Bombay High Court
Reshamsingh And Co. Pvt. Ltd vs Dharti Dredging And Infrastructure Ltd on 9 July, 2010
Author: D.Y.Chandrachud
Bench: D.Y.Chandrachud
1 ARBAP66 /2009
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
ARBITRATION APPLICATION NO.66 OF 2009
Reshamsingh and Co. Pvt. Ltd. ..Applicant.
Vs.
Dharti Dredging and Infrastructure Ltd. ..Respondent.
....
Mr.Santosh Shetty i/b Mr.Manoj R. Khatri for the Applicant.
Mr.Mayur Khandeparkar i/b M/s.K.K.Associates for the Respondent.
....
CORAM : DR.D.Y.CHANDRACHUD, J.
ig 9 July 2010.
ORAL JUDGMENT :
1. A charter party agreement was entered into between the Applicant and the Respondent on 26 May 2008. Under the agreement the Applicant provided a tug for towing the dredgers and barges of the Respondent at Vizag Port. A notice was issued by the Applicant on 22 November 2008 setting out the disputes which have arisen between the parties and raising a demand. On 5 May 2009 the Applicant invoked arbitration.
2. An affidavit in reply has been filed by the Respondent denying that the clause in the charter party constitutes an arbitration agreement.
::: Downloaded on - 09/06/2013 16:07:27 ::: 2 ARBAP66 /20093. The clause in the charter party which, according to the Applicant, is an agreement to refer disputes to arbitration, is as follows :
"All disputes subject to Mumbai Jurisdiction under Arbitration."
4. The contention of the Applicant is that this clause constitutes a valid agreement to refer disputes to arbitration. In the affidavit in reply the Respondent has stated that parties never intended to refer their disputes to arbitration; the mere use of the expression "under Arbitration" cannot constitute an agreement of arbitration and that the clause only indicates that the disputes between the parties are subject to Mumbai jurisdiction.
The submission of counsel for the Respondent is that; (i) There is no agreement to refer disputes to arbitration; (ii) The mere use of the expression 'arbitration' does not constitute an arbitration clause; (iii) The clause in the present case means that all disputes would be subject to Mumbai jurisdiction and this would have been an ancillary clause if there was an arbitration agreement; and (iv) There was no expression of intention by the parties to exclude the jurisdiction of the Civil Courts.
5. Under Section 7 of the Arbitration and Conciliation Act 1996 an ::: Downloaded on - 09/06/2013 16:07:27 ::: 3 ARBAP66 /2009 arbitration agreement means 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 legal relationship, whether contractual or not.
An arbitration agreement has to be in writing. The law does not prescribe any particular form for an arbitration agreement. Such an agreement can be contained in a document, in an exchange of communications or in an exchange of the statements of claim and defence in which the existence of such an agreement is alleged by one party and not denied by the other.
6. In Jagdish Chander v. Ramesh Chander1 the Supreme Court held that the intention of the parties to enter into an arbitration agreement has to be gathered from the terms of the agreement. The terms of the agreement must indicate an intention on the part of the parties to the agreement to refer disputes to a private tribunal for adjudication and a willingness to be bound by the decision of the Tribunal. While no specific form of an arbitration agreement is required, the language used by the parties should disclose a determination and obligation to go to arbitration and not merely a contemplation or possibility of doing so in future The essence of an arbitration agreement, is indicated in the judgment of the 1 (2007) 5 SCC 719.
::: Downloaded on - 09/06/2013 16:07:27 ::: 4 ARBAP66 /2009Supreme Court thus :
"(ii) Even if the words "arbitration" and "Arbitral Tribunal (or arbitrator)" are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are: (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it.
(d) The parties should have agreed that the decision of the private tribunal in respect of the disputes will be binding on them."
At the same time, the Supreme Court has held that the mere use of the word "arbitration" or "arbitrator" in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration.
7. In the present case, the clause in the charter party agreement is essentially a clause on jurisdiction. The clause provides that all disputes would be subject to Mumbai jurisdiction 'under arbitration'. From this clause, it cannot be said that parties have agreed to refer the disputes between them to the decision of a private tribunal for adjudication; that the ::: Downloaded on - 09/06/2013 16:07:27 ::: 5 ARBAP66 /2009 private tribunal is empowered to adjudicate upon the disputes and that the decision of the tribunal would be binding upon them. The clause in question cannot be construed as an agreement to refer disputes to arbitration.
8. The judgment in Visa International Limited v. Continental Resources (USA) Limited2 which is relied upon by counsel for the Applicant was rendered on an application under sub Sections (5) and (9) of Section 11. The arbitration clause in that case was to the following effect :
"Any dispute arising out of this agreement and which cannot be settled amicably shall be finally settled in accordance with the Arbitration and Conciliation Act, 1996."
9. This clause, as was noted by the Supreme Court, clearly indicated that upon the failure of the parties to settle their disputes amicably, the disputes would be finally settled under the Arbitration and Conciliation Act 1996. In these circumstances, the absence of the word 'reference' was regarded as not being conclusive. The Supreme Court held that the words "shall be finally settled" were significant and what was meant was that the award of the Tribunal would be final and binding.
2 (2009) 2 SCC 55.
::: Downloaded on - 09/06/2013 16:07:27 ::: 6 ARBAP66 /200910. The clause in the charter party agreement in the present case is completely different. The clause has been made in the context of the submission of disputes by parties to Mumbai jurisdiction. The clause in the present case does not indicate that the parties intended to submit the disputes that would arise between them to a private arbitral tribunal; that the tribunal was empowered to adjudicate upon the disputes or that the parties agreed that the award of the Tribunal would be final and binding.
Hence, there is no arbitration agreement. In the absence of an arbitration agreement, it would be impermissible for the Court to exercise its powers under Section 11(6) of the Act. The Arbitration Application is accordingly dismissed.
(Dr. D.Y.Chandrachud, J.) ::: Downloaded on - 09/06/2013 16:07:27 :::