M/S. CENTROTRADE MINERALS AND METALS INC.V.HINDUSTAN COPPER LTD.

PARTIES OF THE CASE

  • APPELLANT: M/s. Centrotrade Minerals and Metals Inc.
  • RESPONDENT: Hindustan Copper Ltd.

CITATION: (2006) 11 SCC 245

BENCH: J. Rohinton Fali Nariman, J. Navin Sinha, J. B.R. Gavai

BRIEF FACTS 

Centrotrade Minerals and Metals Inc. and Hindustan Copper Limited entered into a contract for sale. After the contract had been acted upon, a dispute arose regarding the manner in which the same was done. Thus, Centrotrade invoked the arbitration clause in the contract. The arbitrator appointed by the Indian Council of Arbitration made a NIL award. Centrotrade subsequently invoked the second part of the said arbitration agreement. HCL, during the pendency of the proceedings before the arbitrator, filed a suit in the Court at Khetri, in the State of Rajasthan, questioning the initiation of the second arbitration proceeding before the International Chamber of Commerce. No interim order was passed, owing to which an appeal was preferred by HCL before the District Judge, which was also dismissed. In a revision filed by HCL, the High Court granted an injunction. Meanwhile, the sole arbitrator commenced arbitration proceedings. Centrotrade filed a special leave application before the Supreme Court of India, questioning the order of injunction passed by the Rajasthan High Court and by an order, the interim injunction was vacated. HCL, in a series of letters to the International Court of Arbitration and the arbitrator, maintained that the arbitration agreement was void, claiming that it was opposed to the public policy of India. 

Submissions by HCL were received by the arbitrator without any supporting evidence or any justification for not complying with the earlier orders passed by him. The arbitrator, however, considered the submissions made by HCL in making the award. The award held, inter alia, that, the Arbitration clause contained in the agreement was neither unlawful nor invalid and that, the Arbitrator had jurisdiction to decide his own jurisdiction in terms of the Arbitration and Conciliation Act, 1996 (ACA). HCL filed an application purported to be under Section 48 of the ACA, 1996, in the Court of the District Judge, Alipore, Calcutta. HCL also filed a suit before the Civil Judge, Senior Division, Alipore praying for a declaration that the ICC award was void and a nullity, additionally claiming for permanent injunction and damages. Centrotrade filed an application for enforcement of the original award in the Court of the District Judge, Alipore. Upon an application made in terms of Clause 13 of the Letters Patent of the Calcutta High Court by Centrotrade, the said execution case was transferred to the Calcutta High Court. A learned Single Judge of the said Court by a judgment and order allowed the said execution petition. Aggrieved by this, HCL preferred an appeal before the Supreme Court.

ISSUES

  1. Whether the Respondent was given a fair opportunity to present its case in the arbitration proceeding? 
  2. Interpretation of Section 48(1)(b) of the Arbitration and Conciliation Act,1996
  3. The authority of an arbitrator in the arbitration proceedings

JUDGMENT 

Centrotrade’s appeal was allowed, while HCL’s appeal of 2006 was dismissed. Further, the foreign award was enforced. 

Applying the principle of party autonomy, the Court held that parties are not prevented from entering into an agreement providing for non-statutory appeals so that their disputes and differences could preferably be settled without resorting to Court processes. The Court reasoned that on a combined reading of Section 34 and 35 of the ACA, 1996, an arbitral award would be final and binding on the parties unless it was set aside by a competent Court, on an application made by a party to the arbitral award. However, this does not preclude the autonomy of the parties to mutually agree to a procedure, whereby the arbitral award might be reconsidered by another arbitrator or panel of arbitrators, by way of an appeal. Wherein, the result of that appeal was accepted by the parties to be final and binding was subject to a challenge as provided under the ACA, 1996. The Supreme Court of India, further held that a multi-tier arbitration clause was also not contrary to the public policy of India, as there was nothing in the ACA, 1996 which restricted the autonomy of the parties to agree to an arbitration clause, with the pre-arrangement for appellate proceedings, before another arbitral tribunal.

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