Arbitration Court Reckoner : February 2021

By way of the present column, an attempt is made to briefly review the salutary judgments pronounced by the Courts in the month of February 2021 under the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the 'Act'). That while as many judgments as possible are sought to be reviewed, owing to the limited column space, some judgments would invariably be left out. That also while an attempt is made to include and review some judgments of various other High Courts, the emphasis is essentially on the judgments of the High Court of Delhi and Supreme Court of India. That judgments have been compiled for review with reference to the Section of the Act that they are primarily dealing with and a detailed analysis has been forgone in favour of succinctness. Section 2(2) To oust the jurisdiction of Indian Courts u/s 9, a specific 'ouster clause' or 'exclusive jurisdiction clause' is required In Mewa Mishri Enterprises Private Limited v AST Enterprises Inc.[1], High Court of Delhi held that the jurisdiction of the Court to entertain Section 9 application will not be ousted merely because the seat of arbitration is outside India. It held that to oust the jurisdiction of this Court, a specific 'ouster clause' or 'exclusive jurisdiction clause' is required, which admittedly was absent in the case before the Court. The Court held that even though exercise of powers us/ 9 is premised on the underlying principles of Orders XXXVIII and XXXIX of the C.P.C., yet the Court is not unduly bound by the text of these provisions. On the facts of the case, the Court directed the Appellant to either deposit the entire claimed amount in cash with the Registry of the Court or to furnish a bank guarantee. To balance the equities, the Court directed that in the event the respondent-petitioner's claim is rejected by the arbitral tribunal, then the appellant shall be entitled to claim reimbursement of bank guarantee charges as well as loss of interest that it may have incurred in depositing the money or in providing the bank guarantee. Section 2(h) Jurisdiction is conferred on an Arbitral Tribunal under the Act only by agreement of parties and not by operation of law In M. Mythrai and Ors. v T. Ramesh and Ors.[2] High Court of Madras held that a reading of the Act would indicate that the framers of the Act have not contemplated the impleadment of Third parties, which is clearly evident from the fact that jurisdiction is conferred on an Arbitral Tribunal under the Act only by agreement of parties and not by operation of law as party is defined in S. 2(h) in relation to the arbitration agreement. The Court held that it is the intention of the law makers to restrict the jurisdiction of an Arbitral Tribunal to the four corners of the Agreement and to persons, who are parties to the Agreement. The Court held that while amendment to Section 8(1) by the amending Act 3 of 2016 has expanded this to include "a person claiming under a party to the Arbitration Agreement" , even such a third party should be one who is claiming under a "party to the Agreement". In the facts of the case, the Court held that agreement by one third party binding herself to the arbitration agreement will not bind other third parties, who were successors in interest from her and who had not given any such consent, and interests in whose favour stood transferred by the consenting third party before she had given her consent. Section 9 Court required to mould relief to secure claim of applicant in arbitral proceedings where Respondent has no assets at all or its assets are fully encumbered In Essar House Private Limited v Arcellor Mittal Nippon Steel India Limited[3] High Court of Bombay held that it cannot be said that the Court is required to dismiss the petition u/s 9 of only on the ground that the opponent has no assets at all or the assets of the opponent are fully encumbered, as that will be against the principles of equitable justice required to be exercised by the Court while exercising powers u/s 9 of the Arbitration Act so as to secure the claim of the applicant in the arbitral proceedings who prima-facie has good chances of succeeding in arbitration. Where default pre-dated the onset of the COVID-19 pandemic, the Petitioner not entitled to relief u/s 9 against termination In Mep Sanjose Talaja Mahuva Road Pvt. Ltd. and Ors. v National Highways Authority of India and Ors.[4], High Court of Delhi High Court of Delhi was dealing with a fact situation where the petitioner had been in prior default, as on 19.02.2020, of its obligations under the concession agreement with the Respondent. The Court held that as default pre-dated the onset of the COVID-19 pandemic, the petitioner would not be entitled to the benefit of Circulars issued by the government/the Respondent giving concession in view of the pandemic, as the said circulars carried the...

Arbitration Court Reckoner : February 2021

Kanika Singh

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