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2020 Supreme(Del) 1475
IN THE HIGH COURT OF DELHI AT NEW DELHI
Mukta Gupta, J.
Dholi Spintex Pvt Ltd - Appellant
Versus
Louis Dreyfus Company India Pvt Ltd - Respondent
Civil Suit (Comm) No. 286 of 2020
Decided On : 24-11-2020
Nakul Dewan, Advocate, Devang Nanavati, Advocate, Rishi Agrawala, Advocate, Karan Luthra, Advocate, Prachiti Shah, Advocate, Aarushi Tiku, Advocate, Anushka Shah, Advocate, Sambit Nanda, Advocate, Dev Shah, Advocate, Jayant K Mehta, Advocate, Rakesh K Ojha, Advocate, Sanjeev Sarawast, Advocate, Achintya Dwivedi, Advocate, Ankush Chattopadhyay, Advocate
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 45 - Dispute arising from sale contract - Plaintiff sought declaration of arbitration clause as void, citing Indian law applicability due to both parties being Indian - Courts recognize party autonomy in international arbitration, upholding validity of the arbitration agreement and affirming foreign seated arbitration may be permissible - Issues of jurisdiction and governing law examined without declaring contract null. (Paras 31, 33-35)
(B) Contract Law - Public policy considerations - Indian parties cannot contract out of Indian law if performance occurs within India - However, foreign elements in agreements allow party autonomy - Agreement upheld as valid under English law, seat of arbitration recognized in London. (Paras 31.1, 32-34)
| Table of Content |
|---|
| 1. contractual dispute regarding arbitration invalidity (Para 1 , 3 , 4) |
| 2. defendant's assertion of high seas sale and international arbitration (Para 5 , 18 , 20) |
| 3. parties' arguments on applicable law and jurisdiction (Para 7 , 10 , 11 , 12 , 21) |
| 4. international arbitration and applicability of foreign law (Para 19 , 23 , 27) |
| 5. court's jurisdiction over arbitration agreement validity (Para 30 , 31 , 34) |
| 6. maintainability of the suit and injunction request (Para 32 , 33) |
| 7. final dismissal of the suit as not maintainable (Para 35) |
JUDGMENT
Mukta Gupta, J. - CS(Comm) 286/2020
I.A. 6298/2020 (under Order XXXIX Rule 1 and 2 CPC)
I.A. 6299/2020 (under Order II Rule 2 CPC)
I.A. 6701/2020 (under Section 45 of the Arbitration and Conciliation Act-by defendant)
1. The plaintiff-Dholi Spintex Pvt. Ltd. (in short "Dholi Spintex") has instituted the present suit, inter alia, seeking a decree of declaration, declaring Clause 6 of the contract dated 30th May, 2019 being a sale contract between the Dholi Spintex and defendant-Louis Dreyfus Company India Pvt. Ltd. (in short "Louis Dreyfus") providing for reference of dispute between the parties through arbitration under the rules and arbitration procedures of International Cotton Association (in short, the "ICA") as invalid, null & void and consequentially, a declaration of the letter dated 29th April, 2020 issued by the ICA and the reference through arbitration being ICA Reference LOU005.0004/AO1 2020 24 initiated by the defendant as null and void besides permanent injunction restraining the defendant from proceeding/continuing with the arbitration proceedings against the plaintiff.
2. After the summons in the suit and notice in the application were issued on 30th July, 2020 to the defendant, defendant filed the written statement as also an application under Section 45 of the Arbitration and Conciliation Act, 1996 (in short "the Act") to which reply has been filed by the plaintiff and rejoinder thereto by the defendant.
3. Case of the plaintiff-Dholi Spintex is that it entered into a contract with the defendant-Louis Dreyfus for supply of 600 Metric Tons of American imported raw Cotton in Bales to Dholi Spintex on 30th May, 2019. Since the shipment and delivery of the raw Cotton Bales was delayed, Dholi Spintex refused to take delivery of the goods. Pursuant to the rejection of the goods by Dholi Spintex in India defendant-Louis Dreyfus initiated arbitration proceedings against Dholi Spintex before ICA on 29th April, 2020 under Clause-6 of the contract. Dholi Spintex thereafter received a communication dated 29th April, 2020 from the ICA forwarding the request for appointment of a Technical Arbitrator made by the defendant-Louis Dreyfus and calling upon Dholi Spintex to appoint its nominee Arbitrator within 14 days from the receipt of request of arbitration clearly advising that the arbitration under ICA Bylaws is conducted under the English Arbitration Act, 1996. Dholi Spintex was unable to respond to ICA''s mail dated 29th April, 2020 due to nationwide lockdown in India. On 2nd June, 2020, Dholi Spintex received another letter informing appointment of Mr.David Adcroft as an Arbitrator on behalf of Dholi Spintex since it failed to do so within the stipulated time stated by ICA. As per the Dholi Spintex, Mr.David Adcroft has given a declaration that he had been employed with one of the group companies of Louis Dreyfus namely LDCS, Switzerland until June, 2015. On 10th June, 2020 Louis Dreyfus submitted its claim for a sum of Rs. 2,44,85,796/-. Dholi Spintex wrote an email to ICA seeking extension of time for taking necessary action on 6th July, 2020 without prejudice to its contentions and submissions to the arbitration, however, in disregard thereof, ICA issued an email to the parties dated 9th July, 2020 quoting the Tribunal''s communication to the ICA. On 16th July, 2020, Louis Dreyfus submitted its rejoinder/additional comments as directed by the ICA pursuant whereto,
