Overbearing interpretations a bane of Indian arbitration: SC

The Supreme Court has underscored how "overbearing intellectualisation" by courts has become the "bane of Indian arbitration", in a pointed critique of the judiciary's expansive intervention and interpretation of the Arbitration and Conciliation Act, 1996 (ACA).

- Utkarsh Anand

While examining a case involving the interplay of ACA and the Limitation Act, the top court flagged how a strict reading of the provisions curtails the right of parties to challenge arbitral awards and urged Parliament to step in to address the issue.

A bench comprising justices PS Narasimha and Pankaj Mithal delivered the judgment, noting that the current position of law creates a stringent limitation framework that may deter parties from opting for arbitration.

"The purpose of reading the Limitation Act alongside the ACA is not to restrict the special remedy under the ACA but to enable exercise of such remedy in circumstances as contemplated under the Limitation Act," observed the bench in a January 10 judgment.

The judgment arose from a dispute where the appellants received an arbitral award on February 14, 2022. The statutory three-month period to challenge the award under Section 34(3) of ACA ended on May 29, 2022, which was a working day. Following the expiration of this period, the courts were closed for vacation between June 4 and July 3, 2022. The appellants filed their challenge on July 4 -- the day the courts reopened.