Case BriefsSupreme Court

Supreme Court: A Bench comprising of Uday U. Lalit and Ashok Bhushan, JJ. dismissed a review petition filed against Supreme Court’s judgment dated 13-02-2018 [Emaar MGF Ltd. v. Aftab Singh, 2018 SCC OnLine SC 2378 (order)] whereby the appeals filed by review petitioners were dismissed.

The appeals were filed challenging the order of National Consumer Disputes Redressal Commission (NCDRC) in Aftab Singh v. Emaar MGF Ltd., 2017 SCC OnLine NCDRC 1614 holding consumer disputes to be non-arbitrable. The respondent entered into a buyer’s agreement with the petitioner company for the purchase of a villa in the township to be developed by them. Dispute arose regarding the same. The respondent filed a complaint with NCDRC under Consumer Protection Act, 1986 for certain reliefs in the matter. The company relied on the arbitration clause provided in the agreement and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration. This application filed was rejected NCDRC. The company filed appeals against NCDRC order which was dismissed by the Delhi High Court as well as the Supreme Court.

The Supreme Court discussed the object of the Consumer Protection Act as well as the A&C Act and also the position before and after the Arbitration and Conciliation (Amendment) Act, 2015. Reference was made to various decisions including, National Seeds Corporation Ltd. v. M. Madhusudan Reddy, (2012) 2 SCC 506. It was observed, “….complaint under Consumer Protection Act being a special remedy, despite there being an arbitration agreement the proceedings before Consumer Forum have to go on….”. The Court noted several categories of cases, which are not arbitrable. It is also said that “The words notwithstanding any judgment, decree or order of the Supreme Court or any Court added by amendment in Section 8 were with intent to minimise the intervention of judicial authority in the context of arbitration agreement… The Court cannot refuse to refer the parties to arbitration “unless it finds that prima facie no valid arbitration agreement exists.”

However, denying the contention that amended Section 8 is applicable even to cases which are themselves non-arbitrable, the Court held, “The amendment in Section 8 cannot be given such expansive meaning and intent so as to inundate entire regime of special legislations (like Consumer Protection Act) where such disputes were held to be non-arbitrable.” Something which legislation never intended cannot be accepted as side wind to override the settled law.” Thus, it was held that the Consumer Protection Act being special legislation, NCDRC was right in rejecting company’s application under Section 8 of Arbitration Act. Therefore, the review petition was dismissed. [Emaar MGF Land Ltd. v. Aftab Singh,2018 SCC OnLine SC 2771, decided on 10-12-2018]

Case BriefsHigh Courts

Uttaranchal High Court: A Single Judge Bench comprising of Manoj K. Tiwari, J., dismissed a bunch of writ petitions filed against the order of the District Judge whereby petitioners’ applications under Section 34 of Arbitration and Conciliation Act, 1996 were decided in terms of compromise between the parties.

Bhumidari land of the petitioners was acquired by Respondent 2 – National Highway Authority of India, for widening National Highway 58. The amount of compensation decided by the Competent Authority of Land Acquisition under Section 3(G)(1) of the National Highways Act, 1956 was accepted by the petitioners under protest. The matter was referred to the Collector for arbitration who gave his award. Against the award of the Collector, the petitioners filed applications under Section 34. Before the District Judge, petitioners entered into a compromise with the respondent. The petitioners, in the instant petitions, challenged the order passed by the District Judge contending that the compromise decree was fraudulently obtained from them.

The High Court held that such a contention could not be accepted in proceedings under Article 227 of the Constitution. It was observed that although provisions of CPC does not apply to the A&C Act, however, in view of Section 19 thereof, principles of CPC can be looked for guidance. It was further observed that Section 96(3) CPC bars an appeal against a decree passed with the consent of parties. In such view of the matter, the Court held that there was no scope of interference with the order impugned. The petitions were accordingly dismissed. [Mahmood v. State of Uttarakhand, 2018 SCC OnLine Utt 721, dated 02-08-2018]

Case BriefsHigh Courts

Uttaranchal High Court: An application for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, was dismissed by a Single Judge Bench comprising of Sudhanshu Dhulia, J., holding that the property in question was in Delhi and thus the present application was barred by want of territorial jurisdiction.

