Arbitration Law

The Supreme Court upheld the Delhi High Court's ruling that a sub-contract clause refusing interest claims on held-up payments, deposits and delayed payments "or otherwise" barred the arbitrator from awarding pre-reference and pendente lite interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996. The residuary words are not read down by ejusdem generis; the contractor keeps its substantive claims and post-award interest (paras 14, 16-18).

In execution of an arbitral award over the Uhl hydro-electric project in Himachal Pradesh, the Supreme Court held that its earlier order restoring the award's interest component revived only 9% interest from the date of claim to the award and 18% thereafter, each capitalised annually. It did not restore the compound interest the award had built into the pre-claim expenses (paras 2, 14-16).

The Supreme Court held that the Rajasthan High Court's Division Bench should not have decided for itself whether to exclude time under Section 14 of the Limitation Act for Continental Engineering's Section 34 challenge to a 2017 arbitral award involving Jaipur Metro Rail Corporation. Keeping the remand, it directed the Single Judge to decide that question first, after notice to Jaipur Metro, and to reach the merits only if the challenge is within time (paras 7, 19).

The Supreme Court held, prima facie, that two later partners of a Mumbai firm who never signed the 1985 partnership deed containing the arbitration clause are veritable parties to the arbitration over the firm's commercial property, because their rights depend on whether the appellants' disputed 1995 retirement deed is valid (paras 15-17). Their limitation and estoppel objections were left to the Arbitral Tribunal (paras 16, 18).

The Supreme Court set aside the Delhi High Court's appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, holding that where the arbitration clause names both Delhi and Goa, the named venue does not automatically become the seat, and the clause giving Goa courts exclusive jurisdiction shows that Goa is the juridical seat (paras 21-22, 24).

A three-judge Bench of the Supreme Court appointed a sole arbitrator for disputes between an Indian company and its Korean partner under their joint venture agreement and MoU, rejecting the plea that a Seoul arbitration clause in their earlier licence agreement governed. The agreements prima facie operate in different fields; any overlap with licence claims and whether a non-signatory subsidiary is bound were left to the arbitrator (paras 18-23).