ARBITRALITY OF FRAUD IN INDIA

Arbitration and Conciliation Act 1996 was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act was to bring the existing law on arbitration in conformity with UNCITRAL Model Law on Commercial Arbitration, 19854 and thereby fulfilling India’s quest for economic prosperity which was only possible through making the existing legal regime in tune with international law on dispute resolution. Thus, minimum intervention of courts, severability of arbitration agreement form main contract and principle of kompetenz were made the fundamental principles of arbitration jurisprudence in India Although the Act does not expressly exclude any category of disputes as unarbitrable, by implication, it does exclude the certain cases which require determination of right inrem, as against right inpersonam, meaning thereby, except criminal proceedings, all disputes of civil nature and/or arising out of contractual relationship between parties are arbitrable. However, the courts in India have tended to enlarge their jurisdiction by overlooking these fundamental principles and have held a certain class of private disputes to be unarbitrable or incapable of being settled by arbitration. One such subject of private/ civil dispute is arbitrability of fraud which, although not, expressly or by implication, excluded from applicability of the Act, has been held to be unarbitrable in a series of judgments.

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