A contract was executed between the applicant and the respondent at Delhi for lending out hydraulic compressors installed at various sites in Delhi. The agreement had an arbitration clause and as a dispute arose between the parties, the applicant gave an arbitration notice to the respondent. Since the respondent failed to comply with the notice, the applicant filed the instant application. The respondent objected as to the maintainability of the application on grounds of jurisdiction as the contract was executed in Delhi, parties resided in Delhi, and also the said hydraulic compressors were installed in Delhi.

The Court observed that cause of action is a bundle of facts. The Court perused provisions of the Transfer of Property Act as well as the General Clauses Act to hold that the hydraulic compressors were permanently fastened to earth and therefore, they were an immovable property. The applicant relied on Section 20 of CPC to contend that as the office of the applicant was registered at Haridwar, the courts in Uttarakhand have jurisdiction in the matter. However, the High Court dismissed the contention holding that Section 20 is subject to the provisions of Sections 15-19 of CPC. Only if the case does not fall within the purview of Sections 15-19, then Section 20 comes into play. The Court finally held that as the property was situated in Delhi, therefore, in light of Section 16 of CPC, the courts having jurisdiction to decide the matter were the courts at Delhi. Consequently, the arbitration application was dismissed. [Sri Hanuman Trust v. Indian Compressor Ltd., 2018 SCC OnLine Utt 211, dated 26-03-2018]

OP. ED.

Introduction

A well-known example of huge litigation costs is the famous defamation case of super model Naomi Campbell, against the publishers of the newspaper Daily Mirror. The trial court awarded damages of UK £3500. The decision was reversed by Court of Appeal[1] but restored by the House of Lords[2] by a majority of 3:2. While doing so, the House of Lords ordered MGN Ltd., the publishers of the newspaper to pay the costs in the Court of Appeal and in the House of Lords. The solicitors of Naomi Campbell filed a bill of costs of UK £377,070.07 in the trial court, UK £114,755.40 in the Court of Appeal and UK £594,470.00 in the House of Lords totalling a staggering figure of UK £1,086,295.47!

According to a Press Note released by the Government of India in August 2016 the total amount currently tied up only in infrastructure project related arbitrations is estimated at Rs 70,000 crores, one can imagine the costs that would be involved by the time the entire arbitral process fructifies. Today globally, various jurisdictions have recognised the benefits of third-party funding of arbitrations and have legalised the same.

The most common benefits of third-party funding are, it can provide access to justice for under-resourced parties (as is often the case in investor-State disputes), enabling them to pursue proceedings which a lack of financing would otherwise have prevented. For parties that are adequately resourced, funding can offer a more convenient financing structure, allowing capital which would otherwise be spent on legal fees to be allocated to other areas of their business during the proceedings. This article proposes to examine the Indian legal position vis-à-vis third-party arbitration funding.

Legal position in India

In India, third-party funding is expressly recognised in the context of civil suits in States such as Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh. This consent to third-party funding can be found in the Civil Procedure Code, 1908, (CPC) Order 25 Rule 1 (as amended by Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh) provides that the courts have the power to secure costs for litigation by asking the financier to become a party and depositing the costs in court[3].

Currently, there is no law which expressly bars or allows third-party funding agreements in arbitration. The Arbitration and Conciliation Act, 1996 (1996, Act) governs arbitration in India. As the 1996 Act is silent on this issue, third-party arbitration agreements have been rendered virtually non-existent in India. To date, no precedent on third-party arbitration funding exists and thus these agreements are uncommon.

Debate on common law doctrines of maintenance and champerty

Maintenance refers to funding of legal proceedings by an unconnected third party. Champerty is where a third-party funds legal proceedings for a share in the proceeds.

Although not directly deciding in relation to arbitrations, following are a few decisions which dealt with the issue of maintenance and champerty. A few are as old as passed by the Privy Council:

A constitutional Bench of Supreme Court, in G, Senior Advocate, In re[4], has noted that a champerty contract in which returns are contingent on the success of the case is not per se illegal, except in cases where an advocate might be a party[5]. While making a distinction between litigations that involve lawyers and those that involve non-legal persons, it was observed that in case of the latter, “…there was, nothing against public policy and public morals in such a transaction per se….”

