Many people think that Arbitration is a kind of settlement or mediation process. But, Arbitration is a process to decide the issue between parties in accordance with law in an exclusive Tribunal constituted either by the consent of the parties or through the order of court. Arbitration exists in India for a very long time even before any legal enactment. There was a practice to submit the disputes with a common man acceptable to both the parties for resolution. The said process was called as Panchayat.
Only during British Regime , modern Arbitration came into picture through the provisions of The Bengal Regulations, 1772. It provided for reference by a court to arbitration, with the consent of the parties, relating to the suits for accounts, and breach of contract, amongst others.
Later on, Indian Arbitration Act, 1899 and then Arbitration Act, 1940 enacted and later Arbitration and Conciliation Act, 1996 and now the 1996 Act has also been amended.
The principle of Arbitration explained by Francis Russell as “Arbitration is usually limited to parties who have consented to the process, either by agreeing in their contract to refer any disputes arising in the future between them to arbitration or by submitting to arbitration when a dispute arises. A party who has not so consented, often referred to as a third party or a non-signatory to the arbitration agreement, is usually excluded from the arbitration. There are, however, some occasions when such a third party may be bound by the agreement to arbitrate. For example, …, assignees and representatives may become a party to the arbitration agreement in place of the original signatory on the basis that they are successors to that party’s interest and claim “through or under” the original party. The third party can then be compelled to arbitrate any dispute that arises.”
Important Judgments on Arbitration
Oriental Insurance Company Limited – VERSUS M/s Narbheram Power and Steel Pvt. Ltd. -SC (02-05-2018)
An arbitration clause is required to be strictly construed. Any expression in the clause must unequivocally express the intent of arbitration. It can also lay the postulate in which situations the arbitration clause cannot be given effect to. If a clause stipulates that under certain circumstances there can be no arbitration, and they are demonstrably clear then the controversy pertaining to the appointment of arbitrator has to be put to rest.
Ameet Lalchand Shah & Others Versus Rishabh Enterprises & Another
Arbitration and Conciliation Act, 1996 – Section 8 and 45 – Allegation of fraud – Reference to arbitration can be refused only where serious question of fraud is involved – Cannot be refused on mere allegation of fraud – Instantly parties consciously proceeding with the commercial transactions to commission the Photovoltaic Solar Plant – No serious allegation of fraud – Arbitrator can examine allegations of fraud.
2018 SCC OnLine SC 352
Chhotanben and Anr. v. Kiritbhai Jalkrushnabhai Thakkar and Ors. – Supreme Court (10-04-2018)
The limitation for challenging the Sale Deed is not from the date of Sale Deed, but from the date of knowledge. Further, this kind of question of limitation is a triable issue and the same cannot be dealt in an application under Order 7 Rule 11 of CPC.
CHERAN PROPERTIES LIMITED VERSUS KASTURI AND SONS LIMITED AND ORS (SC-24-04-2018)
Arbitral Award can be enforced before NCLT in view of the provisions of Sec.35 of the Act.
2017-5-LW -323
Seat of arbitration not specified in the agreement- place of arbitration determines the law that will apply to arbitration and related matters like challenging the award
A. Ayyasamy v. A. Paramasivam and others (2016) 10 SCC 386
Mere allegation of fraud is not a ground to nullify the effect of arbitration agreement between the parties and arbitration clause need not be avoided and parties can be relegated to arbitration where merely simple allegations of fraud touched upon internal affairs of parties is leveled.
Indowind Energy Limited v Wescare (India) Limited-2010-5-SCC 306
S.N.Prasad, Hitek Industries (Bihar) Limited v Monnet Finance Limited-2011-1-SCC 320
Arbitration-Binding nature-The principle that an arbitration agreement will, under Section 7, bind only parties and not a third party
Chloro Controls India Private Limited v Severn Trent Water Purification Inc. 2013-1-SCC 641
Though the scope of an arbitration agreement is limited to the parties who entered into it and those claiming under or through them, the courts under the English law have, in certain cases, also applied the “group of companies doctrine”. This doctrine has developed in the international context, whereby an arbitration agreement entered into by a company, being one within a group of companies, can bind its non-signatory affiliates or sister or parent concerns, if the circumstances demonstrate that the mutual intention of all the parties was to bind both the signatories and the non-signatory affiliates
