The High Court holds that without a valid arbitration agreement under the SEZ Act, it lacks jurisdiction to appoint an arbitrator under the Arbitration Act, reaffirming the statutory framework governing disputes in Special Economic Zones.

ORDER :

1. The petitioner entered into Annexure 1 agreement with the 3^rd respondent, a Company functioning in the Special Economic Zone, Koratty, engaged in the business of developing software. Substantial disputes have arisen between the petitioner and the 3^rd respondent. The petitioner issued Annexure 3 notice through his lawyer requesting the 2^nd respondent to appoint an arbitrator for resolution of disputes between him and the 3^rd respondent. According to the petitioner, the request was made in view of Section 42 (3) of the Special Economic Zones Act, 2005 (‘SEZ Act’ for short). There is no response from the 2^nd respondent yet.

2. This arbitration request has been filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of a suitable person as arbitrator to settle the dispute between the petitioner and the 3^rd respondent.

3. When the learned counsel for the petitioner was called upon to explain how this application can be maintained under Section 11 of the Arbitration and Conciliation Act since the indispensable requirements to invoke the jurisdiction of this Court are absent, the learned counsel submitted that the petitioner has approached this Court since the 2^nd respondent has not appointed an arbitrator as provided under Section 42 (3) of the SEZ Act. According to the learned counsel, since the competent Authority has not appointed an arbitrator the petitioner is justified in approaching this Court under of the.

4. The Special Economic Zones Act, 2005, contemplates designation of a Special Court under Section 23 of the SEZ Act to try all suits of a civil nature arising in the Special Economic Zone and to try notified offences committed in the Special Economic Zone. If no Court has been designated under (1) of the SEZ Act, disputes of civil nature shall be referred to arbitration. The arbitrator shall be appointed by the Central Government. Thus, in the matter of resolution of disputes of civil nature, the SEZ Act envisages a special forum and in the absence of it, resort can be made to arbitration.

5. For clarity, reference to the relevant provisions of the Special Economic Zones Act is essential:

Section 23 of the SEZ Act reads as under:

“23. Designated Courts to try suits and notified offences:

(1) The State Government, in which the Special Economic Zone is situated, may, with the concurrence of the Chief Justice of the High Court of that State, designate one or more courts-

(a) to try all suits of a civil nature arising in the Special Economic Zone;

(b) to try notified offences committed in the Special Economic Zone.

(2) No court, other than the court designated under subsection (1), shall try any suit or conduct the trial of any notified offence referred to in that sub-section:

Provided that the courts, in which any suit of a civil nature in a Special Economic Zone had been filed before the commencement of this Act, shall continue to try such suit after such commencement:

Provided further that the courts, in which any trial of any notified offence is being conducted before the commencement of this Act, shall continue to conduct the trial of such offence after the commencement of this Act:

Provided also that the courts competent to try any notified offence, before the commencement of this Act, shall conduct the trial in respect of such offence after the commencement of this Act until the Courts have been designated under sub-section (1) and all such cases relating to such trials shall thereafter be transferred to such Courts so designated which shall conduct the trial from the stage at which such cases were so transferred.

Section 42 of the SEZ Act is extracted hereunder:

“42. Reference of dispute:

(1) Notwithstanding anything contained in any other law for