Arbitration Cases Weekly Round-Up: 4 December To 10 December, 2022

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.

Calcutta High Court:

Section 9 Of The A&C Act Is A Provision In Aid Of The Arbitration, Applies To Foreign Seated Arbitration Also: Calcutta High Court Reiterates

Case Title: Chemex Oil Private Limited versus Seastarr International Pvt. Ltd.

The High Court of Calcutta has held that Section 9 of the A&C Act that provides for interim relief by the Court, applies to foreign seated arbitration as well.

The bench of Justice Shekhar B. Saraf held that Section 9 is a provision that is in aid of the arbitration proceedings in contrast to other provisions of Part-I of the A&C Act that relate to the conduct of the arbitration proceedings, and that it has been mandated to apply to foreign seated arbitrations as well.

Delhi High Court:

Disclosure By The Arbitrator Is Not A Discretionary But A Mandatory Requirement, Non-Disclosure Vitiates The Award: Delhi High Court

Case Title: Ram Kumar versus Shriram Transport Finance Co. Ltd.

The High Court of Delhi has held that disclosure by the arbitrator under Section 12 r/w 6th Schedule of the A&C Act is not a discretionary but a mandatory requirement. The Court held that the failure of the arbitrator to disclose a fact that might give rise to a justifiable doubt as to his impartiality vitiates the arbitral proceedings as well as the consequent award.

The bench of Justices Vibhu Bakhru and Amit Mahajan set aside an arbitral award passed without the arbitrator making the necessary disclosure. The Court held that disclosure is a necessary safeguard to ensure the integrity and efficacy of arbitration, therefore, the same cannot be an option but an obligation.

High Court Cannot Review The Order Passed Under Section 11 Of The A&C Act: Delhi High Court

Case Title: Kush Raj Bhatia versus M/S DLF Power & Services Ltd.

The High Court of Delhi has held that the High Courts cannot review an order passed under Section 11 of the A&C Act as the Act does not contain any provision for review.

The bench of Justice Neena Bansal Krishna held that power of review is not an inherent power but the creation of a statute, therefore, it cannot be exercised in absence of a provision. The Court held that unlike the Supreme Court, which by virtue of Article 137 enjoys the inherent power of review, there is no such power conferred on a High Court. Therefore, once an application for the appointment of the arbitrator has been heard and rejected, the same cannot be re-opened by an indirect method i.e., through a review petition.

Requirement Of Notice Of Arbitration Is Not A Mere Technicality: Delhi High Court

Case Title: Rahul Jain & Ors. versus Atul Jain & Ors.

The High Court of Delhi has held that a notice of arbitration is sine qua non for commencing arbitral proceedings, and that invalidity of invocation goes to the very root of the matter and hits the jurisdiction of the Court to entertain applications arising out of the arbitration proceedings.

The bench of Justice Prateek Jalan held that requirement of notice of arbitration is not a mere technicality and its non-compliance cannot be ignored merely because the instrument was a family settlement agreement.

An Issue As To Which Party Would Bear The GST Expenses Under The Agreement Is Arbitrable: Delhi High Court

Case Title: Spectrum Power Generation Limited versus GAIL (India) Limited

The High Court of Delhi has held that an issue that purely relates to the inter se liability of the parties regarding the burden of GST is not related to the taxing power of the State, therefore, the same is arbitrable.

The bench of Justice Yashwant Varma held that a dispute surmised on the Pricing Clause in an agreement wherein the inter se liabilities of the parties regarding the payment of taxes are given, can be referred to arbitration.

Jammu & Kashmir and Ladakh High Court:

[Arbitration & Conciliation Act] Proceedings U/S 9 Interim In Nature, Not Meant For Enforcement Of Conditions Of Contract: JKL High Court

Case Title: M/s Doon Caterers versus UOI & Ors.

The Jammu and Kashmir and Ladakh High Court has ruled that final relief cannot be granted under Section 9 of the Arbitration and Conciliation Act, 1996 as proceedings under the said provision are of interim measure and are not meant for enforcement of the conditions of the contract, which can be done only when the rights of the parties are finally adjudged or crystallized by the Arbitral Tribunal.

Jharkhand High Court:

Fresh Notice Under Section 21 Not Required To Be Issued For Appointment Of Substitute Arbitrator: Jharkhand High Court

Case Title: M/s. Central Coalfields Limited versus Eastern India Powertech Ltd.

The Jharkhand High Court has ruled that a party is not required to make a fresh request for appointment of substitute arbitrator by issuing a notice under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act), if notice under Section 21 was issued for appointment of the arbitrator sought to be substituted.

The bench of Justice Sujit Narayan Prasad held that once an application under Section 11(6) is filed by the party before the High Court, seeking appointment of arbitrator, the jurisdiction of the parties to appoint the arbitrator as per the arbitration clause is seized.

Therefore, once the mandate of the arbitrator appointed by the High Court under Section 11(6) terminates, for appointment of a substitute arbitrator, the party is not required to again make a request by issuing a notice under Section 21. The applicant can directly file an application before the High Court under Section 11(6), seeking appointment of the substitute arbitrator.

Kerala High Court:

Arbitration Barred In Respect Of Matters Within Exclusive Jurisdiction Of TDSAT Under TRAI Act: Kerala High Court

Case Title: A. Salim versus M/s Asianet Satellite Communication Ltd.

The Kerala High Court has held that arbitration under the Arbitration and Conciliation Act, 1996 is barred in respect of matters which are within the exclusive jurisdiction of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act).