Tiered Dispute Resolution Clauses: The Indian Picture

Introduction

Arbitration clauses form part of majorly all commercial contractual transactions. Often, these clauses provide for a tiered mechanism to achieve the ends of speedy justice. The prescription of such clauses in the contractual arrangement manifestly implies that the parties are left with limited right to knock on the door of courts. Arbitration and Conciliation Act, 1996[1] also resonates this understanding. It particularly provides for limited interference by courts in matters where the contracting parties have made arrangements to get their disputes resolved through arbitration[2] and recognises the principle of kompetenz kompetenz in line with the Uncitral model law[3].

The interpretation of the Arbitration and Conciliation Act, 1996, still in its infancy, has intrigued scholars all across the legal domain. The contour of application of law becomes more complex when the preconditions for arbitration are not fulfilled. The first question to be answered in such a case is whether the preconditions are enforceable or not. In cases where the preconditions to arbitration are held to be enforceable, in such scheme of things, when the jurisdiction over the subject-matter of the dispute does not get vested with the Arbitral Tribunal, can the matter be made out to the Court, is another question which the authors of this piece pen down in this work. Taking cue from jurisdictions across the globe, the authors raise the curtains of the Indian picture to tiered dispute resolution clauses. This paper focuses on the enforceability of such clauses around the globe and their effect on the jurisdiction of the Arbitral Tribunal.

Multi-tiered dispute resolution clauses and their significance

Multi-tier dispute resolution clauses are also known as escalation clauses or filter clauses. They provide a forum for alternative resolution of disputes at each stage which finally escalate to arbitration. The inclusion of such clauses in commercial transactions is premised on the necessity to look for amicable modes of dispute resolution. These clauses generally contain preconditions of mediation and/or conciliation and/or negotiation before making a reference of the disputes to arbitration. Such clauses are often assailed on the grounds of their enforceability in the courts of law. Courts around the globe have held such clauses to be unenforceable on the principle that they lack certainty. Moreover, in cases where the preconditions for arbitration to take place are not fulfilled, there arises an issue over the jurisdiction of the Arbitral Tribunal. The inclusion of such clauses in today’s commercial transactions are majorly governed by recognition of the understanding that a number of disputes get settled and scripting a multi-tier arbitration clause ensures that parties will at least look for alternative modes before moving towards the adversarial process of arbitration. Each tier in a multi-tier dispute resolution clause “escalates” the dispute management to a level above the previous step. The next part of this paper provides a cross?jurisdictional analysis of the applicability of such clauses around the globe.

Cross-jurisdictional analysis

(a) The United Kingdom approach

Preconditions in multi-tiered dispute resolution clauses were considered to be unenforceable under the English law until recently. In Walford v. Miles[4], the Court held that a bare agreement to negotiate lacked the necessary certainty and is therefore unenforceable. The Court further held that such an agreement was unworkable in practice. The decision in Walford[5] was followed in similar cases.[6]

In Cable & Wireless Plc v. IBM United Kingdom Ltd.[7], an application to stay an action pending the dispute being referred to alternative dispute resolution was considered. The High Court held that the obligation to attempt in good faith to settle a dispute through alternative dispute resolution was sufficiently certain to be enforced because the procedure to be followed was well enunciated.

In Holloway v. Chancery Mead Ltd.[8], the Court had to consider whether a provision in a building contract that the parties shall seek to resolve a dispute through conciliation by the NHBC (Clause 24.1) and a further provision that the making of a determination by an NHBC investigator (Clause 24.6) were conditions precedent or not to the commencement of an arbitration. The Court held that they were not and the matter was apt to be referred to arbitration. The Court laid a three prong test for such agreements to be enforceable and held:

First, that the process must be sufficiently certain in that there should not be the need for an agreement at any stage before matters can proceed. Secondly, the administrative processes for selecting a party to resolve the dispute and pay that person should also be defined. Thirdly, the process or at least a model of the process should be set out so that the detail of the process is sufficiently certain[9].

