2016 (7) TMI 1119 - SC - Indian Laws

Arbitration and Conciliation - appointment of a sole arbitrator for adjudication of disputes that have arisen between the parties in relation to Buyers Agreement dated 18.10.2012 executed between them - Held that - As is evident from the averments in the petition, disputes have actually arisen between the parties in relation to the agreement and in view of clause 14 such disputes could be resolved only by way of arbitration. Whether the respondent is bound to pay Euro 393916.95 alongwith interest at the rate of 24% per annum; whether the respondent has committed breach of Clause 2.2 of the agreement in cancelling the orders; whether the respondent is liable to compensate for cancelling the orders and reimburse the cost and damages incurred by the petitioner; whether the respondent acted in violation of Clause 4.1 of Buyers Agreement dated 18.10.2012 by diverting the orders to another agency and, if so, whether the respondent is liable to compensate the petitioner and such other incidental questions can be examined only by the arbitrator. When an arbitration agreement exists between the parties, the present petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions. In the result, we allow this petition and appoint Mr. Justice Kailash Gambhir, a Former Judge, Delhi High Court as a Sole Arbitrator for adjudication of the disputes that have arisen between the parties in relation to the Buyers Agreement dated 18.10.2012 executed between them. We leave it open for the parties to make their claims and counter claims in relation to the agreement aforementioned before the Arbitrator.

Summary

Issues involved:
Appointment of a sole arbitrator for adjudication of disputes arising from a 'Buyers Agreement' dated 18.10.2012 between the petitioner and the respondent.

Analysis:
The petitioner, a proprietorship firm engaged in manufacturing home furnishing products, had a long-standing business relationship with the respondent, a concern from France. Disputes arose when the respondent failed to pay outstanding dues as per the 'Buyers Agreement.' Additionally, the respondent breached clauses related to product supply exclusivity and order targets, leading to cancellation of orders and purchasing from other firms in violation of the agreement.

The petitioner invoked arbitration clause 14 of the 'Buyers Agreement' for the appointment of arbitrators, following which legal actions were taken in France to recover unpaid dues. The French courts dismissed the petitioner's claims, citing jurisdiction issues and the existence of an arbitration agreement. The petitioner then filed a petition before the Supreme Court to appoint a sole arbitrator as per the arbitration clause in the agreement.

The Supreme Court noted that disputes had indeed arisen between the parties concerning payment, order cancellations, and breach of agreement clauses. Given the presence of an arbitration clause, the Court allowed the petition under Section 11 of the Arbitration and Conciliation Act, 1996, appointing a former Delhi High Court Judge as the sole arbitrator. The parties were directed to present their claims and counterclaims before the arbitrator, who would determine the resolution of the disputes outlined in the 'Buyers Agreement.'

In conclusion, the Supreme Court granted the petition, appointing a sole arbitrator to adjudicate the disputes arising from the 'Buyers Agreement.' The parties were instructed to appear before the arbitrator to present their claims, and all legal contentions could be raised before the arbitrator for resolution.