Arbitration Cases Weekly Round-Up: 21 To 27 May, 2023

Supreme Court:

Limitation Period For Arbitration | Cause Of Action To Appoint Arbitrator Commences From The “Breaking Point” Between Parties : Supreme Court

Case Title: M/s B and T AG vs Ministry of Defence

The Supreme Court has held that the cause of action to appoint an arbitrator would commence from the “Breaking Point” at which any reasonable party would abandon efforts for at arriving at a settlement and contemplate referral of the dispute for arbitration. “Breaking Point” should be treated as the date at which the cause of action arose for the purpose of limitation.

The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has observed that the entire history of the negotiation between the parties must be specifically pleaded and placed on record, in order to facilitate the Court to find out what was the “Breaking Point” for the purpose of limitation computation. 

Limitation Period For Arbitration | Mere Negotiations Between Parties Will Not Postpone The Cause Of Action : Supreme Court

Case Title: M/s B and T AG vs Ministry of Defence

The Supreme Court while adjudicating an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator, has held that the limitation period of three years for filing such application would commence from the date when the cause of action arose. Subsequent negotiations between the parties, which take place after the cause of action has arisen, will not postpone the cause of action for the purpose of limitation computation.

The Bench comprising of the Chief Justice Dr. Dhananjaya Y. Chandrachud and Justice J. B. Pardiwala, while adjudicating an appeal filed in M/s B and T AG v Ministry of Defence, has held that, “Negotiations may continue even for a period of ten years or twenty years after the cause of action had arisen. Mere negotiations will not postpone the “cause of action” for the purpose of limitation. The Legislature has prescribed a limit of three years for the enforcement of a claim and this statutory time period cannot be defeated on the ground that the parties were negotiating.”

High Courts:

Calcutta High Court:

Delay In Resuming The Arbitration Proceedings Will Not Make The Claim Time Barred: Calcutta High Court

Case Title: East India Minerals Limited vs The Orissa Mineral Development Company Limited

The Calcutta High Court has held that once the arbitral proceedings have been commenced pursuant to reference under Section 21 of the Arbitration and Conciliation Act, 1996, any delay in the conclusion/resumption of such proceedings would not wipe out the arbitral reference. 

The bench of Justice Shekhar B. Saraf held that arbitral proceedings cannot be rendered inoperative for the reason that there was some delay in the conclusion of the proceedings or that the proceedings were stalled and its resumption took a long time. 

Delhi High Court:

Agreement Providing For Exclusive Appointment Of Party’s Nominee As Arbitrator, Conditional Acceptance; A Case Of Non-Survival Of Arbitration Clause: Delhi High Court

Case Title: M/s Vindhya Vasini Construction Co vs M/s Bharat Heavy Electricals Ltd

The Delhi High Court has ruled where the Arbitration Agreement unambiguously provides that in case the stipulated person cannot act as an Arbitrator, the dispute is not to be referred to Arbitration at all, the same reflected the conditional acceptance of Arbitration by the party.

The bench of Justice Navin Chawla further remarked that it cannot be said that the said condition stipulated in the subsequent part of the Arbitration Agreement is severable, in view of the express provision contained in the Agreement regarding its non-enforceability.

Arbitration: Courts Should Not Grant Injunction In Public Work Projects; Delhi High Court Reiterates Law

Case Title: Roadway Solutions India Infra Limited vs National Highway Authority of India

The Delhi High Court has ruled that in view of Sections 20A and 41(ha) of the Specific Relief Act, 1963, the courts should grant no injunction relating to infrastructure projects where delay may be caused by such an injunction.

The bench of Justice Chandra Dhari Singh remarked that the role of courts is to interfere to the minimum extent so that public work projects are not impeded or stalled.

Reasons For Bias Do Not Fall Under VII Schedule Of A&C Act , Petition Is Abuse Of Process Of Court : Delhi High Court

Case Title: Maj Pankaj Rai vs NIIT Ltd

The Delhi High Court has held that an arbitrator can be removed under Section 14(1)(a) of the Arbitration and Conciliation, 1996 (A&C Act) which provides for de jure ineligibility of arbitrator only if his appointment falls within the grounds mentioned under the VII Schedule.

The bench of Justice Chandra Dhari Singh held that the mandate of the arbitrator on grounds of bias and prejudice cannot be terminated if the test of Schedule VII is not satisfied as the grounds mentioned therein are the only situations that render an arbitrator de jure ineligible to act as arbitrator.