Arbitrability of employment disputes in India

In recent years, arbitration has often been the preferred method of dispute resolution in most commercial contracts in India, including employment contracts. Factors including privacy, flexibility, cost and time effectiveness of arbitration have been some of the key driving contributors to such a growing preference for arbitration over traditional court-driven and other dispute resolution methods. That said, however, Indian law does place a restriction on arbitrating ‘certain disputes’ on account of public policy considerations. Through this article, we evaluate and explore the complexities surrounding arbitrability of disputes arising out of employment contracts in India through various judicial precedents, with the aim of decoding the scope of employment disputes that can be adjudicated through arbitration.

Understanding ‘arbitrability’. The Indian Arbitration and Conciliation Act, 1996 (“Arbitration Act”) defines and consolidates the law on domestic arbitration, international commercial arbitration, conciliation as well as enforcement of foreign arbitral awards. The Arbitration Act recognizes that “certain disputes may not be submitted to arbitration” and that a competent court may set aside arbitral awards passed with respect to matters where the “subject-matter of the dispute is not capable of settlement by arbitration under the law”. As such, ‘arbitrability’, for the purposes of this article, refers to the question of whether a particular dispute can be submitted to arbitration for resolution.

Please click here to read the full article by Gerald Manoharan, Sonakshi Das and Sandhya Swaminathan published in ET Edge Insight.