The Privy Council, in Ram Coomar Coondoo v. Chunder Canto Mookerjee[6], while recognising that champertous agreements are void in England, held that this principle is not applicable in India, but would apply to a transaction which is “inequitable, extortionate and unconscionable and not made with the bona fide objects of assisting a claim”. It was observed in this case that the prohibition was not absolute, but restricted to “improper objects, gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits”.

In Ram Lal v. Nil Kanth[7] the Privy Council went so far as to hold that “agreements to share the subject of litigation, if recovered in consideration of supplying funds to carry it on, are not in themselves opposed to public policy”.

In Lala Ram Sarup v. Court of Wards[8], the Privy Council observed that given the uncertainties of litigation, the financier “may be allowed some chance of exceptional advantage”.

In Vatsavaya Ventaka Jagapati v. Poosapati Venkatapati[9], the validity of a charge on the probable decretal amount in favour of the financier was upheld by the Privy Council on the ground that the financier did not derive an undue benefit and was trying to recover only the amount loaned.

Additionally, if a third-party funding agreement contains an extortionate or unconscionable objective or consideration (e.g. recovery of a gambling debt), the agreement would be rendered unenforceable under the Contract Act, 1872.[10]

Projected risks of third-party funding

Despite the benefits highlighted above, there are concerns about third-party funding of arbitration and there is a level of projected risks involved. Clear insight into the potential downsides and sufficient risk preparation are therefore essential when making a decision on funding.

Under the 1996 Act, the claimant company would have to disclose any third-party funding agreement to verify the absence of any connections between the financier and the arbitrator[11]. There are primary risks that arise out of this disclosure for claimant companies. A respondent might use knowledge of the third-party funding to block the arbitration[12] at the outset, or if the arbitration proceeds, to challenge it on grounds of it being against Indian public policy[13] or the Contract Act.

Further, the claimant company is likely to face risks such as dilution of autonomy, conflict of interest, breach of confidentiality and discouragement of settlement as part of the third-party funding agreement because of the financier’s involvement.

As mentioned above these are merely projected risks, as neither the legislature nor the executive has provided an opinion on the issue of third-party funding agreements and the courts have not had a chance to verify their validity due to the absence of these agreements in relation to arbitration.

Assuming that third-party funding agreements are rendered legal for arbitrations, the risks would be best managed by legislating strict rules regarding: (a) the financier’s right to interfere; (b) penalties for duress and threat; (c) the right to terminate the funding agreement; and (d) rules regarding confidentiality and disclosures.

Conclusion

Arbitration funding is becoming increasingly prevalent around the world with funders who are legally sophisticated and understand a wide breadth of claim types, with each funder having a varying risk profile and appetite.

The International Council for Commercial Arbitration (ICCA), working with Queen Mary University of London, has created a taskforce that has examined third-party funding in international arbitration. Public consultation on the draft report ran from 1-9-2017 to 31-10-2017, with a view to adopt the final report in April 2018 at the ICCA Congress.

American Jurist Oliver Wendell Holmes Jr. had famously quoted:

The life of the law has not been logic; it has been experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy, avowed or unconscious, even the prejudices which Judges share with their fellowmen, have had a good deal more to do than the syllogism in determining the rules by which men should be governed.

In keeping with the felt necessities of the time and to keep pace with current economic scenario and the global developments in international commercial arbitration, it is essential that India considers legalising third-party funding of arbitration albeit, with external regulation in the form of statutory guidelines in order to set out the parameters within which a third-party funding agreement may apply. The proposed regulation should seek to maintain uniformity in relation to these agreements, which would further assist in regulating them. Further, it would prevent unscrupulous agents from misusing third-party funding agreements by establishing the necessary limitations and penalties.

 

* M. Rishi Kumar Dugar, Advocate, Madras High Court.

[1]  Compbell v. MGN Ltd., 2003 QB 633 : (2003) 2 WLR 80.

[2]  Compbell v. MGN Ltd., (2004) 2 AC 457 : (2004) 2 WLR 1232.

[3]  Or. 25 of CPC was amended for Maharashtra by Bombay High Court Notification P. 0102/77 dated 5-9-1983. This same amendment has been adopted by Gujarat and Madhya Pradesh. Allahabad has added only R. 2 of Or. 25, which states that costs may be secured from the third-party funding of litigation.

