Legal News

In the recent Supreme Court's judgment in the CORE (Central Organisation for Railway Electrification) vs ECI-SPICSMOMCML case on the appointment of arbitrators, the intended result and reactions have been contrasting.

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Don't misread arbitration ruling

The court has doubled down on the legal position that was laid down by it in TRF v. Energo Engineering Projects (2017) and Perkins Eastman Architects DPC v. HSCC (India) Ltd (2019) cases: unilateral appointment of an arbitrator - where one party has direct or indirect control over the selection of an arbitrator to resolve disputes - is prohibited.

But India Inc seems to have misunderstood the judgment. What was a judgment in favour of neutral, transparent and process-driven arbitration has resulted in the industry moving away from arbitration. Yes, most loan agreements that India Inc used until 2019 contained arbitrator appointment clauses that were unilateral in nature. But this does not mean that the only recourse available to them is to go to courts and ask them to appoint arbitrators or to abandon arbitration altogether.