In Brief
The Supreme Court struck down a clause in an arbitration agreement that required a party invoking arbitration to deposit 10% of the claimed amount, with unsuccessful claimants forfeiting the proportional shortfall. The Court held this clause arbitrary and violative of Article 14 because it applies universally without first determining frivolousness of claims, creates unjust results by allowing losing parties to retain portions of deposits, and discourages resort to arbitration—an alternative dispute mechanism intended to be speedy, inexpensive, and encourage court de-clogging. The Court affirmed that even when the State contracts commercially, it must act fairly under Article 14.
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