Future-Amazon : Article 227 Can't Be Invoked To Challenge Case Management Orders Of Arbitral Tribunal - Delhi High Court

The Delhi High Court has held that the High Court, in the exercise of jurisdiction under Article 227, cannot dictate to a duly constituted Arbitral Tribunal, the manner and the procedure of carrying out the arbitration proceedings.

On the aspect of the limited scope of interference under Article 227 over Arbitral Tribunal's procedure, Justice Amit Bansal added that there is only a small window for interference with orders passed by the Arbitral Tribunal while exercising jurisdiction under Article 227.

The observations came while the Court dismissed the two petitions moved by the Future Group challenging the two orders passed by the Singapore Arbitration Tribunal. The impugned orders deferred the hearing in the plea filed by Future Group seeking termination of the arbitration proceedings instituted by Amazon. Future Group sought a direction that the the Arbitral Tribunal should first hear its applications to abort the proceedings before final hearing of the matter. Turning down this plea, the High Court said that Article 227 cannot be invoked to challenge the case management orders passed by an Arbitral Tribunal.

"The said window becomes even narrower where the orders passed by the Arbitral Tribunal are procedural in nature. Therefore, this window cannot be used for impugning case management orders passed by the Arbitral Tribunal, which are in the nature of procedural orders. Such orders are completely in the domain and discretion of the Arbitral Tribunal, and include orders relating to the scheduling of the arbitration proceedings or the order in which applications filed by the parties are to be considered or the timelines in relation to the arbitration proceedings," the Court said.

The Court also observed that the arbitrators have a greater flexibility in adopting procedure to conduct the arbitration proceedings as compared to the Civil Court and that such a Tribunal is not bound by the procedure of the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.

"This flexibility would also vest the discretion in the Arbitral Tribunal to decide the manner in which the proceedings are to be conducted, including the order in which the applications filed by the parties are to be considered. For this Court to interfere in the aforesaid issues would be violative of the autonomy vested in the Arbitral Tribunal," it added.

In the plea filed by the Future Group, reliance was placed on an order passed by the Competition Commission of India on December 17, 2021, which had kept the approval granted for Amazon's deal with Future Group in abeyance.

On receipt of the CCI order, an application was moved before the Singapore Tribunal seeking closure of arbitration proceedings stating that any assertion of contractual rights against Future Group by Amazon would be in direct contravention of the CCI order.

Future Group pointed that the schedule that was set down for hearing of the cross-examination of the expert witnesses by the Arbitration Tribunal from 5 to 8 January, 2022, is a complete travesty, averring that the Arbitration Tribunal was informed by the Future Group that during the ongoing proceedings 6 members of its legal team of 12 lawyers attending the case were Covid positive and thus, it was impossible for them to cope with the directions of the tribunal, file submissions and to instruct the concerned counsel on cross examination of the witnesses.

According to Future Group, the impugned orders passed by the Tribunal were illegal and without jurisdiction as being contrary to sec. 18 of the Arbitration and Conciliation Act, therefore, seeking quashing of the same.

The Court was  of the view that there was nothing to suggest that the Arbitral Tribunal had denied equal opportunity to the parties or that the Arbitral Tribunal was not accommodating towards requests of the Future Group.

"Mere fixation of tight timelines or denial of requests for adjournment by the Arbitral Tribunal or deciding the order in which the Arbitral Tribunal considers the applications filed by the parties cannot be reason enough to contend that the orders of the Arbitral Tribunal are perverse or lacking in inherent jurisdiction. Therefore, no exceptional circumstances or perversity have been demonstrated/made out in the petitions or during the hearing to warrant the exercise of jurisdiction by this Court under Article 227 of the Constitution of India," the Court added.

The Court said that just because the hearing of the termination application was scheduled for a date after the hearing of the expert witnesses, it did not mean that the Arbitral Tribunal was not willing to consider the said applications on merits or was discounting the merits of the said applications.

On the submission of Future Group that some of its lawyers had tested positive for COVID-19, and therefore, the preparations for the examinations of witnesses scheduled in January had been adversely affected, the Court added:

"It is to be noted that the COVID-19 pandemic is a reality that the world has been living with for the last two years and may continue to live with for the near foreseeable future. Therefore, the business community at large as well as professionals, including lawyers/law firms, would have to learn to live with this reality and continue with their regular professional and business activities, subject of course, to any regulations that may be imposed by state/national governments. Court hearings as well as hearings in arbitrations have been successfully conducted in this period of two years through the virtual mode."

"A lot of conferences and meetings, where physical presence of parties was required earlier, have now given way to virtual conferences, which have proven to be almost as effective as physical hearings/conferences. Even as of today, when COVID-19 cases are on the rise in India, Courts in the country, including the Supreme Court of India, continue to function, albeit through the virtual mode. Functioning during the COVID-19 pandemic is a reality that lawyers, judges and arbitrators have had to come to terms with."

Further adding that all the parties in the arbitration proceedings are big corporations and have a battery of lawyers representing them before multiple fora, the Court said that even if some of the lawyers had tested positive for COVID-19, it can be duly expected that the parties and their law firms would endeavour to make alternate arrangements.

"An adjournment at the last minute cannot be sought in respect of an international commercial arbitration of this magnitude, involving arbitrators, counsels and experts from different jurisdictions," the Court said.

The Amazon-Future deal has given rise to several rounds of litigation in India. Amazon had invoked arbitration proceedings in Singapore to halt Future Retail's deal with the Reliance group. An emergency award was passed by the Singapore Arbitrator to halt the Future-Reliance deal. This was challenged by FRL in the Delhi High Court. Ultimately, the matter reached the Supreme Court, which approved the emergency award passed by the Singapore Arbitrator.

 

Title: FUTURE RETAIL LTD. Vs. AMAZON.COM NV INVESTMENT HOLDINGS LLC & ORS.

Citation: 2022 LiveLaw (Del) 3

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