OUTLINE OF LANDMARK JUDGEMENTS OF ARBITRATION IN 2023

OUTLINE OF LANDMARK JUDGEMENTS OF ARBITRATION IN 2023

OUTLINE OF LANDMARK JUDGEMENTS OF ARBITRATION IN 2023

 

Impactful decisions and bold reforms have created a new culture of arbitration in India, intending to minimize judicial intervention. The Indian legal framework has undergone substantial transformation to align with the international trends of arbitration, which have aimed to position India as a global hub for international arbitration. Consequently, the courts have adopted a pro-arbitration stance and have promoted arbitration as the cardinal way to resolve commercial disputes. India's arbitration laws are governed by The Arbitration and Conciliation Act, which was enacted in 1996 and subsequently updated in 2015, 2019, and 2021. These amendments have had a substantial impact on the development of India's arbitration jurisprudence. Fourteen of the most important arbitration rulings issued in 2023 are briefly reviewed in this article.

 

1.     TATA Sons (P) Ltd. v Siva Industries and Holdings Ltd. [i]–

In this instance, the Hon’ble Supreme Court made it clear that the time restriction for arbitral awards is outlined in the modified requirements of Section 29-A, which is located in Part II of the Arbitration Act and deals only with domestic arbitration. After the end of the pleadings, the arbitral tribunals in international commercial arbitrations are only urged to wrap up the proceedings in a year. They do not have to precisely follow the time limit, unlike domestic arbitrations.

 

2.     Alpine Housing Development Corp. (P) Ltd. v Ashok S. Dhariwa l[ii] – 

The Hon'ble Supreme Court ruled that the previous version of Section 34(2)(a) of the Arbitration Act will apply to arbitration proceedings that were started and finished before the 2019 modification. It specifies that if certain requirements listed in the applicable provisions are met and the party filing the application has “furnished proof,” an arbitral verdict may be overturned. Additionally, parties may file affidavits to draw the court's attention to specific issues that are relevant to the issues listed in Section 34(2)(a) of the act but are not covered elsewhere.

 

3.     NTPC Ltd. v SPML Infra Ltd. [iii] – 

In this instance, the Arbitration Act's narrowly defined Section 11(6) was invoked to assert the referral courts' jurisdiction over two particular questions. Determining the existence and validity of an arbitration agreement entails looking into the parties and applicant's relationship to the agreement in the first question. The dispute's non-arbitrability is the subject of the second question. Furthermore, emphasis was placed on the instruction provided to the courts to refrain from using a mechanical approach and to make sure that parties are not forced to arbitrate conflicts that are, on their face, not amenable to arbitration.

 

4.     B&T AG v Ministry of Defence [iv] –

In this instance, the Hon’ble Supreme Court provided clarification on how to calculate the statute of limitations in arbitration proceedings containing contractually mandated pre-arbitral negotiations. Furthermore, discussions may continue for a further ten or twenty years following the original cause of action, but the "cause of action" cannot be delayed for the sake of limitation through negotiations. Furthermore, if the parties are making significant efforts to engage in polite negotiations, the court needs to determine the "breaking point" at which these efforts will be abandoned.

4.     Tomorrow Sales Agency Private Limited v SBS Holdings Inc. [v] – 

An arbitral ruling cannot be enforced against a third-party funder, as the learned High Court of Delhi made clear when it declined to impose payment requirements on the funder in this specific case due to an adverse costs award. A third-party funder is someone who is not included in the arbitration or the award. 

 

5.     Nuovopignone International SRL v. Cargo Motors (P) Ltd. [vi] –

The learned High Court of Delhi upholds the enforceability of foreign consent awards after obtaining independent legal consultations in the present case. The court has adopted a pro-arbitration stance on the lines of the New York Convention. Furthermore, it has underscored the analysis of Section 30(4) of the Arbitration Act, stating that the consent award has the same implications as any other award on the substance of the dispute, which reinstates the essence of Indian jurisprudence.

 

6.     Larsen Air Conditioning & Refrigeration Co. v Union of India & Ors. [vii] –

The main argument of the ruling is based on the fact that, by Section 34 of the Arbitration Act, a court is only permitted to set aside an arbitral result in its entirety or part. Thus, it is agreed that Section 34 of the Arbitration Act is a "limited remedy." 

 

7.     Hindustan Construction Co. Ltd. v National Highways Authority of India [viii]–

If the majority decision is overturned, the ruling holds that a minority or dissenting opinion expressed in an arbitral proceeding cannot be regarded as an award. It might, nevertheless, offer insightful information about the procedural problems. Moreover, the Hon’ble Supreme Court recommended that the courts refrain from using the contract's primary interpretation to support a review, as this is specifically forbidden by Section 34 of the Arbitration Act.

 

8.     Chennai Metro Rail Ltd, v. Transtonnelstroy Afcons [ix] –

This ruling mandates that an arbitral tribunal's simple attempt to unilaterally amend the arbitral fee cannot be grounds for finding it unsuitable for proceedings. Furthermore, the Arbitration Act prohibits terminating an arbitral tribunal's ruling for any reason. 

 

9.     Unibros v All India Radio [x]–

According to the court, an arbitral award for lost profits made in the absence of strong proof is against Indian public policy. Therefore, it is untenable for any award to try to overturn a legally binding judgment that goes against basic public policy.

 

10.  Lombardi Eng. Ltd. v Uttarakhand Jal Vidyut Nigam Ltd. [xi]–

In the case at hand, the Honorable Supreme Court ruled that a referral court, in evaluating an application under Section 11(6) of the Arbitration Act, which deals with the arbitrators' appointment process, has the authority to determine whether the arbitration agreement is arbitrary and in violation of Article 14. It further emphasized that the Constitution, which is the ultimate source of law and the "Grundnorm," must be followed by all laws in India.

 

11.  Sri Ganesh Engineering Works v Northern Railways [xii] –

The principles of "counter-balancing," as highlighted by the Hon'ble Supreme Court in the Perkins Eastman Architects DPC vs. HSCC (India) Ltd. judgement, are violated by the decision of the learned Delhi High Court regarding an arbitration clause granting a party the authority to nominate two-thirds of the arbitral tribunal. The Court stressed how concerning it is to provide a party with the ability to nominate two-thirds of the tribunal and how this undermines the tribunal's independence and impartiality.

 

12.  Cox and Kings v SAP [xiii]–

The Supreme Court aimed to investigate the applicability of the "group of companies" doctrine in the Indian setting. They clarified further that when dealing with multi-party agreements, the courts or arbitral tribunals have to examine the corporate structure to ascertain if signing and non-signatory parties are part of the same group. The following step is to ascertain whether all parties intend to bind the non-signatory to the arbitration agreement once the corporate group's existence has been confirmed. taking into account both signatory and non-signatory when defining "parties" in Section 2(1)(h) and Section 7 of the Arbitration Act.

 

13.  Re Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 [xiv]–

In this particular case, the Honorable Supreme Court emphasized that an arbitration agreement that is not stamped or is not stamped enough may be considered inadmissible in evidence under Section 35 of the Stamp Act. These contracts, however, are not always null and invalid. The arbitral tribunal is allegedly the appropriate body to handle objections about the agreement's stamping.