FACTS AND ISSUE

The petitioner has submitted a petition invoking Section 11 of the Arbitration & Conciliation Act of 1996. The purpose of this petition is to seek the appointment of an arbitrator who can effectively address and resolve the disputes that have arisen between the petitioner and the respondent.

The conflicts in question emerged after the petitioner was awarded a Letter of Award related to the establishment of a township for the respondent’s Super Thermal Power Project. Allegedly, these disputes can be traced back to the terms and conditions specified in the Letter of Award, which has caused disagreements and conflicts between the parties involved.

Following the issuance of the Letter of Award, the petitioner and the respondent proceeded to execute a Contract Agreement. This contract represents a formal agreement between the parties and outlines the obligations, rights, and terms that both parties are bound to follow.

By submitting this petition, the petitioner is seeking the intervention of an arbitrator who can impartially assess the conflicts and disputes arising from the execution of the Contract Agreement. The appointment of an arbitrator is essential to facilitate a fair and neutral resolution process, ensuring that both parties’ rights and interests are protected in accordance with the provisions of the A&C Act.

RULE

Section 12(5) of the Arbitration and Conciliation Act, 1996

“ Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:

Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.”

ARGUMENTS

Petitioner

The petitioner argues that clause 56 of the GCCs, relating to the letter of award, is unenforceable due to the retrospective effect of section 12(5) in the A&C Act. Disputes have arisen between the parties, and the petitioner seeks arbitration to resolve them. The petitioner requests the court’s involvement in appointing an impartial arbitrator to address the conflicts and ensure a fair resolution process according to the A&C Act.

Respondent

The petitioner acknowledges that the claims may be time-barred, indicating a potential failure to initiate legal action within the prescribed timeframe. Additionally, it is highlighted that the consent of both parties is necessary for arbitration to proceed, meaning both parties must agree to engage in the arbitration process for it to be valid.

JUDGEMENT AND ANALYSIS

In a ruling, the High Court of Delhi emphasized that an arbitration agreement encompasses various elements that govern different aspects of the arbitration procedure. These elements may include provisions regarding the seat or venue of arbitration, the procedural rules to be followed, the language to be used during arbitration, and so on. However, the court made it clear that these individual aspects are separate from the core agreement, which is the mutual consent of the parties to refer their dispute to arbitration.

The court highlighted that irregularities or invalidity in these individual aspects of the arbitration agreement would not render the core agreement itself unworkable or unenforceable. In other words, if there are issues or flaws in specific provisions within the arbitration agreement, such as the choice of language or the procedural rules, it does not nullify the fundamental agreement of the parties to resolve their dispute through arbitration.

The ruling emphasizes the distinction between the core agreement to arbitrate and the procedural or ancillary provisions within the arbitration agreement. It clarifies that the irregularity or invalidity of specific provisions does not undermine the validity of the core agreement itself, which is the mutual consent of the parties to resort to arbitration as a means of resolving their dispute.

Therefore, the court asserts that even if there are flaws or inconsistencies in certain aspects of the arbitration agreement, the parties are still bound by their core agreement to resolve their dispute through arbitration.

CONCLUSION

In conclusion, the petitioner has sought the appointment of an arbitrator through a petition under Section 11 of the Arbitration & Conciliation Act of 1996 to resolve the disputes arising from the Letter of Award and the subsequent Contract Agreement. The court recognized that an arbitration agreement consists of various elements governing different aspects of the arbitration procedure. However, it clarified that irregularities in these individual aspects do not invalidate the core agreement of the parties to refer their dispute to arbitration. The court emphasized the distinction between the core agreement and the procedural provisions, stating that flaws in specific provisions do not undermine the validity of the core agreement itself. Therefore, the parties are still bound by their mutual consent to resolve their dispute through arbitration.

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