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National Law University, Jodhpur: (CA Towards The Fulfillment of The Assessment in The Subject of ADR)
National Law University, Jodhpur: (CA Towards The Fulfillment of The Assessment in The Subject of ADR)
JODHPUR
SUMMER SESSION
On appeal to the division bench, the Court looked at the factual relationship between
the said agreements. It considered some of its previous pronouncements. In Chloro
1 Pan Liberty Navigation v. World Link (H.K) Res. Ltd, (2005) BCCA 206
Previously, the law as laid down in the case of Sukanya Holdings Pvt. Ltd. v. Jayesh
H. Pandya5 was said to hold the field, whereby if a dispute involved non-signatories
or included subject matter which was not strictly within the arbitration agreement, the
matter could not be referred to arbitration. However, the present judgment has clearly
distinguished between the Sukanya case, which now applies only to domestic
arbitrations and where an application under section 8 of the Act is made. Thus, in
international commercial arbitrations, parties claiming through or under a signatory to
an arbitration agreement can also be referred or apply for the dispute to be referred to
arbitration, whereas in a purely domestic scenario that may not be the case.
5 infra
being subject to arbitration which may include group entities and directors. The Court
decided that the phrase “any person claiming through or under him” must be read to
include a non-signatory third party. Provided that “the transaction should be of a
composite nature where performance of the mother agreement may not be feasible
without aid, execution and performance of the supplementary or ancillary agreements,
for achieving the common object and collectively having bearing on the dispute.
Besides all this, the court would have to examine whether a composite reference of
such parties would serve the ends of justice”.
In this case the Court acknowledges that the pre-amendment section 8, applicable to
the domestic arbitration, did not allow for integration of parties to a dispute if not
specifically agreed upon by them. Following the 2015 amendment to the Act, section
8 has been brought in line with section 45 to include the phrase “if a party to the
arbitration agreement or any person claiming through or under him”. The Court
decided that the principal agreement lays down the purpose of the onward lease and
acknowledges the contract between the respondents and appellants for the same. They
agreed that the three agreements were for the same commercial project and inter-
twined. The performance of one would be contingent on the other.
7 (International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 418 (4th
Cir.2000)
Hence from the above position of laws analyized both in domestic and international
spheres it can be seen that in modern times it has become essential to manage the two
very important principles of arbitration i.e managing the consenual nature of
arbitration and making the arbitration meaningful by involving parties which are
closely related to the case and without whose involvement the entire process would
become meaningless. It can be said however that while not diluted the scope of the
first principle mentioned here has been expanded in cases like Chloro Control by
enhancing the ambit and width of the word consent and not merely restricting it to me
to be explicit. Which according to me is the correct approach to take in order to make
arbitration meaningful in modern area where very complex and convulated
transactions take place.
9 Marc Blessing. Introduction to Arbitration – Swiss and International Perspectives. Swiss Commercial
Law Series vol. 10