Trace Your Case

Category: Appointment and Challenge

Categories
Appointment and Challenge

Amazon.Com NV Investment Holdings LLC v. Future Coupons Private Limited & Ors, 2021 SCC OnLine Del 1279.

AMAZON.COM NV INVESTMENT V. FUTURE COUPONS

Amazon.Com NV Investment Holdings LLC v. Future Coupons Private Limited & Ors, 2021 SCC OnLine Del 1279.

ISSUE:

  • What is the legal status of an Emergency Arbitrator (EA), i.e. whether the EA is an arbitrator in terms of the Act and whether the interim order of an EA is an order under Section 17(1) and is enforceable under Section 17(2) of the Act?
  • Whether the EA misapplied the Group of Companies doctrine, which arguably applies only to proceedings under Section 8 of the Act?
  • Whether the interim order of EA is null and void as it was passed without jurisdiction

RULE:

  • Emergency arbitral awards are enforceable under Section 17(2) of the Arbitration and Conciliation Act, 1996 of India (the Act) as an interim order of an arbitral tribunal made under Section 17(1) of the Act.

FACTS:

  • Amazon and Future Coupons Private Limited (FCPL) entered into a shareholder agreement in 2019, which contained an arbitration clause.
  • In 2020, Future Retail announced a merger with Reliance Retail.
  • Amazon filed an emergency arbitration case in Singapore, seeking to prevent Future Retail from going ahead with the merger.
  • The emergency arbitrator ruled in favor of Amazon and granted an interim injunction restraining Future Retail from proceeding with the merger.
  • Future Retail challenged the emergency arbitral award in the Delhi High Court.
  • The Supreme Court of India overturned the Delhi High Court’s order and allowed the emergency arbitral award to be enforced.

HELD:

  • The emergency arbitrator had jurisdiction to hear the dispute.
  • The emergency arbitral award was valid and enforceable.
  • Emergency arbitral awards are enforceable under Section 17(2) of the Arbitration and Conciliation Act, 1996 as an interim order of an arbitral tribunal made under Section 17(1) of the Act.
  • In other words, the Supreme Court held that emergency arbitral awards are enforceable in India, even if the arbitration agreement is governed by foreign law.
  • The Court also reinforced the principle of party autonomy in arbitration, as it upheld the right of parties to agree to an emergency arbitration procedure.
  • The Supreme Court’s decision in this case is a significant development in Indian arbitration law.
  • It provides businesses with more certainty and predictability in the enforcement of arbitral awards, and it makes India a more attractive destination for international arbitration.
Categories
Appointment and Challenge

Entertainment City Ltd. v. Aspek Media (P) Ltd., 2020 SCC OnLine Del 2648

ENTERTAINMENT CITY LTD V. ASPEK MEDIA PRIVATE LTD

Entertainment City Ltd. v. Aspek Media (P) Ltd., 2020 SCC OnLine Del 2648

ISSUE:

  • Whether the fees charged by the Arbitrator are subject to the statutory limits stipulated in the fourth schedule of the Arbitration and Conciliation Act 1996?

RULE:

  • Section 14 of the Arbitration and Conciliation Act 1996 deals with the resignation and termination of appointed arbitrators on the grounds of inability to perform duties de jure or de facto or any such reasons.

FACTS:

  • The arbitral disputes arising between the petitioner and the respondent for appointment of an arbitrator to arbitrate on the disputes. Vide order, dated 21th December, 2018, a learned retired Judge of this Court was appointed as Sole Arbitrator. The said order did not fix any fees, as payable to the learned Sole Arbitrator. The contract/agreement, dated 14th August, 2014, between the petitioner and the respondent, too, contained an arbitral clause, but does not fix any fees as payable to the Arbitrator.
  • A claim of Rs. 71,76,11, 202 with an 18% interest was filed by the Respondent, and a counter-claim of Rs. 64,34,20,140 was filed by the Petitioner. The Learned Sole Arbitrator heard the parties and issued an award, for which the Petitioners prayed for terminating the mandate of the Arbitrator, especially relating to the fees being charged by the Arbitrator under Section 14 of the Act.
  • The matter was appealed before the High Court of Delhi.

