Answer ... As per Section 16(2) of the Arbitration Act, a plea that the tribunal does not have jurisdiction must be raised no later than submission of the statement of defence. Also, as per Section 16(3), a plea that the tribunal has exceeded the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the proceedings. However, under Section 16(4), the tribunal has the power to admit a later plea if it considers the delay justified.
An objection to the jurisdiction of the tribunal can be raised by making an application to the tribunal under Section 16 of the Arbitration Act. In M/s MSP Infrastructure Ltd v MP Road Development Corporation Ltd (Civil Appeal 10778 of 2014), the Supreme Court of India elaborated on the scope of Section 16 of the Arbitration Act and held that all objections to the tribunal’s jurisdiction must be made by no later than submission of the statement of defence.
Answer ... Yes, under Section 16 of the Arbitration Act, the tribunal has the power to rule on its own jurisdiction. Section 16 gives effect to the principle of competence-competence, whereby the tribunal must exercise jurisdiction over the dispute under the arbitration agreement. A challenge as to the existence or validity of the arbitration agreement will not prevent the tribunal from proceeding with the arbitration and ruling on its jurisdiction.
The competence-competence principle has two aspects:
- The tribunal may decide on its jurisdiction; and
- The courts cannot determine this issue before the tribunal has decided thereon.
Answer ... If a challenge is made to the jurisdiction of the tribunal under Sections 16(2) and 16(3), the tribunal will decide on its jurisdiction under Section 16(5).
If the tribunal rejects the challenge under Section 16(5) and continues with the proceedings and makes an arbitral award, a party can apply to the courts for a ruling on the jurisdiction of the tribunal while challenging the award under Section 34 of the Arbitration Act.
Conversely, if the tribunal concludes that it does not have jurisdiction, then it is open to the aggrieved party to go on appeal to the relevant court under Section 37(2)(a).
The Supreme Court of India explained this in NTPC v Siemens (AIR 2007 SC 1491) as follows:
It is in the context of the various sub-sections of Section 16 that one has to understand the content of the expression 'jurisdiction' and the scope of the appeal provision. In a case where the Arbitral Tribunal proceeds to pass an award after overruling the objection relating to jurisdiction, it is clear from Sub-section (6) of Section16 that the parties have to resort to Section 34 of the Act to get rid of that award, if possible. But, if the Tribunal declines jurisdiction or declines to pass an award and dismisses the arbitral proceedings, the party aggrieved is not without a remedy. Section 37(2) deals with such a situation. Where the plea of absence of jurisdiction or a claim being in excess of jurisdiction is accepted by the Arbitral Tribunal and it refuses to go into the merits of the claim by declining jurisdiction, a direct appeal is provided.