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Resolution
Rittika
[1]
Session: 2012-13
(Hons.)
B.com LL.B
5 th
Semester
Roll
no.-145/11
Acknowledgement
[2]
Compiled by:
Rittika Dattana
B.com LL.B (hons.)
Roll no-145/11
[3]
Contents
S.No.
Particulars
Pages
1.
2.
3.
4.
5.
6.
7.
8.
Table of Cases
Introduction
Arbitration: Meaning
Interim Measures
Scope of Article 9
Scope of Article 17
Comparison
Bibliography
4
5
6-8
9-11
12-16
17-18
19-21
22
[4]
Table of Cases
Corporation
Shoney Sanil v. Coastal Foundation
Mikuni Corporation v. UCAL Fuel Systems Ltd
Arun Kapoor v. Vikram Kapoor
Firm Madan Lal Roshan Lal Mahajan v. Hukam Chand Mills Ltd., Indore
Ashok Traders vs. G.D Saluja
Channel Tunnel group Ltd. vs. Balfour Beatty construction Limited
Anil Construction vs. Vidharbha Irrigation Dev. Corpn.
Navbharat Ferro Alloys Ltd. vs. Continental Glass Ltd
Nimbus Television & Sports Vs D G Doordarshan
Bhatia International v. Bulk Trading Co.
Marriott International Inc. vs. Ansal Hotels Limited
Max India Ltd v General Binding Corp
Dominant Offset (P) Ltd vs. Adamovske Strojirny
[5]
Intoduction
Gandhiji said: "I had learnt the true practice of law. I had learnt to find
out the better side of human nature, and to enter men's hearts. I realized
that the true function of a lawyer was to unite parties given as under. The
lesson was so indelibly burnt unto me that the large part of my time, during
the twenty years of my practice as a lawyer, was occupied in bringing about
private compromises of hundreds of cases. I lost nothing, thereby not even
money, certainly not my soul." 1
Conflict is a fact of life. It is not good or bad. However, what is
important is how we manage or handle it. Negotiation techniques are often
central to resolving conflict and as a basic technique these have been around
for many thousands of years. Alternative Dispute Resolution (ADR) refers to a
variety of streamlined resolution techniques designed to resolve issues in
controversy more efficiently when the normal negotiation process fails.
Alternative Dispute Resolution (ADR) is an alternative to the Formal
Legal System. It is an alternative to litigation. It was being thought of in view
of the fact that the Courts are over burdened with cases. The said system
emanates from dissatisfaction of many people with the way in which disputes
are traditionally resolved resulting in criticism of the Courts, the legal
profession and sometimes lead to a sense of alienation from the whole legal
system- thus, the need for Alternative Dispute Resolution. 2
The various types of ADR techniques are:
Mediation
Arbitration
Conciliation
http://www.fdrindia.org/publications/AlternativeDisputeResolution_PR.pdf, 30th
Oct, 2013, 5.30 PM
[6]
Judicial Settlement
Lok Adalat
Negotiation
[7]
Arbitration: Meaning
[8]
dispute have agreed, or legislation has decreed, will be final and binding.
There are limited rights of review and appeal of arbitration awards.3
Arbitral Award:
Arbitral Award means an award given by the Arbitrator in an arbitral
proceeding and Section 2(1)(c) mentions that Arbitral Award includes an
interim award. Since the arbitrators are empowered to give an interim award,
all the provisions which are applicable to arbitral award will be equally
applicable to an interim award also. An award is nothing but a decision of the
arbitrators in writing duly signed by them.
Disputes which cannot be referred to arbitration:
If a matter is governed by any other law which excludes reference to
Arbitration, this Act will not apply. Since in those cases, the law has given
precise jurisdiction to specified courts or tribunals only, those cases cannot
be decided through the mechanism of Arbitration. The following matters in
general practice, are not arbitral:
1. Insolvency matters;
2. Matrimonial causes (except matters pertaining to settlement of terms
of separation or divorce)
3. Testamentary matters; e.g., validity of a Will
4. Suit under section 92 of the Code of Civil Procedure, 1908
5. Proceedings for appointment of guardian of a minor or lunatic person
6. Industrial disputes
7. Criminal proceedings [excepting matters relating to compoundable
offences]
[9]
8. Relating to charities
9. Pertaining to dissolution or winding up of a company incorporated and
registered under the provisions of the Companies Act, 1956 (Haryana
Telecom Ltd. vs. Sterlite Ind. Ltd.) 1999 (4) L.J. (S.C.) 389.
10.
11.
12.
