Introduction:
Arbitration is a key mechanism in Alternative Dispute Resolution (ADR) offering a quicker and more cost-effective way to resolve disputes compared to traditional litigation. Governed by the Arbitration and Conciliation Act, 1996 arbitration involves parties agreeing to submit their disputes to a neutral arbitrator. However, because arbitral tribunals are not classified as courts, they lack direct powers to enforce compliance or punish for its contempt. Understanding how contempt of court applies in arbitration particularly in distinguishing between civil and criminal contempt is essential for effective dispute resolution.
Arbitration and Contempt: An Overview
Arbitration is one of the Alternative Dispute Resolution (ADR) mechanisms that is used for affordable and speedy justice. It not only resolves disputes within less time but is also an effective alternative to the conventional route of litigation saving money and having better resolving power. Arbitration in India is governed by Arbitration and Conciliation Act, 1996. Arbitration by nature is a Quasi-judicial body wherein the parties to a dispute approach an arbitrator by mutual agreement between parties to a dispute. The term “Arbitrator” is not defined under Arbitration and Conciliation Act, of 1996 but it means a neutral third party who makes a final and binding decision on a dispute. Arbitration is mostly used as a resolution mechanism for commercial disputes. On the basis of the agreement between the parties disputes are submitted to the Arbitral Tribunal which consists of a sole arbitrator or a panel of arbitrators depending upon the provisions of the agreement. Arbitrations are key to dispute resolution and facilitate speedy resolution of disputes. Arbitral tribunals do not have to adhere to the technicalities of the court procedures especially in taking of evidence, testimonies, etc. but their decisions carry the wholesome vigour of the decisions of the civil courts in terms of execution of arbitral awards. The judicial precedent as set by the Hon’ble Supreme Court thus holds that if an act is in contempt of an arbitral tribunal it could well be prosecuted in the same manner as such contempt will be dealt with by a civil court.
The issue of contempt powers of an arbitral tribunal again came into light by virtue of the Hon’ble High Court’s judgment in the case of Dalmia Family Office Trust & Anr v. Getamber Anand & Ors.[1] The Hon’ble High Court through this judgment underscored the authority to initiate contempt proceedings under Section 27(5) of the Arbitration Act. The High Court further noted that the Arbitral Tribunal is no different from a Civil Court in respect of dealing with contempt against itself. Thus, any misconduct before an Arbitral Tribunal or a Sole Arbitrator would be liable to be dealt with in accordance with law, if the same constitutes civil law contempt.
Enforcement of Contempt of court in Arbitration:
Section 27(5) of the Arbitration and Conciliation Act [2]states that, Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. Thus, individuals who fail to attend hearings, make intentional errors, refuse to provide evidence, or display contempt towards the arbitral tribunal may face penalties similar to those imposed in court proceedings, as determined by a court upon the tribunal’s request. In the case of Anuptech Equipments Ltd. V. M/s. Ganpati Cooperative Housing Society Ltd. & Ors[2], the Hon’ble Bombay High Court interpreted the term ‘contempt’ broadly, observing that any contemptuous behaviour during arbitration proceedings should be treated on par with treatment to such behaviour in a civil court.
Since the term ‘contempt’ is not specifically defined under the Arbitration and Conciliation Act, it is pertinent to refer to Section 2(a) of the Contempt of Courts Act, which classifies ‘contempt of court’ into two categories: civil contempt and criminal contempt. The phrase ‘any contempt’ carries a broad meaning, suggesting that it would be limiting to interpret it only as civil contempt and not criminal contempt. During arbitration proceedings parties may engage in actions that could undermine the authority of a court or interfere with the administration of justice.
Examples
1 2024:DHC:7895-DB
2 AIR 1999 BOM 219
of criminal contempt in this context include filing a false affidavit, defamatory attacks on an arbitral tribunal or making libelous claims.
It is important to note that criminal contempt does not involve personal injury but is directed to preserve the power and dignity of the tribunal. While there may be no explicit authorities supporting this reasoning, invoking Section 27(5) should not be dismissed as judicial interpretation stresses the integrity of the arbitral process.
Interpretation of ‘Guilty of any contempt’ before and after amendment:
The interpretation of ‘guilty of any contempt’ under Section 27(5) of the Arbitration and Conciliation Act underwent significant evolution before and after the 2015 amendment. Prior to the amendment, the scope of Section 27(5) was construed narrowly as demonstrated by the Bombay High Court’s decision in Alka Chandewar v. Shamshul Ishrar Khan[1] which argues that the tribunal is not a court as defined in the Act and the term ‘guilty of any contempt’ applied only to conduct directly related to arbitral proceedings. This restrictive view limited the tribunal’s authority and necessitated that parties seek the High Court’s intervention for enforcement of contempt complicating the process. However, the Supreme Court later overturned this interpretation[2] emphasising that the phrase must be given its plain meaning allowing for a broader understanding that encompassed various forms of contempt including disobedience to interim orders. The 2015 Amendment further solidified this change by deeming interim orders under Section 17 as enforceable as court orders, thereby leaving Section 27(5) as an alternative remedy while enabling parties to directly approach the court for contempt arising from arbitral proceedings. This shift reflects a significant expansion of the tribunal’s power and the enforcement mechanisms available for ensuring compliance with its orders.
Contempt in Arbitration and Judicial Interpretation:
The legal landscape regarding the contempt powers of arbitral tribunals has been shaped by various judgements, reflecting both support and scepticism toward recognising such powers. The Hon’ble Supreme Court, in M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt.
3 Alka Chandewar v. Shamshul Ishrar Khan, 2015 SCC OnLine Bom 5618
4 Alka Chandewar v. Shamshul Ishrar Khan, (2017) 16 SCC 1
Ltd.[1] emphasised that the phrase ‘guilty of any contempt’ section 27(5) encompasses a broader range of disobedience. The Delhi High Court in Sri krishan v. Anand[2] highlighted that the remedy for contempt lies in the tribunal’s ability to represent to the court for enforcement. Despite this subsequent judgements reinforced the notion that arbitral tribunals lack self-enforcement powers, complicating the understanding of contempt in arbitration. The Hon’ble High Court’s judgment in Dalmia Family office Trust[3] underscores the contempt powers of arbitral tribunals that recognise misconduct against an arbitrator as akin to contempt of a civil court, allowing for proceedings under the Contempt of Courts Act,1971.
Conclusion:
In conclusion, arbitration continues to serve as an essential mechanism in resolving disputes swiftly and cost-effectively. However, its effectiveness can be hampered by precedents that interpret in favour of acknowledging the lack of inherent powers of arbitral tribunals to directly enforce compliance or punish for contempt. However, recent judicial pronouncements on section 27(5) of the Arbitration and Conciliation Act, has helped bridge this gap by allowing arbitral tribunals to address contempt on its own.
Shreya Saji Pillai
IV BALLB
ILS Law College, Pune.
6 Managing Director, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd., (2004) 9 SCC 619
7 OMP.No.597/2008,In the High Court of Delhi at New Delhi,Date of Judgment 18.08.2009
8 Supra 119