In Sulamérica Cia Nacional de Seguros SA v. Enesa Engelharia SA[10], the Court of Appeal had to consider whether an undertaking by the parties that, “prior to a reference to arbitration, they will seek to have the dispute resolved amicably by mediation” was an enforceable obligation. The Court of Appeal held that in circumstances where the clause did not set out a defined mediation process or refer to the services of a specific mediation provider the clause was not apt to create an enforceable obligation to commence or participate in a mediation process. The Court further held that since the clause in issue was unenforceable, reference to arbitration by the disputing parties stood the test of maintainability.

In Wah v. Grant Thornton International Ltd.[11], the Court had to consider whether an Arbitral Tribunal had jurisdiction to determine a partnership dispute in circumstances where, (i) a clause in the agreement between the parties provided that any dispute should be referred to a panel of three members of the Board of the partnership and that no party shall commence arbitration until the earlier of such date as the panel determine that it cannot resolve the dispute and the date one month after the dispute has been referred to it; and where (ii) the Board’s attempt to constitute a panel had been unsuccessful. The Court held that the obligations in the dispute resolution clause were too nebulous to be given legal effect as an enforceable condition precedent to arbitration. For a tiered dispute resolution clause to be enforceable, along with the positive injunctions it proffers, the Court opined that the negative injunctions should be unambiguous and make the operability of a precondition certain in a way that the parties should be aware of their respective rights and obligations from the tiered clause. As the tiered dispute resolution clause was held to be unenforceable, the Court held that the Arbitral Tribunal was right in exercising jurisdiction over the dispute.

In Emirates Trading Agency LLC v. Prime Mineral Exports Pte Ltd.[12], where the dispute was whether the precondition of undertaking a “friendly discussion” before commencement of arbitration was mandatory and enforceable, the Court held that the use of the word “shall” in the dispute resolution clause indicated that the obligation was mandatory and that friendly discussions were a condition precedent to the right to refer a claim to arbitration. The Judge distinguished previous case law where similar clauses had been held to be unenforceable due to incompleteness and uncertainty, stating that “an obligation to seek to resolve a dispute by friendly discussions in good faith has an identifiable standard, namely, fair, honest and genuine discussions aimed at resolving a dispute”. Having acknowledged that condition precedent to arbitration were enforceable, the Court held that the Arbitral Tribunal had jurisdiction to adjudicate as the conditions have been factually satisfied.

The Courts in United Kingdom, therefore, have adapted a narrow approach in construction of tiered dispute resolution clauses. Earlier such clauses were outrightly held to be unenforceable because of lack of certainty. However, now, the Courts have laid a three prong test for holding the tiered dispute resolution clauses as enforceable.

(b) Australia

In United Group Rail Services v. Rail Corpn. New South Wales[13], the Court was asked to adjudicate that whether a contract for the design and build of rolling stock which contained a dispute resolution clause which provided that the parties should “meet and undertake genuine and good faith negotiation with a view to resolving the dispute”; failing such resolution the dispute could be arbitrated, was enforceable. The New South Wales Court of Appeal held that the obligation to negotiate was enforceable. The Court accepted that an “agreement to agree” was unenforceable due to lack of certainty, but this did not imply that an agreement to undertake negotiations in good faith to settle a dispute arising under a contract was unenforceable. The Court stressed that difficulty in proving a breach did not mean that the obligation lacks real content. Having held so, the Court opined that the arbitration clause was severable from the preconditions of arbitration and so the Arbitral Tribunal has the jurisdiction to adjudicate upon the dispute, even if the clauses were enforceable.

(c) Singapore

In International Research Corpn. Plc v. Lufthansa Systems Asia Pacific Pte Ltd.[14] the High Court of Singapore had to consider whether a clause which referred to arbitration of disputes “which cannot be settled by mediation” provided for a condition precedent to arbitration which was too uncertain to be enforceable. The Arbitral Tribunal had held that it was. But the High Court held that it was enforceable. The High Court held that the agreement to negotiate serve a useful purpose and merely because there will be difficulty in proving breach, the courts should not hold such clauses to be lawfully unenforceable.

The High Court of Singapore held that the preconditions being performed, the Arbitral Tribunal had the necessary jurisdiction to adjudicate the dispute. However, the Court of Appeal in Singapore later reversed the judgment of the High Court on the point that the preconditions in the multi-tier clause had not been complied with. Whilst the enforceability of the multi-tier clause had not been the subject of the appeal, the Court of Appeal took the opportunity nonetheless to note that it would have upheld the multi-tier clause if it had been challenged. Accordingly, the Court of Appeal held that the Arbitral Tribunal would not have had the jurisdiction to hear the parties’ disputes.

