The Kompetenz-Kompetenz or the Competence-Competence principle, refers to the power and authority an arbitral tribunal possesses to decide its jurisdiction.
Section 16 of the Arbitration and Conciliation Act, 1996 incorporates this important legal principle into Indian arbitration. The principle holds great importance in India to promote the independence of arbitral tribunals by minimizing judicial intervention, also recognised under Section 5 of the 1996 Act.
Along with the power to rule on its own jurisdiction, the tribunal also possesses the authority to rule on the objections raised by the parties, concerning the validity of the arbitration agreement or the arbitration clause.
Further, if the objection is rejected by the tribunal, the parties are not remediless and may file an application under Section 34 of the Arbitration Act, challenging the award on limited grounds provided thereunder.
Thus, the principle plays a key role in reforming Indian Arbitration by instilling confidence in parties towards arbitration for resolving their disputes.
The Supreme Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) acknowledged the importance of the Kompetenz-Kompetenz principle and held that once the arbitral tribunal is constituted, all issues and objections including objections concerning the tribunal deciding its own jurisdiction.
In the case of United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., also cited in BSNL v. Nortel Networks (India) (P) Ltd. , the Supreme Court, following the Kompetenz-Kompetenz principle held that the arbitral tribunal has the sole authority to decide its own jurisdiction as well as the validity of the arbitration agreement.