The Delhi High Court has held that Rules of an Arbitration Institution cannot decide on the Seat of Arbitration as only Courts at the place of arbitration proceedings have jurisdiction to decided it.
The single-judge bench of Justice Vibhu Bakhru while dealing with a petition under Section 11 of the Arbitration and Conciliation Act, 1996 ruled out its judrisdiction as Arbitration proceedings are running in Gwalior, Madhya Pradesh.
The parties hererin had entered into a Concession Agreement for “Implementation of Regional Integrated Solid Waste Management Project for 16 Urban Local Bodies”. Certain disputes arose between them and petitioner issued a preliminary termination notice to the respondent in terms of Article 9.2(b)(ii) of the Concession Agreement alleging violation of certain terms of the said Agreement. It was contended that in terms of the Concession Agreement, the respondent was obliged to send a proposal for curing the defect/defaults. However, instead of doing so, the respondent had issued a notice under Article 9 terminating the said Concession Agreement.
The respondent had also encashed the bank guarantees furnished in the sum of ₹12,73,00,000/- of the petitioner . In view of the disputes, the petitioner invoked the Dispute Resolution Clause (Article 11 of the Concession Agreement) and sought amicable resolution of the disputes. Since the parties could not resolve their disputes, the petitioner issued a notice under Section 21 of the A&C Act invoking the Arbitration Agreement in terms of Article 11.2(a) of the Concession Agreement and also nominated a former Judge of this Court as an Arbitrator.
It was stated that the respondent has failed and neglected to respond to the said Notice. Consequently, the petitioner has filed the present petition, the maintainability of which has been questioned by the respondent.
It was averred from his side that the arbitration is required to be conducted under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 and not in accordance with the A&C Act. He further contended that this Court doesn't have the territorial jurisdiction to entertain the present petition as the place of arbitration is Gwalior.
Counsel for the petitioner, on the other hand submitted that it is apparent that the parties had consciously elected that the disputes be resolved under the A&C Act and not under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983.
He submitted that the parties had agreed that the arbitration shall be conducted under the Rules of the International Centre for Alternative Dispute Resolution, New Delhi (ICADR Rules) and that they expressly provided that the place of arbitration would be New Delhi or such other places where the regional offices of the International Centre for Alternative Dispute Resolution (ACADR) are located.
The Court upon analyse, found out that there is no ambiguity that the place of arbitration is Gwalior.
"Rule 17 of the ICADR Rules indicates that the place of arbitration would be New Delhi or such other place where the regional office of ICADR is situated as the parties may agree. However, the proviso further makes it clear that failing any such agreement, the place of arbitration shall be determined by the Arbitral Tribunal. Clearly, there is no agreement that the place of arbitration shall be New Delhi or any other place where the regional office of ICADR is located. Therefore, it would be for the Arbitral Tribunal to determine the place of arbitration. As noticed above, Article 11.2(b) of the Concession Agreement clearly indicates that the place of arbitration is required to be in Gwalior."
Article 16.2 of the Concession Agreement also expressly indicates that the Courts at Gwalior will have the exclusive jurisdiction with regard to the subject matter of the Agreement, the Court noted. Article 11.2 and Article 16.2 of the Agreement, indicate the place of arbitration and the courts that would exercise jurisdiction in the matter, it added.
The Court referred to S.P. Singla Constructions Pvt. Ltd. Vs. State of Himachal Pradesh, 2018 Latest Caselaw 898 SC wherein the similar facts occur and and a petition akin to the present one was dismissed.
Insofar as the question whether the arbitration is required to be conducted under the A&C Act or the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, the Court mentioned M.P. Road Development Corporation (supra) which covers the issue.
The Court concluded that it doesn't have the jurisdiction to entertain the present petition under Section 11 of the A&C Act.
Case Title: ECOGREEN ENERGY GWALIOR PVT. LTD. vs COMMISSIONER OF MUNICIPAL CORPORATION, GWALIOR
Case Details: ARB.P. 1120/2021
Coram: Justice Vibhu Bakhru
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