09 - Chapter 6
09 - Chapter 6
AIR 1999Bom.296
H.G. Bajaj vs. Sharedeal Financial Consultants (P) Ltd. AIR 2003
Bom. 296
Section 34 (challenge to an award) or 37 (an appeal against an
Order). Consequently, it was held that when the remedy is not
available to an aggrieved person, and as it is a cardinal principle
of Indian jurisprudence that no party should be left without a
remedy the Court could in exercise of its extra-ordinary
jurisdiction under Article 226 of the Constitution of India, intervene
as it involves civil rights of the parties, as though the arbitral
tribunal may not have all the trappings of quasi-judicial body,
nonetheless was “other person under Article 12 of the
Constitution of India to whom a writ could be issued.” This view
has been followed by Division Bench of the same High Court in
Dowell Leasing and Finance Ltd. V. Radheshyam B.
Khandelwal & Others^^^
356
(2001 (3) Commercial Law General 49)
parties to agree on the “rules of the game”. Such recognition of
the freedom of the parties is not merely a consequence of the fact
that arbitration rests on the agreement of the parties but also the
result of policy consideration geared to international practice^^’.
One of the frustrations inherent in municipal laws is that such
laws may have mandatory provisions that are not universal in
nature. Such provisions produce unexpected and sometimes
undesired consequences. The principle of party autonomy is
intended to prevent such frustrations. Accordingly Article 19(1) of
the Model Law provides thus: Subject to the provisions of this law,
the parties are free to agree on the procedures to be followed by
the arbitral tribunal in conducting the proceedings^^®. The freedom
of the parties to choose the laws and the rules that govern their
contract is however not absolute. In appropriate cases, the courts
may intervene. Prior to the adoption of the model law, there were
national procedural laws that were inappropriate or inadequate for
international commercial arbitration. There was therefore the
need to detach arbitral proceedings from these local laws.
According to Herrmann: Article 19 which grants freedom to the
parties to agree on the procedure and, failing agreement
empowers the arbitral tribunal to conduct the proceedings as
considered appropriate may be called the "Magna Carta of
Arbitral Procedure’’ It is the central provision and clearest
expression of what may be regarded as the most salient feature
and greatest benefit of the Model Law for international cases:
Award In Icc Case No. 5103, 115 J.D.I. (Clunet) 1206 (1988); Partial
Award In Icc Case No. 5894, 2(2) Icc Ct. Bull. 25 (1991); Final Award
In Icc Case No. 6519, 2(2) Icc Ct. Bull. 34 (1991); Interim Award In Icc
Case No. 6610, Xix Y.B. Comm. Arb. 162 (1994); Jarvin, The Group Of
Companies Doctrine, In The Arbitration Agreement - Its Multifold
Critical Aspects 181 (Asa Special Series No. 8 1994).
Stavros L. Brekoulakis, Third Parties In International Commercial
Arbitration 1|5.01-5.02 (2010)
have thereafter been considerably developed by subsequent
judicial and academic analysis, and the same is analyzed below:
417
ICC Case No. 11160 Of 2002, 16(2) Icc Bull 99, 101 (2005).
BREKOULAKIS, at p5.89
^27 Born at 1172
^28 BREKOULAKIS, af p5.89-5.90.
The possibility to extend arbitration agreement to third parties
depends on the law applicable to the arbitration agreement. For
instance, England is still reluctant to disregard corporate entity on the
basis of the discussed doctrines and allows it only in exceptional
circumstances. E.g., Peterson Farms Inc v. C&M Farming Ltd [2004]
EWHC 121, p 62 (Comm) (the court stating that “[the group of
companies] doctrine....forms no part of English law”). Commentators
treated or generally ignored by national courts, which makes its
application generally much riskier than that of the piercing the
corporate veil.
Peterson Farms Inc. v. C&M Farming Ltd [2004] 1 Lloyd's Rep. 603
^Q.B.). See also In re Scaplake [1978] 2 Lloyd's Rep. 380 (Q.B.).
Sukhanya Holdings v. Jayesh H. Pandya & Anr. (2003) 5 SCO 531
in writing’ and the subject matter of the agreement and disputes
arising from that agreement. These words normally interpreted
would have meant “Successors or legal representatives’ of the
signatories to the agreement. As an illustration in a merger of
one company with another or principal and agent. In relation to
the group of Companies Doctrine, quoting from the proceedings
of the working group of the UNCITRAL Commission. Binder
States'^^^ “it was considered that this particular fact situation
raised issues which were too difficult to achieve wide acceptance
by a harmonized rule. It was therefore dropped from the list and
not discussed further.’’ Given that the Indian Act has not made
deviations from the Model Law, it would therefore be inaccurate to
state that Section 45 includes the Group of Companies Doctrine.
Further, the theory has been developed on the basis of the
language of Section 45. Section 45 is a power in the Court. If the
judgment is followed it would only apply when a judicial authority
is seized of an action. It would not apply when the parties directly
approach the Tribunal, except in institutional arbitrations where
there may be a provision for joinder by consent. The judgment
has not taken into consideration this aspect. The judgment is one
more instance of judicial legislation by the Supreme Court.
Peter Binder
enable joinder the basis for tfiis approacli in arbitration is
debatable. Arbitral proceedings are voluntary in nature between
parties to the arbitration agreement. In the absence of specific
provision in the relevant act under the misplaced concept of
multiplicity, courts should not club proceedings, unless all the
parties to the arbitration agreement agree.
(2011)5 8 0 0 532
(2012) 9 S.O. 545
Explaining the scope of section 34, the Supreme Court has
observed in Mag International vs. Burns Standard Company
Limited'’'*” as under:-
Badat & Co. vs. East India Trading Company, 1964 S.C. 538.
281
The enforcement of an award can be refused if the party
opposing enforcement proves that the party to the Agreement
was under the law applicable to them under some incapacity.
The Court may also refuse enforcement if the opposing party is
able to prove that he was unable to present his case or it was not
given proper notice of the appointment of the arbitrator or had no
notice of the arbitral proceedings. Procedural irregularities can
lead to refusal of enforcement of foreign award. The Supreme
Court in Renusgar Power Company Ltd. vs. General Electric
Company''^' held that enforcement of foreign award would be
refused on the ground that it is contrary to public policy or such
enforcement would be contrary to (a) fundamental policy of Indian
Law (b) the interest of India and (c) justice or morality. This was
the narrow view of public policy taken by the Indian Supreme
Court in Renusagar. In the enforcement of foreign awards under
the 1996 Act, the narrovy principle of public policy enunciated in
Renusagar has been followed'*^^.
461
[See Redfern & Hunter, 5*^ Edition pages 651-653
462
Gary Bom p.3357 2"'^ Edn.