BEFORE THE ARBITRATION TRIBUNAL

In The Matter Of:

Frugalia City Foods.......................................... Claimant v. True Fair Bottling Company..............................Respondents

TABLE OF CONTENTS
LIST OF ABBREVIATIONS...................................................................................................3 INDEX OF AUTHORITIES.....................................................................................................4 JURISDICTION........................................................................................................................5 STATEMENT OF FACTS.........................................................................................................6 ISSUE RAISED.........................................................................................................................7 SUMMARY OF ARGUMENTS...............................................................................................8 ARGUMENTS ADVANCED..............................................................................................9-11 PRAYER.................................................................................................................................12

Written submission on behalf of the claimant

LIST OF ABBREVIATIONS
- Paragraph AIR - All India Reporter Anr - Another Ed. - Edition Ors - Others SC - Supreme Court SCR - Supreme Court Reports V - versus Act Indian Arbitration and Conciliation Act,1996 UNCITRAL-United Nations Commission on International Trade Law

Written submission on behalf of the claimant

INDEX OF AUTHORITIES

CASES

S.NO 1. 2.
3.

Title Firm Ashok Traders and another v. Gurumukh Das Saluja and others, AIR 2004 SC 1433 Prima Paint Corp. v. Flood & Conklin Mfg. Co, 388 U.S. 395 (1967) National Agricultural Coop. Mktg. Federation India Ltd. v. Gains Trading Ltd, (2007) 5 SCC 692

Page no 11 11 10

4.

P. Manohar Reddy and Bros.v. Maharashtra Krishna Valley 10 Development Corporation and others ,(2009) 2 SCC 494

STATUTE S.NO 1. Title Arbitration and Conciliation Act,1996 Page No 11,12

2.

Indian Contract Act,1872

10

OTHER INTERNATIONAL LEGAL DOCUMENT

S.NO

TITLE

PAGENO

Written submission on behalf of the claimant

1.

UNCITRAL Model Law on International Commercial 11 Arbitration, 2June 1985 (with amendments as adopted on 7 July 2006)

JURISDICTION
Frugalia City Foods Council, the Claimant in the instant case, has submitted this Memorial before the Arbitration Panel, in pursuance of Clause 23 of the Contract between Claimant and Respondent and in furtherance of S.16 of the Arbitration and Conciliation Act, 1996.

Written submission on behalf of the claimant

STATEMENT OF FACTS

1. Frugalia City Foods and Truefair Bottling Company are companies incorporated under Indian Laws. Frugalia entered into Contract with Truefair for supply and sale of soft drinks. The contract was made in English and Clause 23 of the Contract is the Dispute Resolution clause. The Dispute resolution Clause read as follows : a) Any dispute arising out of or in connection with this contract, shall be referred to and finally resolved by arbitration in India in accordance with the UNCITRAL Arbitration rules for the time being in force, which rules are deemed to be incorporated by reference in this clause b) The number of arbitrators shall be one to be appointed by the agreement of parties. The seat of arbitration shall be New Delhi, India. c) The governing law of the contract shall be substantive law of England.

2. On 15 October, 2012, a dispute arose between the two companies regarding the payment of purchase price. The Claimant alleged that the respondent had delivered only 5000 bottles of LIMCA in past month [1 September, 2012 1 October, 2012] whereas Respondent alleged foul play on part of the claimant for not paying up the price for the consignment.

3. Claimant initiated arbitration proceeding by choosing Ms A as its arbitrator and sent notice to the respondent but respondent did not respond to the notice ,or approve Ms. As appointment. Then claimant approached the High Court of Delhi and Consequently Mr. X, an ex Judge of the Delhi High Court was appointed as the sole arbitrator.

Written submission on behalf of the claimant

4. After receiving the notice of the preliminary hearings, Respondents counsel Mr. P challenged the jurisdiction of the arbitrator on the ground that contract is itself void because it chose a foreign law as substantive law and forgoes Indian law.

QUESTION PRESENTED

I.

Whether this Arbitration tribunal has the jurisdiction in present case.

a) Whether the contract is void and if it is void then whether the arbitration tribunal has the jurisdiction.

Written submission on behalf of the claimant

SUMMARY OF ARGUMENTS

I.

Whether this Arbitration tribunal has the jurisdiction in present case.

It is humbly submitted that the arbitration tribunal has jurisdiction in present case. The contract was entered with the agreement of both the parties and hence it is mutual mistake of law that the parties have chosen law of England as the substantive law of the contract. Even if presume that contract is void then also the tribunal has jurisdiction as per section 16 of Arbitration and Conciliation Act, 1996. As the arbitral clause is separate agreement and distinct from the substantive contract.

Written submission on behalf of the claimant

Arguments Advanced

I.

Whether this Arbitration tribunal has the jurisdiction in present case.

