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2009 Supreme(Del) 112

IN THE HIGH COURT OF DELHI
Honble Judge: S. Ravindra Bhat, J.
Sara International Ltd. – Appellants
Vs.
Arab Shipping Co. (P) Ltd. – Respondent
OMP No. 325/2005
Decided On: 27.01.2009

Advocates appeared:
For Appellant/Petitioner/Plaintiff: Siddharth Agarwal and Simon Benjamin, Advs.
For Respondents/Defendant: Prashant Pratap and O.P. Gaggar, Advs.

Headnote:Arbitration and Conciliation Act, 1996 Section 34 - Proper law applicable to the arbitration agreement - Agreement of the parties unequivocally points to the intention that the proper law of the contract would be English law - Proper law of the arbitration agreement - The law of the seat (of arbitration) is necessarily the procedural law governing arbitration - Held that if the seat of the arbitration is in a different country than the laws of one, which govern the contract, the proper law of the arbitration agreement and the curial law would be that of the former.

       

JUDGMENT

S. Ravindra Bhat, J.

1. The present proceeding under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter "the Act") questions the validity of an award, drawn by an arbitrator, and published on 9th June, 2005 (hereafter called "the impugned award").

.2. The facts, in brief are that the respondent/claimant (referred to as "the claimant"), a company incorporated in Singapore, and disponent owner (a term which, according to the Maritime dictionary -www.m-i-link.com/dictionary/means a person or company which has commercial control over a vessels operation without owning the ship) of the vessel MV Asha Manan, entered into a Charter Party with the Petitioner (hereafter called "the Charterer") whereby 15000 MTs (5% more, or less) of bulk wheat were to be shipped from Kandla, for discharge, in the ports of Salalah and Sultan Qaboos, (the latter port hereafter referred to as "PSQ") in Oman. It is a matter of record that disputes arose between parties, over settlement of demurrage, dispatch, freight balance as well as damage to and shortage of cargo. The claimant sought recourse to arbitration. Clause 25 of the "Box Condition" in the Charter Party, dated 22.07.2003 embodying general conditions, stated "Arbitration In Mumbai, English Law to Apply". Clause 32 of the "GENCON" Charter, agreed to by the parties, read as follows:

.Any dispute arising under this Charter Party shall be referred to Arbitration in Mumbai, English law to apply, one arbitrator being appointed by each party. On the receipt by a party of the nomination in writing of the other partys arbitrator, that party shall appoint its arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If arbitrators properly appointed shall not agree they shall appoint an Umpire whose decision shall be final and binding. For disputes where the total amount claimed by either party does not exceed the amount of US $ 50000 the arbitrator shall be conducted in accordance with the small claim procedure on the London Maritime Arbitrators.

.3. The petitioner completed loading operations at Kandla on 16th August, 2003. The claimants demanded payment of US$ 63, 295.46 for load port demurrage @ US$ 5250 per day, and also recovery of US $4124.66 as demurrage at first discharge port, Salalah. The claimant further demanded US $ 9241.80 towards balance freight. This was disputed by the petitioner, who alleged short-landing of

.cargo, and claimed set off. This was referred to arbitration; the resultant impugned award is questioned by the petitioner.

4. On 20.12.2003, the claimant through Counsel intimated about appointment of Shri R.S. Cooper as its nominee Arbitrator and called upon the petitioner to follow suit and nominate its Arbitrator. On 02.01.2004, the petitioner nominated one Mr.

K.V. Ganesh as its nominee Arbitrator. However, on 02.02.2004, the said Shri Ganesh expressed his unwillingness to accept the assignment. The claimant, therefore, called upon the petitioner to appoint a fresh Arbitrator. The latter wrote back on 05.02.2004 expressing that it would nominate someone else within a few days. On 26.2.2004, the claimant wrote back to the petitioner calling upon the latter to appoint the Arbitrator within 7 days failing which its nominee Shri Cooper was to be treated as Sole Arbitrator. On 3.3.2004, the petitioner by its letter intimated the claimant that it had appointed one Captain Diwan as its nominee Arbitrator. Thereafter the claimant in its letter dated 16.3.2004 voiced its position that Mr. Cooper would be the Sole Arbitrator since the petitioner had not nominated any one. The petitioner, therefore, wrote to the claimant stating that it had already nominated Shri Diwan. On 31.3.2004 Captain Diwan issued a letter accepting his appointment. By letter dated 7.4.2004, Counsel on behalf of claimant wrote to Mr. Devinder Diwan previously nominated by the petitioner as its Arbitrator, inter alia, stating as follows:

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