The
Also, it brings
Brief Facts and Procedural History
Subsequently, Future struck a deal with Reliance on
- the deal was deemed to be violative of the 'Right of First Refusal' clause in Amazon's favour,
- Future was barred to sell their stake without Amazon's consent, and
- Reliance was demarcated as a 'restricted party', i.e., Future was not allowed to deal with the entity as part of the agreement.
In pursuance of the same, Amazon invoked emergency arbitration (which was permitted under SIAC's Rules to grant interim protection) on
Disappointed with this outcome and without waiting for the constitution of an
Further bolstered by this outcome, an application under Section 17(2) of the Arbitration and Conciliation Act, 1996 ("Act") to enforce the award by the EA was filed by Amazon wherein the
Aggrieved by this, Future approached
Consequently, Amazon filed a Special Leave Petition before the
We now move towards the Apex Court's decision in the matter on
Judgment
The
- Whether an award passed by the EA under the SIAC's rules could be construed as an "order" under Section 17(1) of the Act, and
- Whether an order to enforce an EA's award under Section 17(2) was appealable under the Act.
The Apex Court answered the first question in the affirmative, and the latter in the negative.
Some of the salient points noted by the
- The Court examined the objective and scope of the Act's provisions as well as relying on numerous judgements to re-emphasize that party autonomy was one of the most crucial aspects of arbitration. Thus, parties were allowed to determine the procedure via which they wanted to resolve a dispute and that the Act did not contemplate a bar on emergency arbitration as a forum for adjudication. Furthermore, a reference to the SIAC Rules was made wherein it was clearly stated that an EA and an arbitral tribunal have the same powers.
- The Court stated that once a party has agreed to certain institutional rules and acted in pursuance of the same, in this case being bound by SIAC Rules that provide for emergency arbitration and participating in it, an argument cannot consequently be entertained that such an order or award is not bound to be followed.
- The Court noted that an emergency arbitration is a natural corollary and extension of the objectives of Section. 9 of the Act, which provides for interim relief by courts prior to constitution of the arbitral tribunal, i.e., to unclog traditional forums and provide timely and efficient relief till such constitution.
-
The Court quoted the B.N. Srikrishna Committee Report which had contemplated interpreting the Act in a manner that allows enforcement of EA orders in the nation. Referencing the 246th Law Commission Report, the Court opined that even though its recommendation to allow EA rulings in the country was not inserted statutorily by the
Parliament , that would not be tantamount to the same being unenforceable if it was determined that its enforceability was within the scope of the Act. - With respect to the issue of appealability, the Court held that enforcement under Section 17(2) of the Act has a very limited function and clear purpose. It is a legal fiction created to uphold interim orders of an arbitral tribunal akin to an order of the court. It was only created as the tribunal itself does not have the same powers to utilize the Code of Civil Procedure vis a vis a court of law. On inspecting the Act's scheme, the Court noted that Section 37, which lays down the law with respect to appealability of court/arbitral tribunal orders, is complete and sufficient and thus the legislature did not envisage appeals arising from Section 17(2) as that would be incorrectly extending the aforementioned fiction.
Conclusion
This is a landmark decision of great significance for dispute resolution in
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Level 3, Tower B,
Gurgaon
122 002
Tel: 1244545 222
Fax: 1244375 596
E-mail: Priyanka.gupta@kochhar.com
URL: www.kochhar.com
© Mondaq Ltd, 2021 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source