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14 February 2022, Monday

2 years ago

Once stamp duty is paid, its adequacy is not a question going to existence or validity that the Section 11 court should consider: Supreme Court of India

24 January 2022 | Intercontinental Hotels Group (India) (P) Ltd v. Waterline Hotels (P) Ltd | Arb A (Comm) 02/2021 | NV Ramana, Surya Kant and Hima Kohli JJ | Supreme Court of India | 2022 SCC OnLine SC 83>

The Supreme Court has appointed an arbitrator in an international commercial arbitration rejecting the argument of insufficient stamping. The petitioner conducted a “self-adjudication” and paid the stamp duty during the proceedings, but the respondent still objected to the petitioner’s method of stamping and classification. >

The court ruled that once the duty was paid, the issue of ‘existence’ and ‘validity’ of the arbitration clause “would not be needed to be looked into”, and it “is a question that may be answered at a later stage as this court cannot review or go into this aspect under Section 11(6).” If, however, the court said, “it was a question of complete non stamping, then this court, might have had an occasion to examine the concern raised in N.N. Global.” >

To briefly recap the context for a new reader:>

  1. Section 11 (6A) ACA, introduced by the 2015 Amendments, provides that the court, while considering an application for appointment, “shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.”
  2. In Garware (2019) 9 SCC 209, a 2-judge bench of the Supreme Court ruled that an agreement containing an arbitration clause, if unstamped, does not exist in the eyes of the law.
  3. Vidya Drolia (2021) 2 SCC 1, a 3-judge bench decision, approved Garware.
  4. In NN Global Mercantile, another 3-judge bench disagreed with Garware and referred the issue to a 5-judge bench. According to the Supreme Court’s website, the case is likely to be listed before a 5-judge bench on 23 March 2021 [CA No 003802 - 003803 of 2020]

Read the decision here. >

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Categories: Appointment of Arbitrators | Competence Competence | Competence of Arbitral Tribunal to Rule on its Jurisdiction | Existence of Arbitration Agreement | Garware | Global Mercantile | Jurisdiction | Jurisdiction of Arbitral Tribunal | Kompetenz Kompetenz | Prima Facie No Valid Arbitration Agreement Exists | Section 11 (6A) ACA | Section 11 ACA | Section 16 ACA | Section 8 ACA | Severability | Stamp Duty | Stamping of Arbitration Agreement | Stamping of Main Agreement | Substantive Validity of Arbitration Agreement | Test of Arbitrability | Unstamped Agreement | Validity | Vidya Drolia | Who Decides Question

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