2014 (7) TMI 544 - SC - Indian Laws

Appointment of arbitrator - The case of the appellant is that the Company had completed a major part of the work. This was disputed by the respondents. According to them, only 41% of the work was completed as on 22.12.2007, based on the original contract price. - Held that - In view of stand taken by the parties and as they mutually agreed for arbitration by retired Hon ble Judge of the Kerala High Court, without going into the question of merit, we set aside the impugned order dated 19th July, 2010 and refer the matter to Hon ble Mr. Justice K. John Mathew (retired). The parties will negotiate and settle the terms and conditions of arbitration. It is expected that the arbitration proceeding will be concluded at an early date.

Summary

Issues:
1. Rejection of appellant's prayer for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 by the High Court.
2. Interpretation of clauses related to Dispute Review Expert and arbitration agreement in the contract.
3. Disagreement on the existence of a valid arbitration agreement due to the absence of nomination of Dispute Review Expert.
4. Reference to previous court decisions regarding arbitration clauses in contracts.
5. Mutual agreement of parties on the appointment of an arbitrator.

Issue 1: Rejection of Appellant's Prayer for Appointment of an Arbitrator:
The appellant's appeal was directed against the High Court's order rejecting their prayer for the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The High Court dismissed the request, citing the absence of an arbitration agreement as the basis for their decision.

Issue 2: Interpretation of Clauses Related to Dispute Review Expert and Arbitration Agreement:
The appellant relied on Clauses 24 and 25 of the Standard Bidding Document, which outlined the procedure for disputes and the appointment of a Dispute Review Expert. These clauses specified the process for resolving disputes and the subsequent arbitration procedure if needed.

Issue 3: Disagreement on the Existence of a Valid Arbitration Agreement:
The respondents contended that the absence of the nomination of a Dispute Review Expert invalidated any arbitration agreement. They highlighted a specific clause in the contract that stated arbitration shall not be a means of settling disputes, leading to a dispute over the existence of a valid arbitration agreement.

Issue 4: Reference to Previous Court Decisions:
The appellant's counsel referenced a previous court decision regarding arbitration clauses in contracts, emphasizing the importance of specific clauses and procedures for arbitration. The court distinguished the case relied upon by the appellant, indicating a need for clarity and specificity in arbitration-related clauses.

Issue 5: Mutual Agreement of Parties on the Appointment of an Arbitrator:
Following the parties' joint application, they mutually agreed on the appointment of a retired Honorable Judge of the Kerala High Court as the arbitrator. The Supreme Court, considering this mutual agreement, set aside the previous order and referred the matter to the agreed arbitrator, expecting a prompt conclusion of the arbitration proceedings.

In conclusion, the Supreme Court disposed of the appeals with the directive for the parties to negotiate and settle the terms and conditions of arbitration with the appointed arbitrator, Honorable Mr. Justice K. John Mathew (retired), emphasizing the importance of a swift resolution without additional costs incurred by either party.