2019 (7) TMI 2014 - HC - Indian Laws

Appointment of a sole Arbitrator for adjudicating the disputes - Section 11(6) of the Arbitration and Conciliation Act 1996 - HELD THAT - The Court while exercising its power under Section 11 of the Act cannot recast the terms of the Contract and direct the parties to go for a composite arbitration contrary to the procedure prescribed under the arbitration clause provided in distinct arbitration agreements. The overlapping of the issues does not mean that the arbitration proceedings under the two respective contracts cannot commence and continue independently. Fundamental feature of an arbitration agreement is that there is an understanding between the parties to adopt alternate mechanism for the adjudication of the future disputes that arise between them. The law does not prescribe any standard form of arbitration agreement and the parties are free to agree upon a procedure and designate the private forum where the parties would like to go in case the disputes and differences arise between them. Thus there is to be consensus ad-idem between the parties regarding the choice of the forum. The Supreme Court in certain judgments has held that in certain exceptional circumstances the Court has a power to make an appointment of the Arbitrator notwithstanding the choice of the specified forum agreed between the parties. Parties were conscious of the terms of the agreement and they willingly and consciously agreed for the arbitral procedure envisaged under the agreement without any reservation. Petitioner is now suggesting that the agreed choice of forum should be ignored and that part of the Agreements should be severed and further Respondent should tow it s line and agree to the Arbitral Tribunal contrary to what has been provided in the Contracts. This cannot be permitted and thus the relief claimed in the present petition for appointment of a common arbitrator cannot be granted. There is no merit in the present petition and the same is dismissed.

Summary

Issues Involved:
1. Appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Interconnected and overlapping disputes between the parties.
3. Separate and distinct arbitration clauses in the agreements.
4. Feasibility of composite arbitration.
5. Invocation of arbitration agreement and adherence to the agreed procedure.

Detailed Analysis:

1. Appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996:
The petitioner sought the appointment of a sole arbitrator to adjudicate disputes arising under various agreements with Respondent Nos. 1 and 2. The court found the petition wholly misconceived and untenable in law. The disputes and differences between the parties were acknowledged, but the court emphasized that the prayer for a sole arbitrator could not be allowed due to the distinct and separate arbitration clauses in the agreements.

2. Interconnected and overlapping disputes between the parties:
The petitioner argued that the agreements were interconnected and overlapping, necessitating a composite arbitration to avoid conflicting awards and multiplicity of proceedings. The court recognized the interconnected nature of the disputes but held that this alone could not justify directing a composite arbitration. The commercial transactions had two limbs: Dealership Arrangement and Financing Arrangement, each governed by separate agreements with distinct arbitration clauses.

3. Separate and distinct arbitration clauses in the agreements:
The court highlighted the distinct arbitration clauses in the agreements. For instance, the Dealership Agreement with Respondent No. 1 provided for arbitration administered by the Singapore International Arbitration Centre (SIAC), while the financing agreements with Respondent No. 2 had different arbitration mechanisms. The court noted that Respondent No. 2 was not a party to the Dealership Agreement and vice versa, making a composite arbitration impractical and contrary to the agreed terms.

4. Feasibility of composite arbitration:
The court rejected the petitioner's plea for a composite arbitration, stating that it would amount to rewriting the terms of the agreements. The invocation notice was found unspecific and not as per the procedure prescribed under the arbitration agreements. The court emphasized that directing a composite arbitration would be contrary to the contractual terms and the distinct arbitration mechanisms agreed upon by the parties.

5. Invocation of arbitration agreement and adherence to the agreed procedure:
The court found that the petitioner had not proceeded as per the agreed procedure under any of the arbitration agreements. The invocation notice was contrary to the contracts, and the petitioner had called upon the respondents to agree to an arbitration mechanism contrary to the agreed procedure. The court reiterated that it could not recast the terms of the contracts and direct a composite arbitration contrary to the prescribed procedure.

Conclusion:
The court dismissed the petition for the appointment of a common arbitrator, emphasizing that the parties must adhere to the arbitration mechanisms provided in their respective agreements. The dismissal does not preclude the parties from invoking the arbitration clauses and seeking the appointment of the Arbitral Tribunal as per the agreed procedures. No order as to costs was made.