"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Friday, February 25, 2011

Dallah Real Estate, Best Xerox and Universal Metal

Some issues/ decisions on arbitration.

Lex Arbitri Blog had brought to our attention that the French Court of Appeal had decided in Dallah Real Estate v. Pakistan that the arbitral award was valid. This was in complete contradiction to the decision of the UK Supreme Court which refused to enforce the same arbitral award. The Conflict of Laws. Net Blog has a detailed post on the French Court of Appeal decision. Do check it out.

Best Xerox Centre v. Xerox Modi India Ltd.

Best Xerox Centre had filed a complaint under the Competition Act, 2002 against Xerox Modi India Ltd. alleging abuse of dominant position. The allegation is that the abuse of dominant position is for coercing Best Xerox Centre (BXC) to sign the Full Service Maintenance Agreement (FSMA) with an arbitration clause in which Xerox Modi (Xerox) had the exclusive right to appoint the arbitrators.

According to BXC, in order to lure customers for selling the products of Xerox, Xerox provided equitable terms of contract, including the arbitration clause wherein both BXC and Xerox had to contribute in appointing the arbitrators. However, once BXC purchased the machines of Xerox, in the service agreement (FSMA) entered for the purpose of servicing the machines of Xerox, the arbitration clause provided for the unilateral constitution of the tribunal by Xerox.

The Competition Commission of India held that there was no prima facie case of abuse of dominant position and also held:
The Commission is not the forum for challenging the terms of any arbitration clause, unless there is any anti competitive element involved.”
We had, in a previous post, discussed about the unilateral right of a party to appoint the arbitral tribunal under the arbitration agreement. 

Universal Metal Company Ltd. v. GAIL (India) Ltd.
As per the Gas Sales Agreement (GSA) between the petitioner, Universal Metal Company Ltd. (Universal) and GAIL (India) Ltd. (GAIL), GAIL had the right to levy certain charges on Universal. When GAIL levied such charges, Universal petitioned to the PNGRB alleging that levy of such charges by GAIL was arbitry and unjust. The Petroleum and Natural Gas Regulatory Board (PNGRB) heard the matter and held that in view of Article 13 of the GSA which provided for reference of disputes to arbitration and in view of Section 24(1) of the Petroleum and Natural Gas Regulatory Board Act, the PNGRB is under an obligation to dismiss the matter and refer the same to arbitration. Section 24(1) reads:
Save as otherwise provided for arbitration in the relevant agreements between entities or between an entity or any other person, as the case may be, if any dispute arises, in respect of matters referred to in sub-section(2) among entities or between an entity and any other person, such dispute shall be decided by a Bench consisting of the Member (Legal) and one or more members nominated by the Chairperson: Provided that if the members of the Bench differ on any point or points, they shall state the point or points on which they differ and refer the same to a member other than a member of the Bench for hearing on such point or points and such point or points shall be decided according to the opinion of that member.”(emphasis not in the original)

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