Scope of judicial interference

Introduction

There are only a few sections in the Arbitration and Conciliation Act, 2016 (“Act”), in which Court’s reference or assistance is invited post commencement of arbitration and constitution of the arbitral tribunal.


Continue Reading Scope of judicial interference – Order passed by an Arbitral Tribunal under Section 27 of the Arbitration and Conciliation Act, 1996

Enforcement of Arbitration Awards via Insolvency Proceedings - A Contrary Perspective

As the Insolvency regime in India builds its new course under the Insolvency and Bankruptcy Code, 2016 (‘Insolvency Code’), numerous issues of application have arisen and will continue to grapple the corridors of the insolvency courts. One of the concerns is the interaction between debt enforcement/ execution procedures and the Insolvency Code. Insolvency Code allows operational creditors to initiate insolvency proceedings against a debtor, with a valid proof of undisputed claim. Form 5 of the IBBI (Application to Adjudication Authority) Rules, 2016, under which an Operational Creditor makes an application for initiation of insolvency process, considers a court decree or an arbitration award adjudicating on the default as a valid evidence of default to support insolvency commencement. The all-encompassing term ‘Arbitration Award’ includes both domestic awards and foreign awards. While the domestic awards are per se enforceable before the civil courts, unless stayed in a challenge before the court, and no distinct process for enforcement needs to be complied with under the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), foreign awards must follow a procedure of recognition, prior to being considered as enforceable before Indian courts. The Rules, however, shed no light on issues such as, at what stage the arbitration awards are eligible to be presented before the insolvency courts for insolvency commencement.
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All Orders terminating proceedings are not Awards - Delhi HC sets the record straight

The issue of whether simplicitor orders terminating an arbitral proceeding is an award under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), has been a question that has been plaguing various Courts in India for a while now. The issue is crucial in nature, as it determines the remedy of a party aggrieved by such an order. While some Courts have taken the view that such an order is an award appealable under Section 34 of the Arbitration Act, others have not. This ambiguity is a cause of concern for litigants since it delays the entire time bound arbitral process intended under the Arbitration Act and leaves the litigant in a lurch. However, the Hon’ble High Court of Delhi (“Delhi HC”) in PCL SUNCON v National Highway Authority of India[1] (“PCL SUNCON Case”) has addressed this issue and cleared the said ambiguity to a great extent.
Continue Reading All Orders terminating proceedings are not Awards: Delhi HC sets the record straight

 Supreme Court Clarifies Law On Limitation Period For Filing An Appeal Under Section 37 Of The Arbitration Act

INTRODUCTION:

The Supreme Court in the case of Government of Maharashtra (Water Resources Department) Represented by Executive Engineer v. M/s Borse Brothers Engineers & Contractors Pvt. Ltd.[1] has inter alia set right the law regarding the period of limitation for condonation of delay in filing appeals under Section 37[2] of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). Overruling its earlier decision in N.V. International v. State of Assam[3] (“N.V. International”) and emphasising the central object of speedy disposal of disputes sought to be achieved by the Arbitration Act and the Commercial Courts Act, 2015 (“Commercial Courts Act”), the Court has allowed condonation of only ‘short delays’, setting out strict parameters for permitting the same.
Continue Reading Supreme Court Clarifies Law on Limitation Period for Filing an Appeal under Section 37 of The Arbitration Act

Does NCLT has power to refer parties to Arbitration in an in rem insolvency proceeding

The conflict between Insolvency and Arbitration is almost of near polar extremes. The difference in focus of the two was well illustrated in Re United States Lines Inc[1] as a:

“… conflict of near polar extremes: bankruptcy policy exerts an inexorable pull towards centralization while arbitration policy advocates a decentralized approach towards dispute resolution”.

Thus, while insolvency/ bankruptcy aims to centralise all the proceedings against a debtor to one jurisdiction and give rise to a proceeding in rem (against the world at large) thereby creating third party rights for all creditors of the debtor, arbitration on the other hand advocates a decentralised approach and promotes party autonomy in dispute resolution resulting in a proceeding in personam (against a particular person).
Continue Reading Does NCLT has power to refer parties to Arbitration in an in rem insolvency proceeding?

The Supreme Court Revisits the Consequences of Non-Payment of Stamp Duty on the Arbitration Agreement – Part I

In Part I of this post, we discussed the findings of the Court on the issue of separability of arbitration agreements from the underlying contract and the corresponding validity of arbitration agreements in unstamped agreements. In this part, we will analyse the findings of the Court with respect to arbitrability of disputes involving fraud; and

The Supreme Court Revisits the Consequences of Non-Payment of Stamp Duty on the Arbitration Agreement – Part I

Introduction

Recently, a three-judge bench of the Supreme Court in M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unique Flame Ltd. & Others[1] has reiterated and clarified the law on the (i) doctrine of separability of arbitration agreements from the underlying contract; (ii) arbitrability of disputes involving fraud; and (iii) maintainability of a writ petition against orders passed under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).
Continue Reading The Supreme Court Revisits the Consequences of Non-Payment of Stamp Duty on the Arbitration Agreement – Part I

Section 34 4 of the Arbitration and Conciliation Act 1996 – A fly in the ointment Part II

In Part I of this post, we examined the contours of Section 34(4) of the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”), pre-conditions for its invocation and the scope of the powers conferred upon the court thereunder. In this post, we analyse some of the questions and ambiguities that may arise in the applicability of Section 34(4) of the Arbitration Act.

Can Section 34(4) of the Arbitration Act be invoked to eliminate any ground under Section 34(2) of the Arbitration Act?

Section 34(2) of the Arbitration Act provides two sets of grounds on which an award may be set aside. Section 34(2)(a) sets out grounds of challenge such as incapacity of a party, invalidity of the arbitration agreement, lack of proper notice of appointment of the arbitrator or of the arbitral proceedings or inability of a party to present his case, an award which deals with disputes not submitted to arbitration, improper composition of the arbitral tribunal or arbitral procedure contrary to the agreement between the parties, etc. These grounds must be established by the party challenging the award, on the basis of the record of the arbitral tribunal.
Continue Reading Section 34(4) of the Arbitration and Conciliation Act, 1996 – A Fly in the Ointment? (Part II)

Conditional or unconditional stay, that is the question – The fate of arbitral awards in India, pending challenge

Background

Ever since the enactment of the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”), arbitral awards have been statutorily granted the same status as a decree of a civil court by way of a deeming fiction under Section 36 of the Arbitration Act. Up until the amendment of the Arbitration Act in 2015, the filing of an application challenging an arbitral award had the effect of an automatic stay on the enforcement of the award. The Arbitration and Conciliation (Amendment) Act, 2015 (the “2015 Amendment Act”) changed this, by mandating a separate application to be filed seeking stay of the award, which may (or may not) be granted by the court, subject to such conditions as it may deem fit.
Continue Reading Conditional or Unconditional Stay, That is the Question – The Fate of Arbitral Awards in India, Pending Challenge