LI Network
Published on: February 10, 2024 at 12:15 IST
In a recent ruling, the Delhi High Court, under the jurisdiction of Justice Prateek Jalan, declared that a dispute resolution clause, incorporating various settlement methods including arbitration and utilizing the term “will,” does not necessitate the explicit consent of the opposing party for opting for arbitration.
The Court asserted that in such instances, a consensus ad idem has already been established between the parties regarding the resolution of disputes, be it through mutual settlement, mediation, or arbitration.
The case involved a Memorandum of Understanding/Settlement Agreement between Praveen Kumar Kapoor (“Petitioner”) and Respondent Nos. 1 and 2. The agreement stipulated that the respondents would construct the third and fourth floors of a property owned by the petitioner.
The dispute resolution clause in the agreement mandated resolving disputes either through mutual agreement or via a mediator/arbitrator appointed by both parties.
Subsequently, as the respondents failed to meet their construction obligations within the agreed timeframe, the petitioner paid them Rs. 50 Lakhs.
Displeased by this, the petitioner filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking restraint against the respondents from selling or transferring the property’s third and fourth floor.
Upon facing the argument of being time-barred, the petitioner filed an appeal before the Delhi High Court, challenging the Commercial Court’s decision.
During the appeal, the petitioner initiated arbitration proceedings and sent a notice to the respondents. Unanswered, the petitioner filed a Section 11 application before the High Court for the appointment of an arbitrator.
The respondents raised objections, contending that the dispute resolution clause did not constitute an arbitration clause due to presenting three alternative modes of settlement and that the MoU exceeded the three-year limitation period for arbitration invocation.
The High Court, in its observations, emphasized that while the clause offered multiple methods for dispute resolution, it also established an agreement between the parties regarding each method. The use of the term “will” in the clause indicated an agreement, eliminating the need for fresh consent for arbitration. Addressing the limitation issue, the court found no evident bar on the face of the petition and record, allowing the petition to proceed for further consideration by the arbitrator.
Consequently, the Delhi High Court granted the petition, referring the disputes to arbitration under the Delhi International Arbitration Centre.
The case is titled Praveen Kumar Kapoor vs Raj Kumar Jain and Anr, with case number ARB.P. 1245/2023. Advocates for the petitioner were Mr. Ravin Rao, Mr. Jujhar Singh, and Mr. Bhushan Arora, while Mr. Milan Verma & Mr. Aman Sharma represented the respondent.