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Latest trends in Arbitration
LATEST TRENDS IN ARBITRATION:
The Courts exercise supervisory jurisdiction over the arbitration proceedings. This supervision is limited to granting interim measures, appointment of arbitrator, assistance in evidence taking and setting aside of the arbitral award.
Principles of Natural Justice prevail over the Arbitration Clause:
Recently, the Supreme Court in the case of Perkins Eastman Architects DPC & Anr v. HSCC (India) Ltd., AIR 2020 SC 59, addressed the issue, where the Arbitration clause gave power to one party for the appointment of "Sole Arbitrator". The Supreme Court held that an interested party is disqualified from appointing a Sole Arbitrator.
according to 2015 Amendment of the Arbitration Act, if an Arbitrator appointed, is related to one of the parties, he is statutorily incompetent and also disqualified to nominate a Sole Arbitrator even if the consent for the same was given by the parties.
In case of Statutory Arbitration, Arbitral Tribunal can grant interim measure under Section 17:
The Supreme Court in the case of State of Gujarat through Chief Secretary & Anr. v. Amber Builders, Civil Appeal No. 8307 of 2019 decided on 8th January 2020, that a Statutory Arbitration Tribunal has the power to act outside the scope of the Statute, if it is permissible under A&C Act.
In the State of Gujarat, all the disputes arising out of the works contract entered by the State Government or the Public Sector Undertakings with any person are governed under the Gujarat Public Works Contracts Dispute Arbitration Tribunal Act, 1992 (the Act). The matters of dispute are referred to Gujarat Public Works Contract Dispute Tribunal under Section 3 of the Act.
The State contended that the High Court does not have the jurisdiction as all the matters of the dispute were dealt by the Tribunal. On an appeal by the State, matter went to the Supreme Court and the Court held that, in order to arrive at an appropriate remedy for the contractor, the had to approach the Arbitral Tribunal constituted under the Gujarat Act. The jurisdiction therefore is with the tribunal to decide whether there is a prima facie case by the contractor for the grant of Interim relief.
The Court further stated that the power is vested in the Arbitral Tribunal under Section 17 of the A&C Act such powers can be exercised by the Tribunal constituted under the Gujarat Act as there is no inconsistency in the two acts in regards with the interim relief. The power already vests in the tribunal under the Gujarat Act and Section 17 of the A&C Act compliments these powers and therefore it cannot be said that the provisions of Section 17 of the A&C Act are inconsistent with the Gujarat Act. The appeal by State was allowed and High Court Order was set aside.
Section 87 of the A & C Act, 1996 struck down:
The automatic stay on the arbitration award upon the filing of a challenge under Section 34, for setting aside an Arbitration Award has caused a lot of trouble to the parties waiting for the enforcement of Arbitral Award. The SC in Hindustan Construction Company Limited & Anr v. Union of India, 2019 (6) ARB LR 171 (SC), held, Section 87 of A&C Act, as unconstitutional.
Section 87 was introduced through A&C (Amendment) Act, 2019. It states that there will be an automatic stay on the enforcement of the award, in cases where the award was challenged that arose out of Arbitration that commenced prior to October 23, 2015.
In this case, the court failed to consider Section 9 (the courts the liberty to pass any interlocutory even after passing of the award prior to its enforcement) and Section 35 of the Act (that Section 36 has to be read in the light of Section 35, which states that award is binding on the parties and persons claiming under them). Therefore, the concept of automatic Stay was never there, further 2015 Amendment clarified it. The Court also held that 2019 Amendment Act failed to observe the Supreme Court's decision in BCCI. The insertion of Section 87 and deletion of Section 26 was arbitrary and is contrary to public interest. Court accordingly struck down Section 87 as it violates Article 14 of the Constitution.
- Principles of Natural Justice prevail over the Arbitration Clause
- In case of Statutory Arbitration, Arbitral Tribunal can grant interim measure under Section 17
- Section 87 of the A & C Act, 1996 struck down
