Discovery And Inspection Orders By Arbitral Tribunal Are Not Interim Awards If They Do Not Resolve Disputed Issues: Delhi High Court

Brief Facts:

The matter pertained to a petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 where Aptec Advanced Protective Technologies AG (Petitioner) challenged what it describes as an interim award made by the Sole Arbitrator on November 18, 2010. This award dismissed four applications filed by the Petitioner, who was the claimant in the arbitral proceedings, seeking the discovery of certain documents from Union of India (Respondent).

The four applications filed by the Petitioner before the Arbitrator sought various documents. In summary:

- Application I.A. No. 1 of 2009 sought several documents including Acceptance Test Procedures and Defect Investigation Reports related to specific models of boots. The Arbitrator found that some documents were not available because they did not exist or had been provided through other means while others were deemed confidential or irrelevant.

- Application I.A. No. 2 of 2009 requested the production of a Field Trial Report for a particular model of boot. The Arbitrator noted that the report had been produced but concluded that the trial was conducted on a limited scale that did not warrant further disclosure.

- Application I.A. No. 3 of 2009 sought several documents including Field Trial Directives and Purchase Orders. The Arbitrator found that these documents were either outdated, confidential, or irrelevant to the case.

- Application I.A. No. 4 of 2009 sought details of investigations and correspondence regarding boot crampons. The Arbitrator deemed this application belated and ruled it as an attempt to conduct a fishing inquiry, with no specific plea being made by the claimant for the documents.

The dispute underlying these applications revolved around the Petitioner, a Swiss company, filing a claim against the Respondent for the non-payment of boots supplied for ice-wall climbing at the Siachen Glacier. The Respondent contended that the boots were defective, while the Petitioner argued that the defect was due to obsolete crampons attached to the boots, which were sourced from a different supplier.

The Respondent raised a preliminary objection regarding the maintainability of the petition under Section 34 of the Arbitration Act arguing that the decision does not constitute an interim award and thus is not subject to challenge under this provision. The Petitioner argued that the decision effectively addressed a key aspect of the dispute—whether the crampons were satisfactory and compatible with the boots—thus making it an interim award. The Petitioner contended that this decision prejudged a part of the claim and should be challengeable under Section 34, read with Section 31(6) of the Arbitration Act.

Observations by the High Court:

The High Court noted that the Arbitrator, in deciding the four applications related to the discovery and inspection of documents, engaged in a detailed analysis of various aspects of the disputes between the parties. While the Arbitrator's decision does delve into several issues, the High Court noted that the Arbitrator explicitly stated that this decision does not address the merits of the underlying disputes. Although the phrasing of the decision might give the impression that the Arbitrator has made a final determination regarding the quality of the crampons and their compatibility with the boots, the Arbitrator clarified in the minutes of the meeting dated April 5, 2011, that the orders were limited to the discovery and inspection of documents and did not constitute a final resolution of the disputes.

The High Court referred to its own decision in Rhiti Sports Management (P) Ltd. vs. Power Play Sports & Events Ltd. The High Court in that case discussed the attributes of an interim award under Section 32 of the Arbitration Act. It explained that a final award would represent the culmination of disputes, either through adjudication or otherwise. Section 31(6) of the Arbitration Act allows an Arbitral Tribunal to issue an interim award on any matter that could eventually be addressed in a final award. For an order to be considered an interim award, it must address a matter that the tribunal can ultimately resolve through a final award. The High Court held that a final award resolves either all disputes or the remaining disputes if partial or interim awards have been issued previously. Thus, for an order to be deemed an arbitral award, it must settle a dispute at issue between the parties and conform to the requirements of Section 31 of the Arbitration Act. The High Court held that procedural orders or those that do not settle a matter at issue do not qualify as arbitral awards.

The High Court noted that the Arbitrator's impugned decision acknowledged that the central issue in the arbitration, Issue No. 6 regarding the alleged defectiveness or sub-standard quality of the boots, remains unresolved. The decision does not dispose of Issue No. 6, which was crucial to the arbitration proceedings. Consequently, the High Court held that the impugned decision does not qualify as an interim award as it does not settle any matter at issue between the parties.

Given these considerations, the High Court held that the impugned decision is not an interim award but merely an order on the applications concerning discovery and inspection of documents.

Therefore, the High Court dismissed the petition.

Case Title: Aptec Advanced Protective Technologies Ag Vs Union Of India & Anr

Citation: 2024 LiveLaw (Del) 944

Case Number: O.M.P. (COMM) 216/2020

Advocate for the Petitioner: Mr. Ashish Dholakia, Senior Advocate with Mr. Akash Panwar & Mr. Rohan Chawla, Advocates.

Advocate for the Respondent: Ms. Mamta Tiwari with Ms. Veronica Mohan, Advocates.

Date of Judgment: 20th August 2024

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