Is a two-tier arbitration clause valid in India?

Yes. The Supreme Court upheld the validity of a clause that provides first arbitration in India and a second arbitration before the ICC in London.

When can Indian courts refuse enforcement under Section 48?

Refusal is allowed only on limited grounds. For natural justice, the test is impossibility to present one’s case, not mere difficulty or choice not to participate.

Did Hindustan Copper show it was unable to present its case?

No. The Court found HCL had multiple opportunities but chose not to engage initially; hence Section 48(1)(b) was not attracted.

Was jurisdiction to be decided first by the ICC arbitrator?

The Court rejected this late argument and found no reason to fault the arbitrator’s approach on jurisdiction sequencing.

What was the final outcome?

Centrotrade’s appeal was allowed and HCL’s appeal was dismissed. Enforcement of the ICC London award proceeded.

centrotrade-minerals-and-metals-inc-v-hindustan-copper-limited-2020

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Quick Summary

Core idea: The contract allowed a first arbitration in India and a second ICC arbitration in London if unhappy. The Supreme Court upheld this two-tier clause and explained that enforcement of the foreign award cannot be refused unless a party shows impossibility (not just difficulty) in presenting its case.

Two-tier clause valid
Section 48: strict refusal grounds
ICC London award enforced

Issues

Is a two-tier arbitration clause (India → ICC London) legitimate under Indian law?
Can the ICC London award be refused in India under Section 48 for alleged unfairness or jurisdiction issues?

Rules

Two-tier clause: Parties may agree to a second arbitration before the ICC if the first award (India) is unsatisfactory.
Section 48 (Enforcement): Refusal only on narrow grounds. For natural justice, the test is inability to present one’s case, not mere non-participation by choice.
Procedure/Jurisdiction objections: Must be timely and substantive; late, vague claims carry little weight.

Facts — Timeline

View Timeline

Deal: Centrotrade (US) agreed to sell 15,500 DMT copper concentrate to HCL, delivery at Kandla Port, Gujarat.

Clause: Two-tier arbitration—first in India (Indian Council of Arbitration); second before ICC London if dissatisfied.

Dispute: Quantity issues led to arbitration; the Indian arbitrator gave a Nil Award.

Second tier: ICC London arbitrator awarded in Centrotrade’s favour with quantified sums.

Litigation: HCL sued in Rajasthan; interim stay later set aside by the Supreme Court.

Enforcement path: Calcutta HC single judge allowed enforcement; Division Bench reversed; matter reached the Supreme Court.

Arguments

Appellant (Centrotrade)

Two-tier clause is a valid party autonomy arrangement.
HCL had adequate opportunity during ICC proceedings.
No Section 48 ground to refuse enforcement.

Respondent (HCL)

Two-tier mechanism and procedure allegedly unfair.
Claimed inability to present case at ICC London.
Jurisdiction should have been decided first.

Judgment

Clause validity: Two-tier arbitration is lawful in India.
Fairness test: No proof that HCL was unable to present its case; non-participation was its choice.
Jurisdiction point: Late and unsubstantial; rejected.
No remand power: Enforcing court cannot remand to ICC arbitrator under Section 48.
Result: Centrotrade’s appeal allowed; HCL’s appeal dismissed. ICC London award enforceable.

Ratio Decidendi

Party-agreed two-tier arbitration is valid. For refusing a foreign award on natural justice, the standard is impossibility to present one’s case—difficulty or non-participation by choice is not enough. Enforcing courts cannot remand under Section 48.

Why It Matters

Strengthens party autonomy and contract design in cross-border deals.
Sets a high bar for resisting foreign awards under Section 48.
Gives drafting guidance for tiered dispute resolution clauses.

Key Takeaways

Two-tier arbitration clauses are enforceable.
Section 48 refusal requires strict proof; “impossibility” is the test.
Late jurisdiction objections usually fail.
Courts enforcing awards cannot remand to the arbitrator.

Mnemonic + 3-Step Hook

Mnemonic — “TWO → ICC → ENFORCE”

TWO — Two-tier clause allowed.
ICC — Second stage abroad can stand.
ENFORCE — Section 48: enforce unless impossible to be heard.

3-Step Hook: Agree Two-Tier → Follow Process → Enforce Unless Impossible.

IRAC Outline

Issue	Rule	Application	Conclusion
Is a two-tier arbitration clause valid?	Party autonomy permits layered arbitration processes.	Contract clearly provided India first, then ICC London.	Valid and enforceable.
Can enforcement be refused for unfairness?	Section 48: requires inability to present case.	HCL had opportunities; chose not to engage initially.	Refusal not made out; award enforced.
Can the enforcing court remand the matter?	Section 48 has no remand power.	Request to send back to ICC rejected.	No remand; proceed with enforcement.

Glossary

Two-Tier Arbitration: A contractually agreed, staged process with a second arbitration if the first result is contested.
Section 48: Provision listing limited grounds to refuse enforcement of foreign awards in India.
Impossibility Standard: Refusal for natural justice only if a party could not present its case, not if it simply did not.