Clifford Chance
The Indian Supreme Court upholds competence-competence
24 March 2014
In World Sport Group (Mauritius) Ltd v MSM Satellite (Singapore) Ltd, the Supreme Court of India held that issues of fraud should properly be dealt with initially by the arbitral tribunal in accordance with the arbitration agreements entered into between the parties, and not initially by the courts, departing from an earlier controversial line of Indian case law that had held otherwise.
A similar decision was reached just days before by the Bombay High Court in HSBC PI Holdings (Mauritius) Ltd v Avitel Post Studioz Ltd and others.
Following the groundwork laid by the Supreme Court of India in cases such as Bharat Aluminum Co Ltd v Kaiser Aluminum and Shri Lal Mahal v Progetto Grano Spa, the most recent decisions show a developing judicial maturity on the part of the Indian courts not to interfere with the international arbitral process and to be willing to uphold valid international arbitration agreements between parties.
Clifford Chance LLP acted for HSBC PI (Mauritius) Holdings and instructed local counsel to appear on its behalf before the Bombay High Court in HSBC PI Holdings (Mauritius) Ltd v Avitel Post Studioz Ltd.
Key issues:
- Trend of "pro-arbitration" shown by Indian higher courts in two recent cases.
- Indian courts uphold underlying arbitration agreements.
- Allegations of fraud can be dealt with by arbitrators not only by courts.