(d) France

In Medissimo v. Logica[15], the question which was put before the French cour de cassation was that if a party does not comply with a multi-tiered clause, how the breaching party should be sanctioned. The Court held that a contractual clause establishing a mandatory conciliation procedure is lawful and binding upon the parties until the end of the conciliation procedure. However, the claims could not be declared inadmissible without entering into the merits of the case and without requiring the party raising the plea to prove any damage. The judgment further provided that only some clauses could be held to be binding upon parties. The inadmissibility of the claims would be dependent on the wording of the multi-tiered clause in relation to the following questions:

(a) Is the amicable dispute resolution clause mandatory?

(b) Is the amicable dispute resolution clause a condition precedent to the right to refer a claim to litigation or arbitration?

(c) Is the amicable dispute resolution clause procedure sufficiently detailed?

Only if all the above the above requirements were fulfilled, could the clause considered to be enforceable.

The above analysis of case law suggests that the multi-tier dispute resolution clauses are worldwide accepted as enforceable if they are casted in certain terms. While construing such clauses, the courts across the globe have held that one has to look at the negative injunctions drawn in such clauses to ascertain the certainty of enforcement. It is essential in tiered dispute resolution clauses to ascertain whether the preconditions are mandatory, whether a procedure has been provided for amicable resolution of disputes and whether the preconditions provide an unambiguous solution for the breaching party. The next part of this paper focuses on the Indian picture with respect to such clauses.

India: Multi-tiered dispute resolution clauses

For the purpose of this paper, it is important to understand, whether under the Arbitration and Conciliation Act, 1996, the Chief Justice or his designate is empowered to see if the pre-arbitral mechanism has been followed or not. This question was taken up for consideration in Sunil Manchanda v. Ansal Housing and Construction Ltd.[16] In Sunil Manchanda case[17] the dispute resolution clause in the agreement between the parties read that:

  1. 2. … 51. All disputes arising out of or in connection with this agreement shall be resolved by mutual discussions between the parties within 15 days of the said disputes arising, failing which, such disputes shall be referred to conciliation. If the conciliation proceedings fail to resolve the disputes then the disputes will be referred for arbitration to a sole arbitration being a retired Judge of the Supreme Court of India….[18]

Thus, it involved a pre-arbitration step of mutual discussion between the parties within 15 days of arising of the disputes. In this case, the Court observed and held that it was “not obliged to examine the question as to whether the procedure prescribed in the arbitration agreement has, in fact, been followed before the invocation of the arbitration and seeking appointment of the arbitrator. In this view, I am fortified by the Constitution Bench decision of the Hon’ble Supreme Court in Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd.[19]” The Court had, thus, come to this conclusion on the basis of Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd.[20], in which it was the finding of the Supreme Court that there is nothing in Section 11 of the Arbitration and Conciliation Act, 1996 that requires a party other than the party making the request to be even noticed and it does not contemplate a response from the other party. The Supreme Court further held that appointment of arbitrator by the Chief Justice or his designate is not a judicial function resulting in an adjudicatory order and that Section 11 does not contemplate a decision on any controversy between the parties. However, it does not remain a controversy any longer, as the nature of the function of the Chief Justice or his designate under Section 11 has been settled to be a judicial function in SBP & Co. v. Patel Engg. Ltd.[21] Thus presumably, since the very foundation of the judgment in Sunil Manchanda[22] does not hold good, the law laid down therein also does not hold good any longer. Therefore, in the opinion of the authors, the Court has requisite jurisdiction to go into the question of whether the pre-arbitral steps have been followed or not.

