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2008(6) Supreme 230
supreme court of india
Dalveer Bhandari, J.
Great Offshore Ltd. — Petitioner/Applicant
versus
Iranian Offshore Engineering & Construction Company — Respondent
Arbitration Petition No. 10 of 2006
Decided on : 25-08-2008
AIR 2006 SC 871; AIR 1999 SC 504 – Relied upon.
(1934) 2 KB 17 – Referred.
(b)Arbitration and Conciliation Act, 1996 – Section 11(5)((6)(9) and (12) – Applicant sufficiently proving that the faxed CPA was not forged – On the other hand respondent failed to prove that its signature was forged – Held, the faxed CPA was legitimate and was not a product of forgery. (Para 58)
(c)Arbitration and Conciliation Act, 1996 – Section 7(3) & 7(A)(a) – The provision requires that the arbitration agreement be in writing and signed by the parties – Affixing a seal is not a requirement. (Para 61)
(2003) 7 SCC 418; (1998) 3 SCC 573 – Relied upon.
(d)Arbitration and Conciliation Act, 1996 – Section 7 – Where the statute has gone to great lengths to define exactly what is meant by the term “in writing,” not requiring an arbitration agreement to be in original, Court is precluded from another term to definition – One of the main objectives of the Act, 1996 being to minimise the role of the Court; adding additional requirements to the Act is antithetical to such a goal. (Para 63 and 64)
AIR 1945 PC 108; (1978) 1 All ER 948; (1981) 3 SCC 531; (2000) 2 All ER 109 – Relied upon.
(e)Arbitration and Conciliation Act, 1996 – Section 7 – Section 7 does not require that the agreement be stamped or that parties sign on every page. (Paras 65, 66)
(f)Arbitration and Conciliation Act, 1996 – Section 7(4)(b) – Section 7(4)(b) states that an agreement is in writing if it is contained in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement – The present faxed CPA fulfilled this requirement. (Para 67)
(g)Arbitration and Conciliation Act, 1996 – Section 11(5)((6)(9) and (12) – Once it is established that the faxed CPA is valid, it follows that a valid contract and a valid arbitration clause exist – Further, in view of the existence of a valid arbitration clause since a dispute had arisen between the applicant and the respondent, it needed to be referred to the arbitrator. (Paras 75 and 76)
Facts of the case :
1.The applicant, Great Offshore Ltd., submitted that it had entered into a charter party agreement with the respondent, Iranian Offshore Engineering & Construction Company.
2.The charter party agreement (“CPA”) contained an arbitration clause. Relying on this clause, the applicant had asked this Court to appoint an arbitrator to resolve the dispute.
3.The respondent, however, contended that the two parties had not progressed beyond the stage of negotiation and that there was no concluded contract between them. Therefore there was no question of referring the dispute to arbitration.
Finding of the Court :
A valid contract as also valid arbitration clause exists between the parties.
Result : Matter referred to arbitration.
Judgment
Dalveer Bhandari, J. —
1.Great Offshore Limited has filed a petition under section 11(5)((6)(9) and (12) of the Arbitration and Conciliation Act, 1996 whereby the applicant seeks the appointment of a sole arbitrator. The applicant, Great Offshore Ltd., submits that it has entered into a charter party agreement with the respondent, Iranian Offshore Engineering & Construction Company. The charter party agreement (“CPA”) contains an arbitration clause. Relying on this clause, the applicant has asked this Court to appoint an arbitrator to resolve the dispute. The respondent, however, contends that the two parties had not progressed beyond the stage of negotiation and that there is no concluded contract between them. Therefore, it is argued that there is no question of referring the dispute to arbitration.
2.Brief facts which are relevant to dispose of this arbitration petition are recapitulated below.
3.The charter party agreement in dispute marks the second time the parties have done business with each other. The first time was in 2004. In March of that year, the respondent entered into a contract with the Oil and Natural Gas Corporation Limited (“ONGC”) to carry out construction work on ONGC’s installations at Bombay High. On 26th October, 2004, the applicant and the respondent entered into a charter party agreement. Under this prior agreement, the respondent hired a vessel combination from the applicant. The respondent required a specialized offshore construction barge known as a “Gal Constructor.” It also required an anchor handling tug, named “AHT Malaviya Five.” The AHT Malaviya is used in combination with the Gal Constructor. I shall refer to the Gal Constructor and the AHT Malaviya as the “vessel combination.”
4.The respondent needed this combination to execute offshore work for ONGC. This work was part of ONGC’s RSPPM project, Phase I. The first phase was completed in November 2004.
5.In this case, the controversy is confined to the alleged agreement relating to the second phase of ONGC’s project.
6.In this arbitration petition, I need to decide whether the parties have entered into a valid contract containing an arbitration clause. To this end, it has become imperative to review the relevant correspondence between them. Only then will I be able to arrive at a conclusion as to whether there was a concluded contract or whether the parties had never progressed beyond the stage of negotiation.
7.After the parties expressed mutual interest in resuming business for Phase II, the respondent faxed a letter to the applicant. The letter is dated June 20th, 2005. In this letter, the respondent expressed its intention to use the applicant’s vessel combination for 170 days pursuant to the same terms as the preceding agreement. A few amendments, however, were to be made to that agreement.
8.The applicant responded vide email the next day and stated that it would like to “come to an agreement.” After meeting the respondent on 22nd June, the applicant faxed an offer to the respondent on June 23rd, 2005.
9.In turn, the respondent faxed a letter of intent on June 23rd, 2005. The letter stated that it was “...a firm and unconditional letter of intent (for short LIO) for award of contract for charter hire of your barge Gal Constructor and Malviya 5". Nevertheless, the very same letter contained a contingency clause :
“This Agreement is subject to IOEC [respondent] providing a suitable barge and AHT acceptable to GE Shipping [applicant] for a period of 45-55 days on mutually agreed rates for commencement between 25th October and 10th November 05 for BHN MOL project works.”
10.On July 1st, 2005, the respondent’s minutes of meeting indicate that the barge (vessel) was to be available for visual examination “...until 25th of July after which the barge will leave AJMAN port in UAE for the project in PG”.
11.On August 4th, 2005, the applicant explained that it no longer wanted the respondent to provide a barge for 45-55 days, as mentioned in the res
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