ARBITRATION AND CONCILIATION RECENT

JUDGEMENTS

Former Employee Not Disqualified From Acting As An Arbitrator, Even After 2015
Amendment

The Government of Haryana, PWD Haryana (B and R) Branch V. M/s. G.F. Toll Road Pvt. Ltd. &
Ors., 2019 (132) ALR 686
The Supreme Court held that the Arbitration and Conciliation Act, 1996, does not disqualify a former
employee from acting as an arbitrator, provided that there are no justifiable doubts as to his
independence and impartiality. The bench of Justice Abhay Manohar Sapre and Justice Indu Malhotra
observed that, even after 2015 amendment, the position remains the same, as Entry 1 to 5th Schedule
of the Act does not include "past/former employees."

Mere Delay In Passing The Award By Itself Cannot Be The Ground To Appoint Another
Arbitrator

Rajasthan Small Industries Corporation Limited V. M/S Ganesh Containers Movers Syndicate,
S.L.P(C) No.22809 of 2016, decided on 23.01.2019
In this case, it was observed that mere neglect of an arbitrator to act or delay in passing the award by
itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the
parties.The bench comprising of Justice R. Banumathi and Justice Indira Banerjee held thus while
considering appeal against Rajasthan High Court order appointing a retired District Judge as the sole
arbitrator to resolve the dispute between the parties, by allowing application under Section 11 and
Section 15 of the Arbitration and Conciliation Act, 1996, filed by contractor.

Arbitral Tribunal Cannot Award Interest If Agreement Expressly Bars Its Payment

Jaiprakash Associates Ltd. V. Tehri Hydro Developmentcorporation India Ltd., 2019(2 )Arb LR2
(SC)
It was reiterated that arbitrator cannot award interest on award if the agreement expressly prohibits
grant of interest. The bench of Justices A K Sikri, Abdul Nazeer and M R Shah dismissed an appeal to
uphold a judgment of Delhi High Court, which had set aside an arbitration award to the extent it
granted interest overlooking the prohibition in the agreement.

Independent Assessment Of Merits Of Award Cannot Be Made In An Arbitration Appeal

MMTC Ltd. V. M/S Vedanta Ltd., AIR 2019 SC 1168

The Supreme Court observed that, a court while considering an appeal under Section 37 of the
Arbitration and Conciliation Act, cannot undertake an independent assessment of the merits of the
award.The bench comprising Justice Mohan M. Shantanagoudar and Justice Vineet Saran observed
that, in such appeals, the court must only ascertain that the exercise of power by the Court under
Section 34 has not exceeded the scope of the provision.

Maintainability Of Execution Case To Be Considered Along With Issue Of Enforceability Of

Foreign Award

LMJ International Ltd. V. Sleepwell Industries Co. Ltd., 2014 (1) Arb LR 227 (Cal)
The Apex Court observed that piecemeal consideration of the issue of maintainability of the execution
case concerning the foreign awards, in the first place; and then the issue of enforceability thereof, is
not envisaged under the scheme of Section 48 of the Arbitration and Conciliation Act, 1996. The
bench comprising Justice AM Khanwilkar and Justice Ajay Rastogi observed that the Court is
expected to consider both these aspects viz. maintainability and enforceability, simultaneously at the
threshold.

Pre-Deposit Clauses To Invoke Arbitration Makes Arbitral Process Ineffective And Expensive

M/S ICOMM Tele LTD. V.Punjab State Water Supply & Sewerage Board & Anr., SLP 1013/2018
In this case, the Court observed that pre-deposit clauses to invoke arbitration would render the arbitral
process ineffective and expensive.The bench comprising Justice Rohinton Fali Nariman and Justice
Vineet Saran struck down such a clause in a notice inviting tender by Punjab State Water Supply &
Sewerage Board.

Court Can Appoint Independent Arbitrator Only After Resorting To The Procedure In
Arbitration Agreement

Union Of India V. Parmar Construction Company, SLP No. 6312/2018

The Supreme Court observed that the High Court, while dealing with an application under Section
11(6) of the Arbitration and Conciliation Act, seeking appointment of an 'independent Arbitrator',
should first resort to the mechanism in appointment of an arbitrator as per the terms of contract as
agreed by the parties.
One of the issue in a batch of appeals was whether it was permissible for the High Court under
Section 11(6) of the Arbitration and Conciliation Act, 1996 (prior to the Amendment Act, 2015) to
appoint third party or an independent Arbitrator when the parties have mutually agreed for the
procedure vis-à-vis the authority to appoint the designated arbitrator.

