In Case Of Multiple Agreements Between Parties, Agreements To Be Reconciled To Decide Which Of The Arbitration Clauses Would Apply: SC
A two-judge Bench Chief Justice of India N.V. Ramana and Justice Surya Kant has held that when there are multiple agreements between parties and they disagree on which arbitration clause is to be invoked to resolve disputes, Court will have to read the agreements in harmony and reconciled so as to avoid any head-on collision, and thereafter a conclusion as to which of the clauses would be applicable in the case needs to be drawn.
In this case, the Petitioners had moved to the Supreme Court for the appointment of a sole arbitrator for the resolution of the disputes it had with the Respondent, under Section 11(6) read with Section 11(12) of the Arbitration and Conciliation Act, 1996. As per the Petitioners, these disputes had stemmed from two agreements- the DLF-Rajapura Homes Construction Management Services Agreement (RCMA) and the DLF-Southern Homes Construction Management Services Agreement (SCMA). The said two agreements provided for arbitration with New Delhi as the venue, to be governed by the Arbitration and Conciliation Act, 1996.
As per the Respondents, the disputes arise out of two share purchase agreements, which provide for arbitration to be conducted in accordance with the rules of the Singapore International Arbitration Centre (SIAC), with the seat and venue of the arbitration being Singapore.
While answering the contentions presented before it, the Court observed, "The jurisdiction of this Court under Section 11 is primarily to find out whether there exists a written agreement between the parties for resolution of disputes through arbitration and whether the aggrieved party has made out a prima facie arbitrable case. The limited jurisdiction, however, does not denude this Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood."
The Court further asserted, "To say it differently, this Court or a High Court, as the case may be, are not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen Arbitrator. On the contrary, the Court(s) are obliged to apply their mind to the core preliminary issues, albeit, within the framework of Section 11(6-A) of the Act. Such a review, as already clarified by this Court, is not intended to usurp the jurisdiction of the Arbitral Tribunal but is aimed at streamlining the process of arbitration. Therefore, even when an arbitration agreement exists, it would not prevent the Court to decline a prayer for reference if the dispute in question does not correlate to the said agreement. "
After analyzing all the facts, contentions, and the Court held that the disputes are adjudicable as per the arbitration clause in RCMA and SCMA. The Court held, "...we may re-iterate that the Parties have neither denied that there is no 'arbitrable dispute' between them nor have they challenged the existence of the arbitration clause(s) in the Construction Management Service Agreements. Considering that the primary twin-test envisioned under Section 11(6) of the Act has been satisfed by the Petitioner-DHDL, we are of the view that the instant application(s) are maintainable. The nature of disputes that have arisen between the parties, thus, can be adjudicated in the arbitral proceedings under Clause 11 of the RCMA and SCMA."
Accordingly, the Court appointed Mr. Justice (Retd.) R.V. Raveendran, Former Judge, Supreme Court of India as the sole arbitrator to resolve all disputes/differences between the parties and allowed the Arbitration Petitions.
