Paragraph numbers below are the court’s original numbering, recovered from the source text.
31. Shri Venugopal submitted that the agreement dated 15th February, 2005 is of inchoate nature and is a contingent agreement, therefore, even if any dispute had arisen the same cannot be referred to any Ai'bitral Tribunal to resolve it.
32. The decision reported in E.J.R. Lovelock Ltd. Vs. 'r Export/es [1968] Vol.1 Lloyd's Law Reports 163 and AIG Europe S.A. vs. QBE International Insurance Ltd. reported in [2001] Vol.2 LLR 268 upon which reliance was placed are not applicable to the facts of the case and render any assistance to resolve the issue. In E.J.R. Lovelock Ltd.(supra) the arbitration clause was divided into two parts. The first part (which was lifted bodily from a standard form and contract) provided for arbitration before English ~rbitrators. The second · part provided for arbitration in Russia in accordance with Russian Chamber of Commerce Arbitration Rules. Lord Denning having interpreted the arbitration clause contained in the agreement in that case observed that the clause was so uncertain that the court cannot give effect to it. "The .clause is divided into two parts which are inconsistent with one another: G, and it is impossible to .reconcile. them. The first part of this –,A arbitration clause would send "any dispute and/or claim to arbitration in England. The second part of the clause would send ''any other dispute" to arbitration in Russia. It is beyond the wit of man or at any rate beyond my wit – to say which [2008) 16 S.C.R. A dispute comes within which part of the clause … : … the whole · c clause is meaningless. It must be rejected. The court cannot give ·effect to It. Ttle dispute cannot be sent to arbitration." In AIG Europe S.A.; Queen's Bench Division while construing a contract of rei~surance which inter-alia provided: "All terms clauses and conditions as original in all respects including settlements: · The underlying policy contained among its general conditions the following cla.uses: (L) Arbitral Procedure In case of dispute between the insured and the insurers the parties will apply to Tribunal de Commerce in Paris who wili appoint an arbitrator ….. (M) Law and Jurisdiction. In the event of dispute. between the insured and the insurer ….. the ….. parties should address themselves to the · French Courts which have sole jurisdiction; foreign companies which have accepted part of the risk are also subject to the jurisdiction of the French Courts … " observed that clause (L) on its face merely provided for a pr~liminary procedure involving appointment of persons F described a~ arbitrators; but it was clear that it was at best a procedure for consideration which might or might not result in a compromise of a dispute; it was clearly not an arbitration agreement in the sense in which that expression was normally used, nor did it deprive the courts of jurisdiction; as between G the insured and insurer.
33. In the present case the parties have agreed that the disputes arising out of the agreement which cannot be settled amicably to be finally settled in accordance with the provisions H of Arbitration and Conciliation Act, 1996. The Act not only VISA INTERNATIONAL LTD. v. CONTINENTAL RESOURCES (USA) LTD. [B. SUDERSHAN REDDY, J.J provides for the pror;edure involving appointment of arbitrator but also comprehensively provides as to jurisdiction of Arbitral Tribunal and conduct of arbitral proceedings such as determination of rules of procedure; place of arbitration etc. and for making arbitral award and termination of proceedings. The arbitral award shall be final and binding on the parties and persons claiming under them respectively. The award is .JI enforceable under the Code of Civil Procedure in the same manner as if it was a decree of the court. The parties have thus agreed for the resolution of the disputes making all the provisions of the Arbitration and Conciliation Act, 1996 c applicable until the final termination of their disputes arising out of the agreement. The absence of word 'Reference' may not clinch the issue inasmuch as it is the whole clause providing for the resolution/settlement of the disputes arising out of the agreement and not a word or two is required to be interpreted in order to gather the intention of the parties. In my considered opinion clear intention to refer the disputes to arbitration in r accordance with the provisions of Arbitration and Conciliation Act, 1996 is clearly evident from Article VI incorporated in the agreement. It is also required to notice that clause VI contains expression "shall be finally settled ….. " which is of some significance. The Qward passed by the Arbitral Tribunal is final and binding on the parties and the persons claiming under them respectively of course subject to the provisions contained in Chapter Ill o{the Act. A plane reading of the arbitration clause reveals that parties intended to settle disputes finally in accordance with the provisions of the Act in case of failure to arrive at amicable settlement.
