Arbitrability: What Cannot Be Sent to Arbitration at All

In one line

Some disputes cannot be arbitrated no matter what the parties agreed, because the law reserves them to the courts.

In exam wording: arbitrability is the question whether the subject matter of a dispute is capable of settlement by arbitration; section 2(3) of the Arbitration and Conciliation Act 1996 preserves any other law by virtue of which certain disputes may not be submitted to arbitration, and section 34(2)(b)(i) makes it a ground for setting aside an award that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.

Why party agreement is not enough

Everywhere else in this Module, the parties' agreement is what creates the arbitrator's power. Arbitrability is the limit on that. However clearly two people agree to arbitrate, some questions are not theirs to hand to a private tribunal.

The reason is that arbitration is private and binds only the parties. That is exactly what makes it attractive for a commercial dispute, and exactly what makes it unsuitable where an outcome must bind the world, or where the State has an interest beyond the two litigants, or where a statute has given a particular forum exclusive jurisdiction to protect a weaker party.

Where the Act deals with it, which is barely

The striking thing is how little the Act says. It nowhere lists non-arbitrable subjects. It deals with the question in three indirect places:

Section 2(3): this Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. So the Act defers to other laws rather than making its own list.

Section 8, as chapter 240 explains, is where the objection is first taken: a court asked to refer will not send the parties to arbitration on a dispute the law does not permit to be arbitrated.

Section 34(2)(b)(i): an award may be set aside if the court finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force. Note that this is a ground the court may take on its own, unlike the grounds in section 34(2)(a) which a party must prove. The same appears for foreign awards in section 48(2)(a).

So the content of the doctrine is judge-made, and Booz Allen is where it was assembled.

Booz Allen: the categories, and the reasoning behind them

Booz Allen & Hamilton Inc v. SBI Home Finance Ltd, decided 15 April 2011.

The Court began from the position that where a dispute is inarbitrable, a court where a suit is pending will refuse to refer the parties to arbitration under section 8 even if the parties had agreed upon arbitration as the forum. It then set out what it called the well recognised examples of non-arbitrable disputes: