Arbitration & Conciliation Act, 1996

84
Arbitration & Conciliation Act, 1996

description

a. Arbitration & Conciliation Act, 1996. Group members. 04 Scarlet Almeida 05 Mihir Bhammar 09 Sumitra Cardoz 10 Anshul Chadha 29 Fazeel Kazi 31 Prashant Kokare 50 Sandip Saha. Introduction. An Act covering: domestic arbitration international commercial arbitration - PowerPoint PPT Presentation

Transcript of Arbitration & Conciliation Act, 1996

Page 1: Arbitration & Conciliation Act, 1996

Arbitration & Conciliation Act, 1996

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04 Scarlet Almeida05 Mihir Bhammar09 Sumitra Cardoz10 Anshul Chadha29 Fazeel Kazi 31 Prashant Kokare 50 Sandip Saha

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IntroductionAn Act covering:

domestic arbitration international commercial arbitration enforcement of foreign arbitral awardsconciliation

Modern concept of harmonious working partnership between the Court and Arbitration.

Has far reaching effect on reducing court litigation Gives more importance to Arbitration and

Conciliation by adding speed and economy to settlement of disputes.

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Alternative Dispute Resolution (ADR)

Mechanism used across the world - effective, faster and less expensive.4 methods of ADR:Negotiation – unrecognizedMediation – unrecognizedConciliation – recognizedArbitration - recognizedRecognized by the Arbitration and Conciliation Act, 1996

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Necessity of the ActShrinking Boundaries, Free trade & International

Commerce have become global necessities. Competition often leads to conflicts between

entrepreneurs resulting in commercial disputes.Growing strength and role of India in the global

economyIncreasing FDI and other forms of collaboration -

increasing disputes between Indian and foreign partiesQuick redressal to commercial disputes through private

Arbitration. Settlement of dispute in an expeditious, convenient,

inexpensive and private manner so that they do not become the subject of future litigation between the parties.

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Acts addressing ADR in IndiaThe law on arbitration in India was substantially

contained in three enactments, namely:

The Arbitration (Protocol & Convention) Act, 1937

The Arbitration Act, 1940 The Foreign Awards (Recognition and

Enforcement) Act, 1961.

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The Arbitration & Conciliation Act, 1996An Act to consolidate and amend the law relating to

domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto.

"Arbitration is the reference of dispute between not less than two parties, for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction.”

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Law Based on UNCITRAL Model Law The present Act is based on model law

drafted by United Nations Commission on International Trade Laws (UNCITRAL), both on domestic arbitration as well as international commercial arbitration, to provide uniformity and certainty to both categories of cases.

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WHAT CAN BE REFERRED TO ARBITRATION

All disputes of a civil nature or quasi-civil nature which can be decided by a civil court can be referred to arbitration:

Relating to propertyRight to hold an office Compensation for non-fulfillment of a clause

in a contract Disputes in a partnership

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Disputes excluded from the Arbitration ActThe law has given jurisdiction to determine certain matters to specified tribunal only; these cannot be referred to arbitration:Matters involving questions about validity of a will.Relating to appointment of a guardian.Pertaining to criminal proceedingsRelating to Charitable TrustsWinding up of a companyMatters of divorce or restitution of conjugal rightsLunacy proceedingsDisputes arising from an illegal contract Insolvency matters, such as adjudication of a person as an

insolvent.Matters falling within the purview of the Competition Act.

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Scheme of the ActThe Act is divided in to the following parts (a) Part I - Domestic arbitration. (b) Part II - Enforcement of foreign awards. (c) Part III - Conciliation procedures. (d) Part IV - Supplementary provisions.

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Arbitration AgreementArbitration Agreement - an agreement by the

parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

Power to refer parties to arbitration when there is an arbitration agreement.

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Arbitration Agreement Interim Measures by Court appointment of a guardian for a minor or person of

unsound mind for the purposes of arbitral proceedings

protection in respect of preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement

securing the amount in disputethe detention, preservation or inspection of any

property or thing which is the subject-matter of the dispute

interim injunction or the appointment of a receiver;Any other interim measure of protection as may

appear to the Court to be just and convenient

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Appointment of ArbitratorAny person can be appointed as an arbitrator.Generally impartial and independent persons –C A’s, engineers, retired judges, advocates and

other professionals are preferred. Parties are free to determine the number of

arbitratorsNumber shall not be an even number. The arbitrator shall disclose in writing to the

parties anything that may give rise to justifiable doubts about his independence or impartiality.

