Answer first: The question of which disputes are arbitrable under Indian law remains unsettled, with courts grappling over the scope of subject-matter arbitrability. Landmark Supreme Court rulings such as Booz Allen and Ayyasamy have advanced pro-arbitration principles but left key ambiguities unresolved, particularly in fraud and…
Patents context for IP teams
Arbitral tribunals in India have traditionally been empowered to adjudicate civil or commercial disputes that a civil court can decide, provided the dispute falls within the arbitration agreement, the parties consent to arbitration, and the subject matter is capable of settlement by arbitration. However, the most contentious issue remains “subject-matter arbitrability” — whether certain disputes can be resolved through arbitration under Indian law.
Historically, Indian courts have classified several disputes as non-arbitrable, aligning with the UNCITRAL Model Law which allows domestic courts to set aside arbitral awards on grounds including subject-matter arbitrability. The Indian Arbitration Act, 1996, does not define arbitrability, leaving the judiciary to develop the contours of this doctrine.
Key takeaways for subject-matter arbitrability in India
- Confirm how the development affects patents ownership, enforcement, licensing, or portfolio records.
- Separate confirmed facts from legal interpretation before advising business teams.
- Map deadlines, affected assets, contracts, and evidence files to the responsible internal owner.
- Use the issue as a prompt for monitoring, filing strategy, dispute preparation, or member education.
Practical analysis
The Supreme Court’s landmark decision in Booz Allen Hamilton v. SBI Home Finance Limited established the “test of arbitrability,” distinguishing between rights in personam, which are arbitrable, and rights in rem, which are reserved for courts and public tribunals. While this test compartmentalized arbitrability, it was criticized for potential misuse by parties attempting to frame disputes as rights in rem to avoid arbitration.
Subsequent rulings, including N. Radhakrishnan v. Maestro Engineers, recognized that disputes involving public consequences or fraud were generally non-arbitrable. Yet, Booz Allen itself cautioned against rigid application of the rem-personam distinction, acknowledging that subordinate rights in personam arising from rights in rem could be arbitrated. This laid the groundwork for a more arbitration-friendly approach.
In a significant pro-arbitration judgment, the Supreme Court in A Ayyasamy v. A Paramasivam clarified that only serious and complicated fraud allegations oust an arbitrator’s jurisdiction. Simple fraud claims, particularly those internal to the parties without public implications, do not preclude arbitration. Serious fraud includes cases amounting to criminal offenses, forgery, or fraud permeating the arbitration agreement itself.
However, Ayyasamy did not provide a definitive litmus test to distinguish simple from serious fraud, leaving courts to interpret this distinction. Subsequent decisions have attempted to outline parameters but the arbitrability of fraud-related disputes remains unsettled.
Intellectual property (IP) disputes illustrate the ongoing challenges. The Bombay High Court in Eros International Media Limited v. Telemax Links India Pvt. Ltd. held that contractual disputes over copyright infringement, being rights in personam, are arbitrable despite the underlying copyright being a right in rem. Conversely, the Indian Performing Right Society Limited v. Entertainment Network ruling held copyright infringement remedies like injunctions and damages to be non-arbitrable, reserved for courts.
The Supreme Court’s obiter in Ayyasamy further complicated matters by suggesting patents, trademarks, and copyright disputes are non-arbitrable. The Madras High Court later clarified that Ayyasamy’s list of non-arbitrable disputes was not binding ratio and reaffirmed that patent infringement disputes involve rights in personam and are arbitrable. Nonetheless, the broader question of IP dispute arbitrability remains open.
Tenancy disputes have also been contentious. Booz Allen and the Supreme Court’s recent decision in Himangi Enterprises v. Kamaljeet Singh Ahluwalia affirmed exclusive civil court jurisdiction over tenancy matters under special rent legislation. Yet, a 2019 Supreme Court bench disagreed with this exclusivity and referred the question of arbitrability of landlord-tenant disputes to a larger bench, leaving the issue pending.
Special statutes granting exclusive jurisdiction to particular courts have further narrowed arbitrability. The Supreme Court in Ayyasamy and Himangi Enterprises reinforced this principle. For example, the Delhi High Court in Union of India v. Competition Commission of India held that the Competition Commission’s exclusive jurisdiction excludes arbitration of competition law disputes.
Conversely, the Delhi High Court in HDFC Bank Limited v. Satpal Singh Bakshi held that disputes within the jurisdiction of debt recovery tribunals may be arbitrable, emphasizing that the existence of a special forum does not automatically render disputes non-arbitrable. Similarly, consumer disputes and those under the Electricity Act, 2003, have been held arbitrable under certain conditions.
Internationally, arbitration enjoys broader acceptance, prioritizing commercial interests over public policy constraints. As India aspires to become a global arbitration hub attracting foreign investment, there is growing recognition of the need for clear, efficient, and autonomous dispute resolution mechanisms.
With critical questions on subject-matter arbitrability pending before the Supreme Court and various High Courts, India stands at a crossroads. The judiciary’s forthcoming rulings will be pivotal in defining the balance between party autonomy and public interest, shaping the future of arbitration in India’s commercial landscape.
Related IIPLA reading
India's Arbitration Landscape at a Crossroads Over Subject-Matter Arbitrability The question of which disputes are arbitrable under Indian law remains unsettled, with courts grappling over the scope of subject-matter arbitrability. Landmark Supreme Court rulings such as Booz Allen and Ayyasamy have... Read the full IIPLA blog post: https://iipla.org/blog/india-s-arbitration-landscape-at-a-crossroads-over-subject-matter-arbitrability