Landmark judgments on arbitration law in 2020-2021

Several landmark judgments on arbitration law were passed by the Supreme Court in the year 2020-2021. These judgments tried to make India an arbitration-friendly country to an extent. Here we have summarized some of the most important judgments rendered by India’s supreme court and their impact on the status quo.

Whether the tenancy disputes are resolved by arbitration:

Vidya Darolia and others v Durga Trading Corporation

Date of the Judgment: 14.12.2020

In the above-mentioned case, the Supreme Court repealed the ratio laid down in Himangni Enterprises v. Kamaljeet Singh Ahluwalia and held that the tenancy disputes are arbitrable as the Transfer of Property act, 1882 does not prevent arbitration. However, an exception is provided for tenancy disputes, which are governed by rent control legislation. There are specific forums designed which have been given special jurisdiction to decide upon the disputes between the parties.

Emergency arbitrator and section 2(1)(d) of the A&C Act

Future Retail Ltd. V. Amazon.Com Investment Holdings LLC &Ors.

Date of the judgment: 21.12.2020

CS(Comm) 493/2020

The supreme court followed the ratio laid down in the case of Avital Post and held that an emergency arbitrator is outside the scope of section 2(1)(d) of the Arbitration and Conciliation Act. In its 246th report, the law commission recommended amending sec 2(1)(d) to include an emergency arbitrator. However, the parliament did not accept these recommendations.

The extent of judicial intervention in the arbitration award

Dinesh Gupta & Ors. V. Anand Gupta & Ors.

Date of the judgment: 17.09.2020

Arb. A. 4/2020

The court had thrown light on minimum judicial intervention in the award issued by the arbitrator. If the adequate application informs the decision of the mind, then the judicial interference would violate the Arbitration and Conciliation Act, 1996.

Scope of Section 9 of the Act

CRSC Research and Design Institute Group Co. Ltd. V. Dedicated freight Corridor Corporation of India Ltd.& Ors.

Date of the judgment: 30.09.2020

OMP(I) (COMM.) 184/2020

The court held that interim protection is granted under section 9 of the act if the case fulfills the following three conditions:

•Firstly presence of an arbitration clause signifies the parties’ intention to initiate arbitration proceedings.

• Secondly, the existence of a prima facie case, A proper justification for granting interim relief.

• Thirdly existence of emergent necessity to if the interim relief is not provided, the parties would suffer.

The binding arbitration clause in the agreement

Royal Orchid Associated Hotels Private ltd.v. Kesho Lal Goyal

Date of the judgment: 03.11.2020

OMP(I)(COMM) 247/2020

In the above-mentioned case, the language of the clause offered two solutions to the dispute. The petitioner either wants to get the dispute resolution through court or by arbitration. Since the petitioner filed a petition under section 9 of the act, it can be inferred that there is an intention to enter into arbitration. Therefore the court held that the arbitration clause is binding.

Whether the court can appoint the arbitrator suggested by the respondent?

Tata Projects Ltd.v. Oil and Natural Gas Corporation Ltd.

Date of the judgment: 09.10.2020

Arb. P 302/2020

In the present case, the following question was before the court:

Whether the court can appoint the arbitration suggested by the respondent even after the respondent has lost its right to do so?

The court held that if the arbitrator is found suitable and qualified for the case, the court can do so. Hence The suggestion by the respondent does not matter either hinder the court from appointing the arbitrator.

Allegations of fraud and the nullity of the arbitration clause

Sai Guru Mega Solar Park Pvt. Ltd. V. Union of India, Through the Ministry of New and Renewable Energy and Anr.

Date of judgment: 26.10.2020

Common Arbitration Application No. 85 of 2020

The court followed the ratio laid in the case of Avital Post. The Court held that the mere allegations of fraud against one party do not nullify the arbitration clause. The allegations do not amount to the inference that the parties intend to opt out of arbitration. However, it was later found that the respondents did not file any application to nullify the arbitration clause.

Invocation of Arbitration Clause of a superseded contract.