In fact, even before the judgment of Patel Engg.[23], the Courts had been recognising the enforceability of pre-arbitral steps. The judgment of Nirman Sindia v. Indal Electromelts Ltd.[24], delivered by the Kerala High Court in 1999 is of utmost importance and a matter of discussion for the purposes of this paper. The factual matrix of the case was that the petitioner had approached the High Court for the appointment of arbitrator in a contract, which was contended to have been wrongfully terminated. The contract between the parties contemplated, that the disputes were to be referred to arbitration. It also contemplated that before being referred to arbitration, any dispute was to be first referred to the engineer. Upon decision of the engineer, either party being dissatisfied could approach the adjudicator who would render a decision within 28 days. Thereafter, in case either party was not satisfied with the finding of the adjudicator, the disputes were to be resolved by arbitration. Both, the engineer as well as the adjudicator were named in the contract between the parties. The petitioner approached the Court for the appointment of the arbitrator without having first exhausted the procedure provided by the agreement between the parties. Neither was there a reference to the engineer, nor was there any reference to the adjudicator. The question of the enforceability of the pre-arbitral mechanism, provided contractually, came into question in this particular case. The petitioner who had approached the Court for the appointment of the arbitrator had contended that since the agreement had been wrongfully terminated by the opposite party, the clauses relating to the pre-arbitral steps were no longer binding upon the parties. Rejecting this contention of the petitioner, the High Court of Kerala observed:

When the parties to a contract agree to any special mode for resolution of the disputes arising out of the agreement and they are bound to comply with the mode prescribed under the agreement. Without resorting to the first step provided for the resolution of the dispute in the agreement they cannot jump to the second step or to the final step to settle the disputes between the parties.[25]

After duly scrutinising the dispute resolution clause in the agreement, the Court came to a conclusion that the agreement between the parties had clearly established that it was agreed between the parties to settle the disputes through arbitration and such reference to arbitration was to be preceded by a decision by the engineer and a challenge to that decision before the adjudicator by the aggrieved party within the time prescribed under those clauses. In light of these observations, the Kerala High Court was pleased to observe, that in absence of these mandatory steps having been followed, the petitioner’s request to appoint the arbitrator in accordance with the arbitration clause provided in the agreement was not maintainable as being premature.

Conditions necessary for enforceability of pre-arbitral steps in a multi-tiered clause

The enforceability of the pre-arbitral steps in a multi-tiered dispute resolution clause depends on the language of the clause as well as the conduct of the parties.

a. Language of the clause

In Sushil Kumar Sharma v. Union of India[26], it was observed by the Court that “… Nature of clause has to be seen. If the clause is mandatory with regard to the steps preceding arbitration, then the procedure ought to be followed. Without having followed the steps, the Arbitral Tribunal does not have jurisdiction to entertain it.”

b. Conduct of the parties

In Visa International Ltd. v. Continental Resources (USA) Ltd.[27], the Hon’ble Supreme Court of India had the occasion to reflect upon a clause in the agreement, which contemplated a pre-arbitral step before the invocation of arbitration. The agreement between the parties in this case provided vide its multi-tiered dispute resolution clause that, “Any dispute arising out of this agreement and which cannot be settled amicably shall be finally settled in accordance with the Arbitration and Conciliation Act, 1996.” The Court observed that the precondition for referring any dispute to arbitration in the agreement between the parties was that the dispute should not be able to be “settled amicably”. It was contended on behalf of the counsel for the respondent, that in order for a dispute to be endeavoured to be settled amicably, there must be formal conciliation between the parties and that the agreement was contingent upon the failure of such conciliation. He further contended that since the applicant had not formally initiated conciliation proceedings, therefore the application for the appointment of arbitrator was premature and thus it ought to be dismissed. The Hon’ble Court observed that there were several letters and correspondences which had been exchanged between the parties. These correspondences ranged over a period of months. In the view of the Court, these clearly established that the dispute between the parties could not have been amicably settled. In view of the same, the case was ripe for reference to arbitration and thus the request for appointment of arbitrator was duly granted.

