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2006 Supreme(SC) 233

(2006) 4 Supreme Court Cases 372
(BEFORE B.N. SRIKRISHNA, J.)
YOU ONE ENGINEERING & CONSTRUCTION CO. LTD. AND ANOTHER - Petitioners
Versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI) - Respondent
Arbitration Petitions No. 27 of 2005 with Nos. 28 and 29 of 2005,
Decided on March 10, 2006
Advocates appeared
M.S. Ganesh, Senior Advocate (Ravikesh Sinha, Abhijat P. Medh and Surendra Mishra, Advocates, with him) for the Petitioners;
Mukul Rohatgi, Senior Advocate (V.B. Joshi, Ravi Kini and Krishan Kumar, Advocates, with him) for the Respondent.

Headnote:

Arbitration - Appointment of Presiding Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11(6) - Appointment of Arbitrators by the Chief Justice of India Scheme, 1996 - [Arbitration] - [Appointment of Presiding Arbitrator] - [Section 11(6) of the Arbitration and Conciliation Act, 1996] - [The judgment discusses the application under Section 11(6) read with Section 11 (12) of the Arbitration and Conciliation Act, 1996 for appointment of a third/presiding arbitrator in accordance with an agreement dated 23 - 5 - 2001 between the parties. It also highlights the interpretation of the appointment procedure agreed to under clause 67.3 and the validity of the appointment of the presiding officer by IRC.]

B.N. SRIKRISHNA, J. - This is an application under Section 11(6) read with Section 11 (12) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") read with para 2 of the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996 (hereinafter referred to as "the Scheme") for appointment of a third/presiding arbitrator in accordance with an agreement dated 23 - 5 - 2001 between the parties. Under Section 3 of the Scheme, the Chief Justice of India has designated me as the person to pass appropriate orders on the applications and, hence, the applications have been placed before me.

2. Since the issue involved in all the three applications is same, these applications can be disposed of by a common order.

3. The petitioner in each of these applications is a joint venture of two a constituents, who entered into a construction contract with the respondent National Highways Authority of India (for short "NHAI").

4. The first petitioner is a company incorporated/registered under the laws of the Republic of Korea, with its registered office at Seoul. Thus, it is a body corporate incorporated in a country other than India within the meaning of Section 2(f)(ii) of the Act. Further, the contract entered into between the parties and the respondent pertains to execution of construction work, which is considered as commercial under the laws in force in India. The petitioners had entered into three different contracts each one of them contained an arbitration clause that the arbitration arising therefrom would amount to an international commercial arbitration within the meaning of Section 2(f)(ii) of the Act. Although the three contracts relate to construction of highways as C part of the National Highways Development Programme in different areas, the arbitration agreements in two of the contracts pertain to Delhi and Hyderabad. The arbitration agreements are contained in the standard form "General Conditions of Contract" (GCC) for Delhi and Hyderabad, while the third contract which pertains to Vishakhapatnam, stands modified by the incorporation by reference of the FIDIC conditions of contract. The d arbitration agreement as contained in clause 67.3 reads as under:

"ARBITRATION Clause 67.3 is modified to read as follows:

Any dispute in respect of which the recommendation(s), if any, of the Board has not become final and binding pursuant to clause 67.1, shall be finally settled by arbitration as set forth below. The Arbitral Tribunal shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the engineer and any recommendation(s) of the Board related to the dispute.

(i) A dispute with an Indian contractor shall be finally settled by arbitration in accordance with the Arbitration and Conciliation Act, 1996, or any statutory amendment thereof. The Arbitral Tribunal shall consist of three arbitrators, one each to be appointed by the employer and the contractor. The third arbitrator shall be chosen by the two arbitrators so appointed by the parties and shall act as presiding arbitrator. In case of the g failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the presiding arbitrator shall be appointed by the President, Indian Roads Congress for the purpose of this sub - clause, the term Indian contractor means a contractor who is registered in India and is a juridical person created under Indian law as well as a joint venture between such a contractor and a foreign contractor.

(ii) In case of a dispute with a foreign contractor, the dispute shall be finally settled in accordance with the provisions of the UNCITRAL Arbitration Rules. The Arbitral Tribunal shall consist of three arbitrators, one each to be appointed by the employer and the contractor. The third arbitrator shall be chosen by the two arbitrators so appointed b














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