The Madhya Pradesh High Court (Jabalpur Bench) has held that the power to appoint an arbitrator in an International Commercial Arbitration lies exclusively with the Supreme Court under Section 11(6) read with Section 11(12)(a) of the Arbitration and Conciliation Act, 1996. Hence, an order passed by the High Court appointing an arbitrator in an International Commercial Arbitration suffers from an inherent lack of jurisdiction, rendering the constituted Arbitral Tribunal a coram-non-judice and the resultant arbitral award a nullity in law. Such a defect of inherent jurisdiction strikes at the very authority of the tribunal and cannot be cured even by the consent or active participation of the parties.
The Division Bench comprising Justice Vivek Rusia and Justice Pradeep Mittal observed that the respondent (SMEC International) is a body corporate incorporated in Australia, making the arbitration an ‘International Commercial Arbitration’ within the meaning of Section 2(1)(f)(ii) of the Act of 1996. Part I of the Act applies to international commercial arbitrations seated in India, making the Section 34 application maintainable; however, the ground of ‘patent illegality’ under Section 34(2A) is not available for international commercial arbitrations.
On Limitation under Section 34(3), the Bench stated that Section 34(3) uses the passive phrase ‘if a request had been made’ under Section 33, without any qualification as to which party made it. The limitation period runs from the date the corrected award is disposed of, which was March 13, 2018. Thus, Section 34 application filed on August 06, 2018, was within the maximum period of three months plus the thirty days condonable period, making the Commercial Court’s finding on limitation legally erroneous and perverse.
The Bench clarified that while the contract is a ‘works contract’ under the M.P. Madhyastham Adhikaran Adhiniyam, 1983, the jurisdictional objection was raised for the first time at the post-award stage under Section 34. Referring to the Supreme Court’s decision in Gayatri Project Ltd. v. M.P. Road Development Corporation Ltd. [(2025) 10 SCC 750], the Bench held that the award cannot be set aside solely on the ground of lack of jurisdiction under the M.P. Act when raised at this stage.
On the validity of Arbitrator appointment by the High Court, the Bench observed that a conjoint reading of Section 11(6) and Section 11(12)(a) of the Act makes it abundantly clear that the power to appoint an arbitrator in an ICA lies exclusively with the Supreme Court. The High Court has no jurisdiction to appoint an arbitrator in an international commercial arbitration, and such an order suffers from a complete lack of jurisdiction. This is an inherent lack of jurisdiction, not a mere procedural flaw, and it cannot be cured by the consent or participation of the parties.
Briefly, the appellant, Water Resources Department, Government of Madhya Pradesh, issued a Request for Proposal (RFP) on December 14, 2005, for consultancy services for developing Capacity Building for Water User Associations. The respondent, SMEC International Pty. Ltd., an Australian company, submitted its proposal which was accepted by the appellant on March 28, 2007, leading to the execution of a Lump Sum Contract for a total value of Rs. 19.26 crores. An advance payment of Rs. 1.92 crores were made against a bank guarantee. Alleging that the respondent failed to deploy key professionals and submit acceptable deliverables, the appellant terminated the contract on December 27, 2010, and encashed the bank guarantee.
The respondent filed a petition for the appointment of an arbitrator, and the High Court appointed a Sole Arbitrator on May 06, 2015, who passed an award on February 15, 2018, allowing the respondent’s claim. Subsequently, the respondent filed an application under Section 33 of the Arbitration and Conciliation Act, 1996, and a corrected/modified award was passed on March 13, 2018.
The appellant then filed an application under Section 34 of the Act before the Commercial Court, Bhopal, which was dismissed on April 20, 2022, remanded by the High Court on September 15, 2022, and again dismissed on June 22, 2023, on the grounds that the application was barred by limitation and that the appellant failed to substantiate the ground of International Commercial Arbitration.
Appearances:
For Appellant: Deputy Advocate General, Abhijeet Awasthi
For Respondent: Advocate Dr. Anuvad Shrivastava