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Appointment of ArbitratorIf they are unable to agree- Each party will appoint one arbitrator and the

two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator.

If not appointed within 30 days, the party can request Chief Justice of High Court to appoint an arbitrator.

In case of international commercial dispute, the application for appointment of arbitrator has to be made to Chief Justice of India.

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Termination of Arbitrator

Appointment of Arbitrator can be challenged only if

Circumstances exist that give rise to justifiable doubts as to his independence or impartiality

He does not possess the qualifications agreed to by the parties.

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Termination of Arbitrator

The mandate of an arbitrator shall terminate if---he becomes de jure or de facto unable to perform his

functions or for other reasons fails to act without undue delay; and

he withdraws from his office or the parties agree to the termination of his mandate.

where he withdraws from office for any reason; or by or pursuant to agreement of the parties.

Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

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Conduct of Arbitral ProceedingsThe Arbitral Tribunal is not bound by Code of Civil

Procedure, 1908 or Indian Evidence Act, 1872. The parties to arbitration are free to agree on the

procedure to be followed by the Arbitral Tribunal.Law of limitation (1963) applicableFlexibility in respect of procedure, place & language.Submission of statement of claim & defense maybe

amended/ supplemented at any timeHearings & Written Proceedings – at the discretion of

the tribunal Can be oral at the request of either party

Settlements during Arbitration

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Arbitral AwardThe decision of Arbitral Tribunal will be by majority

The arbitral award shall be in writing and signed by the members of the tribunal.

States the reasons for the award unless the parties have agreed that no reason for the award is to be given.

The award should be dated and place where it is made should be mentioned.

Copy of award given to each party.

Tribunal can make interim award also.

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Arbitral Award - AppealAn arbitral award may be set aside by the Court only if;

The party furnishes proof of some incapacity the arbitration agreement is not valid under the law to which the

parties have subjected it the party was not given proper notice of the appointment of an

arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matter beyond the scope of the submission to arbitration

the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties

the arbitral award is in conflict with the public policy of India.

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Cost of ArbitrationFees and expenses of arbitrators and witnesses,

legal fees and expenses, administration fees of the institution supervising the arbitration and other expenses.

Tribunal can decide the cost and share of each party. If parties refuse to pay the costs, the Arbitral

Tribunal may refuse to deliver its award; thus any party can approach Court.

The Court will ask for deposit from the parties and on such deposit, the award will be delivered by the Tribunal. Then Court will decide the costs of arbitration and shall pay the same to Arbitrators. Balance, if any, will be refunded to the party.

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Intervention by CourtThe earlier arbitration law was that the party could

access court almost at any stage of arbitration. Now, approach to court has been drastically

curtailed.If an objection is raised by the party, the decision

on that objection can be given by Arbitral Tribunal itself & the arbitration proceedings are continued

The aggrieved party can approach Court only after Arbitral Award is made.

Appeal to court is now only on restricted grounds. Tribunal cannot be given unlimited and

uncontrolled powers and supervision of Courts cannot be totally eliminated.

ARBITRATION ACT HAS OVER-RIDING EFFECT 

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Enforcement of Foreign AwardsForeign award" means an arbitral award on differences

relating to matters considered as commercial under the law in force in India. The foreign awards which can be enforced in India are as follows : -

New York convention award - made after 11th October, 1960New York convention awards are enforceable in India. New York convention was drafted and kept in United Nations

for signature of member countries on 21st December, 1958.

Geneva convention award - made after 28th July, 1924.

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Enforcement of Foreign AwardsTo enforce a foreign award party has to

produce arbitral award, agreement of arbitration to the district court having jurisdiction over the subject matter of the award.

The enforcement of award can be refused by court only in cases specified in law.

Otherwise, the foreign award is enforceable through court as if it is a decree of the court.

If the court declines to enforce the arbitral award, appeal can be made to the court where appeal normally lies from the district court.

No further appeal can be made (except appeal to Supreme Court) . Indian courts can be approached only at the time of

implementation of award. The courts can refuse to implement the award only on limited

grounds.

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ConciliationThe act makes provision for conciliation proceedings. In

conciliation proceedings:

There is no agreement for arbitration.