The counsel for the claimant humbly submits that the arbitration panel has the jurisdiction in the present case .Clause 23 of the contract1 between claimant and respondent, gives the jurisdiction to the arbitration tribunal in the case. In the present case the contract was made with the agreement of both the parties. Both the parties chose substantive law of England and hence the contract cannot be held void. The law relating to contracts in India is contained in Indian Contract Act, 1872 and the act is based on the principles of English Common and if there are no relevant domestic cases, Indian courts have taken into consideration English common. Even if we presume that Indian parties cannot forgo Indian law then also the Arbitration panel has the jurisdiction to determine the rights and liabilities of the party in present case. This can be taken as mistake of law and this mistake of law is a mutual mistake as the contact was made with the agreement of both the parties and hence this mistake cannot forfeit the jurisdiction of the panel in determining the rights and liabilities of the parties. Also this will result in complete injustice to the claimant as he has suffered loss .The contract between claimant and respondent was for supply and sale of soft drinks bottles. Where as in month of September only 5000 bottles of LIMCA were send by the respondent instead of 7500 bottles and also the respondent refused to claim the responsibility of loss and instead alleged foul play on the part of the claimant for not paying the price of 7500 bottles2. In the present case there was a mutual mistake of law and hence the contract cannot be held void.

1 2

Fact Sheet 3 Fact sheet 4

Written submission on behalf of the claimant

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A.1 Arguendo ,even if contract is void then also the Arbitrator has the jurisdiction in the present case Even if we presume that the contract between claimant and respondent is void then also the arbitration tribunal has the jurisdiction is present case in furtherance of Section 16 of the Indian Arbitration and Conciliation Act, 1996. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement3. It is a very common modality to include arbitration clause in a detailed contract .In case of any dispute, the arbitrator appointed as per the arbitration clause, has the competence to separate the arbitration clause from the underlying contract, and decide the issue. The Arbitration and Conciliation Act, 1996, also recognises the same principle and provides that the Arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract4; and a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause5. This is widely recognised as the doctrine of separability in the international commercial arbitration. It necessarily entails that the arbitration clause contained in a contract remains valid, even if the contract becomes null and void. The separability doctrine states that the arbitration clause is an agreement separate and apart from the contract in which it appears. The Indian Arbitration and Conciliation Act, 1996, being reproduction of the UNCITRAL Model Law on Arbitration, contain the doctrine of separability under Section 16. The Supreme Court of India in P. Manohar Reddy and Bros.v. Maharashtra Krishna Valley Development Corporation and others6, observed in paragraphs 27 & 28 as under: An arbitration clause, as is well known, is a part of the contract. It being a collateral term need not, in all situations, perish with coming to an end of the contract. It may survive. This concept of separability of the arbitration clause is now widely accepted. In line with this thinking, the UNCITRAL Model Law on International Commercial Arbitration incorporates the doctrine of separability in Article 16(1). The Indian law - The Arbitration

3 4

Section 7 (2) of the Arbitration and conciliation Act,1996 Section 16(1)a) of the Arbitration and conciliation Act,1996 5 Section 16(1)b) of the Arbitration and conciliation Act,1996 6 (2009) 2 SCC 494

Written submission on behalf of the claimant

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and Conciliation Act, 1996, which is based on the UNCITRAL Model Law, also explicitly adopts this approach in Section 16 (1)(b). In National Agricultural Coop. Mktg. Federation India Ltd. v. Gains Trading Ltd7., the Supreme Court of India held: That an arbitration clause is a collateral term in the contract, which relates to resolution of disputes, and not performance. Even if the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. In Firm Ashok Traders and another v. Gurumukh Das Saluja and others8, it has been categorically held that in the scheme of the new Act, the arbitration clause is separable from other clauses of a deed and it constitutes an agreement by itself. In Prima Paint Corp. v. Flood & Conklin Mfg. Co9, the Supreme Court of United States held that: First, an arbitration provision is severable from the rest of the contract. Second, unless the challenge is to the arbitration clause itself, the validity of a contract is for the arbitrator to decide. Hence an arbitration agreement is a separate and distinct agreement from the substantive contract and is not ordinarily impeached or rendered void if the substantive contract is discharged, frustrated, rescinded or void10. In the present case as per Section 7 of the Arbitration and Conciliation Act, 1996 there was an arbitration agreement in the arbitration clause mentioned in the contract. Clause 23 of the contract deals with the arbitration agreement and it reads as follows: Any dispute arising out of or in connection with this contract, shall be referred to and finally resolved by arbitration in India .This dispute resolution clause is an independent agreement and this arbitral agreement gives the jurisdiction to this arbitration tribunal under Section 16

7 8

(2007) 5 SCC 692 AIR 2004 SC 1433 9 388 U.S. 395 (1967) 10 Firm Ashok Traders and another v. Gurumukh Das Saluja and others , AIR 2004 SC 1433

Written submission on behalf of the claimant

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(1) a) of the Arbitration and Conciliation Act, 1996 to determine the rights and liabilities of the parties in the present case.

PRAYER
In light of the facts stated, question raised, arguments advanced and authorities cited, the claimant prays before this Arbitration tribunal that the tribunal has the jurisdiction in the present case.

Written submission on behalf of the claimant