Nandan Biomatrix Limited v. D 1 Oils Limited

• Arbitration Petition No. 6 of 2007 decided on 11/02/2009 by Hon'ble Mr. Justice S.H. Kapadia

• Application: sub-section (5) and (9) of Section 11 of the Arbitration and Conciliation Act, 1996

• Prayer: to appoint an Arbitrator in terms of clause 15.1 of the Agreement dated 10.8.04

• Agreements: Supply Agreement dated 10.8.04 containing an arbitration clause, a Joint Venture Agreement dated 30.09.04 without an arbitration clause, a Termination Agreement dated 16.10.04 and a Research and Development Agreement dated 26.11.04.

• Dispute: The dispute is whether the Termination Agreement terminated the supply. The claimants allege the Termination Agreement to be fabricated.

• Arbitration Clause: "15.1. Any dispute that arises between the parties shall be resolved by submitting the same to the institutional arbitration in India under the provisions of Arbitration and Conciliation Act, 1996."

• Contention on the Arbitration Clause:

Non-claimants allege the arbitration clause to be vague because the clause obligates the parties to resolve their disputes by some arbitral institution without specifying any institution.
Further contention is that only the supply agreement contains an arbitration clause and the other agreements do not.

• Decision of the Court:

The 1996 Act does not prescribe any form of arbitration agreement. What is important under the Act is whether the parties intended to refer their disputes to arbitration. At the time when parties entered into the Supply Agreement, their intention was to resolve all disputes between them through institutional arbitration.

There exists a live claim between the parties and number of questions would have to be decided, including questions as to “whether the Deed of Termination stood forged as claimed by the applicant? If not, whether it has been signed by the two Directors who were not authorized to sign on behalf of the applicant? Effect of the R & D Agreement and its implementation on the Supply Agreement? Whether Joint Venture Agreement replaced the Supply Agreement? Whether the Supply Agreement should be read along with the Joint Venture Agreement and the R & D Agreement or whether the Supply Agreement should be read as a stand-alone item? Whether the claim for alleged expenditure incurred by the applicant for supply of seedlings under the Supply Agreement stood extinguished by the Deed of Termination dated 16.10.04? Whether claims, if any, under the Supply Agreement had ceased in view of the Termination Agreement dated 16.10.04?”

All disputes and differences between the parties should be referred to Singapore International Arbitration Centre (SIAC), which would nominate an Arbitrator from its panel to decide all disputes and differences

• Comments:

• It may be asked why the Judge did not refer to an Indian arbitral institution instead referred the dispute to SIAC. The arbitration clause is mute on the venue of arbitration. However, the Claimant moved an application under Ss 11(5) & (9) of the Act. S 11(9) provides:

“In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.”

• Thus, the court has rightly fulfilled its obligations under S 11 of the Act as well as that of the arbitration clause.

• However, the question is why SIAC and not any other arbitral institution, such as New York, London or Hong Kong? What are the criteria on the basis of which the Court referred the dispute to SIAC? Was it because the parties agreed so in the Court? Is this judgement binding as per Article 141 of the Constitution?

• In the SIAC arbitration proceedings, the Lex arbitrii would be Singaporean Law with Indian Arbitration and Conciliation Act, 1996 prescribing the procedure governing the arbitration.