Ssangyong engineering and construction company ltd. v. S.B. engineering associates, arbitration appeal nos. 14 of 2023 and 25 of 2023, decided on 22 April 2026 (High court of Madhya Pradesh).

Legal proceedings in progress at a desk with a gavel and scales, representing the High Court of Madhya Pradesh's decision on the Ssangyong Engineering and Construction Company Ltd. vs. S.B. Engineering Associates, Arbitration Appeals.

The decision delivered by the High Court of Madhya Pradesh in Ssangyong Engineering and Construction Company Ltd. v. S.B. Engineering Associates marks a significant development in Indian arbitration jurisprudence concerning the appointment of arbitrators in International Commercial Arbitration. The judgment revisits the distinction between mandatory and derogable provisions under the Arbitration and Conciliation Act, 1996 and clarifies that jurisdictional defects in the constitution of an arbitral tribunal cannot be cured by consent, waiver, or participation in proceedings. The dispute arose out of a subcontract agreement between Ssangyong Engineering and Construction Company Ltd., a company incorporated in South Korea, and S.B. Engineering Associates. Ssangyong had been awarded a highway construction project by the National Highways Authority of India and had subsequently subcontracted part of the work to S.B. Engineering Associates. Differences emerged between the parties regarding execution of the contract, leading to termination of the subcontract by Ssangyong. Pursuant to the arbitration clause contained in the agreement, S.B. Engineering Associates invoked arbitration proceedings. When Ssangyong failed to appoint an arbitrator, S.B. Engineering Associates approached the Madhya Pradesh High Court under Section 11 of the Arbitration and Conciliation Act for appointment of a sole arbitrator. The High Court appointed a retired judge as the sole arbitrator, who later passed an award partly in favour of both parties. Subsequently, the award was challenged before the Commercial Court and later before the High Court in appeals under Section 37 of the Act.

The central issue before the High Court was whether the appointment of the arbitrator by the High Court itself was legally valid. Since Ssangyong was a foreign incorporated company, the Court examined whether the dispute qualified as an “International Commercial Arbitration” under Section 2(1)(f) of the Arbitration and Conciliation Act. The Court held that the arbitration clearly fell within the ambit of International Commercial Arbitration because one of the parties was a body corporate incorporated outside India. Having determined the nature of the arbitration, the Court proceeded to interpret Section 11 of the Act as it existed prior to the 2015 amendment. Under the statutory framework, the power to appoint an arbitrator in domestic arbitrations vested with the Chief Justice of the High Court, whereas in International Commercial Arbitrations such power vested exclusively with the Chief Justice of India or his designate. Therefore, the Madhya Pradesh High Court held that it lacked jurisdiction to appoint the sole arbitrator in the present case.

One of the most important aspects of the judgment is the Court’s discussion on mandatory and non derogable provisions of arbitration law. The respondent argued that Ssangyong had participated in the arbitration proceedings for several years without objecting to the jurisdiction of the arbitral tribunal and therefore had waived its right to challenge the appointment. This argument was rejected by the Court. Relying extensively upon the judgments of the Supreme Court of India in Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd. and Central Organization for Railway Electrification v. ECI SPIC SMO MCML (JV), the Court held that waiver under Section 4 of the Arbitration Act applies only to derogable and procedural provisions. Mandatory provisions concerning jurisdiction cannot be waived by conduct, consent, or acquiescence. The Court observed that if an authority inherently lacks jurisdiction, any proceedings conducted by such authority are void ab initio. Since the High Court itself was incompetent to appoint the arbitrator in an International Commercial Arbitration, the arbitrator had no legal authority to conduct proceedings or render an award. Consequently, the arbitral award was declared non est and unenforceable in law.

The judgment further emphasised that objections relating to inherent lack of jurisdiction can be raised at any stage of proceedings, even for the first time in an appeal under Section 37 of the Arbitration Act. The Court reiterated the settled principle that jurisdiction cannot be conferred by consent of parties. Even prolonged participation in arbitral proceedings cannot validate an appointment made contrary to mandatory statutory provisions. This ruling is particularly important because it strengthens procedural discipline in arbitration proceedings and reinforces the legislative distinction between domestic arbitration and International Commercial Arbitration. It also demonstrates the judiciary’s commitment to preserving the integrity of arbitral processes by ensuring that tribunals are constituted strictly in accordance with statutory requirements.

The judgment has wider implications for arbitration practice in India. It serves as a caution to parties and courts alike that the question of jurisdiction must be carefully examined at the threshold stage itself. The ruling also highlights the importance of statutory compliance in the appointment process and limits the scope of party autonomy where mandatory provisions of law are involved.

In conclusion, the decision in Ssangyong Engineering and Construction Company Ltd. v. S.B. Engineering Associates represents a significant reaffirmation of foundational principles of arbitration law. The Court unequivocally held that the appointment of an arbitrator in an International Commercial Arbitration by an authority lacking jurisdiction renders the entire arbitral process void. By rejecting the applicability of waiver and acquiescence in cases involving mandatory jurisdictional defects, the judgment strengthens the legal framework governing arbitration in India and contributes substantially to the evolving jurisprudence on International Commercial Arbitration.