Delhi High Court: Confirm Arbitration Agreement, Refrain from Other Issues

The Delhi High Court, under Justice Amit Bansal, has clarified that once a court confirms the existence of a valid arbitration agreement, its role should be limited to that verification, leaving all other issues to the arbitral tribunal.

Case Background:

The case involved a contract dispute where the petitioner, awarded a contract for road rehabilitation and upgradation in Tripura, alleged that the respondent failed to provide an encumbrance-free Right of Way (ROW) and rectify its SAP system to facilitate payments. This, the petitioner claimed, caused financial strain and hindered progress. Despite efforts, the petitioner faced accusations from the respondent of slow progress and non-completion, leading to cure notices and eventually being declared a Non-Performer. The respondent issued a notice of intention to terminate the contract, and although an extension was granted, the contract was later abruptly terminated without prior notice.

Petitioner’s Actions:

Following the contract’s termination, the petitioner invoked conciliation under Clause 26.2 of the EPC Contract. However, the respondent ignored this and issued a new Notice inviting Bids for the project. This led the petitioner to approach the Delhi High Court for the appointment of a Sole Arbitrator.

High Court’s Observations:

The court referred to Clause 26 of the EPC Contract, which allows disputes to be referred to arbitration if conciliation fails. Given the petitioner had exhausted the conciliation process, the court ruled that the petitioner was entitled to seek arbitration.

Justice Bansal emphasized that the amendments introduced by the Arbitration and Conciliation (Amendment) Act, 2015, specifically Section 11(6A), restrict the court’s role to verifying the existence of a valid arbitration agreement. Other issues are to be decided by the arbitral tribunal, as affirmed in the BSNL v. Nortel Networks Private Ltd. (2021) case.

Conclusion:

The High Court confirmed the arbitration agreement and appointed Mr. Amiet Andlay, Advocate, as the sole arbitrator to adjudicate the disputes, underscoring the principle that courts should refrain from delving into issues beyond verifying the arbitration agreement’s validity.

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