Calcutta High Court Asserts Arbitrator's Supremacy, Rejects Court's Alternate Opinion on Evidence Evaluation

Calcutta High Court Asserts Arbitrator's Supremacy, Rejects Court's Alternate Opinion on Evidence Evaluation

In a recent ruling, the Calcutta High Court emphasised the sanctity of an arbitrator's perspective, asserting that it should not be replaced by an alternative opinion that a court might develop upon re-evaluating the evidence. The case in question was Jaldhi Overseas Pte Ltd v. Steer Overseas Pvt Ltd.

Justice Shekhar B Saraf made this noteworthy observation while presiding over a case involving a foreign arbitral award.

In the ruling, Justice Saraf underscored that a court should refrain from replacing the arbitrator's viewpoint with its own and should limit its involvement to a preliminary determination of the case. The judge specifically stated that such substitution should only occur if it is clearly evident that no arbitral agreement existed in the first place.

"In my view, this court should tread carefully while undertaking the task of determining whether there was a concluded contract along with an arbitration clause, specifically when the arbitrator has decided on it," Justice Saraf said in his order.

He further noted that a court's discretion in such matters is restricted. The Court, after careful consideration, chose not to intervene or interfere with the arbitral award in the present case. This decision was made after acknowledging that the case did not involve a situation where there was a lack of a concluded contract or the absence of an arbitration agreement.

The respondent, who was the award debtor in the case before the Court, argued against the enforcement of a foreign award issued under the International Arbitration Act of Singapore. The respondent contended that the arbitral proceedings were conducted in accordance with the rules of the Singapore International Arbitration Centre.

The respondent put forth the argument that a valid arbitration agreement did not exist between the parties due to a lack of mutual agreement or understanding between them. The respondent claimed that there was no meeting of minds regarding the arbitration agreement.

The Court took note of the fact that the arbitrator, in the award, had arrived at the determination that there was indeed an agreement between the parties that included an arbitration clause.

Given this context, Justice Saraf expressed the opinion that the Court must exercise caution and proceed judiciously when assessing the existence of the arbitral agreement.

Justice Saraf acknowledged the task of adjudication, recognising the legal constraints imposed while exercising discretion under Section 48 of the Act. The judge emphasised the importance of adhering to these constraints, which include refraining from re-evaluating evidence, substituting the court's perspective for that of the arbitrator, and reviewing the matter anew.

The Court also observed that in order to deny the enforcement of an arbitral award, there must be explicit evidence demonstrating the absence of a concluded contract between the parties. Furthermore, it would require a clear demonstration that the arbitrator had severely deviated from their duty. Without such evidence, the refusal of enforcement would not be justified.

Furthermore, it was noted that in the present case, the inquiry was not merely focused on determining the existence of an agreement. Rather, the crucial question revolved around identifying the specific correspondences that constituted the agreement between the parties.

"The difference between the two is a thin line, but is of great significance. Once the latter is decided by the arbitrator, the parties between whom the agreement existed become manifest. This decision should not, in my opinion, be tinkered with," Justice Saraf stated.

Consequently, the objections raised by the respondent were dismissed, and the Court ruled that the award was enforceable and could be executed as a decree of the High Court.

Senior Advocate Tilak Bose, along with Advocates K Thaker and Anurag Bagaria, represented the petitioners in the case.

The respondents were represented by Senior Advocate Joy Saha and Advocates Anuj Singh, Rashhmi Singhee, Aman Agarwal, Trinisha De, and Siddhartha Roy.