[4]  AIR 1954 SC 557 : (1955) 1 SCR 490.

[5]  R. 20, Bar Council of India’s Standards of Professional Conduct and Etiquette, Ch. II, Part VI, Bar Council of India Rules, 1975 [read with S. 49(1)(c) of the Advocates Act, 1961 read with the proviso thereto].

[6]  1876 SCC OnLine PC 19.

[7]  1893 SCC OnLine PC 7.

[8]  1939 SCC OnLine PC 55 : AIR 1940 PC 19.

[9]  1924 SCC OnLine PC 22.

[10]  Ss. 27 and 28 of the Contract Act,1872.

[11]  Under S. 12, read with Sch. 5 of the 1996 Act even affiliates of parties are covered.

[12]  It may be argued that the arbitration agreement (inextricably linked to the third-party funding agreement) is not prima facie a valid arbitration clause.

[13]  S. 34(2)(b)(ii) of the 1996 Act.

Case BriefsHigh Courts

Delhi High Court: A Division Bench comprising of Gita Mittal, Actg. CJ and C. Hari Shankar, J., disposed of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 on grounds of the underlying dispute being settled by a settlement agreement by way of mediation.

The parties had preferred an appeal each, both of which were dealt with the court jointly. The appellant had challenged the order which upheld the arbitral award in favour of the respondent, whereas the respondent had appealed against the order rejecting a petition under Section 9 of the Arbitration Act with regard to the subject matter of the aforesaid arbitral award. The Court on the date of hearing noted that the dispute between the parties appeared to be capable of being resolved through mediation. The parties were, consequently, referred to Mr. Sudhanshu Batra, Sr. Advocate/Mediator at Delhi High Court Mediation and Conciliation Centre. The parties were able to arrive at a settlement and the original settlement agreement was forwarded to the Court. The parties confirmed the correctness of the record received. Additionally, the counsel stated that the parties had acted upon the terms thereof and in view of the settlement in place, nothing survived for further adjudication. Hence, the appeal may be disposed of. The Court, noting the same, disposed of the appeals. [M/s Konka Group Company Ltd v. M/s A2VP Distributors,  2018 SCC OnLine Del 7015, decided on 31.01.2018]

Case BriefsHigh Courts

Karnataka High Court: While deciding a civil petition under Section 11(6) and (8) read with Section 15(2) of the Arbitration and Conciliation Act, 1996, a Single Judge Bench comprising of Vineet Kothari, J. dismissed the petition holding that the essentials required for exercise of Court’s power under S. 11(6) of the Act were not fulfilled.

The petitioner filed the petition against the respondent, praying before the Court to appoint an arbitrator. Learned counsel for the petitioner submitted that the Arbitral Tribunal constituted in terms of the contract between the parties was re-constituted at the request of the respondent. The said Tribunal was directed by the High Court to conclude the proceedings within a period of six-months. It was submitted that the said Tribunal had failed to conclude the proceedings even after a long time. And being aggrieved by non admission of his claim before the Tribunal, the petitioner preferred a writ petition before the High Court which was pending. Hence, he prayed that a fresh arbitrator may be appointed in the present case.

The Court perused the record as well as submissions made on behalf of the parties and opined that Section 11(6) of the Act envisages intervention and appointment of an arbitrator by the Court, only if the parities to the agreement fail to act as required under the procedure agreed between them or the arbitrator fails to perform the functions entrusted to him. Therefore, it is only on the failure of the parties or the arbitrator that such a petition under Section 11(6) can be preferred and not where the arbitral tribunal was already seized of the arbitration proceedings under the agreed procedure.

In the instant case, the Court found that the Arbitral Tribunal was already constituted and it was seized of the dispute. It was not a case where the Tribunal failed to perform its functions. In fact, the petitioner was himself responsible for the delay in proceedings by filing unnecessary writ petition which was still pending before the Court. Accordingly, the petition was found to be sans merits and dismissed. [Hindustan Steel Works Construction Ltd. v. Union of India, CMP No. 102 of 2015, order dated  02.11.2017]

Case BriefsHigh Courts

Madhya Pradesh High Court: In three separate writ petitions, the termination of the mandate of the Arbitrator and the appointment of a new arbitrator was allowed by the Court.