Sanjiv Prakash v. Seema Kukreja

Date of the judgment: 22.10.2020

Arb. P. 4/2020

The court held that an arbitration agreement could be destroyed by a subsequent agreement owing to novation. The arbitration clause has perished if the contract is renewed; hence it can not be invoked.

Presence of two arbitration clauses in two related agreements between the same parties

Balasore Alloys Ltd. V. Medima LLC

Date of the judgment: 16.09.2020

Arbitration Petition(civil) no. 15/2020

There was confusion in the court in the following case because of two arbitration clauses in two related agreements between the same parties. The confusion was that which arbitration clause must be relied on in such cases. The court held that both clauses should be read and interpreted without any bias. The clause which would be relevant to the nature of the dispute would be considered.

Himachal Pradesh Power Corporation Ltd. V. Hindustan Construction Company Ltd.

Date of the judgment: 25.09.2020

OMP(T) (COMM) 65/2019

In the present case, the arbitrator had recused himself in another arbitration proceeding between the same parties. The parties contended that the mandate of the arbitrator must be terminated on the above-mentioned grounds. The court held that the grounds of termination of the mandate are mentioned in the VII schedule of the A&C Act, 1996. The present case does not come under the 19 categories mentioned in the Act. Thus section 12(5) does not bar the eligibility of the arbitrator.

M/S Ved Prakash Mittal &Sons v. Principal Kirorimal College

Date of the judgment: 24.09.2020

CM(M) 452/2020

The court held that unless the arbitration clause explicitly mentioned specifically referred disputes, counterclaims could be entertained. The counterclaims can be raised, amended, or added. These counterclaims must be arbitrable in nature and within the limitations.

Anglo American Metallurgical Coal Pvt. Ltd. V. MMTC

Date of the judgment: 17.12.2020

Civil appeal no. 4083/2020

In this case, the question before was whether the arbitration tribunal was the final judge for the evidence. The court relied on the judgment passed in Sudarshan Trading Co. V. Govt. of Kerala. The court held that the arbitration tribunal is the final judge of the evidence before it.

Dholi Spintex pvt. Ltd. V. Louis Dreyfus company India pvt. Ltd.

Date of the judgment: 24.11.2020

CS(COMM) 286/2020

The court held that the two parties could agree to choose foreign law as the law governing arbitration. This is highly encouraged in cases involving foreign payments. The arbitration contracts are independent of the substantive contract. As a result, the parties can choose different governing laws for arbitration.

Edelweiss Asset Reconstruction Company ltd. V. GTL Infrastructure ltd.

Date of judgement:18.11.2020

The court held that under section 17 of the A&C Act, 1996, the high Courts are given appellate powers against the arbitration tribunal. Hence if anything is not specifically mentioned, the courts can modify the arbitration award under section 37 of the 1996 Act.

Hero Electric Vehicles Private Limited & Anr. v. Lectro E- Mobility Private limited & Anr

Date of the judgment: 02.03.2021

This judgment deals with the jurisdiction of the courts while examining applications under section 8 of the act. The court held that the courts need to exercise the same jurisdiction as the arbitration tribunal exercised. This jurisdiction must be exercised while determining the arbitrability of the dispute.

PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited

Date of the judgment: 20.04.2020

The present case’s question was whether the Indian parties could choose the foreign seat of arbitration. The court held that the parties are independent to choose the procedural law and the substantive law. Hence two Indian parties can choose the foreign seat of arbitration.

BSNL & Anr v. M/S Nortel Networks India Pvt Ltd

Date of the judgement:10.03.2021

This case deals with the limit for applying section 11 of the act. The court held that t article 137 of the Limitation Act should govern the time limit for applying section 11 of the act. Hence the time limit for applying is 3 years from the date when the right to apply accrues.

Indus Biotech private Limited v Kotak India Venture (Offshore) Fund & Ors

Date of the judgment: 26.03.2021

The court held that if an application is filed under section 7 of IBC, any application made under section 8 of the Arbitration and Conciliation Act shall not be maintainable. If an application is filed under section 8 of the Act, the court must first decide on the application under section 7 of the IBC.