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Settlement of disputes through reference to a third party is a part of the volkgiest of India since times immemorial. It has undergone a phenomenal metamorphosis, growing from the stage of village elders sitting under a banyan tree and resolving disputes to the stage of gaining a statutory recognition. India has put in place a progressive piece of legislation which is essentially based on the Model Law and the UNCITRAL Arbitration Rules. The Parliament enacted the Arbitration and Conciliation Act of 1996 with a view to making arbitration less technical and more useful and effective, which not only removes many serious defects of the earlier arbitration law, but also incorporates modern concepts of arbitration. What it now needs is inculcation of the culture of arbitration within the bar, the bench and the arbitral community.
INTRODUCTION
“I realized that the true fiction of a lawyer was to unite parties… A large part of my time during the 20 years of my practice as a lawyer was occupied in bringing out private compromise of hundreds of cases. I lost nothing thereby- not even money, certainly not my soul.”
- Mahatma Gandhi
ADR is not immune from criticism. Some have seen in it a waste of time; others recognize the risk that it be only initiated to check what is the minimum offer that the other party would accept.[3]he delay in disposal of cases in Law Courts, for whatever reason it may be, has really defeated the purpose for which the people approach the Courts for their redressal. In many parts of India, rapid development has meant increased caseloads for already overburdened courts, further leading to notoriously slow adjudication. As a result, alternative dispute resolution mechanisms have become more crucial for businesses operating in India as well as those doing businesses with Indian firms.[1] So Alternate Dispute Resolution (herein after as ADR) is necessary as a substitute to existing methods of dispute resolution such as litigation, conflict, violence and physical fights or rough handling of situations. It is a movement with a drive from evolving positive approach and attitude towards resolving a dispute.[2]
In the subsequent parts of the paper we will discuss the evolution of ADR and its present scenario in the Indian context.
HISTORY
In India, the law and practice of private and transactional commercial disputes without court intervention can be dated back to ancient times. Arbitration or mediation as an alternative to dispute resolution by municipal courts has been prevalent in India from Vedic times. The earliest known treatise is the Bhradarnayaka Upanishad , in which various types of
arbitral bodies viz (i) the Puga (ii) the Sreni (iii) the Kula are referred to. These arbitral bodies, known as Panchayats , dealt with variety of disputes, such as disputes of contractual, matrimonial and even of a criminal nature.[4] The disputants would ordinarily accept the decision of the panchayat and hence a settlement arrived consequent to conciliation by the panchayat would be as binding as the decision that was on clear legal obligations.
The Muslim rule in India saw the incorporation of the principles of Muslim law in the Indian culture. Those laws were systematically compiled in the form of a commentary and came to be known as Hedaya. During Muslim rule, all Muslims in India were governed by Islamic laws- the Shari’ah as contained in the Hedaya. The Hedaya contains provisions for arbitration as well. The Arabic word for arbitration is Tahkeem , while the word for an arbitrator is Hakam. An arbitrator was required to posses the qualities essential for a Kazee – an official Judge presiding over a court of law, whose decision was binding on the parties subject to legality and validity of the award. The court has the jurisdiction to enforce such awards given under Shari’ah though it is not entitled to review the merits of the dispute or the reasoning of the arbitrator.[5]
ADR picked up pace in the country, with the coming of the East India Company. The British government gave legislative form to the law of arbitration by promulgating regulations in the three presidency towns: Calcutta, Bombay and Madras. Bengal Resolution Act, 1772 and Bengal Regulation Act, 1781 provided parties to submit the dispute to the arbitrator, appointed after mutual agreement and whose verdict shall be binding on both the parties.[6] These remained in force till the Civil Procedure Code 1859, and were extended in 1862 to the Presidency towns.
LEGISLATIONS OF ADR IN INDIA
Code of Civil Procedure
The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits while sections 326 and 327 provided for arbitration without court intervention. The Code of Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908 has laid down that cases must be encouraged to go in for ADR under section 89(1).[7] Under the First Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an endeavor to assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of the suit.[8] The second schedule related to arbitration in suits while briefly providing arbitration without intervention of a court. Order I, Rule 1 of the schedule says that where in any suit, all the parties agree that any matter in difference between them shall be referred to arbitration, they may, at any time before judgment is pronounced; apply to the court for an order of
International Commercial Arbitration if UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral procedure. The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the desired uniformity. The full text of this Model Law was adopted on 21 st^ June 1985 by UNCITRAL. This is a remarkable legacy given by the United Nations to International Commercial Arbitration, which has influenced Indian Law. In India, the Model Law has been adopted almost in its entirety in the 1996 Act.[13] This Act repealed all the three previous statutes. Its primary purpose was to encourage arbitration as a cost-effective and quick mechanism for the settlement of commercial disputes. It covers both domestic arbitration and international commercial arbitration.[14] It marked an epoch in the struggle to find an alternative to the traditional adversarial system of litigation in India.
