2002 (12) TMI 631 - SC - Indian Laws

Court dismisses petition for arbitrator appointment due to New York venue under Arbitration Act

Shreejee Traco (I) Private Limited Versus Paperline International Inc.

The court dismissed the petition seeking appointment of an arbitrator under s.11(4) of the Arbitration and Conciliation Act, 1996, as the agreed place of ... - Issues:Appointment of arbitrator under s.11(4) of the Arbitration and Conciliation Act, 1996 when the place of arbitration is in New York.Analysis:1. The petitioner, an Indian company, placed an order with a New York-based company for the supply of facial tissue paper. A dispute arose when the goods did not conform to the sample, leading to the petitioner demanding damages and compensation. The petitioner sought appointment of an arbitrator as per the arbitration clause in the pro forma invoice which specified New York as the place of arbitration.2. The petitioner initiated proceedings under s.11(4) of the Act, requesting the respondent to nominate an arbitrator. However, the respondent remained absent, prompting the petitioner to seek clarification on whether the Chief Justice of India or his designate could appoint an arbitrator given the agreed place of arbitration in New York. Legal arguments were presented by both parties' counsels, emphasizing the interpretation of s.2(2) of the Act.3. The interpretation of s.2(2) of the Act was crucial in determining the applicability of Part I of the Act when the place of arbitration is outside India. The petitioner argued that since the contract was to be performed in India and the breach occurred there, the petition under s.11 was maintainable before the Chief Justice of India or his designate. However, the respondent's absence and the chosen place of arbitration in New York raised doubts regarding the jurisdiction for appointing an arbitrator.4. Referring to the case of National Thermal Power Corpn. Vs. Singer Co., the court considered the significance of the place of arbitration in determining the applicable law. The court highlighted the freedom of parties to choose the governing law of an international commercial arbitration agreement. The absence of an express choice of law governing the arbitration agreement led to a presumption that the law of the country where arbitration is held applies.5. The court concluded that the language of s.2(2) of the Act clearly indicates that Part I applies only when the place of arbitration is in India. Therefore, in this case where the agreed place of arbitration was New York, the petition under s.11(4) of the Act was deemed not maintainable before the Chief Justice of India or his designate. The petition seeking appointment of an arbitrator was dismissed, acknowledging the assistance provided by the Senior Advocate in the proceedings.