Alerts & Updates

Arbitration Weekly Update

Litigation, Arbitration & Dispute Resolution | May 25, 2020

The past few weeks have been quite eventful for the Indian arbitration regime. Even though the Supreme Court (SC) continues to function at a limited scale, nonetheless, it has recently pronounced 3 decisions significant for the arbitration stakeholders in India. For this week’s arbitration update, we analyze the following three decisions:

South East Asia Marine Engineering & Constructions Ltd. (SEAMEC Ltd.) v. Oil India Limited
The case pertained to Section 34 of the Arbitration and Conciliation Act, 1996. The impugned award had held the increase in prices of diesel to be covered within the ambit of a ‘Change in Law’ (CIL) clause. After reviewing the record of proceedings, it was held by the SC that the parties had not agreed to a broad interpretation of the CIL clause, and therefore the Tribunal should have read the terms of the contract as a whole and in a mutually explanatory manner.

Quippo Construction Equipment Ltd. v. Janardan Nirman Private Ltd.
Disputes under four different agreements were referred to a sole arbitrator in New Delhi. While three agreements stipulated the venue of the arbitration proceedings as New Delhi, one agreement provided for the venue to be in Kolkata. Upon invocation of arbitration proceedings, and on account of the non-appearance of the Respondent thereafter, a common ex-parte award was made in favour of the Appellant by the sole arbitrator at New Delhi. Considering the fact that the Respondent had failed to participate in the proceedings before the arbitrator and also did not raise any submissions regarding the arbitrator’s jurisdiction or scope of authority, the SC ultimately held that the Respondent had waived its right to all objections as to the venue of proceedings.

Rajasthan Firm Udyog & Ors. v. Hindustan Engineering & Industries Ltd.
The Appellant and the Respondent entered into an agreement dated February 1, 1980 (Agreement) for purchase of the Appellant’s land. As per the Agreement, the price of land was to be determined by means of an arbitration. However, at the time of executing the award which determined such price, the Respondent also prayed for a deed of sale to be executed for the said land. This execution application was allowed by the executing court and subsequently also upheld by the High Court in revision. In the appeal before it, the SC set aside the High Court’s order on the ground that the reference to the arbitrator was only for fixing the price of the land and not for enforcement of the Agreement. In doing so, the SC reiterated that execution of an award could only be to the extent of the award itself.

Extension of the period of limitation
On May 6, 2020, in an application seeking, inter alia, appropriate directions qua ”arbitration proceedings in relation to section 29A” of the Act, the SC ordered that “all periods of limitation” prescribed under the Act and also the Negotiable Instruments Act 1881 shall be extended with effect from March 15, 2020 till further orders. Further, the SC has also directed that in case the limitation expired after March 15, 2020 then the period from March 15, 2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of the lockdown.