India: Appellate Arbitration Permissible In India – But Should You Provide For It?

Last Updated: 5 January 2017
Article by Niyati Gandhi and Vyapak Desai
  • Supreme Court permits two-tier i.e. appellate arbitration in India
  • Party autonomy is paramount in arbitration under the Indian Arbitration & Conciliation Act, 1996.
  • No express and implied prohibition of appellate arbitration is contained in the Arbitration & Conciliation Act, 1996.

A three-judge bench, of the Supreme Court of India (SC), in Centrotrade Minerals & Metal v. Hindustan Copper has found that parties may provide for an appeal in their arbitration clause and such a choice would not be contrary to the laws of India. The issue, originally heard in 2006, had been referred to a higher bench due to a difference of opinion between the two judges hearing the case.

The Dispute Resolution Clause

The question before the SC was whether a settlement of disputes or difference through a two tier arbitration procedure provided for in the contract between the parties was permissible under Indian law. The arbitration agreement contained in Clause 14 of the contract provided:

14. Arbitration - All disputes or differences whatsoever arising between the parties out of, or relating to, the construction, meaning and operation or effect of the contract or the breach thereof shall be settled by arbitration in India through the arbitration panel of the Indian Council of Arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration.

If either party is in disagreement with the arbitration result in India, either party will have the right to appeal to a second arbitration in London, UK in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce in effect on the date hereof and the result of this second arbitration will be binding on both the parties. Judgment upon the award may be entered in any court in jurisdiction

It is also relevant to note that the applicable substantive law was also Indian law.


The SC first noted that a plain reading of the arbitration agreement indicated that the intention of the parties was to provide for two opportunities at resolving their disputes or differences. Let's label the decision of the first tribunal as First Award and that of the second tribunal as the Second Award.

The SC addressed several argument raised by counsel in the judgment, of which the significant ones are listed below:

A. Is the First Award an "arbitral award"?

The SC noted that the First Award is an arbitral award and not just a decision rendered by a tribunal with no enforceable effect. The reasons for this finding were two fold-

  1. The First Award contained all the elements and ingredients of an arbitration award; and
  2. If the decision was not considered to be an arbitral award, a legal vacuum would exist post the arbitration result.

While the SC has found that no such vacuum can be read to exist and such an award would be enforceable under the Indian Arbitration & Conciliation Act, 1996 (A&C Act, 1996), it has not addressed whether or not the First Award can be enforced while the second tribunal is hearing the matter in appeal.

B. Is appellate arbitration contrary to the laws of India?

The SC noted that it was inappropriate to argue that appellate arbitration is contrary to the laws of India because that would indicate that the party knowingly entered into a contract wherein one of the provisions of the contract was contrary to the laws of India. This could amount to serious fraud and would have serious long-term ramifications on international commercial contracts with Indian parties.

The SC then divided the argument raised in appeal into three parts:

  1. Whether the A&C Act, 1996 does not sanction appellate arbitration;
  2. Whether the A&C Act, 1996 contains an implied prohibition to appellate arbitration; and
  3. Whether appellate arbitration is contrary to Indian public policy.

The SC took note of the Report of the UNCITRAL Working Group, the Arbitration Act of 1940, referred to some commentaries, as well as previous judgments to find that appellate arbitration has historically been considered valid. The SC duly considered this and found that that the legislature would be aware of such a practice at the time of drafting the A&C Act, 1996 and the lack of specific proscription would indicate that appellate arbitration is permissible in India.

The SC took note of the argument that the right of appeal can only be provided by statute. After studying various precedents on the issue, the SC noted that the right of appeal is a substantive right and is not just a mere matter of procedure. On this ground, the SC distinguished appellate arbitration vis a vis statutory appeals before courts and tribunals, to find that an appeal procedure contained in an arbitration agreement was a substantive right created by the parties by mutual consensus.

In regards the implied prohibition contained in the A&C Act, 1996, the court read Section 34-36 in together to find that the availability of recourse to a court for challenging an award, contained in the statue, does not ipso facto prohibit the parties from mutually agreeing to a "second look". Furthermore, the idea that an arbitration award is "final and binding" does not necessary rule out the possibility of an appeal. The SC found that an award being "final and binding" indicates that it has legal effect and doesn't preclude appellate arbitration.

As for the public policy argument, the court dismissed the same stating that there is nothing fundamentally objectionable in the parties preferring and accepting a two-tier appellate arbitration mechanism. Such a choice would not violate any mandatory provision of the A&C Act, 1996.

Lastly and most importantly, the SC has placed significant emphasis on party autonomy while arriving at this decision, even noting that it is "virtually the backbone of arbitration" and that the intention in the A&C Act, 1996 "is not to throttle the autonomy of parties or preclude them from adopting any other acceptable method of redressal such as appellate arbitration. Therefore, there is nothing in the A&C Act, 1996 that prohibits the parties from explicitly or implicitly agreeing on appellate arbitration.


The present judgment continues the line of pro-arbitration judgments in India. Special mention should be made to the increasing respect being accorded by courts to party autonomy in arbitration.

One cannot ignore that parties may be concerned about the possibility of error in high-stakes disputes and appellate arbitration may safeguard the integrity of the arbitration process and protect parties from such errors. Similarly, the knowledge of the availability of an appeal, may also serve as an encouragement to parties to complete the first proceeding expeditiously. Arbitration can no longer take a standard, one-size-fits-all approach and it must evolve to address the interests of parties in different disputes of varying quantum. These manifold pros of an appeals procedure has also been noted in investor state arbitration and and an optional appeals procedure has been made available to give the process greater legitimacy.

While the judgment can be hailed for its party-autonomy oriented approach to the issue which echoes the adoption of appellate mechanisms in arbitration in other jurisdictions, it is pertinent to ask –

While appellate arbitration has been found to be permissible in India, is it good for your dispute?

The availability of an appeals mechanism also has various cons. A simple example could be that it provides a recalcitrant respondent yet another delaying tactic. However, the larger concern is the lack of clarity on how the availability of an appellate mechanism in arbitration will affect the arbitration system as a whole. Parties choose arbitration over litigation for its final and binding effect at first instance. While the need for an appeal mechanism to protect legitimate interests of parties must be acknowledged, the mechanics will surely implement the structure and spirit of international arbitration.

It is up to arbitral institutions now to draft and provide appellate procedure rules that can cover operational issues that are likely to arise. Some examples are questions regarding which issues can be submitted to an appeal as against the commencement of de novo procedures; when would time for the purposes of limitation stop running; or how soon would an appeal need to be filed.

While this judgment is surely an interesting development in Indian arbitration law, its implications remain to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Niyati Gandhi
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions