The Practical Law of Arbitration and Conciliation is a new edition of the definitive work on arbitration and conciliation law. It sets out the legal framework for resolving disputes without recourse to litigation.

1. University Institute of Laws, Regional Centre, Ludhiana

2. Arbitration is a dispute redressal mechanism for resolving disputes that arises between two private parties. The matter is referred to arbitration when it is according to the agreement between the said parties. In
arbitration, an undisputed third party is appointed/ selected to judge the dispute. Generally, the disputes related to the ‘rights in personam‘ are adjudicated via arbitration. However, there can be instances where
the matter of disputes related to the ‘right in rem’ that is subordinate to the ‘rights in personam’ are settled through arbitration, provided the parties to the agreement so agree.
The Indian Contract Act defines ‘fraud’ under Section 17 as an act done with an intent to deceive or induce the opposite party or its agent thereto to enter into the contract where;
the fact stated is not true or is not believed to be true,
there is active concealment of facts and the party committing fraud knows the same,
the intention to abide by the promise is absent,
the intention is to deceive the other party, or
any act declared fraudulent by the provisions of law.

3. CONCEPTS RELATED TO THE ARBITRABILITY OF FRAUD IN INDIA:

4. The Doctrine of Public Policy: The concept of public policy is not defined in any statute but it is referred to as the policy that is equivalent to law, as the main
purpose of the framers of the constitution was to ensure the welfare of the public. The fundamental policies mentioned in the Indian Laws ensure that;
There is a judicial approach to determine the rights of the natives of the country, and there is a parallel obligation that is attached with such rights as determined by
the quasi-judicial authorities.
Arbitration when discussed through the doctrine of public policy elaborates on the contention that the court of law has the authority and the power to intervene in the
recourse of an arbitral award that is passed based on any irregularity or any substantial injustice caused to the applicant/parties to the agreement. The public policy
aims to strengthen and encourage the settlement of civil/commercial disputes by arbitration.
Principle of Severability: The principle of severability states that if there is an issue regarding the validity of the law, the Supreme Court has the power to resolve the
matter. It is further stated that if any part of the law is termed unconstitutional, the court would determine whether the remaining part of the law can survive being
constitutional or not.
In the arbitration agreements, the arbitrators may decide the nature of dispute arising and their validity at the initial as well as the subsequent stages of the arbitration
proceedings.

5. In RS Jiwani v Ircon Inernational Ltd, it was held by the honorable court that if the constitutional/valid part of the arbitral award can be severed from
the unconstitutional or illegal part, the constitutional part holds validity and hence, shall be duly enforced.
Matters Arbitrable as per the Act: The Arbitration and Conciliation Act, 1996 does not specifically exclude any matters that cannot be adjudicated via
arbitration. However, Section 34(2)(b) and Section 48(2) of the Act relates to various ‘subject matters’ of the disputes that cannot be settled by
arbitration.
The matters that are outside the purview of arbitration that is termed non-arbitrable are as follows:
issues arising from Intellectual Property Rights such as patents, copyrights, trademarks, etc.
issues related to Competition Laws;
issues related to insolvency and winding up;

7. issues of serious criminal liability
issues of bribery and corruption,
issues arising out of fraud
issues arising out of matrimonial causes, restitution of conjugal rights, testamentary matters, etc.
Correlation of Arbitration and Fraud

9. Fraud is said to possess a dualistic characteristic. The decision of fraud entails features of both rights in rem as well as right in personam. Right in personam means
where one possesses a right against a specific individual (person) whereas, right in rem means where the right is available against the society at large.
There have been demystifying views regarding the adjudication of fraud via arbitration. The right in personam is considered to be amenable to arbitration. Right in
rem is not included in the adjudication process through arbitration. If interpreted otherwise, the disputes relating to the subordinate right in personam that arise from
right in rem can be considered for arbitration. In other words, if the matters allege for any serious allegation, adjudication through arbitration is not allowed. The fraud
which is attributable to a civil aspect emerges due to the impeachment of the underlying contract, on the discretion can be adjudged via arbitration.
Competence of Courts u/s 16: Section 16 of the Act is based on the principle Kompetenz Kompetenz, where the arbitration tribunal before the adjudication of
proceedings limits its jurisdiction that is then reviewed by the courts. Section 16 states that the arbitral tribunal suo moto can restrict its jurisdiction concerning either
the existence or validity of an arbitration agreement. In the case of Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr it was held that Section 34 would
assess the amenability raised under Section 16(2), (4), and (6).

10. Provisions in other statutes:
Section 9 of the Civil Procedure Code, 1908 elaborates the jurisdiction of civil courts to try the suits unless the court is barred by any other statute. The said provision ensures the fundamental rights of the individual to
file a suit and be heard in the civil courts if not arbitral tribunals.
JUDICIAL BACKING
Fraud is an intentional misrepresentation or concealment of facts that are essential to decide the validity of a contract. The major ingredient for an act to become fraud includes:
intention and knowledge,
use of unjust practices or commission of an unjust act,
deliberate intent to conceal or misrepresent a fact.
The courts have analyzed the arbitrability of fraud in India and assessed every possible contention that could arise from the same. The contentions are discussed in light of recent judgments.

11. Scope of Arbitrability of Fraud: Rashid Raza v Sadaf Akhtar
The court while justifying the scope of arbitrability of fraud stated that the ‘simple’ allegations of fraud that relate to the internal or private affairs of the
parties to the agreement would have a bare minimum effect on the validity of the contract. The apex court conducted a twin test to streamline the
views relating to the arbitrability of fraud. The two contentions were;
if the plea of fraud correlates to the entire contract, such a contract should be null and void.
If the allegations of fraud correlate to the internal affairs of the parties to the agreement, then there would be no implication towards the public
domain.