Arbitration Cases Weekly Round-Up: 22 To 28 January, 2023

Award Debtor Failed To Take Recourse To S. 26 of Arbitration Act; Cannot Challenge Award Claiming Expert Was Not Examined: Bombay High Court

Case Title: Zenobia Poonawala versus Rustom Ginwalla & Ors.

The Bombay High Court has ruled that if an award debtor has failed to take recourse to the provisions of Section 26 of the Arbitration and Conciliation Act, 1996 (A&C Act), it cannot seek to set aside the award on the ground that the expert, whose report was relied upon by the arbitrator, was not examined by the opposite party.

Reference Under Section 18(1) Of MSMED Act Would Override Arbitration Agreement Between Parties: Bombay High Court

Case Title: Bajaj Electricals Limited versus Chanda S. Khetawat & Anr.

The Bombay High Court has ruled that once reference under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) is made and the Facilitation Council is in the process of commencing arbitration under Section 18(3), the application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking appointment of arbitrator cannot be allowed merely because the parties had entered into an arbitration agreement.

Delhi High Court:

Objections Under Section 47 Of CPC Cannot Be Considered In An Enforcement Petition Under Section 36 Of The A&C Act: Delhi High Court

Case Title: Hindustan Zinc Ltd versus National Research Development Corporation

The High Court of Delhi has held that objections available under Section 47 of CPC cannot be considered by a Court at the time of enforcement of an arbitration award under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The bench of Justice Vashwant Varma held that though under the Arbitration Act, 1940, the Arbitral Award was required to be made a rule of the Court and a decree, but Section 36 of the Arbitration Act, 1996, confers the Arbitral Award with a status of a decree to be enforced in the same manner as if it were a decree of the Court. However, the deeming fiction is limited for the purpose of enforcement and not to make it a decree for all purposes. Thus, the objections that can be raised against a decree at the enforcement stage would not apply to an arbitration award which is a deemed decree only, the Court said.

Arbitration Clause Continues To Operate Even After Dissolution Of Partnership: Delhi High Court

Case Title: M/s Shyamjee Prepaid Services versus M/s Top Steels & Mrs. Renu Devi & Anr.

The Delhi High Court has ruled that an arbitration clause contained in a contract executed with a partnership firm, will continue in effect even after the death of a partner causes the dissolution of the partnership.

The bench of Justice Chandra Dhari Singh held that the Court has the power to conduct a procedural review of its order passed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act). It further remarked that the Courts’ competence to review Section 11 orders is unaffected by substantive concerns like a Tribunal’s jurisdiction or the authenticity of evidence.

Resort To Resolve Disputes Internally Before Filing Section 11 Application Under A& C Act: Delhi High Court

Case Title: Chabbras Associates versus HSCC India Limited

The High Court of Delhi has held that an application for the appointment of an arbitrator under Section 11 of the A&C Act would be premature if it is filed without compliance with the pre-arbitration internal dispute resolution mechanism stipulated under the agreement.

The bench of Justice Navin Chawla held that when the agreement provides for a multi-tier dispute resolution process in the form of reference of dispute, firstly, to some internal authorities and on being dissatisfied, to invoke arbitration, then the parties cannot directly approach the court for the appointment of arbitrator without exhausting the remedy given under the contract.

Madras High Court:

Non - Signatory Can Be Referred To Arbitration Under ‘Doctrine Of Alter Ego’: Madras High Court

Case Title: Vatsala Jagannathan & Anr. versus Tristar Accommodations & Ors.

The Madras High Court has ruled that non-signatories to arbitration agreement can be referred to arbitration by invoking the ‘doctrine of alter ego’ only in exceptional cases where there is convincing evidence that the non-signatory is the ‘alter ego’ of the signatory.

The bench of Justice Senthilkumar Ramamoorthy remarked that the doctrine of alter ego is applied in exceptional circumstances by piercing the corporate veil of the signatory Company in order to determine who lurked behind it at the relevant point of time.