34. Further the respondent has placed reliance and referred to the checklist of matters to be considered/suggested by Russel in his treatise, Russe_I on Arbitration. The contention .. ,), was that the disputed clause does not satisfy the checklist of matters to be considered. Russ.el in his. treatise suggests that while drafting an arbitration agreement care needs to be taken to ensure whettier they need to be addressed in the particular • r A circumstances of ttie case. The following is the checklist of the matterswhich according to Russel need to be consideredwhen 1.– ,._ drafting ari arb,itration (3greement But it may not be necessary to include any provision for all of them. But thought should be given as to whether they need to be addressed in .the particular . B circumstances ohHe case. Aclose scrutiny of clause VI of the· agreement which ptovieies for the applicability of the provisions of Arbitration and Conciliation Act reveals that essential r elements stated in the ctrecklist have been addressed to namely: c 1. The parties have been properly identified; 2. ·There is a clear. reference to arbitration in · accordance with the provisions of Arbitration and Conciliation Act, 1996; . The disputes that had arisen between the parties 3. which could not be amicably settled are 'to be referred to arbitration; 4. . The seat of the ~rbitration is' to be i~. tern1s, of Sectioh 20(1) and 20(2). The arbitral tribunal in the absence of any agreement betvyeen the parties is entitled to determine the place of arbitration; 5. The substance of the dispute is to be determined in accordance with the provisions of Sections 19,23,24,25,26,27 and· other provisions of the Arbitration and Conciliation Act, 1996. i •-.. i
35. The arbitration clause states that the disputes arising . i out of the agreement which cannot be settled amicably to be G finally settled in :ccordance with the Arbitration and Conciliation Act, 1 ~96. Ther fore, the provisions of the said Act will govern . the appointmenf of Arbitrafor, the reference of disputes and the A. …. entire pro.cess tcnd procedure of arbitration from the stage of appointment ofi arbitration till the award is made and executed/ H given effect to/' The provisions of the said Act would meet the VISA INTERNATIONAL LTD. v. CONTINENTAL RESOURCES (USA) LTD. [B. SUDERSHAN REDDY, J.] requirement of checklist of the matters enumerated in the -..\, treatise. Once the parties agree for resolution of dispute in accofdance with the Arbitration and Conciliation Act, 1996 the said Act will take care of the entire processes and procedure. Be that as it may when the specific intention of the parties is clearly evident from the arbitration clause the same cannot be treated as vague on the ground that it does not satisfy the suggested checklist of all matters to be considered while … i drafting an arbitration agreement. Whether invocation of Article VJ providing for arbitration is premature? c
36. It was contended that the pre-condition for amicable settlement of the dispute between the parties has not been exhausted and therefore the application seeking appointment of arbitrator is premature. From the correspondence exchanged between the parties at pages 54-77 of the Paper- book, it is clear that there was no scope for amicable r- settlement, for both the parties have taken rigid stand making aUegations against each other. In this regard a reference may be made to the letter dated 15th September, 2006 from the respondent herein in which it is inter-alia stated " …… since February, 2005 after the execution of the agreements, various meetings/discussions have taken place between both the parties for furtherance of the objective and purpose with which the agreement and MOU was signed between parties. Several correspondences have been made by CRL to VISA to help and support its endeavour for achieving the goal for which the above mentioned agreements were executed." In the same letter it is alleged that in spite of repeated requests the petitioner has not provided any Funding Schedules for their portion of equity along with supporting documents to help in convincing OMC of G financial capapilities of the parties and ultimately to obtain ·-).. financial closure of the project. The exchange of letters between the parties undoubtedly discloses that attempts were made for an amicable settlement but without any result leaving· no option but to invoke arbitration clause. Whether there is any live issue between the parties ?
37. The next question that falls for consideration is as to whether- there is a live issue between the parties? The application for arbitration can be made only when a dispute arises between the parties to the arbitration agreement and such dispute gives rise to a live issue. As to what is the meaning and nature of dispute has been summed up by Mustill and Boyd c in their treatise on Arbitration law titled Law and Practice of r- Commercial Arbitration, 1982 ….. . "A dispute means that there may be a difference of opinion as to the future performance of a contract. For example, ope party may be denying that any further performance is due, on the ground that the contract has been discharg~d by repudiation or frustration; or it may be a common ground that the contract is subsisting, but the parties may be in a dispute abo.ut whether ~ particular act would .con~titute a valid performance, or whether one party is entitled to give a particul_ar order, or exercise an option in a particular way. If the parties stand their ground in such a situation, a time will come when it is too late for the right view to prevail; one party will irremedia~ly in the wrong; .and serious financial loss is likely to ensue. All this can be prevented if the partie~ can mount arbitration with sufficient speed to enable them to know the true position under the · _ _contract before the time for performance has finally expir~d."
38. In the present case, in this sense there is a dispute and live issue between bottl the parties. It is not a stale claim -or a claim barred by any limitation. However, it is required to G note that this finding as to the existence of dispute is confined only for the purpose of finding out whether the arbitral procedure has 'to be. started for resolving the live is-sue in between the ""_., parties.
39. In SBP & Co. vs. Paff!! Engineering Ltd. & Anr. [(2005) VISA INTERNATIONAL LTD. v. CONTINENTAL RESOURCES (USA) LTD. [B. SUDERSHAN REDDY, J.] 8 sec 618] it is observed: "39. It is necessary to define what exactly the Chief Justice, approached with an application under Section 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense whether the party making 8 the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the c question whether the claim was a dead one; or a long- barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the 'y arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11 (6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such -l.; evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the G proceedings before the Arbitral Tribunal." ~ )-.
40. It is amply clear from the facts as pleaded and as well as from the exchange of correspondence between the parties that there has not been any satisfaction recorded by the parties )__ A with respect to their claims. There has been no· mutual satisfaction arrived at between the parties as regards the dispute in hand. The claims are obviously not barred by any limitation. It is thus clear that there is a live issue subsisting between the parties requiring its resolution.
41. In the light of foregoing discussion I am of the clear opinioh that a clear case is made out for appointment of an r- arbitrator to decide the disputes. between the parties. 4:2; Hon'ble Shri Justice Dr. AS. Anand, former Chief c Justice of India is appointed as the sole Arbitrator with a request to him to decide the disputes between the parties arising out of the agreement referred to in this order. The sole Arbitrator shall be at liberty to fix his fee in the matter. 43. The application is accordingly allowed. RP. Application allowed. -{ .