Antrix Corp.Ltd. vs. Dewas Multimedia Private Limited Arbitration Petition No. 20 of 2011, Decided on May 10, 2013
Brief Facts
of the case:
In this case as per the Arbitration clause the arbitration
proceedings was to be held in accordance with the rules and procedures of the
International Chamber of Commerce (ICC) or UNCITRAL.
Respondent invoked the jurisdiction of the ICC. The Petitioner subsequently
invoked the Arbitration Agreement in accordance with the UNCITRAL Rules on the
ground that Respondent had invoked ICC Rules unilaterally, without allowing the
Petitioner to exercise its choice.
Application under Section 11(4) read with Section 11(10) of the 1996
Act, came to be filed by the Petitioner, inter alia, for a direction upon
Respondent to nominate its Arbitrator in accordance with the Agreement, and the
UNCITRAL Rules, to adjudicate upon the disputes, which had arisen between the
parties and to constitute the Arbitral Tribunal and to proceed with the
Arbitration.
In the above
circumstances the question before the Hon’ble Court was whether Section 11 of
the 1996 Act could be invoked when the ICC Rules had already been invoked by
one of the parties? Or Whether Section 11 of the 1996 Act empowers the Chief
Justice to constitute a Tribunal in supersession of the Tribunal already in the
stage of constitution under the ICC Rules, notwithstanding the fact that one of
the parties had proceeded unilaterally in the matter.
The Hon’ble
Court observed:
“In order to answer the said
question, we will have to refer back to the provisions relating to arbitration
in the agreement entered into between the Petitioner and the Respondent on 28th
January, 2005. Article 19 in clear terms provides that the rights and
responsibilities of the parties under the Agreement would be subject to and
construed in accordance with the laws in India, which, in effect, means the
Arbitration and Conciliation Act, 1996. Article 20 of the Agreement
specifically deals with arbitration and provides that disputes between the
parties regarding the provisions of the Agreement or the interpretation
thereof, would be referred to the Senior Management of both the parties for
resolution within three weeks, failing which the dispute would be referred to
an Arbitral Tribunal comprising of three Arbitrators. It was also provided that
the seat of arbitration would be New Delhi in India and the arbitration would
be conducted in accordance with the rules and procedures of the International
Chamber of Commerce or UNCITRAL. [Para 25]
The Respondent has invoked
the provisions of Article 20 of the Agreement and has approached the ICC for
the appointment of an Arbitral Tribunal in accordance with the rules of
arbitration and, pursuant thereto, the Respondent appointed its nominee
Arbitrator. In fact, after the Respondent had invoked the arbitration clause,
the Petitioner came to know of the same from the Respondent's request for
arbitration which was forwarded by the ICC to the Petitioner on 5th July, 2011.
By the said letter, the Petitioner was also invited by the ICC to nominate its
nominee Arbitrator, but, as mentioned hereinbefore, instead of nominating its
Arbitrator, the Petitioner once again requested Respondent to convene the
Senior Management Meet on 27th July, 2011, in terms of the
Agreement. Simultaneously, the Petitioner appointed a former Judge of this
Court, Mrs. Sujata V. Manohar, as its Arbitrator and informed the ICC Court
accordingly. However, disputes were also raised by the Petitioner with the ICC
that since the Agreement clearly intended that the arbitration proceedings
would be governed by the Indian law, which was based on the UNCITRAL model, it
was not available to the Respondent to unilaterally decide which of the rules
were to be followed. [Para 26]
The Court held:
“….in our view, once the Arbitration Agreement had been invoked by Respondent
and a nominee Arbitrator had also been appointed by it, the Arbitration
Agreement could not have been invoked for a second time by the Petitioner,
which was fully aware of the appointment made by the Respondent. It would lead
to an anomalous state of affairs if the appointment of an Arbitrator once made,
could be questioned in a subsequent proceeding initiated by the other party
also for the appointment of an Arbitrator. …while the Petitioner was certainly
entitled to challenge the appointment of the Arbitrator at the instance of Respondent,
it could not do so by way of an independent proceeding under Section 11(6) of
the 1996 Act. While power has been vested in the Chief Justice to appoint an
Arbitrator under Section 11(6) of the 1996 Act, such appointment can be
questioned under Section thereof. In a proceeding under Section 11 of the
1996 Act, the Chief Justice cannot replace one Arbitrator already appointed in
exercise of the Arbitration Agreement. [Para 31]
“Sub-Section (6) of Section 11
of the 1996 Act, quite categorically provides that where the parties fail to
act in terms of a procedure agreed upon by them, the provisions of Sub-Section
(6) may be invoked by any of the parties. Where in terms of the Agreement, the
arbitration clause has already been invoked by one of the parties thereto under
the I.C.C. Rules, the provisions of Sub-section (6) cannot be invoked again,
and, in case the other party is dissatisfied or aggrieved by the appointment of
an Arbitrator in terms of the Agreement, his/its remedy would be by way of a
petition under Section 13, and, thereafter, under Section 34 of the 1996 Act.
