M/s Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. - Supreme Court Case

 M/s Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. - Supreme Court Important Judgment 2016 - 

On 15th December, 2016, in the case of M/s Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. [Civil Appeal No. 2562 of 2006], while examining the validity of two-tier arbitration procedure in India, a three Judge Bench held that “an arbitral award would be final and binding on the parties unless it is set aside by a competent court on an application made by a party to the arbitral award” but this does not exclude the autonomy of the parties to an arbitral award to mutually agree to a procedure whereby the arbitral award might be reconsidered by another arbitrator or panel of arbitrators by way of an appeal and the result of that appeal is accepted by the parties to be final and binding subject to a challenge provided for by the Arbitration & Conciliation Act, 1996.

 The Bench held that “the fact that recourse to a court is available to a party for challenging an award does not ipso facto prohibit the parties from mutually agreeing to a second look at an award with the intention of an early settlement of disputes and differences. The intention of Section 34 of the Arbitration & Conciliation Act, 1996 and of the international arbitration community is to avoid subjecting a party to an arbitration agreement to challenges to an award in multiple forums, say by way of proceedings in a civil court as well under the arbitration statute. The intention is not to throttle the autonomy of the parties or preclude them from adopting any other acceptable method of redressal such as an appellate arbitration.”

 It was held that “the “final and binding” clause in Section 35 of the A&C Act does not mean final for all intents and purposes. The finality is subject to any recourse that an aggrieved party might have under a statute or an agreement providing for arbitration in the second instance. The award is binding in a limited context.” The Bench observed that “there is nothing in the A&C Act that prohibits the contracting parties from agreeing upon a second instance or appellate arbitration – either explicitly or implicitly” and in the instant case, the arbitration clause in the agreement between the parties did “not violate the fundamental or public policy of India by the parties agreeing to a second instance arbitration.”