Greetings, everyone! Welcome back to our Arbitration Briefcase carrying updates from around the globe for happenings in May 2026. Happy reading!
Global News
International Arbitration Court issues supplemental award on maximum pondage under the Indus Waters Treaty – Indus Waters Western Rivers Arbitration, PCA Case No. 2023-01
On 15 May 2026, the Court of Arbitration in the Indus Waters Western Rivers Arbitration has issued a Supplemental Award holding that the calculation of maximum pondage under the Indus Waters Treaty, 1960 must be grounded in realistic, well-founded, and defensible projections of a proposed plant’s installed capacity and anticipated load. The Award further holds that a minimum downstream environmental flow obligation may arise, under both the Treaty and customary international law, to be assessed on a case-by-case basis for each hydro-electric plant. The dispute remains pending, with the Court retaining jurisdiction over all unresolved issues, including the compliance of specific Indian projects with the Treaty’s provisions. India disputes the very basis and maintainability of these arbitration proceedings, and has not participated in them. India’s position is that the Court of Arbitration was illegally constituted in contravention of the Treaty, as a Neutral Expert was already seized of the same differences under Article IX(6) of the Treaty.
ICC released revised Arbitration Rules, 2026
On 22 May 2026, the International Chamber of Commerce (ICC) released the 2026 ICC Arbitration Rules (“2026 Rules”), which came into force on 1 June 2026 and apply to all arbitrations commenced on or after that date, unless the parties have agreed otherwise. Some key changes introduced are as follows:
- Removal of mandatory terms of reference: The 2026 Rules no longer make it mandatory to draw the terms of reference. However, the arbitral tribunal still retains the discretion to establish them as a useful case management tool wherever it may deem appropriate.
- Highly expedited arbitration: The 2026 Rules introduce a new Highly Expedited Arbitration procedure (Appendix VI) mandating strict time limits and no possibility for joinder or consolidation. Article 7(1) of Appendix VI states that the arbitral tribunal must render its award within 3 months from the initial case management conference, unless the President extends the timeline upon a request from the tribunal or upon the President’s own initiative.
- Early determination of claims or defences: Article 30(1) allows parties to apply for early determination of claims or defences on the ground that they are: (i) manifestly without merit; or (ii) manifestly outside the tribunal’s jurisdiction. This enables the tribunal to dismiss unmeritorious claims or defences at an early-stage resulting in cost and time savings for parties.
- Expanded use of electronic communications: The 2026 Rules formalize the use of electronic communications for submission of documents (Article 3(1) and 3(2)) and video conferencing for any hearings (Article 27(1)), making electronic means the default for most written communications.
Domestic Highlights
Supreme Court restores the award, clarifying that appellate / commercial courts cannot exercise powers under Section 33 of the Arbitration and Conciliation Act, 1996 (“Act”) –Gujarat Water Supply and Sewerage Board v. Saryu Plastics Pvt. Ltd. [Civil Appeal Nos. 769-770 of 2026]
The Supreme Court recently restored an award which was wrongly modified by the review court by subsisting “simple interest” with “compound interest” purportedly as per Section 33 of the Act. The Supreme Court clarified that review courts cannot exercise powers under the garb of Section 33 of the Act to modify an award. Such powers under Section 33 are solely the limited of an arbitral tribunal to itself correct any computational, clerical, or typographical errors in an award and not for subsequent courts to materially change the award.
Supreme Court puts quietus to the issue on whether an unsuccessful party can maintain a Section 9 petition at the post-award stage – Home Care Retail Marts Private Limited v. Haresh N. Sanghavi, SLP(C) No. 29972 of 2015
While resolving a split view amongst two sets of High Courts on the issue whether an unsuccessful party in arbitration can seek post-award interim relief under Section 9 of the Act, the Supreme Court has held that the expression “a party” in Section 9 is defined under Section 2(h) of the Act without any distinction based on arbitral outcome, and reading such a restriction into clear statutory language would amount to judicial amendment of the statute.
Non-signatory to the Contract can invoke arbitration when liability of the party is joint and several – Elecon Engineering Co. Ltd. v. Bhartiya Rail Bijlee Co. Ltd. and Anr., Civil Appeal No. 7116 of 2026
Setting aside the order of High Court, the Supreme Court recently allowed the collaborator to invoke arbitration in a contract which was between the contractor and principal employer. Citing the “Deed of Joint Undertaking” which was executed jointly by the collaborator and contractor and relied upon by employer as well while responding to the Section 21 notice, the court held that the collaborator was a veritable and inextricable party to the contract having joint and several responsibilities to complete the project.
The law on unilateral appointment of arbitrators applies equally to appointments through ODR institutions or algorithm-based selections – DS Textiles v. IIFL Finance Ltd., Arb. Pet. (L) No. 12097 of 2026; Azajul Haque Khan v. ICICI Bank, Comm. Arb. Pet. (L) No. 16052 of 2026
The Bombay High Court reprimanded NBFCs and Banks for unilaterally appointing arbitrators by routing appointments through online dispute resolution (ODR) platforms and other algorithm-based selections in the hope that the inherent illegality in unilateral appointments would be cured. It held that ODR platforms must operate within the same limits as in-person arbitration. There are only two methods in law to appoint an arbitrator: (i) by obtaining the consent of the parties; and (ii) appointment by a Section 11 Court having jurisdiction in the matter. Any third kind of appointment cannot be whitewashed as being a compliant appointment.
Award partly set aside as the arbitral tribunal incorrectly converted an EPC lump sum contract into an item-wise contract – President of India Through Chief Engineer v. KEC International Ltd., Comm. Arb. Pet. No. 855 of 2025
In an interesting decision, the Bombay High Court partly set aside the arbitral award on the ground that the arbitral tribunal misconstrued the contract and committed a patent illegality. It held that the change in scope of work under the contract only covered changes in the nature of work and not increase in the quantity of work. Since there was no “additional work” and only the quantity of earthwork was increased, the arbitral tribunal could not direct payments for the excess quantity and convert the essential nature of the EPC lump sum contract into an item-wise contract.
Disclaimer
The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at knowledge@sarthaklaw.com.