2021 (3) TMI 245 - Supreme Court

Sole Proprietorship whether it falls under international commercial arbitration.

Seeking appointment of a sole arbitrator - international commercial arbitration or not - Jurisdiction to appoint arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - association or body of individuals under Section 2(1)(f)(iii) and not under Section 2(1)(f)(i) - whether the requirements of sub-clause (i) to Section 2(1)(f) have been met, in which case it is unnecessary to go to sub-clause (iii), as under Section 2(1)(f), “at least one of the parties” must fall under sub-clauses (i) to (iv) of Section 2(1)(f),

In the above mentioned case law, Respondents have themselves applied to become distributors of Amway products in India, as a sole proprietorship concern under the relevant forms issued by the appellant, read with the Code of Ethics.    

In Ashok Transport Agency Versus Awadhesh Kumar And Another - 1998 (3) TMI 701 - Supreme Court, this Court has clearly held that a sole proprietary concern is equated with the proprietor of the business.

Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 would show that whatever be the transaction between the parties, if it happens to be entered into between persons, at least one of whom is either a foreign national, or habitually resident in, any country other than India; or by a body corporate which is incorporated in any country other than India; or by the Government of a foreign country, the arbitration becomes an international commercial arbitration notwithstanding the fact that the individual, body corporate, or government of a foreign country referred to in Section 2(1)(f) carries on business in India through a business office in India. 

Hon'ble Delhi High Court had no jurisdiction to appoint an arbitrator in the facts of the case.

The Petitioner urged the hon'ble apex court to use its power under Article 142 of the Constitution to straightaway appoint an arbitrator, now that the matter is before this Court. 

Article 142 provides discretionary power to the Supreme Court,as in the exercise of its jurisdiction it may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. 

The court refused to grant such a relief as the respondents would have to follow the rigours of Section 11(6) read with Section 11(9) of the Arbitration Act.

This judgment elaborates upon as in a place of an entity or its character as in a sole proprietor, partnership or an "entity" as a company or any other form of business cannot be used to hide from the provisions of international commercial arbitration and the provisions of Arbitration and Conciliation Act, 1996.

 

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Full Text:

2021 (3) TMI 245 - Supreme Court

International commercial arbitration: sole proprietorships qualify when a party has a foreign nexus, triggering arbitration rules. A sole proprietorship is equated with its proprietor and, when a party has a foreign nexus-foreign national status, habitual residence abroad, foreign incorporation, or foreign government involvement-the dispute qualifies as international commercial arbitration, even if that party operates through a local office; statutory procedures govern appointment of arbitrators and extraordinary discretionary relief cannot bypass those appointment mechanisms.