Siddharth Nigotia & Agnish Aditya comment on the case of A. Ayyasamy v. A. Paramasivam and attempts to clarify the law in this regard.
Abstract
The question of arbitrability has puzzled courts across the world. Arbitrability of fraud in particular has generated a lot of discussion in India, because Courts never settled the matter conclusively. The absence of certainty in this regard enabled parties to delay arbitration proceedings by alleging fraud. The case of A. Ayyasamy v. A. Paramasivam has attempted to clarify the law in this regard. In Ayyasamy, the Court settled the issue by holding that “mere allegations of fraud” are arbitrable, whereas “serious allegations of fraud” are not. The Court supported the well recognized principles of arbitration embodied in the Arbitration and Conciliation Act, like minimum judicial intervention, kompetenz-kompetenz and party autonomy. However, the authors shall argue that the Court merely indulged in a pro-arbitration rhetoric and still seems to harbour apprehensions towards the arbitral process. In this comment, the authors will argue that although Ayyasamy attempted to clarify the law with regards to arbitrability of fraud, it failed to do so. In the first part of this comment, we look at the Supreme Court cases dealing with the issue of arbitrability of fraud, and argue that the approach in the Swiss Timings case should be adopted in this regard. In the second part, we analyse the judgment in Ayyasamy, and argue that its dicta cannot be applied uniformly. Lastly, we conclude by arguing that the remedy to this problem is the principle of negative kompetenz-kompetenz which would entail that the jurisdiction of deciding matters of arbitrability will rest with the tribunal.