Read Time: 07 minutes

The Chief Justice of Karnataka High Court by an administrative order, has constituted a Single Judge Bench in the commercial division to hear challenges to international arbitral arbitral award.

This order came to be passed in view of the judgment of the Division Bench of the court, wherein ITI Limited had challenged an international commercial arbitral award.

The plea to set aside the award raised certain questions such as the jurisdiction of the Karnataka High Court to hear challenges to international awards and whether the same would lie before a Single Judge or Division Bench. The plea also raised a question as to the limitation on the basis of the pecuniary Jurisdiction for the exercise of powers by the court.

C.K. Nandakumar, Sr. Adv, appearing for ITI Ltd had submitted that as per Section 4 of the  Commercial Courts Act, in all the High Courts, having Ordinary Original Civil Jurisdiction , the Chief Justice of the High Court can constitute Commercial Division for this purpose. He further submitted that as per Section 5 of the act , the Chief Justice of the High Court has the powers to constitute Commercial Appellate Division having Division Benches.

Nandakumar argued that a challenge to a domestic arbitral award would have to be made before the Commercial Court or a Commercial Division of the High Court. He submitted that a complexity arises as Section 10 of the Commercial Courts Act does not provide for a  situation where a Commercial Division has not been constituted in the High Court. He argued that Section 4 of the Act or any other provisions of law provide for creation of Commercial Division by High Court  which does not having Ordinary Original Civil Jurisdiction. He argued that as a result of this the proceedings under section 34 challenging the International Commercial Arbitration are being placed before the Division Bench owing to which the litigant loses a right to appeal.

He submitted that the Section 37 of the Arbitration & Conciliation Act commences with a non- abstante clause “Notwithstanding anything contained in any other law for the time being in force” thereby mandating that an appeal “shall” lie from an order setting aside or refusing to set aside an arbitral award under Section 34 to the Court authorised by law to hear appeals from original decrees of the Court passing the order.

Nandakumar further submitted that a perusal of these provisions would lead to a conclusion that even if a  High Court does not have Ordinary Original Civil Jurisdiction, a Commercial Division is required to be established for purposes of hearing challenges to international arbitral awards.

The court on hearing his submissions ordered that a challenge to an award passed in an International Commercial Arbitration can be made before the High Court of Karnataka in view of Section 2 (e) (ii) of the Arbitration & Conciliation Act 1996. It further noted that in terms of Section 10 (1) if the Commercial Courts Act, a challenge to an International Commercial Arbitral Award would have to be considered by a Commercial Division established in the High Court consisting of a Single Judge, thereby the court directed the registry place the order before the Chief Justice in the administrative side to pass orders in this regard.

The Chief Justice accordingly issued a circular constituting a single judge bench to hear challenges to international commercial arbitral awards on 24th February 2022.

Case title: ITI Ltd Vs Alphion Corporation & And