The main question before the Court was whether the mandate of an Arbitrator can be terminated and a new arbitrator be appointed in his place. The parties had entered into an agreement which had an arbitration clause. When a dispute arose between the parties, a single Arbitrator was appointed to resolve the dispute.

The Court observed that in these cases the Arbitrator did not proceed with the dispute resolution process after 14.03.2009 even though he was free to proceed with the matter. A reading of Section 14(1)(1) of the Arbitration and Conciliation Act shows that the mandate of the Arbitrator shall terminate if he becomes unable to perform his duties de jure or de-facto or he fails to act without undue delay. Here the mandate of the Arbitrator was held to be terminated due to the undue delay caused in the proceedings.

As to the question of appointment of a new Arbitrator, the Court stated that since mandate of the previous Arbitrator stands terminated due to undue delay, a suitable Arbitrator can be appointed for the present case as the arbitration clause as well as the dispute is still existent. [Swadesh kumar Agrawal v. Dinesh Kumar Agrawal, 2017 SCC OnLine MP 1180 decided on 07.09.2017]

Case BriefsHigh Courts

Delhi High Court: The Court elaborated on Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 while dismissing an appeal before it for setting aside of an award.

The matter before the arbitrator was in relation to a contract for extraordinary repair (EOR) at Defense Colony in New Delhi. The contract dated back to 1999. The findings of the arbitrator was that the appellant had started the work near the deadline provided by the contract and had continued work with sub-standard material. The appellant also continued working despite direction by the respondent to halt the work.

The Court found no reasonable reason to interfere in the arbitral award. It is well settled that such an award can only be interfered with if it is against the contract between the parties or is against the law of the land or is so completely perverse that the court feels obliged to interfere with the award on grounds of public policy. In the present case, the Court found no infirmity in the arbitral award. Hence, the petition was dismissed with costs of Rs 20,000 to be recovered by the respondent. [M/s. Brij Lal & Sons v. Union of India, 2017 SCC OnLine Del 9931, decided on 17.08.2017]

Case BriefsHigh Courts

Karnataka High Court: While passing the order in a civil miscellaneous petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, a Single Judge Bench comprising of Ashok B. Hinchigeri, J. held that such petition was not maintainable before the High Court.

The petitioner prayed to the Court to exercise its jurisdiction and powers under S. 9 of the Act, and direct the respondent firm to permit the petitioner to re-start/commence the removal of its property, being all global items, from the premises of the respondent. The respondent raised objection as to the maintainability of the petition.

The Court upholding the objection held that the petition filed under S. 9 of the Arbitration and Conciliation Act, 1996 could be filed only before the civil court of original jurisdiction in a district. The Court, accordingly, rejected the petition. The petitioner was given liberty to file the petition before appropriate forum. [M/s Annam Steels Private Limited v. M/s KIOCL Limited, C.M.P. No. 235 of 2016, dated August 1, 2017]

Case BriefsHigh Courts

Delhi High Court: Petitioners appeared before the Delhi High Court under Section 34 of the Arbitration and Conciliation Act, 1996 to challenge the arbitral award. Over a dispute between petitioner and respondents (buyer and seller), petitioners one fine day received a notice from a sole arbitrator appointed by the respondent that the dispute between them will be arbitrated over by him.

The grievance of the petitioner was that the unilateral appointment of the arbitrator by the respondent was bad in law and without issuing notice under Section 21 of the Act invoking the arbitration clause; the respondent could not have proceeded to arbitration. The Court on hearing both the parties considered the question whether notice under Section 21 is mandatory very carefully. The Court observed that with the plain reading of the provision, it is clear that the date of commencement of arbitration proceedings would be the date on which the recipient of the notice receives from the claimant a request for referring the dispute to arbitration. Ascertaining the object behind the provision, it said that the party to the arbitration agreement against whom a claim is made should know what the claims are and it impossible that in response to notice, the issues on dispute may be narrowed down.

