Section 8 Arbitration Act: Power to refer parties to arbitration where there is an arbitration agreement

Section 8 of Arbitration and Conciliation Act, 1996: Power to refer parties to arbitration where there is an arbitration agreement

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) A judicial authority, seized of an action in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies 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, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:

Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.

(3) 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.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Arbitration Sec 2(1)(a) Arbitration Agreement Sec 7

Legal Commentary & Landmark Judgments: Section 8

Judicial authorities seized of an action concerning a dispute governed by an arbitration clause are statutorily commanded to refer the parties to arbitration under Section 8, divesting civil courts of subject-matter jurisdiction upon threshold prima facie review.

Arbitration Framework & Scope: Under Section 8(1), when a party brings an action before a judicial authority in a matter covered by an arbitration agreement, the judicial authority is statutorily mandated to refer the parties to arbitration if the opposing party applies not later than the date of submitting its first statement on the substance of the dispute.
Core Legal Standard: Following the 2015 amendment, the court's scrutiny is restricted strictly to determining prima facie whether a valid arbitration agreement exists.

The second proviso clarifies that arbitration proceedings may commence or continue, and an award may be made, even while the Section 8 application is pending before the court.

Key Landmark Precedents:

Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1: Held that the standard of judicial review under Section 8 is restricted to a summary prima facie examination of whether a valid arbitration agreement exists; when in doubt, courts must refer the dispute to arbitration.
Ameet Lalchand Shah v. Rishabh Enterprises (2018) 15 SCC 678: Held that where multiple interconnected contracts form part of a single composite commercial transaction, parties must be referred to arbitration even if some interconnected agreements do not contain an arbitration clause.
Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532: Established that mortgage suits and actions enforcing rights in rem fall outside the purview of arbitration and cannot be referred under Section 8.

Legal Commentary:

Operating as a mandatory jurisdictional bar against civil suits in arbitral matters, Section 8 uses the peremptory command 'shall refer', leaving no judicial discretion once the existence of a prima facie valid arbitration clause is demonstrated.

Section 8: Power to refer parties to arbitration where there is an arbitration agreement

Section 8 of Arbitration and Conciliation Act, 1996: Power to refer parties to arbitration where there is an arbitration agreement

Legal Commentary & Landmark Judgments: Section 8