ARBITRABILITY OF CONSUMER DISPUTES: THE ARBITRATION AND CONCILIATION ACT AND THE CONSUMER PROTECTION ACT AT LOGGERHEADS by Aashesh Singh
Recently, the National Consumer Disputes Redressal Commission (NCDRC) had the opportunity to adjudicate upon the issue of its jurisdiction in the case of Aaftab Singh v Emaar. The parties to the consumer dispute had, under the consumer contract, agreed on arbitration as the preferred dispute redressal method. Much against the resurgent wave of the pro-arbitration jurisprudence in India, the NCDRC asserted its jurisdiction in the consumer dispute over arbitration. The Commission adjudged that the Section 8 of the amended Arbitration and Conciliation Act (Act) is not applicable to consumer disputes, and the commission is thereby not obligated to refer a dispute to arbitration even if a valid arbitration agreement exists.
Section 8 of the Arbitration Act states that “A judicial authority shall…. notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.” The defendants had argued that the Commission, being a ‘judicial authority’ within the meaning of the Act, is bound by Section 8 to refer the dispute to arbitration, as a valid arbitration agreement existed in the consumer contract. Per contra, the complainants argued, and to which the Commission agreed, that the remedy under Consumer Protection Act (CPA) is not an exclusive remedy, but rather by virtue of Section 3 of the CPA, it exists as an additional remedy that operates without derogation of reliefs that can be sought under other laws. Thus, the Commission held that it was not obligated to refer the dispute to arbitration as the cause of action therein existed independently of the arbitration procedure.
Section 8 of the Arbitration Act is a non-obstante clause which serves to pre-empt any kind of judicial intervention in cases where valid arbitration agreement exists. But under Section 5 of the Arbitration act, the pre-condition for such clause to take effect is that the concerned dispute should be within the jurisdiction of the Arbitration act i.e. the dispute should be arbitrable. The NCDRC ventured into the argument of arbitrability and held that consumer disputes by their very nature are non-arbitrable disputes. To arrive at the above conclusion, the court relied on following arguments:
- Arbitration in consumer disputes goes against the notion of equity as the hapless consumer virtually has no say in the pre-decided terms of the of the non-negotiable adhesion contracts. - The provision of arbitration may prove to be financially inviable for Consumers who will be expected to split the costs of arbitration procedure in equal amounts with economically resourceful Corporations. - The remedies provided under specific statutes enacted for special purposes should not be allowed to be circumvented by arbitration.
The judgement is a welcome move to empower the consumers against the onslaught of commercial leviathans and it succeeds to an extent in tipping the scales in the favour of the former. However, the judgement may prove to be counterproductive to its object in as much as it tries to extinguish the option of arbitration from the domain of consumer disputes. Declaring consumer disputes wholly non-arbitrable was an unnecessary step as the object of maintenance of suit under CPA despite the existence of arbitration agreement is somewhat already fulfilled by section 3 of the CPA.
A blanket ban on arbitration in consumer disputes will preclude consumers wishing to avoid the tedious process of litigation under formal dispute resolution mechanisms from the option of arbitration. The reason advanced in the favour of judgement, though sound, are not absolutely true. Firstly, with introduction of various platforms like Online Dispute Resolution (ODR), the process of arbitration has become highly cost effective. Secondly, the concerns regarding unequal bargaining power and adhesion contracts can be ameliorated by the provision of mandatory post-dispute arbitration agreement or individually negotiated arbitration, as not all consumer disputes will have bargaining power skewed totally in the favour of the seller. In any case, if the consumer feels the terms of arbitration are unfair, he can always avail of the option of going to consumer forum first under Section 3 of the CPA. Lastly, a dispute does not become non-arbitrable per se just because it is governed by a special legislation. The issue of non-arbitrability depends on other factors like the nature of violated right and nature of the forum prescribed under the act itself (Booz Allen v SBI Home Finance). Disputes under Recovery of Debts Due to Banks and Financial Institutions Act (RDBFIA) are held to arbitrable despite their being specialised tribunal in form of Debt Recovery Tribunal to deal with the disputes arising therein (HDFC v Satpal Singh).
