Significant Judgments On Arbitration And Conciliation Act, 1996
The Arbitration And Conciliation Act, 1996 (Arbitration Act) consolidates and amends the arbitration law and enforcement of the foreign arbitral awards. The legislative intent and essence of the Arbitration Act is to bring domestic as well as international commercial arbitration in consonance with the UNCITRAL Model Rules, the New York Convention, and the Geneva Convention. In 2015 and 2019, amendments to the Arbitration Act brought changes to India’s arbitration system. Thus, this blog covers significant judgments that have been classified into various categories below.
Force Majeure
Case: Rashmi Cements Limited v. World Metals and Alloys (FZC) and Others
Citation: O.M.P.(I) (COMM) 117
Jurisdiction: Delhi High Court)
Date of Judgment: June 18, 2020
Judgment: A force majeure clause cannot be applied in the abstract, but rather after examination of the facts and circumstances of each case. Mere difficulty in performing the contractual obligations cannot be a ground for invoking a force majeure clause. Meanwhile, the petitioner’s contention regarding the applicability of the force majeure clause at a party’s request cannot be accepted. In addition, invoking the clause needs to be determined in the arbitration proceedings. Also, the court reiterated that the force majeure clause cannot be invoked at the party’s request.
Venue or Seat or arbitration
Case: Geo Foundations and Structures Private Limited v. Tata Projects Limited
Citation: O.P. No. 760 of 2019
Jurisdiction: Madras High Court
Date of Judgment: May 7, 2020
Judgment: It is open to parties to an arbitration agreement to exclude all other courts from exercising jurisdiction when more than one court has jurisdiction to adjudicate the disputes arising out of an arbitration agreement. The facts of the case are that the contract was signed in Chennai and cause of action also arose in Chennai. However, the parties had agreed to submit to courts in Hyderabad. Thus, this clause indicates that parties had specifically excluded other courts’ to try the dispute.
Section 9
Case: Goodwill Non-Woven (P) Limited v. Xcoal Energy & Resources LLC.
Citation: O.M.P.(I) (COMM) 120/2020
Jurisdiction: Delhi High Court
Date of Judgment: June 9, 2020
Judgment: Petition under Section 9 of the Arbitration Act cannot be rejected because the foreign party does not have any assets in India. In other words, the passing of orders or granting interim measures under Section 9 does not presuppose the existence of assets in India.
Section 11
Case: Parsvnath Developers Limited and Ors. v. Rail Land Development Authority
Citation: Arb. P. 710/2019
Jurisdiction: Delhi High Court
Date of Judgment: May 19, 2020
Judgment: Section 11 of the Arbitration Act is restricted only to examining the existence of an arbitration clause. To clarify the arbitral tribunal can decide whether claims are overlapping in previous arbitrations. Further, the courts cannot examine such issues. Additionally, Order II Rule 2 of the Code of Civil Procedure, 1908 bars the same.
Section 31
Case: V4 Infrastructure Private Limited v. Jindal Biochem Private Limited
Citation: FAO(OS) (COMM) 107/2018
Jurisdiction: Delhi High Court
Date of Judgment: May 5, 2020
Judgment: The issue revolved around the legality of awarding a high rate of interest by way of damages at the rate of interest at the rate of 18% per annum by an arbitrator. However, this 18% interest rate per annum was not supported by any evidence. The court observed that the banking rate of interest was much lower than the interest awarded by the arbitrator. Thereafter, the court held that the arbitral award was unreasonable, irrational, unjustified, and reduced the same to 9% per annum.