The Boundaries of Arbitration: Confidentiality and Judicial Restraint

• Author(s): Sabah Iqbal Siddiqui
• Date: 18-Aug-2025
• Post in: Arbitration

Arbitration as a dispute resolution mechanism widely rests on the principles of party autonomy, privacy and minimal judicial intervention. Yet, Courts have time and again been called upon to resolve disputes over who gets to participate in the arbitration proceedings and how far the Court’s hand can stretch once the arbitral tribunal is in place. Recently, the Supreme Court in Kamal Gupta & Anr. vs. M/s L.R. Builders Pvt. Ltd & Anr. Etc.^[1]  addressed both the issues ruling that arbitration belongs to the parties who agreed to it and that once a court appoints an arbitrator under Section 11(6) of the Arbitration and Conciliation Act 1996 (“Act”) they have no further jurisdiction to intervene.

The dispute before the Court arose out of a Family Settlement Deed / Memorandum of

Understanding (FSD/MoU) over properties and commercial assets. The FSD/MoU was executed between certain family members, but it excluded other individuals and companies associated with them. When disputes followed, the signatories to the FSD/MoU approached the Court seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”) and seeking interim protection under Section 9 of the Act. Some non-signatories, apprehending that the arbitral proceedings might affect their property rights, sought to intervene in the proceedings. In March 2024, the Court passed an order appointing an arbitrator with the direction that the pending Section 9 petition be treated as an application under Section 17 to be decided by the arbitrator. Further, the request for intervention by the non-signatories was denied. With this order, the Section 11(6) proceedings under the Act stood concluded.

Months later, the non-signatories returned to Court by filing fresh application in the disposed of Section 11(6) proceedings inter alia seeking permission to attend arbitral hearings and to have access to all pleadings and orders including the Award passed by the Arbitrator. The Court allowed the application permitting the non-signatories to attend the arbitration proceedings. This decision was challenged by the signatories.   

In this background, the Supreme Court framed two issues for consideration. The first, whether a non-signatory to an arbitration agreement can be permitted to remain present in arbitral proceedings between signatories? Second, whether after appointing an arbitrator under Section 11(6) of the Act the Court can issue further directions in the disposed of proceedings concerning the arbitration that have commenced post appointment of the arbitrator?

On the first issue, the Court examined Sections 2(h) and 35 of the Act to note that an arbitral award would only bind the signatories and those claiming under them. The non-signatories would have no legal basis to be present in the arbitration proceedings. It emphasized that allowing the non-signatories would not only be without jurisdiction but would also breach the confidentiality provisions under Section 42A of the Act. The remedy, if any, available to such non-signatories would arise under Section 36 of the Act if the award is sought to be enforced against them. It was accordingly held that a non-signatory to an arbitration agreement cannot be permitted to remain present in arbitral proceedings between signatories.

On the second issue, the Court applied the principle of functus officio to hold that once an arbitrator has been appointed under Section 11(6) of the Act, the Court has discharged its statutory role and has no further jurisdiction in the matter. The Court reasoned that the Act is a self-contained Code governing all stages of arbitration, from the commencement of arbitration to execution of the arbitral award. Further, Section 5 of the Act precludes judicial intervention in matters not expressly provided in Part I of the Act. It noted that where the statute provides the complete scheme, the power of the Court under Section 151 of the Code of Civil Procedure 1908 could not have been invoked to re-open the proceedings as the same would amount to abuse of the process of law.

The Supreme Court accordingly set aside the order permitting non-signatories to attend the arbitration. The applications filed by the non-signatories in the disposed of Section 11(6) proceedings under the Act were held to misconceived and an abuse of the process of law.

This judgment serves as a reminder of what arbitration truly is, a closed, party driven process that belongs only to those who have chosen it. Outsiders cannot force their way in, and courts must step back once the arbitrator is in place. By reinforcing these principles of confidentiality, autonomy, and finality, the Court has given arbitration in India a firmer foundation and greater assurance that it will remain an efficient and private system of dispute resolution.