Conciliation can be done even if there is arbitration agreement.

The conciliator only brings parties together and tries to solve the dispute using his good offices.

The conciliator has no authority to give any award.

Helps parties in arriving at a mutually accepted settlement.

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ConciliationIn such agreement they may draw and sign a

written settlement agreement. Duly signed by the conciliator

However after the settlement agreement is signed by both the parties and the conciliator, it has the same status and effect as if it is an arbitral award.

Conciliation is the amicable settlement of disputes between the parties, with the help of a conciliator.

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Offer for ConciliationThe conciliation proceedings can start when one

of the parties makes a written request to other to conciliate, briefly identifying the dispute.

The conciliation can start only if other party accepts in writing the invitation to conciliate.

Unless there is written acceptance, conciliation cannot commence. If the other party does not reply within 30 days, the offer for conciliation can be treated as rejected

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What Can Be Referred To ConciliationMatters of a –

Civil nature

Breach of contract

Disputes of movable or immovable property

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What Cannot Be Referred To Conciliation

Matters of –

Criminal nature

Illegal transactions

Matrimonial matters like divorce suit etc.

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Supplementary ProvisionsThe High Court has the power to make rules

under this act

Removal of difficulties by central Government through provisions made under the Act

Rules made by Central Government subject to approval by parliament

The present Act overrules the previous Acts

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Bhatia International V Bulk Trading & Others

CASE NO.:Appeal (civil) 6527 of 2001

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Facts of Case

Petitioner : Bhatia InternationalRespondents : Bulk Trading & othersDate of Judgement : 13.2.2002Bench : G B Pattanik & S N VariavaAppeal : Against the Judgement Dated

10.10.2000: Madras High Court Petitioner Counsel : Mr.S. SenRespondent Counsel : Mr. Sundaram

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Brief HistoryBhatia International contract with Bulk trading in

1997 - arbitration clauseGoverned by as per rules of International Chambers

of Commerce (ICC)Bulk trading filed a request with ICC for arbitration

with parties agreed process to be held in Paris and appointment of Sole Arbitrator

Respondents filed an application u/s 9 of Arbitration & concilation Act 1996 is district courts of Indore & Orissa against Bhatia International

Interim relief was sought – injunction restraining the parties from transferring/creating any third party right & dealing or selling their business assests or properties

Bhatia international – raised plea of maintainability of such an applicaton

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Case HistoryMr. Sen on behalf of the petitioner Bhatia

International stated that Part – I of the act wouldnot apply to arbitrations where the place of arbitrations is not in India

The application was dismissed by the IIIrd Additional District Judge on 1st Feb 2000

A writ petition was filed before the High Court of Madhya Pradesh, Indore Bench & same was dismissed on 10th Oct 2000

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Case is Supreme Court Counsel Sen – Part –I of the Act applies to arbitration where the place of

arbitration is in India other wise it will be Part –II of the Act would apply

Section 2 (2) states that provisions of the Part –I of the Act do not apply where the place of arbitration is not in India

Section 2 (8) of the Act defines international arbitration can take place in India or outside India, if outside India then Part –I doesn’t apply

Arbitration outside India – Part I does not apply hence section 9 & section 17 would not apply.

Part –II of the Act deals with the enforcement of the foreign Awards.

Section 2 & Section 17 have been purposely omitted – reason for this is arbitration take places outside India

Jurisdiction – of courts of that particular country where it is held.

Section 9 – an application for interim measure must be made before the award is enforced also section 36 deals with enforcement of domestic award only

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Section 5 of the Act – Judicial authority should not interfere except as provided in the said Act. “reason”

M.P. High court of Indore Bench were wrong in entertaining the application u/s 9 of the Act based on which rejected the appilcation of the Appellant

Inspite of the fact that – A number of high courts Orissa,Madras, & Delhi have held that Part – I of the act would not apply to arbitrations which take place outside India

Judgments – Mariott International V Ansal Hotels Ltd – Delhi Court- accepted the same canvassing as the that of learned counsel Sen

The Respondents – Counselor Advocate Sundaram provided with the argument that if parties by their agreement exclude its provisions of Part I then only will not be part otherwise would apply to all international commercial arbitrations including those that take place outside India

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Court Views If Sen agruments are taken into account – there would be a

lacunae as neither Part I nor Part II would apply to arbitration held in a non-conventional country It would mean that there is no law in India governing such arbitrations

International Commercial Arbitration which takes place outside India – no protection to its citizens

Object of the Act was to establish a uniform legal frame work for fair & efficient settlement of disputes arising in international commercial arbitration

Always to look at the intension of the legislative makersNot possible for most imaginative legislature to forecast

exhaustively situations – courts duty to expound arises with a caution that courts should not try to legislate

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Section 1 of the Act – implies to the whole of India, inclduing the state of Jammu & Kashmir.

