2009 (7) TMI 1199 - SC - Companies Law

Court appoints sole arbitrator under Section 11 for dispute between Malaysian and Indian companies over unpaid dues.

SIME DARBY ENGINEERING SDN. BHD. Versus ENGINEERS INDIA LTD.

The court allowed the petition for the appointment of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996. Justice D.P. ... Petitioner praying for appointment of the arbitral tribunal to adjudicate the claims and disputes between the petitioner and the respondent - Held that:- As it is clearly provided in the Arbitration and Conciliation Act 1996 that an arbitral tribunal can, if necessary, take the help of experts in terms of Section 27 of the said Act. If the sole arbitrator requires the assistance of an expert it can always take such assistance. Thus accordingly appoint Justice D.P. Wadhwa, a former Judge of this Court, the sole arbitrator in this case. Issues Involved:1. Appointment of arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.2. Determination of the number of arbitrators to be appointed.Issue-wise Detailed Analysis:1. Appointment of Arbitral Tribunal under Section 11 of the Arbitration and Conciliation Act, 1996:The petitioner, a Malaysian company, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitral tribunal to adjudicate disputes with the respondent, an Indian company. The dispute arose from a subcontract related to a project for the Oil and Natural Gas Corporation Limited (ONGC) at the Mumbai High South Field offshore site. The petitioner claimed unpaid dues of US $14,244,812.02 and invoked the arbitration clause after failed negotiations. The respondent initially opposed the arbitration as premature but later conceded that the disputes should be resolved through arbitration.2. Determination of the Number of Arbitrators to be Appointed:The core issue was whether the arbitration should be conducted by a sole arbitrator or a panel of three arbitrators. The arbitration clause (Clause 12.2) in the subcontract did not specify the number of arbitrators. The petitioner argued for a sole arbitrator based on Section 10(2) of the Act, which states that if the number of arbitrators is not determined, the tribunal shall consist of a sole arbitrator. The respondent contended that Clause 12.3's use of the term 'arbitrator(s)' implied the possibility of more than one arbitrator and cited a policy for contracts over Rs.10 Crores to be referred to a panel of three arbitrators.The court analyzed the relevant clauses and legal provisions, including Section 10 of the Act and UNCITRAL rules. It concluded that in the absence of a specified number of arbitrators in Clause 12.2, Section 10(2) mandates a sole arbitrator. The court also dismissed the respondent's reliance on its policy decision, noting that it could not override the contractual terms agreed upon in 2004, especially since the policy came into effect in 2005.The court emphasized the importance of party autonomy in arbitration agreements and found that the reference to 'arbitrator(s)' in Clause 12.3 did not alter the intention for a sole arbitrator as per Clause 12.2. The court also noted that a sole arbitrator could seek expert assistance under Section 27 of the Act if needed.Ultimately, the court appointed Hon'ble Mr. Justice D.P. Wadhwa, a former Judge of the Supreme Court, as the sole arbitrator by consensus, as his name was suggested by both parties. The court requested the arbitrator to resolve the disputes preferably within six months and left the terms of the arbitration proceedings to his discretion.Conclusion:The petition was allowed, and Justice D.P. Wadhwa was appointed as the sole arbitrator. The court's decision was based on the interpretation of the arbitration clause in conjunction with Section 10(2) of the Arbitration and Conciliation Act, 1996, emphasizing the contractual terms and party autonomy in arbitration agreements. No order as to costs was made.