In a recent decision the Delhi High Court observed that mere use of word ‘arbitration’ or ‘arbitrator’ not enough to constitute an arbitration agreement.
As per the Petitioner, Pure Diets India, a Supply Agreement was executed between the parties on 18.08.2017 for supply of products such as organic sugar, organic molasses, etc. customised for the Petitioner. The agreement inter alia contains a clause mandating exclusivity on the part of the Respondent for markets in U.S.A. and Europe where the Petitioner desired to acquire supply of these products. Subsequent thereto, parties entered into several other agreements for different quantities of the products, however, parties are ad idem that no other agreement contains any clause akin to Clause 15.7 in the Agreement.
On the other hand, the respondent, Lokmangal Agro Industries Ltd., contended that the agreement between the parties did not contain an arbitration clause and Clause 15.7 only provided that parties were at liberty to seek equitable/interim/provisional relief from a Court of competent jurisdiction including temporary or permanent injunction concerning a dispute, either prior to or during ‘any arbitration’ to protect their interests and preserve the status quo pending arbitration proceedings. There was nothing in the Clause which could be construed to mean and connote that parties envisaged appointment of an Arbitrator.
Jagdish Chander case, the Supreme Court was examining an arbitration clause which read: “(16) If during the continuance of the partnership or at any time afterwards any dispute touching the partnership arises between the partners, the same shall be mutually decided by the parties or shall be referred for arbitration if the parties so determine.” Construing the clause, the Supreme Court observed that the Clause was not an arbitration agreement but a provision which enabled arbitration only if parties mutually decided after due consideration as to whether the disputes should be referred to arbitration or not
In Avante Garde Clean Room & Engg Solutions Pvt. Ltd. v. Ind Swift Limited, construed an arbitration clause which read: “Arbitration – Dispute if any arising out of this Agreement shall be subject to the exclusive jurisdiction of the courts in city of Delhi.” and held that even though the heading of the clause used the expression “arbitration”, it would not militate against the substance of the clause which, in unequivocal terms, stated that the disputes arising under the agreement shall be subject to exclusive jurisdiction of the Courts and declined to refer the parties to arbitration.
A Single Bench of Justice Jyoti Singh concluded that “I am unable to discern an unambiguous, certain or unequivocal intent of the parties from a reading of Clause 15.7 to resort to arbitration as mode of settlement of their disputes arising out of Agreement. In fact, the plea of the Petitioner is further negated by incorporation of Clause 15.2 in the Agreement which is an exclusive jurisdiction Clause providing for adjudication of disputes through Courts at Delhi.”
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