Relating to possession of leased premises governed by the
provisions of the Bombay Rent, Hotel and Lodging House Rates Control
Act, 1947.4
[10]
Arbitration Process:
The process can start only if there exists a valid Arbitration Agreement
between the parties prior to the emergence of the dispute.
As per Section 7, such an agreement must be in writing.
The contract regarding which the dispute exists, must either
contain an arbitration clause or must refer to a separate
document signed by the parties containing the arbitration
agreement.
The existence of an arbitration agreement can also be inferred
by written correspondence such as letters, talex, or telegrams
which provide a record of the agreement.
An exchange of statement of claim and defence in which
existence of an arbitration agreement is alleged by one party
and not denied by other is also considered as valid written
arbitration agreement.
Any party to the dispute can start the process of appointing arbitrator
and if the other party does not cooperate, the party can approach the
office of Chief Justice for appointment of an arbitrator.
There are only two grounds upon which a party can challenge the
appointment of an arbitrator
reasonable doubt in the impartiality of the arbitrator; and
the lack of proper qualification of the arbitrator as required by
the arbitration agreement.
A sole arbitrator or a panel of arbitrators so appointed constitutes the
Arbitration Tribunal.
Except for some interim measures, there is very little scope for judicial
intervention in the arbitration process.
The arbitration tribunal has jurisdiction over its own jurisdiction.
Thus, if a party wants to challenge the jurisdiction of the
arbitration tribunal, it can do so only before the tribunal itself.
If the tribunal rejects the request, there is little the party can do
except to approach a court after the tribunal makes an award.
Section 34 provides certain grounds upon which a party can
appeal to the principal civil court of original jurisdiction for
setting aside the award.
[11]
The period for filing an appeal for setting aside an award is over, or if
such an appeal is rejected, the award is binding on the parties and is
considered as a decree of the court.5
Concept:
Interim Measures are granted during the pendency of adjudication of a
dispute and are usually in the form of injunctions, specific performance, preaward attachments etc. By definition, interim reliefs are temporary or
interim in nature and are granted in advance of the final adjudication
of the dispute by the arbitral tribunal.
[12]
[1995] 1 AC 38 HL
Gary B Born, International Commercial Arbitration, (Vol II Kluwer Law International 2009)
1943, Electronic copy available at: http://ssrn.com/abstract=2141718
[13]
[14]
for securing the amount in dispute or for the preservation, custody or sale of
the property in dispute. During the pendency of a proceeding in a court, a
party may make an application for grant of an interim measure(s) and the
court may grant such measure(s) as permitted under the procedural rules
governing the powers of the court or those that it may derive through its
inherent powers.
, Lira Goswami, Interim Relief under the Arbitration Act, 1996.(Goswami) Speech
at New Delhi: 2000, available at www.arbitrationicca.org/media/0/12119958380600/2000.pd, 30th Oct, 2013, 7.01 PM
[15]
Under Indian Law there was a conflict of judicial opinion on the question whether Courts
could issue a temporary injunction through the use its inherent power u/s 151 of the
Code of Civil Procedure when the case did not fall with the purview of Order 39 Rules 1
and 2. The matter was settled in Manohar Lal v. Seth Hira Lal, (1) SCR 450, wherein the
Supreme Court of India held that a Court had power u/s 151 to issue injunctions for
matters not falling in Order 39, Rules 1 and 2
[16]
c.
10 Justice R.S. Bachawat, Justice Bachawats Arbitration & Conciliation Act, 1996
(4th ed Wadhwa 2005) 405,
[17]
considered by the court for issuing necessary directions. The court has no
power under the section to decide the merits of the case or rights of the
parties.12
Jurisdiction of Courts
The powers of the court under this provision are available only when
the place of arbitration is in India. Sub section (2) of section 2 provides
in a clear and unambiguous language that Part I shall apply where the place
of Arbitration is in India. However, the Delhi High Court, in Dominant Offset
(P) Ltd vs. Adamovske Strojirny13 where the arbitration took place at
London, held that Part I also applies to International Commercial Arbitration
conducted outside India.
However, the Division Bench of Delhi High Court in Marriott
International Inc. vs. Ansal Hotels Limited14, where arbitration
proceedings were held at Kuala Lumpur in Malaysia, held that Part I of the
Act shall apply to all arbitrations where the place of arbitration is in India.
Moreover, in Max India Ltd v General Binding Corp.15, the Division
Bench of the Delhi High Court upheld the decision of the Single Bench of the
High Court regarding the jurisdiction of Indian courts to grant interim relief in
international commercial arbitrations.
