Arbitration analysis: The Indian Supreme Court (the
Court) held as arbitrary and unconstitutional, an arbitration
clause mandating a contractor of a State's Water Supply and
Sewerage Board (the State Board) to furnish a pre-deposit of 10% of
the amount of its claim in arbitration at the time of invoca-tion
of arbitration. In doing so, the Court re-affirmed the primary
purpose of arbitration as 'de-clogging the Court system.'
The Court held that such a pre-deposit clause was itself a
'clog' on entering the arbitral process and would render
the same impermissibly 'ineffective and expensive.'
Siddharth Ratho, Senior Member and Moazzam Khan, head of the
International Dispute Resolution Practice at Nishith Desai
Associates consider the decision.
