Fewer Interventions Key To Keep Arbitration Relevant

The Arbitration and Conciliation Act of 1996 has been in the limelight on a number of recent occasions.

- SAAI SUDHARSAN SATHIYAMOORTHY Advocate, Madras High Court

In Cox and Kings vs SAP India, a constitution bench of the Supreme Court permitted adding third-party non-signatories in an arbitration. Subsequently, in the Central Organisation for Railway Electrification case, another constitution bench held that unilateral appointment of arbitrators is impermissible since it breaches the principle of equality.

Even on the policy front, there was a furore when the Centre sought to introduce a guideline that limited the resort to arbitration in large public contracts, much to the chagrin of the arbitration practitioners.

The Act became the focal point yet again with the Supreme Court constituting a five-judge constitution bench to decide whether the courts have the power to modify arbitral awards under Section 34 of the Act. The reference to the constitution bench was made by a three-judge bench in the Gayatri Balaswamy vs ISG Novasoft case. After extensive hearing, the Supreme Court has reserved its verdict. When it comes, the answer to the question on the power to modify could reshape the foundations of India's arbitration landscape.

At the outset, it is important to understand that the enforceable nature of awards serves as the fundamental principle of arbitration, ensuring both certainty and closure for the parties. The raison d'etre of arbitration is not only to resolve disputes swiftly, but also to minimise judicial intervention.