Allegations Of Fraud Are Arbitrable – Even In Domestic Arbitrations In India

The Supreme Court has held that: 

• Allegations of fraud are arbitrable unless serious and complex in nature;
• N. Radhakrishnan did not make blanket exclusion of fraud from the purview of arbitration;
• Swiss Timing does not over-rule N. Radhakrishnan since it arose under Section 11 of the A&C Act;
• Issues of fraud are arbitrable unless the arbitration agreement itself is impeached. 

INTRODUCTION

The Supreme Court of India ("Supreme Court"), in A. Ayyasamy (Appellant) v. A. Paramasivam & Ors. (Respondents)¹ has held that disputes involving allegations of fraud arising out of contracts bearing an arbitration clause shall be referred to arbitration.

Distinguishing, yet not casting away, the oft-cited ruling of the Supreme Court in the case of N. Radhakrishnan v. Maestro Engineers² in matters involving arbitrability of fraud, a division bench of the Supreme Court has held that N. Radhakrishnan did not subscribe to the blanket proposition