Nullifying The Effect Of Arbitration Agreement

In a recent decision of the Supreme Court dated 04 October 2016 in the case of A. Ayyasamy Vs. Respondent: A. Paramasivam and Ors. answered whether allegation of fraud simpliciter would also preclude arbitrability under a contract.

In deciding the above question the Supreme Court laid down that allegations of criminal wrongdoing or of statutory violation would not detract from the jurisdiction of the arbitral tribunal to resolve a dispute arising out of a civil or contractual relationship on the basis of the jurisdiction conferred by the arbitration agreement, and held that allegation of fraud simplicitor may not be a ground to nullify the effect of arbitration agreement between the parties. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract,