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TMI Blog2000 (10) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... , V.B. Sharya, P.B. Suresh and Vipin Nair for the Respondent. ORDER M. Jagannadha Rao, J. - Learned Solicitor General of India Sri Harish Salve, appearing for the appellants, has submitted that the order dated 4-7-1997 of the learned Chief Justice of the Bombay High Court, under section 11 of the Arbitration and Conciliation Act, 1996 ( the Act ) on the preliminary issues is a judicial order and, on facts, is liable to be set aside under Article 136 of the Constitution of India. It is contended that, even if it is to be treated as administrative in nature, it is amenable to article 136. 2. The learned Chief Justice in his order dated 4-7-1997 held that inasmuch as the appellant-company failed to appoint Arbitrators as required under the arbitration clause, the appellants should be compelled to furnish a panel of names of arbitrators to the respondent-contractors and one name should be suggested by the appellants. The learned Chief justice had also rejected the plea of the appellants that no reference be made as the matters were excepted matters and held that the question whether the claims related to excepted matters or not was also to be decided by the arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w well-settled in several countries, where the Uncitral model has been adopted and where the arbitrator also is permitted to decide questions as to the existence of the arbitration clause or validity of the agreement - that the court can decide certain preliminary disputes which are raised before it at or before the appointment of arbitrators - such as disputes relating to existence of the arbitration agreement or a question as to the very existence of a dispute or as to whether the items of disputes fell within excepted matters or whether an arbitrator could be appointed where the invocation of the clause by one party was beyond the prescribed period in which one has to ask the other side to appoint an arbitrator, etc. It is true that under section 16(1) of the new Act, the arbitrator is now empowered to decide his own jurisdiction including any objection as to the existence or validity of the agreement and for that purpose the arbitration clause is deemed to be independent of the main contract (called Kompetenz- Kompetenz principle). The counsel contends that, it may be that in situations where the matter has straightway gone before an arbitrator by act of parties without int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 Act) or a similar provision of the law governing arbitration at the seat of the arbitration (as in Article 8 of the Model Law). The relevant national court must decide whether the arbitration agreement is null and void, inoperative or incapable of being performed; if it is not, the parties will be referred to arbitration." ( See also para 5.51 which deals with a combined approach ). 7. In several countries, the negative effects of the Kompetenz-Kompetenz principle, conferring powers on the arbitrator, has been considered. 8. In this connection, there is an exhaustive and detailed discussion of this aspect in Fouchard, Gaillard Goldman on International Arbitration) [1999] (paras 672 to 682) (pages 407-413), referring to the post-UNCITRAL case-law in France, Austria, Sweden, Belgium, Netherlands, USA etc. to the effect that if the Court is first seized of these preliminary issues before appointment of arbitrator, - even in cases where the arbitrator, under the statute, is empowered to decide these questions - the Court can and will decide these issues first rather than permit the arbitrator to decide them. The experience of the various Courts in these countries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and then the Courts to reach their decisions." In a very recent case in Azov Shipping Co. v. Baltic Shipping Co. [1999(1) LL LR 68], which arose under the 1996 Act, the parties had first gone before the arbitrator on the preliminary question of jurisdiction, the matter was argued for three days to ascertain whether or not there was a contract with the respondent and the arbitrator held that the respondent before him was a party to the contract. The matter then came under section 67 before the Court. The Court observed that this was perhaps a case where the parties could have straight come first before the Court for determination on this issue and that would have saved costs and time. (The English Act permits parties to take consent or by consent of the arbitrator, to go to Court on jurisdictional issues). Rix J said (p. 70): "This was perhaps a case where the parties might well have come to Court, either by agreement or upon an application from the one side or the other, for the court to determine issues of jurisdiction, on the ground that it was likely to produce substantial savings in cost and that there was good reason why the matter should be decided by the Court." [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e administrative in nature. That is the contention. 12. It was pointed out by the learned Solicitor General that in this very case, the learned Chief Justice of the Bombay High Court had passed a judicial order on the preliminary issues raised - and which could be raised at the stage anterior to the appointment of the arbitrator. These issues had to be decided. Other examples are also referred to. The case in SLP(C) No. 19549 of 1999 which was heard by the three Judge Bench (From the order of the Chief Justice, Gauhati) alongwith Konkan Railway Corpn. s case ( supra ) ( see para 8 at p.77) is one such. But the three Judge Bench however characterised a detailed reasoned judicial order of the Chief Justice, Gauhati in that SLP as an administrative order though the Chief Justice had decided a preliminary issue concerning the existence or otherwise of an arbitration agreement. Learned Solicitor General argued that the judgment of the three judge Bench was not correct in stating that the Chief justice of Guwahati was not functioning as a Court when the said order was passed. A similar question arose in Wellington Associates Ltd. v. Mr. Kirit Mehta [JT 2000 (4) SC 135] (be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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