Supreme Court Rules on Ambit of Arbitration Act.

In Sukanya Holdings Ltd v Jayesh H Pandya the Supreme Court decided the ambit and scope of Section 8 of the Arbitration and Conciliation Act 1996.

The act does not oust the jurisdiction of the Civil Court to decide disputes where the parties to an arbitration agreement fail to take appropriate steps as contemplated under Sections 8(1) and (2).

The Supreme Court agreed that the act contains no specific provision to the effect that where the subject matter of a lawsuit includes the subject matter of an arbitration agreement, the matter must be referred to arbitration. However, the term 'a matter' in Section 8 indicates that in such cases the entire subject matter of a lawsuit should be subject to the arbitration agreement.

In addition, the court held that Section 89 of the Civil Procedure Code cannot be employed to interpret Section 8, and that it applies in the absence of an agreement to refer a dispute to arbitration.

The Judgement in Bhatia International’s case was reaffirmed in a later judgement of the Hon’ble Supreme Court in the matters of Venture Global Engineering V/s. Satyam Computer Services Ltd., reported in (2008) 4 SCC 190 and goes a step further to hold that if the substantive law agreed between the parties is Indian, then the award will be treated as an Indian Award and therefore subject to challenge under Section 34.