HELD:

  • The High Court of Delhi held that Section 14 deals with situations where there is an impossibility to act, where, on the part of the Learned Sole Arbitrator, the mandate is terminated. The Court referred to Section 11(4) of the Act which empowers the Court to frame rules for the purpose of determining the fees of the arbitral authorities, taking into consideration the rates mentioned in the Fourth Schedule of the Act.
  • The Court further held that the rates fixed in the fourth schedule of the Act are not necessarily binding on the Arbitrator in the present matter, and the Petitioners did not insist on a fee at the time of appointment, and thus it is not up to the Petitioners to seek a termination of the mandate of the Arbitrator at this stage.
Categories
Appointment and Challenge

DSC Ventures (P) Ltd. v. Ministry of Road Transport & Highways, 2020 SCC OnLine Del 669

DSC VENTURES PVT LTD V. MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

DSC Ventures (P) Ltd. v. Ministry of Road Transport & Highways, 2020 SCC OnLine Del 669

ISSUE:

  • Whether a party can appoint an arbitrator after the expiry of 30 days from the date of demand to do so, in a case falling under Section 11(6) of the Arbitration and Conciliation Act 1996?

RULE:

  • Section 11(6) of the Arbitration and Conciliation Act 1996 reads that when a party has failed to act as required by procedure, or when the parties fail to reach an amicable solution, they may request the Supreme Court or as the case may be, the High Court to take necessary steps or direct orders, unless the agreement between the disputing parties prescribes other means for the same.

FACTS:

  • The petitioner and respondent entered into a Concession Agreement, dated 8th May, 2003, whereunder the respondent was to convert an existing 2-lane highway, (NH-6) in the state of Chhattisgarh, into a 4-lane highway. Disputes arose between the two parties, and clause 19.2 (a) of the Concession Agreement provided for reference of disputes to a three member arbitral tribunal, if efforts at resolution, by amicable settlement, were to fail.
  • Attempts, at amicable settlement of the disputes between the petitioner and respondent, failed. On 23rd March, 2007, the petitioner appointed its nominee arbitrator and, on 18th April, 2007, the respondent did likewise.
  • On 24th February, 2020, before the award was announced, unfortunately, Mr. S.C. Sharma, the learned arbitrator appointed by the respondent, expired. From this unfortunate occurrence, emanates the present dispute.
  • On the ground that, reading Section 15 (2), along with Section 11 (4) of the 1996 Act, the time of thirty days, as available with the respondent, for appointing a substitute arbitrator in place of Mr. S.C. Sharma, had expired, the petitioner has moved the present petition, under Section 11 (6) of the 1996 Act, praying that this Court should appoint a substitute arbitrator, in place of Mr. S.C. Sharma.
  • During the pendency of these proceedings, on 8th June, 2020, the respondent appointed Mr. Manoj Kumar, as its substitute arbitrator, in place of Mr. S.C. Sharma.

HELD:

  • The High Court of Delhi dismissed the petition and held that the Arbitration Clause in the present case clearly specified that issuance of a notice by the Petitioner to the Respondent was required for the appointment of an Arbitrator, and in the given case, no such notice was given by the Petitioner, thus the Petitioner could not press on the Respondents right to appoint a substitute arbitrator.
  • The Court also held that the action of the Respondent appointing a substitute arbitrator even after 30 days would not go unnoticed given the restrictions laid down due to COVID-19.
Categories
Appointment and Challenge

HRD Corpn. v. GAIL (India) Ltd., (2018) 12 SCC 471

HRD CORPORATION V. GAIL INDIA LTD

HRD Corpn. v. GAIL (India) Ltd., (2018) 12 SCC 471

ISSUE:

  • Whether Justice Lahoti should be removed as an Arbitrator under Items 1, 8 and 15 of the seventh schedule of the Arbitration and Conciliation Act 1996?
  • Whether Justice Doabia should be removed as an Arbitrator under Items 1, 15 and 16 of the Act?

RULE:

  • The IBA Guidelines on Conflicts of Interest in International Arbitration lay down the general principles on the appointment of an arbitrator, wherein, it is mandated that every arbitrator shall be impartial and independent and shall remain so until the final award has been declared. The Guidelines also state that an Arbitrator must also decline said appointments if he/she has doubts regarding the ability to be impartial and independent.

FACTS:

  • The Respondents entered into a contract with the Appellants for the supply of wax, produced at the respondents plant. The Apellants later contended that the Respondents had wrongfully withheld the wax supplies and thus, invoked the arbitration clauses of the general agreement signed between both parties. Since three arbitrations had already taken place, the current dispute is a matter in relation to the fourth arbitration.
  • The Appellants appointed Justice K. Ramamoorthy and the Respondents appointed Justice Doabia as arbitrators respectfully. The two parties also mutually appointed Justice KK Lahoti as the presiding arbitrator. After Justice K. Ramamoorthy withdrew from the case, Justice Mukul was appointed to Appellants.
  • The Appellants challenged the appointment of Justice Doabia, stating that he had presided and rendered an award in another dispute between the two parties, and prayed that he must be removed as an arbitrator. Justice Lahoti’s appointment was also challenged since he was an advisor to the Respondents in a previous matter.
  • Justice Lahoti and Justice Doabia stated that they should be entitled to continue with the arbitration proceedings, and Justice Mugdal held that Justice Doabia’s appointment must be terminated whereas Justice Lahoti’s appointment was not to be challenged. The High Court dismissed the petitions, and the matter was then appealed to the Supreme Court.

