Tag: Arbitration Agreement

Mere Use of Word “Arbitration” Doesn’t Bind Parties: Key Business Contract Lesson from Supreme Court
20Jan By The Legal ChamberNo Comments
Supreme Court

Mere Use of Word “Arbitration” Doesn’t Bind Parties: Key Business Contract Lesson from Supreme Court

The Supreme Court held that Clause 8.28 did not constitute a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. The clause lacked essential attributes, such as finality and a binding decision by a neutral tribunal, as it ultimately permitted parties to seek remedies in civil courts if unresolved. Facts Of The Case: The appellant, M/s Alchemist Hospitals Ltd., entered into a Software Implementation Agreement with the respondent, M/s ICT Health Technology Services India Pvt. Ltd., on 1st November 2018 for upgrading its hospital-information software. Following implementation, the appellant alleged persistent technical failures and operational issues with the respondent's "HINAI Web Software," leading to the system being rolled back i...
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How a Defective Arbitration Clause & the Pandemic Shaped a Landmark Supreme Court Ruling on Limitation
1Dec By The Legal ChamberNo Comments
Supreme Court

How a Defective Arbitration Clause & the Pandemic Shaped a Landmark Supreme Court Ruling on Limitation

The Supreme Court held that an arbitration clause is not rendered invalid merely because the named arbitrator becomes statutorily ineligible; courts retain authority under Section 11(6) of the Arbitration Act to appoint a neutral arbitrator. Additionally, the limitation period for filing the application was extended by excluding the COVID-19 period from 15 March 2020 to 28 February 2022. Facts Of The Case: The appellant, Offshore Infrastructures Limited, was awarded a contract by the respondent, Bharat Petroleum Corporation Limited (formerly Bharat Oman Refineries Limited), for composite works at the Bina Refinery. The work, accepted on 31 December 2016, was to be completed by 30 May 2017 but was ultimately finished on 31 January 2018. The appellant raised its final bill on 20 Ma...
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Clarity on Post-Award Interest: Supreme Court Explains When Hyder Consulting Judgment Applies
15Nov By The Legal ChamberNo Comments
Supreme Court

Clarity on Post-Award Interest: Supreme Court Explains When Hyder Consulting Judgment Applies

This Supreme Court judgment clarifies that an arbitral award granting a composite interest rate from the cause of action until the date of repayment, based on a contract between the parties, excludes the default application of separate post-award interest under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. Party autonomy governs, and a decree-holder cannot claim compound interest at the execution stage if it was not stipulated in the contract or awarded by the tribunal, as this would amount to impermissibly modifying the award. Facts Of The Case: The dispute originated from a Memorandum of Understanding (MoU) dated 09.04.2014 between HLV Limited and PBSAMP Projects Pvt. Ltd. for the sale of land in Hyderabad. PBSAMP paid an advance of Rs. 15.5 crores to HLV. After...
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Supreme Court Ruling : Businesses Take Note ,Email Exchanges Can Create a Binding Arbitration Agreement
29Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Ruling : Businesses Take Note ,Email Exchanges Can Create a Binding Arbitration Agreement

This Supreme Court judgment reaffirms that a valid arbitration agreement can be constituted through conduct and correspondence, without a signed contract. The Supreme Court held that if parties have demonstrably acted upon the terms of an unsigned agreement, they are bound by its arbitration clause, and a referral court need only conduct a prima facie review of the agreement's existence. Facts Of The Case: The dispute arose from a proposed contract for the sale of 6,000 metric tons of zinc metal between Glencore International AG (Appellant) and Shree Ganesh Metals (Respondent No.1). The terms were negotiated via email, and Glencore sent a formal contract (No. 061-16-12115-S) incorporating an arbitration clause, which it signed. The Respondent, however, never signed this document. Despite...
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Supreme Court Strikes Down Unilateral Arbitration Clauses, Upholds Neutral Appointments
19Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Strikes Down Unilateral Arbitration Clauses, Upholds Neutral Appointments

