The SC’s Amazon ruling upholds the doctrine of party autonomy

Source: Livemint

Relevance: To understand the recent SC ruling and extension of the Indian Arbitration Act 1996.

Synopsis: The SC order in Amazon’s case has answered two important judicial questions.

What is the background of the event?

What is the story so far?

1. When Future Retail struck a deal with Reliance Retail, Amazon initiated the proceedings as per SIAC rules. The future group then approached Delhi HC, but HC refused to grant any relief.
2. Amazon also requested Delhi HC for enforcement of the Singapore arbitration award, which was accepted by Delhi HC. This single judge ruling was later stayed by the division bench of Delhi HC, after which Amazon approached SC.

What are the two important points questions answered by SC?

In the recent ruling of the Amazon and Reliance case, the court answered two important questions.

1. Whether an award by the emergency arbitrator under the SIAC Rules could be valid for consideration under the Indian Arbitration Act.
2. Whether a court order enforcing such an award is appealable.

SC’s response:

On the first question:

• “Doctrine of Party autonomy” – In arbitration, both parties agreed upon the principles and platform for conflict resolution. Upon receiving an adverse award, the party cannot wriggle out of responsibility.
• Though the institution of emergency arbitration is not explicitly covered in Arbitration Act 1996, its provisions are broad upon to cover it. In fact, they help in decongesting the Judiciary.

On 2nd question:

• On the second issue, the court observed that while the interim award was subject to review, the order of HC on its enforcement was not.

Way forward:

• The Judiciary is becoming sensitive to party autonomy and is more open to welcoming awards of international arbitrations.
• Such enforcement of contracts would help in promoting EODB (Ease of Doing Business)