HELD:

  • The Apex Court also dismissed the challenges regarding the appointments of Justice Doabia and Justice Lahoti and emphasized the difference between the fifth and seventh schedules of the Act in pursuance to the 2016 amendment. The Court stated that since in this case the Arbitral Tribunal did not declare an award, challenges pertaining to the fifth schedule could not be delved into by the Court.
  • The challenge regarding Justice Lahoti and Justice Doabia’s appointments were dismissed and the dispute which Justice Lahoti had delivered an opinion upon was not in concern with the present dispute at hand, and Items 8 and 15 could not stand as eligible arguments. The Court held that Justice Doabia could not be disqualified by the fact that he had rendered an award in a different dispute between the two parties.
Categories
Appointment and Challenge Non Signatories

Pravin Electricals Pvt Ltd v. Galaxy Infra and Engineering Pvt Ltd., 2021 SCC Online SC 190.

ISSUE:

Whether the party has filed a complaint with the proper High Court?

Whether an arbitration agreement exists for the arbitrator to resolve? - Whether the party, who has applied for reference and is a party to such agreement, be entitled to a more thorough assessment?

RULE:

The scope of judicial intervention in the determination of the validity of an arbitration agreement is limited.

Subscribe to Read More.
Login Join Now
Categories
Appointment and Challenge

Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665

VOESTALPINE SCHIENEN GMBH v. DELHI METRO RAIL CORPORATION LTD.

Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665

ISSUE:

  • Whether the Panel of Arbitrators by DMRC is in violation of Section 12(5) of the Arbitration and Conciliation Act 1996?

RULE:

  • Section 12(5) of the Arbitration and Conciliation Act 1996 holds that a person would be rendered ineligible to be appointed arbitrator or part of an Arbitral Tribunal if he/she stands to hold a relationship with either of the disputing parties.

FACTS:

  • The Respondents (DMRC) awarded a contract to the Plaintiffs (Voestalpine) for the supply of rails. The General Contract contained an arbitration clause which stated that particular procedure which was to be followed for the constitution of the Arbitral Tribunal in case of a dispute between the contracting parties.
  • The Arbitration clause specifically stated that the Respondents would forward five names to the Petitioners and they would have to choose its nominee arbitrator from the said panel. On forwarding the names, the Petitioners did not accept the same and argued that the panel is contrary to Section 12(5) of the Act.
  • The Respondents then filed a suit for the appointment of an independent arbitrator or tribunal. The same was heard before the Supreme Court of India.

HELD:

  • The Supreme Court held that the selection of retired engineers or PSU’s did not violation Section 12(5) of the Arbitration Act, and the Court rejected the contention that government entities and PSU’s were a conflict of interest in being arbitrators or part of the Arbitral Tribunal.
  • The Court stated, forming an important precedent, that in disputes in relation to Government Contracts, private parties would not be able to object the process of nomination of Arbitrators by the Government entity, unless they were absolutely able to prove a conflict of interest.
Categories
Appointment and Challenge Arbitrability

Swiss Timing Ltd. vs. Organizing Committee, Commonwealth Games 2010 Delhi, (Arbitration Petition No. 34 of 2013)

SWISS TIMING LTD. V. ORGANIZING COMMITTEE, COMMONWEALTH GAMES 2010 DELHI

Swiss Timing Ltd. v. Organizing Committee, Commonwealth Games 2010 Delhi, (Arbitration Petition No. 34 of 2013)

ISSUE:

  • Whether a dispute involving allegations of fraudulent, corrupt, collusive or coercive practice be settled by arbitration?

RULE:

  • Allegations of fraud and other malpractices are arbitrable, but the arbitral tribunal cannot deal with a case of serious fraud and its jurisdiction is merely limited to determining the issue of simpliciter fraud.

