Trace Your Case

MMTC LTD. V. STERILE INDUSTRIES

MMTC Ltd. v. Sterlite Industries Ltd. (1996), 6 SCC 716

ISSUE:

  • Whether the arbitration clause in the sales contract between MMTC and Sterlite was valid and enforceable.
  • Whether the arbitrator had jurisdiction to hear the dispute.
  • Whether the arbitrator’s award was valid and enforceable.

RULE:

  • Arbitration clauses in international commercial contracts are valid and enforceable in India.

FACTS:

  • MMTC Ltd. (MMTC) is a public sector undertaking under the Government of India, engaged in the import and export of commodities.
  • Sterlite Industries Ltd. (Sterlite) is a private company engaged in the manufacturing of copper and copper products.
  • MMTC and Sterlite entered into a sales contract for the supply of copper cathodes.
  • The sales contract contained an arbitration clause, which provided that any disputes arising out of the contract would be settled by arbitration in London.
  • A dispute arose between MMTC and Sterlite regarding the quality of the copper cathodes.
  • Sterlite initiated arbitration proceedings in London.
  • MMTC objected to the arbitration proceedings, arguing that the arbitration clause was not valid and enforceable.
  • The arbitrator rejected MMTC’s objections and ruled in favor of Sterlite. – MMTC challenged the arbitrator’s award in the Supreme Court of India.

HELD:

  • The arbitration clause in the sales contract between MMTC and Sterlite was valid and enforceable.
  • The arbitrator had jurisdiction to hear the dispute.
  • The arbitrator’s award was valid and enforceable.
  • The Court also rejected MMTC’s arguments that the arbitration agreement was entered into under duress, that it was unconscionable, and that the arbitrator was biased. – The Court’s decision is significant because it establishes the principle that arbitration clauses in international commercial contracts are valid and enforceable in India.