Arbitral Tribunal

Q. Whether the private law bound Arbitral Tribunal can apply public law principles or Article 14 against a public body and whether the commercial arbitrators are entitled to settle a dispute by applying what they conceive is 'fair and reasonable'?

In the instant case, it was held that a writ court may well hold against a public body on a public law principle or by invoking Article 14; but an arbitrator, constrained as he or she is by the contract, has no such power. Consequently, it was ruled that there is absolutely no authority for the proposition that a private-law-bound tribunal has recourse to hold a public body accountable on the principles under Article 14.

Further, the Hon'ble Court held that commercial arbitrators are not entitled to settle a dispute by applying what they conceive is 'fair and reasonable',in the absence of a specific authorization in the arbitration agreement. Section 28(3) of the Arbitration and Conciliation Act, 1996 mandates the arbitral tribunal to take into account the terms of the contract while making and deciding the award. Further, under Section 28(2), the Arbitral Tribunal is required to decide ex aequo et bono or as amiable compositeur only if the parties expressly authorize it to do so. The Arbitrator is bound to implement the contractual clauses and cannot go contrary to them. Thus, commercial arbitrators cannot decide based on their notions of equity and fairness, unless the contract permits it. Lastly, the Hon'ble Court set aside the Rs 4814 crore arbitral awardpassed by the Arbitral Tribunal, as the Respondent i.e., Deccan Chronicle Holdings Ltd. was in "unquestionable breach of its contractual obligations".

Board of Control for Cricket in India vs. Deccan Chronicle Holdings Ltd. (16.06.2021 - BOMHC) : MANU/MH/1437/2021

Q. Whether courts under Section 11 of the Arbitration and Conciliation Act, 1996 can usurp the jurisdiction of the arbitral tribunal?

In the instant case, theSupreme Court held that issue of novation of a contract requires detailed consideration of the clauses of the two Agreements along with the surrounding circumstances in which these Agreements were entered into, and a full consideration of the law on the subject. The court further held that such exercise cannot be done, given the limited jurisdiction of a court u/s 11 of the Act.The detailed arguments on whether an agreement which contains an arbitration Clause has or has not been novated cannot possibly be decided in exercise of a limited prima facie review as to whether an arbitration agreement exists between the parties. Thus, it was held that the court cannot, at this stage, enter into a mini trial or elaborate review of the facts and law which would usurp the jurisdiction of the arbitral tribunal.

Sanjiv Prakash vs. Seema Kukreja and Ors. (06.04.2021 - SC) : MANU/SC/0238/2021

Q. Whether the mandate of the Arbitral Tribunal appointed by the Respondent calls for termination by the court?

In the instant case, the High Court of Delhi held that mere fact that the judgment of Supreme Court in Central Organisation for Railway Electrification v. M/s. ECI-SPIC-SMO-MCML has been referred to a larger bench by order dated 11.01.2021 passed in Union of India v. M/s. Tantia Constructions Limited would not mean that the judgment in CORE (supra) ceases to be good law. The Court held that until a larger bench answers the reference made to it one way or the other, the decision of the three-judge bench in CORE (supra) will continue to be operative. The Court thus upheld the arbitration clause providing for appointment from a panel and dismissed the Section 11 petition filed by the Petitioner. Lastly, it was held that there is no ground to terminate the mandate of the Arbitral Tribunal. Merely on the basis of the observation made by the Supreme Court in Tantia Constructions (supra) with respect to the decision in CORE (supra), it cannot be held that the appointment of the Arbitral tribunal in the present case stands terminated de jure.

IWorld Business Solutions Private Ltd. vs. Delhi Metro Rail Corporation Limited (07.04.2021 - DELHC) : MANU/DE/0797/2021

Q. Whether a mandatory injunction can be granted by the Arbitral Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996 except to maintain status quo?

In the instant case, the High Court of Delhi upheld the order passed by the Arbitral Tribunal u/s 17 and rejected the Appellant's contention that mandatory injunction cannot be granted except to maintain status quo. The Court held that it is apparent from the plain language of Clause (e) of Section 17(1)(ii) of the Act that it is of a wide import. The said provision enables the Arbitral Tribunal to pass such orders as may be passed by the Court for the purposes of and in relation to the proceedings before it and Section 17(1)(ii)(e) cannot be read in a restricted manner.

Supertech Limited vs. B.E. Billimoria and Co. Ltd. and Ors. (23.04.2021 - DELHC) : MANU/DE/0788/2021

Q. Whether the arbitral institutions nominated in the contract established by a specific trade, would be considered as a neutral institution?

In the instant case, the Court rejected the contention of the plaintiff that the arbitral institution nominated in the contract between the parties is not a neutral institution and is controlled by oil seed producers such as Defendant, and it does not qualify as a neutral arbitral institution. The Court further held that there are several arbitral institutions spread across the world which are established by organisations or entities that represent the interest of the specific trade and the rationale for the same is that expertise is necessary to effectively adjudicate such disputes and trade practice and the knowledge thereof is also significant. The Court held that the material on record does not support a conclusion that the arbitral institution is ex facie not neutral and it cannot be said to be biased merely because it is an organisation representing the interest of traders in oil seeds and fats.

ADM International Sarl A One Business Centre and Ors. vs. Sunraja Oil Industries Private Limited and Ors. (22.04.2021 - MADHC) : MANU/TN/3272/2021

Q. Can the issue of arbitral tribunal lacking jurisdiction be raised for the first time in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996?

In the case at hand, the sole ground on which the appellant has tried to assail the arbitral award is lack of jurisdiction of the Arbitrator on account of not valid arbitration agreement between the parties. As per section 34(2)(a)(i), such plea is valid plea to set aside the arbitral award.

However, the Court held that the party has to raise such issue at the first available opportunity. The appellant neither raised the issue by replying to Section 11 notice, nor did he participate in the Arbitration proceedings to raise such dispute. The arbitral award cannot be set aside now merely because the issue of jurisdiction being the legal issue can be raised at any stage.

Leepee Enterprise vs. Mehul Industries (03.03.2022 - GUJHC) : MANU/GJ/1396/2022