FACTS:

  • The Petitioner, a Swiss company, and the Respondent entered into an agreement in 2010 to provide the time, score, outcome, and support services necessary to hold the Commonwealth Games in India.
  • The Petitioner initiated arbitration pursuant to clause 38 of the Contract after alleging that the Respondent had failed to make the payments required by the Contract.
  • The Respondent failed to nominate its arbitrator on the grounds that Swiss Timing Ltd. had broken a warranty that it would not engage in corrupt, fraudulent, collusive, or coercive practices, which it claimed was evidenced by the criminal cases pending against the officials of Swiss Timing Ltd.
  • The Petitioner approached the Supreme Court under Section 113 of the Arbitration and Conciliation Act, 1996 Act, for the constitution of the arbitral tribunal.

HELD:

  • The Hon’ble Apex Court held that the allegations of fraud can be determined by arbitration, where an arbitration agreement exists between the parties.
  • It was also observed by the Hon’ble Court that initiation of a criminal case cannot be a reason for denying arbitration.
  • The Court further held that the contention of substantive Contract being void/voidable is not a bar to arbitration, and the court must follow the policy of least interference.
  • Hence, the court held that the possibility of conflicting decisions is not a bar against simultaneously proceeding with arbitration and criminal proceedings.
Categories
Appointment and Challenge

Sanjiv Prakash v. Seema Kukreja and Ors., 2021 SCC Online SC 282

SANJIV PRAKASH V. SEEMA KUKREJA AND ORS.

Sanjiv Prakash v. Seema Kukreja and Ors., 2021 SCC Online SC 282

ISSUE:

  • Whether an agreement which contains an arbitration clause has or has not been novated be decided in the exercise of a limited prima facie review as to whether an arbitration agreement exists between the parties.

RULE:

  • The existence of an arbitration agreement presupposes a valid agreement which the Court would enforce by relegating the parties to the arbitration.
  • The existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law.

FACTS:

  • The Appellant and his family members (Respondents) were shareholders in Asian Films Laboratories Private Limited, afterwards renamed ANI Media Private Limited (Company), which was established as a private limited company.
  • The Appellant was approached by Thomson Reuters Corporation (Reuters) about a long-term equity investment and partnership with the Company with the stipulation that the Appellant would be actively involved in the operation of the Company.
  • It was agreed in a Memorandum of Understanding (MOU), that in the event the Respondents wanted to sell their shares, the Appellant would have the first opportunity to buy them. The Arbitration Agreement, another arbitration clause, was included in the MOU.
  • Invoking the MOU’s arbitration clause and claiming that the transfer of one of the respondents transferred their shares to another respondent violated his preemptive right to buy the transferred shares, the Appellant gave notice of arbitration to the respondents.
  • The Appellant requested that the Respondents accept the arbiter he had chosen. The Respondents who were allegedly in violation of the MOU asserted that the SHA superseded the MOU and that the Arbitration Agreement, therefore, did not apply.
  • A petition under Section 11 of the Act was filed before the High Court of Delhi by the Appellant for the appointment of an arbitrator. The Hon’ble High Court refused to appoint an arbitrator. The Hon’ble Apex Court was approached.

HELD:

  • It was held that for the Section 11 Court to decide any matter, the “existence of an arbitration agreement” is mandatory.
  • Whether or not an arbitration agreement exists is a question to be determined by the Arbitral Tribunal.
  • The Court said that the detailed arguments on whether an agreement that contains an arbitration clause has or has not been novated could not be decided in the exercise of a limited prima facie review as to whether an arbitration agreement exists between the parties.
  • The Hon’ble SC set aside the judgment of the High Court and referred the parties to the arbitration of a sole arbitrator who was supposed to decide the dispute between the parties without referring to any observations made by the SC.
Categories
Appointment and Challenge

National Highways Authority of India v. Sayedabad Tea Company, 2019 SCC ONLINE SC 1102

NATIONAL HIGHWAYS AUTHORITY OF INDIA V. SAYEDABAD TEA COMPANY

National Highways Authority of India v. Sayedabad Tea Company, 2019 SCC ONLINE SC 1102

ISSUE:

  • Whether or not Section 11 (6) of the Arbitration and Conciliation Act of 1996 stands forfeited when the central Government exercised its right, which is bestowed by Section 3G (5) of the National Highway Act 1956 Act, to appoint an Arbitrator?

RULE:

  • Being a special enactment, the National Highway Act of 1956 is a code in and of itself that lays out the acquisition process as well as the method used to determine compensation by the competent authority. Anyone who feels that the compensation set under subsections (1) or (2) of Section 3G of the Act of 1956 is unfair can certainly move to appoint an arbitrator, who the Central Government is required to name under Section 3G(5) of the Act of 1956.

