2008 (11) TMI 714 - SC - Indian Laws

Summary

Issues Involved:
1. Appointment of Arbitrator u/s 11 of the Arbitration and Conciliation Act, 1996.
2. Existence and validity of Arbitration Clause.
3. Nature of the Agreement: Commercial or Employment Contract.
4. Jurisdiction of Chief Justice of India in International Commercial Arbitration.

Summary:

1. Appointment of Arbitrator u/s 11 of the Arbitration and Conciliation Act, 1996:
The petitioner filed an application u/s 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a third arbitrator as Presiding Arbitrator or a Sole Arbitrator due to a dispute with the respondent. The petitioner initially approached the High Court of Gujarat, but the application was withdrawn following the respondent's objection that the matter involved International Commercial Arbitration, thus falling under the jurisdiction of the Chief Justice of India.

2. Existence and Validity of Arbitration Clause:
The respondent contended that there was no arbitration clause in the agreement. However, Clause 12 of the agreement explicitly provided for arbitration, stating, "If there be any dispute pertaining to meaning of this MoU or of any nature, will be solved and decided by appointing an independent Arbitrator acceptable to all the parties." The Court found this clause to be a valid arbitration clause.

3. Nature of the Agreement: Commercial or Employment Contract:
The respondent argued that the agreement was an employment contract, thus outside the scope of the Act. The Court examined the responsibilities and roles assigned to the respondent, including his appointment as Director (Technical) and Chief Executive Officer of the subsidiary company, and concluded that the agreement involved commercial elements. The Court referred to precedents and the UNCITRAL Model Law, which broadly defines "commercial" to include consultancy and other business-related activities. The Court held that the respondent's role was dual, involving both employment and commercial responsibilities, making the dispute subject to arbitration.

4. Jurisdiction of Chief Justice of India in International Commercial Arbitration:
The respondent, being a British national, brought the case within the definition of "International Commercial Arbitration" u/s 2(1)(f) of the Act. Consequently, the Chief Justice of India had the jurisdiction to appoint an arbitrator. The Court rejected the respondent's preliminary objections and upheld the application for arbitration.

Conclusion:
The Court allowed the application, holding that the dispute was covered by Clause 12 of the MoU and fell under International Commercial Arbitration. The Court appointed Mr. Madhukar Fanse, retired Judge, City Civil Court, Ahmedabad, as the sole arbitrator to resolve the dispute.