The changes brought about by the 1996 Act were so drastic that the entire case law built up over the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there was no widespread debate and understanding of the changes before such an important legislative change was enacted. The Government of India enacted the 1996 Act by an ordinance, and then extended its life by another ordinance, before Parliament eventually passed it without reference to Parliamentary Committee.
Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution, became one more “inning” in the game. Not only that, the arbitrator and the parties’ lawyers treated arbitration as “extra time” or overtime work to be done after attending to court matters. The result was that the normal session of an arbitration hearing was always for a short duration. Absence of a full-fledged Arbitration Bar effectively prevented arbitrations being heard continuously on day-to-day basis over the normal working hours, viz. 4-5 hours every day. This resulted in elongation of the period for disposal.
Veerappa Moily also said in the ADR congress held in the year 2010 that the 1996 Act, although modeled along international standards, has so far proved to be insufficient in meeting the needs of the business community, for the speedy and impartial resolution of disputes in India.[15]
The Law Commission of India prepared a report on the experience of the 1996 Act and suggested a number of amendments. Based on the recommendations of the Commission, the Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in the Parliament. The standing committee of law ministry felt that provisions of the Bill gave room for excessive intervention by the courts in arbitration proceedings. [16]
MODES AND PRACTICES OF ADR
IN INDIA
ADR can be broadly classified into two categories: court-annexed options (Mediation, Conciliation) and community based dispute resolution mechanism (Lok-Adalat).
The following are the modes of ADR practiced in India:
- Arbitration
- Mediation
- Conciliation
- Negotiation
- Lok Adalat
1. Arbitration:
The definition of ‘arbitration’ in section 2(1) (a) verbatim reproduces the text of article 2(a) of the Model Law-‘arbitration means any arbitration whether or not administered by a permanent arbitral institution’.[17]It is a procedure in which the dispute is submitted to an arbitral tribunal which makes a decision (an “award”) on the dispute that is binding on the parties.[18] It is a private, generally informal and non-judicial trial procedure for adjudicating disputes. There are four requirements of the concept of arbitration: an arbitration agreement; a dispute; a reference to a third party for its determination; and an award by the third party.[19]
The essence lies in the point that it is a forum chosen by the parties with an intention that it must act judicially after taking into account relevant evidence before it and the submission of the parties.[20]Hence it follows that if the forum chosen is not required to act judicially, the process it is not arbitration.[21]
Types of arbitration are:
Ad Hoc Arbitration
An ad hoc arbitration is one which is not administered by an institution and therefore, the parties are required to determine all aspects of the arbitration like the number of arbitrators, manner of their appointment, etc. Provided the parties approach the arbitration in a spirit of cooperation, ad hoc proceedings can be more flexible, cheaper and faster than an administered proceeding. The advantage is that, it is agreed to and arranged by the parties themselves. However, the ground realities show that arbitration in India, particularly ad hoc arbitration, is becoming quite expensive vis-à-vis traditional litigation.[22]
Institutional Arbitration
mediator alters the dynamics of negotiations.[28] The concept of mediation is not foreign to Indian legal system, as there existed, different aspects of mediation. The Village Panchayats and the Nyaya Panchayats are good examples for this. A brief perusal of the laws pertaining to mediation highlights that it has been largely confined to commercial transactions. The Arbitration and Conciliation Act, 1996 is framed in such a manner that it is concerned mainly with commercial transactions that involves the common man rather than the common man’s interest.
In India, mediation has not yet been very popular. One of the reasons for this is that mediation is not a formal proceeding and it cannot be enforced by courts of law. There is a lack of initiative on the part of the government or any other institutions to take up the cause of encouraging and spreading awareness to the people at large.