Section 2 (a) – defines arbitration - arbitration could be under a body

like the ICC Section 2 (f) International Commercial Arbitration makes no

difference between International Arb. Takes places in India or internal Arb. which takes place outside India

Section 2 (2) – provides that part I would apply to cases where Arb. Takes place in India – to emphasis that the word “ only” not used hence legislature did not mean that the Part I would not apply to Arb. Outside India

Section 2 (4) & (5) – defines every arbitration - hence the word every arbitration includes all types

Section (5) – judicial intervention not except in Part I, Section (8) allows parties to approach Judicial but only to court is u/s 2 (e)

Legistalure has kept in mind that even international arb. Part I implies

Section 28 – does not provide to rules where Arb. Outside India

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Seimilar to u/s 9 & u/s 17 – no section foreign Awards – indicating that legislature that no injunction can be brought – Stated by Sen

Said Act - Consolidated & Integratd Act – General provisons appilcable to all arbitrations would not be repeated in all chapters

Article 23 of the ICC rules permits parties to apply to a competent judicial authority for interim and conservatory measures Therefore, in such cases an application can be made under Section 9

of the said Act. Act does not appear to be a well drafted legislation Therefore the

High Courts of Orissa, Bombay,Madras, Delhi and Calcutta cannot be faulted for interpreting it in the manner indicated above

In this view of the matter we see no reason to interfere with the impugned judgment. The Appeal stands dismissed. There will be no Order as to costs throughout

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Supreme Court Judgment, Civil appeal under ‘Arbitration And Conciliation Act’ for setting aside of Foreign Award

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IntroductionThe parties:

Venture Global Engineering (VGE) Satyam Computer Services Ltd.

made a 50:50 JV.

An SHA was also signed:Disputes have to be resolved amicably.If not resolved, refer to arbitration.

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BackgroundSatyam alleged that the VGE had

committed a default.Several venture companies became

insolvent.Satyam exercised its option to purchase the

VGE shares in the JV at its book value.A series of petitions & cross-petitions

happened.Finally the case came to Supreme Court.

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Background CasesSatyam VGE

1) London Court of International Arbitration2) United States District Court, Michigan

5) High Court of Andhra Pradesh

3) Cross Petition

4) 1st Addl. Chief Judge, Civil Court, Secunderabad6) Appeal

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Current CaseJV was situated in India.Satyam enforced the award in USA.VGE challenged it saying the award should

have been enforced in India.SC had to decide if enforcement of a foreign

award can be challenged in India.

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Reference Case - Bulk Trading vs. Bhatia InternationalSimilar case in which arbitration was held by

ICC, Paris.Bulk Trading filed an application in District

Court which it won.Bhatia International approached SC.SC dismissed the petition in favour of Bulk

Trading.

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Contentions of VGEForeign award can be challenged based on

reference case.Satyam cannot enforce in US.SHA did not provide for approaching US

Court.Satyam was motivated by the intention of

evading the legal and regulatory scrutiny.

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Contentions of SatyamNo suit can be filed against enforcement of

foreign award.No compulsion in seeking award in India as

per agreement.SHA does not have any objection related to

foreign award.VGE riding two horses at the same time.All previous cases except Bhatia held view

that foreign award can’t be challenged.

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JudgmentReferred Bhatia International case.

Even in international arbitrations, unless specifically mentioned in contract, enforcement can be challenged.

This case has close link with India and its laws.

If foreign award can’t be challenged in India, it leaves a party remediless.

Satyam had fraudulent intentions.

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JudgmentSC not expressing anything about either

party.

SC judgment only related to challenging foreign award.

Arbitration proceedings to decide further.

6 months notice to dispose of case.

