ARAVALI POWER COMPANY PVT. LTD. V. M/S. ERA INFRA ENGINEERING LIMITED

Quick Summary

In Aravali Power v Era Infra, the Supreme Court held that if arbitration was invoked before 23 October 2015, the 2015 Amendment to Section 11 cannot be used to attack an arbitrator already appointed under the contract. For pre-amendment cases, courts must give maximum effect to the contractual mechanism, following Northern Railway Administration.

Issues

• Can parties challenge a pre-2015 arbitrator appointment by relying on the 2015 Amendments?

Rules

• Section 11 scheme: Courts must adhere to the contract’s arbitration clause as closely as possible and ensure contractual remedies are first used.
• The Chief Justice/designate is not bound to appoint the named arbitrator, but must respect contractually required qualifications and relevant considerations.
• Prospective effect: The 2015 Amendment ended the practice of appointing an officer of one party as arbitrator for future invocations, not retroactively.

Arguments

Judgment

Held: Since arbitration was invoked before 23 Oct 2015, the amended Section 11 could not be used to challenge the appointment already made. While the 2015 Amendment prospectively stops appointing a party’s own officials, pre-amendment cases follow earlier law: courts must adhere to the contract and ensure the Section 11 scheme is respected.

Ratio Decidendi

1. Temporal line: Applicability of the 2015 Amendment depends on the date of invocation.
2. Contract first: Under Section 11, courts strive to give effect to the arbitration clause as far as possible.
3. Northern Railway Administration governs pre-amendment scenarios to maximise fidelity to the agreed procedure.

Why It Matters

The decision gives a clear cut-off for challenges under Section 11: pre-23 Oct 2015 invocations stay under the old regime. It protects party autonomy and predictability in pending, older arbitrations.

Key Takeaways

• Check the invocation date before applying the 2015 changes.
• Courts should honour the clause and ensure agreed steps are first exhausted.
• Post-2015 policy on neutrality is prospective.
• Precedent: Northern Railway Administration continues for pre-amendment cases.

Mnemonic & 3-Step Hook

IRAC Outline

Glossary

Section 11

Provision on court power to appoint arbitrators; stresses giving effect to the arbitration agreement.

Invocation Date

The date a party first triggers arbitration; key to decide if amendments apply.

Section 14

Termination of arbitrator’s mandate in specified situations (e.g., ineligibility, inability).

FAQs

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