Arbitration and Conciliation Act 1996

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Reinstating Party Autonomy in Ad Hoc Arbitrations

The Supreme Court in Oil and Natural Gas Corporation Limited (“ONGC”) Afcons Gunanusa JV (“Afcons”),[1] while deciding on four cases, inter alia held that:

(i) arbitrators cannot unilaterally decide their own fees but can exercise discretion to apportion the costs, demand deposit, and exercise lien over the delivery of the arbitral award if payments to it remain outstanding;

(ii) the fees of the arbitrator must be fixed at the inception to avoid unnecessary litigation and conflicts between parties at a later stage;

(iii) the term ‘sum in dispute’, which is the header of the first column of the Fourth Schedule to the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”), refers to the sum in dispute in a claim and counter-claim separately and not cumulatively. Consequently, arbitrators are entitled to charge separate fees for the claim and the counter-claim in an ad hoc arbitration proceeding;

(iv) the highest fee payable in an arbitration proceeding governed by the Fourth Schedule is INR 30,00,000, which is a ceiling applicable on a per-arbitrator basis and subject to a sole arbitrator’s entitlement of an additional amount of 25% on the fee payable as per the Fourth Schedule;

(v) the Fourth Schedule is to have a mandatory effect on the stipulation of fees by arbitrators appointed by arbitral institutions designated for such purpose in terms of Section 11 of the Arbitration Act in the absence of an arbitration agreement governing the fee structure; and

(vi) as regards court-appointed arbitrators, the Supreme Court held that the Fourth Schedule is by itself not mandatory in the absence of rules framed by the High Court concerned, and issued directives for fixing of fees in ad hoc arbitrations where arbitrators are appointed by courts.…

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Arbitration and Conciliation Act

Background

Interim measures act as significant procedural safeguards in ensuring the efficacy of the arbitration process. They serve to protect the rights of parties from the inception of the dispute till the execution of the final award. In India, interim measures may be granted in three stages i.e. before the commencement of arbitration proceedings, during the pendency of arbitration proceedings and after the passing of the arbitral award, but before its enforcement.[1]…

Continue Reading Section 9(2) of The Arbitration and Conciliation Act, 1996: A Ticking Clock on Invocation of Arbitrations in India

Arbitration and Conciliation Act 1996

In Part I[1] and II[2] of this post, we have analysed the contours of Section 34(4) of the Arbitration and Conciliation Act, 1996 (“the Act”), and the questions and ambiguities that may arise in its applicability. The purpose of this blog is to further analyse the limited scope of Section 34(4) of the Act, in light of the Hon’ble Supreme Court’s judgement in I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Limited[3] case, wherein it is observed that failure on the part of the arbitral tribunal in providing findings on contentious issues in the award is not a “curable defect” under Section 34(4) of the Act, and is an acceptable ground for setting the award aside (instead).…

Continue Reading Section 34(4) of the Arbitration and Conciliation Act, 1996: A Fly in The Ointment? (Part III)

International Regime

A three judge bench of the Hon’ble Supreme Court of India in its recent judgment dated April 27, 2022, in Oil and Natural Gas Corporation Limited v. M/s Discovery Enterprises Pvt. Ltd. & Anr.[1], while deciding on a challenge to an interim award on the ground that the arbitral tribunal failed to apply the group of companies doctrine, has held that a non-signatory company within a group of companies can be held bound to an arbitration agreement.…

Continue Reading Hon’ble Supreme Court Follows the International Regime: Upholds Group of Companies Doctrine in Arbitration

Arbitration

An arbitrator is a creature of a contract and is, therefore, equally bound by it. The Supreme Court, in the recent judgement of Union of India vs. Manraj Enterprises[i], set aside an arbitral award wherein the arbitrator had awarded pendente lite and future interest on the amount awarded, inspite of a contractual bar. The Court, relying upon a catena of judgments dealing with the inherent powers of an arbitrator to award pendente lite and future interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 (the 1996 Act), held that such powers are exercisable only in the absence of an agreement to the contrary.…

Continue Reading The Power to Grant Interest Pendente Lite – Arbitrator Bound by the Agreement Between the Parties: The Supreme Court Reiterates

Arbitration

INTRODUCTION

Recently, in the case of Gyan Prakash Arya vs. Titan Industries Limited[1], the Supreme Court enunciated the limited scope of an arbitral tribunal’s power under Section 33 of the Arbitration and Conciliation Act, 1996 (the Act). The Court has authoritatively clarified that such power can only be exercised to correct clerical and/or arithmetic errors (and errors of similar nature).…

Continue Reading The Supreme Court Clarifies: The Power Under Section 33 is Limited to Rectifying Clerical/ Arithmetical Errors

Arbitration Agreement

Background

Kompetenz-kompetenz, allowing the arbitral tribunal to rule on its own jurisdiction, is one of the fundamental principles of arbitration. In Indian arbitration law, this is captured in Section 16 of the Arbitration and Conciliation Act, 1996 (“Act”). This is further emphasised in Indian Farmer Fertilizer Cooperative Limited v. Bhadara Products (2018) 2 SCC 534 (“IFFCO Judgment”), wherein the Supreme Court has held that ‘jurisdiction’ mentioned in Section 16 has reference to three things: (1) existence of a valid arbitration agreement, (2) whether arbitral tribunal is properly constituted and (3) whether matters submitted to arbitration are in accordance with the arbitration agreement. Clearly, the existence of a valid arbitration agreement falls within the scope of jurisdictional matters to be determined by the arbitral tribunal.…

Continue Reading Scope of Scrutiny of An Arbitration Agreement in a Section 9 Petition Filed before Commencement of Arbitral Proceedings

TIME IS THE ESSENCE OF THIS CONTRACT - IS IT REALLY

INTRODUCTION

Negotiated, as also standard format contracts, are rife with clauses proclaiming time is of the essence. Parties are usually rest assured after spelling this out, hoping (nay assured) that such words employed would by themselves be adequate to enforce rights through a Court or an arbitral process. Sadly, mere words are usually never enough.

The Supreme Court, in the recent judgement of Welspun Specialty Solution Limited vs. Oil and Natural Gas Corporation Ltd.[i], has reiterated the principles basis which Courts are required to construe whether time is of the essence of a contract. The Court held that a collective reading of the entire contract and its surrounding circumstances is imperative to come to such a conclusion. Merely having an explicit clause in the contract may not be sufficient to make time the essence of it. The Court also held that the availability of extension procedures to fulfil obligations under a contract, along with consequent imposition of liquidated damages, are good indicators to hold that time is not of the essence.
Continue Reading Time is the Essence of this Contract: Is it Really?

Interim Application Already Considered by Court

Introduction

Recently, the Supreme Court in Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd.,[1] (“Arcelor-Essar Judgment”) held that the bar on the Court from entertaining interim applications under Section 9(3) of the Arbitration and Conciliation Act, 1996 (“Act”) was applicable only if the application  had not been taken up for consideration at the time of the constitution of the Arbitral Tribunal. However, if the Court had heard the application even in part, and had applied its mind to it, it could decide to proceed with the adjudication of the same.…

Continue Reading Interim Application Already Considered by Court? Section 9(3) of the Arbitration Act to Not Apply

Supreme court draws lakshman rekha on powers of a court under section 34: no power to modify an award

  1. The Supreme Court handed down a significant judgment[1] on the scope of power of a Court hearing a challenge to an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). The Supreme Court reiterated that there is no power under Section 34 to modify or vary an arbitral award.

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Continue Reading Supreme court draws lakshman rekha on powers of a court under section 34: No power to modify an award