The Delhi High Court in the case Vedanta Limited vs Shreeji Shipping observed and has held that if an arbitration agreement stipulates multiple seats of arbitration, thereby, offering a choice to the parties is not void under Section 29 of the Indian Contract Act, 1872 declares agreements uncertain in meaning or incapable of being made certain as void. The bench headed by Justice Jasmeet Singh was hearing the present matter.
Facts of the Case:
The present matter relates to a Purchase Order between Vedanta Limited i.e., the Petitioner and the respondent i.e., Shreeji Shipping for the transportation of coal from Kandla Port to Bhachau Plant and Bedi Port to Khambalia Plant, along with the execution of Standard Terms and Conditions for Transport Agreement appended to the Purchase Order.
Therefore, the Petitioner invoked the Arbitration Clause due to shortfalls in transported amounts and disputes arising from the Contract and the petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, the Arbitration Act for appointment of arbitrator in the Delhi High Court.
It has also been contended by the respondent that the existence of an arbitration agreement, claiming the Purchase Order was never accepted by the Respondent. Thus, it emphasized that it commenced handling and delivery of coal upon the arrival of the first vessel within the time frame specified in the Purchase Order but without signing it.
It was also argued before the court that the arbitration clause included in the Purchase Order’s Standard Terms and Conditions was not agreed to by the Respondent.
On the other hand, the respondent asserted that the services were provided based on a Letter of Intent (LoI) dated June 17, 2021, which was to be converted into a formal Purchase Order. It pointed out that Clause 14.10 of the Appendix stated that the Purchase Order would be valid and binding only upon signature by both parties, which never occurred.
Furter, it also challenged the the jurisdiction of the arbitration agreement, contending that Clause 10.1(ii) specifying the seat of arbitration was void under Section 29 of the Indian Contract Act, 1872. Thus, it argued that for the application of Section 20 of the Civil Procedure Code to determine jurisdiction, asserting that the courts in Gujarat, where the cause of action arose, should have jurisdiction.
The petitioner in the plea argued that the Purchase Order was issued via email and that mediation proceedings were initiated by sending a mediation notice to the Respondent, in accordance with the arbitration agreement. Thus, it highlighted that the Respondent’s invoices referenced the Purchase Order, which indicates a clear acknowledgment of the Contract and the arbitration agreement therein.
The arbitration clause is reproduced below:
(ii) The language of the mediation and arbitration proceedings shall be English. The seat of arbitration shall be [Local Jurisdiction in Goa or Local Jurisdiction Karnataka /Delhi], India.
Observations Made by the High Court:
The High Court in the case observed and has noted that in Section 11 petition the courts’ role is limited to ascertain the prima facie existence of an arbitration agreement rather than delving into the merits of the case.
The court also noted that the Purchase Order, albeit denied by the Respondent, was sent via email by the Petitioner to the Respondent, with the Respondent’s email address clearly stated.
Further, the court held that the Respondent’s invoices referenced the Purchase Order, indicating a clear acknowledgment of the Contract and the arbitration agreement therein.
The High Court with regards to the applicability of Section 29 of the Indian Contract Act, 1872 held that it was not related to the arbitration clause in the present case. The section 29 declares agreements uncertain in meaning or incapable of being made certain as void.
The High Court in the case observed and has held that the arbitration clause in question clearly stipulated that the seat of arbitration could be Goa, Karnataka, or Delhi, offering a choice to the parties.
The High Court in the case referred to the decision of the Supreme Court in the case Indus Mobile Distribution (P) Ltd. v. Datawind Innovations (P) Ltd and has held that designating the seat of arbitration is akin to an exclusive jurisdiction clause. It clarified that once the seat is determined, it vests exclusive jurisdiction with the courts of that seat for regulating arbitral proceedings arising from the agreement between the parties.
The court appointed Mr. Abhijat as a sole arbitrator to adjudicate the dispute between the parties.
Accordingly, the High Court allowed the petition.
The counsel, Advocates, Mr. Krishendu Dutta, Sr. Adv. with Mr. Anurag Tandon, Mr. Rajat Sinha, Mr. Shiva Pande appeared for the Petitioner.The counsel, Advocates, Mr. Navin Pahwa, Sr. Adv. with Ms. Aastha Mehta, Mr. Yash Goyal, Ms. Prerna Mohapatra represented the respondent.