The more recent judgment of Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee[28], dealt with a similar dispute resolution clause. The clause in that particular case was as follows:

  1. 13. … 38.3 A party seeking to resolve the dispute must notify the existence and nature of the dispute to the other party (“the notification”). Upon receipt of the notification the parties must use their respective reasonable endeavours to negotiate to resolve the dispute by discussions between Delhi 2010 (or a person it nominates) and the service provider (or a person it nominates). If the dispute has not been resolved within 10 business days of receipt of the notification (or such other period as agreed in writing by the parties) then the parties must refer the dispute to the Chairman of Delhi 2010 and the Chief Executive Officer or its equivalent) of the service provider.[29]

It was urged by the respondent that since no formal notification of disputes and endeavour to negotiate such disputes had been undertaken before approaching the court for appointment of arbitrator, the application was premature. The Court, while dealing with the objection observed that there were several discussions between the parties and efforts were taken, even by the ambassadors of various countries to resolve disputes before going to formal arbitration. Keeping in mind the facts and circumstances of the case, the Court observed that it could not be said that the parties had not made their best endeavours to negotiate to resolve the disputes and therefore, the arbitrator had jurisdiction to look into the dispute.

In light of the discussion of Visa International[30] and Swiss Timing[31], one issue which still remains shrouded in mystery is the ascertainment of the question that how the Court draws the line regarding the compliance of the pre-arbitration mechanism having been followed. It is a fact that in every case where a dispute arises, the parties make an attempt to communicate and converse in order to resolve disputes and reach an amicable solution before going for formal litigation or arbitration. In such cases, where does the Court, in all probability, come to a conclusion that the clause has been complied with. For instance, in contracts such as the Swiss Timing case[32], the clause specifically provides that a party has to give the opposite party a notice containing the exact nature of the dispute and within 10 days of the receipt of such dispute, the parties have to use their best endeavour to negotiate the dispute. In such a case, whether the Court was right in giving a go-by to a strict compliance of the clause in favour of negotiation efforts, is a question of great introspection and finds no response, at least in the law prevalent in India. Thus, in this particular class of cases, the pre-arbitration mechanism, although enforceable, has not been strictly complied with and the standard of compliance has been held to be valid by courts.

One thing is for certain, that even in such cases, where the multi-tiered dispute resolution clauses are uncertain and unworkable, the Indian courts have not held them to be unenforceable. This is a drawn distinction from similar cases in England, where such clauses have been observed to have been unenforceable as they lacked the necessary certainty.

Unenforceability of multi-tiered dispute resolution clause

In the most recent case of Sun Security Services v. Babasaheb Bhimrao Ambedkar University[33], the relevant portion of the dispute resolution clause was to effect that:

In case of any dispute which may arise during the currency of contract or agreement, it would be settled by the Registrar, Babasaheb Bhimrao Ambedkar University, Lucknow. In case it is not settled, decision of Vice-Chancellor, Babasaheb Bhimrao Ambedkar University, Lucknow shall be final and binding on both the parties. However, if the security agency is still not satisfied the arbitration shall be conducted in accordance with the provision of Arbitration and Conciliation Act, 1996 (26 of 1996)….

The question which arose in this case was, whether decision of the Vice?Chancellor was a mandatory precondition before referring disputes to arbitration. A very divergent view was taken in this case. The Court observed that it was settled law, that if the procedure given for appointment of arbitrator was not followed, the case could not be referred to arbitration in accordance with Section 11 of the Arbitration and Conciliation Act, 1996. However, it was held that the steps provided in the agreement between the parties could not have been said to be a procedure for the appointment of arbitrator. Furthermore, the pre-arbitration steps were not in the nature of an adjudicatory mechanism and were thus not mandatory. In light of these observations, it was held:

In the instant case as well, it may be noted that Clause 22 does not contemplate any adjudicatory mechanism or passing of any order by the Vice-Chancellor, after the parties are given opportunity to lead evidence. It is only a pre-arbitration settlement mechanism to prevent dispute going to the arbitrator. Such mechanism cannot be interpreted to be an absolute bar, once the parties are sure of the stand taken by the other. Further, the settlement made by the Vice-Chancellor, is itself arbitrable. Thus, there is no force in the contention that the application for appointment of arbitrator, is premature.

In this particular case, the Allahabad High Court made three observations, which are as follows:

(i) Unless the pre-arbitration mechanism provided by the parties is a procedure for appointment of the arbitrator, it is not enforceable.

(ii) If the pre-arbitration mechanism is not adjudicatory in nature, it is unenforceable.

(iii) Once the parties are sure of the stand taken by the other party, pre-arbitration mechanism need not be complied with.

