Seven-judge bench to review SC’s April arbitration verdict
New Delhi: Citing the “limitless uncertainty in the area of arbitration" at present, the Supreme Court on Tuesday preferred a seven-judge bench to review its ruling in April that held an arbitration clause is not enforceable in law if the agreement is unstamped or insufficiently stamped. The April judgment was expected to create further delays in appointment of arbitrators by adding one more layer of scrutiny, besides being contrary to India’s pro-arbitration stance.
“Having regard to the larger ramifications and consequences of the view of the majority in the NM Global case, these proceedings should be placed before a seven-judge bench to reconsider the correctness of the view of the five-judge bench," said a Constitution bench, led by Chief Justice of India Dhananjaya Y. Chandrachud.
The Constitution bench of five judges was hearing a curative petition, demanding a reconsideration of the 25 April verdict. The April verdict, by 3-2 majority, relied extensively on the 1899 Indian Stamps Act requiring certain agreements to be compulsorily registrable or chargeable to stamp duty while holding that a court could very well go into the aspects of stamping and other compliances before the arbitrator is appointed.
Sushmita Gandhi, partner, IndusLaw, said that the April verdict made a huge impact on the arbitration space. “Given the impact it had and continues to have on arbitral proceedings prior and post the judgment and that it was also at odds with the present arbitration regime leading to uncertainties and delays, a reference to a larger bench was perhaps a matter of time," she added.
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