Court Can't Appoint Arbitrator When The Contract Containing Arbitration Clause Is
Insufficiently Stamped

Garware Wall Ropes Ltd vs. Coastal Marine Constructions & Engineering Ltd., AIR 2019 SC 2053
The Supreme Court held that it would be necessary for the Court before considering and passing final
orders on an application under Section 11(6) of the Act to await the adjudication by the stamp
authorities, in a case where the document objected to, is not adequately stamped.
The bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran observed that the law
laid down in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd. still applies, even after
introduction of Section 11(6A), by way of the Arbitration and Conciliation (Amendment) Act, 2015.

Person Ineligible To Be Arbitrator Under Sec.12(5) Of Arbitration Act Cannot Appoint

Another Arbitrator

Bharat Broadband Network Limited V. United Telecoms Limited, AIR 2019 SC 2434
The Supreme Court held that the appointment of arbitrator by a person who himself is ineligible to be
an arbitrator as per Section 12(5) of the Arbitration and Conciliation Act 1996 is void ab initio.The
bench of Justices R F Nariman and Vineet Saran followed the 2017 decision in TRF Ltd. v Energy
Engineering Projects Ltd (2017) 8 SCC 377 (TRF Ltd)., which had held that an ineligible person
cannot appoint arbitrator.

Sec.34 Arbitration Act- Unilateral Addition To Contract By Arbitral Tribunal Violates Most
Basic Notions Of Justice

Ssangyong Engineering & Construction Co. Ltd. V. National Highways Authorityof India (NHAI),
2019(3) Arb LR 152 (SC)
Holding that "a unilateral addition or alteration of a contract can never be foisted upon an unwilling
party", the Supreme Court set aside an arbitral award on the grounds of it being in conflict with "most
basic notions of justice" and thereby conflicting with "public policy of India" as per Section
34(2)(b)(ii)(iii) of the Arbitration and Conciliation Act 1996.
In addition to that, the Court held that the award was also liable to be set aside under Section
34(2)(a)(iii) on the finding that the party was rendered "unable to present his case".

Termination Of Arbitration Proceedings U/s 32 Of Arbitration And Conciliation Act Cannot Be

Recalled

Sai Babu vs. Clariya Steels Pvt. Ltd., 2019 4 AWC 3150 SC
The Supreme Court observed that the termination of Arbitration proceedings by the Arbitrator under
Section 32(2) (c) of the Arbitration and Conciliation Act cannot be recalled.
In this case, the sole arbitrator terminated proceedings under Section 32(2) (c) i.e. on the ground that
the continuation of the proceedings become unnecessary or impossible. Later, he allowed an
application by one of the parties seeking recall of the order terminating the proceedings. The
Karnataka High Court dismissed the challenged against this 'recall' by the Arbitrator.

A Court Deciding 'Section 34' Petition Has No Jurisdiction To Remand The Matter To
Arbitrator For Fresh Decision

Radha Chemicals V. Union Of India, SLP (C) No. 2334/2018

The Supreme Court reiterated that the court while deciding a petition under Section 34 of the
Arbitration and Conciliation Act has no jurisdiction to remand the matter to the arbitrator for a fresh
decision.The bench comprising Justice Rohinton Fali Nariman and Justice Navin Sinha set aside a
Calcutta High Court order that remanded the matter to the arbitrator in order to decide the point of
limitation afresh. The division bench of the high court had affirmed the single bench order of remand.

'Association' Referred To In Section 2(1)(f)(iii) Of The Arbitration And Conciliation Act Would
Include A Consortium Of Companies, One Of Which Is A Foreign Company

M/S Larsen And Toubro Limited Scomi Engineering Bhd V. Mumbai Metropolitan Region
Development Authority, Civil No. 28/2017
The Supreme Court held that an 'association' referred to in Section 2(1)(f)(iii) of the Arbitration and
Conciliation Act, 1996, would include a consortium consisting of two or more bodies corporate, at
least one of whom is a body corporate incorporated in a country other than India.