In Sun Security[34] judgment, strong reliance was placed on the judgment of P. Dasaratharama Reddy Complex v. Govt. of Karnataka[35] passed by the Supreme Court of India. In P. Dasaratharama case[36], Clause 29 of the agreement empowered the Chief Engineer to settle the disputes at the first instance between the contractor and the Department. It further provided that in case the decision of the Chief Engineer was not acceptable to the contractor, he could approach the law courts at Karwar for settlement of dispute after giving due written notice in this regard to the Chief Engineer within a period of ninety days from the date of receipt of the written notice of the decision of the Chief Engineer. In this case, the contractor had approached court with an application for appointment of arbitrator contending that the clause provided was an arbitration clause by way of providing the decision by the engineer. This contention was rejected after holding that the decision of the engineer was not an adjudicatory process and was merely a step to avoid further disputes. The next step was to go to the Court. Surprisingly, the Sun Security[37] judgment applied the ratio of P. Dasaratharama[38] in holding that the pre-arbitration mechanism was unenforceable. P. Dasaratharama[39] was a case where the Supreme Court had interpreted whether a clause was an arbitration clause or not and whether such a clause could be held to be enforceable before approaching court. The Allahabad High Court has applied the reasoning and logic in the Supreme Court’s decision upon its own facts. The effect of this holding implies that a pre-arbitration mechanism has been treated at par with a pre-litigation mechanism. Such observation by the Allahabad High Court blurs the stand of enforceability of a multi-tier dispute resolution clause in Indian law as the Court has held the mechanism to be unenforceable.

Apart from the Sun Security[40] judgment, there is another scenario, where the Indian Courts have held the pre-arbitration mechanism to be unenforceable. This is by waiver of the pre-arbitral steps, by either express agreement or by the conduct of the parties. The said exception had also been carved out in Nirman Sindia case[41], where the court had held that a waiver of the pre-arbitral steps by both parties would be a contingency where the party approaching the Court could circumvent the pre-arbitral steps provided in the agreement.

Another judgment which discussed the exception of waiver was M.K. Shah Engineers & Contractors v. State of M.P.[42] The arbitration clause in the agreement provided for reference of disputes to arbitration. Such reference was required to be preceded by a decision of the Superintending Engineer and a challenge to such decision within 28 days by the party feeling aggrieved. In this particular case, the Superintending Engineer had kept silent with respect to a decision for more than a year and further, had sub-delegated his functions to a sub-committee constituted by highly placed officials in the Government. Before a decision of the Superintending Engineer could be given, the contractor, time and again approached the Government for appointment of the arbitrator. The Government appointed the arbitrator and raised a dispute regarding maintainability before the arbitrator. Once again, when the contractor approached the court for appointment of arbitrator, the Government waived its objections by voluntarily appointing an arbitrator. In view of the conduct of the Government, the Supreme Court had observed that, “The respondent State of M.P. has acquiesced in the appointment of arbitrators and the proceedings for settlement of disputes by arbitration. The respondent cannot be permitted to turn around and plead invalidity or non-maintainability of arbitration proceedings by reference to clause.” In view of these observations, the pre-arbitral steps were held to have been waived and it was observed:

The steps preceding the coming into operation of the arbitration clause though essential are capable of being waived and if one party has by its own conduct or the conduct of its officials, disabled such preceding steps being taken, it will be deemed that the procedural prerequisites were waived. The party at fault cannot be permitted to set up the bar of non-performance of prerequisite obligation so as to exclude the applicability and operation of the arbitration clause.[43]

Denouement

In the light of the above discussion, the only conclusion which can be reached about the Indian scenario is that there are no cases where the clause per se has been held to be unenforceable. Although the Sun Security[44] judgment is one judgment which has held the clause per se to be unenforceable, the criteria laid down are rather vague. There are also certain circumstances, such as waiver, where the courts have held such clauses, not to be per se unenforceable, but to have subsequently become unenforceable owing to such waiver.

  *   Saurabh Bindal, Advocate, practising at the Delhi High Court. He can be reached at saurabhbindal13@gmail.com.

**  Gunjan Chhabra, Advocate, practising at various courts in Delhi. She can be reached at gunjanchhabra89@gmail.com.

[1]    Hereinafter referred to as the “1996 Act”.

[2]    See generally, Ss. 5, 8 and 45, Arbitration and Conciliation Act, 1996.

