Decided on 6 August 2021| Supreme Court of India

On 6 August 2021, a bench of the Hon’ble Supreme Court presided by Hon’ble Justice R.F Nariman and Hon’ble Justice B.R. Gavai upheld the judgment dated 18 March 2021 of the Single Judge Bench of Delhi High Court and set aside the judgment dated 22 March 2021 of the Division Bench of the Delhi High Court in favour of Amazon.com NV Investment Holdings LLC (“Amazon”) (readers may note that judgments dated 18 March 2021 and 22 March 2021of the Delhi High Court were covered in our update dated 13 April 21). The Supreme Court had to deal with two questions in the appeal – first, as to whether an “award” passed by an Emergency Arbitrator (“EA”) under the Arbitration Rules of Singapore International Arbitration Centre (“SIAC Rules”) can be considered as an order under Section 17(1) of the Arbitration and Conciliation Act 1996 (the “Arbitration Act”); and second as to whether an order passed under Section 17(2) of the Arbitration Act by a Court to enforce an Emergency Order is appealable. The first question was held in the positive and the second question was held in the negative. As a result, the amalgamation deal between Reliance Retail and Future Retail Ltd. (“FRL”) has been put on hold after the EA had found merit in Amazon’s objections.

Judgment of the Supreme Court

In respect of the first question,  the Court found that an EA’s orders (if provided for under institutional rules) would be covered by the Arbitration Act.  The Court emphasised that when there is no provision in the Arbitration Act which interdicts an EA order from being made, the losing party cannot claim that the award has been made sans jurisdiction. The Court highlighted the importance of  party autonomy enshrined in the Arbitration Act and the freedom to have a dispute decided in accordance with institutional rules which include the provision of Emergency Arbitration. Accordingly, the Court held that an “award” delivered by an EA under institutional rules constitutes as an order under Section 17(1) of the Arbitration Act and is enforceable as such.  The Court further expressed such orders to be an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties.

On the issue of maintainability of the appeal under Section 37 of the Arbitration Act, the Court held that no appeal lies under Section 37 against an order of enforcement of EA Order made under Section 17(2) of the Arbitration Act. While arriving at such a conclusion, the Court found that Section 37 of the Arbitration Act “is a complete code so far as appeals from order and award made under the Arbitration Act are concerned”.  Consequently, the interim orders of the Court stand vacated, including the judgement of the Division bench of Delhi HC.

Comments

The judgment provides needed clarity on the status of enforcement of EA order made in arbitrations that are seated in India. The Supreme Court through the judgment emphasises that party autonomy is supreme in arbitrations and reiterates the evolving pro-arbitration approach being adopted by Indian courts.