| The Petitioner is an Indian Company
and the Respondent is a Bangadeshi Company. The Petitioner
made an application under Section 11 of the Act of 1996 to
the Chief Justice of India with a request to nominate an Arbitrator
as the Respondent had failed to nominate Arbitrator in terms
of the arbitration agreement between the parties.
The Arbitration agreement was entered into between the parties
under the Arbitration Act of 1940 before it was repealed by
the Act of 1996. The relevant portion of the arbitration agreement
is reproduced hereunder:
“….. matter in disputes will be referred to two
Arbitrators, one to be nominated by the seller and the other
by the buyer and in case of the said Arbitrators not agreeing
then an Umpire has to be appointed by the Arbitrators in writing
before proceeding on the reference…”.
In M.M.T.C. Ltd. vs. Sterlite Industries (India) Ltd. a question
arose whether there is anything in the Act of 1996 to make
an agreement under the Arbitration Act, 1940 unenforceable.
This court answered in the negative and said as under:
“We do not find any such indication in the New Act.
There is no dispute that the arbitral proceeding in the present
case commenced after the New Act came into force and, therefore,
the New Act applies. In view of the term in the arbitration
agreement that the two arbitrators would appoint the umpire
or the third arbitrator before proceeding with the reference,
the requirement of sub-section (1) of Section 10 is satisfied
and sub-section (2) thereof has no application. As earlier
stated the agreement satisfies the requirement of Section
7 of the Act and, therefore is a valid arbitration agreement.
The appointment of arbitrators must therefore, be governed
by Section 11 of the New Act.”
In Thyssen Stahlunion GMBH vs. Steel Authority of India
Ltd. the Supreme Court court while considering Section 85
of the Act of 1996 held as under:
“1. The provisions of the old Act (Arbitration Act,
1940) shall apply in relation to arbitral proceedings which
have commenced before the coming into force of the new Act
(the Arbitration and Conciliation Act, 1996).
2. The phrase ‘in relation to arbitral proceedings’
cannot be given a narrow meaning to mean only pendency of
the arbitration proceedings before the arbitrator. It would
cover not only proceedings pending before the arbitrator but
would also cover the proceedings before the court and any
proceedings which are required to be taken under the old Act
for the award becoming decree under Section 17 thereof and
also appeal arising thereunder.
3. * * *
4. The new Act would be applicable in relation to arbitral
proceedings which commenced on or after the new Act comes
into force.”
The Chief Justice of India under Section 11 of the Act of
1996, read with the Appointment of Arbitrators by the Chief
Justice of India Scheme, 1996 designated the above mentioned
Judge of the Supreme Court to consider the request of the
Petitioner for appointment of an Arbitrator on behalf of the
Respondent. The Petitioner requested the learned Judge of
the Supreme Court to appoint an Arbitrator on behalf of the
Respondent since the agreement between the parties provided
for appointment of two arbitrators who in turn have to appoint
an umpire. The Petitioner drew the attention of the learned
Judge of the Supreme Court to Section 10 and Section 34 of
the Act of 1996. Section 10(1) of the Act of 1996 lays down
that the parties are free to determine the number of arbitrators,
provided that such number shall not be even number. Sub-section
2 of Section 10 provides that failing the determination referred
to under sub-section 1 , the Arbitral Tribunal shall consist
of a Sole Arbitrator.
Section 34 of the Act of 1996 lays down the grounds for setting
aside arbitral awards. Section 34(2)(v) thereof provides that
an arbitral award may be set aside only if the composition
of the Arbitral Tribunal or the arbitral procedure was not
in accordance with the agreement of the parties, unless the
said agreement was in conflict with a provision of this part
from which the parties cannot derogate, or, failing such agreement
was not in accordance with this part.
The Supreme Court held in this case that there exists an
arbitration agreement between the parties within the meaning
of Section 7 of the Act of 1996 and it relates to international
commercial arbitration. The arbitration would be governed
by the Act of 1996 though the arbitration agreement was entered
into before the enforcement of the Act, which is 25-1-1996.
A retired Judge of the Orissa High Court was appointed by
the Supreme Court as an Arbitrator on behalf of the Respondent.
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