FACTS:

  • The Appellant (National Highways Authority of India) acquired the subject land, which is 5.08 acres in size and is part of the “Sayedabad Tea Estate” in Mouza Purba, in accordance with its authority under Section 3(D) of the Act 1956, by means of a notification dated November 22, 2005, in order to build highways.
  • On December 8, 2006, the respondent applicant submitted a request to the Central Government for the appointment of an arbitrator in accordance with Section 3G(5) after expressing dissatisfaction with the compensation award made by the appropriate authority under paragraph (1) of Section 3G of the Act, 1956.
  • It is claimed that the Central Government failed to react to his request for the appointment of an arbitrator in accordance with a letter dated December 8, 2006, within a reasonable amount of time.
  • The High Court of Calcutta held that the right of appointment of the Arbitrator by the Central Government stands forfeited as it failed to appoint the Arbitrator until the filing of the application under Section 11(6) of the Act, 1996 before the High Court of Calcutta and appointment of Arbitrator during the pendency of proceedings, cannot be said to be a valid appointment and hence referred the matter to be placed before the Chief Justice for naming an Arbitrator to vide its Order dated July 6 2007.
  • Getting the review application dismissed in the Hon’ble High Court of Calcutta, the Appellant moved to the Supreme Court.

HELD:

  • According to the Hon’ble Supreme Court, the High Court of Calcutta did not have the authority to appoint an arbitrator under Section 11 of the Act, 1996.
  • The Arbitration Act’s provisions can only be used where the Highway Act is silent, the Court further noted. As a result, Section 11, in this instance, cannot be upheld.
  • The Arbitration Act’s provisions can only be used where the Highway Act is silent, the Court further noted. As a result, Section 11, in this instance, cannot be upheld.
  • The Arbitrator was ratified by the Court and given immediate instructions to decide the case and present the arbitral ruling. The earlier rulings of the High Court were overturned by the Supreme Court.
Categories
Appointment and Challenge

Indian Oil Corporation v Raja Transport, (2009) 8 SCC 520

INDIAN OIL CORPORATION V RAJA TRANSPORT

Indian Oil Corporation v Raja Transport, (2009) 8 SCC 520

ISSUE:

  • Whether appointing the Indian Oil Corporation’s Director as Arbitrator would take away the independence and impartiality of the arbitral tribunal?

RULE:

  • Government contract arbitration clauses stating that an employee of the Department (often a high official unrelated to the work or the contract) will serve as the Arbitrator are valid and enforceable.
  • While the appointment of an employee as an arbitrator is not ipso facto a ground to raise a presumption of bias.

FACTS:

  • In 2005, the Appellant (IOC) appointed the Respondent (Raja Trasport) as its dealer for the retail sale of petroleum products. Later, the Appellant terminated the dealership of the Respondent on the recommendation of its Vigilance Department.
  • The Respondent filed in the Court of Civil Judge Dehradun for a declaration that the order of termination of the dealership was illegal and void.
  • The Appellant filed an application under the Civil Procedure Code, praying that the suit be rejected, and the matter be referred to arbitration in terms of Clause 69 of the agreement. The Court of Civil Judge allowed the said application filed by the Appellant, directing the parties to refer the matter to arbitration within two months.
  • The Respondent issued a notice dated 4.1.2006 through its counsel to the Appellant, referring to the Appellant’s insistence that only its Director (Marketing) or an officer nominated by him could act as the Arbitrator in pursuance of the order of the Civil Judge.
  • The Respondent filed an application under section 11(6) of the Act in March 2006 before the Chief Justice of Uttaranchal High Court, praying for the appointment of an independent arbitrator to decide the dispute relating to the validity of the termination of the dealership.
  • The Hon’ble Uttaranchal High Court appointed a retired High Court Judge as the sole Arbitrator to decide the dispute. The said order of the Chief Justice is challenged by the Appellant.

HELD:

  • The Hon’ble Supreme Court held that in an arbitration agreement, parties are free to choose an employee of one of the parties to serve as an arbitrator.
  • Additionally, it was decided that the Court had the right to reject to designate an employee of one party as the Arbitrator in a dispute if there was any reason to doubt his impartiality or independence.
  • If a party enters into a contract with a government agency, statutory corporation, or public sector organisation knowing full well that it contains an arbitration clause specifying that one of its secretaries or directors shall serve as the Arbitrator, he cannot later claim that he is okay with dispute resolution through arbitration, but not by the named Arbitrator.
  • The Court concluded arbitration agreements in government contracts providing that an employee of the Department (usually a high official unconnected with the work or the contract) will be the Arbitrator are neither void nor unenforceable.