The Hon’ble Supreme Court held that the scope of the arbitration agreement is defined by the Arbitration Agreement itself. And arbitration cannot proceed on public law remedies, and construction needs to be strictly done within the framework of Contract Law.
After these judgments, it is clear that “serious allegations of fraud” arise only if either of the two tests laid down are satisfied, and not otherwise.The first test is satisfied only when it can be said that the arbitration clause or agreement itself cannot be said to exist in a clear case in which the court finds that the party against whom breach is alleged cannot be said to have entered into the agreement relating to arbitration at all. The second test can be said to have been met in cases in which allegations are made against the State or its instrumentalities of arbitrary, fraudulent, or malafide conduct, thus necessitating the hearing of the case by a writ court in which questions are raised which are not predominantly questions arising from the contract itself or breach thereof, but questions arising in the public law domain.
For More Information Contact Advocate Prakhar Gupta