This edition of our Briefcase unpacks the latest arbitration updates from January 2025, keeping you informed on key developments. Happy reading!
Rendezvous – Indian Courts and Arbitration
Supreme Court
Benefit of Section 4 of the Limitation Act, 1963 cannot be availed indefinitely – MyPreferred Transformation and Hospitality Pvt. Ltd. & Anr. v. M/s Faridabad Implements Pvt. Ltd. (2025 SCC OnLine SC 70)
Recently, the Supreme Court while deciding objections to an award, clarified that Section 4 of the Limitation Act benefits a party only when the ‘prescribed period’ i.e., the 3-month limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996 (“Act / 1996 Act”) expires on a court holiday. Section 4 does not come to the aid of the party when the 3-month prescribed period expires on a day when the court was working. In the case at hand, the Award was passed on 14.02.2022, the prescribed period got over on 29.05.2022 and the court vacations were from 04.06.2022 to 03.07.2022. The objections under Section 34 were only filed on 04.07.2022. The Court, after noting the facts, did not grant benefit of Section 4 of the Limitation Act to the party and held that the Section 34 objections are barred by limitation, which expired on 28.06.2022.
Challenge to arbitral tribunal impermissible after submitting the Statement of Defence – M/s Vidyawati Construction Company v. Union of India (2025 SCC OnLine SC 236)
In the present case, a sole arbitrator was appointed by the High Court of Allahabad. Subsequently, statements of claim and defence were also filed by respective parties. However, after filing of defence, the Respondent objected to the appointment of sole arbitrator as the arbitration clause provided for a three-member tribunal. The arbitrator rejected this objection and passed the award. The award was objected to under Section 34 of the 1996 Act and the same was held to be illegal solely on the grounds of composition of tribunal. The illegality was further confirmed under Section 37 of the 1996 Act. Accordingly, the matter reached supreme court, which took note of the fact that the Respondent had at first consented to appointment of the sole arbitrator, thereafter also file its statement of defence. Noting that there is a bar under Section 16 of the 1996 Act to raise a plea of lack of jurisdiction after submission of statement of defence, the supreme court has remitted the matter back to the Section 34 court for deciding the matter afresh on other objections. However, to the extent of contention on bar of jurisdiction, the supreme court has noted that the issue stands finally concluded.
Delhi High Court
An interim order stating final findings is amenable to challenge under Section 34 – Aptec Advanced Protective Technologies AG v. Union of India (2025 SCC OnLine Del 92)
The Delhi High Court recently decided an appeal under Section 37 of the 1996 Act, challenging dismissal of Section 34 objections, where the subject matter of challenge was an interim order passed by the arbitral tribunal, deciding several applications filed for discovery of documents. Upon perusal of the impugned order, the High Court found that the arbitrator has given final findings on facts, conclusively deciding aspects of main disputes between the parties. The Court concluded that such an order would amount to an interim award and would be amenable to challenge under Section 34 of the 1996 Act. The court relied on the judgement of Rhiti Sports Management Pvt. Ltd. v. Power Play Sports & Events Ltd. 2018 SCC OnLine Del 8678 stating that an order to qualify an award whether final or interim, it must settle a dispute on which parties are at issue.
Delhi High Court expands the scope of ‘non-arbitrability’; holds that party did not seek liberty of Section 34 court for re-adjudication of disputes – Jaiprakash Associates Limited v. NHPC (2025 SCC OnLine Del 170)
Digressing from the now settled principal of minimum intervention by a court at the stage of appointment of arbitrator, the Delhi High Court, recently refused to appoint an arbitrator, in a case where the party was seeking re-adjudication of disputes, after the first award was set aside. The Court noted that the earlier award was set aside on grounds that the claims were allowed without any evidence and only on the basis of good conscience and equity. The Court while referring to previous precedents and existing position of law, concluded that though the Arbitral Tribunal is the first preferred authority to determine the question pertaining to non-arbitrability, yet the referral Court may exercise its limited jurisdiction to refer arbitration cases which are ex-facie frivolous and where it is certain that disputes are not arbitrable. Going further, the court also remarked that Jaiprakash Associates did not take leave of the Section 34 court for fresh adjudication. Lastly, the court also remarks that allowing parties to re-arbitrate is contrary to fair play and justice.
In the editor’s opinion, the ruling tends to expand the scope of what is ‘non-arbitrable’. It also leaves a lasting question in the minds of practitioners on whether they should advice clients on amending their respective Section 34 petitions and seek additional relief of liberty to re-adjudicate the dispute, in case the award is set-aside.
Reiterated! Section 34 objections without a copy of the Award is non -est – KGF Cottons Pvt. Ltd. v. Haldiram Snacks Pvt. Ltd. (2025 SCC OnLine Del 200)
In the instant matter, the petitioner had filed Section 34 objections challenging the award within the prescribed period however, did not file the impugned award. The Court reasoned that a Section 34 objection without the impugned award is meaningless as unless the award is perused, it cannot adjudicate upon the appropriateness and correctness of the Award. The Court reiterated that since there is no reason for not filing a copy of the award, the filing is non – est and hence objections are barred by limitation.
Madras High Court
Award maybe set aside on account of inordinate and unexplained delay – M/s Unique Builders v. The Union of India (2025 SCC OnLine Mad 239)
In an unusual turn of events, the Madras High Court has set aside an award as it was passed after an inordinate and unexplained delay of 18 months. After perusing the arbitral record, the court observed that at first, despite conclusion of final arguments in the matter and lapse of 17 months thereafter, , the tribunal did not pass the award. However, when the parties filed an application under Sections 14 and 15 of the 1996 Act for termination of mandate of the arbitrator, he hurriedly passed the award. The Court elaborated on settled law to state that ‘arbitration aims to provide speedy justice and substantial delay in passing the award would lead to the Arbitrator forgetting the crucial facts.’ Be that as it may, the arbitrator is under an obligation to explain the inordinate delay and in absence of such an explanation it would cause grave prejudice to the aggrieved party. Accordingly, the court after noting several inconsistencies in the award and the amount of unexplained delay in passing of the same, was constrained to set-aside the same.
Global Highlights
The English Supreme Court discussed the question of seat and issue of proper place in International Arbitration – UniCredit v. RusChemAlliance
In the case, the Respondent had initiated arbitration proceedings which were commenced before Russian Courts in respect of Common Law in French seated arbitration agreement. The Court dwelled into the issue of (i)Whether Common law will be applicable in the dispute (ii) Whether England was the proper place to bring the claim. The court held that if English law was applicable to underlying contracts, then the same would also be applicable to the arbitration agreements. On the same like the English court also affirmed to its jurisdiction to seek anti-suit relief stating that it is not right that only one court can properly exercise jurisdiction over a party for purpose of granting relief.