3. Conciliation:
Conciliation is “a process in which a neutral person meets with the parties to a dispute which might be resolved; a relatively unstructured method of dispute resolution in which a third party facilitates communication between parties in an attempt to help them settle their differences”.[29]
This consists in an attempt by a third party, designated by the litigants, to reconcile them either before they resort to litigation (whether to court or arbitration), or after. The attempt to conciliate is generally based on showing each side the contrary aspects of the dispute, in order to bring each side together and to reach a solution.[30]
Section 61 of the 1996 Act provides for conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. After its enactment, there can be no objection, for not permitting the parties to enter into a conciliation agreement regarding the settlement of even future disputes.
There is a subtle difference between mediation and conciliation. While in meditation, the third party, neutral intermediary, termed as mediator plays more active role by giving independent compromise formulas after hearing both the parties; in conciliation, the third neutral intermediary’s role, is to bring the parties together in a frame of mind to forget their animosities and be prepared for an acceptable compromise on terms midway between the stands taken before the commencement of conciliation proceedings.[31]
4. Negotiation:
Negotiation-communication for the purpose of persuasion-is the pre- eminent mode of dispute resolution. Compared to processes using mutual third parties, it has the advantage of allowing the parties themselves to control the process and the solution.[32]
Essentials of Negotiation are:
- It is a communication process;
- It resolves conflicts;
- It is a voluntary exercise;
- It is a non-binding process;
- Parties retain control over outcome and procedure;
- There is a possibility of achieving wide ranging solutions, and of maximizing joint gains.[33]
In India, Negotiation doesn’t have any statutory recognition. Negotiation is self-counselling between the parties to resolve their dispute. Negotiation is a process that has no fixed rules but follows a predictable pattern.
5. Lok Adalats:
Lok Adalat was a historic necessity in a country like India where illiteracy dominated other aspects of governance. It was introduced in 1982 and the first Lok Adalat was initiated in Gujarat. The evolution of this movement was a part of the strategy to relieve heavy burden on courts with pending cases. It was the conglomeration of concepts of social justice, speedy justice, conciliated result and negotiating efforts. They cater the need of weaker sections of society. It is a suitable alternative mechanism to resolve disputes in place of litigation. Lok Adalats have assumed statutory recognition under the Legal Services Authorities Act, 1987. These are being regularly organized primarily by the State Legal Aid and the Advice Boards with the help of District Legal Aid and Advice Committees.[34]
Legal Services Authorities Act, 1987:
The Legal Services Authorities Act, 1987 was brought into force on 19 November 1995. The object of the Act was to provide free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen. The concept of legal services which includes Lok Adalat is a revolutionary evolution of resolution of disputes. Though settlements were affected by conducting Lok Nyayalayas prior to this Act, the same has not been given any statutory recognition. But under the new Act, a settlement arrived at in the Lok Adalats has been given the force of a decree which can be executed through Court as if it is passed by it. Sections 19, 20, 21 and 22 of the Act deal with Lok Adalat. Section 20 provides for different situations where cases can be referred for consideration of Lok Adalat.
Honorable Delhi High court has given a landmark decision highlighting the significance of Lok Adalat movement in the case of Abdul Hasan and National Legal Services Authority v. Delhi Vidyut Board and Others[35]. The court passed the order giving directions for setting up of permanent Lok Adalats.
ADR is successful in India with its own limitations and therefore carries scope of improvement within.
vii) The major lacuna in ADR is that it is not binding. One could still appeal against the award or delay the implementation of the award. “Justice delayed is justice denied.” The very essence of ADR is lost if it is not implemented in the true spirit. The award should be made binding on the parties and no appeal to the court should be allowed unless it is arrived at fraudulently or if it against public policy.[38]
CONCLUSION
With the advent of the alternate dispute resolution, there is new avenue for the people to settle their disputes. The settlement of disputes in Lok Adalat quickly has acquired good popularity among the public and this has really given rise to a new force to ADR and this will no doubt reduce the pendency in law Courts. There is an urgent need for justice dispensation through ADR mechanisms. The ADR movement needs to be carried forward with greater speed. This will considerably reduce the load on the courts apart from providing instant justice at the door-step, without substantial cost being involved. If they are successfully given effect then it will really achieve the goal of rendering social justice to the parties to the dispute.
SC on whether Arbitration
Agreement can be Binding on
Non-Signatory to the Agreement
Case name: Cheran Properties Limited v. Kasturi and Sons Limited
and Ors.- In this case of April, 2018, the Supreme Court Bench while
deciding the issue \ whether a non-signatory to an arbitration
agreement is bound by the same or not, the Apex Court has held
that t hat in certain situations, an arbitration agreement between
two or more parties may operate to bind other parties as well. The
Court’s observation was that the fact that the appellant was not a
party to the arbitral proceedings will not conclude the question as to
whether the award can be enforced against it on the ground that it
claims under a party.
