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Arbitration Alert-April-2021

Supreme Court of India, Allahabad High Court, Calcutta High Court, Chhattisgarh High Court, Gujarat High Court, Madras High Court, Madhya Pradesh High Court, Orissa High Court, Telangana High Court, Delhi Districts Courts, National Green Tribunal, National Company Law Appellate Tribunal have advanced their summer vacations with a view to allow time for court staff and advocates to recover from this wave…

Welcome back to our updates from the world of arbitration!

We hope that our readers have been left unscathed by the second wave of Covid-19 which has swept across the country. A large number of lawyers, judges and court staff succumbed to Covid-19. We pray for the departed souls!

Supreme Court of IndiaAllahabad High CourtCalcutta High Court, Chhattisgarh High CourtGujarat High CourtMadras High CourtMadhya Pradesh High CourtOrissa High CourtTelangana High CourtDelhi Districts CourtsNational Green TribunalNational Company Law Appellate Tribunal have advanced their summer vacations with a view to allow time for court staff and advocates to recover from this wave.

In addition, the Supreme Court on 27.04.2021, in Re Cognizance For Extension of Limitation case taking judicial notice of the steep rise of COVID-19 virus cases across India, has directed that the period from 14th March, 2021 till further orders shall  stand excluded in computing the limitation period for  all judicial or quasi-judicial proceedings, whether condonable or not.

Cairn Energy PLC has sued Air India in the United States to enforce the $ 1.2 billion arbitration award against India awarded by the PCA in Hague in December, 2020. Earlier, the Indian government had asked Public Sector Banks to protect their overseas assets in dollars leading to banks not depositing further amounts in foreign accounts. The move to seek seizure of Air India assets may also cause hiccups in the disinvestment plans of the Government for Air India. It was also reported in the media that Cairn Energy had offered to forego the interest and costs awarded by the PCA and invest the principal amount ($ 1.2 bn) in India.

The Supreme Court has stayed all the proceedings before the single bench and the division bench of the High Court of Delhi in the Amazon-Future Retail dispute. The apex court will now finally adjudicate the matter.

From the Docket

In PASL Wind Solutions v. GE Power Conversion, the Supreme Court upheld the principle of party autonomy in arbitrations and concluded that two Indian Parties can opt for a foreign law to decide their dispute. The SC held that the parties opting to settle their dispute at a neutral forum outside India will not be against the public policy as defined under section 23 and section 28 of the Contract Act, 1872. An award rendered between the parties when they have opted for a neutral forum outside India will be recognized as a foreign award under section 44 of the Arbitration and Conciliation Act, 1996.

In Oriental Structural Engineers v. State of Kerala, the Supreme Court held the payment of interest cannot be denied on the ground that the rate of interest is left ‘blank’ in the contract (in the clause providing for payment of interest).  In such situations, payment of interest cannot be denied in the absence of a clear exclusion clause on payment of interest on delayed payment. The Supreme Court in the present matter awarded simple interest at the rate of 8% to the successful party.

The Supreme Court has held that if the parties to an arbitration – by mutual agreement –  specifically shift the venue/place of arbitration from place A to place B, the courts at place B shall have exclusive jurisdiction over the arbitration proceedings.

The Delhi High Court in Savita Jain v. Krishna Packaging, held that under section 9 of the Arbitration and Conciliation Act, 1996, the court has wide powers in granting interim at all stages of arbitration proceedings to ensure that the award is not rendered infructuous or unexecutable. The Court also highlighted that although the powers of the court under section 9 of the Act are to be exercised on the premise of Orders XXXVIII or XXXIX of the Code of Civil Procedure, 1908, the Court is not unduly bound by the same.

The Delhi High Court in Tantia Construction v. IRCON International held that the delays in filing an application under section 33 of the Act cannot be automatically condoned by the Arbitral Tribunal. The intent of the legislature behind section 33(1) of the Act is that the period of 30 days can be extended only if the parties agree to another period for applying thereunder. In absence of any such mutual agreement between the parties, the period of 30 days cannot be relaxed.

A Division Bench of Delhi High Court in Union of India  v. Manraj Enterprises has held that a clause barring interest on earnest money, security or other money payable to the contractor will not bar the arbitrator from granting the interest on the due payment. The clause in this case was worded as follows:

“16 (2) No interest will be payable upon the earnest money or the security deposit or amounts payable to the Contractor under the Contract, but Government Securities deposited in terms of Sub-Clause (1) of this clause will be repayable with interest accrued thereon.”

The division bench held that judgment passed by the Supreme Court in  Union of India v. M/s Pradeep Vinod Construction Co.  is a binding precedent and it was correctly relied upon by the single-judge bench in allowing the payment of interest.

In Shapoorji Pallonji v. Rattan India Power, the Delhi High Court while expounding the principle of group of companies doctrine held that in order to compel a non-signatory  party to the arbitration, a direct benefit to a non-signatory party arising from the contract should be necessarily established. The Court further held that in order to establish the relationship between various parties, the corporate veil can be pierced in certain circumstances.

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