Unsigned Arbitration Agreement Not Invalid In All Cases

Caravel Shipping Services Pvt. Ltd. Vs. Premier Sea Foods Exim Pvt. Ltd., 2019(2) Bom CR21
The Supreme Court held that the only prerequisite for an arbitration agreement is that it should be in
writing and it cannot be said that in all cases, an arbitration agreement needs to be signed. The bench
comprising Justice Rohinton Fali Nariman and Justice Navin Sinha observed that the plaintiff has
itself relied upon the Bill of Lading as part of its cause of action in his suit against defendants.

Application for Enforcement of Foreign Award Shall Not Be Dismissed Merely For Non-
Production of Requisite Documents 'At The Time Of Application'

P.E.C. Limited vs. Austbulk Shipping SDN BHD, AIR 2019 SC105
The Supreme Court held that, at the initial stage of filing of an application for enforcement of a
foreign award, non-compliance of the production of the documents mentioned in Section 47 of the
Arbitration and Conciliation Act shall not entail in dismissal of the application for enforcement of an
award.
Any Challenge To Arbitrator Appointed Should Be Raised Before The Arbitrator Himself In
First Instance

Sp Singla Constructions Pvt. Ltd. V.State Of Himachal Pradesh And Another, 2018 (6) Arb LR 355
(SC)
The Supreme Court reiterated that any challenge to the arbitrator appointed should be raised before
the arbitrator himself under Section 13 of the Arbitration and Conciliation Act 1996, in the first
instance and thereafter under Section 34 of the Act.
The bench comprising Justice R. Banumathi and Justice Indira Banerjee was considering high court
order that held that the appointment of arbitrator could not be challenged by way of an application
under Section 11(6) of the Act.

'Administrative Difficulties' Not A Valid Reason To Condone Delay In Filing Application To Set
Aside Arbitral Award

M/S Simplex Infrastructure Ltd V. Union Of India, AIR 2017 SC 2119

The Supreme Court held that administrative difficulties would not be a valid reason to condone a
delay above and beyond the statutory prescribed period under Section 34 of the Arbitration and
Conciliation Act, 1996 to file an application to set aside arbitration award.

No Appointment Of Arbitrator If There Is Violation Of Conditionality Clause In Arbitration

Agreement

United India Insurance Co. Ltd. vs. Hyundai Engineering and Construction Co. Ltd., 2019 ACJ
734
While setting aside a Madras High Court judgment appointing an arbitrator ignoring the conditionality
clause in an arbitration agreement, the Supreme Court observed that, even after the 2015 amendment
insertion of sub-section 6A in Section 11 of the Arbitration and Conciliation Act, the arbitration
clause has to be interpreted strictly considering the conditionality clause.

Prior Notice To Other Party Before Filing Application To Set Aside Arbitral Award Not
Mandatory

The State Of Bihar & Ors. V. Bihar Rajya Bhumi Vikas Bank Samiti, AIR 2018 SC 1627
Disapproving view adopted by many High courts in the matter of interpretation of Section 34(5) the
Arbitration and Conciliation Act, the Supreme Court held that the requirement (under Section 34(5))
of prior notice to the other party before filing an application to set aside an arbitral award is a
directory.

Limitation Period For Application For Setting Aside Arbitration Award Begins From The Date
Of Signed Copy Of The Award Delivered To The Party Making It

Anilkumar Jinabhai Patel (D) v Pravinchandra Jinabhai Patel, AIR 2018 SC 1627
The Supreme Court reiterated that the limitation period prescribed under Section 34(3) of the
Arbitration and Conciliation Act would commence only from the date of the signed copy of the award
delivered to the party making the application for setting it aside.
The bench of Justice RK Agrawal and Justice R Banumathi made this observation while referring to
State of Maharashtra and Ors v Ark Builders Pvt Ltd, wherein it was held that the expression "...party
making that application had received the arbitral award..." cannot be read in isolation and it must be
understood that Section 31(5) of the Act requires a signed copy of the award to be delivered to each
party.