Summary
Five separately awarded port-expansion contracts and a corporate guarantee each contained their own arbitration clause. A later memorandum clarifying technical and execution priorities did not merge them or incorporate the original tender’s arbitration clause. Applying Section 11(6A) as introduced in 2015, the Court constituted six separate tribunals with the same arbitrators: two international commercial and four domestic.
Issues
- Whether the memorandum and corporate guarantee justified one composite international commercial arbitration.
- Whether reference to the original tender incorporated its arbitration clause under Section 7(5).
- What scrutiny Section 11(6A) permitted at the appointment stage.
Provisions considered
- Section 11(6A), as introduced by the 2015 amendment, Arbitration and Conciliation Act, 1996Confined appointment-stage scrutiny to the existence of an arbitration agreement, superseding the wider preliminary inquiry under earlier decisions. (¶¶ Banumathi13–19, Kurian3, Kurian10–13)
- Section 7(5), Arbitration and Conciliation Act, 1996Incorporation by reference requires an intention to make the arbitration clause part of the contract; a reference limited to technical execution did not suffice here. (¶¶ Banumathi32–35, Kurian7–8)
Held
- The parties consciously split the work into five distinct contracts with separate arbitration clauses. The corporate guarantee contained a sixth clause. Neither the guarantee nor the later memorandum superseded those agreements, and the memorandum effected no novation or merger. (¶¶ Banumathi20–29, Banumathi35–36, Kurian4–6)
- The memorandum referred to the original tender for clarity about technical and execution priorities. It contained no arbitration clause and disclosed no intention to incorporate the original tender’s clause. The facts differed from the composite contractual arrangement in Chloro Controls. (¶¶ Banumathi33–36, Banumathi40, Kurian7–9)
- Under the amended Section 11(6A) applied in this 2017 decision, the court examined whether an agreement provided arbitration for the disputes between its parties. The legislative policy restricted the wider preliminary scrutiny recognised before the amendment. (¶¶ Banumathi13–19, Kurian3, Kurian10–13)
- Separate tribunals were required for each agreement although their arbitrators could be identical. The foreign company’s package and guarantee required two international commercial tribunals; the Indian subsidiary’s four packages required four domestic tribunals. A concession could not extend Section 34(2A) to international commercial arbitration contrary to statute. (¶¶ Banumathi37–43, Kurian14)
Result
Duro Felguera’s appointment petition allowed and the other matters disposed of by constituting six separate tribunals comprising Justices R.M. Lodha, D.R. Deshmukh and M.N. Rao, with Justice Lodha presiding; parties to bear their own costs.