Concerns about the impact of this decision on India’s aspirations to become an international arbitration hub, given that the award in question is domestic, in my view are overstated. The court’s intervention is based on grounds of patent illegality and perversity, which are only applicable to domestic arbitrations. Therefore, the decision in the DMRC case is unlikely to negatively impact India’s status as a preferred seat for arbitration, as the doctrine of patent illegality does not extend to international commercial arbitration or the enforcement of foreign awards.
Additionally, as mentioned earlier, the decision in the stamp matter was well received within the domestic and international arbitration community. Recently, Gary Born at a lecture titled “Recent Developments in International Arbitration: Swiping Left & Swiping Right”, delivered at the offices of Holland and Knight in New York, endorsed the decision of the seven judges. Clearly, the issue does not lie with the Supreme Court’s exercise of curative jurisdiction.
The counterargument to my above suggestions could be that, although the DMRC case pertains to domestic arbitration, it sets a precedent for the potential exercise of curative power to international commercial arbitration and foreign awards.
While that appears unlikely, the answer perhaps lies in restricting (in fact doing away) with the expansive doctrine of patent illegality, which includes perversity and irrationality or in other words, Wednesbury. It is the inclusion of Wednesbury principles, that poses a greater threat to Indian arbitration. I have consistently warned against the expansion of this doctrine, predicting that it would eventually have negative repercussions. The current situation exemplifies the adverse consequences of broadening the doctrine of patent illegality.
The justification of this expanded doctrine rests on perceived deficiencies in the quality of Indian arbitrators. It is important to consider, if the messaging is that Indian arbitrators are not competent enough for domestic arbitration, why would they be perceived as competent by foreign parties? It is important to consider why foreign parties would consider India as a preferred seat, if indeed the quality of Indian arbitrators is questionable, and there is a need for accreditation or mandatory training courses to enhance their competence and not expand the court’s jurisdiction. The establishment of the Arbitration Bar of India presents an opportunity to address this issue.
Source: Barandbench
