Arbitration Cases Monthly Round-Up: December 2022

High courts Allahabad High Court: Section 9 Application, Against Cashing Unconditional BG; Court To Consider Only Terms Of BG: Allahabad High CourtCase Title: U.P. Expressways Industrial Development Authority versus M/s. Sahakar Global Ltd.The Allahabad High Court has ruled that while dealing with an application under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking to restrain the invocation or encashment of the Bank Guarantee, the Court is only required to consider the terms of the Bank Guarantee Agreement and not the conditions contained in the main Contract between the parties, in terms of which the guarantee was furnished. The bench of Justices Attau Rahman Masoodi and Om Prakash Shukla held that while dealing with an application under Section 9, the Court is not required to interpret the contract and/or form a prima facie opinion as to whether the beneficiary of the Bank Guarantee has wrongfully invoked the Bank Guarantee. The Court ruled that such an exercise can only be done in a substantive proceeding before the Arbitral Tribunal. Bombay High Court: Participation In Arbitral Proceedings, Does Not Disentitle Party To Challenge Award On Ground Of Unilateral Appointment Of Arbitrator: Bombay High Court Case Title: Naresh Kanayalal Rajwani & Ors. versus Kotak Mahindra Bank Limited & Anr. The Bombay High Court has ruled that merely because a party participated in the arbitration proceedings, it is not disentitled from challenging the arbitral award on the ground that the arbitration proceedings were vitiated due to the unilateral appointment of the Arbitrator by the opposite party, falling foul of Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996 (A&C Act). The bench of Justice Manish Pitale held that Section 12(5) of the A&C Act can be waived only in terms of the proviso to Section 12(5). Clause Merely Providing Departmental Remedies, For Faster Resolution Of Disputes; Does Not Constitute An Arbitration Agreement: Bombay High Court Case Title: M/s. Mehra & Company versus State of Maharashtra The Bombay High Court has ruled that the power of appointment of arbitrator by the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), cannot be deemed to have a precedential value. However, the Court held that the same cannot be a reason to completely ignore the interpretation placed by the High Court in its previous decisions, in respect of the identical clauses contained in the agreement, while dealing with an application under Section 11. The single bench of Justice Sandeep V. Marne ruled that where a clause merely provides for departmental remedies to a contractor for faster resolution of disputes, the same would not constitute an arbitration agreement. A&C Amendment Act of 2015 Applies Even If Arbitration Commenced Prior, In Case It Is Stated That Amendment Act Applies: Bombay High Court Case Title: M/s Skoda Auto Volkswagen India Private Limited versus M/s Commercial Auto Products Private Limited The Bombay High Court has ruled that where an arbitration agreement between the parties provided for the application of the Arbitration & Conciliation Act, 1996 (A&C Act), along with any statutory modification or re-enactment to the A&C Act existing at the time being in force, it constituted an agreement between the parties as contemplated under Section 26 of the A&C (Amendment) Act, 2015. Thus, the bench of Justices Mangesh S. Patil and Abhay S. Waghwase held that the parties were bound by the 2015 Amendment Act, notwithstanding the fact that the arbitral proceedings commenced prior to the cut-off date, i.e., 23.10.2015. Application Of Hudson's Formula For Computation Of Loss In Construction Contract, Not Unreasonable: Bombay High Court Case Title: The State of Maharashtra & Ors. versus Bharat Constructions The Bombay High Court has ruled that while deciding the petition under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), the Court is not precluded from considering the findings and conclusions contained in the dissenting opinion of a minority member of the Arbitral Tribunal. The bench of Justice Manish Pitale observed that the majority opinion in the arbitral award, while computing the compensation to be awarded to the claimant for the loss suffered by it, had referred to the Hudson’s formula. Referring to the Supreme Court’s decision in McDermott International Inc. versus Burn Standard Co. Ltd. & Ors. (2006), the High Court held that Hudson’s formula is widely accepted in construction contracts for computation of losses. Thus, the award passed by the majority members of the Arbitral Tribunal could not be said to be unreasonable so as to warrant interference under Section 34. Court Empowered To Grant Money Claim Under Section 9 Of A&C Act On Basis Of Admitted Claim:...

Arbitration Cases Monthly Round-Up: December 2022

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