The division bench uphold the judgment of single judge and came to
the conclusion that as per the decision in Bhatia International v. Bulk
13 1997 (2) ALR 335, Similar view was again taken by Delhi High Court in the case
of Olex Focas Private Limited vs. Skoda export co. Ltd., (AIR 2000 Delhi 161)
[18]
Trading Co.16 it was settled law that Part 1 of the Arbitration and
Conciliation Act would apply to all arbitrations, including international
commercial arbitrations held outside India, unless the parties by express or
implied agreement excluded all or any of its provisions .
As far as the position of the Indian Law is concerned, this decision
seeks to clarify the scope of the powers of an Indian court to grant interim
relief in international commercial arbitration. The rule that seems to emerge
is that when the parties have specifically intended that:
(a) the law governing the contract;
(b) the rules governing the arbitration; and
(c) the courts jurisdiction and the place of arbitration are outside India,
then it would signify that the Indian courts jurisdiction and applicability of
Part 1 of the Act (which contains the power of the Indian courts to provide
interim measures) are excluded.
15 FAO (OS) 193/2009 Delhi High Court. Max India Ltd had filed a petition under s.9
seeking to restrain GeneralBinding Corp (GBC) from implementing the terms of
an agreement that it had entered into directly or through its holding company
with Cosmo Films regarding the sale of its commercial prints finishing business.
The agreement specifically provided that the Singapore courts had jurisdiction to
resolve any disputes between the parties subject to Arbitration under the
Singapore International Arbitration Center Rules. Max India had invoked the
arbitration clause and duly served notice on GBC. Pending the arbitration Max
India argued that it had the right to file S.9 application in India itself.
[19]
not otherwise specifically provided for. Section 9 of the Act is, however, an
exception to the general rule contained in Section 5 in as much as the former
specifically empowers the Civil Court concerned to pass suitable orders on
the subject and in relation to matters stipulated therein. There is, therefore,
no merit in the contention that Section 5 would exclude the jurisdiction of the
Civil Court otherwise competent to entertain applications and pass orders in
regard to the stipulated matters under Section 9 of the Act.17
18 OP Malhotra, Indu Malhotra, The Law and Practice of Arbitration & Conciliation,
(2nd ed, LexisNexis,2006) 382
[20]
22 2000 (1) M L J 38
[21]
[22]
[23]
new Act the arbitrator has the power to rule on its own jurisdiction. This
section corresponds to Article 16 of the UNCITRAL Model Law and Article 21
of the UNCITRAL Arbitration Rules.
Article 16 of the Model Law says that the Arbitral tribunal may rule on
its own jurisdiction whereas Article 21 of the Rules states that the Arbitral
tribunal shall have the power to rule. Such power given to the arbitral
tribunal is also referred to as Kompetenz. Thus, it has enacted the principle
of Kompetenz-Kompetenz which states that if there is a clause in the
agreement entered into between the parties that there dispute shall be
settled through the process of arbitration, then the arbitral tribunal had the
jurisdiction to rule over that case. It can then decided the validity of the
agreement also and in such a case the power of the courts are restricted.
The power of the arbitrator to grant interim measures under S.17 of
the new Act is a limited one to the extent of the agreement between the
parties to the dispute. The interim measures which are given by the tribunal
are temporary & provisional, and are operative till the dispute is resolved by
an award, to protect the interest of a party. The courts cannot sit in appeal
over the views of the arbitral tribunal by re-examining and re-assessing the
materials.
The Court cannot review the award and correct any mistake in his
adjudication unless objection to legality of award is apparent in the face
of it. Hence, it can be stated over here that the power has been given to the
Court to set aside the award given by the arbitral tribunal on the grounds of
legal misconduct in proceedings only. The word legal misconduct in
proceedings as defined by Atkin, J. means
such a mishandling of the arbitration as is likely to cause some
substantial miscarriage of justice and one instance of this is where the
arbitrator refuses to hear evidence upon a material issue.
The Honble Supreme Court of India has also observed in the case,
Firm Madan Lal Roshan Lal Mahajan v. Hukam Chand Mills Ltd.,
[24]
Indore27, that the award, both on fact and law is final and the court cannot
review the award and correct any mistakes in its adjudication unless there is
a legal misconduct on the face of record.
Under Section 17 of the Act, it is also stated that the power of the
arbitrator to grant interim award will come into picture only when there is a
specific clause in the agreement entered into between the parties that the
dispute shall be settled by the arbitrator. In the absence of such a clause in
the agreement, the arbitrator cannot pass interim order even with the
consent of the parties as it will be acting ultra vires.
