Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Amit Bansal, J.
Sorin Group Italia S.R.L. - Appellant
Versus
Neeraj Garg - Respondent
CS(Comm) 92 of 2020 & I.A. 2712 of 2020(O-XXXIX R-1 & 2 of CPC), I.A. 1795 of 2021(O-XXXVII R-3(5) of CPC)
Decided On : 28-10-2022
Arbitration & Conciliation Act - Application under Section 45 - Agreement - Article 15 - Dispute Resolution and Forum - Milan, Italy - [Section 45 of Arbitration & Conciliation Act, 1996] - The court discussed the arbitration clause in the Agreement, the scope of disputes covered, and the jurisdiction of the courts. The court referred to relevant judgments and legal principles to determine the arbitrability of the dispute and upheld the maintainability of the present suit before the court.
Fact of the Case:
The plaintiff filed a suit seeking recovery of unpaid invoices. The defendant sought reference to arbitration under Section 45 of the Arbitration & Conciliation Act, 1996, based on the arbitration clause in the Agreement.
Finding of the Court:
The court held a preliminary inquiry to determine the arbitrability of the dispute and found that the claim for recovery of unpaid invoices fell under 'excepted matters' and was not arbitrable. The court dismissed the defendant's application and upheld the maintainability of the suit before the court.
Issues: Arbitrability of the dispute, interpretation of the arbitration clause, and maintainability of the suit.
Ratio Decidendi: The court must hold a preliminary inquiry to determine the arbitrability of the dispute. The choice of the parties in the arbitration clause must be given supremacy. The scope of disputes covered under the arbitration clause and 'excepted matters' must be analyzed to decide arbitrability.
Final Decision: The court dismissed the defendant's application under Section 45 of the Arbitration & Conciliation Act, 1996, and upheld the maintainability of the suit before the court.
JUDGMENT
I.A. 8832/2022 (of the defendant u/S 45 of Arbitration & Conciliation Act, 1996)
1. By way of this judgment, I shall decide the application filed on behalf of the defendant under Section 45 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking that the parties be referred to arbitration and the plaint in the present suit be rejected.
2. The present suit has been filed by the plaintiff (hereinafter referred to as 'Sorin') under provisions of Order XXXVII of the Code of Civil 2022/DHC/004476 Procedure, 1908 (CPC) as a summary suit seeking recovery of USD 3,08,203.45/- along with pendent lite and future interest. Sorin and the defendant entered into a Sole Distribution Agreement dated 1st July, 2017 (hereinafter referred to as 'Agreement'), in terms of which, the defendant placed a purchase order on Sorin to supply certain goods. Sorin supplied the said goods under the purchase order and raised three invoices on the defendant. Since the defendant failed to make full payment in terms of the said invoices, Sorin filed the present suit under Order XXXVII of the CPC seeking recovery of the balance payment in respect of the invoices raised by Sorin on the defendant.
3. Upon summons being issued in the suit, the defendants filed an application under Section 8 of the A&C Act and an application seeking leave to defend. The application under Section 8 of the A&C Act was withdrawn by the defendant on 5th May, 2022 with liberty to file an application under Section 45 of the A&C Act. Pursuant to the said liberty, the present application has been filed. Notice in this application was issued on 31st May, 2022 and reply has been filed on behalf of Sorin.
4. At the outset, the relevant clauses of the Agreement in relation to dispute resolution and choice of law are set out below:
'Article 15 -Enforcement of Agreement 15.1 Choice of Law This Agreement, and any issues or disputes arising out of or in connection with it (Whether such disputes are contractual or non-contractual in nature such as claims in tort, for breach of statute or regulation, or regulation, or otherwise) shall be governed by and construed in accordance with the laws of Italy, excluding its rules governing conflicts of laws and the United Nations Convention on the International Sale of Goods. 15.2 Dispute Resolution and Forum
a) If a dispute arises between the Parties relating to the termination or the grounds for the termination (including expiration) including potential claims for indemnification or compensation thereof, the exclusive dispute resolution mechanism for such disputes shall be as follows:
(i) Representatives of the Parties with decision-making authority shall meet to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies.
(ii) If within sixty (60) days after such meeting the Parties have not succeeded in negotiating a resolution of the dispute, such dispute shall be submitted to final and binding arbitration under the then current Commercial Arbitration Rules of the Chamber of Commerce Milan, by three (3) arbitrators.
(iii) The place of arbitration shall be Milan, Italy
(iv) The language used during the arbitration proceedings shall be exclusively English.
(v) The Parties shall bear the cost of arbitration equally and shall bear their own expenses, including professional fees. The decision of the arbitrators shall be final and non-appealable and may be enforced in any court of competent jurisdiction.
b) As for all other disputes between the parties resulting from the Agreement, the courts located within Milan, Italy shall have exclusive jurisdiction to adjudicate any disputes arising out of or in connection with this Agreement. Consequently, Distributor hereby consents to the personal jurisdiction of the courts located in Milan, Italy for 2022/DHC/004476 resolution of disputes as set forth in Article 15.
However, Sorin at its sole discretion, shall always have the right to invoke the jurisdiction of any court
The court must conduct a preliminary inquiry to determine the arbitrability of a dispute and give supremacy to the choice of parties in the arbitration clause.
The court held that disputes regarding settled amounts are not arbitrable under the Arbitration and Conciliation Act, 1996, unless specifically covered by the arbitration agreement.
The main legal principle established in the judgment is the legislative intent to promote arbitration, the limited power of prima facie review at the reference stage, and the rejection of the Law Com....
The arbitration agreement is separate and severable from the underlying contract, and the Arbitral Tribunal has the competence to rule on its own jurisdiction, including the existence or validity of ....
The main legal point established is that unless a party establishes a prima facie case of non-existence of a valid arbitration agreement, the parties are to be referred to arbitration.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
