TMI Blog2008 (12) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the parties and the evidence such as exchange of correspondence between the parties. The respondent in none of its letters addressed to the applicant suggested that the dispute between the parties is required to be settled through conciliation and not by arbitration. In response to the applicant's letter invoking the arbitration clause the respondent merely objected to the names inter-alia contending the suggested arbitration would not be cost effective and the demand for arbitration itself was a premature one. Is there any material available on record suggesting that the parties intended to resolve their disputes through conciliation on failure to settle the disputes amicably among themselves? - HELD THAT:- The arbitration clause states that the disputes arising out of the agreement which cannot be settled amicably to be finally settled in accordance with the Arbitration and Conciliation Act, 1996. Therefore, the provisions of the said Act will govern the appointment of Arbitrator, the reference of disputes and the entire process and procedure of arbitration from the stage of appointment of arbitration till the award is made and executed/given effect to. The provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial investments to set up an integrated aluminium complex in Orissa with an Alumina refinery to be catered by the bauxite deposits of Gandhamardan Mines entered into a Memorandum of Understanding (for short MOU ) with Orissa Mining Corporation Ltd. (for short OMC ) for mining of bauxite deposits from the Gandhamardan Mines situated in the State of Orissa. In order to help set up integrated aluminium complex in Orissa, OMC had decided and agreed to enter into a Joint Venture Agreement with the respondent on certain terms and conditions. 4. In terms of the proposed joint venture agreement, the respondent was required to set up an integrated alumina complex in the vicinity of the Gandhamardan area and was further obliged to utilize the bauxite lifted from the said mines as raw material in the proposed aluminum complex. The respondent proposed to the applicant to set up the said integrated aluminum complex in joint venture with the applicant by duly incorporating a Special Purpose Vehicle (SPV) for the purpose. 5. The applicant relying upon representations and assurances had accepted the proposal for setting up of the said aluminum complex in joint venture with the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach. The applicant asserted that the agreement dated 15.2.2005 entered into by and between the parties continued to be valid and subsisting and whereas the respondent contended that the agreement became unworkable. On 25.9.2006 the respondent informed the applicant that MOU dated 14.2.2005 and agreement dated 15.2.2005 stand discharged and CRL stands discharge of its obligations under the said agreement. MOU dated 14.2.2005 and agreement dated 15.2.2005 was treated as cancelled. The applicant vide letter dated 6.3.2007 informed the respondent that its action of unilaterally terminating the said MOU and also the agreement was not acceptable to it. The applicant accordingly invoked the arbitration clause duly informing the respondent that disputes thus have arisen out of the said MOU and the agreement which are required to be resolved by the Arbitrator. The respondent in its turn vide letter dated 3.4.2007 rejected the names suggested by the applicant to be appointed as Arbitrator for the reasons that (a) the arbitration will not be cost effective; and (b) the arbitration is pre-mature. 7. Be it noted that the respondent never disputed the existence of the arbitration clause. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and which cannot be settled amicably shall be finally settled in accordance with the Arbitration and Conciliation Act, 1996. 12. Arbitration agreement is defined under Section 7 of the Act. It does not prescribe any particular form as such. In terms of the said provision arbitration agreement means: (1) An agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in - a) a document signed by the parties; b) .... c) .... (5) .... 13. This Court in Rukmani Bai Gupta v. Collector of Jabalpur AIR1981SC479 had an occasion to construe a clause in the lease deed which provided: Whenever any doubt, difference or dispute shall hereafter arise touching construction of these presents or anything herein contained or any matter or things connected with the said lands: o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring the matter for arbitration is irrelevant and inappropriate in absence of any valid agreement, in as much as the MOU dated 14.2.2005 was itself conditional and not effective. The respondent did not dispute the existence of a valid arbitration clause in the agreement. The plea was that agreement entered into between the parties on 15.2.2005 itself was not a valid one. 18. That an arbitration agreement is not required to be in any particular form has been reiterated in more than one decision. see: Bihar State Mineral Development Corporation v. Encon Building AIR2003SC3688 . What is required is to gather the intention of the parties as to whether they have agreed for resolution of the disputes through arbitration. What is required to be decided in an application under Section 11 of the Act is whether there is any arbitration agreement as defined in the Act? It needs no reiteration that Section 7 of the Act does not prescribe any particular form and it is immaterial whether or not expression `arbitration' or `arbitrator' or `arbitrators' has been used in the agreement. 19. Shri K.K. Venugopal, learned senior counsel appearing on behalf of the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (emphasis supplied) 22. The case has no application to the fact situation in hand. It was a case where one of the parties invoked Section 11(6) of the Act without there being no allegation that any one of the contingencies enumerated in Section 11(6) Clause (a) or (b) or (c) had occurred. 