'Constitution Of Separate Arbitral Tribunals A Mischief' : Delhi HC Issues Series Of Directions To Avoid Multiplicity Of Arbitration Proceedings [Read Order]

Before passing the directions, the Single Bench of Justice Prathiba M Singh observed that:

'Though there is no doubt that multiple arbitrations are permissible, it would be completely contrary to public policy to permit parties to raise claims as per their own convenience. While provisions of the CPC do not strictly apply to arbitral proceedings, the observations of the Supreme Court in Dolphin (supra) show that when an arbitration clause is invoked, all disputes which exist at the time of invocation ought to be referred and adjudicated together.'

The court further observed that:

'This is necessary in order to ensure that there is certainty in arbitral proceedings and the remedy of arbitration is not misused by parties. The constitution of separate arbitral tribunals is a mischief which ought to be avoided, as the intent of parties may also not be bona fide.'

The order has come in a petition filed by Gammon India Private Limited against the National Highway Authority of India raising multiple disputes regarding the fixation of rates and violation of other terms of the contract.

The history of the dispute is marked by the invocation of multiple arbitral tribunals adjudicating upon different issues raised by the parties at different stages.

Before delving into the merits, the court highlighted that it is multiplicity which renders the entire arbitration process to be complex. The court further highlighted that repeated steps have been taken in judgments and by amendments to the law, to make the system efficient, but more needs to be done.

In order to resolve the issue of multiplicity in arbitration process, the court passed the following directions:

1. In every petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter, "Section 34 petition"), the parties approaching the Court ought to disclose whether there are any other proceedings pending or adjudicated in respect of the same contract or series of contracts and if so, what is the stage of the said proceedings and the forum where the said proceedings are pending or have been adjudicated.
2. At the time when a Section 34 petition is being heard, parties ought to disclose as to whether any other Section 34 petition in respect of the same contract is pending and if so, seek disposal of the said petitions together in order to avoid conflicting findings.
3. In petitions seeking appointment of an Arbitrator/Constitution of an Arbitral Tribunal, parties ought to disclose if any Tribunal already stands constituted for adjudication of the claims of either party arising out of the same contract or the same series of contracts. If such a Tribunal has already been constituted, an endeavor can be made by the arbitral institution or the High Court under Section 11, to refer the matter to the same Tribunal or a single Tribunal in order to avoid conflicting and irreconcilable findings.
4. Appointing authorities under contracts consisting of arbitration clauses ought to avoid appointment or constitution of separate Arbitrators/ Arbitral Tribunals for different claims/disputes arising from the same contract, or same series of contracts.

In light of these directions, the court further directed that the present order shall be sent to the Registrar General for being placed before the Chief Justice for considering if any modifications are required to be made in the Rules of the Delhi High Court framed under the Arbitration and Conciliation Act, 1996.

The court has asked for the present order to be sent to the Secretary, Ministry of Law & Justice, Government of India and the Chairman, National Highway Authority of India.

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