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2013 (5) TMI 402 - SC - Companies LawArbitration application u/s 11(4) read with Section 11(10) of the Arbitration and Conciliation Act, 1996 What is the scope and ambit of the powers of the Chief Justice u/s 11(6) of the said Act? - In the instant case, the Arbitration Agreement provides that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL. Devas (respondent) made a request for arbitration to the ICC International Court of Arbitration on 29th June, 2011, in accordance with the aforesaid Agreement and one Mr. V.V. Veedar was appointed by Devas (respondent) as its nominee Arbitrator. By the letter written by the International Chamber of Commerce on 5th July, 2011, the Petitioner was required to appoint its nominee Arbitrator, but it chose not to do so and instead made an application under Section 11(6) of the 1996 Act and also indicated that it had appointed Mrs. Justice Sujata V. Manohar, as its Arbitrator in terms of Article 20(9) of the Agreement. Held that - The law is well settled that where an Arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an Arbitrator is not maintainable. Once the power has been exercised under the Arbitration Agreement, there is no power left to, once again, refer the same disputes to arbitration under Section 11 of the 1996 Act, unless the order closing the proceedings is subsequently set aside. In view of the language of Article 20 of the Arbitration Agreement which provided that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL, Devas (respondent) was entitled to invoke the Rules of Arbitration of the ICC for the conduct of the arbitration proceedings. Article 19 of the Agreement provided that the rights and responsibilities of the parties thereunder would be subject to and construed in accordance with the laws of India. There is, therefore, a clear distinction between the law which was to operate as the governing law of the Agreement and the law which was to govern the arbitration proceedings. Parties had agreed that the procedure for the arbitration would be governed by the ICC Rules, the same would necessarily include the appointment of an Arbitral Tribunal in terms of the Arbitration Agreement and the said Rules. Thus, Arbitration Petition u/s 11(6) of the 1996 Act for the appointment of an Arbitrator must, therefore, fail and is rejected.
Issues Involved:
1. Unilateral invocation of ICC Rules for arbitration. 2. Correctness of TDM Infrastructure v. UE Development judgment. 3. Jurisdiction of the Court under Section 11 to declare the constitution of an arbitral tribunal invalid. 4. Jurisdiction of an arbitral tribunal constituted by an institution. 5. Court's jurisdiction under Section 11 to interfere after the constitution of an arbitral tribunal. 6. Definition of international commercial arbitration between two Indian companies. 7. Maintainability of the petition and conditions precedent for exercising jurisdiction under Section 11. Issue-wise Detailed Analysis: 1. Unilateral Invocation of ICC Rules for Arbitration: The arbitration agreement between the parties allowed for arbitration under either ICC Rules or UNCITRAL Rules. Devas unilaterally invoked the ICC Rules and appointed an arbitrator without consulting the petitioner. The court emphasized that once the arbitration clause is invoked and an arbitrator is appointed, the arbitration agreement cannot be invoked again by the other party. The petitioner should have challenged the appointment under Section 13 and Section 34 of the Arbitration and Conciliation Act, 1996, rather than filing a fresh application under Section 11(6). 2. Correctness of TDM Infrastructure v. UE Development Judgment: The court did not delve into the correctness of the TDM Infrastructure judgment as the primary issue to be resolved was whether Section 11 could be invoked after ICC Rules had been invoked by one party. 3. Jurisdiction of the Court under Section 11 to Declare Constitution of Arbitral Tribunal Invalid: The court held that once an arbitral tribunal is constituted under the agreed rules (ICC in this case), the jurisdiction to question its validity lies with the tribunal itself under Section 16 of the 1996 Act. The Chief Justice or his designate under Section 11 does not have the authority to replace an already appointed arbitrator. 4. Jurisdiction of an Arbitral Tribunal Constituted by an Institution: The court reiterated the Kompetenz-Kompetenz principle under Section 16, which allows the arbitral tribunal to rule on its own jurisdiction, including the validity of its constitution. Any challenge to the tribunal's jurisdiction should be raised before the tribunal and not under Section 11 of the Act. 5. Court's Jurisdiction under Section 11 to Interfere after Constitution of Arbitral Tribunal: The court concluded that once an arbitral tribunal is constituted, the court does not have jurisdiction under Section 11 to interfere and constitute another tribunal. The remedy for any grievance regarding the constitution of the tribunal lies within the arbitral process itself, as per Sections 13 and 34 of the Act. 6. Definition of International Commercial Arbitration between Two Indian Companies: The court did not address this issue in detail as it was not central to the resolution of the primary question regarding the invocation of ICC Rules and Section 11. 7. Maintainability of the Petition and Conditions Precedent for Exercising Jurisdiction under Section 11: The court found that the petition under Section 11(6) was not maintainable since the arbitration clause had already been invoked by Devas under the ICC Rules. The petitioner's proper course of action was to challenge the appointment within the arbitration framework rather than seeking a fresh appointment under Section 11. Conclusion: The court dismissed the arbitration petition, emphasizing that once the ICC Rules were invoked and an arbitrator appointed, the petitioner could not seek to re-invoke the arbitration agreement under Section 11(6). The appropriate remedy for the petitioner was to challenge the appointment under the provisions of the Arbitration and Conciliation Act, 1996. Each party was ordered to bear its own costs.
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