Section 45 of the Arbitration and Conciliation Act, 1996 sits in Part II of the Act, which gives effect to the New York Convention. It deals with a familiar situation: a party to an international arbitration agreement is sued in an Indian court on the very matter it agreed to arbitrate.
The referral obligation
Where the agreement falls within the New York Convention, the judicial authority must, at the request of a party or a person claiming through or under it, refer the parties to arbitration, unless the agreement is null and void, inoperative or incapable of being performed. The provision mirrors Article II(3) of the Convention.
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What the 2019 amendment changed
The Arbitration and Conciliation (Amendment) Act, 2019 substituted the words “unless it finds” with “unless it prima facie finds”. The court’s review of the agreement at the referral stage is therefore a preliminary one, leaving fuller examination of objections to the arbitral tribunal. The change aligns Section 45 with the pro-arbitration approach taken for domestic referrals under Section 8.
Practical implications
- Parties resisting referral face a higher threshold at the outset.
- Applications for referral should be made promptly, before submitting to the court on the merits.
- Drafting matters: clear seat, rules and scope reduce room for objection.
Our advisor, R.K. Sanghi, Senior Advocate, has written on this subject in the ICA Quarterly (Vol. 201, April–June 2019).
This note is for general information only and does not constitute legal advice. For advice on a specific matter, please contact us.
