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        Law of Competition

        2012 (2) TMI 503 - HC - Law of Competition

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        Arbitration clause cannot oust competition jurisdiction; government rail and transport services fall within enterprise definition. An arbitration clause does not bar competition proceedings because disputes under the Competition Act concern statutory competition law, not merely ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Arbitration clause cannot oust competition jurisdiction; government rail and transport services fall within enterprise definition.

                          An arbitration clause does not bar competition proceedings because disputes under the Competition Act concern statutory competition law, not merely contractual rights, and the Act operates in addition to other laws. The arbitral forum is confined to contractual disputes and cannot determine abuse of dominance or similar competition issues. A Government department engaged in railway and transport services is an "enterprise" under Section 2(h) because those activities are commercial or service-oriented and not primary, inalienable sovereign functions. In the absence of an exemption notification, the challenge to the regulator's jurisdiction failed and the writ petition was dismissed.




                          Issues: (i) Whether the existence of an arbitration agreement between the parties barred the maintainability of the information and proceedings before the Competition Commission of India; (ii) Whether the petitioner was an "enterprise" within the meaning of Section 2(h) of the Competition Act, 2002.

                          Issue (i): Whether the existence of an arbitration agreement between the parties barred the maintainability of the information and proceedings before the Competition Commission of India.

                          Analysis: The proceedings before the Competition Commission concern alleged contravention of competition law and are distinct from contractual disputes arising between the parties. The Act expressly operates in addition to, and not in derogation of, other laws, and its overriding effect excludes any argument that the mere existence of an arbitration clause ousts the Commission's jurisdiction. An arbitral tribunal is confined to contractual disputes and cannot investigate abuse of dominant position or similar competition issues in the manner contemplated under the Act.

                          Conclusion: The arbitration agreement did not bar the proceedings before the Competition Commission.

                          Issue (ii): Whether the petitioner was an "enterprise" within the meaning of Section 2(h) of the Competition Act, 2002.

                          Analysis: The statutory definition of "enterprise" includes a Government department engaged in activities relating to the provision of services, unless the activity is relatable to the sovereign functions of the Government. The running of railways and the rendering of transport services were treated as commercial and welfare-oriented activities, not as primary, inalienable sovereign functions. In the absence of any exemption notification under the Act, the petitioner's activity fell within the statutory definition.

                          Conclusion: The petitioner was an "enterprise" under Section 2(h) of the Competition Act, 2002.

                          Final Conclusion: The challenge to the Commission's jurisdiction failed, and the writ petition was dismissed.

                          Ratio Decidendi: A government department engaged in commercial or service-oriented activity is an "enterprise" under competition law unless the activity is a primary and inalienable sovereign function, and an arbitration clause does not exclude the jurisdiction of the competition regulator over statutory competition claims.


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