July 30, 2017This is the 1st time in India when Section 11 of the Arbitration and Conciliation Act, 2015, has been invoked for asking an independent body to appoint an Arbitrator in a matter.

Apex Court has told the Mumbai Centre for International Arbitration (MCIA) to appoint an Arbitrator in an international dispute between leading drug maker Sun Pharmaceutical Industries Ltd. & Nigeria-based Falma Organics Ltd.

This has signaled a major boost to arbitration in India, according to the legal experts.

This is the 1st time in the country when a court in India has invoked Section 11 of the Arbitration & Conciliation Act, 2015, asking an independent body to appoint an arbitrator in the matter.

Under Section 11 of the Act if a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party, the appointment can be made, upon request of a party by the Chief Justice or any institution or person designated by him.

SC order passed by Justice Adarsh Kumar Goel & Justice Uday Umesh Lalit said “We're of the view that case for reference to the arbitrator is made out; accordingly we refer the matter to the Arbitration Centre in Mumbai to appoint an arbitrator.”

According to this order, both Sun Pharma & Falma Organics were told to appear before the MCIA on 10th July for the MCIA to appoint an arbitrator. Proceedings in this case'll shortly begin in Mumbai.

“We're extremely pleased with the faith that the SC has reposed in the MCIA. We believe that the courts are integral to improving the quality of arbitration in India & this is an extremely positive step in this direction,” said Madhukeshwar Desai CEO of MCIA about the Supreme Court order.

According to the SC order, the dispute between Sun Pharma & Falma Organics pertains to a distribution agreement of April 2004.

In 2014, Sun Pharma approached the SC to appoint an arbitrator in the case. In 2015, the apex court sent the parties to the mediation centre at the Bombay HC to amicably settle the dispute.

In 2016, the Apex court disposed of the case after it was informed that both the firms have agreed for an settlement. However, on 9th January 2017, Sun Pharma again approached the SC to appoint an arbitrator as it said the “settlement wasn't effected.”

So far, India has hardly been a preferred country for settling disputes through Arbitration due to lack of credible Arbitral institution, absence of a dedicated arbitration bar, excessive judicial intervention & lack of clarity on concept of the public policy in the country.

As per a study conducted by the Singapore International Arbitration Centre, almost 30% of the disputes it hears annually relate to matters involving Indian businesses. Also, the no. of disputes it settled between year 2001 & 2013-14 has shown a 10-fold increase.

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