Arbitrability of Disputes basically means to answer whether or not the subject area of dispute can come under the ambit of arbitration. This would mean that the dispute may or may not be resolved using an alternative dispute resolution mechanism of Arbitration that happens outside of court.
In India, two landmark cases laid down simple tests that would help in determining the arbitrability of a dispute. These two cases were the Booz-Allen & Hamilton Inc v. SBI Finance Ltd. & Ors.[1] and A. Ayyasamy v. Paramasivam & Ors.[2]-
1.Right in Rem v. Right in Personam
Right in Rem= Right against the world at large
Right in Personam= Right against an Individual
Only subject areas which provide a right against an individual are arbitrable and not the ones which are available at large.
2.Special Statutes
Disputes that can be settled or resolved only through a special legislation/statute that has been laid down, in that case a dispute falling under the subject area of that legislation will be governed through the provisions of that law itself and not arbitration.
3.Criminal Offences
4.Matrimonial Disputes
5.Guardianship Matters
6.Insolvency and Winding Matters
7.Eviction or Tenancy Matters
8.Dispute interest between Trust, Trustees and Beneficiaries
Intellectual Property Rights provide protection as well as recognition to people over discovery, novelty, appeal, design, innovation etc. which takes the form of trademarks, patents, designs amongst others. Further these rights are protected as per the specific statutes such as the Copyright Act, 1957, Trademark Act, 1999, Designs Act, 2000, etc. Rights against any exploitations are also laid down.
In the Booz Allen case, the court held that Intellectual Property Rights disputes are ‘Right in Rem’ as they are available against the world at large. However, disputes in this subject area also revolve around contractual obligations that are to be followed between parties. In that case it would be considered as ‘Right in Personam’ as it is sought against an Individual.
There was a contrasting view about arbitrability of Intellectual Property Rights dispute in Mundipharma Ag v. Wockhardt Ltd.[3], wherein courts gave a different reason of why they are not arbitrable. The court was of the view that in case of infringement of a Copyright, the civil courts can be approached as per Chapter XII of the Copyright Act, 1957 who will help in finding the best possible civil remedies such as granting of injunction or damages.
This argument was considered flawed by many and in Eros International Media Limited v. Telemax Links India Pvt. Limited[4] the court observed that making all the dispute-areas that fall under Intellectual Property Rights as non-arbitrable would go against the rights of commercial enterprises. In this case Eros International Media Limited had filed a copyright infringement case against Telemax Links India Pvt. Limited. The respondent filed an application under section 8 of the Arbitration and Conciliation Act, 1996 on the ground that the dispute is of a contractual nature and has agreed on this method for dispute resolution. Hence, the court held that not all disputes w.r.t. to IPR can be held as non-arbitrable.
To sum up, it can be understood that-
-If a matter of dispute in Intellectual Property Rights is with respect to contractual obligations of parties, then it would fall under the category of ‘Right in Personam’ and therefore can be resolved through alternative dispute resolution mechanism of Arbitration.
-If a matter of dispute in Intellectual Property Rights is with respect to protection, recognition and accessibility of the concerned intangible asset, it would fall under the category of ‘Right in Rem’ as that right would be available against the world at large. This should then be dealt with in courts under the special statute.
Also read- Difference between Ad Hoc Arbitration and Institutional Arbitration
[1] Supreme Court of India, April 2011
[2] Supreme Court of India, October 2016
[3] Delhi High Court, September 1990
[4] Bombay High Court, April 2016
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