Supreme Court Holds Two-Tier Arbitration Valid Under The Arbitration And Conciliation Act, 1996

Parties to an agreement have the autonomy to provide for a second instance appeal for settlement of disputes or differences arising between them. This concept of providing second level of arbitration if either party is dissatisfied with the first arbitration (also known as 'two-tier arbitration' process) has been the bone of contention for long and strongly debated for and against. The issue has been finally settled by the Supreme Court of India ("SC") by holding that two-tier arbitration is neither prohibited under the Arbitration and Conciliation Act, 1996 ("Act") nor lies against the fundamental public policy of India. The issue regarding legality of two-tier arbitration process under the laws of India was considered by the SC recently in the case of M/s. Centrotrade Minerals & Metal Inc. vs. Hindustan Copper Ltd.¹