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High Court Of Delhi
BHARTI TELEVENTURES LTD. - Appellant
Versus
DSS ENTERPRISES PRIVATE LTD. - Respondent
I.A. : 9735 of 2003
Decided On : 08/17/2005
The Court held that the provisions of Part I of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `arb. and Con. Act ) apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or rules will not apply.
Fact of the Case:
The Plaintiff, Bharti Cellular Limited, filed a suit against the Defendants, DSS Enterprises Pvt. Ltd. and Crompton Greaves Ltd., seeking an injunction to restrain the Defendants from selling their shares in SKYCELL Communications Pvt. Limited (SKYCELL) to any person other than the Plaintiff. The Defendants contended that the dispute should be referred to arbitration in accordance with the arbitration clause contained in the Joint Venture Agreement (JVA) between the parties. The Plaintiff argued that the arbitration clause was not valid and that the Court had jurisdiction to decide the dispute.
Finding of the Court:
The Court held that the arbitration clause in the JVA was valid and that the dispute should be referred to arbitration. The Court found that the Plaintiff had not filed an application under Section 8 of the Arb. and Con. Act seeking a reference to arbitration, and that the Defendant had not filed an application under Section 45 of the Arb. and Con. Act seeking a stay of the Court proceedings. The Court also found that the Defendant had taken various legal steps in various civil courts notwithstanding the existence of the arbitration clause. The Court concluded that the Defendant had waived its right to arbitration and that the Court had jurisdiction to decide the dispute.
Issues: 1. Whether the arbitration clause in the JVA was valid and enforceable. 2. Whether the Plaintiff had waived its right to arbitration. 3. Whether the Court had jurisdiction to decide the dispute.
Ratio Decidendi: The Court held that the arbitration clause in the JVA was valid and enforceable because it was contained in a written agreement signed by the parties and it related to a dispute arising out of the JVA. The Court also held that the Plaintiff had waived its right to arbitration because it had not filed an application under Section 8 of the Arb. and Con. Act seeking a reference to arbitration, and because it had taken various legal steps in various civil courts notwithstanding the existence of the arbitration clause. The Court further held that it had jurisdiction to decide the dispute because the Defendant had waived its right to arbitration.
Final Decision: The Court allowed the Plaintiff's application for an injunction and restrained the Defendants from selling their shares in SKYCELL to any person other than the Plaintiff.
Based on the provided legal document, the following key points can be summarized:
The court emphasized that the provisions of the Arbitration and Conciliation Act, 1996 (Part I) apply to all arbitrations and related proceedings, including international commercial arbitrations held outside India, unless explicitly excluded by agreement or specific statutory provisions (!) (!) (!) (!) (!) (!) (!) .
The validity and enforceability of arbitration clauses depend on their inclusion in a written agreement signed by the parties, and such clauses can be waived through conduct, such as taking legal steps in civil courts despite the existence of an arbitration agreement (!) (!) (!) .
Parties may waive their right to arbitration either explicitly or through conduct that indicates an election to pursue judicial remedies, such as filing or continuing legal proceedings in civil courts (!) (!) (!) (!) .
The jurisdiction of civil courts is not entirely ousted by the arbitration statute; courts retain jurisdiction unless there is an express or clear implied exclusion, and the scheme of the law indicates the intent to exclude civil court intervention (!) (!) (!) .
The venue or place of arbitration plays a significant role in determining the applicable law and jurisdiction. The law of the place of arbitration influences procedural aspects, but the law governing the contract also has a substantial impact, especially when the contract specifies Indian laws or the arbitration is conducted in India (!) (!) (!) (!) (!) .
In cases involving international arbitration, the applicable legal regime depends on factors such as the location of arbitration, the law chosen by the parties, and the specific provisions of international treaties like the New York Convention. The law of the seat of arbitration is particularly influential in determining the jurisdiction and enforcement procedures (!) (!) (!) (!) (!) .
The court’s role includes examining whether the arbitration agreement is valid and operative, and whether the arbitration clause has been waived or rendered inoperative by conduct. Courts should refrain from interfering with arbitration proceedings unless there is clear evidence that the arbitration agreement is null, void, or inoperative (!) (!) (!) (!) (!) .
