Arbitration Cases Weekly Round-Up: 4 June To 10 June 2023

Calcutta High Court:

Clause Making Arbitration An Option For Resolution Of Dispute Is Not A Valid Arbitration Agreement: Calcutta High Court

Case Title: Blue Star Limited vs Rahul Saraf

The High Court of Calcutta has held that a clause in an agreement that merely provides for a possibility of arbitration is not a binding arbitration agreement. 

The bench of Justice Shekhar B. Saraf held that a clause which provides for resolution of dispute either by way of litigation or arbitration cannot be held to be a binding arbitration agreement as the clause makes arbitration a possibility which may unravel itself, if and only if the parties choose to opt for it, post occurrence of disputes.

The Court also reiterated that nomenclature of a clause is irrelevant and mere use of words like ‘arbitration’ would not make any clause a valid arbitration agreement.

Venue Would Not Be The Seat Of Arbitration When The Agreement Confers Exclusive Jurisdiction On The Courts At A Different Place: Calcutta High Court

Case Title: Homevista Décor & Furnishing Pvt Ltd. vs Connect Residuary Pvt Ltd. 

The High Court of Calcutta has held that the venue would not become the seat of the arbitration when the agreement confers exclusive jurisdiction on the Court in a different place. 

The bench of Justice Shekhar B. Saraf held that presence of a clause which confers exclusive jurisdiction upon a Court in a place other than the venue of arbitration is a ‘Contrary Indicia’ that prevents the venue of arbitration from becoming the seat. 

Delhi High Court:

Plea That The Arbitrator Is De Jure Ineligible Can Be Raised As An Additional Ground To Challenge Award, Even Without Amendment Of S. 34 Petition: Delhi High Court

Case Title: Man Industries (India) Limited vs Indian Oil Corporation Limited

The Delhi High Court has ruled that the plea that the Arbitrator is de jure ineligible to act as an Arbitrator is a plea of lack of jurisdiction. This plea can be allowed to be raised as an additional ground in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), by way of an amendment and even without the same, the court has held.

The bench of Justice Navin Chawla made the observation while allowing the amendment application seeking to add an additional ground to challenge the arbitral award, even though the said application was filed much beyond the limitation period prescribed in Section 34(3) of the A&C Act. In its amendment application, the petitioner sought to raise the additional ground that the Arbitrator was de jure ineligible to act as such in view of Section 12(5) of the A&C Act.

IRCTC Being A State Under A. 12 Is Bound By Its Affidavit Before Any Court Of Law, Cannot File A Contrary Affidavit To Defeat A Claim In Arbitration: Delhi High Court

Case Title: Indian Railway Catering & Tourism Corp. Ltd. vs M/s Goel & Goel

The High Court of Delhi has held that IRCTC is a State under Article 12 of the Constitution of India and is bound by its affidavit before any court of law and it cannot file contrary affidavit before the arbitral tribunal to defeat a claim of the other party in arbitration. 

Arbitration Clause In A Contract Perishes With Its Novation: Delhi High Court

Case Title: B.L. Kashyap and Sons Ltd vs MIST Avenue Pvt Ltd

The High Court of Delhi has held that an arbitration clause contained in an agreement would perish with its novation if the novated agreement does not contain any arbitration clause. 

Extension Of Period Of Agreement By Written Communications, No Novation, The Arbitration Clause Continues To Be Operative: Delhi High Court

Case Title: Unique Décor (India) Pvt Ltd. vs Synchronized Supply Systems Ltd.

The High Court of Delhi has held that if the parties have, by written communications, extended the period of agreement, the arbitration clause that was a part of the agreement continues to be operative.

The bench of Justices Vibhu Bakhru and Amit Mahajan has distinguished between the situations wherein an arbitration clause expires with the novation of the main agreement and when the arbitration clause continues to be operative when the original agreement is not superseded by any other agreement but extended by the parties through written communications.

A Consent Foreign Award Is Enforceable Under The New York Convention: Delhi High Court

Case Title: Nuovopignone International SRL vs Cargo Motors Private Limited & Anr.

The High Court of Delhi has held that a consent foreign award is enforceable under the New York Convention/Part II of the A&C Act, 1996. 

The bench of Justice Yashwant Varma rejected the argument that consent arbitration award do not fall within the rubric of New York Convention. The Court rejected the argument that an award to be recognized under the Convention must be one based on adjudication as arbitration presupposes adjudication by the tribunal and any award incorporating the settlement agreement entered into by the parties during the pendency of the proceedings would not amount to an award.

‘Partial Reduction In Traffic’ Due To Remote Event Of Flood Is Not A Force Majeure Event, Delhi High Court Sets Aside The Award Against NHAI

Case Title: NHAI vs Suresh Chandra

The Delhi High Court has held that ‘partial reduction in traffic’ due to a remote event of flood is not a force majeure event. 

The bench of Justice Manoj Kumar Ohri held that force majeure event contemplates a complete blockade of the road due to the floods and not mere reduction of the traffic on a particular road. 

Gujarat High Court:

Gujarat High Court Deprecates And Cautions Arbitrator Morris Samuel Christian's Conduct, Warns Against Impersonation And Arbitrary Proceedings; Allows Petition By GMDC Ltd

Case Title: Gujarat Mineral Development Corporation Limited vs Morris Samuel Christian 

The Gujarat High Court recently allowed the writ petition filed by Gujarat Mineral Development Corporation Limited praying for quashing and setting aside the mandate, constitution and authority of Morris Samuel Christian (respondent no.1) in relation to an Arbitration Case, with a further request to quash and set aside the ‘Final Awarding’ passed by the respondent. 

Jammu and Kashmir and Ladakh High Court:

No Appeal Or Revision Against Delay Condonation In Filing Application U/S 34 For Setting Aside Arbitral Award: Jammu & Kashmir And Ladakh High Court

Case Title: Mahant Subash Shah vs Kabir Singh & Anr.

The Jammu and Kashmir and Ladakh High Court has held that no appeal or revision would lie against an order allowing an application for condonation of delay accompanying an application filed under section 34 of the Arbitration and Conciliation Act for setting aside arbitral award.

A bench of Justice Javed Iqbal Wani said the legislature by using expression an appeal shall lie from the orders provided therein "and from no others" in Section 37 (Appealable orders) has taken away the right to appeal against all orders except specified in Section 37 (1) and (2).

Requirement To Refer The Claims To Dispute Adjudication Board (DAB) Is Mandatory: Jammu & Kashmir And Ladakh HC

Case Title: Union of India vs S.P. Singla Construction Pvt Ltd.

The High Court of Jammu & Kashmir and Ladakh has held that the requirement to refer the dispute to DAB, as per the GCC of FIDIC Contracts, is mandatory and the failure to comply with the provision results in making the dispute non-arbitrable. 

The bench of Justice Vinod Chatterji Koul held that when the agreement between the parties provides for reference of claims to DAB as pre-arbitration requirement and also provides for the consequences for the non-compliance, the parties must necessarily follow the agreed procedure and failure would result in the claims becoming non-arbitrable.