Revue - Les Cahiers de l'Arbitrage N°2 - 2024 - 78

CASE LAW
As discussed below, the Supreme Court bench deciding on the curative petition
filed by DMRC found it compelling to revisit (and nullify) its previous decision
reinstating the award, within the purview of this legal framework.
The basis for the 'rarest of rare' scrutiny
The arbitration law in India is governed by the Arbitration and Conciliation Act,
1996 (the Act). The Act sets out separate legal regimes for domestic and foreign
seated arbitrations - Part I of the Act applies to arbitrations seated in India and
Part II applies to arbitrations seated outside of India, provided they are seated
in a country that is a Party to either the Geneva Convention or the New York
Convention. While Indian courts have the power to set aside an award governed
by Part I, they may only refuse enforcement of a foreign seated award falling within
the purview of Part II. 12
Part I of the Act also anticipates a distinction between " international commercial
arbitration " , where at least one party is foreign, 13
and domestic arbitration, where
both parties are Indian. The scheme of Part I indicates that Indian courts are
unlikely to engage in a strict application of local standards in the context of an
" international commercial arbitration " seated in India. 14
As DMRC and DAMEPL are both Indian parties, the arbitration underlying the
Decision qualifies as a domestic arbitration governed by Part I of the Act.
The starting point for the Supreme Court for deciding on the substance of
DMRC's curative petition was the legal basis for setting aside an India seated
arbitration under Part I of the Act. In particular, the Court emphasized on Section
34(2A) of the Act, which reads:
" An arbitral award arising out of arbitrations other than international commercial
arbitrations, may also be set aside by the Court, if the Court finds that the
award is vitiated by patent illegality appearing on the face of the award. " 15
On the standard of " patent illegality " , the Court observed:
" In essence, the ground of patent illegality is available for setting aside a domestic
award, if the decision of the arbitrator is found to be perverse, or so irrational
that no reasonable person would have arrived at it; or the construction of the
12. While Indian Courts have set aside foreign seated arbitrations (with an Indian party) in
the past on the ground that there was no express exclusion of Part I, this is not the case since the
2012 Supreme Court decision in Bharat Aluminium v Kaiser Aluminium, see M. Thadikkaran, Judicial
Intervention in International Commercial Arbitration: Implications and Recent Developments from
the Indian Perspective, (2012) 29 J. Int. Arb. 6.
13. The Arbitration and Conciliation Act, 1996, Section 2(1)(f).
14. For example, Section 28 of Part I states that the tribunal in an international commercial
arbitration can decide the dispute in accordance with the foreign (substantive) law chosen by
the parties, whereas a domestic arbitration between Indian parties would have to be decided in
accordance with Indian law. Further, the 12-month time limit for rendering an award by a tribunal
pursuant to Section 29A of Part I does not apply to international commercial arbitrations. Also, 'patent
illegality' (which was relevant for the Decision) is not a ground for setting aside an international
commercial arbitration pursuant to Section 34(2A) of Part I.
15. The Arbitration and Conciliation Act, 1996, Section 34(2A).
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The Paris Journal of International Arbitration 2024‑2

Revue - Les Cahiers de l'Arbitrage N°2 - 2024

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