Arbitration Cases Weekly Round-Up: 24 July To 30 July, 2022

Pendency Of Arbitration Is Not A Bar To The Maintainability Of An Admiralty Suit For Arrest Of The Ship: Bombay High Court

Case Title: Vision Projects Technologies Pvt. Ltd. versus OSV Crest Mercury 1

Citation: 2022 LiveLaw (Bom) 270

The High Court of Bombay has held that the pendency of an arbitration proceeding between the parties on the same cause of action is not a bar to the institution of an admiralty suit.

The Bench of Justice N.J. Jamadar held that merely because the vessel owner has instituted an arbitration against the charterer, the same would not preclude the charterer from filing an admiralty suit for recovery of its dues and arrest of the vessel in an action in rem.

Section 29A Of The A&C Act Applies Prospectively, Does Not Apply To Arbitration That Commenced Before The 2015 Amendment: Bombay High Court

Case Title: Meenanath Fatarpekar versus MicroStrategy India Pvt. Ltd.

Citation: 2022 LiveLaw (Bom) 268

The High Court of Bombay has held that Section 29A of the A&C Act that provides a timeline of 12 months for passing an arbitral award would not apply to arbitration that commenced before the 2015 Amendment to the Act.

The Bench of Justice G.S. Kulkarni held that provisions of Section 29A of the A&C Act, which was incorporated into the principal act via the 2015 Amendment Act, would not apply to an arbitration proceeding commenced on 3rd Feb 2015 as in terms of Section 26 of the 2015 Amendment Act, the amendment came in to force on 23rd October 2015.

Delhi High Court:

Order Of Facilitation Council, After Termination Of Conciliation Under MSMED Act, Not Executable: Delhi High Court

Case Title: M/s. Unicon Engineers versus M/s. Jindal Steel and Power Ltd.

Citation: 2022 LiveLaw (Del) 722

The Delhi High Court has ruled that an order passed by the Facilitation Council under Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) after the termination of conciliation proceedings, without taking the dispute up for arbitration or referring it to an institution or centre for arbitration, is a nullity and does not constitute an arbitral award. Therefore, the Court ruled that it cannot be enforced under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The Single Bench of Justice Prateek Jalan reiterated that the proceedings for conciliation and arbitration cannot be clubbed.

The Arbitrator Cannot Alter The Express Terms Of The Agreement Between The Parties By Applying The Business Efficacy Test: Delhi High Court

Case Title: Food Corporation of India versus Adani Agri Logistics Ltd.

Citation: 2022 LiveLaw (Del) 718

The High Court of Delhi has held that the arbitrator cannot alter the express terms of the agreement by applying the business efficacy test when there is no ambiguity as to the intention of the parties.

The Bench of Justice Vibhu Bakhru held that the Penta Test as propounded by the Supreme Court in Nabha Power Ltd versus Punjab State Power Corp. Ltd. is only for the purpose of determining the intention when the terms of the agreement are not express or are silent on an aspect, and thus, it would have no application when there is no ambiguity as to the contract between the parties.

Just Because Interlocutory Order Of Arbitral Tribunal Is Not Challengeable Under Section 34 Of A&C Act, Remedy Is Not Writ Under Article 226 And 227: Delhi High Court

Case Title: Easy Trip Planners Ltd. versus One97 Communications Ltd.

Citation: 2022 LiveLaw (Del) 717

The Delhi High Court has ruled that merely because an interlocutory order passed by the Arbitral Tribunal is not amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), the remedy under Article 226 and Article 227 of the Constitution of India would not be available against the said order.

The Single Bench of Justice C. Hari Shankar held that a party can approach the Court against an interim order passed in the arbitral proceedings only if the order is appealable under Section 37 of the A&C Act.

When The Main Relief Is Rejected By The Arbitral Tribunal, Which Included Interim Relief, The Interim Relief Granted In Isolation Is Incorrect: Delhi High Court

Case Title: Orchid Infrastructure Developers (P) Ltd. versus Five Star Constructions Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 712

The Delhi High Court has ruled that when the main relief claimed by the claimant has been rejected by the Arbitral Tribunal, the Arbitral Tribunal cannot award an interim or ancillary amount, which is included under the same claim, in favour of the claimant.

The Single Bench of Justice Sanjeev Narula held that when the main relief is rejected by the Arbitral Tribunal, axiomatically, the interim relief ought to be rejected as well.

Sections 15 And 16 Of The MSMED Act Are Mandatory Provisions, Arbitrator Must Assign Reasons For Not Awarding Compound Interest: Delhi High Court

Case Title: Bharat Heavy Electrical Ltd. versus Bhatia Engineering Company

Citation: 2022 LiveLaw (Del) 711

The High Court of Delhi has affirmed the order of the lower Court by which it had set aside an arbitral award for not awarding interest in terms of Sections 15 and 16 which are mandatory provisions of the MSMED Act.

The Bench of Justice Vibhu Bakhru and Justice Amit Mahajan held that once the arbitrator has held that MSMED Act applies to the dispute between the parties, it must assign reasons for not awarding interest in terms of Sections 15 and 16 of the Act.

Karnataka High Court:

Mentioning Referral Of The Matter To Arbitral Institution Is Sufficient; Party Not Required To Name Arbitrator: Karnataka High Court

Case Title: M/s Geosmin Studio Sustainable Solutions LLP versus M/s Ethnus Consultancy Services Pvt. Ltd.

The Karnataka High Court has ruled that a notice issued by a party, stating that the matter would be referred to the Council of Architecture, is sufficient for the purpose of invocation of the Arbitration Clause, since the Council of Architecture is an arbitral institution within the meaning of Section 11 of the Arbitration and Conciliation Act, 1996.

The Single Bench of Justice Suraj Govindaraj held that it is sufficient if there is a mention made to refer the matter to the institution for arbitration and that there is no specific requirement that a party should name an arbitrator.

Arbitration Clause Can Be Invoked Against Disputes Under Another Agreement, If Both Agreements Form One Composite Transaction: Karnataka High Court

Case Title: M/s Bestpay Solutions Private Limited versus M/s Razorpay Software Private Limited

The Karnataka High Court has ruled that a party can invoke the Arbitration Clause contained in an agreement with respect to the disputes arising with a third party under another agreement, if both the agreements refer to each other and form one composite transaction.

The Single Bench of Justice Suraj Govindaraj held that where one of the necessary parties was not issued a legal notice, the said legal notice would be defective and not in consonance with Section 21 of the Arbitration and Conciliation Act, 1996.