Section 8: When a Court Must Send the Parties to Arbitration

In one line

If a party sues in court on a matter covered by an arbitration agreement, the other side can ask the court to send them to arbitration instead, and the court must do it unless there is prima facie no valid agreement.

In exam wording: section 8 of the Arbitration and Conciliation Act 1996 requires a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement to refer the parties to arbitration, on the application of a party or a person claiming through or under him made not later than the date of submitting his first statement on the substance of the dispute, unless it finds that prima facie no valid arbitration agreement exists.

Why the section exists

Section 7 makes the agreement. Section 8 enforces it against the party who ignores it.

Without section 8, an arbitration agreement would be worth very little: a party could simply file a suit, and the other side's only remedy would be to sue for breach of the agreement to arbitrate. Section 8 gives a direct answer instead. The court stops and sends them where they agreed to go.

Section 8(1), clause by clause

"A judicial authority", not "a court". The expression is wider, and it is used on purpose: a tribunal or forum that is not a civil court can still be required to refer.

"Before which an action is brought in a matter which is the subject of an arbitration agreement." Two conditions: an action must have been brought, and the matter must fall within the agreement.

"Shall ... refer the parties to arbitration." Mandatory in form. It is not a discretion to be exercised on the balance of convenience.

"If a party to the arbitration agreement or any person claiming through or under him, so applies."

Two things here were changed by the 2015 amendment. The words "or any person claiming through or under him" were added, which widens who may apply beyond the signatories themselves. And a court cannot act on its own: somebody must apply. A judge who notices an arbitration clause and refers without an application has acted outside the section.

"Not later than the date of submitting his first statement on the substance of the dispute." This is the deadline and it is strict. Once a defendant has filed a written statement dealing with the merits, the right to be referred is gone. The phrase does not mean "the first document filed": an application for time, or an appearance, is not a statement on the substance.

"Notwithstanding any judgment, decree or order of the Supreme Court or any Court." Also inserted in 2015, and remarkable drafting: Parliament used a non obstante clause aimed squarely at judicial decisions, to displace the case law that had grown up on the earlier text.