Brief Facts of the case: In the case an arbitration agreement was
entered into between KC Palanisamy (KCP), KSL and SPIL and a
company by the name of Hindcorp Resorts Pvt. Ltd. (Hindcorp). Later
on disputes arose between the parties resulting in the
commencement of arbitral proceedings. Under the terms of the
award, a direction was issued under which KCP and SPIL were
required to return documents of title and share certificates
contemporaneously with KSL paying an amount of Rs 3,58,11,
together with interest at 12% p.a. on a sum of Rs 2.55 crores. KCP
challenged the award of the arbitral tribunal under Section 34 of the
Arbitration and Conciliation Act, 1996 on the ground that the arbitral
award could not be executed against the appellant which is
admittedly not a signatory to the agreement.
Bench’s Verdict:
The Three-Judge Bench of the Supreme Court headed by Chief
Justice Dipak Misra dismissed the appeal and made the following
observations in the case:
Whether a non-signatory to arbitration agreement is bound by the
same?
The Court opined that in holding a non-signatory bound by an
arbitration agreement, the Court approaches the matter by
attributing to the transactions a meaning consistent with the
business sense which was intended to be ascribed to them.
Therefore, factors such as the relationship of a non-signatory to a
party which is a signatory to the agreement, the commonality of
subject matter and the composite nature of the transaction weigh in
the balance.
The Court also made reference to the group of companies’ doctrine
to state that the doctrine essentially intended to facilitate the
fulfilment of a mutually held intent between the parties, where the
circumstances indicate that the intent was to bind both signatories
and non-signatories. The effort is to find the true essence of the
business arrangement and to unravel from a layered structure of
commercial arrangements, an intent to bind someone who is not
formally a signatory but has assumed the obligation to be bound by
the actions of a signatory.
Why does the law postulate that there should be a written
agreement to arbitrate?
The Court held that the mandate to have a written agreement is to
exclude the jurisdiction of national courts. Where parties have
agreed to resolve their disputes by arbitration, they seek to
substitute a private forum for dispute resolution in place of the
adjudicatory institutions constituted by the state.
Does the requirement, as in Section 7 that an arbitration
agreement be in writing exclude the possibility of binding third
parties who may not be signatories to an agreement between two
contracting entities?
In this context the Court remarked that the evolving body of
academic literature as well as adjudicatory trends indicate that in
certain situations, an arbitration agreement between two or more
parties may operate to bind other parties as well.
SC: Referring Parties to
Arbitration has Serious Civil
Consequences
Case name: Kerala State Electricity Board and Anr. v. Kurien E.
Kathilal- In this case of March, 2018 the Supreme Court held that if
no arbitration agreement exists between the parties then without a
joint memo or a joint application of the parties, the parties cannot
be referred to arbitration. Under Such circumstances, the procedural
mechanism as enumerated under Section 89 Code of Civil Procedure
is to be duly adhered to.
In the case, the Appellant State Electricity Board had entered into an
agreement with respondent contractor for construction of a
composite dam in connection with Banasura Sagar Scheme. Later in
view of revised minimum wages of labours, the respondent
contractor claimed labour escalation charges. However, the
Government of Kerala referred the matter to the industrial tribunal
for adjudication of the dispute with regard to the said claim of
workmen. While the adjudication with reference to the concerned
issue was pending, the Appellant terminated the contract with the
contractor. When the case came before the High Court, the Court
with reference to the amount payable for additional work done by
the Respondent contractor with the consent of the counsel for the
parties, referred the matter to arbitration to resolve the dispute
relating to items which they could not amicably resolve.
In view of the aforesaid facts, the issue for consideration by the
Supreme Court was whether the High Court was right in referring the
parties to arbitration on the oral consent given by the counsel
without written instruction from the party?
- In the aforesaid context, the Supreme Court noted that
the Jurisdictional pre-condition for reference to arbitration
under Section 7 of the Arbitration and Conciliation Act is
that the parties should seek a reference or submission to
arbitration.
- That so far as reference of a dispute to arbitration under
Section 89 Code of Civil Procedure (settlement of dispute
outside the Court), the same can be done only when parties
agree for settlement of their dispute through arbitration in
contradistinction to other methods of alternative dispute
resolution mechanism stipulated in Section 89 Code of Civil
Procedure. That for reference of the parties to arbitration, oral
consent given by the counsel without a written memo of
instructions does not fulfill the requirement under Section 89
Code of Civil Procedure.
