Arbitration Cases Weekly Round-Up: 6 November To 12 November, 2022

Arbitrator Cannot Apply 'Trade Usages' Against The Express Understanding Of The Parties: Calcutta High Court

Case Title: M/s. Universal Seaport Private Limited versus The Chairman, Board Of Trustees For The Port Of Kolkata

The Calcutta High Court has held that the arbitrator cannot, while adjudicating the dispute between the parties, apply trade usages against the express intention of the terms of the agreement between the parties.

The bench of Justice Shekhar B. Saraf held that by virtue of Section 28(3) of the A&C Act, an arbitrator can apply trade usages to determine the dispute between the parties, however, the same cannot be applied to the contravention of the contract but only when the latter is silent or ambiguous on some aspect. It held that the jurisprudence on arbitration bows down to party autonomy.

Delhi High Court:

Arbitrator Gets Jurisdiction Only With Respect To 'Notified' Claims; Delay/ Failure to Certify Claim as 'Notified', Does Not Operate As Waiver: Delhi High Court

Case Title: L&T Hydrocarbon Engineering Limited versus Indian Oil Corporation Limited

The Delhi High Court has ruled that an arbitrator gets the jurisdiction only with respect to the claims which are 'notified' by the specified authority, as provided in the arbitration clause, and that if the claims are not notified, they will not form the subject matter of arbitration.

The Single Bench of Justice V. Kameswar Rao held that the procedure of forwarding a panel of names to the other contracting party, to choose its nominee arbitrator from amongst them, is no longer a valid procedure.

Circumstances Mentioned Under Schedule V Do Not Per Se Render The Arbitrator Ineligible: Delhi High Court

Case Title: Bharat Foundry and Engineering Works versus Intec Capital Limited

The High Court of Delhi has held that unlike Schedule VII, the circumstances mentioned under the Vth Schedule do not per se render an arbitrator ineligible to be appointed as arbitrator unless it is established that the arbitrator's neutrality was indeed compromised.

The bench of Justice Manoj Kumar Ohri held that merely because an Arbitrator has been appointed in more than two arbitral proceedings between the parties/their affiliates, the Award cannot be set aside, until a concrete foundation is laid down for doubting the independence and impartiality of the Arbitrator.

When Financial Institution Is A 'Borrower' It Can't Invoke Arbitration Under Section 11 Of SARFAESI Act: Delhi High Court

Case Title: Bell Finvest India Ltd. versus A U Small Finance Bank Limited

The High Court of Delhi has held that a borrower which also happens to be a financial institution cannot resort to arbitration provided under Section 11 of SARFAESI Act.

The bench of Justice Anup Jairam Bhambhani held that Section 11 of SARFAESI Act provides for remedy by way of arbitration only in cases of inter se dispute between the financial institution but does not cover a simple lender-borrower dispute, even if the borrower is a financial institution.

Uttarakhand High Court:

Court Cannot Partly Set Aside Award In Absence Of Manifest And Patent Error, And Without A Finding As To Its Severability: Uttarakhand High Court

Case Title: M/s Ravindra Kumar Gupta and Sons versus Union of India & Ors.

The Uttarakhand High Court has ruled that in the absence of a manifest and patent error in the arbitral award, the Court under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) cannot interfere with the award, by partly upholding it and by disallowing the rest of the claims of the claimant.

The Division Bench of Justices Sanjaya Kumar Mishra and Ramesh Chandra Khulbe observed that the lower court had not given any finding as to whether the claims set aside by it were vitiated by patent illegality and whether they formed a severable part of the award or not.