Justice Nariman Challenges Recent Arbitration Rulings
Former Supreme Court Justice Rohinton Fali Nariman has expressed concerns regarding recent arbitration judgments by the Supreme Court of India. Speaking at the Gujarat High Court Arbitration Centre’s Arbitration Week 2026, Justice Nariman criticized several decisions, asserting that they have introduced significant uncertainty into settled legal principles.
Analysis of Constitution Bench Decisions
Justice Nariman scrutinized five Constitution Bench rulings concerning the appointment of arbitrators and challenges to arbitral awards. He argued that the decisions do not promote legal certainty. According to him, constantly revisiting resolved issues creates “grave uncertainty,” and some judgments are fundamentally flawed.
He highlighted the contradiction between the five-judge decision in Cox and Kings and a later seven-judge ruling on unstamped arbitration agreements. The former required the Arbitration and Conciliation Act, 1996 to be interpreted alongside the Contract Act to determine the binding nature of arbitration agreements on non-signatories. In contrast, the latter described the Arbitration Act as a self-contained code, seemingly opposing the earlier interpretation.
Critique of Reopening Settled Questions
Justice Nariman also criticized the quick reopening of the five-judge ruling in NN Global by a seven-judge bench. He expressed concern over the potential for further overturning by a nine-judge bench, highlighting the instability this creates in arbitration law.
Delhi Metro Dispute: A Case of Overreach?
In the Delhi Metro case, the Supreme Court’s curative judgment set aside an arbitral award favoring Delhi Airport Metro Express Private Limited. Justice Nariman argued that the Court overstepped by questioning factual determinations that should have remained within the arbitrators’ purview. He criticized the introduction of a broad “miscarriage of justice” ground at the curative stage, suggesting it undermines the finality of arbitral awards.
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Debate Over Modification Powers
Justice Nariman further addressed the Supreme Court’s ruling in Gayatri Balasamy v ISG Novasoft Technologies Limited, where a limited power to modify arbitral awards was recognized under Section 34 of the Arbitration and Conciliation Act. He argued that this decision contradicted the precedent set by NHAI v M Hakeem, which allowed courts to set aside but not modify awards. Justice Nariman maintained that Section 33 permits only arbitrators to correct awards, while Section 34 allows courts to set aside awards entirely or partially.
Recommendations for Arbitration Reform
Justice Nariman proposed significant reforms to the domestic arbitration framework. He suggested allowing full appeals on facts and law, directly to a High Court division bench, bypassing the single-judge stage. He emphasized the need for accuracy in arbitral awards, comparable to trial court judgments, to restore faith in arbitration processes.
Additionally, he recommended fixing arbitrators’ fees as a lump sum at the start of proceedings, with the amount held in escrow and released post-award.