- That referring the parties to arbitration has serious
consequences of taking them away from the stream of civil
courts and subject them to the rigour of arbitration
proceedings, in the absence of arbitration agreement, the
Court can refer them to arbitration only with written consent of
parties either by way of joint memo or joint application.
- That under Section 89 Code of Civil Procedure, referring the
parties to arbitration could be made only when the parties
agree for settlement of the dispute through arbitration by a
joint application or a joint affidavit before the Court[1].
- That referring the parties to arbitration has serious civil
consequences. Once the parties are referred to arbitration, the
proceedings will be in accordance with the provisions of
Arbitration and Conciliation Act and the matter will go outside
the stream of the civil court. Under Section 19 of Arbitration
and Conciliation Act, the arbitral tribunal shall not be bound by
the CPC and the Indian Evidence Act. Once the award is
passed, the award shall be set aside only under limited
grounds. Hence, referring the parties to arbitration has serious
civil consequences procedurally and substantively.
- That when there was no arbitration agreement between the
parties, without a joint memo or a joint application of the
parties, the High Court ought not to have referred the parties
to arbitration.
The entire case can be accessed here.
SC: Arbitration Clause Does not
Bar Filing of Complaint with
Consumer Forum
In a recent case M/S Emaar MGF Land Limited & Anr. v. Aftab Singh ,
the Two-Judge Bench of the Supreme Court agreed with NCDRC’s
holding in July 2017 whereby, the National Commission ruled that an
Arbitration Clause in Buyer’s Agreement cannot circumscribe the
jurisdiction of a Consumer Fora, notwithstanding the amendments
made to Section 8 of the Arbitration Act.
The NCDRC’s order in the case is encapsulated below:
Brief Facts of the case: In the case, the National Consumer Dispute
Redressal Commission (NCDRC) took up a batch of petitions wherein
the subject matter pertained to complainants who had booked
distinction, repeatedly explained by the Hon’ble Supreme
Court.
- Jurisprudence on Arbitrability of Consumer Disputes– the
NCDRC in view of catena of decisions of Supreme Court on this
aspect held that existence of an Arbitration Clause will not be
a bar for the entertainment of the Complaint by a Consumer
Fora. Heavy reliance was placed on the case of Skypak
Couriers Ltd. Vs. Tata Chemicals Ltd., whereby the
Supreme Court inter alia observed that even if there exists an
arbitration clause in an agreement and a complaint is made by
the consumer, in relation to a certain efficiency of service, then
the existence of an arbitration clause will not be a bar to the
entertainment of the complaint by the Redressal Agency,
constituted under the Consumer Protection Act, since the
remedy provided under the Act is in addition to the provisions
of any other law for the time being in force.
In view of the afore-going discussion, NCDRC made the following
conclusions in the case:
- the disputes which are to be adjudicated and governed by
statutory enactments, established for specific public purpose
to sub-serve a particular public policy are not arbitrable;
- there are vast domains of the legal universe that are non-
arbitrable and kept at a distance from private dispute
resolution;
- (^) the subject amendment was meant for a completely different
purpose, leaving status quo ante unaltered and subsequently
reaffirmed and restated by the Hon’ble Supreme Court;
- Section 2(3) of the Arbitration Act recognizes schemes under
other legislations that make disputes non-arbitrable
- (^) In light of the overall architecture of the Consumer Act and
Court-evolved jurisprudence, amended sub-section (1) of
Section 8 cannot be construed as a mandate to the Consumer
Forums, constituted under the Act, to refer the parties to
Arbitration in terms of the Arbitration Agreement.
In view of the aforesaid findings and observations, the NCDRC held
that an Arbitration Clause in the afore-stated kind of Agreements
between the Complainants and the Builder cannot circumscribe the
jurisdiction of a Consumer Fora, notwithstanding the amendments
made to Section 8 of the Arbitration Act.
SC: Appeal against Enforcement
of Foreign Award to Lie u/
Section 50 of Arbitration Act
Only
Case name: Kandla Export Corporation & Anr. v. M/s OCI Corporation
& Anr. – In this recent case of February, 2018, the Supreme Court has
held that appeals filed under Section 50 of the Arbitration Act would
have to follow the drill of Section 50 alone and not Section 13(1) of
the Commercial Courts Act.