It also observed that the notice under Section 21 serves an important purpose of facilitating a consensus on the appointment of an arbitrator. Lastly, the Court explained that as per Section 11(6) of the Act, without the notice under Section 21 of the Act, a party seeking reference of disputes to arbitration will be unable to demonstrate that there was a failure by one party to adhere to the procedure and accede to the request for the appointment of an arbitrator. The Court held that mere acceptance of supplies by one party to another on the basis of invoices containing arbitration clause would not mean that the same had been accepted by the other party and endorsement on receipt of goods and the invoices would not lead to a conclusion that a party agreed to the arbitration clause printed on the said invoices and therefore, the alleged arbitration agreement in the case was held to be invalid. The Court accordingly set aside the arbitral award for the agreement was null and void and also, for the reason that the mandatory requirement of supplying the notice under Section 21 was not complied with. [Alupro Building Systems Pvt Ltd v. Ozone Overseas Pvt. Ltd., 2017 SCC OnLine Del 7228, decided on 28.02.2017]

 

Case BriefsHigh Courts

Bombay High Court: In the case where Board of Control for Cricket in India (BCCI) challenged both the arbitral awards ordered against it, by filing applications under the Arbitration and Conciliation Act, 1996, an amendment was brought to the Act subsequently. The Bench of R.P. SondurBaldota, J., dismissing the applications upheld the validity of the amended Act over the previous one, even in cases that were filed before the commencement of the amended Act.

In the instant case, BCCI had filed the applications under Section 34 of the Arbitration Act, as a consequence, under Section 36 execution of the arbitral awards could not take place until and unless the applications were dismissed. However, on 23rd October, 2015, the amended Act came into force, under which Section 36 was repealed and a new Section 36 was introduced due to which under clause (2), the filing of such application would not by itself render the award unenforceable, unless the Court grants an order of stay of operation. The Act (amended) also contained a saving section i.e, Section 26. BCCI contended that as the applications were filed prior to promulgation of the Arbitration Ordinance, the same would be governed by Section 36 of the Arbitration Act, prior to its amendment. Therefore, the two arbitral awards will become enforceable against it, only if and when, the petitions are dismissed.

The Court discussed a plethora of judgments and finally came to the conclusion that the amended Section 36 lifts the shadow over the right of the award holder, his disability gets removed and at the same time, the provision enables the award-debtor to apply to the Court to make the award inexecutable pending his application, by way of an interim relief. It makes no difference if the application under Section 34 filed was prior to 23rd October, 2015 or not, the same cannot be said to be prejudicial to the award-debtor. [M/s Rendezvous Sports World v. The Board of Control for Cricket, 2016 SCC OnLine Bom 6064,  decided on 14-6-2016]

Case BriefsSupreme Court

Supreme Court: Explaining the scope of Section 8 of the Arbitration and Conciliation Act, 1996, the Bench of Dr. A.K. Sikri and D.Y. Chandrachud, JJ held that mere allegation of fraud simplicitor may not be a ground to nullify the effect of arbitration agreement between the parties. Where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration.

The Court further explained that it is only in those cases where the Court finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by civil court on the appreciation of the voluminous evidence that needs to be produced, the Court can sidetrack the agreement by dismissing application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself.

It was, hence, said that while dealing with an application under Section 8 of the Act, the focus of the Court has to be on the question as to whether jurisdiction of the Court has been ousted instead of focusing on the issue as to whether the Court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as non-arbitrable. Such categories of non-arbitrable subjects such as disputes relating to rights and liabilities which give rise to or arise out of criminal offences; matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights and child custody; Insolvency and winding up; etc., are carved out by the Courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication and settlement by arbitration and for resolution of such disputes, Courts are better suited than a private forum of arbitration.

D.Y. Chandrachud, J added that the Arbitration and Conciliation Act, 1996, should be interpreted so as to bring in line the principles underlying its interpretation in a manner that is consistent with prevailing approaches in the common law world. Jurisprudence in India must evolve towards strengthening the institutional efficacy of arbitration. Deference to a forum chosen by parties as a complete remedy for resolving all their claims is but part of that evolution. Minimising the intervention of courts is again a recognition of the same principle. [A. Ayyasamy v. A. Paramasivam, 2016 SCC OnLine SC 1110, decided on 04.10.2016]