2010 Supreme(SC) 169

2010 (1) Supreme 690
SUPREME COURT OF INDIA
Aftab Alam, J.
Dolphin Drilling Ltd. — Petitioner
versus
Oil and Natural Gas Corporation Ltd. — Respondent
Arbitration Petition No. 21 of 2009
Decided on : 17-02-2010

Headnote:Arbitration and Conciliation Act, 1996- Section 11(6) -Agreement entered into between applicant and respondent for “Charter Hire of Deepwater Drilling Rig DP-Drill Ship `Belford Dolphin’ along with Services on Integrated Basis”- Clause 28 of agreement contained arbitration clause- Grievance of applicant that a number of its invoices were not paid or only paid in part by the respondent and on demands made by it the respondent did not even give any satisfactory reply for non-payment/part-payment of those invoices- Failing to get any positive response from the respondent despite demands and reminders, applicant filed an application under Section 11(6) of Act, 1996 for appointment of an arbitrator and to refer dispute(s) between parties for arbitration-Objection thereagainst by respondent on plea that applicant had already invoked the arbitration clause albeit in connection with a different dispute earlier arising under agreement and since remedy of arbitration under clause 28 of the agreement was a one-time measure it could not be taken recourse to repeatedly even though disputes may be different and unconnected to each other-The words “all disputes” in clause 28.3 of the agreement can only mean “all disputes” that might be in existence when the arbitration clause is invoked and one of the parties to the agreement gives the arbitration notice to the other- In its present form clause 28 of the agreement cannot be said to be a one time measure and it cannot be held that once the arbitration clause is invoked the remedy of arbitration is no longer available in regard to other disputes that might arise in future- The issue of financial burden caused by the arbitration proceedings is indeed a legitimate concern but the problem can only be remedied by suitably amending the arbitration clause- In future agreements, the arbitration clause can be recast making it clear that the remedy of arbitration can be taken recourse to only once at the conclusion of the work under the agreement or at the termination/cancellation of the agreement and at the same time expressly saving any disputes/claims from becoming stale or time -barred etc. and for that reason alone being rendered non-Arbitrable- Hence objection raised on behalf of respondent held unsustainable-Application allowed (Paras 6 to 9)

       Facts of the Case :

        An Agreement was entered into between applicant and respondent for “Charter Hire of Deepwater Drilling Rig DP-Drill Ship `Belford Dolphin’ along with Services on Integrated Basis”.Clause 28 of agreement contained arbitration clause.Grievance of applicant that a number of its invoices were not paid or only paid in part by the respondent and on demands made by it the respondent did not even give any satisfactory reply for non-payment/part-payment of those invoices. Failing to get any positive response from the respondent despite demands and reminders, applicant filed an application under Section 11(6) of Act, 1996 for appointment of an arbitrator and to refer dispute(s) between parties for arbitration. Objection thereagainst was raised by respondent on plea that applicant had already invoked the arbitration clause albeit in connection with a different dispute earlier arising under agreement and since remedy of arbitration under clause 28 of the agreement was a one-time measure it could not be taken recourse to repeatedly even though disputes may be different and unconnected to each other .

       Findings of the Court :

        It was held that words “all disputes” in clause 28.3 of the agreement can only mean “all disputes” that might be in existence when the arbitration clause is invoked and one of the parties to the agreement gives the arbitration notice to the other. In its present form clause 28 of the agreement cannot be said to be a one time measure and it cannot be held that once the arbitration clause is invoked the remedy of arbitration is no longer available in regard to other disputes that might arise in future. The issue of financial burden caused by the arbitration proceedings is indeed a legitimate concern but the problem can only be remedied by suitably amending the arbitration clause. In future agreements, the arbitration clause can be recast making it clear that the remedy of arbitration can be taken recourse to only once at the conclusion of the work under the agreement or at the termination/cancellation of the agreement and at the same time expressly saving any disputes/claims from becoming stale or time -barred etc. and for that reason alone being rendered non-Arbitrable. Hence objection raised on behalf of respondent was held unsustainable. Application was allowed

       Result : Application allowed