IMPORTANT POINT
When an arbitration agreement is silent as to the law and procedure to be followed in implementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governing the contract itself.

ORDER

1. By a Memorandum of Understanding, hereinafter referred to as “the Memorandum”, entered into between the appellant and the respondent on 11th June, 2002, the parties agreed to collaborate on an exclusive basis for jointly preparing and submitting their tender for work associated with the designing, manufacturing, supply, installation, test and commissioning contract for the Indian Railways Crashworthiness Project. Pursuant thereto the parties jointly prepared and submitted a tender signed by both the parties on 30.9.2002 in response to a bid invitation by RITES Limited, a Public Sector Undertaking of the Ministry of Railways, on 30.9.2002.

2. After submission of such bid the parties were invited to call upon the respondent on 29.10.2002 for contract negotiation in India, but without any valid or justifiable reason the respondent terminated the Memorandum on 12.11.2002 and on 15.11.2002 unilaterally withdrew the joint bid submitted to RITES without any reference to the applicant. According to the applicant, some of the other terms of the Memorandum dated 11.6.2002 were also breached by the respondent which impelled the applicant to address a letter to the respondent on 23.6.2003 calling upon it to explain the various defaults committed by it. A request was also made to the respondent to enter into a dialogue to work out the fair level of compensation for the losses suffered by the applicant on account of such breach. The allegations contained in the letter were denied by the respondent by its reply dated 20.8.2003. Several letters were thereafter exchanged between the parties culminating in a legal notice being sent on behalf of the applicant to the respondent to compensate the applicant for the losses incurred by it on account of the unlawful acts of the respondent. The response of the respondent to the legal notice was one of denial and assertion that the respondent had acted fairly and properly in the matter.

3. Since all attempts made by the applicant, including resolution of the dispute through an alternate dispute resolution process and mediation, proved to be abortive, the applicant ultimately filed the present application for the appointment of a sole Arbitrator under Section 11(9) of the Arbitration Act, 1996, as per clause 13(2) of the Memorandum of Understanding dated 11th June, 2002. Inasmuch as, one facet of the dispute between the parties involves the wording of the said clause of the Agreement, the same is reproduced hereinbelow for the sake of reference:

“CLAUSE 13 - SETTLEMENT OF DISPUTES

13.1 This Agreement, its construction, validity and performance shall be governed by and constructed in accordance with the laws of England and Wales;

13.2 Subject to Clause 13.3 all disputes or differences arising out of, or in connection with, this Agreement which cannot be settled amicably by the Parties shall be referred to adjudication;

13.3 If any dispute or difference under this Agreement touches or concerns any dispute or difference under either of the Sub Contract Agreements, then the Parties agree that such dispute or difference hereunder will be referred to the adjudicator or the courts as the case may be appointed to decide the dispute or difference under the relevant Sub Contract Agreement and the Parties hereto agree to abide by such decision as if it were a decision under this Agreement.”

4. On behalf of the appellant company, Mr. S.C. Gupta, learned advocate, submitted that although in the Memorandum the law which was to apply to the construction and performance of the agreement had been mentioned, the venue for such adjudication or arbitration had not been stipulated in the agreement since the choice of venue has obviously been left to the parties. It was submitted that primarily two questions were required to be answered in this matter, namely,:

(i) Whether clauses 13.2 and 13.3 of the Memorandum of Understanding can be construed to be an arbitration agreement; and

(ii) Whether having regard to clause 13.1 of t