The Bombay High Court dismissed an arbitration application seeking the appointment of a Sole Arbitrator for resolving the disputes that arose with the Respondent in terms of Clause 25 of a Multimodal Transport Bill of Lading dated 12.09.2020 read with Section 11(5) of the Arbitration and Conciliation Act, 1996. The Court observed that the mere caption of a particular clause “Arbitration” does not conclusively imply the mandatory nature of arbitration when the option is left to the parties to settle their disputes through arbitration.
Brief Facts:
The Applicant was approached by M/s American Alupack Industries LLC (AAI) located in California, USA, for the purchase of corrugated boxes of aluminum foil, and accordingly, orders via email were placed. Pursuant to this, the Applicant issued a proforma invoice to AAI and agreed to deliver the goods in six containers at the price agreed between themselves. The carriage of the consignment was to be delivered to Charleston, South Caroline, USA and for this purpose, the Applicant entered into Agreement with the Respondent, who agreed to transfer six containers of aluminum foil and the Applicant agreed to pay freight charges of Rs.2,23,550/- and raised invoice, pursuant to which the Applicant paid freight charges.
Out of the six containers of the consignment, four were successfully delivered and a dispute arose between the parties as regards the delivery of the fifth container. The bill issued by the Respondent contained a clause that said “…difference of opinion or dispute thereunder can be settled by arbitration…” The applicant alleges that the respondent wrongly and illegally delivered the goods belatedly without the original bill of lading which resulted in loss and damage. The same was contested by the respondent. To solve the dispute, the applicant sought to go for arbitration. The efficacy of arbitration as a mode of settlement of the dispute was contested by the respondent.
Contentions of the Applicant:
The Counsel for the Applicant contended that the word “can” in the clause of arbitration has to be construed as an imperative mandate.
Contentions of the Respondent:
The Counsel for the Respondent contended that arbitration is only an option that is made available to settle the dispute by arbitration and the said clause in no way indicates a consensus between the parties for being referred to arbitration.
Observations of the Court
The Court remarked that the attribute of an arbitration agreement necessarily is a consensus or an arrangement between the parties to refer the disputes or differences to arbitration and the parties must expressly or impliedly spell out their intention to do so. If the terms contained in the agreement are clearly indicative of the intention on part of the parties to refer their disputes for adjudication to a Tribunal and the willingness to be bound by the decision of the Tribunal, it would certainly amount to an ‘Arbitration Agreement’. Where there is merely a possibility of the parties agreeing to arbitration in the future in contrast to an obligation indicating the intention of the parties to refer the dispute to arbitration, there is no valid and binding arbitration agreement.
Further, the Court observed that the word used “can” has qualified Arbitration as a mode of settlement and it has been further qualified by an option of having the arbitration either in India or a place mutually agreed upon between the parties. The choice is left open to the parties to have the disputes settled through arbitration is not equivalent to the parties mutually agreeing that they “shall” refer themselves to arbitration. The mere caption of a particular clause “Arbitration” does not conclusively imply the mandatory nature of arbitration when the option is left to the parties to settle their disputes through arbitration. The definite and explicit intention of the parties unmistakably and unequivocally agreeing that if the dispute arises between the parties, it shall be settled by arbitration, is not discerned from the concerned clause.
The decision of the Court:
The Bombay High Court, rejecting the application, held that it is manifestly and ex-facie certain that there is no agreement between the parties to mandatorily refer the disputes that have arisen between them for arbitration.
Case Title: Nagreeka Indcon Products Pvt. Ltd. v Cargocare Logistics (India) Pvt. Ltd.
Coram: Hon’ble Justice Bharati Dangre
Case no.: ARBITRATION APPLICATION NO.168 OF 2022
Advocate for the Applicant: Mr. Amit Singh and Mr. Kabeer Pansare
Advocate for the Respondent: Mr. Dhruva Gandhi
Read Judgment '
Social media is bold.
Social media is young.
Social media raises questions.
Social media is not satisfied with an answer.
Social media looks at the big picture.
Social media is interested in every detail.
social media is curious.
Social media is free.
Social media is irreplaceable.
But never irrelevant.
Social media is you.
(With input from news agency language)
If you like this story, share it with a friend!
We are a non-profit organization. Help us financially to keep our
journalism free from government and corporate pressure .
0 Comments