When arbitration proceedings are initiated or pending, courts may stay proceedings or enforce interim measures, but their jurisdiction is limited by statutory provisions and the conduct of the parties. The existence of an arbitration clause does not automatically preclude civil courts from exercising jurisdiction if the parties have taken legal steps inconsistent with arbitration (!) (!) (!) (!) .
The law recognizes that arbitration is a preferred method of dispute resolution, but courts retain a supervisory role to ensure that arbitration clauses are valid and that proceedings are not used to abuse legal processes or cause undue delay (!) (!) (!) .
The legal framework allows civil courts to intervene in arbitration matters under certain circumstances, such as to decide on the validity of arbitration agreements, to grant interim relief, or to enforce or set aside arbitral awards, provided statutory conditions are met (!) (!) (!) (!) .
These points reflect the principles outlined in the document regarding the applicability of arbitration law, waiver of arbitration rights, jurisdictional issues, and the interplay between civil courts and arbitration proceedings.
( 1 ) SHOULD the Court e arbitration agreement exists between the parties has yet again arisen like the mythical phoenix from the ashes of litigation. Mr. Rajiv Sawhney, learned Senior counsel for the contesting Defendant has contended that the Court must forthwith refer the parties to arbitration, leaving it to the Arbitral Tribunal to decide upon its own jurisdiction viz. whether the parties before it had agreed to resolve their disputes through arbitration and/or whether the original compact to this effect does not subsist as it had been abandoned and given up or should be deemed to have been given up. In this case I have not been presented with a clean slate on which to write the judgment inasmuch as the controversy between the parties has received jural attention already. Benefitting from the detailed and erudite legal submissions made before me, it is my understanding that if possible or plausible cases are presented on behalf of both the adversaries, then the Court should direct them to ventilate their respective cases before the arbitrators. However, if upon even a cursory consideration of the facts there is a strong preponderant possibility that one of the parties will needlessly and vexatiously be subjected to arbitration, thereby compelling it to expend avoidable time, effort and expense, the Arbitration and conciliation Act, 1996 (hereinafter referred to as `arb. and Con. Act ) expects the Court to look into the matter, and thereby obviate a futile and facile Reference. This opinion holds irrespective of whether it is in the context of a domestic or a foreign arbitration; in fact this determination is essential in the latter case.
( 2 ) MR. Rajiv Sawhney has relied very heavily on the decision of the Hon ble Supreme Court titled Bhatia International vs. Bulk Trading S. A. and another, (2002) 4 SCC 105 for the proposition that in all instances where parties contract with each other that indian laws would apply to the arbitration, the Award rendered thereon would invariably be pursuant to a domestic and not a foreign arbitration; accordingly, Part i and not Part II would govern any disputes that may be brought before the Court or Arbitral Tribunal. It is through this dialectic that he has argued that Section 45 of the Arb. and Con. Act could not be resorted to; that instead Section 8 of the Arb. and Con Act mandates the court to refer the parties to arbitration, leaving it to the Arbitral Tribunal under Section 16 to settle objections even to their own jurisdiction, both of which fall in Part I of the Arb. and Con. Act. Mr. Sawhney has contended that it is the applicable law and not the venue of the arbitration which is the determinative factor in resolving this legal nodus. It is apparent from a perusal of this celebrated decision that the argument that every statute should be interpreted in a manner which would not lead to its extraterritoriality was not raised at all. Therefore, for the Arb. and Con. Act to apply it is imperative to find some connectivity with india. (see C. E. B. Draper and Sons Ltd. v. Edward Turner and son, Ltd. , [1964] 3 All E. R. 148. ).
( 3 ) THE opinion of the Apex Court in Bhatia international case (supra) can be gleaned from the following passages-- 16. A reading of the provisions show that the said Act applies to arbitrations which are held in India between indian nationals and to international commercial arbitrations whether held in India or out of India. Section 2 (1) (f) defines an international commercial arbitration. The definition makes no distinction between international commercial arbitrations held in India or outside India. An international commercial arbitration may be held in a country which is a signatory to either the New York Convention or the Geneva Convention (hereinafter called the convention country ). An international commercial arbitration may be held in a non- convention country. The said Act nowhere provides that its provisions are not to apply
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