REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

ARBITRATION PETITION NO. 16 OF 2007

VISA International Ltd.

…Applicant

Versus

Continental Resources (USA) Ltd.

…Respondent

J U D G M E N T

B.SUDERSHAN REDDY,J.

This application under sub-section (5) and (9) of Section 11 of

the Arbitration and Conciliation Act, 1996 (for short “the Act”) has

been filed with a prayer to appoint an Arbitrator in terms of Clause VI

of the agreement dated 15.2.2005 entered into by and between the

applicant and the respondent.

2.

The facts leading to filing of this application may briefly be

noticed:

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3.

The applicant is, inter alia, engaged in the business of providing

services in international trading of Minerals, Metals and Ship

Chartering. The respondent with an intention to make substantial

investments to set up an integrated aluminium complex in Orissa with

an Alumina refinery to be catered by the bauxite deposits of

Gandhamardan Mines entered into a Memorandum of Understanding

(for short “MOU”) with Orissa Mining Corporation Ltd. (for short

“OMC”) for mining of bauxite deposits from the Gandhamardan Mines

situated in the State of Orissa. In order to help set up integrated

aluminium complex in Orissa, OMC had decided and agreed to enter

into a Joint Venture Agreement with the respondent on certain terms

and conditions.

4.

In terms of the proposed joint venture agreement, the

respondent was required to set up an integrated alumina complex in

the vicinity of the Gandhamardan area and was further obliged to

utilize the bauxite lifted from the said mines as raw material in the

proposed aluminum complex. The respondent proposed to the

applicant to set up the said integrated aluminum complex in joint

venture with the applicant by duly incorporating a Special Purpose

Vehicle (SPV) for the purpose.

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5.

The applicant relying upon representations and assurances

had accepted the proposal for setting up of the said aluminum complex

in joint venture with the respondent. The parties mutually agreed to

execute a MOU and an agreement to clearly define their respective

rights and obligations thereto. Accordingly, a MOU dated 14.2.2005

was executed by and between the applicant and the respondent

whereby and whereunder it was agreed that the applicant and the

respondent would incorporate a company in the name and the style of

“VISA Aluminum Ltd” for the purpose of setting up an integrated

Aluminum Complex. The said MOU was followed by an agreement

dated 15.2.2005 executed between the parties. In terms of the said

agreement it was agreed that the respondent would enter into the

joint venture agreement with OMC while the applicant and the

respondent would incorporate a company in the name and style of

“VISA Aluminum Limited” for setting up an integrated Aluminum

Complex. In terms of the said agreement 26% of the issued and paid

up equity shares of the proposed company to be retained by the

respondent and the remaining 74% of the shareholding to be held by

the applicant. The applicant agreed to bear a sum of US$ 7,40,000

being 74% of US$ 10,00,000 to have been incurred by the respondent

on the pre-project activities. Day to day control was agreed to be that

of the applicant exclusively. The applicant also undertook to pay a sum

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of US$ 22,50,000 to the respondent for the future overseas costs in

terms of the said agreement. Article IV of the said agreement

stipulated that the agreement to be effective upon signing by both the

parties with immediate effect. The whole controversy centers around

the interpretation of Article VI in the said agreement which according

to the applicant contains the Arbitration Clause.

6.

It may not be necessary for the purpose of disposal of this

application to note further details as to what transpired between the

applicant and the respondent after entering