Arbitration and Conciliation Act, 1996 (“ACA”) gives power to the court to refer the parties to arbitration, but only when its ingredients are fulfilled.
  2. One of the ingredients requires that an application to refer the matter to arbitration should be made by the respondent/defendant, who is “a party to the arbitration agreement or any person claiming through or under him.”
  3. Under Section 8 ACA, ouster of the court’s jurisdiction is only by choice of the defending party.

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