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CriticismWidely criticized in international law

community.Erroneous interpretation of act.Party Autonomy rendered useless.The enforcement mechanism has

been rendered inefficient, clumsy, and uncertain. 

Little use of arbitration.

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International Commercial ArbitrationIt means an arbitration relating to disputes arising

out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is---

(i) an individual who is a national of, or habitually resident in, any country other than India; or

(ii) a body corporate which is incorporated in any country other than India; or

(iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or

(iv) the Government of a foreign country

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Appellants: TDM Infrastructure Private Limited Vs.Respondent: UE Development India Private Limited

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The problem Determination of applicability of Section 2(1)(f) of

the Indian Arbitration and Conciliation Act, 1996 questioned

Companies registered and incorporated under the Companies Act, 1956, 

Directors and shareholders of the Petitioner residents of Malaysia

Parties into contractual terms resorted to arbitration clause contained therein pursuant to disputes arose amongst them

Neither the proposal nor the nominees proposed by parties accepted and hence the application for appointment of Sole Arbitrator was filed

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The problemDespite the Company being incorporated and

registered in India, since its central management and control being exercised in Malaysia, it would come within the purview of Clause (iii) of Section 2(1)(f) of the 1996 Act 

Company incorporated in India can only have Indian nationality for the purpose of the Act

Where both parties have Indian nationalities, the arbitration between such parties cannot be said to be an international commercial arbitration 

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The Outcome

“When both the companies are incorporated in India, and have been domiciled in India, the arbitration agreement entered into by and between them would not be an international commercial arbitration agreement.”

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The OutcomeFor the purposes of taxation, test of

residence may not be registration but where the company does its real business and where the central management and control exists

All the board meetings in the instant case took place in Malaysia

Hence the present Court has no jurisdiction to nominate an Arbitrator and hence the application dismissed 

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Case Appellants: National Agricultural Co-op.

Marketing Federation India Ltd.Vs.Respondent: Gains Trading Ltd.

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Case StudyDispute arose between the partiesRespondent alleged of non-performance of

the contract — Invoking the arbitration clause of the agreement, notice sent by the Petitioner

Respondent replied with refusal to comply with — Applicability of section 11 questioned

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Case StudyWhether an arbitration clause comes to an

end if contract abrogatedHeld, 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

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Case StudySection 16(1) of the Act clarifies that an

arbitration clause forming part of the contract to be treated as an agreement independent of the other terms of the contract

Contract null and void would not entail ipso jure the invalidity of the arbitration clause

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Case

Appellants: India Household and Healthcare Ltd.Vs.Respondent: LG Household and Healthcare Ltd.

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Effect of Fraud on Arbitration AgreementPetitioner called upon the respondent to

appoint an Arbitrator to decide the disputeRespondent contended that arbitration

proceedings under MoU and agreement would be null and void as both were vitiated by fraud

On appeal Madras High Court granted interim injunction restricting Petitioner from taking any action in terms of the agreement

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Cont…Held, a judicial authority obligated to refer the

parties to arbitration where arbitration agreement exists

But when instance of fraud is proved, it goes on to vitiate the entire agreement.

Arbitration agreement is rendered null and incapable of being performed due to the effect of fraud

Hence, in cases of fraud, no judicial authority can enforce arbitration clause as the same ceases to operate

Application for appointment of Arbitrator, not maintainable unless the procedure and mechanism agreed to by and between the parties complied with — Application dismissed

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Case Study Malaysian Airlines Systems BHD (II) vs. Stic Travels (P) Ltd(Arbitration Petition No.

18 of 2000), Supreme Court’s ruling on arbitrator’s

nationality Decided by Justice M. Jagannadha Rao, the

nominee of the Chief Justice of India.

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Facts of the caseMalaysian Airlines(Foreign Co.) appointed

Stic Travels Pvt. Ltd(Indian Co.) as the General Sales Agent(Passenger) for various countries.

Two agreement dated September 15, 1986 and January 11, 1989 were entered into for this purpose. The former agreement related to passenger, and latter related to cargo. The originals of these agreements were with the Indian company.

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Facts of the CaseFurther, the said agreements were

terminated by the foreign company by notice dated March 1, 1999 delivered to the Indian company on the same date. This was done on the ground that the Indian company failed to remit and pay to the foreign company all the sums and money received by it in the course of agency on account of sale of passenger tickets and airway bills.

