INDIA Law and Practice Contributed by: Neeraj Tuli, Rajat Taimni, Amrit Singh and Anuj Bahukhandi, Tuli & Co
Accordingly, the principal legal and practical barriers to enforcement are a valid and timely challenge to a domestic award, the obtaining of a stay of enforce- ment, or, in the case of a foreign award, satisfaction of one of the limited grounds under Section 48 of the Arbitration Act. The prevailing approach of the Indian Courts is to uphold the finality of arbitral awards and to avoid converting enforcement proceedings into a second merits review. 3.3 Practical Use of Arbitration in Insurance Matters Most commercial general insurance contracts typi- cally have a standard arbitration clause where any dispute may be referred to arbitration. However, the insured may also choose to approach the consumer forum, which is a summary procedure. The Supreme Court has recently settled the question of whether corporate insureds can be considered as “consumers” under the Consumer Protection Act 1986 (“Consumer Act 1986”). The Supreme Court in the case of National Insurance Co Ltd v Harsolia Motors (2023) 8 SCC 362 has held that since insur- ance contracts are contracts of indemnity there exists no element of profit generation and therefore insur- ance disputes come within the purview of the Con- sumer Act 1986. Reinsurance disputes are increasingly being referred to arbitration, particularly given the complex and highly negotiated nature of reinsurance arrangements. Courts have generally given effect to these contractual arrangements, recognising arbitration as an estab- lished mechanism for resolving disputes between insurers, reinsurers and, in appropriate cases, rein- surance intermediaries. Arbitral proceedings are confidential. Section 42A of the Arbitration Act requires the arbitrator, arbitral institution and parties to maintain confidentiality of all arbitral proceedings, subject to disclosure of an award where necessary for its implementation or enforce- ment. The Supreme Court has treated confidentiality as an important statutory feature of the arbitral pro- cess. In Kamal Gupta v LR Builders Pvt Ltd , 2025 SCC OnLine SC 1691, the Supreme Court held that a non-
signatory could not be permitted merely to attend and observe arbitral proceedings, noting that such partici- pation would be inconsistent with the confidentiality obligation under Section 42A. Challenge and Appeal of Awards Section 34 of the Arbitration Act provides a party with a right to approach a Court to set aside an arbitral award. A Court hearing a challenge of an award does not sit as an Appellate Court over the decisions of an arbitral tribunal, and therefore, it cannot re-examine the evidence/merits to arrive at a different possible conclusion or finding. The Court’s scope of interference is limited to the grounds laid out in Section 34, which includes inca- pacity of a party to enter into arbitration, improper notice of arbitration, ultra vires jurisdiction, invalid composition of the arbitral tribunal, a conflict with the public policy of India, and patent illegality appearing on the face of the award. Also, by way of the amend- ment to the Arbitration Act in 2015, the scope of “pub- lic policy” has been narrowed down to include only those instances where: • the making of the award is fraudulent or corrupt; • the award is in contravention of the fundamental policy of Indian law; or • the award is in conflict with the most basic notions of morality or justice. The scope of interference is further restricted where an arbitral award has been passed in an international commercial arbitration, in which case the ground of “patent illegality”, which includes perversity, is not available. An application for setting aside an award must be made before the expiry of three months from the date on which the award was received by the party concerned. The Courts can entertain the application beyond three months, but within 30 days, if the party concerned is able to demonstrate sufficient cause. The order by the Court under Section 34 of the Arbi- tration Act can be appealed, under Section 37, to the Court with the necessary jurisdiction to hear appeals from the Court in question. There is no statutory right
154 I NSURANCE L I T IGATI O N 2026
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