Arbitration and Competition Law disputes in India

Introduction

In this contemporary era where the global trade and modernization is on the rise, there is also a parallel rise in the commercial disputes. These days the best available remedy to settle these disputes is via Arbitration. It is one of the key mechanisms of Alternate Dispute Resolution that provides a flexible and impartial adjudication of disputes. These days almost all the contracts/agreements/understanding between the private parties include an arbitration clause and enables the parties to forgo the time consuming court adjudication. Arbitration is generally the solution when the disputes are between the private parties but the moot question that arises is whether the disputes within the ambit of “public law” are arbitral or not.

This brings our attention to the title of the article and with this, we first understand the role of Competition Law in India. The Competition Law, 2002 is the successor of the MRTP Act i.e. Monopolies and Restrictive Trade Practices Act and the aim of the act is to promote competition in India with control on anti-competitive practices. Thus, the act is in the domain of larger public interest as it simultaneously fosters the growth of fair trade practices in the market with the protection of the consumers from unfair trade practices.

Arbitrability of Competition Law

The arbitrability of Competition Law can be well understood in two ways i.e.

  1. Growth in International Perspective
  2. Growth in National Perspective

Growth in International Perspective

Originally, the position regarding the arbitrability of Competition Law at the International level was very ambiguous and there was no settled law. But the legal position went an overhaul after the landmark judgment in the case Mitsubishi Motors Corp v. Soler Chrysler Plymouth[1] where the court held that “antitrust issues can be submitted to an arbitration proceedings in an international contract and it should be given full effect and adjudication of such disputes shall be done by arbitrators who are more acquainted or experts in competition law.” In another leading case of EcoSwiss China Time Ltd v. Benetton International NV[2],the European Court of Justice ruled that the Arbitral Tribunal has the requisite power to hear the competition law disputes. Thus, at the international level the position regarding the nexus between the arbitration and the competition law is way too coherent and lucid. But when it comes to understanding the nexus in Indian perspective we shall delve into plethora of cases to understand the legal position.

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Understanding the Question of Arbitrability in India

Arbitration in India is governed as per the provisions of the Arbitration and Conciliation Act,1996. The Act is silent as to what kind of disputes are non- arbitrable but a bare reading of section 7 of the Act creates an imprint that all such disputes can be resolved by Arbitration unless one reads Section 2(3) which reads that “This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration”. Thus the Act per se bars the jurisdiction of an Arbitral Tribunal and thus what is arbitral or not depends upon the precedents that have been laid by the courts.

One such case is ofBooz Allen and Hamilton Inc. v. SBI Home Finance Limited,[3]the Supreme Court held that the rights in personam (Right against an individual) was the subject matter of Arbitration whereas rights in rem( Rights against all) are required to be adjudicated by courts and special tribunals. This position was further made clear in the case of Kingfisher Airlines Limited v. Prithvi Malhotra Instructor[4] wherein it was held that the creation of special tribunals per se does not oust the jurisdiction of Arbitration insteaddisputes would be considered non-arbitral only where a particular enactment creates special rights and obligations and gives special powers to the Tribunals that are not enjoyed by civil courts.[5] The close analysis of these cases help us in understanding the arbitrability of a dispute, it is clear now that whether a dispute is per se arbitrable or not depends on this two-prong test:

  1. Whether the subject matter of the dispute is right in personam or right in rem. If the dispute is right in rem then it prima facie ousts the jurisdiction of Arbitral Tribunal.
  2. If it is right in personam then whether its adjudication is protected under any special statute and conferred to any special tribunal, if yes then it precludes arbitration.
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Growth in National Perspective

So the above discussion will enable us to understand that what is arbitral or not, If we analyze the Competition Act, 2002 we see that it has subject matter for both – rights in personam and rights in rem. Like section 3 which deals with anti-competitive agreements like agreements pertaining to price-fixing, output restriction and tying arrangements are all in nature of rights in rem whereas the abuse of dominant position in the market (section 4) is in nature of the right in personam. So does it imply that there can be arbitration for disputes under Competition Law? This was discussed in the case of Union of India v. Competition Commission of India[6] wherein it was held that “the Arbitral Tribunal would neither have the mandate, nor the expertise, nor the wherewithal” to decide the dispute in question. Here, the court allowed CCI to settle the dispute by the very reasoning that the scope of CCI’s proceedings is very different from that of the Arbitral Tribunal. Thus the conclusion drawn is that the presence of an arbitration clause per se will not oust the jurisdiction of CCI but whether there can be adjudication via arbitration in Competition Law disputes remains unanswered and an open-ended question.

Conclusion

So Section 61 of the Competition Act bars the jurisdiction of civil court and when a conjoint reading of this section is done with Section 2(3) of the Arbitration and Conciliation Act, it gives a simple deduction that CCI/COMPAT have exclusive jurisdiction as these bodies act as public forum and operate in realm of rights in rem( thus no arbitration is permissible). But in these times when the development in field of arbitration is on the rise, it is unjustified to preclude it in competition law disputes. There should be an amendment to Section 61 of the Competition Act with an enabling provision being inserted that grants the parties to resort to Arbitration and radical change is to done in the determination of non-arbitral disputes. In India, these disputes are determined merely on the ground that they are protected by special statutes hence no arbitration is permissible, rather the test to determine this should be depending on the subject –matter of the dispute i.e. Whether it is in the realm of rights in Personam/rights in Rem.

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[1]473 US 614 (1985).

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[2](1999) ECR I- 3055.

[3](2011) 5 SCC 532.

[4]2013(7) Bom CR 738 (India).

[5]Id.

[6]AIR 2012 Del 66.

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