25 important judgments on Arbitration from January to May 2021

Important decisions delivered by Indian Courts on Arbitration law.

Tariq Khan

Highlights of 25 important decisions delivered by the Indian courts on Arbitration law from January 2021 to May 2021 follow.

Section 2

1. Whether an ‘Emergency Arbitrator’ is an arbitrator within the meaning of Section 2(1)(d) of the Arbitration & Conciliation Act?

Amazon.Com NV Investment Holdings LLC v. Future Coupons Private Limited & Ors (Judgment dated March 18)

The Court held that the concept of emergency arbitrator is based upon party autonomy as the law gives complete freedom to the parties to choose an arbitrator or an arbitral institution. Further, the emergency arbitrator is an arbitrator for all purposes. The order of the emergency arbitrator is binding upon the parties but not on the subsequently constituted arbitral tribunal which has the power to reconsider, modify, terminate or annul the order/award of the emergency arbitrator. Lastly, it was held that the order passed by the emergency arbitrator is an order under Section 17(1) and enforceable as an order of the Court under Section 17(2) of the Act.

Section 8

2. Whether an arbitration agreement would be unenforceable if the underlying contract was not stamped?

M/S NN Global Mercantile Pvt Ltd v. M/S Indo Unique Flame Ltd & Others (Judgment dated January 11)

The Supreme Court held that the arbitration agreement is an independent agreement between the parties, and is not chargeable to payment of stamp duty. The non-payment of stamp duty on the commercial contract would not invalidate the arbitration clause since it has an independent existence of its own. Further, the Court observed that the finding in SMS Tea Estates and Garware that the non-payment of stamp duty on the commercial contract would invalidate even the arbitration agreement, is not the correct position in law, and referred the issue to a larger bench.

3. What is the scope of Court’s jurisdiction while examining an application under Section 8 of the Act?

Hero Electric Vehicles Private Limited & Anr V Lectro E-Mobility Private Limited & Anr (Judgment dated March 2)

The Court held that while dealing with cases under Section 8 of the Act, the Court has to make sure that it is exercising the very same jurisdiction which the arbitral tribunal is empowered to exercise while determining the aspect of arbitrability of the dispute, or the existence of a valid arbitration agreement.

4. Whether any application filed under Section 8 of the Arbitration Act, 1996 will be maintainable if a petition under Section 7 of the Insolvency & Bankruptcy Code is pending?

Indus Biotech Private Limited v. Kotak India Venture (Offshore) Fund & Ors (Judgment dated March 26)

The Supreme Court held that if a petition under Section 7 of IBC is admitted, any application u/s 8 of the Arbitration Act made thereafter, will not be maintainable. However, if petition u/s 7 of IBC is yet to be admitted and, if an application under Section 8 of the Act is filed, the adjudicating authority must first decide the application u/s 7 of the IBC by recording a satisfaction as to whether there is default or not, even if the application under Section 8 of Act is kept along for consideration.

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Section 9

5. Whether two Indian parties can choose a foreign seat of arbitration?

PASL Wind Solutions Private Limited V GE Power Conversion India Private Limited (Judgment dated April 20)

The Supreme Court held that the parties to an arbitration agreement have the autonomy to decide not only on the procedural law to be followed but also the substantive law. Therefore, two Indian parties can choose a foreign seat of arbitration.

6. Whether the Division Bench can dispose of in entirety the proceedings under Section 9 of the Act which were pending before the Single Judge?

Panipat Jalandhar NH-1 Tollway Pvt Ltd vs National Highways Authority of India (Judgment dated April 27)

The Supreme Court held that it was inappropriate for the Division Bench to dispose of an application under Section 9 which was pending before the Single Judge. The application u/s 9 of the Act was restored to enable the applicant place his submissions before the Single Judge.

Section 11

7. Whether the dispute relating to novation of Contract is required to be examined by the Arbitral Tribunal or by the Court u/s 11?

SPML Infra Ltd v. NTPC Limited (Judgment dated April 8)

The Court held that once it is established that the parties had entered into an arbitration agreement, the courts must relegate the parties to arbitration to adjudicate the dispute.

8. Whether a party can be compelled to arbitrate even though it is not a signatory to the contract?

Shapoorji Pallonji and Co Pvt Ltd v. Rattan India Power Ltd & Anr (Judgment dated April 7)

The Delhi High Court held that a non-signatory being directly involved in the contract can be compelled to arbitrate.

9. What is the time limit for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996?

Bharat Sanchar Nigam Ltd & Anr v. M/S Nortel Networks India Pvt Ltd (Judgment dated March 10)

The Supreme Court held that the time limit for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 would be governed by Article 137 of Limitation Act i.e., three years from the date when the right to apply accrues.

10. Whether the scope of Section 11 is confined to the examination of the existence of an arbitration agreement?

Pravin Electricals Pvt Ltd v. Galaxy Infra And Engineering Pvt Ltd (Judgment dated March 8)

The Supreme Court observed that Section 11 proceedings are preliminary and summary and not a mini trial. Relying on Vidya Drolia v. Durga Trading Corporation, the Court held that when it appears that prima facie review would be inconclusive and requires detailed examination, the matter should be left for final determination by the arbitral tribunal. Further, the expression “existence of an arbitration agreement” in Section 11 of the Act would include aspect of validity of an arbitration agreement.

11. What is the scope of powers of the Court under Section 11 of the Arbitration Act, 1996?

Sanjiv Prakash v. Seema Kukreja And Ors (Judgment dated April 6)

The Supreme Court held that the court at Section 11 stage cannot enter into a mini trial or elaborate review of the facts and law which would usurp the jurisdiction of the arbitral tribunal.

Section 12

12. Whether the decision in the case of Perkins Eastman Architects DPC & Anr. v. HSCC (India) Limited ought to be read in a restrictive manner?

City Lifeline Travels Private Limited v. Delhi Jal Board (Judgment dated January 27)

The Court held that the efficacy of arbitration as an alternate dispute resolution mechanism rests on the foundation that the disputes would be adjudicated by independent and impartial arbitrators. Therefore, the decision in Perkins Eastman Architects DPC & Anr. v. HSCC (India) must be read in an expansive manner, not in a restrictive way.

Section 16

13. Whether a jurisdictional objection u/s 16 of the Act can be decided ‘while passing the award'?

Surender Kumar Singhal & Ors v. Arun Kumar Bhalotia & Ors (Judgment dated March 25)

The Delhi High Court observed that an arbitral tribunal ought to decide the objection u/s 16 of the Act as a preliminary issue, as soon as possible. It was held that the question of jurisdiction would have to be adjudicated first, prior to the passing of the final award.

14. Whether Rule 20 of the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018 can be equated with Section 16 of the Arbitration and Conciliation Act, 1996?

Jeph Bev Private Limited & Ors v. Delhi International Arbitration Centre & Ors (Judgment dated February 8)

The Delhi High Court held that Rule 20 of the Delhi International Arbitration Centre cannot be equated to Section 16 of the Act. The said Rule deals with competence of the DIAC to administer and not of the competence of the arbitral tribunal to adjudicate.