Section 8: When a Court Must Send the Parties to Arbitration
Chapter Twenty-Three
Syllabus topic 2.1, "The Arbitration and Conciliation Act, 1996"
Pages 120 to 123 of 377
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.
Section 8: When a Court Must Send the Parties to Arbitration
"Refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists."
This is the heart of the modern section and the words to quote. The court does not decide whether there is a valid arbitration agreement. It refers unless it finds that prima facie none exists. The enquiry is deliberately shallow, and the default is referral: if the court is unsure, it refers, and the tribunal decides under section 16.
Section 8(2): the document requirement
The application shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy.
A proviso added in 2015 solves the obvious problem: where the original or a certified copy is retained by the other party, the applicant may file the application with a copy of the agreement together with a petition praying the court to call upon the other party to produce the original or a certified copy. Without that proviso, a party could defeat a reference simply by keeping the only signed original.
Section 8(3): the arbitration need not wait
Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
This stops the section 8 application itself becoming the delay. The arbitration can run in parallel, and an award can be made, while the court decides whether to refer.
How much may the court examine? Vidya Drolia
The recurring question is what "prima facie no valid arbitration agreement exists" lets a court look at, and how it interacts with non-arbitrability.
The leading authority is Vidya Drolia v. Durga Trading Corporation, decided 14 December 2020, which lays down when a court at the reference stage may refuse to refer, and sets out a fourfold test for when a subject matter is not arbitrable.
That judgment is in the queue in authorities/cases.json and has not been read for facts and holding, so this book does not state its reasoning or quote it. Chapter 250 sets out the arbitrability question on the statute and on Booz Allen; read Vidya Drolia before attributing propositions to it.
What can be said on the text alone is the direction of travel. The pre-2015 section required the court to be satisfied of a valid agreement; the present section requires it to refer unless prima facie none exists. Parliament moved the enquiry from the court to the tribunal, and section 16 is where the tribunal takes it up.
Section 8: When a Court Must Send the Parties to Arbitration
Section 8 and section 45 side by side
Part II has its own version of this section for foreign-seated arbitrations, and the difference is a fair examination question. Chapter 510 works through section 45.
| Section 8, Part I | Section 45, Part II | |
|---|---|---|
| Applies to | An arbitration governed by Part I | An agreement to which the New York Convention applies |
| Who may apply | A party, or a person claiming through or under him | A party, or a person claiming through or under him |
| Test | Refer unless prima facie no valid arbitration agreement exists | Refer unless the agreement is null and void, inoperative or incapable of being performed |
| Deadline | Not later than the first statement on the substance | On the request of a party |
A worked example
Farida's company has a distribution agreement with an arbitration clause. She sues the distributor in the City Civil Court for unpaid invoices. The distributor's advocate appears, takes two adjournments to file a written statement, and then files an application under section 8 with a photocopy of the agreement, the signed original being with Farida.
Is the application in time? Yes. The deadline is the date of submitting the first statement on the substance of the dispute. Appearing and taking adjournments is not such a statement; the written statement has not been filed.
Is a photocopy enough? Under section 8(2) the application must be accompanied by the original or a duly certified copy. But the proviso covers exactly this case: the original is retained by the other party, so the distributor may file the copy together with a petition asking the court to call upon Farida to produce the original.
What must the court decide? Not whether the agreement is valid. It refers the parties unless it finds that prima facie no valid arbitration agreement exists. If Farida says the agreement was never signed by an authorised person, that is an issue for the tribunal under section 16 unless the absence of an agreement is apparent on a prima facie view.
Can the arbitration start meanwhile? Yes. Section 8(3) allows an arbitration to be commenced or continued and an award made even while the section 8 application is pending.
Change one fact. Suppose the distributor had filed a full written statement on the merits three months ago and only now applied under section 8. The application fails: the right is lost once the first statement on the substance has been submitted. He may also be met by section 4, having proceeded without objection.
What beginners get wrong
A court cannot refer on its own motion. Section 8 requires an application by a party or a person claiming through or under him.
The court does not decide validity. It refers unless prima facie no valid agreement exists; validity goes to the tribunal under section 16.
Section 8: When a Court Must Send the Parties to Arbitration
The deadline is the first statement on the substance, not the first appearance.
Section 8(3) means the arbitration is not stayed by a pending section 8 application.
"Judicial authority" is wider than "court", so the section can bite on forums that are not civil courts.
Quick revision
- Section 8(1): a judicial authority before which an action is brought in a matter that is the subject of an arbitration agreement shall 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, notwithstanding any judgment, decree or order of the Supreme Court or any Court, unless it finds that prima facie no valid arbitration agreement exists.
- Section 8(2): the application must be accompanied by the original agreement or a duly certified copy; by the 2015 proviso, where the other party retains it, a copy plus a petition to call for production suffices.
- Section 8(3): an arbitration may be commenced or continued and an award made while the application is pending.
- The 2015 amendment added "claiming through or under him", the non obstante clause, the prima facie test and the proviso to sub-section (2).
- Vidya Drolia (14 December 2020) governs the scope of the reference-stage enquiry and non-arbitrability. It is in the queue and unread; do not attribute reasoning to it.
Test yourself
1. What exactly must a court find before refusing to refer under section 8? That prima facie no valid arbitration agreement exists. It does not decide validity; if it cannot say that on a prima facie view, it must refer, and the tribunal takes the question under section 16.
2. By when must the application be made? Not later than the date of submitting the applicant's first statement on the substance of the dispute. An appearance, or an application for time, is not such a statement.
3. The signed original agreement is with the plaintiff. Can the defendant still apply? Yes. The proviso to section 8(2), inserted in 2015, lets him file the application with a copy of the agreement together with a petition praying the court to call upon the other party to produce the original or a duly certified copy.
4. Does a pending section 8 application stop the arbitration? No. Section 8(3) expressly allows an arbitration to be commenced or continued, and an award to be made, notwithstanding that the application is pending before the judicial authority.
5. What is the difference between the tests in section 8 and section 45? Section 8 requires referral unless the court finds prima facie no valid arbitration agreement exists. Section 45, for a New York Convention agreement, requires referral unless the agreement is null and void, inoperative or incapable of being performed.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself for the same subject.