Tag: Arbitration and Conciliation Act 1996

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits
9Oct By The Legal ChamberNo Comments
Supreme Court

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits

This Supreme Court judgment clarifies that a contractual clause merely barring interest on delayed or disputed payments does not, by itself, expressly or by necessary implication prohibit an arbitral tribunal from awarding pendente lite interest. The power to award such interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, is only denuded if the agreement contains a clear and comprehensive bar. Facts Of The Case: The dispute arose from an arbitral award dated 21.11.2004, which directed the appellant, Oil and Natural Gas Corporation Ltd. (ONGC), to pay a total sum of USD 6,56,272.34 to the respondent, M/s G & T Beckfield Drilling Services Pvt. Ltd., for outstanding invoices and other claims. The arbitral tribunal rejected ONGC's preliminary objection to the ma...
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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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Clarifying Jurisdiction: Supreme Court Reaffirms Exclusive Power of MP Arbitration Tribunal for Public Works
28Aug By The Legal ChamberNo Comments
Supreme Court

Clarifying Jurisdiction: Supreme Court Reaffirms Exclusive Power of MP Arbitration Tribunal for Public Works

The Supreme Court upheld the exclusive jurisdiction of the Madhya Pradesh Arbitration Tribunal over disputes arising from state works contracts, as per the MP Madhyastham Adhikaran Adhiniyam, 1983. It ruled that a private arbitration clause in a concession agreement cannot override this statutory mandate, rendering such arbitration non-est in law. Facts Of The Case: The dispute arose from a Concession Agreement dated 05.01.2012 between Umri Pooph Pratappur Tollways Pvt. Ltd. (Appellant) and the Madhya Pradesh Road Development Corporation (Respondent) for the development of a state highway on a BOT (Toll + Annuity) basis. Following alleged breaches and delays attributed to the Respondent, the Appellant first initiated proceedings in 2018 before the Madhya Pradesh Arbitration Tribunal, a s...
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Supreme Court Backs Arbitrator’s Power to Award Compound Interest :Rules on Interest Calculation in Award Enforcement
25May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Backs Arbitrator’s Power to Award Compound Interest :Rules on Interest Calculation in Award Enforcement

The Supreme Court ruled that arbitral tribunals have the power to award compound interest (interest on interest) under Section 31(7) of the Arbitration Act, 1996. It clarified that the "sum awarded" includes both principal and pre-award interest, and post-award interest can be calculated on this total amount. The judgment overruled earlier contrary interpretations, affirming arbitrators' discretion in interest calculations unless expressly barred by contract. The Court emphasized this aligns with the compensatory purpose of arbitration awards for delayed payments. Facts Of The Case: The case involved a contractual dispute between M/s Interstate Construction (appellant) and National Projects Construction Corporation Ltd. (respondent) regarding construction work for Ramagundam Super Therma...
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Supreme Court Clarifies: When Can an Arbitral Award Be Challenged for Lack of Jurisdiction?
22May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Clarifies: When Can an Arbitral Award Be Challenged for Lack of Jurisdiction?

The Supreme Court ruled that an arbitral award under the Arbitration and Conciliation Act 1996, cannot be annulled solely for lack of jurisdiction if no plea was raised before the tribunal under Section 16(2). It harmonized conflicting precedents, holding that objections under Section 34 must show strong grounds, and upheld the finality of awards where jurisdictional challenges were untimely. The judgment clarifies that the Madhya Pradesh Arbitration Act 1983, does not automatically override arbitration agreements unless jurisdictional objections are raised at the appropriate stage. Facts Of The Case: The case involved a contractual dispute between M/s Gayatri Projects Limited and Madhya Pradesh Road Development Corporation regarding road construction works in Madhya Pradesh. The parties...
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Supreme Court Clarifies Power of Arbitral Tribunals to Join Non-Signatories: Key Ruling on Arbitration and Corporate Group Doctrine
2May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Clarifies Power of Arbitral Tribunals to Join Non-Signatories: Key Ruling on Arbitration and Corporate Group Doctrine

The Supreme Court held that an arbitral tribunal has the authority to implead non-signatories to an arbitration agreement under the Group of Companies doctrine. It affirmed that such power is not confined to referral courts under Section 11 of the Arbitration and Conciliation Act, 1996, upholding the tribunal's jurisdiction. Facts Of The Case: The case arises from a dispute involving Shapoorji Pallonji and Company Private Limited (SPCPL), which entered into a Works Contract dated 21.11.2016 with ASF Insignia SEZ Pvt. Ltd. (AISPL), part of the ASF Group. The contract was later novated to Black Canyon SEZ Pvt. Ltd. (BCSPL), another ASF Group entity, through a Novation Agreement dated 17.04.2018. A Settlement Agreement was executed in 2020 due to performance issues. BCSPL initiated arbitrat...
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