23. In the present case the parties did not agree upon any particular procedure for the appointment of the arbitrator. Clause VI provides that disputes arising out of the agreement which could not be settled amicably shall be finally settled in accordance with the provisions of the Act. The question is whether the parties have agreed to resolve their disputes by arbitration or through conciliation? 24. Be it noted that at no stage the respondent took any plea that the dispute was required to be settled through conciliation in accordance with the Arbitration and Conciliation Act, 1996. It is evidently an afterthought. Shri Venugopal submitted that on a comparison with dispute resolution clause in the MOU entered into between the OMC and CRL with the settlement clause in the agreement dated February 15, 2005, it is apparent that there was no specific intention of the parties t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute and the conciliation proceedings shall commence when the other party accepts in writing the invitation of conciliation. If the other party rejects the invitation, there will be no conciliation proceedings. Part III of the Act does not envisage any agreement for conciliation of future disputes. It only provides for an agreement to refer the disputes to conciliation after the disputes had arisen. Whereas Section 7 of the Act which speaks of arbitration agreement provides for an agreement between the parties to submit to the arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. 29. Clause VI in the present case obviously provides for resolution of the disputes between the parties which may arise out of the agreement after its execution. There was no dispute between the parties even as on the date of the agreement. That apart the conciliator only assists the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their disputes. The conciliator provides guidance as provided for under Section 67 of the Act. Under Section 73 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement in that case observed that the clause was so uncertain that the court cannot give effect to it. The clause is divided into two parts which are inconsistent with one another: and it is impossible to reconcile them. The first part of this arbitration clause would send any dispute and/or claim to arbitration in England. The second part of the clause would send any other dispute to arbitration in Russia. It is beyond the wit of man or at any rate beyond my wit - to say which dispute comes within which part of the clause...the whole clause is meaningless. It must be rejected. The court cannot give effect to it. The dispute cannot be sent to arbitration. In AIG Europe S.A.; Queen's Bench Division while construing a contract of reinsurance which inter-alia provided: All terms clauses and conditions as original in all respects including settlements: The underlying policy contained among its general conditions the following clauses: (L) Arbitral Procedure In case of dispute between the insured and the insurers the parties will apply to Tribunal de Commerce in Paris who will appoint an arbitrator.... (M) Law and Jurisdiction In the even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on the parties and the persons claiming under them respectively of course subject to the provisions contained in Chapter III of the Act. A plane reading of the arbitration clause reveals that parties intended to settle disputes finally in accordance with the provisions of the Act in case of failure to arrive at amicable settlement. 34. Further the respondent has placed reliance and referred to the checklist of matters to be considered/suggested by Russel in his treatise, Russel on Arbitration. The contention was that the disputed clause does not satisfy the checklist of matters to be considered. Russel in his treatise suggests that while drafting an arbitration agreement care needs to be taken to ensure whether they need to be addressed in the particular circumstances of the case. The following is the checklist of the matters which according to Russel need to be considered when drafting an arbitration agreement. But it may not be necessary to include any provision for all of them. But thought should be given as to whether they need to be addressed in the particular circumstances of the case. A close scrutiny of Clause VI of the agreement which provides for the applicabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this regard a reference may be made to the letter dated 15th September, 2006 from the respondent herein in which it is inter-alia stated ...since February, 2005 after the execution of the agreements, various meetings/discussions have taken place between both the parties for furtherance of the objective and purpose with which the agreement and MOU was signed between parties. Several correspondences have been made by CRL to VISA to help and support its endeavour for achieving the goal for which the above mentioned agreements were executed. In the same letter it is alleged that in spite of repeated requests the petitioner has not provided any Funding Schedules for their portion of equity along with supporting documents to help in convincing OMC of financial capabilities of the parties and ultimately to obtain financial closure of the project. The exchange of letters between the parties undoubtedly discloses that attempts were made for an amicable settlement but without any result leaving no option but to invoke arbitration clause. Whether there is any live issue between the parties ? 37. The next question that falls for consideration is as to whether there is a live iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal. 40. It is amply clear from the facts as pleaded an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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