Bombay HC: Post-Facto NCLT Approval of Arbitration Proceedings Valid

Bombay HC Ruling on NCLT Approval of Arbitration

The Bombay High Court has upheld the validity of arbitration proceedings commenced prior to NCLT’s post-facto approval, stating that such approval does not make the proceedings void ab initio. Rather, the effectiveness of the arbitration is retroactively validated to the date of approval.

This ruling clarifies the legal standing of arbitral proceedings initiated in the absence of prior formal approval, reaffirming that post-facto approvals can play a significant role in operationalizing arbitration agreements within insolvent entities under the IBC.

The implications for legal practitioners are substantial, as it allows for flexibility in arbitration proceedings even in the context of insolvency. Lawyers are encouraged to ensure that approvals are obtained post-facto to safeguard the validity of arbitration efforts, especially as they navigate complex insolvency scenarios.