The Supreme Court passed directions on the pre-2019 amendment version of section 34(2)(a) of the Act (which concerns the circumstances when an arbitral award may be set aside by the court). The court held that the section applies to arbitration proceedings commenced and completed prior to the 2019 amendment. The bench comprising Justice MR Shah and Justice CT Ravikumar held that if issues relevant to the resolution of matters under section 34(2)(a) are not recorded in the arbitration, then the party challenging the award based on the grounds permitted in section 34(2)(a) may only be permitted to file an affidavit as evidence in exceptional circumstances. However, such permission will only be granted when absolutely necessary.

The Supreme Court ruled on the issue of computing limitation in arbitration cases involving contractually mandated pre-arbitral negotiations. In this judgment, the court stated that negotiations can continue for 10 or 20 years after the cause of action arose. Therefore, negotiations will not delay the “cause of action” for the purpose of limitation. The legislature has set a three-year limitation period for filing a section 11 application, beginning on the date the cause of action first arose. In cases where parties are engaged in significant negotiations aimed at amicably resolving the dispute, the court is tasked to determine the “breaking point” at which such efforts would be abandoned. The court provided guidance to calculate the limitation period: the entire history of negotiations must be presented and documented in order for the court to determine the specific “breaking point”.

The Delhi High Court took a pro-arbitration stance and accepted the enforcement of foreign consent awards obtained after seeking legal opinions under Part II of the Act, which enforces foreign arbitral awards to which the New York Convention applies. In doing so, the judge rejected the arguments that the consent award was outside the scope of the New York Convention and was contrary to public policy. Separately, the court noted that Section 30(4) of the Act clearly states that a consent award has the same status and effect as any other award on the substance of the dispute. Sub-section (4) is essentially a reiteration of the well-established principle of Indian jurisprudence that a decree drawn by consent has equal vigour and standing as a decree drawn after due contest.

The Supreme Court held that if the majority award is overturned, a dissenting opinion rendered in an arbitration proceeding cannot be considered an award. The court was of the opinion that the dissenting opinion does not receive the same level of scrutiny as the majority award (which was being challenged). As a result, the so-called conversion of the dissenting opinion into a tribunal’s findings (in the event a majority award is overturned) and elevation of that opinion as an award would be inappropriate and improper in relation to the majority award.

The Supreme Court held that an award for loss of profit or general or specific damages cannot be made without evidence of the claimant’s injury, as this would be contrary to the Indian public policy under section 34(2)(b)(ii) of the Act. In doing so, the court provided guidance on the conditions that must be met to establish a claim for loss of profit, as well as the types of evidence that will be required to be considered when deciding such claims.

The Delhi High Court held that an arbitration clause granting a party the right to nominate two-thirds of the tribunal members violates the principle of counterbalancing established in the landmark Perkins Eastman Architects DPC v HSCC (India) Ltd case. The High Court also emphasised the requirement highlighted by the Supreme Court in Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd, which is to have a broad-based panel so that there is no misapprehension that the principle of impartiality and independence has been discarded at any stage of the arbitral tribunal’s constitution.

The seven-judge bench, led by Chief Justice DY Chandrachud, upheld the validity of unstamped or inadequately stamped agreements and unanimously overturned the decision in N.N. Global Mercantile Pvt. Ltd v M/s. Indo Unique Flame Ltd. And Ors. In doing so, the court determined that non-stamping or inadequate stamping is a curable defect. Agreements that are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Indian Stamp Act 1899 (“Stamp Act”), but such agreements are not rendered void or void ab initio (i.e. legally null from the start) or unenforceable. Furthermore, any objection to the stamping of the agreement falls under the purview of the arbitral tribunal.