Dispute Resolution Hotline: Indian Supreme Court strikes down pre-deposit requirement in arbitration agreement

Posted by By at 28 March, at 13 : 04 PM Print

March 28, 2019

INDIAN SUPREME COURT STRIKES DOWN PRE-DEPOSIT REQUIREMENT IN ARBITRATION AGREEMENT 


This article was originally published on 26th March, 2019 in

Lexis®PSL Arbitration

The Indian Supreme Court in M/S Icomm Tele v Punjab State Water Supply & Sewerage Board [Civil Appeal No 2713 of 2019 arising out of SLP (Civil) No 3307 of 2018] held as arbitrary and unconstitutional, an arbitration clause mandating a contractor of a State’s Water Supply and Sewerage Board (the State Board) to furnish a pre-deposit of 10% of the amount of its claim in arbitration at the time of invocation of arbitration. In doing so, the Court re-affirmed the primary purpose of arbitration as ‘de-clogging the Court system.’ The Court held that such a pre-deposit clause was itself a ‘clog’ on entering the arbitral process and would render the same impermissibly ‘ineffective and expensive.’ 

Through this judgment, the judiciary has demonstrated the ideal way in which courts may play a guiding role in the arbitral process by stepping in constructively when parties may overstep the four corners of the constitution or may act against the very objective of arbitration, while maintaining utmost reverence for party autonomy, the very crux of alternative dispute resolution mechanism.

For the complete article, please click here.

– Siddharth Ratho & Moazzam KhanYou can direct your queries or comments to the authors



Legal500 Asia-Pacific 2019: Tier 1 for Dispute Resolution, International Tax, Investment Funds, Labour & Employment, TMT and Corporate M&A

Chambers and Partners Asia Pacific 2019: Band 1 for Labour & Employment, Lifesciences, Tax and TMT

AsiaLaw 2019: Ranked ‘Outstanding’ for Technology, Labour & Employment, Private Equity, Regulatory and Tax

IFLR 1000 Asia Pacific 2019: Tier 1 for TMT and Private Equity

RSG-Financial Times: India’s Most Innovative Law Firm (2014, 2015 & 2017)

RSG-FT Awards (London) 2016: Asia Pacific’s Most Innovative Law Firm

Merger Market 2018: Fastest growing M&A practice

Benchmark Litigation Asia Pacific 2018: Tier 1 for Tax

IDEX: Tier 1 for Dispute Resolution

Asian Mena Counsel’s In-House Community Firms survey 2018- NDA voted as the only firm from India to excel in the Life Sciences sector

The Most Innovative Law Firm in Asia-Pacific


DISCLAIMER

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This Hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This Hotline does not substitute the need to refer to the original pronouncements.

This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender’s contact information, which this mail does. In case this mail doesn’t concern you, please unsubscribe from mailing list.

Hotline

Related Posts

Post Your Comment

You must be logged in to post a comment.

About Us

Nishith Desai Associates (NDA) is a research based international law firm with offices in Mumbai, Bangalore, Silicon Valley, Singapore, New Delhi, Munich and New York.

Mobile App

.

  • .
  • .
  • .