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Facts of the CaseThe foreign company claimed that the Indian

Company had, in its letter dated June 15, 1999 admitted liability up to Rs 83,54,655.79 and failed to pay the same and had fraudulently attempted to `arbitrarily and illegally' adjust the same against false claims with a view to defraud it.

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Case StudyThe application under Section 11 (5) for

appointment of arbitrator by the Chief Justice of India or his nominee is by the Malaysian Airlines company.

The claim of the foreign company is that the Indian company is liable to pay it a sum of Rs 96,21,137 with interest at 24 per cent with quarterly rests with effect from May 1, 1999 besides other amounts.

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Case StudyThe Indian company contended that the

agreements in question had ceased to exist and, hence, there was no arbitration clause. The notice by the foreign company was bad in law.

The foreign company had not produced the original agreements. They are not with the Indian company. The foreign company cannot file attested copies of the two agreements.

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Case StudyAfter hearing the parties, the designated

judge identified two points for consideration: (1) Whether the preliminary issues raised by

the Indian company can be decided at this stage or be referred to the arbitrator;

(2) Whether, in the case of an international arbitration agreement, where one of the parties is an Indian national, it is not permissible to appoint an arbitrator of Indian nationality

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Case StudyOn the first point he declined to decide the

preliminary issues and directed that the matter be straight away referred to an arbitrator.

On second point He observed that while the nationality of the Arbitration is a matter to be kept in view, it does not follow from Section 11(9) that the proposed arbitrator is necessarily disqualified because he belongs to the nationality of one of the parties.

In case the party who belongs to a nationality other than that of the proposed arbitrator, has no objection, the Chief Justice of India (or his nominee) can appoint an arbitrator belonging to a nationality of one of the parties.

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Case StudyIn case, there is objection by the one party to

the appointment of an arbitrator belonging to the nationality of the opposite party, the Chief Justice of India (or his nominee) can certainly consider the objection, and see if an arbitrator not belonging to the nationality of either parties can be appointed.

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Haryana Telecom v Sterlite IndustriesPetitioner : Haryana Telecom LtdRespondent : Sterlite Industries (India) LtdDate of Judgement : 13/7/1999Bench B N Kirpal & S. Rajendra BabuCase no: 1999 (3) SCR 861Sections referred in the Act – Section 8 of

Arbitration and Concilation Act 1996Petitioner represented by Learned Counsel

– Mr. Arun Jaitely

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Brief HistoryHaryana Telecom Ltd, a State – PSU entered into

agreement with the Sterlite Industries for laying of cables a 150 crore order.

Due to business recession the venture could not be completed by Sterlite Industries and had to go for winding up of its business

A petition was filed in the session court by the respondent Sterlite Industries under the Companies Act for insolvency

The Government has raised objection and filed an application in the High Court for referring the matter to Arbitration

High court rejected its plea and petition was filed in the Supreme Court

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What HappenedPetitioner moved against the court – contending

that the High Court should refer the matter to the Arbitration

Earlier Courts – - The Single Judge Dismissed the Application - Same was upheld by the Division bench

Similar cases relating to applications which have been filed under the provisions of Arbitration Act 1940- the question regarding the winding up of the company could not be referred to an arbitrator

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What HappenedLearned counsel – Mr. Jaitely – contested that the

Section 8 (1) of the Act Judicial Authority is bound to refer the matter to arbitration when the arbitration agreement exist between the parties

Section 8 – important pointsA judicial authority before which an action is brought

in a matteris the subject matter of an arbitration agreement shall, refer the parties to arbitration

Should not be entertained unless its is accompanied by original arbitration agreement or a duly certified copy there of

Arbitral Award, continuation or commencement of the process may be initiated inspite of the application made & pending before the judicial authority

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What HappenedThe court held that : Judicial authorities will

refer the matter to the Arbitration only when in their opinion the matter or dispute which the arbitrator is competent or empowered to decide

In this case, the courts held a view that the Claim in petition for winding up is not for money

The company has become commercially insolvent with the petition filed under the Companies Act, hence should wound up

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The OutcomeAn arbitrator has no jurisdiction to order the

winding up of the company.Notwithstanding any agreements between

the partiesTherefore the matter pending before the high

court could not be referred to the A and the High Court was right in rejecting the petition.

Hence the petition for the reasons stated above have been dismissed in Limein

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