In this case the seminal issue confronted by Two-Judge Bench of the
Supreme Court was whether an appeal, not maintainable
under Section 50 of the Arbitration Act , is nonetheless
maintainable under Section 13(1) of the Commercial Courts,
Commercial Division and Commercial Appellate Division of High
Courts Act, 2015 (“the Commercial Courts Act”)?
In the case, the Appellants had filed an appeal under the
Commercial Courts Act, which was dismissed stating that the
Commercial Courts Act did not provide any additional right of appeal
which is not otherwise available to the Appellants under the
provisions of the Arbitration Act.
Considering the fact that Section 50 of the Arbitration Act only
provided for an appeal in case a petition to enforce a foreign award
was rejected, the High Court held, keeping in view the legislative
policy of the Arbitration Act, (to speedily determine matters relating
to enforcement of foreign awards) that since an appeal did not lie
from a judgment enforcing a foreign award under the said section,
no such appeal would be maintainable under the Commercial Courts
Act.
Bench’s Verdict
The Court while delivering its judgment in the case heavily relied on
the Fuerst Day Lawson Limited v. Jindal Exports Limited [3]
wherein it was observed that that the Arbitration Act is a self-
contained Code on all matters pertaining to arbitration, which would
exclude the applicability of the general law contained in Section 13
of the Commercial Courts Act.
Other key observations made by the Court in the case are as
under:
- That no change was made in Section 50 of the Arbitration Act
when the Commercial Courts Act was brought into force, which
clearly implies that Section 50 is a provision contained in a
self-contained code on matters pertaining to arbitration, and
which is exhaustive in nature.
the commencement of negotiations, the dispute shall be referred to
a Sole Arbitrator as appointed by the Company. The Intending Sub
Lessee hereby agrees and confirms that it shall have no objection to
such appointment. The Arbitration shall be conducted as per the
Arbitration and Conciliation Act, 1996 or its statutory modifications,
amendments or re- enactments thereof. The Award of the Arbitrator
shall be final and binding upon the parties. The venue of arbitration
shall be Noida/New Delhi.
It is agreed by and between the Parties hereto that the arbitration
proceedings and all other matters connected to arbitration and any
disputes, suits, complaints, litigation, claim or any other matter
arising out of or in relation to this Agreement, shall be subject to the
exclusive jurisdiction of Courts at Noida.
Bench’s Verdict
- (^) That there cannot be two or more seats of arbitration though
the venue of arbitration may depend upon convenience of the
parties. Article 12 of the Agreement gives exclusive jurisdiction
to courts at Noida while keeping Delhi and Noida as venue for
arbitration.
- (^) Difference between seat and venue- The Bench referred to
Supreme Court’s verdict in the recent case of Indus Mobile
Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd.
& Ors [5]. wherein the Apex Court ruled that Section 20(1)
and 20(2) where the word “place” is used, refers to “juridical
seat”, whereas in Section 20 (3), the word “place” is equivalent
to “venue”. In this case it was further held that the moment
the seat is designated, it is akin to an exclusive jurisdiction
clause.
- Section 20 of the Arbitration and Conciliation Act provides for
the place of arbitration.
- That there shall be only one seat of arbitration though venues
may be different and where the arbitration seat is fixed only
such court shall have an exclusive jurisdiction.
- That in view of the facts barring the registered office of the
respondent company at Delhi, none of the cause of action
arose within the jurisdiction of Delhi High Court. Admittedly the
agreement was executed at Noida; it was to be performed at
Noida; payments pursuant to the agreement were to be made
at Noida; the agreement pertains to a sub- lease of unit based
in Noida; the stamp paper on which the agreement was
executed pertains to Utter Pradesh; and that the petitioner and
respondent had agreed to an exclusive jurisdiction of Noida as
per Article 12(3).
- That the contention that there is no High Court in Noida would
not confer the jurisdiction upon the Courts at U.P. and that
would result in stretching Article 12 in the Agreement too
much. The subject agreement when refer to the venues of
arbitration be at Noida/New Delhi it relate only to the
convenience of parties in holding arbitral hearings and does
not in any way confer jurisdiction upon Delhi Courts.
- That in the light of an exclusive jurisdiction clause in relation to
arbitration proceedings, which excludes the jurisdiction of all
other Courts than the Court mentioned therein, the application
would only lie before the High Court exercising jurisdiction over
Noida, Uttar Pradesh and not before this Court.
