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Arbitration Cases Weekly Round-Up: 15 January to 21 January 2022

Parina Katyal
22 Jan 2023 9:30 AM GMT
Arbitration Cases Weekly Round-Up: 15 January to 21 January 2022

Supreme Court:

12 Months Time Limit Under Section 29A Arbitration Act Not Applicable To International Commercial Arbitration: Supreme Court

Case Title: TATA Sons Pvt Ltd versus Siva Industries and Holdings Ltd

The Supreme Court has held that the time limit of twelve months as prescribed in Section 29A of Arbitration and Conciliation Act is not applicable for international commercial arbitration.

"In terms of the amended provisions of Section 29A, arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of competition of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations.", the bench of CJI D Y Chandrachud and Justice P S Narasimha observed.

The court also added that Section 29A(1), as amended, is remedial in nature, and thus it is applicable to all arbitral proceedings pending on the effective date i.e., 30 August 2019.

Bombay High Court:

Issue Whether Main Claim Is Time Barred, Is An Issue On Merits; Must Be Decided In Arbitral Proceedings: Bombay High Court

Case Title: TLG India Pvt Ltd versus Rebel Foods Pvt Ltd

The Bombay High Court has ruled that while the limitation period for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking appointment of arbitrator, is to be examined by the Court, the limitation aspect of the substantive claims is to be looked into only by the arbitral tribunal and not by the Court. The bench of Justice Bharati Dangre added that the only exception to this is, if the claim being referred to arbitration is hopelessly barred by limitation, which is apparent from the admitted facts and documents.

The Court further remarked that, “Seeking adjudication of claims after a long gap of time definitely causes more injustice than justice, particularly when certain rights are vested in the parties and it would become greatly impossible to dislodge these rights”.

‘Limitation’ Doesn’t Involve Any “Basic Notions Of Morality Or Justice”, For Setting Aside Award: Bombay High Court

Case Title: Thomas Cook (India) Limited versus Red Apple Chandrarat Travel

The Bombay High Court has ruled that the ground of limitation, being a mixed question of law and fact, can never be a ground which would involve any “basic notions of morality or justice” for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Court reckoned that the arbitral tribunal had concluded that the claims raised by the claimant were not barred by limitation, by recording a finding of fact that there was a running account between the parties. The bench of Justice G. S. Kulkarni ruled that the said finding of fact cannot be re-examined by appreciating evidence under Section 34 of the A&C Act.

Delhi High Court:

Award Of Costs By Arbitrator, Not Containing Quantification And Reasons, Is Arbitrary: Delhi High Court

Case Title: Union of India & Anr. versus Alcon Builders and Engineer Pvt. Ltd

The Delhi High Court has ruled that the mandate contained in Section 31(3) of the Arbitration and Conciliation Act, 1996 (A&C Act), as per which an arbitral award shall state the reasons on which it is based, must pervade every aspect of the award, including the award of costs.

Awarding costs by a stroke of the pen, without stating reasons therefor, would fly in the face of section 31(3), apart from being opposed to well accepted canons of fairness and justice”, the bench of Justice Anup Jairam Bhambhani remarked. The Court thus set aside the award of costs made against the award debtor, holding that the same was arbitrary since it was unreasoned and did not contain any quantification.

Delivery Of Arbitration Award To Employee/ Agent Of Party, Not A Valid Delivery Under Arbitration Act: Delhi High Court

Case Title: Monika Oli versus M/s CL Educate Ltd.

The Delhi High Court has ruled that delivery of arbitral award, to be effective under the Arbitration and Conciliation Act, 1996 (A&C Act), must be made to a person who has direct knowledge of the arbitral proceedings. The bench of Justice Chandra Dhari Singh remarked that the word ‘party’ in Section 34(3) of the A&C Act means party to the arbitral proceedings and does not include an agent of the party as well.

The Court further held that, delivery of the arbitral award to the employee of an entity in which the award debtor is a shareholder but the arbitral dispute does not pertain to that entity, would not constitute as proper delivery in terms of the A&C Act.

Wrong Application Of Law Not Leading To Perversity; Arbitral Award Cannot Be Set Aside: Delhi High Court

Case Title: Bright Simons versus Sproxil Inc & Anr.

The Delhi High Court has ruled that merely because the arbitrator had wrongly applied the .IN Domain Name Dispute Resolution Policy (INDRP Policy), while adjudication a dispute over domain names under the said Policy, the award cannot be set aside in the absence of perversity.

The bench of Justice Chandra Dhari Singh ruled that the terminology used by the arbitrator in the award, that the party had failed to prove its claim “beyond doubt”, cannot be equated with the legal term ‘beyond reasonable doubt’, as is used in the criminal trial. Thus, the Court rejected the argument that the standard of proof imposed by the arbitrator violated the fundamental principles of Indian law.

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