Courts Cannot Decide Arbitrability While Appointing Arbitrators: Supreme Court Dismisses Motilal Oswal's Appeal

The Supreme Court of India recently held that courts cannot decide questions of arbitrability while appointing arbitrators, even when a party relies on a special statute to oppose arbitration. At the Section 11 stage, the court said judges are required to “confine to the examination of the existence of an arbitration agreement” and nothing beyond that. On that basis, the court dismissed an appeal filed by Motilal Oswal Financial Services Limited challenging the appointment of an...

Commercial Courts Cannot Hear Non-Commercial Arbitration Disputes Without Specified Claim Value: MP High Court

The Madhya Pradesh High Court has clarified that arbitration challenges arising from non-commercial disputes with no determinable monetary value cannot be heard by Commercial Courts, even if such courts function at the level of a Civil Judge (Senior Division). The court clarified that the Commercial Courts Act, 2015 applies only when two conditions are met, the dispute must be commercial in nature and must have a specified value as defined under the law. Justice Vivek Jain said that where...

S. 37 Arbitration | Arbitral Awards Not Liable To Set Aside On Mere Error In Law Or Misappreciation Of Evidence : Supreme Court

The Supreme Court on Thursday (December 18) overturned the Chhattisgarh High Court's judgment, holding that the High Court had exceeded its jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996 by effectively acting as an appellate court, re-appreciating the evidence, and substituting its own interpretation in place of the arbitral award. “High Court, in exercise of limited jurisdiction under Section 37, impermissibly re-appreciated facts and substituted its own...

Issues About Party's Capacity To Invoke Arbitration And Maintainability Issues Fall Within Tribunal's Domain : Supreme Court

The Supreme Court on Wednesday (December 17) reiterated that the questions related to whether an individual is a veritable party to an arbitration agreement, eligible to invoke the arbitration clause, shall be referred for the Arbitral Tribunal's consideration. A Bench comprising Justice P.S. Narasimha and Justice Atul S. Chandurkar declined to interfere with the Telangana High Court's decision referring the dispute to arbitration and rejected the appellant's objection that Respondent No. 1 was...

S. 29A Arbitration Act | Arbitrator's Mandate Terminates On Expiry Of Time; Substituted Arbitrator Must Resume After Extension : Supreme Court

The Supreme Court on Wednesday (December 10) held that once the statutory 18-month period for delivering an arbitral award expires, the arbitrator's mandate automatically comes to an end as per Section 29A(4) of the Arbitration and Conciliation Act, 1996, when no application for extension is made. Therefore, when an extension of time is granted by the Court after the mandate of the arbitrator is terminated, then the substitution of the arbitrator is mandatory under Section 29A(6) of the...

Supreme Court Flags Failure Of New Arbitration Bill In Providing Statutory Appeal Against Arbitral Tribunals' Termination Orders

The Supreme Court criticised the new Arbitration and Conciliation Bill for failing to address the ambiguity regarding the relief against an arbitral tribunal terminating the proceedings, noting that the new Bill made no effort to remedy this gap in the law."It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plague the arbitration regime of India. The Department of Legal Affairs has now, once again...

Non-Signatory Which Isn't A Veritable Party Cannot Invoke Arbitration Clause : Supreme Court

The Supreme Court on Tuesday (December 9) held that a non-signatory to an arbitration agreement cannot invoke the arbitration clause against a party with whom it shares no legal relationship and where there is no indication of any intention to bind the non-signatory to the main contract. A bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan heard the matter, where the Respondent, admittedly a non-signatory to the primary contract between HPCL and AGC Networks Ltd., sought to invoke the...

If Arbitral Tribunal Terminates Proceedings For Not Paying Fees, Remedy Is To Seek Recall & Then Invoke S.14(2) : Supreme Court

The Supreme Court has held that an arbitral tribunal is legally empowered to terminate proceedings under Section 38(2) of the Arbitration and Conciliation Act, 1996 when a party fails to pay its share of the arbitrator's fees.Once such a termination occurs, the remedy available to the party is to seek the recall of the order before the Tribunal itself. If the recall application is dismissed, then the party has to approach the Court under Section 14(2).A bench of Justice JB Pardiwala and Justice...

Supreme Court Refers 'Bharat Drilling' Judgment' To Larger Bench For Clarity Whether Prohibited Claims Bind Arbitral Tribunals

The Supreme Court on Friday referred its 2009 judgment in Bharat Drilling and Foundation Treatment Private Limited versus State of Jharkhand (2009) 16 SCC 705. to a larger bench, observing that the ruling has been repeatedly and incorrectly relied upon to dilute prohibitory clauses in government contracts. A bench of Justice P S Narasimha and Justice A S Chandurkar said the earlier decision is not an authority for the proposition that excepted or prohibited claim clauses bind only the...

Arbitration | Agreed Interest Rate Can't Be Later Challenged As Exorbitant; Arbitrator Cannot Overrride Contractual Rate : Supreme Court

The Supreme Court on Wednesday dismissed appeals filed by BPL Limited against an arbitral award, upholding the enforcement of a 36% annual interest rate on outstanding dues owed to Morgan Securities and Credits Private Limited. The Court ruled that corporate entities cannot claim contractual terms are "unconscionable" after voluntarily agreeing to them ..“Once the parties by mutual consent agreed to a particular rate of interest to be charged and the same is included in the terms of the contract...

PSU Objects To International Arbitration Being Moved From Delhi To London; Supreme Court Questions Change Of Venue For Convenience

The Supreme Court on Wednesday heard a dispute between NMDC Steel Ltd, a Public Sector Undertaking of the Government of India and Italian company Danieli & C. Officine, regarding the shifting of the place of hearing of the international arbitration between them from Delhi to London.The bench comprising Chief Justice of India Surya Kant, Justice Ujjal Bhuyan and Justice NK Singh was hearing a Special Leave Petition filed by NDMC Steel Ltd against the order of the Telangana High Court which...

Arbitration | No Review Or Appeal Lies Against Order Appointing Arbitrator : Supreme Court

The Supreme Court observed that a review or appeal from an order of appointment of an arbitrator is impermissible.“Once an arbitrator is appointed, the arbitral process must proceed unhindered. There is no statutory provision for review or appeal from an order under Section 11, which reflects a conscious legislative choice.”, the Court held, while setting aside the Patna High Court's order allowing the review petition and recalling its earlier appointment of an arbitrator, despite the party...