Tag: Arbitration Law

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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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 Does a Dispute Resolution Clause Qualify as Arbitration? Mediation or Arbitration
22May By The Legal ChamberNo Comments
Supreme Court

Supreme Court Clarifies: When Does a Dispute Resolution Clause Qualify as Arbitration? Mediation or Arbitration

The Supreme Court ruled that Article 20 of the Concession Agreements between MCD and private contractors did not constitute a valid arbitration clause under Section 7 of the Arbitration and Conciliation Act, 1996. The Court emphasized that clauses lacking mutual intent, impartial adjudication, and procedural fairness cannot be enforced as arbitration agreements, directing parties to pursue alternative remedies. The judgment reiterated the essential elements of arbitration clauses from K.K. Modi v. K.N. Modi (1998) and upheld precedent in SDMC v. SMS AAMW Tollways (2019). Facts Of The Case: The case involved three separate appeals before the Supreme Court concerning Concession Agreements between the Municipal Corporation of Delhi (MCD) and private contractors (SMS Ltd., DSC Ltd., and CCC ...
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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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“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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