While the judgment goes a long way in providing impetus to consumer rights, it does have its fair share of practical problems insofar as it provides for preclusion of consumer disputes from settlement through arbitration. The judgement is yet to be challenged in the Supreme court, but in case this occurs, it will be interesting to see the approach the Supreme Court takes on the interplay of the conflicting legislations and the aforementioned issues which were not addressed in this judgement. ... See MoreSee Less
WILL THE SC COME TO THE RESCUE OF ROHINGYAS? by Shrikrishna & Sukriti
The writ petition filed in the Supreme Court against the Central Government’s decision to deport around 40,000 Rohingya refugees, is scheduled for hearing on Monday, before a bench headed by Chief Justice Dipak Mishra. The large-scale movement of Rohingya Muslims, an ethnic community of Myanmar, was fuelled by grave threat to their lives due to extreme human rights violations perpetrated by the State and its army, which according to the United Nations Human Rights Council (UNHRC) Report of 2016 include summary executions, enforced disappearances, arbitrary arrests and detention, torture and ill-treatment, forced labour, severe beating, sexual humiliation and abuse, denial of medical treatment, and custodial deaths.
The petitioners have advanced two major arguments against the proposed deportation. First, the deportation is violative of the Constitutional guarantees found in Article 14 and Article 21. Second, they have contended that any such act of deportation is contrary to the principle of ‘non-refoulement’, which has been widely recognised as a customary principle of international law.
Articles 14 and 21 apply to ‘persons’, a term which includes non-citizens in its ambit. The government’s decision to deport Rohingyas is based on unfounded apprehensions of the community posing a threat to national security, including links to terror organisations like ISIS. Even if such fears were assumed to be true, the act of deporting all of the 40,000 odd refugees is grossly disproportionate to the potential threat, unless it can be established that each one of the refugees has terror links, and hence, the decision is arbitrary. The threat of radicalisation need not be met with an excessive measure like deportation of the whole refugee community itself. This move falls afoul of the established principles of proportionality and non-arbitrariness covered under Article 14.
Further, in NHRC v. State of Arunachal Pradesh, the SC has held that India being a country governed by the rule of law, the Constitution confers rights on every human being, the State is bound to protect the life and liberty of every human being, a citizen or otherwise. Thus, the Indian State is bound to offer them protection and assistance and not send them back into the hands of persecution.
The recent statements of Home Minister Kiren Rijiju, terming them ‘illegal migrants’ and asking for their deportation, go against the principles of customary international law, under which India remains bound, even though India is not a party to the Refugee Convention of 1951. Rijiju’s statements calling Rohingyas illegal migrants are misplaced, for Rohingyas fall under the category of refugees and not illegal migrants. ‘Migrants’ is a category of people who “leave their place of habitual residence to live elsewhere” for reasons like better job prospects. According to the Convention Relating to the Status of Refugees (Refugee Convention), 1951 and Protocol Relating to the Status of Refugees (Refugee Protocol) of 1967, “any person, who, owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular group or political opinion, is outside the country if his nationality and is unable, or owing to such fear is unwilling to return to it”, is a refugee. Therefore, the term “migrant” would include “refugee” but all migrants are not refugees. The Rohingyas certainly fall under the above-mentioned definition of refugee.
India remains subject to the international customary law related to refugees and hence, the principle of non-refoulement is applicable. Article 33(1) of the Refugee Convention, provides as follows, “no contacting State shall expel or return (‘refouler’) a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion”. Refugees as per this principle cannot be sent back to their country of persecution, from which they have fled. Apart from being a part of the international customary law, this principle is also a part of the Universal Declaration of Human Rights, International Convention on the Elimination of all Forms of Racial Discrimination, International Covenant on Civil and Political Rights, Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, and International Convention on Protection of all Persons Against Enforced Disappearances, to all of which India is a signatory.
India, therefore, has an obligation under international law to not deport Rohingyas and return them to Myanmar where they risk death, torture and other forms of persecution. This obligation exists irrespective of whether the refugees are documented or not.
The mantle now rests with the Supreme Court of India to come to the rescue of those who have been described as among the world’s most persecuted community. ... See MoreSee Less
It is our pleasure to bring you Volume 10 Issue 3 of the NUJS Law Review! This issue contains articles of contemporary relevance, focusing on areas like, Triple Talaq, debt reform, enforcement of court orders, animal rights and artificial intelligence. The issue can be found at nujslawreview.org/. We would like to thank all of the authors who contributed to making this issue a success. We welcome all feedback and comments. ... See MoreSee Less