[3]    The United Nations Commission on International Trade Law (Uncitral) prepared the Uncitral Model Law on International Commercial Arbitration, which was adopted by the United Nations Commission on International Trade Law on 21-6-1985. The same model has been adopted by India in the form of the Arbitration and Conciliation Act, 1996.

[4]    (1992) 2 AC 128 : (1992) 2 WLR 174 : (1992) 1 All ER 453 (HL).

[5]    Ibid.

[6]    See generally, Dhanani v. Crasnianski, (2011) 2 All ER (Comm) 799 : 2011 EWHC 926 (Comm) and Shaker v. Vistajet Group Holding SA, (2012) 2 All ER (Comm) 1010 : 2012 EWHC 1329 (Comm).

[7]    (2002) 2 All ER (Comm) 1041 : 2002 EWHC 2059 (Comm).

[8]    (2008) 1 All ER (Comm) 653 : 2007 EWHC 2495 (TCC).

[9]    Ibid.

[10]   (2013) 1 WLR 102 : (2012) 2 All ER (Comm) 795 : (2012) 1 Lloyd’s Rep 671 (CA).

[11]   (2013) 1 Lloyd’s Rep 11 : (2013) 1 All ER (Comm) 1226.

[12]   (2015) 1 WLR 1145 : 2014 EWHC 2104 (Comm).

[13]   (2009) 127 Con LR 202.

[14]   2012 SGHC 226.

[15]   Cass.com. 29-4-2014, n° 12-27.004.

[16]   2004 SCC OnLine Del 707 : (2004) 3 Arb LR 100 (Del).

[17]   Ibid.

[18]   2004 SCC OnLine Del 707 : (2004) 3 Arb LR 100, 102, para 2 (Del).

[19]   (2002) 2 SCC 388.

[20]   (2000) 8 SCC 159.

[21]   (2005) 8 SCC 618.

[22]   2004 SCC OnLine Del 707 : (2004) 3 Arb LR 100 (Del).

[23]   (2005) 8 SCC 618.

[24]   1999 SCC OnLine Ker 149 : AIR 1999 Ker 440.

[25]   1999 SCC OnLine Ker 149 : AIR 1999 Ker 440, 442, para 6.

[26]   (2005) 6 SCC 281.

[27]   (2009) 2 SCC 55.

[28]   (2014) 6 SCC 677.

[29]    (2014) 6 SCC 677, 686, para 13.

[30]     (2009) 2 SCC 55.

[31]     (2014) 6 SCC 677.

[32]     Ibid.

[33]   Arbitration Case No. 4 of 2013 (All).

[34]   Ibid.

[35]   (2014) 2 SCC 201.

[36]   Ibid.

[37]   Arbitration Case No. 4 of 2013 (All).

[38]   (2014) 2 SCC 201.

[39]   Ibid.

[40]   Arbitration Case No. 4 of 2013 (All).

[41]   1999 SCC OnLine Ker 149 : AIR 1999 Ker 440.

[42]   (1999) 2 SCC 594.

[43]   (1999) 2 SCC 594, 605, para 17.

[44]   Arbitration Case No. 4 of 2013 (All).

2 comments

  • Avatar

    Very well written article.

    Clearly brings out many facets of the multi tiered dispute resolution clauses and their significance.

  • Avatar

    Nice article.
    Though it only talks about ‘tiered dispute resolution clauses’ in the context of steps preceding an arbitration, another aspect of tiered clauses is ‘appellate arbitration clauses’ wherein if a party is not satisfied with the award, it can appeal to a larger or different arbitration tribunal.
    Example of such clause –
    “All disputes arising between the parties shall be settled by arbitration in India. If either party is in disagreement with the arbitration result in India, either party will have the right to appeal to a second arbitrator in London, UK and the result of this second arbitration will be binding on both the parties.”
    The enforceability of such clauses is still in question before the Supreme Court in the case of Centrotrade Minerals & Metals v Hindustan Copper Limited: 2006 (11) SCC 245.
    The case did not produce any clear verdict, with both Justice Sinha and Justice Chatterjee giving widely contrasting opinions. The matter now is before a three judge bench of the Supreme Court and we are still awaiting judgement since the last 8 years.

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