Supreme Court Flags Failure Of New Arbitration Bill In Providing Statutory Appeal Against Arbitral Tribunals' Termination Orders

The Supreme Court criticised the new Arbitration and Conciliation Bill for failing to address the ambiguity regarding the relief against an arbitral tribunal terminating the proceedings, noting that the new Bill made no effort to remedy this gap in the law.

"It is indeed very sad to note that even after these many years, procedural issues such as the one involved in the case at hand, have continued to plague the arbitration regime of India. The Department of Legal Affairs has now, once again proposed to replace the existing legislation on arbitration with the Arbitration and Conciliation Bill, 2024.", observed a bench of Justices JB Pardiwala and R Mahadevan, adding that "the Arbitration and Conciliation Bill, 2024 should explicitly provide the nature and effect of the termination of proceedings insofar as the authority of the arbitral tribunal is concerned to entertain a recall application. A proper remedy against an order terminating the proceedings is the need of the hour."

The judgment authored by Justice Pardiwala recommended that “the Parliament in its wisdom, should also consider the option of providing a statutory appeal in Section 37 of the Arbitration and Conciliation Bill, 2024 against an order terminating the proceedings, similar to an order passed by the arbitral tribunal under Section 16 when it accedes to a plea of lack of jurisdiction.”

Further, the Court expressed its disinclination to allow the party to re-initiate the arbitration proceedings, which were once terminated by their own fault; otherwise, it would grant a mischievous party a license to forum shop without fear.

“In our opinion, a party who has allowed the proceedings to terminate by its own obdurate stance, should ordinarily be not allowed to once again re-initiate arbitration. To allow the same would lead to a chilling effect, where a devious party, if it finds that the proceedings are not progressing favourably towards his claims, could mischievously let the same terminate by its own actions and then re-initiate arbitration.”, the court observed.

“At the same time, arbitration is not infinite. Every arbitration initiated under the Act, 1996 comes at the expense of several precious hours of the judicial time and resources. The pendency of arbitration proceedings due to unavailability of arbitrators is already alarming. If we are to add more unnecessary proceedings on top of this already overburdened system, then that, in our opinion would be the death knell of arbitration.”, the court added.

In view of the aforesaid, the Court urged “the Department of Legal Affairs, Ministry of Law and Justice to take a serious look at the arbitration regime that is prevailing in India and bring about necessary changes while the Arbitration and Conciliation Bill, 2024 is still being considered.”

Cause Title: HARSHBIR SINGH PANNU AND ANR. Versus JASWINDER SINGH

Citation : 2025 LiveLaw (SC) 1183

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Also From Judgment: If Arbitral Tribunal Terminates Proceedings For Not Paying Fees, Remedy Is To Seek Recall & Then Invoke S.14(2) : Supreme Court