This Supreme Court judgment affirms that a unilateral arbitration clause granting one party the sole power to appoint an arbitrator is invalid. Following the Constitution Bench in CORE, the Court held that an ineligible person (such as a Managing Director) cannot nominate a sole arbitrator, as it raises justifiable doubts regarding impartiality under Section 12(5) of the Arbitration and Conciliation Act, 1996. Facts Of The Case: The appellant, Bhayana Builders Pvt. Ltd., filed petitions before the Delhi High Court under Section 14(2) of the Arbitration and Conciliation Act, 1996, seeking to terminate the mandate of a sole arbitrator. This arbitrator had been unilaterally appointed by the Managing Director of the respondent, Oriental Structural Engineers Pvt. Ltd., pursuant to Clause 9.03...
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Supreme Court Reins In Judicial Intervention in Arbitration After Appointment
17Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Reins In Judicial Intervention in Arbitration After Appointment

This Supreme Court judgment holds that a non-signatory to an arbitration agreement has no legal right to be present in the arbitral proceedings as the award would not bind them, violating the confidentiality mandate under Section 42A. Furthermore, a court becomes functus officio after appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and cannot entertain subsequent applications for intervention or issue ancillary directions. Facts Of The Case: The case originated from an oral family settlement between Pawan Gupta (PG) and Kamal Gupta (KG), later recorded in a Memorandum of Understanding/Family Settlement Deed (MoU/FSD) dated 09.07.2019, which was not signed by KG’s son, Rahul Gupta (RG). PG initiated proceedings under Section 11(6) of the Arbitra...
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Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged
5Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged

The Supreme Court reaffirmed that under Section 11(6A) of the Arbitration Act, a court's role is prima facie confined to examining the existence of an arbitration agreement. All other contentious issues, including allegations of serious fraud and non-arbitrability, are jurisdictional matters that must be decided by the arbitral tribunal under Section 16. Facts Of The Case: The appellant, Bihar State Food and Civil Supplies Corporation, entered into agreements with various rice millers for the custom milling of paddy procured from farmers. The agreements contained an arbitration clause. When the millers allegedly failed to deliver the stipulated quantity of rice, the Corporation initiated recovery proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914. The millers challe...
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No Arbitration Without Clear Agreement: When Does a Dispute Clause Become Binding? Supreme Court’s Latest Verdict Explained
14Aug By The Legal ChamberNo Comments
Supreme Court

No Arbitration Without Clear Agreement: When Does a Dispute Clause Become Binding? Supreme Court’s Latest Verdict Explained

The Supreme Court held that Clause 13 of the contract, which stated disputes "may be sought through arbitration," did not constitute a binding arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. The use of "may" indicated no mandatory intent to arbitrate, requiring further mutual consent. The Court emphasized that an arbitration agreement must reflect a clear, unequivocal commitment to resolve disputes through arbitration, excluding domestic courts. Mere enabling language without obligation is insufficient. The High Court’s dismissal of the arbitration application was upheld. Facts Of The Case: The dispute arose between BGM & M-RPL-JMCT (JV) (Appellant) and Eastern Coalfields Limited (Respondent) over a contract for transportation/handling of goods. T...
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“Courts Can’t Decide Arbitrability” Supreme Court Clarifies Arbitrator Appointment Scope Under Section 11 Arbitration Act
17May By The Legal ChamberNo Comments
Supreme Court

“Courts Can’t Decide Arbitrability” Supreme Court Clarifies Arbitrator Appointment Scope Under Section 11 Arbitration Act

The Supreme Court ruled that under Section 11(6A) of the Arbitration Act, courts must limit their examination to the existence of an arbitration agreement and cannot decide arbitrability or exclude claims as "excepted matters" at the appointment stage. Citing the 7-judge bench in In Re: Interplay and 3-judge bench in SBI General Insurance, it held that arbitral tribunals—not courts—must determine whether claims fall under non-arbitrable categories. The judgment clarifies that courts cannot bifurcate claims into arbitrable/non-arbitrable during arbitrator appointments, ensuring minimal judicial interference at the referral stage. Facts Of The Case: The dispute arose from a contractual agreement between Office for Alternative Architecture (Appellant) and IRCON Infrastructure (Respondent), ...
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