27 AIR 1967 SC 1030; Also relied in Puri Construction Pvt. Ltd.v. Union of India: AIR
1989 SC 777; Food Corporation of India v. Joginderpal Mohinderpal: AIR 1989 SC
1263.
[25]
28 Ibid.23
[26]
going by the scheme of the said Act, there is no room to hold that by an
interim measure under Section 9, the rights of third party, holding possession
on the basis of a court sale could be interfered with, injuncted or subjected to
proceedings under Section 9 of the Act.
Section 9 of the Act contemplates issuance of interim measures by the
court only at the instance of a party to an arbitration agreement with regard
to the subject-matter of the arbitration agreement. This can be only as
against the party to an arbitration agreement, or, at best, against any person
claiming under him. The writ petitioner is a third party auction purchaser in
whose favour is a sale certificate, followed by delivery of possession. He
cannot therefore be subjected to proceedings under Section 9 of the Act,
initiated on the basis of an alleged arbitral agreement between the
respondents.
It was held similarly in National Highways Authority of India v.
China Coal Construction Group Corporation31 that an interim order could
be passed in respect of parties to arbitration and in connection with subject
matter thereof and no interim order could be passed in respect of a party
who had no privity of contract with the petitioner. Thus the petition seeking
interim measures against a non party to the arbitration was held to be not
maintainable.
In Smt. Kanta Vashist v. Shri Ashwani Khurana32 also it was held
that no injunction could be issued even against companies which though of
the family, members whereof were parties to the arbitration, were
independent legal entities and not parties to the arbitration agreement.
Finally, the most recent judicial consideration of this issue was by the
Bombay High Court in Girish Mulchand Mehta v. Mahesh S. Mehta33. In
2009, when it noted the prior observations of the Kerala and Delhi High
Courts to the effect that a section 9 application is maintainable only against
32 MANU/DE/0380/2008
[27]
a party to the arbitration, or someone claiming under him. The Bombay High
Court seemed to be uncomfortable with this interpretation. However, in the
spirit of judicial deference, the Court responded by placing the burden of
proof on the respondent to establish that he was not a party of claiming
under him. In the words of the Court,
Thus understood, Section 9 can be invoked even against a third party
who is not party to an arbitration agreement or arbitration
proceedings, if he were to be person claiming under the party to the
arbitration agreement and likely to be affected by the interim
measures. The Appellants herein will have to substantiate that they
were claiming independent right in respect of any portion of the
subject matter of the Arbitration Agreement on their own and not
claiming under the Respondent No. 2 Society who is party to the
Arbitration Agreement. In absence thereof, the Court would certainly
have jurisdiction to pass appropriate order by way of interim measures
even against the Appellants herein, irrespective of the fact that they
are not party to the Arbitration Agreement or the Arbitration
Proceedings.
In Maharashtra State Electricity Board Vs Datar Switchgear
Ltd , it was discussed the scope of power of the court u/s 9 vis a vis the
powers granted to the arbitrator u/s 17. The court held that if the power that
has been conferred upon the court u/s9 is compared with the power
conferred on the arbitral tribunal u/s17, it is immediately noticeable that the
court can exercise its power either before or during arbitral proceedings or
even thereafter upon making of the award but before it is enforced. The Act
does not contemplate interference of courts at the interim stage in matters
of jurisdiction of the Tribunal or n challenges to the existence or validity of
the arbitration agreement.
34
33 MANU/MH/1458/2009
[28]
Comparison:
Basis
Scope
Power
Order
Exercise
Section 9 (Courts)
Section 17 (Tribunals)
Wider
More power; not limited to
only subject-matter; supreme
Against anyone, i.e. any third
party
Even before the tribunal is
constituted.
Narrower
Limited to subject matter of
the dispute
Against any of the engaged
parties
Only after tribunal is
constituted
[29]
Bibliography
Books:
Weblinks:
http://www.ebc-india.com/lawyer/articles/2002v1a3.htm
http://www.fdrindia.org/publications/AlternativeDisputeResolution_PR.pdf
http://en.wikipedia.org/wiki/Arbitration,
http://www.indiainfoline.com/Markets/News/Overview-of-ADR-AlternateDispute-Resolution-Mechanisms-in-India/5514204080,
http://en.wikipedia.org/wiki/Alternative_dispute_resolution,
http://ssrn.com/abstract=2141718
http://www.arbitration-icca.org/media/0/12119958380600/2000.pdf
[30]