[Para 32]
“The law is well settled
that where an Arbitrator had already been appointed and intimation thereof had
been conveyed to the other party, a separate application for appointment of an
Arbitrator is not maintainable. Once the power has been exercised under the
Arbitration Agreement, there is no power left to, once again, refer the same
disputes to arbitration under Section 11 of the 1996 Act, unless the order
closing the proceedings is subsequently set aside.”[Para 33]
On the facts of
the case the SC observed:
“In view of the language of
Article 20 of the Arbitration Agreement which provided that the arbitration
proceedings would be held in accordance with the rules and procedures of the
International Chamber of Commerce or UNCITRAL, Respondent was entitled to
invoke the Rules of Arbitration of the ICC for the conduct of the arbitration
proceedings.”
“Article 19 of the Agreement
provided that the rights and responsibilities of the parties thereunder would
be subject to and construed in accordance with the laws of India. There is,
therefore, a clear distinction between the law which was to operate as the
governing law of the Agreement and the law which was to govern the arbitration
proceedings. Once the provisions of the ICC Rules of Arbitration had been
invoked by Devas, the proceedings initiated thereunder could not be interfered
with in a proceeding under Section 11 of the 1996 Act. The invocation of the
ICC Rules would, of course, be subject to challenge in appropriate proceedings
but not by way of an application under Section 11(6) of the 1996 Act.
“Where the parties had
agreed that the procedure for the arbitration would be governed by the ICC
Rules, the same would necessarily include the appointment of an Arbitral
Tribunal in terms of the Arbitration Agreement and the said Rules. Arbitration
Petition No.20 of 2011 under Section 11(6) of the 1996 Act for the appointment
of an Arbitrator must, therefore, fail and is rejected, but this will not
prevent the Petitioner from taking recourse to other provisions of the
aforesaid Act for appropriate relief.”
The Court also
noted following case laws:
Gesellschaft Fur Biotechnologische Forschun GMBH Vs. Kopran Laboratories
Ltd. & Anr. [(2004) 13 SCC 630], a learned Single Judge of the Bombay High
Court, while hearing an appeal under Section 8 of the 1996 Act, directed the
claims/disputes of the parties to be referred to the sole arbitration of a
retired Chief Justice with the venue at Bombay, despite the fact that under the
Arbitration Agreement it had been indicated that any disputes, controversy or
claim arising out of or in relation to the Agreement, would be settled by
arbitration in accordance with the Rules of Reconciliation of the International
Chamber of Commerce, Paris, with the venue of arbitration in Bombay,
Maharashtra, India. This Court held that when there was a deviation from the
methodology for appointment of an Arbitrator, it was incumbent on the part of
the Chief Justice to assign reasons for such departure.
Som Datt Builders Pvt. Ltd.
Vs. State of Punjab [2006 (3) RAJ 144 (P&H)], the Division Bench of the
Punjab & Haryana High Court held, and we agree with the finding, that when
the Arbitral Tribunal is already seized of the disputes between the parties to
the Arbitration Agreement, constitution of another Arbitral Tribunal in respect
of those same issues which are already pending before the Arbitral Tribunal for
adjudication, would be without jurisdiction.
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