Judicial Intervention in Arbitration

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...

The Supreme Court held that signing a full and final discharge voucher under financial duress does not extinguish arbitration rights if the validity of the settlement is challenged. Following Boghara Polyfab and SBI General Insurance, it ruled that arbitral tribunals must examine coercion claims, and courts under Section 11(6) of the Arbitration Act need only confirm the existence of an arbitration agreement. The judgment reaffirms that "accord and satisfaction" does not automatically nullify arbitration clauses unless expressly agreed, emphasizing minimal judicial interference at the referral stage. Economic duress and arbitrability are left for the tribunal’s determination. Facts Of The Case: The appellant, Arabian Exports Private Limited, engaged in meat exports, suffered ...

Tag: Judicial Intervention in Arbitration

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

Supreme Court Rules: Insured Can Challenge ‘Full Settlement’ Under Arbitration Clause