The Calcutta High Court has held that an application under Section 8 of the Arbitration and Conciliation Act, 1996, seeking a reference of a dispute to arbitration, is not maintainable unless there is a valid, written arbitration agreement. The court’s reasoning emphasizes that simply referring to “arbitration” in a contract or clause is insufficient; there must be a clear, binding agreement that demonstrates the parties’ genuine intent to arbitrate. In a recent judgment, the court observed that the mere use of the word “arbitration” does not automatically transform any clause into a legally enforceable arbitration agreement under Section 7 of the Act. Unless the language of the agreement reveals a clear intent to resolve disputes through arbitration, the court will not construe it as an arbitration clause.
Moreover, the Calcutta High Court has stressed the importance of timing when filing a Section 8 application. The court held that such an application must generally be made before or at the same time as the defendant’s first substantive statement on the dispute—typically, the written statement. If a party fails to file its application for arbitration by that time, the court may infer that the party has waived its right to have the dispute referred to arbitration. The court has rejected attempts to treat objections raised in the written statement itself—such as disputing the jurisdiction of the court because of an arbitration clause—as a substitute for a formal Section 8 application. The court reasoned that an objection in the written statement challenges the civil court’s competence, while an application under Section 8 seeks a referral to arbitration, and these are distinct legal actions.
In one significant case, the court held that a belated Section 8 application, filed after the written statement was submitted, could not be entertained. The court observed that Section 8 does not mandate dismissal of the suit, but requires a referral to arbitration, and that no application made out of time should deprive the parties of this remedy when the conditions are not met. The court was also careful to note that Section 8 does not itself strip the civil court of subject-matter jurisdiction; even after a reference is made, courts may retain a role—for instance, by deciding whether, prima facie, a valid arbitration agreement exists.
Taken together, these rulings reflect the court’s balanced approach: while it gives due respect to arbitration clauses, it also insists on procedural rigor and the existence of genuine, written agreements. The Calcutta High Court’s decisions reinforce that parties cannot rely on vague or implied references to “arbitration” and must act promptly to file their Section 8 application appropriately.
0 Comments
Thank you for your response. It will help us to improve in the future.