Arbitration Cases Monthly Round-Up: May 2023

SUPREME COURT:Referral Court Has Duty To Conclusively Decide Issue Of ‘Existence & Validity Of Arbitration Agreement’ Raised At Pre-Referral Stage: Supreme CourtCase Title: Magic Eye Developers Pvt. Ltd. vs M/s. Green Edge Infrastructure Pvt. Ltd. & Ors. The Supreme Court has held that under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the issue of ‘existence and validity of an arbitration agreement’ is raised at pre-referral stage, then the Court is duty bound to conclusively decide the issue. If the issue regarding ‘existence and validity of an arbitration agreement’ is left to the Arbitral Tribunal, then it will be contrary to Section 11(6A) of the Arbitration Act. This is to protect the parties from being forced to arbitrate in absence of a valid arbitration agreement. The Bench comprising of Justice M.R. Shah and Justice C.T. Ravikumar has observed that the ‘pre-referral’ jurisdiction of Court under Section 11(6) of Arbitration and Conciliation Act, 1996 consists of two inquiries, (i) existence and validity of arbitration agreement; and (ii) non-arbitrability of dispute. Award Can Be Said To Be Suffering From 'Patent Illegality' Only If It Is An Illegality Apparent On The Face Of It : Supreme CourtCase Title: Reliance Infrastructure Ltd. vs State of Goa The Supreme Court has observed that an award could be said to be suffering from “patent illegality” only if it is an illegality apparent on the face of the award and the award is not to be searched out by way of re-appreciation of evidence.The narrow scope of “patent illegality” cannot be breached by mere use of different expressions which nevertheless refer only to “error” and not to “patent illegality”, the bench of Justices Dinesh Maheshwari and Sanjay Kumar observed while allowing appeals filed by Reliance Infrastructure Ltd. 2015 Arbitration Amendment Not Applicable Though S.11 Application Was Filed After It, If Arbitration Notice Was Issued Pre-Amendment: Supreme CourtCase Title: M/s. Shree Vishnu Constructions vs The Engineer in Chief Military Engineering Service & Ors.The Supreme Court has ruled that where the notice invoking arbitration is issued prior to the coming into force of the Arbitration and Conciliation (Amendment) Act, 2015, i.e., prior to 23.10.2015, and the application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking appointment of an arbitrator, is made post the enforcement of the Amendment Act, the 2015 Amendment Act shall not be applicable."It is observed and held that in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015 and the application under Section 11 for appointment of an arbitrator is made post Amendment Act, 2015, the provisions of pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015", the Court held. Limitation Period For Arbitration | Cause Of Action To Appoint Arbitrator Commences From The “Breaking Point” Between Parties : Supreme CourtCase Title: M/s B and T AG vs Ministry of DefenceThe Supreme Court has held that the cause of action to appoint an arbitrator would commence from the “Breaking Point” at which any reasonable party would abandon efforts for at arriving at a settlement and contemplate referral of the dispute for arbitration. “Breaking Point” should be treated as the date at which the cause of action arose for the purpose of limitation.The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has observed that the entire history of the negotiation between the parties must be specifically pleaded and placed on record, in order to facilitate the Court to find out what was the “Breaking Point” for the purpose of limitation computation. Limitation Period For Arbitration | Mere Negotiations Between Parties Will Not Postpone The Cause Of Action : Supreme CourtCase Title: M/s B and T AG vs Ministry of DefenceThe Supreme Court while adjudicating an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator, has held that the limitation period of three years for filing such application would commence from the date when the cause of action arose. Subsequent negotiations between the parties, which take place after the cause of action has arisen, will not postpone the cause of action for the purpose of limitation computation.The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has held that, “Negotiations may continue even for a period of ten years or twenty years after the cause of action had arisen. Mere negotiations will not postpone the “cause of action” for the purpose of limitation. The Legislature has prescribed a limit of three years for the enforcement of a claim and this statutory time period cannot...

Arbitration Cases Monthly Round-Up: May 2023

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