High Court Oversteps in Arbitration involving a foreign company
MP Bench Declares Award Void in Ssangyong Case
Exclusive Power Lies with Chief Justice of India
By Our Legal Correspondent
New Delhi: April 24, 2026:
The Madhya Pradesh High Court has ruled that it cannot appoint arbitrators in international commercial disputes, declaring such appointments void ab initio. The judgment underscores that only the Chief Justice of India or their designate has exclusive jurisdiction under the Arbitration and Conciliation Act, 1996.
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Background of the Case
The dispute arose from a subcontract awarded in 2007 by Ssangyong Engineering and Construction Company Ltd (a Korean firm) to SB Engineering Associates (an Indian company) for highway construction under the National Highways Authority of India. Following termination of the contract in 2009, arbitration was invoked. The Madhya Pradesh High Court appointed a sole arbitrator in 2009, who passed an award in 2016. Challenges under Section 34 were dismissed in 2022, leading to appeals under Section 37. Ssangyong then raised a jurisdictional objection, arguing that the High Court lacked authority to appoint an arbitrator in an international commercial arbitration.
Key Legal Provisions Discussed
- Section 2(1)(f), Arbitration and Conciliation Act, 1996
Defines international commercial arbitration as disputes where at least one party is a foreign entity. Since Ssangyong is a Korean company, the arbitration qualified as international. - Section 11(9) & 11(12)
Grants exclusive power to the Chief Justice of India or their designate to appoint arbitrators in international commercial arbitration. High Courts have no jurisdiction in such matters. - Section 4
Deals with waiver of objections. The Court clarified that jurisdictional defects cannot be waived by consent or participation. Lack of jurisdiction “strikes at the root” and renders proceedings void. - Section 34 & Section 37
Provide mechanisms for challenging arbitral awards. However, the jurisdictional defect here was so fundamental that the award itself was declared unenforceable.
Court’s Reasoning
- The Bench held that jurisdictional provisions are mandatory and non-derogable.
- Even though Ssangyong participated in arbitration without objection, this did not validate the High Court’s appointment.
- The arbitral award was declared void ab initio, meaning it never had legal existence.
Implications of the Ruling
- High Courts cannot appoint arbitrators in disputes involving foreign parties.
- Parties must approach the Supreme Court for such appointments.
- Jurisdictional objections can be raised at any stage, even after years of proceedings.
- The ruling strengthens India’s arbitration framework by clarifying the exclusive role of the Supreme Court in international disputes.
Critical Analysis
This judgment reinforces the principle that jurisdiction cannot be conferred by consent or conduct. It ensures consistency in international arbitration by centralizing appointments under the Chief Justice of India. However, it also raises concerns about delays and inefficiencies, as parties must approach the Supreme Court rather than local High Courts. While this enhances uniformity, it may burden the apex court with procedural matters.
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FAQ: Key Legal Points
Q1: Who can appoint arbitrators in international commercial arbitration in India?
Only the Chief Justice of India or their designate has jurisdiction under Section 11(9) & (12).
Q2: What qualifies as international commercial arbitration?
If one party is a foreign entity (company, individual, or body corporate), the dispute is classified as international under Section 2(1)(f).
Q3: Can parties waive jurisdictional defects by consent or participation?
No. The Court held that lack of jurisdiction cannot be waived under Section 4.
Q4: What happens if a High Court wrongly appoints an arbitrator?
The appointment and subsequent proceedings are void ab initio and unenforceable.
Q5: What sections of the Arbitration Act were central to this ruling?
Sections 2(1)(f), 4, 11, 34, and 37 were discussed extensively.
Q6: What is the practical impact of this ruling?
Parties in international disputes must approach the Supreme Court for arbitrator appointments, ensuring uniformity but potentially increasing case load at the apex court.
In essence, the Madhya Pradesh High Court’s ruling clarifies that international arbitration appointments are the sole domain of the Supreme Court, reinforcing the mandatory nature of jurisdictional provisions under the Arbitration Act.