Arbitration Weekly Round-Up: 30th October to 5th November

Hong Kong Court Refuses To Enforce A Mainland Arbitration Award For Failure Of Arbitrator To Meaningfully Engage With Arbitral Proceedings

Case Title: SONG LIHUA v. LEE CHEE HON, CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 111 OF 2022

Citation: [2023] HKCFI 2540

The Hong Kong Court of First Instance has refused enforcement of a Mainland (China) award on the ground that one of the members of the arbitral tribunal failed to meaningfully engage with the arbitral proceedings.

The bench of Judge Mimmie Chan found that enforcing a Mainland award with a tribunal member absent during significant proceedings would violate Hong Kong's 'Public Policy' and principles of natural justice, as seen from an objective standpoint.

The Court also reiterated that mere confirmation of the award by the Mainland Court (Seat Court) would not preclude the Court where the award is sought to be enforced to deny its enforcement on the ground that it results in the violation of the public policy of the enforcing Court. It held that the public policy of the seat Court and the enforcing Court could be different.

Supreme Court

Will The Mandate Of The Tribunal Terminate Under Section 29A Unless Extended During Its Subsistence? Supreme Court To Examine

The Supreme Court is set to examine an important issue related to the arbitration law that whether the mandate of the tribunal terminates upon the expiry of the time provided under Section 29A unless extended during its subsistence.

The bench of Justices Sanjiv Khanna and S.V.N. Bhatti has issued notice in an SLP filed against the order of the Calcutta High Court wherein the High Court held that the mandate of the arbitrator terminates upon the expiry of the time period provided under Section 29A unless it is extended during its subsistence.

The High Court had held that in terms of Section 29-A(1) and an award shall be made by the arbitral tribunal within a period of 12 months from the date of completion of pleadings, further under sub-section (3), the parties may, by consent, extend the period by another 6 months. It held that in terms of Section 29(A)(4), the mandate of the tribunal stands terminated if it fails to make an award within the specified time period and any application seeking extension of time must be made during that period only and not afterwards.

Allahabad High Court

S.34 Arbitration Act | Court Has Power To Recalculate Compensation Awarded Under NHAI Act: Allahabad High Court

Case Title: Chandra Kishori v. Union Of India Thru. Chairman Of National Highway Authority Of India And 2 Others [Appeal Under Section 37 Of Arbitration And Conciliation Act 1996 No. - 55 of 2022]

The Allahabad High Court held that the Court adjudicating upon arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 has the power to recalculate compensation awarded under the National Highway Authority of India Act, 1956.

The bench comprising of Justice Jaspreet Singh held that if the calculation of compensation is patently illegal and the award is against the public policy of India, the Court under Section 34 ought to interfere and set aside the award.

Delhi High Court

Delhi High Court Sets Aside Arbitration Award Passed In Defiance Of Supreme Court Order

Case Title: Unison Hotel v. Value Line Interiors

Citation: 2023 LiveLaw (Del) 1051

The High Court of Delhi has set aside an arbitral award for having been passed in defiance of the order of the Supreme Court. It held that such an award would be against the public policy and that if the arbitral tribunal is allowed to defy the order of the Supreme Court, it would violate principle of Judicial discipline.

The bench of Justices Sanjeev Sachdeva and Manoj Jain held that when the Supreme Court grants liberty to a party, to file an application before the arbitral tribunal to take its statement of defence and counter-claim on record within a specified time, the tribunal ought to wait till the expiry of the said period before passing the award without taking the statement of defence and counter-claim on record.

The Court held that if the arbitral tribunal without waiting for the expiry of the period granted by the Apex Court, the same would result in denying the party an opportunity to present its case and the award would fall foul of Section 34(2)(iii) of the A&C Act. It held that indeed the it would be the discretion of the tribunal to allow or disallow the application on its own merits, however, the tribunal cannot proceed before the period of liberty granted by the Supreme Court expires.

Designation Of Venue Of Arbitration Tantamount To Seat Of Arbitration In Absence Of A Significant Contrary Indicia: Delhi High Court Reiterates

Case Title: Vasudev Garg v. Embassay Commercial Project

Citation: 2023 LiveLaw (Del) 1049

The High Court of Delhi has held that the venue of arbitration would actually be the seat of arbitration when the agreement does not contain any contrary indicia. It held that clause proving for venue of arbitration would have a superseding effect over a clause providing for exclusive jurisdiction on any other Court if the parties have expressly made the latter subject to the former.

The bench of Justice Yogesh Khanna held that if the agreement contains a venue clause as well as an exclusive jurisdiction clause, however, the clause providing for exclusive jurisdiction is made subject to the venue clause, then reference to courts of exclusive jurisdiction is reduced to the adjudication of disputes other than those covered by the arbitration/venue clause.

The Court also held that accrual of cause of action howsoever trivial or significant, would not be relevant for determining the jurisdiction of the Court when the agreement provides a specific seat of arbitration.

Bombay High Court

A Party Cannot Be Allowed To Take Advantage Of Inartistic Drafting Of Arbitration Clause As Long As The Intention To Arbitrate Is Clear: Bombay High Court

Case Title: Abhishek Pictures v. Abhishek Agarwal Arts LLP, Arbitration Petition (Lodging) No. 18905 of 2023

The High Court of Bombay has held that a party cannot be allowed to take advantage of inartistic or poor drafting of an arbitration clause as long as the clause contains the necessary ingredients and the intention to arbitrate is clear.

The bench of Justice Manish Pitale also held that a Court exercising power under Section 9 of the A&C Act would be within its power to scrutinize and decide as to whether the arbitration clause is valid in law.

The Court also held that while interpreting terms of an agreement, the Court has to adopt a view that supports all the covenants of the agreement and not one that renders one or more clauses nugatory.