Parties Cannot Participate In Arbitration And Later Challenge The Process Only After An Unfavourable Outcome : Supreme Court

“A Party Cannot Keep A ‘Jurisdictional Ace’ Up Its Sleeve”, In a significant observation reinforcing fairness and procedural discipline in arbitration proceedings, the Supreme Court of India held that a party cannot silently participate in arbitration proceedings and later raise a jurisdictional objection regarding the constitution of the arbitral tribunal after the proceedings have substantially progressed.

On 11 March 2026, a Bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar emphasized that the conduct of parties during arbitration is a crucial factor in determining whether objections regarding the arbitral process are genuine or merely tactical afterthoughts.

The Court warned that arbitration law does not permit litigants to keep silent during the proceedings and then challenge the process only after an adverse result, observing:

“A party cannot keep a ‘jurisdictional ace’ up its sleeve and then claim that filing of a jurisdictional challenge would wipe out its past conduct and acquiescence.”

Background of the Dispute

The dispute arose from a consultancy agreement executed in 1995 between the Municipal Corporation of Greater Mumbai (MCGM) and M/s R.V. Anderson Associates Limited, a Canadian engineering consultancy firm, relating to consultancy services for upgrading sewerage operations and maintenance services.

After disputes arose regarding payment of outstanding dues, the respondent invoked arbitration in 2005. Both parties appointed their nominee arbitrators, who later appointed a presiding arbitrator in accordance with the arbitration clause of the agreement.

The arbitral tribunal eventually passed an award directing MCGM to pay certain sums to the respondent along with interest. MCGM challenged the award before the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996, alleging improper constitution of the tribunal. The challenge failed both before the Single Judge and the Division Bench under Section 37, leading to the appeal before the Supreme Court.

Conduct of the Appellant During Arbitration Proceedings

A crucial factor considered by the Supreme Court was the conduct of MCGM throughout the arbitral proceedings.

The Court noted that the corporation remained silent at several stages when the presiding arbitrator was appointed by the co-arbitrators. In fact, the co-arbitrators appointed three different individuals as presiding arbitrator at different stages, yet no objection was raised by MCGM.

Even when communications regarding the appointment of the presiding arbitrator were shared with both parties, the corporation did not raise any protest or suggest that the appointment should instead be made by the Secretary General of ICSID, as later argued.

The Court also noted that representatives of MCGM attended the preliminary meeting of the arbitral tribunal, yet no objection regarding the tribunal’s constitution was raised at that stage.

Only after the arbitral proceedings had progressed did MCGM send a letter alleging that the appointment of the presiding arbitrator was a “nullity”.

Supreme Court On Acquiescence In Arbitration Proceedings

The Supreme Court held that although the appellant formally raised a jurisdictional challenge under Section 16 of the Arbitration and Conciliation Act before filing its statement of defence, the previous conduct of the party remained highly relevant.

The Court observed that arbitration law recognizes the doctrines of waiver, acquiescence and estoppel, and parties are expected to raise procedural objections promptly.

The Bench observed:

“The subsequent conduct of the parties serves as a powerful practical tool to understand their contractual intent.”

The Court noted that MCGM had remained passive while the arbitral process continued, despite being fully aware of the manner in which the presiding arbitrator was appointed.

This conduct demonstrated that the corporation itself never interpreted the arbitration clause in the restrictive manner it later sought to argue before the Court.

Supreme Court Warns Against Tactical Arbitration Challenges

The Court strongly disapproved of attempts to raise belated jurisdictional objections as a litigation strategy after participating in arbitration proceedings.

Emphasizing the ethos of arbitration as an efficient alternative dispute resolution mechanism, the Bench observed that allowing such conduct would undermine the integrity of arbitration.

The Court held:

“If such conduct is permitted, it will erode the basic principles of alternative dispute resolution and the ethos of arbitration.”

The judgment highlights that arbitration law discourages parties from approbating and reprobating, meaning they cannot accept the arbitral process when convenient and challenge it later after an adverse award.

Appeal Dismissed

After considering the conduct of the parties, the interpretation of the arbitration clause, and the limited scope of judicial interference under the Arbitration Act, the Supreme Court concluded that there was no ground to interfere with the arbitral award.

The Court upheld the decisions of the Bombay High Court under Sections 34 and 37 and dismissed the appeals filed by MCGM.

The judgment serves as an important reminder that arbitration proceedings require procedural fairness and prompt objections. Parties cannot strategically remain silent during arbitration and later challenge the process to invalidate an unfavourable award.

By emphasizing the role of conduct, acquiescence and procedural discipline, the Supreme Court reaffirmed that arbitration must remain efficient, predictable and insulated from tactical litigation strategies.

Date of Decision: 11 March 2026