Case BriefsHigh Courts

Karnataka High Court: While deciding a civil petition under Section 11(6) and (8) read with Section 15(2) of the Arbitration and Conciliation Act, 1996, a Single Judge Bench comprising of Vineet Kothari, J. dismissed the petition holding that the essentials required for exercise of Court’s power under S. 11(6) of the Act were not fulfilled.

The petitioner filed the petition against the respondent, praying before the Court to appoint an arbitrator. Learned counsel for the petitioner submitted that the Arbitral Tribunal constituted in terms of the contract between the parties was re-constituted at the request of the respondent. The said Tribunal was directed by the High Court to conclude the proceedings within a period of six-months. It was submitted that the said Tribunal had failed to conclude the proceedings even after a long time. And being aggrieved by non admission of his claim before the Tribunal, the petitioner preferred a writ petition before the High Court which was pending. Hence, he prayed that a fresh arbitrator may be appointed in the present case.

The Court perused the record as well as submissions made on behalf of the parties and opined that Section 11(6) of the Act envisages intervention and appointment of an arbitrator by the Court, only if the parities to the agreement fail to act as required under the procedure agreed between them or the arbitrator fails to perform the functions entrusted to him. Therefore, it is only on the failure of the parties or the arbitrator that such a petition under Section 11(6) can be preferred and not where the arbitral tribunal was already seized of the arbitration proceedings under the agreed procedure.

In the instant case, the Court found that the Arbitral Tribunal was already constituted and it was seized of the dispute. It was not a case where the Tribunal failed to perform its functions. In fact, the petitioner was himself responsible for the delay in proceedings by filing unnecessary writ petition which was still pending before the Court. Accordingly, the petition was found to be sans merits and dismissed. [Hindustan Steel Works Construction Ltd. v. Union of India, CMP No. 102 of 2015, order dated  02.11.2017]

Case BriefsHigh Courts

Karnataka High Court: While passing the order in a petition filed under S. 11(5) of the Arbitration and Conciliation Act, 1996 praying to appoint an Arbitral Tribunal, a Single Judge Bench of A.S. Bopanna, J. held that since the process of constitution of Arbitral Tribunal as decided by the parties became unworkable, the Court was empowered to act under S. 11(6) of the Act to constitute the Tribunal.

The petitioner and the respondent entered into a trade agreement which provided for an arbitration clause where under it was agreed that in case of a dispute, the parties will resolve it through arbitration. The clause provided that from the panel of 5 arbitrators enlisted by the respondent, both the parties are to chose 1 arbitrator each who will further choose the third arbitrator. But in the facts of the situation, three out of five arbitrators on the enlisted panel declined to act as an arbitrator. In such circumstances, the petitioner claimed that the arbitration clause became unworkable and this petition was filed.

The respondent opposed the petition contending that the Tribunal had to be re-constituted by the respondent themselves in terms of the general conditions of the contract and the instant petition filed under S. 11 of the Act was not maintainable.

The Court was faced with the question that whether in the facts of the present case, it should decline to entertain the petition and permit the constitution of the Tribunal only from the panel of Arbitrators as re-constituted by the respondent.

The Court perused the arbitration clause and held that it did not provide for the contingency where 3 out of 5 Arbitrators on the panel decline to act. In such a situation the constitution of the Arbitral Tribunal under the contract failed but the arbitration clause subsisted. The situation was such that the parties concerned had to approach the Court by invoking S. 11(5) of the Act and the Court was empowered to constitute an Arbitral Tribunal under S. 11(6) of the Act. Accordingly, the Court appointed three members to constitute the Arbitral Tribunal as prayed for by the petitioner. [JMC Projects (India) Ltd. v. Bangalore Metro Rail Corporation Ltd., C.M.P. No. 97/2016, decided on 06.09.2017]