TMI Blog2019 (11) TMI 1281X X X X Extracts X X X X X X X X Extracts X X X X ..... rted at the threshold, when a preliminary objection is raised by one of the parties - The doctrine of kompetenzkompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Subsection (1) of Section 16 provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement - In the present case, the issue of limitation was raised by the Respondent Company to oppose the appointment of the arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of provision thereof, anything thereunder contained or arising thereunder or as to rights, liabilities or duties of the said parties hereunder or any matter whatsoever incidental to this contract shall be referred to the sole Arbitration of the person appointed by Director (Pers.) of NCL. CONTRACTOR shall have no objection to any such appointment that the arbitrator so appointed is an employee of NCL or that he had dealt with the matter to which the contract related and that in the course of his duties as NCL employees he has expressed views on all or any of the matter of disputes or difference. 13.2 If the arbitrator to whom the matter is originally by referred dies or refused to act or resigns for any reason from the position of arbitrator, it shall be lawful, for Director (Pers.) of NCL to appoint another person to act as Arbitrator. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor or to precede denovo. 13.3 It is agreed that no person other than the person appointed by Directed (Pers.) of NCL as aforesaid shall act as Arbitrator. 13.4 It is term of the contract that the CONTRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before this Court. 9. We have heard learned Counsel for the parties and perused the pleadings. 9.1. Section 21 of the 1996 Act provides that arbitral proceedings commence on the date on which a request for disputes to be referred to arbitration is received by the respondent. 9.2. In the present case, the Notice of Arbitration was issued by the Petitioner Contractor to the Respondent Company on 09.03.2016. The invocation took place after Section 11 was amended by the 2015 Amendment Act, which came into force on 23.10.2015, the amended provision would be applicable to the present case. 9.3. The 2015 Amendment Act brought about a significant change in the appointment process under Section 11 : first, the default power of appointment shifted from the Chief Justice of the High Court in arbitrations governed by Part I of the Act, to the High Court; second, the scope of jurisdiction under subsection (6A) of Section 11 was confined to the examination of the existence of the arbitration agreement at the prereference stage. 9.4. Prior to the coming into force of the 2015 Amendment Act, much controversy had surrounded the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. (emphasis supplied) 9.6. Based on the recommendations of the Law Commission, Section 11 was substantially amended by the 2015 Amendment Act, to overcome the effect of all previous judgments rendered on the scope of power by a non obstante clause, and to reinforce the kompetenzkompetenz principle enshrined in Section 16 of the 1996 Act. The 2015 Amendment Act inserted subsection (6A) to Section 11 which provides that : The Supreme Court or, as the case may be, the High Court, while considering any application under subsection (4) or subsection (5) or subsection (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. (emphasis supplied) By virtue of the non obstante clause incorporated in Section 11(6A), previous judgments rendered in Patel Engineering (supra) and Boghara Polyfab (supra), were legislatively overruled. The scope of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also BSNL v. Telephone Cables Ltd. (2010) 5 SCC 213. Refer to PSA Mumbai Investments PTE Ltd. v. Board of Trustees of the Jawaharlal Nehru Port Trust Anr. (2018) 10 SCC 525 ). If an arbitration agreement is not valid or nonexistent, the arbitral tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made . 9.10. The legislative intent underlying the 1996 Act is party autonomy and minimal judicial intervention in the arbitral process. Under this regime, once the arbitrator is appointed, or the tribunal is constituted, all issues and objections are to be decided by the arbitral tribunal. 9.11. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. In view of the aforesaid discussion, we set aside the impugned judgment and order dated 11.01.2018 passed by the High Court, and direct that the issue of limitation be decided by the arbitral tribunal. 11. With the consent of Counsel for the parties, we appoint Mr. Justice (Retd.) A. M. Sapre, former Judge of this Court, as the Sole Arbitrator, subject to the declarations being made under Section 12 of the 1996 Act (as amended) with respect to the independence and impartiality of the arbitrator, and the ability to devote sufficient time to complete the arbitration within the period specified by Section 29A of the 1996 Act. 12. The arbitration agreement states that the arbitration will be at Singrauli, Madhya Pradesh. Consequently, the seat of arbitration is at Singrauli, subject to any modification that may be made by consent of the parties. The arbitrator is, however, at liberty to conduct the proceedings at a convenient venue as per the convenience of the arbitrator and the parties if so required. The Arbitrator will be paid fees in accordance with the Fourth Schedule of the 1996 Act. Both parties will share the costs of the arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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