Disputes are arbitrable even after a party approaches International Chambers of Commerce, Paris to appoint an arbitrator and exhausts its arbitrable remedy: High Court of Delhi

Disputes between the parties could be arbitrable u/s 11(6) read with Section 10(2) of the Arbitration and Conciliation Act, 1996 even after a party exhausts its arbitrable remedy by approaching the International Chambers of Commerce, Paris in accordance with terms of arbitration contract. These were held by High Court of Delhi, consisting Justice Suresh Kumar Kait in the case of AMR-BBB Consortium vs. Bharat Cooking Coal Ltd. [ARB.P. 1247/2021] on 13.01.2022.

The facts of the case are that the petitioner is a Consortium comprising of two companies i.e. AMR India Limited, a company registered under the Companies Act, 1956 (AMR Construction Limited) and Building Business Bridges UK Limited (BBB) and the Consortium Agreement was entered into between AMR and BBB for participating in the tender process and development, mining and extraction of the Kapuria Block. According to the petitioner, respondent is a public sector undertaking and a subsidiary of Coal India Limited and engaged in the business of mining of cooking coal. As per the averments made in the present petition, by the respondent, petitioner was awarded to undertake the work under Contract for the Development of Kapuria Block & extraction of coal by mass production technology package for a minimum guaranteed production of 2.0 million ton per Year on turnkey basis for the amount of Rs. 798.82 crores as capital cost for development phase-I, and Rs. 1427.25 crores as Revenue cost for phase-II. Accordingly, in terms of the Contract, the scope of Work included preparation of a Detailed Project Report (DPR) & EMP by the Petitioner for the development and extraction of coal from the mine for commercial production period of nine 9 years. However, respondent failed to establish letters of credit in favour of petitioner to import plant and machinery for the purpose of extraction of coal and also failed to clear the payments under different invoices. Thereafter, petitioner invoked arbitration in terms of the Contract.

The learned Counsel for the petitioner submitted that the petitioner approached International Chambers of Commerce, Paris to appoint an arbitrator in accordance with the contract but the institution failed to act in accordance with the Contract. ICC vide payment request dated 02.09.2021 demanded to deposit $ 78,000 from all parties i.e., Petitioner as well as Respondent and the additional parties. Since there was no compliance, therefore the ICC, on 14.09.2021 treated the claims as withdrawn and eventually petitioner also withdrew its claims. However petitioner made another attempt to amicably resolve the disputes and called upon the respondent to join in the appointment of Arbitrator by its letter, which was also not responded to by the Respondent.

The learned counsel for respondent opposed the present petition by submitting that petitioner- Consortium deliberately and mala fidely suppressed certain material and relevant facts from this Court. Learned counsel has pointed out that the Notice dated 10.07.2020 for cancellation of the Contract was sent to petitioner, as it had prepared DPR based on limited data available and had not taken up additional exploration work and rather granted 15 days’ time to come up with its submissions, failing which the contract shall be cancelled. In response to the aforesaid, petitioner vide letter dated 23.07.2020, sought settlement of the disputes through ‘Conciliation’. It was pointed out that vide communication dated 10.11.2020, respondent asked the petitioner to submit specific disputes, questions, differences upon which conciliation was intended. However, instead of replying to said communication, the petitioner invoked arbitration. Learned counsel submitted that having approached the ICC, the petitioner already exhausted its arbitral remedy and therefore, the present petition deserves to be rejected.

The High Court of Delhi held that disputes are arbitrable and and appointed an Arbitrator. In view of above, the present petition was allowed. Accordingly, a sole Arbitrator was appointed to adjudicate the dispute between the parties. The Court stated that the learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration and he shall decide the fee after consulting with the parties. The present petition was therefore, disposed of accordingly.

Judgment reviewed by Shristi Suman. Read Judgment

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