There is a perception that arbitration proceedings in India are plagued with delays, interventionist courts, and parties attempting to scuttle the proceedings. A mere allegation of fraud was often enough to obstruct an arbitration proceeding on the ground that the criminality underlying the fraud would render the dispute non-arbitrable. This is no longer the case.
A major factor in making arbitration proceedings efficient is minimal judicial intervention. However, parties often subvert and delay arbitral proceedings by raising the ground that the nature of the dispute is non arbitrable. For instance, when commercial relations go sour leading to disputes, parties routinely make allegations of fraud. This was then used as a ground to force the dispute out of arbitration and into the traditional court system. This relied upon the Supreme Court’s decision in N. Radhakrishnan v. Maestro Engineering, that disputes involving allegations of fraud are incapable of being adjudicated by an arbitral tribunal. The subsequent decision in Swiss Timing v. Organising Committee, took a contrary view to N. Radhakrishnan. These contradictory decisions left the issue open and continued the uncertainty around the viability of domestic arbitrations as an effective dispute resolution mechanism.
The issue now stands settled. The Supreme Court in the recent decision of A. Ayyasami v. A. Paramasivam has held that a mere allegation of fraud will not render disputes non-arbitrable.