Arbitration Cases Monthly Round-Up: June 2023

High Courts Allahabad High Court: Facilitation Council Which Was The Conciliator Under MSMED Act, Can Arbitrate The Dispute; Bar Contained In S. 80 Of Arbitration Act Not Applicable: Allahabad High Court Case Title: Bata India Limited & Anr. vs U.P. State Micro and Small Enterprise Facilitation Council & Anr. The Allahabad High Court has ruled that the discretion given to Facilitation Council under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) in respect of selection of forum for arbitration between the parties, is absolute and has overriding effect over any other law. In exercise of the said discretion, the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act), including the prohibition contained in Section 80, will have no application, the court has ruled. Therefore, the court held that in the event the conciliation proceedings carried out by the Council under Section 18(2) of theMSMED Act fail, the Council can itself proceed to arbitrate the dispute between the parties. Bombay High Court: Arbitration: Application For Amendment Of Statement Of Claims Can Be Opposed On All Available Grounds, Including Ground Of Delay: Bombay High Court Case Title: Kavis Fashions Private Limited vs Dimple Enterprises and others The Bombay High Court has ruled that the opposite party is entitled to oppose the application for amendment of Statement of Claims on all available grounds. The bench of Justice Manish Pitale rejected the contention that under Section 23(3) of the Arbitration and Conciliation Act, 1996 (A&C Act), a party opposing the amendment application can oppose the same only on the ground of delay in making the amendment. The court remarked that Section 23(3) uses the words ‘having regard to the delay in making it’ in contradistinction to the words ‘having regard only to’. Thus, the opposite party is entitled to oppose the application for amendment on all available grounds, including the ground of delay, the bench said. Mere Filing Of S. 7 Application Under IBC Does Not Bar Application For Appointment Of Arbitrator: Bombay High Court Case Title: M/s Sunflag Iron & Steel Co. Ltd vs M/s. J. Poonamchand & Sons The Bombay High Court has ruled that mere filing of an application under Section 7(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) is not enough to invoke the bar of Section 238 of the Code. Thus, the same would not bar the court from entertaining an application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (A&C Act) for appointment of Arbitrator, the court said. The bench of Justice Avinash G. Gharote held that there is no inconsistency between the provisions of the A&C Act and the IBC, since the provisions of Section 238 of the IBC would come into play only after an order has been passed by the Adjudicating Authority under Section 7(5) of the Code. Absence Of A Specific Clause Under GAFTA Arbitration Rules Doesn’t Bar Arbitrator From Deciding The Challenge Made To Its Jurisdiction: Bombay High Court Case Title: Arbaza Alimentos Ltda vs MAC Impex and others The Bombay High Court has reiterated that a general reference to a standard form of contract would be enough for incorporation of an arbitration clause. The court was dealing with a petition seeking execution of a foreign arbitral award passed in the arbitral proceedings conducted under the ‘Grain and Feed Trade Association (GAFTA) Simple Disputes Arbitration Rules No.126.’ The bench of Justice Manish Pitale further dismissed the contention of the award-debtor that the arbitrator could not have pronounced upon its own jurisdiction since the ‘GAFTA Simple Disputes Arbitration Rules No.126’ do not provide a power to the arbitrator to decide his own jurisdiction. The bench said that a specific clause under the said Rules would not be necessary for deciding the challenge made to the jurisdiction of the arbitrator, as the said issue goes to the very root of the matter. It added that a decision on the said issue is necessary before proceeding to consider the claims / counter-claims raised by the parties, on merits. 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...

Arbitration Cases Monthly Round-Up: June 2023

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