ARBITRATION OF COMPETITION LAW DISPUTES IN INDIA

-Shivam Garg*

Introduction

The position of arbitrability of competition matter is still unclear in India, unlike USA where in Mitsubishi Motors Corp v. Soler Chrysler Plymouth[1] and in EU[2]  in case of Eco Swiss China Time Ltd. v. Benetton Int’l N.V[3] where the courts have held that antitrust issues can be submitted to arbitration in case of international contract. The major purpose why arbitration should be allowed in matter dealing with competition law is to promote certainity and predictability through vibrant system of arbitration. According to a report[4], most of the CCI decisions are pending either at COMPAT or before Supreme Court, thus, private investor are uncertain when the outcome will come. Thus, the same could be used as shield[5] to defend the arbitration proceedings. The possible solution to this problem could be that CCI could play double role of amicus curiae and parens patriae[6], by adopting US “second look doctrine”, formulated in Mitubishi case.[7]

Arbitrability of Competition Dispute

The Arbitration and Conciliation Act of 1996 does not define non arbitrable matter. The Act, however imposes restriction, under Section 2(3)[8], Section 34(2)(b)[9] and Section 48(2)[10]. There is substantial public interest involved. There are two major grounds to decide the same-

  • If it is RIGHT in REM
  • If the adjudication exclusive to Public Forum.

If it is RIGHT in REM

The honourable Supreme Court in the landmark judgment of Booz Allen and Hamilton Inc. v. SBI Home Finance Limited, [11] held that all disputes relating to Rights in Rem should be adjudicated by courts and dispute having Right in Personam can go for arbitration as per party autonomy. The Competition Act of India covers

Right in Rem – Section 19(1)[12] allows any person to file with CCI, who in turn does investigation and if infringement is found passes “cease and desist” order. Section 53N allows third party to claim compensation.

Right in Personam-  Section 53 allows only aggrieved party to file for statutory rights and remedies.

If the adjudication exclusive to Public Forum

In the landmark case of Kingfisher Airlines Limited v. Prithvi Malhotra Instructor[13], it was held that even in dispute involving right in personam, it becomes non arbitrable if reserved for public forum. The jurisdiction of civil court is barred under Section 61 of the Competition Act. Relying on principle laid down in HDFC Bank case, the competition Act has created special rights and obligation thus CCI has exclusive jurisdiction.

The Arguendo that Section 5 of Arbitration Act start with non obstante clause, will not be successful[14] as it cant be read in isolation, Section 2(3) has to be read along.

Judgment So Far

The Competition Act provide power to CCI[15] for regulatory and quasi judicial power and COMPAT to decide appeals[16]. They have no referral power to send parties to arbitration like Section 79 of Civil Procedure Code.

Under, the MRTP Act, the Supreme Court in Man Roland v. Multicolour Offset, held there are remedies available both under Contract Act and MRTP Act, thus court will have jurisdiction.

The Delhi High Court, in Union of India v. Competition Commission of India[17], observed that “the Arbitral Tribunal would neither have the mandate, nor the expertise, nor the  wherewithal” to prepare an investigation report which is necessary to decide the dispute in question. The matter was regarding the Concession agreement signed between Ministry of Railways and Contractors. The contractor filed a complaint to CCI for increased charges and restricting access to infrastructure, which was abuse of dominant position by railways.

The decisions only provide that jurisdiction of CCI cannot be taken away. This doesn’t provide that competition matters are not arbitrable.

Conclusion

The position is still unclear. The right in personam can be arbitrated but presence of exclusive forum is holding it back. Let’s see what the future outcome will be. India can take pro arbitration look like USA and EU, where special forum is no more prohibiting arbitrability as party is not forgoing its substantive rights afforded by statute, it is only submitting its dispute for resolution in an arbitral tribunal rather than judicial forum[18], or it can remain fixed with public policy concern.

[1] Albert Cluver Co v Scherk, 417 US 506

* Shivam Garg, Permanent Member of CompetitionLawObserver & alumni of National Law University, Jodhpur. He can be reached at shivamgarg24@gmail.com

[1] Mitsubishi Motors Corp v. Soler Chrysler Plymouth, 473 U.S. 614 (1985).

[2] Council Regulation (EC) No. 1/2003 (Dec. 16 2002).

[3] Case C-126/97, Eco Swiss China Time Ltd. v. Benetton Int’l N.V., 1999 E.C.R. I-3055.

[4] Rahul Goel & Anu Monga, Private Antitrust Litigation 2014, GLOBAL COMPETITION REV. 74, 77 (2014)

[5] Robert B. von Mehren, From Vynior’s Case to Mitsubishi: The Future of Arbitration and Public Law, 12 BROOK. J. INT’L L. 583 (1986).

[6] Rahul Satyan, Policing Mergers, Remedies & Procedure (Oct. 31, 2011), http://cci.gov.in/images/media/ResearchReports/Policing%20Mergers_%20Remedies%20&%20Procedure.pdf.

[7] Supra Note 1

[8] “the Act would not affect any law by virtue of which certain disputes may not be submitted to arbitration”

[9] “the subject-matter of the dispute is not capable of settlement by arbitration under

the law for the time being in force”

[10] “award is in conflict with the public policy of India.”

[11] Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 S.C.C. 532

[12] “any person, consumer or association”

[13] Kingfisher Airlines Limited v. Prithvi Malhotra Instructor, 2013(7) Bom C.R. 738

[14] Warehouse Corporation v. Fortpoint Automotive Pvt. Ltd., 2010 (1) Bom C. R. 560

[15] Section 7

[16] Section 53A

[17] Union of India v. Competition Commission of India, A.I.R. 2012 Del 66 (India).

[18] Albert Cluver Co v Scherk, 417 US 506

Disclaimer: This article has been written by a member. The article is just an opinion of the Author and no legal consequences follow from the same

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