In a series of Judgments Supreme Court highlighted the list of Non- Arbitrable disputes by following the settled principle of arbitrability, this blog will analyze the principles on which arbitrability can be decided and the list of disputes which are already been  declared as non- arbitrable by following the settled principle of arbitrability.

Principles to decide the Arbitrability

Supreme Court propounded a fourfold test for determining when the subject matter of a dispute in an arbitration agreement is not arbitrable:[1]

  1. when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.
  2. when cause of action and subject matter of the dispute affects third party rights; have erga omnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable;
  3. when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; and
  4. when the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).

List of Non Arbitrable Matters-

Supreme Court came up with certain well-recognised examples of non-arbitrable disputes in series of its pronouncements, they are:

  1. disputes relating to rights and liabilities which give rise to or arise out of criminal offences;
  2. matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody;
  3. guardianship matters;
  4. insolvency and winding-up matters;
  5. testamentary matters (grant of probate, letters of administration and succession certificate); and
  6. eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.[2]
  7. disputes relating to private trusts, trustees, and beneficiaries of the trust and the Trusts Act were held to be non-arbitrable.[3]
  8. the claims covered by the DRT Act are non-arbitrable as there is a prohibition against waiver of jurisdiction of the DRT by necessary implication.
  9. Where serious allegations of fraud is involved, which needs adjudication.[4]
  10. Consumer Protection Act cases are not arbitrable as the Consumer Protection Act, has an implied bar for referring a matter to arbitration, being a special legislation. [5]
  11. grant and issue of patents and registration of trademarks.

Reasoning behind terming some of those example as non-arbitrable

Insolvency or intracompany disputes have to be addressed by a centralized forum, be the court or a special forum, which would be more efficient and has complete jurisdiction to efficaciously and fully dispose of the entire matter. They are also actions in rem.

Similarly, grant and issue of patents and registration of trademarks are exclusive matters falling within the sovereign or government functions and have erga omnes effect. Such grants confer monopoly rights. Thus, they are non-arbitrable.

Matrimonial disputes relating to the dissolution of marriage, restitution of conjugal rights etc. are not arbitrable as they fall within the ambit of sovereign functions and do not have any commercial and economic value. Criminal cases again are not also arbitrable as they relate to sovereign functions of the State. Further, violations of criminal law are offenses against the State and not just against the victim. Thus non arbitrable.

Matters relating to probate, testamentary matter etc. are actions in rem and are a declaration to the world at large and hence are nonarbitrable.

[1] Vidya Drolia and Ors. Vs. Durga Trading Corporation and Ors., (2021)2SC C 1

[2] Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532

[3] Vimal Kishor Shah and Ors. v. Jayesh Dinesh Shah and Ors., (2016) 8 SCC 788,

[4] A. Ayysamy v. A. Paramsivam, (2016) 10 SCC 386

[5] Emaar MGF Land Limited v. Aftab Singh, (2019) 12 SCC 751

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